<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934.
FOR THE QUARTERLY PERIOD ENDED AUGUST 31,1999
--------------------------
OR
- --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE TRANSITION FROM ____________________ TO ______________________
COMMISSION FILE NUMBER: 0-26383
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ATLANTIC SYNDICATION NETWORK, INC.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0325940
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(STATE OR OTHER JURISDICTION OF INCORPORATION (I.R.S. EMPLOYER IDENTIFICATION
OR ORGANIZATION) NO.)
2140 West Charleston, Suite B, Las Vegas, Nevada 89102
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(702) 388-8800
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(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
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(FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE
LAST REPORT.)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days X Yes No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock, $.001 par value - 13,806,440 shares as of August 31, 1999
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ATLANTIC SYNDICATION NETWORK, INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
----
<S> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets (Unaudited) as of August 31, 1999 and 3
February 28,1999
Condensed Consolidated Statements of Operations (Unaudited) for the three 4
months ended August 31, 1999 and 1998
Condensed Consolidated Statements of Operations (Unaudited) for the six 4
months ended August 31, 1999 and 1998
Condensed Consolidated Cash Flows (Unaudited) for the six months ended 5
August 31, 1999 and 1998
Notes to Unaudited Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of 9
Operations
PART II. OTHER INFORMATION 10
Item .
SIGNATURES 10
INDEX TO EXHIBITS
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
ATLANTIC SYNDICATION NETWORK, INC.
Condensed Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
August 31, February 28,
1999 1999
----------------- ----------------
<S> <C> <C>
ASSETS
Current assets
Cash $ 2,896 $ 165,494
Assets held for sale 20,000 20,000
----------------- ----------------
Total current assets 22,896 185,494
----------------- ----------------
Property and equipment, net 20,965 23,374
----------------- ----------------
Property and equipment, net 20,965 23,374
----------------- ----------------
Other assets
Project development costs 401,214 346,371
Amortization project development costs (121,789) (97,022)
Organizational and franchise development costs 205,098 205,098
Amortization organizational and franchise development costs (205,098) (205,098)
----------------- ----------------
Net other assets 279,425 249,349
----------------- ----------------
Total assets $ 323,286 $ 458,217
================= ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 21,668 $ 21,668
Notes payable (current portion) 7,074 7,074
Refundable deposits 10,000 10,000
Due to stockholder 82,915 83,915
Deposit for project development 100,000 100,000
----------------- ----------------
Total current liabilities 221,657 222,657
----------------- ----------------
Long-term liabilities
Long-term debt (net of current portion) 66,287 80,458
----------------- ----------------
Long-term liabilities 66,287 80,458
----------------- ----------------
Total liabilities 287,944 303,115
Stockholders' equity
Preferred stock, $.01 par value: Authorized shares - 500,000; Issued
and outstanding - none.
Common stock, $.001 par value: Authorized shares- 50,000,000;
Issued and outstanding shares - 13,806,440 at August 31,1999
and 13,667,100 at February 28,1999, respectively 13,806 13,667
Additional paid-in capital 1,219,090 1,197,959
Retained earnings (deficit) (1,056,524) (1,056,524)
Net income (loss) (141,029) -
----------------- ----------------
Net stockholders' equity 35,343 155,102
----------------- ----------------
Total liabilities and stockholders' equity $ 323,286 $ 458,217
================= ================
</TABLE>
See accompanying notes.
3
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ATLANTIC SYNDICATION NETWORK, INC.
Condensed Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended August 31, Six Months Ended August 31,
1999 1998 1999 1998
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Net revenue $ - $ - $ - $ -
Costs and expenses:
Amortization expense 12,384 14,016 24,767 28,032
Depreciation expense 1,963 1,963 3,924 3,926
General and administrative expenses 45,435 31,403 156,294 59,666
(Less) Capitalization as project development costs (10,001) (21,326) (54,843) (40,519)
------------ ------------ ------------- ------------
Total operating expenses 49,780 26,056 130,142 51,105
------------ ------------ ------------- ------------
Operating (loss) (49,780) (26,056) (130,142) (51,105)
Interest income - - - -
Interest expense - (4,594) (10,887) (8,729)
Other (expense) income - - - -
------------ ------------ ------------- ------------
(Loss) before income taxes (49,780) (30,650) (141,029) (59,834)
Income tax provision (benefit)
------------ ------------ ------------- ------------
Net (loss) $ (49,780) $ (30,650) $ (141,029) $ (59,834)
============ ============ ============= ============
Net (loss) per share of common stock $ (0.004) $ (0.002) $ (0.010) $ (0.005)
============ ============ ============= ============
Weighted average shares outstanding during the period 13,667,100 12,807,100 13,667,100 12,807,100
============ ============ ============= ============
</TABLE>
See accompanying notes.
4
<PAGE>
ATLANTIC SYNDICATION NETWORK, INC.
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended August 31,
1999 1998
------------ -----------
<S> <C> <C>
Net cash flow from operating activities:
Net income (loss) $ (141,029) $ (59,834)
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation and amortization 28,691 31,958
Other changes in operating assets and liabilities
Stock issued for services in lieu of cash 6,600
------------ -----------
Total adjustments 35,291 31,958
------------ -----------
Net cash provided by operating activities (105,738) (27,876)
------------ -----------
Cash flows from investing activities:
Property and equipment (1,516)
Other Assets (54,843) (40,519)
------------ -----------
Net cash (used) by investing activities (56,359) (40,519)
------------ -----------
Cash flows from financing activities:
Notes payable (14,171) 9,439
Due to stockholders (1,000)
Funds raised from stock issued 14,670 100,700
------------ -----------
Net cash (used) by financing activities (501) 110,139
------------ -----------
Increase (decrease) in cash and cash equivalents (162,598) 41,744
Cash at beginning of year 165,494 3,971
============ ===========
Cash at end of year $ 2,896 $ 45,715
============ ===========
Supplemental cash flow information
Interest paid $ 10,887 $ 8,729
============ ===========
Non-cash items
Stock issued in lieu of cash $ 21,270 $ -
============ ===========
</TABLE>
See accompanying notes.
5
<PAGE>
ATLANTIC SYNDICATION NETWORK, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
August 31, 1999
Note (A) - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements
include the accounts of Atlantic Syndication Network, Inc. ("ASNI" or "the
Company"), and have been prepared in accordance with generally accepted
accounting principles for interim financial information, and with the
instructions to form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three-month and
six-month periods ended August 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending February 28, 2000. These
financial statements should be read in conjunction with the consolidated
financial statements and footnotes thereto included in the Company's Annual
Report to Stockholders for the year ended February 28, 1999.
Note (B) - FISCAL YEAR
The Company's fiscal year ends on February 28 each year. The Company
has presented its fiscal quarters as ending on May 31, August 31, November 30
and February 28.
Note (C) - PROPERTY AND EQUIPMENT
Property and equipment consisted of the following at:
<TABLE>
<CAPTION>
August 31,1999 February 28,1999
(In Thousands) (In Thousands)
-------------- --------------
<S> <C> <C>
Tools $ 6 $ 6
Office equipment 117 116
Software 59 58
----------------- ----------------
Total property and equipment 181 180
(Less) accumulated depreciation ( 161) ( 157)
----------------- ----------------
Total property and equipment, net $ 20 $ 23
</TABLE>
Note (D) - TERM DEBT
Term debt consisted of the following at:
<TABLE>
<CAPTION>
August 31,1999 February 28,1999
(In Thousands) (In Thousands)
-------------- --------------
<S> <C> <C>
NOTE PAYABLE
Payable to a financial institution, secured by
Selected equipment, monthly payment $362
For 51 months, interest at 21.3%. $ 10 $ 10
</TABLE>
6
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Note (D) - TERM DEBT - continued
<TABLE>
<S> <C> <C>
NOTES PAYABLE
Over the years, the Company has issued unsecured
Demand notes payable to trade accounts payable
Creditors. The unpaid balance at August 31, and
February 28, 1999, respectfully was: 15 29
CREDIT CARDS
Pledged by personal guarantee of major stockholder: 10 10
CONVERTIBLE NOTES PAYABLE
Under a private placement issue, stock is sold along
With convertible notes (See Note F). Since these
Unsecured notes can be converted to stock, they are
Reported as long-term debt: 38 38
Total notes payable 73 87
(Less) current portion ( 7) ( 7)
-------------- --------------
Total long-term debt $ 66 $ 80
</TABLE>
Note (E) - RELATED PARTY TRANSACTIONS
There were no related party transaction during the six months ended
August 31,1999.
Note (F) - COMMON STOCK
In August 1994, the Company held a private placement offering for 70
investment units. Each unit consists of 3,200 shares of common stock
and one $2,400, 10%, three-year convertible note. Each $2,400 note is
convertible to common shares of Company stock if converted within three
years at the option of the stockholder. Each $2,400 note may be
converted into:
THREE THOUSAND (3,000) shares of common stock within 6 months
from the date of issuance at $0.80 and/or
TWO THOUSAND (2,000) shares of common stock within 18 months
from the date of issuance at $1.20 and/or
TWELVE HUNDRED (1.200) shares of common stock within 30 months
from the date of issuance at $2.00 and/or
ONE THOUSAND (1,000) shares of common stock on or within 36
months at $2.40 and/or at the time the note is due and
payable.
The notes may be repayable in whole or in part (in minimum increments
of $2,400) after 90 days from issuance, at the option of the Company,
at 100% of the principal amount owed together with interest thereon
payable to the date of prepayment.
Nearly all stock authorized to issue pursuant to the August 1994
private placement offering have been sold and issued.
As of August 31,1999, there are 13,806,440 shares issued and
outstanding. Of this amount, 857,500 shares are free trading whereas
12,948,940 shares have been or still are restricted subject to Rule 144
of the 1933 Securities and Exchange Act.
7
<PAGE>
Note (G) - DEPOSIT FOR PROJECT DEVELOPMENT
In January 1999, the Registrant received $100,000 as an investment on a
production project. Management believes the committed project will be
completed and ready for marketing by February 28, 2000. The project
entails developing and marketing an infomercial to promote video tapes
related to drug and alcohol addiction. The Registrant and the investor
in this project have entered into a profit participation agreement that
takes affect after the marketing begins. All costs associated with the
development and marketing of this project are reimbursed by the project
before profits are disbursed. Rights to the project remain in the hands
of the Registrant.
Note (H) - SUBSEQUENT EVENTS (UNAUDITED)
Management with Board of Director's is planning to relocate the video
production services of Atlantic Syndication Network, Inc. to Las Vegas,
Nevada. This move will take place in the third quarter of this fiscal
year. With the corporate office already in Las Vegas, Nevada, this move
will consolidate the Company's resources. Space to house Atlantic
Syndication Network, Inc. is being sought at this time.
In addition to consolidating facilities, Management is communicating
with R & R Studios of Hawaii in an attempt to share production space
and equipment. This should enable both companies to reduce capital
needs and operating expenses if the necessary arrangements can be
completed.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
THE FOLLOWING INFORMATION INCLUDES FORWARD-LOOKING STATEMENTS, THE
REALIZATION OF WHICH MAY BE IMPACTED BY CERTAIN IMPORTANT FACTORS DISCUSSED IN
"RISK FACTORS," BELOW, AND THE OTHER INFORMATION IN THIS FORM 10-Q.
OVERVIEW
The Registrant develops, produces and distributes entertaining,
educational and informational television programming. The Company endeavors to
present its programming on network, cable and public television.
The Company derives its revenues from the sale of advertising and
promotion during the shows the Company produces and from companies, who sponsor
these shows.
At present, the Company has several projects in production, "The
Stock Show" and "Intervention". Management has targeted the fourth quarter of
this fiscal year or the first quarter on next fiscal year to market these
projects.
RESULTS OF OPERATIONS
Atlantic Syndication Network, Inc. had no revenues for the six months
ended, August 31,1999. During this period, the Company incurred $156,000 of
operating expenses. Due to the nature of these operating expenses, $55,000 of
operating expenses were capitalized as project development costs; to be
amortized over the useful life of the project.
In August, 1999, the Company went from a 10-SB reporting entity to a
"full" reporting Corporation with the SEC.
RISK FACTORS
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Quarterly Report on Form 10-Q may contain forward-looking
statements that are based on current expectations and involve a number of risks
and uncertainties. All information herein, which is not historic, and any
inference from historic information concerning future periods, is a
forward-looking statement.
NATURE OF THE ENTERTAINMENT INDUSTRY. The television, merchandising and
direct-to-video industries are highly speculative and historically have involved
a substantial degree of risk. The success of a television show or video
production depends upon unpredictable and changing factors such as audience
acceptance, which may bear little or no correlation to the Company's production
and other costs. Audience acceptance of the Company's products represents a
response not only to the artistic components of the products, but also to
promotion by the distributor, the availability of alternative forms of
entertainment and leisure time activities, general economic conditions and
public taste generally, and other intangible factors, all of which change
rapidly and cannot be predicted with certainty. Therefore, there is a
substantial risk that some or all of the Company's projects will not be
commercially successful, resulting in costs not being recouped or anticipated
profits not being realized.
DEPENDENCE ON KEY EMPLOYEES. The Company is highly dependent on its
Chief Executive Officer, Kent G. Wyatt, Sr., and each of the other principal
members of its management team, the loss of whose services could have a material
adverse effect upon the business and financial condition of the Company, as well
as the ability of the Company to achieve its objectives. The Company is also
dependent on other key personnel, and on its ability to continue to attract,
retain and motivate highly skilled personnel.
9
<PAGE>
RISK FACTORS - continued
The competition for such employees is intense, and there can be no assurance
that the Company will be successful in attracting, retaining or motivating key
personnel or that personnel cost increases will not have an adverse effect on
the Company's net income or results of operation.
THE YEAR 2000 ISSUE. The "Year 2000 Issue" variously known as "Y2K
Issue" or the "Millennium Bug" arises out of the fact that many existing
computer programs use only two digits to identify a year in the date field, and
if uncorrected, would fail or create erroneous results by or at the Year 2000.
In 1998, the Company evaluated the Y2K issue and its impact on the
Company's operations. Currently, all computers in use and all software is Y2K
compliant and no problems are anticipated.
PART II. OTHER INFORMATION
Item 1. Legal proceedings - Not applicable
Item 2. Changes in securities - Not applicable
Item 3. Defaults on senior securities - Not applicable
Item 4. Submission of matters to a vote of security holders -
Not applicable
Item 5. Other information - Not applicable
Item 6. (a) Exhibits: None
(b) Reports on Form 8-K: None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
ATLANTIC SYNDICATION NETWORK, INC. (Registrant)
November 17,1999 /s/ KENT G. WYATT, SR.
-------------------------------------
Kent G. Wyatt, Sr.
President and Chief Executive Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-2000
<PERIOD-START> MAR-01-1999
<PERIOD-END> AUG-31-1999
<CASH> 2,896
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 20,000
<CURRENT-ASSETS> 22,896
<PP&E> 181,000
<DEPRECIATION> (161,000)
<TOTAL-ASSETS> 323,286
<CURRENT-LIABILITIES> 221,657
<BONDS> 66,287
0
0
<COMMON> 13,806
<OTHER-SE> 21,537
<TOTAL-LIABILITY-AND-EQUITY> 323,286
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 130,142
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,887
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (141,029)
<EPS-BASIC> .010
<EPS-DILUTED> .010
</TABLE>
