<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 NOVEMBER 30,1999
------------------
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
---------
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 (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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 - 13,830,440 shares as of November 30, 1999
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1
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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 November 30, 1999 and 3
February 28,1999
Condensed Consolidated Statements of Operations (Unaudited) for the three 4
months ended November 30, 1999 and 1998
Condensed Consolidated Statements of Operations (Unaudited) for the nine 4
months ended November 30, 1999 and 1998
Condensed Consolidated Cash Flows (Unaudited) for the nine months ended 5
November 30, 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>
November 30, February 28,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS
Current assets
Cash $ 6,883 $ 165,494
Assets held for sale 20,000 20,000
----------- -----------
Total current assets 26,883 185,494
----------- -----------
Property and equipment, net 19,002 23,374
----------- -----------
Property and equipment, net 19,002 23,374
----------- -----------
Other assets
Project development costs 401,214 346,371
Amortization project development costs (134,173) (97,022)
Organizational and franchise development costs 205,098 205,098
Amortization organizational and franchise development costs (205,098) (205,098)
----------- -----------
Net other assets 267,041 249,349
----------- -----------
Total assets $ 312,926 $ 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 103,215 83,915
Deposit for project development 75,000 100,000
----------- -----------
Total current liabilities 216,957 222,657
----------- -----------
Long-term liabilities
Long-term debt (net of current portion) 66,087 80,458
----------- -----------
Long-term liabilities 66,087 80,458
----------- -----------
Total liabilities 283,044 303,115
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 - 13,830,440 at November 30,1999
and 13,667,100 at February 28,1999, respectively 13,830 13,667
Additional paid-in capital 1,225,066 1,197,959
Retained earnings (deficit) (1,056,524) (1,056,524)
Net income (loss) (152,489) --
----------- -----------
Net stockholders' equity 29,883 155,102
----------- -----------
Total liabilities and stockholders' equity $ 312,926 $ 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 November 30, Nine Months Ended November 30,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenue $ 25,000 $ -- $ 25,000 $ --
Costs and expenses:
Amortization expense 12,384 14,016 37,151 42,048
Depreciation expense 1,963 1,963 5,887 5,889
General and administrative expenses 22,113 34,543 178,407 94,209
(Less) Capitalization as project development costs -- (23,458) (54,843) (63,977)
------------ ------------ ------------ ------------
Total operating expenses 36,459 27,064 166,602 78,169
------------ ------------ ------------ ------------
Operating (loss) (11,459) (27,064) (141,602) (78,169)
Interest income -- -- -- --
Interest expense -- (5,053) (10,887) (13,782)
Other (expense) income -- -- -- --
------------ ------------ ------------ ------------
(Loss) before income taxes (11,459) (32,117) (152,489) (91,951)
Income tax provision (benefit)
------------ ------------ ------------ ------------
Net (loss) $ (11,459) $ (32,117) $ (152,489) $ (91,951)
============ ============ ============ ============
Net (loss) per share of common stock $ (0.001) $ (0.003) $ (0.011) $ (0.007)
============ ============ ============ ============
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>
Nine Months Ended November 30,
1999 1998
--------- ---------
<S> <C> <C>
Net cash flow from operating activities:
Net income (loss) $(152,489) $ (91,951)
Adjustments to reconcile net income to cash provided by
(used in) operating activities:
Depreciation and amortization 43,038 47,937
Other changes in operating assets and liabilities
Deposit for project development (25,000)
Stock issued for services in lieu of cash 6,600
--------- ---------
Total adjustments 24,638 47,937
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Net cash provided by operating activities (127,851) (44,014)
--------- ---------
Cash flows from investing activities:
Property and equipment (1,516)
Other Assets (54,843) (63,977)
--------- ---------
Net cash (used) by investing activities (56,359) (63,977)
--------- ---------
Cash flows from financing activities:
Notes payable (14,371) 9,439
Due to stockholders 19,300
Funds raised from stock issued 20,670 100,700
--------- ---------
Net cash (used) by financing activities 25,599 110,139
--------- ---------
Increase (decrease) in cash and cash equivalents (158,611) 2,148
Cash at beginning of year 165,494 3,971
========= =========
Cash at end of year $ 6,883 $ 6,119
========= =========
Supplemental cash flow information
Interest paid $ 10,887 $ 13,782
========= =========
Non-cash items
Stock issued in lieu of cash $ 21,270 $ 5,000
========= =========
</TABLE>
See accompanying notes. 5
<PAGE>
ATLANTIC SYNDICATION NETWORK, INC.
Notes to Unaudited Condensed Consolidated Financial Statements
November 30, 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
nine-month periods ended November 30, 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>
November 30,1999 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 ( 162) ( 157)
-------------- --------------
Total property and equipment, net $ 19 $ 23
</TABLE>
Note (D) - TERM DEBT
Term debt consisted of the following at:
<TABLE>
<CAPTION>
November 30,1999 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 nine months ended
November 30,1999.
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.
7
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As of November 30,1999, there are 13,830,440 shares issued and
outstanding. Of this amount, 857,500 shares are free trading whereas
12,972,940 shares have been or still are restricted subject to Rule 144
of the 1933 Securities and Exchange Act.
Note (G) - DEPOSIT FOR PROJECT DEVELOPMENT
In January 1999, the Registrant received $100,000, of which $75,000 was
an investment on a production project and $25,000 was reclassified to
Advertising and Marketing Consulting fees for services rendered in
November, 1999. 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)
The Registrant is preparing a Private Placement Memorandum under
Regulation "D", Rule 505, for the purpose of raising $750,000 in
exchange for 1,500,000 shares of Common Stock, $0.50 per share value.
The proceeds from this offering will be used for operations, including
additional staff for marketing, sales and production of television
shows, product acquisition and development, production of direct
response commercials and infomercials, purchasing of media and
television time for airing of ASNI shows and infomercials, product
order taking and fulfillment of orders.
The "Y 2K" situation has had no impact on ASNI's systems or daily
operations at this time.
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 $25,000 in revenues for the nine
months ended, November 30, 1999 for Advertising and Marketing Consulting
Services. During this period, the Company incurred $178,000 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 the third Quarter of 1999, Atlantic Syndication Network, Inc.
relocated its' production facility from Southern California to Las Vegas,
Nevada.
In August, 1999, the Company filed its' Form 10-SB to be 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
9
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RISK FACTORS - continued
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. 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.
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)
January 12, 2000 /s/ Kent G. Wyatt, Sr.
------------------
Kent G. Wyatt, Sr.
President and Chief Executive Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> FEB-29-2000 FEB-29-2000
<PERIOD-START> SEP-01-1999 MAR-01-1999
<PERIOD-END> NOV-30-1999 NOV-30-1999
<CASH> 6,883 6,883
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 20,000 20,000
<CURRENT-ASSETS> 26,883 26,883
<PP&E> 181,002 181,002
<DEPRECIATION> 162,000 162,000
<TOTAL-ASSETS> 312,926 312,926
<CURRENT-LIABILITIES> 216,957 216,957
<BONDS> 66,087 66,087
0 0
0 0
<COMMON> 13,830 13,830
<OTHER-SE> 16,053 16,053
<TOTAL-LIABILITY-AND-EQUITY> 312,926 312,926
<SALES> 0 0
<TOTAL-REVENUES> 25,000 25,000
<CGS> 0 0
<TOTAL-COSTS> 22,113 123,564
<OTHER-EXPENSES> 14,347 43,038
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 10,887
<INCOME-PRETAX> (11,459) (152,489)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (11,459) (152,489)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (11,459) (152,489)
<EPS-BASIC> 0.001 0.011
<EPS-DILUTED> 0.001 0.011
</TABLE>
