UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
FOR THE QUARTER ENDED September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 000-28485
CLUBCHARLIE.COM, INC.
-------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 88-0380343
-------- ----------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
4275 EXECUTIVE SQUARE, SUITE 1180 LA JOLLA, CALIFORNIA 92037
------------------------------------------------------ -----
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (877) 882-5822
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: COMMON STOCK, PAR
VALUE $.001 PER SHARE
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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.
Yes [X] No[ ]
As of November 10, 2000, there were 7,967,500 shares of the Registrant's common
stock, $.001 par value per share, issued and outstanding.
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<TABLE>
TABLE OF CONTENTS
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION................................. 2
Item 1. Financial Statements.................................. 3
Balance Sheets......................................... 5
Statement of Operations for the Three Months
Ended September 30, 1999 and 2000................... 6
Statement of Operations for the Nine Months
Ended September 30, 1999 and 2000................... 7
Statement of Cash Flows for the Nine Months
Ended September 30, 1999 and 2000................... 8
Notes to Financial Statements
as of September 30, 2000............................ 9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 13
PART II OTHER INFORMATION..................................... 14
Item 1: Legal Proceedings..................................... 14
Item 2: Changes in Securities................................. 14
Item 3: Defaults Upon Senior Securities....................... 14
Item 4: Submission of Matters to a Vote of Security Holders... 14
Item 5: Other Information..................................... 14
Item 6(a): Exhibits.............................................. 14
Item 6(b): Reports on Form 8-K................................... 14
SIGNATURES....................................................... 15
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PART I - FINANCIAL INFORMATION
NOTE REGARDING FORWARD-LOOKING STATEMENTS.
This Form 10-QSB contains forward-looking statements within the meaning of the
"safe harbor" provisions under Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act of 1995. We use forward-
looking statements in our description of our plans and objectives for future
operations and assumptions underlying these plans and objectives. Forward-
looking terminology includes the words "may," "expects," "believes,"
"anticipates," "intends," "projects," or similar terms, variations of such
terms or the negative of such terms. These forward-looking statements are based
on management's current expectations and are subject to factors and
uncertainties, which could cause actual results to differ materially from
those, described in such forward-looking statements. We expressly disclaim any
obligation or undertaking to release publicly any updates or revisions to any
forward-looking statements contained in this Form 10-QSB to reflect any change
in our expectations or any changes in events, conditions or circumstances on
which any forward-looking statement is based. Factors, which could cause such
results to differ materially from those described in the forward-looking
statements, and elsewhere in, or incorporated by reference into this
Form 10-QSB.
Item 1. Financial Statements
CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
Financial Statements
as of September 30, 2000,
and for the periods ended
September 30, 1999 and 2000
and from
Inception (January 6, 1993)
through September 30, 2000
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TABLE OF CONTENTS
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Page
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Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Statements of Operations (three months) . . . . . . . . . . . . . 3
Statements of Operations (nine months) . . . . . . . . . . . . . . 4
Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . 6-9
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CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
<TABLE>
Balance Sheets
<CAPTION>
12/31/99 09/30/00
--------- ---------
(audited) (unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ - $ 1,497
Due from related party 6,777 -
Prepaid expenses 13,581 -
--------- ---------
Total current assets 20,358 1,497
Screenplay rights, at cost 150,000 150,000
--------- ---------
Total assets $ 170,358 $ 151,497
========= =========
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 24,182 $ 24,745
Related party advance 50,000 50,000
Line of credit - 1,500
Amounts due officers and directors 152,762 26,213
Related party acquisition loan 150,000 135,000
--------- ---------
Total current liabilities 376,944 237,458
Commitments and contingencies (See Note 2) - -
Stockholders' equity (deficit):
Common stock, $0.001 par value; 50,000,000 shares 3,860 7,967
authorized; 3,860,000 and 7,967,500 shares issued
and outstanding at December 31, 1999
and September 30, 2000, respectively
Additional paid in capital - 397,643
Subscription receivable - (81,500)
Deficit accumulated during development (210,446) (410,071)
--------- ---------
Total stockholders' equity (deficit) (206,586) (85,961)
--------- ---------
Total liabilities and stockholders' equity (deficit) $ 170,358 $ 151,497
========= =========
<FN>
See accompanying notes and accountant's report.
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CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
<TABLE>
Statements of Operations
<CAPTION>
Three months ended
---------------------
09/30/99 09/30/00
--------- ---------
(unaudited) (unaudited)
<S> <C> <C>
Revenue $ - $ -
Costs and expenses
Salaries and director's fees 50,000 77,500
Marketing 2,010 3,888
Research and development 4,952 5,425
Professional services 1,700 16,190
General and administrative 14,368 28,056
--------- ---------
Net loss before other income (73,030) (131,059)
Other Income
Gain on extinguishments of debt - 137,500
--------- ---------
Net income (loss) $ (73,030) $ 6,441
========= =========
Net loss per share available
to common stockholders:
Basic and diluted $ (0.02) $ 0.00
========= =========
Weighted average number of
common shares outstanding 3,860,000 5,115,833
========= =========
<FN>
See accompanying notes and accountant's report.
</TABLE>
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CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
<TABLE>
Statements of Operations
<CAPTION>
Nine months ended Inception
--------------------- (01/06/93) to
09/30/99 09/30/00 09/30/00
--------- --------- ---------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Revenue $ - $ - $ -
Costs and expenses
Salaries and director's fees 52,000 152,500 352,500
Marketing 2,010 8,088 23,361
Research and development 4,952 13,425 31,531
Professional services 7,612 38,723 64,394
General and administrative 16,132 49,389 75,785
--------- --------- ---------
Net loss before other income (82,706) (262,125) (547,571)
Other Income
Gain on extinguishments of debt - 62,500 137,500
--------- --------- ---------
Net income (loss) $ (82,706) $(199,625) $(410,071)
========= ========= =========
Net loss per share available
to common stockholders:
Basic and diluted $ (0.03) $ (0.05) $ (0.18)
========= ========= =========
Weighted average number of
common shares outstanding 3,082,222 4,278,611 2,276,855
========= ========= =========
<FN>
See accompanying notes and accountant's report.
</TABLE>
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CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
<TABLE>
Statements of Cash Flows
<CAPTION>
Nine months ended Inception
--------------------- (01/06/93) to
09/30/99 09/30/00 09/30/00
--------- --------- ---------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities -
Net loss $ (82,706) $(199,625) $(410,071)
Adjustments to reconcile net loss to
cash used in operating activities -
Common stock issued for services 2,000 201,750 203,750
Changes in assets and liabilities -
Decrease in current assets - 20,358 -
Increase in current liabilities 80,713 (125,986) 102,818
--------- --------- ---------
Cash provided by (used in)
operating activities 7 (103,503) (103,503)
Cash used in investing activities - - -
Cash from financing activities -
Proceeds from issuance of common stock - 118,500 118,500
Payment on related party loan - (15,000) (15,000)
Loans from unrelated third parties, net - 1,500 1,500
--------- --------- ---------
Cash provided by financing activities - 105,000 105,000
Net increase in cash 7 1,497 1,497
Cash, beginning of the period - - -
--------- --------- ---------
Cash, end of the period $ 7 $ 1,497 $ 1,497
========= ========= =========
<FN>
Supplemental information:
No interest or taxes were paid.
2,000,000 shares of common stock were issued for services during the nine
months ended September 30, 1999.
2,017,500 shares of common stock were issued for services during the nine
months ended September 30, 2000.
$137,500 in accrued officers salary was forgiven by an officer of the Company
during the nine months ended September 30, 2000. In addition $150,000 in
accrued officers salary was converted into common stock of the Company.
A $150,000 loan payable was entered into between the Company and a related
party for the acquisition of screenplay rights on July 13, 1999.
<FN>
See accompanying notes and accountant's report.
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CLUBCHARLIE.COM, INC.
(FORMERLY LOTUS ENTERPRISES, INC.)
(A Development Stage Entity)
Notes to the Financial Statements
1. HISTORY AND OPERATIONS OF THE COMPANY.
HISTORY. The Company was organized January 6, 1993, under the laws of the
State of Nevada, as Lotus Enterprises, Inc. On February 1, 1993, the Company
issued 18,600 shares of its no par value common stock for $1,860. On
December 17, 1997, the State of Nevada approved the restated Articles of
Incorporation, which changed the no par value common shares to par value of
$.001. The Company increased its authorized capitalization to 25,000,000
common shares. Additionally, the Company approved a forward stock split on the
basis of 100:1 thus increasing the outstanding common stock from 18,600 shares
to 1,860,000 shares. On April 6, 1999, the State of Nevada approved filed the
restated Articles of Incorporation, which increased its authorized
capitalization to 50,000,000 common shares. The Company changed its name to
Clubcharlie.com, Inc. On April 16, 1999, the Company issued 2,000,000 shares of
its common stock to the three board members for services valued at $2,000. No
stock has been issued since April 16, 1999.
OPERATIONS. Planned principal operations have not yet commenced; activities to
date have been limited to forming the Company, assembling a management and
consulting team, obtaining financial commitments and investments into the
Company and searching for the proper acting talent. In accordance with
Statement of Financial Accounting Standard No.7, the Company is considered a
development stage company. However, the Company owns screenplay rights to "The
Misadventures of Charlie Chance" and intends to produce and distribute it into
the wide-screen market.
2. COMMITMENTS AND CONTINGENCIES
GOING CONCERN CONTINGENCY. The Company has minimal capital resources presently
available to meet obligations that normally can be expected to be incurred by
similar companies, and with which to carry out its planned activities. These
factors raise doubt about the Company's ability to continue as a going concern.
Management is seeking additional equity financing to fund planned operations;
management believes actions currently being taken provide the opportunity for
the Company to continue as a going concern. However, there is no assurance
that the Company will be able to obtain such financing. The accompanying
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
3. RELATED PARTY TRANSACTIONS
FORGIVENESS OF DEBT. During the quarter ended September 30, 2000, Mr. Glen
Chilton, former Director, President and Chief Executive Officer of the Company
forgave his salary that had been accruing since July 1999. The total amount
that had accrued as of June 30, 2000 was $137,500. This amount was forgiven
upon the resignation of Mr. Chilton and surpasses his employment agreement
entered into during 1999.
PAYMENT TO RELATED PARTY. During the quarter ended September 30, 2000, the
Company paid $15,000 to Charley Chance Productions, the production company
owned by the Company's current President and Chief Executive Officer, Mr. Zee
Batal. This payment is made pursuant to the Acquisition Loan entered into
during 1999 purchasing the rights and title to the "Adventures of Charley
Chance."
CONVERSION OF ACCRUED SALARY. The Company and its current President and Chief
Executive Officer entered into an agreement whereby the Company would issue Mr.
Batal 1,500,000 shares of common stock of the Company in satisfaction of Mr.
Batal's salary through the period ending July 31, 2000 and beginning August 1,
1999 for a total of $150,000 in salary pursuant to his employment contract.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND PLAN OF OPERATIONS
SECURITIES LITIGATION REFORM ACT.
Except for the historical information contained herein, the matters discussed
in this Form 10-QSB are forward-looking statements which involve risks and
uncertainties, including but not limited to economic, competitive, governmental
and technological factors affecting the Company's operations, markets,
products, services, prices, and other factors discussed in the Company's
filings with the Securities and Exchange Commission.
PLAN OF OPERATIONS.
We have not realized any revenue from operations. The Company generated no
revenues from operations during the quarter ended September 30, 2000, and
management does not anticipate any operating revenue until following the
completion and production of the movie and the Internet affinity program. The
Company however did recognize forgiveness of debt, in the form of accrued
officers salary to its former president and chief executive officer. Mr.
Chilton forgave the $137,500 of accrued officers salary through June 30, 2000.
The Company's capital is limited. The Company anticipates operational costs
will be limited until such time as significant efforts have been undertaken
regarding the film and television series production, the marketing of the film
and television series productions, and sponsorship programs. The Internet
affinity program efforts will also commence upon the beginning of the film and
television Production.
We believe that the main sources of our revenue will be (i) film and television
series production revenues from foreign distribution and domestic theatrical,
home video, pay-per-view, pay cable and basic cable distribution; (ii)
commissions, licensing fees or other compensation received from the sale of our
products or our corporate partners' products and services; (iii) advertising
and sponsorship revenues earned from website banner ads and web-based
publications; (iv) enrollment and annual renewal fees of as much as $10 per
card holder charged by attributing "negative point" balances to membership
cards; (v) transaction fees on loyalty purchases made by our card holders on
our website or at a point-of sale at a participating merchant location; (vi)
interest earned on money being held by us for the future redemption of
membership points; (vii) breakage revenues received from unredeemed points; and
(viii) database access fees.
Our success is materially dependent upon our ability to satisfy additional
financing requirements. We are reviewing our options to raise additional
capital. In order to satisfy our requisite budget, management has held
and continues to conduct negotiations with various investors. We anticipate
that these negotiations will result in additional investment capital for us.
Our operations involve risks and uncertainties and actual results could fail as
a result of a number of factors. We anticipate that we will need to raise
additional capital to develop, promote and conduct our operations. Additional
capital may be raised through public or private financing as well as borrowings
and other sources. There can be no assurance that additional funding will be
available under favorable terms. If adequate funds are not available, we may be
required to curtail operations significantly or to obtain funds through
entering into arrangements with collaborative partners or others that may
require us to relinquish rights to certain products and services that we would
not otherwise relinquish.
Liquidity and capital resources. The Company had a cash balance of $1,497 as
of September 30, 2000. Current liabilities exceeded current assets by
$235,961.
As of September 30, 2000, the Company had no material commitments for capital
expenditures. The Company is dependent upon its ability to raise additional
financing through various means. The Company had borrowed funds from an
unrelated party at a nominal interest rate; the total amount drawn against this
line of borrowings was approximately $100,000. The unrelated party converted
their note payable into common stock of the Company. The Company issued
1,000,000 shares of restricted stock for the $100,000. The Company also entered
into another agreement with unrelated party to subscribe to common stock of the
Company. As of September 30, 2000 the Company had received $18,500, and as of
November 10, 2000, $25,000. The Company expects to receive the remaining
portion of the subscribed common stock of the Company before the fourth quarter
has closed. The Company has also begun a private placement of common stock of
the Company with a maximum offering of $1,000,000 at a price of $0.25 per share
only to accredited investors. The Company has received considerable
Counter Market. The Company continues to pay for its services and expenditures
through the use of issuing common stock. The Company believes with proper
financing and working capital in place that the Company will discontinue the
use of issuing shares in lieu of cash payment.
Expenses. During the nine months ended September 30, 2000, the Company
incurred $152,500 in officer salary and directors fees (compared to $52,000 for
the same period in 1999), $8,088 in marketing (compared to $2,010 for the same
period in 1999), $13,425 in research and development (website) costs (compared
to $4,952 for the same period in 1999), $38,723 in professional services
(compared to $7,612 for the same period in 1999), and $49,389 in general
administrative expenses (compared to $16,132 for the same period in 1999)
associated with its business operations. The total increase in expenditures for
the nine months ended September 30, 2000 were $262,125 compared with $82,706
for the nine months ended September 30, 1999, an increase of $179,419 or 216.9%
from the period before.
Impact of the Year 2000. The Year 2000 (commonly referred to as "Y2K") issue
results from the fact that many computer programs were written using two,
rather than four, digits to identify the applicable year. As a result, computer
programs with time-sensitive software may recognize a two-digit code for any
year in the next century as related to this century. For example, "00", entered
in a date-field for the year 2000, may be interpreted as the year 1900,
resulting in system failures or miscalculations and disruptions of operations,
including, among other things, a temporary inability to process transactions or
engage in other normal business activities. While it is still too soon to state
positively that the Y2K transition has passed without mishap, we believe that
Y2K issues will not have a material adverse affect on our business.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
The Company is not subject to any material litigation nor, to the Company's
knowledge, is any material litigation currently threatened against the Company.
Item 2. CHANGES IN SECURITIES
The Company issued the following securities during the quarter ended September
30, 2000, which were not registered under the Securities Act of 1933, as
amended.
1,500,000 shares of common stock to an officer of the Company as consideration
and settlement of accrued salary of $150,000.
1,000,000 shares of common stock in the aggregate to four unrelated parties as
consideration of cancellation of a note payable in the amount of $100,000.
400,000 shares of common stock to two directors of the Company as consideration
for services as directors of the Company totaling $40,000 in value.
117,500 shares of common stock to three vendors of the Company as consideration
for the payment of services and product totaling $11,750.
1,000,000 shares of common stock issued pursuant to a subscription receivable
in the amount of $100,000 to four unrelated parties.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There have been no matters requiring a vote put forth.
Item 5. OTHER INFORMATION
The Company participated in the OTC Bulletin Board, an electronic quotation
medium for securities traded outside of the NASDAQ Stock Market, under the
trading symbol "CLUC". The Company's common stock had closed at a low of $1/32
and a high of $2 7/16 for the 52-week period ending January 20, 2000. As of
January 21, 2000, the Company failed to comply with eligibility requirements
specified in Rule 6530 and therefore should have been de-listed from the OTC
Bulletin Board on January 21, 2000. However, although the Company notified the
OTC Bulletin Board Compliance Unit of its failure to so comply, the Company was
not de-listed until March 8, 1999. The Company anticipates that it will be
re-listed to trade on the OTC Bulletin Board after the Company has complied
with all of the review comments imposed on it by the NASD Reviewer. The Company
believes that it is very near in completing this task through the assistance of
legal counsel and its market maker. The Company continues to comply with all of
its filing requirements imposed upon it by the Securities and Exchange
Commission.
Item 6. EXHIBIT AND REPORTS ON FORM 8-K
a) Exhibits
27.1 Financial data schedule filed herewith.
b) Reports on Form 8-K
None.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Date: November 10, 2000 By: /s/ Zee Batal
------------------
Zee Batal
Director
President
In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the Registrant and in
the capacities and on the dates indicated.
Date: November 14, 2000 By: /s/ Zee Batal
------------------
Zee Batal
Director
President
Date: November 14, 2000 By: /s/ Kenneth Yonika
------------------
Kenneth Yonika, CPA
Director
Chief Financial Officer
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