<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------
Form 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-6106
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UNITED LEISURE CORPORATION
(Exact name of registrant as specified in its charter)
-----------
Delaware 13-2652243
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1990 Westwood Boulevard, Penthouse 90025
Los Angeles, California (Zip Code)
(Address of Principal Executive Offices)
(Registrant's telephone number, including area code) (310) 441-0900
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) 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 [_]
The number of shares of Common Stock, $.01 par value, outstanding (the
only class of common stock of the Company outstanding) was 19,827,227 on May 15,
2000.
Transitional Small Business Disclosure Format (Check one): Yes [_] No [X]
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<PAGE>
UNITED LEISURE CORPORATION AND SUBSIDIARIES
Quarter Ended March 31, 2000
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)............... 3
Consolidated Balance Sheets as of March 31,
2000 and December 31, 1999.................................. 3
Consolidated Statements of Operation and
Comprehensive Income (Loss) for the Three
Months Ended March 31, 2000 and March 31,
1999........................................................ 4
Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 2000 and March 31,
1999........................................................ 5
Notes to Condensed Consolidated Financial Statements........ 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations......................... 9
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds................... 12
Item 6. Exhibits and Reports on Form 8-K............................ 12
SIGNATURE.................................................................. 12
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,923,610 $ 1,998,059
Receivables 94,498 88,540
Deferred production cost - 115,027
Prepaid expenses and other current assets 41,857 75,208
------------ ------------
TOTAL CURRENT ASSETS 6,059,965 2,276,834
------------ ------------
PROPERTY AND EQUIPMENT, NET 243,134 181,765
------------ ------------
INVESTMENTS
Investment in HEP II at equity - related party 100,000 100,000
Investment in Grand Havana at fair value - related party 116,000 101,500
------------ ------------
TOTAL INVESTMENTS 216,000 201,500
------------ ------------
OTHER ASSETS
Loan receivable from Grand Havana - related party 795,640 779,680
Loan receivable from other - related party 71,387 46,387
Due from former officer 75,070 81,027
Deposits and other assets 87,153 61,689
------------ ------------
TOTAL OTHER ASSETS 1,029,250 968,783
------------ ------------
$ 7,548,349 $ 3,628,882
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 603,402 $ 751,976
Due to related parties 82,503 141,774
Deferred revenues 8,339 235,923
Deposits and other 2,912 2,612
------------ ------------
TOTAL CURRENT LIABILITIES 697,156 1,132,285
STOCKHOLDERS' EQUITY
Preferred stock, $100 par value; authorized - 100,000 shares;
issued and outstanding - none - -
Common stock, $.01 par value; authorized - 30,000,000 shares;
issued and outstanding - 18,581,868 shares in 2000
and 16,146,868 shares in 1999 185,818 161,468
Additional paid-in capital 32,570,287 26,892,688
Accumulated deficit (25,982,245) (24,620,392)
Accumulated other comprehensive income - unrealized gain on investment 77,333 62,833
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,851,193 2,496,597
------------ ------------
$ 7,548,349 $ 3,628,882
============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
3
<PAGE>
UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
<TABLE>
<CAPTION>
Three Months Ended
-------------------------------------
March 31, March 31,
2000 1999
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUE
Children's recreational activities $ 268,734 $ 319,443
Licensing fees 700,000 -
----------- ------------
TOTAL REVENUE 968,734 319,443
EXPENSES
Direct operating expenses 1,354,240 704,512
Selling, general and administrative expenses 1,016,580 278,365
Depreciation and amortization 11,212 44,838
----------- ------------
TOTAL EXPENSES 2,382,032 1,027,715
----------- ------------
LOSS BEFORE OTHER INCOME (EXPENSE) (1,413,298) (708,272)
OTHER INCOME (EXPENSE)
Litigation settlement (5,000) -
Equity in net income of United Hotel - 50,141
Equity in net loss of Genisys - (210,133)
Interest income 79,340 38,195
Interest expense (35,356) (115,735)
Other, net 12,461 (65,781)
----------- ------------
TOTAL OTHER INCOME (EXPENSE) 51,445 (303,313)
----------- ------------
NET LOSS (1,361,853) (1,011,585)
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OTHER COMPREHENSIVE INCOME
Unrealized holding gain on securities arising during the period 14,500 -
----------- ------------
COMPREHENSIVE LOSS $(1,347,353) $ (1,011,585)
=========== ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 18,498,535 14,202,000
=========== ============
BASIC AND DILUTED LOSS PER SHARE $ (0.07) $ (0.07)
=========== ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
4
<PAGE>
UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------
March 31, March 31,
2000 1999
------------- ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,361,853) $ (1,011,585)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 11,212 44,838
Loss on termination of lease - 45,333
Fair value of options and warrants granted to non-employees - 34,188
Equity in net loss of United Hotel - (50,141)
Equity in net loss of Genisys - 210,133
Accrual of interest income from related parties (15,960) (34,490)
Changes in operating assets and liabilities:
Receivables (5,958) (79,883)
Deferred production cost 115,027 -
Prepaid expenses and other current assets 33,351 35,424
Deposits (25,164) -
Accrued interest - 77,293
Accounts payable and accrued expenses (148,574) 54,172
Accrued expenses due to related parties 5,957 107,194
Deferred revenues (227,584) 251,848
------------ ------------
NET CASH USED IN OPERATING ACTIVITIES (1,619,546) (315,676)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment (72,581) (13,589)
Loans receivable from Grand Havana - (75,000)
Advances to related party (25,000) (101,555)
Payments of advances from related party (59,271) -
Deposits and other - (12,893)
------------ ------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (156,852) (203,037)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 5,701,949 -
Common stock issued for warrants and options exercised - 181,000
------------ ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,701,949 181,000
------------ ------------
NET DECREASE IN CASH AND CASH EQUIVALENTS 3,925,551 (337,713)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 1,998,059 799,369
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,923,610 $ 461,656
============ ============
CASH PAID FOR:
Interest $ - $ 16,233
============ ============
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND
FINANCING ACTIVITIES:
Fair value of options and warrants to non-employees $ - $ 34,188
============ ============
Accretion in the carrying amount of common stock subject to - $ 27,000
repurchase ============ ============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
5
<PAGE>
UNITED LEISURE CORPORATION
NOTES TO CONSOLIDATED STATEMENTS (UNAUDITED)
MARCH 31,2000
1. BASIS OF PRESENTATION
The interim consolidated financial statements presented have been prepared
by United Leisure Corporation (the "Company" or "ULC") without audit and,
in the opinion of the management, reflect all adjustments of a normal
recurring nature necessary for a fair statement of (a) the consolidated
results of operations for the three months ended March 31, 2000 and 1999,
(b) the consolidated financial position at March 31, 2000 and (c) the
consolidated cash flows for the three months ended March 31, 2000 and 1999.
Interim results are not necessarily indicative of results for a full year.
The consolidated balance sheet presented as of December 31, 1999 has been
derived from the consolidated financial statements that have been audited
by the Company's independent auditors. The consolidated financial
statements and notes are condensed as permitted by Form 10-QSB and do not
contain certain information included in the annual financial statements and
notes of the Company. The consolidated financial statements and notes
included herein should be read in conjunction with the financial statements
and notes included in the Company's Annual Report on Form 10-KSB.
2. STOCKHOLDERS' EQUITY
In November 1999 and January 2000, the Company's subsidiary, United
Internet Technologies, Inc., granted options to purchase 4,250,000 shares
and 640,000 shares, respectively, to its employees, officers and a member
of the advisory board.
In January 2000, the Company sold a total of 2,240,000 shares of its
common stock for a total of $5,600,000, or $2.50 per share to five
accredited investors. The offer and sale of the shares was exempt from the
registration provisions of the Securities Act of 1933, as amended (the
Act), pursuant to Section 4(2) of the Act. No general forms of advertising
were used in connection with the issuance of shares. The purchasers
acquired the shares for their own account. Each purchaser was, prior to the
sale of the Company's securities, fully informed and advised about such
matters concerning the Company as its business, financial affairs and other
matters.
From February 2000 to March 2000, options and warrants to purchase a total
of 295,000 shares of common stock were exercised at prices ranging from
$0.23 to $1.50 per share for a total of $226,950. The options and warrants
were granted in 1999 to employees of the Company and in connection with
certain services rendered. The issuance of shares of common stock upon
conversion of the options and warrants was exempt from the registration
provisions of the Act pursuant to Section 4(2) thereof. The option and
warrant holders acquired the shares for their own account.
3. LITIGATION
The Company and its wholly-owned subsidiary, United Internet Technologies,
Inc. ("UIT"), are parties in two patent infringement lawsuits, both
involving Hyperlock Technologies, Inc. In the first action, Case No.
99C3776, filed on June 7, 1999 by Hyperlock in the Northern District of
Illinois, Hyperlock alleged infringement by UIT of U.S. Patent Nos.
5,892,825 and 5,937,164. In the second action, originally filed by UIT on
February 7, 2000 in the Central District of California, UIT alleged
infringement by Hyperlock and Broadbridge Media, LLC of UIT's U.S. Patent
No. 5,996,000. The California case has been transferred to the Northern
District of Illinois, and has been consolidated with the earlier filed
Illinois case. No settlements have been reached in either case.
6
<PAGE>
UNITED LEISURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
4. SEGMENT INFORMATION
The Company operates in two business segments: developing and licensing
Internet video technology and children's recreational activities.
Children's recreational activities consist of summer day camps and
children's play-learning centers known as Planet Kids.
Segment operating loss is defined as total segment revenue reduced by
operating expenses identifiable to that business segment. Corporate
expenses include general corporate administrative costs. The Company
evaluates performance and allocates resources based on operating income.
The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. There are no
intersegment sales.
<TABLE>
<CAPTION>
CHILDREN'S
INTERNET RECREATIONAL CONSOLIDATED
----------- ------------ ------------
<S> <C> <C> <C>
2000
----
Revenue $ 700,000 $ 268,734 $ 968,734
Loss from operations (1,040,943) (89,388) (1,130,331)
Assets 4,025,140 139,571 4,164,711
1999
----
Revenue - 319,443 319,443
Loss from operations (192,532) (168,036) (360,568)
Assets 450,026 2,095,999 2,546,025
</TABLE>
Reconciliation from the segment information to the consolidated balances
for loss from operations and assets is set forth below:
<TABLE>
<CAPTION>
2000 1999
----------- -----------
<S> <C> <C>
Segment loss from operations $(1,130,331) $ (360,568)
Selling, general & administrative expense (279,740) (268,983)
Depreciation and amortization (2,403) (2,403)
Other income (loss) 50,621 (379,631)
----------- -----------
Consolidated net loss $(1,361,853) $(1,011,585)
=========== ===========
Segment asset $ 4,164,711 $ 2,546,025
Cash and cash equivalent 2,222,724 317,887
Receivables - 48,167
Prepaid expense 5,825 15,905
Property and equipment 25,981 34,900
Investments 216,000 4,221,260
Other assets 913,108 792,636
----------- -----------
Consolidated total assets $ 7,548,349 $ 7,976,780
=========== ===========
</TABLE>
7
<PAGE>
UNITED LEISURE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 2000
5. INVESTMENT IN AND LOAN RECEIVABLE FROM GRAND HAVANA
On March 31, 2000, the quoted market value of the Company's investment in
Grand Havana was $116,000. The Company recorded changes in the market value
in Other Comprehensive Income. The valuation represents a mathematical
calculation based on the closing quotation published by OTC Bulletin Board
and is not necessarily indicative of the amounts that could be realized
upon sale.
Additional $15,960 in Loan Receivable from Grand Havana represents accrued
interest income for three months ended March 31, 2000
6. LOAN RECEIVABLE FROM OTHER - RELATED PARTY
Changes in Loan Receivable from Other - Related Party represent additional
advances made to Brian Shuster and an other related party in the first
quarter of 2000.
7. DUE FROM FORMER OFFICER
Changes in Due from Former Officer represent net changes in due to and from
Harry Shuster which arose from accrued interest income and accrued interest
expense.
8. DUE TO RELATED PARTIES
Changes in Due to Related Parties represent payments to Brian Shuster for
$65,000 and additional advances from Grand Havana for $5,729.
8
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion contains forward looking statements regarding
events and financial trends that may affect the Company's future operating
results and financial position. Such statements can be identified by the use of
such words as "may," "expect," "believe," "anticipate," "intend" and similar
expressions. Such statements involve risks and uncertainties that could cause
the Company's actual results to differ materially. Factors that could cause or
contribute to such differences include, but are not limited to, costs and
uncertainties associated with future developments, concerns regarding the
Company's liquidity and financial condition, regulatory policies, competition
from other similar businesses, and market and general economic factors. The
Company undertakes no obligation to publicly release the result of any revision
of these forward-looking statements to reflect events or circumstances after the
date they are made or to reflect the occurrence of unanticipated events. The
following discussion should be read in conjunction with the Company's
consolidated financial statements and the notes thereto appearing elsewhere in
this Quarterly Report on Form 10-QSB.
OVERVIEW
Through its wholly owned subsidiary, United Internet Technologies, Inc.
("United Internet"), the Company is primarily engaged in the business of
developing and licensing proprietary Internet technology and sites on the World
Wide Web that incorporate the Company's technology. The Company has developed
two proprietary technologies: (1) Parallel Addressing Technology and (2)
Digitally Integrated Video Overlay ("DIVO"). The use of this technology is
primarily licensed to others for their use. The Company has licensed an
application for television to NBC, an application for wrestling and related
activities to World Championship Wrestling, Inc. ("WCW") and travel-related
applications to Genisys Reservation Systems, Inc. The Company's technology uses
proprietary program instruction applications to provide a means of linking a
full motion video on a user's CD-ROM or DVD-ROM drive to a site on the Web. The
Company intends to pursue licensing agreements with others and may also develop
its own Web sites.
Before February 1997, the Company's primary business was to act as a
developer and manager of facilities for children's recreational activities. As
part of the Company's decision to reorient its business to developing and
licensing its technology, it closed some of its facilities and intends to
dispose of others. In August 1999, the Company sold real property located in El
Cajon, California which was previously used for some of its children's
recreational activities. In October 1999, the Company sold its real estate
holdings in Las Vegas, Nevada. As a result of the reduced operations of the
Company's children's recreational activities, it had significantly fewer
employees through the first quarter of 2000.
Results of Operations
Three Months Ended March 31, 2000 Compared to Three Months Ended
March 31, 1999.
Revenues
The Company had total revenue of $968,734 in the quarter ended March 31,
2000, compared to total revenue of $319,443 for the quarter ended March 31,
1999, an increase of $649,291 or approximately 203%. This increase resulted
primarily from revenues generated by licensing agreements in connection with
interactive CD-ROMs for Teen People Magazine and for Nordstrom stores.
Children's Recreational Activities. Revenues from children's recreational
activities decreased from $319,443 for the quarter ended March 31, 1999 to
$268,734 in the quarter ended March 31, 2000, a decrease of approximately 16%.
Because the Company reoriented its business to focus on its Internet technology
and moved away from its historical emphasis on children's recreational
activities, the Company expects its revenue from children's recreational
activities to continue to decline in future periods.
Licensing Fees. Revenues from licensing fees increased from -0- in the quarter
ended March 31, 1999 to $700,000 in the quarter ended March 31, 2000. The
increase was due to the completion of a turn-key project, which involved the
conception, design and production of an interactive CD-ROM for Teen People
Magazine and Nordstrom stores.
9
<PAGE>
Operating Expenses
Operating expenses increased from $1,027,715 in the quarter ended March 31,
1999 to $2,382,032 in the quarter ended March 31, 2000 an increase of
approximately 132%.
Direct Operating Expenses. Direct operating expenses increased from $704,512 in
the quarter ended March 31, 1999 to $1,354,240 in the quarter ended March 31,
2000 an increase of approximately 92%. This increase is primarily due to the
Teen People Magazine project and expenses incurred in connection with the
growth of the Company's internet business.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses increased from $278,365 in the quarter ended March 31,
1999 to $1,016,580 in the quarter ended March 31, 2000 an increase of 265%. This
increase was primarily due to increased marketing expenses and expenses incurred
in connection with the growth of the Company's internet business.
Depreciation and Amortization. Depreciation and amortization expenses decreased
from $44,838 in the quarter ended March 31, 1999 to $11,212 in the quarter ended
March 31, 2000 a decrease of 75%. This decrease was due to discontinued
operations from children's recreational activities.
Other Income
Other income consists of interest income, interest expense and litigation
settlement. During the quarter ended March 31, 2000, other income was $51,445 an
increase of $354,758 over the other expense during the quarter ended March 31,
1999. This increase was primarily due to the absence of a net loss from the
Company's interest in Genisys Reservations Systems, Inc., a reduction in
interest expense and an increase in interest income.
Net Loss
For the quarter ended March 31, 2000, the Company had a net loss of
($1,361,853) or ($0.07) per share as compared to net loss of ($1,011,585) or
($0.07) per share for the quarter ended March 31, 1999. This increase in net
loss is primarily a result of increased selling, general and administrative and
direct operating expenses.
10
<PAGE>
Liquidity and Financial Condition
The Company has experienced operating losses in recent years. For the three
months ended March 31, 2000, the Company had cash and cash equivalents of
$5,923,610 and a working capital surplus of $5,362,809, an increase of 369%.
Net cash used in operating activities was $1,619,546 in the quarter ended
March 31, 2000 and $315,676 in the quarter ended March 31, 1999. This increase
is primarily due to higher selling, general and administrative and direct
operating expenses in connection with growth of the Company's internet business.
Net cash used in investing activities was $156,852 in the quarter ended
March 31, 2000 and $203,037 in the quarter ended March 31, 1999. This decrease
is primarily due to a reduction in advances to a related party.
Net cash provided by financing activities was $5,701,949 in the quarter
ended March 31, 2000 and $181,000 in the quarter ended March 31, 1999. This
increase is due to a private placement of common stock in January 2000.
The Company's future capital requirements will depend on various factors
including:
1. The number of applications using the Company's technology that the
Company wants to develop; and
2. United Internet's need to hire additional technical and marketing
personnel.
If the Company is unable to raise additional funds, when needed, through
the private placement of its securities, it may seek financing from affiliated
or unaffiliated third parties. There can be no assurance, however, that such
financing would be available to the Company when and if it is needed, or that if
it is available, that it will be available on terms acceptable to the Company.
If the Company is unable to sell its securities or obtain financing to meet its
working capital needs and to repay indebtedness as it becomes due, the Company
may have to consider such alternatives as selling or pledging portions of its
assets, among other possibilities, in order to meet such obligations.
The Company believes that its primary sources for cash over the next twelve
months will be its current cash and income investments, repayment of amounts
previously advanced by the Company to Grand Havana and the exercises of
warrants. After repayment of a $1.9 million note payable to Westminster Capital,
Inc., the Company realized in excess of $3 million from the October 1999 sale of
its real estate holdings in Las Vegas, Nevada. Although the Company believes
these sources will provide the Company with sufficient funds to meet the
Company's anticipated working capital and capital expenditures needs for at
least the next 12 months, there can be no assurance that this will be the case.
With respect to the warrants, there can be no assurance that holders of warrants
will exercise in sufficient number to generate significant cash for the Company.
The Company wishes to expand its development and marketing capabilities for
its technology. While the continued development of some applications can be
funded from internal sources, more aggressive development and marketing may
require additional financing from either public or private sources. To
accomplish this, the Company may raise additional capital by borrowing money or
11
<PAGE>
through a public or private sale of debt or equity securities. There can be no
assurance, however, that the Company will be able to acquire additional
financing on favorable terms, or at all.
Year 2000 Compliance
The Company has tested its systems and products and believes that they are
year 2000 compliant. The Company has also inquired of significant vendors of its
internal systems as to their year 2000 readiness, and the Company has also
tested its material internal systems. The Company believes that, based on these
tests and assurances of vendors, the Company will not incur material costs to
resolve year 2000 issues for products and internal systems. Furthermore, to date
the Company has not experienced any year 2000 problems and customers or vendors
have not informed the Company of any material year 2000 problems. Nevertheless,
no assurance can be given that no year 2000 problems will arise or that if they
arise the costs of fixing such problems will not be material. If the Company
discovers that there are any year 2000 problems with products or software used
in internal systems are not year 2000 compliant, then the Company will endeavor
to make modifications our products and internal systems, or purchase new
internal systems, to quickly respond to the problem. The costs already incurred
by the Company to date related to year 2000 compliance are not material, and the
Company do not anticipate incurring additional material costs related to year
2000 compliance.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company and its wholly-owned subsidiary, United Internet Technologies,
Inc. ("UIT"), are parties in two patent infringement lawsuits, both involving
Hyperlock Technologies, Inc. In the first action, Case No. 99C3776, filed on
June 7, 1999 by Hyperlock in the Northern District of Illinois, Hyperlock
alleged infringement by UIT of U.S. Patent Nos. 5,892,825 and 5,937,164. In the
second action, originally filed by UIT on February 7, 2000 in the Central
District of California, UIT alleged infringement by Hyperlock and Broadbridge
Media, LLC of UIT's U.S. Patent No. 5,996,000. The California case has been
transferred to the Northern District of Illinois, and has been consolidated with
the earlier filed Illinois case. No settlements have been reached in either
case.
Item 2. Changes in Securities
In January 2000, the Company sold a total of 2,240,000 shares of its
common stock for a total of $5,600,000, or $2.50 per share to five accredited
investors. The offer and sale of the shares was exempt from the registration
provisions of the Securities Act of 1933, as amended (the Act), pursuant to
Section 4(2) of the Act. No general forms of advertising were used in connection
with the issuance of shares. The purchasers acquired the shares for their own
account. Each purchaser was, prior to the sale of the Company's securities,
fully informed and advised about such matters concerning the Company as its
business, financial affairs and other matters.
From February 2000 to March 2000, options and warrants to purchase a total
of 295,000 shares of common stock were exercised at prices ranging from $0.23 to
$1.50 per share for a total of $226,950. The options and warrants were granted
in 1999 to employees of the Company and in connection with certain services
rendered. The issuance of shares of common stock upon conversion of the options
and warrants was exempt from the registration provisions of the Act pursuant to
Section 4(2) thereof. The option and warrant holders acquired the shares for
their own account.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
United Leisure Corporation,
a Delaware corporation
May 19, 2000 By: /s/ Brian Shuster
--------------------------------------
Brian Shuster
Chairman of the Board and
Chief Executive Officer
(Duly Authorized Officer and Principal Financial
Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,923,610
<SECURITIES> 0
<RECEIVABLES> 94,498
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 6,059,965
<PP&E> 243,134
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,548,349
<CURRENT-LIABILITIES> 697,156
<BONDS> 0
0
0
<COMMON> 185,818
<OTHER-SE> 6,665,375
<TOTAL-LIABILITY-AND-EQUITY> 7,548,349
<SALES> 968,734
<TOTAL-REVENUES> 968,734
<CGS> 1,354,240
<TOTAL-COSTS> 2,382,032
<OTHER-EXPENSES> (86,801)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 35,356
<INCOME-PRETAX> (1,361,853)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,361,853)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,361,853)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
