UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB (Mark One)
[ X ] Annual Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
[Fee Required]
For the fiscal year ended
December 31, 1999
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 33-7764-C
GLOBESPAN TECHNOLOGY PARTNERS, INC.
Exact name of registrant as specified in charter)
|
Delaware
(State or other jurisdiction of incorporation or organization)
|
23-2838676
(I.R.S. Employer Identification No.)
|
4070 Butler Pike - Plymouth Meeting, PA 19462
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 941-0305
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.001/par value per share
(Title of class)
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. Yes [X ] No [
]
As of May 24, 2000, there were 23,084,903 shares of the Registrant's
common stock outstanding. The aggregate market value of the
Registrant's voting stock held by nonaffiliates of the Registrant was
approximately $2,263,772 computed at the closing price for the
Registrant's common stock on the NASD Bulletin Board on May 24, 2000.
TABLE OF CONTENTS
| |
Page |
| PART I | |
| 1. |
Business |
1 |
| 2. |
Properties |
4 |
| 3. |
Legal Proceedings |
4 |
| 4. |
Submission of Matters to a Vote of Securities Holders |
5 |
|
PART II | |
| 5. |
Market Price for Registrant's Common Equity and Related Stockholder
Matters |
6 |
| 6. |
Selected Financial Data |
8 |
| 7. |
Management's Discussion and Analysis of Financial Condition and Results
of Operations |
11 |
| 8. |
Financial Statements and Supplementary Data |
14 |
| 9. |
Changes in and Disagreement with Accountants on Accounting and Financial
Disclosure |
38 |
|
PART III
| |
| 10. |
Directors and Executive Officers of the Registrant |
38 |
| 11. |
Executive Compensation |
41 |
| 12. |
Security Ownership of Certain Beneficial Owners and Management |
42 |
| 13. |
Certain Relationships and Related Transactions |
43 |
|
PART IV | |
| 14. |
Exhibits, Financial Statement Schedules, and Reports on Form 8-K |
43 |
|
Exhibit 27, Financial Data Schedule (For Electronic Filing Purposes
Only) |
44 |
|
Signatures |
45 |
PART I
ITEM I. BUSINESS
General
History and Organization
GlobeSpan Technology Partners, Inc. (formerly Interactive Gaming &
Communications Corp. and formerly, Sports International Ltd.) the
("Company") was incorporated in the state of Delaware in June 1986 under
the name of "Entertainment Tonight Video Express Ltd." to develop a
market for the home delivery of video cassette rentals, which effort was
abandoned in November 1987. From December 1987 until August 1994, the
Company did not conduct any operations, transactions or business
activities. In August 1994, the Company began negotiations to acquire
Sports International, Ltd. (Antigua) and its business from the
stockholders of Sports International, Ltd. (Antigua), and successfully
closed the transaction in October 1994, in accordance with its Plan of
Reorganization.
Plan of Reorganization
At the Special Meeting of Shareholders held on September 9, 1994, the
shareholders of the Company approved a Plan of Reorganization which
required; (1) the reverse split of one (1) for four (4) shares of the
common stock of the Company; (2) the acquisition of Sports
International, Ltd. (Antigua) by the exchange of Stock and Notes; (3)
the election of former officers and directors of Sports International,
Ltd. (Antigua) to the Board of Directors of the Company, and (4) the
amendment of the Company's Certificate of Incorporation changing the
Company's name from Entertainment Tonight Video Express Ltd. to Sports
International, Ltd. Effective March 27, 1996, the Company changed its
name to Interactive Gaming & Communications Corp. to reflect its
expanding operations. In December 31, 1999 the Company changed its name
to GlobeSpan Technology Partners, Inc. to better reflect its image of a
technology holding company and its expanding operations.
Acquisition - Exchange of Stock and Notes
The acquisition of all of the capital stock of Sports International,
Ltd. (Antigua) was completed on October 20, 1994 by the issuance of
4,500,000 common shares (post split) and an aggregate of $4,000,000 of
the Company's Convertible Notes (the "Notes") to shareholders of Sports
International, Ltd. (Antigua).
The Notes were scheduled to mature on December 31, 1996, together with
interest at the prevailing prime rate, accrued quarterly, and were
convertible into common stock at the rate of one share for each $1.00 of
outstanding principal amount and accrued interest. All the shares
issued to the Sports International, Ltd. (Antigua) stockholders and the
shares issuable upon conversion of the Notes, together with accrued
interest, are "restricted" shares, as such term is used in Rule 144,
promulgated under the Securities Act of 1933, as amended.
These Notes were converted into 4,000,000 shares of common stock
effective December 31, 1994 and the interest thereon was waived in
connection with the conversion.
Nature of Operations
The Company is a holding company publicly trading on the National
Association of Securities Dealers Automated Over the Counter (OTC)
Market Bulletin Board under the trading symbol "SBET". The Company is
comprised of two subsidiaries, Global Gaming Corp. (Grenada) ("Global")
Intersphere Communications, Ltd. (Grenada) ("Intersphere") and
Interactive Gaming Corp. (Delaware) ("IGC"). Each of the Company's
subsidiaries provides several unique and proprietary products and
services to the emerging Internet, national and international
marketplaces. The Company is responsible for supplying its subsidiaries
with administrative and management assistance, accounting, consulting
and necessary funding to complete projects or initiate endeavors.
As discussed in Note 19 to the financial statements, incorporated
herein, the Company implemented a plan to divest its subsidiaries
engaged in international Internet sports book and casino gaming.
Therefore, the consolidated financial statements include the accounts of
Sports International, Ltd. (Grenada) ("Sports") and Global Casinos, Ltd.
(Grenada) ("Casinos"), the two subsidiaries sold on March 18, 1998, as
discontinued operations.
Intersphere is a software development, marketing and Internet
Communications Company specializing in the Internet market. Intersphere
developed the LiveAction Gaming Platform (formerly known as WiseGuy)
wagering system, the first wagering system that allows casino race &
sports books to take a wager from a customer over the Internet. The
LiveAction Gaming Platform was first used by Sports in 1995.
Intersphere's revenues are derived from Web Page Development and Design,
traditional advertising, licensing of the LiveAction Gaming Platform and
the development of other related gaming software products and B to B
Internet solutions.
Casinos operated one of the world's first Internet Casino Race & Sports
books. By accessing the Company's Internet site, a betting enthusiast
could play and place wagers on a variety of casino games, horse races
and sporting events. Casinos operated its business under a gaming
license issued and authorized by the government of Grenada, before
discontinuance of operations.
Global was the exclusive principal international gaming license holder
in the country of Grenada, West Indies. Through this exclusive licensing
agreement with the government of Grenada, Global had the right to
operate and issue sub licenses to qualified gaming companies for
operating international casinos or sports books via the Internet or
other telecommunications. Revenues were derived from annual licensing
fees and a percentage of the sub licensees' net gaming revenues. The
company has withdrawn from conducting further licensing activities in
Grenada until both the political and industry environment becomes more
favorable.
Sports operated an international Internet sports book. Sports betting
enthusiasts, once they established an account, could place a wager on
just about any horse race or sporting event over the phone or the
Internet via a personal computer. Wagers were accepted on all major
sporting events in the U.S. and Europe. Sports operated its business
under a gaming license issued and authorized by the government of
Grenada. Sports was the principal source of revenue for the Company,
generally accounting for 70% and 95% of the Company's net revenues for
the years ended December 31, 1997 and 1996, respectively, before
discontinuance of operations.
Industry Segments
The gaming industry is comprised of five separate service industries;
(1) traditional pari-mutuel wagering on horse and dog racing; (2) casino
and riverboat gambling; (3) lotteries; (4) charitable organization
gambling (Bingo and Las Vegas Nights); and (5) sports book.
The Company operates in all of the above segments via the
Internet/Intranet, telecommunications and broadband video streaming
utilizing proprietary software developed by its subsidiaries and joint
venture affiliates. The Company derives its revenues from licensing
fees and royalties on its products, advertising revenue from its portal
web sites and Internet related Business to Business development and
design services.
Marketing
The Company primarily advertises its products and services during peak
periods of sporting events (September through April) in both gaming and
gambling related magazines and newspapers, and will continue this method
of advertising in the future. The success of increased revenues is
directly dependent upon the amount of advertising in both conventional
and Internet markets.
Intellectual Property
The Company currently holds no patents. However, the Company has applied
for US Trademark registration for several of its software products and
marketing.
Government Regulation
The gaming licensing business of the Company is conducted through its
wholly owned subsidiaries, which are legally organized in Grenada and
licensed by the Grenadan government to conduct its business. The company
no longer operates any casino gambling or gambling license business,
which is regulated by government.
Future Developments
In March 1997, the Company launched its live Internet casino and
sportsbook via its Casino subsidiary and an Internet casino via its
Sports subsidiary. The first entertainment offered to its customers was
a slot machine tournament followed by blackjack and poker games. Sports
and Casinos were sold in March 1998.
The Company also has plans to develop an Internet/Intranet based
pari-mutuel wagering system for the thoroughbred horse racing and
greyhound racing industry. The system when completed will also offer to
pari-mutuel operators the ability to Broadband video stream its live
races to its customer while at the same time making a wager. The system
will be designed to replace existing pari-mutuel systems while at the
same time interface with existing systems until replacement can be
effectively accomplished. The finished product will be marketed to Horse
tracks, Greyhound tracks and Jai-Lai facilities worldwide through its
subsidiary IGC.
Employees
As of May 2000, the Company had 13 full-time employees: 5 software
engineers; 1 graphic designer; 2 marketing personnel; 1 HTML writer; and
4 employees engaged in service support. The Company also utilizes
full-time and part-time consultants on an as-needed basis. None of the
company's employees is represented by a labor union and the Company
believes its relations with its employees are satisfactory.
Backlog
The nature of the Company's business does not involve any backlog.
Insurance
The Company maintains general liability and workers' compensation
insurance, which covers injury to employees.
Competition
Many segments of the Internet, Internet gaming and pari-mutuel wagering
industry are characterized by intense competition, with a large number
of companies and syndicates offering similar wagering systems, Business
to Business and Internet solutions. All of these entities in most
instances have vastly greater resources than the Company.
The Company estimates that there are 6 companies that offer similar
Internet/intranet casino race & sports book products. However, since
the majority of these enterprises are privately owned, and financial
information is not publicly available, the Company is unable to evaluate
its position among its competitors.
ITEM 2. PROPERTIES
Commencing December 9, 1997, the Company entered into a new four-year
lease for its corporate and subsidiary, headquarters in Plymouth
Meeting, Pennsylvania. The lease provides for current annualized rent
of approximately $49,000.
ITEM 3. LEGAL PROCEEDINGS
On February 18, 1997, a search warrant (the "Warrant") was issued, filed
in the United States District Court for the Eastern District of
Pennsylvania, authorizing the Federal Bureau of Investigation to search
the premises of the Company's executive offices and the offices of
Intersphere in Blue Bell, Pennsylvania including any and all computer
hardware, software, peripheral devices and computer-related
documentation on any of such premises. The Warrant lists a variety of
items to be obtained based on the assumption that there was a violation
of federal laws and that an illegal gambling business was being
conducted from its premises in Pennsylvania. Based on the advice of
counsel with significant criminal law, trial and appellate experience
and comprehensive understanding of the jurisdictional scope of gaming
laws, both domestic and international, management does not believe the
gaming operations of its subsidiaries violated either the laws of the
United States or the Commonwealth of Pennsylvania, since no gaming or
gambling operations are conducted there.
In May 1997, the State of Missouri indicted the Company and its
President, Michael F. Simone, and filed a judgement in the amount of
$66,050 for statutory "gambling" violations in Missouri. The Company
has been advised by competent legal counsel experienced in civil,
criminal and constitutional matters, that the Missouri proceedings lack
merit because Missouri has no in personum jurisdiction of the Company or
of Mr. Simone. On September 22, 1998, the company and Simone entered
into a plea agreement with the State of Missouri. As part of the
agreement the Company was to pay a fine in the amount of $5,000 and an
additional $20,000. For the costs to prosecute the case. Simone was
fined $2,500. As of December 31, 1998, $15,000 remains unpaid and is
included in accounts payable and accrued expenses. According to the plea
agreement, if the $20,000 was not paid within sixty days following the
date of the plea, the State of Missouri may bring additional criminal
charges against the Company. As of May 2000 both the company and Mr.
Simone have paid all fines and prosecutorial costs to the State of
Missouri and has been accounted for in the Company's financials.
The Company has filed suit against International Gaming to collect
payments due under a $4,990,000 note representing payment for the
capital stock of Sports International, Inc. and Global Casinos, Inc.
(Note 19). International Gaming has filed an Answer and Counterclaim
asserting there were material misstatements, misrepresentations and
omissions from the warranties and representations provided under the
Stock Purchase Agreement between the two Companies. The Company has
been advised by competent legal counsel that they will receive a
judgment, though collection of the amount owed is still uncertain.
The Company was sued by, among others, Empire Corporation ("Empire"),
who claimed the Company improperly terminated an alleged Joint Venture
Agreement, appropriated certain funds belonging to Empire under the
agreement and otherwise refused to pay monies due to Empire. Empire
also asserted claims of fraud and breach of fiduciary duty. An answer,
new matter and counterclaim has been filed by the Company asserting that
the Agreement had been properly terminated and that funds are due the
Company from Empire. Empire claims damages in excess of $160,000 as
well as punitive damage in the amount of $1,000,000. The Company's
counterclaim seeks damages in excess of $95,000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
On March 18, 1998, a Special Meeting of Shareholders was held to approve
the sale of all of the capital stock of Sports and Casinos for
$5,000,000. The sale was unanimously approved by the Shareholders.
PART II
ITEM 5. MARKET PRICE FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
After the Company completed a Plan of Reorganization, its Common Stock
resumed trading on the National Association of Securities Dealers
Automated Over the Counter Market (OTC) Bulletin Board on December 19,
1994, under the trading symbol "SBET". The following table sets forth
high and low closing sales prices (in dollars) for the Company's Common
Stock, as reported on the Bulletin Board, since trading resumed.
|
1999 |
1998 |
1997 |
|
High |
Low |
High |
Low |
High |
Low |
| First Quarter |
2.25 |
.18 |
.21 |
.13 |
1 7/8 |
1 |
| Second Quarter |
.875 |
.35 |
.16 |
.11 |
1 1/16 |
5/8 |
| Third Quarter |
1.25 |
.3125 |
.44 |
.13 |
.50 |
.34 |
| Fourth Quarter |
1.41 |
.49 |
.08 |
.05 |
5/16 |
.13 |
On May 24, 2000 the last reported sales price for the Common Stock was
$0.52.
On May 24, 2000 the Company had approximately 1550 shareholders.
Dilution and Absence of Dividends
The Company has not paid any cash dividends on its common stock in the
past and does not anticipate paying any such cash dividends in the
foreseeable future. Earnings, if any, will be retained to finance
future growth. The Company may issue shares of its common stock in
private and/or public offerings to obtain financing, capital, or to
acquire other businesses that can improve the performance and growth of
the Company. Issuance/sales of substantial amounts of common stock
could adversely affect prevailing market prices in the Common Stock of
the Company.
Description of the Company's Securities
Common Stock
The authorized capital stock of the Company consists of 75,000,000
shares, $.001 par value ("Common Stock"), of which 23,084,903 shares are
issued and outstanding as at May 24, 2000.
Approximately 10,807,369 shares of Common Stock issued in connection
with the reverse merger acquisition, conversion of Notes, and for
certain services and the gaming license are "restricted" shares, as such
term is used in Rule 144 of the Securities Act of 1993, as amended.
The holders of Common Stock are entitled to one vote per share for the
election of directors and all other purposes and do not have cumulative
voting rights. The holders of Common Stock are entitled to receive
dividends when, as, and if declared by the Board of Directors and, in
the event of the liquidation by the Company, to receive prorata all
assets remaining after payment of debts and expenses. Holders of the
Common Stock do not have any pre-emptive or other right to subscribe for
or purchase additional shares of capital stock. All the outstanding
shares of Common Stock are fully paid and non-assessable.
Sale of Unregistered Common Stock and Common Stock Warrants
Effective June 26, 1996, the Company entered into a stock and warrant
purchase agreement with a software developer and issued 375,000 shares
of restricted common stock for $750,001 and a common stock purchase
warrant for $1,000. The common stock purchase warrant is for 100,000
shares at a purchase price of $1.00 per share and expires on June 30,
2001. The Company's private offering represented 3.3% of the
outstanding common stock at June 26, 1996.
On October 11, 1996, the Company issued 254,474 shares of restricted
common stock in settlement of accounts payable of $508,947 incurred in
the development of the "Virtual Casino" software.
On November 4, 1996, the Company acquired all the outstanding common
stock of Intersphere for 1,000,000 restricted shares of previously
unissued common stock of the Company. Intersphere developed an
exclusive proprietary product known as the WiseGuy Sports Wagering
System. Intersphere's revenue is derived from software licensing fees
related to its proprietary product, as well as from advertising,
marketing and web page design services primarily to Internet based
accounts.
On November 4, 1996, the Company also acquired all the outstanding
common stock of Global for 1,100,000 restricted shares of previously
unissued common stock of the Company. Global owns the exclusive
principal master license to conduct gambling operations from the Country
of Grenada. The exclusive gambling license is for two six-year terms
and allows Global to sell up to four sub-licenses to qualified
applicants.
On June 30, 1997, the Company issued 29,250 shares of restricted common
stock in settlement of service of $42,000 rendered in the development of
the "Virtual Casino" software.
On May 25,1999 the company issued a warrant for 4,000,000 shares of the
Company's common stock at a purchase price of $0.01 per share and
expires on December 31, 2004. The warrants were issued in connection
with the Company's sale Gamblenet Technologies, Ltd. ("Gamblenet") for
$2,600,000 consisting of $140,000 in cash and a five year note for
$2,500,000.00
On December 30, 1999 the Company issued 7,500,000 shares of restricted
common stock pursuant to an agreement entered into on June 22, 1999 with
Century Industries, Inc. ("Century"). The agreement calls for certain
control block shareholders of Century to sell to the Company 53.26% of
Century's issued and outstanding Class A shares in exchange for the
Company's common stock. As of May 24, 2000 the deal has not been
completed. However, the Company anticipates the finalization of the
Century acquisition to take place in the immediate future.
Preferred Stock
In May 1995, the shareholders approved an amendment of the Company's
Certificate of Incorporation to authorize the issuance of up to
10,000,000 shares of preferred stock. The amendment permits the Board of
Directors to issue from time to time authorized but un-issued shares of
preferred stock and to fix and determine the terms, limitations,
relative rights and preferences of such shares.
On December 30,1999 the company's Board of Directors, in connection with
the Century control block acquisition, have approved the issuance of
1,000,000 shares of Series A Voting Convertible Preferred stock with
each share having the equivalent of fifteen (15) common stock votes. The
shares may be converted into shares of the Company at 15 shares Common
stock for every 1 share Preferred. At December 31, 1999, no preferred
stock of the Company had been issued.
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data presented on the following tables for, and
as of the end of, each of the years or periods ended for the three year
period ended December 31, 1999, are derived from the financial
statements of the Company reflecting both income from continuing and
discontinued operations. The financial statements for the years ended
December 31, 1998 and 1997 have been audited by Parente, Randolph,
Orlando, Carey & Associates, LLC. The December 31, 1999 financial
statements have been audited by Stefanou & Company, LLP. The 1998 and
1999 Selected Financial Data includes the consolidated reporting of all
the Company's subsidiaries included by reference herein.
The selected financial data should be read in conjunction with the
accompanying consolidated financial statements of the Company and the
notes thereto and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS."
|
1999 |
1998 |
1997 |
| Selected Financial Data: |
|
|
(1) |
| Income Statement Data : |
|
| |
| Revenues |
$ 1,199,400 |
$ 325,416 |
$ 689,663 |
| Expenses |
1,675,305 |
1,206,542 |
2,311,493 |
| Other Income |
2,533 |
11,499 | |
| Loss from continuing operations
before income taxes, discontinued operations and extraordinary item |
(443,372) |
(869,627) |
(1,621,830) |
| Deferred income tax benefit |
|
|
100,000 |
| Loss from continuing operations, before
discontinued operations and extraordinary
item |
(443,372) |
(869,627) |
(1,521,830) |
| (Loss) income from discontinued operations |
|
(66,579) |
18,637 |
| Loss before extraordinary item |
(443,372) |
(936,206) |
(1,503,193) |
| Extraordinary item: debt forgiveness income, net of related income taxes
of $100,000 |
115,509 |
864,721 |
0 |
| Net loss |
$ (327,863) |
$ (71,485) |
$ (1,503,193) |
| Basic (loss) earnings per common share: | | | |
| Continued operations | $ (.02) | $ (0.06) | $ (0.11) |
| Discontinued operations | | 0 | 0 |
| Extraordinary item | 0.00 | 0.06 | 0 |
| Net (loss) income per share |
$ (.02) |
$ 0 |
$ (0.11) |
| Weighted average
Common shares
Outstanding |
18,696,615 |
13,701,290 |
13,682,752 |
| 1999 |
1998 |
1997 |
| Selected Financial Data: | | | |
| Balance Sheet Data: | | | |
| Working capital (deficit) |
$( 850,899) |
$(1,311,501) |
$( 542,447) |
| Total assets |
$1,843,415 |
$ 1,777,274 |
$ 3,064,345 |
| Deficit |
$(2,640,729) |
$(2,312,866) |
$(2,241,381) |
| Stockholders' equity (deficit) |
$ 802,218 |
$ 377,131 |
$ 448,616 |
(1) See Note B to the consolidated financial statements of
this Form 10-K.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Years Ended December 31, 1999 & 1998
In March 1998, the Company sold its two gaming subsidiaries Sports and
Casinos. Therefore the Consolidated Statement of Operations for 1998 and
1997 have been restated to reflect the results from the continuing
operations. The continuing operations for the Company as restated for
those years and as discussed prospectively herein reflect licensing
fees, royalties and other revenues earned from traditional advertising
sources and Internet related development and design fees. Accordingly,
such revenues for 1999 were $1,199,900 as compared to $325,416 for 1998
and $689,663 for 1997. The increase in revenues for 1999 as compared to
1998 resulted from software licensing agreements. Licensing and
royalties fees for gaming and software licenses accounted for 65% of the
revenues in 1999, 59% of the revenues in 1998, 46% of the revenues in
1997. The remaining revenues were generated from advertising and other
Internet related services. Expenses from continuing operations
increased from $1,206,542 in 1998 to $1,675,305 in 1999 mainly as a
result of ongoing system development and increased charges for
depreciation and doubtful accounts in 1999 amounting to $313,496. In
addition, in 1999 the Company obtained computer equipment under
noncancelable leases.
Liquidity and Capital Resources
The Company's working capital deficit decreased by $2,162,400, from
$1,311,501 in 1998 to $850,899 in 1999. The largest component decrease
in the working capital deficit was accounts payable and accrued expenses
which decreased by $442,125 or 82%. The decrease was a result of trade
accounts payables being paid down in 1999.
Further cost reductions and anticipated revenue growth from licensing as
described in the Prospective Outlook discussion that follows should
contribute to a gradual decrease in the working capital deficit.
If the outlook for greater revenues and reduced expenditures does not
meet its goals, then the Company will seek joint venture partners or
private placement funding to obtain capital to meet current working
capital demands. The continuation of the Company in its present form is
dependent upon its ability to obtain additional financing, if needed,
and the eventual achievement of sustained profitable operations.
Although there can be no assurances that the Company will be able to
obtain such financing in the future, the Company did demonstrate its
ability to obtain such financing in 1996 with its strategic alliances to
develop new proprietary products and the sale of Sports and Casinos in
1998. However, there are no assurances that management's future actions
will be successful or, if they are not successful, that the Company
would be able to continue as a going concern
Year 2000
The "Year 2000 Problem" arose because many existing computer programs
use only the last two digits to refer to a year. Therefore, these
computer programs do not properly recognize a year that begins with "20"
instead of the familiar "19". If not corrected, many computer
applications could fail or create erroneous results. The problems
created by using abbreviated dates appear in hardware such as
microchips, operating systems and other software programs. The
Company's Year 2000 ("Y2K") compliance project is intended to determine
the readiness of the Company's business for the Year 2000. The Company
defines Y2K compliance to mean that the computer code will process all
defined future dates properly and give accurate results.
In September 1998, the Company formed a Y2K compliance committee, which
includes chief software writing personnel reporting directly to the
President. Management of the Company believes that it has an effective
program in place to resolve any Y2K issues and that all of its
equipment and software are in compliance to address Y2K readiness.
However, although management believes that the Company's systems and
applications are Y2K compliant, there can be no assurance that the
systems of other companies with which it does business will be Y2K
compliant on a timely basis.
Government Regulation - Effect on Financing
The licensing business of the Company is conducted through its wholly
owned subsidiaries, which are legally organized in Grenada and licensed
by the Grenadan government to conduct its business. The company no
longer operates any business, which is regulated by government.
Inflation
Inflation has not had a significant impact on the Company's comparative
results of operations.
Prospective Outlook
Certain matters discussed in this section contain forward-looking
statements, including without limitation, statements containing the
Company's future revenue and earnings. These forward-looking statements
involve risks and uncertainties, which could cause actual results to
differ materially from those projected.
On February 23, 1999, the Company and Century Industries, Inc.
("Century") entered into a joint effort agreement and formed Gamblenet
Technologies, Ltd. ("Gamblenet"). The Company and Century each own 50%
of Gamblenet's initially outstanding common shares. In exchange for the
Company's 50% interest, the Company licensed certain gaming and software
licenses to Gamblenet along with 4,000,000 restricted shares of the
Company's Common Stock, which have been reserved for, but have not been
issued.
On June 22, 1999, the Company entered into a majority acquisition and
parent/subsidiary relationship agreement with Century Industries, Inc.
("Century"). The agreement calls for certain control block shareholders
of Century to sell to the Company 53.26% of Century's issued and
outstanding shares in exchange for 7,500,000 shares of the Company's
common stock. The Company expects to complete the transaction in the
immediate future.
The Company will focus its efforts on software development such as
pari-mutuel wagering platform for Internet/Intranet horse racing and
licensing its proprietary products and exclusive licensing privileges
for future revenues. The Company has effectively exited the Internet
gaming business involving the acceptance of customers' wagers with the
sale of its gaming subsidiaries Sports and Casinos in March 1998 and
will be engaged principally in its gaming and entertainment software
development business.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FINANCIAL STATEMENTS AND SCHEDULES
DECEMBER 31, 1999 AND 1998
FORMING A PART OF ANNUAL REPORT
PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934
GLOBESPAN TECHNOLOGIES, INC.
(FORMERLY INTERACTIVE GAMING & COMMUNICATIONS CORP.)
Index to Financial Statements and Supplementary Data
| Page |
| INDEPENDENT AUDITORS' REPORT |
15 |
| |
|
CONSOLIDATED FINANCIAL STATEMENTS: | |
| Balance Sheet |
16 |
| Statement of Operations |
17 |
| Statement of Stockholders' Equity |
18 |
| Statement of Cash Flows |
19 |
| Notes to Financial Statements |
20 - 31 |
Financial Statement schedules not included in this Form 10-KSB have been
omitted because they are not applicable or are the required information
is shown in the financial statements or notes thereto.
Stefanou & Company, LLP
Certified Public Accountants
1360 Beverly Road
Suite 305
McLean, VA 22101-3621
703-448-9200
703-448-3515 (fax)
Philadelphia, PA
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Globespan Technology Partners, Inc.
(formerly Interactive Gaming & Communications Corp.)
Plymouth Meeting, Pennsylvania
We have audited the accompanying consolidated balance
sheet of Globespan Technology Partners, Inc. (formerly Interactive
Gaming & Communications Corp.) and its subsidiaries at December 31, 1999
and the related consolidated statements of losses, stockholders' equity
and cash flows for the year ended December 31, 1999. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements
based on our audits. The financial statements of Interactive Gaming &
Communications Corp. as of December 31, 1998 were audited by another
auditor whose report May 11, 1999 on those statements included an
explanatory paragraph that described the Company had sustained
significant operating losses in 1998 and 1997 and had negative working
capital at December 31, 1998 and 1997.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for
our opinion.
In our opinion, the 1999 consolidated financial
statements referred to above present fairly, in all material respects,
the financial position of Globespan Technology Partners, Inc. (formerly
Interactive Gaming & Communications Corp.) and its subsidiaries as of
December 31, 1999, and the results of their operations and their cash
flows for the year then ended in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared on
a going concern basis, which contemplates continuity of operations, the
realization of assets and the satisfaction of liabilities in the normal
course of business. As discussed in Note B to the financial statements,
the Company has negative working capital at December 31, 1999 and
negative cash flows from operations for the years ended December 31,
1999 and 1998. The Company will need to seek other financing or
generate sufficient cash flows to pay the current liabilities of
continuing operations. The Company incurred a loss from continuing
operations of $443,372 in 1999 and $ 869,627 in 1998 and there is no
assurance that profitable operations will be achieved in the future.
These factors, among others, raise substantial doubt about the Company's
ability to continue as a going concern. The consolidated financial
statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ STEFANOU & COMPANY LLP
Stefanou & Company, LLP
McLean, Virginia
May 23, 2000
GLOBESPAN TECHNOLOGY PARTNERS, INC.
CONSOLIDATED BALANCE
SHEET
DECEMBER 31, 1999 |
| ASSETS |
|
| Current assets: |
|
| Cash and equivalents |
$ 47,301 |
| Accounts receivable, net of allowance
for doubtful accounts of $ 25,550 |
18,798 |
| Other accounts receivable |
6,460 |
| Total current assets |
72,559 |
| Property, plant & equipment, at cost |
| Furniture and fixtures |
19,521 |
| Machinery and equipment |
269,161 |
| Computer software |
4,780 |
| Transportation equipment |
97,789 |
|
391,251 |
| Less accumulated depreciation and amortization (Note D) |
166,666 |
|
224,585 |
| Other assets: |
|
| Systems development costs, net of
accumulated amortization |
1,202,616 |
| Gaming and software licenses, net of
accumulated amortization |
342,537 |
| Security deposits |
1,118 |
|
$ 1,843,415 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities: |
|
| Current portion of long-term debt (Note
E) |
$ 352,714 |
| Current portion of capitalized lease
obligation ( Note I) |
21,747 |
| Accounts payable and accrued expenses |
548,997 |
| Total
current liabilities |
923,458 |
| Long term debt, less current liabilities ( Note E) |
81,026 |
| Long term portion of capitalized lease ( Note I) |
36,713 |
| Stockholders' Equity |
|
Preferred stock, 10,000,000 shares
authorized none issued
- Common stock, $0.001 par
value, 75,000,000 shares
authorized,
23,084,903 shares issued and
outstanding |
23,085 |
| Additional paid-in capital |
7,464,184 |
| Notes receivable |
(4,044,322) |
| Deficiency in retained earnings |
( 2,640,729) |
| Total stockholders' equity |
802,218 |
|
$ 1,843,415 |
|
See accompanying notes to financial
statementsF-4 |
GLOBESPAN TECHNOLOGY PARTNERS, INC..
CONSOLIDATED STATEMENT OF
OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND
1998
|
|
1999 |
1998 |
| Revenues: |
| |
| Software licensing and fees |
$ 1,199,400 |
$ 325,416 |
| Operating expenses: |
| Selling, general and administrative |
1,350,359 |
995,062 |
| Interest expense |
37,000 |
48,618 |
| Depreciation and amortization |
287,946 |
162,862 |
|
1,675,305 |
1,206,542 |
| Other Income |
| Interest income |
32,533 |
- |
| Miscellaneous income |
- |
11,499 |
|
32,533 |
11,499 |
Loss from continuing operations, before income taxes,
discontinued
operations and extraordinary item |
(443,372) |
(869,627) |
| Provision for income taxes |
- |
- |
Loss from continuing operations, before
discontinued operations
and extraordinary item |
(443,372) |
(869,627) |
| Loss from discontinued operations (Note J) |
- |
(66,579) |
| Loss before extraordinary item |
(443,472) |
(936,206) |
| Extraordinary item- forgiveness of debt, net of related income taxes
|
115,509 |
864,721 |
| Net Loss |
$(327,863) |
$ (71,485) |
| Net loss per common share ( see Note L): |
| |
| Basic and diluted: |
| Loss from continuing operations |
$ (.02) |
$ (0.06) |
| Loss from discontinued operations |
- |
- |
| Extraordinary income |
0.00 |
0.06 |
| Net loss per share |
$ (0.02) |
(0.00) |
Weighted average common shares outstanding:
(Basic and assuming
dilution) |
18,696,615 |
13,701,290 |
See accompanying notes to financial
statements |
GLOBESPAN TECHNOLOGY PARTNERS, INC.
CONSOLIDATED STATEMENT OF
STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999 AND
1998 |
|
CommonShares |
Amount |
Additional
Paid
InCapital |
Note
Receivable |
Deficiency in
Retained
Earnings |
Total |
| Balance at December 31, 1997 |
13,701,290 |
$ 13,701 |
$ 2,676,296 |
$ - |
$ ( 2,241,381)) |
$ 448,616 |
| Net loss, 1998 |
- |
- |
- |
- |
(71,485) |
( 71, 485) |
| Balance at December 31, 1998 |
13,701,290 |
13,701 |
2,676,296 |
- |
(2,312,866) |
377,131 |
| Sale of warrant ( See Note K) |
|
|
2,628,000 |
(2,169,322) |
|
458,678 |
| Shares issued in exchange for services |
1,883,613 |
1,884 |
292,388 |
- |
- |
294,272 |
Shares issued in connection
with acquisition (see Note M) |
7,500,000 |
7,500 |
1,867,500 |
(1,875,000) |
- |
- |
| Net loss , 1999 |
- |
- |
- |
- |
(327,863) |
(327,863) |
| Balance at December 31, 1999 |
23,084,903 |
$ 23,085 |
$ 7,464,184 |
$ (4,044,322) |
$ (2,640,729) |
$ 802,218 |
See accompanying notes to financial
statements |
GLOBSPAN TECHNOLOGY PARTNERS, INC.
CONSOLIDATED STATEMENT OF
CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999 AND
1998
|
|
1999 |
1998 |
| Cash Flows From Operating Activities: |
| Net loss |
$ (327,863) |
$ (71,485) |
Adjustments to reconcile net loss to net
cash
(used in) provided by operating
activities: |
| Depreciation and amortization |
287,946 |
162,862 |
Change in net assets and liabilities of
discontinued
operations |
- |
(848,731) |
| Deferred income tax expense (benefit) |
- |
100,000 |
| Common stock issued for services |
294,272 |
- |
| (Increase) decrease in assets: |
| Accounts
receivable |
(11,864) |
61,582 |
| Other
assets |
1,118 |
- |
Increase in liabilities,
Accounts
payable and accrued expenses |
(442,125) |
537,383 |
| Net cash (used in)provided by operating activities |
(198,516) |
(58,389) |
| Cash Flows From Investing Activities:: |
| Purchase of equipment and software |
( 276,291) |
- |
| Net cash used in investing activities |
(276,291) |
|
| Cash Flows From Financing Activities: |
| Bank overdraft |
- |
(74,109) |
| Payments of notes payable |
(190,479) |
(77,044) |
| Proceeds from notes payable |
187,718 |
- |
| Proceeds form capital lease obligation,
net |
60,483 |
|
| Proceeds from warrant |
458,678 |
- |
| Net cash from financing activities |
516,400 |
(151,153) |
| Increase (decrease) in cash |
41,593 |
(209,542) |
| Cash at beginning of year |
5,708 |
215,250 |
| Cash at end of year |
$ 47,301 |
$ 5,708 |
| Supplemental disclosures of cash flow information |
| Cash paid during the year for
interest |
$ 26,774 |
$ 52,707 |
| Cash paid during the year for taxes |
- |
- |
| Common stock issued for services (Note
12) |
294,272 |
- |
| Assets purchased under capital lease
obligation, net |
60,483 |
- |
GLOBESPAN TECHNOLOGY PARTNERS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A- SUMMARY OF ACCOUNTING POLICIES
A summary of accounting policies applied in the preparation of the
accompanying consolidated financial statements follows.
Basis of Presentation
The consolidated financial statements include the accounts of Globespan
Technology Partners, Inc. (formerly Interactive Gaming & Communications
Corp.), the "Company" or "Globespan" and its wholly-owned subsidiaries,
Global Gaming Corp.(Grenada) ("Global"),and Intersphere Communications,
Ltd. (Grenada) ("Intersphere"). Significant intercompany transactions
have been eliminated in consolidation.
As discussed in Note J, the Company divested its subsidiaries engaged
in international Internet sports book and casino gaming. Therefore, the
1998 consolidated financial statements include the accounts of Sports
International, Ltd. (Grenada) ("Sports") and Global Casinos, Ltd.
(Grenada) ("Casinos"), the two subsidiaries that were sold on March 18,
1998, as discontinued operations.
Financial Instruments
The carrying amounts of cash, accounts receivable, notes payable,
long-term debt, and accounts payable approximate fair value at December
31, 1999.
System Development Costs
The Company capitalizes the cost of developing certain software products
it plans to market in accordance with Statement of Financial Accounting
Standards No. 86, "Accounting for the Costs of Computer Software to be
Sold, Leased, or Otherwise Marketed" (Note D). Amortization is computed
on an individual product basis and is the greater of: (a) the ratio of
current gross revenues for a product to the total amount and anticipated
future gross revenues for the product or (b) the straight-line method
over the estimated economic life of the product. The Company is using
an estimated economic life of ten years.
Gaming and Software Licenses
Through its subsidiaries Global and Intersphere, the Company licenses
its gaming operations and sports wagering software. The Company has
valued these licensing agreements at their fair value as determined by
the present value of anticipated future cash flows. Amortization is
provided using the straight-line method over 10 to 12 years and was $
42,247 in 1999 and $37,702 in 1998, respectively. Accumulated
amortization was $182,133.
Common Stock
The Company has from time to time issued restricted common stock,
unregistered with the Securities and Exchange Commission. The Company's
restricted shares are only limited as to the holders ability to resell
the stock into the public trading markets. At December 31, 1999
14,644,201 shares of the total issued and outstanding shares of
23,084,903 were restricted as described above.
Revenue Recognition
Software revenue is recognized when an arrangement exists, installation
has occurred, fees are determinable and collection is probable.
Property and Equipment
For financial statement purposes, property and equipment are depreciated
using the straight-line method over their estimated useful lives (five
years for furniture, fixtures and equipment). . Depreciation and
amortization expense for 1999 and 1998 was $ 287,942 and $ 31,770,
respectively. An accelerated method of depreciation is used for tax
purposes.
Income Taxes
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 191, "Accounting for Income Taxes."
Under the method, deferred tax assets and liabilities are determined
based on differences between the financial reporting and tax basis of
assets, and liabilities are measured using the enacted tax rates
expected to be in effect when the differences are settled.
Cash Equivalents
For purposes of the Statements of Cash Flows, the Company considers all
highly liquid debt instruments purchased with a maturity date of three
months or less to be cash equivalents.
Long-Lived Assets
The Company accounts for its long-lived assets under the provision of
Statement of Financial Accounting Standards No. 121 Accounting for the
Impairment of Long-Lived assets and for Long-Lived Assets to be Disposed
of (SFAS 121).
The Company's long-lived assets are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
such assets may not be recoverable. Events relating to recoverability
may include significant unfavorable changes in business conditions,
recurring losses, or a forecasted inability to achieve break-even
operating results over an extended period. The Company evaluates the
recoverability of long-lived assets based upon forecasted undercounted
cash flows. Should an impairment in value be indicated, the carrying
value of intangible assets will be adjusted, based on estimates of
future discounted cash flows resulting from the use and ultimate
disposition of the asset.
Stock Based Compensation
The Company accounts for stock based compensation using the intrinsic
value method prescribed in Accounting Principle Board Opinion No. 25,
"Accounting for Stock Issued to Employees." The Company has adopted the
disclosure-only provisions of Statement of Financial Accounting
Standards No. 123, "Accounting for Stock Based Compensation" with
respect to options and warrants granted to employees.
Advertising
The Company follows the policy of charging the costs of advertising to
expenses incurred. Advertising costs charged to expenses for 1999 and
1998 was $ 27,437 and $ 7,918 respectively.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly actual results could differ from those estimates.
The Company has recognized the value of its gaming and software
licensing agreements based on the anticipated future revenues.
Additionally, the Company believes that certain capitalized software
development costs are also recoverable through anticipated future
revenues. These anticipated future revenues are management's best
estimates of future cash flows to be derived from these products. The
Company's value of these products is based on certain assumptions
management has made based on information available at December 31, 1999.
Capitalized software development costs of approximately $ 1,652,000 at
December 31, 1999 are still under development and realization will be
dependent upon the ability to market the software. It is reasonably
possible that these estimates and assumptions may change within one year
from the balance sheet date based on changes in operations and revenues.
Concentrations of Credit Risk
Financial instruments and related items which potentially subject the
Company to concentrations of credit risk consist primarily of cash, cash
equivalents and trade receivables. The Company places its cash and
temporary cash investments with high credit quality institutions. At
times, such investments may be in excess of the FDIC insurance limit.
The Company has a broad customer base and it routinely assesses the
financial strength of its customers. The Company periodically reviews
its trade receivables in determining its allowance for doubtful
accounts. The allowances for doubtful accounts was $ 25,551 at December
31, 1999.
Earnings Per Share
The Company has adopted Statement of Financial Accounting Standard No.
128, "Earnings Per Share," specifying the computation, presentation and
disclosure requirements of earnings per share information. Basic
earnings per share has been calculated based upon the weighted average
number of common shares outstanding. Stock options and warrant's have
been excluded as common stock equivalents in the diluted earnings per
share because they are either antidilutive, or their effect is not
material. There is no effect on earnings per share information for the
years ended December 31, 1999 and 1998 relating to the adoption of this
standard.
Comprehensive Income
Statement of Financial Accounting Standards No.130, "Reporting
Comprehensive Income" ("SFAS 130"), establishes standards for reporting
and display of comprehensive income, its components and accumulated
balances. Comprehensive income is defined to include all changes in
equity except those resulting from investments by owners and
distributions to owners. Among other disclosures, SFAS 130 requires that
all items that are required to be recognized under current accounting
standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements. The Company adopted SFAS 130 during the year ended
December 31, 1998 and has no items of comprehensive income to report.
New Accounting Pronouncements
The Company adopted Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information
("SFAS 131") in the year ended December 31, 1998. SFAS establishes
standards for reporting information regarding operating segments in
annual financial statements and requires selected information for those
segments to be presented in interim financial reports issued to
stockholders. SFAS 131 also establishes standards for related
disclosures about products and services and geographic areas. Operating
segments are identified as components of an enterprise about which
separate discrete financial information is available for evaluation by
the chief operating decision maker, or decision making group, in making
decisions how to allocate
resources and assess performance. The information disclosed herein,
materially represents all of the financial information related to the
Company's principal operating segment.
The Company adopted Statement of Financial Accounting Standards No. 132,
Employers' Disclosures about Pension and Other Post Employment Benefits
(SFAS 132") in the year ended December 31, 1999. SFAS No. 132
establishes disclosure requirements regarding pension and post
employment obligations. SFAS No. 132 does not effect the Company as of
December 31, 1999.
In March 1998, Statement of Position No. 98-1 was issued, which
specifies the appropriate accounting for costs incurred to develop or
obtain computer software for internal use. The new pronouncement
provides guidance on which costs should be capitalized, and over what
period such costs should be amortized and what disclosures should be
made regarding such costs. This pronouncement is effective for fiscal
years beginning after December 15, 1998, but earlier application is
acceptable. Previously capitalized costs will not be adjusted. The
Company believes that it is already in substantial compliance with the
accounting requirements as set forth in this new pronouncement, and
therefore believes that adoption will not have a material effect on
financial condition or operating results.
In April 1998, Statement of Position No. 98-5 was issued which requires
that companies expense defined previously capitalized start-up costs
including organization costs and expense future start-up costs as
incurred. Adoption of this statement does not have an effect on
financial condition or operating results.
The Company adopted Statement of Financial Standards No. 133, Accounting
for Derivative Instruments and for Hedging Activities ("SFAS No. 133")
in the year ended December 31, 1999. SFAS No. 133 requires that certain
derivative instruments be recognized in balance sheets at fair value
and for changes in fair value to be recognized in operations.
Additional guidance is also provided to determine when hedge accounting
treatment is appropriate whereby hedging gains and losses are offset by
losses and gains related directly to the hedged item. SFAS No. 133's
impact on the Company's consolidated financial statements is not
expected to be material as the Company has not historically used
derivative and hedge instruments.
Reclassifications
Certain balances and amounts in the 1998 financial statements have been
reclassified to conform with the 1999 presentation.
NOTE B- BASIS OF PRESENTATION AND CERTAIN SIGNIFICANT RISKS
AND UNCERTAINTIES
The accompanying statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements during the years ended December 31, 1999 and 1998, the
Company incurred loses from operations of $ 443,372 and $ 869,627,
respectively. These factors among others may indicate that the Company
will be unable to continue as a going concern for a reasonable period of
time.
The Company's existence is dependent upon management's ability to
develop profitable operations and resolve it's liquidity problems.
Management anticipates the Company will attain profitable status and
improve it liquidity through the continued developing, marketing and
selling of its products and additional equity investment in the Company.
The accompanying financial statements do not include any adjustments
that might result should the Company be unable to continue as a going
concern.
The Company had a working capital deficiency of $ 850,899 at December
31, 1999 , and negative cash flows from operating activities of $
198,516 and $58,389 in 1999 and 1998, respectively. The Company
continues to seek other financing or generate sufficient cash flows to
pay the current liabilities of continuing operations. These factors,
among others, indicate the Company's ability to continue in existence is
dependent upon favorable governmental regulations, its ability to
achieve adequate profitable operations and/or obtain additional debt or
equity financing. The financial statements do not include any
adjustments relating to the recoverability and classification of
recorded assets amounts that might be necessary should the Company be
unable to continue in existence.
Management anticipates generating revenue and cash flows from its
software licensing agreements. Additionally, management plans to
continue to refine its operations, control expenses, evaluate
alternative methods to conduct its business, and seek available and
attractive sources of debt or equity financing through a combination of
a private placement, and sharing of development costs, or other
resources. There can be no assurance that the Company's efforts will be
successful. If operations and cash flows continue to improve through
these efforts, management believes that the Company can continue to
operate. However, no assurance can be given that management's actions
will result in profitable operations or the resolution of its liquidity
problems.
C- RELATED PARTY TRANSACTIONS
Included in accounts payable and accrued expenses is $55,369 at December
31, 1999 which represents advances from stockholders or officers of the
company. No formal agreements or repayment terms exist.
D- SYSTEMS DEVELOPMENT COSTS
In May 1995, the Company signed a definitive letter of intent with a
major software developer to produce and market a "Virtual Casino" by
offering its customers the opportunity to play classic casino games,
such as blackjack, craps, roulette, baccarat and slot machine games, on
their personal computers using the Internet World Wide Web, with the
Company managing the wagering. Additionally in September 1996, the
Company entered into a software development and licensing agreement with
another software developer to develop a "Global Casino" to provide
services similar to the above on a state-of-the-art operating platform.
After the economic and technical feasibility of the projects had been
established, the Company began funding them. Costs incurred subsequent
to the establishment of technological feasibility and directly related
to the project have been capitalized. Capitalized project costs were
$1,652,149 at December 31, 1999. The "Global Casino" project was
completed in 1997 and amortization expense was $ 165,215 and $93,390 in
1999 and 1998, respectively. Accumulated amortization was $ 423,819 at
December 31, 1999. As management has made estimates in determining the
net realizable value of system development costs, it is reasonably
possible that these values will change in the near term.
E- LONG TERM DEBT
Long-term debt at December 31, 1999 consists of the following:
|
Bank loan payable in monthly installments of accrued interest at the
bank's prime lending rate plus 1% .The note is unsecured and guaranteed
by a Company officer and Director. |
$ 195,980 |
| Bank loan payable in monthly installments of $ 4,606, plus accrued
interest at the bank's prime lending rate plus 1.5% The note is
guaranteed by a Company officer and Director and collateralized by
1,000,000 shares of company stock owned by the Company's President.
|
68,403 |
| Shareholder loan payable in monthly installments of $950 including
interest at 9.75 % per annum, unsecured |
41,444 |
| Shareholder loan payable in monthly installments of $950 including
interest at 9.75 % per annum, unsecured |
41,848 |
| Shareholder demand note payable, interest at bank prime lending rate,
plus 1.5%, unsecured |
86,065 |
| 433,740 |
| Less current portion |
352,714 |
| Long-term debt |
$ 81,026 |
Aggregate maturities of long-term debt as of December 31, 1999 are as
follows:
| Year ending December 31 | |
| 2000 |
$ 15,416 |
| 2001 |
16,986 |
| 2002 |
18,720 |
| 2003 |
20,626 |
| | 9,278 |
| |
| Total |
$ 81,026 |
F- INCOME TAXES
The Company has adopted Financial Accounting Standard number 109 which
requires the recognition of deferred tax liabilities and assets for the
expected future tax consequences of events that have been included in
the financial statement or tax returns. Under this method, deferred tax
liabilities and assets are determined based on the difference between
financial statements and tax bases of assets and liabilities using
enacted tax rates in effect for the year in which the differences are
expected to reverse. Temporary differences between taxable income
reported for financial reporting purposes and income tax purposes are
insignificant.
For income tax reporting purposes, the Company's aggregate unused net
operating losses approximate $ 1,900,000 which expire
through 2015. The deferred tax asset related to the carryforward is
approximately $650,000. The Company has provided a valuation reserve
against the full amount of the net operating loss benefit, since in the
opinion of management based upon the earning history of the Company, it
is more likely than not that the benefits will be realized.
Components of deferred tax assets as of December 31, 1999 are as
follows:
| Non Current: | |
| Net operating loss carryforward | $ 650,000 |
| Valuation allowance | (650,000) |
| Net deferred tax asset | $ - |
G-STOCK OPTION PLANS
The following table summarizes the changes in options outstanding and
the related prices for the shares of the Company's common stock issued
to a former Officer of the Company .
| Number of shares | Weighted Average Exercise Price | Number of Shares Exercisable |
| Outstanding at December 31, 1997 |
50,000 |
$ 1.25 |
50,000 |
| Granted |
- |
- |
- |
| Exercised- |
- |
- |
- |
| Cancelled |
- |
- |
- |
| Outstanding at December 31, 1998 |
50,000 |
- |
50,000 |
| Granted |
- |
- | |
| Exercised |
- |
- |
- |
| Cancelled |
(50,000) |
- |
(50,000) |
| Outstanding at December 31, 1999 |
- |
$ - |
- |
The fair value of the options at the date of grant was nominal. The
options were not exercised . Accordingly, no compensation expense
related to the options granted has been recognized by the Company.
In June 1996, the Company entered into a stock and warrant purchase
agreement with a software developer and issued 375,000 shares of
restricted common stock for $750,001 and a common stock purchase warrant
for $1,000. The common stock purchase warrant is for 100,000 shares at
a purchase price of $1.00 per share and expires on June 30, 2001. The
warrant is outstanding at December 31, 1999.
H-COMPENSATORY PLANS
On March 18, 1998, the Company authorized the issuance of 1,000,000
shares of the Company's stock to its President in lieu of salary. In
addition they issued 650,000 shares to a consultant in lieu of
consulting fees.
The Company applied APB Opinion 25 in accounting for the shares awarded
to the President and FASB Statement No. 123 in accounting for the shares
awarded to the consultant. Accordingly, compensation of $257,730 was
charged to operations for the year ended December 31, 1998.
I-COMMITMENTS
Leases
The Company leases office space in Plymouth Meeting, Pennsylvania.
Commitments for minimum rentals under noncancellable operating leases at
the end of 1999 are as follows:
| 2000 |
$ 51,000 |
| 2001 |
54,000 |
Rent expense under operating leases was $ 46,088 and $ 62,426 in 1999
and 1998, respectively.
As of December 31, 1999, the Company had computer equipment and
software purchased under non-cancelable leases with an original cost of
$ 67,393 included in the Company's consolidated balance sheet.
Depreciation and amortization of $5,616 has been charged to operations
as of December 31, 1999 ..
Future minimum lease payments required under the capital leases are as
follows:
| 2000 | $ 24,768 |
| 2001 | 24,768 |
| 2002 | 16,512 |
| 66,048 |
| Less amount representing interest |
7,588 |
| Present value of future minimum lease
payments | 58,460 |
| Less current portion |
21,747 |
| Long- term portion |
$ 36,713 |
Litigation
On February 18, 1997, a search warrant (the "Warrant") was issued, filed
in the United States District Court for the Eastern District of
Pennsylvania, authorizing the Federal Bureau of Investigation to search
the premises of the Company's executive offices and the offices of
Intersphere in Blue Bell, Pennsylvania including any and all computer
hardware, software, peripheral devices and computer-related
documentation on any of such premises. The Warrant lists a variety of
items to be obtained based on the assumption that there was a violation
of federal laws and that an illegal gambling business was being
conducted from its premises in Pennsylvania. Based on the advice of
counsel with significant criminal law, trial and appellate experience
and comprehensive understanding of the jurisdictional scope of gaming
laws, both domestic and international, management does not believe the
gaming operations of its subsidiaries violate either the laws of the
United States or the Commonwealth of Pennsylvania, since no gaming or
gambling operations are conducted there. Management's belief is based
principally on its understanding, as interpreted by its counsel, that
the operations of the Gaming and Licensing Division are legally
authorised in Grenada and, as such, are beyond the scope and outside the
jurisdiction of the U.S. criminal laws relating to gaming activities.
The Company, through counsel, while co-operating fully with the
officials of the United States, intends to move to quash the Warrant and
subsequent subpoena in the United States District Court on the grounds
that jurisdiction is lacking. Although the Company intends to defend
vigorously any action that may ultimately be brought by the United
States in connection with the Warrant and subpoena, no assurance can be
given that management's beliefs as to the criminality of its
subsidiaries' operations, or its basis for such beliefs, are correct and
that the Company will prevail. In addition, the State of Missouri in
April 1997 sought an injunction in its counts seeking to restrict the
Company from offering the Global Casino through the Internet to Missouri
residents. While not admitting personal jurisdiction, the Company
through its counsel agreed not to offer these services to Missouri
residents. The Company posted a notice to this effect within its
Internet web site. Subsequently, an investigator employed by the State
of Missouri accessed the Company's web site; apparently determining that
the Company had breached its agreement with Missouri.
Accordingly, in May of 1997, the State of Missouri indicted the Company
and its President, Michael F. Simone, and filed a judgement in the
amount of $66,050 for statutory "gambling" violations in Missouri. On
September 22, 1998, the Company and Simone entered into a plea agreement
with the State of Missouri. As part of the agreement the Company was to
pay a fine in the amount of $5,000 and an additional $20,000 for the
costs to prosecute the case. Simone was fined $2,500. As of December
31, 1998, $15,000 remains unpaid and is included in accounts payable and
accrued expenses. According to the plea agreement, if the $20,000 was
not paid within sixty days following the date of the plea, the State of
Missouri may bring additional criminal charges against the Company.
The Company has filed suit against International Gaming to collect
payments due under a $4,990,000 note representing payment for the
capital stock of Sports International, Inc. and Global Casinos, Inc.
(Note J). International Gaming has filed an Answer and Counterclaim
asserting there were material misstatements, misrepresentations and
omissions from the warranties and representations provided under the
Stock Purchase Agreement between the two Companies. The Company has
been advised by competent legal counsel that they will receive a
judgement, though collection of the amount owed is still uncertain.
The Company was sued by, among others, Empire Corporation ("Empire"),
who claimed the Company improperly terminated an alleged Joint Venture
Agreement, appropriated certain funds belonging to Empire under the
agreement and otherwise refused to pay monies due to Empire. Empire
also asserted claims of fraud and breach of fiduciary duty. An answer,
new matter and counterclaim has been filed by the Company asserting that
the Agreement had been properly terminated and that funds are due the
Company from Empire. Empire claims damages in excess of $160,000 as
well as punitive damage in the amount of $1,000,000. The Company's
counterclaim seeks damages in excess of $95,000. In the opinion of
management, the ultimate outcome of this case in unknown.
Other litigation
The Company, in the normal course of business, is subject to litigation
and is presently involved as a defendant in several lawsuits. In the
opinion of management, the ultimate outcome of these cases is unknown
and any exposure to liability, if any, cannot be estimated at this time.
Consequently, no amount has been accrued at December 31, 1999.
J-DISCONTINUED OPERATIONS
In March 1998, the Company sold Sports and Casino (the "Gaming
Divisions") for $5,000,000, which included a $4,990,000 note receivable
and debt forgiveness of $975,664. The interest rate on the note is the
prime rate. The first eighteen months of the note only require monthly
payments of interest on the unpaid principal portion. The second
eighteen months require payment of interest plus principal of $27,725
per month. A balloon payment of $4,490,950 is payable on the
thirty-seventh month. The stock of the Gaming Divisions has been
pledged by the buyer as collateral. The sale resulted in a pre-tax gain
of approximately $909,000 in 1998 after considering costs incurred in
connection with the sale and operating results through the date of
disposition. As collection of the $4,990,000 note is uncertain, the
Company will defer the gain on the note and recognize revenue as
principal is collected.
Net current assets from discontinued operations were primarily cash and
customer receivables. Net noncurrent assets from discontinued
operations were primarily fixed assets. Net current liabilities were
customers' credit balances, security deposits and accounts payable and
accrued expenses.
The financial statements reflect the operating results and balance sheet
items of the discontinued operations separately from continuing
operations. Prior years have been restated. Operating results for the
discontinued operations for the year ended December 31, 1998 were:
| Gross handle |
$ 1,223,497 |
| Less customer win |
1,168,189 |
| Net win |
55,308 |
| Other revenues |
- |
| Net win and other revenues |
55,308 |
| Expenses |
(121,887) |
| Net (loss) income |
$ (66,579) |
K- DISPOSITION OF GAMBLENET TECHNOLOGIES, LTD.
In February 1999, the Company and Century Industries, Inc. ("Century")
formed Gamblenet Technologies, Ltd. ("Gamblenet"). The Company and
Century each owned 50% of Gamblenet's initially outstanding common
shares. In exchange for the Company's 50% interest, the Company
licensed certain gaming and software licenses to Gamblenet and issued a
warrant to purchase 4,000,000 shares of the Company's restricted
common stock at the stock's par value of $ .001 per share. The warrant
expires December 31, 2004.
In May, 1999, Gamblenet, whose principal assets was the warrant to
purchase 4,000,000 shares of the Company's restricted common stock, was
sold to an unrelated third party in exchange for $2,628,000, comprised
of $ 128,000 in cash and a promissory note in the amount of $
2,500,000. The note, which bears interest at 6% per annum, matures in
May, 2004 with principal payments of $ 500,000 due annually prior
thereto. The amount of the promissory note outstanding at December 31,
1999 was $2,008,790 and is shown on the balance sheet as a reduction in
stockholders' equity . As of the date of the Company's financial
statements, the warrant holder has not exercised its rights to acquire
the Company's common stock underlying the warrant.
NOTE L-LOSSES PER COMMON SHARE
The following table presents the computation of basic and diluted loss
per share:
| 1999 | 1998 |
| Net loss available for common shareholders | $(327,863) | $ (71,485) |
| Basic and fully diluted loss per share |
$ (0.02) | $ (.00) |
| Weighted average common shares outstanding |
18,696,615 | 13,701,290 |
Net loss per share is based upon the weighted average number of shares
of common stock outstanding.
M-SUBSEQUENT EVENT
In December, 1999, the Company authorized a series of 1,000,000 shares
of the Company's preferred stock as convertible preferred stock
("Series A Voting Convertible Preferred Stock"). After five years,
each share of the Preferred Stock is convertible into 15 shares of the
Company's Common Stock. In addition, the holders of the preferred stock
may not convert their shares to the Company's common stock unless the
Company earns $.25 per share on a fully diluted basis for the year ended
prior to the conversion; the market value of the Company's common shares
has averaged $5.00 per share for 30 days prior to the conversion; and
the shares will remain intact as a class, and shall remain restricted as
a control block, salable pursuant to SEC rule 144 In the event of
liquidation, dissolution, or winding up of the Company, the holders of
the Preferred Stock have a liquidation preference of $1.00 per share.
Subsequent to the date of the Company's financial statements, the
Company took the steps necessary to issue 1,000,000 shares of
convertible preferred stock in exchange for 1,275,000 shares of
Globespan Technologies Group, PLC, a company formed under the laws of
Ireland.
In June, 1999, the Company issued 7,500,000 shares of its restricted
common stock for the purpose of acquiring a controlling interest in
certain assets owned by Century Industries, Inc. ("Century"). As of the
date of the financial statements the Company had not fully consummated
the transaction.
Pursuant to a Share Trust and Lock Up Agreement dated December 30, 1999,
beginning in 2000, the Company will accounted for the Century assets
acquired as a wholly-owned subsidiary of the Company.
The unaudited pro forma combined financial data is presented for
informational purposes only. They are not necessarily indicative of the
results of operations or of the financial position which would have
occurred had the acquisition been completed during the periods or as of
the date for which the pro forma data are presented. They are also not
necessarily indicative of the Company's future results of operations or
financial position. No adjustment has been included in the pro forma
combined financial data for anticipated costs to be incurred upon
consummation of the acquisition.
Pro forma per share amounts for the combined company are based on the
number of shares outstanding on a fully diluted basis.
UNAUDITED SELECTED PRO FORMA COMBINED FINANCIAL DATA
|
1999 |
| Pro Forma Combined Statement of Income Data: | |
| Sales |
$ 6,128,127 |
| Loss from continuing operations |
(96,568) |
| Loss from continuing operations
per common share |
$ (0.00) |
| Weighted average number of common shares | 22,595,245 |
| Pro forma combined Balance Sheet Data: | |
| Total assets |
$ 3,940,361 |
| Total shareholders' equity |
$ 1,900,698 |
| Book value per common share |
$ .08 |
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
The Board of Directors appointed Stefanou & Company, LLP as its Auditor
for 1999 to replace Parante, Randolph Carey & Associates. There were no
changes or disagreements with accountants on financial disclosure during
this period.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Executive Officers and Directors
The following table sets forth the name, age, and position of each
executive officer and director of the Company.
| Name |
Age |
Position |
Term Expires |
| Michael F. Simone |
50 |
Chairman of the Board, Director, President and Chief Executive Officer |
1999 Annual Meeting |
| Jeffrey D. Erb |
29 |
Director and Secretary |
1999 Annual Meeting |
All the directors were re-elected to the Board of Directors at the
Annual Meeting of Shareholders on March 18, 1998. The term of office
for each director is one year or until his or her successor is elected
and qualified at the Company's annual meeting of shareholders.
Michael F. Simone is a Company Director, and was President/Treasurer,
Organizer and Owner of 50% of the outstanding shares of Sports
International, Ltd. (Antigua) from inception in November 1992 until the
Company acquired all of the capital stock of Sports International, Ltd.
(Antigua) on October 20, 1994. From 1989 to 1992, Mr. Simone was a Vice
President of Anchor Savings Bank, heading one of the bank's real estate
lending divisions. He graduated from The University of Miami in 1972,
and holds a BS Degree in Finance.
Jeffrey D. Erb is the Vice President of Intersphere. Mr. Erb is well
versed in all aspects of the World Wide Web and the Internet, as well as
design and management. He has overseen and personally handled much of
the layout and programming of the World Wide Web pages and received
international attention and awards. He is qualified in HTML programming
and all aspects of Internet development. Mr. Erb is an active member of
several high tech and Internet organizations and is a contributing
writer in the advertising industry online magazine "Channel Seven" with
his own column "Ad Bytes".
Board Meetings and Committees
Directors who are employees of the Company receive no compensation for
services as directors.
The Company plans to establish an Audit Committee, a Compensation
Committee and an Option Committee, each of which will consist of two
directors.
The Audit Committee will review with the Company's independent
accountants the scope and timing of the accountants' audit services and
any other services they are asked to perform, their report on the
Company's financial statements following completion of their audit and
the Company's policies and procedures with respect to internal
accounting and financial controls. In addition, the Audit Committee
will be asked to make annual recommendations to the Board of Directors
for the appointment of independent public accountants for the ensuing
year.
The Compensation Committee will review and recommend to the Board of
Directors the compensation and benefits of all officers and key
employees of the company, and review general policy matters relating to
compensation and benefits of employees of the Company.
The Option Committee will determine the number, if any, and terms of any
options granted by the Company, except to members of the Committee.
Options to the members of the Option Committee must be granted and
approved by the majority vote of the Board of Directors.
Limitation of Liability
As a Delaware corporation, the Company is bound by Section 145 of the
General Corporation Law of Delaware which allows the indemnification of
officers, directors, employees or agents of the Company against
liabilities and expenses arising out of actions brought by a third
party, provided that the Board of Directors determines that such person
acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, and, with respect to a
criminal matter, had no reasonable cause to believe his conduct was
unlawful. Such law also permits indemnification against expenses in
actions brought by a shareholder on behalf of a corporation or by the
corporation itself if the standards of conduct required for
indemnification in third party actions are met, and either (1) such
person was not adjudged liable to the corporation, or (2) the Delaware
Chancery Court or other court in which the action was brought determines
that such person is fairly and reasonably entitled to be indemnified.
The Company may make advances for expenses incurred in defending a suit
upon the receipt of an undertaking by an officer, director, employee or
agent to repay such amount if it is ultimately determined that such
person is not entitled to be indemnified.
The Company's Certificate of Incorporation provides that directors and
officers of the Company are indemnified to the fullest extent permitted
by law and states that no director or officer shall have any personal
liability to the Company or its stockholders for any monetary damages
for breach of fiduciary duty as a director except for liability
resulting from (i) breach of the duty of loyalty to the Company or its
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under
Section 174 of Delaware corporation law (relating to unlawful dividends
or redemptions), or (iv) for any transaction from which such director or
officer derived an improper personal benefit. The indemnification is
against all expenses arising from the lawsuit or action unless the
director or officer is finally adjudged to be liable for gross
negligence, recklessness or willful misconduct in the performance of his
duty to the Company (unless the Delaware Chancery Court determines that
in view of the circumstances of the case, the person is entitled to
indemnity as determined by the court). Expenses are paid or reimbursed
as incurred in advance of final disposition upon receipt of an unsecured
contractual written undertaking that such amount must be repaid if it is
determined that the person is not entitled to the indemnity.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended (the "Securities Act"), may be permitted to
directors, officers, or persons controlling the registrant pursuant to
the foregoing provisions, the registrant has been informed that in the
opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable.
The Company does not currently maintain any directors' and officers'
liability insurance.
ITEM 11. EXECUTIVE COMPENSATION
Summary of Compensation Table
| Annual Compensation |
| Name and Principal Position |
Salary |
Bonus |
Other Stock |
|
Michael F. Simone, Chairman, President, and Chief Executive Officer
| | | |
| 1999 |
$ - |
$ - |
$ - |
| 1998 |
- |
- |
$156,200 |
| 1997 |
30,800 |
- |
- |
| 1996 |
144,230 |
- |
- |
| 1995 |
105,750 |
- |
- |
| 1994 |
150,000 |
- |
- |
| Jeffrey D.Erb, Director and Secretary | | | |
| 1999 |
54,000 |
- |
- |
| 1998 |
49,399 |
- |
- |
| 1997 |
44,923 |
- |
- |
Employee Agreements and Benefits
The Company does not have any employment contracts, retirement, pension,
profit sharing, with or covering its officers, directors, consultants,
and employees. During 1996, the Company established a medical insurance
plan for its officers and employees.
Stock Option and Stock Award Plan
In May 1995, the stockholders approved the 1995 Stock Option and Stock
Award Plan (the "Plan) and the 1995 Directors Stock Option Plan (the
"Director's Plan"). The purpose of the Plan is to attract and retain
qualified and competent persons as officers, employees, consultants,
agents, and independent contractors. The purpose of the Director'' Plan
is to attract and retain nonemployee directors to the Company'' board.
Under the Plan and the Director's Plan, the Company may grant up to
600,000 and 300,000 stock options, respectively. The terms of the
options granted shall be determined by the Stock options Committee
appointed by the Board of Directors. At December 31, 1995, no stock
options had been awarded under either plan. On October 25, 1996,
pursuant with a Director's voluntary resignation, the Company authorized
the purchase of 50,000 shares of stock at an exercise price 33% higher
than the fair market value of the Company's common stock on the date of
the grant or $1.25 per share with an exercise deadline of October 25,
1999.
On March 18, 1998, the Company authorized the issuance of 1,000,000
shares of the Company's stock to its President in lieu of salary. In
addition they issued 650,000 shares to a consultant in lieu of
consulting fees.
The Company applied APB Opinion 25 in accounting for the shares awarded
to the President and FASB Statement No. 123 in accounting for the shares
awarded to the consultant. Accordingly, compensation of $257,730 was
charged to operations for the year ended December 31, 1998.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Principal Shareholders
The table below sets forth information as to each person owning of
record or who was known by the Company to own beneficially more than 5%
of the 23,084,903 shares of issued and outstanding Common Stock of the
Company as of December 31, 1998 and information as to the ownership of
the Company's Common Stock by each of its directors and executive
officers and by the directors and executive officers as a group. Except
as otherwise indicated, all shares are owned directly, and the persons
named in the table have sole voting and investment power with respect to
shares shown as beneficially owned by them.
| Name and Address of Beneficial Owner |
Nature of Ownership |
Number of Shares Owned |
Percent |
Michael F. Simone
188 Jericho Valley Drive
Wrightstown, PA 18940 |
Common Stock, Direct |
4,487,713 |
19.4% |
Rina Moscariello
994 Derring Lane
Bryn Mawr, PA 19110 |
Common Stock, Direct |
1,360,000 |
5.89% |
|
All Executive Officers and Directors, as a Group (1 Persons)
|
|
5,847,713 |
25.29% |
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There are no other material relationships or transactions that qualify
for disclosure under this caption.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
Financial Statement Schedules
The consolidated financial statements and related schedules filed as
part of this Form 10-Ksb are included in Part II, Item 8.
Reports on Form 8-K
On March 8, 1999, the Company reported that it entered into a joint
effort agreement with Century Industries, Inc. ("Century") and formed
Gamblenet Technologies, Ltd. ("Gamblenet"). The Company and Century each
own 50% of Gamblenet's initially outstanding common shares. In exchange
for the Company's 50% interest, the Company licensed certain gaming and
software licenses to Gamblenet along with 4,000,000 restricted shares of
the Company's Common Stock, which have been reserved for, but have not
been issued.
EXHIBIT 27, FINANCIAL DATA SCHEDULE
(FOR ELECTRONIC FILING PURPOSES ONLY)
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
| Cash |
$ 47,301 |
| Marketable Securities |
0 |
| Notes and Accounts Receivable |
15,258 |
| Allowances for Doubtful Accounts |
25,550 |
| Inventory |
0 |
| Total Current Assets |
72,559 |
| Property, Plant and Equipment |
391,251 |
| Accumulated Depreciation |
166,666 |
| Total Assets |
1,843,415 |
| Total Current Liabilities |
923,458 |
| Bonds, Mortgages and Similar Debt |
0 |
| Preferred Stock - Mandatory Redemption |
0 |
| Preferred Stock - No Mandatory Redemption |
0 |
| Common Stock |
23,085 |
| Other Stockholders' Equity |
802,218 |
| Total Liabilities and Stockholders' Equity |
1,843,415 |
| Net Sales of Tangible Products |
0 |
| Total Revenues |
1,199,400 |
| Cost of Tangible Goods Sold |
0 |
| Total Costs and Expenses App. to Sales and Revenues |
0 |
| Other Costs and Expenses |
1,675,305 |
| Provision for Doubtful Accounts |
25,550 |
| Interest and Amortization of Debt Discount |
37,000 |
| Income/Loss Before Taxes and Other Items |
(327,863) |
| Income Tax Expense/Benefit |
0 |
| Income/Loss Continuing Operations |
(443,372) |
| Discontinued Operations |
0 |
| Extraordinary Items |
115,509 |
| Cumulative Effect-Changes in Accounting Principles |
0 |
| Net Income or Loss |
(327,863) |
| Earnings Per Share - Primary |
0 |
| Earnings Per Share - Fully Diluted |
0 |
SIGNATURES
Pursuant to the requirements of section 13 or 15(d) 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.
GLOBESPAN TECHNOLOGY PARTNERS, INC.
Dated: July 8, 1999
By:
/s/ Michael F. Simone
Michael F. Simone, President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities indicated on this 8th day
of July 1999.
GLOBESPAN TECHNOLOGY PARTNERS, INC.
By:
/s/ Michael F. Simone
Michael F. Simone, Director, President, and Chief Executive Officer
By:
/s/ Jeffrey Erb
Jeffrey Erb, Director and Secretary
