Securities and Exchange Commission
Washington, D.C. 20549
_______________________
FORM 10-QSB
Quarterly Report
Under
Section 13 or 15(d) of the
Securities Exchange Act of 1994
________________________
For Quarter Ended: June 30, 1997
Commission File Number: 000-20598
Definition, Ltd.
(Exact name of Registrant as specified in its charter)
NEVADA 75-2293489
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1334 South Killian, Unit 4, Lake Park, Florida 33403
(561) 844-7701
(Address of principal executive offices, including zip code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past twelve 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 [ ] No [ X]
The number of shares outstanding of the issuer's common equity as of June 30,
1997, was 7,161,842 shares of common stock, par value $.0001.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
DEFINITION, LTD.
Form 10-QSB for the Quarter Ended June 30, 1997
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Item 2 - Changes in Securities
Item 3 - Defaults Upon Senior Securities
Item 4 - Submission of Matters to a Vote of Security Holders
Item 5 - Other Information
Item 6 - Exhibits and Reports on Form 8-K
DEFINITION, LTD.
Form 10-QSB for the Quarter Ended June 30, 1997
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations
DEFINITION, LTD.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited) (Unaudited)
June 30, 1997 December 31,1996
---------------- ----------------
ASSETS
Current Assets:
Cash and cash equivalents $ 22,834 $ 63,151
Notes receivable 210,000 210,000
Accounts receivable (net) 352,502 2,964,036
---------------- ----------------
Total Current Assets 585,336 3,237,187
---------------- ----------------
Property and Equipment:
Broadcast resource library 2,985,536 2,985,536
Computer, prod. & other equip 851,105 851,105
Streaming technology hardware 62,776 62,776
Building and improvements 469,153 469,153
Other 4,470 4,470
---------------- ----------------
Total-property and equipment 4,373,040 4,373,040
---------------- ----------------
Accumulated depreciation (2,246,752) (1,879,464)
---------------- ----------------
Net Property and Equipment 2,126,288 2,493,576
---------------- ----------------
Other Assets:
Deposits - Paris office 78,020 78,020
Contracts & A/R-long term 5,928,071 5,928,071
Equity investment - J.V.(W3D) 1,891,066 385,142
Streaming Technology R&D 355,262 773,300
Accumulated amort. - R&D (59,210) (23,684)
---------------- ----------------
Total Other Assets 8,193,209 7,140,849
---------------- ----------------
TOTAL ASSETS $ 10,904,833 $ 12,871,612
================ ================
See accompanying notes and accountants' compilation report
DEFINITION, LTD.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1997 AND DECEMBER 31, 1996
(Unaudited) (Unaudited)
June 30, 1997 December 31,1996
---------------- ----------------
LIABILITIES
Current Liabilities
Accounts payable - trade $ 91,000 $ 3,010,234
Payroll liabilities 23,612 23,700
Federal income taxes payable 104,656 31,656
Current portion of debt 1,500 1,500
---------------- ----------------
Total Current Liabilities 220,768 3,067,090
---------------- ----------------
Long-Term Liabilities
Note payable-Dorothy Sivilli 27,000 27,000
Note Payable-Crawford 17,500 0
Mortgage payable-building 79,168 80,601
---------------- ----------------
Total Long-Term Liabilities 123,668 107,601
---------------- ----------------
TOTAL LIABILITIES 344,436 3,174,691
---------------- ----------------
EQUITY
Capital stock 11,662 6,522
Paid-in capital 10,992,377 10,291,517
Deferred advertising credits (1,568,335) (1,568,335)
Retained earnings 1,124,693 967,217
---------------- ----------------
TOTAL EQUITY 10,560,397 9,696,921
---------------- ----------------
TOTAL LIABILITIES & EQUITY $ 10,904,833 $ 12,871,612
================ ================
See accompanying notes and accountants' compilation report
DEFINITION, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited) (Unaudited)
6 Months Ended 6 Months Ended
June 30, 1997 June 30, 1996
-------------- --------------
Revenues:
Revenue $ 69,749 $ 3,595,795
-------------- --------------
Total Revenues 69,749 3,595,795
-------------- --------------
Cost of Revenues 0 1,691,305
-------------- --------------
Gross Profit 69,749 1,904,490
-------------- --------------
Operating Expenses:
General and administrative 51,518 150,033
Consulting and other prof. 313,724 104,902
Depreciation and Amort. 402,814 301,137
-------------- --------------
Total Operating Expenses 768,056 556,072
-------------- --------------
Income(loss) from operations (698,307) 1,348,418
-------------- --------------
Other Income (expenses):
Interest Expense (3,179) (3,946)
Gain on sale of assets 931,962 0
-------------- --------------
Total Other Income (expense) 928,783 (3,946)
-------------- --------------
Income (Loss) before tax 230,476 1,344,472
Provision for income taxes 73,000 457,120
-------------- --------------
Net income (loss) $ 157,476 $ 887,352
============== ==============
See accompanying notes and accountants' compilation report
DEFINITION, LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited) (Unaudited)
3 Months Ended 3 Months Ended
June 30, 1997 June 30, 1996
-------------- --------------
Revenues:
Revenue $ 40,147 $ 1,121,660
-------------- --------------
Total Revenues 40,147 1,121,660
-------------- --------------
Cost of Revenues 0 791,759
-------------- --------------
Gross Profit 40,147 329,901
-------------- --------------
Operating Expenses:
General and administrative 20,073 81,581
Consulting and other prof. 18,790 28,657
Depreciation and Amort. 201,407 150,568
-------------- --------------
Total Operating Expenses 240,270 260,806
-------------- --------------
Income(loss) from operations (200,123) 69,095
-------------- --------------
Other Income (expenses):
Interest Expense (1,575) (1,968)
-------------- --------------
Total Other Income (expense) (1,575) (1,968)
-------------- --------------
Income (Loss) before tax (201,698) 67,127
Provision for income taxes (79,000) 22,823
-------------- --------------
Net income (loss) $ (122,698) $ 44,304
============== ==============
See accompanying notes and accountants' compilation report
DEFINITION, LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30, 1997 and 1996
(unaudited) (unaudited)
Six Months Six Months
Ended Ended
June 30, 1997 June 30, 1996
-------------- --------------
Cash Flows from Operating Activities
Net Income $157,476 $887,352
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities
Depreciation and amortization 402,814 301,137
Common stock issued for service 256,000
Gain on sale of assets (931,962)
(Increase) decrease in:
Accounts receivable 2,611,534 (2,602,372)
Contracts & long term receivables 208,738
Deposits
Increase (decrease) in:
Accounts payable
Trade (2,919,234) (24,255)
Other (88)
Affiliates 900,187
Accrued federal income tax 73,000 462,427
-------------- --------------
Net cash provided by (used in)
operating activities (350,460) 133,214
-------------- --------------
Cash Flows from Investing Activities
Increase in property and equipment 1,350,000 (255,394)
Increase in investment in Joint Venture (1,505,924) (45,891)
-------------- --------------
Net cash provided by (used in)
investing activities (155,924) (301,285)
-------------- --------------
Cash Flows from Financing Activities
Decrease in Long Term Debt 16,067 (349)
Issuance of common stock 450,000
-------------- --------------
Net cash provided by (used in) financing
activities 466,067 (349)
-------------- --------------
INCREASE (DECREASE) IN CASH (40,317) (168,420)
Cash at beginning of period 63,151 177,450
-------------- --------------
Cash at end of period $22,834 $9,030
============== ==============
The accompanying footnotes are an integral part of these financial statements.
PART II - Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
General
The discussion below pertains to the financial condition of the Company
including subsidiary operations, for the six months ended June 30, 1997,
and 1996, as well as for each of the business segments of the Company for
such periods. The Company's business segments are: (1) television
segment, which includes the operation of a television station, sales of
copies of its film library to television stations and production of
infomercials and educational programs; (2) multimedia segment, which
includes parental education programs, computer hardware sales and cable
television/Internet operations; and (3) import segment, which involves the
import and sale of objects of art and other items, including furniture.
Unless otherwise noted, references to the Company include all of its
subsidiaries.
Results of Operations
Three Months Ended June 30, 1997 versus
Three Months Ended June 30, 1996.
Total Revenues for the quarter ended 6/30/97 were only $40,147
compared to $1,121,660 for the quarter ended 6/30/96. As reported in the
first quarter 10-QSB, the Company began receiving payments on the
Parent Academy Network (in the multimedia segment)as anticipated after
resolving differences with the participating schools. In addition, income
from sale of artwork & furniture from that segment of the Company were
very limited as the Company continued to focus on development and
utilization of the Video Streaming technology and related joint ventures.
In addition, there were only limited revenues from the television segment
during the quarter. Company management is working to resolve
operational issues at the Florida television station. The management
company utilized to handle operations has experienced turnover. Sales of
film library excerpts and other sales have been limited while management
issues were being resolved. In the prior year, sales were very strong
related to the import business, which was almost nonexistent in the quarter
ended 6/30/97 since that business is now handled in the joint venture with
W3D. The books have been adjusted to record the transaction between
W3D and the Company for its share of the Joint Venture. Approximately
$2.6 million of receivables and $1.6 of payables related to the Artwork
segment have been assumed by the Joint Venture.
Six Months Ended June 30, 1997, versus
Six Months Ended June 30, 1996.
Revenues for the 6 months ended June 30, 1997 were only $69,749 versus
$3,595,795 for the six months ended June 30, 1996. As stated above and
in the prior 10-QSB, the Company has been focusing on the development
of the Video Streaming Technology and their part in the W3D Joint
Venture to assume the import segment of the business. The sale of this
technology during the first quarter of 1997 resulted in a gain which is the
basis for the current year profits.
Segment Information - Domestic/Foreign Revenues.
During the Current Period, all of the revenues were derived from domestic
sources. During the Prior Period, approximately 60% of the Company's
revenues were from Foreign customers.
Liquidity and Capital Resources
The Company's position of liquidity continues to deteriorate. At June 30,
1997, the total cash and cash equivalents totaled $22,834 compared to
$63,151 at 12/31/96. Cash flow has been impacted by the lack of
television segment sales and the assignment of the import segment
accounts receivable to the W3D Joint Venture.
Cash Flow from Financing Activities.
The Company issued 4,500,000 shares to a joint venture partner during the
Current Period. The Company has valued this transaction at ten cents per
share. In exchange, the Joint Venture Partner assumed the payables of the
import segment in connection with the business plan changes for the
Company.
Capital Expenditures.
Due to the lack of liquidity and the change in business plan, the Company
does not expect to acquire any capital assets in the foreseeable future.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
During the three months ended June 30, 1997, None
Item 3 - Defaults Upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
Signatures
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Definition, Ltd.
By: /s/ Charles Kiefner
Charles Kiefner
Chief Executive Officer &
Principal Financial Officer
Dated: 9/7/97
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