DEFINITION, LTD.
QUARTERLY REPORT ON FORM
10-QSB FOR THE QUARTER ENDED 3/31/98 - PAGE 1 U.S. SECURITIES
AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Quarterly Period Ended
March 31, 1998
[ ] Transition Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the Transition
Period from to .
Commission File No. 0-20598
Definition, Ltd.
(Name of
Small Business Issuer in its Charter)
NEVADA
75-2293489
(State or other jurisdiction of
(IRS Employer
incorporation organization)
Identification No.)
1334 South Killian Drive, Unit 4, Lake
Park, Florida 33403
(Address of principle executive
offices, including zip code)
(561) 840-0556
(Issuer's telephone number, including area
code)
Securities Registered under Section 12(b) of the Exchange Act:
Title of Each Class
Name of Exchange on Which Registered
None None
Securities Registered under Section 12(g) of the Exchange Act:
Common Stock, $.001 par value per share
(Title of Class)
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
12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject of such
filing requirements for the past 90 days. Yes [ ] No [ X ]
The number of shares outstanding of the issuer's common equity
as of November 15, 1998, was 21,998,580 shares of common stock,
par value $.001.
Transitional Small Business Disclosure Format (check one): Yes [
] No [X]
<PAGE>
DEFINITION, LTD.
FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 1998
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
PART I
Item 1. Financial Statements.
ASSETS
March 31, 1998 December 31, 1997
Current Assets
Cash and Cash Equivalents $ 4,015 $ 1,990
Accounts Receivable, Other 2,000 0
Total Current Assets 6,015 1,990
Property and Equipment
Broadcast Resource Library 2,985,536 2,985,536
Computer, Production and Broadcast Equipment
270,346 261,398
Building and Improvements 469,153 469,153
3,725,035 3,716,087
Less Accumulated Depreciation
(2,115,816) (1,996,179)
Property and Equipment, Net 1,609,219 1,719,908
Total Assets $ 1,615,234 $ 1,721,898
LIABILITIES AND
STOCKHOLDERS' EQUITY
March 31, 1998 December 31, 1997
Current Liabilities
Mortgage Payable, Current Portion
$ 1,655 $ 1,655
Accounts Payable, Trade
32,235 17,500
Payroll Tax Liabilities
23,700 23,700
Total Current Liabilities
57,590 42,855
Long-Term Liabilities
Mortgage Payable, Noncurrent Portion 78,480 78,480
Due To Others 46,000 0
Total Long-Term Liabilities 124,480 78,480
Total Liabilities 182,070 121,335
Stockholders' Equity
Preferred Stock: Authorized $0.01 Par Value, 5,000,000
Shares; Issued and Outstanding, None None None
Common Stock: Authorized $0.001 Par Value, 75,000,000 Shares;
Issued and Outstanding, 7,873,512 Shares and 7,773,512
Shares at March 31, 1998 and December 31, 1997 7,794
7,774
Additional Paid In Capital 11,110,510 11,090,530
Retained Earnings (Deficit) (9,685,140) (9,497,741)
Total Stockholders' Equity 1,433,164 1,600,563
Total Liabilities and Stockholders' Equity $ 1,615,234 $
1,721,898
<PAGE>
Three Months Period Ended March 31, 1998 Three Months Period
Ended March 31, 1997 Year To Date March 31, 1998 Year To
Date March 31, 1997
Revenues $ 27,139 $ 29,602 $ 27,139 $
29,602
Cost of Revenues 0 0 0
0
Gross Profit 27,139 29,602 27,139 29,602
Operating Expenses
General and Administrative 92,600 33,049 92,600 33,049
Consulting and Other Professional Fees 0 294,934
0 294,934
Depreciation and Amortization 119,634 201,407 119,634
201,407
Total Operating Expenses 212,234 529,390 212,234 529,390
Operating Loss (185,095) (499,788) (185,095) (499,788)
Other Income (Expense)
Gain on Sale of Assets 0 931,962 0 931,962
Interest Expense 2,304 0 2,304 0
Total Other Income (Expense) (2,304) 931,962 (2,304) 931,962
Income (Loss) Before Income Taxes (187,399) 432,174
(187,399) 432,174
Provision for Income Taxes 0 152,000 0
152,000
Net Income (Loss) Available to Common Stockholders $
(187,399) $ 280,174 $ (187,399) $ 280,174
Income (Loss) Per Weighted Average Share of Common
Stock $ (0.02) $ 0.05 $ (0.02) $
0.05
Weighted Average Number of Common Shares
Outstanding 7,775,179 5,540,179 7,775,179 5,540,179
<PAGE>
For the Year to Date March 31, 1998 For the Year to Date
March 31, 1997
Cash Flows From Operating Activities
Net Income (Loss) $ (187,399) $ 280,174
Adjustments to Reconcile Net Income (Loss) to Net
Cash Provided by (Used in) Operating Activities
Depreciation and Amortization 119,637 201,407
Common Stock Issued for Services 0 256,000
Gain on Disposal of Fixed Assets 0 (931,962)
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 0
(1,443)
(Increase) Decrease in Accounts Receivable,
Other (2,000) 0
Increase (Decrease) in Accounts Payable, Trade
14,735 (1,332,476)
Increase (Decrease) In Accrued Federal Income
Taxes 0 152,000
Total Adjustments 132,372 (1,656,474)
Net Cash Provided by (Used In) Operating Activities
(55,027) (1,376,300)
Cash Flows From Investing Activities
Purchase of Property and Equipment
(8,948) 0
Proceeds From the Sale of Assets 0 1,350,000
Net Cash Flows Provided By (Used In) Investing
Activities (8,948) 1,350,000
Cash Flows From Financing Activities
Proceeds (Repayments) From Long Term Debt 0 (702)
Proceeds From the Issuance of Common Stock 20,000 0
Advances From Others 46,000 0
Net Cash Provided by (Used in) Financing Activities 66,000
(702)
For the Year to Date March 31, 1998 For the Year to Date March
31, 1997
Increase (Decrease) in Cash and Cash Equivalents 2,025
(27,002)
Cash and Cash Equivalents at Beginning of Period 1,990 63,151
Cash and Cash Equivalents at End of Period $ 4,015 $
36,149
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 2,303 $ 6,614
Income taxes $ 0 $ 0
Supplemental Schedule of Noncash Investing and
Financing Activities:
Issuance of Common Stock for Services $ 0 $
256,000
Exchange of Common Stock for Investment in Joint
Venture $ 0 $ 2,000,000
<PAGE>
Note 1. Interim Consolidated Financial Statements.
In the opinion of management, the accompanying consolidated
financial statements for the three months period ended March 31,
1998 and 1997, reflect all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the
financial condition, results of operations, and cash flows of
Definition, Ltd. and subsidiaries (the Company) and include the
accounts of the Company and all of its subsidiaries. All
material intercompany transactions and balances have been
eliminated.
The financial statements included herein have been prepared by
the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in
financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. It is suggested that
these unaudited financial statements be read in conjunction with
the financial statements and notes thereto to be included in the
Company's Annual Report on Form 10-KSB which was filed with the
Securities and Exchange Commission for the year ended December
31, 1997. Certain reclassifications and adjustments may have
been made to the financial statements for the comparative period
of the prior fiscal year to conform with the present
presentation. The results of operations for the interim periods
are not necessarily indicative of the results to be obtained for
the entire year.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
(1) Results of Operations
The Company continues to operate its TV Station with revenues
for the three months ended March 31, 1998 (Current Period) of
$27,139, compared to the three months ended March 31, 1997
(Prior Period) of $29,602, a decrease $2,463. There was no
significant increase or decrease or any unusual items effecting
revenues during either of these time periods.
The Company's General and Administrative costs increased from
$33,049 for the prior period compared to $92,600 for the current
period, for a net increase of $59,551, or 180%. The increase
was due principally to an increase in salaries of $46,500, due
to the addition of approximately seven employees. The remainder
of the increase represents additional overhead incurred for the
Company's general operating expenses, such as office supplies,
postage, rent and utilities. Consulting and other professional
fees decreased from $294,934 in the prior period to $0 in the
current period, as a result of the Company's end to an attempt
to inquire into the possible acquisition or merger with other
similar businesses in 1997. Depreciation expense decreased from
$201,407 in the prior period to $119,634 in the current period,
for a net decrease of $81,773, or 41%. The Company experienced
a net loss of $187,399 for the current period compared to net
income of the prior period of $432,174. A majority of the
Company's net income for the prior period is attributable to a
gain realized (approximately $932,000) on the sale of one-half
of the Company's Internet Video Streaming capacity in
cancellation of trade accounts payable to one trade creditor in
the amount of $1,350,000. As a result, the Company accrued
income taxes of $152,000 in the prior period to cover the gain
on the sale.
(2) Liquidity
The Company's liquidity position continues to be poor. Working
capital continues to be negative. At March 31, 1998, the
Company had a negative working capital of $51,575, as compared
to $40,865 at December 31, 1997. The decrease is related to
the increase in accounts payable for the current period.
Management anticipates revenues to increase and also intends to
seek additional funding from private or public equity
investments to meet the increased working capital needs in the
next 12 months.
PART II
Item 1. Legal Proceedings.
The Company is not currently engaged in any legal proceeding,
nor, to the Company's knowledge, is any suit or other legal
action pending or threatened.
Item 2. Changes in Securities.
During the three months ended March 31, 1998, the Company issued
shares of its common stock as follows:
1. 20,000 shares for cash at $1.00 per share, or $20,000.
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to Vote of Security Holders.
None
Item 5. Other Information.
No events to report.
Item 6. Exhibits and Reports on Form 8-K.
There are no exhibits to be included in this quarterly report on
Form 10-QSB.
Reports on Form 8-K: During the three months ended March 31,
1998, the Company filed, on or about March 17, 1998, a Current
Report on Form 8-K relating to its change in Registrant's
Certifying Accountant.
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:
Charles Kiefner
President and
Chief Executive Officer
Dated ___________________
In accordance with the Exchange Act, this report has been signed
below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
