DEFINITION, LTD.
QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED 9/30/98 - 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
September 30, 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]
DEFINITION, LTD.
FORM 10-QSB FOR THE QUARTER ENDED SEPTEMBER 30, 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
September 30, 1998 December 31, 1997
Current Assets
Cash and Cash Equivalents $ 61,177 $ 1,990
Accounts Receivable, Other 4,725 0
Total Current Assets 65,902 1,990
Property and Equipment
Broadcast Resource Library 2,985,536 2,985,536
Computer, Production and Broadcast Equipment
312,460 261,398
Building and Improvements 469,153 469,153
3,767,149 3,716,087
Less Accumulated Depreciation
(2,357,417) (1,996,179)
Property and Equipment, Net 1,409,732 1,719,908
Other Assets
Prepaid Airtime 195,000 0
Total Assets $ 1,670,634 $ 1,721,898
LIABILITIES AND
STOCKHOLDERS' EQUITY
September 30, 1998 December 31, 1997
Current Liabilities
Mortgage Payable, Current Portion
$ 1,797 $ 1,655
Accounts Payable, Trade
23,300 17,500
Payroll Tax Liabilities
23,700 23,700
Total Current Liabilities
48,797 42,855
Long-Term Liabilities
Mortgage Payable, Noncurrent Portion 77,259 78,480
Due To Others 142,229 0
Total Long-Term Liabilities 219,488 78,480
Total Liabilities 268,285 121,335
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, 10,498,580 Shares and 7,773,512
Shares at September 30, 1998 and December 31, 1997
10,499 7,774
Additional Paid In Capital 11,997,805 11,090,530
Retained Earnings (Deficit) (10,605,955) (9,497,741)
Total Stockholders' Equity 1,402,349 1,600,563
Total Liabilities and Stockholders' Equity $ 1,670,634 $
1,721,898
<PAGE>
Three Months Period Ended September 30, 1998 Three Months
Period Ended September 30, 1997 Nine Months Period Ended
September 30, 1998 Nine Months Period Ended September 30, 1997
Revenues $ 24,475 $ 136,049 $ 69,276 $
205,798
Cost of Revenues 23,549 (9,471) 28,164 (9,471)
Gross Profit 926 126,578 41,112 196,327
Operating Expenses
General and Administrative 84,900 179,412 260,325 230,930
Consulting and Other Professional Fees 50,000 47,001
518,300 360,725
Depreciation and Amortization 121,142 26,743 361,236
429,557
Total Operating Expenses 256,042 253,156 1,139,861 1,021,212
Operating Income (Loss) (255,116) (126,578) (1,098,749) (824,885)
Other Income (Expense)
Write-off, Investment in J.V. 0 (2,000,000) 0 (2,000,000)
Reverse Gain on Sale of Fixed Assets 0 (931,962) 0 0
Interest Expense (4,138) (3,967) (9,465) (7,146)
Total Other Expense (4,138) (2,935,929) (9,465) (2,007,146)
Loss Before Income Taxes (259,254) (3,062,507)
(1,108,214) (2,832,031)
Provision For Income Taxes 0 73,000 0
0
Net Loss Available to Common Stockholders
$ (259,254) $ (2,989,507) $ (1,108,214) $ (2,832,031)
Loss Per Weighted Average Share of Common Stock $
(0.03) $ (0.45) $ (0.13) $
(0.42)
Weighted Average Number of Common Shares
Outstanding 8,801,496 6,700,179 8,801,496 6,700,179
<PAGE>
For the Nine Months Ended September 30, 1998 For the Nine
Months Ended September 30, 1997
Cash Flows From Operating Activities
Net Loss $ (1,108,214) $ (2,832,031)
Adjustments to Reconcile Net Loss to Net Cash Used In
Operating Activities
Depreciation and Amortization 361,238 429,557
Common Stock Issued for Services 515,000 382,000
Write-Off of Assets 0 2,000,000
Bad Debt Expense 0 46,600
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable,
Other (4,725) 5,626
Increase (Decrease) in Checks Issued in Excess of
Cash 0 6,726
Increase (Decrease) in Accounts Payable, Trade
5,800 (63,716)
Total Adjustments 877,313 2,806,793
Net Cash Used In Operating Activities (230,901) (25,238)
Cash Flows From Investing Activities
Purchase of Property and Equipment
(51,062) (36,816)
Net Cash Flows Used In Investing Activities (51,062) (36,816)
Cash Flows From Financing Activities
Proceeds (Repayments) From Long Term Debt (1,079) (1,097)
Proceeds From the Issuance of Common Stock 200,000 0
Advances From Others 142,229 0
Net Cash Provided By (Used In) Financing Activities 341,150
(1,097)
For the Nine Months Ended September 30, 1998 For the Nine
Months Ended September 30, 1997
Increase (Decrease) in Cash and Cash Equivalents
59,187 (63,151)
Cash and Cash Equivalents at Beginning of Period 1,990
63,151
Cash and Cash Equivalents at End of Period $ 61,177 $
0
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 9,465 $ 6,432
Income taxes $ 0 $ 0
Supplemental Schedule of Noncash Investing and
Financing Activities:
Issuance of Common Stock for Services $ 515,000 $
382,000
Exchange of Common Stock for Investment in Joint
Venture $ 0 $ 2,000,000
Exchange of Common Stock for Prepaid Airtime $ 195,000
$ 0
<PAGE>
Note 1. Interim Consolidated Financial Statements.
In the opinion of management, the accompanying consolidated
financial statements for the three and nine months ended
September 30, 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
Three Months Ended September 30, 1998 versus September 30, 1997:
The Company continues to operate its TV Station with revenues
for the three months ended September 30, 1998 (Current Period)
of $24,475, compared to the three months ended September 30,
1997 (Prior Period) of $136,049, a decrease of $111,574, or
456%. Revenues from the television segment have decreased
significantly, comparatively speaking, due to key employee
turnover. Management's focus is on the television segment and
sales from the programming library, which it expects to increase
over the next six months.
The Company's general and administrative costs decreased from
$179,412 for the prior period compared to $84,900 for the
current period, for a net decrease of $94,512, or 53%. The
decrease is due principally to write-offs of uncollectible
accounts receivable of approximately $82,000 in the prior
period. The Company experienced a net loss of $2,989,507 for
the prior period compared to a net loss of the current period of
$259,254, or an increase of $2,730,253. The majority of the
loss is attributable to the write-off of the Company's
investment in joint venture of $2,000,000. A reversal of the
gain recognized in the first quarter of the prior period was
made for $931,962 because the Company wrote-off its investment
in the joint venture, which generated this gain.
Nine Months Ended September 30, 1998 versus September 30, 1997:
The Company continues to operate its TV Station with revenues
for the nine months ended September 30, 1998 (Current Period) of
$69,276, compared to the nine months ended September 30, 1997
(Prior Period) of $205,798, a decrease of $136,522, or 66%.
Management is still focusing on the television segment to
generate significant revenues.
Consulting and professional fees of the prior period of $360,725
have increased to $518,300 of the current period, for a net
increase of $157,575. Consulting and professional fees of the
prior period relate to the Company's attempt to inquire into the
possible acquisition or merger with other similar businesses in
1997, an effort the Company has primarily put an end to.
Consulting and professional fees of the current period relate to
shares issued for legal and consulting services to promote the
Company's television segment. The Company experienced a net
loss of $1,108,214 for the current period compared to the prior
period of $2,832,031, or an increase of $1,724,087. As
discussed above, the Company ended all of its joint venture
efforts, resulting in write-off of $2,000,000.
(2) Liquidity
The Company's liquidity position has improved over the quarter.
Working capital is a positive $17,105 at September 30, 1998,
compared to a negative of $40,865 at December 31, 1997. The
increase results from the Company's sale of common stock to meet
working capital needs. Total proceeds from the sale of common
stock for the three months ended September 30, 1998, was
$150,000. Cash flows has been impacted by the decrease in sales
over the periods. 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, if necessary, 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 September 30, 1998, the Company
issued shares of its common stock as follows:
1. Issued 1,000,000 shares for consulting services rendered at
$0.05 per share, or $50,000.
2. Issued 150,000 shares of common stock for cash at $1.00 per
share, of $150,000.
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: 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:
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.
