DEFINITION, LTD.
QUARTERLY REPORT ON FORM 10-QSB FOR THE
QUARTER ENDED 6/30/99 - PAGE 1U.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
June 30, 1999
[ ] 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.)
4625 W. Nevso Drive, Suite 2, Las Vegas,
Nevada 89103
(Address of principle executive
offices, including zip code)
(702) 253-1333
(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 September 17, 1999, was 11,862,873 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 JUNE 30, 1999
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet as of June 30, 1999 and December 31,
1998
Consolidated Statement of Operations for the Six Months Ended
June 30, 1999 and June 30, 1998, and for the Three Months Ended
June 30, 1999 and 1998
Consolidated Statement of Cash Flows for the Six Months Ended
June 30, 1999 and June 30, 1998, and for the Three Months Ended
June 30, 1999 and 1998
Notes to Interim Consolidated Financial Statements
All schedules are omitted because they are not applicable or the
required information is shown in the financial statements or
notes thereto.
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 (Unaudited) June 30, 1999 December 31, 1998
Current Assets
Cash and Cash Equivalents $ 0 $ 31,144
Property and Equipment
Broadcast Resource Library 2,985,536 2,985,536
Computer, Production and Broadcast Equipment 310,514
310,508
Building and Improvements 469,153 469,153
3,765,203 3,765,197
Less Accumulated Depreciation
(2,792,405) (2,525,834)
Property and Equipment, Net 972,798 1,239,363
Other Assets
Prepaid Airtime 126,750 146,250
Total Assets $ 1,099,548 $ 1,416,757
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) June 30,
1999 December 31, 1998
Current Liabilities
Checks Issued in Excess of Cash $ 3,857 $
0
Mortgage Payable, Current Portion 1,951
1,847
Accounts Payable, Trade
38,300 62,835
Payroll Tax Liabilities
23,700 23,700
Due to Related Party 227,915 164,383
Total Current Liabilities
295,723 252,765
Long-Term Liabilities
Mortgage Payable, Noncurrent Portion 75,776 76,777
Total Liabilities 371,499 329,542
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, 50,000,000
Shares; Issued and Outstanding, 11,862,873 and 1,254,929
Shares at June 30, 1999 and December 31, 1998 11,863
1,255
Additional Paid In Capital 14,347,821 12,737,049
Retained Earnings (Deficit) (13,631,635) (11,651,089)
Total Stockholders' Equity 728,049 1,087,215
Total Liabilities and Stockholders' Equity $ 1,099,548 $
1,416,757
<PAGE>
(Unaudited) Three Months Period Ended June 30,
1999 (Unaudited) Three Months Period Ended June 30,
1998 (Unaudited) Six Months Period Ended June 30,
1999 (Unaudited) Six Months Period Ended June 30, 1998
Revenues $ 41,733 $ 17,662 $ 78,952 $
44,801
Cost of Revenues 29,839 4,615 73,749 4,615
Gross Profit 11,894 13,047 5,203 40,186
Operating Expenses
General and Administrative 165,110 671,585 1,983,741
883,819
Operating Loss (153,216) (658,538) (1,978,538) (843,633)
Other Expense
Interest Expense 0 (3,023) (2,008) (5,327)
Net Loss Available to Common Stockholders $ (153,216) $
(661,561) $ (1,980,546) $ (848,960)
Basic Loss Per Share of Common Stock $ (0.01) $
(1.61) $ (0.23) $ (2.03)
Weighted Average Number of Common Shares Outstanding
10,607,500 411,509 8,686,250 417,760
<PAGE>
(Unaudited) For the Six Months Period Ended June 30,
1999 (Unaudited) For the Six Months Period Ended June 30, 1998
Cash Flows From Operating Activities
Net Loss $ (1,980,546) $ (848,960)
Adjustments to Reconcile Net Loss to Net Cash Used In
Operating Activities
Depreciation and Amortization 286,065 240,094
Common Stock Issued for Services 1,609,405 465,000
Changes in Assets and Liabilities
(Increase) Decrease in Accounts Receivable 0
(2,000)
Increase (Decrease) in Checks Issued In Excess of
Cash 3,857 6,052
Increase (Decrease) in Accounts Payable, Trade
(12,560) 19,735
Total Adjustments 1,886,767 728,881
Net Cash Used In Operating Activities (93,779) (120,079)
Cash Flows From Investing Activities
Purchase of Property and Equipment
0 (31,981)
Net Cash Flows Used In Investing Activities 0 (31,981)
Cash Flows From Financing Activities
Proceeds (Repayments) From Long Term Debt (897) (660)
Proceeds From the Issuance of Common Stock 0 50,000
Advances From Others 63,532 100,730
Net Cash Provided By Financing Activities 62,635 150,070
Decrease in Cash and Cash Equivalents (31,144) (1,990)
Cash and Cash Equivalents at Beginning of Period 31,144
1,990
Cash and Cash Equivalents at End of Period $ 0
$ 0
(Unaudited) For the Six Months Period Ended June 30,
1999 (Unaudited) For the Six Months Period Ended June 30, 1998
Supplemental Disclosure of Cash Flow Information:
Cash paid for:
Interest $ 2,008 $ 5,985
Income taxes $ 0 $ 0
Supplemental Schedule of Noncash Investing and
Financing Activities:
Issuance of Common Stock for Services $ 1,609,405 $
465,000
Exchange of Common Stock for Prepaid Airtime $
0 $ 195,000
Conversion of Debt to Equity $ 11,975 $
0
<PAGE>
NOTE 1. Statement of Information Furnished
The accompanying unaudited interim consolidated financial
statements have been prepared in accordance with Form 10QSB
instructions and in the opinion of management contains all
adjustments (consisting of only normal recurring adjustments)
necessary to present fairly the financial position as of June
30, 1999, the results of operations for the three and six months
ended June 30, 1999, and the statement of cash flows for the six
months ended June 30, 1999. These results have been determined
on the basis of generally accepted accounting principles and
practices and applied consistently with those used in the
preparation of the Company's 1998 Annual Report on Form 10-KSB.
Certain information and footnote disclosure normally included in
the financial statements presented in accordance with generally
accepted accounting principles have been condensed or omitted.
It is suggested that the accompanying consolidated financial
statements be read in conjunction with the accompanying
consolidated financial statements and notes thereto incorporated
by reference in the Company's 1998 Annual Report on Form 10-KSB.
NOTE 2. Stock Split
On January 8, 1999, the Board of Directors approved a 20:1
reverse stock split at $0.001 par value (no effect to par value)
reducing the outstanding shares at December 31, 1998, of
25,098,580 to 1,254,929. All per share and per share
information have been adjusted retroactively to reflect the
stock split.
NOTE 3. Common Stock
On August 23, 1999, the Company canceled 400,000 shares of
common stock previously issued for services rendered at $0.05
per share. This transaction will be reflected in the third
quarter.
NOTE 4. Acquisition of New Film Library
On September 7, 1999, the Company acquired a new film library
for a total cost of $2.5 million, in exchange for the issuance
of 175,000 shares of its preferred stock at $10.00 per share and
750,000 shares of its common stock at $1.00 per share. The
transaction is expected to be completed by September 22, 1999.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
When used in this discussion, the words "believes",
"anticipates", "expects", and similar expressions are intended
to identify forward-looking statements. Such statements are
subject to certain risks and uncertainties, which could cause
actual results to differ materially from those projected.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date
hereof. The Company undertakes no obligation to republish
revised forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence
of unanticipated events. Readers are also urged to carefully
review and consider the various disclosures made by the Company
which attempt to advise interested parties of the factors which
affect the Company's business, in this report, as well as the
Company's periodic reports on Forms 10-KSB, 10QSB and 8-K filed
with the Securities and Exchange Commission.
(1) Results of Operations
Revenues. The Company continues to operate its TV Station with
revenues for the three months ended June 30, 1999 of $41,733,
compared to the three months ended June 30, 1998 of $17,662, an
increase of $24,071, or 136%. Revenues six month period ended
June 30, 1999, increased from $44,801 to $78,952. There was no
apparent reason for the increase. To date, the Company has not
relied on any revenues for funding. During the next several
years, the Company expects to derive the majority of its
potential revenues from the distribution of its newly acquired
film library.
General and Administrative Expenses. During the three months
ended June 30, 1999, the Company incurred $165,110 in general
and administrative expenses, a decrease of 75.4% from second
quarter 1998 expenses of $506,475. General and administrative
expenses for the six month period June 30, 1999, increased
124.45% from $883,819 to $1,983,741. The increase is primarily
attributable to the issuance of common stock for consulting
services of $1,609,405. The Company experienced a net loss of
$1,980,546 for the six months period ended June 30, 1999,
compared to a net loss of the prior period of $843,633, or an
increase of $1,136,913. The majority of the loss is
attributable to the common stock issued for services rendered as
discussed above.
Provision for Income Taxes. As of June 30, 1999, the Company's
accumulated deficit was $13,631,635. Accordingly, the Company
has recorded a full valuation allowance against any income tax
benefit to date.
(2) Liquidity
The Company's liquidity position continues to be poor. Working
capital continues to deteriorate. At June 30, 1999, the Company
had a negative working capital of $295,723, as compared to
$221,621 at December 31, 1998. Due to the "start-up" nature of
the Company's business, the Company expects to incur losses as
it expands its business. The Company may raise additional funds
through public or private equity investment in order to expand
the range and scope of its business operations. The Company may
seek access to the private or public equity but there is no
assurance that such additional funds will be available for the
Company to finance its operations on acceptable terms, if at
all.
PART II
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to 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/ Donna Anderson
President and
Chief Executive Officer
Dated: September 17, 1999
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.
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