DEFINITION, LTD.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark One)
X QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 19634
For quarterly period ended March 31, 1999
_______ TRANSITION REPORT PURSUANT TO 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.
(exact name of registrant as specified in its charter)
NEVADA 75-2293489
--------------- ----------
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation
or organization)
4625 W. Nevso Drive, Suite 2, Las Vegas, Nevada 89103
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(Address of principle executive offices) (zip code)
Registrant's telephone number, including area code: (702) 253-1333
-------------
Indicate by check mark whether the registrant (1) has filed all reports
required 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 for the
past 90 days. Yes [ ] No [ X ]
The number of shares outstanding of the Registrant's Common Stock as of
September 17, 1999, was 11,862,873, par value $0.001.
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1
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DEFINITION, LTD.
FORM 10-QSB FOR THE QUARTER ENDED MARCH 31, 1999
TABLE OF CONTENTS PAGE
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheet as of March 31, 1999................. 3
Consolidated Statement of Operations for the Three Months
Ended March 31, 1999........................................ 4
Consolidated Statement of Cash Flows for the Three Months
Ended March 31, 1999....................................... 5
Notes to Interim Consolidated Financial Statements.............. 6
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................... 6
PART II - OTHER INFORMATION
Item 1 Legal Proceedings...................................... 7
Item 2 Changes in Securities.................................. 7
Item 3 Defaults Upon Senior Securities........................ 7
Item 4 Submission of Matters to a Vote of Security Holders.... 7
Item 5 Other Information...................................... 7
Item 6 Exhibits and Reports on Form 8-K....................... 7
Signatures...................................................... 7
2
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PART I
Item 1. Financial Statements.
- ------ --------------------
DEFINITION, LTD.
INTERIM CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
(Unaudited)
ASSETS March 31, December 31,
1999 1998
-------- -----------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 1,773 $ 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 (2,659,114) (2,525,834)
--------- ---------
Property and Equipment, Net 1,106,089 1,239,363
Other Assets
Prepaid Airtime 136,500 146,250
--------- ---------
Total Assets $1,244,362 $1,416,757
========= =========
<CAPTION>
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY March 31, December 31,
1999 1998
-------- -----------
<S> <C> <C>
Current Liabilities
Mortgage Payable, Current Portion $ 1,898 $ 1,847
Accounts Payable, Trade 38,300 62,835
Payroll Tax Liabilities 23,700 23,700
Due to Related Party 222,915 164,383
------- -------
Total Current Liabilities 286,813 252,765
Long-Term Liabilities
Mortgage Payable, Noncurrent Portion 76,284 76,777
------- -------
Total Liabilities 363,097 329,542
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 March 31,
1999 and December 31, 1998 11,863 1,255
Additional Paid In Capital 14,347,821 12,737,049
Retained Earnings (Deficit) (13,478,419) (11,651,089)
---------- ----------
Total Stockholders' Equity 881,265 1,087,215
---------- ----------
Total Liabilities and
Stockholders' Equity $1,244,362 $1,416,757
========= =========
</TABLE>
3
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DEFINTION, LTD.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
3/31/99 3/31/98
------------ -----------
<S> <C> <C>
Revenues $ 37,219 $ 27,139
Cost of Revenues 43,910 0
------ -------
Gross Margin (6,691) 27,139
Operating Expenses
General and Administrative 1,818,631 212,234
--------- -------
Operating Loss (1,825,322) (185,095)
Other Expense
Interest Expense 2,008 2,304
--------- -------
Net Loss Available to
Common Stockholders $(1,827,330) $ (187,399)
========== =======
Basic Loss Per Common Share $ (0.23) $ (0.48)
========= =======
Basic Weighted Average Common
Shares Outstanding 7,910,726 389,010
========= =======
</TABLE>
4
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DEFINITION, LTD.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
3/31/99 3/31/98
------------ -------------
<S> <C> <C>
Cash Flows From Operating Activities
Net Loss $(1,827,330) $ (187,399)
Adjustments to Reconcile Net
Loss to Net Cash Used in
Operating Activities
Depreciation and Amortization 143,024 119,637
Common Stock Issued for Services 1,609,405 0
Changes in Assets and Liabilities
(Increase) Decrease in Accounts
Receivable, Other 0 (2,000)
Increase (Decrease) in Accounts
Payable, Trade (12,560) 14,735
---------- -------
Total Adjustments 1,739,869 132,372
---------- -------
Net Cash Used In Operating Activities (87,461) (55,027)
Cash Flows From Investing Activities
Purchase of Property and Equipment 0 (8,948)
-------- -------
Net Cash Flows Used In Investing Activities 0 (8,948)
Cash Flows From Financing Activities
Principal Payment on Mortgage Payable (442) 0
Proceeds From the Issuance of
Common Stock 0 20,000
Advances From Related Party 58,532 46,000
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Net Cash Provided By Financing Activities 58,090 66,000
------- ------
Increase (Decrease) in Cash and
Cash Equivalents (29,371) 2,025
Cash and Cash Equivalents,
Beginning of Period 31,144 1,990
------- -----
Cash and Cash Equivalents,
End of Period $ 1,773 $ 4,015
======= =====
Supplemental Disclosure of Cash
Flow Information:
Cash paid for:
Interest $ 2,008 $ 2,303
Income taxes $ 0 $ 0
Supplemental Schedule of Noncash
Investing and Financing Activities:
Issuance of Common Stock for
Services Rendered $1,609,405 $ 0
Conversion of Debt to Equity $ 11,975 $ 0
</TABLE>
5
<PAGE>
DEFINITION, LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL INFORMATION
MARCH 31, 1999
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 March
31, 1999, the results of operations for the three months ended March 31,
1999, and the statement of cash flows for the three months ended March 31,
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.
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 March 31, 1999 of $37,219, compared to the three
months ended March 31, 1998 of $27,139, an increase of $10,080, or 37.14%.
There was no apparent reason for the increase. To date, the Company has not
relied on any revenues for funding.
General and Administrative Expenses. During the three months ended March 31,
1999, the Company incurred $1,818,631 in general and administrative expenses,
an increase of $1,606,397, or 757% from first quarter 1998 expenses of
$212,234. 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 $1,827,330 for the current period compared to a net loss of the prior
period of $187,399, or an increase of $1,639,931. The majority of the loss
is attributable to the common stock issued for services rendered as discussed
above.
6
<PAGE>
Provsion for Income Taxes. As of March 31, 1999, the Company's accumulated
deficit was $13,478,419. 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 March 31, 1999, the Company had a negative
working capital of $285,040, 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 has been dependent
upon funds advanced from stockholders to support its working capital needs.
The Company may raise additional funds through public or private equity
investment in order to expand the range and scope of its business operations,
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.
As detailed in the financial statements, the Company issued 10,607,944 shares
of its common stock during the three months ended March 31, 1999, as follows:
1. 30,000 shares for settlement of lawsuit $.001 per share, or $30.
2. 10,000 shares for conversion of debt to equity at $1.20 per share, or
$11,975.
3. 940,000 shares for services rendered at $1.20 per share, or $1,128,000.
4. 9,627,500 shares for services rendered at $0.05 per share, or $481,375.
5. Fractional shares issued of 444.
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.
Signature page
- --------------
Pursuant to the requirements of Section 13 or 15(d) of the Securities
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: October 8, 1999
7
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 1773
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1773
<PP&E> 3765203
<DEPRECIATION> 2659114
<TOTAL-ASSETS> 1244362
<CURRENT-LIABILITIES> 286813
<BONDS> 0
0
0
<COMMON> 11863
<OTHER-SE> 869402
<TOTAL-LIABILITY-AND-EQUITY> 1244362
<SALES> 37219
<TOTAL-REVENUES> 37219
<CGS> 43910
<TOTAL-COSTS> 43910
<OTHER-EXPENSES> 1818631
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2008
<INCOME-PRETAX> (1,827,330)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,827,330)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,827,330)
<EPS-BASIC> (.23)
<EPS-DILUTED> (.23)
</TABLE>
