DEFINITION, LTD.
QUARTERLY REPORT ON FORM 10-QSB FOR THE QUARTER ENDED
3/31/99-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, 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 MARCH 31, 1999
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Balance Sheet as of March 31, 1999
Consolidated Statement of Operations for the Three Months Ended
March 31, 1999
Consolidated Statement of Cash Flows for the Three Months Ended
March 31, 1999
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
Signatures
PART I
Item 1. Financial Statements.
ASSETS (Unaudited) March 31, 1999 December 31, 1998
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
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) March 31,
1999 December 31, 1998
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
<PAGE>
(Unaudited) Three Months Ended March 31, 1999 Three Months
Ended March 31, 1998
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
<PAGE>
(Unaudited) Three Months Ended March 31, 1999 (Unaudited)
Three Months Ended March 31, 1998
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
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
(Unaudited) Three Months Ended March 31, 1999 (Unaudited)
Three Months Ended March 31, 1998
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
<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 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
(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.
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.
3. 9,627,500 shares for services rendered at $0.05 per share,
or $481,375.
4. 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.
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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