UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
X QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES
- ------- EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1999
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------ SECURITIES 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 jurisdiction of (IRS Employer
incorporation organization) Identification No.)
4625 W. Nevso Drive, Suite 2, Las Vegas, Nevada 89103
----------------------------------------------- -----
(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 of 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 $.001.
----------
1
<PAGE>
DEFINITION, LTD.
FORM 10-QSB/A FOR THE QUARTER ENDED JUNE 30, 1999
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION PAGE
----
Item 1 Financial Statements
Consolidated Balance Sheet as of June 30, 1999.................. 3
Consolidated Statement of Operations for the Six Months
Ended June 30, 1999.......................................... 4
Consolidated Statement of Cash Flows for the Six Months
Ended June 30, 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
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 .....................................................
2
<PAGE>
PART I
Item 1. Financial Statements.
DEFINITION, LTD.
INTERIM CONSOLIDATED BALANCE SHEET
MARCH 31, 1999 AND DECEMBER 31, 1998
<TABLE>
<CAPTION>
(Unaudited)
ASSETS June 30, December 31,
1999 1998
-------- -----------
<S> <C> <C>
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
========= =========
<CAPTION>
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY June 30, December 31,
1999 1998
----------- ------------
<S> <C> <C>
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
========= =========
</TABLE>
3
<PAGE>
DEFINITION, LTD.
INTERIM CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
6/30/99 6/30/98 6/30/99 6/30/98
----------- ------------ --------- -----------
<S> <C> <C> <C> <C>
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
========== ======= ========= =======
</TABLE>
4
<PAGE>
DEFINITION, LTD.
INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (unaudited)
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
6/30/99 6/30/98
------------ ------------
<S> <C> <C>
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
Repayments On 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,
Beginning of Period 31,144 1,990
-------- ------
Cash and Cash Equivalents,
at End of Period $ 0 $ 0
======== ========
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
</TABLE>
5
<PAGE>
DEFINITION, LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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 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.
6
<PAGE>
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
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, 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
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-END> JUN-30-1999 JUN-30-1999
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 3765203 3765203
<DEPRECIATION> 2792405 2792405
<TOTAL-ASSETS> 1099548 1099548
<CURRENT-LIABILITIES> 295723 295723
<BONDS> 0 0
0 0
0 0
<COMMON> 11863 11863
<OTHER-SE> 716186 716186
<TOTAL-LIABILITY-AND-EQUITY> 1099548 1099548
<SALES> 41733 78952
<TOTAL-REVENUES> 41733 78952
<CGS> 29839 73749
<TOTAL-COSTS> 29839 73749
<OTHER-EXPENSES> 165110 1983741
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 2008
<INCOME-PRETAX> (153216) (1980546)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (153216) (1980546)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (153216) (1980546)
<EPS-BASIC> (.01) (.23)
<EPS-DILUTED> (.01) (.23)
</TABLE>
