SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED June 30, 2000
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _____________
Commission file number 0-22622
INTERACTIVE ENTERTAINMENT LIMITED
(Exact name of registrant as specified in its charter)
BERMUDA 98-0170199
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
Cedar House, 41 Cedar Street
Hamilton HM 12, Bermuda
(Address of principal executive offices)
(604) 947-2555
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed 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 requirements for the past 90 days. Yes __X__ No _____
The registrant had 50,000,000 shares of common stock outstanding
as of June 30,2000.
Exhibit index is located on page 13.
INTERACTIVE ENTERTAINMENT LIMITED
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1.
Consolidated Financial Statements
Consolidated Balance Sheets - June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations - Three Months ended June 30, 2000
and June 30, 1999 4
Consolidated Statements of Operations - Six Months ended June 30, 2000
and June 30, 1999 4
Consolidated Statements of Cash Flows - Six Months ended June 30, 2000
and June 30, 1999 5
Consolidated Statement of Shareholders' Equity (Deficit) 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
PART II. OTHER INFORMATION
Item 6.(a) Exhibits 13
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INTERACTIVE ENTERTAINMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
June 30
June 30,
December 31,
2000
1999
1999
Current Assets
Cash and cash equivalents
$ 85,526
$ 151,465
$ 56,785
Accounts and notes receivable, less allowance for
doubtful accounts of $46,828
128,765
93,578
92,481
Prepaid expenses
Total current assets
109,655
14,940
89,106
323,946
259,983
238,372
Furniture, fixtures and equipment, at cost
443,936
724,240
447,666
Less: accumulated depreciation
(249,094)
(337,756)
(203,667)
Furniture, fixtures and equipment, net
194,842
386,484
243,999
Game software (net of amortization)
280,848
561,694
421,271
Goodwill (net of amortization)
273,649
786,742
530,196
Total assets
$ 1,073,285
$ 1,994,903
$ 1,433,838
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses
Notes Payable, Current Liabilities
929, 826
18,000
$ 770,817
--
$ 755,173
18,000
Total current liabilities
947,826
770,817
773,173
Notes Payable, Long Term
59,452
--
81,322
1,007,278
770,817
854,495
Shareholders' equity
Class A preferred shares, $0.01 par value, authorized
- 3,000 shares, outstanding - 2,237 shares
22
22
22
Class B preferred shares, $0.01 par value, authorized
- 5,000,000shares, outstanding - 2,075 and 2,662 shares
21
21
21
Common shares, $0.01 par value authorized - 50,000,000
shares; outstanding 46,475,000 and 24,367,414 shares 500,000
500,000
500,000
Additional paid-in-capital
65,616,313
65,616,313
65,616,313
Accumulated deficit
(66,050,349)
(64,892,270)
(65,537,013)
66,007
1,224,086
579,343
Total liabilities and shareholders' equity
$ 1,073,285
$ 1,994,903
$ 1,433,838
INTERACTIVE ENTERTAINMENT LIMITED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30,
Six Months Ended June 30,
2000
1999
2000
1999
Revenue
$ 139,595
$ 111,975
$ 267,475
$ 252,498
Operating Expenses
Sky Play Management
36,000
--
48,000
--
General and administrative
68,237
98,313
76,086
171,143
Consulting and contract labor
7,500
14,096
36,793
27,276
Marketing
--
550
1,740
550
Legal
2,539
32,371
9,557
35,209
Business discontinuation
--
-
--
17,877
Depreciation and amortization
221,198
238,480
442,397
476,959
335,474
383,810
614,573
729,014
Other (Income) and Expense
Interest expense
--
--
--
--
Interest income
(1,103)
(755)
(1,504)
(1,166)
(1,103)
(755)
(1,504)
(1,166)
Net loss
$ 194,776
$ 271,080
$ 345,594
$ 475,350
BASIC AND DILUTED LOSS PER SHARE
Numerator for basic and diluted loss per share:
Net loss
$ 194,776
$ 271,080
$ 345,594
$ 475,350
Preferred stock dividends
81,399
89,736
167,742
185,707
Loss to common shareholders
$ 276,175
$ 360,816
$ 513,336
$ 661,057
Denominator for basic and diluted loss per share:
Weighted average shares outstanding
50,000,000
46,475,000
50,000,000
43,807,716
Net loss per share
$ 0.006
$ 0.008
$ 0.010
$ 0.015
INTERACTIVE ENTERTAINMENT LIMITED AND SUBSIDIARIES
STATEMENTS OF CASH FLOW
(UNAUDITED)
Six Months
Six Months
Ended
Ended
June 30,
June 30,
2000
1999
OPERATING ACTIVITIES
Net Loss
$ (345,594)
$ (475,350)
Reconciliation of net loss to net cash used in operating activities:
Depreciation and amortization
442,397
476,959
Other
--
2
Changes in assets/liabilities: (excluding effect of acquisition)
Accounts receivable
(36,284)
(11,222)
Prepaid expenses
(20,549)
100,292
Accounts payable and accrued expenses
174,653
147,203
Net cash provided by (used in) operating activities
214,623
237,884
INVESTING ACTIVITIES
(Purchases) sales of property and equipment
3,730
3,646
Net cash provided by (used in) investing activities
3,730
3,646
FINANCING ACTIVITIES
Payment of preferred stock dividends
(167,742)
(185,707)
Notes payable
( 21,870)
--
Net cash provided by (used in) financing activities
(189,612)
(185,707)
Net increase (decrease) in cash
28,741
55,823
Cash, beginning of period
56,785
95,642
Cash, end of period
$ 85,526
$ 151,465
INTERACTIVE ENTERTAINMENT LIMITED AND SUBSIDIARIES
Consolidated Statement of Shareholders' Equity (Deficit)
For the Six Months Ended June 30, 2000
June 30 June 30
2000 1999
Balance, December 31, 1999 (1998) $65,537,013 $64,231,213
Current Period's Accruing 345,594 475,350
Preferred Stock Dividends 167,742 185,707
Balance, end of Period $66,050,349 $64,892,270
INTERACTIVE ENTERTAINMENT LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - NATURE OF OPERATIONS
The consolidated financial statements of Interactive Entertainment Limited
and Subsidiaries ("IEL" or the "Company") included herein have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC"). In management's opinion, these financial statements
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results of operations for the
interim periods presented. Pursuant to SEC rules and regulations, certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted from these statements unless
significant changes have taken place since the end of the most recent
fiscal year. For this reason, the consolidated financial statements and
notes thereto should be read in conjunction with the financial statements
and notes included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1998.
The Company is a Bermuda exempted company which, in June 1997, changed its
name from Sky Games International, Ltd. ("SGI") to Interactive Entertainment
Limited. The Company's activities had been focused on providing inflight
gaming softwareand services by developing, implementing and operating a
computer-based interactive video entertainment system of gaming and other
entertainment activities on, but not limited to, the aircraft of international
commercial air carriers. In November, 1998, the Company ceased operations of
its inflight gaming business and current operations are limited to its Sky
Play entertainment games business.
On January 13, 1998, the Company completed the acquisition of all the
outstanding capital stock of Inflight Interactive Limited ("IIL") in
exchange for 500,000 shares of the Company's $.01 par value common stock
(the "Common Stock"). IIL is a United Kingdom developer and provider of
amusement games to the airline industry. The games are marketed under the
name Sky Play and, as of June 30, 1999 were currently operating on a number
of airlines, including Air China, American Airlines, Cathay Pacific,
Continental, Egyptair, Japan Air Lines, Lauda Air, Malaysia Airlines, and
Virgin Atlantic. The purchase agreement provides for the Company to issue up
to 250,000 additional shares of Common Stock to the previous owners of IIL
upon achievement of certain milestones regarding implementation of the
Company's Sky Games gaming software with an international airline to be
designated by the parties. The acquisition was accounted for using the
purchase method.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries: Sky Games International Corp. (a Nevada
corporation), Creator Island Equities Inc., (a Yukon Territory corporation),
IEL (Singapore) Pte. Ltd. (a Singapore corporation) and, (since January 13,
1998), Inflight Interactive Limited (a U.K. corporation). All material
intercompany transactions have been eliminated in consolidation.
Goodwill
The goodwill, which arose from the acquisition of IIL is being amortized on a
straight-line basis over three years. Management regularly evaluates whether
or not the future undiscounted cash flows are sufficient to recover the
carrying amount of this asset. Additionally, management continually monitors
such factors as the competitive environment and advances in the computer
software and hardware industries. If the estimated future undiscounted cash
flows are not sufficient to recover the carrying amount of this asset and,
accordingly, an impairment has occurred, management intends to write down
the carrying amount to its estimated fair value based on discounted cash
flows.
Software Development
All software production costs have been capitalized until the software was
available for general release to customers in accordance with the provisions
of Statement of Financial accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased, or Otherwise Marketed."
Amortization of the software costs over a three year period started in June,
1998.
Comprehensive Income
The Company adopted Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," ("SFAS No. 130") effective January 1, 1998.
SFAS No. 130 establishedstandards for the reporting and display of
comprehensive income and its components in a fullset of general purpose
financial statements. The Company's comprehensive income (loss) is
substantially equivalent to net income (loss) for the six months ended June
30, 1999 and 1998, respectively.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect amounts reported in the financial statements and accompanying
notes and in determining the impairment of long-lived assets. Actual results
could differ from those estimates.
NOTE 3 - ACQUISITION OF MINORITY INTEREST
Prior to June 17, 1997, the Company operated its principal business activities
under the name Sky Games International, Ltd. through its indirectly 80%-owned
subsidiary then known as Interactive Entertainment Limited ("Old IEL"). The
remaining 20% of Old IEL was held by an affiliate of Harrah's Entertainment,
Inc. (which, together with its affiliates, is referred to herein as
"Harrah's"). Harrah's also managed the operations of Old IEL pursuant
to a management agreement effective December 30, 1994, (the "Management
Agreement").
Effective June 17, 1997, pursuant to a Plan and Agreement of Merger and
Amalgamation dated May 13, 1997, Old IEL was merged into the Company (the
"Amalgamations"). As part of the Amalgamations, the Management Agreement
with Harrah's was terminated. Harrah's received a total of 5,879,040 shares
of Common Stock in exchange for its 20% ownership interest in Old IEL and as
consideration for the termination of the Management Agreement. The
Amalgamation has been accounted for under the purchase method. The shares
issued to Harrah's were valued at $26,255,793 based on the average quoted
market price of the Company's Common Stock when the Amalgamations were
announced, or $4.466 per share.
NOTE 4 - CONVERTIBLE DEBENTURES
During the ten months ended December 31, 1997, the Company issued $2,163,250
of 8% convertible debentures due in 1999. All of the debentures outstanding
as of December 31, 1997 were converted into shares of Common Stock during the
first quarter of 1998, and all remaining deferred interest charges and
placement feeswere expensed during the period and are included as interest
expense during the six month period ended June 30, 1998.
NOTE 5 - SHAREHOLDERS' EQUITY
In December 1994, the Company discontinued an engineering and marketing
arrangement with B/EAerospace, Inc. ("BEA"). As part of the termination,
the Company issued to BEA a promissory note in the original principal amount
of $2.5 million at 12% per annum. On February 28, 1997, an agreement was
reached with BEA to exchange the note, in the amount of $2,737,000, including
accrued and unpaid interest, for Class A Preference Shares at $1,000 per
share. The exchange for 2,737 Class A Preference Shares was completed in
June, 1997. During 1998, the Company and BEA agreed that the Company would
redeem the Class A Preference Shares in installments beginning June 30, 1998.
The Company redeemed 500 shares at their redemption price of $1,000 per share
during 1998, but has been unable to redeem additional shares.
The Class A Preference Shares are convertible at any time into a number of
shares of Common Stock determined by dividing $1,000 per share of Class A
Preference Shares, plus any accrued and unpaid dividends thereon by: (i)
prior to August 31, 1999, a conversion price equal to 65% of the average mean
of the closing bid and ask prices of the Common Stock for the 20 trading days
prior to the conversion (the "Market Price") and (ii) after August 31, 1999,
a conversion price equal to 60% of the Market Price. Dividends on the Class A
Preference Shares are cumulative and payable quarterly at an annual dividend
rate of 9%. The Company, at its option, may redeem the Class A Preference
Share, in whole or in part, at any time and from time to time, at a
redemption price of $1,000 per share plus any accrued and unpaid dividends
thereon. The Company is not required to redeem the Class A Preference Shares.
Upon liquidation, holders of the Class A Preference Shares will be entitled
to repayment of an amount equal to $1,000 per share plus accrued and unpaid
dividends, prior to any distributions to holders of common Stock. Unpaid
dividends of $150,600 were in arrears as of June 30, 1999 and are included
on the Consolidated Balance Sheets in accounts payable and accrued expenses.
The Class A Preference Shares do not have any voting rights.
As part of the Amalgamation, Harrah's entered into the "Registration and
Preemptive Rights Agreement" under which, among other things, Harrah's has
the right to receive additional shares of Common Stock at $.01 per share in
order to maintain their ownership percentage in the Company in the event that
the Class A Preference Shares held by BEA are converted into Common Stock.
The value of any such shares of Common Stock issued to Harrah's will be
accounted for as an adjustment to the purchase price incurred in the
Amalgamation when and if such shares are issued.
On December 17, 1997, the Company issued 1,000 shares of Series A Convertible
Preference Shares of the Company's Class B Preferred Stock to two investors
for a total consideration of $1,000,000. The Class B Series A Preferred
Shares are convertible into a number of shares of Common Stock, determined
by dividing the stated value of $1,000 per share by the lesser of: $3.2038
(the "Fixed Conversion Price") and a price (the "Floating Conversion
Price") calculated by (i) determining the average of the three lowest closing
bid prices for the Common Stock during the thirty trading days occurring
immediately prior to, but not including, the conversion date, and (ii)
multiplying such average by 85%. On July 24, 1998, the Company issued 2,000
shares of the Class B Series A Preferred shares to the same investors for an
aggregate purchase price of $2,000,000. Dividends are cumulative and may
be paid, at the option of the Company and with prior notice, in additional
shares of Common Stock at an annual dividend rate of 8%. Warrants for the
purchase 185,152 shares of Common Stock were issued in connection with the
issuance of the Series A Class B Preferred Shares. The warrants, which have
an exercise price of $3.2038, are exercisable beginning June 17, 1998 and
expired on December 17, 1999. The original purchasers of the Company's Class B
Series A Preferred Shares converted 600 of the shares into Common Stock,
retained 120 shares, and sold the remaining 2,280 shares in private sales.
As of September 30, 1999, 1,280 shares of the Class B Series A Preferred
Shares had been submitted for conversion into 28,550,710 share of Common
Stock. All Common Stock issuable upon the conversions has been issued
except for 3,492,426 shares which the Company lacks the authority to issue
since issuance would cause the Company to exceed its maximum authorized
capital. Subsequent to the conversions, the holders of the Class B Series
A Preferred Shares agree to amend the conversion terms so that the Floating
Conversion Price will not be less than $0.25 per share.
As of February 20, 1998, the Company sold 300 shares of Class B Series B
Convertible Preferred Stock at $1,000 per share. The Class B Series B
Convertible Preferred Shares have the same dividend and conversion features
as the Class B Series A Preferred Shares. The investor also received a
warrant to purchase 18,515 shares of Common Stock at a price of $3.2038 for
18 months. As of September 30, 1999, 38 shares of the Series B Class B
shares had been converted into Common Stock and 262 shares remained
outstanding.
Unpaid dividends of $178,200 were in arrears as of June 30, 1999 and are
included on the Consolidated Balance Sheets in accounts payable and accrued
expenses. The Class B Preference Shares do not have any voting rights.
NOTE 6 - AGREEMENT REGARDING REDEMPTION OF PERFORMANCE SHARES
When the Company acquired the rights to the inflight gaming software from Sky
Games International, Inc. ("SGII") on November 7, 1991, a portion of the
consideration was 3,000,000 shares of Common Stock which, according to then
applicable requirements, were placed in escrow, to be released on the basis
of one share for each U.S. $1.78 of net cash flow generated from the assets
over a ten-year period (the "Performance Shares"). 2,000,000 of the
Performance Shares were issued to SGII (87% of the outstanding stock of which
was owned by James P. Grymyr, formerly a director of the Company, and his wife)
and 1,000,000 shares were issued to Anthony Clements, a director of the
Company. An additional 525,000 shares, which were issued to Dr. Rex E.
Fortescue, formerly a director of the Company, are held in the escrow on the
same terms and are also included as Performance Shares. Each of Performance
Shares when and if they are released from escrow for any reason whatsoever
(the "Redemption Agreement"). As consideration for such agreement to tender
the Performance Shares for cancellation by the Company in the event they are
ever released from the escrow, the Company has issued to Messrs. Clements
and Fortescue, 333,333 and 175,000 shares of Common Stock, respectively.
SGII, as of April 30, 1997, also agreed that it will tender the 2,000,000
Performance Shares which it holds for cancellation by the Company when and
if such Performance Shares are released from escrow for any reason whatsoever
(the "Redemption and Cancellation Agreement"). As consideration of such
agreement, in February 1997, the Company expensed the outstanding balance of
a note made by SGII to the Company in the approximate amount of $550,000 and
issued to SGII 80,590 shares of Common Stock. In the event the Performance
Shares are not released prior to six months after the end of the Company's
financial year ending in the year 2002, the Performance Shares will
automatically be canceled in accordance with the terms of the escrow
agreement.
As part of the agreements to allow the redemption and cancellation of the
Performance Shares, the holders of the Performance Shares have issued an
irrevocable proxy to a bank which has agreed not to vote the Performance
Shares at any General Meeting of Shareholders or otherwise. The irrevocable
proxy and the agreement not to vote the Performance Shares will terminate
upon the cancellation of the Performance Shares. The escrow agent is
prohibited from canceling the Performance Shares under the escrow agreement.
The Performance Shares have no rights and, therefore are excluded from per
share calculations for all periods presented. Effective April 30, 1997, the
Performance Shares were no longer considered outstanding for financial
statement purposes.
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Recent Developments
On January 5, 1999, the Company's Common Stock was delisted from the Nasdaq
SmallCap Market for failing to maintain a bid price greater than or equal
to $1.00 per share for the prior thirty consecutive trading days.
Maintenance of a $1.00 stock price is required for continued listing of the
Company's Common Stock on the Nasdaq SmallCap Market. The Common Stock
currently trades through the OTC Bulletin Boardr which is a regulated
quotation service of the Nasdaq Stock Market, Inc.
Delisting of the Company's Common Stock from the Nasdaq SmallCap Market placed
the Company in default of certain agreements related to the sale of the Class
B Preference Shares. A default requires the Company to redeem the remaining
outstanding Class B Preference Shares at 130% of the stated value of the
shares. The Company does not currently have the resources to redeem such
shares. The Company is currently in default under its Registration
Rights Agreement with the holders of the Class B Preference Shares.
Overview
Interactive Entertainment Limited ("IEL" or the "Company"), formerly known as
Sky Games International Ltd. ("SGI"), is a Bermuda exempted company which was
incorporated on January 28, 1981. The Company's activities had been focused
on providing inflight gaming software and services by developing,
implementing and operating a computer-based interactive video entertainment
system of gaming and other entertainment activities on, but not limited to,
the aircraft of international commercial air carriers.
On November 12, 1998, the Company announced that it had been unable to attract
the additional capital necessary for continued development of its Sky Games
inflight gaming business and that it had discontinued all operations
associated with the Sky Games product line. The Company stated that it would
refocus its business efforts to concentrate exclusively on its Sky Play PC
games, non-gaming inflight customers and business. All employees were
terminated as of November 13, 1998. Some former employees have been
retained on a part-time contract basis to assist with the management of Sky
Play. The discontinuation of the Sky Games business may have an adverse
impact on the Sky Play business.
On January 13, 1998, the Company completed the acquisition of all the
outstanding stock of Inflight Interactive Limited ("IIL") in exchange for
500,000 shares of the Company's Common Stock. IIL is a U. K. developer and
provider of amusement games to the airline industry marketed under the name
Sky Play. IIL's games are currently operating on approximately 100 aircraft
of a number of airlines, including Air China, American Airlines, Cathay
Pacific, Continental, Egyptair, Japan Air Lines, Lauda Air, Malaysia
Airlines, and Virgin Atlantic.
Results of Operations
Three Months Ended June 30, 2000 and 1999
Revenue from operations for the three months ended June 30, 2000 was $139,595
compared to $111,975 during the three months ended June 30, 1999. Revenue
consisted of fees generated from the Sky Play amusement games acquired with
the purchase of IIL. The increase in revenue is attributable to an increase
in the average number of aircraft licensed to use the Company's software.
General and administrative expense decreased from $98,313 in the 1999 period to
$68,257 during the 2000 period.
Consulting and contract labor expenses decreased from $14,096 in 1999 to $7,500
for 2000. Legal expense down from $32,371 to $2,539 for 2000.
Six Months Ended June 30, 2000 and 1999
Revenue from operations for the six months ended June 30, 2000 was $267,475
compared to $252,498 during the six months ended June 30, 1999. Revenue
consisted of fees generated from the Sky Play amusement games acquired with
the purchase of IIL. The increase in revenue is attributable to an increase
in the average number of aircraft licensed to use the Company's software.
General and administrative expense decreased from $171,143 in the 1999 period
to $76,086 during the 2000 period.
Liquidity and Capital Resources
At June 30, 2000, the Company had a working capital deficit of $623,880.
Although the Company had positive cash flow from operations during the six
months ended June 30, 2000, cash flow is not sufficient to provide the
necessary funds for marketing, for continued development of the Company's
products or to fund payment of the Company's dividend obligations on
outstanding preference shares. The Company's primary source of funding has
been through sales of its equity and securities convertible into equity.
The Company has subsequently negotiated a restructuring and reduction of
certain amounts owed to two of itslargest creditors and to a deferred
payment plan on these obligations.
Forward-Looking Information
This Form 10-Q contains forward-looking statements that include among others,
statements concerning the Company's plans to implement its software products,
commence generating revenue from certain of its products, expectations as to
funding its capital requirements, the impact of competition, future plans
and strategies, statements which include the words "believe," "expect," and
"anticipate" and other statements of expectations, beliefs, anticipated
developments and other matters that are not historical facts. These
statements reflect the Company's views with respect to such matters.
Management cautions the reader that these forward-looking statements are
subject to risks and uncertainties that could cause actual events or results
to materially differ from those expressed or implied by the statements.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
EXHIBIT DESCRIPTION
2. Plan and Agreement of Merger and Amalgamation, dated as of May 13, 1997,
among the Company, SGI Holding Corporation Limited, IEL and Harrah's
Interactive Investment Company. (Incorporated by reference to the same
numbered exhibit to the Registrant's Form 8-K as filed with the SEC on
June 27, 1997.)
3.i(a) Articles of Incorporation (Yukon Territory). (Incorporated by
reference to Exhibit 1.1 to the Registrant's Annual Report on Form 20-F
(File No. 0-22622) as filed with the SEC on October 12, 1993.)
3.i(b) Certificate of Continuance (Bermuda). (Incorporated by reference
to Exhibit 1.2 to the Registrant's Annual Report on Form 20-F (File No.
0-22622) as filed with the SEC on September 16, 1996.)
3.ii Bye-Laws as amended. (Incorporated by reference to the same numbered
exhibit to the Registrant's Annual Report on Form 10-K/A No. 2 as filed with
the SEC on July 8, 1998.)
4.1 Escrow Agreement dated May 27, 1992, as amended, among Montreal Trust
Company of Canada, the Company and certain shareholders. (Incorporated by
reference to Exhibit 3.2 to the Registrant's Annual Report on Form 20-F
(File No. 0-22622) as filed with the SEC on October 12, 1993.)
4.2 Redemption Agreement, dated as of February 25, 1997, between the
Company and Anthony Clements and Rex Fortescue. (Incorporated by reference
to Exhibit 3.12 to the Registrant's Annual Report on Form 20-F (File No.
0-22622) as filed with the SEC on September 12, 1997.)
4.3 Redemption and Cancellation Agreement, dated as of April 30, 1997,
between the Company and Sky Games International, Inc. (Incorporated by
reference to Exhibit 3.13 to the Registrant's Annual Report on Form 20-F
(File No. 0-22622) as filed with the SEC on September 12, 1997.)
4.4 Shareholder Rights Agreement, dated June 17, 1997, between the
Company and Harrah's Interactive Investment Company. (Incorporated by
reference to Exhibit 3.15 to the Registrant's Annual Report on Form 20-F
(File No. 0-22622) as filed with the SEC on September 12, 1997.)
4.5 Registration and Preemptive Rights Agreement, dated June 17, 1997,
between the Company and Harrah's Interactive Investment Company.
(Incorporated by reference to Exhibit 4(a) to the Registrant's Form 8-K as
filed with the SEC on June 27, 1997.)
4.6 Registration Rights Agreement, dated June 17, 1997, between the Company
and B/E Aerospace, Inc. (Incorporated by reference to Exhibit 4(b) to the
Registrant's Form 8-K as filed with the SEC on June 27, 1997.)
4.7 Subscription Agreement, dated as of October 22, 1997, between the
Company and Henderson International Investments Limited. (Incorporated by
reference to Exhibit 3.22 to the Registrant's Quarterly Report on Form
10-Q/A No. 1 as filed with the SEC on July 8, 1998.)
4.8 Subscription Agreement, dated as of October 22, 1997, between the
Company and Michael A. Irwin. (Incorporated by reference to Exhibit 3.23 to
the Registrant's Quarterly Report on Form 10-Q/A as filed with the SEC on
July 8, 1998.)
4.9 First Amendment to Registration and Preemptive Rights Agreement dated
March 18, 1998 between the Company and Harrah's Interactive Investment
Company. (Incorporated by reference to Exhibit 99.22 to the Registrant's
Amended Registration Statement on Form S-3 as filed with the SEC on July 15,
1998.)
4.10 First Amendment to Subscription Agreement between the Company and
Henderson International Investments Limited dated as of April 2, 1998.
(Incorporated by reference to Exhibit 99.23 to the Registrant's Amended
Registration Statement on Form S-3 as filed with the SEC on July 15, 1998.)
4.11 Securities Purchase Agreement between the Company and each of Marshall
Capital Management, Inc. (formerly Proprietary Convertible Investment Group,
Inc.) and CC Investments, LDC dated as of December 17, 1997. (Incorporated
by reference to Exhibit 99 to the Registrant's Form 8-K as filed with the
SEC on December 24, 1997.)
4.12 Registration Rights Agreement between the Company and each of Marshall
Capital Management, Inc. (formerly Proprietary Convertible Investment Group,
Inc.) and CC Investments, LDC dated as of December 17, 1997 (Incorporated by
reference to Exhibit 4(c) to the Registrant's Form 8-K as filed with the SEC
on December 24, 1997.)
4.13 Securities Purchase Agreement between the Company and Palisades Holding,
Inc. dated February 20, 1998. (Incorporated by reference to Exhibit 99.6 to the
Registrant's Amended Registration Statement on Form S-3 as filed with the SEC
on July 15, 1998.)
4.14 Registration Rights Agreement between the Company and Palisades Holding,
Inc. dated February 20, 1998. (Incorporated by reference to Exhibit 99.5 to the
Registrant's Amended Registration Statement on Form S-3 as filed with the SEC
on July 15, 1998.)
4.15 Securities Agreement between the Company and B/E Aerospace, Inc. dated
June 25, 1998. (Incorporated by reference to Exhibit 99.1 to the Registrant's
Form 8-K filed with the SEC on July 2, 1998.)
10.5* Services Agreement, dated as of November 7, 1995, between IEL and
Singapore Airlines Limited. (Incorporated by reference to Exhibit 3.9 to the
Registrant's Annual Report on Form 20-F (File No. 0-22622) as filed with the
SEC on September 16, 1996.)
10.6* Software License and Software Services Agreement, dated as of November
7, 1995, between IEL and Singapore Airlines Limited. (Incorporated by reference
to Exhibit 3.10 to the Registrant's Annual Report on Form 20-F (File No.
0-22622) as filed with the SEC on September 16, 1996.)
10.7 Sublease Agreement dated as of June 5, 1997, between IEL and Harrah's
Operating Company, Inc. (Incorporated by reference to Exhibit 3.11 to the
Registrant's Annual Report on Form 20-F (File No. 0-22622) as filed with the
SEC on September 12, 1997.)
10.8 Consulting Agreement, dated as of April 30, 1997, between the Company and
James P. Grymyr. (Incorporated by reference to Exhibit 3.14 to the Registrant's
Annual Report on Form 20-F (file No. 0-22622) as filed with the SEC on
September 12, 1997.)
10.9* Software License Agreement, dated June 17, 1997, between the Company
and Harrah's Interactive Investment Company. (Incorporated by reference to
Exhibit 3.16 to the Registrant's Annual Report on Form 20-F (File No.
0-22622) as filed with the SEC on September 12, 1997.)
10.10 Continuing Services Agreement, dated June 17, 1997, between the Company
and Harrah's Interactive Entertainment Company. (Incorporated by reference to
Exhibit 3.17 to the Registrant's Annual Report on Form 20-F (File No. 0-22622)
as filed with the SEC on September 12, 1997.)
10.11 Termination Agreement and Release, dated as of June 17, 1997, among the
Company, SGI Holding Corporation Limited, IEL, Harrah's Interactive Investment
Company, and Harrah's Interactive Entertainment Company. (Incorporated by
reference to Exhibit 3.21 to the Registrant's Annual Report on Form 20-F
(File No. 0-22622 as filed with he SEC on September 12, 1997.)
27** Financial Data Schedule.
* Confidential treatment has been granted.
** Submitted herewith.
Signature
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTERACTIVE ENTERTAINMENT LIMITED
August 15,2000 BY: /s/ Deborah Fortescue-Merrin
Chairman of the Board
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets and the Consolidated Statements of Operations
and is qualified in its entirety by reference to such financial statements.
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-2000
[PERIOD-START] JAN-01-2000
[PERIOD-END] JUN-30-2000
[CASH] 151465
[SECURITIES] 0
[RECEIVABLES] 128,765
[ALLOWANCES] 46828
[INVENTORY] 0
[CURRENT-ASSETS] 323,946
<FF&E> 443,936
[DEPRECIATION] 249,094
[TOTAL-ASSETS] 1,073,285
[CURRENT-LIABILITIES] 947,826
[BONDS] 59,452
[PREFERRED-MANDATORY] 0
[PREFERRED] 43
[COMMON] 500,000
[OTHER-SE] 65,616,313
<TOTAL-LIABILITY-
AND-EQUITY> 1,073,285
[SALES] 267,475
[TOTAL-REVENUES] 267,475
[CGS] 0
[TOTAL-COSTS] 0
[OTHER-EXPENSES] 614,573
[LOSS-PROVISION] 0
<INTEREST-REVENUE> 1,504
[INCOME-PRETAX] (345,594)
[INCOME-TAX] 0
[INCOME-CONTINUING] (345,594)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (345,594)
[EPS-BASIC] (.010)
[EPS-DILUTED] (.010)
[FN]
Amounts inapplicable or not disclosed as a separate line item on the Balance
Sheet or Statement of Operations are reported as 0 herein.
3
