UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-QSB/A
Amendment No. 1
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
Commission file number: 0-22242
BOUNCEBACKTECHNOLOGIES.COM, Inc.
(Name of the Small Business Issuer in its Charter)
Minnesota 41-0950482
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
707 Bienville Boulevard
Ocean Springs, Mississippi 39564
--------------------------------
(Address of principal executive officers)
Issuer's telephone number: (228) 872-5558
--------------
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 to such filing requirements for the past 90 days.
[X] Yes [ ] No
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] Yes [ ] No
As of May 12, 2000, 12,161,258 Shares of Common Stock of the Company were
outstanding.
1
<PAGE>
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000 AND SEPTEMBER 30, 1999
(unaudited)
<TABLE>
March 31, 2000 September 30, 1999
<S> <C> <C>
Assets:
Current Assets:
Cash and cash equivalents $ 39,000 $ 957,000
Accounts receivable - trade and other 54,000 184,000
Inventories 13,000 -
Prepaid expenses 174,000 70,000
Net assets held for sale - gaming 1,395,000 1,471,000
Net assets held for sale - entertainment 696,000 1,045,000
-------------------------------------------------------
Total Current Assets 2,371,000 3,727,000
Property and Equipment, Net 317,000 279,000
-------------------------------------------------------
Noncurrent Assets
Cost of assets held in excess of fair market value 139,000
Notes and advances receivable-related parties,
net of allowance for uncollectibles 328,000 410,000
Other assets - net 24,000 74,000
-------------------------------------------------------
Total Noncurrent Assets 491,000 484,000
TOTAL ASSETS $ 3,179,000 $ 4,490,000
=======================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable 535,000 275,000
Subordinated convertible debentures - 121,000
Current maturities of long-term debt 753,000 843,000
Accrued expenses and other liabilities 353,000 580,000
-------------------------------------------------------
Total Current Liabilities 1,641,000 1,819,000
Long-Term Liabilities
Long-term debt, less current maturities 691,000 1,424,000
Deferred revenue 2,000,000 2,000,000
-------------------------------------------------------
Total Long-Term Liabilities 2,691,000 3,424,000
Total Liabilities 4,332,000 5,243,000
Stockholders' Equity
Preferred stock, 8% cumulative; $.01 par value;
authorized 5,000,000 shares; none issued
Common stock, $.01 par value; authorized 30,000,000
shares; 11,068,223 and 10,768,223 shares issued and
outstanding as of 03/31/00 and 9/30/99, respectively 111,000 108,000
Additional paid-in capital 23,063,000 22,950,000
Deficit (24,327,000) (23,811,000)
-------------------------------------------------------
Total Stockholders' (Deficit) Equity (1,153,000) (753,000)
-------------------------------------------------------
TOTAL LIABILITY AND STOCKHOLDERS' EQUITY $ 3,179,000 $ 4,490,000
=======================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
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BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(unaudited)
<TABLE>
2000 1999
----- ----
<S> <C> <C>
REVENUE
Continuing Operations 37,000 -
Cost and Expenses
Continuing operations 153,000
General and administrative 1,243,000 1,194,000
Interest expense-net of interest income of $7,000
and $5,000 in 2000 and 1999 respectively 25,000 42,000
Gain on sale of joint venture - (91,000)
-----------------------------------------
Total Cost and Expenses 1,421,000 1,145,000
Loss from continuing operations before taxes (1,384,000) (1,145,000)
Income tax expense - (2,000,000)
Loss from continuing operations (1,384,000) (3,145,000)
Loss from discontinued operations - entertainment 546,000 267,000
Income (Loss) from discontinued operations-gaming (69,000) (395,000)
Extraordinary gain on early extinguishment of
debt & refinancing 391,000 -
Net Income (Loss) (516,000) (3,273,000)
- ----------------------------------------------------------------------------------------------
Basic & Fully diluted Income (Loss)per Common Share
Continuing operations (0.13) (0.32)
Discontinued operations 0.05 (0.01)
Extraordinary gain 0.04
Net Loss (0.05) (0.33)
Weighted Average Number of Common Shares
Outstanding 10,506,261 9,830,834
=========================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
4
<PAGE>
BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTHS ENDING MARCH 31, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Loss from continuing operations (1,384,000) (3,145,000)
Adjustments to reconcile loss to net cash
Depreciation 17,000 44,000
Reversal of deferred tax asset 2,000,000
Gain on sale of joint venture - (91,000)
Discount upon conversion of convertible debentures 370,000 19,000
Loss on Impairment of Palace note receivable 56,000
Early extinguishment of subordinated debentures 21,000 -
Accretion of note receivable interest - (7,000)
Change in Assets and Liabilities
Account receivable 130,000 14,000
Inventories (13,000)
Prepaid expense (104,000) 49,000
Other assets (89,000) 142,000
Accounts payable 260,000 (226,000)
Accrued expense and other liabilities (227,000) (715,000)
--------------------------------------------------
Net Cash used in Operating Activities (1,019,000) (1,860,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (54,000) (14,000)
Proceeds from sale of joint venture 20,000
Decrease (Increase) in due from related parties 82,000 (42,000)
--------------------------------------------------
Net cash provided by (used in) investing activities 28,000 (36,000)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of debentures and draws on line of credit - 50,000
Reduction of long-term debt (829,000) (147,000)
--------------------------------------------------
Net cash provided by (used in) financing activities (829,000) (97,000)
Cash provided by (used in)
Discontinued Operations-Gaming 7,000 (334,000)
--------------------------------------------------
Cash provided by
Discontinued operations-entertainment 895,000 1,643,000
--------------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (918,000) (684,000)
Cash and Cash Equivalents, at beginning of period 957,000 761,000
Cash and Cash Equivalents, at end of period 39,000 77,000
==================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
----- ----
REVENUE
<S> <C>
Continuing Operations 37,000 -
Cost and Expenses
Continuing operations 153,000
General and administrative 665,000 546,000
Interest expense-net of interest income of $7,000
and $5,000 in 2000 and 1999 respectively 9,000 7,000
Gain on sale of joint venture - (91,000)
------------------------------------------------
Total Cost and Expenses 827,000 462,000
Loss from continuing operations before taxes (790,000) (462,000)
Income tax expense - (2,000,000)
Loss from continuing operations (790,000) (2,462,000)
Loss from discontinued operations - entertainment (384,000) (595,000)
Income (Loss) from discontinued operations-gaming 91,000 (55,000)
Net Income (Loss) (1,083,000) (3,112,000)
- --------------------------------------------------------------------------------------------------------------
Basic & Fully diluted Income (Loss)per Common Share
Continuing operations (0.08) (0.25)
Discontinued operations (0.03) (0.07)
Net Income (Loss) (0.10) (0.32)
Weighted Average Number of Common Shares
Outstanding 10,506,261 9,830,834
================================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
6
<PAGE>
BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDING MARCH 31, 2000 AND 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Loss from continuing operations (790,000) (2,462,000)
Adjustments to reconcile loss to net cash
Depreciation 12,000 34,000
Reversal of deferred tax asset 2,000,000
Gain on sale of joint venture - (91,000)
Discount upon conversion of convertible debentures - 5,000
Loss on impairment of Palace receivable 56,000
Early extinguishment of subordinated debentures - -
Accretion of note receivable interest - (2,000)
Change in Assets and Liabilities
Account receivable 47,000 (55,000)
Inventories (13,000)
Prepaid expense (103,000) 97,000
Other assets (139,000) 242,000
Accounts payable 91,000 (282,000)
Accrued expense and other liabilities (58,000) (523,000)
--------------------------------------------
Net Cash used in Operating Activities (953,000) (981,000)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (37,000) (11,000)
Proceeds from sale of joint venture 20,000
Decrease (Increase) in due from related parties 41,000 (21,000)
--------------------------------------------
Net cash provided by (used in) investing activities 4,000 (12,000)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of debentures and draws on line of credit 50,000
Reduction of long-term debt (7,000) (84,000)
--------------------------------------------
Net cash provided by (used in) financing activities (7,000) (34,000)
Cash provided by (used in)
Discontinued Operations-Gaming (42,000) 59,000
--------------------------------------------
Cash provided by
Discontinued operations-entertainment (217,000) 389,000
--------------------------------------------
Net Increase (Decrease) in Cash and Cash Equivalents (1,215,000) (579,000)
Cash and Cash Equivalents, at beginning of period 1,254,000 656,000
Cash and Cash Equivalents, at end of period 39,000 77,000
============================================
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
7
<PAGE>
BOUNCEBACKTECHNOLOGIES.COM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Business
BounceBackTechnologies.com, Inc. and Subsidiaries (the "Company") was formerly
known as Casino Resource Corporation. The name change, effective January 4,
2000, reflects the Company's intent to focus on marketing, sales and business
solutions to the Internet and e-commerce industries. It is the Company's intent
to utilize its marketing and sales expertise by providing services to a new
media marketplace which is experiencing strong growth. The Company's new ticker
symbol for its common stock is "BBTC" and the stock is traded on the NASDAQ
Bulletin Board.
To strengthen its position and bolster its efforts in penetrating the e-commerce
industry, the Company acquired all of the assets of Raw Data, Inc., on December
31, 1999. Raw Data, Inc. focused on the development, sales and distribution of
e-commerce business solutions through direct advertising of mini-CDs used by
consumers and businesses to link potential customers to web sites and e-commerce
centers. Upon acquisition, the Company changed the name of its new subsidiary to
BounceBackMedia.com, Inc.
BounceBackMedia.com, Inc., a Nevada corporation, will be headquartered in
Fresno, California to take advantage of the technological innovations and
skilled personnel available in the Silicon Valley. In addition to sales and
marketing support services, the Company's corporate offices, located in Ocean
Springs, Mississippi, will provide administrative and accounting support
services to BounceBackMedia.com, Inc.
The Company entered into a letter of intent to purchase the assets of
Go2Technologies, Inc., a company in the business of distributing CD-ROM
technology on mini-CDs. To this date, no transaction is completed and the
Company is still performing due diligence with respect to the acquisition.
On April 5, 2000, the Company announced that BounceBackMedia.com, Inc. began
implementing its new business plan and marketing campaign with a focus on
advertising agencies, multi-media houses and major retail suppliers. The
Company's marketing strategy includes a direct mail campaign utilizing a
demonstration CD card, which will link prospective clients to the Company's web
site. It is anticipated that BounceBackMedia.com will also target industry
specific trade publications and trade shows later in the next fiscal quarter.
As reported earlier, the Company accomplished the restructuring and elimination
of a majority of its long-term debt during the first fiscal quarter.
Additionally, the Company implemented a plan to divest itself of its gaming
segment, Casino Caraibe, located in Tunisia, North Africa and its entertainment
segment including the Country Tonite Theatre in Branson, Missouri and its
musical production company, Country Tonite Enterprises in Pigeon Forge,
Tennessee. These business segments are reported as discontinued operations
herein. On April 20, 2000 the Company granted a license to the owner/operator of
the Pigeon Forge, Theatre venue, ("CTT, PF"). This license grants CTT,PF the
rights to market, promote, produce and direct the Country Tonite Show within a
150 mile radius surrounding Pigeon Forge, Tennessee, excluding Nashville,
Tennessee. CTT, PF agreed to pay $1.3 million for the licensing rights for a
forty-year
8
<PAGE>
term. CTT, PF paid $900,000 in cash and will make eight annual payments of
$50,000 per year beginning December 2000. The Company is continuing to actively
discuss a potential sale or a long-term lease of Casino Caraibe with a third
party. The Country Tonite Theatre Show in Branson, Missouri continues to be held
out for sale.
The cash from the licensing agreement allows the Company to immediately
intensify its marketing efforts of the new mini CD-ROM technology. The
divestiture of its remaining segments held for sale should provide the long-term
capital needed to continue the Company's efforts in its Internet and e-commerce
endeavors.
Basis of Presentation
The accompanying condensed consolidated financial statements of the Company are
unaudited. However, this information reflects all normal and recurring
adjustments, which, in the opinion of management, are necessary for a fair
presentation of results for the six-month and three-month periods ended March
31, 2000.
Certain reclassifications of prior period amounts have been made to conform to
current period presentation. The Company's entertainment and gaming segments are
reported in the financial statements as "discontinued operations." The results
of operations and related assets and liabilities of the discontinued operations
for the prior period have been restated in conformity with current period
presentation.
The results of operations for the six-month and three-month periods ending March
31, 2000 are not necessarily indicative of the results expected for the full
fiscal year.
NOTE 1 Prepaid Expenses
As of March 31, 2000 prepaid expenses consist primarily of insurance payments,
rent and other contractual payments. These payments will be recorded as expense
or applied against outstanding obligations in the next quarter.
NOTE 2 Net Assets Held for Sale
Entertainment
In conjunction with the Company's decision to focus its business efforts on
marketing and sales applications in the e-commerce industry, it has implemented
a plan to divest itself of its entertainment segment. The entertainment segment
is comprised of the Company's wholly owned subsidiaries, Country Tonite
Enterprises, Inc., which was under contract to perform at the Country Tonite
Theatre in Pigeon Forge, Tennessee, and CRC of Branson, Inc. which leases and
operates the Country Tonite Theatre in Branson, Missouri.
On April 20, 2000, the Company granted a license to the owner/operator of the
Country Tonite Theatre in Pigeon Forge, Tennessee, ("CTT, PF"). This license
grants CTT, PF the rights to market, promote, produce and direct the Country
Tonite Show within a 150 mile radius surrounding Pigeon Forge, Tennessee,
excluding Nashville, Tennessee. As a result, the Company's subsidiary Country
Tonite Enterprises, Inc. will no longer perform at Pigeon Forge and the
accompanying overhead
9
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costs are eliminated. In exchange for the rights granted under the licensing
agreement, CTT, PF will pay an aggregate of $1,300,000 to the Company. The
Company received $900,000 upon the execution of the agreement and will receive
eight payments of $50,000 on an annual basis beginning December 31, 2000. The
revenue from this licensing agreement will be recognized in the third quarter of
fiscal 2000.
The remaining subsidiary, CRC of Branson, Inc. continues to be held for sale.
Assets and liabilities of the entertainment segment at March 31, 2000 and
September 30, 1999 were as follows;
March 31, September 30,
Current Assets $ 357,000 $ 934,000
Fixed Assets 714,000 762,000
Current Liabilities 375,000 651,000
---------- ----------
Net assets held for sale $ 696,000 $1,045,000
========== ==========
Gaming
In addition to divesting itself of its entertainment segment, the Company has
adopted a formal plan to sell or lease its 85% interest in CRC Tunisia, S.A. to
Samara, the lessor of the Casino Caraibe property. The Company anticipates
negotiations to be finalized by June 2000. The Company anticipates generating a
gain on the proposed sale of this transaction in the event of a sale. A lease
arrangement may provide the Company with monthly lease revenue. Upon the
completion of either potential transaction, the Company would no longer incur
overhead costs associated with the casino.
Assets and liabilities for the gaming segment at March 31, 2000 and September
30, 1999 were as follows:
March 31, September 30,
Current Assets $ 904,000 $ 694,000
Net Property & Equipment 1,291,000 1,584,000
Current Liabilities 800,000 807,000
---------- ----------
Net assets held for sale $1,395,000 $1,471,000
========== ==========
NOTE 3 Supplemental Disclosure of Cash Flow Information
Cash expended during the six months ended March 31, 2000 and 1999 for interest
was $45,000 and $61,000, respectively.
10
<PAGE>
NOTE 4 Long-Term Liabilities
The Company has restructured and eliminated a majority of its long-term debt
during the first quarter of fiscal 2000.
Subordinated Convertible Debentures
The remaining balance of the $800,000, 13% subordinated convertible debenture as
of September 30, 1999 in the amount of $121,325 was settled in full by a cash
payment of $100,000 in October 1999. This transaction resulted in an
extraordinary gain of $21,325, which was recognized during the three-month
period ending December 31, 1999.
Long-Term Debt
On December 31, 1999, the Company and Roy Anderson Holding Corp agreed to amend
and restate the 6%, $1,530,000 (face amount) debenture agreement which had an
outstanding principal balance as of September 30, 1999 in the amount of
$1,195,729. In connection with the transaction, Roy Anderson Holding Corp was
granted an option to purchase 300,000 shares of the common stock of the Company
at an exercise price of $0.17 per share. The remaining balance of the debenture,
as of December 31, 1999, in the amount of $1,028,553 was separated into two
debentures. The first debenture, in the amount of $342,655, is payable in
monthly installments with simple interest fixed at 6% per annum. Monthly
payments of $44,326 begin in April 2000 with the last payment due in November
2000. The second debenture, in the amount of $685,898, with simple interest
fixed at 6% per annum is payable in one lump sum at its maturity on December 31,
2002. The second debenture provides for mandatory prepayments if certain
conditions arise. These most notably relate to the Company's completion of the
sale of its discontinued operations, sale or other disposition of its existing
business or assets, collection of any proceeds from litigation or any payments
from the Lakes Gaming agreement. Currently, 1,100,000 shares of the Company's
common stock are held in escrow as collateral. Upon the Company's satisfaction
in full of all outstanding amounts due under these debentures, the common stock
held in escrow will be cancelled.
On April 28, 2000, the Company received a Notice of Election from Roy Anderson
Holding Corp of its intent to exercise its option for the purchase of the
300,000 shares described above. This transaction is anticipated to close on May
30, 2000.
In October 1999, the Company entered into an agreement to retire the $1,000,000,
10% note payable due August 2022. The note was discounted to an effective rate
of 9.5% and retired in consideration for a cash payment of $150,000 and a
non-interest bearing note in the amount of $512,500. The new note is payable in
18 equal monthly installments of $28,472 beginning on December 1, 1999. An
extraordinary gain on this transaction in the amount of $369,501 was recognized
as a result of this transaction.
The Company has a revolving line of credit in the amount of $200,000 guaranteed
by Mr. Pilger personally. As of March 31, 2000, the Company had no draws or
outstanding balance under this line of credit.
The Company's subsidiary, BounceBackMedia.com, Inc. entered into a non-interest
bearing note payable in the amount of $65,000 to the principals of Raw Data,
Inc. as part of Raw Data's acquisition. The note becomes payable within 30 days
11
<PAGE>
if BounceBackMedia.com, Inc., has achieved a prescribed cumulative revenue
threshold within two years of the acquisition.
NOTE 5 Deferred Revenue
During 1999, the Company received a $2 million cash down payment as a result of
its Revised Conditional Release Agreement and Termination Agreement with Lakes
Gaming. The terms of the agreement calls for the payment of up to $16.1 million,
including the cash down payment mentioned above. The $2 million cash down
payment is recorded as deferred revenue until such time as a casino is opened in
Michigan by the Pokagon Band of Potawatomi Indians (the "Pokagons"). The balance
of $14.1 million is payable if certain events occur relative to the location of
the Tribe's casino, the actual fact that the casino does open, that Lakes Gaming
is the manager when the casino opens, and Lakes Gaming continues to manage the
casino during the five year term of the management agreement with the Pokagons,
other than a buy-out by the Pokagons of the remainder of Lakes Gaming management
term. The remaining balance of $2.5 million is due only if the Pokagons build a
casino in Indiana and Lakes Gaming is the manager. The agreement also calls for
the Company to repay the $2 million cash down payment if after five years there
is no casino open in either Michigan or Indiana.
Note 6 Deferred Tax Asset
Included in the results of operations for the six month period ending March 31,
1999, is the reversal of a deferred tax asset in the amount of $2,000,000 and
recorded as income tax expense. The deferred tax asset was originally recorded
in fiscal 1998.
12
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is management's discussion and analysis of certain factors which
have affected the Company's financial position and operating results during the
period included in the accompanying condensed consolidated financial statements.
SIX MONTHS ENDED MARCH 31, 2000 COMPARED TO SIX MONTHS ENDED MARCH 31, 1999.
Continuing Operations-BounceBackMedia.com, Inc.
BounceBackMedia.com, Inc. commenced operations in January 2000. Revenues through
the six month period ended March 31, 2000 were $37,000. Costs and expenses
incurred during this period totaled $153,000. These costs and expenses consisted
primarily of cost of goods sold, wages, marketing and promotional expenses and
office costs. Since, BounceBackMedia.com, Inc. was in a start-up mode, these
expenses were incurred in advance of future revenues to be generated. A loss
from operations of $116,000 was incurred for the period ended March 31, 2000.
No comparative results of operations are presented for the same period of the
prior year.
General and Administrative Expenses
The Company's general and administrative expenses aggregated $1,243,000 for the
six months ended March 31, 2000. This was an increase of $49,000 or 4.0%, from
the $1,194,000 incurred in the same period in 1999. The increase was due
primarily to increases in wages, legal fees and bad debt expense which was
offset by decreases in a variety of expenses including professional fees, public
relation costs and new venture costs.
Interest Expense
Interest expense totaled $45,000 for the six months ended March 31, 2000
compared to $61,000 for the same period in fiscal 1999. The reduction was
primarily due to the refinancing and early extinguishment of debt.
Extraordinary Gain
The Company recognized a gain on the early extinguishment of debt on the
subordinated convertible debenture in the amount of $21,325 in October 1999. In
addition, a gain of $369,501 was recognized on the refinancing of the $1 million
10% note payable originally due August 2022. The negotiated discount was granted
as consideration for the Company's $150,000 payment and agreement to pay down
the $512,500 balance in 18 monthly interest free payments of $28,472 beginning
December 1, 1999.
13
<PAGE>
Income Taxes
No federal income tax expense was recorded for the six months ended March 31,
2000. Income tax expense in the amount of $2,000,000 is recorded for the six
months ended March 31, 1999 due to a reversal of a deferred tax asset originally
recorded in fiscal 1998.
Discontinued Operations
Entertainment Segment
Operating results of the entertainment segment being held for sale, exclusive of
corporate charges, for the six month periods ended March 31, 2000 and 1999 were
as follows:
2000 1999
---- ----
Revenues $2,995,000 $3,183,000
Net Income $ 546,000 $ 267,000
========== ==========
Gaming Segment
Operating results of the gaming segment being held for sale, exclusive of
corporate charges, for the six month periods ended March 31, 2000 and 1999 were
as follows:
2000 1999
---- ----
Revenues $ 1,502,000 $ 1,141,000
Net Loss $ (69,000) $ (395,000)
=========== ===========
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31, 1999.
Continuing Operations-BounceBackMedia.com, Inc.
BounceBackMedia.com, Inc. commenced operations in January 2000. Revenues during
the three month period ended March 31, 2000 were $37,000. Costs and expenses
incurred during this period totaled $153,000. These costs and expenses consisted
primarily of cost of goods sold, wages, marketing and promotional expenses and
office costs. Since, BounceBackMedia.com, Inc. was in a start-up mode these
expenses were incurred in advance of future revenues to be generated. A loss
from operations of $116,000 was incurred for the period ended March 31, 2000.
No comparative results of operations are presented for the same period of the
prior year.
General and Administrative Expenses
The Company's general and administrative expenses aggregated $665,000 in the
three months ended March 31, 2000. This was an increase of $119,000 or 21.8%,
from the $546,000 incurred in the same period in 1999. The increase was due
primarily to increases in wages and legal fees.
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<PAGE>
Interest Expense
Interest expense totaled $16,000 for the three months ended December 31, 1999
compared to $12,000 for the same period in fiscal 1999.
Income Taxes
No federal income tax expense was recorded for the three months ended March 31,
2000. Income tax expense in the amount of $2,000,000 is recorded for the three
months ended March 31, 1999 due to a reversal of a deferred tax asset originally
recorded in fiscal 1998.
Discontinued Operations
Entertainment Segment
The Country Tonite theatres in Branson, Missouri, and Pigeon Forge, Tennessee
are closed January to mid-March 2000, which closings coincide with historical
seasonal closings of similar theatres in Branson, Missouri, and Pigeon Forge,
Tennessee.
Operating results of the entertainment segment being held for sale, exclusive of
corporate charges, for the three month periods ended March 31, 2000 and 1999
were as follows:
2000 1999
Revenues $ 546,000 $ 508,000
Net Income (Loss) $(384,000) $(595,000)
========= =========
Gaming Segment
Operating results of the gaming segment being held for sale, exclusive of
corporate charges, for the three month periods ended March 31, 2000 and 1999
were as follows:
2000 1999
Revenues $ 839,000 $ 580,000
Net Income (Loss) $ 91,000 $ (55,000)
========= =========
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased from $957,000 as of September 30, 1999 to
$39,000 as of March 31, 2000. Cash and cash equivalents do not reflect any cash
balances from the entertainment or gaming segments being held for sale. The cash
balances of these segments as of March 31, 2000 are $123,000 and $344,000,
respectively. Nor does the March 31, 2000 cash balance reflect the $900,000
payment received upon the execution of the licensing agreement between the
Company and CTT, PF on April 20, 2000.
The Company anticipates using the proceeds from the licensing agreement and sale
of its remaining discontinued operations to provide capital for its marketing
and sales applications relative to mini-CD technology. BounceBackMedia.com will
require a minimum amount of working capital through December 31, 2000 of
$500,000. As of March 31, 2000, the Company has provided $231,000 in working
capital to BounceBackMedia.com, Inc.
15
<PAGE>
Under the Revised Conditional Release and Termination Agreement with Lakes
Gaming, the Company could receive up to $16.1 million over the life of the
management contract Lakes Gaming has with the Pokagon Band of Potawatomi
Indians. A $2 million down payment was received in fiscal 1999. The agreement
also calls for the Company to repay the $2 million cash down payment if after
five years a Pokagon casino is not opened. The Company will not receive any
further payments under the agreement until a Michigan or Indiana casino opens.
Until such time the remaining discontinued segments are sold, the Company
anticipates that cash on hand and cash provided from the licensing agreement and
future operations will be sufficient to meet the working capital and debt
service requirements of its existing business for the next fiscal year. Also,
the cash balances on hand for the entertainment and gaming segments held for
sale are anticipated to be sufficient to meet the working capital and debt
service requirements of those entities without additional working capital from
continuing operations.
Capital expenditures by the Company were $54,000 for the six months ended March
31, 2000, compared to $14,000 for the same period in 1999. These expenditures
were primarily due to year 2000 compliance issues and accounting software costs
associated with a new computer system upgrade and start-up equipment purchases
for BounceBackMedia.com, Inc.
SEASONALITY
The theatre operations of the discontinued entertainment segment are affected by
seasonal factors. The Country Tonite Theatre in Branson, Missouri, was closed
from mid-December 1999 through the first week of March 2000. The Country Tonite
Theatre in Pigeon Forge, Tennessee, was closed from January 2, 2000 through
mid-March 2000. These closings coincide with the historical closings of similar
theatres in the Branson, Missouri, and Pigeon Forge, Tennessee areas.
The casino operations of the discontinued gaming segment are also subject to
seasonal factors. Primarily the slow tourist season occurs from October through
April each year.
IMPACT OF INFLATION
Management of the Company does not believe inflation has had any significant
effect on the Company's financial condition or results of operations for the
periods presented. However, an increase in the rate of inflation could adversely
affect the Company's future operations and expansion plans.
FOREIGN CURRENCY TRANSACTIONS
The Company's transactions with respect to its discontinued gaming segment in
Tunisia are in dinars. As such, there are risks that pertain to fluctuations in
foreign exchange rates and potential restrictions or costs associated with the
transfer of funds to the United States.
16
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Accounting Standards Board issued SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities." This standard establishes
accounting and reporting standards for derivative instruments and for hedging
contracts. This standard is effective for all fiscal quarters of all fiscal
years beginning after June 15, 2000. When the Company adopts this statement, it
is not expected to have a material impact on the Company's financial statements
or their presentation.
PRIVATE SECURITIES LITIGATION ACT OF 1995
All statements contained herein that are not historical facts are based on
current expectations. These statements are forward looking in nature and involve
a number of risks and uncertainties. Actual results may differ materially. Among
the factors that could cause actual results to differ materially are the
following: changes in travel patterns which could affect demand for the
Company's theatres or casino; changes in development and operating costs,
including labor, construction, land, equipment, and capital cost; general
business and economic conditions; political unrest in Tunisia or the region; and
other risk factors described from time to time in the Company's reports filed
with the Securities and Exchange Commission. The Company wishes to caution
readers not to place undue reliance on any such forward looking statements,
which statements are made pursuant to the Private Securities Litigation Reform
Act of 1995, and as such, speak only as to the date made.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In 1995, James Barnes and Prudence Barnes, two former officers of a subsidiary
of the Company, brought suit in State District Court, Clark County, Nevada,
against the Company in connection with their employment termination in June
1995. The Barnes have alleged the Company breached their contracts based on the
termination of the Barnes employment; intentional misrepresentation; and breach
of contract based on the untimely registration of their stock. No specific
amount of damages has been claimed, however the plaintiffs have informally
indicated that they would entertain a settlement offer between $250,000 and
$350,000. A trial date has been rescheduled for May 2000. The Company intends to
vigorously defend itself in this matter. The matter is still pending.
On December 31, 1997, the Company's former chairman, Kevin Kean,
defaulted on repaying $1,232,000 plus accrued interest due the Company. The
Company filed suit against Mr. Kean which resulted in a settlement agreement
(the "Settlement Agreement"). Under the Settlement Agreement, 220,000 Shares of
Company stock were canceled along with the 150,000 Shares then pledged to the
Company, at the market price of $1.19 per Share. Additionally, Mr. Kean executed
a new promissory note in favor of the Company (the "Renewal Note"). The Renewal
Note in the amount of $1,196,885, bears interest at 7% per annum and matures on
January 15, 2001. The Renewal Note was collateralized by Mr. Kean's 5% interest
in the Company's Pokagon management fee. The Settlement Agreement also permitted
that in the Company's sole discretion, and at any time prior to maturity, the
Company could take the collateral as payment in full for the note. Further,
under the terms of the Settlement Agreement: "in the event that the Company
shall sell, assign or transfer its interest in the Pokagon Project, in whole or
in part, to any other party, by way of sale, loan, settlement, fee or otherwise
for consideration in an amount in excess of $1 million, Kean's obligation under
the Renewal Note shall be fully discharged and satisfied and the Company shall
mark the Renewal Note "Paid" and return it to Kean." In August 1999, the Company
and Lakes Gaming entered into a Revised Conditional Release Agreement and
Termination Agreement regarding the Pokagon Project pursuant to which the
17
<PAGE>
Company received a $2 million cash down payment, which is subject to repayment
if certain future events do not occur, and the Company may receive additional
consideration if certain future events do occur. The Company has marked the
Renewal Note "Paid" and returned it to Kean with the understanding that the
obligations thereunder are now discharged.
The Company initiated a civil suit against Harrah's on September 4, 1998 in
United States District Court for District of Minnesota. The Company alleges that
Harrah's breached the Technical Assistance and Consulting Agreement and
tortuously interfered with the Company's contractual and prospective economic
advantage associated with the Pokagon Band of Potawatomi Indians' Management
Agreement. The suit further alleges that Harrah's withheld vital business
information from the Company. The Court granted Harrah's motion for Summary
Judgment and the Company's complaint was dismissed with prejudice on May 24,
1999. The Company filed an appeal in the Eighth Circuit United States Court of
Appeals on September 16, 1999. The Company asserts that it has the right to
resolve the dispute with Harrah's in some forum and the trial court erred by
dismissing the Company's complaint without granting the Company leave to file an
amended complaint which would include a claim for an accounting and damages
under the Uniform Partnership Act. The Company plans to vigorously pursue the
claim and seeks a judgment against Harrah's plus interest and legal fees.
The Company initiated a civil suit against Willard Smith and Monarch Casinos,
Inc. on December 19, 1998 in the Circuit Court of Jackson, Mississippi. The
Company alleges that Mr. Smith and Monarch Casinos, Inc. have breached the terms
of the Memorandum of Understanding, Amendment and Modification Agreement, and
Consulting Agreement by failing to provide the services required under the terms
of the agreements, breaching their obligations of good faith to the Company and
by attempting to secure the termination of the Company's interest in the Pokagon
project. The suit further alleges Mr. Smith has defaulted on his obligations to
pay rent and maintain the up-keep of the Company residential property located at
303 LaSalle Street, Ocean Springs, Mississippi and defaulted on repayment of
loans from the Company in excess of $300,000.
The Company seeks a judgment against Monarch Casinos, Inc. and Willard Smith
plus interest and attorneys fees for notes due and material breach of
agreements; removal of Smith from the rental property and punitive damages. Mr.
Willard Smith filed a counter claim on February 16, 1999, alleging breach of
contract; breach of duty of fair dealing; tortuous interference with prospective
business advantage; specific performance of contract to purchase real property
and fraud. The Company plans to vigorously defend itself in this counterclaim
and is asking the court to dismiss the matter. A trial date has been set for
November 2000.
Norm D. Holm, and N.D. H. Inc., ("NDH"), a Minnesota corporation, brought suit
in the Tenth Judicial District Court, county of Sherburne, Minnesota, against
the Company on August 11, 1998. NDH alleges that the Company entered into an
indemnification and hold harmless agreement to indemnify and hold NDH harmless
from loss of claims, etc., incurred as a result of services provided to real
property known as "Pintail Woods", which claim purportedly totals $158,000.
These claims were brought before the American Arbitration Association ("AAA") in
December 1992, which ruled that the arbitration was not appropriate at that
time. On July 7, 1999, the Tenth Judicial District Court, county of Sherburne,
Minnesota, ordered this matter submitted to arbitration. The matter was heard by
an arbitrator on April 25, 2000 and the AAA has 30 days or until May 25, 2000 to
render a determination on this matter.
18
<PAGE>
The Company initiated suit against Mark McKinney and Mana Corporation, on March
12, 1999, in the Circuit Court of Benton County, Arkansas. The Company alleges
that Mr. McKinney and Mana Corporation breached the terms of the Letter of
Intent and the Extension Agreement dated December 4, 1998, by prematurely
terminating the agreement before April 30, 1999, and failure to repay a short
term loan made to Mark McKinney, personally. The Company seeks a judgment
against Mark McKinney and Mana Corporation in the amount of $150,000 plus
interest and attorney's fees. Due to the uncertainty of Mr. McKinney's ability
to make payment, $75,000 of this receivable was reserved. In November 1999, Mana
Corporation petitioned an Arkansas Court for reorganization under Chapter 11 of
the Bankruptcy Code; therefore the balance of the receivable was reserved in
November 1999. The Company received a judgment against Mark McKinney, personally
in the amount of $165,000 in Benton County, Arkansas Circuit Court. On April 10,
2000 a writ of execution was forwarded to the Sheriff of Benton County to take
into possession from Mark McKinney certain property with an equivalent value of
$165,000.
On March 9, 2000, IGT brought suit in Circuit Court of Harrison County,
Mississippi against the Company in connection with the final two payments due it
under a slot machine purchase agreement. IGT alleges the Company defaulted on
two invoices totaling $66,638 and seeks a judgment in that amount plus interest
and attorney fees. The Company does not dispute the amount due IGT, but has
withheld payment until IGT produces original invoices to CRC Tunisia, SA so that
the Company may seek reimbursement from that subsidiary. The Company intends to
vigorously defend itself in this matter.
Cunningham, Hamilton, Quiter, P.A. ("CHQ") filed suit in the Circuit Court of
Jackson County, Mississippi alleging the Company and John J. Pilger defaulted on
$40,000 in payments due for services rendered in 1994. The Circuit Court awarded
CHQ $22,500 which was settled by the Company on March 28, 2000.
Item 2. Exhibits and Reports on Form 8-K
a) Exhibits
b) No current reports on Form 8-K have been filed during the six months ended
March 31, 2000.
19
<PAGE>
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant
caused this report to be signed on behalf by the undersigned, hereunto duly
authorized.
BOUNCBACKTECHNOLOGIES.COM, INC.
Date: May 15, 2000 By: s/ John J. Pilger
-------------------
John J. Pilger, President, CEO & CFO
Date: May 15, 2000 By: s/ Michael J. Wesaw
-------------------
Michael J. Wesaw, Financial Controller
20
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