SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 033-67536
AMERICAN DREAM ENTERTAINMENT, INC.
---------------------------------
(Exact name of registrant as specified in charter)
Minnesota 59-3169033
--------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1800 East Sahara Avenue, Suite 107, Las Vegas, Nevada 89104
- ----------------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone Number, including area code: (702) 734-7557
Securities registered pursuant to Section 12(b) of the Exchange Act: None
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
The number of shares outstanding of the Issuer's Common Stock, $.0001 Par
Value, as of February 29, 2000 was 17,320,000.
Transitional Small Business Disclosure Format:
[ ] Yes [ X ] No
FEDERAL AFFORDABLE HOUSING CORPORATION
--------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Index
Page
Part I - Financial Information ----
Item 1. Financial Statements
Balance Sheet -
February 29, 2000................................................. 1
Statements of Operations -
Three months and nine months ended February 29, 2000
and February 28, 1999............................................ 2
Statements of Cash Flows -
Three months and nine months ended February 29, 2000
and February 28, 1999............................................ 3
Notes to Financial Statements......................................... 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 5
Part II - Other Information
Item 1. Legal Proceedings................................................. 6
Item 5. Other Information................................................. 6
Item 6. Exhibits and Reports on Form 8-K.................................. 6
Signatures....................................................... 7
Exhibit 11................................................................ 8
<PAGE>
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Balance Sheet
February 29, 2000
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Assets
Current assets:
Cash $ 3,902
Other 31,961
--------------------
35,863
--------------------
Other assets:
Trademark and license 5,501,600
Deposits 550
--------------------
5,502,150
--------------------
$ 5,538,013
====================
Liabilities and Stockholders' Deficit
Current liabilities:
Due to stockholders $ 5,926,448
Accrued expenses 355,748
--------------------
Total current liabilities 6,282,196
--------------------
Stockholders' deficit:
Common stock; $.0001 par value; 50,000,000 shares
authorized; 17,320,000 shares issued and outstanding 1,732
Capital in excess of par value 152,639
Accumulated deficit (898,554)
--------------------
Total stockholders' deficit (744,183)
--------------------
$ 5,538,013
====================
</TABLE>
See notes to financial statements.
1
<PAGE>
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
--------------------------------- ---------------------------------
February 29, February 28, February 29, February 28,
2000 1999 2000 1999
-------------- --------------- -------------- ---------------
<S> <C> <C> <C> <C>
Operating expenses:
General and administrative
expenses $ (230,169) $ (41,653) $ (494,102) $ (50,943)
Interest income - 4,430 - 13,390
Other income - - - 2,229
-------------- --------------- -------------- ---------------
(230,169) (37,223) (494,102) (35,324)
-------------- --------------- -------------- ---------------
Net income (loss) $ (230,169) $ (37,223) $ (494,102) $ (35,324)
============== =============== ============== ===============
Accumulated deficit - beginning
of period (668,385) (224,630) (404,452) (226,529)
-------------- --------------- -------------- ---------------
Accumulated deficit - end of period $ (898,554) $ (261,853) $ (898,554) $ (261,853)
-------------- --------------- -------------- ---------------
Income (loss) per common share $ (0.01) $ (0.08) $ (0.03) $ (0.07)
============== =============== ============== ===============
</TABLE>
See notes to financial statements.
2
<PAGE>
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
February 29, February 28,
--------------------------------
2000 1999
--------------- ---------------
<S> <C> <C>
Operating activities
Net loss $ (494,102) $ (35,324)
Adjustments to reconcile net loss to net
cash (used) by operating activities:
Increase (decrease) in:
Other current assets (31,961)
Accrued expenses 192,620 -
--------------- ---------------
Total adjustments 160,659 -
--------------- ---------------
Net cash (used) by operating activities (333,443) (35,324)
--------------- ---------------
Investing activities
Contributed Capital - 30,000
Increase in notes receivable - (38,530)
--------------- ---------------
Net cash (used) by investing activities - (8,530)
--------------- ---------------
Financing activities
Principle payments on notes payable - (11,515)
Offering costs 104,098
Advances from stockholders 233,247 -
--------------- ---------------
Net cash (used) provided by
financing activities 337,345 (11,515)
--------------- ---------------
Net (decrease) increase in cash 3,902 (55,369)
Cash, beginning of period - 68,214
--------------- ---------------
Cash, end of period $ 3,902 $ 12,845
=============== ===============
</TABLE>
See notes to financial statements.
3
<PAGE>
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Notes to Financial Statements
(Unaudited)
Note 1 - Basis of presentation
The accompanying unaudited financial statements, which are for interim periods,
do not include all disclosures provided in the annual financial statements.
These unaudited financial statements should be read in conjunction with the
financial statements and the footnotes thereto contained in the Audited
Financial Statements for the year ended May 31, 1999 and 1998 of American Dream
Entertainment, Inc.
In our opinion, the accompanying unaudited financial statements contain all
adjustments (which are of a normal and recurring nature) necessary for a fair
presentation of the financial statements. The results of operations for the
three month and nine month periods ended February 29, 2000 are not necessarily
indicative of the results to be expected for the full year.
Note 2 - Per share calculations
Per share data was computed by dividing net loss by the weighted average number
of shares outstanding during the three month and nine month periods ended
February 29, 2000. The weighted average shares outstanding for the three month
period ended February 29, 2000 was 17,320,000 as compared to 493,500 for the
three month period ended February 29, 1999. The weighted average shares
outstanding for the nine month period ended February 29, 2000 was 17,762,418 as
compared to 493,500 for the three month period ended February 29, 1999.
Note 3 - Equity Transactions
Please refer to Audited Financial Statements consisting of our balance sheet as
of May 31, 1999, and related statements of operations, changes in stockholders
equity, and cash flows for the year ended May 31, 1999, as audited by Pender,
Newkirk & Company, Certified Public Accountant.
In December 1999, the company entered into a settlement agreement with Lasalle
Group, Ltd. According to this settlement agreement, Lasalle Group, Ltd. agreed
to return 660,000 shares of American Dream Entertainment common stock originally
issued to assist the company in its capital raising efforts. These shares were
returned to the company as treasury stock and subsequently retired during the
nine month period ended February 29, 2000.
4
<PAGE>
AMERICAN DREAM ENTERTAINMENT, INC.
(f/k/a Federal Affordable Housing Corporation)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Report on Form 10-QSB, that are not purely
historical, are forward-looking information and statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. These include statements regarding our expectations,
intentions, or strategies regarding future matters. All forward-looking
statements included in this document are based on information available to us on
the date hereof. It is important to note that our actual results could differ
materially from those projected in such forward-looking statements contained in
this Form 10-QSB. The forward-looking statements contained here-in are based on
current expectations that involve numerous risks and uncertainties. Assumptions
relating to the foregoing involve judgments regarding, among other things, our
ability to secure financing or investment for capital expenditures, future
economic and competitive market conditions, and future business decisions. All
these matters are difficult or impossible to predict accurately and many of
which may be beyond our control. Although the we believe that the assumptions
underlying our forward-looking statements are reasonable, any of the assumptions
could be inaccurate and, therefore, there can be no assurance that the
forward-looking statements included in this form 10-QSB will prove to be
accurate.
GENERAL
American Dream Entertainment, Inc., formerly Federal Affordable Housing
Corporation, acquired the exclusive rights in the United States to exploit the
Media Property known as "Robin and The Dreamweavers" under a License and Royalty
Agreement granted by Dreamweavers N.V. a Curacao Company that has developed the
"Robin and The Dreamweavers" concept. This concept consists of several media
products: an animated feature length show for television, an animated television
series, a soundtrack, an Internet Site and games, a Robin private label (a
fashion label with designs based upon the character of "Robin"), ancillary
merchandising products related to the video games, toys, apparel, school
supplies and cosmetic products.
There have been no revenues to date in the animated film business and we have
incurred significant losses associated with the promotion of our animated
feature film. American Dream Entertainment does not expect to generate revenues
until the "Robin and The Dreamweavers" project is completed and becomes
contractually available for telecasting or exhibition. The amount of
distribution and licensing revenues earned by American Dream Entertainment will
be dependent on, among other things, the timeline for the completion of the
project and its distribution by others.
Lou Scheimer Productions in Los Angeles, California has been engaged for the
production of the "Robin and The Dreamweavers" feature film and a twenty-six
episode television series. The release of the film is expected in May 2000.
Following this feature film release, we plan on releasing the first thirteen
episodes of the series in June 2000. American Dream Entertainment has presented
its "Robin and The Dreamweavers" project at "MIPCOM" in Cannes, France. We
signed an agreement with Tempo Media, of Copenhagen, Denmark for the
distribution of the television production in the United States. On January 25,
2000, the terms of this agreement were extended until June 1, 2000. This
agreement could generate potential revenues of approximately $7.5 million.
RESULTS OF OPERATIONS
Three months ended February 29, 2000 compared to three months ended February 28,
1999
There were no revenues for the three month periods ended February 29, 2000 and
February 28, 1999.
For the three month period ended February 29, 2000, total selling, general and
administrative expenses were $230,169 as compared to $41,653 for the same period
in 1999, an increase of $188,516. This increase in selling, general and
administrative expenses is the result of promotional efforts associated with our
animated feature film and higher professional fees that were not pertinent in
the prior year period. In addition, general and administrative expenses reflect
a write-off of offering costs of $104,098.
5
<PAGE>
AMERICAN DREAM ENTERTAINMENT, INC.
(f/k/a Federal Affordable Housing Corporation)
Interest income decreased from $4,430 in the three month period ended February
28, 1999 to -0- in the same period of 1999. This interest income was due to
interest earned on a mortgage receivable that was transferred to AAA Homes, Inc
at December 31, 1998, and subsequently the stock distributed to our shareholders
of record as of February 1, 1999.
Net loss was $230,169 for the three months ended February 29, 2000, as compared
to net loss of $37,223 for the previous period ended February 28, 1999. This
increase in net loss is associated with promotional efforts related to our
animated feature film. In addition, there was no revenue or interest income in
the three month period ended February 29, 2000 to absorb selling, general, and
administrative expenses incurred during the period.
Nine months ended February 29, 2000 compared to Nine months ended February 28,
1999
There were no revenues for the nine month periods ended February 29, 2000 and
February 28, 1999.
For the nine month period ended February 29, 2000, total selling, general and
administrative expenses were $494,102 as compared to $50,943 for the same period
in 1998, an increase of $443,159. This increase in selling, general and
administrative expenses is the result of promotional efforts associated with our
animated feature film and higher professional fees that were not pertinent in
the prior year period.
Interest income decreased from $13,390 in the nine month period ended February
28, 1999 to -0- in the same period of 2000. This interest income was due to
interest earned on a mortgage receivable that was transferred to AAA Homes, Inc
at December 31, 1998, and subsequently the stock distributed to our shareholders
of record as of February 1, 1999.
Other income decreased from $2,229 in the nine month period ended February 28,
1999 to -0- in the nine month period ended February 29, 2000.
Net loss was $494,102 for the nine months ended February 29, 2000, as compared
to net loss of $35,324 for the previous period ended February 28, 1999. This
increase in net loss is associated with promotional efforts related to our
animated feature film. In addition, there was no revenue or interest income in
the nine month period ended February 29, 2000 to absorb selling, general, and
administrative expenses incurred during the period.
LIQUIDITY AND CAPITAL RESOURCES
Our operations are currently funded through advances made on our behalf by
Dreamweavers, N.V. Through February 29, 2000, Dreamweavers has advanced
approximately $426,448 on our behalf. These amounts primarily relate to
promotional costs and payments made to consultants, advisors, reimbursement of
travel expenses and lease expenses. We are not presently generating sufficient
revenues from operations to fund capital requirements. Our ability to alleviate
our working capital deficit and obtain capital adequate to fund future costs
associated with operations and expansion plans is dependent upon Dreamweavers,
N.V. commitment to continue funding our operations, the private placement of our
securities and the realization of projected sales for our products. There is no
assurance that such revenues will be generated or that other funding will be
available.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In December 1999, the company entered into a settlement agreement with Lasalle
Group, Ltd. According to this settlement agreement, Lasalle Group, Ltd. agreed
to return 660,000 shares of American Dream Entertainment common stock originally
issued to assist the company in its capital raising efforts. These shares were
returned to the company as treasury stock and subsequently retired during the
nine month period ended February 29, 2000.
ITEM 5. OTHER INFORMATION
None
6
<PAGE>
AMERICAN DREAM ENTERTAINMENT, INC.
(f/k/a Federal Affordable Housing Corporation)
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 has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: April 14, 2000 By: /s/ Dirk W. Peschar
-------------------
Dirk W. Peschar, Principal Executive Officer
and President
7
American Dream Entertainment, Inc.
(f/k/a Federal Affordable Housing Corporation)
Computation of Income (Loss) Per Common Share
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
February 29, February 28, February 29, February 28,
----------------------------------------- -----------------------------------------
2000 1999 2000 1999
------------------ ------------------ ------------------ -------------------
<S> <C> <C> <C> <C>
Shares outstanding: 17,320,000 493,500 17,320,000 493,500
Weighted average shares outstanding 17,320,000 493,500 17,762,418 493,500
Net income (loss) $ (230,169) $ (37,223) $ (494,102) $ (35,324)
Net income (loss) per common share $ (0.01) $ (0.08) $ (0.03) $ (0.07)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-31-2000
<PERIOD-START> MAY-31-1999
<PERIOD-END> FEB-29-2000
<CASH> 3,902
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 35,863
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,538,013
<CURRENT-LIABILITIES> 6,282,196
<BONDS> 0
0
0
<COMMON> 1,732
<OTHER-SE> (745,915)
<TOTAL-LIABILITY-AND-EQUITY> 5,538,013
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 494,102
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (494,102)
<INCOME-TAX> 0
<INCOME-CONTINUING> (494,102)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (494,102)
<EPS-BASIC> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
