U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
(Mark one)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ______________.
Commission file number 0-23506
DIVA ENTERTAINMENT, INC.
------------------------
(Exact name of small business issuer in its charter)
DELAWARE 33-0601498
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 VARICK STREET, 13TH FLOOR, NEW YORK, NEW YORK 10014
-------------------------------------------------------
(Address of principal executive offices)
(212) 807-6994
--------------
(Issuer's telephone number)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act of 1934 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.
YES [X] NO [ ]
The number of shares outstanding of the issuer's Common Stock, $.001
par value per share, as of January 17, 2000 is 5,498,800.
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [X]
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED FINANCIAL INFORMATION
DIVA ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
9/30/99 6/30/99
(UNAUDITED) (AUDITED)
--------- ---------
ASSETS $ $
Current assets
Cash ...................................... -- --
Accounts receivable ....................... 1,168,321 1,201,860
Other current assets ...................... 341,300 151,599
--------- ---------
Total current assets ............................ 1,509,621 1,353,459
Property, plant and equipment, net of accumulated
depreciation of $118,893 and $96,792 at
September 30, 1999 and June 30, 1999,
respectively .............................. 365,725 349,316
Other assets
Goodwill .................................. 546,897 558,872
Other assets .............................. 39,293 42,775
--------- ---------
Total other assets .............................. 586,190 601,647
Total Assets .............................. 2,461,536 2,304,422
========= =========
LIABILITIES
Current liabilities
Overdraft ................................. 265,289 183,045
Accounts payable .......................... 637,724 831,467
Accrued liabilities ....................... 207,085 161,242
Other current liabilities ................. 1,439,476 1,195,258
--------- ---------
Total current liabilities ....................... 2,549,574 2,371,012
Other liabilities
Debt payable after 12 months .............. 155,645 192,448
--------- ---------
Total Liabilities ......................... 2,705,219 2,563,460
SERIES B REDEEMABLE CONVERTIBLE PREFERRED
STOCK, $0.001 PAR VALUE, 3,000,000 SHARES
ISSUED AND OUTSTANDING .................... 3,000,000 3,000,000
1
<PAGE>
STOCKHOLDERS' DEFICIENCY
Common stock .................................... 5,498 5,498
Paid in capital in excess of par value .......... 50,425 50,425
Series A Convertible Preferred Stock ............ 1,150,000 1,150,000
Retained earnings ............................... (4,449,606) (4,464,961)
---------- ----------
Total Stockholders' Deficiency ............ (3,243,683) (3,259,038)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS
DEFICIENCY................................. 2,461,536 2,304,422
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
2
<PAGE>
CONSOLIDATED FINANCIAL INFORMATION
DIVA ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
THREE MONTHS ENDED
9/30/99 9/30/98
(UNAUDITED) (UNAUDITED)
---------- ----------
$ $
Revenue ................................... 590,886 384,676
SG&A expenses ............................. 562,998 502,280
Amortization of goodwill .................. 11,975 11,975
---------- ----------
Operating Profit (Loss) .......... 15,913 (129,579)
Interest expense .......................... 556 11,684
---------- ----------
Pre-Tax Profit (Loss) ............ 15,357 (141,263)
Income tax expense ........................ -- --
---------- ----------
Net Income (Loss) ................ 15,357 (141,263)
========== ==========
Weighted average number of
common shares outstanding ................. 5,498,800 4,721,000
Net income (loss) per share of common stock $0.00 ($0.03)
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE>
CONSOLIDATED FINANCIAL INFORMATION
DIVA ENTERTAINMENT, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED
9/30/99 9/30/98
(UNAUDITED) (UNAUDITED)
-------- --------
$ $
Operating activities
Net income (loss) .................. 15,357 (141,263)
Depreciation and amortization ...... 34,076 27,095
Change in other net operating assets (51,361) (8,836)
Increase in cash overdraft ......... 82,244 144,863
Other .............................. (41,805) 2,031
-------- --------
Net cash provided by (used in)
operating activities ............... 38,511 23,890
Investing activities
Capital expenditures ............... (38,511) (47,751)
-------- --------
Net cash provided by (used in)
investing activities ............... (38,511) (47,751)
Financing activities ........................ -- --
-------- --------
Net cash provided by (used in)
financing activities ............... -- --
-------- --------
Increase in cash ............................ -- (23,861)
Cash at July 1 .............................. -- 23,861
Cash at September 30 ........................ -- --
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE>
DIVA ENTERTAINMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1
The accompanying unaudited consolidated condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments considered necessary for a fair presentation have
been included, and such adjustments are of a normal recurring nature. Results
for interim periods should not be considered indicative of results for any other
interim period or for future years.
NOTE 2
No income taxes were paid during the three months ended September 30, 1999.
NOTE 3
The effects of non-cash investing and financing activities have been excluded
from the statement of cash flows in accordance with SFAS 95.
5
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Diva Entertainment, Inc. (the "Company") achieved net income of $15,357
for the quarter ended September 30, 1999, compared with a net loss of $141,263
for the quarter ended September 30, 1998. This improvement is due to sales
increasing by over 50% from $385,000 for the quarter ended September 30, 1998 to
$591,000 for the quarter ended September 30, 1999. In contrast, the SG&A
expenses only increased by 12% from $502,000 for quarter ended September 30,
1998 to $563,000 for quarter ended September 30, 1999.
The operating performance of Prima Eastwest Model Management, Inc.
("Prima") in the quarter ended September 30, 1999, showed a significant decline
from the corresponding period in the previous year (a loss of $28,000 compared
with a profit of $23,000). The sales were approximately 11% higher, increasing
from $224,000 in the quarter ended September 30, 1998 to $249,000 in the quarter
ended September 30, 1999. This was below the sales levels achieved in the same
quarter for previous years confirming that there remains considerable room for
improvement. At the same time, SG&A expenses increased by approximately 37%.
These expenses increased from $188,000 in the quarter ended September 30, 1998
to $258,000 in the quarter ended September 30, 1999. Although these higher
expenses are partly due to the new and more expensive rented office, management
is reviewing the expenses to ensure that they do not continue to increase at
levels so much above inflation without a corresponding increase in productivity
and sales.
Management forecast losses at Que for the first years of operations.
However, the results of Que were better than forecast and management believes
that many of the initial expenses will not be repeated. Furthermore, Que has
already begun working and co-operating closely with Prima to the benefit of both
companies. This enabled the Company to make a profit on its Que operations for
the quarter ended September 30, 1999. Management believes that, with continued
expansion, Que should be profitable for the fiscal year ending June 30, 2000
although there is no assurance that this will happen or that, if it does, the
Company as a whole will be profitable as a result. In the quarter ended
September 30, 1999, Que had sales of $342,000 compared with $161,000 for the
fiscal quarter ended September 30, 1998, which is an increase of approximately
111%. At the same time SG&A expenses only increased by approximately 5% from
$254,000 for the quarter ended September 30, 1998 to $268,000 for the quarter
ended September 30, 1999. The operating performance changed from a loss of
$107,000 for the fiscal quarter ended September 30, 1998 to a profit of $59,000
for the fiscal quarter ended September 30, 1999.
6
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
EXHIBITS:
(A) 27 Financial Data Schedule
(B) Form 8-K:
On August 9, 1999, the Company filed a Current Report on Form 8-K
regarding a corporate reorganization effective April 1, 1999.
On September 28, 1999, the Company filed a Current Report on Form 8-K
dated June 1, 1999, regarding a change in the Company's fiscal year end and the
appointment of accountants.
7
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
DIVA ENTERTAINMENT, INC.
Date: February 14, 2000 By: /s/ Peter C. Zachariou
-------------------------------
Peter C. Zachariou, President
8
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 1,168,321
<ALLOWANCES> 157,750
<INVENTORY> 0
<CURRENT-ASSETS> 1,509,621
<PP&E> 365,725
<DEPRECIATION> 118,893
<TOTAL-ASSETS> 2,461,536
<CURRENT-LIABILITIES> 2,549,574
<BONDS> 0
0
3,000,000
<COMMON> 5,498
<OTHER-SE> 3,249,181
<TOTAL-LIABILITY-AND-EQUITY> 2,461,536
<SALES> 0
<TOTAL-REVENUES> 590,886
<CGS> 0
<TOTAL-COSTS> 91,264
<OTHER-EXPENSES> 483,709
<LOSS-PROVISION> 157,750
<INTEREST-EXPENSE> 556
<INCOME-PRETAX> 15,357
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,357
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,357
<EPS-BASIC> 0.00
<EPS-DILUTED> 0.00
</TABLE>
