<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1996
Commission file number 0-25624
LOTTOWORLD, INC.
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(Exact name of registrant as specified in its charter)
Florida 65-0399794
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(State of Incorporation) (IRS Employer ID No.)
2150 Goodlette Road
Suite 200
Naples, FL 33940
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(Address of principal executive offices) (Zip Code)
(941) 643-1677
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(Telephone Number)
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
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Common stock, par value $.001 per share; 3,973,522 shares outstanding as of May
5, 1996
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LOTTOWORLD, INC.
TABLE OF CONTENTS
PART I Financial Information Page No.
Item 1. Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Common Shareholders'
Equity (Deficit) 5
Condensed Statements of Cash Flows 6
Notes to Condensed Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II Other Information
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 10
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LOTTOWORLD, INC
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
(Unaudited)
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<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $1,367,548 $1,318,983
Accounts receivable, net 376,477 159,479
Stock subscriptions receivable - 449,980
Accounts receivable, officers 58,375 58,375
Prepaid expenses 1,000,000 168,412
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2,802,400 2,155,229
Furniture, Fixtures and Equipment, net 538,951 556,253
Other Assets 10,101 10,101
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$3,351,452 $2,721,583
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current maturities of long-term debt $16,667 $16,667
Accounts payable 699,477 851,673
Accrued expenses 58,000 56,302
Deferred revenue 219,418 149,549
Dividends payable - 25,000
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993,562 1,099,191
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Long-Term Debt, less current maturities 20,883 25,050
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Redeemable convertible preferred stock 1,000,020 1,000,020
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Common Shareholders' Equity
Common stock 3,973 3,106
Common stock subscribed - 1,316,230
Additional paid-in capital 9,990,370 7,933,759
Accumulated deficit (8,646,496) (7,789,523)
Less treasury stock (10,860) -
Less stock subscriptions - (866,250)
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1,336,987 597,322
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$3,351,452 $2,721,583
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</TABLE>
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LOTTOWORLD, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Sales revenue $246,266 $37,596
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Operating expenses:
Production, distribution and editorial 410,551 274,202
Circulation 265,734 142,147
Advertising, promotion and business development 133,508 115,954
Selling, general and administrative 317,869 339,249
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1,127,662 871,552
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Operating (loss) (881,396) (833,956)
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Other income (expense):
Interest income 25,442 15,063
Interest expense (1,019) (12,597)
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24,423 2,466
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Net (loss) ($856,973) ($831,490)
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Net (loss) per common share ($0.26) ($0.40)
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Weighted average number of common shares outstanding 3,357,689 2,576,152
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</TABLE>
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LOTTOWORLD, INC.
CONDENSED STATEMENT OF COMMON SHAREHOLDERS' EQUITY
(DEFICIT)
<TABLE>
<CAPTION>
Common Additional Common Total
Common Stock Paid-in Accumulated Stock Treasury Shareholders
Stock Subscribed Capital (Deficit) Subscriptions Stock Equity
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<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 $ 1,885 $ - $ 2,095,394 ($2,094,330) $ - $ - $ 2,949
Common stock issued (1,221,090 shares) 1,221 - 5,838,365 - - - 5,839,586
Stock subscriptions - 1,316,230 - - (866,250) - 449,980
Dividend distributions - - - (100,002) - - (100,002)
Net (loss) - - - (5,595,191) - - (5,595,191)
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Balance, December 31, 1995 3,106 1,316,230 7,933,759 (7,789,523) (866,250) - 597,322
Common stock (867,500 shares) (unaudited) 867 (1,316,230) 2,056,611 - 866,250 - 1,607,498
Purchase of stock for treasury (3,000 shares)
(Unaudited) (10,860) (10,860)
Net (loss) (Unaudited) - - - (856,973) - - (856,973)
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Balance, March 31, 1996 (Unaudited) $ 3,973 $ 0 $ 9,990,370 ($8,646,496) $ 0 ($10,860) $ 1,336,987
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</TABLE>
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LOTTOWORLD, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1996 AND 1995
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
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<S> <C> <C>
Net cash (used in) operating activites ($1,522,807) ($1,901,218)
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Cash Flows (Used In) Investing Activities
Purchase of furniture and equipment (21,099) (97,325)
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Cash Flows From Financing Activities
Issuance on long-term notes payable (4,167) 1,000,020
Issuance of common stock 1,607,498 4,565,551
Purchase of treasury stock (10,860)
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1,592,471 5,565,571
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Net increase in cash 48,565 3,567,028
Cash
Beginning 1,318,983 1,061,855
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Ending $1,367,548 $4,628,883
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</TABLE>
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LOTTOWORLD, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) The unaudited financial statements and the related notes have been
prepared pursuant to the rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
omitted pursuant to such rules and regulations. The accompanying
financial statements and related notes should be read in conjunction
with the audited financial statements of the Company, and notes
thereto, for the year ended December 31, 1995.
The information furnished reflects, in the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary for a
fair presentation of the results of the interim periods presented.
(2) The net (loss) per common share amounts are computed using the
weighted average number of common shares outstanding during the
periods.
(3) The Company had an initial public offering of its common stock and on
March 3, 1995 and March 31, 1995 sold 685,000 and 102,750 shares
respectively.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The loss for the three months ended March 31, 1996 and 1995 are
$(857,000) and $(831,000) respectively before dividends paid to preferred
shareholders.
The Company declared a dividend in the amount of $.15 per share for
record holders of its Series A Convertible Preferred Stock as of the close of
business on March 31, 1996 payable on May 31, 1996.
The Company expects newsstand revenues to increase as a result of the
promotion of the "Lucky 7 Prepack" for display at grocery store service
counters and non-traditional magazine outlets. This promotion has already
placed over 3,500 Prepacks at wholesalers throughout the Northeast United
States.
The Company expects to generate the major portion of its revenues
through the sale of advertising in the controlled circulation magazines it
will be publishing. The Company expects this advertising to begin in the
fourth quarter of 1996.
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Liquidity and Capital Resources
The Company believes that its capital resources on hand at March 31,
1996, together with the above private placement and the expected revenues from
sales, will not be sufficient to satisfy its working capital requirements for
the next 12 months.
The Company anticipates that it will require additional financing of
$1,000,000 and is currently exploring various options available for this
financing and is confident it will be able to obtain said financing.
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<PAGE>
PART II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 11: Computation of net (loss) per share of
Common Stock - not required
(b) Exhibit 27: Financial Data Schedule
(c) The Registrant did not file a Form 8-K during
the quarter ended March 31, 1996.
SIGNATURES
Pursuant to the requirements 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.
LOTTOWORLD, INC.
DATED: May 15, 1996 s/ Stuart Dubow
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Stuart Dubow
Chief Financial Officer
DATED: May 15, 1996 s/ Stuart Dubow
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Stuart Dubow
Chief Financial Officer
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<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF LOTTOWORLD, INC. FOR THE THREE MONTHS ENDED
MARCH 31, 1995, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,368
<SECURITIES> 0
<RECEIVABLES> 1,368
<ALLOWANCES> 934
<INVENTORY> 0
<CURRENT-ASSETS> 2,802
<PP&E> 683
<DEPRECIATION> 144
<TOTAL-ASSETS> 3,351
<CURRENT-LIABILITIES> 994
<BONDS> 21
<COMMON> 4
1,000
0
<OTHER-SE> 1,333
<TOTAL-LIABILITY-AND-EQUITY> 3,351
<SALES> 246
<TOTAL-REVENUES> 246
<CGS> 0
<TOTAL-COSTS> 1,128
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<INTEREST-EXPENSE> (24)
<INCOME-PRETAX> (857)
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<INCOME-CONTINUING> (857)
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<CHANGES> 0
<NET-INCOME> (857)
<EPS-PRIMARY> (.26)
<EPS-DILUTED> 0
</TABLE>
