U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO 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, 1997
Commission file number 0-25624
LOTTOWORLD, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0399794
(State of Incorporation) (IRS Employer ID No.)
2150 Goodlette Road
Suite 200
Naples, FL 34102
(Address of principal executive offices) (Zip Code)
(941) 643-1677
(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
--- ---
Common stock, par value $.001 per share; 7,299,401 shares outstanding as of
April 30, 1997
<PAGE>
LOTTOWORLD, INC.
TABLE OF CONTENTS
PART I Financial Information Page No.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 3
PART II Other Information
Item 6. Exhibits and Reports on Form 8-K 5
SIGNATURES 5
2
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations:
- ----------------------
For the three months ended March 31, 1997 and 1996, the Company had
operating revenues of $261,000 and $246,000; operating expenses of $1,581,000
and $1,128,000; operating losses of $1,319,000 and $ $881,000; net losses of
$$1,309,000 and $857,000; and losses per share of $.20 and $.26 respectively.
Included in the losses for the quarter ended March 31, 1997are $450,000
attributable to the start-up of the New York Lottery Players Monthly and
$250,000 attributable to investor relations. The $250,000 attributable to
investor relations refers to contracts entered into as of March 31, 1996, later
extended to June 30, 1996, for one year of consulting services setting up a
series of investor seminars, meetings, etc., including all out-of-pocket
expenses.
Production, distribution and editorial expenses rose $174,000 from
$411,000 in 1996 to $585,000 in 1997, or 43%. $85,000 of the net increase is
linked to the printing of the New York Lottery Players Monthly, which did not
begin publication until October 1996 ($188,000) and the reduction of the print
order of LottoWorld magazine, whose printing expense deceased $103,000. The
balance of the increase is attributable to increased editorial personnel.
Selling, general and administrative expenses increased $429,000 from
$318,000 to $747,000, or 75%. In addition to the increase of $250,000 for
investor relations: (i) $65,000 was expended for financing costs associated with
$500,000 of a convertible note payable on demand which was obtained in February
1997; (ii) overall salaries increased by $30,000; (iii) taxes and benefits
increased $19,000 attributable to more employees being eligible for full payment
of their medical insurance due to longevity of service; iv) legal and accounting
expenses increased $24,000 as a result of additional Securities and Exchange
reporting requirements; and (v) the remaining $41,000 is attributable to
increased costs of a larger company.
Liquidity and Capital Resources
- -------------------------------
The Company had a net decrease in its cash position of $119,000 for the
three months ended March 31, 1997. This was net of $275,000 of additional
capital raised through the issuance of common stock. The Company also paid a
dividend of $25,000 to the holders of the Series A Convertible Preferred Stock.
This dividend was paid, despite the significant decrease in working capital and
the liquidity problems faced by the Company, because the Company had a
continuing obligation to register shares under a Registration Statement on Form
S-3, File No. 333-13863, and in order to be able to use Form S-3, the Company
could not be in default of in the payment of any dividends since the end of the
last fiscal year.
3
<PAGE>
The Company does not have sufficient capital to operate its business past
May 1997 unless the Company raises additional capital.
The Company is currently negotiating with several sources for the needed
capital and while the Company is confident it will raise the necessary capital,
there can be no assurance the Company will be successful.
RECENT DEVELOPMENTS WITH THE NASDAQ STOCK MARKET
On April 18, 1997, the Company received a letter from The Nasdaq
Stock Market, Inc. ("Nasdaq") informing the Company that based upon its Annual
Report on Form 10-KSB for the year ended December 31, 1996, the Company's
capital and surplus was less than $1,000,000 and that Nasdaq required companies
listed on The Nasdaq SmallCap Market must maintain capital and surplus of at
least $1,000,000 for continued listing. Nasdaq went on to say "in light of the
circumstances, the Company's shares of common stock are subject to delisting
effective with the close of business on May 2, 1997 unless the Company can
provide three (3) copies of an SEC-filed report, which demonstrates that the
Company currently meets all The Nasdaq SmallCap Market listing criteria."
On a Current Report on Form 8-K and 8-K/A, dated April 22, 1997,
the Company reported that based upon its March 31, 1997 balance sheet
(unaudited) and a pro-forma balance sheet as of the same date, including (I) the
conversion of $250,000 of the Company's Series A Redeemable Convertible
Preferred Stock; (ii) the issuance of $500,000 of shares of the Company's common
stock in exchange for an investment in Sound Money Investor's Inc.; and (iii)
the payment, by common stock, for $101,000 of printing services, thereby the
Company reported capital and surplus of $1,031,467.
On May 6, 1997, Nasdaq wrote the Company, "Although the Company
reported capital and surplus of $1,031,467 ..., the Company only achieved
minimal compliance.." and the Company's common stock will be delisted from
Nasdaq effective with the close of business May 13, 1997.
The Company is entitled to a review of the delisting determination
by Nasdaq's staff and has asked for an appeal of the determination at the
earliest time available. Nasdaq has set June 12, 1997 as the date of the review.
Until the review and appeal process is completed, the Company's common stock
will continue to be listed on The Nasdaq SmallCap Market.
On June 17, 1997 the Company was notified that effective June 18, 1997,
the Company's securities would no longer be listed on the Nasdaq SmallCap
Market. The Company's securities now trade on the OTC Bulletin Board.
The Company is currently negotiating with several sources for the needed
capital and while the Company is confident it will raise the necessary capital,
there can be no assurance the Company will be successful.
4
<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) The Registrant did not file a Form 8-K during the quarter
ended March 31, 1997.
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: June 20, 1997 S/ Stuart Dubow
-----------------------
Stuart Dubow
Chief Financial Officer
DATED: June 20, 1997 S/ Stuart Dubow
-----------------------
Stuart Dubow
Chief Financial Officer
5
