ASPV SEC Filings Management Discussion: Investor -
America's Sports Voice Inc.
First Fiscal Quarterly Report (SEC form 10Q)
ITEM 1. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION, RESULTS
OF OPERATIONS and PROPOSED ACQUISITIONS
The following discussion should be read in conjunction with the America's
Sports Voice, Inc.'s (the "Company" or "ASV") financial statements and notes
thereto included herein. In connection with, and because it desires to take
advantage of, the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995, the Company cautions readers regarding certain forward
looking statements in the following discussion and elsewhere in this report and
in any other statement made by, or on the behalf of the Company, whether or not
in future filings with the Securities and Exchange Commission. Forward-looking
statements are statements not based on historical information and which relate
to future operations, strategies, financial results or other developments.
Forward looking statements are necessarily based upon estimates and assumptions
that are inherently subject to significant business, economic and competitive
uncertainties and contingencies, many of which are beyond the Company's control
and many of which, with respect to future business decisions, are subject to
change. These uncertainties and contingencies can affect actual results and
could cause actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. The Company
disclaims any obligation to update forward-looking statements.
The Company through its subsidiary Gourmet Cuisine, Corp. has evolved from
a developmental stage Company into a fully operational Company with revenues of
$493,981 during the six-month period ended December 31, 2000. The Company did
not have any operating income in the prior year. The Company's revenues are
being generated from its food processing line of business. During the current
quarter the Company had revenue of $235,141 and incurred $347,496 in selling,
general and administrative expenses and $26,840 in stock compensation. This
resulted in a net loss of .03 per share, versus a loss of .07 per share in the
prior year quarter.
ITEM 2. Plan of Operation
In addition to its food processing business, the Company intends to provide
information to market the benefits, not only of gourmet foods but diet foods,
prepared foods for working people, catering and direct sales food shipped to
consumers, at a discount, through the Company's Website. As a result, the
Company anticipates revenues not only from its present contracts within the
Airline Industry but in addition from Supermarkets and its direct consumer home
delivery service as well.
In addition ASV has targeted a national and international audience to
market its various products from foreign airlines to international Casinos. ASV
will launch its marketing drive in the northeast United States, commencing in
the New York metropolitan area. To promote the Company's brand name to new
regions and markets, the Company expects to utilize television, radio, print,
direct mail advertising and trade shows in addition to Internet advertising.
Each of the advertising media is intended to solicit a different segment of the
Company's target market. The food processing company, Gourmet Cuisine Corp. has
developed it's own product catalog on CD for marketing it's merchandise. The 500
recipes that Gourmet Cuisine Corp. has acquired the rights to were created by
the world famous Master Chef, Gerhard Daniel.
ITEM 3. ASV intends to develop a multi-media platform for its food-oriented
projects. In this regard, ASV is currently in negotiations with a television
production company, Internet service provider and a renowned comedian and movie
star to become a spokesperson on behalf of the Company. These negotiations
involve the production and filming of a unique broadcast of a new concept that
will capitalize on a proven trend of direct selling to the consumer. In
addition, ASV intends to produce an infomercial, which will consist of, " The
Nutritional Gourmet" doing interviews and call-ins. It is anticipated, although
no agreement has been executed with cable networks, that this broadcast will be
available through various cable networks and the Company's website. The Company
believes that with the combined Infomercial and Internet distribution, the
Company will reach more of its target markets.
ITEM 4 Management believes that it is extremely important to build ASV's
brand image, which should enable the Company to attract an additional stream of
income from sales revenues as the Company's concept is accepted and grows. The
advertising and marketing campaign will blanket targeted markets promoting the
Company's brand name in the consumer marketplace.
ITEM 5. In addition to the Company's forgoing marketing plans, the Company
intends to market to other companies who are interested in marketing either
their products, services or food to their members. The Company plans to private
label and/or co-pack for various food companies, consumer driven businesses such
as hotels and casinos. The Company intends to use its website to notify accounts
of new locations to receive discounts on goods, services and food. The website
will hold a multitude of pricing and items processed daily so the accounts will
have an interest to check the site often, even multiple times daily from home or
office quickly and easily. This traffic visiting the Company's website will act
as an incentive for potential advertisers to market their goods to the website's
visitors. The Company intends to change the content of the website daily and in
some cases prices will be updated multiple times throughout the day.
ITEM 6. The Company anticipates that it will require an infusion of additional
capital, from outside sources, to accomplish its business objectives described
herein. The Company believes that its present anticipated revenues from
operations would not be sufficient to fund operations based upon its business
objectives. There can be no assurance that such funds will be available, in
which case, the Company may have to scale back its business objectives and
planned operations.
ITEM 7. The Company requires additional funding in order to effectuate its
business plan. There is no assurance such funds will become available. Further,
it is anticipated that any such funding, so obtained, will result in significant
dilution of existing shareholders. The inability to obtain sufficient funds from
operations and external sources when needed would have a material adverse affect
on the Company's business, results of operations and financial condition.
Subsequent Event
In May 2000, the Company through its acquisition of Finova Capital
Corporation's ("Finova") secured position acquired Gourmet Cuisine
International, Ltd., a privately held company and its three wholly owned
subsidiary companies, including, Hannelore Gourmet Foods, LTD. (Hereinafter
jointly referred to as "GCI") The Company initially received an assignment of
Finova's security interest, which was a first security interest in all of the
assets of GCI as security for a loan with a principal balance of $1,228,000 at
the time the relevant note was acquired by the Company. The Company paid an
aggregate of $219,000 to fund. (See notes in financial section). Pursuant to
its' rights as the secured creditor the Company is taking the steps to foreclose
on GCI and assume all of the assets, equipment, inventory, receivable and
clients of GCI.
At the time the Company purchased the Finova security interest, the Company also
executed an agreement to purchase the stock of the principals of GCI; however,
the Company based upon substantial misrepresentation proffered said primary the
Company has sought to rescind the agreement. The Company has commenced an action
in Supreme Court, Westchester County to rescind this agreement and obtain
damages from the two principals. The Company will also pursue the repayment of
the $1,228,000 note that was personally guaranteed by the principals.
The Company is also negotiating with the mortgagor to purchase the building
directly from said mortgagor. In October 2000 the mortgagee obtained title to
the property and building through a foreclosure sale based upon a judgment of
foreclosure. The Company has obtained, on February 5, 2001, a motion to dismiss
the mortgagor's action for summary proceeding with this Court recognizing the
Company rights to the existing lease. The mortgagor has moved for rearguement of
the decision
The Company has entered into a contract to purchase a 22,000 square foot
USDA approved building in Herkimer County, New York from KeyBank. The sales
price is $150,000; this includes the plant on 10.5 acres and 2 houses that are
presently rented. The Company has placed a deposit with KeyBank. There is no
date for closing.
In order to obtain the $219,000 necessary to acquire the security interest,
the Company obtained a loan from a minority shareholder in such amount. The
terms of this loan included interest accruing at the rate of 10% per annum,
which loan is due and payable two years from issuance. The relevant note
requires that interest only be paid during the two-year term of the note, which
interest is payable quarterly. (see financial notes)
Liquidity and Capital Resources
The Company presently has nominal cash or cash equivalents. However the
Company has obtained agreement from key management to defer or reduce their
salaries for the present time. The President of the Company has agreed to waive
any salaries due, pursuant to his employment agreement with the Company, until
such time as the Company begins generating revenues from operations. The board
has granted the president and secretary the option to receive 144 stock as
compensation for their back salaries if they elect.
Source: Primark. (c) Copyright 2000. All rights reserved.
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
Index to Form 10-QSB
For the Periods Ended December 31, 2000
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets ............................... 3
Consolidated Statements of Operations ..................... 4-5
Consolidated Statements of Stockholders' Deficit .......... 6-7
Consolidated Statements of Cash Flows ..................... 8-10
Notes to Consolidated Financial Statements ................ 11-20
Item 2. Management's Discussion and Analysis ........................... 21-24
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 2000 AND JUNE 30, 2000
Audited
December 31, June 30,
2000 2000
----------- -----------
ASSETS
Current Assets:
Cash in banks $ 4,487 $ 16,285
Accounts receivable 158,924 --
Inventories 19,026 --
Loan receivable -- 1,150
----------- -----------
Total current assets 182,437 17,435
Other assets:
Equipment, net of accumulated
depreciation of $3,075 218 145
Deposits 5,075 5,075
Deferred acquisition costs 231,308 340,969
----------- -----------
Total other assets 236,601 346,189
----------- -----------
TOTAL ASSETS $ 419,038 $ 363,624
=========== ===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Accounts payable $ 172,233 $ 256,061
Salaries and taxes payable 378,971 --
Accrued expenses 61,950 20,000
Current portion of stockholder loans payable 157,467 157,467
----------- -----------
Total current liabilities 770,621 433,528
Stockholder loans payable 237,000 219,000
----------- -----------
TOTAL LIABILITIES 1,007,621 652,528
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' (DEFICIT)
Common stock, par value $.0001;
150,000,000 shares authorized; 9,357,500
and 8,837,500 shares issued and
outstanding at December and June 2000,
respectively 936 884
Additional paid-in capital 1,253,019 1,128,221
Accumulated (deficit) (1,842,538) (1,418,009)
----------- -----------
Total stockholders' (deficit) (588,583) (288,904)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT) $ 419,038 $ 363,624
=========== ===========
3
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
---------- ----------
Sales $ 235,141 --
Cost of sales (143,992) --
---------- ----------
Gross profit 91,149 --
General and Administrative Expenses
Professional fees 64,805 --
Salaries and benefits 143,831 --
Office and other administrative expenses 165,700 67,962
Bad debt expense -- 339,808
Depreciation -- --
---------- ----------
Total general and administrative expenses (374,336) (407,770)
---------- ----------
(Loss) from operations (283,187) (407,770)
---------- ----------
Other income and expense
Interest expense (5,483) --
---------- ----------
Total other income and (expense) (5,483) --
---------- ----------
Net (loss) before income taxes (288,670) (407,770)
Income taxes -- --
---------- ----------
Net (loss) $ (288,670) $ (407,770)
========== ==========
Net (loss) per common share $ (.03) $ (.07)
========== ==========
Weighted average number of
shares of common stock outstanding 9,357,500 5,987,500
========== ==========
4
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
---------- ----------
Sales $ 493,981 --
Cost of sales (295,017) --
---------- ----------
Gross profit 198,964 --
General and Administrative Expenses
Professional fees 201,768 --
Salaries and benefits 209,970 --
Office and other administrative expenses 200,652 100,844
Bad debt expense -- 339,808
Depreciation 145 770
---------- ----------
Total general and administrative expenses 612,535 (441,422)
---------- ----------
(Loss) from operations (413,571) (441,422)
---------- ----------
Other income and expense
Interest expense (10,958) --
---------- ----------
Total other income and (expense) (10,958) --
---------- ----------
Net (loss) before income taxes (424,529) (441,422)
Income taxes -- --
---------- ----------
Net (loss) $ (424,529) $ (441,422)
========== ==========
Net (loss) per common share $ (.05) $ (.08)
========== ==========
Weighted average number of
shares of common stock outstanding 9,216,087 5,487,500
========== ==========
5
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000
Common Additional Total
Stock $.0001 Par Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) (Deficit)
---------- ---- ---------- ----------- ---------
Opening balance - July 1, 2000 8,837,500 $884 $1,128,221 $(1,418,009) $(288,904)
Issuance of common stock for promotion
and consulting services rendered 520,000 52 124,798 124,850
Net loss during for the
six months ended December 31, 2000 (424,529) (424,529)
---------- ---- ---------- ----------- ---------
Closing balance - December 31, 2000 9,357,500 $936 $1,253,019 $(1,842,538) $(588,583)
========== ==== ========== =========== =========
6
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' (DEFICIT)
FOR THE YEAR ENDED JUNE 30, 2000
Common Additional Total
Stock $.0001 Par Paid-in Accumulated Stockholders'
Shares Amount Capital (Deficit) (Deficit)
--------- ------ ---------- ----------- -----------
Opening balance - July 1, 1999 4,987,500 $499 $ 723,506 $ (408,485) $ 315,520
Stock issued in private placement 2,000,000 200 29,800 -- 30,000
Stock issued as compensation 1,600,000 160 356,190 -- 356,350
Stock options exercised 250,000 25 18,725 -- 18,750
Net loss for the year ended
June 30, 2000 (1,009,524) (1,009,524)
--------- ---- ---------- ----------- -----------
Closing balance - June 30, 2000 8,837,500 $884 $1,128,221 $(1,418,009) $ (288,904)
========= ==== ========== =========== ===========
7
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) $(424,529) $(441,422)
ADJUSTMENTS TO RECONCILE NET LOSS
FROM OPERATIONS TO CASH USED IN
OPERATING ACTIVITIES
Bad debt -- 339,808
Depreciation and amortization 145 770
Stock issued for professional services 124,850 --
(Increase) decrease in assets:
Accounts receivable (158,924) --
Inventories (19,026) --
Deferred acquisition costs 109,661 --
Increase (decrease) in liabilities:
Accounts payable (83,828) 96,742
Salary and taxes payable 378,971 --
Accrued expenses 41,950 --
--------- ---------
Total adjustments 393,799 437,320
--------- ---------
Net cash provided by (used in) operations (30,730) (4,102)
8
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
-------- -------
Balance forward (30,730) (4,102)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (218) --
CASH FLOWS FROM FINANCING ACTIVITIES:
Loans receivable (advanced) repaid 1,150 (1,149)
Net proceeds from loans 18,000 --
Stockholder loans -- 5,575
Net proceeds from common stock sold -- 100
-------- -------
Net cash from (used) in financing activities 19,150 4,526
Net Increase (decrease) in cash in banks (11,798) 424
-------- -------
Cash in banks - beginning of period 16,285 (10)
-------- -------
Cash in banks - end of period $ 4,487 $ 414
======== =======
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for:
Interest expense $ -- $ --
======== =======
Income taxes $ -- $ --
======== =======
9
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
NON-CASH INVESTING AND FINANCING TRANSACTIONS
During the quarter ended September 30, 2000, ASV issued 520,000 shares of common
stock valued at $124,850 in connection with professional promotion services.
10
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
Note 1- UNAUDITED FINANCIAL INFORMATION
The unaudited financial information included for the periods ended December 31,
2000 and 1999 was taken from the books and records without audit. However, such
information reflects all adjustments (consisting only of normal recurring
adjustments, which are of the opinion of management, necessary to reflect
properly the results of interim periods presented.) The results of operations
for the six-month period ended December 31, 2000 are not necessarily indicative
of the results expected for the fiscal year ending June 30, 2001.
Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of America's Sports Voice, Inc.
and subsidiary (hereinafter referred to "ASV" or "the Company") is presented to
assist in understanding the financial statements. The financial statements and
notes are representations of the management of ASV, who is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
(A) NATURE OF BUSINESS
America's Sports Voice was incorporated in the State of New York in February
1997. The Company was formed to create a sports fan advocacy group that provides
information, sports programming and sports merchandise. Since inception, the
Company has not generated any revenues from its intended principal business
activity.
Effective June 28, 2000, the company created a wholly owned subsidiary, Gourmet
Cuisine Corp. that was formed for the purpose of acquiring the assets and
business of Gourmet Cuisines International, Ltd., as described in Note 4.
11
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
(B) USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual results
could differ from those estimates.
(C) REVENUE RECOGNITION
ASV records revenue when products are shipped from its plant.
(D) OFFICE EQUIPMENT AND DEPRECIATION
Office equipment is stated at cost. Upon retirement or disposal of assets, the
cost and accumulated depreciation are eliminated and the resulting gain or loss
is included in other income. Maintenance and repairs are expensed as incurred.
Depreciation of equipment is provided over the estimated useful lives of the
various assets. Generally, the equipment has been depreciated using the
straight-line method over a period of five years. Depreciation expense was $145
and $770 for the six months ended December 31, 2000 and 1999, respectively.
12
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
(E) DEFERRED ACQUISITION COSTS
Deferred acquisition costs represent the costs associated with the planned
acquisition described in Note 4. Deferred acquisition costs are capitalized as a
component of total acquisition costs until successful consummation of a planned
acquisition. Such costs will be expensed upon determination that a proposed
acquisition is unlikely to occur or will be amortized upon completion of the
acquisition. Until October 28, 2000, the Company was offsetting rent payments as
per an agreement with Hannelore Enterprises against amounts advanced to Gourmet
Cuisines International, Ltd. Since October 28, 2000 as discussed in note 7
(Litigation), ASV has stopped offsetting rent payable to Hannelore and is
accruing rent of $11,000 per month pending the resolution of the legal matter.
(F) INVENTORIES
Inventories are stated at the lower of cost or market.
(G) INCOME TAXES
No income taxes were provided during each of the fiscal periods presented since
ASV incurred losses in each period. Normally, taxes are provided on all revenue
and expense items included in the consolidated statement of operations,
regardless of the period in which such items are recognized for income tax
purposes, except for items representing a permanent difference between pretax
accounting income and taxable income.
(H) RECLASSIFICATIONS
Certain reclassifications have been made to the 1999 financial statements in
order to conform to the 2000 financial statement presentation.
13
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
(I) CONSOLIDATED NET (LOSS) PER SHARE
Consolidated net (loss) per common share is computed on the basis of the
weighted average number of common shares and equivalents outstanding during the
period. Only the weighted average number of shares of common stock outstanding
was used to compute basic loss per share for the periods ended December 31, 2000
and 1999 as the effect of stock options, or other common stock equivalents
outstanding during the period were anti-dilutive.
Note 3 - FINANCING OPERATIONS
ASV has experienced cash losses from operations for the six months ended
December 31, 2000, which have been funded primarily by loans. The company will
require additional equity or debt financing in order to sustain its ongoing
operations. The Company is aggressively pursuing investors/lenders and is
confident it will secure the necessary working capital within the near term with
which it can continue to grow the Company and provide for its working capital
and investment needs.
Note 4- PLANNED ACQUISITION
In May 2000, ASV entered into an agreement to acquire all of the issued and
outstanding stock of Gourmet Cuisines International, Ltd., a privately held
company and its three wholly owned subsidiary companies (hereinafter jointly
referred to as "GCI") in exchange for the issuance of an aggregate of 400,000
shares of ASV's "restricted" common stock. GCI is engaged in the business of
processing gourmet meals for first class passengers on various air carriers. In
conjunction therewith, ASV received an assignment of a security interest from
Finova Capital Corporation ("Finova"), which held a first position security
interest in all of the assets of GCI, for which ASV paid an aggregate of
$219,000. The outstanding principal balance owed by GCI to Finova was $1,228,000
at the time the note and security interest was acquired by ASV.
14
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
Note 4 - PLANNED ACQUISITION (CONTINUED)
Subsequent to entering into the agreement, ASV discovered that GCI had
significant undisclosed liabilities. Such liabilities included a $5 million
lawsuit against GCI. ASV also discovered that GCI was the guarantor of a
mortgage given by 247 Broadway, LLC (an affiliate of GCI) the owner of the
building that ASV presently operates in. Such mortgage was in default and on
October 28, 2000, the building was foreclosed upon.
As a result of the above developments, ASV decided not to close on the
acquisition of GCI. Instead, ASV is planning to exercise its security interest
acquired from Finova to foreclose on the related unpaid note and thereby acquire
all the assets of GCI, including GCI's wholly owned subsidiaries. Such assets
will be assigned to Gourmet Cuisine Corp., ASV's wholly owned subsidiary. In
addition, ASV has personal guarantees from the two stockholders of GCI.
Such plans are contingent upon ASV's ability to capitalize the food processing
operations, obtain financing in the amount of approximately $500,000 to acquire
real estate and to establish its planned operations in Utica, NY and to obtain
financing in the amount of approximately $975,000 to acquire the building ASV
now occupies.
15
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
Note 5 - STOCKHOLDER LOANS PAYABLE
Stockholder loans payable consist of the following:
Unsecured 10% loan payable to MGZ International
Corp., a minority stockholder. Principal is due
May 2002. Interest only is payable quarterly. $219,000
Unsecured, non-interest bearing loan from
Pacificom 18,000
Unsecured, non-interest bearing demand loan
payable to MGZ 157,467
--------
Total 394,467
Less current portion 157,467
--------
Stockholder loans payable -net of current portion $237,000
========
In conjunction with the loans payable to MGZ described above, ASV granted the
note holder the option to convert the principal amount of the note into as many
as one million shares of the Company's common stock at a conversion price of
$0.50 per share. The note holder may exercise it option to convert through
February 2002.
NOTE 6 - INCOME TAXES
ASV accounts for income taxes on the liability method, as provided by Statement
of Financial Accounting Standards 109, Accounting for Income Taxes (SFAS 109).
For the periods ended December 31, 2000, and for the year ended June 30, 2000,
no income tax (benefit) was recorded in the consolidated statements of
operations.
16
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
Note 6 - INCOME TAXES (CONTINUED)
Deferred tax assets and liabilities consist of the following:
Dec. 31, Dec. 31,
2000 1999
-------- --------
Deferred tax assets-
Tax benefit of net operating
loss carryovers $522,000 $268,000
Valuation allowance 522,000 268,000
-------- --------
$ 0 $ 0
======== ========
The valuation allowance provided for the periods are based on management's
valuation of the likelihood of realization. Management has concluded that the
income tax benefit provided in the Statements of Operations should be limited to
the amount of future benefit that can be assured. ASV has net operating losses
for financial reporting purposes approximating $1,740,000 through December 31,
2000 available to offset future income for financial reporting purposes expiring
in 2022.
NOTE 7- COMMITMENTS AND CONTINGENCIES
EMPLOYMENT CONTRACT
Effective September, 1998, ASV entered into an employment contract with the
company's President. The contract is for a 5 year period and provides for annual
compensation of $98,000. As of December 31, 2000, accounts payable includes $
280,500 of unpaid compensation due to the Company's President and to other
employees.
17
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
NOTE 7 - COMMITMENTS AND CONTINGENCIES (CONTINUED)
On December 30, 2000, the Board of Directors of ASV granted the President and
Secretary of the Company options to purchase shares of common stock of the
Company on account of accrued salaries owed to them at the agreed rate of 50% of
the bid price at the time the options are exercised. For financial statement
purposes additional compensation expense of $26,840 was recorded for the total
number of shares of stock issuable at the grant date valued at the closing price
of the stock less a 40% discount due to the lack of marketability and other
factors.
DEPOSIT ON LAND
During the year ended June 30, 2000 the Company placed a $5,000 deposit on the
purchase of a tract of land near Utica, New York. The land is to be utilized in
the establishment of a food processing plant.
CONSULTING AGREEMENT
During April 2000, ASV entered into a consulting agreement with MGZ
International Corp. ("MGZ"), a minority stockholder. Under the terms of the
agreement, MGZ is entitled to an $80,000 fee upon the acquisition of the
business of CGI as described in note 3. Since the acquisition has not been
consummated as of December 31, 2000, no consulting fees have been recorded by
ASV.
LOAN AGREEMENT
During February 2000, ASV entered into a loan agreement with Pacificom
(`Pacificom").
Under the terms of the agreement, Pacificom agreed to loan ASV up to $1 million
at 11% interest with unpaid principal and interest due December 31, 2000. The
agreement is secured by 1 million shares of ASV's common stock which was pledged
by MGZ, a minority stockholder.
18
AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
NOTE 7- COMMITMENTS AND CONTINGENCIES(CONTINUED)
In addition, the lender received the option to purchase up to 1 million shares
of ASV's common stock at $0.10 per share. Such options may be exercised during
the month of December 2000. ASV also has the right to acquire up to 900,000 of
the options from Pacificom at a purchase price of $0.10 per share at any time
prior to December 2000. Since the full amount of the note was not funded, the
parties are seeking to resolve the matter and have entered in to a "stand-still"
agreement until June 30, 2001. The parties have agreed to use their best efforts
to resolve this matter prior to June 30, 2001. It should be noted that the
company has only acknowledged receipt of $394,000.
Pacificom made only $18,000 of direct loans to ASV. Pacificom advanced funds to
MGZ. Such funds were used by MGZ to make $376,000 of loans to ASV. Accordingly,
the total outstanding obligation of ASV is the loan payable to MGZ described in
note 5. ASV, MGZ and Pacificom are currently negotiating a revision to the
original loan agreement that would recognize that ASV would have no direct
indebtedness to Pacificom. ASV's management and legal counsel believe that such
revision will be effected on terms satisfactory to ASV.
MANAGEMENT AGREEMENT
Effective February 1, 2000, ASV entered into an agreement with Hannelore Gourmet
Foods, Ltd. ("Hannelore"), a wholly-owned subsidiary of CGI (see note 4) to
manage Hannelore's business and finances. The agreement is for a one-year period
ending January 31, 2001, but may be terminated by either party upon 30-day
written notice. ASV is to be paid 50% of the profits of Hannelore at the end of
the contract. The Company has not recorded any management revenue during the
period ended December 31, 2000.
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AMERICA'S SPORTS VOICE, INC. AND SUBSIDIARY
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
NOTE 7- COMMITMENTS AND CONTINGENCIES(CONTINUED)
LITIGATION
ASV is involved in two legal matters arising out of the demised premises
utilized by the company to operate the food processing and food distribution
business of CGI and it wholly owned subsidiary Hannelore. The first matter is a
litigation, which involves a claim by 247 Broadway, LLC as Landlord for back
rent and an Order of Eviction of the Tenant. The Company has made a motion to
dismiss the summary proceeding of 247 Broadway, LLC based upon the fact that in
October, 2000, 247 Broadway, LLC lost title to the property through a
foreclosure action by the mortgagor. That motion is before the court .
Subsequent to October, the mortgagor having obtained title to the building and
property through its foreclosure action, commenced a summary proceeding against
the Company to evict. The Company made a motion to dismiss the action, which was
granted by the Court. In the decision of the Court the lease was recognized as
continuing in force. Accordingly, the Court stated that the lease was not
extinguished by the foreclosure sale. The mortgagor has moved for a re-argument
of the court's decision. Management believes that it will resolve this matter
without it having a material impact upon the Company.
During the year ended June 30, 2000, ASV instituted a legal action against First
Capital, Inc., a Florida stock brokerage firm. The action seeks the return of
600,000 shares of ASV's common stock which were issued to First Capital for
services to be rendered in connection with promotion of the Company's stock. ASV
alleges that such services were never provided. While the outcome of this matter
cannot be determined at this time, in the opinion of management, the matter will
ultimately be resolved on terms favorable to the Company.
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