UNITED STATES
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
For the quarter ended December 31, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE EXCHANGE ACT
Commission file number: 0-22242
BOUNCEBACKTECHNOLOGIES.COM, Inc.
(Name of the Small Business Issuer in its Charter)
Minnesota 41-0950482
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
707 Bienville Boulevard
Ocean Springs, Mississippi 39564
-------------------------------------
(Address of principal executive office)
Issuer's telephone number: (228) 872-5558
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
As of February 12, 2001, 12,461,258 Shares of Common Stock of the Company were
outstanding.
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Exhibits and Reports on Form 8-K
SIGNATURES
2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BOUNCEBACKTECHNOLOGIES.COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS at December 31, 2000 September 30, 2000
------------ ------------
CURRENT ASSETS
Cash $ 276,273 $ 98,208
Accounts receivable, net 149,171 121,132
Inventory 10,005 12,149
Prepaid expenses 94,436 174,123
Net assets for sale - entertainment 395,040 505,274
Net assets for sale - gaming 633,684 698,475
------------ ------------
TOTAL CURRENT ASSETS 1,558,609 1,609,361
DEFERRED INCOME TAXES -- --
PROPERTY AND EQUIPMENT, net 330,938 368,873
GOODWILL, net 503,912 523,300
NOTES RECEIVABLE - related parties, net 202,818 244,145
OTHER ASSETS 24,201 24,201
------------ ------------
$ 2,620,478 $ 2,769,880
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 428,344 $ 335,820
Current obligation - long term debt 220,262 390,342
Accrued expenses and other liabilities 117,244 269,906
------------ ------------
TOTAL CURRENT LIABILITIES 765,850 996,068
LONG TERM DEBT, net of current portion 793,153 815,351
DEFERRED REVENUE 2,000,000 2,000,000
MINORITY INTEREST (104,904) (82,602)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred Stock - 8% cumulative, $0.01
par value; 5,000,000 shares authorized,
none issued and outstanding -- --
Common Stock - $0.01 par value; 30,000,000
shares authorized, 12,461,258 shares issued and 113,613 113,613
outstanding
Additional paid-in capital 23,155,247 23,155,247
Retained deficits (24,102,481) (24,227,797)
Accumulated comprehensive income -- --
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (833,621) (958,937)
------------ ------------
$ 2,620,478 $ 2,769,880
============ ============
The accompanying notes are an integral part of these condensed consolidated financial statements.
3
BOUNCEBACKTECHNOLOGIES.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31
(unaudited)
2000 1999
------------ ------------
OPERATING REVENUES:
Management fees $ -- $ --
Technology sales 92,952 --
------------ ------------
92,952
------------ ------------
OPERATING EXPENSES:
Technology cost of sales 56,855 --
Technology selling, general and administrative expenses 147,609 --
Corporate selling, general and administrative expenses 476,330 578,204
------------ ------------
680,794 578,204
------------ ------------
OPERATING PROFIT (587,842) (578,204)
OTHER INCOME AND EXPENSES:
Other income 3,735 --
Interest income 18,669 13,443
Interest expense -- (28,866)
------------ ------------
22,404 (15,423)
------------ ------------
LOSS BEFORE MINORITY INTEREST (565,438) (593,627)
Minority Interest 22,302 --
------------ ------------
LOSS BEFORE INCOME TAXES (543,136) (593,627)
Provision for income taxes -- --
------------ ------------
NET LOSS - OPERATING (543,136) (593,627)
------------ ------------
DISCONTINUED OPERATIONS:
Income from discontinued operations - entertainment 760,727 929,766
Loss from discontinued operations - gaming (92,276) (159,840)
------------ ------------
NET INCOME (LOSS) - DISCONTINUED OPERATIONS 668,451 769,926
------------ ------------
EXTRAORDINARY ITEM - Gain on early extinguishment of debt -- 390,826
------------ ------------
NET INCOME (LOSS) $ 125,315 $ 567,125
------------ ------------
NET INCOME (LOSS) PER SHARE - Basic and Diluted
Operating loss $ (0.04) $ (0.06)
Discontinued operations 0.05 0.07
Extraordinary item - gain on early extinguishments of debt -- 0.04
------------ ------------
NET INCOME (LOSS) PER SHARE $ 0.01 $ 0.05
------------ ------------
Weighted average common shares outstanding 12,361,258 10,431,880
------------ ------------
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
BOUNCEBACKTECHNOLOGIES.COM, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
(unaudited)
2000 1999
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (543,136) $ (593,627)
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on early extinguishment of debt -- 390,826
Depreciation and amortization 19,816 8,260
Provisions for doubtful accounts 7,862 --
Minority interests (22,302) --
Net change in working capital accounts (45,759) 124,210
Net change in long term accounts 98,650 42,348
----------- -----------
NET CASH PROVIDED BY OPERATING ACTIVITIES (484,869) (27,983)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment -- (14,208)
----------- -----------
NET CASH PROVIDED BY INVESTING ACTIVITIES -- (14,208)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of long term debt (22,198) (822,106)
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES (22,198) (822,106)
----------- -----------
CASH FLOWS PROVIDED BY OPERATIONS (507,067) (864,297)
CASH FLOWS FROM DISCONTINUED OPERATIONS
Entertainment segment 768,619 1,111,752
Gaming segment (83,487) 49,290
----------- -----------
NET CASH PROVIDED BY DISCONTINUED OPERATIONS 685,132 1,161,042
----------- -----------
NET INCREASE (DECREASE) IN CASH 178,065 296,745
CASH AT BEGINNING OF PERIOD 98,208 957,253
----------- -----------
CASH AT END OF PERIOD $ 276,273 $ 1,253,998
=========== ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the three months for interest expense $ -- $ 27,866
Cash paid during the three months for income taxes $ -- $ --
DISCLOSURE OF NON-CASH FINANCING AND INVESTING ACTIVITIES
Common stock issued on conversion of debentures 629,378
The accompanying notes are an integral part of these condensed consolidated financial statements.
5
BOUNCEBACKTECHNOLOGIES.COM, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE MONTHS ENDED DECEMBER 31, 2000 and 1999
Common Additional Accumulated
Stock Common Paid-In Retained Comprehensive
Outstanding Stock Capital Deficits Income Total
----------- ----- ------- -------- ------ -----
BALANCE at
September 30, 1999 10,431,880 $ 104,319 $22,953,761 $ (23,811,409) $ - $(753,329)
Common stock issued on
conversion of debentures 629,378 6,294 144,486 150,780
Options issued on
conversion of debentures 9,000 9,000
Net income 567,125 567,125
-------------- ------------
BALANCE at
December 31, 1999 11,061,258 $ 110,613 $ 23,107,247 $ (23,244,284) $ - $(26,424)
========== ========= ============ ============== ======== =========
BALANCE at
September 30, 2000 12,461,258 $ 113,613 $ 23,155,247 $ (24,227,797) - (958,937)
Net loss 125,315 125,315
-------------- ------------
BALANCE at
December 31, 2000 12,461,258 $ 113,613 $ 23,155,247 $ (24,102,481) $ - $ (833,621)
========== ========= ============ ============== ======== ============
The accompanying notes are an integral part of these condensed consolidated financial statements.
6
BOUNCEBACKTECHNOLOGIES.COM, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements of the Company are unaudited. In the
opinion of management, all adjustments (which include only normal recurring
accruals) necessary for a fair presentation of such financial statements have
been included. Interim results are not necessarily indicative of results of a
full year.
The financial statements and notes are presented in accordance with the rules
and regulations of the Securities and Exchange Commission and do not contain
certain information included in the Company's annual report. Therefore, the
interim statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's annual report.
Note 1 - Business
Recent Developments:
BounceBackTechnologies.com, Inc. (together with its subsidiaries the "Company")
was formerly known as Casino Resource Corporation. The name change, effective
January 1, 2000, reflects the Company's intent to focus on marketing, sales and
advertising business solutions to the Internet and e-commerce industries. The
Company's new ticker symbol for its common stock is "BBTC" and the stock is
traded on the NASD OTCBB.
Effective January 25, 2001, the Company entered into an asset purchase agreement
with On Stage Entertainment, Inc. ("On Stage") to sell the Company's assets
relating to the Country Tonite Theatre in Branson, Missouri, and the Country
Tonite Production Show for $3.8 million. The sale does not include the licensing
agreement with Country Tonite Theatre Pigeon Forge, Tennessee. On January 31,
2001, the Company closed the sale transaction with On Stage and received
$380,000 in cash, a secured short term 10% interest bearing note for $650,000 of
which $150,000 is due on or before February 15, 2001 and $500,000 is due on or
before March 15, 2001, and the balance of $2,800,000 million is payable to the
Company under a 10% interest bearing secured promissory note due no later than
July 31, 2001. Interest payments underlying the promissory note will be paid
monthly, one month in arrears, beginning March 1, 2001. Accordingly, CRC of
Branson, Inc., a wholly owned Missouri subsidiary and Country Tonite
Entertainment, Inc., a wholly owned Nevada subsidiary as previously disclosed
the "entertainment segment" are reported as discontinued operations.
Additionally, the Company has implemented a strategy to divest itself of its
gaming segment, Casino Caraibe, located in Tunisia, North Africa; which is also
reported as discontinued operations herein.
NOTE 2 Net Assets Held for Sale
Entertainment
In conjunction with the Company's decision to focus its business efforts on
marketing and sales applications in the e-commerce industry, it offered its
entertainment segment for sale. The entertainment segment is comprised of the
Company's wholly owned subsidiaries, Country Tonite Enterprises, Inc. and CRC of
Branson, which leased and operated the Country Tonite Theatre in
7
Branson, Missouri and entered into a license agreement with the Country Tonite
Theatre in Pigeon Forge, Tennessee.
Statement of Operations and Assets and Liabilities of the entertainment segment
at December 31, 2000 and September 30, 2000 were as follows;
Three months ended Dec. 31 2000 1999
----------- -----------
Revenues
CRC of Branson $ 1,897,566 $ 2,038,289
CTE -- 411,000
CTT, LLC -- --
----------- -----------
1,897,566 2,449,289
Expenses
CRC of Branson 1,130,939 1,189,078
CTE 5,900 336,445
CTT, LLC -- (6,000)
----------- -----------
1,136,839 1,519,523
Income $ 760,727 $ 929,766
=========== ===========
DEC. 31, 2000 SEP. 30, 2000
----------- -----------
Assets
Current assets $ 564,147 $ 664,415
Property and equipment 212,179 220,070
Other assets -- --
----------- -----------
Total assets 776,326 884,485
----------- -----------
Liabilities
Current liabilities 381,286 379,211
Long term debt -- --
Other liabilities -- --
----------- -----------
Total liabilities 381,286 379,211
----------- -----------
Net assets for sale $ 395,040 $ 505,274
=========== ===========
8
Gaming
Through its wholly owned subsidiary CRC of Tunisia, S.A., the Company leases and
operates a casino and 500 seat theatre in Sousse, Tunisia, North Africa. The
Company desires to sell its casino operation in Tunisia, and continues to report
its activity as a discontinued operation.
Three months ended Dec. 31 2000 1999
----------- -----------
Revenues $ 450,690 $ 663,349
Expenses 542,966 823,189
----------- -----------
Income (Loss) $ (92,276) $ (159,840)
=========== ===========
Assets
Current assets $ 990,514 $ 854,442
Property and equipment 893,043 1,019,676
Other assets -- --
----------- -----------
Total assets 1,883,557 1,874,118
----------- -----------
Liabilities
Current liabilities 1,242,148 1,167,918
Long term debt -- --
Currency translation 7,725 7,725
----------- -----------
Total liabilities 1,249,873 1,175,643
----------- -----------
Net assets for sale $ 633,684 $ 698,475
=========== ===========
NOTE 3 Long-Term Liabilities
DEC. 31, 2000 SEP. 30, 2000
---------- ----------
Debenture, 6% $ -- $ 127,894
Debenture, zero, discounted at 6% 728,154 710,268
Note payable, zero, discounted at 9.5% 139,127 219,869
Mortgage payable, 9.5% 81,134 82,457
Equipment notes, 9.95% to 10.9% 65,000 65,205
---------- ----------
1,013,415 1,205,693
Less current obligation 220,262 390,342
---------- ----------
$ 793,153 $ 815,351
========== ==========
Long-Term Debt
On December 31, 1999, the Company and Roy Anderson Corporation agreed to amend
and restate the debenture agreement. The restated debenture agreement separated
the remaining balance outstanding of $1,028,553 as of December 31, 1999 into two
debentures. The first debenture of $342,655 is payable at 6% fixed interest in
monthly installments of $44,326 beginning April 2000 with the last payment due
November 2000. The second debenture of $685,898 is payable in one lump sum at 6%
fixed interest on December 31, 2002. Mandatory prepayment conditions exist for
the second debenture should the Company complete its sale of discontinued
operations, the sale or disposition of other existing business assets or
operations, the collection of any proceeds from litigation or the collection of
any payments from the Lakes Gaming agreement. In addition, the Company granted
Mr. Anderson an option to purchase 300,000 shares of common stock to modify the
original debenture. (These options were exercised in May 2000.) The Company also
posted 1,100,000 shares of common stock in escrow as collateral.
9
In October 1999, the Company renegotiated an agreement to restructure a
discounted note payable in consideration for a cash payment of $150,000 paid in
November 1999 and a noninterest-bearing note of $512,500 payable in monthly
installments of $28,472 beginning December 1, 1999. This note will be discounted
to an effective interest rate of 9.5%. This restructuring resulted in an gain on
the extinguishment of debt in the amount of $374,642.
A mortgage payable with interest at 9.5%, collateralized by real estate, is
payable in monthly installments of $1,139 through May 2000 with a final payment
of $83,506 due in June 2001. It is the Company's intent to refinance this debt.
Other notes payable, with interest ranging from 9.95% to 10.9%, are
collateralized by equipment, payable in monthly principal and interest
installments ranging from $634 to $1,191 through June 2004.
As of December 31, 2000, annual maturities of long term debt are as follows:
Year ending
2001 $ 198,064
2002 49,677
2003 759,554
2004 3,060
2005 3,060
Thereafter -
-----------
$ 1,013,415
===========
The Company has a line of credit of $200,000 of which zero balance was due
December 31, 2000.
NOTE 4 Deferred Revenue
In December 1998, the Company entered into a Memorandum of Understanding to form
a joint venture with Lakes Gaming, Inc. (NASDAQ: LACO) for the purpose of
pursuing a management and development agreement to develop one or more casinos
on behalf of the Pokagon Band of Potawatomi Indians (the "Pokagon Tribe") in
southwestern Michigan and northern Indiana. In May 1999, the Company and Lakes
Gaming entered into an agreement to terminate the Memorandum of Understanding,
in the event that the Pokagon Tribe chose to enter into management and
development agreements solely with Lakes Gaming. In June 1999, Lakes Gaming was
selected by the Pokagon Tribe to negotiate a management and development
agreement. On August 31, 1999, the newly elected tribal council of the Pokagon
Tribe ratified the Management and Development Agreement with Lakes Gaming and
the Company's Revised Conditional Release and Termination Agreement with Lakes
Gaming became effective. The terms of the Revised Conditional Release and
Termination Agreement call for the payment by Lakes Gaming, Inc. to the Company
of an aggregate maximum sum of $16.1 million. The balance of $14.1 million is
payable if certain events occur relative to, among other things, the location of
the Tribe's casino, the opening of the casino and Lakes Gaming manages the
casino. The Company received a $2 million payment on August 31, 1999. The
agreement calls for the Company to repay the $2 million if after five years the
casino has not opened. Further, $2.5 million of the $16.1 million payment is due
only if the Tribe builds a casino in Indiana and Lakes Gaming is the manager.
10
The Company is not scheduled to receive any further payments until a Michigan or
Indiana casino opens. Lakes Gaming anticipates the commencement of construction
on a Michigan casino in 2001. However, there can be no assurances provided with
respect to timing of completion of the casino as the proposed gaming site must
be accepted into trust by the U.S. government before construction can begin
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is management's discussion and analysis of certain factors which
have affected the Company's financial position and operating results during the
period included in the accompanying condensed consolidated financial statements.
THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO THREE MONTHS ENDED
DECEMBER 31, 1999.
The Company is holding its entertainment and gaming segments for sale in order
to focus the Company's resources on promotional and marketing opportunities in
the e-commerce industry. As a result, the entertainment and gaming segments are
reported as discontinued operations. Consequently, only BounceBackMedia reported
revenues of $92,952 from continuing operations reported for the three months
ended December 31, 2000.
As of January 25, 2001 the Company entered into an asset purchase agreement with
On Stage Entertainment, Inc. for $3.8 million. The company closed the sale with
On Stage on January 31, 2001 and received cash totaling $380,000 and secured 10%
interest bearing promissory notes for the remaining balance due.
The Company's general and administrative expenses aggregated $453,926 in the
three months ended December 31, 2000. This was a decrease of $124,278 or 21%,
from the $578,204 incurred in the same period in 1999. The decrease was due
primarily to a reduction in accounting fees ($36,491), bad debt expense
($79,526) and interest expense ($42,525).
Interest expense totaled $5,127 for the three months ended December 31, 2000
compared to $27,866 for the same period in fiscal 1999. The reduction was
primarily due to the refinancing and early extinguishment of debt.
No federal income tax expense was recorded for the three months ended December
31, 2000 or December 31, 1999 as a result of available federal net operating
loss carryforwards. At December 31, 2000, the Company has net operating loss
carryforwards of approximately $10,000,000 for federal and state tax purposes
that begin to expire in 2009.
11
Operating results of the entertainment segment being held for sale, exclusive of
corporate charges, for the three month periods ended December 31, 2000 and 1999
were as follows:
2000 1999
---------- ----------
Revenues $1,897,566 $2,449,289
Net Income $ 760,727 $ 929,766
========== ==========
Operating results of the gaming segment being held for sale, exclusive of
corporate charges, for the three month periods ended December 31, 2000 and 1999
were as follows:
2000 1999
--------- ---------
Revenues $ 450,690 $ 663,349
Net Loss $ (92,276) $(159,840)
========= =========
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased from $98,208 as of September 30, 2000 to
$276,273 as of December 31, 2000. Cash and cash equivalents do not reflect any
cash balances from the entertainment or gaming segments being held for sale. Nor
do these balances reflect any funds from the anticipated sale from either
discontinued business segment.
The Company anticipates using the proceeds from the sale of its discontinued
operations to provide, among other things, capital for its marketing and sales
applications relative to its mini-CD technology.
Under the Revised Conditional Release and Termination Agreement with Lakes
Gaming, the Company could receive up to $16.1 million over the life of the
management contract Lakes Gaming has with the Pokagon Band of Potawatomi
Indians. A $2 million payment was received in fiscal 1999. The agreement also
calls for the Company to repay the $2 million payment if after 5 years a Pokagon
casino is not opened. The Company will not receive any further payments under
the agreement until a Michigan or Indiana casino opens.
Until such time the discontinued segments are sold, the Company anticipates that
cash on hand and cash from future operations will be sufficient to meet the
working capital and debt service requirements of its existing business for the
next fiscal year.
Capital Expenditures by the Company were $3,240 for the three months ended
December 31, 2000, compared to $14,208 for the same period in 1999. This
expenditure was for the purchase of computer equipment for BounceBackMedia.com.
SEASONALITY
The casino operations of the discontinued gaming segment is subject to seasonal
factors. Primarily the slow tourist season occurs from October through April
each year.
FOREIGN CURRENCY TRANSACTIONS
The Company's transactions with respect to its discontinued gaming segment in
Tunisia is in dinars. As such, there are risks that pertain to fluctuations in
foreign exchange rates and potential restrictions or costs associated with the
transfer of funds to the United States.
12
NEW ACCOUNTING PRONOUNCEMENTS
Implementation of SAB 101
The Securities and Exchange Commission (SEC) issued Staff Accounting
Bulletin (SAB) 101, Revenue Recognition in Financial Statements, in December
1999. The SAB 101 summarizes certain of the SEC staff's views in applying
generally accepted accounting principles to revenue recognition in financial
statements. Concurrent with the audit of its financial statements for fiscal
2000, the Company performed a comprehensive review of its revenue recognition
policies and determined that they are in compliance with SAB 101.
Forward-Looking Statements:
The Private Securities Litigation Reform Act of 1995 (the Act) provides
a safe harbor for forward-looking statements made by or on behalf of the
Company. The Company and its representatives may from time to time make written
or oral statements that are "forward-looking," including statements contained in
this report and other filings with the Securities and Exchange Commission and in
reports to the Company's stockholders. Management believes that all statements
that express expectations and projections with respect to future matters,
including but are not limited to, those relating to expansion, acquisition, the
sale of assets and business segments and other development activities,
dependence on existing management, leverage and debt service, domestic or global
economic conditions (including sensitivity to fluctuations foreign currencies),
changes in federal or state tax laws or the administration of such laws, changes
in gaming laws or regulations (including legalization of gaming in certain
jurisdictions) and the requirement to apply for licenses and approvals under
applicable jurisdictional laws and regulations (including gaming laws and
regulations) are forward-looking statements within the meaning of the Act. These
statements are made on the basis of management's views and assumptions, as of
the time the statements are made, regarding future events and business
performance. There can be no assurance, however, that management's expectations
will necessarily come to pass.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In 1995, James Barnes and Prudence Barnes, two former officers of a subsidiary
of the Company, brought suit in State District Court, Clark County, Nevada,
against the Company in connection with their employment termination in June
1995. The Barnes have alleged the Company breached their contracts based on the
termination of the Barnes employment; intentional misrepresentation; and breach
of contract based on the untimely registration of their stock. No specific
amount of damages has been claimed. On May 31, 2000, the Clark County, Nevada
Court dismissed the Barnes' claims of intentional misrepresentation and breach
of contract based on the untimely registration by the Company of the Barnes'
stock but found in favor of the plaintiffs with respect to breach of the Barnes'
employment contracts. The Court awarded the Barnes the balance of wages under
their employment agreements plus interest and certain attorney expenses, which
total $185,000. The judgment was paid with respect to this matter and the claims
Barnes asserted with respect to the matter are now fully and finally resolved.
13
On December 31, 1997, the Company's former chairman, Kevin Kean, defaulted on
repaying $1,232,000 plus accrued interest due the Company. The Company filed
suit against Mr. Kean which resulted in a settlement agreement (the "Settlement
Agreement"). Under the Settlement Agreement, 220,000 shares of Company stock
were canceled along with the 150,000 shares then pledged to the Company, at the
market price of $1,19 per share. Additionally, Mr. Kean executed a new
promissory note in favor of the Company, (the "Renewal Note"). the Renewal Note
was in the amount of $1,196,885, and was to mature on January 15, 2001. The
Renewal Note was collateralized by Mr. Kean's 5% interest in the Company's
Pokagon management fee. The Settlement Agreement also permitted that in the
Copmany's sole disretion, and at any time prior to maturity, the Company could
take the collateral as payment in full for the note. Further, under the terms of
the Settlement Agreement: "In the event that the Company shall sell, assign or
transfer its interest in the Pokagon Project, in whole or in part, to any other
party, by way of sale, loan, settlement, fee or otherwise for consideration in
an amount in excess of $1 million, Kean's obligation under the Renewal Note
shall be fully discharged and satisfied and the Company shall mark the Renewal
Note "Paid" and return it to Kean. In August 1999, the Company and Lakes Gaming
entered into a Revised Conditional Release Agreement and Termination Agreement
regarding the Pokagon Project pursuant to which the Company received a $2
million cash advance, which is subject to repayment if certain future events do
not occur. The Company marked the Renewal Note "Paid" after offsetting any fee
due Mr. Kean under the Pokagon Management Agreement and returned it to Kean with
the understanding that the obligations thereunder are now discharged.
The Company initiated a civil suit against Harrah's on September 4, 1998 in
United States District Court for District of Minnesota. The Company alleges that
Harrah's breached the Technical Assistance and Consulting Agreement and
tortuously interfered with the Copany's contractual and prospective economic
advantage associated with the Pokagon Band of Potawatomi Indians' Management
Agreement. The suit further alleges that Harrah's withheld vital business
information from the Company. The trial court dismissed the case on May 24, 1999
for lack of jurisdication stating that the Company's claims were preempted by
the Indian Gaming Regulatory Act. Accordingly, the court held that the Company's
claims could not be heard in Federal Court. The Company asserts that it has the
right to resolve the dispute with Harrah's in some forum and the trial court
erred by dismissing the Company's complaint without granting the Company leave
to file an amended complaint which would include a claim for an accounting and
damages under the Uniform Partnership Act. The Company plans to vigorously
pursue the claim and seeks a judgment against Harrah's plus interest and legal
fees.
The Company initiated a civil suit against Willard Smith and Monarch Casinos,
Inc. on December 19, 1998 in the Circuit Court of Jackson County, Mississippi.
The Company alleges that Mr. Smith and Monarch Casinos, Inc. have breached the
terms of the Memorandum of Understanding, Amendment and Modification Agreement,
and Consulting Agreement by failing to provide the services required under the
terms of the agreements, breaching their obligations of good faith to the
Company and by attempting to secure the termination of the Company's interest in
the Pokagon project. The suit further alleges Mr. Smith has defaulted on his
obligations to pay rent and maintain the up-keep of the Company residential
property located at 303 LaSalle Street, Ocean Springs, Mississippi and defaulted
on repayment of loans from the Company in excess of $300,000. The Company seeks
a judgment against Monarch Casinos, Inc. and Willard Smith plus interest and
attorneys fees for notes due and material breach of agreements; removal of Smith
from the rental property and punitive damages.
14
Mr. Willard Smith filed a counter claim on February 16, 1999, alleging breach of
contract; breach of duty of fair dealing; tortuous interference with prospective
business advantage; specific performance of contract to purchase real property
and fraud. Additionally, Willard Smith filed a suit on July 10, 2000, against
the Company's CEO, John J. Pilger, alleging he is the alter ego of CRC and as
such liable for the acts of CRC including breach of contract; breach of duty of
good faith and fair dealing; tortuous interference with prospective business
advantage; breach of contract to purchase real property, and fraudulent
inducement. The Company and Mr. Pilger each plan to vigorously defend themselves
against the alleged counterclaims and are asking the court to dismiss the
matter. A trial date has been set for October, 2001.
The Company initiated suit against Mark McKinney and Mana Corporation, on March
12, 1999, in the Circuit Court of Benton County, Arkansas. The Company alleges
that Mr. McKinney and Mana Corporation breached the terms of the Letter of
Intent and the Extension Agreement dated December 4, 1998, by prematurely
terminating the agreement before April 30, 1999, and failure to repay a short
term loan made to Mark McKinney, personally. The Company sought a judgment
against Mark McKinney and Mana Corporation in the amount of $150,000 plus
interest and attorney's fees. Due to the uncertainty of Mr. McKinney's ability
to make payment, $75,000 of this receivable was reserved. In November 1999, Mana
Corporation petitioned the Arkansas Court for reorganization under Chapter 11 of
the Bankruptcy Code; therefore the balance of the receivable was reserved in
November 1999. The Company received a judgment against Mark McKinney, personally
in the amount of $165,000 in Benton County, Arkansas Circuit Court. On April 10,
2000, Mark McKinney, personally, petitioned the Western District, Arkansas Court
for protection under Chapter 13 of the Bankruptcy Code.
Subsequent Events
Effective January 25, 2001, the Company entered into an asset purchase agreement
with On Stage Entertainment, Inc. ("On Stage") to sell the Company's assets
relating to the Country Tonite Theatre in Branson, Missouri, and the Country
Tonite Production Show for $3.8 million. The sale does not include the licensing
agreement with Country Tonite Theatre Pigeon Forge, Tennessee. On January 31,
2001, the Company closed the sale transaction with On Stage and received
$380,000 in cash, a secured short term 10% interest bearing note for $650,000 of
which $150,000 is due on or before February 15, 2001 and $500,000 is due on or
before March 15, 2001, and the balance of $2,800,000 million is payable to the
Company under a 10% interest bearing secured promissory note due no later than
July 31, 2001. Interest payments underlying the promissory note will be paid
monthly, one month in arrears, beginning March 1, 2001. Accordingly, CRC of
Branson, Inc., a wholly owned Missouri subsidiary and Country Tonite
Entertainment, Inc., a wholly owned Nevada subsidiary as previously disclosed
the "entertainment segment" are reported as discontinued operations.
15
Item 2. Exhibits and Reports on Form 8-K
a) Asset Purchase Agreement
b) The following reports on Form 8-K have been filed during the three
months ended December 31, 2000:
1) Form 8-K filed on December 12, 2000
2) Form 8-K/A filed on December 20, 2000
3) Form 8-K filed on December 26, 2000
16
SIGNATURES
In accordance with requirements of the Exchange Act, the registrant
caused this report to be signed on behalf by the undersigned, hereunto duly
authorized.
BOUNCBACKTECHNOLOGIES.COM, INC.
Date: February 14, 2001 By: /s/ John J. Pilger
--------------------------------------
John J. Pilger,
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Rgistrant and in the capacities and on the dates indicated.
SIGNATURE AND TITLE
Date: February 14, 2001 By: /s/ John J. Pilger
----------------
John J. Pilger, Chief Executive
Officer, President and Chairman of
the Board of Directors ("principal
executive officer")
Date: February 14, 2001 By: /s/ John J. Pilger
----------------
John J. Pilger, Chief Financial
Officer and Chief Accounting
Officer ("principal financial and
accounting officer")
17