U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the quarterly period ended June 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________
Commission file number: 0-27637
Global Entertainment Holdings/Equities, Inc.
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(Name of small business issuer in its charter)
Colorado 47-0811483
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6235 South 90th Street, Omaha, Nebraska 68127
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (402) 331-3189
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. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of 3/31/00 there were 10,277,140:
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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Global Entertainment Holdings/Equities, Inc.
FORM 10-QSB/A
TABLE OF CONTENTS
PART I-FINANCIAL INFORMATION
ITEM 1. Financial Statements. 3
June 30, 2000 Financial Statements F-1 to F-7
ITEM 2. Management's Discussion and Analysis or Plan of Operation. 4
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings. 7
ITEM 2. Changes in Securities. 7
ITEM 3. Defaults Upon Senior Securities. 7
ITEM 4. Submission of Matters to a Vote of Security Holders. 7
ITEM 5. Other Information. 7
ITEM 6. Exhibits and Reports on Form 8-K. 8
Page 2
PART I-FINANCIAL INFORMATION
ITEM 1. Financial Statements.
As used herein, the term "Company" refers to Global Entertainment
Holdings/Equities, Inc., and its subsidiaries and predecessors unless otherwise
indicated. Consolidated, unaudited, condensed interim financial statements
including a balance sheet for the Company as of the quarter ended June 30, 2000
and statements of operations and statements of cash flows for the interim period
up to the date of such balance sheet and the comparable period of the preceding
year are attached hereto as Pages F-1 through F-7 and are incorporated herein by
this reference.
The consolidated financial statements for the Company included herein are
unaudited but reflect, in management's opinion, all adjustments, consisting only
of normal recurring adjustments, that are necessary for a fair presentation of
the Company's financial position and the results of its operations for the
interim periods presented. Because of the nature of the Company's business, the
results of operations for the three months ended June 30, 2000 are not
necessarily indicative of the results that may be expected for the full fiscal
year. The financial statements included herein should be read in conjunction
with the financial statements and notes thereto included in the Form 10K-SB for
the year ended December 31, 1999.
Page 3
GLOBAL ENTERTAINMENT HOLDINGS/EQUITIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2000 (Unaudited) and December 31,1999
As of June 30, As of December 31,
2000 1999
(Unaudited) (Audited)
ASSETS
Current Assets:
Cash & Cash Equivalents 113,564 236,184
Accounts Receivable Net of Provision 1,990,767 1,511,226
for Bad Debts of $119,590 in 2000
and $71,800 in 1999
Prepaid Expenses 45,874 67,941
Interest Receivable 4,200 2,632
Employee Accounts Receivable 42,000 51,312
--------- ----------
Total Current Assets 2,196,405 1,869,295
Property & Equipment
Automobile- Net 35,484 59,484
Package Software- Net 112,420 108,951
Office Improvements- Net 33,297 21,696
Computer Equipment- Net 561,470 590,819
Furniture & Fixtures- Net 134,912 121,288
Websites - Net 719,674 737,897
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Total Property & Equipment 1,597,257 1,640,135
Other Assets
Security Deposit 21,434 17,220
Software Design & Development-Net 231,927 117,975
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Total Other Assets 253,361 135,195
Total Assets $4,047,023 $3,644,625
========= ==========
See accompanying summary of accounting principles and
notes to consolidated financial statements.
F-1
GLOBAL ENTERTAINMENT HOLDINGS/EQUITIES, INC. & SUBSIDIARIES
Consolidated Balance Sheets
June 30, 2000 (Unaudited) and December 31, 1999
As of June 30, As of December 31,
2000 1999
(Unaudited) (Audited)
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts Payable 459,284 304,021
Accrued Expenses 39,285 13,471
Accrued Interest 66,132 40,170
Accrued Wages 37,152 49,930
Customer Deposits - 35,880
Current Portion- Capital Leases 26,667 31,285
Current Portion- Notes Payable 225,000 240,000
Note Payable- Line of Credit 38,262 35,693
Income Taxes Payable 5,999 11,571
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Total Current Liabilities $ 897,781 $ 762,021
Long Term Liabilities
Notes Payable 417,373 565,000
Less Current Portion (225,000) (240,000)
----------- -----------
Total Long Term Notes Payable 192,373 325,000
Capital Lease Payable 26,013 35,395
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Net Long Term Liabilities 218,386 360,395
----------- -----------
Total Liabilities $ 1,116,167 $ 1,122,416
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Stockholders' Eqiuty
Preferred Stock, 25,000,000
Shares Authorized, at $.001
Par Value, None Issued
Common Stock, 100,000,000
Shares Authorized 10,277 9,940
Par Value of $.001;
10,277,140 & 9,940,353 Shares Issued and
Outstanding Respectively Retroactively Restated
Paid in Capital 3,206,653 2,854,948
Retained Earnings(Deficit) (286,074) (342,679)
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Net Stockholders' Equity 2,930,856 2,522,209
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Total Liabilities and Stockholders' Equity $4,047,023 $ 3,644,625
=========== ===========
See accompanying summary of accounting principles and notes to consolidated
financial statements.
F-2
GLOBAL ENTERTAINMENT HOLDINGS/EQUITIES, INC. & SUBSIDIARIES
Statements of Cash Flows (Unaudited)
For the Six Months Period January 1, 2000 to June 30, 2000
For the Six Months Period January 1, 1999 to June 30, 1999
For the Six Months Ended
June 30
2000 1999
--------------- ---------------
Cash Flows from Operating Activities
Net Income $ 56,605 $ 406,459
Adjustments to Reconcile Net Income (Loss) to
Net Cash Provided by Operating Activities;
Amortization 104,249 63,390
Depreciation 175,483 72,585
Provisions for Bad Debt - -
Non Cash Expenses 50,077
Change in Operating Assets & Liabilities
(Increase) Decrease in Fees Receivable (479,541) (422,258)
(Increase) Decrease in Prepaid Expenses 22,067 (487)
(Increase) Decrease in Security Deposits (4,214) (5,267)
(increase) Decrease in Interest Receivable (1,568) (840)
(Increase) Decrease in Employee Receivable 9,312 (44,500)
Increase in Accounts Payable 155,263 77,581
Incrrease in Software Design (113,952) -
Increase in Accrued Expenses (10,066) 6,328
Increase in Taxes Payable (5,572) 16,169
(Decrease) Increase in Accrued Interest 25,962 (2,760)
(Decrease) Increase in Accrued Wages (12,778) (4,450)
(Decrease) Increase in Cash in Escrow Restricted (6,348)
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Net Cash Provided (Used) in Operating Activities $ (78,750) $ 205,679
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Cash Flows from Investina Activities
Purchase of Fixed Assets (236,854) (764,310)
Net Cash (Used) in investing Activities $ (236,854) $ (764,310)
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See accompanying summary of accounting principles and
notes to financial statements.
F-3
GLOBAL ENTERTAINMENT HOLDINGS/EQUITIES, INC. & SUBSIDIARIES
Statements of Cash Flows (Unaudited)
For the Six Months Period January 1, 2000 to June 30, 2000
For the Six Months Period January 1, 1999 to June 30, 1999
For the Six Months Ended
June 30
2000 1999
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Cash Flows from Financial Activities
Increase( Decrease) in Capital Lease Liabilities (14,000) 53,193
Increase (Decrease) in Notes Payable (145,058) 225,000
Sale of Common Stock 352,042 390,587
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Net Cash Provided by Financing Activities $ 192,984 $ 668,780
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Increase (Decrease) in Cash & Cash Equivalents (122,620) 110,149
Cash & Cash Equivalents at Beginning of Period 236,184 122,422
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Cash & Cash Equivalents at End of Period $113,564 $ 232,571
============= ==========
Disclosures from Operating Activities:
Interest Expense 26,065 15,156
Taxes 13,698 16,169
Significant Non-Cash Transactions:
Issued 39,000 for Prepaid Public Relations 0 130,000
See accompanying summary of accounting principles and
notes to financial statements.
F-4
GLOBAL ENTERTAINMENT HOLDINGS/EQUITIES, INC. & SUBSIDIARIES
Consolidated Statement of Operations (Unaudited)
For the Three Months Ended For the Six Months Ended
June 30, June 30,
2000 1999 2000 1999
Revenues:
License Fees - 425,000 - 445,000
Royalty Fees 598,914 164,185 1,317,660 782,498
Hosting Income 161,062 320,171 -
Advertising Revenues 216,713 21,470 450,440 21,470
------------- ---------- ------------- ------------
Total Revenues $976,689 $610,655 $2,088,271 $ 1,248,968
------------- ---------- ------------- ------------
Expenses
Bad Debt Provision - - 47,790 -
Uncollectible Fees Written Off - - 25,000 -
Amortization 31,695 31,695 104,249 63,390
Depreciation 83,619 59,423 175,483 72,585
Rents 81,816 43,123 194,985 83,567
Professional Fees 33,550 41,069 60,731 80,739
Travel 36,931 10,745 68,412 37,436
Financial & Investor Relations - 9,600 32,499 9,600
Administrative Expenses 241,494 72,668 448,424 192,861
Consulting 366,942 38,057 591,650 272,580
Advertising 122,505 - 175,876 -
Bandwidth Expenses - 69,510
Wages and Salaries 31,337 65,123 -
------------- ---------- ------------- ------------
Total Expenses $ 1,029,889 $306,380 $ 2,059,732 $812,758
------------- ---------- ------------- ------------
Income (Loss) from Operations (53,200) 304,275 28,089 436,210
Other Income(Exi)enses)
Interest(Expense) (15,676) (15,156) (26,065) (15,156)
Interest Income 2,623 1,310 3,834 1,574
Other Income(Expense) 9,578 (1,565) 45,175 -
------------- ---------- ------------- ------------
Total Other Income(Expenses) (3,475) (15,411) 22,944 (13,582)
------------- ---------- ------------- ------------
Income Before Taxes (56,675) 288,864 51,033 422,628
Provisions for Income Tax 19,270 - 5,572 (16,169)
------------- ---------- ------------- ------------
Net Income $(37,405) $288,864 $56,605 $406,459
============= ========== ============= ============
Basic Earnings Per Share $(0.01) $0.03 $0.01 $0.04
Diluted Earnings Per Share $(0.01) $0.03 $0.01 $0.04
Weighted Average Shares Outstanding 10,108,741 9,531,057 10,108,741 9,531,057
Retroactively Restated
Weighted Average Shares & Options 10,108,741 9,531,057 10,108,741 9,531,057
Outstanding
See accompanying summary of accounting policies and notes
to consolidated financial statements.
F-5
Global Entertainment Holdings/Equities, Inc., & Subsidiaries
Notes to Financial Statement
NOTE #1 - Organization
The Company was incorporated on July 10, 1997, under the laws of the state of
Colorado using the name Masadi Resources, Inc. On February 10, 1998, Articles of
Amendment were filed changing the name to International Beverage Corporation.
Pursuant to a Merger Agreement dated August 27, 1998, International Beverage
Corporation merged with Global Entertainment Holdings/Equities, Inc., and
subsequently the surviving corporation became known as Global Entertainment
Holdings/Equities, Inc.
The purpose of the Corporation is to engage in any lawful act or activity for
which corporations may be organized under the laws of the state of Colorado. The
Company currently has two wholly owned subsidiaries; Interactive Gaming and
Wagering NV, (IGW), a Netherlands Antilles Corporation in Curacao, Netherlands
Antilles, and Prevail Online, Inc., (Prevail), a Colorado Corporation. IGW, is
engaged in the conception and creation of computer software programs for the
gaming and wagering industry. Prevail, was purchased in August of 1999 and it is
engaged in the creation and operation of websites and derives its revenues from
banner advertising.
NOTE #2 - Significant Accounting Policies
A. The Company uses the accrual method of accounting.
B. Revenues and directly related expenses are recognized in the period in
which they occur. Revenues and related expenses are recognized from the
sale of the licenses when persuasive evidence of an arrangement exists,
delivery of access to the software has occurred, the license fee has been
determined and collectiability of the license fee is probable. License fees
are billed to be paid in three installments over a relatively short period
of time, usually within ninety days.
C. The Company considers all short term, highly liquid investments that are
readily convertible, within three months, to known amounts as cash
equivalents. The Company currently has no cash equivalents.
D. Basic Earnings Per Shares are computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding during the period. Diluted Earnings Per Share shall be computed
by including contingently issuable shares with the weighted average shares
outstanding during the period. When inclusion of the contingently issuable
shares would have an antidilutive effect upon earnings per share no diluted
earnings per share shall be presented.
E. Consolidation Policies: The accompanying consolidated financial statements
include the accounts of the company and its wholly-owned subsidiaries.
Inter-company transactions and balances have been eliminated in
consolidation.
F. Depreciation: The cost of property and equipment is depreciated over the
estimated useful lives of the related assets. The cost of leasehold
improvements is amortized over the
F-6
lesser of the length of the lease of the related assets of the estimated
lives of the assets. Depreciation and amortization is computed on the
straight-line method.
G. Estimates: The preparation of the financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the amounts reported in the financial
statements and accompanying notes. Actual results could differ from those
estimates.
H. Foreign Currency: All cash transactions in the Netherlands Antilles are
conducted from the Antilles Banking Corporation in United States dollars.
I. Stock Options are valued at the difference in the market price of the
shares on the day of the grant and the present value of the shares at a
risk free discounted rate for the option period. When restricted shares are
to be acquired by exercise of the options the Company may apply a
marketability discount to the deemed value of the options.
NOTE #3 - Statement Preparation
The Company has prepared the accompanying financial statements with interim
financial reporting requirements promulgated by the Securities & Exchange
Commission. The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair presentation of financial position
and results of operations.
The financial statements should be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's 1999 10-K
report.
F-7
ITEM 2. Management's Discussion and Analysis or Plan of Operation.
Forward-Looking Information-General
This report contains a number of forward-looking statements, which reflect
Global's current views with respect to future events and financial performance
including statements regarding Global's projections, and the internet gaming
industry. These forward-looking statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from
historical results or those anticipated. In this report, the words
"anticipates", "believes", "expects", "intends", "future", "plans", "targets"
and similar expressions identify forward-looking statements. Readers are
cautioned to not place undue reliance on the forward-looking statements
contained herein, which speak only as of the date hereof Global undertakes no
obligation to publicly revise these forward- looking statements, to reflect
events or circumstances that may arise after the date hereof.
Additionally, these statements are based on certain assumptions that my prove to
be erroneous and are subject to certain risks including, but not limited to,
Global's dependence on limited cash resources, and its dependence on certain key
personnel within Global. Accordingly, actual results may differ, possibly
materially, from the predictions contained herein.
Results of Operations
The Company generates operating revenues exclusively from its wholly owned
subsidiaries, IGW and Prevail. The acquisition of Prevail added an additional
source of revenue for the Company through its website advertising fees.
For the Quarter ended June 30, 2000, Prevail generated revenues of over
$216,000, which accounted for approximately 22% of the Company's revenues for
that period.
The Company's subsidiaries, IGW and Prevail currently generate revenues from
three (3) primary sources: (i) licensing fees, (ii) monthly website hosting and
maintenance fees, and (iii) royalties and advertising fees.
Historically, approximately 50% of all gaming revenue for "Sportsbook"
operators, in the USA and abroad, are generated during American Professional and
Collegiate football season. This statistic has proven to be steadfast during the
short time that IGW began licensing its Internet Sportsbook software platform,
as fourth quarter royalty revenue represented over 50% of all revenue generated
in 1998 and 1999. This seasonal royalty revenue is anticipated to continue for
the Sportsbook software platform; however, with the recent development,
licensing and introduction of the new Internet based casino software, revenues
should balance out during the off season months as a result of the additional
royalties gained through the licensing of the newly introduced Casino software.
Page 6
Seasonal royalty revenue for football season currently represents over 50% of
all Company revenue, however, as new licensees and additional software platforms
are added, the revenues will balance out during the other sport seasons.
Through research and development in the past four years, the Company identified
the opportunity of offering proprietary software and related services to online
gaming operators and successfully launched its first licensee in November 1997.
The Company encourages its licensee's to target only customers in countries that
regulate online gaming. Currently, there are several countries which support the
online gaming industry through regulation and/or taxation, including; such
nations as Sweden, Finland, Australia, Germany, Liechtenstein, the Netherlands
Antilles, Dominica and Antigua.
Since the beginning of January 2000, through June 30, 2000, revenues from all
components of the software licensing business, which include software licensing,
Website services and software licensing royalties have undergone growth and
generated revenues over $1.6 Million.
The Company's revenues increased to $976,689 for the quarter ended June 30, 2000
as compared to $610,655 for the quarter ended June 30, 1999.
The growth is primarily due to additional revenues generated from software
licensing, and Website services for licensees (including Royalties). The
Company, through IGW, offers to its licensees Internet based Casino and
Sportsbook software as well as telephone based (call centers) Sportsbook
software. Revenue from software licensing services, which is the significant
income source, accounts for 61% of the total revenues for the three months ended
June 30, 2000.
Operating expenses were $1,029,889 for the three months ended June 30, 2000 and
$306,380 for June 30, 1999.
Loss from operations for the three months ended June 30, 2000, was ($53,200) as
compared to income from operations of $304,275 for the three months ended June
30, 1999.
During the three months ended June 30, 2000 there were significant increases in
operating expenses due to the continuing operational and employment expansion of
Interactive Gaming and Wagering, NV. (IGW) More specifically, Depreciation
expense was $83,619 at June 30, 2000 compared to $59,423 at June 30, 2000. Both
of these expense increases are attributed to the increase in an investment in
assets during the last fiscal year. Rent expense at June 30, 2000 was $81,816
increasing from $43,123 at June 30, 1999 because of larger facilities in Curacao
for IGW. Administrative expenses increased to $241,494 at June 30, 2000 compared
to $72,668 at June 30, 1999, which reflects the cost of the expanded employment
force at IGW and the additional administrative costs of Prevail Online, Inc.
Additionally, the Company has intensified its efforts to refine and enhance its
computer programs and operations at IGW in Curacao. This resulted in an increase
in consulting expenses from
Page 7
$38,057 at June 30, 1999 to $366,942 at June 30, 2000.
The Company expects licensing revenues to continue to grow as more licensees
commence operations and royalties from existing licensee's Internet gaming
operations increase.
Liquidity and Capital Resources
At June 30, 2000, the Company had $113,564 in cash and cash equivalents, as
compared to $232,571 at June 30, 1999.
Accounts receivable at June 30, 2000 increased to $1,990,767 as compared to
$1,384,587 at June 30, 1999. The majority of the receivables are from new
licensees that were offered an installment payment plan on the initial licensing
fees and from operating licensees, which have a 30-day term agreement for
royalties.
Net cash used from operating activities for the six months ended June 30, 2000,
was $78,750 as compared to a net provided of $205,679 for the six months ended
June 30, 1999.
Net cash used for investing activities for the six months ended June 30, 2000,
was $236,854 as compared to $764,310 for the six months ended June 30, 1999.
Net cash provided by financing activities for the six months ended June 30,
2000, was $192,984, as compared to $668,780 for the six months ended June 30,
1999.
PART II-OTHER INFORMATION
ITEM 1. Legal Proceedings.
On November 26, 1997, the Company as Masadi Resources, Inc. ("Company") entered
into an Agreement of Purchase and Sale ("Agreement") to purchase Beverage Source
Worldwide, Inc. ("BSI"). On May 5, 1998, the Company filed a Complaint in the
Superior Court of California, County of San Diego, asking the Court to declare
the Agreement rescinded. The Company further alleged that various individuals
including Mark Darnell ("Darnell") had breached the Agreement and alleged, the
individuals, including Darnell had breached their fiduciary duties and had
committed other malfeasance and illegal acts. All parties to the lawsuit other
than Darnell were dismissed prior to Trial. The trial was held on November 8-10,
1999, in the Superior Court of San Diego. In a Minute Order dated December 23,
1999, the Court ruled against the Company on all counts and further ordered that
a rescission had not taken place and ordered that Darnell retained all
previously held stock interest in the company. Subsequent to the Court's ruling,
the Company and Darnell entered into a Settlement Agreement and Mutual Release
of all Claims ("Settlement Agreement") wherein the Company paid Darnell $75,000
and Darnell agreed to rescind the Agreement. The $75,000 per theSettlement
Agreement was to be paid as follows: $35,000 on 2/23/00; $20,000 on 5/18/00; and
$20,000 on 8/18/00. The first two payments have
Page 8
been made by the Company and the final payment will be made when due per the
Agreement, on 8/18/00. This final payment will resolve all aspects of this
litigation.
The Company is not a party to any other litigation and none is contemplated nor
has any been threatened.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the quarter for which this
report is filed.
The following exhibits are attached hereto.
3.1 Articles of Incorporation
3.2 Bylaws.
27 Financial Data Schedule for the 3 month period ending June 30, 2000.
Page 9
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Registrant has duly caused this Quarterly
Report on Form 10-QSB/A to be executed on its behalf by the undersigned,
hereunto duly authorized.
Global Entertainment Holdings/Equities, Inc.
/s/ David Wintroub
- -------------------------
David Wintroub, President
Page 10
INDEX TO EXHIBITS
Exhibits marked with an asterisk have been filed previously with the
Commission and are incorporated herein by reference.
EXHIBIT PAGE
NO. NO. DESCRIPTION
- --- --- -----------
3.1 * Articles of Incorporation
3.2 * Bylaws.
27 12 Financial Data Schedule for the 3 month period ending June 30,
2000.
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