U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act
of 1934
For the quarterly period ended August 31, 2001
[ ] Transition Report under Section 13 or 15(d) of the Exchange Act for the
Transition Period from ________ to ___________
Commission File Number: 333-46690
BECOR COMMUNICATIONS, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 95-4766094
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
17337 Ventura Boulevard, Suite 224
Encino, California 91316
Issuer's Telephone Number: (818) 784-0040
(Address and phone number of principal executive offices)
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 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 [ ]
The Registrant has 1,273,650 shares of Common stock, par value $.001 per
share issued and outstanding as of August 31, 2001.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements 3
Balance Sheets (unaudited) 4
Statements of Operations and Accumulated
Deficit (unaudited) 5
Statements of Cash Flows (unaudited) 6
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan
of Operation 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities and Use of Proceeds 10
Item 3. Defaults upon Senior Securities 10
Item 4. Submission of Matters to a Vote
of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
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BECOR COMMUNICATIONS, INC.
BALANCE SHEETS
--------------------------------------------------------------------------------
August 31,
2001 May 31,
(Unaudited) 2001
--------- ---------
ASSETS
CASH ............................................. $ 4,201 $ 3,483
ACCOUNTS RECEIVABLE .............................. 38,671 34,178
PROPERTY AND EQUIPMENT ........................... 4,068 3,700
PREPAID EXPENSES AND OTHER CURRENT ASSETS ........ 2,518 2,518
--------- ---------
TOTAL ASSETS ..................................... $ 49,458 $ 43,879
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Accrued royalties ................................ $ 21,926 $ 13,959
Accrued expenses ................................. 66,744 69,512
Note payable to shareholder ...................... 281,562 268,562
Note payable to bank ............................. 5,000
Accrued interest due to shareholder .............. 42,590 37,183
--------- ---------
Total liabilities ................................ 417,822 389,216
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, par value - $.001,
25,000,000 shares authorized, 1,273,650
and 1,250,000 shares issued and
outstanding at August 31, 2001 and
May 31, 2001, respectively ................... 1,274 1,250
Additional paid-in capital ....................... (100,929) (105,443)
Accumulated deficit .............................. (268,709) (241,144)
--------- ---------
Total shareholders' deficit ...................... (368,364) (345,337)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT ...... $ 49,458 $ 43,879
========= =========
See accompanying notes to financial statements.
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BECOR COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED AUGUST 31, 2001 AND 2000
--------------------------------------------------------------------------------
2001 2000
----------- -----------
REVENUES ..................................... $ 98,380 $ 49,792
COST OF REVENUES ............................. 46,220 12,749
----------- -----------
GROSS PROFIT ................................. 52,160 37,043
----------- -----------
EXPENSES:
Selling and marketing ........................ 30,818 14,507
General and administrative ................... 38,104 35,816
Research and development ..................... 4,596 3,306
Interest expense ............................. 5,407 6,390
----------- -----------
Total expenses ............................... 78,925 60,019
----------- -----------
LOSS BEFORE INCOME TAXES ..................... (26,765) (22,976)
INCOME TAXES ................................. 800
----------- -----------
NET LOSS ..................................... (27,565) $ (22,976)
===========
ACCUMULATED DEFICIT AT MAY 31, 2001 .......... (241,144)
-----------
ACCUMULATED DEFICIT AT AUGUST 31, 2001 ....... $ (268,709)
===========
BASIC LOSS PER SHARE ......................... $ (.02) $ (.02)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING ................................ 1,261,114 1,250,000
=========== ===========
See accompanying notes to financial statements.
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BECOR COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2001 AND 2000
--------------------------------------------------------------------------------
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $(27,565) $(22,976)
Adjustments to reconcile net loss
to net cash used by operating activities:
Amortization ................................... 274
Changes in operating assets and
liabilities:
Accounts receivable ............................ (4,493) 992
Inventory ...................................... (763)
Accrued expenses ............................... 10,606 396
-------- --------
Net cash used by operating activities .............. (21,178) (22,351)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of equipment ............................ (642)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock ............................... 4,538
Net borrowings from shareholder .................... 13,000 21,000
Net borrowings from bank ........................... 5,000
-------- --------
Net cash provided by financing activities .......... 22,538 21,000
-------- --------
NET INCREASE (DECREASE) IN CASH .................... 718 (1,351)
CASH, BEGINNING OF PERIOD .......................... 3,483 3,605
-------- --------
CASH, END OF PERIOD ................................ $ 4,201 $ 2,254
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest ............................. $ -0- $ 12,781
Cash paid for income taxes ......................... $ 800 $ -0-
See accompanying notes to financial statements.
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BECOR COMMUNICATIONS, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - The accompanying unaudited financial statements
have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to
Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three-month period ended August 31, 2001, are not
necessarily indicative of the results that may be expected for the year
ended May 31, 2002. For further information, refer to the financial
statements and footnotes thereto included in the Company's report on Form
10K-SB for the year ended May 31, 2001.
The balance sheet at May 31, 2001, has been derived from the audited
financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
GENERAL INFORMATION - The Company produces and markets business training
videos.
GOING CONCERN - The Company experienced significant operating losses for
the year ended May 31, 2001 and through August 31, 2001. The financial
statements have been prepared assuming the Company will continue to operate
as a going concern which contemplates the realization of assets and the
settlement of liabilities in the normal course of business. No adjustment
has been made to the recorded amount of assets or the recorded amount or
classification of liabilities which would be required if the Company were
unable to continue its operations. As discussed in Note 2, management has
developed an operating plan which they believe will generate sufficient
cash to meet its obligations in the normal course of business. In addition,
the Company has an agreement with its President and majority shareholder
which provides for borrowings up to $500,000.
UNCLASSIFIED BALANCE SHEET - In accordance with the provisions of SFAS No.
53, the Company has elected to present an unclassified balance sheet.
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LOSS PER SHARE - The Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share" that
established standards for the computation, presentation and disclosure of
earnings per share ("EPS"), replacing the presentation of Primary EPS with
a presentation of Basic EPS. It also requires dual presentation of Basic
EPS and Diluted EPS on the face of the income statement for entities with
complex capital structures. The Company did not present Diluted EPS since
it has a simple capital structure.
2. MANAGEMENT PLANS
Management believes that it will require additional investment in order to
achieve higher sales and cash flows from operations. Projected sales
combined with available borrowings on the line of credit with its sole
shareholder will be adequate to finance the next fiscal year's cash flow
requirements. Management also plans on obtaining additional financing
sources consisting of equity and debt to fund working capital and product
development.
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BECOR COMMUNICATIONS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Plan of Operation
Through our subsidiary Advanced Knowledge, we will continue to devote our
limited resources to marketing our workforce training video library and related
training materials. At this time these efforts are focused on four titles,
"Twelve Angry Men: Teams That Don't Quit", "The Cuban Missile Crisis: A Case
Study In Decision Making And Its Consequences", "What It Really Takes To Be A
World Class Company", and "It's A Wonderful Life: Leading Through Service". In
addition, we anticipates spending some of our resources on the production of
additional training videos, and the acquisition of distribution rights to
training videos produced by other companies. The amount of funds available for
these expenditures will be determined by our ability to raise capital, either
through an equity offering or traditional borrowing sources. There can be no
assurance that we will be successful in these efforts.
Operating expenses and production costs during the quarter ending August 31,
2001 were $125,000. Management expects that sales of its videos and training
materials, along with available funds under an agreement with its President and
majority shareholder, and the sale of equity should satisfy its cash
requirements over the next year. However, there can be no assurance that its
President will continue to supply funds pursuant to such agreement, nor that the
Company will be successful in raising capital through the sale of equity. The
Company's marketing expenses and the production of new training videos will be
adjusted accordingly.
During the quarter ended August 31, 2001 the Company sold 23,650 shares of its
common stock for $4,538. We used the proceeds from the sale of these shares for
legal and accounting expenses.
We currently have 2 employees. These employees received no compensation through
August 31, 2001. If cash resources permit, the Company plans to increase its
employees to 6 during calendar 2002, (2 administrative, 4 sales).
During the quarter ended August 31, 2001, we had revenues of approximately
$98,000 versus $50,000 for the same quarter in the prior year. Cost of revenues
increased from $13,000 (26% of revenues) in the quarter ended August 31, 2000 to
$46,000 (47% of revenues) in 2001. Increased distribution and production costs
accounted for the increased costs in 2001.
Selling and marketing costs increased from $15,000 (29% of revenues) in 2000 to
$31,000 (32% of revenues in 2001). The increased expenses are primarily
commissions paid on increased sales.
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General and administrative expenses increased from $36,000 (72% of revenues) in
2000 to $38,000 (39% of revenues) in 2001. Such costs are primarily fixed in
nature and are not expected to increase proportionately with revenues.
We have an agreement with our President and majority shareholder to provide, at
the President's discretion, up to $500,000 at 8% interest. Repayment is to be
made when funds are available with the balance of principal and interest due
December 31, 2002. The Company has borrowed approximately $287,000 through
August 31, 2001.
The Company has no material commitments for capital expenditures nor does it
foresee the need for such expenditures over the next year. In connection with
the production of its video and training materials, the Company has an agreement
with the co-producer of the video, 12 Angry Men, and The Cuban Missile Crisis to
pay a royalty based on a specified formula, which has averaged to approximately
35% of gross sales.
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
During the last quarter, our wholly owned subsidiary Advanced
Knowledge received a letter from a competitor demanding the payment of
damages for, among other things, are intentional interference with
contractual relations." The demand is based upon the claim that an
independent sales representative engaged by us was, for a period of
time, an employee of the competitor while performing sales efforts on
our behalf. We dispute the facts as alleged and deny any liability to
the competitor. We have been threatened with litigation, but have not
been served with a summons or complaint. If the competitor commences
legal action, we intend to defend it vigorously.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended August 31, 2001, no matters were submitted to
the Company's security holders.
ITEM 5. OTHER INFORMATION None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K None.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BECOR COMMUNICATIONS, INC.
(Registrant)
Dated: October 2, 2001 /s/ Buddy Young
-------------------------------------
Buddy Young, President and Chief
Executive Officer
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