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 November 30, 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 November 30, 2001.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
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INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements 3
Consolidated Balance Sheets
November 30, 2001 and May 31, 2001 4
Consolidated Statements of Operations
For the Three- and Six-Month Periods
Ended November 30, 2001 and 2000 6
Consolidated Statements of Cash Flows
For the Six Months Ended
November 30, 2001 and 2000 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan
of Operation 10
PART II OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities and Use of Proceeds 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
2
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
(Financial Statements Commence on Following Page)
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BECOR COMMUNICATIONS, INC.,
CONSOLIDATED BALANCE SHEETS
NOVEMBER 30, 2001 AND MAY 31, 2001
November 30,
2001 May 31,
(Unaudited) 2001
--------- ----
ASSETS
CASH ............................................... $ 301 $ 3,483
ACCOUNTS RECEIVABLE,
Less allowance of $26,096 ........................ 52,551 34,178
PREPAID EXPENSES ................................... 165 165
PROPERTY AND EQUIPMENT,
Less accumulated depreciation of $1,400
and $1,126, respectively ....................... 4,068 3,700
OTHER ASSETS ....................................... 2,353 2,353
------- -------
TOTAL ASSETS ....................................... $59,438 $43,879
======= =======
(Continued)
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BECOR COMMUNICATIONS, INC.,
CONSOLIDATED BALANCE SHEETS - CONTINUED
NOVEMBER 30, 2001 AND MAY 31, 2001
November 30,
2001 May 31,
(Unaudited) 2001
--------- ---------
LIABILITIES AND SHAREHOLDERS' DEFICIT
ACCRUED EXPENSES ................................. $ 58,687 $ 69,512
ACCRUED ROYALTIES ................................ 28,899 13,959
ACCRUED INTEREST TO SHAREHOLDER .................. 53,606 37,183
NOTE PAYABLE TO SHAREHOLDER ...................... 291,562 268,562
--------- ---------
TOTAL LIABILITIES ................................ 432,754 389,216
--------- ---------
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, respectively ................ 1,274 1,250
Additional paid-in capital ....................... (100,929) (105,443)
Accumulated deficit .............................. (273,661) (241,144)
--------- ---------
Total shareholders' deficit ...................... (373,316) (345,337)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT ...... $ 59,438 $ 43,879
========= =========
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BECOR COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE AND SIX MONTH-PERIODS ENDED
NOVEMBER 30, 2001 AND 2000
Three Months Ended Six Months Ended
2001 2000 2001 2000
--------- --------- --------- ---------
REVENUES:
Rental income .............. $ 5,647 $ 7,732 $ 7,027 $ 9,172
Sales ...................... 93,752 51,558 188,965 92,250
Royalty income ............. 2,616 1,195 4,403 8,855
--------- --------- --------- ---------
Total revenues ............. 102,015 60,485 200,395 110,277
--------- --------- --------- ---------
OPERATING EXPENSES:
Cost of goods sold ......... 53,794 9,088 100,014 21,837
Selling and marketing ...... 24,293 48,944 55,111 63,451
General and
administrative ........... 19,337 61,515 57,441 97,331
Research and development ... 2,163 520 6,759 3,826
--------- --------- --------- ---------
Total operating expenses ... 99,587 120,067 219,325 186,445
--------- --------- --------- ---------
INCOME (LOSS) FROM
OPERATIONS ............... 2,428 (59,582) (18,930) (76,168)
OTHER EXPENSE - Interest ... (7,379) (2,059) (12,786) (8,449)
--------- --------- --------- ---------
LOSS BEFORE INCOME TAXES ... (4,951) (61,641) (31,716) (84,617)
INCOME TAXES ............... -0- 800 800 800
--------- --------- --------- ---------
NET LOSS ................... $ (4,951) $ (62,441) $ (32,516) $ (85,417)
========= ========= ========= =========
BASIC AND DILUTED
LOSS PER COMMON SHARE .... $ -0- $ (.05) $ (.03) $ (.07)
========= ========= ========= =========
WEIGHTED AVERAGE
SHARES OUTSTANDING ....... 1,273,650 1,250,000 1,261,114 1,250,000
========= ========= ========= =========
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BECOR COMMUNICATIONS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED NOVEMBER 30, 2001 AND 2000
2001 2000
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $(32,516) $(85,417)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation ................................... 274 482
Amortization ................................... 7,200
Changes in operating assets and
liabilities:
Accounts receivable .......................... (18,373) 8,785
Video inventory and production costs ......... (18,183)
Accrued expenses ............................. 20,540 16,075
Other assets ................................. 2,113
-------- --------
Net cash used by operating activities .............. (30,075) (68,745)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of equipment ............................ (642)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings from shareholder ........................ 23,000 85,000
Sales of common stock .............................. 4,535
-------- --------
Net cash provided by financing activities .......... 27,535 85,000
-------- --------
NET INCREASE (DECREASE) IN CASH .................... (3,182) 16,255
CASH, BEGINNING OF PERIOD .......................... 3,483 3,605
-------- --------
CASH, END OF PERIOD ................................ $ 301 $ 19,860
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ....................................... $ -0- $ -0-
Income taxes ................................... $ 800 $ 800
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BECOR COMMUNICATIONS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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 six-month period ended November 30, 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 November 30, 2001 and has a net
shareholders' deficit of approximately $373,000. 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 marketing of 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 November 30,
2001 were approximately $99,600. 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 six months ended November 30, 2001 the Company sold 20,000 shares of
its common stock for $4,500. 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
November 30, 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 November 30, 2001, we had revenues of approximately
$102,000 versus $60,500 for the same quarter in the prior year. Cost of revenues
increased from $9,100 (15% of revenues) in the quarter ended November 30, 2000
to $53,800 (53% of revenues) in 2001. Increased distribution and production
costs accounted for the increased costs in 2001.
Selling and marketing costs decreased from $48,900 (81% of revenues) in 2000 to
$24,300(24% of revenues in 2001). The decreased expenses reflect the reduction
in the employment of consultants by the Company.
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General and administrative expenses decreased from $61,500 (102% of revenues) in
2000 to $19,300 (19% of revenues) in 2001. The decrease in cost relate to the
professional fees incurred in the prior year in connection with the Registration
Statement filed in September 2000. 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 $291,600 through
November 30, 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, The Cuban Missile Crisis, It's
A Wonderful Life: Leading Through Service" and Own It, 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 was served with a complaint from a competitor. The complaint
seeks damages for, among other things, alleged "intentional
interference with contractual relations. The complaint is based upon
the claim that an independent sales representative engaged by Advanced
Knowledge, who was a former employee of that competitor, was (i) for a
short period of time, employed by that competitor while performing
sales efforts on our behalf; and, (ii) engaging in unfair business
practices. We dispute the allegations and deny any liability. However,
in order to avoid the costs and uncertainty associated with
litigation, we are engaged in settlement discussions with the
competitor. We anticipate that the matter will be resolved and settled
without any further litigation.
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 November 30, 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: January 9, 2002 /s/ Buddy Young
-------------------------------------
Buddy Young, President and Chief
Executive Officer
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