U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
(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, 2002
[ ] 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 1,612,900 shares of Common stock, par value $.001 per
share issued and outstanding as of August 31, 2002.
Based on the average of the closing bid and asked prices of the issuer's
common stock on August 31, 2002, the aggregate market value of the voting stock
held by non-affiliates of the registrant on that date was $64,850.
Traditional Small Business Disclosure Format (check one) Yes [ ] No [X]
1
INDEX TO QUARTERLY REPORT
ON FORM 10-QSB
PART I FINANCIAL INFORMATION
Page
----
Item 1. Financial Statements..................................................3
Balance Sheets
August 31, 2002 (unaudited) and May 31, 2002......................4
Statements of Operations and Accumulated Deficit (unaudited)
For the Three-Months Ended
August 31, 2002 and 2001..........................................5
Statements of Cash Flows (unaudited)
For the Three Months Ended
August 31, 2002 and 2001..........................................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....................................................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)
3
BECOR COMMUNICATIONS, INC.
BALANCE SHEETS
- --------------------------------------------------------------------------------
August 31,
2002 May 31,
(Unaudited) 2002
--------- ---------
ASSETS
CASH ............................................... $ 916 $ 25,256
ACCOUNTS RECEIVABLE, Net ........................... 44,389 58,561
PROPERTY AND EQUIPMENT, Net ........................ 6,452 7,265
PREPAID EXPENSES AND OTHER ASSETS .................. 1,986 1,986
--------- ---------
TOTAL ASSETS ....................................... $ 53,743 $ 93,068
========= =========
LIABILITIES AND SHAREHOLDERS' DEFICIT
LIABILITIES:
Bank overdraft ..................................... $ 20,781
Line of credit ..................................... 31,522 20,122
Accrued royalties .................................. 2,378 26,628
Accrued expenses ................................... 77,226 90,240
Note payable to shareholder ........................ 318,562 308,312
Accrued interest due to shareholder ................ 66,630 60,259
--------- ---------
Total liabilities .................................. 517,099 505,561
--------- ---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' DEFICIT:
Common stock, par value - $.001,
25,000,000 shares authorized, 1,612,900
shares issued and outstanding at
August 31, 2002 and May 31, 2002, respectively ... 1,613 1,613
Additional paid-in capital ......................... (33,226) (33,226)
Accumulated deficit ................................ (431,743) (380,880)
--------- ---------
Total shareholders' deficit ........................ (463,356) (412,493)
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT ........ $ 53,743 $ 93,068
========= =========
See accompanying notes to financial statements.
4
BECOR COMMUNICATIONS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED AUGUST 31, 2002 AND 2001 (unaudited)
- --------------------------------------------------------------------------------
2002 2001
----------- -----------
REVENUES ..................................... $ 86,054 $ 98,380
COST OF REVENUES ............................. 39,446 46,220
----------- -----------
GROSS PROFIT ................................. 46,608 52,160
----------- -----------
EXPENSES:
Selling and marketing ........................ 29,365 30,818
General and administrative ................... 56,842 38,104
Research and development ..................... 4,774 4,596
Interest expense ............................. 6,490 5,407
----------- -----------
Total expenses ............................... 97,471 78,925
----------- -----------
LOSS BEFORE INCOME TAXES ..................... (50,863) (26,765)
INCOME TAXES ................................. 800
----------- -----------
NET LOSS ..................................... (50,863) $ (27,565)
===========
ACCUMULATED DEFICIT AT MAY 31, 2002 .......... (380,880)
-----------
ACCUMULATED DEFICIT AT AUGUST 31, 2002 ....... $ (431,743)
===========
BASIC LOSS PER SHARE ......................... $ (0.03) $ (.02)
=========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING .............................. 1,612,900 1,261,114
=========== ===========
See accompanying notes to financial statements.
5
BECOR COMMUNICATIONS, INC.
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED AUGUST 31, 2002 AND 2001 (unaudited)
- --------------------------------------------------------------------------------
2002 2001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ........................................... $(50,863) $(27,565)
Adjustments to reconcile net loss
to net cash used by operating activities:
Depreciation and amortization .................. 813 274
Changes in operating assets and
liabilities:
Accounts receivable .......................... 14,172 (4,493)
Accrued expenses and overdraft ............... (10,112) 10,606
-------- --------
Net cash used by operating activities .............. (45,990) (21,178)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of equipment ............................ -- (642)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock ............................... 4,538
Net borrowings from shareholder .................... 10,250 13,000
Net borrowings from bank ........................... 11,400 5,000
-------- --------
Net cash provided by financing activities .......... 21,650 22,538
-------- --------
NET INCREASE (DECREASE) IN CASH .................... (24,340) 718
CASH, BEGINNING OF PERIOD .......................... 25,256 3,483
-------- --------
CASH, END OF PERIOD ................................ $ 916 $ 4,201
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ -0- $ -0-
Cash paid for income taxes $ -0- $ 800
See accompanying notes to financial statements.
6
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, 2002, are not
necessarily indicative of the results that may be expected for the year
ended May 31, 2003. 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, 2002.
The balance sheet at May 31, 2002, 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, 2002 and through August 31, 2002. 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.
7
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.
8
BECOR COMMUNICATIONS, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations
are based upon our consolidated statements, which have been prepared in
accordance with accounting principles generally accepted in the United States.
The preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenues and
expenses. In consultation with our Board of Directors, we have identified two
accounting policies that we believe are key to an understanding of our financial
statements. These are important accounting policies that require management's
most difficult, subjective judgments.
The first critical accounting policy relates to revenue recognition. We
recognize revenue from product sales upon shipment to the customer. Rental
income is recognized over the related period that the videos are rented.
The second critical accounting policy relates to research and development
expenses. We expense all research and development expenses as incurred. Costs
incurred to establish the feasibility and marketability of a product is expensed
as incurred and included in Research and Development expenses.
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 five 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", "How Do You Put A Giraffe In The Refrigerator", 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,
2002 were $130,427. 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
9
capital through the sale of equity. The Company's marketing expenses and the
production of new training videos will be adjusted accordingly.
We currently have 2 employees. These employees received no compensation through
August 31, 2002. If cash resources permit, the Company plans to increase its
employees to 6 during calendar 2003, (2 administrative, 4 sales).
During the quarter ended August 31, 2002, we had revenues of approximately
$86,000 versus $98,000 for the same quarter in the prior year. Cost of revenues
decreased from $46,000 (47% of revenues) in the quarter ended August 31, 2001 to
$39,000 (46% of revenues) in 2002. Decreased distribution and production costs
accounted for the decreased costs in 2002.
Selling and marketing costs decreased from $31,000 (32% of revenues) in 2001 to
$29,000 (34% of revenues in 2002). The decreased expenses are primarily
commissions paid on reduced sales.
General and administrative expenses increased from $38,000 (39% of revenues) in
2001 to $57,000 (66% of revenues) in 2002. The increased expenses are primarily
accounting and consulting costs. 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, 2003. The Company has borrowed approximately $318,500 through
August 31, 2002.
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.
10
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS None.
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, 2002, no matters were submitted
to the Company's security holders.
ITEM 5. OTHER INFORMATION None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
99.1 Certification
11
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 7, 2002 /s/ Buddy Young
--------------------------------
Buddy Young, President and Chief
Executive Officer
12