-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VCOVzlFkB2/80I85vG0xdfmeXvAucORhqjRd2+bn8BmHKVUUv0btEpB3HnjkBw78 hoU7GkzDDO4WIQZt/g7SaA== /in/edgar/work/20000814/0001034840-00-000017/0001034840-00-000017.txt : 20000921 0001034840-00-000017.hdr.sgml : 20000921 ACCESSION NUMBER: 0001034840-00-000017 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CHAMPION ENTERTAINMENT INC CENTRAL INDEX KEY: 0001034840 STANDARD INDUSTRIAL CLASSIFICATION: [7812 ] IRS NUMBER: 943261987 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22833 FILM NUMBER: 700167 BUSINESS ADDRESS: STREET 1: 26203 PRODUCTION AVENUE STREET 2: SUITE 5 CITY: HAYWARD STATE: CA ZIP: 94545 BUSINESS PHONE: 5107858750 MAIL ADDRESS: STREET 1: 26203 PRODUCTION AVENUE STREET 2: SUITE 5 CITY: HAYWARD STATE: CA ZIP: 94545 10QSB 1 0001.txt FORM 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 1O-QSB [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 pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, For the transition period ___________ to ____________ Commission File Number 333-18967 AMERICAN CHAMPION ENTERTAINMENT, INC. (Exact Name of Registrant as Specified in its Charter) Delaware 94-3261987 (State or Other Jurisdiction or (IRS Employer Incorporation or Organization) Identification Num 1694 The Alameda, Suite 100, San Jose, California 95126 (408) 288-8199 (Registrant's Address of Principal Executive Offices and Telephone N (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) Indicate by check mark whether the registrant: (1) has filed all report required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has bee subject to such filing requirements for the past 90 days. Yes ..X.. No ..... APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING TH PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15 (d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ..... No ..... APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date. Class Outstanding at June 30, 2000 ------------------------- -------------------------- Common Stock, $.0001 par value 7,008,618 shares Transitional Small Business Disclosure Format (check one) Yes.... No Exhibit Index on Page AMERICAN CHAMPION ENTERTAINMENT, INC. Form 10-QSB June 30, 2000 TABLE OF CONTENTS PART I - Financial Information Item 1. Financial Statements Consolidated Balance Sheet as of June 30, 2000 Consolidated Statements of Operations for the three mon the six month periods ended June 30, 2000 and 1999 Consolidated Statements of Cash Flows for the three mon the six month periods ended June 30, 2000 Notes to Consolidated 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 4. Submission of Matters to a Vote of Security Holders Item 6. Exhibits and Reports on Form 8-K Signatures Exhibit Index Exhibits PART I - FINANCIAL INFORMATION ITEM 1- Financial Statements - (unaudited) AMERICAN CHAMPION ENTERTAINMENT, INC. Condensed Consolidated Balance Sheets (unaudited)
June 30, December 2000 1999 ------------ -------- Assets Cash...................................... $211,842 $32, Account receivable........................ 1,099,349 481, Loans receivable, related parties......... 114,937 114, Prepaid expenses ......................... 22,164 7, Property and equipment, net............... 271,168 312, Investments............................... -- 203, Film costs, net........................... 7,561,834 7,553, Note receivable........................... 354,814 354, Other assets.............................. 285,029 226, ------------ -------- Total assets.............................. $9,921,137 $9,286, ============ ======== Liabilities Accounts payable and accrued expenses..... $700,957 $1,042, Note payable, related parties............. -- 4, Other..................................... -- 4, Deferred revenues......................... 16,920 16, Notes payable............................. 1,154,562 450, ------------ -------- Total long-term liabilities............... 1,872,439 1,598, Stockholders' Equity: Preferred stock -- -- Common stock, paid in capital............. 23,167,328 17,594, Accumulated deficit........................ (15,118,631) (9,906, ------------- -------- Total stockholders' equity ................ 8,048,697 7,688, ------------- -------- Total Liabilities and Stockholders Equity.. $9,921,137 $9,286, ============= ========
See accompanying notes. AMERICAN CHAMPION ENTERTAINMENT, INC. Condensed Consolidated Statements of Operations (unaudited)
Three Months Ended Six Mon June 30, June ---------------------- ----------- 2000 1999 2000 ----------- ---------- ----------- REVENUE: Tuition and related fees......... $8,415 $19,256 $50,601 Accessories and video sales...... 40 0 145 License fee and sponsorship fee.. 465,050 0 465,050 Film income...................... 15,290 214,206 17,268 Interest income.................. 3,100 0 9,678 ----------- ---------- ----------- Total revenue.................... 491,895 233,462 542,742 ----------- ---------- ----------- COSTS AND EXPENSES: Cost of sales.................... 842 0 1,617 Amortization of film costs....... 31,057 231,569 31,057 Salaries and payroll taxes....... 261,438 10,653 561,911 Rent............................. 33,900 72,249 62,807 Selling, general and administrative................. 1,662,196 333,135 4,608,036 Financing expense*............... -- 741,210 -- Debenture conversion expense..... 65,683 -- 83,817 Beneficial conversion feature of debentures.................. 107,429 -- 372,393 Interest......................... 11,681 607,583 33,295 ----------------------------------- Total costs and expenses......... 2,174,226 1,996,400 5,754,933 ----------------------------------- Net Loss From Operations............(1,682,331)(1,762,938) (5,212,191) Gain On Sale Of Studio 0 0 0 Net Loss Before Income Tax..........(1,682,331)(1,762,938) (5,212,191) Income Tax 0 4,240 0 Net Loss (1,682,331)(1,767,178) (5,212,191) Accumulated Deficit (15,118,631)(5,853,684) (15,118,631) Weighted average number of shares outstanding**.................... 6,555,737 1,964,081 6,555,737 ======================= =========== Basic loss per share............... (0.26) (0.90) (0.80) ======================= ===========
* Financing expense of $741,210 consists of $114,500 in cash and a non-cash portion of $626,710 in valuation of common stock and warrants granted pursuant to the redemption of debt. ** Adjusted for 1:4 reverse split of the Company's common stock on January 4, 2000. See accompanying notes. AMERICAN CHAMPION ENTERTAINMENT, INC. Condensed Consolidated Statements of Cash Flows (unaudited)
Three Months Six Ended E June 30, Ju ----------------- 2000 2 ----------- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss........................................ $(1,682,331) $(5,2 Adjustments to reconcile net loss to net cash used for operating activities: Non-cash charge related to beneficial conversion feature of debentures.......... 107,429 37 Depreciation and amortization............... 53,750 8 Conversion of debenture interest to common stock 9,171 2 Amortization of original issue discount On long-term debt........................ 65,683 8 Amortization of loan fees................... 22,322 2 Securities issued for services.............. 94,465 2,46 Options granted for services................ 356,378 35 Amortization of deferred consulting expenses 93,300 18 (Increase) Decrease in: Accounts receivable........................... (406,057) (41 Prepaid expenses and other.................... 6,235 (1 Increase (Decrease) in: Accounts payable and accrued expenses......... 108,438 (34 Deferred revenues............................. -- ----------------- Net cash used for operating activities..... (1,171,217) (2,39 ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase or (sale) of property and equipment.... -- ( Payments for film costs......................... (36,088) (4 ----------------- Net cash used for investing activities..... (36,088) (5 ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from exercise of common stock options.. 100,000 43 Payments on redemption of common stock.......... (63,072) (6 Payments of loans from related parties.......... -- (8 Proceeds from exercise of warrants.............. -- 45 Proceeds on notes payable....................... 1,000,000 2,25 Payments on notes payable....................... -- (27 Payments of OID on notes payable................ (88,873) (8 Principal payments on capital leases............ (1,878) ( ----------------- Net cash provided by financing activities.. 946,177 2,62 ----------------- NET INCREASE (DECREASE) IN CASH................. (261,128) 17 CASH, beginning of period....................... 472,970 3 ----------- ----- CASH, end of period............................. 211,842 21 =========== ===== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Cash paid during the period for: Interest.................................... $--- $- State income taxes.......................... $--- $- SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: Long-term debt converted to equity.......... $346,000 $1,07 Beneficial conversion feature of debentures. $107,429 $37 Common stock and warrants issued related to services............................... $94,465 $2,10 Common stock warrants issued with debts..... $83,962 $36 Stock options granted to consultants........ $356,378 $35 Stock warrants issued to consultants........ $--- $35 Common stock warrants issued related to loan fees................................. 351,828 35
See accompanying notes. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 Note 1 - Nature of Operations and Summary of Significant Accounting Policies Nature of Operations and Consolidation - The consolidated financial st include the accounts of American Champion Entertainment, Inc. (the "Co and its wholly owned subsidiary, America's Best Karate ("ABK") which o of American Champion Media, Inc. ("AC Media"). The Company and AC Med formed during 1997. Pursuant to an Agreement and Plan of Merger, dated July 14, 1997, the Company entered into a reorganization transaction p to which the Company acquired all of the issued and outstanding shares (the "Reorganization"). The financial statements included herein give to the Reorganization in which the Company became the successor to ABK significant intercompany accounts and transactions have been eliminate consolidation. AC Media focuses on operating and managing all media-related programs Company. These programs consist of fitness information video tapes, bo audio tapes and production of educational television programs for chil which emphasize martial arts values and fun. ABK focuses solely on ope and managing the Company's karate studios which are located in the San Francisco Bay Area. Revenue Recognition - AC Media - Revenue from films is recognized on t accrual method. Film costs are amortized using the individual-film-forecast-computation method which amortizes costs in t ratio that current gross revenues bear to anticipated total gross reve from all sources. The management of AC Media periodically reviews its estimates of future revenues for each master and if necessary a revisio made to amortization rates and a write down to net realizable value may occur. Concentration of Credit Risk - Financial instruments which potentially subject the Company to concentrations of credit risk are cash and acco receivable arising from its normal business activities. The Company pla its cash with high credit quality financial institutions. The amount on deposit in any one institution that exceeds federally insured limits i subject to credit risk. To reduce credit risk, the Company requires ad payments from students and thus, no student fees receivable is recorded Film Costs - Film costs consist of the capitalized costs related to the production of original film masters for videos and television programs. net film costs are presented on the balance sheet at the net realizable value for each master. Fair Values of Financial Instruments - The carrying value of cash, receivables, accounts payable and short-term borrowings approximates fa value due to the short maturity of these instruments. The carrying valu long-term obligations approximates fair value since the interest rates either fluctuate with the lending banks' prime rates or approximate mar rate. None of the financial instruments are held for trading purposes. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2000 Note 1 - Nature of Operations and Summary of Significant Accounting Policies (continued) Basic Loss Per Share - Net loss per share is based on the weighted ave outstanding shares issued. Because the Company has a net loss, the comm stock equivalents would have an anti-dilutive effect on earnings per sh Accordingly, basic earnings per share and diluted earnings per share ar same. Income Taxes - Deferred tax assets and liabilities are recognized for t expected tax consequences of temporary differences between the tax base assets and liabilities and their reported amounts. The Company and its Subsidiaries file a consolidated tax return. Presentation - Because of the Company's reduced activity in its karate instruction segment, management believes utilizing a classified balance sheet presentation is no longer appropriate, as the operating cycle of media-related segment of the Company is expected exceed 12 months. Accordingly, an unclassified presentation is utilized for the accompan balance sheet, which is an acceptable method under SFAS No. 53, "Financ Reporting by Producers and Distributors of Motion Picture Films". Reclassifications - Certain reclassifications have been made to the 199 amounts to conform to the current presentation. Note 2 - Basis of Reporting 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. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles for completed fina statements. In the opinion of management, such statements include all adjustments (consisting only of normal recurring items) which are consi necessary for a fair presentation of the financial position of the Comp at June 30, 2000 and the results of its operations and its cash flows f the three months periods ended June 30, 2000 and 1999. The accompanyin unaudited financial statements should be read in conjunction with the financial statements and notes for the year ended December 31, 1999 inc in the Company's Form 10-KSB as filed with the SEC on March 30, 2000. Note 3 - Uses of Estimates, Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates a assumptions that affect the reported amounts of assets and liabilities disclosure of contingent assets and liabilities at the date of the fina statements and the reported amounts of revenues and expenses during th reporting period. Actual results could differ from those estimates. Significant estimates used in these financial statements include the recovery of film costs which has a direct relationship to the net real value of the related asset. It is at least reasonably possible that management's estimate of revenue from films could change in the near te which could have a material adverse effect on the Company's financial condition and results of operations. Note 4 - Film Costs Film costs consist of the capitalized costs related to the production o videos and programs for television as follows: June 30, 2000 1999 -------------- ------- Television program The Adventures with Kanga Roddy............. $8,117,427 $8,077, Videos Montana Exercise Video...................... 148,253 148, Strong Mind Fit Body........................ 18,042 18, ----------- -------- 8,283,722 8,243, Less accumulated amortization............... 721,888 690, ----------- -------- 7,561,834 7,553, =========== ======== Production of the first seven episodes of The Adventures with Kanga Rod completed during 1997. The Company completed 9 and 13 additional episod during the years ended December 31, 1999 and 1998, respectively. Both exercise videos were completed in 1996, but only the Strong Mind Fit Bo video has been released. Note 8 -Beneficial Conversion Feature of Debentures The Company accounts for the beneficial conversion feature of its 7% convertible debentures issued during the quarter in accordance with EIT "Accounting for Convertible Securities with Beneficial Conversion Featu Contingently Adjustable Conversion." The application of EITF D-60 resu the recognition of a non-cash charge to interest expense of $107,429 fo quarter ended June 30, 2000 corresponding increase to additional paid i capital. These amounts are included in interest expense. PART I - FINANCIAL INFORMATION ITEM 2 - Management's Discussion And Analysis Of Financial Condition And Results Of Operations Forward Looking Information The Private Securities Litigation Reform Act of 1995 provides a "safe h from liability for forward-looking statements. Certain information incl in this Form 10-QSB and other materials filed or to be filed by the Com with the Securities and Exchange Commission (as well as information inc in oral statements or other written statements made or to be made by or behalf of the Company) are forward-looking, such as statements relating operational and financing plans, capital uses and resources, competitio and demands for the Company's products and services. Such forward-looki statements involve important risks and uncertainties, many of which wil beyond the control of the Company. These risks and uncertainties could significantly affect anticipated results in the future, both short-term long-term, and accordingly, such results may differ from those expresse forward-looking statements made by or on behalf of the Company. These r and uncertainties include, but are not limited to, the acceptance by television viewers and public television stations of the television ser ADVENTURES WITH KANGA RODDY, production delays and/or cost overruns wit respect to such series, changes in external competitive market factors the Company's internal budgeting process which might impact trends in t Company's results of operations, unanticipated working capital or other requirements, changes in the Company's business strategy or an inabili execute its strategy due to unanticipated change in the industries in w it operates; and various competitive factors that may prevent the Compa from competing successfully in the marketplace. The following section discusses the significant operating changes, busi trends, financial condition, earnings and liquidity that have occurred the three-month period ended June 30, 1999. This discussion should be r in conjunction with the Company's consolidated financial statements and notes appearing elsewhere in this report. Results of Operations Revenues. For the three months ended June 30, 2000, the Compan total revenue increased to $491,895, an increase of $258,433 or 110.7% compared to $233,462 for the comparable period in 1999. This increase i due to the sponsorship revenue for the Company 's boxing event in April Costs and Expenses. Within the three months ended June 30, 200 Company has an amortized expense of film cost in the amount of $31,057 its television show. Such amortization, is calculated based upon the proportion to the revenue generated by the television show in this peri compared to total expected revenues from the television show. The Company's expenses for salaries and payroll taxes increased $261,438, an increase of $250,785 for the three months ended June 30, 2 from $10,653 for the comparable period in 1999. The increase was the c result of all salaries and payroll taxes charged to expense instead of capitalizing to production and an increase in marketing personnel. Rent expense decreased to $33,900 for the three months ended Ju 2000, a decrease of $38,349 or 53.1% from $72,249 for the comparable pe 1999. The decrease in rents is due to the closure of karate studios. Total selling, general and administrative expenses increased to $1,662,196, an increase of $1,329,061 for the three months ended June 3 from $333,135 for the comparable period in 1999. This increase is prim due to cost of producing the boxing event in China in the amount of $74 Interest expense decreased to $11,681, a decrease of $595,902 f three months ended June 30, 2000 from $607,583 for the comparable perio 1999. The beneficial conversion feature of debenture expense for the q ended June 30, 2000 is a non-cash charge of $107,429 related to the convertible debentures the Company issued issued earlier in the year, a there were no such charge for the comparable period in 1999. The debent are convertible to common stock of the Company with the shares to be is upon conversion based on 17.5% of the fair value of the stock at the ti conversion. Since the debt can be converted at any time, the value of discount as of the issuance date has been charged to interest expense w corresponding increase to additional paid in capital. The balance of t increase is attributable to the interest accrued on convertible debentu and certain private loans of the Company. As a result of the foregoing factors, the Company's net loss decreased to $1,682,331 during the three months ended June 30, 2000 fro $1,762,938 for the comparable period in 1999. Net loss per share decre to ($0.26) for the three months ended June 30, 2000 from ($0.90) for th comparable period in 1999. Weighted average number of shares outstandin increased to 6,555,737 for the three months ended June 30, 2000 from 1,964,081 for the comparable period in 1999 primarily due to the conver of debentures into the Company's common stock. The outstanding number o shares and net loss per share figures are adjusted for the 1:4 reverse of the company's common stock on January 4, 2000. Liquidity And Capital Resources Cash decreased for the three months ended June 30, 2000 by $261 which $1,171,217 was net operating cash loss and $36,088 was used in th production of the Adventures With Kanga Roddy show, while financing act resulted in an inflow of $946,177. Deferred consulting fees of $93,300 relate to common stock and issued to consultants and are being amortized over the term of the cons agreements which range from 12 to 24 months. As of June 30, 2000, total liabilities were $1,872,439 and ther no loan payable to related parties. In addition, deferred revenues we $16,920 at June 30, 2000. Deferred revenues are pre-paid tuition for t karate studios and booked revenue from sponsorship activities which can immediately recognized. The last karate studio was closed during the q ended March 31, 2000. There has not been significant request for refun pre-paid tuition and the Company may elect to claim the remaining defer revenues later this year. The Company continues to believe that the unamortized cost of t Kanga Roddy program is recoverable due to the fact that management is actively pursuing other broadcast avenues for the program. The current exclusive distribution agreement with public television through KTEH, t affiliate station in San Jose, is expiring in April 2001. The Company optimistic that a commercial broadcaster or cable network would distrib the Kanga Roddy series, thereby generating distribution revenue and creating a larger audience and demand for ancillary products. The distributor for the Montana exercise video is planning on a Internet marketing plan within the third quarter of 2000. With correct pricing and an aggressive outreach strategy, the Company maintains that unamortized costs of this program is recoverable. Recent Developments In April 2000, the Company engaged into an Equity Line of Credi Sibson Holdings, Ltd. The equity line is for a maximum of $5,000,000 wi bridge loan of $1,000,000. The Company is in the process of filing a registration statement on form SB-2 for this transaction, and will seek shareholders' approval to ratify this transaction at the coming shareho meeting scheduled on September 27, 2000. On May 3, 2000, the Company's subsidiary American Champion Mark Group, Inc. ("ACMG") signed an agreement with Irwin Toy Limited for the licensing of characters from the TV program "ReBoot". ACMG is the lice agent for Mainframe Entertainment, Inc., the producer of "ReBoot". On July 17, 2000, the Company signed a short-form agreement for acquisition of 50.01% of 21e-sports Company, Ltd. of Beijng China. Upo satisfactory completion of the due diligence process, a final agreement be executed and then the Company will file a proxy statement with the S seek shareholders' approval for the acquisition. PART II - OTHER INFORMATION Item 1. Legal Proceedings. There is no on-going legal proceedings during the three months ended June 30, 2000. Item 4. Submission of Matters to a Vote of Security Holders There is no submission of matters to a vote of security holders during the three months ended June 30, 2000. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits. See the Exhibit Index beginning on page 16. (b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter for which this report is filed. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of the Company has duly caused this report to be signed on its behalf by t undersigned, thereunto duly authorized. AMERICAN CHAMPION ENTERTAINMENT, INC. (Registrant) Dated: August 14, 2000 By: /s/ Anthony K. Chan ------------------------------ Anthony K. Chan, Chief Executive Offi By: /s/ Mae Lyn Woo ------------------------------ Mae Lyn Woo, Vice President, Chief Financial Officer & Chief Operations Officer INDEX TO EXHIBITS Exhibit No. Exhibit 10.53 Sponsorship Agreement between Shun Li De Commerce and Tradin American Champion Media, Inc. for sponsorship of boxing even 10.54 Deal Memorandum between Irwin Toy Limited and American Champ Marketing Group, Inc. for the licensing of characters from t program "ReBoot" produced by Mainframe Entertainment, Inc. (portions deleted pursuant to request for confidential treat 27.1 Financial Data Schedule (shown on EDGAR format only) EX-10.53 2 0002.txt SPONSORSHIP AGREEMENT FOR BOXING EVENT IN CHINA EXHIBIT 10.53 SPONSORSHIP AGREEMENT for Boxing Event in China, on April 22, 2000 American Champion Media, Inc. ("ACM"), a Delaware company with headquar at 1694 The Alameda, San Jose, CA 95126, U.S.A., is the host and produ a boxing event to take place at the Tian He Stadium in Guangzhou, China "Event"). This Event is scheduled to take place on April 22, 2000, and Sponsorship Agreement (the "Agreement") dated as of April 14, 2000 is by and between Shun Li De Commerce & Trading Ltd ("SLD") a Beijing com with headquarters at Xin Xing Dong Xiang, Bldg 1 Suite 1413, Xi Cheng District, Beijing, China (the "Sponsor") and ACM. 1) The Sponsor wishes to become a sponsor of the Event, a producti of ACM, to take place on April 22, 2000 at the Tian He Stadium in Guangzhou, China. 2) As a sponsor of the Event, the Sponsor is entitled to the following sponsorship components: * Two Floor Cards (12in x 66in) in prominent position for TV camera * Two Drapes over ropes (5in x 60in, with lettering within the middle * Two Ring Side banners (200cm x 15cm) * One overhead banner (5ft x 8 ft) to be hung over boxing ring * Other handout materials for audience 3) For the above sponsorship components, the Sponsor agrees to pay a total amount of US$400,000.00. The amount is payable 180 days from t date of the Event. 4) This is understood between the parties that SLD may resale all some of the above sponsorship components to other buyers, provided that shall submit third party display materials at least five days prior to event for ACM's approval. 5) ACM retains all of its rights under copyright and trademark law pertaining to the Event's intellectual property, whether registered or unregistered, and any applications of the Event's logo, name, character likeness. Video and audio excerpts of the Event must have ACM's approv writing prior to such use. The Sponsor shall retain all of its rights copyright and trademark laws pertaining to any of its intellectual prop 6) Display materials from the Sponsor must be delivered to the Tia He Stadium at least two days prior to the event. 7) All covenants, promises and agreements by or on behalf of the parties contained in this Agreement shall be binding upon and shall inu the benefit of the successors and assigns of the parties; but nothing this Agreement, expressed or implied is intended to confer on any party right to assign its rights or obligations hereunder. Nothing in this Agreement, whether expressed or implied, is intended to confer any rig remedies under or by reason of this Agreement on any persons other tha parties to it and their respective successors and assigns, nor is anyth in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shal provision give any third person any right of subrogation or action over against any party to this Agreement. 8) This Agreement shall be governed by, and construed and enforced accordance with, the laws of the State of California and the laws of Ho Kong. In the event of a dispute, the parties shall seek mediation at a third country mutually agreed upon. 9) This Agreement sets forth the entire agreement of the parties h with regard to the subject matter hereof and supersedes and replaces al prior agreements, understandings and representations, oral or written, regard to such matter. 10) This Agreement may be executed in two or more counterparts, eac which shall be deemed an original, but all of which together shall constitute one and the same instrument. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date hereby written. /s/ Anthony K. Chan Anthony K. Chan Chief Executive Officer American Champion Media, Inc. /s/ He, Li He, Li Chief Financial Officer Shun Li De Commerce & Trading Ltd EX-10.54 3 0003.txt LICENSING DEAL MEMORANDUM WITH IRWIN TOY LIMITED Exhibit 10.54 REBOOT Deal Memorandum Date: May 3, 2000 "Agent for Licensor" American Champion Marketing Group, Inc. 1694 The Alameda, Suite #100 San Jose, CA 95126 Contact: Joy Tashjian Phone: 408-288-8098 Fax: 408-288-8098 "Licensee" Irwin Toy Limited 43 Hanna Avenue Toronto, ON M6K1X6 Contact: Francess Wells Cunningham Phone: 416-583-4548 Fax: 415-333-3257 Property: Shall mean all characters, characterizations, names, sc locales, themes and storylines, including all copyright material, trademarks, (pending, registered or unregistered) now existing, or hereafter coming into existence and associated with the television seri known as "ReBoot" but excluding Imax ReBoot Ridefilms (Imax Rights) or features produced under the Maxframe Joint Venture. Initial Term: Two (2) years and six months commencing July 1, 2000 an expiring on December 31, 2002. Renewal Option: If the Licensee is in full compliance with all the term conditions of the Agreement for the Initial Term and the Licensee shal made royalty payments to the Licensor of no less than US$(deleted) or US$(deleted) as the case may be in respect of the Initial Term as act in the Minimum Guarantee Clause, then the Licensee shall have the sole to extend the Agreement for an additional term of three years at the sa royalty rates as apply for the Initial Term. If Licensee meets the requirements and exercises Its right to extend the term of the Agreemen Licensee shall in respect of the renewal term, pay the Licensor a nonrefundable Advance of US$(deleted), with a Minimum Guarantee of US(d if the television episodes of the Property "ReBoot" are aired in all of following countries by December 31, 2002: U.K., France, Germany, Italy Spain, and US$(deleted) if they are not aired. Territory: Worldwide, excluding Japan. Minimum Guarantee: US $(deleted) provided however that in the even television episodes of the Property "Reboot" are not aired in all of t following countries: UK, France, Germany, Italy and Spain by December 2002, the Minimum Guarantee shall be US $(deleted). Advance: (i) US$(deleted) non-refundable advance against royalt upon the receipt of a fully- executed copy of this Deal Memorandum by Licensee; and (ii) Such amount by July 1, 2001, if required, which together US$(deleted) advance under (i) above and earned royalties paid up to J 30, 2001 would bring aggregate royalty and royalty advance payments up US$(deleted). Balance Of Guarantee: Due sixty (60) days prior to the expiration of agreement if not previously earned and paid in royalties. Royalty Rate: On North American sales where Irwin distributes direct retailers and consumers: X% of net sales for the first US$(dele X% of net sales for the second US$(deleted); X% thereafter; On International sales where Irwin markets through third party distributors: X% of net sales On F.O.B. sales: X% on the F.O.B. selling price for the fi US$(deleted); X% on the F.O.B. for the second US$(deleted); and X% thereafter; Grant of Right: Exclusive. Licensed Articles Description: Action Figures; Vinyl Figures; Vehicle for Action Figures; Die-cast Vehicles; Plush Toys; Model Kits; Bendabl Injection molding machines that create injected molded plastic figures through a process of melting the plastic in the machine; Non-electron superballs, also known as high bounce balls, with a figure or disc emb inside; Non-electronic or Interactive board games and jigsaw puzzles bu specifically excluding trading card games or any form of 3- D puzzles; carrying cases but specifically excluding all other types of bags or lu Reporting and Remittances: Thirty (30) days following the end of each quarterly Calendar Period. Marketing Date: Within three (3) months of the Commencement Date. Post Expiration Disposal Period: Ninety (90) days Trademark and Copyright Notices: ReBoot(TM) and (C) (year) Mainframe Entertainment, Inc. All Rights Reserved. Submission of Production Samples: Three (3) production samples finished Article, and each item of promotional and packaging material (i) upon Packing to Licensor: completion of first production and (ii) annually thereafter. Reservation Rights: Licensor reserves to itself, without restrictio all rights with respect to Articles not specifically granted hereunder including but not limited to premiums and giveaways. Advertising: Licensee agree to spend a minimum of (deleted) U.S. Dollars (U.S.$deleted) on advertising and promotion in respect of the Initial Term. Liability Insurance: Ten Million Canadian Dollars (CDN$10,000,000) combined single limit with a deductible amount not in excess of Twenty Thousand Canadian Dollars (CDN$25,000) for each single occurrence for bodily injury and/or for property damage. Agreed To And Approved By: Licenser: Licensee: Mainframe Entertainment, Inc. Irwin Toy Limited Per: /s/ Ian Pearson Per: /s/ Francess Wells-Cunni Title: CEO / President Title: Vice President - Marketi Date: 15th May, 2000 Date: May 3, 2000 Agent: American Champion Marketing Group, Inc. Per: /s/ Joy M. Tashjian Title: CEO / President Date: 9th May, 2000 EX-27.1 4 0004.txt FINANCIAL DATA SCHEDULE
5 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATIO FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND STATEMENT OF INCOME AND IS QUALIFIED IN ITS ENTIRE REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 3-MOS DEC-31-1999 APR-01-2000 JUN-30-2000 211,842 0 1,099,349 0 0 9,921,137 271,168 0 9,921,137 1,872,439 0 0 0 23,167,328 (15,118,631) 9,921,137 40 491,895 842 842 2,173,384 0 11,681 (1,682,331) 0 0 0 (1,682,331) 0 (1,682,331) ($0.26) ($0.26)
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