Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington D.C.
(X Quarterly Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1997 Commission File No. 0-26884
NETTER DIGITAL ENTERTAINMENT, INC.
(exact name of registrant as specified in charter)
Delaware 95-3392054
(State or other (I.R.S. Employer
jurisdiction of incorporation) Identification No.)
611 North Brand Blvd., 3rd Floor
Glendale, California 91203
(Address of principal executive office)
Registrant's telephone number, including area code: 818/753-1990
Indicate by check mark whether the Registrant (1) has filed all reports 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 been subject to such filing
requirements for the past 90 days.
YES X NO ___
As of April 30, 1997 the Registrant had 3,317,221 shares of its Common Stock,
$.01 par value, issued and outstanding.
Page 1 of 13
<PAGE>
NETTER DIGITAL ENTERTAINMENT, INC. AND SUBSIDIARIES
FORM 10-Q
March 31, 1997
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements (Unaudited) NUMBER
------
Consolidated Balance Sheet as of March 31, 1997 3
Consolidated Statement of Operations for the three-months
ended March 31, 1997 and March 31, 1996 and the nine-months
ended March 31, 1997 and March 31, 1996 4
Consolidated Statements of Cash Flows for the nine-months
ended March 31, 1997 and 1996 5
Notes to Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
Page 2 of 13
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
NETTER DIGITAL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31,
1997
------------
(unaudited)
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,297,506
Accounts receivable, net of allowances of $52,430 688,327
Due from officer 194,876
Inventory 958,107
Production costs, net 245,884
Prepaid expenses 107,508
Deferred tax benefit 32,299
------------
TOTAL CURRENT ASSETS 3,524,507
EQUIPMENT, net 1,305,393
GOODWILL 2,052,870
DEPOSITS AND OTHER ASSETS 175,173
------------
$ 7,057,943
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 1,371,429
Accrued expenses 449,602
Sales taxes payable 55,832
Current portion of long-term debt 186,609
------------
TOTAL CURENT LIABILITIES 2,063,472
LONG-TERM DEBT 162,874
------------
TOTAL LIABILITIES 2,226,346
MINORITY INTEREST 500
STOCKHOLDERS' EQUITY:
Preferred stock, $0.001 par value, 2,000,000 shares
authorized; 47,145 shares issued and outstanding 258,011
Common stock, $0.01 par value, 6,000,000 shares
authorized; 3,317,221 shares issued and outstanding 33,172
Additional paid-in capital 4,641,343
Accumulated deficit (101,429)
------------
TOTAL STOCKHOLDERS' EQUITY 4,831,097
------------
$ 7,057,943
============
<FN>
<F1>
The accompanying notes are an integral part of the consolidated financial statements.
</FN>
</TABLE>
Page 3 of 13
<PAGE>
<TABLE>
<CAPTION>
NETTER DIGITAL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months ended Mar. 31, Nine Months Ended Mar. 31,
----------------------------- -----------------------------
1997 1996 1997 1996
-------------- -------------- -------------- --------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
REVENUES:
Production $ 7,648,370 $ 7,932,226 $ 17,069,982 $ 21,659,544
Merchandising - 350,000 - 350,000
-------------- -------------- -------------- --------------
TOTAL REVENUES 7,648,370 8,282,226 17,069,982 22,009,544
EXPENSES:
Production 6,272,887 7,818,507 14,762,238 21,100,813
General and administrative 1,243,428 446,487 2,275,051 923,271
Amortization of goodwill 17,251 - 17,251 -
-------------- -------------- -------------- --------------
TOTAL EXPENSES 7,533,566 8,264,994 17,054,540 22,024,084
-------------- -------------- -------------- --------------
OPERATING INCOME (LOSS) 114,804 17,232 15,442 (14,540)
OTHER INCOME (EXPENSE):
Interest income 14,209 27,362 71,271 46,131
Interest (expense) (38,641) (944) (38,641) (10,780)
Other income 4,133 14,095 4,301 15,098
-------------- -------------- -------------- --------------
TOTAL OTHER INCOME (EXPENSE) (20,299) 40,513 36,931 50,449
-------------- -------------- -------------- --------------
INCOME BEFORE PROVISION FOR INCOME TAXES 94,505 57,745 52,373 35,909
PROVISION FOR INCOME TAXES - 19,633 - 28,800
-------------- -------------- -------------- --------------
NET INCOME $ 94,505 $ 38,112 $ 52,373 $ 7,109
============== ============== ============== ==============
Cumulative preferred stock dividend 7,072 - 7,072 -
-------------- -------------- -------------- --------------
Net income to common shareholders $ 87,433 $ 38,112 $ 45,301 $ 7,109
============== ============== ============== ==============
Net income per common share $ 0.03 $ 0.01 $ 0.02 $ -
============== ============== ============== ==============
Weighted average common shares outstanding 2,969,074 2,795,000 2,969,074 2,795,000
============== ============== ============== ==============
<FN>
<F1>
The accompanying notes are an integral part of the consolidated financial statements.
</FN>
</TABLE>
Page 4 of 13
<PAGE>
<TABLE>
<CAPTION>
NETTER DIGITAL ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31,
-----------------------------
1997 1996
-------------- --------------
(unaudited) (unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 52,373 $ 7,109
-------------- --------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 155,540 -
Goodwill 17,251 -
Changes in operating assets and liabilities:
(Increase) in accounts receivable (192,997) (238,674)
(Increase)/decrease in prepaid expenses (17,750) 932
(Increase) in inventory (31,025) -
(Increase) in production costs (180,675) (26,008)
(Increase) in deposits and other assets (56,655) (8,929)
Increase in accounts payable 386,031 351,424
Increase/(decrease) in accrued expenses 29,908 (74,377)
(Decrease) in sales tax payable (43,652) -
(Decrease) in deferred revenue - (84,038)
-------------- --------------
65,976 (79,670)
-------------- --------------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 118,349 (72,561)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (626,286) (228,309)
Advances to subsidiary prior to acquisition (275,000) -
Net cash used in acquisition (net of previously deferred
acquisition costs of $113,396 and cash acquired) (352,527) -
-------------- --------------
NET CASH (USED IN) INVESTING ACTIVITIES (1,253,813) (228,309)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in deferred registration costs - 60,363
(Decrease) in long-term debt (95) -
Increase in additional paid-in capital 903 -
Proceeds from public offering - 3,543,798
Proceeds from sale of preferred stock 250,939 -
Increase in minority interest - 500
Repayment of note payable - line of credit - (110,000)
-------------- --------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 251,747 3,494,661
-------------- --------------
NET (DECREASE)/INCREASE IN CASH (883,717) 3,193,791
Cash, beginning of period 2,181,223 338,231
-------------- --------------
Cash, end of period $ 1,297,506 $ 3,532,022
============== ==============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest $ 36,664 $ 10,780
Cash paid for income taxes $ - $ 28,800
Preferred stock dividend $ 7,072 $ -
<FN>
<F1>
The accompanying notes are an integral part of the consolidated financial statements.
</FN>
</TABLE>
Page 5 of 13
<PAGE>
NETTER DIGITAL ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PREPARATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial statements and with the instructions to Form 10-QSB and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and disclosures required for annual financial statements. These
financial statements should be read in conjunction with the consolidated
financial statements and related footnotes for the year ended June 30, 1996
included in the Form 10-KSB for the year then ended.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of March 31, 1997, and the results of operations and cash flows
for the three and nine month periods ended March 31, 1997, and 1996 have been
included.
The results of operations for the three and nine month periods ended March 31,
1997, are not necessarily indicative of the results to be expected for the
full fiscal year. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's Form 10-
KSB as filed with the Securities and Exchange Commission for the year ended
June 30, 1996.
Earnings per share has been calculated based upon the weighted average number
of common shares outstanding. Stock options have been excluded as common
stock equivalents because they are either antidilutive, or their effect is not
material.
DUE FROM OFFICER/RECEIVABLE FROM RELATED PARTY
On November 20, 1995, the Company's Chief Executive Officer entered into a
promissory note with the Company in the amount of $194,876, bearing interest
at 7.25% per annum. The entire unpaid principal balance and all accrued
interest is due on May 20, 1997.
MERGER AGREEMENT WITH VIDESSENCE, INC.
On January 10, 1997, the Company completed its previously announced
acquisition of Videssence, Incorporated ("Videssence") through the merger of
Videssence into NDEI. This transaction was completed pursuant to an Agreement
and Plan of Merger (the "Plan") dated April 26, 1996 between Videssence and
NDEI which was approved by NDEI's shareholders at a Special Meeting held on
August 5, 1996. This merger was accounted for as a purchase. Under the Plan,
NDEI acquired all of the outstanding common stock of Videssence in exchange
for 522,221 shares of NDEI's Common Stock, valued at $9.00 per share. The
Videssence shareholders can earn up to an additional maximum of 788,000 shares
of the Company's Common Stock upon Videssence achieving certain performance
based criteria over the next five years. Acquisition costs amounted to
$479,910. As a result of the merger, Videssence shareholders have become
shareholders of NDEI and Videssence is a wholly-owned subsidiary of NDEI. For
the purpose of these statements, the effective date of the merger is January
1, 1997.
Page 6 of 13
<PAGE>
The following table summarizes the acquisition:
Purchase price, including acquisition costs $ 1,592,241
Net fair value of liabilities assumed (477,880)
-------------
Cost in excess of net book value of assets acquired $ 2,070,121
=============
As of December 31, 1996, the Company had $625,000 of outstanding advances to
and $23,400 of outstanding interest receivable from Videssence, Inc. which
were evidenced by written promissory notes bearing interest at 9% per annum.
The unpaid principal and accrued interest receivable has been eliminated in
consolidation. The following schedule combines the pro-forma results of
operations of the Company and Videssence, Inc. as if the acquisition had
occurred on January 1, 1996 and includes such adjustments which are directly
attributable to the acquisitions. It should not be considered indicative of
the results that would have been achieved had the acquisition not occurred or
the results that would have been obtained had the acquisition actually
occurred on January 1, 1996.
Three months ended Nine months ended
March 31, 1996 March 31, 1996
------------------ -----------------
Net sales $ 9,434,173 $ 23,161,491
Net income $ 134,286 $ 103,283
Net income per share $ 0.05 $ 0.03
Shares used in computation 2,969,074 2,969,074
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS ADDRESSED
IN THIS ITEM 2 CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF
SECTION 27A OF THE SECURITIES ACT OF 1933, AS AMENDED, AND SECTION 21E OF THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. SUCH FORWARD-LOOKING STATEMENTS
ARE SUBJECT TO A VARIETY OF RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED BY THE COMPANY'S
MANAGEMENT.
General
- -------
Historically, the Company has operated primarily as a provider of production
services to distributors such as Warner Bros. and The Walt Disney Company and
to networks such as ABC and NBC. Through its wholly owned subsidiary,
Videssence, the Company now also designs, manufactures and distributes
lighting products in the television, video, motion picture, theater and theme
park industries.
In its production related activities, it has been the Company's practice to
arrange for the distributor or network to provide production funding, while
retaining a back-end producer's profit participation. Employing this
strategy, the Company reduces the risk of production by generating production
fees to cover all production expenses. This approach has limited the
Company's ongoing revenue participation, however, as the distributor or
Page 7 of 13
<PAGE>
network retains a significant portion of the rights to the main and ancillary
markets in return for assuming the risk of production. Revenues are
recognized when earned, which is typically upon receipt. Costs associated
with these revenues are recognized on the same basis. These revenues are
primarily dependent on the number of projects being produced by the Company
and the agreements relating to such projects. Accordingly, year to year
comparisons of production revenues from these sources are not necessarily
indicative of future revenues.
To increase production margins, the Company has invested in additional in-
house post production and computer graphics/animation facilities that were
implemented in the third and fourth quarters of fiscal 1996 and the first
quarter of fiscal 1997. These leading-edge production technologies are used
intensively to create the visual effects for "Babylon 5" and the Company's
other production activities enabling it to generate more special effects per
season than previously possible. By investing in cost-effective technologies,
the Company has been able to significantly reduce the need for contracting out
to third party vendors, thus allowing it to realize higher margins on its
services. With these expanded facilities now in place, the Company is
positioned to offer its technology services to outside companies, thus
creating a potential new revenue stream. Of course, there can be no assurance
that such new revenues will be achieved by the Company.
The Company retained the merchandising rights for the Hypernauts Production of
13 episodes, which were sold to the ABC Network and aired in Spring, 1996.
Pursuant to the Hypernauts agreement with the ABC Network, the Company
established a merchandising licensing division which included a master toy
license with a major toy manufacturer. The merchandising of "Hypernauts" was
suspended when the production was not renewed for the 1996 Fall television
season. The merchandising division overhead was eliminated in the first
quarter of fiscal 1997. The production and merchandising of "Hypernauts" will
only be reinstated if and when the Company is successful in finding an
alternative distributor to finance the production. The Company is not
currently engaged in any discussions with any alternative distributor.
Videssence designs, manufactures and distributes lighting products, which
incorporate Videssence patented SRGBtm light technology, for the illumination
of studios, stages and production environments in the television, video,
motion picture, theater and theme park industries. Videssence's high-speed
fluorescent lighting products emit energy-efficient, low-heat light that is up
to 90% more efficient than traditional incandescent lighting. Videssence
currently utilizes a combination of direct marketing with trade promotions and
advertising to reach its customer base. Videssence employs newsletters,
direct mail, trade show appearances, a website domain on the Internet, and
traditional display advertising to promote its products. Videssence believes
that by combining these means with its own full time dedicated regional sales
managers, and a network of established third party dealers it can adequately
service its markets. To date, Videssence sales have been primarily to
television studio and video production operations. The Company is currently
in the process of developing products for entry into the film production
markets. Of course, there can be no assurance that the Company will
successfully enter these markets.
Page 8 of 13
<PAGE>
Results of Operations
- ---------------------
Net Revenues. Net Revenues decreased 22% to $17.1 million for the nine months
ended March 31, 1997, as compared to $22.0 million in net revenues for the
nine months ended March 31, 1996. Although the acquisition of Videssence
contributed a new source of revenues in the third quarter, specifically $1.2
million for the quarter, net revenues were down for the nine month period
primarily due to two factors. First, the production of the fourth season of
"Babylon 5" started on August 26, 1996 compared to July 31, 1995 for the
third season, causing revenues to decrease approximately $2 million for the
nine months ended March 31, 1997. Second, additional revenue was generated in
the previous fiscal year with the production of the children's series,
"Hypernauts", which was not renewed for the Fall 1996-97 season. For the
three month period ended March 31, 1997, net revenues were down 8% to $7.65
million, as compared to net revenues of $8.28 million for the three month
period ended March 31, 1996, primarily due to the "Hypernauts" nonrenewal.
The difference in the "Babylon 5" start date primarily affected the first
quarter, as revenues for this production remained consistent in the third
quarters of both periods. The decrease in revenue from "Babylon 5" will be
recouped in the fourth quarter as the total number of episodes to be produced
is the same in both years.
Gross Margin. The Company's gross profit for the nine months ended March 31,
1997 was $2,307,744, or 13.5% of net revenues, compared with $908,731, or 4.1%
for the nine months ended March 31, 1996. For the three month period ended
March 31, 1997, the company's gross profit was $1,375,483, or 18.0% of net
revenues, compared with $463,719, or 5.6% of net revenues, for the three month
period ended March 31, 1996. Although revenues declined compared to last
year, the Company has been able to attain not only higher margins but higher
gross profits in terms of absolute dollars. This has occurred for two
reasons. First, the aforementioned expansion of the post production and
graphics/animation facilities has allowed the company to significantly reduce
the need for outside production services. Thus, through the integration of
technology at its facilities, the Company is able to achieve top quality
productions while realizing higher gross margins. Second, gross margins have
been boosted through the merger of Videssence, Inc. which is involved in a
higher gross margin business.
General and Administrative Expenses. General and administrative expenses
increased 146% to $2,275,051, or 13.3% of net revenues, for the nine months
ended March 31, 1997 as compared to $923,271, or 4.2% of net revenues, for the
nine months ended March 31, 1996. This increase was caused by the creation of
the project development group, the expansion of the Company's technology
operations, and the staffing, legal, regulatory, accounting and other expenses
that resulted from being a publicly traded company as of November 1995. In
addition, the inclusion of Videssence's operations for the first time
accounted for a significant portion of these expenses, specifically $762,601.
The Company also incurred operating expenses during the first quarter in
connection with the curtailment of the merchandising activities for the
"Hypernauts" project totaling approximately $70,000.
Other Income and Expenses. Interest income increased to $71,271 for the nine
months ended March 31, 1997 compared to $46,131 for the nine months ended
March 31, 1996. The increase was due primarily to interest earned on proceeds
from the Company's initial public offering which was completed in November
1995 and from interest earned on advances made to Videssence prior to the
closing of the acquisition.
Page 9 of 13
<PAGE>
Provision for Income Taxes. The Company is reporting $52,373 of net income
for the nine month period ending March 31, 1997. At normal statutory tax
rates, this would require a tax provision of approximately $21,000. As the
company currently possesses net operating loss carryforwards in excess of this
amount, and as the Company has chosen in the past not to capitalize these tax
benefits, no provision is currently necessary.
Liquidity and Capital Resources
- -------------------------------
In addition to distributor and network funding of production activities
described in "General" above, the Company has funded its operations to date
primarily through cash flows from operations, through the initial public
offering of Common Stock and Warrants completed in November 1995 which
generated net proceeds of approximately $3.2 million, and from the proceeds
received from exercises of stock warrants, which have generated approximately
$300,000.
In October 1996, the Company commenced a "limited public offering" of Class
A Cumulative Convertible Preferred Stock marketed over the Internet and
IPONet. This offering, managed by an investment banking firm acting as
placement agent, was intended to raise a minimum of $2 million and a maximum
of $5 million to be used for expansion and for working capital for
Videssence's operations. The offering was later amended to eliminate the $2
million minimum. On February 28, 1997, the Company closed the offering with
gross proceeds of $424,300.
Cash provided by operating activities was approximately $118,349 for the nine
months ended March 31, 1997. The primary source of operational cash was net
income, as adjusted for depreciation and amortization.
Investments in capital equipment totaled approximately $626,286 for the nine
months ended March 31, 1997, primarily for additions of computer graphics and
post production equipment for the expansion of the technology group, primarily
for post production and 3D animation activities.
Management believes that its present cash position and overall liquidity will
enable the Company to meet its operating commitments for the next twelve
months. As of March 31, 1997, the Company's sources of liquidity included
cash and cash equivalents totaling approximately $1.3 million. The Company
has $349,483 of outstanding debt as of March 31, 1997, all of which was
assumed as part of the closing of the merger with Videssence.
The Company's sources of working capital for its current production activities
are principally derived from contract production receipts from a major studio
for the production of "Babylon 5." These monies are received by the Company in
installments spread over the year for the production of "Babylon 5." The
Company currently has funding commitments for "Babylon 5" through the
end of season four which ends in July 1997. Discussions are currently
underway for a possible fifth season of "Babylon 5" and/or a spin-off series.
However, there can be no assurance that "Babylon 5" or a spin-off will be
renewed for additional seasons which could adversely affect the Company's
working capital. The Company, however, does have funding commitments for two
"Babylon 5" made for television movies scheduled for delivery in October 1997.
Page 10 of 13
<PAGE>
The Company also has several other projects in development. In the past, the
Company has been able to secure production financing from a major studio or
distributor for all of its projects that go into production. While the Company
believes that similar financing arrangements can be made for future productions,
there can be no assurance the Company will be successful in obtaining such
production financing. In that event, its working capital will be reduced
accordingly. Moreover, as the Company continues to develop new forms of high
technology production activities and projects for new entertainment and
multimedia ancillary markets, it may elect to make additional commitments for
these new projects and to cover the resulting increased overhead for these
endeavors. These financial commitments may create additional risk for the
Company as to whether it will recover the costs of investment and generate a
profit.
Videssence has traditionally relied on cash flow from operations and the
financing of accounts receivable for its working capital needs. The Company
is seeking a source of additional working capital for the contemplated growth
of the Videssence operations. Although the Company is currently in
discussions with various financial institutions for this purpose, there can be
no assurance that the Company will obtain such additional working capital; in
this case, the Company's expansion plans and growth could be adversely
affected.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Company's 1996 Annual Meeting of Shareholders was held on March 21, 1997.
In order to allow adequate time for holders of the Company's Series A
Preferred Stock to cast their votes in the election of directors, the portion
of the Meeting which called for the voting of the Company's Stockholders for
the election of directors was adjourned to the close of business on April 3,
1997. At the Meeting, the following individuals were elected to serve as
directors until the next annual meeting of shareholders and until their
respective successors are elected and qualified: Douglas Netter, John
Copeland, Rowland Perkins, Kate Netter Forte, Leonard Silverman and Paul
Costa. There were no other matters voted on at the Meeting. The vote on the
election of directors was as follows:
DIRECTORS FOR WITHHELD
- --------- ----------- -----------
Douglas Netter 3,220,489 12,400
John Copeland 3,223,089 9,800
Rowland Perkins 3,223,089 9,800
Kate Netter Forte 3,220,489 12,400
Leonard Silverman 3,223,089 9,800
Paul Costa 3,223,089 9,800
Item 6. Exhibits and Reports on Form 8-K
(a.) Exhibits
Exhibit Description
------- -----------
27 Financial Data Schedule
Page 11 of 13
<PAGE>
(b.) Reports on Form 8-K
Following the filing of a Current Report on Form 8-K dated January
10, 1997 which reported the Company's acquisition of Videssence,
Inc., the Company filed a Current Report on Form 8-K/A on March 24,
1997. This report contained the audited financial statements of
Videssence, Inc. and all pro forma financial information which were
not originally available during the initial filing.
Page 12 of 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
NETTER DIGITAL ENTERTAINMENT, INC.
Registrant
Dated: April 30,1997
By: /s/Thomas Jorgenson
-----------------------
Thomas Jorgenson
Chief Operating Officer
By: /s/Chad Kalebic
-----------------------
Chad Kalebic
Corporate Controller
Page 13 of 13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,297,506
<SECURITIES> 0
<RECEIVABLES> 935,633
<ALLOWANCES> (52,430)
<INVENTORY> 958,107
<CURRENT-ASSETS> 3,524,507
<PP&E> 1,493,765
<DEPRECIATION> (188,372)
<TOTAL-ASSETS> 7,057,943
<CURRENT-LIABILITIES> 2,063,472
<BONDS> 0
0
258,011
<COMMON> 33,172
<OTHER-SE> 4,539,914
<TOTAL-LIABILITY-AND-EQUITY> 7,057,943
<SALES> 1,190,030
<TOTAL-REVENUES> 17,069,982
<CGS> 362,780
<TOTAL-COSTS> 14,762,238
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 38,641
<INCOME-PRETAX> 52,373
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 52,373
<EPS-PRIMARY> 0.02
<EPS-DILUTED> 0
</TABLE>
