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 quarter ended December 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 33-80321
REDWOOD BROADCASTING, INC.
(Name of Small Business Issuer in Its Charter)
Colorado 84-1295270
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation) Identification No.)
First Interstate Bank Plaza
P.O. Box 3463
11 Sundial Circle #17
Carefree, AZ 85377
(Address of Principal Executive Offices) (Zip Code)
Issuer's telephone number, including area code: (602) 488-2596
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, $.004 PAR VALUE
(Title of Class)
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 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 [ ].
The number of shares of the registrant's .004 par value Common Stock
outstanding as of December 31, 1997 was 1,410,000.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheet as of
December 31, 1997 .................................... 3
Consolidated Statements of Income for the Three and
Nine months ended December 31, 1997 and 1996 ......... 4,5
Consolidated Statements of Cash Flows for the Nine
months ended December 31, 1997 and 1996 ............. 6
Notes to the Consolidated Financial Statements ....... 7
Item 2. Management's Discussion and Analysis or
Plan of Operation .................................... 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings .................................... 14
Item 2. Changes in Securities ................................ 14
Item 3. Defaults Under Senior Securities ..................... 14
Item 4. Submission of Matters to a Vote of Security Holders .. 14
Item 5. Other Matters ........................................ 14
Item 6. Exhibits and Reports on Form 8-K ..................... 14
Signatures ........................................... 14
<PAGE>
REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
December 31,
1997
(unaudited)
ASSETS
CURRENT ASSETS
Cash $ 51,241
Accounts receivable, net 167,805
Receivable from related parties 118,339
Other receivables (Note 6) 45,000
Deposits (Note 2) 275,000
Other current assets 20,914
---------
Total current assets 678,299
INVESTMENTS (Note 2) 240,000
PROPERTY AND EQUIPMENT, net 208,523
INTANGIBLE ASSETS, net 935,933
OTHER ASSETS 174,650
---------
TOTAL $2,237,405
=========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 221,880
Payables to related parties 143,355
Current portion of notes payable 58,905
Current portion of notes payable to related parties 51,839
---------
Total current liabilities 475,979
NOTES PAYABLE 674,011
---------
Total liabilities 1,149,990
---------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.04; 2,500,000 shares authorized;
27,500 shares issued and outstanding (Note 6) 275,000
Common stock, par value $.004; 12,500,000 shares authorized;
1,410,000 shares issued and outstanding (Note 6) 5,640
Additional paid-in capital 1,453,506
Accumulated deficit (601,731)
Note receivable from stockholder (45,000)
---------
Total stockholders' equity 1,087,415
---------
TOTAL $2,237,405
=========
See notes to consolidated financial statements.
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REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Three Months
Ended Ended
December 31, 1997 December 31, 1996
(unaudited) (unaudited)
REVENUE
Broadcast revenue $ 77,724 $ 154,601
Less agency commissions 6,243 14,410
--------- ---------
Net revenue 71,481 140,191
--------- ---------
OPERATING EXPENSE
General and administrative 88,627 15,172
Station operating expenses 22,130 221,249
Depreciation and amortization 41,187 21,589
--------- ---------
Total 151,944 258,010
--------- ---------
INCOME/(LOSS) FROM OPERATIONS (80,463) (117,819)
--------- ---------
OTHER INCOME (EXPENSE)
Interest income (expense) (27,201) (70,720)
Other income (expense) 66,977 13,277
--------- ---------
Total other - net 39,776 (57,443)
--------- ---------
NET INCOME/(LOSS) (40,687) (175,262)
--------- ---------
NET INCOME (LOSS) PER COMMON SHARE $ (0.04) $ (0.20)
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,140,996 861,758
========= =========
See notes to consolidated financial statements.
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REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Nine Months
Ended Ended
December 31, 1997 December 31, 1996
(unaudited) (unaudited)
REVENUE
Broadcast revenue $ 819,038 $ 293,993
Less agency commissions 74,739 22,955
--------- ---------
Net revenue 744,299 271,038
--------- ---------
OPERATING EXPENSE
General and administrative 391,856 37,976
Station operating expenses 414,270 450,348
Depreciation and amortization 99,647 69,036
--------- ---------
Total 905,773 557,360
--------- ---------
INCOME/(LOSS) FROM OPERATIONS (161,474) (286,322)
--------- ---------
OTHER INCOME (EXPENSE)
Interest income (expense) (54,022) (82,795)
Other income (expense) 166,164 (32,155)
--------- ---------
Total other - net 112,142 (114,950)
--------- ---------
NET INCOME/(LOSS) (49,332) (401,272)
--------- ---------
NET INCOME (LOSS) PER COMMON SHARE $ (0.04) $ (0.47)
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 1,140,996 861,758
========= =========
See notes to consolidated financial statements.
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REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Nine Months
Ended Ended
December 31, December 31,
1997 1996
(unaudited) (unaudited)
OPERATING ACTIVITIES
Net Income/(loss) $ (49,332) $(401,272)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 99,647 69,036
Changes in operating assets and liabilities:
Accounts receivable (46,245) (9,445)
Accounts receivable - related parties (46,793) --
Other current assets 304,993 (107,969)
Other assets 182,313 --
Accounts payable and accrued expenses (166,785) 13,744
Other current liabilities (13,520) 161,445
-------- --------
Net cash provided by(used in) operating activities 264,278 (274,461)
-------- --------
INVESTING ACTIVITIES
Investment in Power Surge, Inc. (240,000) --
Purchases of equipment (34,047) (797,324)
-------- --------
Net cash provided by (used in)
investing activities (274,047) (797,324)
-------- --------
FINANCING ACTIVITIES
Proceeds from (repayment of)
notes payable 64,824 921,875
Proceeds from (repayment of) notes
payable - related parties (638,610) --
Payments on capital lease obligations (11,994) --
Common stock redemption (304,512) --
Proceeds from issuance of preferred stock 275,000 --
Proceeds from issuance of common stock 635,511 195,000
-------- --------
Net cash provided by (used in)
financing activities 20,219 1,116,875
-------- --------
NET INCREASE (DECREASE) IN CASH 10,450 45,090
CASH, Beginning of period 40,791 (23,188)
-------- --------
CASH, End of period $ 51,241 21,902
======== ========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest $ 68,840 $ 33,497
See notes to consolidated financial statements.
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<PAGE>
REDWOOD BROADCASTING, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. General
The consolidated financial statements for the three and nine months ended
December 31, 1997 and 1996 are unaudited and reflect all adjustments (consisting
only of normal recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position and operating
results for the interim periods. The consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto, together with management's discussion and analysis of financial
condition and results of operations, contained in the Company's annual report on
Form 10-KSB for the fiscal year ended March 31, 1997. Results of operations for
interim periods are not necessarily indicative of results which may be expected
for the year as a whole.
2. Acquistion of Assets
Effective April 1, 1997, the Company entered into an option agreement to
purchase radio stations KNRO-AM and KARZ-FM (KNRO/KARZ) licensed to Redding,
California from Power Surge, Inc. (Power Surge). Power Surge acquired the
licenses from Power Curve, Inc. (Power Curve) on March 31, 1997. Power Surge and
Power Curve are both controlled by the Company's President. Power Curve acquired
KNRO/KARZ on January 31, 1997 for $480,000 in cash and a $720,000 promissory
note. Under the terms of the option agreement, the Company could either (1)
purchase KNRO/KARZ for $1,200,000 in cash or (2) issue 1,000,000 shares of its
common stock in exchange for all of the issued and outstanding shares of common
stock of Power Surge. The option was due to expire on September 30, 1997.
However, by mutual agreement, the Company and Power Surge extended the date of
the option to March 31, 1998. In addition to extending the option exercise
period, the parties agreed to amend the terms of purchase by the Company to
include a combination of cash and stock. To date the Company has disbursed
$275,000 in the form of a deposit and issued 200,000 shares of common stock
($240,000) toward the purchase of KNRO/KARZ. The total consideration paid thus
far by the Company of $515,000 will be credited against the purchase price at
closing. Concurrent with the execution of the option agreement, the Company
entered into an LMA with Power Surge for a period of one year. Under the terms
of the LMA, the Company is operating KNRO/KARZ and is obligated to pay Power
Surge a monthly fee of $5,000.
3. Disposition of Assets
On October 10, 1997, Alta California Broadcasting, Inc. ("Alta"), a wholly-owned
subsidiary of the Company entered into an Agreement of Merger (the " MERGER")
with Regent Communications ("REGENT") whereby Alta will be merged into a
wholly-owned subsidiary of REGENT formed for purposes of completing the MERGER.
Simultaneously with the companies entering into the MERGER, Alta entered into a
Time Brokerage Agreement with REGENT whereby REGENT will operate the stations
being merged during the period leading up to the date of closing of the MERGER.
Alta is the owner, operator and licensee of radio station KRDG-FM, Shingletown,
California. Alta, through its wholly-owned subsidiary Northern California
Broadcasting, Inc. ("Northern"), operates KNNN-FM, Central Valley, California
(licensed to Northern). Alta also holds an option to purchase(see footnote 2
above), prior to the closing date of the MERGER, all of the tangible and
intangible assets used or held by Power Surge, Inc. for use in the operation of
KRRX-FM, Burney, California and KNRO-AM, Redding, California.
As consideration for Alta entering into the merger with REGENT, the Company will
receive, at closing, $1,000,000 in cash plus 200,000 shares of REGENT Series "E"
Convertible Preferred Stock valued at $5.00 per share. In addition, REGENT is
assuming $1,500,000 in debt of Alta as part of the transaction.
- 7 -
<PAGE>
4. Stockholder's Equity
In February 1997, the Company completed the filing of a Registration Statement
Form SB-2 under the Securities Act of 1933. The filing effectively registered
for sale all shares of common stock issued and outstanding at that time, 203,008
common stock put options which were subsequently issued to certain stockholders
and an additional 400,000 shares of the Company's common stock to be offered to
the public at $2.00 per share. The registration of the outstanding shares and
the put options were required pursuant to an Agreement and Plan of
Reorganization dated June 16, 1995.
At March 31, 1997, the 203,008 common stock put options remained outstanding.
The put options granted the optionholders the right to sell to the Company their
shares of common stock at a price of $1.50 per share. The Company's potential
obligation under the put options of $304,512 was classified as redeemable common
stock in the Company's balance sheet at March 31, 1997. The put options expired
June 13, 1997; however, prior to such expiration, 102,946 options were
excercised by the optionholders and, accordingly, these shares were acquired for
$154,419. The remaining put options were forfeited.
In May 1997, the Company issued 25,000 shares of common stock pursuant to the
Company's public offering at $2.00 per share receiving proceeds of $50,000. In
September, 1997 the Company issued 25,000 additional shares of common stock
pursuant to this offering receiving another $50,000 in proceeds.
In July 1997, the Company issued 75,000 shares of common stock in exchange for
the forgiveness of $82,500 in long term notes payable.
In December 1997, the Company issued 200,000 shares of common stock representing
an investment in Power Surge, Inc. (See footnote #2 above) at $1.20 per share
for a total of $240,000.
In December 1997, the Company issued 27,500 shares of $10.00 preferred stock to
a related party receiving total proceeds of $275,000. The Company may elect to
retire the preferred stock from the proceeds of the Regent acquisition of Alta.
In December 1997, the Company issued 10,000 shares of common stock at $2.00 per
share in exchange for services provided to the Company.
5. Borrowings Under Lines of Credit
In September 1997, the Company negotiated an increase in its bank line of credit
from $25,000 to $50,000. Borrowings under the line of credit bear interest at a
rate of 7.9% per annum. The line of credit is collateralized by a $25,000
certificate of deposit placed with the bank by a related party of the Company.
As of December 31, 1997, 100% of available funds had been advanced for working
capital purposes. Also in September 1997, the Company negotiated a $50,000, 3
year term loan bearing interest at the rate of 11% per annum. This loan is for
capital equipment purchases. As of December 31, 1997, the Company had purchased
$31,504 in equipmen utilizing this credit facility.
6. Pending License Application Settlement
In December 1997, the Company entered into a private auction to settle its
pending application for a construction permit to build an FM radio station
licensed to Shasta Lake City, California. There were multiple applicants
participating in the auction. The Company was not the winning bidder. The
Company will receive a settlement award of approximately $45,000. This amount
has been booked in the current quarter as a receivable. All costs incurred by
the Company during the application filing and prosecution process (legal,
engineering, etc.) have been written off and any net gain recorded as other
income during the period.
- 8 -
<PAGE>
7. Subsequent Events
Following the close of the quarter ended December 31, 1997 the Company entered
into a negotiated settlement related to the Company's pending application for a
construction permit to build an FM radio station licensed to Mesquite, Nevada.
Under the terms of the agreement the Company will recover the amount of its cost
basis incurred in filing and prosecuting the application. As of December 31,
1997 the Company had incurred costs of $5,880.70 pertaining to the Mesquite,
Nevada application.
Also following the close of the quarter, the Company entered into a negotiated
settlement related to the Company's pending application for a construction
permit to build a television station in Pocatello, Idaho. This transaction
involved two other competing applicants. The applicants agreed to form a
separate entity into which the three individual applications would be merged.
The new entity intends to build and operate the station. The Company will have a
10% carried equity interest in this new entity. All of the funding to build the
station will be provided by the other applicants. As of December 31, 1997 the
Company had incurred costs of $6,238.77 pertaining to the Pocatello, Idaho
application.
- 9 -
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
General
The following is a discussion of the consolidated financial condition and
results of operations of the Company as of and for the two fiscal periods ended
December 31, 1997 and 1996. This discussion should be read in conjunction with
the Consolidated Financial Statements of the Company and the Notes related
thereto included in the Company's Form 10-KSB for the fiscal year ended March
31, 1997. The forward-looking statements included in Management's Discussion and
Analysis of Financial Condition and Results of Operations, which reflect
management's best judgement based on factors currently known, involve risks and
uncertainties. Actual results could differ materially from those anticipated in
these forward-looking statements as a result of a number of factors, including
but not limited to those discussed herein.
Overview
Effective April 1, 1997, the Company entered into an option agreement to
purchase radio stations KNRO-AM and KARZ-FM (KNRO/KARZ) licensed to Redding,
California from Power Surge, Inc. (Power Surge). Power Surge acquired the
licenses from Power Curve, Inc. (Power Curve) on March 31, 1997. Power Surge and
Power Curve are both controlled by the Company's President. Power Curve acquired
KNRO/KARZ on January 31, 1997 for $480,000 in cash and a $720,000 promissory
note. Under the terms of the option agreement, the Company could either (1)
purchase KNRO/KARZ for $1,200,000 in cash or (2) issue 1,000,000 shares of its
common stock in exchange for all of the issued and outstanding shares of common
stock of Power Surge. The option was due to expire on September 30, 1997.
However, by mutual agreement, the Company and Power Surge extended the date of
the option to March 31, 1998. In addition to extending the option exercise
period, the parties agreed to amend the terms of purchase by the Company to
include a combination of cash and stock. To date the Company has disbursed
$275,000 in the form of a deposit and issued 200,000 shares of common stock
($240,000) toward the purchase of KNRO/KARZ from Power Surge. The total
consideration paid thus far by the Company of $515,000 will be credited against
the purchase price at closing. Concurrent with the execution of the option
agreement, the Company entered into an LMA with Power Surge for a period of one
year. Under the terms of the LMA, the Company is operating KNRO/KARZ and is
obligated to pay Power Surge a monthly fee of $5,000.
On October 10, 1997 the Company's wholly-owned subsidiary, Alta California
Broadcasting, Inc. (Alta) entered into an Agreement of Merger(the Merger) with
Regent Communications (Regent) whereby Alta will be merged into a wholly-owned
subsidiary of Regent formed for purposes of completing the Merger.
Simultaneously with the companies entering into the Merger, Alta entered into a
Time Brokerage Agreement (TBA) with Regent whereby Regent will operate Alta's
radio stations being merged during the period leading up to the date of closing
of the Merger.
Alta is the owner, operator and licensee of radio station KRDG-FM, Shingletown,
California. Alta, through its wholly-owned subsidiary Northern California
Broadcasting, Inc. (Northern), operates KNNN-FM, Central Valley, California
(licensed to Northern). Alta also holds an option to purchase, prior to the
closing date of the Merger, all of the tangible and intangible assets used or
held by Power Surge, Inc. for use in the operation of KRRX-FM, Burney,
California and KNRO-AM, Redding, California. Alta has been operating these two
stations under a TBA since March 1, 1997.
As consideration for Alta entering into the merger with Regent, the Company will
receive, at closing, $1,000,000 in cash plus 200,000 shares of Regent Series "E"
Convertible Preferred Stock valued at $5.00 per share. In addition, Regent is
assuming $1,500,000 in debt of Alta as part of the transaction.
- 10 -
<PAGE>
Liquidity and Capital Resources - December 31, 1997 compared to March 31, 1997
As of December 31, 1997 the Company had total assets of $2,237,405 representing
an decrease in assets of $209,418. Total liabilities decreased significantly
from $1,916,075 at March 31, 1997 to $1,149,990 at December 31, 1997. Total
stockholders equity increased $861,179 to $1,087,415 at December 31, 1997.
Total current assets as of December 31, 1997 were $678,299 and consisted of net
accounts receivable of $212,805, receivables from related parties of $118,339,
deposits of $275,000 and other current assets of $20,914. Total current
liabilities as of December 31, 1997 were $475,979 comprised primarily of vendor
accounts payable and accrued expenses of $221,880, accounts payable and the
current portion of notes payable to related parties of $195,194 and the current
portion of notes payable to unrelated parties of $58,905. Working capital as of
December 31, 1997 was $202,320 representing a slight decrease in working capital
for the period of $32,066.
As of December 31, 1997 the Company reported total assets of $2,237,405
including net property and equipment of $208,523, net intangibles (radio
broadcast licenses and non-compete agreements) of $935,933 attributable to
KRDG-FM acquired in July, 1996 and KNNN-FM acquired in September, 1996, other
assets of $174,650 and investments of $240,000.
Total liabilities as of December 31, 1997 of $1,149,990 include, in addition to
current liabilities of $475,979 discussed above, the long term portion of notes
payable of $674,011. The long term portion of notes payable is comprised of
$155,000 in term debt associated with the acquisition of KRDG-FM, $450,208 in
term debt associated with the acquisition of KNNN-FM, bridge financing from
unrelated parties of $40,000 and bank debt of $38,804 used for equipment
purchases. This compares with total liabilities of $1,916,075 as of March 31,
1997 and represents a decrease of $766,085.
As of December 31, 1997, the Company reported stockholders equity of $1,087,415.
This represents an increase of $861,179 over March 31, 1997 stockholders equity
of $226,236 Contributing to the increase in stockholders equity since year-end
were the following:
* At March 31, 1997, 203,008 common stock put options were outstanding. The
put options granted the optionholders the right to sell to the Company
their shares of common stock at a price of $1.50 per share. The Company's
potential obligation under the put options of $304,512 was classified as
redeemable common stock in the balance sheet at March 31, 1997. The put
options expired June 13, 1997; however, prior to such expiration, 102,946
options were exercised by the optionholders and, accordingly, these shares
were acquired for $154,419. The remaining unexercised put options were
forfeited. The value of the forfeited options of $150,093 was credited to
additional paid in capital at the time of forfeiture.
* The issuance of 50,000 shares of common stock pursuant to the Company's
public offering at $2.00 per share generated $100,000 of additional
capital.
* The issuance of 75,000 shares of common stock at $1.10 per share
(restricted stock) in exchange for the forgiveness of $82,500 in long term
debt.
* The issuance of 10,000 shares of common stock at $2.00 per share in
exchange for services provided by the company.
* The issuance of 200,000 shares of common stock at $1.20 per share
representing an investment in Power Surge, Inc., the license holder of
radio stations KARZ-FM and KNRO-AM which are to be acquired by the Company.
* The issuance of 27,500 shares of $10.00 preferred stock to a related party
contributed $275,000 of equity to the Company.
- 11 -
<PAGE>
Results of Operations - Three months ended December 31, 1997 compared to Three
Months Ended December 31, 1996
Net revenues for the quarter ended December 31, 1997 were $71,481 compared to
net revenues of $140,191 for the same period a year ago. The decrease in revenue
for the quarter is attributed to the TBA that Alta entered into with Regent on
October 10, 1997. From this date through December 31, 1997 the Company's radio
advertising revenues inured to the benefit of Regent pursuant to the terms of
the TBA. In the prior year comparable period, the Company operated two radio
stations providing advertising revenues during the entire quarter.
Operating expenses for the three months ended December 31, 1997 were $151,944
comprised of station operating expenses of $22,130, general and administrative
expenses of $88,627 and depreciation and amortization of $41,187. Operating
expenses for the three month period ended December 31, 1996 were $258,010
comprised of station operating expenses of $221,249, general and administrative
expenses of $15,172 and depreciation and amortization of $21,589.
The Company incurred net interest expense (interest expense offset by interest
income) for the quarter ended December 31, 1997 of $27,201 comprised primarily
of interest arising from acquisition debt.
As a result of the foregoing, the Company sustained a net loss for the three
months ended December 31, 1997 of ($40,687) or ($0.04) per share compared to a
net loss of ($175,262) or ($0.20) per share for the three months ended December
31, 1996
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<PAGE>
Results of Operations - Nine Months Ended December 31, 1997 compared to Nine
Months Ended December 31, 1996
Net Revenues (gross revenues less agency commissions) for the nine months ended
December 31, 1997 were $744,299 compared to net revenues for the nine months
ended December 31, 1996 of $271,038. Revenue for the nine months ended December
31, 1997 was comprised of radio advertising sales associated with five radio
stations located in Redding, California that the Company either owns or
operates. In the prior year comparable period, the Company only operated two
radio stations in Redding, California; one of these stations was operated from
July through December(KRDG-FM) and a second station for the months of August
through December(KNNN-FM). Therefore, the increase in revenue in the current
period is attributable to an increase in volume of radio advertising sales.
Operating expenses for the nine months ended December 31, 1997 were $905,773
comprised of station operating expenses of $414,270, general and administrative
expenses of $391,856 and depreciation and amortization of $99,647. Operating
expenses for the period were generated by the Company's five Redding, California
radio stations. As previously stated, in the prior year comparable period, the
Company only operated two radio stations and did not operate these stations for
the entire nine month period ended December 31, 1996. Thus the Company only
generated operating expenses of $557,360 last year comprised of station
operating expenses of $450,348, general and administative expenses of $37,976
and depreciation and amortization of $69,036. As a result of the foregoing, the
Company sustained a loss from operations for the nine month period ended
December 31, 1997 of $161,474 compared to a loss from operations for the nine
months ended December 31, 1996 of $286,322. This improvement in profitability
for the current period is attributed to increased revenues and with more
efficient operations.
The Company incurred interest expense for the nine months ended December 31,
1997 of $54,022 comprised primarily of financing costs associated with the
Company's acquisition of KRDG-FM and KNNN-FM. Offsetting the Company's interest
charges for the period was $166,164 in other income. Other income was comprised
of auction settlement income of $45,000 received from with the settlement, via
private auction, of the Company's pending application for a construction permit
to build an FM radio station licensed to Shasta Lake City, California. There
were multiple participants in the auction. The company was not the winning
bidder but will be reimbursed for its costs incurred to date in the project for
legal, engineering and other expenses associated with prosecuting the Company's
application. In addition to the auction settlement income, the Company generated
option income of $70,000 attributable to with the sale of KNSN-AM, additional
gain of $17,000 recorded as part of the sale of KNSN-AM, interest income on
notes receivable of $14,818, and the recognition of deferred revenue of $9,722.
As a result of the foregoing, the Company sustained a net loss of ($49,322) or
($0.04) per share based on a weighted average number of shares outstanding of
1,140,996 for the nine month period ended December 31, 1997 compared to a net
loss of ($401,272) or ($0.47) per share based on a weighted average number of
shares outstanding of 861,758 for the same period a year ago.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit No. Exhibit Name
27 Financial Data Schedule
(b) The Company filed a Form 8-K on October 14, 1997 in reporting
the disposition of assets. Alta California Broadcasting, Inc.
a wholly-owned subsidiary of the Company is being merged with
Regent Communications, Inc. All required financial statements
were filed at that time.
In accordance with the Exchange Act, this report has been signed below
by the following persons on behalf of the Registrant and in the capacities and
on the dates indicated.
Signature Title Date
/s/ John C. Power President and Chief Executive Officer 02/19/97
JOHN C. POWER Chairman of the Board of Directors
/s/ J. Andrew Moorer Chief Financial Officer and Director 02/19/97
J. ANDREW MOORER
- 14 -
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