UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[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
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission file number: 33-80935
NETWORK EVENT THEATER, INC.
(Exact name of Small Business issuer as specified in its charter)
Delaware 13-3864111
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification No.)
149 Fifth Avenue, New York, New York 10010
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (212) 779-2740
- --------------------------------------------------------------------------------
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15 (d) of the Securities and Exchange Act of 1934 during the
preceding 12 months (or such shorter period that the registrant was required to
file such reports), and (2) has been subject of such filing requirements for the
past 90 days.
Yes ___X___ No _____
At May 13, 1997 there were 8,845,450 shares of Common Stock, $.01 par value
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes _____ No X
<PAGE>
Network Event Theater, Inc.
Form 10-QSB
Index
PART I - FINANCIAL INFORMATION Page Number
Item 1 Financial Statements
Condensed consolidated balance sheets - March 31, 1997
(unaudited) and June 30, 1996 1
Condensed consolidated statements of operations - three and nine
months ended March 31, 1997 and 1996 (unaudited) 2
Condensed consolidated statements of cash flows - nine months
ended March 31, 1997 and 1996 (unaudited) 3
Condensed consolidated statement of stockholders' equity - nine
months ended March 31, 1997 (unaudited) 4
Notes to condensed consolidated financial statements 5
Item 2 Plan of Operation 9
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
Part I
Financial Statements
Item 1. Financial Statements
Network Event Theater, Inc
Condensed Consolidated Balance Sheets
<TABLE>
<CAPTION>
March 31, June 30,
1997 1996
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS:
Current assets:
Cash and cash equivalents $ 891,308 $ 266,806
Accounts receivable, net 3,179,883 236
Investments 2,490,150 7,882,570
Prepaid expenses 654,840 --
Deposits and other current assets 25,163 26,169
------------ ------------
Total current assets 7,241,344 8,175,781
------------ ------------
Property and equipment, net of accumulated depreciation 4,827,171 3,081,620
Intangible assets, net of accumulated amortization 5,243,632 58,634
------------ ------------
Total assets $ 17,312,147 $ 11,316,035
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 3,593,249 $ 462,634
Current portion of long-term debt 725,000 --
------------ ------------
Total current liabilities 4,318,249 462,634
Long-term debt 5,209,037 --
Stockholders' equity:
Preferred stock, $.01 par value, 1,000,000 shares authorized, no shares
issued and outstanding -- --
Common stock, $.01 par value, 17,000,000 shares authorized,
8,654,440 shares issued and outstanding at March 31,1997
and June 30, 1996 86,544 86,544
Additional paid-in capital 16,177,302 16,177,302
Accumulated deficit (8,476,926) (5,380,355)
Unrealized depreciation on marketable equity securities (2,059) (30,090)
------------ ------------
Total stockholders' equity 7,784,861 10,853,401
------------ ------------
Total liabilities and stockholders' equity $ 17,312,147 $ 11,316,035
============ ============
</TABLE>
See notes to condensed consolidated financial statements
1
<PAGE>
Network Event Theater, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
---------------------- --------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net revenues $ 2,265,011 $ -- $ 4,937,969 $ --
Operating expenses
Payroll and related taxes 955,765 166,552 2,234,592 489,747
Professional fees 464,642 354,663 1,237,015 997,292
Other expenses 1,882,985 193,599 3,645,813 397,666
Depreciation and amortization 312,226 155,266 794,285 318,293
----------- ----------- ----------- -----------
Total operating expenses 3,615,618 870,080 7,911,705 2,202,998
----------- ----------- ----------- -----------
Operating loss (1,350,607) (870,080) (2,973,736) (2,202,998)
Interest and other income (expense), net (39,219) 508 42,156 47,782
----------- ----------- ----------- -----------
Loss before provision for income taxes (1,389,826) (869,572) (2,931,580) (2,155,216)
Provision for income taxes 60,910 -- 164,991 --
----------- ----------- ----------- -----------
Net loss $(1,450,736) $ (869,572) $(3,096,571) $(2,155,216)
=========== =========== =========== ===========
Net loss per common share $ (0.17) $ (0.10) $ (0.36) $ (0.25)
=========== =========== =========== ===========
Weighted average common shares outstanding 8,654,440 8,654,440 8,654,440 8,654,440
=========== =========== =========== ===========
</TABLE>
See notes to condensed consolidated financial statements
2
<PAGE>
Network Event Theater, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
March 31,
--------------------------
1997 1996
---- ----
<S> <C> <C>
Net cash used in operating activities $(2,949,426) $(1,753,958)
Cash flows from investing activities
Purchase of property and equipment (2,369,656) (2,670,491)
Expenditures for acquisition of business (5,382,873) --
Sale of investments 5,392,420 --
----------- -----------
Net cash used in by investing activities (2,360,109) (2,670,491)
Cash flows from financing activities
Net proceeds from sale of common stock -- 906,578
Net proceeds from note payable -- 500,000
Net proceeds from issuance of long-term debt 5,934,037 --
----------- -----------
Net cash provided by financing activities 5,934,037 1,406,578
----------- -----------
Net increase (decrease) in cash and cash equivalents 624,502 (3,017,871)
Cash and cash equivalents at beginning of period 266,806 3,232,035
----------- -----------
Cash and cash equivalents at end of period $ 891,308 $ 214,164
=========== ===========
Supplementary cash flow information:
Cash paid for interest $ 199,102 $ --
Cash paid for taxes $ 142,352 $ --
</TABLE>
See notes to condensed consolidated financial statements
3
<PAGE>
Network Event Theater, Inc.
Condensed Consolidated Statement of Stockholders' Equity
Nine Months ended March 31, 1997
(Unaudited)
Common Stock
---------------------------
Shares Amount
------ ------
Balances at June 30, 1996 8,654,440 $ 86,544
Net loss -- --
Unrealized appreciation on
marketable equity securities -- --
------------ ------------
Balances at March 31, 1997 8,654,440 $ 86,544
============ ============
Additional
paid-in Accumulated
Capital Deficit
------- -------
Balances at June 30, 1996 $ 16,177,302 $ (5,380,355)
Net Loss -- (3,096,571)
Unrealized appreciation on
marketable securities -- --
------------ ------------
Balances at March 31, 1997 $ 16,177,302 $ (8,476,926)
============ ============
Unrealized
Appreciation
On Marketable
Equity Securities Total
----------------- -----
Balances at June 30, 1996 $ (30,090) $ 10,853,401
Net loss -- (3,096,571)
Unrealized appreciation on
marketable equity securities 28,031 28,031
Balances at March 31, 1997 $ (2,059) $ 7,784,861
============ ============
See notes to condensed consolidated financial statements
4
<PAGE>
Network Event Theater, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1997
(Unaudited)
1. Basis of Presentation
The accompanying condensed consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Item 310 of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine month period ended March 31, 1997
are not necessarily indicative of the results that may be expected for the year
ended June 30, 1997. For further information, refer to the financial statements
and footnotes thereto included in Network Event Theater, Inc.'s (the "Company")
Form 10-KSB for the transition period ended June 30, 1996 filed with the
Securities and Exchange Commission on November 20, 1996.
The accompanying condensed consolidated financial statements include the
accounts and transactions of the Company and its wholly-owned subsidiaries
American Passage Media, Inc. ("American Passage") and Campus Voice, LLC ("Campus
Voice"). All significant intercompany transactions have been eliminated.
2. Acquisitions
On September 13, 1996, the Company, through its newly created wholly owned
subsidiary, American Passage, acquired from American Passage Media Corporation
("APMC") substantially all of APMC's assets relating to its college and high
school media, marketing, and service businesses. The businesses acquired include
APMC's college newspaper placement operations, college campus postering
operations, high school focused GymBoards(TM) operations and various other
advertiser and sponsorship activities. APMC has been involved in the young adult
marketing business since 1976.
As consideration for the assets (i) American Passage paid APMC approximately
$3.5 million in cash, (ii) American Passage issued to APMC a two-year
subordinated promissory note for $750,000, (iii) the Company issued to APMC a
contingent option to purchase up to 100,000 shares of the Company's common stock
pursuant to an option agreement, (iv) American Passage entered into a two-year
consulting agreement with APMC for $273,600 and (v) American Passage assumed
certain of APMC's contractual liabilities.
On February 21, 1997, the Company, through its newly created wholly owned
subsidiary, Campus Voice, acquired from a wholly owned subsidiary of Sirrom
Capital Corporation ("Sirrom") substantially all of the assets relating to a
business of a national network of proprietary giant wallboards on college
5
<PAGE>
Network Event Theater, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1997
(Unaudited)
campuses. The network consists of over 3,500 giant wallboards located on 388
college campuses across the United States.
As consideration for the assets, Campus Voice delivered to Sirrom its junior
secured promissory notes in the aggregate amount of approximately $1.6 million.
Campus Voice also paid Sirrom certain lending and legal fees of $14,000. Sirrom
also agreed to advance up to $660,000 of working capital to Campus Voice from
the date of acquisition until January 1, 1998 on a senior basis; Sirrom had
advanced $210,000 of that amount as of March 31, 1997. All of the Campus Voice
debt is secured solely by the assets and cash flow of Campus Voice and is not an
obligation of the Company.
These acquisitions have been accounted for using the purchase method of
accounting. Accordingly, the purchase price of each of the acquisitions has been
allocated to the assets based on their fair values at the respective date of
acquisition. Intangible assets representing the excess of cost over the assets
acquired and liabilities assumed are being amortized over a period of fifteen
years. The results of operations of the properties acquired are included in the
Company's condensed consolidated results of operations from the respective date
of acquisition.
The total purchase price of the transactions described above of approximately
$7.2 million has been preliminarily allocated as follows: approximately $1.8
million to property and equipment and approximately $5.4 to intangible assets.
The following unaudited supplemental pro forma information for the nine months
ended March 31, 1997 and 1996 is presented as if the Company had completed the
acquisitions of American Passage and Campus Voice on July 1, 1995.
Nine Months Nine Months
Ended Ended
March 31, 1997 March 31, 1996
-------------- --------------
Net revenue ................................... $ 5,032,239 $ 4,560,706
Net loss ...................................... (3,734,252) (2,092,777)
Net loss per common share ..................... (0.43) (0.24)
Common shares outstanding ..................... 8,654,440 8,654,440
The pro forma information is not necessarily indicative either of the results of
operations that would have occurred had these transactions been made at the
beginning of the period or of future results of operations.
6
<PAGE>
Network Event Theater, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1997
(Unaudited)
3. Debt
On September 13, 1996, in conjunction with the acquisition of certain assets of
APMC (see Note 2), American Passage entered into a five year $3.5 million loan
with Signet Bank (the "Loan"). The Loan is secured by all of American Passage's
assets and is guaranteed by the Company. The Loan is payable in installments
with the final installment due on September 30, 2001. Interest is payable
monthly at a variable rate of interest set each ninety days based either on 300
basis points above LIBOR for U.S. Dollar deposits of ninety day maturity or 100
basis points above the prime rate of Signet Bank. The current rate of interest
is 8.5313% per annum.
Additionally, on September 13, 1996, American Passage delivered a two-year
subordinated promissory note to APMC in the principal amount of $750,000 which
provides for payment in eight equal quarterly installments of principal which
commenced on December 13, 1996 together with interest thereon at the rate of 8%
per year.
On February 21, 1997, in conjunction with the acquisition of certain assets from
Sirrom (see Note 2), Campus Voice delivered to Sirrom its junior secured
promissory notes in the aggregate amount of approximately $1.6 million with a
maturity date of December 31, 2006. The debt accrues interest at the rate of
12.0% per year from the date of purchase, but no interest or principal payments
are due to be paid in cash until June 30, 1999. After that time, interest is
payable monthly and principal payments must be made annually until full
repayment, including all accrued interest. In addition, Sirrom has agreed to
advance up to $660,000 of senior indebtedness which is to be used as working
capital for Campus Voice. As of March 31, 1997, $210,000 of such senior
indebtedness had been advanced to Campus Voice. This senior debt accrues
interest at the rate of 8.0% per annum and requires that interest be paid
monthly. The senior debt is due December 31, 1999. Campus Voice is obligated to
apply its Free Cash Flow (as defined) to prepayment of its notes to Sirrom; in
addition, the subordinated notes provide for certain annual minimum prepayments.
All of the Campus Voice debt is secured solely by the assets and cash flow of
Campus Voice and is not an obligation of the Company.
4. Net Loss Per Share
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("FAS 128"). FAS
128 establishes standards for computing and presenting earnings per share
("EPS") and supersedes APB Opinion No. 15, "Earnings Per Share" ("Opinion 15").
FAS 128 replaces the presentation of primary EPS with a presentation of basic
EPS which excludes dilution and is computed by dividing income available to
common stockholders by the weighted average number of common shares outstanding
during the period. This statement also requires dual presentation of basic EPS
and diluted EPS on the face of the income statement for all periods presented.
Diluted EPS is computed similarly to fully diluted EPS pursuant to Opinion 15,
with some modifications. FAS 128 is effective for financial statements issued
7
<PAGE>
Network Event Theater, Inc.
Notes to Condensed Consolidated Financial Statements
March 31, 1997
(Unaudited)
for periods ending after December 15, 1997, including interim periods. Early
adoption is not permitted and the statement requires restatement of all prior
period EPS data presented after the effective date. The Company does not
anticipate that the implementation of FAS 128 will have a material impact on the
Company's condensed consolidated financial position or results of operations.
8
<PAGE>
Item 2. Plan of Operation
The following discussion of the financial condition and results of operations of
the Company should be read in conjunction with the condensed consolidated
financial statements and related notes thereto. The following discussion
contains certain forward looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, risks and uncertainties relating to leverage,
the ability to obtain financing, integration of the recently completed
acquisitions, the ability of the Company to continue the expansion of its
Network (as hereinafter defined), the management of growth and the introduction
of new technology. The Company undertakes no obligation to publicly release the
results of any revisions to these forward looking statements that may be made to
reflect any future events or circumstance.
Network Event Theater, Inc. (the "Company") is engaged in developing or
acquiring media and marketing services businesses that focus on the young adult
and college market segments and in operating its college campus theater network
(the "Network").
The Company intends to continue to expand its college media and marketing
businesses either through internal growth or acquisitions. On September 13,
1996, American Passage Media, Inc. ("American Passage"), a newly organized
wholly owned subsidiary of the Company, acquired from American Passage Media
Corporation ("APMC") substantially all of APMC's assets relating to its college
and high school media and marketing business. APMC has been involved in the
young adult marketing business since 1976. The acquired businesses included
APMC's college newspaper placement operations, college campus postering
operations, high school focused GymBoard(TM) operations and various other
advertiser and event sponsorship related activities.
On February 21, 1997, the Company, through its newly created wholly owned
subsidiary, Campus Voice, LLC, acquired from a wholly owned subsidiary of Sirrom
Capital Corporation, ("Sirrom") substantially all of the assets relating to a
business of operating a national network of proprietary giant wallboards on
college campuses. The network, which was started in 1981, today consists of over
3,500 giant wallboards located on 388 college campuses across the United States
reaching 3.6 million college students. The posters are replaced each month and
primarily contain editorial content of interest to college students and paid
advertisements. The Company believes that the network is a complementary part of
the Company's offering to advertisers and entertainment companies which desire
to reach the college market and that it can operate the network profitably
because it will be part of the Company's overall sales strategy and that
advertisements for this network can be sold by the Company's other sales staffs.
On April 11, 1997, the Company acquired the assets and certain liabilities of
Posters Preferred, Inc. and is operating its business of distributing posters to
college students through twice yearly catalogs as a division of the Company
9
<PAGE>
using the name "Beyond the Wall". "Beyond the Wall" is one of the largest
circulation print medium that specifically targets the college student market,
with 4.1 million catalogs distributed to 700 campuses each year. As
consideration for this purchase, the Company issued to the seller 70,000 shares
of its common stock; assumed certain trade accounts payable and other
obligations of the seller; is obligated to issue up to 6,666 additional shares
of the Company's common stock in each of 1998, 1999 and 2000, subject to the
satisfaction of certain conditions; and agreed to pay to the seller cash amounts
to the extent that the market price of shares of the Company's common stock is
less than $5.00 per share on the first anniversary of any date on which shares
are to be issued pursuant to the purchase agreement.
On April 30, 1997, Pik:Nik Media, LLC ("Pik:Nik"), a newly created wholly owned
subsidiary of the Company, acquired from Pik:Nik LLC the assets and certain
liabilities of its free post card distribution business. The Company expects to
expand the operations of that business to locations that appeal to young adults,
such as movie theaters, malls and certain retail locations as well as college
campuses. As consideration for the purchase, Pik:Nik paid to the principals of
the seller cash in the aggregate amount of $68,750; paid to certain creditors of
the seller cash in the amount of $20,000 and agreed to pay to those creditors an
additional $240,000, plus interest, in installments over the succeeding 36
months; the Company issued to the principals of the seller and certain creditors
an aggregate of 29,118 shares of the Company's common stock; and Pik:Nik and the
Company agreed to pay additional amounts of cash and to issue additional shares
to the principals of the seller based on the amount of Pik:Nik's EBIT, as
defined, during each of the four successive fiscal years commencing July 1,
1997. The Company has also agreed to contribute to Pik:Nik at least $300,000 of
working capital, of which $116,000 had been contributed as of May 1, 1997.
The Company has signed a letter of intent to acquire another company engaged in
the free post card distribution business; that transaction is subject to the
completion of due diligence and to the preparation and execution of definitive
agreements. The Company is also currently engaged in discussions with several
other entities that may lead to future acquisitions. There can be no assurance
that the Company will consummate these or any other transactions.
The Company is now generating significant operating revenues on a consolidated
basis and is no longer in the development stage. These revenues result primarily
from the acquisition of American Passage and, to a lesser extent, from payments
from product providers utilizing the Network. Because of expenses required to
make and assimilate acquisitions and to evaluate additional business
opportunities for the Company, as well as to install Network theater equipment
at colleges and to obtain programming for these theaters, the Company is still
generating operating losses on a consolidated basis. These losses may continue
and may remain significant until the newly acquired businesses and the Network
are integrated and begin to generate revenues. The success of the Company's
10
<PAGE>
proposed plan of operations will be largely dependent upon the Company's ability
to operate both its acquired companies and the theater Network on a profitable
basis which involves, with regard to theater operations, attracting revenues
from sponsors, advertisers and entertainment companies. The Company believes
that the campus theater Network can be profitable without significant additional
expansion in either the number of theaters or in the number of relationships
with advertisers and entertainment companies. While the Company is continuing to
seek to expand the number of theaters it operates, the pace of such expansion
has slowed. As of March 31, 1997, the Company had installed Network theater
equipment at 32 campus theaters and had entered into contracts with four other
schools. During the next twelve months, the Company intends to enter into
agreements with additional colleges and universities and intends to install at
least one new theater each quarter. The Company currently has two full-time
employees engaged in marketing the Company's Network to colleges and
universities across the United States.
Since January 1996, the Company has entered into a number of licensing
agreements with content providers such as Miramax, Don King Productions, Mercury
Records, Warner Brothers and ABC Network for individual productions. In August
1996, the Company entered into an agreement with Home Box Office ("HBO") to show
one program a month during the 1996-1997 academic year on its Network. In the
Fall of 1996, among other events, the Company presented three HBO programs and
premiered two movies for Miramax, including Swingers and Scream. The Network
also premiered the R.E.M. Road Movie for Warner Brothers and presented a live
concert featuring Rusted Root for Polygram. In the Spring of 1997, the Company
presented three HBO programs, a program for Fox Television and premiered two
original Company productions including an exclusive interview with world famous
film director Milos Forman and a program of comedy recorded live from Los
Angeles's comedy club, the Laugh Factory. During the next twelve months, the
Company will seek to develop further relationships with these and other content
providers to acquire rights to special events. However, there can be no
assurance that the Company will obtain the programming necessary to attract
sponsors and advertisers and thereby generate meaningful revenues or achieve
profitable operations from its Network.
Over the next twelve months the Company will continue to make significant
capital investments as it continues to assimilate and expand its purchased
businesses, evaluate future acquisitions and business opportunities and install
equipment in theaters on college campuses. The Company has no current plans to
increase staff significantly with regard to either the Network or any of its
other operations except incremental increases in sales and administrative staff
to generate and accommodate increased business needs.
Results of Operations
During the three and nine months ended March 31, 1997, the Company generated
approximately $2.3 million and $4.9 million, respectively, of net revenues,
principally from its subsidiary, American Passage. For the comparable periods in
11
<PAGE>
the prior year, the Company had not acquired American Passage and was still in
the development stage, and did not earn any material revenues.
Operating expenses for the three months ended March 31, 1997 are proportionately
greater than those for the nine month period ended March 31, 1997 because the
first quarter's results for American Passage reflected expenses only from the
date of its acquisition. Amounts for interest and other income (expense) for the
three and nine month periods primarily reflect interest charges related to the
acquisition of American Passage and to a lesser degree, for the three month
period, the acquisition of Campus Voice. For the comparable periods of the prior
year interest and other income (expense) reflect the interest income earned on
the proceeds of the Company's initial public offering (see below).
Liquidity and Capital Resources
The Company consummated an initial public offering of its common stock and
warrants on April 9, 1996 (the "Offering"), pursuant to which it raised net
proceeds of approximately $9.7 million, of which $0.5 million was used to repay
previously existing Company indebtedness. As of March 31, 1997, the Company had
cash and cash equivalents and investments in the amount of approximately
$891,000 and $2.5 million, respectively, on a consolidated basis. Since the
Offering, the Company has purchased approximately $1.1 million of Network
theater equipment and invested approximately $1.2 million of the proceeds of the
public offering in the acquisitions of American Passage and Campus Voice (the
remainder of the cash portion of the purchase prices having been borrowed). The
balance of the proceeds have otherwise been used to fund the Company's
operations.
The Company's primary capital requirement with respect to its operations have
been for acquisitions and for the purchase and installation of theater equipment
on college campuses for its Network of campus theaters. Based on current results
of operations and the Company's plans (including installing approximately one
additional theater each calendar quarter), the Company anticipates that it has
sufficient resources to satisfy its contemplated cash requirements for
approximately the next four months (see below).
Implementation of the Company's business plan beyond the next four months will
require financial resources substantially greater than currently available to
the Company. In the event that the Company's plans and assumptions with respect
to its Network change or prove to be inaccurate, if its assumptions with respect
to American Passage and Campus Voice being able to fund their operations and
make required debt service payments out of their own cash flow prove to be
inaccurate, or if the working capital or capital expenditure requirements of its
Beyond the Wall division or of the Company's Pik:Nik subsidiary prove to be
greater than anticipated, then the Company could be required to seek additional
12
<PAGE>
financing sooner. The inability to obtain additional financing will have a
material adverse effect on the Company, including possibly requiring the Company
to significantly curtail or cease its operations.
The Company may also determine, depending upon the opportunities available to
it, to seek additional debt or equity financing to fund the cost of additional
expansion of its Network and the cost to develop or acquire additional college
marketing business complementary to the Network. To the extent that the Company
finances its requirements through the issuance of additional equity securities,
any such issuance would result in dilution to the interests of the Company's
stockholders.
Additionally, to the extent that the Company incurs indebtedness or issues debt
securities in connection with financing activities, the Company will be subject
to all of the risks associated with incurring substantial indebtedness,
including the risk that interest rates may fluctuate and cash flow may be
insufficient to pay principal and interest on any such indebtedness. The Company
has no current arrangements with respect to, or sources of, additional
financing. There can be no assurance that any additional financing will be
available to the Company on acceptable terms, if at all.
13
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
May 15, 1997
By: /s/ Harlan D. Peltz
---------------------------------------
Harlan D. Peltz
Chairman of the Board
and Chief Executive Officer
By: /s/ Bruce L. Resnik
---------------------------------------
Bruce L. Resnik
Executive Vice President
Chief Financial Officer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 891,308
<SECURITIES> 2,490,150
<RECEIVABLES> 2,532,160
<ALLOWANCES> 42,010
<INVENTORY> 0
<CURRENT-ASSETS> 7,241,344
<PP&E> 6,106,002
<DEPRECIATION> 1,278,831
<TOTAL-ASSETS> 17,312,147
<CURRENT-LIABILITIES> 4,318,249
<BONDS> 0
0
0
<COMMON> 86,544
<OTHER-SE> 7,698,317
<TOTAL-LIABILITY-AND-EQUITY> 17,312,147
<SALES> 0
<TOTAL-REVENUES> 4,937,969
<CGS> 0
<TOTAL-COSTS> 7,670,980
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198,569
<INCOME-PRETAX> (2,931,580)
<INCOME-TAX> 164,991
<INCOME-CONTINUING> (3,096,571)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
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