<PAGE> 1
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 quarterly period ended June 30, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act For the
transition period from to
Commission file number 0-27934
KATZ DIGITAL TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 13-3871120
- ---------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No)
organization)
Twenty One Penn Plaza, New York, New York 10001
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 594-4800
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
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
------- ------
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the last practicable date: 4,503,745 as of July
30, 1997
<TABLE>
<CAPTION>
Class Number of Shares
----- ----------------
<S> <C>
Common Stock, $.001 par value 4,503,745
</TABLE>
Transitional Small Business Disclosure Format (check one):
Yes No X
------- -------
<PAGE> 2
KATZ DIGITAL TECHNOLOGIES, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
QUARTER ENDED JUNE 30, 1997
ITEMS IN FORM 10-QSB
Facing Page Page
Part I
Item 1. Financial Statements 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II
Item 1. Legal Proceedings None
Item 2. Changes in Securities None
Item 3. Default Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K 14
Signatures
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<PAGE> 3
PART I
Item 1. Financial Statements
-3-
<PAGE> 4
KATZ DIGITAL TECHNOLOGIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1997
(Unaudited) December 31, 1996
------------- -----------------
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,684,142 $ 3,428,175
Accounts receivable, net of allowance for doubtful accounts of $110,238
and $94,738 at June 30, 1997 and December 31, 1996, respectively 3,939,469 3,216,386
Work-in-process inventory 90,449 69,328
Prepaid expenses and other current assets 139,304 163,514
----------- -----------
Total Current Assets 6,853,364 6,877,403
PROPERTY AND EQUIPMENT - NET 4,042,231 3,568,853
OTHER ASSETS 72,585 80,333
GOODWILL - NET 1,808,346 1,140,819
----------- -----------
$12,776,526 $11,667,408
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 1,302,345 $ 1,160,254
Current portion of notes payable 166,665
Current portion of obligations under capital leases 747,028 699,029
Income taxes payable 18,450 66,151
Deferred taxes payable 114,000 114,000
Due to stockholders 339,912
----------- -----------
Total Current Liabilities 2,348,488 2,379,346
DEFERRED CREDITS 351,945 265,520
DEFERRED TAXES PAYABLE 151,000 265,000
PENSION LIABILITY 191,258 191,258
NOTES PAYABLE 333,335
OBLIGATIONS UNDER CAPITAL LEASES, NET OF
CURRENT PORTION 1,669,291 1,490,323
----------- -----------
Total Liabilities 5,045,317 4,591,447
----------- -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value; 5,000 shares authorized;
no shares issued -- --
Common stock, $.001 par value; 25,000,000 shares authorized;
4,503,745 and 4,425,000 shares issued and outstanding
at June 30, 1997 and December 31, 1996, respectively 4,504 4,425
Additional paid-in capital 7,096,423 6,860,267
Retained earnings 630,282 211,269
----------- -----------
Total Stockholders' Equity 7,731,209 7,075,961
----------- -----------
$12,776,526 $11,667,408
=========== ===========
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
KATZ DIGITAL TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------- -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $4,703,565 $ 3,955,240 $9,150,729 $ 7,298,354
Cost of goods sold 2,133,563 1,583,851 4,060,543 2,974,663
---------- ----------- ---------- -----------
Gross profit 2,570,002 2,371,389 5,090,186 4,323,691
Selling, general and administrative expenses 2,062,813 1,826,337 4,215,067 3,418,829
---------- ----------- ---------- -----------
Operating income 507,189 545,052 875,119 904,862
Interest expense (income) -net 31,844 (1,423) 49,386 31,111
---------- ----------- ---------- -----------
Earnings before provision for income taxes 475,345 546,475 825,733 873,751
Provision for income taxes 227,532 245,904 406,719 1,020,904
---------- ----------- ---------- -----------
Net earnings (loss) $ 247,813 $ 300,571 $ 419,014 ($ 147,153)
========== =========== ========== ===========
Pro forma data:
Historical earnings before provision for income taxes $ 475,345 $ 546,475 $ 825,733 $ 873,751
Provision for income taxes 227,532 245,904 406,719 393,188
---------- ----------- ---------- -----------
Net earnings $ 247,813 $ 300,571 $ 419,014 $ 480,563
========== =========== ========== ===========
Net earnings per share $ 0.06 $ 0.07 $ 0.09 $ 0.13
========== =========== ========== ===========
Weighted average number of shares outstanding 4,503,745 4,456,435 4,503,745 3,754,955
========== =========== ========== ===========
</TABLE>
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<PAGE> 6
KATZ DIGITAL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities
Net earnings (loss) $ 419,014 $ (147,153)
Adjustments to reconcile net earnings (loss) to net cash
provided by operating activities:
Depreciation and amortization 639,804 529,245
Deferred rent
Interest payable to stockholders
Deferred credits 86,425 215,868
Deferred taxes (114,000) 521,000
Increase (decrease) in cash flows from changes in
operating assets and liabilities:
Accounts receivable (723,083) (1,106,090)
Work-in-process inventory (21,121) (54,013)
Prepaid expenses and other current assets 24,210 (73,569)
Other assets 7,748 1,234
Accounts payable and accrued expenses 111,050 477,254
Income taxes payable (47,701) 184,389
----------- -----------
Net cash provided by operating activities 382,346 548,165
----------- -----------
Cash flows from investing activities:
Purchase of property and equipment - net (421,910) (787,087)
----------- -----------
Net cash used in investing activities (421,910) (787,087)
----------- -----------
Cash flows from financing activities:
Distributions to stockholders (339,912) (672,342)
Payments of obligations under capital leases (364,557) (403,660)
Net proceeds from public offering 6,361,892
----------- -----------
Net cash provided by (used in) financing activities (704,469) 5,285,890
----------- -----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (744,033) 5,046,968
Cash and cash equivalents - beginning of period 3,428,175 200,729
----------- -----------
Cash and cash equivalents - end of period $ 2,684,142 $ 5,247,697
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 118,215 $ 107,062
Income taxes $ 555,200 $ 356,734
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
Capital lease obligations of $803,524 and $1,736,651 were incurred in the
six month periods ended June 30, 1997 and 1996, respectively, as a result
of the Company entering into new equipment leases.
In conjunction with the 1996 acquisition of The Sarabande Press, Inc.,
notes payable, common stock, additional paid in capital and accrued
interest totaling $767,276 with a corresponding amount of goodwill, was
recorded in the six month period ended June 30, 1997
The accompanying notes are an integral part of these statements.
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<PAGE> 7
KATZ DIGITAL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The summarized financial information included herein does not include all
disclosures required in a complete set of financial statements prepared in
conformity with generally accepted accounting principles. Such disclosures were
included with the financial statements of the Company at December 31, 1996 and
for the year then ended in the Company's Form 10K as filed with the Securities
and Exchange Commission. These statements should be read in conjunction with the
data therein.
The financial information included herein contains all adjustments (consisting
of normal recurring accruals) which, in the opinion of management, are deemed
necessary for a fair presentation of the results for the interim period. The
results for the interim periods are not necessarily indicative of results that
may be expected for the full fiscal year. Certain reclassifications have been
made to the prior year statements to conform to the current year presentation.
NOTE B - TERMINATION OF S CORPORATION STATUS AND PRO FORMA INFORMATION
Prior to the consummation of the Company's initial public offering, The Company
filed its Federal and state income tax returns under the provisions of
Subchapter S of the Internal Revenue Code. Accordingly, no provision had been
made in the accompanying financial statements for Federal and certain state
income taxes for the S Corporation periods, since income of the Company was
taxable directly to its stockholders. The Company was however, liable for
certain state and local taxes, which are reflected in the accompanying financial
statements. Upon closing of the public offering, the Company's income tax status
as an S Corporation terminated. The Company converted to a C Corporation,
adopted the accrual basis of accounting and is subject to both Federal and state
corporate income taxes. Accordingly, $723,000 additional Federal and state
income taxes, applicable to temporary differences in the recognition of income
and expenses for financial accounting and income tax reporting purposes existing
at March 26, 1996 (the date of the initial public offering), have been recorded
and charged to operations for the six months ended June 30, 1996. Pro forma
income taxes in 1996 reflect an additional provision for income taxes at the
effective Federal, state and local rates applied to the Company's financial
statement income.
Pro forma earnings per share are based on the weighted average number of common
and common equivalent shares outstanding during the period. The shares
outstanding for the period ending June 30, 1996, give retroactive effect to the
merger and recapitalization of the Company as well as 154,443 shares deemed to
be outstanding, which represent the approximate number of shares deemed to be
sold by the Company (at an assumed public offering price of $5.00 per share) to
fund the portion of the shareholder distribution in excess of 1995 undrawn
earnings.
NOTE C - NEW ACCOUNTING PRONOUNCEMENT
In February 1997, The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share, which is effective
for financial statements for both interim and annual periods ending after
December 15, 1997. The new Standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and, if applicable,
diluted earnings per share. Basic earnings per share is computed by dividing
income available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per share reflects the weighted
average common shares outstanding and dilutive potential common shares such as
stock options. The pro forma effect of adopting the new standard would not
materially effect reported earnings per share for the periods presented.
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<PAGE> 8
NOTE D - ACQUISITIONS
As reported on a Current Report on Form 8-K filed with the Securities and
Exchange Commission on August 13, 1997, on July 31, 1997 the Company completed
its acquisition by merger of Advanced Digital Services, Inc ("ADS"). The
purchase price of $1,585,673 was composed of $500,000 in cash, $250,000 in 7%
five year notes and 301,818 restricted shares of the Company's common stock. The
final purchase price is subject to adjustment based on Net Worth (as defined in
the Plan and Agreement of Merger, filed as an exhibit to the Form 8-K) pursuant
to an audit of ADS's financial statements, the collectibility of certain
accounts receivable and revenues generated by the ADS operations during the
twelve month period following the merger. In addition, concurrent with the
merger, the former shareholders of ADS each entered into five year employment
agreements, as well as agreements imposing certain non-competition and
confidentiality restrictions.
In conjunction with the 1996 acquisition of The Sarabande Press, Inc. notes
payable, common stock, additional paid in capital and accrued interest totaling
$767,276 with a corresponding amount of goodwill, was recorded in the six month
period ended June 30, 1997.
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<PAGE> 9
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth for the periods indicated, the
percentage of net sales represented by certain items reflected in the Company's
statements of operations. The statements of operations contained in the
Company's financial statements and the following table include pro forma
adjustments for income taxes. Certain reclassifications have been made to the
prior year statements to conform to the current year presentation.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------- --------
1997 1996 1997 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
====== ====== ====== ======
Cost of goods sold 45.4% 40.0% 44.4% 40.8%
Gross profit 54.6% 60.0% 55.6% 59.2%
Selling, general and administrative expenses 43.9% 46.2% 46.1% 46.8%
Net earnings (loss) 5.3% 7.6% 4.6% (2.0)%
Pro forma net earnings 5.3% 7.6% 4.6% 6.6%
</TABLE>
THREE MONTHS ENDED JUNE 30, 1997 COMPARED TO THREE MONTHS ENDED JUNE 30, 1996
Net sales for the three months ended June 30, 1997 were $4,703,565,
an increase of $748,325 or 18.9%, compared to $3,955,240 for the three months
ended June 30, 1996. The increase in net sales was primarily attributable to
increased volume of services which includes sales from The Sarabande Press, Inc.
("Sarabande"), acquired in August 1996, and increased sales of digital short run
printing.
Cost of goods sold for the three months ended June 30, 1997 was
$2,133,563, an increase of $549,712, or 34.7%, compared to $1,583,851 for the
three months ended June 30, 1996. The increase in cost of goods sold was
primarily attributable to production costs added through the Sarabande
acquisition plus increased production wages and supplies related to the greater
volume and changed mix of services.
Gross profit for the three months ended June 30, 1997 was
$2,570,002, an increase of $198,613, or 8.4%, compared to $2,371,389 for the
three months ended June 30, 1996. Gross profit as a percent of net sales
decreased to 54.6% for the three months ended June 30, 1997 from 60.0% in the
prior year. The lower gross profit percentage in 1997 was attributable to the
continuing change in the Company's product mix favoring digital printing which
generates a lower gross profit rate compared to the Company's other services.
-9-
<PAGE> 10
Selling, general and administrative expenses for the three months
ended June 30, 1997 were $2,062,813, an increase of $236,476, or 12.9%, compared
to $1,826,337 for the three months ended June 30, 1996. The increase was
primarily attributable to goodwill amortization for the Sarabande acquisition,
increased rent related to additional facilities, and management salaries for
added personnel.
Net interest expense for the three months ended June 30, 1997 was
$31,844, a decrease of $33,267 compared to net interest income of $1,423 for the
three months ended June 30, 1996. The decrease was due to reduced interest
income from the investment of the reduced balance of unused proceeds from the
Company's March 1996 initial public offering of its securities (the "IPO").
As a result of the foregoing, net earnings decreased to $247,813
($.06 per share) for the three months ended June 30, 1997 from $300,571 ($.07
per share) for the prior comparable period, a decrease of $52,758 ($.01 per
share).
SIX MONTHS ENDED JUNE 30, 1997 COMPARED TO SIX MONTHS ENDED JUNE 30, 1996
Net sales for the six months ended June 30, 1997 were $9,150,729, an
increase of $1,852,375 or 25.4%, compared to $7,298,354 for the six months ended
June 30, 1996. The increase in net sales was primarily attributable to increased
volume of services which includes sales from the Sarabande acquisition, and
increased sales of digital short run printing.
Cost of goods sold for the six months ended June 30, 1997 was
$4,060,543, an increase of $1,085,880, or 36.5%, compared to $2,974,663 for the
six months ended June 30, 1996. The increase in cost of goods sold was primarily
attributable to production costs added through the Sarabande acquisition plus
increased production wages and supplies related to the greater volume and
changed mix in services.
Gross profit for the six months ended June 30, 1997 was $5,090,186,
an increase of $766,495, or 17.7%, compared to $4,323,691 for the six months
ended June 30, 1996. Gross profit as a percent of net sales decreased to 55.6%
for the six months ended June 30, 1997 from 59.2% in the prior year. The lower
gross profit percentage in 1997 was attributable to the continuing change in the
Company's product mix favoring digital short run printing, which generates a
lower gross profit rate than the Company's other services and increases in
production equipment depreciation as a result of major equipment acquisitions
over the last twelve months.
Selling, general and administrative expenses for the six months
ended June 30, 1997 were $4,215,067, an increase of $796,238, or 23.3%, compared
to $3,418,829 for the six months ended June 30, 1996. The increase was primarily
attributable to greater costs for management personnel, plus costs associated
with the Sarabande acquisition including goodwill amortization.
Net interest expense for the six months ended June 30, 1997 was
$49,386, an increase of $18,275 or 58.7% compared to $31,111 for the six months
ended June 30, 1996. The increase in expense was due to decreased interest
income from the investment of unused proceeds from the IPO.
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<PAGE> 11
Included in the provision for income taxes for the six months ended
June 30, 1996 is a non-recurring charge of $723,000 for additional Federal and
state income taxes resulting from the termination of the Company's S Corporation
tax status.
As a result of the foregoing, net earnings (loss) increased to
$419,014 for the six months ended June 30, 1997 from a loss of $147,153 for the
prior comparable period, an increase of $566,167. Net earnings, after giving
effect to a pro forma adjustment for income tax provisions in 1996, would have
been $419,014 ($.09 per share) and $480,563 ($.13 per share) for the six months
ended June 30, 1997 and 1996, respectively. The lower "per share" earnings in
1997 included the effect of a 20% increase in the average number of shares
outstanding in that period. The increase in the number of shares outstanding was
primarily due to the Company's IPO.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had working capital of $4,504,876,
substantially unchanged from working capital of $4,498,057 at December 31, 1996.
Net cash provided by operating activities totaled $382,346 for the
six months ended June 30, 1997 compared to $548,165 in the prior year. The
decrease in the first six months of 1997 compared to the first six months of
1996 resulted principally from the absence, in 1997, of the large increase in
deferred taxes and reductions in current liabilities which occurred in 1996,
which together more than offset the improvement in net earnings (loss) in the
first six months of 1997 combined with the smaller increase in accounts
receivable compared to the prior year. The deferred taxes in the first six
months of 1996 related to the Company's change in tax status from an S
corporation to a C corporation.
Cash flows from investing activities were related to purchases of
property and equipment and were down from the high level of 1996's first six
months. Cash provided from financing activities decreased $5,990,359 in the
first six months of 1997 as compared to 1996 as a result of the Company's IPO
partly reduced by the repayment of a bank note in 1996, and the completion of
distributions to the S corporation shareholders in 1997. The net effect of cash
flows from operating activities, investing activities and financing activities
was a net decrease in cash during the first six months of 1997 of $744,033 to an
ending balance of $2,684,142.
The Company maintains a $2,000,000 line of credit with a commercial
bank. At June 30, 1997 there were no outstanding borrowings under the line. The
Company believes that current cash balances, current borrowing capacity and cash
generated by operations, will provide sufficient cash to meet its operating
requirements for the next twelve months. See "Forward Looking Information."
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<PAGE> 12
FORWARD LOOKING INFORMATION
This quarterly report on Form 10-QSB contains certain
forward-looking statements and information relating to the Company that are
based on the beliefs of management, as well as assumptions made by and
information currently available to the Company. When used in this document, the
words "anticipate," "believe," "estimate," and "expect" and similar expressions,
as they relate to the Company, are intended to identify forward-looking
statements. Such statements reflect the current views of the Company with
respect to future events and are subject to certain risks, uncertainties and
assumptions, including those described in this quarterly report on Form 10-QSB.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements.
-12-
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
A Proxy Statement was mailed on or about March 26, 1997 to
shareholders of record of the Company as of March 19, 1997 in connection with
the Company's 1997 Annual Meeting of Shareholders, which was held on May 15,
1997 at the Main Board Room of the Company's offices, 21 Penn Plaza, 8th Floor,
New York, New York. At the Meeting, the shareholders voted on three matters and
all of such matters were approved.
The first matter was the election of the members of the Board of
Directors. The five directors elected and the tabulation of the votes (both in
person and by proxy) was as follows:
<TABLE>
<CAPTION>
Nominees for Directors For Withheld Against
---------------------- --- -------- -------
<S> <C> <C> <C>
Gary Katz 3,851,108 0 16,800
Michael Sklar 3,851,108 0 16,800
Murray L. Skala 3,851,108 0 16,800
Ronald Grudberg 3,851,108 0 16,800
Burtt Ehrlich 3,851,108 0 16,800
</TABLE>
There were 770 broker held non-voted shares represented at the
Meeting with respect to this matter.
The second matter upon which the shareholders voted was the proposal
to ratify the appointment by the Board of Directors of Grant Thornton LLP as
independent certified public accountants for the Company for 1997. The
tabulation of the votes (both in person and by proxy) was as follows:
<TABLE>
<CAPTION>
For Against Abstentions
--- ------- -----------
<S> <C> <C>
3,836,553 8,450 22,905
</TABLE>
There were 770 broker held non-voted shares represented at the
Meeting with respect to this matter.
-13-
<PAGE> 14
The third matter upon which the shareholders voted was the proposal
to adopt the Company's Amended and Restated 1996 Stock Option Plan. The
tabulation of the votes (both in person and by proxy) was as follows:
<TABLE>
<CAPTION>
For Against Abstentions
--- ------- -----------
<S> <C> <C>
3,109,430 51,200 21,205
</TABLE>
There were 686,073 broker held non-voted shares represented at the
Meeting with respect to this matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
Exhibit No. Description
3.1 Certificate of Incorporation (1)
3.2 By-Laws (1)
27.1* Financial Data Schedule
------------------
* Filed herewith.
(1) Filed as an exhibit to the Registrant's Registration
Statement on Form SB-2 (File No. 333-1190) and the
amendments thereto, incorporated herein by reference.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the second quarter of the
fiscal year ending December 31, 1997.
-14-
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
KATZ DIGITAL TECHNOLOGIES, INC.
--------------------------------------
(Registrant)
Date: August 13, 1997 /s/ Gary Katz
---------------------------------------
Gary Katz
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 1997 /s/ Donald L. Flamm
---------------------------------------
Donald L. Flamm
Vice President-Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,684,142
<SECURITIES> 0
<RECEIVABLES> 4,049,707
<ALLOWANCES> 110,238
<INVENTORY> 90,449
<CURRENT-ASSETS> 6,853,364
<PP&E> 6,512,171
<DEPRECIATION> 2,469,940
<TOTAL-ASSETS> 12,776,526
<CURRENT-LIABILITIES> 2,348,488
<BONDS> 0
0
0
<COMMON> 7,731,209
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 12,776,526
<SALES> 9,150,729
<TOTAL-REVENUES> 9,150,729
<CGS> 4,060,543
<TOTAL-COSTS> 4,215,067
<OTHER-EXPENSES> 4,215,067
<LOSS-PROVISION> 15,500
<INTEREST-EXPENSE> 49,386
<INCOME-PRETAX> 825,733
<INCOME-TAX> 406,719
<INCOME-CONTINUING> 419,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 419,014
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
</TABLE>