<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 March 31, 1998
[ ] 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: 5,009,211 as of April 30,
1998
Class Number of Shares
Common Stock, $.001 par value 5,009,211
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 MARCH 31, 1998
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 12
Item 3. Default 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 13
Signatures
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<PAGE> 3
PART I
ITEM 1. Financial Statements
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<PAGE> 4
KATZ DIGITAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, 1998
(Unaudited) December 31, 1997
------------- -----------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 297,020 $ 1,651,930
Accounts receivable, net of allowance for doubtful accounts of $322,738
and $140,238 at March 31, 1998 and December 31, 1997, respectively 9,528,837 4,723,183
Work-in-process inventory 455,588 100,483
Prepaid expenses and other current assets 202,884 106,651
Prepaid income taxes 185,554
-----------------------------
Total Current Assets 10,484,329 6,767,801
PROPERTY AND EQUIPMENT - NET 6,970,479 3,893,006
OTHER ASSETS 419,215 288,508
GOODWILL - NET 11,630,995 2,627,485
-----------------------------
$29,505,018 $13,576,800
=============================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 3,713,983 $ 1,732,277
Current portion of notes payable 157,900
Current portion of term loan 1,500,000
Current portion of obligations under capital leases 1,520,344 739,603
Income taxes payable 153,097
Deferred taxes payable 186,000 186,000
-----------------------------
Total Current Liabilities 7,231,324 2,657,880
DEFERRED CREDITS 426,333 410,774
DEFERRED TAXES PAYABLE 85,000 85,000
NOTES PAYABLE 434,324 300,000
REVOLVING CREDIT 4,489,000
TERM LOAN 4,125,000
OBLIGATIONS UNDER CAPITAL LEASES, NET OF
CURRENT PORTION 2,372,486 1,351,568
-----------------------------
Total Liabilities 19,163,467 4,805,222
-----------------------------
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;
5,009,211 and 4,705,202 shares issued and outstanding
at March 31, 1998 and December 31, 1997, respectively 5,009 4,705
Additional paid-in capital 8,797,528 7,687,621
Retained earnings 1,539,014 1,079,252
-----------------------------
Total Stockholders' Equity 10,341,551 8,771,578
-----------------------------
$29,505,018 $13,576,800
=============================
</TABLE>
The accompanying notes are an integral part of these statements.
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<PAGE> 5
KATZ DIGITAL TECHNOLOGIES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Net sales $ 11,375,136 $ 4,447,164
Cost of goods sold 5,678,804 1,926,980
-----------------------------
Gross profit 5,696,332 2,520,184
Selling, general and administrative expenses 4,575,474 2,152,254
-----------------------------
Operating income 1,120,858 367,930
Interest expense -net 292,451 17,542
Other income (29,281)
-----------------------------
Earnings before provision for income taxes 857,688 350,388
Provision for income taxes 397,925 179,187
-----------------------------
Net earnings $ 459,763 $ 171,201
=============================
Basic earnings per share $ 0.09 $ 0.04
=============================
Diluted earnings per share $ 0.09 $ 0.04
=============================
</TABLE>
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<PAGE> 6
KATZ DIGITAL TECHNOLOGIES, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1998 1997
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net earnings $ 459,763 $ 171,201
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Depreciation and amortization 739,187 299,785
Deferred credits 15,559 36,573
Increase (decrease) in cash flows from changes in
operating assets and liabilities (net of acquisition):
Accounts receivable (1,117,716) (699,383)
Work-in-process inventory 123,327 (15,784)
Prepaid expenses and other current assets 181,206 50,178
Prepaid income taxes 185,554
Other assets 97,125 (23,999)
Accounts payable and accrued expenses 93,053 319,022
Income taxes payable 153,097 (66,151)
----------- -----------
Net cash provided by operating activities 930,155 71,442
----------- -----------
Cash flows from investing activities:
Acquisition of Speed Graphics (292,731)
Proceeds from sale of equipment 350,000
Purchase of property and equipment - net (251,934) (256,015)
----------- -----------
Net cash used in investing activities (194,665) (256,015)
----------- -----------
Cash flows from financing activities:
Distributions to stockholders (271,242)
Revolving credit payments (475,000)
Term loan payment (375,000)
Other note payments (824,532)
Payments of obligations under capital leases (415,868) (163,612)
----------- -----------
Net cash used in financing activities (2,090,400) (434,854)
----------- -----------
NET DECREASE IN CASH AND
CASH EQUIVALENTS (1,354,910) (619,427)
Cash and cash equivalents - beginning of period 1,651,930 3,428,175
----------- -----------
Cash and cash equivalents - end of period $ 297,020 $ 2,808,748
=========== ===========
Supplemental disclosures of cash flow information:
Cash paid during the period for
Interest $ 255,049 $ 51,591
Income taxes $ 74,849 $ 162,820
</TABLE>
Supplemental disclosures of noncash investing and financing activities:
Capital lease obligations of $30,640 and $437,276 were incurred in the
three month periods ended March 31, 1998 and 1997, respectively, as a
result of the Company entering into new equipment leases.
The accompanying notes are an integral part of these statements.
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<PAGE> 7
KATZ DIGITAL TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED 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, 1997 and
for the year then ended in the Company's Form 10KSB 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 - PRINCIPLES OF CONSOLIDATION
The accompanying financial statements include the accounts of the Company and
its wholly owned subsidiaries. All material intercompany transactions have been
eliminated.
NOTE C - 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 collectability 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.
The acquisition of ADS has been treated as a "purchase" for the purposes of
generally accepted accounting principles, with the purchase price allocated
based on the fair value of the assets acquired and liabilities assumed.
Approximately $1,309,000 was allocated to goodwill.
As reported on Current Reports on Form 8-K filed with the Securities and
Exchange commission on January 23, 1998 and March 24, 1998 respectively, on
January 9, 1998 as amended on March 6, 1998, a wholly owned subsidiary of the
Company acquired substantially all the assets of Speed Graphics, Inc. (Speed)
and DDP, Inc. an affiliate of Speed. Speed is based in New York City and
provides commercial photo lab, prepress photo imaging and digital short-run
printing services.
As aggregate consideration for the acquisition, Speed received cash in the
amount of $10,964,000 and 173,913 shares of the Company's common stock. The
acquisition has been treated as a "purchase" for accounting purposes and
approximately $8,848,000 was allocated to goodwill. The Company is still
compiling certain information required to complete the allocation of the
purchase price of Speed. Further adjustments may arise as a result of the
finalization of the ongoing review.
Concurrently with the acquisition, the Company entered into a loan agreement
with a commercial bank whereby the bank agreed to loan the Company (i)
$6,000,000 in the form of a secured term loan and (ii) $7,000,000 in the form of
a secured revolving credit facility note.
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<PAGE> 8
NOTE D - PRO FORMA RESULTS
The unaudited pro forma results of operations, which reflects the purchases of
ADS and Speed as if they had occurred as of the beginning of the period, are as
follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
-------------------------------
1998 1997
----------- -----------
<S> <C> <C>
Net Sales $11,375,136 $11,201,201
Net Earnings 459,763 482,005
Pro Forma Net Earnings 459,763 354,211
Pro Forma Basic Earnings Per Share $ .09 $ .08
Pro Forma Diluted Earnings Per Share .09 .08
</TABLE>
NOTE E - EARNINGS PER COMMON SHARE
In. February 1997, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings Per Share,"
which is effective for financial statements for interim and annual periods
ending after December 31, 1997 and requires that all prior period earnings per
share data be restated. The Company's financial statements reflect this
adoption. The new standard eliminates primary and fully diluted earnings per
share and requires presentation of basic and, if applicable, diluted earnings
per common share. Basic earnings per common share is computed by dividing income
available to common shareholders by the weighted average common shares
outstanding for the period. Diluted earnings per common share reflect the
weighted average common shares outstanding and dilutive potential common shares,
such as stock options.
NOTE F - EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income,"
which is effective for fiscal years beginning after December 31, 1997. The
Statement addresses the reporting and presentation of comprehensive income and
its components. Adoption of SFAS No. 130 relates to disclosure within the
financial statements and did not impact the Company's financial statements.
In June 1997, the FASB also released SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" which is effective for fiscal years
beginning after December 15, 1997. The Statement changes the way publicly owned
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly reports on a comprehensive basis beginning with the Company's
quarter ending March 31, 1999. Adoption of SFAS No. 131 is not expected to have
a material effect on the Company's financial statements.
-8-
<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.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------
1998 1997
<S> <C> <C>
Net sales 100.0% 100.0%
===== =====
Cost of goods sold 49.9% 43.3%
Gross profit 50.1% 56.7%
Selling, general and administrative 40.2% 48.4%
expenses
Net earnings 4.0% 3.8%
</TABLE>
Three Months Ended March 31, 1998 Compared to Three Months Ended March 31, 1997
Net sales for the three months ended March 31, 1998 were $11,375,136, an
increase of $6,927,972 or 155.8%, compared to $4,447,164 for the three months
ended March 31, 1997. The increase in net sales was primarily attributable to
the inclusion of sales from Speed Graphics, Inc. ("Speed"), whose assets were
acquired as of January 1, 1998, plus continued strong growth from continuing
operations.
Cost of goods sold for the three months ended March 31, 1998 was
$5,678,804, an increase of $3,751,824, or 194.7%, compared to $1,926,980 for the
three months ended March 31, 1997. The increase in cost of goods sold was
primarily attributable to costs related to the increased sales from Speed and
Katz's continuing operations.
Gross profit for the three months ended March 31, 1998 was $5,696,332, an
increase of $3,176,148, or 126.0%, compared to $2,520,184 for the three months
ended March 31, 1997. Gross profit as a percent of net sales decreased to 50.1%
for the three months ended March 31, 1998 from 56.7% in the prior year. The
lower gross profit percentage in 1998 was primarily attributable to the
inclusion in sales of Speed's non-digital or traditional photo-lab services,
which historically have earned a lower gross profit than digital products and
services.
Selling, general and administrative expenses for the three months ended
March 31, 1998 were $4,575,474, an increase of $2,423,220, or 112.6%, compared
to $2,152,254 for the three months ended March 31, 1997. The increase was
primarily attributable to selling, general and administrative costs related to
the Speed operations.
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<PAGE> 10
Net interest expense for the three months ended March 31, 1998 was
$292,451, an increase of $274,909 compared to $17,542 for the three months ended
March 31, 1997. The increase was due to interest costs associated with
borrowings used to finance the acquisition of Speed plus the interest costs of
Speed's capital leases.
The Company's effective tax rate for the three months ended March 31, 1998
was 46.4% compared to 51.1% for the three months ended March 31, 1997.
As a result of the foregoing, net earnings increased to $459,763 ($.09 per
share) for the three months ended March 31, 1998 from $171,201 ($.04 per share)
for the prior comparable period, an increase of $288,562, or $.05 per share.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1998, the Company had working capital of $3,253,005, compared
to $4,109,921 at December 31, 1997, a decrease of $856,916.
Net cash provided by operating activities totaled $1,131,162 for the three
months ended March 31, 1998 compared to $71,442 in the prior comparable period.
The increase in cash from operating activities in the first quarter of 1998
compared to the first quarter of 1997 resulted principally from (i) increase in
net income and (ii) the increase in depreciation and amortization which now
includes amounts from Speed's operations as well as the goodwill amortization of
the Speed acquisition. Cash flows from investing activities were related to
purchases of production related property and equipment and were substantially
unchanged from the first quarter of 1997. Cash used in financing activities
increased $1,655,546 in the first quarter of 1998 as a result of the inclusion
of Speed's payments on their capital leases, a scheduled payment on the
Company's Term Loan and reductions in the outstanding balance on the Company's
Revolving Credit. The net effect of cash flows from operating activities,
investing activities and financing activities was a net decrease in cash during
the first quarter of 1998 of $1,211,172 to an ending balance of $297,020.
The Company maintains a $7,000,000 revolving credit facility with a
commercial bank of which $4,489,000 was outstanding at March 31, 1998. The
Company believes that current cash balances, available borrowing capacity on its
revolving credit facility and cash generated from operations will provide
sufficient cash to meet its operating requirements. See "Cautionary Statement
Regarding Forward Looking Information."
CAUTIONARY STATEMENT REGARDING 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
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<PAGE> 11
those described herein as anticipated, believed, estimated or expected. The
Company does not intend to update these forward-looking statements.
OTHER MATTERS
The Company believes that advanced information processing is essential to
maintaining its competitive position. The Company has upgraded its management
information systems to ensure proper processing of transactions including those
relating to the year 2000 and beyond. Additionally, the Company uses an
independent service bureau for the processing for payroll and payroll tax
related operations and has been notified by the service bureau that all of its
systems will be fully compliant with year 2000 requirements. Although the
Company believes that the information systems of its major customers and vendors
(insofar as they relate to the Company's business) comply with year 2000
requirements, there can be no assurance that the year 2000 issue will not effect
the information systems of such customers and vendors as they relate to the
Company's business or that any such impact on such customers' and vendors'
information systems would not have a material adverse effect on the Company's
business, financial condition or results of operations.
EFFECT OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standard (SFAS) No. 130, "Reporting Comprehensive
Income," which is effective for fiscal years beginning after December 31, 1997.
The Statement addresses the reporting and presentation of comprehensive income
and its components. Adoption of SFAS No. 130 relates to disclosure within the
financial statements and did not impact the Company's financial statements.
In June 1997, the FASB also released SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information" which is effective for fiscal years
beginning after December 15, 1997. The Statement changes the way publicly owned
companies report information about segments of their business in their annual
financial statements and requires them to report selected segment information in
their quarterly reports on a comprehensive basis beginning with the Company's
quarter ending March 31, 1999. Adoption of SFAS No. 131 is not expected to have
a material effect on the Company's financial statements.
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<PAGE> 12
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(c) Recent Sales of Unregistered Securities.
On January 9, 1998, Katz N.Y. Acquisition, Inc., a wholly-owned subsidiary
of the Company ("KNY"), acquired substantially all of the assets of Speed
Graphics, Inc. ("SGI") and DDP, Inc. ("DDP"), an affiliate of SGI, pursuant to
an Asset Acquisition Agreement (the "Acquisition Agreement") by and among the
Company, KNY, SGI, DDP and Mr. Ronald Krivosheiw ("Krivosheiw"), the sole
shareholder of SGI and DDP (the "Acquisition"). SGI and DDP shall sometimes be
referred to collectively herein as "Speed".
As partial consideration for the Acquisition (i) Speed received 173,918
shares of Common Stock of the Company (the "Shares"); (ii) options to purchase
55,000 shares of Common Stock were granted to two senior employees of Speed (the
"Speed Senior Employee Options"); and (iii) subject to shareholder approval, the
Company agreed to grant to other employees of Speed options to purchase 345,000
shares of Common Stock, provided that such individual continues to be employed
by the Company at the time of such grant (the "Speed Junior Employee Options").
As of May 7, 1998, the Speed Junior Employee Options were not yet granted. The
Speed Senior Employee Options and the Speed Junior Employee Options shall be
referred to collectively herein as the "Options."
The exercise price for each of the Options is equal to the closing price
of the Common Stock as reported on the Nasdaq National Market on the day on
which such Option is granted, or, if there is no trading or closing price on
that day, the closing price on the most recent day preceding the day for which
closing prices are available.
The number of Shares and Options included as partial consideration for the
Acquisition was determined by arms-length negotiations between the management of
the Company and Mr. Krivosheiw.
Subject to the requirements of the Acquisition Agreement, Speed was
granted the one-time right at any time prior to January 1, 2001 to require the
Company to use its best efforts to file a registration statement with the
Securities and Exchange Commission and to have such registration statement
declared effective to permit the sale of the Shares in the public securities
markets. In addition, if at any time prior to January 1, 2001, the Company
proposes to register any of its securities under the Securities Act of 1933, as
amended (the "Act") (other than pursuant to a registration statement on Form
-12-
<PAGE> 13
S-8, S-4 or similar or successor form), the Acquisition Agreement provides that
Speed may require the Company to use its best efforts to register the Shares
along with the shares being registered by the Company to permit the sale or
other disposition of the Shares.
The issuance of the securities listed above were sold without registration
under the Act, as they did not involve any public offering, pursuant to the
provisions of Section 4(2) of the Act.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Exhibit No. Description
- ----------- -----------
2.1+ Asset Acquisition Agreement by and among the Company, Katz
N.Y. Acquisition, Inc., Speed Graphics, Inc., DDP, Inc. and
Ronald Krivosheiw, with schedules thereto.(P)(1)
2.2 Agreement dated March 6, 1998, by and among the Company, Katz
N.Y. Acquisition, Inc., Moondance, Inc., DDP, Inc. and Ronald
Krivosheiw.(2)
3.1 Certificate of Incorporation (3)
3.2 By-Laws (3)
4.1 Subordinated Promissory Note of Company to Speed Graphics,
Inc. (included in Exhibit 2.1 as a schedule thereto).(1)
4.2+ Loan Agreement by and among the Company, Katz N.Y.
Acquisition, Inc., Advanced Digital Services, Inc. and the
Bank of New York, with schedules thereto.(1)
4.3 Term Loan Note of Company to the Bank of New York (included in
Exhibit 4.2 as a schedule thereto).(1)
4.4 Revolving Credit Loan Note of Company to the Bank of New York
(included in Exhibit 4.2 as a schedule thereto).(1)
4.5 Subordination Agreement by and between Speed Graphics, Inc.
and the Bank of New York.(1)
27.1* Financial Data Schedule
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<PAGE> 14
----------
* Filed herewith.
(1) Filed as an exhibit to the Company's Current Report on Form 8-K,
filed with the Commission on January 23, 1998, and incorporated
herein by reference.
(2) Filed as an exhibit to the Company's Current Report on Form 8-K/A,
filed with the Commission on March 24, 1998, and incorporated herein
by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form
SB-2 (File No. 333-1190) and the amendments thereto, and
incorporated herein by reference.
(b) REPORTS ON FORM 8-K
On January 23, 1998, the Company filed a Current Report on Form 8-K,
reporting the Acquisition. See "Item 2 - Changes in Securities and Use of
Proceeds." On March 24, 1998, the Company filed Amendment #1 to such Current
Report on Form 8- K/A, reporting the following: (i) certain amendments to the
terms of the Acquisition; (ii) that the Board of Directors, based on the
recommendations of Management, unanimously agreed to appoint Michael Sklar as
the Company's new Chief Operating Officer and President; and (iii) all financial
information required to be reported in connection with the Acquisition. No other
Current Reports on Form 8-K were filed by the Company during the quarter ended
March 31, 1998.
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<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: May 11, 1998 /s/ Gary Katz
----------------------------------------
Gary Katz
Chairman and Chief Executive Officer
(Principal Executive Officer)
Date: May 11, 1998 /s/ Donald L. Flamm
----------------------------------------
Donald L. Flamm
Vice President-Finance and
Chief Financial Officer
(Principal Financial and Accounting Officer)
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<PAGE> 16
EXHIBITS INDEX
Exhibit No. Description
2.1+ Asset Acquisition Agreement by and among the Company, Katz
N.Y. Acquisition, Inc., Speed Graphics, Inc., DDP, Inc. and
Ronald Krivosheiw, with schedules thereto.(P) (1)
2.2 Agreement dated March 6, 1998, by and among the Company, Katz
N.Y. Acquisition, Inc., Moondance,Inc., DDP, Inc., and Ronald
Krivosheiw. (2)
3.1 Certificate of Incorporation (3)
3.2 By-Laws (3)
4.1 Subordinated Promissory Note of Company to Speed Graphics,
Inc. (included in Exhibit 2.1 as a schedule thereto) (1)
4.2+ Loan Agreement by and Among the Company, Katz N.Y.
Acquisition, Inc., Advanced Digital Services, Inc., and the
Bank of New York with schedules thereto. (1)
4.3 Term Loan Note of Company to the Bank of New York (included
in Exhibit 4.2 as a schedule thereto. (1)
4.4 Revolving Credit Loan Note of Company to the Bank of New
York (included in Exhibit 4.2 as a schedule thereto). (1)
4.5 Subordination Agreement by and between Speed Graphics, Inc.,
and the Bank of New York. (1)
27.1* Financial Data Schedule
- ----------
* Filed herewith.
(1) Filed as an exhibit to the Company's Current Report on Form 8-K,
filed with the Commission on January 23, 1998, and incorporated
herein by reference.
(2) Filed as an exhibit to the Company's Current report on Form 8-K/A,
filed with the Commission on March 24, 1998, and incorporated herein
by reference.
(3) Filed as an exhibit to the Company's Registration Statement on Form
SB-2 (File No. 333-1190) and the amendments thereto, and
incorporated herein by reference.
-16-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 297,020
<SECURITIES> 0
<RECEIVABLES> 9,851,575
<ALLOWANCES> 322,738
<INVENTORY> 455,588
<CURRENT-ASSETS> 10,484,329
<PP&E> 11,539,341
<DEPRECIATION> 4,568,862
<TOTAL-ASSETS> 29,505,018
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0
0
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</TABLE>
