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UNITED STATES OMB APPROVAL
SECURITIES AND EXCHANGE COMMISSION OMB NUMBER: 3235-0058
Washington, D.C. 20549 Expires: May 31, 1997
Estimated average burden
FORM 12b-25 hours per response....2.50
SEC File Number 0-28676
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CUSIP Number 38870L100
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NOTIFICATION OF LATE FILING
(Check One):
[ ] Form 10-K [ ] Form 11-K [ ] Form 20-F [X] Form 10-Q [ ] Form N-SAR
For Period Ended: September 30, 1997
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[ ] Transition Report on Form 10-K
[ ] Transition Report on Form 20-F
[ ] Transition Report on Form 11-K
[ ] Transition Report on Form 10-Q
[ ] Transition Report on Form N-SAR
For the Transition Period Ended:
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Read Instruction (on back page) Before Preparing Form. Please Print or Type.
Nothing in this form shall be construed to imply that the Commission has
verified any information contained herein.
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If the notification relates to a portion of the filing checked above,
identify the Item(s) to which the notification relates:
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PART I -- REGISTRANT INFORMATION
Graphix Zone, Inc.
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Full Name of Registrant
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Former Name if Applicable
2915 Daimler Street
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Address of Principal Executive Office (Street and Number)
Santa Ana, California 92705
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City, State and Zip Code
PART II--RULES 12b-25(b) AND (c)
If the subject report could not be filed without unreasonable effort or expense
and the registrant seeks relief pursuant to Rule 12b-25(b), the following
should be completed. (Check box if appropriate)
| (a) The reasons described in reasonable detail in Part
| III of this form could not be eliminated without
| unreasonable effort or expense;
|
[X] | (b) The subject annual report, semi-annual report,
| transition report on Form 10-K, Form 20-F, Form
| 11-K, Form N-SAR, or portion thereof, will be filed
| on or before the fifteenth calendar day following
| the prescribed due date; or the subject quarterly
| report or transition report on Form 10-Q, or portion
| thereof will be filed on or before the fifth
| calendar day following the prescribed due date; and
|
| (c) The accountant's statement or other exhibit required
| by Rule 12b-25(c) has been attached if applicable.
PART III--NARRATIVE
State below in reasonable detail the reasons why Forms 10-K, 20-F, 11-K, 10-Q,
N-SAR or the transition report or portion thereof could not be filed within the
prescribed time period.
The Company employs only one full-time executive employee and several
consultants and is in the midst of a restructuring. Management and its
consultants have been required to spend a significant amount of time to
structure and pursue the proposed restructuring plan. In light of these severe
time demands of management, the Company's quarterly report on Form 10-Q could
not be filed on a timely basis without unreasonable effort and expense.
(ATTACH EXTRA SHEETS IF NEEDED)
SEC 1344 (11/91)
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PART IV--OTHER INFORMATION
(1) Name and telephone number of person to contact in regard to
this notification
<TABLE>
<S> <C> <C>
John F. Della Grotta, Esq.,
Paul, Hastings, Janofsky & Walker LLP. 714 668-6210
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(Name) (Area Code) (Telephone Number)
</TABLE>
(2) Have all other periodic reports required under Section 13 or
15(d) of the Securities Exchange Act of 1934 or Section 30 of
the Investment Company Act of 1940 during the preceding 12
months or for such shorter period that the registrant was
required to file such report(s) been filed? If answer is no,
identify report(s).
[X] Yes [ ] No
(3) Is it anticipated that any significant change in results of
operations from the corresponding period for the last fiscal
year will be reflected by the earnings statements to be
included in the subject report or portion thereof?
[X] Yes [ ] No
If so, attach an explanation of the anticipated change, both
narratively and quantitatively, and, if appropriate, state the
reasons why a reasonable estimate of the results cannot be
made.
See Attachment "A"
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Graphix Zone, Inc.
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(Name of Registrant as Specified in Charter)
has caused this notification to be signed on its behalf by the undersigned
hereunto duly authorized.
Date 11/14/97 By /s/ DAVID J. HIRSCHHORN
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David J. Hirschhorn
Chairman of the Board,
President, Chief Executive
Officer, Chief Financial
Officer and Treasurer
INSTRUCTION: The form may be signed by an executive officer of the registrant
or by any other duly authorized representative. The name and title of the
person signing the form shall be typed or printed beneath the signature. If
the statement is signed on behalf of the registrant by an authorized
representative (other than an executive officer), evidence of the
representative's authority to sign on behalf of the registrant shall be filed
with the form.
ATTENTION
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Intentional misstatements or omissions of fact constitute
Federal Criminal Violations (See 18 U.S.C. 1001)
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GENERAL INSTRUCTIONS
1. This form is required by Rule 12b-25 (17 CFR 240,12b-25) of the General
Rules and Regulations under the Securities Exchange Act of 1934.
2. One signed original and four conformed copies of this form and amendments
thereto must be completed and filed with the Securities and Exchange
Commission, Washington, D.C. 20549, in accordance with Rule 0-3 of the
General Rules and Regulations under the Act. The information contained in
or filed with the Form will be made a matter of public record in the
Commission files.
3. A manually signed copy of the form and amendments thereto shall be filed
with each national securities exchange on which any class of securities
of the registrant is registered.
4. Amendments to the notifications must also be filed on Form 12b-25 but need
not restate information that has been correctly furnished. The form shall be
clearly identified as an amended notification.
5. Electronic Filers. This form shall not be used by electronic filers unable
to timely file a report solely due to electronic difficulties. Filers unable
to submit a report within the time period prescribed due to difficulties in
electronic filing should comply with either Rule 201 or Rule 202 of
Regulation S-T or apply for an adjustment in filing date pursuant to Rule
13(b) of Regulation S-T.
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ATTACHMENT "A"
Until June 1997, the principal business operations of the Company
consisted of developing, producing and marketing interactive entertainment and
multimedia products for the personal computer industry. During the third
quarter of Fiscal 1997, the Company hired a new executive management team to
evaluate the current business and operations and financial condition of the
Company and, if necessary, restructure the Company. On June 3, 1997, the Board
of Directors of the Company adopted the restructuring plan (the "Restructuring
Plan") proposed by the management team, which included terminating the
Company's existing business operations. By June 24, 1997, the Company had taken
steps to cease its principal business operations and had terminated
all-employees other than Mr. David Hirschhorn, the Chairman of the Board,
President, Chief Executive Officer, Chief Financial Officer and Treasurer of
the Company. On each of July 14, 1997 and August 29, 1997, the Company received
a Notice of Default and Demand for Payment from its senior secured lender
based on the Company's failure to make certain interest payments when due. As
of November 13, 1997, the Company has not paid the past-due amounts and the
senior secured lender has not foreclosed on the senior secured loan. Since July
1997, the Company's business activities have consisted of licensing and
attempting to enter into licenses for certain of the entertainment software
products held in its library, divesting or disposing of its businesses and
products related to the personal computer industry, and attempting to
restructure its debt obligations, equity structure and business operations. In
November 1997, the Company ceased attempting to enter into new licenses for its
entertainment software products.
As a result of the implementation of the Restructuring Plan and the
cessation in June 1997 of most of the Company's business activities in the
entertainment software industry, the Company experienced the following changes
in its results of operations during the three months ended September 30, 1996
("First Quarter 1996") as compared to the three months ended September 30, 1997
("First Quarter 1997"): (i) net revenues decreased 80% from $3,455,135 during
the First Quarter 1996 to $675,466 during the First Quarter 1997, (ii) cost of
revenues decreased 94% from $871,820 during the First Quarter 1996 to $54,001
during the First Quarter 1997 and (iii) operating expenses decreased 85% from
$2,246,576 during the First Quarter 1996 to $344,192 during the First Quarter
1997.
Interest expense increased 454% from $33,901 during the First Quarter
1996 to $187,707 during the First Quarter 1997. The increase in interest expense
is primarily related to the increase in the Company's notes payable balance as a
result of borrowing $3,740,000 in January 1997 and $1,300,000 in June 1997 from
its senior secured lender. During the First Quarter 1997, the Company incurred
amortized loan expenses of $387,466 and did not incur any similar expenses in
First Quarter 1996. The amortized loan expenses relate to the Company's
borrowings in January and June 1997, and therefore, no amortized loan expenses
were incurred during the First Quarter 1996.
During the First Quarter 1996, the Company's net income was $302,838 or
$0.03 per share, and during the First Quarter 1997, the Company's net loss was
$(297,900) or $(0.02) per share.
