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 SEPTEMBER 30,
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 No. 0-22913
THE RECOVERY NETWORK, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
Colorado 39-1731029
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1411 5th Street, Suite 200, Santa Monica, California, 90401
(Address of Principal Executive Offices)
Issuer's Telephone Number, Including Area Code: (310) 393-3979
Check whether the issuer: (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities 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 |_| No |X|
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date: 4,936,250 shares as
of November 7, 1997
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
<PAGE>
THE RECOVERY NETWORK, INC.
(A development stage company)
INDEX
-----
PART I - FINANCIAL INFORMATION Page
----
Item 1. Financial Statements
Condensed Balance Sheets as of September 30, 1997
(unaudited), June 30, 1997 and Pro Forma Condensed
Balance Sheet as of September 30, 1997...............................3
Condensed Statements of Operations (unaudited) for
the three month periods ended September 30, 1997
and 1996 and for the period from inception (May
1992) to September, 1997.............................................4
Condensed Statements of cash flows (unaudited) for
the three month periods ended September 30, 1997
and 1996 and for the period from inception (May
1992) to September, 1997.............................................5
Notes to Condensed Financial Statements (unaudited).......................6
Item 2. Plan of Operations ................................................8
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds..........................11
Item 6. Exhibits and Reports on Form 8-K ..................................11
Signatures....................................................................12
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
THE RECOVERY NETWORK, INC.
(A development stage company)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
Pro forma
September 30, 1997 September 30, 1997 June 30, 1997
(Unaudited) (Unaudited)
CURRENT ASSETS:
<S> <C> <C> <C>
Cash $ 7,884,410 $ 8,021 $ 10,883
Accounts Receivable 23,122 23,122 25,631
Prepaid expenses 5,126 5,126 15,693
------------ ----------- -----------
Total current assets 7,912,658 36,269 52,207
CAPITALIZED PROGRAMMING COSTS 225,750 225,750 237,600
FURNITURE AND EQUIPMENT, net 122,546 122,546 112,750
INVESTMENT IN JOINT VENTURE -- -- --
DEFERRED FINANCING COSTS 8,110 8,110 100,269
DEFERRED OFFERING COSTS -- 582,790 270,040
OTHER 48,935 48,935 26,386
------------ ----------- -----------
$ 8,317,999 $ 1,024,400 $ 799,252
============ =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY(DEFICIT)
CURRENT LIABILITIES:
Notes payable $ -- $ 2,605,250 $ 1,520,432
Accounts payable and accrued liabilities 837,287 1,028,320 502,642
Accrued professional fees 457,613 457,613 312,249
Current portion of capital lease obligation 17,029 17,029 17,029
Deferred compensation 169,059 169,059 51,672
Due to shareholders and directors 88,830 88,830 65,751
------------ ----------- -----------
Total current liabilities 1,569,818 4,366,101 2,469,775
CAPITAL LEASE OBLIGATION, net of current portion 26,040 26,040 30,301
------------ ----------- -----------
Total liabilities 1,595,858 4,392,141 2,500,076
------------ ----------- -----------
COMMITMENTS & CONTINGENCIES
SHAREHOLDERS' EQUITY(DEFICIT):
Common stock, $.01 par value:
Authorized--25,000,000 shares
Issued and outstanding, 2,521,250 shares at June
30, 1997, and at September 30, 1997 and 4,936,250 shares 49,362 25,212 25,212
at September 30,1997 (pro forma)
Additional paid-in capital 14,242,440 4,176,708 4,176,708
Prepaid consulting costs -- -- (5,625)
Deficit accumulated in the development stage (7,569,661) (7,569,661) (5,897,119)
----------- ----------- -----------
Shareholders' equity (deficit) 6,722,141 (3,367,741) (1,700,824)
----------- ----------- -----------
$ 8,317,999 $ 1,024,400 $ 799,252
=========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of
these condensed balance sheets.
3
<PAGE>
THE RECOVERY NETWORK, INC.
(A development stage company)
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 AND FOR THE
PERIOD FROM INCEPTION (MAY 1992) TO SEPTEMBER 30 1997
<TABLE>
<CAPTION>
From Inception
(May 1992) to
Three months ended September 30, September 30,
1997 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
DOMESTIC ADVERTISEMENT SALES ............... $ 28,137 $ 8,980 $ 61,601
----------- ----------- -----------
SALARIES AND CONSULTING EXPENSES ........... 327,167 164,203 2,865,514
GENERAL AND ADMINISTRATIVE EXPENSES ........ 213,282 113,844 1,461,002
PROGRAMMING EXPENSES ....................... 237,638 18,501 788,434
MARKETING EXPENSES ......................... 172,529 34,915 681,411
LOSS ON INVESTMENT IN JOINT VENTURE ........ -- 23,469 300,000
-------- -------- -----------
Operating expenses ...................... 950,616 354,932 6,096,361
------- ------- -----------
Loss from operations .................... (922,479) (345,952) (6,034,760)
INTEREST EXPENSE, net .................... (750,063) (3,032) (1,531,501)
--------- --------- -----------
Loss before provision for income taxes .. (1,672,542) (348,984) (7,566,261)
PROVISION FOR STATE INCOME TAXES ........... -- -- 3,400
----------- ----------- -----------
Net Loss .............................. $(1,672,542) $ (348,984) $(7,569,661)
=========== =========== ===========
LOSS PER SHARE INFORMATION:
Loss per share ............................. $ (.56) $ (.17)
=========== ===========
Weighted average number of common and common
equivalent shares outstanding ........... 2,981,798 2,052,517
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed statements.
4
<PAGE>
THE RECOVERY NETWORK, INC.
(A development stage company)
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996 AND
FOR THE PERIOD FROM INCEPTION (MAY 1992) TO SEPTEMBER 30 1997
<TABLE>
<CAPTION>
rom inception
(May 1992) to
Three months ended September 30, September 30,
1997 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss .................................................................. $(1,672,542) $(348,984) $(7,569,661)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of notes payable discount and deferred financing costs .... 601,987 -- 1,314,712
Amortization of capitalized programming costs .......................... 11,850 -- 130,639
Depreciation and other amortization .................................... 13,492 5,166 48,400
Common stock issued for services and accrued interest .................. -- -- 794,743
Provision for deferred compensation .................................... 117,387 45,000 169,059
Provision for doubtful accounts ........................................ 7,000 -- 7,000
Loss on investment in joint venture .................................... -- 23,469 300,000
Changes in assets and liabilities:
Accounts receivable .................................................... (4,491) (6,640) (30,122)
Prepaid expenses ....................................................... 10,567 (843) (5,126)
Other assets ........................................................... (22,549) -- (50,165)
Capitalized programming costs .......................................... -- -- (356,389)
Accounts payable and accrued liabilities ............................... 525,678 16,389 1,028,320
Accrued professional fees .............................................. 145,364 -- 457,613
Due to shareholders and directors ...................................... 23,079 167 88,830
----------- --------- -----------
Net cash used in operating activities ............................ (243,178) (266,276) (3,672,147)
----------- --------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of furniture and equipment ................................... (17,663) (6,889) (117,583)
Investment in joint venture ............................................ -- (100,000) (300,000)
----------- --------- -----------
Net cash used in investing activities ............................ (17,663) (106,889) (417,583)
----------- --------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings ............................................... 574,990 250,000 1,880,350
Payments on borrowings ................................................. -- -- (60,000)
Payments on capital lease obligations .................................. (4,261) (390) (9,064)
Proceeds from the issuance of common ................................... -- -- 3,102,150
stock, warrants and stock subscriptions
Repurchase of common stock ............................................. -- -- (4,973)
Deferred offering and financing costs incurred ......................... (312,750) -- (810,712)
----------- --------- -----------
Net cash provided by financing activities ........................ 257,979 249,610 4,097,751)
----------- --------- -----------
NET INCREASE (DECREASE) IN CASH ........................................ (2,862) (123,555) 8,021
CASH, beginning of period .............................................. 10,883 137,492 --
----------- --------- -----------
CASH, end of period .................................................... $ 8,021 $ 13,937 $ 8,021
=========== ========= ===========
</TABLE>
The accompanying notes are an integral of these condensed statements.
5
<PAGE>
THE RECOVERY NETWORK, INC.
( A development stage company)
NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1997
Note A -- Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial statements and the instructions to Form 10-QSB related to interim
period financial statements. Accordingly, these condensed financial statements
do not include certain information and footnotes required by generally accepted
accounting principles for complete financial statements. However, the
accompanying unaudited condensed financial statements contain all adjustments
(consisting only of normal recurring accruals) which, in the opinion of
management, are necessary in order to make the financial statements not
misleading. The results of operations for interim periods are not necessarily
indicative of the results to be expected for the full year. The Company's
condensed financial statements should be read in conjunction with the Company's
audited financial statements and notes thereto included in the Company's
Registration Statement on Form SB-2 (File No. 333-27787) that became effective
on September 29, 1997.
Net loss per share is based on the weighted average number of common
shares outstanding and dilutive common stock equivalents during the periods
presented. Pursuant to Securities and Exchange Commission Staff Accounting
Bulletin no. 83, common stock issued for consideration below the offering price
of $5.00 per share (the "Offering Price") and stock options and warrants issued
with exercise prices below the Offering Price during the twelve-month period
preceding the September 1997 initial public offering (the "IPO"), have been
included in the calculation of common stock, using the treasury stock method, as
if they were outstanding for all periods presented. The effect of the stock
options and warrants issued at consideration below the IPO price was to increase
the weighted average shares outstanding by 460,548 shares for the periods ended
September 30, 1997 and prior.
On October 3, 1997, the Company consummated the IPO pursuant to which
it issued 2,415,000 units (consisting of one share of common stock and one
warrant to purchase one share of common stock for $5.50) for $12,316,500 (or
$5.10 per unit). IPO Offering expenses were approximately $2,226,500. Notes
payable of $2,605,250 and accrued interest thereon of approximately $190,750 was
paid from the net proceeds from the IPO.
The unaudited pro forma condensed balance sheet reflects all
adjustments which, in the opinion of management, are necessary for a fair
presentation of financial position as if the IPO was consummated on September
30, 1997. Such adjustments included the issuance of common shares for net cash
received by the Company, after offering costs, of approximately $10,090,000 and
the payment of notes payable and accrued interest at September 30, 1997 of
approximately $2,796,000.
The results of operations on a pro forma basis, assuming the IPO had
been completed as of July 1, 1996 are as follows:
6
<PAGE>
<TABLE>
<CAPTION>
Three months ended September 30,
1997 1996
----------- -----------
<S> <C> <C>
Historical net loss ................................................................... $ 1,673,000 $ 349,000
Reduction in interest expense due to retirement of Financing Notes and Promissory Notes (743,000) --
----------- -----------
Pro forma net loss .............................................................. $ 930,000 $ 349,000
=========== ===========
Historical weighted average shares outstanding ......................................... 2,981,798 2,052,517
Additional Shares to be sold to retire debt ............................................ 521,050 --
----------- -----------
Pro forma weighted average shares outstanding .................................. 3,502,848 2,052,517
=========== ===========
Pro forma loss per share ............................................................... $ (.27) $ (.17)
=========== ===========
</TABLE>
Note B -Significant Business Risk
Going Concern
The accompanying condensed financial statements have been prepared
assuming the Company will continue as a going concern. The Company has recurring
losses from operations, has minimal operating revenues and prior to the
completion of its IPO in October 1997 had a net capital deficiency. The ability
of the Company to operate as a going concern is dependent upon its ability (1)
to obtain sufficient additional capital, (2) to distribute programming and
services through multimedia channels, (3) to achieve a critical mass of viewers
to attract advertisers and healthcare providers and (4) to acquire and develop
appropriate programming for broadcast. Subsequent to September 30, 1997, the
Company raised additional working capital through a public offering resulting in
net proceeds of approximately $10,090,000. Management believes that the proceeds
raised in the IPO will be sufficient to fund its operations at least through
June 30, 1998. However, the successful outcome of future activities cannot be
determined at this time and there are no assurances that if achieved, the
Company will have sufficient funds to execute its intended business plan or
generate positive operating results.
7
<PAGE>
Item 2. Plan of Operation.
The following discussion and analysis should be read in conjunction
with the condensed financial statements and notes thereto appearing elsewhere
herein.
General
The Recovery Network, Inc. (the "Company") was organized in 1992, and
is in the development stage. The Company's current business plan is to provide
information, interaction and support via television, radio and interactive media
services to persons affected by or afflicted with alcoholism, drug and substance
abuse, eating disorders, depression and a variety of behavioral and mental
health problems ("Recovery Issues"), as well as to persons seeking to prevent
the onset of these problems and select positive lifestyle choices ("Prevention
Issues"). The Company currently addresses Recovery Issues and Prevention Issues
through The Recovery Network(TM), a cable television network, Recovery Talk
Radio(TM), a nationally-syndicated talk radio program, and a toll-free helpline
that offers information to viewers of The Recovery Network about where to obtain
information and help in their communities. The Company also owns a 50% interest
in RecoveryNet Interactive, L.L.C., a joint venture with an affiliate of
TeleCommunications, Inc., that was formed to provide behavioral health care
products and services to managed care organizations and other organizations
offering or providing health care services, as well as to provide information,
interaction and support regarding Recovery Issues and Prevention Issues through
an integrated multimedia platform. The Company is not required to contribute any
additional funding to RecoveryNet Interactive and does not intend at this time
to make any significant additional capital contributions. Should the joint
venture require additional funding and TeleCommunications Inc. agree to
contribute additional funds, the Company's 50 percent interest would be reduced
accordingly.
The Company has not generated any meaningful revenues and does not
expect to generate any meaningful revenues for the foreseeable future. To date,
the Company has incurred significant net losses, including net losses of
$1,223,829, $3,817,652, $348,984 and $1,672,542 for the years ended June 30,
1996 and 1997 and the three months ended September 30, 1996 and 1997,
respectively. The Company believes that generation of meaningful revenues will
be dependent upon the Company entering into affiliation agreements with local
cable systems with a significant number of subscribers, developing television
programming to enable The Recovery Network to expand its hours of broadcast,
achieving significant viewer loyalty, attracting advertisers and developing or
entering into arrangements for the supply of products, such as videotapes, audio
cassettes and books, to merchandise. The Company expects to incur substantial
up-front capital expenditures and operating costs in connection with the
operation and expansion of The Recovery Network, satellite transmission of its
programming and the development and production of television programming, which
will result in significant losses for the foreseeable future.
In April 1997, the Company launched The Recovery Network nationally.
Pursuant to a nesting contract (the "Nesting Contract") with Access Television
Network ("ATN"), ATN provides satellite uplink, master control and other related
services on its satellite transponder to The Recovery Network for two hours of
broadcast time every day to subscribers of cable systems with which ATN has
affiliation agreements. Currently, The Recovery Network is broadcast one hour in
the morning to approximately 16 million subscribers and one hour in the evening
to approximately 5 million subscribers. In addition to the distribution under
the Nesting Contract, the Company is seeking two hours of broadcast time per day
in other local cable systems in a large number of markets. The Capital Nesting
Contract expires in April 1998 unless renewed by both parities. The Company has
identified all local cable systems in the United States with at least 50,000
subscribers and is engaged in a general marketing campaign ("affiliate
marketing") directed at those 259 systems. The Company is also targeting a more
focused affiliate marketing effort on 11 major cities whose communities contain
103 of those 259 systems.
8
<PAGE>
The Company anticipates that it will generate revenues from sales of
The Recovery Network and Recovery Talk Radio, merchandising recovery-related
products and services on The Recovery Network, Recovery Talk Radio and the
Company's site on the world wide web by seeking sponsorships for its programming
and from license fees from cable systems for its programming. The Company does
not expect that it will generate any meaningful revenues from fees until such
time, if ever, that The Recovery Network enters into affiliation agreements
providing the Company with a significant subscriber base. There can be no
assurance that the Company will be able to enter into affiliation agreements
with local cable systems with a sufficient number of subscribers, achieve
significant viewer loyalty or attract advertisers for The Recovery Network,
generate meaningful revenues or achieve profitable operations. The Company also
anticipates that Recovery Interactive will generate revenue from monthly
subscriber fees from managed care companies, insurance companies and employers
for delivering mental and behavioral health benefits to covered individuals and
merchandising.
Liquidity and Capital Resources
The Company's primary capital requirements in the next ten months
will be to fund the costs of its affiliate marketing efforts, sales of
advertising time and producing its programming, satellite transponder costs,
costs for uplink and transmission services under the Nesting Contract and
working capital expenses.
The Company's capital requirements have been and will continue to be
significant and its cash requirements have been exceeding its cash flow from
operations. At September 30, 1997, the Company had a working capital deficit of
$4,329,832 due to, among other things, costs associated with program development
and affiliate marketing efforts. As a result, the Company has been substantially
dependent on loans from its shareholders and private placements of its debt and
equity securities to fund its operations.
During the period from November 1995 through March 1, 1997, the
Company issued in private placements 745,674 shares of common stock at prices
ranging from $.77 per share to $3.48 per share for net proceeds of approximately
$1,433,767. Additionally, the Company raised debt proceeds of $310,000 through a
private placement. Of these debt proceeds raised, $250,000 was converted into
71,033 shares of common stock and $60,000 was repaid as of June 30, 1997. Upon
conversion and repayment of debt, warrants to purchase 157,563 shares of common
stock were issued. Warrants to purchase 142,065 shares of common stock have been
exercised for $330,000. A warrant to purchase 15,498 shares of common stock at
$3.87 per share remains outstanding. Also, during this period, options to
purchase 73,615 shares of common stock were exercised for $171,000. See the
Company's Registration Statement on Form SB-2 effective September 29, 1997 for
specifics of these fund raising activities.
In March and April 1997, the Company completed a private financing
pursuant to which it issued to 21 "accredited investors" an aggregate of 40
Units consisting of an aggregate of (i) $2,000,000 principal amount of unsecured
non-negotiable promissory notes that bear interest at the rate of 9% per annum
and became due upon the consummation of the IPO; (ii) 400,000 shares of Common
Stock; and (iii) warrants to purchase an aggregate of 500,000 shares of Common
Stock at an exercise price of $5.50 per share. The offering price was $50,000
per Financing Unit. After payment of $200,000 in placement agent fees to the
Underwriter, which acted as placement agent for the Company in connection with
the Private Financing, and other offering expenses of approximately $262,000,
the Company received net proceeds of approximately $1,538,000 from the sale of
the Financing Units. The net proceeds of the Private Financing were used by the
Company for, among other things, an affiliate marketing campaign in connection
with the national launch of The Recovery Network, programming expenses for the
production of Full Circle, Testimony and Bottoms, a capital contribution in the
amount of $200,000 to Recovery Interactive and payments under the Nesting
Contract with ATN in the amount of $102,000. The Company repaid the entire
principal amount of, and accrued interest on, the Financing Notes subsequent to
9
<PAGE>
September 30,1997 with proceeds received from the IPO. During the three month
period ended June 30, 1997, the Company amortized approximately $713,000 of loan
discount and deferred offering costs related to the Financing Notes. The Company
incurred financing costs during the fiscal quarter ended September 30, 1997 of
approximately $743,000 relating to Private Financing and Promissory Notes.
From July through September 1997, the Company issued promissory notes
(the "Promissory Notes") with an aggregate principal amount of $605,250 to five
lenders. The Company paid to each lender a loan origination fee in an amount
equal to 5% of the Promissory Notes for a total of approximately $30,300. The
Promissory Notes plus $95,000 of interest thereon were repaid on October 3,
1997. The net proceeds from the issuance of the Promissory Notes were used for
working capital.
The Company anticipates that the net proceeds from its initial public
offering, together with projected revenues from operations, will be sufficient
to fund the Company's operations and capital requirements until at least June
30, 1998. There can be no assurance, however, that such funds will not be
expended prior thereto due to unanticipated changes in economic conditions or
other unforeseen circumstances. In the event the Company's plans change or its
assumptions change or prove to be inaccurate, the Company could be required to
seek additional financing sooner than currently anticipated. The Company has no
current arrangements with respect to, or potential sources of, any additional
financing, and it is not anticipated that existing shareholders will provide any
portion of the Company's future financing requirements. Consequently, there can
be no assurance that any additional financing will be available to the Company
when needed, on commercially reasonable terms, or at all. Any inability to
obtain additional financing when needed would have a material adverse effect on
the Company, requiring it to curtail and possibly cease its operations. In
addition, any additional equity financing may involve substantial dilution to
the interests of the Company's then existing shareholders.
Disclosure Regarding Private Securities Litigation Reform Act of 1995
- ---------------------------------------------------------------------
This report contains certain forward-looking statements with respect
to the future performance of the Company that involve risks and uncertainties.
Various factors could cause actual results to differ materially from those
projected in such statements. These factors include, but are not limited to, the
Company's lack of meaningful revenues, its significant and continuing losses,
its significant capital requirements, the uncertainty of its ability to
implement its plan of operation and other factors discussed herein and in the
Company's other filings with the Securities and Exchange Commission.
10
<PAGE>
PART II
OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
On September 29, 1997, the Securities and Exchange Commission
declared effective the Company's Registration Statement on Form SB-2 (File No.
333-27787). The underwriter in the offering (the "Offering") was Whale
Securities Co., LP (the "Underwriter"). The Underwriter sold 2,415,000 units
(the "Units") in the Offering for the Company's account at an aggregate-offering
price of $12,316,500. Each Unit consisted of one share of the Company's common
stock, par value $.01 per share (the "Common Stock"), and one warrant to
purchase one share of Common Stock at a price of $5.50. Additionally, the
following securities with respect to warrants issued to the Underwriter were
registered: (i) 210,000 warrants, each such warrant to purchase one share of
Common Stock (the "Underwriter's Stock Purchase Warrants"), (ii) 210,000
warrants, each such warrant to purchase one warrant (the "Underwriter's
Warrants"), (iii) 210,000 shares of Common Stock issuable upon exercise of the
Underwriter's Stock Purchase Warrants, (iv) 210,000 warrants issuable upon
exercise of the Underwriter's Warrants and (v) 210,000 shares of Common Stock
issuable upon exercise of the warrants issuable upon exercise of the
Underwriter's Warrants.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
The Company did not file any reports on Form 8-K during
the quarterly period ended September 30, 1997.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE RECOVERY NETWORK, INC.
Dated: November 14, 1997 By: /s/ William D. Moses
-------------------------------------
William D. Moses
President and Chief Executive Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
27.1 Financial Data Schedule
13
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001017822
<NAME> The Recovery Network, Inc.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 8021
<SECURITIES> 0
<RECEIVABLES> 30122
<ALLOWANCES> 7000
<INVENTORY> 0
<CURRENT-ASSETS> 36269
<PP&E> 169717
<DEPRECIATION> 47171
<TOTAL-ASSETS> 102440
<CURRENT-LIABILITIES> 4366101
<BONDS> 0
0
0
<COMMON> 25212
<OTHER-SE> (3392953)
<TOTAL-LIABILITY-AND-EQUITY> (3367741)
<SALES> 28137
<TOTAL-REVENUES> 28137
<CGS> 0
<TOTAL-COSTS> 950616
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (750063)
<INCOME-PRETAX> (1672542)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1672542)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1672542)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> 0
</TABLE>
