<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending: September 30, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-21395
ALLIN COMMUNICATIONS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 25-1795265
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
300 Greentree Commons, 381 Mansfield Avenue,
Pittsburgh, Pennsylvania 15220-2751
(Address of principal executive offices, including zip code)
(412) 928-8800
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 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
Shares Outstanding of the Registrant's Common Stock
As of December 12, 1996
Common Stock, 5,157,399 Shares
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Allin Communications Corporation
Form 10-Q
Index
Part I - Financial Information
Item 1. Financial Statements................................. Page 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................. Page 9
Part II - Other Information
Item 2. Changes in Securities................................ Page 13
Item 4. Submission of Matters to a Vote of Security Holders.. Page 15
Item 6. Exhibits and Reports on Form 8-K..................... Page 16
Signatures Page 19
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<PAGE>
Part I - Financial Information
ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
(Unaudited at September 30, 1996)
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 193 $ 126
Accounts receivable 43 108
Prepaid expenses 9 635
----------- ------------
Total current assets 245 869
Property and equipment, at cost:
Leasehold improvements 42 48
Furniture and equipment 189 493
On-board equipment 1,313 2,806
Construction-in-progress -- 2,383
----------- ------------
1,544 5,730
Less--accumulated depreciation (153) (510)
----------- ------------
1,391 5,220
Other assets, net of accumulated amortization of
$141 and $369 717 618
----------- ------------
Total assets $ 2,353 $ 6,707
=========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Line of credit $ -- $ 5,000
Shareholder notes payable 1,493 --
Accounts payable 152 2,023
Accrued liabilities:
Management fees 45 78
Guarantee fees -- 127
Other 48 464
----------- ------------
Total current liabilities 1,738 7,692
Long-term liabilities:
Accrued Interest 393 951
Shareholder notes payable 3,000 3,000
----------- ------------
Total liabilities 5,131 11,643
Series A convertible, redeemable preferred stock -
authorized 100,000 shares, issued and
outstanding 25,000 shares -- 2,465
Shareholder's equity:
Common stock, par value $.01 per share - authorized
20,000,000 shares, issued and
outstanding 2,400,000 shares 0 24
Additional paid-in-capital 2 3
Retained deficit (2,780) (7,428)
----------- ------------
Total shareholders' equity (2,778) (7,401)
----------- ------------
Total liabilities and shareholders' equity $ 2,353 $ 6,707
=========== ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Revenue $ -- $ 133 $ -- $ 296
Cost of sales -- 42 -- 83
------- -------- ------- --------
Gross profit -- 91 -- 213
Selling, general & administrative 128 1,859 894 4,026
------- -------- ------- --------
Loss from operations (128) (1,768) (894) (3,813)
Interest expense, net 189 328 295 796
------- -------- ------- --------
Net loss $ (317) $ (2,096) $(1,189) $ (4,609)
======= ======== ======= ========
Net loss per common share $ (0.13) $ (0.81) $ (0.46) $ (1.77)
======= ======== ======= ========
Weighted average common shares outstanding
during the period 2,603,385 2,603,385 2,603,385 2,603,385
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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ALLIN COMMUNICATIONS CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
September 30, September 30,
1995 1996
<S> <C> <C>
Cash flows from operating activities:
Net loss (1,189) (4,609)
Adjustments to reconcile net loss to net cash flows
from operating activities:
Depreciation and amortization 192 585
Accrued interest on shareholder notes payable 294 558
Accretion to stated value of preferred stock -- 15
Changes in certain assets and liabilities:
Accounts receivable -- (65)
Prepaid expenses (13) (626)
Software development costs (875) (144)
Other assets (28) --
Accounts payable 54 1,871
Accrued liabilities -- 577
------ ------
Net cash flows from operating activities (1,565) (1,838)
------ ------
Cash flows from investing activities:
Capital expenditures (892) (4,186)
------ ------
Cash flows from financing activities:
Proceeds from shareholder notes payable 2,571 3,628
Proceeds from line of credit -- 5,000
Payments on shareholder notes payable -- (3,621)
Issuance of preferred stock, net of transaction costs -- 950
------ ------
Net cash flows from financing activities 2,571 5,957
------ ------
Net change in cash and cash equivalents 114 (67)
Cash and cash equivalents, beginning of period 33 193
------ ------
Cash and cash equivalents, end of period 147 126
====== ======
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
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Allin Communications Corporation and Subsidiaries
Notes to Condensed Consolidated Financial Statements
1. Basis of Presentation
---------------------
The information contained in these financial statements and notes for the
three and nine months ended September 30, 1996, should be read in conjunction
with the financial statements and notes for the year ended December 31, 1995,
and for the six months ended June 30, 1996, contained in the Company's
Prospectus dated November 1, 1996 for its initial public offering. The
accompanying unaudited Condensed Consolidated Financial Statements have been
prepared in accordance with generally accepted accounting principles and the
rules and regulations of the Securities and Exchange Commission. These
condensed interim statements do not include all of the information and
footnotes required for complete financial statements. It is management's
opinion that all adjustments (including all normal recurring accruals)
considered necessary for a fair presentation have been made; however, results
for these interim periods are not necessarily indicative of results to be
expected for the full year.
Earnings Per Share
Earnings per share of common stock have been computed using the weighted
average number of common and common equivalent shares outstanding during the
period. For all periods presented, the weighted average number of common and
common equivalent shares include instruments convertible into common stock,
issued within one year of the initial public offering (See Note 4).
Supplemental Disclosure Of Cash Flow Information
There were no cash payments for income taxes during the periods presented.
Cash payments for interest were $-0- and approximately $112,000 during the
nine months ended September 30, 1995, and 1996, respectively.
The conversion of $1.5 million of shareholder loans into 15,000 shares of
Series A Convertible Redeemable Preferred Stock represents a non-cash
financing activity.
2. Line of Credit
--------------
The Company has a financing agreement which provides for a line of credit that
permits maximum allowable borrowings of $5 million. Borrowings bear interest
at either prime or Euro-rate plus 1-1/2% and are payable upon demand. The
maturity date is May 31, 1997, and borrowings are guaranteed by certain
shareholders of the Company, for which they will receive a guarantee fee.
This fee will be equal to the difference between 15% and the rate accrued on
borrowings under the line of credit. As of September 30, 1996, $5 million has
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been borrowed under this line of credit. (See Note 4 for a discussion of
subsequent amendments to the line of credit.)
3. Equity Transactions
-------------------
During the three months ended September 30, 1996, the following transactions
have occurred:
i. Designation of 40,000 shares of authorized preferred stock as Series A
Convertible Redeemable Preferred Stock with a par value of $.01 per
share.
ii. Receipt of $1.5 million in the form of loans from two shareholders.
These loans bore interest at 8%.
iii. Conversion of the shareholder loans referred to above into 15,000
shares of Convertible Redeemable Preferred Stock and the issuance of an
additional 10,000 shares of Convertible Redeemable Preferred Stock.
These shares are entitled to cumulative compounded quarterly dividends,
when and as declared by the Board of Directors, of 8%. Additionally, the
25,000 shares issued are convertible into 203,385 common shares, at the
option of the holder, not earlier than six months after the date of the
Company's initial public offering (See Note 4).
4. Subsequent Events
-----------------
Subsequent to September 30, 1996, the following transactions have occurred:
i. A stock split of 2,400 common shares for each common share outstanding
occurred in October, 1996. This split has been reflected retroactively
in the accompanying Condensed Consolidated Financial Statements.
ii. On November 6, 1996, the Company closed the offering of 2,000,000 shares
of common stock, at a price of $15 per share. The Company received total
net proceeds, after deduction of expenses payable and underwriting
discounts, of approximately $27 million. On the date the offering
closed, the Company used a portion of the proceeds to repay outstanding
borrowings under the line of credit, to pay accrued interest under the
shareholder notes payable and for the acquisitions described below. The
remaining proceeds are being used for planned capital expenditures. On
December 4, 1996, the underwriters, following the exercise of their
over-allotment option, purchased 300,000 additional shares of common
stock under the same terms as the initial public offering. Net proceeds
received were approximately $4.2 million.
iii. Closing of an agreement for the acquisition by the Company of all issued
and outstanding shares of International Sports Marketing, Inc. (ISM), an
entity in which certain shareholders of the Company had an ownership
interest. This acquisition provided for cash payments of $2.4 million
upon closing and contingent payments up to $2.4 million
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based upon future operating income. ISM's name has been changed to
SportsWave, Inc. subsequent to acquisition.
iv. Closing of an agreement for the merger of Kent Consulting Group, Inc.
(KCG) into Kent Acquisition Corporation, a wholly owned subsidiary of
the Company. The consideration includes $2.0 million in cash and $3.2
million in common stock, valued at the initial public offering price and
contingent payments up to $2.8 million based upon future operating
income.
v. Creation of the 1996 Stock Plan which provides up to 266,000 shares of
common stock to be awarded as stock options, stock appreciation rights,
restricted shares and restricted units to officers, other executive
employees, consultants and advisors (including non-employee directors)
of the Company. As of the closing of the initial public offering, 26,666
restricted common shares were reserved for issuance in connection with
the acquisition of KCG. Additionally, options to purchase 219,000 shares
of common stock at the initial public offering price were granted.
vi. On October 28, 1996, the maximum amount of borrowing allowed under the
line of credit was increased to $7.5 million. The amount borrowed on the
line at the time of closing of the initial public offering, November 6,
1996, was $6,000,000, which was repaid coincident with the closing.
vii. Coincident with the closing of the initial public offering, $3,000,000
of shareholder notes payable were converted into 244,066 shares of
common stock. The conversion rate was $12.29 per share.
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Item 2.
Allin Communications Corporation
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis by management provides information
with respect to the Company's financial condition and the results of operations
for the three-month and nine-month periods ended September 30, 1996 and 1995,
respectively. This discussion should be read in connection with the information
in the condensed consolidated financial statements and the notes pertaining
thereto, for the year ended December 31, 1995, and for the six months ended June
30, 1996, contained in the Company's Prospectus dated November 1, 1996 for its
initial public offering (See Note 4 to Notes to Condensed Consolidated Financial
Statements).
Overview
Allin Communications Corporation (the Company) was formed in July 1996 to
act as a holding company for four operating subsidiaries, which will focus on
particular aspects of the Company's business plan. SeaVision, Inc. and
PhotoWave, Inc., operating subsidiaries, and Kent Acquisition Corporation, a
non-operating subsidiary, were in existence and owned by the Company as of
September 30, 1996 and their Balance Sheets and Results of Operations are
included in the Condensed Consolidated Financial Statements as of that date.
SportsWave, Inc., formerly International Sports Marketing, Inc., was acquired
subsequent to September 30, 1996 and accordingly, is not included in the
Condensed Consolidated Financial Statements as of that date.
SeaVision was formed in June 1994 and focuses on the travel and leisure
industry. SeaVision became a subsidiary of the Company in July 1996 through
merger. Its operations to date have involved the development of an interactive
digital platform and the installation and operation of interactive television
(ITV) systems in the international cruise industry. In addition, SeaVision is
providing shipboard systems integration services under an agreement to install
and operate a new television distribution and broadcast system aboard the Cunard
Line QE2. Through September 30, 1996, SeaVision has completed installation of
three ITV systems on cruise ships and had six additional installations in
progress.
PhotoWave was formed as a subsidiary of the Company on August 15, 1996 to
continue the development and marketing of the Company's digital imaging
business.
Kent Acquisition Corporation, a non-operating subsidiary, was formed August
16, 1996. It was inactive at September 30, 1996. This subsidiary was formed to
effect a merger with Kent Consulting Group, Inc., which was completed coincident
with the closing of the Company's initial public offering.
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The Company's historical results of operations reflect the operations of
SeaVision for the three- and nine-month periods ended September 30, 1996 and
1995 and of Allin Communications Corporation, PhotoWave, Inc., and Kent
Acquisition Corporation since inception.
Results of Operations:
- ---------------------
Three Months Ended September 30, 1996 compared to Three Months Ended September
30, 1995
As of September 30, 1996, SeaVision had installed its ITV system on three
cruise ships with an annual passenger capacity of 261,352, based on their
itineraries and passenger configurations at that time. SeaVision did not record
revenue or direct expenses for the three months ended September 30, 1995.
Accordingly, a comparison of revenue and direct expenses for the three-month
periods ended September 30, 1995 and September 30, 1996 is not meaningful.
Revenue for the three months ended September 30, 1996 was $133,000
including $84,000 for pay-per-view movies and $48,000 for games of chance.
Direct costs for the three months ended September 30, 1996 were $43,000 and
related primarily to cost of sales for the video-on-demand module. Selling,
general and administrative expenses during the three months ended September 30,
1996 increased to $1.9 million from $128,000 for the corresponding period in
1995. This increase is attributable primarily to the costs of additional
personnel as the Company moved from the developmental stage to the
implementation stage of its ITV system. Depreciation and amortization expense
increased to $234,000 during the three months ended September 30, 1996 as
compared to $122,000 in the corresponding period in 1995 as a result of the
completed installation of additional ITV systems.
The Company's operating loss increased to $1.8 million for the three months
ended September 30, 1996 , from $128,000 for the three months ended September
30, 1995. This increase is attributable primarily to the costs of additional
personnel as the Company moved from the developmental stage to the
implementation stage of its ITV system. Interest expense increased from
$190,000 to $328,000 for the three months ended September 30, 1995 and September
30, 1996, respectively. Interest expense of $144,000 related to stockholder
loans was accrued but unpaid during the period. With respect to the three
months ended September 30, 1996, $184,000 of interest and guarantee fee expense
was recorded relating to the borrowings under its line of credit with National
City Bank. The Company sustained a net loss of $2.1 million during the three
months ended September 30, 1996, compared to a net loss of $317,000 for the
three months ended September 30, 1995, as a result of the increased operating
losses discussed above.
Nine Months Ended September 30, 1996 compared to Nine Months Ended September 30,
1995
As of September 30, 1996, SeaVision had installed its ITV system on three
cruise ships with an annual passenger capacity of 261,352, based on their
itineraries and passenger configurations at that time. SeaVision did not record
revenue or direct expenses for the nine months ended September 30, 1995.
Accordingly, a comparison of revenue and direct expenses for the nine-month
periods ended September 30, 1995 and September 30, 1996 is not meaningful.
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Revenue for the nine months ended September 30, 1996 was $296,000,
including $170,000 for pay-per-view movies and $123,000 for games of chance.
Direct costs for the nine months ended September 30, 1996 were $83,000 and
related primarily to cost of sales for the video-on-demand module. Selling,
general and administrative expenses during the nine months ended September 30,
1996 increased to $4.0 million from $894,000 for the corresponding period in
1995. This increase is attributable primarily to the costs of additional
personnel as the Company moved from the developmental stage to the
implementation stage of its ITV system. Depreciation and amortization expense
increased to $584,000 during the nine months ended September 30, 1996 as
compared to $192,000 in the corresponding period in 1995 as a result of the
completed installation of additional ITV systems.
The Company's operating loss increased to $3.8 million for the nine months
ended September 30, 1996, from $894,000 for the nine months ended September 30,
1995. This increase is attributable primarily to the costs of additional
personnel as the Company moved from the developmental stage to the
implementation stage of its ITV system. Interest expense increased from
$295,000 to $796,000 for the nine months ended September 30, 1995 and September
30, 1996, respectively. Interest expense of $558,000 related to stockholder
loans was accrued but unpaid during the period. With respect to the nine months
ended September 30, 1996, $238,000 of interest and guarantee fee expense was
recorded relating to the borrowings under its line of credit with National City
Bank. The Company sustained a net loss of $4.6 million during the nine months
ended September 30, 1996, compared to a net loss of $1.2 million for the nine
months ended September 30, 1995, as a result of the increased operating losses
and interest expense discussed above.
Liquidity and Capital Resources
From its organization in June 1994 through May 31, 1996, the working
capital needs of the Company were funded through stockholder loans. On May 31,
1996, SeaVision entered into a line of credit with Integra Bank (now National
City Bank). The maximum amount of borrowing initially allowed under the line of
credit was $5 million, all of which was outstanding as of September 30, 1996. On
October 28, 1996, the maximum amount of borrowing allowed under the line of
credit was increased to $7.5 million. The amount outstanding at closing of the
initial public offering on November 6, 1996 was $6 million, which was repaid
coincident with the closing. The initial funding under the line of credit
occurred May 31, 1996 and was in the amount of $4.3 million, $3.6 million of
which was used to repay a portion of the principal amount of stockholder loans.
The Company may choose between two rates of interest at each funding date, the
Prime Rate or the Euro-Rate (as defined in the Amended and restated Line of
Credit Note dated October 28, 1996) plus one and one-half percent. The remaining
amounts funded under the line of credit have been used as general working
capital in the operation of the Company. The line of credit expires on May 31,
1997 and is guaranteed by certain stockholders of the Company. The guarantors
are entitled to a guarantee fee from the Company equal to the difference between
15% per annum and the rate which the Company is charged under the terms of the
line of credit.
On August 16, 1996 the Company issued an aggregate of 25,000 shares of
Series A Convertible Redeemable Preferred Stock ("Convertible Preferred Stock")
to Henry Posner, Jr., Thomas D. Wright, Richard W. Talarico, James C. Roddey,
William C. Kavan and Mark Kottler,
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each of whom is also an officer, director and/or holder of Common Stock of the
Company. The Company has used the $2,450,000 net proceeds from the sale of the
Convertible Preferred Stock for general working capital purposes. The holders of
Convertible Preferred Stock are entitled to receive, when and as declared by the
Company's Board of Directors, cumulative compounded quarterly dividends at the
rate of eight percent per annum. For a limited period beginning six months after
the Offering, each holder of Convertible Preferred Stock will have the right to
convert all, but not less than all, of the Convertible Preferred Stock then
owned by such holder into shares of Common Stock at the rate of approximately
8.1 shares of Common Stock for each share of Convertible Preferred Stock. Shares
of Convertible Preferred Stock not converted into Common Stock will remain
outstanding until the earlier of the time such shares are redeemed by the
Company or June 30, 2006.
The Company recognized an operating loss during the nine months ended
September 30, 1996, and the Company's business will require substantial capital
investment on an ongoing basis to finance its expansion in the travel and
leisure industry and for the implementation of its business plans for PhotoWave
and the businesses acquired subsequent to September 30, 1996. Capital
expenditures were $4.2 million during the nine months ended September 30, 1996
compared to $892,000 for the nine months ended September 30, 1995. The Company
expects to incur capital expenditures of approximately $6.4 million during the
full year ended December 31, 1996 and approximately $16.5 million for the year
ending December 31, 1997. The actual amount and timing of the Company's capital
expenditures will vary (and such variations could be material) depending
primarily upon the number of new contracts, if any, for installation of its ITV
systems and shipboard systems integration entered into by the Company, the costs
of such installations and the rate of implementation of the PhotoWave and
SportsWave business plans.
The Company believes that the net proceeds from its initial public stock
offering, together with available funds and cash flows expected to be generated
by operations, will be sufficient to meet its anticipated cash needs for working
capital and capital expenditures for at least the next 24 months. If cash
generated by operations, together with the net proceeds of the offering, were
insufficient to satisfy the Company's cash requirement, the Company would be
required to consider other financing alternatives, such as selling additional
equity or debt securities or obtaining long or short-term credit facilities,
although no assurance can be given that the Company could obtain such financing.
Any sale of additional equity or convertible debt securities would result in
additional dilution to the Company's shareholders.
Special Note on Forward-Looking Statements
Certain statements in the preceding two paragraphs constitute
"forward-looking statements" within the meaning of the Federal Private
Securities Litigation Reform Act of 1995. Such forward-looking statements
involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance, or achievements of the Company to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among other
things, the Company's limited operating history and uncertainty as to the
Company's future profitability; the Company's history of net losses, accumulated
deficit and dependence on its proprietary technology; the risks inherent in
development of new products; competition in the Company's existing and potential
future lines of business; risks associated with the Company's management of
growth; dependence on key personnel; rapidly changing technology and a rapidly
evolving market for interactive applications; fluctuations in operating results,
as well as other risks and uncertainties.
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Part II - Other Information
Item 2. Changes in Securities.
---------------------
(a) Not applicable.
(b) On August 16, 1996, the Company issued an aggregate of 25,000 shares
of Series A Convertible Redeemable Preferred Stock (the "Convertible
Preferred Stock") having a liquidation of $100 per share. The holders
of Convertible Preferred Stock are entitled to receive, when and as
declared by the Company's Board of Directors, cumulative compounded
quarterly dividends at the rate of eight percent of the liquidation
value thereof per annum. The holders of Convertible Preferred Stock
have no voting rights except as provided by the Delaware General
Corporation Law and except with respect to actions which affect
adversely the rights and preferences of the Convertible Preferred
Stock set forth in the Certificate of Designation relating to such
shares. The Convertible Preferred Stock is senior in right of payment
and on liquidation to the Common Stock.
During the seven-month period beginning May 6, 1997 (the "Conversion
Period"), each holder of Convertible Preferred Stock will have the
right to convert all, but not less than all, of the Convertible
Preferred Stock then owned by such holder into shares of Common Stock
at the rate of approximately 8.1 shares of Common Stock for each share
of Convertible Preferred Stock (as adjusted for stock dividends, stock
splits, reverse stock splits and any other stock combination or
division). Cash payments will be made in lieu of the issuance of any
fractional shares of Common Stock upon any such conversion. In
connection with, and upon such conversion, the holders of Convertible
Preferred Stock will have no right to receive any accrued and unpaid
dividends. Shares of Convertible Preferred Stock which are not
converted to Common Stock during the Conversion Period will remain
outstanding until the earlier of the time such shares are redeemed by
the Company or June 30, 2006.
If the Company, prior to the end of the Conversion Period, issues
Common Stock or warrants or options exercisable for Common Stock (other
than pursuant to any employee stock option plan or director stock plan
approved by the Board of Directors of the Company), and the price per
share at which such shares, warrants or options are issued (the "New
Share Price") multiplied by the aggregate number of issued and
outstanding shares of Common Stock (determined on a fully diluted
basis, but excluding shares then being issued or which are issuable
pursuant to warrants or options then being issued) is less than $35.0
million, then the outstanding shares of Convertible Preferred Stock
will become convertible into such additional number of shares of Common
Stock equal to a fraction, the numerator of which is the number of
outstanding shares of Convertible Preferred Stock multiplied by 100 and
the denominator of which is the New Share Price.
The Company has the right at any time after the Conversion Period but
prior to maturity, to redeem the outstanding shares of Convertible
Preferred Stock at $100 per share, plus accrued and unpaid dividends,
if any. Unless earlier redeemed or
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converted into Common Stock, the outstanding shares of Convertible
Preferred Stock are to be redeemed by the Company at $100 per share,
plus accrued and unpaid dividends, if any, on June 30, 2006.
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Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
(a) The stockholders of the Company acted by written consent (the
"Written Consent") in lieu of a Joint Special Meeting of
Stockholders dated September 29, 1996.
(b) Not applicable.
(c) The Written Consent was signed by the holders of all of the 1,000
shares of Common Stock then outstanding and by the holders of all
of the 25,000 shares of Convertible Redeemable Preferred Stock
then outstanding. The matter acted upon by the stockholders
pursuant to the Written Consent was the authorization of technical
amendments to replace references to a $100 par value with
references to a $100 liquidation value in the Certificate of
Designation relating to the Convertible Redeemable Preferred
Stock.
(d) Not applicable.
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Item 6. Exhibits and Reports on Form 8-K.
--------------------------------
(a) Exhibits.
Exhibit
Number Description of Exhibit
- ------ ----------------------
2.1 Stock Purchase Agreement dated August 14, 1996 by and among
International Sports Marketing, Inc., Henry Posner, Jr., Thomas D.
Wright, Michael J. Fetchko, James C. Roddey, Richard W. Talarico, John
F. Hensler and Allin Communications Corporation (incorporated by
reference to Exhibit 2.1 to Allin Communications Corporation's
Registration Statement No. 333-10447 on Form S-1).
2.2 Agreement and Plan of Merger dated August 16, 1996 by and among Kent
Consulting Group, Inc., Les Kent and Allin Communications Corporation
(incorporated by reference to Exhibit 2.2 to Allin Communications
Corporation's Registration Statement No. 333-10447 on Form S-1).
3(i)(a) Certificate of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3(i)(a) to Allin Communications
Corporation's Registration Statement No. 333-10447 on Form S-1).
3(i)(b) Certificate of Designation of the Registrant relating to the Series A
Convertible Redeemable Preferred Stock (incorporated by reference to
Exhibit 3(i)(b) to Allin Communications Corporation's Registration
Statement No. 333-10447 on Form S-1).
3(i)(c) Certificate of Amendment to Certificate of Designation of the
Registrant relating to the Series A Convertible Redeemable Preferred
Stock (incorporated by reference to Exhibit 3(i)(c) to Allin
Communications Corporation's Registration Statement No. 333-10447 on
Form S-1).
3(ii) Amended and Restated By-laws of the Registrant (incorporated by
reference to Exhibit 3(ii) to Allin Communications Corporation's
Registration Statement No. 333-10447 on Form S-1).
4 Certificate of Designation of Registrant relating to Series A
Convertible Redeemable Preferred Stock and Certificate of Amendment
relating thereto (incorporated by reference to Exhibits 3(i)(b) and
3(i)(c) to Allin Communications Corporation's Registration Statement
No. 333-10447 on Form S-1).
I0.1 Sublease Agreement dated August 1, 1996 between SeaVision, Inc. and
Blair Haven Entertainment, Inc. (incorporated by reference to Exhibit
10.1 to Allin Communications Corporation's Registration Statement No.
333-10447 on Form S-1).
10.2 Assignment of Intellectual Property Rights dated October 3, 1994 by
Brian K. Blair and R Daniel Foreman in favor of SeaVision, Inc.
(incorporated by reference to Exhibit 10.2 to Allin Communications
Corporation's Registration Statement No. 333-10447 on Form S-1).
-16-
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.3 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders (incorporated by reference to
Exhibit 10.3 to Allin Communications Corporation's Registration Statement
No. 333-10447 on Form S-1).
10.4 Registration Rights Agreement dated July 23, 1996 by and among the
Registrant and certain of its stockholders (incorporated by reference to
Exhibit 10.4 to Allin Communications Corporation's Registration Statement
No. 333-10447 on Form S-1).
10.5 Note Conversion Agreement dated July 23, 1996 by and among the
Registrant, Henry Posner, Jr., Thomas D. Wright, Terence M. Graunke,
James C. Roddey and Richard W. Talarico (incorporated by reference to
Exhibit 10.5 to Allin Communications Corporation's Registration Statement
No. 333-10447 on Form S-1).
10.6 License Agreement dated December 1, 1993 between Major League Alumni
Marketing, Inc. and Hawthorne Sports Marketing, Inc. (incorporated by
reference to Exhibit 10.6 to Allin Communications Corporation's
Registration Statement No. 333-10447 on Form S-1).
10.7 Amended and Restated Line of Credit Note, dated October 28, 1996, made by
SeaVision, Inc. in favor of Integra Bank (incorporated by reference to
Exhibit 10.7 to Allin Communications Corporation's Registration Statement
No. 333-10447 on Form S-1).
10.8 1996 Stock Plan of the Registrant (incorporated by reference to Exhibit
10.8 to Allin Communications Corporation's Registration Statement No.
333-10447 on Form S-1).
10.9 Employment Agreement dated August 1, 1996 by and between the Registrant
and Richard W. Talarico (incorporated by reference to Exhibit 10.9 to
Allin Communications Corporation's Registration Statement No. 333-10447
on Form S-1).
10.10 Employment Agreement dated August 1, 1996 by and between the Registrant
and R. Daniel Foreman (incorporated by reference to Exhibit 10.10 to
Allin Communications Corporation's Registration Statement No. 333-10447
on Form S-1).
10.11 Employment Agreement dated August 1, 1996 by and between the Registrant
and Brian K. Blair (incorporated by reference to Exhibit 10.11 to Allin
Communications Corporation's Registration Statement No. 333-10447 on Form
S-1).
10.12 Employment Agreement dated September 16, 1996 by and between the
Registrant and Jon E. VanAmringe (incorporated by reference to Exhibit
10.17 to Allin Communications Corporation's Registration Statement No.
333-10447 on Form S-1).
-17-
<PAGE>
Exhibit
Number Description of Exhibit
- ------ ----------------------
10.13 First Amended and Restated Agreement dated June 1, 1996 between
SeaVision, Inc. and Celebrity Cruises Inc. (subject to request for
confidential treatment) (incorporated by reference to Exhibit 10.12 to
Allin Communications Corporation's Registration Statement No. 333-10447
on Form S-1).
10.14 Agreement dated February 6, 1996 between SeaVision, Inc. and Carnival
Corporation (subject to request for confidential treatment) (incorporated
by reference to Exhibit 10.13 to Allin Communications Corporation's
Registration Statement No. 333-10447 on Form S-1).
10.15 Agreement dated August 8, 1996 by and between SeaVision, Inc. and
Norwegian Cruise Line Limited (subject to request for confidential
treatment) (incorporated by reference to Exhibit 10.14 to Allin
Communications Corporation's Registration Statement No. 333-10447 on Form
S-1).
10.16 Installation Agreement dated September 9, 1996 by and between SeaVision,
Inc. and Cunard Line Limited (subject to request for confidential
treatment) (incorporated by reference to Exhibit 10.15 to Allin
Communications Corporation's Registration Statement No. 333-10447 on Form
S-1).
10.17 Concession Agreement dated September 17, 1996 by and between SeaVision,
Inc. and Royal Caribbean Cruise Line (subject to request for confidential
treatment) (incorporated by reference to Exhibit 10.16 to Allin
Communications Corporation's Registration Statement No. 333-10447 on Form
S-1).
11 Computation of Earnings per Share.
27 Financial Data Schedule
(b) Reports on Form S-K.
No report on Form 8-K was filed by the Company during the quarter
ended September 30, 1996.
-18-
<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.
ALLIN COMMUNICATIONS CORPORATION
(Registrant)
Date: December 13, 1996 By: /s/ Richard W. Talarico
---------------------------------
Richard W. Talarico
Chairman and Chief Executive Officer
Date: December 13, 1996 By: /s/ Jon E. VanAmringe
---------------------------------
Jon E. VanAmringe
Chief Financial Officer
-19-
<PAGE>
Exhibit 11
ALLIN COMMUNICATIONS CORPORATION
CALCULATION OF NET LOSS PER COMMON SHARE
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Net loss $ (317) $ (2,096) $ (1,189) $ (4,609)
============ ========== =========== ==========
Net loss per common share $ (0.13) $ (0.81) $ (0.46) $ (1.77)
============ ========== =========== ==========
Weighted average common shares outstanding
during the period (1) 2,400,000 2,400,000 2,400,000 2,400,000
Effective of conversion of preferred stock
issued within one year of the offering 203,385 203,385 203,385 203,385
------------ ---------- ----------- ----------
Shares used in calculating net loss per common
share 2,603,385 2,603,385 2,603,385 2,603,385
============ ========== =========== ==========
</TABLE>
(1) The weighted average common shares outstanding has been retroactively
restated for the effect of the 2,400 for 1 stock split.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FINANCIAL
DATA FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. DOLLAR AMOUNTS IN THOUSANDS,
EXCEPT EARNINGS PER SHARE.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 126
<SECURITIES> 0
<RECEIVABLES> 108
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 869
<PP&E> 5,730
<DEPRECIATION> 510
<TOTAL-ASSETS> 6,707
<CURRENT-LIABILITIES> 7,692
<BONDS> 0
0
2,465
<COMMON> 27
<OTHER-SE> (7,428)
<TOTAL-LIABILITY-AND-EQUITY> 6,707
<SALES> 296
<TOTAL-REVENUES> 296
<CGS> 83
<TOTAL-COSTS> 83
<OTHER-EXPENSES> 4,153
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 669
<INCOME-PRETAX> (4,609)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,609)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,609)
<EPS-PRIMARY> (1.77)
<EPS-DILUTED> (1.77)
</TABLE>
