<PAGE> 1
UNITED STATES 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 quarter ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________________ to ___________________
Commission file number 0-16730
ALL-COMM MEDIA CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 88-0085608
- --------------------------------- -------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
400 Corporate Pointe, Suite 780
Culver City, California 90230
- ---------------------------------- ------------------------------------
(Address of principal executive (Zip Code)
offices)
- ------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Registrant's telephone number, including area code: (310) 342-2800
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.01 per share
--------------------------------------
(Title of class)
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 [ ]
As of November 12, 1996, there were 5,105,407 shares of the Registrant's common
stock outstanding.
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
TABLE OF CONTENTS
FORM 10-QSB REPORT
SEPTEMBER 30, 1996
<TABLE>
<S> <C>
PART I - FINANCIAL INFORMATION Page
----
Item 1 Interim Condensed Consolidated Financial Statements
(unaudited)
Condensed Consolidated Balance Sheets -
September 30, 1996 and June 30, 1996 3
Condensed Consolidated Statements of Operations -
Three months ended September 30, 1996 and 1995 4
Condensed Consolidated Statements of Cash Flows -
Three months ended September 30, 1996 and 1995 5
Notes to Interim Condensed Consolidated Financial
Statements 6-8
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 8-11
PART II - OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 12
Item 6 Exhibits and Reports of Form 8-K
(a) Exhibits 13
(b) Reports on Form 8-K 14
Signatures 15
Exhibit 10.3 Amendment No. 1 to the Registration Rights Agreement dated
as of October 9, 1996
Exhibit 10.9 Form of letter dated September 10, 1996 rescinding
Private Placement Agreement dated June 7, 1996
Exhibit 11.1 Statements Regarding Computation of Net Loss Per Share
Exhibit 27.1 Financial Data Schedule
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,180,129 $ 1,393,044
Accounts receivable, net of allowance for doubtful accounts of
$6,000 at September 30 and $34,906 at June 30 1,864,425 2,681,748
Land held for sale at cost 921,465
Other current assets 560,968 107,658
------------ ------------
Total current assets 3,605,522 5,103,915
Property and equipment at cost, net 494,031 299,045
Intangible assets at cost, net 7,755,414 7,851,060
Other assets 35,846 47,046
------------ ------------
Total assets $ 11,890,813 $ 13,301,066
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 102,224 $ 500,000
Trade accounts payable 317,228 470,706
Accrued salaries and wages 420,773 706,039
Other accrued expenses 485,404 758,112
Income taxes payable 10,000
Long-term obligations to related party, current portion 700,000 583,333
Related party payable 425,000
------------ ------------
Total current liabilities 2,025,629 3,453,190
Long-term obligations to related party less current portion 1,341,667 1,516,667
Other liabilities 111,105 80,315
------------ ------------
Total liabilities 3,478,401 5,050,172
------------ ------------
Commitments and contingencies
Stockholders' equity:
Convertible preferred stock, $.01 par value; 50,000 shares authorized
consisting of: 6,200 shares of Series B Convertible Preferred Stock
issued and outstanding; 2,000 shares of Series C Convertible
Preferred Stock issued and outstanding 82 82
Common stock - authorized 6,250,000 shares of $.01 par value
at June 30, 1996, increased in August 1996 to 36,250,000;
3,303,207 and 3,198,534 shares issued, respectively 33,032 31,985
Additional paid-in capital 14,900,758 14,462,306
Accumulated deficit (6,385,991) (6,108,010)
Less 11,800 shares of common stock in treasury, at cost (135,469) (135,469)
------------ ------------
Total stockholders' equity 8,412,412 8,250,894
------------ ------------
Total liabilities and stockholders' equity $ 11,890,813 $ 13,301,066
============ ============
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Revenues $3,932,030 $3,926,438
---------- ----------
Operating costs and expenses:
Salaries and benefits 3,303,499 3,161,669
Direct costs 145,230 129,713
Selling, general and administrative 544,636 386,575
Professional fees 168,187 145,428
Amortization of intangible assets 95,646 90,226
---------- ----------
Total operating costs and expenses 4,257,198 3,913,611
---------- ----------
Income (loss) from operations (325,168) 12,827
---------- ----------
Other income (expense):
Gain from sale of land 90,021
Interest income 9,561 3,244
Interest expense (48,417) (98,802)
---------- ----------
Total 51,165 (95,558)
---------- ----------
Loss before income taxes (274,003) (82,731)
Provision for income taxes (3,978) (53,295)
---------- ----------
Net loss $ (277,981) $ (136,026)
========== ==========
Net loss attributable to common
stockholders $ (344,481) $ (136,026)
========== ==========
Net loss per common share $(.11) $(.05)
===== =====
Weighted average common and common
equivalent shares outstanding 3,214,884 3,016,028
========== ==========
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
Operating activities:
Net loss $ (277,981) $ (136,026)
Adjustments to reconcile loss to net cash provided by (used in)
operating activities:
Gain from sale of land (90,021)
Depreciation 38,086 44,863
Amortization 95,646 90,226
Warrant issuances to consultants 76,000
Changes in assets and liabilities:
Accounts receivable 817,323 208,627
Other current assets (128,310) (9,326)
Other assets (6,500) (4,087)
Trade accounts payable (153,478) (28,106)
Accrued expenses and other current liabilities (749,942) (64,249)
Income taxes payable (10,000) (19,838)
---------- ----------
Net cash provided by (used in) operating activities (389,177) 82,084
----------- ----------
Investing activities:
Net proceeds from sale of land 860,443
Proceeds from issuances of warrants 5,000
Purchase of property and equipment (233,072) (13,696)
Payments relating to acquisition of Alliance and SD&A (40,806)
---------- ----------
Net cash provided by (used in) investing activities 632,371 (54,502)
---------- ----------
Financing activities:
Repayments of bank loans (397,776) (19,588)
Repayments of notes payable other (18,000)
Repayment of acquisition debt (58,333) (375,000)
---------- ----------
Net cash used in financing activities (456,109) (412,588)
----------- ----------
Net decrease in cash and cash equivalents (212,915) (385,006)
Cash and cash equivalents at beginning of period 1,393,044 1,217,772
---------- ----------
Cash and cash equivalents at end of period $1,180,129 $ 832,766
========== ==========
</TABLE>
Supplemental schedule of non cash investing and financing activities:
In October 1995, in accordance with the acquisition agreement between Alliance
Media Corporation and the former owner of SD&A the purchase price was increased
by $92,702.
In September 1996, the Company issued 96,748 shares of common stock, valued at
$425,000, as an earn out payment to the former owner of SD&A for achieving
certain targeted earnings for the fiscal year ended June 30, 1996.
In September 1996, the Company incurred approximately $325,000 in accrued
professional fees related to acquisitions and registration statement
preparation which were deferred as of September 30, 1996.
Accrued and unpaid dividends on shares of Convertible Preferred Stock during
the three months ended September 30, 1996 totaled $66,500 which are payable in
common stock.
During the three months ended September 30, 1996, the Company issued warrants
to consultants valued at $81,000 for $5,000 in cash.
See Notes to Condensed Consolidated Financial Statements.
5
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ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited Interim Condensed Consolidated Financial
Statements include the accounts of All-Comm Media Corporation and Subsidiaries
(the "Company"). They have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the fiscal year
ending June 30, 1997. For further information, refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended June 30, 1996. Certain
reclassifications have been made in the fiscal 1996 interim financial
statements to conform with the fiscal 1997 presentation. Certain amounts have
been reclassified to conform with industry standards.
2. NET LOSS PER COMMON SHARE
Net loss per common share is computed based upon the weighted average
number of shares outstanding during the periods presented and common stock
equivalents unless antidilutive. Primary and fully diluted loss per share are
the same in the periods presented.
3. ACQUISITION OF ALLIANCE MEDIA CORPORATION AND STEPHEN DUNN & ASSOCIATES,
INC.
On April 25, 1995, the Company acquired all of the outstanding common
shares of Alliance Media Corporation ("Alliance") which simultaneously acquired
Stephen Dunn & Associates, Inc. ("SD&A").
These acquisitions were accounted for using the purchase method. The
operating results of these acquisitions are included in the results of
operations from the date of acquisition.
4. LONG-TERM OBLIGATIONS TO RELATED PARTY
In connection with the acquisition of SD&A on April 25, 1995, Alliance
issued promissory notes totaling $4,500,000 to SD&A's current president and
former sole shareholder. The notes bore interest at the prime rate, not to
exceed 10% or drop below 8%, payable monthly. Principal payments were due
quarterly, and originally $1,500,000 was due in quarterly installments during
fiscal 1996. During 1996, principal payments of $2,400,000 were made and the
long-term obligations were restructured such that the remaining obligations of
$2,100,000 are now payable at $58,333 per month, plus interest at 8%, starting
September 19, 1996.
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5. INCOME TAXES
In the three month periods ended September 30, 1996 and 1995, the income
tax provision totaled $4,000 and $53,000 on losses from operations of $274,000
and $83,000, respectively. The provisions resulted from state and local income
taxes incurred on taxable income at the operating subsidiary level which could
not be offset by losses incurred at the corporate level.
6. GAIN FROM SALE OF LAND
The Company, through its wholly-owned subsidiary, All-Comm Holdings,
Inc., owned approximately seven acres of undeveloped land in Laughlin, Nevada,
which had a carrying value of $921,465 as of June 30, 1996. During fiscal
1996, a bond measure was passed by Clark County, Nevada authorities, resulting
in a special assessment to fund improvements which would benefit the land. The
principal balance assessed to the Company totaled $154,814 plus interest at
6.4% and was payable in semi-annual installments over twenty years. The
principal was capitalized by the Company in fiscal 1996. On August 16, 1996,
the land was sold to, and liability assumed by, an unaffiliated third party, by
auction, for $952,000 in cash, resulting in a net gain after commissions and
other selling costs of approximately $90,000.
7. STOCK OPTIONS
On September 26, 1996, the Board of Directors approved the increase in
the number of shares available under the 1991 Stock Option Plan by 600,000
shares, to 1,450,000, and granted options exercisable for 300,000 shares of
common stock, par value $.01 per share (the "Common Stock") to each of the
Company's Chief Executive Officer and Chief Operating Officer. Options
exercisable for the first 150,000 shares were granted to each such officer at
an exercise price of $2.50 per share (the fair market value of the stock as of
the effective date of the grant), and the remaining 150,000 each were granted
at an exercise price of $3.00 per share. The options vest and are exercisable
immediately and expire on July 1, 2001.
8. SUBSEQUENT EVENTS
Effective as of October 1, 1996, the Company acquired Metro Services
Group, Inc. ("Metro") pursuant to a merger agreement. In exchange for all of
the then outstanding shares of Metro, the Company issued 1,814,000 shares of
its Common Stock valued at $7,256,000 and promissory notes (the "Notes")
totaling $1,000,000. The Notes shall be due and payable, together with
interest thereon at the rate of 6% per annum, on June 30, 1998, subject to
earlier repayment, at the option of the holder, upon completion by the Company
of a public offering of its equity securities. The Notes are convertible on or
before maturity, at the option of the holder, into shares of Common Stock at an
exchange rate of $5.38 per share. Metro develops and markets information-based
services, used primarily in direct marketing by a variety of commercial and
not-for-profit organizations, principally in the United States.
On October 17, 1996, the Company filed a Form SB-2 registration
statement (the "Registration Statement") with the Securities and Exchange
Commission. The Registration Statement relates to an offering of 1,500,000
shares of Common Stock, of which 1,400,000 shares are being offered by the
Company and 100,000 are being offered by certain stockholders of the Company.
It also relates to the sale
7
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of 1,344,468 shares of Common Stock by certain selling stockholders, none of
whom are members of, or affiliated with, the Board or management, of which
94,468 shares are currently owned and 1,250,000 shares are issuable upon
conversion of shares of the Company's Series B Convertible Preferred Stock, par
value $.01 per share. Such 1,250,000 shares will be subject to "lock up"
provisions that prohibit resale of such shares for a period of nine months from
the Company's offering.
In connection with the offering, the Company will incur a non-recurring
non-cash charge estimated to be $0.5 million in the fiscal quarter in which the
offering is consummated, as a result of the issuance by the Company of warrants
exercisable for an aggregate of up to 1,191,985 shares of Common Stock to
certain stockholders of the Company as consideration for the agreement of such
stockholders to certain lock-up arrangements.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Introduction
This discussion summarizes the significant factors affecting the
consolidated operating results, financial condition and cash flows of the
Company for the three month period ended September 30, 1996. This should be
read in conjunction with the financial statements and notes thereto, included
in this Report on Form 10-QSB and the Company's financial statements and notes
thereto, included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1996. As more fully described in Note 3 to the consolidated
financial statements included in such Form 10-K, on April 25, 1995, the Company
purchased 100% of the stock of Alliance Media Corporation which had
simultaneously acquired Stephen Dunn & Associates, Inc. ("SD&A").
The Company operates as a direct marketing services provider with its
initial concentration in a telemarketing and telefundraising company that
specializes in direct marketing services for the arts, educational and other
cultural organizations.
As more fully described in Note 8 to the condensed consolidated
financial statements included in this Form 10-QSB, in October 1996 the Company
purchased 100% of the stock of Metro Services Group, Inc. ("Metro"). This
acquisition will be reflected in the consolidated financial statements using
the purchase method of accounting starting in October 1996. Metro develops and
markets information-based services used primarily in direct marketing by a
variety of commercial and not-for-profit organizations.
Results of Operations for the Three Months Ended September 30, 1996, Compared
to the Three Months Ended September 30, 1995
Revenues of $3,932,000 in the three months ended September 30, 1996
(the "current period") increased by $6,000 over revenues of $3,926,000 in the
three months ended September 30, 1995 (the "prior period"). Revenues from
on-site telemarketing and telefundraising campaigns totaled $3,417,000 and
$3,421,000, respectively, or 86.9% and 87.1% of revenues in the current and
prior periods, respectively. Revenues from off-site campaigns totaled $516,000
and $505,000, respectively, or 13.1% and 12.9% of revenues, respectively, in
the current and prior periods.
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Salaries and benefits of $3,303,000 in the current period increased by
$142,000 over the prior period total of $3,161,000. Salaries and benefits also
increased as a percent of revenues from 80.5% in the prior period to 84.0% in
the current period. Telemarketing sales labor expense increased by $152,000 in
the current period. This increase was largely due to the commencement of
on-site campaigns for new clients in the current period (which generally require
higher labor expenses in their early years). Off-site and administrative
salaries at SD&A increased by $58,000, the majority of which, $32,000, was
attributable to hiring of new telemarketing sales representatives to staff the
newly relocated and expanded Berkeley calling center, and the balance of which
included the hiring of a human resources director. These increases were
partially offset by a $68,000 reduction in parent company administrative
salaries in the current period as compared to the prior period.
Direct costs of $145,000 in the current period increased by $15,000
over direct costs of $130,000 in the prior period, primarily attributable to
higher telephone costs incurred for off-site campaigns.
Selling, general and administrative expenses of $545,000 in the
current period increased by $158,000, or 41%, over comparable expenses of
$387,000 in the prior period. Of the increase, $101,000 was attributable to
SD&A and $57,000 to corporate administration. At SD&A, travel expense
increased by $47,000 in the current period principally as a result of bringing
campaign managers to Los Angeles for training on SD&A's new on-site software.
Of the SD&A increase, $11,000 was a one-time moving and additional rent expense
due to relocating the off-site calling center in August 1996 and the remaining
increase of $43,000 resulted principally from an increase in printing,
promotion and advertising expenses. At the parent company level, public
relations expenses increased by $41,000 due to the hiring of a new firm in the
current period. Parent company travel expenses increased by $12,000 due to
increased acquisition and financing efforts. Directors fees of $9,000 were
incurred for a September 1996 meeting; no such meeting was held in the prior
period. Net decreases of $5,000 resulted from reductions in director and
officer insurance premiums and other miscellaneous items.
Professional fees of $168,000 in the current period, associated with
various valuation studies and analysis relating to financial matters, increased
by $23,000 over professional fees of $145,000 in the prior period. The current
period included a non-recurring charge of approximately $76,000 in consulting
fees attributable to the value of warrants acquired by former consultants during
the period. The prior period included accounting and legal fees incurred for
finalization of issues related to prior operations of the Company.
Amortization of intangible assets of $96,000 in the current period
increased by $6,000 over amortization of $90,000 in the prior period.
Amortization of the goodwill and a covenant-not-to-compete associated with the
Alliance and SD&A acquisitions on April 25, 1995 increased in the current
period due to an increase in goodwill of $850,000 as of June 30, 1996 for
payments made to the former owner of SD&A resulting from achievement of defined
results of operations of SD&A for the year then ended.
The Company recorded a net gain of $90,000 from the sale of the its
undeveloped parcel of land in Laughlin, Nevada in August 1996, which gain was
recorded net of commissions and related selling expenses.
Interest expense of $48,000 in the current period decreased by $51,000
compared to $99,000 in the prior period due to principal payments on the SD&A
seller debt and reductions in the interest rate.
The provision for income taxes of $4,000 in the current period
decreased by $49,000 compared to $53,000 in the prior period. Despite
consolidated losses from continuing operations, the provision resulted from
state and local taxes incurred on taxable income at the operating subsidiary
level which could not be offset by losses incurred at the parent company level.
As a result of the foregoing factors, the Company's
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net loss increased from $136,000 ($0.05 per share) in the prior period to
$278,000 ($0.11 per share) in the current period.
Capital Resources and Liquidity
At September 30, 1996 and June 30, 1996, on a consolidated basis the
Company had cash and cash equivalents of $1,180,000 and $1,393,000,
respectively, and accounts receivable net of allowances of $1,864,000 and
$2,682,000, respectively.
The Company generated losses from operations of $278,000 in the current
period and used net cash in operating activities of $389,000. Due to seasonal
decreases in revenues and certain related expenses between the fourth and first
fiscal quarters, at September 30, 1996, accounts receivable relating to the SD&A
operation decreased $817,000 and trade accounts payable and accrued liabilities
decreased $903,000 compared to levels at June 30, 1996.
In part due to certain seasonal marketing patterns and subscriptions,
revenues are expected to decrease during the second and third fiscal quarters.
Starting in October 1996, the Company will recognize revenues of Metro. The
fourth calendar quarter, which is the Company's second fiscal quarter, has
historically been Metro's strongest. The Company cannot predict the degree to
which, on a consolidated basis, these trends will continue.
In the current period, net cash of $632,000 was provided from investing
activities. The Company received proceeds of $860,000 from the sale of its land
in Laughlin, Nevada, which was net of commissions and related selling expenses.
Purchases of property and equipment of $233,000 resulted primarily from the
Company's relocation and expansion of its Berkeley calling center in August
1996.
In the current period financing activities used $456,000. The Company has
a $500,000 line of credit with a bank which was fully drawn as of June 30, 1996.
During the current period the Company repaid $398,000 on the line. The Company
is exploring the possible increase or replacement of such line of credit with a
larger credit facility. No assurance can be given that the Company will be able
to obtain such a replacement credit facility, or that any such replacement
credit facility will be larger than the existing facility.
In connection with the Metro acquisition, which was affected as of October
1, 1996, the Company issued promissory notes to the former shareholders of Metro
in an aggregate principal amount of $1.0 million. Such notes bear interest at
6% per annum, are scheduled to mature June 30, 1998 and are convertible at the
option of the holders thereof into 185,874 shares of Common Stock.
Amortization expense will increase starting in October 1996 with the
inclusion of Metro operating results and recognition of goodwill arising from
that acquisition. Additional contingent payments in connection with the
acquisition of SD&A, based on the achievement of certain defined earnings
levels, may be due at the end of fiscal 1997 and 1998, which will continue to
increase amortization expense in subsequent years.
On October 17, 1996, the Company filed a Form SB-2 registration statement
(the "Registration Statement") with the Securities and Exchange Commission. The
Registration Statement relates to an offering of 1,500,000 shares of Common
Stock, of which 1,400,000 shares are being offered by the Company and 100,000
are being offered by certain stockholders of the Company (the "Offering"). It
also relates to the sale of 1,344,468 shares of Common Stock by certain selling
stockholders of which 94,468 shares are currently owned and 1,250,000 shares are
issuable upon conversion of shares of the Company's
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Series B Convertible Preferred Stock, par value $.01 per share. Such 1,250,000
shares will be subject to "lock up" provisions that prohibit resale of such
shares for a period of nine months from the Company's offering.
In connection with the offering, the Company will incur a non-recurring
non-cash charge estimated to be $0.5 million in the fiscal quarter in which the
offering is consummated, as a result of the issuance by the Company of warrants
exercisable for an aggregate of up to 1,191,985 shares of Common Stock to
certain stockholders of the Company as consideration for the agreement of such
stockholders to certain lock-up arrangements. There can be no assurance as to
when or whether the offering will be consummated or the terms thereof.
The Company believes that the net proceeds of the Offering, if
consummated, together with the funds available from operations, including the
operations of Metro and from the August 1996 sale of the Laughlin, Nevada land,
should be adequate to finance its operations and enable the Company to meet
interest and debt obligations through its fiscal year ending June 30, 1998. In
conjunction with the Company's acquisition and growth strategy, additional
financing may be required to complete any such acquisitions and to meet
potential contingent acquisition payments. There can be no assurance, however,
that such capital, if required, will be available on terms acceptable to the
Company, if at all.
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PART II - OTHER INFORMATION
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 14, 1996 the Company held a Special Meeting of Shareholders to
vote on management's proposal to amend the Company's Amended and Restated
Articles of Incorporation to increase the number of authorized shares of Common
Stock of the Company from 6,250,000 shares to 36,250,000 shares. The shares
voted were as follows:
For 2,276,607
Against 99,424
Abstentions 2,419
Broker non-votes None
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ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Exhibit Exhibit
Number Item (See Notes) (*)
- ----------- ---- ---------------
2.1 Agreement and Plan of Merger dated as of October B (2.1)
1, 1996 between All-Comm Media Corporation, Metro
Services Group, Inc., Metro Merger Corp. and the
Shareholders named therein
3.1 Certificate of Designation for Series C A (3.7)
Convertible Preferred Stock
10.1 Form of promissory note of All-Comm Media B (2.1)
Corporation issued to former shareholders of
Metro Services Group, Inc. (included in
Exhibit 2.1)
10.2 Form of Registration Rights Agreement dated as of B (2.1)
October ___, 1996 between All-Comm Media
Corporation and the Shareholders named
therein (included in Exhibit 2.1)
10.3 Amendment No. 1 to the Registration Rights C
Agreement dated as of October 9, 1996
10.4 Form of Employment Agreement between Metro B (2.1)
Services Group, Inc. and Mr. J. Jeremy Barbera
(included in Exhibit 2.1)
10.5 Form of Employment Agreement between Metro B (2.1)
Services Group, Inc. and Mr. Robert M. Budlow
(included in Exhibit 2.1)
10.6 Form of Employment Agreement between Metro B (2.1)
Services Group, Inc. and Ms. Janet Sautkulis
(included in Exhibit 2.1)
10.7 Form of Series C Convertible Preferred Stock A (10.26)
Private Placement Purchase Agreement
10.8 Form of Warrant Certificate Issued to holders of A (10.26)
Series C Convertible Preferred Stock (included
in Exhibit 10.7)
10.9 Form of letter dated September 10, 1996 rescinding C
Private Placement Agreement dated June 7, 1996
11.1 Statement Regarding Computation of Net Income Per C
Share
27.1 Financial Data Schedule C
Notes relating to Exhibits
A Incorporated by reference to the Company's Registration Statement on Form
SB-2, filed on October 17, 1996.
B Incorporated by reference to the Company's Report on Form 8-K dated October
11, 1996.
C Filed herewith.
* Numbers in parentheses next to any of the above letters A and B refer to the
exhibit numbers within each document from which the Exhibit is incorporated
by reference herein.
13
<PAGE> 14
b) Reports on Form 8-K
1. On or about August 16, 1996, the Company filed a Current
Report on Form 8-K regarding the sale of its undeveloped land
in Laughlin, Nevada, for $952,000.
2. On or about October 11, 1996, the Company filed a Current
Report on Form 8-K regarding the acquisition of Metro Services
Group, Inc. ("Metro") for 1,814,000 shares of the Company's
common stock, par value $.01 per share, valued at $7,256,000,
and promissory notes having an aggregate face value of
$1,000,000. Audited financial statements of Metro were
incorporated by reference to the Company's Form SB-2
Registration Statement filed on October 17, 1996 and included:
balance sheets as at December 31, 1995 and June 30, 1996
(unaudited); statements of operations for the years ended
December 31, 1995 and 1994 and the (unaudited) six months
ended June 30, 1996 and 1995; statements of shareholders'
equity deficit or the years ended December 31, 1995 and 1994
and the (unaudited) six months ended June 30, 1996;
statements of cash flows for the years ended December 31,
1995 and 1994 and the (unaudited) six months ended June 30,
1996 and 1995; and the related notes thereto.
14
<PAGE> 15
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ALL-COMM MEDIA CORPORATION
(Registrant)
By /s/ Barry Peters
--------------------------------
Barry Peters
Chairman of the Board and Chief
Executive Officer
Date: November 13, 1996
15
<PAGE> 1
Exhibit 10.3
AMENDMENT NO. 1 TO REGISTRATION RIGHTS AGREEMENT
Amendment No. 1 to the Registration Rights Agreement referred
to below, dated as of October 9, 1996 ("Amendment No. 1"), among All-Comm Media
Corporation, a Nevada corporation (the "Company"), and J. Jeremy Barbera, Janet
Sautkulis and Robert M. Budlow (the "Shareholders").
The Company and the Shareholders are parties to a Registration
Rights Agreement, dated as of October 9, 1996 (as in effect on the date hereof,
the "Registration Rights Agreement"), which the Company and the Shareholders
desire to amend as set forth herein.
Accordingly, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
agree as follows:
Section 1. Definitions. Except as otherwise defined in this
Amendment No. 1, terms used but not defined herein have the meanings given to
such terms in the Registration Rights Agreement.
Section 2. Amendments. Subject to the execution and delivery
of this Amendment No. 1 by the parties hereto, but effective as of the date
hereof, the Registration Rights Agreement shall be amended as follows:
2.01 Section 2(a) of the Registration Rights Agreement is
hereby amended to read in its entirety as follows:
(a) In the event the Holders are not notified of the filing
of a registration statement as provided in Section 4 of this agreement
within nine (9) months after the completion of an underwritten public
offering by the Company of its securities ("Public Offering") (or by
December 31, 1997, if such an underwritten public offering has not
been completed by March 31, 1997), any Requesting Holders may make a
written request to the Company (specifying that it is being made
pursuant to this Section 2) that the Company file a registration
statement under the 1933 Act (or a similar document pursuant to any
other statute then in effect corresponding to the 1933 Act) covering
the registration of Registrable Stock. In such event, the Company
shall (x) within ten (10) days thereafter notify in writing all other
Holders of Registrable Stock of such request, and (y) use its best
efforts to
<PAGE> 2
cause to be registered under the 1933 Act all Registrable Stock that
the Requesting Holders and such other Holders have, within thirty (30)
days after the Company has given such notice, requested be registered.
2.02 The first sentence of Section 4 of the Registration
Rights Agreement is hereby amended to read in its entirety as follows:
Commencing nine (9) months after the completion of a Public Offering
(or, if such a Public Offering has not been completed by March 31,
1997, commencing December 31, 1997), if the Company determines that it
shall file a registration statement under the 1933 Act (other than a
registration statement on Form S-4 or Form S-8 or filed in connection
with an exchange offer or an offering of securities solely to the
Company's existing stockholders) on any form that would also permit
the registration of the Registrable Stock and such filing is to be on
its behalf and/or on behalf of selling holders of its securities for
the general registration of its common stock to be sold for cash, at
each such time the Company shall promptly given each Holder written
notice of such determination setting forth the date on which the
Company proposes to file such registration statement, which date shall
be no earlier than forty (40) days after the date of such notice and
advising each Holder of such Holder's right to have Registrable Stock
included in such registration statement.
Section 3. Miscellaneous. As amended hereby, the
Registration Rights Agreement shall remain in full force and effect. This
Amendment No. 1 may be executed in any number of counterparts, all of which
taken together shall constitute one and the same amendatory instrument and any
of the parties hereto may execute this Amendment No. 1 by signing any such
counterpart. This Amendment No. 1 shall be governed by, and construed in
accordance with, the law of the State of New York, without regard to the
conflict of law rules and principles thereof.
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
1 to be duly executed and delivered as of the day and year first above written.
ALL-COMM MEDIA CORPORATION
By/s/ Barry Peters
---------------------------------------
Name: Barry Peters
Title: Chairman of the Board and Chief
Executive Officer
/s/ J. Jeremy Barbera
---------------------------------------
J. Jeremy Barbera
/s/ Janet Sautkulis
---------------------------------------
Janet Sautkulis
/s/ Robert M. Budlow
--------------------------------------
Robert M. Budlow
<PAGE> 1
Exhibit 10.9
September 10, 1996
Dear Subscriber:
We refer to the Private Placement Purchase Agreement between you and the
Company dated June 7, 1996 (the "Prior Agreement"). The Prior Agreement is
hereby rescinded, as if it had never been signed. You will promptly deliver to
the Company, for cancellation, all instruments which were delivered to you
under the Prior Agreement.
Concurrently herewith, the Company and you are entering into a Private
Placement Purchase Agreement dated of this date and effective as of June 7,
1996 (the "New Agreement"). Amounts paid by you to the Company under the Prior
Agreement are deemed to have been returned to you by the Company and to have
been immediately reinvested by you as the full purchase price for securities
purchased by you under the New Agreement.
Please confirm your agreement with the foregoing by signing and returning the
enclosed copy of this letter.
ALL-COMM MEDIA CORPORATION
By: /s/ E. William Savage
---------------------------------
E. William Savage
President
Agreed:
- -------------------------------
By:
<PAGE> 1
Exhibit 11.1
STATEMENTS REGARDING COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended September 30
-------------------------------
1996 1995
--------- ---------
<S> <C> <C>
Net loss per share was calculated as follows:
Net loss $(277,981) $(136,026)
Accrued dividends on preferred stock (66,500)
Net loss attributable to common stockholders $(344,481) $(136,026)
Primary:
Weighted average common shares outstanding 3,214,884 3,016,028
Incremental shares under stock options computed under the
treasury stock method using the average market price
of the issuer's common stock during the periods 3,500,731 11,063
Incremental shares under convertible preferred stock 1,907,295
Weighted average common and common equivalent
shares outstanding unless antidilutive 3,214,884 3,016,028
Net loss per common share (.11) (.05)
Fully diluted:
Weighted average common shares outstanding 3,214,884 3,016,028
Incremental shares under stock options computed under the
treasury stock method using the market price of the
issuer's common stock at the end of the periods if
higher than the average market price 3,500,731 11,063
Incremental shares under convertible preferred stock 1,907,295
Weighted average common and common equivalent
shares outstanding unless antidilutive 3,214,884 3,016,028
Net loss per common share (.11) (.05)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ALL-COMM MEDIA CORPORATION AS OF
AND FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 INCLUDED IN THIS REPORT ON
FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,180,129
<SECURITIES> 0
<RECEIVABLES> 1,180,425
<ALLOWANCES> 6,000
<INVENTORY> 0
<CURRENT-ASSETS> 3,605,522
<PP&E> 705,449
<DEPRECIATION> (211,418)
<TOTAL-ASSETS> 11,890,813
<CURRENT-LIABILITIES> 2,025,629
<BONDS> 1,452,772
0
82
<COMMON> 33,032
<OTHER-SE> 8,379,288
<TOTAL-LIABILITY-AND-EQUITY> 11,890,813
<SALES> 3,932,030
<TOTAL-REVENUES> 3,932,030
<CGS> 145,230
<TOTAL-COSTS> 145,230
<OTHER-EXPENSES> 3,303,499
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,417
<INCOME-PRETAX> (274,003)
<INCOME-TAX> 3,978
<INCOME-CONTINUING> (277,981)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (277,981)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
