SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended
SEPTEMBER 30, 2000
Commission File Number
0-8508
BROADVIEW MEDIA, INC.
(Exact Name of Small Business Issuer as Specified in its Charter)
Minnesota 41-0641789
(State or other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
4455 West 77th Street
Minneapolis, MN 55435
Address of Principal (Zip Code)
Executive Offices)
Issuer's telephone number including Area Code: 952-835-4455
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15 of Exchange Act during the past twelve months (or
for such shorter period that the issuer was required to file such
reports) and (2) has been subject to such filing requirements for the
past 90 days.
Yes__X___ No______
1,361,092 shares of $.01 par value common stock were outstanding at
November 1, 2000.
Transitional Small Business Disclosure Format (Check One):
Yes____ No___X___
<PAGE>
BROADVIEW MEDIA, INC.
AND SUBSIDIARIES
INDEX
FORM 10-QSB
September 30, 2000
PART I Financial Information
Item 1. Financial Statements Page No.
Condensed Consolidated Balance Sheets:
September 30, 2000 and March 31, 2000 3
Condensed Consolidated Statements of Operations:
Three and Six Months Ended September 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flow:
Six Months Ended September 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management Discussion and Analysis 7- 9
PART II Other Information
Item 1. Legal Proceedings 10
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8K 10
<PAGE>
Part I
Broadview Media, Inc. and Subsidiaries
Consolidated Balance Sheet
<TABLE>
<CAPTION>
September 30 March 31
2000 2000
----------- -----------
<S> <C> <C>
Assets (Unaudited) *
Current Assets
Cash $ 1,170,738 $ 1,132,890
Cash Restricted 3,698
Trade accounts receivable less doubtful accounts
reserve of $51,824 and $38,999, respectively 1,343,980 1,850,699
Refundable income taxes 13,632
Other assets 179,550 130,336
----------- -----------
Total Current Assets 2,694,268 3,131,255
Property and Equipment
Leasehold improvements 639,699 622,353
Machinery and equipment 12,355,113 12,223,977
----------- -----------
12,994,812 12,846,330
Less: accumulated depreciation 11,309,460 10,881,312
----------- -----------
1,685,352 1,965,018
Other Assets 83,150 128,407
----------- -----------
83,150 128,407
----------- -----------
Total Assets $ 4,462,770 $ 5,224,680
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long term debt and capital leases $ 379,766 $ 396,722
Trade accounts payable 188,802 306,231
Commissions, salaries and withholding 159,764 206,837
Miscellaneous payables and accrued expenses 140,456 243,782
Deferred Gain-Short Term 62,376 62,376
Customer deposits 1,029,136 1,385,769
----------- -----------
Total Current Liabilities 1,960,300 2,601,717
Deferred Gain-Long Term 47,024 78,212
Long Term Debt and Capital Leases, less current maturities 804,655 1,052,869
Stockholders' Equity
Common stock 13,611 13,578
Additional paid-in capital 579,072 577,680
Retained earnings 1,058,108 900,624
----------- -----------
1,650,791 1,491,882
----------- -----------
Total Liabilities and Equity $ 4,462,770 $ 5,224,680
=========== ===========
</TABLE>
*The balance sheet at March 31, 2000 has been taken from the audited financial
statements at that date. See notes to unaudited condensed consolidated
financial statements.
<PAGE>
Broadview Media, Inc. and Subsidiaries
Consolidated Statement of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September September
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net Sales $ 2,006,379 $ 2,550,181 $ 4,030,238 $ 5,243,550
Cost of products and services sold 1,633,405 2,043,705 3,313,196 4,163,407
----------- ----------- ----------- -----------
Gross Profit 372,974 506,476 717,042 1,080,143
Selling, general and administrative 269,000 374,627 537,215 750,003
----------- ----------- ----------- -----------
Operating Income 103,974 131,849 179,827 330,140
Other income(expense)
Miscellaneous income 13,141 9,640 42,199 15,508
Severance charge (43,772) (43,772)
Gain on sale of equipment 2,870 36,045
Interest expense (36,963) (133,117) (98,087) (275,426)
----------- ----------- ----------- -----------
Total other expense, net (20,952) (167,249) (19,843) (303,690)
Income (Loss) Before Income Taxes 83,022 (35,400) 159,984 26,450
Income tax expense (1,250) (1,250) (2,500) (2,500)
----------- ----------- ----------- -----------
Net Income (Loss) $ 81,772 ($ 36,650) $ 157,484 $ 23,950
=========== =========== =========== ===========
=========== =========== =========== ===========
BASIC INCOME (LOSS) PER SHARE $ .06 ($ .03) $ .12 $ .02
=========== =========== =========== ===========
DILUTIVE INCOME (LOSS) PER SHARE $ .05 ($ .03) $ .10 $ .02
=========== =========== =========== ===========
</TABLE>
(1) Net earnings (loss) per share data are based on the weighted average
number of common shares outstanding during the periods as follows:
Basic Dilutive
Six months ended September 30, 2000 1,358,984 1,560,461
Six months ended September 30, 1999 1,356,425 1,356,425
Three months ended September 30, 2000 1,360,195 1,565,130
Three months ended September 30, 1999 1,356,425 1,356,425
See notes to unaudited condensed consolidated financial statements.
<PAGE>
Broadview Media, Inc. and Subsidiaries
Condensed Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30
2000 1999
----------- -----------
<S> <C> <C>
CASH FLOW-OPERATING ACTIVITIES
Net Income $ 157,484 $ 23,950
Adjustments
Depreciation 428,148 513,017
Other (85,815) 89,515
Decrease in trade receivables 506,719 71,465
(Decrease) Increase in customer deposits (356,633) 755,582
Other-net (235,873) (69,391)
----------- -----------
Net cash provided by operating activities 414,030 1,384,138
CASH FLOW-INVESTING ACTIVITIES
Property and equipment additions (148,482) (225,288)
Net proceeds from sale of assets 36,045 0
----------- -----------
Net cash used by investing activities (112,437) (225,288)
CASH FLOW-FINANCING ACTIVITIES
Advances-Line of credit (446,547)
Advances-Long term borrowing 400,000
Payments-Long term borrowing (665,170) (380,655)
Common stock options exercised 1,425
----------- -----------
Net cash used by financing activities (263,745) (827,202)
----------- -----------
NET INCREASE (DECREASE) IN CASH $ 37,848 ($ 331,648)
=========== ===========
CASH AT BEGINNING OF PERIOD 1,132,890 316,150
CASH AT END OF PERIOD 1,170,738 647,798
</TABLE>
See notes to unaudited condensed consolidated financial statements.
<PAGE>
BROADVIEW MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Interim Financial Statements
The consolidated balance sheet as of September 30, 2000, the
consolidated statement of operations for the three and six month
periods ended September 30, 2000 and 1999 and the condensed
consolidated statements of cash flow for the six month period then
ended have been prepared by the Company without audit. In the opinion
of management, all adjustments which consisted of only normal recurring
adjustments necessary to present fairly the financial position, results
of operations and changes in statement of cash flow at September 30,
2000 and for all periods presented have been made.
Certain information and footnotes normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
March 31, 2000 annual report to shareholders. The results of operations
for the period ended September 30, 2000 are not necessarily indicative
of the results for the full year.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenue
and expense during the reporting period. Actual results could differ
from these amounts.
2. Earnings/(Loss) Per Common Share
The number of shares used in the calculations of EPS are as follows:
<TABLE>
<CAPTION>
Three months Ended Six Months Ended
September September
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Weighted average number of common shares used in
basic EPS 1,360,195 1,356,425 1,358,984 1,356,425
Effect of dilutive stock options 204,935 -- 201,477 --
--------- --------- --------- ---------
Weighted average number of common shares and
dilutive potential common stock used in diluted EPS 1,565,130 1,356,425 1,560,461 1,356,425
</TABLE>
Antidilutive options and warrants totaling 242,000 shares were not included in
the computation of diluted earnings per share for the six month period ended
September 30, 2000. All such options and warrants were antidilutive for the
corresponding period of the prior year.
<PAGE>
BROADVIEW MEDIA, INC. AND SUBSIDIARIES
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL REQUIREMENTS
Operating cash requirements for the first six months of fiscal 2001 were met
from cash flow from operations and utilization of the cash reserves from March
31, 2000. Net cash provided by operations went from $1,384,138 to $414,030 which
is a decline of $970,108. This change was due primarily to the timing of
customer deposits, receivables and the decline in sales as discussed below.
On April 20, 2000 the Company entered into a financing agreement with Fidelity
Bank which consists of a $1,000,000 working capital line of credit expiring May
2001, a $400,000 equipment purchases line of credit expiring January 2001, and a
$400,000 term note due in monthly installments through April 2004. Interest on
all loans outstanding under the financing agreement is based on prime plus .5%.
The $400,000 equipment line of credit was not utilized during the six months
ended September 30, 2000. The financing is secured by substantially all of the
Company's assets. Proceeds from the new term note were used to retire the
Nations Credit term note due April 24, 2000.
It is suggested that the Company's annual report to shareholders be read for
more detail as to the Company's overall financial position.
RESULTS OF OPERATIONS - SIX MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the six months ended September 30, 2000 of $4,030,238 compare with
sales of $5,243,550 for corresponding period of the prior year, a 23.1%
decrease. The net sales decrease of $1,213,312 is attributable to the closing of
the Dallas facility and last year's completion of the Company's Department of
Defense contract work.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the six months ended September 30, 2000
totaled $3,313,196 as compared to a cost of sales of $4,163,407 in the
corresponding period of the prior year. This decrease in the cost of sales of
$850,211 is the result of reduced sales. The decrease in the cost of sales
consists of decreases in variable costs, affected by the decline in sales, and a
continued decrease in fixed costs such as payroll, depreciation and general
overhead, a portion of which is attributable to the closing of the Dallas
facility. Also contributing to the decrease was a rebate from the State of
Minnesota for expenses incurred in a prior period in the amount of $71,500. This
rebate was for television productions that were done in the state of Minnesota.
The cost of sales as a percent to sales increased to 82% for the six months
ended September 30, 2000 from 79% for the same period in the prior year. This
increase is due to the declining sales in relation to the fixed costs in cost of
sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the six months ended September
30, 2000 totaled $537,215, as compared to $750,003 in the corresponding period
of the prior year, a decrease of $212,788, or 28.4%. The closing of the Dallas
facility accounted for an estimated forty-six percent (46%) of the reduction.
Reduced expenses for legal fees associated with a lawsuit the company settled in
May 2000 coupled with decreased salary and general overhead expenses accounted
for the remainder of the savings.
<PAGE>
INTEREST EXPENSE
Interest expense for the six months ended September 30, 2000 totaled $98,087
compared with expense of $275,426 in the corresponding period of the prior year,
a decrease of $177,339, or 64%. The decrease in interest expense is the result
of a significant reduction in the amount of outstanding debt and a new financing
agreement set in place in April 2000 which included reduced interest rates and
fees.
INCOME TAX EXPENSE (CREDIT)
During the year ended March 31, 2000, the Company had a valuation allowance of
$936,000 on the deferred tax assets. Income tax expense of $2,500 for the period
reflects minimum tax fees imposed by the State of Minnesota. The Company has
available deferred tax benefits that may be utilized as the Company realizes
profits. A portion of these deferred tax benefits were utilized for the two
periods ended September 30, 2000 and March 31, 2000.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the three months ended September 30, 2000 of $2,006,379 compare with
sales of $2,550,181 for corresponding period of the prior year, a 21.3%
decrease. The net sales decrease of $543,802 is attributable to the closing of
the Dallas facility and last year's completion of the Company's Department of
Defense contract work.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the three months ended September 30, 2000
totaled $1,633,405 as compared to a cost of sales of $2,043,705 in the
corresponding period of the prior year. This decrease in the cost of sales of
$410,300 is the result of reduced sales. The decrease in the cost of sales
consists of decreases in variable costs, affected by the decline in sales, and a
continued decrease in fixed costs such as payroll, depreciation and general
overhead, a portion of which is attributable to the closing of the Dallas
facility. Also contributing to the decrease was a rebate from the State of
Minnesota for expenses incurred in a prior period in the amount of $71,500. This
rebate was for television productions done in the State of Minnesota. The cost
of sales as a percent to sales increased to 81.4% for the three months ended
September 30, 2000 from 80.1% for the same period in the prior year.
This increase is due to the declining sales in relation to the fixed costs in
cost of sales.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses for the three months ended
September 30, 2000 totaled $269,000, as compared to $374,628 in the
corresponding period of the prior year, a decrease of $105,628, or 28.2%. The
closing of the Dallas facility accounted for an estimated forty-three percent
(43%) of the reduction. Reduced expenses for legal fees associated with a
lawsuit the company settled in May 2000 coupled with decreased salary and
general overhead expenses accounted for the remainder of the savings.
INTEREST EXPENSE
Interest expense for the three months ended September 30, 2000 totaled $36,963
compared with expense of $133,117 in the corresponding period of the prior year,
a decrease of $96,154, or 72%. The decrease in interest expense is the result of
a significant reduction in the amount of outstanding debt and a new financing
agreement set in place in April 2000 which included reduced interest rates and
fees.
<PAGE>
INCOME TAX EXPENSE (CREDIT)
During the year ended March 31, 2000, the Company had a valuation allowance of
$936,000 on the deferred tax assets. Income tax expense of $1,250 for the period
reflects minimum tax fees imposed by the State of Minnesota. The Company has
available deferred tax benefits that may be utilized as the Company realizes
profits. A portion of these deferred tax benefits were utilized for the two
periods ended September 30, 2000 and March 31, 2000.
FORWARD LOOKING INFORMATION
This section contains disclosures which are forward-looking statements.
Forward-looking statements include all statements that do not relate solely to
historical or current facts, and can be identified by the use of words such as
"may," "will," "expect," "project," "estimate," "anticipate," "envision,"
"plan," or "continue." These forward-looking statements are based upon the
Company's current plans or expectations and are subject to a number of
uncertainties and risks that could significantly affect current plans and
anticipated actions and the Company's future financial condition and results.
The uncertainties and risks include, but are not limited to, general economic
and business conditions; loss of significant customers; changes in levels of
client advertising; and the impact of competition. As a consequence, current
plans, anticipated actions and future financial condition and results may differ
from those expressed in any forward-looking statements made by or on behalf of
the Company.
<PAGE>
PART II
Item 1. Legal Proceedings.
On September 28, 2000, Vadim Branitski, a former employee, filed a complaint
against the Registrant in Federal District Court for the District of Minnesota
alleging age discrimination under the federal Age Discrimination in Employment
Act and seeking damages in excess of $75,000. The Registrant filed an answer to
the complaint on October 23, 2000. The Registrant believes that the claim is
without merit and intends to vigorously defend its position.
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of the Registrant's shareholders was held on August
25, 2000.
(b) At the Annual Meeting a proposal to set the number of directors at six
was adopted by a vote of 1,300,596 shares in favor, with 1,943 shares
against, 505 shares abstaining and 0 shares represented by broker
nonvotes.
(c) Proxies for the Annual Meeting were solicited pursuant to Regulation
14A under the Securities Exchange Act of 1934, there was no
solicitation in opposition to management's nominees, and the following
persons were elected directors of the Registrant to serve until the
next annual meeting of shareholders and until their successors shall
have been duly elected and qualified:
Nominee Number of Votes For Number of Votes Withheld
-------- ------------------- ------------------------
Dean Bachelor 1,292,144 10,900
Ronald V. Kelly 1,292,144 10,900
Steven Lose 1,292,144 10,900
John C. McGrath 1,291,444 11,600
Gerald W. Simonson 1,292,144 10,900
Phillip A. Staden 1,292,144 10,900
Item 6. Exhibits and Reports on Form 8-K
a)Exhibits
27. Financial Data Schedule
b) Reports on Form 8-K
None
<PAGE>
Signatures
Pursuant to the requirements of he Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 2000 Broadview Media, Inc.
(Registrant)
By: /s/ Phillip A. Staden
Phillip A. Staden
President and Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit # Description
27 Financial Data Schedule
