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
JUNE 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______
1,357,759 shares of $.01 par value common stock were outstanding at
August 1, 2000.
Transitional Small Business Disclosure Format (Check One):
Yes____ No___X___
<PAGE>
BROADVIEW MEDIA, INC.
AND SUBSIDIARIES
INDEX
FORM 10-QSB
June 30, 2000
PART I Financial Information
Item 1. Financial Statements Page No.
Condensed Consolidated Balance Sheets:
June 30, 2000 and March 31, 2000 3
Condensed Consolidated Statements of Operations:
Three Months Ended June 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash Flow:
Three Months Ended June 30, 2000 and 1999 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management Discussion and Analysis 7 & 8
PART II Other Information
Item 6. Exhibits and Reports on Form 8K 9
<PAGE>
Part I
Broadview Media, Inc. and Subsidiaries
Consolidated Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
June 30 March 31
2000 2000
<S> <C> <C>
Assets (Unaudited) *
Current Assets
Cash $969,209 $1,132,890
Cash Restricted 3,698
Trade accounts receivable less doubtful accounts
reserve of $44,512 and $38,999, respectively 1,583,726 1,850,699
Refundable income taxes 13,632
Other assets 214,114 130,336
---------------- ---------------
Total Current Assets 2,767,049 3,131,255
Property, Plant and Equipment
Leasehold improvements 622,353 622,353
Machinery and equipment 12,306,053 12,223,977
---------------- ---------------
12,928,406 12,846,330
Less: accumulated depreciation 11,096,218 10,881,312
---------------- ---------------
1,832,188 1,965,018
Other Assets 102,731 128,407
---------------- ---------------
102,731 128,407
---------------- ---------------
Total Assets $4,701,968 $5,224,680
================ ===============
Liabilities and Stockholders' Equity
Current Liabilities
Current maturities of long term debt and capital leases $370,873 $396,722
Trade accounts payable 307,291 306,231
Commissions, salaries and withholding 226,462 206,837
Miscellaneous payables and accrued expenses 193,840 243,782
Deferred Gain-Short Term 62,376 62,376
Customer deposits 1,036,007 1,385,769
---------------- ---------------
Total Current Liabilities 2,196,849 2,601,717
Deferred Gain-Long Term 62,618 78,212
Long Term Debt and Capital Leases, less current maturities 874,907 1,052,869
Stockholders' Equity
Common stock 13,578 13,578
Additional paid-in capital 577,680 577,680
Retained earnings 976,336 900,624
---------------- ---------------
1,567,594 1,491,882
---------------- ---------------
Total Liabilities and Equity $4,701,968 $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
June
2000 1999
--------------------- --------------------
<S> <C> <C>
Net Sales $2,023,859 $2,693,369
Cost of products and services sold 1,679,791 2,119,702
--------------------- --------------------
Gross Profit 344,068 573,667
Selling, general and administrative 268,215 375,376
--------------------- --------------------
Operating Income 75,853 198,291
Other income(expense)
Miscellaneous income 29,058 5,867
Gain on sale of equipment 33,175
Interest expense (61,124) (142,309)
--------------------- --------------------
Total other income(expense), net 1,109 (136,442)
Income Before Income Taxes 76,962 61,849
Income tax expense (1,250) (1,250)
--------------------- --------------------
Net Income $75,712 $60,599
===================== ====================
BASIC INCOME PER SHARE $ .06 $.04
===================== ====================
DILUTIVE INCOME PER SHARE $ .05 $.04
===================== ====================
</TABLE>
(1) Net earnings per share data are based on the weighted average number
of common shares outstanding during the periods as follows:
Basic Dilutive
Three months ended June 30, 2000 1,357,759 1,550,269
Three months ended June 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>
Three Months Ended
June 30
2000 1999
--------------- -----------------
CASH FLOW-OPERATING ACTIVITIES
<S> <C> <C>
Net Income $75,712 $60,599
Adjustments
Depreciation 214,906 257,058
Other (71,966) 34,514
(Increase) Decrease in trade receivables 266,973 (19,067)
(Decrease) Increase in customer deposits (349,762) 834,912
Other-net (46,832) (64,595)
--------------- -----------------
Net cash provided by operating activities 89,031 1,103,421
CASH FLOW-INVESTING ACTIVITIES
Property and equipment additions (82,076) (131,147)
Net proceeds from sale of assets 33,175 0
--------------- -----------------
Net cash used by investing activities (48,901) (131,147)
CASH FLOW-FINANCING ACTIVITIES
Advances-Line of credit 286,548
Advances-Long term borrowing 400,000
Payments-Long term borrowing (603,811) (172,726)
Other (42,500)
--------------- -----------------
Net cash provided (used) by financing activities (203,811) 71,322
--------------- -----------------
NET INCREASE (DECREASE) IN CASH $(163,681) $1,043,596
=============== =================
CASH AT BEGINNING OF PERIOD 1,132,890 316,153
CASH AT END OF PERIOD 969,209 1,359,749
</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 June 30, 2000, the consolidated
statement of operations for the three month periods ended June 30, 2000 and
1999 and the condensed consolidated statements of cash flow for the three
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 June 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 June 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>
2000 1999
<S> <C> <C>
Weighted average number of common shares used
in basic EPS 1,357,759 1,356,425
Effect of dilutive stock options 192,500 -
---------- ---------
Weighted average number of common shares and
dilutive potential common stock used in diluted EPS 1,550,269 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 three month period ended
June 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 three 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 $1,103,421 to $89,031 which
is a decline of $1,014,390. 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 three months
ended June 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 - THREE MONTHS ENDED JUNE 30, 2000 COMPARED WITH
CORRESPONDING PERIOD OF PRIOR YEAR.
SALES
Sales for the three months ended June 30, 2000 of $2,023,859 compare with sales
of $2,693,369 for corresponding period of the prior year, a 24.9% decrease. The
net sales decrease of $669,510 is attributable to the closing of the Dallas
facility and last year's completion of the Company's Department of Defense
contract work. During the quarter the Company achieved sale increases in its
Programming Group but this was offset by a decrease in the Company's
non-programming related sales. The overall affect was a net reduction in sales.
COST OF PRODUCTS AND SERVICES SOLD
Cost of products and services sold for the three months ended June 30, 2000
totaled $1,679,791 as compared to a cost of sales of $2,119,702 in the
corresponding period of the prior year. This decrease in the cost of sales of
$439,911 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. The cost of sales as a percent to sales increased to 83% for the three
months ended June 30, 2000 from 78.7% 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 June 30,
2000 totaled $268,215, as compared to $375,376 in the corresponding period of
the prior year, a decrease of $107,161, or 28.5%. The closing of the Dallas
facility accounted for an estimated fifty percent (50%) 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 three months ended June 30, 2000 totaled $61,124
compared with expense of $142,309 in the corresponding period of the prior year,
a decrease of $81,185, or 57%. 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 $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 June 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 6. Exhibits and Reports on Form 8-K
a)Exhibits
10.1 Working Capital Line of Credit with Fidelity Bank April 20, 2000
10.2 Equipment Purchase Line of Credit with Fidelity Bank April 20, 2000
10.3 Term Loan with Fidelity Bank April 20, 2000
27. Financial Data Schedule
b) Reports on Form 8-K
A form 8-K/A (1) was filed on April 6, 2000 in order to file the contract
of sale of the Company's Texas property.
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: August 14, 2000 Broadview Media, Inc.
(Registrant)
By: /s/ Phillip A. Staden
Phillip A. Staden
President
<PAGE>
EXHIBIT INDEX
Exhibit# Description
10.1 Working Capital Line of Credit with Fidelity Bank April 20, 2000
10.2 Equipment Purchases Line of Credit with Fidelity Bank April 20, 2000
10.3 Term Loan with Fidelity Bank April 20, 2000
27 Financial Data Schedule
