UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended - August 31, 1995
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission File Number 0-18299
NEWS COMMUNICATIONS, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 13-3346991
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
174-15 Horace Harding Expwy., Fresh Meadows, New York 11365
(Address of principal executive offices)
(718) 357-3380
(Issuer's telephone number)
(Former name, former address and former fiscal
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
12, 13 or 15 (d) of the Exchange Act during the past 12 months (or 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 __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity , as of October 13, 1995: 7,793,426 shares $ .01 par value common
stock
FORM 10-QSB
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
TABLE OF CONTENTS
PAGE
PART I. Financial Information
Item 1. Financial Statements
Unaudited Consolidated Balance Sheet
at August 31, 1995 3
Unaudited Consolidated Statements of
Operations for the three and nine months
ended August 31, 1995 and August 31, 1994 5
Unaudited Consolidated Statements of Cash
Flows for nine months ended
August 31, 1995 and August 31, 1994 6
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis
or Plan of Operation 10
PART II. Other Information 15
Item 6. Exhibits and Reports on Form 8-K
Signatures 16
PART I-ITEM 1
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 1995
(UNAUDITED)
Assets:
Current Assets:
Cash and Cash Equivalents $ 32,586
Accounts Receivable [Less: Allowance for
Doubtful Accounts of $1,068,307] 5,010,544
Due From Related Parties 76,266
Other Current Assets 495,625
Total Current Assets 5,615,021
Property and Equipment at Cost- Net of
Accumulated Depreciation of $644,844 663,831
Goodwill - Net 3,699,030
Other Assets 169,884
Total Assets $ 10,147,766
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF AUGUST 31, 1995
(UNAUDITED)
Liabilities and Stochholders' Equity:
Current Liabilities:
Accounts Payable $ 457,407
Accrued Expenses 159,979
Accrued Payroll Taxes 48,501
Notes Payable - Bank 480,000
Other Current Liabilities 154,956
Total Current Liabilities 1,300,843
Stockholders' Equity:
Preferred Stock, $1.00 Par Value; 500,000 Shares Authorized:
10% Convertible Preferred Stock, 1,250 Shares Authorized;
32 Issued and Outstanding, $500 Per Share Per Annum
Cumulative Dividends, $160,000 Liquidation Value $ 32
8% Convertible Preferred Stock, 500 Shares Authorized,
217 Issued and Outstanding, $80 Per Share Per Annum
Cumulative Dividends, $217,000 Liquidation Value 217
12% Convertible Preferred Stock, 200 Shares Authorized,
200 Issued and Outstanding, $120 Per Share Per Annum
Cumulative Dividends, $200,000 Liquidation Value 200
Common Stock, $.01 Par Value; Authorized 100,000,000
Shares; 7,934,376 Shares Issued 79,344
Paid-in-Capital Preferred Stock 519,873
Paid-in-Capital Common Stock 13,677,385
(Deficit) (5,021,399)
Total $9,255,652
Less: Treasury Stock [151,000 Shares]-
At Cost (408,729)
Total Stockholders' Equity 8,846,923
Total Liabilities and Stockholders' Equity $ 10,147,766
<TABLE>
<CAPTION>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended August 31, Nine Months Ended August 31
1995 1994 1995 1994
Unaudited
<S> <C> <C> <C> <C>
Net Revenues $5,602,219 $3,969,208 $13,543,016 $9,312,826
Expenses:
Direct Mechanical Costs 1,617,361 1,344,106 4,094,584 3,013,444
Salaries, Benefits and
Outside Labor Costs 2,494,283 1,547,640 6,732,541 4,178,834
Rent, Occupancy & Utilities 232,017 140,408 619,679 367,210
Provisions for Doubtful
Accounts 87,000 84,000 159,000 173,000
General and Administrative 794,770 310,079 2,041,067 942,005
Total Expenses 5,225,431 3,426,233 13,646,871 8,674,493
Operating Income (Loss) Before
Interest Expense and
Interest Income 376,788 542,975 (103,855) 638,333
Interest Expense (6,803) (13,339) (13,278) (69,829)
Interest Income 13 3,802 31,591 36,441
Net Income (Loss) $ 369,998 $ 533,438 $ (85,542) $ 604,945
Net Income (Loss) Per Share $ .05 $ .07 $(.01) $ .08
Weighted Average Shares
Outstanding 7,783,376 7,632,549 7,776,286 7,434,227
</TABLE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended August 31,
1995 1994
Unaudited
Operating Activities:
Net Income (Loss) $ (85,542) $ 604,945
Adjustments to Reconcile Net
(Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 373,077 257,558
Provision for Losses on Accounts
Receivable 159,000 173,000
Change in Assets and Liabilities:
(Increase) Decrease in Accounts
Receivable (1,405,859) (1,509,640)
(Increase) Decrease in Other Current
Assets (333,422) (702,988)
(Increase) Decrease in Due from
Related Parties 3,856 ----
Decrease (Increase) in Other Assets 23,153 (18,063)
(Increase) Decrease in Goodwill (24,033) ----
Increase (Decrease) in Accounts Payable
and Accrued Expenses (793,481) 149,011
Increase (Decrease) in Payroll
Taxes Payable (82,367) (79,409)
Increase (Decrease) in Other
Current Liabilities 148,516 (67,314)
Total Adjustments (1,931,560) (1,797,845)
Net (Deficit) - Operating Activities - (2,017,102) (1,192,900)
Investing Activities:
Purchase of the Nassau Newspapers ---- (313,000)
Purchase of Brooklyn Skyline ---- ( 25,000)
Purchase of Bronx Press Review ---- (17,551)
Sale of Marketable Securities 924,633 ----
Capital Expenditures (120,009) (136,583)
Net Cash Provided (Used) by
Investing Activities 804,624 (492,134)
Financing Activities:
Principal Payments Long-Term Debt (75,747) (470,250)
Proceeds from Exercise of Warrants 9,216 2,055,709
Dividend on Preferred Stock (31,020) (31,020)
Proceeds from Notes Payable - Bank 480,000 ----
Proceeds from Exercise of Stock Options 19,758 1,000
Payment of Notes Payable ---- (81,254)
Net Cash Provided by Financing Activities 402,207 1,474,185
Net Increase (Decrease) in Cash (810,271) (210,849)
Cash - Beginning of Periods 842,857 2,832,858
Cash - End of Periods $ 32,586 $ 2,622,009
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 9,547 $ 10,754
Income Taxes ---- ----
Supplemental Schedule of Non-Cash Investing and Financing Activities:
On August 18, 1994 the Company acquired certain assets of Brooklyn Skyline
Publications, Inc. ("Brooklyn Skyline"). The net purchase price consisted of
cash and stock valued at approximately $110,000. On December 9, 1993 the
Company acquired certain assets of Long Island News Group and MB Publishing Co.,
publishers of eight paid weekly newspapers in Nassau County, New York (the
"Nassau Newspapers"). The net purchase price consisted of cash and stock valued
at approximately $655,000. The cash portion ($313,000) was paid at the time of
acquisition with the stock to be issued in annual installments beginning in
December 1996.
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The Consolidated Balance Sheet as of August 31, 1995 and the Consolidated
Statements of Operations for the three and nine-month periods ended August 31,
1995 and August 31, 1994, and the Consolidated Statements of Cash Flows have
been prepared by the company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flow have
been made. The results for the interim periods are not necessarily indicative of
the results for a full year.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been consolidated or omitted. These consolidated financial statements
should be read in conjunction with the Company's annual report Form 10-KSB for
the fiscal year ended November 30, 1994 and the related audited financial
statements included therein.
B. Income/Loss per Share:
Loss per share is based on the weighted average number of shares outstanding
during the periods.
PART I-ITEM 2
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
News Communications, Inc. publishes various weekly community newspapers and
related targeted audience publications.
The Company publishes the Dan's Papers, and the Montauk Pioneer,Our Town,
the Manhattan Spirit, the Chelsea Clinton News, and the Westsider, the Queens
Tribune, the Bronx Press Review, (and the Riverdale Review and Westchester
Lifestyles), the Nassau Newspapers, (including Lynbrook USA, Malverne Times,
Rockville Centre News & Owl, Valley Stream MAILeader, Independent Voice of Long
Beach, Oceanside & Island Park, Rockville Centre-Oceanside Beacon, Baldwin
Citizen, East Rockaway Observer, six editions of the Long Island Market and Long
Island Lifestyles) and the Brooklyn Skyline - all weekly regional newspapers.
The Company also publishes a monthly glossy magazine, Manhattan File, and The
Hill, a weekly newspaper devoted to coverage of the United States Congress. The
following table sets forth, for the periods indicated, certain information
relating to each of the Company's publications and to certain expenses incurred
by the parent company, News Communications, Inc. The numbers set forth below
reflect the operations of the following acquired or start-up publications from
the dates indicated: Bronx Press Review - December 1992; Nassau Newspapers -
December 1993; Brooklyn Skyline - August 1994; Manhattan File - August 1994; The
Hill - September 1994; Westside Publications - September 1994. The information
for the three and nine months ended August 31, 1995 and August 31, 1994 is
unaudited.
<TABLE>
<CAPTION>
Three Months Ended August 31, Nine Months Ended August 31,
1995 1994 1995 1994
Unaudited
<S> <C> <C> <C> <C>
Net Revenues:
Existing Publications:
Queens Tribune $ 896,695 $ 901,447 $ 2,320,369 $2,292,841
Dan's Papers 1,621,268 1,423,318 2,535,152 2,203,808
Manhattan Spirit 392,993 424,938 1,231,335 1,295,716
Our Town 358,883 392,495 1,146,363 1,185,317
The Bronx Press Review 257,748 239,245 731,827 760,630
Nassau Newspapers 733,694 575,872 1,998,153 1,562,621
Total Net Revenues - Existing
Publications 4,261,281 3,957,315 9,963,199 9,300,933
Acquisitions and Start-ups:
The Hill 403,379 ---- 1,019,991 ----
Manhattan File 365,629 ---- 1,041,547 ----
Brooklyn Skyline 300,915 11,893 752,111 11,893
Westside Publications 271,015 ---- 766,168 ----
Total Net Revenues Acquisitions
and Start-ups 1,340,938 11,893 3,579,817 11,893
Total Net Revenues $ 5,602,219 $ 3,969,208 $ 13,543,016 $ 9,312,826
Income (Loss) Publications Before Goodwill:
Existing Publications:
Queens Tribune $ 170,510 $ 192,884 553,402 582,356
Dan's Papers 608,029 575,612 773,440 655,005
Manhattan Spirit 27,399 24,827 84,394 78,271
Our Town 40,559 33,538 184,143 179,955
The Bronx Press Review (17,643) 19,727 (13,695) 73,595
Nassau Newspapers 72,834 12,610 95,538 (6,070)
Income - Existing Publications 901,688 859,198 1,677,222 1,563,112
Acquisitions and Start-ups:
The Hill (54,442) ---- (354,662) ----
Manhattan File (76,005) ---- (212,808) ----
Brooklyn Skyline (21,628) (670) (59,106) (670)
Westside Publications 7,252 ---- 38,021 ----
Income (Loss) Acquisitions
and Start-ups (144,823) (670) (588,555) (670)
Income (Loss) - Publications $ 756,865 $ 858,528 $1,088,667 $1,562,442
Income (Loss) Publications After Goodwill (1):
Existing Publications:
Queens Tribune $143,793 $ 166,167 473,251 502,205
Dan's Papers 595,354 562,937 735,414 616,979
Manhattan Spirit 27,399 24,827 84,394 78,271
Our Town 27,098 20,077 143,760 139,573
The Bronx Press Review (21,205) 17,227 (24,380) 66,095
Nassau Newspapers 65,085 5,110 72,291 (28,570)
Income - Existing Publications 837,524 796,345 1,484,730 1,374,553
Acquisitions and Start-ups:
The Hill (54,442) ---- (354,662) ----
Manhattan File (76,005) (670) (212,808) (670)
Brooklyn Skyline (23,022) ---- (63,288) ----
Westside Publications 3,991 ---- 28,238 ----
Income (Loss) Acquisitions
and Start-ups (149,478) (670) (602,520) (670)
Income (Loss)-Publications $ 688,046 $ 795,675 $ 882,210 $ 1,373,883
Parent Company Expenses:
Personnel, Rent, General
and Administrative 311,258 256,502 986,066 773,739
Interest (2) 6,790 5,735 (18,314) (4,801)
Total Parent Company Expenses 318,048 262,237 967,752 768,938
Net Income (Loss) $ 369,998 $ 533,438 $ (85,542) $ 604,945
</TABLE>
<TABLE>
<CAPTION>
(1) Reflects expense for amortization of goodwill by publication as follows:
Three Months Ended August 31, Nine Months Ended August 31,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Queens Tribune $26,717 $26,717 $ 80,151 $ 80,151
Dan's Papers 12,675 12,675 38,026 38,026
Our Town 13,461 13,461 40,383 40,383
The Bronx Press Review 3,562 2,500 10,685 7,500
Nassau Newspapers 7,749 7,500 23,247 22,500
Brooklyn Skyline 1,394 --- 4,182 ----
Westside Publications 3,261 --- 9,783 ----
$68,819 $62,853 $206,457 $188,560
</TABLE>
(2) Net of interest income of $13 and $3,802 for the three months ended August
31, 1995 and 1994 respectively and $31,592 and $38,189 for the nine months ended
August 31, 1995 and 1994 respectively.
Results of Operations:
The following discussion compares results of operations for the three months
ended and nine months ended August 31, 1995 and August 31, 1994.
Three Months Ended August 31, 1995 and August 31, 1994
Net Revenues:
Total revenues from existing publications were up just over 7%. The Queens
Tribune had a decrease of 1% due to the "Official Guide to Queens" being
published in the fourth quarter of this year as compared to the third quarter
last year, offset by additional revenues from its new Bayside Trib at Home
edition. The addition of Long Island Lifestyles, a four color lifestyle section
which is included in all the existing Nassau Newspapers publications has enabled
advertisers to make an effective regional buy and helped increase revenues for
the Nassau Newspapers by 27%. Dan's Papers has continued to expand its
geographic base to the North Fork of Long Island and further west in the
Hamptons, increasing its revenues by 14%. There were decreases in revenues of 8%
at the Manhattan Spirit and Our Town, attributed in part to a change in sales
management and a shift away from lower margin sales. The Bronx Press Review
revenues were up by 7% as a result of increased sales efforts. The additional
revenues generated by the acquisitions and start-ups has brought the total
revenues for the quarter to more than $5,600,000, an increase of 41%.
Income (Loss) - Publications:
Net Income from existing publications increased by 5%, even as newsprint
prices have continued increasing. The Company has been engaging in ongoing
negotiations with paper suppliers and reviewing contracts with printers which
has enabled it to continue to maintain profits. The decrease in income for the
Queens Tribune is attributed to the shifting of its "Official Guide to Queens"
to the fourth quarter. Dan's Papers income had an increase of 6% as a result
of the increase in revenues. The Bronx Press Review had a loss compared to last
year as a result of the change in management, repositioning it for growth. The
income for Nassau Newspapers showed an increase of 478% as a result of its
expansion with Long Island Lifestyles. The Manhattan Spirit and Our Town both
were able to maintain last years profit levels. Acquisitions and start-ups
continued their move towards profitability. The Company is continuing to focus
on increasing sales and controlling costs.
Parent Company Expenses:
The increase in parent company expenses of 21% was primarily a result of
increased rent and personnel costs required for the continuing corporate growth
and expansion.
Nine Months Ended August 31, 1995 and August 31, 1994
Net Revenues:
Total revenues from existing publications were up over 7%. The addition of
Long Island Lifestyles, a four color lifestyle section which is included in all
the existing Nassau Newspapers publications has enabled advertisers to make an
effective regional buy and helped increase revenues for the Nassau Newspapers by
28%. The Queens Tribune has expanded with an edition in the affluent Bayside
section of Queens and will be realizing additional revenues in future periods.
Dan's Papers has continued to expand its geographic base to the North Fork of
Long Island and further west in the Hamptons, increasing its revenues by 15%.
The additional revenues generated by the acquisitions and start-ups has brought
the total revenues for the six months to over $13,000,000, an increase of 45%.
Income (Loss) - Publications:
Net Income from existing publications increased by more than 7%. Dan's
Papers had an increase of 19% as a result of the increase in revenues and
tighter financial controls. The Bronx Press Review had a slight loss compared to
a profit last year as a result of the sale of its building last year. The
increase in sales for Nassau Newspapers resulted in a profit this year as
compared to a loss of over $6,000 last year. All other existing publications
were able to maintain last years profit levels. The Company is continuing to
focus on increasing sales and controlling costs. As newsprint prices have
increased, the Company continues to engage in ongoing negotiations with paper
suppliers and review contracts with printers in order to continue to increase
profits .
Parent Company Expenses:
The increase in parent company expenses of 27% was primarily a result of
increased rent and personnel costs required for the continuing corporate growth
and expansion.
Liquidity and Capital Resources:
At August 31, 1995, the Company had an excess of current assets over current
liabilities in the amount of approximately $4,315,000. In January 1995, $85,000
was used to pay notes and accrued interest incurred with the acquisition of the
Bronx Press Review. In May 1995 the Company obtained a $500,000 working capital
line of credit, from a bank, to be used to offset seasonal fluctuations in
cashflow.
Although there can be no assurance, management believes that the Company's
operations will generate positive cash flow for the fiscal year ending November
30, 1995. It is the opinion of management that the line of credit and cash on
hand from operations are expected to be sufficient to meet the Company's cash
needs on an ongoing basis.
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits - None
B. Reports on Form 8-K - None
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
NEWS COMMUNICATIONS, INC.
(Registrant)
Date: October 18, 1995 By:/s/ Michael Schenkler
Michael Schenkler, President
Date: October 18, 1995 By:/s/ Robert Berkowitz
Robert Berkowitz, Controller
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENTS OF OPERATIONS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> AUG-31-1995
<CASH> 32,586
<SECURITIES> 0
<RECEIVABLES> 6,078,851
<ALLOWANCES> 1,068,307
<INVENTORY> 0
<CURRENT-ASSETS> 5,615,021
<PP&E> 1,308,675
<DEPRECIATION> 644,844
<TOTAL-ASSETS> 10,147,766
<CURRENT-LIABILITIES> 1,300,843
<BONDS> 0
<COMMON> 79,344
449
0
<OTHER-SE> 8,767,130
<TOTAL-LIABILITY-AND-EQUITY> 10,147,766
<SALES> 13,543,016
<TOTAL-REVENUES> 13,543,016
<CGS> 0
<TOTAL-COSTS> 13,646,871
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13,278)
<INCOME-PRETAX> (85,542)
<INCOME-TAX> 0
<INCOME-CONTINUING> (85,542)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (85,542)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
