SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended - August 31,1994
Commission file number 0-18299
NEWS COMMUNICATIONS, INC.
(exact name of registrant as specified in its charter)
NEVADA 13-3346991
(State of jurisdiction of incorporation) (I.R.S. Employer I.D Number)
174-15 Horace Harding Expwy., Fresh Meadows, New York 11365
(Address of principal executive offices)
Registrant's telephone number (718) 357-3380
Indicate by check mark whether 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 such shorter period that Registrants was required to
file such reports), and (2) has been subject to such filing requirements for the
past 90 days. YES NO X
As of October 14, 1994, 7,696,029 shares of common stock were outstanding.
1
<PAGE>
TABLE OF CONTENTS
PAGE NUMBER
DESCRIPTION
1 10-QSB Title Page
2 Table of Contents
3 Consolidated Balance Sheet as of
August 31, 1994
6 Consolidated Statements of
Operations for the three and nine
months ended August 31, 1994
and 1993
7
Consolidated Statements of Cash
Flows for the nine months ended
August 31, 1994 and 1993
10 Notes to Consolidated Financial
Statements
11 Managements Discussion and Analysis
or Plan of Operations
16
Signatures
2
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PART I-ITEM 1
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
ASSETS
August 31, 1994
(Unaudited)
Restated
CURRENT ASSETS:
Cash and Cash Equivalents $ 2,622,009
Accounts Receivable- Less: Allowance
for Doubtful Accounts of $889,722 3,362,030
Other Current Assets 851,789
TOTAL CURRENT ASSETS 6,835,828
Property and Equipment at Cost- Net of
Accumulated Depreciation of $516,348 488,236
Goodwill - Net 3,543,015
Other Assets 137,800
TOTAL ASSETS $ 11,004,879
3
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NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
August 31, 1994
(Unaudited)
Restated
CURRENT LIABILITIES:
Accounts Payable $ 617,896
Accrued Expenses 427,114
Accrued Payroll Taxes 58,952
Notes Payable 75,747
Other Current Liabilities 5,150
TOTAL CURRENT LIABILITIES 1,184,859
TOTAL LIABILITIES 1,184,859
ISSUABLE COMMON STOCK 300,000
COMMITMENTS AND CONTINGENCIES ---
STOCKHOLDERS' EQUITY:
Preferred Stock, $1.00 Par Value;
500,000 Shares Authorized:
10% Convertible Preferred Stock,
1,250 Shares Authorized; 32 Issued
and Outstanding 32
8% Convertible Preferred Stock, 500 Shares
Authorized, 217 Issued and Outstanding 217
12% Convertible Preferred Stock, 200 Shares
4
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Authorized, 200 Shares Issued and Outstanding 200
Common Stock, $.01 Par Value; Authorized
100,000,000 Shares; 7,787,029 Shares Issued 77,863
Paid-in-Capital Preferred Stock 519,873
Paid-in-Capital Common Stock 13,235,593
(Deficit) (3,905,029)
Total $9,928,749
Less: Treasury Stock [151,000 Shares]-
At Cost (408,729)
TOTAL STOCKHOLDERS' EQUITY 9,520,020
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 11,004,879
5
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NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended August 31, Nine Months Ended August 31,
1994 (A) 1993 1994 (A) 1993
Unaudited
<S> <C> <C> <C> <C>
NET REVENUES $3,928,040 $2,705,886 $9,185,739 $6,506,546
EXPENSES:
Direct Mechanical Costs 1,344,106 740,648 3,013,444 1,677,015
Salaries, Benefits and
Outside Labor Costs 1,547,640 1,104,418 4,178,834 3,158,409
Rent, Occupancy & Utilities 140,408 99,455 367,210 253,209
Provisions for Doubtful Accounts 84,000 80,000 173,000 155,000
General and Administrative 354,359 282,440 1,011,701 856,686
TOTAL EXPENSES 3,470,513 2,306,961 8,744,189 6,100,319
OPERATING INCOME
BEFORE INTEREST EXPENSE 457,527 398,925 441,550 406,227
INTEREST EXPENSE 9,537 14,617 33,388 35,545
6
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NET INCOME $ 447,990 $ 384,308 $ 408,162 $ 370,682
NET INCOME PER SHARE $ .06 $ .06 $ $.06 $ .06
WEIGHTED AVERAGE SHARES
OUTSTANDING 7,632,549 5,939,519 7,434,227 5,938,619
(A) - Restated
</TABLE>
7
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NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Nine Months Ended August 31,
1994 (A) 1993
Unaudited
<S> <C> <C>
Operating Activities:
Net (Loss) $ 408,162 $ 370,682
Adjustments to Reconcile Net
Income to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 257,558 246,285
Provision for Losses on Accounts
Receivable 173,000 155,000
Change in Assets and Liabilities:
(Increase) in Accounts
Receivable (1,382,553) (776,981)
(Increase) in Other Current
Assets (702,988) (84,741)
(Increase) in Other Assets (18,063) (28,268)
Increase in Accounts Payable
and Accrued Expenses 218,707 103,965
(Decrease) in Payroll Taxes Payable (79,409) (91,015)
(Decrease) in Other Current Liabilities (67,314) (2,316)
Total Adjustments (1,601,062) (478,071)
NET CASH USED BY OPERATING ACTIVITIES
Forward (1.192,900) (107,389)
</TABLE>
8
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News Communications, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended August 31,
1994 (A) 1993
Unaudited
<S> <C> <C>
NET CASH USED BY OPERATING ACTIVITIES -
Forwarded (1,192,900) (107,389)
INVESTING ACTIVITIES:
Capital Expenditures (145,158) (216,946)
NET CASH USED BY INVESTING
ACTIVITIES (145,158) (216,946)
FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt (470,250) (497,500)
Procceds from Exercise of Warrants 2,055,709 ---
Payment of Dividends on Preferred Stock (31,020) (31,020)
Payment of Notes Payable (81,254) ---
Proceeds From Exercise of Stock Options 1,000 ---
Sale of Building 8,575 ---
Purchase Nassau Newspapers (313,000) ---
Purchase Brooklyn Skyline (25,000) ---
Other Financing Activities --- (5,000)
Purchase of Bronx Press Review (17,551) (90,000)
NET CASH PROVIDED BY FINANCING
ACTIVITIES 1,127,209 (623,520)
NET (DECREASE) IN CASH (210,849) (947,855)
CASH - BEGINNING OF PERIODS 2,832,858 1,637,312
CASH - END OF PERIODS $ 2,622,009 $ 689,457
(A)- Restated
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 10,754 $ 189
Income Taxes --- ---
</TABLE>
9
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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 weekly newspapers in Nassau County, New York (the "Nassau
Newspapers"). The net purchase price consisted of cash and stock valued at
approximately $613,000. 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.
On December 18, 1992 the Company purchased 100% of the outstanding stock of
The Bronx Press Review. The net purchase price was approximately $342,500, of
which $90,000 was paid at the time of acquisition and the remainder in annual
installments of approximately $78,000.
10
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NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The Consolidated Balance Sheet as of August 31, 1994 and the Statements
of Operations for the three and nine month periods ended August 31, 1994 and
1993, and the Consolidated Statements of Cash Flows for the nine months ended
August 31, 1994 and 1993 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, 1993 and the related audited financial statements included
therein. B. Income per Share: Income per share is based on the weighted average
number of shares outstanding during the periods.
11
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PART I-ITEM 2
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
ANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
News Communications, Inc. publishes various weekly community newspapers.
The Company publishes Dan's Papers, (and the Montauk Pioneer), Our Town,
The Queens Tribune, The Manhattan Spirit, The Bronx Press Review (and the
Riverdale Review and Westchester Lifestyles), the Nassau Newspapers, (including
LynbrookUSA, Malverne Times, Rockville Centre News & Owl, Valley Stream
MAILeader, Independent Voice of Long Beach, Oceanside & Island Park, Rockville
Centre-Oceans de Beacon, Baldwin Citizen, East Rockaway Observer, and six
editions of the Long Island Market), and the Brooklyn Skyline - all weekly
regional publications. The Company began publication of a monthly glossy
magazine, Manhattan File, with a Sneak Preview issue in August 1994 and its
Premier issue in September 1994. The Company also began publication of The Hill
in September 1994, The Hill, which is a weekly newspaper published in Washington
D.C. focusing on every aspect of Congress. In September 1994 the Company
acquired the assets of Chelsea Clinton News and the Westsider, both weekly
regional publications in Manhattan. 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 information for the three and nine months ended August
31, 1994 and 1993 is unaudited.
12
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<TABLE>
<CAPTION>
Three months ended August 31, Nine months ended August 31,
1994 (6) 1993 1994 (6) 1993
Unaudited
<S> <C> <C> <C> <C>
Net Revenues:
Queens Tribune $ 884,551 $ 651,066 $ 2,207,199 $ 1,931,189
Manhattan Spirit 424,938 424,251 1,295,716 1,322,338
Dan's Papers 1,423,318 1,107,031 2,203,808 1,760,036
Our Town 392,495 381,752 1,185,317 1,154,421
The Bronx Press Review (3) 231,309 141,786 750,611 338,562
Nassau Newspapers (4) 559,536 --- 1,531,195 ---
Brooklyn Skyline (5) 11,893 --- 11,893 ---
Total Revenues $ 3,928,040 $ 2,705,886 $ 9,185,739 $ 6,506,546
Income (Loss)
Publications Before Goodwill:
Queens Tribune $ 169,888 $ 119,756 $ 490,614 $ 341,877
Manhattan Spirit 16,693 8,771 53,871 48,474
Dan's Papers 575,612 476,846 655,005 521,824
Our Town 28,964 19,547 166,231 149,248
The Bronx Press Review (3) 9,657 (12,548) 61,442 17,658
Nassau Newspapers (4) (3,726) --- (37,496) ---
Brooklyn Skyline (5) ( 670) (4,420) (670) ---
Net Income (Loss)-Publications $ 796,418 $ 607,952 $ 1,388,997 $ 1,079,081
13
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Income (Loss)
Publications After Goodwill (1):
Queens Tribune $ 143,171 $ 93,039 $ 410,463 $ 261,726
Manhattan Spirit 16,693 8,771 53,871 48,474
Dan's Papers 562,937 464,171 616,979 483,799
Our Town 15,503 6,086 125,849 108,865
The Bronx Press Review (3) 7,157 (15,048) 53,942 10,158
Nassau Newspapers (4) (11,226) --- (59,996) ---
Brooklyn Skyline (5) (670) --- (670) ---
Net Income (Loss)-Publications $ 733,565 $ 557,019 $ 1,200,438 $ 913,022
Parent Company Expenses:
Personnel, Rent, General
and Administrative $ 279,840 $ 156,534 $ 797,077 $ 505,162
Interest (2) 5,735 16,177 (4,801) 37,178
Total Parent Company Expenses 285,575 172,711 792,276 542,340
Net Income (Loss) $ 477,990 $ 384,308 $ 408,162 $ 370,682
14
<FN>
(1) Reflects expense for amortization of goodwill by publication as follows:
Three Months ended August 31, Nine months ended August 31,
1994 1993 1994 1993
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 2,500 2,500 7,500 7,500
Nassau Newspapers 7,500 --- 22,500 ---
$ 62,853 $ 55,353 $ 188,560 $ 166,060
(2) Net of interest income of $ 1,459 for the three and $ 13,114 for the nine months ended August
31, 1993 and $3,802 for the three and $36,441 for the nine months ended August 31, 1994.
(3) The Bronx Press Review was acquired in December 1992.
(4) Nassau Newspapers were acquired in December 1993.
(5) Brooklyn Skyline was acquired in August 1994.
(6) The results of operations for 1994 have been restated to reflect increased expenses and loss.
</FN>
</TABLE>
15
<PAGE>
Results of Operations:
The following discussion compares results of
operations for the three months ended and the nine months ended August 31, 1994
and August 31, 1993.
Three Months Ended August 31, 1994 and August 31, 1993
Net Revenues:
Total revenues were up 45% due primarily to the acquisition of the
Nassau Newspapers, the start-up of the Riverdale Review and Westchester
Lifestyles and the acquisition of Brooklyn Skyline. The Queens Tribune had an
increase in revenue (36%) due to increased print sales and increased sales
efforts. Dan's Papers' increase in revenue (29%) was primarily from increased
display sales due to greater recognition in the community and increased sales
efforts. Our Town had a slight increase in revenue (3%), while the Manhattan
Spirit remained even. The Bronx Press Review has expanded with two new
publications (the Riverdale Review and Westchester Lifestyles) which accounts
for its increased revenues. The Nassau Newspapers and Brooklyn Skyline were
acquired this year. Manhattan File and The Hill began publication in September
1994.
Income (Loss) - Publications:
The increase in income for the Manhatan Spirit (90%) is a result of more
effective management. The Bronx Press Review showed a profit this quarter, as
compared to a loss last year, due primarily from increased revenues. The increa
es in income for Dan's Papers (21%), the Queens Tribune (42%) and Our Town (50%)
are a result of increased revenues. The Nassau Newspapers and Brooklyn Skyline
were acquired this year. Manhattan File and The Hill began publication in
September 1994.
Parent Company Expenses:
The increase in parent company expenses (78%) were primarily a result of
additional personnel costs required for continuing corporate growth.
Nine months Ended August 31, 1994 and August 31, 1993
Net Revenues
The improved sales efforts resulted in increased revenues at the Queens
Tribune (14%), Our Town (3%), and Dan's (25%). The slight decrease in revenue
(2%) at Manhattan Spirit reflects the remaining effects of the severe weather in
the first quarter which depressed revenues for that period. The Nassau
Newspapers and Brooklyn Skyline were acquired this year. Manhattan File and The
Hill began publication in September 1994.
Income (Loss) - Publications
As a result of the increases in revenues and/or reduction in operation
expenses there were substantial increases to income at Manhattan Spirit (12%)
and The Queens Tribune (44%), Dan's (26%) and Our Town (11%). The Bronx Press
Review has expanded with two new publications and sold its building in the first
half of this year accounting for its six-fold increase in income. The Nassau
Newspapers and Brooklyn Skyline were acquired this year. Manhattan File and The
Hill began publication in September 1994.
Parent Company Expenses
Parent Company expenses increased (58%) primarily as a result of additional
personnel costs and professional fees required for the continuing corporate
growth.
16
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Liquidity and Capital Resources:
At August 31, 1994, the Company had an excess of current assets over
current liabilities in the amount of approximately $5,850,000. As a result
of the exercise of the Class C and D warrants, the Company received net
proceeds of approximately $2,055,000. In December 1993 $92,000 was used
to repay notes and accrued interest incurred in connection with the
acquisition of the Bronx Press Review. In January 1994 $175,000 was used to
repay notes and accrued interest incurred with the re-acquisition in 1991 of
Common Stock from a former officer. In May 1994 $250,000 was used to repay the
last note payable to the former owner of Our Town. In December 1993 $313,000
was used to purchase the Nassau Newspapers. In August 1994 $25,000 was used to
purchase Brooklyn Skyline.
At August 31, 1994, there remained $78,000 due to the former owner of the
Bronx Press Review, payable in December 1994. Approximately $79,000 was repaid
in July 1994 using the proceeds of the sale of the building.
Although there can be no assurance, management believes that the Company's
ope ations will generate positive cash flow for the fiscal years ending November
30, 1994 and 1995. It is the opinion of management that cash on hand and cash
from operations are expected to be sufficient to meet the Company's cash needs
on an ongoing basis.
Although there can be no assurance, management believes that the Company's
operations will generate positive cash flow for the fiscal years ending November
30, 1993 and 1994. It is the opinion of management that cash on hand and cash
from o erations are expected to be sufficient to meet the Company's cash needs
through at least November 30, 1994.
17
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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: April 20, 1996 By:/s/Michael Schenkler
Michael Schenkler, President
Date: April 20, 1996 By:/s/Robert Berkowitz
Robert Berkowitz, Controller
18
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> AUG-31-1994
<CASH> 2,622,009
<SECURITIES> 0
<RECEIVABLES> 4,251,752
<ALLOWANCES> 889,722
<INVENTORY> 0
<CURRENT-ASSETS> 6,835,828
<PP&E> 1,004,584
<DEPRECIATION> 516,348
<TOTAL-ASSETS> 11,004,879
<CURRENT-LIABILITIES> 1,184,859
<BONDS> 0
<COMMON> 77,863
0
449
<OTHER-SE> 9,441,708
<TOTAL-LIABILITY-AND-EQUITY> 11,004,879
<SALES> 9,185,739
<TOTAL-REVENUES> 9,185,739
<CGS> 0
<TOTAL-COSTS> 8,744,189
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (33,388)
<INCOME-PRETAX> 408,162
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 408,162
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
</TABLE>
