UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
AMENDMENT 2
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended - May 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 July 13, 1995: 7,783,376 shares $ .01 par value common stock
<PAGE>
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 May 31, 1995...................................... 3
Unaudited Consolidated Statements of
Operations for the three and six months
ended May 31, 1995 and May 31, 1994.................. 5
Unaudited Consolidated Statements of Cash
Flows for the three and six months ended
May 31, 1995 and May 31, 1994........................ 6
Notes to Consolidated Financial Statements........... 8
Item 2. Management's Discussion and Analysis
or Plan of Operation................................. 9
PART II. Other Information.................................... 14
Item 6. Exhibits and Reports on Form 8-K
Signatures.......................................................... 15
2
<PAGE>
PART I-ITEM 1
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 1995
(UNAUDITED)
Assets:
Current Assets:
Cash and Cash Equivalents $ 161,519
Accounts Receivable [Less: Allowance for
Doubtful Accounts of $990,828] 4,440,715
Due From Related Parties 86,414
Other Current Assets 125,132
---------
Total Current Assets 4,813,780
Property and Equipment at Cost- Net of
Accumulated Depreciation of $600,799 674,944
Goodwill - Net 3,767,849
Other Assets 181,348
---------
Total Assets $ 9,437,921
===========
3
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET AS OF MAY 31, 1995
(UNAUDITED)
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable $ 520,512
Accrued Expenses 466,209
Accrued Payroll and Payroll Taxes 331,423
Notes Payable - Bank 225,000
Other Current Liabilities 113,419
Total Current Liabilities 1,656,563
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; 7,930,576 Shares Issued 79,306
Paid-in-Capital Preferred Stock 519,873
Paid-in-Capital Common Stock 13,670,123
(Deficit) (6,079,664)
---------
Total $ 8,190,087
Less: Treasury Stock [151,000 Shares]-
At Cost (408,729)
---------
Total Stockholders' Equity 7,781,358
---------
Total Liabilities and Stockholders' Equity $ 9,437,921
==========
4
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended May 31, Six Months Ended May 31,
-------------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
Unaudited
<S> <C> <C> <C> <C>
Net Revenues $4,551,179 $3,121,401 $7,855,078 $5,257,697
--------- ---------- --------- ---------
Expenses:
Direct Mechanical Costs 1,604,763 946,069 2,766,767 1,669,338
Salaries, Benefits and
Outside Labor Costs 2,383,379 1,405,424 4,561,602 2,631,193
Rent, Occupancy & Utilities 196,954 122,567 387,662 226,802
Provisions for Doubtful Accounts 36,000 56,000 72,000 89,000
General and Administrative 607,923 369,702 1,246,297 700,262
--------- ----------- --------- ---------
Total Expenses 4,829,019 2,899,762 9,034,328 5,316,595
--------- ----------- --------- ---------
Operating Income (Loss) Before Interest
Expense and Interest Income (277,840) 221,639 (1,179,250) (58,898)
Interest Expense -- (6,875) (6,475) (13,750)
Interest Income 23,542 19,113 31,579 32,639
--------- ---------- ----------- ---------
Net Income (Loss) $ (254,298) $ 233,877 $ (1,154,146) $ (40,009)
========= ========= =========== =========
Net Income (Loss) Per Share $ (.03) $ .03 $(.15) $( .01)
========= ========= =========== =========
Weighted Average Shares
Outstanding 7,776,709 7,624,586 7,772,742 7,379,113
========= ========= ========= =========
</TABLE>
5
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended May 31,
1995 1994
---- ----
Unaudited
Operating Activities:
Net Income (Loss) $ (1,154,146) $ (40,009)
----------- ---------
Adjustments to Reconcile Net
(Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 252,636 172,293
Provision for Losses on Accounts
Receivable 72,000 89,000
Change in Assets and Liabilities:
(Increase) Decrease in Accounts
Receivable (749,579) (488,509)
(Increase) Decrease in Other Current
Assets 37,071 (221,120)
(Increase) in Due from Related Parties ( 6,294) --
Decrease (Increase) in Other Assets (1 051) (3,403)
(Increase) Decrease in Goodwill (4,074) --
Increase (Decrease) in Accounts Payable
and Accrued Expenses (423,278) (59,683)
Increase (Decrease) in Payroll Taxes Payable 200,557 (78,462)
Increase (Decrease) in Other Current Liabilities 106,980 5,315
------- -------
Total Adjustments (515,032) (584,569)
------- --------
Net (Deficit) - Operating Activities - (1,669,178) (624,578)
Forward
6
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended May 31,
1995 1994
---- ----
Unaudited
Net (Deficit) - Operating Activities -
Forwarded (1,669,178) (624,578)
========= ========
Investing Activities:
Purchase of the Nassau Newspapers -- (313,000)
Purchase of Bronx Press Review -- (17,551)
Sale of Marketable Securities 924,633 --
Capital Expenditures (87,082) (7,039)
-------- -------
Net Cash Provided (Used) by Investing Activities 837,551 (337,590)
-------- -------
Financing Activities:
Principal Payments Long-Term Debt (75,747) (470,250)
Proceeds from Exercise of Warrants 9,216 2,039,385
Dividend on Preferred Stock (20,680) (20,680)
Proceeds from Exercise of Stock Options 12,500 1,000
Proceeds from Notes Payable - Bank 225,000 --
-------- ---------
Net Cash Provided by Financing Activities 150,289 1,549,455
-------- ---------
Net Increase (Decrease) in Cash (681,338) 587,287
Cash - Beginning of Periods 842,857 2,832,858
-------- ---------
Cash - End of Periods $ 161,519 $ 3,420,145
========= ==========
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest $ 9,547 $ 1,747
Income Taxes -- --
Supplemental Schedule of Non-Cash Investing and Financing Activities:
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.
7
<PAGE>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The Consolidated Balance Sheet as of May 31, 1995 and the Consolidated
Statements of Operations for the three and six-month periods ended May 31, 1995
and May 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. Loss per Share:
Loss per share is based on the weighted average number of shares outstanding
during the periods.
C. The results of operations for 1995 and 1994 have been restated to reflect
additional expenses and loss.
8
<PAGE>
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 CentreOceanside 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 six months ended May 31, 1995 and May 31, 1994 is unaudited.
9
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended May 31, Six Months Ended May 31
1995 (3) 1994 (3) 1995 (3) 1994 (3)
<S> <C> <C> <C> <C>
Unaudited
Net Revenues:
Existing Publications:
Queens Tribune $ 830,624 $ 708,500 $1,499,493 $1,322,648
Dan's Papers 679,817 594,123 913,884 780,489
Manhattan Spirit 468,906 525,409 838,341 870,777
Our Town 400,965 420,278 787,480 792,822
The Bronx Press Review 247,912 316,092 474,079 519,302
Nassau Newspapers 583,562 556,999 1,102,923 971,659
--------- --------- --------- ---------
Total Net Revenues - Existing Publications 3,211,786 3,121,401 5,616,200 5,257,697
--------- --------- --------- ---------
Acquisitions and Start-ups:
The Hill 439,130 -- 616,611 --
Manhattan File 359,197 -- 675,918 --
Brooklyn Skyline 247,727 -- 451,196 --
Westside Publications 293,339 -- 495,153 --
--------- --------- --------- --------
Total Net Revenues Acquisitions and
Start-ups 1,339,393 -- 2,238,878 --
--------- ---------- ---------- ----------
Total Net Revenues $ 4,551,179 $ 3,121,401 $ 7,855,078 $ 5,257,697
========== ========== ========== ==========
Income (Loss) Publications Before Goodwill:
Existing Publications:
Queens Tribune $ 180,518 $ 241,859 293,843 320,725
Dan's Papers 189,173 158,199 114,970 79,393
Manhattan Spirit 37,582 34,975 20,523 37,178
Our Town 46,847 78,128 80,092 137,267
The Bronx Press Review (2,900) 50,108 (14,921) 51,784
Nassau Newspapers (84,627) 17,103 (185,131) (33,769)
---------- ---------- ---------- ---------
Income - Existing Publications 366,593 580,372 309,376 592,578
---------- ---------- ---------- ---------
Acquisitions and Start-ups:
The Hill (69,068) -- (340,108) --
Manhattan File (92,620) -- (244,931) --
Brooklyn Skyline (31,805) -- (84,726) --
Westside Publications 16,473 -- 18,314 --
---------- ---------- ----------- ---------
Income (Loss) Acquisitions and Start-ups (177,020) -- (651,451) --
---------- ---------- ----------- ---------
Income (Loss) - Publications $ 189,573 $ 580,372 $ (342,075) $ 592,578
========== ========== =========== =========
Income (Loss) Publications After Goodwill (1):
Existing Publications:
Queens Tribune $ 153,801 $ 215,142 240,409 267,291
Dan's Papers 176,498 145,524 89,620 54,043
Manhattan Spirit 37,582 34,975 20,523 37,178
Our Town 33,386 64,667 53,170 110,345
The Bronx Press Review (6,462) 47,608 (22,045) 46,784
Nassau Newspapers (92,376) 9,603 (200,629) (48,769)
---------- --------- ---------- ---------
Income - Existing Publications 302,429 517,519 181,048 466,872
---------- --------- ---------- ---------
</TABLE>
10
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Acquisitions and Start-ups:
The Hill (69,068) -- (340,108) --
Manhattan File (92,620) -- (244,931) --
Brooklyn Skyline (33,199) -- (87,514) --
Westside Publications 13,212 -- 11,792 --
--------- --------- ---------- ----------
Income (Loss) Acquisitions and Start-ups (181,675) -- (660,761) --
--------- --------- ---------- ----------
Income (Loss)-Publications $ 120,754 $ 517,519 $ (479,713) $ 466,872
========== ============ ========= ==========
Parent Company Expenses:
Personnel, Rent, General and
Administrative 398,594 295,880 699,537 525,770
Interest (2) (23,542) (12,238) (25,104) (18,889)
---------- --------- --------- ----------
Total Parent Company Expenses 375,052 283,642 674,433 506,881
---------- --------- ----------- ----------
Net Income (Loss) $ (254,298) $ 233,877 $(1,154,146) $ (40,009)
========== ========== ========== ==========
(1) Reflects expense for amortization of goodwill by publication as follows:
Three Months Ended May 31, Six Months Ended May 31,
1995 1994 1995 1994
---- ---- ---- ----
Queens Tribune $ 26,717 $ 26,717 $ 53,434 $ 53,434
Dan's Papers 12,675 12,675 25,350 25,350
Our Town 13,461 13,461 26,922 26,922
The Bronx Press Review 3,562 2,500 7,124 5,000
Nassau Newspapers 7,749 7,500 15,498 15,000
Brooklyn Skyline 1,394 -- 2,788 --
Westside Publications 3,261 -- 6,522 --
------ ------- ------ -------
$ 68,819 $ 62,853 $137,638 $125,706
======= ======= ======= =======
</TABLE>
2) Net of interest income of $23,542 and $19,113 for the three months ended May
31, 1995 and 1994 respectively and $31,579 and $$32,639 for the six months ended
May 31, 1995 and 1994 respectively.
(3) The results of operations for 1995 and 1994 have been restated to reflect
additional expenses and loss.
Results of Operations:
The following discussion compares results of operations for the three months
ended and six months ended May 31, 1995 and May 31, 1994.
Three Months Ended May 31, 1995 and May 31, 1994
Net Revenues:
Total revenues from existing publications were up over 5%. The Queens
Tribune had an increase (17%) due to an increase in non-advertising revenues and
11
<PAGE>
an ongoing increased sales effort. The addition of Long Island Lifestyles, a
four color lifestyle section which is included in all the existing Nassau
Newspape s publications has enabled advertisers to make an effective regional
buy and helped increase revenues for the Nassau Newspapers (19%). 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 (14%). There were
decreases in revenues at the Manhattan Spirit (10%) and Our Town (5%),
attributed in part to a change in sales management. The Bronx Press Review
revenues were even after adjusting for the sale of its building last year. The
additional revenues generated by the acquisitions and start-ups has brought the
total revenues for the quarter to more than $4,600,000, an increase of 48%.
Income (Loss) - Publications:
The decrease in income for the Queens Tribune is attributed primarily to
expansion with a new door-to-door edition in the affluent Bayside area of
Queens. Dan's Papers had an increase (20%) as a result of the increase in
revenues and tighter inancial controls. The Bronx Press Review had a small loss
as compared to a profit last year as a result of the gain on the sale of its
building last year. The increase in sales for Nassau Newspapers was offset by
start-up costs related to its expansion with Long Island Lifestyles and
increased printing costs, resulting in a loss as compared to a profit last year.
Our Town had a decrease in income as a result of lower sales and increased
printing costs. The Manhattan Spirit was able to maintain last years profit
levels. As newsprint prices continue to increase, the Company has been engaging
in ongoing negotiations with paper suppliers and reviewing contracts with
printers which has enabled it to mitigate the effect on profits The Company is
continuing to focus on increasing sales and controlling costs.
Parent Company Expenses:
The increase in parent company expenses (32%) was primarily a result of
increased rent and personnel costs required for the con inuing corporate growth
and expansion.
Six Months Ended May 31, 1995 and May 31, 1994
Net Revenues:
Total revenues from existing publications were up over 9%. 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
(29%). The Queens Tribune as expanded with an edition in the affluent Bayside
section of Queens and will be realizing additional revenues in future periods.
12
<PAGE>
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 (17%). The
additional revenues generated by the acquisitions and start-ups has brought the
total revenues for the six months to over $8,000,000, an increase of 52%.
Income (Loss) - Publications:
Dan's Papers had an increase (45%) in income as a result of the
increase in revenues and tighter financial controls. The decrease in income for
the Queens Tribune is attributed primarily to expansion with a new door-to-door
edition in the affluent Bayside area of Queens. 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 was offset by
start-up costs related to its expansion with Long Island Lifestyles and
increased printing costs, resulting in an increased loss. Our Town and Manhattan
Spirit had decreases in income primarily as a result of lower sales and
increased printing costs. The Company is continuing to focus on increasing sales
and controlling costs. As newsprint prices have increased, the Company has been
engaging in ongoing negotiations with paper suppliers and reviewing contracts
with printers which has enabled it to mitigate the effect on profits .
Parent Company Expenses:
The increase in parent company expenses (33%) was primarily a result of
increased rent and personnel costs required for the continuing corporate growth
and expansion.
Liquidity and Capital Resources:
At May 31, 1995, the Company had an excess of current assets over current
liabilities in the amount of approximately $3,157,000. 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 and from operations are expected to be sufficient to meet the Company's
cash needs on an ongoing basis.
13
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits - None
B. Reports on Form 8-K - None
14
<PAGE>
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: August 9, 1996 By: /s/ Michael Schenkler
----------------------------
Michael Schenkler, President
Date: August 9, 1996 By: /s/ Robert Berkowitz
----------------------------
Robert Berkowitz, Controller
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1995
<PERIOD-END> MAY-31-1995
<CASH> 161,519
<SECURITIES> 0
<RECEIVABLES> 5,431,543
<ALLOWANCES> 990,828
<INVENTORY> 0
<CURRENT-ASSETS> 4,813,780
<PP&E> 1,275,743
<DEPRECIATION> 600,799
<TOTAL-ASSETS> 9,437,921
<CURRENT-LIABILITIES> 1,656,563
<BONDS> 0
<COMMON> 79,306
0
449
<OTHER-SE> 7,701,603
<TOTAL-LIABILITY-AND-EQUITY> 9,437,921
<SALES> 7,855,078
<TOTAL-REVENUES> 7,855,078
<CGS> 0
<TOTAL-COSTS> 9,034,328
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (6,475)
<INCOME-PRETAX> (1,154,146)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,154,146)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,154,146)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
<PAGE>
</TABLE>
