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 - May 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 July 15, 1994, 7,627,579 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 May 31, 1994
5 Consolidated Statements of
Operations for the three and six
months ended May 31, 1994 and 1993
6 Consolidated Statements of Cash
Flows for the six months ended
May 31, 1994 and 1993
9 Notes to Consolidated Financial Statements
10 Managements Discussion and Analysis
for Plan of Operations
17 Signatures
2
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PART I-ITEM 1
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEET
ASSETS
May 31, 1994
(Unaudited)
<S> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $ 3, 420,145
Accounts Receivable- Less: Allowance
for Doubtful Accounts of $807,921 2,550,047
Other Current Assets 344,921
---------------
TOTAL CURRENT ASSETS 6,315,113
Property and Equipment at Cost- Net of
Accumulated Depreciation of $493,936 381,104
Goodwill - Net 3,605,868
Other Assets 123,140
------------
TOTAL ASSETS $10,425,225
</TABLE>
3
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<TABLE>
<CAPTION>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
LIABILITIES AND STOCKHOLDERS' EQUITY
May 31, 1994
(Unaudited)
<S> <C>
CURRENT LIABILITIES:
Accounts Payable $ 437,355
Accrued Expenses 329,265
Accrued Payroll Taxes 59,899
Notes Payable 157,000
Other Current Liabilities 77,779
------------------
TOTAL CURRENT LIABILITIES 1,061,298
TOTAL LIABILITIES 1,061,298
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
Authorized, 200 Shares Issued and Outstanding 200
Common Stock, $.01 Par Value; Authorized
100,000,000 Shares; 7,778,579 Shares Issued 77,786
Paid-in-Capital Preferred Stock 520,233
Paid-in-Capital Common Stock 13,218,686
(Deficit) (4,344,498)
Total $ 9,472,656
Less: Treasury Stock [151,000 Shares]-
At Cost (408,729)
TOTAL STOCKHOLDERS' EQUITY 9,063,927
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,425,225
================
</TABLE>
4
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<TABLE>
<CAPTION>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended May 31, Six Months Ended May 31,
: 1994 1993 1994 1993
---- ----- ----- ----
Unaudited
<S> <C> <C> <C> <C>
NET REVENUES $3,121,401 $2,215,479 $5,257,697 $3,800,818
---------- ---------- ---------- ----------
EXPENSES:
Direct Mechanical Costs 946,069 512,673 1,669,338 936,367
Salaries, Benefits and
Outside Labor Costs 1,405,424 1,098,859 631,193 2,053,991
Rent, Occupancy & Utilities 122,567 72,024 226,802 153,754
Provisions for Doubtful Accounts 56,000 51,000 89,000 75,000
General and Administrative 350,589 285,518 667,623 574,404
---------- --------- --------- ---------
TOTAL EXPENSES 2,880,649 2,020,074 5,283,956 3,793,516
----------- --------- ---------- ----------
OPERATING INCOME (LOSS)
BEFORE INTEREST EXPENSE 240,752 195,405 (26,259) 7,302
INTEREST EXPENSE 6,875 120,321 13,750 20,928
---------- ---------- ---------- --------
NET INCOME (LOSS) $233,877 $183,373 $(40,009) $(13,626)
========= ======== ========= =========
NET INCOME (LOSS) PER SHARE $ .03 $ .03 $(.01) $ (.00)
========= ========= ========= =========
WEIGHTED AVERAGE SHARES
OUTSTANDING 7,624,586 5,937,719 7,379,113 5,937,719
========= ========= ========= =========
</TABLE>
5
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<TABLE>
<CAPTION>
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended May 31,
1994 1993
Unaudited
<S> <C> <C>
Operating Activities:
Net Income (Loss) $(40,009) $ (13,626)
--------- -----------
Adjustments to Reconcile Net
(Loss) to Net Cash Provided
by Operating Activities:
Depreciation and Amortization 172,293 173,432
Provision for Losses on Accounts
Receivable 89,000 75,000
Change in Assets and Liabilities:
(Increase) in Accounts
Receivable (488,509) (430,094)
(Increase) in Other Current
Assets (221,120) (48,502)
(Increase) in Other Assets (3,403) (43,238)
(Decrease) in Accounts Payable
and Accrued Expenses (59,683) (74,799)
(Decrease) in Payroll Taxes Payable (78,462) (77,000)
(Increase) in Other Current Liabilities 5,315 5,864
---------- -------------
Total Adjustments (584,569) (419,337)
--------- ------------
NET (DEFICIT) - OPERATING ACTIVITIES (624,578) (432,963)
--------- --------------
Forward
</TABLE>
6
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<TABLE>
<CAPTION>
News Communications, Inc. and Subsidiaries
Six Months Ended May 31,
1994 1993
----- -----
Unaudited
<S> <C> <C>
NET (DEFICIT) - OPERATING ACTIVITIES -
Forwarded (624,578) (432,963)
----------- -------------
INVESTING ACTIVITIES:
Capital Expenditures (15,614) (137,010)
----------- -------------
NET CASH USED BY INVESTING
ACTIVITIES (15,614) (137,010)
----------- -------------
FINANCING ACTIVITIES:
Principal Payments of Long-Term Debts (470,250) (473,750)
Procceds from Exercise of Warrants 2,039,385 ---
Sale of Building 8,575 ---
Proceeds from Exercise of Stock Options 1,000 ---
Dividend on Preferred Stock (20,680) (20,680)
Purchase of Bronx Press Review (17,551) (90,000)
Purchase of the Nassau Newspapers (313,000) (5,000)
--------- --------------
NET CASH PROVIDED BY FINANCING
ACTIVITIES (1,227,479) (589,430)
------------- ----------
NET INCREASE (DECREASE) IN CASH 587,287 (1,159,403)
CASH - BEGINNING OF PERIODS 2,832,858 1,637,312
----------- ------------
CASH - END OF PERIODS $ 3,420,145 $ 477,909
=========== ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 1,747 $ 467
Income Taxes --- ---
</TABLE>
7
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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 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.
8
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NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A. Basis of Presentation:
The Consolidated Balance Sheet as of May 31, 1994 and the Statements of
Operations for the three and six month periods ended May 31, 1994 and 1993, and
the Consolidated Statements of Cash Flows for the six months ended May 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. 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 1994 have been restated to reflect additional
expenses and loss.
9
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PART I-ITEM 2
NEWS COMMUNICATIONS, INC. AND SUBSIDIARIES
MANAGEMENT'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) and the Nassau Newspapers,
(including Lynbrook USA, Malverne Times, Rockville Centre News & Owl, Valley
Stream MAILead r, Independant Voice of Long Beach, Oceanside & Island Park,
Rockville Centre-Oceanside Beacon, Baldwin Citizen, East Rockaway Observer, and
six editions of the Long Island Market) - all weekly regional publications. The
Company is currently developing a glossy bi-weekly magazine due out in August
1994 , Manhattan File, which will be aimed at Manhattan's upscale and fashion
conscious 20 to 40 year olds as well as a weekly newspaer , The Hill, which will
be published in Washington, D.C. beginning in September 1994 and will focus on
every aspect of 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 information for the three and six months ended May 31, 1994 and 1993 is
unaudited.
10
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<TABLE>
Three months Ended May 31, Six Months Ended May 31,
1994 (5) 1993 1994 (5) 1993
----- ----- ---- ----
Unaudited
<S> <C> <C> <C> <C>
Net Revenues:
Queens Tribune $ 708,500 $ 723,378 $ 1,322,648 $ 1,280,123
Manhattan Spirit 525,409 492,569 870,777 898,087
Dan's Papers 594,123 474,688 780,489 653,005
Our Town 420,278 394,213 792,822 772,669
The Bronx Press Review (3) 316,092 130,631 519,302 196,776
Nassau Newspapers (4) 556,999 ---- 971,659 ----
--------- --------- ----------- ------------
Total Revenues $ 3,121,401 $2,215,479 $ 5,257,697 $ 3,800,660
========= ========== ============ ============
Income (Loss)
Publications Before Goodwill (1):
Queens Tribune $ 241,859 $ 201,690 $ 320,725 $ 222,121
Manhattan Spirit 34,975 33,575 37,178 39,703
Dan's Papers 158,199 116,835 79,393 44,978
Our Town 78,128 68,858 137,267 129,701
The Bronx Press Review (3) 50,108 16,803 51,784 30,206
Nassau Newspapers (4) 17,103 ---- (33,578) ----
Net Income (Loss)-Publications $ 580,372 $ 437,761 $ 592,913 $ 466,709
============ =========== =========== ===========
Income (Loss)
Publications After Goodwill:
Queens Tribune $ 215,142 $ 174,973 $ 267,291 $ 168,687
Manhattan Spirit 37,975 33,575 37,178 39,703
11
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Dan's Papers 145,524 104,160 54,043 19,628
Our Town 64,667 55,397 110,345 102,779
The Bronx Press Review (3) 47,608 14,303 46,784 25,206
Nassau Newspapers (4) 9,603 --- (48,769) ---
------- ------------- ------------- ---------
Net Income (Loss)-Publications $ 517,519 $ 382,408 $ 466,872 $ 356,003
============ ========== =========== ==========
Parent Company Expenses:
Personnel, Rent, General
and Administrative $ 295,880 $ 187,043 $ 525,770 $ 348,628
Interest (2) (12,238) 11,992 (18,889) 21,001
------------ ---------- ------------ -----------
Total Parent Company Expenses 283,642 199,035 506,881 369,629
------------ ----------- --------- -----------
Net Income (Loss) $ 233,877 $ 183,373 $ (40,009) $ (13,626)
=========== ========== ============= ============
<FN>
(1) Reflects expense for amortization of goodwill by publication as follows:
Three Months Ended May 31, Six Months Ended May 31,
1994 1993 1994 1993
---- ----- ----- -----
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 2,500 2,500 5,000 5,000
Nassau Newspapers 7,500 --- 15,000 ---
---------- ------------- ---------- ---------
$ 62,853 $ 55,353 $ 125,706 $ 110,706
========= ========= ========== =========
12
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(2) Net of interest income of $19,113 for the three and $32,639 for the six
months ended May 31, 1994.
(3) The Bronx Press Review was acquired in December 1992.
(4) Nassau Newspapers were acquired in December 1993.
(5) The results of operations for 1994 have been restated to reflect additional
expenses and loss.
</FN>
</TABLE>
Results of Operations:
The following discussion compares results of operations for the three months
ended and the six months ended May 31, 1994 and May 31, 1993.
Three Months Ended May 31, 1994 and May 31, 1993
Net Revenues:
Total revenues were up 42% due primarily to the acquisition of the Nassau
Newspapers and the st rt-up of the Riverdale Review and Westchester Lifestyles.
The increase in revenue at the The Manhattan Spirit (7%) and Our Town (7%) were
primarily from an increase of both display and classified sales resulting from
improved sales efforts. Dan's Papers' increase in revenue (25%) was primarily
from increased display sales due to greater recognition in the community and
increased sales efforts. The Queens Tribune revenue decreased very slightly. The
Bronx Press Review was acquired in December 1992 and has since sold its building
and expanded with two new publications (the Riverdale Review and Westchester
Lifestyles) which accounts for its increase in revenues (143%). The Nassau
Newspapers were acquired in December 1993. Mahattan File and The Hill have not
yet begun publication.
13
<PAGE>
Income (Loss) - Publications:
The increases in income for the Manhattan Spirit (3%), Dan's Papers (35%)
and ur Town (15%) are the result of the increases in revenues and, along with
the Queens Tribune with an increase in income of 28%, have benefitted from
instituting more effective management controls, resulting in reductions in
printing costs and various general and administrative expenses. The Bronx Press
Review was not acquired until December 1992 and its increase in revenue (194%)
includes approximately $80,000 profit on the sale of its building which was
offset in part by development costs involved in the start-up of the Riverdale
Review and Westchester Lifestyles. Costs associated with the development of
Manhattan File and The Hill have been deferred until the start of publication.
Parent Company Expenses:
The increase in parent company expenses (42%) were primarily additional
personnel costs and professional fees required for the continuing corporate
growth.
Six Months Ended May 31, 1994 and May 31, 1993
Net Revenues
The improved sales efforts resulted in increased revenues at the Queens
Tribune (3%), Our Town (3%), and Dan's (20%). The slight decrease in revenue
(3%) at the Manhatttan Spirit reflects the remaining effects of the severe
weather in the first quarter which depressed revenue for that period. The Bronx
Press Review increase in revenue (165%) includes the sale of its building and
the expansion with the Riverdale Review and Westchester Lifestyles. The Nassau
Nespapers were acquired in December 1993.
14
<PAGE>
Income (Loss) - Publications
As a result of the increases in revenues and reduction in operation
expenses there were increases to income at Our Town (8%), The Queens Tribune
(58%) and Dan's Papers (76%). The Bronx Press Review increase in profit (78%)
includes the gain on the sale of its building , partly offset by development
costs associated with the start-up of the Riverdale Review and Westchester
Lifestyles.
Parent Company Expenses
Parent company expenses increased (37%) primarily as a result of
additional personnel costs and professional fees required by the continuing
corporate growth.
Liquidity and Capital Resources:
At May 31, 1994, the Company had an excess of current assets over
current liabilities in the amount of approximately $1,200,000. In October 1992
the Company had a public offering of its Common Stock, resulting in net
proceeds, af er costs and expenses, of approximately $1,975,000. In January
1993, $90,000 was used to the acquired Bronx Press Review with the balance of
the purchase price ($235,000) being financed by notes to the former owner. In
January 1993 $223,750 was used to pay notes payable incurred with the
reacquisition in 1991 of Common Stock from a former officer. In May 1993,
$250,000 was used to pay notes payable due to the former owner of Our Town.
At May 31, 1994, there remained outstanding $250,000 due o the former
owner of Our Town, which is payable in May 1994. Of $190,000 of notes payable to
the former officer of the Company at May 31, 1993, $23,750 was paid in July
1993, $23,750 is payable during 1993; and $142,500 plus accrued interest is
payable in 1994.
15
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To date, since its inception, the Company has not generated cash flow from
its operations. During the last two fiscal years, the aggregate cash flow
deficit from the Company's operations was in excess of $1.3 million. All requir
d cash funds not furnished by revenues from operations have been provided
through loans or sales of securities.
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 operations are expected to be sufficient to meet the Company's cash needs
through at least November 30, 1993.
16
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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
17
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<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1994
<PERIOD-END> MAY-31-1994
<CASH> 3,420,145
<SECURITIES> 0
<RECEIVABLES> 3,357,968
<ALLOWANCES> 807,921
<INVENTORY> 0
<CURRENT-ASSETS> 6,315,113
<PP&E> 875,040
<DEPRECIATION> 493,936
<TOTAL-ASSETS> 10,425,225
<CURRENT-LIABILITIES> 1,061,298
<BONDS> 0
<COMMON> 77,786
0
449
<OTHER-SE> 8,985,692
<TOTAL-LIABILITY-AND-EQUITY> 10,425,225
<SALES> 5,257,697
<TOTAL-REVENUES> 5,257,697
<CGS> 0
<TOTAL-COSTS> 5,283,956
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13,750)
<INCOME-PRETAX> (40,009)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (40,009)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
