U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-QSB
(mark one)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13
OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-16355
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PRINCETON MEDIA GROUP, INC.
(Name of Small Business Issuer in its Charter)
Ontario, Canada 98-0082860
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
214 Brazilian Avenue, Suite 300, Palm Beach, Florida 33480
(Address of principal executive offices)
561/659-0121
(Issuer's telephone number)
-----------------------------------------
Securities registered under Section 12(b) of the Act: None.
Securities registered under Section 12(g) of the Exchange Act as of September
30,1999:
Common Stock, no par value.
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for 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 [ ]
The number of shares outstanding of the issuer's common stock, no par value,
as of November 14, 1999 was 4,178,722.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
All financial information is expressed in United States dollars.
INDEX TO FINANCIAL STATEMENTS
Balance Sheet September 30, 1999
Consolidated Statements of Operations and Accumulated Deficit
for the Nine Months Ended September 30, 1999 and 1998
and for the Three Months Ended September 30, 1999 and 1998
Consolidated Statements of Cash Flows
for the Nine Months Ended September 30, 1999 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
<TABLE>
PRINCETON MEDIA GROUP, INC.
Balance Sheet
September 30, 1999
(Unaudited)
<S> <C>
Assets
Current assets
Cash $ 387
Marketable securities 7,850
Total current assets 8,237
Property and equipment, cost 43,408
Less accumulated depreciation (15,804)
Property and equipment, net 27,604
Total assets $ 35,841
Liabilities and Shareholders' Equity (Deficit)
Current liabilities:
Accounts payable $ 271,691
Accrued expenses 50,000
Advances 19,387
Note payable on demand 81,526
Note payable on demand 250,000
Total current liabilities 672,604
Shareholders' equity (deficit):
Series A Preference Shares 28,923
Series C Preference Shares 739,696
Common Stock 21,297,570
Accumulated deficit (22,702,952)
Total shareholders' equity (deficit) ( 636,763)
Total liabilities and shareholders' equity $ 35,841
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PRINCETON MEDIA GROUP, INC.
Consolidated Statements of Operations and Accumulated Deficit
(Unaudited)
<TABLE>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Distribution, circulation, and
other income $ - $2,292,462 $ - $ 8,220,657
Advertising income - 637,450 - 2,046,185
Printing income - 359,968 - 1,196,954
Net revenues - 3,289,880 - 11,463,796
Cost of sales - 2,856,558 - 8,971,763
Gross profit - 433,322 - 2,492,033
Operating expenses 3,024 1,239,684 36,698 4,443,178
Income (loss) from operations ( 3,024) ( 806,362) (36,698) (1,951,145)
Interest and other income - 22,217 - 52,692
Interest and other expense - (268,371) - (794,573)
Bad debt expense - (1,529,160) - (1,529,160)
Writeoff of deferred acquisition costs - (1,229,309) - (1,229,309)
Loss on disposition of asset - ( 25,866) - ( 26,168)
Gain on reduction of guaranteed note payable - - 72,055 -
Net income (loss) ( 3,024) (3,836,851) 35,357 (5,477,663)
Accumulated deficit,
beginning of period (22,669,928) (16,612,954) (22,738,309) (14,972,142)
Accumulated deficit,
end of period ($22,702,952) ($20,449,805) ($22,702,952)($20,449,805)
Basic and diluted
loss per share ($ 0.01) ($ 0.93) ($ 0.00)($ 1.44)
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> PRINCETON MEDIA GROUP, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
Nine months ended September 30,
<S> <C> <C>
1999 1998
Cash flows from operating activities:
Net income (loss) $ 35,357 $(5,477,663)
Adjustments to reconcile net loss
to net cash used in
operating activities
Depreciation 5,869 249,587
Amortization - 288,091
Loss on disposition of asset - 26,168
Bad debt expense - 1,529,160
Writeoff of deferred acquisition costs - 1,228,309
Gain on reduction of guaranteed payment (72,055) -
Stock issued as payment for consulting, legal
Settlement, and employee stock option plan - 426,079
Changes in assets and liabilities
(Increase) decrease in:
Accounts receivable - (780,957)
Inventories - 237,165
Prepaid expenses and deposits - ( 54,429)
Deferred costs - acquisitions - (191,969)
Accrued interest receivable - ( 44,247)
Increase (decrease) in:
Accounts payable 11,829 1,415,971
Accrued expenses - 78,241
Deferred revenue - 23,109
Accrued interest - 107,500
Net cash used in operating
activities (19,000) (937,885)
Cash flows from investing activities:
Capital expenditures - ( 63,260)
Proceeds from sale of asset - 4,000
Investment in joint venture - ( 25,866)
Advances on note receivable - related party 19,387 (686,387)
Net cash provided by (used in)
investing activities 19,387 (771,513)
<PAGE>
Cash flows from financing activities:
Proceeds from exercise of stock options - 740,125
Proceeds from note payable - 1,750,000
Payments of long-term debt - (1,177,507)
Payments on borrowings on line of credit - ( 118,333)
Net cash provided by
financing activities - 1,194,285
Net increase (decrease) in cash 387 ( 517,113)
Cash, December 31, 1998 and 1997 - 616,558
Cash, September 30, 1999 and 1998 $ 387 $ 99,445
Supplemental disclosures of cash flow information:
1999 1998
Interest paid $ - $ 687,073
Noncash investing and financing activities:
Common stock issued for consulting, legal settlement,
and employee stock option plan $ - 426,079
Common stock issued for capitalized
Consulting services on acquisitions in process $ - $ 457,696
Common stock issued for accrued expenses $ - $ 1,781
Trademarks acquired for advertising credits in
1998 of $100,000 and in 1997 of $300,000
and accrued expense of $100,000 $ - $ 100,000
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PRINCETON MEDIA GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis for Presentation
The accompanying unaudited interim financial statements include the accounts
of Princeton Media Group, Inc. ("Princeton") and, in the prior year, the
accounts of its wholly owned subsidiaries. On October 27, 1998, Princeton
Publishing, Inc. and Firestone Publishing, Inc., wholly-owned subsidiaries of
Princeton Media Group, Inc., and Kingston Press, Inc., a wholly-owned
subsidiary of Princeton Publishing, Inc., each filed an Assignment for the
Benefit of Creditors (the Assignment(s)), a proceeding governed under the laws
of the State of Florida. The Assignments were filed with the Court of the
11th Judicial Circuit in and for Miami-Dade County, Florida on October 27,
1998. The Assignment proceeding gives creditors the opportunity to file
proofs of claims. The Assignments were filed in order to expedite an orderly
sale and disposition of the assets of the entities and pay claims in order of
priority.
As of the end of 1998, Princeton had no operations. All amounts shown for the
quarter ended and the nine month period ended September 30, 1998 represent
discontinued operations. In the prior year, all significant intercompany
transactions and balances have been eliminated in consolidation. In the
opinion of management, the accompanying unaudited interim consolidated
financial statements contain all adjustments (consisting only of normal
recurring accruals) necessary to present fairly the financial position as of
September 30, 1999, and the results of their operations in 1999 and
discontinued operations of 1998 and their cash flows for the quarters ended
and for the nine month periods ended September 30, 1999 and 1998. The results
of operations for the six months ended September 30, 1999 are not necessarily
indicative of the results to be expected for the full year. These statements
should be read in conjunction with the Company's annual report on Form 10-KSB
for the year ended December 31, 1998.
2. Basic and Dilutive Loss Per Share
Net loss per share is computed using the weighted average number of shares of
common stock outstanding. Common equivalent shares from stock options and
warrants, and additional shares assuming the conversion of debentures and
preferred shares, are excluded from the computation as their effect is
antidilutive.
For the quarter and for the nine months ended September 30, 1999, cumulative
dividends of $11,000 and $33,000, respectively, related to preferred Series C
have been added to net loss in the loss per share computation.
The following table sets forth the computation of basic and diluted loss per
share as of September 30, 1999 and 1998:
1999 1998
Net loss from operations $( 36,698) $(5,477,663)
Preferred dividends - Series C ( 33,000) ( 33,000)
Net loss to common shareholders - operations $( 69,698) $(5,510,663)
Extraordinary item:
Gain on reduction of guaranteed note 72,055 -
Net income (loss)to common shareholders $ 2,357 $(5,510,663)
Weighted average common shares outstanding 4,178,722 3,834,303
Basic and diluted loss per share:
Before extraordinary item $( .02) $( 1.44)
Gain on reduction of guaranteed note .02 -
Basic income (loss) per share $ .00 $( 1.44)
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking Statements
Statements contained in this Form 10-QSB regarding the Company's future
prospects or profitability constitute forward-looking statements and as such,
must be considered with caution and with the understanding that various
factors could cause actual results to differ materially from those in such
forward-looking statements. Such factors include but are not limited to
failure of pending or anticipated acquisitions to be consummated.
General
Year 2000 Reporting
On August 4, 1998, the SEC issued expanded requirements for disclosure
regarding the international computer programming problems whereby certain
computer programs will not be able to properly recognize the date in the year
2000. Management believes the Company has no material exposure from the year
2000 problem. The Company's management information systems department reports
that because the Company's system was originally designed to be unaffected by
year 2000 problem, the Company has no exposure to the problem within its own
system. Because the Company has discontinued operations, the Company has no
vendors and suppliers whose non-compliance with correction of the problem
could cause material damage to the Company.
CURRENT PLANS
During 1999, management of the Company has been pursuing a plan of attempting
to identify an acquisition that could provide stable operations in order to
restore shareholder value.
Results of Operations
The Company has discontinued operations. Net loss from operations for the
period consists of minor office expenses, audit fees, and depreciation.
The nine months ended September 30, 1999 compared to the nine months ended
September 30, 1998:
Revenues for the nine months ended September 30, 1998 amounted to $11,463,796
compared to $-0- for the nine months ended September 30, 1999. The decrease in
revenues reflected for the nine months ended September 30, 1999 is a result of
the assignment of all of the Company's operating subsidiaries.
Costs and expenses of revenues for the nine months ended September 30, 1998
were $8,971,763 compared to $36,698 for the nine months ended September 30,
1999. The decrease in expenses is a result of the assignment of all of the
Company's operating subsidiaries.
The Company had guaranteed a note related to the operations of the assigned
subsidiaries. Per the terms of the note, the note was reduced by receipts to
the holder of the note from publications of the subsidiaries of Princeton.
During the first quarter of 1999, the note was reduced by $72,055 from
proceeds of publications of the former subsidiaries of Princeton.
Net loss for the nine months ended September 30, 1998 from discontinued
operations was ($5,477,663). Net income for the nine months ended September
30, 1999 was $35,357 consisting of the extraordinary item of gain from
reduction of guaranteed note of $72,055 and loss from operations of $36,698.
Liquidity and Capital Resources
During the nine months ended September 30, 1998, $794,573 in interest expense
was charged to operations compared to $-0- in interest expense for the nine
months ended September 30, 1999. The interest expense of the prior year period
was accrued primarily pursuant to two promissory notes delivered by Princeton
and Firestone in connection with the purchases of the magazine publishing
assets in March and September of 1996.
Liquidity and capital resources are discussed in three broad categories:
operating activities, investing activities and financing activities.
Cash increased $387 to $387 at September 30, 1999 from $-0- at December 31,
1998. Net cash used in operating activities was $19,000 during the nine
months ended September 30, 1999 compared to cash used by operating activities
of $937,885 during the nine months ended September 30, 1998. The decrease in
net cash used in operating activities in the nine months of 1999 compared to
the nine months of 1998 is a result of the assignment of all of the Company's
operating subsidiaries.
During the nine months ended September 30, 1998, net cash used in investing
activities was $771,513 compared with $19,387 provided by investing activities
during the nine months ended September 30, 1999. In 1998 the primary use of cash
in investing activities was advances on a note receivable to a related party
in the amount of $686,387. In 1999 advances were made by related parties to
cover minimal operating expenses and audit fees.
During the nine months ended September 30, 1998, net cash provided by financing
activities was $1,194,285 compared to $-0- from net cash provided by financing
activities during the nine months ended September 30, 1999 as a result of the
assignment of all of the Company's operating subsidiaries.
PART II. OTHER INFORMATION
Item 5: Certain Relationships and Related Transactions
The Company shares corporate headquarters office space with Celebrity
Entertainment, Inc., a company with common directorship. In 1999 advances
were made by related parties to cover minimal operating expenses and audit
fees.
Item 6: Exhibits and Reports on Form 8-K.
(a) Exhibits - None.
(b) Reports on Form 8-K: None.
SIGNATURES
In accordance with Section 13 and 15 (d) of the Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: November 14, 1999
PRINCETON MEDIA GROUP, INC.
/s/ James J. McNamara
By: James J. McNamara,
Chairman of the Board and
Acting Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 387
<SECURITIES> 7,850
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 8,237
<PP&E> 43,408
<DEPRECIATION> 15,804
<TOTAL-ASSETS> 35,841
<CURRENT-LIABILITIES> 672,604
<BONDS> 0
28,923
739,696
<COMMON> 21,297,570
<OTHER-SE> (636,763)
<TOTAL-LIABILITY-AND-EQUITY> 35,841
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 36,698
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (36,398)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,398)
<DISCONTINUED> 0
<EXTRAORDINARY> 72,055
<CHANGES> 0
<NET-INCOME> 35,357
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
