<PAGE>
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Act of 1934
Date of Report (Date of earliest event reported): June 10, 1999
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Metro Global Media, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-21634 65-0025871
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State or other (Commission (IRS Employer
jurisdiction File Number) Identification No.)
of incorporation
1060 Park Avenue, Cranston, Rhode Island 02910
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (401) 942-7876
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(Former name of former address, if changed since last report)
<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
(2) Unaudited Balance Sheet and Unaudited Statement of Income of
Fanzine International, Inc. for the six month period ended June
30, 1998.
(b) Unaudited Pro Forma Financial Information
(1) Pro Forma unaudited Balance Sheet and unaudited Statement of
Income which give effect to the acquisition of Fanzine
International, Inc.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
METRO GLOBAL MEDIA, INC.
By: /s/ Janet Hoey
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Janet Hoey, Treasurer
June 10, 1999
<PAGE>
FANZINE INTERNATIONAL, INC.
BALANCE SHEET
JUNE 30, 1998
(Unaudited)
<TABLE>
<S> <C>
CASH $ 689,817
INVESTMENT IN MARKETABLE SECURITIES 211,817
ACCOUNTS RECEIVABLE - NET 3,532,429
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TOTAL ASSETS $4,433,875
==========
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $1,304,663
SHAREHOLDERS'S EQUITY 3,129,212
TOTAL LIABILITIES AND SHAREHOLDERS'S EQUITY $4,433,875
==========
</TABLE>
Exhibit 7(a)(2)
<PAGE>
FANZINE INTERNATIONAL INC.
STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(Unaudited)
<TABLE>
<S> <C>
SINGLE COPY SALES $ 20,768,575
Less: Estimated Returns (14,305,307)
Distributor's Discount
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NET REVENUE $ 6,463,268
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COSTS AND EXPENSES
Production & Distribution $ 2,857,972
Editorial & Artwork 230,215
Officers Salaries
General & Administrative 190,000
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TOTAL COSTS AND EXPENSES $ 3,278,187
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NET INCOME $ 3,185,081
============
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED
FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet has been prepared
by combining the consolidated balance sheets of the Company as of May 30,1998
and of Fanzine International, Inc. as of June 30, 1998. The Acquisition is
accounted for using the purchase method of accounting as if the Acquisition had
occurred on June 1, 1997. Under this method, based upon a preliminary purchase
price for Fanzine International, Inc., the identifiable assets and liabilities
of Fanzine International, Inc., have been adjusted to their estimated fair
values and certain estimated costs to downsize and reorganize Fanzine
International, Inc. operations have been accrued.
The following unaudited pro forma consolidated statements of operations have
been prepared by combining the consolidated statements of operations of the
Company for the fiscal year ended May 30, 1998 and for Fanzine the 11 months
ended June 30, 1998. The Acquisition is accounted for using the purchase method
of accounting as if the Acquisition had occurred on June 1, 1997. No cost
savings and synergies which the Company expects to realize as a result of the
Acquisition has been recognized in the pro forma consolidated statements of
operations.
The pro forma consolidated financial statements do not purport to represent what
the Company's consolidated financial position or results of operations actually
would have been had the Acquisition been completed on the dates for which the
Acquisition is being given effect, nor is it necessarily indicative of future
financial position or operating results of the Company. The pro forma
consolidated financial statements should be read in conjunction with the
accompanying notes and the historical financial statement of the respective
companies and the related notes thereto. Certain reclassifications have been
made to the historical financial statements of the Company and Fanzine
International, Inc. in order to provide classifications appropriate to the pro
forma financial statements.
The pro forma consolidated financial statements do not take into account any
modifications to the Acquisition which may be required to address any gain-out
contingencies or future redemption of the Company's stock issued to selling
shareholders.
Exhibit 7(b)(1)
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
Pro Forma Consolidated Balance Sheet (unaudited)
Historical
(all amounts in thousands)
<TABLE>
<CAPTION>
FANZINE
ASSETS METRO GLOBAL INTERNATIONAL Pro forma
MEDIA, INC INC. Pro forma Financial
May 30, 1998 June 30, 1998 Adjustments Statements
---------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Current Assets
Cash $ 185 $ 690 $ (130)(c) $ 2,411
1,666 (c)
Investment in marketable securities - 212 212
Accounts receivable, net 5,092 3,532 8,624
Inventory 3,727 3,727
Other current assets 327 327
---------------- ------------- ----------- ------------
Total Current Assets 9,331 4,434 1,536 15,301
Motion pictures and other films,less
accumulated amortization 4,143 4,143
Property and Equipment at cost, less
accumulated depreciation 1,479 1,479
Goodwill,net 7,042 (a) 7,042
Other assets 484 122 (a) 660
54 (b)
---------------- ------------- ----------- ------------
Total Assets $ 15,437 $ 4,434 $ 8,754 $ 28,625
================ ============= =========== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of capital lease obligation $ 364 364
Short-term borrowings 1,030 3,000 (a) 4,030
Accounts payable and accrued expenses 4,233 1,305 130 (a) 8,367
413 (b)
2,286 (c)
Other current liabilities 326 713 (d) 1,039
---------------- ------------- ----------- ------------
Total current liabilities 5,953 1,305 6,542 13,800
Convertible debentures 1,000 (a) 1,000
Capital lease obligations, less current portion 352 352
Deferred income taxes 59 59
---------------- ------------- ----------- ------------
Total liabilities 6,364 1,305 7,542 15,211
---------------- ------------- ----------- ------------
Redeemable common stock 3,500 (a) 3,500
Minority interest 18 18
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Commitments and Contingencies
Shareholders' Equity
Series A cumulative convertible preferred
stock, $.0001 par value, $1,000 stated 858 858
Preferred Stock, no par value
Common Stock, $.0001 par value 1 1
Additional paid in capital 6,546 218 (b) 6,764
Retained Earning 1,713 3,129 1,666 (c) 2,336
(4,172)(d)
---------------- ------------- ----------- ------------
9,118 3,129 (2,288) 9,959
---------------- ------------- ----------- ------------
Unearned Compensation (63) (63)
---------------- ------------- ----------- ------------
Total Shareholders' Equity 9,055 3,129 (2,288) 9,896
---------------- ------------- ----------- ------------
Total liabilities and shareholders' equity $ 15,437 $ 4,434 $ 8,754 $ 28,625
================ ============= =========== ============
</TABLE>
See notes to Pro forma Consolidated Financial Statements
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUBSIDIARIES
Pro Forma Consolidated Statement of Operations (Unaudited)
Historical
(all amounts in thousands, except per share information)
<TABLE>
<CAPTION>
FANZINE
METRO GLOBAL INTERNATIONAL
MEDIA, INC INC. Pro forma
Year ended Eleven months ended Pro forma Financial
May 30, 1998 June 30, 1998 Adjustments Statements
------------- --------------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 20,391 $ 9,746 $ 30,137
Cost of Revenues 13,331 4,141 17,472
------------- --------------------- ------------- -------------
7,060 5,605 0 12,665
Selling, general and administrative expenses 6,219 810 (200)(c) 9,445
330 (c)
2,286 (c)
------------- --------------------- ------------- -------------
Income (loss) from operations 841 4,795 (2,416) 3,220
Other income and expenses
Interest expense (349) (577)(b) (926)
Other income (expense) 105 105
Amortization expense (466)(a) (466)
------------- --------------------- ------------- -------------
(244) 0 (1,043) (1,287)
------------- --------------------- ------------- -------------
Income before provision for income taxes 597 4,795 (3,459) 1,933
Provision for income taxes 247 713 (d) 960
------------- --------------------- ------------- -------------
Net income $ 350 $ 4,795 $ (4,172) $ 973
============= ===================== ============= =============
Basic earnings per common share $ 0.09 $ 0.21
Diluted earnings per common share 0.09 0.17
Weighted average number of shares outstanding
Basic 3,661,994 916,667 (a) 4,578,661
Diluted 3,812,213 916,667 (a) 5,826,130
1,097,250 (b)
</TABLE>
See notes to Pro forma Consolidated Financial Statements
<PAGE>
METRO GLOBAL MEDIA, INC. AND SUSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) On July 31, 1998, Metro Global Media, Inc. ("Metro") purchased 100% of
the outstanding stock of Fanzine International, Inc. for a purchase
price of $7,500,000. The purchase price consists of $4,000,000 cash, of
which $2,000,000 was payable at closing, $1,000,000 due on October 31,
1998 and $1,000,000 due on January 31, 1999, and 1,000,000 restricted
shares of Metro's common stock. The 1,000,000 shares were valued at
$3.50 based on the average closing price of Metro's stock 10 days prior
to 10 days after the announcement of the acquisition on July 16, 1998.
The excess of the purchase price over the net assets acquired was
allocated to goodwill and other assets. The goodwill is being amortized
over 15 years. The amortization expense for the period ended May 30,
1998 is $466,277.
(b) To finance the acquisition, the Company entered into a $1,000,000 8%
convertible debenture with a third party. Due to the beneficial
conversion feature, Metro recognized $218,093 in interest expense. The
balance of the purchase price was financed through short-term
borrowings at various interest rates. Metro recognized total interest
expense of $531,400. Metro is also amortizing $100,000 of related
financing costs as interest expense.
(c) Metro entered into employment agreements with the 4 selling
shareholders of Fanzine. The employment agreement stipulates fixed
salaries and incentive compensation. The incentive compensation for the
4 selling shareholders is calculated at 49% of Fanzine's net income
before goodwill amortization, interest expense and income taxes. Metro
added back salaries and distributions the selling shareholders received
during the eleven months.
(d) The Company recognized income taxes for the income tax effect of
Fanzine's income at the statutory rate of 40%. The amortization of the
goodwill is not deductible for tax purposes.
