UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
- -------------------------------------------------------------------------------
ACTV, Inc
(Exact name of registrant as specified in its charter)
Delaware 94-2907258
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1270 Avenue of the Americas
New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(212) 262-2570 (Registrant's telephone number, including area code)
- --------------
Securities registered pursuant to Section 12 (g) of the Act:
Title of each class Name of exchange on which
- ------------------- -------------------------
registered
- ----------
Common Stock, Par Value $0.10 Boston Stock Exchange
Securities registered pursuant to Section 12 (g) of the Act:
Common Stock, par value $0.10 per share
---------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Sections 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 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 v No__________
As of May 13, 1997, there were 11,838,734 shares of the registrant's common
stock outstanding.
<PAGE>
ACTV, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
(Audited) (Unaudited)
December 31, March 31,
1996 1997
---------------- ------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents .................... $ 6,520,756 $ 4,134,200
Accounts receivable-net ...................... 410,193 933,344
Education equipment inventory ................ 337,504 328,411
Other ........................................ 316,962 236,445
------------ ------------
Total current assets .................... 7,585,415 5,632,400
------------ ------------
Property and equipment-net ....................... 724,089 772,811
------------ ------------
Other Assets:
Patents and patents pending ................. 253,779 247,864
Goodwill .................................... 3,067,560 2,960,967
Other ....................................... 61,781 129,781
------------ ------------
Total other assets ...................... 3,383,120 3,338,612
============ ============
Total .............................. $ 11,692,624 $ 9,743,823
============ ============
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses ....... $ 1,594,655 $ 1,809,162
Deferred stock appreciation rights .......... 701,517 69,855
Preferred dividends payable ................. 195,384 316,926
------------ ------------
Total current liabilities ............... 2,491,556 2,195,943
Shareholders' equity:
Preferred stock, $.10 par value, 1,000,000
shares authorized, none issued .......... -- --
Convertible preferred stock, no par value,
436,000 shares authorized: issued and
outstanding 400,000 at December 31, 1996,
394,825 at March 31, 1997 ............... 9,115,664 8,976,716
Common stock, $.10 par value, 35,000,000
shares authorized: issued and outstand-
ing 11,787,106 at December 31, 1996,
11,838,734 at March 31, 1997 ............ 1,178,711 1,183,874
Additional paid-in capital .................. 38,272,205 38,399,104
Notes receivable from stock sales ........... (200,000) (200,000)
Accumulated deficit ......................... (39,165,512) (40,811,814)
------------ ------------
Total shareholders' equity .............. 9,201,068 7,547,880
------------ ------------
Total .............................. $ 11,692,624 $ 9,743,823
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
2
<PAGE>
ACTV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended March 31, 1996 1997
---------- -----------
Revenues:
Sales revenues ............................ $ 343,522 $ 907,944
License fees from related party ........... 7,152 --
---------- -----------
Total revenues ......................... 350,674 907,944
Cost of Sales ............................. 208,010 279,491
---------- -----------
Gross profit .......................... 142,664 628,453
Expenses:
Operating expenses ........................ 518,102 346,290
Selling and administrative ................ 1,530,619 1,984,845
Depreciation and amortization ............. 187,879 47,980
Amortization of goodwill .................. 106,593 106,593
Stock appreciation rights ................. 393,591 (277,037)
---------- -----------
Total expenses ......................... 2,736,784 2,208,671
Interest (income) ............................ (33,237) (58,137)
---------- -----------
Net loss ..................................... 2,560,883 1,522,081
Preferred stock dividend ..................... -- 124,221
----------- -----------
Loss applicable to common stock
shareholders ................................. $ 2,560,883 $ 1,646,302
=========== ===========
Loss per common share ........................ $.22 $.14
Weighted average number of common shares
outstanding .................................. 11,478,815 11,829,110
See Notes to Consolidated Financial Statements
3
<PAGE>
ACTV, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended March 31, 1996 1997
----------- -----------
Cash flows from operating activities:
Net loss applicable to common stock
holders .................................. $ 2,560,883 $ 1,646,302
----------- -----------
Adjustments to reconcile net loss to net
cash used in operations:
Depreciation and amortization ................ 294,472 207,535
Stock appreciation rights .................... 393,591 (631,662)
Common stock issued for preferred
dividends ................................ -- 2,679
Common stock issued for services ............. 99,766 --
Changes in operating assets and liabilities:
Loss from interest in ACTV Interactive ....... -- --
Accounts receivable .......................... 44,883 (523,151)
Other assets ................................. (78,875) (40,445)
Accounts payable and accrued expenses ........ 227,308 214,507
Education equipment inventory ................ (30,517) 9,093
Convertible preferred stock dividends
payable .................................. -- 121,542
----------- -----------
Net cash used in operating
activities .......................... (1,610,255) (2,286,204)
----------- -----------
Cash flows from financing activities:
Proceeds from sale of common stock ........... 1,903,485 --
Expense related to convertible preferred
stock issuance ........................... -- (9,565)
----------- -----------
Net cash provided by (used in) financing activities 1,903,485 (9,565)
Cash flows from investing activities:
Investment in property and equipment ......... (169,033) (90,787)
----------- -----------
Net cash used in investing
activities .......................... (169,033) (90,787)
----------- -----------
Net increase (decrease) in cash and cash
equivalents ....................................... 124,197 (2,386,556)
Cash and cash equivalents,
beginning of period .......................... 3,531,782 6,520,756
----------- -----------
Cash and cash equivalents,
end of period ..................................... 3,655,979 4,134,200
=========== ===========
See Notes to Consolidated Financial Statements
4
<PAGE>
ACTV, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997
1(a). The consolidated financial statements are unaudited, except as indicated.
In the opinion of management, these consolidated financial statements reflect
all normal, recurring adjustments necessary for a fair presentation of the
results for all periods. The financial results for the interim periods presented
are not necessarily indicative of the results to be expected for either
succeeding quarters or the full fiscal year.
1(b) During 1996, the Company raised approximately $9.1 million in net proceeds
from a private placement of 5% convertible preferred stock (the "Convertible
Preferred Stock") issued by a wholly-owned subsidiary. The Convertible Preferred
Stock is convertible into Common Stock of ACTV, Inc., beginning January 1, 1997,
at discounts to the market price of the Common Stock that increase from 14% in
January 1997 to a maximum of 30.375% in September 1997. After September 1, 1997,
holders of the Convertible Preferred Stock will be able to use the lesser of (i)
the then current market price of the Company's Common Stock, or (ii) an average
market price during the month of August 1997 as the price to which the 30.375%
discount is applied for conversions. In addition, beginning in October 1997, the
Company will have the right to redeem the Convertible Preferred Stock at a price
equal to $25 times the number of shares being purchased, plus accrued and unpaid
dividends (the "Redemption Price"). This right may be exercised by the Company
only if the closing price of the Company's Common Stock is above $9.00 for
thirty consecutive trading days prior to redemption. Notwithstanding the
foregoing, any or all of the Convertible Preferred Stock may be purchased by the
Company from the holders at a price equal to the Redemption Price times 1.43627
at any time prior to October 1997. The Company believes that it is highly likely
that the holders of the Convertible Preferred Stock will elect to convert their
stock into Common Stock of the Company and, accordingly, has included the
Convertible Preferred Stock in its consolidated statement of shareholders'
equity.
Management of the Company believes that its current funds will enable the
Company to finance its operations at their present level for at least the next
twelve months. Such belief is based on assumptions that could prove to be
incorrect, in which case the Company may require additional financing during
this period. Moreover, the Company believes that it will require additional
funds of $25 million for the two InSports Regional Networks, whose launch and
operation are planned during the next nine to twelve-month period. While the
Company has engaged an investment bank for assistance in securing such
financing, the Company has no commitments from lenders or investors at this time
and there is no assurance that it will be able to raise the necessary capital to
effect such launches.
2. For a summary of significant accounting policies and additional financial
information, see the Company's Annual Report on Form 10-K for the year ended
December 31, 1996.
3. The Company's balance sheets at March 31, 1997 and December 31, 1996 reflect
credits to shareholders' equity of $55,000 and $27,500, respectively, related to
options issued but not yet vested at a price below the prevailing market price
on the date of issuance. The options were issued to acquire a patent in
September 1995. The Company's balance sheets at March 31, 1997 and December 31,
1996 also reflect a debit to shareholders' equity of $200,000 related to a
non-recourse
5
<PAGE>
loan made by the Company to an employee in August 1995 to purchase the Company's
common stock by exercising options. The due date of the non-recourse
loan corresponds with the respective expiration date of the option exercised.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE COMPANY
To the extent that the information presented in this Form 10-Q discusses
financial projections, information or expectations about the Company's products
or markets, or otherwise makes statements about future events, such statements
are forward-looking and are subject to a number of risks and uncertainties that
could cause actual results to differ materially from the statements made. These
include, among others, the successful and timely development and acceptance of
new products and markets and the availability of sufficient funding to effect
such product and/or market development.
ACTV, Inc. (the "Company") was organized to develop and market ACTV's
Individualized Programming, which permits each television viewer to control what
he or she is watching by making seamless changes within the live or pre-recorded
programming. Individualized Programming appears to be a standard TV program, but
in fact is a multi-path telecast of several elements of programming material,
such as instant replay, isolation cameras, statistical data, or alternative
story lines. Since its inception, the Company has incurred operating losses
approximating $41 million related directly to the development and marketing of
the ACTV's Individualized Programming.
ACTV's Individualized Programming is designed to work with both single
and multiple channels of 6 MHz band-width and with different modes of
transmission: cable, direct broadcast satellite ("DBS"), wireless cable,
broadcast systems and distance learning networks. While it is compatible with
one-way analog systems, the Company's emphasis is on the newer digital systems
that have recently begun to be deployed.
The chief markets presently targeted by the Company for ACTV's
Individualized Programming are in-home entertainment and education (with an
emphasis on distance learning and Internet applications). The Company seeks to
exploit these markets, principally in the U.S., through licensing its
Individualized Programming, by creating joint venture relationships, and by
direct sales.
In December 1996 the Company and FOX Sports Net entered into a master
programming agreement that extends through June 30, 2003 and covers all FOX
Sports Net programming. Under terms of the agreement, the Company has the right
to offer enhanced FOX Sports Net programming to any distributor that carries the
corresponding regional FOX Sports Net channel. The Company intends to enhance
FOX Sports Net's professional and college sports programs as the basis for new
individualized regional programming networks. FOX Sports Net will receive a
share of subscriber fee and advertising revenue generated by future ACTV
television networks located within FOX Sports Net regions.
6
<PAGE>
FOX Sports Net is the domestic telecasting arm of the worldwide sports
alliance recently formed between News Corporation, Liberty Media and
TeleCommunications Inc. FOX Sports Net consists of eight owned and operated
regional sports networks and six affiliated networks serving 40 million
subscribers nationwide.
The FOX Sports Net national agreement followed the completion of the
Company's eighteen-month Individualized Programming trial within the TCI of
Ventura County cable system in greater Los Angeles. Sports programming for the
trial was supplied to ACTV by FOX Sports West. Viewers participating in the
trial received individualized FOX Sports-West telecasts of Lakers and Clippers
basketball, Kings and Ducks hockey, and California Angels baseball, among other
offerings.
Based on the success of the Los Angeles trial, the Company plans a
commercial launch of two individualized networks over the next nine to twelve
months within FOX Sports regions in Texas and Southern California. FOX Sports
Southwest has 5.1 million homes in Texas, Louisiana, Arkansas, Oklahoma and nine
New Mexico counties, while FOX Sports West reaches 4.4 million subscribers in
the region from Los Angeles to San Diego and Phoenix. The planned regional
networks, like the recently completed trial, will feature individualized FOX
Sports regional programming. The Company will be responsible for the incremental
content, transmission, delivery and master control costs incurred in connection
with the production and distribution of the individualized programming to be
presented through its regional networks.
The Company has formed a wholly-owned holding company, Individualized
Regional Sports Network, Inc. (InSports), and two operating subsidiaries of the
holding company, Texas Individualized Television Network, Inc. and Los Angeles
Individualized Television Network, Inc., to launch and operate the regional
networks in the FOX Sports Southwest and West regions, respectively.
The Company anticipates that its InSports regional networks will offer
premium cable programming services that are advertiser-supported, with monthly
subscription prices comparable to other U.S. premium channels. Although the
Company's intention is to launch the InSports regional networks over the next
nine to twelve month period, there is no assurance that it will secure the
funding necessary to effect such launches, or that other factors might not delay
or prohibit the successful implementation of the plan.
The Company will direct initial marketing of the InSports regional
networks toward the cable operators in each respective FOX Sports Net regional
market who are buying digital set-top boxes. Expansion could follow in either
additional FOX Sports Net regions or in other regional sports markets. The
recently completed trial and the projected regional network expansion are part
of the Company's plan to develop the entertainment division of its business,
which to date does not generate any revenue for the Company. There can be no
assurance that the regional networks, even if launched, will generate
significant revenues for the Company.
7
<PAGE>
The Company's objective in education is to create and deliver
individualized instruction to the classroom through distance learning networks.
ACTV's Individualized Programming enables students in remote classrooms to
respond to questions during a televised lesson from the program's instructor.
After choosing a response, each student receives individualized audio feedback
based on his or her input.
The instructor is able to create and include individualized segments in
a TV lesson by means of the Company's easy-to-use digital television authoring
software. This Windows-based application permits the instructor to enter
questions into a computer and then record, in his or her own voice,
individualized audio responses. The responses tell students more than whether
they are right or wrong -- they provide explanations and reinforcement.
During a live lesson telecast, the instructor receives an instantaneous
graphical summary of the student responses on a monitor in the studio. This
two-way communication enables each student to receive the benefit of individual
attention, while the teacher gets real-time, empirical data on the effectiveness
of the televised lesson.
In March 1997, the Company released a new education service for the
Internet, eSchool Online. eSchool Online's software enables instructors to
stream web content to their students' desktop computers in sync with distance
learning video content that is presented simultaneously. eSchool Online's user
software provides each student with a PC interface that displays three separate
instructional elements together on-screen: a television lesson received directly
by the PC (or played on a TV adjacent to the computer; Internet web sites,
delivered to each student's computer at pre-determined times during the lesson
to support the televised content; and an interactive eSchool "chat" application,
which promotes student collaboration and student/teacher dialogue.
The Company's entertainment business is conducted through its wholly-
owned subsidiary, ACTV Entertainment, Inc. ("ACTV Entertainment"). ACTV
Entertainment, Inc. was formed in 1988 with ACTV, Inc. and Le Groupe Videotron
("LGV") of Canada as equal shareholders. In June 1993 the Company became the
sole shareholder of ACTV Entertainment through an agreement that eliminated the
royalty fees that LGV had been paying to the Company. Simultaneously with the
change in ownership of ACTV Entertainment, LGV received a non-exclusive,
royalty-free license to manufacture an analog set-top terminal with compatible
ACTV Programming functionality and to produce ACTV Programming for its Videoway
service. No ACTV Programming is currently in production under this license,
except in the London, England cable systems that LGV has recently sold.
The Company's education business, which accounts for all its current
revenues, is conducted through its wholly-owned subsidiary, ACTV, Net, Inc.
(formerly ACTV Interactive, Inc.). ACTV Net, Inc. was formed in 1992, first as a
partnership between the Company and a subsidiary of the Washington Post Company
(the "Post Company"), with the subsidiary of the Post Company owning a 51%
share. In 1994, the Company purchased the Post Company's full 51% interest in
ACTV Interactive.
For purposes of discussing the combined statements of the Company and
its subsidiaries, all intercompany items have been eliminated.
RESULTS OF OPERATIONS
Comparison of Three Month Periods Ended March 31, 1997 and March 31, 1996
8
<PAGE>
During the three month period ended March 31, 1997 ("First Quarter 1997"),
the Company's revenues increased approximately 2.6 times, to $907,944, from
$350,674 in the three month period ended March 31, 1996 ("First Quarter 1996").
In the more recent quarter, most of the Company's revenues derived from distance
learning education sales. Revenues in First Quarter 1995 were derived from sales
to the education market as well as from license and executive producer fees.
The cost of sales, as a percentage of sales revenue, decreased to 31% in the
more recent quarter as compared to 59%, in the corresponding 1996 quarter. The
decrease was the result of a preponderance of distance learning sales in more
recent quarter, which carry a higher profit margin than much of the Company's
other revenue sources.
Total expenses excluding cost of sales and interest expense decreased
approximately 19%, by $528,113 in First Quarter 1997, to $2,208,671, from
$2,736,784 in First Quarter 1996. The decrease was due principally to lower
stock appreciation rights (SARs) expense, and depreciation expense. The Company
recognized net income related to SARs, in the amount of $277,037, in the more
recent quarter, as compared to an expense of $393,591 in the corresponding
period last year. The difference was the result of a decrease in the price of
ACTV, Inc.'s common stock during the First Quarter 1997. The Company also
incurred higher research and development costs in First Quarter 1997 related
principally to digital set-top terminal software and Internet product
development.
Depreciation and amortization expense decreased $139,899 in First Quarter 1997
to $154,573, from $294,472 in First Quarter 1996, due to the full depreciation
of video program inventory in 1996.
The Company incurred no interest expense in the First Quarter of 1997, or the
First Quarter of 1996. Interest income in First Quarter 1997 was $58,137, an
increase of over 75%, compared with $33,237 in First Quarter 1996. The increase
resulted from higher available cash balances and prevailing market interest
rates in the more recent period.
For the quarter ended March 31, 1997, the Company accrued $124,221 for the
payment of dividends to holders of convertible preferred stock issued in August
1996 by one of its wholly-owned subsidiaries. The Company paid $2,679 in
preferred dividends during First Quarter 1997 by issuing shares of common stock
of ACTV, Inc.
For First Quarter 1997, the Company's net loss applicable to common shareholders
was $1,644,302 or $.14 per share, a decrease of 1.6 times compared to the net
loss of $2,560,883, or $.22 per share, in First Quarter 1996. The decrease in
net loss during the more recent quarter was the result of significantly higher
revenues combined with an overall reduction in total expenses.
Comparison of Three Month Periods Ended March 31, 1996 and March 31, 1995
During the three month period ended March 31, 1996 ("First Quarter 1996"), the
Company's revenues increased approximately 3%, to $350,674, from $341,634 in the
three month period ended March 31, 1995 ("First Quarter 1995"). In the more
recent quarter, the Company's revenues derived from education sales, as well as
from license and executive producer fees related to its agreement with The
Greenwich Group. All revenues in First Quarter 1995 were derived from the
education market.
9
<PAGE>
Cost of sales in First Quarter 1996 was $208,010, a 139% increase compared to
First Quarter 1995's cost of sales of $87,101. The Company's gross margin
declined to 41% in the more recent quarter, from 75% in the corresponding 1995
quarter. The decline was due to the inclusion in the more recent quarter of
executive production fees, which carry a lower profit margin than the Company's
other revenue sources, and from proportionately lesser revenues from education
programs, when compared to First Quarter 1995. Education programs have a higher
gross margin than other education products sold by the Company.
Total expenses excluding cost of sales and interest expense increased
approximately 19% in First Quarter 1996, to $2,736,784, from $2,299,282 in First
Quarter 1995. The increase was due principally to higher selling and
administrative and operating expenses associated with the Company's operation of
its Los Angeles Regional Network, which had not yet been launched during First
Quarter 1995. The Company also incurred higher research and development costs in
First Quarter 1996 related to an ongoing distance learning project, new
initiatives in digital set-top terminal software, and Internet product
development.
Depreciation and amortization expense increased in First Quarter 1996 to
$294,238, from $215,272 in First Quarter 1995, due to greater depreciation costs
associated with equipment purchased by the Los Angeles Regional Network.
Interest expense declined to $0 in First Quarter 1996, from $40,262 in First
Quarter 1995. During 1995, the Company paid in full all of its short and
long-term interest bearing obligations. Interest income in First Quarter 1996
was $33,237, an increase of 12% compared with $29,779 in First Quarter 1995. The
increase resulted from higher available cash balances and prevailing market
interest rates in the more recent period. The Company recorded other income of
$8,279 in First Quarter 1995 arising from reimbursements of expenses recognized
in prior periods, compared to other income of $0 in First Quarter 1996.
The Company's net loss in First Quarter 1996 before extraordinary gain increased
approximately 25%, to $2,560,883, or $.22 per share, from $2,046,953, or $.22
per share, in First Quarter 1995, the result of greater selling and
administrative and operating expenses and higher cost of sales. The Company
recorded an extraordinary gain of $94,117 in First Quarter 1995 due to the
discounted prepayment of a note payable. Net loss in First Quarter 1995 after
this extraordinary gain was $1,952,836, or $.21 per share.
Liquidity and Capital Resources
Since its inception, the Company (including its operating subsidiaries) has not
generated revenues sufficient to fund its operations, and has incurred operating
losses. Through March 31, 1997, the Company had an accumulated deficit of
approximately $40.8 million. The Company's cash position on March 31, 1997 was
$4,134,200, compared to $6,520,756 on December 31, 1996.
During First Quarter 1997 the Company used $2,286,204 in cash for its
operations, compared with $1,610,255 in First Quarter 1996. The increase in
First Quarter 1997 was due principally to higher operating and selling and
administrative expenses. The Company met its cash needs in First Quarter 1997
from the remaining proceeds from the private sale of convertible preferred stock
effected in August 1996. The Company met its cash needs in First Quarter 1996
from the remaining proceeds from private sales of common stock effected in 1995,
as well as from sales of common stock totaling $1.9 million that were concluded
during First Quarter 1996.
10
<PAGE>
With respect to investing activities, in First Quarter 1997 and 1996 the Company
used cash of $90,787 and $169,033, respectively. Investing activities, in the
more recent quarter, were related to leasehold improvements, while such
activities in the 1996 Quarter related to equipment purchases for the Los
Angeles trial.
The Company's balance sheets at March 31, 1997 and March 31, 1996 reflect
expense accruals of $69,855 and $960,474, respectively, related to the Company's
stock appreciation rights plan.
The Company believes that it may be required to expend approximately $1.1 to
$1.5 million during 1997 to facilitate the completion of current research and
development projects, relating principally to firmware for digital set-top
converter boxes, upgraded software for its entertainment master control
facilities and Internet software applications.
Management of the Company believes that its current funds will enable
the Company to finance its operations at their present level for at least the
next twelve months. Such belief is based on assumptions that could prove to be
incorrect, in which case the Company may require additional financing during
this period. Moreover, the Company believes that it will require additional
funds of $25 million for the two InSports Regional Networks whose launch and
operation are planned during the next nine to twelve-month period. While the
Company has engaged an investment bank for assistance in securing such
financing, the Company has no commitments from lenders or investors at this time
and there is no assurance that it will be able to raise the necessary capital to
effect such launches.
The Company does not have any material contractual commitments for
capital expenditures.
Statement of Financial Accounting Standards No. 128.
Statement of Financial Accounting Standards ("SFAS") No. 128, Earnings
per Share, effective for interim and annual periods ending after December 15,
1997, establishes standards for computing and presenting earnings per share
("EPS") and simplifies the standards for computing EOS currently found in
Accounting Principles Board Opinion No. 15, Earnings Per Share. Common stock
equivalents under APB No. 15, with the exception of contingently issuable shares
(shares issuable for little or no cash consideration), are no longer included in
the calculation of primary, or basic EPS. Under SFAS No. 128, contingently
issuable shares are included in the calculation of primary EPS. The Company has
determined that the adoption of this statement will have no material effect on
the financial statements.
Statement of Financial Accounting Standards No. 129.
SFAS No. 129, Disclosure of Information about Capital Structure,
effective for periods ending after December 15, 1997, establishes standards for
disclosing information about an entity's capital structure, for all entities.
The statement requires disclosure of the pertinent rights and privileges of
various securities outstanding (stock, options, warrants, preferred stock, debt
and participation rights) including dividend and liquidation preferences,
participant rights, call prices and dates, conversion of exercise prices and
redemption requirements. Adoption of this statement will have no effect of the
Company as it currently discloses the information specified.
Impact of Inflation
11
<PAGE>
Inflation has not had any significant effect on the Company's operating costs
PART II OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
There are no pending material legal proceedings to which the Company is a party.
ITEM 2 CHANGES IN SECURITIES
None.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
None.
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Computation of Loss per Share
27 Financial Data Schedule
(b) Reports on Form 8-K: None.
12
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ACTV, Inc.
Registrant
Date: May 13, 1997 /s/ William C. Samuels
------------ ----------------------
William C. Samuels
Chairman, Chief Executive Officer
and Director
Date: May 13, 1997 /s/ Christopher C. Cline
------------ ------------------------
Christopher C. Cline
Senior Vice President (principal financial
and accounting officer)
13
<PAGE>
EXHIBIT 11
ACTV, INC. AND SUBSIDIARIES
COMPUTATION OF LOSS PER SHARE
Three Month Period
Ended March 31,
1996 1997
----------- -----------
Weighted average shares outstanding ............ 11,478,815 11,829,110
Common stock equivalents ....................... -- --
----------- -----------
Total ................................. 11,478,815 11,829,110
=========== ===========
Net loss .................................... $ 2,560,883 $ 1,646,302
=========== ===========
Loss per share applicable to common shareholders
............................................... $.22 $.14
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTERLY PERIOD ENDED
MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
CONSOLIDATED FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000854152
<NAME> ACTV Financial Data Schedule
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
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0
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