<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
____________________
FORM 10-QSB
Quarterly Report Under Section 13 or 15
(d) of the Securities
Exchange Act of 1934.
____________________
For Quarter Ended September 30, 1995 Commission file number 0-18410
THE PRODUCERS ENTERTAINMENT GROUP LTD.
(Exact name of registrant as specified in its charter)
Delaware 95-4233050
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9150 Wilshire Boulevard, Suite 205, Beverly Hills, CA 90212
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (310) 285-0400
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the 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 proceeding 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
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common stock - November 10, 1995 - 10,420,996
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
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CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1995 1995
----------- --------
(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 293,984 $ 832,754
Accounts receivable, net 515,690 652,074
Notes receivable, net 402,842 402,842
Receivables from related parties 99,883 116,229
Film costs, net 1,554,811 2,104,503
Fixed assets, net 72,692 76,439
Other assets 192,184 199,829
---------- -----------
$3,132,086 $4,384,670
========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 626,823 $ 847,595
Deferred participations based on estimated
revenues 280,210 350,000
Deferred revenue - 598,708
---------- -----------
Total liabilities 910,033 1,796,303
---------- -----------
Shareholders' equity:
Preferred Stock, $.001 par value.
Authorized 10,000,000 shares;
Issued 1,000,000 shares - Series A 1,000 1,000
Common stock, $.001 par value.
Authorized 50,000,000 shares;
issued 11,543,432 and 11,388,770 shares 11,544 11,389
Additional paid-in capital 15,321,059 15,321,214
Accumulated deficit (12,101,358) (11,735,044)
----------- -----------
3,232,245 3,598,559
Treasury stock 1,122,436 shares, at cost (1,010,192) (1,010,192)
---------- -----------
Net shareholders' equity 2,222,053 2,588,367
---------- -----------
$3,132,086 $4,384,670
========== ===========
</TABLE>
See notes to condensed consolidated financial statements.
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
2
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended September 30,
--------------------------------
1995 1994
---------- ---------
<S> <C> <C>
Revenues $1,073,401 $4,092,863
Amortization of film costs 634,000 2,191,734
---------- ---------
439,401 1,170,474
General and administrative expenses 813,322 983,569
---------- ---------
Operating income (loss) (373,921) 998,970
Interest income 7,607 7,322
---------- ---------
Net income (loss) (366,314) 924,882
Dividend requirement of Series A
Preferred Stock (106,250) -
---------- ---------
Net income (loss) applicable to common
shareholders $(472,564) $924,882
========== =========
Net income (loss) per common share $(.05) $ .09
===== =====
Average common and (in 1994) common
equivalent shares outstanding 10,343,665 9,904,000
========== =========
</TABLE>
See notes to condensed consolidated financial statements.
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
3
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CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
THREE MONTHS ENDED SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Series A Additional
Preferred Common Paid-In Treasury
Stock Stock Capital Deficit Stock Net
----- ------ ------- ------- ----- ---
<S> <C> <C> <C> <C> <C> <C>
Balance,
June 30, 1995 $1,000 11,389 15,321,214 (11,735,044) (1,010,192) 2,588,367
Dividend on Series
A preferred stock 155 (155) -
Net (loss) (366,314) (366,314)
------ ------ ---------- ----------- ---------- ---------
Balance,
September 30,
1995 $1,000 11,544 15,321,059 (12,101,358) (1,010,192) 2,222,053
====== ====== ========== =========== ========== =========
</TABLE>
See notes to condensed consolidated financial statements.
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
4
<PAGE> 5
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended September 30,
--------------------------------
1995 1994
-------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) ($366,314) $ 924,882
Adjustments to reconcile net income (loss)
to net cash (used in) operating activities:
Depreciation and amortization 641,645 2,201,578
Changes in assets and liabilities:
Decrease in receivables 136,384 51,682
(Increase) decrease in other assets 3,747 (69,267)
(Decrease) in accounts payable and
accrued expenses (217,772) (189,439)
(Decrease) in deferred participations (69,790) -
(Decrease) in deferred revenues (598,708) (3,308,276)
-------- ----------
Net cash (used in) operating activities (470,808) (388,840)
-------- ----------
Cash flows from investing activities:
Additions to film costs (84,308) (682,101)
Capital expenditures - (9,998)
Decrease (increase) in due from related
parties 16,346 (3,727)
-------- ----------
Net cash (used in) investing activities (67,962) (1,456,639)
-------- ----------
Cash flows from financing activities:
Borrowings, repayments, net - 914,750
Proceeds from exercise of stock options - 454,375
-------- ---------
Net cash provided by financing activities - 1,369,125
---------
Net increase (decrease) in cash (538,770) 284,459
Cash at beginning of period 832,754 964,387
-------- ----------
Cash at end of period $293,984 $1,248,846
======== ==========
</TABLE>
See notes to condensed consolidated financial statements.
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
5
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1995
(1) Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
accruals) which are, in the opinion of management, necessary to present fairly
the results of operations for the periods presented.
The information contained in this Form 10-QSB should be read in
conjunction with the audited financial statements filed as part of the
Company's Annual Report on Form 10-KSB for the fiscal year ended June 30, 1995.
(2) Income (Loss) Per Common Share
Income (loss) per common share has been computed based on the weighted
average number of common shares outstanding during the periods. In 1995 (loss)
per common share has been computed after deducting the dividend requirement of
the Series A Preferred Stock from net (loss). In 1994 average shares
outstanding gives effect to dilutive stock options and warrants. The assumed
conversion of the Series A Preferred Stock or the assumed exercise of
outstanding stock options and warrants has not been included in 1995 because
the effect would be anti-dilutive.
(3) Dividend on Series A Preferred Stock
During the three months ended September 30, 1995, the Company paid the
dividend on its Series A Preferred Stock for the quarter ended June 30, 1995 by
issuing 155,662 shares of Common Stock. The par value of these shares ($155)
has been charged to additional paid-in capital.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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RESULTS OF OPERATIONS
The amount of revenues earned by the Company in any one period is
dependent on, among other things, the number of projects completed during any
such period and the distribution of completed projects. Revenues from producers
and other fees are primarily dependent on the number of projects being produced
and the agreements relating to such projects. Accordingly, the amount of
revenues earned by the Company in any period are not necessarily indicative of
future revenues.
THREE MONTHS ENDED SEPTEMBER 30, 1995 AS COMPARED TO THREE MONTHS ENDED
SEPTEMBER 30, 1994
Revenues for the three months ended September 30, 1995 consisted of
production and distribution fees from completed projects, including previously
deferred revenues that were recognized upon the completion of a television
series during the quarter. Revenues for the three months ended September 30,
1995 also included producer fees from television series and personal management
fees. Revenues for the three months ended September 30, 1994 included
production and distribution fees from a television series that was completed
during that quarter, producer fees from television series and personal
management fees.
Amortization of film costs for the three months ended September 30,
1995 and 1994 were $634,000 and $2,191,734, respectively and was computed using
the individual film forecast method.
General and administrative expenses for the three months ended
September 30, 1995 were $813,322 as compared to $983,569 for the three months
ended September 30, 1994 or a decrease of $170,242. The primary reasons for
this decrease were the termination of certain unprofitable operations of DSL,
including related compensation and other expenses, somewhat offset by legal
fees incurred in connection with lawsuits with the former President and owner
of DSL. The level of general and administrative expenses is dependent on the
level of the Company's future operations.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1995, the Company had cash and cash equivalents of
$293,984 and accounts receivable of $515,690 (aggregate - $809,674. At
September 30, 1995, the Company also had accounts payable and accrued expenses
of $629,823. During the quarter ended September 30, 1995, the Company used
$470,808 of cash in its operations.
The Company's cash receipts are principally derived from exhibition
and distribution of its completed projects, producers fees and personal
management fees. These cash receipts are affected
7
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by various factors including the timing of the completion, exhibition and
distribution of its completed projects and the number of projects produced.
Therefore, the Company is unable to accurately predict the level or timing of
its future cash receipts.
The Company's cash commitments for the next twelve months include
compensation to its officers and others of approximately $1,125,000 and minimum
office rent of $220,000 (aggregate - approximately $1,345,000). The Company
also incurs overhead and other costs such as salaries, related benefits, office
expenses, professional fees and similar expenses. For the three months ended
September 30, 1995, general and administrative expenses, which includes
compensation and rent, but does not include the effects of the new employment
agreements agreed to be entered into by the Company, aggregated approximately
$813,000. The Company also expends funds on the production and development of
projects.
The dividend on the Company's Series A Preferred Stock for the quarter
ended September 30, 1995 was subsequently paid by the Company issuing 154,662
shares of its common stock.
The Company has no arrangements for external sources of liquidity such
as bank lines of credit and has no material commitments for capital
expenditures. Management believes that the Company's present and future
resources will be sufficient for its needs for at least the next twelve months.
PART II -- OTHER INFORMATION
8
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ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 1995.
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.
THE PRODUCERS ENTERTAINMENT GROUP LTD.
Date: November 10, 1995 /s/ Irwin Meyer
---------------
Irwin Meyer,
President and Chief Executive
Officer
November 10, 1995 /s/ Charles J. Weber
--------------------
Charles J. Weber,
Principal Financial and
Accounting Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE (A)
FINANCIAL STATEMENTS CONTAINED IN THE COMPANY'S FORM 10-QSB FOR THE QUARTER
(B) ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS AND NOTES THERETO.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 293,984
<SECURITIES> 0
<RECEIVABLES> 1,018,415
<ALLOWANCES> 0
<INVENTORY> 1,554,811
<CURRENT-ASSETS> 0
<PP&E> 72,692
<DEPRECIATION> 0
<TOTAL-ASSETS> 3,132,086
<CURRENT-LIABILITIES> 910,033
<BONDS> 0
<COMMON> 11,554
0
1,000
<OTHER-SE> 2,209,499
<TOTAL-LIABILITY-AND-EQUITY> 3,132,086
<SALES> 1,073,401
<TOTAL-REVENUES> 1,073,401
<CGS> 634,000
<TOTAL-COSTS> 634,000
<OTHER-EXPENSES> 813,322
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (7,607)
<INCOME-PRETAX> (366,314)
<INCOME-TAX> 0
<INCOME-CONTINUING> (366,314)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (366,314)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
