U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of
1934
For the quarterly period ended January 31, 1997
Commission file number 0-19997
UC TELEVISION NETWORK CORP.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
Delaware 13-3557317
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
645 Fifth Avenue - East Wing, New York, NY 10022
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(Address of Principal Executive Offices)
(212) 888-0617
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
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 [ ]
Number of shares of common stock outstanding as of March 13, 1996: 10,984,857
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
<PAGE>
UC TELEVISION NETWORK CORP.
BALANCE SHEET
January 31, 1997
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................................. $ 601,722
Accounts receivable ........................................ 700,063
Prepaid expenses ........................................... 71,440
Other current assets ....................................... 19,541
------------
Total current assets ................................ 1,392,766
Property and equipment, net ................................... 1,649,457
Other assets .................................................. 7,320
------------
TOTAL ............................................... $ 3,049,543
============
LIABILITIES
Current liabilities:
Accounts payable and accrued expenses ..................... $ 431,854
Dividends payable ......................................... 2,003
------------
Total current liabilities ................................ 433,857
------------
Redeemable preferred stock .................................... 3,333
------------
Commitments and contingencies
STOCKHOLDERS' EQUITY
Capital stock:
Redeemable preferred stock - $.001 par;
authorized 1,500,000 shares; issued and
outstanding 3,333 shares (liquidation value - $3,333 )
Preferred stock - $.001 par; authorized
500,000 shares; none issued
Common stock - $.001 par; authorized 50,000,000 shares;
issued and outstanding 10,984,857 shares ................. 10,985
Additional paid in capital .................................... 14,870,263
Accumulated deficit ........................................... (12,268,895)
------------
Total stockholders' equity .......................... 2,612,353
------------
TOTAL ............................................... $ 3,049,543
============
The accompanying notes are an integral part of the financial statements.
<PAGE>
UC TELEVISION NETWORK CORP.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
----------------------------------------------
1997 1996
----------------------- ---------------------
<S> <C> <C>
Sales. . . . . . . . . . . . . . . . . . . . $ 507,500 $ 290,963
----------------------- ---------------------
Cost of sales. . . . . . . . . . . . . . . . 426,541 369,416
Selling, general and administrative. . . . . 642,763 666,763
Interest income. . . . . . . . . . . . . . . (10,118) (6,551)
----------------------- ---------------------
1,059,186 1,029,628
----------------------- ---------------------
NET LOSS. . . . . . . . . . . . . . . . . . $ (551,686) $ (738,665)
======================= =====================
Loss per share . . . . . . . . . . . . . . . $ (0.05) $ (0.12)
Weighted average number of
common shares outstanding. . . . . . . . 10,947,925 5,968,886
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
UC TELEVISION NETWORK CORP.
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
January 31,
---------------- -------------
1997 1996
---------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss .................................................................... $ (551,686) $ (738,665)
Adjustments to reconcile net loss to net cash (used in)
operating activities:
Depreciation and amortization ........................................... 175,201 98,347
Issuance of common stock for services ................................... 30,000
Changes in operating assets and liabilities:
Decrease in accounts receivable ....................................... 61,733 316,897
Decrease in prepaid expenses and other current assets ................. 18,873 10,603
Increase (decrease) in accounts payable and accrued expenses .......... (101,607) 220,022
----------- ---------
Net cash used in operating activities ............................... (397,486) (62,796)
----------- ---------
Cash flows used in investing activities:
Purchases of property and equipment ......................................... (183,482) (28,544)
----------- ---------
Net cash generated in investing activities .......................... (183,482) (28,544)
----------- ---------
Cash flows from (used in) financing activities:
Proceeds from exercise of employee stock options ............................ 23,952
Deferred issuance costs ..................................................... (83,755)
----------- ---------
Net cash provided by (used in) financing activities ................. 23,952 (83,755)
----------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS ...................................... (557,016) (175,095)
Cash and cash equivalents - beginning of period ................................ 1,158,738 792,424
----------- ---------
CASH AND CASH EQUIVALENTS - END OF PERIOD ...................................... $ 601,722 $ 617,329
=========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
<PAGE>
UC TELEVISION NETWORK CORP.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB and Item 310(b) of
Regulation S-B. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. These financial statements should be read in conjunction
with the Company's financial statements for the fiscal year ended October 31,
1996 included in the Annual Report as filed on Form 10-KSB with the United
States Securities and Exchange Commission.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have been
included.
The results of operations for the three months ended January 31, 1997
are not necessarily indicative of the results of operations for the full fiscal
year ending October 31, 1997.
NOTE (A) - The Company:
UC Television Network Corp., formerly Laser Video Network, Inc. ("the
Company"), is a broadcasting company which owns and operates the UC Television
Network ("UCTN"), a proprietary interactive commercial television network
operating on college and university campuses, through single-channel television
systems placed primarily in campus dining facilities and student unions.
Substantially all of the Company's revenues are derived from advertising
displayed on UCTN. At January 31, 1997, UCTN was installed or contracted for
installation at approximately 227 locations in various colleges and universities
throughout the United States.
The Company's revenues are affected by the pattern of seasonality
common to most school-related businesses. Historically, the Company generates a
significant portion of its revenues during the period of September through May
and substantially less revenues during the summer months when colleges and
universities do not hold regular classes.
NOTE (B) - Commitments and Contingencies:
On November 5, 1996, the Company signed an agreement with Turner
Private Networks, Inc. to provide news and sports programming on UCTN during the
period from January 1, 1997 to December 31, 1999 for a aggregate cost of
$890,095, payable in equal installments during the term of the agreement after
an initial payment of $30,000.
The Company executed an equipment rental agreement with Hughes Network
Systems on November 6, 1996. The agreement calls for the installation of 200
systems for receiving satellite transmissions with payments aggregating $328,032
over a three year period. At the end of such period, the Company may purchase
the equipment for $1.00. This arrangement will be classified as a capital lease
at such time the equipment is placed into service.
In connection with the acquisition of certain assets, the Company
agreed to pay two former shareholders of the seller an aggregate of $100,000,
one-half being payable at such time the Company's net pre-tax income equals at
least $500,000, and the balance being payable at such time as the Company has an
additional $500,000 in net pre-tax earnings.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATIONS
The following discussion and analysis should be read in conjunction
with the Company's financial statements appearing elsewhere in this report.
Information contained or incorporated by reference in this report contains
"forward looking statements" which can be identified by the use of
forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negative thereof or other variations thereon or
comparable terminology, or by discussions of strategy. No assurance can be given
that the future results covered by the forward-looking statements will be
achieved.
RESULTS OF OPERATION
The Company is a broadcasting company whose principal activities
involve operating and marketing UCTN, a private commercial television network.
At January 31, 1997, UCTN was installed or contracted for installation at
approximately 227 locations in various colleges and universities throughout the
United States. Substantially all of its revenues are derived from advertising
displayed on UCTN.
The Company's revenues are affected by the pattern of seasonality
common to most school-related businesses. Historically, the Company generates a
significant portion of its revenues during the period of September through May
and substantially less revenues during the summer months when colleges and
universities do not hold regular classes.
The following table sets forth certain financial data derived from the
Company's statement of operations for the three months ended January 31, 1997
("1st Quarter 1997") and January 31, 1996 ("1st Quarter 1996"):
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
January 31, 1997 January 31, 1996
------------------------------- ---------------------------
% of % of
$ Sales $ Sales
------------------ ----------- --------------- -----------
<S> <C> <C> <C> <C>
Sales . . . . . . . . . . . . . . . . . . . $ 507,500 100% $ 290,963 100%
Cost of sales . . . . . . . . . . . . . . . 426,541 84 369,416 127
Selling, general and administrative . . . . 642,763 127 666,763 229
Interest income . . . . . . . . . . . . . . 10,118 2 6,551 2
Net loss . . . . . . . . . . . . . . . . . 551,686 109 738,665 254
</TABLE>
Sales increased by 74% to $507,500 for 1st Quarter 1997 from $290,963
for the comparable period last year. Increased commitments from existing
customers combined with new customers was the primary source of this increase.
The Company anticipates continued sales growth during the year ending October
31, 1997 ("Fiscal 1997"), with advertising commitments for Fiscal 1997 as of
February 28, 1997 at approximately 75 percent above commitments for Fiscal 1996
at the same date last year. Although the Company has agreements with national
advertisers and has held discussions or had prior agreements with other national
advertisers, no assurance can be given that these or other advertisers will
continue to purchase advertising from the Company, or that future significant
advertising revenues will ever be generated. A failure to significantly increase
advertising revenues could have a material impact on the operations of the
Company.
<PAGE>
The cost of sales increased to $426,541 for 1st Quarter 1997 from
$369,416 for the same period last year, however it decreased as a percentage of
sales to 84% for 1st Quarter 1997 from 127% for the same period last year. The
increase over the prior year is primarily attributed to increased depreciation
expense relating to the retrofit of existing systems to utilize satellite
transmission technology.
Selling, general and administrative expenses decreased to $642,763 for
1st Quarter 1997 versus $666,763 for the same period last year. Fees and
commissions based on a percentage of sales are generally paid to agencies
representing advertisers on UCTN. An increase in advertising agency fees and
commissions, a direct result of increased sales, was more than offset by a
decrease in professional fees.
Interest income increased to $10,118 for 1st Quarter 1997 as compared
to $6,551 for the same period last year. The increase is attributed to higher
average cash levels during 1st Quarter 1997.
The net loss decreased to $551,686 for 1st Quarter 1997 as compared to
a net loss of $738,665 for the same period last year. In order to reach the
stage where the Company is profitable, the Company will need to continue to
expand into additional college dining facilities. Furthermore, additional
financing may be required to produce the additional systems necessary to reach
profitable operating levels.
FINANCIAL CONDITION AND LIQUIDITY
At January 31, 1997, the Company had working capital of $958,909. At
such date, the Company's cash and cash equivalents totaled $601,722.
Cash used in operations increased to $397,486 during the 1st Quarter
1997 from $62,796 for the comparable period last year. The increase was
primarily related to the timing of collections of accounts receivable and
payments of accounts payable.
Purchases of property and equipment increased to $183,482 during 1st
Quarter 1997 from $28,544 during 1st Quarter 1996 due to the ongoing conversion
of UCTN to a satellite delivered network. Installation of new systems during 1st
Quarter 1996 was minimal as a result of the anticipated retrofitting of the
network.
On November 5, 1996, the Company signed an agreement with Turner
Private Networks, Inc. to provide news and sports programming on UCTN during the
period from January 1, 1997 to December 31, 1999 for a aggregate cost of
$890,095, payable in equal installments during the term of the agreement after
an initial payment of $30,000.
The Company executed an equipment rental agreement with Hughes Network
Systems on November 6, 1996. The agreement calls for the installation of 200
systems for receiving satellite transmissions with payments aggregating $328,032
over a three year period. At the end of such period, the Company may purchase
the equipment for $1.00.
The Company has incurred substantial losses since commencement of its
operations and anticipates that such losses will continue in Fiscal 1997. In
order to reach the stage where the Company is profitable, it is expected that
additional financing will be required to fund the Company's planned expansion.
The Company is expected to seek additional financing, however, there can be no
assurance that such financing will be obtained and if so, on favorable terms to
the Company.
In the event the Company does not achieve anticipated revenue levels
and/or obtain additional financing, the Company expects to reduce its operating
expenses by, among other actions, downsizing its personnel and reducing its
marketing, promotional and product development costs in an effort to reduce cash
requirements. Reduction of operating expenses alone is not expected to assure
profitability.
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security-Holders.
None.
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Form 8-K have been filed for the
quarter for which this report is being filed.
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.
UC TELEVISION NETWORK CORP.
Registrant
Date: March 17, 1997 /s/ Peter L. Kauff
------------------
Peter L. Kauff
Chairman of the Board
(Principal Executive Officer)
Date: March 17, 1997 /s/ Alan M. Pearl
-----------------
Alan M. Pearl
Chief Financial Officer, Secretary and
Treasurer (Principal Accounting
and Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED FINANCIAL STATEMENTS CONTAINED IN THE JANUARY 31, 1997 QUARTERLY
REPORT FILED ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> JAN-31-1997
<CASH> 601,722
<SECURITIES> 0
<RECEIVABLES> 700,063
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,392,766
<PP&E> 3,666,066
<DEPRECIATION> (2,016,609)
<TOTAL-ASSETS> 3,049,543
<CURRENT-LIABILITIES> 433,857
<BONDS> 0
3,333
0
<COMMON> 10,985
<OTHER-SE> 2,601,368
<TOTAL-LIABILITY-AND-EQUITY> 3,049,543
<SALES> 507,500
<TOTAL-REVENUES> 507,500
<CGS> 426,541
<TOTAL-COSTS> 426,541
<OTHER-EXPENSES> 642,763
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (551,686)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (551,686)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
