<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
(Amendment No.1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) September 15, 1999
-------------------------
<TABLE>
<CAPTION>
CTN MEDIA GROUP, INC.
---------------------------------
<S> <C> <C>
Delaware 0-19997 13-3557317
- ------------------------------ ----------- ------------------
(state of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
5784 Lake Forrest Drive, Suite 275, Atlanta, Georgia 30328
------------------------------------------------------------
(Address of principal office)
Registrant's telephone number, including area code (404) 256-4444
-------------------------
College Television Network, Inc.
--------------------------------
(Former name or former address, if changed since last report)
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
On September 15, 1999, College Television Network, Inc. (the "Company")
filed a Current Report on Form 8-K to report the Company's acquisition of all of
the outstanding capital stock of Armed Forces Communications, Inc., a New York
corporation doing business as Market Place Media ("MPM"). In such report, the
Company indicated that the Company's financial statements and pro forma
financial information relating to the acquisition were unavailable at that time
and would be filed as soon as practicable. Filed herewith, according to
Regulation S-B under the Securities Exchange Act of 1934, are such financial
statements and pro forma financial information.
A) Historical Financial Statements
(1) Audited Financial Statements of Armed Forces Communications,
Inc. d/b/a Market Place Media as of and for the years ended December 31, 1998
and 1997, and Unaudited Financial Statements as of and for the eight month
period ended August 31, 1999, attached hereto as Schedule 1.
B) Pro Forma Financial Statements of Combined Business
In connection with the acquisition discussed above, the Company paid
the sellers $30,000,000, subject to certain adjustments to be made, if any, as
defined in the purchase agreement. The purchase of MPM was financed through the
issuance of $15,000,000 of Series A Convertible Preferred Stock and the
incurrence of $15,000,000 of bank debt. The acquisition will be accounted for as
a purchase. The purchase price for MPM's common stock and the Company's
preliminary allocation of such price is as follows:
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Cash paid for common stock $30,000,000
Acquisition costs 500,082
-----------
Total purchase 30,500,082
Less: Fair value of tangible net
assets acquired (1,008,943)
-----------
Excess purchase price 29,491,139
-----------
</TABLE>
The Company has allocated the excess purchase price to intangible
assets consisting primarily of customer relationships, tradenames/trademarks,
and goodwill. Such amounts are being amortized on a straight-line basis over 15
years.
The Unaudited Pro Forma Consolidated Statements of Operations for the
fiscal year ended December 31, 1998 and the nine month period ended September
30, 1999 give effect to certain pro forma adjustments related to the acquisition
of MPM as if such transaction had occurred as of January 1, 1998. No Unaudited
Pro Forma Consolidated Balance Sheet as of September 30, 1999 has been presented
in this Form 8-K/A as MPM is included in the Company's September 30, 1999
Consolidated Balance Sheet filed with the Company's third quarter Form 10-QSB.
The Unaudited Pro Forma Consolidated Statements of Operations do not
purport to be indicative of the results that actually would have been obtained
if the combined operations had been conducted during the period presented and
they are not necessarily indicative of operating results to be expected in
future periods. The Unaudited Pro Forma Statements of Operations and notes
thereto should be read in conjunction with the Consolidated Financial Statements
and the related notes thereto of the Company and MPM.
(1) Unaudited Pro Forma Consolidated Statement of Operations for
the year ended December 31, 1998, attached hereto as Schedule 2.
(2) Unaudited Pro Forma Consolidated Statement of Operations for
the nine month period ended September 30, 1999, attached hereto as Schedule 3.
(3) Unaudited Consolidated Balance Sheet for the nine month
period ended September 30, 1999 (incorporated by reference to Item 1 to
Form 10-QSB filed November 15, 1999).
(c) Exhibit.
23.1 Consent of PricewaterhouseCoopers, LLP
-2-
<PAGE>
SIGNATURE
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 hereunto duly authorized.
November 15, 1999 COLLEGE TELEVISION NETWORK, INC.
By: /s/ Jason Elkin
-------------------
Jason Elkin
Chairman of the Board and
Chief Executive Officer
-3-
<PAGE>
Schedule 1
- ----------
ARMED FORCES
COMMUNICATIONS, INC.
d/b/a MARKET PLACE MEDIA
Financial Statements
December 31, 1998, 1997 and August 31, 1999
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholders of
College Television Network, Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in stockholders' equity and of cash flows present fairly,
in all material respects, the financial position of Armed Forces Communications,
Inc. d/b/a Market Place Media (the "Company") at December 31, 1998 and 1997, and
the results of its operations and its cash flows for each of the years then
ended in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 9 to the financial statements on August 31, 1999, the
Company's stockholders closed on an agreement to sell all of the shares of the
Company to College Television Network, Inc.
PricewaterhouseCoopers LLP
September 10, 1999
<PAGE>
<TABLE>
<CAPTION>
ARMED FORCES COMMUNICATIONS, INC.
d/b/a MARKET PLACE MEDIA
Balance Sheets
- --------------------------------------------------------------------------------------------------------------------------
December 31, August 31,
1998 1997 1999
(Unaudited)
<S> <C> <C> <C>
Assets
Current assets
Cash $ - $ 159,661 $ 100,533
Accounts receivable, net 8,597,295 5,891,984 8,680,035
Prepaid expenses and other current assets 145,093 61,603 251,081
---------------- ---------------- ----------------
Total current assets 8,742,388 6,113,248 9,031,649
---------------- ---------------- ----------------
Property and equipment, net 821,274 438,016 1,247,856
Deposits 30,734 12,470 26,040
---------------- ---------------- ----------------
Total assets $ 9,594,396 $ 6,563,734 $ 10,305,545
---------------- ---------------- ----------------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $ 8,150,688 $ 5,616,547 $ 8,335,749
Accrued expenses 236,822 236,123 345,041
Deferred revenue 128,228 14,647 615,812
Accrued dividends 525,000 156,000 -
Current portion of notes payable 42,993 36,725 -
---------------- ---------------- ----------------
Total current liabilities 9,083,731 6,060,042 9,296,602
Long-term portion of notes payable 19,956 53,219 -
---------------- ---------------- ----------------
Total liabilities 9,103,687 6,113,261 9,296,602
---------------- ---------------- ----------------
Commitments and contingencies
Stockholders' equity
Common stock - $0 par value, 200 shares
authorized, 100 shares issued and outstanding - - -
Additional paid-in capital 35,000 35,000 385,000
Retained earnings 455,709 415,473 623,943
---------------- ---------------- ----------------
Total stockholders' equity 490,709 450,473 1,008,943
---------------- ---------------- ----------------
Total liabilities and stockholders' equity $ 9,594,396 $ 6,563,734 $ 10,305,545
---------------- ---------------- ----------------
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
ARMED FORCES COMMUNICATIONS, INC.
d/b/a MARKET PLACE MEDIA
Statements of Operations
- -------------------------------------------------------------------------------------------------------------------------
Eight months
Years ended ended
December 31, August 31,
1998 1997 1999
(Unaudited)
<S> <C> <C> <C>
Sales $29,749,781 $23,251,623 $ 21,666,171
Cost of sales 24,154,715 19,264,358 17,390,464
----------- ----------- ------------
Gross profit 5,595,066 3,987,265 4,275,707
Expenses
Selling expense 1,970,794 1,323,529 1,355,615
General and administrative expense 2,498,610 2,271,904 2,316,484
----------- ----------- ------------
Total selling, general and administrative expense 4,469,404 3,595,433 3,672,099
Income from operations 1,125,662 391,832 603,608
----------- ----------- ------------
Other income (expense)
Interest expense (8,439) (14,999) (2,003)
Interest income 17,013 12,204 26,629
----------- ----------- ------------
Total other income (expense)
8,574 (2,795) 24,626
----------- ----------- ------------
Net Income $ 1,134,236 $ 389,037 $ 628,234
----------- ----------- ------------
</TABLE>
3
<PAGE>
ARMED FORCES COMMUNICATIONS, INC.
d/b/a MARKET PLACE MEDIA
Statement of Changes in Stockholders' Equity
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
<S> <C> <C> <C> <C> <C>
Balance, December 31, 1996 100 $ -- $ 35,000 $ 440,436 $ 475,436
Net income 389,037 389,037
Dividends declared (414,000) (414,000)
--- ----------- ----------- ----------- -----------
Balance, December 31, 1997 100 -- 35,000 415,473 450,473
Net income 1,134,236 1,134,236
Dividends declared (1,094,000) (1,094,000)
--- ----------- ----------- ----------- -----------
Balance, December 31, 1998 100 -- 35,000 455,709 490,709
Net income (unaudited) 628,234 628,234
Capital contributed (unaudited) 350,000 350,000
Dividends declared (unaudited) (460,000) (460,000)
--- ----------- ----------- ----------- -----------
Balance, August 31, 1999 (unaudited) 100 $ -- $ 385,000 $ 623,943 $ 1,008,943
--- ----------- ----------- ----------- -----------
</TABLE>
4
<PAGE>
ARMED FORCES COMMUNICATIONS, INC.
d/b/a MARKET PLACE MEDIA
Statements of Cash Flows
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
For the
eight months
Years ended ended
December 31, August 31,
1998 1997 1999
(Unaudited)
<S> <C> <C> <C>
Cash flows from operating activities
Net income $ 1,134,236 $ 389,037 $ 628,234
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 164,043 145,263 147,699
Provision for bad debts 114,000 36,000 --
Changes in assets and liabilities
Accounts receivable, net (2,819,311) (850,443) (82,740)
Prepaid expenses (83,490) (2,100) (105,988)
Deposits (18,264) 4,085 4,694
Accounts payable 2,534,141 1,134,990 185,061
Accrued expenses 699 93,397 108,219
Deferred revenue 113,581 14,647 487,584
----------- ----------- -----------
Net cash provided by operating activities 1,139,635 964,876 1,372,763
----------- ----------- -----------
Cash flows from investing activities
Purchases of equipment (547,301) (73,256) (625,005)
----------- ----------- -----------
Net cash used in investing activities (547,301) (73,256) (625,005)
----------- ----------- -----------
Cash flows from financing activities
Contributed capital 350,000
Payments under notes payable obligation (26,995) (105,052) (62,949)
Dividends paid (725,000) (631,000) (934,276)
----------- ----------- -----------
Net cash used in financing activities (751,995) (736,052) (647,225)
----------- ----------- -----------
Net (decrease) increase in cash (159,661) 155,568 100,533
Cash, beginning of period 159,661 4,093 --
----------- ----------- -----------
Cash, end of period $ -- $ 159,661 $ 100,533
----------- ----------- -----------
</TABLE>
5
<PAGE>
1. Description of the Business
Armed Forces Communications, Inc. d/b/a Market Place Media ("Market Place
Media" or the "Company") was incorporated in 1987. The Company performs
media placement services for a wide variety of advertisers. The Company
utilizes various advertising vehicles or media outlets throughout the
United States to meet its customer's needs, including but not limited to
newspapers, radio, magazines, and on-site events to target specific markets
such as college students, minorities, military personnel and senior
citizens.
2. Significant Accounting Policies
Revenue recognition
Revenue is recognized in the period during which the media outlet
distributes the advertisement which was placed by the Company.
Certain of the Company's revenues are affected by the pattern of
seasonality. Revenue generated in the college markets is substantially
less during the summer months when colleges and universities do not hold
regular classes.
Concentration of credit risk and major customers
Financial instruments which potentially subject the Company to credit risk
consist primarily of cash and trade receivables. The Company maintains
cash with a financial institution that at times may exceed the insurable
limits. The Company limits their exposure by using an established
financial institution.
Trade receivables subject the Company to a potential credit risk with
customers in various commercial sectors. To reduce credit risk, the
Company performs ongoing evaluations of its customers' financial condition.
Approximately 41%, 41% and 46% of the Company's trade receivable balance
was represented by 10 customers at December 31, 1998 and 1997 and August
31, 1999, respectively.
Sales to 10 customers represented approximately 47%, 43% and 41% of the
revenue for the years ended December 31, 1998 and 1997 and the eight months
ended August 31, 1999, respectively. One customer represented
approximately 14%, 18% and 13% of total revenue for 1998, 1997 and the
eight months ended August 31, 1999, respectively.
Accounts receivable
Accounts receivable consist primarily of trade receivables. At December
31, 1998 and 1997 and August 31, 1999, an allowance for uncollectible
accounts of approximately $150,000, $36,000 and $150,000, respectively, was
recorded.
<PAGE>
Property and equipment
Property and equipment is recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the assets which
range from five to seven years. Upon the retirement or sale of fixed
assets, the book value is removed from the accounts and the difference
between such net book value and salvage value received is recorded in
income. Expenditures for maintenance and repairs are charged to expense
during the period incurred; renovations and capital improvements are
capitalized and amortized over the assets' remaining economic useful lives.
Internally developed computer software
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). The
financial statements reflect the application of SOP 98-1. In accordance
with this standard, the Company has capitalized approximately $288,000 and
$218,063 of internal costs related to the configuration and installation of
new computer software at December 31, 1998 and August 31, 1999,
respectively. Prior to 1998, all costs associated with this software
project were research related costs and were expensed as incurred. These
capitalized costs will be amortized using the straight-line method over an
estimated useful life of five years when the computer software is ready for
its intended use.
Income taxes
The Company operates under an "S" corporation election, which provides for
the revenues and expenses of the Company to be passed on to the
stockholders of the Company for tax purposes. The Company is subject to S-
corporation tax laws in the states in which it maintains offices. The
Provision for income taxes on the Statements of Operations results from
state franchise tax liabilities.
Comprehensive income
As of January 1, 1998, the Company adopted Statements of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income." This
standard establishes new rules for the reporting and display of
comprehensive income and its components. The adoption of this statement
has no impact on the Company's net income or stockholders' equity. During
fiscal 1998 and the prior periods presented, total comprehensive income
substantially equaled net income.
Fair value of financial instruments
The carrying amounts of financial instruments including cash, accounts
receivable, accounts payable, and other liabilities approximate fair value.
The carrying amount of long term debt approximates fair value based on
current rates of interest available to the Company for loans of similar
maturities.
<PAGE>
Impairment of long-lived assets
In accordance with SFAS No. 121 "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of," the Company
determines whether there has been an impairment of long-lived assets based
on whether certain indicators of impairment are present. In the event that
facts and circumstances indicate that the cost of any long-lived assets may
be impaired, an evaluation of recoverability would be performed. If an
evaluation is required, the estimated future gross, undiscounted cash flows
associated with the asset would be compared to the asset's carrying amount
to determine if a write-down is required.
Earnings per share
Earnings per share information has not been presented in the financial
statements since the Company's stock is not publicly traded.
New accounting pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative
Instruments and Hedging Activities" ("SFAS 133"). SFAS 133 established new
rules for accounting for derivative instruments and hedging activities.
The standard will be effective for the Company's fiscal year 2001. The
Company has not entered into any derivative financial instrument
transactions. SFAS 133 is not expected to impact the Company.
Use of estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at
the date of the financial statements and the reported amounts of revenues
and expenses during the reported period. Actual results could differ from
these estimates.
Interim financial information
The accompanying financial statements and related notes as of August 31,
1999 and for the eight months ended August 31, 1999 are unaudited.
However, in the opinion of management, such interim financial information
has been prepared on the same basis as the audited financial statements and
includes all adjustments, consisting of only normal recurring adjustments,
necessary to present fairly the Company's financial position as of August
31, 1999 and the results of the Company's operations and its cash flows for
the eight months ended August 31, 1999. The results for the eight months
ended August 31, 1999 are not necessarily indicative of results for any
future period.
<PAGE>
3. Property and Equipment
Property and equipment consists of the following:
<TABLE>
<CAPTION>
Estimates December 31, August 31,
Useful Lives 1998 1997 1999
(unaudited)
<S> <C> <C> <C> <C>
Equipment 5-7 years $ 842,258 $ 724,094 $1,241,901
Capitalized software costs 5 years 288,001 - 506,064
Leasehold Improvements 7 years 73,608 49,734 79,108
Furniture and Fixtures 7 years 123,502 67,909 137,805
Vehicles 7 years 98,179 98,179 -
---------- --------- ----------
1,425,548 939,916 1,964,879
Less - Accumulated depreciation (604,274) (501,900) (717,023)
---------- --------- ----------
Total $ 821,274 $ 438,016 $1,247,856
---------- --------- ----------
</TABLE>
Depreciation expense for the years ended December 31, 1998 and 1997 and for
the eight-month period ended August 31, 1999 was approximately $164,000,
$145,300 and $147,700, respectively.
4. Debt
Long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31, August 31,
1998 1997 1999
(unaudited)
<S> <C> <C> <C>
Promissory notes $ 50,325 $ 60,134 $ -
Equipment under capital lease 12,624 29,810 -
-------- -------- ----
62,949 89,944 -
Less: Current maturities (42,993) (36,725) -
-------- -------- ----
$ 19,956 $ 53,219 $ -
-------- -------- ----
</TABLE>
The Company entered into promissory note agreements with a financial
institution during 1996 to finance the purchase of Company vehicles. These
notes were personally guaranteed by the President and the Chief Executive
Officer, the Company's sole stockholders. During 1999, the Company paid
off these notes.
<PAGE>
5. Stockholders' Equity
The Company's Articles of Incorporation provide that the authorized capital
of Armed Forces Communications, Inc. d/b/a Market Place Media consists of
200 shares of $0 par value common stock. At December 31, 1998, 1997 and
August 31, 1999, 100 shares of common stock were outstanding. The
outstanding shares of common stock are held equally by the Company's Chief
Executive Officer and the Company's President.
Dividends may be declared and only paid out of earned surplus, in such
amounts, and at such time as the Board of Directors may determine.
Dividends of $725,000, $631,000 and $934,276 were paid for the years ended
December 31, 1998 and 1997 and the eight-months ended August 31, 1999,
respectively. These amounts together with accrued dividends, primarily
represent reimbursement of certain personnel expenses and income tax
obligations of the stockholders.
6. Commitments
Employment agreements
The Company has employment agreements through 1999 with certain officers.
The agreements call for minimum base salaries for the year ending December
31, 1999 of approximately $320,000. Certain employees are guaranteed three
months salary upon termination.
Minimum lease payments
The Company leases certain of its office facilities under operating leases
which terminate at various dates through 2003. Future minimum lease
payments under noncancelable operating leases as of December 31, 1998 are
as follows:
Year ending
December 31,
1999 $337,500
2000 148,000
2001 145,000
2002 60,000
2003 18,000
------------
Total minimum lease payments $708,500
----------------
Lease expense was approximately $311,000, $268,000 and $273,494 for the
years ended December 31, 1998 and 1997 and for the eight-month period ended
August 31, 1999, respectively.
<PAGE>
7. Income Taxes
As described in Note 2, the Company operates under an "S" corporation
election. Had the Company conducted business as a "C" corporation during
1998 and 1997, the following provision for income taxes would have been
recognized:
<TABLE>
<CAPTION>
Years ended
December 31,
1998 1997
<S> <C> <C>
Current provision
Federal $331,717 $113,163
State 130,329 40,990
-------- --------
Subtotal 462,046 154,153
-------- --------
Deferred provision
Federal (30,268) (46,894)
State 1,375 (4,585)
-------- --------
Subtotal (28,893) (51,479)
-------- --------
Total $433,153 $102,674
-------- --------
</TABLE>
In addition, the Company would have recorded the following deferred tax
assets and liabilities:
<TABLE>
<CAPTION>
December 31,
1998 1997
<S> <C> <C>
Deferred tax assets
Current
Federal $133,891 $14,115
State 20,170 -
-------- -------
Total deferred tax assets $154,051 $14,115
-------- -------
Deferred tax liabilities
Noncurrent
Federal $122,909 $38,208
State 38,535 12,886
-------- -------
Total deferred tax liabilities $161,444 $51,094
-------- -------
</TABLE>
<PAGE>
8. Employee Benefit Plans
Employees of the Company can elect to participate in the Market Place Media
401(k) Profit Sharing Plan (the "Plan") which is intended to be qualified
and exempt from tax under Section 401(k) of the Internal Revenue Code.
Employees are eligible to participate in the Plan after one year of service
and can elect to invest up to 10% of their pre-tax earnings. All employee
contributions are fully vested and the Company is expected to contribute
approximately $67,000 for the 1998 plan year. Such amount has been
included in accrued expenses at December 31, 1998.
9. Related Party Transactions
The Company leases a residential apartment in New York City from its
stockholders. The property is used by Company employees while conducting
business in New York. The Company paid $33,000, $30,000 and $24,000 in
1998, 1997 and for the eight months ended August 31, 1999, respectively,
under the lease agreement.
10. Subsequent Events
On August 31, 1999, the Company's stockholders closed on an agreement to
sell all of the shares of the Company to College Television Network, Inc.
in exchange for $30,000,000.
<PAGE>
Schedule 2
- ----------
CTN Media Group, Inc.
Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 1998
<TABLE>
<CAPTION>
CTN MPM
12/31/1998 12/31/1998 Pro Forma Pro Forma
HISTORICAL HISTORICAL Adjustments Combined
<S> <C> <C> <C> <C>
Revenue $ 8,509,878 $29,749,781 $ 38,259,659
Operating expenses 4,481,434 24,154,715 28,636,149
Selling, general & admin 10,830,795 4,259,279 15,090,074
Depreciation and Amortization 2,203,988 210,125 2,048,748 A 4,462,861
Interest (income) expense (412,392) (8,574) 1,349,925 B 928,959
Net loss from operations (8,593,947) 1,134,236 (3,398,673) (10,858,384)
Basic and diluted loss
per common share $ (0.90) $ (1.14) C
Weighted average number
of common shares outstanding
used in calculation 9,529,087 9,529,087
</TABLE>
A Represents the amortization of the increase in intangible assets of
approximately $29.5 million over 15 years.
B Represents increased interest expense associated with additional borrowing
of $15 million which was used to finance the MPM acquisition at an assumed
rate of approximately 8.4%. Amount also includes the amortization of loan
costs associated with obtaining such financing. Total loan costs were
approximately $500,000. Amortization of approximately $100,000 is included
in the amount above.
C Calculation reflects earnings per share based upon continuing operations.
This calculation does not give effect to the impact of accretion of
mandatorily redeemable preferred stock or dividends. These amounts are
reflected in the historical financial statements of CTN. Amounts are not
included as they do not represent fixed, measurable, recurring charges to
equity given the nature of the securities.
<PAGE>
Schedule 3
- ----------
Unaudited Pro Forma Consolidated Statement of Operations
For the nine month period ended September 30, 1999
<TABLE>
<CAPTION>
CTN MPM
9/30/1999 8/31/1999 Pro Forma Pro Forma
HISTORICAL HISTORICAL Adjustments Combined
<S> <C> <C> <C> <C>
Revenue $13,871,234 $21,666,171 $ 35,537,405
Operating expenses 9,935,767 17,390,464 27,326,231
Selling, general & admin 11,861,056 3,524,400 15,385,456
Depreciation and Amortization 1,305,576 147,699 1,536,561 A 2,989,836
Interest (Income) 112,846 (24,626) 923,513 B 1,011,733
Net (loss) income (9,344,011) 628,234 (2,460,074) (11,175,851)
Basic and diluted loss
per common share $ (0.65) $ (0.78) C
Weighted average number
of common shares
outstanding
used in calculation 14,333,341 14,333,341
</TABLE>
A Represents the amortization of the increase in intangible assets of
approximately $29.5 million over 15 years.
B Represents increased interest expense associated with additional borrowing
of $15 million which was used to finance the MPM acquisition at an assumed
rate of approximately 8.4%. Amount also includes the amortization of loan
costs associated with obtaining such financing. Total loan costs were
approximately $500,000. Amortization of approximately $75,000 is included in
the amount above.
C Calculation reflects earnings per share based upon continuing operations.
This calculation does not give effect to the impact of accretion of
mandatorily redeemable preferred stock or dividends. These amounts are
reflected in the historical financial statements of CTN. Amounts are not
included as they do not represent fixed, measurable, recurring charges to
equity given the nature of the securities.
<PAGE>
EXHIBIT 23.1
- ------------
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-3 (No. 333-58479) and
Form S-8 (No. 333-79967) of College Television Network, Inc. of our report dated
September 10, 1999 relating to the financial statements of Armed Forces
Communications, Inc. d/b/a Market Place Media, which appears in the Current
Report on For 8-K/A of CTN Media Group, Inc. dated November 15, 1999.
PRICEWATERHOUSECOOPERS LLP
Atlanta, Georgia
November 12, 1999
