SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K/A
(Mark One)
[X] Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [Fee Required]
For the Fiscal Year ended June 30, 1997; or
[ ] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the Transition Period from ______ to ______
Commission File Number 1-19577
HARMONY HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4333330
(State or Other Jurisdiction (I.R.S. Employer Identification No.)
of Incorporation or Organization)
1990 Westwood Boulevard, Suite 310
Los Angeles, California 90025-4676
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code: (310) 446-7700
Securities Registered Pursuant to Section 12(b) of the Act: NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock, $.01 par value
(Title of Class)
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 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[x] No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]
State the aggregate market value of the voting stock held by
non-affiliates of the Registrant (based upon the average of the closing bid and
asked prices of such stock as reported on the National Association of Securities
Dealers Automated Quotation System as of September 24, 1997):
Common Stock, $.01 par valueC$13,312,604
Indicate the number of shares outstanding of each of the Registrant's
classes of Common Stock, as of the latest practicable date.
Class Outstanding at October 28, 1997
Common Stock, par value 6,487,429 shares
$.01 per share
DOCUMENTS INCORPORATED BY REFERENCE
None
<PAGE>
PART III
MANAGEMENT
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
The following table sets forth certain information with respect to each
of the current Directors and executive officers of the Company and the
Presidents of the Company's principal subsidiaries at September 30,
1997:
<S> <C> <C>
Name Age Position with the Company
Christopher T. Dahl 54 Chairman of the Board and President
Harvey Bibicoff 58 Chief Executive Officer
Brian Rackohn 37 Chief Financial Officer
Stephen Oakes 42 President of Curious Pictures, Inc.
Elizabeth Silver 36 President of The End, Inc.
Rick Bieber 42 President and Chief Executive Officer of Harmony
Pictures, Inc.
Richard W. Perkins 66 Director
William E. Cameron 52 Director
William M. Toles 50 Director
</TABLE>
Christopher T. Dahl, has been President and Chairman of the
Board of the Company since July 22,1997. Since its inception in
February 1990, Mr. Dahl has been the President, Chief Executive Officer
and Chairman of the Board of Directors of Children=s Broadcasting
Corporation (ACBC@), the country=s premier radio network devoted
exclusively to programming for children. He is also Chairman and Chief
Executive Officer of Community Airwaves Corporation, a company that
owns and operates radio stations in the Midwest and Hawaii.
2
<PAGE>
Harvey Bibicoff has served as Chief Executive Officer since
January 19, 1996, and as Chairman of the Board of Directors and as a
director of the Company from August 1991 until July 1997. From May 1996
until February 1997, Mr. Bibicoff also acted as Chief Executive Officer
of Harmony Pictures, Inc. Mr. Bibicoff served as the Chairman of the
Board, Chief Financial Officer, Secretary and as a director of Ventura
Entertainment Group, Inc. , a company engaged in various entertainment
ventures, from May 1988 through April 1995.
Brian Rackohn has been the Chief Financial Officer of the
Company since March 1994 and Secretary from December 1, 1995 until July
22, 1997. Previously, Mr. Rackohn served five years as the General
Manager and Chief Financial Officer of Superior Stamp & Coin Co., Inc.
of Beverly Hills, California, which filed for bankruptcy protection on
August 23, 1994.
Stephen Oakes has been President of Curious Pictures
Corporation since January 1993. Prior to 1993, Mr. Oakes founded and
operated Broadcast Arts in 1981 a company engaged in television
commercial production. He has directed over 270 mixed-media
commercials, was creative director and producer for the original season
of "Pee-Wee's Playhouse" for CBS, and was designer, director or
producer of on-air graphics and program openings for networks and cable
groups, including CBS, MTV, HBO, Cinemax and Showtime.
Elizabeth Silver has been President of The End, Inc. since April
1993. Ms. Silver founded The End, Inc. along with another individual
in March 1991. Previously, Ms. Silver headed several major production
companies' music video divisions. Ms. Silver has over a decade of
musical film production and programming experience.
Rick Bieber has served as President and Chief Executive Officer
of Harmony Pictures, Inc., since February 1997. From 1992 to 1997 Mr.
Bieber served as president of Rick Bieber Productions, located on the
Twentieth Century Fox lot, during which time he additionally acted as
President of Fox West Pictures, a unit of Fox, Inc., assisting in the
launch of Fox's weekly movie night.
Richard W. Perkins, has been a Director of the Company since
July 22, 1997. For more than five years, Mr. Perkins has been President
and Chief Executive Officer of Perkins Capital Management, Inc., a
registered investment advisor. Mr. Perkins is a director of the
following companies: Community Airwaves Corporation; CBC; Bio-Vascular,
Inc.; CNS, Inc.; LifeCore Biomedical, Inc.; Nortech Systems, Inc.;
Eagle Pacific Industries, Inc.; and Quantech LTD.
William E. Cameron, has been a Director of the Company since
July 22, 1997. For more than the past five years, Mr. Cameron has been
Head of International Business Development for Universal Health
Communications, the largest medical/health/wellness video library in
the world.
William M. Toles, has been a Director of the Company since
July 22, 1997. For more than five years, Mr. Toles has been the
President and Chief Executive Officer of Tol-O-Matics, a privately held
manufacturer of motion control products.
3
<PAGE>
Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's executive officers and Directors, and persons who
beneficially own more than 10% of the Company's Common Stock, to file
reports of ownership and changes in ownership with the Securities and
Exchange Commission. Executive officers, Directors and beneficial
owners of more than 10% of the Company's Common Stock are required by
the Commission's regulations to furnish the Company with copies of all
Section 16(a) forms that they file. Based solely on a review of the
copies of such forms furnished to the Company, or written
representations that no reports on Form 5 were required, the Company
believes that for the period from July 1, 1996 through June 30, 1997,
all of its executive officers, Directors and beneficial owners of more
than 10% of the Company's Common Stock complied with Section 16(a)
filing requirements applicable to them.
ITEM 11. EXECUTIVE COMPENSATION
Summary of Executive Officer Compensation. The following table
sets forth the total compensation paid or accrued by the Company to the
Chief Executive Officer and the other most highly compensated executive
officer of the Company who served in such capacities during fiscal 1997
("Named Executive Officers") whose aggregate cash compensation exceeded
$100,000 for all services rendered to the Company and its subsidiaries
during each of the last three fiscal years:
<TABLE>
<CAPTION>
Summary Compensation Table
Long Term
Compensation
Awards
Fiscal Year Salary Bonus Other Annual Options/SARs
Name and Position Ended Amount Amount Compensation (Number)
<S> <C> <C> <C> <C> <C>
Harvey Bibicoff, Chief Executive Officer 1997 247,200 -- -- 350,000
1996 165,000 -- -- --
1995 165,288 -- -- --
Brian Rackohn, Chief Financial Officer 1997 133,900 -- -- 75,000 (1)
1996 114,900 -- -- 25,000
1995 101,923 -- -- 25,000
</TABLE>
--------------------
(1) In connection with the issuance of 75,000 options exercisable
at a price of $1.50, 25,000 options were cancelled that had been
issued at an exercise price of $3.00 in fiscal 1996 and 25,000 options
were cancelled that had been issued at an exercise price of $3.30 in
fiscal 1995.
4
<PAGE>
Stock Option Grants in Fiscal Year ended June 30, 1997. The
following table contains information concerning the grant of stock
options under the Stock Option Plan to the Named Executive Officers in
the fiscal year ended June 30, 1997:
<TABLE>
<CAPTION>
Stock Option Grants in Fiscal Year ended June 30, 1997
Potential Realizable
Value at Assumed
Annual Rates of
Stock Price
Appreciation
Individual Grants for Option Term
% of Total
Options
Options Granted in Exercise Expiration
Name Granted Fiscal Year Price Date 5% (2) 10% (2)
<S> <C> <C> <C> <C> <C> <C>
Harvey Bibicoff 350,000 36% $1.50 10/01/01 $145,048 $320,518
Brian Rackohn 75,000(1) 8% 1.50 01/02/02 31,082 68,682
</TABLE>
(1) In connection with the issuance of 75,000 options, 25,000
options were cancelled that had been issued at $3.00 in fiscal
1996 and 25,000 options were cancelled that had been issued at
$3.30 in fiscal 1995.
(2) Potential gains and net of exercise price, but before taxes
associated with exercise. The 5% and 10% assumed compounded
annual rates of stock price appreciation are mandated by rules
of the Securities and Exchange Commission. There can be no
assurance provided to any executive officer or any other
holder of the Company's securities that the actual stock price
appreciation over the ten-year option term will be at the
assumed 5% and 10% levels or at any other defined level.
Unless the market price of the Common Stock appreciates over
the option term, no value will be realized from the option
grants made to persons named in this table.
Stock Option Exercises in Fiscal Year ended June 30,
1997 and Option Values at June 30, 1997. The following table
provides information on the Named Executive Officers'
unexercised options at June 30, 1997. None of the Named
Executive Officers exercised any options during the fiscal
year ended June 30, 1997:
<TABLE>
<CAPTION>
Stock Option Values at June 30, 1997
For the year ended 6/30/97
Name Shares acquired Dollar value Number of Value of
from options Realized on unexercised In-the-Money
exercised exercise Options/SARs Options/SARs
at FY-End (#) at FY-End ($) (1)
------------------- ----------------- ----------------- ----------------- ------ ------------------- ------
------------------- ----------------- ----------------- ----------------- ------ ------------------- ------
<S> <C> <C> <C> <C> <C> <C>
Harvey Bibicoff 0 0 850,000 (e) 670,313 (e)
Brian Rackohn 0 0 50,000 (e) 40,625 (e)
25,000 (ue) 20,313 (ue)
</TABLE>
Exercisable (e)
Unexercisable (ue)
(1) Represents the closing price of the Common Stock on June 30,
1997 minus the exercise price of the options.
5
<PAGE>
<TABLE>
<CAPTION>
Ten Year Stock Option Repricings
Name Date Number of Market Price of Exercise Price at New Length of
securities Stock at Time Time of Repricing Exercise Original
underlying of Time of or Amendment ($) Price ($) Option Term
Stock Options Repricing or Remaining at
Repriced or Amendment ($) Date of
Amended (#) Repricing or
Amendment
------------------- ------------ ----------------- ----------------- -------------------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C>
Brian Rackohn 01/02/97 25,000 1.25 3.30 1.50 2.1years
Brian Rackohn 01/02/97 25,000 1.25 3.00 1.50 3.25years
</TABLE>
Compensation of Directors
No fees are paid to Directors of the Company who are also
officers or employees of the Company for their services as members of
the Board of Directors. Harry Shuster and Ivan Berkowitz both of whom
resigned as Board of Director members on July 22, 1997 had been issued
five year stock options to acquire 25,000 shares at an exercise price
of $2.00 during the fiscal year ended June 30, 1997 and paid $250 for
work on the audit committee. The Company reimbursed all Directors for
reasonable travel and lodging expenses incurred in attending meetings
of the Board of Directors.
Concurrently with his election as a Director and Chairman of the
Board of the Company on July 22, 1997, Christopher T. Dahl was
appointed the Company's President. Mr. Dahl presently receives an
annual salary of $75,000 for his services as President.
On August 1, 1997 the Company entered into an independent
contractor agreement with William Cameron, a Director of the Company.
Under the agreement Mr. Cameron will be providing non-exclusive
services to the Company including, without limitation, the initiation,
promotion, development and maintenance of business and investment
contacts relating to increasing the Company's sales , marketing and
investment opportunities. The contract is at will and compensation
under the contract is $3,000 for every month that it is in force.
COMPENSATION REPORT
During the fiscal year ended June 30, 1997, the Company did
not have a Compensation Committee and therefore, the entire Board acted
on the matters that would have been acted on by Compensation Committee.
The Compensation Report set forth below described the compensation
policies of the Board of Directors for the fiscal year ended June 30,
1997 and reflects the salaries and bonuses paid during that fiscal
year. The current Board of Directors assumed their positions in July
1997 and established a Compensation Committee in October 1997.
Accordingly, the policies described below may not reflect the policies
of the Compensation Committee or the current Board of Directors. The
Compensation Report shall not be deemed incorporated by reference by
any general statement incorporating by reference this proxy statement
into any filing under the Securities Act 1933 or the Securities
Exchange Act of 1934, except to the extent that the Company
specifically incorporates this information by reference, and shall not
otherwise be deemed filed under such act.
Overview and Philosophy
The Board of Directors establishes the general compensation
policies of the Company, determines the compensation levels for the
Chief Executive Officer ("CEO") and other senior Company officers, and
administers and/or provides oversight on all short-term (annual)
incentive plans, all long-term incentive plans, including the Stock
Option Plan, and approves any grants of stock options, stock and/or
stock warrants to Company officers.
The Company applies a consistent philosophy to compensation
for all employees, including the officers. This philosophy is based
upon the premise that the achievements of the Company result from the
coordinated efforts of all individuals working toward common, defined
objectives. The Company strives to attain these objectives through
teamwork that is focused upon meeting the expectations of customers and
stockholders.
6
<PAGE>
Compensation Policy
The Company's compensation policy is to ensure that a
substantial portion of potential aggregate annual compensation be
contingent upon the performance of the Company. The goals of the
compensation programs are to align compensation with performance and to
enable the Company to attract, retain and reward personnel who
contribute to the success of the Company. The Company's compensation
program for officers is based on the same guidelines that apply to all
Company employees.
The Company is committed to providing incentive opportunities
that, together with base salaries (where appropriate), provide for
competitive and equitable total cash compensation opportunities.
Additionally, future base salary increases or incentive pay
opportunities are directly linked to the achievement of key financial
objectives.
The variable compensation plans focus respective employees on
the immediate objectives of the business and their job; encourage
employees to work together as a team to achieve Company success; and,
recognize and reward the sustained contribution of outstanding
performers within the Company.
Components of Compensation
The Company has compensation programs that include both cash
and equity components. The Board has established base salary, short and
long-term incentive compensation mix targets for each officer and for
all employees, where applicable, of the Company. The compensation mix
targets define the desired percentage for each component of total
compensation.
With respect to cash compensation for officers, the Company
sets base salaries and target incentive opportunities for each officer
by reviewing the cash compensation provided to comparable positions and
through assessing the internal equity of cash compensation
opportunities based on position responsibilities, the performance of
each incumbent, and overall levels of contribution to the Company. When
considering competitive pay practices, the Board reviews compensation
levels in both the entertainment industry and general industry at firms
comparable in size and revenue to the Company.
With regard to equity-based compensation for officers, the
Company considered and granted stock options for the reported year.
Stock option grants were based on relative position, responsibilities
and/or historical and expected contribution to the Company.
Compensation of the Chief Executive Officer
Mr. Bibicoff has been Chief Executive Officer of the Company
since January 19, 1996. Based on a thorough review, it was determined
that Mr. Bibicoff's base salary was within a competitive range of pay,
as compared with companies of similar size and scope. In determining
Mr. Bibicoff's compensation, the Board considered various factors
particularly Mr. Bibicoff's guidance in the Company=s turnaround. See
"Employment Agreements" herein.
The Board of Directors (at June 30, 1997):
Harvey Bibicoff
Ivan Berkowitz
Harry Shuster
Compensation Committee Interlocks and Insider Participation
During the fiscal year ended June 30, 1997, the Company had no
Compensation Committee or other Board Committee performing equivalent
functions. Mr. Bibicoff, the Company=s Chief Executive Officer, served
as a Director of the Company until July 22, 1997 and participated in
deliberations of the Board concerning the compensation of all executive
officers other than himself.
Employment Agreements
On January 1, 1997, Brian Rackohn, Chief Financial Officer, of
the Company, entered into a two-year employment contract with the
Company, which contract expires on December 31, 1998. Under the
contract, Mr. Rackohn is entitled to a salary of $132,000 in year one
and $141,000 in year two. He was also granted five-year options to
purchase 75,000 shares of the Company's Common Stock at an exercise
price of $1.50 per share. In addition 50,000 existing five-year options
previously granted to Mr. Rackohn, to purchase shares of the Company's
Common Stock were canceled. See "Executive Compensation" herein.
7
<PAGE>
On May 2, 1994, Harvey Bibicoff, Chief Executive Officer
entered into a four-year employment contract with the Company, which
was to expire on June 30, 1998. Under such agreement, Mr. Bibicoff
earned an annual salary of $165,000 and was granted five-year options
to purchase 250,000 shares of the Company's Common Stock at an exercise
price of $2.50 per share. On October 1, 1996, Mr. Bibicoff entered into
an amendment to his May 1994, employment contract that provided for a
revised expiration date of August 19, 2000. Mr. Bibicoff then became
entitled to an annual salary of $265,000 per year and was granted
additional five-year options to purchase 350,000 shares of the
Company's Common Stock at an exercise price of $1.50 per share. On July
22, 1997, Mr. Bibicoff entered into an amended and restated employment
agreement, which expires on July 21, 1999. Mr. Bibicoff continues to be
entitled to a salary of $265,000 per year. However, the Company, at the
sole discretion of its Board of Directors, can terminate Mr. Bibicoff's
obligations to perform as the Company's Chief Executive Officer upon
furnishing ten days written notice. Commencing September 20, 1997, Mr.
Bibicoff also obtained the right to resign as the Company's Chief
Executive Officer upon furnishing ten days written notice. Upon either
event Mr. Bibicoff would continue to receive his salary for the
remaining term of the agreement. On October 23, 1997, Mr. Bibicoff
submitted to the Company ten days written notice to resign as the
Company's Chief Executive Officer effective November 3, 1997.
8
<PAGE>
Comparison of Five Preceding Year Cumulative Stockholder Return
The following graph shows the cumulative return experienced by
the Company's stockholders during the period July 1, 1992 through June
30, 1997 as compared with the NASDAQ Total Return Index (U.S.) And the
NASDAQ Tele-communications Stock Index. The graph assumes $100 on July
1, 1992 in the Company's Common Stock and each of the indices. Total
return calculations assume the reinvestment of all dividends. The
Company has never paid dividends.
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Fiscal Year End
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
7/01/92 6/30/93 6/30/94 6/30/95 6/30/96 6/30/97
Harmony Holdings, Inc. 100 200 88 112 68 74
NASDAQ Total return Index (US) 100 126 127 170 218 265
NASDAQ Financial 100 131 148 169 220 322
--------------------------------- ----------- ----------- ----------- ----------- ------------ -----------
</TABLE>
9
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of Common
Stock of the Company beneficially owned as of October 14, 1997, by: (i)
each person who beneficially owns more than five percent of the
Company's Common Stock; (ii) each Director and Named Executive Officer
and (iii) all executive officers and Directors of the Company as a
group. Except as otherwise noted, the person named has sole voting and
dispositive power over the total number of shares beneficially owned:
<TABLE>
<CAPTION>
Amount and
Name and Nature of Percentage
Address of Beneficial of Outstanding
Beneficial Owner (1) Ownership Common Stock
<S> <C> <C>
Children's Broadcasting Corporation 2,938,731 (2)(4) 40.7%
Harvey Bibicoff 600,000 (2) 9.6%
Christopher T. Dahl 10,000 *
Richard W. Perkins 200,000 3.1%
William E. Cameron 0 *
William M. Toles 0 *
Brian Rackohn 50,000 (3) *
All officers and Directors as a group
(6 persons) 910,000 (2)(3) 14.1%
--------------------
</TABLE>
* Percentage omitted because it is less than 1%
(1) The business address of Messrs Bibicoff and Rackohn
and all officers and directors of the Company is 1990
Westwood Boulevard, Suite 310, Los Angeles,
California 90025. The address of Children's
Broadcasting Corporation ("CBC") is 724 First Street
North, 4th floor, Minneapolis, Minnesota 55401.
(2) Includes 300,000 immediately exercisable options
held by Mr. Bibicoff and 750,000 immediately
exercisable options held by CBC.
(3) Consists of 50,000 immediately exercisable options
held by Mr. Rackohn.
(4) Based solely on information contained in schedule 13D
as filed with the Securities and Exchange Commission,
CBC has entered into an agreement with Glenn B.
Laken, whereby Mr. Laken can require CBC to purchase
225,000 shares of the Company's stock he controls on
or after January 31, 1998, and CBC has the right to
purchase such shares on or before February 15, 1998,
all subject to various conditions set forth in such
agreement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CERTAIN TRANSACTIONS
As of September 30, 1997, the Company was owed $208,889
pursuant to a note receivable from Harvey Bibicoff ,the Company's Chief
Executive Officer, in connection with Mr. Bibicoff's purchase of stock
options from a former officer of the Company in 1996. The note was
originally issued for $260,000, is due May 31, 1998 and accrues
interest at the prime rate plus 1 1/2 %.
10
<PAGE>
The Company has entered into an agreement with Bibicoff &
Associates, Inc., whereby such corporation provides investor relation
services to the Company through September 30, 2000, for a flat rate of
$75,000 paid upon execution of the agreement. The Company's Chief
Executive Officer, Harvey Bibicoff, is also the President of Bibicoff &
Associates, Inc.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Harmony Holdings, Inc.
By:/s/Brian Rackohn Dated: October 28, 1997
Brian Rackohn
Chief Financial Officer
