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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(RULE 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND
AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a)
(AMENDMENT NO. 4)*
Harmony Holdings, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
41322310
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(CUSIP Number)
Avron L. Gordon, Esq.
Brett D. Anderson, Esq.
Briggs and Morgan, P.A.
2400 IDS Center
Minneapolis, MN 55402
(612) 334-8400
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
June 30, 1998
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(Date of Event which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box / /.
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*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 or otherwise subject to the liabilities of that section of the Act but
shall be subject to all other provisions of the Act (however, SEE the NOTES).
(Continued on following pages)
(Page 1 of 10 Pages)
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CUSIP No. 41322310 13D Page 2 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Children's Broadcasting Corporation
41-1663712
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) / /
(b) / /
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
2(D) OR 2(E) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Minnesota
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7 SOLE VOTING POWER
3,188,731
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8 SHARED VOTING POWER
NUMBER OF
SHARES 0
BENEFICIALLY
OWNED BY ----------------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING
PERSON 3,188,731
WITH
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,188,731
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
44.1%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
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Children's Broadcasting Corporation (the "Company") hereby amends its
statement on Schedule 13D (the "Schedule 13D") originally filed on July 31,
1997, and amended on September 23, 1997, September 30, 1997 and October 1, 1997,
with respect to its beneficial ownership of shares of common stock, par value
$0.01 per share ("Common Stock"), of Harmony Holdings, Inc., a Delaware
corporation ("Harmony").
Items 2 through 5 of the Schedule 13D are hereby amended and restated to
read as follows:
Item 2: Identity and Background.
This statement is filed by Children's Broadcasting Corporation, a Minnesota
corporation which formerly broadcast children's radio in the United States,
with its principal business and principal executive offices at 724 First
Street North, Minneapolis, Minnesota 55401.
The attached Schedule I is a list of the executive officers and directors
of the Company which contains the following information regarding each
person listed on such schedule:
(a) name;
(b) residence or business address;
(c) present principal occupation or employment and, if other than the
Company, the name, principal business and address of any
corporation or other organization in which such employment is
conducted; and
(d) citizenship.
During the past five years, neither the Company nor, to the best of the
Company's knowledge, any person named in Schedule I has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors)
or been a party to a civil proceeding of a judicial or administrative body
of competent jurisdiction as a result of which it was or is subject to a
judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3: Source and Amount of Funds or Other Consideration.
The Company obtained funds for the Option Exercise and the Share Purchase
(as hereinafter defined) pursuant to the Securities Purchase Agreement by
and between the Company, Talisman Capital Opportunity Fund Ltd., Dominion
Capital Limited and Sovereign Partners LP, dated June 25, 1998. Pursuant
to such agreement, the Company issued 606,061 shares of its Series B
Convertible Preferred Stock for which it received net proceeds of
approximately $1,850,000. In connection with such financing, the Company
issued five-year
(Page 3 of 10 Pages)
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warrants to the investors for the purchase of an aggregate of 100,000
shares of the Company's Common Stock, at an exercise price of $3.7734375
per share.
Item 4: Purpose of Transaction.
The Company performed the Option Exercise and the Share Purchase to
increase its voting power. The Company reserves the right to purchase
additional shares of Common Stock, on the open market or through direct
purchases from Harmony, if it deems such action to be in its best interest.
Other than the information disclosed above, the Company does not presently
have plans or proposals which relate to, or would result in, any of the
matters listed in Paragraphs (a) through (j) of Item 4 of Schedule 13D.
Item 5: Interest in Securities of the Issuer.
THE REPORTING PERSON
(a) As of July 1, 1998, the Company beneficially owned 3,188,731 shares of
Common Stock of Harmony, which constitute approximately 44.1% of the
outstanding Common Stock of Harmony.
(b) As of July 1, 1998, the Company had the sole power to vote or to
direct the vote and the sole power to dispose or to direct the
disposition of 3,188,731 shares of Common Stock of Harmony.
(c) In April 1998, the Company assigned to (i) Pyramid Partners, L.P.
("Pyramid"), an entity controlled by Richard W. Perkins, a director of
the Company; (ii) Perkins & Partners, Inc., Profit Sharing Plan &
Trust, an entity controlled by Mr. Perkins; and (iii) Christopher T.
Dahl and the State Bank of New Prague Joint Account its obligation to
purchase 225,000 shares of Common Stock of Harmony at $2.50 per share
from Glenn B. Laken, a shareholder of Harmony.
On June 30, 1998, the Company exercised options to purchase an
aggregate of 750,000 shares of Common Stock of Harmony at $1.50 per
share (the "Option Exercise").
On July 1, 1998, the Company purchased an aggregate of 250,000 shares
of Common Stock of Harmony at $1.73 per share, including a $0.05 per
share commission paid to Brookstreet Securities (the "Share
Purchase").
(d) Funds for previously reported acquisitions have originated from
multiple sources, including (i) $2,400,000 pursuant to the Company's
Amended and Restated Loan and Security Agreement with Foothill Capital
Corporation ("Foothill"), (ii) $500,000
(Page 4 of 10 Pages)
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pursuant to a loan from Pyramid, (iii) $500,000 pursuant to a loan
from Rodney P. Burwell, a former director of the Company, and (iv)
$250,000 pursuant to a loan from William M. Toles, a shareholder of
the Company.
Foothill has a security interest in substantially all of the assets of
the Company. Further, in the event of default under the promissory
described above, Pyramid, Mr. Burwell and Mr. Toles have the right to
receive or the power to direct the receipt of dividends from, or the
proceeds from the sale of, 192,308, 192,308, and 96,154 shares of
Common Stock, respectively.
(e) Not applicable.
CHRISTOPHER T. DAHL
(a) As of July 1, 1998, Christopher T. Dahl, the President, Chief
Executive Officer and Chairman of the Board of the Company,
beneficially owned 160,000 shares of Common Stock of Harmony, which
constitute approximately 2.2% of the outstanding Common Stock of
Harmony.
(b) As of July 1, 1998, Mr. Dahl had the sole power to vote or to direct
the vote and the sole power to dispose or to direct the disposition of
135,000 shares of Common Stock of Harmony. As of July 1, 1998, Mr.
Dahl had shared power to vote or to direct the vote and shared power
to dispose or to direct the disposition of 25,000 shares of Common
Stock of Harmony. Such power is shared with the State Bank of New
Prague.
(c) In March 1998, Harmony issued a ten-year incentive stock option to Mr.
Dahl for the purchase of 300,000 shares of Common Stock at a per share
exercise price of $1.375. Such option vests in increments of one-
third upon achieving certain increases in the closing price of
Harmony's Common Stock; namely, one-third vests after a closing price
in excess of $1.71875 per share, an additional one-third vests after
a closing price in excess of $2.0625 per share and the remaining one-
third vests after a closing price in excess of $2.75 per share. As
of July 1, 1998, one-third of such option had vested.
In March 1998, Harmony issued a five-year director stock option to Mr.
Dahl for the purchase of 75,000 shares of Common Stock at a per share
exercise price of $1.375. One-third of such option vested upon
issuance, one-third vests in March 1999 and the remaining one-third
vests in March 2000.
In April 1998, the Company assigned to Christopher T. Dahl and the
State Bank of New Prague Joint Account its obligation to purchase
25,000 shares of Common Stock of Harmony at $2.50 per share from Glenn
B. Laken, a shareholder of
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Harmony. Christopher T. Dahl and the State Bank of New Prague Joint
Account purchased such shares in April 1998.
(d) Not applicable.
(e) Not applicable.
JAMES G. GILBERTSON
(a) As of July 1, 1998, James G. Gilbertson, the Chief Operating Officer
of the Company, beneficially owned 25,000 shares of Common Stock of
Harmony, which constitute less than 1.0% of the outstanding Common
Stock of Harmony.
(b) As of July 1, 1998, Mr. Gilbertson had the sole power to vote or to
direct the vote and the sole power to dispose or to direct the
disposition of 25,000 shares of Common Stock of Harmony.
(c) In March 1998, Harmony issued a ten-year incentive stock option to Mr.
Gilbertson for the purchase of 75,000 shares of Common Stock at a per
share exercise price of $1.375. Such option vests in increments of
one-third upon achieving certain increases in the closing price of
Harmony's Common Stock; namely, one-third vests after a closing price
in excess of $1.71875 per share, an additional one-third vests after a
closing price in excess of $2.0625 per share and the remaining one-
third vests after a closing price in excess of $2.75 per share. As
of July 1, 1998, one-third of such option had vested.
(d) Not applicable.
(e) Not applicable.
LANCE W. RILEY
(a) As of July 1, 1998, Lance W. Riley, the General Counsel and Secretary
of the Company, beneficially owned 25,000 shares of Common Stock of
Harmony, which constitute less than 1.0% of the outstanding Common
Stock of Harmony.
(b) As of July 1, 1998, Mr. Riley had the sole power to vote or to direct
the vote and the sole power to dispose or to direct the disposition of
25,000 shares of Common Stock of Harmony.
(c) In March 1998, Harmony issued a ten-year incentive stock option to Mr.
Riley for the purchase of 75,000 shares of Common Stock at a per share
exercise price of $1.375. Such option vests in increments of one-
third upon achieving certain increases in the closing price of
Harmony's Common Stock; namely, one-third vests after a closing
(Page 6 of 10 Pages)
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price in excess of $1.71875 per share, an additional one-third vests
after a closing price in excess of $2.0625 per share and the remaining
one-third vests after a closing price in excess of $2.75 per share.
As of July 1, 1998, one-third of such option had vested.
(d) Not applicable.
(e) Not applicable.
RICHARD W. PERKINS
(a) As of July 1, 1998, Richard W. Perkins beneficially owned 425,000
shares of Common Stock of Harmony, which constitute approximately 5.9%
of the outstanding Common Stock of Harmony.
(b) As of July 1, 1998, Mr. Perkins, as President of Perkins Capital
Management, Inc., which is the General Partner of Pyramid, had the
sole power to vote or to direct the vote and the sole power to dispose
or to direct the disposition of 425,000 shares of Common Stock of
Harmony. Mr. Perkins disclaims beneficial ownership of shares of
Common Stock of Harmony owned by Perkins Capital Management, Inc.
(c) In March 1998, Harmony issued a five-year director stock option to Mr.
Perkins for the purchase of 75,000 shares of Common Stock at a per
share exercise price of $1.375. One-third of such option vested upon
issuance, one-third vests in March 1999 and the remaining one-third
vests in March 2000.
In April 1998, the Company assigned to Pyramid and Perkins & Partners,
Inc., Profit Sharing Plan & Trust its obligation to purchase 200,000
shares of Common Stock of Harmony at $2.50 per share from Glenn B.
Laken, a shareholder of Harmony. Pyramid and Perkins & Partners,
Inc., Profit Sharing Plan & Trust purchased such shares in April 1998.
(d) Not applicable.
(e) Not applicable.
(Page 7 of 10 Pages)
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SIGNATURE
After reasonable inquiring and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: July 2, 1998
CHILDREN'S BROADCASTING CORPORATION
By: /s/ James G. Gilbertson
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James G. Gilbertson
Chief Operating Officer
(Page 8 of 10 Pages)
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SCHEDULE I
Executive Officers and Directors of Children's Broadcasting Corporation
The name, business address, principal occupation or employment and
citizenship of each executive officer and director is set forth below.
<TABLE>
<CAPTION>
Residence Address or
Principal Business Occupation or
Address and, if Employment or Citizenship
different, Address Principal or Place of
Name of Principal Office Business Organization
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EXECUTIVE OFFICERS OF CHILDREN'S BROADCASTING CORPORATION:
<S> <C> <C> <C>
Christopher T. Dahl 724 First Street North President, Chief U.S.A.
Minneapolis, MN 55401 Executive Officer
and Chairman of
the Board
James G. Gilbertson 724 First Street North Chief Operating U.S.A.
Minneapolis, MN 55401 Officer and Treasurer
Patrick D. Grinde 724 First Street North Chief Financial U.S.A.
Minneapolis, MN 55401 Officer
Lance W. Riley 724 First Street North General Counsel U.S.A.
Minneapolis, MN 55401 and Secretary
Gary W. Landis 724 First Street North Executive Vice U.S.A.
Minneapolis, MN 55401 President of
Programming
Barbara A. McMahon 724 First Street North Executive Vice U.S.A.
Minneapolis, MN 55401 President of
Affiliate
Relations
Rick E. Smith 724 First Street North Executive Vice U.S.A.
Minneapolis, MN 55401 President of
National Sales
</TABLE>
(Page 9 of 10 Pages)
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<TABLE>
<CAPTION>
DIRECTORS OF CHILDREN'S BROADCASTING CORPORATION:
<S> <C> <C> <C>
Christopher T. Dahl 724 First Street North President, Chief U.S.A.
Minneapolis, MN 55401 Executive Officer
and Chairman of
the Board
Richard W. Perkins 730 East Lake Street President and U.S.A.
Wayzata, MN 55391 CEO of Perkins
Capital Management, Inc.
(a registered investment
adviser)
Michael R. Wigley 3030 Centre Pointe Drive President and CEO of U.S.A.
Suite 900 Great Plains Companies,
St. Paul, MN 55164 Inc. (a building material
and supply company)
William E. Cameron 13900 Tahiti Way, #208 Head of International U.S.A.
Marina Del Rey, CA 90291 Business Development
for Universal Health
Communications
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(Page 10 of 10 Pages)
