<PAGE>
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 For the Fiscal Year ended June 30, 1998; or
[-] Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 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 of (I.R.S. Employer Identification No.)
Incorporation or Organization)
724 First Street North,
Fourth Floor 55401
Minneapolis, Minnesota
(Address of Principal Executive (Zip Code)
Offices)
Registrant's Telephone Number, Including Area Code:(612) 338-3300
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. [X]
State the aggregate market value of the voting stock held by non-affiliates of
the Registrant (based upon the closing price of such stock as reported on the
National Association of Securities Dealers Automated Quotation System as of
October 23, 1998):Common Stock, $.01 par value; $4,517,123
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 23, 1998
Common Stock, par value 7,237,429 shares $.01 per share
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PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
The information relating to the Company's executive officers as of
October 5, 1998 is contained in the following table:
<TABLE>
<CAPTION>
Name Age Position
----- --- --------
<S> <C> <C>
Christopher T. Dahl 55 Chairman of the Board and
Chief Executive Officer
Richard W. Perkins 67 Director
William E. Cameron 53 Director
Gerald Germain 56 Director
William M. Toles 51 Director
James G. Gilbertson 37 Chief Operating Officer and
Chief Financial Officer
Lance W. Riley 47 Secretary and General Counsel
</TABLE>
CHRISTOPHER T. DAHL has been Chairman of the Company since July 22, 1997
and Chief Executive Officer since November 3, 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
("CBC"), a publicly traded company and the Company's largest shareholder. He
is also Chairman and Chief Executive Officer of Community Airwaves
Corporation ("CAC"), a company that owns and operates radio stations in
Hawaii. Mr. Dahl serves as the managing partner of Radio Management, L.L.C.
("RMLLC"), a company that provides corporate, legal, accounting and financial
services to the Company and CBC. From 1969 to 1979, he was the founder and
President of a group of companies involved in photo finishing, retail photo
sales, home sewing notions, toy distribution and retail craft stores. He was
employed by Campbell-Mithun and Knox Reeves Advertising
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from 1965 through 1969.
RICHARD W. PERKINS has been a director of the Company since July 22,
1997. Mr. Perkins has also been a director of CBC since its inception. 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 also Partner of RMLLC, as well as a director of the following
publicly held companies: Bio-Vascular, Inc., a medical products manufacturer;
CNS, Inc., a consumer products manufacturer; Lifecore Biomedical, Inc., a
medical device manufacturer; Nortech Systems, Inc., an electronic sub-systems
manufacturer; Eagle Pacific Industries, Inc., a manufacturer of plastic pipe;
and Quantech LTD., a developer or immunological tests.
WILLIAM E. CAMERON has been a director of the Company since July 22, 1997.
Mr. Cameron has also been a director of CBC since April 2, 1998. For more than
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.
GERALD GERMAIN has been a director of the Company since May 13, 1998.
For the past four years, Mr. Germain has been recognized as a television
commercial production industry authority on a large variety of financial and
operations issues. From 1984 to 1994, he served as Chief Financial Officer
and, towards the end, as Vice Chairman of Doyle Dane Bernbach (now known as
DDB Needham). In 1978, Mr. Germain became Chief Financial Officer of Compton
Communications, Inc. (now known as Saatchi & Saatchi Worldwide) and became
its Executive Vice President in 1982. In 1967, Mr. Germain was also a staff
accountant with the advertising agency D'Arcy, Masius, Benton & Bowles, where
he eventually became Senior Vice President, Worldwide Treasurer. Mr. Germain
graduated from Brooklyn College and received a J.D. degree from the New York
University of Law School.
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-Matic, a privately held manufacturer of motion control
products.
JAMES G. GILBERTSON has served as the Company's Chief Operating Officer
since November, 1997, as of October 2, 1998 as the Company's Chief Financial
Officer. Mr. Gilbertson has also served as CBC's Chief Operation Officer since
April 1996 and its Chief Financial Officer since July 1992. From June 1988 to
July 1992, he was the Chief Financial Officer of Parker Communications, which
operated a group of radio stations. From 1985 to June 1988, he was Controller of
the radio division of Palmer Communications located in Des Moines, Iowa. Prior
to joining Palmer Communications, Mr. Gilbertson was practicing certified public
accountant with the firm of Ernst & Young LLP. Mr. Gilbertson received a B.A.
from the University of Iowa and an MBA from the Carlson School of Management
at the University of Minnesota.
LANCE W. RILEY became Secretary of the Company in November, 1997, and
General Counsel of the Company in July, 1998. Mr. Riley is also Secretary and
General Counsel of CBC, and has been practicing law since 1977. Mr.
Riley held the position of Chairman of the Communications Law Section of the
Minnesota State Bar Association from 1990 to 1994. He is also Of Counsel with
the firm of Hessian & McKasy, P.A. (formerly known as Hessian, McKasy &
Soderburg, P.A.), located in Minnesota, since 1994. Prior to joining CBC, Mr.
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Riley was partner in the firm of Courey, Albers, Gilbert and Riley, P.A. Mr.
Riley received B.A., Magna cum laude, from Hamline University and a J.D., cum
laude, from the University of Minnesota School of Law.
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, 1997 through June 30, 1998, 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
The following table sets forth the aggregate cash compensation paid
to or accrued by all persons who have served as the Company's Chief
Executive Officer during the last fiscal year and by each of the
Company's other executive officers receiving in excess of $100,000 (the
"Named Executive Officers") for services rendered to the Company and its
subsidiaries during the fiscal years ended June 30, 1998, 1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
Compensation -------------------------
Name and -------------------------- Securities Underlying
Principal Position Year Salary ($) Bonus ($) Options (#)
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher T. Dahl (1)
Chief Executive Officer
and Chairman of the Board 1998 68,750 15,000 375,000
1997 - - -
1996 - - -
Harvey Bibicoff (1)
Chief Executive Officer 1998 274,600 - -
1997 247,200 - 350,000
1996 165,000 - -
Brian Rackohn (2)
Chief Financial Officer 1998 149,507 10,000 75,000 (3)
1997 133,900 - -
1996 114,900 - 25,000
</TABLE>
(1) Mr. Bibicoff served as the Company's Chief Executive Officer until
November 3, 1997, at which time Mr. Dahl became Chief Executive
Officer of the Company.
(2) Mr. Rackohn's employment with the Company terminated on June 15,
1998.
(3) 75,000 options were originally granted January 2, 1997 at an exercise
price of $1.50 per share. These options were repriced, therefore
considered terminated and reissued March 10, 1998 pursuant to a board
resolution of the same date. They now carry an exercise price of $1.44
per share.
The following table sets forth the number of securities underlying
options granted in 1998 to the named officers, the percent the grant
represents of the total options granted to employees during such fiscal
year, the per-share exercise price of the options granted, the
expiration date of the options for the Named Executive Officers, and the
potential realized value.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION> Potential
Realized Value at
Assumed Annual
Rates of Stock Price
Number of Percent of Total Appreciation
Securities Options Granted to Exercise for Option Term (1)
Underlying Options Employees in Price Expiration -------------------------
Name Granted (#) Fiscal Year ($/Share) Date 5% ($) 10% ($)
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Christopher T. Dahl 375,000 18.2% 1.38 03/02/03 142,875 315,863
Harvey Bibicoff - - - - - -
Brian Rackohn (2) 75,000 3.6% 1.44 12/31/98 3,038 6,075
</TABLE>
(1) Sets forth potential option gains based on assumed annualized rates
of stock price appreciation from the exercise price at the date of
grant of 5% and 10% (compounded annually) over the full term of the
grant with appreciation determined as of the expiration date. The
5% and 10% assumed rates of appreciation are mandated by the rules
of the Securities and Exchange Commission and do not represent the
Company's estimate or projection of future Common Stock prices.
(2) 75,000 options were originally granted January 2, 1997 at an exercise
price of $1.50 per share. These options were repriced March 10, 1998
pursuant to a board resolution of the same date.
The following table sets forth certain information regarding options
exercised by the Named Executive Officers during 1998 and the number and
value of unexercised in-the-money options for the Named Executive Officers
at June 30, 1998.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised in-
Shares Value Options at the-Money Options at
Acquired on Realized Fiscal Year Ended (#) Fiscal Year Ended (1) ($)
-----------------------------------------------------------
Name Exercise (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Christopher T. Dahl - - 125,000/250,000 30,625/61,250
Harvey Bibicoff - - 300,000/- 34,375/-
Brian Rackohn - - 75,000/- 13,875/-
</TABLE>
(1) Market value of underlying securities at fiscal year-end minus the
exercise price.
COMPENSATION OF DIRECTORS
No fees are paid to Directors of the Company for their services as
members of the Board of Directors. 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.
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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table contains certain information as of October 23, 1998,
regarding the beneficial ownership of the Company's Common Stock by (i) each
person known by the Company to own beneficially more than 5% of the Company's
Common Stock, (ii) each director of the Company, (iii) the executive officers
of the Company and directors as a group, and (iv) each Named Executive
Officer, and as to the percentage of the outstanding shares held by them on
such date. Any shares which are subject to an option or a warrant exercisable
within 60 days are reflected in the following table and are deemed to be
outstanding for the purpose of computing the percentage of Common Stock owned
by the option or warrant holder but are not deemed to be outstanding for the
purpose of computing the percentage of Common Stock owned by any other
person. The business address of Messrs., Dahl, and Cameron is 724 First
Street North, Minneapolis, Minnesota 55401.
<TABLE>
<CAPTION>
Shares Percent
Beneficially of
Owned (1) Class
--------- -----
<S> <C> <C>
Children's Broadcasting Corporation ............................. 3,188,731(2) 44.1%
724 First Street North
Minneapolis, Minnesota 55401
Perkins Capital Management, Inc ................................. 300,000(3) 4.2%
730 East Lake St.
Wayzata, Minnesota 55319
Harvey Bibicoff ................................................. 300,000(4) 4.0%
Christopher T. Dahl ............................................. 160,000(5) 2.2%
Richard W. Perkins .............................................. 125,000(6) 1.7%
Brian Rackohn ................................................... 75,000(7) 1.0%
William E. Cameron .............................................. 25,000(6) *
William M. Toles ................................................ 25,000(6) *
Gerald Germain .................................................. 25,000(6) *
All Directors and Executive Officers as a Group
(Seven persons) ............................................ 410,000(8) 9.4%
</TABLE>
- -------------
* Less than 1 %.
1. Securities "beneficially owned" by a person are determined in accordance
with the definition of "beneficial ownership" set forth in the regulations
of the Commission and, accordingly, may include securities owned by or for,
among others, the spouse, children or certain other relatives of such
person as well as other securities as to which the person has or shares
voting or investment power or has the option or right to acquire Common
Stock within 60 days.
2. Based upon statements filed with the Commission on July 30, 1997 and August
5, 1997, Children's Broadcasting Corporation has the sole right to sell
such shares and has sole voting power over such shares.
3. Based upon statements filed with the Commission, Perkins Capital
Management, Inc. is a registered investment adviser of which Richard W.
Perkins, a director of the Company, is President. As set forth in Schedule
13G filed with the Commission May 7, 1998, Perkins Capital Management, Inc.
has the sole right to sell such shares and has sole voting power over such
shares. Mr. Perkins and Perkins Capital Management, Inc. disclaim any
beneficial interest in such shares.
4. Includes 300,000 shares purchasable upon the exercise of options.
5. Includes 125,000 shares purchasable upon the exercise of options.
6. Includes 25,000 shares purchasable upon the exercise of options.
7. Includes 75,000 shares purchasable upon the exercise of options.
8. Includes 600,000 shares purchasable upon exercise of options.
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SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Amendment No. 1 to
be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 28, 1998
HARMONY HOLDINGS, INC.
By: /s/ James G. Gilbertson
--------------------------------
James G. Gilbertson
Chief Operating Officer and
Chief Financial Officer
