<PAGE>
FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For Quarterly period ended June 30, 1996 or
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[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the Transition period from _________ to _________
Commission File No. 0-21534
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Children's Broadcasting Corporation
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(Exact name of registrant as specified in its charter)
Minnesota 41-1663712
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
724 First Street North-4th Floor, Minneapolis, MN 55401
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(Address of principal executive office zip code)
(612) 338-3300
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Registrant's telephone number, including area code
Former Address:
- ----------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since
last report
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
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APPLICABLE ONLY TO ISSUER INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court
Yes No
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APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. 5,629,858
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<PAGE>
INDEX
CHILDREN'S BROADCASTING CORPORATION
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets -- June 30, 1996 and December
31, 1995.
Consolidated Statements of Operations -- Three and six months
ended June 30, 1996 and 1995.
Consolidated Statements of Cash Flows -- Six months ended June
30, 1996 and 1995.
Notes to consolidated financial statements -- June 30, 1996.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
This Form 10-QSB/A for the quarter ended June 30, 1996 contains certain forward-
looking statements as defined in the Private Securities Litigation of 1995,
which may be identified by the use of such forward-looking terminology as
"believes," "expects," "anticipates," "will," and "intends," or comparable
terminology. Such statements are subject to certain risks and uncertainties
that could cause actual results to differ materially from those projected.
Potential purchasers of the Company's securities are cautioned not to place
undue reliance on such forward looking statements which are qualified in their
entirety by the cautions and risk factors contained in the Company's Form 8-K
Report filed on July 8, 1996 (File NO. 0-21534).
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CHILDREN'S BROADCASTING CORPORATION
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
AMENDED
JUNE 30 DECEMBER 31
1996 1995
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ASSETS
<S> <C> <C>
Current assets:
Cash and Cash Equivalents $4,541,745 $587,292
Accounts Receivable 933,472 876,487
Allowance For Bad Debts (54,890) (71,490)
Accounts Receivable-Other 108,334 49,576
Prepaid Expenses 92,343 707,689
Trade Activity, Net 155,748 23,435
Inventory 77,260 74,046
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TOTAL CURRENT ASSETS 5,854,012 2,247,035
Deferred Expenses 7,261 2,288,141
Property & Equipment, Net 3,497,905 3,083,769
Broadcast License, Net 17,140,364 4,969,573
Intangible Assets, Net 1,136,792 738,220
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TOTAL ASSETS $27,636,334 $13,326,738
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LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $515,370 $749,742
Accrued Interest 49,420 301,389
Other Accrued Expenses 642,242 733,371
Short-Term Debt 1,268,192 3,650,000
Short-Term Debt -- Officers and Directors 0 900,000
Long-Term Debt - Current Portion 383,684 297,365
Obligation Under Capital Lease - Current Portion 11,276 36,173
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TOTAL CURRENT LIABILITIES 2,870,184 6,668,040
Long-Term Debt - Net of Current Portions 1,747,164 872,338
Obligation Under Capital Lease 8,437 52,847
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TOTAL LIABILITIES 4,625,785 7,593,225
Convertible Preferred Stock
Autorized Shares - 290,213
Issued and Outstanding Shares - 290,213 redeemable
at $10 Per Share on August 29, 1999 2,326,633 2,246,838
Shareholders' Equity:
Common Stock, $.02 Par Value:
Authorized shares - 12,500,000
Issued & outstanding shares - Voting: 5,440,817
1996 and 2,945,183-- 1995;
Issued and Outstanding Shares - 189,041 nonvoting -
1996 and 1995 112,597 62,683
Additional Paid-In Capital 41,963,086 19,491,302
Accumulated Deficit (21,391,767) (16,067,310)
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TOTAL SHAREHOLDERS' EQUITY 20,683,916 3,486,675
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $27,636,334 $13,326,738
------------- -----------
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</TABLE>
<PAGE>
CHILDREN'S BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Amended Amended
Three Months Ended Six Months Ended
June 30 June 30
----------------------------- ----------------------------
1996 1995 1996 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES:
Owned, Operated and LMA Stations $1,082,178 $1,140,322 $1,940,658 $2,030,126
Network 249,289 263,950 606,832 635,976
------------- ------------- ------------- -------------
REVENUES $1,331,467 $1,404,272 2,547,490 2,666,102
OPERATING EXPENSES:
Owned, Operated and LMA Stations:
General and Administrative 524,774 480,243 994,212 1,041,702
Technical and Programming 222,073 231,345 421,875 525,901
Selling 341,642 409,440 682,169 904,308
------------- ------------- ------------- -------------
1,088,489 1,121,028 2,098,256 2,471,911
Network:
General and Administrative 222,156 127,724 448,140 258,074
Programming 212,997 150,119 431,127 282,069
Selling 215,279 255,323 428,070 583,224
Marketing 123,718 6,684 243,949 13,244
Magazine 62,396 38,567 125,541 57,558
------------- ------------- ------------- -------------
836,546 578,417 1,676,827 1,194,169
TOTAL BROADCASTING OPERATING EXPENSES 1,925,035 1,699,445 3,775,083 3,666,080
Corporate 364,712 213,565 656,889 427,964
Corporate Expenses Paid to Affiliated
Management Company 150,000 150,000 300,000 300,000
Depreciation & Amortization 559,320 225,391 OP1,091,085 457,191
Loss on Exchange of Assets - 24,226 - 28,687
* Write Off of Deferred Warrant Expense 1,662,378 1,662,378
------------- ------------- ------------- -------------
TOTAL OPERATING EXPENSES 4,661,445 2,312,627 7,485,435 4,879,922
------------- ------------- ------------- -------------
LOSS FROM OPERATIONS (3,329,978) (908,355) (4,937,945) (2,213,820)
Interest Income (132,955) (4,673) (170,191) (7,449)
Interest Expense 171,766 169,801 476,908 305,490
------------- ------------- ------------- -------------
NET LOSS ($3,368,789) ($1,073,483) ($5,244,662) ($2,511,861)
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
($0.90) ($1.40) ($1.43) ($0.93)
------------- ------------- ------------- -------------
NET LOSS PER SHARE ------------- ------------- ------------- -------------
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 3,736,000 2,710,000 3,736,000 2,710,000
------------- ------------- ------------- -------------
------------- ------------- ------------- -------------
</TABLE>
* This write off is the result of the July 1996 decision by ABC Radio
Networks, Inc. to terminate its joint operating agreement with the Company,
effective October 1996.
<PAGE>
CHILDREN'S BROADCASTING CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
AMENDED
SIX MONTHS ENDED
JUNE 30
-------------------- --------------------
1996 1995
-------------------- --------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss ($5,244,662) ($2,511,861)
Adjustments to Reconcile Net Loss to Net
Cash used in Operating Activities:
Depreciation & Amortization 1,091,085 457,191
Trade Activity (144,785) (58,996)
Amortization and Write-Off of Deferred Warrant Expense 1,971,629 -
Decrease (Increase) in:
Accounts Receivable (73,585) (361,877)
Other Receivables (58,758) 1,174
Prepaid Expenses 338,133 (88,127)
Inventory (3,214) (287)
Other Assets - -
Increase (Decrease) in:
Accounts Payable (234,372) 40,691
Accrued Interest (251,969) 192,376
Other Accrued Expenses (91,129) (88,482)
-------------------- --------------------
NET CASH USED IN OPERATIONS (2,701,627) (2,418,198)
-------------------- --------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Sale of Property & Equipment - 770,589
Purchase of Property & Equipment (675,866) (160,167)
Sale of Intangible Assets - -
Purchase of Intangible Assets (8,538,434) (63,831)
-------------------- --------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (9,214,300) 546,591
-------------------- --------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Capital Lease Obligation (69,307) (10,904)
Increase in Short Term Debt 900,000 2,125,000
Decrease in Short Term Debt (4,700,000) -
Payment of Long Term Debt (111,139) (83,929)
Proceeds from Long Term Debt - 69,350
Proceeds from Convertible Preferred Stock - 74,415
Proceeds from Issuance of Common Stock 19,850,826 5,001
-------------------- --------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 15,870,380 2,178,933
-------------------- --------------------
Increase in Cash 3,954,453 307,326
Cash - Beginning of Period 587,292 243,733
-------------------- --------------------
CASH - END OF PERIOD $4,541,745 $551,060
-------------------- --------------------
-------------------- --------------------
Supplemental Disclosure of Cash Flow Information:
Cash Paid During the Period for Interest $500,046 $24,340
-------------------- --------------------
-------------------- --------------------
</TABLE>
Supplemental Disclosure of Non-Cash Investing and Financing Activities:
In conjunction with the purchase of WJDM in the New York market, the
Company recognized intangible assets and incurred long term debt of
$1,072,284 through a non-competition agreement. Additionally, assets
aggregating $2,670,871 were purchased by issuing 270,468 shares of common
stock, and assuming debt of $518,192 which was subsequently paid off in
July 1996.
<PAGE>
CHILDREN'S BROADCASTING CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1996
NOTE 1--BASIS OF PRESENTATION
The accompanying unaudited consolidated 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 of
Regulation SB. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals with the exception of the adjustments discussed in
Note 2) considered necessary for a fair presentation have been included.
Operating results for the six month period ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 1996. For further information, refer to the consolidated financial
statements and footnotes thereto included in the annual report or Form 10-KSB
for the year ended December 31, 1995.
NOTE 2--SIGNIFICANT TRANSACTIONS DURING 1996
The following significant transactions occurred during the first six months of
1996 and are considered non-recurring:
A. In January 1996, the Company obtained financing of $750,000 from lenders,
evidenced by notes bearing an interest rate of 6% per annum, payable July
8, 1996. The Company also granted warrants to the lenders to purchase
57,500 shares of common stock at $13.00 per share. Proceeds from this
financing were used for the purchase of WJDM-AM in the New York market.
The note was subsequently paid off in July 1996.
B. The Company effected a one-for-two reverse stock split effective for
shareholders of record January 23, 1996. Management believes this action
will enhance acceptability and marketability of the Company's stock by the
financial community and investing public.
C. In March 1996, the Company completed a public offering for 2.2 million
shares of common stock at $10 per share. Proceeds from the Offering were
used to acquire radio stations in the New York and Detroit markets, to
reduce debt and for working capital.
D. With the proceeds obtained as a result of its public offering, the Company
repaid $4,700,000 of principal on short term debt as well as approximately
$408,000 of related interest.
E. In June 1996, the Company purchased the assets of radio station WCAR-AM in
Detroit, Michigan for $1.5 million cash.
<PAGE>
F. In June 1996, the Company purchased the stock of Radio Elizabeth, Inc. in
order to obtain WJDM-AM in the New York market. The purchase price was
$11,500,000, $2,500,000 of which was paid by the issuance of 270,468 shares
of the Company's common stock.
G. In July 1996, ABC Radio Networks, Inc. ("ABC") terminated its joint
operating agreement with the Company. In connection with obtaining this
agreement, the Company capitalized deferred expenses aggregating $2,221,000
related to the value of certain warrants issued to ABC. These costs were
being amortized over the original 24 month term of the agreement. The July
termination by ABC, combined with other related factors, are felt to
support the belief that the working relationship between the Company and
ABC was deteriorating and call into question the value associated with this
agreement related to the remaining net unamortized deferred expenses.
Accordingly, the remaining deferred expenses aggregating $1,662,378 at June
30, 1996, were written off as a second quarter expense. Total amortization
and write-off of these deferred expenses aggregated approximately
$1,972,000 for the quarter.
In September 1996, the Company commenced an action against ABC related to
the termination. No prediction of the outcome related to this action can
be given at this time.
H. The original quarterly financial statements have been amended to reflect
the retroactive write-off of the $1,662,378 deferred expense as discussed
in Note G above.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
THREE AND SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO THREE AND SIX MONTHS
ENDED JUNE 30, 1995.
REVENUE:
The Company's total revenues decreased 5% in the second quarter of 1996 to
$1,331,000 compared to second quarter 1995 revenues of $1,404,000. For the
first six months, total revenues of $2,547,000 were $119,000 or 4% lower than
the same period in 1995. Trade/barter revenue decreased 40% during the first
half of 1996 compared to the first half of 1995. Cash revenues derived from the
owned, operated and LMA stations increased $176,000 from $1,432,000 during the
first half of 1995 to $1,608,000 during the first half of 1996, an increase of
12%. The decrease in network revenues was due in part to the elimination of
national advertising personnel and the transition of that function to ABC Radio
Network, Inc. (ABC) as part of the joint operating agreement. Although the ABC
agreement was canceled by ABC in July 1996, revenues for the network are
expected to increase in the third and fourth quarters compared to the same
periods in the prior year. These increases are expected due to booked
advertising commitments from various advertisers which have already been secured
by the Company without the assistance of ABC.
OPERATING EXPENSES:
Network Expenses:
General and administrative expenses increased $94,000 in the second
quarter of 1996 to $222,000 as compared to $128,000 for the same period of 1995.
These expenses increased $190,000 or 74% for the first six months of 1996
compared to the same period in 1995. The primary reason for the increase was
the monthly payment of $25,000 to ABC for services provided under the joint
operating agreement. General and administrative expenses have grown as the
scope of the network's activities has increased.
Programming expenses increased $63,000 to $213,000 in the second
quarter of 1996 compared to $150,000 in the second quarter of 1995. For the
first six months, programming expenses increased 53% or $149,000 compared to the
same period in 1995. This increase was due to the increase in programming
salaries and the increase in remote live broadcasts which carry line charge,
talent fee and rights fee expenses. Additionally, the network implemented an
integrated telephone system to enhance programming and encourage active listener
participation.
Sales expenses in the second quarter of 1996 were $215,000 compared to
$255,000 during the same period of 1995, a
<PAGE>
decrease of $40,000. Sales expenses decreased 27% to $428,000 in the first half
of 1996 compared to $583,000 in the first half of 1995. These sales expenses
relate to both advertising sales and affiliate relations sales. This decrease
is due primarily to the reduction of advertising sales salaries as well as the
reduction of travel and lodging expenses as a result of the Company utilizing
the ABC advertising team under its joint operating agreement. Commissions,
which are accounted for in the sales expense, vary with sales.
Marketing expenses were $124,000 during the second quarter of 1996
compared to $7,000 in the second quarter of 1995. During the six months ended
June 1996, marketing expenses increased $231,000 over the same period for 1995.
The Company has begun to develop this department and anticipates expenses will
remain at current levels as it becomes fully operational.
Magazine expenses were $62,000 for the second quarter of 1996, and
$126,000 for the six months ended June, 1996. These expenses are the result of
the 1994 agreement the Company entered into with Time Warner to produce the
national Radio AAHS monthly magazine. Time Warner has closed Warner Music
Enterprises, the division responsible for producing the Radio AAHS magazine.
Since production and distribution of the magazine have been interrupted,
management expects these expenses to decrease until such time a new outlet is
found for the production of the magazine.
Owned, Operated and LMA Station Expenses:
General and administrative expenses increased 9% to $525,000 for the
second quarter of 1996 from $480,000 during the same period of 1995, due to the
addition of the Detroit and New York stations in June 1995. Expenses decreased
5% in the six months ended June 30, 1996 to $994,000 from $1,042,000 in the six
month period ended June 30, 1995, due to the reallocation of expenses which were
included in the 1995 LMA fees incurred by the Denver station. This station was
subsequently purchased by the Company in November 1995.
Technical and programming expenses decreased $9,000 in the second
quarter of 1996 from $231,000 in the second quarter of 1995 to $222,000. During
the first half of 1996, these expenses decreased $104,000 or 20% compared to the
same period in 1995. The technical expenses have decreased as equipment has
been upgraded, thus requiring less maintenance and repair at this time.
Sales expenses decreased from $409,000 in the second quarter of 1995
to $342,000 in the second quarter of 1996, a decrease of 17%. For the first six
months of 1996, selling expenses of $682,000 were 25% lower than the same period
in 1995. This change can be primarily attributed to the 61% reduction of
trade/barter expenses during 1996 compared to the first half of 1995. Increases
in cash expensed for the period are due primarily
<PAGE>
to the increase of billboard and print advertising used for clients as sales
incentives. Commissions, which are accounted for in sales expense, vary with
sales.
Corporate charges were $515,000 in the second quarter of 1996 compared
to $364,000 in the second quarter of 1995, representing an increase of 42%.
Corporate charges increased 31% in the first six months of 1996 over the same
period in 1995. This increase is attributable to an increase in outside service
fees including investor relations and professional fees related to stock,
trademark and employee matters.
Depreciation and amortization increased to $250,000 in the second
quarter of 1996 from $225,000 in the second quarter of 1995. For the first six
months depreciation and amortization of $782,000 was $325,000 or 71% higher than
the same period in 1995, due in part to the acquisition of the assets of its
Denver station acquired in November 1995 and the value of the warrant to
purchase the Company's common stock issued to ABC as part of a joint operations
agreement.
Interest expense for the quarter decreased $126,000 as a result of the
repayment of debt from the proceeds of the public offering. Interest expense
for the first half of 1996 increased 3% from $298,000 to $307,000.
The net loss increased 213% in the second quarter of 1996 to
$3,369,000 up $2,295,000 over the second quarter of 1995. For the first six
months, net loss of $5,245,000 was $2,733,000 or 108% higher than the same
period in 1995. A significant portion of the increased loss is due to the write
off of the deferred warrant expense associated with the ABC Radio Networks joint
operating agreement. This write-off, which totaled $1,662,378, became necessary
pursuant to the July 1996 decision by ABC to terminate this agreement, effective
October 1996. Prior to ABC's termination, the deferred warrant expense was
being amortized over the life of the agreement. Consistent with its business
plan and network strategy, the Company anticipates that its coverage of the
United States will continue to expand during the year either through affiliation
or acquisition of additional radio stations. The Company expects to incur
operating losses as such network expansion increases, and that the losses will
continue throughout 1996 and for 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, as measured by its working capital, was $2,984,000
at June 30, 1996 compared to negative working capital of $4,421,000 at December
31, 1995. The increase in net working capital during the first half of 1996,
was the result of the Company completing its public offering of common stock and
repaying approximately $4,500,000 of short term debt and its corresponding
accrued interest.
<PAGE>
The Company recently closed on the acquisition of a Philadelphia radio
station, reducing the Company's working capital to a projected $500,000 as
of September 30, 1996. Subsequent to June 30, 1996, the Company signed a
purchase agreement to acquire a radio station in the Chicago market in
January, 1997 which will require approximately $2,000,000 of cash at the time
of closing. The Company considers Chicago to be a key market in connection
with the Company's strategy of building a national radio network. Given the
Company's current cash and working capital balance, the Company will be
required to raise additional capital to complete the acquisition of the radio
station in the Chicago market and provide working capital for the Company.
The Company is seeking to raise additional capital to enable it to complete
this acquisition and to provide working capital for 1997, but no assurance
can be given that the Company will be able to do so on a timely basis or on
terms which are acceptable to the Company. The failure to obtain such
additional capital could result in a default by the Company under its
agreement with the Seller and would result in the loss of the escrow deposit
and this opportunity to acquire a station in this key market.
The Company is continuing to develop its radio network and is generally
subject to the risks attendant to a new or emerging business venture. The
Company has incurred net losses since its inception in 1990 and has not
generated positive cash flow sufficient to fund its ongoing operations. For
the three years ended December 31, 1993, 1994, 1995 and the six months ended
June 30, 1996, the Company incurred net losses of $3,247,000, $4,519,000,
$6,107,000 and $5,244,000, respectively, and anticipates that it will
continue to operate at a loss from operations for the remainder of 1996. Due
to past and current operating losses, and because the Company has not
generated positive cash flow from operations, the Company has had frequent
working capital shortages. Working capital requirements have been met by
short-term borrowings from investors, including affiliates of the Company,
and from the proceeds of public offerings of the Company's Common Stock. The
Company is seeking sources of financing for its working capital needs and for
acquisitions, although it has no current commitments for such financing. Such
arrangements could include the leveraging of Company's radio station
properties under agreements with asset-based lenders. If the Company should
be unable to obtain working capital when required, its operations and
prospects would be materially and adversely affected. Depending upon the
terms of such financing the Company's leverage would be significantly
increased and dilution to existing shareholders may result if equity
securities or rights to acquire equity securities are issued in connection
therewith.
Consolidated cash was $4,542,000 at June 30, 1996 and $587,000 at
December 31, 1995, an increase of $3,955,000. The change in cash can be
attributed to the cash raised at the completion of the public offering of
common stock less the cash used to purchase stations in the New York and
Detroit markets.
Accounts receivable increased $74,000 from $805,000 at December 31,
1995. Prepaid expenses decreased $338,000 from December 31, 1995 while other
receivables and inventory increased a total of $62,000. Accounts payable
decreased $234,000 to $515,000 compared to the $750,000 balance at December
31, 1995. Other accrued expenses also decreased 12% from December 31, 1995
and accrued interest decreased $252,000 in the first six months of 1996. The
increased amount of cash used for operations was a result of using the monies
received through the Company's public offering of common stock to pay down
interest and accounts payable.
During the first six months of 1996, $13,476,000 was used for investing
activities. This cash was used to purchase stations in the New York and
Detroit markets.
Cash obtained through financing activities amounted to $20,132,000
during the first half of 1996. This cash represents the monies received from
the Company's public offering of common stock less the repayment of debt.
<PAGE>
SEASONALITY AND INFLATION
The Company's revenues generally follow retail sales trends, with the fall
season (September through December) reflecting the highest revenues for the
year, due primarily to back-to-school and holiday season retail advertising, and
the first quarter reflecting the lowest revenues for the year. The Company does
not believe inflation has affected the results of its operations, and does not
anticipate that inflation will have an impact on its future operation.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEMS 2. THROUGH 5.
None
ITEM 6.
The following documents filed by the company with the Commission (File No.
0-21534) are incorporated into this 10-QSB/A by reference:
(a) The Company's 8-K Report filed on June 19, 1996 (File No. 0-21534),
relating to acquisition of Radio Elizabeth, Inc.;
(b) The Company's 8-K/A Report filed on June 21, 1996 (File No. 0-21534),
relating to acquisition of Radio Elizabeth, Inc.;
(C) The Company's 8-K Report filed on June 18, 1996 (File No. 0-21534),
relating to acquisition of the assets of Radio Station WCAR-AM; and
(d) The Company's 8-K/A Report filed on June 21, 1996 (File No. 0-21534),
relating to acquisition of the assets of Radio Station WCAR-AM.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the undersigned
thereunto duly authorized.
CHILDREN'S BROADCASTING
CORPORATION
Date: 10/17/96 BY: /s/ James G. Gilbertson
-------- ---------------------------
Treasurer (Chief Operating
Officer and Chief Financial
Officer)
