SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT TO REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
June 18, 1996
Date of Report (Date of earliest event reported)
CHILDREN'S BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-21534 41-1663712
(State or other jurisdiction (Commission File No.) (IRS Employer ID No.)
of incorporation)
724 First Street North
Minneapolis, Minnesota 55401
(Address of principal executive offices)
(612) 338-3300
(Registrant's telephone number, including area code)
The undersigned registrant hereby amends the following items, financial
statements, pro forma financial information and exhibits, if any, or other
portions of its Form 8-K Report filed June 18, 1996, as set forth in the pages
attached hereto.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
Financial statements required to be filed pursuant to
Item 7 of Form 8-K filed June 18, 1996, for WCAR-AM,
Livonia, Michigan.
(b) Pro Forma Financial Information.
Pro forma financial information required to be filed
pursuant to Item 7 of Form 8-K filed June 18, 1996,
for Children's Broadcasting Corporation.
(c) Exhibits
Consent of Kleiman, Carney & Greenbaum.
WOLPIN BROADCASTING COMPANY
BALANCE SHEETS
ASSETS
December 31, March 31,
1995 1996
(Audited) (Unaudited)
-------- --------
Current Assets
Cash $ 2,102 $ 23,344
Accounts Receivable (Including Barter
Of $9,231 In 1996 And $13,216 In
1995) 38,624 29,619
Prepaid Expenses 10,468 4,766
-------- --------
Total Current Assets 51,194 57,729
-------- --------
Property And Equipment
Broadcasting Equipment 282,341 282,341
Leasehold Improvements 24,387 24,387
Office Furniture And Equipment 31,227 31,227
Vehicle 500 500
-------- --------
338,455 338,455
Less: Accumulated Depreciation 329,156 329,867
-------- --------
Property And Equipment At Depreciated Cost 9,299 8,588
-------- --------
Other Asset
License And Goodwill 273,465 273,465
-------- --------
Total Assets $333,958 $339,782
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Note Payable - Bank $ -- $ 25,000
Accounts Payable
Trade 16,374 20,973
Barter And Deposits 30,718 20,534
Employees' Deduction For Withheld Taxes 1,293 776
Accrued Expenses
Salaries And Wages 3,634 6,433
Taxes, Other Than Income 1,851 1,089
-------- --------
Total Current Liabilities 53,870 74,805
-------- --------
Stockholders' Equity
Common Stock, $1 Par Value; 200,000 Shares Authorized;
Issued And Outstanding, 75,000 Shares 75,000 75,000
Retained Earnings 205,088 189,977
-------- --------
Total Stockholders' Equity 280,088 264,977
-------- --------
Total Liabilities And Stockholders' Equity $333,958 $339,782
======== ========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
WOLPIN BROADCASTING COMPANY
STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
----------------------- ---------------------------
1994 1995 1995 1996
(Audited) (Audited) (Unaudited) (Unaudited)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales
Station Time (Including $57,433 Barter Sales
In 1994, $57,502 In 1995 And $17,316 In 1996) $643,441 $575,252 $147,949 $108,208
Less: Commissions - Agencies 10,110 9,211 2,066 1,534
-------- -------- -------- --------
Net Sales $633,331 $566,041 $145,883 $106,674
-------- -------- -------- --------
Operating Expenses
Technical 116,027 100,992 18,626 28,885
Program 15,624 16,869 3,277 3,706
Selling 110,274 106,009 32,801 22,219
General And Administrative 264,247 251,158 62,197 66,975
-------- -------- -------- --------
Total Operating Expenses 506,172 475,028 116,901 121,785
-------- -------- -------- --------
Net Income $127,159 $ 91,013 $ 28,982 ($ 15,111)
======== ======== ======== ========
</TABLE>
See Accompanying Notes To Financial Statements
WOLPIN BROADCASTING COMPANY
STATEMENTS OF RETAINED EARNINGS
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
----------------------- ---------------------------
1994 1995 1995 1996
(Audited) (Audited) (Unaudited) (Unaudited)
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Balance, Beginning Of Year $196,916 $229,075 $229,075 $205,088
Addition
Net Income 127,159 91,013 28,982 --
-------- -------- -------- --------
324,075 320,088 258,057 205,088
Deduction
Stockholders' Distributions/net Loss 95,000 115,000 -- (15,111)
-------- -------- -------- --------
Balance, End Of Period $229,075 $205,088 $258,057 $189,977
======== ======== ======== ========
</TABLE>
See Accompanying Notes To Financial Statements
WOLPIN BROADCASTING COMPANY
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended December 31, Three Months Ended March 31,
------------------------- ------------------------
1994 1995 1995 1996
(Audited) (Audited) (Unaudited) (Unaudited)
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Operating Activities
Net Income/(loss) $127,159 $ 91,013 $ 28,982 ($ 15,111)
Charges To Net Income, Not Requiring The Use Of Cash
Depreciation 3,156 2,350 505 711
Loss On Disposal Of Equipment 686 -- -- --
Change In Operating Assets And Liabilities That Provide (Use) Cash
Accounts Receivable And Prepaid Expenses (858) (4,102) 5,527 14,707
Accounts Payable, Accrued Expenses And Employees' Deductions
For Withheld Taxes (11,162) (17,765) 17,858 (4,065)
--------- --------- --------- ---------
Cash Provided By Operating Activities 118,981 71,496 52,872 (3,758)
--------- --------- --------- ---------
Financing Activities
Proceeds Of Note Payable -- -- -- 25,000
--------- --------- --------- ---------
Cash Provided By Financing Activities -- -- -- 25,000
--------- --------- --------- ---------
Investing Activities
Proceeds From Sale Of Equipment 300 -- -- --
Purchase Of Property And Equipment (500) (5,664) -- --
Stockholders' Distributions (95,000) (115,000) -- --
--------- --------- --------- ---------
Cash Used By Investing Activities (95,200) (120,664) -- --
--------- --------- --------- ---------
Increase (Decrease) In Cash 23,781 (49,168) 52,872 21,242
Cash, Beginning Of Year 27,489 51,270 51,270 2,102
--------- --------- --------- ---------
Cash, End Of Period $ 51,270 $ 2,102 $ 104,142 $ 23,344
========= ========= ========= =========
Supplemental Cash Flow Disclosure
Cash Paid During The Period For Interest $ -- $ -- $ -- $ 137
========= ========= ========= =========
</TABLE>
See Accompanying Notes To Financial Statements
WOLPIN BROADCASTING COMPANY
NOTES TO FINANCIAL STATEMENTS
For The Year Ended December 31, 1995 And The Quarter Ended March 31, 1995
Note 1 - Summary Of Significant Accounting Policies
Business Activity
The corporation owns and operates an am radio station in Garden City,
Michigan.
Property and Depreciation
All tangible property is recorded at cost. Expenditures for maintenance
and repairs are charged to operations in the year incurred. Property is
depreciated over the following estimated useful lives, using the designation
methods of depreciation:
Broadcasting Equipment 7 Years 200% Declining Balance
Leasehold Improvements 15 Years 150% Declining Balance
Office Furniture And Equipment 5-7 Years 200% Declining Balance
Vehicle 5 Years 200% Declining Balance
License and Goodwill
The license and goodwill represents a portion of the costs paid in May,
1969 to acquire the broadcasting business from its preceding owner.
Federal Income Tax
The stockholders of the corporation have elected under Section 1362(a)
of the internal revenue code to be taxed as an S corporation and, accordingly,
no income tax provision is accrued herein.
Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Note 2 - Related Entity
Wolpin Broadcasting Company pays rent on a month to month basis, for
its premises to an entity which is related to the corporation by controlled
ownership. The annual rental payments are $18,000.
Note 3 - Note Payable - Bank
At March 31, 1996 the note payable to a bank represents the outstanding
balance of a $50,000 line of credit, expiring September, 1996. The note is
unsecured and personally guaranteed by the majority stockholder.
Interest is payable quarterly at the prime rate.
Note 4 - Subsequent Event
In January, 1996, the company entered into an agreement to sell
substantially all of its assets for $1,260,000. A deposit of $100,000 towards
the sale is being held by the company's legal counsel. The closing is scheduled
to take place in early June, 1996.
Unaudited pro forma financial position as if the acquisitions had
occurred March 31, 1996 would be:
<TABLE>
<CAPTION>
Radio Pro forma Combined Wolphin Pro forma
CBC Elizabeth Adjustments Total Broadcasting Adjustments Total
----------- ---------- ----------- ----------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
March 31, 1996:
Current assets $16,868,827 $ 327,412 $ -- $17,196,239 $ 57,729 $ (57,729)(2) $17,196,239
Deffered expenses 1,978,890 1,978,890 1,978,890
Property and equipment 3,033,401 152,088 137,912 (1) 3,323,401 8,588 306,412 (2) 3,638,401
Broadcast licenses 4,913,259 26,351 10,801,688 (1) 15,741,298 273,465 911,535 (2) 16,926,298
Other assets 1,305,215 1,305,215 1,305,215
----------- ---------- ----------- ----------- ---------- ---------- -----------
Total assets $28,099,592 $ 505,851 $10,939,600 $39,545,043 $ 339,782 $1,160,218 $41,045,043
=========== ========== =========== =========== ========== ========== ===========
Current liabilities $ 3,062,072 $1,032,068 $(1,032,168)(1) $ 3,061,972 $ 74,805 $ (74,805)(2) $ 3,061,972
Long-term debt 662,447 662,447 662,447
Other liabilities 50,899 50,899 50,899
Redeemable convertible 0
preferred stock 2,286,386 2,286,386 2,286,386
Shareholders' equity (deficit) 22,037,788 (526,217) 11,971,768 (1) 33,483,339 264,977 1,235,023 (2) 34,983,339
----------- ---------- ----------- ----------- ---------- ---------- -----------
Total liabilities and
shareholders' equity $28,099,592 $ 505,851 $10,939,600 $39,545,043 $ 339,782 $1,160,218 $41,045,043
=========== ========== =========== =========== ========== ========== ===========
</TABLE>
Pro forma adjustments to financial position:
(1) Purchase accounting adjustments associated with the acquisition of Radio
Elizabeth, Inc.,including: (i) adjustment of property and equipment to a fair
market value of $290,000 (ii) seller obligation to repay all liabilities out of
the proceeds of the sale totalling $1,032,068 at March 31, 1996; (iii) common
stock valued at $11,500,000 to be issued to finance the purchase and (iv)
$10,828,039 of broadcast license value purchased, allocated $750,000 to 1530 AM
and $10,087,039 to 1660 AM.
(2) Purchase accounting adjustments associated with the acquisition of Wolpin
Broadcasting Company,including: (1) seller to retain title to all current assets
(ii) adjustment of existing property and equipment to a fair market value of
$75,000 and record land purchased in conjunction with the acquisition valued at
$240,000 (iii) $1,185,000 of broadcast license value purchased (iv) seller
obligation to repay all liabilities out of the proceeds of the sale totalling
$74,805 at March 31, 1996; and (iii) common stock valued at $1,500,000 to be
issued to finance the purchase.
<TABLE>
<CAPTION>
Year Ended December 31, 1995:
Children's Radio Wolpin
Broadcasting Elizabeth, Pro Forma Combined Broadcasting Pro Forma
Corporation Inc. Adjustments Total Company Adjustments Total
----------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues $ 5,106,545 $ 405,173 $ (405,173)(1) $ 5,112,545 $ 566,041 $ $ 5,678,586
6,000 (4) --
Operating expenses (421,167)(1)
10,006,059 421,167 577,652 (2) 10,583,711 475,028 66,275(5) 11,125,014
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from
operations (4,899,514) (15,994) (555,658) (5,471,166) 91,013 (66,275) (5,446,428)
Reorganization items (28,751) 28,751 (1) 0 0
Interest expense, net (1,208,263) (35,480) 35,480 (1) (1,208,263) (1,208,263)
Income taxes (55) 55 (1) 0 0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income (loss) $(6,107,777) $ (80,280) $ (491,372) $(6,679,429) $ 91,013 $ (66,275) $(6,654,691)
=========== =========== =========== =========== =========== =========== ===========
Net loss per share $ (2.22) $ (1.74)
=========== ===========
Weighted average number
of shares outstanding 2,815,500 3,815,500
=========== ===========
Three Months Ended March 31, 1996:
Revenues $ 1,216,023 $ 78,964 $ (78,964)(1) $ 1,217,523 $ 106,674 $ $ 1,324,197
1,500 (4)
Operating expenses 144,413 (2)
2,823,990 90,798 (90,798)(1) 2,968,403 121,785 85,781 3,175,969
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income (loss) from
operations (1,607,967) (11,834) (131,079) (1,750,880) (15,111) (85,781) (1,851,772)
Reorganization items
Interest expense, net (267,906) (9,998) 9,998 (1) (267,906) (267,906)
Income taxes
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net Income (loss) $(1,875,873) $ (21,832) $ (121,081) $(2,018,786) $ (15,111) $ (85,781) $(2,119,678)
=========== =========== =========== =========== =========== =========== ===========
Net loss per share $ (0.63) $ (0.52)
=========== ===========
Weighted average number
of shares outstanding 3,062,500 4,062,500
=========== ===========
</TABLE>
Pro forma adjustments to operations:
(1) Eliminate the revenue and operating expenses related to the
operation of radio station WJDM 1530 AM to give effect for the local
programming agreement.
(2) Reflects an adjustment to depreciation and amortization expense
related to property and equipment and broadcast licenses acquired
from Radio Elizabeth, Inc. as if the transaction had occurred
on January 1, 1995. Straight-line depreciation is calculated over
eight years for equipment and the broadcast license is amortized
over a twenty year life.
(3) Pursuant to the terms of the agreement with the sellers of Radio
Elizabeth, Inc. the final acquisition price paid at closing was
reduced for all monthly LMA fees paid by CBC prior to closing. These
payments, aggregating $320,000 have been reflected as part of the
actual acquisition cost of Radio Elizabeth, Inc. to be consistent
with the substance of the transaction. Accordingly, no pro-forma
adjustment has been recorded for these payments.
(4) LMA fee of $500 per month paid by the seller to CBC for the
continued rights to broadcast on 1530 AM.
(5) Reflects an adjustment to depreciation and amortization expense
related to property and equipment and broadcast licenses acquired
from Wolpin Broadcasting Company as if the transaction had occurred
on January 1, 1995. Straight-line depreciation is calculated over
eight years for equipment and the broadcast license is amortized
over a twenty year life.
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 thereunto duly authorized.
CHILDREN'S BROADCASTING
CORPORATION
Date: January 31, 1997 By /s/ James G. Gilbertson
-----------------------
James G. Gilbertson
Chief Operating Officer and
Treasurer
January 30, 1997
Consent of Independent Auditors
We consent to the use of our reports dated January 19, 1996, February 2, 1996
and May 30, 1996, with respect to the financial statements of Wolpin
Broadcasting Company in the 8-K/A of Children's Broadcasting Corporation.
Very truly yours,
KLEIMAN, CARNEY & GREENBAUM
/s/ Mark Carney
MARK CARNEY
Certified Public Accountant
Farmington Hills, Michigan
January 30, 1997
