SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[_] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 1-11976
UNAPIX ENTERTAINMENT, INC.
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(Exact name of small business issuer as
specified in charter)
Delaware 95-4404537
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification number)
200 Madison Avenue
New York, NY 10016
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(Address of principal executive offices)
212-252-7600
---------------------------
(Issuer's Telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 |_|
As of August 11, 1997 there were 5,980,934 shares of the Company's common stock
outstanding.
No Exhibits
Page 1
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Consolidated Balance Sheet
(In thousands, except per share amounts)
June 30,
1997
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ASSETS
Cash and equivalents $ 190
Accounts receivable- trade, net of allowances of $988 12,580
Film costs, net 20,963
Product inventory 1,042
Property and equipment, net 579
Other assets 2,935
Excess of cost over net assets acquired 2,811
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Total Assets $ 41,100
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 7,149
Deferred income taxes 499
Royalty payable 3,548
Bank line of credit 4,291
Acquisition fund payable 1,068
Variable rate senior subordinated notes 2,842
10% convertible subordinated notes 6,781
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Total Liabilities $ 26,178
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Stockholders' Equity:
Common stock $.01 par value per share; 20,000 authorized; 5,974
shares issued and outstanding 60
Cumulative convertible series A 8% preferred stock, $.01 par
value per share; 3,000 authorized; 504 issued and
outstanding (aggregate liquidation preference of $1,516) 5
Additional paid-in capital 16,857
Notes receivable from equity sales (2,007)
Retainded Earnings 7
--------
Total Stockholders' Equity $ 14,922
--------
Total Liabilities and Stockholders' Equity $ 41,100
========
See accompanying notes to consolidated financial statements
Page 2
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UNAPIX ENTERTAINMENT, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
For the Three Months Ended June 30
1997 1996
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Revenues:
Licensing and distribution $ 3,328 $ 2,304
Home video 4,207 3,049
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7,535 5,353
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Operating costs:
Licensing and distribution 2,366 1,610
Home video 2,613 2,121
General and administrative expenses 1,807 1,583
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6,726 5,314
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Income from operations 749 39
Interest expense and financing expense, net (297) (9)
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Income before taxes $ 452 $ 30
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Provision for income taxes 197 12
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Net income $ 255 $ 18
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Net income per common share $ .04 $ --
======= =======
Average number of common shares outstanding 5,903 5,227
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See accompanying notes to consolidated financial statements
Page 3
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
For the Six Months Ended June 30
1997 1996
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Revenues:
Licensing and distribution $ 6,137 $ 3,498
Home video 7,835 7,087
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13,972 10,585
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Operating costs:
Licensing and distribution 4,299 2,322
Home video 5,029 4,663
General and administrative expenses 3,342 3,156
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12,670 10,141
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Income from operations 1,302 444
Interest expense and financing expense, net (449) (23)
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Income before taxes $ 853 $ 421
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Provision for income taxes 362 174
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Net income $ 491 $ 247
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Net income per common share $ .08 $ .03
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Average number of common shares outstanding 5,696 5,224
======== ========
See accompanying notes to consolidated financial statements
Page 4
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UNAPIX ENTERTAINMENT, INC.
Consolidated Statements of Cash Flows
(In thousands)
For the Six Months Ended June 30,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 491 $ 247
Adjustments to reconcile net income to net
cash used by operating activities:
Amortization and depreciation 6,626 4,102
Deferred income taxes 370 164
Accretion of debentures discount 34 18
Loss on disposal of assets -- 2
(Increase) decrease in accounts
receivable, net (2,426) 450
Film cost expenditures (10,699) (8,080)
Decrease (increase) in product inventory (353) (103)
Increase in other assets (730) (427)
Increase in accounts payable and
accrued expenses 1,081 317
Increase in royalties payable 779 1,327
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Total cash flows used by operating activities (4,827) (1,983)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (163) (153)
Acquisition of subsidiary (808) --
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Total cash flows used by investing activities (971) (153)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from 10% convertible notes
private placement 1,250 563
Net borrowings under bank line of credit 3,983 100
Proceeds from employee notes receivable 26 49
Proceeds from warrant and option exercises 170 --
Private placement expenditures (79) (50)
Preferred stock dividends (21) (23)
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Total cash flows from financing activities $ 5,329 $ 639
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See accompanying notes to consolidated financial statements
Page 5
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UNAPIX ENTERTAINMENT, INC.
Consolidated Statements of Cash Flows (continued)
(In thousands)
For the Six Months Ended June 30
1997 1996
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NET DECREASE IN CASH AND EQUIVALENTS $ (469) $(1,497)
CASH AND EQUIVALENTS AT BEGINNING OF
PERIOD 659 2,028
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CASH AND EQUIVALENTS AT END OF PERIOD $ 190 $ 531
======= =======
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of accrued liability to
acquisition fund payable 71 143
Preferred stock dividend paid in cash 21 51
Stock issued for acquisition 1,400 --
Warrants issued 81 --
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$ 1,573 $ 194
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 324 $ 303
======= =======
Cash paid for taxes $ 25 $ 17
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See accompanying notes to consolidated financial statements
Page 6
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Notes to Consolidated Financial Statements
June 30, 1997
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Unapix
Entertainment, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-QSB. Accordingly, they do not include all of 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) considered necessary for a fair
presentation have been included. Operating results for the six-month period
ended June 30, 1997 are not necessarily indicative of the results that may be
expected for the year ended December 31, 1997. For further information, refer to
the consolidated financial statements and footnotes thereto included in the
Company's Form 10-KSB for the year ended December 31, 1996.
2. Financing
On May 2, 1997, Unapix Entertainment, Inc. (the "Company"), A Pix Entertainment
("A Pix") and Miramar Images, Inc., the Company's wholly-owned subsidiary
("Miramar;" collectively, the Company, A Pix and Miramar are referred to as
"Borrowers"), entered into a credit facility (the "Facility") with Imperial Bank
(the "Bank") providing for borrowings of up to $7,000,000. Loans are extended
and required to be repaid based upon the Company's outstanding accounts
receivable and other contractual rights to payment. Interest on the outstanding
loan balance accrues at a rate of 1.25% per annum in excess of the Bank's
publicly announced prime rate. The Borrowers were required to pay a facility fee
of $87,500, and are also required to pay an unused line fee at a rate equal to
.5% per annum of the amount by which $7,000,000 exceeds the average daily loan
balance during any calendar quarter.
The term of the Facility expires on September 30, 1998. Outstanding amounts
under the Facility are secured by a security interest in substantially all of
the Borrowers' assets. The Facility contains restrictive covenants that require
minimum tangible net worth. The covenants also, among other things, prohibit the
payment of cash dividends on the Company's common stock, and limit (a) the
Company's ratio of debt to net worth on a consolidated basis, (b) the amount of
costs that the Company can incur in producing, financing or acquiring
entertainment properties, (c) the amount of costs and expenses that the
Borrowers may incur with respect to theatrical releases of films, and (d) the
Borrowers incurring losses for two consecutive quarters.
The Facility replaces the Company's previous credit facility with Atlantic Bank
of New York that permitted borrowings of up to $2,500,000 (the "Atlantic
Facility"). Proceeds from the Facility were utilized to repay the Atlantic
Facility in full. Other proceeds from loans under the Facility have been, and
will be, used for working capital purposes, including enabling the Borrowers to
acquire distribution rights with respect to entertainment programming.
In April 1997, the Company completed a $1,000,000 private offering of Units,
each consisting of: (i) a $250,000 principal amount 10% Convertible Subordinated
Note due June 30, 2003
Page 7
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Notes to Consolidated Financial Statements
June 30, 1997
2. Financing (continued)
convertible into the Company's common stock, par value $.01 per share ("Common
Stock") at a price of $4.50 per share (a "Note"); and (ii) Warrants to purchase
25,000 shares of the Common Stock, at an exercise price of $6.00 per share
("Warrant"), expiring June 30, 2003. The Warrants and Notes are redeemable by
the Company under certain circumstances. The Units and the securities comprising
the Units were offered in a private placement. The shares of Common Stock
issuable upon exercise and conversion of the Notes and Warrants have since been
registered under the Securities Act of 1933 (the "Act"). During the first
quarter, the Company sold $250,000 of Notes. A total of 100,000 Warrants were
issued in conjunction with this offering. The Company incurred a finder's fee of
approximately $75,000 in total and 60,000 five year warrants with an exercise
price of $4.50.
In the quarter ended March 31, 1997, the Company sold in a private offering
$250,000 of the total $6,222,500 of Units sold, each consisting of: (I) a
$250,000 principal amount 10% Convertible Subordinated Note due June 30, 2003
convertible into the Company's common stock, par value $.01 per share ("Common
Stock") at a price of $4.50 per share (a "Note"); and (ii) Warrants to purchase
25,000 shares of the Common Stock, at an exercise price of $6.00 per share
("Warrant"), expiring June 30, 2003. The Warrants and Notes are redeemable by
the Company under certain circumstances. The Units and the securities comprising
the Units were offered in a private placement. The shares of Common Stock
issuable upon exercise and conversion of the Notes and Warrants have since been
registered under the Act. A total of 622,250 Warrants were issued in conjunction
with this offering. The Company incurred placement and finders' fees of $319,000
and 235,000 five year warrants with an exercise price of $4.50.
3. Acquisitions
In March 1997 the Company acquired all of the capital stock of Miramar Images,
Inc. ("Miramar"), a producer and distributor of music videos and audio
recordings primarily for the New Adult Contemporary market, for an aggregate
purchase price of approximately 291,000 shares of the Company's common stock.
The Company's shares had an aggregate fair market value of approximately
$1,300,000 as of the closing date and were issued and delivered to certain
creditors and shareholders of Miramar in exchange for the capital stock and
Miramar debt. It is expected that almost all of such shares will be liquidated
periodically during the next six month period primarily to enable the
shareholders and certain other creditors to repay debt they have incurred to
institutional lenders. To the extent the proceeds from the sale of approximately
243,000 of such shares are not at least approximately $1,100,000 in one year
following the closing of the acquisition, the Company has agreed to pay in cash
the amount of such shortfall. Additionally, Miramar's shareholders received
approximately 22,500 shares of Common Stock of the Company having an aggregate
fair market value of approximately $100,000 as of the closing date. The
acquisition of Miramar is being accounted for as a purchase and the Company
recorded $2,811,000 of excess cost over net assets in connection with the
acquisition.
Page 8
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Notes to Consolidated Financial Statements
June 30, 1997
3. Acquisitions (continued)
In connection with the acquisition, the Company entered into a four-year
employment agreement with the current president of Miramar providing for, among
other things, an annual salary of $125,000 per year, a performance bonus equal
to 5% of Miramar's pre-tax profit (as defined), and one-half of one percent of
the increase of the gross revenues of Miramar over its revenues for the
immediately preceding year. In addition, for each fiscal year commencing on or
after January 1, 1998, if such increase in revenues is equal to or greater than
20% of such precedings year's gross revenues, then the president also will
receive one-half of one percent of the excess of such previous year's gross
revenues over the gross revenues realized by Miramar during the second
immediately preceding fiscal year. The Company also issued an aggregate of
210,000 stock options to Miramar employees and consultants (including the
current president). Each option entitles the holder to purchase one share of the
Company's Common Stock at a purchase price of $4.375 (i.e. $.125 above the
market price of the Company's Common Stock on the closing date of the
acquisition), subject to the holder's continuing to be employed by the Company.
The options have a term of ten years, but, subject to certain exceptions, will
not be exercisable for a period of 9.5 years unless Miramar's operations attain
certain earnings thresholds.
4. Film costs
The Company's film costs include:
June 30,
1997
--------------
(In thousands)
Films released $ 43,531
Films completed but not released 1,673
Films in process 8,019
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53,223
Accumulated amortization (32,260)
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$ 20,963
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Page 9
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Notes to Consolidated Financial Statements
June 30, 1997
5. Net income (loss) per common share
Net income (loss) per common share ("EPS") is based upon the weighted
average number of common shares and common share equivalents outstanding during
each period.
For the quarters and six months ended June 30, 1997 and 1996, the weighted
average shares consist of common shares outstanding. This amount does not
include the assumed conversion of any warrants, options or other convertible
securities as the impact of such conversions on the EPS calculation would be
antidilutive.
The number of shares and net income per share for the three and six months
ended June 30, 1996 have been restated to reflect the 5% stock dividend paid in
the second quarter of 1996.
Earnings per share was determined by dividing net income, as adjusted
below, by applicable shares outstanding (in thousands):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net income as reported $ 255 $ 18 $ 491 $ 247
Preferred stock dividends (28) (37) (61) (74)
------- ------- ------- -------
Total income used for earnings per share $ 227 $ (19) $ 430 $ 173
======= ======= ======= =======
Weighted average number of common and
common equivalent shares 5,903 5,227 5,646 5,224
======= ======= ======= =======
</TABLE>
Page 10
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Three Months Ended June 30, 1997 Compared with Three Months Ended June 30, 1996
Revenues for the three months ended June 30, 1997 increased by 41% to $7,535,000
from $5,353,000 in the same three month period in 1996. This increase in
revenues is partially due as a result of the increase in licensing and
distribution revenues by 44% to $3,328,000 as compared to $2,304,000 in 1996.
This increase reflects the Company's aggressive growth in high quality
non-fiction product acquisition and production. Management expects that the
improvement over the prior year will continue throughout 1997. Home video
revenues also increased by 38% to $4,207,000 from $3,049,000 in 1996. The
increase is primarily attributable to the Company's releasing stronger titles
into the video rental marketplace. The increase also reflects the beginning of
the contribution of its acquisition of Miramar Images, Inc., which occurred late
in the first quarter. The Company expects to recognize substantial growth in the
Home Video market throughout the remainder of 1997. This growth will be
generated by Miramar Images, Inc. phasing out of its start-up period and into
aggressive market penetration, as well as by the Company's emphasis on
distributing higher quality films to the rental marketplace and non-fiction
titles to the sell-through marketplace.
Licensing and distribution costs have increased by 47% to $2,366,000 from
$1,610,000 in 1996. This increase reflects increased royalty, amortization and
other film expenses associated with the higher levels of revenues described
above. Home video costs for the three months ended June 30, 1997 increased by
23% to $2,613,000 from $2,121,000 as compared to the corresponding period in
1996. This increase reflects increased royalty, amortization and other film
expenses associated with the higher levels of revenues described above.
General and administrative costs were $1,807,000 for the three months ended June
30, 1997, as compared to $1,584,000 in the same period in 1996. This increase in
costs reflects a full quarter of expense relating to the acquisition of Miramar.
The Company had income from operations of $749,000 for the three months ended
June 30, 1997, as compared to $39,000 in the same period in 1996. This
improvement in margins reflects the result of the Company's releasing higher
quality releases into the licensing and distribution and video rental and
sell-through markets.
Interest expense and financing expense increased to $297,000 in 1997 from $9,000
in 1996. This increase primarily reflects the interest and related expenses on
the 10% Convertible Notes issued after the second quarter of 1996 and in 1997,
as well as increased bank borrowings.
The Company had income before taxes of $452,000 for the three months ended June
30, 1997 as compared to income before taxes of $30,000 for the corresponding
three month period in 1996. This improvement reflects the higher quality
releases into the Company's various markets. Management anticipates that as the
number of higher quality releases to the video rental and sell through markets
and the licensing and distribution markets increase in 1997, the impact on
operations should continue to be favorable.
Page 11
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results of Operations
Six Months Ended June 30, 1997 Compared with Six Months Ended June 30, 1996
------------- -------------
Revenues for the six months ended June 30, 1997 increased by 32% to $13,972,000
from $10,585,000 in the same six month period in 1996. This increase in revenues
is primarily due to the increase in licensing and distribution revenues by 75%
to $6,136,000 as compared to $3,498,000 in 1996. This increase reflects the
Company's aggressive growth in high quality non-fiction product acquisition and
production. Management expects that the improvement over the prior year will
continue throughout 1997. Home video revenues increased by 11% to $7,835,000
from $7,087,000 in 1996. The increase is partially attributable to the Company's
releasing stronger titles into the video rental marketplace. The increase also
reflects the beginning of the contribution of its acquisition of Miramar Images,
Inc., which occurred late in the first quarter. The Company expects to recognize
substantial growth in the Home Video market in the second half of 1997. This
growth will be generated by Miramar Images, Inc. phasing out of its start-up
period and into aggressive market penetration, as well as by the Company's
emphasis on distributing higher quality films to the rental marketplace and
non-fiction titles to the sell-through marketplace.
Licensing and distribution costs have increased by 85% to $4,298,000 from
$2,322,000 in 1996. This increase reflects increased royalty, amortization and
other film expenses associated with the higher levels of revenues described
above. Home video costs for the six months ended June 30, 1997 increased by 8%
to $5,029,000 from $4,663,000 as compared to the corresponding period in 1996.
This increase reflects increased royalty, amortization and other film expenses
associated with the higher levels of revenues described above.
General and administrative costs were $3,342,000 for the six months ended June
30, 1997, as compared to $3,158,000 in the same period in 1996. This increase in
costs reflects a full quarter of expense relating to the acquisition of Miramar
Images, Inc.
The Company had income from operations of $1,302,000 for the six months ended
June 30, 1997, as compared to $444,000 in the same period in 1996. This
improvement in margins reflects the result of the Company's releasing higher
quality releases into the licensing and distribution and video rental and
sell-through markets.
Interest expense and financing expense increased to $449,000 in 1997 from
$23,000 in 1996. This increase primarily reflects the interest and related
expenses on the 10% Convertible Notes issued after the second quarter of 1996
and in 1997, as well as increased bank borrowings.
The Company had income before taxes of $853,000 for the six months ended June
30, 1997 as compared to income before taxes of $421,000 for the corresponding
six month period in 1996. This improvement reflects the higher quality releases
into the Company's various markets. Management anticipates that as the number of
higher quality releases to the video rental and sell through markets and the
licensing and distribution markets increases in 1997, the impact on operations
should continue to be favorable.
Page 12
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources
For the six months ended June 30, 1997, the Company utilized net cash for
operating activities of $4,206,000, primarily as a result of the $10,699,000
incurred in acquiring, producing and promoting new properties for the home
video rental and the licensing and distribution markets. Operating cash
requirements were primarily met by cash inflows from operations, cash on hand,
the proceeds of the private offerings of 10% Convertible Subordinated Notes,
described below, and the utilization of the Company's credit facility.
In the normal course of business the Company makes certain guarantees to
producers and other third parties as to the minimum amount such parties will
receive from the Company's distribution of their products. The Company has
committed to pay film acquisition advances and guarantees of approximately
$2,000,000 as of June 30, 1997, which amounts are payable upon delivery of the
films. The Company also expects to incur significant additional costs relating
to its continued expansion. In order to meet its future funding needs the
Company will utilize cash on-hand (including cash from the financings described
below), operating cash flows, its line of credit and other potential financings.
On May 2, 1997, the Company entered into a credit facility (the "Facility") with
Imperial Bank (the "Bank") providing for borrowings of up to $7,000,000. The
Facility replaces the Company's previous credit facility with Atlantic Bank of
New York that permitted borrowings of up to $2,500,000 (the "Atlantic Facility")
(see footnote 2 for further details). Proceeds from the Facility were utilized
to repay the Atlantic Facility in full. Other proceeds from loans under the
Facility have been, and will be, used for working capital purposes, including
enabling the Borrowers to acquire distribution rights with respect to
entertainment programming.
As of June 30, 1997, under the Imperial Facility, the Company had borrowed
$4,291,000 and had remaining availability of $2,300,000.
In the first Quarter, the Company sold in a private offering $250,000 of the
total $6,222,500 of Units sold, each consisting of: (I) a $250,000 principal
amount 10% Convertible Subordinated Note due June 30, 2003 convertible into the
Company's common stock, par value $.01 per share ("Common Stock") at a price of
$4.50 per share (a "Note"); and (ii) Warrants to purchase 25,000 shares of the
Common Stock, at an exercise price of $6.00 per share ("Warrant"), expiring June
30, 2003. The Warrants and Notes are redeemable by the Company under certain
circumstances. The Company incurred placement and finders' fees of $319,000 and
235,000 five year warrants with an exercise price of $4.50 (for further details
concerning this private placement see footnote 2).
In April 1997, the Company completed a $1,000,000 private offering of Units,
each consisting of: (i) a $250,000 principal amount 10% Convertible Subordinated
Note due June 30, 2003 convertible into the Company's common stock, par value
$.01 per share ("Common Stock") at a price of $4.50 per share (a "Note"); and
(ii) Warrants to purchase 25,000 shares of the Common Stock, at an exercise
price of $6.00 per share ("Warrant"), expiring June 30, 2003.
Page 13
<PAGE>
UNAPIX ENTERTAINMENT, INC.
Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Capital Resources (continued):
The Warrants and Notes are redeemable by the Company under certain
circumstances. The Company incurred finder's fees of approximately $75,000 and
60,000 five year warrants with an exercise price of $4.50.
During the third quarter of 1997 the Company commenced an offering to a select
group of accredited investors, of up to 20 units ("Units") of its securities,
each priced at $250,000 and consisting of: (i) a $250,000.00 principal amount
10% Convertible Subordinated Note due June 30, 2004, convertible into Common
Stock at a price of $5.00 per share (a "Note"); and (ii) warrants to purchase
25,000 shares of Common Stock at an exercise price of $6.00 per share expiring
June 30, 2004 ("Warrants"). The Notes and Warrants and the shares of Common
Stock issuable upon the conversion or exercise of the Notes and Warrants are
being offered in Private Placement, pursuant to an exemption to the
registration requirements of the Securities Act of 1933, as amended. The
purchasers of the Units will have certain registration rights with respect to
the shares of Common Stock issuable upon the conversion or exercise of the Notes
or warrants. There is no assurance that the private placement will be
successfully completed.
The feature film and television licensing and distribution industries require
significant expenditures of funds to establish and expand a library of films and
programs from which revenues may be generated. The Company could be dependent
upon future financings to continue its long term plans of expansion and growth.
The Company anticipates that as its asset base grows it will secure an increased
working capital line of credit as well as explore other film acquisition
financing arrangements. The Company may also have debt or equity
financings in addition to that described above.
Except for the historical information contained herein, the matters discussed
are forward-looking statements that are subject to risks and uncertainties,
including those factors described in "FACTORS WHICH MAY AFFECT RESULTS"
contained in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1996 (which has been filed with the Securities and Exchange
Commission).
Page 14
<PAGE>
UNAPIX ENTERTAINMENT, INC.
PART II - OTHER INFORMATION
Items 1 and 3 are not applicable.
Item 2. Changes in Securities
(a) and (b) are not applicable
(c) As previously reported, in April 1997 the Company sold a total of
three Units of its securities. Each Unit was priced at $250,000 and consisted
of (I) a $250,000 principal amount 10% Convertible Subordinated Note due June
30, 2003, convertible into the Company's common stock, $.01 par value per share
("Common Stock"), at a price of $4.50 per share; and (ii) 25,000 common stock
purchase warrants, each entitling the holder to purchase one share of Common
Stock at a price of $6.00 per share and expiring June 30,2003. Two of such
Units were purchased by a single investor and the other Unit was purchased by
another investor. The offering was made pursuant to the exemption contained in
Section 4(2) of the Securities Act of 1933, as amended (the "Act"). All of the
investors were "accredited" (as such term is defined in Rule 501 of Regulation D
promulgated under the Act). In connection with the sale of the three Units, the
Company paid a finder's fee of: $56,250 in cash; and 45,000 common stock
purchase warrants, each entitling the holder to purchase one share of Common
Stock at a price of $4.50 per share and expiring December 2001 (the "Finder Fee
Warrants"). The Finder Fee Warrants were issued pursuant to the exemption
contained in Section 4(2) of the Act. See Footnote [2] to the Financial
Statements in this Report.
A total of 987 shares of Common Stock are issuable to a public relations
firm as partial consideration for services rendered during the second quarter of
1997. The shares were issued pursuant to the exemption contained in Section 4(2)
of the Act.
Items 4 and 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K in connection with
its acquisition of all of the capital stock of Miramar Images, Inc. ("Miramar"),
which was effectuated on March 17, 1997. The date of the Report was May 30, 1997
and it contained Audited Financial Statements of Miramar for the years 1995 and
1996 as well as unaudited financial statements of Miramar for each of the three
month periods ended March 31, 1996 and 1997. Pro Forma Financial Statements
reflecting the purchase of Miramar were also filed with the Report.
Page 15
<PAGE>
UNAPIX ENTERTAINMENT, INC.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Unapix Entertainment, Inc.
/s/ Daniel T. Murphy Chief Financial Officer August 13, 1997
- -------------------------
Daniel T. Murphy
Page 16
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