<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
Commission File Number 1-11976
UNAPIX ENTERTAINMENT, INC.
(Exact name of small business issuer as
specified in charter)
Delaware 95-4404537
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification number)
200 Madison Avenue
New York, NY 10016
(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 November 10,1999 there were 10,214,049 shares of the Company's common
stock outstanding.
Page 1
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
ASSETS
<S> <C> <C>
Cash $ 3,427 $ 1,707
Accounts receivable-trade, net 19,121 18,968
Film costs, net 43,875 36,525
Product inventory 3,472 2,978
Property and equipment, net 1,062 1,037
Other assets 4,160 1,389
Excess of cost over fair value of
net assets acquired 3,148 3,279
------------- ------------
Total Assets $ 78,265 $ 65,883
------------- ------------
------------- ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable and accrued expenses $ 10,020 $ 8,845
Deferred income taxes 1,223 1,104
Royalty payable 4,811 5,234
Revolving Credit 25,413 --
Bank line of credit -- 9,978
Variable rate senior subordinated notes 699 2,608
10% convertible subordinated notes 4,875 13,343
------------- ------------
Total Liabilities $ 47,041 $ 41,112
------------- ------------
------------- ------------
Stockholders' Equity:
Preferred stock; $.01 par value; 3,000,000 authorized
Cumulative convertible Series A 8% preferred stock;
501,000 issued and outstanding (aggregate liquidation
preference of $1,503) 5 5
Non-voting convertible Series B 6% preferred stock;
300 shares issued and outstanding, (aggregate
liquidation preference of $3,000) -- --
Cumulative Convertible Series C 8% preferred stock;
1,175 and 675 shares issued and outstanding (aggregate
liquidation preference of $1,175) -- --
Common stock $.01 par value per share; 40,000,000 authorized;
10,163,000 and 7,515,000 shares issued and outstanding 102 76
Additional paid-in capital 34,387 26,695
Notes receivable from equity sales (2,598) (2,715)
Retained Earnings (Deficit) (672) 710
------------- ------------
Total Stockholders' Equity $ 31,224 $ 24,771
------------- ------------
Total Liabilities and Stockholders' Equity $ 78,265 $ 65,883
------------- ------------
------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements
Page 2
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Three Months Ended September 30,
1999 1998
---- ----
<S> <C> <C>
Revenues:
Licensing and distribution $ 5,307 $ 3,040
Home video 5,807 5,843
-------- -------
11,114 8,883
-------- -------
Operating costs:
Licensing and distribution 3,957 2,327
Home video 3,374 3,839
General and administrative expenses 2,692 3,044
Amortization of goodwill 44 43
-------- -------
10,067 9,253
-------- -------
Income loss from operations 1,047 (370)
Interest and debt expense, net 768 408
Debt conversion expense (non-cash) 1,270 --
-------- -------
2,038 408
-------- -------
Income (loss) before taxes and extraordinary item (991) (778)
Provision (credit) for income taxes 126 (303)
-------- -------
Income (loss) before extraordinary item (1,117) (475)
Extraordinary item (net of $320 tax benefit) (714) --
-------- -------
Net (loss) income $ (1,831) $ (475)
-------- -------
-------- -------
Loss per common share - basic and diluted
Loss before extraordinary item $ (.16) $ (.07)
Extraordinary item (.09) --
-------- -------
$ (.25) $ (.07)
-------- -------
-------- -------
Average common stock - basic and diluted 7,804 7,440
-------- -------
-------- -------
</TABLE>
See accompanying notes to consolidated financial statements
Page 3
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1999 1998
---- ----
<S> <C> <C>
Revenues:
Licensing and distribution $ 14,156 $ 8,839
Home video 17,392 16,775
------------ ------------
31,548 25,614
------------ ------------
Operating costs:
Licensing and distribution 8,040 6,124
Home video 11,369 9,808
General and administrative expenses 8,497 8,373
Amortization of goodwill 132 129
------------ ------------
28,038 24,434
------------ ------------
Income (loss) from operations 3,510 1,180
Interest and debt expense, net 2,077 1,282
Debt conversion expense (non-cash) 1,270 --
------------ ------------
3,347 1,282
------------ ------------
Income (loss) before taxes and extraordinary item 163 (102)
Provision (credit) for income taxes 610 (35)
------------ -------------
Income (loss) before extraordinary item (447) (67)
Extraordinary item (net of $320 tax benefit) (714) --
------------ ------------
Net (loss) income $ (1,161) $ (67)
------------ ------------
------------ ------------
Less per common share - basic and diluted
Less before extraordinary item $ (.10) $ (.03)
Net income per share, diluted (.09) --
------------ ------------
$ (.19) $ (.03)
------------ ------------
------------ ------------
Average common stock - basic and diluted 7,642 6,537
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements
Page 4
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1999 1998
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,161) $ (67)
Adjustments to reconcile net loss to net cash used by operating
activities:
Amortization and depreciation 10,726 9,985
Deferred income taxes 119 (44)
Deferred charges 524 --
Accretion of debentures discount 133 81
Charge for debt conversion 1,270 --
Film rights received -- (368)
Decrease (increase) in accounts receivable, net (153) (5,575)
(Increase) decrease in product inventory (494) (704)
Increase in other assets (1,287) (22)
Increase in accounts payable and
accrued expenses 1,174 979
Increase (decrease) in royalties payable (424) 844
-------- --------
Total cash flows provided by operating activities 10,427 5,109
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Film cost expenditures (17,277) (17,337)
Purchase of property and equipment (253) (297)
-------- --------
Total cash flows used by investing activities (17,530) (17,634)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from 10% convertible notes private placement -- 4,063
Payments of 10% convertible notes (5,595) --
Borrowing under bank line of credit 4,499 2,608
Repayments under bank line of credit (14,477) --
Borrowing under revolving credit 25,413 --
New financing expenditures (1,496) --
Proceeds from employee notes receivable -- --
Proceeds from warrant and option exercises -- 4,825
Private placement expenditures -- (6)
Preferred stock dividends (21) (59)
Advances from affiliates 675 700
Payments to affiliates (675) (1,100)
Proceeds from issuance of preferred shares 500 2,815
-------- --------
Total cash flows from financing activities $ 8,823 $ 13,846
-------- --------
</TABLE>
See accompanying notes to consolidated financial statements
Page 5
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended September 30,
1999 1998
---- ----
<S> <C> <C>
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS $1,720 $1,321
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 1,707 425
------ ------
CASH AND EQUIVALENTS AT END OF PERIOD $3,427 $1,746
------ ------
------ ------
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES:
Preferred stock dividends paid in common stock $ 204 $ 36
Exchange of acquisition fund for 10% convertible subordinated debentures -- 1,000
Notes received for exercise of warrants -- 779
Common stock issued for film rights 440 --
Common stock issued for conversion of debt 6,480 --
------ ------
------ ------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $1,912 $1,410
------ ------
------ ------
Cash paid for taxes $ 165 $ 105
------ ------
------ ------
</TABLE>
See accompanying notes to consolidated financial statements
Page 6
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
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 nine-month period
ended September 30, 1999 are not necessarily indicative of the results that may
be expected for the year ended December 31, 1999. 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, 1998.
2. FINANCING
On September 28, 1999, Unapix Entertainment, Inc. (the "Company") and its direct
and indirectly owned subsidiaries (collectively, the "Borrowers") entered into a
credit facility (the "Facility") with General Electric Capital Corporation
("GECC") providing for borrowings of up to $40,000,000 (the "Maximum Amount").
Loans are extended and required to be repaid based upon the then "Borrowing
Base" [as such term is defined in the Credit and Security Agreement, dated
September 28, 1999 (the "Credit Agreement"), by and among Borrowers and GECC].
The Borrowing Base consists of certain of the Company's accounts receivable and
other contractual rights to payment as well as a specified amount that the
Borrowers are permitted to borrow based upon the value of their library of films
and other entertainment programming (such portion of the borrowing base is
referred to as the "Library Credit"). The Library Credit is initially
$26,000,000 and is required to be reduced by $500,000 per quarter, $1,000,000
per quarter, $2,000,000 per quarter and $3,000,000 per quarter during the
second, third, fourth and fifth years of the Facility respectively. The Library
Credit also is required to be pre-paid under certain other circumstances. The
Maximum Amount will be reduced by an amount equal to the amount that the Library
Credit is reduced. Voluntary prepayments are subject to certain restrictions and
a prepayment premium of 2%. The Borrowers paid to GECC a closing fee of $200,000
in addition to GECC's out-of-pocket expenses incurred in connection with the
transaction. The Borrowers are also required to pay an unused line fee (the
"Unused Line Fee") at a rate that is initially 0.5% per annum of the sum by
which a Maximum Amount exceeds the average daily closing loan balance of the
loans outstanding under the Facility during the period for which such fee is
due.
Interest on the outstanding loan balance accrues at a rate equal to, at the
Borrower's option, either (i) a floating rate equal to the "Index Rate" plus the
"Applicable Margin" (as such terms are defined below" or (ii) a fixed rate for
the periods of one, two or three months equal to the reserve adjusted London
Interbank Offered Rate ("LIBOR RATE") plus the Applicable Margin. The "Index
Rate" is the higher of the prime rate as reported by The Wall Street Journal or
the overnight Federal Funds rate plus 50 basis points. The "Applicable Margin"
for the Index Rate loan is initially 1.25% per annum and the "Applicable Margin"
for the LIBOR loan initially 3.25% per annum. Commencing with the fiscal quarter
ended September 30, 2001, the Applicable Margins will be increased or decreased
quarterly based upon the Borrowers'consolidated fixed charge coverage ratio for
the immediate preceding four quarters.
The term of the Facility expires on September 28, 2004. Outstanding amounts
under the Facility are secured by security interest in substantially all the
Borrowers' assets. The Facility contains restrictive coverage that require the
Company to maintain minimum fixed charge coverage ratios, to achieve minimum
"EBITDA" (earnings before interest, taxes, depreciation and amortization)
thresholds, and to maintain minimum ratios of film library values to accounts
payable and certain other costs, all determining monthly based upon the
preceding 12 months. The covenants also, among other things, limit the payments
of cash dividends of the Company's common stock and restrict (i) the amount of
costs that the Company can incur in developing, producing, financing or
acquiring entertainment properties, (iii) the amount of costs and expenses that
the Borrowers may incur with respect to theatrical release of film and (iv) the
amount of unreleased completed product.
The Facility replaces the Company's previous credit facility with Imperial
Bank that permitted borrowing of up to $18,000,000 (the "Imperial Facility").
Proceeds from the Facility were utilized to repay the Imperial Facility in
full. Approximately $6,000,000 of proceeds were used to repurchase $5,595,000
principal amount of the Company's outstanding subordinated indebtedness
together with accrued and unpaid interest and a prepayment premium thereon.
In connection with such repurchase, an additional $5,395,000 principal amount
of subordinated indebtedness (as well as accrued and unpaid interest
Page 7
<PAGE>
and prepayment premiums thereon) was converted into, or exchanged for, shares
of the Company's common stock at a price of $2.51875 per share. A total of
2,282,375 shares were issued in connection with such exchanges and
conversions. 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 the third quarter of 1999, a charge for debt conversion expense of $1,270,000
was recorded for the additional 504,000 shares of common stock issued to the
convertible debenture holders as an inducement to convert.
An extraordinary charge of $714,000 (net of a $350,000 tax benefit) related to
extinguishment of debt was also recorded in the quarter and includes premiums
paid in redemption of subordinated debentures and charging off deferred debt
expense and discount on the debentures and deferred debt expense on the previous
credit facility.
3. FILM COSTS
<TABLE>
<CAPTION>
September 30,
1999
--------------
(In thousands)
<S> <C>
Films released $ 97,065
Accumulated amortization (60,407)
-----------
36,658
Films in process 7,217
-----------
$ 43,875
-----------
-----------
</TABLE>
Page 8
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
4. NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per basic common share ("EPS") is computed by dividing the net
income available to common shareholders by the weighted average number of common
shares outstanding.
Net income per diluted share is computed by dividing the net income available to
common shareholders, adjusted on an as if converted basis, by the weighted
average number of common shares outstanding plus potential dilutive securities.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average basic shares outstanding 7,804 7,440 7,642 6,537
Effect of dilutive securities:
Options -- -- -- --
Warrants -- -- -- --
------- ------- ------- -------
Weighted average dilutive shares outstanding 7,804 7,440 7,642 6,537
------- ------- ------- -------
------- ------- ------- -------
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------- -------------------------------
1999 1998 1999 1998
---- ---- ---- ----
Loss before extraordinary item $(1,117) $ (475) $ (447) $ (67)
Preferred stock dividends (98) (78) (281) (128)
------- ------- ------- -------
Loss before extraordinary item used for earnings
per share (1,215) $ (553) $ (728) $ (195)
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
Page 9
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH THREE MONTHS ENDED SEPTEMBER
30, 1998
Revenues for the three months ended September 30, 1999 increased by 25% to
$11,114,000 from $8,883,000 in the same three month period in 1998. This
increase in revenues is largely the result of the increase in licensing and
distribution revenues of 74.6% to $5,307,000, as compared to $3,040,000 in 1998.
Revenues in the 1999 quarter includes $2,307,000 for licensing revenue and a
license of $3,000,000 of certain rights relating to 37 titles for which the
company has distribution rights. Management expects that the improvement over
the prior year will continue throughout 1999 as higher volume and margin genre
films are released. This growth should be generated by continued market
penetration, as well as by the Company's emphasis on licensing and distributing
higher quality films to the rental marketplace and non-fiction titles to the
sell-through marketplace.
Licensing and distributing costs for the three months ended September 30, 1999
increased by 70% to $3,957,000 from $2,327,000 as compared to the corresponding
period in 1998. This increase reflects increased film expenses associated with
the higher levels of revenues described above.
General and administrative costs were $2,692,000 for the three months ended
September 30, 1999, as compared to $3,044,000 in the same period in 1998, a
decrease of $352,000. This decrease is chiefly consisted of decreased staffing
and office costs related to the home video business.
The Company had income from operations of $1,047,000 for the three months ended
September 30, 1999, as compared to a loss of $370,000 in the same period in
1998. This improvement in margins reflects the result of the Company's releasing
higher quality releases into the licensing and distribution markets.
Interest expense and financing expense, net, increased to $766,000 in 1999 from
$408,000 in 1998. This increase primarily reflects the interest and related
expenses on the 10% Convertible Notes, as well as increased bank borrowings.
The Company had income before taxes and debt conversion of $281,000 for the
three months ended September 30, 1999 as compared to a loss before taxes of
$778,000 for the corresponding three month period in 1998. The increase is
primarily attributable to higher revenues from licensing and distribution.
See note 2 to consolidated financial statements for details of debt conversion
expense of $1,270,000 and extraordinary item of $714,000.
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1998
Revenues for the nine months ended September 30, 1999 increased by 23% to
$31,548,000 from $25,614,000 in the same nine month period in 1998. This
increase in revenues is largely the result of the increase in licensing and
distribution revenues of 60% to $14,156,000, as compared to $8,839,000 in 1998.
Management expects that the improvement over the prior year will continue
throughout 1999. The growth should be generated by continued market penetration,
as well as by the Company's emphasis on licensing and distributing higher
quality films.
Licensing and distributing costs for the nine months ended September 30, 1999
increased by 31% to $8,040,000 from $6,124,000 as compared to the corresponding
period in 1998. This increase reflects increased film expenses associated with
the higher levels of revenues described above.
General and administrative costs were $8,497,000 for the nine months ended
September 30, 1999, as compared to $8,373,000 in the same period in 1998, an
increase of $124,000. This increase includes $137,000 in costs for new business
activities.
The Company has income from operations of $3,510,000 for the nine months ended
September 30, 1999, as compared to $1,180,000 in the same period in 1998. The
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, net, increased to $2,076,000 in 1999
from $1,282,000 in 1998. This increase primarily reflects the interest and
related expenses on the 10% Convertible Notes, as well as increased bank
borrowings.
Page 10
<PAGE>
UNAPIX ENTERTAINMENT, INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED WITH NINE MONTHS ENDED SEPTEMBER
30, 1998 (CON'T.)
The Company had income before taxes and debt conversion of $1,434,000 for the
nine months ended September 30, 1999 as compared to a loss before taxes of
$102,000 for the corresponding nine month period in 1998.
See note 2 to consolidated financial statement for details of debt conversion
expense of $1,270,000 and extraordinary item of $714,000.
LIQUIDITY AND CAPITAL RESOURCES
For the nine months ended September 30, 1999, operating activities provided cash
of $10,427,000. The company used $17,530,000 in investing activities which
consisted primarily of $17,277,000 incurred in acquiring and producing new
properties for the home video rental and licensing and distribution markets. The
additional cash requirements were primarily met by proceeds of $8,823,000 from
financing activities which included $25,413,000 borrowed under the GE Capital
credit facility, $4,499,000 borrowed under the bank line of credit, $14,477,000
repayment of the Imperial credit facility, $5,595,000 to repurchase principal
amount of the Company's outstanding subordinated indebtedness, financing costs
of $1,496,000 for the GE Capital credit facility, and $500,000 proceeds from
private placement of preferred stock.
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
$3,400,000 as of September 30, 1999, which amounts are payable upon delivery of
the films. The Company also expects to incur significant additional cash flow
needs relating to its continued expansion. In order to meet its future funding
needs the Company will utilize cash on-hand (including cash from the financing
described below), operating cash flows, its line of credit and other potential
financing.
The Company's borrowing facility provides for borrowing of up to $40,000,000,
$26,000,000 secured by the Company's library of films and other entertainment
programming and $14,000,000 secured by accounts receivable. The proceeds from
loans under the facility have been, and will be, used for repayment of the
Imperial facility in full, repurchase $5,595,000 principal amount of the
Company's outstanding subordinated indebtedness and for working capital
purposes, including enabling the Borrowers to acquire distribuion rights with
respect to entertainment programming. As of September 30,1999, the Company has
borrowed $25,413,000 and had a remaining availability of $9,323,000.
The feature film and television licensing and distribution industries require
signigicant 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 additional debt or equity
financings.
Year 2000
The Company has undertaken a study of its technological systems to determine
their year 2000 compliance and to the extent of noncompliance, the required
remediation. The Company has generally completed this process of review. All
software in use is vendor supplied and has been upgraded to a current version
and is certified as year 2000 compliant. The Company believes it has identified
all non-compliant hardware and has replaced the non-compliant equipment. The
cost to complete such remediation was not material.
An assessment of the readiness of year 2000 compliance of third party entities
such as suppliers, banking institutions, customers and others is ongoing. As
with other companies in its industry, the Company is dependent on a number of
third parties for the supply of products and services that are themselves
dependent on computers. The Company's initial assessment of compliance by third
party entities is not yet completed, and therefore, the Company has not yet
developed any related contingency plans. Currently, the Company is unable to
predict the cause of the worst case year 2000 scenario nor the likelihood of any
third party not being year 2000 compliant or the direct or indirect costs to the
Company of non-compliance by third parties.
Page 11
<PAGE>
Except for the historical information contained herein, the matters discussed
are forward-looking statements that are subject to risks and uncertainties,
including the inherent unpredictability of the entertainment industry in which a
success of a product depends upon factors such as competition and audience
acceptance, which may bear little or no correlation to the Company's production
or other costs, as well as the other 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, 1998 (which has been filed with the Securities and
Exchange Commission). The highlighted risks should not be assumed to be the only
things to affect the Company's future performance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has a borrowing facility on which it incurs interest equal to 1.25%
per annum above the Index Rate which was 8.25% at September 30, 1999. A 1%
change in the Index Rate applied to the outstanding borrowings at September 30,
1999 would result in an increase or decrease in interest expense of $254,000 per
year.
Receivables from sales to foreign customers are generally denominated in U.S.
dollars. The Company has no significant foreign exchange gains or losses.
PART II - OTHER INFORMATION
ITEMS 1 AND 3 ARE NOT APPLICABLE.
ITEM 2. CHANGES IN SECURITIES
(A) and (B) are not applicable
In August 1999 the Company issued 200,000 shares of its common stock to
a licensor of certain programming as partial payment for the license of
certain distribution rights to programming. The 200,000 shares were
issued and sold pursuant to the exemption contained in Section 4 (2) of
the Securities Act of 1933, as amended. Other information required to
be reported hereunder has previously been reported on the Company's
Current Report on form 8-K for event of September 28, 1999 and the
Company's Quarterly Report on Form 10-Q for the Quarterly Period ended
June 30, 1999.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Information regarding the Company's Annual Meeting of Stockholders held
on July 29, 1999 was previously reported in the Company's Quarterly Report on
form 10-Q for the Quarterly Period ended June 30, 1999.
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
Financial Data Schedule
b) Reports on Form 8-K
c) The Company filed a Current Report on Form 8-K for an event on
September 28, 1999. The report covers the Company's closing on
a credit facility with General Electric Capital Corporation,
the repurchase of a portion of the Company's subordinated
indebtedness with the proceeds therefrom, and the conversion
into shares of common stock of a portion of such indebtedness.
Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
UNAPIX ENTERTAINMENT, INC.
/s/ CHERYL FREEMAN November 12, 1999
- -----------------------------------------
Cheryl Freeman, Chief Financial Officer
Page 13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,427
<SECURITIES> 0
<RECEIVABLES> 19,121
<ALLOWANCES> 0
<INVENTORY> 3,472
<CURRENT-ASSETS> 0
<PP&E> 1,062
<DEPRECIATION> 0
<TOTAL-ASSETS> 78,265
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0
5
<COMMON> 102
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<TOTAL-LIABILITY-AND-EQUITY> 78,265
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<CGS> 0
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<INCOME-TAX> 610
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<EXTRAORDINARY> 714
<CHANGES> 0
<NET-INCOME> (1,161)
<EPS-BASIC> (.19)
<EPS-DILUTED> (.19)
</TABLE>
