<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 2
TO
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) -- June 15, 1998
REGENT COMMUNICATIONS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 0-15392 31-1492857
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
50 EAST RIVERCENTER BOULEVARD
SUITE 180
COVINGTON, KENTUCKY 41011
(Address of principal executive offices)
(606) 292-0030
(Registrant's telephone number, including area code)
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ITEM 1. CHANGES IN CONTROL OF REGISTRANT.
On June 15, 1998, Regent Communications, Inc. (the "Company") acquired
control of 31 radio stations located in California, Arizona, Michigan and Ohio
through acquisitions of assets or stock for cash or by way of merger
transactions. The cash needed for these transactions was provided by bank
financing from the Company's senior credit facility with Bank of Montreal,
Chicago Branch, General Electric Capital Corporation and Bank One, Indianapolis,
NA, and by the proceeds from the sale of shares of the Company's convertible
preferred stock, most of which having full voting rights. Additional shares of
the Company's convertible preferred stock with full voting rights were issued in
the merger transactions.
Prior to these transactions, approximately 51.5% of the Company's
outstanding voting stock was held by Terry S. Jacobs. As a result of these
transactions, Mr. Jacobs now holds approximately 5.8% of the outstanding voting
stock of the Company. The Company's voting stock is now dispersed among numerous
stockholders with no single stockholder holding a majority. The Company's
largest single stockholder is Blue Chip Capital Fund II Limited Partnership
("Blue Chip"), which holds 1,702,718 shares of the Series C Convertible
Preferred Stock of the Company, representing approximately 23% of the Company's
outstanding voting stock. John H. Wyant is a beneficial owner and manager of the
general partner of Blue Chip as well as a beneficial owner and manager of the
general partner of Miami Valley Venture Fund L.P. ("Miami Valley"), which holds
300,479 shares of the Series C Convertible Preferred Stock of the Company. All
of these shares of Series C Convertible Preferred Stock were issued in exchange
for shares of common stock of Faircom Inc. in the merger of Faircom Inc. with
the Company on June 15, 1998. See Item 2 below. The Faircom Inc. common stock
was acquired by Blue Chip and Miami Valley upon conversion prior to the merger
of $7,500,000 in principal amount of subordinated notes of Faircom Inc.
Together, Blue Chip and Miami Valley hold approximately 27% of the Company's
outstanding voting stock.
The Company's next largest stockholder is Waller-Sutton Media Partners,
L.P. ("Waller-Sutton"), which purchased on June 15, 1998 1,000,000 shares of the
Series F Convertible Preferred Stock of the Company for $5,000,000 and acquired
an additional 400,640 shares of the Series C Convertible Preferred Stock of the
Company by having purchased for $1,500,000 certain subordinated notes of Faircom
Inc. which were ultimately converted into the Company's Series C Convertible
Preferred Stock in the merger of Faircom with the Company. See Item 2 below.
Waller-Sutton is managed by Waller-Sutton Management Group, Inc., of which
William H. Ingram is Chairman of the Board of Directors. Mr. Ingram holds
personally 50,000 shares of the Series F Convertible Preferred Stock of the
Company which he acquired on June 15, 1998 at $5.00 per share. These combined
holdings of Waller-Sutton and Mr. Ingram constitute approximately 19.5% of the
outstanding voting shares of the Company, not including warrants held by
Waller-Sutton and Mr. Ingram to purchase a total of 660,000 shares of the
Company's common stock for $5.00 per share. The exercise of these warrants could
increase Waller-Sutton's and Mr. Ingram's combined voting interest in the
Company to approximately 26%. Waller-Sutton and Mr. Ingram have agreed, subject
to certain conditions, to purchase an additional 1,050,000 shares of the Series
F Convertible Preferred Stock of the Company at $5.00 per share to finance
future acquisitions. Should this purchase occur, Waller-Sutton's and Mr.
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Ingram's combined voting interest in the Company, assuming exercise of their
warrants in full, could increase to approximately 30.7%.
In conjunction with these transactions, holders of approximately 82% of
the outstanding voting stock of the Company entered into a Second Amended and
Restated Stockholders' Agreement (the "Stockholders' Agreement") by which the
parties to the Stockholders' Agreement agreed to vote all of their shares for
the election of a specific group of seven individuals (to be identified from
time to time) as the Board of Directors of the Company. Initially, this group
will consist of Terry S. Jacobs, William L. Stakelin, Joel M. Fairman, William
H. Ingram, Richard Patterson, R. Glen Mayfield, and John H. Wyant, and the
voting agreements contained in the Stockholders' Agreement will assure their
election. These voting agreements are to remain in effect until the Company has
completed an underwritten public offering of the Company's common stock at not
less than $12.00 per share (equitably adjusted for any stock splits, reverse
stock splits, or stock dividends) and generating not less than $25,000,000 of
gross proceeds to the Company (excluding the effect of any over-allotment
option).
Under the terms of the Stockholders' Agreement, the Company has agreed
that, for so long as Waller-Sutton and the other purchasers of the Series F
Convertible Preferred Stock of the Company, and their permitted transferees, own
10% or more of the voting stock of the Company, the Company may not take or
permit to occur (and the parties to the Stockholders' Agreement will not consent
to, authorize or vote for) any of the following events or actions, unless such
has been approved in advance, in writing, by Waller-Sutton:
(a) any merger or consolidation of the Company with any other
entity, and any merger or consolidation of any subsidiary of the Company with
any other entity other than the Company or another wholly-owned subsidiary of
the Company;
(b) the purchase or lease by the Company or any subsidiary
thereof of any business or assets, other than the purchase or lease of assets in
the ordinary course of business (not to include the purchase or lease of any
radio broadcasting station or Federal Communications Commission ("FCC")
license), or the execution of any agreement providing for the purchase, lease,
construction or management of or in respect of radio broadcasting stations
(including time brokerage agreements and local marketing agreements and the
like);
(c) the sale of any assets of the Company or any subsidiary
thereof, or the execution of any agreement in respect thereof (other than the
sale of advertising time and excess or obsolete furniture, fixtures or equipment
in the ordinary course of business);
(d) the issuance or sale of any equity or debt securities of
the Company or any subsidiary thereof or any rights to acquire any of such
equity or debt securities (including options and warrants) or the issuance or
sale of stock appreciation or other "phantom" stock rights, other than permitted
issuances pursuant to existing agreements, or the execution of any agreements in
respect thereof;
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(e) the incurrence or assumption of any indebtedness for
borrowed money, secured by a lien, or pursuant to guaranties by the Company or
any subsidiary thereof, other than indebtedness permitted under the Company's
current senior debt facility;
(f) any change of control of the Company;
(g) any amendment to the Company's 1998 Management Stock
Option Plan or the adoption of any other stock option, stock purchase or
restricted stock appreciation right plan;
(h) any amendment to the Amended and Restated Certificate of
Incorporation or By-Laws of the Company;
(i) the execution by the Company or any party to the
Stockholders' Agreement of any voting, voting trust, registration rights or
stockholders agreements with respect to the Company or any of its shares of
capital stock (other than the Stockholders' Agreement and a Registration Rights
Agreement of even date therewith); or
(j) the execution by the Company of any contract or agreement
for the construction or management of radio stations.
The Stockholders' Agreement also provides for the obligation of the
Company to repurchase shares of the Company's convertible preferred stock held
by the parties to the Stockholders' Agreement after five years from date of
issuance if Waller-Sutton requests that the Company repurchase the Eligible Put
Shares (as defined therein) held by Waller-Sutton. In the event the Company
should fail to repurchase such shares within the time requirements set forth in
the Stockholders' Agreement (from a minimum of six months to as long as one
year, depending on the circumstances), Waller-Sutton would have the right under
the Stockholders' Agreement to require the election of such additional designees
of Waller-Sutton to the Board of Directors of the Company such that, after
giving effect thereto, the designees of Waller-Sutton elected to the Board under
the terms of the Stockholders' Agreement would constitute a majority of the
members of the Board. The exercise of such "put" rights could likely result in a
change of control of the Company.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On June 15, 1998, the Company consummated the following acquisitions:
1. The Company acquired all of the outstanding capital stock of Faircom
Inc., a Delaware corporation ("Faircom"), which, through its wholly-owned
subsidiaries, owns radio stations WFNT(AM) and WCRZ(FM) in Flint, Michigan;
WWBN(FM) in Tuscola, Michigan, a community north of Flint; WMAN(AM) and WYHT(FM)
in Mansfield, Ohio and WSWR(FM) in Shelby, Ohio, adjoining Mansfield. The
acquisition was accomplished by a merger of Faircom with and into Regent Merger
Corp., a wholly-owned subsidiary of the Company. The consideration paid to the
Faircom stockholders for the Faircom stock was 3,720,620 shares of the Company's
Series C Convertible Preferred Stock (stated value $5.00 per share). Pursuant to
Rule 12g-3 promulgated under the Securities Exchange Act of 1934, the Company's
Series C Convertible Preferred Stock is deemed registered under Section 12(g) of
the Securities Exchange Act of 1934. Options outstanding at the time of the
merger for the purchase of shares of Faircom's common stock were
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converted at the time of the merger into options for the purchase, on equivalent
terms, of 274,045 shares of Regent's Series C Convertible Preferred Stock. Upon
consummation of the merger, Joel M. Fairman, President of Faircom, became a Vice
Chairman and a Director of the Company, and the Company entered into an
agreement with Mr. Fairman providing for a two-year employment period and a
one-year consulting period, with annual compensation of $190,000, discretionary
annual bonuses, discretionary stock option awards, ownership of a term life
insurance policy paid for by the Company, an automobile allowance and certain
other benefits. John H. Wyant, an affiliate of Faircom's largest stockholder at
the time of the merger, became a director of the Company upon consummation of
the merger.
2. The Company acquired all of the outstanding capital stock of The
Park Lane Group, a California corporation which, through its wholly-owned
subsidiaries, owns radio stations KQMS(AM) and KSHA(FM) in Redding, California;
KPPL(FM), KFMF(FM) and KALF(FM) in Chico, California; KVOY(AM) and KTPI(FM) in
Palmdale, California; KROY(AM) and KATJ(FM) in Victorville, California; KAAA(AM)
and KZZZ(FM) in Kingman, Arizona; KOWL(AM) and KRLT(FM) in Lake Tahoe,
California; and KVNA(AM), KVNA(FM) and KZGL(FM) in Flagstaff, Arizona. The
purchase price for the stock was $17,467,737, paid in cash to the stockholders
of The Park Lane Group. In addition, at the time of the acquisition, the Company
entered into a one-year Consulting and Non-Competition Agreement with James H.
Levy, the President of The Park Lane Group, providing for the payment of a
consulting fee of $200,000 to Mr. Levy.
3. The Company acquired all of the outstanding capital stock of Alta
California Broadcasting, Inc. ("Alta") by virtue of a merger of Alta with and
into Regent Acquisition Corp., a wholly-owned subsidiary of the Company. The
purchase price for the stock was $2,000,000, paid in the form of $1,000,000 in
cash and 200,000 shares of the Company's Series E Convertible Preferred Stock
(stated value $5.00 per share). Of the 200,000 shares of Series E Convertible
Preferred Stock, 194,750 shares were issued to the seller, Redwood Broadcasting,
Inc.(of which 20,000 shares are currently being held in escrow pursuant to an
indemnification agreement between the Company and the seller), and 5,250 shares
were issued to Miller Capital Corp. as partial payment of commissions due and
payable to it by the seller. Prior to the merger, Alta was the owner, operator
and licensee of radio station KDRG(FM) in Shingleton, California and, through
its subsidiary, Northern California Broadcasting, Inc., KNNN(FM) in Central
Valley, California. Prior to the merger, Alta also acquired from Power Surge,
Inc., an affiliate of Alta, all of the assets used in the operation of radio
stations KRRX(FM) (formerly KARZ(FM)) in Burney, California and KNRO(AM) in
Redding, California.
4. The Company (through Regent Broadcasting of Kingman, Inc., a
wholly-owned subsidiary of the Company, and its wholly-owned subsidiary, Regent
Licensee of Kingman, Inc.) acquired from Continental Radio Broadcasting, L.L.C.
the FCC licenses and related assets used in the operation of radio stations
KFLG-AM and KFLG-FM in Bullhead City, Arizona. The purchase price for these
assets (other than the accounts receivable) was approximately $3,622,000 in
cash. The Company separately acquired the accounts receivable of these stations
for an additional cash purchase price of approximately $130,000.
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5. The Company acquired all of the outstanding capital stock of Topaz
Broadcasting, Inc. ("Topaz") by virtue of a merger of Topaz with and into Regent
Broadcasting of Victorville, Inc., a wholly-owned subsidiary of the Company
("Regent-Victorville"). Immediately following the merger, Regent-Victorville
acquired the assets used in the operation of radio station KIXA(FM) in Lucerne
Valley, California pursuant to an Asset Purchase Agreement between Topaz and
RASA Communications Corp. The consideration paid for the Topaz stock was 242,592
shares of the Company's Series E Convertible Preferred Stock (stated value $5.00
per share).
6. The Company acquired, through Regent Broadcasting of Victorville,
Inc., a wholly-owned subsidiary of the Company, and Regent Licensee of
Victorville, Inc., its wholly-owned subsidiary, the FCC licenses and related
assets used in the operation of radio stations KIXW(AM) and KZXY(FM) in Apple
Valley, California. The purchase price for these stations was $5,995,500 in
cash.
The terms of each of the foregoing acquisitions were arrived at and
agreed upon through arms' length negotiations between the parties. The Company
intends to continue to use the assets acquired in the foregoing acquisitions in
a manner consistent with their use prior to their acquisition by the Company.
The sources for the cash portion of the consideration paid by the
Company in the foregoing transactions, aggregating approximately $53,650,000
(including approximately $3,400,000 of transaction costs) were $34,400,000
borrowed under the Company's Credit Agreement with Bank of Montreal, Chicago
Branch, General Electric Capital Corporation and Bank One, Indianapolis, NA
("Credit Agreement"), $18,150,000 in additional equity from the sale of the
Company's convertible preferred stock, and approximately $1,100,000 of Company
funds. See Item 5 below.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
Effective with the Company's acquisition by merger on June 15, 1998 of
all of the outstanding capital stock of Faircom, the Company disengaged the
accounting firm of BDO Seidman, LLP and retained the accounting firm of
PricewaterhouseCoopers LLP to perform the annual audit of Faircom's financial
statements for 1998. PricewaterhouseCoopers LLP (successor to Coopers & Lybrand
L.L.P.) has been the auditor for the Company and its subsidiaries for all
fiscal years since the Company's formation in 1996. The change in accountants
for Faircom's financial statements from BDO Seidman, LLP to
PricewaterhouseCoopers LLP was precipitated by the Company's acquisition of
Faircom as its wholly-owned subsidiary and by the desire to have one accounting
firm responsible for the consolidated audited financial statements of the
Company. This action was approved by the Company's Board of Directors.
The reports of BDO Seidman, LLP on the financial statements of Faircom
for 1997 and 1996 contained no adverse opinion or disclaimer of opinion, nor
were they qualified or modified as to uncertainty, audit scope or accounting
principles.
During the 1997 and 1996 fiscal years and the interim period prior to
June 15, 1998, there were no disagreements between Faircom and BDO Seidman, LLP
on any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure or any reportable events which, if
not resolved to the satisfaction of BDO Seidman, LLP, would have caused BDO
Seidman, LLP to make reference to the subject matter of its disagreement in
connection with its report.
The Company requested that BDO Seidman, LLP furnish it with a letter
addressed to the SEC stating whether it agrees with the above statements. A copy
of this letter, dated March 30, 1999, is filed as Exhibit 16 to this Form 8-K/A.
ITEM 5. OTHER EVENTS.
New Debt
In order to finance the foregoing acquisitions and to provide
additional working capital, the Company borrowed $34,400,000 under its Credit
Agreement on June 15, 1998.
Additional Equity Capitalization.
On June 15, 1998, the Company issued additional equity as follows, the
proceeds of which were used to fund the Company's acquisitions completed on that
date:
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1. The Company issued to the purchasers set forth below a total of
2,050,000 shares of its Series F Convertible Preferred Stock at a purchase price
of $5.00 per share, and in conjunction therewith, issued to such purchasers
warrants to purchase a total of 860,000 shares of the Company's Common Stock at
$5.00 per share.
<TABLE>
<CAPTION>
Number of Shares Number of Warrants
Name of Purchaser Purchased Received
<S> <C> <C>
Waller-Sutton Media Partners, L.P. 1,000,000 650,000
WPG Corporate Development
Associates V, L.P. 562,900 112,580
WPG Corporate Development
Associates (Overseas) V, L.P. 87,100 17,420
General Electric Capital Corporation 250,000 50,000
River Cities Capital Fund Limited
Partnership 100,000 20,000
William H. Ingram 50,000 10,000
</TABLE>
These purchasers also have committed to purchase, on a pro rata basis, an
additional 2,050,000 shares of the Company's Series F Convertible Preferred
Stock at $5.00 per share to fund future acquisitions by the Company.
In addition, Waller-Sutton purchased $1,500,000 of certain Class A and
Class B Faircom Subordinated Notes from Blue Chip and Miami Valley, which were
converted into shares of Faircom's common stock and then exchanged in the merger
of Faircom and Regent Merger Corp. for 400,640 shares of the Company's Series C
Convertible Preferred Stock.
2. General Electric Capital Corporation ("GE Capital") paid $3,900,000
cash to complete its purchase of shares of the Company's Series B Senior
Convertible Preferred Stock, pursuant to the terms of its Stock Purchase
Agreement and Promissory Note dated December 8, 1997. In addition, the Company
issued to GE Capital a warrant to purchase 50,000 shares of the Company's Common
Stock at $5.00 per share.
3. BMO Financial, Inc. paid $3,900,000 cash for 780,000 shares of the
Company's Series D Convertible Preferred Stock.
4. William L. Stakelin, a member of the Company's Board of Directors,
as well as its President, Chief Operating Officer and Secretary, purchased
20,000 shares of the Company's Series A Convertible Preferred Stock at a
purchase price of $5.00 per share.
In addition to the preferred stock and warrants issued as described in
paragraphs numbered 1 through 4 above and the Series E Convertible Preferred
Stock issued in the Alta and Topaz mergers as described in Item 2 above, the
Company (a) granted options effective June 15, 1998 under the Company's 1998
Management Stock Option Plan to each of Terry S. Jacobs (the Chairman of the
Board, Chief Executive Officer, Treasurer and a director of the Company) and
William L. Stakelin (the President, Chief Operating Officer, Secretary and a
director of the Company) for the purchase of 608,244 shares of the Company's
Common Stock at a purchase price of $5.00 per share, and (b) issued to River
Cities Capital Fund Limited Partnership ("River Cities") on June 15, 1998 a
five-year warrant to purchase 80,000 shares of the Company's Common Stock at an
exercise price of $5.00 per share, as an inducement for River Cities, as an
existing holder of the Company's Series A Convertible Preferred Stock, to
approve the Company's merger with Faircom and the issuance of the Company's
Series C Convertible Preferred Stock in connection therewith.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Pursuant to generally accepted accounting principles, Faircom
Inc. was deemed the "accounting acquirer" in the merger that was consummated on
June 15, 1998 between Faircom Inc. and the Company and, thus, the historical
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financial statements of Faircom Inc. have become the historical financial
statements of the Company. The Form 10-K of Faircom Inc. for the year ended
December 31, 1997 and the Form 10-Q of Faircom Inc. for the quarter ended March
31, 1998, including all exhibits thereto, as filed with the Securities and
Exchange Commission on March 30, 1998 and May 14, 1998, respectively, are
incorporated herein by this reference.
In addition, the following financial statements and notes thereto are included
in this report or, where indicated, are incorporated by reference herein:
<TABLE>
<CAPTION>
Page
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REGENT COMMUNICATIONS, INC.
Consolidated Condensed Balance Sheets at March 31, 1998 (unaudited) and
December 31, 1997.......................................................F-4
Consolidated Condensed Statements of Operations for the three months
ended March 31, 1998 and 1997 (unaudited)...............................F-5
Consolidated Condensed Statements of Cash Flows for the three months
ended March 31, 1998 and 1997 (unaudited)...............................F-6
Notes to Consolidated Condensed Financial Statements......................F-7
THE PARK LANE GROUP AND SUBSIDIARIES
Consolidated Balance Sheets at March 31, 1998 and December 31, 1997.......F-9
Consolidated Statements of Operations for the three months ended
March 31, 1998 and 1997 (unaudited).....................................F-10
Consolidated Statements of Cash Flows for the three months ended
March 31, 1998 and 1997 (unaudited).....................................F-11
Notes to Consolidated Financial Statements................................F-12
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
Report of Independent Auditors Report.....................................F-13
Consolidated Balance Sheets at March 31, 1998 and 1997....................F-14
Consolidated Statements of Operations for the years ended March 31, 1998
and 1997................................................................F-15
Consolidated Statements of Stockholder's Deficit..........................F-16
Consolidated Statements of Cash Flows for the years ended March 31, 1998
and 1997................................................................F-17
Notes to Consolidated Financial Statements................................F-19
POWER SURGE, INC.
Balance Sheets at March 31, 1998 (unaudited) and December 31, 1997........F-26
Statements of Operations for the three months ended March 31, 1998
and 1997 (unaudited)....................................................F-27
Statements of Cash Flows for the three months ended March 31, 1998
and 1997 (unaudited)....................................................F-28
Notes to Financial Statements.............................................F-29
CONTINENTAL RADIO BROADCASTING L.L.C.
Balance Sheets at March 31, 1998 (unaudited) and December 31, 1997........F-30
Statements of Operations for the three months ended March 31, 1998
and 1997 (unaudited)....................................................F-31
Statements of Cash Flows for the three months ended March 31, 1998
and 1997 (unaudited)....................................................F-32
Notes to Financial Statements.............................................F-33
RADIO STATION KZXY (FM)
Report of Independent Accountants.........................................F-34
Statement of Net Assets Acquired at June 15, 1998.........................F-35
Notes to Financial Statement .............................................F-36
Statement of Revenues and Direct Expenses for the three months ended
March 31, 1998 and 1997 (unaudited).....................................F-37
Note to Statement of Revenues and Direct Expenses.........................F-38
</TABLE>
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<TABLE>
<S> <C>
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP (WYHT (FM) AND
WMAN (AM))
Report of Independent Accountants......................... *
Balance Sheets at November 30, 1996 and 1995.............. *
Statement of Partners' Deficit for the years ended
November 30, 1996 and 1995............................. *
Statement of Income for the years ended November 30, 1996
and 1995............................................... *
Statement of Cash Flows for the years ended November 30,
1996 and 1995.......................................... *
Notes to Financial Statements............................. *
Condensed Balance Sheets at May 31, 1997 and 1996
(unaudited)............................................ *
Condensed Statements of Operations for the six months
ended May 31, 1997 and 1996 (unaudited)................ *
Condensed Statements of Cash Flows for the six months
ended May 31, 1997 and 1996 (unaudited)................ *
Note to Interim Financial Statements...................... *
REGENT COMMUNICATIONS, INC.
Report of Independent Accountants......................... **
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... **
Consolidated Statements of Operations for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996.................. **
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 1997 and the period from
November 5, 1996 (inception) through December 31,
1996................................................... **
Consolidated Statements of Cash Flows for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996.................. **
Notes to Consolidated Financial Statements................ **
THE PARK LANE GROUP AND SUBSIDIARIES
Report of Independent Accountants......................... **
Consolidated Balance Sheets at December 31, 1997 and
1996................................................... **
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995....................... **
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1997, 1996 and 1995... **
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995....................... **
Notes to Consolidated Financial Statements................ **
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
Independent Auditors' Report.............................. **
Consolidated Balance Sheet at March 31, 1997.............. **
Consolidated Statement of Operations for the year ended
March 31, 1997......................................... **
Consolidated Statement of Stockholders' Equity
(Deficiency) for the year ended March 31, 1997......... **
Consolidated Statement of Cash Flows for the year ended
March 31, 1997......................................... **
Notes to Consolidated Financial Statements................ **
</TABLE>
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<TABLE>
<S> <C>
Consolidated Balance Sheet at December 31, 1997 (unaudited) **
Consolidated Statements of Operations for the nine months
ended December 31, 1996 and 1997 (unaudited)........... **
Consolidated Statement of Stockholder's Equity
(Deficiency) for the nine months ended December 31,
1997 (unaudited)....................................... **
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1996 and 1997 (unaudited)........... **
Notes to Consolidated Financial Statements................ **
POWER SURGE, INC.
Independent Auditors' Report.............................. **
Balance Sheet at December 31, 1997........................ **
Statement of Operations for the year ended December 31,
1997................................................... **
Statement of Stockholders' Equity for the year ended
December 31, 1997...................................... **
Statement of Cash Flows for the year ended December 31,
1997................................................... **
Notes to Financial Statements............................. **
CONTINENTAL RADIO BROADCASTING L.L.C.
Report of Independent Accountants......................... **
Balance Sheet at December 31, 1997........................ **
Statement of Operations for the year ended December 31,
1997................................................... **
Statement of Changes in Partners' Deficit for the year
ended December 31, 1997................................ **
Statement of Cash Flows for the year ended December 31,
1997................................................... **
Notes to Financial Statements............................. **
RADIO STATION KZXY(FM)
Report of Independent Accountants......................... **
Statement of Revenues and Direct Expenses for the years
ended December 31, 1997 and 1996....................... **
Notes to Statement of Revenues and Direct Expenses........ **
</TABLE>
* These financial statements, notes thereto and report thereon have been
previously filed, appearing under Item 7A on pages 4 through and including 23
of the Form 8-K/A, Amendment No. 2 to Current Report dated June 30, 1997
(filing date September 12, 1997), of Faircom Inc., and are incorporated herein
by this reference.
** These financial statements, notes thereto and reports thereon have been
previously filed, appearing on pages F-50 through and including F-102 and F-109
through and including F-130 of the Company's Form S-4 Registration Statement
No. 333-46435 effective May 7, 1998, and are incorporated herein by this
reference.
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REGENT COMMUNICATIONS, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
AT MARCH 31, 1998 AND DECEMBER 31, 1997
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 223,868 $ 1,013,547
Accounts receivable, net 1,375,251 1,507,623
Deposits held in escrow for station acquisitions 1,975,000 1,975,000
Assets Held for Sale 7,500,000 7,500,000
Other current assets 358,978 226,419
----------- -----------
Total current assets 11,433,097 12,222,589
Property and equipment, net 101,383 53,792
Other assets, net 2,072,180 1,089,462
----------- -----------
Total assets $13,606,660 $13,365,843
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 587,018 $ 526,004
Accrued expenses 1,463,805 655,078
Notes payable 7,500,000 7,500,000
----------- -----------
Total current liabilities 9,550,823 8,681,082
Redeemable preferred stock:
Series B Senior convertible preferred stock,
1,000,000 shares authorized, 1,000,000
issued and outstanding, $5.00 stated
value (liquidation value: $1,208,356 and
$1,122,055), net of subscription for
780,000 shares for $3,900,000 1,208,356 1,122,055
Series D convertible preferred stock, 1,000,000
shares authorized, 220,000 issued and
outstanding, $5,00 stated value (liquidation
value: $1,123,838 and $1,104,852) 1,123,838 1,104,852
----------- -----------
Total redeemable preferred stock 2,332,194 2,226,907
Shareholders' equity:
Preferred stock, $.01 par value; 20,000,000
shares authorized:
Series A convertible preferred stock,
620,000 shares authorized, 600,000 issued
and outstanding, $5.00 stated value
(liquidation value $3,153,214
and $3,119,268) 3,000,000 3,000,000
Series C convertible preferred stock,
4,000,000 shares authorized, none
issued or outstanding, $5.00 stated
value
Series E convertible preferred stock,
5,000,000 shares authorized, none issued
or outstanding, $5.00 stated value
Common stock, $.01 par value; 30,000,000 shares
authorized; 240,000 shares issued and
outstanding 2,400 2,400
Additional paid-in capital 465,997 571,285
Deficit (1,744,754) (1,115,831)
------------ -----------
Total shareholders' equity 1,723,643 2,457,854
------------ -----------
Total liabilities and shareholders'
equity $ 13,606,660 $13,365,843
============ ===========
</TABLE>
See notes to financial statements.
F-4
<PAGE> 12
REGENT COMMUNICATIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
---------- -----------
<S> <C> <C>
Broadcast revenue $2,564,175 $ 12,536
Less agency commissions 148,417 0
----------- ----------
Net revenue 2,415,758 12,536
Broadcast operating expenses 2,374,202 12,536
Time brokerage agreement fees, net 235,000 0
Depreciation and amortization 2,364 0
Corporate general and administrative
expenses 231,095 16,838
----------- ----------
Operating loss (426,903) (16,838)
Interest expense, net 203,928 0
Other income, net 1,908 4,105
----------- ----------
Net loss $ (628,923) $ (12,733)
=========== ==========
Loss applicable to common shares:
Net loss $ (628,923) $ (12,733)
Preferred stock dividend requirements (159,250) 0
----------- ----------
Loss applicable to common shares $ (788,173) $ (12,733)
=========== ==========
Basic and diluted net loss per common share $ (3.28) $ (.05)
=========== ==========
Shares used in basic and diluted per share
calculation 240,000 240,000
=========== ==========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 13
REGENT COMMUNICATIONS, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
1998 1997
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (628,923) $ (12,733)
Adjustments to reconcile net loss to net
cash used in operating activities
Barter, net 4,331 0
Depreciation 2,364 0
Changes in operating assets and liabilities:
Accounts receivable 132,373 (16,536)
Prepaid expenses and other current assets (132,559) 500
Accounts payable 61,014 3,596
Accrued expenses 385,727 1,509
----------- ----------
Net cash used in operating activities (175,673) (23,664)
----------- ----------
Cash flows from investing activities:
Cash paid for acquisition costs (559,718) (2,106)
Capital expenditures (54,288) 0
----------- ----------
Net cash used in financing activities (614,006) (2,106)
----------- ----------
Cash flows from financing activities:
Proceeds from the issuance of common stock 0 50,000
----------- ----------
Net cash provided by financing activities 0 50,000
----------- ----------
Net (decrease) increase in cash and cash
equivalents (789,679) 24,230
Cash beginning of period 1,013,547 0
----------- ----------
Cash end of period $ 223,868 $ 24,230
=========== ==========
Noncash investing and financing activities:
Accrued acquisition costs $ 423,000 $ 0
=========== ==========
</TABLE>
See notes to financial statements.
F-6
<PAGE> 14
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
These unaudited interim financial statements reflect all normal recurring
adjustments which are, in the opinion of management, necessary to present
fairly, in all material respects, the financial position of Regent
Communications, Inc. and its subsidiaries (the "Company") as of March 31, 1998
and December 31, 1997 and the results of operations and cash flows for the three
months ended March 31, 1998 and 1997. Because all of the disclosures required by
generally accepted accounting principles are not included, these interim
statements should be read in conjunction with the audited financial statements
and notes thereto for the year ended December 31, 1997. The year-end balance
sheet data was derived from the audited financial statements and does not
include all of the disclosures required by generally accepted accounting
principles. The statements of operations for the periods presented are not
necessarily indicative of results to be expected for any future period, nor for
the entire year.
The Company has adopted the provisions of Statement of Financial Accounting
Standards No. 128, Earnings Per Share ("SFAS 128"). SFAS 128 requires the
presentation of basic and diluted earnings per share. Basic earnings per share
is computed by dividing income (loss) available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share is computed giving effect to all dilutive potential common
shares that were outstanding during the period. The Company's convertible
preferred stock was anti-dilutive and, therefore, was not included in the
diluted earnings per share computation.
2. SIGNIFICANT EVENTS
In January 1998, the Board of Directors of the Company adopted the Regent
Communications, Inc. 1998 Management Stock Option Plan (the "1998 Plan"). The
1998 Plan provides for the issuance of up to 2,000,000 common shares in
connection with the issuance of nonqualified and incentive stock options. The
Company's Board of Directors determines eligibility. The exercise price of the
options is to be not less than the fair market value at the grant date, except
for any 10% owner (as defined), for whom the option share price must be at
least 110% of fair market value at the grant date. The options expire no later
than ten years from the date of grant, or earlier in the event a participant
ceases to be an employee of the Company. The Company intends to apply the
provisions of APB Opinion 25, "Accounting for Stock Issued to Employee," in
accounting for the 1998 Plan. Under APB 25, no compensation expense is
recognized for options granted to employees at exercise prices that are equal
to the fair market value of the underlying common stock at the grant date. The
Company had not issued options as of March 31, 1998.
In February 1998 and effective with the consummation of the merger with Faircom
Inc., the Board of Directors authorized a grant of incentive stock options to
the Chief Executive Officer and Chief Operating Officer of the Company. The
options will provide each of the holders with the right to acquire approximately
608,244 shares of the Company's common stock at an expected price per share of
$5.00. Of these options, 200,000 shares will be exercisable by each holder in
equal 10% increments beginning on the grant date and on each of the following
nine anniversary dates of the grants. The balance of the options will be
exercisable in equal one-third increments at the end of each of the first three
years following the grant. All options expire on February 28, 2008.
3. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997 the Financial Accounting Standard Board issued Statement No. 130
(SFAS 130), Reporting Comprehensive Income. SFAS 130 establishes standards of
disclosure and financial statement display for reporting total comprehensive
income and its individual components. Company management has determined that
comprehensive income equals Net Income as of March 31, 1998.
In June 1998, Statement of Financial Accounting Standards (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities," was issued. SFAS
No. 133 establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company may employ a
small number of financial instruments to manage its exposure to fluctuations in
interest rates. The Company does not hold or issue such financial instruments
for trading purposes. The Company will adopt SFAS No. 133, as required in the
year 2000, and does not expect the impact of adoption to be material.
In March 1998, the AICPA issued SOP 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use," which is effective for fiscal
years beginning after December 15, 1998. SOP 98-1 requires the capitalization
of certain expenditures for software that is purchased or internally developed
for use in the business. Company management believe that the prospective
implementation of SOP 98-1 in 1999 is likely to result in some additional
capitalization of software expenditures in the future. However, the amount of
such additional capitalized software expenditures can not be determined at this
time.
In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start-up
Activities." The SOP provides guidance on financial reporting of costs of
start-up activities. SOP 98-5 is effective for fiscal years beginning after
December 15, 1998. The Company believes the implementation of SOP 98-5 will not
have a material impact on its financial reporting.
4. SUBSEQUENT EVENTS
On June 15, 1998 the following acquisitions were consummated.
The Company acquired all of the outstanding common stock of Faircom Inc.
("Faircom") for 3,720,620 shares of the Company's Series C Preferred Stock. The
acquisition has been treated for accounting purposes as the acquisition of the
Company by Faircom with Faircom as the accounting acquirer (reverse
acquisition).
F-7
<PAGE> 15
Upon consummation of the Faircom Merger, the Board of Directors of the Company
adopted the Regent Communications, Inc. Faircom Conversion Stock Option Plan
which applies to those individuals previously participating in the Faircom, Inc.
Stock Option Plan (the "Faircom Plan"). In exchange for relinquishing their
options under the Faircom Plan, five former officers and/or members of Faircom's
Board of Directors were given, in total, the right to acquire 274,045 shares of
the Company's Series C Preferred Stock at exercise prices per share of $0.8865
to $3.7305.
The Company acquired all of the outstanding capital stock of The Park Lane Group
("Park Lane") for approximately $17,468,000 in cash. The acquisition was
accounting for under the purchase method of accounting and was financed through
borrowing under the Company's credit facility. The excess cost over the fair
market value of net assets acquired and FCC licenses related to this acquisition
will be amortized over a 40-year period. Park Lane owns 16 radio stations in
California and Arizona. At the time of the acquisition, the Company entered
into a one-year consulting and non-competition agreement with the President of
Park Lane, providing for the payment of a consulting fee of $200,000.
The Company acquired the FCC licenses and related assets used in the operation
of radio stations KIXW (AM) and KZXY (FM) in Apple Valley, California from Ruby
Broadcasting, Inc. ("Ruby"), an affiliate of Topaz Broadcasting, Inc. ("Topaz"),
for $5,995,500 in cash. The acquisition was financed through borrowings under
the Company's credit facility. The FCC licenses acquired will be amortized over
a 40-year period.
The Company acquired the FCC licenses and related assets used in the operation
of radio stations KFLG (AM) and KFLG (FM) in Bullhead City, Arizona from
Continental Radio Broadcasting, L.L.C. ("Continental") for approximately
$3,622,000 in cash. The Company separately acquired the accounts receivable of
these stations for an additional cash purchase price of approximately $130,000.
The acquisitions were financed through borrowings under the Company's credit
facility. The FCC licenses acquired will be amortized over a 40-year period.
The Company acquired all of the outstanding capital stock of Alta California
Broadcasting, Inc. ("Alta") for $1 million in cash and 200,000 shares of the
Company's Series E Convertible Preferred Stock at a stated value of $5.00 per
share. The acquisition was accounted for under the purchase method of accounting
and was financed through borrowings under the Company's credit facility. The
excess cost over the fair market value of net assets acquired and FCC licenses
related to this acquisition will be amortized over a 40-year period. Alta owns 4
radio stations in California.
The Company acquired all of the outstanding capital stock of Topaz and the FCC
license and operating assets of radio station KIXA (FM) in Lucerne Valley,
California for 242,592 shares of the Company's Series E Convertible Preferred
Stock at a stated value of $5.00 per share. The Topaz acquisition was accounted
for under the purchase method of accounting. The excess cost over the fair
market value of net assets acquired and FCC licenses related to this acquisition
will be amortized over a 40-year period. Topaz operated 1 radio station in
California and owned the right to purchase the station from RASA Communications.
The Company, immediately following the acquisition of Topaz, exercised this
purchase option for $275,000 cash, adjusted as defined in the agreement.
On July 10, 1998, the Company entered into an asset purchase agreement with
Oasis Radio, Inc. to acquire substantially all of the assets of radio station
KAVC (FM) located in Lancaster, California for $1.6 million in cash, subject to
adjustment as defined in the agreement. The closing is conditioned on, among
other things, receipt of FCC and other regulatory approvals. The Company has
placed a $160,000 deposit held in escrow pending the closing of the transaction.
In order to finance the foregoing acquisitions and to provide additional
working capital, the Company borrowed $34,400,000 under its Credit Agreement on
June 15, 1998.
Also on June 15, 1998, the Company issued additional equity as follows, the
proceeds of which were used to fund the aforementioned acquisitions:
The Company issued 2,050,000 shares of its Series F Convertible Preferred Stock
at a purchase price of $5.00 per share, and in conjunction therewith, issued
warrants to purchase a total of 860,000 shares of the Company's Common Stock at
$5.00 per share.
The purchasers of the Company's Series F Convertible Preferred Stock have
committed to purchase, on a pro rata basis, an additional 2,050,000 shares of
the Company's Series F Convertible Preferred Stock at $5.00 per share to fund
future acquisitions by the Company.
General Electric Capital Corporation ("GE Capital") paid $3,900,000 cash to
complete its purchase of shares of the Company's Series B Senior Convertible
Preferred Stock, pursuant to the terms of its Stock Purchase Agreement and
Promissory Note dated December 8, 1997. In addition, the Company issued to GE
Capital a warrant to purchase 50,000 shares of the Company's Common Stock at
$5.00 per share.
BMO Financial, Inc. paid $3,900,000 cash for 780,000 shares of the Company's
Series D Convertible Preferred Stock.
The Company's President, Chief Operating Officer and Secretary, purchased
20,000 shares of the Company's Series A Convertible Preferred Stock at a
purchase price of $5.00 per share.
The Company issued to River Cities Capital Fund Limited Partnership ("River
Cities") on June 15, 1998 a five-year warrant to purchase 80,000 shares of the
Company's Common Stock at an exercise price of $5.00 per share, as an
inducement for River Cities, as an existing holder of the Company's Series A
Convertible Preferred Stock, to approve the Company's merger with Faircom and
the issuance of the Company's Series C Convertible Preferred Stock in
connection therewith.
Total costs associated with the above transactions were approximately $6.0
million.
F-8
<PAGE> 16
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
------
at December 31, 1997 and March 31, 1998
<TABLE>
<CAPTION>
December 31, March 31,
ASSETS 1997 1998
---------------- -------------
(Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 431,466 $ 334,647
Accounts receivable - trade, less allowance for doubtful accounts of
$45,414 in 1997 and $15,245 in 1998 53,009 18,490
Prepaid expenses and other current assets 83,474 109,089
------------ ------------
Total current assets 567,949 462,226
Property and equipment, net 2,502,766 2,354,199
Intangible assets, net 5,937,566 5,786,155
------------ ------------
Total assets $ 9,008,281 $ 8,602,580
============ ============
LIABILITIES, REDEEMABLE PREFERRED STOCK, CONVERTIBLE
PREFERRED STOCK, COMMON STOCK AND SHAREHOLDERS' DEFICIT
Current liabilities: $ 94,513 $ 112,919
Accounts payable
Accrued expenses:
Compensation and related expenses 86,432 21,555
Interest 45,508 49,360
Other 119,725 162,810
Notes payable to bank 70,526 ---
Notes payable to shareholders 120,000 120,000
Current portion, long-term debt 760,964 755,837
------------ ------------
Total current liabilities 1,297,668 1,222,481
Long-term debt 5,607,199 5,537,896
------------ ------------
Total liabilities 6,904,867 6,760,377
------------ ------------
Commitments
Mandatorily redeemable Series B preferred stock, $0.01 par value:
Authorized: 43,000 shares;
Issued and outstanding: 42,805 shares in 1997 and 1998 5,231,150 5,391,650
(Liquidation value: $6,344,000 in 1997 and $6,504,000 in 1998)
Mandatorily redeemable convertible Series C preferred stock, $0.01 par value:
Authorized: 13,500 shares;
Issued and outstanding: 12,021 in 1997 and 1998 1,327,101 1,357,101
(Liquidation value: $1,436,000 in 1997 and $1,466,000 in 1998)
Convertible Series A preferred stock, $0.01 par value:
Authorized: 6,117,945 shares;
Issued and outstanding: 5,595,875 shares in 1997 and 1998 5,595,875 5,595,875
(Liquidation value: $5,596,000 in 1997 and 1998)
Class B common stock, $0.01 par value:
Authorized: 3,238,828 shares;
Issued and outstanding: 3,238,821 shares in 1997 and 1998 1,163,612 1,163,612
Class C common stock, $0.01 par value:
Authorized: 1,350,000 shares;
Issued and outstanding: 1,202,100 in 1997 and 1998 80,915 80,915
Class A common stock, $0.01 par value:
Authorized: 15,000,000 shares;
Issued and outstanding: 797,225 shares in 1997 and 811,600 in 1998 389,202 386,522
Note Receivable from Shareholders (2,680)
Accumulated deficit (11,681,761) (12,133,472)
------------ ------------
Total liabilities redeemable preferred stock, convertible
preferred stock, common stock and shareholders' deficit $ 9,008,281 $ 8,602,580
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE> 17
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
for the three month periods ended March 31, 1997 and 1998 (unaudited)
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Revenues from broadcast operations $ 1,818,792 $ 0
Less agency commissions (139,551) 0
------------ ------------
Net revenues 1,679,241 0
Time Brokerage Agreement Fees 0 252,600
------------ ------------
Total revenues 1,679,241 252,600
------------ ------------
Broadcast operating expenses (1,412,023) 7,402
Depreciation and amortization (349,283) (299,489)
Corporate administrative expenses (202,238) (92,473)
------------ ------------
Operating loss (284,303) (131,960)
Interest expense (166,016) (148,626)
Other income, net 1,908 19,372
------------ ------------
Net loss (448,411) (261,214)
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-10
<PAGE> 18
THE PARK LANE GROUP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three month periods ended March 31, 1997 and 1998 (unaudited)
<TABLE>
<CAPTION>
1997 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (448,411) $ (261,214)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation 174,370 146,802
Amortization 174,913 152,686
Accounts receivable 122,141 34,519
Prepaid expenses and other assets 32,608 (25,615)
Accounts payable 11,787 18,406
Accrued expenses (25,636) (60,532)
Accrued interest (2,100) 43,085
------------ ------------
Net cash provided by operating activities 39,672 48,137
------------ ------------
Cash flows from investing activities:
Purchases of property and equipment (2,643) 0
------------ ------------
Net cash used in investing activities (2,643) 0
------------ ------------
Cash flows from financing activities:
(Payments on) borrowings under note payable to bank (92,116) (70,526)
Borrowing under lease line of credit 112,131 0
Principal payments on long-term debt (47,919) (74,430)
------------ ------------
Net cash provided (used) by financing activities (27,904) (144,956)
------------ ------------
Net increase (decrease) in cash and cash equivalents 9,127 (96,819)
Cash and cash equivalents, beginning of period 223,292 431,466
------------ ------------
Cash and cash equivalents, end of period 232,419 $ 334,647
============ ============
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITY
Conversion of convertible notes to Series B stock $ 310,000
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-11
<PAGE> 19
THE PARK LANE GROUP AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation and Accounting Policies:
----------------------------------------------
These unaudited interim financial statements reflect all normal
recurring adjustments which are, in the opinion of management,
necessary to present fairly, in all material respects, the financial
position of The Park Lane Group and its subsidiaries as of December
31, 1997 and the results of operations and cash flows for the three
month period ended March 31, 1998 and 1997. Because all of the
disclosures required by generally accepted accounting principles are
not included, these interim statements should be read in conjunction
with the audited financial statements and notes thereto for the year
ended December 31, 1997. The year-end balance sheet data was derived
from the audited financial statements and does not include all of the
disclosures required by generally accepted accounting principles. The
statements of operations for the periods presented are not necessarily
indicative of results to be expected for any future period, nor for the
entire year.
2. STOCK SALE AGREEMENT
--------------------
In August 1997, the Company entered into an arrangement with Regent
Communications, Inc. ("Regent") for the acquisition of all the
outstanding capital stock of the Company (the "acquisition"). The
transaction closed on June 15, 1998. Effective August 17, 1997, the
Company also entered into an operating agreement with Regent under
which most of the operations of the Company's radio stations are
managed by Regent and the Company receives a monthly fee based on their
performance subject to a guaranteed minimum.
F-12
<PAGE> 20
INDEPENDENT AUDITORS' REPORT
Alta California Broadcasting, Inc.
We have audited the accompanying consolidated balance sheets of Alta California
Broadcasting, Inc. (a wholly-owned subsidiary of Redwood Broadcasting, Inc.) and
subsidiary as of March 31, 1998 and 1997 and the related consolidated statements
of operations, stockholder's deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Alta California Broadcasting, Inc.
and subsidiary as of March 31, 1998 and 1997, and the results of their
operations and their cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ STOCKMAN KAST RYAN & SCRUGGS, P.C.
- --------------------------------------
Colorado Springs, Colorado
July 10, 1998
F-13
<PAGE> 21
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Note 6) $ 31,143 $ 37,754
Accounts receivable, net (Note 1) 48,024 121,560
Receivable from related parties (Note 5) 6,139 38,286
Receivable from bid settlement (Note 9) 45,000
Receivable from sale of stations (Note 2) 633,000
Other current assets 11,059 10,807
----------- -----------
Total current assets 141,365 841,407
PROPERTY AND EQUIPMENT, net (Notes 3 and 6) 227,249 213,472
INTANGIBLE ASSETS, net (Notes 4 and 6) 915,716 996,584
DEPOSIT ON PURCHASE OF STATIONS (Notes 2 and 10) 973,000
NOTE RECEIVABLE (Note 2) 200,000
OTHER ASSETS 37,666 37,963
----------- -----------
TOTAL $ 2,294,996 $ 2,289,426
=========== ===========
LIABILITIES AND STOCKHOLDER'S DEFICIT
CURRENT LIABILITIES
Payable to Redwood Broadcasting, Inc.
(Note 5) $ 1,613,493 $ 1,292,025
Accounts payable 81,233 143,500
Accrued liabilities 74,258 194,365
Payables to related parties (Note 5) 43,848 14,500
Current portion of notes payable (Note 6) 97,940 34,517
Current portion of notes payable to related parties (Note 5) 165,064 25,000
Capital lease obligations 11,994
----------- -----------
Total current liabilities 2,075,836 1,715,901
NOTES PAYABLE (Note 6) 428,371 605,208
NOTES PAYABLE TO RELATED PARTIES (Note 5) 130,949
----------- -----------
TOTAL LIABILITIES 2,504,207 2,452,058
----------- -----------
STOCKHOLDER'S DEFICIT
Common stock, no par value; 1,000,000
shares authorized; 30,000 shares issued
and outstanding 225,000 225,000
Accumulated deficit (434,211) (387,632)
----------- -----------
Total stockholder's deficit (209,211) (162,632)
----------- -----------
TOTAL $ 2,294,996 $ 2,289,426
=========== ===========
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
F-14
<PAGE> 22
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
REVENUE
Broadcast revenue $ 830,724 $ 545,185
Less agency commissions 73,638 37,268
--------- ---------
NET REVENUE 757,086 507,917
--------- ---------
OPERATING EXPENSE
Selling, general and administrative 453,175 408,859
Broadcasting 333,110 339,499
Depreciation and amortization 133,877 151,544
--------- ---------
Total 920,162 899,902
--------- ---------
LOSS FROM OPERATIONS (163,076) (391,985)
--------- ---------
OTHER INCOME (EXPENSE)
Gain on sale of stations (Note 2) 678,206
Loss on sale of land (Note 2) (80,000)
Interest expense (Note 5) (37,960) (104,731)
Other income - net (Notes 2 and 9) 154,457 59,664
--------- ---------
Other income, net 116,497 553,139
--------- ---------
NET INCOME (LOSS) $ (46,579) $ 161,154
========= =========
NET INCOME (LOSS) PER
COMMON SHARE $ (1.55) $ 5.37
========= =========
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 30,000 30,000
========= =========
</TABLE>
See notes to consolidated financial statements
- --------------------------------------------------------------------------------
F-15
<PAGE> 23
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S DEFICIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK TOTAL
--------------------- ACCUMULATED STOCKHOLDER'S
SHARES AMOUNT DEFICIT DEFICIT
<S> <C> <C> <C> <C>
BALANCES,
APRIL 1, 1996 30,000 $ 225,000 $(548,786) $(323,786)
Net income 161,154 161,154
--------- --------- --------- ---------
BALANCES,
MARCH 31, 1997 30,000 225,000 (387,632) (162,632)
Net loss (46,579) (46,579)
--------- --------- --------- ---------
BALANCES,
MARCH 31, 1998 30,000 $ 225,000 $(434,211) $(209,211)
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-16
<PAGE> 24
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss) $ (46,579) $ 161,154
Adjustments to reconcile net income (loss) to
net cash used in operating activities:
Depreciation and amortization 133,877 151,544
Gain on bid settlement (36,205)
Gain on sale of stations (678,206)
Loss on sale of land 80,000
Changes in operating assets and liabilities:
Accounts receivable 73,536 (46,998)
Other current assets (252) (3,961)
Accounts payable and accrued expenses (182,374) (40,658)
Other assets (8,498) 14,854
--------- ---------
Net cash used in operating activities (66,495) (362,271)
--------- ---------
INVESTING ACTIVITIES
Purchases of station assets (66,786) (448,920)
Collection of receivable from sale of stations 833,000
Proceeds from sale of stations, net of commissions paid 588,333
Proceeds from sale of land 370,000
--------- ---------
Net cash provided by investing activities 766,214 509,413
--------- ---------
FINANCING ACTIVITIES
Proceeds from borrowings under related party
notes 155,000 273,675
Proceeds from borrowings under notes 82,403 170,000
Borrowings from (repayments to) Redwood Broadcasting, Inc. (751,532) 651,257
Principal payments on notes to related parties (45,885) (529,900)
Principal payments on notes (195,817) (445,275)
Decrease (increase) in net payable to related
parties 61,495 (215,481)
Payments on capital lease obligations (11,994) (13,664)
--------- ---------
Net cash used in financing activities (706,330) (109,388)
--------- ---------
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS (6,611) 37,754
CASH AND CASH EQUIVALENTS,
Beginning of period 37,754 --
--------- ---------
CASH AND CASH EQUIVALENTS,
End of period $ 31,143 $ 37,754
========= =========
(continued)
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-17
<PAGE> 25
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
SUPPLEMENTAL NONCASH INVESTING
AND FINANCING ACTIVITIES
Increase in payable to Redwood Broadcasting, Inc.
for deposit on purchase of stations $ 973,000
Assumption of note payable to related party by
Redwood Broadcasting, Inc. (Note 5) 100,000
Promissory note received for sale of stations $ 200,000
Receivable for sale of stations 633,000
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid for interest 80,556 103,577
</TABLE>
(concluded)
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
F-18
<PAGE> 26
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
(A WHOLLY-OWNED SUBSIDIARY OF REDWOOD BROADCASTING, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION - Alta California Broadcasting, Inc. (Alta) and its
subsidiary, Northern California Broadcasting, Inc. (Northern)
(collectively, the Company), operate in the radio broadcasting
industry. Alta is a wholly-owned subsidiary of Redwood Broadcasting,
Inc. (Redwood) which, in turn, is a majority-owned subsidiary of
Redwood MicroCap Fund, Inc. (MicroCap). Organized for the purpose of
acquiring and/or developing undervalued radio broadcasting properties
located in small to medium sized markets, the Company has embarked upon
an aggressive acquisition and development program and currently
operates radio stations in Northern California.
The accompanying financial statements for the year ended March 31, 1997
only include the operations of radio stations KRDG-FM and KNNN-FM. The
accompanying financial statements for the year ended March 31, 1998
include the operations of radio stations KRDG-FM, KNNN-FM, KNRO-AM and
KRRX-FM through October 10, 1997, at which time, Alta entered into an
agreement to sell such stations and a Local Management Agreement (LMA)
with the acquiror. See Notes 2 and 10.
PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
include the accounts of Alta and its wholly-owned subsidiary, Northern.
All significant intercompany accounts and transactions have been
eliminated in consolidation.
ACCOUNTS RECEIVABLE - The Company maintains an allowance for doubtful
accounts based upon the expected collectibility of all accounts
receivable. At March 31, 1998 and 1997, the allowance was $8,250 and
$3,200, respectively.
PROPERTY AND EQUIPMENT - Property and equipment are recorded at fair
value as of the date of acquisition of the related station or cost if
purchased subsequently. Depreciation is provided on a straight line
basis over the estimated useful lives of the assets as follows:
buildings and improvements - 10 years; transmitter - 20 years; computer
equipment - 3 years; and technical equipment and furniture and fixtures
- 5 to 7 years. The recoverability of the carrying value of property
and equipment is evaluated periodically in relation to the estimated
value of the radio stations based on their operating performance and
cash flows.
INTANGIBLE ASSETS - Intangible assets include the radio station
purchase price allocations to license costs and the noncompete
agreement. License costs are amortized on a straight line basis over a
period of 20 years and the noncompete agreement is amortized on a
straight line basis over the three-year period of the agreement. The
recoverability of the carrying value of intangible assets is evaluated
periodically in relation to the estimated value of the radio stations
based on their operating performance and cash flows.
REVENUE RECOGNITION - The Company's primary source of revenue is the
sale of air time to advertisers. Revenue from the sale of air time is
recorded when the advertisements are broadcast.
F-19
<PAGE> 27
BARTER TRANSACTIONS - Revenue from barter transactions (advertising
provided in exchange for goods and services) is recognized based on the
fair value of the goods or services received when the advertisements
are broadcast. Goods and services received are recognized when used.
INCOME TAXES - The Company accounts for income taxes using the asset
and liability method. Under the asset and liability method, deferred
income taxes are recognized for the tax consequences of temporary
differences by applying enacted statutory tax rates to differences
between the financial statement carrying amounts and the tax bases of
existing assets and liabilities. The effect on deferred taxes of a
change in tax rate is recognized in the period that includes the
enactment date.
PER SHARE AMOUNTS - Per share amounts are based upon the net income or
loss applicable to common shares and upon the weighted average of
common shares outstanding during the period.
USE OF ESTIMATES - The preparation of the Company's financial
statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of income and expenses during the reporting period.
Actual results could differ from those estimates.
STATEMENT OF CASH FLOWS - For purposes of the statement of cash flows,
highly liquid investments, maturing within three months of acquisition,
are considered to be cash equivalents.
CONCENTRATIONS OF RISK - Financial instruments which potentially
subject the Company to concentrations of credit risk consist primarily
of cash and cash equivalents and receivables. Also, the Company's radio
stations broadcast in Northern California, which results in a risk to
the Company due to the concentration in one geographic area.
2. RADIO STATION ACQUISITIONS AND DISPOSITIONS
The following radio station acquisitions and sales have been completed
by Alta:
KHSL AM/FM - In 1994, Alta acquired radio stations KHSL-AM/FM licensed
to Chico and Paradise, California, respectively. Subsequent to its
acquisition by Alta, KHSL-AM changed its call letters to KNSN-AM.
In March 1996, Alta entered into separate Asset Sale Agreements to sell
the assets of both KNSN-AM and KHSL-FM, excluding a parcel of land, for
$1,466,333. Concurrently with signing the Asset Sale Agreements, Alta
entered into a LMA with the prospective purchaser until the sale closed
on March 31, 1997, at which time the LMA terminated. Included in other
income for the year ended March 31, 1997 is $46,033 resulting from LMA
fees from the prospective purchaser.
Alta received $633,333 cash and a $200,000 promissory note, bearing
interest at a rate of 7%. Alta was also to receive $633,000 in cash no
later than April 30, 1997 for KNSN-AM; however, pursuant to the Asset
Purchase Agreement, the buyer of KNSN-AM had the option to defer
payment of such amount for monthly option fees of $10,000 or $15,000.
Included in other income for the year ended March 31, 1998 is $70,000
resulting from monthly option fees collected. As of March 31, 1998, all
amounts receivable from the sale of KHSL-AM/FM had been collected.
F-20
<PAGE> 28
A gain on the sale of $678,206 has been recorded in the accompanying
statement of operations for the year ended March 31, 1997.
In April 1996, the parcel of land was sold to an unrelated party for
$370,000. A loss on the sale of $80,000 has been recorded in the
accompanying statement of operations for the year ended March 31, 1997.
KRDG-FM (F/K/A KHZL AND KCFM) - In March 1995, Alta entered into a LMA
with an option to purchase radio station KCFM-FM licensed to
Shingletown, California, which began commercial broadcasting in August
1995. KCFM-FM primarily serves the Redding, California market. In
September 1995, KCFM-FM changed its call letters to KHZL-FM. In July
1996, Alta completed the acquisition of KHZL-FM, thereby terminating
the LMA. Alta paid $65,000 cash and issued a $155,000 promissory note
as consideration for KHZL-FM (see Note 6). The acquisition was recorded
using the purchase method and the $220,000 purchase price was recorded
as license costs as no other assets of KHZL-FM were acquired. Effective
September 27, 1996, Alta changed KHZL-FM's call letters to KRDG-FM.
KNNN-FM - In May 1996, Alta entered into an Asset Purchase Agreement to
acquire KNNN-FM licensed to Central Valley, California. The Asset
Purchase Agreement was subsequently assigned to Northern. KNNN-FM
primarily serves the Redding, California market. In August 1996, Alta
began operating KNNN-FM under a LMA pending approval of the transfer of
ownership by the FCC. The purchase price for KNNN-FM was $825,000,
$325,000 of which was paid in cash at closing, and the balance of which
was in the form of a promissory note (see Note 6). Pursuant to the
Asset Purchase Agreement, the seller of KNNN-FM agreed to not compete
in the Redding, California market for a period of three years. The
acquisition was recorded using the purchase method and the purchase
price was allocated to property and equipment, the noncompete agreement
and license costs, based on estimated fair values.
KLXR-FM - In May 1996, Alta entered into an Asset Purchase Agreement to
acquire KLXR-AM, licensed to Redding, California, for a total purchase
price of $100,000. In February 1997, Alta entered into a LMA with the
seller and, in April 1998, Alta completed the purchase of KLXR for
$100,000 cash.
KNRO-AM AND KRRX-FM (F/K/A KARZ-FM) - Effective April 1, 1997, the
Company acquired an option to purchase radio stations KNRO-AM and
KARZ-FM (KNRO/KARZ) licensed in Redding, California from Power Surge,
Inc. (Power Surge), a wholly-owned subsidiary of Power Curve, Inc.
(Power Curve). Power Surge and Power Curve are both controlled by the
Company's President. Power Curve acquired KNRO/KARZ on January 31, 1997
for $480,000 in cash and a $720,000 promissory note. Power Surge
operated the stations form February 1, 1997 through March 31, 1997 and
received the licenses from Power Curve on March 31, 1997. Under the
terms of the option agreement, the Company can either (1) purchase
KNRO/KARZ for $1,200,000 in cash or (2) issue 1,000,000 shares of
Redwood's common stock in exchange for all of the issued and
outstanding shares of common stock of Power Surge. Also effective April
1, 1997, Alta entered into a LMA with Power Surge for a period of one
year. Alta operated KNRO/KARZ through October 10, 1997 and was
obligated to pay Power Surge a monthly LMA fee of $5,000. Effective May
16, 1997, KARZ-FM changed its call letters to KRRX-FM. As of March 31,
1998, Redwood made cash payments of $733,000 and issued 200,000 shares
of its common stock, with an agreed-upon value of $240,000, to Power
Curve on behalf of Alta as deposits on the purchases. Alta has
reflected such amounts as a deposit on purchase the purchase
F-21
<PAGE> 29
of the stations with a corresponding increase in its payable to Redwood
in the accompanying March 31, 1998 balance sheet. Subsequent to
year-end the option agreement and LMA were extended, the option price
was increased to $1,235,000, and Alta exercised its option on June 15,
1998. Immediately thereafter, the stations, along with KRDG-FM and
KNNN-FM were sold to Regent Communications, Inc. (Regent) (see Note 10).
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at March 31, 1998 and
1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Buildings and improvements $ 54,098 $ 29,437
Equipment 220,107 181,360
Furniture and fixtures 43,719 40,341
------------ -------------
Total property and equipment 317,924 251,138
Less accumulated depreciation 90,675 37,666
------------ -------------
Property and equipment - net $ 227,249 $ 213,472
============ =============
</TABLE>
4. INTANGIBLE ASSETS
Intangible assets consist of the following at March 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
License costs $ 950,489 $ 950,489
Noncompete agreement 100,000 100,000
------------- --------------
Total intangible assets 1,050,489 1,050,489
Less accumulated amortization 134,773 53,905
------------- --------------
Intangible assets - net $ 915,716 $ 996,584
============= ==============
</TABLE>
F-22
<PAGE> 30
5. RELATED PARTY TRANSACTIONS
Notes payable to related parties consist of the following at March 31,
1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Unsecured notes payable to related entities with
interest at 8.25% and principal and interest
due on June 30, 1998 $ 155,000
Unsecured notes payable to stockholders of Redwood
with interest at 8% and principal and interest
due on March 31, 1999 10,064 $ 30,949
Unsecured note payable to a related entity
controlled by an officer and stockholder of
Redwood (see below) 100,000
Unsecured note payable to a related entity with
interest at 12% and principal and interest
due on demand 25,000
------------ -------------
Total 165,064 155,949
Less current portion 165,064 25,000
------------ -------------
Total $ - $ 130,949
============ =============
</TABLE>
Management believes that the fair values of its notes payable to
related parties are not materially different from their carrying values
based on the terms and varying characteristics of the notes.
The $100,000 note payable to a related entity as of March 31, 1997 was
assumed by Redwood during the year ended March 31, 1998, resulting in a
corresponding increase in the Company's payable to Redwood in the
accompanying balance sheet as of such date. The Company has noninterest
bearing payables to Redwood of $1,613,493 and $1,292,025 as of March
31, 1998 and 1997, respectively, which have no set repayment terms. The
Company recorded interest expense on the related party notes of
approximately $13,000 and $62,000 for the years ended March 31, 1998
and 1997, respectively.
The Company has receivables from and payables to entities controlled by
an officer and stockholder of Redwood. The receivables and payables
total $6,139 and $43,848, respectively, as of March 31, 1998 and
$38,286 and $14,500, respectively, as of March 31, 1997.
F-23
<PAGE> 31
6. NOTES PAYABLE
Notes payable consist of the following as of March 31, 1998 and 1997:
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
Note payable to seller of KNNN-FM with interest at 8.5%, collateralized
by the common stock of Northern, payable in monthly principal and
interest installments of $6,199 through October 2001 with the
remaining balance due
at that date $ 450,208 $ 484,725
Note payable to bank with interest rates ranging from 8% to 11%,
partially collateralized by cash equivalents and equipment,
interest payable monthly and principal due in varying amounts
from April 1, 1998 through September 2, 2000 76,103
Note payable to seller of KRDG-FM with interest at 8.25% and payable
semi-annually, principal payable on July 21, 2004, collateralized
by property and equipment, guaranteed by MicroCap 155,000
------------ -------------
Total 526,311 639,725
Less current portion 97,940 34,517
------------ -------------
Total $ 428,371 $ 605,208
============ =============
</TABLE>
Under the terms of the promissory note agreements, future minimum
annual principal payments during the fiscal years ending March 31 are
as follows: 1999 - $97,940; 2000 - $53,621; 2001 - $47,502; and 2002 -
$327,248.
Management believes that the fair values of its notes payable are not
materially different from their carrying values based on the terms and
varying characteristics of the notes.
7. LEASE AGREEMENTS
The Company leases land and equipment under operating lease agreements
expiring in various years through 2002. Lease expense under the
operating lease agreements totalled $30,263 and $74,039 for the years
ended March 31, 1998 and 1997, respectively.
Pursuant to the LMA between Alta and Regent (see Note 2), the Company
was reimbursed for all operating lease payments subsequent to October
10, 1997. The lease agreements were assumed by Regent upon the closing
of the sales agreement with Regent on June 15, 1998.
F-24
<PAGE> 32
8. INCOME TAXES
The Company's operations are included in the consolidated federal and
state income tax returns of Redwood. Under Redwood's tax allocation
method, a tax provision is allocated to the Company based upon a
calculation of income taxes as if the Company filed separate income tax
returns.
As of March 31, 1998, Redwood has approximately $540,000 of
consolidated net operating loss carryovers of which approximately
$240,000 were attributable to the Company. The carryovers expire in
various years through 2013 and result in deferred income tax assets of
approximately $80,000. However, because of the uncertainty regarding
future realization of the deferred income tax assets, the Company has
established a valuation allowance of $80,000 as of March 31, 1998. The
valuation allowance increased (decreased) by $12,000 and $(52,000)
during the years ended March 31, 1998 and 1997, respectively.
9. OTHER INCOME
Included in other income for the year ended March 31, 1998 is a
$36,205 gain resulting from a FCC license auction and settlement
agreement.
10. SUBSEQUENT EVENT
On June 15, 1998, Alta exercised its option to acquire KNRO-FM and
KRRX-FM (see Note 2). Alta was simultaneously sold to Regent with
Redwood receiving as consideration approximately $950,000 cash and
200,000 shares of Regent's Series E preferred stock. Regent also
assumed approximately $1,500,000 of the Company's liabilities. Regent
operated such stations through June 15, 1998 under a LMA which was
effective on October 10, 1997.
- --------------------------------------------------------------------------------
F-25
<PAGE> 33
POWER SURGE, INC.
(A WHOLLY-OWNED SUBSIDIARY OF POWER CURVE, INC.)
BALANCE SHEETS
AT MARCH 31, 1998 AND DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS March 31, December 31,
1998 1997
----------- -----------
(UNAUDITED)
<S> <C> <C>
CURRENT ASSETS
Cash $ (45) $ 82
Accounts receivable, net 18,735 0
Income taxes receivable 4,000 4,000
Receivable from related party 61,537 65,137
----------- -----------
Total current assets 84,227 69,219
PROPERTY AND EQUIPMENT, net 148,202 152,273
INTANGIBLE ASSETS, net 929,726 953,477
----------- -----------
TOTAL $ 1,162,155 $ 1,174,969
=========== ===========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES
Payable to Power Curve, Inc. $ 2,883 $ 2,133
Accounts payable 117 117
----------- -----------
Total current liabilities 3,000 2,250
----------- -----------
STOCKHOLDER'S EQUITY
Common stock, no par value; 1,500
shares authorized; 1,250 shares issued
and outstanding 1,202,500 1,202,500
Accumulated deficit (43,345) (29,781)
----------- -----------
Total stockholder's equity 1,159,155 1,172,719
----------- -----------
TOTAL $ 1,162,155 $ 1,174,969
=========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-26
<PAGE> 34
<TABLE>
<CAPTION>
POWER SURGE, INC.
(A WHOLLY-OWNED SUBSIDIARY OF POWER CURVE, INC.)
STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
1998 1997
--------- ---------
(UNAUDITED) (UNAUDITED)
REVENUE
Broadcast revenue $ 0 $ 74,704
Less agency commissions 0 5,893
-------- ---------
Net revenue 0 68,811
-------- ---------
OPERATING EXPENSE
Selling, general and administrative 744 24,203
Broadcasting 0 32,438
Depreciation and amortization 27,822 19,094
-------- ---------
Total 28,566 75,735
-------- ---------
LOSS FROM OPERATIONS (28,566) (6,924)
-------- ---------
Other income, net 15,003 0
-------- ---------
LOSS BEFORE INCOME TAXES (13,563) (6,924)
INCOME TAXES 0 0
-------- ---------
NET LOSS $(13,563) $ (6,924)
======== =========
</TABLE>
See notes to financial statements
- -------------------------------------------------------------------------------
F-27
<PAGE> 35
<TABLE>
<CAPTION>
POWER SURGE, INC.
(A WHOLLY-OWNED SUBSIDIARY OF POWER CURVE, INC.)
STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 1998 AND MARCH 31, 1997
- -------------------------------------------------------------------------------
OPERATING ACTIVITIES 1998 1997
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net loss $ (13,563) $ (6,924)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 27,822 19,094
Changes in operating assets and
liabilities:
Accounts receivable (18,736) (50,679)
Receivable from related party 3,600 0
Accounts payable and accrued expenses 750 41,596
----------- -----------
Net cash provided by (used in)
operating activities (127) 3,087
----------- -----------
FINANCING ACTIVITIES
Borrowings from Power Curve, Inc. 0 11,000
----------- -----------
Net cash provided by financing activities 0 11,000
----------- -----------
NET INCREASE IN CASH (127) 14,087
CASH, Beginning of period 82 0
----------- -----------
CASH, End of period $ (45) $ 14,087
=========== ===========
</TABLE>
See notes to financial statements.
- --------------------------------------------------------------------------------
F-28
<PAGE> 36
POWER SURGE, INC.
(A WHOLLY-OWNED SUBSIDIARY OF POWER CURVE, INC.)
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES -- These unaudited
interim financial statements reflect all normal recurring adjustments
which are, in the opinion of management, necessary to present fairly,
in all material respects, the financial position of its subsidiaries as
of December 31, 1997 and the results of operations and cash flows for
the three month period ended March 31, 1998 and 1997. Because all of
the disclosures required by generally accepted accounting principles
are not included, these interim statements should be read in
conjunction with the audited financial statements and notes thereto for
the year ended December 31, 1997. The year end balance sheet data was
derived from the audited financial statements. The statements of
operations for the periods presented are not necessarily indicative of
results to be expected for any future period or for the entire year.
2. RADIO STATION ACQUISITIONS
On January 31, 1997, Power Curve acquired radio stations KNRO-AM (KNRO)
and KARZ-FM (KARZ), licensed in Redding, California, for $480,000 in
cash and a $720,000 promissory note. Power Surge operated the stations
from February 1, 1997 through March 31, 1997 under a Local Marketing
Agreement (LMA) with Power Curve. On March 31, 1997, the stations were
contributed to Power Surge by Power Curve. This contribution was
recorded as contributed capital of $1,200,000 and was allocated to
accounts receivable, property and equipment, noncompete agreement and
license costs based on their respective estimated fair estimated
values. Since Power Curve is the parent company of Power Surge and it
was the intention to have Power Surge own and operate the stations upon
acquisition, the accompanying financial statements have been prepared
as if Power Surge owned the stations during the period from February 1,
1997 through March 31, 1997 (the date of the contribution).
Effective April 1, 1997, Alta California Broadcasting, Inc. (Alta), an
affiliated entity under common control, acquired an option to purchase
KNRO and KARZ from Power Surge. Under the terms of the option
agreement, Alta can either (1) purchase the stations for $1,200,000 in
cash or (2) issue 1,000,000 shares of its common stock in exchange for
all of the issued and outstanding shares of common stock of Power
Surge. The option terminates on March 31, 1998. Concurrently, Alta
entered into a LMA with Power Surge for a period of one year. Under the
terms of the LMA, Alta is operating KNRO and KARZ and is obligated to
pay Power Surge a monthly fee of $5,000. Accordingly, the operating
activities of the radio stations from April 1, 1997 through September
30, 1997 are not reflected in the accompanying financial statements.
Effective May 16, 1997, KARZ changed its call letters to KRRX-FM.
3. STOCK SALE AGREEMENT
Effective October 10, 1997, Alta entered into an agreement to merge
with Regent Acquisition Corp., a subsidiary of Regent Communications,
Inc. (Regent). In conjunction with this agreement and effective October
10, 1997, Redwood Broadcasting Inc. entered into an operating agreement
with Regent under which the operations of KNRO and KRRX are managed by
Regent and Power Surge receives a monthly fee. Alta is required to
exercise its option and complete its acquisition of KNRO and KRRX from
Power Surge prior to the closing of the merger.
F-29
<PAGE> 37
CONTINENTAL RADIO BROADCASTING, L.L.C.
BALANCE SHEET
at March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
1998 1997
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash $ 0 $ 373
Trade accounts receivable, less allowance for doubtful
accounts of $14,144 in 1998 and $26,000 in 1997 162,350 172,345
Other receivables 13,428 7,544
Prepaid expenses 3,319 4,125
------------- --------------
Total current assets 179,097 184,507
Property, plant and equipment, net 280,226 303,560
Intangible assets, net 1,056,895 948,647
Other assets, net 4,143 127,527
------------- --------------
Total assets $ 1,520,361 $ 1,564,241
============= ==============
LIABILITIES AND PARTNER'S DEFICIT
Current liabilities:
Accounts payable $ 53,290 $ 46,683
Book overdraft 18,589 8,950
Accrued expenses 73,729 69,066
Current portion of long-term debt 1,725,000 1,670,000
------------- --------------
Total current liabilities 1,870,608 1,794,699
Long-term debt 0 90,000
------------- --------------
Total liabilities 1,870,608 1,884,699
------------- --------------
Commitments and contingencies
Partner's Deficit:
Capital contributions $ 10,000 $ 10,000
Deficit (360,247) (330,458)
------------- --------------
Total partner's deficit (350,247) (320,458)
------------- --------------
Total liabilities and partner's deficit $ 1,520,361 $ 1,564,241
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-30
<PAGE> 38
CONTINENTAL RADIO BROADCASTING, L.L.C.
STATEMENT OF OPERATIONS
for the three months ended March 31, 1998 and March 31, 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Broadcast revenue $ 253,054 $ 220,233
Less agency commissions 14,407 14,048
------------- -----------
Net revenue 238,647 206,185
Broadcast operating expenses 173,484 128,056
Depreciation and amortization 50,999 67,911
------------- -----------
Operating income 14,164 10,218
Interest expense 43,954 46,424
------------- -----------
Net loss $ (29,032) $ (36,206)
============= ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-31
<PAGE> 39
CONTINENTAL RADIO BROADCASTING, L.L.C.
STATEMENT OF CASH FLOWS
for the three months ended March 31, 1998 and March 31, 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (29,032) $ (36,206)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 26,081 40,686
Amortization 24,918 27,225
Changes in operating assets and liabilities:
Accounts receivable 10,115 7,272
Other receivables, prepaid expenses and other assets (14,860) (14,398)
Accounts payable 16,688 (20,999)
Accrued expenses 4,663 729
Other (1,199) 0
------------- -------------
Net cash provided by operating activities 37,374 4,309
------------- -------------
Cash flows from investing activities:
Capital expenditures (2,747) (28,405)
------------- -------------
Net cash used in investing activities (2,747) (28,405)
Cash flows from financing activities:
Borrowings of long term debt 0 10,500
Payments of long term debt (35,000) (35,000)
------------- -------------
Net cash used in financing activities (35,000) (24,500)
------------- -------------
Net decrease in cash (373) (48,592)
------------- -------------
Cash, beginning of period 373 74,927
------------- -------------
Cash, end of period $ 0 $ 26,331
============= =============
</TABLE>
The accompanying notes are integral part of the financial statements.
F-32
<PAGE> 40
CONTINENTAL RADIO BROADCASTING, L.L.C.
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. BASIS OF PRESENTATION AND ACCOUNTING POLICIES:
----------------------------------------------
These unaudited interim financial statements reflect all norma
recurring adjustments which are, in the opinion of management,
necessary to present fairly, in all material respects, the financial
position of The Park Lane Group and its subsidiaries as of December 31,
1997 and the results of operations and cash flows for the three month
period ended March 31, 1998 and 1997. Because all of the disclosures
required by generally accepted accounting principles are not included,
these interim statements should be read in conjunction with the audited
financial statements and does not include all of the disclosures
required by generally accepted accounting principles. The statements of
operations for the periods presented are not necessarily indicative of
results to be expected for any future period, not for the entire year.
2. ASSET SALE AGREEMENT:
---------------------
On December 9, 1997, the Company entered into an agreement to sell
substantially all of the assets of radio stations KFLG (FM) and KFLG
(AM) to Regent Communications, Inc. for approximately $3,600,000 in
cash, subject to adjustment. The closing is conditioned on, among
other things, receipt of FCC and other regulatory approvals.
F-33
<PAGE> 41
REPORT OF INDEPENDENT ACCOUNTANTS
To Ruby Broadcasting, Inc.
In our opinion, the accompanying Statement of Net Assets Acquired of radio
station KZXY (FM) ("KZXY") presents fairly, in all material respects, the net
assets acquired of KZXY at June 15, 1998 in conformity with generally
accepted accounting principles. This financial statement is the responsibility
of the Company's management, our responsibility is to express an opinion on
this financial statement based on our audits. We conducted our audit of this
statement in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statement is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statement, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
/s/PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 15, 1998
F-34
<PAGE> 42
RADIO STATION KZXY (FM)
STATEMENT OF NET ASSETS ACQUIRED
June 15, 1998
Assets Acquired:
Property and equipment $ 289,000
Intangible assets 5,129,000
----------
Total assets acquired $5,418,000
==========
The accompanying notes are an integral part of this financial statement.
F-35
<PAGE> 43
RADIO STATION KZXY (FM)
NOTES TO FINANCIAL STATEMENT
1. BASIS OF PRESENTATION, ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
a. ORGANIZATION AND BUSINESS: KZXY (FM), a radio station located in
Apple Valley, California, is owned and operated by Ruby
Broadcasting, Inc., a Delaware corporation.
In December 1997, Ruby entered into an agreement to sell the FCC
license and related operating assets of this station to Regent
Communications, Inc. ("Regent") for $5,000,000 in cash, subject to
adjustment. The transaction was consummated on June 15, 1998.
b. BASIS OF PRESENTATION: The transaction has been accounted for under
the purchase method of accounting and the purchase price allocated
to the assets acquired on the basis of their fair market value. A
statement of net assets acquired for radio station KZXY (FM) has
not been presented on a historical cost basis because not all of
the required financial information is available.
c. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts to revenues and expenses during
the reporting period. Actual results could differ from those
estimates.
2. PROPERTY EQUIPMENT:
Property equipment acquired consist of the following:
Leasehold improvements $ 5,457
Office equipment 14,030
Broadcast equipment 229,305
Furniture and fixtures 26,563
Vehicles 13,645
----------
$ 289,000
==========
3. INTANGIBLE ASSETS:
Intangible assets acquired consists of the following:
Acquisition cost allocated to FCC license $5,129,000
==========
F-36
<PAGE> 44
RADIO STATION KZXY (FM)
STATEMENT OF REVENUES AND DIRECT EXPENSES
for the three months ended March 31, 1998 and 1997 (Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
Broadcast revenue $ 0 $ 276,321
Time Brokerage Fees 56,500 0
Less agency commissions 0 (9,379)
----------- -----------
Net revenue 56,500 266,942
Broadcast operating expenses 5,078 115,406
Depreciation and amortization 7,621 6,617
General and administrative expenses 0 97,895
----------- -----------
Total direct expenses 12,699 219,918
Excess of revenues over direct expenses $ 43,801 $ 47,024
=========== ===========
</TABLE>
The accompanying note is an integral part of this financial statement.
F-37
<PAGE> 45
RADIO STATION KZXY (FM)
NOTE TO STATEMENT OF REVENUES AND DIRECT EXPENSES
1. BASIS OF PRESENTATION, ACCOUNTING POLICIES AND DESCRIPTION OF BUSINESS:
ORGANIZATION AND BUSINESS: KZXY (FM), a radio station located in Apple
Valley, California, is owned and operated by Ruby Broadcasting, Inc.
("Ruby"), a Delaware corporation. The Statement of Revenues and Direct
Expenses includes certain costs shared with other stations under common
ownership. These amounts primarily cover administrative and production
support, facility costs, repairs and supplies. These costs have generally
been allocated among the affiliated stations based on estimated time spent,
space or volume of use. Management believes that these allocation methods
are reasonable. As a result of the allocations, however, the financial
statements presented may not be indicative of the results achieved had the
Company operated as a nonaffiliated entity.
In December 1997, Ruby entered into an agreement to sell the FCC license and
related operating assets of this station and radio station KIXW (AM) to
Regent Communications, Inc. ("Regent") for $6,000,000 in cash, subject to
adjustment. The closing is conditioned on, among other things, receipt of
FCC and other regulatory approvals. Additionally, on January 1, 1998, Ruby
entered into a time brokerage agreement with Regent Communications, Inc.
related to radio stations KZXY (FM) and KIXW (AM).
F-38
<PAGE> 46
(b) PROFORMA FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements
are included in this report or, where indicated, are incorporated by reference
herein:
Page
----
Pro Forma Condensed Combined Financial Statements Introduction........ P-2
Pro Forma Condensed Combined Balance Sheet at March 31, 1998.......... P-3
Pro Forma Condensed Combining Statement of operations for the
Three Months Ended March 31, 1998................................... P-4
Notes to Unaudited Pro Forma Condensed Combined Financial
Statements.......................................................... P-5
Pro Forma Condensed Combined Financial Statements Introduction........ *
Pro Forma Condensed Combined Balance Sheet at December 31, 1997....... *
Condensed Combining Statement of Operations for the
Year Ended December 31, 1997........................................ *
Notes to Pro Forma Condensed Combined Financial Statements............ *
* This pro forma financial information, appearing under the heading
"Unaudited Pro Forma Condensed Combined Financial Statements of Regent
Communications, Inc." on pages 56 through and including 63 of the Company's
Form S-4 Registration Statement No. 333-46435 effective May 7, 1998, are
incorporated herein by this reference.
P-1
<PAGE> 47
UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC.
INTRODUCTION
The following unaudited pro forma condensed combined financial statements
reflect the effect of the Merger between Regent and Faircom consummated on June
15, 1998 and the effects of Regent's significant acquisitions of radio stations
owned by The Park Lane Group ("Park Lane"), Alta California Broadcasting, Inc.
("Alta"), Power Surge, Inc. ("Power Surge"), Continental Radio Broadcasting
L.L.C. ("Continental") and Ruby Broadcasting, Inc. ("Ruby" or "KZXY(FM)") (the
"Included Transactions"), and the related financing transactions also
consummated on June 15, 1998. Regent acquired all of the outstanding common
stock of Faircom in the Merger. For accounting purposes, the Merger is being
accounted for under the purchase method of accounting as a reverse merger since
the shareholders of Faircom are receiving the larger shareholding in the merged
company. The Included Transactions are also being accounted for under the
purchase method of accounting with Regent being identified as the acquiror.
The unaudited pro forma condensed combined balance sheet gives effect to
the Merger and the Included Transactions as if they had occurred on March 31,
1998. The unaudited pro forma condensed combined statements of operations gives
effect to these transactions as if they had occurred on January 1, 1997. The
purchase price of each acquisition has been allocated to the acquirees'
historical assets and liabilities based on their respective fair market values.
The fair value of assets acquired was determined based on a detailed analysis
prepared by an independent appraisal for each consummated transaction.
The unaudited pro forma condensed combined financial statements do not
purport to present the actual financial position or results of operations of
Regent had the transactions and events assumed therein in fact occurred on the
dates specified, nor are they necessarily indicative of the results of
operations that may be achieved in the future. The unaudited pro forma financial
information is based on certain assumptions and adjustments described in the
notes to the unaudited pro forma condensed combined financial statements and
should be read in conjunction therewith.
No pro forma adjustments have been made to reflect Regent's acquisitions
of radio stations KIXA(FM) in Lucerne Valley, California and KIXW(AM) in Apple
Valley, California because Regent has determined that the impact of such
transactions was not material to Regent's results of operations or financial
condition. In addition, historical balance sheet data has not been included in
the Condensed Combined Balance Sheet to reflect Regent's acquisition of radio
station KZXY(FM) in Apple Valley, California because the required financial
information cannot be obtained. However, the Pro Forma Condensed Combined
Balance Sheet does reflect the fair value of assets acquired for KZXY(FM).
P-2
<PAGE> 48
REGENT COMMUNICATIONS, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA INCLUDED TRANSACTIONS
ADJUSTMENTS REGENT -------------------------
FOR THE AS ADJUSTED
HISTORICAL HISTORICAL MERGER FOR THE HISTORICAL HISTORICAL
REGENT FAIRCOM (NOTE 3) MERGER PARK LANE ALTA
----------- ------------ ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................ $ 223,868 $ 524,181 $ 748,049 $ 334,647 $ 31,143
Accounts receivable......... 1,375,251 1,086,206 2,461,457 18,490 99,163
Prepaid expenses and
other..................... 9,833,978 59,048 9,893,026 109,089 11,059
----------- ----------- ----------- ----------- ----------- -----------
Total current
assets.............. 11,433,097 1,669,435 13,102,532 462,226 141,365
Property and equipment, net... 101,383 2,299,151 2,400,534 2,354,199 227,249
Intangible assets, net........ 8,605,826 $ 650,668 9,256,494 5,786,155 915,716
Deferred charges and other.... 2,072,180 1,311,147 ($ 1,470,668) 1,912,659 0 1,010,666
----------- ----------- ----------- ----------- ----------- -----------
Total assets.......... $13,606,660 $13,885,559 ($ 820,000) $26,672,219 $ 8,602,580 $ 2,294,996
=========== =========== =========== =========== =========== ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Account payable, accrued
liabilities and other..... $2,050,823 $ 650,392 $2,701,215 $ 346,644 $ 1,812,832
Notes payable............... 7,500,000 7,500,000 120,000 263,004
Current portion of long-term
debt...................... 460,012 ($ 460,012) 755,837
----------- ----------- ----------- ----------- ----------- -----------
Total current
liabilities......... 9,550,823 1,110,404 (460,012) 10,201,215 1,222,481 2,075,836
Long-term debt, net of current
maturities.................. 22,886,652 (9,539,988) 13,346,664 5,537,896 428,371
Other......................... 611,919 611,919
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities..... 9,550,823 24,608,975 (10,000,000) 24,159,798 6,760,377 2,504,207
Redeemable preferred stock.... 2,332,194 2,332,194 6,748,751
Shareholders' equity:
Preferred stock............. 3,000,000 1,723,643 4,723,643 5,595,875
Common stock................ 2,400 73,782 (73,782) 2,400 1,631,049 225,000
Additional paid-in
capital................... 465,997 2,605,813 6,982,385 10,054,195
Retained earnings
(deficit)................. (1,744,754) (13,403,011) 547,754 (14,600,011) (12,133,472) (434,211)
----------- ----------- ----------- ----------- ----------- -----------
Total shareholders'
equity (deficit).... 1,723,643 (10,723,416) 9,180,000 180,227 (4,906,548) (209,211)
----------- ----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders'
equity.............. $13,606,660 $13,885,559 ($ 820,000) $26,672,219 $ 8,602,580 $ 2,294,996
=========== =========== =========== =========== =========== ===========
<CAPTION>
PRO FORMA PRO FORMA
INCLUDED TRANSACTIONS ADJUSTMENTS ADJUSTMENTS
------------------------ FOR THE FOR
HISTORICAL INCLUDED FINANCING
POWER HISTORICAL TRANSACTIONS TRANSACTIONS COMBINED
SURGE CONTINENTAL (NOTE 3) (NOTE 3) PRO FORMA
---------- ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash........................ ($ 45) ($ 1,000,000) $ 113,794
Accounts receivable......... 80,272 $ 175,778 (175,778) 2,659,782
Prepaid expenses and
other..................... 4,000 3,319 (1,928,319) 8,092,174
----------- ----------- ------------ ------------ -----------
Total current
assets.............. 84,227 179,097 (3,104,097) 10,865,350
Property and equipment, net... 148,202 280,226 3,412,637 8,823,047
Intangible assets, net........ 929,726 1,056,895 25,416,508 43,361,494
Deferred charges and other.... 4,143 (42,143) 2,885,325
----------- ----------- ------------ ------------ -----------
Total assets.......... $ 1,162,155 $ 1,520,361 25,682,905 $ 0 $65,935,216
=========== =========== ============ ============ ===========
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Account payable, accrued
liabilities and other..... $ 3,000 $ 145,608 ($ 1,168,608) $ 3,840,691
Notes payable............... (383,004) 7,500,000
Current portion of long-term
debt...................... 1,725,000 (2,480,837) 0
----------- ----------- ------------ ------------ -----------
Total current
liabilities......... 3,000 1,870,608 (4,032,449) 11,340,691
Long-term debt, net of current
maturities.................. 31,229,254 $(15,900,000) 34,642,185
Other......................... 2,580,000 3,191,919
----------- ----------- ------------ ------------ -----------
Total liabilities..... 3,000 1,870,608 27,196,805 (13,320,000) 49,174,795
Redeemable preferred stock.... (6,748,751) 16,360,000 18,692,194
Shareholders' equity:
Preferred stock............. (4,595,875) (3,000,000) 2,723,643
Common stock................ 1,202,500 (3,058,549) 2,400
Additional paid-in
capital................... 10,000 (10,000) (40,000) 10,014,195
Retained earnings
(deficit)................. (43,345) (360,247) 12,899,275 (14,672,011)
----------- ----------- ------------ ------------ -----------
Total shareholders'
equity (deficit).... 1,159,155 (350,247) 5,234,851 (3,040,000) (1,931,773)
----------- ----------- ------------ ------------ -----------
Total liabilities and
shareholders'
equity.............. $ 1,162,155 $ 1,520,361 $ 25,682,905 $ 0 $65,935,216
=========== =========== ============ ============ ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
P-3
<PAGE> 49
REGENT COMMUNICATIONS, INC.
CONDENSED COMBINING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS REGENT INCLUDED TRANSACTIONS
FOR THE MERGER AS ADJUSTED ------------------------
AND HISTORICAL FOR THE MERGER
HISTORICAL HISTORICAL ACQUISITION AND HISTORICAL HISTORICAL HISTORICAL
REGENT FAIRCOM (NOTE 4) ACQUISITION PARK LANE ALTA
----------- ----------- -------------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
Net revenue............................. $ 2,415,758 $ 1,465,077 $ 3,880,835 $ 12,787
Broadcast operating expenses............ 2,374,202 1,098,911 3,473,113 $ (7,402) 34,752
Time brokerage agreement fees, net...... 235,000 235,000 (252,600)
Depreciation and amortization........... 2,364 290,548 $ 3,250 296,162 299,489 34,230
Corporate general and administrative
expenses.............................. 231,095 113,528 130,000 474,623 92,473
----------- ----------- ----------- ----------- ----------- ---------
Operating income (loss)............. (426,903) (37,910) (133,250) (598,063) (131,960) (56,195)
Interest expense........................ 203,928 503,770 707,698 148,626 9,747
Other income (expense), net............. 1,908 12,152 14,060 19,372 (1,570)
----------- ----------- ----------- ----------- ----------- ---------
Income (loss) from continuing operations
before income taxes................... (628,923) (529,528) (133,250) (1,291,701) (261,214) (67,512)
Provision (benefit) for income taxes.... 12,000 (12,000)
----------- ----------- ----------- ----------- ----------- ---------
Income (loss) from continuing
operations............................ $ (628,923) $ (541,528) $ (121,250) $(1,291,701) $ (261,214) $ (67,512)
=========== =========== =========== =========== =========== =========
Earnings per share data:
Loss from continuing operations..... (628,923) (1,291,701)
=========== ===========
Preferred stock dividend
requirements...................... (159,250) (484,804)
Preferred stock accretion........... 0 0
----------- -----------
Loss applicable to common
shares.......................... (788,173) (1,776,505)
=========== ===========
Basic and diluted loss per common
share............................. $ (3.28) $ (7.40)
=========== ===========
Weighted average shares
outstanding....................... 240,000 240,000
=========== ===========
<CAPTION>
PRO FORMA
INCLUDED TRANSACTIONS ADJUSTMENTS
------------------------------------- FOR THE
HISTORICAL INCLUDED
POWER HISTORICAL HISTORICAL TRANSACTIONS COMBINED
SURGE CONTINENTAL KZXY(FM) (NOTE 4) PRO FORMA
---------- ----------- ---------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net revenue............................. $ 238,647 $ 4,132,269
Broadcast operating expenses............ $ 745 173,484 $ 5,078 3,679,770
Time brokerage agreement fees, net...... (15,000) (56,500) $ 89,100 0
Depreciation and amortization........... 27,822 50,999 7,621 14,000 730,323
Corporate general and administrative
expenses.............................. (181,573) 385,523
--------- ---------- ---------- ----------- ------------
Operating income (loss)............. (13,567) 14,164 43,801 78,473 (663,347)
Interest expense........................ 954 (92,000) 818,025
Other income (expense), net............. 3 31,865
--------- ---------- ---------- ----------- ------------
Income (loss) from continuing operations
before income taxes................... (13,564) (29,032) 43,801 170,473 (1,449,507)
Provision (benefit) for income taxes.... 0
--------- ---------- ---------- ----------- ------------
Income (loss) from continuing
operations............................ $ (13,564) $ (29,032) $ 43,801 $ 170,473 $ (1,449,507)
========= ========== ========== =========== ============
Earnings per share data:
Loss from continuing operations..... (1,449,507)
============
Preferred stock dividend
requirements...................... (828,555)
Preferred stock accretion........... (232,845)
------------
Loss applicable to common
shares.......................... (2,510,907)
============
Basic and diluted loss per common
share............................. $ (10.46)
============
Weighted average shares
outstanding....................... 240,000
============
</TABLE>
- ---------------
See Notes to Unaudited Pro Forma Condensed Combined Financial Statements.
P-4
<PAGE> 50
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC.
1. GENERAL
The Merger will be accounted for under the purchase method of accounting as
a reverse merger since the shareholders of Faircom are receiving the larger
portion of voting rights in the merged company. The Included Transactions will
also be accounted for under the purchase method of accounting with Regent being
identified as the acquiror.
The historical financial statements reflect the financial position and
results of operations of Regent, Faircom, and the other Included Transactions
(the "Pro Forma Companies") and were derived from the respective entities
financial statements.
2. THE MERGER AND INCLUDED TRANSACTIONS:
The following table sets forth the consideration to be paid in cash and
shares of Regent's Preferred Stock to the common stockholders of Faircom and the
owners of each of the Included Transactions, the allocation of the consideration
to net assets acquired, station licenses and the resulting goodwill. For
purposes of computing the estimated purchase price for accounting purposes, the
value of shares issued is determined using the estimated fair value of net
assets received.
The purchase price of each acquisition has been allocated to the acquirees'
assets and liabilities based on their respective fair market values. The fair
value of assets acquired was determined based on an independent appraisal for
each consummated transaction.
<TABLE>
<CAPTION>
Total Consideration(a)
--------------------------------------------
FAIR CASH EXCLUDING
MARKET VALUE LIABILITIES ADJUSTED STATION
ACQUISITION SHARES OF STOCK ASSUMED(b) TOTAL NET ASSETS(c) LICENSES GOODWILL
----------- --------- ------------ -------------- ----------- ------------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Merger:
Regent................ 3,720,620 $ 1,723,643(d) $ 1,723,643 $ 1,072,975 $ 650,668
Included Transactions:
Park Lane............. $18,228,000 18,228,000 (1,725,000) $18,131,000 1,822,000
Alta/Power Surge...... 200,000 1,000,000 1,387,000 2,387,000 (388,000) 3,369,000 406,000
Continental........... 3,995,000 3,995,000 562,000 3,140,000 293,000
KZXY(FM).............. 5,418,000 5,418,000 289,000 4,662,000 464,000
--------- ----------- ----------- ----------- ----------- ----------- ----------
3,920,620 $ 2,723,643 $29,028,000 $31,751,643 $ (189,025) $28,302,000 $3,635,668
========= =========== =========== =========== =========== =========== ==========
</TABLE>
- ---------------
(a) Amounts include estimated acquisition costs and closing adjustments.
(b) Does not include $6,880,000 of liabilities assumed in the Park Lane stock
purchase transaction and $1,500,000 of liabilities assumed in the Alta/Power
Surge stock purchase transaction.
(c) Net of certain assets which will not be acquired and certain liabilities
which will not be assumed, including pre-existing intangible assets. See
Note 3.
(d) Represents the assigned value under reverse merger purchase accounting based
on the fair value of Regent's net assets as of March 31, 1998.
P-5
<PAGE> 51
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
OF REGENT COMMUNICATIONS, INC. -- (CONTINUED)
3. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET ADJUSTMENTS
The following table summarizes unaudited pro forma condensed combined
balance sheet adjustments:
<TABLE>
<CAPTION>
PRO FORMA INCLUDED TRANSACTIONS ADJUSTMENTS
MERGER ADJUSTMENTS ADJUSTMENTS ---------------------------------
(A) (B) MERGER (C) (D)
------------ ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................... ($1,000,000)
Accounts receivable................ (175,778)
Prepaid expenses and other......... (1,928,319)
------------ ------------ ------------ ------------ -----------
Total current assets............. (3,104,097)
Property and equipment, net........ 3,123,637 $ 289,000
Intangible assets, net............. $ 650,668 $ 650,668 20,287,508 5,129,000
Deferred charges and other
assets........................... (1,470,668) (1,470,668) 95,857 (138,000)
------------ ------------ ------------ ------------ -----------
Total assets..................... $ 0 ($820,000) ($820,000) $20,402,905 $5,280,000
============ ============ ============ ============ ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities...................... ($1,168,608)
Notes payable...................... (383,004)
Current portion of long term
debt............................. ($460,012) ($460,012) (2,480,837)
------------ ------------ ------------ ------------ -----------
Total current liabilities........ (460,012) (460,012) (4,032,449)
Long-term debt, net of current
maturities......................... ($10,000,000) 460,012 (9,539,988) 25,949,254 $5,280,000
Other...............................
------------ ------------ ------------ ------------ -----------
Total liabilities................ (10,000,000) (10,000,000) 21,916,805 5,280,000
Redeemable preferred stock.......... (6,748,751)
Shareholders' equity:
Preferred stock.................... 1,723,643 1,723,643 (4,595,875)
Common stock....................... 190,120 (263,902) (73,782) (3,058,549)
Additional paid-in capital......... 10,234,880 (3,252,495) 6,982,385 (10,000)
Retained earnings (deficit)........ (425,000) 972,754 547,754 12,899,275
------------ ------------ ------------ ------------ -----------
Total shareholders' equity
(deficit)...................... 10,000,000 (820,000) 9,180,000 5,234,851
------------ ------------ ------------ ------------ -----------
Total liabilities and
shareholders' equity
(deficit)...................... $0 ($820,000) ($820,000) $20,402,905 $5,280,000
============ ============ ============ ============ ===========
<CAPTION>
PRO FORMA PRO FORMA
ADJUSTMENTS ADJUSTMENTS
FOR THE FINANCING TRANSACTIONS FOR
INCLUDED ------------------------- FINANCING
TRANSACTIONS (E) (F) TRANSACTIONS
------------ ----------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash............................... ($1,000,000)
Accounts receivable................ (175,778)
Prepaid expenses and other......... (1,928,319)
----------- ------------ ----------- -----------
Total current assets............. (3,104,097)
Property and equipment, net........ 3,412,637
Intangible assets, net............. 25,416,508
Deferred charges and other
assets........................... (42,143)
----------- ------------ ----------- -----------
Total assets..................... $25,682,905 $ 0 $ 0 $ 0
=========== ============ =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable, accrued
liabilities and other current
liabilities...................... $(1,168,608)
Notes payable...................... (383,004)
Current portion of long term
debt............................. (2,480,837)
----------- ------------ ----------- -----------
Total current liabilities........ (4,032,449)
Long-term debt, net of current
maturities......................... 31,229,254 $ (7,800,000) $ (8,100,000) $(15,900,000)
Other............................... 0 2,580,000 2,580,000
----------- ------------ ----------- -----------
Total liabilities................ 27,196,805 (7,800,000) (5,520,000) (13,320,000)
Redeemable preferred stock.......... (6,748,751) 7,800,000 8,560,000 16,360,000
Shareholders' equity:
Preferred stock.................... (4,595,875) (3,000,000) (3,000,000)
Common stock....................... (3,058,549) (40,000) (40,000)
Additional paid-in capital......... (10,000)
Retained earnings (deficit)........ 12,899,275
----------- ------------ ----------- -----------
Total shareholders' equity
(deficit)...................... 5,234,851 (3,040,000) (3,040,000)
----------- ------------ ----------- -----------
Total liabilities and
shareholders' equity
(deficit)...................... $25,682,905 $ 0 $ 0 $ 0
=========== ============ =========== ===========
</TABLE>
P-6
<PAGE> 52
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF REGENT COMMUNICATIONS, INC. -- CONTINUED
- ---------------
(A) Records the conversion of Class A and Class B Faircom Subordinated Notes
into Faircom Common Stock immediately precedent to the Merger in the
aggregate amount of $10,000,000.
Also records a non-recurring charge to reflect the issuance of additional
stock options to certain Faircom executives to purchase 1,118,700 shares of
Faircom common stock conditional on the conversion of Class A and Class B
Faircom Subordinated Notes into Faircom Common Stock in conjunction with
the Merger. The total estimated non-recurring charge is approximately
$425,000.
(B) Records the reverse merger transaction, consisting of 3,720,796 shares of
preferred stock valued based on Regent's fair value of approximately
$1,723,643 at March 31, 1998, including acquisition costs. The excess
purchase price over the fair value of the net assets acquired is
approximately $651,000.
Also records non-recurring charges related to the write-off of Faircom's
deferred financing costs and recognize fees associated with the early
extinguishment of Faircom's debt.
(C) Records the purchase of the Included Transactions, except for KZXY (FM)
(See Note D), consisting of approximately $23,610,000 in cash and 200,000
shares of preferred stock valued at $1,000,000, for a total estimated
purchase price of $24,610,000. Adjustment reflects $164,651 of certain
assets which will not be acquired and $352,019 of certain liabilities which
will not be assumed in the Included Transactions. Adjustment also reflects
the elimination of existing goodwill and other intangible assets. The
excess purchase price over the fair value of the net assets acquired is
$26,161,000. The cash portion of the purchase price was funded through
the use of existing cash, that is in excess of operating needs, a bank
credit facility and the issuance of additional equity securities. See Notes
E and F. Adjustment also includes a credit facility fee of $1.2 million,
which is reflected in Deferred Charges and Other in the Pro Forma Condensed
Combined Balance Sheet.
(D) Records the purchase transaction of KZXY(FM) from Ruby for a total
estimated purchase price of $5,418,000. Adjustment reflects the appraised
values of assets acquired. A historical balance sheet does not appear
in the Form 8-K because the required financial information cannot be
obtained.
(E) Records final proceeds of $3,900,000 related to the original issuance of
1,000,000 shares of Series B Preferred Stock and the issuance of 780,000
shares of Series D Preferred Stock in the amount of $3,900,000 in
conjunction with the Included Transactions. Proceeds from the issuances
were used to reduce bank credit facility borrowings.
(F) Records the issuance of Series F Preferred Stock in the aggregate amount of
$10,250,000, the issuance of Series A in the aggregate amount of $100,000
and the issuance of 860,000, 80,000, and 50,000 warrants to the holders of
Series F Preferred Stock, Series A Preferred Stock, and Series B Preferred
Stock, respectively, in conjunction with the Included Transactions. Holders
of Series F Preferred Stock (and warrants related thereto) may put their
respective shares of Series F Preferred Stock to Regent; therefore, the
Series F Preferred Stock has been classified outside of equity. Shares of
the Series A, B and D Preferred Stock (but not the Series C and E Preferred
Stock) will be entitled to put to Regent for mandatory redemption on the
same basis if the put rights related to the Series F Preferred Stock are
exercised. Consequently, the Series A Preferred Stock has been reclassified
to be excluded from equity to reflect such anticipated "put rights." The
860,000 Put Warrants issued to holders of Series F Preferred Stock have
been assigned a fair value of $2,580,000 and have been classified as a
long-term liability. The 80,000 and 50,000 Warrants issued to holders of
Series A and Series B Preferred Stock have been assigned a fair value of
$160,000 and $100,000, respectively. Both amounts have been classified as
additional paid-in capital. Issuance fees of approximately $1,950,000
related to the Series A, B, D, and F Preferred Stock have been deducted
from the proceeds. Issuance fees of approximately $300,000 related to
Series C Preferred Stock have been presented as a reduction of
Shareholders' Equity.
P-7
<PAGE> 53
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS --
CONTINUED
OF REGENT COMMUNICATIONS, INC.
4. UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENT OF OPERATIONS ADJUSTMENTS
The following table summarizes unaudited pro forma condensed combining
statement of operations adjustments:
FOR THE THREE MONTHS ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
MERGER ADJUSTMENTS FOR THE MERGER INCLUDED TRANSACTIONS
------------------------------------- AND HISTORICAL -----------------------
(A) (B) (C) ACQUISITION (D) (E)
-------- -------- --------- -------------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Net revenue...............................
Broadcast operating expenses..............
Time brokerage agreement fees, net........
Depreciation and amortization............. $ 3,250 $ 3,250 $ 14,000
Corporate general and administrative
expenses................................ $ 130,000 130,000
-------- -------- --------- ----------- ------- ---------
Operating income (loss)............... (3,250) (130,000) (133,250) (14,000)
Interest expense.......................... $ (92,000)
Other income (expense), net...............
-------- -------- --------- ----------- ------- ---------
Loss from continuing operations before
income taxes............................ (3,250) (130,000) (133,250) (14,000) 92,000
Provision (benefit) for income taxes...... $(12,000) (12,000)
-------- -------- --------- ----------- ------- ---------
Income (loss) from continuing
operations.............................. $ (3,250) $ 12,000 $(130,000) $ (121,250) $(14,000) $ 92,000
======== ======== ========= =========== ======= =========
<CAPTION>
PRO FORMA
ADJUSTMENTS
INCLUDED TRANSACTIONS FOR THE
--------------------------------- INCLUDED
(F) (G) TRANSACTIONS
------- --------- ------------
<S> <C> <C> <C>
Net revenue............................... $ 0
Broadcast operating expenses.............. 0
Time brokerage agreement fees, net........ $ 89,100 89,100
Depreciation and amortization............. 14,000
Corporate general and administrative
expenses................................ $(92,473) (89,100) (181,573)
-------- --------- ------------
Operating income (loss)............... 92,473 0 78,473
Interest expense.......................... (92,000)
Other income (expense), net............... 0
-------- --------- ------------
Loss from continuing operations before
income taxes............................ 92,473 170,473
Provision (benefit) for income taxes...... 0
-------- --------- ------------
Income (loss) from continuing
operations.............................. $ 92,473 $ 0 $ 170,473
======== ========= ============
</TABLE>
- ---------------
(A) Reflects the amortization of intangible assets to be recorded as a result of
the Merger over 40 year estimated lives.
(B) Reflects the reduction in federal and state income taxes assuming a
consolidated return basis of reporting. No deferred income tax assets have
been recorded due to the uncertainty of the ultimate realization of future
benefits from such assets.
(C) Reflects the incremental compensation expense related to certain employment
agreements effective upon the Merger. A nonrecurring charge to reflect the
issuance of additional stock options to certain Faircom executives to
purchase 1,118,700 shares of Faircom Common Stock conditional on the
conversion of Class A and Class B Faircom Subordinated Notes into Faircom
Common Stock in conjunction with the Merger has not been reflected in the
Unaudited Pro Forma Condensed Combining Statement of Operations. The total
estimated nonrecurring charge is approximately $425,000.
(D) Reflects the amortization of intangible assets to be recorded as a result of
the Included Transactions over 40-year estimated lives less historical
amortization of goodwill and other intangible assets.
(E) Reflects a $196,000 reduction in interest expense associated with the
borrowings under a bank credit facility necessary to complete the Included
Transactions using an assumed rate of 8.25%. A 1/8% change in the interest
rate under the Credit Agreement would result in a further reduction in
interest expense of approximately $110,000 for the three months ended March
31, 1998. Adjustment also reflects amortization of estimated deferred
financing costs over the seven year loan period of approximately $54,000 for
the three months ended March 31, 1998. In conjunction with refinancing
existing debt obligations related to the Merger, Regent will incur a
prepayment penalty of approximately $370,000, and will write-off
approximately $800,000 of deferred financing costs. These items will be
accounted for as extraordinary items in the debt extinguishment period. The
Unaudited Pro forma Condensed Combined Balance Sheet as of March 31, 1998
reflects the issuance of 820,000 Put Warrants to the holders of Series F
Preferred Stock. Interest expense has been adjusted by $50,000 to reflect an
estimated change in fair value for such warrants during the three month
period ended March 31, 1998 using an assumed change in market value for
Regent's Common Stock of 10%. A 0% and 20% change in Regent's Common Stock
would result in a $80,000 decrease and $67,500 increase in interest expense,
respectively, for the three months ended March 31, 1998. Once such Warrants
have been issued, a valuation will be obtained on a quarterly basis and any
resulting change in value will be properly treated as an adjustment to
interest expense.
P-8
<PAGE> 54
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL STATEMENTS OF REGENT COMMUNICATIONS, INC. -- CONTINUED
5. UNAUDITED PRO FORMA CONDENSED COMBINING STATEMENTS OF OPERATIONS ADJUSTMENTS
The pro forma earnings per share calculation is based on the weighted-
average number of shares of common stock of Regent outstanding as of March 31,
1998. The preferred shares to be issued in conjunction with the Merger and the
Included Transactions have not been considered since their effect would be
antidilutive. The preferred stock dividend used in computing loss applicable to
common shares is based on the following Regent preferred shares being issued in
conjunction with the Merger and the Included Transactions as of January 1,
1997: (i) 3,720,796 shares of Series C Preferred Stock and 20,000 shares of
Series A Preferred Stock in conjunction with the Merger; and (ii) 780,000
shares each of Series B and D Preferred Stock, 200,000 shares of Series E
Preferred Stock and 2,050,000 shares of Series F Preferred Stock in conjunction
with the Included Transactions. Loss applicable to common shares has been
adjusted to reflect the accretion of Series A, B, D and F Preferred Stock to
their redemption value based on the earliest redemption date for each
respective Series of Preferred Stock.
P-9
<PAGE> 55
(c) EXHIBITS.
The Exhibit Index following the signature page hereof constitutes a
list of all Exhibits filed with or incorporated by reference in this Form 8-K/A.
<PAGE> 56
SIGNATURES
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 hereunto duly authorized.
REGENT COMMUNICATIONS, INC.
Date: March 30, 1999 By: /s/ TERRY S. JACOBS
------------------------------------
Terry S. Jacobs, Chairman of the Board and
Chief Executive Officer
<PAGE> 57
EXHIBIT INDEX
The following exhibits are filed, or incorporated by reference where
indicated, as part of this Current Report on Form 8-K/A:
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(a)* Agreement of Merger among Faircom Inc., Regent Merger Corp.,
Regent Communications, Inc., Blue Chip Capital Fund II Limited
Partnership and Miami Valley Venture Fund L.P. dated as of
December 5, 1997, as amended (previously filed as Exhibit 2(a)
to the Registrant's Form S-4 Registration Statement No.
333-46435 effective May 7, 1998 and incorporated herein by
this reference).
The following exhibits to the foregoing Agreement of Merger
are omitted as not material; the Company will furnish
supplementally a copy of any omitted schedule to the
Commission upon request:
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
1(j) Faircom Licenses
1(k) Faircom Senior Debt
1(x) Form of Amended and Restated Certificate of Incorporation of Regent
Communications, Inc.
1(bb) Regent Licenses
1(ff) Regent Subsidiaries
4(a) Certificate of Incorporation of Subsidiary
4(b) By-Laws of Subsidiary
10(a) Form of Regent Option Agreement
12B Rule 145 Letter
13(b)(3) Form of Redemption and Warrant Agreement
21(a) Capital Stock of Faircom Subsidiaries
21(b) Faircom Options
21(f) Faircom Affiliates
21(g) Rights to Acquire Securities (Faircom)
21(i) Title to Faircom Broadcast Assets
21(k-1) Faircom Contracts
21(m-1) Faircom Key Employees
21(m-2) Faircom Accounts and Safe Deposit Boxes
21(o) Faircom Related Transactions
21(p) Faircom Taxes
21(q) Faircom Employee Benefit Plans
21(r) Faircom Compliance with Commission Regulations
21(s) Faircom Tangible Personal Property
21(t) Faircom Real Property
21(u) Faircom Environmental
</TABLE>
E-1
<PAGE> 58
<TABLE>
<CAPTION>
Exhibit Description
------- -----------
<S> <C>
21(v) Faircom Insurance
21(bb) Faircom Litigation
21(ee) Faircom Intellectual Property
21(hh) Certain Changes (Faircom)
21(ii) Faircom Personnel
21(kk) Faircom Outstanding Debt
22(a) Information Regarding Regent Subsidiaries
22(f) Regent Affiliates
22(g) Rights to Acquire Securities (Regent)
22(i) Title to Regent Assets
22(k-1) Regent Contracts
22(m-1) Regent Key Employees
22(o) Regent Related Transactions
22(p) Regent Taxes
22(q) Regent Employee Benefit Plans
22(r) Regent Compliance with Commission Regulations
22(s) Regent Tangible Personal Property
22(t) Regent Real Property
22(u) Regent Environmental
22(v) Regent Insurance
22(bb) Regent Litigation
22(dd) Regent Required Consents
22(ee) Regent Intellectual Property
22(hh) Certain Changes (Regent)
22(ii) Regent Personnel
22(kk) Regent Outstanding Debt
22(ll) Exceptions to Negative Covenants
27c) Form of Opinion of Fulbright & Jaworski L.L.P.
28(b) Form of Opinion of Strauss & Troy
34 Form of Employment Agreement
</TABLE>
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(b)* Agreement of Merger dated as of December 17, 1997 among Regent
Communications, Inc., Regent Broadcasting of Victorville, Inc.
and Topaz Broadcasting, Inc. (previously filed as Exhibit 2(b)
to the Registrant's Form S-4 Registration Statement No.
333-46435 effective May 7, 1998 and incorporated herein by
this reference).
E-2
<PAGE> 59
The following schedules to the foregoing Agreement of Merger
are omitted as not material; the Company will furnish
supplementally a copy of any omitted schedule to the
Commission upon request:
Schedule Description
1(c)(ix) Excluded Assets
1(f) Attributes of Series E Preferred Stock
20(f) Interests in Other Businesses
20(g) Rights to Acquire Securities
20(j) Financials
20(k-1) Contracts
20(k-2) Trade Agreements
20(m-1) Employees with Annual Compensation over
$20,000
20(m-2) Topaz Bank Accounts
20(o) Debts and Obligations to Stockholder
20(p) Tax Exceptions
20(q) Employee Benefit Plans and Other
Arrangement
20(s) Tangible Personal Property
20(t) Environmental
20(u) Insurance
20(v) Compliance with Law
20(z) Litigation
20(cc) Intellectual Property
20(ff) Employees
20(gg) Debt of Topaz
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(c)* Asset Purchase Agreement dated December 17, 1997 between
Regent Broadcasting of Victorville, Inc. and Ruby
Broadcasting, Inc. (previously filed as Exhibit 2(c) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
The following schedules to the foregoing Asset Purchase
Agreement are omitted as not material; the Company will
furnish supplementally a copy of any omitted schedule to the
Commission upon request:
Schedule Description
1.2.9 Miscellaneous Excluded Assets
7.4 FCC Licenses and Exceptions
7.7 Personal Property
E-3
<PAGE> 60
Schedule Description
7.8 Leases and Real Property Exceptions
7.9 Assumed Contracts
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Employees
7.15 Litigation
7.16 Compliance with Law
7.17 Employee Benefit Plans and Other Arrangements
7.19 Changes Not in the Ordinary Course
A Deposit Escrow Agreement
B Time Brokerage Agreement
C Assignment and Assumption Agreement
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(d)* Asset Purchase Agreement dated December 9, 1997 between Regent
Broadcasting of Kingman, Inc. and Continental Radio
Broadcasting, L.L.C. (previously filed as Exhibit 2(d) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
The following schedules and exhibits to the foregoing Asset
Purchase Agreement are omitted as not material; the Company
will furnish supplementally a copy of any omitted schedule to
the Commission upon request:
Schedule Description
1.2.9 Miscellaneous Excluded Assets
7.4 Stations Licenses, Etc.
7.7 Tangible Personal Property
7.8 Real Property
7.9 Contracts (including identification
of Material Contracts)
7.11 Environmental Matters
7.12 Intellectual Property
7.13 Financial Statements
7.14 Personnel Information
7.15 Litigation
7.16 Compliance With Laws
7.17 Employee Benefit Plans
E-4
<PAGE> 61
Exhibit Description
A Indemnification Escrow Agreement
B Deposit Escrow Agreement
C Agreement re Allocation of Purchase Price
D Assignment and Assumption Agreement
E Opinion of Seller's Corporate Counsel
F Opinion of Seller's FCC Counsel
G Opinion of Buyer's Counsel
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
2(e)* Stock Purchase Agreement dated as of June 16, 1997 among
Regent Communications, Inc. and the shareholders of The Park
Lane Group, as amended (previously filed as Exhibit 2(e) to
the Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
The following exhibits to the foregoing Stock Purchase
Agreement are omitted as not material; the Company will
furnish supplementally a copy of any omitted schedule to the
Commission upon request:
Exhibit Description
A Deposit Escrow Agreement
C Opinion of Counsel for Sellers
D Form of FCC Opinion
E Opinion of Counsel for Buyer
F Consulting and Non-Competition Agreement
G Time Brokerage Agreement
H Required Consents
2(f)* Agreement of Merger among Alta California Broadcasting, Inc.,
Regent Acquisition Corp. and Regent Communications, Inc. dated
October 10, 1997 (previously filed as Exhibit 2(f) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
The following exhibits to the foregoing Agreement of Merger
are omitted as not material; the Company will furnish
supplementally a copy of any omitted schedule to the
Commission upon request:
E-5
<PAGE> 62
Exhibit Description
1(c)(x) Exceptions to Broadcast Assets
1(d) Consolidated 1997 Budget Projections
1(k) Licenses
20(f) Affiliates of Alta
20(g) Exceptions to Rights to Acquire Securities
20(i) Exceptions to Title to Broadcast Assets
20(k-1) List of Contracts Relative to the Stations
20(k-2) List of Balances of Trade Accounts
20(k-3) Percentages
20(m-1) Employees exceeding $20,000
20(m-2) Bank Accounts of Alta
20(o) Related Transactions
20(p) Taxes
20(q) Employee Benefit Plans
20(x) Compliance with FCC Regulations
20(s) Personal Property
20(t) Real Property
20(u) Environmental Matters
20(v) Insurance
20(bb) Litigation
20(ee) Intellectual Property
20(ii) Personnel Information
20(jj) Outstanding Debt
20(kk) Certain Negative Covenants
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4(a)# Amended and Restated Certificate of Incorporation of Regent
Communications, Inc.
4(b)* Amended and Restated By-Laws of Regent Communications, Inc.
(previously filed as Exhibit 3(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(c)# Second Amended and Restated Stockholders' Agreement dated as
of June 15, 1998 among Regent Communications, Inc., Terry S.
Jacobs, William L. Stakelin, Waller-Sutton Media Partners,
L.P., William H. Ingram, WGP Corporate Development Associates
V, L.P., WGP Corporate Development Associates (Overseas) V,
L.P., River Cities Capital Fund Limited Partnership, BMO
Financial, Inc., General Electric Capital Corporation, Joel M.
Fairman, Miami Valley Venture Fund II Limited Partnership, and
Blue Chip Capital Fund II Limited Partnership (excluding
exhibits not deemed material or filed separately in executed
form).
E-6
<PAGE> 63
EXHIBIT
NUMBER EXHIBIT DESCRIPTION
4(d)# Stock Purchase Agreement dated June 15, 1998 among Regent
Communications, Inc., Waller-Sutton Media Partners, L.P., WPG
Corporate Development Associates V, L.P., WPG Corporate
Development Associates (Overseas) V, L.P., General Electric
Capital Corporation, River Cites Capital Fund Limited
Partnership and William H. Ingram (excluding exhibits not
deemed material or filed separately in executed form).
4(e)# Registration Rights Agreement dated June 15, 1998 among Regent
Communications, Inc., PNC Bank, N.A., Trustee, Waller-Sutton
Media Partners, L.P., WPG Corporate Development Associates V,
L.P., WPG Corporate Development Associates (Overseas) V, L.P.,
BMO Financial, Inc., General Electric Capital Corporation,
River Cites Capital Fund Limited Partnership, Terry S. Jacobs,
William L. Stakelin, William H. Ingram, Blue Chip Capital Fund
II Limited Partnership, Miami Valley Venture Fund L.P. and
Thomas Gammon (excluding exhibits not deemed material or filed
separately in executed form).
4(f)# Warrant for the Purchase of 650,000 Shares of Common Stock
issued by Regent Communications, Inc. to Waller-Sutton Media
Partners, L.P. dated June 15, 1998 (See Note 1 below).
4(g)# Warrant for the Purchase of 50,000 Shares of Common Stock
issued by Regent Communications, Inc. to General Electric
Capital Corporation dated June 15, 1998.
4(h)# Agreement to Issue Warrant dated as of June 15, 1998 between
Regent Communications, Inc. and General Electric Capital
Corporation (excluding exhibits not deemed material or filed
separately in executed form).
4(i)* Grant of Incentive Stock Option effective June 15, 1998 in
favor of Terry S. Jacobs (previously filed as Exhibit 4(i)
to the Registrant's Form 10-Q filed on August 19, 1998 and
incorporated herein by this reference).
4(j)* Grant of Incentive Stock Option effective June 15, 1998 in
favor of William L. Stakelin (previously filed as Exhibit 4(j)
to the Registrant's Form 10-Q filed on August 19, 1998 and
incorporated herein by this reference).
4(k)* Warrant for the Purchase of 80,000 Shares of Common Stock
issued by Regent Communications, Inc. to River Cities
Capital Fund Limited Partnership dated June 15, 1998
(previously filed as Exhibit 4(k) to the Registrant's
Form 10-Q filed on August 19, 1998 and incorporated herein by
this reference).
4(l)* Stock Purchase Agreement dated as of May 20, 1997 between
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(b) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
4(m)* Stock Purchase Agreement dated as of May 20, 1997 between
River Cities Capital Fund Limited Partnership and Regent
Communications, Inc. (previously filed as Exhibit 4(c) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
4(n)* Stock Purchase Agreement dated as of November 26, 1997 and
Terry S. Jacobs and Regent Communications, Inc. (previously
filed as Exhibit 4(d) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
4(o)* Stock Purchase Agreement dated as of December 1, 1997
between William L. Stakelin and Regent Communications,
Inc. (previously filed as Exhibit 4(e) to the Registrant's
Form S-4 Registration Statement No. 333-46435 effective
May 7, 1998 and incorporated herein by this reference).
4(p)* Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and General Electric
Capital Corporation (previously filed as Exhibit 4(f) to
the Registrant's Form S-4 Registration Statement No.
333-46435 effective May 7, 1998 and incorporated herein by
this reference).
4(q)* Stock Purchase Agreement dated as of December 8, 1997
between Regent Communications, Inc. and BMO Financial,
Inc. (previously filed as Exhibit 4(g) to the Registrant's
Form S-4 Registration Statement No. 333-46435 effective
May 7, 1998 and incorporated herein by this reference).
4(r)* Amended and Restated Redemption and Warrant Agreement
dated as of March 31, 1998 among Regent Communications,
Inc., Blue Chip Capital Fund II Limited Partnership,
Miami Valley Venture Fund L.P. and Faircom Inc. (previously
filed as Exhibit 4(i) to the Registrant's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998
and incorporated herein by this reference).
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<PAGE> 64
4(s)* Credit Agreement dated as of November 14, 1997 among
Regent Communications, Inc., the lenders listed therein,
as Lenders, General Electric Capital Corporation, as
Documentation Agent and Bank of Montreal, Chicago Branch,
as Agent (excluding exhibits not deemed material or filed
separately in executed form) (previously filed as Exhibit
4(j) to the Registrant's Form S-4 Registration Statement
No. 333-46435 effective May 7, 1998 and incorporated herein
by this reference).
4(t)* Revolving Note issued by Regent Communications, Inc. to
Bank of Montreal, Chicago Branch dated November 14, 1997
in the principal amount of $20,000,000 (See Note 2 below)
(previously filed as Exhibit 4(k) to the Registrant's Form
S-4 Registration Statement No. 333-46435 effective May 7,
1998 and incorporated herein by this reference).
4(u)* Agreement to Issue Warrant dated as of March 25, 1998
between Regent Communications, Inc. and River Cities
Capital Fund Limited Partnership (previously filed as
Exhibit 4(l) to the Registrant's Form S-4 Registration
Statement No. 333-46435 effective May 7, 1998 and
incorporated herein by this reference).
4(v)* Regent Communications, Inc. Faircom Conversion Stock
Option Plan (previously filed as Exhibit 4(m) to the
Registrant's Form S-4 Registration Statement No. 333-46435
effective May 7, 1998 and incorporated herein by this
reference).
4(w)# First Amendment to Credit Agreement dated as of February 16,
1998 among Regent Communications, Inc., the financial
institutions listed therein, as lenders, General Electric
Capital Corporation, as Documentation Agent, and Bank of
Montreal, Chicago Branch as Agent.
4(x)# Second Amendment and Limited Waiver to Credit Agreement
dated as of June 10, 1998 among Regent Communications, Inc.
the financial institutions listed therein, as lenders,
General Electric Capital Corporation, as Documentation
Agent, and Bank of Montreal, Chicago Branch as Agent.
16 Letter dated March 30, 1999 from BDO Seidman, LLP to Regent
Communications, Inc.
20(a)# Form 10-K of Faircom Inc. for the year ended December 31,
1997, including all exhibits thereto, as filed with the
Securities and Exchange Commission on March 30, 1998.
20(b)# Form 10-Q of Faircom Inc. for the quarter ended March 31,
1998, including all exhibits thereto, as filed with the
Securities and Exchange Commission on May 14, 1998.
20(c)# Executive Employment Agreement dated June 15, 1998 between
Regent Communications, Inc. and Joel M. Fairman (excluding
exhibits not deemed material or filed separately in
executed form).
20(d)# Consulting and Non-Competition Agreement between Regent
Communications, Inc. and James H. Levy.
23(a) Consent of PricewaterhouseCoopers LLP
23(b) Consent of PricewaterhouseCoopers LLP
23(c) Consent of PricewaterhouseCoopers LLP
23(d) Consent of PricewaterhouseCoopers LLP
23(e) Consent of Stockman Kast Ryan & Company, P.C.
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<PAGE> 65
99(a)# The following financial statements appearing on pages F-50
through and including F-102 and pages F-109 through and
including F-130 of the Registrant's Form S-4 Registration
Statement No. 333-46435 effective May 7, 1998, have been
incorporated by reference in this Form 8-K/A and copies of
which are filed as this Exhibit 99(a):
REGENT COMMUNICATIONS, INC.
Report of Independent Accountants.
Consolidated Balance Sheets at December 31, 1997 and
1996.
Consolidated Statements of Operations for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996
Consolidated Statements of Shareholders' Equity for the
year ended December 31, 1997 and the period from
November 5, 1996 (inception) through December 31,
1996.
Consolidated Statements of Cash Flows for the year ended
December 31, 1997 and the period from November 5, 1996
(inception) through December 31, 1996
Notes to Consolidated Financial Statements
THE PARK LANE GROUP AND SUBSIDIARIES
Report of Independent Accountants.
Consolidated Balance Sheets at December 31, 1997 and
1996.
Consolidated Statements of Operations for the years ended
December 31, 1997, 1996 and 1995.
Consolidated Statements of Shareholders' Equity (Deficit)
for the years ended December 31, 1997, 1996 and 1995.
Consolidated Statements of Cash Flows for the years ended
December 31, 1997, 1996 and 1995.
Notes to Consolidated Financial Statements
ALTA CALIFORNIA BROADCASTING, INC. AND SUBSIDIARY
Independent Auditors' Report
Consolidated Balance Sheet at March 31, 1997
Consolidated Statement of Operations for the year ended
March 31, 1997
Consolidated Statement of Stockholder's Equity
(Deficiency) for the year ended March 31, 1997
Consolidated Statement of Cash Flows for the year ended
March 31, 1997
Notes to Consolidated Financial Statements
Consolidated Balance Sheet at December 31, 1997.
Consolidated Statements of Operations for the nine months
ended December 31, 1996 and 1997.
Consolidated Statement of Stockholder's Equity
(Deficiency) for the nine months ended December 31,
1997.
Consolidated Statements of Cash Flows for the nine months
ended December 31, 1996 and 1997.
Notes to Consolidated Financial Statements
POWER SURGE, INC.
Independent Auditors' Report
Balance Sheet at December 31, 1997
Statement of Operations for the year ended December 31,
1997.
Statement of Stockholders' Equity for the year ended
December 31, 1997
Statement of Cash Flows for the year ended December 31,
1997.
Notes to Financial Statements.
CONTINENTAL RADIO BROADCASTING L.L.C.
Report of Independent Accountants.
Balance Sheet at December 31, 1997
Statement of Operations for the year ended December 31,
1997.
Statement of Changes in Partners' Deficit for the year
ended December 31, 1997
Statement of Cash Flows for the year ended December 31,
1997.
Notes to Financial Statements.
RADIO STATION KZXY(FM)
Report of Independent Accountants.
Statement of Revenues and Direct Expenses for the years
ended December 31, 1997 and 1996.
Notes to Statement of Revenues and Direct Expenses
99(b)# The following financial statements appearing under Item 7A on
pages 4 through and including 23 of the Form 8-K/A, Amendment
No. 2 to Current Report dated June 30, 1997 (filing date
September 12, 1997) of Faircom Inc. have been incorporated by
reference in this Form 8-K/A and copies of which are filed as
this Exhibit 99(b):
TREASURE RADIO ASSOCIATES LIMITED PARTNERSHIP (WYHT (FM) AND
WMAN (AM))
Report of Independent Accountants
Balance Sheets at November 30, 1996 and 1995
Statement of Partners' Deficit for the years ended
November 30, 1996 and 1995.
Statement of Income for the years ended November 30, 1996
and 1995.
Statement of Cash Flows for the years ended November 30,
1996 and 1995
Notes to Financial Statements.
Condensed Balance Sheets at May 31, 1997 and 1996.
Condensed Statements of Operations for the six months ended
May 31, 1997 and 1996
Condensed Statements of Cash Flows for the six months ended
May 31, 1997 and 1996
Note to Interim Financial Statements
99(c)# The following pro forma financial information, appearing
under the heading "Unaudited Pro Forma Condensed Combined
Financial Statements of Regent Communications, Inc." on pages
56 through and including 63 of the Company's Form S-4
Registration Statement No. 333-46435 effective May 7, 1998,
has been incorporated by reference in this Form 8-K/A and
copies of which are filed as this Exhibit 99(c):
Pro Forma Condensed Combined Financial Statements
Introduction
Pro Forma Condensed Combined Balance Sheet at December 31,
1997
Pro Forma Condensed Combined Statement of Operations for the
year ended December 31, 1997
Notes to Pro Forma Condensed Combined Financial Statements
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<PAGE> 66
*Incorporated by reference as indicated.
#Previously filed as an exhibit to the initial Form 8-K or Amendment No. 1
thereto which this Amendment No 2 to Form 8-K/A amends and incorporated herein
by this reference.
Notes:
1. Six substantially identical Warrants for the purchase of shares of
Registrant's common stock were issued as follows:
Waller-Sutton Media Partners, L.P. 650,000
WPG Corporate Development Associates V, L.P. 112,580
WPG Corporate Development Associates (Overseas) V, L.P. 17,420
General Electric Capital Corporation 50,000
River Cites Capital Fund Limited Partnership 20,000
William H. Ingram 10,000
2. Two substantially identical notes were issued to Bank of Montreal,
Chicago Branch, in the principal amounts of $15,000,000
and $20,000,000.
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<PAGE> 1
Exhibit 16
March 30, 1999
Securities and Exchange Commission
450 5th Street N.W.
Washington, D.C. 20549
Gentlemen:
We have been furnished with a copy of the response to Item 4 of Form 8-K/A,
Amendment No. 2 for the event that occurred on June 15, 1998, to be filed by
Regent Communications, Inc., which acquired by merger our former client,
Faircom Inc., on that date. We agree with the statements made in response to
that Item insofar as they relate to our firm.
Very truly yours,
BDO Seidman, LLP
<PAGE> 1
Exhibit 23(a)
We consent to the incorporation by reference in this Form 8-K/A, Amendment
No. 2, of our report dated January 30, 1998, on our audit of the consolidated
financial statements of Regent Communications, Inc. as of December 31, 1997 and
1996, and for the three years in the period ending December 31, 1997, appearing
in the registration statement on Form S-4 (SEC File No. 333-46435) of Regent
Communications, Inc. filed with the Securities and Exchange Commission pursuant
to the Securities Act of 1933.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
January 30, 1998
<PAGE> 1
Exhibit 23(b)
We consent to the incorporation by reference in this Form 8-K/A, Amendment
No. 2, of our report dated February 16, 1998, on our audit of the consolidated
financial statements The Park Lane Group and Subsidiaries as of December 31,
1997 and 1996, and for the three years in the period ending December 31, 1997,
appearing in the registration statement on Form S-4 (SEC File No. 333-46435) of
Regent Communications, Inc. filed with the Securities and Exchange Commission
pursuant to the Securities Act of 1933.
PricewaterhouseCoopers LLP
Menlo Park, California
February 16, 1998
<PAGE> 1
Exhibit 23(c)
We consent to the incorporation by reference in this Form 8-K/A, Amendment
No. 2, of our report dated February 10, 1998, on our audit of the consolidated
financial statements of Continental Radio Broadcasting, L.L.C. as of December
31, 1997 and for the year then ended, appearing in the registration statement on
Form S-4 (SEC File No. 333-46435) of Regent Communications, Inc. filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
February 10, 1998
<PAGE> 1
Exhibit 23(d)
We consent to the incorporation by reference in this Form 8-K/A, Amendment
No. 2, of our report dated January 9, 1998, on our audit of the Statement of
Revenues and Direct Expenses of Radio Station KZXY (FM) for the years ended
December 31, 1997 and 1996, appearing in the registration statement on Form S-4
(SEC File No. 333-46435) of Regent Communications, Inc. filed with the
Securities and Exchange Commission pursuant to the Securities Act of 1933.
PricewaterhouseCoopers LLP
Cincinnati, Ohio
January 9, 1998
<PAGE> 1
INDEPENDENT AUDITORS' CONSENT
Exhibit 23(e)
We consent to the incorporation by reference in this Form 8-K/A under the
Securities Act of 1934 of Regent Communications, Inc. of our report dated
March 13, 1998 relating to the financial statements of Power Surge, Inc. for
the year ended December 31, 1997, and of our report dated June 25, 1997 and
October 10, 1997 relating to the financial statements of Alta California
Broadcasting, Inc. and Subsidiary for the year ended March 31, 1997, contained
in Registration Statement No. 333-46435 of Regent Communications, Inc. on Form
S-4 under the Securities Act of 1933.
STOCKMAN KAST RYAN & COMPANY, P.C.
Colorado Springs, Colorado
March 30, 1999
