<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-23364
MECKLERMEDIA CORPORATION
------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 06-1385519
______________________________________ _______________________________
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) No.)
20 KETCHUM STREET
WESTPORT, CONNECTICUT 06880
______________________________________ _______________________________
(Address of principal executive offices) (Zip Code)
(203) 226-6967
---------------
(Registrant's telephone number, including area code)
NOT APPLICABLE
--------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
----- -----
The number of outstanding shares the registrant's common stock, par value
$.01 per share, as of March 31, 1997, was 8,513,202.
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
-----------------------------------------
INDEX
-----
<TABLE>
<CAPTION>
Page
-----
<S> <C> <C>
PART I Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1997
and September 30, 1996 3-4
Consolidated Statements of Operations -
Three and Six Months Ended March 31, 1997 and 1996 5
Consolidated Statements of Cash Flows - Six Months
Ended March 31, 1997 and 1996 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-12
PART II. Other Information 13-14
Signatures 15
EXHIBIT 11. STATEMENT REGARDING COMPUTATION OF
PER SHARE EARNINGS (LOSS) 16
EXHIBIT 27. FINANCIAL DATA SCHEDULE 17
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND SEPTEMBER 30, 1996
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $23,267 $19,859
Accounts receivable, less
allowances of $1,120 and $647, 13,107 7,327
respectively
Current note receivable 221 213
Income taxes receivable 9 6
Inventory 529 511
Prepaid trade show expenses 1,072 2,265
Prepaid expenses and other 616 578
------- -------
Total current assets 38,821 30,759
LONG-TERM NOTE RECEIVABLE - 205
DEFERRED PROMOTION COSTS, NET OF
ACCUMULATED AMORTIZATION 431 481
OTHER ASSETS 23 33
PROPERTY AND EQUIPMENT:
Leasehold improvements 326 297
Furniture, fixtures and equipment 845 517
Computer equipment 2,023 1,497
------- -------
3,194 2,311
Less: Accumulated depreciation
and amortization (962) (652)
------- -------
2,232 1,659
INTANGIBLE ASSETS, net of accumulated
amortization of $569 and $193, respectively 2,845 1,449
------- -------
Total assets $44,352 $34,586
======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
3
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND SEPTEMBER 30, 1996
(Dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------------- ----------------
(Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,685 $ 2,876
Accrued expenses 6,350 2,237
Current income taxes payable 251 75
Deferred magazine revenue 3,005 2,586
Deferred trade show revenue 10,282 12,138
------- -------
Total current liabilities 23,573 19,912
DEFERRED MAGAZINE REVENUE - LONG-TERM 431 281
------- -------
Total liabilities 24,004 20,193
COMMITMENTS - -
STOCKHOLDERS' EQUITY:
Preferred stock ($.01 par value,
1,000,000 shares authorized,
no shares issued and
outstanding) - -
Common stock ($.01 par value,
35,000,000 shares authorized,
8,513,202 and 8,479,243
shares issued and outstanding
at March 31, 1997 and September
30, 1996, respectively) 85 85
Additional paid-in capital 23,791 23,348
Accumulated deficit (3,457) (9,050)
Foreign currency translation
adjustment (71) 10
------- -------
Total stockholders' equity 20,348 14,393
------- -------
Total liabilities and
stockholders' equity $44,352 $34,586
======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these balance sheets.
4
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
------------------ ----------------
1997 1996 1997 1996
--------- ------- ------- --------
<S> <C> <C> <C> <C>
REVENUES:
Magazines and newspaper $ 4,765 $ 3,281 $10,293 $ 6,305
Trade shows 14,925 2,059 26,122 5,894
Other 826 382 1,587 691
------- ------- ------- -------
20,516 5,722 38,002 12,890
------- ------- ------- -------
COST OF SALES AND DIRECT COSTS:
Magazines and newspaper 3,380 2,115 6,460 4,242
Trade shows 7,200 1,602 13,470 3,990
Other 425 174 850 261
------- ------- ------- -------
11,005 3,891 20,780 8,493
------- ------- ------- -------
Gross profit after cost of sales and 9,511 1,831 17,222 4,397
direct costs
OPERATING EXPENSES:
Advertising, promotion and selling 3,667 2,454 7,255 4,514
General and administrative 2,452 1,377 4,648 2,825
------- ------- ------- -------
Operating income (loss) 3,392 (2,000) 5,319 (2,942)
------- ------- ------- -------
Interest income, net 274 234 546 507
------- ------- ------- -------
Income (loss) before income taxes 3,666 (1,766) 5,865 (2,435)
Provision for income taxes 158 26 273 45
------- ------- ------- -------
Net income (loss) $ 3,508 $(1,792) $ 5,592 $(2,480)
======= ======= ======= =======
Income (loss) per share $0.40 $(0.21) $0.64 $(0.30)
======= ======= ======= =======
Weighted average number of common shares 8,786 8,392 8,782 8,384
======= ======= ======= =======
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
5
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Six
Months Ended Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 5,592 $ (2,480)
Adjustments to reconcile net cash
used in operations-
Depreciation and amortization 686 214
Accretion of interest income
on note receivable (16) (22)
Changes in assets and liabilities -
(Increase) in accounts
receivable (5,750) (910)
(Increase) decrease in
inventory (18) 114
Decrease (increase) in
prepaid trade show expenses 1,193 (193)
Decrease (increase) in
deferred promotion costs 50 (460)
(Increase) in prepaid
expenses and other (31) (200)
Increase in accounts payable
and accrued expenses 4,892 1,007
Increase (decrease) in income
taxes payable 176 (26)
Increase in deferred magazine
revenue 569 281
(Decrease) increase in
deferred trade show revenue (1,856) 1,925
(Decrease) in deferred book
revenue - (117)
------- -------
Net cash provided by
(used in) operating
activities 5,487 (867)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from note receivable 213 200
Sales of short-term investments - 9,947
Purchases of short-term investments - (9,947)
Additions to property and equipment (883) (502)
Additions to intangibles (1,771) (266)
------- -------
Net cash provided by
(used in) investing
activities (2,441) (568)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of options 443 168
Repayment of notes and loans - (14)
------- -------
Net cash provided by
(used in) financing
activities 443 154
------- -------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (81) 56
------- -------
Net increase (decrease) in cash and
cash equivalents 3,408 (1,225)
------- -------
CASH AND CASH EQUIVALENTS, beginning of
period 19,859 19,442
------- -------
CASH AND CASH EQUIVALENTS, end of period $23,267 $18,217
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid for interest $ - $ 1
Cash paid for income taxes $ 92 $ 57
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these statements.
6
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(UNAUDITED)
(Dollars in thousands, except per share data)
(1) The Company:
-----------
The Company is a leading provider of information about the Internet through its
(i) publication of INTERNET WORLD, a monthly general circulation magazine, (ii)
publication of WEB WEEK, a weekly business-to-business controlled circulation
newspaper, (iii) publication of WEB DEVELOPER, a bimonthly general circulation
magazine for technical, hands-on Internet professionals, (iv) publication of
INTERNET SHOPPER, a quarterly general circulation magazine, (v) INTERNET WORLD
trade shows and conferences, and (vi) iWORLD, the Company's electronic daily
newspaper for Internet news and resources located on the World-Wide Web. Since
all of the Company's products and services relate to providing Internet-related
information to business and information technology professionals, and consumers,
the Company's success is dependent on the continued growth of the Internet.
(2) Basis of Presentation:
---------------------
The accompanying unaudited financial statements have been prepared from the
books and records of the Company in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements. It is suggested that these unaudited
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's report on Form
10-KSB for the fiscal year ended September 30, 1996. In the opinion of
management, all adjustments considered necessary for a fair presentation of the
results for the interim periods presented have been reflected in such financial
statements. Certain of the Company's operations are cyclical in nature. The
number and size of trade shows and magazine promotions in a particular quarter
has and will continue to significantly impact the Company's quarterly results.
Accordingly, presentation of quarterly results of operations is not necessarily
indicative of annual results or trends.
Certain amounts have been reclassified in the prior year statements to conform
to the current year presentation.
The Company does not believe any recently issued accounting standards will have
a material impact on its financial condition or results of operations.
(3) Inventory:
---------------
Components of inventory include:
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
--------- -------------
<S> <C> <C>
Finished goods $ - $ 74
Work-in-process 529 437
----- -----
$ 529 $ 511
===== =====
</TABLE>
(4) Income Taxes:
-------------
Income taxes are provided at the projected annual effective tax rate. The income
tax provision for the fiscal 1997 interim period is less than the federal
statutory rate due primarily to the utilization of available net operating loss
carryforwards.
7
<PAGE>
(5) Common Stock:
------------
On December 23, 1996, the Company's Board of Directors authorized the Company to
purchase up to $2 million of the Company's common stock in the public market.
For the six months ended March 31, 1997, the Company did not purchase any of its
common stock.
8
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
INTRODUCTION
- ------------
Certain of the Company's operations are cyclical in nature. The number and size
of trade shows and magazine promotions in a particular quarter has and will
continue to significantly impact the Company's quarterly results. Accordingly,
presentation of quarterly results of operations is not necessarily indicative of
annual results or trends.
Since 1993, the Company has focused its efforts toward the Internet, launching
INTERNET WORLD magazine in August 1993. The Company launched its INTERNET WORLD
trade shows in 1994. In addition, the Company added its WEB WEEK newspaper and
iWORLD World-Wide Web site in 1995, and in October 1995, launched the magazine
WEB DEVELOPER. In March 1997, the Company launched INTERNET SHOPPER magazine.
Since all of the Company's products and services relate to providing Internet-
related information to business and information technology professionals, and
consumers, the Company's success is dependent on the continued growth of the
Internet.
RESULTS OF OPERATIONS
- ---------------------
Comparison of the Three Months Ended March 31, 1997 and 1996
Revenues. Revenues for the three months ended March 31, 1997, increased 259% to
approximately $20.5 million from $5.7 million for the comparable period in
fiscal 1996. Of this $14.8 million increase, approximately $1.5 million was a
result of greater revenues from magazines and newspaper, including $1.3 million
related to the growth in advertising from WEB WEEK which was partially related
to the increase in frequency to eight issues published in the three months ended
March 31, 1997, compared to three issues in the same period of the prior year.
Growth in advertising and paid circulation of WEB DEVELOPER and the launch of
INTERNET SHOPPER contributed approximately $300,000 of the revenue increase for
the period. Trade show revenues for the three months ended March 31, 1997, of
approximately $14.9 million increased by approximately $12.9 million, or 625%,
from the comparable period in fiscal 1996. This increase was due primarily to
the timing of Spring 1997 INTERNET WORLD, which had paid exhibition space of
approximately 290,000 square feet. Spring 1996 INTERNET WORLD, which had paid
exhibition space of 120,000 square feet, was held in the third quarter of fiscal
1996 as a result of venue availability. Other revenues increased to $826,000
for the three months ended March 31, 1997, from $382,000 in the comparable
period in fiscal 1996, due primarily to the continued development and marketing
of subscriber lists for rental and advertising and other revenues from iWORLD,
the Company's electronic daily newspaper for Internet news and resources located
on the World-Wide Web.
Cost of sales and direct costs. Cost of sales and direct costs include the
costs associated with editing, producing and distributing the Company's
publications and costs associated with producing its trade shows. Cost of sales
and direct costs for the three months ended March 31, 1997, increased to
approximately $11.0 million from $3.9 million for the comparable period in
fiscal 1996. Magazine and newspaper cost of sales and direct costs increased by
approximately $1.3 million for the three month period ended March 31, 1997, from
the comparable period for fiscal 1996. Of this increase, $887,000 related to
the change in publication frequency of WEB WEEK newspaper from monthly to weekly
and $192,000 related to the launch of INTERNET SHOPPER in March 1997. The cost
of sales and direct costs associated with magazines and
9
<PAGE>
newspaper increased from approximately 64% to 71% of magazine and newspaper
revenue. This percentage increase is a function of the increase in frequency of
WEB WEEK from monthly to weekly and the launch of INTERNET SHOPPER in March
1997. Gross profit after cost of sales and direct costs for magazines and
newspaper for the three months ended March 31, 1997, increased 19% to
approximately $1.4 million from $1.2 million for the comparable period in fiscal
1996. Trade show cost of sales and direct costs for the three months ended March
31, 1997, increased by approximately $5.6 million to $7.2 million from the
comparable period in fiscal 1996. The increase was due to the expansion and
timing of Spring 1997 INTERNET WORLD. In fiscal 1996, Spring INTERNET WORLD was
held during the three months ended June 30, 1996. Gross profit after cost of
sales and direct costs for trade shows for the three months ended March 31,
1997, increased $7.3 million to approximately $7.7 million from $457,000 for the
comparable period in fiscal 1996. The cost of sales and direct costs associated
with trade shows decreased from 78% to 48% of trade show revenue. This
percentage decrease is primarily attributable to the efficiencies of the larger
Spring INTERNET WORLD show, as well as the costs incurred in fiscal 1996
associated with canceling the Company's future VR WORLD trade shows. Cost of
sales and direct costs for other revenues increased to $425,000 for the three
month period ended March 31, 1997, compared to $174,000 in the comparable period
in fiscal 1996, due primarily to the expansion of the Company's iWORLD
electronic daily newspaper located on the World-Wide Web and costs associated
with list rentals.
Advertising, promotion and selling expenses. Advertising, promotion and selling
expenses represent costs related to circulation and promotion, including direct
mail, newsstand promotion and fulfillment expense, sales commissions, and
advertising and marketing staff. In addition, advertising, promotion and
selling expenses include the amortization of deferred promotion costs.
Advertising, promotion and selling expenses for the three months ended March 31,
1997, increased 49% to approximately $3.7 million from $2.5 million for the
comparable period in fiscal 1996. Of this increase, approximately $524,000
related to WEB WEEK due primarily to increased selling expense as a result of
higher advertising revenues. For the three months ended March 31, 1997,
advertising, promotion and selling expense for INTERNET WORLD, WEB DEVELOPER,
INTERNET SHOPPER, and iWORLD increased by $682,000 from the same period in
fiscal 1996.
General and administrative expenses. General and administrative expenses
include salaries, depreciation, amortization, telecommunications, insurance and
professional fees. General and administrative expenses for the three months
ended March 31, 1997, increased 78% to approximately $2.5 million from $1.4
million for the comparable period in fiscal 1996. In addition to the other
costs required to support current operations and the anticipated growth of the
Company, approximately $331,000 of this increase was due to personnel costs,
$307,000 was due to professional fees for trademarks and other matters, and
$276,000 was due to increased depreciation and amortization expense. The
Company anticipates that future general and administrative expenses will
increase in the aggregate, although such expenses are expected to continue to
decline as a percentage of revenue.
Income taxes. Income taxes are provided at the projected annual effective tax
rate. The income tax provision for the three months ended March 31, 1997, of
$158,000, which is primarily for federal alternative minimum tax, state capital
tax, and foreign income taxes, is less than the federal statutory rate due to
the utilization of available net operating loss carryforwards. For the same
period in fiscal 1996, the provision for income taxes of $26,000 was for state
capital taxes.
COMPARISON OF THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
- ----------------------------------------------------------
Revenues. Revenues for the six months ended March 31, 1997, increased 195% to
approximately $38.0 million from $12.9 million for the comparable period in
fiscal 1996. Of this $25.1 million increase, approximately $4.0 million was a
result of greater revenues from magazines and newspaper, including $2.8 million
related to the growth in advertising from WEB WEEK which was partially related
to the increase in frequency to fourteen issues published in the first six
months of fiscal 1997 compared to six issues in the same period of the prior
year, and $406,000 related to the growth in advertising and paid circulation of
INTERNET WORLD magazine, which increased its paid circulation to approximately
350,000 for the April 1997 issue from approximately 292,000 for the April 1996
issue. Growth in advertising and paid circulation of WEB DEVELOPER, for which
there were three issues published in the first six months of fiscal 1997
compared to two issues in the same period of the prior year, also contributed
$594,000 of the revenue increase for the period. Trade show revenues for the
six months ended March 31, 1997, of approximately $26.1 million increased by
approximately $20.2
10
<PAGE>
million, or 343%, from the comparable period in fiscal 1996. This increase was
due primarily to the increase in exhibition space sales and registrations
related to Fall 1996 INTERNET WORLD and Spring 1997 INTERNET WORLD, which had
paid exhibition space of approximately 240,000 and 290,000 square feet
respectively, compared to 60,000 square feet for Fall 1995 INTERNET WORLD. In
the prior year, Spring INTERNET WORLD was held in the three months ended June
30, 1996. Other revenues increased to $1.6 million for the six months ended
March 31, 1997, from $691,000 in the comparable period in fiscal 1996, due
primarily to the continued development and marketing of subscriber lists for
rental and advertising and other revenues from iWORLD, the Company's electronic
daily newspaper for Internet news and resources located on the World-Wide Web.
Cost of sales and direct costs. Cost of sales and direct costs include the
costs associated with editing, producing and distributing the Company's
publications and costs associated with producing its trade shows. Cost of sales
and direct costs for the six months ended March 31, 1997, increased to
approximately $20.8 million from $8.5 million for the comparable period in
fiscal 1996. Magazine and newspaper cost of sales and direct costs increased by
approximately $2.2 million for the six month period ended March 31, 1997, from
the comparable period for fiscal 1996. Of this increase, $1.6 million related
to the change in publication frequency of WEB WEEK newspaper from monthly to
weekly and $207,000 related to the increased cost of publishing three issues of
WEB DEVELOPER in the six months ended March 31, 1997, compared to two issues in
the same period for the prior year. The launch issue of INTERNET SHOPPER in
March 1997 and the higher print order for INTERNET WORLD for the first six
months of fiscal 1997 also contributed to the increase in magazine cost of sales
and direct costs. The cost of sales and direct costs associated with magazines
and newspaper decreased from approximately 67% to 63% of magazine and newspaper
revenue. This percentage decrease is a function of the higher revenue
associated with the advertising space for WEB WEEK. Gross profit after cost of
sales and direct costs for magazines and newspaper for the six months ended
March 31, 1997, increased 86% to approximately $3.8 million from $2.1 million
for the comparable period in fiscal 1996. Trade show cost of sales and direct
costs for the six months ended March 31, 1997, increased by approximately $9.5
million to $13.5 million from $4.0 million for the comparable period in fiscal
1996. The increase was due to the expansion of Fall 1996 INTERNET WORLD and the
timing of Spring 1997 INTERNET WORLD. Gross profit after cost of sales and
direct costs for trade shows for the six months ended March 31, 1997, increased
$10.7 million to approximately $12.7 million from $1.9 million for the
comparable period in fiscal 1996. The cost of sales and direct costs associated
with trade shows decreased from 68% to 52% of trade show revenue. This
percentage decrease is primarily attributable to the efficiencies of the larger
Fall and Spring INTERNET WORLD shows, as well as the costs incurred in fiscal
1996 associated with producing the Company's December 1995 VR WORLD trade show
and in canceling the Company's future VR WORLD trade shows. Cost of sales and
direct costs for other revenues increased to $850,000 for the six month period
ended March 31, 1997, compared to $261,000 in the comparable period in fiscal
1996, due primarily to the expansion of the Company's iWORLD electronic daily
newspaper located on the World-Wide Web, the writedown of book inventory and
costs associated with list rentals.
Advertising, promotion and selling expenses. Advertising, promotion and selling
expenses represent costs related to circulation and promotion, including direct
mail, newsstand promotion and fulfillment expense, sales commissions, and
advertising and marketing staff. In addition, advertising, promotion and selling
expenses include the amortization of deferred promotion costs. Advertising,
promotion and selling expenses for the six months ended March 31, 1997,
increased 61% to approximately $7.3 million from $4.5 million for the comparable
period in fiscal 1996. Of this increase, approximately $1.1 million related to
INTERNET WORLD due primarily to circulation marketing efforts as well as
increased selling expense as a result of higher advertising revenues and
approximately $1.0 million related to increased selling expense for WEB WEEK.
For the six months ended March 31, 1997, the Company incurred approximately
$715,000 for advertising, promotion and selling expense for WEB DEVELOPER and
INTERNET SHOPPER compared to $280,000 for the same period in fiscal 1996.
General and administrative expenses. General and administrative expenses
include salaries, depreciation, amortization, telecommunications, insurance and
professional fees. General and administrative expenses for the six months ended
March 31, 1997, increased 65% to approximately $4.6 million from $2.8 million
for the
11
<PAGE>
comparable period in fiscal 1996. In addition to the other costs required to
support current operations and the anticipated growth of the Company,
approximately $786,000 of this increase was due to personnel costs, $602,000 was
due to professional fees for trademarks and other matters, and $472,000 was due
to increased depreciation and amortization expense. The Company anticipates that
future general and administrative expenses will increase in the aggregate,
although such expenses are expected to continue to decline as a percentage of
revenue.
Income taxes. Income taxes are provided at the projected annual effective tax
rate. The income tax provision for the six months ended March 31, 1997 of
$273,000, which is primarily for federal alternative minimum tax, state capital
tax, and foreign income taxes, is less than the federal statutory rate due to
the utilization of available net operating loss carryforwards. For the same
period in fiscal 1996, the provision for income taxes of $45,000 was for state
capital taxes.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Since the beginning of fiscal 1994, the Company's primary sources of liquidity
have been the proceeds from sales of assets, borrowing under lines of credit
that have been repaid, its public offerings in February 1994 and August 1995 and
operations. Through its public offerings, the Company realized net proceeds,
after offering expenses and underwriters' discounts, of approximately $20.7
million. At March 31, 1997, the Company had cash and cash equivalents of
approximately $23.3 million, compared to $19.9 million at September 30, 1996.
Operating activities for the six months ended March 31, 1997, provided
approximately $5.5 million in cash, due primarily to net income of approximately
$5.6 million for the period and changes in components of working capital.
The Company's accounts receivable increased to approximately $13.1 million at
March 31, 1997, from $7.3 million at September 30, 1996, primarily as a result
of advance billings for exhibit space in future trade shows and the growth in
advertising revenues in the period. Accounts payable and accrued expenses
increased to approximately $10.0 million primarily as a result of expanded
domestic and international trade show activity. Deferred magazine revenue
increased to approximately $3.4 million at March 31, 1997, from approximately
$2.9 million at September 30, 1996, reflecting growth in the subscription levels
of the Company's magazines. Deferred trade show revenue decreased to $10.3
million at March 31, 1997, from $12.1 million at September 30, 1996, primarily
as a function of revenue earned from the Fall 1996 Internet World trade show
offset by billings for participation in the Spring 1997, Summer 1997 and Fall
1997 INTERNET WORLD trade shows.
The Company had capital expenditures of approximately $883,000 for the six
months ended March 31, 1997. This was primarily due to an increase in computer
equipment and software purchases required for the Company's general operating
activities and its iWORLD World-Wide Web site. The Company anticipates that the
level of capital expenditures will decrease for the remainder of fiscal 1997.
During the six months ended March 31, 1997, the Company also incurred
approximately $1.8 million for Web site acquisitions and for expenditures to
register its various trade names in the United States and throughout the world.
The Company believes that funds available will be sufficient to meet its
obligations and its anticipated capital requirements for the foreseeable future.
12
<PAGE>
PART II - OTHER INFORMATION
<TABLE>
<CAPTION>
Item 1. LEGAL PROCEEDINGS
<S> <C>
Not Applicable
Item 2. CHANGES IN SECURITIES
Not Applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
</TABLE>
a) The Registrant's 1997 Annual Meeting of Stockholders (the "Annual
Meeting") was held on March 26, 1997.
b) Proxies were solicited by the Registrant's management pursuant to
Regulation 14A under the Securities Exchange Act of 1934; there
was no solicitation in opposition to management's nominees for
director as listed in the proxy statement; and all of such
nominees were elected for a one-year term.
c) The following matters were voted upon at the Annual Meeting with
the voting results as indicated:
1. Proposal to approve the election of the individuals set forth
below to the Board of Directors of the Registrant to serve
until the 1998 Annual Meeting of Stockholders of the
Registrant.
<TABLE>
<CAPTION>
Nominee Votes For Votes Against Votes Withheld
- ------------------------ --------- ------------- --------------
<S> <C> <C> <C>
Alan M. Meckler 6,661,318 - 4,391
Wayne A. Martino 6,661,318 - 4,391
Michael J. Davies 6,661,318 - 4,391
Walter H. Lippincott 6,661,318 - 4,391
Christopher S. Cardell 6,661,318 - 4,391
Gilbert F. Bach 6,661,318 - 4,391
</TABLE>
13
<PAGE>
2. Proposal to approve an amendment to the Registrant's 1995
Stock Option Plan providing for an increase in the number of
shares available for grant pursuant to the exercise of options
thereunder.
<TABLE>
<CAPTION>
Votes For Votes Against Abstain
- --------------------------- ------------------------- ------------------------
<S> <C> <C>
6,644,169 19,077 2,463
</TABLE>
3. Proposal to appoint Arthur Andersen LLP, independent
accountants, to act as auditors for the Registrant for the
year ending September 30, 1997.
<TABLE>
<CAPTION>
Votes For Votes Against Abstain
- --------------------------- ------------------------- ------------------------
<S> <C> <C>
6,662,535 2,016 1,158
</TABLE>
There were no broker non-votes in connection with any of the
proposals listed above.
Item 5. OTHER INFORMATION
Not Applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 - Statement Regarding Computation of Per Share Earnings (Loss)
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE>
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 thereunto duly authorized.
MECKLERMEDIA CORPORATION
Dated: May 2, 1997 /s/ Alan M. Meckler
---------------------------------------
Alan M. Meckler
Director, Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Dated: May 2, 1997 /s/ Christopher S. Cardell
---------------------------------------
Christopher S. Cardell
Director, Executive Vice President, Chief
Operating Officer and Chief Financial
Officer
15
<PAGE>
EXHIBIT 11
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS (LOSS)
(UNAUDITED)
( In thousands, except per share amounts )
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31 March 31
-------------------------- -----------------------
1997 1996 1997 1996
------------ ----------- --------- ---------
<S> <C> <C> <C> <C>
NET INCOME (LOSS) $3,508 $(1,792) $5,592 $(2,480)
====== ======= ====== =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 8,501 8,392 8,493 8,384
DILUTIVE STOCK OPTIONS AND WARRANTS 285 - 289 -
----- ----- ----- -----
TOTAL PRIMARY COMMON SHARES AND
EQUIVALENTS 8,786 8,392 8,782 8,384
====== ======= ====== =======
PRIMARY EARNINGS (LOSS) PER COMMON
SHARE $ 0.40 $ (0.21) $ 0.64 $ (0.30)
====== ======= ====== =======
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MECKLERMEDIA
CORPORATION'S UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS AS OF AND FOR THE
PERIOD ENDED MARCH 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> MAR-31-1997
<CASH> 23,267
<SECURITIES> 0
<RECEIVABLES> 14,457
<ALLOWANCES> 1,120
<INVENTORY> 529
<CURRENT-ASSETS> 38,821
<PP&E> 3,194
<DEPRECIATION> 962
<TOTAL-ASSETS> 44,352
<CURRENT-LIABILITIES> 23,573
<BONDS> 0
<COMMON> 85
0
0
<OTHER-SE> 20,263
<TOTAL-LIABILITY-AND-EQUITY> 44,352
<SALES> 10,293
<TOTAL-REVENUES> 38,002
<CGS> 6,460
<TOTAL-COSTS> 20,780
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 5,865
<INCOME-TAX> 273
<INCOME-CONTINUING> 5,592
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,592
<EPS-PRIMARY> 0.64
<EPS-DILUTED> 0.64
</TABLE>
