<PAGE>
Explanatory Note: The following amendment on Form 8-K/A amends the Current
Report on Form 8-K filed by the Company on May 29, 1998 to include the financial
statements referred to in Item 7.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 15, 1998
Mecklermedia Corporation
- --------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-23364 06-1385519
- --------------------------------------------------------------------------
(State or other jurisdiction (Commission File No.) (I.R.S. Employer
of incorporation) Identification No.)
20 Ketchum Street
Westport, Connecticut 06880
- --------------------------------------------------------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (203) 226-6967
--------------
N/A
- --------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
---------------------------------
(a) Financial Statements of Businesses Acquired:
-------------------------------------------
The financial statements of Boardwatch Magazine, Inc. and One,
Inc. and the reports of Arthur Andersen LLP, Mecklermedia
Corporation's independent public accountants, relating to such
financial statements are included in this Report:
(i) BOARDWATCH MAGAZINE, INC.
FINANCIAL STATEMENTS
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
DECEMBER 31, 1997 AND 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Stockholder of Boardwatch Magazine, Inc.:
We have audited the accompanying balance sheets of Boardwatch Magazine, Inc. (a
Colorado subchapter S corporation) as of December 31, 1997 and 1996, and the
related statements of operations and retained earnings 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, the financial statements referred to above present fairly, in
all material respects, the financial position of Boardwatch Magazine, Inc. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
July 1, 1998
-2-
<PAGE>
BOARDWATCH MAGAZINE, INC.
-------------------------
BALANCE SHEETS
--------------
DECEMBER 31, 1997 AND 1996
--------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ---------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 305,985 $ 82,846
Accounts receivable, less allowances of $190,991 and $90,717, 445,570 310,109
respectively
Prepaid expenses and other 390,051 151,749
---------- ---------
Total current assets 1,141,606 544,704
PROPERTY AND EQUIPMENT:
Computer equipment 121,963 115,762
Furniture, fixtures and equipment 138,791 135,748
---------- ---------
Total property and equipment 260,754 251,510
Less: Accumulated depreciation (229,068) (198,322)
---------- ---------
31,686 53,188
Total assets $1,173,292 $ 597,892
========== =========
LIABILITIES AND STOCKHOLDER'S EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 11,901 $ 9,897
Current portion of note payable 13,057 13,057
Deferred magazine revenue 99,078 137,468
---------- ---------
Total current liabilities 124,036 160,422
NOTE PAYABLE 8,765 21,822
DEFERRED MAGAZINE REVENUE - LONG-TERM 154,986 198,818
---------- ---------
Total liabilities 287,787 381,062
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDER'S EQUITY:
Common stock (no par value, 100,000 shares authorized, 1,000
shares issued and outstanding) 10,000 10,000
Retained earnings 875,505 206,830
---------- ---------
Total stockholder's equity 885,505 216,830
---------- ---------
Total liabilities and stockholder's equity $1,173,292 $ 597,892
========== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
-3-
<PAGE>
BOARDWATCH MAGAZINE, INC.
-------------------------
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
----------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
REVENUES
Print publishing $2,752,022 $1,756,841
Web sites 107,823 6,000
---------- ----------
2,859,845 1,762,841
---------- ----------
COST OF SALES AND DIRECT COSTS:
Print publishing 1,344,679 1,076,754
Web sites 36,557 35,014
---------- ----------
1,381,236 1,111,768
---------- ----------
Gross profit after cost of sales and direct costs 1,478,609 651,073
OPERATING EXPENSES:
Advertising, promotion and selling 101,114 184,223
General and administrative 380,393 352,026
---------- ----------
Operating income 997,102 114,824
Interest income 7,769 2,849
---------- ----------
Net income $1,004,871 $ 117,673
========== ==========
RETAINED EARNINGS, beginning of period $ 206,830 $ 407,713
Net income 1,004,871 117,673
Dividends to stockholder (336,196) (318,556)
---------- ----------
RETAINED EARNINGS, end of period $ 875,505 $ 206,830
========== ==========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-4-
<PAGE>
BOARDWATCH MAGAZINE, INC.
-------------------------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $1,004,871 $ 117,673
Adjustments to reconcile net cash provided by operations-
Bad debt expense 100,274 --
Depreciation 30,746 54,642
Changes in current assets and liabilities -
Increase in accounts receivable (235,735) --
Increase in prepaid expenses and other (238,302) (28,301)
(Decrease) increase in accounts payable and accrued expenses 2,004 (13,285)
Increase (decrease) in deferred magazine revenue (82,222) 80,437
---------- ---------
Net cash provided by operating activities 581,636 211,166
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment (9,244) (8,046)
---------- ---------
Net cash used in investing activities (9,244) (8,046)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholder (336,196) (318,556)
Repayment of note payable (13,057) (15,814)
---------- ---------
Net cash used in financing activities (349,253) (334,370)
---------- ---------
Net increase (decrease) in cash 223,139 (131,250)
Cash, beginning of period 82,846 214,096
---------- ---------
Cash, end of period $ 305,985 $ 82,846
========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid for interest $ 1,451 $ 1,757
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-5-
<PAGE>
BOARDWATCH MAGAZINE, INC.
-------------------------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
(1) The Company:
------------
Boardwatch Magazine, Inc. (the "Company"), a Colorado subchapter S
corporation, is the publisher of the monthly trade magazine BOARDWATCH and
the DIRECTORY OF INTERNET SERVICE PROVIDERS. The Company also operates two
Web sites to promote its print publications as well as the trade shows of
an affiliate.
BOARDWATCH is a monthly general circulation magazine that has a circulation
of approximately 25,000 readers and features articles covering the
Internet, the Web, and the communications industry. BOARDWATCH's target
audience is the "online community," including Internet Service Providers
("ISPs"), telecommunications professionals, software developers and
consultants.
The DIRECTORY OF INTERNET SERVICE PROVIDERS is a print publication listing
over 4,500 ISPs across the United States in over 17,500 listings by area
code. It also provides detailed profiles on 40 national backbone operators,
descriptions of the Network Access Point architecture, Internet
measurements, national dial-up access providers, ISP connections to the
Internet and lists of Points of Presence across the country.
(2) Summary of Significant Accounting Policies:
-------------------------------------------
Revenue recognition-
--------------------
Print publishing revenues-
--------------------------
Subscription revenue-
---------------------
Proceeds from subscriptions are recorded as deferred magazine revenue
when received and are included in revenue over the terms of the
subscriptions, generally one to three years, upon commencement of
subscription services. Subscriptions expiring within one year are
included as a current liability and the portion of the subscriptions
in excess of one year are classified as a non-current liability under
the caption deferred magazine revenue.
Newsstand revenue-
------------------
Sales to newsstand distributors are recognized as revenue in the
month of distribution utilizing historical experience to estimate the
ultimate sales of magazines to the newsstand. In the event that
actual sales differ from
-6-
<PAGE>
estimates, adjustments are made in subsequent months. Historically,
these adjustments have not been material.
Advertising revenue-
--------------------
Revenue from the sales of advertising space in magazines is
recognized at the time the issue is circulated.
Web sites-
----------
Revenue from the sales of advertising space in the Company's Web
sites is recognized ratably over the display period, which typically
ranges from one month to one year.
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 the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Prepaid expenses and other -
----------------------------
Prepaid expenses and other consist principally of magazine expenditures
for advance issues and other prepaid items. In addition, included in this
caption are amounts due from a related party (See Note 4).
Property and equipment-
-----------------------
Property and equipment are stated at cost. The Company records
depreciation, using the straight-line method, in amounts sufficient to
write-off the cost of depreciable assets over the following estimated
useful lives:
Computer equipment 3 years
Furniture, fixtures and equipment 5-7 years
Maintenance and repair expenditures are charged to appropriate expense
accounts in the period incurred; replacements, renewals and betterments
are capitalized. Upon sale or other disposition of property, the cost and
accumulated depreciation of such properties are eliminated from the
accounts and the gains or losses thereon are reflected in operations.
-7-
<PAGE>
Income taxes-
-------------
No provision or liability for income taxes has been included in the
financial statements as income from subchapter S corporations is included
in the individual tax returns of the corporation's stockholders.
Other-
------
The Company does not believe any recently issued accounting standards will
have a material impact on its financial condition or results of
operations.
(3) Commitments and Contingencies:
------------------------------
The Company shares office space with an affiliate (See Note 4).
The following is a schedule of approximate annual future minimum rental
payments required under operating leases that have initial or remaining
noncancelable lease terms in excess of one year as of December 31, 1997:
<TABLE>
<CAPTION>
Fiscal Year
-----------
<S> <C>
1998 $132,775
1999 195,420
2000 195,420
2001 81,425
--------
Total $605,040
========
</TABLE>
For the years ended December 31, 1997 and 1996, the total rent expense was
approximately $45,000 and $33,000, respectively.
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions will not materially
affect the financial position of the Company.
(4) Transactions with Related Parties:
----------------------------------
In 1997 and 1996, respectively, the Company paid advertising and promotion
expenses of $24,000 and $16,000 to an affiliate. In addition, during 1997
and 1996, the Company received approximately $59,500 and $15,000,
respectively, from an affiliate for advertising in the Company's magazine.
The Company invoiced an affiliate approximately $31,000 and $28,000 in 1997
and 1996, respectively, for the affiliate's share of overhead costs.
Included in prepaid expenses and other is approximately $83,000 and $28,000
representing amounts due from an affiliate as of December 31, 1997 and
1996, respectively.
-8-
<PAGE>
(5) Note Payable:
-------------
The Company has a note payable of $21,822 and $34,879 as of December 31,
1997 and 1996, respectively. The note is collateralized by the Company's
vehicle. Interest on the note is fixed at 10%. The following represents
future principal payments on the note:
<TABLE>
<S> <C>
1998 $13,057
1999 $ 8,765
</TABLE>
At December 31, 1997, the fair value of the note approximates its carrying
value.
(6) Subsequent Event:
-----------------
On May 15, 1998, the Company was acquired by Mecklermedia Corporation.
-9-
<PAGE>
(ii) ONE, INC.
FINANCIAL STATEMENTS
TOGETHER WITH
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
AS OF DECEMBER 31, 1997 AND 1996
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
----------------------------------------
To the Stockholder of One, Inc.:
We have audited the accompanying balance sheets of One, Inc. (a Colorado
subchapter S corporation) as of December 31, 1997 and 1996, and the related
statements of operations and retained earnings (accumulated 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, the financial statements referred to above present fairly, in
all material respects, the financial position of One, Inc. as of December 31,
1997 and 1996, and the results of its operations and its cash flows for the
years then ended in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Stamford, Connecticut
July 1, 1998
-10-
<PAGE>
ONE, INC.
---------
BALANCE SHEETS
--------------
DECEMBER 31, 1997 AND 1996
--------------------------
<TABLE>
<CAPTION>
1997 1996
------------------ ------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $1,305,620 $ 2,888
Prepaid trade show expenses and other 107,280 6,105
---------- --------
Total current assets 1,412,900 8,993
PROPERTY AND EQUIPMENT:
Computer equipment 16,551 -
Furniture, fixtures and equipment 3,160 -
---------- --------
Total property and equipment 19,711 -
Less: Accumulated depreciation (2,984) -
---------- --------
16,727 -
Total assets $1,429,627 $ 8,993
========== ========
LIABILITIES AND STOCKHOLDER'S EQUITY
(DEFICIT)
CURRENT LIABILITIES:
Accrued expenses $ 90,621 $ 28,301
Deferred trade show revenue 1,062,725 -
---------- --------
Total current liabilities 1,153,346 28,301
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDER'S EQUITY (DEFICIT):
Common stock (no par value; 100,000 shares authorized, 1,000 shares issued and
outstanding) 12,500 12,500
Retained earnings (accumulated deficit) 263,781 (31,808)
---------- --------
Total stockholder's equity (deficit) 276,281 (19,308)
---------- --------
Total liabilities and stockholder's equity (deficit) $1,429,627 $ 8,993
========== ========
</TABLE>
The accompanying notes to financial statements
are an integral part of these balance sheets.
-11-
<PAGE>
ONE, INC.
---------
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS (ACCUMULATED DEFICIT)
--------------------------------------------------------------------
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
---------------- ----------------
<S> <C> <C>
REVENUES $ 2,517,332 $ 871,702
COST OF SALES AND DIRECT COSTS 887,243 461,215
----------- ---------
Gross profit after cost of sales and direct costs 1,630,089 410,487
OPERATING EXPENSES:
Advertising, promotion and selling 121,709 60,811
General and administrative 133,196 166,527
----------- ---------
Operating income 1,375,184 183,149
Interest income 19,431 2,466
Interest expense - (3,610)
----------- ---------
Net income $ 1,394,615 $ 182,005
=========== =========
ACCUMULATED DEFICIT, beginning of period $ (31,808) $(107,994)
Net income 1,394,615 182,005
Dividends to stockholder (1,099,026) (105,819)
----------- ---------
RETAINED EARNINGS (ACCUMULATED DEFICIT), end of period $ 263,781 $ (31,808)
=========== =========
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-12-
<PAGE>
ONE, INC.
---------
STATEMENTS OF CASH FLOWS
------------------------
FOR THE YEARS ENDED DECEMBER 31, 1997 AND 1996
----------------------------------------------
<TABLE>
<CAPTION>
1997 1996
-------------------- ------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,394,615 $ 182,005
Adjustment to reconcile net cash provided by operations-
Depreciation 2,984 -
Changes in current assets and liabilities -
Decrease (increase) in prepaid trade show expenses and other (101,175) 13,680
(Decrease) increase in accrued expenses 62,320 (83,558)
Increase in deferred revenue 1,062,725 -
----------- ---------
Net cash provided by operating activities 2,421,469 112,127
----------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
(Additions to) disposal of property and equipment, net (19,711) 38,151
----------- ---------
Net cash (used in) provided by investing activities (19,711) 38,151
----------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends to stockholder (1,099,026) (105,819)
Repayment of note payable - (70,000)
----------- ---------
Net cash used in financing activities (1,099,026) (175,819)
----------- ---------
Net increase (decrease) in cash 1,302,732 (25,541)
CASH, beginning of period 2,888 28,429
----------- ---------
CASH, end of period $ 1,305,620 $ 2,888
=========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW:
Cash paid for interest $ - $ 3,610
</TABLE>
The accompanying notes to financial statements
are an integral part of these statements.
-13-
<PAGE>
ONE, INC.
---------
NOTES TO FINANCIAL STATEMENTS
-----------------------------
DECEMBER 31, 1997 AND 1996
--------------------------
(1) The Company:
------------
One, Inc. (the "Company"), a Colorado subchapter S corporation, is the
organizer of the ISPCON trade shows, the largest tradeshows in the Internet
Service Provider industry. Each trade show consists of seminars, tutorials
and an exhibit hall in which organizations pay for exhibition space. The
Company's two ISPCON trade shows are held annually in the spring and fall.
(2) Summary of Significant Accounting Policies:
-------------------------------------------
Trade show revenue-
------------------
Proceeds from the sale of trade show space, sponsorship fees and prepaid
admission fees are deferred and recognized as revenue at the time the
trade shows are held.
Prepaid trade show expenses-
---------------------------
Prepaid trade show expenses consist of deposits on trade show
facilities, advertising and promotion and related direct labor costs.
These costs are expensed at the time the trade show is held.
Property and equipment-
----------------------
Property and equipment are stated at cost. The Company records
depreciation, using the straight-line method, in amounts sufficient to
write-off the cost of depreciable assets over the following estimated
useful lives:
<TABLE>
<CAPTION>
<S> <C>
Computer equipment 3 years
Furniture, fixtures and equipment 7 years
</TABLE>
Maintenance and repair expenditures are charged to appropriate expense
accounts in the period incurred; replacements, renewals and betterments
are capitalized. Upon sale or other disposition of property, the cost
and accumulated depreciation of such properties are eliminated from the
accounts and the gains or losses thereon are reflected in operations.
Income taxes-
------------
No provision or liability for income taxes has been included in the
financial statements as income from subchapter S corporations is
included in the individual tax returns of the corporation's
stockholders.
-14-
<PAGE>
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 the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
Other-
-----
The Company does not believe any recently issued accounting standards
will have a material impact on its financial condition or results of
operations.
(3) Commitments and Contingencies:
------------------------------
The Company shares office space with an affiliate (See Note 4).
The Company is subject to legal proceedings and claims which arise in the
ordinary course of its business. In the opinion of management, the amount
of ultimate liability with respect to these actions, if any, will not
materially affect the financial position of the Company.
(4) Transactions with Related Parties:
----------------------------------
In 1997 and 1996, respectively, the Company recorded trade show revenue of
$24,000 and $16,000 from an affiliate for booth rental at the Company's
trade show, ISPCON. In addition, during 1997 and 1996, the Company paid
approximately $59,500 and $15,000, respectively, to an affiliate for
advertising in the affiliate's print publication. The Company was
allocated costs of approximately $31,000 and $28,000 in 1997 and 1996,
respectively, from the affiliate for shared overhead expenses.
Included in accrued expenses is approximately $83,000 and $28,000
representing amounts due to the affiliate as of December 31, 1997 and 1996,
respectively.
(5) Subsequent Events:
------------------
On May 15, 1998, the Company was acquired by Mecklermedia Corporation.
-15-
<PAGE>
(b) Pro Forma Financial Information:
The pro forma consolidated unaudited financial statements of Mecklermedia
Corporation included in this Report are not necessarily indicative of the
results that actually would have been attained if the acquisition had been
in effect on the dates indicated or which may be attained in the future.
Such statements should be read in conjunction with the historical
statements of Mecklermedia Corporation, Boardwatch Magazine, Inc. and One,
Inc.:
-16-
<PAGE>
<TABLE>
<CAPTION>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1998
(IN THOUSANDS)
TOTAL CONSOLIDATED
MECKLERMEDIA BOARDWATCH ONE,INC. ADJUSTMENTS BALANCES
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 18,796 $ 245 $ -- $ (14,000)(c) $ 5,041
Accounts receivable, net 5,754 364 -- -- 6,118
Advanced billings for trade shows 8,952 -- -- -- 8,952
Inventory 451 -- -- -- 451
Prepaid trade show expenses 2,277 -- -- -- 2,277
Deferred income taxes 518 -- -- -- 518
Prepaid expenses and other 750 121 -- -- 871
------------------------------------------------------------------
Total current assets 37,498 730 -- (14,000) 24,228
PROPERTY AND EQUIPMENT, NET 2,598 29 17 -- 2,644
INTANGIBLE ASSETS, NET 6,991 -- -- 30,638(b) 37,629
OTHER ASSETS 486 -- -- -- 486
------------------------------------------------------------------
Total assets $ 47,573 $ 759 $ 17 $ 16,638 $ 64,987
==================================================================
</TABLE>
-17-
<PAGE>
<TABLE>
<CAPTION>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEETS
MARCH 31, 1998
(IN THOUSANDS)
TOTAL CONSOLIDATED
MECKLERMEDIA BOARDWATCH ONE,INC. ADJUSTMENTS BALANCES
---------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,651 $ -- $ 95 $ -- $ 2,746
Accrued expenses 6,747 138 246 1,000(d) 8,131
Accrued income taxes 2,393 -- -- -- 2,393
Note payable -- 13 -- -- 13
Deferred trade show revenue 11,952 -- -- -- 11,952
Deferred magazine revenue 462 116 -- -- 578
---------------------------------------------------------------------
Total current liabilities 24,205 267 341 1,000 25,813
NOTE PAYABLE -- 7 -- -- 7
DEFERRED MAGAZINE REVENUE - LONG TERM -- 150 -- -- 150
---------------------------------------------------------------------
Total liabilities 24,205 424 341 1,000 25,970
COMMITMENTS AND CONTINGENCIES -- -- -- -- --
STOCKHOLDERS' EQUITY:
Preferred stock -- -- -- -- --
Common stock 83 10 12 (14)(e) 91
Additional paid-in capital 25,843 -- -- 15,641(e) 41,484
Treasury stock (5,272) -- -- -- (5,272)
Retained earnings (Accumulated deficit) 2,841 325 (336) 11(f) 2,841
Foreign currency translation adjustment (127) -- -- -- (127)
---------------------------------------------------------------------
Total stockholders'
equity 23,368 335 (324) 15,638 39,017
---------------------------------------------------------------------
Total liabilities and stockholders'
equity $ 47,573 $ 759 $ 17 $16,638 $ 64,987
=====================================================================
</TABLE>
-18-
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATING INCOME STATEMENTS
FOR THE SIX MONTHS ENDING
MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TOTAL CONSOLIDATED
MECKLERMEDIA BOARDWATCH ONE, INC. ADJUSTMENTS BALANCES
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Trade shows $ 34,065 $ -- $ 4,181 $ -- $ 38,246
Print publishing 7,506 1,294 -- -- 8,800
Web sites 1,599 83 -- -- 1,682
Other 822 -- -- -- 822
--------------------------------------------------------------------
43,992 1,377 4,181 -- 49,550
COST OF SALES AND DIRECT COSTS:
Trade shows 14,397 -- 1,028 -- 15,425
Print publishing 6,411 969 -- -- 7,380
Web sites 860 20 -- -- 880
Other 223 -- -- -- 223
--------------------------------------------------------------------
21,891 989 1,028 -- 23,908
Gross profit after cost of sales and
direct costs 22,101 388 3,153 -- 25,642
OPERATING EXPENSES:
Advertising, promotion and selling 6,303 36 149 -- 6,488
General and administrative 4,992 177 248 1,019(a) 6,436
--------------------------------------------------------------------
Operating income 10,806 175 2,756 (1,019) 12,718
Interest income, net 514 8 6 (350)(g) 178
Gain on sale of assets 2,036 -- -- -- 2,036
--------------------------------------------------------------------
Income before income taxes 13,356 183 2,762 (1,369) 14,932
Provision for income taxes 5,209 -- -- 599(h) 5,808
--------------------------------------------------------------------
Net income $ 8,147 $ 183 $2,762 $(1,968) $ 9,124
====================================================================
Basic earnings per share $ 0.97 $ 0.99(i)
======= =========
Diluted earnings per share $ 0.94 $ 0.97(i)
======= =========
Weighted average number of common
shares:
-- Basic 8,427 9,177(i)
======= =========
-- Diluted 8,673 9,423(i)
======= =========
</TABLE>
-19-
<PAGE>
MECKLERMEDIA CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATING INCOME STATEMENTS
FISCAL 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
TWELVE TWELVE TWELVE
MONTHS ENDED MONTHS ENDED MONTHS ENDED
9/30/97 12/31/97 12/31/97 TOTAL CONSOLIDATED
MECKLERMEDIA BOARDWATCH ONE, INC. ADJUSTMENTS BALANCES
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
REVENUES:
Trade shows $ 32,818 $ -- $ 2,517 $ -- $ 35,335
Print publishing 19,067 2,752 -- -- 21,819
Web sites 1,479 108 -- -- 1,587
Other 1,829 -- -- -- 1,829
-------------------------------------------------------------------------------------------
55,193 2,860 2,517 -- 60,570
COST OF SALES AND DIRECT COSTS:
Trade shows 16,255 -- 887 -- 17,142
Print publishing 13,982 1,345 -- -- 15,327
Web sites 1,104 37 -- -- 1,141
Other 521 -- -- -- 521
-------------------------------------------------------------------------------------------
31,862 1,382 887 -- 34,131
Gross profit after cost of sales and
direct costs 23,331 1,478 1,630 -- 26,439
OPERATING EXPENSES:
Advertising, promotion and selling 12,514 101 121 -- 12,736
General and administrative 8,923 380 133 2,038(a) 11,474
-------------------------------------------------------------------------------------------
Operating income 1,894 997 1,376 (2,038) 2,229
Interest income, net 1,123 8 19 (700)(g) 450
-------------------------------------------------------------------------------------------
Income before income taxes 3,017 1,005 1,395 (2,738) 2,679
Benefit for income taxes (727) -- -- (128)(h) (855)
-------------------------------------------------------------------------------------------
Net income $ 3,744 $ 1,005 $1,395 $(2,610) $ 3,534
===========================================================================================
Basic earnings per share $ 0.44 $ 0.38(i)
======== ===========
Diluted earnings per share $ 0.43 $ 0.37(i)
======== ===========
Weighted average number of common
shares
Basic 8,507 9,257(i)
======== ===========
Diluted 8,762 9,512(i)
======== ===========
</TABLE>
NOTES TO THE UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
-20-
<PAGE>
(a) On May 15, 1998, Mecklermedia Corporation (the "Company") paid
approximately $29.5 million in cash and common stock for the acquisitions
of Boardwatch Magazine, Inc. ("Boardwatch") and One, Inc. ("One"). Goodwill
will be amortized over a period of 15 years. The pro forma adjustments
reflect six months and twelve months of amortization expense for the six
months ended March 31, 1998 and the twelve months ended September 30, 1997,
respectively, assuming the transaction had occurred on October 1, 1996.
(b) The purchase price consisted of cash of $14.0 million and the issuance of
750,000 shares of the Company's common stock. The following represents the
allocation of purchase price over the historical net book values of the
acquired assets and assumed liabilities of Boardwatch and One. The summary
below is for illustrative purposes only. Actual fair values will be based
on financial information as of the acquisition date. Assuming the
transaction had occurred on March 31, 1998, the allocation would have been
as follows (in thousands):
Assets acquired:
<TABLE>
<S> <C>
Cash $ 245
Accounts receivable, net 364
Property and equipment 46
Goodwill 30,638
Liabilities assumed: (1,765)
--------
Purchase price $ 29,528
========
</TABLE>
(c) The pro forma adjustment reflects the utilization of $14.0 million of the
Company's cash for the acquisition.
(d) The pro forma adjustment reflects a reserve for preacquisition
contingencies and acquisition-related costs.
(e) The pro forma adjustment reflects the redemption of the Boardwatch and One
shares and the issuance of 750,000 shares of the Company's common stock.
-21-
<PAGE>
(f) The pro forma adjustment reflects the elimination of Boardwatch and One
retained earnings.
(g) The pro forma adjustment reflects the reduction of interest income due to
the utilization of $14.0 million of the Company's cash for the acquisition.
(h) The pro forma adjustment reflects the federal and state income tax effects
of the acquisition of Boardwatch and One and the aforementioned pro forma
adjustments.
(i) The pro forma basic earnings per share computation is computed by dividing
net income by the weighted average number of common shares outstanding.
The pro forma diluted earnings per share computation is computed by
dividing net income by the sum of the weighted average number of common
shares outstanding plus dilutive common stock equivalents. The calculation
of the weighted average number of shares outstanding assumes that the
750,000 shares of the Company's common stock issued in the acquisition were
outstanding for the entire period presented.
-22-
<PAGE>
(c) Exhibits:
--------
None
-23-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act, of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
MECKLERMEDIA CORPORATION
Date: July 28, 1998 By: /s/ Christopher S. Cardell
---------------------------------
Christopher S. Cardell
President
-24-
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
N/A N/A
-25-
