<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
September 30, 1997
Commission File No 1-13084
BYRON PREISS MULTIMEDIA COMPANY, INC.
- ------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
New York 13-3676574
- ------------------------ ----------------
(State of Incorporation) (I.R.S. Employer
Identification
number)
24 West 25th Street
New York, New York 10010
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
(212) 989-6252
---------------------------
(Issuer's telephone number)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15 (d) of the Securities Exchange Act of 1934 during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
----- -----
The number of shares outstanding of the issuer's class of common equity, as of
the latest practical date is 7,174,438 shares of common stock par value $.001
per share as of November 10, 1997.
Page 1 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC.
FORM 10-QSB
INDEX
PART I FINANCIAL INFORMATION PAGE
- ------ --------------------- ----
Item 1. Financial Statements:
Consolidated Balance Sheet as of September 30, 1997. 3
Consolidated Statement of Operations for three
and nine months ended September 30, 1997 and 1996. 4
Consolidated Statements of Changes in Shareholders' Equity
for nine months ended September 30, 1997. 5
Consolidated Statements of Cash Flows for the
the nine months ended September 30, 1997 and 1996. 6-7
Notes to Consolidated Financial Statements. 8-11
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 11-14
PART II
- -------
Item 6. Exhibits & Reports on Form 8-K. 14
Signatures 15
Page 2 of 15 pages
<PAGE>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
BYRON PREISS MULTIMEDIA COMPANY,INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
September 30,
1997
------------
(unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 434,985
Accounts receivable, net 1,402,554
Inventory, net 37,738
Other current assets 152,281
------------
Total current assets 2,027,558
PREPUBLICATION COSTS AND RIGHTS PURCHASED,net 2,444,171
EQUIPMENT AND LEASEHOLD IMPROVEMENTS, net 585,151
GOODWILL, net 2,463,946
OTHER ASSETS 97,309
Total assets $ 7,618,135
============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,147,865
Deferred income 1,339,462
Current maturities of convertible note 467,080
Reserve for product returns 381,727
Note payable - current 36,799
Other current liabilities 132,035
------------
Total current liabilities 4,504,968
CONVERTIBLE NOTE, less current maturities (Note 4) 1,346,154
------------
Total liabilities 5,851,122
Minority Interest 11,981
SHAREHOLDERS' EQUITY:
Preferred Stock, 5,000,000 shares authorized; 0 shares
issued and outstanding --
Common stock, 30,000,000 shares authorized,
7,174,438 shares issued and outstanding,
$.001 par value 7,174
Additional paid-in capital 13,391,529
Retained deficit (11,643,671)
------------
Total shareholders' equity 1,755,032
------------
Total liabilities and shareholders' equity $ 7,618,135
============
The accompanying notes are an integral part of this balance sheet.
Page 3 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET REVENUES $ 968,042 $ 1,304,224 $ 2,683,785 $ 3,223,524
COST OF REVENUES 752,943 1,309,608 2,878,695 2,968,881
----------- ----------- ----------- -----------
Gross profit (loss) 215,099 (5,384) (194,910) 254,643
SELLING, GENERAL AND
ADMIN EXPENSES 1,060,259 949,233 3,695,334 2,888,192
RESTRUCTURING
CHARGES -- -- 1,437,259 --
----------- ----------- ----------- -----------
Loss from operations (845,160) (954,617) (5,327,503)* (2,633,549)
OTHER INCOME
(EXPENSE), net 38,026 26,759 33,142 118,908
----------- ----------- ----------- -----------
Net loss $ (807,134) $ (927,858) $(5,294,361) $(2,514,641)
=========== =========== =========== ===========
NET LOSS PER WEIGHTED
AVERAGE SHARES
OUTSTANDING $ (0.11) $ (0.22) $ (0.87)* $ (0.59)
=========== =========== =========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING 7,174,438 4,261,875 6,064,706 4,261,875
=========== =========== =========== ===========
</TABLE>
*includes a restructuring charge of $1,437,259
The accompanying notes are an integral part of these consolidated statements.
Page 4 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(unaudited)
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained
Stock Capital Deficit Total
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE,
December 31, 1996 $ 4,262 $ 10,789,441 $ (6,289,105) $ 4,504,598
Purchase of
Dolphin, Inc. 400 399,600 400,000
Conversion of
debentures 2,512 1,837,488 1,840,000
Sale of 19.9% interest
in subsidiary 365,000 365,000
Net loss for the
nine months ended
September 30,1997 (5,354,566) (5,354,566)
------------ ------------
BALANCE,
September 30,1997 $ 7,174 $ 13,391,529 $(11,643,671) $ 1,755,032
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 5 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
----------------------------
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS USED IN OPERATING ACTIVITIES:
Net Loss $(5,354,566) $(2,514,641)
Adjustments to reconcile net loss to net
cash provided by operating activities-
Depreciation and amortization:
Equipment, leasehold improvements and
organization costs 173,200 47,991
Amortization of goodwill 129,682 --
Prepublication costs and rights purchased 423,068 2,943,212
Restructuring charges 1,437,259 --
Changes in operating assets and liabilities-
Accounts receivable 878,587 243,348
Inventory 356,262 --
Other assets 33,789 (369,783)
Accounts payable and accrued expenses 138,195 393,597
Other current liabilities (2,890) 144,730
Reserve for product return 380,627 --
Royalty payable (233,038) --
Deferred income 643,895 860,729
----------- -----------
Net cash used in operating activities (995,930) 1,749,183
CASH FLOWS USED IN INVESTING ACTIVITIES:
Sale of marketable securities -- 5,455,931
Purchase of marketable securities -- (4,473,221)
Purchase of Dolphin, Inc (600,000) --
Increase in minority interest 11,981 --
Note payable - current 36,799
Convertible Note payable 63,234
Investment by AOL 365,000
Prepublication costs and rights purchased (1,559,283) (4,856,620)
Purchase of fixed assets (44,402) (77,619)
----------- -----------
Net cash used in investing activities (1,726,671) (3,951,529)
----------- -----------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Proceeds from convertible debenture (net) 1,840,000 --
Fees related to purchase of Dolphin, Inc. (64,412) --
Proceeds from issuance of common stock, net -- (85,000)
----------- -----------
Net cash provided by (used in) finan. actv. 1,775,588 (85,000)
----------- -----------
Net (decrease) in cash and
cash equivalents (947,013) (2,287,346)
CASH AND CASH EQUIVALENTS, beginning of year 1,381.998 4,593,120
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 434,985 2,305,774
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 6 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
(continued) (Unaudited)
<TABLE>
<CAPTION>
For the nine months ended
September 30,
---------------------------
1997 1996
---------- ----------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for -
Taxes $ 26,756 $ 15,750
Interest 64,538 1,695
Non-cash Investing and Financing:
Common Stock - Dolphin Acquisition $ 400,000 --
7% Convertible Note - Dolphin Acquisition 1,750,000 --
</TABLE>
Page 7 of 15 pages
<PAGE>
BYRON PREISS MULTIMEDIA COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997 AND 1996
1. FINANCIAL STATEMENTS
The balance sheet as of September 30, 1997 and the related statements of
operations, statement of changes in shareholders' equity and statements of cash
flows for the periods ended September 30, 1997 have been prepared by the
Company, without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly its
financial position, results of operations and cash flows as of September 30,
1997 and 1996 have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is suggested that these financial statements
be read in conjunction with the December 31,1996 audited financial statements
and notes thereto. The results of operations for the three and nine months ended
September 30, 1997 are not necessarily indicative of the operating results for
the full year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Company and its wholly owned subsidiaries, Dolphin, Inc., Virtual Comics,
Inc., Byron Preiss Multimedia On-Line Services, Inc. and Byron Preiss
Multimedia Holdings, Inc. Dolphin, Inc. was acquired on March 21, 1997 and
Virtual Comics, Inc. was incorporated in the State of Delaware in November
1996. In July, 1997 America Online, Inc. entered into a letter of intent
regarding its acquisition of a 19.9% interest in Virtual Comics Inc. Byron
Preiss Multimedia On-Line Services, Inc. and Byron Preiss Multimedia
Holdings, Inc. have had no activity. All significant intercompany accounts
and transactions have been eliminated in consolidation.
3. Restructuring Charges
During the second quarter of 1997, the Company recorded $1,437,259 in
restructuring charges. The Company initiated a restructuring plan to respond to
changing market conditions and to reflect the Company's expanded operations in
the education and publishing markets. The Company is reducing its reliance on
development and sale of CD-ROMS for the retail/consumer market. This
restructuring resulted in the write-down of costs associated with the partial
development of certain CD-ROM products which the Company has ceased development
for and, to a lesser extent, the write down of certain of its inventory which is
no longer being actively sold.
4. Convertible Debentures
On February 5, 1997, the Company completed the sale of 8.0% convertible
debentures ("Debentures") due January 31, 1999 in the aggregate principal
Page 8 of 15 pages
<PAGE>
amount of $2,000,000 in reliance upon the exemption from registration under
Regulation S afforded by the Securities Act of 1933. In connection with the
sale, the Company received net proceeds in the amount of approximately
$1,840,000 (excluding legal, accounting and other miscellaneous expenses).
During April 1997, in accordance with the notices of conversion, the Debentures
were presented to the Company by each holder of Debentures and the Company
issued and delivered 2,512,563 shares of Common Stock representing approximately
35% of the Company's issued and outstanding shares of Common Stock.
5. Convertible Note
On March 21,1997, the Company acquired all of the issued and
outstanding capital stock of Dolphin, Inc., a New Jersey corporation. (See Note
6 to the Financial Statements) As part of the purchase price, the Company issued
to the principal shareholder, Andrew K. Gardner, a $1,750,000 7% Convertible
Note due March 1, 2001. The outstanding principal balance of this Note, together
with interest accruing thereon, is repayable in thirty-nine equal monthly
installments of $53,087.35 commencing January 2, 1998.
6. RELATED PARTY TRANSACTIONS
Byron Preiss, a principal shareholder and CEO of the Company, is also the owner
and CEO of Byron Preiss Visual Publications, Inc. ("BPVP") and co-owner of
General Licensing Company, Inc. and Byron Preiss/Richard Ballantine, Inc. These
companies function as book producers, acquiring licenses from authors and
institutions. Byron Preiss Multimedia Company Inc. has purchased several such
licenses from said companies upon terms, including royalties in certain cases,
which the Company believes are as favorable as the terms which the Company could
have obtained in dealing with unaffiliated parties, and will have the
opportunity to purchase additional licenses under similar terms and conditions.
The Company also contracts public relations and marketing services from
Hilsinger Mendelson, Inc., on a project by project basis, whose president is the
spouse of Byron Preiss.
7. ACQUISITION. On March 21, 1997, the Company acquired all of the issued and
outstanding capital stock of Dolphin, Inc., a New Jersey corporation, for total
consideration of $2,750,000, consisting of $600,000 in cash, a $1,750,000 7%
convertible note and 400,000 shares of the Company's common stock valued at
$1.00 per share. The acquisition has been accounted for as a purchase and the
related goodwill is being amortized over ten years. Dolphin is a software
development company serving customers in need of high quality, interactive
education and training software products. Such tailored products are used for
educational and training purposes of students, teachers, researchers, medical
professionals, and workers across a broad foray of industries. (See Note 5 to
Financial Statements)
Page 9 of 15 pages
<PAGE>
PROFORMA WITH DOLPHIN, INC.
(unaudited)
The following reflects the financial results if Dolphin, Inc. acquisition had
occurred on January 1, 1997 and 1996.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 968,042 $ 1,803,369 $ 2,683,785 $ 4,763,394
Loss from operations (845,160) (810,558) (3,890,244) (2,119,212)
Net loss (807,134) (789,297) (5,294,361)* (2,010,724)
Loss per weighted average
shares outstanding $ (0.11) $ ($0.17) $ (0.87) $ (0.43)
Weighted average
shares outstanding 7,174,438 4,661,875 6,064,706 4,661,875
</TABLE>
*includes a restructuring charge of $1,437,259
8. SEGMENT INFORMATION. In 1996, due to increased competition in the consumer
software market and increasing consumer demand in the Company's book titles, the
Company changed its strategy from a vertical approach of selling CD-ROMs to
placing more emphasis on growing its existing book publishing and educational
software operations and effectively segmented its primary operation into
interactive multimedia development and book publishing.
In the table set forth below, information regarding operations for each
of the Company's industry segments as of September 30, 1997 is as follows:
Nine months ending September 30, 1997 (000's omitted)
-------------------------------------
Interactive
Multimedia Book
Development Publishing Consolidated
----------- ---------- ------------
Net Revenues $ 1,469 $ 1,215 $ 2,684
============
Loss from operations (2,773) (1,117) $ (3,890)
Restructuring charge (1,304) (134) (1,437)
Other income, net 33
------------
Net loss $ (5,294)
============
Identifiable assets 5,937 1,586 $ 7,523
Corporate assets 95
$ 7,618
============
Depreciation and amortization of
equipment and leasehold
improvements $ 124 $ 49 $ 173
Capital expenditures $ 32 $ 12 $ 44
Page 10 of 15 pages
<PAGE>
9. SUBSEQUENT EVENT In October 1997, the Company completed a financing covering
the sale of 6% Convertible Debentures due October 31, 1999 aggregating $250,000.
This financing provided the Company with additional capital for the purpose of
financing potential acquisitions and for working capital. (See Management's
Discussion and Analysis of Financial Condition and Results of Operations).
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations:
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AS COMPARED TO
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1996
Initiated in the second quarter and continuing into the third quarter
ended September 30, 1997, the Company's restructuring plan reflects its expanded
operations in the education and publishing markets. The Company is and continues
to reduce its reliability on development and sale of CD-ROM's for the
retail/consumer market unless such titles are co-published or otherwise
underwritten.
Net Revenues. For the three months ended September 30, 1997, the Company
reported net revenues of $968,042 as compared to $1,304,224 for the prior
comparable period. For the nine month period ending September 30, 1997 the
Company reported net revenues of $2,683,785 as compared to $3,223,524 for the
comparable period a year ago. The decrease in net revenues for both the three
months and nine month periods ended September 30, 1997 when compared to the
comparable periods of a year ago, can be attributed to a lesser number of CD-ROM
titles being developed and co-published and distributed which is slightly offset
by an increase in the sales of books and the inclusion of Dolphin Inc. sales in
the second and third quarters of 1997. Dolphin Inc. was acquired on March 21,
1997. Revenues for the three months ended September 30, 1997 are comprised
principally of Dolphin, Inc $447,630 or 46% of total revenues while book
publishing accounted for $436,872 or 45% of total revenues.
Interactive Multimedia net revenues accounted for $1,469,000 or 55% of net
revenues for the nine months ended September 30, 1997 as compared to $2,395,000
or 74% of net revenues for the first nine months ended September 30, 1996. Books
for the nine months ended September 30, 1997 accounted for $1,215,000 or 45% of
net revenues as compared to $828,000 or 26% of net revenues for the comparable
period a year ago. No new CD-ROM revenues were recorded during the third quarter
of 1997.
For the nine months ended September 30, 1997, Dolphin, Inc. revenues
totalled $942,889 or 35% of total revenues while book publishing totalled
$1,214,934 or 45% for a grand total of $2,157,823 or 80% of total revenues as
compared to a year ago where book publishing revenues totalled $828,217 or 26%.
There were no revenues in 1996 from Dolphin Inc. since the company was
Page 11 of 12 pages
<PAGE>
acquired in March 1997. Revenues from CD-ROM's for the first nine months of this
year totalled $376,712 or 14% of total revenues as compared to $2,311,396 or 72%
of total revenues for the 1996 comparable period. Under both the Company's
co-publishing and distribution arrangements with Simon & Schuster, CD-ROM net
revenues declined to $350,807 for the nine months ended September 30, 1997
compared to $2,123,817 for the same nine month period ended September 30, 1996.
The decline in CD-ROM revenues with Simon & Schuster can partially be attributed
to the Company's restructuring plan in response to changing market conditions.
Under the Company's co-publishing agreement with Putnam Berkley
Group,Inc., book revenues totalled $885,428 for the first nine months ending
September 30, 1997 an increase of 20%, up from $737,245 in the prior comparable
period ended September 30, 1996.
Under a co-publishing and a distribution arrangement with Pocket Books,
a division of Simon & Schuster, revenues totalled $250,849 for the first nine
months ended September 30, 1997 as compared to $90,972 for the same period a
year ago.
Cost of Revenues. Cost of revenues of the three months ended September 30, 1997
declined to $752,943 as compared to $1,309,608 for the same period a year ago
resulting in a gross profit of $215,099 for the three months ended September 30,
1997 as compared to a gross loss of $5,384 in the prior comparable period. Cost
of revenues for the nine months ended September 30, 1997 decreased to $2,878,695
as compared to $2,968,881 for the same period a year ago. The decline in cost of
revenues for both the three and nine months ending September 30, 1997 is
directly the result of the Company's new strategy of expanding into the
education and publishing markets where the cost of revenue is lower while at the
same time reducing its reliance on the development and sale of CD-ROM's for the
retail/consumer market where the cost of revenue is much higher.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the quarter ended September 30 1997 was $1,060,259
and for the nine months was $3,695,334 as compared to $949,233 and $2,888,192
respectively for the prior year comparable periods. The increase in selling,
general and administrative expenses for the nine months and to a lesser extent
for the three months ended September 30, 1997 is largely attributable to an
increase in expenses relating to the Company's international and domestic
financial public relations activities ($186,000), legal expenses associated
primarily with the Company's financing and acquisition program ($114,000),
amortization of goodwill associated with the acquisition of Dolphin Inc.
($129,000) and salaries ($71,000).
Restructing Charge. As previously announced in the second quarter ended June 30,
1997 and included in the nine months ended September 30, 1997 is a restructuring
plan which resulted in a charge of $1,437,259. The charge includes a write-down
of prepublication costs ($1,166,925) and inventory ($270,334) associated with
canceled or older titles which are no longer being actively marketed.
Page 12 of 15 pages
<PAGE>
Other income (expense).Other income increased to $38,026 for the three months
ended September 30, 1997 as compared to ($26,759) for the comparable period and
decreased to $33,142 for the nine months ended September 30, 1997 as compared to
$118,908 for the comparable prior year. The decline for the nine months ended
September 30,1997 as compared to nine months ended September 30, 1996 is due
principally to less funds being available for investment and the incurrence of
interest expense on the convertible note issued to seller of Dolphin, Inc.
New Accounting Standard. In February 1997, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards no. 128, "Earnings per
Share." This Statement establishes standards for computing and presenting
earnings per share ("EPS") and applies to all entities with publicly held common
stock or potential common stock. This Statement replaces the presentation of
primary EPS and fully diluted EPS with a presentation of basic EPS and diluted
EPS, respectively. Basic EPS excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number of
common shares outstanding for the period. Similar to fully diluted EPS, diluted
EPS reflects the potential dilution of securities that could share in the
earnings. This statement is not expected to have a material effect on the
Company's reported EPS amounts. This Statement is effective for the Company's
financial statements for the year ending December 31, 1997.
Liquidity and Capital Resources. The Company's balance sheet at September
30,1997 reflects cash and cash equivalents totalling $434,985 and accounts
receivable totalling $1,402,554 with total current assets of $2,027,558.
Accounts payable and accrued expenses total $2,147,865, current portion of notes
payable total $503,879 and other current liabilities total $132,035. Deferred
income of $1,339,462, which is expected to be earned in the future, and a
reserve for product returns totalling $381,727 is also included in current
liabilities.
On February 5, 1997, the Company completed a financing covering the
sale of 8.0% Convertible Debentures due January 31, 1999 in the aggregate
principal amount of $2,000,000. In April 1997, the Debentures were converted
into common stock of the Company (See Note 4 to the Financial Statements).
In August 1997 the Company executed an Interative Services Agreement
between America OnLine, Inc. ("AOL") and Virtual Comics, Inc. a subsidiary of
Byron Preiss Multimedia Company. AOL agreed to convert its prepaid Royalty of
$300,000 plus an additional amount of $65,000 into a miniority interest of
Virtual Comics, Inc.
In October 1997 the Company completed an additional financing covering
the sale of 6% Convertible Debentures due October 31, 1999 in the aggregate
principal amount of $250,000 in order to provide funds for a potential
acquisition and working capital.
At this time, the Company is pursuing various potential acquisitions.
In order to complete such acquisitions and to fund the future operations of
these acquisitions as well as to fund current on-going operations of the Company
in order to support its current working capital requirements, the Company is
required to raise additional capital. There can be no assurance
Pae 13 of 15 pages
<PAGE>
that the Company will be successful in raising such additional capital or that
such additional capital will be available on a timely basis or available on
commercially acceptable terms to the Company. The failure by the Company to
currently raise capital for each of the purposes discussed above will result in
a material adverse effect to the business and operations of the Company.
FORWARD-LOOKING INFORMATION. Statements contained in this Form 10-QSB that are
not historical facts, including, but not limited to, statements found in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1999 that involve
a number of risks and uncertainties. The actual results of the future events
described in such forward-looking statements in this Form 10- QSB could differ
materially from those stated in such forward-looking statements. Among the
factors that could cause actual results to differ materially are: the Company's
ability to successfully develop, distribute and market titles, increasingly
intense competition in the interactive multimedia development and book
publishing industries and other risks detailed from time to time in the
Company's periodic earnings releases and reports filed with the Securities and
Exchange Commission, as well as the risks and uncertainties discussed in this
Form 10-QSB.
Item 6.
EXHIBITS & REPORTS ON FORK 8-K
a. Exhibits
The following Exhibit is hereby filed as part of this Quarterly Report
on form 10QSB:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
b. Reports on Form 8-K
The Company filed a Current Report on Form 8-K (Date of Event -
November 3, 1997) under Item 5 relating to the completion of sale of 6%
Convertible Debentures due October 31, 1999 in an aggregate principal amount of
$250,000 in reliance upon exemption from registration under Regulation S
afforded by the Securities Act of 1933, as amended.
Page 14 of 15 pages
<PAGE>
SIGNATURE
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 thereunto duly authorized.
BYRON PREISS MULTIMEDIA COMPANY, INC.
Date: November 18, 1997 By: /s/ Byron Preiss
Chief Executive Officer,
President and Executive
Officer
Date: November 18, 1997 By: /s/ James R. Dellomo
hief Financial Officer
Page 15 of 15 pages
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from the Company's
Consolidated Balance Sheet and Consolidated Statement of Operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 434,985
<SECURITIES> 0
<RECEIVABLES> 1,402,554
<ALLOWANCES> 0
<INVENTORY> 37,738
<CURRENT-ASSETS> 2,027,558
<PP&E> 585,151
<DEPRECIATION> 0
<TOTAL-ASSETS> 7,618,135
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 7,174
<OTHER-SE> 13,391,529
<TOTAL-LIABILITY-AND-EQUITY> 7,618,135
<SALES> 2,683,785
<TOTAL-REVENUES> 2,683,785
<CGS> 2,125,753
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