UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
-------------
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 0-26368
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TRANSMEDIA ASIA PACIFIC, INC.
-----------------------------
(Exact name of Registrant as specified in its charter)
DELAWARE 13-3760219
------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
11 ST. JAMES'S SQUARE, LONDON SW1Y 4LB, ENGLAND
-----------------------------------------------
(Address of principal executive offices) (zip code)
U.K. 011-44-171-930-0706
------------------------
(Registrant's telephone
number including area code)
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 |_|
29,320,381 Shares, $.00001 par value, as of August 13, 1999
(Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date)
<PAGE>
TRANSMEDIA ASIA PACIFIC INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
Assets
Current assets
Cash and cash equivalents $ 464,445 $ 1,504,921
Trade accounts receivable 479,385 446,193
Restaurant credits (net of allowance for irrecoverable
credits of $72,064 as of June 30, 1999 and
$48,033 as of September 30, 1998) 162,982 195,548
Amounts due from related parties (note 15) 403,931 591,916
Prepaid expenses and other current assets 183,934 26,394
----------- -----------
Total current assets 1,694,677 2,764,972
----------- -----------
Non current assets
Investment in affiliated company (Note 9) 9,463,662 2,877,728
Property and equipment, (net of accumulated
depreciation of $210,433 as of June 30, 1999 and
$106,260 as of September 30, 1998) 193,372 240,269
Goodwill, (net of accumulated
amortization of $439,542 as of June 30, 1999 and
$ 204,897 as of September 30, 1998)(note 11) 4,313,013 3,759,284
Intangible and other assets, (net of accumulated
amortization of $840,235 as of June 30, 1999 and
$ 768,277 as of September 30, 1998)(note 10) 1,001,339 1,073,297
Restricted cash and cash equivalents 811,831 139,209
Other assets 69,825 104,003
----------- -----------
Total non-current assets 15,853,042 8,193,790
----------- -----------
TOTAL ASSETS $17,547,719 $10,958,762
=========== ===========
</TABLE>
See accompanying notes
2
<PAGE>
TRANSMEDIA ASIA PACIFIC INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (CONTINUED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities
Trade accounts payable $ 1,076,037 $ 538,708
Bank credit line 19,606 0
Deferred membership fee income 307,496 467,588
Accrued liabilities 477,457 990,672
Liability for sign on fees 0 296,500
Amount due to related parties (note 15) 1,715,567 3,924,386
Notes payable 3,732,541 1,615,000
----------- -----------
Total Current Liabilities 7,328,704 7,832,854
----------- -----------
Minority interest 133,986 629,784
Stockholders' equity
Common stock, $0.00001 par value per share
Authorised 95,000,000 shares;
(29,320,381 issued and outstanding as of June 30, 1999
and 19,521,316 as of September 30, 1998) 293 196
Additional paid in capital 25,118,295 14,823,648
Cumulative foreign currency translation (638,967) (211,268)
adjustment
Accumulated deficit (14,394,592) (12,116,452)
----------- -----------
Total Stockholders' Equity 10,085,029 2,496,124
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $17,547,719 $10,958,762
=========== ===========
</TABLE>
See accompanying notes
3
<PAGE>
TRANSMEDIA ASIA PACIFIC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months Three months Nine months Nine months
ended ended ended ended
June 30, June 30, June 30, June 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenues 995,143 1,539,076 3,030,012 3,291,867
Cost of sales (223,908) (208,556) (635,196) (786,913)
----------- ----------- ----------- -----------
Gross profit 771,235 1,330,521 2,394,816 2,504,954
Selling, general and
administrative expenses (1,477,377) (1,792,493) (4,537,570) (5,593,490)
----------- ----------- ----------- -----------
Loss from operations (706,142) (461,973) (2,142,754) (3,088,536)
Share of profits of associated company 13,009 (167,428) 18,701 (161,450)
Interest (expense) / income (46,327) 45,872 (261,108) 48,808
----------- ----------- ----------- -----------
Loss before income taxes (739,460) (583,529) (2,385,160) (3,201,178)
Income taxes 35,229 (56,418) 107,020 (56,418)
----------- ----------- ----------- -----------
Loss after income taxes (704,231) (639,947) (2,278,140) (3,257,596)
Minority Interest 4,319 (114,376) 0 (189,459)
----------- ----------- ----------- -----------
Net loss $(699,912) $(754,323) $(2,278,140) $(3,447,055)
Loss per common share $(0.03) $(0.04) $(0.10) $(0.20)
Weighted average number of common
shares outstanding 22,940,048 18,899,338 22,487,335 17,075,112
----------- ----------- ----------- -----------
</TABLE>
See accompanying notes
4
<PAGE>
TRANSMEDIA ASIA PACIFIC INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended Nine months ended
June 30, 1999 June 30, 1998
--------------- ---------------
<S> <C> <C>
Cash flows from Operating Activities:
- - Net loss $(2,278,140) $(3,447,055)
Adjustment to reconcile net loss
to net cash used in operating activities
- - Depreciation 84,893 184,583
- - Amortization of intangible assets 394,898 235,991
- - Provision for irrecoverable restaurant credits 15,298 100,000
- - Share of profits of affiliates (18,701) 161,450
- - Minority interests 0 181,459
- - Provision for bad debts 8,286 0
Changes in assets and liabilities:
- - Accrued interest expense 0 0
- - Trade accounts payable 537,329 33,222
- - Accrued liabilities (482,969) 665,616
- - Restaurant credits 17,268 4,299
- - Prepaid expense and other current assets (157,540) (799,013)
- - Trade accounts receivable (41,478) (158,965)
- - Restricted cash & cash equivalents (672,622) 0
- - Due from/(to) related parties (2,079,502) (1,309,293)
- - Deferred membership fees (160,092) 100,901
- - Accrued sign-on fees (296,500) 729,793
- - Other current assets 34,178 0
----------- -----------
Net cash used in operating activities (5,095,394) (3,309,012)
----------- -----------
Cash flows from investing activities:
- - Disposal/(purchase) of property and equipment (33,962) (143,415)
- - Purchase of NHS (1,233,451) (1,678,688)
- - Investment in Countdown America (24,967) 0
- - Investment in Porkpine (25,575) (570,547)
- - Investment in Breakaway 0 (83,748)
- - Investment in DBS Direct (500,000) 0
----------- -----------
Net cash used in investing activities (1,837,551) (2,476,398)
----------- -----------
Cash flows from financing activities:
- - Net proceeds received from issuance of:
common stock 3,757,000 3,934,595
- - Bank credit line 19,606 0
- - Issuance of notes, net of repayments 2,616,464 1,584,798
- - NHS cash acquired 0 841,347
----------- -----------
Net cash (used in)/provided by financing activities 6,393,070 6,360,740
----------- -----------
Effect of foreign currency on cash (539,875) 160,582
Minority Interest 518,601 0
----------- -----------
Net (decrease)/increase in cash and
cash equivalents (1,058,476) 736,182
Cash and cash equivalents at beginning of period 1,504,921 13,104
----------- -----------
Cash and cash equivalents at end of period $ 446,445 $ 749,286
=========== ===========
</TABLE>
See accompanying notes
5
<PAGE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
1. Cash paid during the periods presented for:
Nine Months Ended Nine Months Ended
June 30, 1999 June 30, 1998
Interest $235,637 $42,879
Taxes 0 0
2. In June 1999 the Company issued 4,589,732 shares of its common stock as
part payment for its investment in DSS Direct Connect, L.L.C. ("DBS
Direct"). The Company paid a total consideration of $3,368,583 for its
investment in DBS Direct made up as follows:
Cash payment 500,000
Issuance of 4,589,732 shares of common stock 6,038,821
----------
$6,538,821
----------
3. In June 1998 the Company issued 666,667 shares of its common stock in full
satisfaction of a $500,000 promissory note. See Note 12 - Notes Payable.
6
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1 - The Company
Transmedia Asia Pacific, Inc. ("TMAP" or the "Company") was incorporated under
the laws of the state of Delaware in March 1994. On May 2, 1994 the Company
acquired, from Conestoga Partners II, Inc. ("Conestoga"), the rights Conestoga
had previously acquired from Transmedia Network, Inc. ("Network"). The rights
acquired, pursuant to a Master License Agreement ("License Agreement") dated
March 21, 1994, were an exclusive license ("License") to use certain trademarks
and service marks, proprietary computer software programs and know-how of
Network to establish and operate a discount restaurant charge card business in
substantially all countries in Asia and the Pacific Rim including Japan, China,
Hong Kong, Taiwan, Korea, the Philippines and India (the "Licensed
Territories").
The Company has worked closely with its affiliate Transmedia Europe, Inc.
("TME") since inception. TME is a company which acquired a similar license to
that of the Company to operate a discount restaurant charge card business in
Europe, Turkey and the other countries outside of Europe which were formerly
part of the Union of Soviet Socialist Republics. The Company and TME have the
same directors and officers. Edward J. Guinan III is Chairman and Chief
Executive Officer of the Company and TME, as well as a principal shareholder in
each.
Through 1996 the Company operated a discount restaurant charge card business in
Australia through its wholly owned subsidiary Transmedia Australia Pty Limited.
In late 1996 management identified the need to expand the Company's operations
to become a broader based "member benefits" provider, believing that the Company
needed a range of benefits to offer its corporate clients and individual
members, in addition to discount dining. Such benefits included discount
shopping, travel, hotel accommodation and telephone helpline services. At the
same time TME made a similar strategic decision and as a result the Company and
TME decided to work together in expanding their business operations.
In April 1997 the Company and TME jointly acquired Countdown Holdings Limited
("Countdown"), an international provider of membership based discount shopping
services. In December 1997 Transmedia Australia Holdings Pty Limited
("Transmedia Australia"), a company owned jointly by the Company and TME,
purchased 51% of the shares of common stock of NHS Australia Pty Limited
("NHS"). NHS purchased the net assets and business operations of Nationwide
Helpline Services Pty Limited ("Nationwide"). NHS is a provider of telephone
helpline services covering advice on legal, tax, accounting, medical and home
emergency. In addition NHS offers travel related products such as airline
tickets, vacation packages, insurance and provides international medical case
management and repatriation services to a number of insurance companies. On May
14, 1998 the Company and TME jointly acquired Porkpine Limited, a business
trading as Logan Leisure, which produces and sells discount shopping and
services directories. On May 22, 1998 Transmedia Australia Travel Holdings Pty
Limited ("Transmedia Travel"), a company owned jointly by the Company and TME
acquired Breakaway Travel Club Pty Limited ("Breakaway"). Breakaway, which is
based in Sydney, Australia, is a licensed travel agent specializing in discount
packaged vacations for individuals employed in the travel industry in Australia.
In July 1998 the Company and TME jointly incorporated Countdown America, Inc.
("Countdown America") to establish a member benefits business in the United
States and on November 17, 1998, Transmedia Australia acquired the balance of
49% of the shares of common stock of NHS. In November, 1998, Countdown launched
an internet shopping program, Countdown Arcade. Finally, in June 1999, the
Company and TME jointly acquired DSS Direct Connect, L.L.C. ("DBS Direct") a US
company having the right, on a preferred basis, to provide localized turn-key
sales and installation services for DirecTV and USSB, a leading provider of
digital "direct-to-the-home" multi-channel video programming services.
7
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 1 - The Company (continued)
In light of the close collaboration between the Company and TME since
incorporation and, more particularly, in view of the joint ownership of
Countdown, NHS, DBS Direct, Countdown America, Logan Leisure and Breakaway
Travel, management of the Company and TME have announced their intention to
pursue a merger of the two companies. The proposed merger is subject to approval
by the respective boards of directors, fairness opinions by independent
investment advisers and the approval of shareholders of both companies.
The Company commenced business operations in Sydney, Australia in November 1994.
As of June 30, 1999, the Company had the following equity interests in its
direct subsidiaries and affiliates:
<TABLE>
<CAPTION>
Name Country of Incorporation % Owned
- ---- ------------------------ -------
<S> <C> <C>
Transmedia Australia Pty Ltd Australia 100
Transmedia Australasia Pty Ltd New Zealand 100
Transmedia Australia Holdings Pty Ltd Australia 50
Transmedia Australia Travel Holdings Pty Ltd Australia 50
Countdown Holdings Limited UK 50
Porkpine Limited Channel Islands 50
Countdown America, Inc. United States 50
DSS Direct Connect, L.L.C. United States 50
</TABLE>
All references herein to "Company" and "TMAP" include Transmedia Asia Pacific,
Inc. and its subsidiaries unless otherwise indicated.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in conformity with generally accepted accounting principles for interim
financial information and with the instructions for Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all the information and
footnotes required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, the statements
contain all adjustments (consisting only of normal recurring accruals) necessary
to present fairly the financial position as of June 30, 1999, the results of
operations for the three and nine months ended June 30, 1999 and 1998 and the
changes in cash flows for the nine months ended June 30, 1999 and 1998. The
results of operations for the three and nine months ended June 30, 1999 are not
necessarily indicative of the results to be expected for the full year.
The September 30, 1998 balance sheet has been derived from the audited
consolidated financial statements as of that date included in the Company's
Annual Report on Form 10-K. These unaudited consolidated financial statements
should be read in conjunction with the audited consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K
8
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 2. Basis of Presentation (continued)
Effective control over Transmedia Australia and Transmedia Travel is exercised
by the Company and accordingly Transmedia Australia's accounts are consolidated
in the accounts of the Company. Although the Company has significant influence
over the operating and financial decisions of Countdown, DBS Direct, Countdown
America and Porkpine, TME has effective control over the operations of those
businesses. Accordingly, the operations of Countdown, DBS Direct, Countdown
America and Porkpine are accounted for under the equity method in the financial
statements of the Company.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company's ability to continue as a
going concern may depend on its ability to obtain outside financing sufficient
to support its operations. Management believes, based upon the Company's history
of obtaining necessary financing, that sufficient funds will be available to the
Company to enable it to operate for the foreseeable future. However there can be
no assurance given that the Company will obtain such short-term or long-term
outside financing.
Note 3. Foreign Currencies
The reporting currency of the Company is the United States dollar. The
functional currencies of the Company's operating subsidiaries and affiliates are
the Australian dollar, UK pound sterling, Irish punt and the United States
dollar.
For consolidation purposes, the assets and liabilities of the Company's
subsidiaries are translated at the exchange rate in effect at the balance sheet
date. Consolidated statements of income for the Company's subsidiaries are
translated at the average rates of exchange during the period. Exchange
differences arising on these translations are taken directly to stockholders'
equity.
The average exchange rates during the three and nine months ended June 30, 1999
and 1998 and the exchange rates in effect at June 30, 1999 and September 30,
1998 were as follows:
UK Pound Australian Irish
Sterling ((pound)) Dollar Punt
------------------ ------ ----
Average exchange rates
- ----------------------
3 months ended June 30, 1999 1.6067 0.6539 1.3415
3 months ended June 30, 1998 1.6542 0.7697 1.5257
6 months ended June 30, 1999 1.6455 0.6374 1.4213
6 months ended June 30, 1998 1.6347 0.7810 1.5884
Closing exchange rate
- ---------------------
June 30, 1999 1.5763 0.6611 1.4903
September 30, 1998 1.6125 0.7251 1.4545
9
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 4. Income Taxes
The Company adopts Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes" which recognizes (a) the amount of taxes payable
or refundable in the current year and (b) deferred tax liabilities and assets
for the future tax consequences of events that have been recognized in an
enterprise's financial statements or tax returns.
A valuation allowance is established to reduce the deferred tax assets when
management determines it is more likely than not that the related tax benefits
will not be realized
Note 5. New Accounting Standards
Effective quarter ended March 31, 1998 the Company adopted Statement of
Financial Accounting Standards No. 128 "Earnings per Share". SFAS No. 128
requires that all prior period earnings per share data be restated to conform to
this standard. The adoption of this standard has not had a material effect on
the Company's restated historic earnings per share
In June 1997, the Financial Accounting Standards Board ("FASB") issued two new
disclosure standards, SFAS No. 130, "Reporting Comprehensive Income" and SFAS
No. 131, "Disclosure about Segments of an Enterprise and Related Information".
The Company has adopted SFAS No. 130 which establishes standards for reporting
and display of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity except those
resulting from investments by owners and distributions to owners.
The Company has also adopted SFAS No. 131 which supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise," and establishes
standards for the way that public enterprises report information about operating
segments in financial statements issued to the public. It also establishes
standards for disclosures regarding products and services, geographic areas and
major customers.
Both of these standards require comparative information to be restated. Results
of operations and financial position are unaffected by implementation of these
new standards.
In February 1998, the FASB issued SFAS No. 132, "Employers' Disclosures about
Pensions and Other Post-retirement Benefits" (SFAS No. 132), which revises
employers' disclosures about pension and other post-retirement benefit plans.
SFAS 132 is effective for financial statements for the periods beginning after
December 15, 1997, and requires comparative information for earlier years to be
restated. This standard does not apply currently to the Company.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes standards for accounting
for the various derivative instruments commonly used in hedging activities. This
standard is effective for fiscal years beginning after June 15, 1999.
10
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 6. Revenue Recognition
Revenues comprise:
(i) the retail value of food and beverage purchased from participating
restaurants by the Company's Transmedia cardholders (less the cardholders'
20% or 25% discount) and the cardholders' membership fees,
(ii) NHS membership fees paid by sponsoring corporations, and
(iii) Travel agency commissions earned by the Teletravel division of NHS and
Breakaway Travel Club Pty Limited.
Transmedia card membership fees are recognized as revenue in equal monthly
installments over the membership period. NHS membership fees paid by sponsoring
corporations for the provision of "helpline services", are recognized as revenue
when received.
Note 7. License Costs
The Company evaluates the carrying value of its investment in License Costs for
impairment based on estimated future net cash flows generated by, and directly
attributable to, the Transmedia License. If the estimated future net cash flows
are less than the carrying value of the license costs, it is the policy of the
Company to recognize the impairment and adjust the carrying value of the License
Costs to their estimated fair value. In the opinion of management, there has
been no permanent impairment of the License Costs as of June 30, 1999.
Note 8. Restaurant Credits
Restaurant credits represent the total advances made to participating
restaurants less the amount recouped by the Company as a result of Company
cardholders using their cards at participating restaurants. Restaurant credits
are recouped by the Company within one year of advance and accordingly are
classified as a current asset. The amount by which such credits are recouped
equates to approximately 50% of the retail value of the food and beverage
purchased by cardholders at participating restaurants. The Company periodically
reviews the recoverability of restaurant credits and establishes an appropriate
provision against irrecoverable restaurant credits.
The funds advanced to participating restaurants are generally unsecured.
11
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 9. Investment in Affiliated Companies
Investment in affiliated company comprises the Company's interest in Countdown,
DBS Direct, Countdown America and Logan Leisure which are made up as follows:
<TABLE>
<CAPTION>
June 30, September 30,
1999 1998
----------- -----------
Countdown
<S> <C> <C>
Cost of investment $ 2,682,487 $ 2,682,487
Cost of Option 171,860 171,860
Share of profits/(losses)
- From acquisition date to September 30, 1998 (854,216) (854,216)
- Nine months ended June 30, 1999 108,576 0
- Amortization of goodwill on investment (457,297) (215,204)
Amounts due from/(to) Countdown 407,158 278,956
----------- -----------
$ 2,058,568 $ 2,063,883
=========== ===========
Porkpine Limited
Cost of investment $ 896,797 $ 896,797
Additions 25,575 0
Share of profits/(losses)
- From acquisition date to September 30, 1998 (60,889) (60,889)
- Nine months ended June 30, 1999 35,378 0
- Amortization of goodwill on investment (70,777) (22,063)
----------- -----------
$ 826,084 $ 813,845
=========== ===========
Countdown America
Cost of investment $ 24,967 $ 0
Share of profits/(losses)
From inception to September 30, 1998 0 0
Nine months ended June 30, 1999 (115,253) 0
Amounts due from/(to) Countdown America 140,475 0
----------- -----------
$ 50,189 $ 0
=========== ===========
</TABLE>
12
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 9. Investment in Affiliated Companies (continued)
DBS Direct
Cost of investment $6,538,821 $0
Share of profits/(losses)
Nine months ended June 30, 1999 (10,000) 0
----------- ----
$6,528,821 $0
=========== ====
Note 10. Intangible Assets
Intangible assets primarily consist of the cost of the Transmedia License, net
of amortization. The Transmedia License cost is being amortized on a straight
line basis over its estimated useful life of fifteen years from the commencement
of operations in November, 1994.
June 30, September 30,
1999 1998
----------- -----------
Formation Expenses $ 784 $ 784
Transmedia License 1,840,790 1,840,790
Less: Accumulated amortization (840,235) (768,277)
----------- -----------
Total $ 1,001,339 $ 1,073,297
=========== ===========
Note 11. Goodwill
The Company recognizes the excess of the purchase price paid over the fair value
of net assets acquired in connection with its acquisitions as goodwill. Goodwill
arising on acquisitions is amortized on a straight line basis usually over a
period of fifteen years.
13
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 12. Notes Payable
On April 29, 1998 the Company engaged in a private placement of debt securities.
The Placement was made pursuant to the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The placement consisted of three 250,000 pounds sterling
(approximately $413,000) face amount, 8% promissory notes payable on November 1,
1998 and one 200,000 pounds sterling (approximately $330,000) face amount, 8%
promissory note payable on the same date.
The holders of the 250,000 pounds sterling promissory notes each received a
three and a half year warrant to purchase 41,660 shares of the common stock of
the Company at an exercise price of $2.00 per share and the holder of the
200,000 pounds sterling promissory note received a warrant to purchase 33,328
shares on the same terms. The warrants are exercisable at any time after
issuance through November 1, 2001. The Company failed to pay the promissory
notes on the due date and accordingly, pursuant to the terms of the promissory
notes, the holders each received additional warrants for the same number of
shares and exercisable on the same terms as the original warrants.
As of the date hereof the Company has repaid the three 250,000 pounds sterling
promissory notes in full, together with accrued interest. In addition, the
holder of the 200,000 pounds sterling promissory note has been paid
approximately $41,700 in part repayment and has agreed to give the Company
additional time to repay the balance of the note together with accrued interest.
The Company granted such note holder a conversion privilege to convert the
balance of the note, together with accrued interest, into shares of common stock
at a conversion price of $.75 per share.
During the course of negotiations with the note holders, the Company granted two
of the 250,000 pounds sterling note holders an additional warrant each to
purchase 41,660 shares of common stock and agreed to adjust the exercise price
of all warrants issued to all note holders from $2.00 to $1.00.
On November 17, 1998 the Company entered into a One Year Secured Promissory Note
("Note") in the principal sum of $3.4 million executed with FAI General
Insurance, a shareholder of the Company and TME. Interest on the Note accrues at
the rate of 10% per annum and is payable quarterly in arrears. The Note is
secured by a charge over Transmedia Australia and is guaranteed by TME. The Note
is repayable on November 16, 1999. The Note holder received a three-year warrant
to purchase 1,000,000 shares of the common stock of the Company at an exercise
price of $1.00 per share. In addition the Company agreed to exchange warrants to
purchase 633,366 shares of common stock, exercisable at prices between $1.00 and
$1.40, for a warrant to purchase 633,366 shares at an exercise price of $1.00.
14
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 12. Notes Payable (continued)
On February 5, 1999 the Company engaged in a private placement of debt
securities. The Placement was made pursuant to the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, and
Regulation D promulgated thereunder. The placement consisted of a $500,000 face
amount zero coupon promissory note payable on March 5, 1999. The note holder
received a three-year warrant to purchase 100,000 shares of the common stock of
the Company at an exercise price of $1.25 per share. The warrant is exercisable
at any time after issuance through February 4, 2002. The Company failed to pay
the note on the due date but the note holder agreed to extend the repayment date
to June 21, 1999. In consideration for the additional time to repay the note,
the Company granted the note holder the right, prior to repayment, to convert
the note in whole or in part into shares of common stock of the Company at a
conversion price of $.75 per share. On June 18, 1999, the note holder exercised
his conversion privilege and the Company issued 666,667 shares of its common
stock in full satisfaction of the note.
Note 13. Stockholders Equity
On October 16, 1998 the Company commenced a private placement pursuant to the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. The placement closed
on November 30, 1998 upon the sale of 842,666 shares of common stock at $0.75
per share, resulting in net proceeds to the company of $632,000.
On January 25, 1999 the Company commenced a private placement pursuant to the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. The placement closed
on January 31, 1999 upon the sale of 700,000 shares of common stock at $1.25 per
share, resulting in net proceeds to the company of $875,000.
On May 11, 1999 the Company commenced a private placement pursuant to the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. As of the date hereof
the Company has sold 3 million shares of common stock at $.75 per share,
resulting in net proceeds to the company of $2.25 million.
On June 18, 1999 the holder of a $500,000 promissory note exercised his
conversion privilege and converted such promissory note into 666,667 shares of
the Company's common stock, a price of $.75 per share. See Note 12 - Notes
Payable.
15
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 14. Acquisitions
On December 2, 1997, Transmedia Australia, purchased 51% of the common stock of
NHS. NHS purchased the net assets and business of Nationwide. Nationwide was an
Australian provider of telephone helpline services and other member benefit
programs. The Company exercises effective control over Transmedia Australia and
accordingly Transmedia Australia's accounts are consolidated in the accounts of
the Company. The total consideration paid by Transmedia Australia for its 51%
interest in the equity capital of NHS was Aus$6,000,000 (approximately
$4,290,000 as of December 2, 1997). Transmedia Australia also agreed to purchase
the balance of the equity capital of NHS for Aus$2,500,000 on June 30, 1998 with
the right to extend such obligation ("Balance Obligation") until September 30,
1998 by paying interest at 5% per annum. Transmedia Australia exercised the
extension right. In addition the Company and TME agreed to pay Aus$4,000,000 in
sign-on fees to the two former executive directors of Nationwide. On October 21,
1998 Transmedia Australia reached agreement to reduce the sign-on fees by
Aus$1,000,000. On November 17, 1998 Transmedia Australia acquired the remaining
49% and settled the Balance Obligation. The Company and TME also paid the
balance of the reduced sign-on fees on that date. The total revised sign-on fees
of Aus$3,000,000 (approximately $1,940,000) were charged in full as compensation
expense in the income statements of the Company and TME for the year ended
September 30, 1998. The acquisition was accounted for as a purchase and the
excess purchase price attributable to goodwill was $3,905,384.
On June 15, 1999 the Company and TME jointly acquired DBS Direct. DBS Direct is
a US corporation with the right, on a preferred basis, to provide localized
turn-key sales and installation services for DirecTV and USSB, a leading
provider of digital "direct-to-the-home" multi-channel video programming
services. The consideration paid by the Company for its 50% interest in DBS
Direct comprised 4,589,732 shares of the common stock of the Company plus
$500,000 in cash. TME paid a consideration of 4,831,057 shares of its common
stock and $500,000 in cash for the remaining 50% of DBS Direct. See the
Company's Current Report on Form 8-K dated June 15, 1999.
16
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 15. Related Parties
Amounts due from related parties comprise the following:
June 30, September 30,
1999 1998
----------- -----------
Related Party
Transmedia UK 318,634 383,507
Conestoga Partners Inc. 26,260 26,260
International Advance 0 140,000
Paul Harrison 59,037 42,149
----------- -----------
Total $403,931 $591,916
----------- -----------
Amounts due to related parties comprise the following:
June 30, September 30,
1999 1998
----------- -----------
Related Party
J. V. Vittoria 1,227,507 1,182,137
TMNI 336,754 287,533
Transmedia Europe, Inc. 151,306 2,454,716
----------- -----------
Total $1,715,567 $3,924,386
----------- -----------
17
<PAGE>
TRANSMEDIA ASIA PACIFIC, INC. AND SUBSIDIARIES
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Note 16. Loss per common share
The Company has adopted Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings per Share" in fiscal 1998. SFAS 128 requires restatement of prior
periods. Assumed exercise of warrants is not included in the calculation of
diluted loss per share since the effect would be anti-dilutive. Accordingly,
basic and diluted loss per share do not differ for any period presented.
The following table summarizes securities that were outstanding at June 30, 1999
and 1998 but not included in the calculation of diluted loss per share because
such shares are anti-dilutive.
June 30, June 30,
1999 1998
----------- -----------
Stock options and warrants 8,755,465 2,865,509
18
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This Quarterly Report on Form 10-Q and the documents incorporated herein contain
"forward looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among others, those described below and those presented elsewhere by management
from time to time. When used in this Quarterly Report, statements that are not
statements of current or historical fact may be deemed to be forward-looking
statements. Without limiting the foregoing, the words "anticipate", "plan,"
"intend," "believe", "estimate" and similar expressions are intended to identify
such forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date
hereof. Except as required by law, the Company undertakes no obligation to
update any forward-looking statement, whether as a result of new information,
future events or otherwise.
The following discussion should be read in conjunction with the unaudited
Consolidated Financial Statements and notes thereto.
General
The business of the Company is the design and supply of a range of member
benefit programs to corporations, affinity groups and individuals on an
international scale. In 1996 the Company and TME decided to work closely to
implement a strategy to create a broader based international member benefits
business. As a result the Company currently has established business operations
in Australia and New Zealand and through its affiliates, Countdown, DBS Direct,
Countdown America and Logan Leisure, has an interest in business operations in
Europe and elsewhere. In addition, in November 1998 Countdown launched its
transactional web site business, Countdown Arcade.
The future success of the Company is primarily dependent upon its ability to
develop and expand its current business operations by increasing their
membership base, broadening the range of member benefit programs offered and
migrating its products to the internet. Management continues to actively recruit
senior executives to strengthen the management team to facilitate such
development and expansion.
The Company will continue to look for new opportunities within the member
benefits industry and may expand its operations through further acquisitions.
Management believes that the international member benefits market is
significantly less developed than in the United States, providing an opportunity
for the Company to expand its operations from its established base in
Australasia and through its affiliates in Europe and the United States.
Results of Operations
Three Months ended June 30, 1999 compared to Three Months ended June 30, 1998
The Company generated revenues of $995,143 (1998: $1,539,076) in the three
months ended June 30, 1999, a decrease of $543,933 or 35.3% over the
corresponding period in 1998. NHS generated revenues of $593,700 (1998:
$1,159,398) and Breakaway generated revenues of $249,835 (1998: $103,199 from
May 22 the date of acquisition to June 30, 1998). The decrease in NHS revenues
is due to a number of corporate clients not renewing their help-line service
contracts when they expired. Management has taken steps to improve sales and
marketing in this division and is actively pursuing potential clients to replace
lost accounts. The restaurant charge card business recorded a decline in
revenues of $124,871 to $151,608 due to lower card usage by cardholders and a
reduction in the participating restaurant base.
19
<PAGE>
Cost of sales totaled $223,907 (1998: $208,555) for the three months ended June
30, 1999, generating a gross profit percentage of 77.5% (1998: 86.4%). The
decrease in gross profit percentage is due to the impact of the revenue decline
in the high margin NHS business, which was only partially offset by the impact
of Breakaway Travel which generates a gross profit of 100% on its travel
commission revenues. NHS achieved a gross profit of 76.6% (1998: 94.9%) and the
restaurant card business 43.8% (1998: 46.1%).
Selling, general and administrative expenses totaled $1,477,377 (1998:
$1,792,493) for the three months ended June 30, 1999, a decrease of $315,116 or
17.6% over the corresponding period in 1998. Adjusting such decrease for the
impact of Breakaway ($211,964) which was acquired in May 1998, the Company
recorded a year on year decrease in selling, general and administrative expenses
in pre-existing operations of $527,080. Selling, general and administrative
expenses of NHS decreased by $324,218 as compared to the corresponding period in
1998. NHS recorded expense decreases in a majority of cost categories, most
significantly in payroll and communication costs. Selling, general and
administrative expenses in the restaurant card business were marginally ahead of
1998 levels and head office costs showed a net decrease of $228,229 over prior
year levels. The net decrease in head office selling, general and administrative
expenses comprised increases in depreciation and amortization charges $15,558,
payroll costs $151,828 and professional fees $116,226 which were offset by the
impact of office relocation expenses of $468,184 incurred in 1998.
The Company's share of profits/(losses) of its affiliates Countdown, DBS Direct,
Countdown America and Logan Leisure were $56,529, $(10,000), $(30,095) and
$(3,425) respectively for the three months ended June 30, 1999 (1998:
$(169,414), nil, nil and $1,986).
Minority interests comprise TME's 50% interest in Transmedia Australia and
Transmedia Travel.
Nine Months ended June 30, 1999 compared to Nine Months ended June 30, 1998
Revenues totaled $3,030,012 (1998: $3,291,867) for the nine months ended June
30, 1999, a decrease of $261,855 or 7.9% as compared to the corresponding period
in 1998. NHS recorded a decrease in revenues of $404,990 (excluding the affect
of only being consolidated for 7 months in the corresponding period in fiscal
1998) which was offset by the impact of Breakaway. Breakaway revenues were
$571,808 higher in the nine months to June 30, 1999 because Breakaway was
consolidated for only 8 days in the corresponding period in fiscal 1998. The
restaurant charge card business recorded a decline in revenues of $428,673 to
$612,349 due to lower card usage by cardholders and a reduction in the
participating restaurant base.
Cost of sales totaled $635,196 (1998: $786,913) for the nine months ended June
30, 1999 resulting in a gross profit percentage of 79.0% (1998: 76.1%). The
increase in gross profit percentage reflects the impact of the 100% gross margin
of Breakaway. The gross profit percentage achieved in the period by NHS was
81.7% as compared to 48.3% in the restaurant card business. In the corresponding
period in 1998 NHS achieved a gross profit percentage of 90.9% and the
restaurant card business 43.2%.
Selling, general and administrative expenses totaled $4,537,570 (1998:
$5,593,490) for the nine months ended June 30, 1999, a decrease of $1,080,783 or
19.3% over the corresponding period in 1998. Selling, general and administrative
expenses for the nine months ended June 30, 1998 included $1,258,089 in respect
of sign-on fees paid to the former executive directors of NHS. Excluding the
impact of such sign-on fees and Breakaway which was acquired on May 22, 1998,
selling, general and administrative expenses decreased by $572,488 in the nine
months ended June 30, 1999 as compared to the corresponding period in 1998. NHS,
despite being consolidated for only 7 months in fiscal 1998, recorded a decrease
in selling, general and administrative of $100,048 primarily in the areas of
communication costs, property costs and professional fees. The restaurant card
business recorded cost reductions totaling $131,561 across all expense
categories. Head office selling, general and administrative expenses were
$340,879 lower than in fiscal 1998 excluding the impact of the sign-on fees
referred to above. Such decrease primarily comprised office relocation costs
$180,562, restaurant card royalty costs $42,777 and property costs $27,815.
20
<PAGE>
The Company's share of profits/(losses) of its affiliates Countdown, DBS Direct,
Countdown America and Logan Leisure were $108,576, $(10,000), $(115,253) and
$35,378 respectively for the nine months ended June 30, 1999 (1998: $(163,436),
nil, nil and $1,986).
Minority interests comprise TME's 50% interest in Transmedia Australia and
Transmedia Travel.
Liquidity and Capital Resources
The following chart represents the net funds provided by or used in operating,
financing and investment activities for each period as indicated:
Nine Months Ended
-----------------
June 30, 1999 June 30, 1998
Cash (used in)/provided by
Operating Activities $(5,095,394) $(3,309,012)
Cash used in
Investing activities $(1,837,551) $(2,476,398)
Cash provided by financing
Activities $6,393,070 $6,360,740
The Company incurred a net loss of $2,278,140 in the nine months ended June 30,
1999, which when adjusted for non-cash items resulted in funds used in operating
activities totaling $5,095,394, net of working capital movements. Non-cash items
comprised depreciation and amortization charges $479,791, the Company's share of
profits of affiliates of $18,701, provision against irrecoverable restaurant
credits $15,298 and a release of provision for bad debts of $8,286.
Net cash used in investing activities of $1,837,551 comprised the cash elements
of the Company's investment in Transmedia Australia to complete the acquisition
of NHS ($1,233,451), the Company's investment of $50,542 in its affiliates
Countdown America ($24,967) and Porkpine ($25,575) and the cash element of its
investment in DBS Direct. In addition, the Company invested $33,962 in fixed
assets in the nine months ended June 30, 1999. In the corresponding period in
1998 net cash used in investing activities comprised the cash element of the
Company's investment in Transmedia Australia to acquire NHS ($1,678,688), the
cash element of its investment in Porkpine ($570,547), its acquisition of
Breakaway ($83,748) and $143,415 invested in fixed assets.
To meet its cash requirements during the nine months ended June 30, 1999, the
Company sold in aggregate 4,542,666 shares of its common stock in equity private
placements, resulting in net proceeds to the Company of $3,757,000. In addition,
in November 1998 the Company raised $3.4 million through the issuance of a
One-Year Secured Promissory Note (see Note 12 to the unaudited consolidated
financial statements).
During the nine months ended June 30, 1999 and prior periods the Company has
relied on the net proceeds of equity placements and short-term debt financing to
fund its operating needs and investments. Management has taken steps to reduce
the amount of cash used by operations, however the Company's operations may not
provide sufficient internally generated cash flows to meet its projected
requirements in the short-term. Accordingly, the Company will require further
capital infusions in order to meet its loan repayment commitments and the
ongoing funding requirements of its operations. Based upon the Company's history
of obtaining necessary financing, management believes that sufficient funds will
be available for the Company to operate in the foreseeable future and meet its
loan repayment obligations. However there can be no assurance given that the
Company will be able to obtain such funding.
21
<PAGE>
Historically, the Company's ability to grow and generate cash from operations
has been restricted by the single product offered, the Transmedia dining card.
However, in recent years the Company and TME have worked closely to implement a
strategy to create a broader based international member benefits business and to
migrate such business interests to the internet where appropriate. As a result,
the Company currently has established business operations in Australia and New
Zealand and through its affiliates, Countdown, DBS Direct, Countdown America and
Logan Leisure, has an interest in business operations in the United States,
Europe and elsewhere.
The Company and TME have recently acquired DBS Direct and established business
operations in the United States. Additionally, in November 1998 Countdown
launched its transactional web site business, Countdown Arcade. Management
believes that after completion of the proposed merger with TME, the Company and
TME will be well positioned to achieve profitability in the medium term.
However, there can be no assurance given that the proposed merger will be
completed or when, if at all, profitability will be achieved.
Inflation and Seasonality
The Company does not believe that its operations have been materially influenced
by inflation in the three and nine months ended June 30, 1999, a situation which
is expected to continue for foreseeable future. The business of Breakaway is to
some extent seasonal. However, the Company has no basis at this time on which to
project the effects, if any, on its business as a whole.
Year 2000 disclosure issues
The Company has considered the guidance of the Statement of the Commission
regarding disclosure of Year 2000 issues for public companies (Release No.
33-7558) effective date August 4, 1998. Full disclosure of Year 2000 issues was
made in the Company's Annual Report on Form 10-K for the year ending September
30, 1998.
22
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings
Management are not aware of any lawsuits or claims pending against the Company
or any of its subsidiaries.
ITEM 2. Change in Securities and Use of Proceeds
On October 16, 1998 the Company commenced a private placement pursuant to the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. The placement is
closed on November 30, 1998 upon the sale of 842,666 shares of common stock at
$0.75 per share, resulting in the net proceeds to the company of $632,000. The
proceeds of the placement were applied to working capital.
On January 25, 1999 the Company commenced a private placement pursuant to the
exemption from registration afforded by Section 4(2) of the Securities Act of
1933, as amended, and Regulation D promulgated thereunder. The placement closed
on January 31, 1999 upon the sale of 700,000 shares of common stock at $1.25 per
share, resulting in net proceeds to the company of $875,000. The proceeds of the
placement were used to meet debt repayment obligations and for working capital
generally.
On February 5, 1999 the Company engaged in a private placement of debt
securities. The Placement was made pursuant to the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, and
Regulation D promulgated thereunder. The placement consisted of a $500,000 face
amount zero coupon promissory note payable on March 5, 1999. The proceeds of the
placement were used to meet debt repayment obligations and for working capital
generally. The Company failed to pay the note on the due date but the note
holder agreed to extend the repayment date to June 21, 1999. In consideration
for the additional time to repay the note, the Company granted the note holder
the right, prior to repayment, to convert the note in whole or in part into
shares of common stock of the Company at a conversion price of $.75 per share.
On June 18, 1999, the note holder exercised his conversion privilege and the
Company issued 666,667 shares of its common stock in full satisfaction of the
note.
On May 11, 1999 the Company commenced an equity private placement pursuant to
the exemption from registration afforded by Section 4(2) of the Securities Act
of 1933, as amended, and Regulation D promulgated thereunder. As of the date
hereof the Company has sold 3 million shares of common stock at $.75 per share,
resulting in net proceeds to the company of $2.25 million. The proceeds of the
placement were used to pay the cash element of the Company's investment in its
affiliate, DBS Direct, to meet debt repayment obligations and for working
capital generally.
See also Item 3 "Default Upon Senior Securities" below.
23
<PAGE>
ITEM 3. Default Upon Senior Securities
On April 29, 1998 the Company engaged in a private placement of securities. The
placement was made pursuant to the exemption from registration afforded by
Section 4(2) of the Securities Act of 1933, as amended, and Regulation D
promulgated thereunder. The placement consisted of three 250,000 pounds sterling
(approximately $413,000) face amount, 8% promissory notes payable on November 1,
1998 and one 200,000 pounds sterling (approximately $330,000) face amount, 8%
promissory note payable on the same date. The holders of the 250,000 pounds
sterling promissory notes each received a three and a half year warrant to
purchase 41,660 shares of the common stock of the Company at an exercise price
of $2.00 per share and the holder of the $200,000 pounds sterling promissory
note received a warrant to purchase 33,328 shares on the same terms. The
warrants are exercisable at any time after issuance through November 1, 2001.
The Company failed to pay the promissory notes on the due date and accordingly,
pursuant to the terms of the promissory notes, the holders each received
additional warrants for the same number of shares and exercisable on the same
terms as the original warrants.
As of the date hereof the Company has repaid the three 250,000 pounds sterling
promissory notes in full, together with accrued interest. In addition, the
holder of the 200,000 pounds sterling promissory note has been paid
approximately $41,700 in part repayment and has agreed to give the Company
additional time to repay the balance of the note together with accrued interest.
The Company granted such note holder a conversion privilege to convert the
balance of the note, together with accrued interest, into shares of common stock
at a conversion price of $.75 per share at any time prior to repayment.
During the course of negotiations with the note holders, the Company granted two
of the 250,000 pounds sterling note holders an additional warrant each to
purchase 41,660 shares of common stock and agreed to adjust the exercise price
of all warrants issued to all note holders from $2.00 to $1.00.
On February 5, 1999 the Company engaged in a private placement of debt
securities. The Placement was made pursuant to the exemption from registration
afforded by Section 4(2) of the Securities Act of 1933, as amended, and
Regulation D promulgated thereunder. The placement consisted of a $500,000 face
amount zero coupon promissory note payable on March 5, 1999. The note holder
received a three-year warrant to purchase 100,000 shares of the common stock of
the Company at an exercise price of $1.25 per share. The warrant is exercisable
at any time after issuance through February 4, 2002. The Company failed to pay
the note on the due date but the note holder agreed to extend the repayment date
to June 21, 1999. In consideration for the additional time to repay the note,
the Company granted the note holder the right, prior to repayment, to convert
the note in whole or in part into shares of common stock of the Company at a
conversion price of $.75 per share. On June 18, 1999, the note holder exercised
his conversion privilege and the Company issued 666,667 shares of its common
stock in full satisfaction of the note.
24
<PAGE>
ITEM 6. Exhibits and Reports on Forms 8-K
(A) Exhibits filed herewith:
None
(B) Forms 8-K filed during quarter
Acquisition of DSS Direct Connect, L.L.C. on June 15, 1999
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.
TRANSMEDIA ASIA PACIFIC, INC.
By: /S/ Paul Harrison
- -----------------------------------
President
25
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Form 10K and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 464,445
<SECURITIES> 0
<RECEIVABLES> 642,367
<ALLOWANCES> 72,064
<INVENTORY> 0
<CURRENT-ASSETS> 1,694,677
<PP&E> 193,372
<DEPRECIATION> 210,433
<TOTAL-ASSETS> 17,547,719
<CURRENT-LIABILITIES> 7,328,704
<BONDS> 0
0
0
<COMMON> 293
<OTHER-SE> 10,084,739
<TOTAL-LIABILITY-AND-EQUITY> 17,547,719
<SALES> 0
<TOTAL-REVENUES> 3,030,012
<CGS> 0
<TOTAL-COSTS> 635,196
<OTHER-EXPENSES> 4,537,570
<LOSS-PROVISION> 23,584
<INTEREST-EXPENSE> 479,791
<INCOME-PRETAX> (2,385,160)
<INCOME-TAX> 107,020
<INCOME-CONTINUING> (2,278,140)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,278,140)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
