SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT - MAY 12, 1999
--------------------------------
(Date of Earliest Event Reported)
5TH AVENUE CHANNEL CORP.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
FLORIDA
------------------------
(State of Incorporation)
0-25896 59-3175814
- --------------------- -------------------
(Commission File No.) (I.R.S. Employer
Identification No.)
3957 N.E. 163RD STREET, NORTH MIAMI BEACH, FLORIDA 33160
--------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(305) 947-3010
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits
(c) Exhibits:
99.1 Attached as Exhibit 99.1 to this current report on Form
8-K are the financial statements for International Broadcast Consultants of
America, Inc. which was acquired by the Company as disclosed in the Company's
quarterly report on Form 10-QSB filed on May 17, 1999.
99.2 Attached as Exhibit 99.2 to this current report on Form
8-K are the pro forma financial statements giving effect to the acquisition of
certain assets of International Broadcast Consultants of America, Inc. by the
Company as disclosed in the Company's quarterly report on Form 10-QSB filed on
May 17, 1999.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: December 27, 1999
5TH AVENUE CHANNEL CORP.
By: /S/ Melvin Rosen
----------------
Melvin Rosen, President
<PAGE>
EXHIBIT INDEX
99.1 Financial Statements of International Broadcast Consultants of
America, Inc.
99.2 Pro Forma Financial Statements giving effect to the acquisition of
certain assets of International Broadcast Consultants of America, Inc.
EXHIBIT 99.1
EXHIBIT 99.1
COMBINED FINANCIAL STATEMENTS OF
INTERNATIONAL BROADCAST CONSULTANTS
OF AMERICA, INC. AND AFFILIATE
FOR THE YEARS ENDED DECEMBER 31, 1998 AND 1997
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
TABLE OF CONTENTS
PAGE
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS EI-1
COMBINED FINANCIAL STATEMENTS EI-2
Balance Sheet EI-3
Statements of Operations EI-4
Statements of Owners' Equity EI-5
Statements of Cash Flows EI-6
Notes to Financial Statements EI-7
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders
International Broadcast Consultants of America, Inc. and Affiliate
North Miami Beach, Florida
We have audited the accompanying combined balance sheet of International
Broadcast Consultants of America, Inc. and Affiliate (the Company) as of
December 31, 1998, and the related statements of operations, owners' equity and
cash flows for the years ended December 31, 1998 and 1997. These combined
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these combined financial statements
based on our audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of International
Broadcast Consultants of America, Inc. and Affiliate as of December 31, 1998,
and the combined results of their operations, owners' equity and their cash
flows for the years ended December 31, 1998 and 1997, in conformity with
generally accepted accounting principles.
As discussed in Note 1 to the combined financial statements, the Company entered
into an agreement to sell certain assets and business operations to 5th Avenue
Channel Corp. effective January 4, 1999. The operations of the Company have been
integrated with 5th Avenue Channel Corp., and the Company ceased operations as
of that date.
Fort Lauderdale, Florida
October 12, 1999
EI-1
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
COMBINED BALANCE SHEET
DECEMBER 31, 1998
ASSETS
------
Current Assets:
Cash $ 40,381
Accounts receivable 93,750
Loans receivable - stockholder 50,503
Inventories 312,265
--------
Total current assets 496,899
--------
Property and Equipment, Net 44,429
--------
Other Assets:
Informercial 118,825
Other 7,752
--------
126,577
--------
$667,905
========
LIABILITIES AND OWNERS' EQUITY
------------------------------
Current Liabilities:
Accounts payable $279,300
Accrued expense 95,459
Stockholder loans 106,024
--------
Total current liabilities 480,783
--------
Minority Interest 100,000
--------
Commitments, Contingencies and Other Matters -
Owners' Equity:
Common stock, 500 shares of $1.00 par value authorized,
issued and outstanding 500
Additional paid-in capital
500
Retained earnings 86,122
Partners' capital -
--------
87,122
--------
$667,905
========
EI-2
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
COMBINED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
----------- -----------
Gross Revenue $1,174,013 $2,507,758
Cost of Sales 928,947 1,929,344
---------- ----------
Gross Margin 245,066 578,414
---------- ----------
Operating Expenses
Salaries 266,490 277,740
Selling, general and administrative 667,511 288,777
---------- ----------
934,001 566,517
---------- ----------
Net Income (Loss) From Operations (688,935) 11,897
---------- ----------
Other Income (Loss):
Interest 513 -
Termination proceeds:
Distribution agreement 363,887 -
Joint venture 450,000 -
Loss on psychic network investment (40,750) -
---------- ----------
Total 773,650 -
---------- ----------
Net Income Before Taxes 84,715 11,897
Provision for Income Taxes 22,000 2,000
---------- ----------
Net Income $ 62,715 $ 9,897
========== ==========
EI-3
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
COMBINED STATEMENTS IN OWNERS' EQUITY
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED PARTNERS'
SHARES AMOUNT CAPITAL EARNINGS CAPITAL TOTAL
------ ------ ------- -------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 500 $500 $500 $13,510 $ - $14,510
Year Ended December 31, 1997:
Net income - - - 9,897 - 9,897
--- ---- ---- ------- -------- -------
Balance, December 31, 1997 500 500 500 23,407 - 24,407
Year Ended December 31, 1998:
Joint venture funding - - - - 100,000 100,000
Minority interests - - - - (100,000) (100,000)
Net income - - - 62,715 - 62,715
--- ---- ---- -------- -------- -------
Balance, December 31, 1998 500 $500 $500 $86,122 $ - $87,122
=== ==== ==== ======= ======== =======
</TABLE>
EI-4
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
COMBINED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 62,715 $ 9,897
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation 10,765 1,036
Changes in operating assets and liabilities:
(Increase) decrease in:
Accounts receivable, net 232,153 (176,983)
Inventories (156,723) (79,605)
Prepaid expenses and other assets 54,440 (52,281)
(Decrease) increase in:
Accounts payable (108,806) 228,833
Accrued expenses 25,256 67,656
--------- ---------
Net cash provided by (used in) operating activities 119,800 (1,447)
--------- ---------
Cash Flows from Investing Activities:
Purchases of property and equipment (51,048) (5,182)
Loan to stockholder (50,503) -
Informercial costs (118,825) -
--------- ---------
Net cash used in investing activities (220,376) (5,182)
--------- ---------
Cash Flows from Financing Activities:
Joint venture capital contribution 100,000 -
Stockholder loans - 134,123
Payments on stockholder loans - (90,800)
Net cash provided by investing activities 100,000 43,323
--------- ---------
Net Increase (Decrease) in Cash (576) 36,694
Cash, Beginning 40,957 4,263
Cash, Ending $ 40,381 $ 40,957
========= =========
Supplemental Disclosure of Cash Flow Information:
Cash paid for taxes $ 22,000 $ 2,547
========= =========
</TABLE>
EI-5
<PAGE>
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF COMBINATION
The financial statements have been combined to present the
aggregate financial position and results of operations of the
following entities:
o International Broadcast Consultants of America, Inc.
o Gary Null Joint Venture
All significant intercompany transactions and balances have been
eliminated.
BUSINESS
International Broadcast Consultants of America, Inc. (the "Company"
or "IBC") is a marketer and distributor of consumer goods and
products primarily through the media of cable television. The
Company specializes in marketing new or innovative products. The
Company was incorporated in Florida on March 20, 1995.
Gary Null Joint Venture ("JV") was established in 1998 for the
purpose of developing, promoting and marketing certain products
developed by Gary Null.
SUBSEQUENT SALE OF BUSINESS
The Company entered into an agreement in May 1999, with an
effective date of January 4, 1999, to sell certain assets and
business operations including the Gary Null Joint Venture, to 5th
Avenue Channel Corp. ("5th Avenue"), in exchange for 300,000 shares
of 5th Avenue common stock and $450,000 in cash. The operations of
IBC were integrated with 5th Avenue effective January 4, 1999, and
the Company ceased operations (see Note 8).
INVENTORIES
Inventories are stated at the lower of cost or market; cost being
determined on a first-in, first-out basis. An allowance has been
established for non-salable items.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is computed
on the straight-line method. Estimated useful lives of assets are 5
to 10 years.
At each balance sheet date, management determines whether any
property or equipment or any other assets have been impaired based
on the criteria established in Statement of Financial Accounting
Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED
ASSETS AND LONG-LIVED ASSETS TO BE DISPOSED OF. The Company made no
adjustments to the carrying values of the assets during the year
ended December 31, 1998.
EI-6
<PAGE>
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
REVENUE RECOGNITION
Revenue is recognized when goods are shipped or in the case of drop
ship sales, when the goods are invoiced. Revenue is reduced for
estimated customer returns and allowances.
INCOME TAXES
The Company accounts for its income taxes using Statement of
Financial Accounting Standards (SFAS) No. 109, "ACCOUNTING FOR
INCOME TAXES," which requires recognition of deferred tax
liabilities and assets for expected future tax consequences of
events that have been included in the financial statements or tax
returns. Under this method, deferred tax liabilities and assets are
determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in
effect for the year in which the differences are expected to
reverse.
ADVERTISING
Advertising costs are charged to expense as incurred. Advertising
expense was $197,509 and $22,463 for the years ended December 31,
1998 and 1997, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CONCENTRATIONS OF CREDIT RISK
Financial instruments that potentially subject the Company to
concentrations of credit risk are cash and accounts receivable.
CASH
At various times during the year, the Company had deposits in
financial institutions in excess of the federally insured limits.
ACCOUNTS RECEIVABLE
The Company does business and extends credit based on an evaluation
of the customers' financial condition generally without requiring
collateral. Exposure to losses on receivables is expected to vary
by customer due to the financial condition of each customer. The
Company monitors exposure to credit losses and maintains allowances
for anticipated losses considered necessary under the
circumstances.
EI-7
<PAGE>
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board issued SFAS
No. 130, "REPORTING COMPREHENSIVE INCOME". SFAS No. 130 establishes
standards for reporting and displaying comprehensive income, its
components and accumulated balances. SFAS No. 130 is effective for
periods beginning after December 15, 1997. The Company adopted this
new accounting standard in 1998, and the adoption had no effect on
the Company's financial statements and disclosures.
In June 1998, the Financial Accounting Standards Board issued SFAS
No. 133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES." SFAS No. 133 requires companies to recognize all
derivatives contracts as either assets or liabilities in the
balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as
a hedge, the objective of which is to match the timing of the gain
or loss recognition on the hedging derivative with the recognition
of (i) the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk or (ii) the
earnings effect of the hedged forecasted transaction. For a
derivative not designated as a hedging instrument, the gain or loss
is recognized in income in the period of change. SFAS No. 137,
"ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES -
DEFERRAL OF THE EFFECTIVE DATE OF FASB STATEMENT NO. 133," has
deferred the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000.
Historically, the Company has not entered into derivatives
contracts to hedge existing risks or for speculative purposes.
Accordingly, the Company does not expect adoption of the new
standard to affect its financial statements.
NOTE 2. PROPERTY AND EQUPMENT
1998
----
Furniture and equipment $42,099
Leasehold improvements 13,095
-------
55,194
Less accumulated depreciation 10,765
-------
$44,429
=======
NOTE 3. RELATED PARTY TRANSACTIONS
The Company has borrowed and loaned funds to its stockholders in
the normal course of operations. The stockholder loans have no
specific repayment terms and are due on demand. Interest is 10% per
annum.
Interest expense on the stockholder loans was $9,639 and $7,523 for
the years ended December 31, 1998 and 1997, respectively.
EI-8
<PAGE>
NOTE 4. JOINT VENTURES
GARY NULL JOINT VENTURE
Assets consist principally of production costs totaling
approximately $119,000 for an infomercial. These costs associated
with production of the infomercial have been capitalized. The cost
will be amortized over the estimated life from the revenue derived
from this infomercial once it begins to air. The infomercial has
not aired as of October 12, 1999.
An unrelated third party (`Investor") entered into an Equity
Participation Agreement ("Joint Venture") with IBC on future sales
derived from the infomercial. The investor invested $100,000 for an
8% ownership interest in the Gary Null Joint Venture. The investor
is to receive 8% of the future sales revenue generated for the Gary
Null infomercial entitled, "Reversing The Aging Process." IBC has
guaranteed the return of the investor's $100,000 investment.
IBC sold the Company's equity in the joint venture as part of the
sale of its assets and business operations to 5th Avenue Channel
Corp. effective January 4, 1999 (see Note 1). Subsequently, 5th
Avenue Channel Corp. entered into a distributing agreement with a
distribution company to complete the infomercial and market the
joint venture's products. There is a revenue sharing agreement for
the joint venture.
NOTE 5. INCOME TAXES
Significant components of the provision for income taxes for the
years ended December 31, 1998 and 1997 attributable to continuing
operations are as follows:
1998 1997
---- ----
Current:
Federal $17,000 $1,800
State and local 5,000 200
------- ------
$22,000 $2,000
======= ======
The net tax effects of temporary differences between the carrying
amount of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes are reflected in
deferred income taxes. There were no significant deferred tax
assets or liabilities at December 31, 1998.
NOTE 6. RETIREMENT PLAN
The Company established a Money Purchase Plan (the "Plan") during
1998. The Plan is a defined contribution plan and covers all
full-time employees. Employees are eligible for the Plan after
completion of one year of service. The Company is required to
contribute to the Plan 6.5% of compensation to employees, 10% of
compensation for working spouses of owner employees, and 25% of
compensation for owner employees. The Plan does not require or
permit employee contributions. The Plan has a graded vesting
schedule. Employees become 100% vested after six years of service.
The contribution to the Plan for the year ended December 31, 1998
was $24,000.
EI-9
<PAGE>
NOTE 7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES
In 1998, the Company entered into a lease agreement, expiring May
2003, for office space. The lease requires annual lease payments of
$60,750 in the first year of the lease up to $78,750 in the final
year of the lease. The Company incurred approximately $30,000 and
$9,500, during 1998 and 1997, respectively, in rent expense. The
lease has been assumed by 5th Avenue.
MAJOR CUSTOMERS
The Company derived 78% and 41% of its revenue from two customers
for the years ended December 31, 1998 and 1997, respectively.
LITIGATION
The Company is involved in certain litigation matters arising in
the ordinary course of business. In the opinion of management, any
liabilities resulting from such matters would not be material in
relation to the Company's financial position.
NOTE 8. OTHER INCOME AND LOSSES
The Company has received income from settlements during 1998. The
Company received $450,000 in capital contributions from an entity that
was going to invest in certain IBC products, and the Company and the
entity were going to establish joint ventures and share revenues on
these products. The entity failed to fund the additional amounts
pursuant to the agreement and entered into a settlement agreement in
which it forfeited its $450,000 contribution.
During 1998, the Company terminated its right to distribute the
Cosmopolitan Virtual Makeover Kit for $250,000 and 20,000 units of the
product. The proceeds received, net of costs equaled approximately
$364,000.
The Company spent approximately $41,000 to develop an infomercial for a
psychic network. During 1998, the Company decided not to pursue this
project and expensed the costs incurred to that point.
NOTE 9. YEAR 2000 (UNAUDITED)
The Company recognizes the need to ensure its operations will not
be adversely impacted by year 2000 software failures. Software
failures due to processing errors potentially arising from
calculations using the year 2000 date are a known risk. The Company
is addressing this risk to the availability and integrity of
financial systems and the reliability of operational systems. The
Company has evaluated the risk associated with this problem and
expects to be fully compliant by the end of 1999.
EI-10
EXHIBIT 99.2
PRO FORMA FINANCIAL STATEMENTS OF
INTERNATIONAL BROADCAST CONSULTANTS
OF AMERICA, INC. AND AFFILIATE
FOR THE YEAR ENDED DECEMBER 31, 1998
<PAGE>
5TH AVENUE CHANNEL CORP.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
------------ ------------ ------------
<S> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 256,209 $ 40,381 (a) $ 296,590
Accounts receivable, net 41,559 66,750 (a) 108,309
Loans receivable, related parties 28,191 88,406 (a) 116,597
Inventory -- 312,265 (a) 312,265
Prepaid expenses and other current assets 104,629 -- 104,629
------------ ------------ ------------
Total current assets 430,588 507,802 938,390
Property and Equipment, net 1,323,404 44,429 (a) 1,367,833
--
Licenses, net 4,651,061 -- 4,651,061
--
Acquired Intangibles, net 615,000 2,516,840 (a) 3,131,840
--
Other Assets 87,119 26,424 (a) 113,543
------------ ------------ ------------
TOTAL ASSETS $ 7,107,172 $ 3,095,495 $ 10,202,667
============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 775,417 182,495 (a) 957,912
Current portion of long-term debt 26,840 -- 26,840
Loans and notes payable, related parties 972,529 450,000 (a) 1,422,529
Accrued salary, President 270,000 -- 270,000
Convertible debentures, net 390,652 -- 390,652
------------ ------------ ------------
Total current liabilities 2,435,438 632,495 3,067,933
Long-term debt:
Convertible debenture to President 2,366,000 (2,366,000) --
Convertible subordinated debentures, net of unamortized discount 232,449 -- 232,449
License installment payment plan notes 931,148 -- 931,148
Other long-term debt 1,960 -- 1,960
------------ ------------ ------------
5,966,995 (1,733,505) 4,233,490
------------ ------------ ------------
Stockholders' Equity:
Common stock 4,504 300 (a) 9,536
4,732 (b)
Additional paid-in-capital 9,942,225 2,462,700 (a) 14,766,193
2,361,268 (b)
Deficit (8,806,552) -- (8,806,552)
------------ ------------ ------------
Total stockholders' equity 1,140,177 4,829,000 5,969,177
------------ ------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,107,172 $ 3,095,495 $ 10,202,667
============ ============ ============
</TABLE>
E2-1
<PAGE>
INTERNATIONAL BROADCAST CONSULTANTS OF AMERICA, INC. AND AFFILIATE
NOTES TO COMBINED FINANCIAL STATEMENTS
(Continued)
5TH AVENUE CHANNEL CORP.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
5TH AVENUE PRO FORMA
CHANNEL CORP. IBC ADJUSTMENTS PRO FORMA
------------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue 1,453,033 1,174,013 2,627,046
Direct Costs 235,367 928,947 -- 1,164,314
---------- ---------- ---------- ----------
Gross Margin 1,217,666 245,066 -- 1,462,732
Operating Expenses:
Selling, general and administrative 2,734,473 667,511 167,789 (c) 3,569,773
Website and product development 696,762 -- 696,762
Provision for asset impairment 350,000 -- 350,000
Salaries -- 266,490 -- 266,490
---------- ---------- ---------- ----------
3,781,235 934,001 167,789 4,883,025
---------- ---------- ---------- ----------
Net Income (Loss) from Operations (2,563,569) (688,935) (167,789) (3,420,293)
Other Income (Expense):
Interest income 2,377 513 -- 2,890
Interest expense (736,749) -- (27,000)(d) (763,749)
Termination proceeds: --
Distribution agreement -- 363,887 (363,887)(e) --
Joint Venture -- 450,000 (450,000)(e) --
Loss on investment -- (40,750) 40,750 (e) --
---------- ---------- ---------- ----------
(734,372) 773,650 (800,137) (760,859)
---------- ---------- ---------- ----------
Net Income (Loss) Before Taxes (3,297,941) 84,715 (967,926) (4,181,152)
----------
Provision for Income Taxes -- 22,000 (22,000)(f) --
---------- ---------- ---------- ----------
Net Income (Loss) (3,297,941) 62,715 (945,926) (4,181,152)
========== ========== ========== ==========
Net Income) Loss Per Common Share - Basic and Diluted (0.81) (0.46)
========== ==========
300,000 (a)
Weighted Average Number of Shares Outstanding 4,080,242 4,732,000 (b) 9,112,242
========== ========== ==========
</TABLE>
E2-2
E2-2
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION (UNAUDITED)
OF 5TH AVENUE CHANNEL CORP.
INTRODUCTION
The accompanying unaudited condensed consolidated financial
information of 5th Avenue Channel Corp. gives effect to the
acquisition by 5th Avenue Channel Corp. of certain assets,
liabilities and business operations of International Broadcast
Consultants of America, Inc. (IBC). The acquisition was accounted
for under the purchase method of accounting.
The pro forma condensed consolidated balance sheet was prepared as
if such transaction had occurred on December 31, 1998. The pro
forma condensed consolidated statement of operations was prepared
as if such transaction had occurred on January 1, 1998.
The pro forma condensed consolidated balance sheet includes
adjustments for the recapitalization of the Company whereas the
Company's President converted his convertible debenture into shares
of the Company's common stock.
The pro forma condensed consolidated balance sheet and statement of
operations are not necessarily indicative of the consolidated
financial position or results of operations as they might have been
had the transaction actually occurred on the dates indicated. The
pro forma consolidated balance sheet and statement of operations
should be read in conjunction with the financial statements of 5th
Avenue Channel Corp.
E2-3
