<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
For Quarter Ended September 30, 1996
Quarterly Report pursuant to Section 13 or 15(d)
of the Securities and Exchange Act of 1934
Commission File Number 0-26828
---------
FOOD COURT ENTERTAINMENT NETWORK, INC.
(Exact name of registrant as specified in its charter)
Delaware 51-0338736
(State of other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
220 East 42nd Street
New York, New York
10017-5806
(Address of Principal Executive Offices)
(Zip Code)
(212) 983-4500
(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
------ ------
As of November 5, 1996, there were 3,918,125 shares of Series A Common Stock,
$0.01 par value of the registrant outstanding, 1,126,115 shares of Series B
Common Stock, $0.01 par value of the registrant outstanding, 4,345,000 shares of
Class A Warrants of the registrant outstanding, and 3,220,000 shares of Class B
Warrants of the registrant outstanding.
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Condensed Financial Statements
Condensed Balance Sheets as of Dec. 31, 1995
(audited) and September 30, 1996 (unaudited)....................... 1
Condensed Statements of Operations
for the three months ended September
30, 1996 & 1995 (unaudited) and for the
nine months ended September 30, 1996 & 1995
(unaudited)......................................................... 2
Condensed Statement of Cash Flows
for the nine months ended
September 30, 1996 & 1995 (unaudited)...................... ....... 3
Notes to Financial Statements.................................... 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 6-10
Part II. OTHER INFORMATION................................................. 11
Signature page.................................................... 12
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK, INC.
(a development stage company)
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30,
December 31, 1996
1995 (Unaudited)
------------- ---------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 5,191,897 $ 673,274
Other current assets - 31,291
------------- ---------------
Total Current Assets 5,191,897 704,565
Fixed assets-(less accumulated
depreciation of $197,221 and $478,199 respectively) 1,435,273 1,956,002
Other assets 8,630 106,693
------------- ---------------
TOTAL ASSETS $ 6,635,800 $ 2,767,260
------------- ---------------
LIABILITIES
Current Liabilities:
Accounts payable $ 284,431 $ 465,168
Accrued expenses 448,161 450,924
------------- ---------------
Total current liabilities 732,592 916,092
Due to former employee 200,000 200,000
------------- ---------------
TOTAL LIABILITIES 932,592 1,116,092
------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock- 5,000,000 shares authorized, none issued
authorized, none issued
Common Stock:
Series A common stock-$.01 par value, 25,000,000 shares
authorized 3,793,125 and 3,918,125 $ 37,931 $ 39,181
shares outstanding, respectively
Series B common stock-$.01 par value, 1,250,000 shares
authorized 1,146,250 outstanding 11,462 11,462
Additional Paid in Capital 15,074,356 15,423,106
Deficit accumulated during the development stages (9,420,340) (13,822,380)
------------- ---------------
Total 5,703,409 1,651,369
Treasury stock (201) (201)
------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 5,703,208 1,651,168
------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 6,635,800 $ 2,767,260
------------- ---------------
</TABLE>
See accompanying notes to condensed financial statements
1
<PAGE>
` FOOD COURT ENTERTAINMENT NETWORK INC.
(a development stage company)
STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
February 12, 1992
(Inception)
Three month period ended Nine month period ended Through
September 30, September 30, September
1995 1996 1995 1996 1996
-------- ---------- ---------- --------- ----------------
<S> <C> <C> <C> <C> <C>
Advertising revenues -- 28,750 -- 38,750 38,750
--------- ----------- ----------- ---------- ----------------
General and administrative expenses 119,031 144,975 341,781 463,851 1,458,728
Development costs 546,160 1,580,952 2,297,326 4,087,052 11,966,287
--------- ----------- ----------- ---------- ----------------
Total expenses 665,191 1,725,927 2,639,107 4,550,903 13,425,015
--------- ----------- ----------- ---------- ----------------
Operating income (loss) (665,191) (1,697,177) (2,639,107) (4,512,153) (13,386,265)
Other (income) expenses:
Interest expense 159,656 -- 361,722 -- 641,205
Interest and other (income) -- (17,661) (1,684) (110,113) (205,090)
--------- ---------- ----------- ---------- ----------------
NET (loss) (824,847) (1,679,516) (2,999,145) (4,402,040) (13,822,380)
========= ========== =========== ========== ================
Net (loss) per share of
common stock $ (0.80) $ (0.38) $ (1.41) $ (1.01)
========= ========== =========== ==========
Number of common share and common
share equivalents used in computation 1,073,125 4,408,125 1,959,964 4,359,514
========= ========== =========== ==========
</TABLE>
See accompanying notes to condensed financial statements
2
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK, INC.
(a development stage company)
CONDENSED STATEMENTS OF CASH FLOW
(unaudited)
<TABLE>
<CAPTION>
Nine months period ending February 12, 1992
September 30, (inception)
------------------------------------- through
1995 1996 September 30, 1996
----------------- ----------------- ------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net (loss) $ (2,999,145) $ (4,402,040) $ (13,822,380)
Adjustments to reconcile net income(loss)
cash provided by operating activities:
Depreciation and amortization 444,562 280,978 854,971
Write-off of debt issuance costs 146,397
Value assigned to options and
warrants issued as compensation 108,583
Common Stock issued as consideration
for programming 350,000 350,000
Changes in operating assets and liabilities:
(Increase) in other assets (1,349) (49,354) (52,318)
Increase (decrease) in accrued
expenses and other liabilities 2,034,761 183,500 1,116,092
----------------- ----------------- --------------
Net Cash (Used In) Operating Activities (521,171) (3,636,916) (11,298,655)
----------------- ----------------- --------------
Cash Flows from Investing Activities
Purchase of property and equipment (1,338,360) (801,707) (2,434,201)
Organization costs (11,336)
----------------- ----------------- --------------
Net Cash (Used By) Investing Activities (1,338,360) (801,707) (2,445,537)
----------------- ----------------- --------------
Cash Flows from Financing Activities:
Net proceeds from sale of preferred & common stock 440 15,711,828
Capital Contribution 32,500
Redemption of preferred stock (1,146,250)
Preferred dividends paid (148,112)
Proceeds from bridge loan 850,000 2,250,000
Repayment of bridge loan (2,250,000)
Deferred financing costs (110,500) (65,000) (357,500)
Deferred registration costs (372,965) (15,000) (15,000)
Proceeds from directors and officers loans 50,000 390,000
(Repayment of) directors and officers loans (50,000)
Proceeds from notes payable 670,099 954,572
(Repayment of) notes payable (954,572)
----------------- ----------------- --------------
Net Cash Provided (Used In) Financing Activities 1,087,074 (80,000) 14,417,466
----------------- ----------------- --------------
NET INCREASE (DECREASE) IN CASH (772,457) (4,518,623) 673,274
Cash at beginning of period 777,457 5,191,897
----------------- ----------------- --------------
CASH AT END OF PERIOD $ 5,000 $ 673,274 $ 673,274
================= ================= ==============
Supplemental schedule of Net Cash financing activities:
Warrants issued in connection with bridge loan $ 85,000 $ 225,000
Director and officer loans exchanged for common
and preferred stock 150,000
Director loan contributed to capital 190,000
Supplemental disclosure of cash flow information:
Cash paid for interest 32,459 336,406
</TABLE>
See accompanying notes to condensed financial statements
3
<PAGE>
FOOD COURT ENTERTAINMENT, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
Financial Statements
In the opinion of management, the accompanying unaudited financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to present fairly the financial position of the Company
and its results of operations and cash flow for the interim period presented.
Such financial statements have been condensed in accordance with the
applicable regulations of the Securities and Exchange Commission and, therefore,
do not include all disclosures required by generally accepted accounting
principles.
The results of the operations for the nine months ended September 30,
1996 are not necessarily indicative of the results to be expected for the entire
fiscal year.
These financial statements should be read in conjunction with the
financial statements included in the Company's Annual Report on Form 10-KSB for
the year ended December 31, 1995.
Loss Per Share of Common Stock
Net loss per share of common stock for the nine months ended September
30, 1995 is based on the weighted average number of shares outstanding during
such period as modified in accordance with the "cheap stock" rules of the
Securities and Exchange Commission. For the nine months ended September 30, 1996
options and warrants have been excluded as they are anti-dilutive. Series B
common shares in escrow have been excluded for all periods. Net loss has been
adjusted for the nine months ended September 30, 1995 for the amortization of an
assumed discount on the Series A redeemable preferred stock.
Commitments
On April 15, 1996, the Company and Turner Private Networks, Inc.
("Turner") entered into a preliminary agreement pursuant to which Turner agreed
to provide programming for Cafe USA and act as the Company's exclusive
advertising sales agent for national advertising for a period of two years (the
"Turner Agreement"). The Turner Agreement is conditioned upon the parties
entering into detailed programming, advertising sales and equipment reseller
agreements, and is subject to termination by either party.
The Company and Capital Cities/ABC New Media ("Capital Cities/ABC")
have suspended a representation agreement between the parties pursuant to which
Capital Cities provided sales representation services to the Company. The
Company is obligated to pay Capital Cities an aggregate of $100,000 on or before
October 1, 1996, of which $25,000 has been paid and $75,000 has been deferred
until additional financing is received by the Company. By October 1, 1997, the
representation agreement will either resume, or the Company will be obligated to
pay $100,000 to terminate such agreement. As of September 30, 1996 the Company
has $75,000 accrued in connection with this agreement.
4
<PAGE>
Digital Equipment Corporation ("DEC") has begun to develop software
applications and will provide hardware necessary to deliver the Cafe USA(R)
program digitally through telecommunications networks into malls nationwide. The
Company and DEC are negotiating the details of the arrangement including
discounts on pricing, deferred payment terms, and ownership of and marketing
rights to the hardware/software functionality. As of November 5, 1996, the
Company has paid to DEC a non-refundable amount of $150,000, and has agreed to
pay $50,000 per month through the end of the year or until a completed agreement
is negotiated. It is estimated that the total cost of the development of
software applications and hardware will be approximately $1,250,000.
The Company has terminated the employment of Harvey S. Wilson, its
former Executive Vice President. Mr. Wilson's employment agreement entitles him
to receive severance pay and additional compensation which may have been earned
during the term, in the form of cash bonuses, stock bonuses and/or stock
options, the exact amount of which are presently being negotiated. On October
24, 1996, Stephen Bowen, the Company's president and chief executive officer,
resigned as an officer and director of the Company. The Company entered into a
formal termination agreement and release with Mr. Bowen whereby it is obligated
to make severance payments aggregating $175,000 through September 30, 1997. In
addition, Mr. Bowen will be granted 100,000 stock options.
The Company entered into an agreement with an advisor for assistance in
obtaining certain financing transactions. The Company has made certain payments
pursuant to the agreement and, although, the Company has terminated such
agreement, it may be required to pay consideration, including warrants, in the
future to such advisor for any financing obtained by the Company from sources
within the scope of the agreement.
5
<PAGE>
ITEM 2-MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
RESULT OF OPERATIONS
Results of Operations
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto appearing elsewhere in this
Report. The Company is a development stage company engaged primarily in the
production and broadcasting of television programming and the sale and marketing
of Cafe USA to advertisers and mall operators. The Company's principal expenses
from its inception through September 30, 1996 have been salaries and payments to
consultants ($4,900,000), production costs for Cafe USA(R) programming
($3,200,000) and advertising/marketing expenses ($1,200,000). Additionally, the
Company invested approximately $2,600,000 in capital equipment and network
development through September 30, 1996. Accordingly, as of September 30, 1996,
the Company had a deficit accumulated in the development stage of approximately
$13,800,000. The Company continues to incur substantial losses and is utilizing
the proceeds of its initial public offering (the "Offering") to continue its
business. For the foreseeable future, and until significant sales, if any, of
advertising occur, the Company expects losses to continue and is entirely
dependent on public or private financing.
During the third quarter of fiscal 1996, the Company continued
discussions and negotiated agreements with advertisers, mall developers and
potential sources of financing.
General and administrative expenses increased from the corresponding
prior year periods due principally to additional costs for staffing and
consultants.
Development costs increased from the corresponding prior year periods
due to increased programming, broadcast operations and market research costs
associated with the broadcast of programming in seven malls and increased sales
and marketing expenses associated with promoting Cafe USA(R) to mall developers,
national advertisers and financing sources.
Interest expense decreased from the corresponding prior year periods
due to repayment of bank loans and bridge notes.
Charge to Income in the Event of Release of Escrow Shares
In connection with the offering of units of Series A Common Stock and
Series A Redeemable Preferred Stock beginning in November, 1993 (the "Preferred
Stock Unit Offering"), 750,000 share of Series B Common Stock were placed in
escrow of which 103,750 have been canceled effective as of July 5, 1994. In the
event the Company attains any of the earnings thresholds or the Company's Series
A Common Stock meets certain minimum purchase prices required for the release of
the Escrow Shares, such release will require the Company to recognize additional
compensation expense for shares held by officers, directors, consultants and
employees. Such charges could substantially increase the loss or reduce or
eliminate the Company's net income, if any, for financial reporting purposes for
the period in which the Escrow Shares are released or are probable of being
released. Although the amount of compensation expense recognized by the Company
will not affect the Company's total stockholders' equity or its working capital,
it may have a depressive effect on the market price of the Company's securities.
If the Escrow Shares are not released by December 31, 1998, the Escrow Shares as
well as any dividends or other distributions made with respect thereto, will be
contributed to the capital of the Company.
6
<PAGE>
Liquidity and Capital Resources
On October 16, 1995, the Company closed an initial public offering (the
"IPO") of 2,800,000 units, each unit consisting of one share of Series A Common
Stock, one Class A Warrant and one Class B Warrant (the "IPO Units), and on
November 9, 1995 the Company closed the sale of an additional 420,000 IPO Units
to D.H. Blair Investment Banking Corporation ("Blair") pursuant to Blair's
over-allotment option. The total net proceeds to the Company from the foregoing
sales were approximately $13,811,000. The proceeds were used for redemption of
preferred stock (approximately $1,294,000), repayment of notes and bank loans
(approximately $3,500,000), payment of accrued expenses and other indebtedness
(approximately $2,100,000) and approximately $2,300,000 was used to fund A ten
week evaluation of Cafe USA programming in four major enclosed mall food courts,
which took place in the Fall of 1995 (the "Evaluatory Period"). The Company has
utilized and will continue to utilize the remainder of the proceeds to fund
operations until such time as it begins to receive sufficient revenue from
operations, if ever.
On October 8, 1996, the Company signed a Letter of Intent with Blair,
whereby Blair will act as the Company's exclusive placement agent with regard to
a planned $3,000,000 to $9,000,0000 private placement of securities (the
"Private Placement"). On October 28, 1996, the Company distributed a
confidential Term Sheet for the Private Placement to potential investors. The
Private Placement is for Units ("Units"), each Unit consisting of such number of
units identical to those sold by the Company in the IPO in October of 1995 ("IPO
Units"), each IPO Unit consisting of one share of Series A Common Stock, $.01
par value ("Series A Common Stock"), of the Company, one redeemable Class A
Warrant ("Class A Warrant") and one redeemable Class B Warrant ("Class B
Warrant" and together with the Class A Warrants, the "Warrants") as equals the
total of $100,000 divided by the lower of (a) 60% of the closing bid price of
the IPO Units in the over-the-counter market as reported by NASDAQ (the "Bid
Price") on the business day immediately preceding the first closing (the "First
Closing") of the private placement, or (b) 60% of the average Bid Price for the
thirty consecutive business days ending on the business day immediately
preceding the First Closing, in either case rounded to the next highest whole
share. However, in the event that there is more than one closing and if, at any
closing after the First Closing, the number of IPO Units to be included in the
Units is greater than the number of IPO Units included in the Units sold at any
prior closing, then the number of Units in all prior closings shall be
retroactively adjusted to consist of such greater number of IPO Units. On
October 24, 1996, the Bid Price of the IPO Units was $5.25. Each Purchaser of
Units will agree not to sell any Units (or the underlying securities) for the
four month period commencing on the date of the First Closing (as herein
defined) and not to sell more than 50% of such Units (or underlying securities)
until eight months after the date of the First Closing.
As of September 30, 1996, the Company had a working capital deficit of
$211,500. The Company has financed its operations to date almost exclusively
through private placements of securities, bank loans and the IPO, including
gross proceeds of $2,292,500 through a Preferred Stock Unit Offering in 1994,
$2,250,000 through a Bridge Note financing in 1994 and 1995, $1,086,000 through
bank loans and $16,100,000 through the IPO.
The Company's operating activities used net cash of $968,000 during the
three months ended September 30, 1996, primarily as a result of its net loss
from operations of $1,680,000. Investing activities used net cash of
approximately $383,000 for the purchase of property and equipment.
As of November 5, 1996, the Company has employment contracts with four
executive officers and employees, which provide for aggregate salaries in 1996
in the amount of approximately $550,000. The Company's lease agreement for its
offices provide for monthly payments of approximately $10,400.
7
<PAGE>
The Company has entered into a settlement agreement with a former
director and officer of the Company dated October 12, 1993 regarding any claims
he had or may have had with respect to continued employment with the Company and
rights to acquire additional securities of the Company for $200,000. Payments
under such settlement agreement will be made from 25% of "Excess Cash Flow" (as
defined below) of the Company, if any. However, the remaining unpaid balance of
$200,000 shall be due and payable regardless of the Company's cash flow no
later than December 31, 1997. Interest will accrue on such obligation at the
prime rate commencing January 1, 1996 and will be paid quarterly thereafter.
"Excess Cash Flow" is defined in the agreement as follows: for any fiscal
quarter (i) net income before taxes of the company for such fiscal quarter, plus
(ii) amortization and other non-cash charges during such fiscal quarter (to the
extent deducted in computing net income), minus (iii) capital expenditures made
or accrued during such fiscal quarter. Dividends and redemptions shall not be
treated as expenses in determining the Company's net income. In addition to the
above, the settlement agreement provided for the purchase by the former director
and officer from the Company of 11,240 shares of the Company's Series B Common
Stock at a price of $0.01 per share and the payment of consulting fees for
services provided at the request of the Company.
As consideration for programming, under the Turner Agreement, the
Company will deliver to Turner a promissory note for $1,250,000 and will issue
250,000 shares of Series A common stock (125,000 shares of which have been
issued). The promissory note is payable to Turner upon the later of (i) March
31, 1997 or (ii) completion and timely delivery of 52 weekly programs. The value
of the promissory note and the fair value of the common stock are being charged
to operations over the first year of the Agreement. As of September 30, 1996,
the Company has charged $610,377 to operations. The second year of programming
provides for payment of up to $3,500,000 in cash or other consideration to be
determined. Under the advertising sales provisions of the Turner Agreement, the
Company will pay sales commissions of 10% and up to 15% of net advertising sales
(as defined in the Turner Agreement) for the first and second year,
respectively.
In connection with the underwriting agreement for the IPO, the Company
entered into an agreement with Blair that provides for a finder's fee to be paid
to Blair if it consummates a merger, acquisition, joint venture or other similar
transaction with a party introduced by Blair during the five-year period from
the consummation of the Offering. The fee is based on a percentage of the
consideration paid in the transaction ranging from 7% of the first $1,000,000 to
2 1/2% of any consideration in excess of $9,000,000.
The Company has agreed not to solicit Warrant exercises other than
through Blair. Upon any exercise of the Class A or Class B Warrants after one
year from the date of Offering, the Company will pay Blair a fee of 5% of the
aggregate exercise price, if (i) the market price of the Company's Series A
Common Stock on the date the Warrant is exercised is greater than the then
exercise price of the Warrants; (ii) the exercise of the Warrant was solicited
by a member of the National Association of Securities Dealers, Inc.; (iii) the
warrant holder designates in writing that the exercise of the Warrant was
solicited by a member of the National Association of Securities Dealers, Inc.
and designates in writing the broker-dealer to receive compensation for such
exercise; (iv) the Warrant is not held in a discretionary account; (v)
disclosure of compensation arrangements was made both at the time of the
Offering and at the time of exercise of the Warrants; (vi) the solicitation of
exercise of the Warrant was not in violation of Rule 10b-6 promulgated under the
Exchange Act.
8
<PAGE>
Plan of Operation
The Company is in its development stage. To date, the activities have
consisted primarily of designing and developing Cafe USA(R) programming,
establishing contacts with potential advertisers and mall operators, producing
and evaluating test pilots of Cafe USA(R), developing and refining an acoustical
system for delivery of programming into mall food courts, and implementation of
the Cafe USA(R) network and installing and operating Cafe USA(R) in eight mall
food courts (with the ninth mall's anticipated opening within one week of
filing). Through September 30, 1996, the Company has expended approximately $12
million dollars in development activities.
As of November 5, 1996, the Company had five clients paying for
advertising through the end of 1996: Sears, AT&T, 20th Century Fox, The
Athlete's Foot and Renaissance Cosmetics (which is paying for two 30 second
spots; one for its Canoe Men's Fragrance and one for its Chantilly Ladies
Fragrance). As part of the Turner Agreement, Turner (and its affiliates) is also
an advertiser. There can be no assurance that the Company's television
programming and advertising in shopping mall food courts will be accepted in the
marketplace or that the Company's operations will be commercially viable. The
commercial viability of the Cafe USA concept will be determined in large part by
the acceptance of Cafe USA by advertisers and mall operators. The Company is
currently broadcasting advertisements for national advertisers on Cafe USA in
only eight mall food courts. Without further acceptance by the marketplace, the
Company may be forced to cease operations. While the Company has conducted
testing of its Cafe USA concept, such testing was on a limited basis. There can
be no assurance that the test results of the acceptance of Cafe USA in four
malls are indicative of widespread acceptance in the marketplace or that, if
accepted, will ever result in the Company achieving profitable operations.
Based upon the current plan to proceed with the expansion of Cafe USA
into additional malls, the Company is seeking to obtain commitments from
advertisers for participation in the mall expansion and is negotiating with mall
operators for installation and operation of Cafe USA(R). The Company has
installed Cafe USA(R) in eight food courts (with the ninth mall's anticipated
opening within one week of filing), and has agreements, or is finalizing
agreements, to install Cafe USA in 16 additional food courts.
The Company has limited cash and cash equivalents remaining for
expansion (estimated to be approximately $450,000 at October 28, 1996) and
without additional financing, of which there can be no assurance, the Company
will not be able to pursue its expansion plans. The conclusions drawn by the
Company's management from the Evaluatory Period, the 1995 Nielson Survey and
marketing and sales activities during 1996 resulted in the Company modifying its
business strategy. The Company determined that in order to successfully sell
Cafe USA to a substantial number of advertisers, and thereby generate
significant revenues, the distribution network for Cafe USA must first be
expanded. Accordingly, the Company requires substantial funds, revenues from
operations and financing available from external sources in order to implement
its business plan and reach profitable operations. The Company intends to seek
strategic alliances, either through joint venture, merger or acquisition
transactions, with other entities that have significant financial or other
resources, in order to provide the Company with the necessary funding required
to successfully complete the expansion of Cafe USA, and to build its internal
marketing and advertising sales force. There can be no assurance that the
9
<PAGE>
Company will be able to enter into any such arrangements. If the Company is
unsuccessful in securing any arrangements with third parties to provide the
necessary funding, the Company may be unable to complete its expansion.
On November 11, 1996, the shareholders of the Company approved (1) an
increase in the number of authorized shares of all classes of stock from
31,250,000 to 206,250,000, (2) an increase in the number of all shares of
authorized Common Stock, par value $.01 per share, from 26,250,000 to
201,250,000, and (3) an increase in the number of authorized shares of Series A
Common stock from 25,000,000 to 200,000,000.
10
<PAGE>
PART II
OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Securities Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
1. Exhibit 11
2. Exhibit 27
(b) Reports on Form 8-K
(none)
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Food Court Entertainment Network, Inc.
--------------------------------------
(Registrant)
November 11, 1996 By: /s/ James N. Perkins
- ----------------- ---------------------------------------------
(Date) James N. Perkins, President
November 11, 1996 By: /s/ Darren M. Sardoff
- ----------------- ----------------------------------------------
(Date) Darren M. Sardoff, Chief Financial Officer
12
<PAGE>
EXHIBIT INDEX
Exhibit Page
Number Document Number
- ------- -------- ------
11 Schedule of Computation of 14
Net Loss Per Share
27 Financial Data Schedule 15
13
<PAGE>
FOOD COURT ENTERTAINMENT NETWORK, INC.
EXHIBIT 11
SCHEDULE OF COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, 1995 September 30, 1995
------------------ ------------------
<S> <C> <C>
Net Loss ($824,847) ($2,999,145)
Reduction of interest and
amortization of financing costs 321,763
Interest on hypothetical investment 29,048
Dividends on Preferred Stock (22,925) (91,700)
Preferred stock discount (6,941) (27,763)
----------- ------------
Adjusted Net Loss ($854,713) ($2,767,797)
=========== ============
Weighted average shares outstanding 1,073,125 1,959,964
=========== ============
NET LOSS PER SHARE OF COMMON STOCK ($0.80) ($1.41)
=========== ============
</TABLE>
14
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000940800
<NAME> FOOD COURT ENTERTAINMENT NETWORK, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 673,274
<SECURITIES> 0
<RECEIVABLES> 0
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0
0
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</TABLE>
