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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number 0-25982
METRO DISPLAY ADVERTISING, INC.
(exact name of small business issuer as specified in its charter)
CALIFORNIA 33-0093323
(State of Incorporation) (IRS Employer Identification No.)
SUITE 100
15265 ALTON PARKWAY
IRVINE, CA 92618
(address of principal executive offices)
(714) 727-3333
(issuer's telephone number, including area code)
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Indicate by check mark whether the issuer (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 each such shorter period that the
registrant was required to file such report), and (2) has been filing such
requirements for the past 90 days.
YES _X_ NO ___
Number of shares outstanding of each issuer's classes of common stock, as
of March 31, 1997: 983,030
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This report contains 8 sequentially numbered pages.
<PAGE>
METRO DISPLAY ADVERTISING, INC.
INDEX
PART I - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
March 31, 1997 and December 31, 1996
Condensed Consolidated Statement of Operations
for the Three Months Ended March 31, 1997 and 1996
Condensed Consolidated Statement of Cash Flows
for the Three Months Ended March 31, 1997 and 1996
Notes to the Condensed Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II - OTHER INFORMATION
Item 5. Other Information
See accompanying Notes to Condensed Financial Statements.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1, Financial Statements
METRO DISPLAY ADVERTISING, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
December 31, Mar 31,
1996 1997
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(unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash ................................................................... 74,947 188,212
Accounts receivable, net of allowance .................................. 989,804 989,443
Prepaid expenses and other assets ...................................... 226,844 60,819
Deferred taxes- current portion ........................................ 196,000 196,000
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TOTAL CURRENT ASSETS ............................................... 1,487,595 1,431,474
PROPERTY AND EQUIPMENT, net ............................................ 6,172,659 6,081,056
OTHER ASSETS
Performance Bond Deposits .............................................. 734,722 709,722
Deferred taxes - less current portion .................................. 3,052,000 3,052,000
Other assets ........................................................... 186,528 217,722
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TOTAL OTHER ASSETS ..................................................... 3,973,250 3,979,444
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$ 11,633,504 $ 11,491,974
============ ============
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Current portion of long-term debt ...................................... 693,065 620,327
Accounts payable & accrued expenses .................................... 1,031,117 851,015
Advance payments ....................................................... 226,067 150,000
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TOTAL CURRENT LIABILITIES ....................................... 1,950,249 1,621,342
LONG-TERM DEBT, net of current portion ................................. 833,785 813,458
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SHAREHOLDERS EQUITY
Preferred stock, 1,000,000 shares authorized, no par value,
no shares issued
Common stock, 5,000,000 shares authorized, no par value ................ 9,504,532 9,504,532
Accumulated Deficit .................................................... (655,062) (447,358)
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TOTAL SHAREHOLDERS' EQUITY ..................................... 8,849,470 9,057,174
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$ 11,633,504 $ 11,491,974
============ ============
</TABLE>
See accompanying Notes to Condensed Financial Statements.
<PAGE>
METRO DISPLAY ADVERTISING INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
Mar. 31,
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1996 1997
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SALES ........................................ $ 1,277,436 $ 2,076,870
COST OF SALES
City fees ................................ 370,711 357,843
Advertising commissions and expenses ..... 301,231 536,310
Installation and maintenance ............. 361,432 283,894
Other costs .............................. 45,376 45,932
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TOTAL COST OF SALES ................ 1,078,750 1,223,979
GROSS PROFIT ............................. 198,686 852,891
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OPERATING EXPENSES
Sales and administrative .................. 316,082 397,765
Depreciation .............................. 236,643 235,371
Interest expense .......................... 34,873 32,205
Other expense (Income) .................... (26,059) (20,154)
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TOTAL OPERATING EXPENSES ............ 561,539 645,187
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NET INCOME (LOSS) ............................ $ (362,853) $ 207,704
=========== ===========
COMMON SHARES OUTSTANDING .................... 823,030 983,030
=========== ===========
NET INCOME (LOSS) PER SHARE .................. (.44) .21
=========== ===========
See accompanying Notes to Condensed Financial Statements.
<PAGE>
METRO DISPLAY ADVERTISING INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Month Ended
Mar. 31
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1996 1997
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) .................................................................... $(362,853) $ 207,704
Adjustments to reconcile net income to net cash provided (used) by
operating activities:
Depreciation and Amortization ......................................................... 236,643 235,371
Changes in operating assets and liabilities:
Accounts receivable ................................................................. 465,995 3,361
Prepaid expenses & other ............................................................ 29,292 166,025
Accounts payable and accrued expenses ............................................... (229,449) (180,102)
Advanced payments ................................................................... -- (76,067)
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NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES .................................................................... 139,628 356,292
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment .................................................... (20,536) (143,768)
Advances to joint venture ............................................................. -- (31,194)
Performance bond deposits ............................................................. (7,000) 25,000
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NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES ......................................................... (27,536) (149,962)
CASH FLOWS FROM FINANCING ACTIVITIES
Principal reductions of long-term debt ................................................ (160,138) (93,065)
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NET CASH PROVIDED (USED) BY
FINANCING ACTIVITIES ........................................................ (160,138) (93,065)
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NET INCREASE (DECREASE) IN CASH ............................................................ (48,046) 113,265
Beginning of period .................................................................. 225,524 74,947
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CASH, End of period ........................................................................ $ 177,478 $ 188,212
========= =========
</TABLE>
See accompanying Notes to Condensed Financial Statements.
<PAGE>
METRO DISPLAY ADVERTISING, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
(Unaudited)
Note 1. Introduction
The accompanying condensed consolidated financial statements of Metro
Display Advertising, Inc. (the "Company") have been prepared without audit
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations, although
the Company believes that the disclosures made are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with the consolidated financial statements and related footnotes
included in the Company's latest Annual Report on Form 10-SB. In the opinion of
management, all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of the Company as of March
31, 1997, and the statements of its operation and its cash flows for the three
month periods ended March 31, 1997 and 1996 have been included. The results of
operation for interim periods are not necessarily indicative of the results,
which may be realized for the full year.
See accompanying Notes to Condensed Financial Statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Plan of Operations
General
From January 22, 1992 until January 7, 1994, Metro Display Advertising,
Inc., a California Corporation (the "Company"), was in bankruptcy. Since its
bankruptcy proceedings, the Company has primarily been in the business of
leasing advertising space on panels located in its bus stop shelters. The
Company's shelters are located in both Northern and Southern California. In
addition, the Company operates in Clark County, Nevada, and the City of Las
Vegas, Nevada through Bustop Shelter of Nevada, (BSON), a Nevada Corporation and
fully owned susidiary.
During the fiscal years ended December 31, 1994 and 1995, the Company made
the transition from a company operating under the bankruptcy court in prior
years, to a company operating under a revised business plan. The Company's
primary focus was on increasing sales and occupancy rates, reducing overhead,
and continuing scheduled payments to pre-bankruptcy Plan of Reorganization. The
Company's objectives for fiscal year 1997 remain dedicated to this business
plan.
Comparisons of three-months ended March 31, 1997 and March 31, 1996
Sales
Sales for the three-month quarter ended March 31, 1997 (the "Current
Quarter") increased by $799,434, or 63%, in comparison to the three-month period
ended March 31, 1996 (the "Prior Quarter"). This increase in sales in the
Current Quarter is attributable to the intensive marketing and public relations
campaign that has been staged to offset the on-going litigation with the City of
Victorville. The on-going litigation involves the Company's First Amendment
Rights. In general, the Company believes that its rights to freely advertise
were violated when the City prevented the Company from displaying paid
advertising for a local labor union. While the first quarter results have been
positive it is expected that this litigation will continue to impact sales
growth in the remaining three-quarters of 1997.
Cost of Sales
Cost of sales increased by $145,229 or 13.5% over the prior quarter
primarily due to increases in advertising commissions and expenses resulting
from sales growth for the quarter ended March 31, 1997. The increase in
advertising commissions and expenses were partially offset by a decrease in
installation and maintenance costs over the prior period. Cost of sales as a
percentage of sales declined from 84.5% in the Prior Quarter, to 58.9% in the
Current Quarter. The Company's gross profit percentage increased from 15.6% in
the Prior Quarter to 41.1% in the Current Quarter, primarily resulting from
first quarter sales growth.
Operating Expenses
An increase of $83,648 was incurred in operating expenses during the
current quarter principally due to increases in marketing, public relations, and
legal expenses necessary to deal with the Victorville litigation.
See accompanying Notes to Condensed Financial Statements.
<PAGE>
Net Profit(Loss)
Due to the significant sales growth for the period ending March 31, 1997,
the Company posted a $207,704 net income, before income taxes, during the
current quarter compared to a ($362,853) of net loss before taxes during the
prior quarter. The Company has maintained its primary focus on increasing sales
and occupancy rates, and reducing overhead.
Liquidity and Capital Resources
As of March 31, 1997, the Company's current liabilities exceeded its
current assets by $189,868. Approximately $329,893 of the current liabilities
consists of the current portion of indebtness owed to Dr. Allan Ross, a Director
of the Company. The Company's working capital position inproved by $272,786
during the Current Quarter, primarily the result of an increase in sales of
$799,434. Cash flows from operating activities increased by $ 216,664 over the
Prior Quarter, principally due to the change in net income for the Current
Quarter. The amount available under the credit facility is approximately
$700,000. The Company believes that it will be able to fund its current working
capital needs from (1) cash generated from operating activitities and (2) draws
against the credit line facility.
PART II
OTHER INFORMATION
Item 5. Other Information
Subsequent to year-end December 31, 1996, the Company signed a memorandum of
uderstanding with a buyer for the sale of all of the Company's stock. The
transaction is subject to stockholder ratification and completion of due
diligence procedures to be performed by the buyer.
Signature
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
METRO DISPLAY ADVERTISING, INC.
/s/ Scott Kraft
Dated May 14, 1996 -------------------------------
Scott A. Kraft, President
and Chief Financial Officer
See accompanying Notes to Condensed Financial Statements.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 188,212
<SECURITIES> 0
<RECEIVABLES> 1,132,982
<ALLOWANCES> (143,539)
<INVENTORY> 0
<CURRENT-ASSETS> 1,431,474
<PP&E> 6,081,056
<DEPRECIATION> 235,371
<TOTAL-ASSETS> 11,491,974
<CURRENT-LIABILITIES> 1,621,342
<BONDS> 0
0
0
<COMMON> 9,504,532
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 11,491,974
<SALES> 2,076,870
<TOTAL-REVENUES> 2,076,870
<CGS> 1,223,979
<TOTAL-COSTS> 1,223,979
<OTHER-EXPENSES> 645,187
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 32,205
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 207,704
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 207,704
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
