-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Fe0ViDIhK6u3YIC6/H6gvo9p1jQdr9FOwW/i7AEWIBgBBQegTwgLPKVTvFDf8mb6 xqYVO7i7jGQRQLzHSenuWg== 0001004991-97-000003.txt : 19970804 0001004991-97-000003.hdr.sgml : 19970804 ACCESSION NUMBER: 0001004991-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970801 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: REDWOOD BROADCASTING INC CENTRAL INDEX KEY: 0001004991 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 840928022 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-80321 FILM NUMBER: 97650146 BUSINESS ADDRESS: STREET 1: 7518 ELBOW BEND RD P O BOX 3463 STREET 2: BLDG A STE I CITY: CAREFREE STATE: AZ ZIP: 85377 BUSINESS PHONE: 6024882596 MAIL ADDRESS: STREET 1: 7518 ELBOW BEND RD P O BOX 3463 STREET 2: BLDG A STE I CITY: CAREFREE STATE: AZ ZIP: 85377 FORMER COMPANY: FORMER CONFORMED NAME: INTELLIGENT FINANCIAL HOLDING CORP DATE OF NAME CHANGE: 19951215 10QSB 1 10QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended June 30, 1997 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 33-80321 REDWOOD BROADCASTING, INC. (Name of Small Business Issuer in Its Charter) Colorado 84-1295270 (State or Other Jurisdiction (I.R.S. Employer of Incorporation) Identification No.) 7518 Elbow Bend Road P.O. Box 3463 Carefree, AZ 85377 (Address of Principal Executive Offices) (Zip Code) Issuer's telephone number, including area code: (602) 488-2596 Securities registered under Section 12(b) of the Exchange Act: None Securities registered under Section 12(g) of the Exchange Act: COMMON STOCK, $.004 PAR VALUE (Title of Class) Check whether the issuer: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]. The number of shares of the registrant's .004 par value Common Stock outstanding as of June 30, 1997 was 997,054. INDEX PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Consolidated Balance Sheet as of June 30, 1997 ........................................ 3 Consolidated Statements of Income for the Three months ended June 30, 1997 and 1996 ............ 4 Consolidated Statements of Cash Flows for the Three months ended June 30, 1997 and 1996 ............ 5 Notes to the Consolidated Financial Statements ....... 6 Item 2. Management's Discussion and Analysis or Plan of Operation .................................... 7 PART II. OTHER INFORMATION Item 1. Legal Proceedings .................................... 9 Item 2. Changes in Securities ................................ 9 Item 3. Defaults Under Senior Securities ..................... 9 Item 4. Submission of Matters to a Vote of Security Holders .. 9 Item 5. Other Matters ........................................ 9 Item 6. Exhibits and Reports on Form 8-K ..................... 9 Signatures ........................................... 9 REDWOOD BROADCASTING, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET June 30, 1997 (unaudited) ASSETS CURRENT ASSETS Cash $ 19,611 Accounts receivable, net 192,066 Receivable from related parties 65,820 Receivable from sale of radio station 633,000 Other current assets 15,359 --------- Total current assets 925,856 PROPERTY AND EQUIPMENT, net 231,529 INTANGIBLE ASSETS, net 976,367 NOTE RECEIVABLE FROM SALE OF RADIO STATION 200,000 OTHER ASSETS 223,001 --------- TOTAL $2,556,753 ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued expenses $ 344,855 Payables to related parties 202,032 Current portion of notes payable 48,335 Current portion of notes payable to related parties 25,000 Capital lease obligation 8,175 --------- Total current liabilities 628,397 NOTES PAYABLE 605,208 NOTES PAYABLE TO RELATED PARTIES 710,479 --------- Total liabilities 1,944,084 --------- COMMITMENTS REDEEMABLE COMMON STOCK 154,419 --------- STOCKHOLDERS' EQUITY Preferred stock, par value $.04; 2,500,000 shares authorized; none issued and outstanding Common stock, par value $.004; 12,500,000 shares authorized; 997,054 shares issued and outstanding 3,988 Additional paid-in capital 1,069,740 Accumulated deficit (520,478) Note receivable from stockholder (45,000) Common stock subscribed (50,000) --------- Total stockholders' equity 458,250 --------- TOTAL $2,556,753 ========= See notes to consolidated financial statements. - 3 - REDWOOD BROADCASTING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS Three Months Three Months Ended Ended June 30, 1997 June 30, 1996 (unaudited) (unaudited) REVENUE Broadcast revenue $ 373,317 $ -- Less agency commissions 33,399 -- --------- --------- Net revenue 339,918 -- --------- --------- OPERATING EXPENSE General and administrative 120,026 13,722 Station operating expenses 191,302 60,416 Depreciation and amortization 28,460 24,102 --------- --------- Total 339,788 98,240 --------- --------- INCOME/(LOSS) FROM OPERATIONS 130 (98,240) --------- --------- OTHER INCOME (EXPENSE) Interest expense (10,960) (1,200) Other income (expense) 42,751 (28,009) --------- --------- Total other - net 31,791 (29,209) --------- --------- NET INCOME/(LOSS) 31,921 (127,449) --------- --------- NET INCOME (LOSS) PER COMMON SHARE $ 0.03 $ (.22) ========= ========= WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 934,523 590,000 ========= ========= See notes to consolidated financial statements. - 4 - REDWOOD BROADCASTING, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Three Months Ended Ended June 30, June 30, 1997 1996 (unaudited) (unaudited) OPERATING ACTIVITIES Net Income/(loss) $ 31,921 $(127,449) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 28,460 24,102 Changes in operating assets and liabilities: Accounts receivable (70,506) 70,010 Other current assets (2,452) (114,646) Accounts payable and accrued expenses (43,810) (83,005) Other assets (66,038) 17,264 Other liabilities -- (626) -------- -------- Net cash provided by(used in) operating activities (122,425) (214,350) -------- -------- INVESTING ACTIVITIES Purchases of equipment (26,299) -- Sale of radio station assets -- 445,488 -------- -------- Net cash provided by (used in) investing activities (26,299) 445,488 -------- -------- FINANCING ACTIVITIES Proceeds from borrowings under related party notes 45,030 -- Proceeds from borrowings under notes 25,000 -- Principal payments on notes to related parties -- (243,336) Principal payments on notes (39,550) -- Increase in net payable to related parties 50,883 -- Payments on capital lease obligations (3,819) -- Proceeds from issuance of common stock 50,000 30,000 -------- -------- Net cash provided by (used in) financing activities 127,544 (213,336) -------- -------- NET INCREASE (DECREASE) IN CASH (21,180) 17,802 CASH, Beginning of period 40,791 (23,188) -------- -------- CASH, End of period $ 19,611 $ (5,386) ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION Cash paid for interest $ 10,960 $ 1,200 See notes to consolidated financial statements. - 5 - REDWOOD BROADCASTING, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. General The consolidated financial statements for the three months ended June 30, 1997 and 1996 are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the financial position and operating results for the interim periods. The consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's annual report on Form 10-KSB for the fiscal year ended March 31, 1997. Results of operations for interim periods are not necessarily indicative of results which may be expected for the year as a whole. 2. Acquistions Effective April 1, 1997, the Company acquired an option to purchase radio stations KNRO-AM and KARZ-FM (KNRO/KARZ) licensed in Redding, California from Power Surge, Inc. (Power Surge). Power Surge received the licenses from Power Curve, Inc. (Power Curve) on March 31, 1997. Power Surge and Power Curve are both controlled by the Company's President. Power Curve acquired KNRO/KARZ on January 31, 1997 for $480,000 in cash and a $720,000 promissory note. Under the terms of the option agreement, the Company can either (1) purchase KNRO/KARZ for $1,200,000 in cash or (2) issue 1,000,000 shares of its common stock in exchange for all of the issued and outstanding shares of common stock of Power Surge. The option terminates on September 30, 1997. Concurrently, the Company entered into an LMA with Power Surge for a period of one year. Under the terms of the LMA, the Company is operating KNRO/KARZ and is obligated to pay Power Surge a monthly fee of $5,000. 3. Stockholder's Equity In February 1997, the Company completed the filing of a Registration Statement Form SB-2 under the Securities Act of 1933. The filing effectively registered for sale all shares of common stock issued and outstanding at that time, 203,008 common stock put options which were subsequently issued to certain stockholders and an additional 400,000 shares of the Company's common stock to be offered to the public. The registration of the outstanding shares and the put options were required pursuant to an Agreement and Plan of Reorganization dated June 16, 1995. At March 31, 1997, the 203,008 common stock put options remained outstanding. The put options granted the optionholders the right to sell to the Company their shares of common stock at a price of $1.50 per share. The Company's potential obligation under the put options of $304,512 was classified as redeemable common stock in the Company's balance sheet at March 31, 1997. The put options expired June 13, 1997; however, prior to such expiration, 102,946 options were excercised by the optionholders and, accordingly, the Company will acquire all of these shares of the Company's common stock for $154,419. The remaining put options were forfeited. Therefore, the put option liability reflected in the accompanying balance sheet (dated June 30, 1997) has been reduced from $304, 512 to $154,419 with the difference - $150,093 being credited to common stock and additional paid in capital. In May, 1997 the Company issued 25,000 shares of common stock pursuant to the Company's public offering (400,000 shares total are registered for this purpose) at $2.00 per share receiving proceeds of $50,000. In addition, during the quarter ended June 30, 1997, the Company received a subscription agreement for an additional 25,000 shares of common stock to be issued pursuant to the Company's public offering at $2.00 per share, said shares to be issued upon receipt of payment. Management anticipates receipt of the $50,000 during the Company's second quarter ending September 30, 1997. This transaction is currently reflected in the accompanying balance sheet as "common stock subscribed." -6- 4. Borrowings Under Lines of Credit The Company had a $25,000 line of credit agreement with a bank which was to expire April 1, 1998. Borrowings under the line of credit agreement would bear interest of a rate of 7.9% and were collateralized by a certificate of deposit from a related party. There were no borrowings under the line of credit agreement as of or during the year ended March 31, 1997. However, the Company borrowed 100% of the line during the three months ended June 30, 1997 for working capital purposes. In addition, subsequent to the close of the quarter, the Company was granted an increase in the line to $50,000 under the same terms and conditions. This additional amount ($25,000) was also drawn on for equipment purchases following the close of the quarter. Item 2. Management's Discussion and Analysis or Plan of Operation Overview The following is a discussion of the consolidated financial condition and results of operations of the Company as of and for the two fiscal periods ended June 30, 1997 and 1996. This discussion should be read in conjunction with the Consolidated Financial Statements of the Company and the Notes related thereto included in the Company's Form 10-KSB for the fiscal year ended March 31, 1997. The forward-looking statements included in Management's Discussion and Analysis of Financial Condition and Results of Operations, which reflect management's best judgement based on factors currently known, involve risks and uncertainties. Actual results could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including but not limited to those discussed herein. Liquidity and Capital Resources - June 30, 1997 compared to March 31, 1997 The Company's balance sheet at June 30, 1997 reflects continued improvement in financial condition when compared with the Company's balance sheet at March 31, 1997. Total assets increased from $2,446,823 as of March 31, 1997 to $2,556,753 as of June 30, 1997, representing an increase of $109,930; total liabilities increased $28,009 to $1,944,084; commitments (redeemable common stock) decreased $150,093 and total stockholder's equity increased $232,014 from $226,236 as of March 31, 1997 to $458,250 as of June 30, 1997. Total current assets at June 30, 1997 were $925,856 and consisted of cash of $19,611, net accounts receivable of $192,066, a receivable from the sale of a radio station of $633,000 and other current assets of $81,179. Total current liabilities at June 30, 1997 were $628,397 (comprised primarily of accounts payable and accrued expenses of $344,855 and payables to related parties of $202,032), resulting in working capital of $297,459. This compares favorably to working capital of $234,386 as of March 31, 1997, an improvement of $63,073 or 27%. Contributing significantly to this increased working capital position were the following: * An increase in net accounts receivable of $70,506 * A decrease in accounts payable and accrued expenses of $43,810 * A reduction in the current portion of notes payable of $15,549 At March 31, 1997, the Company reported total assets of $2,556,753 including property and equipment of $231,529 net of accumulated depreciation of $45,909 and $976,367 (net of $74,122 in accumulated amortization) of intangibles (radio broadcast licenses and non-compete agreements) attributable to KRDG-FM acquired in July, 1996 and KNNN-FM acquired in September, 1996. Total liabilities of $1,944,034 (excluding $154,419 in put option liability associated with redeemable common stock) include, in addition to current liabilities of $628,397 referred to above, the long term portion of notes payable of $605,208 associated with the acquisitions of KRDG-FM and KNNN-FM and notes payable to related parties of $710,449. This compares with total liabilities of $1,916,075 (excluding the put option liability associated with redeemable common stock) at March 31, 1997 and represents an increase of only $28,009. -7- As of June 30, 1997, the Company reported stockholders equity of $458,250. This compares favorably to stockholders equity of $226,236 as of March 31, 1997. Contributing to the increase in stockholder's equity of $232,014 were the following: * Earnings for the three month period ended June 30, 1997 of $31,921 had a positive impact on stockholder's equity by reducing the Company's accumulated deficit from ($552,399) to ($520,478) * The issuance of 25,000 shares of common stock pursuant to the Company's public offering at $2.00 per share generated $50,000 of additional capital. Another 25,000 shares of common stock were issued after June 30, 1997 at $2.00 per share which will generate $50,000 of additional equity during the Company's second quarter. * At March 31, 1997, 203,008 common stock put options remained outstanding. The put options grant the optionholders the right to sell to the Company their shares of common stock at a price of $1.50 per share. The Company's potential obligation under the put options of $304,512 was classified as redeemable common stock in the balance sheet at March 31, 1997. The put options expired June 13, 1997; however, prior to such expiration, 102,946 options were exercised by the optionholders and, accordingly, the Company will acquire all of these shares of the Company's common stock for $154,419. The remaining put options were forfeited. Therefore, the put option liability reflected in the accompanying balance sheet (dated June 30, 1997) has been reduced from $304, 512 to $154,419 with the difference - $150,093 being credited to common stock and additional paid in capital. Results of Operations - Three Months Ended June 30, 1997 compared to the Three Months Ended June 30, 1996 Net Revenues (gross revenues less agency commissions) for the three months ended June 30, 1997 were $339,918 compared to no net revenue for the three months ended June 30, 1996. Net revenue for the current quarter is comprised of radio advertising sales associated with the Company's radio stations located in Redding, California. The Company had no revenue during the three months ended June 30, 1996 because the Company had entered into a Local Marketing Agreement (LMA) with a prospective buyer of its two radio stations located in Chico, California (KHSL-FM and KNSN-AM). The LMA and related purchase contracts were entered into on March 15, 1996. Under the LMA, the prospective buyer operated the radio stations thereby receiving the benefit of all revenue generated during the first quarter ended June 30, 1996. The Company in turn received a monthly LMA fee. This amount, $16,500, is included in other income for the three month period ended June 30, 1997. Operating expenses for the three months ended March 31, 1997 were $339,788 comprised of station operating expenses of $191,302, general and administrative expenses of $120,026 and depreciation and amortization of $28,460. This represents an increase of $241,548 over the same period a year ago. Operating expenses for the current quarter were generated by the Company's Redding, California radio stations. As previously stated, the Company transferred operational control of its two Chico, California stations under an LMA on March 15, 1996. The Company incurred minimal operating costs during the prior year first quarter associated with salary and benefits of a general manager and an engineer (as required by the LMA) and certain severence costs associated with employees that were not hired by the prospective buyer at the time the LMA was signed. The Company generated other income (net of other expense) of $31,921 during the quarter compared to other expense of ($29,209) for the quarter ended June 30, 1996. Current quarter other income was comprised primarily of option income of $30,000 associated with the sale of KNSN-AM, interest income of $5,000 associated with notes receivable ( $200,000 taken as part of the KHSL-FM closing and $45,000 taken as part of a stock sale to a shareholder of the Company), and the recognition of deferred revenue of $9,722. Other income was partially offset by interest expense on notes payable of $10,960. As a result of the foregoing, the Company produced net income of $31,921 or $0.03 per share based on a weighted average number of shares outstanding of 934,523 for the three months ended June 30, 1997 compared to a net loss of ($127,449) or ($0.22) per share based on a weighted average number of shares outstanding of 590,000 for the three months ended June 30, 1996. -8- PART II - OTHER INFORMATION Item 1. Legal Proceedings. None. Item 2. Changes in Securities. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to a Vote of Security Holders. None. Item 5. Other Information. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit No. Exhibit Name 27 Financial Data Schedule (b) The Company filed a Form 8-K on May 27, 1997 in reporting its change in certifying accountant. No financial statements were required to be filed. In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ John C. Power President and Chief Executive Officer 08/01/97 JOHN C. POWER Chairman of the Board of Directors /s/ J. Andrew Moorer Chief Financial Officer and Director 08/01/97 J. ANDREW MOORER -9- EX-27 2 REDWOOD BROADCASTING, INC.
5 (Replace this text with the legend) 0001004991 Redwood Broadcasting, Inc. 1 U.S. Dollars 3-MOS MAR-31-1997 APR-01-1997 JUN-30-1997 1 19,611 0 197,366 5,300 0 925,856 259,989 28,460 2,556,753 628,397 0 0 0 3,988 1,069,740 2,556,753 373,317 373,317 33,399 373,187 0 0 10,960 31,921 0 31,921 0 0 0 31,921 0.03 0.03
-----END PRIVACY-ENHANCED MESSAGE-----