-----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, KF2ese31cwVcM4plONK3tPQSnwAyfyZa9vJTAuPPVDuJ037T+ZVkt++cwZ5hXeiv 5Q3adxgWk9WLYPPnQIH0Wg== 0000944209-97-000199.txt : 19970222 0000944209-97-000199.hdr.sgml : 19970222 ACCESSION NUMBER: 0000944209-97-000199 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970219 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALL-COMM MEDIA CORP CENTRAL INDEX KEY: 0000014280 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 880085608 STATE OF INCORPORATION: NV FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 001-01768 FILM NUMBER: 97538812 BUSINESS ADDRESS: STREET 1: 400 CORPORATE POINTE STREET 2: SUITE 780 CITY: CULVER CITY STATE: CA ZIP: 90230 BUSINESS PHONE: 310-342-28 MAIL ADDRESS: STREET 1: 400 CORPORATE POINTE SUITE 780 CITY: CULVER CITY STATE: CA ZIP: 90280 FORMER COMPANY: FORMER CONFORMED NAME: SPORTS TECH INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL HOLDINGS INC DATE OF NAME CHANGE: 19920518 FORMER COMPANY: FORMER CONFORMED NAME: BRISTOL GAMING CORP DATE OF NAME CHANGE: 19890518 10QSB 1 FORM 10-QSB FOR PERIOD ENDED 12/31/96 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended December 31, 1996 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from __________________ to ____________________ Commission file number 0-16730 ALL-COMM MEDIA CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Nevada 88-0085608 - --------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 400 Corporate Pointe, Suite 780 Culver City, California 90230 - ---------------------------------------- ------------------ (Address of principal executive offices) (Zip Code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Registrant's telephone number, including area code: (310) 342-2800 -------------- Securities registered pursuant to Section 12(b) of the Act: None ---- Securities registered pursuant to Section 12(g) of the Act: Common Stock, par value $.01 per share -------------------------------------- (Title of class) 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 February 14, 1997, there were 8,274,264 shares of the Registrant's common stock outstanding. 1 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS FORM 10-QSB REPORT DECEMBER 31, 1996
Page ---- PART I - FINANCIAL INFORMATION Item 1 Interim Condensed Consolidated Financial Statements (unaudited) Condensed Consolidated Balance Sheets - December 31, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Operations - Three and Six months ended December 31, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows - Six months ended December 31, 1996 and 1995 5 Notes to Interim Condensed Consolidated Financial Statements 6-10 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 10-15 PART II - OTHER INFORMATION Item 2 Changes in Securities 16 Item 4 Submission of Matters to a Vote of Security Holders 16 Item 6 Exhibits and Reports of Form 8-K (a) Exhibits 17-18 (b) Reports on Form 8-K 18 Signatures 19 Exhibit 10.7 Loan Agreement and Credit Facility dated December 27, 1996 by and between Stephen Dunn & Associates, Inc. and 1/st/ Business Bank Exhibit 11.1 Statements Regarding Computation of Net Loss Per Share Exhibit 27.1 Financial Data Schedule
2 PART I - FINANCIAL INFORMATION ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - ------------------------------------------------------------------------ ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
June 30, 1996 December 31, 1996 (as restated) ------------------ ------------- ASSETS - ------ Current assets: Cash and cash equivalents $ 771,949 $ 1,393,044 Accounts receivable, net of allowance for doubtful accounts of $46,000 at December 31 and $34,906 at June 30 4,261,321 2,681,748 Land held for sale at cost 921,465 Other current assets 275,482 107,658 ----------- ----------- Total current assets 5,308,752 5,103,915 Property and equipment at cost, net 776,396 299,045 Intangible assets at cost, net 15,780,867 7,851,060 Deferred registration costs 1,122,579 Other assets 104,598 47,046 ----------- ----------- Total assets $23,093,192 $13,301,066 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ Current liabilities: Short-term borrowings $ 750,000 $ 500,000 Notes payable on repurchase of Series C Preferred Stock 1,000,000 Notes payable to related parties 931,428 Trade accounts payable 2,741,444 470,706 Accrued salaries and wages 566,201 706,039 Other accrued expenses 878,230 758,112 Income taxes payable 18,880 10,000 Long-term obligations to related party, current portion 700,000 583,333 Related party payable 425,000 ----------- ----------- Total current liabilities 7,586,183 3,453,190 Long-term obligations to related parties less current portion 1,209,667 1,516,667 Other liabilities 228,776 80,315 ----------- ----------- Total liabilities 9,024,626 5,050,172 ----------- ----------- Commitments and contingencies: Redeemable convertible preferred stock, $.01 par value; consisting of 6,200 shares of Series B Convertible Preferred Stock issued and outstanding at June 30, none at December 31; 2,000 shares of Series C Convertible Preferred Stock issued and outstanding at June 30, none at December 31 1,306,358 ----------- Stockholders' equity: Convertible preferred stock, $.01 par value; 50,000 shares authorized, 8,200 redeemable shares outstanding at June 30, none at December 31 - - Common stock - authorized 6,250,000 shares of $.01 par value at June 30, 1996, increased in August 1996 to 36,250,000; 8,286,064 and 3,198,534 shares issued, respectively 82,861 31,985 Additional paid-in capital 22,986,755 13,173,520 Accumulated deficit (8,865,581) (6,125,500) Less 11,800 shares of common stock in treasury, at cost (135,469) (135,469) ----------- ----------- Total stockholders' equity 14,068,566 6,944,536 ----------- ----------- Total liabilities and stockholders' equity $23,093,192 $13,301,066 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 3 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (unaudited)
Three Months Ended Six Months Ended December 31, December 31, 1996 1995 1996 1995 ------------- ----------- ------------- ----------- Revenues $ 5,913,649 $2,959,398 $ 9,845,679 $6,885,836 ------------ ---------- ------------ ---------- Operating costs and expenses: Salaries and benefits 3,523,811 2,744,970 6,827,310 5,930,546 Non-recurring compensation expense on option grants 1,650,000 Direct costs 1,796,590 259,810 1,941,820 389,522 Selling, general and administrative 822,012 495,178 1,366,648 857,846 Professional fees 160,461 71,672 328,648 217,101 Amortization of intangible assets 208,150 91,076 303,796 181,302 ------------ ---------- ------------ ---------- Total operating costs and expenses 6,511,024 3,662,706 12,418,222 7,576,317 ------------ ---------- ------------ ---------- Loss from operations (597,375) (703,308) (2,572,543) (690,481) ------------ ---------- ------------ ---------- Other income (expense): Gain from sale of land 90,021 Interest income 4,974 2,770 14,535 6,014 Interest expense (133,247) (97,190) (248,164) (195,992) ------------ ---------- ------------ ---------- Total (128,273) (94,420) (143,608) (189,978) ------------ ---------- ------------ ---------- Loss before income taxes (725,648) (797,728) (2,716,151) (880,459) Benefit (provision) for income taxes (19,961) 27,220 (23,939) (26,075) ------------ ---------- ------------ ---------- Net loss $ (745,609) $ (770,508) $ (2,740,090) $ (906,534) ------------ ---------- ------------ ---------- Net loss attributable to common stockholders* $(10,154,049) $ (770,508) $(12,566,610) $ (906,534) ------------ ---------- ------------ ---------- Net loss per common share $(1.87) $(.25) $(2.91) $(.30) ------------ ---------- ------------ ---------- Weighted average common and common equivalent shares outstanding 5,423,871 3,022,542 4,319,377 3,019,417 ------------ ---------- ------------ ----------
* Includes the impact of non-recurring dividends on preferred stock for (a) $8.5 million non-cash dividend on conversion of Series B Preferred Stock; (b) $573,000 on repurchase of Series C Preferred Stock; and (c) periodic non-cash accretions on preferred stock (see Note 8). See Notes to Condensed Consolidated Financial Statements. 4 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995 (unaudited)
1996 1995 ------------ ----------- Operating activities: Net cash used in operating activities $(1,053,700) $ (303,054) ----------- ---------- Investing activities: Net proceeds from sale of land 860,443 Proceeds from issuances of warrants 5,000 Purchase of property and equipment (340,703) (34,628) Payments relating to acquisition of Alliance and SD&A (47,747) Acquisition of Metro, net of cash acquired of $349,446 262,346 ----------- ---------- Net cash provided by (used in) investing activities 787,086 (82,375) ----------- ---------- Financing activities: Proceeds from (repayments of) bank loans 375,000 (39,177) Payments on deferred registration costs (496,148) Proceeds from land option 150,000 Repayments of notes payable other (36,000) Repayment of acquisition debt (233,333) (650,000) ----------- ---------- Net cash used in financing activities (354,481) (575,177) ----------- ---------- Net decrease in cash and cash equivalents (621,095) (960,606) Cash and cash equivalents at beginning of period 1,393,044 1,217,772 ----------- ---------- Cash and cash equivalents at end of period $ 771,949 $ 257,166 ----------- ----------
Supplemental schedule of non cash investing and financing activities: In October 1995, in accordance with the acquisition agreement between Alliance Media Corporation and the former owner of SD&A the purchase price was increased by $92,702. In October 1995, the Company issued 6,250 shares of common stock in settlement of a liability of $26,250. Deferred financing costs of $60,000 remained unpaid at December 31, 1995. In September 1996, the Company issued 96,748 shares of common stock, valued at $425,000, as an earn out payment to the former owner of SD&A for achieving certain targeted earnings for the fiscal year ended June 30, 1996. In October 1996, the Company issued 1,814,000 shares of its common stock and $1,000,000 face value in debt to acquire 100% of the outstanding stock of Metro Services Group, Inc. The debt was discounted to $920,000. On December 23, 1996, the Company issued 3,168,857 shares of its common stock and $1,000,000 face value in debt as part of a recapitalization. 6,200 shares of Redeemable Series B Preferred Stock were converted into 2,480,000 common shares; 2,000 shares of Redeemable Series C Preferred Stock were repurchased for $1,000,000; warrants for 3,000,000 shares were exchanged for 600,000 common shares and $145,753 in accrued interest was converted into 88,857 common shares. (See Note 8). Deferred registration costs of $607,000 remained unpaid at December 31, 1996. See Notes to Condensed Consolidated Financial Statements. 5 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES NOTES TO INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) 1. BASIS OF PRESENTATION - ------------------------- The accompanying unaudited Interim Condensed Consolidated Financial Statements include the accounts of All-Comm Media Corporation and Subsidiaries (the "Company"). They have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month periods ended December 31, 1996 are not necessarily indicative of the results that may be expected for the fiscal year ending June 30, 1997. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the fiscal year ended June 30, 1996. Certain reclassifications have been made in the fiscal 1996 interim financial statements to conform with the fiscal 1997 presentation. Certain amounts have been reclassified to conform with industry standards. 2. NET LOSS PER COMMON SHARE - ----------------------------- Net loss per common share is computed based upon the weighted average number of shares outstanding during the periods presented and common stock equivalents unless antidilutive. The net loss is reduced by dividends to preferred stockholders to determine the net loss attributable to common stockholders. Primary and fully diluted loss per share are the same in the periods presented. For the three and six months ended December 31, 1996, preferred dividends included periodic non-cash increases to accrete the carrying value up to the redemption value, as well as non-recurring dividends incurred as part of the recapitalization described in Note 8. 3. ACQUISITION OF METRO SERVICES GROUP, INC. - -------------------------------------------- Effective as of October 1, 1996, the Company acquired Metro Services Group, Inc. ("Metro") pursuant to a merger agreement. In exchange for all of the then outstanding shares of Metro, the Company issued 1,814,000 shares of its common stock valued at $7,256,000 and promissory notes (the "Notes") totaling $1,000,000. The Notes, which have a stated interest rate of 6%, were discounted to $920,000 to reflect an estimated effective interest rate of 10%. The Notes shall be due and payable, together with interest thereon, on June 30, 1998, subject to earlier repayment, at the option of the holder, upon completion by the Company of a public offering of its equity securities. The Notes are convertible on or before maturity, at the option of the holder, into shares of common stock at a conversion rate of $5.38 per share. Metro develops and markets information-based services, used primarily in direct marketing by a variety of commercial and tax-exempt organizations, principally in the United States. The acquisition was accounted for using the purchase method of accounting. The purchase price was allocated to assets acquired based on their estimated fair value. This treatment resulted in approximately $7.3 million of costs in excess of net assets acquired, after recording covenants not to compete of 6 $650,000 and proprietary software of $250,000. Such excess is being amortized over the expected period of benefit of forty years. The covenants and software are amortized over their expected benefit periods of three and five years respectively. The operating results of this acquisition are included in the consolidated results of operations from the date of acquisition. The following summary, prepared on a pro forma basis, combines the consolidated results of operations as if Metro had been acquired as of the beginning of the periods presented, after including the impact of certain adjustments, such as amortization of intangibles and increased interest on acquisition debt and the non-cash compensation expense of $1,650,000 recorded on the grant of options in 1996.
Unaudited --------- For the six months ended December 31, 1996 1995 ------------------ ------------------ Revenues $12,072,688 $11,429,435 Net loss $(2,760,881) $ (629,426) Loss per common share $ (.53) $ (.13)
The unaudited pro forma information is provided for informational purposes only. It is based on historical information and is not necessarily indicative of future results of operation of the combined entities. 4. CREDIT FACILITY - ------------------- In December 1996, Stephen Dunn & Associates, Inc. ("SD&A"), a wholly-owned subsidiary of the Company, renewed its credit facility with a commercial bank, increasing its line of credit commitment from $500,000 to a maximum of $750,000. Interest on the outstanding principal is payable monthly at the bank's reference rate plus 1/2%. The line must be repaid in full for at least thirty consecutive days during each twelve month period and it matures on September 30, 1997, renewable at the discretion of the bank. The line of credit was fully used at December 31, 1996. The credit facility also provides for a term loan totaling $125,000 payable in 35 equal monthly principal installments of $3,473 beginning January 31, 1997. Interest is payable monthly at the bank's reference rate plus 3/4%. The entire loan is outstanding as of December 31, 1996. 5. INCOME TAXES - ---------------- In the three months ended December 31, 1996 and 1995, the income tax benefit (provision) totaled ($20,000) and $27,000, respectively. In the six month periods ended December 31, 1996 and 1995, the income tax provisions totaled $24,000 and $26,000, respectively. The current period provisions resulted from state and local income taxes incurred on taxable income at the operating subsidiary level which could not be offset by losses incurred at the corporate level. An income tax benefit at SD&A for each of the three months ended December 31, 1996 and 1995 resulted from reversal of prior quarters income tax provision at SD&A due to current quarter taxable losses. The benefit in 1996 was offset by a provision at Metro. 7 6. GAIN FROM SALE OF LAND - -------------------------- The Company, through its wholly-owned subsidiary, All-Comm Holdings, Inc., owned approximately seven acres of undeveloped land in Laughlin, Nevada, which had a carrying value of $921,465 as of June 30, 1996. During fiscal 1996, Clark County, Nevada authorities passed a bond measure, resulting in a special assessment to fund improvements which would benefit the land. The principal balance assessed to the Company totaled $154,814 plus interest at 6.4% and was payable in semi-annual installments over twenty years. The principal was capitalized by the Company in fiscal 1996. On August 16, 1996, the land was sold by auction to, and liability assumed by, an unaffiliated third party for $952,000 in cash, resulting in a net gain after commissions and other selling costs of approximately $90,000. 7. STOCK OPTIONS - ----------------- On September 26, 1996, the Board of Directors approved the increase in the number of shares available under the 1991 Stock Option Plan by 600,000 shares, to 1,450,000, and granted options exercisable for 300,000 shares of common stock, par value $.01 per share (the "Common Stock") to each of the Company's Chief Executive Officer and Chief Operating Officer. Options exercisable for the first 150,000 shares were granted to each such officer at an exercise price of $2.50 per share and the remaining 150,000 each were granted at an exercise price of $3.00 per share. On December 23, 1996, the $3.00 options were canceled as part of the recapitalization described in Note 8. The remaining options vest and are exercisable immediately and expire on July 1, 2001. Although the Company intended to grant the options in May, 1996, when the market price of the stock was $2.50, at September 26, 1996, the date of Board ratification, the market price was $5.50. Accordingly, the Company recorded a non-recurring, non- cash charge of $1,650,000 to compensation expense for the difference between market price and exercise price of the options for 600,000 shares. No benefit was recognized on cancellation of the options for 300,000 as part of the recapitalization. 8. RECAPITALIZATION - -------------------- On December 23, 1996, the Company and certain of its securityholders effected a recapitalization of the Company's capital stock, whereby: (i) the Company's Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), was converted, in accordance with its terms without the payment of additional consideration, into 2,480,000 shares of Common Stock; (ii) the Company's Series C Convertible Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), was repurchased for promissory notes in an aggregate principal amount of $1.0 million, which promissory notes bear interest at a rate of 8% per annum and are repayable on demand at any time from and after the date of the consummation of an underwritten public offering by the Company of Common Stock, but in any event such notes mature June 7, 1998; (iii) all accrued interest on the Series B Preferred Stock and the Series C Preferred Stock was converted into 88,857 shares of Common Stock; (iv) warrants related to the Series C Preferred Stock, currently exercisable for 3,000,000 shares of Common Stock, were exchanged for 600,000 shares of Common Stock; and (v) options held by two of the Company's principal executive officers to purchase 300,000 shares of common stock were canceled at no cost to the Company. Upon conversion of the Series B Preferred Stock and accumulated interest thereon into Common Stock on December 23, 1996, the Company incurred a non-cash, non- recurring dividend for the difference between the conversion price and the market price of the Common Stock, totaling $8.5 million. Upon repurchase of the Series C Preferred Stock, the Company incurred a non-recurring dividend of $573,000 for the difference between the repurchase price and the accreted book 8 value of the stock at December 23, 1996. These dividends do not impact net income (loss), but do impact net income (loss) attributable to common stockholders in the calculation of earnings per share. 9. SUBSEQUENT EVENTS - --------------------- On October 17, 1996, the Company filed a Form SB-2 registration statement (the "Registration Statement") with the Securities and Exchange Commission. The Registration Statement related to an underwritten public offering (the "Offering") of 2,100,000 shares of Common Stock, of which 1,750,000 shares were being offered by the Company and 350,000 were being offered by certain stockholders of the Company. It also related to the sale of 1,381,056 shares of Common Stock by certain selling stockholders on a delayed basis pursuant to Rule 415 of the Securities Act of 1933, as amended, none of whom are members of, or affiliated with, the Board or management. On February 11, 1997, the Company withdrew the Registration Statement. The Company currently intends to refile the Registration Statement. As such, Offering costs incurred through December 31, 1996, of $1.1 million have been deferred as of December 31, 1996. Additional costs estimated to approximate $265,000 were incurred from January 1, 1997 through the date of the withdrawal. Such costs will be deferred in accordance with the Company's intention to refile the Registration Statement. The notes payable to the former shareholders of Metro with an accreted value of $931,000, and the $1,000,000 in notes payable on repurchase of the Series C Preferred Stock are payable in full at maturity in June 1998 or, at the option of the holders, out of the proceeds of an underwritten offering. As the Company intends to pursue an offering, these notes have been classified as current liabilities. 10. RESTATEMENTS FOR CORRECTIONS OF ERRORS - ------------------------------------------- The financial statements for the three months ended September 30, 1996 and year ended June 30, 1996 were restated for corrections of two errors. As originally filed, the financial statements for the three months ended September 30, 1996 did not include compensation expense for the stock options granted to officers (as discussed in Note 7), as the Company intended the options to be granted in May 1996 when the market price of the stock was $2.50. The net loss attributable to common stockholders for the three months ended September 30, 1996 was originally reported at $344,481 and related net loss per share was $(0.11). Subsequently, in accordance with Securities and Exchange Commission requirements it was determined that the grant of these options was not effective until ratification by the Board on September 26, 1996, when the market price was $5.50. Accordingly, the Company amended the financial statements for the three months ended September 30, 1996 to record a non-recurring, non-cash charge of $1,650,000 for compensation expense in connection with the grant of these options, which increased the net loss for the quarter to $1,994,481 and net loss per share to $(0.62). Additionally, as originally filed, the Company reported its Convertible Preferred Stock as equity. The Preferred Stock contained two provisions for mandatory redemption, which the Company had considered remote and not within the control of the holders. Subsequently, in accordance with the Securities and Exchange Commission requirements, these securities were reclassified as mezzanine financing and the September 30, 1996 and June 30, 1996 financial statements were restated accordingly. In conjunction with this, previously recorded dividends of $66,500 for the three months ended September 30, 1996 were reclassified as interest and the net loss of $277,981 increased to $344,481. Previously recorded 9 dividends of $17,490 for the year ended June 30, 1996 were reclassified as interest and the net loss of $1,076,833 increased to $1,094,373. These was no impact on earnings per share, as the dividends had previously increased the net loss attributable to common stockholders. ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - -------------------------------------------------------------------------------- OF OPERATIONS ------------- Introduction - ------------ This discussion summarizes the significant factors affecting the consolidated operating results, financial condition and cash flows of the Company for the three and six month periods ended December 31, 1996. This should be read in conjunction with the financial statements and notes thereto, included in this Report on Form 10-QSB and the Company's financial statements and notes thereto, included in the Company's Annual Report on Form 10-K for the year ended June 30, 1996. As more fully described in Note 3 to the consolidated financial statements included in such Form 10-K, on April 25, 1995, the Company purchased 100% of the stock of Alliance Media Corporation which had simultaneously acquired Stephen Dunn & Associates, Inc. ("SD&A"). From April 25, 1995 through September 30, 1996, the Company operated as a direct marketing services provider with its initial concentration in a telemarketing and telefundraising company that specializes in direct marketing services for the arts, educational and other cultural organizations. As more fully described in Note 3 to the condensed consolidated financial statements included in this Form 10-QSB, effective October 1, 1996 the Company purchased 100% of the stock of Metro Services Group, Inc. ("Metro"). This acquisition is reflected in the consolidated financial statements using the purchase method of accounting starting October 1, 1996. Metro develops and markets information- based services used primarily in direct marketing by a variety of commercial and tax-exempt organizations. Results of Operations for the Three Months Ended December 31, 1996, Compared to - ------------------------------------------------------------------------------- the Three Months Ended December 31, 1995 - ---------------------------------------- Revenues of $5,914,000 in the three months ended December 31, 1996 (the "current period") increased by $2,955,000 over revenues of $2,959,000 in the three months ended December 31, 1995 (the "prior period"). $2,736,000 of the increase was attributable to the inclusion of Metro revenues in the current period. Revenues from on-site telemarketing and telefundraising campaigns totaled $2,367,000 and $2,309,000, respectively, or 74% and 78% of telemarketing and telefundraising revenues in the current and prior periods, respectively. Revenues from off-site campaigns totaled $811,000 and $650,000, respectively, or 26% and 22% of telemarketing and telefundraising revenues, respectively, in the current and prior periods. The increase in off-site revenues resulted from a fifty percent increase in capacity at the Berkeley Calling Center in September, 1996. During the three months ended December 31, 1996 and 1995, the Company's margins relating to off-site campaigns were generally higher than margins relating to on-site campaigns. Salaries and benefits of $3,524,000 in the current period increased by $779,000 over the prior period total of $2,745,000. Salaries and benefits decreased as a percentage of revenues, from 93% in the prior period, to 60% in the current period. Of the dollar increase, $543,000 was attributable to the inclusion of Metro in the current period. SD&A salaries and benefits increased $219,000 in the current period, largely due to salary increases and commencement of on-site campaigns for new clients in the current period (which generally require a higher labor expense in the early years). Parent company 10 administrative salaries increased by $17,000 in the current period as compared to the prior period, principally due to salary increases offset by staff reductions. Direct costs of $1,797,000 in the current period increased by $1,537,000 over direct costs of $260,000 in the prior period. Metro direct costs, principally costs of lists rented on behalf of clients, totaled $1,625,000 in the current period. This was offset by a decrease in telemarketing and telefundraising costs of $88,000, primarily attributable to savings in postage as a result of more off-site clients handling their own mailing campaigns in the current year. Selling, general and administrative expenses of $822,000 in the current period increased by $327,000 over comparable expenses of $495,000 in the prior period. Of the net increase, $112,000 was attributable to SD&A and $251,000 to the inclusion of Metro. Corporate administration decreased by $36,000. At SD&A, travel, training and related expenses increased by $50,000 in the current period as campaign managers were brought to Los Angeles for training on SD&A's new on-site software and new computer equipment and supplies were shipped to campaign sites. The remaining increases were principally attributable to administrative costs, including rent, utilities and insurance, associated with the expansion of the Berkley Calling Center and administration and regulatory costs relating to SD&A's new Canadian campaign. At the parent company level, the $36,000 decrease was principally due to prior year identification and evaluation of potential acquisitions and finalization of issues related to prior operations of the Company. Professional fees of $160,000 in the current period, including $68,000 from Metro, increased by $88,000 over professional fees of $72,000 in the prior period. The current period included accounting and legal fees incurred for research on tax and labor issues. Amortization of intangible assets of $208,000 in the current period increased by $117,000 over amortization of $91,000 in the prior period. Of the increase, $113,000 is attributable to the amortization of costs in excess of net tangible assets acquired in the Metro acquisition, including amortization of $650,000 in covenants not to compete and $250,000 in proprietary software amortized over three and five years, respectively. The remaining costs are amortized over their expected period of benefit of forty years. Amortization of the goodwill and a covenant-not-to-compete associated with the Alliance and SD&A acquisitions on April 25, 1995 increased in the current period due to an increase in goodwill of $850,000 as of June 30, 1996 for payments made to the former owner of SD&A resulting from achievement of defined results of operations of SD&A for the year then ended. Interest expense of $134,000 in the current period increased by $37,000 compared to $97,000 in the prior period. Of the net increase, $27,000 was attributable to interest payable on notes due to the former owners of Metro and $60,000 due to amounts payable to the holders of the Series B Redeemable Preferred Stock and Series C Preferred Stock in the current period. This was offset by reductions of $48,000 due to principal payments on the SD&A seller debt and reductions in the interest rate and $2,000 of other minor items. The provision for income taxes of $20,000 in the current period increased by $47,000 compared to a net benefit of $27,000 in the prior period. Despite consolidated losses from continuing operations, the provision resulted from state and local taxes incurred on taxable income at Metro, which could not be offset by losses incurred at the parent company level. In each period, a tax benefit was recorded at SD&A resulting from the reversal of prior quarters income tax provisions due to current quarters taxable loss at SD&A. 11 Results of Operations for the Six Months Ended December 31, 1996, Compared to - ----------------------------------------------------------------------------- the Six Months Ended December 31, 1995 - -------------------------------------- Revenues of $9,846,000 in the six months ended December 31, 1996 (the "current period") increased by $2,960,000 over revenues of $6,886,000 in the six months ended December 31, 1995 (the "prior period"). $2,736,000 of the increase was attributable to the inclusion of Metro revenues in the current period, starting October 1, 1996. Revenues from on-site telemarketing and telefundraising campaigns totaled $5,784,000 and $5,731,000, respectively, or 81% and 83% of revenues in the current and prior periods, respectively. Revenues from off-site campaigns totaled $1,327,000 and $1,155,000, respectively, or 19% and 17% of revenues, respectively, in the current and prior periods. The increase in off-site revenues resulted from a fifty percent increase in capacity at the Berkeley Calling Center in September, 1996. During the six months ended December 31, 1996 and 1995, the Company's margins relating to off-site campaigns were generally higher than margins relating to on-site campaigns. Salaries and benefits of $8,477,000 in the current period increased by $2,546,000 over the prior period total of $5,931,000. Of the increase, $543,000 was attributable to the inclusion of Metro in the current period. SD&A salaries and benefits increased $398,000 in the current period, largely due to salary increases and commencement of on-site campaigns for new clients in the current period (which generally require a higher labor expense in the early years). These increases were partially offset by a $45,000 reduction in parent company administrative salaries in the current period as compared to the prior period, due to staff reductions as well as salary reductions during the three months ended September 30, 1996. In addition, in the current period, the Company incurred a non-recurring, non-cash charge of $1,650,000 to compensation expense relating to options granted to two principal executive officers. Such charge was incurred because the exercise price of each option, which was based upon the market price of the common stock on May 30, 1996 (the date which the Company intended as the effective date of the grant) rather than the market price on September 26, 1996 (the actual effective date of the grant), was lower than the market price of the common stock on September 26, 1996. Direct costs of $1,942,000 in the current period increased by $1,552,000 over direct costs of $390,000 in the prior period. Metro direct cost, principally costs of lists rented on behalf of clients, totaled $1,625,000 in the current period. This was offset by a decrease in telemarketing and telefundraising costs of $73,000, primarily attributable to savings in postage as a result of more off-site clients handling their own mailing campaigns in the current year. Selling, general and administrative expenses of $1,367,000 in the current period increased by $509,000, over expenses of $858,000 in the prior period. Of the increase, $211,000 was attributable to SD&A, $251,000 to the inclusion of Metro and $47,000 to corporate administration. At SD&A, travel expense increased by $75,000 in the current period principally as a result of bringing campaign managers to Los Angeles for training on SD&A's new on-site software. Of the SD&A increase, $34,000 resulted principally from an increase in printing, promotion and advertising expenses and $59,000 was incurred for rent, business taxes and insurance associated with moving the Berkeley Calling Center, a new Canadian campaign and other. The remaining net increase of $44,000 was principally due to increases in shipping expenses for new on-site computers, as well as related increases in computer supplies and other. At the parent company level, public relations expenses increased by $44,000 due to the hiring of a new firm in the current period. Parent company travel expenses increased by $14,000 due to increased acquisition and financing efforts. Net decreases of $11,000 resulted from prior year finalization of issues relating to prior operations of the Company and investigation of potential acquisitions. 12 Professional fees of $329,000 in the current period, including $68,000 from Metro, increased by $112,000 over professional fees of $217,000 in the prior period. The current period included a non-recurring charge of approximately $76,000 in consulting fees attributable to the value of warrants acquired by former consultants during the period, as well as fees incurred for various valuation studies and analysis relating to financial matters. The prior period included accounting and legal fees incurred for finalization of issues related to prior operations of the Company. Amortization of intangible assets of $304,000 in the current period increased by $123,000 over amortization of $181,000 in the prior period. Of the increase, $113,000 is attributable to the amortization of costs in excess of net tangible assets acquired in the Metro acquisition, including amortization of $650,000 in covenants not to compete and $250,000 in proprietary software amortized over three and five years, respectively. The remaining costs are amortized over their expected period of benefit of forty years. Amortization of the goodwill and a covenant-not-to-compete associated with the Alliance and SD&A acquisitions on April 25, 1995 increased in the current period due to an increase in goodwill of $850,000 as of June 30, 1996 for payments made to the former owner of SD&A resulting from achievement of defined results of operations of SD&A for the year then ended. The Company recorded a net gain of $90,000 from the sale of the its undeveloped parcel of land in Laughlin, Nevada in August 1996, which gain was recorded net of commissions and related selling expenses. Interest expense of $247,000 in the current period increased by $51,000 compared to $196,000 in the prior period. Of the net increase, $27,000 was attributable to interest payable on notes due to the former owners of Metro and $127,000 due to amounts payable to the holders of the Series B Preferred Stock and Series C Preferred Stock in the current period. This was offset by reductions of $100,000 due to principal payments on the SD&A seller debt and reductions in the interest rate and $3,000 of other minor items. The provision for income taxes of $24,000 in the current period decreased by $2,000 compared to $26,000 in the prior period. Despite consolidated losses from continuing operations, the provision resulted from state and local taxes incurred on taxable income at the operating subsidiary level which could not be offset by losses incurred at the parent company level. Capital Resources and Liquidity - ------------------------------- At December 31, 1996 and June 30, 1996, on a consolidated basis the Company had cash and cash equivalents of $772,000 and $1,393,000, respectively, and accounts receivable net of allowances of $4,261,000 and $2,682,000, respectively. The Company generated losses from operations of $2,740,000 in the current six month period and used net cash in operating activities of $791,000. These losses in the current period included a non-recurring, non-cash charge of $1,650,000 to compensation expense relating to options granted to two principal executive officers of the Company. Due to seasonal decreases in revenues and certain related expenses between the fourth and second fiscal quarters, at December 31, 1996, accounts receivable relating to the SD&A operation decreased $1,006,000 and trade accounts payable and accrued liabilities decreased $217,000 compared to levels at June 30, 1996. 13 In part due to certain seasonal marketing patterns and subscriptions, telemarketing/telefundraising revenues are expected to increase slightly during the third fiscal quarter. Historically, the fourth fiscal quarter is the Company's strongest for telemarketing/telefundraising revenues. Starting in October 1996, the Company recognized results of operations of Metro. The fourth calendar quarter, which is the Company's second fiscal quarter, has historically been Metro's strongest. Metro accounts receivable and payable increased $748,000 and $299,000, respectively, over levels at October 1, 1996 (acquisition date) due to seasonal increases in its business. The Company cannot predict the degree to which, on a consolidated basis, these trends will continue. During the six months ended December 31, 1996, in connection with efforts to effect an underwritten offering, the Company incurred offering costs of $1.1 million, as well as incurring additional administrative costs. The Company has now taken steps to significantly reduce expenses at the corporate staff level and intends to implement a program of further cost reductions at the operational level. In the current period, net cash of $525,000 was provided from investing activities. The Company received proceeds of $860,000 from the sale of its land in Laughlin, Nevada, which was net of commissions and related selling expenses. Purchases of property and equipment of $341,000 resulted primarily from the Company's relocation and expansion of its Berkeley calling center in August 1996 and purchases of computer equipment at Metro and SD&A. The Company intends to continue to expand its business by investing up to approximately $1.7 million for technology, computer systems, software and equipment. Financing for this expansion is expected to be obtained from the sale of common stock and, if applicable, the exercise of outstanding warrants and/or options. In the current period financing activities used $354,000. The Company had a $500,000 line of credit with a bank which was fully drawn as of June 30, 1996. The Company obtained an increase in the line with a revised credit facility which included a line of credit up to $750,000 and a term loan totaling $125,000. As of December 31, 1996, the credit facility was fully drawn. The Company intends to pursue a further increase in the credit facility during the current fiscal year, however, there can be no assurance that any such increase will be obtained. In connection with the Metro acquisition, which was affected as of October 1, 1996, the Company issued promissory notes to the former shareholders of Metro in an aggregate principal amount of $1.0 million. Such notes bear interest at 6% per annum, are scheduled to mature June 30, 1998 and are convertible at the option of the holders thereof into 185,874 shares of Common Stock. As described in footnote 8 to the consolidated financial statements included in this Report on Form 10-QSB, on December 23, 1996, the Company and certain of its stockholders effected a recapitalization of the Company's capital stock, whereby: (i) the Company's Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), was converted, in accordance with its terms without the payment of additional consideration, into 2,480,000 shares of Common Stock; (ii) the Company's Series C Convertible Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), was repurchased for promissory notes in an aggregate principal amount of $1.0 million, which promissory notes bear interest at a rate of 8% per annum and are repayable on demand at any time from and after the date of the consummation of an underwritten public offering by the Company of Common Stock, but in any event such notes mature June 7, 1998; (iii) all accrued interest on the Series B Preferred Stock and the Series C Preferred Stock was converted into 88,857 shares of Common Stock; (iv) warrants related to the Series C Preferred Stock, currently exercisable for 3,000,000 shares of 14 Common Stock, were exchanged for 600,000 shares of Common Stock; and (v) options held by two of the Company's principal executive officers to purchase 300,000 shares of common stock will be canceled at no cost to the Company. Upon conversion of the Series B Preferred Stock and accumulated interest thereon into Common Stock on December 23, 1996, the Company incurred a non-cash, non- recurring dividend for the difference between the conversion price and the market price of the Common Stock, totaling $8.5 million. Upon repurchase of the Series C Preferred Stock, the Company incurred a non-recurring dividend of $573,000 for the difference between the repurchase price and the accreted book value of the stock at December 23, 1996. The dividends do not impact net income (loss), but do impact net income (loss) attributable to common stockholders in the calculation of earnings per share. Additional contingent payments in connection with the acquisition of SD&A, based on the achievement of certain defined earnings levels, may be due at the end of fiscal 1997 and 1998, which will continue to increase amortization expense in subsequent years. On October 17, 1996, the Company filed a Form SB-2 registration statement (the "Registration Statement") with the Securities and Exchange Commission. The Registration Statement related to an offering of 2,100,000 shares of Common Stock, of which 1,750,000 shares were being offered by the Company and 350,000 were being offered by certain stockholders of the Company (the "Offering"). It also related to the delayed sale of 1,381,056 shares of Common Stock by certain selling stockholders. On February 11, 1997, the Company withdrew the Registration Statement. As the Company intends to refile the Registration Statement, $1.1 million in offering costs have been deferred as of December 31, 1996. Additional offering costs estimated to approximate $265,000 were incurred from January 1, 1997 through the date of the withdrawal. Such costs will be deferred pending completion of the offering. Subsequent to withdrawal of the Registration Statement, the Company entered into discussions with certain warrant holders for the exercise of warrants for one million shares of common stock at their current exercise price of $2.50 per share. If these warrants are exercised, the proceeds of $2.5 million would be used for capital expenditures, debt repayment and general corporate purposes. Such warrants are currently exercisable for unregistered shares of the Company's common stock and contain registration rights. There can be no assurance that such warrants will be exercised. The Company believes that the funds available from operations, including the operations of Metro, together with any net proceeds from the Offering, exercise of warrants or increases in credit lines, together with the funds available from operations, including the operations of Metro, should be adequate to finance its operations, pay its accrued registration costs and enable the Company to meet operating requirements and interest and debt obligations through its fiscal year ending June 30, 1998. In conjunction with the Company's acquisition and growth strategy, additional financing may be required to complete any such acquisitions and to meet potential contingent acquisition payments. There can be no assurance, however, that such capital, if required, will be available on terms acceptable to the Company, if at all. Further, there can be no assurances that the Offering will be consummated, or that stockholders will exercise warrants, or that an increase in credit lines will be obtained. 15 PART II - OTHER INFORMATION ITEM 2 - CHANGES IN SECURITIES - ------------------------------ On December 23, 1996, the Company and certain of its securityholders effected a recapitalization of the Company's capital stock, whereby: (i) the Company's Series B Convertible Preferred Stock, par value $.01 per share (the "Series B Preferred Stock"), was converted, in accordance with its terms without the payment of additional consideration, into 2,480,000 shares of Common Stock; (ii) the Company's Series C Convertible Preferred Stock, par value $.01 per share (the "Series C Preferred Stock"), was repurchased for promissory notes in an aggregate principal amount of $1.0 million, which promissory notes bear interest at a rate of 8% per annum and are repayable on demand at any time from and after the date of the consummation of an underwritten public offering by the Company of Common Stock, but in any event such notes mature June 7, 1998; (iii) all accrued interest on the Series B Preferred Stock and the Series C Preferred Stock was converted into 88,857 shares of Common Stock; (iv) warrants related to the Series C Preferred Stock, currently exercisable for 3,000,000 shares of Common Stock, were exchanged for 600,000 shares of Common Stock; and (v) options held by two of the Company's principal executive officers to purchase 300,000 shares of common stock were canceled at no cost to the Company. ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ------------------------------------------------------------ On August 14, 1996 the Company held a Special Meeting of Shareholders to vote on management's proposal to amend the Company's Amended and Restated Articles of Incorporation to increase the number of authorized shares of Common Stock of the Company from 6,250,000 shares to 36,250,000 shares. The shares voted were as follows: For 2,276,607 Against 99,424 Abstentions 2,419 Broker non-votes None
16 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K - ----------------------------------------- a) Exhibits
Exhibit Exhibit Number Item -------------- - ------- ----- (See Notes) (*) 2.1 Agreement and Plan of Merger dated as of B (2.1) October 1, 1996 between All-Comm Media Corporation, Metro Services Group, Inc., Metro Merger Corp. and the Shareholders named therein 3.1 Certificate of Designation for Series C A (3.7) Convertible Preferred Stock 10.1 Form of promissory note of All-Comm Media B (2.1) Corporation issued to former shareholders of Metro Services Group, Inc. (included in Exhibit 2.1) 10.2 Form of Registration Rights Agreement dated B (2.1) as of October ___, 1996 between All-Comm Media Corporation and the Shareholders named therein (included in Exhibit 2.1) 10.3 Amendment No. 1 to the Registration Rights C Agreement dated as of October 9, 1996 10.4 Form of Employment Agreement between Metro B (2.1) Services Group, Inc. and Mr. J. Jeremy Barbera (included in Exhibit 2.1) 10.5 Form of Employment Agreement between Metro B (2.1) Services Group, Inc. and Mr. Robert M. Budlow (included in Exhibit 2.1) 10.6 Form of Employment Agreement between Metro B (2.1) Services Group, Inc. and Ms. Janet Sautkulis (included in Exhibit 2.1) 10.7 Form of Series C Convertible Preferred Stock A (10.26) Private Placement Purchase Agreement 10.8 Form of Warrant Certificate Issued to holders A (10.26) of Series C Convertible Preferred Stock (included in Exhibit 10.7) 10.9 Form of letter dated September 10, 1996 C rescinding Private Placement Agreement dated June 7, 1996 10.10 Form of Series B Conversion Agreement A (10.30) 10.11 Form of Warrant Cancellation Agreement A (10.31) 10.12 Form of Series C Repurchase and Exchange A (10.32) Agreement 10.13 Form of Option Cancellation Agreement A (10.33) 10.14 Form of Amended and Restated Series B A (10.34) Conversion Agreement 10.15 Form of Amended and Restated Series C A (10.35) Repurchase and Exchange Agreement 10.16 Form of Amended and Restated Option A (10.36) Cancellation Agreement 10.17 Loan Agreement and Credit Facility, dated D December 27, 1996, by and between Stephen Dunn & Associates, Inc. and 1/st/ Business Bank 11.1 Statement Regarding Computation of Net Income D Per Share 27.1 Financial Data Schedule D
17 Notes relating to Exhibits A Incorporated by reference to the Company's Registration Statement on Form SB-2, filed on October 17, 1996. B Incorporated by reference to the Company's Report on Form 8-K dated October 11, 1996. C Incorporated by reference to the Company's Report on Form 10-QSB for the quarter ended September 30, 1996. D Filed herewith. * Numbers in parentheses next to any of the above letters A and B refer to the exhibit numbers within each document from which the Exhibit is incorporated by reference herein. b) Reports on Form 8-K 1. On or about October 11, 1996, the Company filed a Current Report on Form 8-K regarding the acquisition of Metro Services Group, Inc. ("Metro") for 1,814,000 shares of the Company's common stock, par value $.01 per share, valued at $7,256,000, and promissory notes having an aggregate face value of $1,000,000. Audited financial statements of Metro were incorporated by reference to the Company's Form SB-2 Registration Statement filed on October 17, 1996 and included: balance sheets as at December 31, 1995 and June 30, 1996 (unaudited); statements of operations for the years ended December 31, 1995 and 1994 and the (unaudited) six months ended June 30, 1996 and 1995; statements of shareholders' equity deficit or the years ended December 31, 1995 and 1994 and the (unaudited) six months ended June 30, 1996; statements of cash flows for the years ended December 31, 1995 and 1994 and the (unaudited) six months ended June 30, 1996 and 1995; and the related notes thereto. 2. On or about November 26, 1996, the Company filed a Current Report on Form 8-K regarding recapitalization of the Company's capital stock. 18 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ALL-COMM MEDIA CORPORATION (Registrant) By /s/ Barry Peters ------------------------- Barry Peters Chairman of the Board and Chief Executive Officer Date: February 18, 1997 19 EX-10.7 2 LOAN AGREEMENT December 27, 1996 Exhibit 10.7 Mr. Tom Scheir Executive Vice President Stephen Dunn & Associates, Inc. 1728 Abbot Kinney Blvd. Venice, CA 90291-4839 RE: Loan Agreement This Agreement ("Agreement") is made and entered into as of December 27, 1996 by and between STEPHEN DUNN & ASSOCIATES, INC., a California Corporation and all its subsidiaries ("Borrower"), and 1ST BUSINESS BANK, a California banking corporation ("Bank"). SECTION I: THE CREDIT FACILITY ------------------- 1.1 LINE OF CREDIT. This will confirm the availability until September 30, -------------- 1997, a line of credit commitment ("Line") not to exceed Seven Hundred Fifty Thousand dollars ($750,000) by Bank to Borrower for its normal short-term working capital requirements. Upon the request of Borrower, made at any time and from time to time during the term hereof and so long as no Event of Default has occurred under this Agreement, Bank shall lend to Borrower, up to Sixty Five percent (65%) of the net amount of Borrower's Eligible Accounts (as defined herein) provided, however, that in no event shall Bank be obligated to make advances to Borrower whenever the aggregate amount of advances exceeds or would exceed, at any one time the sum of Seven Hundred Fifty Thousand dollars ($750,000). For purposes of this Agreement, the term "Accounts" shall mean and include all presently existing and hereafter arising accounts of Borrower as defined in the Bank's General Security Agreement which is attached as Exhibit A to this Agreement. For purposes of this Agreement, the term "Eligible Accounts" shall mean and include those Accounts which are due and payable pursuant to the written terms for payment expressly set forth on the face of the invoices corresponding to such Accounts, within Ninety (90) Days or less from the date of invoice, or within Sixty (60) Days or less from the due date expressly set forth on the invoice corresponding to such Accounts, whichever is less, and have been validly assigned to Bank and strictly comply with all of Borrower's warranties and representations to Bank, but Eligible Accounts shall not include the following: (a) Accounts with respect to which the account debtor is an officer, employee or agent of Borrower; (b) Accounts with respect to which goods are placed on consignment, guaranteed sale or other terms by reason of which the payment by the account debtor may be conditional; (c) Accounts with respect to which the account debtor is not a resident of the United States; (d) Accounts with respect to which the account debtor is the United States or any department, agent, or instrumentality of the United States; (e) Accounts with respect to which the account debtor is a subsidiary of, related to, affiliated or has common officers or directors with Borrower; (f) Accounts with respect to which Borrower is or may become liable to the account debtor for goods sold or services rendered by the account debtor to Borrower; (g) that portion of the Accounts owed by any single account debtor which exceeds ten (10) percent of all the accounts; and (h) Accounts deemed ineligible as defined in this Agreement. For purposes of this Agreement, the Bank may deem ineligible "Ineligible Accounts" any Account owing by an account debtor if (a) any Account of that account debtor does not comply with Borrower's representations and warranties stated in Section III of this Agreement; (b) thirty percent (30%) or more of the aggregate dollar amount of the Account of that account debtor is not paid by that account debtor within the lesser of Ninety (90) days from the date of invoice or Sixty (60) days from the due date expressly set forth in the invoices corresponding to such Accounts; (c) that account debtor disputes liability or makes any claim with respect to any of its Accounts; (d) any Insolvency Proceeding is filed by or against that account debtor or; (e) that account debtor becomes insolvent, fails or goes out of business. 20 At maturity on September 30, 1997, and from time to time thereafter, the Bank may, in its sole and absolute discretion, renew the Line on such terms and on such conditions as the bank may require. In the event the Bank requires terms and/or conditions, including but not limited to a change in financial covenants, inconsistent with this Agreement, this Agreement shall be amended and modified by the parties hereto as a condition precedent to any such renewal or renewals. Borrower shall execute Bank's standard revolving promissory note (the "Note"), and each disbursement in a minimum amount of at least $50,000, under the Note shall be made during the availability period in accordance with the Bank form of authorization to disburse executed by the Borrower. The Bank shall enter each amount borrowed and repaid on the back of the Note and such entries shall be prima facie evidence of the amount of the Line outstanding. Bank may use an alternate method to evidence the amount of the Line outstanding. Borrower agrees that for at least 30 consecutive days during each twelve month period, loan under the revolving line of credit shall be repaid in full. 1.2 LINE OF CREDIT INTEREST. Interest on the outstanding principal balance on ----------------------- the Note shall be payable monthly beginning on the last day of the month in which the loan funds. Interest on the Note shall be payable at 1st Business Bank's Reference Rate of Interest plus 1/2%, which is the rate announced by Bank from time to time at its Corporate Headquarters as its Reference Rate, and which shall vary concurrently with any change in such rate as announced by bank. Interest hereunder shall be calculated on the basis of a 360 day year on the actual number of days elapsed. 1.3 TERM LOAN. Subject to the terms of this agreement, this will confirm the --------- availability of a term loan ("Term Loan") in the amount of One Hundred Twenty- five Thousand and no/100 Dollars ($125,000) payable in 35 equal monthly principal installments of $3,473.00 each beginning January 31, 1997. All principal and interest remaining unpaid on this term loan on December 31, 1999, shall become immediately due and payable. The term loan proceeds shall be used to finance capital assets for the Borrower's Berkeley facility. The Term Loan shall be evidenced by a Promissory Note (the "Term Note") on the form used by Bank for such purposes. 1.4 TERM LOAN INTEREST. Interest on the Term Note shall be payable monthly ------------------ beginning on the last day of the month in which the loan funds. Interest on the Term Note shall be payable at 1st Business Bank's Reference Rate of Interest plus 3/4%, which is the rate announced by Bank from time to time at its Corporate Headquarters as its Reference Rate, and which shall vary concurrently with any change in such rate as announced by Bank. Interest hereunder shall be calculated on the basis of a 360 day year on the actual number of days elapsed. 1.5 DEFINITION. The Line as evidenced by the Note and the Term Loan as ---------- evidenced by the Term Note shall hereafter be referred to collectively "Loan" or "Loans". 1.6 SECURITY. Borrower shall grant or cause to be granted to Bank a first -------- priority security interest on the following assets subject only to such exceptions as are acceptable to Bank: Accounts, Inventory, Equipment, General Intangibles, and any Money, Deposit accounts or other assets of Borrower in which Bank receives a security interest or which hereafter comes into the possession or control of Bank. Security for the payment and performance of all sums and all other obligations under the Loan shall be evidenced by the documents executed by Borrower and/or accommodation pledgor in connection with the Loan, as required by Bank. Collateral shall be security for all obligations to Bank. Bank shall be named as Loss Payee on the insurance policies covering such collateral. Copies of such policies showing Bank as Loss Payee shall be delivered to Bank within thirty (30) days of the date of this Agreement. SECTION II. CONDITIONS PRECEDENT TO THE LOAN -------------------------------- Before Bank is obligated to make any advance, Bank must receive all of the following, each of which must be in form and substance satisfactory to Bank: 21 2.1 LINE OF CREDIT. The original, executed Note; -------------- 2.2 TERM LOAN. The original, executed Term Note; --------- 2.3 BORROWING RESOLUTION. Borrower shall have provided Bank with certified -------------------- copies of resolutions duly adopted by the Board of Directors of Borrower, authorizing this Agreement and all things required of Borrower pursuant to this Agreement. Such resolutions shall also designate the persons who are authorized to act on Borrower's behalf in connection with this Agreement and to do the things required of Borrower pursuant to this Agreement; 2.4 SECURITY INSTRUMENTS / FINANCING STATEMENTS. Original, executed security ------------------------------------------- agreement(s) and financing statement(s) covering the collateral securing the Loan; 2.5 EVIDENCE OF SECURITY. Evidence that the security interests and liens in -------------------- favor of Bank are valid, enforceable, and prior to the rights and interest of others except those consented to in writing by Bank; 2.6 EVIDENCE OF INSURANCE. Evidence acceptable to the bank that the property --------------------- to be provided as collateral is covered by adequate insurance with companies acceptable to Bank and that the Bank is loss payee under such insurance. 2.7 GUARANTEES. Continuing guarantees on the Bank's standard form in favor of ---------- Bank, executed by: Borrower's parent company, All-Comm Media Corporation, Inc., the "Guarantor", in the amount of Eight Hundred Seventy Five Thousand and no/100 Dollars ($875,000); 2.8 SUBSIDIARIES. In the event of a creation or acquisition of a subsidiary, ------------ Borrower will cause said subsidiary to provide Bank with guarantee and other necessary documents to perfect a first priority security interest in its assets as required by Bank. 2.9 BORROWER'S CERTIFICATE. Prior to the disbursement of Loan proceeds, ---------------------- Borrower shall execute a certificate that 1) all representations and warranties as listed are true and correct, 2) no event of default has occurred. This document shall be executed by a duly authorized officer. 2.10 EVIDENCE OF AUTHORITY. Evidence that the execution, delivery and --------------------- performance by Borrower of this Agreement and the execution, delivery and performance by Borrower and any corporate guarantor or corporate subordinating creditor of any instrument or agreement required under this Agreement, as appropriate, have been duly authorized by a certified copy of a resolution of the Board of Directors of such corporation(s). SECTION III. REPRESENTATIONS AND WARRANTIES ------------------------------ Borrower represents and warrants (and each request for an advance shall be deemed a continuing representation and warranty made by Borrower on the date of such request) that: 3.1 ORGANIZATION / AUTHORIZATION / POWER. Borrower is a California Corporation ------------------------------------ duly organized and existing under the laws of the state of its organization and the execution, delivery and performance of this Agreement are within Borrower's powers, have been duly authorized, and are not in conflict with the terms of any organization papers of Borrower; 3.2 AUTHORITY TO BORROW. The execution, delivery and performance of this ------------------- Agreement are not in conflict with any law or any indenture, agreement or undertaking to which Borrower is a party or by which Borrower is bound or affected; 3.3 CONDITIONS TO FUTURE DISBURSEMENTS. On the date any disbursement is ---------------------------------- requested by Borrower under the loan facility set forth in Section I: (i) all representations and warranties contained in Section III hereof shall be true and correct as if made on such date; and (ii) there shall not exist, after giving effect to such disbursement, any event, 22 condition or act which contributes an Event of Default or which with notice, lapse of time or both, would constitute an Event of Default; 3.4 FINANCIAL STATEMENT. All financial information submitted by Borrower to ------------------- Bank, has been prepared according to Generally Acceptable Accounting Principles on an accrual basis. In addition, Borrower represents and warrants that the financial statements presented to Bank, whether previously or in the future, is and will be true and correct in all material respects upon submission and is and will be complete upon submission insofar as may be necessary to give Bank a true and accurate knowledge of the subject matter thereof; 3.5 QUALIFICATION. Borrower is properly licensed and in good standing in each ------------- state in which Borrower is doing business, and Borrower has qualified under, and complied with, where required, the fictitious name statute of each state in which Borrower is doing business; 3.6 LITIGATION. There is no litigation or proceeding pending or threatened ---------- against Borrower or any of its property, the results of which, if decided adversely, might substantially affect the financial condition, property, or business of Borrower in an adverse manner or result in liability in excess of Borrower's insurance coverage; 3.7 DEFAULT. There is no event which is, or with notice of lapse of time or ------- both would be, an Event of Default under the Agreement; 3.8 ERISA. As of the date hereof all Borrower's defined benefit pension plans, ----- as defined in the Employees Retirement Income Security Act of 1974 and amended ("ERISA"), meet the minimum funding standards of Section 302 of ERISA, with no occurrences of Reportable Events or Prohibited Transactions as Defined in ERISA with respect to any such plan. SECTION IV: COVENANTS --------- Borrower agrees, so long as the Loan is available and until full and final payment of the Loan, Borrower will: 4.1 USE OF PROCEEDS. Use the net proceeds of the Loans only for general --------------- corporate purposes in the conduct of the business in which it is presently engaged or in which it presently proposes to engage and, in regard to the Term Loan proceeds, for the purpose set forth in section 1.3 of the Agreement; 4.2 TANGIBLE NET WORTH. Maintain at all times, a minimum Tangible Net Worth of ------------------ One Million Dollars ($1,000,000) on a consolidated basis. Calculations to determine compliance with this Section shall be made as of the end of each fiscal quarter. "Tangible Net Worth" as used herein, shall mean book net worth after deducting patents, trade names, trademarks, goodwill, intangible assets, cost in excess of book value of acquired companies, unamortized debt discount and expense, organization expenses, due from officers, stockholders, employees, affiliate(s), subsidiary(s), and parent company ("All-Comm Media Corporation"), and capitalized research and development; 4.3 DEBT TO TANGIBLE NET WORTH. Maintain a ratio of Total Liabilities to -------------------------- Tangible Net Worth of not greater than 1.5 to 1.0, as measured at the end of each fiscal quarter. "Total Liabilities" as used herein shall mean those liabilities which are so classified by Borrowe's certified public accountant in accordance with Generally Accepted Accounting Principles, except that debt subordinated to Bank shall be excluded from Total Liabilities; 4.4 WORKING CAPITAL; CURRENT RATIO. Maintain a minimum Net Working Capital ------------------------------ equal to at least Nine Hundred Thousand Dollars ($900,000) and a ratio of Current Assets over Current Liabilities of at least 1.5 to 1.0, both on a consolidated basis. "Net Working Capital", as used herein, shall mean the excess of Current Assets over Current Liabilities of Borrower (and its Subsidiaries). "Current Assets" and "Current Liabilities", as used herein, shall mean those assets and liabilities which are so classified by the Borrower's certified public accountant in accordance with generally accepted accounting principles, except that prepaid assets, and any amounts due from Employees, Affiliates, Officers, Related Parties, and other like current assets shall be excluded from Current Assets for purposes of this calculation; 23 4.5 PROFITABILITY. Maintain during the term of this Agreement, a minimum net ------------- income equal to at least Two Hundred Thousand Dollars ($200,000) for Borrower's fiscal year ending 6/30/97 and for each subsequent fiscal year thereafter. Net income for purposes of this Agreement shall mean net income after taxes, as calculated by Generally Accepted Accounting Principles, less the sum of any dividends paid by Borrower during the preceding twelve (12) month period; 4.6 CASH FLOW. Beginning 12/31/96, Borrower shall maintain a minimum net cash --------- flow equal to at least Four Hundred Percent (400%) of debt service, if any. Calculations to determine compliance with this section shall be made as of the end of each fiscal quarter and on a consolidated basis. "Net Cash Flow" as used herein, shall mean the sum of: (i) net income of Borrower, after taxes and dividends, earned during the previous twelve (12) months ending with the applicable fiscal quarter, plus; (ii) the amount of depreciation and amortization charges, computed for the previous twelve (12) months ending with the applicable fiscal quarter. "Debt Service" as used herein, shall mean the sum of; (i) the principal payments due within the twelve (12) months of the applicable fiscal quarter end on all long term debt, plus; (ii) rental payments due within twelve (12) months or the applicable fiscal quarter end on all long term capital leases. "Long term Debt" and "Long Term Capital Leases", as used herein, shall mean those debt and lease obligations or renewals or extensions thereof whose original terms exceed one (1) year. 4.7 FIXED OR CAPITAL ASSETS. Not, in any single fiscal year of Borrower, ----------------------- expend or incur obligations of more than Two Hundred Seventy Thousand Dollars ($270,000) for the acquisition of Fixed or Capital Assets, without the Bank's consent in writing. 4.8 LEASE OBLIGATIONS. Not, in any single fiscal year of Borrower, enter into ----------------- the lease of any personal or real property which would cause Borrower's aggregate annual obligations in excess of that amount reflected on the June 30, 1996 financial statement; 4.9 NOTICE. Give written notice to Bank within fifteen (15) days of: ------ Any litigation affecting Borrower where the amount is Fifty Thousand Dollars ($50,000) or more; Any substantial dispute which may exist between Borrower and any governmental regulatory body or law enforcement authority; Any Event of Default under the Loans or any event which upon notice or a lapse of time or both, would become an Event of Default; Any other matter which has resulted or might result in a material adverse change in Borrower's financial condition or operations; and Any change in Borrower's name or principal place of business; 4.10 INTERIM FINANCIAL STATEMENTS. Furnish within 30 days after the close of ---------------------------- each fiscal quarter, its financial statement as of the close of that quarter prepared internally by Borrower's chief financial officer in accordance with generally accepted accounting principles and signed by Borrower's chief financial officer; 4.11 ANNUAL FINANCIAL STATEMENT. Furnish within 90 days after the close of -------------------------- each fiscal year, a copy of its financial statement prepared on an AUDITED basis in accordance with generally accepted accounting principles applied on a basis consistent with the previous year by its independent Certified Public Accountant selected by Borrower and reasonably satisfactory to Bank. For purposes of this covenant, the annual audited statement of All- 24 Comm Media Corporation will satisfy this requirement, providing such audited statement includes consolidating statements of Borrower; 4.12 GUARANTOR FINANCIAL STATEMENT. Borrower shall cause Guarantor to submit ----------------------------- no later than 90 days after the end of each calendar year, the Guarantor's Audited financial statements and Form 10-K Annual Report, and to submit no later than 60 days after the end of each calendar quarter, the Guarantor's Form 10-Q Quarterly Report. 4.13 DEPOSITORY RELATIONSHIP. Maintain its primary banking deposit ----------------------- relationship with Bank while any loans are outstanding and while any loan commitment exists with Bank with the exception of a local depository account(s) for change orders, payroll, petty cash needs, and/or merchant bank card deposits; 4.14 PHYSICAL MAINTENANCE OF ASSETS. Maintain and preserve all material ------------------------------ rights, privileges franchises now enjoyed, conduct Borrower's business in an orderly, efficient and customary manner, keep all Borrower's properties in good working order and condition, and from time to time make all needed repairs, renewals or replacements so that the efficiency of Borrower's properties shall be fully maintained and preserved; 4.15 INSURANCE. Maintain and keep in adequate amounts such insurance, with --------- carriers reasonably acceptable to Bank, which is usual in the business carried on by Borrower. Bank shall be shown as loss payee on insurance policies; 4.16 RECORDS. Maintain adequate books, accounts and records and prepare all ------- financial statements required hereunder in accordance with generally accepted accounting principles and practices consistently applied, and in compliance with the regulations of any governmental regulatory body having jurisdiction over Borrower or Borrower's business and permit employees or agents of Bank at any reasonable time to inspect Borrower's properties and to examine or audit Borrower's books, accounts and records and make copies and memoranda thereof; 4.17 REPORTS UNDER PENSION PLANS. For all Borrower's defined benefit pension --------------------------- plans as defined in the Employees Retirement Income Security Act of 1974, as amended, ("ERISA"), meet, at all times, the minimum funding standards of Section 302 of ERISA, and no Reportable Event or Prohibited Transaction as defined in ERISA will occur with respect to any such plan; 4.18 COMPLIANCE WITH LAWS, ETC. At all times comply with, or cause to be -------------------------- complied with, all laws, statutes, rules, directions of any governmental authority having jurisdiction over Borrower or Borrower's business. 4.19 LOANS / ADVANCES / GUARANTEES. Except as herein provided, or in the ----------------------------- ordinary course of business as currently conducted; not make any loans or advances, become a guarantor or surety, pledge its credit or properties in any manner, or extend credit to a parent corporation or any other entity; 4.20 ENCUMBRANCES AND LIENS. Not create, assume or suffer to exist any ---------------------- mortgage, encumbrance. security interest, pledge, or other lien, securing a charge or obligation, on or in any of Borrower's property, real or personal, whether now owned or hereafter acquired, except as approved, in writing, by Bank, except for such transactions as may be incurred in the ordinary course of business and except for any mortgage debt outstanding as of the date of this Agreement; 4.21 BORROWINGS. Not sell or discount any receivables or evidence of ---------- indebtedness except to Bank; borrow any money, incur directly or indirectly, any liabilities for borrowed money, except pursuant to agreements made with the Bank; 4.22 LIQUIDATION OR MERGER. Neither liquidate, dissolve, enter into any --------------------- consolidation, merger, partnership or other combination; nor convey, sell or lease all or the greater part of its assets or business; not purchase or lease all or the greater part of the assets or business of another; 25 4.23 UNRELATED BUSINESS ACTIVITIES. Not engage in any business activities or ----------------------------- operations substantially different from or unrelated to present business activities and operations. SECTION V. EVENTS OF DEFAULT ----------------- The occurrences of any of the following events ("Events of Default") shall terminate any obligation on the part of Bank to make or continue the Loans and, at the option of Bank, shall make all sums of interest and principal outstanding under the Loans immediately due and payable, without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor or other notices or demands of any kind or character; 5.1 PRINCIPAL AND INTEREST PAYMENT. Borrower shall default in the due and ------------------------------ punctual payment of the principal of or the interest on the Loan(s) or any renewal thereof and such default shall not be cured within ten (10) days after the occurrence thereof; or 5.2 FALSE REPRESENTATIONS. Any representation or warranty made by Borrower --------------------- herein or in any certificate or financial or other statement heretofore or hereafter furnished by Borrower or its officers or any Guarantor shall prove to be in any material respect false and misleading; or 5.3 VIOLATION OF COVENANTS. Default shall be made by Borrower in the due ---------------------- performance or observance of any covenant or condition of the Loans and such default shall not, within ten (10) days after Borrower has knowledge thereof have been cured; or 5.4 INSOLVENCY. The filing by Borrower of any petition under the bankruptcy ---------- reorganization, arrangement, insolvency or other debtor's relief laws, or the filing against Borrower of any such petition or the appointment of a receiver, trustee or liquidator of all or a substantial part of Borrower's assets if the filing against Borrower is not dismissed within thirty (30) days thereafter; or 5.5 ASSIGNMENT. The making by Borrower of an assignment for the benefit of ---------- creditors; or 5.6 SUSPENSION OF BUSINESS. The voluntary suspension of business by Borrower; ---------------------- or 5.7 REVOCATION OF GUARANTEE / SUBORDINATION. Any guarantee or subordination --------------------------------------- agreement required hereunder is breached or becomes ineffective, or any Guarantor or subordinating creditor disavows or attempts to terminate such guarantee or subordination agreement; or 5.8 MATERIAL ADVERSE CHANGE. It in the opinion of Bark, there is a materially ----------------------- adverse change in the financial condition of Borrower or any Guarantor, or for any reason Bank believes that the prospect of payment or performance pursuant to the Loans, any other indebtedness of Borrower to Bank, or any other agreement or instrument required by Bank in connection with the Loans has been impaired; or 5.9 MANAGEMENT CONTROL. If there is a change in senior management (defined as ------------------ Tom Scheir or Bill Savage), or in ownership or control of any of the issued and outstanding common stock of the Borrower; or 5.10 DEFAULTS UNDER OTHER AGREEMENTS. Borrower shall commit or do or fail to ------------------------------- commit Agreements or do, any act or thing which would constitute an event of default under any of the terms of any other agreement, document or instrument executed, or to be executed by it and concerning the obligation to pay money; or 5.11 MANDATORY DEFAULT PROVISION. Notwithstanding anything to the contrary --------------------------- contained herein, Bank shall have no duty to make advances under the Loans or otherwise during any cure period provided for above. SECTION VI MISCELLANEOUS ------------- 6.1 APPLICABLE LAW. The Loans, and any instrument or agreement required under -------------- it, shall be governed by and construed under the laws of the State of California. 26 6.2 DOCUMENTATION. All advances or loans shall be evidenced by Bank's standard ------------- forms of documentation and the terms and conditions of this letter are supplemental to such documentation. However, in the event of any conflict between the terms of any of the documents and this Agreement, the terms of the document shall prevail. The Bank's rights herein are cumulative, and the exclusion of a right for one document when contained in another is not intended to be a waiver. 6.3 LITIGATION AND ATTORNEYS' FEES. Borrower will pay promptly to Bank without ------------------------------ demand, attorneys' fees including but not limited to the reasonable estimate of the allocated costs and expenses of in-house legal counsel and legal staff and all costs and other expenses paid or incurred by Bank in collecting or compromising the Loans or in enforcing or exercising its rights or remedies created by, connected with or provided in the Agreement or any other agreement or instrument required by Bank in connection with the Loans, whether or not suit is filed. If suit is filed, only the prevailing party shall be entitled to attorneys' fees and court costs. ACCEPTANCE: If you agree to accept the terms of this Agreement, please sign the Agreement and return it on or before the expiration date of this Agreement which is September 30, 1997. 1ST BUSINESS BANK By: /s/ Steven D. Sefton By: /s/ Robert W. Kummer, Jr. ---------------------- --------------------------- Steven D. Sefton Robert W. Kummer, Jr. Vice President Chairman - -------------------------------------------------------------------------------- AGREED AND ACCEPTED THIS 27TH DAY OF DECEMBER, 1996: STEPHEN DUNN & ASSOCIATES, INC. By: /s/ Tom Scheir ------------------------- Tom Scheir Executive Vice President Address where notices to Bank Address where notices to Borrower are to be sent: are to be sent: 1st Business Bank Stephen Dunn & Assoc.,Inc. 601 West 5th Street 1728 Abbot Kinney Blvd. Los Angeles, CA 90071 Venice, CA 90291-4839 27 EX-11.1 3 STATEMENTS REGARDING COMPUTATION OF NET LOSS Exhibit 11.1 STATEMENTS REGARDING COMPUTATION OF NET LOSS PER SHARE
Three Months Ended Six Months Ended December 31 December 31 ---------------------------- --------------------------- 1996 1995 1996 1995 ------------- ------------ ------------- ----------- Net loss per share was calculated as follows: Net loss $ (745,609) $ (770,508) $ (2,740,090) $ (906,534) Periodic non-cash accretions on redeemable convertible preferred stock (368,723) (786,803) Non-cash, non-recurring dividends on conversions of redeemable preferred B stock (8,466,412) (8,466,412) Non-recurring dividends on repurchase of redeemable preferred C stock (573,305) (573,305) Net loss attributable to common stockholders (10,154,049) (770,508) (12,566,610) (906,534) Primary: Weighted average common shares outstanding 5,423,871 3,022,542 4,319,377 3,019,407 Incremental shares under stock options computed under the treasury stock method using the average market price of the issuer's common stock during the periods 2,076,221 50,854 2,115,340 41,609 Weighted average common and common equivalent shares outstanding unless antidilutive 5,423,871 3,022,542 4,319,377 3,019,407 Net loss per common share (1.87) (.25) (2.91) (.30) Fully diluted: Weighted average common shares outstanding 5,423,871 3,022,542 4,319,377 3,019,417 Incremental shares under stock options computed under the treasury stock method using the market price of the issuer's common stock at the end of the periods if higher than the average market price 2,076,221 59,098 2,115,340 41,609 Weighted average common and common equivalent shares outstanding unless antidilutive 5,423,871 3,022,542 4,319,377 3,019,417 Net loss per common share (1.87) (.25) (2.91) (.30)
EX-27 4 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF ALL-COMM MEDIA CORPORATION AS OF AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1996 INCLUDED IN THIS REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS U.S DOLLARS 6-MOS JUN-30-1997 JUL-01-1996 DEC-31-1996 1 771,949 0 430,731 46,000 0 5,308,752 880,302 (103,906) 23,093,192 5,654,755 0 0 0 82,861 13,985,705 23,093,192 9,845,679 9,845,679 1,941,820 1,941,820 10,476,402 0 248,164 (2,716,151) 23,939 (2,740,090) 0 0 0 (2,740,090) $(2.91) $(2.91)
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