-----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, MZIOLki33JxbI/kDYkTKiI1KEf+wJ7oglt8b5me7mSSO52eyS0KnhkULzND30v/M HY8QWsaKHDzsukTohUvCBw== 0000950148-97-000166.txt : 19970127 0000950148-97-000166.hdr.sgml : 19970127 ACCESSION NUMBER: 0000950148-97-000166 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19970124 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/A SEC ACT: 1934 Act SEC FILE NUMBER: 001-01768 FILM NUMBER: 97510281 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/A 1 FORM 10QSB/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB/A [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 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 Identification No.) of incorporation or organization) 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 November 12, 1996, there were 5,105,407 shares of the Registrant's common stock outstanding. 1 2 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES TABLE OF CONTENTS FORM 10-QSB REPORT SEPTEMBER 30, 1996
PART I - FINANCIAL INFORMATION Page ---- Item 1 Interim Condensed Consolidated Financial Statements (unaudited) Condensed Consolidated Balance Sheets - September 30, 1996 and June 30, 1996 3 Condensed Consolidated Statements of Operations - Three months ended September 30, 1996 and 1995 4 Condensed Consolidated Statements of Cash Flows - Three months ended September 30, 1996 and 1995 5 Notes to Interim Condensed Consolidated Financial Statements 6-9 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-12 PART II - OTHER INFORMATION Item 4 Submission of Matters to a Vote of Security Holders 13 Item 6 Exhibits and Reports of Form 8-K (a) Exhibits 14 (b) Reports on Form 8-K 15 Signatures 16 Exhibit 11.1 Statements Regarding Computation of Net Loss Per Share Exhibit 27.1 Financial Data Schedule
2 3 PART I - FINANCIAL INFORMATION ITEM 1 - INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)
September 30, 1996 June 30, 1996 ASSETS (as restated) (as restated) - ------ ------------ ------------ Current assets: Cash and cash equivalents $ 1,180,129 $ 1,393,044 Accounts receivable, net of allowance for doubtful accounts of $6,000 at September 30 and $34,906 at June 30 1,864,425 2,681,748 Land held for sale at cost 921,465 Other current assets 560,968 107,658 ------------ ------------ Total current assets 3,605,522 5,103,915 Property and equipment at cost, net 494,031 299,045 Intangible assets at cost, net 7,755,414 7,851,060 Other assets 35,846 47,046 ------------ ------------ Total assets $ 11,890,813 $ 13,301,066 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term borrowings $ 102,224 $ 500,000 Trade accounts payable 317,228 470,706 Accrued salaries and wages 420,773 706,039 Other accrued expenses 485,404 758,112 Income taxes payable 10,000 Long-term obligations to related party, current portion 700,000 583,333 Related party payable 425,000 ------------ ------------ Total current liabilities 2,025,629 3,453,190 Long-term obligations to related party less current portion 1,341,667 1,516,667 Other liabilities 111,105 80,315 ------------ ------------ Total liabilities 3,478,401 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; 2,000 shares of Series C Convertible Preferred Stock issued and outstanding 1,667,434 1,306,358 ------------ ------------ Stockholders' equity: Convertible preferred stock, $.01 par value; 50,000 shares authorized, 8,200 redeemable shares outstanding -- -- Common stock - authorized 6,250,000 shares of $.01 par value at June 30, 1996, increased in August 1996 to 36,250,000; 3,303,207 and 3,198,534 shares issued, respectively 33,032 31,985 Additional paid-in capital 14,967,396 13,173,520 Accumulated deficit (8,119,981) (6,125,500) Less 11,800 shares of common stock in treasury, at cost (135,469) (135,469) ------------ ------------ Total stockholders' equity 6,744,978 6,944,536 ------------ ------------ Total liabilities and stockholders' equity $ 11,890,813 $ 13,301,066 ============ ============
See Notes to Condensed Consolidated Financial Statements. 3 4 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (unaudited)
1996 1995 ----------- ----------- (as restated) Revenues $ 3,932,030 $ 3,926,438 ----------- ----------- Operating costs and expenses: Salaries and benefits 4,953,499 3,161,669 Direct costs 145,230 129,713 Selling, general and administrative 544,636 386,575 Professional fees 168,187 145,428 Amortization of intangible assets 95,646 90,226 ----------- ----------- Total operating costs and expenses 5,907,198 3,913,611 ----------- ----------- Income (loss) from operations (1,975,168) 12,827 ----------- ----------- Other income (expense): Gain from sale of land 90,021 Interest income 9,561 3,244 Interest expense (114,917) (98,802) ----------- ----------- Total (15,335) (95,558) ----------- ----------- Loss before income taxes (1,990,503) (82,731) Provision for income taxes (3,978) (53,295) ----------- ----------- Net loss $(1,994,481) $ (136,026) =========== =========== Net loss per common share $ (.62) $ (.05) =========== =========== Weighted average common and common equivalent shares outstanding 3,214,884 3,016,028 =========== ===========
See Notes to Condensed Consolidated Financial Statements. 4 5 ALL-COMM MEDIA CORPORATION AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (unaudited)
1996 1995 ----------- ----------- Operating activities: (as restated) Net loss $(1,994,481) $ (136,026) Adjustments to reconcile loss to net cash provided by (used in) operating activities: Gain from sale of land (90,021) Depreciation 38,086 44,863 Amortization 95,646 90,226 Option issuances to two principal executive officers 1,650,000 Warrant issuances to consultants 76,000 Accrued interest on redeemable convertible preferred stock 66,500 Changes in assets and liabilities: Accounts receivable 817,323 208,627 Other current assets (128,310) (9,326) Other assets (6,500) (4,087) Trade accounts payable (153,478) (28,106) Accrued expenses and other current liabilities (749,942) (64,249) Income taxes payable (10,000) (19,838) ----------- ----------- Net cash provided by (used in) operating activities (389,177) 82,084 ----------- ----------- Investing activities: Net proceeds from sale of land 860,443 Proceeds from issuances of warrants 5,000 Purchase of property and equipment (233,072) (13,696) Payments relating to acquisition of Alliance and SD&A (40,806) ----------- ----------- Net cash provided by (used in) investing activities 632,371 (54,502) ----------- ----------- Financing activities: Repayments of bank loans (397,776) (19,588) Repayments of notes payable other (18,000) Repayment of acquisition debt (58,333) (375,000) ----------- ----------- Net cash used in financing activities (456,109) (412,588) ----------- ----------- Net decrease in cash and cash equivalents (212,915) (385,006) Cash and cash equivalents at beginning of period 1,393,044 1,217,772 ----------- ----------- Cash and cash equivalents at end of period $ 1,180,129 $ 832,766 =========== ===========
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 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 September 1996, the Company incurred approximately $325,000 in accrued professional fees related to acquisitions and registration statement preparation which were deferred as of September 30, 1996. Accrued and unpaid interest on shares of Redeemable Convertible Preferred Stock during the three months ended September 30, 1996 totaled $66,500 which are payable in common stock. See Notes to Condensed Consolidated Financial Statements. 5 6 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 month period ended September 30, 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. Primary and fully diluted loss per share are the same in the periods presented. 3. ACQUISITION OF ALLIANCE MEDIA CORPORATION AND STEPHEN DUNN & ASSOCIATES, INC. On April 25, 1995, the Company acquired all of the outstanding common shares of Alliance Media Corporation ("Alliance") which simultaneously acquired Stephen Dunn & Associates, Inc. ("SD&A"). These acquisitions were accounted for using the purchase method. The operating results of these acquisitions are included in the results of operations from the date of acquisition. 4. LONG-TERM OBLIGATIONS TO RELATED PARTY In connection with the acquisition of SD&A on April 25, 1995, Alliance issued promissory notes totaling $4,500,000 to SD&A's current president and former sole shareholder. The notes bore interest at the prime rate, not to exceed 10% or drop below 8%, payable monthly. Principal payments were due quarterly, and originally $1,500,000 was due in quarterly installments during fiscal 1996. During 1996, principal payments of $2,400,000 were made and the long-term obligations were restructured such that the remaining obligations of $2,100,000 are now payable at $58,333 per month, plus interest at 8%, starting September 19, 1996. 6 7 5. INCOME TAXES In the three month periods ended September 30, 1996 and 1995, the income tax provision totaled $4,000 and $53,000 on losses from operations of $1,991,000 and $83,000, respectively. The 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. 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, a bond measure was passed by Clark County, Nevada authorities, 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 to, and liability assumed by, an unaffiliated third party, by auction, 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 (the fair market value of the stock as of the effective date of the grant), and the remaining 150,000 each were granted at an exercise price of $3.00 per share. The options vest and are exercisable immediately and expire on July 1, 2001. In connection with the grant of these options, the Company incurred a non-recurring, non-cash charge of $1,650,000 to compensation expense. (See Note 9). 8. SUBSEQUENT EVENTS 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 shall be due and payable, together with interest thereon at the rate of 6% per annum, 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 an exchange rate of $5.38 per share. Metro develops and markets information-based services, used primarily in direct marketing by a variety of commercial and not-for-profit organizations, principally in the United States. 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 relates to an underwritten public offering (the "Underwritten Offering") of 2,100,000 shares of Common Stock, of which 1,750,000 shares are being offered by the Company and 350,000 are being offered by certain 7 8 stockholders of the Company. It also relates to the sale of 1,381,056 shares (the "Delayed 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. Of such Delayed Shares, 1,291,588 shares will be subject to "lock up" provisions that prohibit resale of such shares for a period of nine months from the date of consummation of the Underwritten Offering. In connection with the Company's filing on Form SB-2, the Convertible Preferred Stock in the accompanying financial statements has been reclassified in accordance with the Securities and Exchange Commission's requirements. Accordingly, the Redeemable Convertible Preferred Stock is no longer presented as part of stockholders' equity and its initial carrying value is being increased to its redemption value by periodic accretions against paid in capital. (See Note 9). The Company and certain of its securityholders have agreed, on December 23, 1996, to effect 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"), will be 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"), will be repurchased for promissory notes in an aggregate principal amount of $1.0 million, which promissory notes will bear interest at a rate of 8% per annum and will be 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 will mature June 7, 1998; (iii) all accrued interest on the Series B Preferred Stock and the Series C Preferred Stock will be converted into 88,840 shares of Common Stock; (iv) warrants related to the Series C Preferred Stock, currently exercisable for 3,000,000 shares of Common Stock, will be exchanged for 600,000 shares of Common Stock; (v) agreements with certain of the Company's securityholders to issue, upon consummation of the Underwritten Offering, warrants exercisable for 1,038,503 shares of Common Stock in consideration for such securityholders' agreement to certain lock-up arrangements will be rescinded at no cost to the Company; and (vi) options held by two of the Company's principal executive officers to purchase 300,000 shares of common stock will be cancelled 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, estimated to be $8.5 million. This dividend will not impact net income (loss), but will impact net income (loss) attributable to common stockholders in the calculation of earnings per share. In connection with the Underwritten Offering, the Company will incur a non-recurring non-cash charge estimated to be $75,000 in the fiscal quarter in which the Underwritten Offering is consummated, as a result of the issuance by the Company of warrants exercisable for an aggregate of up to 160,414 shares of Common Stock to certain stockholders of the Company as consideration for the agreement of such stockholders to certain lock-up arrangements. 9. RESTATEMENTS FOR CORRECTIONS OF ERRORS The accompanying financial statements for the three months ended September 30, 1996 have been 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. 8 9 The net loss attributable to common stockholders was originally reported at $344,481 and related net loss per share was $(0.11). Subsequently, the Company has 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 has 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 has increased the net loss 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 contains 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 accompanying financial statements have been restated accordingly. In conjunction with this, previously recorded dividends of $66,500 have been reclassified as interest and the net loss of $277,981 increased to $344,481. These was no impact on earnings per share, as the dividends had previously increased the net loss attributable to common stockholders to $344,481. 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 month period ended September 30, 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"). The Company operates 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 8 to the condensed consolidated financial statements included in this Form 10-QSB, in October 1996 the Company purchased 100% of the stock of Metro Services Group, Inc. ("Metro"). This acquisition will be reflected in the consolidated financial statements using the purchase method of accounting starting in October 1996. Metro develops and markets information-based services used primarily in direct marketing by a variety of commercial and not-for-profit organizations. 9 10 Results of Operations for the Three Months Ended September 30, 1996, Compared to the Three Months Ended September 30, 1995 Revenues of $3,932,000 in the three months ended September 30, 1996 (the "current period") increased by $6,000 over revenues of $3,926,000 in the three months ended September 30, 1995 (the "prior period"). Revenues from on-site telemarketing and telefundraising campaigns totaled $3,417,000 and $3,421,000, respectively, or 86.9% and 87.1% of revenues in the current and prior periods, respectively. Revenues from off-site campaigns totaled $516,000 and $505,000, respectively, or 13.1% and 12.9% of revenues, respectively, in the current and prior periods. During the three months ended September 30, 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 $4,953,000 in the current period increased by $1,792,000 over the prior period total of $3,161,000. Salaries and benefits also increased as a percentage of revenues, from 80.5% in the prior period, to 126.0% in the current period. Telemarketing sales labor expense increased by $152,000 in the current period. This increase was largely due to commencement of on-site campaigns for new clients in the current period (which generally require a higher labor expense in the early years). Off-site and administrative salaries at SD&A increased by $58,000, the majority of which, $32,000, was attributable to hiring of new telemarketing sales representatives to staff the newly relocated and expanded Berkeley calling center, and the balance of which included the hiring of a human resources director. These increases were partially offset by a $68,000 reduction in parent company administrative salaries in the current period as compared to the prior period. 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 such 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 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 $145,000 in the current period increased by $15,000 over direct costs of $130,000 in the prior period, primarily attributable to higher telephone costs incurred for off-site campaigns. Selling, general and administrative expenses of $545,000 in the current period increased by $158,000, or 41%, over comparable expenses of $387,000 in the prior period. Of the increase, $101,000 was attributable to SD&A and $57,000 to corporate administration. At SD&A, travel expense increased by $47,000 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, $11,000 was a one-time moving and additional rent expense due to relocating the off-site calling center in August 1996 and the remaining increase of $43,000 resulted principally from an increase in printing, promotion and advertising expenses. At the parent company level, public relations expenses increased by $41,000 due to the hiring of a new firm in the current period. Parent company travel expenses increased by $12,000 due to increased acquisition and financing efforts. Directors fees of $9,000 were incurred for a September 1996 meeting; no such meeting was held in the prior period. Net decreases of $5,000 resulted from reductions in director and officer insurance premiums and other miscellaneous items. 10 11 Professional fees of $168,000 in the current period, associated with various valuation studies and analysis relating to financial matters, increased by $23,000 over professional fees of $145,000 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. 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 $96,000 in the current period increased by $6,000 over amortization of $90,000 in the prior period. 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 $115,000 in the current period increased by $16,000 compared to $99,000 in the prior period due to amounts payable to the holders of the Series B Preferred Stock and Series C Preferred Stock in the current period, principal payments on the SD&A seller debt and reductions in the interest rate. The provision for income taxes of $4,000 in the current period decreased by $49,000 compared to $53,000 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. As a result of the foregoing factors, the Company's net loss increased from $136,000 ($0.05 per share) in the prior period to $1,994,481 ($0.62 per share) in the current period. Capital Resources and Liquidity At September 30, 1996 and June 30, 1996, on a consolidated basis the Company had cash and cash equivalents of $1,180,000 and $1,393,000, respectively, and accounts receivable net of allowances of $1,864,000 and $2,682,000, respectively. The Company generated losses from operations of $1,994,000 in the current period and used net cash in operating activities of $389,000. These losses in the current period were due primarily to 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 first fiscal quarters, at September 30, 1996, accounts receivable relating to the SD&A operation decreased $817,000 and trade accounts payable and accrued liabilities decreased $903,000 compared to levels at June 30, 1996. In part due to certain seasonal marketing patterns and subscriptions, revenues are expected to decrease during the second and third fiscal quarters. Starting in October 1996, the Company will recognize revenues of Metro. The fourth calendar quarter, which is the Company's second fiscal quarter, has historically been Metro's strongest. The Company cannot predict the degree to which, on a consolidated basis, these trends will continue. 11 12 In the current period, net cash of $632,000 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 $233,000 resulted primarily from the Company's relocation and expansion of its Berkeley calling center in August 1996. In the current period financing activities used $456,000. The Company has a $500,000 line of credit with a bank which was fully drawn as of June 30, 1996. During the current period the Company repaid $398,000 on the line. The Company is exploring the possible increase or replacement of such line of credit with a larger credit facility. No assurance can be given that the Company will be able to obtain such a replacement credit facility, or that any such replacement credit facility will be larger than the existing facility. 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. Amortization expense will increase starting in October 1996 with the inclusion of Metro operating results and recognition of goodwill arising from that acquisition. 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 relates to an offering of 2,100,000 shares of Common Stock, of which 1,750,000 shares are being offered by the Company and 350,000 are being offered by certain stockholders of the Company (the "Offering"). It also relates to the sale of 1,381,056 shares of Common Stock by certain selling stockholders. 1,291,588 shares will be subject to "lock up" provisions that prohibit resale of such shares for a period of nine months from the Company's offering. In connection with the offering, the Company will incur a non-recurring non-cash charge estimated to be $75,000 million in the fiscal quarter in which the offering is consummated, as a result of the issuance by the Company of warrants exercisable for an aggregate of up to 160,414 shares of Common Stock to certain stockholders of the Company as consideration for the agreement of such stockholders to certain lock-up arrangements. There can be no assurance as to when or whether the Offering will be consummated, or the terms thereof. The Company believes that the net proceeds of the Offering, if consummated, together with the funds available from operations, including the operations of Metro and from the August 1996 sale of the Laughlin, Nevada land, should be adequate to finance its operations and enable the Company to meet 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. 12 13 PART II - OTHER INFORMATION 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
13 14 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 11.1 Statement Regarding Computation of Net Income D Per Share 27.1 Financial Data Schedule D
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. 14 15 b) Reports on Form 8-K 1. On or about August 16, 1996, the Company filed a Current Report on Form 8-K regarding the sale of its undeveloped land in Laughlin, Nevada, for $952,000. 2. 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. 15 16 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: January 24, 1997 16 EX-11.1 2 EXHIBIT 11.1 1 Exhibit 11.1 STATEMENTS REGARDING COMPUTATION OF NET LOSS PER SHARE
Three Months Ended September 30 -------------------------------- 1996 1995 ------------ ------------ Net loss per share was calculated as follows: Net loss $(1,994,481) $ (136,026) Primary: Weighted average common shares outstanding 3,214,884 3,016,028 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 3,500,731 11,063 Incremental shares under convertible preferred stock 1,907,295 Weighted average common and common equivalent shares outstanding unless antidilutive 3,214,884 3,016,028 Net loss per common share (.62) (.05) Fully diluted: Weighted average common shares outstanding 3,214,884 3,016,028 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 3,500,731 11,063 Incremental shares under convertible preferred stock 1,907,295 Weighted average common and common equivalent shares outstanding unless antidilutive 3,214,884 3,016,028 Net loss per common share (.62) (.05)
17 EX-27.1 3 EXHIBIT 27.1
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 THREE MONTHS ENDED SEPTEMBER 30, 1996 INCLUDED IN THIS REPORT ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. YEAR JUN-30-1997 JUL-01-1996 SEP-30-1996 1,180,129 0 1,180,425 6,000 0 3,605,522 705,449 (211,418) 11,890,813 2,025,629 1,452,772 1,667,434 0 33,032 6,711,946 11,890,813 3,932,030 3,932,030 145,230 145,230 4,953,499 0 114,917 (1,990,503) 3,978 (1,994,481) 0 0 0 (1,994,481) (.62) (.62)
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