-----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, MvhydCcXP6tR0OiEwhNjZBR057IA7duXuZwjmUGX0Y1JF+vRgg32FOCGs4g9cqpA p9GYNpxHFqZcjs5JoGwryQ== 0000890163-98-000025.txt : 19980219 0000890163-98-000025.hdr.sgml : 19980219 ACCESSION NUMBER: 0000890163-98-000025 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980218 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NEW FRONTIER MEDIA INC /CO/ CENTRAL INDEX KEY: 0000847383 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE DISTRIBUTION [7822] IRS NUMBER: 841084061 STATE OF INCORPORATION: CO FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-23697 FILM NUMBER: 98544991 BUSINESS ADDRESS: STREET 1: 1050 WALNUT ST STREET 2: STE 301 CITY: BOULDER STATE: CO ZIP: 80302 BUSINESS PHONE: 3034440632 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL SECURITIES HOLDING CORPORATION DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: STRATEGIC ACQUISITIONS INC DATE OF NAME CHANGE: 19600201 10QSB 1 FORM 10QSB SECURITIES & EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) (X) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended: December 31, 1997 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Transition Period From to . Commission File Number: 33-27494-FM New Frontier Media, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Colorado 84-1064061 ------------------------ ----------------------------- (State of Incorporation) (I.R.S. Employer I.D. Number) 1050 Walnut, Suite 301, Boulder, Colorado 80302 ---------------------------------------------------- (Address of principal executive offices and Zip Code (303) 444-0632 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such report(s), and (2) has been subject to such filing requirements for the past 90 days. [ } YES {X} NO APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the registrant's classes of common stock; 4,186,568 common shares, including 189,000 Unit Shares, were outstanding as of December 31, 1997. NEW FRONTIER MEDIA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
ASSETS December 31, March 31, 1997 1997 ---------------- ---------------- CURRENT ASSETS Cash $ 89,363 $ 109,387 Investment in certificates of deposit 250,000 750,000 Accounts receivable 192,336 212,370 Inventories 787,147 659,503 Prepaid distribution rights 76,050 82,250 Other 133,338 68,225 ---------------- ---------------- Total Current Assets 1,528,234 1,881,735 ---------------- ---------------- FURNITURE & EQUIPMENT, at cost 123,395 65,552 Less: Accumulated depreciation (35,218) (22,661) ---------------- ---------------- Net Furniture & Equipment 88,177 42,891 ---------------- ---------------- OTHER ASSETS Note receivable - officer 38,000 38,000 Accounts receivable - retainage 107,189 88,844 Deferred acquisition costs 174,712 0 Deferred stock offering costs 451,363 0 Other 125,158 135,001 ---------------- ---------------- Total Other Assets 896,422 261,845 ---------------- ---------------- TOTAL ASSETS $ 2,512,833 $ 2,186,471 ================ ================
See notes to unaudited condensed consolidated financial statements. - 3 - NEW FRONTIER MEDIA, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY
December 31, March 31, 1997 1997 ---------------- ---------------- CURRENT LIABILITIES Accounts payable $ 432,774 $ 125,928 Accounts payable - related parties 35,915 0 Leases payable 5,808 5,139 Bank credit Line 247,000 341,274 Notes payable 750,000 0 Current portion of long term debt 139,573 139,573 Other accrued liabilities 54,953 45,416 ---------------- ---------------- Total Current Liabilities 1,666,023 657,330 ---------------- ---------------- LONG TERM DEBT - Leases Payable 8,316 12,926 ---------------- ---------------- Total Liabilities 1,674,339 670,256 ---------------- ---------------- MINORITY INTEREST 233,679 305,443 ---------------- ---------------- SHAREHOLDERS' EQUITY (Notes 1 & 2) Common stock, $.0001 par value, 50,000,000 shares authorized, 4,186,568 and 4,189,000, shares issued and outstanding, respectively 420 419 Preferred stock, $.10 par value, 5,000,000 shares authorized: Class A, zero and 10,000 shares issued 0 1,000 and outstanding, respectively Class B, zero and 5,000 shares issued and outstanding 0 500 and outstanding, respectively Additional paid in capital 1,736,048 1,768,661 Deficit (1,131,653) (559,808) ---------------- ---------------- Total Shareholders' Equity 604,815 1,210,772 ---------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,512,833 $ 2,186,471 ================ ================
See notes to unaudited condensed consolidated financial statements. - 4 - NEW FRONTIER MEDIA, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended Three Months Ended December 31, December 31, ------------------------------------ ------------------------------------- 1997 1996 1997 1996 --------------- --------------- --------------- ---------------- SALES, net $ 1,163,492 $ 1,946,103 $ 435,717 $ 624,009 COST OF SALES 700,004 1,303,692 192,951 459,066 --------------- --------------- --------------- ---------------- GROSS PROFIT 463,488 642,411 242,766 164,943 --------------- --------------- --------------- ---------------- OPERATING EXPENSES Occupancy and equipment 135,711 115,515 46,983 40,027 Legal and professional 58,104 41,018 18,197 19,254 Distribution expense 120,000 350,000 0 120,000 Advertising and promotion 235,383 152,460 89,402 75,442 Salaries, wages and benefits 400,040 177,383 177,443 90,137 Communications 34,690 23,085 13,340 8,525 Research and Development 7,048 0 0 0 Consulting 42,092 51,015 11,083 25,424 General and administrative 151,200 116,819 57,252 43,981 --------------- --------------- --------------- ---------------- Total Operating Expenses 1,184,268 1,027,295 413,700 422,790 --------------- --------------- --------------- ---------------- OTHER INCOME (EXPENSE) Licensing Fees and royalties 109,830 130,304 14,547 12,492 Licensing commissions (19,253) (23,650) (3,855) (1,546) Interest income 29,182 21,517 7,917 17,401 Interest expense (42,585) (10,713) (17,182) (4,755) --------------- --------------- --------------- ---------------- Total Other Income 77,174 117,458 1,427 23,592 --------------- --------------- --------------- ---------------- Net Loss before income taxes and Minority Interest (643,606) (267,426) (169,507) (234,255) --------------- --------------- --------------- ---------------- INCOME TAXES 0 (2,454) 0 0 --------------- --------------- --------------- ---------------- Net Loss before Minority Interest (643,606) (269,880) (169,507) (234,255) Minority Interest in Loss of Subsidiary 71,764 0 28,985 0 --------------- --------------- --------------- ---------------- NET LOSS $ (571,842) $ (269,880) $ (140,522) $ (234,255) =============== =============== =============== ================ NET LOSS PER COMMON SHARE (Note 1) $ (0.14) $ (0.06) $ (0.03) $ (0.06) =============== =============== =============== ================ WEIGHTED AVERAGE SHARES OUTSTANDING 4,195,025 4,190,111 4,193,235 4,193,167 =============== =============== =============== ================
See notes to unaudited condensed consolidated financial statements. - 5 - NEW FRONTIER MEDIA, INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, ------------------------------------- 1997 1996 ---------------- ---------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income (Loss) $ (571,842) $ (269,880) Adjustments to reconcile net income (loss) to net cash used in operating activities: Depreciation and amortization 12,557 5,201 Issuance of common stock for services 15,000 0 Increase (decrease) in accounts payable 342,761 (13,905) (Increase) decrease accounts receivable 1,689 (52,648) (Increase) decrease in inventories (127,644) (292,236) (Increase) decrease in income tax receivable 0 60,000 (Increase) decrease in distribution rights 6,200 11,063 (Increase) decrease in other assets (30,270) (35,967) Decrease in minority interest (71,764) 0 Increase (decrease) in other accrued liabilities 9,537 8,830 ---------------- ---------------- Net cash used in operating activities (413,776) (579,542) ---------------- ---------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment and furniture (57,843) (4,470) Increase in deferred acquisition costs (174,712) 0 Redemption of certificates of deposit 500,000 0 ---------------- ---------------- Net cash used in investing activities 267,445 (4,470) ---------------- ---------------- CASH FLOWS FROM FINANCING ACTIVITIES: Retirement of common stock (81,648) 0 Issuance of common stock 7,534 100,001 Increase in deferred stock offering costs (451,363) 0 Contribution of capital 0 1,209,162 Increase in notes payable 750,000 0 Proceeds from line of credit (94,275) 211,644 Payments on capital lease obligation (3,941) 0 ---------------- ---------------- Net cash provided by financing activities 126,307 1,520,807 ---------------- ---------------- NET INCREASE (DECREASE) IN CASH (20,024) 936,795 CASH, BEGINNING OF PERIOD 109,387 48,523 ---------------- ---------------- CASH, END OF PERIOD $ 89,363 $ 985,318 ================ ================
- 6 - NEW FRONTIER MEDIA, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED DECEMBER 31, 1997 NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization, Business, and Consolidation The accompanying unaudited condensed consolidated financial statements include the accounts of NFMI and its wholly owned subsidiaries David Entertainment, Inc. ("DAVID") and Fuzzy Entertainment, Inc. ("FUZZY"), and its 70% owned subsidiary, Boulder Interactive Group, Inc. ("BIG"). All adjustments consisting of normal accruals and elimination of intercompany accounts and transactions, which in the opinion of management, are necessary for a fair presentation, have been reflected in the accompanying financial statements. Net Loss Per Share of Common Stock Net loss per share of common stock is based on the weighted average number of shares of common stock outstanding. Common stock equivalents are not included in the weighted average calculation since their effect would be anti-dilutive. PART 1 ITEM 2 MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND - ------------- RESULTS OF OPERATIONS 1) Overview All of the Company's current revenues are derived through its wholly owned subsidiaries David Entertainment, Inc., Fuzzy Entertainment, Inc. and its 70% owned subsidiary Boulder Interactive Group, Inc. The Company's offices are located at 1050 Walnut Street, Suite 301, Boulder, CO 80302. The telephone number is (303) 444-0632. 2) Results of Operations Third Quarter 1997 Compared to Third Quarter 1996 New Frontier Media, Inc. ("NOOF" or the "Company") The company functions as a holding company for its subsidiaries, and such generates no independent income. The Company incurs administrative expenses such as accounting, auditing, public relations, investor relations and legal. For the three month period ended December 31, 1997, the Company reported no income and total operating expenses of $102,237, compared with total operating expenses of $76,229 for the same period the prior year. The increase of $26,008 for the period was due to increases in payroll costs ($55,911 in 1997 versus $7,519 in 1996). These cost increases are primarily due to the planned public offering and acquisition of Fifth Dimension. Boulder Interactive Group, Inc. dba Inroads Interactive ("Inroads") Inroads reported quarterly sales of $226,192 for the period, up from $74,735 the prior period last year. This increase in sales is due to the release of one title in the current quarter compared to no titles in the prior year quarter. Operating expenses were $197,725, up from $166,767, as Inroads has hired more personnel and spent more on advertising and on development of new product. Net loss of $96,617 decreased from the $151,660 loss in the prior period last year. DaVid Entertainment, Inc. ("DaViD") DaViD had sales of $208,027 for the period, down from $542,107 in the prior year period. Sales were limited by the advent of the DVD format and resulting consumer slow down in laser disc purchases. Operating expenses were $97,083 versus $267,315 last year due primarily to elimination of the distribution agreement with ELM Releasing, LP. and lower corresponding expenses associated with direct management of the distribution function. Net profit was $62,474 compared to a gain of $24,447 for the prior year period. Management believes that profitability will increase in the following quarters as the DVD format gains acceptance. Fuzzy Entertainment, Inc. dba In-Sight Editions ("In-Sight") In-Sight reported total revenue of $1,498 for the period, along with operating expenses of $352 and a net gain of $558. The Company is focused on its public offering and pending acquisition and is not devoting significant resources to In-Sight. First Nine Months of 1997 Compared to First Nine Months of 1996 New Frontier Media, Inc. ("NOOF" or the "Company") For the nine month period ended December 31, 1997, the Company reported no income and total operating expenses of $347,963, compared with total operating expenses of $189,232 for the same period the prior year. The increase of $158,731 for the period was due to increases in travel expense ($65,113 in 1997 versus $19,480 in 1996), payroll costs ($113,795 in 1997 versus $24,412 in 1996), legal ($38,917 in 1997 versus $17,707 in 1996), investor relations ($29,055 in 1997 versus $10,000 in 1996), and travel ($65,113 in 1997 versus $19,480 in 1996). These cost increases are primarily due to the planned public offering and acquisition of Fifth Dimension. Boulder Interactive Group, Inc. dba Inroads Interactive Inroads reported sales of $369,129 for the period, up from $156,877 the prior period last year. This increase in sales is due to one title released during the period. Operating expenses were $504,776, up from $409,174. Inroads has hired more personnel and spent more on advertising and on development of new product. Net loss of $239,214 increased from the $213,351 loss in the prior period last year. DaVid Entertainment, Inc. ("DaViD") DaViD had sales of $789,496 for the period, down from $1,779,644 in the prior year period. Sales were limited by the advent of the DVD format and resulting consumer slow down in laser disc purchases. Operating expenses were $317,777 versus $413,519 last year due primarily to elimination of the distribution agreement with ELM Releasing, LP. and lower corresponding expenses associated with direct management of the distribution function. Net profit was $5,576 compared to a gain of $171,451 for the prior year period. Management believes that profitability will increase in the following quarters as the DVD format gains acceptance. Fuzzy Entertainment, Inc. dba In-Sight Editions ("In-Sight") In-Sight reported total revenue of $4,867 for the period, along with operating expenses of $11,850 and a net loss of $9,294. The Company is focused on its public offering and pending acquisition and is not devoting significant resources to In-Sight. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES First Nine Months of 1997 Compared to First Nine Months of 1996 The Company reported an increase in negative cash flow from operating activities from ($413,776) for the current period from ($579,542) during the same period last year. Cash flow from investing activities increased to $267,445 from ($4,470) due primarily to the redemption of certificates of deposit. Net cash flow from financing activities declined to $126,307 from $1,520,807 due to the one time selling of a 30% interest in BIG last year. Management believes that cash flow from operating activities will turn positive in the near future. PART II OTHER INFORMATION Item 1 Legal Proceedings Item 2 Changes in Securities On February 18, 1998 the Company sold 1,500,000 units, each consisting of 1 share of common stock and 1 redeemable common stock purchase warrant, pursuant to an underwritten public offering. Simultaneous therewith, the Company closed its acquisition of Fifth Dimension's satellite network. Item 3 Defaults upon Senior Securities None. Item 4 Submission of Matters to Vote of Security Holders None. Item 5 Other Information None. Item 6 Exhibits and Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NEW FRONTIER MEDIA, INC. February 18, 1998 By:/S/ MARK H. KRELOFF ----------------------------- Mark H. Kreloff, President February 18, 1998 By:/S/ MICHAEL WEINER ----------------------------- Michael Weiner, Secretary and Treasurer February 18, 1998 By:/S/ SCOTT WUSSOW ----------------------------- Scott Wussow, Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 9-MOS 3-MOS MAR-31-1996 MAR-31-1996 APR-01-1997 OCT-01-1997 DEC-31-1997 DEC-31-1997 89,363 89,363 0 0 192,336 192,336 0 0 787,147 787,147 1,528,234 1,528,234 88,177 88,177 35,218 35,218 2,512,833 2,512,833 1,666,023 1,666,023 0 0 0 0 0 0 420 420 1,736,048 1,736,048 2,512,833 2,512,833 1,163,492 435,717 1,153,492 435,717 700,004 192,951 1,884,272 606,651 0 0 0 0 42,585 17,182 (571,842) (140,522) 0 0 0 0 0 0 0 0 0 0 (571,842) (140,522) (.14) (.03) (.14) (.03)
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