-----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, JOy81NePpYCNVyIaxMlSriXnCh3fpYQhwFbAFJs4JOJ1REsFZk2LIhXfH+aUc5hi wgkKvfXQcRpyfOP4WQrxOQ== 0000868796-98-000004.txt : 19980224 0000868796-98-000004.hdr.sgml : 19980224 ACCESSION NUMBER: 0000868796-98-000004 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980223 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: LANCIT MEDIA ENTERTAINMENT LTD CENTRAL INDEX KEY: 0000868796 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 133019470 STATE OF INCORPORATION: NY FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23414 FILM NUMBER: 98547337 BUSINESS ADDRESS: STREET 1: 601 W 50TH ST 6TH FL CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 2129779100 MAIL ADDRESS: STREET 1: 601 WEST 50TH ST 6TH FL CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: LANCIT MEDIA PRODUCTIONS LTD DATE OF NAME CHANGE: 19930328 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 12/31/97 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Fiscal Quarter 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: 1-10781 LANCIT MEDIA ENTERTAINMENT, LTD. (Exact Name of Registrant as Specified in its Charter) New York 13-3019470 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 601 West 50th Street, New York, New York, 10019 (Address of Principal Executive Offices) (Zip Code) (212) 977-9100 (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 reports) and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of registrant's Common Stock, $.001 par value, outstanding as of February 5, 1998 was 6,634,750 shares. LANCIT MEDIA ENTERTAINMENT, LTD. AND SUBSIDIARIES INDEX PAGE PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS - at December 31, 1997 and June 30, 1997 1 CONSOLIDATED STATEMENTS OF OPERATIONS - For the six and three months ended December 31, 1997 and 1996 2 CONSOLIDATED STATEMENTS OF CASH FLOWS - For the six months ended December 31, 1997 and 1996 3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 5 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK 8 PART II - OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 9 SIGNATURES 10 PART I. FINANCIAL INFORMATION LANCIT MEDIA ENTERTAINMENT, LTD. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, June 30, 1997 1997 ------------ ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 3,219,462 $ 4,461,627 Accounts receivable, net 510,291 1,698,250 Film and program costs, net 2,010,625 1,718,526 Prepaid expenses 96,944 270,215 ------------ ------------ TOTAL CURRENT ASSETS 5,837,322 8,148,618 ACCOUNTS RECEIVABLE - NON-CURRENT 171,500 211,500 FIXED ASSETS, NET 378,627 525,530 GOODWILL, NET 255,076 263,302 DEPOSITS 50,363 50,363 ------------ ------------ TOTAL ASSETS $ 6,692,888 $ 9,199,313 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued expenses $ 1,977,267 $ 2,116,028 Participation payable 1,151,243 1,342,702 Deferred revenue 1,646,396 1,009,413 ------------ ------------ TOTAL CURRENT LIABILITIES 4,774,906 4,468,143 PARTICIPATION PAYABLE - NON-CURRENT 59,644 88,009 DEFERRED REVENUE - NON-CURRENT 24,832 317,620 MINORITY INTEREST 239,078 195,360 STOCKHOLDERS' EQUITY: Common stock, $.001 par value, authorized 15,000,000 shares; issued and outstanding 6,634,750 shares at December 31, 1997 and June 30, 1997 6,635 6,635 Additional paid-in capital 17,604,536 17,504,536 Retained earnings (accumulated deficit) (16,016,743) (13,380,990) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 1,594,428 4,130,181 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$ 6,692,888 $ 9,199,313 ============ ============ See notes to consolidated financial statements. - 1 -
LANCIT MEDIA ENTERTAINMENT, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------- ------------------ 1997 1996 1997 1996 --------- -------- -------- -------- (UNAUDITED) (UNAUDITED) REVENUES: Production and royalties ..... $ 155,236 $ 179,183 $ 381,732 $ 746,008 Licensing agent fees ......... 223,147 319,875 450,788 643,875 ----------- ----------- ----------- ------------ 378,383 499,058 832,520 1,389,883 ----------- ----------- ----------- ------------ OPERATING EXPENSES: Production and royalties ..... 491,187 448,377 1,120,320 978,991 Licensing agent - direct costs 88,009 206,264 275,277 440,248 General and administrative ... 1,112,026 786,354 2,111,400 1,500,770 ----------- ----------- ----------- ------------ 1,691,222 1,440,995 3,506,997 2,920,009 ----------- ----------- ----------- ------------ LOSS FROM OPERATIONS ........... (1,312,839) (941,937) (2,674,477) (1,530,126) INTEREST INCOME - NET .......... 41,418 79,690 82,441 113,813 ----------- ----------- ----------- ------------ LOSS BEFORE MINORITY INTEREST .. (1,271,421) (862,247) (2,592,036) (1,416,313) MINORITY INTEREST .............. 33,151 23,518 43,717 51,601 ----------- ----------- ------------ ------------ NET LOSS ....................... $(1,304,572) $ (885,765) $ (2,635,753) $(1,467,914) =========== =========== ============ ============ NET LOSS PER SHARE ............. $ (0.20) $ (0.13) $ (0.40) $ (0.23) =========== =========== ============ ============ WEIGHTED AVERAGE SHARES ........ 6,634,750 6,626,750 6,634,750 6,443,952 =========== =========== ============ ============
See notes to consolidated financial statements. - 2 - LANCIT MEDIA ENTERTAINMENT, LTD. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED DECEMBER 31, -------------------- 1997 1996 ---------- --------- CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ (2,635,753) $ (1,467,914) ----------- ----------- Adjustments to reconcile net loss to net cash used in operating activities: Amortization of film and program costs 320,833 207,231 Depreciation and other amortization 178,691 197,644 Minority interest 43,717 51,601 Changes in operating assets and liabilities: (Increase) decrease in accounts receivable, net - current 1,187,959 596,728 (Increase) decrease in accounts receivable - non-current 40,000 478,661 Additions to film and program costs (612,932) (1,053,943) (Increase) decrease in prepaid expenses 173,271 77,465 (Increase) decrease in deposits receivable -- 12,421 Increase (decrease) in accounts payable and accrued expenses (138,761) 296,015 Increase (decrease) in participations payable - current (191,459) (55,528) Increase (decrease) in participations payable - non-current (28,365) (59,320) Increase (decrease) in deferred revenue - current 636,983 (349,436) Increase (decrease) in deferred revenue - non-current (292,788) (269,088) ----------- ----------- CASH USED IN OPERATING ACTIVITIES (1,318,604) (1,337,463) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of property and equipment (23,561) (8,409) ----------- ----------- CASH USED IN INVESTING ACTIVITIES (23,561) (8,409) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock 100,000 4,701,001 ----------- ----------- CASH PROVIDED FROM FINANCING ACTIVITIES 100,000 4,701,001 ----------- ----------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (1,242,165) 3,355,129 CASH AND CASH EQUIVALENTS - beginning of period 4,461,627 3,358,230 ----------- ----------- CASH AND CASH EQUIVALENTS - end of period $3,219,462 $6,713,359 =========== =========== CASH PAID DURING THE PERIOD FOR: Interest $ -- $ -- =========== =========== Income taxes $ -- $ -- =========== =========== See notes to consolidated financial statements. - 3 -
LANCIT MEDIA ENTERTAINMENT, LTD. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 (UNAUDITED) 1. BASIS OF PRESENTATION Reference is made to the Company's Annual Report on Form 10-K/A for the fiscal year ended June 30, 1997. The accompanying financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the interim periods presented. All such adjustments are of a normal and recurring nature. The results of operations for any interim period are not necessarily indicative of the results for a full fiscal year. 2. NET INCOME (LOSS) PER SHARE In 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, Earnings per Share (Statement 128). Statement 128 replaced the previously reported primary and fully diluted earnings per share with basic and diluted earnings per share. Unlike primary earnings per share, basic earnings per share excludes any dilutive effects of options, warrants and convertible securities. Diluted earnings per share is very similar to the previously reported fully diluted earnings per share. All earnings per share amounts for all periods have been presented, and where necessary, restated to conform to the Statement 128 requirements. 3. STRATEGY LICENSING COMPANY MINORITY INTEREST In October 1997, the Company entered into an agreement with Arlene J. Scanlan, pursuant to which the Company acquired the remaining 15% of the outstanding shares of the capital stock of Strategy held by her. Additionally, Ms. Scanlan's employment with Strategy and the Company was terminated. In consideration of the foregoing, the Company paid Ms. Scanlan an aggregate of approximately $31,000 and has released Ms. Scanlan from certain restrictions contained in a covenant not to compete with respect to specified properties and entities. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations - Three months ended December 31, 1997 as compared to three months ended December 31, 1996 Production and royalty revenues for the three month period ended December 31, 1997 decreased to $155,236 from $179,183 in the comparable 1996 quarter. This decrease is primarily the result of reduced activity on Reading Rainbow(R) and Backyard Safari(R), partially offset by license fees for broadcast renewal rights and royalties on The Puzzle Place(R) and final production activity on No Really. Licensing agent fee revenues for the three month period ended December 31, 1997 decreased to $223,147 from $319,875 in the comparable 1996 quarter. This decrease is primarily the result of the expiration of certain licensee contracts on The Puzzle Place and reduced royalties on the Sonic the Hedgehog(TM) property. Production and royalty expenses for the three month period ended December 31, 1997 increased to $491,187 from $448,377 in the comparable 1996 quarter, reflecting primarily increased development costs, final production costs on No Really and payments for broadcast renewal rights license fees on The Puzzle Place, all which was partially offset by decreased production activity on Reading Rainbow and Backyard Safari. Direct costs of licensing activities for the three month period ended December 31, 1997 decreased to $88,009 from $206,264 in the comparable 1996 quarter primarily as a result of decreased personnel, travel and trade show expenses, all of which was directly related to the restructuring of the licensing agent operation. General and administrative expenses for the three month period ended December 31, 1997 increased to $1,112,026 from $786,354 in the comparable 1996 quarter, primarily as a result of initiatives involving new personnel and the Company's restructuring, resulting in increased personnel, office related and insurance costs as well as increased legal and other professional fees. Interest income - net for the three month period ended December 31, 1997 decreased to $41,418 from $79,690 in the comparable 1996 quarter. This decrease is primarily due to a decreased level of cash invested during this year's three month period. There was no provision for income taxes recorded for the three month period ended December 31, 1997, or for the comparable 1996 quarter, as both periods resulted in a loss. Minority interest in licensing activities for the three month period ended December 31, 1997 was $33,151 compared to $23,518 in the comparable 1996 quarter. This is primarily the result of increased profitability at a subsidiary where there is a minority owner. Net loss for the three month period ended December 31, 1997 was $1,304,572 ($.20 per share) compared to a net loss of $885,765 ($.13 per share) in the comparable 1996 quarter, as a result of the combination of the factors discussed above. Weighted average shares outstanding for the three month period ended December 31, 1997 increased to 6,634,750 from 6,626,750 in the comparable 1996 quarter primarily as a result of the exercise of employee stock options during the twelve month period since December 31, 1996. Results of Operations - Six months ended December 31, 1997 as compared to six months ended December 31, 1996 Production and royalty revenues for the six month period ended December 31, 1997 decreased to $381,732 from $746,008 in the comparable 1996 six month period. This decrease is primarily the result of significantly reduced production activity on Reading Rainbow and Backyard Safari, which was partially offset by final production activity on No Really and broadcast renewal fees on The Puzzle Place. Licensing agent fee revenues for the six month period ended December 31, 1997 decreased to $450,788 from $643,875 in the comparable 1996 six month period. This decrease is primarily the result of the expiration of certain license contracts on The Puzzle Place and reduced royalties on the Sonic the Hedgehog property. Production and royalty expenses for the six month period ended December 31, 1997 increased to $1,120,320 from $978,991 in the comparable 1996 six month period reflecting primarily increased payments for broadcast renewal rights license fees on The Puzzle Place, increased development costs and final production activity on No Really, all of which was partially offset by reduced production activity on Reading Rainbow and Backyard Safari. Direct costs of licensing agent activities for the six month period ended December 31, 1997 decreased to $275,277 from $440,248 in the comparable 1996 six month period primarily as a result of reduced personnel, travel and trade show expenses, all of which was directly related to the restructuring of the licensing agent operation. General and administrative expenses for the six month period ended December 31, 1997 rose to $2,111,400 from $1,500,770 in the comparable 1996 six month period, primarily as a result of initiatives involving new personnel and the Company's restructuring, resulting in increased personnel, office related and insurance costs as well as increased legal and other professional fees. Interest income - net for the six month period ended December 31, 1997 decreased to $82,441 from $113,813 in the comparable 1996 six month period. This decrease is primarily due to a reduced level of cash invested in 1997 compared to 1996. There was no provision for income taxes recorded for the six month period ended December 31, 1997 or in the comparable 1996 six month period, as both periods resulted in a loss for the period. Minority interest in licensing activities for the six month period ended December 31, 1997 was $43,717 compared to $51,601 in the comparable 1996 six month period. This is primarily the result of increased profitability at a subsidiary where there is a minority owner. Net loss for the six month period ended December 31, 1997 was $2,635,753 ($.40 per share) compared to net loss of $1,467,914 ($.23 per share) in the comparable 1996 six month period primarily as a result of the combination of all factors discussed above. Weighted average shares outstanding for the six month period ended December 31, 1997 increased to 6,634,750 from 6,443,952 in the comparable 1996 six month period primarily as a result of the inclusion for the full six months of shares issued to DCI related to its purchase of a 6.6% equity stake in the Company as well as the exercise of stock options during the twelve month period since December 31, 1996. Liquidity and Capital Resources The Company had cash and cash equivalents as of December 31, 1997 of approximately $3.2 million, and no long-term debt. Notwithstanding the Company's cash position at December 31, 1997, additional funding will be required to enable the Company to continue to meet its obligations and to sustain the Company's operations through the fourth quarter of the current fiscal year. The Company is continuing to actively seek strategic partners, a business combination, a sale of an interest in the Company or other sources of additional funding, through an investment banking firm previously retained for such purpose. The Company also continues to pursue marketing efforts to generate cash from production and other licensing activities, and, where appropriate, may explore turning to account certain non-strategic assets. While the Company has not been successful to date in achieving such a transaction, and there can be no assurance that any such transactions will be available to the Company or, if available, that they will be on terms favorable to the Company or its shareholders, the Company continues to devote considerable management time to these efforts. The Company has also taken steps to reduce, where appropriate, its operating expenses. These steps include relocating Strategy, its merchandising and licensing subsidiary, from Westport, Connecticut to the Company's New York City offices, and certain staff reductions. Cash used in operating activities was approximately $1.3 million for the six month period ended December 31, 1997, compared to the use of approximately the same amount for the same period last year. A net loss of approximately $2.6 million and additions to film and program costs of approximately $0.6 million were partially offset by a decrease in accounts receivable of approximately $1.2 million and an increase in deferred revenue - current of $0.6 million, comprising the major components of cash used in operating activities. Cash provided from financing activities was $0.1 million for the six month period ended December 31, 1997, compared to $4.7 million for the comparable 1996 period. Warrants to purchase 100,000 shares of stock were issued in partial payment as part of the final arrangement for satisfaction of fees owed for services performed in connection with the September 1996 purchase of a 6.6% stake in the Company by DCI. As of December 31, 1997, the Company is completing the remaining elements associated with the outreach for the first 65 episodes of The Puzzle Place. All the remaining costs for the first 65 episodes of The Puzzle Place were accrued in fiscal 1997. The Company estimates that, after it receives the balance of monies due from the Corporation for Public Broadcasting ("CPB") and KCET/ Southern California ("KCET"), it will have no remaining funding obligation on the first 65 episodes of this project. The Company's 13 episodes of Backyard Safari, which was partially funded through a major grant from the National Science Foundation, began airing on PBS stations in November of 1997. The Company estimates that its remaining funding requirement for this project, primarily to complete outreach and promotional activities, is approximately $0.4 million. All of these remaining costs were accrued in fiscal 1997. Management does not expect inflation to have a significant impact on the business. CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 This report, including, without limitation, descriptions of the Company's targets or goals and Management's views concerning the Company's pending and proposed projects, prospects and future financial performance contained in this discussion and analysis and elsewhere, constitute forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasts. These risks include, among others: the ability of the Company to secure timely production funding and additional capital financing; risks generally associated with the production of a television series, movie or other entertainment project; network and studio acceptance of television and motion picture projects; the ability of the Company to successfully negotiate and enter into agreements to acquire rights, develop, produce, market and distribute entertainment and licensing projects; difficulties or delays in the development, production and marketing of entertainment products and/or licensed products; as well as less than anticipated consumer acceptance of entertainment projects or licensed products. These and other risks are described in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997 filed with the Securities and Exchange Commission, copies of which are available from the SEC or may be obtained upon request from the Company. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not Applicable. PART II. - OTHER INFORMATION Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 11. Computation of Earnings Per Share (filed herewith) 27. Financial Data Schedule (electronic filing only) (b) No reports on Form 8-K were filed by the Company during the fiscal quarter ended December 31, 1997. 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. LANCIT MEDIA ENTERTAINMENT, LTD. Date: February 23, 1998 By: /s/ GARY APPELBAUM Gary Appelbaum Senior Vice President, Chief Financial Officer & Treasurer Date: February 23, 1998 By: /s/ SUSAN L. SOLOMON Susan L. Solomon Chief Executive Officer and Chairman of the Board of Directors EX-11 2 COMPUTATION OF EARNINGS PER SHARE Lancit Media Entertainment, Ltd. Exhibit 11 - Computation of Earnings Per Share Three months ended Six months ended December 31, December 31, 1997 1996 1997 1996 ---------- ---------- ---------- --------- Basic Weighted average shares outstanding 6,634,750 6,626,750 6,634,750 6,443,952 Net effect of dilutive stock options - based on the treasury stock method using average market price .................... -- -- -- -- ------------ ------------ ------------ ------------ Total ....................................... 6,634,750 6,626,750 6,634,750 6,443,952 ============ ============ ============ ============ Net Loss .................................... $ (1,304,572) $(885,765) $ (2,635,753) $(1,467,914) ============ ============ ============ ============ Per share amount ............................ $ (0.20) $ (0.13) $ (0.40) $ (0.23) ============ ============ ============ ============ Diluted Weighted average shares outstanding 6,634,750 6,626,750 6,634,750 6,443,952 Net effect of dilutive stock options - based on the treasury stock method using average market price .................... -- -- -- -- ------------ ------------ ------------ ------------ Total ....................................... 6,634,750 6,626,750 6,634,750 6,443,952 ============ ============ ============ ============ Net Loss .................................... $ (1,304,572) $(885,765) $ (2,635,753) $(1,467,914) ============ ============ ============ ============ Per share amount ............................ $ (0.20) $ (0.13) $ (0.40) $ (0.23) ============ ============ ============ ============
EX-27 3 FDS --
5 0000868796 Lancit Media Entertainment, Ltd. 1 U.S. Dollars 3-Mos Jun-30-1998 Jul-01-1997 Dec-31-1997 1.000 3,219,462 0 681,791 0 0 5,837,322 378,627 0 6,692,888 4,774,906 0 0 0 6,635 1,587,793 6,692,888 0 378,383 0 1,691,222 0 0 0 (1,304,572) 0 (1,304,572) 0 0 0 (1,304,572) (.20) (.20)
-----END PRIVACY-ENHANCED MESSAGE-----