-----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, DE4ReRE5piSWOjVyehkmxsV6R8juAw6NABMXPLu647RDegDqMwxrdqM7FN/vHQas 62ONA13xo8bwcB8XCx7EmQ== 0000897101-96-000960.txt : 19961113 0000897101-96-000960.hdr.sgml : 19961113 ACCESSION NUMBER: 0000897101-96-000960 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960619 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHILDRENS BROADCASTING CORP CENTRAL INDEX KEY: 0000882160 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 411663712 STATE OF INCORPORATION: MN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-21534 FILM NUMBER: 96659912 BUSINESS ADDRESS: STREET 1: 724 1ST ST N STREET 2: 4TH FLOOR CITY: MINNEAPOLIS STATE: MN ZIP: 55401 BUSINESS PHONE: 6123383300 MAIL ADDRESS: STREET 1: 724 FIRST STREET NORTH STREET 2: FOURTH FLOOR CITY: MINNEAPOLIS STATE: MN ZIP: 55401 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT TO REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 June 19, 1996 Date of Report (Date of earliest event reported) CHILDREN'S BROADCASTING CORPORATION (Exact name of registrant as specified in its charter) Minnesota 0-21534 41-1663712 (State or other jurisdiction (Commission File No.) (IRS Employer ID No.) of incorporation) 724 First Street North Minneapolis, Minnesota 55401 (Address of principal executive offices) (612) 338-3300 (Registrant's telephone number, including area code) The undersigned registrant hereby amends the following items, financial statements, pro forma financial information and exhibits, if any, or other portions of its Form 8-K Report filied June 19, 1996, as set forth in the pages attached hereto. Item 7. Financial Statements and Exhibits. (a) Financial Statements of Business Acquired. Financial statements required to be filed pursuant to Item 7 of Form 8-K filed June 19, 1996, for Radio Elizabeth, Inc. (b) Pro Forma Financial Information. Pro forma financial information required to be filed pursuant to Item 7 of Form 8-K filed June 19, 1996, for Children's Broadcasting Corporation. (c) Exhibits Consent of Smolin, Lupin & Co., P.A. The Board of Directors and Stockholder Radio Elizabeth, Inc. T/A WJDM - 1530 AM 9 Caldwell Place Elizabeth, New Jersey 07201 INDEPENDENT AUDITORS' REPORT We have audited the accompanying balance sheet of Radio Elizabeth, Inc. T/A WJDM - 1530 AM (Debtor in Possession) as of April 30, 1995, 1994 and 1993, and the related statements of operations and accumulated deficit, and cash flows for the years then ended. These financial statements are the responsibility of the management of Radio Elizabeth, Inc. T/A WJDM - 1530 AM (Debtor in Possession). Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Radio Elizabeth, Inc. T/A WJDM - 1530 AM (Debtor in Possession) as of April 30, 1995, 1994, and 1993, and the results of its operations and cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Smolin, Lupin & Co., P.A. SMOLIN, LUPIN & CO., P.A. November 27, 1995 The Board of Directors and Stockholder Radio Elizabeth, Inc. T/A WJDM - 1530 AM 9 Caldwell Place Elizabeth, New Jersey 07201 We have reviewed the accompanying balance sheet of Radio Elizabeth, Inc. T/A WJDM - 1530 AM as of March 31, 1996, and the related statements of income and accumulated deficit, and cash flows for the eleven months then ended, in accordance with Statements on Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. All information included in these financial statements is the representation of the management of Radio Elizabeth, Inc. T/A WJDM - 1530 AM. A review consists principally of inquiries of company personnel and analytical procedures applied to financial data. It is substantially less in scope than an audit in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our review, we are not aware of any material modifications that should be made to the accompanying financial statements in order for them to be in conformity with generally accepted accounting principles. The accompanying March 31, 1995 financial statements were compiled by us in accordance with Statement and Standards for Accounting and Review Services issued by the American Institute of Certified Public Accountants. A compilation is limited to presenting in the form of financial statements information that is the representation of the management of Radio Elizabeth, Inc. T/A WJDM - 1530 AM. We have not audited or reviewed the March 31, 1995 financial statements and, accordingly, do not express an opinion or any other form of assurance on them. /s/ Smolin, Lupin & Co., P.A. SMOLIN, LUPIN & CO., P.A. West Orange, New Jersey November 6, 1996
RADIO ELIZABETH, INC. T/A WJDM - 1530 AM BALANCE SHEETS ASSETS April 30, March 31 March 31, ------------------------ 1995 1996 1994 1995 (Unaudited) (Unaudited) --------- --------- ---------- ---------- (Audited) CURRENT ASSETS: Cash and Cash Equivalents $ 6,288 $ 85,077 $ 94,002 $ 169,893 Accounts Receivable 56,845 59,110 25,318 87,446 Due from Stockholder 255,633 255,633 255,633 70,073 --------- --------- ---------- ---------- Total Current Assets 318,766 399,820 374,953 327,412 --------- --------- ---------- ---------- EQUIPMENT: Tower Equipment 148,993 148,993 148,993 246,482 Equipment 137,164 137,164 137,164 137,164 --------- --------- ---------- ---------- Total 286,157 286,157 286,157 383,646 Less: Accumulated Depreciation 193,993 208,737 207,509 231,558 --------- --------- ---------- ---------- 92,164 77,420 78,648 152,088 --------- --------- ---------- ---------- BROADCASTING LICENSE -- -- -- 26,351 --------- --------- ---------- ---------- TOTAL ASSETS $ 410,930 $ 477,240 $ 453,601 $ 505,851 ========= ========= ========== ========== LIABILITIES AND STOCKHOLDER'S (DEFICIENCY) CURRENT LIABILITIES: Accounts Payable and Accrued Expenses $ 3,956 $ 95,668 $ 10,398 $ 149,316 Payroll Taxes Payable 2,082 1,455 5,410 6,156 Customer Deposits 9,613 1,515 4,568 869 State Income Taxes 41 91 93 -- Liabilities Subject to Compromise - Current Portion -- -- 82,080 875,727 --------- --------- ---------- ---------- Total Current Liabilities 15,692 98,729 102,549 1,032,068 --------- --------- ---------- ---------- LIABILITIES SUBJECT TO COMPROMISE: Notes Payable in Default 406,640 406,640 406,640 -- Unsecured Accounts Payable 211,095 211,095 191,954 -- Accrued Interest on Defaulted Notes 77,405 98,932 68,921 -- Payroll Taxes Payable 172,169 172,169 139,230 -- Accrued Penalties and Interest on Payroll Taxes Payable 7,024 22,949 21,622 -- -------- -------- ---------- ---------- Total Liabilities Subject to Compromise 874,333 911,785 828,367 -- -------- -------- ---------- ---------- COMMITMENTS STOCKHOLDER'S (DEFICIENCY): Common Stock - No Par Value; 425 Shares Authorized; 250 Shares Issued and Outstanding 75,000 75,000 75,000 75,000 Accumulated Deficit - Since July 11, 1995 in Connection with Reorganization -- -- -- (72,105) Accumulated Deficit - Prior to Reorganization (554,095) (608,274) (552,315) (529,112) -------- -------- ---------- ---------- (479,095) (533,274) (477,315) (526,217) -------- -------- ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDER'S (DEFICIENCY) $ 410,930 $ 477,240 $ 453,601 $ 505,851 ========= ========= ========== ========== See notes to financial statements.
RADIO ELIZABETH, INC. T/A WJDM - 1530 AM STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Year End Year Ended April 30, Eleven Months Ended March 31, ---------------------------------- ----------------------------- 1993 1994 1995 1995 1996 (Audited) (Audited) (Audited) (Unaudited) (Unaudited) --------- --------- --------- --------- --------- REVENUE $ 423,024 $ 434,135 $ 405,470 $ 365,236 $ 377,746 OPERATING EXPENSES 467,213 509,112 389,459 335,172 335,558 --------- --------- --------- --------- --------- INCOME (LOSS) FROM OPERATIONS (44,189) (74,977) 16,011 30,064 42,188 --------- --------- --------- --------- --------- OTHER INCOME AND (EXPENSE): Interest Income -- -- -- 194 1,309 Interest Expense (32,531) (33,606) (40,786) (28,117) (37,211) --------- --------- --------- --------- --------- -- -- -- (27,923) (35,902) --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE REORGANIZATION ITEMS AND STATE INCOME TAXES (76,720) (108,583) (24,775) 2,141 6,286 --------- --------- --------- --------- --------- REORGANIZATION ITEMS: Interest Earned on Accumulated Cash Resulting from Chapter 11 Proceedings -- -- 510 317 771 Professional Fees -- (2,000) (29,329) -- -- --------- --------- --------- --------- --------- Total Reorganization Items -- (2,000) (29,329) -- -- --------- --------- --------- --------- --------- INCOME (LOSS) BEFORE STATE INCOME TAXES (76,720) (110,583) (54,104) 2,458 7,057 STATE INCOME TAXES 75 -- 75 77 -- --------- --------- --------- --------- --------- NET INCOME (LOSS) FOR THE PERIOD (76,795) (110,583) (54,179) 2,381 7,057 ACCUMULATED DEFICIT BALANCE - Beginning (366,717) (443,512) (554,095) (554,696) (608,274) --------- --------- --------- --------- --------- BALANCE - Ending $(443,512) $(554,095) $(608,274) (552,315) (601,217) ========= ========= ========= ======== ======== See notes to financial statements.
RADIO ELIZABETH, INC. T/A WJDM - 1530 AM STATEMENTS OF CASH FLOWS
Year Ended April 30, Eleven Months Ended March 31, ----------------------------------- ---------------------------- 1993 1994 1995 1995 1996 (Audited) (Audited) (Audited) (Unaudited) (Unaudited) --------- --------- --------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Profit (Loss) for the Period $ (76,795) $(110,583) $ (54,179) $ 2,381 $ 7,057 Adjustments to Reconcile Net Loss to Net Cash Provided by Operating Activities: Bad Debts Expense 38,934 41,382 10,535 41,382 14,895 Depreciation 15,734 15,731 14,744 13,515 22,820 Net Change in Operating Assets and Liabilities: Accounts Receivable 8,414 (45,842) (12,800) (9,855) (43,231) Accounts Payable and Accrued Expenses 25,179 71,695 91,712 5,842 53,648 Payroll Taxes Payable (15) 2,082 (627) 3,328 4,701 Customer Deposits 2,912 6,699 (8,098) (5,045) (646) State Income Taxes Payable 35 6 50 52 (91) Unsecured Accounts Payable - Subject to Compromise -- -- -- -- (91,142) Accrued Interest on Defaulted Notes - Subject to Compromise -- 13,736 21,527 21,516 5,411 Payroll Taxes Payable - Subject to Compromise -- -- -- -- (32,939) Accrued Penalties and Interest on Payroll Taxes Payable - Subject to Compromise -- 7,024 15,925 14,598 10,613 --------- --------- --------- --------- --------- Net Cash Provided by Operating Activities 14,398 1,930 78,789 87,714 23,096 --------- --------- --------- --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of Broadcasting License -- -- -- -- (26,351) Purchase of Tower Equipment -- -- -- -- (97,489) Loan to Stockholder (9,075) (2,000) -- -- (74,440) Repayment by Stockholder -- -- -- -- 260,000 --------- --------- --------- --------- --------- Net Cash Provided by (Used by) Investing Activities (9,075) (2,000) -- -- 61,720 --------- --------- --------- --------- --------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,323 (70) 78,789 87,714 84,816 CASH AND CASH EQUIVALENTS - Beginning 1,035 6,358 6,288 6,288 85,077 --------- --------- --------- --------- --------- CASH AND CASH EQUIVALENTS - Ending $ 6,358 $ 6,288 $ 85,077 $ 94,002 $ 169,893 ========= ========= ========= ========= ========= See notes to financial statements.
RADIO ELIZABETH, INC. T/A WJDM - 1530 AM NOTES TO FINANCIAL STATEMENTS MARCH 31, 1996 (UNAUDITED) AND DECEMBER 31, 1995 (AUDITED) AND APRIL 30, 1995 (AUDITED) AND APRIL 30, 1994 (AUDITED) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Nature of Business: Radio Elizabeth, Inc. T/A WJDM - 1530 AM is a 1,000 watt AM radio station broadcasting during daylight hours. The station reaches approximately 1.9 million people in eight Northern New Jersey Counties, Staten Island, parts of Brooklyn, Upper West Manhattan and Eastern Queens. During August of 1994, Radio Elizabeth, Inc. T/A WJDM - 1530 AM changed its broadcasting format from golden oldies to ethnic and religious programming. Bankruptcy Petition: On November 1, 1993, Radio Elizabeth, Inc. T/A WJDM - 1530 AM filed a petition for relief under Chapter 11 of the Federal Bankruptcy Code. Under Chapter 11, certain claims against the Debtor in existence prior to the filing are stayed while the Debtor continues business as a Debtor in Possession. These claims are reflected in the balance sheet as "Liabilities Subject to Compromise". A Plan of Reorganization was approved July 11, 1995 (see Note 8). Cash and Cash Equivalents: Management considers all highly liquid debt instruments purchased with a maturity of ninety days or less to be cash equivalents (see Note 2). Accounts Receivable: The Company makes no provision for doubtful accounts. When an account becomes uncollectible, it is then charged directly to current operations. The Company's management believes that all material accounts receivable will be collected. Property and Equipment: Property and Equipment are recorded at cost and are being depreciated over their estimated useful lives using both accelerated and straight-line methods. Use of Estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. Fair Value of Financial Instruments: Accounts receivable, accounts payable and accrued expenses are carried on the accompanying balance sheet at amounts which approximate their fair value. NOTE 2 - CASH AND CASH EQUIVALENTS: Cash and cash equivalents consist of the following:
April 30 March 31, March 31, 1994 1995 1995 1996 ------ ------- ------- -------- Operating Accounts $6,288 $ 7,157 $26,082) $ 6,321 Money Market - United Jersey Bank interest approximately 2.2% -- 77,920 67,920 12,432 Certificate of Deposit - United Jersey Bank, interest approximately 4.90% -- -- -- 151,140 ------ ------- ------- -------- TOTAL $6,288 $85,077 $94,002 $169,893 ====== ======= ======= ========
NOTE 3 - DUE FROM STOCKHOLDER: Monies advanced to the stockholder of the Corporation do not bear interest and are expected to be repaid within the current year (see Note 9). NOTE 4 - LIABILITIES SUBJECT TO COMPROMISE: On November 1, 1993, Radio Elizabeth, Inc. T/A WJDM - 1530 AM filed a petition for relief under Chapter 11 of the Federal Bankruptcy Code. These claims are as follows:
April 30, March 31, March 31, 1994 1995 1995 1996 -------- -------- -------- -------- Notes Payable in Default: Note Payable - Summit Bank - with interest at 2% above the bank's prime rate secured by accounts receivable, equipment, the stockholder's personal residence in Springfield, New Jersey, and an apartment unit in New York City, and prohibits the issuance of any additional common stock without the prior written consent of the bank. $350,000 $350,000 $350,000 $350,000 Note Payable - Summit Bank - with interest at 2% above the bank's prime rate secured by accounts receivable, equipment, the stockholder's personal residence in Springfield, New Jersey, and an apartment unit in New York City, and prohibits the issuance of any additional common stock without the prior written consent of the bank. 50,000 50,000 50,000 50,000 Note Payable - Summit Bank - with interest at 2% above the bank's prime rate secured by accounts receivable, equipment, the stockholder's personal residence in Springfield, New Jersey, and an apartment unit in New York City and prohibits the issuance of any additional common stock without the prior written consent of the bank. 6,640 6,640 6,640 6,640 Accrued Interest on Defaulted Notes 77,405 98,932 98,921 104,343 -------- -------- -------- -------- Total Secured Claims $484,045 $505,572 $505,561 $510,983 Unsecured Accounts Payable $211,095 $211,095 $211,095 $191,953 Payroll Taxes Payable $172,169 $172,169 $172,169 $139,230 Accrued Penalties and Interest on Payroll Taxes Payable 7,024 22,949 21,622 33,561 -------- -------- -------- -------- Total Liabilities Subject To Compromise 874,333 911,785 910,447 875,727 Less: Current Portion -- -- 82,080 875,727 -------- -------- -------- -------- Total Liabilities Subject to Compromise - Long-Term $874,333 $911,785 $828,367 $ -- ======== ======== ======== ========
NOTE 5 - COMMITMENTS: The Company leases its operating facilities on a month-to-month basis at $1,675, per month. The Company leases parking facilities on a month-to-month basis at $100, per month. The Company also leases its tower transmitting site under a long-term lease expiring March 2000 with a CPI index adjustment after every five years. The current monthly base rent is $375. Rent expense was $20,750, $26,775 and $26,010 for the years ended April 30, 1993, 1994 and 1995 resepctively, and $25,585 and $25,383 for the eleven months ended March 31, 1995 and 1996 respectively. The Company's future minimum lease payments under the above lease agreement are as follows: Period Ended March 31, ------------ 1997 $ 5,244 1998 5,244 1999 5,244 2000 1,311 ------- $17,043 The Company has also entered into contracts to purchase additional tower equipment for the 1660 AM band. The total due on these contracts at March 31, 1996 is $21,077. This amount is included in accounts payable and accrued expenses. NOTE 6 - INCOME TAXES: The Company, as of March 31, 1996, has unused Federal and State operating loss carryforwards of approximately $350,296 and $352,270, which may be applied against future taxable income expiring in 2008 and 2001, respectively. NOTE 7 - SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for interest was $18,000, $8,400 and $8,400 for the years ended April 30, 1993, 1994 and 1995 resepectively and $6,600 and $31,800 for the eleven months ended March 31, 1995 and 1996 respectively. Cash paid for state income taxes was $50, $0, and $25 for the years ended April 30, 1993, 1994 and 1995 and $25 and $97 for the eleven months ended March 31, 1995 and 1996 respectively NOTE 8 - PLAN OF REORGANIZATION: On July 11, 1995, the Bankruptcy Court confirmed the Company's Plan of Reorganization. The confirmed plan provides for the following: Secured Debt: The Company secured debt of $510,983, including accrued interest, to Summit Bank at March 31, 1996 was paid in full in June 1996 (see Note 9). Priority Tax Claims: Payroll and withholding taxes of $172,791, including accrued penalties and interest at March 31, 1996 were paid in full in June 1996 (see Note 9). Unsecured General Creditors: The $191,953 claims of general unsecured creditors at March 31, 1996 were paid in full in June 1996 (see Note 9). NOTE 9 - SUBSEQUENT EVENTS: The Company's stockholder has sold his common stock to Children's Broadcasting Corporation of Minneapolis, Minnesota for $10 million effective June 1, 1996. A portion of the proceeds has been used to fully satisfy all outstanding debt of the Company, and to repay the stockholder loan (see Note 3). It is the intention of Children's Broadcasting Corporation to use the expanded 1660 AM Band to broadcast its children's radio programming which is directed to pre-teenage children and their families. The current stockholder will be allowed to continue to operate the 1530 AM Band up to a maximum of five years as permitted by the Federal Communications Commission under an LMA which was entered into at closing. Unaudited pro forma financial position as if the acquisitions had occurred March 31, 1996 would be:
Radio Pro forma Combined Wolphin Pro forma CBC Elizabeth Adjustments Total Broadcasting Adjustments Total ----------- ---------- ----------- ----------- ---------- ---------- ----------- March 31, 1996: Current assets $16,868,827 $ 327,412 $ -- $17,196,239 $ 57,729 $ (57,729)(2) $17,196,239 Deffered expenses 1,978,890 1,978,890 1,978,890 Property and equipment 3,033,401 152,088 137,912 (1) 3,323,401 8,588 306,412 (2) 3,638,401 Broadcast licenses 4,913,259 26,351 10,801,688 (1) 15,741,298 273,465 911,535 (2) 16,926,298 Other assets 1,305,215 1,305,215 1,305,215 ----------- ---------- ----------- ----------- ---------- ---------- ----------- Total assets $28,099,592 $ 505,851 $10,939,600 $39,545,043 $ 339,782 $1,160,218 $41,045,043 =========== ========== =========== =========== ========== ========== =========== Current liabilities $ 3,062,072 $1,032,068 $(1,032,168)(1) $ 3,061,972 $ 74,805 $ (74,805)(2) $ 3,061,972 Long-term debt 662,447 662,447 662,447 Other liabilities 50,899 50,899 50,899 Redeemable convertible 0 preferred stock 2,286,386 2,286,386 2,286,386 Shareholders' equity (deficit) 22,037,788 (526,217) 11,971,768 (1) 33,483,339 264,977 1,235,023 (2) 34,983,339 ----------- ---------- ----------- ----------- ---------- ---------- ----------- Total liabilities and shareholders' equity $28,099,592 $ 505,851 $10,939,600 $39,545,043 $ 339,782 $1,160,218 $41,045,043 =========== ========== =========== =========== ========== ========== ===========
Pro forma adjustments to financial position: (1) Purchase accounting adjustments associated with the acquisition of Radio Elizabeth, Inc.,including: (i) adjustment of property and equipment to a fair market value of $290,000 (ii) seller obligation to repay all liabilities out of the proceeds of the sale totalling $1,032,068 at March 31, 1996; (iii) common stock valued at $11,500,000 to be issued to finance the purchase and (iv) $10,828,039 of broadcast license value purchased, allocated $750,000 to 1530 AM and $10,087,039 to 1660 AM. (2) Purchase accounting adjustments associated with the acquisition of Wolpin Broadcasting Company,including: (1) seller to retain title to all current assets (ii) adjustment of existing property and equipment to a fair market value of $75,000 and record land purchased in conjunction with the acquisition valued at $240,000 (iii) $1,185,000 of broadcast license value purchased (iv) seller obligation to repay all liabilities out of the proceeds of the sale totalling $74,805 at March 31, 1996; and (iii) common stock valued at $1,500,000 to be issued to finance the purchase.
Children's Radio Pro Forma Wolpin Pro Forma Broadcasting Elizabeth, Pro Forma Including Broadcasting Pro Forma Including Corporation Inc. Adjustments REI Company Adjustments REI and WPC ----------- ----------- ----------- ----------- ----------- ----------- ----------- Year Ended December 31, 1995: Revenues $ 5,106,545 $ 405,173 $ (405,173)(1) $ 5,112,545 $ 566,041 $ $ 5,678,586 6,000 (4) -- Operating expenses 10,006,059 421,167 (421,167)(1) 10,006,059 475,028 66,275(5) 10,547,362 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income (loss) from operations (4,899,514) (15,994) 21,994 (4,893,514) 91,013 (66,275) (4,868,776) Reorganization items (28,751) 28,751 (1) -- -- -- -- Interest expense, net (1,208,263) (35,480) 35,480 (1) (1,208,263) -- -- (1,208,263) Income taxes (55) 55 (1) -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Income (loss) $(6,107,777) $ (80,280) $ 86,280 $(6,101,777) $ 91,013 $ (66,275) $(6,077,039) =========== =========== =========== =========== =========== =========== =========== Net loss per share $ (2.22) ($ 1.59) =========== =========== Weighted average number of shares outstanding 2,815,500 3,815,500 =========== =========== Three Months Ended March 31, 1996: Revenues $ 1,216,023 $ 78,964 $ (78,964)(1) $ 1,217,523 $ 106,674 $ -- $ 1,324,197 1,500 -- Operating expenses 2,823,990 90,798 (90,798)(1) 2,823,990 121,785 85,781 3,031,556 ----------- ----------- ----------- ----------- ----------- ----------- ----------- Income (loss) from operations (1,607,967) (11,834) 13,334 (1) (1,606,467) (15,111) (85,781) (1,707,359) Reorganization items -- -- -- -- -- -- Interest expense, net (267,906) (9,998) 9,998 (1) (267,906) -- (267,906) Income taxes -- -- -- -- -- ----------- ----------- ----------- ----------- ----------- ----------- ----------- Net Income (loss) $(1,875,873) $ (21,832) $ 23,332 $(1,874,373) $ (15,111) $ (85,781) $(1,975,265) =========== =========== =========== =========== =========== =========== =========== Net loss per share $ (0.63) $ (0.50) =========== =========== Weighted average number of shares outstanding 3,062,500 4,062,500 =========== ===========
Pro forma adjustments to operations: (1) Eliminate the revenue and operating expenses related to the operation of radio station WJDM 1530 AM to give effect for the local programming agreement. (2) The acquired broadcast license for 1660 AM valued at $10,078,039 will be amortized over an estimated useful life of 20 years beginning with the issuance of a license covering the new 1660 AM frequency. As a result, no pro forma adjustment has been recorded for amortization expense associated with the purchase broadcast license. (3) LMA fees to be paid by CBC to the seller of $80,000 per month, will begin with the commencement of broadcast operations on the new 1660 AM frequency and continue until FCC approval for the transfer of the broadcast license is received by CBC. As a result, no pro forma adjustment has been recorded for this expense. (4) LMA fee of $500 per month paid by the seller to CBC for the continued rights to broadcast on 1530 AM. (5) Reflects an adjustment to depreciation and amortization expense related to property and equipment and broadcast licenses acquired from Wolpin Broadcasting Company as if the transaction had occurred on January 1, 1995. Straight-line depreciation is calculated over eight years for equipment and the broadcast license is amortized over a twenty year life. SIGNATURE Pursuant to the requirements 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. CHILDREN'S BROADCASTING CORPORATION Date: November 12, 1996 By /s/ James G. Gilbertson ----------------------- James G. Gilbertson Executive Vice President and Chief Financial Officer EX-23 2 CONSENT Children's Broadcasting Corporation 724 First Street North, 4th Floor Minneapolis, Minnesota 55401 Gentlemen: We consent to the use of our reports for the eleven months ended March 31, 1996 and 1995 and the reports for the years ended April 30, 1993, 1994, and 1995, with repsect to the financial statements of Radio Elizabeth, Inc. in the 8-K/A of Children's Broadcasting Corporation. /s/ SMOLIN, LUPIN & CO., P.A. SMOLIN, LUPIN & CO., P.A. West Orange, New Jersey November 12, 1996 -----END PRIVACY-ENHANCED MESSAGE-----