-----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, FRFRa9bigrs/cjc2E5SfUmop3B/9G8wSI7EhLcY6kYkJ76hqn6LNzoFllTi8NZQj c1n30eeqLycNyAZAu3ZqCQ== 0000950152-98-005566.txt : 19980626 0000950152-98-005566.hdr.sgml : 19980626 ACCESSION NUMBER: 0000950152-98-005566 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980430 FILED AS OF DATE: 19980625 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: REGENT COMMUNICATIONS INC CENTRAL INDEX KEY: 0000913015 STANDARD INDUSTRIAL CLASSIFICATION: RADIO BROADCASTING STATIONS [4832] IRS NUMBER: 311492857 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 333-46435 FILM NUMBER: 98654324 BUSINESS ADDRESS: STREET 1: 400 WEST MARKET ST. STREET 2: SUITE 2510 CITY: LOUISVILLE STATE: KY ZIP: 40202 BUSINESS PHONE: 6062920300 MAIL ADDRESS: STREET 1: 50 EAST RIVERCENTER BLVD STREET 2: SUITE 180 CITY: COVINGTON STATE: KY ZIP: 41011 10-Q 1 REGENT COMMUNICATIONS, INC. 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998 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 333-46435 REGENT COMMUNICATIONS, INC. (Exact name of registrant as specified in its charter) Delaware 31-1492857 (State or other jurisdiction of (I.R.S. Employer in corporation or organization) Identification No.) 50 East RiverCenter Boulevard Suite 180 Covington, Kentucky 41011 (Address of principal executive offices) (Zip Code) (606) 292-0030 (Registrant's telephone number, including area code) -------------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No X ----- ----- Indicate the number of shares outstanding of the issuer's classes of common stock, as of the latest practicable date. Common Stock - $.01 Par Value - 240,000 shares as of June 15, 1998. 2 Part I. - FINANCIAL INFORMATION Item 1. Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations On June 15, 1998, a merger was consummated between Regent Communications, Inc. (the "Company") and Faircom Inc. ("Faircom"), pursuant to which Faircom became a wholly-owned subsidiary of the Company. This merger was accounted for as a "reverse acquisition." Pursuant to generally accepted accounting principles, Faircom was deemed the "accounting acquiror," and the historical financial statements of Faircom have become the historical financial statements of the Company. The Form 10-Q of Faircom for the quarter ended March 31, 1998, including all exhibits thereto, as filed with the Securities and Exchange Commission on May 14, 1998, is incorporated herein by this reference in satisfaction of the requirements of Items 1 and 2 of Part I of this Form 10-Q of the Company. PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders A special joint meeting of the stockholders and directors of the Company was held on February 16, 1998. The following matters were submitted to and approved unanimously by the stockholders of the Company at that meeting: (a) approval of the First Amendment to the Stock Purchase Agreement between the Company and the stockholders of The Park Lane Group, which extended the closing date for the consummation of the transactions contemplated by such Stock Purchase Agreement; (b) approval of federal and state securities law compliance matters in connection with consummation of the Agreement of Merger between the Company and Faircom; (c) approval of Employment Agreements between the Company and each of Terry S. Jacobs and William L. Stakelin; (d) approval of the 1997 Regent Communications, Inc. Management Stock Option Plan, providing for the issuance of up to 2,000,000 shares of the Company's common stock to key employees of the Company; (e) approval of the Regent Communications, Inc. Faircom Conversion Stock Option Plan, providing for the conversion of outstanding options for the purchase of Faircom common stock into options to purchase the common stock of the Company on substantially equivalent terms as part of the merger with Faircom; (f) approval of Amended and Restated By-Laws of the Company, amending the indemnification provisions thereof to be consistent with those contained in the Company's Certificate of Incorporation; and (g) designation of 300,000 additional authorized shares of the Company's Series C Preferred Stock. Item 6. Exhibits and Reports on Form 8-K Exhibit 13 Form 10-Q of Faircom Inc. for the quarter ended March 31, 1998, including all exhibits thereto, as filed with the Securities and Exchange Commission on May 14, 1998, incorporated by reference into Part I, Items 1 and 2 of this Form 10-Q, is filed as Exhibit 13 hereto. Exhibit 27 Financial Data Schedule (Incorporated by reference, and filed herewith as a part of Exhibit 13 hereto). 3 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. REGENT COMMUNICATIONS, INC. By: /s/ Matthew A. Yeoman ------------------------------ Name: Matthew A. Yeoman Its: Vice President - Finance (Chief Accounting Officer) DATE: June 25, 1998 4 Exhibit Index Regent Communications, Inc. Form 10-Q For the Quarter Ended March 31, 1998 Exhibit 13 - Form 10-Q of Faircom Inc. for the quarter ended March 31, 1998, including all exhibits thereto, as filed with the Securities and Exchange Commission on May 14, 1998. Exhibit 27 - Financial Data Schedule (Incorporated by reference, and filed herewith as a part of Exhibit 13 hereto). EX-13 2 EXHIBIT 13 1 Exhibit 13 ------------ FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (MARK ONE) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 1998. 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 0-15392 Faircom Inc. (Exact name of registrant as specified in its charter) Delaware 87-0394057 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 333 Glen Head Road, Old Brookville, New York 11545 (Address of principal executive offices) (516) 676-2644 (Registrant's telephone number, including area code) Not Applicable ------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 [ ] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of May 6, 1998: Common Stock, par value $.01 7,378,199 - ---------------------------- ----------------- (Title of each class) (Number of Shares) 2 PART I. FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS FAIRCOM INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three months ended Three months ended March 31, 1998 March 31, 1997 ------------------ ------------------ Gross broadcasting revenues $1,613,205 $1,030,277 Less: agency commissions (148,128) (126,097) --------- ------- Net broadcasting revenues 1,465,077 904,180 --------- ------- Operating expenses Programming and technical expenses 448,278 293,856 Selling, general and administrative expenses 650,633 436,459 Depreciation and amortization 290,548 78,624 Corporate expenses 113,528 115,534 ------- ------- Total operating expenses 1,503,087 924,473 --------- ------- Loss from operations (38,010) (20,293) Interest expense (503,770) (173,042) Other income 12,152 1,584 -------- -------- Loss before taxes on income (529,628) (191,751) Taxes on income (12,000) (16,000) -------- -------- Net Loss $ (541,628) $ (207,751) Basic and diluted net loss per common share $ (.07) $ (.03) ========== ========== Weighted average share outstanding 7,378,199 7,378,199 =========== ===========
-2- 3 FAIRCOM INC. CONSOLIDATED BALANCE SHEETS
March 31, 1998 December 31, (UNAUDITED) 1997 ----------- ----------- ASSETS $ 524,181 $ 535,312 Current assets: Cash and cash equivalents Accounts receivable, less allowance of $32,000 for possible losses in 1998 and 1997 1,086,206 1,358,002 Prepaid expenses 59,048 25,918 ----------- ----------- Total current assets 1,669,435 1,919,232 ----------- ----------- Property and equipment, at cost 7,786,383 7,564,705 Less accumulated depreciation and amortization (5,487,232) (5,408,461) ----------- ----------- Property and equipment, net 2,299,151 2,156,244 ----------- ----------- Intangible assets, net of accumulated amortization of $891,472 in 1998 and $784,790 in 1997 8,605,826 7,701,341 Other assets: Deferred financing costs 841,563 837,411 Escow deposit for purchase of radio stations 0 100,000 Other 469,584 296,326 ----------- ----------- 9,916,973 8,935,078 ----------- ----------- $13,885,559 $13,010,554 =========== =========== LIABILITIES AND CAPITAL DEFICIT - ------------------------------- Current liabilities: Accounts payable $ 102,386 $ 87,280 Accrued expenses and liabilities 354,950 163,805 Taxes payable 88,623 70,150 Current portion of interest payable 104,433 108,391 Current portion of long-term debt 460,012 430,005 ----------- ----------- Total current liabilities 1,110,404 859,631 Long-term debt, less current portion 22,886,652 21,911,661 Interest payable, less current portion 552,434 353,063 Deferred rental income 59,485 67,987 ----------- ----------- Total liabilities 24,608,975 23,102,342 ----------- ----------- Capital deficit: Common stock-$.01 par value, 35,000,000 shares authorized; 7,378,199 shares issued and outstanding 73,782 73,782 Additional paid-in capital 2,605,813 2,605,813 Deficit (13,403,011) (12,861,383) ----------- ----------- Total capital deficit (10,723,416) (10,181,788) ----------- ----------- $13,885,559 $13,010,554 =========== ===========
-3- 4 FAIRCOM INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended --------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Cash flows from operating activities: Net loss $ (541,628) $ (207,751) ----------- ---------- Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 290,548 78,625 Amortization of deferred rental income (8,502) (8,502) Increase (decrease) in caah flows from changes in operating assets and liabilities, net of effects of purchase of radio station: Account receivable 271,796 383,039 Prepaid expenses (33,130) (47,869) Other assets 1,325 0 Account payable 15,106 (8,695) Accrued expenses and liabilities 191,145 (6,124) Taxes payable 18,473 11,318 Interest payable 195,413 (16,972) ----------- ---------- Total adjustments 942,174 384,820 ----------- ---------- Net cash provided by operating activities $ 400,546 $ 177,069 ----------- ----------
-4- 5 FAIRCOM INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (UNAUDITED)
Three Months Ended ----------------------------------- March 31, 1998 March 31, 1997 -------------- -------------- Cash flows from investing activities: Assets related to purchase of radio station $ (1,205,000) $ 0 Capital expenditures (46,898) (10,256) Acquisition of intangible assets (180,946) 0 Escrow deposits for purchase of radio stations 100,000 (400,000) ------------- ------------ Net cash used in investing activities (1,332,844) (410,256) ------------- ------------ Cash flows from financing activities: Payments for deferred financing costs (83,831) (52,618) Principal payments on long-term debt (95,002) (138,000) Principal payments under capital lease obligations 0 (3,547) Proceeds from aecured note payable 0 400,000 Proceeds from subordinated note payable 1,100,000 0 ------------- ------------ Net cash provided by financing activities 921,167 205,835 ------------- ------------ Net decrease in cash and cash equivalents (11,131) (27,352) Cash and cash equivalents, beginning of period 535,312 123,221 ------------- ------------ Cash and cash equivalents, end of period $ 524,181 $ 95,869 ============= ============
-5- 6 FAIRCOM INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for completed financial statements. In the opinion of management, the statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results for the interim periods. The results of operations for any interim period are not necessarily indicative of the results for a full year. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1997, as filed with the Commission. 2. Net Loss Per Common Share The effects of the assumed conversion of the Company's Convertible Subordinated Promissory Notes and the Company's Subordinated Senior Convertible Note and the assumed exercise of outstanding options were not dilutive and, accordingly, have been excluded from the diluted per share calculations for the three months ended March 31, 1998 and March 31, 1997. -6- 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS The results of the Company's operations for the three months ended March 31, 1998 compared to the three months ended March 31, 1997 are not comparable or necessarily indicative of results in the future due to the significance of acquisitions. As of June 30, 1997, the Company, through a wholly-owned subsidiary, Faircom Mansfield Inc. ("Faircom Mansfield"), acquired the assets and operations of two radio stations, WMAN-AM and WYHT-FM, both located in Mansfield, Ohio (the "Mansfield Stations") for aggregate cash consideration of $7,650,000. As of January 21, 1998, Faircom Mansfield purchased substantially all of the assets and operations of radio station WSWR-FM in Shelby, Ohio (the "Shelby Station") for $1,125,000 in cash. The acquisitions have been accounted for as purchases, and accordingly the operating results of the Mansfield Stations and the Shelby Station have been included in the Consolidated Statements of Operations from their respective acquisition dates. The operating results of the Shelby Station, as so included in such Consolidated Statements of Operations for the three months ended March 31, 1998, were not material. The increase in the Company's net broadcasting revenues in the three months ended March 31, 1998 as compared with the same period in 1997 resulted principally from the ownership and operation of the Mansfield Stations during the 1998 period. Net broadcasting revenues increased to $1,465,000 from $904,000, or 62.0%, in the 1998 period as compared with the 1997 period. Programming and technical expenses and selling, general and administrative expenses increased in the three months ended March 31, 1998 as compared with the same 1997 period, principally as a result of the acquisition of the Mansfield Stations. Such increases were to $448,000 from $294,000, or 52.6%, and to $651,000 from $436,000, or 49.1%, respectively. Operating expenses before depreciation, amortization and corporate expenses consequently increased in the three months ended March 31, 1998 as compared with the comparable period in 1997, primarily as a result of the acquisition of the Mansfield Stations. Such increase was to $1,099,000 from $730,000, or 50.5%, in the 1998 period as compared with the same period in 1997. Net broadcasting revenues in excess of operating expenses before depreciation, amortization and corporate expenses ("broadcast cash flow") increased 110.5% to $366,000 in the three months ended March 31, 1998 from $174,000 in the same period in 1997. This increase resulted from the acquisition of the Mansfield Stations as described above, offset somewhat by slightly lower broadcast cash flow from the Company's radio stations in Flint, Michigan. -7- 8 Depreciation and amortization and interest expense increased in the three months ended March 31, 1998, as compared with the same period in 1997, as a result of the addition of assets and debt incurred in connection with the acquisition of the Mansfield Stations and the Shelby Station. As a result principally of higher depreciation and amortization and interest expense in the three months ended March 31, 1998, offset in part by higher broadcast cash flow, net loss was $542,000 for the period in 1998 compared to net loss of $208,000 in the comparable 1997 period. LIQUIDITY AND CAPITAL RESOURCES In the three months ended March 31, 1998, net cash provided by operating activities was $401,000 compared with $177,000 provided by operating activities in the three months ended March 31, 1997. Net decrease in cash and cash equivalents was $11,000 in the 1998 period compared with a net decrease of $27,000 in the comparable 1997 period. Historically, the Company's net cash provided by operating activities is lower in its first and second quarters, and the Company expects such net cash to increase for the balance of 1998. In January 1998, Faircom Mansfield purchased substantially all of the assets and operations of radio station WSWR-FM in Shelby, Ohio for $1,125,000 in cash. The acquisition was financed with internal funds and a loan to the Company of $1,100,000. The loan is in the form of a subordinated note, matures on the first to occur of April 1, 1999 or the closing of the merger with Regent Communications, Inc. ("Regent"), discussed below, and bears accrued interest at 14% per annum, payable at maturity. Based upon current interest rates, and assuming the merger with Regent is not consummated, the Company believes its interest payments for the balance of 1998 will be approximately $909,000. Scheduled debt principal payments are $335,000. Corporate expenses and capital expenditures for the remainder of 1998 are estimated to be approximately $296,000 and $153,000, respectively. The Company expects to be able to meet such interest expense, debt repayment, corporate expenses and capital expenditures, aggregating $1,693,000, from net cash provided by operations and current cash balances. For the years 1999 through 2001, currently scheduled debt principal payments average $685,000 yearly. Interest payments, corporate expenses and capital expenditures are expected to be approximately the same as projected for 1998, adjusted for inflation. The Company expects to be able to meet such cash requirements from net cash provided by operations and cash balances. The Company believes its $1,100,000 loan maturing April 1, 1999, and the balance of its long-term debt in the amount of $19,858,000, maturing July 1, 2002, will be refinanced at their respective maturity dates either from its current lenders or from other sources, if still outstanding. -8- 9 The terms of the Securities Purchase Agreement applicable to the Company's Convertible Subordinated Promissory Class A and Class B Notes (the "Notes"), as amended, provide that if the Company does not, on or before April 1, 1999, consummate a merger of the Company with another corporation on terms acceptable to the holders of the Notes, then upon notice from such holders, the Company shall take all action necessary to liquidate the Company and each of its subsidiaries on terms and conditions acceptable to such holders, such approval not to be unreasonably withheld. As indicated below, the Company expects to complete a merger with Regent in the second quarter of 1998. If, however, such merger should not occur, the Company believes there are a number of alternatives available to it which would be acceptable to the holders of the Notes. On December 5, 1997, the Company announced that it had signed an agreement to merge with Regent, another group radio broadcaster. The Company anticipates a closing of the merger in the second quarter of 1998. The closing of the merger is subject to satisfaction of the conditions of the merger agreement and the approval of the Company's stockholders. The Company estimates the fees and expenses of this transaction, for which the Company is responsible, to be approximately $543,000. Of this amount, approximately $233,000 is payable only if the merger is consummated. Of the balance of $310,000, the Company expects to pay such fees and expenses from net cash provided by operations and current cash balances, and, with respect to the amount payable on consummation of the merger, from current cash balances at the time of the closing of the merger. Cautionary Statement Concerning Forward-Looking Statements This Form 10-Q includes or may include certain forward-looking statements with respect to the Company that involve risks and uncertainties. This Form 10-Q contains certain forward-looking statements concerning financial position, business strategy, budgets, projected costs, and plans and objectives of management for future operations, as well as other statements including words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "project" and other similar expressions. Although the Company believes its expectations reflected in such forward-looking statements are based on reasonable assumptions, readers are cautioned that no assurance can be given that such expectations will prove correct and that actual results and developments may differ materially from those conveyed in such forward-looking statements. For these statements, the Company claims the protections of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Important factors that could cause actual results to differ materially from the expectations reflected in the forward-looking statements herein include changes in general economic, business and market conditions, as well as changes in such conditions that may affect the radio broadcast industry or the markets in which the Company operates, including, in particular, increased competition for attractive radio properties and advertising dollars, fluctuations in the costs of operating radio properties, and changes -9- 10 in the regulatory climate affecting radio broadcast companies. Such forward-looking statements speak only as of the date on which they are made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q. If the Company does update or correct one or more forward-looking statements, readers should not conclude that the Company will make additional updates or corrections with respect thereto or with respect to other forward-looking statements. -10- 11 PART II. OTHER INFORMATION ITEM 1. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 27 Financial Data Schedule All other items of this Part are inapplicable. -11- 12 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. FAIRCOM INC. (Registrant) /s/ Joel M. Fairman ----------------------- Joel M. Fairman Chairman of the Board President and Treasurer (Principal Executive Officer and Chief Financial Officer) Date: May 14, 1998 -12- 13 [ARTICLE] 5 [PERIOD-TYPE] 3-MOS [FISCAL-YEAR-END] DEC-31-1998 [PERIOD-END] MAR-31-1998 [CASH] 524,181 [SECURITIES] 0 [RECEIVABLES] 1,118,206 [ALLOWANCES] 32,000 [INVENTORY] 0 [CURRENT-ASSETS] 1,669,435 [PP&E] 7,786,383 [DEPRECIATION] 5,487,232 [TOTAL-ASSETS] 13,885,559 [CURRENT-LIABILITIES] 1,110,404 [BONDS] 22,886,652 [PREFERRED-MANDATORY] 0 [PREFERRED] 0 [COMMON] 73,782 [OTHER-SE] (10,797,198) [TOTAL-LIABILITY-AND-EQUITY] 13,885,559 [SALES] 0 [TOTAL-REVENUES] 1,613,205 [CGS] 0 [TOTAL-COSTS] 596,406 [OTHER-EXPENSES] 0 [LOSS-PROVISION] 0 [INTEREST-EXPENSE] 503,770 [INCOME-PRETAX] (529,628) [INCOME-TAX] 12,000 [INCOME-CONTINUING] (541,628) [DISCONTINUED] 0 [EXTRAORDINARY] 0 [CHANGES] 0 [NET-INCOME] (541,628) [EPS-PRIMARY] (.07) [EPS-DILUTED] (.07)
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