-----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, UCFoa01Pedpp3J7eA1XUP31/GG19BWXRKYAUyGPVGxOIbO0sUqAer0IECr0b/Az6 UQN0qHOEQm6WRFBB7TZ2gw== 0000891554-97-001086.txt : 19971117 0000891554-97-001086.hdr.sgml : 19971117 ACCESSION NUMBER: 0000891554-97-001086 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: METRO DISPLAY ADVERTISING INC CENTRAL INDEX KEY: 0000944742 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ADVERTISING [7310] IRS NUMBER: 33093323 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25982 FILM NUMBER: 97720083 BUSINESS ADDRESS: STREET 1: 15265 ALTON PARKWAY STREET 2: STE 100 CITY: IRVINE STATE: CA ZIP: 92718 BUSINESS PHONE: 7147273333 MAIL ADDRESS: STREET 1: 15265 ALTON PARKWAY STREET 2: STE 100 CITY: IRVINE STATE: CA ZIP: 92718 10QSB 1 9 MONTHS SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 Commission File Number 0-025982 METRO DISPLAY ADVERTISING, INC. (exact name of small business issuer as specified in its charter) CALIFORNIA 33-0093323 (State of Incorporation) (IRS Employer Identification No.) SUITE 100 15265 ALTON PARKWAY IRVINE, CA 92618 (address of principal executive offices) (714) 727-3333 (issuer's telephone number, including area code) Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities of Act of 1934 during the preceding 12 months (or for each such shorter period that the registrant was required to file such report), and (2) has been filing such requirements for the past 90 days. YES X NO ---- ---- Number of shares outstanding of each issuer's classes of common stock, as of September 30 1997: 943,030 This report contains 9 sequentially numbered pages. METRO DISPLAY ADVERTISING, INC. INDEX PART I - FINANCIAL INFORMATION Page ---- Item 1. Financial Statements Condensed Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 2 Condensed Consolidated Statement of Operations for the Three Months Ended September 30, 1997 and 1996 3 Condensed Consolidated Statement of Operations for the Six Months Ended September 30, 1997 and 1996 4 Condensed Consolidated Statement of Cash Flows for the Three Months Ended September 30, 1997 and 1996 5 Notes to the Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-8 PART II - OTHER INFORMATION Item 5. Other Information 9 PART 1 Financial Information Item 1, Financial Statements METRO DISPLAY ADVERTISING, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS December 31, September 30, 1996 1997 ------------ ------------ (unaudited) CURRENT ASSETS Cash $ 74,947 $ (5,254) Accounts Receivable, net of allowance 989,804 991,788 Prepaid expenses 226,844 11,704 Deferred taxes-current portion 196,000 196,000 ------------ ------------ TOTAL CURRENT ASSETS 1,487,595 1,194,238 PROPERTY AND EQUIPMENT, net 6,172,659 5,659,278 OTHER ASSETS Performance bond deposits 734,722 734,722 Deferred taxes - less current portion 3,052,000 3,052,000 Other assets 186,528 263,906 ------------ ------------ TOTAL OTHER ASSETS 3,973,250 4,050,628 ------------ ------------ $ 11,633,504 $ 10,904,144 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long term debt $ 693,065 $ 865,079 Accounts payable and accured liabilities 1,031,117 1,168,982 Advance payments 226,067 150,000 ------------ ------------ TOTAL CURRENT LIABILITIES 1,950,249 2,184,061 LONG-TERM DEBT, net of current portion 833,785 866,469 SHAREHOLDERS' EQUITY Preferred stock, 1,000,000 shares authorized, no par value, no shares issued -- -- Common stock, 5,000,000 shares authorized, no par value, 943,030 shares issued 9,504,532 9,504,832 Accumulated deficit (655,062) (1,651,218) ------------ ------------ TOTAL SHAREHOLERS' EQUITY 8,849,470 7,853,614 ------------ ------------ $ 11,633,504 $ 10,904,144 ============ ============
See accompanying Notes to condensed Financial Statements METRO DISPLAY ADVERTISING, INC. AND SUBSIDIARY CONDENDSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Three Months Ended September 30, 1996 1997 ------------ ------------ SALES $ 2,786,539 $ 1,606,230 COST OF SALES City fees 710,397 578,269 Advertising commissions and expenses 745,418 353,510 Installation and maintenance 370,374 350,575 Other costs 18,873 14,497 ------------ ------------ TOTAL COST OF SALES 1,845,062 1,296,851 GROSS PROFIT 941,477 309,379 ------------ ------------ OPERATING EXPENSES Sales and administrative 382,232 517,101 Depreciation 240,447 235,143 Interest expense 34,352 29,406 Other expense(income) (52,954) (112) ------------ ------------ TOTAL OPERATING EXPENSES 604,077 781,538 ------------ ------------ NET INCOME (LOSS) $ 337,400 $ (472,159) ============ ============ COMMON SHARES OUTSTANDING 906,364 990,030 NET INCOME (LOSS) PER SHARE 0.37 (0.48) ============ ============
See accompanying Notes to Condensed Financial Statements METRO DISPLAY ADVERTISING, INC. AND SUBSIDIARY CONDENDSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited)
Nine Months Ended September 30, 1996 1997 ------------ ------------ SALES $ 5,819,975 $ 5,446,982 COST OF SALES City fees 1,566,425 1,508,192 Advertising commissions and expenses 1,489,241 1,340,124 Installation and maintenance 1,010,378 1,072,935 Other costs 142,439 83,084 ------------ ------------ TOTAL COST OF SALES 4,208,483 4,004,335 GROSS PROFIT 1,611,492 1,442,647 ------------ ------------ OPERATING EXPENSES Sales and administrative 1,014,621 1,680,186 Depreciation 714,840 705,657 Interest expense 105,223 92,778 Other expense(income) (144,274) (39,818) ------------ ------------ TOTAL OPERATING EXPENSES 1,690,410 2,438,803 ------------ ------------ NET INCOME (LOSS) $ (78,918) $ (996,156) ============ ============ COMMON SHARES OUTSTANDING 906,364 990,030 NET INCOME (LOSS) PER SHARE (0.09) (1.01) ============ ============
See accompanying Notes to Condensed Financial Statements METRO DISPLAY ADVERTISING, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Nine Months Ended September 30, 1996 1997 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $ (78,918) $ (996,156) Adjustments ot reconcile net income to net cash provided (used) by operating activities: Depreciation and amortization 714,840 705,657 Changes in operating assets and liabilities: Accounts receivable (248,127) (1,984) Prepaid expenses and other 27,607 215,140 Deposits and other -- -- Accounts payable and accrued expenses 344,348 61,798 Loss on sale of assets (20,916) -- ------------ ------------ NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 738,834 (15,545) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property and equipment (354,678) (192,276) Advances to joint venture (40,570) (77,378) Performance bond deposits (36,500) -- ------------ ------------ NET CASH PROVIDED FROM INVESTING ACTIVITIES (431,748) (269,654) CASH FLOWS FROM FINANCING ACTIVITIES Principal reductions of long term debt (398,410) (275,302) Loan proceeds -- 480,000 Proceeds from stock options granted -- 300 ------------ ------------ NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (398,410) 204,998 NET INCREASE (DECREASE) IN CASH (91,324) (80,201) Beginning of period 225,524 74,947 ------------ ------------ CASH, End of period $ 134,200 $ (5,254) ============ ============
See accompanying Notes to Condensed Financial Statements METRO DISPLAY ADVERTISING, INC. AND SUBSIDIARY Notes to Condensed Consolidated Financial Statements (Unaudited) Note 1. Introduction The accompanying condensed consolidated financial statements of Metro Display Advertising, Inc. (the "Company") have been prepared without audit pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. These financial statements should be read in conjunction with the consolidated financial statements and related footnotes included in the Company's latest Annual Report on Form 10-KSB. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of the Company as of September 30, 1997, and the statements of its operation and its cash flows for the three month periods ended September 30, 1997 and 1996 have been included. The results of operation for interim periods are not necessarily indicative of the results, which may be realized for the full year. Item 2. Management's Discussion and Analysis of Plan of Operations General From January 22, 1992 until January 7, 1994, Metro Display Advertising, Inc., a California Corporation (the "Company"), was in bankruptcy. Since its bankruptcy proceedings, the Company has primarily been in the business of leasing advertising space on panels located in its bus stop shelters. The Company's shelters are located in both Northern and Southern California. In addition, the Company operates in Clark County, Nevada, and the City of Las Vegas, Nevada through Bustop Shelter of Nevada, (BSON), a Nevada Corporation and fully owned subsidiary. During the fiscal years ended December 31, 1994 and 1995, the Company made the transition from a company operating under the bankruptcy court in prior years, to a company operating under a revised business plan. The Company's primary focus was on increasing sales and occupancy rates, reducing overhead, and continuing scheduled payments to pre-bankruptcy Plan of Reorganization. The Company's objectives for fiscal year 1997 remain dedicated to this business plan. Comparisons of three-months ended September 30, 1997 and September 30, 1996 Sales for the three-month quarter ended September 30, 1997 (the "Current Quarter") decreased by 42% in comparison to the three-month period ended September 30, 1996 (the "Prior Quarter"). The company's revenues from national accounts has dropped significantly due to the company's current litigation with its national advertising agency and selling agent. The company continues with its intensive marketing and public relations campaign that has been staged to offset the on-going litigation with the City of Victorville. The on-going litigation involves the Company's First Amendment Rights. In general, the Company believes that its rights to freely advertise were violated when the City prevented the Company from displaying paid advertising for a local labor union. While the Current Quarter results have been signifantly down compared to prior year, it is expected that this litigation will continue to impact sales growth in the remaining quarter of 1997. Current litigation concerning the marketing agreement with Van Wagner is also expected to impact sales negatively during the remaining quarter of the 1997. Cost of sales decreased by $548,211 or 30% over the prior quarter primarily due to decreases in City fees of $132,128 or 19% and decreases in advertising commission expenses of $391,908, or 53%. The decreases in City fees are primarily due to a decrease in the amount accrued for City fees in the Current Quarter. The decreases in advertising commission expenses are the result of significant decline in national sales, resulting in lower commisions in the Current Quarter. The Company's gross profit percentage declined from 34% in the Prior Quarter to 19% in the Current Quarter, primarily resulting from lower revenues assoicated with fixed costs of maintaining the bus shelters. An increase of $177,461 was incurred in operating expenses during the Current Quarter principally due to increases in office expenses due to office expansion in Nevada, an increase in bad debts, and legal expenses necessary to deal with the Victorville litigation. In addition, the Company has incurred professional fees relating to sale/merger agreement pending. Due to the significant increase in operating expenses relating to sale/merger and litigation expenses, the Company posted a $472,159 net loss, before income taxes, during the Current Quarter compared to a $337,400 net lncome before taxes during the Prior Quarter. The Company has maintained its primary focus on increasing sales and occupancy rates, and reducing overhead. Comparisons of nine-months ended September 30, 1997 and September 30, 1996 Sales for the nine-month period ended September 30, 1997 (the "Current Period") decreased by $372,993, or 6%, in comparison to the nine-month period ended September 30, 1996 (the "Prior Period"). This decrease in sales in the Current Period is attributable to a significant decline in revenues during the Current Quarter. As previously mentioned the Company's litigation with Company's national sales agent has affected national sales significantly, resulting in lower panel occupancy. Cost of sales decreased by $204,148 or 5% over the Prior Period primarily due to a decreases of $58,233, or 4% in City fees, and a decrease of $149,117, or 10% in advertising commissions and expenses. The Company's gross profit percentage decreased from 28% in the Prior Period to 26% in the Current Period. The decline of $168,845 or 10% is the result of lower occupancy and decreases in national account sales. An increase of $748,393 was incurred in operating expenses during the Current Period principally due to increases in Professional fees of $284,765, an increase in bad debts of $132,341 written off during the second quarter, and a general increase in other operating expenses of $122,202. Due to the significant increase in operating expenses coupled with a decline in sales of $372,993 during the Current Period, the Company posted a $996,156 net loss, before income taxes, during the Current Period compared to a $78,918 net loss before taxes during the Prior Period. Liquidity and Capital Resources As of September 30, 1997, the Company's current liabilities exceeded its current assets by $989,823. Approximately $670,000 of the current liabilities consists of the current portion of indebtedness owed to Dr. Allan Ross, a Director of the Company. The Company's working capital position worsened by $527,169 during the Current Period, primarily the result of increases in operating expenses of $748,393. Cash flows from operating activities decreased by $754,379 over the Prior Period, principally due to the net loss of $996,156 for the Current Period. The Company utilized $480,000 against the credit line facility during the Current Quarter to fund current operations. The Company believes that it will be able to fund its current working capital needs from (1) cash generated from operating activities and (2) draws against the credit line facility. PART II OTHER INFORMATION Item 5, Other Information Subsequent to year-end December 31, 1996, the Company signed a memorandum of understanding with a buyer for the sale of all 100% of Metro Display Advertising, Inc. common stock. The transaction is subject to stockholder ratification and completion of due diligence procedures to be performed by the buyer. The Company continues to negotiate the terms and conditions of the sale, given its pending litigation with OSI/Van Wagner concerning contractual and fiduciary relationships between the Company and Van Wagner Communications, Inc. Signature Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized. METRO DISPLAY ADVERTISING, INC. /s/ Scott Kraft Dated November 14, 1997 ------------------------------- Scott A. Kraft, President and Chief Financial Officer EX-27 2 FDS
5 9-MOS DEC-31-1997 SEP-30-1997 (5,254) 0 1,165,327 (173,539) 0 1,194,238 8,998,869 (3,339,591) 10,904,144 2,184,061 0 0 0 9,504,832 0 10,904,144 5,446,982 5,446,982 4,004,335 4,004,335 2,438,803 0 92,778 (996,156) 0 0 0 0 0 (996,156) (1.01) .00
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