-----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, I4yZ7ImbrwifXAUW0KQdsmToG8DxjXqOoAA2CnV1kEdxAP/Rwc7Z1sKw0SQaLlDz /1wGnsNnWsuxyJzWh99uAA== 0001005477-97-001705.txt : 19970623 0001005477-97-001705.hdr.sgml : 19970623 ACCESSION NUMBER: 0001005477-97-001705 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970430 FILED AS OF DATE: 19970620 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: KIDEO PRODUCTIONS INC CENTRAL INDEX KEY: 0000946073 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 133729350 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-28158 FILM NUMBER: 97627762 BUSINESS ADDRESS: STREET 1: 611 BROADWAY STE 523 CITY: NEW YORK STATE: NY ZIP: 10022 MAIL ADDRESS: STREET 1: 611 BROADWAY STREET 2: STE 523 CITY: NEW YORK STATE: NY ZIP: 10012 10QSB/A 1 AMENDMENT NO. 1 TO FORM 10-QSB United States Securities and Exchange Commission WASHINGTON, D. C. 20549 FORM 10-QSB Amendment Number 1 |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 30, 1997 OR |_| TRANSACTION REPORT PURSUANT TO 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-28158 KIDEO PRODUCTIONS, INC. - -------------------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) DELAWARE 13-3729350 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 611 Broadway, Suite 523, New York, New York 10012 - -------------------------------------------------------------------------------- (Address of principal executive office) (zip Code) 212-505-6605 FAX 212-505-2142 - -------------------------------------------------------------------------------- (Issuer's telephone number including area code) Check whether the issuer (1) filed all reports required to be filed by section 13 or 15(d) of the Exchange Act during the past 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 |_|. As of June 16, 1997 2,939,014 shares of the issuer's common stock were outstanding. 1 KIDEO PRODUCTIONS, INC. FORM 10-QSB INDEX PART I Financial Information: Page No. Consolidated Balance Sheet-April 30, 1997 and July 31, 1996........................................ 3 Consolidated Statement of Operations-three and nine months ended April 30, 1997 and 1996...................... 4 Consolidated Statement of Cash Flow-nine months ended April 30, 1997 and 1996.................................. 5 Notes to the Consolidated Financial Statements.............. 6 Management's Discussion and Analysis or Plan of Operation... 7 PART II. Other Information........................................... 11 Signatures.................................................. 12 2 KIDEO PRODUCTIONS, INC. CONSOLIDATED BALANCE SHEET (unaudited) at April at July 30, 31, 1997 1996* -------------------------- ASSETS Current Assets: Cash and cash equivalents ..................... $ 35,809 $ 2,857,097 Accounts receivable ........................... 44,492 94,572 Inventory ..................................... 112,169 17,038 Prepaid expenses .............................. 55,366 122,682 -------------------------- Total current assets ....................... 247,836 3,091,389 Property and equipment, net ....................... 581,684 558,034 Capitalized content costs, net .................... 615,486 431,861 Other assets ...................................... 156,674 286,427 -------------------------- Total assets ............................... $ 1,601,680 $ 4,367,711 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable .............................. $ 506,745 $ 58,988 Accrued expenses .............................. 256,884 270,532 Capital leases, current portion ............... 95,142 147,173 Unearned revenue .............................. 412,781 225,131 -------------------------- Total current liabilities .................. 1,271,552 701,824 Capital leases, long term portion ................. 89,987 80,318 -------------------------- Total liabilities .......................... 1,361,539 782,142 -------------------------- Shareholders' Equity Common Stock, $.0001 par value; authorized 15,000,000 shares, issued and outstanding 2,939,014 shares at July 31,1996 and April 30, 1997 ................................ 294 294 Additional paid-in capital .................... 8,737,136 8,737,136 Accumulated deficit ........................... (8,497,289) (5,151,861) -------------------------- Shareholders' (Deficiency) Equity ............ 240,141 3,585,569 -------------------------- Total liabilities and shareholders' equity . $ 1,601,680 $ 4,367,711 ========================== * Derived from the Form 10-KSB See accompanying notes. 3 KIDEO PRODUCTIONS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
Three months ended Nine months ended April 30, April 30, April 30, April 30, 1997 1996 1997 1996 ------------------------ ------------------------- Sales ........................ $ 301,960 $ 109,222 $ 1,063,190 $ 669,734 Cost of sales ................ 262,672 130,348 873,336 496,521 ------------------------ ------------------------- Gross profit (loss) ......... 39,288 (21,126) 189,854 173,213 Selling expenses ............. 598,270 121,074 1,851,995 536,063 General and administrative expenses .................... 440,408 275,480 1,702,788 805,291 ------------------------ ------------------------- Loss from operations ......... (999,390) (417,680) (3,364,929) (1,168,141) Other income (expense), net .......................... (10,928) (15,429) 19,501 (70,368) Non recurring expenses related to: Debt extinguished in connection with the Initial Public Offering .. -- (204,228) -- (349,797) ------------------------ ------------------------- Net loss ..................... $(1,010,318) $(637,337) $(3,345,428) $(1,588,306) ======================== ========================= Pro forma financial information Net loss ................. N/A $(637,337) N/A $(1,588,306) Pro forma adjustments for: Employment agreements .. N/A N/A N/A (74,000) ----------------------------------------------------- Pro forma net loss ....... N/A $(637,337) N/A $(1,662,306) ======================== ========================= Additional pro forma adjustment for earnings per share calculation: Interest on debt assumed to be converted .............. N/A 25,000 N/A 75,000 Pro forma net loss used in earnings per share ----------------------------------------------------- calculation ............ N/A $(612,337) N/A $(1,587,306) ======================== ========================= Net loss per share ........... $ (0.34) $ (1.14) ============ ============ Pro forma net loss per share.. $ (0.39) $ (1.01) =========== =========== Weighted average number of shares outstanding .......... 2,939,014 2,939,014 ============ ============ Pro forma weighted average number of shares outstanding 1,571,450 1,571,450 =========== ===========
See accompanying notes 4 KIDEO PRODUCTIONS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) Nine months ended April 30, April 30, 1997 1996 -------------------------- Cash flows from operating activities: Net loss ........................................ $(3,345,428) $(1,588,306) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of operating assets ........................................ 509,582 245,250 Amortization of loan discount .................. 148,872 Amortization of deferred debt costs ............ 81,233 Write off of equipment ......................... 226,118 Changes in operating assets and liabilities: Accounts receivable ......................... 50,080 31,703 Inventory ................................... (95,131) Prepaid expenses and other current assets ... 67,316 41,666 Other assets ................................ (89,292) (94,002) Accounts payable ............................ 447,757 4,574 Accrued expenses ............................ (13,648) 110,503 Unearned revenue ............................ 187,650 131,592 -------------------------- Net cash used in operating activities ..... (2,054,996) (886,915) -------------------------- Cash flows from investing activities: Purchase of property and equipment ............ (563,929) (66,760) Increase in capitalized content costs ......... (345,595) -------------------------- Net cash used in investing activities ....... (909,524) (66,760) -------------------------- Cash flows from financing activities: Proceeds from bridge notes .................... 1,175,000 Net proceeds from issuances of capital stock .. 32,125 Proceeds from long term debt .................. 32,125 Proceeds from lease financing ................. 207,102 Loans payable - related parties ............... 400 Principal payments on capital leases .......... (249,464) (45,461) Security deposits applied to capital leases ... 185,594 Pymnet of debt issue costs .................... (160,000) Payment of deferred offering costs ............ (85,098) -------------------------- Net cash provided by financing activities ... 143,232 949,091 -------------------------- Net increase (decrease) in cash ................... (2,821,288) (4,584) Cash and cash equivalents at the beginning of the period ........................................... 2,857,097 61,137 -------------------------- Cash and cash equivalents at the end of the period ........................................... $ 35,809 $ 56,553 ========================== See accompanying notes. 5 KIDEO PRODUCTIONS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (unaudited) The interim financial data is uanudited; however, in the opinion of management, the interim data includes all adjustments, consisting of all normal recurring adjustments necessary for a fair statement of results for the interim periods. The financial statements included herein have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principals have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included herein are adequate to make the information presented not misleading. Operating results for the three and nine months ended April 30, 1997 are not necessarily indicative of the results that may be expected for the year ending July 31, 1997. The organization and the business of the Company, accounting policies followed by the Company and other information are contained in the notes to the Company's consolidated financial statements filed as part of the Company's annual report for the fiscal year ended July 31, 1996 on Form 10-KSB. This quarterly report should be read in conjunction with such annual report. For comparability, certain July 31, 1996 amounts have been reclassified where appropriate to to conform to the financial statement presentation used at April 30, 1997. 6 KIDEO PRODUCTIONS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS The information set forth in "Management's Discussion and Analysis" below includes "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and is subject to the safe harbor created by that section. Readers are cautioned not to place undue influence on these forward-looking statements, as they speak only as of the date hereof. General The Company was organized in August 1993 to develop, manufacture and market personalized videos for children. The process of mass-producing individual videos featuring a subject's likeness and spoken name was developed internally by the Company. In October 1996 a U.S. patent application covering various aspects of the Company's digital personalization production process was allowed by the Patent Examiner. The Company's products are marketed directly to consumers and also through catalogs and retail stores. All customer orders, regardless of their source, are processed at the Company's manufacturing plant in New York City. Revenue is recognized when the completed personalized video is shipped to the customer. Results of Operations The following discussion should be read in connection with the Company's financial statements and notes thereto appearing elsewhere in this report. Nine month comparisons. Comparison of the nine month fiscal period begun August 1, 1996 through April 30, 1997("Current Period") against the nine month fiscal period begun August 31, 1995 through April 30, 1996 ("Prior Period"): Sales: The Company shipped 40,914 personalized videos in the Current Period, an increase of 43% over the 28,695 units shipped in the Prior Period. During the Current Period, the Company released four new personalized video titles. Mystery of the Missing King, and Space Ace are animated titles that were released in October, 1996 with direct mail and telemarketing programs. In January, 1997, the Company released the first live-action and animation personalized videos, Gregory & Me: See What I Can Do! and Gregory & Me: My Amazing Animal Adventure. Both titles feature Gregory Gopher and his friends, proprietary characters developed by the Company. In the current nine month period, these four titles effectively doubled Kideo's offerings to eight proprietary titles. The Company also released a plush version of Gregory Gopher and a non-personalized audio cassette featuring the sound track from the videos. Sales of these ancillary products were not significant in the period. The newly released videos accounted for 30% of the total sales volume in the Current Period. Sales increased 59% to $1,063,000, and include a 304% increase to $643,000 in direct-to-consumer sales. This increase reflects the cumulative results of the Company's direct marketing activities in the first nine months including direct mail, telemarketing, radio, print and television advertising, as well as a higher level of consumer awareness resulting from television and print exposure of the Company and its products. This exposure includes the Oprah Winfrey Show, EXTRA, Managing with Lou Dobbs and articles on the Company published by The New York Times, Gannett Newspapers, NEWSWEEK, and Equity Magazine. Catalog and retail-sourced sales fell 19% to $413,000. A volume decline in the retail channel primarily reflects Prior Period marketing programs that were not rolled out in the Current Period. The number of catalogs offering Kideo products has increased from 16 in the Prior Period to 36 currently. Revenues from this source, however, are level with the Prior Period due to several factors. The timing of the release of the new Gregory & Me titles did not permit their inclusion in Christmas catalogs. Additionally, one of the Company's first and largest customers had been given an exclusive right to sell the Gregory & Me titles in the catalog channel, which limited 7 their exposure. That exclusive right has expired. Since the catalog trade was limited to the four original titles, there was some price erosion in this channel. Gross margin fell to 18% of sales in the Current Period from 26% in the Prior Period. Unit selling prices improved approximately 10% due to the shift in sales mix from catalog-sourced sales (wholesale pricing) to direct-to-consumer sales (retail pricing) Unit sales improved 43%. However, these positive results were offset by increases in fixed costs related to an expansion of production capacity (depreciation, rent, supervision, utilities). In addition, gross margin was negatively affected by amortization of Gregory & Me content development costs. Selling expenses increased 246% to $1,852,000 from $536,000 in the Prior Period, reflecting the costs of marketing the new Gregory & Me titles through TV, radio, print, direct mail, and telemarketing. Retail marketing programs initiated in the Prior Period in the amount of $125,000 were not recurring in the Current Period. General & administrative expenses increased 116% to $1,703,000 from $805,000 in the Prior Period. The Company provided for the disposal of certain production equipment during the second quarter in the amount of $226,000. This equipment was written off after the successful completion of tests allowing for the production of older Kideo titles on new, more efficient equipment. Research and development expenses increased $230,000 during the period, from $114,000 to $344,000. The remainder of interperiod change relates primarily to the higher expenses associated with being a public company (legal, shareholder reporting and insurance accouint for $246,000); and higher infractructure costs (payroll, benefits, depreciation on leasehold improvements and online services account for $296,000). Loss from operations increased 188% to $3,365,000 from $1,168,000, reflecting the above changes. Most notably, the cost of launching the new Gregory & Me titles on radio and TV exceeded the revenues derived. One of the benefits of the launch was that the Company built a substantial database of leads derived from people calling an 800 number for free order kits. The Company intends to use cost-effective means to convert those leads into orders during the remainder of the fiscal year ending July 31, 1997, and into the Christmas season. Management is pursuing strategic marketing alliances with the intent to reduce its financial risk in direct-to-consumer promotions. There can be no assurances that these objectives will be achieved. The loss from operations includes operating investments in infrastructure, including space expansion, operating systems, research & development, and management. In response to unprofitable promotions spending, the Company has implemented cost-saving measures that include across-the-board salary reductions, reductions in shipping costs, headcount, benefits, and discretionary spending. These actions were implemented in March and April, 1997. Other income (expense): The Current Period reflects an excess of interest income from investments (Treasury bills, money market funds and corporate commercial paper) over lease interest expenses. The Prior Period reflects lease interest expenses only; there was no interest income in that period. Nonrecurring expenses relate to interest, amortization of debt discount and issuance costs on securities that were extinguished from a portion of the proceeds of the Company's initial public offering. Net Loss in the period was $3,345,000, or $1.14 per share on 2,939,000 average shares outstanding, vs. $1,662,000, or $1.01 per share on 1,571,000 average shares outstanding. 8 Three month comparisons: Comparison of the third fiscal quarter begun February 1, 1997 through April 30, 1997, ("Current Quarter") against the third fiscal quarter begun February 1, 1996 through April 30, 1996, ("Prior Quarter"): Sales: The Company shipped 9,472 personalized videos in the Current Quarter, an increase of 100% over the Prior Quarter's shipments of 4,726. Sales increased 177% to $302,000 from $109,000 due to television and radio promotions during the current quarter. The direct-to-consumer channel, which returns higher per unit revenues, accounted for the entire increase. Gross Margin improved to 13% of sales in the Current Quarter, compared with a negative gross margin of -19% in the Prior Quarter. Unit selling prices increased as the sales mix shifted to direct-to-consumer sales, which yield a higher, retail price than sales to catalogs and retailers, where the Company realizes a wholesale price. Higher sales volume also contributed to margin improvement, as the incremental sales, less the cost of labor and materials, allowed for better absorption of fixed manufacturing costs. Fixed manufacturing costs increased in the Current Quarter due to amortization of the Gregory & Me titles (in the Current Period only), and higher rent, supervision and utility costs due to the expansion of the Company's production capacity from the levels of the Prior Quarter. Selling expenses increased 394% in the Current Quarter to $598,000 from $121,000 in the Prior Quarter, reflecting the cost of direct mail, radio and TV promotion during the period. General and administrative expenses increased 60% to $440,000 from $275,000 in the Prior Quarter, reflecting higher professional fees in support of the Company's initiatives in the areas of patents & trademarks, new business development, finance, and regulatory reporting. Loss from operations increased 139% to $999,000 from $418,000 in the Prior Quarter. Most notably, the cost of launching the new Gregory & Me titles on radio and TV exceeded the revenues derived. One of the benefits of the launch was that the Company built a substantial database of leads derived from people calling an 800 number for free order kits. The Company intends to use cost-effective means to convert those leads into orders during the remainder of the fiscal year ending July 31, 1997, and into the Christmas season. Management is pursuing strategic marketing alliances with the intent to reduce its financial risk in direct-to-consumer promotions and to develop a broader based distribution for the Company's products. There can be no assurances that these objectives will be achieved. The loss from operations includes operating investments in infrastructure, including space expansion, operating systems, research & development, and management. In response to unprofitable promotions spending, the Company has implemented cost-saving measures that include across-the-board salary reductions, reductions in shipping costs, headcount, benefits, and discretionary spending. These actions were implemented in March and April, 1997. Nonrecurring expenses in the Prior Quarter relate to interest, amortization of debt discount and issuance costs on securities that were extinguished from a portion of the proceeds of the Company's initial public offering. Net Loss in the Current Quarter was $1,010,000, or $0.34 per share on 2,939,000 average shares outstanding, vs. $637,000, or $0.39 per share on 1,571,000 average shares outstanding. Liquidity and Capital Resources The Company's capital requirements have been and will continue to be significant. The Company's cash and cash equivalents declined from $2,857,000 at the fiscal year end, July 31, 1996 to $36,000 at the end of the third fiscal quarter, (April 30, 1997), a decrease of $2,821,000 . Cash used in operations was $2,055,000, representing the net loss of $3,345,000, net of non-cash charges of $736,000, and a net non-cash decrement of working capital. The Company expended $910,000 on the purchase of equipment and on capitalized content costs, and raised $143,000 from leasing transactions. At April 30, 1997, current liabilities exceeded current assets by $1,023,000. On May 13, 1997 the Company closed on the first tranche of a $2,000,000 private placement of a newly authorized series of preferred stock, designated as the Series A 6% Convertible Participating Preferred Stock ("Preferred Stock"). The initial tranche was for $750,000, with subsequent tranches to be received as follows: 9 $500,000 thirty days after the effectiveness of a registration statement, $500,000 thirty days after receipt of the second tranche, and $250,000 thirty days after receipt of the third tranche. The subsequent tranches are subject to certain closing conditions and are avoidable by the Company in the event they are not required. Among the closing conditions on the subsequent tranches is the filing and effectiveness of a registration statement with the SEC covering the shares of Common Stock issuable upon conversion of the Preferred Stock. The Preferred Stock will be convertible into common shares at a discount to the average of the three closing bid prices prior to conversion, which is at the option of the holder after July 12, 1997. The 6% dividend is payable in cash or in kind on each July 31st and January 31st, commencing with July 31,1998. The Company believes that this private placement is sufficient to fund its working capital needs through December 31, 1997. In addition, management has taken actions to reduce the cash burn rate, including reductions in headcount, management salaries, shipping costs, employee benefits, and personal service contracts. Further, management is seeking strategic alliances to fund the marketing of its existing product line on a cost effective basis, to expand its catalog-sourced business and expand its product offerings with nationally recognized characters, and to more fully expose its patented personalization technology to the marketplace. 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings There have been no material changes in the litigation reported in the Company's Annual Report on Form 10-KSB for the year ended July 31, 1996. Item 2. Changes in Securities (a) & (b) The Company's common stock, par value $.0001 per share (the "Common Stock"), is registered pursuant to Section 12(g) of the Securities Exchange Act of 1934. On May 9, 1997, the Company's Board of Directors, acting pursuant to the authority granted under Section 4.2.1 of the Company's Certificate of Incorporation, authorized the creation of a series of the Company's Preferred Stock, par value $.0001 per share. The series so authorized is designated as the Series A 6% Convertible Participating Preferred Stock (the "Series A Preferred Stock") and consists of 4,000 shares, each share having a liquidation value of $1,000. There is no Preferred Stock currently authorized for issuance by the Company other than the Series A Preferred Stock. On May 13, 1997, the Company consummated a private placement sale of 750 shares of Series A Preferred Stock. The shares were sold at their liquidation value, for a total purchase price of $750,000, in a transaction arranged through Gerard Klauer Mattison & Co., Inc., as placement agent. As a result of such sale, and in accordance with the terms of the Series A Preferred Stock and Section 4.3.2 of the Certificate of Incorporation, holders of Common Stock will rank junior to holders of Series A Preferred Stock in the event of any voluntary or involuntary liquidation, distribution or sale of assets, dissolution or winding up of the Company. The following is a summary of certain terms and conditions relating to the Series A Preferred Stock and the agreements pursuant to which the Company effectuated the sale described above. The statements made in such summary (and in the two preceding paragraphs) are qualified in their entirety by reference to the following instruments filed as Exhibits to this Report: the Certificate of Designations relating to the Series A Preferred Stock (the "Certificate of Designations"); the Stock Purchase Agreement, dated as of May 13, 1997, between the Company and Sellet Marketing Corp. ("Sellet"); the Registration Rights Agreement, dated as of May 13, 1997, between the Company and Sellet; and the Joint Escrow Instructions, dated as of May 13, 1997, between the Company and Krieger & Prager, as Escrow Agent. Subject to the satisfaction of certain closing conditions contained in the Stock Purchase Agreement, the Company pursuant to such agreement will have the option to sell to Sellet up to 1,250 additional shares of Series A Preferred Stock for aggregate additional consideration of up to $1,250,000. Among those conditions are the filing with the SEC (and the SEC's declaration of effectiveness) of a registration statement providing for the sale under the Securities Act of 1933 of the shares of Common Stock into which the Series A Preferred Stock may be convertible. As contemplated by the Registration Rights Agreement, the Company anticipates the filing of the registration statement no later than June 12, 1997. Pursuant to the Certificate of Designations, the Series A Preferred Stock will be convertible at a holder's option into shares of Common Stock upon the first to occur of (a) July 12, 1997 and (b) the date as of which the SEC declares the registration statement to be effective (the "Effective Date"). In addition, under the Certificate of Designations, the Company has the right to cause a mandatory conversion of all outstanding shares of Series A Preferred Stock at any time after the one-year anniversary of the Effective Date. The Certificate of Designations provides that the Series A Preferred Stock will initially be convertible (subject to customary anti-dilution adjustments) into common shares based upon the ratio of (a) the total liquidation value (at $1,000 per preferred share) of the preferred shares being converted, to (b) the 11 then-effective conversion price. The conversion price at any point in time will be 80% of the prior three trading days' average of the closing bid price per share of Common Stock (as reported by Nasdaq). The Certificate of Designations provides that dividends on the Series A Preferred Stock are payable semi-annually on each July 31st and January 31st, commencing with July 31, 1998. The Company has the option to pay any or all of the dividends through the issuance of additional common shares (utilizing the same conversion ratio as described above). Item 3. Defaults Upon Senior Securities None. Item 4. Submission of Matters to a Vote of Security Holders None. Item 5. Other Information None. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Required by Item 601 of Regulation S-B None. (b) Reports on Form 8-K. On May 27, 1997, the Company filed a report on Form 8-K relating to the sale of Preferred Stock described under Item 2 above. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. KIDEO PRODUCTIONS, INC. Dated: June 16, 1997 By /s/ Richard L. Bulman -------------------------------- Richard L. Bulman President and Chief Executive Officer By /s/ Robert J. Riscica -------------------------------- Robert J. Riscica Vice President and Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Kideo Productions Inc. and is qualified in it's entirety by reference to such financial statements. 9-MOS JUL-31-1997 AUG-01-1996 APR-30-1997 35,809 0 44,492 0 112,169 247,836 905,865 324,181 1,601,680 1,271,552 89,987 0 0 294 239,847 1,601,680 1,063,190 1,063,190 873,336 3,554,783 0 0 0 (3,345,428) 0 (3,345,428) 0 0 0 (3,345,428) (1.14) (1.14)
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