-----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, HX2Qa+t0o7u7AmOWadY4ItQxEVvPqhgaAPmSDRyZbB7dWdn7zbFEpw1Lt9jdDqfV t1MQ1/KZslQbRmWy9V/gig== 0001005477-96-000612.txt : 19961212 0001005477-96-000612.hdr.sgml : 19961212 ACCESSION NUMBER: 0001005477-96-000612 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961211 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 SEC ACT: 1934 Act SEC FILE NUMBER: 000-28158 FILM NUMBER: 96679034 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 1 FORM 10-QSB United States Securities and Exchange Commission WASHINGTON, D. C. 20549 FORM 10-QSB |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1996 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 December 10, 1996 2,939,014 shares of the issuer's common stock were outstanding. This report contains 9 pages. KIDEO PRODUCTIONS, INC. FORM 10-QSB INDEX PART I. Financial Information: Page No. Consolidated Balance Sheet - October 31, 1996 and July 31, 1996......................................... 3 Consolidated Statement of Operations - three months ended October 31, 1996 and 1995................................. 4 Consolidated Statement of Cash Flows - three months ended October 31, 1996 and 1995................................. 5 Notes to the Consolidated Financial Statements............. 6 Management's Discussion and Analysis or Plan of Operation.. 7 PART II. Other Information.......................................... 9 Signatures................................................. 9 Exhibit 11.1 .............................................. 10 2 KIDEO PRODUCTIONS, INC. CONSOLIDATED BALANCE SHEET (unaudited)
at October 31, at July 31, 1996 1996* ----------- ----------- ASSETS Current Assets: Cash and cash equivalents .................... $ 1,359,397 $ 2,857,097 Accounts receivable .......................... 246,858 94,572 Prepaid expenses ............................. 311,449 139,720 ----------- ----------- Total current assets ..................... 1,917,704 3,091,389 Property and equipment, net .................... 748,307 558,034 Capitalized content costs ...................... 753,575 431,861 Other assets ................................... 318,182 286,427 ----------- ----------- Total assets ............................. $ 3,737,768 $ 4,367,711 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable ............................. $ 203,628 $ 58,988 Accrued expenses ............................. 192,218 270,532 Capital leases, current portion .............. 173,862 147,173 Unearned revenue ............................. 521,058 225,131 ----------- ----------- Total current liabilities ................ 1,090,766 701,824 Capital leases, long term portion .............. 74,733 80,318 ----------- ----------- Total liabilities ........................ 1,165,499 782,142 ----------- ----------- Shareholders' Equity Common Stock, $.0001 par value; authorized 15,000,000 shares, issued and outstanding 2,939,014 shares at July 31, 1996 and October 31, 1996 ...... 294 294 Additional paid-in capital ................... 8,737,136 8,737,136 Accumulated deficit .......................... (6,165,161) (5,151,861) ----------- ----------- Shareholders' (Deficiency) Equity ........ 2,572,269 3,585,569 ----------- ----------- Total liabilities and shareholders' equity ..... $ 3,737,768 $ 4,367,711 =========== ===========
* Derived from the Form 10-KSB See accompanying notes. 3 KIDEO PRODUCTIONS, INC. CONSOLIDATED STATEMENT OF OPERATIONS (unaudited)
Three months ended October 31, October 31, 1996 1995 ----------- ----------- Sales ................................................................ $ 105,801 $ 126,871 Cost of sales ........................................................ 175,453 133,689 ----------- ----------- Gross profit (loss) .................................................. (69,652) (6,818) Selling expenses ..................................................... 444,372 200,746 General and administrative expenses .................................. 528,046 207,849 ----------- ----------- Loss from operations ................................................. (1,042,070) (415,413) Other income (expense), net .......................................... 28,770 (10,920) Non recurring expenses related to debt extinguished in connection with the Initial Public Offering ......................... (51,633) ----------- ----------- Net loss ............................................................. $(1,013,300) $ (477,966) =========== =========== Pro forma financial information Net loss ........................................................... $ (477,966) Pro forma adjustments for employment agreements .................... (64,000) ----------- Pro forma net loss for the three months ended October 31, 1995 ..... $ (541,966) =========== Net loss per share ................................................... $ (0.34) =========== Pro forma net loss per share ......................................... $ (0.40) =========== Weighted average number of shares outstanding ........................ 2,939,014 =========== Pro forma weighted average number of shares outstanding .............. 1,302,373 ===========
See accompanying notes 4 KIDEO PRODUCTIONS, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
Three months ended October 31, October 31, 1996 1995 ---------- ---------- Cash flows from operating activities: Net loss ..................................................... $(1,013,300) $ (477,966) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization of operating assets .......... 98,138 100,478 Effect of changes in operating assets and liabilities: Accounts receivable ..................................... (152,286) (263,257) Prepaid expenses and other current assets ............... (171,729) 20,765 Other assets ............................................ (35,985) (9,183) Accounts payable ........................................ 144,640 32,521 Accrued expenses ........................................ (78,314) (16,793) Unearned revenue ........................................ 295,927 336,555 ----------- ---------- Net cash used in operating activities ........................ (912,909) (276,880) ----------- ---------- Cash flows from investing activities: Purchase of property and equipment ........................... (284,181) (54,048) Increase in capitalized content costs ........................ (321,714) -- ----------- ---------- Net cash used in investing activities ........................ (605,895) (54,048) ----------- ---------- Cash flows from financing activities: Proceeds from bridge notes ................................... -- 300,000 Net proceeds from issuances of capital stock ................. -- 32,125 Proceeds from long term debt ................................. -- 32,125 Proceeds from lease financing ................................ 72,753 -- Repayment of loans payable - related parties ................. -- 200 Principal payments on capital leases ......................... (51,649) (23,079) ----------- ---------- Net cash provided by financing activities .................... 21,104 341,371 ----------- ---------- Net increase in cash ........................................... (1,497,700) 10,443 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 ............. $ 1,359,397 $ 71,580 =========== ==========
See accompanying notes. 5 KIDEO PRODUCTIONS, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The interim financial data is unaudited; 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 principles 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 months ended October 31, 1996 are not necessarily indicative of the results that may be expected for the year ended 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 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 conform to the financial statement presentation used at October 31, 1996. 6 KIDEO PRODUCTIONS, INC. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION The information set forth in "Management's Discussion and Analysis or Plan of Operation" below includes "forward-looking statements" within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended, and is subject to the safe harbor created by that section. Readers are cautioned not to place undue reliance on these forward-looking statements as they speak only as of the date hereof. Results of Operations The following discussion should be read in conjunction with the Company's consolidated financial statements and notes thereto. Sales For the quarter ended October 31, 1996 approximately 4,100 personalized videos were produced and recorded as sold as compared to 4,800 personalized videos for the quarter ended October 31, 1995. Sales income for the quarter ended October 31, 1996 was $105,800 resulting in a decrease of $21,100 from $126,900 recorded for the quarter ended October 31, 1995. Retail and catalogue sales were down $12,000 and $32,600 respectively for the quarter ended October 31, 1996 as compared to the quarter ended October 31, 1995. Direct sales increased 75%, or $23,600 from $31,500 in the three months ended October 31, 1995 to $55,100 in three months ended October 31, 1996. The increase in direct sales is due to several direct marketing initiatives in print, direct mail and telemarketing as well as a higher level of consumer awareness. Cost of Sales Cost of sales increased $41,800, from $133,700 for the three months ended October 31, 1995 to $175,500 for the three months ended October 31, 1996. These costs reflect increased fixed expenses of rent, depreciation on additional equipment, the hiring of a manufacturing manager and additional expenditures incurred in producing two new video titles. Selling Expenses Selling expenses increased $243,700, from $200,700 in the quarter ended October 31, 1995 to $444,400 for the quarter ended October 31, 1996. Marketing and promotional programs accounted for approximately $238,500 of the increase. Payroll costs related to direct marketing and customer service increased as the Company built its infrastructure. These cost increases were offset by decreases in the costs of producing retail packaging and in commissions paid to third party salespersons. General and Administrative Expenses General and administrative expenses increased $299,300, from $228,700 in the quarter ended October 31, 1995 to $528,000 in the quarter ended October 31, 1996. The primary causes of this increase were in development expenses related to enhancing the technology used to personalize videos, costs incurred in connection with the Company's customer and production databases, increased staffing and increased professional fees. The development and database expenses are expected to be ongoing as the Company expands its video title offerings and production volume. For the quarter ended October 31, 1996 the Company had interest, dividend, and miscellaneous income of $37,500, mostly related to its cash and cash equivalent deposits. 7 Liquidity and Capital Resources The Company's working capital decreased $1,562,600 from $2,389,500 at July 31, 1996 to $826,900 at October 31, 1996. This resulted from a net operating loss of $1,013,300 offset by $98,100 in non-cash charges for depreciation and amortization and the use of $62,600 to build working capital exclusive of cash and cash equivalents. An additional $605,900 was spent on the purchase of property, equipment and capitalized content cost. Long term leases for capital equipment loans, net of principal payments, generated an additional $21,100. The Company's capital requirements in connection with its development of new product, infrastructure and marketing activities have been and will continue to be significant. The Company anticipates, based on its currently proposed plans and assumptions relating to its operations (including assumptions regarding the progress and timing of its new product development efforts), that the Company's working capital, together with anticipated revenues from operations and its current cash and cash equivalent balances, will be sufficient to fund the Company's operations and capital requirements to July 31, 1997. In the event the Company's plans change or its assumptions change or prove to be inaccurate, however, the Company could be required to seek additional financing sooner than currently anticipated. The Company has no current arrangements with respect to, or potential sources of any additional financing, and it is not anticipated that existing stockholders will provide any portion of the Company's future financing requirements. Consequently, there can be no assurance that any additional financing will be available to the Company when needed, on commercially reasonable terms, or at all. 8 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 as filed. Item 2. Changes in Securities None. 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 None. Signatures 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, thereunto duly authorized. Kideo Productions, Inc. Date: December 10, 1996 By: \S\ Richard L. Bulman ------------------------------------ Richard L. Bulman President & Chief Executive Officer Date: December 10, 1996 By: \S\ Robert J. Riscica ------------------------------------ Robert J. Riscica Vice President & Chief Financial Officer 9 EX-11.1 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS KIDEO PRODUCTIONS, INC. Statement of Computation of Loss Per Share Exhibit 11.1 (In thousands, except per share amounts) For the three months ended October 31, 1996: Net Loss $ (1,013.3) Weighted average shares outstanding during the period 2,939 ---------- Net loss per share (($1013.3)/2,939) ............................ $ (0.34) ========== For the three months ended October 31, 1995: Net Loss $ (478) Pro forma Adjustments: Reduce net loss for interest on debt assumed to be converted 25 Increase net loss for the effects of certain officer contracts, if such contracts were in effect as of the beginning of the period. (64) ---------- Pro forma net loss .............................................. $ (517) ========== Shares oustanding at the beginning of the period 617 Shares issued during the period at less than the IPO price, assumed outstanding for the entire period 93 $1 million Convertible Debentures, assumed converted, as of the beginning of the period 280 Shares assumed issued from conversion of Preferred Stock 280 Shares assumed issued from exercise of warrants, net of treasury stock assumed acquired from the proceeds 32 Pro forma shares outstanding, all as of the beginning ---------- of the period presented ........................................ 1,302 ========== ---------- Pro forma net loss per share (($517)/1,302) ..................... $ (0.40) ========== EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Kideo Productions, Inc. and is qualified in its entirety by reference to such financial statements. 3-MOS JUL-31-1997 AUG-01-1996 OCT-31-1996 1,359,397 0 246,858 0 0 1,917,704 1,307,450 559,143 3,737,768 1,090,766 74,733 0 0 294 2,571,975 3,737,768 105,801 143,302 175,453 972,418 0 0 8,731 (1,013,300) 0 (1,013,300) 0 0 0 (1,013,300) (0.34) (0.34)
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