SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: April 27, 2009 (June 7, 2007)
(Date of earliest event reported)
Debut Broadcasting Corporation, Inc.
(Exact name of registrant as specified in its charter)
| NEVADA | 000-50762 | 88-0417389 |
| (State or other jurisdiction | (Commission | (IRS Employer |
1025 16th Avenue South, Suite 102 Nashville TN, 37212
(Address of principal executive offices) (Zip Code)
(615) 301-0001
(Registrant’s telephone no., including area code)
1209 16th Avenue South |
| Nashville, TN 37212 |
| (Former name, former address and former fiscal year, if changed since last report) |
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): |
| |
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
SECTION 2 – FINANCIAL INFORMATION
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
FORWARD-LOOKING STATEMENTS. This current report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. In addition, the Registrant (Debut Broadcasting Corporation, Inc. a Nevada Corporation) may from time to time make oral forward-looking statements. Actual results are uncertain and may be impacted by many factors. In particular, certain risks and uncertainties that may impact the accuracy of the forward-looking statements with respect to revenues, expenses and operating results include without imitation; cycles of customer orders, general economic and competitive conditions and changing customer trends, technological advances and the number and timing of new product introductions, shipments of products and components from foreign suppliers, and changes in the mix of products ordered by customers. As a result, the actual results may differ materially from those projected in the forward-looking statements.
Because of these and other factors that may affect the Registrant's operating results, past financial performance should not be considered an indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.
On June 7, 2007, we acquired assets, through our wholly-owned subsidiary, Debut Broadcasting Mississippi, Inc., a Mississippi corporation, comprising two radio broadcast stations identified as WNLA FM 105.5 MHz and WNLA AM 1380 kHz in Indianola, MS, from Shamrock Broadcasting, Inc., including all of the facilities, equipment, licenses and intellectual property necessary to operate these stations in exchange for a total purchase price of $300,000. A copy of the Asset Purchase Agreement is filed as an exhibit to this Current Report on Form 8-K. Except for the Asset Purchase Agreement, there is no material relationship between Shamrock Broadcasting, Inc. and us or any of our affiliates, directors, officers or any associate of any such director or officer.
On June 19, 2007, we acquired assets, through our wholly-owned subsidiary, Debut Broadcasting Mississippi, Inc., a Mississippi corporation, comprising three radio broadcast stations identified as WIQQ FM 102.3 MHz in Leland, MS, WBAQ FM 97.9 MHz and WNIX AM 1330 kHz in Greenville, MS, from River Broadcasting Company, including all of the facilities, equipment, licenses and intellectual property necessary to operate these stations in exchange for a total purchase price of $1,037,134. A copy of the Asset Purchase Agreement is filed as an exhibit to this Current Report on Form 8-K. Except for the Asset Purchase Agreement, there is no material relationship between River Broadcasting Company and us or any of our affiliates, directors, officers or any associate of any such director or officer.
SECTION 8 - OTHER EVENTS
On February 1, 2009 the Registrant moved its corporate headquarters from 1209 16th Avenue South, Nashville, TN 37212 to 1025 16th Avenue South, Suite 102, Nashville, TN 37212
SECTION 9 - FINANCIAL STATEMENTS AND EXHIBITS
| Item 9.01 | Financial Statements and Exhibits. |
Financial Statements:
On or about June 19, 2007 the Registrant submitted Form 8K describing the acquisition of Shamrock Broadcasting, Inc., and River Broadcasting, Inc.
The audited financial statements were not available at the time of the initial filing on Form 8K are provided in this Form 8K-A.
(a) Financial Statements of Business Acquired
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 |
| THE RIVER BROADCASTING COMPANY FINANCIAL STATEMENTS AS OF DECEMBER 31, 2005 and 2006 | 2 |
| Statement of Stockholders Deficit | 4 |
| NOTES TO FINANCIAL STATEMENTS OF RIVER BROADCASTING COMPANY | 6 |
| REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 1 |
| SHAMROCK BROADCASTING COMPANY FINANCIAL STATEMENTS AS OF DECEMBER 31, 2005 and 2006 | 2 |
| Statement of Stockholders Deficit | 4 |
| NOTES TO FINANCIAL STATEMENTS OF SHAMROCK BROADCASTING COMPANY | 6 |
| (b) Pro Forma Financial Information. | |
| Pro forma Consolidated Balance Sheet as of December 31, 2007. | 13 |
Maddox Ungar Silberstein, PLLC CPAs and Business Advisors
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.maddoxungar.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
The River Broadcasting Co.
Greenville, Mississippi
We have audited the accompanying balance sheets of The River Broadcasting Co., as of December 31, 2006 and 2005, and the related statements of operations, stockholders’ deficit, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 audits provide 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 The River Broadcasting Co., as of December 31, 2006 and 2005 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
/s/ Maddox Ungar Silberstein, PLLC
Maddox Ungar Silberstein, PLLC
Bingham Farms, Michigan
December 3, 2008
THE RIVER BROADCASTING CO.
BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2006
| | | 2006 | | | 2005 | |
| ASSETS | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 4,198 | | | $ | 12,319 | |
| Accounts receivable, net | | | 59,366 | | | | 59,966 | |
| Total Current Assets | | | 63,564 | | | | 72,285 | |
| | | | | | | | | |
| Property and equipment, net | | | 131,299 | | | | 151,392 | |
| | | | | | | | | |
| Other Assets | | | | | | | | |
| Goodwill | | | 290,048 | | | | 290,048 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 484,911 | | | $ | 513,725 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable – trade | | $ | 37,642 | | | $ | 36,234 | |
| Accounts payable – shareholder | | | 96,970 | | | | 73,454 | |
| Accrued payroll taxes | | | 579 | | | | 1,167 | |
| Note Payable – current portion | | | 310,334 | | | | 337,450 | |
| Note Payable – related parties | | | 247,700 | | | | 199,800 | |
| Total Current Liabilities | | | 693,225 | | | | 648,105 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 693,225 | | | | 648,105 | |
| | | | | | | | | |
| STOCKHOLDERS’ DEFICIT | | | | | | | | |
| Common stock, $1 par value | | | 29,688 | | | | 29,688 | |
| Additional paid in capital | | | 114,232 | | | | 114,232 | |
| Accumulated deficit | | | (352,234 | ) | | | (278,300 | ) |
| TOTAL STOCKHOLDERS’ DEFICIT | | | (208,314 | ) | | | (134,380 | ) |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT | | $ | 484,911 | | | $ | 513,725 | |
The accompanying notes are an integral part of the financial statements
THE RIVER BROADCASTING CO.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
| | | 2006 | | | 2005 | |
| Gross Revenues | | $ | 418,584 | | | $ | 437,413 | |
| | | | | | | | | |
| Operating Expenses | | | 492,518 | | | | 491,373 | |
| | | | | | | | | |
| Operating Loss | | | (73,934 | ) | | | (53,960 | ) |
| | | | | | | | | |
| Other Income (Expense) | | | 0 | | | | (16,060 | ) |
| | | | | | | | | |
| Net Loss | | $ | (73,934 | ) | | $ | (70,020 | ) |
| | | | | | | | | |
Weighted Average Shares Outstanding: Basic and Diluted | | | 29,688 | | | | 29,688 | |
| | | | | | | | | |
| Net Loss per Share | | $ | (2.49 | ) | | $ | (2.47 | ) |
The accompanying notes are an integral part of the financial statements
THE RIVER BROADCASTING CO.
STATEMENT OF STOCKHOLDERS’ DEFICIT
AS OF DECEMBER 31, 2006
| | | Common Stock | | | Additional Paid | | | Accumulated | | | | |
| | | Shares | | | Amount | | | in Capital | | | Deficit | | | Total | |
| | | | | | | | | | | | | | | | |
| Beginning Balance, | | | | | | | | | | | | | | | |
| January 1, 2005 | | | 29,688 | | | $ | 29,688 | | | $ | 114,232 | | | $ | (208,280 | ) | | $ | (178,592 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss for | | | | | | | | | | | | | | | | | | | | |
| the Year Ended | | | | | | | | | | | | | | | | | | | | |
| December, 31, 2005 | | | | | | | | | | | | | | | (70,020 | ) | | | (70,020 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, | | | | | | | | | | | | | | | | | | | | |
| December 31, 2005 | | | 29,688 | | | | 29,688 | | | | 114,232 | | | | (278,300 | ) | | | (134,380 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Net Loss for | | | | | | | | | | | | | | | | | | | | |
| the Year Ended | | | | | | | | | | | | | | | | | | | | |
| December 31, 2006 | | | | | | | | | | | | | | | (73,934 | ) | | | (73,934 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Ending Balance, | | | | | | | | | | | | | | | | | | | | |
| December 31, 2006 | | | 29,688 | | | $ | 29,688 | | | $ | 114,232 | | | $ | (352,234 | ) | | $ | (208,314 | ) |
The accompanying notes are an integral part of the financial statements.
THE RIVER BROADCASTING CO.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
| | | 2006 | | | 2005 | |
| Cash Flows from Operating Activities: | | | | | | |
| Net loss for the year | | $ | (73,934 | ) | | $ | (70,020 | ) |
| | | | | | | | | |
| Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | | | | | | | | |
| Depreciation expense | | | 29,553 | | | | 27,767 | |
| Changes in Assets and Liabilities | | | | | | | | |
| Decrease in accounts receivable, net | | | 600 | | | | 33,362 | |
| Increase in accounts payable – trade | | | 1,408 | | | | 23,910 | |
| Increase in accounts payable - shareholder | | | 23,516 | | | | 7,500 | |
| (Decrease) in accrued expenses and taxes | | | (588 | ) | | | (1,612 | ) |
| Net Cash Provided By (Used in) Operating Activities | | | (19,445 | ) | | | 20,907 | |
| | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | |
| Acquisition of property and equipment | | | (9,460 | ) | | | 0 | |
| Net Cash Used in Investing Activities | | | (9,460 | ) | | | 0 | |
| | | | | | | | | |
| Cash Flows from Financing Activities: | | | | | | | | |
| Proceeds of notes payable – related parties | | | 62,449 | | | | 0 | |
| Payments of notes payable – related parties | | | (14,549 | ) | | | 0 | |
| Proceeds of notes payable | | | 0 | | | | 593 | |
| Payments of notes payable | | | (27,116 | ) | | | (30,950 | ) |
| Net Cash Provided By (Used in) Financing Activities | | | 20,784 | | | | (30,357 | ) |
| | | | | | | | | |
| Net Decrease in Cash and Cash Equivalents | | | (8,121 | ) | | | (9,450 | ) |
| | | | | | | | | |
| Cash and Cash Equivalents – Beginning | | | 12,319 | | | | 21,769 | |
| | | | | | | | | |
| Cash and Cash Equivalents – Ending | | $ | 4,198 | | | $ | 12,319 | |
| | | | | | | | | |
| Supplemental Cash Flow Information: | | | | | | | | |
| Cash Paid for Interest | | $ | 23,716 | | | $ | 23,743 | |
| Cash Paid for Income Taxes | | $ | 0 | | | $ | 0 | |
The accompanying notes are an integral part of the financial statements.
THE RIVER BROADCASTING CO.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
The River Broadcasting Company, Inc. (the “Company”) is a privately held company, founded in 1979 located in Greenville, Mississippi and conducts business from its principal executive office at 800 Hwy 1 South, Delta Plaza Mall, Greenville, MS 38702. The Company owns and operates three radio stations in Mississippi.
2. Summary of Significant Accounting Policies
Accounts Receivable
The Company uses the allowance method for determining the collectability of our accounts receivable. The allowance method recognizes bad debt expense following a review of the individual accounts outstanding in light of the surrounding facts. Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and economic trends. Accounts receivable are written off against the allowance when a balance is determined to be uncollectible. Accounts receivable on the consolidated balance sheet is stated net of the allowance for doubtful accounts.
Property and equipment
Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful life of the assets. Building improvements are amortized using the straight-line method over the term of the lease or the useful life of the improvements, whichever is shorter. Accelerated depreciation methods are generally used for income tax purposes. Repairs and maintenance costs are charged directly to expense as incurred.
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the purchase method as described in SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill is tested for impairment yearly. The Company recognizes fair values utilizing widely accepted valuation techniques, including discounted cash flows and market multiple analyses.
Income Taxes
The Company has, with the consent of its stockholders, made an election under the Internal Revenue Code to be treated as an S Corporation for Federal tax purposes. Accordingly, the stockholders report the Company’s taxable income and deductions on their individual income tax return. Therefore, the Company has made no provision for Federal income taxes.
THE RIVER BROADCASTING CO.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
2. Summary of Significant Accounting Policies (continued)
Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in the United States (GAAP), the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ materially from our estimates.
Revenue and Cost Recognition
The Company recognizes its advertising and programming revenues when the advertisements air on its radio stations. Generally, the Company is paid by local businesses who contract for advertising services with the company.
New Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.
3. Property and Equipment
Property and equipment consisted of the following at December 31:
| | | 2006 | | | 2005 | |
| Land | | $ | 156,474 | | | $ | 156,474 | |
| Buildings | | | 22,545 | | | | 22,545 | |
| Leasehold improvements | | | 2,116 | | | | 2,116 | |
| Furniture and fixtures | | | 69,049 | | | | 66,471 | |
| Studio equipment | | | 316,274 | | | | 309,392 | |
| Transmitter equipment | | | 123,035 | | | | 123,035 | |
| Mobile studio equipment | | | 19,070 | | | | 19,070 | |
| Towers | | | 95,430 | | | | 95,430 | |
| Subtotal | | | 803,993 | | | | 794,533 | |
| Accumulated depreciation | | | (672,694 | ) | | | (643,141 | ) |
| Property and equipment, net | | $ | 131,299 | | | $ | 151,392 | |
Depreciation expense was $29,553 and $27,767 in 2006 and 2005, respectively.
THE RIVER BROADCASTING CO.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
Notes payable consists of the following at December 31:
| | | 2006 | | | 2005 | |
| Note Payable – Related parties | | $ | 247,700 | | | $ | 199,800 | |
| Note Payable – Planters Bank | | | 310,334 | | | | 337,450 | |
| Total Notes Payable | | $ | 558,034 | | | $ | 537,250 | |
The related party notes consist of notes payable to shareholders of the Company. All related party notes are unsecured, interest free and due on demand.
The Planters bank note is renewable yearly and bears 6.85% interest. The note is secured by the assets of the Company.
Future principal payments under note payable obligations as of December 31, 2007 and for each of the remaining years and in the aggregate are as follows:
| Year Ending | | Amount | |
| December 31, 2007 | | $ | 558,034 | |
| 2008 | | | 0 | |
| 2009 | | | 0 | |
| 2010 | | | 0 | |
| 2011 | | | 0 | |
| Total | | $ | 558,034 | |
5. Commitments and Contingencies
Operating Leases
Future minimum cash lease commitments under all non-cancellable leases in effect at December 31, 2006 were as follows:
| Year ending | | Lease Commitments | |
| December 31, 2007 | | $ | 6,750 | |
| 2008 | | | 0 | |
| 2009 | | | 0 | |
| 2010 | | | 0 | |
| 2011 | | | 0 | |
| Total | | $ | 6,750 | |
The Company leases their offices for $1,125 per month. The lease expired July 1, 2007 and the Company continued on a month to month basis after that date.
THE RIVER BROADCASTING CO.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
6. Subsequent Event
On June 19, 2007, the Company was acquired by Debut Broadcasting of Nashville, TN. Included in the purchase were all of the facilities, equipment, licenses and intellectual property necessary to operate the stations, in exchange for $1,037,134.
Maddox Ungar Silberstein, PLLC CPAs and Business Advisors
Phone (248) 203-0080
Fax (248) 281-0940
30600 Telegraph Road, Suite 2175
Bingham Farms, MI 48025-4586
www.maddoxungar.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Shamrock Broadcasting, Inc.
Indianola, MS
We have audited the accompanying balance sheets of Shamrock Broadcasting, Inc., as of December 31, 2006 and 2005, and the related statements of operations, stockholder’s equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company has determined that it is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. 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 audits provide 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 Shamrock Broadcasting, Inc., as of December 31, 2006 and 2005 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.
/s/ Maddox Ungar Silberstein, PLLC
Maddox Ungar Silberstein, PLLC
Bingham Farms, Michigan
December 9, 2008
SHAMROCK BROADCASTING, INC.
BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2005
| | | 2006 | | | 2005 | |
| ASSETS | | | | | | |
| Current Assets | | | | | | |
| Cash and cash equivalents | | $ | 0 | | | $ | 2,918 | |
| Accounts receivable – trade, net | | | 15,027 | | | | 11,418 | |
| Accounts receivable – employees | | | 2,470 | | | | 1,600 | |
| Total Current Assets | | | 17,497 | | | | 15,936 | |
| Property and equipment, net | | | 51,302 | | | | 55,797 | |
| Other Assets | | | | | | | | |
| Frequency licenses | | | 75,000 | | | | 75,000 | |
| Goodwill | | | 2,500 | | | | 2,500 | |
| Total Other Assets | | | 77,500 | | | | 77,500 | |
| | | | | | | | | |
| TOTAL ASSETS | | $ | 146,299 | | | $ | 149,233 | |
| | | | | | | | | |
| LIABILITIES AND STOCKHOLDER’S EQUITY | | | | | | | | |
| | | | | | | | | |
| Current Liabilities | | | | | | | | |
| Accounts payable | | $ | 6,205 | | | $ | 6,848 | |
| Accrued payroll taxes | | | 317 | | | | 793 | |
| Notes payable – current portion | | | 11,913 | | | | 8,913 | |
| Notes payable – related party | | | 62,500 | | | | 73,000 | |
| Total Current Liabilities | | | 80,935 | | | | 89,554 | |
| Long-Term Debt | | | | | | | | |
| Notes payable | | | 7,927 | | | | 14,327 | |
| | | | | | | | | |
| TOTAL LIABILITIES | | | 88,862 | | | | 103,881 | |
| | | | | | | | | |
| TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | | $ | 146,299 | | | $ | 149,233 | |
The accompanying notes are an integral part of the financial statements.
SHAMROCK BROADCASTING, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
| | | 2006 | | | 2005 | |
| Gross Revenues | | $ | 144,799 | | | $ | 152,343 | |
| | | | | | | | | |
| Operating Expenses | | | 132,744 | | | | 143,424 | |
| | | | | | | | | |
| Operating Income | | | 12,055 | | | | 8,919 | |
| | | | | | | | | |
| Other Income | | | 30 | | | | 824 | |
| | | | | | | | | |
| Net Income | | $ | 12,085 | | | $ | 9,743 | |
| | | | | | | | | |
Weighted Average Shares Outstanding: Basic and Diluted | | | 1,000,000 | | | | 1,000,000 | |
| | | | | | | | | |
| Net Income per Share | | $ | 0.01 | | | $ | 0.01 | |
The accompanying notes are an integral part of the financial statements.
SHAMROCK BROADCASTING, INC.
STATEMENT OF STOCKHOLDER’S EQUITY
AS OF DECEMBER 31, 2006
| | | Common Stock | | | Additional Paid | | | Retained | | | | |
| | | Shares | | | Amount | | | in Capital | | | Earnings | | | Total | |
| | | | | | | | | | | | | | | | |
| Beginning Balance, | | | | | | | | | | | | | | | |
| January 1, 2005 | | | 1,000,000 | | | $ | 1,000 | | | $ | 0 | | | $ | 34,609 | | | $ | 35,609 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income for | | | | | | | | | | | | | | | | | | | | |
| the Year Ended | | | | | | | | | | | | | | | | | | | | |
| December, 31, 2005 | | | | | | | | | | | | | | | 9,743 | | | | 9,743 | |
| | | | | | | | | | | | | | | | | | | | | |
| Balance, | | | | | | | | | | | | | | | | | | | | |
| December 31, 2005 | | | 1,000,000 | | | | 1,000 | | | | 0 | | | | 44,352 | | | | 45,352 | |
| | | | | | | | | | | | | | | | | | | | | |
| Net Income for | | | | | | | | | | | | | | | | | | | | |
| the Year Ended | | | | | | | | | | | | | | | | | | | | |
| December 31, 2006 | | | | | | | | | | | | | | | 12,085 | | | | 12,085 | |
| | | | | | | | | | | | | | | | | | | | | |
| Ending Balance, | | | | | | | | | | | | | | | | | | | | |
| December 31, 2006 | | | 1,000,000 | | | $ | 1,000 | | | $ | 0 | | | $ | 56,437 | | | $ | 57,437 | |
The accompanying notes are an integral part of the financial statements.
SHAMROCK BROADCASTING, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005
| | | 2006 | | | 2005 | |
| Cash Flows from Operating Activities: | | | | | | | | |
| Net income for the year | | $ | 12,085 | | | $ | 9,743 | |
| | | | | | | | | |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities: | | | | | | | | |
| Depreciation expense | | | 7,243 | | | | 10,880 | |
| Changes in Assets and Liabilities | | | | | | | | |
| (Increase) decrease in accounts receivable | | | (3,609 | ) | | | 14,359 | |
| (Increase) decrease in accounts receivable – employees | | | (870 | ) | | | 25 | |
| (Decrease) in accounts payable | | | (643 | ) | | | (4,969 | ) |
| Increase (decrease) in accrued payroll taxes | | | (476 | ) | | | 418 | |
| Net Cash Provided By Operating Activities | | | 13,730 | | | | 30,456 | |
| | | | | | | | | |
| Cash Flows from Investing Activities: | | | | | | | | |
| Acquisition of property and equipment | | | (2,748 | ) | | | (4,243 | ) |
| Net Cash Used in Investing Activities | | | (2,748 | ) | | | (4,243 | ) |
| | | | | | | | | |
| Cash Flows from Financing Activities: | | | | | | | | |
| Payments of notes payable | | | (8,969 | ) | | | (31,831 | ) |
| Payments of notes payable – related party | | | (10,500 | ) | | | (2,000 | ) |
| Proceeds from notes payable | | | 5,569 | | | | 332 | |
| Net Cash (Used in) Financing Activities | | | (13,900 | ) | | | (33,499 | ) |
| | | | | | | | | |
| Net (Decrease) in Cash and Cash Equivalents | | | (2,918 | ) | | | (7,286 | ) |
| | | | | | | | | |
| Cash and Cash Equivalents – Beginning | | | 2,918 | | | | 10,204 | |
| | | | | | | | | |
| Cash and Cash Equivalents – Ending | | $ | 0 | | | $ | 2,918 | |
| | | | | | | | | |
| Supplemental Cash Flow Information: | | | | | | | | |
| Cash Paid for Interest | | $ | 50 | | | $ | 436 | |
| Cash Paid for Income Taxes | | $ | 0 | | | $ | 0 | |
The accompanying notes are an integral part of the financial statements.
SHAMROCK BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
Shamrock Broadcasting, Inc (the “Company”) is a privately held company, founded in 1984 located and conducts business from its principal executive office at 1220 Bayou Drive, Indianola MS 38751. The Company owns and operates two radio stations in Mississippi.
2. Summary of Significant Accounting Policies
Accounts Receivable
The Company uses the allowance method for determining the collectability of our accounts receivable. The allowance method recognizes bad debt expense following a review of the individual accounts outstanding in light of the surrounding facts. Accounts receivable are reported at their outstanding unpaid principal balances reduced by an allowance for doubtful accounts based on historical bad debts, factors related to specific customers’ ability to pay and economic trends. Accounts receivable are written off against the allowance when a balance is determined to be uncollectible. Accounts receivable on the consolidated balance sheet is stated net of the allowance for doubtful accounts.
Property and equipment
Property and equipment are recorded at cost. Depreciation is calculated using the straight-line method over the estimated useful life of the assets. Building improvements are amortized using the straight-line method over the term of the lease or the useful life of the improvements, whichever is shorter. Accelerated depreciation methods are generally used for income tax purposes. Repairs and maintenance costs are charged directly to expense as incurred.
Goodwill
Goodwill is the excess of the purchase price over the fair value of identifiable net assets acquired in business combinations accounted for under the purchase method as described in SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill is tested yearly or impairment. The Company recognizes fair values utilizing widely accepted valuation techniques, including discounted cash flows and market multiple analyses.
Income Taxes
The Company has, with the consent of its stockholder, made an election under the Internal Revenue Code to be treated as an S Corporation for Federal tax purposes. Accordingly, the stockholder reports the Company’s taxable income and deductions on his individual income tax return. Therefore, the Company has made no provision for Federal income taxes.
SHAMROCK BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
2. Summary of Significant Accounting Policies (continued)
Use of Estimates
In preparing the financial statements in conformity with accounting principles generally accepted in the United States (GAAP), the Company is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenue and expenses during the reporting period. Actual results could differ materially from our estimates.
Revenue and Cost Recognition
The Company recognizes its advertising and programming revenues when the Company’s radio shows air on its contracted radio station affiliates. Generally, the Company is paid by a national advertising agency, which sells the commercial time provided by the affiliate.
As the Company earns its revenue from the national advertising agency, it also recognizes any amounts due to the individual shows, which are based on the audience level generated by the specific program. Expenses are accrued at the time the shows are run.
New Accounting Pronouncements
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operation, financial position or cash flow.
3. Property and Equipment
Property and equipment consisted of the following at December 31:
| | | 2006 | | | 2005 | |
| Land | | $ | 17,431 | | | $ | 17,431 | |
| Leasehold improvements | | | 48,946 | | | | 48,946 | |
| Broadcasting equipment | | | 500,249 | | | | 497,502 | |
| Studio office equipment | | | 84,687 | | | | 84,687 | |
| Record library | | | 15,176 | | | | 15,176 | |
| Towers | | | 820 | | | | 820 | |
| Automobiles | | | 83,234 | | | | 83,234 | |
| Subtotal | | | 750,543 | | | | 747,796 | |
| Accumulated depreciation | | | (699,241 | ) | | | (691,999 | ) |
| Property and equipment, net | | $ | 51,302 | | | $ | 55,797 | |
Depreciation expense was $7,243 and $10,880 in 2006 and 2005, respectively.
SHAMROCK BROADCASTING, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 2006 AND 2005
Long-term debt consists of the following at December 31:
| | | 2006 | | | 2005 | |
| Note Payable – Related party | | $ | 62,500 | | | $ | 73,000 | |
| Note Payable – Planters Bank | | | 5,119 | | | | 0 | |
| Note Payable – Amsouth | | | 14,721 | | | | 23,240 | |
| Less current portion | | | (74,413 | ) | | | (81,913 | ) |
| Long-Term Debt | | $ | 7,927 | | | $ | 14,327 | |
The related party note is to G. M. Brophy, a shareholder of the Company, and is unsecured, interest free due on demand.
The note payable to Planters Bank is a commercial line of credit that is drawn upon as needed by the Company. The note renews yearly and bears an interest rate of 6.85%.
The note payable to Amsouth consists of two auto loans that will be paid off in full on May 31, 2008 and November 30, 2008, respectively.
Future principal payments under note payable obligations as of December 31, 2006 and for each of the remaining years and in the aggregate are as follows:
| Year Ending | | Amount | |
| December 31, 2007 | | $ | 74,413 | |
| 2008 | | | 7,927 | |
| 2009 | | | 0 | |
| 2010 | | | 0 | |
| 2011 | | | 0 | |
| Total | | $ | 82,340 | |
On June 7, 2007, the Company was acquired by Debut Broadcasting, Inc. of Nashville, TN. Included in the purchase were all of the facilities, equipment, licenses and intellectual property necessary to operate these stations, in exchange for $300,000. In a separate agreement, the Company sold the accounts receivable to Debut Broadcasting, Inc. in exchange for a $10,134 promissory note receivable in equal installments made in each of three months following completion of the transaction.
DEBUT BROADCASTING CORPORATION, INC
PROFORMA - - CONSOLIDATING BALANCE SHEET
3/31/2007 (UNAUDITED)
| | | The | | | Shamrock | | | River | | | | |
| | | Marketing Group | | | Broadcasting, | | | Broadcasting | | | | |
| | | Inc. | | | Inc. | | | Inc. | | | Consolidated | |
| ASSETS | | | | | | | | | | | | |
| Current Assets | | | | | | | | | | | | |
| Cash | | $ | 30,003 | | | $ | 384 | | | $ | 6,288 | | | $ | 36,675 | |
| Accounts Receivable | | | 403,315 | | | | 19,654 | | | | 53,090 | | | | 476,059 | |
| Total Current Assets | | | 433,318 | | | | 19,948 | | | | 59,378 | | | $ | 512,734 | |
| | | | | | | | | | | | | | | | | |
| Property and Equipment, Net | | | 58,639 | | | | 125,106 | | | | 124,399 | | | $ | 308,144 | |
| | | | | | | | | | | | | | | | | |
Other Assets | | | | | | | | | | | | | | | | |
| Goodwill | | | -- | | | | 2,500 | | | | 290,048 | | | $ | 292,548 | |
| Total Other Assets | | | 11,520 | | | | 2,500 | | | | 290,048 | | | $ | 304,068 | |
| | | | | | | | | | | | | | | | | |
| TOTAL ASSETS | | $ | 491,957 | | | $ | 147,554 | | | $ | 473,825 | | | $ | 1,113,336 | |
| | | | | | | | | | | | | | | | | |
| LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | | | | | | | | | | | | | |
| Current Liabilities | | | | | | | | | | | | | | | | |
| Accounts Payable -Trade | | $ | 208,119 | | | $ | 5,966 | | | $ | 44,145 | | | $ | 258,230 | |
| Accounts Payable - Shareholder | | | -- | | | | -- | | | | 107,820 | | | | 107,820 | |
| | | | | | | | | | | | | | | | | |
| Accrued Expenses | | | 58,180 | | | | 278 | | | | 441 | | | | 58,899 | |
| Notes Payable | | | 844,278 | | | | 17,711 | | | | 302,211 | | | | 1,164,200 | |
| Notes Payable - Related Party | | | 215,157 | | | | 73,000 | | | | 255,700 | | | | 543,857 | |
| TOTAL LIABILITIES | | | 1,325,735 | | | | 96,955 | | | | 710,317 | | | | 2,133,007 | |
| STOCKHOLDERS' DEFICIT | | | | | | | | | | | | | | | | |
| Common stock | | $ | 1,000 | | | $ | 1,000 | | | $ | 29,688 | | | $ | 31,688 | |
| Additional Paid in Capital | | | -- | | | | 114,232 | | | | 114,232 | | | | | |
| | | | | | | | | | | | | | | | | |
| Retained Earnings (Accumulated Deficit) | | $ | (834,778 | ) | | | 49,599 | | | $ | (380,412 | ) | | $ | (1,165,591 | ) |
| | | | | | | | | | | | | | | | | |
| TOTAL STOCKHOLDERS' DEFICIT | | | (833,778 | ) | | | 50.599 | | | | (236,492 | ) | | | (1,070,219 | ) |
| TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | | $ | 491,957 | | | $ | 147,554 | | | $ | 473,825 | | | | | |
Exhibits:
| Exhibit No. | | Document Description |
| 10.1 | Asset Purchase Agreement by and between Shamrock Broadcasting and Debut Broadcasting (incorporated herein by reference). |
| | |
| 10.2 | Asset Purchase Agreement by and between River Broadcasting and Debut Broadcasting (incorporated herein by reference). |
SIGNATURES
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 hereunto duly authorized.
| By: | /s/ SARIAH HOPKINS | |
| | | Sariah Hopkins | |
| | | Chief Financial Officer | |
| | | (Principal Financial And Accounting Officer) | |
