Kupper Parker Communications (KPCG) Inactive
Filed: 15 Jun 00, 12:00am
U.S. 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 April 30, 2000
OR
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to __________
Commission file number: 000-17468
__________
GREENSTONE ROBERTS ADVERTISING, INC
(Exact name of the Registrant as specified in its charter)
| NEW YORK |
| 11-2250305 |
401 Broadhollow Road, Melville, New York 11747
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 249-2121
(Former name, former address and former fiscal year, if changed from last report)
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 ___
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes __ No __.
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:918,277 shares of Common Stock, par value $0.01.
Transitional Small Business Disclosure Format (check one): Yes ___ No X
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PART I - FINANCIAL INFORMATION
|
| Page Number |
Item 1. | Financial Statements (Unaudited) |
|
| Condensed Consolidated Balance Sheets as of | 3 |
| Condensed Consolidated Statements of | 4 |
| Condensed Consolidated Statements of Cash | 5 |
| Notes to Condensed Consolidated Financial | 6 |
Item 2. | Management’s Discussion and Analysis of | 7 |
PART II - OTHER INFORMATION
Item 4. | Submission Of Matters To A Vote Of Security | 9 |
Item 6. | Exhibits and Reports on Form 8-K | 9 |
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited) (Audited)
April 30, October 31,
2000 1999
---- ----
ASSETS
Current Assets
Cash and cash equivalents $1,269,740 $1,985,070
Accounts receivable, net of allowance for bad debts
of $18,000 in 2000 and $998,723 in 1999 2,937,376 4,035,734
Billable production orders in process, at cost 188,316 126,413
Other current assets 89,685 116,886
----------------- ----------------
Total Current Assets 4,485,117 6,264,103
Furniture, equipment and leasehold improvements, less
accumulated depreciation and amortization of
$1,585,911, in 2000 and $1,488,313 in 1999 537,695 632,141
Deferred income taxes 194,120 194,120
Other assets 2,257 2,257
----------------- ----------------
Total Assets $5,219,189 $7,092,621
================= ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued liabilities $3,058,122 $4,834,686
----------------- ----------------
Total Current Liabilities 3,058,122 4,834,686
----------------- ----------------
Other liabilities 113,526 94,070
---------------- -----------------
Total Liabilities 3,171,648 4,928,756
Commitments and contingencies
Shareholders’ Equity
Preferred stock, $1.00 par value, 1,000,000 shares
Authorized, no shares issued or outstanding - -
Common stock, $.10 par value, 30,000,000 shares
Authorized, 1,060,000 shares issued 106,000 106,000
Additional paid-in capital 3,343,793 3,343,793
Accumulated deficit (790,293) (673,969)
Less: treasury stock, 141,723 shares at cost (611,959) (611,959)
----------------- ----------------
Total Shareholders' Equity 2,047,541 2,163,865
----------------- ----------------
Total Liabilities and Shareholders' Equity $5,219,189 $7,092,621
================= ================
See accompanying notes to condensed consolidated financial statements.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For three months ended April 30, For six months ended April 30,
------------------------------- ------------------------------
2000 1999 2000 1999
---- ---- ---- ----
COMMISSIONS AND FEES $828,391 $1,011,718 $1,719,790 $2,170,315
--------- ----------- ----------- -----------
EXPENSES:
Salaries and employee related
expenses 637,142 788,877 1,196,705 1,571,994
Office and general expenses 347,450 427,641 682,507 769,389
--------- ----------- ----------- -----------
Total operating expenses 984,592 1,216,518 1,879,212 2,341,383
--------- ----------- ----------- -----------
Loss from operations (156,201) (204,800) (159,422) (171,068)
Interest income 15,475 13,548 43,098 28,444
--------- ----------- ----------- -----------
LOSS BEFORE INCOME TAXES (140,726) (191,252) (116,324) (142,624)
--------- ----------- ----------- -----------
Provision for income taxes -- -- -- --
--------- ----------- ----------- -----------
NET LOSS (140,726) (191,252) $(116,324) $(142,624)
========= =========== =========== ===========
LOSS PER COMMON
SHARE; BASIC AND DILUTED $(0.15) $(0.26) $(0.13) $(0.19)
========= =========== =========== ===========
Shares used in computing loss
per common share, basic and diluted 918,277 743,277 918,277 743,277
========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the six months ended April 30,
-------------------------------
2000 1999
---- ----
OPERATING ACTIVITIES:
Net income (loss) $ (116,324) $ (142,624)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 97,597 108,562
Provision for bad debts 6,000 38,500
Changes in operating assets and liabilities:
Accounts receivable 1,092,358 923,941
Billable production orders in process, at cost (61,903) 165,480
Other current assets 27,202 (69,473)
Other assets - 3,571
Accounts payable, accrued liabilities and other (1,757,108) (1,533,206)
------------- ------------
Net cash used in operating activities (712,178) (505,249)
------------- ------------
INVESTING ACTIVITIES:
Purchase of furniture, equipment and leasehold improvements (3,152) (48,947)
------------- ------------
Net cash used in investing activities (3,152) (48,947)
------------- ------------
Net decrease in cash and cash equivalents (715,330) (554,196)
Cash and cash equivalents at beginning of year 1,985,070 1,753,681
------------- ------------
Cash and cash equivalents at end of period $1,269,740 $1,199,485
============= ============
See accompanying notes to condensed consolidated financial statements.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. | The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principals for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that the financial statements be read in conjunction with the Company's consolidated audited financial statements and footnotes thereto contained in the Company's Form 10-KSB for the fiscal year ended October 31, 1999. Operating results for the three and six month periods ended April 30, 2000 are not necessarily indicative of the results that may be expected for the full fiscal year ended October 31, 2000. |
2. | The condensed consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company balances and transactions have been eliminated. |
3. | Various claims, suits and complaints arise in the ordinary course of the Company's business. In the opinion of the Company, all such pending matters are without merit, covered by insurance or of such kind, or involve such amounts, as would not have a material adverse effect on the financial statements of the Company if disposed of unfavorably. |
4. | On April 27, 2000 the Company announced that it had signed a letter of intent to merge with Kupper Parker Communications, Inc., St. Louis, Missouri. The transaction is contingent upon executing a definitive written agreement acceptable to both parties. Under the proposed terms, shares of the privately held Kupper Parker stock will be exchanged for 5,074,000 new shares of Greenstone/Roberts. In addition, 300,000 existing Greenstone/Roberts shares would be repurchased by the merged entity for cash at $4.50 per share. |
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Results of operations for the three months ended April 30, 2000 as compared to the three months ended April 30, 1999.
Commissions and fees decreased $183,327 or 18% from $1,011,718 for the three months ended April 30, 1999 to $828,391 for the three months ended April 30, 2000. This decrease is principally attributable to the loss of accounts, which has been partially offset by the addition of new accounts.
Salaries and employee related expenses decreased $151,735 or 19% from $788,877 for the three months ended April 30, 1999 to $637,142 for the three months ended April 30, 2000 due primarily to management efforts to control costs.
Office and general expenses decreased $80,191 or 19% from $427,641 for the three months ended April 30, 1999 to $347,450 for the three months ended April 30, 2000 due to management efforts to control costs.
Interest income, net, increased $1,926 or 14% from $13,548 for the three months ended April 30, 1999 to $15,474 for the three months ended April 30, 2000. This increase is due to higher interest rates and an increase in the amount of short-term investments.
As a result of the above, the Company’s net loss for the three months ended April 30, 2000 was $140,726, which resulted in a basic and diluted loss per share of $0.15, compared to a net loss of $191,252 for the three months ended April 30, 1999, which resulted in a basic and diluted loss per share of $0.26.
Results of operations for the six months ended April 30, 2000 as compared to the six months ended April 30, 1999.
Commissions and fees decreased $450,525 or 21% from $2,170,315 for the six months ended April 30, 1999 to $1,719,790 for the six months ended April 30, 2000. This decrease is principally attributable to the loss of accounts, which has been partially offset by the addition of new accounts.
Salaries and employee related expenses decreased $375,289 or 24% from $1,571,994 for the six months ended April 30, 1999 to $1,196,705 for the six months ended April 30, 2000 due primarily to management efforts to control costs.
Office and general expenses decreased $86,882 or 11% from $769,389 for the six months ended April 30, 1999 to $682,507 for the six months ended April 30, 2000 due to management efforts to control costs.
Interest income, net, increased $14,654 or 52% from $28,444 for the six months ended April 30, 1999 to $43,098 for the six months ended April 30, 2000. This increase is due to higher interest rates and an increase in the amount of short-term investments.
As a result of the above, the Company’s net loss for the six months ended April 30, 2000 was $116,324, which resulted in a basic and diluted loss per share of $0.13, compared to a net loss of $142,624 for the six months ended April 30, 1999, which resulted in a basic and diluted loss per share of $0.19.
Liquidity and Capital Resources
The Company’s working capital was $1,427,000 at April 30, 2000, primarily comprised of cash and cash equivalents of $1,269,000, accounts receivable of $2,937,000 and billable production orders of $188,000, offset by accounts payable and accrued liabilities of $3,058,000.
Net cash used in operating activities for the six months ended April 30, 2000 was approximately $712,000. The principal factors contributing to the decrease in cash flow were decreases in accounts payable and accrued expenses of $1,757,000, partially offset by decreases in accounts receivable of $1,092,000 and increases in billable production orders in process of $62,000.
The Company reduced its gross accounts receivable and the corresponding allowance for bad debts by $986,723 during the period for accounts that had been previously reserved against and deemed to be uncollectable.
Because the Company recognizes commissions as a percentage of expenditures incurred, the accounts receivable balance relates not only to the commissions and fees shown on the income statement, but also to receivables for production costs and media purchased for clients. Similarly, the accounts payable balance includes payables for production costs and media incurred on behalf of clients.
The Company has available an unsecured $500,000 line of credit from a bank which expires in April 2001. Loans against the credit line bear interest equal to the “Prime Rate”, as defined in the loan agreement. The Prime Rate at April 30, 2000 was 9.00 percent. Management believes that its current working capital levels will be sufficient to meet the Company’s liquidity and working capital requirements for the foreseeable future. The Company does not anticipate any increases in capital expenditures or other cash requirements, which would have a material adverse effect on its liquidity.
GREENSTONE ROBERTS ADVERTISING, INC. AND SUBSIDIARY
PART II - OTHER INFORMATION
Item 4 - Submission Of Matters To A Vote Of Security Holders
On April 18, 2000 the Company held its annual meeting and recorded the voting results of its shareholders for the election of Directors and the appointment of independent auditors. The following table details these results:
Appointment of Directors
| Ronald M. Greenstone Richard Projain Monsignor Thomas J. Hartman Victor F. Trizzino | Votes For 779,702 779,702 779,702 779,702 | Votes Against 1,540 1,540 1,540 1,540 | Abstentions 0 0 0 0 |
The directors whose term of office as a director continued after the meeting are: Gary C. Roberts and Anthony V. Curto.
Appointment of Independent Auditors:
| Votes For 780,442 | Votes Against 350 | Abstentions 450 |
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
| During the period covered by this Report the Company filed a Form 8-K on April 27, 2000 announcing that it had signed a letter of intent to merge with Kupper Parker Communications, Inc., St. Louis, Missouri. The transaction is contingent upon executing a definitive written agreement acceptable to both parties. Under the proposed terms, shares of the privately held Kupper Parker stock will be exchanged for 5,074,000 new shares of Greenstone/Roberts. In addition, 300,000 existing Greenstone/Roberts shares would be repurchased by the merged entity for cash at $4.50 per share. |
SIGNATURES
In accordance with the requireents of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: June 15, 2000 Date: June 15, 2000 | Greenstone Roberts Advertising, Inc. By: /s/ Ronald M. Greenstone Ronald M. Greenstone Chairman of the Board, Chief Executive Officer and Director By: /s/ Gary Roberts Gary Roberts President |