1
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-KA
---------------
AMENDMENT TO CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 20, 1997
THE PRODUCERS ENTERTAINMENT GROUP LTD.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
Commission File Number: 0-18410 95-4233050
(I.R.S. Employer
Identification No.)
5757 Wilshire Blvd. - Penthouse One 90036
Los Angeles, California (Zip code)
(Address of principal executive offices)
(213) 634-8634
Registrant's telephone number, including area code
NOT APPLICABLE
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
This report comprises 24 pages Page 1 of 24
2
Item 7. Financial Statements of Business Acquired and Pro Forma Financial
Information
THE FOLLOWING FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
ARE FILED ON THE PAGES LISTED BELOW AS PART OF THIS AMENDMENT TO THE
REGISTRANT'S CURRENT REPORT ON FORM 8-K FILED WITH THE COMMISSION ON NOVEMBER 4,
1997 IN RESPONSE TO AND IN SATISFACTION OF THE REQUIREMENTS OF ITEM 7 OF FORM
8-K TO THE EXTENT REQUIRED UNDER RELEVANT PROVISIONS OF ITEM 310(c) OF
REGULATION SB.
Page
Report of Rosenberg Rich Baker Berman & Company,
Independent Accountants to Grosso Jacobson Companies....................... F-1
Grosso Jacobson Companies Combined Balance Sheet
as at November 30, 1996.................................................... F-2
Grosso Jacobson Companies Combined Statements of
Operations for Fiscal Years Ended November 30, 1995
and November 30, 1996...................................................... F-3
Grosso Jacobson Companies Combined Statements of
Stockholders Equity from November 30, 1994 through
November 30, 1996.......................................................... F-4
Grosso Jacobson Companies Combined Statements of Cash
Flow for Fiscal Years Ended November 30, 1995 and
November 30, 1996.......................................................... F-5
Notes to the Combined Financial Statements of Grosso
Jacobson Companies....................................................... F-6-9
Grosso Jacobson Companies Condensed Combined Balance Sheets
(Unaudited) as at September 30, 1996 and September 30, 1997................F-10
Grosso Jacobson Companies Combined Statements of
Operations (Unaudited) for Ten Months Ended September 30, 1996
and September 30, 1997.................................................... F-11
Grosso Jacobson Companies Combined Statements of
Cash Flows (Unaudited) for Ten Months Ended
September 30, 1996 and September 30, 1997................................. F-12
Page 2 of 24
3
Introductory Note with Respect to Pro Forma Financial Information.......... F-13
Condensed Consolidated Balance Sheets of The Producers
Entertainment Group Ltd. and Subsidiaries, Combined
Balance Sheets of Grosso Jacobson Companies (Unaudited) and
Pro Forma Combined Balance Sheets (Unaudited) as at June 30, 1997
and Notes to Pro Forma Combined Balance Sheets............................ F-14
Condensed Consolidated Statements of Operations of The Producers
Entertainment Group Ltd. and Subsidiaries, Condensed Combined
Statements of Operations of Grosso Jacobson Companies (Unaudited) and
Pro Forma Combined Statements of Operations (Unaudited)
for Fiscal years Ended June 30, 1996 and June 30,1997.................. F-15-16
Condensed Consolidated Balance Sheets of The Producers
Entertainment Group Ltd. and Subsidiaries (Unaudited), Combined
Balance Sheets of Grosso Jacobson Companies (Unaudited) and
Pro Forma Combined Balance Sheets (Unaudited) as at September 30, 1997
and Notes to Pro Forma Combined Balance Sheets............................ F-17
Condensed Consolidated Statements of Operations of The Producers
Entertainment Group Ltd. and Subsidiaries (Unaudited), Condensed Combined
Statements of Operations of Grosso Jacobson Companies (Unaudited) and
Pro Forma Combined Statements of Operations (Unaudited) for
the three months Ended September 30, 1996 and September 30,1997........ F-18-19
EXHIBITS:
Exhibit 23 - Consent of Rosenberg Rich Baker Berman & Company, Independent
Accountants to Grosso Jacobson Companies.
Page 3 of 24
4
[ROSENBERG RICH BAKER BERMAN & COMPANY LETTERHEAD]
PAGE F-1
Independent Auditors' Report
To the Board of Directors and Stockholders of
Grosso Jacobson Companies
We have audited the combined balance sheet of Grosso Jacobson Companies as of
November 30, 1996 and the combined statements of operations, stockholders'
equity and cash flows for the years ended November 30, 1996 and 1995. These
combined 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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. 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 provides a reasonable basis for our opinion.
In our opinion, the combined financial statements referred to above present
fairly, in all material respects, the financial position of Grosso Jacobson
Companies as of November 30, 1996, and the results of their operations, and
their cash flows for the years ended November 30, 1996 and 1995 in conformity
with generally accepted accounting principles.
/s/ ROSENBERG RICH BAKER BERMAN & COMPANY
-----------------------------------------
Rosenberg Rich Baker Berman & Company
Bridgewater, New Jersey
August 11, 1997
Page 4 of 24
5
GROSSO JACOBSON COMPANIES
COMBINED BALANCE SHEET
NOVEMBER 30, 1996
PAGE F-2
Assets
Cash $ 100,370
Accounts receivable 316,511
Productions-in-process 2,618,736
Equipment, less accumulated depreciation 1,858
Deposits 2,400
Deferred tax asset 56,000
-----------
Total Assets 3,095,875
===========
Liabilities and Stockholders' Equity (Impairment)
Accounts payable 125,000
Deferred revenue 2,888,061
Due to related parties 186,800
-----------
Total Liabilities 3,199,861
-----------
Stockholders' Equity
Capital stock 600
Retained earnings (deficit) (104,586)
-----------
Total Stockholders' Equity (Impairment) (103,986)
-----------
Total Liabilities and Stockholders' Equity $ 3,095,875
===========
See notes to the combined financial statements. Page 5 of 24
6
GROSSO JACOBSON COMPANIES
COMBINED STATEMENTS OF OPERATIONS
PAGE F-3
Year Ended November 30,
-----------------------------------
1997 1996
------------ -----------
Revenues $ 1,449,223 $ 6,580,508
Production costs 746,177 5,690,243
----------- -----------
703,046 890,265
Net Operating Revenues
General and administrative expenses 750,961 852,574
----------- -----------
Operating Income (Loss) (47,915) 37,691
----------- -----------
Other Income (Expense)
Interest expense (6,400) -
Interest income 2,518 5,412
----------- -----------
Total Other Income (Expense) (3,882) 5,412
----------- -----------
Income (Loss) Before Provision for Taxes (51,797) 43,103
Benefit From Income Taxes (17,058) (29,412)
----------- -----------
$ 34,739 $ 72,515
Net Income (Loss) =========== ===========
See notes to the combined financial statements. Page 6 of 24
7
GROSSO JACOBSON COMPANIES
COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FROM NOVEMBER 30, 1994 THROUGH NOVEMBER 30, 1996
PAGE F-4
Retained
Common Earnings
Stock (Deficit) Total
--------- --------- ---------
Balance, November 30, 1994 $ 600 $(142,362) (141,762)
Net Income, Year Ended November 30, 1995 - 72,515 72,515
--------- --------- ---------
Balance, November 30, 1995 600 (69,847) (69,247)
Net (Loss), Year Ended November 30, 1996 - (34,739) (34,739)
--------- --------- ---------
Balance, November 30, 1996 $ 600 $(104,586) $(103,986)
========= ========= =========
See notes to the combined financial statements. Page 7 of 24
8
GROSSO JACOBSON COMPANIES
COMBINED STATEMENTS OF CASH FLOWS
PAGE F-5
Year Ended November 30,
------------------------------
1996 1995
----------- -----------
Cash Flows From Operating Activities
Net Income (Loss) $ (34,739) $ 72,515
Adjustments to Reconcile Net Income (Loss)
to Net Cash Provided (Used) by
Operating Activities
Depreciation 1,131 1,608
Deferred taxes (5,200) (32,800)
Changes in Assets and Liabilities
Accounts receivable 357,563 (517,158)
Productions-in-process (2,618,736) -
Accounts payable (73,067) (72,882)
Deferred revenue 2,443,939 384,440
----------- -----------
Net Cash Provided (Used) by Operating Activities 70,891 (164,277)
----------- -----------
Cash Flows From Financing Activities
Loans received from (repaid to) related parties (39,200) 146,000
----------- -----------
Net Cash Provided (Used) by Financing Activities (39,200) 146,000
----------- -----------
Net Increase (Decrease) in Cash 31,691 (18,277)
Cash at Beginning of Period 68,679 86,956
----------- -----------
Cash at End of Period $ 100,370 $ 68,679
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the year for:
Interest $ 6,400 $ -
Income taxes $ (11,858) $ 3,388
See notes to the combined financial statements. Page 8 of 24
9
GROSSO JACOBSON COMPANIES
NOTES TO THE COMBINED FINANCIAL STATEMENTS
PAGE F-6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Organization
Gross Jacobson Companies (the Company) is comprised of three separate
corporations all of which are owned by two shareholders with equal
ownership interests: Grosso-Jacobson Production, Inc. (GJP), Grosso-
Jacobson Entertainment Corporation (GJE) and Grosso-Jacobson Music
Company, Inc. (GJM). GJP and GJE produce television series programs and
made-for-television movies. GJM owns rights to musical selections which
are used in various productions of the Company.
Principles of Combination
The combined financial statements include the accounts of GJP, GJE and
GJM. All significant intercompany balances and transactions have been
eliminated.
Revenue Recognition
The Company recognizes revenue within the provisions of SFAS No. 53.
Revenue from licensing agreements covering productions owned by the
Company is recognized when the production is available to the licensee
for telecast, exhibition, distribution and other conditions of the
licensing agreements have been met. Where the Company does not own the
productions, a producer's fee is recognized upon the completion and
delivery of the production to the network/distributor.
Productions-in-Process
Production costs are recognized upon the completion and delivery of the
production. When costs are expended in a period before the completion of
the production, the costs are capitalized as an asset and immediately
amortized in the period of completion.
Accounts Receivable
All accounts receivable are considered collectible by management. Thus,
no allowance for doubtful accounts has been included.
Depreciation
The cost of equipment is depreciated for financial reporting and income
tax purposes under accelerated methods over the estimated useful life of
5 years. Repairs and maintenance which do not extend the useful lives of
the related assets are expenses as incurred.
Page 9 or 24
10
GROSSO JACOBSON COMPANIES
NOTES TO THE COMBINED FINANCIAL STATEMENTS
PAGE F-7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, Continued
Income Taxes
GJP and GJE are "C" Corporations and file separate Federal and State tax
returns. GJM has elected to file as an "S" Corporation for Federal and
State purposes. Thus, as for GJM, income (loss) is taxed to the
shareholders personally and, accordingly, no provision for such taxes
has been made in the accompanying financial statements for GJM.
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the accrual
basis for financial reporting and the cash basis for income tax
reporting. The deferred tax assets and liabilities represent the future
tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or
settled. Deferred taxes also are recognized for operating losses that
are available to offset future federal income taxes.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Unclassified Balance Sheet
The Company has elected to present unclassified balance sheet, in
accordance with SFAS No. 53.
EQUIPMENT
Equipment, less accumulated depreciation, consists of the following:
Equipment $ 76,772
Less accumulated depreciation 74,913
------------
Total $ 1,859
============
Depreciation expense charged to operations was $1,131 and $1,608 in 1996 and
1995, respectively.
Page 10 of 24
11
GROSSO JACOBSON COMPANIES
NOTES TO THE COMBINED FINANCIAL STATEMENTS
PAGE F-8
CAPITAL STOCK
GJP: no par value common shares, 1,000 shares authorized, 500 shares issued
and outstanding.
GJE and GJM: no par value common shares, 200 shares authorized, 100 shares
issued and outstanding.
OPERATING LEASE COMMITMENTS
The Company leases its office space, automotive and office equipment under
operating leases.
The following is a schedule of future minimum rental payments required under
operating leases that have initial or remaining non-cancelable lease terms
in excess of one year as of November 30, 1996.
Year Ending November 30,
1997 $ 183,843
1998 185,229
1999 185,229
2000 169,774
2001 166,088
Thereafter 83,044
------------
Total minimum payments required $ 973,207
============
The lease for office space also contain provisions for contingent rental
payments based upon increases in the Consumer Price Index.
Rental expense under all operating leases for the year ended November 30,
1996 and 1995 was $217,611 and $237,320, respectively.
INCOME TAXES
The income tax provision (benefit) is comprised of the following:
Year Ended November 30,
----------------------------
1996 1995
------------ ------------
Current $ (11,858) $ 3,388
Deferred (5,200) (32,800)
------------ ------------
$ (17,058) $ (29,412)
============ ============
Deferred taxes are recognized for temporary differences between the basis of
assets and liabilities for financial statements and income tax purposes. The
differences relate primarily to differences between the accrual basis for
financial reporting and the cash basis for income tax reporting as well as
net operating loss carryforwards as follows:
Year Ended November 30,
----------------------------
1996 1995
------------ ------------
Net operating loss carry forwards $ (42,000) $ (11,000)
Book to tax accounting methods 36,800 (21,800)
------------ ------------
$ (5,200) $ (32,800)
============ ============
The Company's provision for income taxes differs from applying the statutory
U.S. federal income tax rate to income before income taxes. The primary
differences result from providing for state income taxes and from
deducting certain expenses for financial statement purposes but not for
federal income tax purposes.
Page 11 of 24
12
GROSSO JACOBSON COMPANIES
NOTES TO THE COMBINED FINANCIAL STATEMENTS
PAGE F-9
INCOME TAXES, Continued
The net deferred tax asset consisted of the following components as of
November 30, 1996:
Deferred tax asset (liability) relating to:
Net operating loss carry forwards $ 94,000
Book to tax accounting methods (38,000)
------------
Net deferred tax asset $ 56,000
============
The Company has available net operating loss carryforwards which may be used
to reduce Federal, State and City taxable income and tax liabilities in
future years as follows:
Available Through Federal State City Total
- ----------------- ------------ ------------ ------------ -----------
2007 $ 19,469 $ 16,974 $ 16,195 $ 52,638
2009 13,840 12,282 11,682 37,804
2010 46,900 46,834 46,773 140,507
2011 232,674 232,674 232,674 698,022
----------- ----------- ----------- ----------
$ 312,883 $ 308,764 $ 307,324 $ 928,971
=========== =========== =========== ==========
401(k) PLAN
The Company sponsors a qualified 401(k) plan (the plan) that covers
substantially all full time employees. The plan allows for eligible
participating employees to contribute up to 15% of their compensation to an
investment trust.
RELATED PARTY TRANSACTIONS
The Company utilizes its two shareholders in a producer capacity and has
compensated them and/or affiliates controlled by them in the amount of
$239,500 and $106,168 for the years ended November 30, 1996 and 1995,
respectively.
Advances made by the two shareholders to the Company amount to $186,800 at
November 30, 1996 and are unsecured, non-interest bearing and due upon
demand.
Page 12 of 24
13
GROSSO JACOBSON COMPANIES
PAGE F-10
COMBINED BALANCE SHEETS
September 30, September 30,
1997 1996
(unaudited) (unaudited)
---------- ----------
ASSETS
Cash and cash equivalents $ 171,841 $ 424,548
Accounts receivable, net trade 1,089,304 80,754
Film costs, net 2,848,451 -
Fixed assets, net - 2,989
Deferred tax asset 51,300 139,500
Other assets 2,400 2,400
---------- ----------
TOTAL ASSETS $4,163,296 $ 650,191
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accrued expenses $ 841,198 $ 65,007
Due to related parties - 96,407
Deferred income 2,464,636 251,798
---------- ----------
TOTAL LIABILITIES $3,305,834 $ 413,212
Stockholders equity:
Common Stock, no par value 600 600
Accumulated deficit and dividends 856,862 236,379
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,163,296 $ 650,191
---------- ----------
Page No. 13 of 24
14
GROSSO JACOBSON COMPANIES
PAGE F-11
COMBINED STATEMENTS OF OPERATIONS
For the 10 months ended:
-----------------------------------
September 30, September 30,
1997 1996
(unaudited) (unaudited)
----------- -----------
Revenues $ 7,867,050 $ 1,408,257
Costs related to revenues:
Amortization of film costs 2,775,101 -
Costs of projects sold 3,434,092 609,506
----------- -----------
Net Revenues 1,657,857 798,751
General and administration expenses 688,296 595,772
----------- -----------
Operating profit (loss) 969,561 202,979
Other income (expense): - 4,574
Interest income 391 198
----------- -----------
Net other income (expense) 391 4,772
Net income (loss) 969,952 207,751
Provision for income taxes 8,504 (98,475)
----------- -----------
Net income (loss) $ 961,448 $ 306,226
=========== ===========
Page No. 14 of 24
15
GROSSO JACOBSON COMPANIES
PAGE F-12
COMBINED STATEMENT OF CASH FLOWS
For the 10 months ended
-------------------------------
September 30, September 30,
1997 1996
(unaudited) (unaudited)
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 961,448 $ 306,226
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating
activities
Depreciation 1,858 -
Amortization of film costs 2,775,101
Deferred taxes 4,700 (88,700)
Changes in assets and liabilities
Accounts receivable (772,793) 593,320
Productions in process (3,004,816) -
Accounts payable 716,198 (132,611)
Deferred revenue (423,425) (192,773)
----------- -----------
Net cash provided (used) by
operating activities 258,271 485,462
----------- -----------
Cash flows from financing activities:
Loans received from (paid to) related parties (186,800) (129,593)
----------- -----------
Net cash provided (used) by financing activities (186,800) (129,593)
----------- -----------
Net increase (decrease) in cash 71,471 355,869
Cash at beginning of period 100,370 68,679
----------- -----------
Cash at end of period $ 171,841 $ 424,548
=========== ===========
Page No. 15 of 24
16
PAGE F-13
Introductory Note With Respect to
Pro Forma Combined Condensed Financial Information
The unaudited Pro Forma combined financial information set forth in the
following Financial Statements presents the Pro Forma Combined Condensed Balance
Sheets of the Registrant, The Producers Entertainment Group Ltd. and
Subsidiaries, and Grosso Jacobson Companies at June 30, 1997 and September 30,
1997 after giving effect to the Grosso Jacobson Mergers as if they had been
consummated on those dates. Also presented is the Pro Forma Combined Statements
of Operations for the fiscal years ended June 30, 1997 and 1996 and the three
months ended September 30, 1997 and 1996, respectively, after giving effect to
the Grosso Jacobson Mergers as if they had been consummated on July 1, 1995. The
unaudited Pro Forma information is based upon the historical financial
statements of the Registrant and Grosso Jacobson companies after giving effect
to the Grosso Jacobson Mergers. The Grosso Jacobson Mergers have been accounted
for as a pooling of interests and is based on the adjustments contained in the
accompanying Pro Forma Combined Condensed Financial Statements.
The unaudited Pro Forma information has been prepared by the Registrant based on
the historical financial statements and related notes thereto of the Grosso
Jacobson Companies incorporated herein by reference. The unaudited Pro Forma
information should be read in conjunction with such historical financial
statements and notes. The Pro Forma Combined Condensed Statements of Operations
are not necessarily indicative of operating results which would have been
achieved had the Grosso Jacobson Mergers been consummated as of the beginning of
the periods for which such information is presented and should not be construed
as being representative of future periods.
For further information concerning the Grosso Jacobson Mergers, reference is
made to the Registrant's Current Report on Form 8-K filed with the Commission on
November 4, 1997.
Page 16 of 24
17
PAGE F-14
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED BALANCE SHEETS
AS OF JUNE 30, 1997
Grosso
The Producers Jacobson
Entertainment Companies PRO FORMA
Group, Ltd. (Combined) COMBINED
(Consolidated) (unaudited) Pro forma Adjusting Entries (unaudited)
-------------- --------------- ------------------------------- ------------
ASSETS
Cash and cash equivalents $ 1,037,130 $ 307,740 $ $ $ 1,344,870
Short term investments 2,698,568 - 2,698,568
Accounts receivable, net trade 106,909 415,319 522,228
Due from related parties 50,631 - 50,631
Prepaid expenses 24,895 - 24,895
Film costs, net 2,144,459 2,273,250 4,417,709
Right to receive revenue 196,105 - 196,105
Fixed assets, net 80,636 1,858 82,494
Covenant not to compete 391,000 - 391,000
Deferred tax asset - 51,300 51,300
Investment in Grosso Jacobson - - 8,000,000(A) (8,000,000)(B) 0
Other assets 61,386 2,400 63,786
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 6,791,719 $ 3,051,867 $ 8,000,000 $ (8,000,000) $ 9,843,586
------------ ------------ ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS EQUITY
Accounts payable and accrued expenses $ 227,325 $ 565,447 $ $ $ 792,772
Dividends payable 212,500 - 212,500
Deferred income 2,641,666 2,628,203 5,269,869
Loans payable - - -
Other - - -
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES $ 3,081,491 $ 3,193,650 $ 0 $ 0 $ 6,275,141
Stockholders equity:
Preferred Stock, $.001 par value, authorized
10,000,000 shares, issued and outstanding
1,000,000 shares - Series A 1,000 - 1,000
Common Stock, $.001 par value, authorized
50,000,000 shares issued and outstanding
12,387,761 and 12,387,761 shares (pro forma
combined with Grosso Jacobson Companies
issued and outstanding 19,054,427 and
19,054,027 shares) 12,387 600 (600)(B) 6,667(A) 19,054
Additional paid in capital 22,531,786 - (7,999,400)(B) 7,993,333(A) 22,525,719
Accumulated deficit and dividends (17,824,753) (142,383) (17,967,136)
------------ ------------ ------------ ------------ ------------
4,720,420 (141,783) (8,000,000) 8,000,000 4,578,637
Treasury stock, 280,609 shares at cost (1,010,192) - (1,010,192)
------------ ------------ ------------ ------------ ------------
Net shareholders' equity $ 3,710,228 $ (141,783) $ (8,000,000) $ 8,000,000 $ 3,568,445
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,791,719 $ 3,051,867 $ (8,000,000) $ 8,000,000 $ 9,843,586
------------ ------------ ------------ ------------ ------------
- ----------
(A) This adjustment is made to show the pro forma effect of 6,666,666
shares, $.001 par value, Common Stock of the Company issued to the
stockholders of the Grosso Jacobson Companies in exchange for their
600 shares of no par value Common Stock of the three Grosso Jacobson
Companies stated at $600.
(B) This adjustment is to eliminate the investment in Grosso Jacobson
Companies for consolidation.
Page No. 17 of 24
18
PAGE F-15
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 1996
Grosso
The Producers Jacobson
Entertainment Companies PRO FORMA
Group, Ltd. (Combined) COMBINED
(Consolidated) (unaudited) Pro forma Adjusting Entries (unaudited)
-------------- ----------- ------------------------------ ------------
Revenues $ 5,367,498 $ 6,075,745 $ $ $ 11,443,243
Costs related to revenues:
Amortization of film costs 857,199 - 857,199
Costs of projects sold 2,579,277 5,177,743 7,757,020
------------ ------------ ------------ ------------ ------------
Net Revenues 1,931,022 898,002 0 0 2,829,024
Write-off of projects in development 103,404 - 103,404
General and administration expenses 3,567,611 1,147,872 4,715,483
------------ ------------ ------------ ------------ ------------
Operating profit (loss) (1,739,993) (249,870) 0 0 (1,989,863)
Other income (expense): 234,987 4,574 239,561
Interest income 80,260 4,651 84,911
Interest and financing expense (22,920) 0 (22,920)
------------ ------------ ------------ ------------ ------------
Net other income (expense) 292,327 9,225 0 0 301,552
Net income (loss) (1,447,666) (240,645) 0 0 (1,688,311)
Provision for income taxes - (123,040) (123,040)
Net income (loss) (1,447,666) (117,605) (1,565,271)
Dividend requirement on Series A
Preferred Stock at $.31875 per share (425,000) (425,000)
------------ ------------ ------------ ------------ ------------
Net profit (loss) applicable to common
shareholders $ (1,872,666) $ (117,605) $ 0 $ 0 $ (1,990,271)
------------ ------------ ------------ ------------ ------------
Net income (loss) per share $ (.63) $ (.67)
Average common shares outstanding 2,967,483 2,967,483
------------ ------------
Page No. 18 of 24
19
PAGE F-16
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED JUNE 30, 1997
Grosso
The Producers Jacobson
Entertainment Companies PRO FORMA
Group, Ltd. (Combined) COMBINED
(Consolidated) (unaudited) Pro forma Adjusting Entries (unaudited)
-------------- ----------- ------------------------------ -----------
Revenues $ 782,181 $ 4,689,856 $ $ $ 5,472,037
Costs related to revenues:
Amortization of film costs 503,552 - 503,552
Costs of projects sold 76,321 3,633,994 3,710,315
------------ ------------ ------------ ------------ ------------
Net Revenues 202,308 1,055,862 0 0 1,258,170
Write-off of projects in development 212,920 - 212,920
General and administration expenses 4,151,252 887,958 5,039,210
------------ ------------ ------------ ------------ ------------
Operating profit (loss) (4,161,864) 167,904 0 0 (3,993,960)
Other income (expense): (547,774) - (547,774)
Interest income 224,570 2,439 227,009
Interest and financing expense (156,975) (6,400) (163,375)
------------ ------------ ------------ ------------ ------------
Net other income (expense) (480,179) (3,961) 0 0 (484,140)
Net income (loss) (4,642,043) 163,943 0 0 (4,478,100)
Provision for income taxes - 95,607 95,607
Net income (loss) (4,642,043) 68,336 (4,573,707)
Dividend requirement on Series A
Preferred Stock at $.31875 per share (425,000) (425,000)
------------ ------------ ------------ ------------ ------------
Net profit (loss) applicable to common
shareholders $ (5,067,043) $ 68,336 $ 0 $ 0 $ (4,998,707)
------------ ------------ ------------ ------------ ------------
Net income (loss) per share $ (.47) $ (.47)
Average common shares outstanding 10,692,684 10,692,684
------------ ------------
Page No. 19 of 24
20
PAGE F-17
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED BALANCE SHEETS
(UNAUDITED)
AS OF SEPTEMBER 30, 1997
The Producers Grosso
Entertainment Jacobson
Group, Ltd. Companies PRO FORMA
(Consolidated) (Combined) Pro forma Adjusting Entries COMBINED
-------------- ---------- --------------------------------- -----------
ASSETS
Cash and cash equivalents $ 2,096,665 $ 171,841 $ $ $ 2,268,506
Short term investments - - -
Accounts receivable, net trade 104,493 1,089,304 1,193,797
Due from related parties 50,631 - 50,631
Prepaid expenses - - -
Film costs, net 3,367,605 2,848,451 6,216,056
Right to receive revenue 196,105 - 196,105
Fixed assets, net 119,115 - 119,115
Covenant not to compete 322,000 - 322,000
Deferred tax asset - 51,300 51,300
Investment in Grosso Jacobson - - 8,000,000(A) (8,000,000)(B) 0
Other assets 177,472 2,400 179,872
------------ ------------ ------------ ------------ ------------
TOTAL ASSETS $ 6,434,086 $ 4,163,296 $ 8,000,000 $ (8,000,000) $ 10,597,382
------------ ------------ ------------ ------------ ------------
LIABILITIES AND SHAREHOLDERS EQUITY
Accounts payable and accrued expenses $ 139,358 $ 841,198 $ $ $ 980,556
Dividends payable 212,500 - 212,500
Deferred income 2,641,666 2,464,636 5,106,302
Loans payable 416,000 - 416,000
Other (14) - (14)
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES $ 3,409,510 $ 3,305,834 $ 0 $ 0 $ 6,715,344
Stockholders equity:
Preferred Stock, $.001 par value,
authorized 10,000,000 shares,
issued and outstanding 1,000,000
shares - Series A 1,000 - 1,000
Common Stock, $.001 par value,
authorized 50,000,000 shares issued and
outstanding 12,387,761 and 12,387,761
shares (pro forma combined with Grosso
Jacobson Companies issued and outstanding
19,054,427 and 19,054,027 shares) 12,387 600 (600)(B) 6,667(A) 19,054
Additional paid in capital 22,531,786 - (7,999,400)(B) 7,993,333(A) 22,525,719
Accumulated deficit and dividends (18,510,405) 856,862 (17,653,543)
------------ ------------ ------------ ------------ ------------
4,034,768 857,462 (8,000,000) 8,000,000 4,892,230
Treasury stock, 280,609 shares at cost (1,010,192) - (1,010,192)
------------ ------------ ------------ ------------ ------------
Net shareholders' equity $ 3,024,576 $ 857,462 $ (8,000,000) $ 8,000,000 $ 3,882,038
------------ ------------ ------------ ------------ ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 6,434,086 $ 4,163,296 $ (8,000,000) $ 8,000,000 $ 10,597,382
------------ ------------ ------------ ------------ ------------
- ----------
(1) For further information concerning the Registrant's financial condition
as at September 30, 1996 and September 30, 1997, reference is made to
the Registrant's Quarterly Report on form 10-QSB dated November 10,
1997.
(A) This adjustment is made to show the pro forma effect of 6,666,666
shares, $.001 par value, Common Stock of the Company issued to the
stockholders of the Grosso Jacobson Companies in exchange for their 600
shares of no par value Common Stock of the three Grosso Jacobson
Companies stated at $600.
(B) This adjustment is to eliminate the investment in Grosso Jacobson
Companies for consolidation.
Page No. 20 of 24
21
PAGE F-18
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996
The Producers Grosso
Entertainment Jacobson
Group, Ltd. Companies PRO FORMA
(Consolidated)(1) (Combined) Pro forma Adjusting Entries COMBINED
----------------- ---------- --------------------------- ---------
Revenues $ 316,859 $ 816,269 $ $ $ 1,133,128
Costs related to revenues:
Amortization of film costs 63,000 - 63,000
Costs of projects sold - 177,934 177,934
------------ ------------ ------------ ------------ -----------
Net Revenues 253,859 638,335 0 0 892,194
General and administration expenses 838,163 158,378 996,541
------------ ------------ ------------ ------------ -----------
Operating profit (loss) (584,304) 479,957 0 0 (104,347)
Other income (expense): - - -
Interest income 40,905 57 40,962
Interest and financing expense (156,975) - -
------------ ------------ ------------ ------------ -----------
Net other income (expense) (116,070) 57 0 0 40,962
Net income (loss) (700,374) 480,014 0 0 (220,360)
Provision for income taxes - 55 -
Net income (loss) (700,374) 479,959 (220,415)
Dividend requirement on Series A
Preferred Stock at $.31875 per share (106,250) - (106,250)
------------ ------------ ------------ ------------ -----------
Net profit (loss) applicable to common
shareholders $ (806,624) $ 479,959 $ 0 $ 0 $ (326,665)
------------ ------------ ------------ ------------ -----------
Net income (loss) per share $ (.06) $ .02
Average common shares outstanding 12,107,152 18,773,818
------------ -----------
- ----------
(1) For further information concerning the Registrant's results of
operations for the quarters ended September 30, 1996 and September 30,
1997, reference is made to the Registrant's Quarterly Report on form
10-QSB dated November 10, 1997.
Page No. 21 of 24
22
PAGE F-19
THE PRODUCERS ENTERTAINMENT GROUP LTD. AND SUBSIDIARIES
GROSSO JACOBSON COMPANIES
AND PRO FORMA PRESENTATION OF POOLED INTEREST OF THE COMBINED COMPANIES
COMBINED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997
The Producers Grosso
Entertainment Jacobson
Group, Ltd. Companies PRO FORMA
(Consolidated)(1) (Combined) Pro forma Adjusting Entries COMBINED
----------------- ------------ ---------------------------- -----------
Revenues $ 403,569 $ 3,985,023 $ $ $ 4,388,592
Costs related to revenues:
Amortization of film costs - 2,775,101 2,775,101
Costs of projects sold - 71,418 71,418
------------ ------------ ------------ ------------ -----------
Net Revenues 403,569 1,138,504 0 0 1,542,073
General and administration expenses 993,251 139,409 1,132,660
------------ ------------ ------------ ------------ -----------
Operating profit (loss) (589,682) 999,095 0 0 409,413
Other income (expense): - - -
Interest income 10,280 150 10,430
Interest and financing expense - - -
------------ ------------ ------------ ------------ -----------
Net other income (expense) 10,280 150 0 0 10,430
Net income (loss) (579,402) 999,245 0 0 419,843
Provision for income taxes - - -
Net income (loss) (579,402) 999,245 419,843
Dividend requirement on Series A
Preferred Stock at $.31875 per share (106,250) - (106,250)
------------ ------------ ------------ ------------ -----------
Net profit (loss) applicable to common
shareholders $ (685,652) $ 999,245 $ 0 $ 0 $ 313,593
------------ ------------ ------------ ------------ -----------
Net income (loss) per share $ (.06) $ .02
Average common shares outstanding 12,107,152 18,773,818
------------ -----------
- ----------
(1) For further information concerning the Registrant's results of
operations for the quarters ended September 30, 1996 and September 30,
1997, reference is made to the Registrant's Quarterly Report on form
10-QSB dated November 10, 1997.
Page No. 22 of 24
23
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.
THE PRODUCERS ENTERTAINMENT
GROUP LTD.
Date: December 24, 1997 By: /s/ ALFRED HAFERKAMP
--------------------------------
Alfred Haferkamp
Controller
Page 23 of 24