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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 JUNE 30, 1999 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: 1-6739
TEAM COMMUNICATIONS GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CALIFORNIA 95-4519215
- ------------------------------- -------------------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
12300 WILSHIRE BOULEVARD, SUITE 400
LOS ANGELES, CALIFORNIA 90025
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (310) 442-3500
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 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 [ ]
On AUGUST 13, 1999, the registrant had outstanding 5,085,904 shares
of Common Stock, no par value.
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TEAM COMMUNICATIONS GROUP, INC.
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
June 30
1999
Cash and cash equivalents $ 937,600
Trade receivables, less allowance for doubtful accounts of $337,000 7,481,600
Television programming costs, less accumulated amortization of $12,295,000 16,766,200
Due from officer 170,400
Fixed assets, net 30,000
Organizational costs and other assets 700,500
-----------
Total Assets $26,086,300
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable, accrued expenses and other liabilities $ 6,313,800
Deferred revenue 85,600
Accrued participations 3,771,500
Bank line of credit 850,000
Notes payable 2,422,700
Accrued interest 596,000
Shareholder loan and note payable 450,000
-----------
Total Liabilities 14,489,600
-----------
Commitments and contingencies
Shareholders' equity:
Preferred stock, no par value; 10,000,000 shares authorized; no shares
issued and outstanding --
Common stock, no par value; 40,000,000 shares authorized; 4,350,509
issued and outstanding 1,000
Paid in capital 10,970,800
Treasury Stock --
Retained earnings 624,900
-----------
Total shareholders' equity 11,596,700
-----------
Total liabilities and shareholders' equity $26,086,300
===========
The accompanying notes are an integral part of these consolidated financial
statements.
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TEAM COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
FOR THE 6 MONTHS FOR THE 6 MONTHS FOR THE 3 MONTHS FOR THE 3 MONTHS
ENDED ENDED ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998 JUNE 30, 1999 JUNE 30, 1998
---------------------------------------------------------------------------
Revenues $ 7,019,900 $ 3,215,900 $ 3,517,900 $ 1,642,500
Cost of Revenues 4,136,200 836,700 1,575,000 457,700
General and administrative expense 1,039,000 1,138,300 653,400 596,800
---------------------------------------------------------------------------
Earnings from operations 1,844,700 1,240,900 1,289,500 588,000
Interest expense 280,100 622,800 128,800 359,800
Interest income 69.600 91,500 37,700 43,500
Other income -- -- -- --
---------------------------------------------------------------------------
Earnings before income taxes 1,634,200 709,600 1,198,400 271,700
Provision for income taxes 581,700 70,000 494,700 70,000
---------------------------------------------------------------------------
Earnings before extraordinary item $ 1,052,500 $ 639,600 $ 703,700 $ 201,700
===========================================================================
Extraordinary loss from early
extinguishment of debt 248,200 -- 248,200 --
---------------------------------------------------------------------------
Net Earnings (loss) $ 804,300 $ 639,600 $ 455,500 $ 201,700
===========================================================================
Primary earnings (loss) per common share
Earnings before extraordinary item $ 0.29 $ 0.57 0.18 0.18
Extraordinary loss (0.07) -- (0.06) --
---------------------------------------------------------------------------
Net Earnings (loss) $ 0.22 $ 0.57 $ 0.11 0.18
===========================================================================
Weighted average number of shares
outstanding basic 3,577,593 1,131,344 4,005,718 1,131,344
===========================================================================
Fully-diluted earnings (loss) per share
Earnings before extraordinary item $ 0.22 $ 0.35 $ 0.13 $ 0.11
Extraordinary loss (0.05) -- (0.05) --
---------------------------------------------------------------------------
$ 0.17 $ 0.35 $ 0.09 $ 0.11
===========================================================================
Weighted average number of shares
outstanding diluted 4,762,511 1,821,800 5,334,870 1,821,800
===========================================================================
The accompanying notes are an integral part of these consolidated financial
statements.
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TEAM COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
FOR THE 6 MONTHS FOR THE 6 MONTHS
ENDED ENDED
JUNE 30, 1999 JUNE 30, 1998
-----------------------------------
OPERATING ACTIVITIES:
Net income $ 804,300 $ 639,600
Adjustments to reconcile net income to cash used
for operating activities:
Depreciation and amortization 6,000 6,900
Amortization of television programming costs 4,136,200 824,300
Allowance for doubtful accounts -- --
Amortization of notes payable discount 17,500 131,000
Changes in assets and liabilities:
Increase in trade receivables (2,744,900) (2,370,700)
Additions to television programming costs (9,883,700) (2,956,600)
Increase in other assets (617,800) (525,200)
Increase in accounts payable, accrued
expenses and other liabilities 4,634,400 2,306,200
Increase (decrease) in deferred revenue (387,300) 113,700
Increase (decrease) in accrued participations 745,700 (130,800)
Increase (decrease) in accrued interest 65,100 237,000
-----------------------------------
Net cash used for operating activities (3,224,500) (1,724,600)
-----------------------------------
INVESTING ACTIVITIES:
Purchase of fixed assets (19,600) --
Decrease (increase) in due from officer (25,000) 49,600
-----------------------------------
Net cash provided (used) for investing activities (44,600) 49,600
-----------------------------------
FINANCING ACTIVITIES:
Proceeds from issuance of notes payable and warrants 2,100,000 1,563,400
Payments on bank line of credit (264,000) --
Principal payment on loan due to shareholder (50,000) --
Issuance of common stock 3,358,100 --
Sale treasury stocks 34,600 --
Extraordinary charge for early retirement of debt 248,200 --
Principal payment of notes payable (2,247,900) (60,000)
-----------------------------------
Net cash provided by financing activities 3,179,000 1,503,400
-----------------------------------
Net change in cash (90,100) (171,600)
Cash at beginning of period 1,027,700 174,400
-----------------------------------
Cash at end of period $ 937,600 $ 2,800
===================================
The accompanying notes are an integral part of these consolidated
financial statements.
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TEAM COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
SUPPLEMENTAL SCHEDULE OF NON CASH ACTIVITIES
FOR THE FOR THE
SIX MONTHS SIX MONTHS FOR THE FOR THE
ENDED ENDED YEAR ENDED YEAR ENDED
JUNE 30, JUNE 30, DECEMBER 31, DECEMBER 31,
1999 1998 1998 1997
----------- ----------- ------------ ------------
(UNAUDITED) (UNAUDITED)
Extinguishment of TPEG settlement payable by
assignment of the treasury stock receivable.... -- -- -- 178,000
Issuance of warrants in conjunction with notes
payable........................................ -- -- 62,500 286,600
Issuance of shares in connection with conversion
of notes payable............................... -- -- 53,600 --
Issuance of shares and warrants in connection
with services provided to the Company.......... 1,235,900 -- 58,000 --
Issuance of shares in connection with
extinguishment of debt......................... 1,146,300 -- 458,000 --
The accompanying notes are an integral part of these consolidated financial
statements.
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TEAM COMMUNICATIONS GROUP, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
(UNAUDITED)
Common Stock
---------------------
Retained
Earnings
Number Paid in Treasury Accumulated
of Shares Par Value Capital Stock (Deficit)
-------------------------------------------------------------------------------
Balance at December 31, 1998 2,816,135 $ 1,000 $ 7,612,700 $ (34,600) $ (179,400)
Net Income for the three months
ended March 31, 1999 -- -- -- -- 804,300
Sale of Treasury Stock 17,000 -- -- 34,600 --
Issuance of shares in connection
with conversion of debt 655,617 1,146,300 -- --
Issuance of stock for services 464,000 -- 1,032,400 -- --
Issuance of warrants -- -- 203,500 -- --
Issuance of debt with beneficial
conversion feature -- -- 185,000 -- --
Private placement of common stock 338,334 -- 765,300 -- --
Exercise of warrants 59,423 -- 25,600 -- --
----------- ----------- ----------- ----------- -----------
Balance at June 30, 1999 4,350,509 $ 1,000 $10,970,800 $ -- $ 624,900
=========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements
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TEAM COMMUNICATIONS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- BASIS OF PREPARATION-SIGNIFICANT ACCOUNTING POLICIES:
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial statements.
Accordingly, they do not include all of the information and disclosures required
for annual financial statements. These financial statements should be read in
conjunction with the financial statements and related footnotes for the year
ended December 31, 1998, included in the TEAM Communications Group, Inc.
("Company") financial report in the Company's 10-KSB.
In the opinion of the Company's management, all adjustments (consisting of
normal recurring accruals) necessary to present fairly the Company's financial
position as of June 30, 1999, and the results of operations and cash flows for
the six month period ended June 30, 1999 have been included. The results of
operations for the six period ended June 30, 1999, are not necessarily
indicative of the results to be expected for the full fiscal year. For further
information, refer to the financial statements and footnotes thereto included in
the Company's 10-KSB filed for the year ended December 31, 1998.
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.
The Company recognizes revenues from licensing agreements covering entertainment
product when the product is available to the licensee for telecast, exhibition
or distribution, and other conditions of the licensing agreements have been met
in accordance with Statement of Financial Accounting Standards ("SFAS") No. 53,
"Financial Reporting by Producers and Distributors of Motion Picture Films."
The Company, as required by SFAS No. 53, values its film cost at the lower of
unamortized cost or net realizable value on an individual title basis. Film
costs represent those costs incurred in the development, production and
distribution of television projects. These costs
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have been capitalized in accordance with SFAS No. 53. Amortization of film cost
is charged to expense and third party participation are accrued using the
individual film forecast method whereby expense is recognized in the proportion
that current period revenues bear to an estimate of ultimate revenues. These
estimates of revenues are prepared and reviewed periodically by management.
During the six months ended June 30, 1999, as the company increased its
activities related to film cost production, overhead was capitalized in
accordance with SFAS No. 53 based upon estimates of production related
activities as a percentage of anticipated film cost expenditures during 1999.
Management reviews the overhead rate throughout the year and will adjust the
overhead rate on a quarterly basis, if necessary. During the second quarter and
the six months ended June 30, 1999, overhead in the amount of approximately
$515,000 and $1,185,000 was capitalized to film production costs, respectively.
NOTE 2 -- ACCOUNTS RECEIVABLE:
Included in Accounts Receivable is $900,000 which is held as security by a
third-party for certain programming rights acquired by the Company. Upon
collection of this receivable the amounts will be placed in escrow and recorded
as cash, although the cash will be restricted as to withdrawal.
NOTE 3 -- TELEVISION PROGRAM COSTS:
Television program costs as of June 30, 1999, consist of the following:
In process and development $ 257,500
Released, less accumulated amortization 16,508,700
------------
Total television program costs $16,766,200
===========
NOTE 4 -- LITIGATION AND CONTINGENCIES:
In the ordinary course of business, the Company has or may become involved in
disputes or litigation. On the basis of information available to it, management
believes such contingencies will not have a materially adverse impact on the
Company's financial position or results of operations.
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NOTE 5 -- LINE OF CREDIT -- BANK:
The Company maintains a revolving line of credit with Mercantile National Bank.
The credit line is up to $850,000. As of June 30, 1999, the outstanding balance
of the line of credit was $850,000. The line of credit is secured by an $860,000
certificate of deposit (included in cash and cash equivalents) which is
restricted as to withdrawal.
NOTE 6 -- NOTE PAYABLE:
Notes payable consists of the following at June 30, 1999, carrying value
approximates fair value:
Debentures:
8% secured convertible debentures, net discounts due 2002 $820,000
Private placements:
12% secured notes due August 1999 225,000
10% secured convertible notes due August 1999 277,800
10% secured convertible notes due August 1999 80,000
Promissory notes:
10% secured promissory note due August 1999 250,000
12% secured promissory note due April 1999, past due 150,000
11% unsecured promissory note past due 124,900
18% secured note past due 115,000
12% secured promissory notes due January 2000 100,000
16% secured note due August 1999 30,000
12% secured note due November 1999 250,000
----------
$2,422,700
==========
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On January 30, 1999, the Company sold $850,000 principal amount of 8%
convertible debentures and 85,000 warrants. The conversion price for each
debenture will be the lesser of a) 90% of the average per share market value for
five consecutive days prior to the Initial Closing date or b) 85% of the per
share market value for the trading day having the lowest per share market value
during the five trading days prior to the conversion date. These departures were
converted to equity in May 1999. The Company recognized a $248,200 extraordinary
loss as a result of redemption of these notes. The extraordinary loss consisted
of the write-off of the associated debt discount.
NOTE 7 -- SUBSEQUENT EVENTS:
On August 5, 1999, the Company completed a $4 million financing in anticipation
of the Company's public offering in Germany this fall. The Note bears interest
at 12% per annum and matures November 30, 2002. The Note is subordinate to any
of the Company's bank financing or senior debt. All or part of the unpaid
principal amount may be converted into shares of Common Stock at the holder's
option any time after November 30, 1999. The conversion price is the lesser of
120% of the average per share market price for five consecutive trading days
prior to August 5, 1999 or 88% of the per share market price for the three days
with the lowest per share market price during the twenty-five days prior to
conversion. Connected with this financing, the Company issued 340,000 warrants
to purchase Team common stock at 105% of the five-day average closing price
prior to the closing of the financing, $7.00.
NOTE 8 -- GOING CONCERN:
The Company's financial statements for the three months and six months ended
June 30, 1999, have been prepared on a going concern basis which contemplates
the realization of assets and the settlement of liabilities and commitments in
the normal course of business. The Company expects to incur substantial
expenditures to produce television programs and/or acquire distribution rights
to television programs produced by third parties. The Company's working capital
plus limited revenue from the licensing of its current inventory of television
programs will not be sufficient to fund the Company's ongoing operations,
including maintaining the Company's current overhead and maintaining the
Company's current development and marketing activities for the next 12 months.
Further, even with the Company successfully raising additional financing, there
is no assurance the Company will achieve profitability or positive cash flow.
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS
OF OPERATIONS
This Management's Discussion and Analysis of Financial Conditions and Results of
Operations contains certain "forward-looking statements" as defined in the
Private Securities Litigation Reform Act of 1995. Such statements relating to
future events and financial performance are forward-looking statements involving
risks and uncertainties that are detailed from time to time in our various
Securities and Exchange Commission filings. Our actual results could differ
materially from those anticipated in these forward-looking statements as a
result of uncontrollable factors. The following discussion should be read in
conjunction with the Consolidated Financial Statements and Notes thereto
appearing elsewhere in this 10-QSB.
RESULTS OF OPERATIONS
For the three months ended June 30, 1999, the Company reported a net income of
approximately $455,500 on total revenues of approximately $3,517,900 compared to
net income of approximately $201,700 on total revenues of approximately
$1,642,500 for the same period ended June 30, 1998. Net income increased by
approximately $253,800 for the three months ended June 30, 1999, versus the
three months ended June 30, 1998, primarily due to the sale of certain rights of
a library of twenty-eight movie of the week titles. Revenue for the period ended
June 30, 1999 included approximately $3,300,000 on the sale of certain European
broadcast rights for twenty movies of the week included in the acquired library.
Revenue for the period ended June 30, 1998, included $882,000 from a sale of pay
television rights for Latin America to 63 episodes of "Water Rates" seasons
three and four.
Cost relating to revenues was $1,575,000 for the three months ended June 30,
1999 as compared to $457,700 for the three months ended June 30, 1998. The costs
relate to amortization of production or acquisition costs of television
programming for which revenue was recognized during the period. Gross profit
margin on sales of television programming for the three months end June 30, 1999
was 55 percent compared to 72 percent for the period ended June 30, 1998.
Included in cost of sales for 1999 is a charge of approximately $450,000 as the
Company wrote off development costs incurred on a project which has been and is
currently in development since 1995.
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General and administrative expense increased to $653,400 for the three months
ended June 30, 1999 from $596,800 for the same period in 1998. Due to the
Company's increased activities related to film cost production approximately
$515,000 in general and administrative expense was capitalized to television
programming costs in accordance with SFAS No. 53. Increase in general and
administrative expenses, prior to capitalizing certain expenses, are a result of
an increase in expenses for staff and approximately $100,000 primarily for
production and development and approximately $300,000 in consulting fees.
The Company also incurred an extraordinary loss of $248,200 related to the
conversion of $850,000 in debt to common stock.
Interest expense was $128,800 for the three months ended June 30, 1999, as
compared to $359,800 for the three months ended June 30, 1998. The decrease is
due to the retirement of debt.
For the six months ended June 30, 1999, the Company reported a net income of
approximately $804,300 on total revenues of approximately $7,019,900 compared to
net income of approximately $639,600 on total revenues of approximately
$3,215,900 for the same period ended June 30, 1998. Net income increased by
approximately $164,700 for the six months ended June 30, 1999, versus the six
months ended June 30, 1998, primarily due to the sale of certain rights of a
library of twenty-eight movie of the week titles. Revenue for the period ended
June 30, 1999 included approximately $3,300,000 on the sale of certain European
broadcast rights for twenty movies of the week included in the acquired library.
Cost relating to revenues was $4,136,200 for the six months ended June 30,
1999 as compared to $836,700 for the six months ended June 30, 1998. The costs
relate to amortization of production costs of television programming for which
revenue was recognized during the period. Gross profit margin on sales of
television programming for the six months end June 30, 1999 was 41 percent
compared to 74 percent for the period ended June 30, 1998. The lower gross
profit margin for the six months ended June 30, 1999 was due to the Company
selling more expensive television drama programming produced and owned by the
Company and its partners as opposed to distributing reality based programming
and programming previously produced and acquired by the Company in the six
months ended June 30, 1998. Included in cost of sales for 1999 is a charge of
approximately $450,000 as the Company wrote off development costs incurred on a
project which has been and is currently in development since 1995.
General and administrative expense is $1,039,000 for the six months ended June
30, 1999 compared to $1,138,300 for the same period in 1998. The 1999 general
and administrative costs increased $315,000 due to consulting fees and the
increase in staff primarily in production and development. Due to the Company's
increased activities related to film cost production, approximately $1,185,000
overhead was capitalized to film product costs in accordance with SFAS No. 53.
The Company also incurred an extraordinary loss of $248,200 related to the
conversion of $850,000 in debt to common stock.
Interest expense was $280,100 for the six months ended June 30, 1999, as
compared to $622,800 for the six months ended June 30, 1998. The decrease is
due to the retirement of debt.
Receivables at June 30, 1999 were $7,481,600, all of which are from entities
domiciled outside the United States. These receivables represent approximately
29% of the total assets of the Company.
LIQUIDITY AND CAPITAL RESOURCES
The entertainment industry is highly capital intensive. As of June 30, 1999, we
had a liquidity deficit of ($5,900,000). Liquidity deficit is defined as cash
and cash equivalents plus accounts receivables (net), and due from officer less
accounts payable, line of credit, notes payable, accrued expenses and other
liabilities, deferred revenue, accrued participation, shareholder loans and
notes payable, and accrued interest.
We continue to finance our operations from our own sales and production
activities, notes payables, lines of credit and loans from our shareholders.
Despite our public offering on July 29, 1998, our operations have been hurt by
ongoing capital shortages caused by a slowness in collecting receivables and the
inability to complete a long term banking relationship. We continue to address
our capital requirements by (i) completing in January and February 1999 a
placement of $1,850,000 convertible debt, all of which is now converted into
common stock, (ii) entering into a letter of intent to complete an offering of
our common stock on the Neuer Market in Germany, (iii) completing the issuance
of $4,550,000 of net proceeds in additional convertible debt in July and August
1999, and (iv) entering into an agreement with an investment banking firm to
provide up to $6,000,000 of additional financing ($2,000,000 by the sale of
500,000 shares of common stock at $4.00 and $4,000,000 in debt securities) also
as a bridge to the German Offering. On August 16th the sale of common stock was
completed and the company received $2,000,000. No assurance can be given that
the German public offering will be completed, or that the sale of $4,000,000
debt securities will be effectuated.
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As of August 13, 1999, we had cash and accounts receivable due to be collected
within one year of approximately $6,470,000. As of August 13, 1999 we had
indebtedness and related accrued interest of $8,453,680, including notes payable
of $6,557,680 of which all matures within one year, accrued interest of
$596,000, $850,000 outstanding on a revolving line of credit and $450,000
outstanding on a shareholder loan. Included is $349,900 of notes which have
matured and are currently in default. We are currently negotiating with these
noteholders and have not yet received any written action regarding the defaults
under these notes. We believe, however, that we will be able to cure these
defaults by either converting the notes to equity or repaying them. No
assurances can be given that we will be able to effectuate any of the foregoing
alternatives, or that if we seek to extend such obligations or refinance them,
that such extensions or refinancing alternatives will be on terms which are
financially advantageous to us.
As we continue to pursue and work toward financing alternatives and search for
additional capital as described above, we also continue to explore a variety of
other financial alternatives to increase our working capital, including
increasing the Company's line of credit with a commercial bank, or pursuing
other types of debt or equity financing. No assurance can be given that such
financing can ultimately be obtained or that it will be on reasonably attractive
terms.
Assuming the foregoing defaults are cured, we believe that without the German
offering but solely with our current resources of cash, accounts receivable and
available credit line will we be able to operate at current expenditure levels
through December 31, 1999. We further believe that our projected cash flow from
operations, with contemplated sales of certain acquired programming and
collections from those sales, will be sufficient to permit the Company to
conduct its operations as contemplated through March 31, 2000. Our belief is
based upon certain assumptions, including assumptions regarding the anticipated
level of operations and overhead, the anticipated sales of certain acquired
programming, and anticipated expenditures required for development and
production of programming. If sales do not materialize and financing is not
completed by these dates, we will have to limit our development and production
activities, reduce our overhead spending, restructure debt pay outs and take
other cost reduction measures. Further, even with if we successfully raising
additional financing, there is no assurance that we will continue to be
profitable or maintain positive cash flow.
RECENT ACCOUNTING PRONOUNCEMENTS
In April 1998, Statement of Position 98-5 "Reporting on the Costs of Start-Up
Activities" ("SOP 98-5") was issued. SOP 98-5 provides guidance on the financial
reporting of start-up
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costs and organization costs. We have adopted this SOP and the adoption of this
statement did not materially effect our financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities", effective for fiscal year beginning after
June 15, 1999. We anticipate that due to our limited use derivative instruments,
the adoption of SFAS No. 133 will not have a material effect on our financial
statements.
In October 1998, the FASB released an exposure draft of the proposed statement
on "Rescission of FASB Statement No. 53, Financial Reporting by Producers and
Distributors of Motion Picture Films." An entity that previously was subject to
the requirements of SFAS No. 53 would follow the guidance in a proposed
Statement of Position, "Accounting by Producers and Distributors of Films." This
proposed Statement of Position would be effective for financial statements for
fiscal years beginning after December 15, 1999 and could have a significant
impact on our results of operations and financial position depending on its
final outcome. We have not concluded on its impact given the preliminary stages
of the proposed Statement of Position.
YEAR 2000 COMPLIANCE
As has been widely reported, many computer systems process dates based on two
digits for the year of a transaction and are unable to process dates in the year
2000 and beyond. Since our formation in 1995, we have installed new information
systems which are year 2000 compliant. Although we do not expect year 2000 to
have a material adverse effect on our internal operations, it is possible that
year 2000 problems could have a significant adverse effect on our suppliers and
their ability to service us and to accurately process payments received.
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PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
In the ordinary course of business, the Company has or may become involved in
disputes or litigation. On the basis of information available to it, management
believes such contingencies will not have a materially adverse impact on the
Company's financial position or results of operations.
Item 6 - Exhibits and Reports on Form 8-K
Exhibits
4.23 Amendment to Securities Purchase Agreement with Austinvest Anstalt
Balzers, Esquire Trade & Finance Inc.; Amro International, S.A. and
Nesher Inc., dated June 28, 1999 (amends 4.19)
4.24 Securities Purchase Agreement between the Company and VMR Luxembourg,
S.A., dated as of February 25, 1999
4.25 VMR Debenture, dated as of February 25, 1999
4.26 VMR Warrant, dated as of February 25, 1999
4.27 VMR Registration Rights Agreement, dated as of February 25, 1999
4.28 Securities Purchase Agreement between the Company and VMR Luxembourg
S.A., dated July 26, 1999
4.29 VMR Debenture, dated as of July 26, 1999
4.30 VMR Security Agreement, dated as of July 26, 1999
4.31 VMR Registration Rights Agreement, dated as of July 26, 1999
4.32 Securities Purchase Agreement between the Company and Hudson
Investors LLC, dated as of August 5, 1999
4.33 Hudson Investors LLC Registration Rights Agreement, dated as of
August 5, 1999
4.34 Hudson Investors LLC Debenture, dated as of August 5, 1999
4.35 Hudson Investors LLC Warrant, dated as of August 5, 1999
10.23 Agreement with Film Libraries, Inc. dated June 25, 1999 and
Agreement with Film Brokers, Inc., dated June 25, 1999,
re: commission for purchase
10.24 Agreement with Renown Pictures, Ltd., dated as of June 28, 1999
27 Financial Data Schedule
Form 8-K
None
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
Dated: August 19, 1999
TEAM COMMUNICATIONS GROUP, INC.
By: /s/ DREW S. LEVIN
------------------------------
Drew S. Levin
Chairman of the Board of
Directors and Chief Executive
Officer
By: /s/ TIMOTHY A. HILL
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Timothy A. Hill
Chief Financial Officer