UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 For the quarter period ended: June 30, 1996
or
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934 For the transition period from: to
Commission file number: 33-5902-NY
MICRO-LITE TELEVISION
(Exact name of registrant as specified in its charter)
Nevada 22-2774460
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
9 Exchange Place, Suite 210, Salt Lake City, Utah 84111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 595-0104
Indicate by check mark whether the registrant (1) has filed all reports 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 [ ]
The number of shares outstanding of the registrant's common stock on July
23, 1996 was 7,009,003 of which 1,004,167 have stop payment orders. The net
shares outstanding of the registrant's common stock on July 23, 1996 was
6,004,836.
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The following Condensed Consolidated Financial Statements of the Company
and its subsidiaries and related notes are included herein:
Condensed Consolidated Balance Sheet as of December 31, 1995 and June 30,
1996;
Condensed Consolidated Statements of Income for the three months ended June
30, 1996 and for the three months ended June 30, 1995;
Condensed Consolidated Statements of Income for the six months ended June
30, 1996 and for the six months ended June 30, 1995;
Condensed Consolidated Statements of Income for the six months ended June
30, 1996 and for the three months ended June 30, 1995;
Condensed Consolidated Statement of Cash Flows for the three months ended
June 30, 1996 and June 30, 1995;
Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND DECEMBER 31, 1995
(UNAUDITED)
December 31, June 30,
ASSETS 1995 1996
- ------ ----------------- -----------
Current Assets:
Cash 7,019 42,742
Marketable Securities 906 906
Notes Receivable 500 29,098
Accounts Receivable & Prepaids 334 917
----------------- -----------------
Total Current Assets 8,759 73,663
Property, Plant & Equipment 254,571 231,569
Other Assets:
Organizational Costs 450 225
Deposits 7,824 11,825
Licenses and Other 1,360,138 1,395,645
----------------- -----------------
1,368,412 1,407,695
TOTAL ASSETS 1,631,742 1,712,927
================= =================
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts Payable 84,870 41,686
Accrued Liabilities 768,762 754,816
Note Payable 176,000 408,621
Income Taxes Payable 800 800
Current Portion of Long-Term Debt 12,684 12,684
Payable - Related Parties 571,560 517,033
----------------- -----------------
Total Current Liabilities 1,614,676 1,735,640
Long-Term Debt 11,627 204,186
----------------- -----------------
Total Liabilities 1,626,303 1,939,826
Shareholders' Equity: Common Stock, $.001 par value; Authorized 200,000,000
shares; Issued and Outstanding 5,816,427 at December 31, 1995 and 6,004,836
at June 30, 1996 5,816 6,005
Additional Paid-in Capital 2,050,120 2,110,925
Retained Earnings (Deficit) (2,050,497) (2,343,829)
----------------- -----------------
Total Shareholders' Equity 5,439 (226,899)
TOTAL LIABILITIES & EQUITY 1,631,742 1,712,927
================= =================
See Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED JUNE 30, 1995 AND JUNE 30, 1996
(UNAUDITED)
Three Months Three Months
Ended Ended
June 30, 1995 June 30, 1996
Revenues From License Sales 253,500 300,000
Cost of Licenses Sold 0 107,394
Gross Profit 253,500 192,606
Other Income 0 0
General & Administrative Expenses:
Brochures & Marketing 223 223
Travel & Auto Expense 12,850 14,926
Postage & Delivery 2,819 4,693
Payroll Taxes 7,500 6,941
Office Expenses 3,996 453
Outside and Professional Services 23,695 46,650
Rent 7,582 9,891
Salaries - Officers 41,250 41,250
Salaries - Others 48,525 57,289
Depreciation & Amortization 10,303 35,555
Bank Charges & Interest (net) 544 2,986
Insurance 9,016 5,851
Equipment Rental 2,622 906
Seminars & Conventions 2,095 1,232
MMDS Lease Payments 8,475 8,950
Tower Lease Payments 0 2,876
FCC Filing Fees 525 360
Telephone Expense 11,352 10,257
Computer Expense 715 1,026
Other Taxes & Licenses 342 1,414
Miscellaneous Expense 977 278
----------------- -----------------
Total General & Administrative Expenses 195,406 254,007
State Income Taxes 0 800
Net Income (Loss) 58,094 (62,201)
================= =================
See Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
SIX MONTHS ENDED JUNE 30, 1995 AND JUNE 30, 1996
(UNAUDITED)
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1996
Revenues From License Sales 256,500 300,000
Cost of Licenses Sold 0 107,394
Gross Profit 256,500 192,606
Profit (Loss) From Sales of Securities 60,275 0
Other Revenues 0 600
General & Administrative Expenses:
Brochures & Marketing 433 324
Travel & Auto Expense 18,582 24,843
Postage & Delivery 4,789 7,533
Payroll Taxes 12,892 13,686
Office Expenses 7,187 2,413
Outside and Professional Services 31,401 78,600
Rent 13,021 17,564
Salaries - Officers 82,500 82,500
Salaries - Others 95,607 112,957
Depreciation & Amortization 19,438 76,392
Bank Charges & Interest (net) 1,221 4,768
Insurance 16,635 10,478
Equipment Rental 5,046 2,801
Seminars & Conventions 2,095 1,308
MMDS Lease Payments 10,325 18,025
Tower Lease Payments 0 6,221
FCC Filing Fees 4,155 4,560
Telephone Expense 19,897 17,162
Computer Expense 1,659 1,770
Other Taxes & Licenses 327 1,539
Miscellaneous Expense 2,318 293
----------------- ---
Total General & Administrative Expenses 349,528 485,737
State Income Taxes 800 800
Net Income (Loss) (33,553) (293,331)
================= =================
See Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
THREE AND SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED)
Three Months Six Months
Ended Ended
June 30, 1996 June 30, 1996
Revenues From License Sales 300,000 300,000
Cost of Licenses Sold 107,394 107,394
Gross Profit 192,606 192,606
Other Revenues 0 600
General & Administrative Expenses:
Brochures & Marketing 223 324
Travel & Auto Expense 14,926 24,843
Postage & Delivery 4,693 7,533
Payroll Taxes 6,941 13,686
Office Expenses 453 2,413
Outside and Professional Services 46,650 78,600
Rent 9,891 17,564
Salaries - Officers 41,250 82,500
Salaries - Others 57,289 112,957
Depreciation & Amortization 35,555 76,392
Bank Charges & Interest (net) 2,986 4,768
Insurance 5,851 10,478
Equipment Rental 906 2,801
Seminars & Conventions 1,232 1,308
MMDS Lease Payments 8,950 18,025
Tower Lease Payments 2,876 6,221
FCC Filing Fees 360 4,560
Telephone Expense 10,257 17,162
Computer Expense 1,026 1,770
Other Taxes & Licenses 1,414 1,539
Miscellaneous Expense 278 293
----------------- ---
Total General & Administrative Expenses 254,007 485,737
State Income Taxes 800 800
Net Income (Loss) (62,201) (293,331)
================= =================
See Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND JUNE 30, 1996
(UNAUDITED)
Six Months Six Months
Ended Ended
June 30, 1995 June 30, 1996
OPERATING ACTIVITIES
Net Income (Loss) (33,553) (293,331)
Adjustments:
Deferred tax (decrease) increase 800 0
Depreciation and Amortization 19,438 76,392
Decrease (Increase) in Licenses and Other (377,749) (92,898)
Changes in current accounts 318,020 65,244
Decrease (Increase) in Notes Receivable (32,304) (28,598)
----------------- -----------------
Net Cash Required by Operating Activities (105,348) (273,191)
INVESTING ACTIVITIES
Purchase of Fixed Assets (2,354) 0
----------------- -----------------
Net Cash Required by Investing Activities (2,354) 0
FINANCING ACTIVITIES
Loans 75,000 178,094
Repayment of Loans (6,697) (6,186)
Liabilities Paid with Common Stock 0 (60,994)
Note Payable on Licenses Purchased 0 198,000
----------------- -----------------
Net Cash Provided (Required) by Investing Activities 68,303 308,914
Increase (Decrease) in Cash and Cash Equivalents (39,399) 35,723
Cash and Cash Equivalents at
Beginning of Period 31,388 7,019
Cash and Cash Equivalents at
End of Period (8,011) 42,742
================= =================
See Notes to Condensed Consolidated Financial Statements.
MICRO-LITE TELEVISION
A NEVADA CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX AND THREE MONTHS ENDED JUNE 30, 1996 AND JUNE 30, 1995
NOTE 1: BASIS OF PRESENTATION
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-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principals for complete
financial statements. In the opinion of the Company's management, all
adjustments (consisting of normal accruals) considered necessary for a fair
presentation of these financial statements have been included. The Company's
activities to date have been purely developmental and the Company has not yet
commenced significant commercial operations.
NOTE 2: CAPITALIZATION
The Company was incorporated in the State of Nevada on July 24, 1984 and
authorized 200,000,000 shares of $0.001 par value common stock. On March 16,
1994 the Company effected a 1 share for 30 share reverse stock split. The split
reduced the total outstanding shares from 32,272,000 to 1,075,807. On March 16,
1994 the Company issued 6,500,000 shares of post reverse-split stock to Marrco
Communications, Inc. in the conjunction with the purchase of all of Marrco's
assets and the assumption of all of Marrco's liabilities.
NOTE 3: RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in other business
activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their business
interests. The Company has not formulated a policy for the resolution of such
conflicts.
At June 30, 1996 the Company owed $517,033 to related parties for loans and
sales to and payments made on behalf of the Company. This balance was equal to
$571,560 as of December 31, 1995.
NOTE 4: INCOME TAXES
The Company has available at June 30, 1996, net operating loss carryforwards of
approximately $2.7 million which may provide future tax benefits expiring in
June of 2008.
NOTE 5: INVESTMENT SECURITY
The investment consists of 909 shares of the common stock in CAI Wireless
Systems, Inc. ("CAI") as of December 31, 1995 and June 30, 1996.
NOTE 6: STOCK OPTION PLAN AND WARRANTS
Since the purchase of Marrco Communications, Inc., the Company has set aside
2,500,000 shares of its common stock for an incentive stock option plan that was
previously in place and fully-vested with certain employees of Marrco
Communications that continued their service in working for the Company.
The exercise is $.88 per share. All of the options are fully vested. None of the
stock options have been exercised. The options expire December 28, 1998. At June
30, 1996, there are outstanding 66,667 warrants to purchase 66,667 shares of
common stock at $4.50 per share. The warrants expire on July 16, 1997. There are
also 300,000 redeemable Class "B" common stock purchase warrants to purchase
common stock at a price of $2.00 per share and 25,000 redeemable Class "C"
common stock purchase warrants with a price of $4.00 per share. These warrants
expire March 31, 1999 and couldn't be exercised prior to June 16, 1994.
NOTE 7: CONTINGENT LIABILITIES
On April 7, 1994 the California Department of Corporations ("DOC") conducted a
search of the Company's facilities and seized some the Company's records.
The DOC alleges that the Company has violated code sections involving the
unlawful use of devices, schemes or artifices to defraud, the unlawful sale or
purchase of securities, the unlawful offering and selling securities for failure
of proper qualification or registration and offering an investment of any type
whatsoever over the telephone without first being registered with the California
Attorney General's Office.
On December 27, 1994, a Final Judgment of Permanent Injunction and Ancillary
Relief Pursuant to Stipulation was filed in California. The Company believes
that it has complied with all of the terms of the judgment and considers the
matter settled.
NOTE 8: SUBSEQUENT EVENTS
See "PART II - Item 5. Other Information".
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The Company's loss for the three months ended June 30, 1996 was equal to
$62,201 compared to income of $58,094 for the three months ended June 30, 1995.
The loss for the current quarter was attributable to the Company's continuing
General and Administrative Expenses of which salaries, professional services and
depreciation and amortization made up the largest amount. Total salaries of
$92,844 were paid or accrued for the three months ended June 30, 1996. This
equated to 36.6% of the total General and Administrative expenses for the
quarter which totaled $254,007. This is compared to salaries of $89,775, or
45.9% of the amount of expenses for the three months ended June 30, 1995. The
total expense for professional services, including legal, accounting and
engineering, totaled $46,650 for the three months ended June 30, 1996. This is a
substantial increase from the amount from the same period in 1995 of $23,695.
This increase is primarily attributable to the legal expenses associated with
the various acquisitions being pursued by the Company. Professional services
expense amounted to 18.4% of total General and Administrative Expenses for the
quarter ended June 30, 1996 and 12.1% for the quarter ended June 30, 1995.
The Company's loss for the six months ended June 30, 1996 was equal to
$293,331 compared to a loss of $33,553 for the six months ended June 30, 1995.
The loss for the six month period was attributable to the Company's continuing
General and Administrative Expenses of which salaries, professional services and
depreciation and amortization made up the largest amount. Total salaries of
$195,457 were paid or accrued for the six months ended June 30, 1996. This
equated to 40.2% of the total General and Administrative expenses for the period
which totaled $485,737. This is compared to salaries of $178,107, or 51.0% of
the amount of expenses for the six months ended June 30, 1995. The total expense
for professional services, including legal, accounting and engineering, totaled
$78,600 for the six months ended June 30, 1996. This is a substantial increase
from the amount from the same period in 1995 of $31,401. This increase is
primarily attributable to the legal expenses associated with the various
acquisitions being pursued by the Company. Professional services expense
amounted to 16.1% of total General and Administrative Expenses for the six
months ended June 30, 1996 and 9.0% for the six months ended June 30, 1995.
Losses are expected to continue throughout the development stage of the Company.
The Company has continued to operate with a working capital deficit through
the second quarter of 1996. As of June 30, 1996, the Company's current
liabilities of $1,735,640 exceeded its current assets of $73,663 by $1,661,977.
Of this negative working capital, $517,033 represents amounts owed to related
parties. The net working capital deficit, excluding payables to related parties,
is equal to $1,144,944. The Company believes that the majority of the current
liabilities can be settled by the issuance of its common stock or by the
assignment of the preferred stock in World Interactive Network, Inc. ("WIN-TV")
which the Company expects to have after the closing of its asset sale to WIN-TV.
(See "Part II - OTHER INFORMATION, Item 5. Other Information. WIN-TV Asset
Sale.")
The Company continues to explore routes of financing to begin its
development plans.
PART II - OTHER INFORMATION
ITEM 5. Other Information.
WIN-TV Asset Sale. As previously disclosed in the Form 10-Q dated September
30, 1995 and the Form 10-K dated December 31, 1995, the Company has entered into
an Agreement to sell certain LPTV and MMDS channel rights to World Interactive
Television, Inc. ("WIN-TV"). An Agreement was executed between the parties in
August of 1995. The parties decided to change the Agreement between them and
executed a revised contract, which replaced the original agreement, on February
9, 1996. The sale will include one LPTV station in each of the following
markets: Columbia, KY; Idaho Falls, ID; Marshalltown, IA; Davenport, IA and Des
Moines, IA. The sale will also include the Company's MMDS holdings in Traverse
City, MI, Augusta, ME and Wausau, WI. The agreement will close upon the
completion of WIN's pending merger with Struthers Industries, Inc. ("SIR"), a
publicly traded company on the American Stock Exchange. The Company will receive
274,000 shares of WIN-TV Cumulative Convertible Preferred Series "C" stock with
a liquidation value of $4,567,580. Currently, 249,000 shares of this stock are
being held in escrow in the name of the Company. The remaining 25,000 shares are
being held for distribution to fulfill a commission obligation payable by the
Company to an unrelated third party. Of the total gross proceeds of sale,
approximately $1,500,000 will be used to satisfy commissions on the sale and for
payments to third parties, including license holders and lessors of the channels
transferred to WIN-TV. The Company intends to assign a significant amount of the
WIN stock to certain creditors to satisfy some of its current liabilities.
Bowling Green Asset Sale. On April 9, 1996, the Company entered into a
Agreement with Wireless One, Inc. ("Wireless One") to sell and assign its rights
to certain channel leases in the Bowling Green, Kentucky market. Wireless One
was the successful bidder in the FCC MDS Auction completed in March of 1996 for
the available commercial wireless cable channels in the Bowling Green market,
paying in excess of $1.2M for these channels. This left the Company in a
competitive situation as a wireless cable operator with Wireless One in the
Bowling Green market. The Company accepted payment of $300,000 for the
assignment of its lease to the channels in Bowling Green. This payment was
received in full on April 19, 1996.
Beaumont Transaction. On April 17, 1996, the Company entered into an
agreement with Beaumont Broadcasting Corporation ("BBC") whereby the Company and
BBC agreed to form a Texas limited liability company, Micro-Lite Television of
Beaumont, LLC (the "LLC"), for purposes of owning and operating a wireless cable
system in the Beaumont, Texas market. The Company has paid $5,000 for a 1%
interest in the LLC and BBC has contributed the licenses and leases for 23
wireless cable channels in the market as well as a significant amount of assets,
including transmission equipment, for the remaining 99% of the LLC. BBC has
granted the Company an option to purchase 79% of the LLC for a purchase price of
$4M, and a second purchase option for the remaining 20% of the LLC for an
additional $1M. BBC and the Company are currently finalizing a management
contract by which the Company would be responsible for the launching and
management of the wireless cable system in Beaumont.
Convertible Debentures. Beginning in February of 1996, the Company began a
Private Placement of convertible debentures. As of June 30, 1996 the Company has
raised $225,000 from five parties in this Private Placement offering. The terms
of the offering call for a Promissory Note in the amount of the sum paid to the
Company. This note is bifurcated into an interest bearing note carrying a rate
of 12% per annum for a term ending upon the Company receiving financing in
excess of Three Million Dollars. This portion of the note, which amounts to
92.5% of the amount paid to the Company may be prepaid by the Company. The
remaining 7.5% of the note is in the form of a Non-Negotiable 12% Convertible
Promissory Note which is convertible, at the option of the payee, into Common
Stock of the Company at a rate of $.25 per share. The Company has accrued total
interest expense of $5,083 on these notes as of June 30, 1996. Should the
conversion option be exercised by all of the holders of these notes, the Company
would issue a total of 67,500 shares of its Common Stock to satisfy the $16,875
of the debt which represents the convertible portion thereof.
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 thereunto duly authorized.
Dated: July 29, 1996
MICRO-LITE TELEVISION
s:/ Jon H. Marple
Jon H. Marple, President and Chairman
s:/ Mary E. Blake
Mary E. Blake, Vice President
and Chief Financial Officer