UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the quarterly period ended December 31, 2002 |
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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For the transition period from to |
Commission File Number: 0-6664
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K-TEL INTERNATIONAL, INC. |
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(Exact name of registrant as specified in its charter) |
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Minnesota |
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41-0946588 |
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(State or other jurisdiction of |
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(I.RS. Employer |
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2655 Cheshire Lane North, Suite 100, Plymouth, Minnesota |
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55447 |
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(Address of principal executive offices) |
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(Zip Code) |
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(763) 559-5566 |
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(Registrant’s telephone number, including area code) |
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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 ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined by Rule 12b-2 of the Exchange Act).
Yes o No ý
As of February 13, 2003, there were 13,653,738 shares of the registrant’s common stock, par value $0.01 per share, outstanding.
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
FORM 10-Q
FOR THE THREE AND SIX MONTH PERIODS
ENDED DECEMBER 31, 2002
INDEX
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PART I. |
Financial Statements (Unaudited): |
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Condensed Consolidated Balance Sheets as of |
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Management’s Discussion and Analysis of
Financial |
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2
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE
SHEETS - UNAUDITED
(in thousands)
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December
31, |
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June 30, |
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ASSETS |
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Current Assets: |
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Cash and equivalents |
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$ |
135 |
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$ |
75 |
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Accounts receivable, net |
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2,069 |
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1,656 |
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Inventories |
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591 |
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637 |
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Royalty advances |
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264 |
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282 |
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Prepaid expenses and other |
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555 |
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378 |
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Total Current Assets |
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3,614 |
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3,028 |
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Property and equipment, net of accumulated depreciation and amortization of $1,471 and $1,418 |
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147 |
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162 |
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Owned catalog masters, net of accumulated amortization of $2,649 and $2,829 |
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922 |
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1,060 |
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$ |
4,683 |
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$ |
4,250 |
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LIABILITIES AND SHAREHOLDERS’ DEFICIT |
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Current Liabilities: |
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Loans payable to affiliate and other |
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$ |
11,217 |
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$ |
10,253 |
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Accounts payable |
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1,560 |
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1,264 |
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Accrued royalties |
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2,255 |
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2,245 |
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Reserve for returns |
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161 |
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40 |
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Net liabilities of discontinued operations |
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78 |
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92 |
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Total Current Liabilities |
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15,271 |
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13,894 |
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Shareholders’ Deficit: |
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Common stock – 50,000,000 shares authorized; par value $.01; 13,653,738 issued and outstanding |
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136 |
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136 |
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Additional paid-in capital |
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21,292 |
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21,292 |
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Accumulated deficit |
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(31,669 |
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(30,771 |
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Cumulative translation adjustment |
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(347 |
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(301 |
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Total Shareholders’ Deficit |
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(10,588 |
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(9,644 |
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$ |
4,683 |
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$ |
4,250 |
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See accompanying notes to condensed consolidated financial statements.
3
K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS - UNAUDITED
(in thousands - except per share data)
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Three
Months Ended |
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Six Months
Ended |
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2002 |
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2001 |
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2002 |
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2001 |
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Net Sales |
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$ |
1,874 |
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$ |
2,104 |
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$ |
3,372 |
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$ |
3,485 |
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Costs and Expenses: |
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Cost of goods sold |
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897 |
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894 |
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1,496 |
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1,416 |
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Advertising |
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19 |
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28 |
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65 |
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51 |
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Selling, general and administrative |
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959 |
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1,035 |
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1,910 |
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2,268 |
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Total Costs and Expenses |
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1,876 |
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1,956 |
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3,472 |
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3,735 |
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Operating Income (Loss) |
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(2 |
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148 |
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(100 |
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(250 |
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Other Income (Expense): |
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Interest expense |
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(133 |
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(88 |
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(269 |
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(169 |
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Other expense |
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(51 |
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(50 |
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(115 |
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(50 |
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Total Other Income (Expense) |
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(184 |
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(138 |
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(384 |
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(219 |
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