UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 

FORM 10-Q

 

 

 

 

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 May 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 NINE MONTH PERIODS

ENDED MARCH 31, 2003

 

INDEX

 

PART I.				Financial Information (Unaudited):
				Item 1.		Condensed Consolidated Balance Sheets as of March 31, 2003 and June 30, 2002
						Condensed Consolidated Statements of Operations for the Three and Nine Month Periods Ended March 31, 2003 and 2002
						Condensed Consolidated Statements of Cash Flows for the Nine Month Periods Ended March 31, 2003 and 2002
						Notes to Condensed Consolidated Financial Statements
				Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations
				Item 3.		Quantitative and Qualitative Disclosures About Market Risk
				Item 4.		Controls and Procedures
PART II.				Other Information:
				Item 1.		Legal Proceedings
				Item 2.		Changes in Securities and Use of Proceeds
				Item 6.		Exhibits and Reports on Form 8-K
Signatures
Certifications
Index to Exhibits

 

Important Factors Relating to Forward Looking Statements

 

Certain statements of a non-historical nature under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere in this Form 10-Q constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may be identified by the use of terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “should,” or “continue” or the negative thereof or other variations thereon or comparable terminology. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results or from those results currently anticipated or projected. Such factors include, among other things, the following: changes in consumer purchasing; demand for and market acceptance of new and existing products; the impact from competition for recorded music; the outcome of legal proceedings; dependence on suppliers and distributors; the outcome of the two subsidiaries’ bankruptcy and liquidation; success of marketing and promotion efforts; technological changes and difficulties; availability of financing; foreign currency variations; general economic, political and business conditions; and other matters. The Company undertakes no obligation to release publicly the result of any revisions to these forward-looking statements, except as required by law.

 

2

 

K-TEL INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS - UNAUDITED

(in thousands)

 

		March 31, 2003			June 30, 2002
ASSETS
Current Assets:
Cash and equivalents		$	83		$	75
Accounts receivable, net		2,076			1,656
Inventories		583			637
Royalty advances		245			282
Prepaid expenses and other		451			378
Total Current Assets		3,438			3,028
Property and equipment, net of accumulated depreciation and amortization of $1,472 and $1,418		110			162
Owned catalog masters, net of accumulated amortization of $2,701 and $2,829		869			1,060
		$	4,417		$	4,250
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Loans payable to affiliate and other		$	11,359		$	10,253
Accounts payable		1,525			1,264
Accrued royalties		2,256			2,245
Reserve for returns		216			40
Net liabilities of discontinued operations		104			92
Total Current Liabilities		15,460			13,894
Shareholders’ Deficit:
Common stock – 50,000,000 shares authorized; par value $.01; 13,653,738 issued and outstanding		136			136
Additional paid-in capital		21,292			21,292
Accumulated deficit		(32,107		)	(30,771		)
Cumulative translation adjustment		(364		)	(301		)
Total Shareholders’ Deficit		(11,043		)	(9,644		)
		$	4,417		$	4,250

 

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)

 

		Three Months Ended March 31,						Nine Months Ended March 31,
		2003			2002			2003			2002
Net Sales		$	1,923		$	1,766		$	5,295		$	5,251
Costs and Expenses:
Cost of goods sold		990			719			2,486			2,135
Advertising		81			18			146			69
Selling, general and administrative		1,026			1,157			2,936			3,425
Total Costs and Expenses		2,097