Wednesday December 16, 9:03 am Eastern Time
Company Press Release
K-tel International Inc. Announces Financing Strategy
CALABASAS, Calif.--(BUSINESS WIRE)--Dec. 16, 1998--K-tel International Inc. (Nasdaq:KTEL - news) Wednesday announced that its board of directors has approved a plan designed to satisfy the Nasdaq Stock Market's National Market System continued listing requirements to maintain net tangible assets of $4 million through the issuance of additional equity, including the commitment of its chairman, Philip Kives, who has previously provided additional funding to the company when needed.
As previously disclosed, the company received notice from Nasdaq that it must have, and demonstrate the ability to maintain, net tangible assets of at least $4 million for continued listing on the Nasdaq National Market System. As of Sept. 30, 1998, the company's net tangible assets were approximately $450,000.
To date during the fiscal quarter ending Dec. 31, 1998, the company has received approximately $2,883,000 of additional equity from the exercise of employee stock options.
On Dec. 15, 1998, under the company's 1997 stock incentive plan, the board of directors granted Kives a stock option to purchase 200,000 shares of the company's common stock at an exercise price of $11.1875 per share, the then fair market value of such shares. Kives has committed to exercise the option in its entirety by Dec. 31, 1998, to enable the company to satisfy the Nasdaq net tangible assets requirement.
After taking into account the option exercises during the quarter ending Dec. 31, 1998, including the anticipated exercise by Kives of the 200,000-share option, and the currently expected net loss of approximately $1 million for the quarter ending Dec. 31, 1998, the net tangible assets of the company are expected to exceed Nasdaq's minimum net tangible assets requirement for continued listing on the Nasdaq National Market System.
The expected net loss of $1 million for the current quarter is mostly attributed to the company's continued investments in its e-commerce operations.
In addition to the issuance of the stock option to Kives, the board of directors authorized management to proceed with seeking to raise approximately $15 million to $20 million of additional equity for the company in order to meet its long-term capital requirements and to assure long-term compliance.
The company believes that the plan addresses the issues raised by Nasdaq in the notice received from Nasdaq. A hearing before Nasdaq is scheduled in early January at which time the company will seek to demonstrate its ability to meet the $4 million minimum net tangible assets requirement for continued listing on the Nasdaq National Market System.
However, there can be no assurance that this plan to maintain the company's net tangible assets will be accepted by Nasdaq or that the company will be able to raise additional equity from outside sources.
K-tel is a vertically integrated developer, marketer and distributor of a variety of entertainment and consumer products worldwide. The company markets its product lines to retailers, mail order, direct response including the Internet (www.ktel.com), and through licensees throughout the world. The company has active operations in the United States, Canada, the United Kingdom, Germany and Finland.
The statements in this news release may contain forward-looking statements relating to future results, performance or events of the company that are ''forward-looking statements'' as defined in the Private Securities Litigation Reform Act of 1995. Actual results or performance may differ materially from those projections as a result of certain risks and uncertainties, including but not limited to changes in market conditions for the sale of securities; political and economic conditions; demand for and market acceptance of new and existing products of the company; the impact from competition for Internet content, merchandise and pre-recorded music; dependence on strategic alliance partners, suppliers and distributors; market acceptance of the Internet for commerce and as a medium for advertising; technological changes and difficulties; and other risks detailed in the company's filings with the Securities and Exchange Commission. The company undertakes no obligation to publicly release the results of any revisions to these forward-looking statements.
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Contact:
K-tel International Inc., Calabasas, 818/225-6160
or
Coffin Communications Group, Sherman Oaks, Calif.
Bill Coffin/Dilek Mir, 818/789-0100 |
