The tv ads are explained in the filing from 9-2-98 below;
2) PREPAID ADVERTISING
In November and December of 1997 Trim-A-Lawn purchased 200,000 advertising spots on major television networks for $2,000,000. In a similar fashion 2,500 radio advertising spots were purchased on a nationally recognized radio network. This purchase amounted to $1,000,000.
The television time was purchased for cash, a percentage of sales resulting from the advertising and common stock. The cash and percentage of sales component of the purchase is limited to $300,000. TAL also exchanged 600,000 shares of its common stock for the balance of the purchase.
The valuation of the television advertising time for financial statement purposes, has been made at the confirmed cash cost of the time. This seller buys unutilized advertising time for cash from major networks and remarkets this time to end users under varying purchase methods including those noted above. The cost to the seller is substantially below rate card values, these being the normal measure of valuation in a transaction of this type.
The radio advertising time was procured directly from the network in exchange for 333,000 restricted shares of TAL common stock. The valuation for financial statement purposes was made at an average rate card value of $400. The network charges from $200 to $700 a spot depending on the time of the broadcast day that advertising is aired. TAL has purchased a "run of the station" mix of advertising time in which to air the 2,500 spots purchased. Accordingly, an average cost per spot of $400 has been utilized to value the time purchased.
Both the radio and television advertising time will be aired over a two year period beginning in 1998.
Prior to these transactions, TAL had purchased $4,000,000 of television advertising time on secondary television networks. In April 1998, TAL exercised its rights to cancel this contract. To enhance financial statement meaningfulness, the effect of the cancellation has been recorded as of December 31, 1997. The $4,000,000 previously recorded as prepaid advertising has been written off as of December 31, 1997 |
