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NewKidCo International Inc. Announces Q3 1999 Results; Company Foresees Significant Revenue Growth and Plans to Raise Additional Capital.

BURLINGTON, Mass.--(BUSINESS WIRE)--Nov. 3, 1999--

The Adventures of Elmo in Grouchland(TM) for Game Boy(R) Color Ships,

Four More Titles Expected to Ship in Q4

NewKidCo International Inc. (OTC BB:NKCIF) (TSE:NKC) today announced consolidated results for the third quarter and nine months ended September 30, 1999.

For the three months ended September 30, 1999, the Company recorded sales of CND $2.7 million. In accordance with Canadian GAAP, the net loss from continuing operations for the quarter ended September 30, 1999, amounted to CND $764,000 or .06 cents per share. Under U.S. GAAP, the net loss from continuing operations for the quarter ended September 30, 1999, was CND $639,000 or .05 cents per share. The difference in the reported net loss under Canadian GAAP and U.S. GAAP from continuing operations arises primarily from the difference in the accounting treatment under Canadian GAAP and U.S. GAAP of the acquisition, by the Company of NewKidCo, LLC. This acquisition was completed during the second quarter of 1999.

For the nine months ended September 30, 1999, the Company recorded sales of CND $14.5 million. In accordance with Canadian GAAP, the net earnings from continuing operations for the nine months ended September 30, 1999, amounted to CND $282,000 or .02 cents per share. Under U.S. GAAP, the net loss from continuing operations for the nine months ended September 30, 1999 was CND $1.2 million or .09 cents per share. Comparisons are not made to the prior year as the Company is now engaged in a fundamentally different business.

During June 1999, the Company completed a private placement offering of Special Warrants for gross proceeds of CND $15 million. The Company foresees significant revenue growth and plans to raise additional equity capital. To finance this growth and to meet its commitments to licensors, NewKidCo will have to raise this capital in the next six months.

Richard Rabins, CEO of NewKidCo International Inc. stated, "our third quarter results are in line with our expectations. NewKidCo is poised for significant growth as we look towards the next two quarters, which are typically our strongest selling periods. Our current titles continue to be very well received by our target market, the under 12 year old game player. Since our titles are fun, non-violent games, we believe that the purchasers of these games, parents and grandparents, will continue to recognize the value of our products during the upcoming gift giving season. Distribution of our product line via mass merchants, toy stores, electronics stores and software specialty retailers, is very strong. Additionally, our recent license agreements with Warner Bros. (the classic characters Tom & Jerry(R)) and Disney (Winnie the Pooh(R), Mulan(R), Doug(R) and Disney Classic characters) have provided us with new titles to produce and distribute in the year 2000. NewKidCo's future looks very bright and we look forward to continued strong growth in the distribution and sales of our present and future titles."

In the fourth quarter, the Company expects to ship five titles, the first of which, The Adventures of Elmo In Grouchland for Game Boy Color, has begun shipping. The debut of the two 'Elmo' titles on Nintendo(R) 64, 'Hello Kitty' on Game Boy Color, and the first title from the recently signed Disney deal --Disney's Story Studio, Mulan will round out the scheduled fourth quarter offerings.

About NewKidCo International Inc.

NewKidCo International Inc. (OTC BB: NKCIF) (TSE: NKC) publishes video games for young children on "next generation" game console systems. NewKidCo's mission is to become the leading provider in the children's video game category with such licensed properties as Sesame Street(R) from Children's Television Workshop(R), Winnie The Pooh(R), Doug, Disney Classic characters and Mulan from Disney, Tom & Jerry(R) from Warner Bros. and Hello Kitty(R) from Sanrio. NewKidCo's products are sold nationwide through the retail channel. To learn more, visit http://newkidco.com

Statements in this press release which are not historical are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that all forward-looking statements involve risk and uncertainties, including without limitation risks associated with the company's financial condition and prospects, risks in product development and market acceptance of and demand for the Company's products, risks of downturns in economic conditions generally, risks associated with competition and competitive pricing pressures, risks associated with the sell-through of products in the sales channels, risks in technology development and commercialization, and other risks detailed in the Company's filings with the Securities and Exchange Commission. These risks may cause results to differ materially from those projected in the forward-looking statements. -0-
NEWKIDCO INTERNATIONAL INC.
Consolidated Balance Sheet
September 30, 1999 and 1998
(in thousands of Canadian dollars)
Unaudited

 Canadian GAAP U.S. GAAP (see Note)
 1999 1998 1999 1998
ASSETS

CURRENT
 Cash and
 short-term
 deposits $ 8,762 $ 3,727 $ 8,762 $ 3,727
 Accounts
 receivable 2,726 10 2,726 10
 Inventory 1,233 -- 1,233 --
 Prepaid expenses
 and deposits 195 276 195 276
 Prepaid
 royalty fees 3,323 -- 3,323 --
 Assets of
 discontinued
 operations 29 1,098 29 1,098
 16,268 5,111 16,268 5,111

CAPITAL ASSETS 108 184 108 184

DEFERRED
PRODUCTION COSTS
 (net of accumulated
 amortization) 5,176 1,508 5,176 1,183

GOODWILL 4,682 -- 2,307 --

INVESTMENT 43 -- 43 --

ORGANIZATION COSTS -- 112 -- 112

ASSETS OF DISCONTINUED
 OPERATIONS 153 -- 153 --
 $ 26,430 $ 6,915 $ 24,055 $ 6,590

LIABILITIES

CURRENT
 Accounts payable
 and accrued charges $ 6,622 $ 1,606 $ 6,622 $ 2,076
 Liabilities of
 discontinued
 operations 816 1,814 816 1,814
 7,438 3,420 7,438 3,890

SHAREHOLDERS' EQUITY

SHARE CAPITAL 72,139 70,168 103,108 101,136
WARRANTS 16,336 -- 16,336 --

DEFICIT (69,483) (66,673) (102,827) (98,436)
 18,992 3,495 16,617 2,700
 $ 26,430 $ 6,915 $ 24,055 $ 6,590



NOTE:
 The consolidated balance sheets and the consolidated statements
of earnings (loss) and deficit are prepared in accordance with
generally accepted accounting principles in the United States (U.S.
GAAP) and have been presented as supplemental information for the
convenience of U.S. Readers.

NEWKIDCO INTERNATIONAL INC.
Consolidated Statements of Earnings (Loss) and Deficit
Three Month Periods Ended September 30, 1999 and 1998
(in thousands of Canadian dollars except share and per share amounts)
Unaudited

 Canadian GAAP U.S. GAAP (see Note)
 1999 1998 1999 1998
REVENUE
 Sales $ 2,698 $ -- $ 2,698 $ --
 Interest income 119 95 119 95
 2,817 95 2,817 95

COST OF SALES 1,717 -- 1,717 --
GROSS PROFIT 1,100 95 1,100 95

EXPENSES
 Amortization 240 14 115 14
 General and
 administrative 512 431 512 431
 Research and
 development 110 145 110 145
 Selling and
 marketing 1,002 158 1,002 158
 Adjustment to
 put liability -- -- -- (290)
 Amortization of
 acquired software
 products -- 327 -- --
 1,864 1,075 1,739 458
LOSS FROM CONTINUING
 OPERATIONS BEFORE
 NON-CONTROLLING INTEREST (764) (980) (639) (363)

NON-CONTROLLING INTEREST -- 63 -- 5

LOSS FROM CONTINUING
 OPERATIONS AFTER
 NON-CONTROLLING INTEREST (764) (917) (639) (358)

EARNINGS (LOSS) FROM
 DISCONTINUED OPERATIONS 695 (1,539) 695 (1,537)
NET EARNINGS (LOSS)
 FOR THE PERIOD (69) (2,456) 56 (1,895)

DEFICIT, BEGINNING
 OF PERIOD (69,414) (64,217) (102,883) (96,541)
DEFICIT, END
 OF PERIOD $ (69,483) $ (66,673) $(102,827) $ (98,436)

Basic
LOSS PER SHARE
 - CONTINUING
 OPERATIONS (0.06) (0.07) (0.05) (0.03)
EARNINGS (LOSS) PER SHARE
 - DISCONTINUED
 OPERATIONS 0.05 (0.12) 0.05 (0.12)
TOTAL LOSS PER SHARE (0.01) (0.19) 0.00 (0.15)

WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 (thousands) 13,783 13,123 13,783 13,123

Diluted
LOSS PER SHARE
 - CONTINUING
 OPERATIONS (0.03) (0.07) (0.04) (0.03)
EARNINGS (LOSS) PER SHARE
 - DISCONTINUED
 OPERATIONS 0.04 (0.12) 0.04 (0.12)
TOTAL EARNINGS
 (LOSS) PER SHARE 0.01 (0.19) 0.00 (0.15)

WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 (thousands) 22,433 13,182 15,813 13,123

NOTE:
 The consolidated balance sheets and the consolidated statements
of earnings (loss) and deficit are prepared in accordance with
generally accepted accounting principles in the United States (U.S.
GAAP) and have been presented as supplemental information for the
convenience of U.S. Readers.

NEWKIDCO INTERNATIONAL INC.
Consolidated Statements of Earnings (Loss) and Deficit
Nine Month Periods Ended September 30, 1999 and 1998
(in thousands of Canadian dollars except share and per share amounts)
Unaudited

 Canadian GAAP U.S. GAAP (see Note)
 1999 1998 1999 1998
REVENUE
 Sales $ 14,460 $ -- $ 14,460 $ --
 Interest
 income 138 461 138 461
 14,598 461 14,598 461

COST OF SALES 7,593 -- 7,593 --
GROSS PROFIT 7,005 461 7,005 461

EXPENSES
 Amortization 612 14 487 14
 General and
 administrative 1,931 794 1,931 794
 Research and
 development 305 177 305 177
 Selling and
 marketing 3,875 374 3,875 374
 Adjustment to
 put liability -- -- 1,614 (290)
 Write off of
 acquired software
 products -- -- -- 1,733
 Amortization of
 acquired software
 products -- 647 -- --
 6,723 2,006 8,212 2,802

EARNINGS (LOSS)
 FROM CONTINUING
 OPERATIONS BEFORE
 NON-CONTROLLING
 INTEREST 282 (1,545) (1,207) (2,341)

NON-CONTROLLING
 INTEREST -- 239 -- 239

EARNINGS (LOSS)
 FROM CONTINUING
 OPERATIONS AFTER
 NON-CONTROLLING INTEREST 282 (1,306) (1,207) (2,102)

EARNINGS (LOSS) FROM
 DISCONTINUED OPERATIONS 2,632 (6,971) 2,632 (6,685)

NET EARNINGS (LOSS)
 FOR THE PERIOD 2,914 (8,277) 1,425 (8,787)

DEFICIT, BEGINNING
 OF PERIOD (72,397) (58,396) (104,252) (89,649)

DEFICIT, END
 OF PERIOD $(69,483) $(66,673) $(102,827) $(98,436)

Basic
EARNINGS (LOSS)
 PER SHARE
 - CONTINUING
 OPERATIONS 0.02 (0.10) (0.09) (0.16)
EARNINGS (LOSS)
 PER SHARE
 - DISCONTINUED
 OPERATIONS 0.20 (0.53) 0.20 (0.51)

TOTAL EARNINGS
 (LOSS) PER SHARE 0.22 (0.63) 0.11 (0.67)

WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 (thousands) 13,382 13,123 13,382 13,123

Diluted
EARNINGS (LOSS)
 PER SHARE
 - CONTINUING
 OPERATIONS 0.03 (0.10) (0.10) (0.16)
EARNINGS (LOSS)
 PER SHARE
 - DISCONTINUED
 OPERATIONS 0.16 (0.52) 0.21 (0.51)
TOTAL EARNINGS (LOSS)
 PER SHARE 0.19 (0.62) 0.11 (0.67)

WEIGHTED AVERAGE
 NUMBER OF COMMON
 SHARES OUTSTANDING
 (thousands) 18,406 13,296 12,618 13,144

NOTE:
 The consolidated balance sheets and the consolidated statements
of earnings (loss) and deficit are prepared in accordance with
generally accepted accounting principles in the United States (U.S.
GAAP) and have been presented as supplemental information for the
convenience of U.S. Readers.
COPYRIGHT 1999 Business Wire
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1999, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

 
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