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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): April 3, 2002
FRANKLIN CAPITAL CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE
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(State or Other Jurisdiction of Incorporation)
1-9727 13-3419202
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(Commission File Number) (I.R.S. Employer Identification No.)
450 PARK AVENUE, 10TH FLOOR
NEW YORK, NEW YORK 10022
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(Address of Principal Executive offices) (Zip Code)
(212) 486-2323
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(Registrant's Telephone Number, Including Area Code
NOT APPLICABLE
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(Former Name or Former Address, if changed Since Last Report)
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ITEMS 2 AND 5. ACQUISITION OR DISPOSITION OF ASSETS AND OTHER EVENTS.
As previously disclosed in a Form 8-K (the "April Form 8-K") filed by
Franklin Capital Corporation ("Franklin") on April 12, 2002, on April 3, 2002
Dial Communications Global Media, Inc., a newly formed wholly-owned subsidiary
of Excelsior Radio Networks, Inc. ("Excelsior"), completed the acquisition of
substantially all of the assets of Dial Communications Group, Inc. ("DCGI"), and
Dial Communications Group, LLC ("DCGL" and together with DCGI, the "Dial
Entities") used in connection with the Dial Entities' business of selling
advertising relating to radio programming (the "Acquisition"). Concurrent with
the Acquisition, Excelsior issued promissory notes to Change Technology
Partners, Inc. and Sunshine II, LLC totaling $7,000,000 (in the aggregate, the
"Notes").
As contemplated in the April Form 8-K, attached hereto is financial
information relative to the Acquisition.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a), (b) Included in the following financial information, under the
column "Dial Communications", is the historical financial information of DCGL
for the periods presented. The following unaudited pro forma combined financial
information for Franklin gives effect to the Acquisition and issuance of the
Notes. Franklin is registered as a business development company and as such
files it financial statements under the Investment Company Act of 1940. The pro
forma financial statements reflect the accounting presentation as an Investment
Company. The unaudited pro forma combined statements of operations for the three
months ended March 31, 2002 give pro forma effect to the Acquisition and
issuance of the Notes as if the Acquisition had occurred, and the Notes had been
issued, on January 1, 2002. The unaudited pro forma condensed combined balance
sheet as of March 31, 2002 gives pro forma effect to the Acquisition and related
purchase accounting adjustments as if the Acquisition had occurred, and the
Notes had been issued, on March 31, 2002. The unaudited pro forma combined
statements of operations for the year ended December 31, 2001 give pro forma
effect to the Acquisition and issuance of the Notes as if the Acquisition had
occurred, and the Notes had been issued, on January 1, 2001. The pro forma
adjustments relating to the Acquisition and Notes are described in the notes to
the pro forma combined financial information.
2
The unaudited pro forma combined financial information does not
purport to represent the results of operations or the financial position of
Franklin that would have resulted had the Acquisition been consummated as of the
date or for the period indicated, and does not purport to be indicative of the
effects that may be expected to occur in the future. The historical financial
information set forth below has been derived from, and is qualified by reference
to, the financial statements of Franklin previously filed with the Securities
and Exchange Commission for the periods presented and should be read in
conjunction with those financial statements and notes thereto.
(c) None.
3
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
FRANKLIN CAPITAL CORPORATION
Date: June 17, 2002 By: /s/ Spencer L. Brown
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Spencer L. Brown
Senior Vice-President
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FRANKLIN CAPITAL CORPORATION
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PRO-FORMA STATEMENTS OF OPERATIONS
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PRO-FORMA
DIAL DECEMBER
FOR THE YEAR ENDED DECEMBER 31, 2001 COMMUNICATIONS ADJUSTMENTS NOTES 31, 2001
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INVESTMENT INCOME
Interest on short term investments and money
market accounts $45,953 $45,953
Dividend income 26,744 26,744
Income from majority-owned affiliates 120,000 120,000
Other income - $4,405,558 ($4,405,558) 1 -
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192,697 4,405,558 (4,405,558) 192,697
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EXPENSES
Salaries and employee benefits 933,081 2,572,258 (2,572,258) 1 933,081
Professional fees 168,618 11,459 (11,459) 1 168,618
Rent 126,134 103,417 (103,417) 1 126,134
Insurance 41,955 41,955
Directors' fees 18,802 18,802
Taxes other than income taxes 40,394 40,394
Newswire and promotion 5,707 5,707
Depreciation and amortization 19,994 19,994
General and administrative 224,697 663,015 (663,015) 1 224,697
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1,579,382 3,350,149 (3,350,149) 1,579,382
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Net investment loss from operations (1,386,685) 1,055,409 (1,055,409) (1,386,685)
Net realized gain (loss) on portfolio of investments:
Investment securities:
Affiliated 7,613 7,613
Unaffiliated 512,842 512,842
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Total investment securities 520,455 520,455
Net realized gain on portfolio of investments 520,455 520,455
Benefit for current income taxes (1,676) 66,000 (66,000) 1 (1,676)
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Net realized loss (864,554) 989,409 (989,409) (864,554)
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Decrease in unrealized appreciation of investments,
net Investment securities:
Affiliated 279,699 279,699
Unaffiliated (1,833,455) (1,833,455)
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Total investment securities (1,553,756) (1,553,756)
Decrease in unrealized appreciation of investments (1,553,756) (1,553,756)
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Decrease increase in net assets from operations (2,418,310) 989,409 (989,409) (2,418,310)
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Preferred dividends 115,150 115,150
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Net (decrease) increase in net assets attributable
to common stockholders ($2,533,460) $989,409 ($989,409) ($2,533,460)
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Basic and diluted net (decrease) increase in net
assets per share attributable to common stockholders ($2.34) $0.91 ($0.91) ($2.34)
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FRANKLIN CAPITAL CORPORATION
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PRO-FORMA STATEMENTS OF OPERATIONS
(UNAUDITED)
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PRO-FORMA
DIAL MARCH
FOR THE THREE MONTHS ENDED MARCH 31, 2002 COMMUNICATIONS ADJUSTMENTS NOTES 31, 2002
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INVESTMENT INCOME
Dividend income $ - $ -
Interest income 1,549 1,549
Management fees 90,000 90,000
Other income - $1,095,307 ($1,095,307) 1 -
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91,549 1,095,307 (1,095,307) 91,549
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EXPENSES
Salaries and employee benefits 181,776 523,498 (523,498) 1 181,776
Professional fees 35,925 34,029 (34,029) 1 35,925
Rent 35,154 27,605 (27,605) 1 35,154
Insurance 11,148 11,148
Directors' fees 500 500
Taxes other than income taxes 18,896 18,896
Newswire and promotion 1,000 1,000
Depreciation and amortization 4,243 4,243
Interest expense 8,850
General and administrative 48,498 123,045 (123,045) 1 48,498
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345,990 708,177 (708,177) 337,140
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Net investment loss from operations (254,441) 387,130 (387,130) (245,591)
Net realized (loss) gain on portfolio of investments:
Investment securities:
Affiliated - -
Unaffiliated (23,507) (23,507)
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Total investment securities (23,507) (23,507)
Net realized (loss) gain on portfolio of investments (23,507) (23,507)
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Provision for current income taxes - 14,050 (14,050) 1 -
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Net realized loss (277,948) 373,080 (373,080) (269,098)
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Increase (decrease) in unrealized appreciation of
investments:
Investment securities:
Affiliated - -
Unaffiliated 37,833 37,833
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Total investment securities 37,833 37,833
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Increase (decrease) in unrealized appreciation of
investments 37,833 37,833
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Net decrease in net assets from operations (240,115) 373,080 (373,080) (240,115)
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Preferred dividends 28,788 28,788
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Net decrease in net assets attributable to
common stockholders ($268,903) $373,080 ($373,080) ($268,903)
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Basic and diluted net decrease attributable to common
stockholders per share ($0.25) $0.34 ($0.34) ($0.25)
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FRANKLIN CAPITAL CORPORATION
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PRO-FORMA BALANCE SHEET
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MARCH 31, PRO-FORMA
2002 DIAL MARCH
(UNAUDITED) COMMUNICATIONS ADJUSTMENTS NOTES 31, 2002
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ASSETS
Marketable investment securities, at market
value (cost: March 31, 2002 - $57,660) $62,175 62,175
Investments, at fair value
(cost: March 31, 2002 - $3,757,830)
Excelsior Radio Networks, Inc. 2,250,000 2,250,000
Other investments 1,358,915 1,358,915
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3,608,915 3,608,915
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Cash and cash equivalents 116,737 $659,116 ($659,116) 1 416,737
300,000 2
Accounts receivable 679,347 (679,347) 1 0
Other assets 99,937 120,438 (120,438) 1 99,937
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TOTAL ASSETS $3,887,764 $1,458,901 ($1,158,901) $4,187,764
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Notes payable $1,000,000 1,000,000
Accounts payable and accrued liabilities 234,922 $217,482 (217,482) 1 234,922
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TOTAL LIABILITIES 1,234,922 217,482 (217,482) 1,234,922
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Commitments and contingencies
STOCKHOLDERS' EQUITY
Convertible preferred stock, $1 par value, cumulative
7% dividend:
5,000,000 shares authorized; 16,450 shares issued
and outstanding at March 31, 2002
(Liquidation preference $1,645,000) 16,450 16,450
Common stock, $1 par value: 5,000,000 shares authorized;
1,505,888 shares issued:1,074,700 shares outstanding
at March 31, 2002 1,505,888 1,505,888
Paid-in capital - common stock 10,271,610 300,000 2 10,571,610
Unrealized depreciation of investments (144,400) (144,400)
Accumulated deficit (6,477,350) 1,241,419 (1,241,419) 1 (6,477,350)
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5,172,198 1,241,419 (941,419) 6,413,617
Deduct common stock held in treasury, at cost,
431,188 shares at March 31, 2002 (2,519,356) (2,519,356)
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Net assets 2,652,842 1,241,419 (941,419) 2,952,842
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,887,764 $1,458,901 ($1,158,901) $4,187,764
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7
Notes to Pro Forma Combined Financial Information:
1. Adjustment to reflect Franklin filing under the Investment Act of 1940.
Franklin's majority-owned investment Excelsior purchased the assets of Dial.
Dial will be consolidated into Excelsior. Since Franklin files under the
Investment Act of 1940, Franklin reflects its investment in Excelsior and does
not consolidate Excelsior.
2. Adjustment to reflect the receipt by Franklin of $300,000 for Franklin's
obligations in connection with any Franklin common stock that may be issued
pursuant to the terms of the purchase agreement or the promissory notes issued
in consideration of the purchase of Dial. Any common stock issued in the future
would be recorded as an entry to common stock and additional paid in capital.
8