U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB/A
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
___ OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition Period from:
Commission File Number: 001-13217
THE ORLANDO PREDATORS ENTERTAINMENT, INC.
-----------------------------------------
(Exact name of small business issuer as specified in its charter)
Florida 91-1796903
------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification Number)
Incorporation or Organization)
400 West Church Street
Orlando, Florida 32801
----------------------
(Address of Principal Executive Offices)
Issuer's Telephone Number: (407) 648-4444
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 X No_____
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court. Yes_____ No_____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: As of November 13, 1998, 4,930,000
shares of the Registrant's no par value Class A Common Stock and 1,000 shares of
no par value Class B Common Stock were outstanding.
Transitional Small Business Disclosure format: Yes[ ] No [X]
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE ORLANDO PREDATORS ENTERTAINMENT, INC.
BALANCE SHEETS
ASSETS
------
September 30, December 31,
1998 1997
---------- ----------
CURRENT ASSETS:
Cash $ 63,165 $2,255,678
Accounts receivable, sponsorships 76,931 --
Accounts receivable, related party 137,600 --
Note receivable, current portion 30,956 --
Interest income receivable 56,499 --
Inventory 33,116 14,659
Receivable from employees 48,780 51,717
Prepaid expenses 40,281 94,134
---------- ----------
Total Current Assets 487,328 2,416,188
PROPERTY AND EQUIPMENT, at cost, net 239,858 262,397
EQUITY INVESTMENT IN AFL 4,071,437 --
NOTE RECEIVABLE, net of current portion 1,935,015 --
MEMBERSHIP COST, net 1,906,949 1,944,259
OTHER INTANGIBLES, net 39,646 55,159
RESTRICTED INVESTMENT 100,000 100,000
OTHER ASSETS 4,344 908
---------- ----------
$8,784,577 $4,778,911
========== ==========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
2
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
BALANCE SHEETS (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
September 30, December 31,
1998 1997
----------- -----------
CURRENT LIABILITIES:
<S> <C> <C>
Accounts payable and accrued expenses $ 399,352 $ 167,355
Accounts payable and accrued expenses, related
parties 47,726 80,108
Due to AFL 10,000 --
Notes payable, related party 273,637 --
Accrued interest, related party 4,751 99,083
Deferred revenue 192,873 457,643
----------- -----------
Total Current Liabilities 928,339 804,189
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, 1,500,000 shares authorized; none
issued or outstanding -- --
Class A Common stock, 15,000,000 shares
authorized; 4,930,000 and 2,480,000 issued and
outstanding 9,623,147 4,861,707
Class B Common Stock, 1,000 shares authorized;
1,000 issued and outstanding 5,000 5,000
Additional paid-in capital 2,802,000 --
Accumulated (deficit) (4,573,909) (891,985)
----------- -----------
Total Stockholders' Equity 7,856,238 3,974,722
----------- -----------
$ 8,784,577 $ 4,778,911
=========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
3
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
STATEMENTS OF OPERATIONS
For the Three For the Three For the Nine For the Period
Months Ended Months Ended Months Ended February 14, to
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
REVENUES:
<S> <C> <C> <C> <C>
Ticket revenues $ 583,250 $ 396,323 $ 1,497,345 $ 1,508,127
Concession income 52,992 -- 122,866 --
Play-off game ticket revenues 130,762 140,318 130,762 140,318
Play-off game revenue sharing 95,000 45,000 95,000 45,000
Local television and radio broadcast
rights 34,724 27,385 76,752 87,632
Advertising and promotions 230,801 179,666 663,861 641,651
Advertising and promotions, related
party 31,250 50,000 100,000 50,000
League revenue 32,699 131,250 100,000 181,250
Telemarketing income, related party 137,600 -- 137,600 --
Other 43,196 317 60,281 6,588
----------- ----------- ----------- -----------
Total Revenues 1,372,274 970,259 2,984,467 2,660,566
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Operations 767,331 623,231 1,815,651 1,596,064
Operations, related party 4,988 5,362 4,988 5,362
Playoff expenses 352,016 229,328 352,016 229,328
Selling and promotional expenses 253,097 197,095 576,342 399,351
League assessments 43,722 123,458 92,875 224,622
General and administrative 324,798 284,621 810,797 638,246
Telemarketing expenses 79,788 -- 102,191 --
Amortization 87,608 13,615 122,824 30,130
Depreciation 12,130 9,588 37,749 21,505
----------- ----------- ----------- -----------
Total Costs and Expenses 1,925,478 1,486,298 3,915,433 3,144,608
----------- ----------- ----------- -----------
OPERATING (LOSS) (553,204) (516,039) (930,966) (484,042)
----------- ----------- ----------- -----------
OTHER INCOME (EXPENSE):
Interest expense (10,570) -- (27,243) --
Interest expense, related party (17,235) (36,322) (34,256) (67,581)
Interest income 58,485 1,379 112,089 5,875
Other -- -- 452
----------- ----------- ----------- -----------
Net Other Income (Expense) 30,680 (34,943) 51,042 (61,706)
----------- ----------- ----------- -----------
NET (LOSS) (522,524) (550,982) (879,924) (545,748)
EFFECT OF MONOLITH LIMITED
PARTNERSHIP PUT AGREEMENT (2,802,000) -- (2,802,000) --
----------- ----------- ----------- -----------
NET (LOSS) ATTRIBUTABLE TO
COMMON STOCKHOLDERS $(3,324,524) $ (550,982) $(3,681,924) (545,748)
=========== =========== =========== ===========
NET (LOSS) PER SHARE - BASIC AND
DILUTED $ (.88) $ (.40) $ (1.26) $ (.40)
=========== =========== =========== ===========
Weighted Average Number of Common
Shares Outstanding 3,772,391 1,380,000 2,920,109 1,380,000
=========== =========== =========== ===========
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
4
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOWS
For the
For the Nine Period
Months Ended February 14, to
September 30, September 30,
1998 1997
------------ ------------
CASH FLOWS FROM (TO) OPERATING ACTIVITIES:
<S> <C> <C>
Net (loss) $ (879,924) $ (545,748)
Adjustments to reconcile net (loss) to net cash
from operating activities:
Depreciation and amortization 160,421 51,635
Changes in assets and liabilities:
Accounts receivable (76,931) 663,089
Employee receivables 2,937 (24,785)
Inventory (18,457) (12,472)
Prepaid expenses 53,853 90,785
Accounts receivable, related party (137,600) --
Interest income receivable (56,499) --
Other assets (3,436) (6,408)
Accounts payable and accrued expenses 120,854 171,007
Deferred revenue (264,770) (1,007,229)
----------- -----------
Net Cash (Used) by Operating Activities (1,099,552) (620,126)
----------- -----------
CASH FLOWS FROM (TO) INVESTING ACTIVITIES:
Purchase of equipment (15,058) (22,130)
Investment in AFL (4,071,437) --
Investment in certificate of deposit -- (100,000)
Payments for contract purchase -- (40,000)
----------- -----------
Net Cash (Used) by Investing Activities (4,086,495) (162,130)
----------- -----------
CASH FLOWS FROM (TO) FINANCING ACTIVITIES:
Loans from stockholders 286,000 1,040,000
Note payable - related party 1,050,000 --
Payment of loans from stockholders (12,363) (101,644)
Payment of bridge loans (200,000) --
Bridge loans 950,000 --
Payment of loan fees (70,000) --
Proceeds from issuance of Class A Common Stock 4,739,427 --
Payment of note payable, related party (1,045,000) --
Issuance of note receivable (1,965,971) --
Payment of offering costs (738,559) --
----------- -----------
Net Cash Provided by Financing Activities 2,993,534 938,356
----------- -----------
INCREASE (DECREASE) IN CASH (2,192,513) 156,100
CASH, beginning of period 2,255,678 --
----------- -----------
CASH, end of period $ 63,165 $ 156,100
=========== ===========
Supplementary information:
CASH PAID FOR INTEREST $ 149,857 $ --
=========== ===========
See Note 6
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
5
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and in
accordance with the instructions for Form 10-QSB. Accordingly, they do not
include all of the information and footnotes required by generally accepted
accounting principles.
In the opinion of management, the interim financial statements for the period
ended September 30, 1998 are presented on a basis consistent with the audited
financial statements and reflect all adjustments, consisting only of normal
recurring accruals, necessary for fair presentation of the results of such
period.
Audited financial statements for Orlando Predators, a division of Orlando
Predators, Ltd., the predecessor owner, for the period prior to acquisition,
January 1, 1997 through February 13, 1997, are not presented since no
substantial activities took place during that period.
The results for the three and nine months ended September 30, 1998 and the
periods ended September 30, 1997 are not necessarily indicative of the results
of operations for the full year. These financial statements and related
footnotes should be read in conjunction with the financial statements and
footnotes thereto included in the Company's Form 10-KSB filed with the
Securities and Exchange Commission for the period ended December 31, 1997.
Certain amounts in the prior period's financial statements have been
reclassified for comparative purposes to conform to the current year.
NOTE 2 - PURCHASE OF EQUITY INTERESTS IN THE AFL
In August 1998 the Company acquired two, non-voting, equity interests in the
Arena Football League, Inc. (AFL) for $6,000,000. Each similar equity interest
entitles the Company to share equally with each other member in AFL revenues.
The AFL guarantees to pay the Company at least $480,000 per year until the
Company receives an aggregate of $6,000,000 through League distribution. If the
Company receives $6,000,000 within one year from the closing of the purchase,
one equity interest returns to the League and one equity interest remains with
the Company without any guaranteed rate of return. Once the Company receives an
aggregate of $6,000,000, the Company will participate in all League revenues,
expenses and liabilities with respect to the two equity interests.
The $6,000,000 was paid as follows: $3,500,000 was paid with the executed
contract and $2,500,000 was paid on August 14, 1998.
The purchase of the interests requires that the two, non-voting, equity
interests in the League are recorded under the equity method of accounting at
$4,071,437, and an unsecured, note receivable is recorded for $1,965,971 from
the League, with imputed interest of 23% and principal due annually on August 14
of each year. The minimum principal and interest payment is $480,000 annually.
6
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 3 - CONTINGENCIES
The AFL is party to a number of lawsuits arising in the normal course of
business. The Company is contingently liable for its share of the outcomes. In
the opinion of management, the resolution of these matters will not have a
material effect on the Company's financial position.
NOTE 4 - PRIVATE PLACEMENT
On August 11, 1998 the Company completed a private placement of 1,250,000 shares
of its Class A Common stock for $2,500,000 ($2.00 per share). On August 31, 1998
the Company completed a private placement for 1,200,000 shares of its Class A
Common stock for $3,000,000 ($2.50 per share) and paid offering costs of
$738,559. On October 13, 1998, the Company completed another private placement
offering. It consisted of one investor totaling $250,000 ($2.50 per share), with
commissions of 15% or $37,500 paid for 100,000 shares of Class A restricted
stock.
NOTE 5 - NOTES PAYABLE - BRIDGE LOANS
During April 1998, the Company completed an offering of 40 units in a private
placement. Each unit consisted of one $50,000 promissory note (totaling
$2,000,000) bearing interest at 7% per annum and 4,000 warrants to purchase the
Company's Class A Common Stock expiring December 31, 2001. The notes are payable
the earlier of December 31, 2001 or on the closing date of a public offering in
excess of $5,000,000. Underwriters were paid a commission of $95,000. Of the
$2,000,000 promissory notes, $1,050,000 were sold to current stockholders or
directors, including $850,000 to Monolith. Notes of $755,000 and accrued
interest of $5,573 were converted to 304,229 shares of the Company's Class A
Common Stock in the August 31, 1998 private placement. The remaining notes
payable and accrued interest of $1,295,774 were paid on September 1, 1998.
NOTE 6 - SUPPLEMENTAL INFORMATION TO STATEMENT OF CASH FLOWS FOR NONCASH
FINANCING ACTIVITIES
On August 31, 1998 the Company converted notes of $755,000 and accrued interest
of $5,573 to 304,229 shares of the Company's Class A Common Stock.
NOTE 7 - RELATED PARTY TRANSACTION
The Company provided telemarketing services valued at $137,600 to a Company
owned by the principal stockholder of the Company. Expenses for the
telemarketing services were $102,191.
7
<PAGE>
THE ORLANDO PREDATORS ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 8 - MONOLITH LIMITED PARTNERSHIP PUT AGREEMENT
In August, 1998, Monolith Limited Partnership ("Monolith"), a major stockholder
of the Company, entered into an agreement with a third party (who is also a
partner in Monolith), who purchased 1,000,000 shares of the Company's Class A
common stock for $2,000,000. The agreement requires Monolith to purchase 600,000
shares of the Company's Class A common stock from the third party for $4,000,000
at the third party's option. The agreement was amended in May 1999, to extend
the period of exercise through March 2001. Generally accepted accounting
principles require that the Company record a capital contribution from Monolith
of $2,802,000 on the date of the transaction, with a corresponding charge to
retained earnings. This amount is also reflected as an addition to net loss in
computing net loss attributable to common stockholders, in the earnings per
share computation. On July 13, 1999, the option agreement for 275,000 of the
600,000 shares was exercised. In consideration for $550,000 paid by Monolith to
the third party, as a cancellation fee, the third party agreed to terminate its
put right for the remaining shares.
NOTE 9 - OPERATING SEGMENTS
The Company organizes its business units into two reportable segments: football
operations and telemarketing services. The football operations segment operates
the AFL team and the telemarketing services segment provides telemarketing
services to a related party.
The segment's accounting policies are the same as those described in the summary
of significant accounting policies included the Company's Form 10K-SB filed with
the Securities and Exchange Commission for the period ended December 31, 1997.
The Company's reportable business segments are strategic business units that
offer different products and services. The segments are managed together because
they utilize similar resources within the Company. There were no reportable
segments during the period ended December 31, 1997. All assets of the Company
relate to the football operations segment.
Football Telemarketing
Operations Services Total
---------- -------- -----
Sales to external customers
and other revenues $ 2,846,867 $ 137,600 $ 2,984,467
Segment profit (loss) $ (966,375) $ 35,409 $ (930,966)
8
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THE ORLANDO PREDATORS ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
- -------
The Company derives substantially all of its revenue from the arena football
operations of the Predators. This revenue is primarily generated from (i) the
sale of tickets to the Predators' home games, (ii) the sale of advertising and
promotions to Predator sponsors, (iii) the sale of local and regional broadcast
rights to Predators' games, (iv) the Predators' share of League contracts with
national broadcast organizations and expansion team fees paid through the AFL,
(v) the sale of merchandise carrying the Predators' logos and (vi) concession
sales at Predators' home games. A large portion of the Company's annual revenue
is determinable at the commencement of each football season based on season
ticket sales and contracts with broadcast organizations and team sponsors.
The operations of the team are year-round; however, the majority of revenues and
expenses are recognized during the AFL playing season, from April through August
of each year. The team begins to receive deposits in late September for season
tickets for the upcoming season. From September through April, the team sells
season tickets and collects revenue from all such sales. Selling, advertising
and promotions also take place from September through April, although these
revenues are not realized until after the season begins. Single game tickets and
partial advertising sponsorships are also sold during the season, primarily from
April through July. Additional revenues are recognized in August from playoff
games, if any.
Except for the historical information contained herein, certain matters set
forth in this report are forward-looking statements within the meaning of the
"safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. These forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. These risks are detailed
from time to time in the Company's periodic reports filed with the Securities
and Exchange Commission. These forward- looking statements speak only as of the
date hereof. The Company disclaims any intent or obligation to update these
forward-looking statements.
Amended Form 10-QSB
- -------------------
This amended Form 10-QSB reflects the effect of a put agreement entered into by
Monolith Limited Partnership ("Monolith"), a major shareholder of the Company,
in August 1998, whereby Monolith arranged for the sale to a third party
1,000,000 shares of the Company's Class A common stock and agreed to repurchase
600,000 of those shares for $4,000,000, at the third party's option, through May
1999. The agreement was amended in May 1999 to extend the period of exercise
through March 2001. The third party is also a partner in Monolith. As a result
of this transaction, the Company has recorded a capital contribution from
Monolith of $2,802,000 and a corresponding charge to additional paid-in capital,
in the accompanying financial statements. There was no effect on income as a
result of this transaction. The calculation of earnings per share has also been
amended to reflect an addition to net loss, in computing net loss attributable
to common stockholders, as the charge to retained earnings is treated similar to
a preferred stock dividend. On July 13, 1999, the option agreement was exercised
for 275,000 of the 600,000 shares. In consideration for $550,000 paid by
Monolith to the third party as a cancellation fee, the third party agreed to
terminate the put right for the remaining shares.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company has made the following additional adjustments to the accompanying
financial statements, resulting in a net increase of the net loss previously
reported of $820,580 to $879,924:
o Accrued sales commission in accordance with the terms of an employment
contract.
o Wrote-off certain sponsorship receivables.
o Reclassified certain general and administrative expenses to selling and
promotional expenses and operations expenses.
Results of Operations
- ---------------------
Nine Months Ended September 30, 1998 Compared To The Period February 14 To
September 30, 1997
Revenues
- --------
The Company recognizes game revenues and expenses over the course of the season
(April through August).
Revenues for the nine months ended September 30, 1998 were $2,984,467, which
represented an increase of $323,901 or 12% as compared to revenues of $2,660,566
for the period ended September 30, 1997.
Season ticket prices for the 1998 season decreased by an average of 10%;
however, the number of season ticket holders increased by 1,889, which
represents an increase in season ticket holders of over 38% for the year.
In comparing the two periods, operating under the new lease agreement for the
arena, the Company generated $122,866 in concession income for the nine home
games played in this period compared to the prior period when no concession
income was generated.
Playoff game revenue decreased by $9,556 or 8% compared to the prior year. This
was due to the reduction of ticket prices for the 1998 season. Playoff game
revenue sharing increased by $50,000 due to the team playing an extra game and
winning the championship over the Tampa Bay Storm by a score of 62-31.
Sponsorship sales increased by $72,210 or 11% compared to the prior period.
League revenues decreased in the amount of $81,250 or 45% over the prior period.
Telemarketing revenue is a new segment for the Company this year. It has earned
income of $137,600. It generates commissions based on the number of sales made
through an employee leasing company, which is owned by a related party. The
Company anticipates the expansion of this division in the future and to continue
to use it to generate sales of season tickets.
Operating Expenses
- ------------------
Operating expenses of $1,815,651 increased by $219,587 or 14% compared to
$1,596,064 in the prior period. The increase was a result of increased medical
costs due to post-season surgeries and increased salaries.
10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Playoff Expenses
- ----------------
Playoff expenses of $352,016 increased by $122,688 in this period compared to
$229,328 in the prior period. This was due to the additional championship away
game. In the prior year, the Company had two playoff games compared to three
games for the current year.
Selling and Promotional Expenses
- --------------------------------
Selling and promotional expenses of $576,342 increased by $176,991 or 44%
compared to the prior period. This is primarily due to a new telemarketing
department which helped to generate increased sales of season tickets by 1,889.
League Assessments
- ------------------
League assessments of $92,875 decreased by $131,747 or 59% compared to $224,622
in the prior period. This decrease is due to a reduction in expenses associated
with legal settlements and legal bills with former teams as well as other
claims. The AFL is comprised of a number of teams who share in all league
expenses and some league revenues. League assessments are based upon the team's
share of league operating expenses and other league expenses such as legal
settlements.
General and Administrative Expenses
- -----------------------------------
General and administrative expenses were $810,797. This is an increase of
$172,551 compared with $638,246 in the prior period. This increase can be
attributed to increased payroll costs due to an increase in the number of
employees. It can also be attributed to the shorter prior period. Other
increases included offering costs from a discontinued offering of $57,046, legal
costs of $21,538 and office operations costs of $63,799.
Telemarketing Expense
- ---------------------
Due to the addition of the new telemarketing services segment, the Company
incurred expenses in the amount of $102,191. These costs were associated with
operating this segment.
Interest Expense
- ----------------
Interest expense during the nine months ended September 30, 1998 was $61,499
compared to $67,581 for the prior period. Related party interest expense was
$34,256 compared to $67,581 for the prior period. The interest expense and the
related party interest expense during the nine months ended September 30, 1998
was related to bridge loans of $2,000,000, which was used in the initial
downpayment for $3,500,000 in securing the two equity interests in the AFL. The
interest expense during the period ended September 30, 1997 was related to the
debt assumed in the purchase of the Company and additional advances for
operations made by stockholders of the Company.
Interest Income
- ---------------
Interest income during the nine months ended September 30, 1998 was $112,089
compared to $5,875 for the prior period. The increase can be attributed to the
proceeds received from the initial public offering and the accrual of interest
related to the note receivable recorded from the League.
11
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
Historically, the Company financed net operating losses primarily with loans
from the team's former managing general partners.
Through December 10, 1997, the Company had issued an aggregate of $2,342,970 in
promissory notes (together with interest thereon) to its two stockholders, most
of which were repaid from proceeds of the IPO. During April 1998, the Company
completed an offering of 40 units in a Private Placement. Each unit consisted of
one $50,000 promissory note (totaling $2,000,000) bearing interest at 7% per
annum and 4,000 warrants to purchase the Company's Class A Common Stock expiring
December 31, 2001. The notes are payable on the earlier of December 31, 2001 or
the closing date of a public offering in excess of $5,000,000. Underwriters were
paid a commission of $95,000. Of the $2,000,000 in promissory notes, $1,050,000
were sold to current stockholders or directors, including $850,000 to Monolith.
On August 11, 1998, the Company completed a private placement of 1,250,000
shares of its class A common stock for $2,500,000 ($2.00 per share) with no
offering costs. These proceeds were used to complete the purchase of the equity
interests in the AFL as described in Note 2.
On August 31, 1998, the Company completed a private placement of 1,200,000
shares of its Class A common stock for $3,000,000 ($2.50 per share) and paid
offering costs of $738,559. Proceeds from this private placement were used to
pay off the outstanding bridge loans and interest (Note 5). The remaining
proceeds were used working capital needs.
Notes of $755,000 and accrued interest of $5,573 were converted to 304,229
shares of the Company's Class A Common Stock in the August 31, 1998 private
placement. The remaining notes payable and accrued interest of $1,295,774 were
paid on September 1, 1998.
On October 13, 1998, the Company completed another private placement offering.
It consisted of one investor totaling $250,000 ($2.50 per share), with
commissions of 15% or $37,500 paid for 100,000 shares of Class A common stock.
These proceeds were used to fund current operations.
The reduction of indebtedness using proceeds of the private placements improved
the Company's liquidity by reducing indebtedness required to be paid in the
future. The Company believes that cash flows from operations, along with
distributions related to the recent purchase of two equity interests in the AFL
will enhance the Company's future cash flows and satisfy the Company's
anticipated working capital requirements for at least the next 12 months. This
will be accomplished by having the AFL make a minimum principle and interest
payment to the Company in the amount of $480,000 annually.
On November 5, 1998, the Company received a payment from the League in the
amount of $672,790. This payment represented the Company's share of the Los
Angeles expansion revenue.
12
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Changes in Securities:
None
Use of Proceeds:
% of Proceeds Amount Total
------------- ------ -----
Gross Proceeds 100.0% $5,500,000
- --------------
Less:
Underwriters' expenses 10.0% 550,000
Other costs and expenses 10.5% 576,089
----- ---------
Total Expenses 20.5% 1,126,089
----- ---------
Net proceeds 79.5% 4,373,911
Use of Proceeds
- ---------------
Repayment of debts 42.1% 2,317,828
Payment of accounts payable 2.7% 150,000
Payment of marketing expenses 4.6% 250,000
Acquisition of 2 non-voting equity
interests in the AFL 30.1% 1,656,083
----- ----------
Total Use of Proceeds 79.5% 4,373,911
----- ----------
REMAINING PROCEEDS .0% $ --
===== ==========
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
Exhibits: None
13
<PAGE>
PART II OTHER INFORMATION
Signatures
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
Date: August 24, 1999 THE ORLANDO PREDATORS ENTERTAINMENT, INC.
-----------------------------------------
Registrant
/s/ Jeff Bouchy
-----------------------------------------
Jeff Bouchy
Chief Financial Officer
14
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<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 63,165
<SECURITIES> 0
<RECEIVABLES> 214,531
<ALLOWANCES> 0
<INVENTORY> 33,116
<CURRENT-ASSETS> 487,328
<PP&E> 239,858
<DEPRECIATION> 0
<TOTAL-ASSETS> 8,784,577
<CURRENT-LIABILITIES> 928,339
<BONDS> 0
0
0
<COMMON> 9,628,147
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 8,784,577
<SALES> 2,984,467
<TOTAL-REVENUES> 2,984,467
<CGS> 3,915,433
<TOTAL-COSTS> 3,915,433
<OTHER-EXPENSES> 51,042
<LOSS-PROVISION> 112,541
<INTEREST-EXPENSE> 61,499
<INCOME-PRETAX> 3,681,924
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,681,924
<EPS-BASIC> (1.26)
<EPS-DILUTED> (1.26)
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