UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934; For the Quarterly Period Ended: March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number: 000-08835
TAURUS ENTERTAINMENT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
formerly TAURUS PETROLEUM, INC.
Colorado 84-0736215
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
505 North Belt, Suite 630
Houston, Texas 77060
(Address of principal executive offices, including zip code)
(281) 820-1181
(Registrant's telephone number, including area code)
Check whether the issuer (1) has 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 CORPORATE ISSUERS
At May 9, 2000, approximately 4,305,012 shares of common stock, $.001 par value,
were outstanding.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [X]
<PAGE>
TAURUS ENTERTAINMENT COMPANEIS, INC.
CONTENTS
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PART I - FINANCIAL INFORMATION
- ----------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 2000 (unaudited) and September
30, 1999 (audited)
Consolidated Statements of Operations for the three and six months ended
March 31, 2000 and 1999 (unaudited)
Consolidated Statements of Cash Flows for the six months ended March 31,
2000 and 1999 (unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
- ------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I - FINANCIAL INFORMATION
----------------------------------
Item 1. Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
-----------
3/31/00 9/30/99
(UNAUDITED) (AUDITED)
------------ -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 51,675 $ 13,775
Accounts receivable 16,070 6,254
Prepaid expenses 27,059 7,866
Inventories 1,041 0
Land held for sale 200,000 200,000
------------ -----------
Total current assets 295,845 227,895
------------ -----------
PROPERTY AND EQUIPMENT
Buildings, land and leasehold improvements 1,932,657 1,782,119
Furniture & equipment 192,036 251,684
------------ -----------
2,124,693 2,033,803
Accumulated depreciation (132,844) (99,195)
------------ -----------
1,991,849 1,934,608
------------ -----------
OTHER ASSETS
Other 1,530 55
------------ -----------
$ 2,289,224 $2,162,558
============ ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
3/31/00 9/30/99
(UNAUDITED) (AUDITED)
------------ -----------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long term debt $ 208,414 $ 195,821
Payable to Parent 215,261 67,484
Accounts payable - trade 111,679 133,705
Accrued expenses 83,919 29,777
------------ ------------
Total current liabilities 619,273 426,787
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debt less current portion 1,287,396 1,369,888
------------ ------------
Total Liabilities 1,906,669 1,796,675
------------ ------------
COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY
Preferred stock - $.10 par, authorized
1,000,000shares; none outstanding --- ---
Common stock - $.001 par, authorized
15,000,000 shares
issued 4,305,012 and 4,305,012 4,305 4,305
Additional paid in capital 4,026,383 4,026,383
Retained earnings (deficit) (3,648,133) (3,664,805)
------------ ------------
Total stockholders' equity 382,555 365,883
------------ ------------
$ 2,289,224 $ 2,162,558
============ ============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
2000 1999 2000 1999
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Service revenues $ 336,281 $ 73,276 $ 663,792 $ 135,799
Other 41,199 397,923 88,939 765,511
----------- ---------- ----------- -----------
377,480 471,199 752,731 901,310
----------- ---------- ----------- -----------
OPERATING EXPENSES
Cost of goods sold 25,398 23,873 51,477 53,751
Salaries and wages 82,809 78,904 147,071 254,087
Other general and administrative
Taxes and permits 40,889 40,057 86,926 76,136
Charge card fees 1,220 1,879 2,443 4,412
Rent 0 72,005 0 121,678
Legal and accounting 21,466 29,643 26,915 49,321
Advertising 35,152 11,782 66,991 34,070
Other 148,528 83,529 284,630 195,938
----------- ---------- ----------- -----------
355,462 341,673 666,453 789,393
----------- ---------- ----------- -----------
INCOME FROM OPERATIONS 22,018 129,526 86,278 111,917
Interest Expense (34,368) (46,748) (69,606) (80,698)
Loss on Termination of Lease 0 (219,780) 0 (219,780)
----------- ---------- ----------- -----------
NET INCOME/(LOSS) BEFORE (12,350) (137,002) 16,672 (188,561)
EXTRAORDINARY ITEM
EXTRAORDINARY ITEM
Gain on Fire Damage 0 256,592 0 256,592
----------- ---------- ----------- -----------
NET INCOME/(LOSS) $ (12,350) $ 119,589 $ 16,672 $ 68,031
=========== ========== ============ ==========
BASIC NET LOSS PER COMMON SHARE:
INCOME BEFORE EXTRAORDINARY $ (0.01) $ (0.03) (0.01) $(0.04)
ITEM
EXTRAORDINARY ITEM 0 0.06 0.00 0.06
----------- ---------- ------------ ----------
$ (0.01) $ 0.03 $ 0.01 $ 0.02
=========== ========== ============ ==========
WEIGHTED AVERAGE SHARES 4,305,012 4,305,012 4,305,012 4,305,012
OUTSTANDING =========== ========== ============ ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2000 AND 1999
2000 1999
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
NET INCOME $ 16,672 $ 68,031
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES:
Depreciation and amortization 33,649 26,652
Gain on fire damage and disposal of assets 0 (247,865)
Loss on termination of lease 0 219,780
Changes in assets and liabilities:
Accounts receivable (9,816) (271,534)
Prepaid expenses (19,193) 22
Inventories (1,041) 765
Other assets (1,475) 0
Accounts payable and accrued expenses 179,893 (161,440)
---------- -----------
Cash provided (used) by operating activities 198,689 (365,589)
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment (90,890) 318,174
Proceeds from insurance on fire damage 0 504,457
---------- -----------
Cash provided (used) by investing activities (90,890) 822,631
---------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (69,899) (187,904)
---------- -----------
Cash provided (used) by financing activities (69,899) (187,904)
---------- -----------
NET INCREASE/(DECREASE) IN CASH 37,900 (235,319)
CASH AT BEGINNING OF PERIOD 13,775 243,346
---------- -----------
CASH AT END OF PERIOD $ 51,675 $ 8,027
========== ===========
CASH PAID DURING PERIOD FOR:
Interest $ 104,834 $ 80,698
========== ===========
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
unaudited consolidated financial statements and related notes thereto included
in this quarterly report and in the audited consolidated Financial Statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A") contained in the Company's 10-KSB for the year ended
September 30, 1999.
FORWARD LOOKING STATEMENT AND INFORMATION
The Company is including the following cautionary statement in this Form
10-QSB to make applicable and take advantage of the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements, which are
other than statements of historical facts. Certain statements in this Form
10-QSB are forward-looking statements. Words such as "expects", "anticipates"
and "estimates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. Such risks and
uncertainties are set forth below. The Company's expectations, beliefs and
projections are expressed in good faith and are believed by the Company to have
a reasonable basis, including without limitation, management's examination of
historical operating trends, data contained in the Company's records and other
data available from third parties, but there can be no assurance that
management's expectation, beliefs or projections will result, be achieved, or be
accomplished. In addition to other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause material adverse affects on the Company's financial condition and
results of operations: the impact and implementation of the sexually oriented
business ordinance in the City of Houston, competitive factors, the timing of
the openings of other clubs, the integration of our operations and management
with our parent, Rick's Cabaret International, Inc., the availability of
acceptable financing to fund corporate expansion efforts, competitive factors,
and the dependence on key personnel. The Company has no obligation to update or
revise these forward-looking statements to reflect the occurrence of future
events or circumstances.
GENERAL
We currently own and operate one adult nightclub under the name "X.T.C.
Cabaret " in Austin, Texas. We own commercial income real estate and undeveloped
real estate. Our revenues are derived from cover charges, and the sale of food.
RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AS
COMPARED TO THE THREE AND SIX MONTHS ENDED MARCH 31, 1999
For the quarter ended March 31, 2000, the Company had consolidated total
revenues of $377,480 compared to consolidated total revenues of $471,199 for the
fiscal quarter ended March 31, 1999, or a decrease of $93,719. The decrease in
revenues was due to the closures of Lucky's due to termination of lease.
The cost of goods sold for the quarter ended March 31, 2000 was 6.73% of
total revenues compared to 5.07% for the quarter ended March 31, 1999. The
increase was due primarily to the increase in the costs of complimentary food.
<PAGE>
Payroll and related costs for the quarter ended March 31, 2000 were $82,809
compared to $78,904 for the quarter ended March 31, 1999. The increase was due
to the increase in payroll expenses in the Austin location.
Other selling, general and administrative expenses for the quarter ended
March 31, 2000 were $247,255 compared to $238,895 for the quarter ended March
31, 1999. The increase in these expenses was primarily due to the increase in
advertising and in management fees that the parent company assessed.
Interest expense for the quarter ended March 31, 2000 was $34,368 compared
to $46,748 for the quarter ended March 31, 1999. The decrease was attributable
to the Company's policy to pay its debts down and not to incur any new debts.
Net loss for the quarter ended March 31, 2000 was ($12,350) compared to a
net income of $119,589 for the quarter ended March 31, 1999. The decrease was
primarily due to the reduction in revenues due to the closure of the Company's
New Orleans location and due to the gain on fire damages in the 1999 quarter.
For the six months ended March 31, 2000, the Company had consolidated total
revenues of $752,731 compared to consolidated total revenues of $901,310 for
the fiscal six months ended March 31, 1999, or a decrease of $ 148,579. The
decrease in revenues was due to the closure Lucky's due to termination of lease.
The cost of goods sold for the six months ended March 31, 2000 was 6.84% of
total revenues compared to 5.97% for the six months ended March 31, 1999. The
increase was due to the increase in the costs of providing complimentary food.
Payroll and related costs for the six months ended March 31, 2000 were
$147,071 compared to $254,087 for the six months ended March 31, 1999. The
decline was due to the closure of the Company's facility in New Orleans.
Other selling, general and administrative expenses for the six months ended
March 31, 2000 were $467,905 compared to $481,555 for the six months ended March
31, 1999. The decrease in these expenses was due to the closures of some of the
Company's facilities.
Interest expense for the six months ended March 31, 2000 was $69,606
compared to $80,698 for the six months ended March 31, 1999. The decrease was
attributable to the Company's policy to pay its debts down and not to incur new
debts.
Net income for the six months ended March 31, 2000 was $16,672 compared to
$68,031 for the six months ended March 31, 1999. The decrease was due to the
reduction in revenues due to the closure of Lucky's and due to the gain on fire
damage in the 1999 quarter.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2000, the Company had working capital of $67,950 compared to a
working capital of $325,862 at September 30, 1999. The decrease in working
capital was due to the additions to property & equipment and payments on note
payable.
Net cash provided by operating activities in the six months ended March 31,
2000 was $198,689 compared to net cash used of $374,316 for the six months ended
March 31, 1999. The increase in cash provided by operating activities was due
principally to certain non-cash gains in 1999 and to increase in accounts
payable in 2000.
<PAGE>
Depreciation and Amortization for the six months ended March 31, 2000 were
$33,649 compared to $26,652 for the six months ended March 31, 1999.
In the opinion of management, working capital is not a true indicator of
the financial status. Typically, the Company carries current liabilities in
excess of current assets because the business receives substantially immediate
payment for sales, with nominal receivable, while inventories and other current
liabilities normally carry longer payment terms. Vendors and purveyors often
remain flexible with payment terms providing the Company with opportunities to
adjust to short-term business down turns. The Company considers the primary
indicators of financial status to be the long term trend and mix of sales
revenues, overall cash flow and profitability from operations and the level of
long-term debt.
SEASONALITY
The Company is significantly affected by seasonal factors. Typically, the
Company has experienced reduced revenues from April through September with the
strongest operating results occurring during October through March.
PART II - OTHER INFORMATION
---------------------------
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Financial Data Schedule -- Exhibit 27.1
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Taurus Entertainment Companies, Inc.
Date: May 10, 2000 By: /s/ Eric Langan
-------------------
Eric Langan
President and Chief Accounting Officer
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Taurus Entertainment Companies, Inc.
We have reviewed the accompanying balance sheets of Taurus Entertainment
Companies, Inc. as of March 31, 2000, and the related statements of operations
for the three month and six month periods then ended and the statement of cash
flows for the three month period then ended. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of analytical procedures applied to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements in order for them to be
in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the balance sheet of Taurus Entertainment Companies, Inc. as of
September 30, 1999, and the related statements of operations and cash flows for
the year then ended (not presented separately herein), and in our report dated
December 1, 1999, we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
balance sheet as of September 30, 1999, is fairly stated, in all material
respects, in relation to the balance sheet from which it has been derived.
Jackson & Rhodes P.C.
Dallas, Texas
May 10, 2000
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 51675
<SECURITIES> 0
<RECEIVABLES> 16070
<ALLOWANCES> 0
<INVENTORY> 1041
<CURRENT-ASSETS> 295845
<PP&E> 2124693
<DEPRECIATION> 132844
<TOTAL-ASSETS> 2289224
<CURRENT-LIABILITIES> 619273
<BONDS> 1287396
0
0
<COMMON> 4305
<OTHER-SE> 378250
<TOTAL-LIABILITY-AND-EQUITY> 2289224
<SALES> 377480
<TOTAL-REVENUES> 377480
<CGS> 25398
<TOTAL-COSTS> 355462
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34368
<INCOME-PRETAX> (12350)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12350)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (12350)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
