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: JUNE 30, 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 AUGUST 7, 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 COMPANIES, INC.
CONTENTS
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 (unaudited) and September
30, 1999 (audited)
Consolidated Statements of Operations for the three and nine months ended June
30, 2000 and 1999 (unaudited)
Consolidated Statements of Cash Flows for the nine months ended June 30, 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
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Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
6/30/00 9/30/99
(UNAUDITED) (AUDITED)
------------ -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 51,717 $ 13,775
Accounts receivable 10,239 6,254
Prepaid expenses 8,828 7,866
Inventories 672 0
Land held for sale 200,000 200,000
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Total current assets 271,456 227,895
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PROPERTY AND EQUIPMENT
Buildings, land and leasehold improvements 1,939,531 1,782,119
Furniture & equipment 192,036 251,684
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2,131,567 2,033,803
Accumulated depreciation (150,059) (99,195)
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1,981,508 1,934,608
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OTHER ASSETS
Other 1,530 55
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$ 2,254,494 $2,162,558
============ ===========
</TABLE>
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<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
6/30/00 9/30/99
(UNAUDITED) (AUDITED)
------------ ------------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long term debt $ 213,667 $ 195,821
Payable to Parent 194,491 67,484
Accounts payable - trade 85,543 133,705
Accrued expenses 43,747 29,777
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Total current liabilities 537,448 426,787
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debt less current portion 1,094,755 1,369,888
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Total Liabilities 1,632,203 1,796,675
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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) (3,408,397) (3,664,805)
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Total stockholders' equity 622,291 365,883
------------ ------------
$ 2,254,494 $ 2,162,558
============ ============
</TABLE>
<TABLE>
<CAPTION>
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
------------------------ ------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
REVENUES
Service revenues $ 337,622 $ 77,755 $1,001,414 $ 215,874
Other 40,656 318,065 129,595 1,081,256
----------- ----------- ----------- -----------
378,278 395,820 1,131,009 1,297,130
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of goods sold 24,100 25,554 75,577 79,305
Salaries and wages 82,955 88,241 230,026 342,328
Other general and administrative
Taxes and permits 38,648 61,379 125,574 137,515
Charge card fees 1,178 1,497 3,621 5,909
Rent 0 4,112 0 125,790
Legal and accounting 3,972 7,045 30,887 56,366
Advertising 37,083 11,558 104,074 45,628
Other 123,836 118,986 408,466 314,924
----------- ----------- ----------- -----------
311,772 318,373 978,225 1,107,765
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 66,506 77,448 152,784 189,365
Interest Expense (33,477) (37,242) (103,083) (117,940)
Loss on Termination of Lease 0 0 0 (219,780)
Other Income 206,707 0 206,707 0
----------- ----------- ----------- -----------
INCOME/(LOSS) BEFORE 239,736 40,206 256,408 (148,355)
EXTRAORDINARY ITEM
EXTRAORDINARY ITEM
Gain on Fire Damage 0 0 0 256,592
----------- ----------- ----------- -----------
NET INCOME/(LOSS) $ 239,736 $ 40,206 $ 256,408 $ 108,237
=========== =========== =========== ===========
BASIC NET LOSS PER COMMON SHARE:
INCOME BEFORE EXTRAORDINARY $ 0.06 $ 0.01 $ 0.06 $ (0.03)
ITEM
EXTRAORDINARY ITEM 0 0 0.00 0.06
----------- ----------- ----------- -----------
$ 0.06 $ 0.01 $ 0.06 $ 0.03
=========== =========== =========== ===========
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
NINE MONTHS ENDED JUNE 30, 2000 AND 1999
2000 1999
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
NET INCOME $ 256,408 $ 108,237
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES:
Depreciation and amortization 50,865 41,251
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 (3,985) (141,588)
Prepaid expenses (962) 1,176
Inventories (672) 765
Other assets (1,475) 39,390
Accounts payable and accrued expenses 92,815 (370,523)
------------ ------------
Cash provided (used) by operating activities 392,994 (349,377)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment (97,764) 1,125
Proceeds from insurance on fire damage 0 504,457
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Cash provided (used) by investing activities (97,764) 505,582
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CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (257,288) (370,523)
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Cash provided (used) by financing activities (257,288) (370,523)
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NET INCREASE/(DECREASE) IN CASH 37,942 (214,318)
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CASH AT BEGINNING OF PERIOD 13,775 243,346
------------ ------------
CASH AT END OF PERIOD $ 51,717 $ 29,028
============ ============
CASH PAID DURING PERIOD FOR:
Interest $ 103,083 $ 117,940
============ ============
</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 NINE MONTHS ENDED JUNE 30, 2000 AS
COMPARED TO THE THREE AND NINE MONTHS ENDED JUNE 30, 1999
For the quarter ended June 30, 2000, the Company had consolidated total
revenues of $378,278 compared to consolidated total revenues of $395,820 for the
fiscal quarter ended June 30, 1999, or an decrease of $17,542. The decrease in
revenues was due to the decrease of revenues in the Company's location in
Austin, Texas.
The cost of goods sold for the quarter ended June 30, 2000 was 6.37% of
total revenues compared to 6.46% for the quarter ended June 30, 1999. The
decrease was due primarily to the continuing efforts by management to achieve
reduction in cost of goods sold through improved inventory management.
<PAGE>
Payroll and related costs for the quarter ended June 30, 2000 were $82,955
compared to $88,241 for the quarter ended June 30, 1999. The decrease was due
to the decrease in payroll expenses in the Austin location.
Other selling, general and administrative expenses for the quarter ended
June 30, 2000 were $204,717 compared to $204,578 for the quarter ended June 30,
1999. The increase in these expenses was primarily due to the increase in
advertising.
Interest expense for the quarter ended June 30, 2000 was $33,477 compared
to $37,242 for the quarter ended June 30, 1999. The decrease was attributable
to the Company's policy to pay its debts down and not to incur any new debts.
Other Income for quarter ended June 30, 2000 was vendors' concessions on
Company's liability.
Net income for the quarter ended June 30, 2000 was $239,736 compared to a
net income of $40,206 for the quarter ended June 30, 1999. The increase was
primarily due to the vendors' concessions on Company's liability.
For the nine months ended June 30, 2000, the Company had consolidated total
revenues of $1,131,009 compared to consolidated total revenues of $1,297,130
for the fiscal nine months ended June 30, 1999, or a decrease of $166,121. The
decrease in revenues was due to the decrease of revenues in the Company's
location in Austin, Texas and the closure of the Company's location in New
Orleans.
The cost of goods sold for the nine months ended June 30, 2000 was 6.69% of
total revenues compared to 6.12% for the nine months ended June 30, 1999. The
increase was due to the increase in the costs of providing complimentary food.
Payroll and related costs for the nine months ended June 30, 2000 were
$230,026 compared to $342,328 for the nine months ended June 30, 1999. The
decline was due to the closure of the Company's facility in New Orleans.
Other selling, general and administrative expenses for the nine months
ended June 30, 2000 were $672,622 compared to $686,132 for the nine months ended
June 30, 1999. The decrease in these expenses was due to the closures of some
of the Company's facilities.
Interest expense for the nine months ended June 30, 2000 was $103,083
compared to $117,940 for the nine months ended June 30, 1999. The decrease was
attributable to the Company's policy to pay its debts down and not to incur new
debts.
Other Income for the nine months ended June 30, 2000 was vendors'
concessions on Company's liability.
Net income for the nine months ended June 30, 2000 was $256,408 compared to
$108,237 for the nine months ended June 30, 1999. The increase was due
principally to vendors' concessions on Company's liability.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had deficit working capital of $265,992
compared to a deficit working capital of $198,802 at September 30, 1999. The
decrease in working capital was due to the additions to property & equipment and
payments on note payable.
<PAGE>
Net cash provided by operating activities in the nine months ended June 30,
2000 was $392,994 compared to net cash used of $349,377 for the nine months
ended June 30, 1999. The increase in cash provided by operating activities was
due to the increase in net income due to debt concessions and the increase in
accounts payable and accrued expenses in 2000.
Depreciation and Amortization for the nine months ended June 30, 2000 were
$50,865 compared to $41,251 for the nine months ended June 30, 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 receivables, 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.
YEAR 2000 ISSUES
We have not had any Year 2000 deficiencies internally or externally. We do
not expect to have any Year 2000 deficiencies internally and externally. If a
Year 2000 deficiency occurs internally or externally, we will shift our internal
and external resources to fix the deficiency. We do not expect any Year 2000
deficiency to require an expenditure of more than $10,000.
PART II - OTHER INFORMATION
-------------------------------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Financial Data Schedule -- Exhibit 27.1
Report of Independent Auditor on Review of Unaudited Financial Statements
-- Exhibit 99.1
(b) Reports on Form 8-K
None.
<PAGE>
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: August 7, 2000 By: /s/ Eric S. Langan
-------------------
Eric S. 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 June 30, 2000, and the related statements of income for
the three month and nine month periods then ended and the statement of cash
flows for the nine 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 earnings 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
August 10, 2000
<PAGE>
