<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
|X| Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1995; or
|_| Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
___________.
Commission File Number 0-6106
UNITED LEISURE CORPORATION
------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-2652243
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
8800 Irvine Center Drive, Irvine, California 92718
----------------------------------------------------
(Address of Principal Executive Offices)
(Zip Code)
(714) 837-1200
--------------------------------------------------
(Registrant's Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports to be filed by Section
13 or 15(d) during the preceding 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 at least the past 90 days.
YES [X] NO
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at June 23, 1995
------------------------- ----------------------------
Common Stock, par value 12,209,434 shares
$.01 per share
Transitional Small Business Disclosure Format (check one):
YES NO [X]
Page 1 of 10 Pages
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UNITED LEISURE CORPORATION AND SUBSIDIARIES
PART I -- FINANCIAL INFORMATION
Page
-----
Item 1. Financial Statements
Consolidated Balance Sheets
June 30, 1995 and December 31, 1994
Consolidated Statements of Operations For the
Three Months Ended June 30, 1995 and June 30, 1994
and the Six Months Ended June 30, 1995 and 1994
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1995 and
June 30, 1994
Notes to Consolidated Financial Statements
June 30, 1995 and June 30, 1994
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
Page 2 of 10 Pages
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PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------- -------------
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 13,291,003 $ 15,955,140
RECEIVABLES 305,799 299,628
PREPAID EXPENSES 219,014 29,423
PROPERTY AND EQUIPMENT, less accumulated depreciation 3,490,434 56,246
INVENTORY 91,106 0
OTHER ASSETS
Due from related party 10,000 10,000
Investment in limited partnership 60,000 60,000
Pre-opening costs 61,296 66,931
Intangible assets, net of accumulated amortization 87,095 97,461
Deposits 154,028 249,726
---------- ----------
$ 17,769,775 $ 16,824,555
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Payable to acquisition of minority
interest in Planet Kids Learning Centers $ 1,040,000 $ 520,000
Accounts payable and accrued expenses 540,870 459,581
Income taxes payable (200) 19,800
Provision for contingent disputed claim (Note 2) 1,128,973 1,128,973
Due to related party 936,549 1,246,571
Deferred revenues 869,266 23,810
Deposits and Other 124,275 124,275
---------- ----------
TOTAL CURRENT LIABILITIES $ 4,639,733 $ 3,523,010
========= =========
Long-term debt 850,000 0
MINORITY INTEREST 0 500,017
STOCKHOLDERS' EQUITY (DEFICIENCY)
Common stock 122,094 122,034
Capital 24,252,736 24,252,297
Accumulated deficit (12,094,788) (11,562,803)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIENCY) 12,280,042 12,801,528
---------- ----------
$ 17,769,775 $ 16,824,555
========== ==========
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 3 of 10 Pages
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UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
-------------------------------------- ------------------------------------
1995 1994 1995 1994
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
REVENUES
Rentals $ 283,106 $ 482,488 $ 530,552 $ 704,722
Admissions 52,988 0 52,988
Camp admissions 91,716 62,657 91,716 62,657
Concessions 11,962 0 11,962
Income - other 17,796 0 17,796
Interest income 179,277 1,009 385,673 3,253
---------------- ---------------- ---------------- ---------------
TOTAL REVENUES $ 636,845 $ 546,154 $ 1,090,687 $ 770,632
================ ================ ================ ===============
COSTS AND EXPENSES
Occupancy $ 696,146 $ 349,312 $ 952,635 $ 622,038
Selling, general and
administrative 287,471 56,054 373,134 109,537
Depreciation and amortization 20,297 35,775 40,594 59,950
Interest 19,568 8,538 39,568 32,094
Legal costs - Irvine Co. litigation 137,389 102,030 205,033 208,844
Write-off goodwill 115,603 0 115,603 0
---------------- ---------------- ---------------- ---------------
TOTAL COSTS AND EXPENSES $ 1,276,474 $ 551,709 $ 1,726,567 $ 1,032,463
= ========= = ======= = ========= = =========
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (639,629) (5,555) (635,880) (261,831)
MINORITY INTEREST 112,411 0 115,620 0
---------------- ---------------- ---------------- ---------------
NET INCOME (LOSS) BEFORE
TAXES (527,218) (5,555) (520,260) (261,831)
PROVISION FOR INCOME TAXES 11,725 49,800 11,725 49,800
---------------- ---------------- ---------------- ---------------
NET INCOME (LOSS) BEFORE
EXTRAORDINARY ITEMS (538,943) 44,245 (531,985) (212,031)
0 107,238 0 107,238
---------------- ---------------- ---------------- ---------------
NET INCOME (LOSS) (538,943) 151,483 (531,985) (104,793)
================ ================ ================ ===============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES 12,209,428 3,510,741 12,209,428 3,510,741
================ ================ ================ ===============
NET INCOME (LOSS) PER SHARE $ (.044) $ .043 $ (.043) $ (.03)
================ ================ ================ ===============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 4 of 10 Pages
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UNITED LEISURE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
1995 1994
---------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net Loss $ (531,985) $ (104,793)
Adjustments to reconcile net loss
to net cash provided (used) by
operating activities:
Depreciation and amortization
of property and equipment 24,129 33,000
Amortization of intangibles 16,465 26,950
Loss attributable to acquisition
of minority interest
Gain from settlement of debt 115,603 (159,438)
Minority interest in net loss of
consolidated subsidiary (115,620)
Changes in operating assets and liabilities:
Receivables (6,171) (36,168)
Inventory (91,107)
Prepaid expenses (189,592) (39,434)
Pre-opening costs 5,635
Deposits 95,699 (1,000)
Amounts payable and accrued expenses 101,289 (551,600)
Income taxes payable (20,000)
Accrued expenses due to related party 19,746
Deferred revenue and other 845,456 764,976
----------------- ---------------
NET CASH PROVIDED (USED) BY OPERATING
ACTIVITIES (249,801) (47,761)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,608,317)
Lease acquisition costs (6,099)
Investment in joint venture (500,000)
Release of Restricted Cash 407,055
NET CASH PROVIDED (USED) BY
INVESTING ACTIVITIES (2,614,416) (92,945)
----------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Exercise of stock warrants 10,500
Sale of common shares 500,000
Preferred stock conversion fee (75,000)
Deferred offering costs (14,788)
Principal payments under short-term
and long-term obligations (172,000)
Repayment of related party advances (310,022) (200,000)
----------------- ---------------
NET CASH PROVIDED (USED) IN
FINANCING ACTIVITIES (299,522) 38,212
----------------- ---------------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,664,137) (102,494)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 15,955,140 682,261
----------------- ---------------
CASH AND CASH EQUIVALENTS
END OF YEAR $ 13,291,003 $ 579,767
================= ===============
</TABLE>
See accompanying Notes to Consolidated Financial Statements.
Page 5 of 10 Pages
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UNITED LEISURE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The results of interim periods are not necessarily indicative
of results to be expected for the year, due to the seasonal nature
of the Company's business. In the opinion of the Company, the
accompanying consolidated financial statements reflect all
adjustments (which are normal recurring adjustments) necessary for
a fair presentation of the results for the interim period and the
comparable period presented. These condensed financial statements
do not purport to be full presentations and do not include all
requirements in accordance with generally accepted accounting
principles, but include all information required by the
instructions to Form 10-QSB.
Note 2. Provision for contingent disputed claim
The provision for contingent disputed claim is the subject of
litigation between the Company and its landlord. In the initial
trial related to such litigation, the jury found that the Company
did not owe such rent and, in its order for a new trial, the court
did not indicate that it disagreed with that conclusion.
Page 6 of 10 Pages
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Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Liquidity and Financial Condition
As a result of a completion of a public offering in November, 1994, at
June 30, 1995, the Company had cash and cash equivalents in the amount of
$13,291,003. Given the stability of the revenues from its current operations,
the Company expects that its operations will continue to generate sufficient
cash flow to continue its current operations through the end of the term of The
Irvine Company Ground Lease (February 28, 1997). In the meantime, the Company
intends to expend the funds raised in the 1994 public offering in the following
directions in order to expand its business and prepare the Company for
operations after the expiration of the Irvine Ground Lease: Planet Kids Learning
Centers Joint Venture - $3,000,000, Camp Frasier expansion - $2,750,000,
interactive multimedia development - $1,000,000, and mergers and acquisitions
program - $3,500,000. During the first six months of 1995, the Company commenced
making some of these investments. $155,315 in developing the Planet Kids
locations, $157,865 toward the acquisition and opening of two additional Camp
Frasier locations and $47,617 for the development of its interactive multimedia
business. In addition, the Company expended $1,040,000 in buying out its joint
venture partner in Planet Kids Learning Centers and purchased for $1,685,000
Marshall Scotty's Amusement Park (now Frasier's Frontier) in San Diego.
The Irvine Company Litigation
Since 1987, the Company's wholly-owned subsidiary, Lion Country Safari,
Inc. - California (the "Subsidiary"), has been engaged in protracted and
expensive litigation with its landlord, Irvine, in Orange County Superior Court
(Case No. 49-12-02). The case is styled The Splash v. The Irvine Company and
Marsh & McLennan; The Irvine Company vs. The Splash and Lion Country Safari,
Inc. - California; Lion Country Safari, Inc. - California v. The Irvine Company.
On April 15, 1994, the court granted a new trial on all issues. The Company has
appealed this order and intends to vigorously continue its prosecution of The
Irvine Company Litigation. It is anticipated that the ruling on this appeal may
take until mid 1996.
Results of Operations
The Company's business has historically been highly seasonal with the
second and third quarters of each being the strongest quarters of operations.
During the quarter ended June 30, 1995, the Company received total revenues of
$636,845, compared to $546,154 in revenues for the second quarter of 1994.
During the six month period ended June 30, 1995, the Company received total
revenues of $1,090,687 as compared to total revenues of $770,634 for the first
six months of 1994. The Company incurred a net loss of $531,985, or $(.043) per
share, with respect to the first six months of 1995 as compared to a net loss of
$104,793, or $(.03) per share, for the comparable period of the previous year.
For the quarter ended June 30, 1995, the Company incurred a net loss of
$538,943, or $(.044) per share, as compared to net income of $151,483, or $.043
per share, for the comparable period of 1994.
Page 7 of 10 Pages
<PAGE>
Revenues were down primarily because of a reduced rentals from Irvine
Meadows Amphitheater which is experiencing a reduced concert season so far this
year. Expenses increased during the first six months of 1995, as compared to
1994 because of increased occupancy expenses related to the two new Camp Frasier
locations and the Planet Kids leases, increased selling and administration
expenses related to the development of the two new Camp Frasier locations, the
development of the initial Planet Kids Learning-Play Center and the development
of Frasier's Frontier, the amusement park property acquired by the Company.
The Company acquired the other 50% interest in Planet Kids Learning
Centers as of June 1, 1995, thereby removing the minority interest reflected on
the financial statements contained in this Quarterly Report on Form 10-QSB for
future periods and opened its initial Planet Kids facility on June 3, 1995. The
two additional Camp Frasier locations opened later in the month of June and are
in operation Like the original Camp Frasier operation, it is expected that it
will take a few years for each of these new locations to mature.
Page 8 of 10 Pages
<PAGE>
PART II -- OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no Reports on Form 8-K during or for the
period covered by this Quarterly Report on Form 10-QSB.
No other Items of Part II are applicable to the Registrant for the
period covered by this Quarterly Report on Form 10-QSB.
Page 9 of 10 Pages
<PAGE>
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
UNITED LEISURE CORPORATION
Date: August 21, 1995 By: /s/ HARRY SHUSTER
----------------------------------
Harry Shuster, Chairman of the
Board and Chief Executive
Officer
Date: August 21, 1995 By: /s/ RENATE GRAF
----------------------------------
Renate Graf, Vice President
and Controller
Page 10 of 10 Pages
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 13,291,003
<SECURITIES> 0
<RECEIVABLES> 305,799
<ALLOWANCES> 0
<INVENTORY> 91,106
<CURRENT-ASSETS> 13,906,922
<PP&E> 7,085,693
<DEPRECIATION> (3,595,259)
<TOTAL-ASSETS> 17,769,775
<CURRENT-LIABILITIES> 4,639,733
<BONDS> 850,000
<COMMON> 122,094
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 17,769,775
<SALES> 0
<TOTAL-REVENUES> 1,090,687
<CGS> 0
<TOTAL-COSTS> 1,325,769
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,568
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (531,985)
<EPS-PRIMARY> (0.043)
<EPS-DILUTED> 0
</TABLE>
