CONFORMED COPY
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For Quarter ended March 31, 1996
CENTURY PARK PICTURES CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-14247 41-1458152
(State of Incorporation) (Commission File Number) (IRS ID Number)
4701 IDS Center, Minneapolis, Minnesota 55402
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (612) 333-5100
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months and (2) has been subject to such filing
requirements for the past ninety (90) days. x Yes No
As at March 31, 1996, 9,886,641 common shares, $.001 par value, were
outstanding.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
This information is included following "Index to Consolidated Financial
Statements".
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OPERATIONS
Period Ended March 31, 1996 compared to Period Ended March 31, 1995.
The Company's wholly owned subsidiary International Theatres Corporation's
(ITC's) admissions revenues were $1,133,488 for the quarter ended March 31,
1996, compared to $1,080,525 for the comparable prior year period. The $52,963
increase in current period admissions revenues was primarily attributable to
increased attendance and increased ticket prices, offset in part by increased
promotional and discounted tickets.
ITC's food, beverage and merchandise sales were $999,325 for the quarter ended
March 31, 1996, compared to $974,717 for the comparable prior year period, and
their related cost of sales were $288,524 and $289,527, respectively. The
$24,608 increase in current period sales was due primarily to increased
attendance and increased prices. The cost of sales for the current year period,
as a percent of food, beverage and merchandise sales, was slighlty lower than
the comparable prior year period, due increased selling prices.
ITC's operating expenses for the quarter ended March 31, 1996, were $1,666,984,
compared to $1,625,331 for the comparable prior year period, representing an
increase of $41,653. The increase in the current year was primarily due to
increased play mounting costs and increased attendance.
General and administrative expenses were $302,694 for the quarter ended March
31, 1996, compared to $325,449 for the comparable prior year period. The
decrease in general and administrative expenses was primarily due to decreased
costs of investigating potential acquisitions and cost containment actions at
ITC.
Net loss for the quarter ended March 31, 1996, was $157,090 compared to a net
loss of $209,817 for the comparable prior year period. The decrease was
primarily due to increased attendance at ITC and decreased costs of
investigating potential acquisitions.
LIQUIDITY AND SOURCES OF CAPITAL
Cash used by operating activities for the six-month period ended March 31, 1996,
was $182,268 compared to $99,785 for the comparable prior year period. The
primary use of cash in operating activities was prepayment of start-up costs
relative to the operations of Minnesota Arena Football, Inc. of approximately
$248,000. The primary source of cash from operating activities was deferred
revenue resulting from prepayments by ITC's customers, which represent gift
certificates and tickets paid for in advance. Cash used in investing activities
for the six-month period ended March 31, 1996, was $13,937, which was primarily
comprised of purchases of equipment of $29,311 and preacquisition costs of
$37,484, which was offet in part by decreased amounts due from related parties
of $53,358. Cash from financing activities for the six-month period ended March
31, 1996, was $222,596, which was comprised of the net proceeds from sale of
common stock of $314,424 upon exercise of stock warrants, offset in part by
reduction of long-term capitalized lease obligations.
At March 31, 1996, the Company had a working capital deficit of ($1,829,777) and
cash totaling $58,469. The working capital deficit at March 31, 1996, was
primarily comprised of accounts payable of $499,056, and deferred revenues of
$1,337,250 related to advance ticket sales for ITC's operations. Management
believes the incremental cost that ITC will incur to realize these deferred
revenues will be offset by the gross profit from food, beverage and merchandise
sales to such customers.
The Company intends to continue to seek out potential acquisitions. It is
probable that any significant acquisitions would require long-term financing.
However, there are no assurances that the Company will complete any acquisitions
or that it will obtain financing under terms acceptable to the Company.
The Company had no material commitments for capital expenditures as of March 31,
1996 and capital expenditures for the remainder of fiscal 1996 are expected to
be immaterial.
Management has caused several of ITC's costs to be reduced or eliminated for the
remainder of fiscal 1996. Management believes that advance ticket sales and
advance bookings are indicative that the third quarter's attendance should
approximate budgeted levels. Management believes that ITC's anticipated results
for the third quarter will provide sufficient funds to sustain their operations
for the remainder of fiscal 1996.
In September, 1995, the Company's CEO entered into a letter of intent to lease,
with the option to purchase, an arena football franchise, to be located in
Minneapolis, MN. In connection therewith, the CEO advanced funds of
approximately $57,000 to or for the benefit of the lessor, the league and
others. During the quarter ended March 31, 1996, the Company finalized the
acquisition of the CEO's interest in the franchise. No additional consideration
was paid to the CEO for his interest in the letter of intent. The definitive
lease agreement and the contractual arrangement were also finalized during the
quarter. The franchise is being operated by Minnesota Arena Football, Inc., (DBA
The Minnesota Fighting Pike) a wholly-owned subsidiary of the Company. The
Company's exercise of the option to purchase the franchise will be dependent in
any respect on the reception of this entertainment to the Minnesota consumer.
During the third and fourth fiscal quarters, the arena football franchise failed
to generate the anticipated cash flow. Consequently, during such quarters the
Company's CEO advanced approximately $206,000 and the Company raised additional
financing from outside sources of approximately $400,000. The financing raised
from outside sources is currently payable, and is secured by the common stock of
Minnesota Arena Football, Inc. Management anticipates such financing will be
converted into the Company's common stock. Management is currently attempting to
sell its interest in the arena football franchise. There are no assurances that
the financing will be converted into the Company's common stock. There are also
no assurances that the Company will be successful in its endeavors to sell its
interest in the arena football franchise, or that the proceeds received from any
such sale will be sufficient to pay the debts incurred by the arena football
franchise during the third and fourth fiscal quarters.
The Company's independent auditors issued their opinion on the consolidated
financial statements as of September 30, 1995, wherein they added an additional
paragraph which raised substantial doubt as to the Company's ability to continue
as a going concern. Management believes its current cash position, including
proceeds from advances received from private individuals, will be sufficient to
satisfy working capital requirements for fiscal 1996, and to fund costs relative
to investigating potential acquisitions. In February 1996, ITC established a
line of credit providing for available funds of $50,000. Management believes ITC
will operate at a profitable level that, along with ITC's available line of
credit, will provide sufficient funds to satisfy ITC's working capital
requirements for fiscal 1996. However, there can be no assurances that
anticipated cash flow from ITC's operations will be achieved.
PART II
ITEM 1. LEGAL PROCEEDINGS.
NONE
ITEM 2. CHANGES IN SECURITIES.
NONE
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 OF 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 THEREUNTO DULY AUTHORIZED.
Dated as of October 22, 1996.
CENTURY PARK PICTURES CORPORATION
By: /s/Thomas K. Scallen
--------------------------------
Thomas K. Scallen
Chief Executive Officer
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Balance Sheets F-1
2. Consolidated Statements of Operations F-2
3. Consolidated Statements of Cash Flows F-3
4. Notes to Consolidated Financial Statements F-4
<TABLE>
<CAPTION>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, 1996 and September 30, 1995
(Unaudited)
ASSETS March 31, September 30,
1996 1995
----------- ------------
CURRENT ASSETS
<S> <C> <C>
Cash $ 58,469 $ 32,078
Accounts receivable 71,049 21,229
Inventories 42,124 41,339
Deferred show costs 158,913 40,350
Due from related parties -- 53,358
Prepaid expenses 384,109 82,681
----------- -----------
Total current assets 714,664 271,035
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Leasehold interest in building 1,000,000 1,000,000
Equipment 477,004 455,237
Furniture and fixtures 455,714 447,670
----------- -----------
1,932,718 1,902,907
Less accumulated depreciation 850,355 701,440
----------- -----------
1,082,363 1,201,467
----------- -----------
INTANGIBLES
Cost in excess of net assets acquired, net of amortization 443,474 455,528
Preacquisition costs, net of amortization 73,192 35,708
----------- -----------
516,666 491,236
----------- -----------
$ 2,313,693 $ 1,963,738
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Current maturities of capitalized lease obligations $ 172,826 $ 173,109
Excess of outstanding checks over bank balance -- 122,659
Due to related parties 48,537 45,588
Accounts payable 499,056 504,118
Deferred revenue 1,418,513 848,612
Accrued compensation 32,761 139,422
Accrued expenses 372,748 211,498
----------- -----------
Total current liabilities 2,544,441 2,045,006
----------- -----------
LONG-TERM CAPITALIZED LEASE OBLIGATIONS 472,642 562,187
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share; authorized
200,000,000 shares; issued March - 9,886,641 shares;
issued September - 8,636,952 shares 9,887 8,637
Additional paid in capital 3,993,605 3,682,431
Accumulated deficit (4,706,882) (4,334,523)
----------- -----------
(703,390) (643,455)
----------- -----------
$ 2,313,693 $ 1,963,738
=========== ===========
See Notes to Consolidated Financial Statements.
F-1
</TABLE>
<TABLE>
<CAPTION>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three-Month and Six-Month Periods Ended March 31, 1996 and 1995
(Unaudited)
Three-Month Periods Six-Month Periods
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenues
<S> <C> <C> <C> <C>
Admissions revenue $ 1,133,488 $ 1,080,525 $ 2,190,993 $ 2,301,637
----------- ----------- ----------- -----------
Food, beverage and merchandise sales 999,325 974,717 2,088,533 2,073,004
Cost of Food, beverage and merchandise sales 288,254 289,257 600,810 611,166
----------- ----------- ----------- -----------
Gross profit 711,071 685,460 1,487,723 1,461,838
----------- ----------- ----------- -----------
Net revenues 1,844,559 1,765,985 3,678,716 3,763,475
----------- ----------- ----------- -----------
Operating Costs and Expenses
Operating costs 1,666,984 1,625,331 3,365,418 3,234,117
General and administration 302,694 325,449 623,371 641,964
----------- ----------- ----------- -----------
Total operating costs and expenses 1,969,678 1,950,780 3,988,789 3,876,081
----------- ----------- ----------- -----------
Operating loss (125,119) (184,795) (310,073) (112,606)
Other, primarily interest expense (29,206) (25,022) (65,817) (50,122)
----------- ----------- ----------- -----------
Loss before equity in income (loss) of WBPI
and income taxes (154,325) (209,817) (375,890) (162,728)
Equity in income (loss) of WBPI (2,264) -- 4,533 --
----------- ----------- ----------- -----------
Loss before minority interest in loss of subsidiary (156,589) (209,817) (371,357) (162,728)
Income taxes 501 -- 1,002 --
----------- ----------- ----------- -----------
Net loss $ (157,090) $ (209,817) $ (372,359) $ (162,728)
=========== =========== =========== ===========
Net loss per share of common stock $ (0.02) $ (0.02) $ (0.04) $ (0.02)
=========== =========== =========== ===========
Weighted average number of common shares 9,886,641 8,636,952 9,325,191 8,636,952
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
F-2
</TABLE>
<TABLE>
<CAPTION>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six-Month Periods Ended March 31, 1996 and 1995
(Unaudited)
1996 1995
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net loss $(372,359) $(162,728)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization 160,969 155,073
Equity in (income) loss of WBPI (4,533) --
Change in assets and liabilities:
(Increase) decrease in-
Accounts receivable (49,820) 5,088
Inventories (785) (1,853)
Deferred show costs (118,563) (85,444)
Prepaid expenses (301,428) 1,900
Increase (Decrease) in-
Accounts payable and accrued expenses (65,650) (258,477)
Deferred revenue 569,901 246,656
--------- ---------
Net cash from operating activities (182,268) (99,785)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Cash paid for preacquisition costs (37,484) (10,575)
Reimbursement of prepaid acquisition costs -- --
Increase in due from related parties 53,358 29,580
Purchase of property and equipment (29,811) (26,446)
--------- ---------
Net cash used in investing activities (13,937) (7,441)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock 312,424 --
Reduction of long-term capitalized lease obligations (89,828) (66,999)
--------- ---------
Net cash used in financing activities 222,596 (66,999)
--------- ---------
Net decrease in cash 26,391 (174,225)
Cash, beginning of period 32,078 427,160
--------- ---------
Cash, end of period $ 58,469 $ 252,935
========= =========
See Notes to Consolidated Financial Statements.
F-3
</TABLE>
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore, do not include
all information and disclosures necessary for a fair presentation of results of
operations, financial position, and consolidated cash flows in conformity with
generally accepted accounting principles. However, such statements do reflect,
in the opinion of management of the Company, all adjustments, consisting of only
normal recurring accruals, necessary for a fair presentation of the results of
operations for these periods.
Note 2. Investment in WBPI
In September, 1995, the Company transferred a portion of its investment in Willy
Bietak Productions, Inc. (WBPI) to Willy Bietak Enterprises, Inc. in
consideration of the guarantees of certain bank debt of WBPI. This resulted in
reducing the Company's ownership in WBPI from 50.1% to 30%. The change in
ownership resulted in a deconsolidation of WBPI. The financial statements for
the three-month and six-month periods ended March 31, 1995 have been restated as
if the deconsolidation occurred as of October 1, 1994.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 58,469
<SECURITIES> 0
<RECEIVABLES> 71,049
<ALLOWANCES> 0
<INVENTORY> 42,124
<CURRENT-ASSETS> 714,664
<PP&E> 1,932,718
<DEPRECIATION> 850,355
<TOTAL-ASSETS> 2,313,693
<CURRENT-LIABILITIES> 2,544,441
<BONDS> 0
0
0
<COMMON> 9,887
<OTHER-SE> 3,993,605
<TOTAL-LIABILITY-AND-EQUITY> 2,313,693
<SALES> 2,088,533
<TOTAL-REVENUES> 3,678,716
<CGS> 0
<TOTAL-COSTS> 3,365,418
<OTHER-EXPENSES> 623,371
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,817
<INCOME-PRETAX> (371,357)
<INCOME-TAX> 1,002
<INCOME-CONTINUING> (372,359)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (372,359)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
