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 December 31, 1998
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
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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 December 31, 1998, 9,886,641 common shares, $.001 par value, were
outstanding.
Page 1 of 5
<PAGE>
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 December 31, 1998 compared to Period Ended December 31, 1997.
Due to the disposal of International Theatres Corporation (ITC) and Willy Bietak
Productions, Inc (WBPI), their respective revenues and expenses have been
classified as discontinued operations. Continuing operations consisted primarily
of administrative expenses and interest expense. Administrative expenses were
$2,690 for 1998 compared to $36,128 for 1997. The decrease is primarily due to
the reduction of office rent resulting from subleasing office space to a company
owned by the Company's CEO. Interest expense was $15,000 for 1998 and 1997,
representing interest accruing on notes payable.
Period Ended December 31, 1997 compared to Period Ended December 31, 1996.
Continuing operations for 1996 included administrative expenses attributable to
the operations of the Pike. There were no other operations related to the Pike
since 1996. Administrative expenses were $36,128 for 1997 compared to $60,872
for 1996. The decrease is primarily due to the elimination of expenses relative
to the Pike after 1996. Interest expense was $15,000 for 1997 compared to
$12,167 for 1996 and consisted primarily of interest accruing on notes payable.
LIQUIDITY AND SOURCES OF CAPITAL
Cash used in operating activities of continuing operations for the quarter ended
December 31, 1998, was $73,366 compared to $42,457 for the comparable prior year
period. The primary use of cash in operating activities was the reduction of
accounts payable and accrued expenses. Cash flows from investing and financing
activities during the quarter ended December 31, 1998, were attributable to
discontinued operations.
At December 31, 1998, the Company had a working capital deficit of ($1,189,188)
and cash of $120. The working capital deficit at December 31, 1998, was
primarily comprised of notes payable of $400,000, accounts payable and accrued
expenses of $435,734, and accrued compensation of $354,500. Approximately
$302,000 of the accounts payable and accrued expenses relate to The Pike.
Management believes that a significant portion of these obligations would be
discharged upon liquidation as discussed below.
Page 2 of 5
<PAGE>
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 December
31, 1998 and capital expenditures for the remainder of fiscal 1999 are expected
to be immaterial.
During the quarter ended March 31, 1996, the Company finalized the acquisition
of an arena football franchise under a lease with an option to purchase the
franchise. During fiscal year 1996 such franchise was operated through a wholly
owned subsidiary, Minnesota Arena Football, Inc. (The Pike).
During the third and fourth fiscal quarters of fiscal year 1996, The Pike 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. However, there are no assurances that
such financing will be converted into the Company's common stock. Throughout
much of the third and fourth fiscal quarters of fiscal 1996, management
attempted to sell its interest in the arena football franchise. Failing to do
so, the option expired. Accordingly, The Pike has ceased operations. Management
is evaluating the appropriate course of action for The Pike, which will most
likely be liquidated either in or out of bankruptcy court.
The Company's independent auditors issued their opinion on the consolidated
financial statements as of September 30, 1998, wherein they added an additional
paragraph which raised substantial doubt as to the Company's ability to continue
as a going concern.
Since the Company has no operations as of December 31, 1998, Management believes
its current cash position will be sufficient to satisfy working capital
requirements for fiscal 1999. However, the Company would require capital from
sources yet to be determined to fund costs relative to investigating potential
acquisitions.
Page 3 of 5
<PAGE>
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 April 30, 1999.
CENTURY PARK PICTURES CORPORATION
By:/s/ Thomas K. Scallen
Thomas K. Scallen
Chief Executive Officer
Page 4 of 5
<PAGE>
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
Page 5 of 5
<PAGE>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, 1998 and September 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
ASSETS Decenber 31, September 30,
1998 1998
----------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 120 $ 16,977
Accounts receivable -- 70,043
Inventories -- 45,771
Deferred show costs -- 74,525
Due from unconsolidated subsidiary -- 293
Prepaid expenses 926 95,776
----------- -----------
Total current assets 1,046 303,385
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Leasehold interest in building -- 1,000,000
Equipment -- 636,728
Furniture and fixtures 94,077 454,414
----------- -----------
94,077 2,091,142
Less accumulated depreciation 94,077 1,609,195
----------- -----------
-- 481,947
----------- -----------
INTANGIBLES
Cost in excess of net assets acquired, net of amortization -- 388,814
----------- -----------
-- 388,814
----------- -----------
$ 1,046 $ 1,174,146
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 400,000 $ 450,000
Current maturities of capitalized lease obligations -- 168,836
Accounts payable 283,659 636,986
Deferred revenue -- 1,187,607
Accrued compensation 354,500 546,041
Accrued expenses 152,075 320,187
----------- -----------
Total current liabilities 1,190,234 3,309,657
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share; authorized
200,000,000 shares; issued and outstanding 9,886,641 shares; 9,887 9,887
Additional paid in capital 3,993,605 4,906,736
Accumulated deficit (5,192,680) (7,052,134)
----------- -----------
(1,189,188) (2,135,511)
=========== ===========
$ 1,046 $ 1,174,146
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-1
<PAGE>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three-Month Periods Ended December 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
Three-Month Periods
1998 1997
----------- -----------
<S> <C> <C>
Operating Expenses
General and administration $ 2,690 $ 36,128
----------- -----------
Operating loss (2,690) (36,128)
Interest expense (15,000) (15,000)
----------- -----------
Loss from continuing operations (17,690) (51,128)
----------- -----------
Discontinued operations (Note 2)
Income from operations of ITC 34,307 42,941
Equity in loss from operations of WBPI -- (2,627)
Gain on forgiveness of debt 986,307 --
Gain on disposal of WBPI & ITC 856,530 --
----------- -----------
Income from discontinued operations 1,877,144 40,314
----------- -----------
Income (loss) before income taxes 1,859,454 (10,814)
Income taxes (Note 3) -- --
----------- -----------
Net income (loss) $ 1,859,454 $ (10,814)
=========== ===========
Loss from continuing operations per share of
common stock $ (0.00) $ (0.01)
=========== ===========
Income from discontinued operations per share of
common stock $ 0.19 $ 0.00
=========== ===========
Net income (loss) per share of common stock $ 0.19 $ (0.00)
=========== ===========
Weighted average number of common shares 9,886,641 9,886,641
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three-Month Periods Ended December 31, 1998 and 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Continuing operations:
Net loss $ (17,690) $ (51,128)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization -- 942
Increase (Decrease) in-
Accounts payable and accrued expenses (55,676) 7,729
----------- -----------
Cash used in continuing operations (73,366) (42,457)
----------- -----------
Discontinued operations:
Net income (loss) 1,877,144 40,314
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization 72,133 100,551
Gain on forgiveness of debt (986,307) --
Gain on disposal of WBPI & ITC (856,530) --
Net change in working capital components relative to discontinued operations 70,991 223,546
----------- -----------
Cash provided by discontinued operations 177,431 364,411
----------- -----------
Net cash provided by operating activities 104,065 321,954
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (35,608) (68,435)
----------- -----------
Net cash used in investing activities (35,608) (68,435)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in notes payable (25,000) (50,000)
Reduction of long-term capitalized lease obligations (60,314) (39,241)
----------- -----------
Net cash used in financing activities (85,314) (89,241)
----------- -----------
Net increase (decrease) in cash (16,857) 164,278
Cash, beginning of period 16,977 30,820
----------- -----------
Cash, end of period $ 120 $ 195,098
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
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. Discontinued Operations:
On December 17, 1998 the Board of Directors passed a resolution to transfer the
Company's interest in ITC and WBPI to the Company's CEO as repayment of $100,000
in advances the Company's CEO made to the Company. In setting the $100,000
amount, the Board of Directors obtained and relied upon an independent market
analysis of ITC and WBPI. Because of the net deficit position of ITC and WBPI as
of December 17, 1998, the transfer resulted in a gain on disposal of $856,530.
On December 31, 1998 the Company's CEO forgave the remainder of the advances and
related accrued interest totaling $986,307.
Note 3. Income Taxes
The accompanying financial statements reflect no income tax expense due to the
anticipated utilization of net operating loss carryforwards.
F-4
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 120
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,046
<PP&E> 94,077
<DEPRECIATION> 94,077
<TOTAL-ASSETS> 1,046
<CURRENT-LIABILITIES> 1,190,234
<BONDS> 0
0
0
<COMMON> 9,887
<OTHER-SE> 3,993,605
<TOTAL-LIABILITY-AND-EQUITY> 1,046
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 2,690
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,000
<INCOME-PRETAX> (17,690)
<INCOME-TAX> 0
<INCOME-CONTINUING> (17,690)
<DISCONTINUED> 1,877,144
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,859,454
<EPS-BASIC> .19
<EPS-DILUTED> .19
</TABLE>
