<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
- - ------ SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
----------------------
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: 0-13740
-----------------
Jillian's Entertainment Corporation
-----------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2334472
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(State or other Jurisdic- (I.R.S. Employer Identif-
tion of Incorporation) ication Number)
727 Atlantic Avenue, Suite 600, Boston, MA 02111
---------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(617) 350-3111
--------------
(Registrant's telephone number, including area code)
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 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
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
9,137,798 shares of common stock, $.001 par value as of August 16, 1996
Total number of pages contained in this document: 10
----------
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<PAGE> 2
JILLIAN'S ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Index
Part I. Financial Information Page No.
- - --------------------------------- --------
Item 1. Consolidated Condensed Balance Sheets as of
June 30, 1996 and March 31, 1996 3
Consolidated Condensed Statements of Operations
for the Three Month Periods ended June 30,
1996 and 1995 4
Consolidated Condensed Statements of Cash Flows
for the Three Month Periods ended June 30,
1996 and 1995 5
Notes to Consolidated Condensed Financial Statements
for the Three Month Period ended June 30, 1996 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
Part II Other Information
- - -----------------------------
Item 6. Exhibits and Reports on Form 8-K 9
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<PAGE> 3
JILLIAN'S ENTERTAINMENT CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED BALANCE SHEET
<CAPTION>
June 30, March 31,
1996 1996
----------- -----------
(Unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 453,520 $ 646,306
Inventory 201,410 204,581
Accounts receivable 47,687 63,386
Other current assets 179,064 166,035
----------- -----------
Total current assets 881,681 1,080,308
Investments 39,725 39,725
Property, leasehold improvements and
equipment, net 7,512,636 7,687,606
Goodwill, net 792,071 805,384
Other assets 290,833 291,248
----------- -----------
Total assets $ 9,516,946 $ 9,904,271
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 950,207 $ 941,707
Accrued expenses and other liabilities 529,683 635,167
Current portion of notes and equipment
leases payable 666,411 712,910
Notes payable to related parties 280,000 -
----------- -----------
Total current liabilities 2,426,301 2,289,784
Deferred rent 1,140,697 1,187,860
Notes payable and equipment
leases payable 1,852,664 1,906,235
Notes payable to related parties - 280,000
----------- -----------
Total liabilities 5,419,662 5,663,879
----------- -----------
Minority interests 1,323,534 1,395,964
----------- -----------
Commitments and contingencies
Stockholders' equity:
Cumulative preferred stock, $.001 par
value, 1,000,000 shares authorized, none
issued or outstanding - -
Common stock, $.001 par value, 25,000,000
shares authorized, 9,137,798 shares issued
and outstanding 9,138 9,138
Paid-in capital 9,536,277 9,536,277
Accumulated deficit (6,771,665) (6,700,987)
----------- -----------
Total stockholders' equity 2,773,750 2,844,428
----------- -----------
Total liabilities and stockholders' equity $ 9,516,946 $ 9,904,271
=========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements
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<PAGE> 4
JILLIAN'S ENTERTAINMENT CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Month Period
Ended June 30,
------------------------
1996 1995
---------- ----------
<S> <C> <C>
Revenues from clubs $3,263,387 $2,461,662
---------- ----------
Cost and expenses:
Cost of club operations:
Cost of food and beverage 739,569 599,743
Wages 785,903 577,730
Rent 432,681 387,540
Direct operating expenses 643,542 539,418
Start-up costs related to development stage clubs - 57,976
General and administrative expenses 420,357 294,970
Depreciation and amortization 209,220 143,548
Minority interest 38,266 19,384
---------- ----------
Total cost and expenses 3,269,538 2,620,309
---------- ----------
Other income/(expenses):
Other income, including interest 19,541 12,701
Interest expense (84,068) (45,218)
---------- ----------
Total other income/(expenses) (64,527) (32,517)
---------- ----------
Net loss $ (70,678) $ (191,164)
========== ==========
Net loss per share of common and common equivalents $ (.01) $ (.02)
========== ==========
Weighted average common and common equivalent
shares outstanding $9,137,798 $9,137,798
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements
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<PAGE> 5
JILLIAN'S ENTERTAINMENT CORPORATION AND SUBSIDIARIES
<TABLE>
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Three Month Period
Ended June 30,
-----------------------
1996 1995
--------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (70,678) $ (191,164)
--------- ----------
Adjustments to reconcile loss to net cash used by operations:
Depreciation and amortization 209,220 143,548
Decrease in accounts receivables 15,699 2,259
Decrease/(increase) in inventory 3,171 (19,942)
(Increase)/decrease in other assets (19,897) 44,707
Increase/(decrease) in accounts payable 8,500 (37,244)
Decrease in other liabilities (152,647) (4,846)
Decrease in minority interest 38,266 19,384
--------- ----------
Total adjustments 102,312 147,866
--------- ----------
Cash provided by/(used) by operating activities 31,634 (43,298)
--------- ----------
Cash flows from investing activities:
Purchases of property and equipment (13,654) (584,173)
Collections of notes receivable - 103,413
--------- ----------
Cash used in investing activities (13,654) (480,760)
--------- ----------
Cash flows from financing activities:
Repayment of notes and leases payables (100,070) (190,425)
Distributions to minority interest shareholders (110,696) (32,136)
--------- ----------
Cash used by financing activities (210,766) (222,561)
--------- ----------
Net decrease in cash and cash equivalents (192,786) (746,619)
Cash and cash equivalents at beginning of year 646,306 1,254,120
--------- ----------
Cash and cash equivalents at end of period $ 453,520 $ 507,501
========= ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements
-5-
<PAGE> 6
JILLIAN'S ENTERTAINMENT CORPORATION AND SUBSIDIARIES
Notes to Consolidated Condensed Financial Statements
June 30, 1996
-------------------
Note A - General
- - ------------------
The unaudited consolidated condensed financial statements include the
accounts of Jillian's Entertainment Corporation (the "Registrant"), Jillian's,
Inc. and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated.
Net loss per share amounts are computed based upon the average number of
common and common equivalent shares outstanding, assuming proceeds from the
assumed exercise of options and warrants were used to purchase common shares
outstanding at the average fair market value during each period, unless such
exercise is anti-dilutive.
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with the instructions for Form 10-QSB and therefore
do not include all information and footnotes necessary for a fair presentation
of financial position, results of operations and changes in cash flow in
conformity with generally accepted accounting principles. The unaudited
consolidated condensed financial statements should be read in conjunction with
the financial statements and related notes included in the Registrant's Annual
Report on Form 10-KSB for the year ended March 31, 1996. In the opinion of
management, the unaudited consolidated condensed financial statements contain
all adjustments necessary for a fair presentation of the results of operations
for the interim periods presented and all such adjustments are of a normal and
recurring nature. The results of operations for the three months ended June 30,
1996 are not necessarily indicative of the results which may be expected for the
entire fiscal year.
Certain amounts in the accompanying condensed consolidated financial
statements for the three months ended June 30, 1995 have been reclassified to
conform to the presentation in the three months ended June 30, 1996.
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<PAGE> 7
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
June 30, 1996
-------------------------------
Results of Operations
- - ---------------------
The Registrant had net losses of $70,678 and $191,164 for the quarters
ended June 30, 1996 and 1995, respectively. The decrease in net losses from 1995
to 1996 was primarily due to higher net club operating income of $304,461 and a
reduction in start-up costs related to development stage clubs of $57,976,
offset in part by increased general and administrative expenses of $125,387,
depreciation and amortization of $65,672 and interest expense of $38,850.
Total revenues were $3,263,387 and $2,461,662 for the quarters ended June
30, 1996 and 1995, respectively. The increase of $801,725 was primarily due to
increased revenues of $728,401 from the Long Beach and Tacoma clubs, which
opened in May and December of 1995, respectively.
Total costs and expenses were $3,269,538 and $2,620,309 for the quarters
ended June 30, 1996 and 1995, respectively. The increase in total expenses of
$649,229 was primarily due to increased costs of $483,781 associated with Long
Beach and Tacoma clubs and increased general and administrative expenses of
$125,387. The Registrant had general and administrative expenses of $420,357 and
$294,970 for the three month period ended June 30, 1996 and 1995, respectively.
The increase in general and administrative expenses was primarily due to
increased wages of approximately $124,000. The increase in wages from 1995 to
1996 was primarily attributed to the hiring of a new Vice President of
Operations, Vice President of Development and support personnel.
Interest expense was $84,068 and $45,218 for the quarter ended June 30,
1996 and 1995, respectively. The increase was primarily due to debt associated
with the Long Beach and Tacoma clubs.
Liquidity and Capital Resources
- - -------------------------------
The Registrant's cash and cash equivalents and restricted cash decreased
$192,786 during the three month period ended June 30, 1996. The primary reason
for the decrease was the repayment of certain indebtedness and distributions to
minority interest shareholders, of approximately $100,000 and $111,000,
respectively.
-7-
<PAGE> 8
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations
June 30, 1996, Continued
-------------------------------
Liquidity and Capital Resources, Continued
- - ------------------------------------------
In December of 1995, the Registrant, through a wholly owned Delaware
corporation, opened a new Jillian's billiard club in Tacoma, Washington. The
property is located near the University of Puget Sound. The club occupies
approximately 25,000 square feet of space on two floors and contains 25
Brunswick billiard tables, along with other table top games, dart boards and a
high-tech electronic game room. The cost of building out and equipping the club
was approximately $2,100,000. The Tacoma club was financed primarily by a
$638,000 landlord contribution, $300,000 in equipment financing, $245,000 in
vendor financing, $300,000 in bank financing, $280,000 in bridge financing and
cash generated from the Registrant's club operations.
The Registrant had ten clubs fully operational as of June 30, 1996 as
compared to nine as of June 30, 1995. Net club operating income was $661,692 and
$357,231 for the three month period ended June 30, 1996 and 1995, respectively.
The Registrant continues to experience a cash shortage. The Registrant is
currently pursuing various alternatives, including bank financing and issuing
additional equity or debt securities, to raise funds to meet its working capital
needs. The Registrant believes that the cash provided from these ten clubs,
other bank financing and the issuance of additional equity or debt securities
should be sufficient to fund current corporate general and administrative
expenses.
The Registrant, as of June 30, 1996, had goodwill of $792,071, net of
amortization. The Registrant evaluates the potential impairment of its
long-lived assets, including goodwill related thereto, in accordance with the
Statement of Financial Accounting Standards No. 121 "Accounting for Improvement
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" and evaluates
other goodwill in accordance with Accounting Principle Board Opinion No. 17
"Intangible Assets". The Registrant does not believe that its long-lived assets
or goodwill has been impaired.
The Registrant intends to develop, through wholly owned subsidiaries of
Jillian's, Inc., additional Jillian's clubs. These clubs may be owned by
Jillian's, Inc. subsidiaries directly or indirectly through their participation
in limited partnerships or joint ventures. In the case of clubs owned by limited
partnerships, the Registrant expects that in each case a wholly owned subsidiary
would be the general partner, own a substantial interest in the limited
partnership and receive a management fee. The Registrant currently is
investigating potential sites for clubs in Massachusetts and certain other areas
in the Midwest and Mid-Atlantic states. There can be no assurance that the
Registrant will be successful in developing additional billiard clubs.
-8-
<PAGE> 9
Part II
Other Information
-----------------
Item 1. Legal Proceedings
On October 13, 1995, an action foreclosing a mechanics lien was filed
against the Registrant in a California Superior Court for Los Angeles
County for approximately $123,000, plus interest. The Registrant filed an
answer and cross compliant on January 3, 1996. While the Registrant is
vigorously defending the action and believes that it has meritorious
defenses, no assurance can be given of a favorable outcome.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
--------
None
(b) Reports on Form 8-K
-------------------
None
-9-
<PAGE> 10
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.
JILLIAN'S ENTERTAINMENT CORPORATION
(Registrant)
By: /s/ Daniel M. Smith
---------------------------
Daniel M. Smith
President and Chief Operating Officer
Dated: August 19, 1996
-10-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1<F1>
<CASH> 453,520
<SECURITIES> 0<F1>
<RECEIVABLES> 47,687
<ALLOWANCES> 0<F1>
<INVENTORY> 201,410
<CURRENT-ASSETS> 881,681
<PP&E> 5,839,660
<DEPRECIATION> (1,672,976)
<TOTAL-ASSETS> 9,516,946
<CURRENT-LIABILITIES> 2,426,301
<BONDS> 1,852,664
<COMMON> 9,138
0
0
<OTHER-SE> 2,764,612
<TOTAL-LIABILITY-AND-EQUITY> 9,516,946
<SALES> 3,263,387
<TOTAL-REVENUES> 3,263,387
<CGS> 739,569
<TOTAL-COSTS> 3,269,538
<OTHER-EXPENSES> 19,541
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (84,068)
<INCOME-PRETAX> (70,678)
<INCOME-TAX> 0
<INCOME-CONTINUING> (70,678)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (70,678)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
<FN>
<F1>Other Current Assets 179,064
Investments, Net 39,725
Goodwill, Net 792,071
Other Assets 290,833
A/P 950,207
Accrued Exp & Other A B 529,683
Current Portion of Notes Eq Pay 666,411
Deferred Rent 1,140,697
Minority Int 1,323,534
Paid in Capital 9,536,277
Accumulated deficit (6,771,665)
</FN>
</TABLE>
