<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission file number 1-9206
------
ENTOURAGE INTERNATIONAL, INC.
(Name of Small Business Issuer in its charter)
Texas 76-0118305
- ----- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
32240 Paseo Adelanto
Suite A
San Juan Capistrano, CA 92675
- ----------------------- -----
(Address of Principal executive offices) (Zip Code)
Issuer's telephone number, including area code (714) 488-2184
--------------
Securities registered pursuant to section 12(b) of act: None
Securities registered pursuant to section 12 (g) of act: None
Common stock $.001 par value.
Check whether the issuer (1) filed all reports required to be filed by
Section 13 of 15 (d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
Yes X No ___
-----
As of February 26, 1997, there were 15,718,074 shares outstanding of the
issuer's common stock, $.001 par value.
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Index to Condensed Financial Statements
---------------------------------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Condensed Balance Sheets
December 31, 1996 and September 30, 1996 3
Condensed Statements of Operations
For the Three Months Ended December 31, 1996
and December 31, 1995 4
Condensed Statements of Cash Flows
For the Three Months Ended December 31, 1996
and December 31, 1995 5
Notes to be Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
PART II - OTHER INFORMATION 8
</TABLE>
2
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
December 31 September 30
1996 1996
---- ----
<S> <C> <C>
Current Assets:
Cash $ 19,580 $ 0
Trade accounts receivable, net 15,365 11,080
Inventory 48,314 51,485
Other current assets 1,378 1,256
----------- -----------
Total current assets $ 84,637 $ 63,821
Property and equipment, net 26,013 30,177
Other assets 11,724 11,724
----------- -----------
Total Assets 122,374 105,722
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued liabilities $ 316,339 $ 325,460
Notes payable - current 283,798 278,145
----------- -----------
Total liabilities 600,137 603,605
=========== ===========
Stockholders' Equity:
Common stock, $.001 par value. Authorized
25,000,000 shares; issued and
outstanding 4,300,574 shares at December
1996 and 3,675,574 at September 1996 $ 4,300 $ 3,675
Additional paid-in capital 3,006,484 2,982,110
Accumulated deficit (3,488,547) (3,483,668)
----------- -----------
Total stockholders' equity (477,763) (497,883)
----------- -----------
Total Liabilities and Stockholders' Equity $ 122,374 $ 105,722
=========== ===========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
December 31 December 31
1996 1995
---- ----
<S> <C> <C>
Net sales $268,700 $254,001
Cost of sales 59,122 20,544
-------- --------
Gross margin 209,578 233,457
-------- --------
Expenses:
Selling and G & A 192,681 183,616
Advertising 18,531 624
Depreciation and amortization 4,165 25,020
-------- --------
Total expenses 215,377 209,260
-------- --------
Operating income (loss) (5,799) 24,197
Interest expense 917 (3,383)
Other income (expense) 1,835 24,123
-------- --------
Gain (loss) from continuing operations
before taxes and extraordinary gain (4,881) 51,703
Income tax expense 0 0
Gain (loss) from continuing operations
before extraordinary gain (4,881) 51,703
Loss from discontinued operations, net
of taxes 0 (64,464)
-------- --------
Loss before extraordinary gain (4,881) (12,761)
Extraordinary gain on debt extinguishment,
net of taxes 0 543,000
Net income (loss) (4,881) 530,239
======== ========
Per common and common equivalent share
Loss from continuing operations before extraordinary gain (.001) (.003)
Extraordinary gain on debt extinguishment .15
Net income (loss) per common share (.001) .14
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Three Three
Months Months
Ended Ended
December 31 December 31
1996 1995
---- ----
<S> <C> <C>
Net cash provided by (used in)
operating activities $(11,073) $(22,727)
Net cash provided by (used in)
investing activities 0 (9,628)
Net cash provided by (used in)
financing activities 30,653 0
-------- --------
Net increase (decrease) in cash 19,580 (32,355)
Cash at beginning of period 0 33,405
Cash at end of period $ 19,580 $ 1,050
======== ========
</TABLE>
5
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
INTERIM FINANCIAL STATEMENTS. The accompanying financial statements have been
- ----------------------------
prepared in accordance with the instructions to quarterly reports on Form 10-
QSB. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows at December 31, 1996 and for all
periods presented have been made. Certain information and footnote data
necessary for fair presentation of financial position and results of operations
in conformity with generally accepted accounting principals have been condensed
or omitted. It is therefore suggested that these statements be read in
conjunction with the summary of significant accounting policies and notes to
financial statements included in the Company's annual Form 10-KSB. The results
of operations for the period ended December 31, 1996, are not necessarily
indicative of operating results for the full year.
WORKING CAPITAL LOAN (Biogime Franchise Services). Effective with the December
- --------------------------------------------------
21, 1995 closing of the Spin Off, the company negotiated a working capital loan
from Biogime Franchise Services (USA), Inc. ("BFS"). BFS agreed to loan the
company up to $175,000 on a demand note secured by the company's assets at an
interest rate of eight percent annually. These funds will be used for general
corporate needs during the post spin off, restructuring period.
INVENTORY NOTE AGREEMENT. The company negotiated an inventory note arrangement
- -------------------------
with Arizona Natural Resources (ANR), its primary supplier, to provide the
company inventory financing during the post spin off restructuring period. The
inventory note is in the amount of $55,000 and has an interest rate of 10% per
year. No payments were required for a six month period until October 1996.
After which, the balance of $55,000 was payable over a six month period ending
March 1997.
6
<PAGE>
ENTOURAGE INTERNATIONAL, INC.
MANAGEMENT DISCUSSIONS AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's liquidity shortage showed some improvement but continued to
be severe during the quarter ending December 31, 1996. The Company had current
liabilities in excess of current assets of $515,500 as of December 31, 1996,
compared with current liabilities in excess of current assets of $539,784 as of
September 30, 1996.
Cash increased from $0 as of September 30, 1996 to $19,580 as of December
31, 1996 primarily as a result of $25,000 in additional paid in capital and a
temporary note for $11,500 executed by the Company payable to a shareholder.
The Company has reduced inventory levels from $51,500 to approximately
$48,300 during the quarter ended December 31, 1996 primarily as a result of a
reduced warehouse inventory level established by the Company.
Accounts payable and accrued liabilities have been reduced from
approximately $325,500 as of September 30, 1996 to $316,500 as of December 31,
1996.
RESULTS OF OPERATIONS - QUARTER ENDED DECEMBER 31, 1996 COMPARED WITH QUARTER
- -----------------------------------------------------------------------------
ENDED DECEMBER 31, 1995.
- ------------------------
The net loss for the quarter ended December 31, 1996, was $4,881 ($.001 per
share), compared to the net loss of $12,761 ($.003 per share) before an
extraordinary gain of $543,000 for debt extinguishment resulting from the Spin
Off transaction December 21, 1995 was realized. The extraordinary gain resulted
in a profit of $530,239 ( $.15 per share) for the quarter ended December 31,
1995.
Net sales, for continuing operations, for the quarter ended December 31,
1996 were $268,700 compared with net sales of $254,001 for the quarter ended
December 31, 1995. The increase in net sales was primarily due to increased
advertising for the period.
Gross margin was 78% for the quarter ended December 31, 1996 and 92% for
the quarter ended December 31, 1995. Inventories were not available at the time
of the Spin Off of the direct sales division on December 21, 1995 and grosses
were estimated at that time. Actual inventories were taken January 31, 1996 and
grosses were adjusted. The average of the two periods is 85% and is more
representative of current operations.
Operating expenses for the quarter ended December 31, 1996 were about
$215,000 compared with about $209,000 for the quarter ended December 31, 1995.
Overall, the company believes that current operating expenses are at a minimum
level to allow the Company to improve its sales volume during fiscal year 1997.
7
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
There are no significant changes to the information reported in
the Form 10-KSB for the year ended September 30, 1996.
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 on Form 8-K
--------------------------------
(a) Exhibits
--------
None.
(b) Reports on Form 8-K
-------------------
Announcement of acquisition of Biogime Franchise Services,
Inc. (USA) as of January 31, 1997.
8
<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 thereunto duly authorized.
ENTOURAGE INTERNATIONAL, INC.
-----------------------------
(registrant)
Date: October 10, 1997 By: /s/ John C. Riemann
--------------------
John C. Riemann
Chief Executive Officer
(Responsible Financial Officer)
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 19,580
<SECURITIES> 0
<RECEIVABLES> 15,365
<ALLOWANCES> 0
<INVENTORY> 48,314
<CURRENT-ASSETS> 1,378
<PP&E> 282,127
<DEPRECIATION> 256,114
<TOTAL-ASSETS> 122,372
<CURRENT-LIABILITIES> 600,137
<BONDS> 0
0
0
<COMMON> 4,300
<OTHER-SE> (482,063)
<TOTAL-LIABILITY-AND-EQUITY> 122,374
<SALES> 268,700
<TOTAL-REVENUES> 270,535
<CGS> 59,122
<TOTAL-COSTS> 251,803
<OTHER-EXPENSES> 22,696
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 917
<INCOME-PRETAX> (4,881)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,881)
<EPS-PRIMARY> (.001)
<EPS-DILUTED> 0
</TABLE>
