SECURITIES AND EXCHANGE COMMISSION
Washington ,D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission File Number 0-15435
FIRST ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-0974303
(State or other jurisdiction I.R.S. Employer Identification No.
of incorporation or organization)
1380 Lawrence Street, Suite 1400, Denver, Colorado 80204
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (303) 592-1235
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check whether the registrant (1) has filed 1) Yes
X__
all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the 2) Yes X__
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.
Indicate the number of shares outstanding of each of the issuer's
classes
of stock, as of the latest practicable date.
Number of Shares
Class Outstanding at September 30,1996
Common stock, $.008 par value 4,947,163 shares
FIRST ENTERTAINMENT, INC
FORM 10-QSB QUARTERLY REPORT
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Consolidated Balance Sheet as of September 30,1996
(Unaudited) and December 31, 1995
Consolidated Statements of Operations (Unaudited)
for the nine months and the three months ended September 30, 1996
and 1995
Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 1996 and 1995
Notes to Consolidated Financial Statements (unaudited)
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II - OTHER INFORMATION
Items 1 through 6
SIGNATURE
<TABLE>
<CAPTION>
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
1996 1995
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 50,208 $ 71,488
Trade accounts receivable, net
of allowance 82,485 89,203
Accounts receivables other 169,611 145,778
Notes receivable, related parties 100,000
Notes receivable, officer 10,000 0
Inventories 72,580 22,234
Other current assets 19,536 18,911
- -----------------------------------------------------------------
404,420 447,614
------------------------------------------------------------------
PROPERTY AND EQUIPMENT
Master Tape Library 1,497,399 1,497,399
Machinery, production and
other equipment 519,505 519,505
Radio station land and building 425,000
Furniture and equipment 174,598 168,449
Leasehold improvement 170,213 170,213
Condominium 57,626 57,626
Transportation 37,370 37,370
Film cost inventory 103,428 103,428
- ------------------------------------------------------------------
2,985,139 2,553,990
Less Accumulated Depreciation 2,338,680 2,162,103
- ------------------------------------------------------------------
646,459 391,887
- ------------------------------------------------------------------
OTHER ASSETS
License and distribution rights,
net of accumulated
amortization of $504,831
and $357,941 1,645,552 892,441
Investments and other 411,000 956
Noncurrent inventory 950,000 0
- ------------------------------------------------------------------
3,006,552 893,397
- ------------------------------------------------------------------
TOTAL ASSETS $ 4,057,431 $ 1,732,898
=================================================================
</TABLE>
<TABLE>
September 30, December 31,
1996 1995
LIABILITIES AND STOCKHOLDERS' EQUITY:
<S> <C> <C>
CURRENT LIABILITIES
Notes payable and current
portion of long term debt $ 863,040 $ 923,048
Notes payable, related parties 0 13,167
Accounts payable 54,092 63,268
Accrued interest 336,276 325,185
Accrued liabilities 67,764 122,830
Net liabilities of discontinued
operations 0 297,565
- ------------------------------------------------------------------
Total current liabilities 1,321,172 1,745,063
- ------------------------------------------------------------------
LONG TERM DEBT, NET OF CURRENT PORTION 1,002,690 54,281
- --------------------------------------------------------------------
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value;
authorized
5,000,000 shares;
Class A preferred stock, 10,689
shares issued and outstanding 10 10
Class B preferred stock, no
shares issued 0 232
Class C preferred stock, 125,000
shares issued and outstanding 125 0
Common stock, $.008 par value;
authorized 6,250,000 shares;
5,024,288 shares issued
at September 30, 1996 40,144 21,052
Capital in excess of par value 13,321,256 11,227,696
Accumulated deficit (10,983,010) (10,567,547)
Deferred compensation (160,132) (263,065)
Treasury stock, at cost
(77,125 shares) (484,824) (484,824)
- ------------------------------------------------------------------
1,733,569 (66,446)
- ------------------------------------------------------------------
Total liabilities and stockholders
equity $ 4,057,431 $1,732,898
=================================================================
</TABLE>
"See accompanying notes to consolidated financial statements."
[CAPTION]
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
REVENUE:
Live
Entertainment $ 288,079 $ 236,642 $ 908,611 $ 752,931
Radio 192,846 177,877 525,893 498,603
Video 50,165 25,947 105,329 30,967
Other 6,194 12,667 32,861 34,515
- -----------------------------------------------------------------
537,284 453,133 1,572,694 1,317,016
- -----------------------------------------------------------------
COSTS AND EXPENSES:
Cost of sales -
live
entertainment 270,606 215,956 796,983 653,120
Cost of
products sold
- radio 127,868 132,145 382,981 369,147
Cost of
products sold
- video 3,075 163 12,520 112,691
Depreciation
and
amortization 105,825 75,545 268,106 252,257
Selling,
general and
administrative 221,312 384,657 849,982 1,074,676
- ------------------------------------------------------------------
728,686 808,466 2,310,572 2,461,891
- ------------------------------------------------------------------
OPERATING LOSS
FROM CONTINUING
OPERATIONS (191,402) (355,333) (737,878) (1,144,875)
OTHER INCOME
(EXPENSE)
Interest
expense (24,651) (27,656) (77,654) (38,239)
Other (2,752) 1,236 22,764 656
- ------------------------------------------------------------------
LOSS FROM
CONTINUING
OPERATIONS (218,805) (381,753) (792,768) (1,182,458)
DISCONTINUED
OPERATIONS
Income (Loss)
from
operations
of
Discontinuance
of Image (148,761) (28,570) (460,677)
Gain on
disposal of
Image 405,875
- -------------------------------------------------------------------
NET INCOME
(Loss) $ (218,805) $ (530,514) $ (415,463)$(1,643,135)
===================================================================
PER SHARE DATA:
Net Income
(loss) per
share,
continuing
operations (.06) (.15) (.21) (.47)
Net income
(loss) per
share,
discontinued
operations (.06) .10 (.18)
Net income
(loss) per
common share (.06) (.21) (.11) (.65)
WEIGHTED-AVERAGE
NUMBER OF
SHARES
OUTSTANDING 3,809,886 2,498,878 3,809,886 2,498,878
================================================================
"See accompanying notes to consolidated financial statements"
</TABLE>
[CAPTION]
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
For the nine months For the nine months
ended September 30, ended September 30,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ (415,463) $ (1,643,135)
Adjustments to
reconcile net
income (loss)
to net cash
from operations
Minority interest (78,950)
Depreciation and
amortization 268,466 292,264
Common Stock
issued for services 428,784 561,610
Gain on disposal
of Image (405,875)
Changes in operating
assets and
liabilities
(Increase) decrease in
Receivables 72,885 233,564
Inventories (346) 144,179
Other current assets (625) 1,792
Other assets (1,944) 0
Increase
(decrease) in
Accounts payable (9,176) (146,867)
Accrued
Liabilities 16,025 (81,466)
Bank Overdraft (40,039)
Net liabilities of
discontinued
operations 149,474
- ---------------------------------------------------------------
NET CASH PROVIDED BY
(USED IN) OPERATING
ACTIVITIES: 102,205 (757,048)
- ------------------------------------------------------------------
CASH FLOWS FROM
INVESTING ACTIVITIES
Capital expenditures
- net (6,149) (156,202)
Investments and other
- ----------------------------------------------------------------------
NET CASH PROVIDED BY
(USED IN) INVESTING
ACTIVITIES (6,149) (156,202)
- --------------------------------------------------------------
CASH FLOWS FROM
FINANCING ACTIVITIES
Advances to affiliates (75,590)
Principal payments
on debt (74,776) (50,261)
Proceeds from
issuance of
common stock 1,111,900
- ------------------------------------------------------------------
NET CASH PROVIDED
BY (USED IN)
FINANCING ACTIVITIES (74,776) 986,049
- -------------------------------------------------------------
NET INCREASE
(DECREASE) IN
CASH (21,280) 72,799
CASH AND CASH
EQUIVALENTS,
BEGINNING OF
PERIOD 71,488 185,888
- -------------------------------------------------------------
CASH AND CASH
EQUIVALENTS,
END OF PERIOD $ 50,208 $ 258,687
=============================================================
"See accompanying notes to consolidated financial statements."
</TABLE>
[CAPTION]
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. General:
The accompanying consolidated financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance
with instructions to Form 10-QSB and Regulation S-B. Accordingly,
they do not include all of the information and footnotes required
by generally accepted accounting principles for complete
financial statements. The accompanying financial information is
unaudited but includes all adjustments (consisting of normal
recurring accruals) which, in the opinion of management, are
necessary to present fairly the information set forth. The
consolidated financial statements should be read in conjunction
with the notes to the consolidated financial statements which are
included in the Annual Report on Form 10-KSB of the Company for
the fiscal year ended December 31, 1995.
The results for the interim period are not necessarily indicative
of results to be expected for the fiscal year of the Company
ending December 31, 1996. The Company believes that the nine
month report filed on Form 10-QSB is representative of its
financial position and its results of operations and changes in
cash flows for the periods ended September 30, 1996 and 1995.
2. Stockholders Equity
On March 31, 1996 the Company acquired certain assets from
Balzac, Inc. (Balzac), a private company which manufactures and
distributes toys, including a product line of toy balls. These
assets consist of inventory and contact rights. These rights
consist of the following 1. Atlanta Distributorship for the
Olympics; 2. Jason Carson Employment Agreement; 3. Interest in
the Joseph Gabriel Secrets of Magic; 4. Distribution of Balzac
Inc. in Japan (Per Mitsui Agreement); 5. The World of Balzac
animated TV show, as presently covered by the Second City
Agreement; and 6. five additional Balzac venues, the locations to
be determined by Balzac over the next 18 months.
In exchange for the inventory and the above-named rights, The
Company has issued 1,100,000 shares of its restricted common
stock. Further, in consideration of the acquisition, the Company
agreed to grant: stock options to Balzac to purchase 750,0000
common shares of the Company at a price of $11.00, excercisable
for a period of five years from the date of grant; and, a stock
option to Balzac to purchase 750,000 common shares of the Company
at a price of $19.00, exercisable for a period of five years from
that date of the grant. In addition, the Company and Balzac
agreed to negotiate additional stock options for Balzac to
purchase 750,000 common shares of the Company at a price of
$28.00 and to purchase 750,000 common shares of the at a price
of $38,00, at such time and upon such terms and conditions as the
parties may mutually agree. Company agreed that it will not
enter into any agreement, including but not limited to the
dilution of its common shares, or any other action that may
materially affect the common shares of the Company without first
obtaining the written consent of Balzac, which consent shall not
be unreasonable without first attaining the written consent of
Balzac, which consent shall not be unreasonable withheld. If and
whenever additional common shares shall be issued by the , then
the number of common shares subject to the options herein shall
be proportionately adjusted so that Balzac's relative position in
the Company will not be diluted. Finally, as a part of this
Agreement, Balzac shall have the right to name two persons to the
Board of Directors as long as Balzac owns any common shares in
the Company. Balzac has not yet named any persons to the Board
of Directors of the Company. In addition, the Company acquired
an exclusive license agreement for the sale of Balzac products in
Australia for $800,000 which is payable over five years based
upon a formula of 60% of net profits from the sale of Balzac
products.
During 1996, a dispute arose between the Company and Balzac where Balzac
asserted a violation of the Purchase Agreement. Balzac seized the inventory
valued at $1 million, which was collateral on the fixed obligation due under
the Australian Licensing Agreement, to satisfy the $800,000 obligation under
the Licensing Agreement. The Company asserted that Balzac had no right under
the Purchase Agreement or License Agreement to seize the inventory and apply
the proceeds against the note obligation under the Licensing Agreement.
In April 1997, Balzac and the Company entered into an agreement whereby Balzac
will but back the Austrailian Licensing Agreement for $800,000, and will repay
the Company $200,000 which was the difference between the value of the seized
inventory and the obligation under the licensing agreement. The $1,000,000
will be repaid over forty months.
Effective March 31, 1996 the Company entered into a Purchase
Agreement with Scott Kajiya and Jamie Ruiz (the Sellers) whereby
the Company acquired 55% of the issued and outstanding common
stock of Indian Motorcycle Company Japan, a development stage
company, and certain licensing rights in exchange for 300,000
shares of the its Class C Preferred Stock valued at $1.00 per
share.
The licensing rights acquired allow the use of Indian Motorcycle
Trademark in Japan on various products including denim and denim
related products, shoes, boots, jewelry, accessories and eyewear.
In February 1995, the Company signed a serious of agreements
giving it a five-year exclusive worldwide licensing and
merchandising rights for the Indian Motor Company, which included
a three year option, as well as exclusive rights to develop,
operate, and franchise the Indian Motor Company Diners and Cafes.
These rights required the approval of the bankruptcy court to
become effective.
In October, 1995 in a hearing in Worechester, Massachuseets,
Indian Motorcycle Manufacturing Company, Inc., the grantor of the
exclusive licensing agreements, was converted to a Chapter 7
bankruptcy and all of its assets including the trademark, were
transferred to the property of the Chapter 7 estate. The effect
of this decision was put into question the validity of the
Company's licensing agreements entered into February, 1995, since
they were never approved by the bankruptcy court.
In January, 1996, in Massachusetts Bankruptcy Court, the Trustee
for Indian Motorcycle Company, Inc., Indian Motorcycle Apparel
and Accessories Co., Inc. and Indian Motorcycle Manufacturing
Company, Inc. (collectively referred to as the Chapter 7
debtors) and the Receiver for Indian Motorcycle Manufacturing
Company, Inc. (IMMCI), agreed to a plan for the coordinated
sale of The Indian Trademark and other trademark related assets.
The Plan is intended to unite in a single entity, a newly formed
entity, all of the claims of the Trademark owned by IMMCI and the
Chapter 7 debtors. The Trustee for the Chapter 7 debtors and the
Receiver for the IMMCI will solicit bids from prospective
purchasers of the newly formed entity. Bids will specify the
percentage ownership of the new entity which the purchaser
desires to acquire, as well as the proposal purchase price. The
new plan of reorganization currently before the court supersedes
the previous plans submitted.
In January, 1996 the Company, A.B. Goldberg, Harvey Rosenberg, a
former director, and several other unrelated third parties were
named as defendants in a lawsuit filed by Sterling Consulting
Corporation, receiver for IMMCI. The complaint alleges
interference by the defendants in the business of IMMCI,
conflicts if interest, breach of fiduciary duty, unjust
enrichment and bankruptcy fraud.
The Company filed a claim against the Receiver in a lawsuit in
July, 1996 alleging intentional interference of contractual
relationships, and breach of licensing agreements.
In February, 1997 the Company and the Receiver agreed to the terms of a
settlement. The proposed Settlement Agreement calls for the Company relinquish
all rights or claims to the Indian Motorcycle Trademark or the use of the
Trademark and any licensing rights. In addition, all claims by the Receiver
and the Company shall be released and the Company shall pay to the Receiver
$114,000. All rights acquired from Scott Kajiya and Jamie Ruiz for the use
of the Indian Motorcycle Trademark in Japan are also assigned to the Receiver.
The transactions described above relating to Balzac Rights and Indian Licensing
have been rescinded in the accompanying financial statements effective from the
date the transactions were entered into as if the transactions did not occur.
If the settlement is achieved, the Company has also determined it
will not pursue its agreement with Scott Kajiya and Jamie Ruiz
and would unwind the transaction previously entered into.
During the quarter ending March 31, 1996, the Company issued
58,500 shares of common stock for consulting services valued at
approximately $37,137. During the quarter ended June 30, 1996,
the Company issued 167,500 shares of common stock for legal and
consulting services valued at approximately $205,000. During the
quarter ended September 30, 1996 the Company issued 88,750 shares
of common stock for legal and consulting valued at approximately
$84,000. The common stock issued for legal and consulting
services were registered in an S-8 registration statement and
were free trading upon issuance.
In July, 1996 the Company issued 770,000 shares of its restricted
common stock, valued at approximately $408,000, in exchange for
approximately 75% of the issued and outstanding shares of Power
Media Communications International, Inc. (Power Media). Power
Media developed the concept of selling infomercial products in
kiosks primarily located in retail malls. The kiosks vary in
size from 25 square feet for unmanned kiosks and 250 square feet
for manned kiosks. The acquisition has been accounted for as a
purchase.
In October, 1996 the stock of Power Media, owned by the Company,
was acquired by The Best of As Seen on TV Systems, Inc. by
issuing 782,800 shares of its common stock. Upon completion of
the transaction the Company owned 51.5% of The Best of. The
Best of intends to raise up to $1,000,000 in a private placement
by January 31, 1997 to fund expansion of the retail kiosk
concept.
In July, 1996, Burt Katz, a director of the Company and holder of
231,976 shares of Class B preferred stock converted the preferred
shares into 57,994 shares of common stock.
On April 9, 1996 the Board of Directors approved a one share for
four reverse stock spilt. Accordingly, all references in the
consolidated financial statements to shares issued, shares
outstanding, average number of shares outstanding, and related
per share amounts, prices, stock option plan data have been
restated to reflect the reverse stock split.
3. Income Taxes
The tax effects of temporary differences and carryforward amounts
that give rise to significant portions of the deferred tax assets
and deferred tax liabilities as of December 31, 1995 and 1994
are:
<TABLE>
Deferred tax assets: 1995 1994
<S> <C> <C>
Net operating
loss carryforwards $ 1,940,000 $ 985,000
Investments 25,000
Future deductible
amounts for
stock issuance 74,000
Discontinued operations 322,000
Other 23,000 33,000
- -----------------------------------------------------------
Total gross deferred
tax assets 2,285,000 1,117,000
Less valuation
allowance (2,229,000) (1,050,000)
Deferred tax
liabilities: 56,000 67,000
Property and equipment (56,000) (67,000)
- ----------------------------------------------------------
Net deferred taxes $ -0- $ -0-
</TABLE>
A valuation allowance has been established to reflect
management's evaluation that it is more likely than not that all
of the deferred tax assets will not be realized.
The valuation allowance increased $1,179,000 in 1995 and $172,000
in 1994.
As of December 31, 1995, net operating loss carryforwards were
approximately $9.7 million. Utilization of certain portions of
this amount is subject to limitations under the Internal Revenue
Code. Carryforward amounts expire at various dates though 2010.
4. Discontinued Operations
On April 24, 1996 the Company and Harvey Rosenberg, a former
officer and director of the Company entered into a purchase
agreement for the sale of Image Marketing Group, Inc. the Company
majority owned subsidiaries which had been accounted for as
discontinued operations since 1995.
Mr. Rosenberg purchased the Company's 1,986,376 shares of Image
for $1,000. The sale resulted in a gain to the Company in the
amount of $485,313 since Image had negative net assets at the
time of the sale of Image to Mr. Rosenburg.
5. Supplemental Data to Statements of Cash Flows
Excluded from the consolidated statement of cash flows were the
effects of certain noncash investing and financing activities as
follows:
In March, 1996 certain radio station property was acquired by
issuing $275,000 in preferred stock and a $150,000 note. In
March, 1996 inventory was acquired by issuing $1,000,000 in
common stock and certain licensing and distribution rights were
acquired by issuing $300,000 in preferred stock and $600,000 in
common stock. In July, 1996 the stock of Power Media, an equity
investment was acquired by issuing $408,000 in common stock.
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(Unaudited)
ITEM 2. MANAGEMENT DISCUSSION AND PLAN OF OPERATION.
Results of Operation
September, 1996 vs. September, 1995
For the period ended September 30, 1996 the Company incurred a
loss from continuing operations of $792,768 as compared to a
loss from continuing operations of $1,182,458 for the period
ended September 30, 1995. The decrease in the net loss for the
quarter ended September 30, 1996 as compared to September 30,
1995 is the result of an increase in live entertainment, radio
sales and video sales, a reduction of general and administrative
expenses. The overall gain from discontinued operations of Image
for the period ended September 30, 1996 is primarily the result
of the sale of Image which had negative net assets at the time of
disposition.
Overall, revenues increased by approximately $256,000, from
$1,317,000 in 1995 to $1,572,694 in 1996. Live entertainment
revenue increased $155,000, radio sales increased by
approximately $27,000 and video sales increased by $75,000. The
increase in live entertainment revenues was due to increased
attendance as a result of big name acts in the first and third
quarter, some of whom performed on weeknights which boosted
revenues. The third quarter of 1996 was not as successful for
live entertainment as the first quarter but was substantially
higher than for the same period last year. Radio sales decreased
from $178,000 in the first quarter of 1996 to $155,000 in the
second quarter of 1996 but increased to 193,000 in the third
quarter of 1996. Radio sales for 1996 are still 5% ahead of 1995
primarily due to concert revenues in 1996 which did not exist in
1995.. Video sales increased by $75,000 in 1996 over 1995 as a
result of receipt of royalties for foreign sales from its foreign
distribution. In 1996 the Company sold its foreign distribution
rights to its foreign distributor for $50,000.
Cost of sales live entertainment increased as a result of an
increase in revenues but the percent of cost of sales to sales
remained level at 88%. Overall attendance increased
substantially but the labor cost increased also.
Cost of goods sold radio, increased approximately $ 14,000
comparing 1996 to 1995. The cost of sales radio decreased from
74% in 1995 to 73% in 1996. The Company is aggressively pursuing
additional advertising revenues in 1996 and increasing its
promotions to obtain a larger market share.
Depreciation and amortization have increased only slightly
comparing 1996 to 1995. General and administrative costs
decreased $225,000 in 1996 as compared to 1995. The major reason
for the decrease is due to a reduction in the use of consultants,
the reduction in leased office space and overall effort by the
Company to reduce costs. The Company is continuing in its
efforts to reduce overhead costs wherever possible.
Interest expense has doubled in 1996 as compared to 1995 as a
result of the increase in long term debt in the second quarter of
1996.
Liquidity and Capital Resources
As of September 30, 1996, the Company had a working capital
deficit of approximately $916,752 , a decrease of $380,697 over
the working capital deficit at December 31, 1995 of $1,279,500.
The primary reason for the decrease in the working capital
deficit is the decrease in current portion of notes payable and
accrued liabilities and the sale of the negative net assets of
the discontinued operations.
Net cash provided by operations for 1996 was $ 102,205 as
compared net cash used in operations of $757,048 in 1995. The
net cash provided by operations in 1996 is the result of
increased revenues, collection of a $100,000 note receivable and
$100,000 from foreign royalties for its video's and the issuance
of common stock for services which reduces the Company's capital
requirements. In 1995, the Company had been successful in raising
approximately $646,000 in equity financing which was used
primarily to finance the net cash used by operations. In addition
the Company has been able to issue common stock for services
thereby reducing the need for cash.
The Company has limited resources both financially and people. A
substantial portion of the Company's efforts since August, 1996
has been the development of the Best of As Seen on TV retail
kiosk concept, which has included product acquisition, kiosk
design and construction and leasing retail space. The holiday
season is significant in terms of potential sales therefore it
was important to get the kiosk built and in place by November 10,
1996 to take advantage of the season.
The Company's ability to continue as a going concern will largely
depend on its ability to generate working capital through debt or
equity financing and profitable operations. Working capital
deficiencies have hindered the Companies ability to fund certain
business segments. Currently the Company has bank debt of $1.1
million which is currently due and due later in 1996. Working
capital is needed to further develop the Kodak Video Trips, the
new acquired Balzac lines of business, the Best of As Seen on
TV, Inc. concept and the Indian Japan opportunities. The
likelihood of obtaining the necessary equity financing needed to
develop these opportunities is uncertain at this time.
PART II - OTHER INFORMATION
- ---------------------------------------------
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 on Form 8-K
(A) Exhibits
None
(B) Reports on Form 8-K dated January 24, 1996 and February
9, 1996 were filed during the quarter ended March 31, 1996.
Reports on Form 8-K dated April 19,996 were filed during
the quarter ended June 30,1996
Report on Form 8-K dated April 26,1996 were filed during
the quarter ended June 30,1996.
SIGNATURES
Pursuant to the requirements of the Exchange Act , the
Registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
First Entertainment Inc.
DATE: April 30, 1997 /s/A.B. Golberg
A.B. Goldberg
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1995
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 50
<SECURITIES> 0
<RECEIVABLES> 262
<ALLOWANCES> 0
<INVENTORY> 73
<CURRENT-ASSETS> 404
<PP&E> 2985
<DEPRECIATION> 2339
<TOTAL-ASSETS> 4057
<CURRENT-LIABILITIES> 1321
<BONDS> 0
<COMMON> 40
0
1
<OTHER-SE> 1693
<TOTAL-LIABILITY-AND-EQUITY>4057
<SALES> 1573
<TOTAL-REVENUES> 1573
<CGS> 1192
<TOTAL-COSTS> 2311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 78
<INCOME-PRETAX> (793)
<INCOME-TAX> 0
<INCOME-CONTINUING> (793)
<DISCONTINUED> 377
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (416)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
