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, 1997 Commission File Number 0-15435
FIRST ENTERTAINMENT, INC.
(Exact name of Company as specified in its charter)
COLORADO 84-0974303
(State or other jurisdiction I.R.S. Employer Identification No.
of incorporation or organization)
1999 Broadway Suite 3135, Denver, Colorado 80202
(Address of principal executive offices) (Zip code)
Company's telephone number, including area code (303) 382-1235
(Former name, former address and former fiscal year, if changed since
last report.)
Indicate by check whether the Company (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 Company 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 October 15, 1997
Common stock, $.008 par value 6,176,504 shares
Class A Preferred Stock, $.001 par value 10,689 shares
Class B Preferred Stock, $.001 par value 23,867 shares
Class C Preferred Stock, $.001 par value 125,000 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 30,1997
(Unaudited) and December 31, 1996
Consolidated Statements of Operations (Unaudited)
for three months and nine months ended September 30, 1997
and 1996
Consolidated Statements of Cash Flows (Unaudited)
for the nine months ended September 30, 1997 and 1996
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,
1997 1996_
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 71,249 $ 62,856
Trade accounts receivable, net of allowance 105,101 105,357
Accounts receivable, other 100,000 218,010
Notes receivable, affiliates 61,187 10,000
Inventories 62,412 51,282
Other current assets 27,625 18,176
- ----------------------------------------------------------------------
427,574 465,681
PROPERTY AND EQUIPMENT
Master tape library and film costs 1,600,827 1,600,827
Equipment and furniture 823,309 770,566
Building and leasehold improvement 528,257 528,257
Land 125,000 125,000
- ----------------------------------------------------------------------
3,077,393 3,024,650
Less Accumulated Depreciation 2,461,021 2,399,175
- ----------------------------------------------------------------------
616,372 625,475
- ----------------------------------------------------------------------
OTHER ASSETS
License, net of accumulated
amortization 783,033 1,629,921
Goodwill, net of accumulated amortization 521,313 511,712
Note receivable, noncurrent 900,000 0
- ----------------------------------------------------------------------
2,204,346 2,141,633
- ----------------------------------------------------------------------
TOTAL ASSETS $ 3,248,292 $3,232,789
======================================================================
"See accompanying notes to consolidated financial statements."
<CAPTION>
</TABLE>
<TABLE>
<CAPTION>
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS, continued
(Unaudited)
September 30, December 31,
1997_ __1996__
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY (Deficit):
CURRENT LIABILITIES
Accounts payable 86,389 115,701
Accrued interest 347,969 324,805
Accrued liabilities 83,553 166,927
Accrued Bonuses 257,600
Notes payable and current portion of
long term debt $ 818,767 861,392
- ----------------------------------------------------------------------
Total current liabilities 1,336,678 1,726,425
- ----------------------------------------------------------------------
LONG TERM DEBT, NET OF CURRENT
PORTION 199,791 199,484
- ----------------------------------------------------------------------
MINORITY INTEREST 199,428 163,787
- ----------------------------------------------------------------------
STOCKHOLDERS' EQUITY (Deficit):
Preferred stock, $.001 par value;
authorized 5,000,000 shares;
Class A preferred stock, 10,689
shares issued 10 10
Class B preferred stock, 23,867
shares issued 26
Class C preferred stock, 125,000
shares issued 125 125
Common stock, $.008 par value;
authorized 6,250,000 shares;
6,176,504 and 5,292,238 shares
issued 49,412 42,338
Capital in excess of par value 14,027,505 13,460,958
Accumulated deficit (12,564,683) (11,829,707)
Deferred compensation 0 (45,807)
Treasury stock, at cost 0 (484,824)
- -----------------------------------------------------------------------
1,512,395 1,143,093
- ----------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (Deficit): $ 3,248,292 $3,232,789
======================================================================
<CAPTION>
"See accompanying notes to consolidated financial statements."
</TABLE>
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,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUE:
Live Entertainment $300,881 $ 288,079 $1,071,415 $ 908,611
Radio 200,985 192,846 575,401 525,893
Retail 24,539 36,808
Video 93 50,165 50,135 105,329
Other 36,347 6,194 100,878 32,861
- -----------------------------------------------------------------------
562,845 537,284 1,784,502 1,572,694
- -----------------------------------------------------------------------
COSTS AND EXPENSES:
Cost of sales -
live entertainment 286,768 270,606 958,487 796,983
Cost of sales
- radio 128,147 127,868 395,428 382,981
Cost of sales
- retail 71,993 95,461
Cost of products
sold - video 11 3,075 13,134 12,520
Depreciation and
Amortization 27,495 105,825 180,967 268,106
Selling, general
and administrative 265,275 221,312 870,182 849,982
- -----------------------------------------------------------------------
779,689 728,686 2,513,659 2,310,572
- -----------------------------------------------------------------------
OPERATING LOSS
FROM CONTINUING
OPERATIONS (216,844) (191,402) 729,157 (737,878)
OTHER INCOME
(EXPENSE)
Interest expense (22,930) (24,651) (70,590) (77,654)
Other 212 (2,752) 1,059 22,764
- ----------------------------------------------------------------------
LOSS FROM CONTINUING
OPERATIONS BEFORE
MINORITY INTEREST (239,562) (218,805) (798,688) (792,768)
MINORITY INTEREST
IN NET LOSS
OF AFFILIATES 40,050 63,712
LOSS FROM
CONTINUING
OPERATIONS (199,512) (734,976)
DISCONTINUED OPERATIONS
Income (Loss)
from operations of
Discontinuance of Image (28,570)
Gain on disposal of Image 405,875
- ----------------------------------------------------------------------
NET INCOME (Loss) $(199,512) $ (218,805) $(734,976) $(415,463)
=======================================================================
</TABLE>
[CAPTION]
<TABLE>
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS - CONTINUED
(Unaudited)
For the three months ended For the nine months ended
September 30, September 30, September 30, September 30
1997 1996 1997 1996
<S> <C> <C> <C> <C>
PER SHARE DATA:
Net Income (loss)
per share,
continuing
operations $(.03) $(.06) $ (.13) $(.21)
Net income(loss)
per share,
discontinued
operations $(.10)
Net income (loss) per
common share $(.03) $(.06) $ (.13) $(.11)
WEIGHTED-AVERAGE
NUMBER OF
SHARES OUTSTANDING 5,818,474 3,809,886 5,818,474 3,809,886
==================================================================
=======
<CAPTION>
"See accompanying notes to consolidated financial statements "
</TABLE>
<TABLE>
<CAPTION>
FIRST ENTERTAINMENT, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the nine months For the nine months
ended September 30, ended September 30,
1997 1996_
<S> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $(734,976) $ (415,463)
Adjustments to reconcile net
income (loss) to net cash
from operations
Minority interest (63,712)
Depreciation and
amortization 180,967 268,466
Common Stock issued
for services 533,620 428,784
Gain on disposal of Image (405,875)
Changes in operating
assets and liabilities
(Increase) decrease in
Receivables (32,921) 72,885
Inventories (11,130) (346)
Other current assets (9,449) (625)
Other assets (1,944)
Increase (decrease) in
Accounts payable (29,322) (9,176)
Accrued Liabilities (60,210) 16,025
Net liabilities of
discontinued operations 149,474
- -----------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES: (227,133) 102,205
- -----------------------------------------------------------------
CASH FLOWS FROM INVESTING
ACTIVITIES
Capital expenditures - net (52,743) (6,149)
Other 14,986
- -----------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (37,757) (6,149)
- -----------------------------------------------------------------
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal payments on debt (42,318) (74,776)
Proceeds from issuance of
common stock of subsidiary 98,351
Proceeds from issuance
of common and preferred stock 217,250
- -------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 273,283 (74,776)
- --------------------------------------------------------------------
NET INCREASE (DECREASE)
IN CASH 8,393 (21,280)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 62,856 71,488
- ------------------------------------------------------------------
CASH AND CASH EQUIVALENTS,
END OF PERIOD 71,248 $ 50,208
===================================================================
<CAPTION>
"See accompanying notes to consolidated financial statements."
</TABLE>
<TABLE>
SUPPLEMENTED SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
FOR THE NINE MONTHS ENDED
September 30, September 30,
1997 1996
<S> <C> <C>
Inventory seized in settlement
of notes payable 800,000
Inventory seized resulting in
accounts receivable, other 200,000
Conversion of liabilities assumed for
Investment in subsidiary to
minority interest 100,000
Liabilities assumed for investment
in subsidiary 130,544
Common stock issued for investment
in subsidiary 50,000 408,100
Common stock and options issued
for services 533,620
Mortgage notes assumed or provided
in property acquisition 150,000
Issuance of preferred stock
for acquisition 275,000
Treasury stock retirements 484,824
Accounts payable and accrued
expenses converted into common stock 257,600
</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, 1996.
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, 1997. The Company believes
that the three and 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, 1997 and 1996.
2. Stockholders Equity
Indian Licensing
Effective March 31, 1996, the Company entered into a
Purchase Agreement with certain individuals whereby the
Company would acquire 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 Company's Class C
Preferred Stock valued at $1.00 per share. In connection
with a settlement agreement entered into with the Receiver
for Indian Motorcycle Manufacturing, Inc. In February 1997,
the Company relinquished the rights acquired and the 300,000
shares of Class C Preferred stock were returned to the
Company.
The transaction described above relating to Indian Licensing
have been rescinded in the accompanying financial statements
effective from the date the transaction were entered into as
if the transactions did not occur.
Balzac, Inc.
In April 1996, the Company acquired certain assets of
Balzac, Inc. ("Balzac") a private company, which
manufactures and distributes toys, including a product line
of toy balls. The assets and rights acquired consisted of
an exclusive license for Australia, inventory of Balzac toys
and various other rights.
The exclusive license agreement for Australia was acquired
for $800,000 and was payable within five years based upon a
formula of 60% of net profits from the sale of Balzac
products in Australia. The inventory and other assets were
acquired by issuing 1,100,000 shares of the Company's
restricted common stock valued at $1.6 million.
During 1996, a dispute arose between the Company and Balzac
and 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 payable
under the Licensing Agreement.
In April 1997, Balzac and the Company entered into an
agreement whereby Balzac will buy back the Australian
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
at 8% annum.
During the quarter ending March 31, 1997, the Company issued
200,500 shares of common stock for consulting services
valued at approximately $292,000. The common stock issued
for consulting services was registered in an S-8
registration statement and were free trading upon issuance.
In addition, the Company issued 420,000 shares of common
stock for payment of accrued bonuses to certain key
employees and consultants.
During the quarter ended June 30, 1997, the Company issued
126,000 shares of common stock for consulting services
valued at approximately $110,100. The common stock was
registered in an S-8 registration statement and were free
trading upon issuance. In addition, the Company issued
20,000 shares restricted common stock for payment of
royalties valued at $13,000.
During the quarter ended September 30, 1997 the Company
issued 93,200 shares of restricted common stock for
consulting services valued at $92,400. In addition the
Company issued 23, 867 shares of class B convertible
preferred stock for $142,250 which was the net of offering
costs. The Company also issued 100,000 shares of common
stock upon exercise of a common stock option receiving
proceeds of $50,000. The Company also issued 100,000 shares
of common stock to a company owned by the wife of the
President of the Company in exchange for 100,000 shares of
stock in ASOTV, a majority owned subsidiary.
During the quarter ended September 30, 1997 77,125 shares
of treasury stock were canceled.
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, 1996 and 1995 are:
<TABLE>
Deferred tax assets: 1996
1995
<S> <C> <C>
Net operating loss carryforwards $ 4,195,000 $ 3,325,000
Property and Equipment 42,000
Stock Bonuses 95,000
Litigation Settlement 43,000
Discontinued operations 595,000
Other 25,000 24,000
Total gross deferred tax assets 4,400,000 3,944,000
Less valuation allowance (4,400,000) (3,840,000)
Deferred tax liabilities:
Property and equipment (104,000)
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 $560,000 in 1996 and
$1,158,000 in 1995.
As of December 31, 1996, net operating loss carryforwards
were approximately $11.3 million. Utilization of certain
portions of this amount is subject to limitations under the
Internal Revenue Code. Carryforward amounts expire at
various dates though 2011.
Letter of Intent
In January 1997, a non-binding letter of intent was signed
with Enternet Corporation, an international marketer of
informercial marketer of informercial products. Enternet
has successfully combined international wholesaling as well
as the franchising of its retail kiosk concept under the
name " TV to You". In addition, Enternet operates the most
prominent " As Seen on TV" internet shopping site under the
name "As On TV", offering a complete array of informercial
products. This potential acquisition fits in well with the
development of " The Best of As Seen on TV" in retail
locations in the United States, combined with Enternet
International expertise and an internet web site. The
Company would issue 300,000 shares of common stock of the
Company and 100,000 shares of ASOTV for 60% of Enternet.
Consummation of the acquisition was subject to a number of
conditions including the negotiation of definitive
agreements, completion of due diligence and approval by the
Board of Directors of both companies. The letter of intent
was terminated July 1997.
Contingent Acquisition
On May 1, 1997, the Company entered into an Agreement and
Plan of Reorganization with Global Casinos, Inc. to acquire
common stock of Global Internet Corporation held by Global
Casinos, Inc.
The Company will issue 30,000 shares of Class B Convertible
Preferred Stock and 1,500,000 warrants to acquire 1,500,000
shares of the 2,950,000 shares of common stock outstanding
of Global Internet Corporation and a Note Receivable of
$375,000 held by Global Casinos, Inc.. Each share of Class
B Convertible Preferred Stock shall have a face value of
$12.50 and may be converted into 10 shares of common stock
of the Company. Each of the 1,500,000 warrants shall be
exercisable at $1.25 per share.
Currently the Company does not have a sufficient number of
shares of common stock authorized to allow the conversion of
the Class B Convertible Preferred Stock nor the exercise of
the warrants. The Company has agreed to call a special
shareholders meeting on December 5, 1997 to ratify the
acquisition and increase the number of common shares at
least sufficient to permit the conversion of Class B
Convertible Preferred Stock and the exercise of the warrant.
Since the acquisition of Global Internet, Inc. is contingent
upon ratification by the shareholders and the increase in
the authorized shares of common stock of the Company, this
Agreement and Plan of Reorganization is accounted for as a
contingent acquisition.
ITEM 2. MANAGEMENT DISCUSSION AND PLAN OF OPERATION.
Results of Operation
September, 1997 vs. September, 1996
For the quarter ended September 30, 1997 the Company
incurred a loss from continuing operations of $240,000 as
compared to a loss from continuing operations of $219,000
for the quarter ended September 30, 1996. The increase in
the net loss for the quarter ended September 30, 1997 as
compared to September 30, 1996 is the result of an increase
in general and administrative expenses and cost of sales -
retail.
For the nine months ended September 30, 1997, the Company
incurred a loss from continuing operations of $799,000 as
compared to a loss from continuing operations of $793,000
for the nine months ended September 30, 1996. The overall
increase in revenues of approximately $212,000 was offset by
an increase in costs and expenses of approximately
$203,000.
For the quarter ended September 30, 1997 revenues increased
by approximately $26,000, from $537,000 in 1996 to $563,000
in 1997. For nine months ended September 30, 1997 revenues
increased approximately $212,000 as compared to nine months
ended September 30, 1996. Most of the increase is from an
increase in live entertainment revenue of $163,000 and radio
sales of $50,000. The increase in live entertainment
revenues was due to increased attendance as a result of big
name acts, some of whom performed on weeknights which
boosted revenues. The first three quarters of 1996 were
exceptionally strong for live entertainment as compared to
historical results for the same nine month period. The
first three quarters of 1997 have surpassed 1996 and are our
most profitable quarters to date. Radio sales were a little
weak in the first quarter of 1997 as compared to 1996, but
have rebounded strongly in the second quarter and third
quarter to where 1997 sales exceed 1996 sales by $50,000.
Retail is a new line of business, which commenced operations
in December 1996 and represents the sales of informercial
products in manned kiosks located in major retail outlets.
As a start-up business the sales volume has not yet reached
a break even point. The Company signed leases for six
spaces in retail malls in Colorado, which all opened by the
third quarter of 1997. The Company expects this new line of
business to be profitable by the end of the fourth quarter
in 1997.
Other income for the nine months ended September 30, 1997
consists of: rental income of $8,750, a state income tax
refund of $7,200, T-shirt, coupon book and cigarette sales
of $23,000 and $62,000 represents payment by a third party
to buy out the Company's office lease for office space.
Cost of sales live entertainment increased by $162,000 as a
result of an increase in revenues but the percent of cost of
sales to sales increased from 80% in 1996 to 89% in 1997.
Although overall attendance increased substantially,
entertainer costs have increased, thereby reducing the
overall gross profit.
Cost of sales - radio, increased approximately $12,000
comparing 1997 to 1996. The cost of sales radio as compared
to radio sales was 69% in 1997 and 77% in 1996. The Company
is aggressively pursuing additional advertising revenues in
1997 and increasing its promotions to obtain a larger market
share.
Depreciation and amortization decreased $87,000 comparing
1997 to 1996 primarily due to the return of Balzac licensing
rights which were amortized only through March 31, 1997.
General and administrative costs increased $20,000 in 1997
as compared to 1996. The major reason for the increase is
due to the addition of a president of the retail division,
whose salary started July 1, 1997.
Interest expense decreased slightly in 1997 over 1996 as a
result of the continued reduction of long term debt.
Liquidity and Capital Resources
As of September 30, 1997, the Company had a working capital
deficit of approximately $909,000 , a decrease of $352,000
over the working capital deficit at December 31, 1996. The
primary reason for the decrease is the issuance of common
stock in settlement of accrued bonuses of $258,000 and
proceeds from the issuance of common stock of a subsidiary
of $98,000 and proceeds from the issuance of preferred stock
of $142,250. Despite a loss of $735,000, net cash used by
operating activities was only $227,000. The Company has
been able to issue common stock for services thereby
reducing the need for working capital.
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 Company's
ability to fund certain business segments. Currently the
Company has notes payable and long term debt of
approximately $1 million, of which $819,000 is due in the
next year. Approximately $450,000 of current notes payable
represents bank debt that is renewed annually based on a
seven year amortization. Working capital is needed to
further develop the retail line of business. The likelihood
of obtaining the necessary equity financing is uncertain at
this time.
New Accounting Standards
In 1997, the Financial Accounting Standards Board issued
Statement No. 128 "Earnings Per Share" which established
standards for computing and presenting earnings per share
and applies to entities with publicly held stock or
potential common stock. In addition, the Financial
Accounting Standards Board issued Statement No. 129
""Disclosure of Information About Capital Structure""
The Company will adopt the provisions of these new standards
effective December 31, 1997 and all prior period earnings
per share data shall be restated. The effect of adoption
will not be material to the financial condition, results of
operation or cash flows.
PART II - OTHER INFORMATION
- ---------------------------------------------
Item 1: Legal Proceedings
In March 1997, The Company commenced legal proceedings
against Image Marketing Group, Inc. and Harvey Rosenberg,
Burt Katz, Burton Katz and Michael Katz, individually for
collection of approximately $700,000 in advances to Image
Marketing. The suit was filed in Denver District County
Court.
In July 1997, a settlement was reached with Image Marketing
Group, Harvey Rosenberg, Burt Katz and Michael Katz whereby
144,410 shares of the Company's common stock held by the
defendants were returned to the Company. The shares were
canceled and returned to the treasury. In addition, Burt
Katz resigned as a director of the Company.
In March 1997, the Company commenced legal proceedings
against HK Retail Concepts for breech of contract. The
claims are unspecified damages at this time. The suit was
filed in Denver District County Court.
In May, 1997 First Entertainment, Inc. was named as a co-
defendant in a lawsuit filed in Superior Court of
California, Court of San Diego relating to Indian Motorcycle
Corporation, Inc. The plaintiff alleges securities fraud
and is seeking the return of their $75,000 investment,
interest at 10% from the date of their investment through
the date of repayment and legal fees. The company believes
the suit is without merit. While the action involves
matters for which the ultimate liability, if any, has not
been determined, management does not expect the outcome to
have an adverse material effect on the financial position of
the Company.
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
Notification of change in Address of the registrant
filed August 29, 1997.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the
Company has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
First Entertainment Inc.
DATE: November 13, 1997
/S/ A.B. Goldberg
A.B. Goldberg
President
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<CASH> 71
<SECURITIES> 0
<RECEIVABLES> 266
<ALLOWANCES> 0
<INVENTORY> 62
<CURRENT-ASSETS> 428
<PP&E> 3077
<DEPRECIATION> 2461
<TOTAL-ASSETS> 3248
<CURRENT-LIABILITIES> 1337
<BONDS> 0
<COMMON> 49
0
1
<OTHER-SE> 1462
<TOTAL-LIABILITY-AND-EQUITY>3248
<SALES> 1784
<TOTAL-REVENUES> 1784
<CGS> 1463
<TOTAL-COSTS> 2514
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 71
<INCOME-PRETAX> (799)
<INCOME-TAX> 0
<INCOME-CONTINUING> (799)
<DISCONTINUED> 353
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (735)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
