U.S. 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 the quarterly period ended AUGUST 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT OF
1934
FOR THE PERIOD FROM June 1, 1997 thru August 31, 1997
Commission File No. 33-37968-A
IMAGICA ENTERTAINMENT, INC.
(Exact name of Registrant as specified in its charter)
Florida 59-2762999
(State or other jurisdiction or (I.R.S. Employer
incorporation or organization) Identification
Number)
1518 SW 12th Avenue, Ocala, Florida 34474
(Address of principal executive offices)
(352) 867-7861
Issuer's telephone number
Check wether the issuer (1) filed all reports required to be filed by Section 13
or 15 (d) of the Exchange Act during the past 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 ( ) No ( X )
Number of common shares outstanding as August 31, 1997 (including the 100,000
shares of redeemable common stock) - 6,033,513
Transitional Small Business Disclosure Format:
Yes ( ) No ( X )
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION Page Number
-----------
Item 1. Financial Statements (Unaudited):
Balance Sheets 3
Statement of Operations 5
Statement of Cash Flows 6
Notes to Financial Statements 7
Item 2. Managements Discussion and Analysis 8
of Financial Condition and
Results of Operations
SIGNATURE 9
2
<PAGE>
IMAGICA
ENTERTAINMENT, INC.
BALANCE SHEETS
August 31, May 31,
ASSETS 1997 1997
- ------ (Unaudited) (Unaudited)
----------- -----------
CURRENT ASSETS:
Cash and equivalents $ 68,212.30 $ 55,849.79
Accounts receivable, less allowance for
possible losses of $ and $13,189 340,679.28 317,081.91
Inventories (less obsolete of $39,000) 178,133.86 188,210.24
Prepaid expenses 63,351.29 1,264,665.82
--------------------------------
Total Current Assets 650,376.73 1,825,807.76
--------------------------------
Property and equipment, net 305,741.93 328,658.55
Other Assets:
Land held for future development --
Equipment not yet placed in service 37,500.00 37,500.00
Deposits on equipment 206,632.00 206,632.00
Other 11,277.90 6,277.90
--------------------------------
Total Other Assets 255,409.90 250,409.90
TOTAL ASSETS $ 1,211,528.56 $ 2,404,876.21
--------------------------------
3
<PAGE>
<TABLE>
<CAPTION>
IMAGICA ENTERTAINMENT, INC.
BALANCE
SHEETS
August 31, May 31,
1997 1997
(Unaudited) (Unaudited)
----------- -----------
LIABILITIES and STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
<S> <C> <C>
Checks issued against future deposits $ -- $ --
Notes Payable 596,792.27 324,196.22
Accounts Payable - Trade 375,251.16 365,465.96
Redeemable Common Stock -- --
Accrued Liabilities 376,685.46 295,968.54
Current Portion of Stockholder Note Payable -- --
Current Maturities of Long-Term Debt 266,420.33 293,820.33
Current Portion of Obligations Under
Capital Leases 23,003.83 24,859.25
--------------------------------
Total Current Liabilities 1,638,153.05 1,304,310.30
Stockholder Note Payable, less current portion 304,654.96 304,654.96
Long-Term Debt, Less Current Maturities 31,648.84 31,648.84
Obligations Under Capital Leases, Less
Current Maturities 13,485.29 14,910.91
--------------------------------
Total Liabilities 1,987,942.14 1,655,525.01
Redeemable Common Stock 100,000.00 100,000.00
Stockholder's Equity
Common Stock, $.001 Par Value, 3,021.67 7,021.67
shares authorized 50,000,000;
issued 8,441,944
Additional Paid-in-Capital 4,581,230.51 4,504,730.51
Accumulated Deficit (5,364,386.00) (3,766,121.20)
--------------------------------
(780,133.82) 745,630.98
Less: Treasury Stock, at cost, 680,000 shares (96,279.77) (96,279.77)
Notes Receivable arising from the
Exercise of Stock Options
Total Stockholders' Equity (876,413.59) 649,351.21
--------------------------------
TOTAL LIABILITIES
and STOCKHOLDERS' EQUITY $ 1,211,528.55 $ 2,404,876.22
4
</TABLE>
<PAGE>
IMAGICA ENTERTAINMENT, INC.
STATEMENT OF OPERATIONS
Three Months ended August 31,
-----------------------------
1997 1996
---- ----
(Unaudited) (Unaudited)
SALES $ 736,851 $ 889,594
COST OF SALES $ 479,934 640,284
GROSS PROFIT $ 256,917 249,310
OPERATING EXPENSES $ 249,509 242,159
INCOME (LOSS) FROM OPERATIONS $ 7,408 7,151
OTHER INCOME (EXPENSES):
INTEREST $ (617) (20,618)
NET INCOME (LOSS) $ 6,791 (13,467)
Earnings (loss) per Share $ 0.01 (0.01)
Weighted average common shares
outstanding 6,033,513 2,403,013
5
<PAGE>
IMAGICA ENTERTAINMENT, INC.
STATEMENTS OF CASH FLOW
Three Months ended August 31,
-----------------------------
1997 1996
---- ----
(Unaudited) (Unaudited)
Cash Flows from operating activities:
Net Income (loss) $ 6,792 (13,467)
Adjustments to reconcile net income (loss)
to net cash provided by operating
activities:
Depreciations and Amortization $ 22,917 34,021
Cash provided by (used for):
Accounts Receivable $(23,597) (17,641)
Inventories $ 10,076 5,790
Prepaid Expenses $(60,878) (1,073)
Checks issued against future deposits $ -- (24,964)
Accounts Payable - Trade $ 9,785 76,574
Customer Deposits $ 47,990 --
Accrued Liabilities $ 32,727 24,170
Net Cash Provided by Operating Activities $ 45,812 83,410
Cash Flows from investing activities:
Purchase of Property and Equipment $ -- --
Decrease in other Assets $ (5,000) 138
Net Cash Provided by (used for)
investing activities: $ (5,000) 138
Cash Flows from financing activities:
Decrease in Note Payable $ -- --
Proceeds from issuance of Convertible $ -- --
Note Payable
Net Decrease in Stockholder Note Payable $ -- 41,100
Principal Payments of Long-Term Debt and $ 27,400 (66,198)
Capital Lease Obligations
Debt Issuance Costs $ --
Net Cash used for financing activities $ 27,400 (25,098)
Net Increase (decrease) in cash and $ 68,212 58,450
cash equivalents
Cash and Cash Equivalents, beginning $ -- --
of Period
Cash and Cash Equivalents, end of Period $ 68,212 58,450
6
<PAGE>
IMAGICA ENTERTAINMENT, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited financial statements presented herein have been prepared in
accordance with the instructions to Form 10-QSB, and do not include all of the
information and disclosures required by generally accepted accounting
principles. These statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Form 10-KSB for the year
ended May 31, 1996 ( year ended May 31, 1997 Form 10-KSB no completed to date).
The accompanying financial statements have not been examined by an independent
accountant in accordance with generally accepted auditing standards, but in the
opinion of management, such financial statements include all adjustments,
consisting only of normal recurring adjustments and accruals, to fairly report
the Company's financial position and results of operations. The results or
operations for the interim periods shown in this report are not necessarily
indicative of results to be expected for the fiscal year.
The results for fiscal 1997 have been restated from previous 10-QSB reports to
reflect the elimination of transactions subsequently determined to be improper
and for the removal of Imagica, Inc. (a Subsidiary) from the results of Imagica
Entertainment, Inc. This was done due to determination that the minutes
authorizing the transaction only authorized the acquisition of stock not a
pooling of interests.
7
<PAGE>
IMAGICA ENTERTAINMENT, INC.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Sales for the three months ended August 31, 1997 were $736,851 reflecting a
decline of $152,473 or 17% from the comparable period in fiscal 1997. the
Company believes this was due to working capital constraints and a reduction in
worker moral and efficiency due to the Companies having filed for protection
under Chapter 11 of the Federal Bankruptcy Code.
Gross profit for the three months ended August 31, 1997 increased by 3% to
$256,917 from $249,310 for the comparable period in fiscal 1997. This was due to
the Company being able to close unprofitable production facilities and eliminate
certain contractual obligations due to the Chapter Eleven filing.
Selling and general administrative expenses (reflected as operating expenses in
the accompanying statements of operations). These expenses were largely
unchanged from the same period in fiscal 1997.
Interest Expense decreased from $20,618 in fiscal 1997 to $617 in the comparable
quarter ended August 1997 due to the Chapter 11 filing.
Gross profit in the quarter ended August 1997 was $6,792 compared to a loss of
(13,467) in the fiscal 1997 period. This was due to a reduction in the interest
expense.
Liquidity and Capital Resources
The Company has experienced serious cash flow difficulties over several years.
In April 1997 a group of dissident stockholders called a special meeting of the
shareholders with the intent of taking control and thru management and capital
input returning the Company to profitability. The existing management blocked
that move by placing the Company in Chapter 11 bankruptcy. Petition was made by
the dissident stockholders to the bankruptcy court to dismiss the dismiss the
bankruptcy filing as unauthorized and turn over control to the dissident group
which had received the majority vote at the special stockholders meeting.
Instead the bankruptcy court remanded the matter to the Marion Count, State of
Florida for determination. Until such time as this matter is resolved and until
significant sources of outside capital have been obtained the future of survival
of the Company is in extreme doubt.
8
<PAGE>
SIGNATURE
---------
In accordance with the requirements of the Exchange Act, the registrant
caused this to be signed on its behalf by the undersigned, thereunto duly
authorized.
IMAGICA ENTERTAINMENT, INC.
(registrant)
Date: March 25, 1998 By: /s/ Braxton P. Jones
--------------------------------
Braxton P. Jones, President
9
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
------------------------------------
EXHIBITS TO
10-QSB REPORT
FOR
QUARTER ENDED
AUGUST 31, 1997
------------------------------------
IMAGICA ENTERTAINMENT, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAY-31-1997
<PERIOD-START> JUN-01-1996
<PERIOD-END> AUG-31-1996
<CASH> 68,212
<SECURITIES> 0
<RECEIVABLES> 353,868
<ALLOWANCES> 13,189
<INVENTORY> 178,134
<CURRENT-ASSETS> 650,376
<PP&E> 2,215,418
<DEPRECIATION> 1,909,675
<TOTAL-ASSETS> 1,211,529
<CURRENT-LIABILITIES> 1,638,153
<BONDS> 349,789
0
0
<COMMON> 3,022
<OTHER-SE> (779,435)
<TOTAL-LIABILITY-AND-EQUITY> 1,211,529
<SALES> 736,851
<TOTAL-REVENUES> 736,851
<CGS> 479,934
<TOTAL-COSTS> 249,508
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 617
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 6,792
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,792
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
