<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period ended
September 30, 1996.
[ ] Transition Report Under Section 13 or 15(d) of the
Exchange Act for the transition period from _________ to
_________
Commission File Number: 0-21070
International Tourist Entertainment Corporation
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(Exact name of small business issuer as specified in its charter)
U.S. Virgin Islands 66-0426648
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7030 Park Centre Drive, Salt Lake City, Utah 84121
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(Address of principal executive offices) (ZIP Code)
(801) 566-9000
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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.
1. Yes No X
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2. Yes X No
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Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13, or 15 (d) of the
Securities Exchange Act of 1934 after the distribution of
securities under a plan confirmed by a court. Yes X No
The number of shares outstanding of the issuer's common
stock, no par value as of June 17, 1997 is 6,735,397 shares.
Transitional Small Business Disclosure Format (check one):
Yes No X
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements Page Number
-----------
Condensed Balance Sheet
September 30, 1996 1
Condensed Statements of Operations
Three Months Ended September 30, 1996
and September 30, 1995 2
Condensed Statements of Cash Flows
Three Months Ended September 30, 1996
and September 30, 1995 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 6
Part II. OTHER INFORMATION 8
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Balance Sheets
(Unaudited)
[CAPTION]
<TABLE>
September 30
ASSETS 1996
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<S> <C>
Current assets:
Cash and cash equivalents $ 642,520
Receivables 24,160
Deposits 12,126
Inventories 54,896
Prepaid expenses 14,174
Prepaid leases-current 166,915
Current portion of notes receivable - tenants 5,024
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Total current assets 919,815
Prepaid leases-non current 1,507,661
Notes receivable-tenants 4,883
Film Development costs, net of amortization of $22,500 877,500
Property and equipment, at cost 5,315,977
Less accumulated depreciation 395,511
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Net property and equipment 4,920,466
TOTAL ASSETS $ 8,230,325
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,180,012
Accrued expenses 741,594
Current installments of capital lease obligations 29,746
Notes payable and current installments of long-term debt 674,636
Notes payable to related parties 608,825
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Total current liabilities 3,234,813
Long-term debt, excluding current installments:
Capital lease obligations (1,092)
Credit facility, notes, and mortgages payable 3,929,206
10% Convertible debenture, due June 1, 2008 2,055,000
Accrued rent land lease-non current 183,130
Security deposits 28,800
Stockholders' equity
Preferred stock, $.001 par value. Authorized 5,000,000
shares, issued and outstanding 212,613 shares as of
September 30, 1996 213
Common stock, $.001 par value. Authorized 40,000,000
shares, issued and outstanding 6,359,985 shares as of
September 30, 1996 6,360
Additional paid-in capital 9,598,966
Accumulated deficit (10,805,071)
---------------
Net stockholders' equity (1,199,532)
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,230,325
===============
</TABLE>
See accompanying notes to condensed financial statements.
1
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Operations
(Unaudited)
[CAPTION]
<TABLE>
Three Months Ended
September 30
1996 1995
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<S> <C> <C>
Revenue:
Theater admissions $ 634,999 694,652
Restaurant 572,554 321,789
Concession and retail sales 91,174 150,789
Retail rental income 106,705 84,433
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1,405,432 1,251,663
Costs and expenses:
Direct exhibition expenses 72,313 102,002
Direct restaurant 165,501 93,402
Direct concession and retail 50,107 70,474
Other operating expenses 130,703 127,405
Selling, general and administrative expenses:
Salaries and wages 337,015 307,787
Advertising 90,640 100,170
Depreciation and amortization 81,562 181,278
Occupancy 81,826 87,474
Other 146,270 174,301
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1,155,937 1,244,293
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Operating income (loss) 249,495 7,370
Other income (expense):
Interest income 4,474 2,426
Interest expense (190,413) (192,888)
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Other income (expense), net (185,939) (190,462)
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Net gain (loss) $ 63,556 (183,092)
Less accrued series B preferred stock dividends (24,548) (54,923)
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Gain (loss) applicable to common stock 39,008 (238,015)
============ ===========
Net gain (loss) per common share $ 0.01 (0.04)
============ ===========
Weighted average common
shares outstanding 6,359,995 6,359,995
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
[CAPTION]
<TABLE>
Three Months Ended
September 30
1996 1995
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<S> <C> <C>
Cash flows from operating activities:
Net loss $ 39,007 (183,667)
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 81,562 181,278
Changes in operating assets and liabilities:
Decrease (increase) in receivables and notes receivable-tenants (4,314) (2,660)
Decrease (increase) in inventories (3,437) (15,853)
Decrease (increase) in deposits and prepaid expenses 22,036 17,361
Decrease (increase) in prepaid leases 41,729 41,729
Increase (decrease) in accounts payable and other accrued expenses 115,358 85,392
Increase (decrease) in other operating liabilities 2,000 1,500
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Net cash provided by (used in) operating activities 293,941 125,080
Cash flows from investing activities:
Capital expenditures (10,981) (58,129)
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Net cash provided by (used in) investing activities (10,981) (58,129)
Cash flows from financing activities:
Principal payments under capital lease obligations (6,571) (5,763)
Principal payments on long-term debt 3,951 (72,105)
Payment of deferred stock offering costs 0 (5,726)
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Net cash provided by (used in) financing activities (2,620) (83,594)
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Increase (decrease) in cash and cash equivalents 280,341 (16,643)
Cash and cash equivalents at beginning of period 362,179 163,587
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Cash and cash equivalents at end of period $ 642,520 146,944
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Supplemental cash flow information:
Cash paid during the period for interest (net of amount capitalized) 106,652 0
Supplemental disclosure of non-cash investing and financing activities:
Short-term notes payable and long-term debt incurred for fixed assets 0 20,804
Accrual of dividends on Series B preferred stock 24,548 54,923
</TABLE>
See accompanying notes to condensed financial statements.
3
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION.
ITEC Attractions (the trade name of the Company) began
operations with the opening of its giant screen theater and
mall facility in Branson, Missouri in October, 1993. This
facility is known as the OZARKS DISCOVERY IMAX THEATER AND
MALL. It contains a 532 seat IMAX theater with a screen that
is 62 feet tall and 83 feet wide. In addition, the facility
includes an enclosed shopping mall with approximately 22,000
square feet of leased retail space. MCFARLAIN'S, a family
restaurant in the mall has been owned and operated by the
Company since May 1, 1995. Seventeen other shops and kiosks
are currently leased to third parties. One kiosk in the mall
is owned and operated by the Company.
During the quarter ended March 31, 1997 the Company received
confirmation of its Plan of Reorganization from the U.S.
Bankruptcy Court. The Plan requires a reorganization of the
Company including a capital infusion of $1.2 million, of which
$600,000 was paid in February, 1997 and $600,000 was paid prior to
September 10, 1997. Investors of the new capital will retain
approximately 80 percent of the Company's common stock.
Pre-petition shareholders, debentureholders/creditors, and
management will retain approximately 10 percent, 5 percent
and 5 percent of the Company's common stock respectively.
RESULTS OF OPERATIONS
Revenues for the quarter ended September 30, 1996 increased 12
percent to $1,405,432 as compared with $1,251,088 for the same
quarter of the previous year. This increase is primarily
related to increased revenues at the Company's McFarlain's
restaurant in the mall. Revenues for the reporting quarter
were comprised of ticket sales (45.2%), restaurant sales
(40.7%), concession and retail sales (6.5%) and retail rental
income (7.6%).
Costs and expenses were $1,155,938 for the reporting quarter
as compared to expenses of $1,244,293 in the previous year.
Depreciation expense decreased $99,716 during the reporting
quarter as a result of the Company's $5.1 million write down
of assets in the fourth quarter of fiscal 1996.
Operating income for the reporting quarter was $249,494 as
compared to $6,795 in the same quarter of the prior year. This
improvement is primarily due to increased revenues during the
quarter together with decreased depreciation and amortization
expenses.
Interest expense totaled $190,413 for the quarter ended
September 30, 1996 as compared to $192,888 for the similar
period of the prior year.
<PAGE>
Net income for the reporting quarter was $39,008 compared to a
net loss of $238,590 in the same quarter of the previous year.
This improvement is primarily related to the increase in
revenues together with the decrease in depreciation/amortization expense.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1996, current assets totaled $919,814
while current liabilities totaled $3,234,812. The Company's
current ratio at September 30, 1996 was .28 to 1. However,
these amounts do not reflect the implementation of the
Company's Plan of Reorganization. The Company's Plan of
Reorganization, which was confirmed on February 6, 1997 by the
U.S. Bankruptcy Court will relieve the Company of
approximately $2.2 million of long-term debt and approximately
$3.2 of current liabilities related to unsecured creditors in
the fourth quarter of the current fiscal year. The Company
will pay approximately $600,000 to satisfy these liabilities.
Going forward, the Company expects to be able to finance its
operations and immediate capital requirements from its
operations and capital invested pursuant to the Plan of
Reorganization.
BUSINESS PLAN
The Company is in the process of seeking trading status for
its common stock on the NASDAQ Bulletin Board. Management
anticipates receiving approval for trading during the summer
of 1997.
The Company is currently offering solely to accredited
investors up to approximately 2.1 million Units at a price of
$.30 per Unit for an aggregate consideration of $650,000.
Each Unit consists of one restricted share of common stock of
the Company and one warrant to purchase one restricted share
of common stock of the Company at a price of $1.00 per share.
These securities are not registered under the Securities Act
of 1933 and may not be offered or resold absent registration
or pursuant to an applicable exemption from registration under
the Securities Act of 1993. No underwriter or selling agent
is being used in connection with this offer and sale. As of
June 17, 1997, the Company had received orders for
approximately one-half of the private placement.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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Except for the bankruptcy filing described above,
there are no material legal proceedings pending to
which the Company is a party or of which any of its
property is the subject.
<PAGE>
Item 2. Changes in Securities
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Pursuant to the Company's Plan of Reorganization
confirmed on February 6, 1997 by the U.S. Bankruptcy
Court, shareholders of preferred stock receive .8
shares of common stock of the Company for each share
of preferred stock held by them pre-petition, rounded
to the nearest whole share and shareholders of common
stock receive 1 share of the common stock of the Company
for each 10 shares of common stock held by them pre-petition,
rounded to the nearest whole share.
The Company's loan agreement with Boatmen's Bank of
Southern Missouri restricts the payment of dividends
to an amount not exceeding the Company's net profits
plus depreciation plus interest expense, less 1.25
times the Company's annual principal and interest
payments unless otherwise agreed to by Boatmen's
Bank of Southern Missouri.
In February 1997, the Company issued approximately
4,433,490 restricted shares of its common stock to
Mr. Paul M. Bluto in consideration of $600,000 cash.
No underwriter or selling agent was used in
connection with this sale. The sale of these shares
was made pursuant to available exemptions under
Section 4(2), Section 4(6), and the regulations
promulgated pursuant thereto, of the Securities Act
of 1933, as amended.
Item 3. Defaults Upon Senior Securities
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Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
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No matters were submitted to a vote of security
holders during the quarter ended September 30, 1996.
During the quarter ended March 31, 1997,
shareholders, debentureholders, and creditors voted
in favor of the Company's Second Amended Plan of
Reorganization Dated December 18, 1996.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A) Exhibits:
4.1 Specimen Certificate for the common stock of the
Registrant (incorporated by reference to the
Registrant's Registration Statement on Form S-1,
Registration No. 33-48630).
10.3 Ground Lease Agreement dated July 27, 1993
between Treasure Lake R.V. Resort Camping Club, Inc.
and International Tourist Entertainment Corporation
(incorporated by reference to Registration Statement
on Form S-1, Registration No. 33-64132).
10.4 Loan Agreement dated July 30, 1993 for loan
from Boatmen's Bank, Branson, Missouri to
International Tourist Entertainment Corporation
(incorporated by reference to Registration Statement
on Form S-1, Registration No. 33-64132).
10.5 Deed of Trust dated July 30, 1993 for benefit
of Boatmen's Bank, Branson, Missouri (incorporated
by reference to Registration Statement on Form S-1,
Registration No. 33-64132).
10.10 Distribution Agreement dated July 14, 1995
between Imax Corporation and the Company
(incorporated by reference to Form 10-KSB for the
year ended June 30, 1996).
10.11 Second Amended Plan of Reorganization dated
December 18, 1996 and Second Amended Disclosure
Statement in Support of Proposed Second Amended Plan
of Reorganization dated December 18, 1996
(incorporated by reference to Form 8-K filed on
February 26, 1997).
10.12 Third Modification Agreement dated March 1,
1997 between Boatmen's Bank of Southern Missouri and
the Company (incorporated by reference to Form 10-KSB
for the year ended June 30, 1996).
10.13 System Lease Agreement as amended dated August
1, 1993 between IMAX Corporation and the Company
(incorporated by reference to Form 10-KSB for the
year ended June 30, 1996).
<PAGE>
B) Reports on Form 8-K :
On February 19, 1997, the Company filed a report on
Form 8-K reporting a change in its certifying
accountant. The Company engaged Tanner + Co., Salt
Lake City, Utah, to replace KPMG Peat Marwick LLP as
the principal accountant to audit the Company's
financial statements. There have been no
disagreements between the Company and the former
accountant on any matter of accounting principles or
practices, financial statement disclosure, or
auditing scope or procedure in connection with the
audits of the two years ended June 30, 1995 or any
subsequent period preceding the change described
herein.
On February 26, 1997, the Company filed a report on
Form 8-K reporting a change in control of the Company
resulting from the confirmation of the Plan of Reorganization
on February 6, 1997 and the Company's Bankruptcy proceeding.
<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.
Date 9/11/97 /s/ Paul M. Bluto
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Paul M. Bluto
Chairman and
Principal Financial Officer
Date 9/11/97 /s/ Kelvyn H. Cullimore
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Kelvyn H. Cullimore
President
Chief Executive Officer
Duly Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS DOCUMENT CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENT OF INCOME 9-30-96 AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 642,520
<SECURITIES> 0
<RECEIVABLES> 24,160
<ALLOWANCES> 0
<INVENTORY> 54,896
<CURRENT-ASSETS> 919,815
<PP&E> 5,315,977
<DEPRECIATION> 395,511
<TOTAL-ASSETS> 8,230,325
<CURRENT-LIABILITIES> 3,234,813
<BONDS> 6,195,044
0
213
<COMMON> 6,360
<OTHER-SE> (1,206,105)
<TOTAL-LIABILITY-AND-EQUITY> 8,230,325
<SALES> 663,728
<TOTAL-REVENUES> 1,405,432
<CGS> 215,608
<TOTAL-COSTS> 1,155,937
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 190,413
<INCOME-PRETAX> 93,556
<INCOME-TAX> 0
<INCOME-CONTINUING> 39,008
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 39,008
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
