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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, 1997.
[ ] 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
- -------------------------------- -----------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
7030 Park Center 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 X No
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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
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The number of shares outstanding of the issuer's common stock, $.001 par
value as of November 12, 1997 is 8,015,397 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
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Condensed Balance Sheet
September 30, 1997 1
Condensed Statements of Operations
Three Months Ended September 30, 1997
and September 30, 1996 2
Condensed Statements of Cash Flows
Three Months Ended September 30, 1997
and September 30, 1996 3
Notes to Condensed Financial Statements 4
Item 2. Management's Discussion and Analysis
or Plan of Operation 5
Part II. OTHER INFORMATION 6
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Balance Sheet
(Unaudited)
September 30
ASSETS 1997
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Current assets:
Cash and cash equivalents $ 838,434
Receivables 33,996
Inventories 75,744
Prepaid expenses 9,868
Prepaid leases-current 166,915
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Total current assets 1,124,957
Property and equipment, net 5,592,188
Prepaid leases-non current 1,340,747
Deposits 12,276
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TOTAL ASSETS $ 8,070,168
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 65,747
Accrued expenses 331,101
Current portion of long-term debt 125,658
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Total current liabilities 522,506
Accrued lease expense 239,479
Long-term debt 3,638,656
Deposits 22,000
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Total liabilities 4,422,641
Stockholders' equity
Common stock, $.001 par value. Authorized 40,000,000
shares, issued and outstanding 8,015,397 shares as of
September 30, 1997 8,015
Additional paid-in capital 10,780,999
Accumulated deficit (7,141,487)
------------
Net stockholders' equity 3,647,527
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 8,070,168
============
See accompanying notes to condensed financial statements.
1
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Operations
(Unaudited)
Three Months Ended
September 30
1997 1996
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Revenue:
Theater admissions $ 637,092 634,999
Restaurant and deli 824,350 572,554
Concession and retail sales 140,856 91,174
Retail rental income 111,478 106,705
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1,713,777 1,405,432
Costs and expenses:
Direct exhibition film costs 83,590 72,313
Direct restaurant and deli costs 252,278 165,501
Direct concession and retail costs 76,339 50,107
Other operating expenses 142,527 130,703
Selling, general and administrative expenses:
Salaries and wages 446,682 337,015
Advertising 88,271 90,640
Depreciation and amortization 100,010 81,562
Occupancy 98,954 81,826
Other 211,833 146,270
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1,500,484 1,155,937
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Operating income 213,292 249,495
Other income (expense):
Interest income 6,914 4,474
Interest expense (85,465) (190,413)
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Other income (expense), net (78,550) (185,939)
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Income before provision for income taxes $ 134,742 63,556
Provision for Income Taxes - -
Net income 134,742 63,556
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Net income per common share $ 0.03 0.01
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Weighted average common
shares outstanding 4,067,000 6,360,000
See accompanying notes to condensed financial statements.
2
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
[CAPTION]
<TABLE>
Three Months Ended
September 30
1997 1996
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<S> <C> <C>
Cash flows from operating activities:
Net income $ 134,742 63,556
Adjustments to reconcile net loss to net cash provided
by (used in) operating activities:
Depreciation and amortization 100,010 81,562
Changes in operating assets and liabilities:
Decrease (increase) in receivables and notes receivable-tenants 2,149 (4,314)
Decrease (increase) in inventories (15,805) (3,437)
Decrease (increase) in deposits and prepaid expenses (59) 22,036
Decrease (increase) in prepaid leases 41,728 41,729
Increase (decrease) in accounts payable and other accrued expenses 40,647 90,809
Increase (decrease) in other operating liabilities 0 2,000
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Net cash provided by (used in) operating activities 303,412 293,941
Cash flows from investing activities:
Capital expenditures (43,369) (10,981)
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Net cash provided by (used in) investing activities (43,369) (10,981)
Cash flows from financing activities:
Principal payments under capital lease obligations (4,739) (6,571)
Principal payments on long-term debt (27,395) 3,951
Proceeds from issuance of common stock 349,751 0
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Net cash provided by (used in) financing activities 317,617 (2,620)
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Increase (decrease) in cash and cash equivalents 577,660 280,341
Cash and cash equivalents at beginning of period 260,774 362,179
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Cash and cash equivalents at end of period $ 838,434 642,520
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Supplemental cash flow information:
Cash paid during the period for interest (net of amount capitalized) 84,657 106,652
See accompanying notes to condensed financial statements.
</TABLE>
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INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Condensed Financial Statements
September 30, 1997
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
International Tourist Entertainment Corporation (the "Company") commenced
operations in October 1993. The accompanying interim condensed financial
statements are unaudited, but in the opinion of management reflect all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the results for such periods. The results of
operations for any interim period are not necessarily indicative of
results for the respective full year. These condensed financial
statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's annual report of form
10-KSB for the year ended June 30, 1997 as filed with the Securities
and Exchange Commission.
NOTE 2. NET INCOME OR LOSS PER SHARE
For all periods presented, the Company's income or loss per share is based
on the weighted average number of common shares outstanding. Common share
equivalents resulting from options or warrants outstanding during the
periods have not been included as they are antidilutive.
4
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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. During the quarter ended
March 31, 1997, the Company acquired assets to begin the operation of
McFarlain's Back Porch, an express deli and bakery in the mall. Seventeen
other shops and kiosks are currently leased to third parties. One kiosk in
the mall is owned and operated by the Company.
RESULTS OF OPERATIONS
Revenues for the quarter ended September 30, 1997 increased 22 percent to a
record $1,713,777 as compared to $1,405,432 for the same quarter of the
previous year. The Company reported revenue increases in every segment of
its operation, with the largest increases coming from the McFarlain's
restaurant operation and from retail sales of souvenir and gift items.
Revenues also increased with the addition of the McFarlain's Back Porch
deli and bakery in the mall. Revenues for the reporting quarter were
comprised of ticket sales (37.2%), restaurant sales (48.1%), concession and
retail sales (8.2%) and retail rental income (6.5%).
Costs and expenses were $1,500,484 for the reporting quarter ended
September 30, 1997 as compared to expenses of $1,155,937 for the
comparable period of the previous year. Costs and expenses were up
primarily due to the increased business generated at the McFarlain's
Restaurant, the addition of the McFarlain's Back Porch deli and bakery
operation discussed above, and increased selling, general and
administrative expenses following the Company's reorganization.
Operating income for the reporting quarter was $213,292 as compared to
$249,495 in the same quarter of the prior year. Expenses associated with
establishing and refining the McFarlain's Back Porch deli operation was the
primary contributor to the decrease in operating income compared to the
similar quarter in the prior year.
Interest expense decreased to $85,465 for the quarter ended September 30,
1997 as compared to $190,413 in the comparable period of the prior year due
to the implementation of the Company's Plan of Reorganization which
relieved the Company of approximately $2.2 million of long-term debt.
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Net income in the reporting quarter increased 112 percent to a record
$134,742 compared to net income of $63,556 in the same quarter of the
previous year. This improvement is related primarily to the decrease in
interest expense during the reporting quarter.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, current assets totaled $1,124,957 while current
liabilities totaled $522,504. The Company's current ratio at September 30,
1997 was 2.2 to 1.
During the reporting quarter, the Company completed a private placement
offering to accredited investors of approximately 2 million Units at a
price of $.30 per Unit for an aggregate consideration of $600,000. Each
Unit consisted 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. No underwriter or selling agent was used in
connection with this offer and sale.
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.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
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There are no material legal proceedings pending to which the
Company is a party or of which any of its property is the
subject.
Item 2. Changes in Securities
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On September 10, 1997, the Company completed a private
placement to accredited investors wherein it issued 2,000,000
units, each unit consisting of one share of restricted common
stock and one warrant to purchase one share of restricted
common stock in consideration of $600,000 cash. No underwriter
or selling agent was used in connection with this sale of
securities which 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.
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Item 4. Submission of Matters to a Vote of Security Holders
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Not applicable.
Item 5. Other Information
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Not applicable.
Item 6. Exhibits and Reports on Form 8-K
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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).
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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).
B) Reports on Form 8-K :
Not applicable.
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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 11/14/97 /s/ Paul M. Bluto
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Paul M. Bluto
Chairman and
Principal Financial Officer
Date 11/14/97 /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 SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AND STATEMENTS OF INCOME 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-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 838,434
<SECURITIES> 0
<RECEIVABLES> 33,996
<ALLOWANCES> 0
<INVENTORY> 75,744
<CURRENT-ASSETS> 1,124,957
<PP&E> 6,377,692
<DEPRECIATION> 785,504
<TOTAL-ASSETS> 8,070,167
<CURRENT-LIABILITIES> 522,504
<BONDS> 3,900,135
0
0
<COMMON> 8,015
<OTHER-SE> 3,639,513
<TOTAL-LIABILITY-AND-EQUITY> 8,070,168
<SALES> 965,206
<TOTAL-REVENUES> 1,713,777
<CGS> 328,617
<TOTAL-COSTS> 1,500,484
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 85,465
<INCOME-PRETAX> 134,742
<INCOME-TAX> 0
<INCOME-CONTINUING> 134,742
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 134,742
<EPS-PRIMARY> .033
<EPS-DILUTED> .033
</TABLE>
