<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 6, 1997
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
(Exact name of registrant as specified in its charter)
U.S. Virgin Islands 0-21070 66-0426648
- - - ---------------------------- ------- ----------
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7030 Park Centre Drive
Salt Lake City, Utah 84121
(Address of principal executive offices)
Registrant's telephone number, including area code: (801) 566-9000
<PAGE>
Item 1. Changes in Control of Registrant
The Registrant's Plan of Reorganization was confirmed by
the United States Bankruptcy Court on February 6, 1997. See
disclosure to Item 3 below. Pursuant to the Plan of
Reorganization, Mr. Paul M. Bluto will pay $600,000 to the
Registrant for which he will receive approximately 55% of the
stock ownership interest of the Registrant. Mr. Bluto's
payment will be from his personal funds. The Plan of
Reorganization also provides that Mr. Bluto underwrite a
private placement by the Registrant for an additional $600,000
for which investors will receive approximately 25% of the
stock ownership interest of the Registrant. Mr. Bluto may
acquire additional ownership interest in the Registrant
pursuant to the private placement. With his stock ownership
interest, Mr. Bluto will effectively control the Registrant.
Item 2. Not Applicable
Item 3. Bankruptcy or Receivership
On February 6, 1997, an Order Confirming Plan of
Reorganization was entered by the United States Bankruptcy
Court, Western District of Missouri, Southern Division, in the
matter of In Re: International Tourist Entertainment
Corporation, Debtor and Debtor-in-Possession, Case No. 96-
60122-S-11 (Chapter 11).
A copy of the Debtor's Second Amended Plan of
Reorganization Dated December 18, 1996 is filed as an exhibit
hereto. The Plan of Reorganization provides for the
reorganization of the Registrant. The terms of the
reorganization provide for (i) the payment in full of
priority, administrative and tax claims, (ii) the modification
of the Boatmen's Bank claim, (iii) settlement of the Bank of
Nova Scotia secured claim by delivery of the St. Thomas, U.S.
Virgin Islands property of the Registrant to the bank, (iv)
the performance of the Great Southern mortgage obligation on a
condominium owned by the Registrant in accordance with its
terms, (v) debentureholders may elect to receive cash in the
amount of 12 1/2% of their claims and one-half share of the
common stock of the Registrant for each $10.00 of their claim;
or cash in the amount of 10% of their claims and one and one-
half shares of the common stock of the Registrant for each
$10.00 of their claim, (vi) creditors with Allowed Unsecured
Claims may elect to receive cash in the amount of 12 1/2% of
their Allowed Unsecured Claims; or cash in the amount of 10%
of their Allowed Unsecured Claims and one share of the common
stock of the Registrant for each $10.00 in debt, (vii)
preferred stockholders will receive .8 shares of the common
stock of the Registrant for each share of preferred stock held
by them, rounded to the nearest whole share, and (viii) common
stockholders will receive 1 share of the common stock of the
Registrant for each 10 shares of common stock held by them
pre-petition, rounded to the nearest whole share.
<PAGE>
The Plan of Reorganization is to be capitalized with a
$1.2 million investment of additional cash. The first
installment of $600,000 will be invested by Mr. Paul M. Bluto
for which he will receive approximately 55% of the stock
ownership of the Registrant. The second installment of
$600,000 will be through a private placement underwritten by
Mr. Paul M. Bluto, the investors in which will receive
approximately 25% of the stock ownership of the Registrant.
Prior to the filing of its petition in bankruptcy, the
Registrant had 6,359,985 shares of its common stock, $.001 par
value, issued and outstanding, and 212,613 shares of its
preferred stock issued and outstanding. Pursuant to the Plan
of Reorganization and following the implementation thereof,
the Registrant will have approximately 8,060,890 shares of its
common stock issued and outstanding, with no other classes of
stock issued and outstanding. The following table illustrates
the ownership of the Registrant's common stock if the maximum
number of shares of its common stock is issued pursuant to the
Plan of Reorganization.
Paul M. Bluto 4,433,490 55%
Private Placement investors 2,015,222 25%
Management 403,045 5%
Debentureholders and Creditors 403,045 5%
Common and Preferred Stockholders 806,089 10%
--------- -----
8,060,890 100%
A copy of the Debtor's Second Amended Disclosure
Statement in Support of Proposed Debtor's Second Amended Plan
of Reorganization Dated December 18, 1996 is filed as an
exhibit hereto.
Items 4 - 6.
Item 7. Financial Statements and Exhibits
(a) & (b) - Not Applicable
(c) Exhibits.
2.1 Debtor's Second Amended Plan of Reorganization
Dated December 18, 1996
2.2 Debtor's Second Amended Disclosure Statement
in Support of Proposed Debtor's Second Amended
Plan of Reorganization Dated December 18, 1996
Item 8. Not Applicable
<PAGE>
SIGNATURE
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 hereunto duly
authorized.
INTERNATIONAL TOURIST
ENTERTAINMENT CORPORATION
Date: 2/25/97 /S/ Kelvyn H. Cullimore
------------ ------------------------------
Kelvyn H. Cullimore, President
<PAGE>
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
In re )
)
INTERNATIONAL TOURIST ENTERTAINMENT ) Case No. 96-60122-S-11
CORPORATION a/k/a ITEC ATTRACTIONS )
d/b/a IMAX THEATER, )
Debtor. ) Chapter 11
DEBTOR'S SECOND AMENDED PLAN OF REORGANIZATION
DATED DECEMBER 18, 1996
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION ("Debtor"
or "DIP"), the Debtor and Debtor-in-possession in the above-captioned
bankruptcy case, hereby submits to the Court and creditors of the Debtor's
estate, the following Second Amended Plan of Reorganization (the "Plan"),
pursuant to Section 1121(a) of the Bankruptcy Code, 11 U.S.C. 101 et seq.
RESPECTFULLY SUBMITTED this 18th day of December, 1996.
/s/ Thomas Carlson
------------------------------
Thomas Carlson, MO Bar 28843
Attorney for Debtor
PO Box 50280
Springfield MO 65805
Telephone: 417/864-7772
Telecopier: 417/864-7894
<PAGE>
TABLE OF CONTENTS
1. INTRODUCTION TO THE DEBTOR AND PLAN 4
1.1 The Debtor and Overview of Proposed Plan 4
1.2 Review Debtor's Disclosure Statement 4
2. DEFINITIONS 4
3. CLASSIFICATION OF CLAIMS AND INTERESTS 8
3.1 Class 1: Super-Priority Claim of Dynatronics 9
3.2 Class 2: Administrative Claims 9
3.3 Class 3: Real Property Tax Claims Relating to the Branson Property 9
3.4 Class 4: Pre-Petition Tax Claims 9
3.5 Class 5: Boatmens Banks Secured Claim 9
3.6 Class 6: Nova Scotia Banks Secured Claim 9
3.7 Class 7: Great Southern Savings Bank Secured Claim 9
3.8 Class 8: General Unsecured Claims Taking Cash and Stock 9
3.9 Class 9: Unsecured Claims Electing to Take Only Cash 9
3.10 Class 10: Debenture Holders Receiving Both Cash and Stock 9
3.11 Class 11: Debenture Holders Electing to Take Mostly Cash 10
3.12 Class 12: Holders of Common Stock 10
3.13 Class 13: Holders of Preferred Stock of the Debtor 10
4. IMPAIRMENT OF CLASSES 10
5. TREATMENT OF CLASSES OF CLAIMS AND
INTERESTS IMPAIRED UNDER THE PLAN 10
5.1 Treatment of Class 1 10
5.2 Treatment of Class 2 10
5.3 Treatment of Class 3 10
5.4 Treatment of Class 4 10
5.5 Treatment of Class 5 10
5.6 Treatment of Class 6 10
5.7 Treatment of Class 7 11
5.8 Treatment of Class 8 11
5.9 Treatment of Class 9 11
5.10 Treatment of Class 10 11
5.11 Treatment of Class 11 11
5.12 Treatment of Class 12 11
5.13 Treatment of Class 13 11
6. MEANS FOR EXECUTION OF THE PLAN 12
6.1 Plan Sponsor 12
6.2 Injection of Funds 12
6.3 Contingencies 12
6.4 Source and use of funds 12
6.5 Capitalization after second offering is completed 13
6.6 Acceleration 13
6.7 Disposition of Unclaimed Funds 13
7. RETENTION AND ENFORCEMENT OF CLAIMS 14
8. EXECUTORY CONTRACTS AND UNEXPIRED LEASES 14
9. OBJECTIONS TO AND ESTIMATIONS OF CLAIMS 14
9.1 Objections and Bar Date for Filing Objections 14
9.2 Settlement of Claims 14
9.3 Estimation of Claims 14
10. ACCEPTANCE OR REJECTION OF THIS PLAN;
EFFECT OF REJECTION BY ONE OR MORE
IMPAIRED CLASSES OF CLAIMS OR INTERESTS 15
10.1 Each Impaired Class or Interests Entitled to Vote Separately 15
10.2 Acceptance By a Class of Claims or Interests 15
<PAGE>
10.3 Confirmation Notwithstanding Rejection By a Class and Request
to Apply Section 1129(b) 15
11. NONALLOWANCE OF PENALTIES, DEFAULTS, AND FINES 15
12. REVESTING 16
13. RETENTION OF JURISDICTION 16
14. GENERAL PROVISIONS 16
<PAGE>
1.
INTRODUCTION TO THE DEBTOR AND PLAN
-----------------------------------
1.1 The Debtor and Overview of Proposed Plan
----------------------------------------
On January 25, 1996, the Debtor filed its voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code. The Debtor is
primarily engaged in the business of operating a retail shopping center and
IMAX theater in Branson, Missouri and producing theme films for presentation
in IMAX theaters. The Debtor is currently operating as a
debtor-in-possession pursuant to 11 U.S.C. Sections 1107 and 1108.
In December of 1996, the Debtor with the approval of the Official Unsecured
Creditors' Committee entered into an agreement with Paul Bluto, one of the
debtor's Board members, to fund this plan. Consummation of this agreement is
contingent upon confirmation of the plan.
The plan offers creditors either a cash payout or a combination of cash and
stock in the debtor and it offers the existing shareholders of the company a
continuing but greatly reduced ownership in the company.
1.2 Review Debtor's Disclosure Statement
------------------------------------
ALL CREDITORS AND EQUITY INTEREST HOLDERS SOLICITED TO VOTE
ARE ENCOURAGED TO CONSULT THE DISCLOSURE STATEMENT BEFORE
VOTING TO ACCEPT OR REJECT THE PLAN. AMONG OTHER INFORMATION,
THE DISCLOSURE STATEMENT CONTAINS A COMPLETE DESCRIPTION OF
THE DEBTOR, THE HISTORICAL BACKGROUND OF THE DEBTOR'S
OPERATIONS, THE CHAPTER 11 CASE, AND THE PRE-PETITION OPERATIONS,
THE PROJECTIONS GERMANE TO THE PLAN AND THE POST-CONFIRMATION
OPERATIONS OF THE DEBTOR AND THE REORGANIZED DEBTOR, AND A
SUMMARY AND ANALYSIS OF THE PLAN. NO SOLICITATION MATERIALS,
OTHER THAN THE DISCLOSURE STATEMENT AND THE RELATED
MATERIALS TRANSMITTED THEREWITH, HAVE BEEN APPROVED BY THE
BANKRUPTCY COURT OR BY THE BANKRUPTCY CODE FOR USE IN
SOLICITING ACCEPTANCES OR REJECTIONS OF THE PLAN.
2.
DEFINITIONS and IDENTITIES OF PARTIES
-------------------------------------
For the purposes of the Plan, the following terms will have the meanings
set forth below:
2.1 Administrative Claim: means any claim for payment of any cost or
expense for administration of the Debtor's estate in the above-captioned
case entitled to priority in accordance with 503(b) and 507(a)(1) of the
Bankruptcy Code, including, without limitation, (a) any action and
necessary expenses of preserving the Debtor's estate and
operating the Debtor's business from and after the Petition Date,
including Claims of employees, trade vendors, taxing authorities and
parties with assumed executory contracts, incurred during these
proceedings (other than such Claims or portions thereof that, by their
<PAGE>
express terms, are not due or payable by the Effective Date), (b) all
allowances of compensation and reimbursement for professionals approved
by the Court in accordance with the Bankruptcy Code, (c) any fees or
charges assessed against Debtor's estate under 28 U.S.C. 1930, and
(d) any and all fees required to be paid by the Debtor to the U.S.
Trustee.
2.2 Allowance Date: means the date an Order of the Court allowing
a Claim in this Case has become final and nonappealable and no appeal
therefrom is pending.
2.3 Allowed Amount: means the amount of any Allowed Claim.
2.4 Allowed Claim: means a Claim against the Debtor (a) with respect
to which a proof of claim has been filed with the Court within the period
of limitations, fixed by Bankruptcy Rule 3001 or by Order of the Court,
or (b) which is scheduled in the list of creditors prepared by the
Debtor and filed with the Court pursuant to Bankruptcy Rule
1007(b) and which is not listed as disputed, contingent or unliquidated
as to amount. In either case, the Claim is allowed only if no objection
to the allowance of the Claim, either as identified in a Proof of Claim
or as scheduled by the Debtor, has been raised within any
applicable period of limitation fixed by Bankruptcy Rule 3001 or Order
of the Court or, when any such objection has been filed, the objection
to the allowance of the Claim has been overruled by a Final Order or
the Claim has been otherwise allowed by Final Order.
2.5 Allowed Interest: means an Interest in the Debtor to the extent
that it is listed as such in the records of the Debtor at the time of
Confirmation.
2.6 Allowed Secured Claim: means an Allowed Claim to the extent of
the value of the Collateral securing the Claim. If the Allowed Claim
exceeds the value of the Collateral,
that excess is an Unsecured Claim.
2.7 Ballot: means the ballot for accepting or rejecting the Plan
which will be distributed to the Creditors holding the Claims in the
classes of Claims which are impaired under the Plan and entitled to
vote on the Plan.
2.8 Ballot Date: means the date set by the Court as the last day
for timely submission of a ballot accepting or rejecting the Plan.
2.9 Bankruptcy Code or the Code: means Title I of the Bankruptcy
Reform Act of 1978, Pub.L.95-598, codified as Title 11 of the United
States Code as amended.
2.10 Bankruptcy Court or Court: means the United States Bankruptcy
Court for the Western District of Missouri, including the United States
Bankruptcy Judge sitting in this particular Case.
2.11 Bankruptcy Estate or the Estate: means the estate created
pursuant to 11 U.S.C. 541 by the filing of the Debtor's bankruptcy
petition under 11 U.S.C. 301.
2.12 Bankruptcy Rules: means the rules of procedure applicable to
cases or proceedings pending before this Court, now existing or as
hereinafter modified or amended.
<PAGE>
2.13 Bar Date: means the last day for filing of Claims pursuant to
the Court's order. The order and notice of time within which to file
proofs of claim and for hearing on the Disclosure Statement shall be
given to all Creditors and other parties in interest in these
proceedings within the guidelines set by this Court and the Bankruptcy Rules.
2.14 Boatmen's Bank: means Boatmen's Bank of Southern Missouri which
asserts a claim against the Debtor secured by a lien on the Ground Lease
and Branson Property.
2.15 Branson Property: means that certain Ozarks Discovery IMAX
Theater and Mall located in Branson, Missouri, including the Debtor's
interests in the Ground Lease covering the real property and any and all
improvements thereon.
2.16 Business Day: means any day on which the Court is open and
performs its ordinary business and affairs.
2.17 Cash: means cash, cash equivalent, negotiable instruments, and
other readily marketable securities or instruments, including, without
limitation, direct obligations of the United States of America,
certificates of deposit issued by banks, and commercial paper of
any entity, including interest earned or accrued thereon.
2.18 Case: means this Chapter 11 case commenced by the filing with
the Court by the Debtor of a voluntary petition for relief under
Chapter 11 of the Code.
2.19 Claim: is used herein as defined in 101(5) of the Code.
2.20 Claimant: means the holder of a Claim.
2.21 Class: means any claim holder, interest holder, or group of
holders of Claims or Interests as specified in Article III of the Plan.
2.22 Collateral: means property in which the Debtor has an interest
and that secures, in whole or in part, the payment of a Claim.
2.23 Condominium: means that certain condominium owned by the
Debtor and located generally at the Woodlands Condominium development,
Branson, Missouri used by the Debtor's employees, officers and directors
when staying in Branson for business purposes.
2.24 Confirmation or Confirmation Order: means the Court's Order,
whether in open Court or otherwise, providing that the Debtor's Plan is
confirmed by the Court.
2.25 Confirmation Date: means the date on which the Order confirming
the Plan becomes a Final Order.
2.26 Confirmation Hearing: means the hearing regarding confirmation
of the Plan conducted pursuant to Bankruptcy Code 1128, as adjourned or
continued from time to time.
2.27 Contested Claim: means any Claim that has been scheduled or
recorded by the Debtor as contingent, unliquidated, or disputed, or with
respect to which an objection has been interposed in accordance with
the Bankruptcy Code, the Bankruptcy Rules, the Plan or
any Order of the Court, or which arises from the rejection by the Debtor
of an executory contract or unexpired lease pursuant to the Plan.
<PAGE>
2.28 Creditor: means every holder of a Claim (whether or not such
Claim is an Allowed Claim) encompassed within the statutory definition
set forth in 101(10) of the Code.
2.29 Debtor: means International Tourist Entertainment Corporation, a
U.S. Virgin Islands corporation, and/or the Debtor-in-Possession of such
entity, as the appropriate context requires.
2.30 Debtor-in-Possession: means the Debtor, when exercising its
rights, powers and duties under 1107(a) and other applicable provisions
of the Code.
2.31 Disclosure Statement: means the Disclosure Statement approved
by the Court pursuant to Code 1125.
2.32 Disputed Claim: means each and every Claim which is not an
Allowed Claim.
2.33 Effective Date: means the first Business Day occurring at
least sixty (60) days after Confirmation. Where, under this Plan, the
Debtor's performance is due on the Effective Date, the following
exceptions shall apply to such requirement:
2.33.1 Where any provision of either the Plan or the Code requires
performance from the Debtor earlier than the Effective Date, such
provisions requiring earlier performance shall be controlling;
2.33.2 Where provisions of the Code, the contractual provisions of
Allowed Claims treated in the Plan, or provisions of the Plan permit the
Debtor to perform later than the Effective Date, the Debtor will be
permitted to perform its obligations at such later date;
2.33.3 Where any provision of the Plan requires performance on or
before the Effective Date with respect to a Claim that is not an Allowed
Claim as of the Effective Date, then the Effective Date will be deemed
to occur with respect to any such Claim that subsequently becomes an
Allowed Claim on the first Business Day occurring at least 30 days after
such Claim becomes an Allowed Claim; and
2.33.4 In all events, the Debtor will have the right, but not the
obligation, to render any performance under the Plan prior to the
Effective Date, if the Debtor, in its sole business judgment, deems it
appropriate to do so, and so long as the Debtor does not thereby violate
any provisions of the Code.
2.34 Executory Contract: means each and every unexpired lease and
other contract which is subject to being assumed or rejected pursuant
to Bankruptcy Code 365.
2.35 Final Order: means an order or judgment of the Court, or of any
other court exercising jurisdiction over the Case or any part thereof,
which order or judgment has not been reversed on appeal, the operation or
effect of which order or judgment has not been stayed, and as to which
order or judgment the time for appeal or to seek review or rehearing has
expired without an appeal, petition for review, or motion for
rehearing being
<PAGE>
filed; or if an appeal, petition for review, or motion for rehearing
has been filed, the order or judgment has been upheld by the Court
adjudicating the petition or motion with no further appeal pending or
available.
2.36 Financing Orders: means the orders in which the Court authorized
the Debtor to borrow funds (i.e. the Post-Petition Indebtedness) and to
grant a super-priority claim and Secured Claim against the Debtor's
property for the amount of the Post-Petition Indebtedness.
2.37 Ground Lease: means that certain Ground Lease Agreement
between Treasure Lake R.V. Resort Camping Club and the Debtor relating to
the Branson Property.
2.38 Indenture Trustee: means West One Bank, Utah, as Indenture
Trustee under that certain Indenture dated September 1, 1993 between the
Debtor and the Trustee.
2.39 Interest: means the legal, equitable and contractual rights
accruing to a holder of any equity interest in the Debtor.
2.40 Nova Scotia Bank: means the Bank of Nova Scotia which asserts
a claim against the Debtor secured by a lien on the St. Thomas Property.
2.41 Person: means "person" as defined in Bankruptcy Code 101(41).
2.42 Petition Date: means the filing date of the voluntary Chapter 11
petition commencing the case. The Petition Date is January 25, 1996.
2.43 Plan: means this Plan of Reorganization, including all exhibits
and as it may be amended or modified from time to time hereafter.
2.44 Post-Petition Indebtedness: means any and all funds loaned to
the Debtor pursuant to a Financing Order, including any and all accrued
interest, attorney's fees and costs authorized to be included in the
Post-Petition Indebtedness by the Financing Order.
2.45 Priority Claim: means a Claim entitled to priority pursuant
to Code 507(a)(2)-(a)(7).
2.46 Proponent: means the Debtor.
2.47 Pro Rata: means proportionally or according to a certain rate
percentage or proportion based upon the whole of any Allowed Claim in
any given Class.
2.48 St. Thomas Property: means that certain 2.5 acre site on the
island of St. Thomas, U.S. Virgin Islands which the Debtor planned to use
for its second giant screen theater complex.
2.49 Secured Claim: means an Allowed Claim that is a secured claim,
as that term is defined in 506 of the Code.
2.50 Tax Claim: means a Claim against the Debtor under 507(a)(8)
of the Code.
2.51 Theme Film: means that certain theme film entitled "Ozarks:
Legacy and Legend" produced by the Debtor.
2.52 Underwriting Agreement: means agreement by Paul Bluto to
underwrite the cash requirements of the plan.
<PAGE>
2.53 Unsecured Claim: means a Claim that is not a Secured Claim, a Tax
Claim, an Administrative Claim, or a Priority Claim and for which such
Claim no collateral in which the Estate has an interest is held.
3.
CLASSIFICATION OF CLAIMS AND INTERESTS
--------------------------------------
All Claims against, and Interests in, the Debtor are classified under
the Plan as stated in this Article 3.
3.1 Class 1: Super-Priority Claim of Dynatronics. Class 1 consists
of the super-priority and secured claim of Dynatronics for certain
post-petition funds extended to the Debtor pursuant to the Financing Order.
3.2 Class 2: Administrative Claims. Class 2 consists of all Allowed
Claims within the meaning of 507(a)(1) of the Bankruptcy Code, which
includes all Administrative Claims.
3.3 Class 3: Real Property Tax Claims Relating to the Branson Property.
Class 3 consists of all Allowed Claims of any and all taxing authorities
secured by the Branson Property.
3.4 Class 4: Pre-Petition Tax Claims. Class 4 consists of all
Allowed Claims within the meaning of 507(a)(8) (except those provided
for in Class 3) of the Bankruptcy Code, which includes real property
taxes relating to any real property other than the
Branson Property, sales taxes, employment taxes, withholding taxes,
and excise taxes, if any.
3.5 Class 5: Boatmen's Bank's Secured Claim. Class 5 consists of
Boatmen's Bank's Allowed Secured Claim, secured by a lien on the
Debtor's Leasehold interest in the Branson Property, the Debtor's
interests in the leases and sub-leases relating to the Branson
Property, certain furnitures, fixtures and equipment at the IMAX facility,
and all improvements in and to the Branson Property.
3.6 Class 6: Nova Scotia Bank's Secured Claim. Class 6 consists of
Nova Scotia Bank's Allowed Secured Claim secured by a lien on the
St. Thomas Property.
3.7 Class 7: Great Southern Savings Bank Secured Claim . Class 7
consists of Great Southerns Allowed Secured Claim secured by a lien on
the Debtor's Condominium.
3.8 Class 8: General Unsecured Claims Taking Cash and Stock. Class 8
consists of all Allowed Unsecured Claims, including the claims of
Dynatronics, Vic Pickett, and Vineyard Productions which previously
were claiming a security interest in the master negative to the Theme Film.
3.9 Class 9: Unsecured Claims Electing to Take Only Cash. Class 9
consists of Unsecured Creditors who elect on their ballots to take
only cash.
3.10 Class 10: Debenture Holders Receiving Both Cash and Stock.
Class 10 consists of all Debenture Holders who do not make an election
on their ballots to take twelve and one-half cents on the dollar in cash
and one-half share of stock for each $10.00 in debentures.
<PAGE>
3.11 Class 11: Debenture Holders Electing to Take Mostly Cash. Class 11
consists of those Debenture Holders who make an election on their ballots
to take twelve and one-half cents on the dollar in cash and one-half share
of stock for each $10.00 in debentures.
3.12 Class 12: Holders of Common Stock. Class 12 consists of all
Allowed Interests of the holders of common stock.
3.13 Class 13: Holders of Preferred Stock of the Debtor. Class 13
consists of Allowed Interests of holders of preferred stock of the Debtor.
4.
IMPAIRMENT OF CLASSES
---------------------
All Classes of Claims and Interests are impaired, as that term is defined
in 11 U.S.C. 1124, under the Plan.
5.
TREATMENT OF CLASSES OF CLAIMS IMPAIRED UNDER THE PLAN
------------------------------------------------------
5.1 Treatment of Class 1 Super-Priority and Secured Claim of
Dynatronics. This claim for $100,000.00 represents a post-petition
loan made by Dynatronics to assist the debtor to meet short term
cash flow needs. If it is not paid before confirmation, it will be
paid in full on or before the effective date of the plan.
5.2 Treatment of Class 2 Administrative Claims. Every Creditor
holding a Class 2 Administrative Claim shall be paid from the Debtor's
cash-on-hand either (a) in full and in cash on the Effective Date if
the Claim is an Allowed Claim; (b) in full and in cash (including any
interest allowed by the Bankruptcy Court) when and if the Claim becomes an
Allowed Claim after the Effective Date; or (c) as otherwise agreed in
writing by the Creditor holding the Allowed Claim or ordered by the
Bankruptcy Court.
5.3 Treatment of Class 3 Real Property Tax Claims Relating to
the Branson Property.
All Class 3 Real Property Tax Claims shall be paid in full on or before
the effective date of the plan.
5.4 Treatment of Class 4 Pre-Petition Tax Claims.
All Class 4 Pre-Petition Tax Claims shall be paid the full Allowed Amount
of any such Claims from the Debtor's Funds. Each holder of a Disputed
Class 4 Priority Tax Claim shall receive Cash in the amount of such Claim
that is ultimately Allowed, without interest, as soon as practical after
the date on which the order allowing such Claim becomes a Final Order.
5.5 Treatment of Class 5 Boatmen's Bank Secured Claim.
The Boatmen's Bank Allowed Secured Claim shall be modified as follows:
The debt to Boatmen's shall be amortized over twenty (20) years with a
fixed rate of interest of eight percent (8%) on the outstanding balance.
The accrued interest on the debt will be discharged. Boatmen's will
retain its lien on all the assets it had pre-petition.
5.6 Treatment of Class 6 Nova Scotia Bank's Secured Claim.
<PAGE>
The St. Thomas property which secures The Nova Scotia Bank's lien
shall be surrendered to the bank in full satisfaction of debt unless the
bank and the Debtor agree to different treatment.
5.7 Treatment of Class 7 Great Southern's Secured Claim.
The debtor shall continue to pay this debt according to the terms of the
original note and deed of trust which are not in default.
5.8 Treatment of Class 8 Allowed Unsecured Claims Taking Cash and Stock.
All holders of Allowed Unsecured Claims other than debenture holders and
holders of Allowed Unsecured Claims electing to take only cash shall
receive on account of their claim, cash in an amount equal to ten percent
(10%) of their Allowed Unsecured Claim and stock equal to one share of
stock for each $10.00 in debt.
5.9 Treatment of Class 9 Allowed Unsecured Claims Electing to Take
Only Cash.
All holders of Allowed Unsecured Claims who make an election on their
ballot to take cash and forego the right to receive stock in the company,
shall receive twelve and one-half (12-1/2%) of their Allowed Unsecured
Claim in cash thirty (30) days after the effective date of the plan.
5.10 Treatment of Class 10 Claims of Debenture Holders Taking Both
Cash and Stock.
Non-electing debenture holders will receive cash thirty (30) days after
the effective date of the plan equal to ten percent (10%) of the amount
of their claims and one and one-half (1-1/2) shares of stock in the debtor
per each $10.00 in debentures held.
5.11 Treatment of Class 11 Claims of Debenture Holders Electing to
Take Mostly Cash.
Debenture holders who elect on their ballot to do so, will receive cash
thirty (30) days after the effective date of the plan equal to twelve and
one-half percent (12-1/2%) of their claim plus one-half (1/2) share of
stock per each $10.00 in debentures held.
5.12 Treatment of Class 12 Common Stockholders.
All holders of common stock and warrants in the debtor shall have their
shares cancelled. Then they shall receive one share of stock in the new
reorganized debtor in exchange and full satisfaction for every ten shares
of stock held in the pre-petition debtor. Where a holder has a
fractional interest, his interest will be rounded to the nearest whole share.
5.13 Treatment of Class 13 Preferred Stockholders.
All holders of preferred stock and warrants shall have their shares
cancelled. Then they shall be issued eight-tenths shares (.08) of common
stock in the new reorganized debtor in exchange and full satisfaction for
every one share of preferred stock they held pre-petition. Where a holder
has a fractional interest, his interest will be rounded to the nearest
whole share.
<PAGE>
6.
MEANS FOR EXECUTION OF THE PLAN
-------------------------------
6.1 Plan Sponsor. This plan is underwritten by Paul Bluto who is a
member of the ITEC Board of Directors. Although the plan has the support
of the Official Unsecured Creditors Committee, it is referred to as a
shareholders plan because the existing shareholders will own ten per cent
(10%) of the stock in the reorganized company. Mr. Bluto made this
provision for the existing shareholders so that there will be a market
for the stock once the company comes out of bankruptcy and is qualified
for trading.
6.2 Injection of Funds. Within one week after the filing of this plan,
Mr. Bluto will post the sum of $100,000.00 in cash or securities. These
funds will be forfeited if Mr. Bluto fails to perform according to the
terms of his proposal. In the event that a better offer is approved by
the Bankruptcy Court, then Mr. Bluto will have the right to request a break
up fee equal to the costs which he has incurred.
6.3 Contingencies. Mr. Blutos obligation to provide the funds necessary
to implement this plan is contingent upon the following requirements set
forth in a memorandum to the Debtor. Those requirements, most of which have
been satisfied, include the following:
-- The satisfactory resolution of the matters affecting the title to
the real estate where the facility is located.
-- Satisfactory resolution of the equipment lease with IMAX over the
sound and projection equipment.
-- Confirmation of the plan as contained herein, specifically as it
relates to the treatment of the secured claim of Boatmens Bank.
-- the acquisition of the master negative to the Theme Film in the
possession of Vineyards Productions.
-- a determination by competent legal counsel that the plan does
not violate any applicable securities laws.
-- Satisfactory agreement between the debtor and its existing
management team for an employment contract so as to insure continuity of
company operations.
6.4 Source and use of funds. The first $600,000.00 which is being put
up by Mr. Bluto will be used generally for the following purposes:
FUNDING THE PLAN OF REORGANIZATION:
BACK REAL ESTATE TAXES $ 85,000
COURT AND ADMINISTRATIVE COSTS 50,000
POST PETITION PAYMENTS TO IMAX 50,000
PAYMENT TO CREDITORS 415,000
TOTAL FOR PLAN OF REORGANIZATION $600,000
--------
IN ADDITION TWO LOANS WOULD BE ASSUMED:
BOATMEN'S FIRST MORTGAGE ON THE FACILITY $3,600,000
GREAT SOUTHERN - CONDO 112,000
<PAGE>
The second $600,000.00 will be used for renovations, improvements and
the funding of company operations as set forth below:
The source of the second $600,000.00 will be from a private stock offering
that will occur after the plan is confirmed. Contingent upon the advice
of counsel, it is estimated that the company will offer to qualified
parties the opportunity to purchase stock in the company in units of
$20,000.00 each. Mr. Bluto is underwriting the private placement
offering and has agreed to subscribe to any units that are not acquired
by other interested parties. The second $600,000.00 will be used as
follows:
ADDITIONAL CAPITAL REQUIREMENTS AND OPERATING CAPITAL
CAPITAL IMPROVEMENTS $ 30,000
FILM PRINT - "OZARKS: LEGACY AND LEGEND" 25,000
OPERATING CAPITAL AND RESERVE (1) 200,000
CONTINGENCY 50,000
BUILD OUT OF RESTAURANT 170,000
PURCHASE OF BEKEMIER DELI & BAKERY 100,000
TOTAL CAPITAL & OPERATING $575,000
TOTAL FUNDS REQUIRED TO FUND PLAN AND FOR
CAPITAL & OPERATING ($600,000 + $575,000) $1,175,000
note 1: The exact amount for paying the unsecured creditors could vary
depending on the number who elect to take more cash and less stock.
If more cash is needed, it would come out of this reserve.
6.5 Capitalization after second offering is completed.
-------------------------------------------------
ISSUANCE OF STOCK
-----------------
First phase new money ($600,000) 55%
Second phase new money ($600,000) 25%
Unsecured Creditors and
Debenture holders as a group 5%
Existing shareholders 10%
Management
(divided among 4 people) 5%
6.6 Acceleration. To the extent the Reorganized Debtor finds it
necessary, or desirable, it may seek modification of the Plan to
accelerate performance under the Plan.
6.7 Disposition of Unclaimed Funds. In the event that a check
distributed to a claimant pursuant to this Plan has not been presented
to the issuing bank for payment on or before the 90th day after the
date of issuance of the check, then:
6.71 payment of such check will be ordered stopped;
<PAGE>
6.72 the payee of such check shall be deemed to have forfeited the
right to receive that or any future distribution pursuant to this Plan; and
6.73 the unclaimed funds shall return to the Reorganized Debtor to be
used in its sole discretion.
7.
RETENTION AND ENFORCEMENT OF CLAIMS
-----------------------------------
Pursuant to 1123(b)(3) of the Bankruptcy Code, the Reorganized Debtor
shall retain and may enforce in its discretion any and all claims and
causes of action of the Debtor, except those claims expressly waived,
relinquished or released in accordance with the Plan. In order to focus
on future operations, however, the debtor does not presently intend to
bring any claims or causes of action.
8.
EXECUTORY CONTRACTS AND UNEXPIRED LEASES
----------------------------------------
The Debtor shall, and hereby does, assume the Ground Lease and that
certain System Lease Agreement dated August 1, 1993 between IMAX
Corporation ("IMAX") and the Debtor relating to, among other things,
the Debtor's lease of an IMAX projection system, a sound system and
a projection screen from ("IMAX") (the "IMAX Lease"), as modified.
To the extent the Debtor is a party to any other executory contracts
or unexpired leases, all such executory contracts and unexpired leases are
deemed rejected, unless the Debtor specifically assumes such contracts or
leases prior to the Confirmation Date, subject to Court approval.
9.
OBJECTIONS TO AND ESTIMATIONS OF CLAIMS
---------------------------------------
9.1 Objections and Bar Date for Filing Objections. As soon as
practicable, but in no event later than sixty (60) days after the
Confirmation Date, objections to Claims shall be filed with the Court
and served upon the holders of each such Claim to which objections
are made pursuant to the Code and the Rules. Objections filed after
such date will be barred. Primary responsibility for objecting to
Claims shall be with the Debtor.
9.2 Settlement of Claims. Settlement of any objection to a Claim
not exceeding $5,000.00 shall be permitted on the eleventh (11th)
day after notice of the settlement has been provided to the Debtor, the
settling party, and other persons specifically requesting
such notice, and if upon such date there is no written objection filed,
such settlement shall be deemed approved. In the event of a written
objection to the settlement, the settlement must be approved by the
Court on notice to the objecting party.
9.3 Estimation of Claims. For purposes of making distributions
provided under the Plan, all Claims objected to shall be estimated
by the Debtor in an amount equal to (1) the amount, if any, determined by
the Court pursuant to 502(c) of the Code as an estimate
for distribution purposes; or (2) that amount set forth in the Debtor's
schedules. The estimated amounts will be deposited into a segregated
account with a reference to the name
<PAGE>
of the potential claimant, yet under the exclusive and singular
control of the Debtor. Notwithstanding anything here and to the
contrary, no distribution shall be made
on account of the Claim until such Claim is an Allowed Claim.
10.
ACCEPTANCE OR REJECTION OF THIS PLAN;
EFFECT OF REJECTION BY ONE OR MORE IMPAIRED
CLASSES OF CLAIMS OR INTERESTS
------------------------------
10.1 Each Impaired Class or Interests Entitled to Vote Separately.
Each Impaired class of Claims or Interests shall be entitled to have
the holders of Claims or Interests therein vote separately to accept
or reject this Plan.
10.2 Acceptance By a Class of Claims or Interests. Consistent with
Section 1126(c) of the Bankruptcy Code, a class of Claims shall have
accepted this Plan if this Plan is accepted by at least two-thirds in
dollar amount and more than one-half in number of the
holders of the Allowed Claims of such class that have timely and
properly voted to accept or reject this Plan. Consistent with Section
1126(d) of the Bankruptcy Code, a class of Interests shall have accepted
the Plan if it has been accepted by at least two-thirds in amount
of the Interests held by holders of such Interests.
10.3 Confirmation Notwithstanding Rejection By a Class and Request to
Apply Section 1129(b). The Debtor hereby requests that the Bankruptcy
Court confirm this Plan in accordance with subsections (a) and (b) of
Section 1129 of the Bankruptcy Code notwithstanding the rejection or
deemed rejection of this Plan by a class of creditors or interest holders.
11.
NONALLOWANCE OF PENALTIES, DEFAULTS, AND FINES
----------------------------------------------
No distribution shall be made under the Plan on account of, and no
Allowed Claim, whether secured, unsecured or priority, and no Allowed
Administrative Claim shall include any fine, penalty, exemplary or
punitive damages, late charges, default interest, or other
monetary charge relating or arising from any default or breach by the
Debtor and any claim on account thereof shall be deemed disallowed,
whether or not an objection is filed to such claim.
<PAGE>
12.
REVESTING
---------
Except as provided for in the Plan or in the Confirmation Order on
the Effective Date, the Reorganized Debtor shall be vested with all
the property of the estate free and clear of all Claims, liens, charges,
and other interests of creditors, arising prior to the Effective Date.
Upon the Effective Date, the Reorganized Debtor shall operate its business
free of any and all restrictions.
13.
RETENTION OF JURISDICTION
-------------------------
Notwithstanding Confirmation of this Plan, the Bankruptcy Court shall
retain jurisdiction to the fullest extent permitted by law for the
following purposes:
(a) determination of the allowability of Claims and interests
upon objection to such Claims by the Debtor, the Reorganized Debtor,
or any other party-in-interest;
(b) determination of requests for payment of Claims entitled to
priority under 507(a)(1) of the Bankruptcy Code, including
compensation of parties entitled, thereto;
(c) resolution of controversies and disputes regarding the
interpretation or enforcement of the terms of the Plan, any of the
instruments issued under the Plan, or any other documentation
evidencing the term of the Plan;
(d) implementation of the provisions of the Plan and entry of
orders in aid of the Confirmation and substantial consummation of the
Plan, including with limitation, appropriate orders to protect the
Reorganized Debtor; and,
(e) entry of a final decree closing the Debtor's case.
14.
GENERAL PROVISIONS
------------------
14.1 Payment of Statutory Fees. All fees payable pursuant to 28
U.S.C. 1930 shall be paid after the Effective Date from the Debtor's Funds.
14.2 Headings. The headings in this Plan are for convenience of
reference only and shall not limit or otherwise affect the meaning of
the terms herein.
<PAGE>
14.3 Article and Section References. Unless otherwise specified, all
references in this Plan to Sections and Articles are to Sections and
Articles of this Plan.
14.4 Severability. Should any provision in this Plan be determined to
be unenforceable following the Effective Date, such determination shall
in no way limit or affect the enforceability of any and all other
provisions of this Plan.
14.5 Governing Law. Except to the extent that the Bankruptcy Code or
other federal law is applicable, the rights, duties and obligations
arising under this Plan shall be governed by and construed and enforced
in accordance with the laws of the State of Missouri.
14.6 Successors and Assigns. The rights, duties and obligations of
any Person named or referred to in this Plan shall be binding upon, and
shall inure to the benefit of, the successors and assigns of such Person.
14.7 Notices. Any Notice required or permitted under the Plan shall
be in writing and served either by (a) certified mail, return receipt
requested, postage prepaid, (b) hand delivery, or (c) reputable overnight
delivery service, postage prepaid, addressed to the following parties:
If to the Debtor: If to Paul Bluto:
Kelvyn H. Cullimore Paul Bluto
3562 Shepard of the Hills Expwy. 20311 Paseo Del Prado
Branson, MO 65616 Walnut, CA 91789
with a copy to Debtor's attorney:
Thomas J. Carlson
318 Park Central East, Ste. 601
Springfield, MO 65806
If to Attorney for Creditors' Committee:
Glenn Green
Lowther, Johnson, Joyner, Lowther
Cully & Housley, L.L.C.
901 St. Louis St., 20th Floor
Springfield, MO 65806
All such notices shall be deemed to be delivered when received.
DATED this 18th day of December, 1996.
-----------------
/s/ Thomas Carlson
---------------------------
Thomas Carlson, MO Bar 28843
Attorney for the Debtor
<PAGE>
UNITED STATES BANKRUPTCY COURT
WESTERN DISTRICT OF MISSOURI
SOUTHERN DIVISION
IN RE: ) Chapter 11
)
INTERNATIONAL TOURIST ENTERTAINMENT) Case No. 96-60122-S-11
CORPORATION a/k/a ITEC ATTRACTIONS )
d/b/a IMAX THEATER, )
Debtor. ) Chapter 11
DEBTOR'S SECOND AMENDED DISCLOSURE STATEMENT IN SUPPORT OF
PROPOSED DEBTOR'S SECOND AMENDED PLAN OF REORGANIZATION
DATED DECEMBER 18, 1996
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
("Debtor" or "DIP"), the Debtor and Debtor-in-possession in
the above-captioned bankruptcy case, hereby submits to the
Court its Second Amended Disclosure Statement In Support of
Proposed Debtor's Second Amended Plan of Reorganization Dated
December 18, 1996, and seeks approval of the Disclosure
Statement pursuant to 11 U.S.C. 1125.
RESPECTFULLY SUBMITTED this 18th day of February, 1997.
/S/ Thomas Carlson
-------------------------------
Thomas Carlson, MO Bar 28843
Attorney for Debtor
PO Box 50280
Springfield MO 65805-0280
Telephone: 417-864-7772
Facsimile: 417-864-7894
<PAGE>
TABLE OF CONTENTS
I. PRELIMINARY CAVEATS 3
II. DEFINITIONS 4
III. INTRODUCTION 10
IV. DESCRIPTION OF THE DEBTOR 11
V. FACTORS LEADING TO BANKRUPTCY 16
VI. FINANCIAL INFORMATION 17
VII. LIQUIDATION ANALYSIS 17
VIII. FINANCIAL PROJECTIONS 18
IX. SUMMARY OF DEBTOR'S PLAN 18
A. BANKRUPTCY REQUIREMENTS 18
B. CAPSULE SUMMARY 20
C. MEANS FOR EXECUTION OF THE PLAN 20
D. OTHER PROVISIONS 21
X. SECURITIES LAW CONSIDERATIONS 23
XI. TAX IMPLICATIONS 28
XII. APPROVAL OF THE PLAN 28
A. Requirements of Voting 28
B. Plan Proponent 29
C. Acceptance of the Proposed Plan 29
D. Confirmation by Cramdown 30
XIII. MISCELLANEOUS PROVISIONS 31
A. No Additional Charges 31
B. Executory Contracts and Unexpired Leases 31
C. Defects, Omissions and Conflicts 31
D. Securities Laws and Exemption from Registration 31
XIV. RECOMMENDATION OF DEBTOR 32
<PAGE>
I.
PRELIMINARY CAVEATS
-------------------
NO REPRESENTATIONS CONCERNING THE DEBTOR (INCLUDING
WITHOUT LIMITATION THE ANTICIPATED FUTURE OPERATIONS OF THE
DEBTOR OR FUTURE VALUATIONS OF THE DEBTOR'S PROPERTY) ARE
AUTHORIZED BY THE DEBTOR EXCEPT AS SET FORTH IN THIS
DISCLOSURE STATEMENT. ANY REPRESENTATIONS OR INDUCEMENTS MADE
BY ANY PARTY OTHER THAN DEBTOR TO SECURE YOUR ACCEPTANCE OF
THE PLAN THAT ARE NOT OTHERWISE CONTAINED WITHIN THE TEXT OF
THIS DISCLOSURE STATEMENT SHOULD NOT BE RELIED UPON BY YOU IN
ANALYZING THE PROPOSED PLAN. ANY SUCH ADDITIONAL OR FURTHER
REPRESENTATIONS AND INDUCEMENTS MADE BY ANY PARTY OTHER THAN
DEBTOR SHOULD BE REPORTED TO COUNSEL FOR DEBTOR, WHO, IN TURN,
SHALL DELIVER SUCH INFORMATION TO THE BANKRUPTCY COURT FOR
SUCH ACTION AS THE COURT MAY DEEM APPROPRIATE.
THIS IS A SOLICITATION BY DEBTOR ONLY. THIS IS NOT A
SOLICITATION BY DEBTOR'S ATTORNEYS, ACCOUNTANTS OR ANY OTHER
PROFESSIONAL ASSOCIATED WITH DEBTOR, AND THE REPRESENTATIONS
MADE IN THIS DISCLOSURE STATEMENT ARE SOLELY THOSE OF THE
DEBTOR AND NOT DEBTOR'S ATTORNEYS, ACCOUNTANTS OR OTHER
RELATED PROFESSIONAL(S) EXCEPT AS OTHERWISE SPECIFICALLY
INDICATED.
NOT ALL OF THE FINANCIAL STATEMENTS AND INFORMATION
CONTAINED IN THIS DISCLOSURE STATEMENT HAVE BEEN SUBJECT TO A
THOROUGH EXAMINATION BY INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS OR OTHER SIMILAR PROFESSIONALS. DEBTOR HAS MADE
EVERY EFFORT TO THOROUGHLY RESEARCH ALL UNAUDITED FINANCIAL
INFORMATION CONTAINED IN THIS DISCLOSURE STATEMENT; WHILE
EVERY EFFORT HAS BEEN MADE TO INSURE THAT THE UNDERLYING
ASSUMPTIONS ARE VALID AND THAT THE INFORMATION IS AS ACCURATE
AS CAN BE MADE UNDER THE CIRCUMSTANCES, DEBTOR DOES NOT
<PAGE>
UNDERTAKE TO WARRANT OR OTHERWISE REPRESENT THAT THE
INFORMATION CONTAINED HEREIN IS WITHOUT ERROR.
APPROVAL OF THIS DISCLOSURE STATEMENT PURSUANT TO 11
U.S.C. 1125 DOES NOT IN ANY MANNER CONSTITUTE A
CERTIFICATION BY THE BANKRUPTCY COURT OR THE DEBTOR OF THE
ACCURACY OF ANY OF THE INFORMATION CONTAINED IN THIS
DISCLOSURE STATEMENT NOR DOES IT CONSTITUTE AN ENDORSEMENT BY
THE BANKRUPTCY COURT OF THE PROPOSED PLAN.
THIS DISCLOSURE STATEMENT MAY NOT BE RELIED UPON BY ANY
PARTY FOR ANY PURPOSES OTHER THAN TO DETERMINE HOW TO VOTE ON
THE PROPOSED PLAN. NOTHING CONTAINED IN THIS DISCLOSURE
STATEMENT SHALL CONSTITUTE AN ADMISSION OF ANY FACT OR
LIABILITY BY THE DEBTOR OR ANY OTHER PARTY; NOR SHALL ITS
CONTENTS BE ADMISSIBLE IN ANY PROCEEDING INVOLVING THE DEBTOR
OR ANY OTHER RELATED PARTY WITHOUT THE EXPRESS WRITTEN CONSENT
OF THE DEBTOR.
THE STATEMENTS CONTAINED IN THIS DISCLOSURE STATEMENT ARE
MADE AS OF THE DATE OF THE PREPARATION OF THIS DISCLOSURE
STATEMENT UNLESS ANOTHER TIME IS SPECIFIED. NEITHER THE
DELIVERY OF THIS DISCLOSURE STATEMENT NOR ANY EXCHANGE OF
RIGHTS MADE IN CONNECTION WITH THIS DISCLOSURE STATEMENT
SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION THAT
THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THE TEXT OF
THIS DISCLOSURE STATEMENT SINCE THE DATE THE DISCLOSURE
STATEMENT WAS COMPILED BY DEBTOR AND FILED WITH THE BANKRUPTCY
COURT.
II
DEFINITIONS
-----------
The following terms shall have the following meanings
indicated whenever used in this Disclosure Statement. All
terms not otherwise defined in this Section or elsewhere in
the Disclosure Statement shall have the meanings assigned to
them in 11 U.S.C. 101 et seq.
<PAGE>
1. Administrative Claim: means any claim for payment of
any cost or expense for administration of the Debtor's estate
in the above-captioned case entitled to priority in accordance
with 503(b) and 507(a)(1) of the Bankruptcy Code,
including, without limitation, (a) any action and necessary
expenses of preserving the Debtor's estate and operating the
Debtor's business from and after the Petition Date, including
Claims of employees, trade vendors, taxing authorities and
parties with assumed executory contracts, incurred during
these proceedings (other than such Claims or portions thereof
that, by their express terms, are not due or payable by the
Effective Date), (b) all allowances of compensation and
reimbursement for professionals approved by the Court in
accordance with the Bankruptcy Code, (c) any fees or charges
assessed against Debtor's estate under 28 U.S.C. 1930, and
(d) any and all fees required to be paid by the Debtor to the
U.S. Trustee.
2. Allowance Date: means the date an Order of the Court
allowing a Claim in this Case has become final and
nonappealable and no appeal therefrom is pending.
3. Allowed Amount: means the amount of any Allowed
Claim.
4. Allowed Claim: means a Claim against the Debtor (a)
with respect to which a proof of claim has been filed with the
Court within the period of limitations, fixed by Bankruptcy
Rule 3001 or by Order of the Court, or (b) which is scheduled
in the list of creditors prepared by the Debtor and filed with
the Court pursuant to Bankruptcy Rule 1007(b) and which is not
listed as disputed, contingent or unliquidated as to amount.
In either case, the Claim is allowed only if no objection to
the allowance of the Claim, either as identified in a Proof of
Claim or as scheduled by the Debtor, has been raised within
any applicable period of limitation fixed by Bankruptcy Rule
3001 or Order of the Court or, when any such objection has
been filed, the objection to the allowance of the Claim has
been overruled by a Final Order or the Claim has been
otherwise allowed by Final Order.
5. Allowed Interest: means an Interest in the Debtor to
the extent that it is listed as such in the records of the
Debtor at the time of Confirmation.
6. Allowed Secured Claim: means an Allowed Claim to the
extent of the value of the Collateral securing the Claim. If
the Allowed Claim exceeds the value of the Collateral, that
excess is an Unsecured Claim.
7. Ballot: means the ballot for accepting or rejecting
<PAGE>
the Plan which will be distributed to the Creditors
holding the Claims in the Classes of Claims which are impaired
under the Plan and entitled to vote on the Plan.
8. Ballot Date: means the date set by the Court as the
last day for timely submission of a ballot accepting or
rejecting the Plan.
9. Bankruptcy Code or the Code: means Title I of the
Bankruptcy Reform Act of 1978, Pub.L.95-598, codified as Title
11 of the United States Code as amended.
10. Bankruptcy Court or Court: means the United States
Bankruptcy Court for the Western District of Missouri,
including the United States Bankruptcy Judge sitting in this
particular Case.
11. Bankruptcy Estate or the Estate: means the estate
created pursuant to 11 U.S.C. 541 by the filing of the
Debtor's bankruptcy petition under 11 U.S.C. 301.
12. Bankruptcy Rules: means the rules of procedure
applicable to cases or proceedings pending before this Court,
now existing or as hereinafter modified or amended.
13. Bar Date: means the last day for filing of Claims
concurrent with the date set for the first hearing on approval
of the Disclosure Statement. The order and notice of time
within which to file proofs of claim and for hearing on the
Disclosure Statement shall be given to all Creditors and other
parties in interest in these proceedings within the guidelines
set by this Court and the Bankruptcy Rules.
14. Boatmen's Bank: means Boatmen's Bank of Southern
Missouri which asserts a claim against the Debtor secured by a
lien on the Ground Lease and Branson Property.
15. Branson Property: means that certain Ozarks
Discovery IMAX Theater and Mall located in Branson, Missouri,
including the Debtor's interests in the Ground Lease covering
the real property and any and all improvements thereon.
16. Business Day: means any day on which the Court is
open and performs its ordinary business and affairs.
17. Cash: means cash, cash equivalent, negotiable
instruments, and other readily marketable securities or
instruments, including, without limitation, direct obligations
of the United States of America, certificates of deposit
issued by banks, and commercial paper of any entity, including
interest earned or accrued thereon.
18. Case: means this Chapter 11 case commenced by the
<PAGE>
filing with the Court by the Debtor of a voluntary
petition for relief under Chapter 11 of the Code.
19. Claim: is used herein as defined in 101(5) of the
Code.
20. Claimant: means the holder of a Claim.
21. Class: means any claim holder, interest holder, or
group of holders of Claims or Interests as specified in
Article III of the Plan.
22. Collateral: means property in which the Debtor has
an interest and that secures, in whole or in part, the payment
of a Claim.
23. Condominium: means that certain condominium owned by
the Debtor and located generally at the Woodlands Condominium
development, Branson, Missouri used by the Debtor's employees,
officers and directors when staying in Branson for business
purposes.
24. Confirmation or Confirmation Order: means the
Court's Order, whether in open Court or otherwise, providing
that the Debtor's Plan is confirmed by the Court.
25. Confirmation Date: means the date on which the Order
confirming the Plan becomes a Final Order.
26. Confirmation Hearing: means the hearing regarding
confirmation of the Plan conducted pursuant to Bankruptcy Code
1128, as adjourned or continued from time to time.
27. Contested Claim: means any Claim that has been
scheduled or recorded by the Debtor as contingent,
unliquidated, or disputed, or with respect to which an
objection has been interposed in accordance with the
Bankruptcy Code, the Bankruptcy Rules, the Plan or any Order
of the Court, or which arises from the rejection by the Debtor
of an executory contract or unexpired lease pursuant to the
Plan.
28. Creditor: means every holder of a Claim (whether or
not such Claim is an Allowed Claim) encompassed within the
statutory definition set forth in 101(10) of the Code.
29. Debtor: means International Tourist Entertainment
Corporation, a U.S. Virgin Islands corporation, and/or the
Debtor-in-Possession of such entity, as the appropriate
context requires.
30. Debtor-in-Possession: means the Debtor, when
exercising its rights, powers and duties under 1107(a) and
other applicable provisions of the Code.
31. Disclosure Statement: means this Disclosure
Statement approved by the Court pursuant to Code 1125.
<PAGE>
32. Disputed Claim: means each and every Claim which is
not an Allowed Claim.
33. Effective Date: means the first Business Day
occurring at least sixty (60) days after Confirmation. Where,
under this Plan, the Debtor's performance is due on the
Effective Date, the following exceptions shall apply to such
requirement:
a. Where any provision of either the Plan or the
Code requires performance from the Debtor earlier than
the Effective Date, such provisions requiring earlier
performance shall be controlling;
b. Where provisions of the Code, the contractual
provisions of Allowed Claims treated in the Plan, or
provisions of the Plan permit the Debtor to perform
later than the Effective Date, the Debtor will be
permitted to perform its obligations at such later date;
c. Where any provision of the Plan requires
performance on or before the Effective Date with respect
to a Claim that is not an Allowed Claim as of the
Effective Date, then the Effective Date will be deemed
to occur with respect to any such Claim that
subsequently becomes an Allowed Claim on the first
Business Day occurring at least 30 days after such Claim
becomes an Allowed Claim; and
d. In all events, the Debtor will have the right,
but not the obligation, to render any performance under
the Plan prior to the Effective Date, if the Debtor, in
its sole business judgment, deems it appropriate to do
so, and so long as the Debtor does not thereby violate
any provisions of the Code.
34. Executory Contract: means each and every unexpired
lease and other contract which is subject to being assumed or
rejected pursuant to Bankruptcy Code 365.
35. Final Order: means an order or judgment of the Court, or
of any other court exercising jurisdiction over the Case or
any part thereof, which order or judgment has not been
reversed on appeal, the operation or effect of which order or
judgment has not been stayed, and as to which order or
judgment the time for appeal or to seek review or rehearing
has expired without an appeal, petition for review, or motion
for rehearing being filed; or if an appeal, petition for
review, or motion for rehearing has been filed, the order or
judgment has been upheld by the Court adjudicating the
petition or motion with no further appeal pending or
available.
<PAGE>
36. Financing Orders: means the orders in which the
Court authorized the Debtor to borrow funds (i.e. the Post-
Petition Indebtedness) and to grant a super-priority claim and
Secured Claim against the Debtor's property for the amount of
the Post-Petition Indebtedness.
37. Ground Lease: means that certain Ground Lease
Agreement between Treasure Lake R.V. Resort Camping Club and
the Debtor relating to the Branson Property.
38. Indenture Trustee: means West One Bank, Utah, as
Indenture Trustee under that certain Indenture dated September
1, 1993 between the Debtor and the Trustee.
39. Interest: means the legal, equitable and contractual
rights accruing to a holder of any equity interest in the
Debtor.
40. Nova Scotia Bank: means the Bank of Nova Scotia which
asserts a claim against the Debtor secured by a lien on the
St. Thomas Property.
41. Person: means "person" as defined in Bankruptcy Code
101(41).
42. Petition Date: means the filing date of the
voluntary Chapter 11 petition commencing the case. The
Petition Date is January 25, 1996.
43. Plan: means the Plan of Reorganization submitted
herewith including all exhibits and as it may be amended or
modified from time to time hereafter.
44. Post-Petition Indebtedness: means any and all funds
loaned to the Debtor pursuant to a Financing Order, including
any and all accrued interest, attorney's fees and costs
authorized to be included in the Post-Petition Indebtedness by
the Financing Order.
45. Priority Claim: means a Claim entitled to priority
pursuant to Code 507(a)(2)-(a)(7).
46. Proponent: means the Debtor.
47. Pro Rata: means proportionally or according to a
certain rate percentage or proportion based upon the whole of
any Allowed Claim in any given Class.
48. St. Thomas Property: means that certain 2.5 acre
site on the island of St. Thomas, U.S. Virgin Islands which
the Debtor planned to use for its second giant screen theater
complex.
49. Secured Claim: means an Allowed Claim that is a
secured claim, as that term is defined in 506 of the Code.
50. Tax Claim: means a Claim against the Debtor under
507(a)(8) of the Code.
<PAGE>
51. Theme Film: means that certain theme film entitled
"Ozarks: Legacy and Legend" produced by the Debtor.
52. Underwriting Agreement: means agreement by Paul
Bluto to underwrite the cash requirements of the plan.
53. Unsecured Claim: means a Claim that is not a Secured
Claim, a Tax Claim, an Administrative Claim, or a Priority
Claim and for which such Claim no collateral in which the
Estate has an interest is held.
III.
INTRODUCTION
------------
This Disclosure Statement and accompanying Plan of
Reorganization are being filed pursuant to Title 11 of the
United States Bankruptcy Code and are designed (1) to inform
all creditors and the Court of the current and recent status
of the Debtor, and (2) to provide for the implementation and
consummation of the Plan.
The Debtor filed its voluntary petition for relief
pursuant to Chapter 11 of the Code on January 25, 1996. The
Debtor has prepared a proposed Chapter 11 Plan of
Reorganization which is submitted herewith. Debtor has
prepared this Disclosure Statement in connection with its
solicitation of acceptances of its Plan. The purpose of this
Disclosure Statement is to enable Creditors to make an
informed judgment in voting to accept or reject the proposed
Plan.
The Plan of Reorganization is not a part of this
Disclosure Statement and must be reviewed independently.
However, this Disclosure Statement, together with the proposed
Plan which is submitted herewith, should be read in its
entirety. For the convenience of creditors and the Debtor,
the terms of the Plan are summarized in this Disclosure
Statement, but all summaries are qualified in their entirety
by the Plan itself. The terms and conditions of the proposed
Plan are controlling in the event of any inconsistency between
this Disclosure Statement and the proposed Plan.
This Disclosure Statement is submitted in accordance with
1125 of the Bankruptcy Code, for the purpose of informing
creditors, and soliciting acceptances, of the proposed Plan
from holders of certain Classes of Claims and Interests. The
Disclosure Statement cannot be used for that purpose until the
Bankruptcy Court has determined that the Disclosure Statement
<PAGE>
contains adequate information to permit those Claimants whose
acceptances of the Proposed Plan is solicited to make an
informed judgment about the Plan.
The Bankruptcy Court will hold a hearing on the approval
of this Disclosure Statement at the time and place set forth
in the Order enclosed herewith. The hearing regarding
approval of this Disclosure Statement may be adjourned from
time to time without prior notice.
The approval of this Disclosure Statement by the
Bankruptcy Court is required by 1125 of the Bankruptcy Code
prior to or simultaneously with the confirmation of the Plan.
Such approval does not constitute a judgment by the
Bankruptcy Court as to the desirability of the proposed Plan
or as to the value or suitability of any consideration offered
thereby. The purpose of the examination of the Disclosure
Statement by the Bankruptcy Court is to determine whether the
Disclosure Statement contains adequate information. The entry
of an order approving this Disclosure Statement means that the
Bankruptcy Court has approved the Disclosure Statement as
containing information of the kind, and in sufficient detail,
adequate to enable a hypothetical, reasonable investor typical
of the Claimants being solicited, to make an informed judgment
about the proposed Plan.
IV.
DESCRIPTION OF THE DEBTOR
-------------------------
General
- - - -------
International Tourist Entertainment Corporation ("Debtor")
was incorporated June 3, 1986, in the U.S. Virgin Islands, to
develop, finance and operate destination, giant screen
theaters and associated amenities in selected, popular tourist
locations throughout the United States and its territories and
in international locations. The business of the Debtor
includes the creation and operation of highly specialized
movie entertainment that captures the culture, history, beauty
and uniqueness of selected tourist destinations.
The Debtor's operations formally commenced on October 8,
1993 with the grand opening of the Ozarks Discovery IMAX
Theater and Mall in Branson, Missouri. The Branson theater
and mall consists of a giant screen theater, food concessions,
and retail space and amenities. During fiscal 1995, the
Debtor produced a theme film entitled, "Ozarks: Legacy and
Legend" (the "Theme Film") which premiered on April 28, 1995
and is shown regularly at the Branson theater complex. The
Debtor also rents films from the available supply of giant
screen films for exhibition at its theater.
<PAGE>
Revenue from the Debtor's Branson theater complex is
generated from three primary sources: (1) ticket sales for
admission to the theater; (2) lease of retail space in
conjunction with the mall; and (3) operation of a restaurant,
retail shops and concessions owned by the Debtor at the
Branson facility. The Debtor also could receive income from
renting the theme film produced by the Debtor for its Branson
theater complex.
The start-up activities of the Debtor were funded
principally through the sale of the Debtor's stock and
debentures for an aggregate consideration to the Debtor from
inception through June 30, 1994, of approximately $10,695,130
net of offering costs and commissions. In the year ended June
30, 1995 the Debtor issued additional stock and raised
$559,862 in net proceeds. Additional funding was provided to
the Debtor through various loans, including loans from, or
guaranteed by, shareholders. As of June 30, 1995, the Debtor
had loans guaranteed by shareholders in the amount of
$1,028,824 principal, repayment of which are secured by a
security interest in the Branson Theme Film.
In December 1992, the Debtor completed the initial public
offering of its securities in which it sold 975,975 units,
each unit consisting of one share of Common Stock and one
Series A Warrant to purchase one share of Common Stock. Net
proceeds to the Debtor from the initial public offering were
$4,677,959.
On July 30, 1993, the Debtor completed the arrangements
for a loan from Boatmen's Bank to provide financing for the
construction of the Debtor's Branson theater complex and to
provide working capital in the amount of $3,500,000. By June
30, 1995, the Debtor had borrowed the entire amount of the
loan. The loan principal is amortized over 14 years beginning
July, 1995 with a balloon payment due at the end of five years
if the loan is not renewed, and the loan bears interest at the
prime rate as published in the Wall Street Journal plus 1.5%
(the prime rate is currently approximately 8.25%).
On September 1, 1993, the Debtor completed the public
offering of and issued $3,500,000 aggregate principal amount
of its 10% convertible debentures due June 1, 2008. Proceeds
from the sale of the Debentures were used to finance a portion
of the costs of development of the Debtor's Branson theater
complex. There is currently $2,055,000 aggregate principal
amount of Debentures outstanding.
In October of 1994, the Debtor undertook a public stock
<PAGE>
offering of securities to raise up to $15 million to finance
the purchase and development of the St. Thomas Property as
well as provide a portion of the costs of the Theme Film for
the Branson theater. The offering period concluded on January
17, 1995 with insufficient funds raised to break escrow.
Consequently, the Debtor fell behind on its payments for
expenses primarily related to development of its St. Thomas
facility, as well as expenses related to the failed Public
Offering.
In order to provide funding to complete the Ozarks Theme
Film, and to supply additional operating capital, the Debtor
raised $500,000 in a private offering of preferred stock and
borrowed a total of $1.3 million from the following sources:
$500,000 from the Bank of Nova Scotia secured by a mortgage on
the property owned by the Debtor in St. Thomas; $500,000 from
Zions Bank which was guaranteed by Dynatronics Corporation, a
major shareholder of the company; and $300,000 from Dr.
Victor 0. Pickett a member of the Debtor's Board of Directors.
In addition to these amounts, Dynatronics Corporation has
paid on behalf of the Debtor approximately $228,000. These
borrowings placed a significant financial burden on the
Debtor.
Locations
- - - ---------
The Debtor has completed and is operating its first giant
screen theater complex in Branson, Missouri, known as the
Ozarks Discovery Imax Theater and Mall. It formally commenced
operations on October 8, 1993. The total size of the Branson
theater complex is approximately 60,000 square feet. The main
features of this facility are a 532 seat Imax giant screen
theater and a 325 seat full service family restaurant. The
theater's screen is approximately 62 feet high by 83 feet
wide. In addition to the theater and restaurant, the Branson
theater complex contains a lobby area and shopping mall with
approximately 22,000 square feet of leasable retail including
restaurant space and approximately 2,000 square feet of
leasable office space. The specialty shopping area features
goods and products appealing to tourists and local residents.
The Ozarks Discovery IMAX Theater and Mall has the look of
a Grand Lodge enhanced with stone, wood and stucco texture.
Massive wood beams and large stone columns provide the mall
with a feeling of warmth and Ozarks ambiance. The auditorium
has been recognized by experts of the giant screen industry as
<PAGE>
one of, if not the most acoustically perfect IMAX Theater
in the world. The Debtor premiered its Theme Film for the
Ozarks Discovery IMAX Theater on April 28, 1995.
The Debtor anticipated a second location proposed to be
developed by the Debtor in St. Thomas, U.S. Virgin Islands.
Although the Debtor signed a letter of intent to finance and
develop this facility, the development was never finalized.
Employees
- - - ---------
The number of employees at the Branson theater and
restaurant has climbed steadily. As of June 30, 1996, the
debtor had 110 employees compared with 82 on June 30, 1995 and
39 on June 30, 1994.
Properties
- - - ----------
The Debtor has entered into a 50 year Ground Lease of an
approximately 5.5 acre site on which its Branson theater
complex is located. The Debtor prepaid the first 20 years of
rent under the Ground Lease with a discounted payment of
$1,025,000. The Ground Lease also provides for annual rent of
$145,000, commencing in the 21st year of the ground lease,
which amount is adjusted during the term to reflect cost of
living increases.
The Debtor has constructed its Branson theater complex on
the leased site in Branson, Missouri at a cost of
approximately $5.6 million. Partial financing for the Branson
theater complex was provided by the Boatmen's Bank Loan and proceeds
from the sale of the 1993 Debentures.
In 1992, the Debtor acquired a condominium in Branson for
use by employees, officers and directors while in Branson on
business for the Debtor for which it paid $90,000, of which
$72,000 was financed by bank borrowing. This condominium was
sold in June 1994 for $110,000 and another condominium
purchased for $148,000, of which $115,000 was financed
through bank borrowing. In February 1993, the Debtor acquired
a residence for its Branson theater manager for which it paid
approximately $80,000, of which $64,000 was financed by bank
borrowing. The Debtor rents the residence to the manager for
the amount of the mortgage payment to the bank, plus all costs
of occupancy, taxes, insurance and maintenance.
The Debtor owns an approximately 2.5 acre site on St.
Thomas which was the planned location for the Debtor's second
giant screen theater complex. This property secures the
<PAGE>
repayment of a $500,000 loan to the Debtor from the Bank of
Nova Scotia. The Debtor owns no other real estate properties.
The Debtor pays Dynatronics Corporation, an affiliate of
the Debtor, $6,000 per month to provide administrative,
staffing, accounting functions and support as well as office
space out of its Salt Lake City, Utah headquarters.
The Debtor maintains an operations and marketing office at
the Branson facility. Each of its other giant screen theater
complex locations, will also have an operations office.
The Debtor has submitted applications to the U.S. Patent
and Trademark Office to register the service marks "ITEC
Attractions," which has been approved, and "Ozarks Discovery,"
and "McFarlain's" which are now pending.
Significant Leases
- - - ------------------
The Debtor is the lessee under that certain System Lease
Agreement dated August 1, 1993 between IMAX Corporation
("IMAX") and the Debtor relating to, among other things, the
Debtor's lease of an IMAX projection system, a sound system
and a projection screen from ("IMAX") (the "IMAX Lease"). The
Debtor uses the IMAX projection system, sound system and
projection screen in the Branson theater.
Other Significant Assets
- - - ------------------------
The ITEC Theme Film Ozarks "Legacy and Legend" is the
company's other major asset. IMAX Theaters are generally
premised on the concept that they are most profitable showing
films that entertain and inform the customer on the region
where the theater is located. Because IMAX Theaters are
generally not conducive for multi-purposes, they are in the
final analysis a single use facility dedicated for showing
their theme films.
Legal Proceedings
- - - -----------------
There are no material pending legal proceedings to which
the Debtor is a party or of which any of its property is the
subject.
Significant Post-Petition Events
- - - --------------------------------
When the bankruptcy was filed, the Debtor had negotiated
an agreement that called for the sale of all of its assets to
a company known as Destination Cinema. However, several weeks
into the case, Destination Cinema withdrew its offer. This
left the Debtor without a buyer and so over the Spring and
<PAGE>
Summer, it fielded various offers for either injection of
money into the company or for the sale of its assets. The
Debtor supplied all potential purchasers with its estimate of
the amount of monies that would be necessary to fund a
feasible plan. Those requirements were incorporated into the
present plan and can be found in the Plan at Article 6.4.
In order to propose a feasible plan, the Debtor had to
resolve several significant matters. They were as follows:
(1) An agreement with IMAX on its lease on projection and
sound equipment.
(2) Resolution of three lis pendens that had been filed
that affected title to the property. This title to the
property had been clouded by the filing of "Lis Pendens."
(3) Approval by the Official Unsecured Creditors'
Committee of the plan.
(4) An agreement with Boatmen's Bank on the long-term
treatment of its secured debt in the case.
(5) An injection of funds necessary to insure the long-
term viability of the company.
With the exception of the issue involving Boatmen's Bank
in which the negotiations are still continuing, all the other
matters have been resolved. For that reason, the Debtor is
now coming forward with its plan. If an agreement can not be
made with the bank, then the Debtor will request the Court to
confirm the Plan over the bank's objection.
V.
FACTORS LEADING TO BANKRUPTCY
-----------------------------
Two major factors caused the filing of this bankruptcy.
First, the theater was not able to achieve the attendance
levels that it had projected and therefore, did not have the
revenues which it anticipated. This has been a factor
throughout the Branson area and although the overall
attendance by tourist to the area have grown slightly, there
has been a glut of new businesses, theaters and restaurants
that are all competing for the same tourism dollar. That
timing phenomenon also effected ITEC.
Secondly, when the companies public offering failed in the
fall of 1994, it had to borrow over a million dollars on a
short term basis. The interest and reduction of principal on
these loans hobbled the company to the point it could not
continue. The problem was exacerbated because the cost of the
offering was not recouped. The company still owes some
$400,000 in costs directly related to the offering and the
preparation of the plans for the St. Thomas project which it
hoped to build from proceeds from the offering.
<PAGE>
VI.
FINANCIAL INFORMATION
---------------------
The Debtor is required to, and has filed, monthly
operating statements with the Court reflecting the Debtor's
post-petition operations. Copies of such operating statements
may be obtained either from the Court or a written request to
Debtor's counsel.
VII.
LIQUIDATION ANALYSIS
--------------------
Debtor's analysis of what would transpire in the event of
liquidation are as follows:
ITEM CREDITOR VALUE AMOUNT EQUITY
OWED
Cash 600,000
IMAX Theater Boatmen's Bank $3.6 Million $3.6 Million
and FF&E* West One Bank** $2 Million -0-
Theme Film*** $200,000 $200,000
---------
GROSS AMOUNT AVAILABLE TO CREDITORS $800,000
LESS:
1. Estimated Chapter 7 administrative costs
(5% of distribution plus estimated $50,000
in professional fees). $100,000
2. Chapter 11 administrative costs. $50,000
3. Repayment of Chapter 11 loan to Dynatronics. $100,000
to debtor.
4. Amount owed IMAX post-petition. $50,000
5. Costs to wind up business. $300,000
---------
TOTAL EXPENSES $500,000
AVAILABLE SUM FOR PAYMENT TO
UNSECURED CREDITORS. $300,000
Total estimated unsecured debt in a chapter 7. $4,500,000
Payout in case of liquidation to unsecureds
is about 6.5 cents on dollar. ($300,000/$4,500,00)
NOTE: The plan, if confirmed, should enhance the recovery to
creditors by nearly twice what they would receive in a
liquidation scenario.
<PAGE>
*Furniture, Fixtures and Equipment.
**West One Bank is Trustee for the debenture holders as a lien
junior to the same collateral as Boatmen's.
***Ozarks "Legacy and Legend"
**** Film is subject to approximately 1.2 million dollars in
liens. However, there is an issue whether the liens would be
valid in an event of a chapter 7 liquidation. For purposes of
this analysis, they are assumed to be unsecured so that the
creditors in the film would share equally with the other
unsecured creditors.
***** Boatmen's has a "broad filing" lien on all of the
debtor's personal property with the exception of the theme
film. Nevertheless, the debtor estimates that there may be a
few thousand dollars from sources not identified of which it
is not aware that it might not be subject to the banks lien.
VIII.
FINANCIAL PROJECTIONS
---------------------
The company's operations have improved since the chapter
11 case was filed in January, 1996. In fact, Schedule "A"
attached, shows that the company has exceeded its projections.
It is this fact that has made Mr. Bluto willing to support
this plan.
Schedule "B" (attached), shows the company's cash flow
projections for 1997.
IX.
SUMMARY OF DEBTOR'S PLAN
------------------------
A. BANKRUPTCY CODE REQUIREMENTS
----------------------------
At the confirmation hearing, the Bankruptcy Court shall
determine whether the requirements of 1129 of the Bankruptcy
Code have been satisfied, in which event the Bankruptcy Court
shall enter an order confirming the proposed Plan. These
requirements are as follows:
1. The proposed Plan complies with the applicable
provisions of the Bankruptcy Code.
2. The Debtor has complied with the applicable
provisions of the Bankruptcy Code.
3. The Plan has been proposed in good faith and not by
any means forbidden by law.
4. Any payment made or promised by the Debtor or by a
person issuing securities or acquiring property under the
proposed plan, for services or costs and expenses in, or in
connection with, the Case, or in connection with the Plan and
incident to the Case, has been disclosed to the Bankruptcy
Court, and any such payment made before the Confirmation of
the Plan is reasonable, or if such payment is to be fixed
after Confirmation of the Plan, such payment is subject to the
approval of the Bankruptcy Court as reasonable.
<PAGE>
5. The disclosure of the identity and affiliations of
any individual proposed to serve, after confirmation of the
Plan, as a director, officer, or voting trustee of the Debtor,
or a successor to the Debtor under the Plan, and the
appointment to, or continuance in, such office of such
individual, is consistent with the interest of creditors and
equity security holders and with public policy.
6. With respect to each class of impaired claims,
either each holder of a claim or interest of such class has
accepted the proposed Plan, or will receive or retain under
the proposed Plan an account of such claim or interest
property of a value, as of the effective date of the Plan,
that is not less than the amount that such holder would so
receive or retain if the Debtor was liquidated on such date
under Chapter 7 of the Bankruptcy Code.
7. Each class of claims or interests has either
accepted the Plan or is not impaired under the Plan.
8. Except to the extent that the holder of a
particular claim has agreed to a different treatment of such
claim, the proposed Plan provides that the administration
expenses and priority claims, including tax claims, will be
paid in full on the effective date.
9. At least one class of claims has accepted the
proposed Plan, determined without including any acceptance of
the Plan by any insider holding a claim of such class.
10. Confirmation of the proposed Plan is not likely to
be followed by the liquidation, or the need for further
financial reorganization of the Debtor or any successor to the
Debtor under the proposed Plan, unless such liquidation or
reorganization is proposed by the Plan.
Debtor believes that the proposed Plan satisfies all of
the statutory requirements of Chapter 11 of the Bankruptcy
Code and that the proposed Plan is made in good faith.
Further, Debtor believes that holders of all claims impaired
under the proposed Plan will receive payments under the Plan
having a present value as of the effective date in amounts not
less than the amounts likely to be received if the Debtor was
liquidated in a case under Chapter 7 of the Bankruptcy Code.
THE PROPOSED PLAN WILL BE PROVIDED TO ALL CREDITORS AND
OTHER PARTIES IN INTEREST ALONG WITH THIS DISCLOSURE STATEMENT
IN ACCORDANCE WITH BANKRUPTCY RULE 3017. THE FOLLOWING
ANALYSIS OF THE PROPOSED PLAN IS INTENDED ONLY TO PROVIDE A
CONTEXT FOR UNDERSTANDING THE DISCLOSURE STATEMENT.
<PAGE>
B. CAPSULE SUMMARY
---------------
This plan is being supported by both the ITEC's Board of
Directors and the Creditors' Committee. They both feel that
the plan represents the best offer for the creditors and the
ongoing operations of the company. Under the plan, Unsecured
Creditors and Debenture Holders will receive cash and/or stock
roughly equal to twelve and one-half percent (12-1/2%) of
their unsecured claims. In addition, there will be enough
money injected into the company to give it the best possible
chance of operating profitably in the future.
As the liquidation analysis indicates in part VII above,
this proposal offers a greater payout to the unsecured
creditors than they would likely receive in a chapter 7 case.
Unquestionably, the payout would be quicker. If the case is
confirmed, then creditors will receive their money no later
than ninety (90) days after confirmation. Whereas, in a
chapter 7 liquidation, it could be one to two years at the
earliest before the unsecured creditors would receive a
payment, which is estimated to be one-half the amount they
would receive under the plan.
C. MEANS FOR EXECUTION OF THE PLAN
-------------------------------
Mr. Bluto will post $100,000.00 in cash or securities
about the same time that this plan is filed. Once the plan is
confirmed, he will inject an additional $500,000.00 to fund
the initial payout to the creditors. At that point, there
will be a second private placement offering to qualified
accredited investors offering an additional $600,000.00 in
stock at $20,000.00 a unit. With these additional funds, the
debtor and the Creditors' Committee feel that the company has
a good chance of success.
Mr. Cullimore has agreed to go to work for the company
after the plan is confirmed according to the following terms:
Mr. Cullimore will receive $100,800 per year base salary.
Mr. Cullimore and his management team will receive incentive bonuses
(see below).
Mr. Cullimore will receive a car allowance of $250 per month.
The condo which is owned by the company will be
furnished to Mr. Cullimore as living accommodations.
The company will contribute $35,000 annually to Mr.
Cullimore's retirement fund.
<PAGE>
Health insurance will be paid by the company.
The management group will be paid a bonus as follow:
No bonus will be paid on the first $200,000 in positive
cash flow from operations.
Of the next $100,000 in positive cash flow from
operations, management will receive 50%. Of the next
$100,000 in cash flow operations, management will
received 25%. Management will receive 10% of all cash
flow in excess of $400,000 per year. Mr. Cullimore will
receive 50% of the management bonuses.
In other words, Mr. Cullimore will receive $25,000
of the positive cash flow from operations between
$200,000 and $300,000, and $12,500 of the positive cash
flow between $300,000 and $400,000, and 5% of all
positive cash flow above $400,000.
D. OTHER PROVISIONS
----------------
1. Legally Binding Effect/Discharge of Claims and Interests.
--------------------------------------------------------
If the proposed Plan is confirmed, the provisions of the
Plan will bind the Debtor and all Creditors, whether or not
they accept the Plan unless, to the extent enforceable under
applicable law, any such Claimant affirmatively does not
consent to the treatment afforded under the Plan.
Confirmation will also discharge the Debtor from all debts
that arose before Confirmation as of the Effective date. Once
the debtor has distributed all the monies in accordance with
this plan and paid the monies over to the creditors, the
claims of the creditors will be deemed to have been fully
discharged.
The distribution of Cash provided for in the proposed
Plan, if any, will be in exchange for and in complete
satisfaction, discharge and release of all Claims and equity
interests, including any Claim for interest after the date of
filing of the Chapter 11 petition, against the Debtor or any
of its assets or properties. On the Effective Date, all
creditors and existing equity interest holders will be
precluded from asserting any claim against the Debtor or its
assets or properties based upon any transaction or other
activity of any kind that occurred prior to the Effective
Date; provided, however, that nothing contained in the
proposed Plan will alter the legal, equitable and contractual
right of the holder of any claim or equity interest
specifically designated as being unimpaired in the proposed
Plan, it being specifically intended that all such rights are
to remain unaltered by the Plan.
<PAGE>
2. Modification of the Plan.
------------------------
The Proponent of a proposed Plan may modify the proposed
Plan at any time before confirmation. As soon as a
modification of a proposed Plan is filed, the modified plan
then becomes the effective plan. The proposed Plan, as
modified, must also meet the Bankruptcy Code requirements as
to classification of Claims and general substantive content.
The Proponent of the Plan, as modified, must also comply
with the disclosure requirements of the Bankruptcy Code.
There can be no solicitation of an acceptance of the modified
Plan unless the Plan solicited has received a written
Disclosure Statement approved by the Bankruptcy Court after
proper notice and hearing. If the Disclosure Statement as to
the Plan was already approved, then the additional disclosure
statement may be relatively streamlined or simplified.
However, such alteration of the disclosure requirements would
depend upon the facts and circumstances of each case.
Regardless of the simplicity of the modification of the
proposed plan, the disclosure requirement must be satisfied.
If acceptance or rejection of the proposed Plan has been
obtained prior to the filing of a proposed modification, the
accepting or rejecting party must take affirmative action to
change its previous acceptance or rejection. The Bankruptcy
Court must establish a time within which an acceptance or
rejection can be changed, if necessary. If the creditor
accepting or rejecting the original Plan does nothing within
the time set by the Bankruptcy Court, the creditor is deemed
to have likewise consented, accepted or rejected (whichever is
appropriate) the Plan as modified.
After confirmation of a Plan, the Proponent of the Plan
may seek to modify the Plan. However, the attempt must be
made prior to "substantial consummation" of the Plan. The
Plan as modified must still meet the requirements of the
Bankruptcy Code as to classification and substantive content.
"Substantial Consummation" under the Bankruptcy Code is
defined as: (1) a transfer of the property proposed to be
transferred by the plan; (2) assumption by the Debtor or the
Debtor's successor of the business or management of the
property dealt with by the plan; and (3) commencement of
distribution under the plan. At that point in time, rights
are vested and cannot be modified.
A MODIFICATION IS EFFECTIVE ONLY IF THE BANKRUPTCY
COURT, AFTER PROPER NOTICE AND HEARING, CONFIRMS THE PLAN AS
MODIFIED. TO DO SO, THE BANKRUPTCY COURT MUST MAKE THE SAME
FINDINGS REQUIRED UNDER THE BANKRUPTCY CODE AS TO THE
<PAGE>
CONFIRMATION OF A PLAN AND, IN ADDITION, FIND THAT THE
CIRCUMSTANCES WARRANT THE PROPOSED MODIFICATION.
X.
SECURITIES LAWS CONSIDERATIONS
I. Issuance of shares of Common Stock
----------------------------------
The Debtor will issue shares of its Common Stock
pursuant to the Plan. These shares of Common Stock constitute
"securities" for purposes of federal and state securities
laws.
A. Shareholders and Creditors. The Plan provides for
the issuance of Common Stock to shareholders of the Debtor and
the issuance of Common Stock or Common Stock and/or cash to
creditors of the Debtor. Section 1145 of the Bankruptcy Code
provides that the registration requirements under federal and
state securities laws do not apply to the issuance of
securities by a debtor under a plan of reorganization to
holders of claims or interests wholly or principally in
exchange for those claims or interests. With certain
exceptions discussed below, recipients of such securities may
also resell them without registration under such laws.
1. Issuance. Section 1145 of the Bankruptcy Code
exempts the original issuance of securities under a plan of
reorganization from registration under the Securities Act of
1933, as amended (the "Securities Act"), and applicable state
securities law registration requirements. For the original
issuance of securities under the plan to be so exempt, three
principal requirements must be satisfied: (i) the securities
must be issued by the Debtor or its successor under the Plan;
(ii) the recipient of the securities must hold a Claim against
or Interest in the Debtor; and (iii) the securities must be
issued entirely in exchange for the recipient's Claim against
or Interest in the Debtor, or "principally" in such exchange
and "partly" for cash or property. The Debtor intends that the
original issuance of securities to shareholders and creditors
pursuant to the Plan will satisfy the foregoing requirements
and, accordingly, will be exempt from registration under the
Securities Act and state securities laws. However, under
certain circumstances, subsequent offers or sales of such
securities may be subject to registration requirements under
the Securities Act and such state laws.
2. Resale. Except of persons who may be deemed
to be "underwriters" as discussed below, holders of Claims or
<PAGE>
Interests who receive securities pursuant to the Plan will be
able to sell and transfer such securities without registration
under the Securities Act or state securities laws and without
complying with Rule 144 under the Securities Act.
Section 1145 (b) of the Bankruptcy Code defines four
types of "underwriters": (i) a person who purchases a claim
against, an interest in, or a claim for administrative
expenses against the debtor with a view to distributing any
security received in exchange for such a claim or interest;
(ii) a person who offers to sell securities offered under a
plan of reorganization for the holders of such securities;
(iii) a person who offers to buy such securities from the
holders of such securities, if the offer is (a) with a view to
distributing such securities and (b) made under a distribution
agreement; and (iv) a person who is an "issuer" with respect
to the security, as the term "issuer" is defined in Section
2(11) of the Securities Act. Under Section 2(11) of the
Securities Act, and "issuer" includes any person directly or
indirectly controlling or controlled by the debtor, or any
person under direct or indirect common control with the
debtor.
To the extent that persons deemed "underwriters" receive
securities pursuant to the Plan, resales by such persons would
not be exempted by Section 1145 of the Bankruptcy Code from
registration under the Securities Act or applicable state
securities laws. However, such persons may be able to sell
such securities without registration subject to the provisions
of Rule 144 under the Securities Act, which would permit the
public sale of securities received pursuant to the Plan by
"underwriters" subject to the availability to the public of
current information regarding the Debtor and to compliance
with specified volume limitations and certain other
conditions.
Given the complex, subjective nature of the question of
whether a particular holder may be an underwriter, the Debtor
makes no representations concerning the right of any person to
trade in any of the securities received under the Plan. THE
DEBTOR RECOMMENDS THAT POTENTIAL RECIPIENTS OF SECURITIES
UNDER THE PLAN CONSULT THEIR OWN COUNSEL CONCERNING THE
EFFECTS OF FEDERAL AND STATE SECURITIES LAWS ON THEIR ABILITY
TO TRADE SUCH SECURITIES.
Sales by "stockbrokers" of securities issued under the
Plan will be exempt under Section 1145(a)(4) of the Bankruptcy
Code from the registration requirements of the Securities Act
and state securities laws if they deliver a copy of the
Disclosure Statement (and supplements hereto, if any, if
ordered by the Court) at or before the time of delivery of
such securities to their customers for the first 40 days after
<PAGE>
the Effective Date. Section 101 of the Bankruptcy Code
defines "stockbroker" as a person having customers that are
engaged in the business of effecting transactions in
securities (i) for the accounts of others or (ii) with the
general public from or for such person's own account.
B. Management. The Plan provides for the issuance of Common Stock to four
employees of the Debtor. These persons include Kelvyn H. Cullimore,
Michael Pitman, Donna Annette Wood and Randy Brashers and they will be
issued an amount of securities equal to approximately 5% of the issued and
outstanding Common Stock of the Debtor upon completion of the Plan. The
Common Stock will be issued pursuant to available private placement
exemptions from the registration requirements of the Securities
Act and applicable state securities laws and will be "restricted" stock
as that term is defined in the Securities Act and the regulations
promulgated pursuant thereto. Restricted stock may not be resold
unless the sale is registered under the Securities Act and applicable
state securities laws or otherwise qualifies for available exemptions.
C. "Fresh Capital". The Plan provides for funding in two phases. Phase
I will occur prior to the Effective Date of the Plan. In Phase I, the
Debtor will issue an amount of securities equal to 55% of the issued and
outstanding Common Stock of the Debtor upon completion of the Plan to
Mr. Paul M. Bluto for $600,000.00 cash. Mr. Bluto is a director and
shareholder of the Debtor and is an "accredited investor" as that term
is defined in the Securities Act and the regulations promulgated
pursuant thereto. The Common Stock will be issued to Mr. Bluto pursuant
to available exemptions under Section 4(2), Section 4(6), and the
regulations promulgated pursuant thereto, from the registration
requirements of the Securities Act and available exemptions under
applicable state securities laws and will be "restricted" stock as that
term is defined in the Securities Act and the regulations promulgated
pursuant thereto. Restricted stock may not be resold unless the sale is
registered under the Securities Act and applicable state securities laws
or otherwise qualifies for available exemptions.
Phase II will occur after the Effective Date of the Plan. In Phase II,
the Debtor will offer for sale, solely to accredited investors, an amount
of securities equal to 25% of the issued and outstanding Common Stock of
the Debtor upon completion of the Plan for $600,000.00 cash. Any of the
offered securities which are not subscribed for will be purchased by Mr.
Bluto. The Common Stock will be issued to
<PAGE>
investors pursuant to available exemptions under Section 4(2), Section 4(6),
and the regulations promulgated pursuant thereto, from the registration
requirements of the Securities Act and available exemptions under applicable
state securities laws and will be "restricted" stock as that term is
defined in the Securities Act and the regulations promulgated pursuant
thereto. Restricted stock may not be resold unless the sale is registered
under the Securities Act and applicable state securities laws or otherwise
qualifies for available exemptions.
D. "Fairness" of issuance of stock to Management and Investor Group.
Under the terms of the plan as discussed above the existing management
group of four persons headed by Kelvyn Cullimore will
receive five percent (5%) of the outstanding stock in the reorganized
company. Mr. Bluto will receive a controlling interest of fifty-five
percent (55%) for his initial cash infusion of $600,000.00.
In order to accomplish this recapitalization, the equity ownership of
the existing shareholder groups will be diluted so that their interest
will comprise approximately ten percent (10%) of the
outstanding stock in the reorganized company.
While this is a drastic reduction in the ownership of the existing
shareholder groups in the company, it is in the opinion of the Debtor
not only fair but the best possible alternative that has
been presented via a bona fide offer. This opinion is based on
several factors.
First, the creditors themselves in this case are receiving only a
percentage of the repayment of the amount that is owed to them.
Typically, in such a case, the shareholders would receive nothing
under the Bankruptcy Code if the creditors as a class objected to the
treatment. In this case, the shareholders are being kept intact although
on a reduced basis because that is a term of Mr. Bluto's
offer. In short, then, the shareholders are getting more than they
might usually receive in a chapter 11 case where the creditors are not
being paid in full.
Second, one of the primary factors influencing Mr. Bluto in making
this offer is the success that the exiting management group has had in
turning the business around during the pendency of the Chapter
11 case. It was his belief that an equity interest in the company
to the management group would provide an additional incentive to make
the business successful and to ensure continuity of management.
Finally, as for the stock ownership that Mr. Bluto will have for his
capital contribution, it should be noted that he is (1) offering
shareholders to buy a greater interest in the company by
another offering after the plan is confirmed and
<PAGE>
(2) his offer must be compared to what has been put forward at this
point. In fact only one offer has actually been made. That was on
behalf of Dwight Egan for a company known as DDRK, Inc.
That offer preserved no stock for existing shareholders and the
amount of cash was no more than that offered by Mr. Bluto. Furthermore,
since his offer provided different treatment for different
creditors, it has the potential for being difficult to confirm the plan.
The Bluto plan by contrast is supported by the Official Unsecured
Creditors Committee.
II. Determination of number of shares of Common Stock
-------------------------------------------------
The number os shares of Common Stock to be issued pursuant to the
Plan to shareholders and creditors of the Debtor, to management of the
Debtor, and to investors in Phase I and Phase II, has
been arbitrarily determined by negotiation between the Debtor and Mr.
Bluto. The number of shares of Common Stock to be issued pursuant to
the Plan does not necessarily bear any relationship to the value
of any claim or interest nor should it be construed as an indication of
the value of the Common Stock. The number of shares of Common Stock it be
issued pursuant to the Plan should not be considered an
indication of the actual value of the Debtor.
III. Available Information
---------------------
The Debtor is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and has registered its
Common Stock pursuant to Section 12(g) of that Act (Commission File No.
0-21070) - In accordance therewith the Debtor is required to file reports
and other information with the Securities and Exchange Commission. The
Debtor has not filed reports or other information with the
Securities and Exchange Commission since the filing of its quarterly
report on Form 10-Q for the quarter ended March 31, 1996. The Debtor has
not filed its annual report on Form 10-K for the year
ended June 30, 1996 or its quarterly report on Form 10-Q for the quarter
ended September 30, 1996. Failure to file the required reports and
information may adversely affect any trading market for the
Common Stock and the ability of holders of the Common Stock to sell their
shares. Holders of the Common Stock and those receiving Common Stock
pursuant to the Plan may be unable to sell their shares
unless and until the Debtor complies with the requirements of the
Securities Exchange Act of 1934. If the Plan is approved at the
confirmation hearing scheduled for February 6th, 1997, the Debtor intends
to proceed with an audit of its financial statements for the year ended
June 30, 1996 and to file all reports and other information required under
the Securities Exchange Act of 1934. If the Plan is not
approved, the
<PAGE>
Debtor's present intention is to submit an alternative plan to the
Bankruptcy Court which would, among other things, result in the Debtor
not being a public company and would relieve the Debtor of any
reporting obligations under the Securities Exchange Act of 1934.
XI.
TAX IMPLICATIONS
----------------
Creditors and parties in interest should consult their own tax
professional for the advise on the tax implications of the plan.
Neither the debtor nor any of its agents purport to make any advice in
the area of taxes.
Substantial differences in the tax implications are likely to be
encountered by the Claimants because of differences in the nature of
their Claims, their taxpayer status, their method of
accounting, and the impact of prior actions they may have taken with
respect to their Claims. FOR THE FOREGOING REASONS, THE FOLLOWING
DISCUSSION DOES NOT CONSTITUTE LEGAL ADVICE TO ANY CLAIMANT AND SHOULD
NOT BE RELIED UPON AS SUCH. EACH CLAIMANT IS URGED TO SEEK ADVICE
FROM HIS OR HER OWN TAX ADVISOR WITH RESPECT TO THE FEDERAL INCOME TAX
AND STATE AND LOCAL INCOME TAX IMPLICATIONS OF THE PLAN.
XII.
APPROVAL OF THE PLAN
--------------------
A. Requirements of Voting
----------------------
A creditor, in order to vote on the proposed Plan, must have filed a
proof of claim with the Bankruptcy Court prior to the Bar Date unless
that creditor was scheduled by the Debtor in Debtor's Schedules and
Statement of Affairs as not disputed, liquidated and not contingent.
Any creditor scheduled as not disputed, liquidated and not contingent,
is, to the extent scheduled deemed to have filed a Claim pursuant to
1111(a) of the Bankruptcy Code, and absent objection by the Debtor or a
party in interest, such Claim is deemed allowed.
Only the members of those Classes whose Claims are impaired under the
proposed Plan will be entitled to vote for acceptance or rejection of the
proposed Plan. HOLDERS OF CONTESTED CLAIMS ARE NOT ENTITLED TO VOTE ON
THE PROPOSED PLAN UNLESS THEY REQUEST PERMISSION FROM THE BANKRUPTCY COURT,
PURSUANT TO BANKRUPTCY RULE 3018, TO TEMPORARILY ALLOW THEIR
<PAGE>
CLAIM IN APPROPRIATE AMOUNTS SOLELY FOR THE PURPOSE OF ENABLING SUCH
HOLDER TO VOTE ON THE PROPOSED PLAN. A ballot, once submitted by a
creditor, can only be changed or withdrawn for cause shown after
notice and a hearing before the Bankruptcy Court pursuant to Bankruptcy
Rule 3018.
DEBTOR RESERVES THE RIGHT, PURSUANT TO 11 U.S.C. 1126(e) OF THE
BANKRUPTCY CODE, TO REQUEST THE BANKRUPTCY COURT TO STRIKE ANY REJECTION
OF THE PROPOSED PLAN BY ANY HOLDER OF A CLAIM THAT IS NOT MADE
IN GOOD FAITH.
B. Plan Proponent
--------------
In a Chapter 11 case, the Debtor is the only possible proponent of a
proposed plan of Reorganization during the initial 120 days of the
bankruptcy proceedings unless certain special limitations are imposed
by the Bankruptcy Court. At this time, the Debtor is the only known party
preparing a Plan.
C. Acceptance of the Proposed Plan
-------------------------------
For the proposed Plan to be accepted by the creditors and thereafter
confirmed by the Bankruptcy Court, each holder of a claim may consent to
the treatment of its claim under the provisions of the
Plan or the Plan must be accepted by each Class of Impaired Claims.
Under 11 U.S.C. 1126, an impaired Class of Claims is deemed to have
accepted the proposed Plan if the holders representing at
least two-thirds (2/3) in total amount and more than one-half (1/2) in the
number of claims that have voted in that particular Class have accepted
the proposed Plan. Consent, on the other hand, is a
defined term that has specific applications throughout the Plan.
IF YOU ARE INCLUDED IN ONE OF THE CLASSES OF CREDITORS WHOSE INTERESTS
ARE AFFECTED BY DEBTOR'S PROPOSED PLAN, IT IS ESSENTIAL THAT YOU VOTE OR
INDICATE WHETHER YOU CONSENT. IF YOU FAIL TO VOTE OR
AFFIRMATIVELY INDICATE NON-CONSENT, YOUR RIGHTS MAY BE JEOPARDIZED.
Debtor shall send ballots to the known holders of allowed claims and
all disputed claims. However, only the holders of allowed claims are
entitled to vote on the proposed Plan. As previously
mentioned, a claim to which an objection has been filed or which has been
scheduled as disputed by the Debtor is not an allowed claim unless and
until the Bankruptcy Court rules on the objection and any
appeals are finally
<PAGE>
determined. Disputed claims may be deemed to consent absent affirmative
rejection.
The forms of ballot for each of the Classes entitled to vote on the
proposed Plan will be sent to you with a copy of the Court approved
Disclosure Statement and the proposed Plan. PLEASE READ THE
BALLOT CAREFULLY. Upon execution of the ballots, please return the ballot
to counsel for Debtor at:
Thomas Carlson
Attorney for ITEC
P.O. Box 50280
Springfield, MO 65805
Telephone: 417-864-7772
Facsimile: 417-864-7894
Ballots must be postmarked no later the date provided for in the
enclosed Order.
In addition, the Bankruptcy Court will hold a hearing on confirmation of
the Debtor's proposed Plan commencing on the date and time, and at the
location, set forth in the enclosed Order. Any and all objections to
confirmation of the proposed Plan must be in writing; must state with
specificity the grounds for any such objections; and must be filed with
the Clerk of Bankruptcy Court and served upon counsel for Debtor at the
address indicated above within the time specified by the Bankruptcy Court.
SINCE MAIL DELAYS MAY INEVITABLY OCCUR, IT IS IMPORTANT THAT THE BALLOT
OR BALLOTS BE MAILED OR OTHERWISE DELIVERED WELL IN ADVANCE OF THE DATE
SPECIFIED BY THE BANKRUPTCY COURT. ANY BALLOT RECEIVED
AFTER THE DATE SPECIFIED BY THE BANKRUPTCY COURT MAY NOT BE INCLUDED IN
ANY CALCULATION BY THE DEBTOR TO DETERMINE WHETHER THE DEBTOR'S CREDITORS
HAVE VOTED TO ACCEPT OR REJECT THE PLAN.
D. Confirmation by Cramdown
------------------------
Pursuant to 1129(b) of the Bankruptcy Code, the Court is hereby
requested to confirm the Plan as to any Class of Claims or Interests
that does not accept it. To do so, the Court must find that at
least one impaired Class of Claims has accepted the Plan and the Plan:
(1) is fair and equitable with respect to each Class of Claims or
Interests that is impaired and has not accepted the Plan; (2) that
each holder of a Claim or Interest receives or retains under the Plan,
an account of such Claim or Interest, property of a value, as of the
Effective Date of the Plan, that is not less than the amount
that would be received or retained if the Debtor's property
<PAGE>
were liquidated under Chapter 7 of the Bankruptcy Code.
Debtor believes the second requirement is satisfied as demonstrated
by the Liquidation Analysis set forth herein. Debtor believes the first
requirement is satisfied with respect to any Class that
might not accept the Plan.
If a Class of Secured Claims does not accept the Plan, the Bankruptcy
Code provides that the fair and equitable requirement is satisfied if
the Class retains its lien and receives
deferred cash payments of a present value equal to the value of the
Claimant's Secured Interest in the Property.
XII.
MISCELLANEOUS PROVISIONS
------------------------
A. No Additional Charges
---------------------
Except as expressly stated in the proposed Plan, or as allowed by the
Bankruptcy Court by order, no interest, penalty, late charge, or additional
charges (such as attorneys' fees) shall be allowed on
any Claim subsequent to the filing date unless otherwise expressly stated
in the proposed Plan.
B. Executory Contracts and Unexpired Leases
----------------------------------------
The Debtor shall assume the Ground Lease and the IMAX Lease. To the
extent the Debtor is a party to any other executory contracts or unexpired
leases, all such executory contracts and unexpired leases
are deemed rejected, unless the Debtor specifically assumes such contracts
or leases prior to the Confirmation Date, subject to Court approval.
C. Defects, Omissions and Conflicts
--------------------------------
After confirmation of the proposed Plan, Debtor may, with the approval of
the Bankruptcy Court, and so long as it does not materially or adversely
affect the interest of creditors, remedy any defect
or omission, or reconcile any inconsistencies in the Plan or in the order
for confirmation in such manner as may be necessary to carry out the
purposes and the effect of the Plan.
D. Securities Laws and Exemption from Registration
-----------------------------------------------
Any satisfaction provided to any creditor pursuant to the proposed Plan
which may be deemed to be a security is exempt from registration under
certain state and federal securities laws pursuant to 11
U.S.C. 1145. Absent
<PAGE>
registration or another exemption from the requirements of registration
pursuant to the Securities Act of 1933, as amended, and any applicable
state securities law, the subsequent transfer of any such
securities is not so exempt.
XIII.
RECOMMENDATION OF DEBTOR
------------------------
It is Debtor's position that its proposed Plan is meritorious for at
least one of the following non-exclusive reasons: (1) The proposed Plan
does not discriminate unfairly against unsecured
creditors and is in the best interests of the Debtor and all of its
creditors, and (2) the proposed Plan provides the Debtor with the
opportunity to maximize the value of its assets and the monetary
recovery to its creditors.
DATED this 18th day of December, 1996.
--------
/s/ Thomas Carlson
----------------------------
Thomas Carlson, MO Bar 28843
Attorney for Debtor
PO Box 50280
Springfield MO 65805-0280
Telephone: 417-864-7772
Facsimile: 417-864-7894
<PAGE>
ITEC ATTRACTIONS
Ozark's Discovery IMAX Theater & Mall
& McFarlain's Restaurant
NOVEMBER Comparative Analysis
Preliminary Figures
REVENUE
Theater Tickets $140,945 $144,000 $155,046
Restaurant 155,203 180,500 239,989
Concession & Gift 24,504 25,500 34,233
Retail Lease Revenue 46,236 45,000 56,772
TOTALS $366,888 $395,000 $486,040
CASH BALANCE
<PAGE>
ITEC CONSOLIDATED CASH BUDGET
CALENDAR YEAR 1997
8% 20 YR. BANK LOAN WITH MCFARLAIN'S EXPANSION
<TABLE>
<CAPTION>
January February March April May June
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PAID THEATER ADMISSIONS 5,000 7,000 23,000 23,000 33,000 35,000
Average Ticket Price 6.25 6.00 5.50 6.25 6.00 6.00
PAID RESTAURANT GUESTS 3,000 3,680 13,000 26,800 37,500 30,300
Average Check 6.22 6.25 6.25 6.29 6.30 6.30
REVENUES
TICKET SALES 31,250 42,000 126,500 143,750 198,000 210,000
CONCESSION SALES 2,500 3,000 11,000 7,000 10,000 14,000
SOUVENIR & GIFT SALES 2,500 2,500 7,500 11,500 15,000 18,000
MCFARLAIN'S RESTAURANT SALES 18,650 23,000 81,300 168,700 236,300 191,000
MALL RENTAL INCOME 32,900 32,900 32,900 34,000 52,000 42,000
----------------------------------------------------------
TOTAL REVENUES 87,800 103,400 259,200 364,950 511,300 475,000
COST OF REVENUES
COS - TICKET COSTS 0 0 0 200 200 6,000
COS - IMAX RENT 7,750 7,750 7,750 7,750 7,750 7,750
COS - IMAX ADDITIONAL RENT 0 0 0 0 0 0
COS - FILM LICENSE FEES 1,600 2,240 11,270 7,360 10,560 16,800
COS - FILM PRINTS & REPAIRS 0 0 25,000 0 0 0
COGS - CONCESSIONS 1,250 1,500 5,500 3,500 5,000 7,000
COGS - SOUVENIRS & GIFTS 1,375 1,375 4,125 6,325 8,250 9,900
COGS - FOOD & BEVERAGE 5,595 6,900 22,765 47,235 64,980 53,480
----------------------------------------------------------
TOTAL COST OF REVENUES 17,570 19,765 76,410 72,370 96,740 100,930
LABOR COSTS*
GIFT SHOP 2,700 1,660 2,400 3,000 3,300 3,300
MAINTENANCE 1,500 1,000 2,000 2,000 2,000 2,000
MANAGEMENT SALARIES 13,250 11,700 11,700 11,700 11,700 11,700
MARKETING SALARIES 5,700 3,800 3,800 3,800 3,800 3,800
MARKETING LABOR 600 0 2,700 2,700 2,700 2,700
OFFICE STAFF 2,425 1,800 1,800 1,800 1,800 1,800
PROJECTION LABOR 7,600 5,500 5,500 5,500 5,500 5,500
THEATER SUPERVISION 9,000 6,000 6,000 6,000 6,000 6,000
THEATER LABOR 8,500 1,000 12,000 15,000 17,000 16,000
RESTAURANT MGMT SALARIES 14,940 9,960 9,960 9,960 9,960 9,960
RESTAURANT LABOR 10,850 9,800 26,000 47,235 63,800 53,480
----------------------------------------------------------
TOTAL LABOR COSTS 77,065 52,220 83,860 108,695 127,560 116,240
* Three Pay Periods in January & August
<PAGE>
OTHER EMPLOYEE COSTS
FICA 3,690 2,340 3,450 3,710 3,875 3,800
FUTA 155 100 145 155 160 160
SUTA 515 325 480 515 540 530
WORKER'S COMP INS 1,180 750 1,100 1,185 1,240 1,215
MEDICAL INSURANCE 4,500 4,500 4,500 4,500 4,500 4,500
SALARY CONTINUATION 2,855 2,855 2,855 2,855 2,855 2,855
RESTAURANT PAYROLL TAX 3,610 2,765 5,035 8,010 10,325 8,880
RESTAURANT WORKER'S COMP INS 1,015 790 1,440 2,290 2,950 2,540
RESTAURANT MEDICAL INS 1,300 1,300 1,300 1,300 1,300 1,300
----------------------------------------------------------
TOTAL OTHER EMPLOYEE COSTS 18,820 15,725 20,305 24,520 27,745 25,780
OPERATING EXPENSES
EQUIPMENT LEASE 2,000 2,000 2,000 2,000 2,000 2,000
REAL PROPERTY TAX 0 0 0 0 0 0
PERSONAL PROPERTY TAX 0 0 0 0 0 0
CASUALTY INS. 4,000 4,000 4,000 4,000 2,000 0
FRANCHISE TAX 0 0 0 0 0 0
LICENSES 400 400 400 400 400 400
SALES TAX 100 100 100 100 100 100
BUILDING MAINTENANCE & REPAIR 3,500 3,500 3,500 4,500 4,500 4,500
EQUIPMENT MAINT & REPAIR 8,500 8,500 8,500 8,500 8,500 8,500
VEHICLE MAINT 200 200 200 200 200 200
UTILITIES 8,000 8,000 8,000 8,000 8,000 8,000
BLDG/CUSTODIAL SUPPLIES 1,650 1,650 1,650 1,650 1,650 1,650
PROJECTION EQUIP. SUPPLIES 1,000 1,000 3,000 3,000 1,000 3,000
GIFT SHOP EXPENSES 250 250 250 250 250 250
CORPORATE FEES OR ACCOUNTING 6,000 6,000 6,000 6,000 6,000 6,000
MEALS & ENTERTAIN 500 500 500 500 500 500
DRIVERS LOUNGE EXPENSE 0 0 0 100 100 100
ADVERTISING/THEATER 4,800 17,000 44,500 22,600 36,600 19,200
UNIFORMS 0 0 1,500 0 0 1,500
SALES PROMOTION / NEIGHBORS 0 0 500 400 400 400
TRADE SHOWS 1,500 1,500 2,500 1,500 1,500 0
RESTAURANT OUTSIDE SERVICES 1,050 440 715 840 815 840
RESTAURANT LINEN & UNIFORM 130 130 200 1,000 1,000 260
RESTAURANT OPERATING SUPPLIES 560 690 2,500 5,700 7,000 4,775
<PAGE>
RESTAURANT DISH SUPPLIES 150 150 500 850 1,180 955
RESTAURANT ADVERTISING 4,610 3,010 4,610 4,750 4,000 4,150
RESTAURANT COUPON DISCOUNTS 300 300 300 300 300 300
RESTAURANT PROMOTIONS 400 400 400 400 400 400
RESTAURANT UTILITIES 4,500 4,000 4,000 4,000 4,000 4,500
RESTAURANT EQUIPMENT LEASE 400 400 400 600 600 600
RESTAURANT DUES & SUBSC 50 50 50 50 50 50
RESTAURANT OFFICE SUPPLIES 200 200 200 200 200 200
RESTAURANT MARKETING FEES 2,000 2,000 2,000 2,000 2,000 2,000
RESTAURANT MAINT & REPAIRS 400 400 500 700 700 700
RESTAURANT BUILD RENT 5,000 5,000 5,000 8,435 11,815 9,550
RESTAURANT CAM 2,400 2,400 2,400 2,400 2,400 2,400
RESTAURANT CASUALTY INS 1,100 1,100 1,100 1,100 1,100 1,100
RESTAURANT LICENSES 300 300 300 300 300 300
----------------------------------------------------------
TOTAL OPERATING EXPENSES 65,950 75,570 112,275 97,325 111,560 89,380
GENERAL INCOME
CONDO PAYMENT 1,000 1,000 1,000 1,000 1,000 1,000
SHARED EXP - RESTAURANT (2,000) (2,000) (2,000) (2,000) (2,000) (2,000)
INTEREST INCOME (1,000) (700) (450) (450) (800) (800)
-------------------------------------------------
TOTAL GENERAL INCOME (2,000) (1,700) (1,450) (1,450) (1,800) (1,800)
GENERAL EXPENSES
TRAVEL EXPENSE 1,500 500 1,000 1,000 1,000 1,000
VEHICLE OPERATION 250 250 250 250 250 250
VEHICLE LEASE / USE 600 600 600 1,200 700 700
EMPLOYEE RELATIONS 0 0 500 500 250 250
MEMBERSHIPS, DUES 500 500 500 500 500 500
COMMUNITY RELATIONS 0 0 0 250 250 250
PROFESSIONAL SERVICES 0 0 0 0 250 250
ACCOUNTING/AUDIT FEES 0 0 0 600 600 600
LEGAL FEES 500 500 500 1,000 1,000 1,000
POSTAGE 500 1,000 1,000 500 1,000 500
TELEPHONE 2,400 2,400 2,400 2,400 2,400 2,400
OVERNIGHT MAIL 250 250 250 250 250 250
OFFICE SUPPLIES/PRINT 500 500 2,000 2,000 2,000 2,000
<PAGE>
BOARD OF DIRECTORS EXPENSE 0 0 1,000 1,000 1,000 1,000
PUBLIC COMPANY EXPENSE 9,000 9,000 9,000
FINANCING EXPENSE 100 100 100 100 100 100
CREDIT CARD FEES 220 285 870 975 1,340 1,450
BANK CHARGES 300 300 300 300 300 300
CASH OVER/SHORT THEATER 75 75 75 75 75 75
INTEREST EXPENSE - BOATMENS 24,000 24,000 24,000 24,000 24,000 24,000
INTEREST EXPENSE - OTHER 2,000 2,000 2,000 2,000 2,000 2,000
MISCELLANEOUS EXPENSE 1,500 1,500 1,500 1,500 1,500 1,500
RESTAURANT TELEPHONE & FAX 350 350 350 350 350 350
RESTAURANT BANK CHARGES 100 100 100 100 100 100
RESTAURANT CREDIT CARD FEES 75 90 325 740 945 760
RESTAURANT PRINTING 400 400 800 400 400 2,200
---------------------------------------------------------
TOTAL GENERAL EXPENSES 36,120 35,700 40,420 50,990 51,560 52,785
TOTAL GENERAL INC & EXP 34,120 34,000 38,970 49,540 49,760 50,985
---------------------------------------------------------
ADDTL CASH FLOW - MCFARLAINS BUILDOUT 0 0 0 0 0 13,850
----------------------------------------------------------
CASH FLOWS BEFORE PRIN. PYMTS. (125,725) (93,880) (72,620) 12,500 97,935 105,535
CAPITAL EXPENDITURES/REPAIRS 0 0 0 0 0 5,000
PRIN. PAYMENT -- BOATMENS LOAN 6,110 6,110 6,110 6,110 6,110 6,110
PRIN. PAYMENT -- OTHER 1,620 1,620 1,620 1,620 1,620 1,620
CASH FLOW AFTER PRIN. PYMTS. (133,455) (101,610) (80,350) 4,770 90,205 92,805
</TABLE>
<PAGE>
ITEC CONSOLIDATED CASH BUDGET
CALENDAR YEAR 1997
8% 20 YR. BANK LOAN WITH MCFARLAIN'S EXPANSION
<TABLE>
<CAPTION>
Year
July August September October November December Total
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
PAID THEATER ADMISSIONS 42,000 36,000 30,000 33,000 25,000 20,000 312,000
Average Ticket Price 6 6 6 6 6 6 6
PAID RESTAURANT GUESTS 28,750 29,850 37,150 44,750 30,600 24,900 310,280
Average Check 6 6 6 6 6 6 6
REVENUES
TICKET SALES 252,000 225,000 187,500 198,000 150,000 120,000 1,884,000
CONCESSION SALES 18,000 15,000 9,000 9,000 8,000 7,000 113,500
SOUVENIR & GIFT SALES 22,000 20,000 20,000 30,000 25,000 17,500 191,500
MCFARLAIN'S RESTAURANT SALES 179,625 186,500 234,000 282,000 192,850 156,775 1,950,700
MALL RENTAL INCOME 46,000 45,000 54,000 57,000 53,000 40,000 521,700
---------------------------------------------------------------------
TOTAL REVENUES 517,625 491,500 504,500 576,000 428,850 341,275 4,661,400
COST OF REVENUES
COS - TICKET COSTS 200 200 200 200 200 200 7,600
COS - IMAX RENT 7,750 7,750 7,750 7,750 7,750 7,750 93,000
COS - IMAX ADDITIONAL RENT 0 0 0 1,140 1,500 1,200 3,840
COS - FILM LICENSE FEES 21,840 17,280 8,400 9,240 8,000 8,000 122,590
COS - FILM PRINTS & REPAIRS 0 6,000 0 25,000 0 0 56,000
COGS - CONCESSIONS 9,000 7,500 4,500 4,500 4,000 3,500 56,750
COGS - SOUVENIRS & GIFTS 12,100 11,000 11,000 16,500 13,750 9,625 105,325
COGS - FOOD & BEVERAGE 50,295 52,220 65,520 76,140 52,065 42,330 539,525
---------------------------------------------------------------------
TOTAL COST OF REVENUES 101,185 101,950 97,370 140,470 87,265 72,605 984,630
LABOR COSTS*
GIFT SHOP 3,300 5,000 3,300 3,300 3,000 2,500 36,760
MAINTENANCE 2,000 4,000 2,000 2,000 2,000 2,000 24,500
MANAGEMENT SALARIES 11,700 13,250 11,700 11,700 11,700 11,700 143,500
MARKETING SALARIES 3,800 5,700 3,800 3,800 3,800 3,800 49,400
MARKETING LABOR 2,700 4,000 2,700 2,700 2,700 2,700 28,900
OFFICE STAFF 1,800 2,700 1,800 1,800 1,800 1,800 23,125
PROJECTION LABOR 5,500 8,250 5,500 5,500 5,500 5,500 70,850
THEATER SUPERVISION 6,000 9,000 6,000 6,000 6,000 6,000 78,000
THEATER LABOR 18,000 24,000 16,000 17,000 15,000 15,000 174,500
RESTAURANT MGMT SALARIES 9,960 14,940 9,960 9,960 9,960 9,960 129,480
RESTAURANT LABOR 50,295 52,220 65,520 73,320 52,065 43,895 548,480
--------------------------------------------------------------------
TOTAL LABOR COSTS 115,055 143,060 128,280 137,080 113,525 104,855 1,307,495
* Three Pay Periods in January & August
<PAGE>
OTHER EMPLOYEE COSTS
FICA 3,945 5,465 3,800 3,875 3,710 3,672 45,330
FUTA 165 230 160 160 155 153 1,899
SUTA 550 760 530 540 515 510 6,309
WORKER'S COMP INS 1,260 1,745 1,215 1,240 1,185 1,173 14,488
MEDICAL INSURANCE 4,500 4,500 4,500 4,500 4,500 4,500 54,000
SALARY CONTINUATION 2,855 2,855 2,855 2,855 2,855 2,855 34,260
RESTAURANT PAYROLL TAX 8,435 10,075 11,320 11,660 8,685 8,540 97,340
RESTAURANT WORKER'S COMP INS 2,410 3,155 3,550 3,330 2,480 2,155 28,105
RESTAURANT MEDICAL INS 1,300 1,300 1,300 1,300 1,300 1,300 15,600
--------------------------------------------------------------------
TOTAL OTHER EMPLOYEE COSTS 25,420 30,085 29,230 29,460 25,385 24,860 297,340
OPERATING EXPENSES
EQUIPMENT LEASE 2,000 2,000 2,000 2,000 2,000 2,000 24,000
REAL PROPERTY TAX 0 0 0 0 0 72,000 72,000
PERSONAL PROPERTY TAX 0 0 0 0 0 22,000 22,000
CASUALTY INS. 0 0 10,000 4,000 4,000 4,000 40,000
FRANCHISE TAX 0 0 0 0 7,000 0 7,000
LICENSES 400 400 400 400 400 400 4,800
SALES TAX 100 100 100 100 100 100 1,200
BUILDING MAINTENANCE & REPAIR 4,500 4,500 4,500 4,500 4,500 4,500 51,000
EQUIPMENT MAINT & REPAIR 8,500 8,500 8,500 8,500 8,500 8,500 102,000
VEHICLE MAINT 200 200 200 200 200 200 2,400
UTILITIES 8,000 8,000 8,000 8,000 8,000 8,000 96,000
BLDG/CUSTODIAL SUPPLIES 1,650 1,650 1,650 1,650 1,650 1,650 19,800
PROJECTION EQUIP. SUPPLIES 3,000 1,000 3,000 3,000 1,000 3,000 26,000
GIFT SHOP EXPENSES 250 250 250 250 250 250 3,000
CORPORATE FEES OR ACCOUNTING 6,000 6,000 6,000 6,000 6,000 6,000 72,000
MEALS & ENTERTAIN 500 500 500 500 500 500 6,000
DRIVERS LOUNGE EXPENSE 100 100 150 150 150 150 1,100
ADVERTISING/THEATER 25,300 17,100 19,800 24,300 14,200 14,100 259,500
UNIFORMS 0 0 700 1,500 700 0 5,900
SALES PROMOTION / NEIGHBORS 400 400 400 400 400 400 4,100
TRADE SHOWS 0 0 1,000 1,000 2,000 2,000 14,500
RESTAURANT OUTSIDE SERVICES 965 1,265 690 1,265 640 640 10,165
RESTAURANT LINEN & UNIFORM 1,260 1,260 260 260 260 260 6,280
RESTAURANT OPERATING SUPPLIES 4,840 6,675 8,120 8,460 4,820 3,915 58,055
<PAGE>
RESTAURANT DISH SUPPLIES 900 933 1,170 1,400 965 800 9,953
RESTAURANT ADVERTISING 3,810 4,410 6,710 3,810 6,210 5,110 55,190
RESTAURANT COUPON DISCOUNTS 300 300 300 300 300 300 3,600
RESTAURANT PROMOTIONS 400 400 400 400 400 400 4,800
RESTAURANT UTILITIES 4,500 5,000 5,000 5,000 4,000 4,000 52,500
RESTAURANT EQUIPMENT LEASE 600 600 600 600 600 600 6,600
RESTAURANT DUES & SUBSC 50 50 50 50 50 50 600
RESTAURANT OFFICE SUPPLIES 200 200 200 200 200 200 2,400
RESTAURANT MARKETING FEES 2,000 2,000 2,000 2,000 2,000 2,000 24,000
RESTAURANT MAINT & REPAIRS 700 700 700 700 700 700 7,600
RESTAURANT BUILD RENT 8,981 9,325 11,700 14,100 9,650 7,850 106,406
RESTAURANT CAM 2,400 2,400 2,400 2,400 2,400 2,400 28,800
RESTAURANT CASUALTY INS 1,100 1,100 1,100 1,100 1,100 1,100 13,200
RESTAURANT LICENSES 300 300 300 300 300 300 3,600
--------------------------------------------------------------------
TOTAL OPERATING EXPENSES 94,205 87,620 108,850 108,795 96,145 180,375 1,228,050
GENERAL INCOME
CONDO PAYMENT 1,000 1,000 1,000 1,000 1,000 1,000 12,000
SHARED EXP - RESTAURANT (2,000) (2,000) (2,000) (2,000) (2,000) (2,000) (24,000)
INTEREST INCOME (1,150) (1,600) (1,900) (2,200) (2,600) (2,600) (16,250)
---------------------------------------------------------------------
TOTAL GENERAL INCOME (2,150) (2,600) (2,900) (3,200) (3,600) (3,600) (28,250)
GENERAL EXPENSES
TRAVEL EXPENSE 2,000 1,000 4,000 1,000 1,000 2,000 17,000
VEHICLE OPERATION 250 250 250 250 250 250 3,000
VEHICLE LEASE / USE 700 700 700 700 700 700 8,600
EMPLOYEE RELATIONS 1,000 250 250 250 250 1,500 5,000
MEMBERSHIPS, DUES 500 500 500 500 500 500 6,000
COMMUNITY RELATIONS 250 250 250 250 250 250 2,250
PROFESSIONAL SERVICES 250 0 0 250 0 0 1,000
ACCOUNTING/AUDIT FEES 600 600 600 600 600 600 5,400
LEGAL FEES 1,000 1,000 1,000 1,000 1,000 1,000 10,500
POSTAGE 500 1,000 1,000 500 500 500 8,500
TELEPHONE 2,400 2,400 2,400 2,400 2,400 2,400 28,800
OVERNIGHT MAIL 250 250 250 250 250 250 3,000
OFFICE SUPPLIES/PRINT 2,000 2,000 2,000 2,000 2,000 2,000 21,000
<PAGE>
BOARD OF DIRECTORS EXPENSE 1,000 1,000 1,000 1,000 1,000 1,000 10,000
PUBLIC COMPANY EXPENSE 9,000 9,000 9,000 9,000 9,000 9,000 81,000
FINANCING EXPENSE 100 100 100 100 100 100 1,200
CREDIT CARD FEES 1,750 1,560 1,300 1,420 1,100 870 13,140
BANK CHARGES 300 300 300 300 300 300 3,600
CASH OVER/SHORT THEATER 75 75 75 75 75 75 900
INTEREST EXPENSE - BOATMENS 24,000 24,000 24,000 24,000 24,000 24,000 288,000
INTEREST EXPENSE - OTHER 2,000 2,000 2,000 2,000 2,000 2,000 24,000
MISCELLANEOUS EXPENSE 1,500 1,500 1,500 1,500 1,500 1,500 18,000
RESTAURANT TELEPHONE & FAX 350 350 350 350 350 350 4,200
RESTAURANT BANK CHARGES 100 100 100 100 100 100 1,200
RESTAURANT CREDIT CARD FEES 720 930 1,170 1,400 770 630 8,555
RESTAURANT PRINTING 400 400 400 400 400 400 7,000
--------------------------------------------------------------------
TOTAL GENERAL EXPENSES 52,995 51,515 54,495 51,595 50,395 52,275 580,845
TOTAL GENERAL INC & EXP 50,845 48,915 51,595 48,395 46,795 48,675 552,595
--------------------------------------------------------------------
ADDTL CASH FLOW - MCFARLAINS B 13,660 13,715 13,660 6,265 11,735 12,095 84,980
--------------------------------------------------------------------
CASH FLOWS BEFORE PRIN. PYMTS. 144,575 93,585 102,835 118,065 71,470 (78,000) 376,270
CAPITAL EXPENDITURES/REPAIRS 0 0 5,000 0 0 0 10,000
PRIN. PAYMENT -- BOATMENS LOAN 6,110 6,110 6,110 6,110 6,110 6,110 73,320
PRIN. PAYMENT -- OTHER 1,620 1,620 1,620 1,620 1,620 1,620 19,440
CASH FLOW AFTER PRIN. PYMTS. 136,845 85,855 90,105 110,335 63,740 (85,730) 273,510
</TABLE>
