UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB
(Mark One)
[ ] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934 [Fee Required] for the fiscal year ended June 30, 1998.
[ X] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required] for the transition period from July 1,
1998 to December 31, 1998.
Commission file number 0-21070
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
U.S. Virgin Islands 66-0426648
- ----------------------- ---------------------------------
(State of Incorporation) (IRS Employer Identification No.)
3562 Shepherd of the Hills Expressway
Branson, Missouri 65616
(417) 335-3533
Securities registered pursuant to Section 12(b) of the
Act: None Securities registered pursuant to Section
12(g) of the Act:
Common Stock, $.001 par value
Check whether the registrant (1) filed all reports required to be filed by
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months, and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
--- ---
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. X
---
The registrant's revenues for transition period July 1, 1998 to December 31,
1998 were $3,938,558.
The aggregate market value of the voting stock held by non-affiliates of the
registrant was approximately $425,000 as of March 25, 1999, computed by
reference to the price at which the stock was sold, or the average bid and asked
prices of such stock.
Check whether the issuer has filed all documents and reports required by Section
12, 13 or 15(d) of the Exchange Act after the distribution of securities under a
plan confirmed by a court. Yes X No .
--- ---
The number of shares outstanding of the registrant's class of common equity as
of March 25, 1999:
Class Shares Outstanding
----- ------------------
Common Stock, $.001 par value 7,937,638
Exhibit index at page 13.
Transitional Small Business Disclosure Format (check one): Yes No X .
--- ---
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PART I
Item 1. Description of Business
-----------------------
International Tourist Entertainment Corporation (the "Company"), a U.S.
Virgin Islands corporation, was incorporated June 3, 1986, to develop, finance,
own and operate destination, giant screen theaters and associated amenities in
popular tourist locations. The Company developed one facility and does not
currently have plans to develop any additional facilities.
The Company currently owns and operates a major entertainment facility
in Branson, Missouri, known as the IMAX(R) Entertainment Complex. The Branson
facility was constructed by the Company and commenced operations on October 8,
1993. The IMAX(R) Entertainment Complex consists of the Ozarks Discovery IMAX(R)
Theater, a giant screen motion picture theater, the Remember When Theater which
features live performances, McFarlain's, a full service restaurant, retail
shops, various food concessions and related amenities.
The Company produced and owns an IMAX(R) theme film entitled "Ozarks:
Legacy and Legend." The theme film premiered on April 28, 1995 and is exhibited
only at the Ozarks Discovery IMAX(R) Theater. The Company also rents giant
screen films and 35mm feature films from third parties for exhibition at its
Branson facility.
Revenues from the Branson facility are generated from four general
sources: (1) ticket sales for admission to the IMAX(R) Theater; (2) lease of
retail space; (3) operation of restaurant facilities, retail shops, and
concessions owned by the Company in the Branson facility; and (4) ticket sales
for admission to the Remember When Theater.
On January 25, 1996, the Company filed a voluntary petition for relief
under Chapter 11 of the United States Bankruptcy Code, Case No. 96-60122-S-11
(Chapter 11), with the United States Bankruptcy Court, Western District of
Missouri, Southern Division. On December 18, 1996, the Company filed its Second
Amended Plan of Reorganization (the "Plan of Reorganization") and its Second
Amended Disclosure Statement in Support of Proposed Debtor's Second Amended Plan
of Reorganization dated December 18, 1996 (the "Disclosure Statement") with the
United States Bankruptcy Court. On February 6, 1997, an Order Confirming the
Plan of Reorganization was entered by the United States Bankruptcy Court in the
matter of In Re: International Tourist Entertainment Corporation, Debtor and
Debtor-in-Possession.
The Plan of Reorganization has proven effective. The Company has
operated with significant positive cash flow since emerging from Chapter 11.
IMAX(R) Entertainment Complex, Branson, MO
- ------------------------------------------
The Company's Branson facility is known as the IMAX(R) Entertainment
Complex. The Complex features a 532 seat IMAX(R) giant screen theater with a
screen that is 6 stories tall and 83 feet wide. This theater is known as the
"Ozarks Discovery IMAX(R) Theater." Other features of the Complex which are
operated by the Company are:
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- - McFarlain's Family Restaurant, one of Branson's most popular eating
establishments. The Restaurant seats 600 people and features regional
food specialties as well as home baked pies and other desserts.
- - The Back Porch, an Ozark style deli. This deli seats some 140 people
and features various homemade food products.
- - The Remember When Theater, a 220 seat live performance theater.
Currently, the theater stars Mike Radford who presents a comedy and
patriotic show, which honors our heritage and pays tribute to our
country. On April 2, 1999, Jimmie Rodgers, a popular singer during the
'60's, will begin holding an early evening show entitled "Jimmie
Rodgers Remembers."
- - Legacy & Legend Gift Shop, which deals primarily in products which tie
to the IMAX(R) films, which are being presented in the theater or
reflect the lifestyle of the Ozarks.
The Complex also houses some 15 other tourist related retail shops and
kiosks, consisting of approximately 10,000 square feet, which are leased to and
operated by third parties.
Ozarks Discovery IMAX(R) Theater and Projection Formats
- -------------------------------------------------------
The Company's giant screen theater was designed initially to take
advantage of only the IMAX(R) film and projection format. This IMAX(R) format is
ten times larger than the 35mm film used in the typical movie theater. This
specially designed giant screen theater, configured with amphitheater style
seating, uses a special projection and sound system. The projected image fills
the screen that is 62 feet high and is 83 feet wide. The result is that giant
screen films can be displayed with great clarity at much larger than usual
viewing size, bringing the viewer "into" the film action on the screen. The
visual image is complemented with a digital, 22,000-watt, 44 speaker, surround
sound system, which management believes is one of the best theater sound systems
in the world.
The Company is leasing the giant screen projection system, sound system
and projection screen from IMAX(R) Corporation.
The Company's exclusive film, "Ozarks: Legacy & Legend," which is
exhibited three to six times per day, was produced in the IMAX(R) format. The
Company typically exhibits two to four IMAX(R) films in its regular daily
schedule, in addition to the "Ozarks: Legacy & Legend" film.
In December of 1997, the Company installed a 35mm projection system
with special lenses that allow the image of regular feature films to be
projected in such a way as to fill approximately 60% of the six story tall
screen. The projection system is tied into the powerful IMAX(R) sound system.
This combination of the largest possible visual image and perhaps the nation's
most sophisticated and effective sound system makes viewing a feature 35mm film
a memorable experience.
The 35mm projection system opened in December 1997 with "Tomorrow Never
Dies" on a "first run" basis, but typically shows "second run" or "move over"
films. During the past year the Company has shown a number of 35mm films,
including "Titanic", which was shown for several months with great success.
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The reception of this unique 35mm projection system has been
outstanding from both the local citizens and tourists. 35mm feature films are
typically longer than IMAX(R) and as a result, concession sales have increased
dramatically during the past year.
McFarlain's Family Restaurant
- -----------------------------
In May of 1995, the Company entered into an agreement to obtain the
leasehold improvements and equipment of the restaurant in the Complex, which had
been leased to a third party. In August of 1995, the name of the restaurant was
changed to McFarlain's Family Restaurant and Pie Shop and the Company began a
concerted effort to develop the restaurant into one of the major eating
establishments in Branson.
The key factors in the success of McFarlain's are quality food with
extra special service. Unique specialties like fried green tomatoes and french
fried sweet potatoes are provided to entice customers.
The Restaurant contained approximately 375 seats in 1995. In May of
1997, an addition to the restaurant of approximately 125 seats was completed.
Recently, another expansion was completed which brings total seating to slightly
over 600.
McFarlain's can now accommodate up to 15 motor coach groups per hour.
While tour groups are important, they represent only 33% of the restaurant's
business. In 1998 the restaurant served over 365,000 people.
Back Porch Deli
- ---------------
In January of 1997, the Company purchased a deli operation in the
Complex and renamed it McFarlain's Back Porch. Because of the need to expand
service and capacity, significant capital improvements were made. The Back Porch
features baked products, sandwiches, fountain products, deserts, and regional
food specialties. The Back Porch is designed to provide rapid service and to
handle high volumes.
Remember When Theater
- ---------------------
To better utilize space and broaden the entertainment offerings of the
Complex, in 1998 the Company completed the construction of a 220 seat, intimate
live performance theater in an area of the facility which had been a holding
area for the IMAX(R) Theater.
This theater was completed in March of 1998 and currently features Mike
Radford's Remember When Show. The show has a comedy and patriotic theme that is
both nostalgic and fun and has a lot of audience participation. Tony Orlando, a
popular singer, has stated, "The Mike Radford Remember When Show is the best
tribute to Veterans in Branson." The Company recently completed negotiations
with Jimmie Rodgers to hold an early evening show called "Jimmie Rodgers
Remembers." In this show Jimmie Rodgers shares his many popular hit songs from
the '60's and performs a number of new songs.
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Legacy & Legends Gift Shop
- --------------------------
In 1994, the Company began selling some gift items related to the films
which are exhibited in the IMAX(R) theater or which are representative of the
lifestyle of the Ozarks. In 1995, this operation was expanded into a
full-fledged specialty gift shop.
The Gift Shop generates the highest percentage profit of any of the
Company's departments. Sales for calendar 1998 at the Gift Shop are 20% higher
than the previous year. Sales continue to be strong during the transition
period.
Retail Shops
- ------------
Since the inception of the Complex in 1993, retail sales have been a
very important factor in creating a total experience for visitors. There are now
15 retail shops and kiosks in the Complex that are leased to third parties. The
Complex boasts the most atmospheric, comfortable and unique indoor shopping
experience in Branson.
Competition
- -----------
The Company operates a single facility in Branson, Missouri providing
entertainment, food, and shopping for tourists. The Company competes with other
entertainment attractions, restaurants, and retail shops in the Branson area.
The Company is also impacted by the competitive draw of Branson in relation to
other locations across the country.
Branson has many live performance theaters with presentations ranging
from music to comedy to drama. These theaters generally operate from May through
mid-December, although more of these theaters are now offering a limited
performance schedule in March and April. On an average, a theater offers two
performances each day, for six days a week, during the peak season, but may
offer only one performance per day or reduce the number of days per week during
slower months. Seasonality causes a definite business cycle within each year for
the Company's Branson facility.
The major attraction in Branson is Silver Dollar City, an amusement
park with an 1890's theme, which attracts almost 2 million visitors each year.
Several other attractions exist in Branson, including water parks, family
amusements, and activities related to the lake in the region. The Company has
entered into cross promotion arrangements with Silver Dollar City and with
several of the major entertainers and timeshare developers in Branson. The
IMAX(R) Entertainment Complex has become established as one of the major
attractions in Branson and approximately 1,000,000 people have visited the
facility in 1998.
Employees
- ---------
At December 31, 1998, and at June 30, 1998, the Company had
approximately 140 full-time employees and all of them work at the IMAX(R)
Entertainment Complex in Branson, Missouri.
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Item 2. Description of Property
-----------------------
The Company entered into a 50-year ground lease in July 1993 for the
5.5-acre site on which its Branson facility is located. The Company has prepaid
the first 20 years of the lease with a payment of $1,025,000. Commencing in the
21st year of the lease, the annual lease payment will be $145,000, adjusted to
reflect inflationary increases.
The Company completed the construction of its Branson facility in 1993
on the 5.5-acre site leased by the Company. The Company owns the Branson
facility subject to a mortgage in the principal amount of approximately
$3,300,000 in favor of NationsBank (formerly Boatmen's Bank of Southern
Missouri).
The Company owns a condominium in Branson, Missouri which it acquired
in 1994 for $148,000 and which is subject to a mortgage, at December 31, 1998 in
the approximate principal amount of $104,000 in favor of Great Southern Bank
with monthly payments of $962. The condominium is used as a part-time residence
by the Company's Chairman, Paul Bluto.
The Company owns no other real properties.
The Company produced and owns the giant screen theme film "Ozarks:
Legacy and Legend."
The Company has registered the service mark "ITEC Attractions(R)" and
the "McFarlain's(R)" Logo with the U.S. Patent and Trademark Office.
The properties and facilities of the Company are deemed adequate and
suitable for its operations.
Item 3. Legal Proceedings
-----------------
There are no material pending legal proceedings to which the Company is
a party or of which any of its property is the subject.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
No matter was submitted to a vote of security holders through the
solicitation of proxies or otherwise during the fourth quarter of the fiscal
year covered by this report.
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PART II
Item 5. Market for the Company's Common Equity and Related Stockholder Matters
----------------------------------------------------------------------
(a) Market Information. Since February 1998 the Company's common stock
has been traded in the over-the-counter market and quoted on the NASD's OTC
Bulletin Board under the symbol "ITEK". The common stock of the Company was
first publicly traded in December 1992. Prior to February 1996, the Company's
common stock was reported on the NASDAQ System. From February 1996 to February
1998, trading in the Company's common stock was limited and sporadic.
Over-the-counter quotations reflect inter-dealer prices, without retail mark-up,
markdown or commission and may not necessarily represent actual transactions.
The following table shows the range of high and low bid information available to
the Company for the Company's common stock for the quarterly periods indicated.
High Low
---- ----
1st Quarter (July 1996 - September 1996) 0.00 0.00
2nd Quarter (October 1996 - December 1996) 0.00 0.00
3rd Quarter (January 1997 - March 1997) 0.00 0.00
4th Quarter (April 1997 - June 1997) 0.00 0.00
1st Quarter (July 1997 - September 1997) 0.00 0.00
2nd Quarter (October 1997 - December 1997) 0.00 0.00
3rd Quarter (January 1998 - March 1998) 1.55 0.60
4th Quarter (April 1998 - June 1998) 1.20 0.40
1st Quarter (July 1998 - September 1998) 0.52 0.26
2nd Quarter (October 1998 - December 1998) 0.32 0.26
(b) Holders. The approximate number of record holders as of March 25,
1999 of the Company's common stock, $.001 par value, was 380. This number does
not include beneficial owners of shares held in "nominee" or "street" name.
Including those beneficial owners, the Company estimates total shareholders
exceed 1,200.
(c) Dividends. The Company has not paid cash dividends on its common
stock during the past two fiscal years or during the transition period. At the
present time, the Company's anticipated capital requirements are such that it
intends to follow a policy of retaining any earnings in order to finance the
development of its business.
The Company's loan agreement with NationsBank restricts the payment of
dividends to an amount not exceeding the Company's net profits plus depreciation
plus interest expense, less 1.25 times the Company's annual principal and
interest payments, unless otherwise agreed to by NationsBank.
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Recent Sales of Unregistered Securities
- ---------------------------------------
As part of the Company's plan of reorganization, in February 1997, the
Company issued 4,433,490 restricted shares of its common stock to Mr. Paul M.
Bluto in consideration of $600,000 cash. No underwriter or selling agent was
used in connection with this sale. The sale of these shares was made pursuant to
available exemptions under Section 4(2) and Section 4(6) of the Securities Act
of 1933, as amended, and the regulations promulgated pursuant thereto.
Commencing February 28, 1997 and concluding on September 10, 1997, the
Company offered and sold 2,000,000 Units at a price of $.30 per Unit for an
aggregate consideration of $600,000. Each Unit consisted of one restricted share
of the common stock of the Company and one warrant to purchase one restricted
share of the common stock of the Company at a price of $1.00 per share. No
underwriter or selling agent was used in connection with this offer and sale.
The sale of these shares was made pursuant to available exemptions under Section
4(2) and Section 4(6) of the Securities Act of 1933, as amended, and the
regulations promulgated pursuant thereto.
Item 6. Management's Discussion and Analysis or Plan of Operation
---------------------------------------------------------
Financial Condition and Results of Operations
- ---------------------------------------------
At December 31, 1998, the end of the transition period, the Company had
a cash balance of $654,760. The Company had working capital at December 31, 1998
of $257,032, and a current ratio of 1.38 to 1. The Company maintains a $200,000
unsecured line of credit facility with a national bank. No borrowings were made
under the line of credit during the reporting quarter.
Going forward, the Company expects to be able to finance its operations
and immediate capital requirements from currently available capital, cash flow
from operations, and available sources of borrowings including the line of
credit
The Company is in the process of ensuring that its internal computer
systems are Year 2000 compliant. The Company does not expect any material Year
2000 compliance issues to arise related to its primary internal business
information systems. With respect to third-party providers whose services are
critical to the Company, the Company intends to monitor the efforts of such
providers, as they become Year 2000 compliant. Management is presently not aware
of any Year 2000 issues that have been encountered by any such third-party
providers that could materially affect the Company's operations. Notwithstanding
the foregoing, there can be no assurance that the Company will not experience
operational difficulties as a result of Year 2000 issues, whether arising out of
internal operations, or caused by third-party service providers, which
individually or collectively could have an adverse impact on business operations
or require the Company to incur unanticipated expenses to remedy such problems.
The Company filed a voluntary petition for relief under Chapter 11 of
the United States Bankruptcy Code on January 25, 1996. An Order confirming the
Company's Plan of Reorganization was entered on February 6, 1997 by the United
States Bankruptcy Court. Pursuant to its Plan of Reorganization, the Company
obtained capital from the sale of its stock. At June 30, 1997, the Company had a
cash balance of $260,774 and at June 30, 1998, the Company had a cash balance of
$350,793. At June 30, 1997 and 1998, the Company had working capital of
$45,801and $8,426, respectively. The Company's financial condition continues to
improve.
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The Company is currently evaluating the feasibility of building a
three-theater complex adjacent to its current facility. This complex would show
35mm feature films. At this time, the Company does not know the cost of
constructing the complex, nor does the Company have access to the land required
for parking. The Company's evaluation of the proposed theater complex is
preliminary and no determination has been made. The Company is not considering
making any other significant purchases or sales of property or equipment during
the current fiscal year.
The Company has not been unusually impacted by inflation or changing
prices during the past two years or during the transition period.
The Company does not expect any other significant changes in the number
of employees during the current fiscal year.
The Company's revenues for the transition period ending December 31,
1998 increased approximately 10% to $3,938,558 compared to $3,587,930 for the
six-month period ending December 31, 1997. The Company's revenues for its fiscal
year ended June 30, 1998 increased approximately 24% to $5,893,074 compared to
$4,749,185 for its fiscal year ended June 30, 1997. These increases were
primarily due to increased revenues at the theater from the showing of 35mm
feature films, the opening of the Remember When Theater, and increased revenues
at McFarlain's Family Restaurant, the BackPorch Deli, and Legacy & Legend Gift
Shop.
The Company's direct costs for film exhibition increased to $329,368
for the transition period ended December 31, 1998 compared to $186,598 for the
six month period ended December 31, 1997. The Company's direct costs for film
exhibition increased to $456,410 for the fiscal year ended June 30, 1998 as
compared to $268,070 in the prior year. These increases are due to the Company
having begun showing, in December 1997, 35mm feature films, which have higher
royalties, and from an increase in theater attendance.
Restaurant expenses increased to $567,798 for the transition period
ended December 31, 1998 as compared to $533,788, for the six month period ended
December 31, 1997. Restaurant expenses increased to $862,826 for the fiscal year
ended June 30, 1998 as compared to $640,848 in the prior year period. These
increases were primarily due to increased sales volume at McFarlain's Family
Restaurant and at the BackPorch Deli.
Selling, general and administrative expenses for the transition
period ended December 31, 1998 increased approximately 12 percent to $2,522,625
compared to $2,247,068 to the same period in 1997. Selling, general and
administrative expenses for the fiscal year ended June 30, 1998 increased 21
percent to $4,355,473 as compared to $3,598,374 in the prior year. This increase
was primarily due to increases in marketing and advertising expenses and
increased costs related to the increase in revenues. Additionally, the Company's
Management incentive bonuses were accrued during the transition period ended
December 31, 1998, but were not accrued during the six months ended December 31,
1997. Management remains focused on controlling expenses while increasing
revenues at its Branson facility.
Income from operations for the transition period ended December
31, 1998 was $355,638 compared to $493,045 for same period ended December 31,
1997. Income from operations for the fiscal year ended June 30, 1998 was $38,130
compared to $114,322 in fiscal 1997.
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Interest expense for the transition period ended December 31, 1998, the
six months ended December 31, 1997, and the fiscal year ended June 30, 1998
primarily reflects carrying costs of the Company's mortgage on the Branson
theater complex. Interest expense for the 1997 fiscal year reflects carrying
costs of the Company's mortgage on the Branson theater complex, the Company's
1993 Debentures issued in September 1993, and borrowings required to complete
the production of the Ozarks film. The 1993 Debentures and other borrowings were
converted to equity in connection with the Company's Plan of Reorganization.
Net income applicable to common stock for the transition period ended
December 31, 1998 totaled $198,679 as compared to a net income of $342,380 for
the same period in 1997. This decrease in net income is primarily attributable
to increases in direct exhibition film costs and increases in overhead resulting
from expanded operations. Net loss applicable to common stock for the fiscal
year ended June 30, 1998 totaled $252,526 as compared to a net income of
$3,567,849 for 1997. The June 30, 1997 net income included an extraordinary gain
in the amount of $4,086,766 from forgiveness of debt in the Company's bankruptcy
reorganization. Without taking into account the extraordinary gain, the Company
had a net loss for its fiscal year ended June 30, 1997 of $518,917.
Item 7. Financial Statements
--------------------
The Financial Statements of the Company required by this Item are
attached as a separate section of this report and are listed in Part IV, Item 13
of this Form 10-KSB.
Item 8. Changes in and Disagreements With Accountants on Accounting and
----------------------------------------------------------------------
Financial Disclosure
--------------------
There has been no disagreement with the Company's independent certified
public accountants, Tanner & Co. Tanner & Co. have served as the Company's
accountant since June 30, 1996.
PART III
Item 9. Directors, Executive Officers, Promoters and Control Persons; Compliance
------------------------------------------------------------------------
with Section 16(a) of the Exchange Act
--------------------------------------
Directors and Executive Officers
The directors and executive officers of the Company at March 25, 1999 are:
Name Age Position in Company
- ---- --- -------------------
Paul M. Bluto 70 Chairman of the Board of
Directors, Chief Executive
Officer and Chief Financial
Officer
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Kelvyn H. Cullimore 63 Director
Kelvyn H. Cullimore, Jr. 42 Director
Francis E. McLaughlin 57 Director
Kumar V. Patel 53 Director
Thomas J. Carlson 46 Director
Lourette Ann Bluto 66 Director
Paul Rasmussen 57 President and Chief
Operating Officer
Robert J. Cardon 35 Secretary/Treasurer
Michael L. Pitman 43 Senior Vice President of
Marketing
Randy S. Brashers 31 Vice President of Operations
Kelvyn H. Cullimore is the father of Kelvyn H. Cullimore, Jr and
Lourette Ann Bluto is the wife of Paul M. Bluto. There are no other family
relationships among any of the above-named persons.
All directors of the Company are elected to hold office until the
annual meeting of the shareholders following their election and until their
successors have been duly elected and qualified. Officers of the Company are
elected by the Board of Directors at the first meeting after the annual meeting
of the Company's shareholders and hold office until their successors are chosen
and qualify, or until their death, or until they resign or have been removed
from office.
All staff personnel employed by the Company devote full-time to the
business of the Company as salaried employees, with the exception of Robert J.
Cardon and Paul Bluto. Paul Bluto is employed by GS & W Services, a Company
owned by Lourette Ann Bluto, and provides services to GS & W, such as marketing,
special projects and computerization. Mr. Bluto devotes approximately 50% of his
time to his duties for the Company. Robert Cardon is an employee of Dynatronics
Corporation and provides services to the company on an as needed basis. Mr.
Cardon devotes approximately 5% of his time to his duties for the Company.
Dynatronics Corporation is a public company, which manufactures devices for the
physical medicine market. See "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS."
Paul M. Bluto has been a Director of the Company since April 1995. He
became Chairman of the Board and Chief Financial Officer in February 1997 and on
March 1, 1999 became Chief Executive Officer. Since 1990, Mr. Bluto has been
employed by G.S.&W Services in marketing, special projects and computerization.
From 1966 to 1990, Mr. Bluto was employed with the United Automobile, Aerospace,
Agriculture Implement Workers of America (U.A.W.), most recently as a Senior
Vice President of Operations and Human Resources.
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Kelvyn H. Cullimore, who has served as President of the Company since
its incorporation in 1986, resigned as President and Chief Executive Officer
effective February 28, 1999. He has been a Director since 1986, and served as
Chairman of the Board from 1986 to February 1997. Mr. Cullimore continues to
serve as a Director of the Company. Mr. Cullimore received a B.S. in Marketing
from Brigham Young University in 1957 and, following graduation, worked for a
number of years as a partner in a family-owned home furnishings business in
Oklahoma City, Oklahoma. Mr. Cullimore has participated in the organization and
management of various enterprises, becoming the president or general partner in
several business entities, including real estate, the motion picture industry
and equipment partnerships and has served on the board of directors of Brighton
Bank and a privately-owned wholesale travel agency. Since 1975, Mr. Cullimore
has consulted for independent film production and distribution companies and has
been involved in the raising of capital for the production of feature-length
films. From 1979 to 1992, Mr. Cullimore served as chairman of the board and
president of American Consolidated Industries ("ACI"), a corporate affiliate of
Dynatronics Corporation, which in 1992 was merged with and into Dynatronics
Corporation. ACI was a privately-owned holding company for various investments.
From 1983 to 1992, Mr. Cullimore also served as president of Dynatronics
Corporation and from 1983 to present, he has served as chairman of the board of
Dynatronics Corporation, a publicly-held company whose securities are registered
under the Securities Exchange Act of 1934, as amended.
Kelvyn H. Cullimore, Jr. has been a Director of the Company since its
incorporation in 1986. He graduated from Brigham Young University with a degree
in Financial and Estate Planning in 1980. Since graduation, Mr. Cullimore, Jr.
has served on the board of directors of several businesses, including
Dynatronics Corporation, Dynatronics Marketing Company, ACI and a
privately-owned wholesale travel agency. In addition, he has served as
secretary/treasurer of each of the foregoing companies. Mr. Cullimore, Jr. also
served as Executive Vice President and Chief Operating Officer of ACI and he
currently serves as President and a Director of Dynatronics Corporation, a
publicly-held company whose securities are registered under the Securities
Exchange Act of 1934, as amended.
Frank E. McLaughlin has been a Director of the Company since 1988. He
is the founder and shareholder of the McLaughlin Companies, which includes the
largest real estate firm in the U.S. Virgin Islands, as well as a real estate
appraisal company and property management companies. He has been involved in the
development of several residential and commercial real estate projects there. An
original investor in the First Virgin Islands Federal Savings Bank, he currently
serves as chairman of the board of the institution. Over the years Mr.
McLaughlin has held leadership positions in civic, community and professional
organizations.
Kumar V. Patel was elected a Director of the Company in April 1995.
Since 1976, Mr. Patel has been self-employed in real estate investment and
management in Southern California. He received a B.A. in Honors Economics and
Accounting from the University of Newcastle-Upon-Tyne, Great Britain. He is a
licensed Real Estate Broker and a licensed General Contractor in California. He
is also President of Great Designs Realty and Development Inc., a family
business offering service in foreclosure, property management and construction.
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<PAGE>
Thomas J. Carlson became a Director in June 1997. Mr. Carlson has been
in a private law practice for over 14 years in Springfield, Missouri. From 1987
to 1993, he served as Mayor of Springfield and currently serves as a member of
Springfield's City Council. He serves on various community service boards of
directors. Mr. Carlson received a JD degree from the University of Missouri at
Kansas City in 1979 and a BA degree in Journalism from George Washington
University in 1975.
Lourette Ann Bluto was elected a Director of the Company on October 3,
1997. She is President and sole owner of GS & W Services, Inc., a full service
printing and mailing corporation. Mrs. Bluto founded GS & W Services in 1969,
and currently has 31 employees. GS & W Services is located in Walnut,
California. Mrs. Bluto is active in community and civic affairs, having served
as Vice-President of Edison Elementary School P.T.A., President of the
Walnut/Diamond Bar Soroptimist Club and Board member of the Santa Ana YWCA Hotel
for Women. She has presided as President of the California Chapter of M.A.S.A.,
and has served on the Board of Directors of several businesses, including Local
509 Federal Credit Union.
Paul Rasmussen was elected President and Chief Operating Officer
effective March 1, 1999. Prior to being named President, he had served as the
Company's Controller. Mr. Rasmussen has held a number of financial and operation
positions in the airline industry prior to joining ITEC. Mr. Rasmussen received
a Bachelor of Science degree in accounting from the University of Montana in
1972.
Robert J. Cardon was appointed Corporate Secretary of the Company in
February 1992 and became Treasurer of the Company in February 1997. Mr. Cardon
is Corporate Secretary and is a full time employee of Dynatronics Corporation.
From 1987 to 1988, Mr. Cardon was employed as a registered representative of an
investment-banking firm. He received his B.A. in 1987 and his M.B.A. in 1990,
both from Brigham Young University
Michael L. Pitman has been with the Company since April of 1993. He
served as Marketing Director until June of 1997 at which time he was elected
Senior Vice President of Marketing. Prior to his employment with ITEC, Mr.
Pitman was a salesman for a natural sugar company and a regional food brokerage.
Prior to that time, he managed Ike's Candy Company in Salt Lake City, Utah for
five years.
Randy S. Brashers was elected Vice President of Operations for the
Company in June of 1997. Mr. Brashers is a life-long resident of the Ozarks. He
grew up in the retail and wholesale broker business and graduated with a B.S.
degree from Southern Missouri State University. He was employed by the
Kimberling City Chamber of Commerce prior to joining ITEC in December of 1993.
He has served as floor manager, assistant operations manager and as operations
manager prior to his current position.
13
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's Officers and Directors and persons who own more than 10% of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission.
Officers, directors and greater than 10% beneficial owners are required by
regulations of the Securities and Exchange Commission to furnish the Company
with copies of all Section 16(a) forms which they file.
The Company believes that all reports required by Section 16(a)
applicable to its officers, directors and greater than 10% beneficial owners
have been made.
Item 10. Executive Compensation
----------------------
Compensation of Executive Officers
- ----------------------------------
The following table sets forth the compensation of the Company's chief
executive officer during the fiscal years ended June 30, 1998, 1997, and 1996
and for the six month transition period ended December 31, 1998. No other
executive officer had a total annual salary and bonus exceeding $100,000.
<TABLE>
<CAPTION>
Summary Compensation Table
------------------------------------------------------------------------------------------------------
Long Term Compensation
------------------------------------------------------------
Annual Compensation Awards Payouts
------------------------------------- ----------------------------------- ----------------------
Other Restricted
Name and Annual Stock LTIP All Other
Principal Compen- Award(s) Options/ Payouts Compen-
Position Year Salary($) Bonus($) sation($) ($) SAR(#) ($)
- --------- ------------------------------------- ----------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Kelvyn H. Cullimore 1998 $ 50,400 $ 43,421(2) $ 20,406(3) $ -0- -0- $ -0- $ -0-
(CEO) (1) 1998 $ 100,800 $ 32,500(2) $ 44,019(3) $ -0- -0- $ -0- $ -0-
1997 $ 100,800 $ -0- $ 37,076(3) $ -0- -0- $ -0- $ -0-(4)
1996 $ 124,784 $ -0- $ 38,791(3) $ -0- -0- $ -0- $ -0-
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1) Mr. Cullimore resigned as the Company's Chief Executive Officer
and President effective February 28, 1999. The table above
represents Mr. Cullimore's compensation for the six-month
transition period ended December 31, 1998. Mr. Cullimore's
presence in Branson on behalf of the Company was considered
temporary and, therefore, the above Compensation Table does not
include any amount for use of the condominium by Mr. Cullimore.
The Company paid approximately $11,500 for the condominium during
each of the last three fiscal years and $5,750 for the six-month
transition period.
2) Mr. Cullimore received $43,421 for the six month transition period
ended December 31, 1998 and $32,500 for fiscal year ended June 30,
1998 respectively under the Company's incentive bonus plan.
14
<PAGE>
3) Included in these amounts are premiums of $39,967 for 1998,
$34,224 for 1997, $34,134 for 1996 and $17,112 for the six-month
transition period on insurance policies funding a salary
continuation plan for Mr. Kelvyn H. Cullimore. Also included are
life insurance premiums, disability insurance premiums and
personal usage of a Company automobile or car allowance.
4) Mr. Cullimore received 201,523 shares of restricted common stock
as part of the Company's Plan of Reorganization in fiscal 1997.
The stock had no value at that time, and since the value was not
determinable, no value was placed on the stock.
The Company did not grant to executive officers nor were there
outstanding any stock options or stock appreciation rights during fiscal years
ending June 30, 1997 and 1998 or during the transition period ended December 31,
1998.
During the last completed fiscal year, the Company made no awards under
any long-term incentive plan. The Company does not maintain any defined benefit
or actuarial plan.
Employment Agreements
- ---------------------
Pursuant to the Plan of Reorganization confirmed by the U.S. Bankruptcy
Court on February 6, 1997, Mr. Cullimore has agreed to continue to work for the
Company through February 1999, on the following terms: an annual salary of
$100,800; an automobile allowance of $250 per month; a $39,967 annual
contribution to Mr. Cullimore's salary continuation plan; and the condominium
owned by the Company will be provided to Mr. Cullimore for his living
accommodations. Mr. Cullimore resigned as President and Chief Executive Officer
effective February 28, 1999.
Mr. Cullimore receives one-half of an incentive bonus pool equal to 50%
of positive cash flow from operations per year from $200,000 to $300,000, 25%
from $300,000 to $400,000, and 10% in excess of $400,000. For the transition
period ending December 31, 1998, Mr. Cullimore was awarded $43,421 under this
arrangement and for the fiscal year ended June 30, 1998; he was awarded $32,500.
Compensation of Directors
- -------------------------
Directors of the Company receive $1050.00 per meeting for service as
directors of the Company. The Board of Directors will meet quarterly or more
often as needed. Directors are reimbursed for expenses incurred on behalf of the
Company in attending directors' meetings.
Item 11. Security Ownership of Certain Beneficial Owners and Management
--------------------------------------------------------------
The following table sets forth, as of March 25, 1999, certain
information with respect to any person who is known to the Company to be the
beneficial owner of more than five percent (5%) of the Company's capital stock,
each director, certain executive officers and as to all directors and officers
as a group:
15
<PAGE>
Common Stock Beneficially Owned
-------------------------------
Number
Name of shares % of Class(1)
---- --------- -------------
Paul M. Bluto (2) 6,296,572 71.1%
Lourette Ann Bluto (2) 6,296,572 71.1%
Kelvyn H. Cullimore (3) 480,649 6.0%
Kelvyn H. Cullimore, Jr. (4) 230,339 2.9%
Francis E. McLaughlin (5) 177,764 2.2%
Kumar V. Patel (6) 200,000 2.5%
Thomas J. Carlson(7) 133,334 1.7%
Michael L. Pitman 70,563 0.9%
Randy S. Brashers 70,543 0.9%
All Directors and Officers
of the Company as a Group
(9 persons)(8) 7,429,445 81.6%
- -------------------
(1) These calculations are based upon a total of 7,937,638 shares
outstanding as of March 25, 1999. In addition, for each person or
group the number of shares owned and the calculation of the
percentage ownership includes the number of shares that person or
group has the right to acquire.
(2) Mr. Paul Bluto and Mrs. Lourette Ann Bluto jointly own 11,013
shares as a result of their pre-bankruptcy holdings. Mr. Bluto
acquired 4,433,490 restricted shares pursuant to the Company's Plan
of Reorganization, Mr. Bluto acquired 539,573 restricted shares in
a private placement by the Company, and Mrs. Bluto owns 6,257
shares. In addition, Mr. Bluto is a trustee of the GS & W Services
Defined Benefit Plan, which acquired 383,333 restricted shares in a
private placement by the Company, and Mr. Bluto is deemed to be the
beneficial owner of these shares. Mr. Bluto also owns warrants to
purchase 539,573 restricted shares at a price of $1.00 per share.
The GS & W Services Defined Benefit Plan also owns warrants to
purchase 383,333 restricted shares at a price of $1.00 per share.
All shares owned directly or beneficially by either Mr. Bluto or
Mrs. Bluto are deemed to be beneficially owned by the other.
16
<PAGE>
(3) Mr. Cullimore owns 10,453 shares as a result of pre-petition
holdings, he received 201,523 shares as part of the Company's Plan
of Reorganization and he owns 5,000 shares, which he received in
satisfaction of claims as a creditor of the Company. In addition,
Mr. Cullimore owns 16,667 restricted shares of common stock
acquired in the Company's private placement, and he owns warrants
to purchase 16,667 restricted shares at a price of $1.00 per share.
Mr. Cullimore may be deemed to be a control person of Dynatronics
Corporation which owns 230,339 shares, which are included in Mr.
Cullimore's holdings.
(4) Mr. Cullimore, Jr. may be deemed to be a control person of
Dynatronics Corporation which owns 230,339 shares, which are
included in Mr. Cullimore, Jr.'s holdings.
(5) Mr. McLaughlin owns 9,430 shares as a result of pre-petition
holdings and he acquired 66,667 restricted shares in the Company's
private placement. He also owns warrants to purchase 66,667
restricted shares of the Company's common stock at a price of $1.00
per share. He has also purchased 35,000 shares in the open market.
(6) Mr. Patel acquired 100,000 restricted shares in the Company's
private placement. He also owns warrants to purchase 100,000
restricted shares of the Company's common stock at a price of $1.00
per share.
(7) Mr. Carlson acquired 66,667 restricted shares in the Company's
private placement. He also owns warrants to purchase 66,667
restricted shares of the Company's common stock at a price of $1.00
per share.
(8) The calculation of beneficially owned shares of all executive
officers and directors as a group eliminates the duplicate entries
of shares owned by Dynatronics which are reflected in the
beneficial ownership of both Kelvyn H. Cullimore and Kelvyn H.
Cullimore, Jr., as well as shares owned by GS & W Services, Inc.
and the Bluto family which are reflected in the beneficial
ownership of both Paul and Lourette Ann Bluto.
Item 12. Certain Relationships and Related Transactions
----------------------------------------------
Mr. Kelvyn H. Cullimore is the Chairman of the Board of
Dynatronics Corporation. Mr. Kelvyn H. Cullimore, Jr. is the President and a
Director of Dynatronics Corporation. Kelvyn H. Cullimore and Kelvyn H.
Cullimore, Jr. may be considered to be affiliates of Dynatronics Corporation by
virtue of their positions with Dynatronics Corporation. Robert J. Cardon, an
employee of Dynatronics Corporation, is the Company Secretary/ Treasurer and is
paid $1,050 for each board meeting. Dynatronics Corporation owns approximately
3% of the common stock of the Company (post reorganization).
17
<PAGE>
PART IV
Item 13. Exhibits and Reports on Form 8-K
--------------------------------
Financial Statements Filed as part of Form 10-KSB:
-------------------------------------------------
Independent Auditors' Report
Tanner + Co F-2
Balance Sheet at December 31, 1998 F-3
Statement of Operations
for the six months ended December 31, 1998 and 1997
and for the fiscal years ended June 30, 1998 and 1997 F-4
Statement of Stockholders' Equity
for the six months ended December 31, 1998
and for the fiscal years ended June 30, 1998 and 1997 F-5
Statement of Cash Flows
for the six months ended December 31, 1998 and 1997
and for the fiscal years ended June 30, 1998 and 1997 F-6
Notes to Financial Statements F-7
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
International Tourist Entertainment Corporation
We have audited the balance sheet of International Tourist Entertainment
Corporation as of December 31, 1998, and the related statements of operations,
stockholders' equity and cash flows for the six months ended December 31, 1998
and the two years ended June 30, 1998 and 1997. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of International Tourist
Entertainment Corporation as of December 31, 1998, and the results of its
operations and its cash flows for the six months ended December 31, 1998 and the
two years ended June 30, 1998 and 1997, in conformity with generally accepted
accounting principles.
TANNER + CO.
Salt Lake City, Utah
February 24, 1999
- --------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Balance Sheet
December 31, 1998
- ----------------------------------------------------------------------------------------------------------
Assets
Current assets:
<S> <C>
Cash $ 654,760
Receivables 14,990
Inventories 78,808
Prepaid expenses 11,702
Current portion of prepaid leases 166,915
------------------
Total current assets 927,175
Property and equipment, net 5,895,108
Prepaid leases 1,132,103
Deposits 12,288
------------------
$ 7,966,674
------------------
- ----------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 155,647
Accrued expenses 375,085
Current portion of long-term debt 139,411
------------------
Total current liabilities 670,143
Accrued lease expense 309,913
Long-term debt 3,507,179
Deposits 20,500
------------------
Total liabilities 4,507,735
------------------
Commitments and contingencies -
Stockholders' equity:
Common stock, $.001 par value; authorized 40,000,000
shares; issued and outstanding 7,937,638 shares 7,938
Additional paid-in capital 10,781,076
Accumulated deficit (7,330,075)
------------------
Total stockholders' equity 3,458,939
------------------
$ 7,966,674
------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Statement of Operations
- ----------------------------------------------------------------------------------------------------------
Six Months Ended Years Ended
December 31, June 30,
-------------------------------------------------------------
1997
1998 (Unaudited) 1998 1997
-------------------------------------------------------------
Revenues:
<S> <C> <C> <C> <C>
Theater admissions and concessions $ 1,441,875 $ 1,267,498 $ 2,286,232 $ 1,990,034
Restaurant and deli 1,918,358 1,829,614 2,843,511 2,108,439
Retail sales 336,822 239,348 333,120 238,423
Retail rental income 241,503 251,470 430,211 412,289
-------------------------------------------------------------
3,938,558 3,587,930 5,893,074 4,749,185
-------------------------------------------------------------
Costs and expenses:
Direct exhibition film costs and
concessions 329,368 186,598 456,410 268,070
Direct restaurant and deli costs 567,798 533,788 862,826 640,848
Direct retail costs 163,129 127,431 180,235 127,571
Selling, general, and administrative
expenses 2,522,625 2,247,068 4,355,473 3,598,374
-------------------------------------------------------------
3,582,920 3,094,885 5,854,944 4,634,863
-------------------------------------------------------------
Income from operations 355,638 493,045 38,130 114,322
-------------------------------------------------------------
Other income (expense):
Interest expense (170,100) (169,719) (340,674) (657,363)
Interest income 12,843 19,054 26,018 22,451
Other 298 - 24,000 1,673
-------------------------------------------------------------
(156,959) (150,665) (290,656) (633,239)
-------------------------------------------------------------
Income (loss) before provision
for income taxes and
extraordinary item 198,679 342,380 (252,526) (518,917)
Provision for income taxes - - - -
-------------------------------------------------------------
Income (loss) before extraordinary item 198,679 342,380 (252,526) (518,917)
Extraordinary gain from forgiveness of debt, net
of $-0- income taxes - - - 4,086,766
-------------------------------------------------------------
Net income (loss) $ 198,679 $ 342,380 $ (252,526) $ 3,567,849
-------------------------------------------------------------
Income (loss) per common share:
Continuing operations $ .03 $ .05 $ (.03) $ (.21)
Extraordinary item - - - 1.66
-------------------------------------------------------------
Net income (loss) per share, basic and
diluted $ .03 $ .05 $ (.03) $ 1.45
-------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Statement of Stockholders' Equity
Six Months Ended December 31, 1998 and
Years Ended June 30, 1998 and 1997
- ----------------------------------------------------------------------------------------------------------
Total
Additional Stockholders'
Preferred Stock Common Stock Paid-In Accumulated Equity
--------------------------------------------
Shares Amount Shares Amount Capital Deficit (Deficit)
-------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, July 1, 1996 212,613 $ 213 635,999 $ 636 $ 9,580,139 $(10,844,077) $ (1,263,089)
Conversion of
debentures and
related interest
for common
stock - - 284,243 285 6,673 - 6,958
Conversion of
preferred stock
to common stock (212,613) (213) 170,090 170 43 - -
Issuance of common
stock for:
Cash - - 5,262,490 5,262 843,439 - 848,701
Forgiveness of debt - - 88,530 88 2,125 - 2,213
Bankruptcy
settlement - - 403,045 403 - - 403
Net income - - - - - 3,567,849 3,567,849
-------------------------------------------------------------------------------------
Balance, June 30,
1997 - - 6,844,397 6,844 10,432,419 (7,276,228) 3,163,035
Issuance of common
stock for cash and
bankruptcy
conversions and
settlements - - 1,093,241 1,094 348,657 - 349,751
Net loss - - - - - (252,526) (252,526)
-------------------------------------------------------------------------------------
Balance, June 30,
1998 - - 7,937,638 7,938 10,781,076 (7,528,754) 3,260,260
Net income - - - - - 198,679 198,679
-------------------------------------------------------------------------------------
Balance,
December 31, 1998 - $ 7,937,638 $ 7,938 $ 10,781,076 $ (7,330,075) $ 3,458,939
-------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Statement of Cash Flows
- ----------------------------------------------------------------------------------------------------------
Six Months Ended Years Ended
December 31, June 30,
---------------------------------------------------
1997
1998 (Unaudited) 1998 1997
---------------------------------------------------
Cash flows from operating activities:
<S> <C> <C> <C> <C>
Net income (loss) $ 198,679 $ 342,380 $ (252,526) $ 3,567,849
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 209,637 201,129 407,449 349,045
Loss on disposition of property and equipment 12,416 - 925 -
Extraordinary gain from forgiveness of debt - - - (4,086,766)
(Increase) decrease in:
Receivables 22,621 (32,414) (1,466) (18,382)
Inventories (1,103) (4,199) (17,766) (8,480)
Prepaid expenses and deposits 23,460 (7,012) (25,365) 26,401
Prepaid leases 83,457 83,457 166,915 178,754
Increase (decrease) in:
Accounts payable and accrued expenses 32,741 (42,846) 212,225 (1,566)
Deposits - (3,000) (1,500) (4,800)
---------------------------------------------------
Net cash provided by
operating activities 581,908 537,495 488,891 2,055
---------------------------------------------------
Cash flows from investing activities-
purchase of property and equipment (188,939) (99,506) (627,737) (460,806)
---------------------------------------------------
Cash flows from financing activities:
Proceeds from debt - - - 5,123
Payments on debt (89,302) (62,488) (120,886) (275,215)
Payments on debentures - - - (221,263)
Net proceeds from issuance of common stock - 349,751 349,751 848,701
---------------------------------------------------
Net cash (used in) provided by
financing activities (89,002) 287,263 228,865 357,346
---------------------------------------------------
Increase (decrease) in cash 303,967 725,252 90,019 (101,405)
Cash beginning of period 350,793 260,774 260,774 362,179
---------------------------------------------------
Cash end of period $ 654,760 $ 986,026 $ 350,793 $ 260,774
---------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
See accompanying notes to financial statements.
F-5
</TABLE>
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
December 31, 1998 and June 30, 1998 and 1997
- --------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies
Organization
The Company's principal business is in the tourist entertainment sector. The
Company has a giant screen tourist entertainment complex in Branson, Missouri,
and began showing its own theme film produced especially for the Branson
location. The Company also operates a restaurant, a deli (as of March 1997), a
live performance theater (as of April 1998), and a small gift shop in the
Branson complex.
Change in Fiscal Year
The Company changed its fiscal year from June 30 to December 31 beginning with
the period ended December 31, 1998.
Unaudited Information
In the opinion of management, the accompanying unaudited financial statements
for the six month period ended December 31, 1997 contain all adjustments
(consisting only of normal recurring items) necessary to present fairly the
results of operations and cash flows for the Company for the six month period
ended December 31, 1997.
Cash Equivalents
The Company considers all highly liquid temporary investments with an original
maturity of three months or less to be cash equivalents.
Inventories
Inventories consist of retail merchandise, food, and concession items and are
recorded at the lower of cost or market, cost being determined on the first-in
first-out (FIFO) method.
- --------------------------------------------------------------------------------
F-6
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies
Continued
Film Development Costs
Film development costs reflect the direct costs incurred to produce a giant
screen film exhibited by the Company. Such costs are amortized using the
straight-line method over an estimated useful life of ten years. The estimated
useful life and method of amortization are based principally on management's
estimates of projected future revenues, and the years over which similar theme
films have been exhibited within the giant screen theater industry. As films are
exhibited and historical information becomes available to aid management in film
revenue projections, amortization will be modified, if necessary, so as to
reasonably relate film costs to estimated gross revenues expected over the
estimated useful life of the films, not to exceed ten years. Management
evaluates the unamortized film development costs for possible impairment giving
consideration to various factors including revenue trends and projected cash
flows. Impairments determined through the evaluation are expensed currently.
Property and Equipment
Property and equipment are recorded at cost, less accumulated depreciation.
Depreciation and amortization on capital leases and property and equipment is
determined using the straight-line method over the estimated useful lives of the
assets or terms of the lease. Expenditures of maintenance and repairs are
expensed when incurred and betterments are capitalized. Gains and losses on sale
of property and equipment are reflected in operations.
Income (Loss) Per Share
The computation of basic income (loss) per common share is based on the weighted
average number of shares outstanding during each period.
The computation of diluted income (loss) per common share is based on the
weighted average number of shares outstanding during the period plus the common
stock equivalents which would arise from the exercise of stock options
outstanding using the treasury stock method and the average market price per
share during the period.
- --------------------------------------------------------------------------------
F-7
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
1. Organization and Summary of Significant Accounting Policies
Continued
Income Taxes
Income taxes are recorded using the asset and liability method, deferred tax
assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases and operating
loss and tax credit carryforwards. Deferred tax assets and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the enactment date.
Concentration of Credit Risk
Financial instruments which potentially subject the Company to concentration of
credit risk consist primarily of receivables. In the normal course of business,
the Company provides credit terms to its customers. Accordingly, the Company
performs ongoing credit evaluations of its customers and maintains allowances
for possible losses which, when realized, have been within the range of
management's expectations.
The Company maintains its cash in bank deposit amounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts and believes it is not exposed to any significant credit risk on
cash and cash equivalents.
Use of Estimates in the Preparation of Financial Statements The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates.
Reclassifications
Certain accounts in the June 1998 and 1997, financial statements have been
reclassified to conform with the current period presentation.
- --------------------------------------------------------------------------------
F-8
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
2. Property and Equipment
Property and equipment at December 31, 1998 consist of the following:
Buildings $ 5,003,774
Equipment 882,018
Furniture and fixtures 285,759
Land improvements 125,870
Film development costs 900,000
----------------
7,197,421
Less accumulated depreciation and
amortization (1,302,313)
----------------
$ 5,895,108
----------------
3. Related Party Transaction
During the years ended June 30, 1998 and 1997, the Company paid Dynatronics
Corporation (Dynatronics), a company which had common management a monthly fee
for administrative staff, accounting services, and accounting personnel. The
related costs are included in general and administrative expenses and amounted
to approximately $64,000 and $68,000, respectively. Management has terminated
this agreement, therefore, no costs were incurred for the six months ended
December 31, 1998.
4. Preferred Stock
Preferred Stock
Prior to its filing for bankruptcy protection, the Company had 212,613 shares of
issued and outstanding preferred stock. The preferred stock had various
provisions including the convertibility into common stock and the entitlement of
dividends to be paid out of legally available funds at a rate of 10%.
The Company's bankruptcy plan of reorganization provided for the conversion of
each share of preferred stock plus the dividend in arrears into .8 shares of the
Company's common stock. During May and June 1997, the Company converted the
212,613 shares of preferred stock plus dividends in arrears of $237,161 into
170,090 shares of the Company's common stock.
- --------------------------------------------------------------------------------
F-9
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
5. Convertible Debenture Offering
During the year ended June 30, 1997 as part of the bankruptcy agreement, the
Company modified the conversion rate of $2,055,000 of convertible debentures
plus approximately $274,000 of accrued interest, and converted the debentures
into cash payments of $221,264 and 284,243 shares of common stock. The Company
realized a gain of $2,100,789 on the conversion of the debentures to common
stock see note 16.
6. Lease Obligations
The Company has a ten-year operating lease agreement for a giant screen theater
projection and sound system for its Branson Theater Complex. Under the terms of
this agreement, the Company was required to make advance rental payments. Such
amounts, net of amortization, are reflected in prepaid leases in the
accompanying financial statements. The advance rent payments are being amortized
on a straight-line basis over the initial ten year lease term. Additionally, the
lease agreement requires the monthly payments, adjusted annually based on the
Consumer Price Index, throughout the remaining lease term, together with annual
percentage royalties ranging from one to ten percent based upon the attainment
of certain net theater admission revenue volumes. Advance and fixed minimum
lease commitments related to this lease are included in the following tables.
The Company also has a fifty year operating lease on land located in Branson,
Missouri, the site of the Company's giant screen tourist entertainment complex.
An advance rent payment of $1,025,000 was made at the time of the lease which
satisfied the Company's rent obligation for years one through twenty of the
lease agreement. For years twenty-one through fifty of the lease, the Company is
obligated to make quarterly rent payments aggregating $145,000 annually, these
amounts are subject to an annual consumer price index adjustment. Base rents
including the $1,025,000 in advance rents and the $145,000 annual amount
commencing in the twenty-first lease year is expensed on a straight-line basis
over the fifty-year lease term, which under the term of the agreement began
October 1, 1993. Amounts recorded as accrued lease expense in the accompanying
balance sheet reflects an accrual for those portions of the rents that will be
paid during years twenty-one through fifty which are expensed currently using
the straight-line expense recognition method.
In addition, the Company leases a vehicle under a noncancellable operating lease
agreement.
- --------------------------------------------------------------------------------
F-10
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
6. Lease Obligations
Continued
Advance rental payments associated with the theater system and land is reflected
in the current portion of prepaid leases and prepaid leases in the accompanying
balance sheet as summarized below:
Advance rents:
Theater system $ 552,413
Land 746,605
-----------------
1,299,018
-----------------
Less current portion of prepaid leases
Theater system (116,298)
Land (50,617)
-----------------
(166,915)
-----------------
Prepaid leases $ 1,132,103
-----------------
Annual amortization expense is as follows:
Theater system $ 116,298
Land 50,617
-----------------
$ 166,915
-----------------
A schedule of future minimum rental payments required under operating leases
that have initial or remaining noncancelable lease terms in excess of one year
as of December 31, 1998, is as follows:
Year Ending December 31: Amount
-----------------
1999 $ 182,895
2000 178,399
2001 177,500
2002 177,500
2003 177,500
Thereafter 4,438,750
-----------------
$ 5,332,544
-----------------
- --------------------------------------------------------------------------------
F-11
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
6. Lease Obligations
Continued
Rental expense on operating leases for the six months ended December 31, 1998
and for the years ended June 30, 1998 and 1997 was approximately $120,000,
$238,000 and $154,000, respectively.
The Company leases certain equipment under noncancellable capital lease
agreements. Assets under capital leases included in property and equipment at
December 31, 1998 are as follows:
Equipment $ 61,040
Less accumulated amortization (20,195)
-----------------
$ 40,845
-----------------
Amortization expense for assets under capital leases during the six months ended
December 31, 1998 and the years ended June 30, 1998 and 1997 was approximately
$14,000, $6,000, and $25,000, respectively.
The capital lease obligations have imputed interest rates approximately equal to
the Company's borrowing rate for similar type transactions and are payable in
monthly installments through October 2002. Future minimum lease payments on
capital lease obligations are as follows:
Year Ending December 31: Amount
-----------------
1999 $ 17,020
2000 9,030
2001 3,621
2002 1,043
-----------------
30,714
Less amount representing
interest (2,933)
-----------------
Present value of capital lease
Obligations $ 27,781
-----------------
- --------------------------------------------------------------------------------
F-12
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
7. Lessor Lease Agreements
The Company has agreements to rent space as lessor to various retail tenants in
its Branson, Missouri theater complex with terms ranging from one to five years.
The agreements also include certain renewal terms for leases beyond five years,
which are not included in the amounts below. As of December 31, 1998, the
Company held $20,500 in deposits related to the leases.
A summary of future minimum rentals to be received are as follows:
Year Ending December 31: Amount
-----------------
1999 $ 397,660
2000 378,060
2001 268,060
2002 137,960
2003 89,060
Thereafter 30,000
-----------------
$ 1,300,800
-----------------
8. Long-Term Debt
Long-term debt at December 31, 1998 is comprised of the following:
Note payable to a bank in monthly installments
of $33,000, including interest at 9%
through February 1999, and prime
plus .75% thereafter, secured by
the theater complex $ 3,343,389
Mortgage payable in monthly installments of $741
including adjustable interest from 4% to 12%,
secured by real property 104,373
Note payable to a bank in monthly installments of
$2,625, including interest at 10%, secured by
equipment 73,829
Note payable in monthly installments of $1,514,
including interest at 10.8%, secured by equipment 67,297
- --------------------------------------------------------------------------------
F-13
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
8. Long-Term Debt
Continued
Note payable in monthly installments of $607,
including interest at 8%, secured by a vehicle 29,921
Capital lease obligations (see note 6) 27,781
-----------------
3,646,590
Less current portion (139,411)
-----------------
Long-term debt $ 3,507,179
-----------------
Future maturities of long-term debt are as follows:
Year Ending December 31: Amount
-----------------
1999 $ 139,411
2000 143,880
2001 144,140
2002 131,910
2003 139,350
Thereafter 2,947,899
-----------------
$ 3,646,590
-----------------
- --------------------------------------------------------------------------------
F-14
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
9. Income Taxes
The provision for income taxes differs from the amounts which would be provided
by applying the statutory federal income tax rate to income (loss) before
provision for income taxes for the following reasons:
Six Months
Ended Years Ended
December 31, June 30,
------------------------------------------
1998 1998 1997
------------------------------------------
Federal income tax (provision)
benefit at statutory rate $ (68,000) $ 84,000 $ (1,208,000)
Change in valuation allowance 68,000 (84,000) 1,208,000
------------------------------------------
$ - $ - $ -
------------------------------------------
Deferred tax assets (liabilities) at December 31, 1998 are comprised of the
following:
Write-down of assets $ 1,666,000
Net operating loss carry forward 884,000
Depreciation (102,000)
Accrued rents 105,000
-----------------
2,553,000
Less valuation allowance (2,553,000)
-----------------
$ -
-----------------
At December 31, 1998, the Company has approximately $2,600,000 of net operating
loss carryforwards for income tax purposes to offset future income. These
carryforwards begin to expire in 2011.
Since certain of the net operating losses were incurred from activities in the
U.S. Virgin Islands and the Company is treated as a foreign corporation doing
business in the United States, net operating losses generated from U.S. Virgin
Island activities are not available to offset income from activities within the
United States. In addition, if substantial changes in the Company's ownership
should occur, there would also be an annual limitation of the amount of NOL
carryforwards which could be utilized.
- --------------------------------------------------------------------------------
F-15
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
10. Supplemental Cash Flow Information
During the six months ended December 31, 1998, the Company acquired property and
equipment in exchange for long-term debt of $60,030.
During the year ended June 30, 1997, the Company:
o Exchange of land for the settlement of a debt
obligation $ 480,000
o Incurred debt for purchase of fixed assets $ 148,522
o Realized gain on forgiveness of accounts payable,
long-term debt and debentures as part of
bankruptcy settlement $ 4,086,766
Actual amounts paid for interest and income taxes are as follows:
Six Months Ended Years Ended
December 31, June 30,
-----------------------------------------------------
1997
1998 (Unaudited) 1998 1997
-----------------------------------------------------
Interest $ 170,100 $ 168,162 $ 337,592 $ 657,362
-----------------------------------------------------
Income taxes $ - $ - $ - $ -
-----------------------------------------------------
11. Fair Value of Financial Instruments
None of the Company's financial instruments are held for trading purposes. The
Company estimates that the fair value of all financial instruments at December
31, 1998, does not differ materially from the aggregate carrying values of its
financial instruments recorded in the accompanying balance sheet. The estimated
fair value amounts have been determined by the Company using available market
information and appropriate valuation methodologies. Considerable judgement is
necessarily required in interpreting market data to develop the estimates of
fair value, and, accordingly, the estimates are not necessarily indicative of
the amounts that the Company could realize in a current market exchange.
- --------------------------------------------------------------------------------
F-16
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
12. Stock Options
The Company has granted stock options to purchase the Company's common stock.
Options generally vest over an eighteen month period.
Information regarding these stock options are summarized below:
Number of Option Price
Options Per Share
---------------------------------
Outstanding at July 1, 1996 - $ -
Granted 829,001 1.00
---------------------------------
Outstanding at June 30, 1997 829,001 1.00
Granted 1,170,999 1.00
---------------------------------
Outstanding at December 31, 1998
and June 30, 1998 $ 2,000,000 1.00
---------------------------------
Options exercisable at December 31, 1998 and June 30, 1998 and 1997 were
2,000,000, 944,000 and 829,001, respectively.
13. Stock-Based Compensation
The Company has adopted the disclosure-only provisions of Statement of Financial
Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation.
Accordingly, no compensation cost has been recognized in the financial
statements. Had compensation cost for the Company's stock options been
determined based on the fair value at the grant date for awards in 1998 and
1997, consistent with the provisions of SFAS No. 123, the Company's net earnings
and earnings per share would have been reduced to the pro forma amounts
indicated below:
Six Months
Ended Years Ended
December 31, June 30,
---------------------------------------------
1998 1998 1997
---------------------------------------------
Net income (loss) - as
reported $ 198,679 $ (252,526) $ 3,567,849
Net income (loss) - pro
forma $ 7,423 $ (476,592) $ 3,527,396
Income (loss) per share - as
reported $ .03 $ (.03) $ 1.45
Income (loss) per share -
pro forma $ - $ (.06) $ 1.43
- --------------------------------------------------------------------------------
F-17
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
13. Stock-Based Compensation
Continued
The fair value of each warrant grant is estimated on the date of grant using the
Black-Scholes option pricing model with the following assumptions:
Six Months
Ended Years Ended
December 31, June 30,
----------------------------------------------------
1998 1998 1997
----------------------------------------------------
Expected dividend yield $ - $ - $ -
Expected stock price
volatility 174% 202% 204%
Risk-free interest rate 5% 6% 5%
Expected life of options 18 months 18 months 18 months
----------------------------------------------------
The weighted average fair value of options granted during the six months ended
December 31, 1998 and the years ended June 30, 1998 and 1997 are $.18, $.19 and
$.20, respectively.
The following table summarizes information about stock options outstanding at
December 31, 1998:
Options Outstanding Options Exercisable
------------------------------------------------------------------
Weighted
Average
Number Remaining Weighted Number Weighted
Range of Outstanding Contractual Average Exercisable Average
Exercise at Life Exercise at Exercise
Prices 12/31/98 (Years) Price 12/31/98 Price
- --------------------------------------------------------------------------------
$ 1.00 2,000,000 0.22 $ 1.00 2,000,000 $ 1.00
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
F-18
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
14. Earnings Per Share
Financial accounting standards require companies to present basic earnings per
share (EPS) and diluted earnings per share along with additional informational
disclosures. Information related to earnings per share is as follows:
Six Months
Ended Years Ended
December 31, June 30,
-----------------------------------------------
1998 1998 1997
-----------------------------------------------
Basic EPS:
Net income (loss) available to
common stockholders $ 198,679 $ (252,526) $ 3,567,849
-----------------------------------------------
Weighted average common shares 7,938,000 7,716,000 2,464,000
-----------------------------------------------
Net income (loss) per share $ .03 $ (.03) $ 1.45
-----------------------------------------------
Diluted EPS;
Net income (loss) available to
common stockholders $ 198,679 $ (252,526) $ 3,567,849
-----------------------------------------------
Weighted average common shares 7,938,000 7,716,000 2,464,000
-----------------------------------------------
Net income (loss) per share $ .03 $ (.03) $ 1.45
-----------------------------------------------
15. Business Segments
The Company operates in three business segments: 1) Theater and
concessions, 2) Restaurant and deli services, 3) Retail services.
The following tables present financial information by business segment for the
six months ended December 31, 1998 and the years ended June 30, 1998 and 1997.
Restaurant Corporate
Six Months Ended Theater and and Deli Retail and
December 31, 1998 Concessions Services Services Eliminations Total
- --------------------------------------------------------------------------------
Sales to
unaffiliated
customers $ 1,441,875 $ 1,918,358 $ 578,325 $ - $ 3,938,558
Operating
income
(loss) $ 1,112,507 $ 1,350,560 $ 415,196 $ (2,522,625) $ 355,638
Identifiable
assets $ 951,750 $ 659,413 $ - $ 4,283,945 $ 5,895,108
- --------------------------------------------------------------------------------
F-19
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
15. Business Segments
Continued
Restaurant Corporate
Year Ended Theater and and Deli Retail and
June 30, 1998 Concessions Services Services Eliminations Total
- -------------------------------------------------------------------------------
Sales to
unaffiliated
customers $ 2,286,232 $ 2,843,511 $ 763,331 $ - $ 5,893,074
Operating
income
(loss) $ 1,829,822 $ 1,980,685 $ 583,096 $ (4,355,473) $ 38,130
Identifiable
assets $ 1,011,129 $ 526,170 $ - $ 4,330,893 $ 5,868,192
Restaurant Corporate
Year Ended Theater and and Deli Retail and
June 30, 1997 Concessions Services Services Eliminations Total
- -------------------------------------------------------------------------------
Sales to
unaffiliated
customers $ 1,990,034 $ 2,108,439 $ 650,712 $ - $ 4,749,185
Operating income
(loss) $ 1,721,964 $ 1,467,591 $ 523,141 $ (3,598,374) $ 114,322
Identifiable
assets $ 812,746 $ 509,991 $ - $ 4,326,094 $ 5,648,831
16. Bankruptcy
On February 6, 1997, the Bankruptcy Court approved the Company's plan of
reorganization (the Plan). The Plan requires a capital infusion of $1,200,000 of
which $848,700 was paid prior to June 30, 1997 for 3,262,490 shares of common
stock and the remaining $351,300 was paid on September 10, 1997. The Company's
ownership after the approved bankruptcy reorganization is as follows:
Stockholders' % Owned
- ----------------- -----------------
New capital infusion 80%
Existing stockholders' 10
Debenture holders 5
Management 5
-----------------
100%
-----------------
- --------------------------------------------------------------------------------
F-20
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Financial Statements
Continued
- --------------------------------------------------------------------------------
16. Bankruptcy Continued
The resulting gain recognized related to the final bankruptcy settlement is as
follows:
Gain on
Forgiveness
Category Description of Debt
- --------------------------------------------------------------------------------
Accounts payable To satisfy $1,257,832 of creditor
and accrued claims the Company issued an
expenses aggregate of 88,530 shares of
common stock and paid $101,565
in cash $ 1,154,054
Convertible To satisfy $2,055,000 of
debentures debentures plus $274,000 of
accrued interest the Company
issued 284,243 shares of common
stock and paid cash of $221,264.
The terms of the conversion were
substantially different than the
convertible terms when the
dentures were issued 2,100,789
Debt The Company transferred real
estate in the Virgin Islands to a
creditor for payment in full of a
$480,000 note payable. The
Company restructured its mortgage
note payable and paid $103,801 in
satisfaction of $935,724 of notes
payable 831,923
------------------
Total gain $ 4,086,766
------------------
In addition, the Company converted its preferred stock to common stock (see note
4) and restructured the employment agreement to an officer.
Final bankruptcy clearance has been received.
- --------------------------------------------------------------------------------
F-21
<PAGE>
(a) Exhibits
--------
Reg. S-B
Exhibit No. Description
----------- -----------
3.1 Articles of Incorporation of the Registrant, as
amended (incorporated by reference to Registration
Statement on Form S-1, Registration No. 33-48630)
3.2 Bylaws of the Registrant, as amended and restated on
April 6, 1991 (incorporated by reference to
Registration Statement on Form S-1, Registration No.
33-48630)
3.3 Amendments to Bylaws of the Registrant dated August
28, 1991 and July 24, 1992 (incorporated by reference
to Registration Statement on Form S-1, Registration
No.
33-48630)
4.1 Specimen Certificate for the Common Stock of the
Registrant (incorporated by reference to Registration
Statement on Form S-1, Registration No. 33-48630)
10.3 Ground Lease Agreement dated July 27, 1993 between
Treasure Lake RV Resort Camping Club, Inc. and
International Tourist Entertainment Corporation
(incorporated by reference to Registration Statement
on Form S-1, Registration No. 33-64132)
18
<PAGE>
10.4 Loan Agreement dated July 30, 1993 for loan from
NationsBank to International Tourist Entertainment
Corporation (incorporated by reference to
Registration Statement on Form S-1, Registration No.
33-64132)
10.5 Deed of Trust dated July 30, 1993 for benefit of
NationsBank (incorporated by reference to
Registration Statement on Form S-1, Registration No.
33-64132)
10.10 Distribution Agreement dated July 14, 1995 between
IMAX(R) Corporation and the Company (incorporated by
reference to Form 10-KSB for year ended June 30,
1997).
10.12 Third Modification Agreement dated March 1, 1997
between NationsBank and the Company. (incorporated by
reference to Form 10-KSB for year ended June 30,
1997).
10.13 System Lease Agreement as amended dated August 1,
1993 between IMAX(R)Corporation and the Company.
(incorporated by reference to Form 10-KSB for year
ended June 30, 1997).
(b) Reports on Form 8-K: No report on Form 8-K has been filed by the Company
during the last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
By /s/ Paul E. Rasmussen Date: March 25, 1999
---------------------------------
Paul E. Rasmussen,
President and
Chief Operating Officer
19
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
/s/ Paul M. Bluto Chairman of the Board of Directors, 3/25/99
- --------------------------
Paul M. Bluto Chief Executive Officer and
Chief Financial Officer
/s/ Paul E. Rasmussen President and 3/25/99
- --------------------------
Paul E. Rasmussen Chief Operating Officer
/s/ Kelvyn H. Cullimore Director 3/25/99
- --------------------------
Kelvyn H. Cullimore
/s/ Kelvyn H. Cullimore, Jr. Director 3/25/99
- --------------------------
Kelvyn H. Cullimore, Jr.
Director 3/25/99
- --------------------------
Francis E. McLaughlin
/s/Lourette Ann Bluto Director 3/25/99
- --------------------------
Lourette Ann Bluto
Director 3/25/99
- --------------------------
Thomas J. Carlson
Director 3/25/99
- --------------------------
Kumar V. Patel
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION FINANCIAL STATEMENTS AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> DEC-31-1998
<CASH> 654,760
<SECURITIES> 0
<RECEIVABLES> 14,990
<ALLOWANCES> 0
<INVENTORY> 78,808
<CURRENT-ASSETS> 927,175
<PP&E> 7,197,421
<DEPRECIATION> 1,302,313
<TOTAL-ASSETS> 7,966,674
<CURRENT-LIABILITIES> 670,143
<BONDS> 3,817,092
0
0
<COMMON> 7,938
<OTHER-SE> 3,451,001
<TOTAL-LIABILITY-AND-EQUITY> 7,966,674
<SALES> 3,938,558
<TOTAL-REVENUES> 3,951,699
<CGS> 1,060,295
<TOTAL-COSTS> 3,582,920
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 170,000
<INCOME-PRETAX> (198,679)
<INCOME-TAX> 0
<INCOME-CONTINUING> (198,679)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (198,679)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
