UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934 for the quarterly period ended March 31, 1999.
[ ] Transition Report Under Section 13 or 15(d) of the Exchange Act for the
transition period from _________ to _________
Commission File Number: 0-21070
International Tourist Entertainment Corporation
-----------------------------------------------
(Exact name of small business issuer as specified in its charter)
U.S. Virgin Islands 66-0426648
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
3562 Shepherd of the Hills Expressway Branson, MO 65616
-------------------------------------------------------
(Address of principal executive offices) (ZIP Code)
(417) 335-3533
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Securities Exchange Act of 1934 after
the distribution of securities under a plan confirmed by a court.
Yes X No
--- ---
The number of shares outstanding of the issuer's common stock, $.001 par value,
as of March 31, 1999 is 7,937,638 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
---- ----
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Page Number
-----------
Condensed Balance Sheet
March 31, 1999 ........................................................1
Condensed Statements of Operations
Three Months Ended March 31, 1999
and March 31, 1998....................................................2
Condensed Statements of Cash Flows
Three Months Ended March 31, 1999
and March 31, 1998....................................................3
Notes to Condensed Financial Statements ..................................4
Item 2. Management's Discussion and Analysis
or Plan of Operation..................................................5
Part II. OTHER INFORMATION..............................................7
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Balance Sheet
(Unaudited)
March 31
ASSETS 1999
--------
Current assets:
Cash and cash equivalents $ 146,472
Receivables 19,183
Inventories 112,125
Prepaid expenses 46,941
Prepaid leases-current 166,915
------------
Total current assets 491,636
Property and equipment, net 5,845,618
Prepaid leases-non current 1,090,374
Deposits 13,088
------------
TOTAL ASSETS $ 7,440,716
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 263,305
Accrued expenses 308,062
Current portion of long-term debt 136,826
-----------
Total current liabilities 708,193
Accrued lease expense 324,000
Long-term debt 3,470,984
Security deposits 20,500
-----------
Total liabilities 4,523,677
Stockholders' equity
Common stock, $.001 par value. Authorized 40,000,000
shares, issued and outstanding 7,937,638 shares as of 7,938
Additional paid-in capital 10,781,076
Accumulated deficit (7,871,975)
-----------
Net stockholders' equity 2,917,039
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,440,716
===========
See accompanying notes to condensed financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Operations
(Unaudited)
Three Months Ended
March 31
1999 1998
------------- --------------
<S> <C> <C>
Revenue:
Theater and concession $ 248,635 $ 291,584
Restaurant and deli 188,482 205,372
Gift shop 43,838 31,424
Mall operations 97,111 107,055
------------- --------------
578,066 635,435
------------- --------------
Direct Expense:
Theater and concession 193,212 260,305
Restaurant and deli 232,473 308,470
Gift shop 36,284 29,339
Mall operations 78,861 41,876
------------- --------------
540,829 639,990
------------- --------------
Gross Profit 37,237 (4,555)
------------- --------------
General and administrative 200,562 277,406
Advertising and marketing 188,592 130,819
Depreciation and amortization 111,355 106,313
------------- --------------
500,509 514,538
------------- --------------
Operating loss (463,272) (519,093)
Other (income) expense:
Interest income (3,473) (7,230)
Interest expense 82,101 84,422
------------- --------------
Other income (expense), net 78,628 77,192
------------- --------------
Loss before provision for income taxes $ (541,900) $ (596,285)
Provision for income taxes - -
------------- --------------
Net loss (541,900) (596,285)
============= ==============
Net loss per common share (basic and diluted) $ (.07) $ (.08)
============= ==============
Weighted average common
shares outstanding (basic and diluted) 7,937,638 7,858,959
============= ==============
See accompanying notes to condensed financial statements.
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31
1999 1998
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (541,900) $ (596,285)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 111,355 106,313
Changes in operating assets and liabilities:
Decrease (increase) in receivables and notes receivable-tenants (4,193) 48,360
Increase in inventories (33,317) (14,079)
Decrease (increase) in deposits and prepaid expenses (36,039) 1,664
Decrease in prepaid leases 41,729 41,729
Increase decrease in accounts payable and other accrued expenses 40,635 97,438
---------------- ----------------
Net cash used in operating activities (421,730) (314,860)
---------------- ----------------
Cash flows used in investing activities-
Capital expenditures (61,865) (301,797)
---------------- ----------------
Cash flows from financing activities:
Principal payments under capital lease obligations and long-term debt (24,693) (28,590)
---------------- ----------------
Increase (decrease) in cash and cash equivalents (508,288) (645,247)
Cash and cash equivalents at beginning of period 654,760 986,026
---------------- ----------------
Cash and cash equivalents at end of period $ 146,472 $ 340,779
================ ================
Supplemental cash flow information:
Cash paid during the period for interest $ 82,101 $ 85,978
---------------- ----------------
See accompanying notes to condensed financial statements.
</TABLE>
<PAGE>
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION
Notes to Condensed Financial Statements
March 31, 1999
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
International Tourist Entertainment Corporation (the "Company") commenced
operations in October 1993. The accompanying interim condensed financial
statements are unaudited, but in the opinion of management reflect all
adjustments (consisting of normal recurring accruals) necessary for a fair
presentation of the results for such periods. The results of operations for any
interim period are not necessarily indicative of results for the respective full
year. These condensed financial statements should be read in conjunction with
the financial statements and notes thereto contained in the Company's annual
report of form 10-KSB for the transition period ended December 31, 1998 as filed
with the Securities and Exchange Commission.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
ITEC Attractions (the trade name of the Company) began operations with the
opening of its giant screen theater and mall facility in Branson, Missouri in
October, 1993. This facility is known as the IMAX Entertainment Complex. The
Complex contains a 532 seat IMAX theater with a screen that is 62 feet tall and
83 feet wide. In addition, the facility includes an enclosed shopping mall with
approximately 22,000 square feet of retail space. McFarlain's, a family
restaurant in the mall, has been owned and operated by the Company since May 1,
1995. During the quarter ended March 31, 1997, the Company acquired assets to
begin the operation of McFarlain's Back Porch, an express deli and bakery which
is also in the mall. In 1994, the company began selling gift items related to
the films which were being exhibited in the theater or which are representative
of the lifestyle of the Ozark's. This operation has evolved into the Legacy &
Legends Gift Shop, which is one of the Company's most profitable and fastest
growing departments. Seventeen other shops and kiosks are currently leased to
third parties. In December 1997, the Company installed a new 35mm projection
system, in addition to its IMAX giant screen projection system, and began
showing feature 35mm films each evening in addition to the IMAX giant screen
film presentations.
In March 1998, the Company completed the construction of a 210 seat theater for
live performances in its Branson complex. The Mike Radford's - Remember When
Show and Jimmie Rodgers Remembers perform daily in this theater.
During the quarter ending September 30, 1998, the Company completed an addition
to the McFarlain's restaurant that increased seating by 133 people. This is the
second expansion of the restaurant during the last two and a half years and
brings the total seating to over 600 people.
RESULTS OF OPERATIONS
Revenues for the quarter ended March 31, 1999 decreased 9 percent to $578,066 as
compared to $635,435 for the same quarter of the previous year. This decrease
was primarily as a result of a decrease in theater and restaurant revenue due to
severe weather conditions in early January.
Direct expense for the quarter ended March 31, 1999 decreased 15 percent to
$540,829 as compared to $639,990 for the same quarter of the previous year. This
decrease was primarily as a result of a decrease in revenues.
The operating loss for the reporting quarter was $463,272 as compared to
$519,093 in the same quarter of the prior year.
<PAGE>
General and administrative expense for the quarter ended March 31, 1999
decreased 28 percent to $200,562 as compared to $277,406 for the same quarter of
the previous year. This difference was primarily as a result of the accrual of
management bonuses during the first quarter of 1998 for calendar year 1997.
Management bonuses were accrued during December of 1998 for calendar year 1998.
Interest expense was $82,101 for the quarter ended March 31, 1999 as compared to
$84,422 for the comparable period of the prior year.
The net loss for the reporting quarter was $541,978 compared to a net loss of
$596,285 in the same quarter of the previous year. It should be noted that
non-cash expenses equaled approximately $37,000 per month. Thus, the cash flow
used in operations for the three month periods ended March 31, 1999 and 1998 was
approximately $430,900 and $485,285 respectively.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1999 current assets totaled $491,636, while current liabilities
totaled $708,193. The Company's current ratio at March 31, 1999 was .69 to 1.
The Company maintains a $200,000 line of credit facility with a commercial bank.
No borrowings were made under the line of credit during the reporting quarter.
This credit facility is secured by a second deed of trust on the theater
complex.
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.
<PAGE>
PART II. OTHER INFORMATION
Item 1 Legal Proceedings
-----------------
There are no material legal proceedings pending to which the
Company is a party or of which any of its property is the
subject.
Item 2. Changes in Securities
---------------------
The Board of Directors of the Company, at a meeting of the
Board of Directors on October 30, 1998, approved an extension
of the Exercise Deadline for the Company's currently
outstanding warrants from December 31, 1998 until December 31,
2000. The warrants were issued subject to the terms and
conditions of a Warrant Agreement dated February 28, 1997, and
all other terms of the warrants, except for the extension of
the Exercise deadline, remain unchanged.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
A) Exhibits:
4.1 Specimen Certificate for the common stock of the
Registrant (incorporated by reference to the Registrant's
Registration Statement on Form S-1, Registration No.
33-48630).
10.3 Ground Lease Agreement dated July 27, 1993 between
Treasure Lake R.V. Resort Camping Club, Inc. and International
Tourist Entertainment Corporation (incorporated by reference
to Registration Statement on Form S-1, Registration No.
33-64132).
<PAGE>
10.4 Loan Agreement dated July 30, 1993 secured by Deed of
Trust for loan from NationsBank (formerly Boatman's Bank),
Branson, Missouri to International Tourist Entertainment
Corporation (incorporated by reference to Registration
Statement on Form S-1, Registration No. 33-64132).
10.5 Deed of Trust dated July 30, 1993 for benefit of
NationsBank Bank, Branson, Missouri (incorporated by reference
to Registration Statement on Form S-1, Registration No.
33-64132).
10.10 Distribution Agreement dated July 14, 1995 between Imax
Corporation and the Company (incorporated by reference to Form
10-KSB for the year ended June 30, 1996).
10.11 Second Amended Plan of Reorganization dated December 18,
1996 and Second Amended Disclosure Statement in Support of
Proposed Second Amended Plan of Reorganization dated December
18, 1996 (incorporated by reference to Form 8-K filed on
February 26, 1997).
10.12 Third Modification Agreement dated March 1, 1997 between
NationsBank Bank of Southern Missouri and the Company
(incorporated by reference to Form 10-KSB for the year ended
June 30, 1996).
10.13 System Lease Agreement as amended dated August 1, 1993
between IMAX Corporation and the Company (incorporated by
reference to Form 10-KSB for the year ended June 30, 1996).
27.1 Financial Data Schedule for the 3 months ended March 31,
1999.
B) Reports on Form 8-K :
----------------------
No reports on Form 8-K were filed during the reporting
quarter.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date 5/15/99 /s/ Paul M. Bluto
--------------- ---------------------------
Paul M. Bluto
Chairman and
Principal Financial Officer
Date 5/15/99 /s/ Paul E. Rasmussen
--------------- ---------------------------
Paul E. Rasmussen
President
Chief Executive Officer
Duly Authorized Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
INTERNATIONAL TOURIST ENTERTAINMENT CORPORATION MARCH 31, 1999 FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 146,472
<SECURITIES> 0
<RECEIVABLES> 19,183
<ALLOWANCES> 0
<INVENTORY> 112,125
<CURRENT-ASSETS> 491,636
<PP&E> 7,259,286
<DEPRECIATION> 1,413,668
<TOTAL-ASSETS> 7,440,716
<CURRENT-LIABILITIES> 708,193
<BONDS> 0
0
0
<COMMON> 7,938
<OTHER-SE> 2,909,101
<TOTAL-LIABILITY-AND-EQUITY> 7,440,716
<SALES> 578,066
<TOTAL-REVENUES> 578,066
<CGS> 540,829
<TOTAL-COSTS> 1,041,338
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 82,101
<INCOME-PRETAX> (541,978)
<INCOME-TAX> 0
<INCOME-CONTINUING> (541,978)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (541,978)
<EPS-PRIMARY> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
