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, 2000.
[ ] Transition Report Pursuant under Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ____________ to
____________.
Commission file number 0-21070
ITEC ATTRACTIONS, INC.
(Exact name of small business issuer as specified in its
charter.)
Nevada 66-0426648
------ ----------
(State of Incorporation) (IRS Employer Identification No.)
3562 Shepherd of the Hills Expressway Branson, Missouri 65616
-------------------------------------------------------------
(Address of principal executive offices)
(417) 335-3533
--------------
(Issuer's telephone number)
Check whether the issuer (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 (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 shared outstanding of the issuer's common stock, $.001 par value
as of March 31, 2000 is 7,937,638 shares.
Transitional Small Business Disclosure Format (check one): Yes No X
<PAGE>
ITEC ATTRACTIONS, INC.
TABLE OF CONTENTS
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
Page Number
-----------
Condensed Balance Sheet
March 31, 2000 .........................................................1
Condensed Statements of Operations
Three Months Ended March 31, 2000
And March 31, 1999 ........................................................2
Condensed Statements of Cash Flows
Three Months Ended March 31, 2000
And March 31, 1999 ........................................................3
Notes to Condensed Financial Statements ....................................4
Item 2. Management's Discussion and Analysis
Or Plan of Operation .....................................................5
PART II. OTHER INFORMATION ................................................8
<PAGE>
ITEC ATTRACTIONS, INC
Condensed Balance Sheet
(Unaudited)
<TABLE>
<CAPTION>
March 31, March 31,
ASSETS 2000 1999
------ --------- ---------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 23,483 146,472
Receivables 45,556 19,183
Inventories 145,994 112,125
Prepaid expenses 77,279 46,941
Prepaid leases-current 166,915 166,915
--------------- ----------------
Total current assets 459,227 491,636
Property and equipment, net 5,775,271 5,845,618
Prepaid leases-non current 923,459 1,090,374
Deposits 11,187 13,088
--------------- ----------------
TOTAL ASSETS $ 7,169,144 7,440,716
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Accounts payable $ 260,398 263,305
Accrued expenses 272,825 308,062
Current portion of long-term debt 179,333 136,826
--------------- ----------------
Total current liabilities 712,556 708,193
Accrued lease expense 380,348 324,000
Long-term debt 3,255,328 3,470,984
Security deposits 17,700 20,500
--------------- ----------------
Total liabilities 4,365,932 4,523,677
--------------- ----------------
Stockholders' equity
Common stock, $.001 par value. Authorized 40,000,000
shares, issued and outstanding 7,937,638 shares as of
March 31, 2000 7,938 7,938
Additional paid-in capital 10,781,076 10,781,076
Accumulated deficit (7,985,802) (7,871,975)
--------------- ----------------
Net stockholders' equity 2,803,212 2,917,039
--------------- ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,169,144 7,440,716
=============== ================
</TABLE>
See accompanying notes to condensed financial statements.
1
<PAGE>
ITEC ATTRACTIONS, INC.
Condensed Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
--------------- -----------------
<S> <C> <C>
Revenue:
Theater and concession $ 328,612 $ 248,635
Restaurant and deli 201,498 188,482
Gift shop 46,866 43,838
Mall operation 100,412 97,111
--------------- -----------------
677,388 578,066
--------------- -----------------
Direct Expense:
Theater and concession 236,410 193,212
Restaurant and deli 262,263 232,473
Gift shop 44,699 36,284
Mall operations 79,080 78,861
--------------- -----------------
622,452 540,830
--------------- -----------------
Gross Profit 54,936 37,236
--------------- -----------------
General and administrative 204,650 200,562
Advertising and marketing 173,556 188,592
Depreciation and amortization 115,556 111,355
--------------- -----------------
493,762 500,509
--------------- -----------------
Operating Loss (438,826) (463,273)
Other (income) expense:
Interest income (3,489) (3,473)
Interest expense 74,762 82,101
--------------- -----------------
Other income (expense), net 71,273 78,628
--------------- -----------------
Income before provision for income taxes (510,099) (541,901)
Income tax expense - -
--------------- -----------------
Net Loss $ (510,099) (541,901)
=============== =================
Net Loss per common share $ (.06) $ (.07)
=============== =================
Weighted average common
shares outstanding 7,937,638 7,937,638
</TABLE>
See accompanying notes to condensed financial statements.
2
<PAGE>
ITEC ATTRACTIONS, INC.
Condensed Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
2000 1999
---------------- -----------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (510,099) $ (541,901)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 115,556 111,355
Changes in operating assets and liabilities:
Decrease (increase) in receivables 35,132 (4,192)
Decrease (increase) in inventories (50,241) (33,317)
Decrease (increase) in deposits & prepaid expenses 12,928 (36,039)
Decrease (increase) in prepaid leases 41,729 41,729
Increase (decrease) in accounts payable and other accrued expenses (32,203) 40,635
---------------- -----------------
Net cash used in operating activities (387,198) (421,730)
---------------- -----------------
Cash flows used in investing activities:
Capital expenditures (199,406) (61,865)
---------------- -----------------
Net cash used in investing activities (199,406) (61,865)
---------------- -----------------
Cash flows from financing activities:
Increase in capital lease obligations 14,087 14,087
Principal payments on long-term debt (48,706) (38,780)
---------------- -----------------
Net cash used in financing activities (34,619) (24,693)
---------------- -----------------
Decrease in cash and cash equivalents (621,223) (508,288)
Cash and cash equivalents at beginning of period 644,706 654,760
---------------- -----------------
Cash and cash equivalents at end of period $ 23,483 $ 146,472
================ =================
Supplemental cash flow information:
Cash paid during the period for interest $ 74,762 $ 82,101
</TABLE>
See accompanying notes to condensed financial statements.
3
ITEC ATTRACTIONS, INC.
Notes to Condensed Financial Statements
March 31, 2000
(Unaudited)
NOTE 1. BASIS OF PRESENTATION
ITEC Attractions, Inc. (formerly known as International Tourist
Entertainment Corporation) (the "Company") commenced operations in October,
1993. The accompanying interim condensed financial statements are unaudited, but
in the opinion of management reflect all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the results for such
periods. The results of operations for any interim period are not necessarily
indicative of results for the respective full year. These condensed financial
statements should be read in conjunction with the financial statements and notes
thereto contained in the Company's annual report of form 10-KSB for the year
ended December 31, 1999.
-4-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the results of
operations and financial condition of ITEC Attractions, Inc. This discussion and
analysis should be read in conjunction with the financial statements related
notes and Management's Discussion and Analysis or Plan of Operation included in
the Company's Report on Form 10-KSB for the year ended December 31, 1999.
ITEC Attractions, Inc. 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 located in the
mall. The Back Porch is currently being converted to The IMAX Food Court. The
IMAX Food Court will include franchises for Quiznos Subs, Baskin Robbins Ice
Cream, and Breadeaux Pizza. The Company expects the IMAX Food Court to open
about May 15, 2000. 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 Ozarks. This operation has evolved into the Legacy &
Legends Gift Shop, which has been one of the Company's most profitable and
fastest growing departments. Fourteen 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 the complex. 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 major expansion of the restaurant during the last two and a half years
and brings the total seating to over 655 people.
RESULTS OF OPERATIONS
Revenues for the quarter ended March 31, 2000 increased 17.1 percent to $677,388
as compared to $578,066 for the same quarter of the previous year. For the three
months, the Company reported revenue increases in all areas of operations.
-5-
<PAGE>
Direct operating expenses were $622,452 for the reporting quarter ended March
31, 2000 representing 91.8 percent of sales, as compared to expenses of $540,830
or 93.6 percent of sales, for the comparable period of the previous year. The
reduction in direct operating expense as a percentage of revenue for the
three-month period, is a result of an expense reduction program that was
implemented in early 1999.
General and administrative expenses were $204,650 and advertising and marketing
were $173,556 for the quarter ended March 31, 2000 as compared to $200,562 and
$188,592 respectively for the same period in 1999.
Interest expense was $74,762 and $82,101 for the quarters ended March 31, 2000
and 1999 respectively.
The net loss was $510,099 for the reporting period compared to $541,901 for the
same period of the previous year.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 2000 current assets totaled $459,227, while current liabilities
totaled $712,556. The Company's current ratio at March 31, 2000 was .64 to 1.00.
The Company maintains a $400,000 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.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, in other filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or stockholder communications, or in oral statements made with the
approval of an authorized executive officer of the Company, the words or phrases
"would be," "will allow," "intends to," "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," or similar expressions
are intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995.
-6-
<PAGE>
The Company cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties, including but not limited to
risk of product demand, market acceptance, economic conditions, competitive
products and pricing, difficulties in product development, commercialization,
and technology, and other risks. In addition, sales and other revenues may not
commence and/or continue as anticipated due to delays or otherwise. As a result,
the Company's actual results for future periods could differ materially from
those anticipated or projected. Please refer to the "Management's Discussion and
Analysis or Plan of Operation" that is found in the Company's Annual Report on
Form 10-KSB for the period ended December 31, 1999, for more details.
Unless otherwise required by applicable law, the Company does not undertake, and
specifically disclaims any obligations, to update any forward-looking statements
to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.
-7-
<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
---------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not applicable.
Item 5. Other Events
------------
None
-8-
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 the Company
(incorporated by reference to Registration Statement on Form
S-1, Registration No. 33-64132).
10.4 Loan Agreement dated July 30, 1993 secured by Deed of
Trust for loan from the Bank of America (successor to
Boatman's Bank), the Company (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 Bank of
America, Branson, Missouri (successor to Boatman's Bank),
(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).
10.12 Third Modification Agreement dated March 1, 1997 between
the Bank of America (successor to Boatman's Bank) 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.
10.14 Ground Lease Agreement dated December 18, 1999 between
Treasure Lake RV Resort Camping Club, Inc. and the Company.
27.1 Financial Data Schedule for the 3 months ended March 31,
2000.
B. Reports on Form 8-K:
--------------------
No reports on Form 8-K were filed during the reporting
quarter.
-9-
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ITEC Attractions, Inc.
Date 5/10/00 /s/ Paul M. Bluto
------- -----------------
Paul M. Bluto
Chairman and
Principal Financial Officer
Chief Executive Officer
Date 5/10/00 /s/ Paul E. Rasmussen
------- ---------------------
Paul E. Rasmussen
President
Chief Operating Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
ITEC ATTRACTIONS, INC. FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 23,483
<SECURITIES> 0
<RECEIVABLES> 45,556
<ALLOWANCES> 0
<INVENTORY> 145,994
<CURRENT-ASSETS> 459,227
<PP&E> 7,657,895
<DEPRECIATION> 1,882,624
<TOTAL-ASSETS> 7,169,144
<CURRENT-LIABILITIES> 712,556
<BONDS> 3,653,376
0
0
<COMMON> 7,938
<OTHER-SE> 2,795,274
<TOTAL-LIABILITY-AND-EQUITY> 7,169,144
<SALES> 677,388
<TOTAL-REVENUES> 680,877
<CGS> 622,452
<TOTAL-COSTS> 1,116,214
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 74,762
<INCOME-PRETAX> (510,099)
<INCOME-TAX> 0
<INCOME-CONTINUING> (510,099)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (510,099)
<EPS-BASIC> (0.06)
<EPS-DILUTED> (0.06)
</TABLE>
