<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
Amendment to Application or Report
Filed Pursuant to Section 12, 14 or 15(d) of
SECURITIES EXCHANGE ACT OF 1934
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
-------------------------------------------
Amendment No. 1
The undersigned amends the following items, financial statements,
exhibits or other portions of its Current Report on Form 8-K (the "8-K") dated
September 12, 1996 (Commission File No. 0-22458) as set forth below:
1. Item 7 Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
The required consolidated financial statements of National
Entertainment Funding, L.P. (NEF) at December 31, 1995 and
1994 for the two periods ended December 31, 1995 together with
the independent auditors' report thereon, are included herein
as Exhibit I
The unaudited consolidated financial statements of NEF for the
period ended August 28, 1996 are included as Exhibit II.
(b) Pro Forma Financial Information
Required pro forma financial information of the Registrant and
the acquired business is included herein as Exhibit III.
The pro forma balance sheet as of September 30, 1996 has not
been presented as the historical balances of Mountasia
Entertainment International, Inc. included in the Form 10-Q at
September 30, 1996, filed on November 12, 1996, includes the
acquisition of the NEF family entertainment centers.
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused the amendment to be signed on its behalf
by the undersigned, thereunto duly authorized.
MOUNTASIA ENTERTAINMENT
INTERNATIONAL, INC.
By: /s/ Richard M. Fitzpatrick
-------------------------------------
Chief Financial Officer
Dated: November 12, 1996
<PAGE> 2
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Operations
Introduction
As described in Mountasia Entertainment International, Inc.'s (the "Company" or
"MEI") Current Report on Form 8-K filed September 12, 1996 the Company entered
into Purchase and Sales Agreements with Family Funn Entertainment, Inc.
("FFE"), Family Entertainment Funding, L.P. ("FEF"), and Leisure Funn, Inc.
("LEI") to acquire their general and limited partnership interests in NEF.
The total consideration paid was as follows:
<TABLE>
<S> <C>
Cash $ 600,000
Issuance of 9.1% subordinated debentures 11,422,422
Assumption of long term debt 4,427,000
Net liabilities assumed 2,272,000
------------------
18,721,422
Carryover of basis 906,500
------------------
$ 19,627,922
==================
</TABLE>
The acquisition was accounted for under the purchase method of accounting and
accordingly, the Company allocated its total purchase price to the assets
acquired based upon their estimated fair values. The excess of purchase price
over the net assets acquired is being amortized over a thirty year period for
purposes of the unaudited pro forma condensed consolidated Statement of
Operations.
The following represents the purchase price allocation:
<TABLE>
<S> <C>
Fixed assets $ 11,991,715
Excess of purchase price over net assets
acquired 7,636,207
------------------
$ 19,627,922
==================
</TABLE>
The pro forma unaudited condensed consolidated statements of operations assume
that the acquisition of NEF occurred as of the first day of the period
presented. The accompanying pro forma unaudited condensed consolidated
statements of operations are presented for comparative purposes only and do not
purport to be indicative of the results which would have occurred had the
acquisition been made as of the first day of the period presented, or of
results which may occur in the future.
<PAGE> 3
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Operations
Pro Forma Unaudited Condensed Consolidated
Statement of Operations Adjustments
Note 1 Pro Forma adjustments related to NEF
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE NINE
ENDED MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
----------------- -----------------
<S> <C> <C> <C>
a. Elimination of intercompany construction
revenue and expenses between MEI and NEF $ 889,712
b. Elimination of MEI syndication revenue related
to formation of NEF 550,000
c. Elimination of intercompany management fees (20,818) $ (4,717)
d. Elimination of intercompany rent (41,557)
e. Elimination of costs related to syndication
revenue recognized upon formation of NEF (86,068)
f. Elimination of cost of warrants issued in
connection with the formation of NEF (300,000)
g. Elimination of effect of current NEF
amortization in excess of amortization of
unallocated excess of purchase price over net
assets acquired over 30 years (153,215) (1,789,300)
h. Increase in interest expense resulting from the
issuance of 9.1% Subordinated Debentures 337,000 484,620
i. Elimination of a fee recognized for the
j. Elimination of equity in net income (loss) of
NEF (37,109) 28,408
k. Net adjustment to consolidated income tax
benefit to reflect a 31% effective rate (1,256,408) (489,257)
------------------ -----------------
$ 975,287 $ (1,770,245)
================== =================
</TABLE>
<PAGE> 4
EXHIBIT I
AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF
NATIONAL ENTERTAINMENT FUNDING, L.P.
DECEMBER 31, 1995 AND 1994
<PAGE> 5
NATIONAL ENTERTAINMENT FUNDING, L.P.
FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
<PAGE> 6
(HOLLAND SHIPES VANN LETTERHEAD)
September 13, 1996
INDEPENDENT AUDITORS' REPORT
To the Partners
National Entertainment Funding, L.P.
We have audited the accompanying balance sheets of National Entertainment
Funding, L.P. as of December 31, 1995 and 1994 and the related statements of
operations, changes in partners' equity and cash flows for the year ended
December 31, 1995 and the period June 30, 1994 (date of inception) through
December 31, 1994. 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 National Entertainment
Funding, L.P. as of December 31, 1995 and 1994 and the results of its
operations and its cash flows for the year ended December 31, 1995 and the
period June 30, 1994 (date of inception) through December 31, 1994, in
conformity with generally accepted accounting principles.
HOLLAND SHIPES VANN, P.C.
<PAGE> 7
NATIONAL ENTERTAINMENT FUNDING, L.P.
BALANCE SHEETS
<TABLE>
<CAPTION>
===================================================================================================================
December 31, 1995 1994
===================================================================================================================
<S> <C> <C>
ASSETS
CURRENT
Cash and cash equivalents $ 201,481 $ 3,946,295
Restricted certificate of deposit (Note 1) 507,838
Accounts receivable 1,121 6,620
Inventories (Note 1) 100,947 82,442
Prepaid insurance 33,702 10,702
- -------------------------------------------------------------------------------------------------------------------
845,089 4,046,059
- -------------------------------------------------------------------------------------------------------------------
PROPERTY AND EQUIPMENT AT COST, less accumulated
depreciation (Notes 1, 2, 3 and 5) 12,200,375 7,667,478
- -------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
Deposits 11,091 10,000
Intangible assets (Notes 1 and 4) 1,980,424 2,162,588
- -------------------------------------------------------------------------------------------------------------------
1,991,515 2,172,588
- -------------------------------------------------------------------------------------------------------------------
$ 15,036,979 $ 13,886,125
===================================================================================================================
LIABILITIES AND PARTNERS' EQUITY
CURRENT
Current portion of notes payable (Note 5) $ 423,702 $ 5,532
Current portion of partner loans (Note 2) 2,742,800 1,371,400
Due to affiliated company (Note 2) 720,878 2,555,780
Accounts payable 450,153 463,435
Accrued management fees (Note 2) 51,764 6,957
Accrued interest 171,425 170,815
Other accrued expenses 230,669 30,970
- -------------------------------------------------------------------------------------------------------------------
4,791,391 4,604,889
- -------------------------------------------------------------------------------------------------------------------
NOTES PAYABLE, less current portion (Note 5) 4,612,596 36,278
- -------------------------------------------------------------------------------------------------------------------
PARTNER LOANS, less current portion (Note 2) 4,114,200 5,485,600
- -------------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY 1,518,792 3,759,358
- -------------------------------------------------------------------------------------------------------------------
$ 15,036,979 $ 13,886,125
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 8
NATIONAL ENTERTAINMENT FUNDING, L.P.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
===================================================================================================================
Year June 30, 1994
Ended Through
December 31, December 31,
1995 1994
===================================================================================================================
<S> <C> <C>
ENTERTAINMENT REVENUES $ 3,567,386 $ 121,188
- -------------------------------------------------------------------------------------------------------------------
OPERATING COSTS AND EXPENSES
Selling, general and administrative expenses 2,541,138 98,607
Payroll and related expenses 1,249,494 43,041
Depreciation and amortization 838,660 27,227
- -------------------------------------------------------------------------------------------------------------------
4,629,292 168,875
- -------------------------------------------------------------------------------------------------------------------
LOSS FROM OPERATIONS (1,061,906) (47,687)
- -------------------------------------------------------------------------------------------------------------------
OTHER INCOME (EXPENSE)
Interest expense (815,068) (178,284)
Interest and other income 92,850 109,819
- -------------------------------------------------------------------------------------------------------------------
(722,218) (68,465)
- -------------------------------------------------------------------------------------------------------------------
NET LOSS $ (1,784,124) $ (116,152)
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 9
NATIONAL ENTERTAINMENT FUNDING, L.P.
STATEMENTS OF CHANGES IN PARTNERS' EQUITY
<TABLE>
<CAPTION>
===================================================================================================================
Year June 30, 1994
Ended Through
December 31, December 31,
1995 1994
===================================================================================================================
<S> <C> <C>
PARTNERS' EQUITY, AT BEGINNING OF PERIOD $ 3,759,358
Capital contributions $ 4,573,000
Syndication costs (Note 1) (630,323)
Net loss (1,784,124) (116,152)
Distributions to partners (456,442) (67,167)
- -------------------------------------------------------------------------------------------------------------------
PARTNERS' EQUITY, AT END OF PERIOD $ 1,518,792 $ 3,759,358
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 10
NATIONAL ENTERTAINMENT FUNDING, L.P.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
===================================================================================================================
Year June 30, 1994
Ended Through
December 31, December 31,
1995 1994
===================================================================================================================
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,784,124) $ (116,152)
- -------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:-
Depreciation and amortization 838,660 27,227
Changes in assets and liabilities:
Accounts receivable 5,499 (6,620)
Inventories (18,505) (82,442)
Prepaid insurance (23,000) (10,702)
Deposits (1,091) (10,000)
Accounts payable 47,449 47,130
Accrued expenses 245,116 208,742
- -------------------------------------------------------------------------------------------------------------------
1,094,128 173,335
- -------------------------------------------------------------------------------------------------------------------
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (689,996) 57,183
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property and equipment (5,024,240) (8,736,912)
Increase in intangible assets (63,522) (454,076)
- -------------------------------------------------------------------------------------------------------------------
NET CASH USED IN INVESTING ACTIVITIES (5,087,762) (9,190,988)
- -------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from borrowing 5,000,000 6,899,275
Restricted certificate of deposit (507,838)
Loan costs (162,362) (250,000)
Principal payments on notes payable (5,512) (465)
Advances from (repayments to) affiliated company (1,834,902) 2,555,780
Syndication costs (630,323)
Capital contributions from partners 4,573,000
Distributions to partners (456,442) (67,167)
- -------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 2,032,944 13,080,100
- -------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,744,814) 3,946,295
CASH AND CASH EQUIVALENTS, at beginning of period 3,946,295 -0-
- -------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS, at end of period $ 201,481 $ 3,946,295
===================================================================================================================
</TABLE>
See accompanying notes to financial statements.
<PAGE> 11
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 and 1994
================================================================================
1. SUMMARY OF National Entertainment Funding, L.P. (the Partnership
SIGNIFICANT or NEF) was organized under the laws of the State of
ACCOUNTING Delaware on June 30, 1994. The Partnership owns and
POLICIES operates three family entertainment centers (FECs) in
Nevada, Florida and Texas. Operations of the
Partnership's Nevada FEC commenced December 1, 1994.
Operations in Florida and Texas began in January and June
1995, respectively.
MANAGEMENT The preparation of the financial statements in
ESTIMATES 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.
INVENTORIES Inventories, consisting primarily of redemption prizes,
food and skates, are stated at the lower of cost or
market (net realizable value). Cost is determined using
the specific identification method.
METHOD OF Depreciation is computed over the estimated useful lives
DEPRECIATION of the assets using the straight-line method.
Depreciation expense totaled $430,612 and $22,437 for the
periods ended December 31, 1995 and 1994, respectively.
INTANGIBLE Goodwill, which represents the excess of the purchase
ASSETS price over the fair value of assets acquired in
connection with the acquisition of the Miami FEC, is
being amortized over 15 years. Organization costs are
being amortized over sixty months. Start-up costs are
being amortized over the first year of the related FEC's
operations. Lease acquisition costs, which relate to a
fee paid to a related party for obtaining the lease on
the Nevada FEC, are being amortized over the 15-year
term of the lease. Loan costs are being amortized
ratably over the life of the loan to which they relate.
1
<PAGE> 12
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINALCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
===============================================================================
SYNDICATION Syndication costs, totaling $630,323, are related to
COSTS the acquisition of partner capital and are reflected as
a reduction of partners' equity.
INCOME TAXES As a limited partnership, profits (or losses) are
reported on the income tax returns of the partners.
Accordingly, no provisions are made for federal and state
income taxes on the accompanying financial statements.
CASH AND CASH The Partnership considers all highly liquid investments
EQUIVALENTS with a maturity of three months or less when purchased
to be "cash equivalents".
RESTRICTED The Partnership's certificate of deposit is restricted
CERTIFICATE OF under a compensating balance agreement with the
DEPOSIT Partnership's third party lender (Note 5).
CONCENTRATION Financial instruments which potentially subject the of
CREDIT RISK Partnership to concentration of credit risk consist
principally of temporary cash investments. The
Partnership maintains its cash in bank deposit accounts
which at times may exceed federally insured limits. To
limit the amount of credit exposure, the Partnership
places its temporary cash investments with quality
financial institutions.
2. RELATED PARTY The amount due to affiliated company of $720,878 (1995)
and $2,555,780 (1994) Transactions represents amounts
payable to Mountasia Entertainment International, Inc.
(MEI), a 14.4% limited partner in the Partnership. MEI
is also the developer of the Partnership's FECs.
On December 31, 1994, the Partnership purchased assets
of an FEC in Miami, Florida from MEI for a total
purchase price of $2,500,000. This purchase included a
service fee of $1,250,000 paid to cancel the
Partnership's obligation to build an FEC in the Miami
area. The purchase was accounted for under the purchase
method of accounting. Of the total
2
<PAGE> 13
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
==============================================================================
purchase price, $1,463,302 was allocated to goodwill
which is amortized over 15 years. In connection with
the purchase of the Miami FEC, the Partnership also
entered into a 15-year long-term land lease with MEI
for this FEC. The lease originally provided for an
annual rental of $400,000, but was reduced to $116,667
for the period September 1995 through March 1996.
The lease provides for three successive five-year
renewal periods. The total expense under the lease
for the year ended December 31, 1995 was $333,334.
The Partnership contracted with MEI for the
construction of its Nevada and Texas FECs and
renovation of its Miami FEC. The total amount
paid to MEI for construction and other services was
approximately $10,021,000. In 1994, the Partnership
also paid MEI due diligence and lease negotiation
fees totaling $550,000.
The Partnership also entered into a contract with
MEI for management of its FECs. The management
agreement initially provided for a management fee
of 6% of gross revenues, but this rate was reduced to
3% for the period September 1995 through March 1996.
Such fees totaled approximately $174,000 and $7,000 for
the periods ended December 31, 1995 and 1994,
respectively. This agreement extends for a period of
five years with annual renewals thereafter.
In connection with the formation of NEF, the partners
loaned the Partnership $6,857,000. The loans bear
interest at 10% per annum, payable quarterly. The loans
are payable in five annual installments of $1,371,400
beginning July 8, 1995. Interest on the loans totaled
$685,638 and $271,616 for the periods ended December 31,
1995 and 1994, respectively.
In connection with its formation, the Partnership also
paid loan costs and debt placement fees to certain
limited partners totaling $776,500, which were accounted
for as loan costs ($250,000) and syndication costs
($526,500).
3
<PAGE> 14
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
================================================================================
3. PROPERTY AND Property and equipment are summarized as follows:
EQUIPMENT
<TABLE>
<CAPTION>
Estimated
Useful Lives
in Years 1995 1994
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Clubhouses 39 $ 6,692,597 $4,941,752
Miniature golf courses,
racetracks and lagoons 20 4,394,494 1,630,985
Games 7 884,137 341,882
Cars and boats 7 436,438 100,213
Furniture, fixtures and
equipment 5 245,758 95,487
-----------------------------------------------------------------------------------
12,653,424 7,110,319
Less: Accumulated depreciation (453,049) (22,437)
-----------------------------------------------------------------------------------
12,200,375 7,087,882
Construction in progress 579,596
-----------------------------------------------------------------------------------
$12,200,375 $7,667,478
===================================================================================
</TABLE>
Interest costs, totaling $128,692 and $146,992 for the
periods ended December 31, 1995 and 1994,
respectively, were capitalized as part of the cost of
construction of the FECs.
4. INTANGIBLE Intangible assets at December 31, 1995 and 1994 are
ASSETS summarized as follows:
<TABLE>
<CAPTION>
1995 1994
--------------------------------------------------------------------
<S> <C> <C>
Goodwill $1,463,302 $1,463,302
Organization and start-up costs 267,598 204,076
Lease acquisition cost 250,000 250,000
Loan costs 412,362 250,000
--------------------------------------------------------------------
2,393,262 2,167,378
Less: Accumulated amortization (412,838) (4,790)
--------------------------------------------------------------------
$1,980,424 $2,162,588
====================================================================
</TABLE>
4
<PAGE> 15
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
================================================================================
5. NOTES PAYABLE Notes payable at December 31, 1995 and 1994 are
summarized as follows:
<TABLE>
<CAPTION>
1995 1994
-------------------------------------------------------------------------
<S> <C> <C>
Note payable to bank in monthly
principal installments of $41,667
plus interest at prime, balloon
payment of $2,500,000 due on
maturity in February 2001, secured
by a first priority security interest
in all real property, equipment,
compensating balances and assign-
ment of land leases $5,000,000
Note payable in monthly installments
of $1,028, including interest at
16.02%, maturing December 1999,
secured by equipment 36,298 $41,810
--------------------------------------------------------------------------
5,036,298 41,810
Less: Current maturities (423,702) (5,532)
--------------------------------------------------------------------------
$4,612,596 $36,278
==========================================================================
</TABLE>
MEI entered into a note purchase agreement with the
lender on the Partnership's note payable to bank. The
agreement provides for MEI to purchase the loan, upon the
lender's written demand, should an event of default occur
which is not cured during a grace period. The agreement
also requires MEI to meet certain financial covenants.
At December 31, 1995, MEI was not in compliance with such
covenants; however, the lender has not demanded that the
note be purchased by MEI. The note was repaid by MEI
subsequent to year-end (see Note 8).
5
<PAGE> 16
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
================================================================================
Principal maturities on notes payable are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
-----------------------------------------------------------------------------------
<S> <C>
1996 $ 423,702
1997 508,245
1998 509,667
1999 511,354
2000 500,000
Thereafter 2,583,330
-----------------------------------------------------------------------------------
$5,036,298
===================================================================================
</TABLE>
6. COMMITMENTS The Partnership has land and leases at each facility
CONTINGENCIES which are accounted for as operating leases, including
the lease with MEI (see Note 2). Future minimum lease
payments are as follows:
<TABLE>
<CAPTION>
Year Ending December 31,
-----------------------------------------------------------------------------------
<S> <C>
1996 $ 693,661
1997 743,661
1998 743,661
1999 748,380
2000 754,986
Thereafter 6,914,411
-----------------------------------------------------------------------------------
$10,598,760
===================================================================================
</TABLE>
The Nevada and Texas leases provide for four successive
five-year renewal periods. The terms of the Texas
ground lease provide for contingent rentals equal
to 5% of adjusted gross sales over $2,900,000,
beginning in May 1996. This base amount of $2,900,000
escalates by 3.5% every May 1 thereafter.
6
<PAGE> 17
NATIONAL ENTERTAINMENT FUNDING, L.P.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
================================================================================
Rent expense totaled $579,512 and $12,576 for the
periods ended December 31, 1995 and 1994, respectively.
7. SUPPLEMENTAL The Partnership made interest payments (net of amounts
CASH FLOW capitalized) of $814,458 and $7,469, for the periods
INFORMATION ended 31, 1995 and 1994, respectively. At December 31,
1995 and 1994, accounts payable for property and
equipment totaled $355,574 and $416,305, respectively.
8. SUBSEQUENT Effective at the close of business on August 28, 1996,
EVENTS the partners sold their general and limited
partnership interests to MEI for a total purchase
price of approximately $18,750,000 payable with 9.1%
subordinated convertible debentures due January 1, 1998,
in the amount of $11,400,000, cash of $651,000 and the
assumption of net liabilities of approximately
$6,699,000, including liabilities to MEI of approximately
$1,134,000.
7
<PAGE> 18
EXHIBIT II
UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
NATIONAL ENTERTAINMENT FUNDING L.P.
AUGUST 28, 1996
<PAGE> 19
NATIONAL ENTERTAINMENT FUNDING, L.P.
BALANCE SHEET
AUGUST 28, 1996 (UNAUDITED)
ASSETS
Current Assets
Cash $ 160,927
Other receivables 1,186
Inventories 100,947
-------------------
Total current assets 263,060
-------------------
Property and Equipment 12,657,036
Less: Accumulated depreciation (834,666)
-------------------
Other noncurrent
Other assets 11,091
-------------------
$ 12,096,521
===================
LIABILITIES AND PARTNERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 204,079
Due to related party 456,224
Other liabilities 2,340,038
Accrued expenses 370,380
-------------------
Total current liabilities 3,370,721
-------------------
Notes payable 32,609
Notes payable to affiliate 10,057,214
-------------------
Total liabilities 13,460,543
-------------------
Partners' Deficit
Partnership capital 3,133,168
Retained deficit (4,497,190)
-------------------
Total Partners' Deficit (1,364,022)
-------------------
$ 12,096,521
===================
<PAGE> 20
NATIONAL ENTERTAINMENT FUNDING, L.P.
INCOME STATEMENT
FOR THE EIGHT MONTHS ENDED
AUGUST 28, 1996 (UNAUDITED)
Operating revenue
Entertainment revenue $ 2,358,528
Other income 38,018
-----------------
Total revenue 2,396,546
-----------------
Operating expenses
Payroll expense 812,804
Operating expenses 1,303,071
Depreciation and amortization 2,362,042
-----------------
Total Expenses 4,477,917
-----------------
Income from operations (2,081,372)
-----------------
Other Expense
Interest expense (515,542)
-----------------
Net loss $ (2,596,914)
=================
<PAGE> 21
EXHIBIT III
PRO FORMA FINANCIAL INFORMATION
<PAGE> 22
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE YEAR FOR THE YEAR
ENDED ENDED
9/30/95 12/31/95 PRO FORMA
MEI NEF NOTE 1 COMBINED
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Operating revenues
Development and construction revenue $ 10,311,271 (5,143,001) (a) $ 5,168,270
from related parties
Entertainment revenue 32,185,420 $ 3,567,386 35,752,806
Syndication revenue 1,600,000 (550,000) (b) 1,050,000
Other 2,109,995 (436,352) (c)(d) 1,673,643
------------ ------------ ----------- ------------
46,206,686 3,567,386 (6,129,353) 43,644,719
------------ ------------ ----------- ------------
Operating expenses
Development and construction expense 9,246,197 (4,253,289) (a) 4,992,908
FEC operating expenses 25,930,779 3,790,632 (498,727) (c)(d) 29,222,684
General and administrative expenses 7,722,641 (386,068) (e)(f) 7,336,573
------------ ------------ ----------- ------------
42,899,617 3,790,632 (5,138,084) 41,552,165
Depreciation and amortization 4,859,831 838,660 (153,215) (g)(h) 5,545,276
Realized loss on sale of securities 293,430 293,430
------------ ------------ ----------- ------------
Operating loss (1,846,192) (1,061,906) (838,054) (3,746,152)
------------ ------------ ----------- ------------
Other (expense) income
Interest expense (3,489,968) (815,068) (337,000) (d) (4,642,036)
Interest income 421,176 92,850 514,026
Other 1,093,750 (1,093,750) (i) 0
------------ ------------ ----------- ------------
Loss before benefit for income taxes and
cumulative effect of a change in accounting principle (3,821,234) (1,784,124) (2,268,804) (7,874,162)
Benefit for income taxes 1,184,517 1,256,408 (k) 2,440,925
Equity in net earnings of limited partnerships, net of tax 78,891 37,109 (j) 116,000
------------ ------------ ------------- ------------
Net loss before cumulative effect of a change in
accounting principle (2,557,826) (1,784,124) (975,287) (5,317,237)
Cumulative effect of a change in accounting (438,068) (438,068)
$ (2,995,894) $ (1,784,124) $ (975,287) $ (5,755,305)
============ ============ ============= ============
NET LOSS APPLICABLE TO COMMON STOCK
Net loss $ (2,995,894) $ (5,755,305)
Less: Preferred stock dividends (75,616) (75,616)
------------ ------------
Net loss applicable to common stock $ (3,071,510) $ (5,830,921)
============ ============
Net loss applicable to common stock before
cumulative effect of a change in accounting principle $ (0.34) $ (0.70)
Loss per share of common stock as a result of cumulative
effect of a change in accounting principle (0.06) (0.06)
------------ ------------
Net loss per share of common stock $ (0.40) $ (0.76)
============ ============
Weighted average number of common stock and common
stock equivalents used in calculating net loss per share 7,719,727 7,719,727
============ ============
</TABLE>
<PAGE> 23
MOUNTASIA ENTERTAINMENT INTERNATIONAL, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS FOR THE PERIOD
ENDED ENDED
9/30/96 8/28/96 PRO FORMA
MEI NEF NOTE 1 COMBINED
------------------ ----------------- --------------- -------------
<S> <C> <C> <C> <C>
Operating revenues
Entertainment revenue $ 29,192,106 2,358,528 $ 31,550,634
Other 1,362,281 38,018 (33,021)(c) 1,367,278
------------- ------------- ----------- -------------
30,554,387 2,396,546 (33,021) 32,917,912
------------- ------------- ----------- -------------
Operating expenses
Family Entertainment Center expenses 25,218,929 2,115,875 (37,737)(d) 27,297,067
General and administrative expenses 7,094,258 7,094,258
------------- ------------- ----------- -------------
32,313,187 2,115,875 (37,737) 34,391,325
Depreciation and amortization 5,541,795 2,362,042 (1,789,300)(g) 6,114,537
Loss due to impairment of assets 2,871,000 2,871,000
------------- ------------- ----------- -------------
Operating loss (10,171,595) (2,081,371) 1,794,016 (10,458,950)
------------- ------------- ----------- -------------
Other (expense) income
Interest expense (3,423,456) (515,543) (484,620)(h) (4,423,619)
Interest income 163,124 163,124
Loss on settlement of strategic allia (1,005,751) (1,005,751)
Gain associated with development and 795,000 795,000
Gain associated with cancellation of 422,333 422,333
Other 1,107,183 1,107,183
------------- -------------
Loss before benefit for income taxes and
extraordinary item (12,113,162) (2,596,914) 1,309,396 (13,400,680)
Extraordinary item (less applicable income tax benefit
of $300,000) (537,580) (537,580)
Benefit for income taxes 4,540,616 489,257 (j) 5,029,873
Equity in net earnings (losses) of limited p (45,976) (28,408)(k) (74,384)
------------- ------------- ----------- -------------
Net loss $ (8,156,102) $ (2,596,914) $ 1,770,245 $ (8,982,771)
============= ============= =========== =============
NET LOSS APPLICABLE TO COMMON STOCK
Net loss before extraordinary item $ (7,618,522) $ (8,445,191)
Less: Preferred stock dividends (379,680) (379,680)
------------- -------------
Net loss applicable to common stock before
extraordinary item (7,998,202) (8,824,871)
Extraordinary item (537,580) (537,580)
------------- -------------
Net loss applicable to common stock $ (8,535,782) $ (9,362,451)
Net loss per share of common stock before
extraordinary item (0.58) (0.64)
Extraordinary item (0.04) (0.04)
------------- -------------
Net loss per share of common stock $ (0.62) $ (0.68)
Weighted average number of common stock and common ============= =============
stock equivalents used in calculating net lo 13,867,288 13,867,288
============= =============
</TABLE>
