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U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997.
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the transition period from to
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Commission File No. 0-23914
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
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(Name of Small Business Issuer in its Charter)
DELAWARE 87-0521389
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(State or Other Jurisdiction of (I.R.S. Employer I.D.No.)
incorporation or organization)
16055 Space Center Blvd., Suite 230
Houston, TX 77062
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(Address of Principal Executive Officers)
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Issuer's Telephone Number: (281)486-6115
Not Applicable
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(Former Name or Former Address, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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 requirements for the past 90 days.
(1) Yes [x] No [ ] (2) Yes [x] No [ ]
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PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check Whether the Registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Not Applicable.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of the latest practicable date:
June 30, 1997
Common stock: 21,990,590
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
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The financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management and commence on the
following pages, together with Related Notes. In the opinion of management, the
Financial Statements fairly present the financial condition of the Registrant.
2
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
(Unaudited) (Note)
CURRENT ASSETS:
CASH $ 68,795.67 $ 14,850.00
ACCOUNTS RECEIVABLE 503,053.07 452,772.00
RETAIL INVENTORIES 124,480.04 138,921.00
OTHER CURRENT ASSETS 94,082.79 82,857.00
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790,411.57 689.400.00
PROPERTY AND EQUIPMENT 4,274,934.52 3,715,051.00
LESS: ACCUMULATED DEPRECIATION (1,672,579.00) (1,429,312.00)
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2,602,355.52 2,285,739.00
OTHER ASSETS 13,633.51 2,635.00
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TOTAL ASSETS 3,406,400.60 2,977,774.00
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 270,908.79 $ 679,902.00
NOTES PAYABLE AND CURRENT PORTION OF
LONG-TERM DEBT 560,358.55 632,880.00
OTHER CURRENT LIABILITIES 4,843.14 80,439.00
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836,110.48 1,393,221.00
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LONG-TERM DEBT 675,704.12 101,929.00
CONTINGENT LIABILITIES 136,416.00 0
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$ 812,120.12 $ 101,929.00
STOCKHOLDERS' EQUITY
COMMON STOCK 21,990.00 20,508.00
ADDITIONAL PAID-IN CAPITAL 2,499,362.19 2,448,268.00
RETAINED EARNINGS (763,182.19) (986,152.00)
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1,758,170.00 1,482,624.00
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,406,400.60 $2,977,774.00
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE: THE BALANCE SHEET AT DECEMBER 31, 1996 HAS BEEN DERIVED FROM AUDITED
FINANCIAL STATEMENTS AT THAT DATE.
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended June 30,
1997 1996
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Revenues $ 1,338,583 $ 1,818,935
Cost of Goods Sold 626,803 931,447
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Gross Profit 713,365 887,488
General and Administrative Expenses 541,048 669,317
Depreciation 109,553 319,545
Interest Expense 21,656 36,394
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Profit (Loss) Before Income Taxes 41,107 (137,768)
Income Taxes 0 0
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Net Profit (Loss) 41,107 (137,768)
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Net Profit (Loss) Per Share $0.003 (0.01)
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Weighted Average Shares Outstanding 21,990,590 20,220,370
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See Notes to Condensed Consolidated Financial Statements.
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Six Months Ended June 30,
1997 1996
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Revenues $ 2,917,152 $ 3,621,542
Cost of Goods Sold 1,394,590 1,817,323
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Gross Profit 1,522,562 1,804,219
General and Administrative Expenses 1,171,267 1,391,735
Depreciation 243,267 595,910
Interest Expense 41,514 56,362
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Profit (Loss) Before Income Taxes 66,513 (239,788)
Income Taxes 0 0
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Net Profit (Loss) 66,513 (239,788)
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Net Profit (Loss) Per Share $0.003 (0.01)
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Weighted Average Shares Outstanding 21,990,590 20,220,370
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See Notes to Condensed Consolidated Financial Statements.
5
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ENTERTAINMENT TECHNOLOGIES & PRODUCTION, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Six Months Ended June 30,
1997 1996
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Cash From Operations $312,063 $ 69,870
Investing Activities
Purchase of property and equipment (14,871) (549,285)
Sale of Note Receivable 0 192,900
Other 0 49,628
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(14,871) (306,757)
Financing Activities
Borrowing and repayment of debt 237,280 219,551
Issuance of additional common stock 0 (11,871)
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237,280 207,680
Increase (Decrease) In Cash 534,472 ($29,207)
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See Notes To Condensed Consolidated Financial Statements
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
JUNE 30, 1997
Note 1. - Basis of Presentation
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10Q and Item 10 of
Regulation S-B. Accordingly, they do not include all of the information for
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three and six month period ended June
30, 1997 are not necessarily indicative of the results that may be expected for
the year ended December 31, 1997.
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
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Six Months Ended June 30, 1997 compared to Six Months Ended June 30,1996.
Revenues for the second quarter of 1997 decreased by $144,323 over the
comparable period for 1996. The decrease was partially offset by the
acquisition of Redfish Management Incorporated's revenue of $87,146.85.
Gross Profit for the first six months of 1997 increased by $306,301.00 over the
first six months of 1996.
General and administrative expenses decreased by $220,468 for the first six
months of 1997, due to conscious attrition.
Depreciation expense decreased $352,643.00 over the comparable period in 1996.
Interest expense is down $14,848.00 for this time period. This will be down
even further in the next quarter due to major debt reconstruction by using a
more traditional lending institution.
As a result of the above, there was a net profit for the second quarter 1997.
Profit for the 2nd quarter is up more than the 1st quarter of 1997 and
considerably more than the same six months of 1996 as noted above.
LIQUIDITY AND CAPITAL RESOURCES
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The Company achieved traditional short term borrowing from Bayshore National
Bank in the amount of $450,000.00 through securing `accounts receivable'. This
relationship for borrowing lowered the cost of short term capital by
approximately 60% against the Company factoring relationship with Celtic Capital
who were paid off as part of the capitalization from Bayshore National Bank.
Also, the Company achieved two of six $100,000.00 tranches through a convertible
debt under an agreement from Capital Growth Planning of El Cajon, CA. The
Company anticipates closing the remaining four $100,00.00 units this year
requiring no additional capital for the balance of the year. The Company is
currently exploring various additional opportunities for outside financing
although there can be no assurances that these efforts will be successful.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
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The only material legal proceeding filed against the company at this
time is the May 17, 1997 suit filed in the Superior Court of
California by the former owner of one of the Company's wholly owned
subsidiaries. The suit alleges breach of contract and non-payment of
amounts owed related to the acquisition of the subsidiary. In the
opinion of the Company's council, the suit is without merit and the
company intends to defend itself vigorously.
Item 2. CHANGES IN SECURITIES.
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The Company achieved a 'Lenders Trust' by securing amusement gaming
assets to achieve a convertible debenture in the amount of
$600,000.00. As of June 30, 1997, two $100,00.00 tranches were
receivd by the Company. As part of the security to the trust, the
Company issued 1,200,000 shares into an escrow account to be used in
case of a default on the debt by the Company. The shares are to serve
as the primary security with the amusement machines as secondary
security in the event of a default.
Also, the Company paid 90,000 shares of restricted and unregistered
common stock to Capital Growth Planning for the placement of the
Lender Trust. Each investor in the Lender Trust, has/will receive
100 shares for each $1,000.00 invested into Lender Trust.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
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None; not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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None; not applicable
ITEM 5. OTHER INFORMATION
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None; not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits;
27 - Financial Data Schedule
(b) Reports on Form 8-K
None
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1939, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
ENTERTAINMENT TECHNOLOGIES &
PROGRAMS, INC.
DATE: AUGUST 13, 1997 BY: JAMES D. BUTCHER/S/
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James D. Butcher, Chairman & CEO
DATE: AUGUST 13, 1997 BY: V. J. FARMER/S/
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V. J. FARMER, CONTROLLER
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 68,796
<SECURITIES> 0
<RECEIVABLES> 503,053
<ALLOWANCES> 0
<INVENTORY> 124,480
<CURRENT-ASSETS> 790,412
<PP&E> 4,274,934
<DEPRECIATION> (1,672,579)
<TOTAL-ASSETS> 3,406,401
<CURRENT-LIABILITIES> 836,110
<BONDS> 0
0
0
<COMMON> 21,990
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 3,406,401
<SALES> 2,917,152
<TOTAL-REVENUES> 2,917,152
<CGS> 1,394,590
<TOTAL-COSTS> 1,394,590
<OTHER-EXPENSES> 1,171,267
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,514
<INCOME-PRETAX> 66,513
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 66,513
<EPS-PRIMARY> .003
<EPS-DILUTED> .003
</TABLE>
