SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission file number
March 31, 1996 33-87714
- --------------------- ----------------------
OLYMPIC ENTERTAINMENT GROUP, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0271810
- ---------------------------- ---------------------
(State of other jurisdiction (IRS Employer
of incorporation) Identification Number)
2001 E. Flamingo Road, Las Vegas, Nevada 89119
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 369-2588
--------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 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.
(1) Yes X No (2) Yes X No
----- ----- -----
As of March 31, 1996 there were 1,978,500 shares of common stock outstanding.
Transitional Small Business Disclosure Format. Yes No X
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
=================================
INDEX
Part I. Item 1. Financial Statements Page No.
- ------- ------- -------------------- --------
Balance Sheet - at March 31, 1996 3
Statements of Operations - for the
three months ended March 31, 1996,
and March 31, 1995 5
Statements of Cash Flows - for the
three months ended March 31, 1996
and March 31, 1995 6
Notes to Financial Statemen 7
Item 2.
Management's Discussion and
Analysis of Financial Condition and Results
of Operations 9
Part II. Other Information
Items 1 through 5 10
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Balance Sheet
March 31, 1996
(unaudited)
Assets
------
Current Assets:
Cash $ 16,420
Prepaid expenses 25,862
----------
Total current assets 42,282
Property and Equipment, net 13,821
Other Assets:
Program library 361,303
Deposits and other assets 13,492
----------
Total assets $ 430,898
==========
See accompanying notes
3
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Balance Sheet
March 31, 1996
(unaudited)
(Continued)
Liabilities and Stockholders' Equity
------------------------------------
Current Liabilities:
Notes payable $ 20,000
Accounts payable 63,998
Accrued expenses 99,299
Deferred revenue 702,505
Amounts due stockholders 79,298
-----------
Total current liabilities 965,100
Redeemable preferred stock:
Preferred stock, 10% cumulative
convertible, $.01 par value, 650,000
shares authorized, 106,500 shares
issued and outstanding, liquidating
preference $1 per share 213,000
Stockholders' equity:
Preferred stock; $.01 par value,
5,000,000 total shares authorized:
Preferred stock, 7% cumulative
convertible, $.01 par value,
32,500 shares authorized, issued
and outstanding, liquidating
preference $10 per share 325,000
Preferred stock, convertible, $.001 par
value, 40,000 shares authorized,
32,800 shares issued and outstanding,
liquidating preference $3 per share
(Series C) 65,600
Preferred stock, convertible, $.001 par
value, 98,000 shares authorized, issued
and outstanding liquidating preference
$3 per share (Series D) 196,000
Common stock, $.01 par value,
20,000,000 shares authorized,
1,978,500 shares issued and outstanding 19,785
Paid in capital 1,858,853
Common stock subscriptions -
Accumulated deficit (3,212,440)
-----------
Total stockholders' equity (747,202)
-----------
Total liabilities and stockholders' equity $ 430,898
===========
See accompanying notes
4
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Operations
For the three months ended
March 31, 1996 and 1995
(Unaudited)
1996 1995
----------- -----------
Revenues:
Net sales $ 286,966 $ 87,109
----------- -----------
Total revenues 286,966 87,109
Amortization of
program costs 31,832 -
Selling, general and
administrative expenses 285,634 217,670
----------- -----------
Total expenses (317,466) (217,670)
----------- -----------
Loss from operations (30,500) (130,561)
Other income and expense:
Interest income - 548
Interest expense (11,263) (500)
----------- -----------
Net loss $ (41,763) $ (130,513)
=========== ===========
Net loss per share: $ (.02) $ (.07)
=========== ===========
Weighted average shares 1,978,500 1,861,353
=========== ===========
See accompanying notes
5
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Cash Flows
For the three months ended March 31, 1996 and 1995
(Unaudited)
1996 1995
---------- -----------
Operating activities: $ (78,046) $ 3,318
Investing activities:
Investment in film library (23,652) -
Purchase of fixed assets (523) (608)
---------- ----------
Net cash provided by (used
in) investing activities (24,175) (608)
Financing activities:
(Increase) decrease in
deferred offering costs - (4,337)
---------- ----------
Net cash provided by (used in)
financing activities - (4,337)
---------- ----------
Net increase (decrease) in cash
and cash equivalents (102,221) (1,627)
Beginning cash 118,641 117,622
---------- ----------
Ending cash $ 16,420 $ 115,995
========== ==========
See accompanying notes
6
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Notes to Financial Statements
March 31, 1996
1. Summary of significant accounting policies
------------------------------------------
Basis of presentation
---------------------
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and Item 310 of Regulation SB. They do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management, all
adjustments (consisting of normal recurring adjustments) considered necessary
for a fair presentation have been included. The results of operations for the
periods presented are not necessarily indicative of the results to be expected
for the full year.
License fees and related costs
------------------------------
The Company recognizes license fee income and amortizes the related direct
costs, such as sales commissions, and affiliate tape stock, over the period of
the related licenses which in all of the Company's existing license agreements
is one year.
Net loss per share
------------------
The net loss per share is computed by dividing the net loss for the period
by the weighted average number of common shares outstanding for the period.
Common stock equivalents are excluded from the computation as their effect would
be anti-dilutive.
Program costs
-------------
Program costs, rights fees, and other costs associated with the production
and acquisition of the Company's entertainment product are amortized, based upon
the individual program forecast method in accordance with Statement of Financial
Accounting Standard #53. This method amortizes such costs in the same ratio that
current revenues bear to total estimated gross revenues. Estimated revenues are
management's best estimate of a product's overall financial performance. Such
amortization commences when the product is first placed into distribution.
7
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Notes to Financial Statements
March 31, 1996
2. Stockholders' equity
--------------------
During December, 1994 the Company filed a registration statement on Form
S-1 with the Securities and Exchange Commission to register the following:
a) 325,000 common shares to be issued upon the conversion of the 7%
convertible preferred stock;
b) 106,500 common shares underlying the conversion privilege of the
106,500 shares of 10% convertible preferred stock currently
outstanding;
c) 423,386 common shares currently held by certain shareholders of the
Company; and
d) 4,000,000 common stock purchase warrants and the underlying common
stock to be distributed to the shareholders of the Company as of
August 31, 1994.
The 4,000,000 common stock purchase warrants are exercisable into one
common share at a purchase price of $2 per share for a period of
18 months from issue and shall be redeemable by the Company at
$.01 per warrant.
3. Notes payable and long-term debt
--------------------------------
During 1991, the Company borrowed $250,000 from an individual with interest
payable at 10% per annum due during September, 1992. On September 30, 1992 this
note along with $38,500 in accrued interest were converted into a convertible
debenture bearing interest at 10% per annum due on December 31, 1993. The holder
of the debenture had the right to convert the debenture into common stock of the
Company at the rate of one share of common stock for each one dollar due on the
debenture. During March, 1994, the holder of the debenture agreed to convert the
debenture and $36,500 of interest into 32,500 shares of the Company's 7%
convertible preferred stock. In addition, during 1993, this individual advanced
the Company an additional $10,000 bearing interest at 10% and due on demand.
During March, 1993, the Company borrowed $10,000 from an individual
pursuant to a debenture bearing interest at 10% per annum due on demand. The
holder of the debenture has the right to convert the debenture into common stock
of the Company at the rate of one share of common stock for each one dollar due
on the debenture.
8
<PAGE>
Item 2 Management's discussion and analysis
- ------ ------------------------------------
GENERAL
The Company was incorporated on May 21, 1987, in the State of Nevada. The
Company is in the business of acquiring, licensing and distributing non-violent
educational, informational and special interest television programming for
children. The Company does business as the "Children's Cable Network" ("CCN").
The Children's Cable Network is comprised of individuals, known as Broadcast
affiliates, who license the Company's programs to air in the various cable
markets throughout the United States. The Company commenced the sale of
broadcast licenses to such affiliates during 1995.
At the end of the 1st quarter, the Company had five affiliates up and
running including the territories of Tampa, FL, Greeley, CO, Columbus, OH,
Staten Island, NY, Wayne, NJ in addition to the Company operated territories of
Las Vegas, NV and Burbank, CA. In addition, the Company is scheduled to go on
the air in three additional territories in the second quarter including new
broadcast affiliates in San Francisco, CA, South Ventura County, CA, and East
San Fernando Valley, CA.
COMPARISON OF CURRENT QUARTER TO PRIOR YEAR
Revenues are up 230% versus the prior year due to a full quarter of
activity in 1996 versus 1995 when the Company had commenced the sale of
broadcast licenses during that quarter. In addition, the Company's sales are
grew significantly as the Company became better established in the market place.
Expenses are up 30% because of the increased activity generated by the
additional sales. Program costs amortization did not occur in 1995 as the
Company had not yet released any of the Company's television product to its
broadcast affiliates. Interest is up significantly due to the addition of the
preferred stock during the later part of 1995 which was not present at March 31,
1995.
9
<PAGE>
PART II Other Information.
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Item 1. Legal Proceedings.
- ------ ------------------
None
Item 2. Changes in Securities.
- ------- ----------------------
None
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
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has fully caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
OLYMPIC ENTERTAINMENT GROUP, INC.
------------------------------------
(Registrant)
By: /s/ David W. Henson
------------------------------------
David W. Henson, CFO
Date: May 15, 1996
10
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 16,420
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 42,282
<PP&E> 13,821
<DEPRECIATION> 0
<TOTAL-ASSETS> 430,898
<CURRENT-LIABILITIES> 965,100
<BONDS> 0
0
799,600
<COMMON> 19,785
<OTHER-SE> (1,353,587)
<TOTAL-LIABILITY-AND-EQUITY> 430,898
<SALES> 0
<TOTAL-REVENUES> 286,966
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 317,466
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 11,263
<INCOME-PRETAX> (41,763)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,763)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> 0
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