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
June 30, 1997 33-87714
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OLYMPIC ENTERTAINMENT GROUP, INC.
---------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0271810
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(State of other jurisdiction (IRS Employer Identification
of incorporation) Number)
2755 E. Desert Inn Rd., Suite 200 Las Vegas, Nevada 89121
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (702) 369-2588
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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 June 30, 1997 there were 2,824,552 shares of common stock outstanding.
Transitional Small Business Disclosure Format. Yes No X
----- -----
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
===================================
INDEX
Page No.
Part I. Item 1. Financial Statements
- ------------------------------------
Balance Sheet - at June 30, 1997 3-4
Statements of Operations - for the three
months ended June 30, 1997 and 1996 5
Statements of Operations - for the six months
ended June 30, 1997 and 1996 6
Statements of Cash Flows - for the six months
ended June 30, 1997 and 1996 7
Notes to Financial Statements 8-9
Item 2.
-------
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
Part II. Other Information
- --------------------------
Items 1 through 5 11
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Balance Sheet
June 30, 1997
(unaudited)
Assets
------
Current assets:
Cash $ 265,818
Accounts receivable 166,000
Prepaid expenses 18,587
Related party receivable 90,000
----------
Total current assets 540,405
----------
Property and equipment, net 145,694
----------
Other assets:
Program library 1,008,268
Deposits and other assets 69,622
----------
Total other assets 1,077,890
----------
Total assets $1,763,989
==========
See accompanying notes.
3
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Balance Sheet
June 30, 1997
(unaudited)
(continued)
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 10,000
Accounts payable-trade 56,938
Accrued expenses 11,900
Film contracts payable 154,875
Current portion of long term debt 22,164
Amounts due stockholders and related parties 73,366
-----------
Total current liabilities 329,243
-----------
Long term debt 26,787
-----------
Redeemable preferred stock:
Preferred stock, 10% cumulative convertible,
$.01 par value, 650,000 shares authorized,
101,500 shares issued and outstanding,
liquidating preference $1 per share 203,000
-----------
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, 2,824,552 shared issued
and outstanding 28,246
Paid in capital 3,306,979
Accumulated deficit (2,391,866)
-----------
Total liabilities and stockholders' equity 1,204,959
-----------
Total liabilities and stockholders' equity $ 1,763,989
===========
See accompanying notes.
4
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Operations
For the three months ended
June 30, 1997 and 1996
(unaudited)
1997 1996
----------- -----------
Revenues:
Net sales $ 578,950 $ 309,896
----------- -----------
Amortization of program costs 34,095 32,570
Selling, general and administrative expenses 382,556 576,745
----------- -----------
Total expenses (416,651) (609,315)
----------- -----------
Income (loss) from operations 162,299 (299,419)
Other income and expenses:
Interest expense (6,841) (250)
----------- -----------
Net income (loss) $ 155,458 ($ 299,699)
=========== ===========
Net income (loss) per share $ .05 ($ .13)
=========== ===========
Weighted average shares 2,938,681 2,392,514
=========== ===========
See accompanying notes.
5
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Operations
For the six months ended
June 30, 1997 and 1996
(unaudited)
1997 1996
----------- -----------
Revenues:
Net sales $ 1,514,795 $ 596,783
----------- -----------
Amortization of program costs 37,937 64,402
Selling, general and administrative expenses 1,043,487 862,330
----------- -----------
Total expenses (1,081,424) (926,732)
----------- -----------
Income (loss) from operations 433,371 (329,949)
----------- -----------
Other income and expenses:
Other income 2,000 --
Interest expense (12,416) (11,513)
----------- -----------
(10,416) (11,513)
Net income (loss) $ 422,955 ($ 341,462)
=========== ===========
Net income (loss) per share $ .14 ($ .16)
=========== ===========
Weighted average shares 2,938,681 2,185,507
=========== ===========
See accompanying notes.
6
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Cash Flows
For the six months ended
June 30, 1997 and 1996
(unaudited)
1997 1996
--------- ----------
Operating activities $ 370,807 $(499,023)
Investing activities:
Investment in film library (300,704) (113,191)
Purchase of property & equipment (54,082) (3,068)
--------- ---------
Net cash provided by (used in)
investing activities (354,786) (116,259)
Financing activities:
Receivable related party 90,000
Proceeds from sale of common stock -- 864,470
Repayment of notes payable and long term debt (12,000) --
(Increase) decrease in related party payables (3,286) --
--------- ---------
Net cash provided by financing activities 74,714 864,470
--------- ---------
Net increase (decrease) in cash and cash equivalents 90,735 249,188
Beginning cash 175,083 118,641
--------- ---------
Ending cash $ 265,818 $ 367,829
========= =========
Supplemental information:
Non-cash financing activities:
Conversion of Series A $ 325,000
Note payable issued for services 78,000
See accompanying notes.
7
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Notes to Financial Statements
June 30, 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNT 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 operation for the periods presented are not
necessarily indicative of the results to be expected for the full year.
Revenue recognition:
The Company recognizes revenue from network license agreements not related
to specific programming over the term of the agreements. Revenue from the
sale of licenses for television program rights is recorded in accordance
with SFAS #53, which provides for recognition of revenue at the beginning
of the license period when specific conditions have been met.
Net income (loss) per share
The net income (loss) per share is computed by dividing the net income
(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.
8
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Notes to Financial Statements
June 30, 1997
(continued)
NOTE 2. NOTES PAYABLE AND LONG-TERM DEBT
Long-term debt consists of an obligation arising from the settlement of a
lawsuit. Monthly payments of $2,000, including interest imputed at 8% per
annum, are due for a 40 month period beginning June 1, 1996.
Notes payable consists of a short-term loan of $10,000 made in March 1993
from an individual pursuant to a debenture bearing interest at 10% per
annum and originally due on March 30, 1994. The holder of the debenture
has the right to convert the debenture into common stock of the Company
at the rate on one share of common stock for each one dollar due on the
debenture. The note has been extended until December 1997.
NOTE 3. EMPLOYMENT CONTRACT
The employment agreement with the Company's chief executive officer was
voided in the second quarter. The prior accruals, made in the first
quarter, were reversed in this quarter.The Adjustment was for $175,000.
9
<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 Cable Affiliates, who license the Company's
programs to air in the various local cable markets throughout the United
States. The Company commenced the sale of program licenses to such
affiliates during 1995.
At the end of the second quarter, the Company added six affiliates during
the quarter which brings the total affiliates to 34. The Company's
affiliates have more than nine million cable subscribers, from a total
cable universe of 65 million. This represents a 14% share of the total
U.S. cable subscribers, which the Company has accomplished in less than
two years.
Comparison of current quarter to prior year
Revenues are up 86% versus the same quarter in 1996 due to the fact that
the Company is now better established and has more broadcast affiliates.
In addition, the Company is now able to charge a higher license fee to
Company affiliates than in the previous year.
Selling, general and administrative expenses are up only 2% because of the
increased activity generated by the additional sales. Program costs
amortization was up 4% in the quarter due to the fact that the Company's
estimate of projected revenue increased in 1996 resulted in the
amortization expense to be only slightly increased, though the film
library is much larger. Interest expense is up in 1997 due to the accrual
of preferred stock interest.
Comparison of current year to date versus prior year to date
Revenues are up 154% for the six month period ended June 30 versus the
prior year due to the factors mentioned above.
Selling, general and administrative expenses are up 16% due to the factors
mentioned above.
10
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
June 30, 1997
PART II. OTHER INFORMATION
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
11
<PAGE>
SIGNATURES
Pursuant to the requirement 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)
Date: August 13, 1997 By: /s/ Bonnie Houldsworth
---------------- ---------------------------------
Bonnie Houldsworth
Chief Financial Officer
12
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 265,818
<SECURITIES> 0
<RECEIVABLES> 166,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 540,405
<PP&E> 170,902
<DEPRECIATION> (25,208)
<TOTAL-ASSETS> 1,763,989
<CURRENT-LIABILITIES> 329,243
<BONDS> 0
203,000
261,600
<COMMON> 29,387
<OTHER-SE> 913,972
<TOTAL-LIABILITY-AND-EQUITY> 1,763,989
<SALES> 1,514,795
<TOTAL-REVENUES> 1,514,795
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,081,424
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,416
<INCOME-PRETAX> 422,955
<INCOME-TAX> 0
<INCOME-CONTINUING> 422,955
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 422,955
<EPS-PRIMARY> .14
<EPS-DILUTED> 0
</TABLE>
