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
Sept 30, 1997 33-87714
OLYMPIC ENTERTAINMENT GROUP, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Nevada 88-0271810
------ ----------
(State of other jurisdiction (IRS Employer Identification
of incorporation) Number)
2755 E. Desert Inn Rd., Suite 200 Las Vegas, Nevada 89121
- --------------------------------------------------------------------------------
(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 September 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 September 30, 1997 3-4
Statements of Operations - for the three months ended
September 30, 1997 and 1996 5
Statements of Operations - for the nine months
ended September 30, 1997 and 1996 6
Statements of Cash Flows - for the nine month
ended September 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
September 30, 1997
(unaudited)
Assets
------
Current assets:
Cash $ 168,621
Accounts receivable 16,000
Prepaid expenses 18,587
Related party receivable 90,000
----------
Total current assets 293,208
----------
Property and equipment, net 143,406
----------
Other assets:
Program library 978,180
Deposits and other assets 96,823
----------
Total other assets 1,075,003
----------
Total assets $1,511,617
==========
See accompanying notes.
3
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Balance Sheet
September 30, 1997
(unaudited)
(continued)
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 10,000
Accounts payable-trade 72,621
Accrued expenses 28,930
Film contracts payable 102,000
Current portion of long term debt 22,164
Amounts due stockholders and related parties 73,777
----------
Total current liabilities 309,492
----------
Long term debt 20,787
----------
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 shares issued
and outstanding 28,246
Paid in capital 3,306,979
Accumulated deficit (2,618,487)
----------
Total liabilities and stockholders' equity 978,338
----------
Total liabilities and stockholders' equity $1,511,617
==========
See accompanying notes.
4
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Operations
For the three months ended
September 30, 1997 and 1996
(unaudited)
1997 1996
----------- -----------
Revenues:
Net sales $ 187,300 $ 305,829
----------- -----------
Amortization of program costs 1,482 41,133
Selling, general and administrative expenses 406,380 387,826
----------- -----------
Total expenses 407,862 428,959
----------- -----------
Income (loss) from operations (220,562) (123,130)
Other income and expenses:
Interest expense (6,060) (5,575)
----------- -----------
Net income (loss) $ (226,622) $ (128,705)
=========== ===========
Net income (loss) per share $ (.07) $ (.05)
=========== ===========
Weighted average shares 2,938,681 2,849,138
=========== ===========
See accompanying notes.
5
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Operations
For the nine months ended
September 30, 1997 and 1996
(unaudited)
1997 1996
----------- -----------
Revenues:
Net sales $ 1,702,095 $ 902,611
----------- -----------
Amortization of program costs 39,419 105,535
Selling, general and administrative expenses 1,449,867 1,243,454
----------- -----------
Total expenses 1,489,286 1,348,989
----------- -----------
Income (loss) from operations 212,809 (446,378)
----------- -----------
Other income and expenses:
Interest income 2,000 --
Interest expense (18,476) (17,088)
----------- -----------
Net income (loss) $ 196,333 ($ 463,466)
=========== ===========
Net income (loss) per share $ .06 ($ .19)
=========== ===========
Weighted average shares 2,938,681 2,417,154
=========== ===========
See accompanying notes.
6
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Statements of Cash Flows
For the nine months ended
September 30, 1997 and 1996
(unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
Operating activities $ 461,566 ($487,058)
Investing activities:
Investment in film library (272,098) (149,599)
Purchase of property & equipment (55,055) (63,714)
--------- ---------
Net cash provided by (used in)
investing activities (327,153) (213,313)
Financing activities:
Receivable related party (90,000) --
Proceeds from sale of common stock -- 903,787
Repayment of notes payable and long term debt (18,000) (16,000)
(Increase) decrease in related party payables (32,875) (75,000)
--------- ---------
Net cash provided by financing activities (140,875) 812,787
--------- ---------
Net increase (decrease) in cash and cash equivalents (6,462) 112,416
Beginning cash 175,083 118,641
--------- ---------
Ending cash $ 168,621 $ 231,057
========= =========
Supplemental information:
Non-cash financing activities:
Conversion of Series A 325,000
Note payable issued for services 78,000
</TABLE>
See accompanying notes.
7
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
Notes to Financial Statements
September 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
September 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.
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.
Atthe end of the third quarter, the Company added two affiliates during the
quarter which brings the total affiliates to 36. 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 down 38% versus the same quarter in 1996 due to the fact that
the Company is now in the process of developing a different sales
strategy.
Selling, general and administrative expenses are up only 4% because of the
increased activity generated by the increased affiliates. Program costs
amortization was down 96% 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 decreased. 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 88% for the nine month period ended September 30 versus the
prior year. The Company is now better established and has more broadcast
affiliates.
Selling, general and administrative expenses are up 16 % due to the factors
mentioned above.
10
<PAGE>
OLYMPIC ENTERTAINMENT GROUP, INC.
September 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: October 3, 1997 By: Bonnie Houldsworth
------------------------- ------------------------------
Bonnie Houldsworth
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 168,621
<SECURITIES> 0
<RECEIVABLES> 16,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 293,208
<PP&E> 171,875
<DEPRECIATION> 28,469
<TOTAL-ASSETS> 1,511,617
<CURRENT-LIABILITIES> 309,492
<BONDS> 0
203,000
261,600
<COMMON> 28,246
<OTHER-SE> 688,492
<TOTAL-LIABILITY-AND-EQUITY> 1,511,617
<SALES> 1,702,095
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,489,286
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,476
<INCOME-PRETAX> 196,333
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 196,333
<EPS-PRIMARY> .06
<EPS-DILUTED> 0
</TABLE>
