_____________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM 10-QSB
_________________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934; For the Quarterly Period Ended: December 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-08835
TAURUS ENTERTAINMENT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
formerly TAURUS PETROLEUM, INC.
Colorado 84-0736215
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2016 Main Street, Suite 109
Houston, Texas 77002
(Address of principal executive offices, including zip code)
(713) 650-0161
(Registrant's telephone number, including area code)
Check whether the issuer (1) has 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 filing requirements for the past 90 days.
Yes [x] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
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. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
At February 18, 1998, approximately 3,840,141 shares of post-reverse
stock split common stock, $.001 par value, were outstanding.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [x]
TAURUS ENTERTAINMENT COMPANIES, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Balance Sheet as of December 31, 1997 4
Statement of Operations --
Three months ended December 31, 1997 and 1996 6
Statement of Changes in Stockholders Equity --
Three months ended December 31, 1997 7
Statement of Cash Flow --
Three months ended December 31, 1997 and 1996 8
Notes to Consolidated Financial Statements 9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders II-1
Item 5. Other Events II-2
Item 6. Exhibits and Reports on Form 8-K II-2
SIGNATURES II-2
TAURUS ENTERTAINMENT COMPANIES, INC.
Quarterly Report on Form 10-QSB
Index
Part I. Financial Information
Item I. Financial Statements (unaudited)
Balance Sheet - December 31, 1997
Statement of Operations -
Three Months Ended December 31, 1997 and 1996
Statement of Changes in Stockholders' Equity
Three Months Ended December 31, 1997
Statement of Cash Flows -
Three Months Ended December 31, 1997 and 1996
Notes to Unaudited Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC.
BALANCE SHEET
(Unaudited)
December 31, 1997
ASSETS
Current Assets:
Trade receivables $ 12,248
Employee advances 7,479
Due from stockholder 3,000
Prepaid rent 4,500
__________
Total Current Assets 27,227
__________
Property and Equipment:
Buildings 860,000
Furniture and fixtures 305,705
Equipment 88,629
Leasehold improvements 47,196
Accumulated depreciation (74,196)
___________
1,227,334
Land 752,732
___________
Total Property and Equipment 1,980,066
___________
Other Assets:
License 225,000
Notes receivable 32,131
Other 51,400
___________
Total Other Assets 308,531
_____________
Total Assets $ 2,315,824
=================
The following notes are an integral part of these unaudited financial
statements.
TAURUS ENTERTAINMENT COMPANIES, INC.
BALANCE SHEET
(Unaudited)
December 31, 1997
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 916
Accounts payable and accrued liabilities 150,020
Current portion of notes payable 290,230
__________
Total Current Liabilities 441,166
__________
Long-term portion of notes payable 1,380,133
__________
Stockholders' Equity:
Common stock, par value $.001; authorized
20,000,000 shares; 3,840,141 issued and
outstanding shares 3,840
Additional paid-in capital 3,706,799
Accumulated deficit (since date of
reorganization in November 1994) (3,133,541)
Less treasury stock, 1,179 shares at cost (82,573)
___________
Total Stockholders' Equity 494,525
____________
Total Liabilities and Stockholders' Equity $ 2,315,824
================
The following notes are an integral part of these unaudited financial
statements.
TAURUS ENTERTAINMENT COMPANIES, INC.
STATEMENT OF OPERATIONS
(Unaudited)
For the
Three Months Ended
December 31,
1997 1996
______ ______
Operating Revenue:
Revenues $ 653,419 $ --
Other -- 147
_________ __________
653,419 147
_________ __________
Cost of goods sold 43,093 --
_________ __________
Gross profit 610,326 --
_________ __________
Expenses:
General and administrative 593,960 997
_________ __________
593,960 997
_________ __________
Income (loss) from operations 16,366 (850)
Other income (expense):
Interest expense 18,823 --
__________ __________
Net loss $ (2,457) $ (850)
=========== ==========
Net loss per common share $ (0.00) $ (0.00)
============ ===========
Weighted average number of
common shares outstanding 36,567,954 60,307,749
============ =============
The following notes are an integral part of these unaudited financial
statements.
TAURUS ENTERTAINMENT COMPANIES, INC.
STATEMENTS OF STOCKHOLDERS' (DEFICIT) EQUITY
For the Three Months Ended December 31, 1997
(Unaudited)
Total
Additional Less Stockholders'
Common Stock Paid-In Accumulated Treasury (Deficit)
Shares Amount Capital Deficit Stock Equity
Balance, September 30, 1997 60,307,749 $ 60,307 $ 3,112,694 $ (3,131,084) $ (82,573) $ (40,656)
Reverse stock split (60,110,108) (60,110) -- -- -- (60,110)
Net loss -- -- -- (2,457) -- (2,457)
Shares issued in exchange for
asset acquired 3,642,500 3,643 594,105 -- -- 594,105
_________ _______ ___________ _____________ __________ _________
Balance, December 31, 1997 3,840,141 $ 3,840 $ 3,706,799 $ (3,133,541) $ (82,573) $ 494,595
========= ======= =========== ============= ========== =========
The following notes are an integral part of these unaudited financial
statements.
TAURUS ENTERTAINMENT COMPANIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
For the
Three Months Ended
December 31,
1997 1996
Cash Flows from Operating Activities:
Net loss $ (2,457) $ (850)
Adjustments to reconcile net loss to
net cash used in operations:
Depreciation and depletion 21,141 --
Increase in receivables (22,727) --
Increase in prepaid expenses (4,500) --
Increase in accounts payable 150,936 --
Increase in current portion of
notes payable 290,230 --
__________ ________
Net cash provided by (used in) operating
activities 432,623 (850)
Cash Flows from Investing Activities:
Acquisition of property and equipment (1,980,066) --
Increase in other assets (308,531) --
___________ _______
Net cash provided by (used in) investing
activities (2,288,597) --
___________ _______
Cash Flows from Financing Activities:
Notes payable 1,380,133 --
Capital contributions, net 474,769 850
__________ _______
Net cash from financing activities 1,854,902 850
___________ _______
Net increase (decrease) in cash (1,072) --
Cash and cash equivalents:
Beginning of period 156 156
___________ _______
End of period $ (916) $ 156
=========== =======
Supplemental disclosure of cash
flow information:
Cash paid during the period
for interest $ 18,823 $ --
============ =========
The following notes are an integral part of these unaudited financial
statements.
TAURUS ENTERTAINMENT COMPANIES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
NOTE 1 - GENERAL
The accounting policies followed by Taurus Entertainment Companies, Inc. (the
"Company"), formerly named Taurus Petroleum, Inc., are set forth in the notes
to the Company's audited financial statements in the report on Form 10-K filed
for the year ended September 30, 1997, which is incorporated herein by
reference. Such policies have been continued without change. Also, refer to
the notes with those financial statements for additional details of the
Company's financial condition, results of operations and cash flows. All
material items included in those notes have not changed except as a result of
normal transactions in the interim, or as disclosed within this report. Any
and all adjustments are of a "normal recurring nature".
In the opinion of management, the accompanying interim unaudited financial
statements contain all adjustments necessary to present fairly the Company's
financial position as of December 31, 1997, and the results of operations and
cash flows for the three month periods ended December 31, 1997 and 1996.
NOTE 2 - ACQUISITION OR DISPOSITION OF ASSETS
On December 31, 1997, Taurus Entertainment Companies, Inc. (the "Company"),
entered into an Asset Purchase Agreement (the "Enigma Agreement") with The
Enigma Group, Inc. ("Enigma") which provided for the acquisition by the Company
of substantially all of the assets of Enigma (the "Enigma Assets"). The Enigma
Assets consisted of: (i) certain real estate commonly known as 410 N. Sam
Houston Parkway E. Houston, Texas 77060 (the "Enigma Location"); (ii)
furniture, fixtures, equipment, goods, and other personal property of Enigma
as such existed on December 31, 1997, located at the Enigma Location (the
"Personal Property"); (iii) Enigma's lease interest as lessor for the Enigma
Location; and (iv) all right, title and interest in and to any and all
trademarks, trade names, trade dress, service marks, slogans, logos, corporate
or partnership names (and any existing or possible combination or derivation of
any or all of the same) and general intangibles.
Pursuant to the terms of the Enigma Agreement, as consideration for the Enigma
Assets, the Company paid to Enigma 350,000 shares of common stock of the
Company valued at $1.00 per share. The Enigma Agreement was the result of
negotiations between the Company and Enigma and was based on numerous factors
including the Company's estimate of the value of the Enigma Location and the
Personal Property. Eric Langan and Stephen E. Fischer, directors of the
Company, controlled Enigma.
TAURUS ENTERTAINMENT COMPANIES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
NOTE 2 - ACQUISITION OR DISPOSITION OF ASSETS (Continued)
The lessee of the Enigma Location is Atcomm Services, Inc. ("Atcomm"), which
operates an adult entertainment business. The Company, through its wholly
owned subsidiary Broadstreets Cabaret, Inc. ("Broadstreets"), entered into an
Asset Purchase Agreement with Atcomm which provided for the acquisition by the
Company of substantially all of the assets of Atcomm (the "Atcomm Agreement").
The assets acquired by Broadstreets consisted of: (i) all right, title,
interest and claim to the permit to operate a sexually oriented business at the
Enigma Location; (ii) all inventory located at the Enigma Location; (iii)
Atcomm's lease interest as lessee for the Enigma Location; and (iv) all right,
title and interest in and to any and all trademarks, trade names, trade dress,
service marks, slogans, logos, corporate or partnership names (and any existing
or possible combination or derivation of any or all of the same) and general
intangibles. The Company intends to continue to operate the adult nightclub at
this location.
Pursuant to the terms of the Asset Purchase Agreement with Atcomm, Broadstreets
agreed to pay, as consideration, $225,000 to Atcomm, payable pursuant to the
terms of a four year unsecured promissory note of Broadstreets, payable
monthly, in arrears and bearing interest at the rate of six percent (6%) per
annum. The Atcomm Agreement was the result of negotiations between the Company
and Atcomm and was based on numerous factors including the Company's estimate
of the value of the sexually oriented business permit owned by Atcomm, current
revenues of Atcomm and the leasehold rights held by Atcomm. Atcomm is owned by
the son of Stephen E. Fischer, a director of the Company. Mr. Fischer
abstained on voting on this transaction.
On December 31, 1997, the Company entered into an Exchange Agreement with the
members of Citation Land, L.L.C. (the "Citation Agreement") which provided for
the acquisition by the Company of all of the outstanding membership interests
in Citation Land, L.L.C. ("Citation"). Citation owns certain real estate in
Houston, Texas at which another company, XTC Cabaret, Inc. ("XTC") operates an
adult entertainment business (the "XTC Location"). As discussed below, the
Company has acquired all of the stock of XTC and intends to continue operating
an adult entertainment business at the XTC Location. Citation also owns
approximately 350 acres of ranch land in Brazoria County, Texas, 50 acres of
raw land in Wise County, Texas, and owns options to purchase real estate in
Austin, Texas and San Antonio, Texas, at which the Company contemplates
operating adult entertainment businesses.
TAURUS ENTERTAINMENT COMPANIES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
NOTE 2 - ACQUISITION OR DISPOSITION OF ASSETS (Continued)
Pursuant to the terms of the Citation Agreement, the Company paid to the
Citation Stockholders an aggregate of 2,500,000 shares of common stock of the
Company which the Company valued at $1.00 per share. The Citation Agreement
was the result of negotiations between the Company and the members of Citation
and was based on numerous factors including the Company's estimate of the value
of the assets of Citation which the Company estimated, based upon the existing
lease, the estimated value of the real estate and the options, to be
approximately $2,500,000. Eric Langan, Chairman of the Board of the Company
controlled Citation. Mr. Langan abstained on voting on this transaction.
On December 31, 1997, the Company entered into a Stock Exchange Agreement with
the stockholders of XTC Cabaret, Inc. (the "XTC Agreement") which provided for
the acquisition by the Company of all of the outstanding stock of XTC Cabaret,
Inc. ("XTC"). XTC operates three adult entertainment businesses, two in
Houston and one in Austin. Citation is the landlord of one of XTC's adult
nightclubs in Houston, Texas and has an option to purchase the real estate in
Austin. The Company intends to continue operating XTC as an adult
entertainment business.
Pursuant to the terms of the XTC Agreement, the Company paid the XTC
Stockholders an aggregate of 525,000 shares of common stock of the Company
valued at $1.00 per share. The XTC Agreement was the result of negotiations
between the Company and the XTC Stockholders and was based on numerous factors
including the Company's estimate of the value of the assets of XTC which the
Company estimated, based upon current operations and future revenues from its
three existing adult nightclubs to be approximately $525,000. Eric Langan,
Chairman of the Board of the Company and Mitchell White, director of the
Company, are the sole stockholders of XTC. Messrs. Langan and White abstained
on voting on this transaction.
NOTE 3 - STOCKHOLDERS' EQUITY
In November 1997, the Company's stockholders' approved a 1 for 300 reverse
common stock split and the number of authorized shares of common stock was
reduced from 200,000,000 to 20,000,000. Additionally, the Company authorized
10,000,000 shares of preferred stock.
NOTE 4 - GOING CONCERN
These financial statements have been prepared on the "going concern" basis,
which presumes that the Company will be able to realize its assets and
discharge its liabilities in the normal course of business for the foreseeable
future.
TAURUS ENTERTAINMENT COMPANIES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
(Unaudited)
NOTE 4 - GOING CONCERN (Continued)
The Company's continuation as a "going concern" is dependent on the
establishment of profitable operations, and upon either the continued financial
support of its principal shareholders or upon the ability of the Company to
raise additional capital. Management is pursuing various options to attract
capital, including infusions of cash and mergers. The outcome of these matters
cannot be predicted at this time. These financial statements do not include
any adjustments to the amounts and classification of assets and liabilities
that might be necessary should the Company be unable to continue in business.
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS.
GENERAL
In December 1997 the Company entered into the Adult Entertainment Industry
through the acquisition of two nude cabarets and one topless cabaret in
Houston, Texas and one nude cabaret in Austin, Texas. Prior to this period the
Company had divested all of its assets and was effectively a "shell company"
with no existing operation.
RESULTS OF OPERATIONS
Revenues increased $653,419 for the first quarter ended December 31, 1997
compared to $ 0 in the first quarter ended December 31, 1996. The increase in
revenues is a result of the acquisition of several Adult Entertainment
establishments during the first quarter ended December 31, 1997.
Cost of goods sold was 43,903 for the first quarter ended December 31, 1997
compared with $0 for the first quarter ended December 31, 1996. The increase in
revenues is a result of the acquisition of several Adult Entertainment
establishments during the first quarter ended December 31, 1997.
General and administrative costs were $593,960 for the first quarter of fiscal
1998 compared to $997 for the same fiscal period in 1997. The increase is due
to the acquisition of several Adult Entertainment establishments, the costs
associated with the annual shareholders meeting and the reverse stock split.
Interest expense during the first quarter increased to $18,823 versus $0 for
the same period in 1996. This increase is a result of the acquisition and
financing of several pieces of real estate associated with the companies
business operations.
Net Losses for the first quarter of fiscal 1998 were ($2,457) compared to
losses of ($850) for the first quarter of fiscal 1997.
ANTICIPATED INCREASE IN REVENUES
The Company further anticipates revenues to increase as a result of the
purchase of a topless cabaret in Houston, Texas as disclosed in the Company's
Form 8-K dated December 31, 1997 which was filed on January 15, 1998. The
Company believes it will be profitable in the second quarter of 1998 as a
result of an anticipated increase in revenue and the reduction of certain
General and Administrative expenses in the first fiscal quarter of 1998 that
were associated with the Annual Shareholders Meeting and the Company's reverse
stock split.
SPECIAL NOTE REQUARDING FORWARD LOOKING INFORMATION
The Management Discussion and Analysis contains various "forward looking
statements" which represents the Company's expectations or beliefs concerning
future events and involves a number of risks and uncertainties. Important
factors that could cause actual results to differ materially from those
indicated include risk and uncertainties relating to the continuation of
operations and/or the anticipated increase in future revenues.
PART II
OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of the Company was held on
November 24, 1997.
(a) A new Board of five Directors was elected consisting of Eric Langan,
Stephen E. Fischer, Mitchell White, Christopher N. Curnow and Michael Thurman.
No other directors continued in office.
Director For
Eric Langan 46,608,969
Stephen E. Fischer 46,608,969
Mitchell White 46,608,969
Christopher N. Curnow 46,608,969
Michael Thurman 46,608,969
(b) The Shareholders voted to change the name of the Company to Taurus
Entertainment Companies, Inc.
For Against Abstain
46,609,475 1,464 374
(c) The Shareholders voted to effectuate a one share for 300 shares (1 : 300)
reverse stock split of the issued and outstanding shares of common stock of the
Company.
For Against Abstain
46,609,751 4,377 1,377
(d) The Shareholders voted to reduce the number of the Company's authorized
shares of common stock par value $0.001 to 20,000,000 shares.
For Against Abstain
46,609,111 4,896 1,498
(e) The Shareholders voted to authorize 10,000,000 shares of Preferred Stock
of the Company.
For Against Abstain
46,605,840 4,170 1,281
(f) The Shareholders voted to ratify the selection of Simonton, Kutac &
Barnidge L.L.P., Certified Public Accountants as the Company's independent
auditor for the fiscal year ending 1997.
For Against Abstain
46,609,929 434 928
Item 5. OTHER EVENTS
During December 1997, the Company acquired two nude cabarets and one
topless bar in Houston, Texas, and one nude bar in Austin, Texas. The nude
cabarets in Houston operate under the name XTC Cabaret, while the Houston
topless bar, located near George Bush Intercontinental Airport, operates under
the name Broadstreets Cabaret. The Austin nude bar operates under the name of
XTC Cabaret. In addition to owning these cabaret operations, the Company also
owns and manages the related real estate at three of its four locations. The
Company filed a Current Report on Form 8-K on January 15, 1998 reporting these
acquisitions.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation SB
(2) Exhibit 27.1 Financial Data Schedule
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
TAURUS ENTERTAINMENT COMPANIES, INC.
Date: February 20, 1998 By: /s/ Eric Langan
_____________________________
Eric Langan, Chairman and
Chief Accounting Officer