FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
ANNUAL REPORT
Pursuant to Section 13 or 15(d) of the
Securities & Exchange Act of 1934
For fiscal year ended September 30, 1995
CENTURY PARK PICTURES CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-14247 41-1458152
(State of Incorporation) (Commission (IRS Employer
File Number) Identification Number)
4701 IDS Center, Minneapolis, Minnesota 55402
(Address of principal executive offices) (zip code)
Registrant's telephone number: (612) 333-5100
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK par value $.001
Registrant has (1) filed all reports to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934, during the preceding 12 months and (2) has been
subject to such filing requirements for the past ninety (90) days.
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(ss.229.405 of this chapter) is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
As at December 31, 1995, 9,859,541 common shares were outstanding and the
aggregate market value of the common shares (based upon the average bid and
asked prices of these shares as at December 31, 1995 as reported by the National
Quotation Bureau, Incorporated) of the Registrant held by non-affiliates was
$305,192.44.
PART I
ITEM 1. BUSINESS
(a) GENERAL DESCRIPTION OF BUSINESS
The Company develops, produces and markets various entertainment properties for
the motion picture, pay/cable and commercial television markets and, until
September 1995 through its 50.1% owned subsidiary, Willy Bietak Productions,
Inc. ("WBPI"), produced and operated0 small touring ice shows and theme shows
appearing in theatres, casinos, and major amusement parks and arenas. On
September 29, 1995, in consideration of guarantees of certain bank debt of WBPI,
provided WBPI by its minority shareholder, the Company transferred 65,900 of its
shares of WBPI common stock to such minority shareholder, thereby reducing the
Company's interest to 30%. The Company's wholly-owned subsidiary, International
Theatres Corporation ("ITC") operates the Chanhassen Dinner Theatre in
Chanhassen, Minnesota which the Company acquired in 1993.
The Company was organized under Minnesota law in 1983. The Company's executive
offices are located at 4701 IDS Center, Minneapolis, Minnesota 55402 and its
telephone number is (612) 333- 5100.
(b) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company's operations are attributable to one business segment. The
ownership, production, and operation of entertainment attractions.
(c) NARRATIVE DESCRIPTION OF BUSINESS
(i) International Theatres Corporation
On July 29, 1993, the Company acquired International Theatres
Corporation which operates the Chanhassen Dinner Theatre, located in suburban
Minneapolis, which the Company believes is the largest dinner theater operation
in the country. The facility, which was founded in 1968, encompasses 87,000
square feet and consists of four theaters and a related food service operation.
The Chanhassen Dinner Theatre has a total theater capacity of over 1,100 and can
serve 1,100 dinners in a two-hour period. Since the Company's purchase, the
Chanhassen Dinner Theatre has been managed by Michael Brindisi, formerly the
artistic director of Chanhassen Dinner Theatre.
The Chanhassen Dinner Theatre's four theaters play to approximately
180,000 customers annually and have played to over 6 million customers since its
inception. Each theater usually performs eight shows per week. The main theater,
which seats 576 people for dinner and theater, typically offers a musical show,
such as "42nd Street", which is currently being performed. The other theaters
seat 250, 130, and 125 people respectively, and offer a variety of popular
plays, such as "Nunsence", "Mass Appeal", "On Golden Pond", and "Sleuth". The
facilities also include cocktail lounges, private banquet areas and a ballroom.
The Chanhassen Dinner Theatre employs approximately 250 full-time employees,
including 50 actors and musicians.
Ticket prices, generally include dinner and a show, and vary from
theatre to theatre. An in-house production staff produces each show, including
the development of all costumes and scenery.
The Chanhassen Dinner Theatre is open all year.
(ii) Motion Pictures, Pay/Cable, and Television
In producing entertainment properties for motion picture, pay/cable
and commercial television, the Company has limited its costs to those incurred
prior to the commencement of principal photography. It has been the Company's
intention to produce or co-produce and arrange for the distribution of primarily
feature length motion pictures with production financing derived from third
party sources. The Company has reported no revenues from motion pictures,
pay/cable and television during 1993, 1994 and 1995. At September 30, 1995, the
Company had two (2) properties in various stages of production and development
of which one (1) was substantially completed. All such properties have been
charged to expenses.
The profits of an enterprise involved in the entertainment industry
generally and, particularly, the motion picture, television and music industries
are greatly dependent upon the audience appeal of each creative product,
compared with the cost of such product's purchase, development, production and
distribution. Competition is intense both within the motion picture and
television industry and other entertainment media. The Company is in competition
with several major film studios, as well as with numerous "independent" motion
picture and television production companies for the acquisition of artistic
properties, and the services for creative and technical personnel.
ITEM 2. PROPERTIES
The Company leases, as its headquarters, 1,941 square feet of office space at
4701 IDS Center, Minneapolis, Minnesota 55402. The Company motion picture and
television operations leases 160 square feet of office space at 3575 Cahuenga
Blvd. West, Los Angeles, California 90048. Management believes that there is
adequate space available in the Los Angeles area to accommodate its California
operations.
International Theaters Corporation leases the Chanhassen Dinner Theatre
facilities pursuant to two leases, both of which expire on May 31, 1999. The
Company has an option to extend the term of these leases for two additional
periods of five years each. The leases cover approximately 87,000 square feet
and contain options to purchase the property for $3,665,000, before expiration.
ITEM 3. LEGAL PROCEEDINGS
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders during the fourth quarter
of the fiscal year covered by this Report.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCK HOLDER MATTERS
a. Price Range of Common Stock
The following table shows the range of the closing bid prices for the
Common Stock in the over-the-counter market for the fiscal years ended September
30, 1995 and 1994. The quotations represent prices in the over-the-counter
market between dealers in securities, do not include retail markup, markdown, or
commission and do not necessarily represent actual transactions.
Fiscal Year 1995 Bid Prices
---------------- ----------
High Low
---- ---
First Quarter 1/16 1/32
Second Quarter 1/8 1/32
Third Quarter 3/32 1/32
Fourth Quarter 1/16 1/32
Fiscal Year 1994 Bid Prices
---------------- ----------
High Low
---- ---
First Quarter 5/8 1/8
Second Quarter 3/4 1/4
Third Quarter 1 1/2
Fourth Quarter 5/8 1/8
b. Number of equity security holders' accounts at December
31, 1995:
980
c. Dividends:
The Registrant has never paid any cash dividends on its Common Stock
and does not plan to pay any cash dividends in the foreseeable future.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
1995 1994 (b) 1993(a)(b) 1992(b) 1991(b)
------------ ------------ ------------ ------------ ------------
Revenues $ 6,665,876 $ 5,776,290 $ 963,862 $ 0 $ 0
Net Income (Loss) (939,169) (437,594) (466,047) (143,344) (241,839)
Net Income (Loss) per Share (.11) (.05) (.07) (.05) (.09)
Weighted Average Number
of Common Shares 8,636,952 8,636,952 6,437,917 2,636,952 2,636,952
Total Assets 1,963,738 2,876,727 3,013,572 79,814 184,115
Long Term Debt 562,187 722,924 861,961 0 0
(excluding current portion)
Stockholders' Equity (Deficit) (643,455) 295,714 733,308 (5,598) 236,241
(a) The Company acquired ITC on July 29, 1993.
(b) Restated to reflect deconsolidation of WBPI. See Note 5 to Consolidated
Financial Statements.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND THE RESULTS OF OPERATIONS
OPERATIONS
Year Ended September 30, 1995 compared to September 30, 1994
Admissions revenues were $4,064,623 for the year ended September 30, 1995
compared to $3,619,314 for the comparable prior year period. All of the
admission revenues were attributable to the operations of ITC. The increase in
admission revenues was primarily attributable to increased paid attendance.
All of the Company's food, beverage and merchandise sales and their related
costs of sales were generated by ITC. Food, beverage and merchandise sales were
$3,665,635 for the year ended September 30, 1995 compared to $3,157,027 for the
comparable prior year period. The increase in such sales was primarily
attributable to increased attendance. The cost of food, beverage and merchandise
sales were $1,151,073 for the year ended September 30, 1995 compared to
$1,011,814 for the comparable prior year period. Such costs as a percent of
related sales were 31.4% and 32.0% for 1995 and 1994, respectively. The slight
improvement in gross margin on food, beverage and merchandise sales were due
primarily to increased prices.
Operating expenses were $5,843,601 for the year ended September 30, 1995
compared to $5,408,396 for the comparable prior year period. The increase in
operating expenses was primarily attributable to increased attendance and more
elaborate props in 1995, offset in part by reduced performers' compensation
which was due to fewer performers in certain productions in 1995 compared to
1994.
General and administrative expenses were $1,243,295 for the year ended September
30, 1995 compared to $1,227,221 for the comparable prior year period. The
increase was primarily due to inflationary increases in certain administrative
costs.
Interest expense was $117,496 for the year ended September 30, 1995 compared to
$139,305 for the comparable prior year period. Substantially all of the interest
expense is related to ITC's capitalized leasehold interest in building as
discussed in Note 3 to the Consolidated Financial Statements. The decrease in
interest is due to the decrease in the outstanding balance of the capitalized
leasehold interest.
Equity in net loss of WBPI was $7,040 for the year ended September 30, 1995
compared to $48,235 for the comparable prior year period. The Company's equity
interest is 30%. See Note 5 to the Consolidated Financial Statements for
condensed financial information of WBPI.
Year Ended September 30, 1994 compared to September 30, 1993
Admissions revenues were $3,619,314 for the year ended September 30, 1994, all
of which were generated by ITC. Admissions revenues were $603,697 for the year
ended September 30, 1993, all of which were generated by ITC. The increase in
admissions revenues was due to the inclusion of ITC's operations for the entire
year in 1994 as compared to the period from July 29, 1993 to September 30, 1993
for the comparable prior year period.
All of the Company's food, beverage and merchandise sales and their related cost
of sales were generated by ITC. The increase in such sales and cost of sales is
attributable to the inclusion of ITC's operations for the entire year in 1994,
as compared to the period from July 29, 1993, to September 30, 1993, for the
comparable prior year period.
Operating expenses were $5,408,396 for the year ended September 30, 1994, all of
which were attributable to the operations of ITC. Operating expenses were
$833,304 for the year ended September 30, 1993, all of which were attributable
to the operations of ITC. The increase in operating expenses was due to the
inclusion of ITC's operations for the entire year in 1994, as compared to the
period from July 29, 1993 to September 30, 1993 for the comparable prior year
period.
General and administrative expenses were $1,227,221 for the year ended September
30, 1994 compared to $545,149 for the comparable prior year period. The increase
was primarily attributable to the inclusion of ITC's operations for the entire
year in 1994, as compared to the period from July 29, 1993 to September 30, 1993
for the comparable prior year period.
The Company incurred a consolidated operating loss of $1,168,157 for the year
ended September 30, 1994, compared to an operating loss of $467,218 for the
comparable prior year period. For the year ended September 30, 1994, ITC
sustained an operating losses of approximately $753,000, and the Company,
exclusive of ITC's operations, sustained an operating loss of approximately
$415,000. For the year ended September 30, 1993, ITC and the Company incurred
operating losses of approximately $57,000 and $410,000, respectively. The
declining results for ITC are primarily related to declining attendance.
During 1994, the Company sold its interest in a letter of intent and option to
purchase television stations for $865,000, net of commissions and reimbursement
of direct expenses which had been reported as prepaid acquisition costs until
such sale was completed. Such revenues are not anticipated to be reoccurring.
Such amount has been reported as non-operating income. See Consolidated
Statement of Operations and Note 9 to Consolidated Financial Statements.
Interest expense was $139,305 for the year ended September 30, 1994 compared to
$37,852 for the comparable prior year period. Substantially all of these amounts
related to the operations of ITC. The increase was primarily attributable to the
inclusion of ITC's operations for the entire year in 1994, as compared to the
period from July 29, 1993 to September 30, 1993 for the comparable prior year
period.
Equity in net income (loss) of WBPI was $(48,235) for the year ended September
1994 compared to $11,103 for the comparable prior year period. The Company's
equity interest is 30%. See Note 5 to Consolidated Financial Statements for
condensed financial
information of WBPI.
LIQUIDITY AND SOURCES OF CAPITAL
Cash provided by (used) in operating activities for the year ended September 30,
1995 was $(501,830) compared to ($518,187) in the comparable prior year period.
Cash provided by investing activities was $65,166 for the year ended September
30, 1995 compared to $698,903 for the comparable prior year period. During 1994,
the Company realized proceeds from sale of option of $985,598. Cash provided
(used) by financing activities was $41,582 for the year ended September 30,
1995, compared to $(113,935) for the comparable prior year period. The increase
in 1995 was primarily due to the increase in excess of outstanding checks over
bank balance of $122,659 and advances from related parties of $45,588.
At September 30, 1995, the Company had cash totaling $32,078 and a working
capital deficit of $1,773,971. The working capital deficit was comprised
primarily of accounts payable of $504,118 and deferred revenues of $848,612.
Accounts payable at September 30, 1995, consisted primarily of ITC's open
invoices that were subsequently paid in the first fiscal quarter of 1996. The
deferred revenues consist primarily of advance ticket sales of ITC's operations.
Management believes the incremental cost that ITC will incur to realize the
revenues attributable to the customers that have purchased tickets in advance
will be offset by the gross profit from food, beverage and merchandise sales to
such customers.
Management intends to continue to restrict expenditures with respect to the
future development of entertainment properties and to market its completed
properties. Management believes these actions will maintain the Company's
liquidity. The Company had no material commitments for capital expenditures as
of September 30, 1995 and capital expenditures for fiscal 1996 are expected to
be immaterial.
The Company intends to continue to seek out potential acquisitions, primarily
but not necessarily limited to, television stations. The Company is currently
investigating several multi-station acquisitions. However, these potential
acquisitions are in the early stages of negotiation. The Company intends to
finance any acquisitions with senior bank financing of approximately 60%, and
the remainder with a combination of other debt and equity instruments. There are
no assurances that the Company will successfully identify these or any other
potential acquisitions or that, if identified, it will obtain financing under
terms acceptable to the Company.
In September 1995, the Company's CEO entered into a letter of intent to lease,
with the option to purchase, an arena football franchise, to be located in
Minneapolis, Minnesota. In connection therewith, the CEO advanced funds of
approximately $57,000 to or for the benefit of the lessor, the league and
others. The Company is finalizing the acquisition of the CEO's interest in the
franchise. The definitive lease agreement, the contractual arrangement with an
arena and the consideration, if any, to be paid to the CEO, are in the process
of finalization. If acquired, the franchise will be operated by Minnesota Arena
Football, Inc., a wholly-owned subsidiary of the Company. The Company's exercise
of the option to purchase the franchise will be dependent in any respect on the
reception of this entertainment to the Minnesota consumer.
Management has caused several of ITC's costs to be reduced or eliminated for
fiscal 1996. ITC's operating budget for fiscal 1996 projects net income.
Management plans to continue to closely monitor the operations of ITC, taking
quick action to control costs and cause expenses to be reduced, should actual
revenues not meet budgeted revenues. ITC's operations are behind budget for the
first fiscal quarter. However, management believes that advance ticket sales and
advance bookings are indicative that the second quarter's results should
approximate budget. Although ITC's operations are continuous throughout the
year, ITC has historically generated profits during the first two fiscal
quarters and has incurred losses during the third and fourth fiscal quarters.
Management anticipates that ITC's results for the first and second fiscal
quarters will provide sufficient funds to sustain their operations for the
remainder of fiscal 1996.
In December, 1995, and early January, 1996, the Company received $312,423 from
the exercise of warrants to purchase 1,249,692 shares of common stock. The
proceeds are to be used to fund working capital requirements and if acquired,
the acquisition costs, start up costs and operation of the arena football
franchise.
Management believes its current cash position, including proceeds from exercise
of stock warrants, is sufficient to sustain its operations for fiscal 1996, and
to fund the cost relative to investigating potential acquisitions. Management
also believes ITC will return to profitability and that ITC and the arena
football franchise, if acquired, will provide sufficient funds to satisfy their
working capital requirements for fiscal 1996. However, there can be no assurance
that anticipated cash flow from ITC's and the arena football franchise's
operations will be achieved.
INFLATION
Inflation and changing prices have not had a significant impact on operations of
the Company to date. It is anticipated that future cost increases will be
recovered by adjustment in pricing admissions to the Chanhassen Dinner Theatre
and the WBPI shows.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
This information is included following "Index to Financial Statements".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
NONE
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
AT SEPTEMBER 30, 1995
Director/
Officer
Name Office Held Since Age
Philip Rogers President, Director 1983 61
Thomas K. Scallen Chief Executive Officer,
Director 1983 70
Ronald L. Leckelt Chief Financial Officer 1992 43
Howard L. Golden Director 1983 58
Bruce Lansbury Director 1983 65
Mr. Rogers became President and Director upon the Company's formation. Mr. Roger
is also a principal of Philipico Picture Company, a motion picture and
television production company.
Mr. Scallen became Chairman of the Board of Directors, Vice President, and
Treasurer of CPPC upon its formation. Mr. Scallen was elected Chief Executive
Officer of the Company on March 14, 1992. Mr. Scallen was president, director
and principal stockholder of International Broadcasting Corporation, a publicly
traded company engaged in entertainment activities, the presentation of touring
shows, arena shows and motion picture or television productions until March
1992. International Broadcasting Corporation filed for protection under Chapter
11 of the Bankruptcy Act in August 1991.
Mr. Leckelt was elected Chief Financial Officer of the Company in June 1992. For
the three years prior, Mr. Leckelt was a general services partner with the firm
of McGladrey & Pullen, L.L.P., Certified Public Accountants and Consultants. Mr.
Leckelt does not currently devote full time to the Company. Mr. Leckelt is also
a partner with the firm of Sharp & Leckelt, Certified Public Accountants.
Mr. Golden became a Director of the Company upon its formation. Mr. Golden is
the Chairman of the Board and Chief Executive Officer of Total Entertainment
Corp., a company that distributes, syndicates and produces film and television
programming.
Mr. Lansbury became a Director of the Company upon its formation. For more than
the past five years, Mr. Lansbury has been an independent producer and is
Supervising Producer and one of the writers for the television series "Murder
She Wrote."
ITEM 11. EXECUTIVE COMPENSATION
Officer Compensation
- --------------------
Cash and Cash Equivalent Aggregate
------------------------ ------------
Name Capacity Year Salaries Remuneration
---- -------- ---- -------- ------------
Philip Rogers President 1995 $ -0- $ -0-
1994 $ -0- $ -0-
1993 $ -0- $ -0-
Thomas K. Scallen CEO 1995 $135,000 $135,000
1994 $135,692 $135,692
1993 $ 70,023 $ 70,023
Ronald L. Leckelt CFO 1995 $ 60,000 $ 60,000
1994 $ 60,000 $ 60,000
1993 $ 70,000 $ 70,000
All Officers as a
Group
(4 in number) 1995 $195,000 $195,000
1994 $195,692 $195,692
1993 $140,023 $140,023
Director Compensation
The Directors have not received any cash compensation. Directors, other than
Messrs. Scallen and Rogers, each received 2 year options to purchase 10,000
shares of the Company's common stock at $1.50 per share in 1993. These options
have been extended to expire September 30, 1996.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following table sets forth as at September 30, 1995, the information with
respect to common stock ownership of each person known to the Company to own
beneficially more than five percent (5%) of the shares of the Company's common
stock and all Directors and Officers as a group.
Name Number of
& Address Shares Percentage
- --------- ------ ----------
Thomas K. Scallen 1,619,480 18.8%
All Officers and Directors
as a Group (5 in number) 1,718,855 19.9%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the year ended September 30, 1994, the Company's CEO provided advances of
$50,000 to the Company. This amount was paid during the fiscal year ended
September 30, 1994. During the year ended September 30, 1995, no advances were
made.
At September 30, 1995 and 1994, the Company has advances to the Company's CEO
totalling $48,150 and $113,000, respectively. Subsequent to September 30, 1995,
the advance of $48,150 was repaid by the Company's CEO. Interest on advances for
the year ended September 30, 1994, was $1,057. For the year ended September 30,
1995, the Company did not charge any interest on these advances.
During the years ended September 30, 1995 and 1994, the Company paid the
Company's CEO $24,000 per year rent for the use of a condominium in Los Angeles.
As of September 30, 1995, the Company had provided salary advances to the
Company's CFO of $5,208. Subsequent to September 30, 1995, the advance of $5,208
was repaid by the Company's CFO through salary deferrals.
As of September 30, 1995, the Company owes the Company's CEO $20,500 for
cumulative accrued salary and rent for the use of a condominium. These amounts
are included in accrued expenses on the balance sheet.
As of September 30, 1995, the Company owes a company owned by the Company's CEO
$45,588 for contracted salary and cash advances.
On September 29, 1995, in consideration of guarantees of certain bank debt of
WBPI, provided WBPI by its minority shareholder, the Company transferred 65,900
of its shares of WBPI common stock to such minority shareholder, thereby
reducing the Company's interest to 30%.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES, AND REPORTS
ON FORM 8-K
(a) 1. Financial Statements. See following "Index to Financial
Statements".
2. Financial Statement Schedules. See following "Index to
Financial Statements".
(b) Reports on Form 8-K
NONE
(c) Exhibits
(3.) Articles of Incorporation and By-Laws are incorporated by
reference to the Exhibits to the Registrant's
Registration Statement of September 15, 1983.
(4.) Rights of warrant holders set forth in Exhibits to Registration
No.33-58546 effective April 12, 1993 incorporated by this
reference.
(10.) Stock Purchase Agreement, dated July 29, 1993 between registrant
and International Broadcasting Corporation, International Theatres
Corporation and National Westminster Bank USA attached as an
Exhibit to Registrants Report on Form 8-K is incorporated by this
reference.
(21.) Registrant owns 30% of Willy Bietak Productions, Inc., a Nevada
corporation.
(22.i) Registrant is the sole shareholder of International Theatres
Corporation, a Minnesota corporation ("ITC"). ITC does business
under the registered trade name, Chanhassen Dinner Theatres.
(22.ii) Registrant is the sole shareholder of Minnesota Arena Football,
Inc., a Minnesota corporation ("MAF"). MAF will do business under
the trade name Minnesota Fighting Pike.
(23) Consent of experts and counsel filed in connection with
Registration #33-58546 filed on February 17, 1993 are incorporated
by this reference.
(27) Financial Data Schedule
CPPC\Form-10K-95
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
CONSOLIDATED FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
INCLUDED IN ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1995
INDEX
Page numbers refer to pages in the attached Consolidated Financial Statements:
Page
Independent Auditor's Report............................ F-1
Consolidated Balance Sheets - September 30, 1995
and September 30, 1994................................ F-2
Consolidated Statements of Operations -
Years ended September 30, 1995, 1994, and 1993........ F-4
Consolidated Statement of Changes in Common
Stockholders' Equity - Years Ended
September 30, 1995, 1994, and 1993.................... F-6
Consolidated Statements of Cash Flows -
Years ended September 30, 1995, 1994, and 1993........ F-7
Notes to Consolidated Financial Statements.............. F-9
CPPC\Form-10K-95
CENTURY PARK PICTURESCCORPORATION
AND SUBSIDIARY
CONSOLIDATED FINANCIAL REPORT
SEPTEMBER 30, 1995
CONTENTS
INDEPENDENT AUDITOR'S REPORT 1
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Consolidated balance sheets 2 - 3
Consolidated statements of operations 4 - 5
Consolidated statements of stockholders' equity 6
Consolidated statements of cash flows 7 - 8
Notes to consolidated financial statements 9 - 17
- --------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Century Park Pictures Corporation
and Subsidiary
Minneapolis, Minnesota
We have audited the accompanying consolidated balance sheets of Century Park
Pictures Corporation and Subsidiary as of September 30, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity (deficit),
and cash flows for each of the years in the three-year period ended September
30, 1995. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Century Park Pictures
Corporation and Subsidiary as of September 30, 1995 and 1994, and the results of
their operations, and their cash flows for each of the years in the three-year
period ended September 30, 1995, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 10 to the
financial statements, the Company has suffered recurring losses from operations,
and its total liabilities exceeds its total assets. This raises substantial
doubt about the Company's ability to continue as a going concern. Management's
plans in regard to these matters are also described in Note 10. The financial
statements do not include any adjustments that might result from the outcome of
this uncertainty.
As discussed in Note 11 to the consolidated financial statements in 1995, the
Company adopted Financial Accounting Standards Board Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of.
Minneapolis, Minnesota
November 6, 1995, except for Note 12, as to which
the date is January 4, 1996
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
September 30, 1995 and 1994
ASSETS 1995 1994
- --------------------------------------------------------------------------------------
Current Assets
Cash $ 32,078 $ 427,160
Accounts receivable 21,229 22,359
Inventories 41,339 46,044
Deferred show costs 40,350 31,462
Due from WBPI -- 77,280
Due from related parties (Note 4) 53,358 116,745
Prepaid expenses:
Royalties 18,924 --
Supplies 28,114 30,157
Other 35,643 91,369
---------- ----------
Total current assets 271,035 842,576
---------- ----------
Property and Equipment, at cost (Note 3)
Leasehold interest in building 1,000,000 1,000,000
Equipment 455,237 435,166
Furniture and fixtures 447,670 426,050
---------- ----------
1,902,907 1,861,216
Less accumulated depreciation and amortization 701,440 413,629
---------- ----------
1,201,467 1,447,587
---------- ----------
Intangibles
Cost in excess of net assets of business acquired, less
accumulated amortization (Notes 2 and 11) 455,528 574,639
Preacquisition costs 35,708 11,925
---------- ----------
491,236 586,564
---------- ----------
$1,963,738 $2,876,727
========== ==========
See Notes to Consolidated Financial Statements.
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 1995 1994
- ------------------------------------------------------------------------------------------
Current Liabilities
Current maturities of capitalized lease obligation $ 173,109 $ 139,037
Excess of outstanding checks over bank balance 122,659 --
Due to related company (Note 4) 45,588 --
Accounts payable 504,118 556,537
Deferred revenue 848,612 946,037
Accrued expenses (Note 4):
Compensation 139,422 104,133
Other 211,498 112,345
----------- -----------
Total current liabilities 2,045,006 1,858,089
----------- -----------
Long-Term Capitalized Lease Obligation (Note 3) 562,187 722,924
----------- -----------
Commitments and Contingencies (Notes 8 and 10)
Stockholders' Equity (Deficit)
Common stock, par value $0.001 per share; authorized
200,000,000 shares; 8,636,952 issued and outstanding 8,637 8,637
Additional paid-in capital 3,682,431 3,682,431
Accumulated deficit (4,334,523) (3,395,354)
----------- -----------
(643,455) 295,714
----------- -----------
$ 1,963,738 $ 2,876,727
=========== ===========
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
1993
1995 1994 (Note 2)
- -----------------------------------------------------------------------------------------------
Revenues:
Admission revenues $ 4,064,623 $ 3,619,314 $ 603,697
Other 86,691 11,763 --
----------- ----------- -----------
4,151,314 3,631,077 603,697
----------- ----------- -----------
Food, beverage, and merchandise sales 3,665,635 3,157,027 511,925
Cost of food, beverage, and merchandise sales 1,151,073 1,011,814 151,760
----------- ----------- -----------
GROSS PROFIT ON FOOD, BEVERAGE,
AND MERCHANDISE SALES 2,514,562 2,145,213 360,165
----------- ----------- -----------
NET REVENUES 6,665,876 5,776,290 963,862
----------- ----------- -----------
Operating costs and expenses:
Operating:
Performers' compensation 1,512,326 1,797,843 174,776
Costs of costumes, sets, and props 734,928 346,284 49,121
Other production costs 3,596,347 3,264,269 609,407
Administration 1,243,295 1,227,221 545,149
Depreciation and amortization (Note 11) 406,922 308,830 52,627
----------- ----------- -----------
7,493,818 6,944,447 1,431,080
----------- ----------- -----------
OPERATING LOSS (827,942) (1,168,157) (467,218)
Nonoperating income (expense):
Sale of option (Note 9) -- 865,000 --
Interest expense (117,496) (139,305) (37,852)
Other income 15,909 55,603 28,420
----------- ----------- -----------
LOSS BEFORE EQUITY IN NET INCOME
(LOSS) OF WBPI AND INCOME
TAXES (929,529) (386,859) (476,650)
Equity in net income (loss) of WBPI (7,040) (48,235) 11,103
----------- ----------- -----------
LOSS BEFORE INCOME TAXES (936,569) (435,094) (465,547)
Federal and state income taxes (Note 6) 2,600 2,500 500
----------- ----------- -----------
NET LOSS $ (939,169) $ (437,594) $ (466,047)
=========== =========== ===========
Net loss per share of common stock (Note 8) $ (0.11) $ (0.05) $ (0.07)
Weighted average number of common shares
(Note 8) 8,636,952 8,636,952 6,437,917
See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
Common Stock, Issued Additional
------------------------ Paid-In Accumulated
Shares Amount Capital Deficit Total
- ----------------------------------------------------------------------------------------------------------
Balance, September 30, 1992 2,636,952 $ 2,637 $ 2,483,478 $(2,491,713) $ (5,598)
Net loss -- -- -- (466,047) (466,047)
Sale of common stock (Note 8) 6,000,000 6,000 1,198,953 -- 1,204,953
--------- ----------- ----------- ----------- -----------
Balance, September 30, 1993 8,636,952 8,637 3,682,431 (2,957,760) 733,308
Net loss -- -- -- (437,594) (437,594)
--------- ----------- ----------- ----------- -----------
Balance, September 30, 1994 8,636,952 8,637 3,682,431 (3,395,354) 295,714
Net loss -- -- -- (939,169) (939,169)
--------- ----------- ----------- ----------- -----------
Balance, September 30, 1995 8,636,952 $ 8,637 $ 3,682,431 $(4,334,523) $ (643,455)
========= =========== =========== =========== ===========
See Notes to Consolidated Financial Statements
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1995, 1994, AND 1993
1993
1995 1994 (Note 2)
- ---------------------------------------------------------------------------------------------------------------------------
Cash Flows From Operating Activities
Net loss $ (939,169) $ (437,594) $ (466,047)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation 288,308 284,719 48,609
Amortization 119,111 24,111 10,518
Gain on sale of option - (865,000) -
Loss on disposal of property and equipment 2,490 6,152 -
Equity in net (income) loss of WBPI 7,040 48,235 (11,103)
Change in assets and liabilities, net of effects of the
acquisition of ITC:
(Increase) decrease in:
Accounts receivable 1,130 (3,353) 37,529
Inventories 4,705 (11,311) (455)
Deferred shows costs (8,888) 46,243 40,813
Prepaid expenses 38,845 (35,073) 38,242
Increase (decrease) in:
Accounts payable and accrued expenses 82,023 297,952 28,650
Deferred revenue (97,425) 127,232 (81,613)
Income taxes payable - (500) -
--------------- --------------- ---------------
NET CASH USED IN OPERATING ACTIVITIES (501,830) (518,187) (354,857)
--------------- --------------- ---------------
Cash Flows From Investing Activities
Capital expenditures (44,678) (19,861) (9,896)
Purchase of ITC, net of cash acquired of $230,279 - - (319,721)
Cash paid for preacquisition costs (23,783) (72,121) (60,402)
Proceeds from sale of option (Note 9) - 985,598 -
Increased investment in WBPI - - (14,027)
(Increase) decrease in due from WBPI 77,280 (73,850) 3,430
(Increase) decrease in advances made to related
parties 56,347 (120,863) 6,725
--------------- --------------- ---------------
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES 65,166 698,903 (393,891)
--------------- --------------- ---------------
Cash Flows From Financing Activities
Excess of outstanding checks over bank balance 122,659 - -
Payments on long-term capitalized lease (126,665) (113,935) (24,104)
Increase (decrease) in advances from related parties 45,588 - (72,300)
Net proceeds received on issuance of common stock - - 1,204,953
--------------- --------------- ---------------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 41,582 (113,935) 1,108,549
--------------- --------------- ---------------
NET INCREASE (DECREASE) IN CASH (395,082) (66,781) 359,801
Cash
Beginning of year 427,160 360,379 578
--------------- --------------- ---------------
End of year $ 32,078 $ 427,160 $ 360,379
=============== =============== ===============
Supplemental Disclosures of Cash Flow Information
Cash paid for interest $ 119,187 $ 148,939 $ 23,926
Net cash paid (refund received) for income taxes 2,600 1,868 (248)
=============== =============== ===============
Acquisition of ITC (Note 2)
Cash purchase price $ - $ - $ 550,000
=============== =============== ===============
Working capital deficit acquired, net of cash
acquired of $230,279 $ - $ - $ (1,037,970)
Fair value of property and equipment acquired - - 1,754,923
Cost in excess of net assets of business acquired - - 602,768
Capital lease obligation assumed - - (1,000,000)
--------------- --------------- ---------------
$ - $ - $ 319,721
=============== =============== ===============
See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NATURE OF BUSINESS: The Company is engaged in the development, production, and
marketing of entertainment properties.
International Theatres Corporation (ITC), a 100 percent owned subsidiary, owns
and operates the Chanhassen Dinner Theatres in Chanhassen, Minnesota (see Note
2).
The Company has a 30 percent investment in Willy Bietak Productions, Inc.
(WBPI), which produces touring ice shows and theme shows appearing in shopping
malls, theaters, casinos, arenas, and major amusement parks throughout the
United States.
Significant accounting policies:
PRINCIPLES OF CONSOLIDATION: The accompanying consolidated financial statements
include the accounts of the Company and its wholly owned subsidiary, ITC. All
significant intercompany transactions and balances have been eliminated in
consolidation.
INVESTMENT IN COMMON STOCK OF WBPI: As explained further in Note 5, during the
year ended September 30, 1995, the Company adopted the equity method of
accounting for its 30 percent investment in WBPI. Under this method, the
Company's equity in the earnings or losses of the investee is reported currently
in the Company's earnings. However, losses of the investee are reported only to
the extent of the carrying amount of the investment plus any Company advances or
commitments. The financial statements for 1993 and 1994 have been restated on a
comparable basis. The effect of this restatement was to increase net income and
retained earnings by $69,293 and $-0- for each of the years ended September 30,
1994 and 1993, respectively.
CASH AND CASH EQUIVALENTS: For purposes of reporting the statements of cash
flows, the Company considers all cash accounts and all highly liquid debt
instruments purchased with an original maturity of three months or less, to be
cash equivalents.
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts.
INVENTORIES: Inventories consist primarily of food and beverages and are stated
at the lower of cost or market using the first-in, first-out method.
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost. Depreciation
is computed by the straight-line and various accelerated methods over the
following estimated useful lives:
Years
-------
Leasehold interest in building 6
Equipment 3-7
Furniture and fixtures 3-7
ENTERTAINMENT PROPERTIES: Entertainment properties consist principally of story
rights and scenarios in various stages of development as of each balance sheet
date.
Costs incurred in connection with development and promotion of entertainment
properties are deferred until the property is sold or abandoned. Investments in
substantially completed properties that have been held for three years and not
scheduled for production are expensed in accordance with Statement No. 53 issued
by the Financial Accounting Standards Board. As of September 30, 1995 and 1994,
all properties owed have been written off in accordance with Statement No. 53.
INTANGIBLES: Cost in excess of net assets of business acquired is being
amortized by the straight-line method over a 25-year period.
The Company has capitalized certain preacquisition costs related to potential
acquisitions in progress. These costs are expensed when the related acquisition
is no longer a prospect or included as a cost of the completed acquisition.
LONG-LIVED ASSETS: During 1995, the Company adopted Financial Accounting
Standards Board No. 121, Accounting for the Impairment of Long-Lived Assets.
Historically, the Company reviewed its long-lived assets at each balance sheet
date to determine potential impairment by comparing the carrying value of the
long-lived assets with expected future net cash flows provided by operating
activities of the long-lived assets. If the sum of the expected future net cash
flows was less than the carrying value, the Company would record an impairment
loss. An impairment loss would be measured by comparing the amount by which the
carrying value exceeds the fair value of the long-lived assets.
Under the new method, the Company reviews impairment whenever events or changes
in circumstances indicate that the carrying amount of the asset is not
recoverable. Impairment is measured by comparing the carrying value of
long-lived assets to estimated fair value of the long-lived assets.
DEFERRED SHOW COSTS: The Company's subsidiary capitalizes the costs of producing
its dinner theater productions as deferred show costs and amortizes these costs
over the show's estimated useful life.
DEFERRED REVENUE: Revenue received from ITC's advance ticket sales and gift
certificates are recognized when used or upon expiration.
INCOME TAXES: As of September 30, 1995, the Company had net operating loss
carryforwards approximating $1,635,000, which expire in varying amounts through
2010. The use of $161,000 of these net operating loss carryforwards has been
limited due to the substantial change in the ownership of the Company (see Note
6).
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences, and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will not be realized. Deferred tax assets and liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.
LOSS PER SHARE: Loss per share is calculated based upon weighted average number
of common shares outstanding.
NOTE 2. BUSINESS COMBINATION
On July 29, 1993, the Company acquired substantially all of the assets and
liabilities of ITC, which owns and operates the Chanhassen Dinner Theater, for a
total consideration of $1,550,000. The acquisition was financed by cash of
$550,000 and a $1,000,000 capital lease. The assets acquired were recorded based
on their fair market values as follows: working capital deficit acquired
$1,037,970, net of cash acquired $230,279, property and equipment $1,754,923,
and cost in excess of net assets of business acquired $602,768. In addition, the
land used in the operations of ITC is leased under an operating lease (Note 7).
The acquisition was accounted for as a purchase and, accordingly, the operations
of the acquired business are included in the accompanying consolidated financial
statements from the effective date of the acquisition.
Unaudited pro forma consolidated operations for the year ended September 30,
1993, as if the acquisition occurred as of October 1, 1992, are as follows:
1993
--------------------------------------------------------
Net revenues $ 6,322,938
Net loss (569,499)
Net loss per common share (0.09)
NOTE 3. LONG-TERM CAPITALIZED LEASE
September 30
-------------------
1995 1994
- -----------------------------------------------------------------------------------------------
Capitalized lease obligation at 15.6%, due in monthly
installments of $21,313, secured by the related buildings $735,296 $861,961
Less current portion 173,109 139,037
-------- --------
$562,187 $722,924
======== ========
Future minimum lease payments by year and in the aggregate under the capital
lease are due as follows:
Year ending September 30:
1996 $277,063
1997 255,750
1998 255,750
1999 170,500
--------
Total minimum lease payments 959,063
Less amount representing interest 223,767
--------
Present value of net minimum lease payments $735,296
========
NOTE 4. RELATED-PARTY TRANSACTIONS
During the year ended September 30, 1994, the Company's CEO provided advances of
$50,000 to the Company. This amount was paid during the fiscal year ended
September 30, 1994. During the year ended September 30, 1995, no advances were
made.
At September 30, 1995 and 1994, the Company has advances to the Company's CEO
totaling $48,150 and $113,000, respectively. Subsequent to September 30, 1995,
the advance of $48,150 was repaid by the Company's CEO. Interest on advances for
the year ended September 30, 1994, was $1,057. For the year ended September 30,
1995, the Company did not charge any interest on these advances.
During the years ended September 30, 1995 and 1994, the Company paid the
Company's CEO $24,000 per year rent for the use of a condominium in Los Angeles.
As of September 30, 1995 and 1994, the Company has provided salary
advances to the Company's CFO of $5,208. Subsequent to September 30, 1995, the
advance of $5,208 was repaid by the Company's CFO through salary deferrals.
As of September 30, 1995, the Company owes the Company's CEO $20,500 for
cumulative accrued salary and rent for the use of a condominium. These amounts
are included in accrued expenses on the balance sheet.
As of September 30, 1995, the Company owes a company owed by the Company's CEO
$45,588 for contracted salary and cash advances.
NOTE 5. INVESTMENT IN WBPI
During the year ended September 30, 1995, the Company transferred a portion of
its investment in common stock of Willy Bietak Production, Inc. (WBPI) to Willy
Bietak Enterprises, Inc. in consideration of the guarantees of certain bank debt
of WBPI. This resulted in reducing the Company's ownership percentage in WBPI
from 50.1 percent to 30 percent. This change in ownership percentage resulted in
a deconsolidation of WBPI. These consolidated financial statements reflect the
financial position, results of operations, and cash flows as if the
deconsolidation occurred as of October 1, 1992.
Condensed financial information of WBPI as of September 30, 1995 and 1994, and
for each of the years ended September 30, 1995, 1994, and 1993, is as follows:
1995 1994
---- ----
BALANCE SHEET $472,428 $248,443
Total current assets 170,447 119,479
Noncurrent assets 707,172 437,215
Total current liabilities
1995 1994 1993
---- ---- ----
OPERATIONS
Admissions revenues $ 2,906,753 $ 3,208,050 $ 2,715,958
Operating costs 2,702,973 3,152,150 2,470,485
General and administrative costs 194,762 221,497 223,271
Nonoperating (income) expense 3,685 (3,473) (2,810)
Income tax expense 337 3,448 2,851
--- ----- -----
Net income (loss) $ 4,996 $ (165,572) $ 22,161
=========== =========== ===========
NOTE 6. INCOME TAX MATTERS
Deferred tax assets consist of the following components:
1995 1994
---- ----
Deferred tax assets:
Deferred revenue $ 339,000 $ 378,000
Other 39,000 38,000
Net operating loss carryforwards 648,000 335,000
------- -------
1,026,000 751,000
Less valuation allowance 577,000 312,000
------- -------
Total deferred tax assets 449,000 439,000
------- -------
Deferred tax liabilities:
Property and equipment 449,000 439,000
------- -------
Total deferred tax liabilities 449,000 439,000
------- -------
Net deferred tax assets $ -- $ --
======= =======
During the year ended September 30, 1995, the Company recorded a valuation
allowance of $577,000 on the deferred tax assets to reduce the total amounts
that management believes will ultimately be realized. Realization of deferred
tax assets is dependent upon sufficient future taxable income during the period
that deductible temporary differences and carryforwards are expected to be
available to reduce taxable income. There was no other activity in the valuation
allowance account during 1995.
Loss carryforwards for tax purposes as of September 30, 1995, have the following
expiration dates which include any limitations on amounts which can be utilized.
Expiration Date Amount
- --------------------------------------------------------------------------------
1998 $ 8,000
1999 17,000
2000 17,000
2001 17,000
2002 17,000
2003 17,000
2004 17,000
2005 17,000
2006 17,000
2007 17,000
2008 482,000
2009 331,000
2010 661,000
----------
$1,635,000
==========
Total income tax benefit for each of the three years in the period ended
September 30, 1995, is different than that expected, computed by applying the
effective tax rate of 34 percent. The reasons for these differences between the
expected credits and the actual credits are as follows:
1995 1994 1993
---- ---- ----
Income tax benefit at federal statutory
rates excluding the investment in WBPI $(317,000) $(132,000) $(162,000)
State taxes 2,600 2,500 500
Effect of limiting tax credit on net operating
losses to taxes paid in previous three years 317,000 132,000 162,000
------- ------- -------
$ 2,600 $ 2,500 $ 500
========= ========= =========
NOTE 7. COMMITMENTS AND CONTINGENCIES
OPERATING LEASES: The Company leases the land used in the operations of ITC
under a lease which has been classified as an operating lease. The lease's
minimum term expires May 31, 1999, and has two five-year renewal options.
In addition, the Company leases its office under a noncancelable operating
lease.
Total rent expense under the above leases for the years ended September 30,
1995, 1994, and 1993, was $325,777, $346,093, and $122,012, respectively.
Minimum annual rental commitments under these leases over future years are as
follows:
1996 $ 296,115
1997 296,115
1998 296,115
1999 194,046
- ---- -------
$ 1,082,391
===============
CAPITALIZED LEASES: The Company leases its building used in its operations under
a capitalized lease (Note 3). The lease expires May 1999 with two five-year
renewal options. In addition, the lease provides for options, which expire on
April 1, 2001, to purchase the land and buildings.
The following is a summary of property under the capitalized lease:
September 30
------------
1995 1994
---- ----
Leasehold interest in building $1,000,000 $1,000,000
Less accumulated amortization 371,428 200,000
------- -------
$ 628,572 $ 800,000
========== ==========
NOTE 8. COMMON STOCK MATTERS
PRIVATE PLACEMENT: During the year ended September 30, 1993, the Company
completed a private placement of 1,500,000 units, each consisting of two shares
of common stock and a two-year warrant for the purchase of two additional shares
of common stock at an exercise price of $1.50 per share. During fiscal year
ended September 30, 1995, the Company extended the exercise date on these
warrants to December 18, 1995, and reduced the exercise price from $1.50 to
$0.25 per share. The Company completed the sale during December 1992 and
received net proceeds of $1,204,953, net of commission of $190,400 and direct
expenses of the offering of $104,647. In accordance with the private placement
documents, the Company registered the stock with the Securities and Exchange
Commission during the year ended September 30, 1993.
In accordance with the private placement agreement, the Company issued one
additional share per unit to the investors because the Company was unsuccessful
in its attempts to register the shares with the Securities and Exchange
Commission by March 18, 1993.
The agreement also contained a second deadline of April 18, 1993, for
registering the shares, or an additional share per unit was to be issued. The
Company registered the shares on April 12, 1993. However, the investors claimed
they were entitled to the additional 1,500,000 shares because the original
shares were not distributed to them by April 18, 1993. Subsequent to the year
ended September 30, 1993, the Company decided to distribute the additional
1,500,000 shares of common stock to the investors. As of September 30, 1993,
these additional shares have been reflected as issuable and treated as
outstanding in the applicable per share amounts and disclosures.
ISSUANCE OF COMMON STOCK OPTIONS: The Company has issued three of its directors
options to purchase up to 10,000 shares of common stock of the Company at an
exercise price of $1.50 per share. These options have been extended to expire
February 24, 1997.
NOTE 9. SALE OF OPTION
During the fiscal year ended September 30, 1993, the Company entered into a
letter of intent and acquired an option to purchase two television stations. In
August 1994, the Company sold the option for $985,598. The gain on the sale of
the option has been reflected in the consolidated statement of operations net of
related option acquisition costs in the amount of $120,598.
NOTE 10. CORPORATE LIQUIDITY
During 1995 and 1994, the Company incurred substantial losses of $939,169 and
$437,594, respectively, and has a working capital deficit as of September 30,
1995, of $1,773,971. The impact of these losses is to limit the liquidity and
available cash resources for operations.
The Company's plans as they relate to ITC include close monitoring of the 1996
budget with quick action to reduce expenses should revenues not meet with
budgeted expectations.
The Company's operations exclusive of its subsidiary, ITC, consist of
acquisition searches and certain administrative costs, both of which could be
scaled back and/or financed by the Company's president and major stockholder.
With these actions, management believes it will have sufficient cash to operate
in the 1996 fiscal year.
NOTE 11. ADOPTION OF NEW ACCOUNTING POLICY
During the fourth quarter of the fiscal year ended September 30, 1995, the
Company adopted Financial Accounting Standards Board Statement No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of. Statement No. 121 requires that long-lived assets and
identifiable intangibles to be held and used by an entity must be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of the assets may not be recoverable. Statement No. 121 provides
criteria for determining when assets should be considered potentially impaired.
As a result of ongoing losses at ITC, the Company reviewed ITC's long-lived
assets for possible impairments. As a result, as of September 30, 1995, the
Company recognized an impairment charge of $95,000 related to its cost in excess
of net assets of the business acquired in 1993, with no related tax benefit.
This impairment charge was included in amortization expense in the consolidated
financial statements. In determining the amount of the impairment charge, the
Company developed its best estimate of the fair value of the long-lived assets
and compared this to the carrying value of the long-lived assets. The excess of
the carrying value over the fair value of the asset was recognized as an
impairment loss.
NOTE 12. SUBSEQUENT EVENT
On December 22, 1995, and January 4, 1996, the Company received $312,423 from
the exercise of stock warrants for the purchase of 1,249,692 shares of common
stock at $0.25 per share.
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, thereunto duly authorized on the 12th, day of February, 1996.
CENTURY PARK PICTURES CORPORATION
By: /s/ Thomas K. Scallen
Thomas K. Scallen
Chief Executive Officer
and
By: /s/ Ronald L. Leckelt
Ronald L. Leckelt
Chief Financial Officer
Pursuant to the Requirements of the Securities Exchange Act of 1934, this Report
has been signed on behalf of the Registrant and in capacities and on the dates
indicated.
/s/ Philip Rogers February 12, 1996
Philip Rogers
President & Director
/s/ Thomas K. Scallen February 12, 1996
Thomas K. Scallen
Chief Executive Officer & Director
/s/ Bruce Lansbury February 12, 1996
Bruce Lansbury
Director
/s/ Howard Golden February 12, 1996
Howard Golden
Director
/s/ Willy Bietak February 12, 1996
Willy Bietak
Director