CONFORMED COPY
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
QUARTERLY REPORT
Pursuant to Section 13 or 15(d) of the Securities and
Exchange Act of 1934
For Quarter ended June 30, 1996
CENTURY PARK PICTURES CORPORATION
(Exact name of registrant as specified in its charter)
Minnesota 0-14247 41-1458152
(State of Incorporation) (Commission File Number) (IRS ID Number)
4701 IDS Center, Minneapolis, Minnesota 55402
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (612) 333-5100
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve (12) months and (2) has been subject to such filing
requirements for the past ninety (90) days. _x_ Yes __ No
As at June 30, 1996, 9,886,641 common shares, $.001 par value, were outstanding.
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
This information is included following "Index to Consolidated Financial
Statements".
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
OPERATIONS
Period Ended June 30, 1996 compared to Period Ended June 30, 1995.
Admissions revenues were $1,301,638 for the quarter ended June 30, 1996, of
which approximately $1,061,000 were generated by the Company's wholly owned
subsidiary International Theatres Corporation (ITC) and approximately $240,600
were generated by the Company's wholly owned subsidiary Minnesota Arena
Football, Inc., DBA The Minnesota Fighting Pike (The Pike). All of the Company's
admissions for the comparable prior year period were generated by ITC. The
approximate $85,400 increase in ITC's current period admissions revenues was
primarily attributable to increased attendance and increased ticket prices,
offset in part by increased promotional and discounted tickets.
The Pike began its first season in the quarter ended June 30, 1996.
ITC's food, beverage and merchandise sales were $959,900 for the quarter ended
June 30, 1996, compared to $950,296 for the comparable prior year period, and
their related cost of sales were $277,713 and $294,718, respectively. The $9,604
increase in current period sales was due primarily to increased attendance and
increased prices. The cost of sales for the current year period, as a percent of
food, beverage and merchandise sales, was slightly lower than the comparable
prior year period, due to increased selling prices.
ITC's operating expenses for the quarter ended June 30, 1996, were $1,539,793,
compared to $1,693,638 for the comparable prior year period, representing an
decrease of $153,845. The decrease in the current year was primarily due to
decreased play mounting costs and cost containment actions taken by management.
The Pike's operating costs were $1,025,969 for the quarter ended June 30, 1996,
its initial period of operations.
General and administrative expenses were $367,854 for the quarter ended June 30,
1996, compared to $304,227 for the comparable prior year period. The increase in
general and administrative expenses was primarily due to the operations of The
Pike.
Net loss for the quarter ended June 30, 1996, was $968,527 compared to a net
loss of $392,667 for the comparable prior year period. The increased loss was
primarily attributable to the operations of The Pike.
LIQUIDITY AND SOURCES OF CAPITAL
Cash used by operating activities for the nine-month period ended June 30, 1996,
was $655,216 compared to $344,965 for the comparable prior year period. The
primary use of cash in operating activities was prepayment of start-up costs
relative to the operations of The Pike of approximately $248,000. The primary
source of cash from operating activities was deferred revenue resulting from
prepayments by ITC's customers, which represent gift certificates and tickets
paid for in advance. Cash provided by investing activities for the nine-month
period ended June 30, 1996, was $18,582, which was primarily comprised of
purchases of equipment of $34,776 which was offset by decreased amounts due from
related parties of $53,358. Cash from financing activities for the nine-month
period ended June 30, 1996, was $581,710, which was comprised of the net
proceeds from sale of common stock of $314,424 upon exercise of stock warrants,
and proceeds from notes payable of $400,000, offset in part by reduction of
long-term capitalized lease obligations.
At June 30, 1996, the Company had a working capital deficit of ($2,696,477) and
a cash deficit of $($22,846). The working capital deficit at June 30, 1996, was
primarily comprised of notes payable of $400,000, accounts payable and accrued
expenses of $1,136,869, and deferred revenues of $1,280,320. Approximately
$800,000 of the accounts payable and accrued expenses relate to The Pike.
Management believes that a significant portion of these obligations would be
discharged upon liquidation as discussed below. The majority of the deferred
revenues relates to advance ticket sales for ITC's operations. .Management
believes the incremental cost that ITC will incur to realize these deferred
revenues will be offset by the gross profit from food, beverage and merchandise
sales to such customers.
The Company intends to continue to seek out potential acquisitions. It is
probable that any significant acquisitions would require long-term financing.
However, there are no assurances that the Company will complete any acquisitions
or that it will obtain financing under terms acceptable to the Company.
The Company had no material commitments for capital expenditures as of June 30,
1996 and capital expenditures for the remainder of fiscal 1996 are expected to
be immaterial.
Management has caused several of ITC's costs to be reduced or eliminated for the
remainder of fiscal 1996. Management believes that advance ticket sales and
advance bookings are indicative that the fourth quarter's attendance should
approximate budgeted levels. Management believes that ITC's anticipated results
for the fourth quarter will provide sufficient funds to sustain their operations
for the remainder of fiscal 1996.
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, MN. In connection therewith, the CEO advanced funds of
approximately $57,000 to or for the benefit of the lessor, the league and
others. During the quarter ended March 31, 1996, the Company finalized the
acquisition of the CEO's interest in the franchise. No additional consideration
was paid to the CEO for his interest in the letter of intent. The definitive
lease agreement and the contractual arrangement were also finalized during the
quarter ended March 31, 1996. The franchise was operated by The Pike.
The Company's option to purchase the franchise has since expired.
During the third and fourth fiscal quarters, The Pike failed to generate the
anticipated cash flow. Consequently, during such quarters the Company's CEO
advanced approximately $206,000 and the Company raised additional financing from
outside sources of approximately $400,000. The financing raised from outside
sources is currently payable, and is secured by the common stock of Minnesota
Arena Football, Inc. Management anticipates such financing will be converted
into the Company's common stock. However, there are no assurances that such
financing will be converted into the Company's common stock. Throughout much of
the third and fourth fiscal quarters, management attempted to sell its interest
in the arena football franchise. Failing to do so, the option expired.
Accordingly, The Pike has ceased operations. Management is evaluating the
appropriate course of action for The Pike, which will most likely be liquidated
either in or out of bankruptcy court.
The Company's independent auditors issued their opinion on the consolidated
financial statements as of September 30, 1995, wherein they added an additional
paragraph which raised substantial doubt as to the Company's ability to continue
as a going concern. Management believes its current cash position, including
proceeds from advances received from private individuals, will be sufficient to
satisfy working capital requirements for fiscal 1996, and to fund costs relative
to investigating potential acquisitions. In February 1996, ITC established a
line of credit providing for available funds of $50,000. Management believes ITC
will operate at a profitable level that, along with ITC's available line of
credit, will provide sufficient funds to satisfy ITC's working capital
requirements for fiscal 1996. However, there can be no assurances that
anticipated cash flow from ITC's operations will be achieved.
PART II
ITEM 1. LEGAL PROCEEDINGS.
NONE
ITEM 2. CHANGES IN SECURITIES.
NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE
ITEM 5. OTHER INFORMATION.
NONE
ITEM 6. EXHIBITS AND REPORTS OF 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 THEREUNTO DULY AUTHORIZED.
Dated as of March 9, 1997.
CENTURY PARK PICTURES CORPORATION
By: /s/Thomas K. Scallen
Thomas K. Scallen
Chief Executive Officer
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
1. Consolidated Balance Sheets F-1
2. Consolidated Statements of Operations F-2
3. Consolidated Statements of Cash Flows F-3
4. Notes to Consolidated Financial Statements F-4
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, 1996 and September 30, 1995
(Unaudited)
ASSETS June 30, September 30,
1996 1995
----------- ------------
CURRENT ASSETS
Cash $ (22,846) $ 32,078
Accounts receivable 130,935 21,229
Inventories 48,522 41,339
Deferred show costs 75,719 40,350
Due from related parties -- 53,358
Prepaid expenses 260,347 82,681
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Total current assets 492,677 271,035
=========== ===========
PROPERTY AND EQUIPMENT, at cost
Leasehold interest in building 1,000,000 1,000,000
Equipment 481,969 455,237
Furniture and fixtures 455,714 447,670
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1,937,683 1,902,907
Less accumulated depreciation 924,814 701,440
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1,012,869 1,201,467
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INTANGIBLES
Cost in excess of net assets acquired, net of amortization 437,447 455,528
Preacquisition costs, net of amortization -- 35,708
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437,447 491,236
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$ 1,942,993 $ 1,963,738
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 400,000 $ --
Current maturities of capitalized lease obligations 178,826 173,109
Excess of outstanding checks over bank balance -- 122,659
Due to related parties 193,391 45,588
Accounts payable 707,743 504,118
Deferred revenue 1,280,068 848,612
Accrued compensation 87,433 139,422
Accrued expenses 341,693 211,498
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Total current liabilities 3,189,154 2,045,006
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LONG-TERM CAPITALIZED LEASE OBLIGATIONS 425,756 562,187
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STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share; authorized
200,000,000 shares; issued March - 9,886,641 shares;
issued September - 8,636,952 shares 9,887 8,637
Additional paid in capital 3,993,605 3,682,431
Accumulated deficit (5,675,409) (4,334,523)
----------- -----------
(1,671,917) (643,455)
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$ 1,942,993 $ 1,963,738
=========== ===========
See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three-Month and Nine-Month Periods Ended June 30, 1996 and 1995
(Unaudited)
Three-Month Periods Nine-Month Periods
1996 1995 1996 1995
----------- ----------- ----------- -----------
Revenues
Admissions revenue $ 1,301,638 $ 975,587 $ 3,492,631 $ 3,277,224
----------- ----------- ----------- -----------
Food, beverage and merchandise sales 959,900 950,296 3,048,433 3,023,300
Cost of Food, beverage and merchandise sales 277,713 294,718 878,523 905,884
----------- ----------- ----------- -----------
Gross profit 682,187 655,578 2,169,910 2,117,416
----------- ----------- ----------- -----------
Net revenues 1,983,825 1,631,165 5,662,541 5,394,640
----------- ----------- ----------- -----------
Operating Costs and Expenses
Operating costs 2,565,762 1,693,638 5,931,180 4,927,755
General and administration 367,854 304,227 991,225 946,191
----------- ----------- ----------- -----------
Total operating costs and expenses 2,933,616 1,997,865 6,922,405 5,873,946
----------- ----------- ----------- -----------
Operating loss (949,791) (366,700) (1,259,864) (479,306)
Other, primarilly interest expense (24,439) (25,967) (90,256) (76,089)
----------- ----------- ----------- -----------
Loss before equity in income (loss) of WBPI
and income taxes (974,230) (392,667) (1,350,120) (555,395)
Equity in income (loss) of WBPI 6,204 -- 10,737 --
----------- ----------- ----------- -----------
Loss before minority interest in loss of subsidiary (968,026) (392,667) (1,339,383) (555,395)
Income taxes 501 -- 1,503 --
----------- ----------- ----------- -----------
Net loss $ (968,527) $ (392,667) $(1,340,886) $ (555,395)
=========== =========== =========== ===========
Net loss per share of common stock $ (0.10) $ (0.05) $ (0.14) $ (0.06)
=========== =========== =========== ===========
Weighted average number of common shares 9,886,641 8,636,952 9,510,283 8,636,952
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine-Month Periods Ended June 30, 1996 and 1995
(Unaudited)
1996 1995
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $(1,340,886) $ (555,395)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization 277,163 222,095
Equity in (income) loss of WBPI (10,737) --
Change in assets and liabilities:
(Increase) decrease in-
Accounts receivable (109,706) 5,920
Inventories (7,183) (5,005)
Deferred show costs (35,369) (4,269)
Prepaid expenses (177,666) 17,184
Increase (Decrease) in-
Accounts payable and accrued expenses 317,712 (63,701)
Deferred revenue 431,456 38,206
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Net cash used in operating activities (655,216) (344,965)
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CASH FLOWS FROM INVESTING ACTIVITIES
Reimbursement of prepaid acquisition costs -- --
Increase in due from related parties 53,358 28,783
Purchase of property and equipment (34,776) (39,846)
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Net cash from (used in) investing activities 18,582 (11,063)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock 312,424 --
Increase (decrease) in notes payable 400,000 --
Reduction of long-term capitalized lease obligations (130,714) (102,365)
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Net cash from (used in) financing activities 581,710 (102,365)
----------- -----------
Net decrease in cash (54,924) (458,393)
Cash, beginning of period 32,078 427,160
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Cash (deficit), end of period $ (22,846) $ (31,233)
=========== ===========
See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation:
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and, therefore, do not include
all information and disclosures necessary for a fair presentation of results of
operations, financial position, and consolidated cash flows in conformity with
generally accepted accounting principles. However, such statements do reflect,
in the opinion of management of the Company, all adjustments, consisting of only
normal recurring accruals, necessary for a fair presentation of the results of
operations for these periods.
Note 2. Investment in WBPI
In September, 1995, the Company transferred a portion of its investment in Willy
Bietak Productions, 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 in WBPI from 50.1% to 30%. The change in
ownership resulted in a deconsolidation of WBPI. The financial statements for
the three-month and nine-month periods ended June 30, 1995 have been restated as
if the deconsolidation occurred as of October 1, 1994.