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, 1998
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
-------------
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, 1998, 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, 1998 compared to Period Ended June 30, 1997
Admissions revenues for the quarter ended June 30, 1998, all of which were
generated by the Company's wholly owned subsidiary International Theatres
Corporation (ITC), were $1,225,183, compared to $1,129,799 for the comparable
prior year period. The approximate $95,400 increase in ITC's current period
admissions revenues was primarily attributable to increased ticket prices and
increased attendance.
ITC's food, beverage and merchandise sales were $1,020,920 for the quarter ended
June 30, 1998, compared to $945,377 for the comparable prior year period, and
their related cost of sales were $299,268 and $277,527, respectively. The
approximate $75,500 increase in current period sales was due primarily to
increased attendance and increased prices. The cost of sales, as a percent of
food, beverage and merchandise sales, was comparable for both periods.
ITC's operating expenses for the quarter ended June 30, 1998 were $1,584,771,
compared to $1,474,811 for the comparable prior year period. The approximate
$110,000 increase in ITC's operating expenses was primarily due to increased
attendance.
General and administrative expenses were $300,424 for the quarter ended June 30,
1998, compared to $289,309 for the comparable prior year period. The approximate
increase of $11,000 in general and administrative expenses was primarily due to
inflationary increases.
LIQUIDITY AND SOURCES OF CAPITAL
Cash from operating activities for the nine-month period ended June 30, 1998,
was $278,511 compared to $159,849 for the comparable prior year period. 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 from (used in) investing activities
for the nine-month period ended June 30, 1998, was $(136,692), which was
primarily comprised of purchases of equipment. Cash from (used in) financing
activities for the nine-month period ended June 30, 1998, was $(134,573), which
was comprised of reductions of notes payable and long-term capitalized lease
obligations, offset by advances from officer.
At June 30, 1998, the Company had a working capital deficit of ($3,022,322) and
cash of $38,066. The working capital deficit at June 30, 1998, was primarily
comprised of notes payable of $400,000, accounts payable and accrued expenses of
$1,403,364, and deferred revenues of $1,521,352. Approximately $340,000 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 deferred revenues relate 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,
1998 and capital expenditures for the remainder of fiscal 1998 are expected to
be immaterial.
Management believes that advance ticket sales and advance bookings are
indicative that ITC's anticipated results will provide sufficient funds to
sustain their operations for the remainder of fiscal 1998.
During the quarter ended March 31, 1996, the Company finalized the acquisition
of an arena football franchise under a lease with an option to purchase the
franchise. During fiscal year 1996 such franchise was operated through a wholly
owned subsidiary, Minnesota Arena Football, Inc. (The Pike).
During the third and fourth fiscal quarters of fiscal year 1996, 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 of fiscal 1996, 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, 1997, 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 will be
sufficient to satisfy working capital requirements for fiscal 1998, and to fund
costs relative to investigating potential acquisitions. ITC has 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 1998. 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 July 29, 1998.
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, 1998 and September 30, 1997
(Unaudited)
June 30, September 30,
ASSETS 1998 1997
------------ ------------
CURRENT ASSETS
Cash $ 38,066 $ 30,820
Accounts receivable 250,967 45,675
Inventories 46,563 42,256
Deferred show costs 61,681 21,717
Due from unconsolidated subsidiary -- 1,918
Prepaid expenses 145,117 80,830
----------- -----------
Total current assets 542,394 223,216
----------- -----------
PROPERTY AND EQUIPMENT, at cost
Leasehold interest in building 1,000,000 1,000,000
Equipment 654,488 517,796
Furniture and fixtures 450,478 450,478
----------- -----------
2,104,966 1,968,274
Less accumulated depreciation 1,577,203 1,291,285
----------- -----------
527,763 676,989
----------- -----------
INTANGIBLES
Cost in excess of net assets acquired, net of amortization 394,375 411,052
Investment in unconsolidated subsidiary -- 709
----------- -----------
394,375 411,761
----------- -----------
$ 1,464,532 $ 1,311,966
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Notes payable $ 440,000 $ 450,000
Current maturities of capitalized lease obligations 200,000 214,826
Accounts payable 629,993 864,353
Deferred revenue 1,521,352 1,074,006
Accrued compensation 320,750 371,016
Accrued expenses 452,621 247,855
----------- -----------
Total current liabilities 3,564,716 3,222,056
----------- -----------
LONG-TERM CAPITALIZED LEASE OBLIGATIONS 26,990 161,537
----------- -----------
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, par value $.001 per share; authorized
200,000,000 shares; issued and outstanding 9,886,641 shares; 9,887 9,887
Additional paid in capital 4,855,871 4,831,071
Accumulated deficit (6,992,932) (6,912,585)
----------- -----------
(2,127,174) (2,071,627)
----------- -----------
$ 1,464,532 $ 1,311,966
=========== ===========
See Notes to Consolidted Financial Statements.
F-1
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three-Month and Nine-Month Periods Ended June 30, 1998 and 1997
(Unaudited)
Three-Month Periods Nine-Month Periods
1998 1997 1998 1997
------------ ----------- ----------- -----------
Revenues
Admissions revenue $ 1,225,183 $ 1,129,799 $ 3,740,939 $ 3,178,832
----------- ----------- ----------- -----------
Food, beverage and merchandise sales 1,020,920 945,377 3,111,972 2,795,452
Cost of Food, beverage and merchandise sales 299,268 277,527 922,678 817,351
----------- ----------- ----------- -----------
Gross profit 721,652 667,850 2,189,294 1,978,101
----------- ----------- ----------- -----------
Net revenues 1,946,835 1,797,649 5,930,233 5,156,933
----------- ----------- ----------- -----------
Operating Costs and Expenses
Operating costs 1,584,771 1,474,811 5,065,719 4,614,340
General and administration 300,424 289,309 859,675 814,874
----------- ----------- ----------- -----------
Total operating costs and expenses 1,885,195 1,764,120 5,925,394 5,429,214
----------- ----------- ----------- -----------
Operating income (loss) 61,640 33,529 4,839 (272,281)
Other, primarily interest expense (24,218) (44,560) (80,256) (131,669)
----------- ----------- ----------- -----------
Income (loss) before equity in income
(loss) of WBPI and income taxes 37,422 (11,031) (75,417) (403,950)
Equity in income (loss) of WBPI -- (10,421) (2,627) (31,263)
----------- ----------- ----------- -----------
Income (loss) before income taxes 37,422 (21,452) (78,044) (435,213)
Income taxes 501 501 2,303 1,503
----------- ----------- ----------- -----------
Net income (loss) $ 36,921 $ (21,953) $ (80,347) $ (436,716)
=========== =========== =========== ===========
Net income (loss) per share of common stock $ 0.00 $ (0.00) $ (0.01) $ (0.04)
=========== =========== =========== ===========
Weighted average number of common shares 9,886,641 9,886,641 9,886,641 9,886,641
=========== =========== =========== ===========
See Notes to Consolidated Financial Statements.
F-2
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine-Month Periods Ended June 30, 1998 and 1997
(Unaudited)
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (80,347) $(436,716)
Adjustments to reconcile net loss to cash
provided by operating activities:
Depreciation and amortization 302,595 271,374
Equity in (income) loss of WBPI 2,627 31,263
Change in assets and liabilities:
(Increase) decrease in-
Accounts receivable (205,292) (48,495)
Inventories (4,307) 16,883
Deferred show costs (39,964) (64,605)
Prepaid expenses (64,287) (43,568)
Increase (Decrease) in-
Accounts payable and accrued expenses (79,860) 97,096
Deferred revenue 447,346 336,617
--------- ---------
Net cash from operating activities 278,511 159,849
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Increase in due from related parties -- 1,918
Purchase of property and equipment (136,692) (20,525)
--------- ---------
Net cash from (used in) investing activities (136,692) (18,607)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Officer advances reported as paid in capital 24,800 --
Increase (decrease) in notes payable (10,000) --
Reduction of long-term capitalized lease obligations (149,373) (151,114)
--------- ---------
Net cash from (used in) financing activities (134,573) (151,114)
--------- ---------
Net increase (decrease) in cash 7,246 (9,872)
Cash, beginning of period 30,820 29,200
--------- ---------
Cash, end of period $ 38,066 $ 19,328
========= =========
See Notes to Consolidated Financial Statements.
F-3
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. Officer Advances Included In Additional Paid In Capital:
At June 30, 1998, the company owed the Company's CEO $862,266 for short-term
advances provided to the Company. Such amount is required to be reported as
additional paid in capital. The advances contain specific repayment provisions
and when repayment occurs, there will be a reduction of additional paid in
capital. The advances are secured by the Company's shares of stock in ITC.
F-4