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, 1998
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 12 months next preceding September
30, 1998 and (2) has been subject to such filing requirements for the ninety
(90) days preceding September 30, 1998.
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 of December 31, 1998, 9,886,641 common shares were outstanding. The aggregate
market value of the common shares (based upon only limited and sporadic
quotations not to exceed $1/10) of the
PAGE 1
Registrant held by non-affiliates was $ 816,815.
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 then 50.1% owned subsidiary, Willy Bietak
Productions, Inc. ("WBPI"), produced and operated 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.
On December 17, 1998 the Board of Directors passed a resolution to transfer the
Company's interest in ITC and WBPI to the Company's CEO as repayment of $100,000
in advances the Company's CEO made to the Company. In setting the $100,000
amount the Board of Directors obtained and relied upon an independent market
analysis of ITC and WBPI.(See Liquidity and Sources of Capital for further
discussion)
The Company may be unable to continue as a going concern without raising
additional funds from outside sources. Management is uncertain as to the
likelihood of raising additional funds. (See Liquidity and Sources of Capital
for Further Discussion.)
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) ACCOUNTANTS OPINION
The Company's independent auditors issued their opinion on the Company's
financial statements for the year ended September 30, 1998, which included an
explanatory paragraph as to substantial doubt about the Company's ability to
continue as a going concern. This doubt was raised primarily due to recurring
losses from
PAGE 2
operations and due to the Company's stockholders' deficit of $2,135,511 at
September 30, 1998.
(d) 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 "Brigadoon". 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. (See General Description of Business for discussion of disposal
of ITC)
(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 1995, 1996 and 1997. At September 30, 1998, 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.
PAGE 3
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 major film studios, as well as with numerous "independent" motion picture
and television production companies for the acquisition of artistic properties,
and the services of 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's motion picture and
television operations lease 160 square feet of office space at 3575 Cahuenga
Blvd. West, Los Angeles, California 90048. An affiliate of the Company presently
is advancing the rent for this space. 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.
(See Item 1(a) General Description of Business for discussion of disposal of
ITC.
ITEM 3. LEGAL PROCEEDINGS
There are no material legal proceedings that involve primary claims for damages
in excess of 10 percent of current assets of the Company.
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
PAGE 4
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, 1998 and 1997. Since the first quarter 1996 there was no established public
trading market for the Company's common shares. There were only limited or
sporadic quotations and none exceed $.10.
Fiscal Years 1997 and 1998 Bid Prices
-------------------------- ----------
High Low
See above explanation
b. Number of equity security holders' accounts at December 31, 1998:
509
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 **
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Revenues $ -- $ -- $ 383,033 $ -- $ --
Income (Loss) from
Continuing Operations (308,698) (391,748) (1,988,093) (670,721) 326,502
Income (Loss) from
Continuing Operations
per Share (0.03) (.04) (.20) (.08) .04
Weighted Average
Number of
Common Shares 9,886,641 9,886,641 9,751,594 8,636,952 8,636,952
Total Assets 1,174,146 1,311,966 1,740,952 1,963,738 2,876,727
Long Term Debt -- 161,537 376,362 562,187 722,924
(excluding current portion)
Stockholders'
Equity (Deficit) (2,135,511) (2,071,627) (1,902,715) (643,455) 295,714
** Restated to reflect the reclassification of ITC's operations and the
Company's equity in the operations of WBI to discontinued operations.
See Note 13 to Consolidated Financial Statements
PAGE 5
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
THE RESULTS OF OPERATIONS
OPERATIONS
Year ended September 30, 1998 compared to September 30, 1997
Due to the disposal of ITC and WBPI as discussed in Item 1(a), their
respective revenues and expenses have been classified as discontinued
operations. Continuing operations consisted primarily of administrative
expenses and interest expense. Administrative expenses were $221,883
for 1998 compared to $297,851 for 1997. The decrease is primarily due
to the elimination of expenses related to the Minnesota Arena Football,
Inc. ("PIKE"). [See Footnote 1 to Financial Statements] Interest
expense was $98,313 for 1998 compared to $91,981 for 1997. The increase
is primarily due to a full years interest in 1998 and only a partial
year in 1997, on notes payable.
Year Ended September 30, 1997 compared to September 30, 1996
Continuing operations for 1996 included the operations of the Pike.
There were no operations related to the Pike since 1996, other than
administrative expenses. As such, there were no revenues, performers
compensation or production costs for 1997. Such respective amounts were
$383,033, $476,226 and $78,990 for 1996.
Administrative expenses attributable to the Pike were $71,655 for 1997
compared to $1,311,533 for 1996. The amount for 1996 included costs
related to operating The Pike whereas the amount for 1997 only included
costs relative to settlements and other costs related to closing down
the Pike.
Interest expense was $91,981 for 1997 compared to $17,758 for 1996. The
increase was due to additional borrowing during 1997.
LIQUIDITY AND SOURCES OF CAPITAL
Cash provided (used) by operating activities for the year ended September 30,
1998 was $275,974 compared to $(11,714) in the comparable prior year period.
Cash used by investing activities was ($157,995) for the year ended September
30, 1998, which was primarily comprised of purchases of property and equipment.
Cash used by financing activities was $(131,862) for the year ended
PAGE 6
September 30, 1998, which was comprised of payments on long-term capitalized
leases offset in part by advances from officers of $75,665.
Management intends to continue to restrict expenditures with respect to the
future development of entertainment properties and to market its completed
properties. The Company has two completed properties. The costs of development
have been written off. Accordingly, the Company will incur little, if any, costs
of marketing. Management believes these actions may contribute to the Company's
liquidity. The Company had no material commitments for capital expenditures as
of September 30, 1998 and capital expenditures for fiscal 1999 are expected to
be immaterial.
During the fiscal years ended September 30, 1998, 1997, and 1996, the Company
incurred substantial losses of $139,549, $426,078 and $2,151,984, respectively,
and has a working capital deficit as of September 30, 1998 and 1997 of
$3,006,272 and $2,998,840, respectively. The impact of these losses is to limit
the liquidity and available cash resources for operations.
During the fiscal years ended September 30, 1998, 1997, and 1996, the Company's
CEO made cash advances to the Company in order to meet cash flow needs. These
advances were secured by the Company's shares of stock in ITC and WPBI.
Subsequent to September 30, 1998 the Company's management, with approval of the
Board of Directors, transferred the assets and operations of ITC and the
Company's investment in WBPI to the CEO as partial repayment of the advances
made to the Company. This left the Company with no on-going operating business
or operating assets. All that remains are the liabilities of Pike and the
Company.
The company's operations exclusive of its subsidiaries consist of acquisition
searches and certain administrative costs, both of which could be scaled back
and/or financed by the Company's CEO and major stockholder.
The Company intends to continue to seek out potential acquisitions, primarily
but not necessarily limited to, television stations. The Company continues to
investigate multi-station acquisitions. However, potential acquisitions are in
the early stages of investigations. 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. Management presently considers an acquisition or a
merger of the Company a viable alternative.
PAGE 7
The Company raised during 1996 financing from outside sources of approximately
$400,000, due to inadequate cash flow and insufficient funds of the Pike. Such
financing was due in December, 1996, and is secured by the common stock of
Minnesota Arena Football, Inc. Management anticipates the majority of the
financing will be converted into the Company's common stock. Management
attempted to sell the Company's interest in the PIKE, but was unsuccessful.
There are no assurances that the financing will be converted into the Company's
common stock. Management is uncertain as to the alternate resolution of the
liabilities of the PIKE. Management continues to evaluate the best course of
action which may involve a bankruptcy filing of the PIKE.
The Company's independent auditors issued their opinion on the Company's
financial statements for the year ended September 30, 1998, which included an
explanatory paragraph as to substantial doubt about the Company's ability to
continue as a going concern. This doubt was raised primarily due to recurring
losses from operations, the Company's stockholder's deficit of $2,135,511 at
September 30, 1998, and to no ongoing operations.
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
PAGE 8
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT AT
SEPTEMBER 30, 1998
Director/
Officer
Name Office Held Since Age
- ---- ----------- ----- ---
Philip Rogers President, Director 1983 64
Thomas K. Scallen Chief Executive Officer, 1983 73
Chief Financial Officer
Director
Bruce Lansbury Director 1983 68
Willy Bietak Director 1992 51
Mr. Rogers became President and Director upon the Company's formation in 1983.
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 in 1983. Mr. Scallen was elected Chief
Executive Officer of the Company on March 14, 1992. Mr. Scallen assumed the
responsibilities of chief financial officer in 1998. 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. Mr.
Leckelt did not currently devote full time to the Company. Mr. Leckelt resigned
as chief financial officer in 1998.
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."
Mr. Bietak became a Director of the Company in 1992. He is President of Willy
Bietak Productions, Inc. and has been associated with the Company since 1986.
ITEM 11. EXECUTIVE COMPENSATION
Officer Compensation
- --------------------
Cash and Cash Equivalent Aggregate
Name Capacity Year Paid or Accrued Salaries Remuneration
---- -------- ---- ------------------------ ------------
Philip Rogers President 1998 $ -0- $ -0-
1997 $ -0- $ -0-
1996 $ -0- $ -0-
Thomas K. Scallen CEO 1998 $135,000 $135,000
PAGE 9
1997 $135,000 $135,000
1996 $135,000 $135,000
Ronald L. Leckelt CFO 1998 $ 60,000 $ 60,000
1997 $ 60,000 $ 60,000
1996 $ 60,000 $ 60,000
All Officers as a
Group
(4 in number) 1998 $195,000 $195,000
1997 $195,000 $195,000
1996 $195,000 $195,000
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
expired September 30, 1996.
PAGE 10
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as at September 30, 1998, 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 16.4%
Heron Cove, Unit B
Windham, NH 03087
All Officers and Directors
as a Group (5 in number) 1,718,855 17.3%
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
During the years ended September 30, 1998 and 1997, the Company's chief
executive officer (CEO) provided short-term advances of $75,665 and $275,166,
respectively to the Company. These amounts are required to be reported as
additional paid in capital in the accompanying financial statements. The
advances contain specific repayment provisions and when repayments occur, there
will be a reduction of additional paid in capital. The advances are secured by
the Company's shares of stock in ITC.
As of September 30, 1998 and 1997, the Company owed the Company's CEO $227,500
and $152,500 respectively for cumulative accrued salary. These amounts are
included in accrued expenses on the accompanying balance sheets.
As of September 30, 1998 and 1997, the Company owed the Company's CFO $127,000
and $75,000 respectively for cumulative accrued salary. These amounts are
included in accrued expenses on the accompanying balance sheets.
As of September 30, 1996, the Company owed a company owned by the Company's CEO
$18,683 for contracted services and cash advances. The Company's CEO sold this
company during the fiscal year ended September 30, 1997, and this amount is now
owed to the Company's CEO.
PAGE 11
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 owned 30% of Willy Bietak Productions, Inc., a Nevada
corporation.
(22.i) Registrant was 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 did business under
the trade name Minnesota Fighting Pike until 1996.
(25) Manually signed copies of powers of attorney for members of the
Board of Directors.
(27) Financial Data Schedule.
PAGE 12
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 as of the 23rd day of February, 1999.
CENTURY PARK PICTURES CORPORATION
By: s/ Thomas K. Scallen
-----------------------------------
Thomas K. Scallen
Chief Executive 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 23, 1999
- -------------------------
Philip Rogers
President
& Director
s/ Thomas K. Scallen February 23, 1999
- -------------------------
Thomas K. Scallen
Chief Executive Officer & Director
*
s/ Bruce Lansbury February 23, 1999
- -------------------------
Bruce Lansbury Director
*
s/ Willy Bietak February 23, 1999
- -------------------------
Willy Bietak Director
* Signed pursuant to Power of Attorney
(SEE EXHIBIT 25 HERETO)
PAGE 13
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, 1998
INDEX
Page numbers refer to pages in the attached Consolidated Financial Statements:
Page
----
Independent Auditors' Report................................................ 1
Consolidated Balance Sheets - September 30, 1998
and September 30, 1997.................................................... 2
Consolidated Statements of Operations -
Years ended September 30, 1998, 1997, and 1996............................ 3
Consolidated Statements of changes in
Stockholders' deficit - Years Ended
September 30, 1998, 1997, and 1996........................................ 4
Consolidated Statements of Cash Flows -
Years ended September 30, 1998, 1997, and 1996............................ 5
Notes to Consolidated Financial Statements.................................. 6
PAGE 14
[LOGO] BPK&Z
[BLANSKI PETER KRONLAGE & ZOCH, P.A. LETTERHEAD]
BOARD OF DIRECTORS AND STOCKHOLDERS
CENTURY PARK PICTURES CORPORATION
MINNEAPOLIS, MINNESOTA
Independent Auditors' Report
We have audited the accompanying consolidated balance sheets of CENTURY PARK
PICTURES CORPORATION as of September 30, 1998 and 1997, and the related
consolidated statements of operations, changes in stockholders' deficit, and
cash flows for the years ended September 30, 1998, 1997, and 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the consolidated 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 consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of CENTURY
PARK PICTURES CORPORATION as of September 30, 1998 and 1997, and the
consolidated results of its operations and its cash flows for the years ended
September 30, 1998, 1997, and 1996 in conformity with generally accepted
accounting principles.
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 11 to
the consolidated financial statements, the Company has suffered recurring losses
from operations, and its total liabilities exceed its total assets. Those
conditions raise substantial doubt about its ability to continue as a going
concern. Management's plans regarding those matters are also described in Note
11. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ BLANSKI PETER KRONLAGE & ZOCH, P.A.
November 6, 1998
(except for Note 13, as to which the date is December 31, 1998)
CENTURY PARK PICTURES CORPORATION
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND 1997
ASSETS
1998 1997
---------- ----------
CURRENT ASSETS:
Cash $ 16,977 $ 30,820
Accounts receivable 70,043 45,675
Inventories 45,771 42,256
Deferred show costs 74,525 21,717
Due from unconsolidated subsidiary 293 1,918
Prepaid expenses 95,776 80,830
---------- ----------
Total current assets 303,385 223,216
---------- ----------
PROPERTY, PLANT, AND EQUIPMENT:
Leasehold interest in building 1,000,000 1,000,000
Equipment 636,728 517,796
Furniture and fixtures 454,414 450,478
---------- ----------
2,091,142 1,968,274
Less accumulated depreciation and amortization 1,609,195 1,291,285
---------- ----------
481,947 676,989
---------- ----------
OTHER
Cost in excess of net assets of business acquired, less
accumulated amortization 388,814 411,052
Investment in unconsolidated subsidiary 709
---------- ----------
388,814 411,761
---------- ----------
$1,174,146 $1,311,966
========== ==========
See notes to consolidated financial statements
LIABILITIES AND STOCKHOLDERS' DEFICIT
1998 1997
----------- -----------
CURRENT LIABILITIES:
Notes payable $ 450,000 $ 450,000
Current maturities of capitalized lease obligation 168,836 214,826
Accounts payable 636,986 864,353
Deferred revenue 1,187,607 1,074,006
Accrued expenses:
Compensation 546,041 371,016
Other 320,187 247,855
----------- -----------
Total current liabilities 3,309,657 3,222,056
----------- -----------
LONG-TERM CAPITALIZED LEASE OBLIGATION 161,537
----------- -----------
COMMITMENTS AND CONTINGENCIES (NOTE 7 AND 11)
STOCKHOLDERS' DEFICIT:
Common stock, $0.001 par; 200,000,000 shares
authorized 9,886,641 and shares issued and
outstanding 9,887 9,887
Additional paid-in capital 4,906,736 4,831,071
Accumulated deficit (7,052,134) (6,912,585)
----------- -----------
(2,135,511) (2,071,627)
----------- -----------
$ 1,174,146 $ 1,311,966
=========== ===========
2
CENTURY PARK PICTURES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
SEPTEMBER 30, 1998, 1997 AND 1996
1998 1997 1996
----------- ----------- -----------
REVENUE:
Admission revenues $ 0 $ 0 $ 362,266
Food, beverage and merchandise sales 20,767
----------- ----------- -----------
0 0 383,033
----------- ----------- -----------
OPERATING COSTS AND EXPENSES:
Performers' compensation 476,226
Other production costs 78,990
Administration 221,883 297,851 1,797,131
Depreciation and amortization 942 1,920 1,920
----------- ----------- -----------
222,825 299,771 2,354,267
----------- ----------- -----------
OPERATING LOSS (222,825) (299,771) (1,971,234)
----------- ----------- -----------
NONOPERATING INCOME (EXPENSE):
Interest expense (98,313) (91,981) (17,758)
Other income 12,440 4 899
----------- ----------- -----------
(85,873) (91,977) (16,859)
----------- ----------- -----------
LOSS FROM CONTINUING OPERATIONS (308,698) (391,748) (1,988,093)
----------- ----------- -----------
DISCONTINUED OPERATIONS (SEE NOTE 13):
Income (loss) from operations of ITC (less
applicable income taxes of $2,000, $2,100 and
$2,000 for 1998, 1997 and 1996, respectively) 171,483 7,358 (206,288)
Equity in net income (loss) from operations of
WBPI (less applicable income taxes of $0) (2,334) (41,688) 42,397
----------- ----------- -----------
NET LOSS $ (139,549) $ (426,078) $(2,151,984)
=========== =========== ===========
Loss from continuing operations per share of
common stock $ (0.03) $ (0.04) $ (0.20)
=========== =========== ===========
Income (loss) from discontinued operations per
share of common stock $ 0.02 $ 0.00 $ (0.02)
=========== =========== ===========
Net loss per share of common stock $ (0.01) $ (0.04) $ (0.22)
=========== =========== ===========
Weighted average number of common shares 9,886,641 9,886,641 9,751,594
=========== =========== ===========
See notes to consolidated financial statements
3
CENTURY PARK PICTURES CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
Common Stock Issued Additional
--------------------------- Paid-In Accumulated
Shares Amount Capital Deficit Total
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1995 8,636,952 $ 8,637 $ 3,682,431 $(4,334,523) $ (643,455)
Exercise of warrants 1,249,689 1,250 311,174 312,424
Advances from officer 580,300 580,300
Net loss (2,151,984) (2,151,984)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1996 9,886,641 9,887 4,573,905 (6,486,507) (1,902,715)
Advances from officer 257,166 257,166
Net loss (426,078) (426,078)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1997 9,886,641 9,887 4,831,071 (6,912,585) (2,071,627)
Advances from officer 75,665 75,665
Net loss (139,549) (139,549)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 1998 9,886,641 $ 9,887 $ 4,906,736 $(7,052,134) $(2,135,511)
=========== =========== =========== =========== ===========
See notes to consolidated financial statements
4
CENTURY PARK PICTURES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
INCREASE (DECREASE) IN CASH
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Continuing operations:
Net loss $ (308,698) $ (391,748) $(1,988,093)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 942 1,920 1,919
Loss on disposal of property and equipment
(Increase) decrease in assets:
Prepaid expenses 10,581
Increase (decrease) in liabilities:
Accounts payable (61,378) (12,902) 342,419
Accured expenses 224,593 101,909 183,790
----------- ----------- -----------
CASH USED IN CONTINUING OPERATIONS BEFORE
INCOME TAXES (144,541) (300,821) (1,449,384)
----------- ----------- -----------
Discontinued operations (See Note 13):
Net income (loss) 169,149 (34,330) (163,891)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation 338,568 295,685 290,709
Amortization 22,238 20,366 24,110
Loss on disposal of property and equipment 15,112 513
Equity in net (income) loss of unconsolidated subsidiary 709 41,688 (42,397)
(Increase) decrease in assets:
Accounts receivable (24,368) 112,821 (137,267)
Inventories (3,515) 6,950 (7,867)
Deferred shows costs (52,808) (17,692) 36,325
Prepaid expenses (14,946) (6,109) (2,621)
Increase (decrease) in liabilities:
Accounts payable (165,989) (53,886) 84,604
Deferred revenue 113,601 (16,495) 241,889
Accured expenses 22,764 (59,891) 42,143
----------- ----------- -----------
CASH PROVIDED BY DISCONTINUED OPERATIONS BEFORE
INCOME TAXES 420,515 289,107 366,250
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 275,974 (11,714) (1,083,134)
----------- ----------- -----------
See notes to consolidated financial statements
1998 1997 1996
----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Continuing operations:
Cash paid for preacquisition costs $ $ $ 35,708
Discontinued operations:
Purchases of property, plant, and equipment (159,580) (25,023) (41,245)
(Increase) decrease in due from unconsolidated subsidiary 1,625 (1,918)
----------- ----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (157,955) (25,023) (7,455)
----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Continuing operations:
Net borrowing on short-term notes 400,000
Increase in advances from related parties 26,453
Advances from officer 75,665 253,483 580,300
Net proceeds received on issurance of common stock 312,424
Discontinued operations:
Advances to officer (15,000)
Excess of outstanding checks over bank balance (122,659)
Net borrowing on short-term notes 50,000
Payments on long-term capitalized lease obligation (207,527) (200,126) (158,807)
----------- ----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITES (131,862) 38,357 1,087,711
----------- ----------- -----------
NET INCREASE (DECREASE) IN CASH (13,843) 1,620 (2,878)
----------- ----------- -----------
CASH AT BEGINNING OF YEAR 30,820 29,200 32,078
----------- ----------- -----------
CASH AT END OF YEAR $ 16,977 $ 30,820 $ 29,200
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for interest $ 46,593 $ 100,359 $ 103,982
=========== =========== ===========
Cash paid during the year for income taxes $ 2,000 $ 2,100 $ 2,000
=========== =========== ===========
5
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
1. DESCRIPTION OF BUSINESS AND CONSOLIDATION:
CENTURY PARK PICTURES CORPORATION (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 13). During the normal course of
business, ITC grants credit to its corporate clients. ITC performs
on-going credit evaluations of its customers' financial condition and
generally requires no collateral from them. Due to the nature of its
business, the Company believes that no allowance for uncollectable
amounts is necessary.
Minnesota Arena Football, Inc. dba Minnesota Fighting Pike (Pike), a 100
percent owned subsidiary, was an indoor professional football team that
the Company obtained the rights to during the fiscal year ended
September 30, 1996. The Pike ceased operations on August 31, 1996. The
net loss generated by the Pike was $1,484,961 for the fiscal year ended
September 30, 1996 with additional losses of $104,582 and $48,019 for
the fiscal years ended September 30, 1997 and 1998 respectively.
Management has not adopted a formal plan to dispose of the Pike.
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, theatres, casinos, arenas, and major amusement parks
throughout the United States (see Note 13).
Principals of consolidation:
The accompanying consolidated financial statements include the
accounts of the Company and its wholly owned subsidiaries, ITC and
Pike. All significant intercompany transactions and balances have been
eliminated in consolidation.
Investment in common stock of WBPI:
The Company uses 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of estimates:
Management uses estimates and assumptions in preparing financial
statements in accordance with generally accepted accounting
principles. Those estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets
and liabilities, and the reported revenue and expenses. Actual results
could vary from the estimates that were used.
6
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Cash:
The Company maintains its cash in bank deposit accounts which, at
times, may exceed federally insured limits.
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, plant, and equipment:
Property and equipment are stated at the lower of depreciated cost or
net realizable value. Depreciation is computed using 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
Income taxes:
Income taxes are provided for the tax effects of transactions reported
in the financial statements and consist of taxes currently due plus
deferred taxes related primarily to differences between the bases of
property, plant, and equipment and accrued vacation for financial and
income tax reporting. The deferred tax assets and liabilities
represent the future tax return consequences of those differences,
which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes also are
recognized for operating losses that are available to offset future
federal income taxes.
Advertising costs:
Advertising costs are charged to operations when the advertising first
takes place. Advertising expense for the periods ended September 30,
1998, 1997 and 1996 was $621,204, $661,468 and $952,117, respectively.
Intangibles:
Costs in excess of net assets of business acquired is being amortized
on the straight-line basis over 25 years
Earnings per share:
During the year ended September 30, 1998, the Company adopted FASB
Statement No. 128 EARNINGS PER Share. Statement No. 128 simplifies the
computation of earnings per share and makes it comparable to
international standards. Primary earnings per share using common stock
equivalents is eliminated and replaced by basic earnings per share,
which reflects no dilution.
7
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
Earnings per share (continued):
Statement No. 128 requires all prior-period earnings per share data to
be restated to conform to the statement. The Company's basic earnings
per share amounts calculated under Statement No. 128 were the same as
primary earnings per share presented in prior years financial
statements.
The Company's net loss per share is computed based upon the weighted
average number of common shares outstanding during the year using the
treasury stock method. The Company is not required to present diluted
earnings per share as these potential common shares would be
anti-dilative. Dilutive common equivalent shares consist of stock
options and convertible debt.
Comprehensive income:
During the year ended September 30, 1998, the Company adopted FASB
Statement No. 130, REPORTING COMPREHENSIVE INCOME. Statement No. 130
requires the reporting of comprehensive income in addition to net
income from operations. Comprehensive income is a more inclusive
financial reporting methodology that includes disclosure of certain
financial information that historically has not been recognized in the
calculation of net income.
There were no items of comprehensive income for the years ended
September 30, 1998, 1997 or 1996.
3. RELATED PARTY TRANSACTIONS:
During the years ended September 30, 1998 and 1997, the Company's chief
executive officer (CEO) provided short-term advances of $75,665 and
$257,166, respectively to the Company. This amount is required to be
reported as additional paid-in capital in the accompanying consolidated
financial statements. The advances contain specific repayment provisions
and when repayments occur, there will be a reduction of additional
paid-in capital. The advances are secured by the Company's shares of
stock in ITC (see Note 13). A summary of additional paid-in capital is
as follows as of September 30, 1998:
Advances from officer $ 913,131
Other paid-in capital 3,993,605
----------
Total additional paid-in capital $4,906,736
==========
As of September 30, 1998 and 1997, the Company owed the Company's CEO
$227,500 and $152,500, respectively for cumulative accrued salary. These
amounts are included in accrued expenses on the accompanying
consolidated balance sheets.
8
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
4. INVESTMENT IN UNCONSOLIDATED SUBSIDIARY:
Condensed financial information of WBPI as of September 30, 1998 and
1997, and for each of the years ended September 30, 1998, 1997, and
1996, is as follows:
1998 1997 1996
----------- ----------- -----------
BALANCE SHEET
Total current assets $ 71,595 $ 65,866 $
Total noncurrent assets 512,595 582,828
Total current liabilities 220,757 710,625
Total noncurrent liabilities 433,145 0
Equity (69,712) (61,931)
OPERATIONS
Admissions revenues $ 2,783,839 $ 2,520,646 $ 3,325,250
Operating costs 2,221,433 2,173,233 2,821,097
General and administrative costs 602,161 462,471 368,660
Nonoperating income 32,142 2,419 7,128
Income tax expense 168 26,319 1,297
----------- ----------- -----------
Net income (loss) $ (7,781) $ (138,958) $ 141,324
=========== =========== ===========
5. NOTES PAYABLE:
The Company has notes payable to various individuals totaling $400,000
at September 30, 1998 and 1997. The notes bear interest at the rate of
12% to 15% and are secured by the Company's right, title, and interest
in the Pike. The notes matured between June and December 1996. The notes
are convertible into common stock of the Company. These notes are in
default at September 30, 1998 and 1997. As of September 30, 1998, the
holders of the notes had not exercised their right to convert.
ITC had an available line of credit with a bank totaling $50,000 at
September 30, 1998 and 1997. The line of credit bears interest at the
rate of 2.5% over the bank's base rate and the amount outstanding at
September 30, 1998 and 1997 was $50,000 each year. The line of credit is
secured by all ITC assets and matures April 1999.
ITC also has a standby letter of credit of $50,000 for the actor's
union. There were no amounts outstanding on the letter of credit at
September 30, 1998 and 1997.
9
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
6. INCOME TAXES:
The Company's net deferred tax assets and liabilities consisted of the
following at September 30:
1998
-------------------------------------------
Federal State Total
----------- ----------- -----------
Deferred tax assets:
Other (current) $ 142,000 $ 47,000 $ 189,000
Property and equipment (non-current) 444,000 148,000 592,000
Net operating loss carryforwards
(non-current) 1,082,000 428,000 1,510,000
----------- ----------- -----------
1,668,000 623,000 2,291,000
Valuation allowance (1,668,000) (623,000) (2,291,000)
----------- ----------- -----------
$ 0 $ 0 $ 0
=========== =========== ===========
Deferred tax liabilities $ 0 $ 0 $ 0
=========== =========== ===========
1997
-------------------------------------------
Federal State Total
----------- ----------- -----------
Deferred tax assets:
Other (current) $ 97,000 $ 32,000 $ 129,000
Property and equipment (non-current) 385,000 129,000 514,000
Net operating loss carryforwards
(non-current) 1,155,000 453,000 1,608,000
----------- ----------- -----------
1,637,000 614,000 2,251,000
Valuation allowance (1,637,000) (614,000) (2,251,000)
----------- ----------- -----------
$ 0 $ 0 $ 0
=========== =========== ===========
Deferred tax liabilities $ 0 $ 0 $ 0
=========== =========== ===========
During the years ended September 30, 1998 and 1997, the Company recorded
valuation allowances of $2,291,000 and $2,251,000, respectively, 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 accounts.
10
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
6. INCOME TAXES (CONTINUED):
The Company has loss carryforwards totaling approximately $3,608,000
that may be offset against future taxable income. If not used, the
carryfowards will expire as follows:
Expiration Date Amount
--------------- ----------
2008 $ 401,000
2009 331,000
2010 747,000
2011 1,969,000
2012 160,000
----------
$3,608,000
==========
The Company's provision for income taxes differs from applying the U.S.
federal income tax rate of 34% to income before income taxes. A
reconciliation between taxes computed at the federal statutory rate and
the consolidated effective rate is as follows for the years ended
September 30:
1998 1997 1996
--------- --------- ---------
Income tax benefit from continuing
operations at federal statutory rates $(105,000) $(133,000) $(676,000)
Income tax expense (benefit) from
discontinued operations at federal
statutory rates 58,000 (12,000) (55,000)
States taxes 2,000 2,100 2,000
Effect of limiting tax credit on net
operating losses from continuing
operations to taxes paid 105,000 133,000 676,000
Effect of limiting tax credit on net operating
(income) losses from discontinued
operations to taxes paid (58,000) 12,000 55,000
--------- --------- ---------
$ 2,000 $ 2,100 $ 2,000
========= ========= =========
7. COMMITMENTS AND CONTINGENCIES:
Operating leases:
The Company leases the land used in the operations of ITC and certain
office equipment under noncancelable operating leases (see Note 13).
The lease for the land expires May 31, 1999 and has two five-year
renewal options. The lease terms for the office equipment vary from 60
to 72 months.
The Company leases office space under a noncancelable operating lease
that expires April 30, 1999. There is an option to renew the lease for
an additional five years at an increased monthly rental. The space has
been sub-leased to a Company owned by the Company's CEO. The Company
incurred no expense related to this lease during the fiscal year ended
September 30, 1998.
11
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
7. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Operating leases (continued):
Total rent expense under the above leases for the years ended
September 30, 1998, 1997, and 1996, was $271,138, $301,453, and
$292,669, respectively. Future minimum rental payments required under
these leases at September 30, 1998 are as follows:
Year ending September 30:
1999 $ 213,040
2000 16,469
2001 6,533
2002 5,656
2003 4,023
----------
$ 245,721
==========
Capitalized leases:
The Company leases the buildings used in the operations of ITC under a
capitalized lease (see Note 13). The lease expires May 1999 with two
five-year renewal options. In addition, the lease provides for
options, which expire on May 31, 1999, to purchase the land and
buildings.
The Company also leases a ticketing system used in the operations of
ITC under a capitalized lease (see Note 13). The lease expires in
1999.
Amortization expense was $172,655, $171,429, and $171,429 for the
years ended September 30, 1998, 1997, and 1996, respectively and is
included in depreciation expense on the accompanying financial
statements.
The following is a summary of leased assets and lease obligations
included on the consolidated balance sheets at September 30:
1998 1997
----------- -----------
Leasehold interest in building $ 1,000,000 $ 1,000,000
Equipment 17,169
----------- -----------
1,017,169 1,000,000
Less accumulated amortization 886,940 714,286
----------- -----------
Net unamortized value $ 130,229 $ 285,714
=========== ===========
12
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
7. COMMITMENTS AND CONTINGENCIES (CONTINUED):
Capitalized lease (continued):
Future minimum payments required under the lease together with the
present value as of September 30, 1998 are as follows:
Year ending September 30:
1999 $ 178,593
----------
Total minimum lease payments 178,593
Less amount representing interest 9,757
----------
Present value of net minimum lease payments 168,836
Less current portion 168,836
----------
Long-term portion $ 0
==========
8. STOCKHOLDER'S DEFICIT:
Exercise of warrants:
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.
During the year ended September 30, 1996, warrants to purchase
1,249,692 shares of common stock were exercised.
Stock options:
The Company issued options to purchase up to 10,000 shares of common
stock of the Company to three of its directors. The exercise price is
$1.50 per share. These options expired February 24, 1998.
9. RETIREMENT PLANS:
ITC has a 401(k) incentive savings plan covering substantially all of
its non-union employees. Eligible employees may defer up to 10% of their
compensation to the plan. ITC will match 25% of the employees'
contribution up to 6% of the employees' compensation.
ITC also contributes to a retirement plan established by the union for
its employees who are represented by a collective bargaining unit. The
required contribution is 8% of gross wages.
For the years ended September 30, 1998, 1997, and 1996. ITC's
contribution to the plans were $29,312, $26,114, and $89,326,
respectively
13
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
10. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Non-cash transactions:
During the year ended September 30, 1997 an officer of the Company
assumed $18,683 of obligations due to non-related parties. This amount
is included in advances from officer on the accompanying financial
statements. There were no non-cash transactions for the years ended
September 30, 1998 and 1996.
11. CORPORATE LIQUIDITY:
During the fiscal years ended September 30, 1998, 1997, and 1996, the
Company incurred substantial losses of $139,549, $426,078, and
$2,151,984, respectively, and has a working capital deficit as of
September 30, 1998, and 1997 of $3,006,272 and $2,998,840, respectively.
The impact of these losses is to limit the liquidity and available cash
resources for operations.
During the fiscal years ended September 30, 1998, 1997, and 1996, the
Company's CEO made cash advances to the Company in order to meet cash
flow needs. These advances are secured by the Company's shares of stock
in ITC (see Note 3). Subsequent to September 30, 1998, the Company's
management, with approval by the Board of Directors, transferred the
assets and operations of ITC and the Company's investment in WBPI to the
CEO as partial repayment of the advances made to the Company (see Note
13). This left the Company with no on-going operating business or
operating assets. All that remains are the liabilities of Pike and the
Company.
The Company's operations exclusive of its subsidiaries consist of
acquisition searches and certain administrative costs, both of which
could be scaled back and/or financed by the Company's CEO and major
stockholder (see Note 3). Management intends to purchase a Company that
will have sufficient cash to operate in the 1999 fiscal year.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The estimated fair values of the Company's financial instruments, none
of which are held for trading purposes, are as follows at September 30:
1998 1997
--------------------- ----------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------- ----------------------
Assets:
Cash $ 16,977 $ 16,977 $ 30,820 $ 30,820
Liabilities:
Notes payable 450,000 450,000 450,000 450,000
The carrying amounts of cash and the short-term notes payable
approximate fair values.
14
CENTURY PARK PICTURES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED SEPTEMBER 30, 1998, 1997, AND 1996
13. SUBSEQUENT EVENT:
On December 17, 1998 the Board of Directors passed a resolution to
transfer the Company's interest in ITC and WBPI to the Company's CEO as
repayment of $100,000 in advances the Company's CEO made to the Company
(see Note 3). In setting the $100,000 amount, the Board of Directors
obtained and relied upon an independent market analysis of ITC and WBPI.
On December 31, 1998 the Company's CEO forgave the remainder of the
advances of approximately $800,000 owed to him by the Company.
The net assets of ITC and WBPI at September 30, 1998 are as follows:
Cash $ 16,667
Accounts receivable 70,043
Inventories 45,771
Deferred show costs 74,525
Due from related parties 139,755
Due from unconsolidated subsidiary 293
Due from officer 15,000
Prepaid expenses 94,850
Property, plant, and equipment - net 481,947
Cost in excess of net assets of business acquired - net 388,814
Notes payable (50,000)
Current maturities of capitalized lease obligation (168,836)
Accounts payable (353,326)
Deferred revenue (1,187,607)
Accrued expenses:
Compensation (191,541)
Other (112,436)
-----------
$ (736,081)
===========
The effect on the September 30, 1999 financial statements will be to
reclassify approximately $900,000 out of additional paid-in capital and
recognize a gain from debt forgiveness of approximately $800,000.
15