U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1998.
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( ) TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
OF 1934
For the transition period from _________________ to __________________
COMMISSION FILE NO. 0-23914
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
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(Name of Small Business Issuer in its Charter)
DELAWARE 87-0521389
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(State or Other Jurisdiction of (I.R.S. Employer I.D. No.)
incorporation or organization)
16055 Space Center Blvd., Suite 230
Houston, TX 77062
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(Address of Principal Executive Officers)
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Issuer's Telephone Number: (281) 486-6115
Not Applicable
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(Former Name or Former Address, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such requirements for the past 90 days.
(1) Yes X No (2) Yes X No
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PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
NOT APPLICABLE.
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date:
July 29, 1998
COMMON STOCK: 29,484,108
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
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The financial Statements of the Registrant required to be filed with
this 10-QSB Quarterly Report were prepared by management and commence
on the following pages, together with Related Notes. In the opinion
of management, the Financial Statements fairly present the financial
condition of the Registrant.
2
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1998 1997
(UNAUDITED) (NOTE)
Current Assets:
CASH $ 222,328.00 120,740.00
ACCOUNTS RECEIVABLE 435,308.00 411,926.00
RETAIL INVENTORIES 161,137.00 147,122.00
PREPAID EXPENSES 131,586.00 41,054.00
OTHER CURRENT ASSETS .00 8,500.00
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950,359.00 729,342.00
PROPERTY AND EQUIPMENT 8,280,103.00 4,145,052.00
LESS: ACCUMULATED DEPRECIATION (2,220,177.00) (1,958,654.00)
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6,059,926.00 2,186,398.00
OTHER ASSETS 812,710.00 66,622.00
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TOTAL ASSETS 7,822,996.00 2,982,362.00
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 353,016.00 $ 378,253.00
NOTES PAYABLE AND CURRENT PORTION OF LONG-TERM DEBT 474,569.00 746,790.00
OTHER CURRENT LIABILITIES 20,932.00 11,770.00
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835,262.00 1,136,813.00
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LONG-TERM DEBT $ 2,045,594.00 $ 612,994.00
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Deferred Income Taxes
Stockholders' Equity
COMMON STOCK $ 556,213.00 $ 21,878.00
ADDITIONAL PAID-IN-CAPITAL $ 5,914,265.00 $ 2,448,268.00
RETAINED EARNINGS (1,541,593.00) (1,237,591.00)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 7,822,999.00 $ 2,982,362.00
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See Notes to Condensed Consolidated Financial Statements
NOTE: THE BALANCE SHEET AT DECEMBER 31, 1997 HAS BEEN DERIVED FROM AUDITED
FINANCIAL STATEMENTS AT THAT DATE.
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30,
1998 1997
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Revenues $ 1,546,889 $ 1,338,583
Cost of Goods Sold 627,892 626,803
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Gross Profit 917,076 713,365
General and Administrative Expenses 795,570 541,048
Depreciation 52,355 109,553
Interest Expense 52,364 21,656
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Profit / (Loss) Before Income Taxes 28,574 41,107
Income Taxes 0 0
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Net Profit / (Loss) 28,574 41,107
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Net Income / (Loss) Per Share $0.001 $0.003
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Weighted Average Shares Outstanding 29,484,108 21,990,590
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended June 30,
1998 1997
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Revenues $ 2,897,569 $ 2,917,152
Cost of Goods Sold 1,165,692 1,394,590
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Gross Profit 1,731,877 1,522,562
General and Administrative Expenses 1,408,385 1,171,267
Depreciation 143,506 243,267
Interest Expense 109,195 41,514
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Profit / (Loss) Before Income Taxes 70,791 66,513
Income Taxes 0 0
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Net Profit / (Loss) 70,791 66,513
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Net Income / (Loss) Per Share $0.002 $0.003
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Weighted Average Shares Outstanding 29,484,108 21,990,590
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See Notes to Condensed Consolidated Financial Statements.
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited)
Six Months Ended June 30,
1998 1997
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Cash From Operations $120,740 $312,063
Investing Activities
Purchase of property and equipment (4,614,787) (14,871)
Other 0 0
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4,614,787 14,871
Financing Activities
Borrowing and repayment of debt 1,453,113 237,280
Issuance of additional common stock 4,562,459 0
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6,015,572 237,280
Increase In Cash 1,521,525 534,472
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See Notes To Condensed Consolidated Financial Statements
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
June 30, 1998
Note 1. - Basis of Presentation
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10Q and Item 10 of Regulation S-B.
Accordingly, they do not include all of the information for footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three month period ended June 30, 1998 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 1998.
THE BOARD OF DIRECTORS IN 1998 ELECTED TO CHANGE FROM A CALENDAR YEAR END TO A
FISCAL YEAR END REPORTING PERIOD. BECAUSE OF THIS ELECTION, 1998 WILL REFLECT
NINE MONTHS OF OPERATION.
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ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Six months Ended June 30,1998 compared to Six Months Ended June 30,1997.
General and administrative expenses increased $237,118 from $1,171,267 to
$1,408,385 during the same period in 1998 due to the acquisitions of Hero's and
Cha Cho's Mexican Restaurants and the expansion of new Hero's locations.
Depreciation expense for the second quarter of 1998 decreased $ 99,761 from
243,267 to $143,506 over the comparable period in 1997. This is due to the
evaluation of the 1998 acquisitions.
Interest expense increased $67,681 during the first quarter of 1998 from $41,514
in 1997 to $109,195 due to higher long-term borrowings to acquire equipment from
Bell Atlantic, Moss Distributing and opening new Hero's locations.
2 million shares of restricted stock was issued for the acquisition of Water
Wonderland consisting of all buildings, equipment and 93 acres of land. 1.7
million shares of stock was issued for funding for the three new Hero's
locations opening in the third quarter.
Revenues for the second quarter of 1998 increased by $206,385 from $1,338,583 in
1997 to $1,546,889 in 1998. This increase was due to the new operations of
Hero's Family Fun and Cha Cho's. The increase of revenues from Redfish Island
has been a contributing factor.
Gross Profit for the second quarter of 1998 increased $203,711 from $713,365 in
the second quarter of 1997 to $917,076 in 1998.
Net profit for the six months increased by $4,278 from $66,513 in 1997 to
$70,791 in 1998.
Accounts Payable and Accrued Expense are down $25,237 from $378,253 in December
1997 to $353,016 in June 1998.
Total Current Liabilities decreased $301,550 from $1,136,813 in December 1997
to $835,262 in June 1998.
Liquidity and Capital Resources
Due to the recent acquisitions and improved operations through management and
cost cutting measurers in 1997 the Company anticipates a working capital
surplus. The Company will continue additional short-term borrowings and
increased portion of long-term debt. Capital expenditure requirements for the
remainder of the year will require the Company to seek additional financing.
The Company is currently exploring various opportunities for outside financing
although there can be no assurances that these efforts will be successful.
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PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
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THERE ARE NO MATERIAL LEGAL PROCEEDINGS
ITEM 2. CHANGES IN SECURITIES.
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NONE; NOT APPLICABLE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
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NONE; NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
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NONE; NOT APPLICABLE
ITEM 5. OTHER INFORMATION
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NONE; NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits;
None
(b) Reports on Form 8-K
None
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SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1939, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
Date: August 11, 1998 By: /s/ JAMES D. BUTCHER
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James D. Butcher, Chairman & CEO
Date: August 11, 1998 By: /s/ V. J. FARMER
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V. J. Farmer, Controller
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