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 December 31, 1998
[ ] 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
(Address of Principal Executive Officers)
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
--- ---
1
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:
January 31, 1999
COMMON STOCK: 30,382,857
PART 1 - FINANCIAL INFORMATION
ITEM 1. Financial Statements
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.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
December 31, 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 December 31, 1998 are not
necessarily indicative of the results that may be expected for the year ended
September 30, 1999.
THE BOARD OF DIRECTORS ELECTED TO CHANGE THE FISCAL YEAR END TO SEPTEMBER 30;
THEREFORE, THE BASIS OF COMPARISON WILL BE 1ST QUARTER ENDING DECEMBER 1998 FOR
YEAR END 1999 TO 1ST QUARTER ENDING MARCH 1998 FOR YEAR END 1998.
3
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
ITEM 2. - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations:
Three months ended December 31,1998 compared to three months ended March
31, 1998.
General and administrative expenses increased $326,402 from $614,386 to $940,788
during the same period in 1998 due to opening of new sites and relocating
equipment.
Depreciation expense for the first quarter of 1999 increased $ 14,880 from
$91,151 to $106,301 over the comparable period in 1998. This is due to the
acquisition of new equipment in the latter part of 1998.
Interest expense decreased $6,853 during the first quarter of 1999 from $57,181
in 1998 to $50,328 due to long-term borrowings to restructure long-term debt.
Revenues for the first quarter of 1999 increased by $201,118 from $1,352,601 in
1998 to $1,553,719 in 1999. This increase was due to the increase of revenues
from Redfish Island and the contributions from Hero's and ChaCho's.
Gross Profit for the first quarter of 1999 decreased $47,125 from $804,935 in
the first quarter of 1998 to $757,810 in 1999.
Net profit for the three months decreased by $297,120 from $42,217 in 1998 to
$(337,337) in 1999.
Accounts Payable and Accrued Expense are up $278,292 from $393,825 in March 1998
to $672,117 in December 1998.
Total Current Liabilities increased $75,160 from $1,203,572 in March 1998 to
$1,278,732 in December 1998.
Liquidity and Capital Resources
The Company believes that internally generated cash is not sufficient to fund
the current level of operations. However, additional capital requirements
needed for planned growth and to reduce short term debt will require the Company
to seek additional outside financing. The Company has signed a financial
agreement with Capital Growth Planing of El Cajon, Ca. for $4,000,000 in
convertible debt. The Company expects this funding to be completed during the
next quarter but there can be no assurances that this funding will close
PART II - OTHER INFORMATION
4
Item 1. LEGAL PROCEEDINGS.
THERE ARE NO MATERIAL LEGAL PROCEEDINGS EXCEPT AS DISCLOSED IN THE
10K-SB AS FILED FOR 1998.
ITEM 2. CHANGES IN SECURITIES.
NONE; NOT APPLICABLE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
NONE; NOT APPLICABLE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
NONE; NOT APPLICABLE
ITEM 5. OTHER INFORMATION
NONE; NOT APPLICABLE
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits;
None
(b) Reports on Form 8-K
None
5
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: February 24, 1999 By: James D. Butcher/s/
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James D. Butcher, Chairman & CEO
Date: February 24, 1999 By: V. J. Farmer/s/
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V. J. Farmer, Controller
6
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS DECEMBER 31 MARCH 31
- ------ 1998 1998
(Unaudited) (Note)
Current Assets:
Cash $ 27,353.26 $ 148,994.27
Accounts Receivable 602,836.86 412,368.11
Retail Inventories 218,184.99 116,940.59
Prepaid Expenses 36,940.90 94,337.37
Other Current Assets 66,319.41 -
-------------- --------------
951,635.42 772,640.34
Property and Equipment $ 8,374,552.15 $ 6,720,661.09
Less: Accumulated Depreciation $(3,130,797.10) $(2,168,234.65)
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5,243,755.05 4,552,426.44
Other Assets 151,311.69 61,020.45
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TOTAL ASSETS $ 6,346,702.16 $ 5,386,087.23
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LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable and Accrued Expenses $ 672,117.29 $ 393,824.83
Notes Payable and Current Portion of Long-Term Debt 563,817.70 768,081.27
Other Current Liabilities 42,796.90 41,665.96
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1,278,731.89 1,203,572.06
============== ==============
Long-Term Debt 2,356,124.97 1,318,492.70
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Deferred Income Taxes
Stockholders' Equity
Common Stock $ 29,485.00 $ 556,213.00
Additional Paid-in Capital 5,049,987.98 3,877,458.92
Retained Earnings (2,367,627.68) (1,569,649.45)
-------------- --------------
Total Liabilities and Stockholders' Equity $ 6,346,702.16 $ 5,386,087.23
============== ==============
See Notes to Condensed Consolidated Financial Statements
Note: Fiscal Year End Changed to September 30th
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED
DECEMBER MARCH
1998 1998
Revenues $ 1,553,719 $ 1,352,601
Cost of Goods Sold 795,909 547,666
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Gross Profit 757,810 804,935
General and Administrative Expenses 940,788 614,386
Depreciation 106,031 91,151
Interest Expense 50,328 57,181
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(Loss) Before Income Taxes (339,337) 42,217
Income Taxes 0 0
Net (Loss) (339,337) 42,217
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Net (Loss) Per Share $ (0.011) $ 0.002
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Weighted Average Shares Outstanding 30,382,857 $24,942,321
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See Notes to Condensed Consolidated Financial Statements
ENTERTAINMENT TECHNOLOGIES & PROGRAMS, INC.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Three Months Ended
December March
1998 1998
Cash From Operations $(579,387) $ 120,740
Investing Activities
Purchase of property and equipment - (2,366,028)
Other -
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- (2,366,028)
Financing Activities
Borrowing and repayment of debt 600,000 601,693
Issuance of additional common stock 2,360,000
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600,000 2,967,721
Increase in Cash 20,613 $ 722,433
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Cash at Beginning of Period 6,740
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$ 27,353
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SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS