SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934; For the Quarterly Period Ended: December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 000-08835
TAURUS ENTERTAINMENT COMPANIES, INC.
(Exact name of registrant as specified in its charter)
formerly TAURUS PETROLEUM, INC.
Colorado 84-0736215
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
505 North Belt Drive Suite 630
Houston, Texas 77060
(Address of principal executive offices, including zip code)
(281) 820-1181
(Registrant's telephone number, including area code)
Check whether the issuer (1) has 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 filing requirements for the past 90 days. Yes [x]
No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
At February 1, 2000, approximately 4,305,012 shares of common stock, $.001
par value, were outstanding.
Transitional Small Business Disclosure Format (check one); Yes [ ] No [x]
TAURUS ENTERTAINMENT COMPANIES, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31, 1999 (unaudited) and September
30, 1999 (audited)
Consolidated Statements of Operations for the three months ended December 31,
1999 and 1998 (unaudited)
Consolidated Statements of Cash Flows for the three months ended December 31,
1999 and 1998 (unaudited)
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
1
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - ASSETS
12/31/99 9/30/99
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 32,000 $ 13,775
Accounts receivable 9,244 6,254
Prepaid expenses 9,069 7,866
Inventories 748 0
Land held for sale 200,000 200,000
------------ ------------
Total current assets 251,061 227,895
------------ ------------
PROPERTY AND EQUIPMENT
Buildings, lands and
leasehold improvements 1,889,964 1,782,119
Furniture & equipment 223,031 251,684
------------ ------------
2,112,996 2,033,803
Accumulated depreciation (115,920) (99,195)
------------ ------------
1,997,075 1,934,608
------------ ------------
OTHER ASSETS
Other 1,475 55
------------ ------------
$ 2,249,611 $ 2,162,558
============ ============
2
LIABILITIES AND STOCKHOLDERS' EQUITY
12/31/99 9/30/99
CURRENT LIABILITIES
Current portion of long term debt $ 203,290 $ 195,821
Payable to Parent 135,419 67,484
Accounts payable - trade 123,476 133,705
Accrued expenses 64,612 29,777
------------ ------------
Total current liabilities 526,797 426,787
LONG TERM DEBT,
LESS CURRENT PORTION
Long-term debts less current portion 1,327,909 1,369,888
------------ ------------
Total Liabilities 1,854,706 1,796,675
------------ ------------
COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY
Preferred stock - $.10 par, authorized
10,000,000 shares; none outstanding --- ---
Common stock - $.01 par, authorized
20,000,000 shares
issued 4,305,012 and 4,305,012 4,305 4,305
Additional paid in capital 4,026,383 4,026,383
Retained earnings (deficit) (3,635,783) (3,664,805)
------------ ------------
Total stockholder's equity 394,905 365,883
------------ ------------
$ 2,249,611 $ 2,162,558
============ ============
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
(UNAUDITED) (UNAUDITED)
REVENUES
Service revenues $ 327,511 $367,588
Other 47,740 62,524
------------ ---------
375,251 430,112
------------ ---------
OPERATING EXPENSES
Cost of goods sold 26,079 29,878
Salaries and wages 64,262 175,183
Other general and administrative
Taxes and permits 46,037 36,079
Charge card fees 1,223 2,533
Rent 0 49,673
Legal and accounting 5,449 19,678
Advertising 31,839 22,288
Other 136,102 112,409
------------ ---------
310,991 447,721
INCOME (LOSS)
FROM OPERATIONS 64,260 (17,609)
Interest Expense (35,238) (33,950)
------------ ---------
NET INCOME/(LOSS) $ 29,022 $(51,559)
============ =========
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12/31/99 9/30/99
BASIC NET INCOME/(LOSS)
PER COMMON SHARE $ 0.01 $ (0.01)
---------- -----------
$ 0.01 $ (0.01)
========== ===========
WEIGHTED AVERAGE
SHARES OUTSTANDING 4,305,012 4,305,012
========== ===========
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
1999 1998
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME/(LOSS) $ 29,022 $ (51,559)
ADJUSTMENTS TO RECONCILE NET INCOME/
(LOSS) TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES:
Depreciation 16,726 20,852
Changes in assets and liabilities:
Accounts receivable (2,990) 7,401
Prepaid expenses (1,203) (6,806)
Inventories (748) -
Other Assets (1,420) ---
Accounts payable and accrued expenses 100,010 226,137
------------- ----------
Net cash provided by operating activities 139,397 196,025
------------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment (79,193) (179,039)
------------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in long term debt - (188,723)
Payments on long term debt (41,979) (17,364)
------------- ----------
Net cash used by financing activities (41,979) (206,087)
------------- ----------
NET (DECREASE) IN CASH 18,225 (189,101)
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12/31/99 9/30/99
CASH AT BEGINNING OF PERIOD 13,775 243,346
------------- ----------
CASH AT END OF PERIOD $ 32,000 $ 54,245
============= ==========
CASH PAID DURING PERIOD FOR:
Interest $ 35,238 $ 33,950
============= ==========
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1999
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-QSB of Regulation S-B. They do
not include all information and footnotes required by generally accepted
accounting principles for complete financial statements. However, except as
disclosed herein, there has been no material change in the information disclosed
in the notes to the financial statements for the year ended September 30, 1999
included in the Company's Annual Report on Form 10-KSB filed with the Securities
and Exchange Commission. The interim unaudited financial statements should be
read in conjunction with those financial statements included in the Form 10-KSB.
In the opinion of Management, all adjustments considered necessary for a fair
presentation, consisting solely of normal recurring adjustments, have been made.
Operating results for the three months ended December 31, 1999 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2000.
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion should be read in conjunction with the Company's
unaudited consolidated financial statements and related notes thereto included
in this quarterly report and in the audited consolidated Financial Statements
and Management's Discussion and Analysis of Financial Condition and Results of
Operations contained in the Company's 10-KSB for the year ended September 30,
1999.
FORWARD LOOKING STATEMENT AND INFORMATION
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The Company is including the following cautionary statement in this Form
10-QSB to make applicable and take advantage of the safe harbor provision of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, future
events or performance and underlying assumptions and other statements which are
other than statements of historical facts. Certain statements in this Form
10-QSB are forward-looking statements. Words such as "expects", "anticipates"
and "estimates" and similar expressions are intended to identify forward-looking
statements. Such statements are subject to risks and uncertainties that could
cause actual results to differ materially from those projected. Such risks and
uncertainties are set forth below. The Company's expectations, beliefs and
projections are expressed in good faith and are believed by the Company to have
a reasonable basis, including without limitation, management's examination of
historical operating trends, data contained in the Company's records and other
data available from third parties, but there can be no assurance that
management's expectation, beliefs or projections will result, be achieved, or be
accomplished. In addition to other factors and matters discussed elsewhere
herein, the following are important factors that, in the view of the Company,
could cause material adverse affects on the Company's financial condition and
results of operations: the impact and implementation of the sexually oriented
business ordinance in the City of Houston, competitive factors, the timing of
the openings of other clubs, the integration of our operations and management
with our parent, Rick's Cabaret International, Inc., the availability of
acceptable financing to fund corporate expansion efforts, competitive factors,
and the dependence on key personnel. The Company has no obligation to update or
revise these forward-looking statements to reflect the occurrence of future
events or circumstances.
GENERAL
We currently own and operate one adult nightclub under the name "XTC
Cabaret " in Austin, Texas. We own commercial income real estate and
undeveloped real estate.
Our revenues are derived from cover charges, and the sale of food.
Our fiscal year end is September 30.
The Company had been operated as an oil and gas company until 1997. All oil
and gas properties and operations were divested by 1996 and the Company entered
the adult entertainment business in December, 1997.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AS COMPARED
TO THE THREE MONTHS ENDED DECEMBER 31, 1998.
For the quarter ended December 31, 1999, the Company had consolidated total
revenues of $375,251, a decrease of $54,860 from the fiscal quarter ended
December 31, 1998 of $430,111. The decrease in revenues compared to the first
quarter ended December 31, 1998 was due to the fact that the Company's location
in Houston was still closed due to fire.
Cost of goods sold were 7% of sales for both first quarters of fiscal 2000
and 1999. The Cost of Goods sold in fiscal 2000 was due to the operations at
the Company's location in Austin, Texas.
Payroll and related costs were $64,262 for the first quarter in 2000
compared to $175,183 for the same fiscal period in 1999. The decrease was due
to the transfer of the costs of corporate personnel to the parent company -
Rick's Cabaret International, Inc. and to the closure of Company's location in
Houston, Texas. Management currently believes that its labor and management
staff levels are at appropriate levels.
10
Other selling, general and administrative expenses for quarter ended
December 31, 1999 were $220,650 compared to $242,660 for the quarter ended
December 31, 1998. The decrease in these expenses was due to the closure of the
company's location in Houston, Texas.
Interest expense was $35,238 in the first quarter of fiscal 2000 compared
to $33,950 in the first quarter of fiscal 1999. The increase was attributable
to interest expense on Company's real estates.
Net profit for the first quarter of fiscal 2000 was $29,022 compared to a
loss of $(51,559) for the first quarter of fiscal 1999. The increase was due
to drastic reduction in overall costs resulting in positive income from
operations. Management currently believes that the Company is in the position
to be profitable for fiscal year 2000.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1999 the Company has negative working capital of $275,736
compared to a negative working capital of $198,892 at September 30, 1999. The
decrease in working capital is due primarily to expenditure of cash in
re-building the Company's location in Houston, Texas.
During the three months ended December 31, 1999, the Company provided
$139,397 cash from operations as opposed to $196,025 cash provided during the
same period in fiscal 1999. The decrease in cash provided by operating
activities was due to decrease in accounts payable and accrued expenses. Net
cash used in investing activities was $79,193, principally in the re-building of
Company's location in Houston, Texas.
Amortization and depreciation expense recorded during the three months
ended December 31, 1999 was $16,726 compared to $20,852 for the three months
ended December 31, 1998.
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In the opinion of management, working capital is not a true indicator of
the financial status of the company. Typically, the Company carries current
liabilities in excess of current assets because the business receives
substantially immediate payment for sales, with nominal receivables, while
inventories and other current liabilities normally carry longer payment terms.
Vendors and purveyors often remain flexible with payment terms providing the
Company with opportunities to adjust to short-term business down turns. The
Company considers the primary indicators of financial status to be the long term
trend and mix of sales revenues, overall cash flow and profitability from
operations and the level of long-term debt.
SEASONALITY
The Company is significantly affected by seasonal factors. Typically, the
Company has experienced reduced revenues from April through September with the
strongest operating results occurring during October through March. While
management continues to believe that the overall trend remains consistent, the
Company has experienced decreased sales in the Houston location during the
October through June period. Management attributes these decreases to the
current level of competition and to the public perception of a newly enacted
city ordinance affecting sexually oriented business, which is undergoing
judicial review.
Year 2000 Issues
We have not had any Year 2000 deficiencies internally or externally. We do
not expect to have any Year 2000 deficiencies internally or externally. If a
Year 2000 deficiency occurs internally or externally, we will shift our internal
and external resources to fix the deficiency. We do not expect any Year 2000
deficiency to require an expenditure of more than $10,000.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits required by Item 601 of Regulation SB
(A) Exhibit 27.1 Financial Data Schedule
(B) Reports on Form 8-K
None.
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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 hereunto duly authorized.
TAURUS ENTERTAINMENT COMPANIES, INC.
Date: February 10, 2000 By: /s/ Eric Langan
---------------------------------
Eric Langan, Chairman, President
and Chief Accounting Officer
13