United States Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
[ X ] Quarterly report under to Section 13 Or 15(D) of the Securities
Exchange Act of 1934; For the quarterly period ended: December 31, 2000
[ ] Transition report under 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)
Colorado 84-0736215
(State or Other Jurisdiction (IRS Employer
of Incorporation or Organization) Identification No.)
505 North Belt, Suite 630
Houston, Texas 77060
(Address of Principal Executive Offices)
(281) 820-1181
(Issuer'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 January 25, 2000, approximately 4,310,012 shares of common stock, $.001 par
value, were outstanding.
Transitional Small Business Disclosure Format (Check One); Yes [ ] No [X]
TAURUS ENTERTAINMENT COMPANIES, INC.
TABLE OF CONTENTS
-----------------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 2000 (unaudited) and September 30, 2000 (audited)
Consolidated Statements of Operations for
the three months ended December 31, 2000 and 1999 (unaudited)
Consolidated Statements of Cash Flows
for the three months ended December 31, 2000 and 1999
(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 2. Changes in Securities
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
12/31/00 9/30/00
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 33,866 $ 35,184
Accounts receivable 42,929 36,413
Prepaid expenses 457 4.510
Inventories 561 2,276
Land held for sale 200,000 200,000
--------------- -------------
Total current assets 277,813 278,383
--------------- -------------
PROPERTY AND EQUIPMENT
Buildings, lands and leasehold improvements 1,678,915 1,678,915
Furniture & equipment 230,186 230,186
--------------- -------------
1,909,101 1,909,101
Accumulated depreciation (162,348) (146,740)
--------------- -------------
1,746,753 1,762,361
--------------- -------------
OTHER ASSETS
Other 130,519 139,839
--------------- -------------
$ 2,155,085 $ 2,180,583
=============== =============
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
--------------------------------------------------------------
12/31/00 9/30/00
(UNAUDITED) (AUDITED)
CURRENT LIABILITIES
Current portion of long term debt $ 273,843 $ 335,955
Payable to Parent 223,629 197,324
Accounts payable - trade 79,119 75,173
Accrued expenses 42,907 46,391
---------------- ----------------
Total current liabilities 619,498 654,843
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debt less current portion 570,308 610,619
---------------- ----------------
Total Liabilities 1,189,806 1,265,462
---------------- ----------------
COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY
Preferred stock - $.10 par, authorized
1,000,000 shares; none outstanding --- ---
Common stock - $.001 par, authorized
15,000,000 shares
issued 4,310,012 and 4,305,012 4,310 4,305
Additional paid in capital 4,026,428 4,026,383
Retained earnings (deficit) (3,065,459) (3,115,567)
---------------- ----------------
Total stockholders equity 965,279 915,121
---------------- ----------------
$ 2,155,085 $ 2,180,583
================ ================
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
(UNAUDITED) (UNAUDITED)
REVENUES
Service revenues $ 333,181 $ 327,511
Other 46,047 47,740
------------ ------------
379,228 375,251
------------ ------------
OPERATING EXPENSES
Cost of goods sold 22,603 26,079
Salaries and wages 72,005 64,262
Other general and administrative
Taxes and permits 33,251 46,037
Charge card fees 924 1,223
Legal and accounting 29,783 5,449
Advertising 15,284 31,839
Other 130,467 136,102
------------ ------------
304,317 310,991
------------ ------------
INCOME FROM OPERATIONS 74,911 64,260
Interest Expense (24,803) (35,238)
NET INCOME $ 50,108 $ 29,022
============ ============
BASIC NET INCOME PER COMMON SHARE $ 0.02 $ 0.01
============ ============
WEIGHTED AVERAGE SHARES OUTSTANDING 4,310,012 4,305,012
============ ============
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 2000 AND 1999
2000 1999
(UNAUDITED) (UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET INCOME $ 50,108 $ 29,022
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation 15,608 16,726
Changes in assets and liabilities:
Accounts receivable (6,516) (2,990)
Prepaid expenses 4,053 (1,203)
Inventories 1,715 (748)
Other Assets 9,320 (1,420)
Accounts payable and accrued expenses 26,817 100,010
-------------- --------------
Net cash provided by operating activities 101,105 139,397
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment --- (79,193)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long term debt (102,423) (41,979)
-------------- --------------
Net cash used by financing activities (102,423) (41,979)
-------------- --------------
NET INCREASE/(DECREASE) IN CASH (1,318) 18,225
CASH AT BEGINNING OF PERIOD 35,184 13,775
-------------- --------------
CASH AT END OF PERIOD $ 33,866 $ 32,000
============== ==============
CASH PAID DURING PERIOD FOR:
Interest $ 24,803 $ 35,238
============== ==============
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2000
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, 2000 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, 2000 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 2001.
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
audited and unaudited consolidated financial statements and related notes
thereto included in this annual report.
FORWARD LOOKING STATEMENT AND INFORMATION
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-QKSB 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 "X.T.C. 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
non-alcoholic beverages.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000 COMPARED TO
THE THREE MONTHS ENDED DECEMBER 31, 1999
For the three months ended December 31, 2000, the Company had consolidated total
revenues of $379,228 compared to consolidated total revenues of $375,251 for the
three months ended December 31, 1999, or a increase of $3,977. The increase in
revenues was due to the increase in revenues at the Company's location in
Austin, Texas.
The cost of goods sold for the three months ended December 31, 2000 was
approximately 5.96 % of total revenues compared to approximately 6.95 % for the
three months ended December 31, 1999. The decrease was due primarily to
decreased cost of providing complimentary food.
Payroll and related costs for the three months ended December 31, 2000 were
$72,005 compared to $64,262 for the three months ended December 31, 1999. The
increase was due to the increase in payroll expenses in the Austin location.
Management currently believes that its labor and management staff levels are at
appropriate levels.
Other selling, general and administrative expenses for the three months ended
December 31, 2000 were $209,709 compared to $220,650 for the three months ended
December 31, 1999. The decrease in these expenses was primarily due to expense
reductions.
Interest expense for the three months ended December 31, 2000 was $24,803
compared to $35,238 for the three months ended December 31, 1999. The decrease
was attributable to the Company's policy to pay its debts down and not to incur
new debts.
Net income for the three months ended December 31, 2000 was $50,108 compared to
net income of $29,022 for the three months ended December 31, 1999. The
increase was primarily 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 2001.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 2000, the Company had a working capital deficit of $341,685
compared to a working capital deficit of $376,460 at September 30, 2000. The
increase in working capital was primarily due to net income from operations.
Net cash provided by operating activities in the three months ended December 31,
2000 was $101,055 compared to net cash provided by operating activities of
$139,397 for the three months ended December 31, 1999. The decrease in cash
provided by operating activities was primarily due to a large increase in
accounts payable and accrued expenses in 1999.
Depreciation and Amortization for the year ended December 31, 2000 were $15,608
compared to $16,726 for the year ended December 31, 1999.
In the opinion of management, working capital is not a true indicator of the
financial status. 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, the mix of sales
revenues, overall cash flow and profitability from operations, and the level of
long-term debt.
We have not established lines of credit other than the existing debt. There can
be no assurance that we will be able to obtain additional financing on
reasonable terms, if at all.
Because of the large volume of cash we handle, stringent cash controls have been
implemented. In the event the sexually oriented business industry is required
in all states to convert the entertainers who perform from independent
contractor to employee status, we have prepared alternative plans that we
believe will protect our profitability. We believe that the industry standard
of treating the entertainers as independent contractors provides sufficient safe
harbor protection to preclude any payroll tax assessment for prior years.
The sexually oriented business industry is highly competitive with respect to
price, service and location, as well as the professionalism of the
entertainment. Although we believe that we are well-positioned to compete
successfully in the future, there can be no assurance that we will be able to
maintain our high level of name recognition and prestige within the marketplace.
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.
PART II OTHER INFORMATION
Item 2. Changes in Securities
In October 2000, we issued 5,000 shares of common stock to one investor for
settlement of previous claim. We relied upon the exemption provided by Section
4(2) of the Securities Act for this issuance.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 -- Report of Independent Auditor on Review of Unaudited Financial
Statements.
(b) Reports on Form 8-K
None.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Taurus Entertainment Companies, Inc.
_______________________________________
By: /s/ Eric S. Langan
Date: February 9, 2000
Eric S. Langan
President and Chief Accounting Officer