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: March 31, 2001
[ ] 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 May 7, 2001, 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 March 31, 2001 (unaudited) and
September 30, 2000 (audited)
Consolidated Statements of Operations for the three and six months
ended March 31, 2001 and 2000 (unaudited)
Consolidated Statements of Cash Flows for the six months ended March
31, 2001 and 2000 (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
Signatures
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
3/31/2001 9/30/2000
(UNAUDITED) (AUDITED)
----------- -----------
CURRENT ASSETS
Cash $ 54,118 $ 35,184
Accounts receivable 42,713 36,413
Prepaid expenses 25,225 4,510
Inventories 566 2,276
Land held for sale 200,000 200,000
----------- -----------
Total current assets 322,622 278,383
----------- -----------
PROPERTY AND EQUIPMENT
Buildings, land and leasehold improvements 1,682,696 1,678,915
Furniture & equipment 230,186 230,186
----------- -----------
1,912,882 1,909,101
Accumulated depreciation (177,980) (146,740)
----------- -----------
1,734,902 1,762,361
----------- -----------
OTHER ASSETS
Other 122,496 139,839
----------- -----------
$2,180,020 $2,180,583
=========== ===========
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
3/31/2001 9/30/2000
(UNAUDITED) (AUDITED)
------------ ------------
CURRENT LIABILITIES
Current portion of long term debt $ 246,043 $ 335,955
Payable to Parent 265,798 197,324
Accounts payable - trade 79,109 75,173
Accrued expenses 28,680 46,391
------------ ------------
Total current liabilities 619,630 654,843
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debt less current portion 511,023 610,619
------------ ------------
Total Liabilities 1,130,653 1,265,462
------------ ------------
COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY
Preferred stock - $.10 par, authorized
1,000,000shares; 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) (2,981,371) (3,115,567)
------------ ------------
Total stockholders' equity 1,049,367 915,121
------------ ------------
$ 2,180,020 $ 2,180,583
============ ============
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS FOR THE SIX MONTHS
ENDED MARCH 31, ENDED MARCH 31,
2001 2000 2001 2000
----------- ----------- ----------- -----------
REVENUES
Service revenues $ 346,504 $ 336,281 $ 679,685 $ 663,792
Other 53,943 41,199 99,990 88,939
----------- ----------- ----------- -----------
400,447 377,480 779,675 752,731
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of goods sold 20,755 25,398 43,358 51,477
Salaries and wages 67,055 82,809 139,060 147,071
Other general and administrative
Taxes and permits 35,341 40,889 68,592 86,926
Charge card fees 1,799 1,220 2,723 2,443
Legal and accounting 20,246 21,466 50,029 26,915
Advertising 16,395 35,152 31,679 66,991
Other 132,583 148,528 263,050 284,630
----------- ----------- ----------- -----------
294,174 355,462 598,491 666,453
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 106,273 22,018 181,184 86,278
Interest Expense (22,185) (34,368) (46,988) (69,606)
----------- ----------- ----------- -----------
NET INCOME/(LOSS) $ 84,088 $ (12,350) $ 134,196 $ 16,672
=========== =========== =========== ===========
BASIC NET INCOME/(LOSS) PER COMMON SHARE:
$ 0.02 $ (0.00) $ 0.03 $ 0.00
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES 4,310,012 4,305,012 4,310,012 4,305,012
OUTSTANDING =========== =========== =========== ===========
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 2001 AND 2000
2001 2000
(UNAUDITED) (UNAUDITED)
NET INCOME $ 134,196 $ 16,672
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH PROVIDED
BY OPERATING ACTIVITIES:
Depreciation and amortization 31,240 33,649
Changes in assets and liabilities:
Accounts receivable (6,300) (9,816)
Prepaid expenses (20,715) (19,193)
Inventories 1,710 (1,041)
Other assets 17,343 (1,475)
Accounts payable and accrued expenses 54,699 179,893
------------ ---------
Cash provided by operating activities 212,173 198,689
------------ ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment (3,781) (90,890)
------------ ---------
Cash used by investing activities (3,781) (90,890)
------------ ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long-term debt (189,458) (69,899)
------------ ---------
Cash used by financing activities (189,458) (69,899)
------------ ---------
NET INCREASE IN CASH 18,934 37,900
CASH AT BEGINNING OF PERIOD 35,184 13,775
------------ ---------
CASH AT END OF PERIOD $ 54,118 $ 51,675
============ =========
CASH PAID DURING PERIOD FOR:
Interest $ 46,988 $ 69,606
============ =========
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2001
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 six months ended March 31, 2001 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 AND SIX MONTHS ENDED MARCH 31, 2001 AS
COMPARED TO THE THREE AND SIX MONTHS ENDED MARCH 31, 2000
For the quarter ended March 31, 2001, the Company had consolidated total
revenues of $400,447 compared to consolidated total revenues of $377,480 for the
fiscal quarter ended March 31, 2000, or an increase of $22,967. The increase in
revenues was due to the increase in cover charge, floor fees, and merchandise
revenues at the Company's location in Austin, Texas.
The cost of goods sold for the quarter ended March 31, 2001 was 5.18% of total
revenues compared to 6.73% for the quarter ended March 31, 2000. The decrease
was due primarily to the decrease in the costs of complimentary food.
Management has developed and implemented a strategy to reduce the food cost
without reduction in food quality.
Payroll and related costs for the quarter ended March 31, 2001 were $67,055
compared to $82,809 for the quarter ended March 31, 2000. The decrease was due
to the overall decrease 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 quarter ended March
31, 2001 were $206,364 compared to $247,255 for the quarter ended March 31,
2000. The decrease in these expenses was primarily due to the decrease in
advertising, administrative and general, and repair and maintenance expenses
Interest expense for the quarter ended March 31, 2001 was $22,185 compared to
$34,368 for the quarter ended March 31, 2000. The decrease was attributable to
the Company's policy to pay its debts down and not to incur any new debts.
Net income for the quarter ended March 31, 2001 was $84,088 compared to a net
loss of ($12,350) for the quarter ended March 31, 2000. The increase was
primarily due to the increase in revenues and to the reduction of expenses at
Company's location in Austin, Texas. Management currently believes that the
Company is in the position to be profitable for fiscal year 2001.
For the six months ended March 31, 2001, the Company had consolidated total
revenues of $779,675 compared to consolidated total revenues of $752,731 for
the fiscal six months ended March 31, 2000, or an increase of $26,944. The
increase in revenues was due to the increase in cover charge, floor fees, and
merchandise revenues at the Company's location in Austin, Texas.
The cost of goods sold for the six months ended March 31, 2001 was 5.56% of
total revenues compared to 6.84% for the six months ended March 31, 2000. The
decrease was due to the decrease in the costs of providing complimentary food.
Management has developed and implemented a strategy to reduce the food cost
without reduction in food quality.
Payroll and related costs for the six months ended March 31, 2001 were $139,060
compared to $147,071 for the six months ended March 31, 2000. The decrease was
due to the overall decrease 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 six months ended
March 31, 2001 were $416,073 compared to $467,905 for the six months ended March
31, 2000. The decrease in these expenses was primarily due to the decrease in
advertising, administrative and general, and repair and maintenance expenses.
Interest expense for the six months ended March 31, 2001 was $46,988 compared to
$69,606 for the six months ended March 31, 2000. The decrease was attributable
to the Company's policy to pay its debts down and not to incur new debts.
Net income for the six months ended March 31, 2001 was $134,196 compared to
$16,672 for the six months ended March 31, 2000. The increase was due to the
increase in revenues and to reduction in expenses at Company's location in
Austin, Texas. Management currently believes that the Company is in the
position to be profitable for fiscal year 2001.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2001, the Company had working capital deficit of $297,008 compared
to a working capital deficit of $376,460 at September 30, 2000. The increase in
working capital was due to the increase in net income and the payment of long
term debts.
Net cash provided by operating activities in the six months ended March 31, 2001
was $212,173 compared to net cash used of $198,689 for the six months ended
March 31, 2000. The increase in cash provided by operating activities was due
principally to the increase in revenues from operation.
Depreciation and Amortization for the six months ended March 31, 2001 were
$31,240 compared to $33,649 for the six months ended March 31, 2000.
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 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.
Date: May 10, 2001 By: /s/ Eric Langan
----------------------
Eric Langan
President and Chief Accounting Officer