SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
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[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934; For the Quarterly Period Ended: December 31, 1998
[ ] 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.)
16770 Hedgecroft
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 11, 1999, 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
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements (Unaudited)
Balance Sheet as of December 31, 1998 and September 30, 1998
Statement of Operations --
Three months ended December 31, 1998 and 1997
Statement of Cash Flow --
Three months ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
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Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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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 ("MD&A") contained in the Company's 10 KSB for the year ended
September 30, 1998. Certain statements in the following MD&A are forward
looking statements. Words such as "expects", "anticipates", "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 and under "Special Note Regarding Forward Looking
Information".
GENERAL
The Company entered into the adult entertainment business in 1997. In 1998,
another public company, Rick s Cabaret International, Inc., acquired 93% of the
outstanding shares of the Company. The Company's fiscal year end is
September 30.
Revenues are derived from the sale of liquor, beer, wine and food, as well as
from dancer performances, cover charges and other income.
Results of Operations
Three months ended December 31, 1998 as compared to the three months ended
December 31, 1997.
For the quarter ended December 31, 1998, the Company had consolidated total
revenues of $430,111 an increase of $429,964 from the fiscal quarter ended
December 31, 1997 of $147. The increase in revenues compared to the first
quarter ended December 31, 1997 is due to the fact that the Company had no
operations during the first quarter of fiscal year 1998.
Cost of goods sold were 7% and 0% of sales for the first quarters of fiscal 1999
and 1998, respectively. The Cost of Goods sold in fiscal 1999 is due to the
operations at the company s location in Austin, Texas.
Payroll and related costs were $175,183 for the first quarter in 1999
compared to $ 0 for the same fiscal period in 1998. Management currently
believes that its labor and management staff levels are at appropriate levels.
Other selling, general and administrative expenses were $242,660 for the first
quarter of fiscal 1999.
Interest expense was $33,950 in the first quarter of fiscal 1999.
Net loss for the first quarter of fiscal 1999 was $(51,559) compared to
a loss of $(850) for the first quarter of fiscal 1998.
Liquidity and Capital Resources
At December 31, 1998 the Company has negative working capital of $324,735
compared to working capital of $73,734 at September 30, 1998. The decrease in
working capital is due primarily to expenditure of cash in re-building one of
the company s locations located in north Houston which was damaged by fire in
May, 1998 and which has been subsequently re-built and leased to a subsidiary of
Rick s Cabaret International, Inc.
LIQUIDITY AND CAPITAL RESOURCES
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.
During the three months ended December 31, 1998, the Company provided
$196,025 cash from operations as opposed to $(850) cash used during the same
period in fiscal 1998. An amortization and depreciation expense recorded during
the period ended December 31, 1998 was $20,852. Net cash used in investing
activities was $179,039, principally in The Company's north Houston location.
There was a decrease in sales in Houston, Texas resulting from the
implementation of the new sexually oriented business ordinance in April and
June 1998. Management believes that the effects of the implementation of
this ordinance will diminish in future months.
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 businesses which is undergoing
judicial review.
SPECIAL NOTE REGARDING FORWARD LOOKING INFORMATION
The Company is including the following cautionary statement in this
Quarterly Report on 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 contained herein are forward looking statements
and, accordingly, involve risks and uncertainties which could cause actual
results or outcomes to differ materially from those expressed in the
forward looking statements. 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 limitations, 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 expectations, beliefs or projections will
result, or 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. Important factors that could cause actual results to differ
materially from those indicated include risks and uncertainties relating to the
impact and implementation of the sexually oriented business ordinance in the
City of Houston, the recent opening of the club in Minneapolis, Minnesota and
the availability of acceptable financing to fund corporate efforts.
PART II
OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits required by Item 601 of Regulation SB
(2) Exhibit 27.1 Financial Data Schedule
Reports on Form 8-K
On October 15, 1998, the Company filed a report on Form 8-K dated October
13, 1998 reporting a change in certifying accountant.
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 12 , 1999 By: /s/ Eric Langan
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Eric Langan, Chairman
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
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12/31/98 9/30/98
(UNAUDITED) (AUDITED)
CURRENT ASSETS
Cash $ 54,245 $ 243,346
Accounts receivable 4,697 2,343
Accounts receivable - related party 9,755
Prepaid expenses 8,406 1,600
Inventories 765 765
Land held for sale 569,069 569,069
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Total current assets 637,181 826,878
PROPERTY AND EQUIPMENT
Buildings, lands and leasehold improvements 1,914,203 1,769,572
Furniture & equipment 204,080 169,671
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2,118,283 1,939,243
Accumulated depreciation (90,603) (69,751)
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2,027,680 1,869,492
OTHER ASSETS
Other 108,705 108,705
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$2,773,566 $2,805,075
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Notes Payable $ 25,000 $ 25,000
Current portion of long term debt 203,163 220,527
Payable to Parent 116,932 79,851
Accounts payable - trade 216,703 185,644
Accrued expenses 361,674 203,677
Income tax payable 38,445 38,445
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Total current liabilities 961,916 753,144
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debts less current portion 1,744,244 1,932,967
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Total Liabilities 2,706,161 2,686,111
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COMMITMENTS AND CONTINGENCIES --- ---
STOCKHOLDERS' EQUITY
Preferred stock - $.10 par, authorized
1,000,000shares; none outstanding --- ---
Common stock - $.01 par, authorized
15,000,000 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) (3,963,282) (3,911,724)
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Total stockholder's equity 67,406 118,964
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$2,773,567 $2,805,075
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
(UNAUDITED) (UNAUDITED)
REVENUES
Sales of alcoholic beverages
Sales of food
Service revenues $ 62,523 $
Other 367,588 147
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430,111 147
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OPERATING EXPENSES
Cost of goods sold 29,878
Salaries and wages 175,183
Other general and administrative
Taxes and permits 36,079
Charge card fees 2,533
Rent 49,673
Legal and accounting 19,678
Advertising 22,288
Other 112,409 997
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447,721 997
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INCOME (LOSS) FROM OPERATION (17,609) (850)
Interest Expense (33,950)
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NET LOSS $ (51,559) $ (850)
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EXTRAORDINARY ITEM
BASIC NET LOSS PER COMMON SHARE:
LOSS BEFORE EXTRAORDINARY ITEM $ (0.01) $ 0.00
EXTRAORDINARY ITEM 0.00
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$ (0.01) $ 0.00
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WEIGHTED AVERAGE SHARES OUTSTANDING 4,305,012 3,573,854
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1998 AND 1997
1998 1997
(UNAUDITED) (UNAUDITED)
NET LOSS $ (51,559) $ (850)
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES:
Depreciation 20,852
Changes in assets and liabilities:
Accounts receivable 7,401
Prepaid expenses (6,806)
Inventories
Accounts payable and accrued expenses 226,137
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Cash provided (used) by operating expenses 196,025 (850)
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CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property equipment (179,039)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued, less offering costs 850
Increase in long term debt (188,723)
Payments on long term debt (17,364)
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(206,087) 850
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NET (DECREASE) IN CASH (189,101) 0
CASH AT BEGINNING OF PERIOD 243,346 156
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CASH AT END OF PERIOD $ 54,245 $ 156
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CASH PAID DURING PERIOD FOR:
Interest 33,950 0
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TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31,1998
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, 1998 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, 1998 are not
necessarily indicative of the results that may be expected for the year ending
September 30, 1999.