- --------------------------------------------------------------------------------
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: March 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, 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 May 4, 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
--------
PART I - FINANCIAL INFORMATION
- ----------------------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1999 (unaudited)
and September 30, 1998 (audited)
Consolidated Statements of Operations for the three and six months
ended March 31, 1999 and 1998 ( unaudited)
Consolidated Statements of Cash Flows for the six months
ended March 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
PART I - FINANCIAL INFORMATION
- ----------------------------------
Item 1. Financial Statements
______________________ _____________
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
------
3/31/99 9/30/98
(UNAUDITED) (AUDITED)
----------- -----------
CURRENT ASSETS
Cash $ 8,027 $ 243,346
Accounts receivable 152,191 2,343
Accounts receivable - related party 131,441 9,755
Prepaid expenses 1,578 1,600
Inventories 0 765
Land held for sale 569,069 569,069
----------- -----------
Total current assets 862,306 826,878
----------- -----------
PROPERTY AND EQUIPMENT
Buildings, lands and leasehold improvements 1,466,997 1,769,572
Furniture & equipment 179,289 169,671
----------- -----------
1,646,286 1,939,243
Accumulated depreciation (96,403) (69,751)
----------- -----------
1,549,883 1,869,492
----------- -----------
OTHER ASSETS
Other 81,312 108,705
----------- -----------
$2,493,501 $2,805,075
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes Payable $ 0 $ 25,000
Current portion of long term debt 165,267 220,527
Payable to Parent 0 79,851
Accounts payable - trade 197,205 185,644
Accrued expenses 173,971 203,677
Income tax payable 0 38,445
------------ ------------
Total current liabilities 536,444 753,144
LONG TERM DEBT, LESS CURRENT PORTION
Long-term debt less current portion 1,770,063 1,932,967
------------ ------------
Total Liabilities 2,306,507 2,686,111
------------ ------------
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) (3,843,694) (3,911,724)
------------ ------------
Total stockholders' equity 186,994 118,964
------------ ------------
$ 2,493,501 $ 2,805,075
============ ============
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
REVENUES
Sales of alcoholic beverages $ --- $ 543,374 $ --- $ 543,374
Sales of food --- 404,423 --- 404,423
Service revenues 73,276 178,422 135,799 178,422
Other 397,923 131,242 765,511 131,242
----------- ----------- ----------- -----------
471,199 1,257,461 901,310 1,257,461
----------- ----------- ----------- -----------
OPERATING EXPENSES
Cost of goods sold 23,873 136,016 53,751 136,016
Salaries and wages 78,904 376,688 254,087 376,688
Other general and administrative
Taxes and permits 40,057 103,877 76,136 103,877
Charge card fees 1,879 17,866 4,412 17,866
Rent 72,005 85,018 121,678 85,018
Legal and accounting 29,643 88,957 49,321 139,337
Advertising 11,782 67,839 34,070 67,839
Other 83,529 214,629 195,938 214,629
----------- ----------- ----------- -----------
341,673 1,090,890 789,393 1,141,270
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 129,526 166,571 111,917 116,191
Interest Expense (46,748) (39,653) (80,698) (39,653)
Loss on Termination of Lease (219,780) (219,780)
----------- ----------- ----------- -----------
NET INCOME/(LOSS) BEFORE INCOME TAX (137,002) 126,918 (188,561) 76,538
AND EXTRAORDINARY ITEM
INCOME TAX EXPENSES 0 (24,956) 0 (24,956)
----------- ----------- ----------- -----------
NET INCOME/(LOSS) BEFORE (137,002) 101,962 (188,561) 51,582
EXTRAORDINARY ITEM
EXTRAORDINARY ITEM
Gain on Fire Damage 256,592 256,592
----------- ----------- ----------- -----------
NET INCOME/(LOSS) $ 119,589 $ 101,962 $ 68,031 $ 51,582
=========== =========== =========== ===========
BASIC NET INCOME (LOSS) PER COMMON SHARE:
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM $ (0.03) $ 0.05 $ (0.04) $ 0.03
EXTRAORDINARY ITEM 0.06 0.00 0.06 0.00
----------- ----------- ----------- -----------
NET INCOME $ 0.03 $ 0.05 $ 0.02 $ 0.03
=========== =========== =========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING 4,305,012 1,980,694 4,305,012 1,980,694
=========== =========== =========== ===========
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MARCH 31, 1999 AND 1998
1999 1998
(UNAUDITED) (UNAUDITED)
------------ ----------
NET INCOME $ 68,031 $ 51,582
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH PROVIDED (USED)
BY OPERATING ACTIVITIES:
Depreciation 26,652 22,865
Gain on fire damage and disposal of assets (247,865) 0
Loss on termination of lease 219,780 0
Changes in assets and liabilities:
Accounts receivable (271,534) (15,805)
Prepaid expenses 22 4,500
Inventories 765 0
Accounts payable and accrued expenses (161,440) 54,850
------------ ----------
Cash provided (used) by operating expenses (365,589) 117,992
------------ ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for notes receivable --- (47,880)
Proceeds from insurance on fire damage 504,457 0
Additions to property equipment 318,174 (581,838)
------------ ----------
Cash provided (used) by investing activities 822,631 (629,718)
------------ ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Common stock issued, less offering costs --- 565,842
Increase in long term debt --- 167,325
Payments on long term debt (187,904) (179,586)
------------ ----------
Cash provided (used) by financing activities (187,904) 553,581
------------ ----------
NET INCREASE/(DECREASE) IN CASH (235,319) 41,855
CASH AT BEGINNING OF PERIOD 243,346 797
------------ ----------
CASH AT END OF PERIOD $ 8,027 $ 42,652
============ ==========
CASH PAID DURING PERIOD FOR:
Interest $ 80,698 $ 39,653
============ ==========
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
TAURUS ENTERTAINMENT COMPANIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 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, 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 six months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ending September 30,
1999.
2. FIRE DAMAGE
On December 15, 1998, a fire damaged the adult entertainment facility known as
XTC Cabaret at Gulf Freeway located in Houston, Texas. The Company incurred a
material decline in revenues subsequent to the closure of XTC - Houston. The
insurance settlement resulted in an extraordinary gain of $256,592.
3. TERMINATION OF LEASE
On February 28, 1999, the Company and the Landlord have agreed to terminate the
lease of one of the Company's subsidiaries known as Lucky's located in New
Orleans, Louisiana. The transaction resulted in a loss of $219,780.
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 FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 1999 AS
COMPARED TO THE THREE AND SIX MONTHS ENDED MARCH 31, 1998
For the quarter ended March 31, 1999, the Company had consolidated total
revenues of $471,199 compared to consolidated total revenues of $1,257,461 for
the fiscal quarter ended March 31, 1998, or a decrease of $786,262. The
decrease in revenues was due to the closures of Broadstreets and XTC - Houston
due to fire and Lucky's due to termination of lease.
The cost of goods sold for the quarter ended March 31, 1999 was 5.07% of
total revenues compared to 10.82% for the quarter ended March 31, 1998. The
decrease was due primarily to the savings in having to purchase non-alcoholic
beverages only.
Payroll and related costs for the quarter ended March 31, 1999 were $78,904
compared to
$376,688 for the quarter ended March 31, 1998. 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 closures of some of the Company's
facilities.
Other selling, general and administrative expenses for the quarter ended
March 31, 1999 were $238,896 compared to $578,186 for the quarter ended March
31, 1998. The decrease in these expenses was due to the closures of some of the
Company's facilities.
Interest expense for the quarter ended March 31, 1999 was $46,748 compared
to $39,653 for the quarter ended March 31, 1998. The increase was attributable
to interest expense on Company's real estates.
Net income for the quarter ended March 31, 1999 was $119,589 compared to
$101,962 for the quarter ended March 31, 1998. The increase was due to positive
income from operations and extraordinary gain resulted from the fire damage to
XTC - Houston.
For the six months ended March 31, 1999, the Company had consolidated total
revenues of $901,310 compared to consolidated total revenues of $1,257,461 for
the fiscal six months ended March 31, 1998, or a decrease of $ 356,151. The
decrease in revenues was due to The decrease in revenues was due to the closures
of Broadstreets and XTC - Houston due to fire and Lucky's due to termination of
lease.
The cost of goods sold for the six months ended March 31, 1999 was 5.97% of
total revenues compared to 10.82% for the six months ended March 31, 1998. The
decrease was due to the savings in having to purchase non-alcoholic beverages
only.
Payroll and related costs for the six months ended March 31, 1999 were
$254,087 compared to $376,688 for the six months ended March 31, 1998. The
decline was due to the transfer of the costs of corporate personnel to the
parent company - Rick's Cabaret International, Inc. and to the closures of some
of the Company's facilities.
Other selling, general and administrative expenses for the six months ended
March 31, 1999 were $481,555 compared to $628,566 for the six months ended March
31, 1998. The decrease in these expenses was due to the closures of some of the
Company's facilities.
Interest expense for the six months ended March 31, 1999 was $80,698
compared to $39,653 for the six months ended March 31, 1998. The increase was
attributable to interest expense arising from Company's real estates.
Net income for the six months ended March 31, 1999 was $68,031 compared to
$51,582 for the six months ended March 31, 1998. The increase was due to
positive income from operations and extraordinary gain resulted from the fire
damage to XTC - Houston.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1999, the Company had working capital of $325,862 compared to
a working capital of $73,734 at September 30, 1998. The increase in working
capital was due to the proceeds received from the insurance on fire damage to
XTC - Houston.
Net cash used by operating activities in the six months ended March 31,
1999 was $365,589 compared to net cash provided of $ 117,992 for the six months
ended March 31, 1998. The decrease in cash provided by operating activities was
due to increase in accounts receivable and decrease in accounts payable.
Depreciation and Amortization for the six months ended March 31, 1999 were
$26,652 compared to $22,865 for the six months ended March 31, 1998.
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 receivable, 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.
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 ordinances, and the
availability of acceptable financing to fund corporate expansion efforts.
__________________ _______________
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Financial Data Schedule -- Exhibit 27.1
(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 ___, 1999 By: /s/ Eric Langan
-----------------
Eric Langan
President and Chief Accounting Officer