FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 QUARTERLY REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 For Quarter ended March 31, 1997 CENTURY PARK PICTURES CORPORATION (Exact name of registrant as specified in its charter) Minnesota 0-14247 41-1458152 (State of Incorporation) (Commission File Number) (IRS ID Number) 4701 IDS Center, Minneapolis, Minnesota 55402 (Address of principal executive offices) (zip code) Registrant's telephone number, including area code: (612) 333-5100 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding twelve (12) months and (2) has been subject to such filing requirements for the past ninety (90) days. _x_ Yes ___ No As at March 31, 1997, 9,886,641 common shares, $.001 par value, were outstanding.
PART I FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS. This information is included following "Index to Consolidated Financial Statements". ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. OPERATIONS Period Ended March 31, 1997 compared to Period Ended March 31, 1996. Admissions revenues, all of which were generated by the Company's wholly owned subsidiary International Theatres Corporation (ITC), were $937,088 for the quarter ended March 31, 1997, compared to $1,133,488 for the comparable prior year period. The approximate $196,000 decrease in ITC's current period admissions revenues was primarily attributable to decreased attendance and increased promotional and discounted tickets, offset in part by increased ticket prices. ITC's food, beverage and merchandise sales were $796,919 for the quarter ended March 31, 1997, compared to $999,325 for the comparable prior year period, and their related cost of sales were $237,625 and $288,254, respectively. The approximate $202,000 decrease in current period sales was due primarily to decreased attendance offset in part by increased prices. The cost of sales, as a percent of food, beverage and merchandise sales, was comparable for both periods. ITC's operating expenses for the quarter ended March 31, 1997, were $1,495,624, compared to $1,666,984 for the comparable prior year period, representing an approximate decrease of $170,000. The decrease in the current year was primarily due to decreased attendance and decreased play mounting costs and cost containment actions taken by management. General and administrative expenses were $247,095 for the quarter ended March 31, 1997, compared to $302,694 for the comparable prior year period. The approximate decrease of $56,000 in general and administrative expenses was primarily due to reduced expenditures relative to potential acquisitions and to cost containment actions taken by management.
LIQUIDITY AND SOURCES OF CAPITAL Cash from (used in) operating activities for the six-month period ended March 31, 1997, was $138,145 compared to $(182,268) for the comparable prior year period. The primary source of cash from operating activities was deferred revenue resulting from prepayments by ITC's customers, which represent gift certificates and tickets paid for in advance. Cash provided from (used in) investing activities for the six-month period ended March 31, 1997, was $(8,172), which was primarily comprised of purchases of equipment of $10,090. Cash from (used in) financing activities for the six-month period ended March 31, 1997, was $(103,847), which was comprised of reductions of notes payable and long-term capitalized lease obligations. At March 31, 1997, the Company had a working capital deficit of ($3,297,396) and cash of $55,326. The working capital deficit at March 31, 1997, was primarily comprised of notes payable of $400,000, accounts payable and accrued expenses of $1,498,713, and deferred revenues of $1,545,361. Approximately $330,000 of the accounts payable and accrued expenses relate to The Pike. Management believes that a significant portion of these obligations would be discharged upon liquidation as discussed below. The deferred revenues relate to advance ticket sales for ITC's operations. Management believes the incremental cost that ITC will incur to realize these deferred revenues will be offset by the gross profit from food, beverage and merchandise sales to such customers. The Company intends to continue to seek out potential acquisitions. It is probable that any significant acquisitions would require long-term financing. However, there are no assurances that the Company will complete any acquisitions or that it will obtain financing under terms acceptable to the Company. The Company had no material commitments for capital expenditures as of March 31, 1997 and capital expenditures for the remainder of fiscal 1997 are expected to be immaterial. Management believes that advance ticket sales and advance bookings are indicative that ITC's anticipated results will provide sufficient funds to sustain their operations for the remainder of fiscal 1997. During the quarter ended March 31, 1996, the Company finalized the acquisition of an arena football franchise under a lease with an option to purchase the franchise. During fiscal year 1996 such franchise was operated through a wholly owned subsidiary, Minnesota Arena Football, Inc. (The Pike). During the third and fourth fiscal quarters of fiscal year 1996, The Pike failed to generate the anticipated cash flow. Consequently, during such quarters the Company's CEO advanced approximately $206,000 and the Company raised additional financing from outside sources of approximately $400,000. The financing raised from outside sources is currently payable, and is secured by the common stock of Minnesota Arena Football, Inc. Management anticipates such financing will be converted into the Company's common
stock. However, there are no assurances that such financing will be converted into the Company's common stock. Throughout much of the third and fourth fiscal quarters of fiscal 1996, management attempted to sell its interest in the arena football franchise. Failing to do so, the option expired. Accordingly, The Pike has ceased operations. Management is evaluating the appropriate course of action for The Pike, which will most likely be liquidated either in or out of bankruptcy court. The Company's independent auditors issued their opinion on the consolidated financial statements as of September 30, 1996, wherein they added an additional paragraph which raised substantial doubt as to the Company's ability to continue as a going concern. Management believes its current cash position will be sufficient to satisfy working capital requirements for fiscal 1997, and to fund costs relative to investigating potential acquisitions. ITC has a line of credit providing for available funds of $50,000. Management believes ITC will operate at a profitable level that, along with ITC's available line of credit, will provide sufficient funds to satisfy ITC's working capital requirements for fiscal 1997. However, there can be no assurances that anticipated cash flow from ITC's operations will be achieved.
PART II ITEM 1. LEGAL PROCEEDINGS. NONE ITEM 2. CHANGES IN SECURITIES. NONE ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE ITEM 5. OTHER INFORMATION. NONE ITEM 6. EXHIBITS AND REPORTS OF 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 THEREUNTO DULY AUTHORIZED. Dated as of December 11, 1997. CENTURY PARK PICTURES CORPORATION By:/s/Thomas K. Scallen Thomas K. Scallen Chief Executive Officer
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS 1. Consolidated Balance Sheets F-1 2. Consolidated Statements of Operations F-2 3. Consolidated Statements of Cash Flows F-3 4. Notes to Consolidated Financial Statements F-4
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS March 31, 1997 and September 30, 1996 (Unaudited) <TABLE> <CAPTION> ASSETS March 31, September 30, 1997 1996 ----------- ----------- <S> <C> <C> CURRENT ASSETS Cash $ 55,326 $ 29,200 Accounts receivable 194,920 158,496 Inventories 44,815 49,206 Deferred show costs 124,228 4,025 Due from related parties -- 1,918 Prepaid expenses 130,372 74,721 ----------- ----------- Total current assets 549,661 317,566 ----------- ----------- PROPERTY AND EQUIPMENT, at cost Leasehold interest in building 1,000,000 1,000,000 Equipment 505,671 495,581 Furniture and fixtures 447,670 447,670 ----------- ----------- 1,953,341 1,943,251 Less accumulated depreciation 1,141,700 993,680 ----------- ----------- 811,641 949,571 ----------- ----------- INTANGIBLES Cost in excess of net assets acquired, net of amortization 419,364 431,418 Investment in unconsolidated subsidiary 21,555 42,397 ----------- ----------- 440,919 473,815 ----------- ----------- $ 1,802,221 $ 1,740,952 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Notes payable $ 450,000 $ 450,000 Current maturities of capitalized lease obligations 200,000 200,127 Excess of outstanding checks over bank balance -- -- Due to related parties 152,983 18,683 Accounts payable 919,919 931,141 Deferred revenue 1,545,361 1,090,501 Accrued compensation 170,000 236,100 Accrued expenses 408,794 340,753 ----------- ----------- Total current liabilities 3,847,057 3,267,305 ----------- ----------- LONG-TERM CAPITALIZED LEASE OBLIGATIONS 272,642 376,362 ----------- ----------- STOCKHOLDERS' EQUITY (DEFICIT) Common stock, par value $.001 per share; authorized 200,000,000 shares; issued and outstanding 9,886,641 shares; 9,887 9,887 Additional paid in capital 4,573,905 4,573,905 Accumulated deficit (6,901,270) (6,486,507) ----------- ----------- (2,317,478) (1,902,715) ----------- ----------- $ 1,802,221 $ 1,740,952 =========== =========== </TABLE> See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three-Month and Six-Month Periods Ended March 31, 1997 and 1996 (Unaudited) <TABLE> <CAPTION> Three-Month Periods Six-Month Periods 1997 1996 1997 1996 ----------- ----------- ----------- ----------- <S> <C> <C> <C> <C> Revenues Admissions revenue $ 937,088 $ 1,133,488 $ 2,049,033 $ 2,190,993 ----------- ----------- ----------- ----------- Food, beverage and merchandise sales 796,919 999,325 1,850,075 2,088,533 Cost of Food, beverage and merchandise sales 237,625 288,254 539,824 600,810 ----------- ----------- ----------- ----------- Gross profit 559,294 711,071 1,310,251 1,487,723 ----------- ----------- ----------- ----------- Net revenues 1,496,382 1,844,559 3,359,284 3,678,716 ----------- ----------- ----------- ----------- Operating Costs and Expenses Operating costs 1,495,624 1,666,984 3,139,529 3,365,418 General and administration 247,095 302,694 525,565 623,371 ----------- ----------- ----------- ----------- Total operating costs and expenses 1,742,719 1,969,678 3,665,094 3,988,789 ----------- ----------- ----------- ----------- Operating loss (246,337) (125,119) (305,810) (310,073) Other, primarily interest expense (31,958) (29,206) (87,109) (65,817) ----------- ----------- ----------- ----------- Loss before equity in income (loss) of WBPI and income taxes (278,295) (154,325) (392,919) (375,890) Equity in income (loss) of WBPI (10,421) (2,264) (20,842) 4,533 ----------- ----------- ----------- ----------- Loss before minority interest in loss of subsidiary (288,716) (156,589) (413,761) (371,357) Income taxes 501 501 1,002 1,002 ----------- ----------- ----------- ----------- Net loss $ (289,217) $ (157,090) $ (414,763) $ (372,359) =========== =========== =========== =========== Net loss per share of common stock $ (0.03) $ (0.02) $ (0.04) $ (0.04) =========== =========== =========== =========== Weighted average number of common shares 9,886,641 9,886,641 9,886,641 9,325,191 =========== =========== =========== =========== </TABLE> See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six-Month Periods Ended March 31, 1997 and 1996 (Unaudited) <TABLE> <CAPTION> 1997 1996 --------- --------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(414,763) $(372,359) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 180,916 160,969 Equity in (income) loss of WBPI 20,842 (4,533) Change in assets and liabilities: (Increase) decrease in- Accounts receivable (36,424) (49,820) Inventories 4,391 (785) Deferred show costs (120,203) (118,563) Prepaid expenses (55,651) (301,428) Increase (Decrease) in- Accounts payable and accrued expenses 104,177 (65,650) Deferred revenue 454,860 569,901 --------- --------- Net cash from (used in) operating activities 138,145 (182,268) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Cash paid for preacquisition costs -- (37,484) Increase in due from related parties 1,918 53,358 Purchase of property and equipment (10,090) (29,811) --------- --------- Net cash from (used in) investing activities (8,172) (13,937) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from sale of common stock -- 312,424 Increase (decrease) in notes payable -- -- Increase (decrease) in due to/from related parties -- -- Reduction of long-term capitalized lease obligations (103,847) (89,828) --------- --------- Net cash from (used in) financing activities (103,847) 222,596 --------- --------- Net decrease in cash 26,126 26,391 Cash, beginning of period 29,200 32,078 --------- --------- Cash (deficit), end of period $ 55,326 $ 58,469 ========= ========= </TABLE> See Notes to Consolidated Financial Statements.
CENTURY PARK PICTURES CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Basis of Presentation: The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and disclosures necessary for a fair presentation of results of operations, financial position, and consolidated cash flows in conformity with generally accepted accounting principles. However, such statements do reflect, in the opinion of management of the Company, all adjustments, consisting of only normal recurring accruals, necessary for a fair presentation of the results of operations for these periods.