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, 1998 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, 1998, 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, 1998 compared to Period Ended March 31, 1997. Admissions revenues, all of which were generated by the Company's wholly owned subsidiary International Theatres Corporation (ITC), were $1,179,758 for the quarter ended March 31, 1998, compared to $937,088 for the comparable prior year period. The approximate $242,700 increase in ITC's current period admissions revenues was primarily attributable to increased attendance and increased ticket prices. ITC's food, beverage and merchandise sales were $900,640 for the quarter ended March 31, 1998, compared to $796,919 for the comparable prior year period, and their related cost of sales were $272,793 and $237,625, respectively. The approximate $103,700 increase in current period sales was due primarily to increased attendance and 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, 1998, were $1,640,661, compared to $1,495,624 for the comparable prior year period, representing an approximate increase of $145,000. The increase in the current year was primarily due to increased attendance. General and administrative expenses were $246,520 for the quarter ended March 31, 1998, which were very comparable to the $247,095 for the comparable prior year period.
LIQUIDITY AND SOURCES OF CAPITAL Cash from operating activities for the six-month period ended March 31, 1998, was $286,599 compared to $138,145 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, 1998, was $(100,038), which was primarily comprised of purchases of equipment. Cash from (used in) financing activities for the six-month period ended March 31, 1998, was $(126,403), which was comprised of reductions of notes payable and long-term capitalized lease obligations, offset by advances from officer. At March 31, 1998, the Company had a working capital deficit of ($3,074,970) and cash of $90,978. The working capital deficit at March 31, 1998, was primarily comprised of notes payable of $400,000, accounts payable and accrued expenses of $1,447,232, and deferred revenues of $1,701,770. Approximately $340,000 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, 1998 and capital expenditures for the remainder of fiscal 1998 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 1998. 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, 1997, 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 1998, 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 1998. 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 July 29, 1998. 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, 1998 and September 30, 1997 (Unaudited) <TABLE> <CAPTION> ASSETS March 31, September 30, 1998 1997 ----------- ----------- <S> <C> <C> CURRENT ASSETS Cash $ 90,978 $ 30,820 Accounts receivable 243,509 45,675 Inventories 50,066 42,256 Deferred show costs 125,696 21,717 Due from unconsolidated subsidiary -- 1,918 Prepaid expenses 163,783 80,830 ----------- ----------- Total current assets 674,032 223,216 ----------- ----------- PROPERTY AND EQUIPMENT, at cost Leasehold interest in building 1,000,000 1,000,000 Equipment 617,834 517,796 Furniture and fixtures 450,478 450,478 ----------- ----------- 2,068,312 1,968,274 Less accumulated depreciation 1,482,211 1,291,285 ----------- ----------- 586,101 676,989 ----------- ----------- INTANGIBLES Cost in excess of net assets acquired, net of amortization 399,934 411,052 Investment in unconsolidated subsidiary -- 709 ----------- ----------- 399,934 411,761 ----------- ----------- $ 1,660,067 $ 1,311,966 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Notes payable $ 400,000 $ 450,000 Current maturities of capitalized lease obligations 200,000 214,826 Accounts payable 647,953 864,353 Deferred revenue 1,701,770 1,074,006 Accrued compensation 291,000 371,016 Accrued expenses 508,279 247,855 ----------- ----------- Total current liabilities 3,749,002 3,222,056 ----------- ----------- LONG-TERM CAPITALIZED LEASE OBLIGATIONS 83,060 161,537 ----------- ----------- 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 4,847,971 4,831,071 Accumulated deficit (7,029,853) (6,912,585) ----------- ----------- (2,171,995) (2,071,627) ----------- ----------- $ 1,660,067 $ 1,311,966 =========== =========== </TABLE> See Notes to Consolidated Financial Statements. F-1
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Three-Month and Six-Month Periods Ended March 31, 1998 and 1997 (Unaudited) <TABLE> <CAPTION> Three-Month Periods Six-Month Periods 1998 1997 1998 1997 ----------- ----------- ----------- ----------- <S> <C> <C> <C> <C> Revenues Admissions revenue $ 1,179,758 $ 937,088 $ 2,515,756 $ 2,049,033 ----------- ----------- ----------- ----------- Food, beverage and merchandise sales 900,640 796,919 2,091,052 1,850,075 Cost of Food, beverage and merchandise sales 272,793 237,625 623,410 539,824 ----------- ----------- ----------- ----------- Gross profit 627,847 559,294 1,467,642 1,310,251 ----------- ----------- ----------- ----------- Net revenues 1,807,605 1,496,382 3,983,398 3,359,284 ----------- ----------- ----------- ----------- Operating Costs and Expenses Operating costs 1,640,661 1,495,624 3,480,948 3,139,529 General and administration 246,520 247,095 559,251 525,565 ----------- ----------- ----------- ----------- Total operating costs and expenses 1,887,181 1,742,719 4,040,199 3,665,094 ----------- ----------- ----------- ----------- Operating loss (79,576) (246,337) (56,801) (305,810) Other, primarily interest expense (26,377) (31,958) (56,038) (87,109) ----------- ----------- ----------- ----------- Loss before equity in income (loss) of WBPI and income taxes (105,953) (278,295) (112,839) (392,919) Equity in income (loss) of WBPI -- (10,421) (2,627) (20,842) ----------- ----------- ----------- ----------- Loss before income taxes (105,953) (288,716) (115,466) (413,761) Income taxes 501 501 1,802 1,002 ----------- ----------- ----------- ----------- Net loss $ (106,454) $ (289,217) $ (117,268) $ (414,763) =========== =========== =========== =========== Net loss per share of common stock $ (0.01) $ (0.03) $ (0.01) $ (0.04) =========== =========== =========== =========== Weighted average number of common shares 9,886,641 9,886,641 9,886,641 9,886,641 =========== =========== =========== =========== </TABLE> See Notes to Consolidated Financial Statements. F-2
CENTURY PARK PICTURES CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Six-Month Periods Ended March 31, 1998 and 1997 (Unaudited) <TABLE> <CAPTION> 1998 1997 --------- --------- <S> <C> <C> CASH FLOWS FROM OPERATING ACTIVITIES Net loss $(117,268) $(414,763) Adjustments to reconcile net loss to cash provided by operating activities: Depreciation and amortization 202,044 180,916 Equity in (income) loss of WBPI 2,627 20,842 Change in assets and liabilities: (Increase) decrease in- Accounts receivable (197,834) (36,424) Inventories (7,810) 4,391 Deferred show costs (103,979) (120,203) Prepaid expenses (82,953) (55,651) Increase (Decrease) in- Accounts payable and accrued expenses (35,992) 104,177 Deferred revenue 627,764 454,860 --------- --------- Net cash from operating activities 286,599 138,145 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Increase in due from related parties -- 1,918 Purchase of property and equipment (100,038) (10,090) --------- --------- Net cash from (used in) investing activities (100,038) (8,172) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Officer advances reported as paid in capital 16,900 -- Increase (decrease) in notes payable (50,000) -- Reduction of long-term capitalized lease obligations (93,303) (103,847) --------- --------- Net cash from (used in) financing activities (126,403) (103,847) --------- --------- Net increase in cash 60,158 26,126 Cash, beginning of period 30,820 29,200 --------- --------- Cash, end of period $ 90,978 $ 55,326 ========= ========= </TABLE> See Notes to Consolidated Financial Statements. F-3
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. Note 2. Officer Advances Included In Additional Paid In Capital: At March 31, 1998, the company owed the Company's CEO $854,366 for short-term advances provided to the Company. Such amount is required to be reported as additional paid in capital. The advances contain specific repayment provisions and when repayment occurs, there will be a reduction of additional paid in capital. The advances are secured by the Company's shares of stock in ITC. F-4