-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, W01PNpBXYUaCbqr4whoayo0nO30JwsfOKI+u6RWDceiZnkWgamXlP6Klhi8vsa3g rZk1xxnUIoTnnzXs8Mp7kQ== 0000815295-96-000006.txt : 19961209 0000815295-96-000006.hdr.sgml : 19961209 ACCESSION NUMBER: 0000815295-96-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960831 FILED AS OF DATE: 19961206 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: IMAGICA ENTERTAINMENT INC CENTRAL INDEX KEY: 0000815295 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED TEXTILE PRODUCTS [2390] IRS NUMBER: 592762999 STATE OF INCORPORATION: FL FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 033-37968-A FILM NUMBER: 96676660 BUSINESS ADDRESS: STREET 1: P O BOX 2121 STREET 2: 1518 SW 12TH AVENUE CITY: OCALA STATE: FL ZIP: 34478 BUSINESS PHONE: 3528677861 MAIL ADDRESS: STREET 1: 1518 SW 12TH AVENUE STREET 2: PO BOX 2121 CITY: OCALA STATE: FL ZIP: 34478 FORMER COMPANY: FORMER CONFORMED NAME: RANGER INTERNATIONAL INC DATE OF NAME CHANGE: 19940524 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended AUGUST 31, 1996 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM __________TO ______________ Commission File No. 33-37968-A IMAGICA ENTERTAINMENT, INC. (Exact name of Registrant as specified in its charter) Florida 59-2762999 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 1518 SW 12th Avenue, Ocala, FLorida 34474 (Address of principal executive offices) (352) 867-7860 (Issuer's telephone number) Check whether the issuer (1) 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 ( ) Number of common shares outstanding as of August 31, 1996 (including the 100,000 shares of redeemable common stock) - 2,403,013. Transitional Small Business Disclosure Format: Yes ( ) No ( X ) INDEX PART I - FINANCIAL INFORMATION Page Number Item 1. Financial Statements (Unaudited): Balance Sheets 3 Statements of Operations 6 Statements of Cash Flows 7 Notes to Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 -2- IMAGICA ENTERTAINMENT, INC. and SUBSIDARY BALANCE SHEETS
August 31, May 31, 1996 1996 (Unaudited) _______ ASSETS CURRENT ASSETS: Cash and equivalents $ 58,450 $ --- Accounts receivable, less allowance for possible losses of $18,611 and $30,611 514,737 528,048 Advances to stockholders 14,308 13,938 Inventories 254,269 258,625 Prepaid expenses 1,008,021 68,823 Total current assets 1,849,785 869,434 Property and equipment, net 810,518 871,480 Other assets: Loan acquisition 5,263 --- Deferred financing costs, less accumulated amorization of $6,159 --- 5,886 Equipment not yet placed in service 37,500 37,500 Deposits on equipment 214,035 206,632 Other 7,680 15,307 264,478 265,325 $2,924,782 $2,006,239
-3- IMAGICA ENTERTAINMENT, INC. and SUBSIDARY BALANCE SHEET
AUGUST 31, May 31, 1996 1996 (Unaudited) LIABILITIES and STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Checks issued against future deposits $ --- $ --- Notes Payable 143,289 105,000 Accounts payable - trade 722,333 652,204 Notes payable to stockholders 398,301 302,225 Accrued liabilites 551,906 520,005 Current maturities of long-term debt 310,247 354,317 Current portion of obligations under capital leases 148,616 232,329 Total current liabilities $2,274,692 $2,166,080 Long-term debt, less current maturities 350,873 420,294 Obligations under capiral leases, less current maturities 265,617 153,665 ______________________________________________________________________ Total liabilities $2,891,182 $2,740,039 Commitments and contingencies --- --- Redeemable common stock 100,000 100,000 Stockholders' equity Common stock, $.001 par value, shares authorized 50,000,000; issued 2,403,013 14,856 1,820 Additional paid-in-capital 2,900,497 1,787,784 Accumulated deficit (2,640,513) (2,282,164) 274,840 ( 492,560)
-4- IMAGICA ENTERTAINMENT, INC. and SUBSIDARY BALANCE SHEETS - Continued
Liabilities and Stockholders' Equity - continued Less: Treasury stock,at cost, 97,500 shares 91,240 91,240 Notes receivable arising from the exercise of stock options 250,000 250,000 Total stockholders' equity ( 66,400) (833,800) $2,924,782 $2,006,239
See accompanying notes to financial statements. -5- IMAGICA ENTERTAINEMNT, INC. and SUBSIDARY STATEMENTS OF OPERATIONS
Three months ended August 31 1996 1995 (Unaudited) (Unaudited) SALES $963,836 $1,377,260 COST OF SALES 693,401 1,009,089 GROSS PROFIT 270,435 368,171 OPERATING EXPENSES 608,974 417,250 INCOME (LOSS) FROM OPERATIONS (338,539) ( 49,079) OTHER INCOME (EXPENSES): INTEREST ( 19,810) ( 34,413) NET INCOME (loss) (358,349) ( 83,492) Earnings (loss) per share ($.15) ($.01) Weighted Average Common Shares Outstanding 2,403,013 8,441,944
See accompanying notes to financial statements. -6- IMAGICA ENTERTAINMENT INC. and SUBSIDARY STATEMENTS OF CASH FLOWS
Three months ended August 31, 1996 1995 (Unaudited) (Unaudited) Cash flows from operating activities: Net income (loss) $(358,348) $ (83,491) Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amorization 61,585 74,772 Cash provoded by (used for): Accounts receivable 13,312 (14,431) Stockholders' Advances ( 370) --- Inventories 4,356 (40,534) Prepaid expenses (938,125) (27,359) Checks issued against future deposits ( 23,035) ( 1,194) Accounts payable - trade 77,858 54,867 Intra company payable 15,304 --- Accrued liabilities 119,777 76,282 Net Cash Provided by operating activities: (1,028,759) 38,912 Cash Flows from investing activities: Decrease in other assets 224 19,380 Net Cash provided by (used for) investing activities: 224 19,380 Cash Flow from financing activities: Decrease in note payable --- --- Net decrease in stockholder note payable 41,100 15,705 Principal payments of long-term debt and capital lease obligations (79,864) (67,968) Proceeds from issuance of stock 475 --- Additional paid-in-capital 1,125,275 --- Net Cash used for financing activities: 1,086,986 (52,263) Net Increase (decrease) in cash and cash equivalents: 58,451 6,028 Cash and Cash Equivalents, beginning of period: --- 8,464 Cash and Cash Equivalents, end of period: 58,451 (37,771)
See accompaning notes to financial statements. -7- IMAGICA ENTERTAINMENT, INC. and SUBSIDARY NOTES TO FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION The unaudited financial statements presented herein have been prepared in accordance with the instructions to Form 10-QSB, and do not include all of the information and disclosures required by generally accepted accounting principles. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-KSB for the year ended May 31, 1996. The accompanying financial statements have not been examined by an independent accountant in accordance with generally accepted auditing standards, but in the opinion of management, such financial statements include all adjustments, consisting only of normal recurring adjustments and accruals, to fairly report the Company's financial position and results of operations. The results of operations for the interim periods shown in this report are not necessarily indicative of results to be expected for the fiscal year. NOTE 2 - SUPPLEMENTAL CASH FLOW INFORMATION During the three months ended August 31, 1996, the Company issued 475,000 shares of common stock as payment for current and future independent consulting services amounting to $1,125,750. This amount will be amortized through June 1997. -8- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Sales for the three months ended August 31, 1996 were $1,377,260 reflecting a decline of $413,424 or 30% from the comparable period in fiscal 1996. The Company believes this was primarily the result of working capital constraints brought on by the April 1996 settlement of case number 94-4342-CA-E in the Circuit Court of Marion County, Florida. Cash that would have been used to purchase materials, labor and finance a higher sales volume, went to satisfy the law suit and pay legal fees. The subsequent revenue stream was reduced. With the Company having a very limited ability to secure outside capital, financing of sales have been restricted. Gross profit for the three months ended August 31, 1996 decreased by 26.5% to $270,435 from $368,171 for the comparable period in fiscal 1996. Despite the 30% reduction in the sales volume, improved cost control resulted in the gross profit improving to 28.1% from 26.7% during the comparable period in fiscal 1996. Selling, general and administrative expenses (reflected as operating expenses in the accompanying statements of operations) took a dramatic jump to $608,974 for the three months ended August 31, 1996 from the $417,250 for the same period in 1995. The accrual for an executive pay increase, consulting fees, and the amortization of consulting fees for the 7/10/96 S-8, accounted for $280,692 of the $608,974 first quarter operating expenses. Declining sales and increased operating expenses as a percentage of sales, operating expenses increased to 63.2% for the first quarter of fiscal 1997 as compared to 30.3% for the same period in fiscal 1996. Interest expense decreased 42.4% to $19,810 during the three months ended August 31, 1996 as compared to the same period in fiscal 1996. This was attributable to a decrease in interest paid on the SunTrust note. The net loss increased to ($358,349) for the three months ended August 31, 1996 as compared to a net loss of ($82,492). When the $280,692, accrued for consulting fees and an executive pay increase, is factored out , the net loss for the quarter ended August 31, 1996 is only ($77,657). Liquidity and Capital Resources The Company has experienced significant cash flow difficulties in recent years. As of August 31, 1996, the Company has certain obligations which are currently due or due within one year including debenture notes payable of $105,000, various notes payable to stockholders amounting to $398,301, current maturities of long-term debt of $310,247, and the current portion of obligations under capital leases of $148,616. The Company currently does not have sufficient funds to repay such obligations. The Company has engaged Gulf Atlantic Capital Corporation to develop an operating plan that will maximize profitability and cash flow, contact vendors and secured creditors, negotiate a repayment plan, and provide plan monitoring and future assistance in acquiring working capital. During June 1996 the Company entered into three agreements with various consultants to arrange the acquisition of funds from investors. The Company anticipates that the funds generated from raising additional capital coupled with the implementation of the Gulf Atlantic plan will be sufficient to enable the Company to: (1) pay current maturities on debts; (2) acquire new printing equipment; and (3) provide working capital for current operations and future growth. There can be no assurance however, that any additional funds can be obtained, nor that net income generated, if any, will be sufficient to enable the Company to meet its obligations or continue operations as a going concern. -9- The Company intends to acquire various equipment in the near future, most notably a printing machine having a cost of approximately $460,000. Of this amount $206,632 has been paid to date and is included in the "deposit on equipment" in the accompanying balance sheet. The Company anticipates that the remaining funding will come from financing as described above. The Company believes the machine will enable it to produce banners at a much faster pace and at a much lower cost. In 1992 the company purchased land for future development with cash ($150,000, of which $125,000 was borrowed from the bank) and 12,500 shares of common stock. In connection with this transaction, the Seller had the option to require the Company to repurchase the common stock for $10.46 per share. The seller elected to require the Company to repurchase the stock for $10.64 per share. A current liability of $133,250 was recognized as of May 31, 1994. The Seller filed a complaint for breach of contract in October 1994. During 1996, settlement was reached between the Company and the Seller. The Company was released of the $133,250 liability, and the Seller was required to repay the remaining balance owed the bank of $100,000 in exchange for the return of the land and 12,500 shares of common stock. -10- PART II: Other Information Item 6. Exhibits and Reports on Form 8-K None. (a) Exhibits Exhibit Description Page (a) Exhibits (2) Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession. None (3) Restated Articles of Incorporation and By-Laws previously filed as an Exhibit to Form S-18 filed January 7, 1991, incorporated herein by reference. (4) Instruments defining the rights of holders, including indentures. None (9) Voting Trust Agreement None (10) Material Contracts (a) Facility Lease between the Company and GWW Partnership, dated September 27, 1989, previously filed as an Exhibit to Form S-18 filed on January 7, 1991, incorporated herein by reference. (b) Facility Lease between the Company and CYNWD dated June 16, 1990, previously filed as an Exhibit to Form S-18 filed January 7, 1991, incorporated herein by reference. (c) Contract for Sale and Purchase (including Addendum and Subscription Agreement) between the Company and C.L. Dinkins, Jr. Trustee, dated May 15, 1992, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (d) Irrevocable Voting Proxy between Richard D. Brown and the Company, dated June 30, 1988, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (e) Irrevocable Voting Proxy between Robert W. Burnham and the Company dated June 30, 1988, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (f) Irrevocable Voting Proxy between Mark S. Heller and the Company, dated June 30, 1988, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (g) Irrevocable Voting Proxy between John Leard and the Company, dated October 31, 1989, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (h) Irrevocable Voting Proxy between William J. White and the Company, dated June 30, 1988, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (i) Irrevocable Voting Proxy between Tracie Dawson and the Company, dated June 30, 1988, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (j) Commitment for Equipment between Climax, Inc. and the Company, dated February 13, 1992, previously filed as an Exhibit to Form 10-K filed on April 26, 1993, incorporated herein by reference. (k) Stock Repurchase Agreement between J. R. Gunter, Robert Wormser, Mark Wormser and the Company dated April 27, 1989. (l) Employment Agreement between the Company and Robert Wormser dated June 1, 1993, previously filed as an Exhibit to Form 10-KSB filed on or about December 20, 1993, incorporated herein by reference. (m) Agreement between the Company and Florida Gulf Capital & Equity Corp., Inc. previously filed as an Exhibit to Form 10-QSB filed on or about May 13, 1994, incorporated herein by reference. (n) Irrevocable Voting Proxy between Donna Wormser and the Company, dated March 3, 1993, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (o) Irrevocable Voting Proxy between Pruitt Hall and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (p) Irrevocable Voting Proxy between William J. White and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (q) Irrevocable Voting Proxy between Tracie Dawson and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (r) Irrevocable Voting Proxy between Carol Monroe and the Company, dated July 29, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (s) Irrevocable Voting Proxy between Sharon Rava and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (t) Irrevocable Voting Proxy between Ricky Brown and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (u) Irrevocable Voting Proxy between Mark Slaughter and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (v) Irrevocable Voting Proxy between John Fernung and the Company, dated July 22, 1994, previously filed as an Exhibit to Form 10-KSB filed October 26, 1994, incorporated herein by reference. (w) Consulting Agreement Tod Lotz and the Company, dated June 12, 1996, previously filed as an Exhibit to Form S-8 filed July 10, 1996, incorporated herein by reference. (x) Consulting Agreement Mark Schultz and the Company, dated July 10, 1996, previously filed as an Exhibit to Form S-8 filed July 10, 1996, incorporated herein by reference. (y) Consulting Agreement Tod Lotz and the Company, dated August 12, 1996, previously filed as an Exhibit to Form S-8 filed September 4, 1996, incorporated herein by reference. (z) Consulting Agreement between Tim Murray and the Company, dated August 12, 1996, previously filed as an Exhibit to Form S-8 filed September 4, 1996, incorporated herein by reference. (11) Statement re: computation of per share earnings None (18) Letter on change in accounting principles None (21) Subsidiaries of the Registrant None (22) Published report re: matters submitted to vote of security holders None (24) Power of Attorney None (27) Financial Data Schedule (28) Information from reports furnished to state insurance regulatory authorities None (99) Additional Exhibits None (b) Form 8-K There were no reports on Form 8-K filed during the last quarter in the period covered by this report. SIGNATURE In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. IMAGICA ENTERTAINMENT, INC and SUBSIDARY (Registrant) Date: October 31, 1996 By: _____________________________ Robert S. Wormser, President (President, Chief Executive Officer and Chief Financial Officer) EX-27 2 ARTICLE 5 FDS FOR 1ST QTR 10-Q
5 This schedule contains summary financial information extracted from Financial Statements for the three (3) months ended August 31, 1996, and is qualified in its entirety by reference to such form 10QSB for quarterly period ended August 31, 1996. 1 3-MOS May-31-1996 Aug-31-1996 58,450 0 533,348 18,611 254,269 1,849,785 2,679,188 1,781,103 2,924,782 2,274,692 616,490 14,356 0 0 18,749 2,924,732 963,836 963,836 693,401 608,974 0 0 19,810 (358,349) 0 (358,349) 0 0 0 (358,349) (.15) (.14)
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