Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 1999, for Century Park Pictures Corporation. The registrant is a Minnesota corporation with 9,886,641 common shares outstanding. The company has effectively ceased active operations following the disposal of its primary subsidiaries, International Theatres Corporation (ITC) and Willy Bietak Productions, Inc. (WBPI), which are now classified as discontinued operations. Continuing operations consist primarily of administrative expenses and interest on notes payable.
Key Financial Metrics
| Metric | Q1 1999 (3 Months) | Q1 1998 (3 Months) | YTD 1999 (6 Months) | YTD 1998 (6 Months) |
|---|---|---|---|---|
| Net Income (Loss) | $(14,537) | $(106,454) | $1,844,917 | $(117,268) |
| Loss from Continuing Ops | $(14,537) | $(91,216) | $(32,227) | $(142,344) |
| Income from Discontinued Ops | $0 | $(15,238) | $1,877,144 | $25,076 |
| Administrative Expenses | $(463) (Credit) | $76,216 | $2,227 | $112,344 |
| Interest Expense | $(15,000) | $(15,000) | $(30,000) | $(30,000) |
| Cash Balance (End of Period) | $783 | $90,978 | $783 | $90,978 |
| Working Capital | $(1,203,525) | N/A | $(1,203,525) | N/A |
Liquidity and Debt: As of March 31, 1999, the company held only $783 in cash against a working capital deficit of $1,203,525. Current liabilities include $400,000 in notes payable, $283,659 in accounts payable, and $354,500 in accrued compensation. Approximately $302,000 of accounts payable relates to "The Pike," a former arena football franchise subsidiary that has ceased operations.
Material Changes vs. Prior Period
- Discontinued Operations: The significant net income of $1.84 million for the six months ended March 31, 1999, is entirely attributable to discontinued operations. This includes a $856,530 gain on the disposal of ITC and WBPI and a $986,307 gain on the forgiveness of debt owed to the CEO. In contrast, the prior year period showed a loss from these operations.
- Continuing Operations: Administrative expenses for the quarter turned into a net credit of $(463) due to a rent credit received, compared to $76,216 in expenses in the prior year. This reduction is attributed to subleasing office space to a company owned by the CEO.
- Cash Flow: Cash used in operating activities for continuing operations increased to $72,903 for the six-month period (compared to $47,903 in the prior year), primarily due to the reduction of accounts payable and accrued expenses.
- Asset Base: The company has written off significant assets, including leasehold interests, equipment, and intangibles, reducing total assets from $1.17 million at September 30, 1998, to $1,709 at March 31, 1999.
Outlook, Risks, and Management Commentary
Going Concern: The company's independent auditors issued an opinion raising substantial doubt about the company's ability to continue as a going concern. Management acknowledges that while current cash may satisfy immediate working capital needs, external capital is required to fund the investigation of potential acquisitions.
Future Strategy: The company intends to seek potential acquisitions but notes there are no assurances that financing will be obtained or that acquisitions will be completed. Capital expenditures for the remainder of fiscal 1999 are expected to be immaterial.
Contingencies: The company is evaluating the liquidation of "The Pike" (Minnesota Arena Football, Inc.), likely in or out of bankruptcy court. Approximately $400,000 in financing secured by The Pike's stock is currently payable, with management anticipating a conversion to common stock, though this is not guaranteed.
Investor Verification Checklist
- Cash Position: Verify the sufficiency of the $783 cash balance against the $1.2 million working capital deficit and the timeline for potential liquidation of The Pike.
- Debt Conversion: Confirm the status of the $400,000 secured financing related to The Pike and the likelihood of its conversion to equity versus immediate repayment demands.
- Going Concern Status: Review the auditor's report regarding the substantial doubt on the company's ability to continue operations.
- Related Party Transactions: Scrutinize the rent credits and the transfer of ITC/WBPI to the CEO, including the valuation methods used for the $100,000 repayment and the $986,307 debt forgiveness.
- Acquisition Pipeline: Assess the feasibility of the stated strategy to seek acquisitions given the lack of current operations and capital constraints.