LOS ANGELES, Calif., Dec. 2, 1999 (PRIMEZONE) -- Showscan Entertainment Inc. (OTCBB:SHOW) today reported a net loss for the fiscal year ended March 31, 1999 of ($4,201,000), or ($0.74) per share, on net sales of $8,027,000, compared with a net loss for the year earlier period of ($8,532,000), or ($1.51) per share, on net sales of $10,414,000.
For the second quarter ended September 30, 1999, Showscan reported a net loss of ($1,479,000), or ($0.26) per share, on net sales of $1,904,000, compared with a net prior three month period of ($325,000), or ($0.06) per share, on net sales of $2,668,000. For the six months ended September 30, 1999, the company reported a net loss of ($3,156,000), or ($0.56) per share, on net sales of $2,451,000, compared with a prior six month period loss of ($1,537,000), or ($0.27) per share, on net sales of $4,430,000. For the first quarter ended June 30, 1999, the company reported a net loss of ($1,677,000), or ($0.30) per share, on net sales of $547,000, compared with a net loss in the prior period of ($1,212,000), or ($0.21) per share, on net sales of $1,762,000.
The company also announced that effective September 1, 1999, it entered into an extension agreement with the holders of its outstanding 8% Convertible Notes which were due September 1, 1999. The agreement provides for the following:
An extension of the maturity to March 1, 2000 from September 1, 1999, with interest continuing to accrue at 8% annually; and a prepayment provision under which the company may, at any time prior to March 1, 2000 pay off the principal amount of the notes at 67.5% of their carrying value, or $3,840,750.
Additionally, in connection with any such future prepayment, Showscan has agreed to then issue warrants to purchase an aggregate of 750,000 shares of its common stock at $0.20 per share and that if the notes are not completely paid by March 1, 2000, the note holders will receive as additional collateral a security interest in the Showscan film library. Presently, the notes are secured by substantially all the assets of the company, excluding the library and the capital stock of certain of Showscan's subsidiaries which include its owned and operated theatres.
Showscan also said it has agreed with the note holders that to the extent it obtains any third part-financing, not less than 75% of the proceeds shall be applied to prepay the notes at the 67.5% discounted rate, plus accrued and unpaid interest. Additionally, Showscan agreed that 60% of any amounts it receives pursuant to the liquidated damages provision relating to the Theater Rights Agreement between it and United Artists Theatre Circuit will be used to prepay the notes.
With regard to that agreement, Showscan said that on September 1, 1999 it initiated binding arbitration with United Artists Theatre Circuit relating to a claim filed by Showscan alleging breach of contract in connection with United Artists' failure to make certain payments under the liquidated damages clause of its contract with Showscan to purchase or install 16 Showscan simulation attractions. Showscan said United Artists failed to comply with the contract and is seeking payment of an amount in excess of $5 million.
In connection with the United Artists dispute, Showscan said its director, Kurt Hall, an executive with United Artists, has resigned from the Showscan board of directors.
Showscan also said that its cash balances have continued to decline during the past year and it expects them to further decline through the remainder of fiscal year 2000. Showscan management believes that if the company is unable to secure additional financing (to supplement its existing cash balances and anticipated cash flows from operations), then in order to preserve cash, the company will be required to affect further reductions in its corporate overhead and infrastructure which actions could have a material adverse affect on its future operations and operating needs.
Showscan said it is actively exploring possible financing, but recent operating losses, declining cash balances and a general decrease in investor interest make it difficult to attract financing.
Showscan Entertainment is an international leader in the production, distribution, and exhibition of exciting movie-based entertainment attractions and experiences worldwide. Showscan's simulation attractions and specialty theatres are open or being installed in 24 countries around the world, located in theme and amusement parks, motion picture multiplexes, expos, festivals and world's fairs, resorts, shopping centers, casinos, museums, location-based and family entertainment centers, and other tourist destinations. It is estimated that worldwide approximately 100 million people have already experienced a Showscan entertainment attraction. Showscan has created business alliances and relationships with some of the leading companies in the simulation attraction industry worldwide. The Showscan camera system, used by Showscan in creating the world's premiere entertainment attractions and experiences, was awarded a Scientific and Engineering Achievement Oscar(r) in 1993 by the Academy of Motion Picture Arts and Sciences. For more information, visit Showscan on the Internet at www.showscan.com.
This release contains statements that constitute "forward-looking statements" within the meaning of Section 21E of the Securities Exchange Act and Section 27A of the Securities Act. Readers are cautioned not to put undue reliance on such forward-looking statements. Such forward-looking statements are not guarantees of future performance and involve risks and uncertainties. Certain factors may cause actual results to differ materially from those contained in the forward looking statements, including but not limited to: the number and timing of available sales and/or installations of Showscan attractions, the development and acceptance of new products, the impact of competition on the company's products, pricing and maintenance of gross profit margins, the success of the company's film software and the impact of global and regional economic conditions. In addition, readers are urged to carefully review the risk factors discussed in the documents Showscan files from time to time with the Securities and Exchange Commission.
SHOWSCAN ENTERTAINMENT INC.
Condensed Consolidated Statements of Operations
(Dollars in thousands, except for per share information)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
1999 1998 1999 1998
------ ----- ----- -----
(unaudited) (unaudited)
Revenues:
Film licensing and
production services $ 588 $ 924 $ 1,115 $ 1,550
Equipment sales and
related services 1,316 1,744 1,336 2,880
------ ------ ------ ------
1,904 2,668 2,451 4,430
Costs of revenues 1,474 1,330 1,869 2,610
------ ------ ------ ------
Gross profit 430 1,338 582 1,820
Costs and expenses:
General and admin-
istrative expenses 1,600 1,314 3,122 2,585
Depreciation and
amortization 143 118 286 288
------ ------ ------ ------
1,743 1,432 3,408 2,873
------ ------ ------ ------
Operating loss (1,313) (94) (2,826) (1,053)
Other income (expense):
Equity in net operations
of O&O Theatres (23) (55) (32) (113)
Other income, including
interest 5 39 19 58
Interest and other
expenses (148) (215) (317) (429)
------ ------ ------ ------
(166) (231) (330) (484)
------ ------ ------ ------
Net loss $(1,479) $ (325) $(3,156) $(1,537)
-------- ------- -------- --------
-------- ------- -------- --------
Basic and diluted net
loss per common share $ (0.26) $ (0.06) $ (0.56) $ (0.27)
-------- ------- -------- --------
-------- ------- -------- --------
SHOWSCAN ENTERTAINMENT, INC.
Condensed Consolidated Statements of Operations
(Dollars in Thousands Except Per Share Information)
Three Months Ended
June 30,
1999 1998
------- -------
(Unaudited)
Revenues:
Film licensing and
production Services $ 527 $ 626
Equipment sales and
related Services 20 1,136
547 1,762
-------- --------
Costs of revenues 395 1,280
-------- --------
Gross profit 152 482
Costs and expenses:
General and admin-
istrative Expenses 1,522 1,270
Depreciation and
amortization 143 170
-------- --------
1,665 1,440
-------- --------
Operating loss (1,513) (958)
Other income (expense):
Equity in net operations
of O&O Theatres (9) (58)
Other income, including
interest 14 18
Interest and other
expenses (169) (214)
------- --------
(164) (254)
-------- --------
Net loss $ (1,677) $ (1,212)
-------- --------
-------- --------
Basic and diluted net
loss per common share $ (0.30) $ (0.21)
-------- --------
-------- --------
SHOWSCAN ENTERTAINMENT INC.
Consolidated Statements of Operations
(Dollars in Thousands Except Share Amounts)
Year Ended March 31
1999 1998 1997
------ ------ ------
Revenues:
Film licensing and
production services $ 4,665 $ 5,726 $ 6,236
Equipment sales and
related services 3,362 4,688 11,475
------ ------ ------
8,027 10,414 17,711
Costs of revenues 4,538 8,756 10,854
------ ------ ------
Gross profit/(loss) 3,489 1,658 6,857
Other costs and expenses:
General and admin-
istrative expenses 5,878 7,860 6,904
Depreciation and
amortization 573 875 961
------ ------ ------
6,451 8,735 7,865
------ ------ ------
Operating Loss (2,962) (7,077) (1,008)
Other income (expense):
Equity in net operations
of O&O theatres (260) (540) (694)
Effect of impairment loss
on equity in net
operations of O&O theatres (268) (313) (1,771)
Other income, including
interest of $32 (1999)
$123 (1998) and $241 (1997) 71 127 250
Other expense, including
interest of $777 (1999)
$703 (1998) and $672 (1997) (778) (725) (692)
------- ------- -------
(1,235) (1,451) (2,907)
------- ------- -------
Loss before taxes (4,197) (8,528) (3,915)
Provision for income taxes 4 4 4
------- ------- -------
Net loss $ (4,201) $(8,532) $(3,919)
------- ------- -------
------- ------- -------
Net loss per common share $ (0.74) $ (1.51) $ (0.70)
------- ------- -------
------- ------- -------