-----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, InmKQJ0Lv5lfIF+bbeMEXBxgaw+un+Dcn084Eqd1z7dytRO05XYxWZZgimJdVB1J jTHhf5lGJfiBaRh/z6o+bQ== /in/edgar/work/20000613/0000909012-00-000422/0000909012-00-000422.txt : 20000919 0000909012-00-000422.hdr.sgml : 20000919 ACCESSION NUMBER: 0000909012-00-000422 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000329 FILED AS OF DATE: 20000613 FILER: COMPANY DATA: COMPANY CONFORMED NAME: TAM RESTAURANTS INC CENTRAL INDEX KEY: 0001048796 STANDARD INDUSTRIAL CLASSIFICATION: [5812 ] IRS NUMBER: 133905598 STATE OF INCORPORATION: DE FISCAL YEAR END: 0929 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 001-13811 FILM NUMBER: 654036 BUSINESS ADDRESS: STREET 1: 1163 FORREST AVE. CITY: STATEN ISLAND STATE: NY ZIP: 10310 BUSINESS PHONE: 7187205959 MAIL ADDRESS: STREET 1: 1163 FORREST AVENUE CITY: STATEN ISLAND STATE: NY ZIP: 10310 10QSB/A 1 0001.txt AMENDED QUARTERLY REPORT OF MARCH 29, 2000 U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Mark One) Amendment No. 1 to Form 10-QSB [Mark One] [ X ] Quarterly report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the quarterly period ended MARCH 29, 2000. [ ] Transition report under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the transition period from to ---------------- ------------------- Commission file number: 0-23757 TAM RESTAURANTS, INC. --------------------- (Exact Name of Small Business Issuer as Specified in its Charter) DELAWARE 13-3905598 -------- ---------- (State or other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 1163 FOREST AVENUE, STATEN ISLAND, NY 10310 ------------------------------------------- (Address of Principal Executive Offices) (718) 720-5959 -------------- (Issuer's Telephone Number) (Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report) - 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 ---- ---- APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 4,503,000 shares of common stock as of March 29, 2000. Transitional Small Business Disclosure Format (check one): Yes No X --- --- i TAM RESTAURANTS, INC. AND SUBSIDIARIES QUARTER ENDED MARCH 29, 2000 FORM 10-QSB/A Amendment No. 1 to Form 10-QSB INDEX Part I. FINANCIAL STATEMENTS Page(s) Item 1. Financial Statements Condensed Consolidated Balance Sheet 1 as of March 29, 2000 (unaudited) Condensed Consolidated Statements of Operations For the Thirteen weeks and Twenty-Six weeks ended March 29, 2000 and March 31, 1999 (unaudited) 2 Condensed Consolidated Statements of Cash flow For the Thirteen weeks and Twenty-Six weeks ended March 29, 2000 and March 31, 1999 (unaudited) 3 Notes to unaudited Condensed Consolidated Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition And Results of Operation 6 Part II. OTHER INFORMATION Item 2. Changes in Securities and Use of Proceeds 10 Item 6. Exhibits and Reports on Form 8-K 10 Signature Page 11
TAM RESTAURANTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) ASSETS MARCH 29, 2000 -------------- Current Assets Cash $ 3,072,991 Accounts receivable (net of allowance for doubtful accounts of $15,000) 730,272 Inventory 300,793 Prepaid and other expenses 503,993 ------------ Total Current Assets 4,608,049 Property and Equipment-Net 5,556,200 Other Assets 410,617 ------------ TOTAL ASSETS $ 10,574,866 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Note payable bank $ 700,000 Current portion of long-term debt 142,813 Current portion of loans payable, related parties 92,456 Current portion of capitalized lease obligations 136,372 Accounts payable 796,351 Due to affiliates 94,808 Contract deposits payable 492,025 Accrued expenses and other 1,535,288 ------------ Total Current Liabilities 3,990,113 ------------ Long-term Liabilities Deferred rent expense 379,301 Long-term debt - net of current portion 2,519,681 Loans payable-related parties - net of current portion 194,521 Capitalized lease obligations-net of current portion 273,761 Barter advances - net of current portion 557,170 ------------ Total Long-term Liabilities 3,924,434 ------------ TOTAL LIABILITIES 7,914,547 ------------ Commitments and Contingencies STOCKHOLDERS' EQUITY Stockholders' Equity Preferred stock; $.0001 par value; 1,000,000 shares authorized, 144,081 shares issued and outstanding 14 Common stock; $.0001 par value, 19,000,000 shares authorized; 4,503,000 shares issued and outstanding 450 Additional paid-in capital 9,977,523 Accumulated deficit (7,317,668) ------------ TOTAL STOCKHOLDERS' EQUITY 2,660,319 ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 10,574,866 ============
The accompanying notes are an integral part of these condensed consolidated financial statements. 1
TAM RESTAURANTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) Thirteen Weeks Ended Twenty-six Weeks Ended March 31, March 29, March 31, March 29, 1999 2000 1999 2000 ---- ---- ---- ---- Sales $ 2,145,607 $ 2,341,944 $ 6,100,158 $ 6,988,094 Cost of Sales 1,530,544 2,210,585 3,855,370 4,950,331 ----------- ----------- ----------- ----------- Gross Profit 615,063 131,359 2,244,788 2,037,763 Operating and Administrative Expenses 1,105,842 1,636,815 2,611,945 3,361,197 ----------- ----------- ----------- ----------- Loss from Operations (490,779) (1,505,456) (367,157) (1,323,434) ----------- ----------- ----------- ----------- Other Expense Interest expense 145,664 109,810 303,272 167,727 Sales Tax Audit Assessment 140,000 140,000 Barter Expense 72,006 110,515 152,475 213,768 ----------- ----------- ----------- ----------- Total Other Expense 217,670 360,325 455,747 521,495 ----------- ----------- ----------- ----------- NET LOSS $ (708,449) $(1,865,781) $ (822,904) $(1,844,929) =========== =========== =========== =========== Net loss per share: Basic and Diluted $ (.20) $ (.46) $ (.23) $ (.50) =========== =========== =========== =========== Weighted average number of common shares outstanding - basic and diluted 3,503,000 4,073,000 3,503,000 3,791,000 =========== =========== =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements. 2
TAM RESTAURANTS, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Twenty-Six weeks Ended March 31, 1999 March 29, 2000 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (822,904) $(1,844,929) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization expense 574,958 435,156 Deferred rent expense 6,724 27,000 Amortization of original issue discount 154,170 -- Deferred income (6,000) -- (Increase) decrease in: Accounts receivable 165,866 1,090 Inventory (18,931) 138 Prepaid and other expenses (111,618) (194,201) Other assets (6,450) 192,409 Increase (decrease) in: Accounts payable 245,869 (755,409) Contract deposits payable 169,290 70,959 Accrued expenses (467,621) 125,843 ----------- ----------- NET CASH USED IN OPERATING ACTIVITIES (116,647) (1,941,944) ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of property and equipment (309,302) (90,414) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends Paid -- (36,024) Proceeds from bank line of credit -- 700,000 Proceeds from long-term debt -- 2,500,000 Sale of common stock -- 2,000,000 Repayment of related party loan -- (1,000,000) Proceeds from barter advances 650,000 139,290 Principal payments on long-term and capitalized lease obligations (395,277) (74,381) Net repayments (advances) of affiliates and others 63,150 544,417 Proceeds from equipment refinancing loans -- 271,320 Repayment of long-term debt -- (22,087) ----------- ----------- NET CASH PROVIDED BY FINANCING ACTIVITIES 317,873 5,022,535 ----------- ----------- Net increase (decrease) in cash (108,076) 2,990,177 Cash, Beginning of year 221,484 82,814 ----------- ----------- Cash, End of period $ 113,408 $ 3,072,991 =========== ===========
The accompanying notes are an integral part of these condensed consolidated financial statements 3 TAM RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. BASIS OF PRESENTATION --------------------- The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB and Item 310(b) of Regulation S-B. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of only normal recurring accruals) considered necessary for a fair presentation have been included. It is suggested that the financial statements be read in conjunction with the Company's consolidated audited financial statements and footnotes thereto contained in the Company's Form 10-KSB for the fiscal year ended September 29, 1999. Operating results for the thirteen and twenty-six week periods ended March 29, 2000 are not necessarily indicative of the results that may be expected for the full fiscal year ended September 27, 2000. 2. ACCOUNTING PERIOD ----------------- The Company reports on a 52/53 year. 3. LONG-TERM DEBT -------------- In February 2000, the Company received $2,500,000 in financing. Repayment of the principal will be paid out of the free cash of a new Lundy's location in Times Square as defined, the financing bears interest at prime plus 1%. In October 1997, the Company obtained $1,000,000 in a secured loan from two entities. The loan bears interest at 10% per annum, payable quarterly and matures September 30, 1999. On January 11, 2000, the Company and Kayne Anderson agreed to provide for a refinancing, thus waiving the effect of default, of the existing loans into new long-term loans aggregating an equal or larger amount. The loan is guaranteed by a principal stockholder of the Company and the guarantee is secured by a pledge of 200,000 shares of common stock held by such stockholder. Additionally, as partial consideration for the loan, the Company granted to the entities warrants to purchase 200,000 shares of common stock at an exercise price of $5.00 per share expiring in October 2002. As of December 29, 1999 the original issue discount was fully amortized. In February 2000 the Company repaid this loan. In October 1997, the Company issued to Mr. Cretella a promissory note in the original principal amount of $720,405 which bears interest at the rate of 10% per annum. Interest is payable in monthly installments of $6,003, with the outstanding principal balance payable in November 2002 upon maturity of the note. On December 30, 1998, Mr. Cretella converted the $720,405 of indebtedness owed to him by the Company into 144,081 shares of Series A Preferred Stock. As further inducement to Mr. Cretella to convert the debt to equity the Company also issued to Mr. Cretella 72,040 warrants to purchase the Company's Common Stock at $6.00 per share. The Company received a fairness opinion with respect to this transaction. 4. LOSS PER SHARE -------------- For the calculation of the loss per share for the twenty-six weeks ended fiscal 2000 and 1999, all of the Company options and warrants are excluded for basic and diluted loss per share as they are anti-dilutive. The net loss for the thirteen and twenty-six weeks ended March 29, 2000 has been adjusted for the preferred stock dividend of $18,010 and $36,024, respectively. 5. SALE OF COMMON STOCK -------------------- In February 2000, the Company, in a private placement, sold 1 million shares of common stock at $2.00 per share for net proceeds of $2,000,000. 4 6. PREFERRED STOCK --------------- The Company's Board of Directors authorized the designation of 150,000 shares of preferred stock, of the 1,000,000 previously authorized and unallocated, to be a series of preferred stock ("Series A Preferred Stock") bearing a 10% cumulative dividend payable quarterly in cash, convertible into Common Stock at anytime after issuance, at the holder's option, at the rate of one share of Common Stock for each share of Series A Preferred Stock, subject to adjustment under certain circumstances. The Series A Preferred Stock is senior in rights and preferences to any subsequently designated series and/or class of preferred stock and is entitled to one vote per share of Common Stock into which the issued and outstanding shares of Series A Preferred Stock is then convertible, on all matters submitted to a vote of the Company's stockholders. Outstanding shares of Series A Preferred Stock are redeemable at any time by the Company, at its option, at the redemption price of $5.00 per share, upon timely notice of its intent to redeem. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995: The statements which are not historical facts contained in the Management's Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report on Form 10-QSB are forward-looking statements that involve a number of known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, the risks related to the opening of new restaurants, including capital requirements, continued popularity of existing and new restaurants, seasonality and other risks detailed in the Company's filings with the Securities and Exchange Commission. The words "believe", "expect", "anticipate", "intend" and "plan" and similar expressions identify forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date the statement was made. OVERVIEW The Company operates LUNDY BROS. RESTAURANT ("LUNDY'S"), a high-volume, casual, upscale seafood restaurant located in Brooklyn, New York, THE BOATHOUSE IN CENTRAL PARK ("THE BOATHOUSE"), a multi-use facility featuring an upscale restaurant and catering pavilion, located on the lake in New York City's Central Park, and AMERICAN PARK AT THE BATTERY ("AMERICAN PARK"), a multi-use facility featuring an upscale restaurant, catering floor, two outside patios and a fast food kiosk, located at the water's edge in Battery Park, a New York City landmark. RESULTS OF OPERATIONS Sales for the twenty-six weeks ended March 29, 2000 were $6,988,094, an increase of $887,936 or 14.6%, as compared to $6,100,158 for the twenty-six weeks ended March 31, 1999. The Company's sales for the thirteen weeks ended March 31, 1999 were $2,341,944, an increase of $196,337 or 9.2%, as compared to $2,145,607 for the thirteen weeks ended March 31, 1999. The increase in sales for both the thirteen week period and twenty-six week period was primarily an increase in sales at the AMERICAN PARK and LUNDY'S locations. Cost of sales for the twenty-six weeks ended March 29, 2000 were $4,950,331 or 70.8% of sales as compared to $3,855,370 or 63.2% of sales for the twenty-six weeks ended March 31, 1999. Cost of sales for the thirteen weeks ended March 29, 2000 were $2,210,585 or 94.4% of sales as compared to $1,530,544 or 71.3% of sales for the thirteen weeks ended March 31, 1999. The increase in the cost of sales relative to overall sales can be attributed to significant increases in payroll expenses at THE BOATHOUSE and AMERICAN PARK, in addition to an unusually short supply of lobsters during the winter months that caused a dramatic increase in the cost of goods at LUNDYS. As a result of the foregoing, gross profit for the twenty-six weeks ended March 29, 2000 was $2,037,763 or 29.2% of sales as compared to $2,244,788 or 36.8% of sales for the twenty-six weeks ended March 31, 1999, an decrease of $207,025 or 9.2%. Gross profit for the thirteen weeks ended March 29, 2000 was $131,359 or 5.6% of sales as compared to $615,063 or 28.7% of sales for the thirteen weeks ended March 31, 1999. 6 Operating and administrative expenses for the twenty-six weeks ended March 29, 2000 were $3,361,197 or 48.1% of sales as compared to $2,611,945 or 42.8% of sales for the twenty-six weeks ended March 31, 1999. Operating and administrative expenses for the thirteen weeks ended March 29, 2000 were $1,636,815 or 69.9% of sales as compared with $1,105,842 or 51.5% of sales for the thirteen weeks ended March 31, 1999. The increase in operating and administrative expenses was a result of the Company's gearing up for expansion relative to the opening of a new LUNDYS location in Times Square and the efforts related to the renewal of THE BOATHOUSE license agreement with the New York City Department of Parks. Other expenses for the twenty-six weeks ended March 29, 2000 were $521,495, an increase of $66,748 or 14.4%, as compared to $455,747 for the twenty-six weeks ended March 31, 1999. Other expenses for the thirteen weeks ended March 29, 2000 were $360,325, an increase of $142,655 or 65.5%, as compared to $217,670 for the thirteen weeks ended March 31, 1999. Other expenses for the twenty-six weeks ended March 29, 2000 consisted of $213,768 of barter expense as compared to $152,475 in fiscal 1999. The Company also completed an sales tax audit for the period ending September 1994, the results of the audit was a one time charge to earnings of approximately $140,000 in underpaid taxes, penalties and interest. These increases were offset by a decrease in interest expense related to a charge of $154,170 for an original issue discount resulting from the issuance of the Kayne Anderson warrants. As a result of the foregoing, net loss amounted to $1,844,929 or $.50 per share for the twenty-six weeks ended March 29, 2000, as compared to a net loss of $822,904 or $.23 per share for the twenty-six weeks ended March 31, 1999. For the thirteen weeks ended March 29, 2000, net loss amounted to $1,865,781 or $.46 per share, as compared to a net loss of $708,449 or $.20 per share for the thirteen weeks ended March 31, 1999. LIQUIDITY AND CAPITAL RESOURCES The Company's capital requirements have been and will continue to be significant and its cash requirements have been exceeding its cash flow from operations (at March 29, 2000, the Company had a working capital surplus of $617,936), due to, among other things, costs associated with development, opening and start-up costs of AMERICAN PARK and PARK VIEW at THE BOATHOUSE and building a corporate infrastructure sufficient to support the Company's operations. As a result, the Company has been substantially dependent upon sales of its equity securities, loans from financial institutions and the Company's officers, directors and stockholders and bartering transactions with member dining clubs to finance a portion of its working capital requirements. During the twenty-six weeks ended March 29, 2000, net cash increased by $2,990,177. Net cash used in operating activities was $1,941,944. Net cash used in investing activities was $90,414, relating primarily to the finalization of the Company's year 2000 preparation. The net increase in cash from financing activities was $5,022,535. The Company enters into bartering agreements with member dining clubs whereby member dining clubs advance cash to the Company in exchange for the Company's agreement to provide to the clubs' members food and beverages at a designated Company restaurant. The restaurant must permit the clubs' members to purchase food and beverages at rates between 160% and 200% of the amount advanced. Upon entering into the agreement, the Company records its obligation to provide food and beverages at the amount of the advance it receives. Upon a guest purchasing food or beverages, the Company records revenue for the amount of food and beverage purchased by the guest, and the barter discount as a barter expense. 7 In October 1997, Kayne Anderson Non-Traditional Investments, L.P. and ARBCO Associates, L.P., affiliates of Kayne Anderson Investment Management, Inc. (collectively, "Kayne Anderson"), loaned the Company an aggregate of $1,000,000. The loans bear interest at the rate of 10% per annum, payable quarterly, and were originally due May 31, 1999. Upon an event of default under the loans, the interest rate increases to 15% per annum and the Company would be required to pay to Kayne Anderson 50% of the operating profits from AMERICAN PARK on a monthly basis until the loan is fully repaid. The loan is guaranteed by Frank Cretella, President, Chief Executive Officer, a director and a principal stockholder of the Company, and the guarantee is secured by a pledge of 200,000 shares of Common Stock owned by Frank Cretella and Jeanne Cretella, Vice President, a director and principal stockholder of the Company. As partial consideration for the loans, the Company issued to Kayne Anderson warrants (the "KA Warrants") to purchase 200,000 shares of Common Stock. The KA Warrants are exercisable at a price of $5.00 per share (subject to adjustment under certain circumstances) and are exercisable at any time until October 31, 2002. The Company incurred a non-cash interest charge of $482,000 representing the original issue discount relating to the promissory notes issued to Kayne Anderson. In February 2000 the Company repaid this loan in full. In February 2000, the Company, in a private placement, sold 1 million shares of common stock at $2.00 per share for net proceeds of $2,000,000. In exchange for services rendered the Company has agreed to issue 45,417 shares of its common stock to certain individuals in relation to the private placement. Also in February the Company received $2,500,000 in financing. Repayment of the principal will be paid out of the free cash of a new Lundy's location in Times Square as defined, the financing bears interest at prime plus 1%. The Company will need to raise additional capital to implement its expansion plans. Other than the ability to enter into bartering transactions with member dining clubs, the Company has no current arrangements with respect to, or potential sources of, additional financing, and it is not anticipated that any officers, directors or stockholders will provide any additional loans to the Company. SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS. The Company's business is seasonal. The bicycle, rowboat rentals and outdoor dining at THE BOATHOUSE are open only March through November. The catering facilities, indoor section of the PARK VIEW restaurant and the fast food operation are opened year round, but at a substantially reduced sales volume during the winter due to the BOATHOUSE'S location in the middle of Central Park. The two outdoor patios at AMERICAN PARK and the fast food kiosk are only open March through November and its location in Battery Park also restricts winter sales potential. The indoor restaurant and catering level are open year round. LUNDY'S is a waterside location and attracts more guests during warmer months. As a result, the Company's average weekly restaurant sales and operating cash flow generally increases from April through October and decreases from November through March. The license agreement with the New York City Department of Parks (PARKS) is due to expire on June 30, 2000. In response to a Request for Proposal issued by PARKS, the Company submitted its proposal for a new fifteen year license agreement. In January 2000, the Company was informed by PARKS that it had made the first cut and was included as one of the three (3) finalists for the license award. In March 2000, the Company was informed that PARKS had recommended another proposer be awarded THE BOATHOUSE license agreement. After a thorough review of all the proposals the Company, believed that the award by PARKS was made as a result of a technical error. In April 2000, the Company presented its findings to the New York City Franchise Concession and Review Committee, the governing body charged with awarding all such license agreements. As a result of its testimony, the Company was asked to provide additional written information to Committee for further review by the 24th of April 2000. The Company intends to vigorously pursue all of its legal remedies with respect to its renewal of THE BOATHOUSE license agreement. 8 The Company also expects that future quarterly operating results will fluctuate as a result of the timing of and expenses related to the openings of new restaurants (as the Company will incur significant expenses during the months preceding the opening of a restaurant), as well as due to various factors, including the seasonal nature of its business, weather conditions in New York City, the health of New York City's economy in general and its tourism industry in particular. Accordingly, the Company's sales and earnings may fluctuate significantly from quarter to quarter and operating results for any quarter will not necessarily be indicative of the results that may be achieved for a full year. YEAR 2000 To date the Company has not experienced any Year 2000 issues. INFLATION The effect of inflation on the Company has not been significant during the last two fiscal years. 9 PART II OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. (a) On November 19, 1998 the Company's Board of Directors authorized the designation of 150,000 shares of a series of preferred stock ("Series A Preferred Stock") bearing a 10% cumulative dividend payable quarterly in cash, convertible into Common Stock at anytime after issuance, at the holder's option, at the rate of one share of Common Stock for each share of Series A Preferred Stock, subject to adjustment under certain circumstances. The Series A Preferred Stock is senior in rights and preferences to any subsequently designated series and/or class of preferred stock and is entitled to one vote per share of Common Stock into which the issued and outstanding shares of Series A Preferred Stock is then convertible, on all matters submitted to a vote of the Company's stockholders. Outstanding shares of Series A Preferred Stock are redeemable at any time by the Company, at its option, at the redemption price of $5.00 per share, upon timely notice of its intent to redeem. (b) In December 1998, Frank Cretella converted $720,405 of indebtedness owed by the Company to him into shares of Series A Preferred Stock at the ratio of one share of Series A Preferred Stock for each $5.00 of indebtedness outstanding. As an inducement to Mr. Cretella to convert the debt to equity, the Company also issued Mr. Cretella 72,040 warrants to purchase the Company's Common Stock at $6.00 per share. (c) On February 7, 2000, and February 9, 2000, the Registrant issued and sold an aggregate of 1,000,000 shares of its Common Stock to three accredited investors for a total purchase price of $2,000,000 under a Common Stock Purchase Agreement dated as of February 1, 2000. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 27 Financial Data Schedule (b) Reports on Form 8-K During the period covered by this Report the Company filed a Form 8-K on February 15, 2000 reporting the issuance of 1,000,000 shares of its Common Stock to three accredited investors for a total purchase price of $2,000,000. 10 TAM RESTAURANTS, INC. AND SUBSIDIARIES Signatures 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. TAM RESTAURANTS, INC. --------------------- (Registrant) Dated: June 12, 2000 /S/ FRANK CRETELLA ------------------ Frank Cretella President and Chief Executive Officer Dated: June 12, 2000 /S/ ANTHONY B. GOLIO -------------------- Anthony B. Golio Vice President 11 -----END PRIVACY-ENHANCED MESSAGE-----