-----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, TMNyzu4XWJcGJ0ZphFN/5FqiGozZlHvtkQ2mI7A2/U8zDnM+xK/P6H/qKUIflWqh 86GKGBhddFLVaC9AG7i2ZA== 0000926274-97-000147.txt : 19971216 0000926274-97-000147.hdr.sgml : 19971216 ACCESSION NUMBER: 0000926274-97-000147 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971212 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: NOBLE ROMANS INC CENTRAL INDEX KEY: 0000709005 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 351281154 STATE OF INCORPORATION: IN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-11104 FILM NUMBER: 97737420 BUSINESS ADDRESS: STREET 1: ONE VIRGINIA AVE STREET 2: SUITET 800 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 BUSINESS PHONE: 3176343377 MAIL ADDRESS: STREET 1: ONE VIRGINIA AVENUE STREET 2: SUITE 800 CITY: INDIANAPOLIS STATE: IN ZIP: 46204 10-Q 1 United States SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ----------------------- FORM 10-Q ----------------------- (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES --- EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO -------- ------- Commission file number: 0-11104 NOBLE ROMAN'S, INC. (Exact name of registrant as specified in its charter) Indiana 35-1281154 (State or other jurisdiction (I.R.S. Employer of organization) Identification No.) One Virginia Avenue, Suite 800 Indianapolis, Indiana 46204 (Address of principal executive offices) (Zip Code) (317) 634-3377 (Registrant's telephone number, including area code) 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 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 ----- ----- As of December 8, 1997, there were 4,131,324 shares of Common Stock, no par value, outstanding. Page 1 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS The following condensed consolidated financial statements are included herein: Condensed consolidated balance sheets as of December 31, 1996 and September 30, 1997 Page 3 Condensed consolidated statements of operations for the nine and three months ended September 30, 1996 and 1997 Page 4 Condensed consolidated statements of cash flows for the nine months ended September 30, 1996 and 1997 Page 5 Notes to condensed consolidated financial statements Page 6 The interim condensed consolidated financial statements included herein reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented, which adjustments are of a normal recurring nature. This report contains forward-looking statements which are inherently subject to risks and uncertainties. Noble Roman's actual results could differ materially from those currently anticipated due to a number of factors, including Noble Roman's ability to improve operating results and trends at its full service restaurants, competition in the markets for its full service restaurants and Express franchises, increases in costs, availability of labor and its ability to manage growth of its Express franchise business. Page 2 Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Balance Sheets
(Unaudited) December 31, September 30, 1996 1997 ------------ ------------- Assets ------ Current assets: Cash $ 74,502 $ 60,925 Accounts receivable 947,924 552,576 Inventories 947,644 821,760 Prepaid expenses 363,074 339,475 ------------- ------------- Total current assets 2,333,144 1,774,736 Property and equipment, less accumulated depreciation and amortization of $4,372,980 and $3,189,601 9,475,794 6,819,609 Deferred tax asset - 2,560,436 Costs in excess of assets acquired, net 6,464,678 6,269,693 Other assets 1,177,069 999,941 ------------- ------------- $ 19,450,685 $ 18,424,415 ------------- ------------- Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued expenses $ 4,190,896 $ 4,384,277 Notes payable - current 14,251,373 16,816,140 Deferred franchise fees - 65,000 Payroll and sales tax 141,945 1,307,000 ------------- ------------- Total current liabilities 18,584,214 22,572,417 Long-term liabilities: Notes payable - less current portion 41,540 32,148 Capital leases 33,646 11,805 ------------- ------------- Total long-term liabilities 75,186 43,953 Stockholders' equity Common stock, no par value, authorized 9,000,000 shares, issued 4,131,324 and 4,131,324 5,518,431 5,518,431 Retained earnings (deficit) (4,727,146) (9,710,386) ------------- ------------- Total stockholders' equity (deficit) 791,285 (4,191,955) ------------- ------------- $ 19,450,685 $ 18,424,415 ------------- -------------
See accompanying note to condensed consolidated financial statements. Page 3 Noble Roman's, Inc. and Subsidiaries Condensed Consolidated Statements of Operations (Unaudited)
Nine Months Ended Three Months Ended September 30, September 30, --------------------- ---------------------- 1996 1997 1996 1997 ---- ---- ---- ---- Restaurant revenue $ 25,207,049 $ 19,394,323 $ 8,346,239 $ 5,742,055 Restaurant royalties 154,599 92,438 56,180 38,304 Express royalties and fees - 242,888 - 140,131 Administrative fees and other 173,148 126,516 30,647 3,933 ------------ ------------ ------------ ------------ Total revenue 25,534,796 19,856,165 8,433,066 5,924,423 Restaurant operating expenses: Cost of revenue 4,805,084 4,088,086 1,496,318 1,291,207 Salaries and wages 8,245,459 7,074,841 2,763,536 2,066,213 Rent 2,248,265 1,891,956 758,388 551,618 Advertising 1,556,715 969,679 416,961 287,117 Other 6,171,920 4,301,150 2,096,904 1,177,822 Depreciation and amortization 893,036 840,325 297,292 259,435 Express operating expenses - 118,340 - 35,928 General and administrative 1,807,121 2,083,166 614,153 629,479 Cost of attempted acquisition and equity offering 768,389 - - - Restructuring costs - 5,159,836 - - ------------ ------------ ------------ ------------ Operating income (loss) (961,193) (6,671,214) (10,486) (374,396) Interest and other expense 1,199,233 880,426 436,591 80,831 ------------ ------------ ------------ ------------ Income (loss) before income taxes (2,160,426) (7,551,640) (477,077) (455,227) Income taxes (benefit) (756,149) (2,568,400) (156,477) (155,600) ------------ ------------ ------------ ------------ Net income (loss) before loss on discontinued operations (1,404,277) (4,983,240) (290,600) (299,627) Loss on discontinued operations 48,750 - - - ------------ ------------ ------------ ------------ Net income (loss) $ (1,453,027) $ (4,983,240) $ (290,600) $ (299,627) ------------ ------------ ------------ ------------ Net income (loss) per share before discontinued operations $ (.34) $ (1.21) $ (.07) $ (.07) ------------ ------------ ------------ ------------ Net income (loss) per share $ (.35) $ (1.21) $ (.07) $ (.07) ------------ ------------ ------------ ------------ Weighted average number of common shares outstanding 4,131,324 4,131,324 4,131,324 4,131,324
See accompanying note to condensed consolidated financial statements. Page 4 Noble Roman's, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
Nine Months Ended September 30, ------------------------- 1996 1997 ---- ---- OPERATING ACTIVITIES -------------------- Net income (loss) $ (1,453,027) $ (4,983,240) Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 982,124 840,325 Restructuring costs - 4,753,384 Deferred federal income taxes - (2,560,436) Changes in operating assets and liabilities (increase) decrease in: Accounts receivable (38,311) (274,536) Inventory (82,929) 54,178 Prepaid expenses (348,634) (609,965) Other assets (249,975) 96,818 Increase (decrease) in: Accounts payable and other current liabilities 459,361 638,830 Deferred franchise fee - 65,000 ------------ ------------ NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (731,391) (1,979,642) INVESTING ACTIVITIES -------------------- Purchase of fixed assets (696,060) (567,469) ------------ ------------ NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (696,060) (567,469) FINANCING ACTIVITIES -------------------- Proceeds from borrowing 1,585,081 2,814,767 Principal payments on long-term debt and capital lease obligations (259,644) (281,233) ------------ ------------ NET CASH PROVIDED BY FINANCING ACTIVITIES 1,325,437 2,533,534 ------------ ------------ INCREASE (DECREASE) IN CASH (102,014) (13,577) Cash at beginning of period 229,462 74,502 ------------ ------------ Cash at end of period $ 127,448 $ 60,925 ------------ ------------
See accompanying note to condensed consolidated financial statements. Page 5 Noble Roman's, Inc. and Subsidiaries Note to Condensed Consolidated Financial Statements (unaudited) 1. SUBSEQUENT EVENTS On November 19, 1997, Noble Roman's, Inc. ("Noble Roman's" or the "Company") entered into an amended and restated credit agreement with The Provident Bank, its principal lender. The new agreement provides for the reduction of previously outstanding debt from approximately $16,900,000 to $11,000,000, cancellation of previously accrued interest, no interest to be paid or accrued on such debt until November 1, 1998, interest on such debt of 8% per annum payable monthly in arrears after November 1, 1998, maturity of the subject note extended to December, 2001, principal payments on such debt beginning December 1, 1998 in an amount equal to 50% of excess cash flow as defined in the agreement, and the cancellation of a previously issued warrant to purchase 465,000 shares of the Company's common stock. In addition, the agreement provides for a new loan in the amount of $2,580,000 due in December, 2000 with interest payable monthly in arrears at a rate of prime plus 2.5% per annum. These arrangements were made in consideration for a new warrant to purchase 2,800,000 shares of the Company's common stock with an exercise price of $.01 per share. Pursuant to entering into the amended and restated credit facility, the Company issued warrants to purchase an aggregate of 1,000,000 shares of common stock to certain executive officers, with an exercise price of $.40 per share. 2. RESTRUCTURING COSTS During the second quarter of 1997 the Company implemented a plan which management believes will improve its stores' profitability by restructuring its operations. This included closing 19 restaurants and selling four others to a franchisee pursuant to a franchise agreement. The Company currently owns 48 full-service restaurants, has 11 full service franchised restaurants and 45 franchised Express locations. The decision to close and sell certain restaurants was made because some of the restaurants were operating at a loss, some were marginally profitable and others were competing in market areas where the Company operates newer restaurants and where the delivery area and some of the dine-in market can be serviced by the newer facility. This action has allowed the Company to consolidate management and supervision in the remaining restaurants. The Company reported a loss of $5.2 million in the second quarter of 1997 from this restructuring as a result of writing off the carrying value of equipment, leasehold improvements, other assets and accruing for estimated losses and ongoing expenses relating to those closed restaurants. Page 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Noble Roman's, Inc. and Subsidiaries Results of Operations - Nine-month and three-month periods ended September 30, 1996 and 1997 The following table sets forth the percentage relationship to total revenue of the listed items included in Noble Roman's condensed consolidated statement of operations. As noted, certain items are shown as a percentage of restaurant revenue.
Nine Months Ended Three Months Ended September 30, September 30, -------------------- ------------------- 1996 1997 1996 1997 ---- ---- ---- ---- Revenue: Restaurant revenue 98.7% 97.7% 99.0 96.9% Restaurant royalties .6 .5 .7 .6 Express royalties and fees - 1.2 - 2.4 Administrative fees and other .7 .6 .3 .1 ----- ----- ----- ----- 100.0 100.0 100.0 100.0 Restaurant operating expenses (1): Cost of revenue 19.1 21.1 17.9 22.5 Salaries and wages 32.7 36.5 33.1 36.0 Rent 8.9 9.8 9.1 9.6 Advertising 6.2 5.0 5.0 5.0 Other 24.5 22.2 25.1 20.5 Depreciation and amortization 3.5 4.2 3.5 4.4 Express operating expense - .6 - .6 General and administrative 7.1 10.5 7.3 10.6 Loss from withdrawn acquisition and offering and restaurants closed in 1987 3.0 - - - Restructuring costs - 26.0 - - ----- ----- ----- ----- Operating income (loss) (3.8) (33.6) (.1) (6.3) Interest 4.7 4.4 5.2 1.4 ----- ----- ----- ----- Income (loss) before income taxes (8.5%) (38.0%) (5.3%) (7.7%)
(1) As a percentage of restaurant revenue. During the second quarter of 1997 the Company implemented a plan which management believes will improve its stores' profitability by restructuring its operations. This included closing 19 restaurants and selling four others to a franchisee pursuant to a franchise agreement. The Company currently owns 48 full-service restaurants, has 11 full service franchised restaurants and 45 franchised Express locations. The decision to close and sell certain restaurants was made because some of the restaurants were operating at a loss, some were marginally profitable and others were competing in market areas where the Company operates newer restaurants and where the delivery area and some of the dine-in market can be serviced by the newer facility. This action also allowed the Company to consolidate management and supervision in the remaining restaurants. The Company reported a loss of $5.2 million from this restructuring as a result of writing off the carrying value of equipment, leasehold improvements, other assets and accruing for estimated losses and ongoing expenses relating to those closed restaurants. Page 7 Total revenue decreased $5.7 million, or 22.2%, and $2.5 million, or 29.7%, for the nine-month and three-month periods ended September 30, 1997, respectively, compared to corresponding periods in 1996. The principal reason for the decrease was the closing of 19 restaurants in the second quarter of 1997 and the sale of four others to a franchisee. In addition, the decreases were partially the result of same store sales declines which were 8.7% and 11.5% for the nine-month and three-month periods ended September 30, 1997, respectively, compared to the corresponding periods in 1996. The Company continues to market its Express concept whereby franchisees operate a Noble Roman's Pizza Express operation in non-traditional restaurant locations including convenience stores, other retail outlets, schools and recreational facilities. The Company currently has 45 Pizza Express franchised locations. Royalties and fees from the Express operations were $242,900 and $140,100 for the nine-month and three-month periods ended September 30, 1997 compared to none in 1996. Cost of revenue as a percentage of restaurant revenue increased from 19.1% and 17.9% to 21.1% and 22.5% for the nine-month and three-month periods ended September 30, 1996 and 1997, respectively. These increases were primarily the result of a change in method of recording many of the specials at net sales price rather than gross sales plus discounts and higher discounts to the menu price in an effort to rebuild customer count. Salaries and wages increased as a percentage of restaurant revenue from 32.7% and 33.1% to 36.5% and 36.0% for the nine-month and three-month periods ended September 30, 1996 and 1997, respectively. These increases were the result of additional staffing to accommodate increased customer count from a discount promotion, same store sales declines, inefficiencies in scheduling as a result of inexperienced store level management, and a more competitive labor market resulting in higher average wage rates. General and administrative expenses as a percentage of total revenue increased from 7.1% and 7.3% to 10.5% and 10.6% for the nine-month and three-month periods ended September 30, 1996 and 1997, respectively. This increase was primarily attributable to additional supervision cost in the first quarter and to the decline in total revenue in the second and third quarters. As a result of the restructuring plan, the Company has reduced its general and administrative expenses. Operating income (loss) decreased from a loss of $961,200 and a loss of $10,500 to a loss of $6.7 million and $374,400 during the nine-month and three-month periods ended September 30, 1996 and 1997, respectively. The primary reason for greater loss in 1997 was the restructuring cost of $5.2 million recorded in the second quarter. Interest and other expense decreased from $1.2 million to $880,000 and decreased from $437,000 to $81,000 for the nine-month and three-month periods ended September 30, 1996 and 1997, respectively. Interest expense has not been accrued for a portion of 1997 because the interest was forgiven as a part of the financial restructuring discussed below under "Liquidity and Capital Resources." Net income (loss) decreased from losses of $1.5 million and $290,600 to $5.0 million and $299,627 during the nine-month and three-month periods ended September 30, 1997, respectively. The increase in the net loss was primarily the result of the restructuring costs recorded in the second quarter of 1997. Page 8 LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Historically, the Company's principal capital requirements arose from the costs associated with the development and opening of new restaurants and refurbishment of existing restaurants, however, no new restaurants have been opened in 1997. The Company's primary sources of working capital are cash flow from operations and borrowings under a credit facility. On March 25, 1996, the Company signed a Letter of Intent whereby it would have acquired Papa Gino's Holdings Corp. (a 180 unit pizza restaurant chain in seven northeastern states) through a merger transaction whereby the stockholders of Papa Gino's Holding Corp. would have received approximately 2.25 million shares of a to-be-authorized class of non-voting common stock of the Company. Among other things, this transaction was conditioned on a public equity offering, implementation of a senior credit facility, a definitive agreement and shareholder approval. Because of delays and uncertainties in negotiating a definitive agreement, the Company and Papa Gino's mutually agreed to terminate the Letter of Intent on June 10, 1996. The expenses incurred with regard to the proposed acquisition and offering aggregated approximately $880,862. In addition, deterioration in operating controls during this effort as a result of senior management's focus on that activity created a severe shortage of working capital. From March, 1995 through June, 1996 the Company's senior management had to focus almost all of its time on arranging for financing and the unsuccessful attempted acquisition of a 180 unit regional pizza restaurant chain operating in seven northeastern states. As a result, the Company's current operations severely deteriorated resulting in personnel turnover, poor service and difficulties with operational standards and controls. Management has sought to improve operations with the ongoing addition of new management and supervisory personnel, extensive training, the implementation of better controls and the restructuring plan completed in the second quarter of 1997 which included closing and selling a portion of its restaurants and concentrating its efforts and management personnel on the remaining restaurants. In addition, the Company began franchising Noble Roman's Pizza Express in December, 1996 and by year-end 1997 expects to have approximately 50 units in operation. Based upon market reaction to date, the Company believes that its Pizza Express concept offers significant growth potential in 1998. The Company earns approximately $5,500 in fees and commissions for each new unit opened and also receives weekly royalty payments equal to 7% of sales generated by each unit open. On November 19, 1997, the Company entered into an amended and restated credit agreement with The Provident Bank, its principal lender. The new agreement provides for the reduction of previously outstanding debt from approximately $16.9 million to $11 million, cancellation of previously accrued interest, no interest to be paid or accrued on such debt until November 1, 1998, interest on such debt of 8% per annum payable monthly in arrears after November 1, 1998, maturity of the subject note extended to December, 2001, principal payments on such debt beginning December 1, 1998 in an amount equal to 50% of excess cash flow as defined in the agreement, and the cancellation of a previously issued warrant to purchase 465,000 shares of the Company's common stock. In addition, the agreement provides for a new loan in the amount of $2.6 million due in December, 2000 with interest payable monthly in arrears at a rate of prime plus 2.5% per annum. These arrangements were made in consideration for a new warrant to purchase 2.8 million shares of common stock with an exercise price of $.01 per share. Pursuant to entering into the amended and restated credit facility, the Company issued warrants to purchase an aggregate of 1.0 million shares of common stock to certain executive officers with an exercise price of $.40 per share. Proceeds from the new loan were primarily for working capital and existing restaurant upgrades. Page 9 Based upon the amendments to the credit agreement, planned improvements in its existing full-service restaurants and the planned growth in the new franchised Express business, management believes the Company will generate sufficient cash flow to meet its obligations and to carry out its current business plan. Currently, the Company anticipates that its capital requirements in 1998 will be approximately $500,000 for improvements to its existing full-service restaurants. The Company also anticipates that most of its growth during 1998 will be generated from franchising of its new Express concept. Page 10 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. From time to time, the Company is involved in litigation relating to claims arising out of its normal business operations. The Company believes that none of its current proceedings, individually or in the aggregate, will have a material adverse effect on the Company. ITEM 2. CHANGES IN SECURITIES. As of November 19, 1997, the Company entered into an amended and restated credit facility with its bank. In connection with such amendment: (i) the bank surrendered warrants to purchase 465,000 shares of Common Stock; (ii) the Company issued to the bank warrants to purchase 2.8 million shares of Common Stock with an exercise price of $.01 per share; and (iii) the Company issued to certain executive officers warrants to purchase an aggregate of 1.0 million shares of Common Stock with an exercise price of $.40 per share. The foregoing warrants were issued in transactions not involving a public offering in reliance upon the exemption provided pursuant to Section 4(2) under the Securities Act of 1933, as amended. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None. ITEM 5. OTHER INFORMATION. Exhibit A. Proforma Balance Sheet as of September 30, 1997. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. Exhibit 10. Amended and Restated Credit Agreement Exhibit 27. Financial Data Schedule Page 11 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. NOBLE ROMAN'S, INC. /s/ Paul W. Mobley Date: December 12, 1997 ----------------------------- ------------------- Paul W. Mobley, President (Principal Executive Officer) /s/ Mitchell E. Katz Date: December 12, 1997 ----------------------------- ------------------- Mitchell E. Katz (Chief Financial Officer) Page 12 EXHIBIT A NOBLE ROMAN'S, INC. CONDENSED CONSOLIDATED PROFORMA BALANCE SHEET (UNAUDITED) The following condensed consolidated proforma balance sheet as of September 30, 1997 has been derived from the unaudited consolidated financial statements of Noble Roman's, Inc. For the purpose of the proforma, this condensed consolidated proforma balance sheet gives effect to the amended and restated credit agreement with The Provident Bank, its principal lender, as of November 19, 1997 and the application of proceeds therefrom as if such transaction had occurred as of September 30, 1997. The amended and restated agreement provides for the reduction of previously outstanding debt from approximately $16.9 million to $11 million, cancellation of previously accrued interest, no interest to be paid or accrued on such debt until November 1, 1998, interest on such debt of 8% per annum payable monthly in arrears after November 1, 1998, maturity of such debt extended to December, 2001, with principal payments beginning December 1, 1998 in an amount equal to 50% of excess cash flow as defined in the agreement, and the cancellation of a previously issued warrant to purchase 465,000 shares of the Company's common stock. In addition, the agreement provides for a new loan in the amount of $2.6 million due in December, 2000 with interest payable monthly in arrears at a rate of prime plus 2.5% per annum. These arrangements were made in consideration for a new warrant to purchase 2.8 million shares of common stock with an exercise price of $.01 per share. Proceeds from the new loan were primarily for working capital and existing restaurant upgrades. Page 13 EXHIBIT A PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1997 (In Thousands)
Proforma Adjustments Unaudited -------------------------------------- Proforma 9/30/97 Debit Credit 9/30/97 --------- ----- ------ -------- ASSETS Current Assets: Cash $ 60,925 2,580,000 (1) 2,262,000 (2) $ 378,925 Other Current Assets 1,713,811 125,300 (3) 1,588,511 ----------- ------------ Total Current Assets 1,774,736 1,967,436 Property and equipment 6,819,609 6,819,609 Deferred tax assets 2,560,436 874,768 (4) 804,922 (5) 2,630,282 Costs in excess of assets acquired 6,269,693 6,269,693 Other assets 999,941 205,300 (3) 605,889 (6) 599,352 ----------- ------------ TOTAL ASSETS $18,424,415 $18,286,372 =========== ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable and accrued expenses $ 4,384,277 875,000 (2) $ 3,509,277 Current portion of long-term debt 16,816,140 16,773,308 (7) 42,832 Deferred franchise fees 65,000 65,000 Payroll and sales tax 1,307,000 1,307,000 (2) 0 ----------- ------------ Total Current Liabilities 22,572,417 3,617,109 Long-term Debt: Long-term liabilities - other 43,953 43,953 Subordinated - note payable 0 5,773,308 (7) 16,773,308 (7) 11,000,000 Senior - note payable 0 2,580,000 (1) 2,580,000 ----------- ------------ 43,953 13,623,953 Common stock 5,518,431 2,800,000 (7) 8,318,431 Retained earnings (deficit) (9,710,386) 2,437,265 (4)(5)(6)(7) (7,273,121) ----------- ------------ Total Stockholders' Equity (deficit) (4,191,955) 1,045,310 ----------- ------------ TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $18,424,415 $18,286,372 =========== ============
(1) New loan in the amount of $2,580,000. (2) Use of proceeds from new loan to reduce accounts payable and payroll and sales taxes payable. (3) Recognition of certain financing costs as other assets. (4) Reversal of valuation allowance for deferred tax assets. (5) Recognition of tax liability arising from the transaction. (6) Recording the expense of unamortized financing costs from prior loan agreement. (7) Reduction of previously outstanding net debt from $16,773,308 to $11,000,000, issuance of stock warrants and recognition of the gain on the forgiveness of debt. Page 14 EX-27 2
5 9-MOS DEC-31-1997 SEP-30-1997 60,925 0 552,576 0 821,760 1,774,736 10,009,210 3,189,601 18,424,415 22,572,417 43,953 0 0 5,518,431 (9,710,386) 18,424,415 19,394,323 19,856,165 4,088,086 14,237,626 8,201,667 0 880,426 (7,551,640) (2,568,400) (4,983,240) 0 0 0 (4,983,240) (1.21) (1.21)
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