-----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, IrXRq5jrWVO96iQQVYkMgLZAW97X1/zguiBC7ofK2m1ZOPl6+Ruy/472I27cYjKk kaXeYbCnlzsxZn+rMRBsyA== 0000930881-97-000014.txt : 19971117 0000930881-97-000014.hdr.sgml : 19971117 ACCESSION NUMBER: 0000930881-97-000014 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: HUDSONS GRILL OF AMERICA INC CENTRAL INDEX KEY: 0000729545 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 953477313 STATE OF INCORPORATION: CA FISCAL YEAR END: 1229 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-13642 FILM NUMBER: 97721668 BUSINESS ADDRESS: STREET 1: 16970 DALLAS NORTH PKWY STE 402 CITY: DALLAS STATE: TX ZIP: 75248 BUSINESS PHONE: 2149319743 MAIL ADDRESS: STREET 1: 16970 DALLAS PARKWAY STREET 2: SUITE 402 CITY: DALLAS STATE: TX ZIP: 75248 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN RESTAURANTS CORP DATE OF NAME CHANGE: 19910825 10QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 Commission file number 0-13642 HUDSON'S GRILL OF AMERICA, INC. (Name of small business issuer in its charter) California (State or other jurisdiction of incorporation) 95-3477313 (IRS Employer Identification Number) 16970 Dallas Parkway, Suite 402, Dallas, Texas 75248 (Address of Principal Executive Offices) Issuer's telephone number, including area code: (972) 931-9237 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO CORPORATE REGISTRANTS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. 6,056,986 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS September 30, December 29, 1997 1996 CURRENT ASSETS: Cash and cash equivalents $ 102,547 $ 78,680 Accounts receivable, net of allowance for doubtful accounts of $36,000 and $22,907 respectively 36,740 66,165 Current portion of notes and leases receivable 100,652 121,055 Prepaid expenses and other 35,477 16,492 Total current assets 275,416 282,392 PROPERTY AND EQUIPMENT, at cost: Leasehold improvements 558,211 614,706 Restaurant equipment 358,699 518,674 Furniture and fixtures 120,149 188,507 Total property and equipment 1,037,059 1,321,887 Less accumulated depreciation and amortization (845,135) (1,080,338) Property and equipment, net 191,924 241,549 LONG TERM PORTION OF NOTES AND LEASES RECEIVABLE 838,608 748,222 LIQUOR LICENSES-net of accumulated amortization of $28,500 at September 30, 1997 and $30,000 at December 29, 1996 31,500 45,186 OTHER ASSETS 23,905 34,711 Total assets $ 1,361,353 $ 1,352,060 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY September 30, December 29, 1997 1996 CURRENT LIABILITIES: Current portion of long-term debt $ $ 35,542 Accounts payable 29,822 46,922 Accrued liabilities 23,877 82,500 Total current liabilities 53,699 164,964 LONG-TERM DEBT OTHER LONG-TERM LIABILITIES 243,046 293,908 DEFERRED INCOME 777,181 612,360 COMMITMENTS AND CONTINGENCIES (Note 4) SHAREHOLDERS' EQUITY: Preferred stock, 5,000,000 shares authorized, none issued or outstanding Common stock, no par value 100,000,000 shares authorized 6,056,986 shares issued and outstanding 4,456,457 4,456,457 Accumulated deficit (4,169,030) (4,175,629) Total shareholders' equity 287,427 280,828 Total liabilities and and shareholders' equity $1,361,353 $1,352,060 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the nine months ended September 30, September 30, 1997 1996 REVENUES: Net sales $ 103,890 $ 109,806 Joint venture revenues 30,019 Franchising fees from restaurants under sales contracts 15,573 84,386 Franchise revenues 252,463 221,010 Equipment lease income 56,139 49,030 Gain on sales of restaurants 53,165 27,775 Other income 51,440 422 Total revenues 532,670 522,448 COSTS AND EXPENSES: Cost of sales 116,938 157,803 General and administrative 445,584 477,992 Depreciation and amortization 24,371 32,501 Total costs and expenses 586,893 668,296 Income (loss) from operations (54,223) (145,848) OTHER INCOME (EXPENSE): Interest expense (672) (73,075) Interest income 61,494 131,105 Total other income (expense) 60,822 58,030 INCOME (LOSS) BEFORE INCOME TAXES 6,599 (87,818) Provision for income taxes NET INCOME (LOSS) $ 6,599 $ (87,818) INCOME (LOSS) PER SHARE Net income (loss) per share $ .0007 $ (.0145) HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) For the three months ended September 30, September 30, 1997 1996 REVENUES: Net sales $ 103,890 $ Joint venture revenues 3,080 Franchising fees from restaurants under sales contracts 3,316 34,504 Franchise revenues 69,604 73,274 Equipment lease income 18,097 13,691 Gain on sales of restaurants 17,021 13,140 Other income 17,177 422 Total revenues 229,105 138,111 COSTS AND EXPENSES: Cost of sales 116 938 3,246 General and administrative 168,158 129,544 Depreciation and amortization 8,068 8,808 Total costs and expenses 293,164 141,598 Income (loss) from operations (64,059) (3,487) OTHER INCOME (EXPENSE): Interest expense (24,059) Interest income 20,315 47,212 Total other income (expense) 20,315 23,153 INCOME (LOSS) BEFORE INCOME TAXES (43,744) 19,666 Provision for income taxes NET INCOME (LOSS) $ (43,744) $ 19,666 INCOME (LOSS) PER SHARE Net income (loss) per share $ (.007) $ .002 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOW For the nine months ended September 30, September 30, 1997 1996 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ 6,599 $ (87,818) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 24,371 32,502 (Gain) loss on sales and closures of restaurants (53,165) (27,775) Changes in assets and liabilities: Accounts receivable 3,944 (15,726) Prepaid expenses and other (8,315) 4,264 Accounts payable (17,100) (23,356) Accrued liabilities and other (118,848) (68,108) Net cash used by operating activities (162,514) (186,017) CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sale of assets 4,634 7,913 Notes receivable principal payments 170,125 155,861 Leases receivable principal payments 51,692 157,114 Fixed assets and other (4,528) 4,799 Net cash provided (used) by investing activities 221,923 325,687 CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of notes payable (35,542) (65,173) Net cash provided (used) by financing activities (35,542) (65,173) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 23,867 74,497 CASH AND CASH EQUIVALENTS, beginning of period 78,680 48,295 CASH AND CASH EQUIVALENTS, end of period $ 102,547 $ 122,792 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 902 $ 70,894 Income taxes paid $ $ 4,800 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, continued SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: Period ended September 30, 1997 In connection with the sale of a restaurant and equipment, the Company received a note receivable of $114,200 and a lease receivable of $240,000. Period ended September 30, 1996 In connection with the sale of the Oxnard, CA restaurant, the Company received a note receivable of $282,086 and a lease receivable of $450,000. The note and lease receivable were foreclosed on during 1996 and the fixtures and equipment repossessed. A note and lease receivable in the total amount of $195,000 relating to the Westlake, CA restaurant were foreclosed upon by the Company and the location repossessed. In connection with the sale of the Hornblowers restaurant, the Company received a note receivable in the amount of $294,000. HUDSON'S GRILL OF AMERICA, INC. Notes to Consolidated Financial Statements A. Basis of Presentation Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although management believes the disclosures are adequate to make the information presented not misleading. These interim financial statements should be read in conjunction with the Company's annual report and most recent audited financial statements included in the report on Form 10-KSB for the year ended December 29, 1996, filed with the Securities and Exchange Commission. The interim financial information included hereto is unaudited; however, such information reflects all the adjustments (consisting solely of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of results of operations and cash flows for the interim periods. The results of operations for the three and nine months ended September 30, 1997 are not necessarily indicative of the results to be expected for the full year. Item 2. Management Discussion and Analysis. Material changes in the financial condition of the issuer and in the results of its operations since the end of its last fiscal year and its results from the comparable period in its last fiscal year include the following. The issuer's accounts receivable at September 30, 1997 ("Q3") were $36,740 as compared to $66,165 at December 29, 1996 ("FYE"). The current portion of issuer's notes and leases receivable at Q3 was $100,652 as compared to $121,055 at FYE. Leasehold improvements at Q3 were $558,211, while at FYE they were $614,706. At the same time, restaurant equipment decreased from $518,674 at FYE to $358,699 at Q3. The decreases in these last two asset accounts were due mostly from the sale of a restaurant in the first quarter. For that same reason, the long term portion of notes receivable increased in the first nine months from $748,222 to $838,608. Current liabilities decreased at Q3 to $53,699 from $164,964 at FYE. The current portion of long term debt, accounts payable, and accrued liabilities all decreased in Q3, as debts were being paid. Deferred income increased at Q3 to $777,181 from $612,360 at FYE. This reflects the sale of a restaurant in the first quarter. Material changes in the results of operations of Q3 compared to the third quarter of 1996 ("Q96") include the following. Net Sales increased to $103,890 in Q3 from $0 in Q96, and cost of sales also increased to $116,938 in Q3 from $3,246 in Q96. These are a result of the repossession of a restaurant during the third quarter of 1997; it is currently operated by a subsidiary of the Company. Franchising fees from restaurants under contract decreased from $34,504 in Q96 to $3,316 in Q3 because there are currently no restaurants operating while under a sales contract. General and administrative expenses increased in Q3 to $168,158 from $129,544 in Q96. This was due to expenses incurred in opening the registrant's first international franchise in Guatemala. Interest expense decreased to $0 in Q3 from $24,059 in Q96 as various notes have been paid off during the past year. The issuer incurred a loss of $43,744 (($.007) per share) in Q3 as compared to a profit of $19,666 ($.002 per share) in Q96. PART II - OTHER INFORMATION Item 1. Legal Proceedings. The registrant incorporates by reference its response in its Form 10-KSB filed with the Securities and Exchange Commission on April 15, 1997. Currently all major litigation involving the registrant has been settled, and the registrant is not aware of any material litigation in process. Item 2. Changes in Securities. There were no changes in securities or in the rights of the holders of the registrant's securities during Q3. Item 3. Defaults Upon Senior Securities. The registrant does not currently have any senior securities outstanding. Consequently, there are no defaults on senior securities. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders during Q3. Item 5. Other Information. The registrant has been in "off and on" discussions with various potential franchisees to develop restaurants. No new agreements have been signed since the signing of the registrant's first franchise in Michigan, which was announced in April 1997. The registrant has contracted with a regional investment broker with the hope of raising capital for the registrant. The registrant is not currently aware of any genuine prospects for new capital or credit as a result of its agreement with the regional investment broker. A lease has been signed by the registrant as part of a plan to open a company owned restaurant for the purpose of using the new restaurant as a model and training site. The registrant plans to have the restaurant open for business in February or March 1998. Negotiations to purchase two restaurants from a franchisee that is affiliated with the registrant's`president, Mr. Osborn, have ceased without any agreement. Future negotiations are currently not anticipated. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibit Index. Following are the exhibits required under Item 601 of Regulation S-B for Form 10-QSB: Item 601 Exhibit No. Description Page Number (2) Plan of Acquisition, Reorgani- zation, Arrangement, Liquida- tion, or Succession n/a (4) Instruments Defining the Rights of Holders Including Indentures n/a (6) No Exhibit Required. n/a (11) Statement Re: Computation of Per Share Earnings n/a (12) No Exhibit Required. n/a (15) Letter on Unaudited Interim Financial Information n/a (18) Letter on Change in Accounting Principles n/a (19) Previously Unfiled Documents n/a (20) Reports Furnished to Security Holders n/a (23) Published Report Regarding Matters Submitted to Vote n/a (24) Consent of Experts and Counsel n/a (25) Power of Attorney n/a (27) Financial Data Schedule attached (28) Additional Exhibits n/a No explanation of the computation of per share earnings on both the primary and fully diluted basis is necessary because the computation can be clearly determined from the financial statements and the notes to the financial statements. No reports on unaudited interim financial information have been prepared by the Company's independent accountants, and therefore, no letter is required from the Company's independent accountants. (b) Reports on Form 8-K. The following reports on Form 8-K were filed during the quarter ending September 30, 1997: 1. July 21, 1997. The Company announced that it filled a vacancy on its board of directors; that two area representation and franchise development agreements were terminated; and that it had reduced its consulting agreement with its inside consultant, Dalm's, Inc. 2. September 16, 1997. The Company announced that its Guatemala franchisee opened the first international Hudson's Grill restaurant; that it had signed a lease for a build to suit restaurant in Dallas; and that a franchisee had closed a restaurant. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. (Registrant) HUDSON'S GRILL OF AMERICA, INC. By: s/s David L. Osborn David L. Osborn, President Date: November 15, 1997 elink\filing\10QSB.973 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE EXTRACTED FROM FINANCIAL STATEMENTS FOR 3RD QUARTER 1997 FORM 10-QSB
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S QUARTERLY FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS JAN-04-1998 SEP-30-1997 102,547 0 36,740 36,000 0 275,416 1,037,058 845,135 1,361,353 53,699 0 0 0 4,456,457 (4,169,030) 1,361,353 103,890 229,105 116,938 293,164 20,315 0 0 (43,744) 0 (43,744) 0 0 0 (43,744) (.007) (.007)
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