-----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, G8NEgCm5idau3tUGhbZCbgRk5RfB6G3NKMOzMCezqvjhEhIS2t6OzsREptVDp4m+ 5KQpA4DrmqBw34K7qGkM7A== 0000930881-98-000008.txt : 19980819 0000930881-98-000008.hdr.sgml : 19980819 ACCESSION NUMBER: 0000930881-98-000008 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980818 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: 98693247 BUSINESS ADDRESS: STREET 1: 16970 DALLAS 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 June 30, 1998 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 Item 1. Financial Statements. HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30, December 28, 1998 1997 CURRENT ASSETS: Cash and cash equivalents $ 26,230 $ 42,401 Accounts receivable, net of allowance for doubtful accounts of $47,425 and $49,000 respectively 56,113 69,830 Current portion of notes and leases receivable 100,000 100,000 Prepaid expenses and other receivables 134,668 23,185 Total current assets 317,011 235,416 PROPERTY AND EQUIPMENT, at cost: Leasehold improvements 13,150 2,969 Restaurant equipment 33,378 33,378 Furniture and fixtures 5,851 5,851 Total property and equipment 52,379 42,198 Less accumulated depreciation and amortization (10,396) (7,030) Property and equipment, net 41,983 35,168 LONG TERM PORTION OF NOTES AND LEASES RECEIVABLE, net of allowance for doubtful accounts of $33,000 and $33,000 respectively 759,501 791,858 LIQUOR LICENSES-net of accumulated amortization of $24,750 at June 30, 1998 and $30,000 at December 28, 1997 20,250 30,815 OTHER ASSETS 16,683 23,463 Total assets $ 1,155,428 $ 1,116,720 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY June 30, December 28, 1998 1997 CURRENT LIABILITIES: Accounts payable $ 144,205 $ 40,886 Accrued liabilities 217,883 201,343 Total current liabilities 362,088 242,229 LONG-TERM DEBT OTHER LONG-TERM LIABILITIES 163,315 206,494 DEFERRED INCOME 743,798 778,367 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 (4,570,230) (4,566,827) Total shareholders' equity (113,773) (110,370) Total liabilities and and shareholders' equity $1,155,428 $1,116,720 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the three months ended June 30, June 30, 1998 1997 REVENUES: Net sales $ 74,696 $ Franchising fees from restaurants under sales contracts 4,164 Franchise revenues 61,218 106,871 Equipment lease income 20,548 21,230 Gain on sales of restaurants 20,945 20,041 Other income 17,499 17,792 Total revenues 194,906 170,098 COSTS AND EXPENSES: Cost of sales 74,882 General and administrative 116,187 143,192 Depreciation and amortization 3,060 8,004 Total costs and expenses 194,129 151,196 Income (loss) from operations 777 18,902 OTHER INCOME (EXPENSE): Interest expense (251) (106) Interest income 16,160 20,822 Total other income (expense) 15,909 20,716 INCOME (LOSS) BEFORE INCOME TAXES 16,686 39,618 Provision for income taxes NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) $ 16,686 $ 39,618 INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ .0017 $ .004 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the six months ended June 30, June 30, 1998 1997 REVENUES: Net sales $ 301,441 $ Franchising fees from restaurants under sales contracts 12,257 Franchise revenues 144,192 182,859 Equipment lease income 33,063 38,042 Gain on sales of restaurants 32,368 36,144 Other income 33,829 34,263 Total revenues 544,893 303,565 COSTS AND EXPENSES: Cost of sales 310,431 General and administrative 255,201 277,426 Depreciation and amortization 6,340 16,303 Total costs and expenses 571,972 293,729 Income (loss) from operations (27,079) 9,836 OTHER INCOME (EXPENSE): Interest expense (251) (672) Interest income 23,927 41,179 Total other income (expense) 23,676 40,507 INCOME (LOSS) BEFORE INCOME TAXES (3,403) 50,343 Provision for income taxes NET INCOME (LOSS) $ (3,403) $ 50,343 INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ (.0006) $ .005 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOW For the six months ended June 30, June 30, 1998 1997 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (3,403) $ 50,343 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 6,218 16,303 (Gain) loss on sales and closures of restaurants (28,443) (36,144) Changes in assets and liabilities: Accounts receivable (100,549) 28,470 Prepaid expenses and other (3,226) 574 Accounts payable 103,319 (31,720) Accrued liabilities and other (34,020) (107,718) Net cash provided (used) by operating activities (60,104) (79,892) CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sale of assets 9,000 4,634 Notes receivable principal payments 18,110 53,991 Leases receivable principal payments 26,994 36,500 Fixed assets and other (10,171) Net cash provided (used) by investing activities 43,933 95,125 CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of notes payable (35,542) Net cash provided (used) by financing activities (35,542) NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (16,171) (20,309) CASH AND CASH EQUIVALENTS, beginning of period 42,401 78,680 CASH AND CASH EQUIVALENTS, end of period $ 26,230 $ 58,371 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 251 $ 902 Income taxes paid $ $ HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, continued SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: Period ended June 30, 1998 The Company sold the restaurant located in Carrollton, TX. No note receivable or lease receivable was generated with this sale. Period ended June 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. 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 28, 1997, 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 six months ended June 30, 1998 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 prepaid expenses and other receivables at June 30, 1998 ("Q2") were $134,668 as compared to $23,185 at December 28, 1997 ("FYE"). Leasehold improvements at Q2 were $13,150, while at FYE they were $2,969. The increase in the prepaid expenses and other receivables was due mostly to construction expenses incurred by a subsidiary of the issuer for a new Hudson's Grill located in Richardson, Texas, and due to an increase in interest receivables from the issuer's franchisees in Pomona, California, and Lancaster, California. Current liabilities increased at Q2 to $362,088 from $242,229 at FYE. The increase was mostly attributed to an increase in accounts payable to $144,205 for Q2 from $40,886 for FYE. This occurred because of an actual increase in payables of $54,347, and costs related to the Richardson construction of $48,972. Other long term liabilities decreased to $163,315 for Q@ from $206,494 for FYE, due to the amortization of estimated liabilities. Material changes in the results of operations of Q2 compared to the second quarter of 1997 ("Q97") include the following. Net Sales increased to $74,696 in Q2 from $0 in Q97, and cost of sales also increased to $74,882 in Q2 from $0 in Q97. These are a result of the operations of a subsidiary, and are essentially a wash. Franchise revenues dropped to $61,218 for Q2 from $106,871 in Q97, which drop reflects a decrease in new franchise fees and a decrease in franchise fee collection. On the other hand, general and administrative expenses dropped to $116,187 for Q2 from $143,192 for Q97, reflecting the termination of a consulting agreement with Dalms, Inc. Overall, income from operations decreased to $777 for Q2 from $18,902 for Q97. After adding interest income and subtracting interest expense, the issuer made a profit of $16,686 ($.0017 per share) in Q2 as compared to a profit of $39,618 ($.004 per share) in Q97. 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 May 15, 1998. Currently the only litigation against the registrant is the lawsuit involving the lease at a former Hudson's Grill in Westlake, California, and a lawsuit by a franchisee attempting to recover expenses incurred by them when they operated a Hudson's Grill in Pomona, California. The registrant is not aware of any other material litigation in process. Item 2. Changes in Securities. There have been no changes in securities or in the rights of the holders of the registrant's securities during Q2 except for the adoption and ratification at the annual shareholders meeting of a plan to incorporate a subsidiary and the spin off the subsidiary to the current shareholders of the registrant. Item 3. Defaults Upon Senior Securities. The registrant does not currently have any senior securities. Consequently, there are no defaults on senior securities. Item 4. Submission of Matters to a Vote of Security Holders. Several matters were submitted to a vote of security holders during Q2. On May 29, 1998, at the annual shareholders meeting, shareholders voted directly and through proxies on the election of three directors, the appointment of the registrant's auditors, and to adopt and ratify a plan to incorporate a subsidiary to which most of the registrant's assets were transferred and then to distribute the shares of the subsidiary to the registrant's shareholders. As a result of the votes, David Osborn, Thomas Sacco and Robert Fischer were elected as directors, Hein + Associates were appointed as the Company's auditors, and the plan to incorporate and spin off the subsidiary was adopted and ratified. Item 5. Other Information. The registrant has been in "off and on" discussions with various potential franchisees to develop restaurants. At June 1, 1998, the registrant sold its subsidiary that operated the Carrollton, Texas, Hudson's Grill to its manager. There was no gain on the sale and no notes were exchanged. 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 June 30, 1998: None 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: August 17, 1998 elink\filing\10QSB1.982 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE EXTRACTED FROM FINANCIAL STATEMENTS FOR 2ND QUARTER 1998 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. 6-MOS DEC-31-1998 JUN-30-1998 26,230 0 56,113 47,425 0 317,011 52,379 10,396 1,155,428 362,088 0 0 0 4,456,457 (4,570,230) 1,155,428 74,696 194,906 74,882 194,129 (15,909) 0 251 16,686 0 16,686 0 0 0 16,686 .002 .002
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