-----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, J9C5oTxqr5hwKJvHbpPVlLpYHfSImCtsR7P/KkPLuEIPou7vrLzAV8YdynOion0E z5j/3aLRDLGIIpAL8LjyNQ== 0000930881-99-000013.txt : 19990818 0000930881-99-000013.hdr.sgml : 19990818 ACCESSION NUMBER: 0000930881-99-000013 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990817 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: 99694132 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, 1999 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 PART I FINANCIAL INFORMATION Item 1. Financial Statements HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS June 30, January 3, 1999 1999 CURRENT ASSETS: Cash and cash equivalents $ 27,613 $ 22,169 Accounts receivable, net of allowance for doubtful accounts of $87,185 and $62,000 respectively 7,777 9,992 Other receivable 6,866 101,633 Current portion of notes and leases receivable 60,350 60,350 Prepaid expenses and other receivables 25,875 26,354 Total current assets 128,481 220,498 PROPERTY AND EQUIPMENT, at cost: Leasehold improvements 294,550 282,877 Restaurant equipment 359,285 91,477 Furniture and fixtures 5,851 5,851 Total property and equipment 659,686 380,205 Less accumulated depreciation and amortization (54,557) (13,763) Property and equipment, net 605,129 366,442 LONG TERM PORTION OF NOTES AND LEASES RECEIVABLE, net of allowance for doubtful accounts of $-0- and $-0- respectively 110,142 134,521 LIQUOR LICENSES, net of accumulated amortization of $-0- and $-0- respectively 3,288 OTHER ASSETS 16,480 15,981 Total assets $ 860,232 $ 740,730 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY June 30, January 3, 1999 1999 CURRENT LIABILITIES: Current portion of long-term debt and capital lease obligation $ 45,384 $ 8,689 Accounts payable - trade 234,107 291,772 Advances - related parties 46,982 56,940 Accrued liabilities 260,018 196,210 Total current liabilities 586,491 553,611 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION, net of current portion 567,604 258,884 OTHER LONG-TERM LIABILITIES 97,995 130,654 DEFERRED INCOME 208,540 231,852 COMMITMENTS AND CONTINGENCIES (Note 5) SHAREHOLDERS' DEFICIT: 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 (5,056,855) (4,890,728) Total shareholders' equity (600,398) (434,271) Total liabilities and and shareholders' equity $ 860,232 $ 740,730 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the three months ended June 30, June 30, 1999 1998 REVENUES: Net sales $ 262,665 $ 74,696 Franchise revenues 62,370 61,218 Equipment lease income 7,427 20,548 Gain on sales of restaurants 10,073 20,945 Other income 20,639 17,499 Total revenues 363,174 194,906 COSTS AND EXPENSES: Cost of sales 242,591 74,882 General and administrative 143,568 116,187 Depreciation and amortization 20,447 3,060 Total costs and expenses 406,606 194,129 Income (loss) from operations (43,432) 777 OTHER INCOME (EXPENSE): Interest expense (20,156) (251) Interest income 4,035 16,160 Total other income (expense) (16,121) 15,909 INCOME (LOSS) BEFORE INCOME TAXES (59,553) 16,686 Provision for income taxes NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) $ (59,553) $ 16,686 INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ (.0098) $ .0017 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the six months ended June 30, June 30, 1999 1998 REVENUES: Net sales $ 493,753 $ 301,441 Franchise revenues 102,358 144,192 Equipment lease income 14,276 33,063 Gain on sales of restaurants 16,590 32,368 Other income 42,503 33,829 Total revenues 669,480 544,893 COSTS AND EXPENSES: Cost of sales 526,075 310,431 General and administrative 247,652 255,201 Depreciation and amortization 40,895 6,340 Total costs and expenses 814,622 571,972 Income (loss) from operations (145,142) (27,079) OTHER INCOME (EXPENSE): Interest expense (29,419) (251) Interest income 8,434 23,927 Total other income (expense) (20,985) 23,676 INCOME (LOSS) BEFORE INCOME TAXES (166,127) (3,403) Provision for income taxes NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) $ (166,127) $ (3,403) INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ (.0274) $ (.0006) HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOW For the six months ended June 30, June 30, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (166,127) $ (3,403) Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 40,895 6,218 (Gain) loss on sales and closures of restaurants (16,590) (28,443) Changes in assets and liabilities: Accounts receivable 71,799 (100,549) Prepaid expenses and other (12,454) (3,226) Accounts payable (37,664) 103,319 Accrued liabilities and other 63,734 (34,020) Net cash provided (used) by operating activities (56,407) (60,104) CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sale of assets 9,000 Notes receivable principal payments 24,379 18,110 Leases receivable principal payments 26,994 Increase in fixed assets (22,657) (10,171) Net cash provided (used) by investing activities 1,722 43,933 CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 71,000 Repayments of long-term debt (10,870) Net cash provided (used) by financing activities 60,130 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 5,445 (16,171) CASH AND CASH EQUIVALENTS, beginning of period 22,168 42,401 CASH AND CASH EQUIVALENTS, end of period $ 27,613 $ 26,230 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 4,714 $ 251 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, 1999 In connection with the payment of an existing liability, the company incurred a long-term debt of $28,460. In connection with the acquisition of property and equipment, the company executed a capital lease agreement for $256,824 and incurred long-term debt of $256,824. Period ended June 30, 1998. The Company sold the restaurant located in Carrollton, TX. No notes receivable or lease receivable was generated with this sale. 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 January 3, 1999, 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, 1999 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 other receivables at June 30, 1999 ("Q2") were $6,866 as compared to $101,633 at January 3, 1999 ("FYE"). Its restaurant equipment at Q2 was $359,285 as compared to $91,477 at FYE. Equipment increased because of equipment for the January opening of the Dallas Hudson's Grill. Accumulated depreciation accordingly increased at Q2 to $54,557 from $13,763 at FYE. Trade accounts payable decreased at Q2 to $234,107 from $291,772 at FYE. On the other hand, the current portion of long term debt increased to $45,384 at Q2 from $8,689 at FYE; also accrued liabilities increased at Q2 to $260,018 from $196,210 at FYE. Long term debt and capital lease obligations increased, too, at Q2 to $567,604 from $258,884 at FYE. These increases primarily are a result of the loans received during the first quarter to complete, open and operate the Dallas Hudson's Grill in Dallas that opened in January 1999. On the other hand, the other long term liabilities decreased at Q2 to $97,995 from $130,654 at FYE. Material changes in the results of operations of Q2 compared to the second quarter of 1998 ("Q98") include the following. Net sales increased in Q2 to $262,665 from $74,696 in Q98 as a result of the newly opened Dallas location. Cost of sales increased to $242,591 in Q2 from $74,882 in Q98. Franchising revenues from restaurants under contract increased slightly from $61,218 in Q98 to $62,370 in Q2. Depreciation increased in Q2 to $20,447 from $3,060 in Q98 because of the increased equipment at the Dallas location. Thus, income from operations decreased substantially from a gain of $777 in Q98 to a loss of ($43,432) in Q2. General and administrative expenses increased in Q2 to $143,568 from $116,187 in Q98. Interest expense increased because of the loans for the new Dallas restaurant; in Q98 there was $251 in interest expense, but in Q2 the Company incurred $20,156. Interest income likewise dropped. Thus, the Company incurred a loss of ($59,553) (($.0098) per share) in Q2 as compared to a gain of $16,686 ($.0017 per share) in Q98. The Company does not believe that it will be affected by any Y2K problems as it concerns computing and administration performed by the issuer. The Company may be affected by third parties, however, to an unknown extent. Such third party effects include problems with bank accounts (paying and depositing funds) and with delays in receiving franchiser fees and payments from franchisees who encounter Y2K problems. Since the Company does not rely heavily on computer software and processing to run its business, problems with changing software to accommodate the year 2000 and years thereafter are not likely to have a material impact on the Company. 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 12, 1999. Additionally, the Company received a copy of a lawsuit that had been filed in California against it by Michael Miller and Ralph Norwood, current franchisees of the Company, alleging breaches of their franchise agreement. The lawsuit has not been served properly on the Company, and the Company believes the lawsuit was filed in an attempt to defend against a judgment that the Company has obtained in Texas against the franchisees. The Texas judgment currently is being collected in California against the franchisees; however, at this time, the Company believes that an amicable settlement ultimately can be made with the franchisees. Item 2. Changes in Securities. There were no changes in securities or in the rights of the holders of the registrant's securities during Q2. 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 Q2 except the election of directors and the ratification of the selection of the Company's auditors. Item 5. Other Information. The registrant does not have any material new information that has not already been disclosed in Forms 8-K and 10-KSB filed since April 1, 1999. 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, 1999, or shortly thereafter: 1. April 23, 1999. The Company announced the opening of a new Hudson's Grill in Marquette, Michigan, by Sharfe, L.L.C., a franchisee that is owned by Frank and Jim Stabile. It is a free standing unit based on the new design. The Company also announced the settlement of a lawsuit involving the Westlake location formerly operated by the Company. 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 16, 1999 elink\filing\10QSB.992 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE EXTRACTED FROM FINANCIAL STATEMENTS FOR 2ND QUARTER 1999 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 JAN-03-1999 JUN-30-1999 27,613 0 7,777 87,185 0 128,481 659,686 54,557 860,232 586,491 0 0 0 4,456,457 (5,056,855) 860,232 262,665 363,174 242,591 406,606 16,121 0 0 (59,553) 0 (59,553) 0 0 0 (59,553) (.01) (.01)
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