-----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, LLUyECjvXt/a/nMV05tO1cCPkw/HFKxV7md/RfYkaMy3UL0wUoZqh/ixBV8gs1dr c1uSGBdmxENNO/auelz+wg== 0000930881-99-000027.txt : 19991122 0000930881-99-000027.hdr.sgml : 19991122 ACCESSION NUMBER: 0000930881-99-000027 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991119 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: 99761315 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 September 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 September 30, January 31, 1999 1999 CURRENT ASSETS: Cash and cash equivalents $ 16,795 $ 22,169 Accounts receivable, net of allowance for doubtful accounts of $99,180 and $62,000 respectively 7,220 9,992 Other receivable 5,291 101,633 Current portion of notes and leases receivable 60,350 60,350 Prepaid expenses and other receivables 31,558 26,354 Total current assets 121,214 220,498 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 (74,954) (13,763) Property and equipment, net 584,732 366,442 LONG TERM PORTION OF NOTES AND LEASES RECEIVABLE, net of allowance for doubtful accounts of $-0- and $-0- respectively 100,072 134,521 LIQUOR LICENSES, net of accumulated amortization of $-0- and $-0- respectively 3,288 OTHER ASSETS 16,429 15,981 Total assets $ 822,447 $ 740,730 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED) LIABILITIES AND SHAREHOLDERS' EQUITY September 30, January 3, 1999 1999 CURRENT LIABILITIES: Current portion of long-term debt and capital lease obligation $ 57,879 $ 8,689 Accounts payable - trade 247,462 291,772 Advances - related parties 59,124 56,940 Accrued liabilities 280,187 196,210 Total current liabilities 644,652 553,611 LONG-TERM DEBT AND CAPITAL LEASE OBLIGATION, net of current portion 550,795 258,884 OTHER LONG-TERM LIABILITIES 81,665 130,654 DEFERRED INCOME 198,327 231,852 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 (5,109,449) (4,890,728) Total shareholders' equity (652,992) (434,271) Total liabilities and and shareholders' equity $ 822,447 $ 740,730 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the three months ended September 30, September 30, 1999 1998 REVENUES: Net sales $ 233,332 $ Franchise revenues 66,388 68,760 Equipment lease income 7,084 12,109 Gain on sales of restaurants 6,853 4,223 Other income 16,330 18,335 Total revenues 329,987 103,427 COSTS AND EXPENSES: Cost of sales 225,241 11 General and administrative 120,392 112,954 Depreciation and amortization 20,449 1,984 Total costs and expenses 366,082 114,949 Income (loss) from operations (36,095) (11,522) OTHER INCOME (EXPENSE): Interest expense (20,166) Interest income 3,668 15,028 Total other income (expense) (16,498) 15,028 INCOME (LOSS) BEFORE INCOME TAXES (52,593) 3,506 Provision for income taxes NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) $ (52,593) $ 3,506 INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ (.00868) $ .0003 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) For the nine months ended September 30, September 30, 1999 1998 REVENUES: Net sales $ 727,085 $ 301,441 Franchise revenues 168,746 212,952 Equipment lease income 21,360 45,172 Gain on sales of restaurants 23,443 36,591 Other income 58,833 52,164 Total revenues 999,467 648,320 COSTS AND EXPENSES: Cost of sales 751,316 310,442 General and administrative 368,044 368,155 Depreciation and amortization 61,344 8,324 Total costs and expenses 1,180,704 686,921 Income (loss) from operations (181,237) (38,601) OTHER INCOME (EXPENSE): Interest expense (49,585) (251) Interest income 12,102 38,955 Total other income (expense) (37,483) 38,704 INCOME (LOSS) BEFORE INCOME TAXES (218,720) 103 Provision for income taxes NET INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS) $ (218,720) $ 103 INCOME (LOSS) PER SHARE Basic and diluted net income (loss) and comprehensive income (loss) per share $ (.03611) $ .00001 HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOW For the nine months ended September 30, September 30, 1999 1998 CASH FLOWS FROM OPERATING ACTIVITIES: Net income (loss) $ (218,720) $ 103 Adjustments to reconcile net income (loss) to net cash used by operating activities: Depreciation and amortization 61,343 8,324 (Gain) loss on sales and closures of restaurants (23,443) (36,591) Changes in assets and liabilities: Accounts receivable 61,935 (19,273) Prepaid expenses and other (22,686) (4,947) Accounts payable (24,309) 32,770 Accrued liabilities and other 92,897 (5,534) Net cash provided (used) by operating activities (72,983) (25,148) CASH FLOWS FROM INVESTING ACTIVITIES: Net proceeds from sale of assets 20,120 Notes receivable principal payments 34,449 31,712 Leases receivable principal payments 37,148 Increase in fixed assets (22,657) (126,016) Net cash provided (used) by investing activities 11,792 (37,036) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from long-term debt 71,000 100,000 Repayments of long-term debt (15,183) Net cash provided (used) by financing activities 55,817 100,000 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (5,374) 37,816 CASH AND CASH EQUIVALENTS, beginning of period 22,169 42,401 CASH AND CASH EQUIVALENTS, end of period $ 16,795 $ 80,217 SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 8,218 $ 251 Income taxes paid $ $ HUDSON'S GRILL OF AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS, continued SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS: Period ended September 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 September 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 nine months ended September 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 September 30, 1999 ("Q3") were $5,291 as compared to $101,633 at January 3, 1999 ("FYE"). Its restaurant equipment at Q3 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 Q3 to $74,954 from $13,763 at FYE. Trade accounts payable decreased at Q3 to $247,462 from $291,772 at FYE. On the other hand, the current portion of long term debt increased to $57,879 at Q3 from $8,689 at FYE; also accrued liabilities increased at Q3 to $280,187 from $196,210 at FYE. Long term debt and capital lease obligations increased, too, at Q3 to $550,795 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 Q3 to $81,665 from $130,654 at FYE. Material changes in the results of operations of Q3 compared to the second quarter of 1998 ("Q98") include the following. Net sales increased in Q3 to $233,665 from $0 in Q98 as a result of the newly opened Dallas location. As a consequent, cost of sales increased to $225,241 in Q3 from $11 in Q98. Franchising revenues from restaurants decreased slightly from $68,760 in Q98 to $66,388 in Q3. Depreciation increased in Q3 to $20,166 from $1,984 in Q98 because of the increased equipment at the Dallas location. Thus, income from operations decreased substantially from a loss of ($11,522) in Q98 to a loss of ($36,095) in Q3. General and administrative expenses increased in Q3 to $120,392 from $112,954 in Q98. Interest expense increased because of the loans for the new Dallas restaurant; in Q98 there was $0 in interest expense, but in Q3 the Company incurred $20,166. Interest income likewise dropped from $15,028 in Q98 to $3,668 in Q3. Thus, the Company incurred a loss of ($52,593) (($.0087) per share) in Q3 as compared to a gain of $3,506 ($.0003 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. The Pearlstein case has been dismissed. 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 Company believes the lawsuit was filed in an attempt to defend against a judgment that the Company has obtained in Texas against the franchisees. Mr. Miller has since filed personal bankruptcy, and the registrant is unsure what impact that will have on the lawsuit. The Texas judgment currently is being collected in California against the franchisee; however, at this time, the Company is unsure what it will collect, if anything, on its judgment against the franchisee. The registrant also has been served with a lawsuit stemming from the closure of the Lancaster, California location by the franchisee that operated at that location. The registrant feels that the lawsuit is without merit since it offered to operate that location, but was turned down by the landlord. The registrant believes that it will be served with a lawsuit from the landlord of the Pomona, California location of a previous franchisee. The Whittier lease lawsuit also continues, without any real possibility of settlement. 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. Since the end of Q3, the directors decided to issue 600,000 shares to David Osborn, Clifford Osborn, and Robert Fischer, in exchange for some debt reduction. 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 does not have any material new information that has not already been disclosed in Forms 8-K, 10-QSB and 10-KSB filed since April 1, 1999, other than it plans to sell its Dallas Hudson's Grill because of its poor performance; it hopes to find a buyer by the end of the year and hopes to spin off the Hudson's Grill International, Inc., subsidiary in the early part of 2000. 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, 1999, or shortly thereafter: 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: November 19, 1999 elink\filing\10QSB.993 EX-27 2 ARTICLE 5 FINANCIAL DATA SCHEDULE EXTRACTED FROM FINANCIAL STATEMENTS FOR 3RD QUARTER 1999 FORM 10-QSB WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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-03-1999 SEP-30-1999 16,795 0 7,220 99,180 0 121,214 659,686 74,954 822,447 644,652 0 0 0 4,456,457 (5,109,449) 822,447 727,085 999,467 751,316 1,180,704 37,483 0 0 (218,720) 0 (218,720) 0 0 0 (218,720) (.0361) (.0361)
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