-----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, AAaY8PBGdyW/jt0yrZQmPDaa310zKfA2u2Nl8KRrVkShcW0UX0P7DPDjzGGPeLa6 uM3HiRoZkpv42uIehAju6g== 0000950148-96-000380.txt : 19960315 0000950148-96-000380.hdr.sgml : 19960315 ACCESSION NUMBER: 0000950148-96-000380 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960131 FILED AS OF DATE: 19960314 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CALIFORNIA BEACH RESTAURANTS INC CENTRAL INDEX KEY: 0000738274 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 952693503 STATE OF INCORPORATION: CA FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-12226 FILM NUMBER: 96534868 BUSINESS ADDRESS: STREET 1: 17383 SUNSET BLVD STE 140 CITY: PACIFIC PALISADES STATE: CA ZIP: 90272 BUSINESS PHONE: 3104599676 MAIL ADDRESS: STREET 2: 17351 SUNSET BLVD STE 404 CITY: PACIFIC PALISADES STATE: CA ZIP: 90272 FORMER COMPANY: FORMER CONFORMED NAME: IHV CORP DATE OF NAME CHANGE: 19900912 FORMER COMPANY: FORMER CONFORMED NAME: NATURAL ORGANICS INC DATE OF NAME CHANGE: 19860318 10-Q 1 QUARTERLY REPORT FOR PERIOD ENDED 1/31/96 1 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 January 31, 1996 ----------------------------------------- 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 0-12226 -------------------------- CALIFORNIA BEACH RESTAURANTS, INC. ------------------------------------------------------ (Exact name of Registrant as specified in its charter) CALIFORNIA 95-2693503 ------------------------------- ---------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 17383 Sunset Boulevard, Suite 140, Pacific Palisades, CA 90272 -------------------------------------------------------------- (Address and zip code of Principal executive offices) (310) 459-9676 -------------------------------------------------------------- (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 the filing requirements for at least the past 90 days. Yes X No ------- ------- Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date: Number of Shares Outstanding Class at March 7, 1996 ----- ---------------------------- Common Stock, $.01 par value 3,400,975 ---------------------------- ------------------- 2 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES JANUARY 31, 1996 INDEX
Part I - FINANCIAL INFORMATION Page Number ----------- Item 1. Financial Statements (Unaudited) Consolidated Balance Sheets at January 31, 1996 and April 30, 1995............................................3 Consolidated Statements of Operations for the Three Months Ended and Nine Months Ended January 31, 1996 and 1995....................................5 Consolidated Statements of Cash Flows for the Nine Months Ended January 31, 1996 and 1995..................6 Notes to Consolidated Financial Statements....................8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..........................10 Part II - OTHER INFORMATION Item 1. Legal Proceedings............................................13 Item 2. Changes in Securities .......................................13 Item 3. Defaults Upon Senior Securities..............................13 Item 4. Submission of Matters to a Vote of Security Holders..........13 Item 5. Other Information............................................13 Item 6. Exhibits and Reports on Form 8-K.............................13 Signature Page........................................................14
2 3 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS ASSETS
January 31, 1996 April 30, 1995 ---------------- -------------- (Unaudited) (1) Current Assets: Cash $ 209,000 $ 493,000 Restricted cash 500,000 500,000 Trade and other receivables 29,000 22,000 Inventories 271,000 262,000 Prepaid expenses 222,000 155,000 ---------- ---------- Total current assets 1,231,000 1,432,000 Fixed Assets (at cost) - net of accumulated depreciation and amortization (Note C ) 1,398,000 1,562,000 Other Assets: Goodwill, net of accumulated amortization 3,019,000 3,568,000 Other 163,000 147,000 ---------- ---------- $5,811,000 $6,709,000 ========== ==========
The accompanying notes to consolidated financial statements are an integral part of this statement. (1) The April 30, 1995 amounts have been extracted from the Company's Annual Report on Form 10-K for the year ended April 30, 1995. 3 4 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
January 31, 1996 April 30, 1995 ---------------- ---------------- (Unaudited) (1) Current Liabilities: Accounts payable $ 536,000 $ 665,000 Accrued interest - 27,000 Accrued liabilities 590,000 656,000 Current portion of long-term debt (Note D) 1,218,000 1,161,000 ------------ ------------ Total current liabilities 2,344,000 2,509,000 Long-term debt, less current portion (Note D) 1,713,000 2,776,000 9.75% convertible subordinated notes (Note E) - 783,000 Stockholders' Equity (Note E): Common stock, $.01 par value, authorized 25,000,000 shares, issued and outstanding, 3,400,975 shares at January 31, 1996 and 280,000 shares at April 30, 1995 34,000 3,000 Series A convertible preferred stock, no par value, authorized 5,000,000 shares, issued and outstanding none at January 31, 1996 and 2,223,556 shares at April 30, 1995 - 1,694,000 Additional paid-in capital 13,175,000 10,853,000 Accumulated deficit (11,455,000) (11,909,000) ------------ ------------ Total stockholders' equity 1,754,000 641,000 ------------ ------------ $ 5,811,000 $ 6,709,000 ============ ============
The accompanying notes to consolidated financial statements are an integral part of this statement. (1) The April 30, 1995 amounts have been extracted from the Company's Annual Report on Form 10-K for the year ended April 30, 1995. 4 5 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended January 31, January 31, ------------------------ ------------------------ 1996 1995 1996 1995 ---- ---- ---- ---- Sales $3,723,000 $3,448,000 $11,384,000 $11,014,000 Costs and Expenses: Cost of goods sold 3,231,000 3,094,000 9,135,000 9,152,000 Selling, general and administrative 302,000 294,000 747,000 714,000 Legal and litigation settlement 45,000 34,000 141,000 168,000 Depreciation 131,000 142,000 330,000 345,000 ---------- ---------- ----------- ----------- 14,000 (116,000) 1,031,000 635,000 Other income (expenses): Interest expense (1,000) (159,000) (43,000) (629,000) Amortization of intangible assets (219,000) (351,000) (549,000) (866,000) Write-down of goodwill - (2,500,000) - (2,500,000) Other, net 11,000 30,000 23,000 42,000 ---------- ---------- ----------- ----------- Income (loss) before income taxes (195,000) (3,096,000) 462,000 (3,318,000) Provision for income taxes 2,000 1,000 8,000 3,000 ---------- ---------- ----------- ----------- Income (loss) before extraordinary item (197,000) (3,097,000) 454,000 (3,321,000) Extraordinary item: Gain from debt restructuring - 2,552,000 - 2,552,000 ---------- ---------- ----------- ----------- Net Income (loss) ($197,000) ($545,000) $454,000 ($769,000) ========== ========== =========== =========== Net Income (loss) per common share (Note F): Primary ($.06) ($1.95) $.16 ($2.74) ========== ========== =========== =========== Fully-diluted ($.06) ($1.95) $.14 ($2.74) ========== ========== =========== ===========
The accompanying notes to consolidated financial statements are an integral part of this statement. 5 6 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS NINE MONTHS ENDED JANUARY 31, (UNAUDITED)
1996 1995 ---- ---- Cash flows from operating activities: Net Income (loss) $ 454,000 ($ 769,000) Adjustments to reconcile net income (loss) to cash provided by operations: Depreciation and amortization 879,000 1,210,000 Write-down of goodwill -- 2,500,000 Debt forgiveness -- (3,160,000) Convertible preferred stock issued to bank -- 980,000 Deferred loan fees -- 57,000 Changes in operating assets and liabilities: Trade and other receivables (7,000) 4,000 Inventories (9,000) (26,000) Prepaid expenses (67,000) (16,000) Accounts payable (129,000) 17,000 Accrued interest (27,000) -- Accrued liabilities (66,000) (352,000) ----------- ----------- Cash provided by operations 1,028,000 445,000 ----------- ----------- Cash flows used in investing activities: Additions to fixed assets (145,000) (257,000) Increase in other assets (16,000) -- ----------- ----------- Net cash used in investing activities (161,000) (257,000) ----------- ----------- Cash flows from financing activities: Net proceeds from Rights Offering 79,000 -- Redemption of 9.75% convertible subordinated notes (203,000) -- Proceeds from issuance of 9.75% convertible subordinated notes -- 783,000 Proceeds from sale of preferred stock -- 714,000 Principal payments on borrowings (1,027,000) (1,938,000) ----------- ----------- Net cash used in financing activities (1,151,000) (441,000) ----------- ----------- Net decrease in cash (284,000) (253,000) Cash at beginning of period 493,000 774,000 ----------- ----------- Cash at end of period $ 209,000 $ 521,000 =========== ===========
6 7 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED NINE MONTHS ENDED JANUARY 31, (UNAUDITED)
1996 1995 ------ ------ Supplemental disclosures of cash flow information: In connection with settlement of a contingent note payable, the Company recorded a $500,000 liability during the quarter ended January 31, 1995. Cash paid during the period for: Interest $66,000 $ - ======= ====== Income taxes $ 2,000 $4,000 ======= ======
During 1995 the Company incurred a capital lease obligation of $21,000 in connection with a lease agreement to acquire equipment. The accompanying notes to consolidated financial statements are an integral part of this statement 7 8 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE A - BASIS OF PRESENTATION The unaudited consolidated financial statements presented herein include the accounts of California Beach Restaurants, Inc., and its wholly-owned subsidiaries (the "Company"). All significant intercompany accounts and transactions have been eliminated. The unaudited consolidated financial statements presented herein have been prepared in accordance with generally accepted accounting principles and the instructions to Form 10-Q and article 10 of Regulation S-X and do not include all of the information and footnote disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying financial statements include all adjustments (consisting of normal recurring accruals) necessary for a fair presentation of the Company's financial position and results of operations. The results of operations for the nine month period ended January 31, 1996 may not be indicative of the results that may be expected for the year ending April 30, 1996. These statements should be read in conjunction with the financial statements and notes thereto included in the Company's Form 10-K for the year-ended April 30, 1995. NOTE B - ACCOUNTING PERIODS The Company's restaurant operations are conducted through its wholly-owned subsidiary, Sea View Restaurants, Inc. ("Sea View"). The Company's consolidated financial statements for the three months and nine months ended January 31, 1996 and 1995 include Sea View's operations for the sixteen weeks and forty weeks ended February 1, 1996 and February 2, 1995, respectively. NOTE C - FIXED ASSETS
January 31, 1996 April 30, 1995 ---------------- -------------- Leasehold improvements $ 2,661,000 $ 2,606,000 Furniture and equipment 795,000 725,000 ----------- ----------- 3,456,000 3,331,000 Less accumulated depreciation and amortization (2,058,000) (1,769,000) ----------- ----------- $ 1,398,000 $ 1,562,000 =========== ===========
NOTE D - LONG-TERM DEBT On December 22, 1994 Sea View completed a restructuring of its bank debt and entered into an Amended and Restated Loan Agreement ("Amended Loan"). The Amended Loan included a senior secured note in the principal amount of $3,000,000, bearing interest at 12% per annum, and payable at varying monthly amounts through October 31, 1997, and a junior secured note in the amount of $400,000 accruing interest at 12% per annum with both interest and principal payable in a single lump sum on October 31, 1997. Interest to maturity on the senior secured and junior secured notes is included in the carrying value of such notes, in accordance with Financial Accounting Standards Board Statement No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring," and will not be recognized as interest expense in current and future years. At January 31, 1996 the balance of the senior secured note was $2,359,000, including $259,000 of future interest costs, while the balance on the junior secured note was $557,000, including $98,000 of future interest costs. 8 9 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED (UNAUDITED) NOTE E - RIGHTS OFFERING On October 18, 1995 the Company completed a Rights Offering to certain shareholders that did not participate in the December 22, 1994 private placement. Eligible shareholders as of September 11, 1995 received 4.7215 rights for each share of stock that they owned. Each right entitled the holder to purchase one share of common stock at $.83 per share. The proceeds of the offering were used to partially redeem the Company's outstanding 9.75% convertible subordinated notes which, if not redeemed, were scheduled to convert into common stock as of October 30, 1995. The Company raised approximately $203,000 from the exercise of 244,020 rights. The proceeds from the Rights Offering were distributed to the holders of the 9.75% convertible subordinated notes on a pro-rata basis. The unredeemed portion of the notes converted into 696,207 shares of common stock. Expenses of the Rights Offering, which were paid by the Company, approximated $124,000. NOTE F - EARNINGS PER SHARE Primary earnings per common share are calculated by dividing net earnings applicable to common stock by the average of common stock outstanding and common stock equivalents. On a fully-diluted basis, both net earnings and shares outstanding are adjusted to assume the conversion of the 9.75% convertible subordinated notes as of May 1, 1995.
Three Months Ended Nine Months Ended January 31, January 31, ------------------------ ---------------------- 1996 1995 1996 1995 ---- ---- ---- ---- Net Income (loss) ($197,000) ($545,000) $ 454,000 ($769,000) Net Income (loss) per common share: Primary: Before extraordinary items ($.06) ($11.06) $.16 ($11.85) Extraordinary items - 9.11 - 9.11 --------- --------- --------- --------- Net Income (loss) ($.06) ($1.95) $.16 ($2.74) ========= ========= ========= ========= Fully-Diluted: Before extraordinary items ($.06) ($11.06) $.14 ($11.85) Extraordinary items - 9.11 - 9.11 --------- --------- --------- --------- Net Income (loss) ($.06) ($1.95) $ .14 ($2.74) ========= ========= ========= ========= Weighted average number of common shares outstanding: Primary 3,401,000 280,000 2,778,000 280,000 ========= ========= ========= ========= Fully-diluted 3,401,000 280,000 3,400,000 280,000 ========= ========= ========= =========
9 10 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. RESULTS OF OPERATIONS RESTAURANT REVENUES Total sales for the three months ended January 31, 1996 were $3,723,000 compared with $3,448,000 for the same period last year, an increase of $275,000 or 8.0%. The Registrant's Gladstone's 4 Fish restaurant is located on the beach in Pacific Palisades, California and is dependent, to a certain extent, on favorable weather and tourism. Sales for the three months ended January 31, 1996 benefited significantly from favorable weather and minimal rainfall as compared with the same period last year. Sales for the nine months ended January 31, 1996 were $11,384,000 compared with $11,014,000 for the same period last year, an increase of $370,000 or 3.4%. The sales increase in the third quarter ended January 31, 1996 accounted for approximately 74% of the year to date sales increase. As noted above, this is primarily due to very favorable weather during this period. Additional factors which have resulted in year to date sales growth include a successful Lobsterfest promotion during the month of October 1995 and a New Year's eve dinner and laser light show. Both of these events were held at the Registrant's Gladstone's 4 Fish restaurant. The Registrant operates its Gladstone's 4 Fish restaurant pursuant to a concession agreement with the County of Los Angeles ("County") which expires October 31, 1997. The County's standard operating procedure is to distribute a request for proposal prior to entering into new agreements. The Registrant anticipates that the County will follow this procedure with regard to the Gladstone's 4 Fish concession agreement and expects that this process will be concluded in 1996. Except for the restaurant structure itself, the Registrant owns all personal property, fixtures and leasehold improvements at Gladstone's. The Registrant also owns the Gladstone's trade name and existing liquor licenses and operates certain sections of the restaurant pursuant to permits granted by the California Coastal Commission. Gladstone's has operated at the present site since 1981. The Registrant intends to complete a proposal to remain as the operator of this site but there can be no assurance that such proposal will ultimately be accepted by the County. The Registrant is currently reviewing other potential restaurant sites for both expansion possibilities as well as for an alternate location to lessen the impact on the business if it is unsuccessful in retaining the present location. As a result of typically more favorable weather and high tourism during the summer months from May through September the Registrant's sales and operating profits have historically been higher in the first and second quarters of its fiscal year. COST OF GOODS SOLD Cost of goods sold includes all food, beverages, liquor, direct labor and other operating expenses of the Registrant's restaurant operations. Cost of goods sold for the three months ended January 31, 1996 was $3,231,000, or, as a percentage of sales, 86.8% compared with $3,094,000, or, as a percentage of sales, 89.7% during the same period last year. This improvement is primarily due to lower labor costs resulting from a more efficient use of restaurant staff as well as significantly lower rates on workers compensation insurance. The reduction in workers compensation insurance should result in lower labor costs through March 31, 1996, the end of the current policy year. 10 11 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES COST OF GOODS SOLD (CONT.) Cost of goods sold for the nine months ended January 31, 1996 was $9,135,000, or, as a percentage of sales, 80.2% compared with $9,152,000, or, as a percentage of sales, 83.1% during the same period last year. This improvement is also primarily due to lower labor costs. In addition, in the comparable period last year the Registrant incurred expenses related to a July 4th fireworks show and non-recurring expenses due to the implementation of a new menu and service approach for Gladstone's outdoor dining area. Cost of goods sold will typically be slightly lower during the first and second quarters due to additional economies of scale that can be achieved with labor and certain other costs when sales levels are higher. For the fiscal year ended April 30, 1995, cost of goods sold, as a percentage of sales, was 82.9%. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES For the three months ended January 31, 1996, selling, general and administrative expenses were $302,000 compared with $294,000 for the same period last year, an increase of $8,000 or 2.7%. For the nine months ended January 31, 1996, selling, general and administrative expenses were $747,000 compared with $714,000 for the same period last year, an increase of $33,000 or 4.6%. This increase is primarily due to expenses incurred in connection with the Registrant's reverse stock split which became effective May 1, 1995, as well as an increase in certain compensation related expenses. LEGAL AND LITIGATION SETTLEMENT For the three months ended January 31, 1996, legal and litigation settlement expenses were $45,000 compared with $34,000 for the same period last year, an increase of $11,000 or 32.3%. This increase is due, in part, to expenses incurred to register 3,004,282 shares of common stock owned by certain stockholders, pursuant to an existing contractual obligation. The selling stockholders do not necessarily intend to sell their shares but may decide to do so in the future. The Registrant is obligated to file amendments to the registration statement in order to update it at any time for up to two years when requested in writing by Bank of America (one of the selling stockholders) with the Registrant bearing all the expenses of such registration and updates up to certain limits. For the nine months ended January 31, 1996, legal and litigation settlement expenses were $141,000 compared with $168,000 for the same period last year, a decrease of $27,000 or 16.1%. The Registrant will incur legal expenses during the balance of its current fiscal year ending April 30, 1996 to defend a lawsuit brought by a former employee of the Registrant (See Part II - Item 1. - Legal Proceedings). INTEREST EXPENSE For the nine months ended January 31, 1996 the Registrant incurred interest expense of $43,000 primarily related to the 9.75% convertible subordinated notes. These notes were partially redeemed by the Registrant in October 1995 and the unredeemed portion of the notes converted into common stock as of October 30, 1995. The Registrant incurred $1,000 of interest expense for the three months ended January 31, 1996 and does not expect to incur any significant interest expense through the end of its current fiscal year. 11 12 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES INTEREST EXPENSE (CONT.) For the three months and nine months ended January 31, 1995 the Registrant incurred interest expense of $159,000 and $629,000, respectively, related to the term loan which was borrowed to fund the acquisition of the Registrant's restaurant operations. On December 22, 1994 the Registrant entered into an Amended and Restated Loan Agreement ("Amended Loan"). Interest to maturity on the Amended Loan has been included in the carrying value of such debt, in accordance with Financial Accounting Standards Board Statement No. 15, "Accounting by Debtors and Creditors for Troubled Debt Restructuring" and will not be recognized as interest expense in current and future years. AMORTIZATION OF INTANGIBLE ASSETS For the three months and nine months ended January 31, 1996 amortization expense was $219,000 and $549,000, respectively, compared with $351,000 and $866,000 for the same periods last year. These decreases are due to the Registrant's covenant not to compete becoming fully amortized as of April 30, 1995. Amortization expense now relates completely to the Registrant's Goodwill and will approximate $714,000 per year. LIQUIDITY AND CAPITAL RESOURCES On December 22, 1994 the Registrant completed a restructuring of Sea View's existing bank debt and settlement of a contingent subordinated note. The Registrant concurrently closed a private placement of securities to finance such restructuring and settlement. The private financing which raised the funds necessary to effect the bank debt restructuring and contingent note settlement, involved a total investment of $1,600,000, excluding expenses, consisting of $817,290 of Series A convertible preferred stock and $782,710 of 9.75% convertible subordinated notes. The Registrant held an annual meeting of shareholders on April 28, 1995. At this meeting the shareholders approved a one for 33.286962 reverse stock split of the Registrant's common stock. The reverse stock split became effective on May 1, 1995 upon the filing of a Certificate of Amendment to the Articles of Incorporation of the Registrant. As a result of the reverse stock split, the Series A convertible preferred stock automatically converted into 2,180,748 shares of common stock on May 1, 1995. On October 18, 1995 the Registrant completed a Rights Offering to certain shareholders that did not participate in the December 22, 1994 private placement. Eligible shareholders as of September 11, 1995 received 4.7215 rights for each share of common stock that they owned. Each right entitled the holder to purchase one share of common stock at $.83 per share. The proceeds of the offering were used to partially redeem the Registrant's 9.75% convertible subordinated notes which, if not redeemed, were scheduled to convert into common stock as of October 30, 1995. The Registrant raised $202,537 from the exercise of 244,020 rights. The proceeds from the offering were distributed to the holders of the 9.75% convertible subordinated notes on a pro-rata basis. The unredeemed portion of the notes converted into 696,207 shares of common stock. Expenses of the offering, which were paid by the Registrant, approximated $124,000. The Registrant currently has no outside sources of short-term or long-term financing. Although the Registrant remains highly leveraged after the completion of the bank debt restructuring, due primarily to the repayment terms of the remaining loan principal, the Registrant believes that its existing cash and cash flow from operations over the next year will allow it to meet its debt obligations under the Amended Loan as well as its normal operating expenses. Capital expenditures through January 31, 1996 totaled approximately $166,000. The Registrant estimates that capital requirements for fiscal 1996 will be approximately $250,000. 12 13 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES PART II OTHER INFORMATION Item 1. Legal Proceedings. In September 1994 the Registrant received notice of a complaint filed in Los Angeles County Superior Court by a former employee seeking unspecified damages for various causes of action, including wrongful termination. The Registrant has filed an answer to the complaint denying any liability. The Registrant believes that this claim is without merit and intends to defend this action vigorously. The matter is currently scheduled for trial on April 1, 1996. Item 2. Changes in Securities. Not applicable. Item 3. Defaults Upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. Not applicable. Item 5. Other Information Not applicable. Item 6. Exhibits and Reports on Form 8-K. Exhibits 27 - Financial data schedule Reports on Form 8-K None 13 14 CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES Signature(s) Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. California Beach Restaurants, Inc. (Registrant) Dated: March 11, 1996 By: Alan Redhead -------------------------------------------- Alan Redhead Chief Executive Officer (Duly Authorized Officer) By: Mark E. Segal -------------------------------------------- Mark E. Segal Vice President - Finance and Chief Financial Officer 14 15 INDEX TO EXHIBITS ITEM NUMBER DESCRIPTION METHOD OF FILING ------ ----------- ---------------- 27 Financial data schedule Filed herewith electronically EX-27 2 FINANCIAL DATA SCHEDULE FOR 10-Q
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED STATEMENTS OF INCOME AND CONSOLIDATED BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS APR-30-1996 MAY-01-1995 JAN-31-1996 709,000 0 29,000 0 271,000 1,231,000 3,456,000 (2,058,000) 5,811,000 2,344,000 0 0 0 34,000 1,720,000 5,811,000 11,384,000 11,384,000 9,135,000 10,353,000 526,000 0 43,000 462,000 8,000 454,000 0 0 0 454,000 .16 .14
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