-----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, Kzx8a5eXz/DJM0w7s2zyF3DUZxFDG54jdO+EVMIBsWEvTpwtOZ+4E6A6Di9hk/aw ubszjjH4GoA0Dw8I0SbASA== 0000784539-01-500020.txt : 20020411 0000784539-01-500020.hdr.sgml : 20020411 ACCESSION NUMBER: 0000784539-01-500020 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011003 FILED AS OF DATE: 20011116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FAMILY STEAK HOUSES OF FLORIDA INC CENTRAL INDEX KEY: 0000784539 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 592597349 STATE OF INCORPORATION: FL FISCAL YEAR END: 1230 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-14311 FILM NUMBER: 1793854 BUSINESS ADDRESS: STREET 1: 2113 FLORIDA BLVD STREET 2: STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 BUSINESS PHONE: 9042494197 MAIL ADDRESS: STREET 1: 2113 FLORIDA BLVD STE A STREET 2: 2113 FLORIDA BLVD STE A CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 10-Q 1 q3rd01.txt 3RD QTR 2001 - 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarter ended October 3, 2001 Commission File No. 0-14311 FAMILY STEAK HOUSES OF FLORIDA, INC. Incorporated under the laws of IRS Employer Identification Florida No. 59-2597349 2113 FLORIDA BOULEVARD NEPTUNE BEACH, FLORIDA 32266 Registrant's Telephone No. (904) 249-4197 Indicate by check mark whether the registrant 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 such filing requirements for the past 90 days. Yes X No_____ Title of each class Number of shares outstanding Common Stock 3,251,016 $.01 par value As of November 2, 2001 FAMILY STEAK HOUSES OF FLORIDA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS October 3, 2001 (Unaudited) Note 1. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions to Form 10-Q, and do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for the interim periods have been included. Operating results for the thirteen and thirty-nine week periods ended October 3, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2002. For further information, refer to the financial statements and footnotes included in the Company's Annual Report on Form 10-K for the fiscal year ended January 3, 2001. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany profits, transactions and balances have been eliminated. Note 2. Earnings Per Share Basic earnings per share for the thirteen weeks and thirty-nine weeks ended October 3, 2001 and September 27, 2000 were computed based on the weighted average number of common shares outstanding. Diluted earnings per share for those periods have been computed based on the weighted average number of common shares outstanding, giving effect to all dilutive potential common shares that were outstanding during the period. Dilutive shares are represented by shares under option and stock warrants. Note 3. New Accounting Pronouncements In June 2001, the FASB issued SFAS No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS 141 requires companies to apply the purchase method of accounting for all business combinations initiated after June 30, 2001 and prohibits the use of the pooling-of-interest method. SFAS 142 changes the method by which companies may recognize intangible assets in purchase business combinations and generally requires identifiable intangible assets to be recognized separately from goodwill. In addition, it eliminates the amortization of all existing and newly acquired goodwill on a prospective basis and requires companies to assess goodwill for impairment, at least annually, based on the fair value of the reporting unit associated with the goodwill. The Company will adopt SFAS 141 for business combinations initiated after June 30, 2001. The Company will adopt SFAS 142 effective January 1, 2002. It does not appear the adoption of SFAS 142 will have a material impact on the Company's financial position, results of operations or cash flows. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Results of Operations Quarter Ended October 3, 2001 versus September 27, 2000 The Company experienced an increase in total sales during the third quarter of 2001 as compared to the same period in 2000, due to the opening of two new restaurants. Same-store sales (average unit sales in restaurants that have been open for at least 18 months and operating during comparable weeks during the current and prior year) in the third quarter of 2001 decreased 2.7% from the same period in 2000, compared to an increase of 3.6% from 2000 as compared to 1999. The decrease in same-store sales resulted primarily from significant sales declines at two restaurants which faced new competition in their market in 2001. Total sales increased 9.2%, due to the fact that the Company operated a net total of one more restaurant in 2001. Since the end of the third quarter of 2000, the Company opened two restaurants and closed one restaurant. Management is seeking to continue to improve sales trends by focusing on improved restaurant operations, devising competitive strategies to offset the effects of new competition and remodeling certain restaurants. The Company added exhibition cooking areas to two of its restaurants in 2000 and two restaurants in 2001, and experienced improved sales trends at these locations. Management intends to make similar additions to at least one more restaurant by the end of 2001, and several more in 2002, if results experienced to date continue. Historically, the third and fourth quarters of each fiscal year are less profitable for the Company than the first and second quarters. Even if the sales trends improve, the Company is likely to incur losses in the fourth quarter. The costs and expenses of the Company's restaurants include food and beverage, payroll, payroll taxes and employee benefits, depreciation and amortization, repairs, maintenance, utilities, supplies, advertising, insurance, property taxes and rents. The Company's food, beverage, payroll and benefit costs are believed to be higher than the industry average as a percentage of sales as a result of the Company's philosophy of providing customers with high value of food and service for every dollar a customer spends. In total, food and beverage, payroll and benefits, depreciation and amortization and other operating expenses as a percentage of sales increased to 91.0% in the third quarter of 2001 from 90.4% in the same quarter of 2000, primarily due to increases in payroll and benefit costs as a percentage of sales. Food and beverage costs as a percentage of sales decreased to 38.1% in the third quarter of 2001 from 39.4% in the same period of 2000, primarily due to higher beef prices in the third quarter of 2000, and to menu price increases implemented by the Company. Payroll and benefits as a percentage of sales increased to 31.0% in the third quarter of 2001 from 29.6% in the same quarter of 2000, primarily due to increases in hourly payroll costs (1.0%), and group health insurance costs (.4%). The hourly payroll increases resulted from incremental payroll costs associated with opening two new restaurants, and from additional payroll expenditures at several restaurants designed to improve customer service and build sales. Other operating expenses as a percentage of sales increased to 16.4% in the third quarters of 2001 from 15.9% in 2000, primarily due to increased utility costs. General and administrative expenses as a percentage of sales were 6.7% in the third quarter of 2001, compared to 6.9% in 2000. Interest expense decreased to $415,200 during the third quarter of 2001 from $478,500 in 2000, due to lower interest rates in 2001. The results for the third quarter of 2001 include net realized gains of $55,300 from transactions in marketable securities, compared to $123,500 in 2000. Interest and other income declined from $63,800 in the third quarter of 2000 to $21,700 in the third quarter of 2001, due to lower cash balances available for investment and lower interest rates. The effective income tax rate for the quarters ended October 3, 2001 and September 27, 2000 was 0.0%. Net loss for the third quarter of 2001 was $397,100, compared to $342,500 in 2000. Net loss per share was $.16 for the third quarter of 2001, compared to $.14 in 2000. Nine Months Ended October 3, 2001 versus September 27, 2000 For the nine months ended October 3, 2001, total sales increased 7.5% compared to the same period of 2000, due to the opening of two new restaurants. Same-store sales decreased 1.4% for the nine months ended October 3, 2001, primarily due to significant sales declines at two restaurants with new competition. Food and beverage costs as a percentage of sales for the nine month period ended October 3, 2001 decreased to 38.1%, compared to 38.8% for the same period in 2000, primarily due to menu price increases implemented in 2001. Payroll and benefits increased to 29.9% in 2001 from 28.1% in 2000, primarily due to increases in hourly payroll costs (1.0%), and group health insurance costs (.4%). The payroll and benefit cost increases resulted from incremental payroll costs associated with opening two new restaurants, and from additional payroll expenditures at several restaurants designed to improve customer service and build sales. For the nine months ended October 3, 2001, other operating expenses as a percentage of sales increased to 15.1% from 14.7% in 2001, primarily due to increased utility costs and to costs incurred in 2001 associated with opening new restaurants. General and administrative expenses decreased to 6.1% in 2001 from 6.4% in 2000, primarily due to costs incurred in 2000 from a full-time consultant. Interest expense decreased for the first nine months of 2001 to $1,319,900 from $1,406,900 for the same period in 2000, due primarily to lower interest rates. The results for the nine months ended October 3, 2001 include net realized losses of $440,900 from the sale of marketable securities, compared to net realized gains of $491,600 for the period in 2000. The effective income tax rate for the nine-month periods ended October 3, 2001 and September 27, 2000 was 0.0%. The 0% rate in 2000 was due to the use of net operating loss carryforwards. Net loss for the nine months ended October 3, 2001 was $710,600, or $.29 per share, compared to net income of $470,500, or $.19 per share for the same period in 2000. The Company's operations are subject to some seasonal fluctuations. Revenues per restaurant generally increase from January through April and decline from September through December. Operating results for the quarter ended October 3, 2001 are not necessarily indicative of the results that may be expected for the fiscal year ending January 2, 2002. Liquidity and Capital Resources Substantially all of the Company's revenues are derived from cash sales. Inventories are purchased on credit and are converted rapidly to cash. Therefore, the Company does not carry significant receivables or inventories. As a result, working capital requirements for continuing operations are not significant. At October 3, 2001, the Company had a working capital deficit of $3,212,800, compared to a working capital deficit of $2,780,600 at January 3, 2001. The increase in the deficit was primarily due to losses from operations and an increase in the current portion of long- term debt. Cash provided by operating activities decreased to $855,100 in the first nine months of 2001 from $1,562,700 in the same period of 2000. This decrease is primarily due to the investment losses incurred in 2001, compared to the investment gains in 2000. During the first nine months of 2001, the Company has liquidated the majority of its investments in order to provide cash for the construction of new restaurants. The Company spent approximately $3,565,300 in the first nine months of 2001 for property and equipment. Total capital expenditures for equipment in 2001, based on present costs and plans for capital improvements, are estimated to be $4.85 million. This amount is based on budgeted expenditures for land, buildings and equipment for two new restaurants in 2001, remodels of several restaurants, recurring equipment purchases and minor building improvements ("Capital Maintenance Items"). In May 2001, the Company opened a new restaurant in Titusville, Florida. As of October 2001, another new restaurant is under construction in Jacksonville, Florida, and is expected to open in December 2001. The Company recently decided not to build a third new restaurant in 2001 as previously planned due to several factors, including the declining economy in Florida. The Company projects that proceeds from the Company's financing agreements (described below), proceeds from the Company's recently-completed rights offering (see discussion below) and cash generated from operations will be sufficient to fund costs associated with construction of the new restaurant in Jacksonville, the store remodels and the estimated Capital Maintenance Items. The Company's ability to open new restaurants after 2001 is dependent upon its ability to acquire additional financing, generate cash to fund a portion of the construction costs not covered by financing, obtain the franchisor's site approval, locate suitable locations at acceptable prices, and upon certain other factors beyond its control, such as obtaining building permits from various government agencies. Beginning in December 1996, the Company entered into a series of loan agreements with FFCA Mortgage Corporation, (now known as GE Capital Franchise Finance Corporation "GE Capital"). As of October 3, 2001, the outstanding balance due under the Company's various loans with GE Capital was $19,051,600. The weighted average interest rate for the GE Capital loan is 7.35%. The Company used the proceeds of the GE Capital loans primarily to refinance its debt and to fund construction of new restaurants. The Company used the proceeds of the GE Capital Loans to retire its Notes with Cerberus Partners, L.P. ("Cerberus") and its loans with the Daiwa Bank Limited and SouthTrust Bank of Alabama, N.A. In addition, the Company retired Warrants for 210,000 shares of the Company's common stock previously held by Cerberus. Cerberus continues to hold Warrants to purchase 140,000 shares of the Company's common stock at an exercise price of $2.00 per share. In addition to the Titusville restaurant, the Company began construction of a new restaurant in Jacksonville in 2001. In July 2000, the Company received a commitment from GE Capital to fund $1,600,000 (subsequently increased to $1,700,000 in June 2001) each for two additional restaurants to be constructed in 2001 or 2002. As of October 3, 2001, the outstanding balance under this loan was $708,500. Management estimates that the new restaurant currently under construction will cost approximately $2,825,000. The Company currently pays franchise fees of 3% of gross sales. The franchise agreement provides that the franchise fee will increase to 4% beginning January 1, 2002. Management projects that this will increase the Company's franchise fee expense by more than $400,000 per year beginning in 2002. The preceding discussion of liquidity and capital resources contains certain forward-looking statements. Forward-looking statements involve a number of risks and uncertainties, and in addition to the factors discussed herein, among the other factors that could cause actual results to differ materially are the following: failure of facts to conform to necessary management estimates and assumptions; the willingness of GE Capital or other lenders to extend financing commitments; repairs or similar expenditures required for existing restaurants due to weather or acts of God; the Company's ability to identify and secure suitable locations on acceptable terms and open new restaurants in a timely manner; the Company's success in selling restaurants listed for sale; the economic conditions in the new markets into which the Company expands; changes in customer dining patterns; competitive pressures from other national and regional restaurant chains and other food vendors; business conditions, such as inflation or a recession, and growth in the restaurant industry and the general economy; and other risks identified from time to time in the Company's SEC reports, registration statements and public announcements. However, this list in not a complete statement of all potential risks or uncertainties. These forward-looking statements are made as of the date hereof based on management's current expectations, and the Company does not undertake any obligation to update such statements, whether as a result of new information, future events or otherwise. Recent Developments On October 1, 2001, the Company completed a Rights Offering ("The Offering") for its shareholders of record as of August 10, 2001. The Company raised approximately $817,000 net of offering costs from the Offering, and issued 827,583 shares of common stock to shareholders exercising rights. The Company's franchise agreement with Ryan's Properties, Inc. ("Ryan's") grants the Company the exclusive right to open Ryan's restaurants in North and Central Florida. In order to maintain this exclusivity, the Company is required to have a total of 25 Ryan's restaurants operating on December 31, 2001. On each December 31 after 2001, the franchise agreement requires that the Company increase the number of restaurants in operation by two by the end of each year until 2010 in order to maintain its exclusive franchise rights in North and Central Florida. Until recently, the Company had expected to open two additional restaurants in late 2001 which would bring it in compliance with the requirement for December 31, 2001. Due to several factors beyond the Company's control, the Company will not be able to build the second restaurant in late 2001, and will not have the required number of restaurants operating by December 31, 2001. Since the Company will not meet the requirement of 25 operating units by December 31, 2001, it could lose the exclusivity provision, and the franchisor (Ryan's) could build restaurants in the Company's territory. If Ryan's does develop restaurants in these areas, it could limit the Company's potential to locate and develop suitable restaurant sites in the future. The Company's common stock recently has consistently traded below NASDAQ's required minimum bid price of $1.00. NASDAQ has suspended its rule concerning the minimum bid price requirement until January 2, 2002. If NASDAQ reinstates this requirement and the Company's stock does not meet the requirement at that time, the Company would likely be notified that it would have a certain amount of time for the stock to reach the $1.00 bid price for 10 consecutive trading days, or be delisted from the NASDAQ market. The Company has received such a notification on two prior occasions, and avoided delisting. However, there can be no assurance that the requirement will be met if the Company receives such notification from NASDAQ again. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS The Company is party to, or threatened with, litigation from time to time, in the normal course of its business. Management, after reviewing all pending and threatened legal proceedings, considers that the aggregate liability or loss, if any, resulting from the final outcome of these proceedings will not have a material effect on the financial position or operation of the Company. The Company will, from time to time when appropriate in management's estimation, record adequate reserves in the Company's financial statements for pending litigation. ITEM 2. CHANGES IN SECURITIES None ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of this report on Form 10-Q, and this list comprises the Exhibit Index. Exhibit 11.1 The table below details the number of shares and common stock equivalents used in the computation of basic and diluted earnings per share: Three Months Ended Nine Months Ended 10/03/01 9/27/00 10/03/01 9/27/00 Basic: Weighted average common shares outstanding used in computing basic (loss) earnings per share 2,432,500 2,416,200 2,425,200 2,413,900 ========= ========= ========= ========= Basic (loss) earnings per share $ (.16) $ (0.14) $ ($.29) $ .19 ========== ========= ========= ========= Diluted: Weighted average common shares outstanding 2,432,500 2,416,200 2,425,200 2,413,900 Effects of shares issuable under stock plans using the treasury method - - - 9,000 Effects of warrants issuable using the treasury method - - - - Shares used in computing --------- ---------- --------- -------- diluted (loss) earnings per share 2,432,500 2,416,200 2,425,200 2,422,900 ========= ========= ========= ========= Diluted (loss) earnings per share $ ( 0.16) $ (0.14) $ (.29) $ .19 ========= ========= ======== ========= For the quarters ended October 3, 2001, and September 27, 2000, stock options totaling 3,400 shares and 7,800 shares, respectively, were excluded from the computation of diluted earnings per share due to their anitdilutive effect. In addition, for the nine months ended October 3, 2001, stock options totaling 2,100 shares were excluded from the computation of diluted earnings per share due to their antidilutive effect. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FAMILY STEAK HOUSES OF FLORIDA, INC. (Registrant) /s/ Glen F. Ceiley Date: November 8, 2001 Glen F. Ceiley Chairman of the Board /s/ Edward B. Alexander Date: November 8, 2001 Edward B. Alexander Executive Vice President (Principal Financial and Accounting Officer) Family Steak Houses of Florida, Inc. Consolidated Results of Operations (Unaudited) For The Quarters Ended Oct. 3, Sept. 27, 2001 2000 Revenues: Sales $10,099,300 $9,248,500 Vending revenue 53,100 40,600 Total revenues 10,152,400 9,289,100 Cost and expenses: Food and beverage 3,844,600 3,641,600 Payroll and benefits 3,131,100 2,737,000 Depreciation and amortization 560,100 512,400 Other operating expenses 1,654,700 1,473,400 General and administrative expenses 674,600 642,500 Franchise fees 302,600 277,200 Loss on store closings and disposition of equipment 43,600 49,900 10,211,300 9,334,000 (Loss) earnings from operations (58,900) (44,900) Investment gain (loss) 55,300 123,500 Interest and other income 21,700 63,800 (Loss) gain on sale of property -- (6,400) Interest expense (415,200) (478,500) (Loss) earnings before income taxes (397,100) (342,500) Provision for income taxes -- -- Net (loss) earnings ($397,100) ($342,500) Basic (loss) earnings per share ($0.16) ($0.14) Diluted (loss) earnings per share ($0.16) ($0.14) For The Nine Months Ended Oct. 3, Sept. 27, 2001 2000 Revenues: Sales $32,276,500 $30,019,400 Vending revenue 163,000 155,400 Total revenues 32,439,500 30,174,800 Cost and expenses: Food and beverage 12,284,900 11,661,500 Payroll and benefits 9,639,500 8,437,300 Depreciation and amortization 1,607,400 1,550,000 Other operating expenses 4,884,100 4,413,100 General and administrative expenses 1,938,300 1,927,000 Franchise fees 967,300 899,700 Loss on store closings and disposition of equipment 144,000 109,800 31,465,500 28,998,400 (Loss) earnings from operations 974,000 1,176,400 Investment gain (loss) (440,900) 491,600 Interest and other income 76,200 147,700 (Loss) gain on sale of property -- 61,700 Interest expense (1,319,900) (1,406,900) (Loss) earnings before income taxes (710,600) 470,500 Provision for income taxes -- -- Net (loss) earnings ($710,600) $470,500 Basic (loss) earnings per share ($0.29) $0.19 Diluted (loss) earnings per share ($0.29) $0.19 See accompanying notes to consolidated financial statements. Family Steak Houses of Florida, Inc. Consolidated Balance Sheets (Unaudited) Oct. 3, Jan. 3, 2001 2001 ASSETS Current assets: Cash and cash equivalents $1,037,500 $631,500 Investments 1,700 815,200 Receivables 113,300 93,000 Current portion of mortgages receivable 13,100 172,000 Inventories 329,700 256,400 Prepaid and other current assets 285,800 193,600 Total current assets 1,781,100 2,161,700 Mortgages receivable 345,500 355,400 Certificate of deposit 10,000 10,800 Property and equipment: Land 9,494,400 8,669,400 Buildings and improvements 23,805,100 22,128,300 Equipment 12,343,600 12,046,200 45,643,100 42,843,900 Accumulated depreciation (17,383,300) (16,487,500) Net property and equipment 28,259,800 26,356,400 Property held for sale 1,904,900 1,903,600 Other assets, principally deferred charges, net of accumulated amortization 856,700 839,100 $33,158,000 $31,627,000 LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,488,000 $1,370,900 Accounts payable - construction 250,000 375,100 Securities sold, not yet purchased 76,700 -- Accrued liabilities 2,133,300 2,461,600 Investment margin debt -- 165,100 Current portion of long-term debt 1,031,000 565,900 Current portion of obligation under capital 14,900 3,700 Total current liabilities 4,993,900 4,942,300 Long-term debt 18,729,100 17,869,400 Obligation under capital lease 1,031,600 1,045,600 Total liabilities 24,754,600 23,857,300 Shareholders' equity: Preferred stock of $.01 par; authorized 10,000,000 shares; none issued -- -- Common stock of $.01 par; authorized 4,000,000 shares; outstanding 3,251,000 and 2,416,200 shares 32,500 24,200 Additional paid-in capital 9,452,400 8,631,400 Accumulated deficit (1,082,600) (372,000) Accumulated other comprehensive income (loss) 1,100 (513,900) Total shareholders' equity 8,403,400 7,769,700 $33,158,000 $31,627,000 See accompanying notes to consolidated financial statements. Family Steak Houses of Florida, Inc. Consolidated Statements of Cash Flows (Unaudited) For the Nine Months Ended Oct 03, Sept. 27, 2001 2000 Operating activities: Net (loss) earnings ($710,600) $470,500 Adjustments to reconcile net (loss) earnings to net cash provided by operating activities: Depreciation and amortization 1,607,400 1,550,000 Directors' fees in the form of stock options 4,000 5,000 Investment loss (gain) 440,800 (491,600) Amortization of loan fees 27,100 23,700 Loss on disposition of equipment 61,900 67,300 Gain on sale of property -- (61,700) Decrease (increase) in: Receivables (20,300) 33,100 Inventories (73,300) 45,900 Prepaids and other current assets (92,200) 13,300 Other assets (53,400) (40,500) Increase (decrease) in: Accounts payable (8,000) 62,700 Accrued liabilities (328,300) (115,000) Net cash provided by operating activities 855,100 1,562,700 Investing activities: Purchases of investments (332,800) (2,283,100) Principal receipts on mortgages receivable 168,800 162,200 Proceeds from sale of investments 797,400 2,341,600 Proceeds from securities sold, not yet purchased 500,600 563,700 Proceeds from sale of restaurants -- 668,200 Proceeds from sale of property held for sale -- 585,100 Issuance of mortgages receivable -- (475,000) Capital expenditures (3,565,300) (1,649,400) Net cash used in investing activities (2,431,300) (86,700) Financing activities: Payments on long-term debt and obligation under capital lease (543,800) (1,083,500) Proceeds from issuance of long-term debt 1,865,800 850,800 Proceeds from rights offering 817,000 -- Payments of investment margin debt (165,100) -- Proceeds from the issuance of common stock 8,300 100 Net cash provided by (used in) financing activities 1,982,200 (232,600) Net increase in cash and cash equivalents 406,000 1,243,400 Cash and cash equivalents - beginning of period 631,500 747,300 Cash and cash equivalents - end of period $1,037,500 $1,990,700 Noncash investing and financing activities: Net change in unrealized (loss) gain $515,000 ($43,400) Supplemental disclosures of cash flow information: Cash paid during the period for interest $1,358,300 $1,380,000 Cash paid during the period for income taxes -- -- See accompanying notes to consolidated financial statements. -----END PRIVACY-ENHANCED MESSAGE-----