-----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, SrVb5/J0P/3lLWpdvEnoPPgA6JUUXedSmGs9QoBV+tHZ9TzNjoPw95a9OdUu1o+T /etT4YycPX6y9n3SdYR8nw== 0000784539-04-000032.txt : 20040903 0000784539-04-000032.hdr.sgml : 20040903 20040903141247 ACCESSION NUMBER: 0000784539-04-000032 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 20040630 FILED AS OF DATE: 20040903 DATE AS OF CHANGE: 20040903 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EACO CORP 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: 041016404 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 CITY: NEPTUNE BEACH STATE: FL ZIP: 32266 FORMER COMPANY: FORMER CONFORMED NAME: FAMILY STEAK HOUSES OF FLORIDA INC DATE OF NAME CHANGE: 19920703 10-Q 1 eaco10q2nd04.txt 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 June 30, 2004 Commission File No. 0-14311 EACO Corporation (Registrant) 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 Family Steak Houses of Florida, Inc. (Former Name of Registrant) 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_____ No__X__ Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes_____ No__X__ Title of each class Number of shares outstanding Common Stock 3,881,901 $.01 par value As of August 4, 2004 EACO Corporation
Consolidated Results of Operations (Unaudited) For The Quarters Ended For The Six Months Ended -------------------------------------------------- June 30, July 2, June 30, July 2, 2004 2003 2004 2003 -------------------------------------------------- Revenues: Sales $9,959,200 $9,567,400 $20,218,500 $20,295,500 Vending revenue 47,600 56,100 96,600 107,200 ---------- ----------- ----------- ----------- Total revenues 10,006,800 9,623,500 20,315,100 20,402,700 ---------- ----------- ----------- ----------- Cost and expenses: Food and beverage 3,840,600 3,619,200 7,691,900 7,718,500 Payroll and benefits 3,138,500 2,887,700 6,032,000 6,090,000 Depreciation and amortization 491,300 508,200 981,900 1,023,600 Other operating expenses 1,789,100 1,607,500 3,220,300 3,180,200 General and administrative expenses 527,700 542,400 1,155,300 1,143,700 Franchise fees 295,600 382,500 666,800 811,700 Asset valuation charge --- --- 594,200 --- Loss on store closings and disposition of equipment 58,600 39,400 93,000 73,900 ---------- ----------- ----------- ----------- 10,141,400 9,586,900 20,435,400 20,041,600 ---------- ----------- ----------- ----------- (Loss) earnings from operation (134,600) 36,600 (120,300) 361,100 Investment (loss) gain (13,100) (19,300) 10,800 (26,500) Interest and other income 26,900 19,900 69,000 93,300 (Loss) gain on sale of property (32,100) 9,400 (32,100) 9,400 Interest expense (418,500) (441,100) (829,500) (887,200) ---------- ----------- ----------- ----------- Loss before income taxes (571,400) (394,500) (902,100) (449,900) Provision for income taxes -- -- -- -- ---------- ----------- ----------- ----------- Net loss ($571,400) ($394,500) ($902,100) ($449,900) ========== =========== =========== =========== Basic loss per share ($0.15) ($0.11) ($0.24) ($0.12) ========== =========== =========== =========== Basic weighted average common shares outstanding 3,771,000 3,706,200 3,744,000 3,706,200 ========== =========== =========== =========== Diluted loss per share ($0.15) ($0.11) ($0.24) ($0.12) ========== =========== =========== =========== Diluted weighted average common shares outstanding 3,771,000 3,706,200 3,744,000 3,706,200 ========== =========== =========== ===========
2 EACO Corporation
Consolidated Balance Sheets (Unaudited) June 30, December 31, 2004 2003 ----------- ------------ ASSETS Current assets: Cash and cash equivalents $45,100 $2,287,800 Investments 2,400 32,600 Receivables 206,500 110,600 Inventories 254,600 300,400 Prepaid and other current assets 566,600 500,500 ----------- ----------- Total current assets 1,075,200 3,231,900 Certificate of deposit 300,000 10,000 Property and equipment: Land 7,310,000 7,310,000 Buildings and improvements 25,241,700 22,858,000 Equipment 12,268,900 11,509,200 Construction in progress 77,100 388,300 ----------- ----------- 44,897,700 42,065,500 Accumulated depreciation (18,222,900) (17,713,500) ----------- ----------- Net property and equipment 26,674,800 24,352,000 Property held for sale 703,800 2,288,800 Other assets, principally deferred charges, net of accumulated amortization 825,000 924,000 ----------- ----------- $29,578,800 $30,806,700 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $1,054,700 $1,121,900 Construction accounts payable 154,800 --- Securities sold, not yet purchased -- 1,187,400 Accrued liabilities 1,811,400 1,801,700 Current of workers compensation liability 646,000 646,000 Current portion of long-term debt 753,800 718,400 Current portion of obligation under capital lease 71,900 30,900 ----------- ----------- Total current liabilities 4,492,700 5,506,300 Deferred rent 63,400 47,500 Deposit liability 23,300 31,300 Workers compensation benefit liability 435,400 469,800 Long-term debt 16,331,300 17,470,700 Deferred gain 1,204,800 1,240,300 Obligation under capital lease 3,986,000 2,279,800 ----------- ----------- Total liabilities 26,536,800 27,045,700 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 3,881,900 shares 38,800 37,100 Additional paid-in capital 10,063,100 9,869,600 Accumulated deficit (7,061,500) (6,159,100) Accumulated other comprehensive income 1,600 13,400 ----------- ----------- Total shareholders' equity 3,042,000 3,761,000 ----------- ----------- $29,578,800 $30,806,700 =========== ===========
See accompanying notes to consolidated financial statements. 3
Consolidated Statements of Cash Flows (Unaudited) For the Six Months Ended ------------------------ June 30, July 2, 2004 2003 ---------- ----------- Operating activities: Net loss ($902,100) ($449,900) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation and amortization 981,900 1,023,600 Asset valuation charge 594,200 -- Net realized (gains) losses on investments (700) 26,500 Amortization of loan fees 40,600 34,200 Loss on disposition of property held for sale 32,100 --- Amortization of deferred gain (35,500) (35,400) Loss (gain) on disposition of property and equipment 32,100 (125,100) (Decrease) increase in: Receivables (95,900) (24,600) Inventories 45,800 (5,900) Prepaids and other current assets (46,100) 18,000 Other assets (8,400) 11,800 (Decrease) increase in: Accounts payable (67,200) (53,900) Construction accounts payable 154,800 --- Accrued liabilities 9,700 (99,300) Deferred rent 15,900 15,900 Deposit liability (8,000) 24,000 Workers compensation benefit liability (34,400) 9,300 ---------- ----------- Net cash provided by operating activities 708,800 369,200 ---------- ----------- Investing activities: Purchase of investments (1,700,000) (349,500) Principal receipts on mortgages receivable --- 342,000 Proceeds from sale of investments 184,600 280,400 Proceeds from securities sold not yet purchased 57,000 572,600 Net proceeds from sale of property held for sale 1,552,900 --- Proceeds from sale of property and equipment --- 1,796,000 Capital expenditures (2,102,200) (343,900) ---------- ----------- Net cash ( used in) provided by investing activities (2,007,700) 2,297,600 ---------- ----------- Financing activities: Payments on long-term debt and obligations under capital leases (1,119,100) (1,788,300) Proceeds from the issuance of common stock 175,300 -- ---------- ----------- Net cash used in financing activities (943,800) (1,788,300) ---------- ----------- Net (decrease) increase in cash and cash equivalents (2,242,700) 878,500 Cash and cash equivalents - beginning of period 2,287,800 1,679,600 ---------- ----------- Cash and cash equivalents - end of period $45,100 $2,558,100 ========== =========== Noncash investing and financing activities: Net change in unrealized gain $12,200 ($17,600) ========== =========== Supplemental disclosures of cash flow information: Cash paid during the six months for interest $821,400 $982,000 ========== =========== Building acquired under capital lease $1,762,300 -- ========== ===========
See accompanying notes to consolidated financial statements. 4 PART I: FINANCIAL INFORMATION Item 1: Financial Statements EACO CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS June 30, 2004 (Unaudited) Note 1. Basis of Presentation The consolidated financial statements include the accounts of EACO Corporation (the "Company"), (formerly Family Steak Houses of Florida, Inc.) and its wholly-owned subsidiary. All significant intercompany profits, transactions and balances have been eliminated. The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the interim financial information 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 twenty-six week periods ended June 30, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2004. 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 December 31,2003. Note 2. Loss Per Share Basic loss per share for the thirteen and twenty-six weeks ended June 30, 2004 and July 2, 2003 were computed based on the weighted average number of common shares outstanding during the respective period. Diluted loss 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 5 outstanding during the period. Dilutive shares are represented by shares under option and stock warrants. Due to the Company's net losses for the thirteen weeks ended June 30, 2004, and July 2, 2003, and for the twenty-six weeks ended June 30, 2004 and July 2, 2003, all potentially dilutive securities are antidilutive and have been excluded from the computation of diluted earnings per share for those periods. Note 3. Other Assets Other assets consist principally of deferred charges, which are amortized on a straight-line basis. Deferred charges and related amortization periods are as follows: financing costs - term of the related loan, and initial franchise rights - 18 months beginning January 1, 2004 in connection with the Company's decision to terminate its franchise agreement. The gross carrying amount of the deferred financing costs was $905,500 and $924,000 as of June 30, 2004 and December 31, 2003, respectively. Accumulated amortization related to deferred financing costs was $230,400 and $216,200 as of June 30, 2004 and December 31, 2003, respectively. Amortization expense was $28,600 and $22,200 for the three-month periods ended June 30, 2004 and July 2, 2003, respectively. Amortization expense was $40,600 and $34,200 for the six-month periods ended June 30, 2004 and July 2, 2003, respectively. Amortization expense for each of the next five years is expected to be $46,200. The gross carrying amount of the initial franchise rights was $354,700 as of June 30, 2004 and December 31, 2003. Accumulated amortization related to initial franchise rights was $246,300 and $179,800 as of June 30, 2004 and December 31, 2003, respectively. Amortization expense was $38,800 and $22,200 for the three-month periods ended June 30, 2004 and July 2, 2003, respectively. Amortization expense was $66,500 and $34,200 for the six-month periods ended June 30, 2004 and July 2, 2003, respectively. Franchise rights will be fully amortized by June 30, 2005. Note 4. Reclassifications Certain items in the prior period financial statements have been reclassified to conform to the 2004 presentation. 6 Note 5. Stock Based Compensation The Company accounts for stock-based compensation utilizing the intrinsic value method under Accounting Principles Board No. 25 (APB 25), "Accounting for Stock Issued to Employees". The Company's long-term incentive plan provides for the grant of stock options and restricted stock. The exercise price of each option equals the market price of the Company's stock on the date of the grant. Options vest in one-quarter increments over a four-year period starting on the date of the grant. An option's maximum term is ten years. See Note 9 "Common Shareholders' Equity" in the Company's Annual Report for the year ended December 31, 2003 for additional information regarding the Company's stock options. Pursuant to the disclosure requirements of Statement of Financial Accounting Standards "SFAS" 148, "Accounting for Stock-Based Compensation - Transition and Disclosure". the following table provides an expanded reconciliation for all periods presented: Three Months Ended Six Months Ended June 30, 2004 July 2, 2003 June 30, 2004 July 2, 2003 ------------------ ---------------- Net (loss) earnings, as reported $(571,400) $(394,500) $(902,100) $(449,900) Add: Stock based compensation expense included in net income, net of tax --- --- --- --- Deduct: Total stock-based compensation expense determined under fair value, net of tax (800) (2,200) (1,600) (4,500) --------- ---------- ----------- --------- Pro forma net loss $(572,200) $(396,700) $(903,700) $(454,400) ========= ========= ========== ========== (Loss) per share - basic and diluted as reported $(0.15) $(0.11) $(0.24) $(0.12) Pro forma $(0.15) $(0.11) $(0.24) $(0.12)
Note 6. Employee Benefit Plans In conjunction with the Financial Accounting Standards Board "FASB" revision of SFAS No. 132, Employer's Disclosures about Pensions and Other Post-retirement Benefits, issued in December 2003, the following describes the Company's benefit plan. Employees of the Company participate in a profit sharing and retirement plan covering substantially all full-time employees at least twenty-one years of age and with more than one year of service. The plan was established in August 1991. Contributions are made to the plan at the discretion of the Company's Board of Directors. No profit- 7 sharing contributions have been made since the inception of the plan. The profit sharing plan includes a 401(k) feature by which employees can contribute, by payroll deduction only, a portion of their annual compensation not to exceed $13,000 in 2004. The plan provides for a Company matching contribution of $.25 per dollar of the first 6% of employee contributions. The Company's matching contribution was $9,000 and $10,500 for the quarters ended June 30, 2004 and 2003 respectively and $18,000 and $21,000 for the six months ended June 30, 2004 and 2003 respectively. Note 7. Subsequent Event On September 1, 2004, the Company completed a private placement of cumulative convertible preferred stock with Glen Ceiley, its Chairman and CEO, which provided $900,000 cash to the Company. The stock has a stated dividend rate of 8.5%, payable quarterly in arrears when declared and is cumulative. The stock is convertible to common stock at $.90 per share. In addition, the stock is redeemable at any time at $27.50 per share and has a liquidating preference of $25 per share. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Critical Accounting Policy and Use of Estimates The Company's accounting policy for the recognition of impairment losses on long-lived assets is considered critical. The Company's policy is to review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For the purpose of the impairment review, assets are grouped on a restaurant-by-restaurant basis. The recoverability of the assets is measured by a comparison of the carrying value of each restaurant's assets to future net cash flows expected to be generated by such restaurant's assets. If such assets are considered impaired, the impairment to be recognized is measured by the amount by which the carrying value of the assets exceeds the fair value of the assets. 8 The preparation of EACO Corporation's consolidated financial statements requires the Company to make estimates, assumptions and judgments that affect the Company's assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The Company bases these estimates and assumptions on historical data and trends, current fact patterns, expectations and other sources of information it believes are reasonable. Actual results may differ from these estimates under different conditions. For a full description of the Company's critical accounting policy, see Management's Discussion and Analysis of Financial Condition and Results of Operations in the Company's 2003 Annual Report on Form 10-K. Results of Operations Quarter Ended June 30, 2004 versus July 2, 2003 The Company experienced an increase in total sales during the second thirteen weeks of 2004 compared to the second thirteen weeks of 2003. Total sales increased 4.1%, due primarily to significant sales increases from two stores remodeled under the Company's new Whistle Junction concept. 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 second quarter of 2004 increased 9.9% from the same period in 2003, compared to a decrease of 5.5% in the second quarter of 2003 as compared to 2002. The increase in same-store sales results primarily from significant sales increases from two stores remodeled under the Whistle Junction concept, an improved economy compared to 2003 and price increases implemented by the Company since the prior year's comparable quarter. The operating expenses of the Company's restaurants include food and beverage, payroll and benefits, depreciation and amortization, and other operating expenses, which include repairs, maintenance, utilities, supplies, advertising, insurance, property taxes and rents. In total, food and beverage, payroll and benefits, depreciation and amortization and other operating expenses as a percentage of sales increased to 93.0% or $9,259,500 in the second quarter of 2004 from 90.1% or $8,622,600 in the same quarter of 2003, primarily as a result of store opening costs and training costs associated with two existing stores reopened under the Whistle Junction concept and the opening of one new Whistle Junction restaurant. Newly opened and reopened stores traditionally have opening expenses ranging from $75,000 to $100,000 for training, advertising and 9 other start up expenses. In addition, they incur higher than normal payroll expenses for a few months subsequent to opening. Food and beverage costs as a percentage of sales increased to 38.6% in the second quarter of 2004 from 37.8% in the same period of 2003 primarily as a result of higher beef costs in 2004 and enhanced menus initiated by the Company in connection with the conversions to Whistle Junction. Payroll and benefits as a percentage of sales increased to 31.5% in the second quarter of 2004 from 30.2% in the same quarter of 2003 due to higher initial payroll costs at converted and newly opened Whistle Junction restaurants. Other operating expenses as a percentage of sales increased to 18.0% in the second quarter of 2004 from 16.8% in 2003 due to store opening expenses of $208,000 during the quarter ended June 30, 2004 from the Whistle Junction restaurants opened during the quarter versus store opening expenses of $0 during the same quarter in 2003. Depreciation and amortization decreased to 4.9% in 2004 from 5.3% in 2003, due to higher average store sales in 2004. General and administrative expenses as a percentage of sales decreased to 5.3% in the second quarter of 2004, from 5.7% in the second quarter of 2003, primarily due to the increase in total sales. The effective income tax rate for the quarters ended June 30, 2004 and July 2, 2003 was 0.0%. Net loss for the second quarter of 2004 was $571,400, compared to net loss of $394,500 in the second quarter of 2003. Net loss per share was $.15 for the second quarter of 2004, compared to net loss per share of $.11 for the second quarter of 2003. Six Months Ended June 30, 2004 versus July 2, 2003 For the six months ended June 30, 2004, total sales were $20,218,500 compared to $20,295,500 for the same period in 2003. Same-store sales increased 8.5% for the six months ended June 30, 2004 from the same period in 2003. Food and beverage costs as a percentage of sales for the six month periods ended June 30, 2004 and July 2, 2003 were 38.0%. Higher beef prices in 2004 were offset by sales price increases implemented by the Company since 2003. Payroll and benefits as 10 a percentage of sales decreased to 29.8% in 2004 from 30.0% in 2003, due to the increase in same store sales. For the six months ended June 30, 2004, other operating expenses as a percentage of sales increased to 15.9% or $3,220,300 from 15.1% or $3,180,700 in 2003, primarily due to store opening expenses of $261,800 from the Whistle Junction restaurants opened during the period versus $0 in the same period of 2003. Depreciation and amortization decreased to 4.9% for the six- month period ended June 30, 2004, compared to 5.0% in 2003. General and administrative expenses for the six-month periods ended June 30, 2004 and July 2, 2003 were 5.7% and 5.6% of sales respectively. Interest expense decreased for the first six months to $829,500 from $887,200 for the same period in 2003 due to reductions in total debt. The Company invests a portion of its available cash in marketable securities. The Company maintains an investment account to effect these transactions. Investments are made based on a combination of fundamental and technical analysis primarily using a value-based investment approach. The holding period for investments usually ranges from 60 days to 24 months. Management occasionally purchases marketable securities using margin debt. In determining whether to engage in transactions on margin, management evaluates the risk of the proposed transaction and the relative returns offered thereby. If the market value of securities purchased on margin were to decline below certain levels, the Company would be required to use additional cash from its operating account to fund a margin call in its investment account. Management reviews the status of the investment account on a regular basis and analyzes such margin positions and adjusts purchase and sale transactions as necessary to ensure such margin calls are not likely. The results for the six months of 2004 include realized gains from the sale of marketable securities of $10,800, compared to realized losses of $26,500 in 2003. At June 30, 2004, the Company had no monies invested in margin potential securities. The Company recognized a non-cash asset valuation charge of $594,200 in 2004 in accordance with SFAS No. 144, "Accounting for the Impairment of or Disposal of Long-Lived Assets." The charge was based on the assessment of one under-performing restaurant as of March 31, 2004. The same impairment assessment performed in 2003 indicated no impairment charge was required in 2003. 11 The effective income tax rate for the six-month periods ended June 30, 2004 and July 2, 2003 was 0.0%. Net loss for the six months ended June 30, 2004 was $902,100 or $.24 per share, compared to net loss of $449,900, or $.12 per share for the same period in 2003. 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 or six months ended June 30, 2004 are not necessarily indicative of the results that may be expected for the fiscal year ending December 29, 2004. Liquidity and Capital Resources As of June 30, 2004, the Company had cash on hand of only $45,100, and its ability to generate sufficient cash flow to meet all of its obligations on a timely basis going forward was questionable. However, the Company recently completed a preferred stock private placement with Glen Ceiley, its Chairman and CEO, which provided $900,000 cash to the Company. Based on this, and the Company's continued positive same-store sales trends, the Company projects it does have sufficient cash flow to meets its obligations. 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 and, other than repayment of debt, working capital requirements for continuing operations are not significant. At June 30, 2004, cash amounted to $45,100 and the Company had a working capital deficit of $3,417,400 compared to $2,274,400 at December 31, 2003. Cash provided by operating activities increased to $708,800 in the first six months of 2004 from $369,200 in the first six months of 2003, due to timing differences in the payments of accounts payable and accrued liabilities. During the six month period ended June 30, 2004, the Company sold two of its previously closed locations for gross sale prices totaling $1,662,500. The two stores had an aggregate net book value of $1,585,000. Related debt of $775,900 was paid off. Net of expenses of the sales of 12 $109,600, the Company recognized a loss of $32,100 on the sales. Total capital expenditures for 2004, based on present costs and plans for capital improvements, are estimated to be approximately $2.3 million. This amount is based on expenditures for land, building, leasehold improvements and equipment for one new restaurant opened in May 2004 and the remodeling of two stores to the Whistle Junction concept completed in the first six months of 2004, and normal recurring equipment purchases and minor building improvements ("Capital Maintenance Items"). The Company spent approximately $2,102,200 in the first six months of 2004 for property and equipment. The Company anticipates funding remaining 2004 capital expenditures from operations. Current plans call for the Company to convert all of its remaining stores to either the Whistle Junction concept or the Florida Buffet concept by June 30, 2005. As of June 30, 2004, twelve stores remain to be converted. Company management estimates that total funds required to accomplish the conversion of all twelve restaurants to be approximately $3,060,000. As of June 30, 2004, management is pursuing various sources of capital to accomplish the conversions including traditional financing, sales leaseback transactions and refinancing existing restaurants. No commitment for financing of the conversions has been made as of June 30, 2004. In the event that conversion capital is not obtained, all twelve unconverted restaurants would be converted to the Florida Buffet concept for approximately $20,000 per store. Management estimates the cost of opening one new restaurant based on current average costs to be approximately $2,900,000. To the extent the Company decides to open new restaurants, management plans to fund any new restaurant construction either by GE Capital funding, sales leaseback financing, developer- funded leases, refinancing existing restaurants, or attempting to get additional financing from other lenders. The Company's ability to open new restaurants is also dependent upon its ability to locate suitable locations at acceptable prices, and upon certain other factors beyond its control, such as obtaining building permits from various government agencies. The sufficiency of the Company's cash to fund operations and necessary Capital Maintenance Items will depend primarily on cash provided by operating activities. The Company has a series of loan agreements with GE Capital Franchise Finance Corporation ("GE Capital"). As of June 30, 13 2004, the outstanding balance due under the Company's various loans with GE Capital was $17,085,100. The weighted average interest rate for the GE Capital loans is 7.4%. Forward-looking Statements 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 pressure 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 general economy; and other risks identified from time to time in the Company's SEC reports, registration statements and public announcements. Recent Developments As of June 30, 2004, the Company had cash on hand of only $45,100, and its ability to generate sufficient cash flow to meet all of its obligations on a timely basis going forward was questionable. However, the Company recently completed a preferred stock private placement with Glen Ceiley, its Chairman and CEO, which provided $900,000 cash to the Company. Based on this, and the Company's continued positive same-store sales trends, the Company projects it does have sufficient cash flow to meets its obligations. On June 17, 2004, the shareholders of the Company voted to amend the Articles of Incorporation of the Company in order to change the name of the Company from Family Steak Houses of Florida, Inc. to EACO Corporation. The Company will be conducting business under the name "Eatery Concepts". In December 2003, the Company entered into an amendment to its franchise agreement with Ryan's Family Steak Houses, Inc. (the 14 "Franchisor") to terminate the franchise agreement between the two companies by June 2005. This amendment requires the Company to convert a specific number of its Ryan's restaurants each quarter to a new name beginning the first quarter of 2004, and requires all of the Company's restaurants to be renamed by June 2005. As soon as each restaurant is converted, franchise fees are no longer payable to the Franchisor. The Company was in compliance with the requirement as of this quarter ended June 30, 2004. The Company plans to convert a majority of its restaurants to a new concept called "Whistle Junction". These conversions entail a substantial remodel of the restaurant buildings designed to look like an old train station on the exterior. The interior of the restaurant will also feature the train theme, including an operating model railroad running through the dining room. The operation of the converted restaurants will continue to be a buffet format with an upgraded menu and improved service levels. Two Whistle Junction remodels have opened as of June 2004, and a newly built Whistle Junction opened in May 2004. The remainder of the Company's restaurants will be converted to an alternate concept called the "Florida Buffet", based on various factors including their location. As of June 2004, three restaurants have been converted to the Florida Buffet. Two additional restaurants will be converted to the Florida Buffet in the third quarter of 2004. The Florida Buffet conversions include interior and exterior changes to the building designed to incorporate a "Florida look" theme, although the changes are not as extensive as those for the Whistle Junction. Menu and service enhancements are also included in the Florida Buffet locations, designed to attract and maintain increased customer volumes. Item 3. QUALITATIVE AND QUANTITATIVE DISCLOSURE ABOUT MARKET RISK There have been no significant changes in the Company's exposure to market risk during the first six months of 2004. For discussion of the Company's exposure to market risk, refer to Item 7A, Quantitative and Qualitative Disclosures about Market Risk, contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2003. 15 Item 4. CONTROLS AND PROCEDURES (a) Evaluation of disclosure controls and procedures. As required by Rule 13a-15 under the Securities Exchange Act of 1934 (the "Exchange Act"), as of the end of the period covered by this report, the Company carried out an evaluation of the effectiveness of the design and operation of the Company's disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of the Company's management, including the Company's Chairman (who serves as the principal executive officer), President (who serves as the principal operating officer), Director of Finance (who serves as the principal financial and accounting officer) and another member of the Board of Directors. Based upon that evaluation, the Company's Chairman, President and Director of Finance have concluded that the Company's disclosure controls and procedures are effective in alerting them to material information regarding the Company's financial statement and disclosure obligation in order to allow the Company to meet its reporting requirements under the Exchange Act in a timely manner. (b) Changes in internal control. There have been no changes in internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. 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 16 ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS (a) On June 17, 2004, the Company held its annual meeting of shareholders to elect directors to serve for the upcoming year. (b) The following table sets forth the number of votes for and against each of the nominees for director. Nominee For Withheld Glen F. Ceiley 3,349,651 22,526 Jay Conzen 3,349,811 22,666 Stephen Catanzaro 3,349,696 22,781 William Means 3,349,751 22,726 The Company is unable to determine the number of broker non-votes. Glen F. Ceiley, Jay Conzen, Stephen Catanzaro and William Means were elected as directors by the affirmative vote of a majority of the 3,372,477 shares of the Company's common stock represented in person or by proxy at the annual meeting of shareholders. ITEM 5. OTHER INFORMATION None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibits are filed as part of the report on Form 10-Q. No. Exhibit 3.01 Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibits 3.01 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.02. Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.02 to the Company's Registration Statement on Form S-1 Registration No. 33-1887, is incorporated herein by reference.) 17 3.03. Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.04. Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the Company's Registration Statement on Form S-1, Registration No. 33-1887, is incorporated herein by reference.) 3.05. Amended and Restated Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 4 to the Company's Form 8-A, filed with the Commission on March 19, 1997, is incorporated herein by reference.) 3.06. Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3 to the Company's Form 8-A filed with the Commission on March 19, 1997, is incorporated herein by reference.) 3.07. Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company's Annual Report on Form 10-K filed with the Commission on March 31, 1998, is incorporated herein by reference.) 3.08. Amendment to Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.08 to the Company's Annual Report on Form 10-K filed with the Commission on March 15, 2000, is incorporated herein by reference.) 3.09 Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc. (Exhibit 3.09 to the Company's Annual Report on Form 10-K filed with the Commission on March 29, 2004 is incorporated herein by reference.) 3.10. Articles of Amendment to the Articles of Incorporation of Family Steak Houses of Florida, Inc., changing the name of the corporation to EACO Corporation. 11. Table detailing number of shares and common stock equivalents used in the computation of basic and diluted (loss) earnings per share. 18 13. Annual Report to Shareholders of Family Steak Houses of Florida, Inc. on Form 10-K filed with the Commission on March 29, 2004 is hereby incorporated by reference. 31.1 Chief Executive Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Chief Financial Officer certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Chief Executive Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Chief Financial Officer certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K None. 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. EACO CORPORATION (Registrant) /s/ Edward B.Alexander Date: September 2, 2004 Edward B.Alexander President / COO /s/ Stephen C. Travis Date: September 2, 2004 Stephen C. Travis Director of Finance 19 Exhibit 31.1 CERTIFICATIONS I, Edward B. Alexander, certify that: 1. I have reviewed this quarterly report on Form 10-Q of EACO Corporation. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have; a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent 20 fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 2, 2004 /s/ Edward B. Alexander Edward B. Alexander President / COO 21 Exhibit 31.2 I, Stephen C. Travis, certify that: 1. I have reviewed this quarterly report on Form 10-Q of EACO Corporation. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have; a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially 22 affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls over financial reporting. Date: September 2, 2004 /s/ Stephen C. Travis Stephen C. Travis Director of Finance 23 Exhibit 32.1: Certification of Periodic Reports CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the EACO Corporation's (the "Company") Quarterly Report on Form 10-Q for the period ending June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward B. Alexander, Chief Operating Officer/President of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,: (1). The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2). The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: September 2, 2004 By:/s/ Edward B. Alexander Edward B. Alexander Chief Operating Officer/ President 24 Exhibit 32.2: Certification of Periodic Reports CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the EACO Corporation's (the "Company") Quarterly Report on Form 10-Q for the period ending June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen C. Travis, Director of Finance for the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,: (1). The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2). The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: September 2, 2004 By:/s/ Stephen C. Travis Stephen C. Travis Director of Finance 25 EX-3 2 exhibit310.txt Exhibit 3.10 ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION OF FAMILY STEAK HOUSES OF FLORIDA, INC. Florida Document No. H77974 FAMILY STEAK HOUSES OF FLORIDA, INC., pursuant to Section 607.1006, Florida Statutes, does hereby file the following Articles of Amendment and state: 1. That the name of the corporation is FAMILY STEAK HOUSES OF FLORIDA, INC. (the "Corporation"). 2. That Article I of the Articles of Incorporation of the Corporation, is hereby amended to read as follows: ARTICLE I The name of the corporation shall be EACO Corporation. 3. That the foregoing amendment was approved by a majority of the outstanding shares of the Corporation's common stock entitled to vote on this amendment at a regular meeting of shareholders held on June 17, 2004, and the number of votes cast was sufficient for approval. 4. The effective date of this amendment shall be the date of filing of these Articles of Amendment. IN WITNESS WHEREOF, the undersigned President of this Corporation has executed these Articles of Amendment on the 18th day of June, 2004. FAMILY STEAK HOUSES OF FLORIDA, INC. By: /s/ Edward B. Alexander Edward B. Alexander, President EX-11 3 exhibit11.txt Exhibit 11
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 Six Months 6/30/04 7/02/03 6/30/04 7/02/03 Basic: Weighted average common shares outstanding used in computing basic (loss) earnings per share 3,771,000 3,706,200 3,744,000 3,706,200 ========= ========= ========= ========= Basic (loss) earnings per share $ (.15) $ (.11) $ (.24) $ (.12) ========= ========== ========= ========= Diluted: Weighted average common shares outstanding 3,771,000 3,706,200 3,744,000 3,706,200 Effects of dilutive stock options --- --- --- --- --------- ---------- ---------- -------- Shares used in computing diluted (loss) earnings per share 3,771,000 3,706,200 3,753,400 3,706,200 ========= ========= ========= ========= Diluted (loss) earnings per share $ (.15) $ (.11) $ (.24) $ (.12) ========= ========= ======== =========
EX-31 4 exhibit3101.txt EXHIBIT 31.01 CERTIFICATIONS I, Edward B. Alexander, certify that: 1. I have reviewed this quarterly report on Form 10-Q of EACO Corporation. 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 1 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 2, 2004 /s/ Edward B. Alexander Edward B. Alexander President and Chief Operating Officer 2 EX-31 5 exhibit3102.txt EXHIBIT 31.02 I, Stephen C. Travis, certify that: 1. I have reviewed this quarterly report on Form 10-Q of EACO Corporation. 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of 1 registrant's board of directors (or persons performing the equivalent function): a) All significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: September 2, 2004 /s/ Stephen C. Travis Stephen C. Travis Director of Finance 2 EX-32 6 exhibit3201.txt EXHIBIT 32.01 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the EACO Corporation's (the "Company") Quarterly Report on Form 10-Q for the period ending June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Edward B. Alexander, Chief Operating Officer/President of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes- Oxley Act of 2002, that,: (1). The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2). The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: September 2, 2004 By: /s/ Edward B. Alexander Edward B. Alexander President and Chief Operating Officer EX-32 7 exhibit3202.txt EXHIBIT 32.02 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the EACO Corporation's (the "Company") Quarterly Report on Form 10-Q for the period ending June 30, 2004, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Stephen C. Travis, Director of Finance/ Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that,: (1). The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and (2). The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: September 2, 2004 By: /s/ Stephen C. Travis Stephen C. Travis Director of Finance -----END PRIVACY-ENHANCED MESSAGE-----