0000912057-95-006141.txt : 19950810 0000912057-95-006141.hdr.sgml : 19950810 ACCESSION NUMBER: 0000912057-95-006141 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950630 FILED AS OF DATE: 19950809 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: STRATAMERICA CORP CENTRAL INDEX KEY: 0000810829 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812] IRS NUMBER: 870368170 STATE OF INCORPORATION: UT FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-15399 FILM NUMBER: 95560249 BUSINESS ADDRESS: STREET 1: 42-620 CAROLINE COURT STREET 2: GARDEN STE CITY: PALM DESERT STATE: CA ZIP: 92211 BUSINESS PHONE: 6197761010 MAIL ADDRESS: STREET 2: 1776 NORTH STATE STREET SUITE 130 CITY: OREM STATE: UT ZIP: 84057 10QSB 1 10QSB FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended June 30, 1995 ------------------------------------------------------------ Commission file number 0-15399 ------------------------------------------------------- StratAmerica Corporation ------------------------------------------------------------------------------ (Exact name of registrant as specified in its charter) Utah 87-0368170 -------------------------------- ------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 42-620 Caroline Court, Palm Desert, California 92211 -------------------------------------------------------- ---------------- (Address of principal executive offices) (Zip Code) (619) 776-1010 ------------------------------------------------------------------------------ (Registrant's Telephone Number, including area code) N/A ------------------------------------------------------------------------------ Former Address from Previous Form 10-Q 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 such filing requirements for the past 90 days. Yes X No ----- ----- 10,000,000 Common Shares, $0.05 par value, were issued and outstanding as of July 31, 1995(1). Transitional Small Business Disclosure Format. Yes No X ----- ----- ----------------------------- (1) Calculated without reference to Regulation 240.13d-3. ITEM 1 - FINANCIAL STATEMENTS STRATAMERICA CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in Thousands) (unaudited)
June 30, March 31, 1995 1995 --------- --------- ASSETS Current assets: Cash $ 6 $ 237 Restricted cash -- 35 Trade accounts receivable 48 23 Interest receivable - related party 38 15 Inventories 165 161 Prepaid expenses 152 75 --------- --------- Total current assets 409 546 Notes receivable - related party 611 611 Property and equipment, net 1,140 1,204 Goodwill, net 476 550 Other assets 82 80 --------- --------- $ 2,718 $ 2,991 --------- --------- --------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 816 $ 765 Accrued liabilities 3,482 3,338 Current portion of long-term debt and capital lease obligations 1,800 1,872 Notes payable 2,329 2,193 Deferred franchise fees 95 120 Deposit 246 246 --------- --------- Total current liabilities 8,768 8,534 Long-term debt and capital lease obligations, less current portion 409 417 Accumulated losses in excess of investment in unconsolidated subsidiary 121 121 Deferred revenue 378 378 Minority interest in consolidated subsidiary 350 350 --------- --------- 10,026 9,800 --------- --------- --------- --------- Shareholder's equity: Common stock, $.05 par value - authorized 10,000,000 shares; 10,000,000 shares issued and outstanding 500 500 Capital in excess of par value 7,936 7,936 Accumulated deficit (15,744) (15,245) --------- --------- (7,308) (6,809) --------- --------- $ 2,718 $ 2,991 --------- --------- --------- ---------
See notes to consolidated financial statements. -1- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in Thousands, except per share amounts) (unaudited)
Three Months Ended June 30, -------------------- 1995 1994 --------- --------- Revenues: Restaurant $2,804 $3,227 Retail 101 37 Franchise fees and royalties 103 99 Other 1 8 Interest 24 71 --------- --------- 3,033 3,442 --------- --------- Expenses: Restaurant cost of sales, excluding depreciation 1,929 2,043 Restaurant rent 324 339 Other restaurant occupancy and operating expenses 539 647 Retail cost of sales 78 16 Retail operating expense 32 26 General and administrative expense 365 404 Depreciation and amortization 144 187 Interest 121 177 Equity in losses of subsidiary -- 20 --------- --------- 3,532 3,859 --------- --------- Net loss $ (499) $ (417) --------- --------- --------- --------- Net loss per share $(0.05) $(0.04) --------- --------- --------- ---------
See notes to consolidated financial statements. -2- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands) (unaudited)
Three Months Ended June 30, -------------------- 1995 1994 --------- --------- Cash flows from operating activities: Cash received from customers $ 2,959 $ 3,448 Cash paid to suppliers and employees (2,857) (3,493) Interest received 1 -- Interest paid (382) (118) --------- --------- Net cash used by operating activities (279) (163) --------- --------- Cash flows from investing activities: Purchase of property and equipment (5) (34) Other (3) 2 --------- --------- Net cash (used in) provided by investing activities (8) (32) --------- --------- Cash flows from financing activities: Principal payments on long-term debt and capital lease obligation (80) (43) Proceeds from borrowings 136 252 --------- --------- Net cash (used in) provided by financing activities 56 209 --------- --------- Net increase in cash (231) 14 Cash at the beginning of period 237 117 --------- --------- Cash at end of period $ 6 $ 131 --------- --------- --------- ---------
(continued) See notes to consolidated financial statements. -3- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands) (unaudited) (continued)
Three Months Ended June 30, -------------------- 1995 1994 --------- --------- Net loss $ (499) $ (417) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 144 187 Equity in losses of subsidiary -- 20 Change in assets and liabilities: Increase in receivables (25) (83) Increase in other receivables (23) -- Increase in inventories (4) (1) Increase in prepaid expenses (77) (73) Increase in accounts payable and accrued liabilities 195 162 Change in deferred revenue, deposits and other 10 42 --------- --------- Net cash used by operating activities $ (279) $ (163) --------- --------- --------- ---------
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None. See notes to consolidated financial statements. -4- STRATAMERICA CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 -- UNAUDITED FINANCIAL STATEMENTS: Information as of June 30, 1995 and for the three months ended June 30, 1995 and 1994 is unaudited. The information in the unaudited financial statements reflects all adjustments which are, in the opinion of management, necessary to a fair presentation of the financial statements. These adjustments are of a normal recurring nature. These financial statements are prepared in accordance with the requirements of Form 10-Q and consequently may not include all the disclosures normally required by generally accepted accounting principles or those normally made in the annual Form 10-K filing. Any required information omitted is either insignificant or is not applicable. NOTE 2 -- LOSS PER SHARE: Loss per share amounts are based on the weighted average shares outstanding of 10,000,000 for the three months ended June 30, 1995 and 1994, respectively. NOTE 3 -- INVENTORY: Inventory consists of food and beverage inventories sold through its restaurant business. NOTE 4 -- SALE OF SUBSIDIARY: During June 1995, the Company entered into a letter of intent to sell Shari's Franchise Corporation, a wholly-owned subsidiary, to Shari's Management Corporation. This transaction is subject to reaching a definitive agreement between the parties and obtaining shareholder approval. NOTE 5 -- COMMITMENTS AND CONTINGENCIES: The Company has guaranteed five store lease obligations of third party and former employee franchisees of Dreams Franchise Corporation, which are in default at June 30, 1995. The total future minimum lease payments related to the leases in default is approximately $785 at June 30, 1995. The Company has accrued for the estimated cost of settling these guarantees. -5- ITEM 2 -- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Total revenues for the three months ended June 30, 1995 were $3,033,000 compared to $3,442,000 for the three months ended June 30, 1994, representing a decrease of $409,000. This decrease is due primarily to a decrease in restaurant revenues of $423,000, resulting from a decrease in restaurant revenues at B.B. O'Briens, Inc. of $245,000 and a decrease in restaurant revenues at Shari's Franchise Corporation of $178,000 during the three months ended June 30, 1995 compared to the three months ended June 30, 1994. The decrease at Shari's Franchise Corporation is due to the October 1994 closure of a Shari's restaurant located in Palm Springs, California. The decrease in restaurant revenues at B.B. O'Briens, Inc. is due to declining sales and the decision to close this operation. The restaurant was closed July 1995. Total expenses for the three months ended June 30, 1995 were $3,532,000 compared to $3,859,000 for the three months ended June 30, 1994, representing a decrease of $327,000. This decrease is due primarily to the decrease in restaurant operations described above. Restaurant cost of sales, occupancy, and operating costs decreased by a total of $237,000, representing the majority of the overall decrease in costs. LIQUIDITY AND CAPITAL RESOURCES At June 30, 1995, the Registrant has a working capital deficit of $8,359,000 compared to a working capital deficit of $7,988,000 at March 31, 1995. This increase in the working capital deficit of $371,000 is due primarily to the losses from operations for the three months ended June 30, 1995. These continued losses have created a significant working capital deficit, which makes it difficult to find additional equity or financing sources. Management has relied primarily on borrowings from related parties to finance ongoing losses from operations but the Registrant cannot predict what additional financing, related party or other financing, may be available in the future, nor can it predict whether it can substantially improve its future results of operations. The failure of the Registrant to obtain additional sources of working capital and/or to substantially improve its results of operations will have a significant negative impact on the liquidity and capital resources of the Registrant and be detrimental to the Registrant's ongoing future operations. The Registrant has entered into a letter of intent to sell Shari's Franchise Corporation and the Registrant has closed the operations of B.B. O'Briens, Inc. While these transactions will improve working capital, they alone are insufficient to significantly impact the current working capital deficit. -6- PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. In October, 1994 a Complaint was filed in San Bernardino Superior Court, State of California against Registrant and Dreams Franchise Corporation ("DFC") by Acquiport Five Corporation relating to a lease in a mall in Montclair, California. The Complaint was an action for unlawful detainer and for past due rents. During the fiscal quarter ended June 30, 1995, Registrant and DFC negotiated a settlement with the Landlord, pursuant to which the monthly rent during the remaining term of the lease commencing June 1, 1995 has been increased to an amount of $4,753.32 per month which rental increases will compensate the Landlord for the past due rents. Pursuant to that settlement, Registrant and DFC also executed a stipulation for entry of judgment which provides that if rental payments required under the lease are not made, after ten days written notice, the Plaintiff shall be entitled to a judgment giving it possession of the premises and writ of execution. 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. None -7- 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. SIGNATURES StratAmerica Corporation 02/01/95 /s/ Sam Battistone ----------------------------- --------------------------------------- Date President Sam Battistone 01/31/95 /s/ Dale E. Larsson ----------------------------- --------------------------------------- Date Principal Financial Officer Dale E. Larsson -8- EX-27 2 EXHIBIT 27
5 1,000 3-MOS MAR-31-1995 APR-01-1995 JUN-30-1995 6 0 48 0 165 409 3,069 (1,929) 2,718 8,768 0 500 0 0 7,936 2,718 2,905 3,033 2,007 3,411 0 0 121 (499) 0 (499) 0 0 0 (499) (.05) (.05)