-----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, A9s+oJYr8hvGCSSimXV2gyj2DCiGflqDQrhGw4toqF0KFzEX1hvCqrMRt8O4OvHU WwfaTUcjRuUXZPAynKS9Ow== 0000912057-95-009379.txt : 19951107 0000912057-95-009379.hdr.sgml : 19951107 ACCESSION NUMBER: 0000912057-95-009379 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951106 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: 95587643 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 SEPTEMBER 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(1) Common Shares, $0.05 par value, were issued and outstanding as of November 1, 1995. Transitional Small Business Disclosure Format. Yes No X ------ ------ - ----------------------- (1)Calculated without reference to Regulation 240.13d-3 PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS. None. 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. On September 8, 1995, Registrant filed a Form 8-K describing, pursuant to Item 5, execution of an agreement to sell certain restaurants. ITEM 1 - FINANCIAL STATEMENTS STRATAMERICA CORPORATION CONSOLIDATED BALANCE SHEET (Dollars in Thousands) (unaudited)
September 30, March 31, 1995 1995 -------------- -------------- ASSETS ------ Current assets: Cash $ 5 $ 237 Restricted cash - 35 Trade accounts receivable 44 23 Interest receivable - related party 77 15 Inventories 169 161 Prepaid expenses 239 75 -------- -------- Total current assets 534 546 Notes receivable - related party 611 611 Property and equipment, net 1,063 1,204 Goodwill, net 378 550 Other assets 83 80 -------- -------- $ 2,669 $ 2,991 -------- -------- -------- -------- LIABILITIES AND SHAREHOLDERS' EQUITY ------------------------------------- Current liabilities: Accounts payable $ 944 $ 765 Accrued liabilities 3,568 3,338 Current portion of long-term debt and capital lease obligations 1,800 1,872 Notes payable 2,564 2,193 Deferred franchise fees 95 120 Deposit 246 246 -------- -------- Total current liabilities 9,217 8,534 Long-term debt and capital lease obliga- tions, less current portion 332 417 Accumulated losses in excess of investment in unconsolidated subsidiary 121 121 Deferred revenue 378 378 Minority interest in consolidated subsidiary 350 350 -------- -------- 10,398 9,800 -------- -------- Shareholders' 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 (16,165) (15,245) -------- -------- (7,729) (6,809) -------- -------- $ 2,669 $ 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 ---------------------- September 30, ---------------------- 1995 1994 --------- ------- Revenues: Restaurant $ 3,704 $ 4,190 Retail 43 43 Franchise fees and royalties 100 151 Other - 28 Interest 39 65 ------- ------- 3,886 4,477 ------- ------- Expenses: Restaurant cost of sales, excluding depreciation 2,421 2,655 Restaurant rent 404 435 Other restaurant occupancy and operating expense 659 842 Retail cost of sales 18 8 Retail operating expense 61 28 General and administrative expense 427 344 Depreciation and amortization 185 226 Interest 132 185 Loss on restaurant closure - 641 ------- ------- 4,307 5,364 ------- ------- Net loss $ (421) $ (887) ------- ------- ------- ------- Net loss per share $ (0.04) $ (0.09) ------- ------- ------- -------
See notes to consolidated financial statements. -2- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Dollars in Thousands, except per share amounts) (unaudited)
Six Months Ended -------------------- SEPTEMBER 30, -------------------- 1995 1994 -------- ------ Revenues: Restaurant $ 6,508 $ 7,417 Retail 144 80 Franchise fees and royalties 203 250 Other 1 36 Interest 63 136 ------- ------- 6,919 7,919 ------- ------- Expenses: Restaurant cost of sales, excluding depreciation 4,350 4,698 Restaurant rent 728 774 Other restaurant occupancy and operating expense 1,198 1,489 Retail cost of sales 96 24 Retail operating expense 93 44 General and administrative expense 792 758 Depreciation and amortization 329 413 Interest 253 362 Equity in loss of unconsolidated subsidiary - 20 Loss on restaurant closure - 641 ------- ------- 7,839 9,223 ------- ------- Net loss $ (920) $(1,304) ------- ------- ------- ------- Net loss per share $ (0.09) $ (0.13) ------- ------- ------- -------
See notes to consolidated financial statements. -3- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands) (unaudited)
SIX MONTHS ENDED ---------------------- September 30, ---------------------- 1995 1994 --------- -------- Cash flows from operating activities: Cash received from customers $ 6,810 $ 7,894 Cash paid to suppliers and employees (6,881) (7,985) Interest received 1 11 Interest paid (357) (369) ------- ------- Net cash used by operating activities (427) (449) ------- ------- Cash flows from investing activities: Purchase of property and equipment (15) (43) Collection on notes receivable - 339 Other (4) - ------- ------- Net cash (used in) provided by investing activities (19) 296 ------- ------- Cash flows from financing activities: Principal payments on long-term debt and capital lease obligation (157) (540) Proceeds from borrowings 371 670 ------- ------- Net cash provided by financing activities 214 130 ------- ------- Net decrease in cash (232) (23) Cash at the beginning of period 237 117 ------- ------- Cash at end of period $ 5 $ 94 ------- ------- ------- -------
(continued) See notes to consolidated financial statements. -4- STRATAMERICA CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Dollars in Thousands) (unaudited) (continued)
SIX MONTHS ENDED --------------------- SEPTEMBER 30, --------------------- 1995 1994 ------- --------- Net loss $ (920) $(1,304) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 329 413 Equity in losses of subsidiary - 20 Change in assets and liabilities: Increase in receivables (21) (175) Increase in other receivables (62) - Increase in inventories (8) (2) Increase in prepaid expenses (164) 491 Increase in accounts payable and accrued liabilities 409 66 Change in deferred revenue, deposits and other 10 42 ------ ------- Net cash used by operating activities $ (427) $ (449) ------ ------- ------ -------
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES: None. See notes to consolidated financial statements. -5- STRATAMERICA CORPORATION ------------------------ NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ------------------------------------------ (unaudited) NOTE 1 - UNAUDITED FINANCIAL STATEMENTS: - --------------------------------------- Information as of September 30, 1995 and for the three months and six months ended September 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 and six months ended September 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 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 September 30, 1995. The total future minimum lease payments related to the leases in default is approximately $785 at September 30, 1995. The Company has accrued for the estimated cost of settling these guarantees. -6- MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- RESULTS OF OPERATIONS - --------------------- Total revenues for the six months ended September 30, 1995 were $6,919,000 compared to $7,919,000 for the six months ended September 30, 1994, representing a decrease of $1,000,000. This decrease is due primarily to a decrease in restaurant revenues of $909,000, resulting from a decrease in restaurant revenues at B.B. O'Briens, Inc. of $530,000 and a decrease in restaurant revenues at Shari's Franchise Corporation of $379,000 during the six months ended September 30, 1995 compared to the six months ended September 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 six months ended September 30, 1995 were $7,839,000 compared to $9,223,000 for the six months ended September 30, 1994, representing a decrease of $1,384,000. 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 $685,000, representing the majority of the overall decrease in costs. Additionally, there was a loss on restaurant closure of $641,000 during the six months ended September 30, 1994 and no similar loss during the six months ended September 30, 1995. The changes in revenues and expenses for the three months ended September 30, 1995 as compared to the three months ended September 30, 1994, reflect differences similar to the differences described above for the six months ended September 30, 1995 and 1994. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At September 30, 1995, the Company had a working capital deficit of $8,683,000 compared to a working capital deficit of $7,988,000 at March 31, 1995. This increase in the working capital deficit of $695,000 is due primarily to the losses from operations for the six months ended September 30, 1995. Management has relied primarily on borrowings from related parties to finance ongoing losses from operations but the Company 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 Company 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 Company and be detrimental to the Company'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 -7- 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. -8- 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 / /95 /s/ Sam Battistone - ------------------------- -------------------------------------------- Date President Sam Battistone / /95 /s/ Dale E. Larsson - ------------------------- -------------------------------------------- Date Principal Financial Officer Dale E. Larsson -9- EX-27 2 EXHIBIT 27
5 1,000 6-MOS MAR-31-1995 JUL-01-1995 SEP-30-1995 5 0 121 0 169 534 3,082 2,019 2,669 9,217 0 500 0 0 7,936 2,669 3,704 3,886 2,439 2,439 1,736 0 132 (421) 0 (421) 0 0 0 (421) (0.04) 0
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