-----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, B2C3kCrYXE9ZfYXIMw1wgWe1h57/JUTefB7dgPGMLIo03h3O8haIEAMm4SBWCeLM 9VuXMPOw7HoWKhPFDRBTGw== 0000861058-98-000006.txt : 19980513 0000861058-98-000006.hdr.sgml : 19980513 ACCESSION NUMBER: 0000861058-98-000006 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19980512 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE RECYCLING TECHNOLOGIES INC CENTRAL INDEX KEY: 0000861058 STANDARD INDUSTRIAL CLASSIFICATION: BLANK CHECKS [6770] IRS NUMBER: 841122431 STATE OF INCORPORATION: GA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-28704 FILM NUMBER: 98616609 BUSINESS ADDRESS: STREET 1: 3500 PARKWAY LANE STREET 2: SUITE 435 CITY: NORCROSS STATE: GA ZIP: 30071 BUSINESS PHONE: 7707299010 MAIL ADDRESS: STREET 1: 3500 PARKWAY LANE STREET 2: SUITE 435 CITY: NORCROSS STATE: GA ZIP: 30092 FORMER COMPANY: FORMER CONFORMED NAME: CLASSIC RESTAURANTS INTERNATIONAL INC /CO/ DATE OF NAME CHANGE: 19960619 FORMER COMPANY: FORMER CONFORMED NAME: CLASSIC RESTAURANTS INC/CO DATE OF NAME CHANGE: 19960604 FORMER COMPANY: FORMER CONFORMED NAME: CASINOS INTERNATIONAL INC/CO DATE OF NAME CHANGE: 19960604 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [x] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended: September 30, 1997 [ ] TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _______________ Commission file number 0-28704 CREATIVE RECYCLING TECHNOLOGIES, INC. (Exact name of small business issuer as specified in its charter) GEORGIA 84-1122431 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 3500 PARKWAY LANE, SUITE 435, NORCROSS, GEORGIA 30092 (Address of principal executive offices) (770)729-9010 (Issuer's telephone number) NOT APPLICABLE (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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___ State the number of shares outstanding of each of the issuer's classes of common equity, as of the last practicable date: 733,280 SHARES OF CLASS A COMMON STOCK, NO PAR VALUE 10,000 SHARES OF CLASS B COMMON STOCK, NO PAR VALUE AS OF MAY 12, 1998 Transitional Small Business Disclosure Format (check one): Yes __ No _X_ CLASSIC RESTAURANTS INTERNATIONAL, INC. TABLE OF CONTENTS PAGE PART I. FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheet dated September 30, 1997 3 Consolidated Statement of Operations 4 Consolidated Statements of Cash Flows for the Three Months Ended September 30, 1996 and 1997 5 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial 7 Condition and Results of Operations PART II. OTHER INFORMATION 8 2 PART I. - FINANCIAL INFORMATION CREATIVE RECYCLING TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEET SEPTEMBER 30, 1997 (UNAUDITED)
September 30, June 30, 1997 1997 -------- -------- ASSETS Current assets: Cash and cash equivalents $ 27,563 $ 36,656 Inventory 14,751 14,039 Prepaid expenses (624) - Due from officers and stockholders 183,625 91,444 Other receivables 8,118 6,655 ---------- ---------- Total current assets 233,433 148,794 Property and equipment-net of accumulated Depreciation 315,726 348,801 Other assets: Intangibles net of accumulated amortization Of $7,167 and $10,707 20,965 21,501 Deposits 39,119 39,119 ----------- ---------- $ 609,243 $ 558,215 =========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) Current liabilities: Accounts payable $ 239,479 $ 184,394 Accrued expenses 164,135 119,169 Notes payable 333,614 333,614 Advance banquet deposits 39,326 26,973 Deferred revenue 11,865 13,833 Deferred rent 23,640 26,640 ----------- ---------- Total current liabilities 812,059 701,623 ----------- ---------- Commitments and contingencies Stockholders' equity (deficiency): Common stock, Class A no par value, 1,800,000,000 shares authorized 3,018,592 and 4,384,116 shares issued and outstanding 4,045,124 3,814,880 Common stock, Class B no par value, 200,000,000 Shares authorized, 200,000 shares issued And outstanding 200 200 Preferred stock, Series A, convertible, stated value $25,000, 20 shares authorized, 14 shares issued and outstanding 350,000 350,000 Preferred stock, Series B convertible, stated value $15, 12,000 shares authorized, 2,918 issued and outstanding 43,770 43,770 Preferred stock, Series C, convertible, stated value $50,000, 12 shares authorized, no shares issued or outstanding - - Accumulated deficit (4,641,910) 4,352,258) ----------- ---------- Total stockholders' equity (deficiency) (202,816) (143,408) ----------- ---------- $ 609,243 $ 558,215 =========== ==========
See accompanying notes to financial statements. 3 CREATIVE RECYCLING TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997 (UNAUDITED)
For the three months ended March 31, 1997 1996 ------ ------ Net sales $ 317,718 $ 411,874 --------- ----------- Operating expenses: Operating and maintenance 376,665 373,965 General and administrative 182,771 250,632 Depreciation and amortization 35,920 35,891 ----------- ----------- Total operating expenses 595,356 660,488 ----------- ----------- Loss from operations (277,638) (248,614) ----------- ----------- Other income (expense): Other income 448 7,209 Interest expense (11,735) (6,229) ----------- ----------- (11,287) 983 ----------- ----------- Net (loss) $(288,925) $(247,631) =========== =========== Per share information: Weighted average shares Outstanding 5,467,449 3,021,925 =========== =========== Basic and diluted loss per share $ (0.05) $ (0.08) =========== ===========
See accompanying notes to financial statements. 4 CREATIVE RECYCLING TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 (UNAUDITED)
1996 1997 ----------- ------------ Cash flows from operating activities: Net loss $ (288,925) $ (247,631) Adjustments to reconcile net loss To net cash provided by (used in) Operating activities: Depreciation and amortization 35,920 35,891 Changes in assets and liabilities: (Increase) decrease in inventory (712) (1,547) (Increase) decrease in prepaid expenses 624 (313) (Increase) decrease in other receivables (1,463) 2,489 (Increase) decrease in accounts payable and accrued expenses 99,324 29,299 Increase (decrease) in advance banquet deposits 12,353 13,206 Increase (decrease) in deferred revenue (1,968) 674 ----------- ----------- Total adjustments 144,078 79,699 ----------- ----------- Net cash (used in) operating activities (144,847) (167,932) ----------- ----------- Cash flows from investing activities: Purchase of intangible assets - - Purchase of fixed assets (2,309) (4,859) ----------- ----------- Net cash (used in) investing activities (2,309) (4,859) Cash flows from financing activities: Net proceeds from issuance of common stock 230,244 20,000 Payments of deposits - (1,521) Proceeds from due to officers and and stockholders - 152,001 Advances to due from officers and stockholders (92,181) (4,300) ---------- ---------- Net cash provided by financing Activities 138,063 166,180 ---------- ---------- Net increase in cash and cash equivalents (9,093) (6,611) Beginning-cash and cash equivalents 36,656 22,759 Ending-cash and cash equivalents $ 27,563 $ 16,148 ========== ==========
See accompanying notes to financial statements. 5 CLASSIC RESTAURANTS INTERNATIONAL, INC. NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1997 (UNAUDITED) 1. BASIS OF PRESENTATION The accompanying unaudited financial statements have been prepared inaccordance with generally accepted accounting principles for interim financial information and Item 310(b) of Regulation SB. They do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair presentation have been included. The results of operations for the periods presented are not necessarily indicative of the results to be expected for the full year. For further information, refer to the financial statements of the Company as of June 30, 1997, and the notes thereto, included in the Company's Form 10-KSB. 2. REINCORPORATION At a special meeting of the shareholders of the Company held on April 13, 1998, the shareholders voted to a approve a merger of the Company with and into Creative Recycling Technologies, Inc. ("CRT"), a wholly owned subsidiary of the Company incorporated under the laws of the State of Georgia, for the purpose of changing the Company's state of incorporation from Colorado to Georgia. The merger became effective on April 14, 1998. As of the effective date of the merger, the Company ceased to exist as a separate legal entity, and CRT assumed, and became the owner of, all of the liabilities and assets of the Company by operation of law. Under the Agreement and Plan of Merger, common and preferred shareholders of the Company received, for each share of common or preferred stock which they owned in the Company, one share of common or preferred stock in the CRT which has the same rights, preferences and limitations as the shares which they owned in the Company immediately before the effective date of the merger. Effective upon the close of trading on April 14, 1998, the Company effected a 1-for-20 reverse stock split of its Class A and Class B Common Stock. All per share amounts herein have not been adjusted to reflect the effects of the reverse stock split. 3. COMMON STOCK For the period July 1, 1997 to September 30, 1997, the Company issued 1,622,500 shares of Class A Common Stock in private placements, and realized net proceeds of $230,244 therefrom. 4. FOREIGN OFFERING In April 1998, the Company entered into an agreement with Brown & Lampe, a brokerage firm based on Vienna, Austria, under which the firm agreed to sell, 6 on a best efforts basis, up to 3,500,000 shares of Class A Common Stock and Series A Warrants for $1.50. Each Series A Warrant entitles the holder to purchase one share of Class A Common Stock for $3.50 per share at any time until December 31, 2003. Under the agreement, Brown & Lampe is entitled to a commission equal to 33 1/3% of the amount raised. The offering is being conducted pursuant to an exemption from registration contained in Regulation S under the Securities Act of 1933. Proceeds from the offering are intended to be used principally to fund the Company's tire recycling operations which it is acquiring pursuant to its agreement to acquire all of the outstanding common stock of AA Corp. 5. VOYAGER IPO SELECT FUND, LTD. On June 20, 1997, the Company entered into an agreement with Voyager IPO Select Fund, Ltd. ("Voyager"), to repurchase six shares of Series A Preferred Stock, which had a face value of $150,000, and 286,088 shares of Class A Common Stock for twelve shares of Series C Preferred Stock and $250,000 cash. The Company and Voyager since orally amended the agreement to provide that the Company would give Voyager a promissory note bearing interest at eight percent (8%) per annum, and due and payable in full on July 1, 1998, in lieu of the $250,000 cash payment. The Series C Preferred Stock has a liquidation value of $50,000 per share, is not entitled to receive dividends, does not have any voting rights, and is convertible into Class A Common Stock based on a conversion price which is determined based on the bid price of the Class A Common Stock immediately before any conversion. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION LIQUIDITY AND CAPITAL RESOURCES At September 30, 1997 the Company had a working capital deficit of ($578,626), compared to a working capital deficit of ($552,829) on June 30, 1997. On September 30, 1997, and June 30, 1997, the Company had cash and cash equivalents of $27,563, and $36,656, respectively. During the quarter ended September 30, 1997, the Company's working capital was impacted by a larger loss from operations during the Company's seasonally slow period, offset by $230,244 in new capital raised from the private placement of shares of common stock. As of the quarter ended September 30, 1997, the Company had substantial trade liabilities, all of which it was unable to pay in the ordinary course of business. In addition, the Company was in default in the payment of principle and interest on $333,614 of note indebtedness. Currently, the Company is dependent upon advances from shareholders and the sale of stock to meet its financing needs. There is no guaranty that the Company will be able to obtain additional financing from these sources. RESULTS OF OPERATIONS For the three months ended September 30, 1997 and 1996, net sales were $317,718 and $411,874, respectively, for a decrease of 23%. This decrease is partly due to the poor tourist market experienced by the area in which the Company's restaurants are located. The fiscal first quarter is traditionally the Company's worst operating quarter, with the winter quarter being the best due to the Florida tourist season. The drop in net sales was offset by a substantial drop in general and administrative expenses from $250,632 in the quarter ended September 30, 1996 to $182,771 in the quarter ended September 30, 1997, representing a 28% decline from the prior year. Management expects this trend to continue for the remainder of fiscal 1998. For the three months ended September 30, 1997, 7 operating expenses were virtually unchanged from the prior year, increasing less than 1% to $376,665 from $373,965 in the three months ended September 30, 1996. The Company experienced a loss from operations of $277,638 and a net loss of $288,925, for the three months ended September 30, 1997. In contrast, for the three months ended September 30, 1996, the Company had a loss from operations of $248,614 and a net loss of $247,631. PART II - OTHER INFORMATION Item 1. Legal Proceedings. In May 1997, Mark Shoom filed a lawsuit against the Company and James Robert Shaw to recover the principal, interest and attorney's fees due under a promissory note dated October 9, 1996 in the original principal amount of $80,000 payable by the Company and guaranteed personally by Mr. Shaw. In June 1997, the Company entered into a Settlement Agreement with Mr. Shoom under which the Company agreed to issue Mr. Shoom 114,737 shares of the Company's Class A Common Stock under Regulation S of the Securities and Exchange Commission. In addition, in the event Mr. Shoom receives net proceeds from the sale of said shares of less than $103,300, the Company is obligated to issue Mr. Shoom additional shares with a value, as determined from the bid price of said stock, equal to the difference between $103,300 and the net proceeds received. To date, the Company has not performed under the Settlement Agreement, in that the Company has not issued Mr. Shoom the initial 114,737 shares of Class A Common Stock. As a result of the Company's breach of the Settlement Agreement, Mr. Shoom, through his attorneys, has recently filed a motion for entry of a default judgment. The Company and Mr. Shaw have filed a motion to reopen the default, as well as an answer and counterclaim. The court recently denied Mr. Shoom's motion and granted the Company's motion to reopen the default. There is a substantial chance that the Company will be found liable to Mr. Shoom for some amount of money, the exact amount of which is unknown at this time. On December 9, 1997, Evelyn Kuntz served a writ of garnishment on the NationsBank, N.A. in collection of a default judgment which she had obtained against the Company in the amount of $46,376.31 on August 20, 1997. The writ of garnishment caused NationsBank to freeze the accounts of the Company and its wholly owned subsidiary, Classic Restaurants International, Inc., a Florida corporation. Mr. Kuntz's initial suit was filed to collect the balance due on a promissory note issued by the Company. On or about December 19, 1997, the Company and Ms. Kuntz entered into a Stipulation for Dissolution of Writ of Garnishment, Settlement Agreement and Order pursuant to which the parties agreed that the funds held by NationsBank on behalf of the Company would be turned over to Ms. Kuntz in partial satisfaction of the judgment and the funds held by NationsBank on behalf of Classic's subsidiary were released to the subsidiary. In addition, the Company agreed to make payments of $5,000 per month to Ms. Kuntz until the balance of the judgment was satisfied, and to issue Ms. Kuntz 125,000 shares of the Company's Class A Common Stock as collateral to secure the Company's remaining obligation to Mr. Kuntz. In return, Ms. Kuntz agreed to forebear from any further collection efforts as long as the Company was not in default under the terms of the Stipulation. The Company is in compliance with its monetary obligations under the Stipulation, and has issued the stock certificates to Ms. Kuntz as collateral under the Stipulation. Item 2. Changes in Securities None. Item 3. Defaults Upon Senior Securities. None. 8 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) Exhibits: REGULATION S-B NUMBER EXHIBIT 27 Financial Data Schedule (b) The Company did not file any reports on Form 8-K during the quarter ended September 30, 1997. SIGNATURES In accordance with the requirements of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CREATIVE RECYCLING TECHNOLOGIES, INC. May 12, 1998 \s\ June M. Cuba Date June M. Cuba Chief Financial Officer 9 EX-27 2 FDS
5 1 U.S. DOLLARS 3-MOS JUN-30-1997 JUL-01-1996 SEP-30-1997 1 27,563 0 191,743 0 14,751 233,433 812,472 496,746 609,243 812,059 0 0 393,770 4,045,124 (4,641,910) 609,243 0 317,718 0 376,665 218,691 0 11,735 (288,925) 0 (288,925) 0 0 0 (288,925) (.05) (.05)
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