0001010549-01-500432.txt : 20011008
0001010549-01-500432.hdr.sgml : 20011008
ACCESSION NUMBER: 0001010549-01-500432
CONFORMED SUBMISSION TYPE: 10QSB
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20010630
FILED AS OF DATE: 20010917
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: RESTAURANT TEAMS INTERNATIONAL INC
CENTRAL INDEX KEY: 0000921066
STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING PLACES [5812]
IRS NUMBER: 752337102
STATE OF INCORPORATION: TX
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10QSB
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13559
FILM NUMBER: 1738788
BUSINESS ADDRESS:
STREET 1: 911 N.W. LOOP 281
STREET 2: SUITE 111
CITY: LONGVIEW
STATE: TX
ZIP: 75604
BUSINESS PHONE: 903.758.28
MAIL ADDRESS:
STREET 1: 911 N.W. LOOP 281
STREET 2: SUITE 111
CITY: LONGVIEW
STATE: TX
ZIP: 75604
FORMER COMPANY:
FORMER CONFORMED NAME: FRESH N LITE INC
DATE OF NAME CHANGE: 19971030
10QSB
1
restteams10q63001.txt
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 2001
-------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
---------- ----------
Commission file number 001-13559
---------
Restaurant Teams International, Inc.
------------------------------------
(Name of small business issuer in its charter)
Texas 75-2337102
(State of other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization
P.O. Box 5310, Longview, Texas 75608
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (903) 295-6800
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]
Number of shares outstanding of each of the issuer's classes of common stock, as
of August 17, 2001 49,574,663 shares of common stock, par value $.01.
RESTAURANT TEAMS INTERNATIONAL, INC.
Page No.
--------
PART I FINANCIAL INFORMATION.................................. 2
Item 1. Financial Statements................................... 2
--------------------
Table of Contents to Financial Information............. 3
Condensed Balance Sheets as of December 31, 2000 and
June 30, 2001.......................................... 4
Condensed Statements of Continuing Operations For Three
Month and Six Month Periods Ended June 30, 2000 and
June 30, 2001.......................................... 6
Condensed Statements of Cash Flows for the Six-Month
Periods Ended June 30, 2000 and June 30, 2001 ......... 7
Notes to Interim Condensed Financial Statements ....... 8
Item 2. Management's Discussion and Analysis of
---------------------------------------
Financial Condition and Results of Operations.......... 9
---------------------------------------------
PART II OTHER INFORMATION...................................... 11
Item 2. Changes in Securities.................................. 11
---------------------
Item 4. Submission of Matters to a Vote of Security Holders.... 11
---------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K....................... 11
--------------------------------
Signatures ....................................................... 12
Exhibit Index ....................................................... 13
1
Item 1. FINANCIAL STATEMENTS
Restaurant Teams International, Inc.
Financial Statements
As of June 30, 2001
2
Restaurant Teams International, Inc.
Financial Statements
As of June 30, 2001
Contents
Financial Statements
Balance Sheet .................................................................4
Statements of Operations ......................................................6
Statements of Cash Flow........................................................7
Notes..........................................................................8
3
Restaurant Teams International, Inc.
Condensed Balance Sheets
Dec. 31, 2000 June 30, 2001
ASSETS
CURRENT ASSETS
Cash $59,133 $6,434
Inventories 6,225 7,357
Marketable Securities 24,140 0
Total Current Assets 89,498 13,791
PROPERTY AND EQUIPMENT, net 2,680,238 2,635,238
OTHER ASSETS
Assets Held for Sale, net 257,000 257,000
Assets of discontinued operations,
net 84,607 0
TOTAL ASSETS 3,111,343 2,906,029
4
LIABILITIES AND SHAREHOLDERS EQUITY
CURRENT LIABILITIES
Amounts due related parties, net 47,500 0
Accounts Payable 446,869 398,779
Accrued Expenses and Other Liabilities 831,232 580,934
Income Tax Payable 10,000 10,000
Current Portion of Long Term Debt 1,764,819 1,764,819
Total current liabilities
3,100,420 2,754,532
CONVERTIBLE DEBENTURES 1,996,301 0
DEFERRED LIABILITIES 32,638 32,638
SHAREHOLDERS EQUITY
Preferred Stock Series A 0 1,999,920
Preferred Stock Series B 0 143,803
Common Stock 365,814 393,247
Additional Paid In Capital 12,265,653 12,754,403
Treasury Stock (773,456) (773,456)
Accumulated Deficit (13,876,027) (13,876,027)
Current Earnings 0 (523,031)
----------- -----------
Total Stockholders Equity (2,018,016) 118,859
TOTAL LIABILITIES AND SHAREHOLDERS EQUITY 3,111,343 2,906,029
5
Restaurant Teams International, Inc.
Condensed Income Statements
For The Three and Six Month Periods Ended
June 30, 2000 and June 30, 2001
Three Months Ended Six Months Ended
June 30 June 30
2001 2000 2001 2000
------------ ------------ ------------ ------------
Revenues
Restaurant sales $ 183,728 $ 190,312 $ 364,392 $ 377,923
Rental income 60,978 78,662 121,951 157,324
------------ ------------ ------------ ------------
Total revenues 241,642 268,974 486,343 535,247
OPERATING COSTS AND EXPENSES
Cost of sales 61,819 67,082 124,441 132,746
Labor and benefits 164,179 59,317 172,268 116,538
Other operating expenses 36,185 129,412 66,634 271,636
General and administrative expenses 51,198 166,317 292,072 384,412
Depreciation expense 22,500 60,535 45,000 83,035
Total operating costs and expenses 335,881 482,663 700,415 988,367
NON - OPERATING INCOME (EXPENSE)
Interest expense (39,408) (250,750) (92,952) (504,620)
(Gain) Loss on Discontinued Operations -- 58,214 -- 116,428
Total non-operating income (expense) (39,408) (192,536) (308,964) (388,192)
------------ ------------ ------------ ------------
NET LOSS $ (126,623) $ (406,225) $ (523,031) $ (841,312)
============ ============ ============ ============
NET LOSS PER COMMON
SHARE - basic and diluted $ (.00) $ (.02) $ (.01) $ (.05)
============ ============ ============ ============
COMMON SHARES OUTSTANDING 36,339,663 7,399,288 36,339,663 7,215,755
6
Restaurant Teams International, Inc.
Condensed Statements of Cash Flows
Six Months Ended
----------------
June 30, 2001 June 30, 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (523,031) $ (841,312)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Depreciation and amortization 45,000 252,382
Amortization of discount and issuance
costs of convertible debentures 0 251,823
Write downs and impairment of RSI assets 0 733,803
Loss (gain) on sale of assets 0 (28,139)
Net change in operating assets and liabilities:
Increase in inventories (1,133) (35,056)
(Increase) decrease in other current assets 24,140 (15,002)
Increase (decrease) in accounts payable
and accrued expenses (298,397) 580,391
Increase (decrease) in notes due to related parties (47,500) 0
----------- -----------
Net cash provided by operating activities (800,911) 898,890
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment 0 (982,972)
Payments in connection with acquisition of Fatburger (pending) 0 (295,000)
Payments in connection with current acquisitions 0 (225,000)
Change in assets of discontinued operations 84,607 0
----------- -----------
Net cash used in investing activities 84,607 (1,502,972)
CASH FLOWS FROM FINANCING ACTIVITIES:
Change in Convertible Dentures (1,996,301) 0
Change in Common Stock 27,433 0
Change in Contributed Capital 488,750 0
Change in Series A Preferred Stock 1,999,920 0
Change in Series B Preferred Stock 143,803 0
Proceeds from issuance of note payable and debentures 0 690,000
----------- -----------
Net cash provided by (used in) financing activities 663,605 690,000
NET INCREASE (DECREASE) IN CASH (52,699) 85,918
CASH AT BEGINNING OF PERIOD 59,133 2,521
----------- -----------
CASH AT END OF PERIOD $ 6,434 $ 88,439
=========== ===========
See accompanying notes to these condensed financial statements.
7
Restaurant Teams International, Inc.
Notes To Interim Condensed Financial Statements
For the Six Month Period Ended
June 30, 2001
Note 1. Basis of Presentation
The condensed financial statements of Restaurant Teams International,
Inc. (the "Company") as of June 30, 1999 and June 30, 2000 have been
prepared by the Company, pursuant to the rules and regulations of the
Securities and Exchange Commission. The information furnished herein
reflects all adjustments (consisting of normal recurring accruals and
adjustments) which are, in the opinion of management, necessary to
fairly state the operating results for the respective periods. However,
these operating results are not necessarily indicative of the results
expected for the full fiscal year. Certain information and footnote
disclosures normally included in annual financial statements prepared
in accordance with generally accepted accounting principals have been
omitted pursuant to such rules and regulations. The notes to the
condensed financial statements should be read in conjunction with the
notes to the financial statements contained in the Form 10-KSB A-1.
Company management believes that the disclosures are sufficient for
interim financial reporting purposes.
8
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward-Looking Statements
This Quarterly Report on Form 10-QSB includes "forward-looking"
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended (the Securities Act), and Section 21E of the Securities Exchange Act of
1934, as amended (the Exchange Act), which can be identified by the use of
forward-looking terminology such as, "may", "believe", "expect", "intend",
"anticipate", "estimate" or "continue" or the negative thereof or other
variations thereon or comparable terminology. All statements other than
statements of historical fact included in this Form 10-QSB, are forward-looking
statements. Although the Company believes that the expectations reflected in
such forward-looking statements are reasonable, it can give no assurance that
such expectations will prove to have been correct. Important factors with
respect to any such forward-looking statements, including certain risks and
uncertainties that could cause actual results to differ materially from the
Company's expectations ("Cautionary Statements") are disclosed in this Form
10-QSB, including, without limitation, in conjunction with the forward-looking
statements included in this Form 10-QSB, and in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1999. Important factors that could
cause actual results to differ materially from those in the forward-looking
statements herein include, but are not limited to, the newness of the Company,
the need for additional capital and additional financing, the Company's limited
restaurant base, lack of geographic diversification, the risks associated with
expansion, a lack of marketing experience and activities, risks of franchising,
seasonability, the choice of site locations, development and construction
delays, need for additional personnel, increases in operating and food costs and
availability of supplies, significant industry competition, government
regulation, insurance claims and the ability of the Company to meet its stated
business goals. All subsequent written and oral forward-looking statements
attributable to the Company or persons acting on its behalf are expressly
qualified in their entirety by the Cautionary Statements.
The following discussion of the results of operations and financial
condition should be read in conjunction with the Financial Statements and
related Notes thereto included herein.
Overview
The Company was organized in June of 1990 as Bosko's, Inc. under the
laws of the State of Delaware. In November of 1992 the Company changed its name
to Fresh'n Lite, Inc., and in November of 1995 the Company merged into a Texas
corporation also bearing the name Fresh'n Lite, Inc. The Company currently owns
and operates 1 Street Talk Cafe restaurant in the Colony, Texas, Tanner's
Rotisserie Grills in Atlanta, GA. and Regulatory Solutions, Inc. of Dallas,
Texas. In September of 1998 the Company changed its name to Restaurant Teams
International, Inc. in order to more accurately reflect management's desire to
position the Company as a franchise holding company.
Results of Operations
Comparison of Three Months Ended June 30, 2000 and 2001
Revenues. For the three months ended June 30, 2001, the Company has
generated revenues from continuing operations of $241,642 compared to revenues
in the same period of 2000 of $268,974, a 10% decrease. The decrease in revenue
is due primarily to the slow down in sales at the Company's Colony restaurant
due to a number of new restaurant openings in the area during the period.
9
Costs and Expenses. Costs and expenses for the three month period ended
June 30, 2001 decreased by $146,782, or 30% to $335,881 as compared to $482,663
for the corresponding period of 2000. This decrease was due to the previous
periods costs associated with the increase in overhead associated with the
gearing up for the Tanner's and Regulatory Solutions, Inc. ("RSI") acquisitions.
Net Loss. The Company had a net loss for the three months ended June
30, 2001 of $126,663 compared to net loss of $406,225 for the corresponding
three months of 2000, representing a loss of $(.00) and $(.02) per share,
respectively.
Comparison of Six Months Ended June 30, 2000 and 2001
Revenues. For the six months ended June 30, 2001, the Company has
generated revenues from continuing operations of $486,343 compared to revenues
in the same period of 2000 of $535,247, a 9% decline.
Costs and Expenses. Costs and expenses for the six-month period ended
June 30, 2001 decreased by $287,952, or 29% to $700,415as compared to $988,367
for the corresponding period of 2000.
Net Loss. The Company had a net loss for the six months ended June 30,
2001 of $523,031compared to a net loss of $841,312 for the corresponding six
months of 2000, representing a loss of $(.01) and $(.05) per share,
respectively.
Liquidity and Capital Resources
Historically, the Company has required capital to fund the operations
and capital expenditure requirements of its Company-owned restaurants.
The Company has negative working capital of $2,740,741 at June 30,
2001, a large portion of which represents the amount owed on it's notes payables
which have matured or will mature in 2001. The Company is seeking to reorganize
its debt structure and will attempt to refinance the amounts owed on notes
payable for longer periods. There is no guarantee that the Company will be
successful in its attempts to refinance and may be required to raise additional
equity in the future to retire its outstanding debt obligations.
Management has determined that an immediate infusion of capital will be
required for the Company to maintain it's operations and to be in a position to
make the acquisitions which have been targeted.
The Company's principal capital requirements are the funding of
acquisitions.
10
PART II - OTHER INFORMATION
Item 2. CHANGES IN SECURITIES
On March 15, 2001, the Board of Directors of the Company approved the issuance
of 1,000,000 shares of Series B Convertible Preferred stock ("Series B") in
exchange for 1,000,000 shares of common stock owned by Curtis A. Swanson and
Stanley L. Swanson and $143,803 in relinquishment of accrued salaries. The
Series B stock has no par value, has full voting power with respect to all
actions taken by shareholders, carries a 50 to 1 voting right as compared to
common shares with anti-dilution rights, is convertible into shares of Common
Stock on a 1 for 1 basis and is non transferable prior to conversion into Common
Stock.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Hereafter set forth as an exhibit to the Form 10-QSB of
Restaurant Teams International, Inc. is the following exhibit:
No. Description of Exhibit
--- ----------------------
27 Financial Data Schedule
(b) Current Reports on Form 8-K:
8-K reporting the change in auditors from Hein & Associates,
LP to Killman Murrell & Company filed with the Securities and
Exchange Commission on July 31, 2001.
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Restaurant Teams International, Inc.
(Registrant)
Date: September 6, 2001 By: /s/ Stanley L. Swanson
----------------------
Stanley L. Swanson, Chief Executive Officer
(Duly Authorized Signatory)
Date: September 6, 2001 By: /s/ Curtis A. Swanson
---------------------
Curtis A. Swanson, Chief Financial Officer
and Executive Vice President
(Duly Authorized Signatory)
12
EXHIBIT INDEX
No. Description of Exhibit
27 Financial Data Schedule
13
Exhibit to 10-QSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): April 30, 2001
Restaurant Teams International, Inc.
(Exact name of registrant as specified in its charter)
State of Texas 001-13559 75-2337102
(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
P.O. Box 5310
Longview, Texas 75608
(Address of principal executive offices) (Zip code)
911 N.W. Loop 281, Suite 111
Longview, Texas 75604
(Former name of address, if changed since last report).
Item 4. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT.
At a meeting held on July 27, 2001, the Board of Directors of the Company
approved the engagement of Killman, Murrell, & Company, P.C., a regional firm
which specializes in SEC work, as its independent auditors for the fiscal year
ending December 31, 2000 to replace the firm of Hein & Associates, LLP. The
audit committee of the Board of Directors approved the change in auditors on the
same date.
The change was made due to the desire of management to reduce costs in an effort
to return the company to profitability.
14
The report of Hein & Associates LLP on the Company's financial statements for
the past fiscal year did not contain an adverse opinion or a disclaimer of
opinion and was not qualified or modified as to uncertainty, audit scope, or
accounting principles.
In connection with the audit of the Company's financial statements for the
fiscal year ended December 31, 1999, and in the subsequent interim period, there
were no disagreements with Hein & Assoicates LLP on any matters of accounting
principles or practices, financial statement disclosure, or auditing scope and
procedures which, if not resolved to the satisfaction of Hein & Associates LLP
would have caused Hein & Associates LLP to make reference to the matter in their
report.
The Company has requested Hein & Associates LLP to furnish it a letter addressed
to the Commission stating whether it agrees with the above statements. A copy of
that letter, dated July 27, 2001 is filed as Exhibit 1 to this Form 8-K, as
required by Item 304 (a) (3) of Regulation S-K.
ITEM 7. FINANCIAL STATEMENT, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
None
(b) Pro Forma Financial Information
None
(c) Exhibits
16.1 Letter re change in Certifying Accountant.
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 hereunto duly authorized.
Restaurant Teams International, Inc.
Date: July 30, 2001 By: /s/ Stanley L. Swanson
-----------------------
Stanley L. Swanson
Chief Executive Officer
(Signature)
Date: July 30, 2001 By: /s/ Curtis A. Swanson
----------------------
Curtis A. Swanson
Chief Financial Officer
(Signature)
15
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
16.1 Letter re change in Certifying Accountant
16
EX-16.1
3
restteams10qa33101ex161.txt
LETTER RE: CHANGE IN CERTIFYING ACCOUNTANT
Exhibit 16.1
July 27, 2001
Office of the Chief Accountant
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Dear Sir or Madam:
We have read Item 4 included in the Form 8-K dated July 27, 2001 of Restaurant
Teams International, Inc. filed with the Securities and Exchange Commission and
are in agreement with the statements contained therein as they relate to us.
Very truly yours,
HEIN + ASSOCIATES LLP
16