-----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, UlIpB3CpMn3U9ErHjOVZPybWXAAQPRXbybSp4/PV1ZEe4HUt8FTKlpdaQtGbp2Wx X1gFMdrsS2QTMjkK/++1Bw== 0000771856-97-000031.txt : 19971211 0000771856-97-000031.hdr.sgml : 19971211 ACCESSION NUMBER: 0000771856-97-000031 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19971210 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: CHAMPIONS SPORTS INC CENTRAL INDEX KEY: 0000771856 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-EATING & DRINKING PLACES [5810] IRS NUMBER: 521401755 STATE OF INCORPORATION: DE FISCAL YEAR END: 0430 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-17263 FILM NUMBER: 97735531 BUSINESS ADDRESS: STREET 1: 2500 WILSON BLVD STREET 2: SUITE 305 CITY: ARLINGTON STATE: VA ZIP: 22201 BUSINESS PHONE: 703-526-0400 MAIL ADDRESS: STREET 1: 1749 OLD MEADOW RD STREET 2: STE 610 CITY: MCLEAN STATE: VA ZIP: 22102 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL GROUP INC DATE OF NAME CHANGE: 19860319 10QSB 1 QUARTERLY REPORT - CHAMPIONS SPORTS, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB Mark One QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF [X ] THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 31, 1997 ---------------- OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF [ ] THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 0-17263 CHAMPIONS SPORTS, INC. ---------------------- (Exact name of registrant as specified in its charter) Delaware 52-1401755 -------- ---------- (State or other jurisdiction of (I.R.S. Employer organization) Identification No.) Suite 305, 2500 Wilson Boulevard, Arlington, VA 22201 ----------------------------------------------------- (Address of principal executive offices) (Zip code) (703) 526-0400 -------------- (Registrant's telephone number, including area code) 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 As of December 10, 1997 the Registrant had a total of 8,500,638 shares of common stock outstanding. CHAMPIONS SPORTS, Inc. FORM 10-QSB INDEX Page Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of October 31, 1997 (unaudited) and April 30, 1997 3 Consolidated Statements of Operations: Three months and six months ended October 31, 1997, and October 31, 1996, (unaudited) 4 Consolidated Statements of Cash Flows: Six months ended October 31, 1997, and October 31, 1996 (unaudited) 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussions and Analysis of Financial Condition and Results of Operations 7 Part II. Other Information and Signatures Item 4. Submission of Matters to a Vote of Security Holders 9 Item 6. Exhibits and Reports on Form 8-K 9 Signatures 10 2 Champions Sports, Inc. and Subsidiaries Consolidated Balance Sheets
OCT 31 APRIL 30 1997 1997 ASSETS Current assets Cash and cash equivalents $179,689 $219,881 Certificate of deposit 25,080 25,080 Accounts receivable - trade 447,600 15,599 Inventories 53,030 57,919 Prepaid expenses 14,664 19,174 Deferred tax asset 215,892 215,892 Total current assets 935,955 553,545 Property and Equipment Furniture and Equipment 524,055 516,956 Leasehold improvements 570,962 567,312 1,095,017 1,084,268 Accumulated depreciation and amortization (671,496) (644,362) 423,521 439,906 Other assets Deposits 11,052 11,052 Total assets $1,370,528 $1,004,503 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $121,035 $49,658 Dividend payable on preferred stock 201,870 201,870 Notes payable 7,745 17,201 Deferred revenue 0 0 Other accrued expenses 44,142 50,733 Current portion of deferred lease concession 4,363 4,363 Total current liabilities 379,155 323,825 Deferred lease concession (excluding current portion) 26,826 29,007 Accounts receivable - trade 447,600 15,599 Note payable, excluding current portion Commitments and contingencies Stockholders' equity Preferred stock: Series A, 12% convertible cumulative, par value $10 per share, preferred as to dividends and liquidation: 650,000 shares authorized 56,075 issued and outstanding. 560,752 560,752 Undesignated, par value $10 per share, 150,000 authorized and unissued. 0 0 Common stock, par value $.001 per share, 50,000,000 shares authorized, 8,500,638 shares issued and outstanding at July 31 and April 30, 1996 8,501 8,501 Additional paid-in capital 5,308,112 5,308,112 Accumulated deficit (4,912,818) (5,225,694) Total stockholders' equity 964,547 651,671 Total liabilities and stockholders' equity $1,370,528 $1,004,503 See notes to consolidated financial statements
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CHAMPIONS SPORTS, INC. Consolidated Statement of Operations (Unaudited) Three months Six months ended October 31 ended October 31, 1997 1996 1997 1996 Revenue Food and beverage sales $406,559 $413,673 $843,989 $845,418 Merchandise 3,790 4,468 8,868 7,623 Licensing fees, royalties and memorabilia 95,700 95,985 226,404 195,687 Interest income 199 515 1,250 794 Other income 4,626 5,699 11,499 10,568 $510,873 $520,339 $1,092,010 $1,060,090 Expense Cost of food and beverage sales 114,540 111,911 235,529 224,504 Cost of merchandise and memorabilia sales 25,165 19,125 29,274 22,124 Restaurant payroll and related costs 147,366 136,531 298,282 284,580 Restaurant occupancy costs 40,358 54,623 91,015 104,720 Other restaurant costs 82,136 89,461 167,714 183,029 General and administrative 106,517 74,195 220,565 162,945 Depreciation and amortization 13,567 13,567 27,134 27,134 Interest expense 84 884 455 1,229 529,733 500,297 1,069,969 1,010,265 Net Income from continuing operations ($18,860) $20,041 $22,042 $49,825 Extraordinary gain $290,641 - $290,641 - Net income $271,781 $20,041 $312,683 $49,825 Net income per common share* $0.03 $0.00 $0.04 $0.01 Weighted average number of common shares outstanding during the period 8,500,638 8,500,638 8,500,638 8,500,638 *The income (loss) per common share has been computed on the weighted average number of shares outstanding during the period. Warrants are not included as common stock equilvants in the computation of income (loss) per share since the effect would not be material.
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CHAMPIONS SPORTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (Decrease) in Cash and Cash Equivalents For the nine months ended January 31, 1997 1996 Cash flows from operating activities: Net income ................................................ $ 54,842 $ 47,597 Adjustments to reconcile net income to cash provided by (used ) by operating activities: Depreciation and amortization ............................ 40,702 50,508 Changes in asset and liabilities Accounts receivable .................................... (95,472) 36,280 Inventories ............................................ (23,620) (16,118) Prepaid expenses ....................................... (14,724) (33,362) Accounts payable ....................................... (9,228) (34,190) Deferred revenue ....................................... -- (75,000) Other accrued expenses ................................. 13,636 2,436 Deferred lease concessions ............................. (3,273) (3,272) Net cash provided (used) by operating activities (37,137) (25,121) Cash flows from investing activities: Purchase of certificate of deposit ........................ 0 0 Sale of property and equipment ............................ 0 0 Net cash provided by investing activities ............ 0 0 Cash flows from financing activities: Repayment of borrowings ................................... (19,196) (14,277) Common Stock issued upon the exercise of options .......... -- 60,000 Net cash provided (used) by financing activities .... (19,196) 45,723 Deferred revenue ....................................... -- (75,000) Net increase (decrease) in cash and cash equivalents ........ (56,332) 20,602 Cash and cash equivalents at beginning of year ............... 141,930 131,102 Cash and cash equivalents at January 31, ..................... 85,598 151,704 Supplemental disclosure of cash flow information: Cash paid during the period for interest .................. 1,946 3,722 See notes to consolidated financial statements
5 CHAMPIONS SPORTS, INC. Notes to Consolidated Financial Statements October 31, 1997 Summarized Financial Information Company or group of companies for which report is filed: CHAMPIONS Sports, Inc. and Subsidiaries The consolidated balance sheet as of October 31, 1997, the consolidated statements of operations and the consolidated statements of cash flows for the three months and six months ended October 31, 1997 and October 31, 1996 have been prepared by the company, without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and changes in cash flow at October 31, 1997 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's 10-KSB as of April 30, 1997. The results of operations for the period ended October 31, 1997 are not necessarily indicative of the operating results for the full year. 6 Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operation For the six month period ended October 31,1997, the Company realized a net profit of $312,683 or $0.04 per common share as compared to a profit of $ 49,825 or $0.01 per common share for the six month period ended October 31, 1996. The increase in net profit is attributed to the Company selling the Champions brand name and trademark to Marriott International during the second quarter of the current fiscal year. Company's assets increased to $1,370,528 at October 31, 1997 from $1,004,503 at April 30, 1997. The Company realized a one time extraordinary gain from the sale of the Champions brand of $290,641 and a profit from its operations of $22,042 during the six months ended October 31, 1997 For the six months ended October 31, 1996, the Company's net profit was $49,825 which was derived from its operations. Revenues The Company's total revenues were $1,092,010 for the six months ended October 31, 1997 versus $1,060,090 for the six month period ended October 31, 1996, an increase of $31,920 or 3.0%. By component, food and beverage sales remained flat at $843,989 compared to $845,418 for the six months ended October 31, 1997 and 1996. Merchandise sales for the six months ended October 31, 1997 and 1996 were less than 1% if the Company's total revenues. Revenues from licensing fees, royalties and memorabilia increased by 15.7% to $226,404 for the six months ended October 31, 1997 from $195,687 in the proceeding period. The Company recorded licensing fees of $226,404 prior to the sale of the Champions brand and trademark to Marriott International. Expenses Cost of food and beverage was $235,529 or 27.9% of related sales of $843,989 for the six months ended October 31, 1997 compared to $224,504 or 26.6% of related sales for the comparable six months ended October 31, 1996. Cost of merchandise and memorabilia sales for the six months ended October 31, 1997 was of $29,274 and $22,124 for the six months ended October 31, 1996. Restaurant payroll and related costs increased to 35.3% or food and beverage sales for the six months ended October 31, 1997 contrasted to 33.7% of food and beverage sales during the six months ended October 31,1996. Restaurant occupancy costs decreased by 13.1% from the comparable period in 1996, due to a decrease in the common area charges and real estate taxes passed on by the landlord. Other restaurant costs decreased by 8.4% to $167,714 from $183,029. This decrease is attributed to reduction in promotion costs. General and administrative expense for the Company's corporate office was $220,565 for the six months ended October 31, 1997 compared to $162,945 for the six months ended October 31, 1996. Depreciation and amortization expense remained constant in each comparable period at $27,134. Liquidity and Capital Resources The Company's cash position on October 31, 1997 was $179,689 compared to $219,881 on April 30, 1997, a decrease of $40,192. On October 31, 1997, as well as on April 30, 1997, the Company maintained a certificate of deposit of $25,080. For the six months ended October 31, 1997, the Company's operating activities consumed $19,987 in cash. The Company purchased $10,749 in property and equipment and repaid borrowings of $9,456. For the six months ended October 31, 1996, the Company's operations provided cash of $41,117 and used $12,413 to repay borrowings. During the six months ended October 31, 1997 and 1996, 7 the Company met its cash needs from its revenues and from cash flow from its San Antonio operation. On October 31, 1997, the Company's working capital was $556,800 versus $229,720 on April 30, 1997. The Company anticipates that the revenues generated from its location in San Antonio, Texas along with revenues generated from its consulting and the sale of memorabilia will be sufficient to met its operating obligations for the next six months. Stockholder's equity increased to $964,547 on of October 31, 1997 compared to $651,671 as of April 30, 1997, as a result of the net profit for the six month period. The Company is actively pursuing merger/acquisition candidates. There is no assurance that the Company will be able to structure a merger or acquisition on terms satisfactory to the Company. Subsequent Events On September 22, 1997, the Board of Directors, in order to preserve the Company's cash reserves, voted to defer payment of $67,290, the annual dividend on the Series A, 12% convertible, cumulative Preferred Stock, par value $10, of which there were 56,075 shares outstanding at October 31, 1997. 8 Part II. Other Information Item 4. Submission of Matters to A Vote of Security Holders The were no matters submitted to a vote of Security Holders during the three month period ended October 31, 1997. Item 6. Exhibits and Reports on Form 8-K On November 10, 1997, the Company filed with the Commission Form 8-K, in which the Company disclosed the sale of the Champions brand and trademark to Marriott International. 9 SIGNATURES Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. CHAMPIONS Sports, Inc. __/s/ James Martell______ James Martell Chairman, President and Chief Executive Officer __/s/ James E. McCollam__ James E. McCollam Controller and Chief Accounting Officer December 10, 1997 10 EX-27 2
5 6-MOS APR-30-1997 OCT-31-1997 204,769 0 447,600 0 53,030 935,955 1,095,017 (671,496) 1,370,528 379,155 0 560,752 0 8,501 395,294 1,370,528 1,079,261 1,092,010 264,803 821,815 248,154 0 455 22,042 0 22,042 0 290,641 0 312,683 0.04 0.04
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