-----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, HLSdnMkaj7M6VRT8Rg0YqVGZZD1pPw4WVE8jpFIrzrHbPROjU7f01taTdB6ETNOV CvCYrm+WEMDGKy80MsmVtw== 0000771856-96-000016.txt : 19961217 0000771856-96-000016.hdr.sgml : 19961217 ACCESSION NUMBER: 0000771856-96-000016 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19961216 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: 1934 Act SEC FILE NUMBER: 000-17263 FILM NUMBER: 96681007 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 FOR 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, 1996 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 13, 1996 the Registrant had a total of 8,500,638 shares of common stock outstanding. 1 CHAMPIONS SPORTS, Inc. FORM 10-QSB INDEX Page Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets as of October 31, 1996 (unaudited) and April 30, 1996 3 Consolidated Statements of Operations: Three months and six months ended October 31, 1996, and October 31, 1995, (unaudited) 4 Consolidated Statements of Cash Flows: Six months ended October 31, 1996, and October 31, 1995 (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
OCTOBER 31 APRIL 30 1996 1996 ASSETS Current assets Cash and cash equivalents $170,635 $141,930 Certificate of deposit 25,080 25,080 Accounts receivable - trade 17,503 4,545 Inventories 72,567 53,160 Prepaid expenses 11,344 20,516 Total current assets 297,128 245,231 Property and Equipment Furniture and Equipment 516,383 516,383 Leasehold improvements 567,312 567,312 1,083,695 1,083,695 Accumulated depreciation and amortization (623,456) (596,322) 460,239 487,373 Other assets Deposits 11,052 11,052 Total assets $768,419 $743,656 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $46,044 $53,338 Dividend payable on preferred stock 134,580 134,580 Notes payable 30,607 31,010 Deferred revenue 0 0 Other accrued expenses 36,130 39,303 Current portion of deferred lease concession 4,363 4,363 Total current liabilities 251,724 262,594 Deferred lease concession (excluding current portion) 31,190 33,371 Note payable, excluding current portion 0 12,010 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 October 31 and April 30, 1996 8,501 8,501 Additional paid-in capital 5,308,112 5,308,112 Accumulated deficit (5,391,860) (5,441,684) Total stockholders' equity 485,505 435,681 Total liabilities and stockholders' equity $768,419 $743,656 See notes to consolidated financial statements
CHAMPIONS SPORTS, INC. Consolidated Statement of Operations (Unaudited) Three months ended Six months ended October 31 October 31 1996 1995 1996 1995 Revenue Food and beverage sales $413,673 $399,410 $845,418 $856,613 Merchandise 4,468 3,503 7,623 7,592 Licensing fees, royalties and memorabilia 95,985 127,224 195,687 224,328 Interest income 514 1,097 794 1,932 Other income 5,698 13,698 10,568 16,978 $520,338 $544,932 $1,060,090 $1,107,443 Expense Cost of food and beverage sales 111,911 113,422 224,504 243,486 Cost of merchandise and memorabilia sales 19,125 13,823 22,124 20,615 Restaurant payroll and related costs 136,531 150,086 284,580 312,479 Restaurant occupancy costs 54,623 50,222 104,720 93,017 Other restaurant costs 89,461 102,723 183,029 213,102 General and administrative 74,196 83,747 162,945 145,382 Depreciation and amortization 13,567 17,873 27,134 33,634 Interest expense 884 1,404 1,229 2,420 500,298 533,300 1,010,266 1,064,135 Net Income $20,040 $11,632 $49,824 $43,308 Net income per common share $0.00 $0.00 $0.01 $0.01 Net income per common share - assuming full dilution $0.00 $0.00 $0.00 $0.00 Weighted average number of common shares outstanding during the period 8,500,638 7,300,638 8,500,638 7,300,638
CHAMPIONS SPORTS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Increase (Decrease) in Cash and Cash Equivalents For the six months ended October 31, 1996 1995 Cash flows from operating activities: Net income ........................................... $ 49,824 $ 43,307 Adjustments to reconcile net income to cash provided by (used ) by operating activities: Depreciation and amortization ....................... 27,134 33,634 Changes in asset and liabilities Accounts receivable ............................... (12,958) 34,835 Inventories ....................................... (19,407) (9,418) Prepaid expenses .................................. 9,172 (826) Accounts payable .................................. (7,294) (51,350) Deferred revenue .................................. 0 (75,000) Other accrued expenses ............................ (3,173) (5,370) Deferred lease concessions ........................ (2,181) (2,181) Net cash provided (used) by operating activities 41,117 (32,369) Cash flows from financing activities: Repayment of borrowings .............................. (12,413) (9,579) Net cash provided (used) by financing activities (12,413) (9,579) Net increase (decrease) in cash and cash equivalents ... 28,705 (41,949) Cash and cash equivalents at beginning of year .......... 141,930 131,102 Cash and cash equivalents at October 31, ................ 170,635 89,153 Supplemental disclosure of cash flow information: Cash paid during the period for interest ............. 1,229 2,420 See notes to consolidated financial statements
CHAMPIONS SPORTS, INC. Notes to Consolidated Financial Statements October 31, 1996 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, 1996, the consolidated statements of operations and the consolidated statements of cash flows for the three months and six months ended October 31, 1996 and October 31, 1995 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, 1996 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, 1996. The results of operations for the period ended October 31, 1996 are not necessarily indicative of the operating results for the full year. Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations Results of Operation For the six month period ended October 31,1996, the Company realized a net profit of $49,824 or $0.00 per common share as compared to a profit of $ 43,308 or $ .01 per common share for the six month period ended October 31, 1995. The Company's assets increased to $768,419 at October 31, 1996 from $743,656 at April 30, 1996. For both comparable periods, the Company's profit was derived from its operations. Revenues The Company's total revenues were $1,060,090 for the six months ended October 31, 1996 versus $1,107,443 for the six month period ended October 31, 1995, a decrease of $47,353 or 4.3%. By component, food and beverage sales decreased 1.3% from $856,613 to $845,418 for the six months ended October 31, 1996. This decrease in food and beverage sales for the same comparable unit is attributed to a decrease in customer volume as there were no material price adjustments for menu items. Merchandise sales for the six months ended October 31, 1996 and 1996 were less than 1% if the Company's total revenues. Revenues from licensing fees, royalties and memorabilia decreased by 12.8% to $195,687 for the six months ended October 31, 1996 from $224,328 in the proceeding period. During each of the periods presented, one new Champions licensed location opened. One in Jakarta, Indonesia (1995) and Beirut, Lebanon (1996). Expenses Cost of food and beverage was $224,504 or 26.6% of related sales of $845,418 for the six months ended October 31, 1996 compared to $243,486 or 28.4% of related sales for the comparable six months ended October 31, 1995. Cost of merchandise and memorabilia sales for the six months ended October 31, 1996 was of $22,124 and $20,615 for the six months ended October 31, 1995. Restaurant payroll and related costs decreased to 33.7% or food and beverage sales for the six months ended October 31, 1996 contrasted to 36.5% of food and beverage sales during the six months ended October 31,1995. Restaurant occupancy costs escalated by 12.6% from the comparable period in 1995, due to an increase in the base rent as prescribed in the lease agreement and in increases in the common area charges and real estate taxes passed on by the landlord. Other restaurant costs decrease by 14.1% to $183,029 from $213,102. This decrease is attributed to reduction in advertising costs which during the six months ended October 31, 1995 proved not to be effective. General and administrative expense for the Company's corporate office was $162,945 for the six months ended October 31, 1996 compared to $145,382 for the six months ended October 31, 1995. Depreciation and amortization expense dropped from $33,634 during the six months ended October 31, 1996 to $27,134 for the six months ended October 31, 1996, as some of the Company's equipment, still in use, becomes fully depreciated. Liquidity and Capital Resources The Company's cash position on October 31, 1996 was $170,635 compared to $141,930 on April 30, 1996, a increase of $28,705. On October 31, 1996, the Company maintained a certificate of deposit of $25,080, as well as on April 30, 1996. For the six months ended October 31, 1996, the Company's operations provided cash of $41,117 and used $12,413 to repay borrowings. For the six months ended October 31, 1995, the Company used $32,369 in cash for its operating activities, repaid borrowings of $9,579 and decreased other current liabilities of $56,720. During the six months ended October 31, 1996 and 1995, the Company met its cash needs from licensing fees and from cash flow from its San Antonio operation. On October 31, 1996, the Company's working capital was $45,404 versus a negative $17,363 on April 30, 1996. The Company anticipates that the revenues generated from its location in San Antonio, Texas along with licensing, royalty and memorabilia revenues will be sufficient to met its operating obligations for the next six months. Stockholder's equity increased to $485,505 on of October 31, 1996 compared to $435,681 as of April 30, 1996, as a result of the net profit for the six month period. Other Events On October 4, 1996, Champions Sports, Inc. signed a joint venture letter of agreement with Business Expansion Capital Corporation, a privately held corporation, to assist Champions Sports, Inc. in actively searching and selection of merger or acquisitions candidate(s). Business Expansion Capital Corporation is owned by George A. Naddaff. The term of the agreement is for two years. Champions Sports, Inc issued 8,500,000 performance based warrants exercisable at $0.11 per share, subject to Champions Sports, Inc. approval of a successful acquisition or merger. Mr. George A. Naddaff has been appointed to the Board of Directors of Champions Sports, Inc. Subsequent Events On November 6, 1996, the Company's Board of Directors 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, 1996. 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, 1996 Item 6. Exhibits and Reports on Form 8-K On October 4, 1996, the Company filed with the Commission Form 8-K, in which the Company disclosed a joint venture letter of agreement between the Company and Business Expansion Capital Corporation and the issuance of 8,500,000 performance based warrants. 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 13, 1996 EX-27 2
5 Financial Data Schedule Champions Sports, Inc. For the six months ended October 31, 1996 6-MOS APR-30-1997 OCT-31-1997 170,635 25,080 17,503 0 72,567 297,128 1,083,695 (623,456) 768,419 251,724 0 560,752 0 8,501 5,308,112 768,419 1,048,728 1,060,090 246,628 837,957 190,079 0 1,229 49,824 0 49,824 0 0 0 49,824 .01 .00
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