-----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, C5mEaLSyOrJkC7mBabdlvIeH8lilVy6HtmcdDRRoRV9zccOJbiQUnrZB9hnOSR5E L0k+/XwBlQ3kp2l41cL6pQ== 0000771856-97-000001.txt : 19970318 0000771856-97-000001.hdr.sgml : 19970318 ACCESSION NUMBER: 0000771856-97-000001 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970131 FILED AS OF DATE: 19970317 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: 97557522 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 January 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 Blvd., 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 March 17, 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 January 31, 1997 (unaudited) and April 30, 1996 3 Consolidated Statements of Operations: Three months and nine months ended January 31, 1997, and January 31, 1996, (unaudited) 4 Consolidated Statements of Cash Flows: Nine months ended January 31, 1997, and January 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
JANUARY 31 APRIL 30 1997 1996 (UNAUDITED) ASSETS Current assets Cash and cash equivalents $85,598 $141,930 Certificate of deposit 25,080 25,080 Accounts receivable - trade 100,017 4,545 Inventories 76,780 53,160 Prepaid expenses 35,240 20,516 Total current assets 322,714 245,231 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 (637,023) (596,322) 446,672 487,373 Other assets Deposits 11,052 11,052 Total assets $780,438 $743,656 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $44,110 $53,338 Dividend payable on preferred stock 201,870 134,580 Notes payable 23,824 31,010 Deferred revenue 0 0 Other accrued expenses 52,939 39,303 Current portion of deferred lease concession 4,363 4,363 Total current liabilities 327,106 262,594 Deferred lease concession (excluding current portion) 30,098 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 January 31, 1997 and April 30, 1996 8,501 8,501 Additional paid-in capital 5,308,112 5,308,112 Accumulated deficit (5,454,131) (5,441,684) Total stockholders' equity 423,234 435,681 Total liabilities and stockholders' equity $780,438 $743,656 See notes to consolidated financial statements 3
CHAMPIONS SPORTS, INC. Consolidated Statement of Operations (Unaudited) Three months ended Three months ended Nine months ended Nine months ended January 31, 1997 Janaury 31, 1996 January 31, 1997 Janaury 31, 1996 Revenue Food and beverage sales $440,949 $424,223 $1,286,367 $1,280,836 Merchandise 3,778 4,220 11,401 11,812 Licensing fees, royalties and memorabilia 81,000 81,000 276,687 305,328 Interest income 315 681 1,108 2,613 Other income 5,180 7,042 15,747 24,020 $531,221 $517,166 $1,591,311 $1,624,609 Expense Cost of food and beverage sales 119,141 120,586 343,645 364,072 Licensing fees, royalties and memorabilia 81,000 81,000 276,687 305,328 Cost of merchandise and memorabilia sales 10,071 4,670 32,194 25,285 Restaurant payroll and related costs 152,907 157,454 437,487 469,933 Restaurant occupancy costs 51,483 52,495 156,203 145,512 Other restaurant costs 83,118 94,838 266,147 307,940 General and administrative 95,200 64,715 258,145 210,097 Depreciation and amortization 13,567 16,818 40,702 50,452 Interest expense 717 1,302 1,946 3,722 526,203 512,878 1,536,468 1,577,013 Net Income $5,018 $4,288 $54,842 $47,596 Net income per common share $0.00 $0.00 $0.01 $0.01 Net income per common share - assuming $0.00 $0.00 $0.00 $0.00 full dilution Weighted average number of common shares outstanding during the period 8,500,638 7,778,613 8,500,638 7,513,607
4
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 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 January 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 January 31, 1997, the consolidated statements of operations and the consolidated statements of cash flows for the three months and nine months ended January 31, 1997 and January 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 January 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, 1996. The results of operations for the period ended January 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 nine month period ended January 31, 1997, the Company realized a net profit of $54,842 or $0.01 per common share as compared to a net profit of $47,596 or $0.01 per common share for the nine month period ended January 31, 1996. The Company's assets increased to $780,438 at January 31, 1997 from $743,656 at April 30, 1996. The Company's net profit from its ongoing operations was $54,842 for the nine months and $5,018 for the three months ended January 31, 1997. Revenues The Company's total revenues were $1,591,311 for the nine months ended January 31, 1997 versus $1,624,609 for the nine month period ended January 31, 1996, a decrease of $33,298 or 2.0%. By component, food and beverage sales increased slightly from the previous year for the nine months and increased 3.9% for the three months period from the previous year. This increase in food and beverage sales is attributed to a increase in customer volume as there were no price increases for menu items. Merchandise sales for the nine months ended January 31, 1997 were comparable to merchandise sales for the same period in 1996. For the nine months ended January 31, 1997, the Company realized$276,687 from Licensing fees, royalties and memorabilia. For the three months ended January 31, 1997, this was $81,000 for the license rights for Guatemala City, Guatemala CA. The Company realized initial licensing fees of $156,000 during the nine months ended January 31, 1996, for the rights to use the Champions trademark in Jakarta Indonesia and Amman, Jordan For the nine months ended January 31, 1997, other income was $15,747 contrasted to $24,020 for the nine months ended January 31, 1996. Expenses Cost of food and beverage was 26.7% of related sales for the nine months and 27.0% for the three months ended January 31, 1997 compared to 28.4% for both the nine month and three months ended January 31, 1996. This decrease is attributed sightly lower costs at the wholesale level. Cost of merchandise and memorabilia sales for the nine months ended January 31, 1997 was $32,194 compared to $25,285 in the preceding year. Restaurant payroll and related costs were 34.1% of related food and beverage sales for the nine months and 34.7% for the three months ended January 31, 1997, versus 36.7% for the nine months and 37.1% for the three months ended January 31, 1996. This decrease is attributed to better labor cost controls implemented in the current fiscal year. Restaurant occupancy costs were $156,203 for the nine months and $51,483 for the three months ended January 31, 1997 compared to $145,512 for the nine month and $52,495 for the three month comparable period in 1996. This increase is attributed to escalation provisions in the lease agreement. Other restaurant costs were 20.7% of food and beverage sales for the nine months and 18.9% of food and beverage sales for the three months ended January 31, 1997 compared to 24.0% of food and beverage sales for the comparable nine month and 22.4% for the three months in 1996. This decrease is ascribed to better cost controls implemented during the current fiscal year. General and administrative expense for the Company's corporate office was $258,145 for the nine months ended January 31, 1997 compared to $210,097 for the nine months ended January 31, 1996. The increase of $48,048 is attributed primarily to the relocation of the Company's corporate offices in November 1996 and cost associated with the Annual Meeting of Shareholders in December, 1996. Depreciation and amortization expense decreased to $40,702 during the nine months ended January 31, 1997 from $50,452 for the nine months ended January 31, 1996. 7 Liquidity and Capital Resources The Company's cash position on January 31, 1997 was $85,598 compared to $141,930 on April 30, 1996, an decrease of $56,332. On both January 31, 1997 and April 30, 1996, the Company maintained a certificate of deposit of $25,080. For the nine months ended January 31, 1997, the Company used $37,137 for its operating activities and repaid borrowings of $19,196. For the nine months ended January 31, 1996, the Company expended $25,121 in cash for its operating activities and repaid borrowings of $14,277. Additionally during the nine months ended January 31, 1996, an officer of the Company exercised an option to purchase 1,200,000 shares of the Company's common stock for $60,000. The Company met its cash needs during the nine months ended January 31, 1996 by using its cash reserves and by reducing its accounts receivable by $36,280. Stockholder's equity was $423,234 as of January 31, 1997 compared to $435,681 as of April 30, 1996. On November 6, 1996, the Company's Board of Directors voted to defer payment of the annual dividend on the Series A, 12% Preferred Stock, in order to preserve the Company's cash reserves. This unpaid amount, $67,290, has been recorded on the Company's balance sheet as a current liability. 8 Part II. Other Information Item 4. Submission of Matters to A Vote of Security Holders (a) Annual Meeting of Shareholders held at the office of the Corporation on Friday December 20, 1996. (b) The Meeting involved the election of three directors: Shares Voted FOR Shares Voted WITHHOLD James Martell 6,196,048 129,194 George Naddaff 6,199,228 126,014 Michael Tomic 6,198,253 126,989 Item 6. Exhibits and Reports on Form 8-K None. 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 Matell --------------- James Martell Chairman, President and Chief Executive Officer /s/ James E. McCollam --------------------- James E. McCollam Corporate Secretary, Chief Accounting Officer and Controller March 17, 1997 10 EX-27 2 FDS 5
5 Financial Data Schedule Champions Sports, Inc. For the nine months ended January 31, 1997 9-MOS APR-30-1997 JAN-31-1997 85,598 25,080 100,017 0 76,780 322,714 1,083,695 (637,023) 780,438 327,106 0 560,752 0 8,501 5,308,112 780,438 1,574,456 1,591,311 375,839 1,235,676 298,847 0 1,946 54,842 0 54,842 0 0 0 54,842 .01 .00
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