-----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, EjMXIyjrcUSzYZE8WVHD7tvbvL6pxT7iUHvaBIN+6PphOpp+Tz2DtRutIlx91gMc pBRtmzvUMYvUv1i9259SbA== 0000771856-99-000002.txt : 19990315 0000771856-99-000002.hdr.sgml : 19990315 ACCESSION NUMBER: 0000771856-99-000002 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990131 FILED AS OF DATE: 19990312 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: 99564133 BUSINESS ADDRESS: STREET 1: 2500 WILSON BLVD STREET 2: SUITE 305 CITY: ARLINGTON STATE: VA ZIP: 22201 BUSINESS PHONE: 703-526-04 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 January 31, 1998 ----------------------------------------------------------- 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 214, 2420 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 12,1999, 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 January 31, 1999 (unaudited) and April 30, 1998 3 Consolidated Statements of Operations: Three months and nine months ended January 31, 1999, and January 31, 1998, (unaudited) 4 Consolidated Statements of Cash Flows: Nine months ended January 31, 1999, and January 31,1998 (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 ASSETS January 31 April 30 1999 1998 Current assets Cash and cash equivalents $689,696 $631,230 Accounts receivable - trade 26,450 612 Inventories 60,527 69,594 Prepaid expenses 14,024 3,850 Deferred tax asset 207,952 207,952 Total current assets 998,649 913,238 Property and Equipment Furniture and Equipment 534,546 530,531 Leasehold improvements 570,962 570,962 1,105,508 1,101,493 Accumulated depreciation and amortization (741,058) (700,356) 364,450 401,137 Other assets Deposits 13,065 13,065 Total assets $1,376,164 $1,327,440 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable $126,446 $42,672 Dividend payable on preferred stock 336,450 269,160 Other accrued expenses 36,011 48,038 Current portion of deferred lease concession 4,363 4,363 Total current liabilities 503,271 364,233 Deferred lease concession (excluding current portion) 21,372 24,644 Stockholders' equity Preferred stock: Series A, 12% convertible cumulative, par value $10 per share, preferred as to dividends and liquidation: 56,075 shares authorized, issued and outstanding. 560,752 560,752 Common stock, par value $.001 per share, 50,000,000 shares authorized, 8,500,638 shares issued and outstanding at January 31, 1999 and April 30, 1998 8,501 8,501 Additional paid-in capital 5,308,112 5,308,112 Accumulated deficit (5,025,843) (4,938,802) Total stockholders' equity 851,522 938,563 Total liabilities and stockholders' equity $1,376,164 $1,327,440 See notes to consolidated financial statements
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CHAMPIONS SPORTS, INC. Consolidated Statement of Operations Unaudited Three months ended Nine months ended January 31, January 31, 1999 1998 1999 1998 Revenue Food and beverage sales $409,758 $486,297 $1,276,838 $1,330,285 Merchandise, memorabilia and licensing fees 236,703 97,753 330,929 333,025 Interest income 5,571 4,686 17,789 5,936 Other income 3,493 7,083 13,747 18,582 Total Revenues $655,525 $595,818 $1,639,302 $1,687,829 Expense Cost of food and beverage sales $112,295 $133,296 $346,282 $368,825 Cost of merchandise and memorabilia 74,828 35,888 105,832 65,163 Restaurant payroll and related costs 150,960 168,334 448,726 466,615 Restaurant occupancy costs 48,415 45,142 155,422 136,157 Other restaurant costs 93,900 101,144 283,254 268,858 General and administrative 114,536 72,884 278,837 293,448 Depreciation and amortization 13,567 13,567 40,702 40,702 Interest expense - - - 455 Total Expense $608,500 $570,255 $1,659,054 $1,640,223 Net Income (loss) from operations $47,025 $25,563 $(19,751) $47,605 Extraordinary gain - - - 290,641 Net income (loss) $47,025 $25,563 $(19,751) $338,246 Basic earnings per share $0.01 $0.00 $0.00 $0.04 Earnings per common share - fully diluted $0.00 $0.00 $0.00 $0.03 Weighted average number of common shares outstanding during the period 8,500,638 8,500,638 8,500,638 8,500,638 See notes to consolidated financial statements
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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, 1999 1998 Cash flows from operating activities: Net income (loss) $(19,751) $338,246 Adjustments to reconcile net income to cash provided by (used ) by operating activities: Depreciation and amortization 40,702 40,702 Extraordinary gain - (290,641) Changes in asset and liabilities Accounts receivable (25,838) 13,766 Inventories 9,067 (5,190) Prepaid expenses (10,174) (305) Accounts payable 83,774 (7,313) Other accrued expenses (12,027) (14,941) Deferred lease concessions (3,272) (3,273) Net cash provided (used) by operating activities 62,481 71,051 Cash flows from investing activities: Purchase of certificate of deposit Purchase of property and equipment (4,015) (10,749) Net cash provided by investing activities (4,015) (10,749) Cash flows from financing activities: Repayment of borrowings - (17,201) Net cash provided (used) by financing activities - (17,201) Net increase (decrease) in cash and cash equivalents 58,466 43,101 Cash and cash equivalents at beginning of year 631,230 219,881 Cash and cash equivalents at January 31 $689,696 $553,621 Supplemental disclosure of cash flow information: Cash paid during the period for interest - - See notes to consolidated financial statements
5 CHAMPIONS SPORTS, INC. Notes to Consolidated Financial Statements January 31, 1999 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, 1999, the consolidated statements of operations and the consolidated statements of cash flows for the three months and nine months ended January 31, 1999 and January 31,1998 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, 1999 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, 1998. The results of operations for the period ended January 31, 1999 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, 1999, the Company incurred a loss of $19,751 or $0.00 per common share as compared to a net profit of $338,246 or $0.04 per common share for the nine month period ended January 31, 1998. Net loss for the nine months ended January 31, 1999 was from the Company's ongoing operations, compared to a profit of $47,605 from continuing operations in the comparable period ended January 31, 1998. The Company realized a extraordinary gain of $290,641 for the nine months ended January 31, 1998 from the sale of the CHAMPIONS brand. The Company's assets increased to $1,376,164 at January 31, 1999 from $1,327,440 at April 30, 1998. The Company's net profit from its ongoing operations was $47,025 for the three months ended January 31, 1999 versus $25,563 for the three months ended January 31, 1998. Revenues The Company's total revenues were $1,639,302 for the nine months ended January 31, 1999 versus $1,687,829 for the nine month period ended January 31, 1998, a decrease of 2.9%. By component, food and beverage sales decreased 4.0% from the previous year for the nine months and decreased 15.7% for the three months period from the previous year. This decrease in food and beverage sales is attributed to a decrease in customer volume, especially during the NBA player lockout. Sales trends have improved and are comparable to the prior year, now that the NBA has commenced its season. Merchandise and memorabilia sales for the nine months ended January 31, 1999 and 1998 accounted for approximately 20% of the Company's total revenues. This was primarily memorabilia for Marriott CHAMPIONS locations. For the three months ended January 31, 1999, this amount was $236,703, or 36.1% of the Company's total revenue versus $97,753 or 16.4% of the Company's revenues for the three months ending January 31, 1998. For the nine months ended January 31, 1999, other income was $13,747 contrasted to $18,582 for the nine months ended January 31, 1998. Interest income in both comparable periods was less than 1.1% of the Company's total revenue. Expenses Cost of food and beverage remained constant at 27.1% of related sales for the nine months and 27.4% for the three months ended January 31, 1999 compared to 27.7% for the nine months and 27.4% for the three months ended January 31, 1998. This is attributed to stable prices at the wholesale level. Cost of merchandise and memorabilia sales for the nine months ended January 31, 1999 was $105,832 compared to $65,163 in the preceding year. Restaurant payroll and related costs were 35.1% of related food and beverage sales for the nine months and 36.8% for the three months ended January 31, 1999, versus 35.1% for the nine months and 34.6% for the three months ended January 31, 1998. Restaurant occupancy costs were $155,422 for the nine months and $48,415 for the three months ended January 31, 1999 compared to $136,157 for the nine month and 6 $45,142 for the three month comparable period in 1998. This increase is attributed to higher common area charges and real estate taxes passed on by the landlord. Other restaurant costs were 22.2% of food and beverage sales for the nine months and 22.9% of food and beverage sales for the three months ended January 31, 1999 compared to 20.2% of food and beverage sales for the comparable nine month and 20.8% for the three months in 1998. General and administrative expense for the Company's corporate office was $278,837 for the nine months ended January 31, 1999 compared to $293,448 for the nine months ended January 31, 1998. Depreciation and amortization expense remained constant at $40,702 during the nine months ended January 31, 1999 and 1998. Liquidity and Capital Resources The Company's cash position on January 31, 1998 increased by $58,466 to $689,696 from $631,230 on April 30, 1998. For the nine months ended January 31, 1999, the Company's ongoing operations provided cash of $62,481. The Company purchased equipment for $4,000. For the nine months ended January 31, 1998, the Company provided $71,051 in cash from its continuing operating activities and repaid borrowings of $17,201. The Company met its cash needs during the nine months ended January 31, 1999 and 1998 from its revenues and from cash flow from its San Antonio, Texas operation. The Company's working capital was $495,378 on January 31, 1999 and $527,356 on January 31 1998. Stockholder's equity was $851,522 as of January 31, 1999 compared to $938,563 as of April 30, 1998. In November 1998, 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. 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. Other The Company relocated its corporate offices in January 1999 to 2420 Wilson Blvd, Suite 214, Arlington, VA 22201. In November 1999, the Company's Board of Directors voted to defer the annual meeting of shareholders in order to preserve the Company's cash position. This document contains "forward-looking statements" (within the meaning of the Private Securities Litigation Act of 1995) that inherently involve risks and uncertainties. The Company's actual results could differ materially from those anticipated in these forward-looking statements as a result of unforeseen external factors. These factors may include, but are not limited to, changes in general economic conditions, customer acceptance of products offered and other general competitive factors. 7 Part II. Other Information Item 4. Submission of Matters to A Vote of Security Holders None Item 6. Exhibits and Reports on Form 8-K None. 8 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 Corporate Secretary, Chief Accounting Officer and Controller March 12, 1998 9 EX-27 2 FDS 5
5 9-MOS APR-30-1999 JAN-31-1999 689,696 0 26,450 0 60,527 998,649 1,105,508 741,058 1,376,164 503,271 0 560,752 0 8,501 282,269 851,522 1,607,766 1,639,302 256,865 1,339,516 278,837 0 0 (19,751) 0 (19,751) 0 0 0 (19,751) 0.00 0.00
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