UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB/A
- --------------------------------------------------------------------------------
(Mark one)
XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
- -------- ACT OF 1934
For the quarterly period ended September 30, 1998
- -------- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________
- --------------------------------------------------------------------------------
Commission File Number: 0-27006
-------
MILLION DOLLAR SALOON, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 13-3428657
------------------------ ------------------------
(State of incorporation) (IRS Employer ID Number)
6848 Greenville Avenue, Dallas, TX 75231
----------------------------------------
(Address of principal executive offices)
(214) 691-6757
(Issuer's telephone number)
- --------------------------------------------------------------------------------
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 X NO
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: November 3, 1998: 6,144,451
Transitional Small Business Disclosure Format (check one): YES NO X
<PAGE>
MILLION DOLLAR SALOON, INC.
Form 10-QSB for the Quarter ended September 30, 1998
Table of Contents
Page
Part I - Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 11
Part II - Other Information
Item 1 Legal Proceedings 14
Item 2 Changes in Securities 14
Item 3 Defaults Upon Senior Securities 14
Item 4 Submission of Matters to a Vote of Security Holders 14
Item 5 Other Information 14
Item 6 Exhibits and Reports on Form 8-K 14
Signatures 15
This amendment includes a discussion related to the Registrant's Y2K
preparedness.
2
<PAGE>
<TABLE>
<CAPTION>
Part 1 - Item 1 - Financial Statements
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, 1998 and 1997
(Unaudited)
ASSETS
------
1998 1997
---------- -----------
<S> <C> <C>
CURRENT ASSETS
Cash on hand and in bank $ 730,242 $ 266,738
Note receivable - current portion 22,604 21,011
Inventory 14,438 10,743
Prepaid expenses 90,682 63,424
----------- -----------
Total current assets 857,966 361,916
----------- -----------
PROPERTY AND EQUIPMENT
Buildings and related improvements 1,987,513 1,955,132
Furniture and equipment 791,049 757,111
Vehicles 52,728 52,728
----------- -----------
2,831,290 2,764,971
Less accumulated depreciation (1,542,662) (1,455,778)
----------- -----------
1,288,628 1,309,193
Land 741,487 741,487
----------- -----------
Net property and equipment 2,030,115 2,050,680
----------- -----------
OTHER ASSETS
Note receivable - noncurrent portion 87,426 111,134
Accounts receivable from officers, shareholders and affiliates 836,107 795,542
Organization costs, net of accumulated amortization
of $45,898 and $33,162, respectively 14,030 41,766
Loan costs, net of accumulated amortization of
$18,964 and $12,642 respectively 12,643 18,965
Deferred tax asset -- 61,500
Other 7,725 23,475
----------- -----------
Total other assets 972,931 1,052,382
----------- -----------
TOTAL ASSETS $ 3,861,012 $ 3,464,978
=========== ===========
</TABLE>
- Continued -
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
3
<PAGE>
<TABLE>
<CAPTION>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
September 30, 1998 and 1997
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
1998 1997
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 122,370 $ 122,370
Accounts payable - trade 26,311 20,120
Accrued liabilities 55,614 24,619
Dividends payable 61,445 78,280
Federal income taxes payable 8,592 --
Tenant deposits 6,500 13,325
----------- -----------
Total current liabilities 280,832 258,714
----------- -----------
LONG-TERM LIABILITIES
Long-term debt, net of current maturities 255,364 416,756
Deferred tax liability 98,936 94,569
----------- -----------
Total liabilities 635,132 770,039
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock - $0.001 par value. 5,000,000 shares
authorized. None issued and outstanding -- --
Common stock - $0.001 par value. 50,000,000 shares
authorized. 6,144,451 and 5,218,500 issued
and outstanding, respectively 6,143 5,219
Additional paid-in capital 598,965 9,781
Retained earnings 2,650,772 2,691,186
----------- -----------
3,255,880 2,706,186
Treasury stock - at cost (30,000) (11,247)
----------- -----------
Total shareholders' equity 2,225,880 2,694,939
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 3,861,012 $ 3,464,978
=========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
4
<PAGE>
<TABLE>
<CAPTION>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Nine and Three months ended September 30, 1998 and 1997
(Unaudited)
Nine months Nine months Three months Three months
ended ended ended ended
September 30, September 30, September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
REVENUES
Bar and restaurant sales $ 2,549,190 $ 2,605,627 $ 900,535 $ 832,859
Rental income 378,579 330,417 139,524 109,805
----------- ----------- ----------- -----------
Total revenues 2,927,769 2,936,044 1,040,059 942,664
----------- ----------- ----------- -----------
COST OF SALES - BAR AND
RESTAURANT OPERATIONS 1,504,252 1,507,790 517,504 467,275
----------- ----------- ----------- -----------
GROSS PROFIT 1,423,517 1,428,254 522,555 475,389
----------- ----------- ----------- -----------
OPERATING EXPENSES
General and administrative expenses 972,561 782,376 299,908 262,046
Interest expense 36,904 49,976 11,295 15,637
Depreciation and amortization 83,074 87,110 27,692 28,328
----------- ----------- ----------- -----------
Total operating expenses 1,092,539 919,462 338,895 306,011
----------- ----------- ----------- -----------
INCOME FROM OPERATIONS 330,978 508,792 183,660 169,378
OTHER INCOME (EXPENSES)
Interest and other miscellaneous 45,086 38,035 15,923 18,016
Gain on sale of fixed assets -- 48,499 -- --
----------- ----------- ----------- -----------
INCOME BEFORE
INCOME TAXES 376,064 595,326 199,583 187,394
INCOME TAX (EXPENSE) BENEFIT
Currently payable (128,159) (125,000) (69,070) (28,300)
Deferred -- -- -- --
----------- ----------- ----------- -----------
NET INCOME $ 247,905 $ 470,326 $ 130,513 $ 159,094
=========== =========== =========== ===========
Earnings per share of
common stock outstanding $0.04 $0.09 $0.02 $0.03
===== ===== ===== =====
Weighted-average number
of shares outstanding 5,937,143 5,018,406 6,144,451 5,034,780
=========== =========== =========== ===========
</TABLE>
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
5
<PAGE>
<TABLE>
<CAPTION>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended September 30, 1998 and 1997
(Unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1998 1997
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 247,905 $ 470,326
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 83,074 87,110
Gain on sale of fixed assets -- (48,499)
Common stock issued for consulting fees 69,700 --
Interest income from shareholders capitalized as principal (30,423) (30,966)
(Increase) decrease in
Federal income taxes receivable 37,248 --
Inventory 1,659 426
Prepaid expenses (17,138) (25,706)
Increase (decrease) in
Accounts payable and other accrued liabilities 23,730 (29,875)
Tenant deposits -- 6,825
Income taxes payable 8,592 --
--------- ---------
Net cash provided by operating activities 424,347 429,641
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Principal collections on note receivable 18,016 15,085
Net proceeds from sale of fixed assets -- 150,374
Purchases of property and equipment (66,319) (1,731)
--------- ---------
Net cash used in investing activities (48,303) 163,728
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Private placement of common stock 530,000 --
Principal payments on notes payable (120,426) (132,257)
Purchase of treasury stock (30,000) (11,247)
Dividends paid (175,328) (450,983)
--------- ---------
Net cash used in financing activities 204,246 (594,487)
--------- ---------
INCREASE IN CASH AND CASH EQUIVALENTS 580,290 (1,118)
Cash and cash equivalents at beginning of period 149,952 267,856
--------- ---------
Cash and cash equivalents at end of period $ 730,242 $ 266,738
========= =========
</TABLE>
- Continued -
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
6
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Nine months ended September 30, 1998 and 1997
(Unaudited)
Nine months Nine months
ended ended
September 30, September 30,
1998 1997
------------- -------------
SUPPLEMENTAL DISCLOSURES OF
INTEREST AND INCOME TAXES PAID
Interest paid during the period $ 36,904 $ 49,976
======== ========
Income taxes paid (refunded) $ 82,319 $125,000
======== ========
SUPPLEMENTAL SCHEDULE OF NON-CASH
INVESTING AND FINANCING ACTIVITIES
Declaration of third quarter
dividend at $0.01 and $0.015
per share, respectively $ 61,445 $ 78,279
======== ========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
7
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
Notes to Financial Statements
Note 1 - Basis of Presentation
Million Dollar Saloon, Inc. (Company) was incorporated under the laws of the
State of Nevada on September 28, 1987. These financial statements reflect the
books and records of Million Dollar Saloon, Inc. (Nevada), Million Dollar
Saloon, Inc. (Texas), Furrh, Inc., Tempo Tamers, Inc., Corporation Lex and Don,
Inc. for the periods ended June 30, 1998 and 1997, respectively. All significant
intercompany transactions have been eliminated in combination. The consolidated
entities are referred to as Company.
During interim periods, the Company follows the accounting policies set forth in
its Annual Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act
of 1934 on Form 10-KSB filed with the Securities and Exchange Commission. The
accompanying financial statements do not include all disclosures required by
generally accepted accounting principles. Users of financial information
provided for interim periods should refer to the annual financial information
and footnotes contained in its Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934 on Form 10-KSB when reviewing the interim
financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the instructions for Form 10-QSB, are unaudited and
contain all material adjustments, consisting only of normal recurring
adjustments necessary to present fairly the financial condition, results of
operations and cash flows of the Company for the respective interim periods
presented. The current period results of operations are not necessarily
indicative of results which ultimately will be reported for the full fiscal year
ending December 31, 1998.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 2 - Summary of Significant Accounting Policies
a) Accounting principles adopted and pending adoption
--------------------------------------------------
In June 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income",
(SFAS130) which established standards for reporting and displaying
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general purpose financial statements. SFAS130
requires that all items that are required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. SFAS130 was effective for periods beginning after December 15,
1997. The Company does not have any items which would be required to be
presented in this separate statement and experienced no material impact from
this change in presentation of its consolidated financial statements.
8
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
Notes to Financial Statements - Continued
Note 2 - Summary of Significant Accounting Policies - Continued
a) Accounting principles adopted and pending adoption - continued
--------------------------------------------------
In June 1997, the Financial Accounting Standards Board released Statement of
Financial Accounting Standards No. 131, "Disclosures About Segments of an
Enterprise and Related Information", (SFAS131) which establishes revised
standards for the method in which public business enterprises are to report
information about operating segments in their annual financial statements and
requires those enterprises to report selected information about operating
segments in interim financial reports issued to shareholders. This statement
also revises the related disclosures about products and services, geographic
areas and major customers. SFAS131 replaces the "industry segment" concept
established in Statement of Financial Accounting Standard No. 14 with a
"management approach" concept as the basis for identifying reportable
segments. SFAS131 is effective for financial statements for annual periods
beginning after December 31, 1997 and for interim periods presented after
December 31, 1998. The Company does not anticipate a material impact from
this change in disclosure presentation in its consolidated financial
statements upon adoption of this standard.
Note 3 - Property and equipment
During the first quarter of 1997, the Company sold a rental property for
gross cash proceeds of approximately $149,474, net of closing costs, and
recognized a gain of approximately $48,499.
Note 4 - Common stock transactions
On March 19, 1998, the Company sold 530,000 shares of restricted, unregistered
common stock to an individual under a Stock Purchase Agreement (Agreement) at a
price of $1.00 per share for total proceeds to the Company of$530,000. The
Agreement also contains a "second closing" clause whereby the individual will
acquire an additional 400,000 shares of equivalent restricted, unregistered
common stock at $1.10 per share for gross proceeds of $440,000, on or before
July 15, 1998. As of September 30, 1998 and through the date of this filing, no
additional shares of common stock have been sold under this Agreement.
Further, the Company has granted the individual the option to purchase an
additional 1,000,000 shares of restricted, unregistered common stock at a price
of $1.25 per share on or before February 28, 1999. The option expiration may be
accelerated if the Company's common stock is traded on the NASDAQ Small-Cap
Market or other national exchange and the closing bid price equals or exceeds
$1.75 per share for 10 consecutive trading days (Trading Period). In this event,
the expiration date of the option shall be the 90th day after the Trading Period
and the Company must notify the individual of the acceleration in writing.
9
<PAGE>
MILLION DOLLAR SALOON, INC. AND SUBSIDIARIES
Notes to Financial Statements - Continued
Note 4 - Common stock transactions - Continued
On March 19, 1998, concurrent with the Stock Purchase Agreement discussed above,
the Company entered into a Consulting Agreement with a separate individual for
consulting, advisory and management services to be performed as directed by the
Company's Board of Directors. The Consulting Agreement is for a term of one (1)
year and may be terminated by either party with ten (10) days written notice.
The compensation for the Consulting Agreement was paid in restricted,
unregistered common stock of the Company as follows: 150,000 shares as payment
for consulting, advisory and management services to be performed as directed by
the Company's Board of Directors and an additional 55,000 shares upon receipt of
the $530,000 discussed above. An additional 45,000 shares will be issued to the
consultant upon receipt of the $440,000 due on or before July 15, 1998.
The Company, upon execution of the Consulting Agreement and receipt of the
$530,000 related to the Stock Purchase Agreement, issued the respective 150,000
and 55,000 shares due under the terms of the Consulting Agreement. These
transactions were valued at approximately $0.34 per share, or an aggregate
$69,700, which approximated the "fair value" of the Company's restricted stock
issued on the transaction date.
(Remainder of this page left blank intentionally)
10
<PAGE>
Part I - Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Caution Regarding Forward-Looking Information
This quarterly report contains certain forward-looking statements and
information relating to the Company that are based on the beliefs of the Company
or management as well as assumptions made by and information currently available
to the Company or management. When used in this document, the words
"anticipate," "believe," "estimate," "expect" and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current view of
the Company regarding future events and are subject to certain risks,
uncertainties and assumptions, including the risks and uncertainties noted.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially from
those described herein as anticipated, believed, estimated, expected or
intended. In each instance, forward-looking information should be considered in
light of the accompanying meaningful cautionary statements herein.
Period ended September 30, 1998 as compared to the Period ended September 30,
1997
Results of Operations
Bar and restaurant operations declined by approximately $56,000 (or
approximately 2.0%) between the nine months of 1998 and the first nine months of
1997. The July to September quarter increased approximately $68,000 (or
approximately 8.1%) in the third quarter 1998 compared to the third quarter of
1997. Total bar and restaurant sales for the year-to-date 1998 period were
approximately $2,549,000 as compared to approximately $2,606,000 for the 1997
period. This decline was due to seasonal fluctuations in patronage, which is
dependent upon convention and visitor activity and other uncontrollable factors
in the Dallas-Ft. Worth Metroplex geographic area. Additionally, rental income
increased by approximately $48,000 for the first nine months in 1998 from
approximately $330,000 for the first nine months of 1997 to approximately
$379,000 for the first nine months of 1998. This increase in rental revenues is
related to the renewal of a lease on one of the Company's properties.
The Company continues to seek effective marketing and advertising methods to
maintain and increase its bar and restaurant patronage.
Cost of sales decreased by approximately $4,000 during the first nine months of
1998 as compared to the same expenses for the same period in 1997. This decrease
reflects the effect of the related declines in bar and restaurant revenues.
Gross profit percentages profiled relatively consistently at 48.62% for the
first nine months of 1998 versus 48.65% for the first nine months of 1997.
General and administrative expenses increased by approximately $173,000 in the
first nine months of 1998 versus the first six months of 1997. Included in this
increase is a non-cash charge of $69,700 as compensation under the Consulting
Agreement to Steve Wheeler, increased legal and professional fees incurred by
management related to preliminary investigations of potential merger and/or
acquisition candidates and development of overall corporate operational
strategies and other broad based increases in general corporate overhead
expenses. As of this filing, management has not identified any suitable merger
or acquisition candidates as a result of their preliminary investigations.
Further, management continues to monitor its expenditure levels to achieve
optimum financial results.
Net income before income taxes, excluding the gain on the sale of fixed assets
of approximately $48,000, was approximately $547,000 for the first nine months
of 1997 versus approximately $376,000 for the first nine months of 1998.
11
<PAGE>
After-tax net income has declined by approximately $222,000 yielding earnings
per share of approximately $0.04 per share for the first nine months of 1998 as
compared to approximately $0.09 per share for the first nine months of 1997.
(3) Liquidity
As of September 30, 1998, the Company has working capital of approximately
$577,000 as compared to approximately $17,000 at December 31, 1997 and
approximately $103,000 at September 30, 1998. The Company achieved positive cash
flows from operations of approximately $424,000 for the first nine months of
1998 versus approximately $430,000 for the first nine months of 1997. The
Company's working capital position was greatly enhanced by the receipt of
approximately $530,000 in proceeds related to the sale of approximately 530,000
shares of restricted, unregistered common stock on March 19, 1998.
The Company has identified no significant capital requirements for the current
annual period. However, the Company has incurred approximately $66,000 in
capitalized expenditures related to repairs and renovations on the Company's
properties. Any liquidity requirements which may be required by future business
expansions or acquisitions, if any are specifically identified or undertaken,
are not readily determinable at this time as no substantive plans have been
formulated by management.
The Stock Purchase Agreement specifically details and limits the utilization of
the $530,000 received as follows:1) potential acquisition of a similar bar and
restaurant operation in Denver, Colorado; 2) expansion and renovation of the
Company's existing Dallas, Texas bar and restaurant operation; 3) expansion and
renovation of property owned by the Company which is under lease to an unrelated
third party and which lease expires during 1998; 4) acquisition of treasury
stock and 5) other corporate expenses related to strategic planning. As of this
filing, the Company has no definitive agreements to acquire or expand any
properties.
The Company anticipates the continuance of dividend payments in future periods
and paid approximately $175,000 during the first three quarters of 1998 and
declared a dividend of approximately $61,400 to be paid in the fourth quarter of
1998. Future operating liquidity, debt service and dividend payments are
expected to be sustained from continuing operations. Additionally, management is
of the opinion that there is additional potential availability of incremental
mortgage debt and the opportunity for the sale of additional common stock
through either private placements or secondary offerings.
Period ended September 30, 1997 as compared to the Period ended September 30,
1996.
Results of Operations
Bar and restaurant operations increased by approximately $132,000 for the first
nine months of 1997 as compared to the first nine months of 1996. During the
second quarter of 1997, management instituted new controls over bar inventories
and the Company experienced increased traffic due to the completion and opening
of a new mass transit rail station near the Company's adult entertainment
operation. This increase was mitigated by lower convention traffic in the
Dallas-Ft. Worth Metroplex during this time period, which is one of the key
factors contributing to the Company's patronage factors. Additionally, due to
scheduled increases, the Company experienced higher rental incomes of
approximately $17,000 during this quarter as compared to the same period in the
prior year.
Cost of sales increased by approximately $27,000 during the first nine months of
1997 as compared to the same expenses for the same period in 1996. This increase
is related to increased sales impacting variable costs related to consumable
inventories, supplies and related State excise taxes, principally during the
second quarter. Gross profit percentages increased slightly to 48.7% for the
first nine months of 1997 versus 46.9% for the first nine months of 1996. This
increase relates directly to the new management controls over bar inventories.
These cost versus sales relationships are anticipated by management to remain
stable for the remainder of 1997.
12
<PAGE>
General and administrative expenses increased by approximately $50,000 in the
first nine months of 1997 versus the first nine months of 1996. This increase
relates to increases in advertising and marketing expenses to offset the decline
in convention and meeting driven traffic and increase locally derived patronage
and increased legal and accounting fees related to preliminary investigations of
potential merger and/or acquisition candidates. The Company has not identified
any suitable merger or acquisition candidates as a result of the preliminary
investigations. Management continues to monitor its expenditure levels to
achieve optimum financial results.
Net income before income taxes, excluding the gain on the sale of fixed assets
of approximately $48,000, was approximately $547,000 for the first nine months
of 1997 versus approximately $462,000 for the first nine months of 1996.
After-tax net income has increased by approximately $79,000 yielding earnings
per share of approximately $0.09 per share for the first nine months of 1997 as
compared to approximately $0.08 per share for the first nine months of 1996.
Liquidity and Capital Resources
As of September 30, 1997, the Company has working capital of approximately
$103,000 as compared to $112,000 at September 30, 1996. The Company achieved
positive cash flows from operations of approximately $430,000 for the first nine
months of 1997 versus approximately $511,000 for the first nine months of 1996.
The Company has identified no significant capital requirements for the current
annual period. Liquidity requirements mandated by future business expansions or
acquisitions, if any are specifically identified or undertaken, are not readily
determinable at this time as no substantive plans have been formulated by
management.
The Company anticipates the continuance of dividend payments and paid
approximately $451,000 through the first nine months of 1997 and declared a
dividend of approximately $78,000 to be paid in the fourth quarter of 1997.
Future operating liquidity, debt service and dividend payments are expected to
be sustained from continuing operations. Additionally, management is of the
opinion that there is additional potential availability of incremental mortgage
debt and the opportunity for the sale of additional common stock through either
private placements or secondary offerings.
Year 2000 Considerations
- ------------------------
The Year 2000 (Y2K) date change is believed to affect virtually all computers
and organizations. The Company has undertaken a comprehensive review of its
information systems, including personal computers, software and peripheral
devices, and its general communications systems. The Company has no direct
electronic links with any customer or supplier. In addition, the Company has
held discussions with certain of its software suppliers with respect to the Y2K
date change. While the Company has not completed its detailed review, as a
preliminary assessment, the Company believes, as of the date of this filing,
that it will not be required to modify or replace significant portions of its
software and any such modifications or replacements are, or will be, readily
available. The Company anticipates that it will complete its detailed review by
March 31, 1999 and complete any modifications, upgrades or replacements during
the second quarter of 1999.
The Company is also planning to hold discussions with its significant suppliers,
shippers, customers and other external business partners related to their
readiness for the Y2K date change.
The Company does not expect the costs associated with the Y2K date change
compliance to have a material effect on its financial position or its results of
operations. There can be no assurance until January 1, 2000, however, that all
of the Company's systems, and the systems of its suppliers, shippers, customers
or other external business partners will function adequately.
13
<PAGE>
Part II - Other Information
Item 1 - Legal Proceedings
None
Item 2 - Changes in Securities
None
Item 3 - Defaults on Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MILLION DOLLAR SALOON, INC.
November 4 , 1998 /s/ Nina J. Furrh
------- ------------------------------------
Nina J. Furrh
President and Director
November 4 , 1998 /s/ Ronald W. Johnston
------- ------------------------------------
Ronald W. Johnston
Chief Financial Officer and Director
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 0001002396
<NAME> Million Dollar Saloon, Inc.
<MULTIPLIER> 1
<CURRENCY> US Dollars
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 730242
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 14438
<CURRENT-ASSETS> 857966
<PP&E> 3572777
<DEPRECIATION> 1542662
<TOTAL-ASSETS> 3861012
<CURRENT-LIABILITIES> 280832
<BONDS> 0
0
0
<COMMON> 6143
<OTHER-SE> 2219737
<TOTAL-LIABILITY-AND-EQUITY> 3861012
<SALES> 2549190
<TOTAL-REVENUES> 2927769
<CGS> 1504252
<TOTAL-COSTS> 1092539
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36904
<INCOME-PRETAX> 376064
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