UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 23, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to _______________
000-23739
(Commission file number)
GALVESTON'S STEAKHOUSE CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 94-3248672
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
10200 Willow Creek Road, San Diego, CA 92131
(Address of principal executive offices)
(619) 689-2333
(Issuer's telephone number)
151 East Alessandro Blvd., Riverside, CA 92508
(Former name, former address and former fiscal year,
if changed since last report)
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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of March 23, 1999: 2,609,325 shares of Common Stock
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet at March 23, 1999 2-3
Condensed Consolidated Statements of Operations for
the twelve weeks ended March 23, 1999 4
Condensed Consolidated Statements of Cash Flows for
the twelve weeks ended March 23, 1999 5
Notes to Condensed Consolidated Financial Statements 6-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Change 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 15
SIGNATURES 15
Part III. EXHIBITS
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
AS OF MARCH 23, 1999
(unaudited)
ASSETS
<TABLE>
<S> <C>
Current assets
Cash and cash equivalents $ 2,323,232
Accounts receivables, net 3,268,516
Inventories 5,192,080
Prepaid expenses and other current assets 3,814,019
------------------
Total current assets 14,597,847
Property and equipment, net 48,115,335
Intangible assets, net 471,920
Other 983,193
Note receivable 500,000
Cash - restricted under collateral agreements 1,558,410
------------------
Total assets $66,226,705
==================
</TABLE>
2
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET (continued)
AS OF MARCH 23, 1999
(unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
Current liabilities
Current portion of long-term debt $21,420,294
Current portion of capital lease obligations 1,111,212
Line of Credit 2,051,021
Accounts payable 7,892,154
Accrued liabilities 13,316,102
Accrued payroll costs 3,189,192
------------------
Total current liabilities 48,979,975
Long-term debt, net of current portion 5,493,183
Capital lease obligations, net of current portion 8,012,247
Deferred rent 3,106,850
------------------
Total liabilities 65,592,255
Commitments and contingencies
Stockholders' equity
Preferred stock, Series B, Convertible, $0.001 par value
1,000,000 shares authorized
1,000,000 shares issued and outstanding
1,000
Common stock, $0.01 par value
10,000,000 shares authorized
2,609,325 shares issued and outstanding
26,093
Additional paid-in capital 7,185,609
Accumulated deficit (6,578,252)
------------------
Total stockholders' equity 634,450
------------------
Total liabilities and stockholders' equity $66,226,705
==================
</TABLE>
See the accompanying notes
3
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
12 Weeks 12 Weeks
Ended Ended
March 23, March 24,
1999 1998
------------------ ------------------
(unaudited) (unaudited)
<S> <C> <C>
Revenues $40,376,282 $ 386,261
Cost of sales
Food and beverage 18,255,341 113,093
Payroll and payroll related costs 11,666,462 128,061
Direct operating costs 7,483,657 125,463
Depreciation and amortization 1,181,853 32,720
------------------ ------------------
Total cost of sales 38,587,313 399,337
Gross profit (loss) 1,788,969 (13,076)
General and administrative expenses 2,492,661 108,601
------------------ ------------------
Loss before other income (expense) (703,692) (121,677)
Other income (expense)
Interest income
20,269 -
Interest and financing costs (870,866) (104,164)
------------------ ------------------
Total other income (expense) (850,597) (104,164)
Loss before provision for income taxes (1,554,289) (225,841)
Provision for income taxes
41,716 -
------------------ ------------------
Net loss $ (1,596,005) $ (225,841)
================== ==================
Basic and diluted loss per share $ (0.65) $ (0.16)
================== ==================
Weighted-average shares outstanding 2,441,254 1,393,451
================== ==================
</TABLE>
See the accompanying notes
4
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
12 Weeks 12 Weeks
Ended Ended
March 23, March 24,
1999 1998
--------------------- ---------------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities
Net loss $ (1,596,005) $ (225,841)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 1,181,853 32,720
Issuance of common stock in exchange for services
Rendered 678,750 -
(Increase) decrease in operating assets 911,821 (216,368)
Increase (decrease) in operating liabilities (358,460) 126,494
--------------------- ---------------------
Net cash provided by (used in) operating activities 817,959 (282,995)
Cash flows from investing activities
Purchases of furniture and equipment (220,341) -
Deposit on future acquisitions (518,325)
-
Change in restricted cash (26,981) -
Other (370,989) (3,803)
--------------------- ---------------------
Net cash used in investing activities (618,311) (522,128)
Cash flows from financing activities
Proceeds from issuance of notes payable 1,500,000 -
Net change in line of credit 404,652 -
Repayment of notes payable and capital leases (536,209) (574,500)
Proceeds from issuance of common stock - 4,422,170
Other - (137,493)
--------------------- ---------------------
Net cash provided by financing activities 1,368,443 3,710,177
--------------------- ---------------------
Net increase in cash and cash equivalents 1,568,091 2,905,054
Cash and cash equivalents, beginning of period 755,141 64,726
--------------------- ---------------------
Cash and cash equivalents, end of period $ 2,323,232 $ 2,969,780
===================== =====================
</TABLE>
See the accompanying notes
5
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The unaudited Condensed Consolidated Financial Statements have been prepared by
the Company, pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished herein reflects all adjustments
(consisting of normal recurring accruals and adjustments) which are, in the
opinion of management, necessary to fairly present the operating results for the
respective periods. Certain information and footnote disclosures normally
present in annual consolidated financial statements prepared in accordance with
generally accepted accounting principles have been omitted pursuant to such
rules and regulations. The results of the twelve week period ended March 23,
1999 are not necessarily indicative of the results to be expected for the full
year ending December 28, 1999. The Company reports results quarterly with the
three quarters having 12 weeks and remaining quarter having 16 weeks. These
consolidated financial statements should be read in conjunction with the 1998
financial statements.
On December 21, 1998, the Company acquired Paragon Steakhouse Restaurants, Inc.
("Paragon"), which owned 78 steakhouses, of which five were closed, and Pacific
Basin Foods, Inc., a restaurant food distribution company. Prior to the
acquisition of Paragon, the Company owned and operated four restaurants. The
accompanying consolidated statement of operations for the twelve week period
ended March 23, 1999 reflects a twenty-fold increase in the number of
restaurants being operated by the Company, therefore, revenues, cost of sales
and operating expenses are substantially higher than the corresponding revenues,
cost of sales and operating expenses reported for the twelve week period ended
March 24, 1998.
NOTE 2 - LOSS PER SHARE
In 1997, the Financial Accounting Standard Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share." SFAS No.
128 replaced the previously reported primary and fully diluted earnings per
share with basic and diluted earnings per share. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very similar
to the previously reported fully diluted earnings per share. Basic earnings per
share is computed using the weighted-average number of common shares outstanding
during the period. Common equivalent shares are excluded from the computation if
their effect is anti-dilutive. Net loss per share amounts for all periods have
been restated to conform to SFAS No. 128 requirements.
6
<PAGE>
GALVESTON'S STEAKHOUSE CORP. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3 - STOCKHOLDERS' EQUITY
During the first quarter of 1999, the Company issued 181,000 shares of common
stock for consulting services and recognized consulting expense of $678,750.
NOTE 4 - NOTES PAYABLE
In March 1999, the Company executed a five-year promissory note for $1,500,000
with a finance company. The note bears interest at 12.5% and is payable in
monthly principal and interest payments of $15,625. At maturity, all unpaid
principal and interest are due and payable in full.
As a result of the purchase of Paragon the Company assumed a note payable
secured by certain restaurants owned by Paragon. The terms of the note payable
agreement include specific financial covenants, restrictions on obtaining other
financing, and limitations on payments to its parent. As of March 23, 1999, the
Company is not in compliance with certain financial ratio loan covenants and
therefore the entire loan balance is classified as current.
NOTE 5 - CONTINGENCIES
The Company is periodically a defendant in cases involving personal injury and
other matters that arise in the normal course of business. While any pending or
threatened litigation has an element of uncertainty, the Company believes that
the outcome of any pending lawsuits or claims, individually or combined, will
not materially affect the financial condition or results of operations.
On January 22, 1999, the Company entered into a settlement agreement that
required it to assign its leasehold interests in three restaurants. The Company
had previously established a reserve in anticipation of this settlement which
represented the value of leasehold improvements and other equipment at these
locations.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General
The following discussion and analysis should be read in conjunction with the
Company's consolidated financial statements and related footnotes and the
Company's Annual Report on Form 10-KSB for the year ended December 29, 1998. The
discussion of results, causes and trends should not be construed to imply any
conclusion that such results or trends will necessarily continue in the future.
The Company currently operates 74 full-service steakhouse restaurants located in
11 states. The Company operates under the brand names of Carvers, Hungry Hunter
Steakhouse, Hunter Steakhouse, Mountain Jack's, Mountain Jack's Steakhouse,
Texas Loosey's and Galveston's.
On December 21, 1998, the Company acquired Paragon Steakhouse Restaurants, Inc.
("Paragon"), which owned 78 steakhouses, of which five were closed, and Pacific
Basin Foods, Inc., a restaurant food distribution company. Prior to the
acquisition of Paragon, the Company owned and operated four restaurants.
The Company believes that its restaurants are well positioned in a high-quality,
moderately priced segment of the restaurant industry. With the acquisition of
Paragon's Carvers restaurants, the Company has entered the upscale restaurant
market specializing in complete steak, chop, prime rib and seafood meals. The
Company plans to expand the number of restaurants it owns either by building new
restaurants or converting existing restaurants acquired from others. The Company
believes that the location of each restaurant is critical to its long-term
success.
8
<PAGE>
Results of Operations
The following discussion of the results of operations include the operations of
the restaurants purchased from Paragon and those previously owned by the
Company. With a twenty-fold increase in the number of restaurants being operated
by the Company, revenues, cost of sales and operating expenses have increased
substantially.
Twelve Weeks Ended March 23, 1999 and March 24, 1998
<TABLE>
<CAPTION>
12 Weeks 12 Weeks
Ended Ended
March 23, March 24, Percentage of Revenue
--------------------------
1999 1998 1999 1998
---------------- --------------- ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 40,376,282 $ 386,261 100.0% 100.0%
---------------- --------------- ------------ ------------
Food and beverage 18,255,341 113,093 45.2% 29.3%
Payroll and payroll related costs 11,666,462 128,061 28.9% 33.2%
Direct operating costs 7,483,657 125,463 18.5% 32.5%
Depreciation and amortization 1,181,853 32,720 2.9% 8.5%
---------------- --------------- ------------ ------------
Gross profit (loss) 1,788,969 (13,076) 4.4% -3.4%
General and administrative 2,492,661 108,601 6.2% 28.1%
---------------- --------------- ------------ ------------
Loss before other income (expense) (703,692) (121,677) -1.7% -31.5%
Total other income (expense) (850,597) (104,164) -2.1% -27.0%
---------------- --------------- ------------ ------------
Loss before provision for income taxes (1,554,289) (225,841) -3.8% -58.5%
Provision for income taxes 41,716 - 0.1% 0.0%
================ =============== ============ ============
Net loss $ (1,596,005) $ (225,841) -4.0% -58.5%
================ =============== ============ ============
</TABLE>
Revenues for the twelve week period ended March 23, 1999 increased $39,990,021
or 10,353% from $386,261 for the twelve week period ended March 24, 1998 to
$40,376,282 for the same period in 1999. The increase is almost entirely
attributable to the acquisition of Paragon. Revenue from the Company's original
restaurants was $363,568 for the twelve week period ended March 23, 1999.
Food and beverage costs for the twelve week period ended March 23, 1999
increased $18,142,248 or 16,042% from $113,093 for the twelve week period ended
March 24, 1998 to $18,255,341 for the same period in 1999. Food and beverage
costs as a percentage of restaurant revenues was 29.3% for the twelve week
period ended March 24, 1998 compared to 34.1% for the same period in 1999. The
food and beverage costs of Paragon's food distribution subsidiary, Pacific Basin
Foods, Inc., were 90.2% of its food distribution revenues for the twelve week
period ended March 23, 1999. The total food and beverage cost for the twelve
week period ended March 23, 1999 as a percentage of total revenue was 45.2%,
which includes the restaurants and the food distribution subsidiary.
Payroll and payroll related costs for the twelve week period ended March 23,
1999 increased $11,538,401 or 9,010% from $128,061 for the twelve week period
ended March 24, 1998 to $11,666,462 for the same period in 1999. Payroll and
payroll related costs as a percentage of revenues were 33.2% for the twelve week
period ended March 24, 1998 compared to 28.9% for the same period in 1999. The
decrease is principally due to the acquisition of Paragon whose payroll costs as
a percentage of revenue are less than those previously experienced by the
Company due to the economies of scales of operating more restaurants.
9
<PAGE>
Direct operating costs include all other unit-level operating costs, the major
components of which are operating supplies, repairs and maintenance, advertising
expenses, utilities, and other occupancy costs. A substantial portion of these
expenses is fixed or indirectly variable. Direct operating costs for the twelve
week period ended March 23, 1999 increased $7,358,194 or 5,865% from $125,463
for the twelve week period ended March 24, 1998 to $7,483,657 for the same
period in 1999. These costs as a percentage of restaurant revenues were 32.5%
for the twelve week period ended March 24, 1998 compared to 18.5% for the same
period in 1999. The decrease is principally due to the acquisition of Paragon
whose direct operating costs as a percentage of revenue are less than those
previously experienced by the Company due to the economies of scales of
operating more restaurants.
Depreciation and amortization for the twelve week period ended March 23, 1999
increased $1,149,133 or 3,512% from $32,720 for the twelve week period ended
March 24, 1998 to $1,181,853 for the same period in 1999. The increase is
principally due to the acquisition of Paragon, which significantly increased the
depreciable assets owned by the Company.
General and administrative expenses for the twelve week period ended March 23,
1999 increased $2,384,060 or 2,195% from $108,601 for the twelve week period
ended March 24, 1998 to $2,492,661 for the same period in 1999. General and
administrative expenses as a percentage of restaurant revenues was 28.1% for the
twelve week period ended March 24, 1998 compared to 6.2% for the same period in
1999. This increase in the dollar amount of general and administrative expenses
is principally due to the acquisition of Paragon and the issuance of 181,000
shares of common stock to consultants valued at $678,750.
Other income (expense) for the twelve week period ended March 23, 1999 increased
$746,433 or 717% from ($104,164) for the twelve week period ended March 24, 1998
to ($850,597) for the same period in 1998. The increase is principally due to an
increase in outstanding indebtedness which was assumed in connection with the
acquisition of Paragon.
Liquidity and Capital Resources
In addition to the approximately $9 million raised by the Company in 1998 in
equity and debt financing, the Company raised $1.5 million by issuing a
promissory note in March 1999. A significant portion of the equity and debt
financing raised in 1998 was used to pay the purchase price and related
transaction costs associated with the acquisition of Paragon and to a lesser
degree to fund the Company's operating loss.
The Company has a cash and cash equivalents balance of $2,323,232 at March 23,
1999. Management of the Company believes that such cash and cash equivalents
together with anticipated cash from operations is sufficient to cover the cost
of operations for at least the next twelve months. If existing cash and cash
equivalents and anticipated cash from operations is insufficient to satisfy the
Company's working capital and capital expenditures requirements, the Company may
have to sell additional equity or debt securities or obtain credit facilities.
The Company is currently in the process of obtaining additional financing to
repay an approximate $20 million loan that is collateralized by 19 restaurants
owned by the Company. The Company is currently in default with respect to
certain loan covenants associated with this loan. The Company is negotiating a
sale-leaseback transaction that will provide
10
<PAGE>
the Company enough money to repay the existing debt on the 19 restaurants and
provide favorable lease rates for a substantial period of time.
Impact of inflation
The primary inflationary factors affecting the Company's operations include food
and labor costs. The Company's restaurant personnel are paid at the federal and
state established minimum wage levels and accordingly, changes in such wage
level affect the Company' s labor costs. As costs of food and labor have
increased, the Company will be seeking to offset those increases through
economics of scale and/or increases in menu prices, although there is no
assurance that such offsets will continue. To date inflation has not had a
material impact on loss from operations.
Year 2000
The Company has begun to make a formal assessment of Year 2000 issues.
Generally, "Year 2000 issues" refers to problems that may arise due to the
inability of some computer software to distinguish between the early part of the
present century and the early part of the next because the software only uses
two digits to identify the year. Thus, 2001 would be indistinguishable from
1901. The Company believes that there are three possible ways that it could be
impacted by this problem.
First, the Company's current accounting and restaurant management systems,
principally those acquired with the acquisition of Paragon has been determined
not to be Year 2000 compliant. The Company is in the process of selecting a new
accounting and restaurant management system that will be Year 2000 compliant.
The software being considered by the Company is not expected to require
significant programming changes to meet the Company's needs. The Company
estimates the cost of a new accounting and restaurant management system to be
$250,000. If the Company is unable to convert to the new software in a timely
manner, the impact could be material to the Company's financial position and
results of operations. The second concern posed by Year 2000 issues is the
impact that such software failure would have on the Company's suppliers. The
Company is also contacting critical suppliers of products and services to
determine the extent to which the Company may be vulnerable to such parties'
failure to resolve their own Year 2000 issues. Where practicable, the Company
will assess and attempt to mitigate its risks with respect to the failure of
these entities to be Year 2000 compliant. The effect, if any, on the Company's
results of operations from the failure of such parties to be Year 2000 compliant
is not reasonably estimable. The third possible threat posed to the Company by
Year 2000 issues is one of a general downturn in the economy due to software
failures. The Company believes that this is a remote possibility.
Although the Company believes that it will not suffer any material adverse
effects as a result of Year 2000 issues, it cannot be certain its judgment
regarding Year 2000 is correct. In the event that the Company or its suppliers
experience a Year 2000 software failure such a failure could have a material
adverse impact on the Company's business, financial condition and results of
operations. Similarly, if the economy as a whole should be adversely impacted by
Year 2000 problems, it could have a material adverse effect on the Company's
business, financial condition and results of operations.
11
<PAGE>
Forward looking statements
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Stockholders are cautioned that all
forward-looking statements involve risks and uncertainty, including without
limitation, the ability of the Company to open new restaurants, general market
conditions, competition and pricing. Although the Company believes the
assumptions underlying the forward-looking statements contained herein are
reasonable, any of the assumptions could be inaccurate, and therefore, there can
be no assurance that the forward-looking statements contained in the report will
prove to be accurate.
12
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
On or about May 7, 1998, J.W.Childs Equity Partners, L.P. ("Childs") filed a
lawsuit in the State of Delaware entitled J.W. Childs Equity Partners, L.P. v.
Paragon Steakhouse Restaurants, Inc. et. al., C.A. No. 16371 (Del. Ch.)(the
"Action"). In the Action, Childs claims that it entered into a letter agreement
with Paragon Steakhouse Restaurants, Inc., a Delaware corporation ("Paragon")
and wholly owned subsidiary of Galveston's Steakhouse Corp. ("Galveston's"),
Kyotaru U.S.A., Inc., and Kyotaru Co., Ltd. (Kyotaru U.S.A., Inc. and Kyotaru
Co., Ltd. are collectively referred to herein as ("Kyotaru") pursuant to which
Childs or its subsidiary would acquire the operating assets of certain
restaurants owned and operated by Paragon. Childs further claims that Paragon
and Kyotaru materially breached the letter agreement by (i) failing to negotiate
in good faith to reach agreement as to the terms of a definitive purchase
agreement and related documents, (ii) intering into negotiations with a
third-party purchaser concerning the possible sale of Paragon's assets or stock,
and (iii) failing to give notice to Childs of the discussions with the potential
third-party purchaser. In the Action, Childs seeks the remedy of specific
performance, or, in the alternative, monetary damages.
On November 6, 1998 the Delaware Court of Chancery dismissed with predjudice
Childs' claim for specific performance, finding that the letter agreement cited
by Childs "is not a contract to sell property." Childs has appealed the Court's
decision.
On January 22, 1999, Paragon, Galveston's, Childs and Childs' subsidiary entered
into a Memorandum of Agreement pursuant to which Childs agreed to dismiss the
entire Action in exchange for Paragon's agreement to assign its leasehold
interests in three restaurants. On March 11, 1999, the parties executed a mutual
release with respect to the Action and entered into an agreement whereby Paragon
agreed to assign its leasehold interests in three restaurants to a subsidiary of
Childs, together with the liquor licenses and other agreements and assets
relating to the three restaurants. On March 12, 1999, Childs filed a Notice of
Voluntary Dismissal with respect to the Action which dismisses the Action with
prejudice.
Except as discussed above, the Company is not involved in any material legal
proceedings.
13
<PAGE>
Item 2. Change in Securities
None
Item 3. Defaults Upon Senior Securities
As a result of the purchase of Paragon the Company assumed a note payable
secured by certain restaurants owned by Paragon. The terms of the note payable
agreement include specific financial covenants, restrictions on obtaining other
financing, and limitations on payments to its parent. As of March 23, 1999, the
Company is not in compliance with certain financial ratio loan covenants and
therefore the entire loan balance is classified as current.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
14
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 - Financial Data Schedule
(b) Reports on Form 8-K
A Report on Form 8-K was filed by the Company on January 5, 1999 reporting the
consummation of the Company's acquisition of Paragon. On February 9, 1999 the
Company filed Amendment No. 1 to the Report on Form 8-K. The Amendment
amended Item 7(a) to provide the financial statements of Paragon and Item 7(b)
to provide the required pro forma financial information relating to the
acquisition of Paragon.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GALVESTON'S STEAKHOUSE CORP.
By: /s/ Hiram J. Woo
------------------------------
Hiram J. Woo
Chief Financial and Principal
Accounting Officer, President,
and Director
Date: May 10, 1999
15
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001017156
<NAME> Galveston's Steakhouse Corp.
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> DEC-28-1999
<PERIOD-START> DEC-30-1998
<PERIOD-END> MAR-23-1999
<CASH> 2,323,232
<SECURITIES> 0
<RECEIVABLES> 3,303,317
<ALLOWANCES> 34,801
<INVENTORY> 5,192,080
<CURRENT-ASSETS> 14,597,847
<PP&E> 53,689,460
<DEPRECIATION> 4,709,485
<TOTAL-ASSETS> 66,226,705
<CURRENT-LIABILITIES> 48,979,975
<BONDS> 0
0
1,000
<COMMON> 26,093
<OTHER-SE> 607,357
<TOTAL-LIABILITY-AND-EQUITY> 66,226,705
<SALES> 40,376,282
<TOTAL-REVENUES> 40,376,282
<CGS> 38,587,313
<TOTAL-COSTS> 2,492,661
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 850,597
<INCOME-PRETAX> (1,554,289)
<INCOME-TAX> 41,716
<INCOME-CONTINUING> (1,596,005)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,596,005)
<EPS-PRIMARY> (0.65)
<EPS-DILUTED> (0.65)
</TABLE>
