<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 29, 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 0-23243
- --------------------------------------------------------------------------------
HOTEL DISCOVERY, INC.
(Name of Small Business Issuer in its Charter)
MINNESOTA 31-1487885
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Indentification No.)
4801 W. 81ST STREET, SUITE 112 55437
BLOOMINGTON, MN (Zip Code)
(Address of principal executive offices)
612-837-9917
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the preceding 12 months (or for such
shorter period that the issuer 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 May 7, 1998, the number of shares outstanding of the Issuer's Common Stock
was 8,000,189.
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
1
<PAGE> 2
FORWARD-LOOKING STATEMENTS
Certain of the matters discussed in the following pages, particularly regarding
estimates of the number and locations of new restaurants that the Company
intends to open during fiscal 1998 and 1999, constitute "forward-looking
statements" within the meaning of the Securities Act of 1933, as amended and the
Securities Exchange Act of 1934, as amended. Forward-looking statements involve
a number of risks and uncertainties, and, in addition to the factors discussed
in this Form 10-QSB, among the other factors that could cause actual results to
differ materially are the following: the Company's ability to identify and
secure suitable locations on acceptable terms, obtain additional capital
necessary for expansion on acceptable terms, open new restaurants in a timely
manner, hire and train additional restaurant personnel and integrate new
restaurants into its operations; the continued implementation of the Company's
strict business discipline over a growing restaurant base; the economic
conditions in the new markets into which the Company expands and possible
uncertainties in the customer base in these areas; changes in customer dining
patterns; competitive pressures from other national and regional restaurant
chains; business conditions, such as inflation or a recession, and growth in the
restaurant industry and the general economy; changes in monetary and fiscal
policies, laws and regulations; and other risks identified from time to time in
the Company's SEC reports, registration statements and public announcements.
- --------------------------------------------------------------------------------
2
<PAGE> 3
HOTEL DISCOVERY, INC.
INDEX
PAGE
----
PART I FINANCIAL INFORMATION 4
ITEM 1. Financial Statements 4
Balance Sheets -
March 29, 1998 and December 28, 1997 5
Statements of Operations -
For the thirteen weeks ended March 29, 1998 and
March 30, 1997 6
Statements of Cash Flows -
For the thirteen weeks ended March 29, 1998 and
March 30, 1997 7
Condensed Notes to the Financial Statements 8
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
ITEM 3. Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure 12
PART II OTHER INFORMATION 13
ITEM 1. Legal Proceedings 13
ITEM 4. Submission of Matters to a Vote of Security Holders 13
ITEM 6. Exhibits and Reports on Form 8-K 13
Signatures 14
3
<PAGE> 4
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS - INDEX
Balance Sheets - March 29, 1998 and December 28, 1997
Statements of Operations - For the thirteen weeks ended March
29, 1998 and March 30, 1997
Statements of Cash Flows - For the thirteen weeks ended March
29, 1998 and March 30, 1997
Condensed Notes to the Financial Statements
4
<PAGE> 5
HOTEL DISCOVERY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
March 29, December 28,
1998 1997
---- ----
ASSETS (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 4,873,266 $ 9,222,174
Landlord allowance receivable 1,600,000 ---
Inventories 40,012 41,766
Other current assets 418,422 250,043
------------- -------------
Total current assets 6,931,700 9,513,983
PROPERTY AND EQUIPMENT, net 7,806,207 5,270,160
OTHER ASSETS 52,710 55,908
------------- -------------
$ 14,790,617 $ 14,840,051
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term notes payable --- 200,000
Accounts payable 418,695 669,380
Accrued expenses 121,835 115,774
Salaries and wages payable 179,356 366,674
Current portion of long-term debt 52,065 69,420
------------- -------------
Total current liabilities 771,951 1,421,249
DEFERRED RENT 1,600,000 ---
LONG-TERM DEBT, less current portion 852,165 852,165
CONVERTIBLE PROMISSORY NOTES PAYABLE 150,000 150,000
------------- -------------
Total liabilities 3,374,116 2,423,414
------------- -------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 100,000,000 shares
authorized; 8,000,189 shares issued and outstanding 80,002 80,002
Additional paid-in capital 20,152,948 20,152,948
Less: Common stock subscribed (400,000) (400,000)
Accumulated deficit (8,416,449) (7,416,312)
------------- -------------
Total shareholders' equity 11,416,501 12,416,638
------------- -------------
$ 14,790,617 $ 14,840,051
============= =============
</TABLE>
The accompanying condensed notes are an integral part of these balance sheets.
5
<PAGE> 6
HOTEL DISCOVERY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen weeks ended
--------------------
March 29, March 30,
1998 1997
---- ----
<S> <C> <C>
NET SALES $ 804,319 $ 1,047,765
-------------- ------------
COSTS AND EXPENSES:
Food, beverage and retail costs 218,416 357,943
Labor and benefits 318,157 592,618
Restaurant operating expenses 363,445 290,793
Depreciation and amortization 125,840 137,000
Selling, general and administrative expenses 742,135 398,293
Pre-opening and development costs 127,318 ---
-------------- ------------
Total costs and expenses 1,895,311 1,776,647
-------------- ------------
LOSS FROM OPERATIONS (1,090,992) (728,882)
-------------- ------------
INTEREST INCOME (EXPENSE), net 90,855 (19,638)
-------------- ------------
NET LOSS $ (1,000,137) $ (748,520)
============== ============
BASIC AND DILUTED WEIGHTED AVERAGE 8,000,189 4,092,400
============== ============
OUTSTANDING SHARES
BASIC AND DILUTED NET LOSS PER SHARE $ (0.13) $ (0.18)
============== ============
</TABLE>
The accompanying condensed notes are an integral part of these financial
statements.
6
<PAGE> 7
HOTEL DISCOVERY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Thirteen weeks ended
-------------------------
March 29, March 30,
1998 1997
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (1,000,137) $ (748,520)
Adjustments to reconcile net loss to cash flows from operating ctivities:
Depreciation 149,641 137,000
Changes in operating assets and liabilities:
Inventories 1,754 20,300
Other current assets (168,379) (48,152)
Other assets 3,198 401
Accounts payable (250,685) 18,225
Accrued expenses (181,257) (333,153)
------------- ------------
Net cash used in operating activities (1,445,865) (953,899)
------------- ------------
INVESTING ACTIVITIES:
Purchase of property and equipment (2,685,688) (217,117)
------------- ------------
FINANCING ACTIVITIES:
Net borrowings/(payments) on short-term notes payable (200,000) (2,500,000)
Advances/(payments) from/(to) shareholder --- 650,642
Proceeds from issuance of stock --- 396,000
Principal repayments on long-term debt (17,355) (11,570)
------------- ------------
Net cash used in financing activities (217,355) (1,464,928)
------------- ------------
DECREASE IN CASH AND CASH EQUIVALENTS (4,349,298) (2,635,944)
CASH AND CASH EQUIVALENTS, beginning 9,222,174 2,709,136
------------- ---------
CASH AND CASH EQUIVALENTS, ending $ 4,873,266 $ 73,192
============= ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest $ 24,910 $ 44,990
Cash paid for income taxes --- ---
Non-cash items - landlord allowance receivable 1,600,000 ---
</TABLE>
The accompanying condensed notes are an integral part of these financial
statements.
7
<PAGE> 8
HOTEL DISCOVERY, INC.
NOTES TO THE FINANCIAL STATEMENTS
MARCH 29, 1998 AND MARCH 30, 1997
1. GENERAL
Hotel Discovery, Inc. (the Company) owns and operates one restaurant in
Cincinnati, Ohio (the Kenwood Restaurant), which opened under the name "Hotel
Mexico" on December 19, 1996. Prior to the opening of this restaurant, the
Company was in the development stage.
The Company's predecessor, Hotel Mexico (HMI), was originally incorporated in
January 1994 as an Ohio corporation. The Kenwood Restaurant Limited Partnership,
an Ohio limited partnership (the Kenwood Partnership), was formed in June 1995
for the purpose of owning and operating the Kenwood Restaurant. HMI's operations
and the net assets of the Kenwood Partnership were combined on November 14,
1996. On that date, the Kenwood Partnership contributed all of its net assets
totalling $1,567,197 to a newly formed corporation in exchange for shares of
such corporation. HMI, with total net assets of $631,966, then merged with and
into the newly formed corporation, the name of which remained Hotel Mexico, Inc.
(hereafter, Hotel Mexico). Upon consummation of the merger, all outstanding
shares of Hotel Mexico were converted into an aggregate of 1,350,000 shares of
Common Stock of the newly formed corporation.
The shares of Hotel Mexico Common Stock received by the Kenwood Partnership in
the reorganization were retained by the Kenwood Partnership until the effective
date of the Company's initial public offering, at which time the shares of
Common Stock and all other partnership assets were distributed to the general
and limited partners in accordance with the partnership agreement and the
Kenwood Partnership was dissolved.
On August 22, 1997, Hotel Mexico merged with and into Hotel Discovery, Inc., a
newly formed Minnesota corporation. The Company has an authorized capital stock
of 100,000,000 undesignated shares, and each share of Common Stock of Hotel
Mexico was converted into one share of the Company's Common Stock.
On February 25, 1998 the Company changed the name of its restaurant concept from
Hotel Discovery to Cafe Odyssey. The Company believes that the new name
better reflects the concept's primary focus on award winning food, served in a
unique environment of adventure, imagination, exploration and innovation. In
conjunction with this action, the Company's Board of Directors approved a
change in its corporate name from Hotel Discovery, Inc. to Cafe Odyssey, Inc.,
subject to shareholder approval. The Cafe Odyssey name will be used for the
planned Mall of America Restaurant and all subsequent restaurants. At the
present time, the company intends to retain the name "Hotel Discovery" for the
Kenwood Restaurant because of its already established and well-received
perception in the marketplace.
2. BASIS OF FINANCIAL STATEMENT PRESENTATION
The accompanying unaudited condensed financial statements have been prepared by
the Company pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations. Although management believes that the disclosures are adequate to
make the information presented not misleading, it is suggested that these
interim condensed financial statements be read in conjunction with the Company's
most recent 10-KSB dated December 28, 1997. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary for a
fair presentation of the financial position, results of operations and cash
flows for the interim periods presented have been made. Operating results for
the thirteen weeks ended March 29, 1998 are not necessarily indicative of the
results that may be expected for the fiscal year ended December 27, 1998.
The Company has adopted a 52-53-week accounting period ending on the Sunday
nearest December 31 of each year.
3. PROPERTY AND EQUIPMENT
Property and equipment consisted of the following as of:
<TABLE>
<CAPTION>
March 29, December 28,
1998 1997
---- ----
<S> <C> <C>
Building and leasehold
improvements $3,264,307 $3,182,160
Equipment and fixtures 2,397,902 2,294,503
Construction in progress 2,907,639 432,497
---------- ----------
8,569,848 5,909,160
Less: accumulated depreciation (763,641) (639,000)
---------- ----------
Total property and
equipment, net $7,806,207 $5,270,160
========== ==========
</TABLE>
4. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
Statement of Financial Accounting Standard (SFAS) No. 130, "Reporting
Comprehensive Income", effective beginning in fiscal 1998, establishes standards
of disclosure and financial statement display for reporting total comprehensive
income and the individual components thereof. The adoption of SFAS No. 130 did
not have a material impact on the Company's financial position or results of
operations as comprehensive income and net income were the same for all periods
presented.
The Company adopted in fiscal 1997, Statement of Financial Accounting Standard
(SFAS) No. 128, "Earnings per Share", which requires disclosure of basic
earnings per share, which requires disclosure of basic earnings per share
(EPS) and diluted EPS, which replace the existing primary EPS and fully diluted
EPS, as defined by Accounting Principles Board (APB) No. 15. Basic EPS is
computed by dividing net income by the weighted average number of shares of
Common Stock outstanding during the year. Diluted EPS is computed similarly to
primary EPS as previously reported provided that, when applying the treasury
stock method to common equivalent shares, the Company must use its average
share price for the period rather than the more dilutive greater of the average
share price or end-of-period share price required by APB No. 15.
The adoption of SFAS No. 128 had no effect on the Company's March 30, 1997 EPS
data.
8
<PAGE> 9
5. EVENT SUBSEQUENT TO MARCH 29, 1998
During the second quarter of 1998, the Company entered into a lease agreement
with Denver Pavilions L.P. to lease approximately 18,000 square feet of space in
the Denver Pavilions, an urban retail/entertainment complex to be constructed
in downtown Denver, Colorado. The lease has an initial term of fifteen years,
with three options to renew for five years each. The lease provides for a fixed
minimum annual rent, contingent rent payments based on a percentage of gross
revenues, as defined, as well as payments of real estate taxes, insurance and
common area costs. In addition, the lease provides for tenant inducements and
rent abatement.
9
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in connection with the Company's
financial statements and related notes thereto included elsewhere in this
report.
OVERVIEW
The Company was formed in January 1994 as an Ohio corporation to develop, own
and operate upscale, casual themed restaurants under the name "Hotel Mexico".
The Company opened its first restaurant in the Kenwood Shopping Center in
Cincinnati, Ohio (the "Kenwood Restaurant") in December 1996. Prior to opening
the Kenwood Restaurant, the Company had no revenues and its activities were
devoted solely to development. The Company is presently developing two
additional restaurants, the first in the Mall of America (the "Mall of America
Restaurant") in Bloomington, Minnesota, a suburb of Minneapolis and the second
at Denver Pavilions (the "Denver Restaurant") in Denver, Colorado.
Future revenue and profits, if any, will depend upon various factors, including
market acceptance of the Hotel Discovery/Cafe Odyssey concept, the quality of
the restaurant operations, the ability to expand to multi-unit locations and
general economic conditions. The Company's present source of revenue is limited
to its existing restaurant. There can be no assurances the Company will
successfully implement its expansion plans, in which case it will continue to be
dependent on the revenues from the existing restaurant. The Company also faces
all of the risks, expenses and difficulties frequently encountered in connection
with the expansion and development of a new and expanding business. Furthermore,
to the extent the Company's expansion strategy is successful, it must manage the
transition to multiple-site operations, higher volume operations, the control of
overhead expenses and the addition of necessary personnel.
The Company uses a 52- or 53-week fiscal year ending on the Sunday nearest
December 31.
RESULTS OF OPERATIONS FOR THE THIRTEEN WEEKS ENDED MARCH 29, 1998 AND MARCH 28,
1997
The Company had no revenues or operations during the period from January 13,
1994 (Inception) to December 19, 1996 (the opening of the Kenwood Restaurant).
Accordingly, comparisons to periods prior to December 19, 1996 are not
meaningful.
For the thirteen weeks ended March 29, 1998 (hereinafter referred to as "first
quarter of 1998"), the Company had net sales of $804,319 compared to $1,047,765
for the thirteen weeks ended March 30, 1997 (hereinafter referred to as "first
quarter of 1997"). This decline in sales is attributable to a comparison of
steady-state operations at the Kenwood Restaurant for the first quarter of 1998
as compared to its initial "honeymoon" period in the first quarter of 1997.
For the first quarter of 1998, food, beverage and retail costs were $218,416 or
27.2% of sales compared to $357,943 or 34.2% of sales for the first quarter of
1997. The improvement in food, beverage and retail costs as a percentage of
sales is due primarily to improved operating efficiencies.
For the first quarter of 1998, labor, benefits and other direct restaurant
operating expenses were $681,602 or 84.7% of sales compared to $883,411 or 84.3%
of sales for the first quarter of 1997. This result occurred despite the lower
sales volume in the first quarter of 1998 as compared to the first quarter of
1997 and the relatively high fixed cost component of restaurant operating
expenses at the Kenwood Restaurant.
Although no assurances can be given, management believes that the Kenwood
Restaurant's current level of sales, trained workforce and general operation
will continue to improve its restaurant-level performance in future periods.
10
<PAGE> 11
For the first quarter of 1998, the Company had a net loss of $1,000,137 compared
to a net loss of $748,520 for the first quarter of 1997. The net loss for the
first quarter of 1998 is primarily attributable to continued concept
development and pre-opening costs of approximately $127,000, as well as
additional general and administration expenses incurred as the Company
increased its corporate overhead structure for the development of additional
restaurants. The net loss for the first quarter of 1997 was largely
attributable to the start-up operations at the Kenwood Restaurant. Continued
development of the Company's concept will impact pre-opening and general and
administrative expenses on an ongoing basis.
LIQUIDITY AND CAPITAL RESOURCES
Since Inception, the Company's principal capital requirements have been (i) the
development of the Company and the Hotel Discovery/Cafe Odyssey concept, (ii)
the construction of the Kenwood Restaurant and the acquisition of furniture,
fixtures and equipment therein and (iii) the development of the Mall of America
Restaurant. Total capital expenditures for the Kenwood Restaurant were
approximately $5.1 million, net of landlord contributions.
When completed, the Company estimates that capital expenditures for the Mall of
America Restaurant will be approximately $4.9 million, net of landlord
contributions of $1.6 million and minimum rent abatement of approximately
$405,000. As of March 29, 1998, the costs incurred to date for the Mall of
America Restaurant were approximately $3.1 million. The Mall of America
Restaurant is expected to be complete in the second quarter of 1998.
The Company's primary sources of working capital have been proceeds from the
sale of Common Stock to and borrowings from its principal shareholder, Stephen
D. King, the private placement of Common Stock and debt, as well as the proceeds
from the Company's initial public offering of Units in November 1997. For the
first quarters of 1998 and 1997, the Company used $1,445,865 and $953,899,
respectively, in cash flow for operating activities. As of March 29, 1998 and
March 28, 1997, the Company had working capital of $6,159,749 and a working
capital deficit of $856,969, respectively.
In November 1997, the Company completed an initial public offering of 2,500,000
Units, each Unit consisting of one share of Common Stock and one redeemable
Class A Warrant at an initial public offering price of $5.00 per Unit. In
December 1997, the Company issued an additional 100,000 Units to its principal
underwriter, R.J. Steichen & Company, pursuant to the underwriter's decision to
exercise a portion of its over-allotment. The Company received net proceeds of
approximately $11.2 million in conjunction with the initial public offering and
the partial exercise of the underwriter's over-allotment.
The Class A Warrants are subject to redemption by the Company at any time, on
not less than 30 days' written notice, at a price of $0.01 per Warrant at any
time following a period of 14 consecutive trading days where the per share
average closing bid price of the Company's Common Stock exceeds $7.00 (subject
to adjustment), provided that a current prospectus covering the shares issuable
upon the exercise of the Class A Warrants is then effective under federal
securities laws. For these purposes, the closing bid price of the Common Stock
shall be determined by the last reported sale price on the primary exchange on
which the Common Stock is traded.
The Company intends to open one restaurant in 1998 and one to three
restaurants in 1999. The Company estimates that its capital expenditures (net
of estimated landlord contributions) will be approximately $10 to $15
million in fiscal 1998 and $10 to $20 million in fiscal 1999. The Company
expects to finance its concept development and expansion through cash flow
from operations, the exercise of its Class A Warrants and other forms of
financing such as the sale of additional equity and debt securities, capital
leases and other credit facilities. There are no assurances that such
financing will be available on terms acceptable or favorable to the
Company.
11
<PAGE> 12
ITEM 3. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
On February 4, 1998, the Company, with the approval of its Board of Directors
and Audit Committee, engaged Arthur Andersen LLP as the independent public
accountants for Hotel Discovery, Inc. Prior to the engagement of Arthur Andersen
LLP, Ernst & Young LLP had served as the independent public accountants for the
Company. The report prepared by Ernst & Young LLP as of December 29, 1996
contained no adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty of audit scope or accounting principles. In
connection with the audit of the financial statements as of December 29, 1996,
and through February 4, 1998, there were no disagreements with Ernst & Young LLP
on any matter of accounting principles or practices, financial statement
disclosure or auditing scope or procedure, which disagreements, if not resolved
to the satisfaction of Ernst & Young LLP, would have caused Ernst & Young LLP to
make reference to the subject matter of the disagreements in its reports.
This Current Report was filed on Form 8-K on February 4, 1998 and on Form 8-K/A
on February 9, 1998.
12
<PAGE> 13
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in routine legal actions in the ordinary course
of its business. Although outcomes of any such legal actions cannot
be predicted, in the opinion of management there is no legal
proceeding pending against or involving the Company for which the
outcome is likely to have a material adverse effect upon the financial
position or results of operations of the Company.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
11. Computation of Net Loss per Common Share
27. Financial Data Schedule
(b) REPORTS ON FORM 8-K
On February 4, 1998, the Company filed a report on Form 8-K relating to
the dismissal by the Company as of February 4, 1998 of Ernst & Young
LLP as its independent public accountants and the engagement of Arthur
Andersen LLP as its new independent public accountants as of February
4, 1998.
13
<PAGE> 14
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.
HOTEL DISCOVERY, INC.
By: /s/ Anne D. Huemme
--------------------
Anne D. Huemme
Vice President-Finance and Chief Financial Officer
(Principal Financial and Accounting Officer)
Date: May 13, 1998
<PAGE> 15
EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
11 Computation of Net Loss Per Common Share
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
HOTEL DISCOVERY, INC.
COMPUTATION OF NET LOSS PER COMMON SHARE
<TABLE>
<CAPTION>
March 29, March 30,
1998 1997
---- ----
<S> <C> <C>
Basic and diluted weighted average number of issued 8,000,189 4,092,400
shares outstanding
Effect of:
Common stock equivalents outstanding(1) -- --
Shares outstanding used to compute net income (loss) 8,000,189 4,092,400
per share
Net loss ($1,000,137) $ (748,520)
Basic and Diluted Net loss per share ($0.13) ($0.18)
===== =====
</TABLE>
(1) For Basic and Diluted Net loss per share, no common stock equivalents are
outstanding due to their anti-dilutive effect.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-27-1998
<PERIOD-START> DEC-29-1997
<PERIOD-END> MAR-29-1998
<CASH> 4,873,266
<SECURITIES> 0
<RECEIVABLES> 1,600,000
<ALLOWANCES> 0
<INVENTORY> 40,012
<CURRENT-ASSETS> 6,931,700
<PP&E> 8,569,848
<DEPRECIATION> (763,641)
<TOTAL-ASSETS> 14,790,617
<CURRENT-LIABILITIES> 771,951
<BONDS> 1,002,165
0
0
<COMMON> 80,002
<OTHER-SE> 11,336,499
<TOTAL-LIABILITY-AND-EQUITY> 14,790,617
<SALES> 804,319
<TOTAL-REVENUES> 804,319
<CGS> 218,416
<TOTAL-COSTS> 1,895,311
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (90,855)
<INCOME-PRETAX> (1,000,137)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,000,137)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,000,137)
<EPS-PRIMARY> (0.13)
<EPS-DILUTED> (0.13)
</TABLE>
