U.S. 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 JUNE 28, 2000.
Transition report under Section 13 or 15 (d) of the Securities Exchange
------- Act of 1934
For the transition period from _______________ to ___________________.
Commission file number 0-23757
-------
TAM RESTAURANTS, INC.
---------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 13-3905598
-------- ----------
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1163 FOREST AVENUE, STATEN ISLAND, NY 10310
-------------------------------------------
(Address of Principal Executive Offices)
(718) 720-5959
--------------
(Issuer's Telephone Number)
(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 the latest practicable date: 4,503,000 SHARES OF COMMON
STOCK AS OF AUGUST 8, 2000.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
TAM RESTAURANTS, INC. AND SUBSIDIARIES
QUARTER ENDED JUNE 28, 2000
FORM 10-QSB
INDEX
PART I. FINANCIAL STATEMENTS PAGE(S)
ITEM 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheet 1
as of June 28, 2000 (unaudited).
Condensed Consolidated Statements of Operations
For the Thirteen weeks and Thirty-Nine weeks
ended June 28, 2000 and June 30, 1999 (unaudited). 2
Condensed Consolidated Statements of Cash Flows
For the Thirty-Nine weeks ended June 28, 2000 and
June 30, 1999 (unaudited). 3
Notes to unaudited Condensed Consolidated
Financial Statements 4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 6
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS 10
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURE PAGE 11
2
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<TABLE>
<CAPTION>
TAM RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
JUNE 28, 2000
-------------
Current Assets
<S> <C>
Cash $ 130,754
Accounts receivable (net of allowance for
doubtful accounts of $15,000) 780,492
Inventory 353,388
Prepaid and other expenses 493,619
------------
Total Current Assets 1,758,253
Property and Equipment-Net 5,807,994
Due from Affiliates 372,915
Restricted Cash 2,236,492
Other Assets 515,652
------------
TOTAL ASSETS $ 10,691,306
============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 120,868
Note payable bank 700,000
Current portion of loans payable, related parties 125,510
Current portion of capitalized lease obligations 129,002
Accounts payable 1,145,740
Contract deposits payable 323,838
Barter Advances 546,018
Accrued expenses and other 1,574,327
------------
Total Current Liabilities 4,665,303
------------
Long-term Liabilities
Deferred rent expense 582,952
Long-term debt - net of current portion 2,505,362
Loans payable-related parties - net of current portion 105,190
Capitalized lease obligations-net of current portion 240,689
------------
Total Long-term Liabilities 3,434,193
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TOTAL LIABILITIES 8,099,496
------------
STOCKHOLDERS' EQUITY
Stockholders' Equity
Preferred stock; $.0001 par value; 1,000,000 shares authorized,
144,081 shares issued and outstanding 14
Common stock; $.0001 par value, 19,000,000 shares authorized;
4,503,000 shares issued and outstanding 450
Additional paid-in capital 9,977,523
Accumulated deficit (7,386,177)
------------
TOTAL STOCKHOLDERS' EQUITY 2,591,810
------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 10,691,306
============
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
3
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<TABLE>
<CAPTION>
TAM RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
June 30, June 28, June 30, June 28,
1999 2000 1999 2000
---- ---- ---- ----
<S> <C> <C> <C> <C>
Sales $ 6,687,053 $ 6,942,768 $ 12,787,211 $ 13,930,862
Cost of Sales 3,810,784 3,946,420 7,666,154 8,896,751
--------- --------- --------- ---------
Gross Profit 2,876,269 2,996,348 5,121,057 5,034,111
Pre-Opening Expenses - 197,288 - 197,288
Operating and Administrative Expenses 2,309,135 2,501,515 4,921,080 5,862,712
--------- --------- --------- ---------
Income (Loss) from Operations 567,134 297,545 199,977 (1,025,889)
------- ------- ------- -----------
Other Expense
Interest Expense - net 198,454 121,100 501,726 288,827
Barter Expense 162,845 226,944 315,320 440,712
Sales Tax Audit Assessment - - - 140,000
-------
Total Other Expense 361,299 348,044 817,046 869,539
------- ------- ------- -------
NET INCOME (LOSS) $ 205,835 $ (50,499) $ (617,069) $ (1,895,428)
========== ========== ============ =============
Net income (loss) per share - Basic $.06 $(.02) $(.18) $(.48)
==== ====== ====== ======
Weighted average number of common
shares outstanding - Basic 3,503 ,000 4,503,000 3,503,000 4,023,147
========== ========= ========= =========
Net income (loss) per share - Diluted $.06 $(.02) $(.18) $(.48)
==== ======= ====== ======
Weighted average number of common
shares outstanding - Diluted 3,647,081 4,503,000 3,503,000 4,023,147
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
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<TABLE>
<CAPTION>
TAM RESTAURANTS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Thirty-Nine weeks Ended
JUNE 30, 1999 JUNE 28, 2000
------------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (617,069) $(1,895,428)
Adjustments to reconcile net loss
to net cash provided by (used in) operating activities:
Depreciation and amortization expense 806,524 659,524
Deferred rent expense 3,362 230,651
Amortization of warrants issued on debt conversion30,257 --
Amortization of original issue discount 231,255 --
Deferred income (6,000) --
(Increase) decrease in:
Accounts receivable (54,139) (49,130)
Inventory (90,887) (52,457)
Prepaid and other expenses (99,441) (183,827)
Other assets (41,469) 87,374
Increase (decrease) in:
Accounts payable 203,265 (406,020)
Accrued expenses (79,023) 164,882
Contract deposits payable -- (97,228)
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 286,635 (1,541,659)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment (570,562) (566,576)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net repayments of officer's loans 3,357 --
Dividends paid -- (54,034)
Proceeds from bank line of credit -- 700,000
Proceeds from long term debt -- 2,500,000
Sale of common stock -- 2,000,000
Repayment of related party loan -- (1,000,000)
Proceeds from barter advances 650,000 128,138
Proceed from equipment refinancing loans -- 254,658
Principal payments on long-term debt
and capitalized lease obligations (478,236) (156,512)
Net repayments (advances) of affiliates and others (4,610) 20,417
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 170,511 4,392,667
----------- -----------
Net increase (decrease) in cash (113,416) 2,284,432
Cash, Beginning of year 221,484 82,814
----------- -----------
Cash, End of period $ 108,068 $ 2,367,246
=========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
TAM RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form 10-QSB
and Item 310(b) of Regulation S-B. Accordingly, they do not include all of
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting of only normal recurring accruals) considered
necessary for a fair presentation have been included. It is suggested that
the financial statements be read in conjunction with the Company's
consolidated audited financial statements and footnotes thereto contained
in the Company's Form 10-KSB for the fiscal year ended September 29, 1999.
Operating results for the thirteen and thirty-nine week periods ended June
28, 2000 are not necessarily indicative of the results that may be expected
for the full fiscal year ended September 27, 2000.
2. ACCOUNTING PERIOD
The Company reports on a 52/53 year.
3. LONG-TERM DEBT
In October 1997, the Company obtained $1,000,000 in a secured loan from two
entities collectively known as Kayne Anderson. In February 2000 the Company
repaid this loan.
In February 2000, the Company received $2,500,000 in financing from a loan
syndicate headed by Kayne Anderson to construct the Lundy's restaurant in
Times Square. The proceeds are maintained in a separate account and can
only be used to construct and open the Times Square restaurant. Repayment
of the principal will be paid out of the free cash flow of the Times Square
Lundy's in accordance with the terms of the loan agreement. The loan bears
interest at prime plus 1%.
4. LOSS PER SHARE
For the calculation of the loss per share for the thirty-nine weeks ended
fiscal 2000 and 1999, all of the Company options and warrants are excluded
for basic and diluted loss per share as they are anti-dilutive. The net
loss for the thirteen and thirty-nine weeks ended June 28, 2000 has been
adjusted for the preferred stock dividend of $18,010 and $54,034,
respectively. The net loss for the thirteen and thirty-nine weeks ended
June 30, 1999 has been adjusted for the preferred stock dividend of $18,010
and $36,020, respectively.
5. SALE OF COMMON STOCK
In February 2000, the Company, in a private placement, sold 1 million
shares of common stock at $2.00 per share for net proceeds of $2,000,000.
6
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
ACT OF 1995: The statements which are not historical facts contained in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations and elsewhere in this report on Form 10-QSB are forward-looking
statements that involve a number of known and unknown risks, uncertainties
and other factors which may cause the actual results, performance or
achievements of the Company to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, but are not limited to,
the risks related to the opening of new restaurants, including capital
requirements, continued popularity of existing and new restaurants,
seasonality and other risks detailed in the Company's filings with the
Securities and Exchange Commission. The words "believe", "expect",
"anticipate", "intend" and "plan" and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the
date the statement was made.
OVERVIEW
The Company currently operates LUNDY BROS. RESTAURANT ("LUNDY'S"), a
high-volume, casual, upscale seafood restaurant located in Brooklyn, New
York, THE BOATHOUSE IN CENTRAL PARK ("THE BOATHOUSE", see discussion
below), a multi-use facility featuring an upscale restaurant and catering
pavilion, located on the lake in New York City's Central Park, and AMERICAN
PARK AT THE BATTERY ("AMERICAN PARK"), a multi-use facility featuring an
upscale restaurant, catering floor, two outside patios and a fast food
kiosk, located at the water's edge in Battery Park, a New York City
landmark.
The Company operates THE BOATHOUSE under a 15-year license agreement
issued by The New York City Department of Parks and Recreation ("Parks").
The Company's original license agreement expired on June 30, 2000. In June
of 1999 Parks issued a formal Request for Proposal so that all potential
operators, including the Company, could submit a proposal to operate THE
BOATHOUSE for a new 15-year license term. In March 2000, the Company was
informed by Parks that it had recommended another proposer be awarded THE
BOATHOUSE license agreement, beginning July 1, 2000. After a thorough
review of all the proposals, the Company believed that the award by Parks
was made as a result of a technical error. In April 2000, the Company
presented its findings to the New York City Franchise Concession and Review
Committee (the "Committee"), the governing body charged with awarding all
such license agreements. At the request of the Committee, the Company
provided additional written information to Committee for further review by
April 24, 2000. In late June 2000, the Company was informed that despite
its efforts the recommendation by Parks to award THE BOATHOUSE contract to
another proposer was upheld and the Company would cease its operations at
THE BOATHOUSE effective July 1, 2000. On June 30, 2000, the Company entered
into an agreement with both Parks and Central Park, LLC, THE BOATHOUSE'S
new operator to extend its operation of THE BOATHOUSE through September 30,
2000. The agreement with Parks requires that the Company pay a minimum of
$450,000 and a maximum of $500,000 in rent for the three months of
additional operation at THE BOATHOUSE. The total rent figure was based on
actual 1999 revenues and 1999 percentage rent formula then applied. The
agreement with Central Park Boathouse, LLC provides that as consideration
for the three month license extension to September 30, 2000, the Company
transfer title to all assets and leasehold improvements at THE BOATHOUSE to
Central Park Boathouse, LLC. The depreciated value of these assets on the
Company's books at year-end will be approximately $265,000. The Company
believes that based upon the historical success that it has achieved during
the July through September period, its revenues and profits will
7
<PAGE>
significantly exceed the value of the equipment and supplies it is
conveying as part of agreement with Central Park Boathouse, LLC. THE
BOATHOUSE generates annual gross revenues in excess of $8 million. For the
thirty-nine week period ended June 28, 2000 generated approximately $6
million in gross revenues and income from direct operations of
approximately $1 million. The expiration of the Company's license to
operate THE BOATHOUSE will have a significant impact on the Company's
operating results.
RESULTS OF OPERATIONS
Sales for the thirty-nine weeks ended June 28, 2000 were $13,930,862,
an increase of $1,143,651 or 8.9%, as compared to $12,787,211 for the
thirty-nine weeks ended June 30, 1999. The Company's sales for the thirteen
weeks ended June 28, 2000 were $6,942,768, an increase of $255,715 or 3.8%,
as compared to $6,687,053 for the thirteen weeks ended June 30, 1999. The
increase in sales for the thirty-nine week period was primarily due a
significant increase in sales at both AMERICAN PARK and LUNDYS. The
increase in sales for the thirteen-week period was primarily due to a
significant increase in sales at AMERICAN PARK.
Cost of sales for the thirty-nine weeks ended June 28, 2000 were
$8,896,751 or 63.9% of sales as compared to $7,666,154 or 60% of sales for
the thirty-nine weeks ended June 30, 1999. Cost of sales for the thirteen
weeks ended June 28, 2000 were $3,946,420 or 56.8% of sales as compared to
$3,810,784 or 57% of sales for the thirteen weeks ended June 30, 1999. For
the thirty-nine week period the increase in the cost of sales relative to
overall sales can be attributed to significant increases in payroll
expenses at THE BOATHOUSE and AMERICAN PARK, in addition to an unusually
short supply of lobsters during the winter months that caused a dramatic
increase in the cost of goods at LUNDYS. In the current thirteen-week
period the increase in sales in conjunction with tighter controls on labor
cost and purchasing returned cost of sales to the levels the Company has
maintained in the past.
As a result of the foregoing, gross profit for the thirty-nine weeks
ended June 28, 2000 was $5,034,111 or 36.1% of sales as compared to
$5,121,057 or 40% of sales for the thirty-nine weeks ended June 30, 1999, a
decrease of $86,946 or 1.7%. Gross profit for the thirteen weeks ended June
28, 2000 was $2,996,348 or 43.2% of sales an increase of $120,079 or 4.2%
as compared to $2,876,269 or 43.0% of sales for the thirteen weeks ended
June 30, 1999.
In April 2000, the Company began construction on a new LUNDY BROS.
RESTAURANT in New York City's Times Square. The restaurant is intended to
open in the late fourth quarter of calendar 2000. This resulted in a
non-cash, pre-opening expense of $197,288 for the thirteen weeks ended June
28, 2000, primarily due to deferred rent expense.
Operating and administrative expenses for the thirty-nine weeks ended
June 28, 2000 were $5,862,712 or 42.1% of sales as compared to $4,921,080
or 38.5% of sales for the thirty-nine weeks ended June 30, 1999. Operating
and administrative expenses for the thirteen weeks ended June 28, 2000 were
$2,501,515 or 36.0% of sales as compared with $2,309,135 or 34.5% of sales
for the thirteen weeks ended June 28, 1999. For the thirteen and
thirty-nine weeks ended June 30, 1999 operating and administrative expenses
increased by $941,632 and $192,380 respectively. The increase in operating
and administrative expenses was a result of the Company's gearing up for
expansion relative to the opening of a new LUNDYS location in Times Square
and the efforts related to the renewal of THE BOATHOUSE license agreement
with the New York City Department of Parks.
8
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Other expenses for the thirty-nine weeks ended June 28, 2000 were
$869,539, an increase of $52,493 or 6.4%, as compared to $817,046 for the
thirty-nine weeks ended June 30, 1999. Other expenses for the thirteen
weeks ended June 28, 2000 were $348,044, a decrease of $13,255 or 3.7%, as
compared to $361,299 for the thirteen weeks ended June 30, 1999. Other
expenses for the thirty-nine weeks ended June 28, 2000 consisted of
$288,827 of interest expense as compared to $501,726 during the same period
in fiscal 1999, this reduction resulted primarily from an original interest
discount charge taken in fiscal 1999. The decrease in interest expense,
however, was offset by an increase in barter expense for the thirty-nine
weeks ended June 28, 2000 to $440,712 as compared to $315,320 in fiscal
1999, combined with a sales tax audit assessment of $140,000 for the period
ending September 1994.
As a result of the foregoing, the net loss amounted to $1,895,428 or
$.48 per share (basic and diluted) for the thirty-nine weeks ended June 28,
2000, as compared to a net loss of $617,069 or $.18 (basic and diluted) per
share for the thirty-nine weeks ended June 30, 1999. For the thirteen weeks
ended June 28, 2000, the net loss amounted to $50,499 or $.02 per share
(basic and diluted), as compared to net income of $205,835 or $.06 per
share (basic and diluted) for the thirteen weeks ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's capital requirements have been and will continue to be
significant and its cash requirements have been exceeding its cash flow
from operations (at June 28, 2000, the Company had a working capital
deficit of $2,907,050, due to, among other things, costs associated with
development, opening and start-up costs of AMERICAN PARK and PARK VIEW at
THE BOATHOUSE and building a corporate infrastructure sufficient to support
the Company's operations. Further, the loss of THE BOATHOUSE license
agreement, effective September 30, 2000, will negatively impact on the
Company's cash flow. As a result, the Company has and will be substantially
dependent upon sales of its equity securities, loans from financial
institutions and the Company's officers, directors, and stockholders, and
bartering transactions with member dining clubs, to finance a portion of
its working capital requirements.
During the thirty-nine weeks ended June 28, 2000, net cash increased
by approximately $2,300,000. Net cash during the thirty-nine weeks ended
June 28, 2000 used in operating activities was $1,542,000 and net cash used
in investing activities was $567,000, and cash provided by financing
activities was $4,393,000. The cash provided by financing activities
relates primarily to the sale of common stock and the addition of
$2,500,000 in long term debt to fund the construction of the new LUNDY'S
BROS. RESTAURANT in Times Square and $1,082,796 in additional financing
generated through bank lines of credit, equipment refinancing and barter
card proceeds. This was offset by the repayment of the Kayne Anderson loans
and other debt.
The Company enters into bartering agreements with member dining clubs
whereby member dining clubs advance cash to the Company in exchange for the
Company's agreement to provide to the clubs' members food and beverages at
a designated Company restaurant. The restaurant must permit the clubs'
members to purchase food and beverages at rates between 160% and 200% of
the amount advanced. Upon entering into the agreement, the Company records
its obligation to provide food and beverages at the amount of the advance
it receives. Upon a guest purchasing food or beverages, the Company records
revenue for the amount of food and beverage purchased by the guest, and the
barter discount as a barter expense.
9
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In October 1997, the Company obtained $1,000,000 in a secured loan from
two entities collectively known as Kayne Anderson. In February 2000 the
Company repaid this loan.
In February 2000, the Company, in a private placement, sold 1 million
shares of common stock at $2.00 per share for net proceeds of $2,000,000.
In February 2000, the Company received $2,500,000 in financing from a
loan syndicate headed by Kayne Anderson to construct a LUNDY BROS
RESTAURANT in New York's Times Square. The proceeds are maintained in a
separate account and can only be used to construct and open the Times
Square restaurant. Repayment of the principal will be paid out of the free
cash flow of the Times Square LUNDY'S in accordance with the terms of the
loan agreement. The loan bears interest at prime plus 1%.
The Company will need to raise additional capital to fund its
operations until the cash flow provided by the planned LUNDY BROS.
RESTAURANT in Times Square is sufficient to cover the shortfall created by
the expiration of THE BOATHOUSE license. Other than the ability to enter
into bartering transactions with member dining clubs, the Company has no
current arrangements with respect to, or potential sources of, additional
financing, and it is not anticipated that any officers, directors or
stockholders will provide any additional loans to the Company.
SEASONALITY AND FLUCTUATIONS IN QUARTERLY OPERATING RESULTS.
The Company's business is seasonal. The two outdoor patios at AMERICAN
PARK and the fast food kiosk are only open March through November and its
location in Battery Park also restricts winter sales potential. The indoor
restaurant and catering level are open year round.
LUNDY'S is a waterside location and attracts more guests during warmer
months. As a result, the Company's average weekly restaurant sales and
operating cash flow generally increases from April through October and
decreases from November through March.
The Company anticipates that the new LUNDY BROS. RESTAURANT, currently
under construction in New York's Times Square will generate gross revenue
approximately equal to those generated by THE BOATHOUSE. However, as a
covenant of the restaurant's financing arrangement, 75% of the free cash
flow generated from that restaurant's operation, as defined by its loan
agreement, will go directly to repay the $2.5 million of principal invested
in the construction and opening of that location.
The Company also expects that future quarterly operating results will
fluctuate as a result of the timing of and expenses related to the openings
of new restaurants (as the Company will incur significant expenses during
the months preceding the opening of a restaurant), as well as due to
various factors, including the seasonal nature of its business, weather
conditions in New York City, the health of New York City's economy in
general and its tourism industry in particular. Accordingly, the Company's
sales and earnings may fluctuate significantly from quarter to quarter and
operating results for any quarter will not necessarily be indicative of the
results that may be achieved for a full year.
10
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YEAR 2000
To date the Company has not experienced any Year 2000 issues.
INFLATION
The effect of inflation on the Company has not been significant during
the last two fiscal years.
SUBSEQUENT EVENTS
On June 2, 2000 NASDAQ notified the Company that its common stock and
warrants would be delisted from the NASDAQ small cap stock market on
September 7, 2000 unless the closing bid price on the common stock was at
least $1.00 per share for ten consecutive days. As of August 17, 2000 the
bid price of the shares had not satisfied the listing criteria. If the
shares fail to meet the listing criteria the Company's stock will be
delisted from NASDAQ and will trade on the pink sheet.
On July 29, 2000 TAM's co-founder and President Frank Cretella
resigned the position of President. He retains the title of Chief Executive
Officer. Mr. Cretella's duties will now consist of managing the
construction of Times Square Lundy's and in assisting the Board in raising
additional financing. Mr. Cretella remains a director of the Company.
On July 29,2000 TAM's co-founder, Jeanne Cretella took an unpaid leave
of absence of 60 days, to attend to personal matters. Mrs. Cretella remains
a Director of the Company.
On August 16,2000 the Board of Directors voted to increase the size of
the Board from 6 to 7 members. That same day the Board of Directors elected
Anthony Golio to the position of President of TAM Restaurants Inc. Mr.
Golio retains his titles of Chief Operating Officer and Chief Financial
Officer.
11
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PART II
OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
(a) On November 19, 1998 the Company's Board of Directors authorized the
designation of 150,000 shares of a series of preferred stock ("Series A
Preferred Stock") bearing a 10% cumulative dividend payable quarterly in
cash, convertible into Common Stock at anytime after issuance, at the
holder's option, at the rate of one share of Common Stock for each share of
Series A Preferred Stock, subject to adjustment under certain
circumstances. The Series A Preferred Stock is senior in rights and
preferences to any subsequently designated series and/or class of preferred
stock and is entitled to one vote per share of Common Stock into which the
issued and outstanding shares of Series A Preferred Stock is then
convertible, on all matters submitted to a vote of the Company's
stockholders. Outstanding shares of Series A Preferred Stock are redeemable
at any time by the Company, at its option, at the redemption price of $5.00
per share, upon timely notice of its intent to redeem.
(b) In December 1998, Frank Cretella converted $720,405 of indebtedness owed by
the Company to him into shares of Series A Preferred Stock at the ratio of
one share of Series A Preferred Stock for each $5.00 of indebtedness
outstanding. As an inducement to Mr. Cretella to convert the debt to
equity, the Company also issued Mr. Cretella 72,040 warrants to purchase
the Company's Common Stock at $6.00 per share.
(c) On February 7, 2000, and February 9, 2000, the Registrant issued and sold
an aggregate of 1,000,000 shares of its Common Stock to three accredited
investors for a total purchase price of $2,000,000 under a Common Stock
Purchase Agreement dated as of February 1, 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the period
covered by this report.
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TAM RESTAURANTS, INC. AND SUBSIDIARIES
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.
TAM RESTAURANTS, INC.
---------------------
(Registrant)
Dated: August 21, 2000 /S/ FRANK CRETELLA
-----------------------------------------
Frank Cretella
Chief Executive Officer
Dated: August 21, 2000 /S/ ANTHONY B. GOLIO
-----------------------------------------
Anthony B. Golio
President
13
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