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 JUNE 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT OF 1934
For the transition period from___________ to __________
Commission file number _________________________________
SOUTH BEACH CONCEPTS, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
FLORIDA 65-0853636
-------------------------------- -------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
5969 CATTLERIDGE BLVD # 201 SARASOTA, FL 34232
----------------------------------------------
(Address of principal executive offices)
(941) 377-7225
------------------------------------------------------
(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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
Securities under a plan confirmed by a court. Yes [_] 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: _________________ Transitional Small
Business Disclosure Format (Check one): Yes [_] No [_]
<PAGE>
PART I
ITEM 1.Financial Statements Attached
ITEM 2.Management Discussion and Analysis of Financial Condition and Results of
Operations
OVERVIEW
The primary business objective of the Company is to develop, operate,
franchise and service take-out, eat-in and delivery restaurants for its three
theme restaurant chains, South Beach Cafe, Pizza World Gourmet Pizza and Cisco &
Pancho and to supply coffee and other related products to its company stores,
its franchisees and other customers worldwide through Cafe Society Coffee
Company. There are currently franchise operations open and operating in Florida,
Illinois, and Missouri. The Company owned restaurants are located in Florida.
CONSOLIDATED BALANCE SHEETS COMPARING PERIOD ENDING JUNE 30, 2000 TO
MARCH 31, 2000.
Inventory decreased from $40,925 to $19,755 primarily due to
consolidation of store inventories. Accounts receivable increased from $91,225
to $100,575. Prepaid expenses decreased from $244,029 to $218,184 as a result of
expensing prepaid items to the appropriate operating expense category. Total
Fixed Assets decreased from $2,611,218 to $2,557,634 primarily due to recording
of Depreciation Expense. Deferred Syndication Costs increased from $319,011 to
$365,118 reflecting additional expenses related to the 506 Offering and stock
issuance. Start Up and Development Costs increased from $3,270 to $26,401 due to
the addition of the Brian Preston Ridge property lease. Accounts Payable
increased from $273,816 to 323,552 as a result of the reversal of accruals and
booking of vendor invoices. Accrued Expenses decreased from $136,760 to $66,647
due to the reversal of accruals and booking of vendor invoices. Shareholder
Loans and Notes Payable reduced from $73,494 to $32,269 as a result of the
granting of certain franchise rights. Notes Payable Mortgage current portion
reduced from $90,000 to $60,402 as a result of reclassification to the long-term
portion of note. Notes Payable long term increased from $439,847 to $458,095 due
to reclassification from Notes Payable current portion.
CONSOLIDATED STATEMENT OF OPERATIONS
Sales increased from $129,562 to $275,623 reflecting retail activities.
Franchises fees increased from $350,000 to $503,000 reflecting additional
franchises fees and area representative fees, but indicating a comparative
decrease in second quarter activity in franchise sales. Other Income increased
from $85,000 to $137,471 primarily resulting from service fee income from
franchisees. Total Cost of Sales increased from $137,993 to $346,646 primarily
due to increased revenues. Gross Profit increased from $426,569 to $570,148.
General Administrative increased from $284,025 to $506,619 reflecting a
comparative decrease in second quarter administrative costs. Earnings decreased
from $152,544 to $73,528. During the quarter the Company closed its Beneva
<PAGE>
Road location as an under performing unit. The company was judged to owe
$12,980.00 in connection with rent charges related to that property. The
training center is undergoing modifications requested by the landlord and
Company determined modifications to its operating systems.
STOCK REVERSAL
On June 5, 2000, the Company effected a one for three stock reversal
relative to its Class A Common Stock and all attendant Warrants. The Company in
connection with the reversal amended its Articles of Incorporation to reduce the
authorized Common Stock from 50,000,000 to 16,666,666 and the authorized
Preferred Stock from 15,000,000 to 5,000,000 both amendments being required by
the Florida Business Law. Subsequent to the reversal there were 8,478,985 shares
of the Class A Common Stock issued and outstanding.
RULE 506
On June 20, 2000, the Company commenced a private placement pursuant to
Rule 506 whereby the Company is offering 75 Units for $20,000 per Unit, each
Unit consisting of ten thousand shares of Class A Common Stock and five thousand
Warrants. Each Warrant entitles the holder to purchase one share of the
Company's Common Stock at an exercise price of $2.20 purchase subject to certain
terms and conditions. The Offering will originally terminate on August 20, 2000
and will automatically be extended an additional 60 days as provided.
ITEM 3.Description of Property
The Company currently maintains it principal office in Sarasota, Florida
PART II
ITEM 1. Legal Proceeding
There are no material legal proceedings against the Company
<PAGE>
ITEM 2.Defaults upon Senior Securities
Not Applicable
ITEM 3.Submission of Matters to a Vote of Security Holders
Not Applicable
ITEM 4.Other Information
Not Applicable
<PAGE>
--------------------------------------------------------------------------------
SOUTH BEACH CONCEPTS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
--------------------------------------------------------------------------------
Unaudited
ASSETS
JUNE 30, 2000 JUNE 30, 1999
---------------- ----------------
CURRENT ASSETS:
Cash $ 14,327.45 9,902.37
Inventory 19,755.83 33,984.85
Accounts Receivable 100,574.95 225,143.06
Notes Receivable Franchisee 215,000.00 0.00
Prepaid Expenses 218,184.06 199,520.00
Due from Affiliates 346,698.61 0.00
Royalties Receivable 14,026.57 0.00
---------------- ----------------
TOTAL CURRENT ASSETS $ 928,567.47 $ 468,550.28
Fixed Assets $ 3,104,753.05 $ 1,429,985.49
Accumulated Depreciation (547,118.09) (467,728.16)
---------------- ----------------
TOTAL FIXED ASSETS $ 2,557,634.96 962,257.33
Deposits $ 15,404.56 $ 25,695.18
Organizational Costs 0.00 46,430.26
Start-up and Development 26,401.35 581,344.41
Accumulated Amortization (13,213.24) 0.00
Acquisition Costs 0.00 0.00
Deferred Tax Asset 186,529.00 0.00
Other Non-Current Assets 93,129.17 126,679.16
Advances 0.00 0.00
Deferred Syndication Costs 365,117.57 0.00
Deferred Offering Costs 14,947.61
---------------- ----------------
TOTAL OTHER ASSETS $ 688,316.02 $ 780,149.01
TOTAL ASSETS $ 4,174,518.45 $ 2,210,956.62
================ ================
<PAGE>
--------------------------------------------------------------------------------
SOUTH BEACH CONCEPTS, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, 2000
--------------------------------------------------------------------------------
Unaudited
LIABILITIES & STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30, 2000 JUNE 30, 1999
---------------- ----------------
<S> <C> <C>
LIABILITIES & CAPITAL
Accounts Payable $ 332,052.24 $ 136,986.92
Wages & Taxes Payable 15,238.24 0.00
Accrued Expenses 66,647.19 0.00
Sales Tax Payable 5,108.17 (155.95)
Notes Payable - Mortgage - Current 60,402.00 0.00
Notes Payable - Clearwater - Current 22,687.00 0.00
Notes Payable 0.00 202,839.90
Shareholder Loan (2,183.07) 7,500.00
---------------- ----------------
TOTAL CURRENT LIABILITIES $ 489,951.77 $ 347,170.87
LONG-TERM LIABILITIES
Notes Payable - Shareholders $ 34,451.90 $ 0.00
Notes Payable - Mortgage 458,095.30 0.00
Notes Payable - Clearwater 37,313.00 0.00
---------------- ----------------
TOTAL LONG-TERM LIABILITIES 529,860.20 0.00
---------------- ----------------
TOTAL LIABILITIES 1,019,811.97 347,170.87
STOCKHOLDERS EQUITY:
Common Stock $ 227,363.00 $ 138,134.65
Additional Paid in Capital 6,579,943.55 4,284,113.00
Retained Deficit (3,726,128.55) (2,579,657.73)
Net Income 73,737.54 21,195.83
---------------- ----------------
Total Stockholders' Equity 3,154,706.48 1,863,785.75
TOTAL LIABILITIES AND STOCKHOLDER'S EQUITY $ 4,174,518.45 $ 2,210,956.62
================ ================
</TABLE>
<PAGE>
South Beach Concepts Inc.
Notes to the Consolidated Financials
June 30, 2000
NOTE 1 - BASIS FOR PRESENTATION
The accompanying unaudited financial statements have been prepared by
South Beach Concepts Inc. (The Company) in accordance with Generally Accepted
Accounting Principles (GAAP) for interim financial statements and with the
instruction to Form 10-QSB and Item 310 of Regulation S-B. Accordingly, they do
not include all of the information and disclosures required by GAAP for complete
financial statements. In the opinion of the company's management, all normal
accounting transactions within the time frame have been included for a fair
presentation of the company's operations. Results of operations for the
six-month period ending June 30, 2000 are not necessarily indicative of future
financial results.
CONSOLIDATION
The consolidated financial statements include the accounts of the company and
its subsidiaries. All significant inter-company transactions and balances have
been eliminated in consolidation.
PROPERTY AND EQUIPMENT
Property and Equipment are carried at cost less accumulated depreciation.
Depreciation is calculated using the straight-line method for financial
reporting purposed and accelerated methods for income tax purposed.
Expenditures for maintenance and repairs are charged against income as incurred
whereas major improvements are capitalized
<PAGE>
--------------------------------------------------------------------------------
SOUTH BEACH CONCEPTS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
--------------------------------------------------------------------------------
Unaudited
JUNE 30, 2000 JUNE 30, 1999
------------- -------------
Cash Flow from Operating Activity:
Net Income 73,528.48 21,196
Other Operating Activity (183,382.84) --
----------- ---------
Total from Operations (109,854.36) 21,196
Cash Flow from Investing Activity (258,685.03) (20,382)
Cash Flow from Financing Activity 303,441.62 --
----------- ----------
Net (Decrease) in Cash (65,097.77) 814
=========== ==========
Cash at Beginning of the Year 79,452.22 9,088
Cash at June 30, 2000 14,327.45 9,902
Net Change Cashflow (65,097.77) 814
<PAGE>
BASIS OF PRESENTATION
Net Earnings Per Common Share
Net earnings per common share are shown as both basic and diluted. Basic
earnings per common share are computed by dividing net earnings less any
preferred stock dividends (if applicable) by the weighted average number of
shares of common stock outstanding. Diluted earnings per common share are
computed by dividing net income less any preferred stock dividends (if
applicable) by the weighted average number of shares of common stock outstanding
plus any dilutive common stock equivalents.
Results of Operations
The company continues as a Development Stage Company and hence requires
continuing its capital raising activities to meet cash flow obligations.
Note 2 Stockholders Equity
The Company is authorized to issue 15,000,000 shares of preferred stock at no
par value, with such designation, voting rights and other preferences as may be
determined from time to time by the Board of Directors.
--------------------------------------------------------------------------------
SOUTH BEACH CONCEPTS, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 2000
--------------------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
Common Common Additional Total
Stock Stock Paid in Retained Stockholders'
Shares Value Capital Deficit Equity
<S> <C> <C> <C> <C> <C>
January 1, 2000 17,821,285 178,213 6,299,284 (3,726,129) 2,751,368
Issuance of Common Stock 7,615,670 49,150 280,660 0 329,810
Stock Reduction 3 to 1 (16,957,470) 0 0 0 0
Net Income 0 0 0 73,529 73,529
Total Stockholders' Equity
as of June 30, 2000 8,478,985 227,363 6,579,944 (3,652,600) 3,154,707
</TABLE>
<PAGE>
--------------------------------------------------------------------------------
SOUTH BEACH CONCEPTS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
AND FOR THE QUARTER ENDING JUNE 30, 2000 AND JUNE 30, 1999
--------------------------------------------------------------------------------
Unaudited
<TABLE>
<CAPTION>
QUARTER ENDING QUARTER ENDING
JUNE 30, 2000 JUNE 30, 1999 JUNE 30, 2000 JUNE 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C>
NET REVENUES
Sales $275,623 $398,072 $146,061 --
Franchise Fees 503,500 276,067 153,500 --
Other Income 137,471 0.00 52,471 --
-------- -------- -------- --------
NET RECEIPTS $916,594 $674,139 $352,032 $500,904
COST OF GOODS SOLD
Food $ 91,831 $ 92,166 $ 38,936 --
Paper 5,089 6,000 2,829 --
Salaries & Wages 207,001 156,854 124,163 --
Cafe Society 42,525 49,055 42,525 --
Other 0.00 0.00 (16,225) --
-------- -------- -------- --------
TOTAL COST OF SALES $346,446 $304,075 $192,228 $175,526
-------- -------- -------- --------
GROSS PROFIT $570,148 $370,064 $159,804 $325,378
GENERAL & ADMINISTRATIVE $506,619 $368,586 $238,819 $253,872
-------- -------- -------- --------
EARNINGS BEFORE OTHER INCOME $ 63,529 $ 1,478 $(79,015) $ 71,506
OTHER INCOME $ 10,000 $ 19,718 0 $ 19,662
-------- -------- -------- --------
NET INCOME/(LOSS) FROM OPERATIONS $ 73,528 $ 21,196 $(79,015) $ 91,168
======== ======== ======== ========
</TABLE>
<PAGE>
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.
Date: August 14, 2000 SOUTH BEACH CONCEPTS
By: /s/ THOMAS N. BURNHAM
----------------------
Thomas N. Burnham, President
