<PAGE> 1
SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec. 240.14a-11(c) or sec. 240.14a-12
------------------------
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
(Name of Registrants as Specified In Their Charters)
(Name of Person(s) Filing Proxy Statement)
------------------------
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), or 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
(4) Proposed maximum aggregate value of transaction:
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Parties:
(4) Date Submitted:
<PAGE> 2
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
NOTICE OF ANNUAL MEETING TO BE HELD JULY 2, 1996
To the Stockholders of
Universal Franchise Opportunities Corp.
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Universal Franchise Opportunities Corp., a Delaware corporation (the "Company"),
will be held at 1500 West Cypress Creek Rd., Suite 512, Ft. Lauderdale, Florida,
on Tuesday, July 2, 1996 at 9:30 a.m. for the following purposes:
1. To elect three directors of the Company.
2. To consider and act upon a proposal to ratify the selection by
the Board of Directors of Goldman & Krinitz, CPA's, P.C., as
independent public accountants of the Company for the year
1996.
3. To transact such other business as may properly come before
the Meeting.
Only stockholders of record at the close of business on June 7, 1996
are entitled to notice of and to vote at such Annual Meeting or any adjournment
thereof.
By order of the Board of Directors
New York, New York Myrna Small, Secretary
June 8, 1996
- -------------------------------------------------------------------------------
IMPORTANT
Whether or not you plan to attend the Meeting, please sign and date the
enclosed proxy, which is solicited by the Board of Directors of the Company, and
return it to the Company. A Proxy Statement and Annual Report are also enclosed.
The proxy may be revoked at any time before it is voted, and stockholders
executing proxies may attend the Meeting and vote thereat in person should they
so desire.
- -------------------------------------------------------------------------------
1
<PAGE> 3
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
705 SEVERN ROAD - SUITE 1037
WILMINGTON, DELAWARE 19803
---------------
PROXY STATEMENT
This statement is furnished in connection with the solicitation by the
Board of Directors of Universal Franchise Opportunities Corp., a Delaware
corporation (the "Company" or "UFOC") of proxies to be used at the Annual
Meeting of Stockholders to be held on Tuesday, July 2, 1996 at 9:30 a.m. and at
any adjournments thereof.
PROXY SOLICITATION
This Proxy Statement and Proxy, together with the 1995 Annual Report to
Stockholders, are being first sent to security holders on or about June 8, 1996.
The cost of preparing, assembling, printing, filing and mailing the Proxy
Statement and Annual Report will be borne by the Company. Brokers, nominees,
fiduciaries and other custodians have been requested to forward soliciting
material to beneficial owners of shares held of record by them.
PROXIES
Stockholders of the Company are requested to complete, date, sign and
promptly return the accompanying form of proxy in the enclosed envelope. Shares
represented by properly executed proxies received by the Company and not revoked
will be voted at the Annual Meeting in accordance with the instructions
contained therein. If no instructions are given, the shares will be voted for
the Board's nominees for directors; to appoint Goldman and Krinitz, CPA's P.C.,
accountants for the year 1996; and in the discretion of the proxies upon such
other matters as may properly come before the meeting.
Proxies may be revoked at any time prior to voting by written notice
addressed to Myrna Small, Small Universal Franchise Opportunities Corp., 1500
West Cypress Creek Road, Ft. Lauderdale, Florida 33309, by submission of another
proxy of a later date, or by voting in person at the Annual Meeting.
VOTING RIGHTS
Only stockholders of record at the close of business on June 7, 1996,
will be entitled to vote at the meeting. On June 7, 1996, the record date, there
were issued and outstanding 2,081,190 shares of Class A Common Stock ("Class A
Stock") and 731,790 shares of Class B Common Stock ("Class B Stock") (Class A
Stock and Class B Stock are collectively referred to as "Capital Stock").
2
<PAGE> 4
As of May 20, 1996, the number of record holders of the respective
classes of stock issued and outstanding, and entitled to vote, were as follows:
<TABLE>
<CAPTION>
CLASS NUMBER
----- ------
<S> <C> <C>
Class A Stock 2,081,190
Class B Stock 731,790
</TABLE>
It should be noted, however, that, many of such holders are brokerage firms or
depositories holding securities in their names on behalf of beneficial holders,
resulting in substantially more beneficial owners of each such classes of
securities. The Company's transfer agent has indicated that it distributed
approximately 600 sets of materials to broker/nominees for distribution to
beneficial holders in June, 1995 in connection with the Company's last annual
meeting of stockholders.
The Company's Certificate of Incorporation provides that holders of
record of the issued and outstanding shares of Class B Stock are entitled,
exclusively and as a class, to elect a majority of the number of directors
constituting the entire Board of Directors of the Company. Two of the three
directors nominated are candidates of the Class B stockholders.
The holders of record of the issued and outstanding shares of Class A
Stock are entitled, exclusively and as a class, to elect the remainder of the
number of directors constituting the entire Board of Directors of the Company.
One nominee will be elected to represent the Class A stockholders.
Any amendment, change or modification in the Certificate of
Incorporation or By-Laws of the Company must be authorized and approved by a
majority vote of the holders of all outstanding shares of Capital Stock and a
majority vote of the holders of all outstanding shares of Class B Stock. Any
action taken, authorized or approved by the Board of Directors of the Company
must be authorized and approved by a majority of directors elected by the
holders of shares of Class B Stock, as well as a majority of all directors.
The relative rights of the Class A Stock and Class B Stock described
above ensure that the current Class B stockholders of the Company, and in
particular, Walter Small the Company's President, as long as he holds a majority
of the Class B Stock, will continue to control the management of the Company and
have the right to prevent any significant change in the structure, business and
affairs of the Company.
Other than as noted above and with regard to conversion rights, the
Company's Certificate of Incorporation provides that each share of Capital Stock
has the same rights, privileges, interests, and attributes, including the right
to one vote on all matters and is subject to the same limitations as every other
share of Capital Stock.
3
<PAGE> 5
DISSENTERS RIGHTS
There are no rights of appraisal or similar rights of dissenters with
respect to any matter to be acted upon at the Annual Meeting.
PRINCIPAL STOCKHOLDERS AND VOTING AGREEMENTS
The following table sets forth, as of June 7, 1996 the beneficial
ownership of the Company's Class A Stock and Class B Stock, as classes, and its
Capital Stock, in the aggregate, by (i) each person known by the Company to own
beneficially more than 5% of the Company's Class A Stock or Class B Stock, (ii)
each person who has been a director or officer of the Company since the
beginning of the last fiscal year, (iii) each Director of the Company, and (iv)
all directors and officers as a group.
<TABLE>
<CAPTION>
Amount and Nature of Beneficial Ownership of Common Stock (1)
-------------------------------------------------------------
Class A Class B Combined (2)
------- ------- ------------
Name & Address Shares Percent of Number of Percent of Total Shares
of Beneficial Owned Class Owned Shares Owned Class Owned & Percent
Holder
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Walter Small 237,100 11,39% 551,900(4) 75.42% 789,000
300 E 56th Street 28.05%
Apt. 22L
N. Y., N.Y. 10022(3)
Myrna Small 50 (6) 100 (6) 150(6)
300 E 56th Street
Apt. 22L
N. Y., N.Y. 10022(5)
Mohamad Al-Omari 40,250(7) (6) 0(6) 40,250(6)
11211 S Military
Trail #2923
Boynton Bch,
Fl 33936
Alan Wachtel 128,700(8) 6.18% 128,700
78 Kings Court 4.6%
Fort Lee, NJ 07024
All Directors & 366,100(9) 17.60% 552,000 75.43% 918,100
Officers as a Group 32.6%
</TABLE>
4
<PAGE> 6
(FOOTNOTES FROM PREVIOUS PAGE)
(1) Except as noted, all shares are beneficially owned, and the sole
voting and investment power is held by the persons named. For the purposes of
this table, a person is deemed to be the beneficial owner of shares which he has
the right to acquire through the exercise of options currently exercisable, and
in computing the percentage of the class owned by such person, such shares are
deemed to be outstanding.
(2) Combines the shares of Class A Stock and Class B Stock to be
outstanding for the purpose of calculating the percent owned.
(3) Does not include 50 shares of Class A Stock and 100 shares of Class
B stock owned by Myrna Small, Mr. Small's wife, and 25 shares of Class A Stock
owned by Deborah Small, Mr. Small's daughter, as to all of which Mr. Small
disclaims beneficial ownership. Also does not include 60,000 shares of Class B
Stock owned of record by Prafulla Marfatia, with respect to which Mr. Small has
been granted an irrevocable proxy. The numbers shown reflect the conversion of
200,000 shares of Class B Common Stock to Class A Common Stock by Mr. Small
during early 1995.
(4) Mr. Marfatia has granted an irrevocable proxy to Mr. Small with
respect to 60,000 shares of Class B Stock owned of record by Mr. Marfatia.
(5) Does not include 237,100 Shares of Class A Stock and 551,900 Shares
of Class B Stock owned by Walter Small, Ms. Small's husband, of which Ms. Small
disclaims beneficial ownership.
(6) Less than one (1%) percent.
(7) Include stock options granted to Mr. Al-Omari to purchase 40,000
shares of the Company's Class A Common Stock, as described under "Option
Agreements" below; Mr. Al-Omari holds stock option to purchase an additional
60,000 shares of the Company's Class A Common Stock; however, these shares were
not included in the foregoing table since the options have not yet vested. See
"Option Agreements" and "Item 10--Executive Compensation".
(8) Includes 2,200 shares held by Mr. Wachtel's wife, 9,400 held by
Wachtel's wife's IRA and 10,000 held by Mr. Wachtel's wholly-owned corporation,
with respect to all of which shares Mr. Wachtel disclaims beneficial ownership.
Does not include stock options granted to Mr. Wachtel in February, 1996 to
purchase an aggregate of 200,000 shares of the Company's Class A Common Stock,
as described under "Option Agreements" below, none of which have yet vested. See
"Option Agreements" below, none of which have yet vested.
5
<PAGE> 7
SHAREHOLDER'S AGREEMENT
On November 7, 1995 the Company and Messrs. Small and Marfatia, at that
time a Vice President and Controller of the Company, entered into a
Shareholders' Agreement. Pursuant to such agreement, Mr. Marfatia has granted to
Mr. Small an irrevocable proxy to vote the 128,040 shares (60,000 shares as of
May 31, 1996 of the Company's Class B Stock owned by Mr. Marfatia as of the date
of such agreement, in Mr. Small's sole discretion. As shares are sold to the
public, they are released from this agreement and the number subject to its
terms declines.
INDEBTEDNESS OF MANAGEMENT
None of the persons listed above were indebted to the Company or any of
its subsidiaries since January 1, 1995.
ELECTION OF DIRECTORS
The Board of Directors proposes the three persons listed below be
elected directors at the Annual Meeting. All are incumbents, with the exception
of Mr. Todd Schlesinger. Messrs. Small and Schlesinger are candidates for
election by the Class B stockholders. Mohamad Al- Omari is a candidate for
election by the Class A stockholders. Unless a proxy shall specify otherwise, it
shall be voted for all directors designated for such class. Consequently,
proxies for Class A shares will be voted for Mohamad Al-Omari and Class B shares
for Messrs. Small and Schlesinger.
<TABLE>
<CAPTION>
Name Age Position
---- --- ---------
<S> <C> <C>
Walter Small 63 President, Treasurer and Director
Mohamad Al-Omari 37 Vice President
Todd Schlesinger 31 Vice President of Advanced Surface Engineering,
Inc.
</TABLE>
Walter Small has served as a principal executive officer and as a
Director of the Company since 1964 and has been President of the Company (except
for a portion of 1995 during which time Mr. Al-Omari filled that position since
1967.
Mohamad Al-Omari, Vice President of SPU, was Director of Operations for
Premiere Franchise Corporation, the predecessor of SPU, from 1992 through its
acquisition by SPU in 1993. Mr. Al-Omari also served as President of the Company
for a portion of 1995. He has been a food industry veteran for the last 15
years. From 1980 to 1985 he held various management positions with Krystals in
Chattanooga, Tennessee. From 1985 to 1987 he was Director of Operations for
Shape Shop, a Canadian chain of sports shops. In 1987 he was
6
<PAGE> 8
named Operations Manager for QSR, Inc. of Fort Lauderdale, Florida, a chain
which became Miami Subs. In 1990 he became a Master Franchisee for Miami Subs in
New York City. He joined Premier Franchise Corporation as Director of Operations
for Sir Pizza in 1992. He participated in the opening of numerous fast food
restaurants in the past 4 years. He is currently Vice President of Operation so
each of UFOC, Custom Carts & Trailers Inc. and SPU Unlimited, Inc. (all of which
are wholly owned subsidiaries of the Company.
Todd Schlesinger is the Vice President of Operations of Advanced
Surface Engineering, Inc. a wholly owned subsidiary of the Company ("ASE"),
having responsibility for all of the technical procedures concerning the then
coating process which the Company is developing and marketing in 1996.
The terms of office of all Directors of the Company are from the time
of election until the next Annual Meeting of Shareholders of the Company, as
provided in the Company's By-laws. All officers hold office at the pleasure of
the Board of Directors.
The Company has no standing audit, nominating or compensation
committees of the Board of Directors, or any Committees performing similar
functions. The Company held sixteen meetings of its board of directors in 1995,
at all of which all Directors were present in person or by telephone, except
that Mr. Wachtel was unable to attend one such meeting.
COMPLIANCE WITH SECTION 16 OF THE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission and the New York Stock Exchange initial
reports of ownership and reports of changes in ownership of Common Stock.
Directors, officers and greater than ten-percent stockholders are required by
SEC regulation to furnish the Company with copies of all Section 16(a) forms
they file. The Company believes that during the past two fiscal years all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with except that (1) as
a result of an administrative oversight and sickness, Form 3 required to be
filed by each of Ronald Berkley (now no longer a director) and Alan Wachtel,
upon their becoming directors of the Company were filed late and (2) because of
change in management which occurred in 1995 the Form 5 required to have been
filed for such year was also filed late.
EXECUTIVE COMPENSATION AND EMPLOYMENT AGREEMENTS
The following table sets forth, in summary form, the compensation paid
by the Company for the fiscal years ended December 31, 1995, 1994, and 1993 for
services rendered in all capacities to (a) the Company's Chief Executive Officer
and the other executive officers of the Company or its subsidiaries, servicing
as executive officers as of December 31, 1995; (b) the stock options granted to
such executives in 1995; and (3) exercise and year-end value
7
<PAGE> 9
information pertaining to stock options rights granted to such executives. No
stock appreciation rights were granted by the Company.
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
------------------- ----------------------
----------------------------------------------------------------
Name of Individual or Year Salary Bonus(2) Option
Number of Persons in Group (1) & other Awards (4)
compensation(3) (No. of Shares)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Walter Small 1995 $139,878 0(6) 0
President, Treasurer 1994 282,913(5) 0(6) 0
and a Director 1993 279,273(5) 0(6) 0
Chairman of SPU
Mohamad Al-Omari 1995 $ 70,000 25,000(2)(7) 0
Vice President--Operations of SPU 1994 69,615 20,563 (7) 0
1993 38,077 7,000 (7) 100,000(4)
Myrna Small 1995 $ 678 0 0
Vice President 1994 17,164(8) 0 0
1993 17,500 0 0
</TABLE>
(1) Reflects salary actually paid in the year indicated, even if a
portion of the amount paid in such year relates to salary earned in a prior
year.
(2) No bonuses of any type were granted or paid in or form 1995, 1994,
or 1993, except that Mr. Al-Omari received a bonus of $6,125 in 1994 and $25,000
in 1995.
(3) None of the executive officers listed received pre-requisites or
other personal benefits, securities or property that exceeded the lesser of
$50,000 or 10% of the salary for such officer if each year, except for the Stock
Options described in such table.
(4) Reflects Non-Qualified Stock Options granted to such officers under
Options granted to such officers under Option Agreements therewith, as described
below under "Option Agreements" and "Option Grants". The Company's Stockholders
also adopted an Incentive Option Plan at the Annual Meeting thereof on July 14,
1993 effective as of June 1, 1993, although no options have been granted
thereunder (See "Incentive Stock Option Plan" below).
(5) Excludes $17,500 paid by the Company to Myrna Small as compensation
for services rendered as a Vice president in each of 1994 and 1993.
(6) The Company owns a 1986 Mercedes 560 for the use of Mr. Small and
pays insurance, maintenance and all expenses related to such automobile. The
Company has allocated 10% ($845) of the annual cost of such car used by Mr.
Small as being for the personal use of Mr. Small for the year ended December 31,
1995.
(7) During 1993 Mr. Al-Omari received $7,000 towards compensation
earned or to be earned from the consulting agreement with "The Exhibition"
described below under "Employment and other Agreements", $14,438 thereunder in
1994 and $988 thereunder in 1995 which amount represents the balance due from
1994. This consulting agreement has expired. Mr. Al-Omari also received a bonus
of $6,125 in 1994 and $25,000 in 1995. Mr. Al-Omari also receives a
non-accountable expense allowance of $300 per month to be applied towards, or in
8
<PAGE> 10
lieu of, rental of an automobile for business purposes, which amount is not
included in this table. See "Employment and Other Agreements".
(8) Does not include premiums paid by the Company on insurance placed
for the Company by an insurance brokerage firm of which Myrna Small, a Vice
President and wife of Walter Small, is Chief Executive Officer and sole
shareholder in the amount of $12,003 in 1995, $11,134 in 1994 and $18,734 in
1993.
Employment and Other Agreements
In July, 1993, the Company entered into a new Employment Agreement with
Mr. Small to become effective upon the expiration of his previous agreement on
October 1, 1993. Such Agreement provides for an annual salary of $279,292.78
(based on his then effective salary), plus increases to reflect increases in the
cost of living index and an incentive bonus equal to 2% of the Company's pre-tax
profits after the end of any fiscal year in which the Company's pre-tax profits
exceed $1,000,000. Mr. Small's agreement expires on September 30, 2000. In
January 1995 Mr. Small voluntarily agreed to reduce his base salary during 1995
to $200,000 per annum; in March 1995, Mr. Small's salary was further voluntarily
reduced to $100,000.
SPU entered into an Employment Agreement with Mohamad Al-Omari, as of
May 1, 1993, pursuant to which the Company employed Mr.Al-Omari as Vice
President of Operations of SPU, for a salary of $5,000 per month, which was
increased to $5,833 as of January 2, 1994. Such Agreement entitles Mr. Al-Omari
to the use of an automobile for purposes of the Company's business; provided,
however, that the total cost thereof (including leasing or other payments) shall
not exceed $300 per month. Mr. Al-Omari's employment is on a month to month
basis, and can be terminated, without any additional compensation, either
without cause upon ninety days notice by either Mr. Al-Omari or the Company, or
for cause, as specified in such agreement (which, among other things, includes
cessation of the business of SPU). SPU also agreed to grant Mr. Al-Omari
additional compensation representing consulting fees with respect to the
transaction with "The Exhibition", which consulting arrangement has expired.
During 1995 Mr. Al-Omari received $9,188 representing the balance of consulting
fees from such arrangement in 1994, and a $25,000 bonus.
In January, 1996, ASE entered into an Employment Agreement with Dr.
Todd Schlesinger pursuant to which it employed Dr. Schlesinger as a Vice
President for a term of four years. Dr. Schlesinger will receive a salary of
$60,000 per annum. The Employment Agreement provides for the payment to the
employee, as conditional compensation, of 40% of ASE's annual net profit in
excess of $150,000.
Except with respect to the exercise of any applicable early termination
provision, none of such employment agreements provides for any additional
payments to be made to any such employee upon termination of his employment,
except for accrued salary and any incentive bonus that he would otherwise be
entitled to, pro-rated through the date of termination. Each of such agreements
provides that the Board of Directors of the Company may grant annual bonuses in
an amount the Board of Directors deems reasonable and appropriate. Each of such
Employees shall be entitled to participate in such health and medical benefit
programs of the
9
<PAGE> 11
company, and such vacation time, as may be established by the Board of Directors
of the Company from time to time. In the past, the Board of Directors, in making
bonus determinations, has generally considered the accomplishments and
responsibilities of such executives, as well as the revenues, profits and losses
of the Company, during such year. Except for the foregoing and as mentioned in
the foregoing paragraphs with regard to incentive bonuses, in the event that the
criteria for profitability referred to therein are met, the company has no
formal plan or criteria for the granting of bonuses. No bonuses were granted for
1995, other than $25,000 to Mohamad Al-Omari.
Although Myrna Small, a Vice President, has received an annual salary
of $17,500 per year, such salary was voluntarily waived in 1995, pursuant to a
resolution of the Board of Directors of the Company.
Until July, 1993, the Company had a policy of paying outside Directors
$250 for each meeting attended. In July, 1993, the Directors superseded such
policy, by voting that Mr. Gubin be compensation for his services as a
non-employee director, at a rate of $5,000 per year, which includes all meetings
and activities by Mr. Gubin as a Director. Mr. Gubin received a total of
approximately $2,500 in 1995 as a result of the foregoing, together with
reimbursement of certain expenses.
OPTION GRANTS IN 1993
No options were granted in 1995. In February, 1996, the Company granted
Alan Wachtel, a director of the Company, options to purchase up to an aggregate
of 200,000 shares of the Company's Class A Common Stock at a price of $.45 per
share. The options are exercisable on a cumulative basis with regard to 40,000
shares each at the end of each year for five years. The options are subject to
certain restrictions, in the event of liquidation and otherwise. The Company
also reduced the exercise price of the stock options which have not yet vested
previously granted to Mohamad Al-Omari from $.875 per share to $.45 per share.
10
<PAGE> 12
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
============================================
CLASS A STOCKHOLDERS
PROXY
============================================
Solicited by the Board of Directors
for the Annual Meeting of Stockholders
on July 2, 1996
The undersigned hereby appoints Myrna Small and Walter Small, or either
one of them, with power of substitution, as proxies and hereby authorizes them
to represent and to vote, as designated below, all shares of Class A Common
Stock of Universal Franchise Opportunities Corp. (the "Company") held of record
by the undersigned at an Annual Meeting of Stockholders to be held on July 2,
1996 and any adjournments thereof.
Name:____________________________________________________________
Address:_________________________________________________________
Number of Shares:________________________________________________
(a) For [ ] Against [ ] Approval of election to the Board of Directors of
Mohamad Al-Omari.
Without authority [ ] to vote for Mohamad Al-Omari as a Director.
(b) For [ ] Against [ ] Ratification of Goldman & Krinitz, CPA's P.C. as
independent accountants for the Company for 1996.
Without authority [ ] to vote for the ratification of Goldman & Krinitz,
CPA's P.C. as independent accountants for the Company
for 1996.
(c) In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the meeting and any adjournments
thereof.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATIONS IS MADE THEY WILL BE VOTED IN FAVOR OF
THE ABOVE ITEMS.
Dated:___________________, 1996
(Signature)_________________________________________
THIS PROXY AND BALLOT IS TO BE SIGNED AND
SUBMITTED BY CLASS A STOCKHOLDERS. CLASS A
STOCKHOLDERS MUST USE THE CLASS A PROXY.
Please sign proxy exactly as your name appears on the stock
certificate. When signing as attorney, executor, administrator, trustee, or
guardian, give full title as such. If signer is a corporation, sign full
corporate name by duly authorized officer. If shares are held in the name of two
or more persons, all should sign.
11
<PAGE> 13
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
============================================
CLASS B STOCKHOLDERS
PROXY
============================================
Solicited by the Board of Directors
for the Annual Meeting of Stockholders
on July 2, 1996
The undersigned hereby appoints Myrna Small and Mohamad Al-Omari, or
either one of them, with power of substitution, as proxies and hereby authorizes
them to represent and to vote, as designated below, all shares of Class B Common
Stock of Universal Franchise Opportunities Corp. (the "Company") held of record
by the undersigned at an Annual Meeting of Stockholders to be held on Tuesday,
July 2, 1996 and any adjournments thereof.
Name:____________________________________________________________
Address:_________________________________________________________
Number of Shares:________________________________________________
(a) For [ ] Against [ ] Approval of election to the Board of Directors of all
nominees listed below (except as marked to the
contrary below:
Walter Small
Todd Schlesinger
Withhold authority [ ] to vote for all nominees listed above.
Instructions: (To withhold authority for any individual nominee,
strike a line through that nominee's name in the list
above).
(b) For [ ] Against [ ] Ratification of Goldman & Krinitz, CPA's P.C. as
independent accountants for the Company for 1996.
Withhold authority [ ] to vote for the ratification of Goldman & Krinitz,
CPA's P.C. as independent accountants for the Company
for 1996.
(c) In their discretion, the Proxies are authorized to vote upon any other
business as may properly come before the meeting and any adjournments
thereof.
THE SHARES COVERED BY THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATIONS MADE. IF NO SPECIFICATIONS IS MADE THEY WILL BE VOTED IN FAVOR OF
THE ABOVE ITEMS.
Dated:___________________, 1996
(Signature)_________________________________________
THIS PROXY AND BALLOT IS TO BE SIGNED AND
SUBMITTED BY CLASS B STOCKHOLDERS. CLASS B
STOCKHOLDERS MUST USE THE CLASS B PROXY.
Please sign proxy exactly as your name appears on the stock
certificate. When signing as attorney, executor, administrator, trustee, or
guardian, give full title as such. If signer is a corporation, sign full
corporate name by duly authorized officer. If shares are held in the name of two
or more persons, all should sign.
12
<PAGE> 14
29th Annual Meeting
of Stockholders
July 22, 1996
---------------
AGENDA
---------------
Dear Stockholder:
Thank you for coming and welcome to the 29th Annual Meeting of
Universal Franchise Opportunities Corp.'s stockholders. We are delighted to see
and meet with you.
The agenda for today's meeting is on the next page. I invite you to
participate, particularly in the item set aside for stockholder questions and
discussion.
Your corporate officers and directors will be happy to assist you in
any way they can--before, during and after the meeting.
Walter Small
President and Treasurer
13
<PAGE> 15
ANNUAL MEETING
AGENDA ITEMS
* Introduction and corporate formalities
* Remarks by Walter Small, Chairman of the Board
* Matters to be voted upon :
1. To elect three directors of the Company.
2. To consider and act upon a proposal to ratify the selection by
the Board of Directors of Independent public accountants of
the Company for the year 1996.
3. To transact such other business as may properly come before
the Meeting.
* General Discussions
MEETING PROCEDURES
Stockholders who wish to ask questions or make remarks relevant to a
subject under discussion are invited to do so.
Speakers will be allowed two minutes in which to make their comments or
ask questions about the business.
in fairness to others you are asked to limit yourself to one or two
questions during the General Discussion period. If time permits, anyone wishing
to speak a second time may do so but only after all other waiting speakers have
had their turn.
VOTING
If you have sent in your proxy card your shares will be voted
accordingly. THEREFORE, PLEASE DO NOT SIGN A BALLOT AT THIS MEETING UNLESS YOU
WANT TO CHANGE THE WAY YOU VOTED ON YOUR PROXY.
Please sign the ballot exactly as your name appears on the stock
certificate. When signing as attorney, executor, administrator, trustee or
guardian, give your full title as such. If the signer is a corporation, set
forth the full corporate name and have it signed by a duly authorized officer of
the corporation. If the shares are held in the name of two or more persons, all
should sign.
14
<PAGE> 16
UFOC
UNIVERSAL FRANCHISE
OPPORTUNITIES CORP.
ANNUAL REPORT
FOR YEAR ENDED
DECEMBER 31, 1995
UNIVERSAL FRANCHISE
OPPORTUNITIES CORP.
<PAGE> 17
DEAR SHAREHOLDER
The results of the Company's operations for the year 1995 are to be
found on the following pages.
The Company sustained a net loss from continuing operations of $0.32
per share for the year ended December 31, 1995 compared to a net loss from
continuing operations of $0.74 per share in 1994.
The 1995 losses from continuing operations were principally
attributable to the failure of the Company's efforts to develop Company-owned
stores, problems related to the acquisition through investment and loans of a
50% ownership in Gourmet Carts, inc., and the legal fees incurred in various
lawsuits.
Donald Ryan was relieved of his duties as President of SP Unlimited,
Inc., in early-1995 and proceeded to sue the Company for wrongful termination. I
am pleased to announce that, subject to appeal, the Company prevailed in this
lawsuit.
Despite the fact that the Company sustained a substantial loss in the
pizza cart business through its investment in Gourmet Carts, Inc., the Board of
Directors was still intrigued by the possibilities of the mobile cart business
and developed and produced a prototype of a new mobile cart. This new cart was
very well received early this year, at both the Las Vegas Pizza Show and the
International Franchise Show in Washington, D.C. The Company has decided to
manufacture these carts through a wholly owned subsidiary, Custom Carts and
Trailers, Inc., and intends to patent the oven and pizza cart. We believe that
the portable oven we developed with the cooperation of two independent engineers
will not only help to sell our pizza carts and store franchises, but will also
be able to be marketed successfully as a stand alone product.
In January, 1996, the Board of Directors decided to enter the ceramic
coating business and established another wholly owned subsidiary for this
purpose, Advanced Surface Engineering, Inc. Dr. Todd Schlesinger, step[son of
the Company's President, developed a nanocomposite self-lubricating ceramic
coating which served as the subject matter of his doctorate and was further
perfected during the past four years when he was working in the industry. We
have had the good fortune to obtain the pending patent rights to this coating
together with five other coatings that Dr. Schlesinger has developed and we are
in the process of obtaining the use of the equipment needed to commercially
produce and market these coatings. This technology offers improvements to metal,
ceramic, polymer/plastic, glass or composite components through hard
self-lubricating wear resistant coatings with chemical and corrosion resistance
as well as heat resistance. The coatings do not harm or change the dimensions of
the product to be coated. Based upon our preliminary investigations, we believe
this process could have widespread applications.
2
<PAGE> 18
Despite the continuing losses, the Company still retains significant
liquid resources. Current assets at December 31, 1995 were $2,100,900, while
current liabilities were only $158,379. Cash U.S. Treasury Securities,
marketable securities, and long-term certificates of deposit totalled $2,643,222
at December 31, 1995.
Until March 10, 1995, the Company's Class "A" Common Stock was
sporadically traded over the counter on the NASDAQ Small-Cap Market under the
symbol MENU. However, under NASDAQ rules, there is a minimum price requirement.
The Company's quoted bid and asked prices were unable to maintain the minimum
price and its stock was de-listed from NASDAQ on March 10, 1995. Currently, the
prices for Class "A" Common Stock can be found on the "pink sheets" on the Over
the Counter market. There is no established public trading market for the
Company's Class "B" Stock. The Shareholders of Class "B" Common Stock may
convert their stock into Class "A" Common Stock on a share for share basis.
The Company has two classes of Common Stock outstanding, Class A Stock
and Class B Stock. Each share of Class B Stock is convertible at any time, at
the option of the holder thereof, into one share of Class A Stock, pursuant to
the procedures set forth in the Company's Certificate of Incorporation. The
Company is also authorized to issue one or more series of Preferred Stock, none
of which has been designated or issued.
The high and low bid quotations for the Company's Class "A" Common
Stock for 1994 and 1995 are as follows:
<TABLE>
<CAPTION>
High Low
<S> <C> <C>
1994
First Quarter 1 5/8 1 1/16
Second Quarter 1 5/16 1
Third Quarter 1 1/16 1/2
Fourth Quarter 5/8 3/8
1995
First Quarter 4/8 1/4
Second Quarter .42 1/4
Third Quarter 5/8 5/16
Fourth Quarter 5/16 5/16
</TABLE>
Such prices represent NASDAQ quotations between dealers without
adjustments for retail markups or commissions, and may not represent actual
transactions. There are no available quotes for Class "B" stock during 1995.
The Company has not paid any dividend in the year 1995 and does not
contemplate paying dividend on any of its stock in the foreseeable future.
3
<PAGE> 19
As of June 7, 1996,the Company had 297 record holders of Class A Common
Stock and 137 record holders of Class B Common Stock.
The problems encountered by the Company during 1995 and 1994 have had a
deleterious effect upon the Company's stock price and its overall financial
position. However, we are hopeful the direction we have taken will re-focus our
commitment and return us to growth and profitability in the years ahead.
President
Walter Small
4
<PAGE> 20
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information which
management believes is relevant to an assessment and understanding of the
Company's results of operations and financial conditions. This discussion should
be read in conjunction with the consolidated financial statements and notes
thereto appearing elsewhere herein.
Discontinued Operations
The Company's wholly-owned subsidiary, CPU (NY) discontinued classed
and ceased New York school operations effective December 31, 1989. Another
wholly-owned subsidiary, Commercial Programming Unlimited of Philadelphia, Inc.
ceased operations at its Philadelphia school on October 15, 1990.
The Company had purchased mainframe and peripheral computer equipment
which had been leased to various corporations. The Company received revenues
therefrom until August, 1993 at which time the Company effectively ceased its
computer leasing business segment.
The leasing and subletting of the facility at the former New York
School Operation had been treated as a separate business segment. As a result of
the surrender of the New York premises to the landlord, and the granting by the
landlord of a release to CPU (NY) of all remaining obligations under the lease,
the Company effectively discontinued its premises and equipment leasing business
segment at its New York facility in May, 1995.
As at December 31, 1995, the Company's only remaining business segment
is the food service and franchising business commenced in April, 1993.
Continuing Operations
The 1995 losses were principally attributable to the failure of the
Company's efforts to develop Company-owned stores, problems related to the
acquisition through investment and loans of a 50% ownership in Gourmet Carts,
Inc., and the legal fees incurred in the various law suits. The 1995 results of
operation are discussed below (see Discussion of Results of Continuing
Operations-1995 compared to 1994).
Despite the continuing losses, the Company still retains significant
liquid resources. Current assets at December 31, 1995 were $2,100,900 while
current liabilities were only $158,379. Cash, U.S. Treasury Securities,
marketable securities, and long-term certificates of deposit totalled $2,643,222
at December 31, 1995.
The Company, through its subsidiaries, intends to continue to seek to
develop franchised stores under the names of Sir Pizza and Sir Subs and Pizza
throughout Florida, the United States and overseas.
5
<PAGE> 21
As a result of the interest generated by the Company's mobile pizza
cart, with a self-contained power source, at the Pizza Trade Show in Las Vegas
in late February, 1996, and at the International Trade Show convention in
Washington, D.C. in early March, 1996 the Board of Directors decided that the
Company should open its own cart manufacturing plant; the Company is currently
in the process of manufacturing the carts at its Florida facilities. The Company
intends to produce and market the pizza carts through a newly organized
wholly-owned subsidiary, Custom Carts.
In 1996, the Company decided to enter into a new business segment: the
development, marketing and production of nanocomposite coatings. ASE was formed
to operate this new line of business. Dr. Todd Schlesinger, stepson of the
Company's President and Chairman of the Board, became Vice-President of
Operations of ASE. Dr. Schlesinger was able to obtain from his previous employer
the patent rights to a self-lubricating coating which he had developed while
working for his doctorate and later for his employer. In addition to this
self-lubricating coating, Dr. Schlesinger has also developed five other
proprietary coatings for use by ASE. The Company intends to market these
coatings as soon as the patent and trademark registrations have been completed.
Discussion of Results of Continuing Operations - 1995 compared to 1994
In 1995, the Company sustained a gross profit(loss) on the one
remaining restaurant of ($61,393) compared to a gross profit (loss) of
($233,719) in 1994. Two of the Company-owned restaurants were closed in July,
1994. Other income from franchise fees, royalties and consulting fees aggregated
$94,054 for 1995, compared to $138,509 for 1994. Such decrease was primarily
attributable to the discontinuance in 1995 of consulting fees received in 1994
from the Company's 50% owned affiliated company, Gourmet Carts, Inc.
In July, 1994, the Company closed the two Margate and Oakland Park,
Florida restaurants and abandoned plans to build any additional restaurants. The
obligations for future occupancy costs and related expenses and the projected
loss on the improvements and equipment aggregated $567,226, which was reflected
as a loss in 1994. This provisions was increased by $11,626 in 1995 to reflect
the loss on sale of land at a proposed site in Palm Beach, Florida offset by
revisions to the aforementioned estimates.
In April, 1994, a wholly-owned subsidiary of the Company entered into
an agreement with the investors of a portable pizza oven to form a corporation,
Gourmet Carts, Inc. to produce and market the oven and related carts. The
Company's subsidiary acquired a 50% interest in Gourmet Carts, Inc. Gourmet
Carts, Inc. sustained an operating loss of $361,000 in 1994. As a result of
these losses, litigation with the investors, and other matters pertaining to the
oven, the Company in 1994 wrote off its investment in and advanced to Gourmet
Carts, Inc., sustaining a loss of $441,993.
General and administrative expenses decreased in 1995 by 4.6% over
1994. This decrease is primarily the result of the decrease in general operating
expenses due to the
6
<PAGE> 22
downsizing of the operations, offset partially by the increase over the 1994
period in legal fees incurred in connection with various litigation involving
Donald Ryan, SP Unlimited, Inc. and Gourmet Carts, Inc.
Depreciation and amortization decreased by $45,003 in 1995 over 1994
due to the closing of two restaurants in 1994.
Interest income declined from $215,333 in 1994 to $174,692 in 1995
primarily due to a decrease in available liquid resources.
Interest expense for 1995 decreased by $28,041 compared to 1994, since
the prior year was burdened by interest incurred in connection with a settlement
of prior tax liabilities.
A majority of the long-term certificates of deposit were redeemed
during 1995 and the proceeds were invested in U.S. Treasury securities. Charges
of $42,890 were incurred during the year as a result of such early redemptions.
The tax provisions for 1995 and 1994 reflect state and local taxes for
the current years. In 1995, a settlement of a prior tax obligation resulted in
$34,129 decrease in a previously recorded liability.
As a result of the foregoing, the after tax loss from continuing
operations was $890,621 compared to a loss of $2,074,333 in 1994.
Discussion of Results of Continuing Operations - 1994 compared to 1993
In 1994, the Company sustained a gross profit (loss) on the two
restaurant operations of ($233,719) compared to a gross profit (loss) of
($80,988) in 1993. Two of the Company-owned restaurants were closed in July
1994. Other income from franchise fees, royalties and consulting fees aggregated
$138,509 for 1994, compared to $98,761 for 1993. Such increase was primarily
attributable to consulting fees receiving from the Company's 50% owned
affiliated company, Gourmet Carts, Inc.
There were no computer equipment rentals in 1994, as a result of the
expiration in August 1993 of the Company's only remaining computer lease. The
equipment was sold in August 1993 and the Company realized a gain of $127,568 on
the disposition of the equipment.
In July 1994, the Company closed the two Margate and Oakland Park,
Florida restaurants and abandoned plans to build any additional restaurants. The
obligation for future occupancy costs and related expenses and the projected
loss on the improvements and equipment aggregated $567,226, which was reflected
in 1994.
In April 1994, a wholly-owned subsidiary of the Company entered into an
agreement with the inventors of a portable pizza oven to form a corporation,
Gourmet Carts, Inc. to produce and
7
<PAGE> 23
market the oven and related carts. The Company's subsidiary acquired a 50%
interest in Gourmet Carts, Inc. Gourmet Carts, Inc. sustained an operating loss
of $361,000 in 1994. As a result of these losses, litigation with the inventors,
and other matters pertaining to the oven, the Company in 1994 wrote off its
investment in and advances to Gourmet Carts, Inc., sustaining a loss of
$441,993.
General and administrative expenses increased in 1994 by 8.7% over
1993. This increase is primarily the result of the added expenses attributable
to the new restaurant and franchising business being conducted in Florida since
April 30, 1993.
Depreciation and amortization increased by $33,156 in 1994 over 1993
due to the restaurant and franchising business operating for a full year as
opposed to only eight months in 1993.
Interest income declined from $277,343 in 1993 to $215,333 in 1994
primarily due to a decrease in available cash balances offset partially by an
increase in short-term interest rates.
The tax provision for 1994 reflects state and local taxes for the
current year.
As a result of the foregoing, the after tax loss from operations was
$2,130,496 compared to a loss of $297,013 in 1993.
Liquidity and Capital Resources
Cash increased during 1995 by $226,428 to $992,189. The net increase in
cash is principally attributed to cash provided by investing activities
($1,280,669) offset by cash used by operating activities $1,035,647).
The Company continues to invest its liquid assets in interest-bearing
accounts and instruments (primarily, U.S. Treasury Securities and certificates
of deposit with federally-insured banks). However, until the Sir Pizza
operations generate profits, or the Company finds other business opportunities
to generate profits, the Company will be unable to report any material profits
on its financial statements.
Inflation
Inflationary factors in recent years have not had a significant effect
on the Company's operations. As long as the Company continues to hold U.S.
Treasury Securities, certificates of deposit and other interest bearing
instruments, changes in interest rates will have a significant impact on such
interest income.
8
<PAGE> 24
SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1991 1992 1993 1994 1995
<S> <C> <C> <C> <C> <C>
SELECTED CONSOLIDATED STATEMENT OF
INCOME DATA:
REVENUES FROM CONTINUING OPERATIONS
EQUIPMENT RENTAL REVENUES $ 568,005 $ 504,000 $ 336,000 $ - $ -
RESTAURANT SALES - - 286,934 698,222 365,337
FRANCHISE FEES - - 55,802 66,166 60,347
OTHER - - 42,959 82,354 33,707
------------------------------------------------------------------------------
TOTAL REVENUES - CONTINUING OPERATIONS 568,005 504,000 721,695 836,731 459,391
------------------------------------------------------------------------------
OPERATING PROFIT (LOSS) - CONTINUING OPERATIONS (1,329,260) (1,382,675) (889,218) (1,808,906) (1,032,159)
INTEREST INCOME 459,324 354,789 277,343 216,333 174,692
INTEREST (EXPENSE) (2,886) - (7,142) (33,777) (5,736)
LOSS ON INVESTMENT IN AND ADVANCES
TO AFFILIATED COMPANY - - - (441,993) -
INCOME (LOSS) FROM CONTINUING OPERATIONS (521,796) (1,097,189) (313,866) (2,074,333) (890,621)
INCOME (LOSS) FROM DISCONTINUED OPERATIONS (4,084) 3,419 16,853 (56,163) (241,499)
NET INCOME (LOSS) $ (525,880) $(1,093,770) $ (297,013) $(2,130,496) $(1,132,120)
==============================================================================
PER SHARE DATA
INCOME (LOSS) CONTINUING OPERATIONS ($0.19) ($0.39) ($0.11) ($0.74) ($0.32)
NET INCOME (LOSS) DISCONTINUED OPERATIONS ($0.00) $0.00 $0.00 ($0.02) ($0.08)
NET INCOME (LOSS) ($0.19) ($0.39) ($0.11) ($0.76) ($0.40)
==============================================================================
SELECTED CONSOLIDATED BALANCE SHEET
DATA:
WORKING CAPITAL $ 6,608,669 $ 6,364,670 $3,048,201 $ 644,437 $ 1,942,421
PROPERTY AND EQUIPMENT-NET 1,383,384 269,664 906,284 441,766 124,448
TOTAL ASSETS 8,110,156 6,818,892 6,664,828 4,495,335 3,268,376
LONG-TERM DEBT - - 80,098 61,500 41,363
STOCKHOLDERS' EQUITY $ 7,712,032 $ 6,618,262 $6,321,249 $ 4,190,763 $ 3,068,633
==============================================================================
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 2,812,980 2,812,980 2,812,980 2,812,980 2,812,980
SHARES OUTSTANDING END OF PERIOD 2,812,980 2,812,980 2,812,980 2,812,980 2,812,980
</TABLE>
<PAGE> 25
INDEPENDENT AUDITOR'S OPINION
Board of Directors
Universal Franchise Opportunities Corp.
We have audited the accompanying consolidated balance sheet of
Universal Franchise Opportunities Corp. and its wholly-owned subsidiaries, as at
December 31, 1995 and the related consolidated statements of income, retained
earnings, stockholders' equity and cash flows for each of the two years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Universal
Franchise Opportunities Corp. and its wholly-owned subsidiaries as at December
31, 1995 and the results of their operations and their cash flows for each of
the two years then ended in conformity with generally accepted accounting
principles.
New York, New York
February 16, 1996
Goldman & Krinitz, CPA's, P.C.
Certified Public Accountants
<PAGE> 26
UNIVERSAL FRANCHISE OPPORTUNITIES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT
DECEMBER 31, 1995
<TABLE>
<S> <C>
Current Assets
Cash (Notes 1(B) and 1(C)) $ 992,189
U.S. Treasury Securities 992,886
Marketable securities, at cost,
which approximates market value 1,672
Inventory (Note 1(F)) 8,477
Prepaid income taxes 6,153
Prepaid expenses 48,931
Other receivables 50,492
----------
Total Current Assets 2,100,800
Property and Equipment (Notes 1(D) and 1(G))
Restaurant improvements and equipment 157,807
Vehicular and office equipment 74,936
----------
232,743
Less: Accumulated depreciation and
amortization 108,295
----------
Total Property and Equipment 124,448
----------
Other Assets
Certificates of deposit, (Notes 1(B) and 1(C)) 656,475
Franchise rights, net of amortization
(Notes 1(D) and (H)) 292,264
Asset acquisition costs, net of amortization 13,262
Restaurant and vehicular equipment held for
resale (Note 4) 40,880
Security deposits 30,246
----------
Total Other Assets 1,033,127
----------
Total Assets $3,258,375
==========
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 27
UNIVERSAL FRANCHISE OPPORTUNITIES CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
AS AT
DECEMBER 31, 1995
<TABLE>
<S> <C>
Current Liabilities
Current portion of long-term debt (Note 3) $ 20,139
Accounts payable 118,240
Deferred income (Note 1(I)) 20,000
----------
Total Current Liabilities 158,379
Long-term debt, less current portion
above (Note 3) 41,363
----------
Total Liabilities 199,742
----------
Commitments and Contingencies (Note 8)
Stockholders' Equity (Note 9)
Preferred stock, par value $.10
per share - authorized 100
shares - no shares issued and
outstanding -
Common stock, Class A par value,
$.025 per share - authorized
5,000,000 shares - 2,081,190
shares issued and outstanding 52,030
Common stock, Class B, par value,
$.025 per share - authorized
2,000,000 shares - 731,790
shares issued and outstanding 18,294
Additional paid in capital 3,356,135
Retained earnings (deficit) (367,826)
----------
Total Stockholders' Equity 3,058,633
----------
Total Liabilities and
Stockholders' Equity $3,258,375
==========
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 28
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the years ended December 31,
--------------------------------
1994 1995
---- ----
<S> <C> <C>
Operating Revenues
(excluding discontinued operations-Note 2)
Restaurant sales $ 698,222 $ 365,337
Franchise fees 56,155 60,347
Consulting fees - franchisees 16,661 33,413
Consulting fees - affiliated company 64,598 --
Other 1,095 294
----------- -----------
836,731 459,391
----------- -----------
Expenses (excluding discontinued operations Note 2)
General and administrative expense 1,046,157 997,884
Restaurant cost of sales 931,941 426,730
Depreciation and amortization -
restaurant improvements and
equipment 64,188 17,660
Amortization - franchise rights 23,700 23,700
Depreciation and amortization -
other 12,425 13,950
Provision for loss on store closings
(Note 4) 567,226 11,626
----------- -----------
2,645,637 1,491,550
----------- -----------
Operating profit (loss) (1,808,906) (1,032,159)
----------- -----------
Other Income (Expense)
Interest income 215,333 174,692
Interest expense (33,777) (5,736)
Charges on redemption of
certificates of deposit -- (42,890)
Provision for doubtful accounts -- (15,399)
Loss on investment in and advances to
Gourmet Carts, Inc., an affili-
ated company (Note 5) (441,993) --
----------- -----------
(260,437) 110,667
----------- -----------
Loss before income and franchise
taxes (excluding discontinued operations) (2,069,343) (921,492)
Provision for income and franchise
taxes (Notes 1(E) and 6) 4,990 (30,871)
----------- -----------
Income (loss) from continuing operations (2,074,333) (890,621)
Income (loss) from discontinued operations,
net of income tax provisions of -0- (56,163) (241,499)
----------- -----------
Net income (loss) ($2,130,496) ($1,132,120)
=========== ===========
Per Share of Common Stock (Note 10)
Income (loss) from continuing operations ($ 0.74) ($ 0.32)
=========== ===========
Income (loss) from discontinued operations ($ 0.02) ($ 0.08)
=========== ===========
Net Income (loss) ($ 0.76) ($ 0.40)
=========== ===========
Average Common Shares Outstanding 2,812,980 2,812,980
=========== ===========
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 29
<TABLE>
<CAPTION>
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31,
--------------------------------
1994 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net income (loss) ($ 2,130,496) ($1,132,120)
Adjustments to reconcile
net income to net cash (used in) provided
by Operating Activities
Depreciation and amortization 164,808 66,999
Loss on abandonment of leasehold - 155,244
Amortization of discount on
U.S. Treasury securities - ( 59,466)
Provision for loss on investments in and
advances to Gourmet Carts, Inc., an
affiliated company 441,993 -
Provision for writedown of assets in
connection with store closings 476,025 13,909
Changes in certain current assets
and liabilities
Inventory 7,980 ( 3,944)
Prepaid income taxes 1,910 7,409
Prepaid expenses 9,378 ( 36,262)
Other receivables 91,431 38,830
Accounts payable 19,592 ( 54,791)
Income taxes payable 3,942 ( 31,455)
Deferred income 10,000 -
---------- -----------
Net Cash Provided (Used) by Operating
Activities ( 903,437) ( 1,035,647)
----------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of long-term certificates of deposit ( 967,837) -
Purchase of U.S. Treasury Securities - ( 1,911,075)
Maturity of U.S. Treasury Securities - 977,655
Redemption of certificates of deposit 293,000 2,095,726
Purchase of property, equipment and
construction in progress ( 158,920) ( 28,762)
Sale of restaurant equipment and land - 148,421
Investment in and advances to Gourmet
Carts, Inc., an affiliated company ( 441,993) -
Decrease (increase) in security
deposits ( 431) ( 1,296)
Increase (decrease) in tenants security
deposits payable ( 55,458) -
----------- ----------
Net Cash Provided (Used) by Investing
Activities ( 1,331,639) 1,280,669
----------- ----------
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 30
<TABLE>
<CAPTION>
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
For the years ended December 31,
--------------------------------
1994 1995
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES:
<S> <C> <C>
Reduction of long-term debt ($ 17,173) ($ 18,594)
Due to officer 150,000 -
Repayment of loan to officer ( 150,000) -
----------- ----------
Net Cash Provided (Used) by
Financing Activities ( 17,173) ( 18,594)
----------- ----------
Net Increase (Decrease) in Cash
and Certificates of Deposits ( 2,252,249) 226,428
Cash and Certificates of Deposit
at Beginning of Year 3,018,010 765,761
----------- ----------
Cash and Certificates of Deposit
at End of Year $ 765,761 $ 992,189
=========== ==========
Supplemental Cash Flow Information
- ----------------------------------
Interest paid $ 33,777 $ 5,736
Income taxes paid (refunded) ($ 2,243) ($ 6,634)
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 31
<TABLE>
<CAPTION>
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
For the years ended December 31,
--------------------------------
1994 1995
---- ----
<S> <C> <C>
Beginning of year $ 2,894,790 $ 764,294
Consolidated net income (loss) for year ( 2,130,496) ( 1,132,120)
----------- -----------
End of year $ 764,294 ($ 367,826)
=========== ===========
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 32
<TABLE>
<CAPTION>
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Capital Stock Additional
Number of Paid in Retained
Shares Amount Capital Earnings Total
----------- -------- ------- -------- -----
<S> <C> <C> <C> <C> <C>
Balance - January
1, 1994 2,812,980 $ 70,324 $ 3,356,135 $ 2,894,790 $ 6,321,249
Net Income (Loss) -
1994 ( 2,130,496) ( 2,130,496)
----------- -------- ---------- ---------- -----------
Balance - December
31, 1994 2,812,980 70,324 3,356,135 764,294 4,190,753
Net Income (Loss) -
1995 ( 1,132,120) ( 1,132,120)
----------- -------- ---------- ---------- -----------
Balance - December
31, 1995 2,812,980 $ 70,324 $ 3,356,135 ($ 367,826) $ 3,058,633
----------- --------- ----------- ----------- -----------
</TABLE>
The accompanying notes to the financial statements are integral parts of this
report and should be read in conjunction herewith.
<PAGE> 33
CORPORATE INFORMATION
Directors
Walter Small Chairman of the Board, President and
Treasurer of the Company; Chairman of SPU
Unlimited, Inc.
Mohamad Al-Omari Vice President-Operations of SP Unlimited,
Inc., Universal Franchise Operations, Inc.
and Custom Carts & Trailers, Inc.
Alan Wachtel President of Wachtel Mechanical Devices
Corp. (an engineering company).
Transfer Agent and Continental Stock Transfer & Trust Co.
Registrar 2 Broadway
New York, New York 10004
Legal Counsel Sierchio & Albert, P.C.
41 East 57th Street, Penthouse A
New York, New York 10022
Independent Auditors Goldman & Krinitz, CPA's, P.C.
425 Madison Avenue
New York, New York 10017
Annual Meeting
The Annual Meeting of Shareholders will be
held on July 2, 1996 at 9:30 a.m. at
1500 West Cypress creek Rd., Suite 512
Ft. Lauderdale, FL 33309
UNIVERSAL FRANCHISE OPPORTUNITIES CORP.
1500 West Cypress Creek Rd., Suite 512
Ft. Lauderdale, FL 33309
