FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Fiscal Year Ended January 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-12145
AMARILLO MESQUITE GRILL, INC.
(formerly Maverick Restaurant Corporation)
(Exact name of Registrant as specified in its charter)
Kansas 48-0936946
(State of Incorporation) (IRS Employer Identification No.)
302 North Rock Road, Suite 200
Wichita, Kansas 67206
(Principal executive offices, including zip code)
Registrant's telephone number including area code: (316) 685-7286
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock $0.01 Par Value
Indicate by check mark whether the Registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve (12) months (or such shorter period that the
Registrant was required to file such reports), and (ii) has been subject to
such filing requirements for the past ninety (90) days.
Yes X No ___
Insert by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
As of April 1, 2000, 8,241,095 common shares (not including 60,000 shares held
as treasury stock) were outstanding, and the aggregate market value of the
common shares (based upon the closing price of these shares ($.88) as of such
date on the OTC Bulletin Board) of Amarillo Mesquite Grill, Inc. held by
non-affiliates was approximately $2,424,810 (For purposes of this valuation
"affiliates" are the officers, directors and 5% shareholders of the Company.)
DOCUMENTS INCORPORATED BY REFERENCE:
Proxy Statement for the fiscal year ended January 30, 2000
(Items 10, 11, 12 and 13 of PART III)
<PAGE>
AMARILLO MESQUITE GRILL, INC.
Annual Report on Form 10-K
For the Fiscal Year Ended January 30, 2000
PART I. PAGE
Item 1. Business 1
Item 2. Properties 5
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 7
Item 6. Selected Financial Data 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
12
Item 8. Financial Statements and Supplementary Data 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 12
PART III.
Item 10. Directors and Executive Officers of the Registrant 13
Item 11. Executive Compensation 13
Item 12. Security Ownership of Certain Beneficial Owners and
Management 13
Item 13. Certain Relationships and Related Transactions 13
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 14
Signatures 16
Financial Statements F-1
<PAGE>
PART I
Item 1. BUSINESS
A) General Development of Business.
Amarillo Mesquite Grill, Inc. (the "Company") operates
fourteen Amarillo Mesquite Grill restaurants in Kansas,
Oklahoma, Missouri and Arkansas. Amarillo Mesquite
Grill restaurants offer a casual dining environment
serving prime rib, steaks, chicken and seafood grilled
over mesquite wood. The Company intends to focus its
business activities on the development of additional
Amarillo Mesquite Grill restaurants.
On June 17, 1996, the Company acquired the assets of the
Amarillo Mesquite Grill restaurant chain from Homestead
West, Inc. and Amagril, Inc. for 1,000,000 shares of the
Company's restricted common stock and cash in the amount
of $1,500,000. The Amarillo Mesquite Grill restaurant
chain consisted of four restaurants at the date of
purchase: two located in Wichita, Kansas, one located in
Hutchinson, Kansas and one located in Overland Park,
Kansas. Since the date of this acquisition, the Company
has converted seven of its Cotton Patch Cafe restaurants
to Amarillo Mesquite Grill restaurants, converted three
other buildings to Amarillo Mesquite Grill restaurants,
constructed a prototype Amarillo Mesquite Grill
restaurant and closed one location upon termination of
the lease term.
During fiscal 2000, the Company opened new restaurants
in Topeka, Kansas and McAlester, Oklahoma.
B) Financial Information About Industry Segments.
Not Applicable
<PAGE>
C) Narrative Description of Business.
i) Principal Products and Services.
Amarillo Mesquite Grill. Amarillo Mesquite Grill restaurants
are open for lunch and dinner. Amarillo Mesquite Grill is a
moderately priced casual dining restaurant that specializes in
aged prime rib and steaks, along with barbecued ribs, chicken
and seafood, all uniquely grilled over an open flame of
mesquite wood. Appetizers and desserts, as well as a
children's menu with lower-priced selections, are also
available.
The Amarillo Mesquite Grill concept, founded in 1982, is
designed to appeal to a broad spectrum of casual dining
customers who are seeking a consistent and high-quality dining
experience attentively served in a distinctive, relaxed
atmosphere for a moderate price. Amarillo Mesquite Grill
provides a casual and comfortable environment and well-
trained, enthusiastic service to its customers.
The Company believes that the Amarillo Mesquite Grill
restaurant concept and menu are designed to attract loyal
clientele who return with a high degree of frequency at both
lunch and dinner. The decor of the Company's restaurants
features a variety of western and country artifacts, giving it
a relaxed friendly feel. Amarillo Mesquite Grill is further
distinguished by requiring from its meat purveyors high-
quality, USDA choice or better graded steaks, many of which
are hand-cut fresh daily on site. High-quality ingredients
are used for all menu items. All meals are served in generous
portions by a well-trained friendly staff.
The Amarillo Mesquite Grill restaurant is a free-standing
building. The Company owns the furniture, fixtures and
equipment used in its restaurants. Each restaurant serves
alcoholic beverages and features a bar area located adjacent
to the dining room primarily to accommodate customers waiting
for tables.
The average cost of a meal at the Company's Amarillo Mesquite
Grill restaurant is approximately $7.00 for lunch and $13.00
for dinner. Alcoholic beverage service accounts for
approximately 8% of the Company's net sales at each
restaurant. The Company's restaurants are open seven days a
week.
<PAGE>
The following table sets forth the location and
opening or acquisition date of the Company's
Amarillo Mesquite Grill restaurants currently in
operation:
<TABLE>
<CAPTION>
DATE OPENED
LOCATION OR PURCHASED
<S> <C>
Wichita, Kansas #1 June 17, 1996
Wichita, Kansas #2 June 17, 1996
Hutchinson, Kansas June 17, 1996
Ponca City, Oklahoma December 9, 1996
Rogers, Arkansas February 17, 1997
Salina, Kansas April 21, 1997
Springfield, Missouri June 23, 1997
Enid, Oklahoma August 1, 1997
Muskogee, Oklahoma November 12, 1997
Wichita, Kansas #3 January 14, 1998
Manhattan, Kansas February 2, 1998
Bartlesville, Oklahoma July 27, 1998
McAlester, Oklahoma September 5, 1999
Topeka, Kansas December 3, 1999
</TABLE>
The Company seeks to locate its restaurants in
smaller cities and suburban areas where they fill
a significant market niche. Amarillo Mesquite
Grill restaurants are distinguished from other
family-oriented steakhouses in these smaller
markets (many of which are cafeteria-style) by
their full table service and attentive wait
staff, full bar service, entertaining atmosphere,
distinctive decor and consistently high-quality
food. The Company distinguishes its restaurants
from other full-service restaurants through their
family orientation which is accomplished by
offering lower priced food (such as hamburgers
and sandwiches) at dinner, placing less emphasis
on alcohol sales as compared to most competitors
and offering features designed to appeal to
children.
ii) Developing Products and Industry Segments.
Not Applicable
<PAGE>
iii) Sources and Availability of Raw Materials.
The Company's food costs are closely tied to market
conditions. The Company attempts to maintain its cost of
sales percentages by refining cost controls, directing
marketing activities to re-emphasize low-cost menu items, and
selectively increasing menu prices. The Company monitors the
cost of ingredients and attempts to adjust prices wherever
possible to maintain desired margins.
iv) Trademarks.
The Company acquired two service marks registered with the
United States Patent and Trademark Office for the words
"Amarillo Grill." Both of these registrations expire in
January 2005, however, they are subject to renewal. The
Company has also obtained from the United States Patent and
Trademark Office a registration for the words "Amarillo
Mesquite Grill" which expires in May 2009. The Company
considers all of these service marks to contribute
significantly to its operations.
v) Seasonality.
The Company experiences increased sales during holiday periods
in its restaurants.
vi) Practices Relating to Working Capital.
See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
vii) Dependence upon a Single Customer.
Not Applicable
viii) Backlog Orders.
Not Applicable
ix) Business Subject to Renegotiation at Election of Government.
Not Applicable
<PAGE>
x) Competition.
The Company competes with mid-priced, full service restaurants
primarily on the basis of quality of food and service,
ambiance, location and price-value relationship. The Company
also competes with a number of other restaurants within its
markets, including both locally owned restaurants and regional
or national chains. The Company believes that its mesquite
grill concept, attractive price-value relationship and quality
of food and service enable it to differentiate itself from its
competitors. While the Company believes that its mesquite
grill restaurants are distinctive in design and operating
concept, it is aware of restaurants that operate with similar
concepts. Many of the Company's competitors are well-
established in the mid-priced dining segment and have
substantially greater financial, marketing and other resources
than the Company. The Company believes that its ability to
compete effectively will continue to depend upon its ability
to offer high quality, moderately priced food in a full
service, distinctive dining environment.
xi) Research and Development.
Not Applicable
xii) Compliance with Environmental Regulation.
Not Applicable
xiii) Employees.
As of April 1, 2000, the Company employed approximately 660
persons, including 10 administrative, 60 managerial, 250 full-
time and 340 part-time restaurant employees.
D) Financial Information About Foreign and Domestic Operations and Export
Sales.
Not Applicable
Item 2. PROPERTIES
The Company's principal executive office is located at 302 North Rock Road,
Suite 200, Wichita, Kansas 67206. This office space is leased from an
unrelated third party.
<PAGE>
The land and buildings for the Company's fourteen restaurants are leased
pursuant to long-term leases with unrelated third parties. The initial lease
terms are for a period of three to twenty years with provisions for two
additional five year extensions. The Company pays minimum annual rentals for
the land and building of each restaurant in amounts ranging from approximately
$33,000 to $129,128. In some cases, the rental rates escalate in accordance
with sales volume in excess of specified amounts. Each lease obligates the
Company to pay the real estate taxes and utilities applicable to the particular
location, to maintain casualty and liability insurance, and to keep the
property in general repair.
The Company currently operates fourteen Amarillo Mesquite Grill restaurants
which encompass approximately 4,000 to 6,000 square feet. These restaurants
seat approximately 140 to 280 persons and have on-site parking for an average
of 70 cars. Typical capital costs for a restaurant facility are approximately
$400,000 for land, $600,000 for the building and $300,000 for equipment and
furnishings. The Company has historically leased the land and buildings used
pursuant to long-term lease arrangements.
Item 3. LEGAL PROCEEDINGS
Not Applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
<PAGE>
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
A) Market Information.
Stock quotations for the Company's stock are currently available on
the OTC Bulletin Board under the symbol "MESQ". The following
tabulation sets forth the high and low closing bid quotations for
the calendar quarters shown as reported by the OTC Bulletin Board.
The prices quoted represent prices between dealers in securities
without adjustment for mark-ups, mark-downs, or commissions and do
not necessarily reflect actual transactions.
<TABLE>
<CAPTION>
Bid Price
Quarter Ended High Low
<S> <C> <C>
April 26, 1998 4 1/8 2
July 26, 1998 5 3/8 2 7/8
October 25, 1998 4 3/8 2 1/2
January 31, 1999 2 1/4 15/16
Bid Price
Quarter Ended High Low
May 2, 1999 2 5/8 1 3/8
July 25, 1999 1 13/16 1 1/4
October 31, 1999 1 5/16 3/4
January 30, 2000 1 7/32 7/8
</TABLE>
B) Holders of Company's Common Stock.
The number of holders of record of the Company's common stock as of
January 30, 2000, was approximately 450, as determined by an
examination of the Company's transfer book. However, because a
number of shares of stock are held in "street name," the actual
number could not be determined more precisely.
C) Dividends.
The Company has not paid dividends to its stockholders since its
inception. For the foreseeable future, it is anticipated that any
earnings which may be generated from operations of the Company will
be used to finance the growth of the Company, and that dividends
will not be paid to stockholders.
<PAGE>
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<CAPTION>
Years Ended January 30, January 31, January 25, January 26, January 28,
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
Operating Data:
Net sales $18,355,305 $20,509,882 $16,022,471 $14,185,898 $10,668,573
Net loss $ (369,097) (490,039) (1,270,293) (1,586,275) (175,341)
Net loss per share $ (.05) $ (.06) (.18) (.24) (.03)
Balance Sheet Data:
Current assets $ 768,758 $ 516,789 $ 965,335 $ 700,560 $ 420,691
Property and
equipment 7,377,764 7,466,707 7,442,598 4,601,807 4,041,077
Other assets 726,929 798,014 873,408 1,155,327 310,012
Total assets $ 8,873,451 $ 8,781,510 $ 9,281,341 $ 6,457,694 $ 4,771,780
Current liabilities $ 2,572,100 $ 3,456,306 $ 3,198,960 $ 2,931,011 $ 1,228,909
Long-term debt,
less current
portion 5,904,586 5,164,077 5,618,279 1,506,421 332,475
Obligation under
capital leases,
less current
portion 961,104 1,006,142 1,046,525 1,500,618 1,457,062
Advances from
affiliates - 81,587 - - -
Deferred credits - - - 6,789 24,204
Stockholders' equity
(deficit) (564,339) ( 926,602) ( 582,423) 512,855 1,729,130
Total liabilities
and stockholders'
equity (deficit) $ 8,873,451 $ 8,781,510 $ 9,281,341 $ 6,457,694 $ 4,771,780
</TABLE>
<PAGE>
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
General
Effective March 24, 1997, the Company sold to Red Apple Corporation all of the
assets of the eight Grandy's restaurants owned and operated by the Company.
Red Apple Corporation is owned by five individuals, three which are officers
and directors of the Company. The consideration received for these assets
consisted of $435,000 in cash. Red Apple Corporation also assumed the lease
obligations associated with these restaurants. The Company recognized a gain
of $249,536 on this disposition. The sales price was computed as three times
the prior year's store level earnings before overhead or administrative
expenses, plus inventories and cash on hand.
During fiscal 1998, the Company wanted to continue the development of new
restaurants but did not have the borrowing capacity or the cash flow required
to open new units. As a result, the Company had to explore creative ways to
continue growth. Consequently, on September 11, 1997, the Company and four of
its stockholders formed AMG, Inc., a Kansas corporation, to develop and own
three Amarillo Grill restaurants. This transaction with AMG Inc. provided
that the investor group would receive a 52% ownership interest in AMG, Inc.
in return for providing financing for the construction of the three restaurants
and the Company would receive a 48% interest for developing and managing the
restaurants.
The accounts and operations of AMG, Inc. have been consolidated with the
Company as entities under common control for the year ended January 25, 1998.
The Company included the amount of AMG, Inc.'s loss otherwise attributable to
the stockholders who own the 52% interest in AMG, Inc., $166,652, in the
consolidated financial statements as of January 25, 1998 because such loss
exceeded the capital investment made by these stockholders and they were under
no obligation to provide additional capital to AMG, Inc.
Effective February 23, 1998, the Company purchased the remaining shares of AMG,
Inc. by issuing 450,000 shares of the Company's common stock in a transaction
accounted for similar to pooling. The purchase price was computed as three and
one-half times estimated store level cash flow. The interest in AMG, Inc.
acquired by the Company had no book value after consideration of the losses
absorbed by the Company in fiscal 1998. Accordingly, this transaction resulted
in no additional assets or liabilities being established, and consolidated
stockholders' equity reflected the issuance of the shares of common stock at
par value, with an offsetting reduction to additional paid-in capital.
Effective September 21, 1998, AMG, Inc. was merged into the Company and the
separate existence of AMG, Inc. ceased.
Results of Operations
For the year ended January 30, 2000, sales were $18,355,305 as compared to
$20,509,882 and $16,022,471 for fiscal 1999 and 1998 respectively. The
following schedule represents a summary of the restaurants operated by the
Company during the three year period ending January 30, 2000.
<PAGE>
<TABLE>
<CAPTION>
Cotton Amarillo
Grandy's Patch Cafe Grill Total
<S> <C> <C> <C> <C>
January 26, 1997 8 5 5 18
Sold (8) - - (8)
Converted - (3) 3 -
Opened - - 3 3
January 25, 1998 - 2 11 13
Opened 1 1
Closed (1) (1)
Converted - (1) 1 -
January 31, 1999 - 1 12 13
Opened - - 1 1
Converted - (1) 1 -
January 30, 2000 - - 14 14
</TABLE>
Cost of sales, as a percentage of total sales, was 34.7%, 37.2% and 37.7% for
fiscal 2000, 1999 and 1998 respectively. The decrease in cost of sales from
fiscal 1999 to fiscal 2000, as a percentage of sales, was the result of
implementing a new menu with more cost effective entrees resulting in an
improvement in cost of sales of 2.5%.
Operating expenses include all direct and indirect labor costs incurred at the
store level and all other store level operating costs, the major component of
which are operating supplies, rent, repairs and maintenance, advertising,
utilities and other occupancy costs. Operating expenses, as a percentage of
total sales, were 49.9%, 49.1% and 53.4% for fiscal 2000, 1999 and 1998
respectively. The decrease in operating expense from fiscal 1998 to fiscal
1999, as a percentage of total sales, is the result of operating more Amarillo
Mesquite Grills which have higher sales volumes and lower operating costs, than
the Grandy's and the Cotton Patch Cafes' which have been disposed of or
converted.
General and administrative expenses include area management personnel and
recruiting and training expenses relating to the development of management
personnel for future restaurants as well as home office costs for
administration, accounting, support personnel, rent and other costs of
maintaining a central office. General and administrative expenses, as a
percentage of total sales, were 7.6%, 7.9% and 10.5% for fiscal 2000, 1999
and 1998 respectively. The decrease in general and administrative expenses
from fiscal 1998 to fiscal 1999, as a percentage of sales, can be attributed
to a reduction in recruiting and training costs.
Depreciation and amortization is directly related to the acquisition or
disposition of fixed assets. The increase in depreciation and amortization
from fiscal 1998 to fiscal 2000 is the result of a greater investment in
property and equipment and therefore increased depreciation and amortization.
Interest expense for fiscal 2000, 1999 and 1998 was $642,724, $689,535 and
$511,531 respectively. Interest expense is directly related to the amount of
borrowings and the interest rate.
<PAGE>
The Company incurred noncash expenses of $97,840 in fiscal 2000, 1999 and 1998,
respectively related to the issuance of stock options pursuant to debt
guarantees as disclosed in note 5 to the financial statements.
As of January 30, 2000, the Company has federal net operating loss
carryforwards for income tax purposes of approximately $7,736,000 which, if
not used, will expire $554,000 in fiscal 2001, $984,000 in fiscal 2002,
$1,193,000 in fiscal 2003, $434,000 in fiscal 2004, $134,000 in fiscal 2005,
$6,000 in fiscal 2006, $180,000 in fiscal 2008, $45,000 in fiscal 2009,
$114,000 in fiscal 2011, $1,524,000 in fiscal 2012, $1,706,000 in fiscal 2013,
$567,000 in fiscal 2014, and $295,000 in fiscal 2020.
The Company's loss for the current year ended January 30, 2000, can in part be
attributed to a lawsuit settlement including legal fees in the amount of
$122,240 resulting from a sexual harassment suit filed against our Company as
a result of the actions of a former restaurant manager. The Company currently
has insurance coverage to cover such incidents. In addition, the Company
incurred approximately $114,000 in preopening expense and first month loss
relating to the opening of two restaurants and an operating loss of
approximately $102,000 relating to two closed restaurants which were disposed
of prior to year end.
Liquidity and Capital Resources
The Company's primary sources of funds to finance its business have been its
cash flow from operations and, principally during the past three years,
proceeds from long-term debt. On January 30, 2000 and January 31, 1999, the
Company had an excess of current liabilities over current assets of $1,803,342
and $2,939,517, respectively. Cash flow from operations was $762,797 and
$712,385 for fiscal 2000 and 1999 respectively, compared to cash flow used in
operations of $626,911 for the year ended January 25, 1998. Management
anticipates higher cash flow from restaurant operations in fiscal 2001 and that
such higher operating cash flow will enable the Company to meet its financial
obligations in fiscal 2001 as they come due.
On May 12, 1998, the President of the Company loaned the Company $250,000 to
fund construction cost overages. The note was an unsecured 10% demand note
due January 1, 1999. As of January 30, 2000, the note had a balance of
$224,000 and has been renewed with a due date of January 3, 2001. Although
the Company's President has made loans to the Company in the past, there is no
assurance that he will make additional loans in the future.
Substantially all of the Company's revenues are derived from cash sales. The
Company does not maintain significant receivables and inventories; therefore,
working capital requirements for continuing operations are not significant.
Additions to property and equipment and the acquisition of restaurants
represent the single largest use of funds by the Company. The expenditures are
primarily made for the purchase and development of new restaurants. Capital
expenditures were $772,851 for the year ended January 30, 2000, compared to
$1,390,636 for the year ended January 31, 1999. These capital expenditures
have resulted in an increase in property and equipment and a decrease in
working capital.
<PAGE>
During the year ended January 30, 2000, three major shareholders purchased
517,242 shares of restricted common stock at market value of $1.16 per share
for a total consideration of $600,000. These funds were used to open two new
restaurants.
The Company plans to continue expansion of the Amarillo Mesquite Grill concept
in fiscal 2001. The Company intends to lease existing restaurant properties
which are suitable for conversion to the Amarillo Mesquite Grill concept. It
is expected that each conversion will require approximately $300,000 to
$500,000 for equipment and remodel costs. A ground-up proto-type restaurant
would cost approximately $1,300,000 for land, building and equipment. The
Company has no commitments for financing at this time. In order for the
Company to meet its expansion goals for fiscal 2001, it will need to raise
additional funds through debt or equity instruments, the availability and terms
of which will depend upon market and other conditions. There can be no
assurance that such additional financing will be available on terms acceptable
to the Company.
The Company has restructured its long-term bank debt to provide for interest
only payments through April 15, 2001. The purpose of the restructuring is to
use cash flow to open additional restaurants that would otherwise be used to
retire long term debt. Management views this as a way to continue our growth,
that should result in increased future earnings and cash flow, but do so
without increasing bank debt.
This report contains certain forward-looking statement, including those
relating to the opening of additional restaurants and planned capital
expenditures. Although the Company believes that the assumptions underlying
the forward-looking statements contained herein are reasonable, actual results
could differ materially from such forward-looking statements. In light of the
significant uncertainties inherent in the forward-looking statements included
herein, the inclusion of such information should not be regarded as a
representation by the Company that objectives and plans of the Company will
be achieved.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements that the Company is required to file under Item 8 of
this Form 10-K are presented on pages F-1 through F-24 of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to this Item is included in the Company's Annual Proxy
Statement for the 2000 Annual Meeting of Stockholders under the section
entitled "Election of Directors" and under the section entitled "Section 16(a)
Beneficial Ownership Reporting Compliance" and these portions of such Proxy
Statement are herein incorporated by reference.
Item 11. EXECUTIVE COMPENSATION
The information relating to this Item is included in the Company's Annual Proxy
Statement for the 2000 Annual Meeting of Stockholders under the section
entitled "Executive Compensation" and "Directors' Fees" and these portions of
such Proxy Statement are herein incorporated by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to this Item is included in the Company's Annual Proxy
Statement for the 2000 Annual Meeting of Stockholders under the section
entitled "Principal Holders of Securities" and that portion of such Proxy
Statement is herein incorporated by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information relating to this Item is included in the Company's Annual Proxy
Statement for the 2000 Annual Meeting of Stockholders under the section
entitled "Certain Relationships and Related Transactions" and that portion of
such Proxy Statement is herein incorporated by reference.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A) Documents Filed as a Part of this Report.
i) Financial Statements
See "Index to Financial Statements" on Page F-1 of this Report
ii) Financial Statement Schedules
Not Applicable
iii) Exhibits
See Item 14(c), "Exhibits" below.
B) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the quarter
ended January 30, 2000.
C) Exhibits.
3.1 Restated Articles of Incorporation of Grandy's of El Paso, Inc. and
Change of Corporate Name to Maverick Restaurant Corporation
and Certificate of Correction to Restated Articles of
Incorporation of Grandy's of El Paso, Inc. changing the
Corporate Name to Maverick Restaurant Corporation as filed
with the Secretary of State of the State of Kansas on July 28,
1983 and August 18, 1983, respectively (filed as Exhibit 3.1
to Registration No. 2-86266-FW and such exhibit is hereby
incorporated by reference).
3.2 Certificate of Amendment to Articles of Incorporation as filed with
the Secretary of State of the State of Kansas on May 22, 1984
(filed as Exhibit 3.2 to the Company's Form 10-K for the
fiscal year ended January 31, 1985, and such exhibit is hereby
incorporated by reference).
3.3 Certificate of Amendment to Articles of Incorporation as filed with
the Secretary of State of the State of Kansas on May 27, 1997
changing the corporate name to Amarillo Mesquite Grill, Inc.
(filed as Exhibit 3.3 to the Company's Form 10-K for the
fiscal year ended January 25, 1998, and such exhibit is hereby
incorporated by reference).
<PAGE>
3.4 Bylaws of the Company (filed as Exhibit 3.2 to Registration No. 2-
86266-FW and such exhibit is hereby incorporated by reference).
10.1 1994 Incentive Stock Option Plan (filed as Exhibit 10.9 to the
Company's Form 10-K for the fiscal year ended January 31, 1995
and such exhibit is hereby incorporated by reference).*
10.2 1997 Incentive Stock Option Plan (filed as Exhibit A to the
Company's Proxy Statement dated April 23, 1997 and such
exhibit is hereby incorporated by reference).*
10.3 Promissory Note dated January 3, 2000 between the Company and
Chris F. Hotze (filed herewith).
23.1 Consent of Allen, Gibbs & Houlik, L.C. (filed herewith).
23.2 Consent of KPMG LLP (filed herewith).
27 Financial Data Schedule (filed herewith).
________________
*Management's Compensation Plan
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMARILLO MESQUITE GRILL, INC.
/s/ Chris F. Hotze
By: _____________________________
Chris F. Hotze, President
Date: April 20, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons of the Registrant and
in the capacities and on the date indicated.
Signature Title Date
/s/Chris F. Hotze President, Chairman of April 20, 2000
Chris F. Hotze the Board and Director
(Principal Executive
Officer)
/s/Linn F. Hohl Vice President of April 20, 2000
Linn F. Hohl Finance, Treasurer,
Assistant Secretary and
Director (Principal
Financial and Accounting
Officer)
/s/Alan L. Bundy Executive Vice President April 20, 2000
Alan L. Bundy and Director
/s/C. Howard Wilkins, Jr. Director April 20, 2000
C. Howard Wilkins, Jr.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
TABLE OF CONTENTS
Page
Independent Auditors' Report F-2
Financial Statements:
Balance Sheets F-4
Statements of Operations F-6
Statements of Stockholders' Equity (Deficit) F-7
Statements of Cash Flows F-8
Notes to Financial Statements F-9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Amarillo Mesquite Grill, Inc.
We have audited the accompanying balance sheets of Amarillo Mesquite Grill,
Inc. as of January 30, 2000 and January 31, 1999 and the related statements
of operations, stockholders' deficit, and cash flows for the 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 audits 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 financial statements referred to above present fairly, in
all material respects, the financial position of Amarillo Mesquite Grill,
Inc. as of January 30, 2000 and January 31, 1999, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
Allen, Gibbs & Houlik, L.C.
March 13, 2000
Wichita, Kansas
F-2
<PAGE>
Independent Auditors' Report
The Board of Directors
Amarillo Mesquite Grill, Inc.:
We have audited the accompanying statements of operations, stockholders'
equity (deficit), and cash flows of Amarillo Mesquite Grill, Inc. for the
year ended January 25, 1998. 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 audit 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 audit
provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of operations and cash flows of
Amarillo Mesquite Grill, Inc. for the year ended January 25, 1998, in
conformity with generally accepted accounting principles.
KPMG LLP
Wichita, Kansas
March 20, 1998
F-3
<PAGE>
AMARILLO MESQUITE GRILL, INC.
BALANCE SHEETS
January 30, 2000 and January 31, 1999
<TABLE>
<CAPTION>
ASSETS
2000 1999
<S> <C> <C>
CURRENT ASSETS
Cash $ 407,710 $ 214,513
Accounts receivable 21,137 16,912
Advances to affiliate 45,655 --
Inventories 169,027 140,414
Prepaid expenses and other
current assets 125,229 144,950
Total current assets 768,758 516,789
PROPERTY AND EQUIPMENT
Buildings 1,108,129 1,107,429
Leasehold improvements 2,868,805 2,559,658
Equipment and fixtures 5,145,941 4,719,724
Transportation equipment 18,999 18,000
Property under capital leases 1,234,626 1,234,626
10,376,500 9,639,437
Less accumulated depreciation
and amortization 2,998,736 2,172,730
Total property and equipment 7,377,764 7,466,707
OTHER ASSETS
Cost in excess of net tangible
assets of purchased businesses,
net of accumulated amortization
of $261,004 and $188,184 686,007 758,827
Deposits and other 40,922 39,187
Total other assets 726,929 798,014
Total assets $ 8,873,451 $ 8,781,510
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' DEFICIT
2000 1999
<S> <C> <C>
CURRENT LIABILITIES
Note payable $ 270,912 $ 300,000
Note payable, related party 224,000 250,000
Current portion of long-term debt 36,075 1,020,795
Current portion of obligations
under capital leases 45,038 40,383
Accounts payable 1,029,247 921,831
Accrued payroll 225,674 140,551
Other accrued liabilities 741,154 782,746
Total current liabilities 2,572,100 3,456,306
LONG-TERM LIABILITIES
Long-term debt, less current
portion 5,904,586 5,164,077
Obligations under capital leases,
less current portion 961,104 1,006,142
Advances from affiliate -- 81,587
Total liabilities 9,437,790 9,708,112
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred stock, $.01 par value,
authorized 10,000,000 shares,
none issued -- --
Common stock, $.01 par value,
authorized 20,000,000 shares,
issued 8,301,137 shares at
January 30, 2000 and 7,705,895
shares at January 31, 1999 83,011 77,059
Additional paid-in capital 7,532,622 6,807,214
Accumulated deficit (7,909,972) (7,540,875)
Treasury stock, 60,000 shares
of common stock, at cost (270,000) (270,000)
Total stockholders' deficit (564,339) (926,602)
Total liabilities and
stockholders' deficit $ 8,873,451 $ 8,781,510
</TABLE>
[FN]
The accompanying notes are an integral
part of these financial statements.
F-5
<PAGE>
<TABLE>
AMARILLO MESQUITE GRILL, INC.
STATEMENTS OF OPERATIONS
Years Ended January 30, 2000, January 31, 1999 and January 25, 1998
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Net sales $ 18,355,305 $ 20,509,882 $ 16,022,471
Costs and expenses:
Cost of sales 6,374,037 7,637,278 6,041,032
Restaurant operating
expenses 9,163,419 10,067,446 8,550,466
General and administrative 1,389,528 1,613,525 1,685,994
Depreciation and amortization 934,614 894,297 655,437
Total costs and expenses 17,861,598 20,212,546 16,932,929
Operating income (loss) 493,707 297,336 (910,458)
Other income (expense):
Interest expense (642,724) (689,535) (511,531)
Gain on sales of restaurants -- -- 249,536
Litigation expense (122,240) -- --
Non-cash expense from issuance
of stock options to related
parties pursuant to debt
guarantees (97,840) (97,840) (97,840)
Total other expense (862,804) (787,375) (359,835)
Loss before income taxes (369,097) (490,039) (1,270,293)
Income taxes -- -- --
Net loss $ (369,097) $ (490,039) $ (1,270,293)
Net loss per common share -
basic and diluted $ (.05) $ (.06) $ (.18)
Average shares outstanding -
basic and diluted 7,908,111 7,545,395 7,103,919
</TABLE>
[FN]
The accompanying notes are an integral
part of these financial statements.
F-6
<PAGE>
<TABLE>
AMARILLO MESQUITE GRILL, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
Years Ended January 30, 2000, January 31, 1999 and January 25, 1998
<CAPTION>
Additional
Common Paid-In Accumulated Treasury
Stock Capital Deficit Stock Total
<S> <C> <C> <C> <C> <C>
Balance, January 26, 1997 $ 71,414 $ 6,491,984 $ (5,780,543) $ (270,000) $ 512,855
Contributed capital -- 9,000 -- -- 9,000
Non-cash expense from
issuance of stock
options to related
parties pursuant to
debt guarantees -- 97,840 -- -- 97,840
Issuance of 42,437 shares
of common stock pursuant
to stock option plans 425 67,750 -- -- 68,175
Net loss -- -- (1,270,293) -- (1,270,293)
Balance, January 25, 1998 71,839 6,666,574 (7,050,836) (270,000) (582,423)
Contributed capital -- 9,000 -- -- 9,000
Non-cash expense from
issuance of stock
options to related
parties pursuant to
debt guarantees -- 97,840 -- -- 97,840
Issuance of 72,000 shares
of common stock pursuant
to stock option plans 720 38,300 -- -- 39,020
Acquisition of AMG, Inc.,
a related party 4,500 (4,500) -- -- --
Net loss -- -- (490,039) -- (490,039)
Balance, January 31, 1999 77,059 6,807,214 (7,540,875) (270,000) (926,602)
Contributed capital -- 9,000 -- -- 9,000
Non-cash expense from
issuance of stock options
to related parties pursuant
to debt guarantees -- 97,840 -- -- 97,840
Issuance of 78,000 shares of
common stock pursuant to
stock option plans 780 23,740 -- -- 24,520
Issuance of 517,242 shares
of common stock to related
parties 5,172 594,828 -- -- 600,000
Net loss -- -- (369,097) -- (369,097)
Balance, January 30, 2000 $ 83,011 $ 7,532,622 $ (7,909,972) $ (270,000) $ (564,339)
</TABLE>
[FN]
The accompanying notes are an integral
part of these financial statements.
F-7
<PAGE>
<TABLE>
AMARILLO MESQUITE GRILL, INC.
STATEMENT OF CASH FLOWS
Years Ended January 30, 2000, January 31, 1999 and January 25, 1998
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $(369,097) $ (490,039) $ (1,270,293)
Adjustments to reconcile net
loss to net cash provided by
(used in) operating activities:
Depreciation and amortization 934,614 894,297 655,437
Gain on sale of restaurants -- -- (249,536)
Non-cash compensation expense 9,000 9,000 9,000
Non-cash expense from issuance
of stock options to related
parties pursuant to debt
guarantees 97,840 97,840 97,840
Increase (decrease) in cash,
net of effects of acquisitions
and dispositions:
Accounts receivable (4,225) 32,560 (27,414)
Advances to affiliate (45,655) -- --
Inventories (28,613) 27,434 (19,943)
Prepaid expenses 19,721 39,229 (47,792)
Accounts payable 107,416 (63,262) 124,933
Accrued expenses 43,531 170,646 60,067
Other (1,735) (5,320) 40,790
Net cash provided by
(used in) operating
activities 762,797 712,385 (626,911)
Cash flows from investing activities:
Additions to property and equipment (772,851) (1,390,636) (3,563,335)
Proceeds from sale of restaurants -- -- 428,300
Net cash used in
investing activities (772,851) (1,390,636) (3,135,035)
Cash flows from financing activities:
Issuance of common stock to
related parties 600,000 -- --
Issuance of common stock pursuant
to stock option plan 24,520 39,020 68,175
Proceeds from long-term debt -- 200,000 4,330,000
(Repayment of) proceeds from note
payable and note payable,
related party (55,088) 550,000 --
(Repayment of) advances
from affiliate (81,587) 81,587 --
Repayment of long-term debt and
capital lease obligations (284,594) (541,679) (400,678)
Net cash provided by
financing activities 203,251 328,928 3,997,497
Increase (decrease)
in cash 193,197 (349,323) 235,551
Cash at beginning of year 214,513 563,836 328,285
Cash at end of year $ 407,710 $ 214,513 $ 563,836
Cash paid during the year for:
Interest $ 666,776 $ 665,483 $ 515,527
Income taxes -- -- --
</TABLE>
[FN]
The accompanying notes are an integral
part of these financial statements.
F-8
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
1. OPERATIONS
Amarillo Mesquite Grill, Inc. (the Company) owns and operates 14
Amarillo Grill restaurants in Kansas, Oklahoma, Missouri, and Arkansas.
Amarillo Grill is a casual, full-service restaurant specializing in
mesquite-grilled steaks.
During fiscal 1998, the Company changed the corporate name from
Maverick Restaurant Corporation to Amarillo Mesquite Grill, Inc.
Effective March 24, 1997, the Company sold to Red Apple Corporation all
the assets of the eight Grandy's restaurants owned and operated by the
Company. Red Apple Corporation also assumed the obligations under
existing leases for each restaurant location; however, in the event it
defaults under the leases, the Company would be obligated to fulfill
the lease commitments. Red Apple Corporation is owned by five
individuals, three of which are officers and directors of the Company
and one of which is a significant stockholder of the Company. The
consideration received for these assets consisted of $435,000 in cash.
The Company recognized a gain of $249,536 on this disposition in fiscal
1998.
On September 11, 1997, the Company and four of its stockholders formed
AMG, Inc., a Kansas corporation, to develop and own three Amarillo
Grill restaurants. AMG, Inc. was owned 48% by the Company and 52% by
the four stockholders as of January 25, 1998. The accounts and
operations of AMG, Inc. were consolidated with the Company as entities
under common control for the year ended January 25, 1998. The Company
included the amount of AMG, Inc.'s loss, otherwise attributable to the
stockholders who own the 52% interest in AMG, Inc., of $166,652, in the
consolidated financial statements as of January 25, 1998 because such
loss exceeded the capital investment made by these stockholders and
they were under no obligation to provide additional capital to AMG, Inc.
Effective February 23, 1998, the Company purchased the remaining shares
of AMG, Inc. by issuing 450,000 shares of the Company's common
stock in a transaction accounted for similar to a pooling. The
interest in AMG, Inc. acquired by the Company had no book value after
consideration of the losses absorbed by the Company in fiscal 1998.
Accordingly, this transaction resulted in no additional assets or
liabilities being established, and stockholders' equity reflects the
issuance of the shares of common stock at par value, with an offsetting
reduction to additional paid-in capital. Effective September 21, 1998,
AMG, Inc. was merged into the Company and the separate existence of
AMG, Inc. ceased.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The Company's fiscal year is the 52 or 53 week period
ending on the last Sunday in January.
Cash - The Company maintains cash in bank deposit accounts that, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts. The Company believes it is
not exposed to any significant credit risk on cash and cash
equivalents.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property and Equipment - Property and equipment is recorded at cost.
Depreciation is computed by the straight-line method based on the
estimated useful life of the asset. Leasehold improvements are
amortized over the lesser of the useful life of the asset or the
remaining lease term. Maintenance and repairs are charged to expense
as incurred; renewals and betterments are capitalized. Estimated
useful lives are as follows:
<TABLE>
<S> <C> <C>
Buildings 98 months - 20 years
Leasehold improvements 3 - 20 years
Equipment and fixtures 5 - 10 years
Autos 3 years
Property under capital leases 20 years
</TABLE>
Impairment of Long-lived Assets - Long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may
not be recoverable. A two-year history of restaurant operating losses
is used as a primary indicator of potential impairment. Recoverability
of assets to be held and used is measured on a restaurant-by-restaurant
basis through comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceed the fair value of the assets. No assets are considered impaired
at January 30, 2000. Assets to be disposed of are reported at the
lower of the carrying amount or fair value less costs to sell.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Intangible Assets - Cost in excess of net tangible assets of purchased
businesses is amortized on a straight-line basis over the remaining
lives of the building leases. The Company periodically assesses the
recoverability of intangible assets on a restaurant-by-restaurant basis
by determining whether the amortization of the intangible asset balance
over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future
operating cash flows. No intangible assets were considered impaired at
January 30, 2000. The assessment of the recoverability of intangible
assets will be impacted if estimated future operating cash flows are
not achieved.
Pre-Opening Costs - Pre-opening costs are charged to operations as
incurred.
Advertising - The Company expenses advertising costs as incurred.
Advertising expense was $293,987, $287,949, and $366,097 during fiscal
years 2000, 1999, and 1998, respectively.
Income Taxes - Deferred income taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards; deferred
tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effect of changes in tax laws and rates on the date of
enactment.
Use of Estimates - The preparation of financial statements requires
management to make estimates and assumptions that affect: (1) the
reported amounts of assets and liabilities, (2) disclosures such as
contingencies, and (3) the reported amounts of revenues and expenses
included in such financial statements. Actual results could differ
from those estimates.
Net Earnings Per Share -The Financial Accounting Standards Board has
issued SFAS No. 128, Earnings Per Share, which replaces the prior
accounting standard regarding computation and presentation of earnings
per share. SFAS No. 128 requires a dual presentation of basic earnings
per share (based on the weighted average number of common shares
outstanding) and diluted earnings per share which reflects the
potential dilution that could occur if contracts to issue securities
(such as stock options) were exercised. The Company adopted SFAS No.
128 as of January 25, 1998 and, accordingly, earnings per share data
for all periods presented has been computed in accordance with the
Statement. The adoption of SFAS No. 128 had no impact on the Company's
previously reported loss per share data.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Options to purchase common stock were not included in the computation
of diluted earnings (loss) per common share because the Company had a
net loss available to common stockholders and the inclusion of such
options would be antidilutive. As of January 30, 2000, there are
1,277,937 options outstanding at a weighted average exercise price of
$2.04 that may become dilutive in the future. As of January 31, 1999,
there were 1,289,453 options outstanding at a weighted average exercise
price of $2.48. As of January 25, 1998, there were 1,273,613 options
outstanding at a weighted average exercise price of $2.11.
Stock Awards - The Company accounts for its stock options in accordance
with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation
expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. In addition,
SFAS No. 123, Accounting for Stock-Based Compensation, requires that
pro forma net income and pro forma income per share disclosures for
employee stock option grants made in fiscal years that begin after
December 15, 1994 be provided as if the fair-value-based cost
measurement method defined in SFAS No. 123 had been applied.
The Company accounts for its stock options issued to persons other than
employees in accordance with the provisions of SFAS No. 123. As such,
expense is determined on the date of grant and is charged to operations
over the period the services are provided, based on the fair-value-
based cost measurement method defined in SFAS No. 123 (see Note 6).
3. RELATED PARTY TRANSACTIONS
The Company shares office space and certain administrative employees
with companies owned in part by certain stockholders of the Company.
Rent expense, utilities, and other office expenses are allocated
between the companies based on estimated usage.
Advances to/from Affiliate - The Company has a receivable from Red
Apple Corporation for $45,655 at January 30, 2000. At January 31,
1999, the Company had an advance from Red Apple Corporation of $81,587.
The note had an implied interest rate of 8%.
Note Payable, Related Party - As of January 30, 2000, the Company has a
10% unsecured demand note payable for $224,000 to the president of the
Company. The note is due January 3, 2001.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
Stockholders' Equity - The Company's president is also employed by
another corporation owned by a major stockholder of the Company, and
his salary is paid by that corporation. He received no compensation
from the Company during 2000, 1999, or 1998. The Company determined
that the president performed services valued at $9,000 and,
accordingly, such amount has been recorded as compensation expense with
a corresponding credit to additional paid-in-capital in the
accompanying financial statements.
On June 17, 1996, the Company entered into Stock Option Agreements with
a director of the Company and a principal stockholder of the Company,
whereby it agreed to grant stock options as consideration for the
guarantee of the note payable to bank of $1,589,296 at January 26, 1997
by such individuals for the benefit of the Company. These two
individuals were each granted options to purchase 250,000 shares of the
Company's common stock. The exercise price of the options granted
pursuant to this agreement is $2.19 per share, and all options granted
are exercisable immediately and expire seven years from the date of
grant. Total noncash debt guarantee expense aggregating $684,875 is
based on the fair value of the stock options granted pursuant to the
Stock Option Agreements, which is being recognized as expense over the
period of time the related debt is outstanding. The amount of noncash
expense recorded was $97,840 for each of the years ended January 30,
2000, January 31, 1999, and January 25, 1998.
The per share weighted average fair value of stock options granted
under the Stock Option Agreements during fiscal 1997 was $1.37 on the
date of grant using the Black Scholes option-pricing model and the
following weighted average assumptions: expected dividend yield 0%,
expected volatility of 145.0%, risk-free interest rate of 6.72% and an
expected life of five years.
At January 30, 2000, the weighted average remaining contractual life of
the 500,000 outstanding options under the Stock Option Agreements was
3.38 years.
4. FINANCING ARRANGEMENTS
Note Payable - As of January 30, 2000, the Company has a 7.75% note
payable to a bank in the amount of $270,912, which is due June 18,
2000.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. FINANCING ARRANGEMENTS (CONTINUED)
Long-term Debt - As of January 30, 2000 and January 31, 1999, long-term
debt consisted of the following:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Note payable to bank, with interest only due
monthly at the Wall Street Journal prime rate
less 1/2% (8.00% at January 30, 2000) with
principal due April 2001. $ 5,904,586 $ --
Note payable to bank, due in monthly
installments of $4,000, including interest,
at the Bank's prime rate plus 1% (10.25% at
January 30, 2000) with final installment due
November 2000. 36,075 78,263
Note payable to bank, due in monthly
installments of $41,161, including interest,
at the Wall Street Journal prime rate (7.75%
at January 31, 1999) with final installments
due May 2003. -- 1,892,293
Note payable to bank, due in monthly
installments of $30,871, including interest,
at the Wall Street Journal prime rate (7.75%
at January 31, 1999) with final installment
due May 2003. -- 1,421,730
Note payable to bank, due in monthly
installments of $32,929, including interest,
at the Wall Street Journal prime rate (7.75%
at January 31, 1999) with final installment
due May 2003. -- 1,513,834
Note payable to bank, due in monthly
installments of $27,000, including interest,
at the Wall Street Journal prime rate (7.75%
at January 31, 1999) with final installment
due June 2003. -- 1,254,235
Note payable to bank, due in monthly
installments of $5,043, including interest,
at the Wall Street Journal prime rate (7.75%
at January 31, 1999) with final installment
due June 1999. -- 24,517
5,940,661 6,184,872
Less current portion 36,075 1,020,795
Long-term debt, less current portion $ 5,904,586 $ 5,164,077
</TABLE>
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
4. FINANCING ARRANGEMENTS (CONTINUED)
In October 1999, the Company negotiated with its bank to consolidate
four of its notes payable into one new note. Interest-only payments
are to be made on this note through April 2001.
<TABLE>
<CAPTION>
Principal amounts payable on the notes are as follows:
<S> <C>
2001 $ 36,075
2002 5,904,586
$ 5,940,661
</TABLE>
The Company has entered into loan agreements with its bank that are
represented by individual promissory notes that provide specific terms.
These notes are secured by substantially all of the Company's assets,
and the loan agreements have been personally guaranteed by certain
stockholders, officers, and directors of the Company. The
stockholders' guarantees are limited to $5,585,000 of debt.
5. LEASE AGREEMENTS
The Company leases its restaurant facilities under agreements with
lease terms of 10 to 20 years generally with a provision for one or
two renewal options of five years each. These agreements provide for
minimum annual rentals and, in certain instances, contingent rentals
based on sales performance. The Company is obligated to pay real
estate taxes, insurance, and maintenance.
The Company has also entered into a lease agreement for its Corporate
offices. The lease agreement has a term of five years with a provision
for two renewal options of three years each. The lease agreement
provides for minimum annual rentals and additional rentals based on
operating costs incurred by the lessor. The Company is obligated to
pay real estate taxes, insurance, and maintenance.
Future minimum lease payments required for the years subsequent to
January 30, 2000, under operating leases are as follows:
<TABLE>
<S> <C>
2001 $ 1,011,146
2002 885,395
2003 893,529
2004 849,519
2005 680,875
Thereafter 5,195,757
$ 9,516,221
</TABLE>
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. LEASE AGREEMENTS (CONTINUED)
Annual rent expense under operating leases was $906,208, $918,441, and
$722,415 for the fiscal years ended January 30, 2000, January 31, 1999,
and January 25, 1998, respectively. This included percentage rental
payments in the amount of $5,709, $46,769, and $33,631 for the fiscal
years ended January 30, 2000, January 31, 1999, and January 25, 1998,
respectively.
Property and accumulated depreciation accounts at January 30, 2000
include $1,234,626 and $442,555, respectively, for leases that have
been capitalized. Generally, the building portions of such leases are
capitalized whereas the land portion of such leases are considered
operating leases. The future minimum lease payment obligations under
capital leases for the years subsequent to January 30, 2000 are as
follows:
<TABLE>
<S> <C>
2001 $ 151,102
2002 151,102
2003 151,102
2004 151,102
2005 151,102
Thereafter 1,181,717
1,937,227
Less amount representing interest 931,085
Total obligations under capital leases 1,006,142
Less current portion 45,038
Obligations under capital leases, less
current portion $ 961,104
</TABLE>
The Company, as lessor, subleases two properties to outside third
parties. Property and accumulated depreciation accounts at January 30,
2000 include $210,308 and $91,107, respectively, related to these
properties.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
5. LEASE AGREEMENTS (CONTINUED)
Future minimum lease payments to be received subsequent to January 30,
2000 are as follows:
<TABLE>
<S> <C>
2001 $ 113,600
2002 115,000
2003 116,000
2004 116,000
2005 99,000
Thereafter 32,000
$ 591,600
</TABLE>
6. STOCKHOLDERS' EQUITY
In March 1984, the Company adopted an Employee Incentive Stock Option
Plan (the 1984 Plan) for a 10-year term to grant options for the
purchase of up to 475,000 shares of common stock. The 1984 Plan
provides the Company may grant options to certain employees at the fair
market value of the stock at the grant date. One-half of the option is
exercisable six months after the grant date and one-half eighteen
months after the grant date. Following is a summary of the activity in
the 1984 Plan for the three years ended January 30, 2000:
<TABLE>
<CAPTION>
Per Share
Number Exercise Price
of Weighted
Shares Range Average
<S> <C> <C> <C>
Balance, January 26, 1997 151,000 $ .29 - .47 $ .37
Canceled (2,500) .29 - .47 .33
Exercised (2,500) .29 .29
Balance, January 25, 1998 146,000 $ .29 - .47 $ .38
Exercised (69,000) .47 .47
Balance, January 31, 1999 77,000 $ .29 $ .29
Exercised (77,000) .29 .29
Balance, January 30, 2000 -- $ -- $ --
Exercisable at January 25, 1998 146,000 $ .29 - .47 $ .38
Exercisable at January 31, 1999 77,000 $ .29 $ .29
Exercisable at January 30, 2000 -- $ -- $ --
</TABLE>
At January 30, 2000, there were no additional shares available for
grant under the 1984 Plan.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS EQUITY (CONTINUED)
On July 25, 1994, the Company adopted an Employee Incentive Stock
Option Plan (the 1994 Plan) for a 10-year term to grant options for the
purchase of up to 600,000 shares of common stock. The 1994 Plan
provides the Company may grant options to certain employees at the fair
market value at the grant date. The vesting period is at the sole
discretion of the Board of Directors. Generally, 10% of the option can
be exercised after one year, an additional 15% after the second year
and 25% in each of the next three years. Following is a summary of the
activity in the 1994 Plan for the three years ended January 30, 2000:
<TABLE>
<CAPTION>
Per Share
Number Exercise Price
of Weighted
Shares Range Average
<S> <C> <C> <C>
Balance, January 26, 1997 494,805 $ .50 - 2.88 $ 1.85
Canceled (135,505) .50 - 2.88 1.12
Exercised (39,937) .50 - 2.88 1.69
Balance, January 25, 1998 319,363 $ 1.81 - 2.19 $ 2.17
Granted 189,740 1.87 - 4.25 3.77
Canceled (25,900) 4.06 - 4.25 4.17
Exercised (2,500) 2.19 2.19
Balance, January 31, 1999 480,703 $ 1.81 - 4.25 $ 2.70
Granted 210,950 .90 - 2.09 1.52
Canceled (121,466) 1.50 - 4.06 2.84
Exercised (1,000) 2.19 2.19
Balance, January 30, 2000 569,187 $ .90 - 2.19 $ 1.96
Exercisable at January 25, 1998 31,936 $ 1.81 - 2.19 $ 2.17
Exercisable at January 31, 1999 306,504 $ 1.81 - 2.19 $ 2.19
Exercisable at January 30, 2000 318,712 $ 2.19 $ 2.19
</TABLE>
At January 30, 2000, there were no additional shares available for
grant under the 1994 Plan, and the weighted average remaining
contractual life of outstanding options was 7.71 years.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY (CONTINUED)
On January 1,1997, the Company adopted an Employee Incentive Stock
Option Plan (the 1997 Plan) for a 10-year term to grant options for the
purchase of up to 700,000 shares of stock. The 1997 Plan provides the
Company may grant options to certain employees at the fair market value
at the grant date. The vesting period is at the sole discretion of the
Board of Directors. Generally, 10% of the option can be exercised
after one year, an additional 15% after the second year and 25% in each
of the next three years. Following is a summary of the activity in the
1997 Plan for the three years ended January 30, 2000:
<TABLE>
<CAPTION>
Per Share
Number Exercise Price
of Weighted
Shares Range Average
<S> <C> <C> <C>
Balance, January 26, 1997 160,000 $ 2.75 $ 2.75
Granted 253,250 2.75 - 4.13 3.70
Canceled (105,000) 2.75 - 4.13 3.00
Balance, January 25, 1998 308,250 $ 2.75 - 4.13 $ 3.44
Granted 50,000 2.63 - 3.94 3.30
Canceled (126,000) 2.75 - 4.13 3.41
Exercised (500) 2.75 2.75
Balance, January 31, 1999 231,750 $ 2.63 - 4.13 $ 3.43
Granted 60,000 .97 - 1.34 1.22
Canceled (83,000) 2.63 - 4.13 3.43
Balance, January 30, 2000 208,750 $ .97 - 2.19 $ 1.91
Exercisable at January 25, 1998 8,500 $ 2.75 $ 2.75
Exercisable at January 31, 1999 41,625 $ 2.75 - 4.13 $ 3.48
Exercisable at January 30, 2000 66,500 $ 2.19 $ 2.19
</TABLE>
At January 30, 2000, there were 490,750 additional shares available for
grant under the 1997 Plan, and the weighted average remaining
contractual life of outstanding options was 8.09 years.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY (CONTINUED)
The per share weighted average fair value of stock options granted
under the 1994 and 1997 Plans during fiscal 2000, 1999, and 1998 was
$1.23, $3.09, and $3.29, respectively, on the date of grant using the
Black Scholes option-pricing model using the following weighted average
assumptions:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Expected dividend yield 0% 0% 0%
Volatility factor 120.82% 119.77% 136.0%
Risk free interest rate 5.85% 5.33% 6.15%
Expected life 5 years 5 years 5 years
</TABLE>
In December 1999, the Company adopted a resolution to reprice all stock
options granted to employees under the 1994 or 1997 Plans. The
exercise price of all options granted that exceeded $2.19 per share was
repriced to $2.19 per share. The pro forma income per share
disclosures below were modified in accordance with SFAS No. 123.
The Company applies APB Opinion No. 25 in accounting for its stock
options issued to employees, and accordingly, no compensation cost has
been recognized for its stock options in the financial statements. Had
the Company determined compensation cost for the 1994 Plan and 1997
Plan based on the fair value at the grant date for its stock options
under SFAS No. 123, the Company's fiscal 2000, 1999, and 1998 pro forma
net loss and pro forma net loss per common share would have been
adjusted to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Net loss: As reported $ (369,097) $ (490,039) $(1,270,293)
Pro forma for SFAS
No. 123 (512,873) (917,769) (1,547,009)
Loss per share: As reported $ (.05) $ (.06) $ (.18)
Pro forma for SFAS
No. 123 (.06) (.12) (.22)
</TABLE>
The above pro forma disclosure reflects only options granted during
fiscal years 2000, 1999, and 1998. Therefore, the full impact of
calculating compensation cost for stock options under SFAS No. 123 is
not reflected in the pro forma net loss amounts presented above because
compensation cost is reflected over the options' vesting period of five
years and compensation cost for options granted prior to February 1,
1995 is not considered.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. INCOME TAXES
As of January 30, 2000, the Company has net operating loss
carryforwards for federal income tax purposes of approximately
$7,736,000, which, if not used, will expire as follows:
<TABLE>
<CAPTION>
Operating
Loss
Fiscal Year Ending Carryforward
<C> <C>
2001 $ 554,000
2002 984,000
2003 1,193,000
2004 434,000
2005 134,000
2006 6,000
2008 180,000
2009 45,000
2011 114,000
2012 1,524,000
2013 1,706,000
2019 567,000
2020 295,000
Total $ 7,736,000
</TABLE>
The Company also has approximately $9,000 of investment tax credits
that expire in fiscal 2001 and certain general business credit
carryforwards that, if not used, will expire in years beyond 2015.
The total provision for income taxes varied from the federal statutory
rate for the following reasons:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Computed "expected" tax benefit (34.0)% (34.0)% (34.0)%
Increase in income taxes
resulting from:
Losses producing no financial
statement tax benefit 34.0% 34.0% 34.0%
--% --% --%
</TABLE>
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
7. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
January 30, 2000 and January 31, 1999 are presented below:
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Deferred tax assets:
Net operating loss carryforwards $ 2,960,000 $ 3,010,234
General business credits 250,500 81,700
Capital leases 81,350 73,235
Debt guarantee expense 134,775 97,538
Other 15,535 20,173
Total gross deferred tax assets 3,442,160 3,282,880
Less valuation allowance (3,143,000) (3,021,540)
Net deferred tax assets 299,160 261,340
Deferred tax liabilities:
Property and equipment (299,160) (261,340)
Net deferred tax assets
(liabilities) $ -- $ --
</TABLE>
8. RESTAURANT CLOSINGS, DISPOSITIONS, AND CONVERSIONS
During fiscal 2000, the Company converted its last Cotton Patch Cafe
restaurant to an Amarillo Grill. The Company incurred an operating
loss of $60,000 in 2000 on the Cotton Patch Cafe prior to its closure.
These costs are included in the results from operations in the
Statement of Operations.
During fiscal 1999, the Company closed one and converted another
restaurant to an Amarillo Grill. The Company incurred operating losses
on these stores of $124,141 prior to closure in 1999, and an additional
$42,000 in losses on the closed store in 2000 due to the Company still
being under lease on the facility until August 1999. These costs are
included in the results from operations in the Statement of Operations.
During fiscal 1998, the Company converted three restaurants to Amarillo
Grills. Conversion costs were provided for during fiscal 1997 at the
time decisions were made for conversion.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the fair value of its financial instruments
in accordance with Statement of Financial Accounting Standards No. 107,
Disclosures About Fair Value of Financial Instruments. The carrying
amounts of variable rate debt instruments approximate their fair value
because the interest rates on these instruments change with market
interest rates. For all other financial instruments, including cash,
accounts receivable, accounts payable, and other accrued liabilities,
the carrying amounts approximate fair value because of the short
maturity of these instruments.
10. STATEMENTS OF CASH FLOWS
Non-cash investing and financing activities included in the following:
<TABLE>
<CAPTION>
2000 1999 1998
<S> <C> <C> <C>
Increase in construction costs payable $ -- $ -- $373,705
</TABLE>
11. LIQUIDITY
At January 30, 2000, the Company had current liabilities in excess of
current assets of $1,803,342 and a stockholders' deficit of $564,339.
The Company reported a net loss of $369,097 and cash provided by
operating activities of $762,797 for fiscal 2000.
Management estimates that the Amarillo Grill restaurants opened in
fiscal 1998, 1999, and 2000 will generate sufficiently increased cash
flow from operations that will enable the Company to meet its financial
obligations in fiscal 2001 as they come due.
<PAGE>
AMARILLO MESQUITE GRILL, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
12. SALE OF GRANDY'S RESTAURANTS
As noted in Note 1, the Company sold all the assets of the eight
Grandy's restaurants owned and operated by the Company.
The following presents the net sales and operating income, before
allocation of corporate overhead, of the above restaurants which are
included in the accompanying statements of operations for the fiscal
year ended January 25, 1998:
<TABLE>
<CAPTION>
1998
<S> <C>
Net sales $ 803,734
Operating income 47,227
</TABLE>
13. LITIGATION
The Company is also a party to various litigation arising in the normal
course of conducting business in the litigious U.S. business
environment. Management does not expect any material amounts of future
loss as a result of such litigation.
<PAGE>
<PAGE>
EXHIBIT INDEX
3.1 Restated Articles of Incorporation of Grandy's of El Paso,
Inc. and Change of Corporate Name to Maverick
Restaurant Corporation and Certificate of Correction to
Restated Articles of Incorporation of Grandy's of El
Paso, Inc. changing the Corporate Name to Maverick
Restaurant Corporation as filed with the Secretary of
State of the State of Kansas on July 28, 1983 and
August 18, 1983, respectively (filed as Exhibit 3.1 to
Registration No. 2-86266-FW and such exhibit is hereby
incorporated by reference).
3.2 Certificate of Amendment to Articles of Incorporation as
filed with the Secretary of State of the State of
Kansas on May 22, 1984 (filed as Exhibit 3.2 to the
Company's Form 10-K for the fiscal year ended January
31, 1985, and such exhibit is hereby incorporated by
reference).
3.3 Certificate of Amendment to Articles of Incorporation as
filed with the Secretary of State of the State of
Kansas on May 27, 1997 changing the corporate name to
Amarillo Mesquite Grill, Inc. (filed as Exhibit 3.3 to
the Company's Form 10-K for the fiscal year ended
January 25, 1998, and such exhibit is hereby
incorporated by reference
3.4 Bylaws of the Company (filed as Exhibit 3.2 to Registration
No. 2-86266-FW and such exhibit is hereby incorporated
by reference).
10.1 1994 Incentive Stock Option Plan (filed as Exhibit 10.9 to
the Company's Form 10-K for the fiscal year ended
January 31, 1995 and such exhibit is hereby
incorporated by reference).*
10.2 1997 Incentive Stock Option Plan (filed as Exhibit A to the
Company's Proxy Statement dated April 23, 1997 and such
exhibit is hereby incorporated by reference).*
10.3 Promissory Note dated January 3, 2000 between the Company
and Chris F. Hotze (filed herewith).
23.1 Consent of Allen, Gibbs & Houlik, L.C. (filed herewith).
23.2 Consent of KPMG LLP (filed herewith).
27 Financial Data Schedule (filed herewith).
________________
*Management's Compensation Plan
<PAGE>
EXHIBIT 10.3
January 3, 2000
PROMISSORY NOTE
Amarillo Mesquite Grill, Inc. promises to pay to Chris F. Hotze the sum of Two
Hundred Twenty-four Thousand Dollars ($224,000) with interest thereon at a rate
of interest of 10% per annum.
The note with interest due from the date hereof shall become due and payable on
January 3, 2001 or upon demand by Chris Hotze or his successors.
Amarillo Mesquite Grill, Inc.
By: /s/ Linn F. Hohl
Linn F. Hohl - Vice President
of Finance
Witnessed and notarized this 3rd day of January 2000 by /s/ Arlene M. Bogle.
My Commission expires 1/22/2002
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Amarillo Mesquite Grill, Inc:
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (nos. 33-95480 and 333-44227), of our report, dated
March 13, 2000, relating to the financial statements of Amarillo Mesquite
Grill, Inc., included in the annual report on Form 10-K, as of and for the
year ended January 30, 2000.
Allen, Gibbs & Houlik, L.C.
Wichita, Kansas
April 17, 2000
<PAGE>
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Amarillo Mesquite Grill, Inc:
We consent to incorporation by reference in the registration statement (no. 33-
95480 and 333-44227) on Form S-8 of Amarillo Mesquite Grill, Inc. of our report
dated March 20, 1998, relating to the balance sheet of Amarillo Mesquite Grill,
Inc. as of January 25, 1998, and the related statements of operations,
stockholders' equity and cash flows for the years ended January 25, 1998 and
January 26, 1997, which report appears in the January 31, 1999 annual report on
Form 10-K of Amarillo Mesquite Grill, Inc.
KPMG LLP
Wichita, Kansas
April 24, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from the audited
financial statements of Amarillo Mesquite Grill, Inc. for the fiscal year ended
January 30, 2000 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-30-2000
<PERIOD-START> FEB-01-1999
<PERIOD-END> JAN-30-2000
<CASH> 407,710
<SECURITIES> 0
<RECEIVABLES> 21,137
<ALLOWANCES> 0
<INVENTORY> 169,027
<CURRENT-ASSETS> 768,758
<PP&E> 10,376,500
<DEPRECIATION> 2,998,736
<TOTAL-ASSETS> 8,873,451
<CURRENT-LIABILITIES> 2,572,100
<BONDS> 0
0
0
<COMMON> 83,011
<OTHER-SE> 7,532,622
<TOTAL-LIABILITY-AND-EQUITY> 8,873,451
<SALES> 18,355,305
<TOTAL-REVENUES> 18,355,305
<CGS> 6,374,037
<TOTAL-COSTS> 17,861,598
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 642,724
<INCOME-PRETAX> (369,097)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (369,097)
<EPS-BASIC> (.05)
<EPS-DILUTED> (.05)
</TABLE>
