HUDSON'S GRILL OF AMERICA, INC.
1995 ANNUAL REPORT
LETTER TO THE SHAREHOLDERS
To the Shareholders of Hudson's Grill of America, Inc.:
In 1995, Hudson's Grill of America, Inc., continued to sell
its company owned and operated restaurants and to focus primarily
on being a franchisor of Hudson's Grills. This has continued the
Company's past policy of reducing its dependence on company
operated restaurants and to produce a greater territorial base for
its sales. The Company currently has franchises in California,
Texas, and New Jersey.
The operations of the Company underwent major changes the past
two years, and will continue to undergo changes in 1996. In
January 1995, the Company terminated a joint venture agreement at
its Whittier restaurant, and operated that troubled unit as a
subsidiary. Additionally, in January, the Company closed on the
sales of its Westlake and Simi Valley restaurants. In September,
the Company settled the lawsuit which had been filed by two former
employees. The lawsuit was settled at no cost to the Company. In
November, 1995, the Company entered into a Franchise Development
Agreement with an existing franchisee to build 24 new Hudson's
Grills in California, New Jersey and New York. In addition, that
franchisee amended its existing franchise agreements and prepaid
some of its future franchise fees. Also in November, the Company
completed a buyout of the lease at one of its closed restaurants,
and the lease was terminated with no future exposure or liability
for the Company. On January 17, 1996, the Company completed the
sale of the Oxnard Hudson's Grill to the operator, and the
restaurant is now a franchise. And in February, 1996, the first of
the New Jersey franchises was opened as an experimental "food
court" location in a large shopping mall.
After reducing the corporate staff substantially the past two
years, management increased the office personnel by adding a part
time administrative assistant. Corporate management consists of
four individuals, two of which, the President and Chief Financial
Officer, are not currently drawing any compensation. Dalms, Inc.,
has been retained as a consultant to increase the number of
franchises, and Thomas A. Sacco, a principal in and Vice-President
of Dalms, has been appointed Senior Vice President of Operations
and Franchise Development.
The Company now expects a slow but steady improvement in its
cash flow and financial performance as the number of its
franchisees increases, and we are now actively pursuing new
franchisees.
David L. Osborn
President and Chief Executive
Officer
HUDSON'S GRILLS
Hudson's Grill is a full service, limited menu concept with
alcoholic beverage service. The management teams work with the
philosophy that the customer should be viewed as their "Guest".
They stress quality of product and service, efficient flow of
communications, integrity in job performance and strong employee
morale. These restaurants range in size from 2,500 to 5,500 square
feet. The decor package has the theme of a "Classic Grill of the
50's and 60's", with the front end of a Hudson's automobile coming
through the wall as a main feature. Some restaurants are in free
standing buildings, and some are located within in-line shopping
centers. One new restaurant is located at a food court in a
shopping mall. Each Hudson's Grill employs approximately forty
employees, seventy percent of whom are part-time employees.
With the exception of the new "food court" location, which has
a limited menu and does not serve alcoholic beverages, the
restaurants have similar operations and offer similar food. The
Company plans to expand primarily through adding franchises, but is
will consider Company owned and operated units in the future.
Since the restaurant industry is very competitive, the Company
plans to attract loyal patrons by higher levels of service and more
exacting specifications for its products.
Most Hudson's Grill restaurants open at 11 a.m. and remain
open until midnight, seven days a week, utilizing the same menu
throughout all parts of the day. They specialize in 1/3 pound
hamburgers with the beef patties produced to very exacting
specifications. The menu also features an expanded chicken burger
section using top quality chicken breasts and whole wheat buns.
Also on the menu are salads, sandwiches, a variety of appetizers,
fajitas, tacos, and handmade milkshakes and malts. Cocktails, beer
and wine are also available with food. The full service restaurant
concept utilizes booths and tables with waiters and waitresses
serving the guests.
As of December 31, 1995, the number of total employees of the
Company was 2, and the number of full time employees was 1.
FRANCHISE PROGRAM
The Company has been issued the trademark registration of a
"Hudson's Grill" logo and of the "Hudson's" name. It is also
currently seeking registration of several older logos and a brand new
one. The Company has secured a permit from the California Department
of Corporations to issue Hudson's Grill franchises in California and
uses a Uniform Franchise Offering Circular where permitted. As of
December 31, 1995, the Company had fourteen franchised restaurants
that were in operation. The current standard terms to franchise a
restaurant are an initial fee of Twenty Five Thousand Dollars and a
royalty of four percent of sales, and require that three percent of
sales be used for advertising. For these payments, the Company is
obligated to do the following: screen and train potential
franchisees, review and approve sites, and provide an operations
manual and assistance.
During 1992, one restaurant was opened in Texas. In 1993, four
additional franchise restaurants opened for business or were
converted from Company owned locations. During 1993, the Company
entered into a restaurant development agreement in Florida.
According to the agreement, one restaurant was to be opened in 1994,
but the Florida franchisee has breached its agreement, which the
Company has terminated. During 1995, two joint ventures were sold
and became franchises, and the Company entered into a Franchise
Development Agreement with a current franchisee to open 24 new
restaurants in California, New Jersey, and New York.
OFFICERS AND DIRECTORS
Below are officers and directors of the Company and their
primary employer:
Principal
Occupation Principal
or Name of Business of
Name Position Employment Employer Employer
David L. Chairman Chief Southpoint Restaurant
Osborn of the Executive Management Management
Board, Chief Officer or Corp., Services and
Executive Partner Famous Operations
Officer, and Bars,
Director Grills &
Cafes of
America,
Inc., and
DAC
Associates
D. Marion Chief CPA and Wood, Accounting,
Wood Financial Share- McClanahan Management,
Officer and holder & Company, Tax and
Director PLLC Auditing
Services
Thomas A. Senior Vice Vice- Dalms, Inc. Restaurant
Sacco President - President Consulting
Operations
and Fran-
chise
Development
Clifford J. Director Retired
Osborn
Mitzy Secretary Admini- Hudson's Grill Franchisor
Ferguson strative of Am., Inc. of
Restaurants
MARKET PRICE AND MARKET INFORMATION
MARKET INFORMATION
The Company's Common Stock, no par value, is traded in the
over-the-counter market and trades under the National Association of
Security Dealers Automated Quotation System ('NASDAQ") symbol "HDSG".
As of April 2, 1996, there were approximately 320 holders of record
of the Company's Common Stock. The following table sets forth the
reported high and low bid prices of the Common Stock for the periods
indicated as regularly quoted by NASDAQ. The over-the-counter market
quotations reflect interdealer prices, without retail mark-up, mark-
down or commissions and may not necessarily represent actual
transactions.
FISCAL YEAR ENDED DECEMBER 31. 1995 High Low
First Quarter ended March 31, 1995 1/8 1/32
Second Quarter ended June 30, 1995 1/16 .02
Third Quarter ended September 30, 1995 1/16 .02
Fourth Quarter ended December 31, 1995 1/16 .02
FISCAL YEAR ENDED JANUARY 1. 1995 High Low
First Quarter ended March 31, 1994 3/8 1/8
Second Quarter ended June 30, 1994 1/4 1/16
Third Quarter ended September 30, 1994 3/32 1/16
Fourth Quarter ended December 31, 1994 1/8 1/16
FISCAL YEAR ENDED JANUARY 2, 1994 High Low
First Quarter ended March 31, 1993 1/4 1/16
Second Quarter ended June 30, 1993 1/4 3/16
Third Quarter ended September 30, 1993 1/4 1/32
Fourth Quarter ended December 31, 1993 1/4 1/32
As of March 29, 1996, the closing bid price of the Common Stock
was 3/32 of one dollar (9.375 cents). This information was obtained
from the National Quotation Bureau, Inc.
DIVIDENDS
The Company has not paid cash dividends on its common stock, and
the present policy of the Company's Board of Directors (the "Board")
is to retain earnings attributable to common stock to provide funds
for the operation and expansion of the Company's business. The
Company does not expect to pay cash dividends on its common stock in
the foreseeable future.
ACCOUNTANTS
The Company has invited accountants from Hein + Associates to be
present at the Annual Meeting; therefore they may be present. If a
representative of Hein + Associates is present at the Annual Meeting
of Shareholders, the representative will be allowed to answer
appropriate questions, and will be afforded an opportunity to make a
statement if so desired. Prior to the appointment in December 1993
of Hein + Associates as the Company's accountants, Deloitte & Touche
acted as the Company's accountants.
Deloitte & Touche was dismissed in December 1993 as the
Company's accountants and replaced by Hein + Associates. Neither of
Deloitte & Touche's reports for its last two year's audits contained
an adverse opinion or disclaimer of opinion, or was modified as to
uncertainty, audit scope, or accounting principles. The Audit
Committee of the Board of Directors recommended to the Board that
Hein + Associates be hired instead of Deloitte & Touche, and the
Directors agreed. The Company did not have any disagreements with
Deloitte & Touche about any accounting matters, financial statement
disclosure, or scope of audit or procedure. Prior to hiring Hein +
Associates, the Company had not contacted them about what types of
opinions they might make about the Company's financial statements or
about any specific transactions.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF ITS FINANCIAL STATEMENTS
For the year ended December 31, 1995, the Company had income
before income taxes and extraordinary items of Thirteen Thousand
Four Hundred Forty Eight Dollars ($13,448). This compares to
losses before income taxes and extraordinary items of Nine Hundred
Twenty Six Thousand Nine Hundred Seventy Four Dollars ($926,974)
for the year ended January 1, 1995, and of Two Million Ninety Six
Thousand Seven Hundred Fifty One Dollars ($2,096,751) for the year
ended January 2, 1994.
For the year ended December 31, 1995, the Company had net
income after taxes and extraordinary items of Thirteen Thousand
Four Hundred Forty Eight Dollars ($13,448). This compares to net
income after taxes and extraordinary items of One Million One
Hundred Eighty Nine Thousand Two Hundred Sixty One Dollars
($1,189,261) for the year ended January 1, 1995, and to a net loss
of One Million Nine Hundred Fifty Six Thousand Seven Hundred Fifty
One Dollars ($1,956,751) for the year ended January 2, 1994. The
net income for the year ended January 1, 1995, resulted primarily
from a gain on restructuring of troubled debt.
Because the Company intends on becoming primarily a
franchisor, several years ago it began closing poorly performing
restaurants and selling the remaining profitable ones. Losses due
to restaurant closures amounted to Two Million Six Hundred Seventy
Five Thousand Six Hundred Twenty One Dollars ($2,675,621) for the
year ended January 2, 1994 and Eight Hundred Two Thousand Seven
Hundred Ninety Nine Dollars ($802,799) for the year ended January
1, 1995. The Company intends to dispose of all of its direct and
indirect restaurant operations as soon as practical so that it will
be solely in the franchising business, before proceeding to build
or to operate any new Company owned restaurants.
One of the four restaurants that were either subsidiaries of,
or were under joint ventures with the Company as of January 1,
1996, has already been sold. The other three restaurants remain
for sale or are under an option to purchase.
REVENUES
Because the Company was holding its remaining restaurants for
sale, it had ceased recording sales and expenses from direct
restaurant operations after January, 1994. However, because the
Company terminated the joint venture for the Whittier Hudson's
Grill in January, 1995, and operated it as a subsidiary, it once
again recorded sales and expenses for that location for 1995. The
Company continued to record only joint venture revenues for the
remaining stores which were operated under joint venture
agreements. These revenues will cease when these stores are sold.
Franchise revenues should continue to increase as new franchises
are added. Franchising revenues have increased from Seventy Two
Thousand Thirty One Dollars ($72,031) for the year ended January 1,
1995, to Two Hundred Ninety Five Thousand Three Hundred Twelve
Dollars ($295,312) for the year ended December 31, 1995. Seventy
Four Thousand Three Hundred Seventy Four Dollars ($74,374) of the
franchise revenues for the year ended December 31, 1995, were due
to one time initial franchise fees of Twenty Five Thousand Dollars
($25,000) per franchise for three new franchises (minus minimal
costs). There were no new franchise fees for the year ended
January 1, 1995. The remainder of franchise fees for the year
ended December 31, 1995, were the result of the weekly continuing
royalty fees paid by franchisees. Thus, the continuing franchise
revenues for the year ended December 31, 1995, were Two Hundred
Twenty Thousand Nine Hundred Thirty Eight Dollars ($220,938),
compared to continuing franchise revenues for the year ended
January 1, 1995, of Seventy Two Thousand Thirty One Dollars
($72,031).
COSTS AND EXPENSES
Since the Company is and has been selling or closing its
restaurants, an analysis of restaurant costs of sales and of
restaurant operating expenses is no longer meaningful because
almost all of the Company's restaurants have been or are being sold
and converted to franchises, or shut down. General and
administrative expenses, and the depreciation and amortization
expenses for equipment leased to restaurants will continue to be
important. General and administrative expenses for the year ended
December 31, 1995, were Four Hundred Eighty Four Thousand Six
Hundred Fifty Six Dollars ($484,656), as opposed to Three Hundred
Eighty One Thousand One Hundred Eighty Two Dollars ($381,182) for
the year ended January 2, 1995. The increase in general and
administrative expenses results from increases in franchising
activities.
Depreciation and amortization, which for the year ended
December 31, 1995, was Eighty Seven Thousand One Hundred Forty
Seven Dollars ($87,147), and was Two Hundred Ninety Seven Thousand
Four Hundred Ninety-one Dollars ($297,491) for the year ended
January 1, 1995, will continue to decrease, particularly to the
extent that furniture, fixtures and equipment are sold to the
purchasers of the Company's restaurants and to the extent
restaurants are closed and written off.
At the current time, the President and Chief Financial Officer
of the Company are not drawing any salary; only the secretary of
the Company and one administrative assistant are being compensated.
The Company is paying for a consultant whose job it is to increase
the number of franchises. Because of this consulting arrangement,
which began in May, 1995, the general and administrative expenses
for the year ended December 31, 1995, have increased.
Interest expense has decreased significantly. The Company
recorded interest expense of One Hundred Four Thousand Two Hundred
Twenty Dollars ($104,220) for the year ended December 31, 1995, Two
Hundred One Thousand Sixty-three Dollars ($201,063) for the year
ended January 1, 1995, and Four Hundred Fifteen Thousand Six
Hundred Forty Four Dollars ($415,644) in the year ended January 2,
1994. The Company paid off two bank loans in December, 1993, and
in January, 1994 it entered into a conditional agreement with its
major secured creditor to reduce the balance of his loan and thus
reduce the monthly payments of interest. The agreement with the
secured creditor was such that the Company lent money to a company
that was, at that time, affiliated with the creditor; the note with
the secured creditor was reduced to the amount of the indebtedness
owed by the company controlled by him, and an offset agreement was
also executed. This arrangement contributed to the Company
receiving One Hundred Seventy Six Thousand Seven Hundred Thirty
Dollars ($176,730) in interest income for the year ended December
31, 1995. Thus, the net interest income for the year ended
December 31, 1995, is Seventy Two Thousand Five Hundred Ten Dollars
($72,510), which is a substantial improvement from the net interest
expense of Sixty Thousand Six Hundred Forty Eight Dollars
($60,648), in the year ended January 1, 1995, and the net interest
expense of Four Hundred Fifteen Thousand Six Hundred Forty Four
Dollars ($415,644) in the year ended January 2, 1994.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1995, the Company had a positive working
capital of One Hundred Ninety Five Thousand Five Hundred Six
Dollars ($195,506), as compared to a deficit of Thirty Six Thousand
Seven Hundred Thirty Five Dollars ($36,735) at January 1, 1995, and
a deficit of One Million One Hundred Eighty Thousand Sixty Seven
Dollars ($1,180,067) at January 2, 1994. The increase in working
capital is largely attributable to the sale of restaurants and the
conversion of the Company's secured debt into stock warrants. The
proceeds from the sale of restaurants has been used to pay down
bank notes and to create notes receivable.
In light of the decision to focus primarily on franchising,
the Company anticipates that its accounts payable will continue to
decrease. Thus, it anticipates that the need for working capital
will also decrease. Most of the Company's cash flow in the year
ended December 31, 1995, came from joint venture revenues,
equipment leasing and franchise fees. This should continue in
1996, but as more of its joint ventures are sold and converted to
franchises, more of its cash flow will come from franchise
royalties, proceeds from the sales of the restaurants, and from
equipment leases; and less will come from joint venture revenue.
After the Company has sold most or all of its joint ventures,
changes in its liquidity and capital will depend mostly on initial
franchise fees and from continuing royalty fees received from
franchisees using the Company's trademark and restaurant concept,
rather than on equipment leasing, which should remain stable for
the next several years.
The Company received Twelve Thousand One Hundred Eighty Two
Dollars ($12,182) in net cash proceeds from the sale of restaurants
in the year ended December 31, 1995, Twenty Two Thousand Dollars
($22,000) in net cash proceeds from the sale of restaurants in the
year ended January 1, 1995, and Two Million Seven Hundred Ninety
Thousand Nine Hundred Fifty Four Dollars ($2,790,954) in net cash
proceeds from the sale of restaurants in the year ended January 2,
1994. The Company anticipates minimal cash proceeds in 1996 from
the sale of its remaining joint ventures since most of the
remaining sales of joint ventures are to a large extent being
financed by the Company with notes and leases covering furniture,
fixtures and equipment. To the extent that the purchasers of the
remaining joint ventures pay their notes and their lease
obligations on a timely basis, the Company's cash resources and
liquidity will increase.
In January 1994, the Company reached a tentative agreement
with its largest secured creditor to reduce and restructure the
secured debt owed to the creditor and certain other related
liabilities owed to him. As part of this agreement, the Company
loaned money to an entity formerly affiliated with the creditor,
and received a note in return (the "FGA Note"). The scheduled
payments on the "FGA Note" are approximately equal to the amounts
payable to the secured creditor under the restructured credit
agreement, and payments not received on the "FGA Note" may be used
to offset payments on the note payable to the secured creditor.
This arrangement will help reduce the future cash requirements of
the Company. The revision of the credit agreement was finalized
and completed on June 27, 1994.
Subsequent to December 31, 1995, the company formerly
affiliated with the secured creditor formally requested and
obtained from the Company a modification of the "FGA Note"; the
Company will forego payments until February 1997, at which time the
entire amount of unpaid principal and interest will be amortized at
8% over ten years. Correspondingly, the Company began to exercise
its right of offset on its note payable to the secured creditor.
The Company was assigned several notes receivable with an aggregate
face value of $1,199,000 as additional collateral in connection
with this note modification.
Once the Company has sold all of its joint ventures, the
Company's revenues will be dependent on royalty fees from
franchised restaurants, all of which except one in New Jersey are
currently located in California and Texas.
FORM 10-KSB ANNUAL REPORT
A copy of Hudson's 1995 Form 10-KSB Annual Report, as filed
with the Securities and Exchange Commission, is available upon
request to shareholders and beneficial owners of shares in the
Company upon written request addressed to: Hudson's Grill of
America, Inc., 16970 Dallas Parkway, Suite 402, Dallas, Texas
75248.
ADDITIONAL INFORMATION
EXECUTIVE OFFICE
The address for the executive office is:
16970 Dallas Parkway, Suite 402
Dallas, Texas 75248
INDEPENDENT AUDITORS
Hein + Associates
12770 Coit Road, Suite 1150
Dallas, Texas 75251
LEGAL COUNSEL
Fischer & Sanger
5956 Sherry Lane, Suite 1204
Dallas, Texas 75225
REGISTRAR AND TRANSFER AGENT
U. S. Stock Transfer Corporation
1745 Gardena Avenue
Glendale, CA 91204-2991
STOCKHOLDERS MEETING
The 1996 Annual Meeting of Stockholders will be held at the
Hudson's Grill of Hurst, 708 Grapevine Highway, Hurst, Texas 76054,
on Tuesday, May 28, 1996 at 10:00 a.m. A notice of the meeting,
proxy statement and proxy voting card, have been mailed to
stockholders with this Annual Report.
FINANCIAL STATEMENTS
Attached are the audited financial statements of the Company for
the most recent fiscal year ended December 31, 1995.
f\sec\960416.O01
HEIN + ASSOCIATES LLP
March 8, 1996
Dallas, Texas
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
DECEMBER 31, JANUARY 1,
CURRENT ASSETS: 1995 1995
Cash and cash equivalents $ 48,295 $ 92,750
Accounts receivable, no allowance for doubtful
accounts considered necessary 40,379 44,098
Current portion of notes and leases receivable 217,221 203,005
Prepaid expenses and other 24,826 14,871
Total current assets 330,721 354,724
PROPERTY AND EQUIPMENT, at cost:
Leasehold improvements 662,879 933,250
Restaurant equipment 480,933 772,812
Furniture and fixtures 196,052 297,266
Total property and equipment 1,339,864 2,003,328
Less accumulated depreciation and amortization (1,206,293) (1,481,435)
Property and equipment, net 133,571 521,893
LONG-TERM PORTION OF NOTES & LEASES RECEIVABLE 2,053,387
1,836,679
LIQUOR LICENSES, net of accumulated amortization
of $67,085 at December 31, 1995 and $60,785
at January 1, 1995 156,530 243,138
OTHER ASSETS 49,735 74,144
Total assets $ 2,723,944 $ 3,030,578
F-2
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS, continued
LIABILITIES AND SHAREHOLDERS' EQUITY
DECEMBER 31, JANUARY 1,
1995 1995
CURRENT LIABILITIES:
Current portion of long-term debt $ 65,199 $ 126,684
Accounts payable 37,430 154,309
Accrued liabilities 32,586 110,466
Total current liabilities 135,215 391,459
LONG-TERM DEBT l,172,989 1,238,187
OTHER LONG-TERM LIABILITIES 422,720 523,436
DEFERRED INCOME 450,858 348,782
COMMITMENTS AND CONTINGENCIES (NOTE 4)
SHAREHOLDERS' EQUITY:
Preferred stock, 1,000,000 shares
authorized, none issued or
outstanding--
Common stock, no par value, 10,000,000
shares authorized,
6,056,986 shares issued and outstanding 4,456,457 4,456,457
Accumulated deficit (3,914.295) (3,927,743)
Total Shareholders' Equity 542.162 528,714
Total Liabilities & Shareholders' Equity $ 2,723,944 $ 3,030,578
See accompanying notes to these financial statements.
F-3
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
PERIODS ENDED
DECEMBER 31, JANUARY 1, JANUARY 2,
1995 1995 1994
REVENUES:
Net sales $ 592,316 $ 44,469 $ 12,574,295
Joint venture revenues 171,606 489,682 111,000
Franchising revenues 295,313 72,031 189,578
Equipment lease income 63,989 48,000
Total revenues 1,123,224 654,182 12,874,873
COST AND EXPENSES:
Cost of sales 732,343 175,700 11,970,123
General and administrative 484,656 381,182 477,843
Depreciation and amortization 87,147 297,491 575,246
Total costs and expenses 1,304,146 854,373 13,023,212
Loss from Operations (180,922) (200,191) (148,339)
OTHER INCOME (EXPENSE):
Interest expense (104,220) (201,063) (415,644)
Interest and dividend income 176,730 140,415
Amortization of deferred income - - 213,678
Gain on sales of restaurants 21,777 47,751 855,211
Gain (loss) on restaurant closures 86,766 (802,799) (2,675,621)
Other 13,317 88,913 73,964
Total Other Income (Expense) 194,370 (726,783) (1,948,412)
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM 13,448 (926,974) (2,096,751)
BENEFIT FOR INCOME TAXES- 369,002
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM: 13,448 (557,972)
(2,096,751)
Extraordinary gain on restructuring of debt - 1,747,233 140,000
NET INCOME(LOSS) $ 13,448 $1,189,261 $(1,956,751)
INCOME (LOSS) PER SHARE:
Before extraordinary item $ - $ (.06) $ (.35)
Extraordinary item - .20 .02
Net Income (Loss) Per Share $ - $ .14 $ (.33)
See accompanying notes to these financial statements.
F-4
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
FOR THE PERIOD FROM JANUARY 4, 1993 THROUGH DECEMBER 31, 1995
COMMON STOCK ACCUMULATED
SHARES AMOUNT DEFICIT TOTAL
BALANCES, January 4, 1993 6,056,986 $4,456,457 $(3,160,253) $ 1,296,204
Net loss - - (1,956,751) (1,956,751)
BALANCES, January 2, 1994 6,056,986 4,456,457 (5,117,004) (660,547)
Net income - - 1,189,261 1,189,261
BALANCES, January 1, 1995 6,056,986 4,456,457 (3,927,743) 528,714
Net income - - 13,448 13,448
BALANCES, Dec. 31, 1995 6,056,986 $4,456,457 $(3,914,295) $ 542,162
See accompanying notes to these financial statements.
F-5
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED
DECEMBER 31, JANUARY 1, JANUARY 2,
1995 1995 1994
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss) $ 13,448 $ 1,189,261 $ (1,956,751)
Adjustments to reconcile net
income (loss) to cash
from operating activities:
Depreciation and amortization 87,147 297,491 575,246
Gain on sales of restaurants (21,777) (47,751) (855,211)
(Gain)loss on restaurant closures(86,766) 802,799 2,675,621
Amortization of deferred income - - (213,678)
Loss on liquor license valuation - - 154,615
Forgiveness of debt, net of
write-oft of related
assets - (1,747,233) (140,000)
Changes in assets and liabilities:
Accounts receivable (57,715) 180,030 (165,724)
Inventories - 86,052 176,330
Prepaid expenses and other (11,865) 34,875 11,812
Accounts payable 36,756 (368,144) (319,473)
Accrued liabilities and other (314,674) (729,888) (913,502)
Net cash used by operating
activities (355,446) (302,508) (970,715)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property and equipment - - (45,532)
Net proceeds from sales of assets 12,182 22,000 2,790,954
Increase in note receivable - (1,000,000) -
Notes receivable principal payments 124,204 239,684 118,797
Payments received on leases
receivable 101,300 15,000 -
Decrease in other assets 24,409 - 38,955
Net cash provided (used)
by investing activities 262,095 (723,316) 2,903,174
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 40,000 - 222,657
Repayments of notes payable (141,104) (176,028) (1,144,479)
Repayments of capital lease
obligations - - (51,717)
Buydown of franchise fees 150,000 - -
Net cash provided (used) by
financing activities 48,896 (176,028) (973,539)
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (44,455) (1,201,852) 958,920
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 92,750 1,294,602 335,682
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 48,295 $ 92,750 $ 1,294,602
- -Continued-
F-6
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS, continued
YEARS ENDED
December 31, January 1, January 2,
1995 1995 1994
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 103,714 $ 102,242 $ 292,046
Income taxes paid (recovered) $ - $(369,002) -
SUPPLEMENTAL DISCLOSURES OF NON-CASH TRANSACTIONS:
Year Ended December 31, 1995 - In connection with the sale of restaurants,
the Company received two notes receivable totaling $100,000 and leases
receivable totaling $320,000.
Year Ended January 1, 1995- In connection with the sale of a restaurant and
equipment the Company received a note receivable of $262,800 and a lease
receivable of $223,000. In addition, liabilities of $2,780,000 were forgiven
in a debt restructuring transaction.
Year Ended January 2, 1994 - In connection with the sale of restaurants, the
Company received a note receivable of $490,000. In addition, $140,000 of
bank debt was forgiven in connection with repayment of the remainder of the
debt in 1993.
See accompanying notes to these financial statements.
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Hudson's Grill of America, Inc. (the "Company") franchises and
previously owned and operated full service restaurants,
primarily in Southern California and Texas. As of December 31,
1995, the Company has thirteen franchised restaurants.
Additionally, it owns four restaurants, all of which are held
for sale. The Company previously operated eleven Wendy's
restaurants. (See Notes 2 and 8).
The consolidated financial statements include the Company and
its wholly-owned subsidiaries, Equipco, Inc. and Hudson's Grill
of Whittier, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.
Management is in the process of attempting to sell and
franchise the Company's restaurants and believes that these
and other cost cutting actions will assist the Company in
meeting its cash flow requirements over the next twelve
months.
Restaurants Held for Sale
As of December 31, 1995, all but one of the restaurants held
for sale are operated under formal or informal joint venture
agreements with prospective purchasers. The Company has ceased
recording operating revenues and expenses on these restaurant
locations, but records joint venture and equipment rental fees
(see Note 8). One restaurant held for sale is operated by the
Company as of December 31, 1995 following a foreclosure under
a joint venture agreement during 1995. The assets of the
restaurants held for sale are primarily property and equipment
and liquor licenses. Management has evaluated the remaining
net assets of the restaurants held for sale and believes the
carrying values do not exceed the net realizable values of
those assets.
Cash and Cash Equivalents
Cash and cash equivalents for purposes of the statement of
cash flows consist of cash and short-term investments
purchased with an original maturity of three months or less.
Non-Current Assets
All of the Company's property and equipment is leased under
operating leases to prospective purchasers, with the exception
of the property and equipment in one restaurant, which had a
carrying value of $30,000 at December 31, 1995.
Depreciation of property and equipment is recognized using the
straight-line method over the estimated lives of the assets
(generally five to seven years).
Amortization of leaseholds is recognized using the
straight-line method over the shorter of the initial term of
the respective lease or the service life of the leased asset.
F-8
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Goodwill was recorded as the difference between the purchase
price and the fair value of net assets acquired upon purchase
of the initial restaurants, and was amortized on the
straight-line method over forty years. The Company charged
against income a total of approximately $3,500,000 of the
remaining goodwill balances during the periods ended January
1, 1995 and January 2, 1994 in connection with the sales and
closures of the related restaurants and the restructuring of
the related acquisition debt.
Liquor licenses are recorded at cost and are amortized over
ten years.
Revenue Recognition
Initial franchise fees are recognized as revenue when all
material services or conditions relating to the sale have been
substantially performed or satisfied. Continuing franchise
fees are recognized as revenue as the fees are earned and
become receivable from the franchisee.
Income Taxes
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due plus deferred taxes related primarily to
differences between the financial and income tax reporting
bases of assets and liabilities. The deferred tax assets and
liabilities represent the future tax return consequences of
those differences, which will either be taxable or deductible
when the assets and liabilities are recovered or settled.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the
reporting period. Significant items in the accompanying
financial statements that include estimates are notes and
leases receivable and lease contingencies. Actual results
could differ materially from those estimates.
Income (loss) per share
Income (loss) per common share is computed based upon the
weighted average number of common and common equivalent shares
outstanding during the year. Common equivalent shares are not
considered if their effect is antidilutive. Common stock
equivalents consist of outstanding stock options and warrants.
Common stock equivalents are assumed to be exercised with the
related proceeds used to repurchase outstanding shares except
when the effect would he antidilutive. Common equivalent
shares were antidilutive in the periods ended December 31,
1995 and January 2, 1994.
The weighted average number of shares outstanding used in the
income (loss) per share computation was 6,056,986 for the year
ended December 31, 1995, 8,845,589 for the year ended January
1, 1995, and 6,056,986 for the year ended January 1, 1994.
F-9
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2. FRANCHISE ACTIVITIES
In 1991, the Company commenced franchising its Hudson's Grill
concept. Under the terms of the standard franchise agreement,
the franchisees are obligated to pay the Company an initial
franchise fee of $25,000, and a weekly continuing royalty fee
of 4% of gross restaurant revenues, and must spend 3% of
gross sales on approved advertising, including a weekly 1%
marketing fee contributed to the Company's marketing fund. The
Company is obligated to provide initial training, continuing
management assistance, administration of advertising and sales
promotion programs and establishment and monitoring of a
marketing fund. Franchising revenues consisted of:
PERIODS ENDED
DECEMBER 31, JANUARY 1, JANUARY 2,
1995 1995 1994
Initial franchise revenues $ 74,374 $ - $ 100,000
Continuing franchise revenues 220,938 72,031 89,578
Total franchise revenues $ 295,312 $ 72,031 $ 189,578
In November 1995, the Company received $150,000 from a
franchisee to prepay franchise fees. The Company recorded the
amount received as deferred income and will amortize it to
income over the life of the agreement. The balance at December
31, 1995 is $145,731.
The Company formerly was a party to franchise agreements with
Wendy's, Inc. ("Wendy's"). In 1991, the Company sold its
Wendy's franchises. Amortization of deferred income of
$213,678 during the year ended of January 2, 1994 represents
amounts formerly payable to Wendy's, payment of which Wendy's
agreed in 1988 to waive as consideration for the Company's
performance of certain conditions, including the continued
operation for at least five years of the Wendy's restaurants
formerly operated by the Company. Although the Wendy's
franchises were sold during 1991, this agreement continued to
be in effect. The agreement, as amended, provided that these
amounts were earned by the Company each year on a
straight-line basis over the five year period ending January
1994.
3. NOTES AND LEASES RECEIVABLE
At December 31, 1995 and January 1, 1995 the Company had a
note receivable with a balance of $1,199,114 from its Texas
franchisee. A principal shareholder of the Company owns an
interest in this entity and Travis L. Bryant (see Note 5)
owned an interest in this entity until 1994. Monthly payments
of principal and interest in the amount of $14,006 were
required for ten years at which time all remaining principal
and accrued interest was due. The note bears interest at a
rate of 8% per year and is collateralized by restaurant
equipment and improvements. In addition, an offset agreement
exists in which the Company can offset any past due amounts on
the note against a note payable to Travis L. Bryant with a
balance of $1,148,110 and $1,154,420 at December 31, 1995 and
January 1, 1995 respectively. See Note 5.
F-10
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Only three payments were received in 1995 from the Texas
franchisee and were applied to accrued interest. The Company
began to exercise its right of offset on its note payable to
Travis L. Bryant beginning in February 1996. Subsequent to
December 31, 1995, the Company and the Texas franchisee agreed
to modify the note by forgoing payments until February 1997,
at which time the entire amount of unpaid principal and
interest is to be amortized at 8% over ten years. The Company
was assigned several notes receivable with an aggregate face
value of $1,199,000 as additional collateral in connection
with the modification agreement. These notes arose from the
sale by the Texas franchisee of four of its restaurants and
are collateralized by the assets of the restaurants.
In connection with the sale of restaurants in the year ended
January 2, 1994, the Company received a note for $490,000 with
annual installments due over four years with the balance due
in the fifth year, plus interest at prime plus 2%. The balance
of the note at December 31, 1995 and January l, 1995 was
$228,409 and $316,667 respectively.
In connection with the sale of a restaurant in the year ended
January 1, 1995, the Company received a note for $262,800. The
note bears interest at a rate equal to the greater of prime
plus 2% or 9%, adjusted on a quarterly basis. Payments of
interest only are required for one year, after which ninety
six monthly payments are required in amounts necessary to
amortize the remaining principal balance of the note. The
balance of the note was $255,752 at December 31, 1995 and
$262,800 at January 1, 1995.
At December 31, 1995 the Company has a $44,216 note receivable
from a franchisee. The note bears interest at 10% and is
payable in equal monthly installments over a two year period.
In connection with the sale of two restaurants in the year
ended December 31, 1995 the Company received notes receivable
totaling $100,000 with annual installments of $24,046 over
five years including interest at 7 1/2 percent. The balance of
the notes receivable at December 31, 1995 totals $62,816.
The notes that arose with the sales of the various restaurants
referred to above are collateralized with certain assets of
those restaurants.
The Company also leased the restaurant equipment to the
purchasers of the restaurants sold in the years ended December
31, 1995 and January 1, 1995. The leases have been classified
as sales-type leases. The net carrying value of the leases
receivable at December 31, 1995 and January 1, 1995 is
$419,093 and $222,233 respectively.
Future lease payments due in fiscal periods ending:
December 29, 1996 $ 160,000
January 4, 1998 144,000
January 3, 1999 120,000
January 2, 2000 48,000
January 1, 2001 48,000
Thereafter 176,307
Total 696,307
Less amount representing
unearned interest (277,214)
$ 419,093
F-11
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4. COMMITMENTS AND CONTINGENCIES
The Company's restaurant buildings and certain equipment are
operated under non cancelable operating leases. Terms of these
leases extend from 3 to 25 years. Certain leases are
guaranteed by former directors. In addition to amounts
included below, the leases generally provide that the Company
pay taxes, maintenance, insurance and certain other operating
expenses applicable to the leased property, plus a percentage
of gross receipts in excess of certain limits stated in the
lease agreements. As explained in Note 8, most of the
Company's remaining restaurants are operated by third parties
under joint venture agreements and the rental payments are
being made by those parties.
The following is a summary by years of future minimum lease
payments on the restaurant locations:
Fiscal Period Ending:
December 29, 1996 $ 299,898
January 4, 1998 271,680
January 3, 1999 271,680
January 2, 2000 271,680
January 1, 2001 204,480
Thereafter 3,213,412
Total minimum lease payments $ 4,532,830
In addition to the leases discussed above, the Company has
assigned to the purchasers the leases of buildings for eight
of the restaurants sold in the periods December 31, 1995,
January 1, 1995 and January 2, 1994. The Company is
secondarily liable for the lease payments on these restaurants
should the purchasers not fulfill their responsibility under
the leases. The future lease payments for these restaurants
total approximately $9,804,152 at December 31, 1995. In
addition, the Company may be secondarily liable under other
leases for restaurants sold in prior years.
Total rental expenses for operating leases were $31,483,
$106,426 and $1,129,286 for the periods ended December 31,
1995, January 1, 1995 and January 2, 1994, respectively.
F-12
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5. LONG-TERM DEBT
Long-term debt at December 31, 1995 and January 1, 1995, which
is collateralized by substantially all
of the assets of the Company, is summarized as follows:
December 31, January 1,
1995 1995
Note payable to Travis L. Bryant, a former
director of the Company and a former part
owner of the Company' s Texas franchisee,
monthly interest payments of $7,696 through
November, 1995 and monthly installments of
$14,006 including interest at 8% through
November, 2005. (See below and Note 3). $ 1,148,110 $ 1,154,420
Note payable to Corona Market Partnership,
due in monthly installments of $5,327,
including interest of 8% through
June, 1997. 90,078 144,414
Note payable in monthly principal
installments of $5,555, plus interest
at prime rate plus 2% (total of 10.5% at
January 1, 1995), due March 1995. - 22,229
Note payable, due in monthly installments
of $1,435, including interest at 12%,
through May 1996. Repaid in 1995. - 23,527
Note payable, due in monthly installments of
$6,793, including interest at 7%, through
March 1995. - 20,281
Total 1,238,188 1,364,871
Less current portion (65,199) (126,684)
Long-term debt $ 1,172,989 $ 1,238,187
Principal payments due in the fiscal periods subsequent to
December 31, 1995 are as follows: (following the modification
to the note agreement with the Texas franchisee referred to in
Note 3).
Fiscal Year Ending:
December 29, 1996 $ 65,199
January 4, 1998 13,342
January 3, 1999 90,529
January 2, 2000 98,043
January 1, 2001 106,180
Thereafter 864,895
Total $ 1,238,188
F-13
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
In the year ended January 1, 1995, Travis L. Bryant formally
agreed to reduce a $3,360,000 note payable to him into a
$1,300,000 note due in monthly installments as described
above. In addition, Bryant agreed to forgive certain other
amounts due him by the Company, which totaled approximately
$720,000. In connection with the restructuring transaction,
Bryant also received a warrant to purchase 4,000,000 shares of
the Company's common stock at $.0625 per share anytime over
the next ten years. Consummation of the agreement was
contingent on the Company's performance of certain conditions,
including the loan of an additional amount to the Texas
franchisee to increase that note receivable from $300,000 to
$1,300,000 (see Note 3) and the compromise and satisfaction of
certain liabilities due lessors of certain closed restaurant
locations (see Note 4). These conditions were satisfied in the
year ended January 1, 1995 and the debt restructure was
consummated. The total debt forgiveness of $1,747,233, net of
approximately $1,033,000 of the write-oft of associated
goodwill, has been recorded as an extraordinary item.
6. INCOME TAXES
There was no income tax provision in 1995 due to the
application of tax net operating loss carry forwards. The
income tax benefit of $369,002 in the year ended January 1,
1995 resulted from the carry back and receipt of refunds for
income tax losses for prior years. The benefit was not
recorded in prior years due to uncertainty of recovery at that
time. The actual tax expense differs from the "expected" tax
expense computed by applying the U.S. Federal corporate tax
rate of 34% to earnings before income taxes for the year ended
January 1, 1995 primarily due to differences between financial
reporting and income tax treatment of the debt restructuring
described in Note 5.
Deferred income taxes are provided for temporary differences
between income tax and financial reporting as of December 31,
1995 and January 1, 1995 as follows:
December 31, 1995 January 1, 1995
Deferred tax asset:
Depreciation $ 182,000 $ 230,000
Net operating loss 134,000 167,000
Accrued settlement 46,000 60,000
Deferral income and rent 90,000 -
Valuation allowance (452,000) (457,000)
Total $ - $ -
At December 31, 1995, the Company had net operating loss (NOL)
and investment tax credit carry forwards for Federal income
tax purposes of approximately $860,000 and $200,000,
respectively. Use of these carry forwards (with the exception
of approximately $390,000 of the NOL carry forward) were
limited due to issuance of the warrant described in Note 5.
7. SHAREHOLDERS' EQUITY
The Company is authorized to issue 1,000,000 shares of
preferred stock with rights and preferences as designated by
the Board of Directors.
F-14
HUDSON 'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company has an incentive stock option plan ("ISO") which
provides for the issuance of options to officers, directors
and employees to purchase up to 825,000 shares of the
Company's common stock. Options are exercisable at prices
equal to the fair market value of common stock at the grant
date, vest 20% annually and expire generally within five
years. In 1993 the shareholders of the Company approved a
Directors' Stock Option Plan ("DSO"). This plan provides for
the issuance of up to 200,000 shares of stock to non-employee
directors in increments of 10,000 shares every two years.
Options will be issued at the average of the closing bid-ask
price on the date of the grant. No options were outstanding as
of December 31, 1995, January 1, 1995 or January 2, 1994 under
either plan.
The Company granted options to a consultant to purchase
400,000 shares of common stock with 100,000 shares vesting
each year from 1995 to 1998. The exercise price is the market
price at time of vesting. The exercise price of the shares
vested in 1995 is $.11 per share. The options expire, if not
exercised in 2003.
The following summarizes information regarding options
granted, outstanding and exercisable:
NUMBER OF SHARES OPTION PRICE
ISO OTHER DSO PER SHARE
Outstanding at January 4, 1993 189,750 305,800 - $.15-$1.14
Canceled (189,750) (305,800) -
Outstanding at January 2, 1994
and January 1, 1995 - - -
Granted - 400,000 - Market Price
Outstanding at December 31, 1995 - 400,000 -
In connection with a transaction with another company in 1991,
the Company issued a warrant to acquire 100,000 shares of the
Company's common stock at $1.00 per share. This warrant
expired unexercised on January 1, 1996.
In January 1994, in connection with a debt restructuring
agreement described in Note 5, the Company issued warrants to
Travis L. Bryant. The warrants are exercisable for 4,000,000
shares of common stock at $.0625 per share and expire in ten
years. The exercise price approximated the market value of the
stock at the time of grant.
8. RESTAURANT SALES AND CLOSURES
During the year ended December 31, 1995, the Company sold two
restaurants and a liquor license for a total loss of $8,550.
Also in 1995, the Company reached a final settlement on a
lease of a closed restaurant in an amount of $86,766 less than
had been previously accrued. This amount was recorded
as a gain in the year ended December 31, 1995.
F-15
HUDSON'S GRILL OF AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
During the year ended January 1, 1995, the Company sold one
restaurant and recorded a deferred gain of $348,782 on the
sale, which will be amortized into income over the terms of
the related note and lease receivables (see Note 3). The
balance of the deferred gain at December 31, 1995 and January
1, 1995 was $305,127 and $348,782, respectively.
On January 31, 1994, the Company closed its Irvine restaurant.
In connection with this closure, a loss of $460,000 was
recorded as of January 2, 1994 to write off goodwill and
estimate the settlement of lease obligations. An additional
$188,000 of losses related to the closure of the Irvine
restaurant were recorded in the year ended January 1, 1995.
The Company is endeavoring to sell all remaining restaurants
and has granted purchase options for three of the remaining
restaurants owned. These purchase options also include certain
joint venture provisions, which began in the second half of
the year ended January 2, 1994, whereby, the future purchasers
operate the restaurants and the Company receives a joint
venturer's fee based on sales, net of certain operating
expenses. In addition, certain joint venturers have agreed to
lease in-store assets over the term of the joint venture
agreements, which expire upon sale of the restaurants. Based
on the option price provided in these agreements, management
does not anticipate recording a loss on sale of these
restaurants.
The Company wrote down the carrying value of the one remaining
restaurant held for sale by approximately $587,000 during the
year ended January 1, 1995 due to diminished prospects for the
sale of the restaurant.
9. FINANCIAL INSTRUMENTS
Concentrations of Credit Risk
Credit risk represents the accounting loss that would be
recognized at the reporting date if counterparties failed
completely to perform as contracted. Concentrations of credit
risk (whether on or off balance sheet) that arise from
financial instruments exist for groups of customers or counter-
parties when they have similar economic characteristics that
would cause their ability to meet contractual obligations to
be similarly effected by changes in economic or other
conditions. In accordance with FASB Statement No. 105,
Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with
Concentrations of Credit Risk, the credit risk amounts shown
do not take into account the value of any collateral or
security.
Financial instruments that subject the Company to credit risk
consist principally of accounts receivable, cash on deposit
and notes and leases receivable.
At December 31, 1995, accounts receivable totaled $40,379, and
the Company has not provided an allowance for doubtful
accounts. Bad debts were immaterial for 1995 and 1994. The
Company performs periodic credit evaluations on its customers'
financial condition and believes that the allowance for
doubtful accounts is adequate.
F-16
HUDSON'S GRILL OF AMERICA, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The Company periodically maintains cash balances in excess of
FDIC insurance limits.
Notes and leases receivables are described in Note 3.
Fair Value of Financial Instruments
The estimated fair values of the Company's financial
instruments were determined by management using available
market information and appropriate valuation methodologies.
The estimates are not necessarily indicative of the amounts
the Company could realize in a current market exchange.
At December 31, 1995, cash, accounts receivable and accounts
payable have fair values that approximate book values based on
their short term or demand maturity.
The fair value of notes receivable and notes payable are based
on estimated discounted cash flows. The fair value of these
instruments approximates book value at December 31, 1995.
F-17
