HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 1996 and December 31, 1995
March 31, December 31,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 1,981 $ 48,295
Accounts receivable, no allowance
for doubtful accounts considered
necessary 33,148 40,379
Current portion of notes and lease
receivable 302,071 217,221
Prepaid expenses and other 24,193 24,826
Total current assets 361,393 330,721
Property and equipment, at cost:
Leasehold improvements 622,883 662,879
Restaurant equipment 581,877 480,933
Furniture and fixtures 183,877 196,052
Total property and equipment 1,388,637 1,339,864
Less accumulated depreciation
and amortization (1,113,992) (1,206,293)
Property and equipment-net 274,645 133,571
Long term portion of notes
and lease receivable 2,185,898 2,053,387
Liquor licenses-net of
accumulated amortization
of $48,525 at March 31, 1996
and $67,085 at December 31, 1995 100,782 156,530
Other assets 49,719 49,735
Total assets $ 2,972,437 $ 2,723,944
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
March 31, 1996 and December 31, 1995
March 31, December 31,
1996 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt $ 83,821 $ 65,199
Accounts payable 51,872 37,430
Accrued liabilities 11,928 32,586
Total current liabilities 147,621 135,215
Long-term debt 1,157,529 1,172,989
Other long-term liabilities 429,848 422,720
Deferred income 778,265 450,858
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 (3,997,283) (3,914,295)
Total shareholders' equity 459,174 542,162
Total liabilities and
and shareholders' equity $2,972,437 $2,723,944
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the three months ended March 31, 1996 and March 31, 1995
March 31, March 31,
1996 1995
Franchise revenue $ 73,667 $ 88,877
Capital lease income 16,804 21,325
Joint venture revenues 27,776 57,319
118,247 167,521
Costs and expenses:
Restaurant operations - net 36,383 24,094
General and administrative 178,535 84,615
Depreciation and amortization 12,120 26,222
227,038 134,931
Income (loss) from operations (108,791) 32,590
Interest expense (24,566) (27,983)
Interest income 40,996 48,022
Gain (loss) on sale of assets 9,375 (11,352)
Net income (loss) before
provision for income taxes (82,986) 41,277
Provision for income taxes -0- -0-
Net income (loss) (82,986) 41,277
Net income (loss) attributable
to common shares (82,986) 41,277
Net income (loss) common share $ (.01) $ .005
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the nine months ended September 30, 1995 and September 30, 1994
September 30, September 30,
1995 1994
Franchise revenue $ 198,891 $ 58,398
Capital lease income 51,183
Joint venture revenues -
and equipment lease income 155,960 408,560
406,034 466,958
Costs and expenses:
Restaurant operations - net 86,517 1,510
General and administrative 367,561 303,662
Depreciation and amortization 66,821 272,237
Franchise expense 5,000
520,899 582,409
Loss from operations (114,865) (115,451)
Interest expense (78,220) (170,952)
Interest income 125,677 103,075
Gain on sale of assets 13,684 371,282
Miscellaneous income 10,899
Gain (loss) on store closure 86,766 (9,441)
Loss from impairment of assets (576,827)
Amortization of deferred income 3,326
Net income (loss) before provision
for income taxes and
extraordinary item 43,941 (394,988)
Provision for income taxes
Net income (loss) before
extraordinary item 43,941 (394,988)
Extraordinary item - Gain from
extinguishment of debt 1,747,233
Net income 43,941 1,352,245
Net income attributable to
common shares 43,941 1,352,245
Net income common share $ .0044 $ .22
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
For the three months ended
March 31, 1996 and March 31, 1995
March 31, March 31,
1996 1995
Cash flows from operating
activities:
Net income (loss) $ (82,986) $ 41,277
Adjustments to reconcile income (loss)
to net cash flows from operating
activities:
Depreciation and amortization 12,120 26,222
Amortization of deferred income (22,324) (21,325)
(Gain) loss on sale of assets (9,375) 11,352
Other non-cash items (877) (8,445)
Net cash provided by (used for)
changes in assets and liabilities:
Accounts receivable 7,231 (6,604)
Prepaid expenses and other (1,396) (15,606)
Notes receivable (49,374)
Accounts payable 14,442 (6,194)
Accrued and other liabilities (1,530) 367
Net cash flows from operating activities (84,695) (28,330)
Cash flows from investing activities:
Net proceeds from sale of assets 5,230
Note receivable principal payments 30,710 7,840
Payments on lease receivables 25,308 35,077
Refund of other assets 2,218
Net cash flows from investing
activities 61,248 45,135
Net cash flows from financing
activities:
Repayment of notes payable (22,867) (48,394)
Repayment of long term liabilities (12,772)
Net cash flows from financing
activities: (22,867) (61,166)
HUDSON'S GRILL OF AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
For the three months ended
March 31, 1996 and March 31, 1995
March 31, March 31,
1996 1995
Net increase (decrease) in cash (46,314) (44,361)
Cash at beginning of period 48,295 92,750
Cash at end of period $ 1,981 $ 48,389
Supplemental cash flow
information:
Interest paid $ 24,847 $ 27,616
Income taxes paid $ 2,400 $ 800
In the period ended March 31, 1996 - In connection with the sale
of a restaurant, the Company received a note receivable of
$282,087 and a lease receivable of $450,000. In addition,
notes and leases receivable in the amount of $157,415 were
exchanged to reacquire restaurant assets to be resold.
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 March 31,
1996, the Company has fourteen franchised restaurants.
Additionally, it owns four restaurants, all of which are held for
sale. (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 March 31, 1996, all 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 revenues (see Note 8). One restaurant
held for sale was operated by the Company through mid-March,
1996, 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.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(CONT'D)
Non-current Assets
All of the Company's property and equipment is leased under
operating leases to prospective purchasers'.
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.
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 basis
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
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(CONT'D)
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 be antidilutive.
The weighted average number of shares outstanding used in
the income (loss) per share computation was 6,056,986 for the
period ended March 31, 1996 and 8,845,589 for the period ended
March 31, 1995.
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:
March 31, March 31,
1996 1995
Initial franchise revenues $ 521 $ 49,374
Continuing franchise
revenues 73,146 39,503
Total franchise revenues $ 73,667 $ 88,877
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
2. FRANCHISE ACTIVITIES (CONT'D)
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 March 31, 1996 is
$141,462.
3. NOTES AND LEASES RECEIVABLE
At March 31, 1996 and December 31, 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 $1,141,758
and $1,148,110 at March 31, 1996 and December 31, 1995
respectively. See Note 5.
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 foregoing 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 March 31, 1996 and December 31, 1995 was $208,111 and
$228,409 respectively.
In connection with the sale of a restaurant in the year
ended January 1, 1995, the Company received a note for $262,800.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
3. NOTES AND LEASES RECEIVABLE (CONT'D):
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 $252,153 at March 31, 1996 and $255,752 at December 31,
1995.
At March 31, 1996, the Company has a $18,979 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 a restaurant in the year
ended December 31, 1995 the Company received a note for $50,000
with annual installments of $12,000 over five years including
interest at 7.5 percent. The balance of the note at March 31,
1996 $29,380.
In connection with the sale of a restaurant in January 1996,
the Company received a note for $282,087. The note bears
interest at 9.75%. Payments of interest only are required for
two years, after which the balance is due over ten years. The
balance of the note was $282,087 at March 31, 1996.
In the first quarter of 1996 a franchisee breached his
franchise agreement and a restaurant was reacquired by the
Company. The Company agreed to forgive debt in the amount of
$157,415 in reacquiring all assets of the restaurant. The
Company immediately joint ventured the restaurant and it is
currently under contract to be sold.
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 periods March 31, 1996
and December 31, 1995. The leases have been classified as sales-type leases.
The net carrying value of the leases receivable at
March 31, 1996 and December 31, 1995 is $432,613 and $419,093
respectively.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
3. NOTES AND LEASE RECEIVABLE (CONT'D)
Future lease payments due in fiscal periods ending:
December 29, 1996 $ 106,500
January 4, 1998 126,000
January 3, 1999 114,000
January 2, 2000 78,000
January 1, 2001 78,000
Thereafter 478,499
Total 980,999
Less amount representing
unearned interest (548,386)
$ 432,613
4. COMMITMENTS AND CONTINGENT LIABILITIES
The Company's restaurant buildings and certain equipment are
operated under noncancelable 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
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
4. COMMITMENTS AND CONTINGENT LIABILITIES (CONT'D):
In addition to the leases discussed above, the Company has
assigned to the purchasers the leases of buildings for nine of
the restaurants sold in the periods March 31, 1996 and December
31, 1995. 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 March 31,
1996. In addition, the Company may be secondarily liable under
other leases for restaurants sold in prior years.
Total rental expenses for operating leases were $22,069 and
$22,183 for the periods ended March 31, 1996 and March 31, 1995,
respectively.
5. LONG-TERM DEBT
Long-term debt at March 31, 1996 and December 31, 1995,
which is collateralized by substantially all of the assets of the
Company, is summarized as follows:
March 31, December 31,
1996 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.) $1,141,758 $1,148,110
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
5. LONG-TERM DEBT (CONT'D):
March 31, December 31,
1995 1995
Note payable to Corona Market
Partnership, due in monthly
installments of $5,327,
including interest of 8%
through June, 1997. 75,802 90,078
Note payable, due in monthly
installments of $2,240,
including interest at 6%,
through December 1996. 23,790
Total 1,241,350 1,238,188
Less current portion (83,821) (65,199)
Long-term debt $1,157,529 $1,172,989
Principal payments due in the fiscal years subsequent to
March 31, 1996 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 $ 68,362
January 4, 1998 31,230
January 3, 1999 90,529
January 2, 2000 98,043
January 1, 2001 106,180
Thereafter 847,006
Total $1,241,350
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
5. LONG-TERM DEBT (CONT'D)
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 totalled 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-off
of associated goodwill, was recorded as an extraordinary item.
6. INCOME TAXES
There was no income tax provision as of March 31, 1996 due
to the application of tax net operating loss carryforwards. 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 primarily due to differences
between financial reporting and income tax treatment of the debt
restructuring described in Note 5.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
6. INCOME TAXES (CONT'D):
Deferred income taxes are provided for temporary differences
between income tax and financial reporting as of March 31, 1996
and March 31, 1995 as follows:
March 31, March 31,
1996 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 36,000
Valuation allowance (398,000) (457,000)
$ $
At March 31, 1996, the Company had net operating loss (NOL)
and investment tax credit carryforwards for Federal income tax
purposes of approximately $860,000 and $200,000, respectively.
Use of these carryforwards (with the exception of approximately
$390,000 of the NOL carryforward) 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.
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 March 31, 1996 or December 31,
1995 under either plan.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
7. SHAREHOLDERS EQUITY (CONT"D):
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 March 31, 1996 400,000 400,000
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 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 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
March 31, 1996 and December 31, 1995 was $299,907 and $305,129
respectively.
HUDSON'S GRILL OF AMERICA, INC.
Notes to Consolidated Financial Statements (Cont'd)
8. RESTAURANT SALES AND CLOSURES (CONT'D)
During the period ended March 31, 1996 the Company sold one
restaurant and recorded a deferred gain of $342,821 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
March 31, 1996 was $336,895.
The Company is endeavoring to sell all remaining restaurants and
has granted purchase options for four 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.
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 counterparties when they have similar economic
characteristics that would cause their ability to meet contractual
obligations to be similarly affected 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 March 31, 1996, accounts receivable totalled $33,148 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 conditions and
believes that the allowance for doubtful accounts is adequate.
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 determine by management using available market information an
appropriate valuation methodologies. The estimates are not
necessarily indicative of the amounts the Company could realize in a
current market exchange.
At March 31, 1996, 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 March 31, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-26-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,981
<SECURITIES> 0
<RECEIVABLES> 33,148
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 361,393
<PP&E> 1,388,637
<DEPRECIATION> 1,113,992
<TOTAL-ASSETS> 2,972,437
<CURRENT-LIABILITIES> 147,621
<BONDS> 0
0
0
<COMMON> 4,456,457
<OTHER-SE> (3,997,283)
<TOTAL-LIABILITY-AND-EQUITY> 2,972,437
<SALES> 118,247
<TOTAL-REVENUES> 118,247
<CGS> 0
<TOTAL-COSTS> 227,038
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24,566
<INCOME-PRETAX> (82,986)
<INCOME-TAX> 0
<INCOME-CONTINUING> (82,986)
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<EXTRAORDINARY> 0
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<NET-INCOME> (82,986)
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</TABLE>
