SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Mark One
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
[X ] THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
[ ] THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17263
CHAMPIONS SPORTS, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1401755
(State or other jurisdiction of (I.R.S. Employer
organization) Identification No.)
Suite 610, 1749 Old Meadow Road, McLean, VA 22102
(Address of principal executive offices)
(Zip code)
(703) 556-3332
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes x No
As of September 1, 1995, the Registrant had a total of 7,300,638 shares
of common stock outstanding.
1
<PAGE>
CHAMPIONS SPORTS, Inc.
FORM 10-QSB
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
July 31, 1995 (unaudited) and
April 30, 1995 3
Consolidated Statements of Operations:
Three months ended
July 31, 1995, and July 31, 1994,
(unaudited) 4
Consolidated Statements of Cash Flows:
Three months ended July 31, 1995, and
July 31, 1994 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussions and
Analysis of Financial Condition
and Results of Operations 7
Part II. Other Information and Signatures
Item 6. Exhibits and Reports on Form 8-K 7
Signatures 8
2
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Champions Sports, Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
JULY 31, APRIL 30,
1995 1995
UNAUDITED
ASSETS
<S> <C> <C>
Current assets
Cash and cash equivalents $100,369 $131,102
Certificate of deposit 25,080 25,080
Accounts receivable - trade 97,933 42,752
Inventories 38,966 41,235
Prepaid expenses 16,005 1,010
Total current assets 278,353 241,179
Property and Equipment
Furniture and Equipment 516,382 516,383
Leasehold improvements 567,312 567,312
1,083,695 1,083,695
Accumulated depreciation and amortization (552,904) (529,053)
530,791 554,642
Other assets
Deposits 11,052 11,052
Total assets 820,196 806,873
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable 74,883 123,486
Dividend payable on preferred stock 67,290 67,290
Deferred revenues 125,000 75,000
Notes payable 18,671 18,671
Other accrued expenses 38,133 43,720
Current portion of deferred lease concession 4,363 4,363
Total current liabilities 328,340 332,530
Deferred lease concession 36,644 37,734
Note payable, excluding current portion 38,036 43,019
Total Liabilities 403,019 413,283
Stockholders' equity
Preferred stock:
Series A, 12% convertible, cumulative,
par value $10 per share, preferred as to
dividends and liquidation: 650,000 shares
56,075 issued and outstanding. 560,752 560,752
Undesignated, par value $10 per
share, 150,000 authorized
none issued and outsanding
Common stock, par value $.001 per share, 50,000,000 shares authorized,
7,300,564 and 7,300,564 shares issued and
outstanding at July 31, 1995 and April 30, 1995. 7,301 7,301
Additional paid-in capital 5,249,312 5,249,312
Accumulated deficit (5,400,188) (5,423,775)
Total stockholders' equity 417,177 393,590
Total liabilities and stockholders' equity 820,196 806,873
</TABLE>
3
<PAGE>
CHAMPIONS SPORTS, INC.
Consoldiated Statment of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months Three months
ended ended
July 31, 1995 July 31, 1994
<S> <C> <C>
Revenue
Food and Beverage sales $457,203 $490,903
Merchandise and memorabilia 4,089 7,232
Initial license fees - -
Other franchise fees and royalties 97,104 61,522
Interest income 835 535
Other income 3,280 4,688
$562,512 $564,879
Expense
Cost of food and beverage sales 130,064 130,158
Cost of merchandise and 6,792 1,661
memorabilia sales
Restaurant payroll and related costs 162,393 169,318
Restaurant occupancy costs 42,795 43,456
Other restaurant costs 110,379 84,105
General and administrative 61,635 109,295
Depreciation and amortization 15,761 25,284
Interest expense 1,016 256
530,834 563,533
Net Income (loss) from continuing $31,678 $1,346
operations
Gain on discontinued operations - $4,176
Net Income / (loss) $31,678 $5,523
Net income (loss) per common share* $0.00 $0.00
Weighted average number of common
shares outstanding during the
period 7,300,564 7,268,536
*The income (loss) per common share has been computed on the weighted average
number of shares outstanding during the period. Warrants are not included as
common stock equilvants in the computation of income (loss) per share since
the effect would not be material.
</TABLE>
4
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CHAMPIONS SPORTS, INC.
Consolidated Statement of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
(UNAUDITED)
<TABLE>
<CAPTION>
JULY 31, JULY 31,
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $31,677 $5,523
Adjustments to reconcile net income
(loss) to cash provided by (used in)
operating activities
Depreciation and amortization 15,761 25,284
(Increase) decrease in accounts receivable (55,181) (9,553)
(Increase) Decrease in prepaid expenses (14,995) (266)
(Increase) Decrease in inventories 2,269 1,474
(Increase) Decrease in notes receivable 4,166
Decrease in other assets 2,269
(Increase) Decrease in deferred revenues 50,000
(Decrease) Increase in accounts payable (48,603) (15,905)
(Decrease) Increase in other current liabilities (5,587) (19,611)
(Decrease) Increase in accrued rent (1,000)
(Decrease) Increase in deferred lease concession (1,090) (1,091)
Total adjustments (57,426) (14,233)
Net cash provided by (used in)
operating activities (25,749) (8,710)
Cash flows from investing activities:
Sale of equipment 5,634
Redemption of certificate of deposit 25,000
Sale of liquor license 35,205
Net cash (used in) investing activities 0 65,839
Cash flows from financing activities:
Repayment of borrowings and capital leases (4,984) (3,268)
Net cash provided by financing
activities (4,984) (3,268)
Net increase (decrease) in cash and
cash equivalents (30,733) 53,861
Cash and cash equivalents at April 30. 131,102 75,466
Cash and cash equivalents at July 31 $100,369 $129,327
</TABLE>
5
<PAGE>
CHAMPIONS SPORTS, INC.
Notes to Consolidated Financial Statements
July 31, 1995
Summarized Financial Information
Company or group of companies for which report is filed:
CHAMPIONS Sports, Inc. and Subsidiaries
The consolidated balance sheet as of July 31, 1995, the consolidated statements
of operations and the consolidated statements of cash flows for the three months
ended July 31, 1995 and July 31, 1994 have been prepared by the company, without
audit. In the opinion of management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flow at July 31, 1995 and for all
periods presented have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted. It is suggested that these consolidated financial statements
be read in conjunction with the financial statements and notes thereto included
in the Company's 10-KSB as of April 30, 1995. The results of operations for the
period ended July 31, 1995 are not necessarily indicative of the operating
results for the full year.
6
<PAGE>
ITEM 2. Management's Discussion and Analysis of Results of Operation
and Financial Condition
RESULTS OF OPERATION
The results of the quarter ended July 31, 1995 produced a net profit of
$31,677, ($0.00 per common share) compared to a net profit of $5,523, ($0.00 per
common share), for the same quarter in the preceding year.
REVENUES
The Company's total revenues were $562,512 for the three months ended
July 31, 1995 compared to $564,879 for the three months ended July 31, 1994, a
decrease of less than 0.5%. By component, food and beverage sales were $457,203
compared to $490,903 for the same period in FY 1995. The decrease of $33,700 is
attributed to a decrease in the volume of customer traffic as there was no
material price increase during the three months ended July 31, 1995. Merchandise
and memorabilia sales were $4,089 for the quarter ended July 31, 1995 versus
$7,232 for the comparable previous period. During the quarters ended July 31,
1995 and July 31, 1994, the Company recognized no initial license fees. Other
franchise fees and royalties revenue was $97,104 for the current quarter
corresponding to $61,522 in the previous year. Interest income in both
comparable quarters amount to less than 1% of the Company's total revenues.
EXPENSES
Cost of food and beverage was 28.4% of related sales for the quarter
ended July 31, 1995 compared to 26.5% of related sales during the preceding
quarter. This increase in the cost of food and beverage sales is attributed to
menu changes made during the first quarter of FY 96. Cost of merchandise and
memorabilia of $6,792 exceeded sales as obsolete inventory items were written
of., compared to $1,661 for the three months ended July 31, 1994. Restaurant
payroll and related costs were $162,393, 35.5% of related sales, compared to
$169,318, 34.5% of related sales for the comparable period. Other restaurant
costs were $110,739 versus $84,105 for the three months ended July 31, 1994 and
1993, an increase of 35% which is attributed to increase in repairs and
maintenance and advertising of the San Antonio restaurant. Occupancy costs for
the same unit in San Antonio were constant to the comparable period in the
previous fiscal period. General and administrative costs for the Company's
corporate offices were $61,635 for the three months July 31, 1995 and $109,295
for the three months ended July 31, 1994 a decrease of 43.6% which is a result
of terminating of the lease for the corporate office in November 1994, decreased
corporate staff positions and paring of other expenses. Depreciation and
amortization expense fell by $9,523 to $15,761 for the three months ended July
31, 1995 from $25,284 in the comparable period in FY 1994. Interest expense for
each of the comparable periods was negligible.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at July 31, 1995 was $100,369 compared to
$131,102 at April 30, 1995, an decrease of $30,733. During the quarter ended
July 31, 1995, the Company met its cash needs from its cash reserves and from
cash flows provided from its operation in San Antonio, TX. During the quarter
ended July 31, 1995, the Company reduced its accounts payable and other current
liabilities by $54,190, repaid borrowing of $4,984 and deferred recognition of
$50,000 in advanced revenues.
During the quarter ended July 31, 1994, the Company met its cash
requirements from cash flow generated by its location in San Antonio, TX., the
sale of surplus equipment and the sale of the liquor license from its former
location in Miami, FL. Additionally, the Company redeemed a certificate of
deposit for $25,000. The Company used $14,232 in cash for its operations and
decreased its current liabilities $36,516 and repaid capital leases of $3,268.
The Company's working capital at July 31, 1994 was a negative $49,987
compared to a negative $91,351 on April 30, 1995.
The Company is seeking additional financing and also possible mergers
or acquisitions to meet its longer term liquidity needs and to finance its
future expansion. There is no assurance that the Company will be able to obtain
such financing or acquisitions on terms satisfactory to the Company.
MISCELLANEOUS
Stockholder's equity on July 31, 1995 was $417,177, an increase of
$23,587 from April 30, 1995 which is a result of the net profit of the period.
On July 31, 1994, stockholder's equity was $145,696 and $140,173 on April 30,
1994.
Item 6. Exhibits and Reports on Form 8-K
None.
7
<PAGE>
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CHAMPIONS Sports, Inc.
/s/ James M. Martell
James M. Martell
Chairman and President
/s/ James E. McCollam
James E. McCollam
Controller and
Chief Accounting Officer
September 13, 1995
8
<PAGE>
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1996
<PERIOD-START> MAY-01-1995
<PERIOD-END> JUL-31-1995
<CASH> 100369
<SECURITIES> 25080
<RECEIVABLES> 97933
<ALLOWANCES> 0
<INVENTORY> 38966
<CURRENT-ASSETS> 16005
<PP&E> 1083695
<DEPRECIATION> (552904)
<TOTAL-ASSETS> 820196
<CURRENT-LIABILITIES> 328340
<BONDS> 0
<COMMON> 7301
560752
0
<OTHER-SE> (150876)
<TOTAL-LIABILITY-AND-EQUITY> 820196
<SALES> 558397
<TOTAL-REVENUES> 562512
<CGS> 136856
<TOTAL-COSTS> 377202
<OTHER-EXPENSES> 15761
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1016
<INCOME-PRETAX> 31678
<INCOME-TAX> 0
<INCOME-CONTINUING> 31678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31678
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
