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, 1996
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
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(State or other jurisdiction of (I.R.S. Employer
organization) Identification No.)
Suite 610, 1749 Old Meadow Road, McLean, VA 22102
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(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 3, 1995, the Registrant had a total of 8,500,564 shares
of common stock outstanding.
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CHAMPIONS SPORTS, Inc.
FORM 10-QSB
INDEX
Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of
July 31, 1996 (unaudited) and
April 30, 1996 3
Consolidated Statements of Operations:
Three months ended
July 31, 1996, and July 31, 1995,
(unaudited) 4
Consolidated Statements of Cash Flows:
Three months ended July 31, 1996, and
July 31, 1995 (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 8
Signatures 9
2
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<TABLE>
<CAPTION>
Champions Sports, Inc. and Subsidiaries
Consolidated Balance Sheets
JULY 31 APRIL 30
1996 1996
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $66,375 $141,930
Certificate of deposit 26,080 25,080
Accounts receivable - trade 104,414 4,545
Inventories 59,669 53,160
Prepaid expenses 23,248 20,516
------ ------
Total current assets 279,785 245,231
Property and Equipment
Furniture and Equipment 516,383 516,383
Leasehold improvements 567,312 567,312
------- -------
1,083,695 1,083,695
Accumulated depreciation and amortization (609,889) (596,322)
-------- --------
473,806 487,373
Other assets
Deposits 11,052 11,052
------ ------
Total assets $764,644 $743,656
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $47,456 $53,338
Dividend payable on preferred stock 134,580 134,580
Notes payable 31,010 31,010
Deferred revenue 0 0
Other accrued expenses 43,277 39,303
Current portion of deferred lease concession 4,363 4,363
----- -----
Total current liabilities 260,686 262,594
Deferred lease concession (excluding current portion) 32,280 33,371
Note payable, excluding current portion 6,213 12,010
Commitments and contingencies
Stockholders' equity
Preferred stock:
Series A, 12% convertible cumulative, par value $10 per share,
preferred as to dividends and liquidation: 650,000 shares
authorized 56,075 issued and outstanding. 560,752 560,752
Undesignated, par value $10 per share, 150,000 authorized
and unissued. 0 0
Common stock, par value $.001 per share,
50,000,000 shares authorized, 8,500,564
shares issued and outstanding at
July 31 and April 30, 1996 8,501 8,501
Additional paid-in capital 5,308,112 5,308,112
Accumulated deficit (5,411,900) (5,441,684)
---------- ----------
Total stockholders' equity 465,465 435,681
Total liabilities and stockholders' equity $764,644 $743,656
======== ========
See notes to consolidated financial statements
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CHAMPIONS SPORTS, INC.
Consolidated Statement of Operations
(Unaudited)
Three months ended July 31,
1996 1995
---- ----
Revenue
Food and beverage sales $431,745 $457,203
Merchandise and memorabilia 3,155 4,089
Initial license fees 0 0
Continuing licensing fees and royalties 99,702 97,104
Interest income 279 835
Other income 4,869 3,280
----- -----
$539,751 $562,512
Expense
Cost of food and beverage sales 112,593 130,064
Cost of merchandise and memorabilia sales 2,999 6,792
Restaurant payroll and related costs 148,049 162,393
Restaurant occupancy costs 50,097 42,795
Other restaurant costs 93,568 110,379
General and administrative 88,750 61,635
Depreciation and amortization 13,567 15,761
Interest expense 345 1,016
--- -----
509,968 530,834
Net Income $29,784 $31,678
======= =======
Net income per common share* $0.00 $0.00
Weighted average number of common
shares outstanding during the
period 8,500,564 7,300,564
*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.
4
<PAGE>
CHAMPIONS SPORTS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
For the three months ended July 31,
1996 1995
Cash flows from operating activities:
Net income $29,784 $31,677
Adjustments to reconcile net income
to cash provided by (used ) by operating activities:
Depreciation and amortization 13,567 15,761
Changes in asset and liabilities
Accounts receivable (99,869) (55,181)
Inventories (6,509) 2,269
Prepaid expenses (2,732) (14,995)
Accounts payable (5,882) (48,603)
Deferred revenue 0 50,000
Other accrued expenses 3,974 (5,587)
Deferred lease concessions (1,091) (1,091)
------ ------
Net cash provided (used) by operating activities (98,542) (25,750)
Cash flows from investing activities:
Purchase of certifcate of deposit (1,000) 0
Sale of property and equipment 0 0
- -
Net cash provided by investing activities (1,000) 0
Cash flows from financing activities:
Repayment of borrowings (5,797) (4,984)
Net cash provided (used) by financing activities (5,797) (4,984)
Net increase (decrease) in cash and cash equivalents (75,555) (30,734)
Cash and cash equivalents at beginning of year 141,930 131,102
------- -------
Cash and cash equivalents at end of year 66,375 100,368
====== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for interest 345 1,016
See notes to consolidated financial statements
</TABLE>
5
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CHAMPIONS SPORTS, INC.
Notes to Consolidated Financial Statements
July 31, 1996
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, 1996, the consolidated statements
of operations and the consolidated statements of cash flows for the three months
ended July 31, 1996 and July 31, 1995 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, 1996 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, 1996. The results of operations for the
period ended July 31, 1996 are not necessarily indicative of the operating
results for the full year.
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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, 1996 produced a net profit of
$29,784 ($0.00 per common share) compared to a net profit of $ 31,678 ($0.00 per
common share) for the same quarter in the preceding year.
REVENUES
The Company's total revenues were $539,751 for the three months ended
July 31, 1996 compared to $562,512 for the three months ended July 31, 1995, a
decrease of 4.0%. By component, food and beverage sales were $431,745 compared
to $457,203 for the same period in FY 1996, a decrease of 5.6%. This decrease is
attributed to a 13.5% reduction in the volume of customer traffic, partially
offset by a 9.6% increase in average customer check and an approximate 3%
increase in retail prices charged in the restaurant during the three months
ended July 31, 1996. Merchandise and memorabilia sales accounted for less than
1% of the Company's consolidated revenues for both comparable quarters. During
the quarters ended July 31, 1996 and July 31, 1995, the Company recognized no
initial license fees. Continuing licensing fees and royalties revenue was
$99,702 for the current quarter corresponding to $97,104 in the previous year.
This nominal increase is ascribed to annual adjustments for the CPI . Interest
income in both comparable quarters amounted to less than 1% of the Company's
total consolidated revenues.
EXPENSES
Cost of food and beverage was 26.1% of related sales for the quarter
ended July 31, 1996 compared to 28.5% of related sales during the preceding
quarter. This decrease in the cost of food and beverage sales is attributed to
menu changes made during the first quarter of FY 96. Restaurant payroll and
related costs were $148,049, 34.3% of related sales, compared to $162,393, 35.5%
of related sales for the comparable period. Other restaurant costs were $93,568
versus $110,379 for the three months ended July 31, 1996 and 1995, a decrease of
15.2% which is attributed to a decrease in advertising of the San Antonio
restaurant. Occupancy costs for the same unit in San Antonio increased by 17.1%
from the comparable period in the previous fiscal period to $50,097 from
$42,795. This increase is according to escalation provisions in the lease
agreement. General and administrative costs for the Company's corporate offices
were $88,750 for the three months July 31, 1996 and $61,635 for the three months
ended July 31, 1995 an increase of 44.0% which is a result of increased travel
costs and professional fees. Depreciation and amortization expense decreased by
$2,194 to $13,567 for the three months ended July 31, 1996 from $15,761 in the
comparable period in FY 1996. Interest expense for each of the comparable
periods was negligible.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at July 31, 1996 was $66,375 compared to
$141,930 at April 30, 1996, an decrease of $75,555. During the quarter ended
July 31, 1996, the Company met its cash need from its cash reserves and from
cash provided from its operations. During this period, the Company increased its
accounts receivable by $99,869 and increased other current assets by
approximately $10,000 while reducing current liabilities by approximately $3,000
and repaying borrowings of $5,797.
During the quarter ended July 31, 1995, the Company met its cash needs
from its cash reserves and
9
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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.
The Company's working capital at July 31, 1996 was $19,099 compared to a
negative $17,363 on April 30, 1996.
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 $465,465, an increase of
$29,784 from April 30, 1996 which is a result of the net profit for the period.
On July 31, 1995, stockholder's equity was $417,177.
Item 6. Exhibits and Reports on Form 8-K
None.
10
<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 3, 1996
11
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
For the three months ended July 31, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> JUL-31-1996
<CASH> 66,375
<SECURITIES> 26,080
<RECEIVABLES> 104,414
<ALLOWANCES> 0
<INVENTORY> 59,669
<CURRENT-ASSETS> 279,785
<PP&E> 1,083,695
<DEPRECIATION> (609,889)
<TOTAL-ASSETS> 764,644
<CURRENT-LIABILITIES> 260,686
<BONDS> 0
560,752
0
<COMMON> 8,501
<OTHER-SE> (103,788)
<TOTAL-LIABILITY-AND-EQUITY> 764,644
<SALES> 534,603
<TOTAL-REVENUES> 539,751
<CGS> 115,592
<TOTAL-COSTS> 291,714
<OTHER-EXPENSES> 102,317
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 345
<INCOME-PRETAX> 29,784
<INCOME-TAX> 0
<INCOME-CONTINUING> 29,784
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,784
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
