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 January 31, 2000
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.
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(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.)
2420 Wilson Blvd., Suite 214, Arlington VA 22201
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(Address of principal executive offices)
(Zip code)
(703) 526-0400
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(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 March 10, 2000, the Registrant had a total of 8,513,591 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
January 31, 2000 (unaudited) and
April 30, 1999 3
Consolidated Statements of Operations:
Three months and nine months ended
January 31, 2000, and January 31, 1999,
(unaudited) 4
Consolidated Statements of Cash Flows:
Nine months ended January 31, 2000, and
January 31,1999 (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 4. Submission of Matters to a Vote
of Security Holders 9
Item 6. Exhibits and Reports on Form 8-K 9
Signatures 10
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Champions Sports, Inc. and Subsidiaries
Consolidated Balance Sheets
January 31, 2000 April 30, 1999
UNAUDITED
ASSETS
Current assets
Cash and cash equivalents $747,362 $726,241
Marketable securities - -
Accounts receivable - trade 873 800
Inventories 33,645 20,176
Prepaid expenses 21,454 3,232
Deferred tax asset 207,952 207,952
Total current assets $1,011,286 $958,401
Property and Equipment
Furniture and Equipment 545,275 539,139
Leasehold improvements 570,962 570,962
1,116,237 1,110,101
Accumulated depreciation and amortization (767,119) (729,420)
Total Property and Equipment 349,118 380,681
Other assets
Deposits 11,052 11,052
Investments 100,000 -
Total assets $1,471,456 $1,350,134
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $66,990 $36,817
Dividend payable on preferred stock 383,940 336,450
Notes payable 6,885 6,885
Other accrued expenses 50,860 38,023
Current portion of deferred lease concession 4,363 4,363
Total current liabilities 513,038 422,538
Deferred lease concession
(excluding current portion) 17,372 20,281
Note payable, excluding current portion 15,597 19,645
Commitments and contingencies
Stockholders' equity
Preferred stock:
Series A, 12% convertible cumulative,
par value $10 per share,preferred as
to dividends and liquidation: 56,075 shares
authorized: 53,325 and 55,775 issued and
outstanding at January 31, 2000 and
April 30, 1999 533,250 557,752
Common stock, par value $.001 per share,
50,000,000 shares authorized: 8,513,591 and
8,500,638 shares issued and outstanding at
October 31 and April 30, 1999 8,504 8,502
Additional paid-in capital 5,334,322 5,311,111
Accumulated deficit (4,950,626) (4,989,695)
Total stockholders' equity 925,450 887,670
Total liabilities and stockholders' equity $1,471,457 $1,350,134
See notes to consolidated financial statements
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<TABLE>
<CAPTION>
CHAMPIONS SPORTS, INC.
Consolidated Statement of Operations
(Unaudited)
Three months Three months Nine months Nine months
ended January 31 ended January 31 ended January 31 ended January 31
2000 1999 2000 1999
Revenue
<S> <C> <C> <C> <C>
Food and beverage sales $461,513 $409,758 $1,378,081 $1,276,838
Merchandise, memorabilia and consulting fee 12,650 236,703 203,194 330,929
Interest income 5,827 5,571 18,017 17,789
Other income 3,512 3,493 11,595 13,747
Total Revenues $483,502 $655,525 $1,610,887 $1,639,303
Expense
Cost of food and beverage sales $115,565 $112,295 $351,723 $346,282
Cost of merchandise and memorabilia 10,141 74,828 70,911 105,832
Restaurant payroll and related costs 163,151 150,960 477,651 448,726
Restaurant occupancy costs 53,535 48,415 157,388 155,422
Other restaurant costs 106,232 93,900 279,555 283,254
General and administrative 66,834 114,536 241,391 278,838
Depreciation and amortization 12,105 13,567 36,430 40,702
Interest expense 1,198 - 2,964 -
Total Expense 528,761 608,501 1,618,013 1,659,056
Net Income (loss) from operations ($45,259) $47,024 $(7,126) $(19,753)
Gain on the sale of securities held for trade 93,684 - 93,684 -
Less preferred stock dividends 15,998 15,998 47,994 47,994
Net income (loss) $32,427 $31,026 $38,564 $(67,747)
Basic earnings per common share $0.00 $0.00 $0.00 $(0.01)
Earnings per common share - $0.00 $0.00 $0.00 $(0.01)
fully diluted
Weighted average number of common
shares outstanding during the period 8,513,591 8,500,638 8,513,591 8,500,638
See notes to consolidated financial statements
</TABLE>
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CHAMPIONS SPORTS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Increase (Decrease) in Cash and Cash Equivalents
For the nine months ended January 31,
2000 1999
Cash flows from operating activities:
Net income $86,559 $(19,751)
Adjustments to reconcile net income
to cash provided by (used )
by operating activities:
Depreciation and amortization 36,430 40,702
Gain on the sale of marketable
securities held for trade (93,684) -
Changes in asset and liabilities
Accounts receivable (73) (25,838)
Inventories (13,469) 9,067
Prepaid expenses (18,222) (10,174)
Accounts payable 30,172 83,774
Other accrued expenses 12,837 (12,027)
Deferred lease concessions (2,909) (3,272)
Net cash provided (used) by operating activities 37,641 62,481
Cash flows from investing activities:
Purchase of restricted securities (100,000) -
Purchase of marketable
securities held for trade (274,626) -
Sale of marketable securities held for trade 368,310 -
Purchase of property and equipment (6,156) (4,015)
Net cash provided ( used) by investing activities (12,472) (4,015)
Cash flows from financing activities:
Repayment of borrowings (4,048) -
Net cash provided (used) by financing activities (4,048) -
Net increase(decrease)in cash and cash equivalents 21,121 58,466
Cash and cash equivalents at beginning of year 726,241 631,230
Cash and cash equivalents at January 31, 747,362 689,696
Supplemental disclosure of cash flow information:
Cash paid during the period for interest 2,964 -
See notes to consolidated financial statements
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CHAMPIONS SPORTS, INC.
Notes to Consolidated Financial Statements
January 31, 2000
Summarized Financial Information
Company or group of companies for which report is filed:
CHAMPIONS Sports, Inc. and Subsidiaries
The consolidated balance sheet as of January 31, 2000, the consolidated
statements of operations and the consolidated statements of cash flows for the
three months and nine months ended January 31, 2000 and January 31,1999 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 January 31, 2000 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, 1999. The results of operations for the
period ended January 31, 2000 are not necessarily indicative of the operating
results for the full year.
This document contains "forward-looking statements" (within the meaning of the
Private Securities Litigation Act of 1995) that inherently involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of unforeseen
external factors. These factors may include, but are not limited to, changes in
general economic conditions, customer acceptance of products offered and other
general competitive factors.
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Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operation
For the nine month period ended January 31, 2000, the Company's net
income was $38,564 or $0.00 per common share as compared to a net loss of
$67,747 or ($0.01) per common share for the nine month period ended January 31,
1999. For the nine months ended January 31, 2000, the Company's ongoing
operations generated loss of $7,126 and the Company realized a gain of $93,684
on marketable securities held for trade , compared to a loss of $19,753 from
continuing operations in the comparable period ended January 31, 1999. Dividends
accrued for the Company's Preferred Stock totaled $47,994. The Company's assets
increased to $1,471,456 at January 31, 2000 from $1,350,134 at April 30, 1999.
The Company's net loss from its ongoing operations was $45,259, and a realized
gain of $93,684 from the sale of marketable securities held for trade during the
three months ended January 31, 2000 versus a net income from operations of
$47,024 for the three months ended January 31, 1999.
Revenues
The Company's total revenues were $1,610,887 for the nine months ended
January 31, 2000 versus $1,639,303 for the nine month period ended January 31,
1999, a decrease of 1.7%. By component, food and beverage sales increased 7.9%
from the previous year, for the nine months and 12.6% for the three months
period from the previous year. This increase in food and beverage sales is
attributed to a increase in customer volume, especially during the NBA playoff
games and to an approximate 4% increase in menu prices initiated in October of
1999. Sales trends continue to improve and are expected to increase 7 to 8% to
the comparable prior year. Merchandise and memorabilia sales for the nine months
ended January 31, 2000 decreased 38.6% to $203,194 compared to $330,929 or 20.1%
of the Company's total revenues for the nine months ended January 31,1999. This
decrease is attributed directly to the number of Marriott CHAMPIONS locations
opened during the period. For the three months ended January 31, 2000, this
amount was $12,650, or 2.6% of the Company's total revenue versus $236,703 or
36.1 % of the Company's revenues for the three months ending January 31, 1999
and $203,194 or 12.6% for the nine months ended January 31, 2000 and $330,929 or
20.2% for the nine months ended January 31, 1999. For the nine months ended
January 31, 2000 and 1999, other income was less than 1% of the Company's total
revenues. Interest income in all comparable periods was approximately1.1% the
Company's total revenue.
Expenses
Cost of food and beverage remained constant at 25.5% of related sales
for the nine months and 25.0% for the three months ended January 31, 2000
compared to 27.1% for the nine months and 27.4% for the three months ended
January 31, 1999. This is attributed to stable prices at the wholesale level and
an increase in menu prices. Cost of merchandise and memorabilia sales for the
nine months ended January 31, 2000 was $70,911 compared to $105,832 in the
preceding year. Restaurant payroll and related costs were 34.7% of related food
and beverage sales for the nine months and 35.4% for the three months ended
January 31, 2000, versus 35.1% for the nine months and 36.8% for the three
months ended January 31, 1999. Restaurant occupancy costs were $157,388 for the
nine months and $53,535 for the three months ended January 31, 2000 compared to
$155,422 for the nine month and $48,415 for the three month comparable period in
1999. This
7
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increase is attributed to higher common area charges and real estate taxes
passed on by the landlord. Other restaurant costs were 20.1% of food and
beverage sales for the nine months and 23.1 of food and beverage sales for the
three months ended January 31, 2000 compared to 22.2% of food and beverage sales
for the comparable nine month and 22.9% for the three months in 1999. General
and administrative expense for the Company's corporate office was $241,391 for
the nine months ended January 31, 2000 compared to $278,838 for the nine months
ended January 31, 1999. Depreciation and amortization expense accounted for less
than 2.5 % of the Company's total revenues during the nine months ended January
31, 2000 and 1999.
Liquidity and Capital Resources
The Company's cash position on January 31, 2000 increased by $21,121 to
$747,362 from $726,241 on April 30, 1999. For the nine months ended January 31,
2000, the Company's ongoing operations provided cash of $37,641 and the Company
realized a gain of $93,684 from the sale of marketable securities held for
trade. At January 31, 2000, the Company held $100,000 of restricted securities
of privately held companies and owned no marketable securities held for trade.
Subsequent to January 31, 2000, the Company purchased additional marketable
securities held for trade for approximately $300,000. During the nine months
ended January 31, 2000, the Company purchased equipment for $6,156 for the
CHAMPIONS location in San Antonio, Texas and repaid borrowing of $4,040. Fro the
nine months ended January 31, 1999, the Company's operating activities provided
$62,481 in cash. The Company met its cash needs during the nine months ended
January 31, 2000 and 1999 from its revenues and from cash flow from its San
Antonio, Texas operation. The Company anticipates that the revenues generated
from its location in San Antonio, Texas along with revenues generated from its
consulting and sales of memorabilia will be sufficient to meet its operating
obligations for the next twelve months.
The Company's working capital was $498,248 on January 31, 2000 and
$535,863 on January 31 1999.
Stockholder's equity was $925,450 as of January 31, 2000 compared to
$887,670 as of April 30, 1999.
The Company continues to review and evaluate its operations and
priorities. The Company is actively pursuing merger or acquisition candidates
and other opportunities to meet its longer term liquidity needs. There is no
assurance that the Company will be able to structure a merger or acquisition on
terms satisfactory to the Company.
Other
In November 1999, the Company's Board of Directors voted to defer the
annual meeting of shareholders in order to preserve the Company's cash position.
8
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Part II. Other Information
Item 4. Submission of Matters to A Vote of Security Holders
None
Item 6. Exhibits and Reports on Form 8-K
None.
9
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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 Martell
James Martell
Chairman, President and
Chief Executive Officer
/s/ James E. McCollam
James E. McCollam
Corporate Secretary, Chief Accounting
Officer and Controller
March 10, 2000
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-END> JAN-31-2000
<CASH> 747,362
<SECURITIES> 0
<RECEIVABLES> 873
<ALLOWANCES> 0
<INVENTORY> 33,645
<CURRENT-ASSETS> 1,011,286
<PP&E> 1,116,237
<DEPRECIATION> (767,119)
<TOTAL-ASSETS> 1,471,456
<CURRENT-LIABILITIES> 513,038
<BONDS> 0
0
533,250
<COMMON> 8,504
<OTHER-SE> 383,696
<TOTAL-LIABILITY-AND-EQUITY> 1,471,457
<SALES> 1,581,278
<TOTAL-REVENUES> 1,610,887
<CGS> 422,634
<TOTAL-COSTS> 914,594
<OTHER-EXPENSES> 241,391
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,964
<INCOME-PRETAX> (7,126)
<INCOME-TAX> 0
<INCOME-CONTINUING> (7,126)
<DISCONTINUED> 0
<EXTRAORDINARY> 93,684
<CHANGES> 0
<NET-INCOME> 38,564
<EPS-BASIC> .00
<EPS-DILUTED> .00
</TABLE>
