[As adopted in Release No. 34-32231, April 28, 1993, 58 F.R. 26509]
U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB/A
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1998
-----------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
Commission file number 33-20111
Eat at Joe's Ltd.
(Exact name of small business issuer as
specified in its charter)
Delaware 75-2636283
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
P.O. Box 500, Yonkers, New York, 10704
(Address of principal executive offices)
(914) 725-2700
Issuer's telephone number
(Former name, former address and former fiscal year, if changed since last
report.)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practical date: August 14, 1998 12,754,305
Transitional Small Business Disclosure Format (check one). Yes ; No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
March 31, December 31,
1998 1997
----------- -----------
ASSETS:
Current Assets:
Cash and Cash Equivalents ................. $ 827,105 $ 232,601
Inventory ................................. 6,630 7,488
Other ..................................... 400 400
Prepaid Expense ........................... 8,333 30,993
Deposits .................................. 30,601 12,701
----------- -----------
Total Current Assets ................... 873,069 284,183
----------- -----------
Property and Equipment:
Equipment ................................. 281,103 279,667
Office Furniture .......................... 2,791 1,000
Leasehold Improvements .................... 1,920,683 1,527,099
----------- -----------
2,204,577 1,807,766
Less Accumulated Depreciation ............. (29,747) (11,546)
----------- -----------
2,174,830 1,796,220
----------- -----------
Other Assets:
Intangible and Other Assets, Net .......... 146,087 234,569
----------- -----------
Total Assets ........................... $ 3,193,986 $ 2,314,972
=========== ===========
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
(Unaudited)
March 31, December 31,
1998 1997
----------- -----------
LIABILITIES:
Current Liabilities:
Accounts Payable and Accrued Liabilities ........ $ 343,723 $ 434,795
Short-Term Notes Payable ........................ 1,219,940 264,940
Shareholder Loans ............................... 408,630 702,922
----------- -----------
Total Liabilities ............................ 1,972,293 1,402,657
----------- -----------
Stockholders' Equity:
Preferred Stock - $.0001 par value,
10,000,000 shares authorized;
51 issued and outstanding
March 31, 1998, none issued
and outstanding December 31, 1997 ........... -- --
Common Stock - $.0001 par value,
50,000,000 shares authorized,
12,733,805 issued and outstanding ............ 1,273 1,273
Common Stock To Be Issued ....................... 4 4
Additional Paid-In Capital ..................... 3,112,314 2,284,295
Retained Deficit ............................... (1,891,898) (1,373,257)
----------- -----------
Total Stockholders' Equity ................... 1,221,693 912,315
----------- -----------
Total Liabilities and Stockholders' Equity ... $ 3,193,986 $ 2,314,972
=========== ===========
The accompanying notes are an integral part of these financial statements.
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months
Ended March 31,
1998 1997
--------- --------
Revenues ................................................ $ 147,347 $ --
Cost of Revenues ........................................ 120,747 --
--------- --------
Gross Margin ............................................ 26,600 --
Expenses
General and Administrative ........................... 421,189 38,858
--------- --------
Net loss from Continuing Operations ..................... (394,589) (38,858)
Other Income (Expense) Net ........................... (8,931) 6
--------- --------
Net Loss Before Income Taxes ............................ (403,520) (38,852)
Income Tax Expense (Benefit) ............................ -- --
--------- --------
Net Loss Before Cumulative effects of Accounting Change . (403,520) (38,852)
Cumulative effect of Accounting Change on Years Prior to
1998, Net of Taxes ...................................... (84,732) --
Net Loss ................................................ $(488,252) $(38,852)
========= ========
Net Loss Per Common Share- Basic and Diluted:
Net Loss Before Cumulative effects of Accounting Change . (0.04) --
Cumulative effect of Accounting Change .................. -- --
--------- --------
Net Loss Per Common Share- Basic and Diluted ............ $ (0.04) $ --
The accompanying notes are an integral part of these financial statements.
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Three Months
Ended March 31,
1998 1997
----------- ---------
Cash Flows from Operating Activities:
Net loss for the period before cumulative effects of . $ (403,520) $ (38,852)
accounting change
Adjustments to Reconcile net loss to net cash
provided by operating activities
Depreciation and amortization ................ 21,951 --
Payment of organization costs ................ -- (8,657)
Amortization of organization costs ........... -- --
(Increase) decrease in:
Inventory ................................. 858 --
Prepaid expense ........................... 22,660 925
Deposits .................................. (17,900) 14,009
Increase (decrease) in:
Accounts payable .......................... (125,114) 11,665
Accrued expenses .......................... 34,042 8,445
----------- ---------
Net Cash Used in Operating Activities: ............... (467,023) (12,465)
----------- ---------
Cash Flows From Investing Activities:
Purchase of property and equipment ................ (396,811) (59,872)
----------- ---------
Net Cash Used by Investing Activities: ............... (396,811) (59,872)
----------- ---------
Cash Flows From Financing Activities:
Issuance of convertible preferred stock ............ 797,630 --
Issuance of common stock ........................... -- 400,000
Proceeds from short-term notes payable ............. 955,000 --
Advances to (from) majority stockholder ............ (294,292) 14,000
----------- ---------
Net Cash Provided by Financing Activities ............ 1,458,338 414,000
----------- ---------
Increase in Cash ..................................... 594,504 341,663
Cash at Beginning of Period .......................... 232,601 34,972
----------- ---------
Cash at End of Period ................................ $ 827,105 $ 376,635
=========== =========
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
For the Three Months
Ended March 31,
1998 1997
--------- ----------
Supplemental Disclosure of
Interest and Income Taxes Paid
Interest paid for the period ................... $4,459 $ --
Income taxes paid for the period ............... $2,671 $ --
Supplemental Disclosure of
Non-cash Investing and
Financing Activities
Intangible Assets
acquired with issuance of
common stock ................................. $ -- $149,837
Organization costs acquired
with issuance of common
Stock ........................................ $ -- $ 200
The accompanying notes are an integral part of these financial statements.
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(Unaudited)
1. Interim Reporting
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles and with Form 10-QSB
requirements. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1998, are not necessarily indicative of the
results that may be expected for the year ended December 31, 1998. For further
information, refer to the financial statements and footnotes thereto included in
the Company's annual report on Form 10-KSB for the year ended December 31, 1997.
2. Adoption of New Accounting Principle
During 1998, the Company changed its method of accounting for costs of
start up activities to conform with new requirements of Statement of Position
98-5 "Reporting on the Costs of Start-Up Activities" (SOP 98-5). The effect of
this change was to increase net loss for the three months ended March 31, 1998
by $84,732 ($0.01 per share). Financial Statements for 1997 have not been
restated in accordance with the provisions of SOP 98-5.
3. Series A Convertible Preferred Stock
On March 2, 1998 the Company, through J.P. Carey, Inc as underwriters,
issued 51 shares (the "shares") of Series A Convertible Preferred Stock for a
total offering price of $1,018,315 less underwriting fees of $120,800. The
shares were issued pursuant to a private placement under Regulation D under the
Securities Act of 1933, as amended.
Dividends - The shares will pay a dividend of 3% per annum, payable in
arrears. The Company may at its option, pay interest in shares of common stock
or in cash on a quarterly basis. The number of shares of common stock issued
shall be determined by dividing the cash amount of interest then owed by the
conversion price (as defined herein) then in effect. Cash interest shall be
calculated based upon the actual number of days elapsed during any interest
period in a year of 360 days.
Conversion - The shares are convertible into common stock at a price
("conversion price") equal to the lower of 120% of the five trading day average
closing bid price of the common stock previous to the closing of the transaction
or the discounted average stock price on the date of conversion. The discounted
average stock price is defined as 75% of the average of the daily closing bid
prices of the common stock for the five consecutive trading days immediately
preceding the date
<PAGE>
of conversion notice. The Company may require conversion of the entire balance
of unconverted shares after two years from the closing date.
Registration - The Company will be required to file a registration
statement covering the resale of shares of common stock received upon conversion
of the shares to permit the holder(s) thereof to resell the shares without
restrictions. The company will be required to file the registration statement,
with the Securities Exchange Commission ("SEC"), using all reasonable efforts to
file within 45 days of the closing date of the transaction. In addition, the
Company shall use its best efforts to have the registration statement declared
effective at the earlier of (a) ninety (90) days from the closing of the
transaction or (b) five (5) days after receiving a "No-Review" status from the
SEC. Such registration statement shall be kept current and effective for a
period through twelve (12) months from the date of the closing of transaction.
Right to Redeem - The Company also maintains the right to redeem, in cash
and in whole or in part, all unconverted shares or shares that have not been
submitted to the company for conversion, at a rate of 120% of the principal
amount. The Company must give investors a 30 day notice of such a redemption.
In connection with this private placement, J.P. Carey, Inc. received
warrants to purchase 102,000 shares of the Company's common stock, subject to
adjustment. The warrants are exercisable at $1.73 per share and expire on March
20, 2003.
The warrant agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the warrants to
protect Warrant Holders against dilution in certain events, including stock
dividends, stock splits, reclassification, and any combination of Common Stock,
or the merger, consolidation, or disposition of substantially all the assets of
the Company.
4. Certain Transactions
During March 1998, the Company entered into a 12 month agreement with the
Wall Street Group, Inc. ("Wall Street") calling for Wall Street to act as a
financial public relations counsel to the Company. The agreement calls for
monthly payments of $5,000 for services rendered and grants a five year option
to Wall Street to acquire 61,350 shares of the Company's common stock at $1.63
per share.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
Plan of Operations - Eat at Joe's Ltd. Intends to open and operate theme
restaurants styled in an "American Diner" atmosphere where families can eat
wholesome, home cooked food in a safe friendly atmosphere. Eat at Joe's, the
classic American grill, is a restaurant concept that takes you back to eating in
the era when favorite old rockers were playing on chrome-spangled jukeboxes and
neon signs reflected on shiny tabletops of the 1950's. Eat at Joe's fulfills the
diner dream with homey ambiance that's affordable while providing food whose
quality and variety is such you can eat there over and over, meal after meal. To
build on the diner experience, a retail section in each Eat at Joe's would allow
customers to take the good feelings home with them, in the form of 50's
memorabilia.
The Company's expansion strategy is to open restaurants either through
Joint Venture agreements or Company owned units. Units may consist of a
combination of full service restaurants or food court locations. Restaurant
construction will take from 90-150 days to complete on a leased site.
In considering site locations, the Company concentrates on trade
demographics, such as traffic volume, accessibility and visibility. High
Visibility Malls and Strip Malls in densely populated suburbs are the preferred
locations. The Company also scrutinizes the potential competition and the
profitability of national restaurant chains in the target market area. As part
of the expansion program, the Company will inspect and approve each site before
approval of any joint venture or partnership.
A typical food court unit is approximately 500 square feet, whereas for a
full service operation it is approximately 3,500 square feet. Food court
operation consists of a limited menu. A full service restaurant consists of
30-35 tables seating about 140- 150 people. The bar area will hold 6-8 tables
and seats 30-35 people.
The restaurant industry is an intensely competitive one, where price,
service, location, and food quality are critical factors. The Company has many
established competitors, ranging from similar casual-style chains to local
single unit operations. Some of these competitors have substantially greater
financial resources and may be established or indeed become established in areas
where the Eat at Joe's Company operates. The restaurant industry may be affected
by changes in customer tastes, economic, demographic trends, and traffic
patterns. Factors such as inflation, increased supplies costs and the
availability of suitable employees may adversely affect the restaurant industry
in general and the Eat at Joe's Company Restaurant in particular. Significant
numbers of the Eat at Joe's personnel are paid at rates related to the federal
minimum wage and accordingly, any changes in this would affect the Company's
labor costs.
Results of Operations - From March 1, 1990 to December 12, 1995 the Company was
an inactive corporation. From December 12, 1995 to November 1997 the Company was
a development stage company and had not begun principal operations. During
November and December, 1997 two restaurants were opened and began operations.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company has generated minimal revenues from product sales. Revenues are
not yet sufficient to support the Company's operating expenses, however, the
Company is cautiously optimistic that operating revenues will be adequate to
meet operating expenses during the next year. Since the Company's formation, it
has funded its operations and capital expenditures primarily through private
placements of debt and equity securities and has borrowed approximately
$1,200,000 from unrelated entities as of March 31, 1998. The notes are payable
one year from the date of issuance together with interest at 6.50% A.P.R. The
Company will be required to seek additional financing in the future. There can
be no assurance that such financing will be available at all or available on
terms acceptable to the Company.
The increase in capital resources for 1998 and 1997 is attributable to the
private placement of Preferred and Common Stock and the issuance of debt.
Government Regulations - The Company is subject to all pertinent Federal, State,
and Local laws governing its business. Each Eat at Joe's is subject to licensing
and regulation by a number of authorities in its State or municipality. These
may include health, safety, and fire regulations. The Company's operations are
also subject to Federal and State minimum wage laws governing such matters as
working conditions, overtime and tip credits.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not party to any material litigation and is not aware of any
threatened litigation that would have a material adverse effect on its business.
Item 2. Changes in Securities
On March 2, 1998 the Company, through J.P. Carey, Inc as underwriters,
issued 51 shares (the "shares") of Series A Convertible Preferred Stock for a
total offering price of $1,018,315 less underwriting fees of $120,800. The
shares were issued pursuant to a private placement under Regulation D under the
Securities Act of 1933, as amended.
The shares will pay a dividend of 3% per annum, payable in arrears. The
Company may at its option, pay interest in shares of common stock or in cash on
a quarterly basis. The number of shares of common stock issued shall be
determined by dividing the cash amount of interest then owed by the conversion
price (as defined herein) then in effect. Cash interest shall be calculated
based upon the actual number of days elapsed during any interest period in a
year of 360 days.
The shares are convertible into common stock at a price ("conversion
price") equal to the lower of 120% of the five trading day average closing bid
price of the common stock previous to the closing of the transaction or the
discounted average stock price on the date of conversion. The discounted average
stock price is defined as 75% of the average of the daily closing bid prices of
the common stock for the five consecutive trading days immediately preceding the
date of conversion notice. The Company may require conversion of the entire
balance of unconverted shares after two years from the closing date.
The Company also maintains the right to redeem, in cash and in whole or in
part, all unconverted shares or shares that have not been submitted to the
company for conversion, at a rate of 120% of the principal amount. The Company
must give investors a 30 day notice of such a redemption.
In connection with this private placement, J.P. Carey, Inc. received
warrants to purchase 10,200 shares of the Company's common stock, subject to
adjustment. The warrants are exercisable at $1.73 per share and expire on March
20, 2003.
The warrant agreement provides for adjustment of the exercise price and the
number of shares of Common Stock purchasable upon exercise of the warrants to
protect Warrant Holders against dilution in certain events, including stock
dividends, stock splits, reclassification, and any combination of Common Stock,
or the merger, consolidation, or disposition of substantially all the assets of
the Company.
<PAGE>
The Board of Directors of the company is authorized to issue, without
further stockholder approval, up to 10,000,000 shares of preferred stock from
time to time in one or more series and to fix such designations, powers,
preferences and relative voting, distribution, dividend, liquidation, transfer,
redemption, conversion and other tights, preferences, qualifications,
limitations or restrictions thereon. Any such preferred stock could have
priority over common stock as to dividends and as to the distribution of the
Company's assets upon any liquidation, dissolution or winding up of the Company.
The right of holders of common stock may become subject in the future to
prior and superior rights and preferences in the event the Board of Directors
establishes one or more additional classes of common stock, or one or more
additional series of preferred stock.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
The Company did not file a report on Form 8-K during the three months ended
March 31, 1998.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
EAT AT JOE'S LTD.
(Registrant)
DATE: August 25, 1998 By: /s/ Joseph Fiore
-------------------------- -------------------
Joseph Fiore
C.E.O., Chairman, Secretary, Director
(Principal financial and Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
BALANCE OF EAT AT JOES LTD. AS OF MARCH 31, 1998 AND THE RELATED STATEMENTS OF
OPERATIONS AND CASH FLOWS FOR THE THREE MONTHS THEN ENDED AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 827
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 7
<CURRENT-ASSETS> 873
<PP&E> 2205
<DEPRECIATION> 30
<TOTAL-ASSETS> 3194
<CURRENT-LIABILITIES> 1972
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 1221
<TOTAL-LIABILITY-AND-EQUITY> 3194
<SALES> 147
<TOTAL-REVENUES> 147
<CGS> 121
<TOTAL-COSTS> 121
<OTHER-EXPENSES> 421
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> (404)
<INCOME-TAX> 0
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<CHANGES> (85)
<NET-INCOME> (488)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
