UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: September 30, 2000
---------------------
[ ] 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.
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(Exact name of small business issuer as specified in its charter)
Delaware 75-2636283
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
670 White Plains Road, Suite 120, Scarsdale, New York, 10583
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(Address of principal executive offices)
(914) 725-2700
Issuer's telephone number
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: September 30, 2000 44,394,967
------------------------------
Transitional Small Business Disclosure Format (check one).
Yes ; No X
---- ----
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
INDEPENDENT ACCOUNTANT'S REPORT
Eat at Joe's, Ltd.
We have reviewed the accompanying balance sheets of Eat at Joe's, Ltd.
as of September 30, 2000 and December 31, 1999, and the related statements of
operations for the three and nine month periods ended September 30, 2000 and
1999, and cash flows for the nine month periods ended September 30, 2000 and
1999. These financial statements are the responsibility of the Company's
management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statement taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications
that should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Respectfully submitted
/S/ ROBISON, HILL & CO.
Certified Public Accountants
Salt Lake City, Utah
November 9, 2000
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2000 1999
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents ........................ $ 18,545 $ --
Receivables ...................................... 2,032 10,439
Inventory ........................................ 30,863 46,050
Prepaid expense .................................. 13,637 76,442
Deposits ......................................... -- 1,710
----------- -----------
Total Current Assets ........................ 65,077 134,641
----------- -----------
Property and equipment:
Equipment ........................................ 156,177 879,441
Furniture & Fixtures ............................. 10,504 47,239
Leasehold improvements ........................... 595,670 2,212,291
----------- -----------
762,351 3,138,971
Less accumulated depreciation .................... (163,109) (547,669)
----------- -----------
599,242 2,591,302
----------- -----------
Other Assets:
Investments ...................................... 100,000 100,000
Intangible and other assets net of amortization .. 113,216 125,954
of $41,621 and $28,884, respectively
----------- -----------
Total Assets ................................ $ 877,535 $ 2,951,897
=========== ===========
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
September 30, December 31,
2000 1999
------------ ------------
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities ..... $ 351,774 $ 735,775
Short-term notes payable ..................... 519,617 342,926
Shareholders loans ........................... 1,075,292 724,760
------------ ------------
Total Current Liabilities ............... 1,946,683 1,803,461
------------ ------------
Convertible Debentures, Net of Issue Costs ... 1,346,035 1,383,290
------------ ------------
Total Liabilities ....................... 3,292,718 3,186,751
------------ ------------
STOCKHOLDERS EQUITY
Preferred stock - $0.0001 par value ..........
10,000,000 shares authorized;
-0- and 2 shares issued and outstanding ... -- --
Common Stock - $0.0001 par value .............
50,000,000 shares Authorized ..............
44,394,967 and 41,874,680 issued and
Outstanding, respectively ................. 4,440 4,187
Additional paid-in capital ................... 9,857,374 9,619,060
Retained deficit ............................. (12,276,997) (9,858,101)
------------ ------------
Total Stockholders' Equity .............. (2,415,183) (234,854)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ... $ 877,535 $ 2,951,897
============ ============
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- ----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues .............................. $ 543,864 $ 849,717 $ 1,540,041 $ 2,788,033
Cost of Revenues ...................... 242,232 475,045 606,453 1,162,965
------------ ------------ ------------ ------------
Gross Margin .......................... 301,632 374,672 933,588 1,625,068
Expenses
Labor and Related Expenses ......... 161,102 440,596 552,737 1,410,334
Rent ............................... 62,273 102,448 160,615 379,930
Other General and Administrative ... 216,352 272,921 598,378 666,463
------------ ------------ ------------ ------------
Income (Loss) Before Depreciation and
Amortization .......................... (138,095) (441,293) (378,142) (831,659)
Depreciation and Amortization ...... 27,484 172,631 229,286 502,824
------------ ------------ ------------ ------------
Net Loss from Continuing Operations ... (165,579) (613,924) (607,428) (1,334,483)
------------ ------------ ------------ ------------
Other Income (Expense)
Interest, Net ...................... (40,018) (32,553) (105,234) (133,120)
Loss on Disposal of Assets ......... (1,704,809) (1,400,307) (1,704,809) (1,400,307)
------------
Net Loss Before Income Taxes .......... (1,910,406) (2,046,784) (2,417,471) (2,867,910)
Income Tax Expense (Benefit) .......... 475 475 1,425 1,425
------------ ------------ ------------ ------------
Net Loss To Common Stockholders ....... $ (1,910,881) $ (2,047,259) $ (2,418,896) $ (2,869,335)
============ ============ ============ ============
Basic and Diluted Loss Per Common Share $ (0.04) $ (0.07) $ (0.06) $ (0.12)
============ ============ ============ ============
Weighted Average Common Shares ........ 44,026,562 27,349,269 42,852,783 23,053,130
============ ============ ============ ============
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the nine months ended
September 30,
--------------------------
2000 1999
----------- -----------
Cash Flows From Operating Activities
<S> <C> <C>
Net loss for the period ...................................... $(2,418,896) $(2,869,335)
Adjustments to reconcile net loss to net cash
Provided by operating activities
Depreciation and Amortization .............................. 229,286 502,824
Stock issued for services, expenses & debenture conversions 238,567 139,548
Loss on disposition of assets .............................. 1,704,809 1,400,307
Decrease (Increase) in Receivables ......................... 8,407 (10,876)
Decrease (Increase) in inventory ........................... 15,188 (256,724)
Decrease (Increase) in deposits ............................ 1,710 --
Decrease (Increase) in other assets ........................ -- (417,665)
Decrease (Increase) in prepaid expense ..................... 62,804 (60,807)
Increase in accounts payable, accrued liabilities & interest (157,922) 144,321
----------- -----------
Net Cash Provided by (Used in) Operating Activities ............. (316,047) (1,428,407)
----------- -----------
Cash Flows From Investing Activities
Purchase of property and equipment ........................... (177,934) (695,967)
----------- -----------
Net Cash Provided by Investing Activities ....................... (177,934) (695,967)
----------- -----------
Cash Flows From Financing Activities
Advances from majority stockholders .......................... 350,650 166,744
Proceeds from short-term notes payable ....................... 161,876 1,835,463
----------- -----------
Net Cash Provided by Financing Activities ....................... 512,526 2,002,207
----------- -----------
Increase (Decrease) in Cash ..................................... 18,545 (122,167)
Cash at beginning of period ..................................... -- 133,957
----------- -----------
Cash at End of Period ........................................... $ 18,545 $ 11,790
=========== ===========
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid during the period .............................. $ -- $ --
Income taxes paid during the period .......................... $ 700 $ 225
Supplemental Disclosure of Non-cash Investing
and Financing Activities:
Common Stock Issued For:
Property and Equipment .................................. $ -- $ 198,500
Debt converted to equity ................................ $ 125,000 $ 2,255,000
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of accounting policies for Eat At Joe's, Ltd. and
Subsidiaries is presented to assist in understanding the Company's financial
statements. The accounting policies conform to generally accepted accounting
principles and have been consistently applied in the preparation of the
financial statements.
The unaudited financial statements as of September 30, 2000 and for the
nine months then ended reflect, in the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to fairly state the
financial position and results of operations for the three and nine months.
Operating results for interim periods are not necessarily indicative of the
results which can be expected for full years.
Organization and Basis of Presentation
Eat At Joe's Ltd. (Company) was incorporated on January 6, 1988, under
the laws of the State of Delaware, as a wholly-owned subsidiary of Debbie
Reynolds Hotel and Casino, Inc. (DRHC) (formerly Halter Venture Corporation or
Halter Racing Stables, Inc.) a publicly-owned corporation. DRHC caused the
Company to register 1,777,000 shares of its initial 12,450,000 issued and
outstanding shares of common stock with the Securities and Exchange Commission
on Form S-18. DRHC then distributed the registered shares to DRHC stockholders.
During the period September 30, 1988 to December 31, 1992, the Company remained
in the development stage while attempting to enter the mining industry. The
Company acquired certain unpatented mining claims and related equipment
necessary to mine, extract, process and otherwise explore for kaolin clay,
silica, feldspar, precious metals, antimony and other commercial minerals from
its majority stockholder and other unrelated third-parties. The Company was
unsuccessful in these start-up efforts and all activity was ceased during 1992
as a result of foreclosure on various loans in default and/or the abandonment of
all assets. From 1992 until 1996 the Company has had no operations, assets or
liabilities.
During the nine months ended September 30, 2000, the Company changed
the domicile of each of the following subsidiaries to Nevada; E.A.J. Hold, Inc.,
E.A.J. Shoppes, Inc., E.A.J. Cherry Hill, Inc., E.A.J. Innerharbor, Inc., E.A.J.
Neshaminy, Inc., E.A.J. PM, Inc., E.A.J. Echelon, Inc., E.A.J. Market East,
Inc., E.A.J. MO, Inc., E.A.J. Syracuse, Inc., E.A.J. Walnut Street, Inc., and
E.A.J. Owings, Inc.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
Principles of Consolidation
The consolidated financial statements include the accounts of Eat At
Joe's, LTD. And its wholly-owned subsidiaries, E.A.J. Hold, Inc., a Nevada
corporation ("Hold"), E.A.J. PHL Airport, Inc., a Pennsylvania corporation,
E.A.J. Shoppes, Inc., a Nevada corporation, E.A.J. Cherry Hill, Inc., a Nevada
corporation, E.A.J. Innerharbor, Inc., a Nevada corporation, E.A.J. Neshaminy,
Inc., a Nevada corporation, E.A.J. PM, Inc., a Nevada corporation, E.A.J.
Echelon, Inc., a Nevada corporation, E.A.J. Market East, Inc., a Nevada
corporation, E.A.J. MO, Inc., a Nevada corporation, E.A.J. Syracuse, Inc., a
Nevada corporation, E.A.J. Walnut Street, Inc., a Nevada corporation, E.A.J.
Owings, Inc., a Nevada corporation, and 1398926 Ontario, Inc. and 1337855
Ontario, Inc., British Columbia corporations. All significant inter-company
accounts and transactions have been.
Nature of Business
The Company is developing, owns and operates theme restaurants styled
in an "American Diner" atmosphere.
Inventories
Inventories consist of food, paper items and related materials and are
stated at the lower of cost (first-in, first-out method) or market.
Income Taxes
The Company accounts for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes." SFAS No.109 requires recognition of deferred
income tax assets and liabilities for the expected future income tax
consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities.
Depreciation
Office furniture, equipment and leasehold improvements, are stated at
cost. Depreciation and amortization are computed using the straight-line method
over the estimated economic useful lives of the related assets as follows:
Furniture & Fixtures 5-10 years
Equipment 5- 7 years
Leasehold improvements 8-15 years
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
Maintenance and repairs are charged to operations; betterments are
capitalized. The cost of property sold or otherwise disposed of and the
accumulated depreciation thereon are eliminated from the property and related
accumulated depreciation accounts, and any resulting gain or loss is credited or
charged to income.
Amortization
Intangible assets are amortized over useful life of 10 years.
The Company has adopted the Financial Accounting Standards Board SFAS
No., 121, "Accounting for the Impairment of Long-lived Assets." SFAS No. 121
addresses the accounting for (i) impairment of long-lived assets, certain
identified intangibles and goodwill related to assets to be held and used, and
(ii) long-live lived assets and certain identifiable intangibles to be disposed
of. SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. If the sum of the expected future cash flows from the
used of the asset and its eventual disposition (undiscounted and without
interest charges) is less than the carrying amount of the asset, an impairment
loss is recognized.
Pervasiveness of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of
credit risk such as foreign exchange contracts, options contracts or other
foreign hedging arrangements. The Company maintains the majority of its cash
balances with one financial institution, in the form of demand deposits.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash equivalents to the extent the funds are not being held for investment
purposes.
Earnings (Loss) Per Share
Diluted net income per common share was calculated based on an
increased number of shares that would be outstanding assuming that the warrants
are converted to common shares. The effect of outstanding common stock
equivalents are anti-dilutive for 2000 and 1999 and are thus not considered.
The reconciliations of the numerators and denominators of the basic
loss per share computations are as follows:
Per-Share
Income Shares Amount
------ ------ ------
(Numerator) (Denominator)
For the three months ended September 30, 2000
---------------------------------------------
Basic Loss per Share
Loss to common shareholders .......... $(1,910,881) 44,026,562 $ (0.04)
=========== =========== =========
For the nine months ended September 30, 2000
--------------------------------------------
Basic Loss per Share
Loss to common shareholders .......... $(2,418,896) 42,852,783 $ (0.06)
=========== =========== =========
For the three months ended September 30, 1999
---------------------------------------------
Basic Loss per Share
Loss to common shareholders .......... $(2,047,259) 27,349,269 $ (0.07)
=========== =========== =========
For the nine months ended September 30, 1999
--------------------------------------------
Basic Loss per Share
Loss to common shareholders .......... $(2,869,335) 23,053,130 $ (0.12)
=========== =========== =========
The effect of outstanding common stock equivalents are anti-dilutive
for September 30, 2000 and 1999 and are thus not considered.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
Reclassifications
Certain reclassifications have been made in the 1999 financial
statements to conform with the 2000 presentation.
NOTE 2 - SHORT-TERM NOTES PAYABLE
Short-Term Notes Payable consist of loans from unrelated entities as of
September 30, 2000 and December 31, 1999. The notes are payable one year from
the date of issuance together with interest at 6.50% A.P.R.
NOTE 3 - INCOME TAXES
As of September 30, 2000, the Company had a net operating loss ("NOL")
carry forward for income tax reporting purposes of approximately $8,320,000
available to offset future taxable income. This net operating loss carry forward
expires at various dates between December 31, 2003 and 2013. A loss generated in
a particular year will expire for federal tax purposes if not utilized within 15
years. Additionally, the Internal Revenue Code contains provisions which could
reduce or limit the availability and utilization of these NOLs if certain
ownership changes have taken place or will take place. In accordance with SFAS
No. 109, a valuation allowance is provided when it is more likely than not that
all or some portion of the deferred tax asset will not be realized. Due to the
uncertainty with respect to the ultimate realization of the NOLs, the Company
established a valuation allowance for the entire net deferred income tax asset
of $2,829,000 as of September 30, 2000. Also consistent with SFAS No. 109, an
allocation of the income (provision) benefit has been made to the loss from
continuing operations.
NOTE 4 - PURCHASE OF SUBSIDIARIES
The Company has entered into a non-binding letter of intent to acquire
a 16 unit regional restaurant chain. Either party to the letter may terminate
the letter of intent without penalty. The parties have agreed to proceed toward
negotiation of a mutually agreeable purchase agreement. No assurances can be
given that the purchase of the restaurant chain will be completed.
In March of 1999, 1337855 Ontario, Inc. ("Ontario"), wholly owned
subsidiary of the Company entered into a purchase agreement with Koo Koo Roo
Canada Limited (Koo Koo Roo) to acquire certain assets and assume certain
liabilities of that company. Koo Koo Roo is a California-based casual dining,
quick service restaurant chain featuring skinless flame broiled chicken, roasted
hand-carved turkey and made-to-order tossed salads and specialty sandwiches. In
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
--------------------------------------------------------------------------------
NOTE 4 - PURCHASE OF SUBSIDIARIES (Continued)
consideration for its payment of approximately $375,000, Ontario acquired (1) a
20 year exclusive license agreement in Canada with a 20 year renewal term to
operate Koo Koo Roo restaurants; (2) re-negotiated the leases to operate 3
existing Koo Koo Roo locations in Toronto, and (3) satisfied outstanding debt
obligations due the second lender to Koo Koo Roo.
On July 1, 2000, the Company opened a new restaurant in Toronto,
Ontario. The restaurant is called "Mediterraneo" and offers primarily Italian
Cuisine.
NOTE 5 - RENT AND LEASE EXPENSE
The Company occupies various retail restaurant space under operating
leases beginning October 1997 and expiring at various dates through 2012.
The minimum future lease payments under these leases for the next five
years are:
Year Ended December 31, Real Property Equipment
----------------------- ------------------ -------------------
2000 $269,808 $ -
2001 269,808 -
2002 269,808 -
2003 269,808 -
2004 269,808 -
------------------ -------------------
Total five year minimum lease payments $1,349,040 $ -
================== ===================
The leases generally provides that insurance, maintenance and tax
expenses are obligations of the Company. It is expected that in the normal
course of business, leases that expire will be renewed or replaced by
leases on other properties.
NOTE 6 - RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2000 and the years1999 and
1998 the officers and/or companies controlled by the two officers paid expenses
and made advances to the Company. As of September 30, 2000, $1,075,292 in
advances was due to officers and directors of the Company.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 7 - CONVERTIBLE PREFERRED STOCK, DEBENTURES, WARRANTS & OPTIONS
Holders of Convertible Preferred Stock received 17,357,061 shares of
the Company's Common stock during the nine months ended September 30, 2000 and
the year 1999 in conversion of 46 shares of Series A, 33 shares of Series B, 14
shares of Series C and 20 Shares of Series D Convertible Preferred Stock.
During the nine months ended September 30, 2000 and the year 1999,
holders of Convertible debentures received 1,200,320 shares of Common Stock on
conversion of debentures.
The following table sets forth the options and warrants outstanding as
of September 30, 2000 and December 31, 1999.
September 30, December 31,
2000 1999
------------ ------------
Options & warrants outstanding, beginning of year 1,247,750 1,247,750
Granted - -
Expired - -
Exercised - -
------------ -----------
Options & warrants outstanding, end of year 1,247,750 1,247,750
============ ===========
Exercise price for options & warrants outstanding,
end of period $0.50 to $1.79 $0.50 to $1.79
============== ==============
NOTE 8 - RESTAURANT CLOSURES
During third and fourth quarter 1999, E.A.J. Cherry Hill, Inc., E.A.J.
Market East, Inc., E.A.J. Innerharbor, Inc., E.A.J. Echelon, Inc., and two of
the 1337855 Ontario restaurants were closed and substantially all assets and
leasehold improvements abandoned. This abandonment of assets has been reported
in the financial statements as a loss on sale of assets at $4,359,377 for the
year ended December 31, 1999.
During third quarter 2000, E.A.J. MO, Inc., E.A.J. Shoppes, Inc.,
E.A.J. Walnut Street, Inc., and the third 137855 Ontario restaurants were closed
and substantially all assets and leasehold improvements abandoned. This
abandonment of assets has been reported in the financial statements as a loss on
sale of assets at $1,704,809 for the nine months ended September 30, 2000.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE 9 - SUBSEQUENT EVENTS
On November 3, 2000, the Company's wholly owned subsidiary E.A.J.
Owings, Inc. ("Owings") filed a registration statement on Form SB-2 . The SB-2
covers the issuance of stock in connection with the spin-off by the Company of
2.2% of the outstanding shares of common stock of E.A.J. Owings, Inc. owned by
the Company to stockholders of the Company.
The Company will accomplish the spin-off by distributing 220,000 shares
or 2.2% of the Company's common stock owned by the Company to holders of record
at September 15, 2000 (date of record) of the Company's common stock. This
spin-off will be accomplished through a distribution of one share of common
stock of Owings for every two hundred shares of the Company's common stock owned
on the date of record. Fractional shares which may result from this spin-off
will rounded up to the nearest whole share.
This prospectus also covers the resale, from time to time, of up to
9,780,000 shares of common stock of Owings, in the over-the-counter market, at
prevailing market prices, at negotiated prices, or otherwise.
The SB-2 is not complete and may be changed. The Company may not sell
these securities until the registration statement filed with the Securities and
Exchange Commission is effective.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation.
General - This discussion should be read in conjunction with Management's
Discussion and Analysis of Financial Condition and Results of Operations in the
Company's annual report on Form 10-KSB for the year ended December 31, 1999.
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.
Two restaurants were opened, during May 1998, and three restaurants were opened
during third quarter 1998 (1 per month) and one restaurant was opened began
operations during October 1998. During march 1999 the Company purchased and
began operating three restaurants in Ontario Canada. During third and fourth
quarter of 1999, four U.S. restaurants and two Canadian restaurants were closed
and substantially all assets and leasehold improvements abandoned. During third
quarter of 2000, three U.S. restaurants and one Canadian restaurants were closed
and substantially all assets and leasehold improvements abandoned.
After its review of over one year of operating revenues from the now
closed U.S. units, management decided to cease operations and cut any negative
cash drain from these units. Also, in contemplating acquisitions, there would be
an overlap of use clauses in every center where these units were located. When
management carefully reviewed the now closed Canada locations, although
high-profile, the economic costs of occupancy made continuing operations
unfeasible without expending additional capital of which management felt would
be utilized more prudently within existing already cash-flow positive units.
Management believes these closings will strengthen cash flows position after the
initial close down costs.
Also during third quarter 2000, the Company opened a new restaurant in
Toronto, Ontario. The restaurant is called "Mediterraneo" and offers primarily
Italian Cuisine.
Total Revenues - For the three months ended September 30, 2000 and 1999, the
Company had total sales of approximately $544,000 and $850,000 respectively. For
the nine months ended September 30, 2000 and 1999, the Company had total sales
of approximately $1,540,000 and $2,788,000 respectively.
Costs and Expenses - For the three months ended September 30, 2000 and 1999, the
Company had a net loss from operations of approximately $166,000 and $614,000
respectively. For the nine months ended September 30, 2000 and 1999, the Company
had a net loss from operations of approximately $607,000 and $1,334,000
respectively. The net loss for 2000 reflects certain costs attributable to the
closed restaurants and certain costs due to restaurant closures. Included in the
net loss from operations for 2000 are professional fees of $56,000 and
consulting of $28,400 which were paid for by the issuance of common stock. These
costs and other General and Administrative costs relating to the closed entities
will not be present in the future. The Company expects to be able to show income
from operations in the near future as a result. Management believes that the
Company is now positioned to provide net income from operations in the coming
quarters.
<PAGE>
Liquidity And Capital Resources
For the nine months ended September 30, 2000 and 1999, the Company used
approximately $316,000 and $1,428,000 in cash flow from operating activities.
The use of cash for 2000 reflects certain costs attributable to the closed
restaurants and certain costs due to restaurant closures. The Company expects to
be able to reduce these costs and/or increase the amount of revenues to cover
costs and expenses in the future. Management believes that the Company is now
positioned to provide positive cash flows from operations in the coming
quarters.
During the nine months ended September 30, 2000 and 1999 the company
paid approximately $178,000 and $696,000 for property and equipment.
During the nine months ended September 30, 2000 and 1999 the Company
borrowed approximately $513,000 and $2,002,000, respectively from shareholder
advances and short-term notes. The $1,698,000 from was converted into Common
Stock of the Company during 1999.
The Company expects future development and expansion will be financed
through cash flow from operations and other forms of financing such as the sale
of additional equity and debt securities, capital leases and other credit
facilities. There are no assurances that such financing will be available on
terms acceptable or favorable to the Company.
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.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
On October 6, 2000, the Company initiated a civil action in federal
court in Massachusetts against several individuals who defamed the Company on
the internet. The Company is seeking the names of individuals who have attempted
to harm the Company's stock making false and defamatory allegations in internet
chat rooms. The Complaint seeks to enjoin the defamatory conduct and to obtain
its fair damages from the individuals. The civil action is in the earliest
discovery phase. The likelihood of recovery and the ultimate resolution of the
case is not known at this stage.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
<PAGE>
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 2nd quarter 2000.
<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.
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(Registrant)
DATE: November 14, 2000 By: /s/ Joseph Fiore
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Joseph Fiore
C.E.O., Chairman, Secretary, Director
DATE: November 14, 2000 By: /s/ Gary Usling
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Gary Usling
C.F.O.
