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: March 31, 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.
(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.)
670 White Plains Road, Suite 120, Scarsdale, New York, 10583
------------------------------------------------------------
(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: March 31, 2000 43,578,303
-----------------------------
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 March 31, 2000, and the related statements of operations, and cash
flows for the three month period then ended. 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
May 4, 2000
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2000 1999
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents ........................ $ -- $ --
Receivables ...................................... 2,032 10,439
Inventory ........................................ 35,716 46,050
Prepaid expense .................................. 79,440 76,442
Deposits ......................................... 1,710 1,710
----------- -----------
Total Current Assets ........................ 118,898 134,641
----------- -----------
Property and equipment:
Equipment ........................................ 879,481 879,441
Furniture & Fixtures ............................. 47,239 47,239
Leasehold improvements ........................... 2,212,291 2,212,291
----------- -----------
3,139,011 3,138,971
Less accumulated depreciation .................... (644,336) (547,669)
----------- -----------
2,494,675 2,591,302
----------- -----------
Other Assets:
Investments ...................................... 100,000 100,000
Intangible and other assets net of amortization
of $33,160 and $28,884, respectively ........... 121,707 125,954
----------- -----------
Total Assets ................................ $ 2,835,280 $ 2,951,897
=========== ===========
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Continued)
March 31, December 31,
2000 1999
------------ ------------
LIABILITIES
Current Liabilities:
Accounts payable and accrued liabilities ....... $ 742,141 $ 735,775
Short-term notes payable ....................... 374,139 342,926
Shareholders loans ............................. 839,642 724,760
------------ ------------
Total Current Liabilities ................. 1,955,922 1,803,461
------------
------------ ------------
Convertible Debentures, Net of Issue Costs ..... 1,287,309 1,383,290
------------ ------------
Total Liabilities ......................... 3,243,231 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.43,578,303 and 41,874,680
issued and outstanding, respectively ........ 4,358 4,187
Additional paid-in capital ..................... 9,773,056 9,619,060
Retained deficit ............................... (10,185,365) (9,858,101)
------------ ------------
Total Stockholders' Equity ................ (407,951) (234,854)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..... $ 2,835,280 $ 2,951,897
============ ============
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended
March 31,
-----------------------------
2000 1999
------------ ------------
Revenues ..................................... $ 532,114 $ 846,995
Cost of Revenues ............................. 195,853 258,080
------------ ------------
Gross Margin ................................. 336,261 588,915
Expenses
Labor and Related Expenses ................ 238,258 374,407
Rent ...................................... 61,710 48,248
Other General and Administrative .......... 229,616 126,619
------------ ------------
Income (Loss) Before Depreciation
and Amortization ....................... (193,323) (39,641)
Depreciation and Amortization ............. 100,913 154,306
------------ ------------
Net Loss from Continuing Operations .......... (294,236) (114,665)
------------ ------------
Other Income (Expense)
Interest, Net ............................. (32,553) (53,669)
------------ ------------
Net Loss Before Income Taxes ................. (326,789) (168,334)
Income Tax Expense (Benefit) ................. 475 475
------------ ------------
Net Loss To Common Stockholders .............. $ (327,264) $ (168,809)
============ ============
Basic and Diluted Loss Per Common Share ...... $ (0.01) $ (0.01)
============ ============
Weighted Average Number of Common Shares ..... 42,943,178 18,447,889
============ ============
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the three months ended
March 31,
----------------------
2000 1999
--------- ---------
Cash Flows From Operating Activities
<S> <C> <C>
Net loss for the period .............................. $(327,264) $(168,809)
Adjustments to reconcile net loss to net cash
Provided by operating activities
Depreciation and Amortization ...................... 100,913 154,306
Stock issued for services and expenses ............. 29,167 10,000
Decrease (Increase) in Receivables ................. 8,407 (6,324)
Decrease (Increase) in inventory ................... 10,334 (255,101)
Decrease (Increase) in other assets ................ -- (614,736)
Decrease (Increase) in prepaid expense ............. (2,998) (7,696)
Increase in accounts payable and accrued liabilities 35,228 163,528
--------- ---------
Net Cash Provided by (Used in) Operating Activities ..... (146,213) (724,832)
--------- ---------
Cash Flows From Investing Activities
Purchase of property and equipment ................... -- (114,845)
--------- ---------
Net Cash Provided by Investing Activities ............... -- (114,845)
--------- ---------
Cash Flows From Financing Activities
Advances from majority stockholders .................. 115,000 --
Proceeds from short-term notes payable ............... 31,213 895,000
--------- ---------
Net Cash Provided by Financing Activities ............... 146,213 895,000
--------- ---------
Increase (Decrease) in Cash ............................. -- 55,323
Cash at beginning of period ............................. -- 133,957
--------- ---------
Cash at End of Period ................................... $ -- $ 189,280
========= =========
Supplemental Disclosure of Interest and Income Taxes Paid
Interest paid during the period ...................... $ -- --
========= =========
Income taxes paid during the period .................. $ 700 $ 2,725
========= =========
Supplemental Disclosure of Non-cash Investing
and Financing Activities: None
</TABLE>
See accompanying notes and accountants' report.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
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 March 31, 2000 and for the
three 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 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.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(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 subsidiarys, E.A.J. Holding Corporation, a
Delaware corporation ("Holding"), E.A.J. PHL Airport, Inc. a Pennsylvania
corporation, Eat At Joe's U. of P., Inc. a Pennsylvania corporation, E.A.J.
Cherry Hill, Inc., a New Jersey corporation, Eat At Joe's Harborplace, Inc., a
Maryland corporation, Eat At Joe's Neshaminy, Inc. a Pennsylvania corporation,
Eat At Joe's Plymouth, Inc., a Pennsylvania corporation, E.A.J. Echelon Mall,
Inc., a New Jersey corporation, E.A.J. Gallery, Inc., a Pennsylvania
corporation, E.A.J. Moorestown, Inc., a New Jersey corporation, E.A.J.
Shoppingtown,Inc., a New York corporation, Eat at Joe's U of P 40th Street,
Inc., a Pennsylvania corporation, Eat at Joe's Owings Mills, Inc., a Maryland
corporation, and 1337855 Ontario. All significant intercompany accounts and
transactions have been eliminated.
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.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
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
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.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
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.
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
earnings per share computations are as follows:
For the three months ended March 31, 2000
-----------------------------------------
Per Share
Income Shares Amount
---------- ---------- ----------
(Numerator) (Denominator)
Basic EPS
Net Loss to common
shareholders .................... $ (327,264) 42,943,178 $ (0.01)
========== ========== ==========
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(Continued)
Earnings (Loss) Per Share (Continued)
For the three months ended March 31, 1999
-----------------------------------------
Per Share
Income Shares Amount
---------- ---------- ----------
(Numerator) (Denominator)
Basic EPS
Net Loss to common
shareholders .................... $ (168,809) 18,447,889 $ (0.01)
========== ========== ==========
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 March 31, 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 December 31, 1999, 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 December 31, 1999. Also consistent with SFAS No. 109, an
allocation of the income (provision) benefit has been made to the loss from
continuing operations.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
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
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.
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 $ 360,036 $ --
2001 360,036 --
2002 360,036 --
2003 360,036 --
2004 360,036 --
Thereafter 2,196,492 --
----------- -----------
Total minimum future lease payments $ 3,996,672 $ --
=========== ===========
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.
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 6 - RELATED PARTY TRANSACTIONS
During the three months ended March 31, 2000 and the years1999 and
1998 the two officers and/or companies controlled by the two officers paid
expenses and made advances to the Company. As of March 31, 2000, $839,642 in
advances was due to officers and directors of the Company.
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 three months ended March 31, 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 three months ended March 31, 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 March 31, 2000 and December 31, 1999.
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
--------- ---------
<S> <C> <C>
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
============== ==============
</TABLE>
<PAGE>
EAT AT JOE'S LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2000
(Continued)
NOTE 8 - CONTINGENCIES
Various Rouse Corporation Entities have brought litigation against various Eat
At Joe's Entities.
The subject litigation was instituted by Cherry Hill Center, Inc.,
Echelon Mall Joint Venture, Owings Mills Limited Partnership and Plymouth
Meeting Mall, Inc. against Eat At Joe's, Cherry Hill, Inc. t/a Eat At Joe's,
E.A.J. Holding Corporation, E.A.J. Echelon Mall, Inc. t/a Eat At Joe's Express,
Eat At Joe's Limited, Eat At Joe's Owings Mills, Inc. t/a Eat At Joe's and Eat
At Joe's Plymouth Meeting, Inc. t/a Eat At Joe's. Each of the Plaintiffs is the
Landlord for the corresponding Eat At Joe's entity, each of which Eat At Joe's
Entities are single purpose entities. E.A.J. Holding Corporation was named as a
party because it is a Guarantor of the leases. To the best of my knowledge, none
of the Eat At Joe's Defendants have any assets or are currently engaged in any
actively ongoing business activity. Therefore, any potential judgment against
them in the action will be uncollectible.
In response to the Complaint of the Plaintiffs, the Defendants
asserted various defenses and Counterclaims against the Plaintiffs and certain
additional Rouse-related Third-Party Defendants based upon fraud, consumer
fraud, tortuous interference with prospective economic advantage, negligent
misrepresentation and breach of the duty of good faith and fair dealing. Eat At
Joe's Moorestown, Inc. joined in the case as a Third-Party Plaintiff to assert
similar claims against certain of the Rouse-related entities. It is very
difficult to predict the outcome of this case. Plaintiffs' claims totaled
approximately $830,000.00 as of the date of the filing of the Complaint.
Additionally, Plaintiffs are seeking judgment for additional rent which comes
due under the leases between the time of the filing of the Complaint and the
entry of the judgment together with their costs and attorney's fees. The Eat At
Joe's Defendants and Third-Party Plaintiffs seek damages in the form of recovery
of Eat At Joe's improvements to the various leaseholds totaling in excess of
$4,000,000.00.
Counsel is presently attempting to negotiate a settlement of the
entire litigation without adverse consequence to Eat At Joe's.
NOTE 9 - RESTAURANT CLOSURES
During 1999, E.A.J. Cherry Hill, Inc., E.A.J. Gallery, Inc., Eat At
Joe's Harborplace, Inc., E.A.J. Echelon Mall, 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
accompanying financial statements as a loss on sale of assets at $4,359,377 for
the year ended December 31, 1999.
<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 second and third
quarter of 1999, four U.S. restaurants and two Canadian restaurants were closed
and substantially all assets and leasehold improvements abandoned.
After its review of over one year of operating revenues from the four 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 two 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.
During the three months ended March 31, 2000 the company operated five
restaurants. During the three months ended March 31, 2000 the Company operated
eight restaurants.
Total Revenues - For the three months ended March 31, 2000 and 1999, the Company
had total sales of approximately $532,000 and $847,000 respectively.
Costs and Expenses - For the three months ended March 31, 2000 and 1999, the
Company had a net loss from operations of approximately $295,000 and $115,000
respectively. The net loss for 2000 reflects certain fixed costs spread across
fewer revenues 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.
Other Income (Expense), Net - For the 1ST quartet 2000 and 1999 the Company
reported net other expenses in the amount of approximately $33,000 and $54,000 .
These expenses primarily represent accrued interest on short term notes.
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended March 31, 2000 and 1999, the Company used
approximately $146,000 and $725,000 in cash flow from operating activities.
<PAGE>
During the three months ended March 31, 1999 the company paid approximately
$115,000 for property and equipment.
During the three months ended March 31, 2000 and 1999 the Company borrowed
approximately $146,000 and $895,000, respectively from shareholder advances and
short-term notes. The $895,000 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
Various Rouse Corporation Entities have brought litigation against various Eat
At Joe's Entities.
The subject litigation was instituted by Cherry Hill Center, Inc.,
Echelon Mall Joint Venture, Owings Mills Limited Partnership and Plymouth
Meeting Mall, Inc. against Eat At Joe's, Cherry Hill, Inc. t/a Eat At Joe's,
E.A.J. Holding Corporation, E.A.J. Echelon Mall, Inc. t/a Eat At Joe's Express,
Eat At Joe's Limited, Eat At Joe's Owings Mills, Inc. t/a Eat At Joe's and Eat
At Joe's Plymouth Meeting, Inc. t/a Eat At Joe's. Each of the Plaintiffs is the
Landlord for the corresponding Eat At Joe's entity, each of which Eat At Joe's
Entities are single purpose entities. E.A.J. Holding Corporation was named as a
party because it is a Guarantor of the leases. To the best of my knowledge, none
of the Eat At Joe's Defendants have any assets or are currently engaged in any
actively ongoing business activity. Therefore, any potential judgment against
them in the action will be uncollectible.
In response to the Complaint of the Plaintiffs, the Defendants
asserted various defenses and Counterclaims against the Plaintiffs and certain
additional Rouse-related Third-Party Defendants based upon fraud, consumer
fraud, tortuous interference with prospective economic advantage, negligent
misrepresentation and breach of the duty of good faith and fair dealing. Eat At
Joe's Moorestown, Inc. joined in the case as a Third-Party Plaintiff to assert
similar claims against certain of the Rouse-related entities. It is very
difficult to predict the outcome of this case. Plaintiffs' claims totaled
approximately $830,000.00 as of the date of the filing of the Complaint.
Additionally, Plaintiffs are seeking judgment for additional rent which comes
due under the leases between the
<PAGE>
time of the filing of the Complaint and the entry of the judgment together with
their costs and attorney's fees. The Eat At Joe's Defendants and Third-Party
Plaintiffs seek damages in the form of recovery of Eat At Joe's improvements to
the various leaseholds totaling in excess of $4,000,000.00.
Counsel is presently attempting to negotiate a settlement of the
entire litigation without adverse consequence to Eat At Joe's.
Item 2. Changes in Securities
Holders of Convertible Preferred Stock received 1,086,957 shares of
the Company's Common stock during the three months ended March 31, 2000 in
conversion of Convertible Preferred Stock, as previously reported in Form 10-KSB
for December 31, 1999.
During the three months ended March 31, 2000, holders of Convertible
debentures received 500,000 shares of Common Stock on conversion of debentures.
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 1st 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.
------------------
(Registrant)
DATE: May 11, 2000 By: /s/ Joseph Fiore
-------------------- -------------------
Joseph Fiore
C.E.O., Chairman, Secretary, Director
DATE: May 11, 2000 By: /s/ Gary Usling
-------------------- ------------------
Gary Usling
C.F.O., Director
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE BALANCE SHEET OF EAT AT JOE'S LTD. AS OF MARCH 31, 2000 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>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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<RECEIVABLES> 2
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<INVENTORY> 36
<CURRENT-ASSETS> 119
<PP&E> 3139
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0
0
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