_________________________________________________________________
_________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark one)
[X X] Quarterly Report Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
For the quarterly period ended March 31, 1995
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Commission file number 0-16808
SIXX HOLDINGS, INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 75-2222883
(State of Incorporation) (IRS Employer Identification
No.)
300 Crescent Court, Suite 1630
Dallas, Texas 75201
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code:
(214) 855-8800
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 XX NO
As of May 12, 1995, 10,881,356 common shares of the registrant
were issued and outstanding.
_________________________________________________________________
_________________________________________________________________
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
The financial consolidated statements of Sixx Holdings,
Incorporated (the "Company") and its subsidiaries included herein
have been prepared by the registrant in conformity with generally
accepted accounting principles. The consolidated financial
statements and information included herein are unaudited;
however, they reflect all adjustments which are, in the opinion
of management, necessary to reflect a fair presentation of the
Company's financial position as of March 31, 1995 and the results
of operations for the interim three-month periods ending March
31, 1995 and 1994. Reference is made to Notes to Unaudited
Consolidated Financial Statements found elsewhere in this
document for additional information concerning the consolidated
financial statements.
Management is responsible for the fairness and reliability
of the consolidated financial statements and other financial data
included in this report. In the preparation of the consolidated
financial statements, it is necessary to make informed estimates
and judgments based on currently available information on the
effects of certain events and transactions.
The Company maintains accounting and other controls which
management believes provide reasonable assurance that financial
records are reliable, assets are safeguarded, and that
transactions are properly recorded in accordance with
management's authorizations. However, limitations exist in any
system of internal control based upon the recognition that the
cost of the system should not exceed benefits derived.
<PAGE>
<PAGE>
<TABLE>
ITEM 1. FINANCIAL STATEMENTS
Sixx Holdings, Incorporated and Subsidiaries
Consolidated Balance Sheets
(Rounded to nearest hundred, except share and per share amounts)
March 31, December 31,
1995 1994
<CAPTION>
(Unaudited)
ASSETS
Current Assets:
<S> <C> <C>
Cash and cash equivalents $171,700 $251,100
Accounts receivable 6,300 61,300
Inventories 76,800 79,900
Prepaid expenses 77,500 97,100
Deferred federal income taxes 23,300 23,300
Total Current Assets 355,600 512,700
Property and equipment (net) 2,481,500 2,557,400
Other assets 23,500 24,100
$2,860,600 $3,094,200
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Current liabilities:
Accounts payable $55,700 $42,500
Accrued liabilities 191,500 212,300
Payable to affiliates 49,900 39,500
Notes payable to stockholder 209,600 209,600
Total Current Liabilities 506,700 503,900
Deferred rent liabilities 92,500 99,000
Deferred federal income taxes 23,300 23,300
TOTAL LIABILITIES 622,500 626,200
STOCKHOLDERS' EQUITY
Common stock of $.01 par value 108,800 108,800
Authorized 12,000,000 shares;
10,881,356 shares issued and
outstanding at March 31, 1995 and
December 31, 1994
Additional paid-in capital 4,201,900 4,201,900
Deficit (since August 1, 1989) (2,072,600) (1,842,700)
TOTAL STOCKHOLDERS' EQUITY 2,238,100 2,468,000
$2,860,600 $3,094,200
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Sixx Holdings, Incorporated and Subsidiaries
Consolidated Statements of Operations (Unaudited)
(Rounded to nearest hundred, except share and per share amounts)
Three Months Three Months
March 31, March 31,
1995 1994
<CAPTION>
<S> <C> <C>
Restaurant revenues $1,217,100 $901,600
Restaurant costs and expenses:
Cost of sales 357,900 247,200
Operating expenses 726,100 692,700
Depreciation and amortization 80,900 29,800
Total restaurant costs and expenses 1,164,900 969,700
Income (loss) from restaurant operations 52,200 (68,100)
General and adminstrative expenses 284,300 350,100
Nonoperating income, net 2,200 27,400
Net loss ($229,900) ($390,800)
Net loss per common share ($0.02) ($0.04)
See accompanying notes to unaudited consolidated financial
statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Sixx Holdings, Incorporated and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
(Rounded to nearest hundred)
Three Months Three Months
Ended Ended
March 31, March 31,
1994 1995
<CAPTION>
Cash flows from operating activities:
Net loss
Adjustments to reconcile net
<S> <C> <C>
loss to net cash used ($229,900) ($390,800)
in operating activities:
Depreciation and amortization 83,900 32,800
Changes in assets and liabilities,
net of effect of merger:
Accounts receivable 55,000 7,000
Inventories 3,100 (31,400)
Prepaid expenses and other assets 20,200 (89,400)
Accounts payable 13,200 (229,700)
Accrued liabilities (20,800) 71,700
Payable to affiliates 10,400 8,700
Deferred rent liabilities (6,500) (4,700)
Net cash used in operating
activities (71,400) (625,800)
Cash flows used in investing activities--
Additions to property and
equipment, net of effect of merger (8,000) (522,300)
Cash flows from financing activities:
Additions to loans from stockholder --- 1,101,500
Distributions to stockholder --- (95,000)
Net cash provided by financing
activities --- 1,006,500
Net decrease in cash and cash equivalents,
net of effect of merger
(79,400) (141,600)
Cash and cash equivalents at beginning
of period 251,100 3,860,000
Cash and cash equivalents at
end of period $171,700 $3,718,400
See accompanying notes to unaudited consolidated financial
statements.
</TABLE>
<PAGE>
<PAGE>
(1) Basis of Presentation
In the opinion of management of the Company, all adjustments
(all of which are normal and recurring) have been made which
are necessary to present fairly the accompanying
consolidated financial statements. The consolidated
statements of operations and cash flows for the Company
have been restated for the quarter ended March 31, 1994, as
described in Note 2 below, to reflect the consolidation of
entities under common control subject to the merger, as if
it had occurred on January 1, 1994, the effective date of
common control .
(2) Merger Transaction
On April 25, 1994, Patrizio Restaurant, Inc., a Texas
corporation ("Patrizio I") and Patrizio North, Inc., a Texas
corporation ("Patrizio II") were merged (the "Merger") with
and into Patrizio Acquisition, Inc., a Texas corporation and
wholly owned subsidiary of the Company. At the effective
date of the Merger, the name of Patrizio Acquisition, Inc.
was changed to Patrizio Restaurant, Inc.
Prior to the Merger, Jack D. Knox, the president, chief
executive officer and a director of the Company, owned 100%
of the outstanding capital stock of Patrizio I and Patrizio
II and approximately 51% of the Company's outstanding common
stock. Pursuant to the terms of the Agreement and Plan of
Merger (the "Merger Agreement"), Mr. Knox exchanged the
outstanding shares of capital stock of Patrizio I and
Patrizio II for, in the aggregate, approximately $2,967,700
(of which $2,365,600 went to repay Mr. Knox for personal
funds advanced to build the Patrizio II restaurant) and
6,163,934 shares of the Company's common stock; of which
4,717,896 shares are restricted and unregistered. As a
result of the common control of the entities, which occurred
effective January 1, 1994, the Merger was treated in a
manner similar to a pooling of interests for financial
accounting purposes. Accordingly, the assets acquired and
liabilities assumed are presented at their historical costs
in the accompanying consolidated financial statements and
the results of operations of Patrizio I and II are included
from the effective date at which common control was
established.
The consideration received by Mr. Knox pursuant to the
Merger Agreement was determined by negotiations between the
parties, and is supported by appraisals prepared by three
separate independent business valuation companies and a
fairness opinion prepared by one of the valuation
companies. The cash portion of the purchase price paid to
Mr. Knox in the Merger was funded from the Company's
existing cash and included payment to Mr. Knox for personal
funds advanced by him in connection with the construction of
<PAGE>
Sixx Holdings, Incorporated
Notes to Unaudited Consolidated Financial Statements
As of March 31, 1995
Patrizio II aggregating approximately $2,365,600.
Prior to the Merger, Patrizio I owned and operated an
upscale Italian food restaurant in Dallas, Texas which
opened for business in 1989, and Patrizio II owned and
operated a similar restaurant in Plano, Texas, since its
opening on March 14, 1994. All assets acquired in the
Merger, which included the two existing restaurants, the
"Patrizio" concept, design and motif, and other assets used
in the day-to-day operations of the two existing
restaurants, continue to be utilized in operating the
existing two restaurants.
(3) Accounting Policies
During the interim periods presented, the Company has
followed the accounting policies set forth in its
consolidated financial statements and related notes thereto,
included in its 1994 Annual Report on Form 10-KSB. Such
document should be referred to for information on accounting
policies and further financial details.
<PAGE>
<PAGE>
ITEM 2.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Prior to April 25, 1994, the Company's assets consisted primarily
of cash and cash equivalents. On that date, Patrizio I and
Patrizio II were merged with and into a subsidiary of the Company
in exchange for the payment by the Company of approximately $3.0
million in cash and 6,163,934 shares of the Company's common
stock. Prior to the Merger, Patrizio I owned and operated an
upscale Italian food restaurant in Dallas, Texas and Patrizio II
owned and operated a similar restaurant in Plano, Texas. All
assets acquired in the Merger, which include the two existing
restaurants, the "Patrizio" concept, design and motif, and other
assets used in the day-to-day operations of the two existing
restaurants, continue to be utilized in operating the existing
two restaurants.
Prior to the Merger, Jack D. Knox, the chairman, president, and
a director of the Company, owned 100% of the outstanding capital
stock of Patrizio I and Patrizio II and approximately 51% of the
Company's outstanding common stock. As a result of the common
control of entities, which occurred effective January 1, 1994,
the Merger was treated in a manner similar to a pooling of
interests for financial accounting purposes. Accordingly, the
assets acquired and liabilities assumed were recorded at their
historical costs and the results of operations of Patrizio I and
Patrizio II are consolidated from the effective date at which
common control was established. Thus, the Company's financial
position and results of operations as of and for the three months
ended March 31, 1994 present the consolidated financial
information of the Company and its subsidiaries as if the Merger
occurred January 1, 1994.
Capital Resources and Liquidity:
Since 1990, the Company reviewed numerous opportunities to
acquire an operating business utilizing its cash and cash
equivalents. As described elsewhere in this document, the Company
acquired the design and concept rights of Patrizio and two
Patrizio Italian-themed restaurants effective April 25, 1994.
This transaction utilized $2,967,661 of the Company's cash and
short-term investments which totalled $3,594,060 at March 31,
1994. As of March 31, 1995, $213,813 is payable to Mr. Knox for
advances made relating to Patrizio I. In addition to the cash
consideration, the Company issued 6,163,934 shares of common
stock to Mr. Knox.
As of May 10, 1995, the Company's cash and short-term investments
were approximately $290,000. Management believes that sales at
the current annual levels will provide sufficient cash flow to
fund operations at existing restaurants for the foreseeable
future. Future restaurant expansion will require additional
capital. Evaluation of various financing options is under
consideration by the Company at this time.
<PAGE>
Results of Operations:
The Company entered the casual dining segment of the restaurant
industry as a result of its Merger with Patrizio I and Patrizio
II on April 25, 1994. Prior to the Merger, the Company had no
operating business. However, all 1994 operations for the Company
prior to the Merger have been restated effective January 1, 1994,
the effective date of common control.
Restaurant revenues for the quarter ended March 31, 1995
increased $315,460 (35%) from the quarter ended March 31, 1994,
primarily because Patrizio II opened in Plano, Texas on March 14,
1994 solely for dinner service. It began serving lunch and
dinner in April 1994. With Patrizio II being open only sixteen
days during the first three month period, Patrizio I accounted
for 62% and 89% of the revenues for the three-month period ended
March 31, 1995 and 1994, respectively.
Restaurant costs and expenses for the three-month period ended
March 31, 1995 increased $195,120 from the same period in 1994,
reflecting operating costs for Patrizio II during the full three-
month period compared to sixteen days in 1994.
General and administrative expenses for the three-month period
ended March 31, 1995 decreased $65,764 (19%) from the three-month
period ended March 31, 1994 as a result of legal and accounting
costs incurred during 1994 which were associated with the merger
transaction.
Nonoperating income declined $25,193 during the first three
months of 1995 compared to the first quarter of 1994 because the
Company had fewer funds available for short-term investment (due
to the consummation of the Merger). Balances invested declined
from $3,594,060 on March 31, 1994 to $171,720 on March 31, 1995.
As of May 9, 1995, $213,813 has not been paid to Mr. Knox in
connection with the Merger.
Impact of Inflation:
The Company is subject to the effect of inflation on its
restaurant labor, food and occupancy costs. The Company employs
workers who are paid hourly rates based upon the federal minimum
wage, which last increased in 1991. Operating margins at the
restaurant level have been maintained through rigorous food cost
control, procurement efficiencies and, at last resort, menu price
adjustments. Competitive pressures and the Company's strategy of
providing an upscale dining experience for a moderate expense
preclude the Company from frequent menu price adjustments. The
cost of new construction, taxes, maintenance and insurance costs
all have an impact on the Company's occupancy costs, which
continued to increase during the period. Management believes the
current practice of maintaining operating margins through a
combination of infrequent menu price increases and costs
controls, careful evaluation of property and equipment needs, and
efficient purchasing practices is the most effective means to
manage the effects of inflation.
<PAGE>
Seasonality
The Company's business is somewhat seasonal in nature, with
restaurant revenues being stronger in the spring and autumn when
patrons can be seated comfortably on each restaurant's outdoor
patio.
<PAGE>
<PAGE>
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None
(b) Reports on Form 8-K: None
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the
Securities Exchange Act of 1934, the Company has duly caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
SIXX HOLDINGS, INCORPORATED
By: /s/ Jack D. Knox
Jack D. Knox, President
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons in the capacities and the dates indicated.
SIGNATURE
<TABLE>
<CAPTION>
<S> <S> <C>
/s/ Jack D. Knox Chairman of the Board, May 12, 1995
Jack D. Knox Director
(Principal Executive Officer)
/s/ Jean S. Baggett Chief Financial Officer May 12, 1995
Jean S. Baggett (Principal and Accounting
</TABLE>
Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 171,700
<SECURITIES> 0
<RECEIVABLES> 6,300
<ALLOWANCES> 0
<INVENTORY> 76,800
<CURRENT-ASSETS> 355,600
<PP&E> 2,481,500
<DEPRECIATION> 83,900
<TOTAL-ASSETS> 2,860,600
<CURRENT-LIABILITIES> 506,700
<BONDS> 0
<COMMON> 108,800
0
0
<OTHER-SE> 4,201,900
<TOTAL-LIABILITY-AND-EQUITY> 2,860,600
<SALES> 1,217,100
<TOTAL-REVENUES> 1,217,100
<CGS> 357,900
<TOTAL-COSTS> 1,164,900
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (229,900)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (229,900)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
