<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
- ------- SECURITIES EXCHANGE ACT OF 1935
For the quarterly period ended June 30, 1996
Commission file number 000-18408
MEXICAN PATIO CAFES, INC.
(Exact name of registrant as specified in its charter)
.............DELAWARE...................................74-2511422..............
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification No.)
2432 WEST PEORIA, SUITE 1282, PHOENIX, ARIZONA 85029
(Address of principal executive offices)
(602) 331-3200
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant has required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Common Stock 8,377,986
Par Value $.0005 Shares outstanding as of
per share June 30, 1996
Small Business Disclosure Format Yes No X
----- -----
<PAGE> 2
PART I - FINANCIAL STATEMENTS
MEXICAN PATIO CAFES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, 1996 December 31, 1995
------------- -----------------
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ (9,142) $ (5,561)
Accounts receivable 117,341 17,397
---------- ----------
Total Current Assets $ 108,199 $ 11,836
Property and Equipment
At cost net of accumulated depreciation 53,682 49,580
Other
Deposits 1,972 3,872
Other investments 45,028 --
---------- ----------
47,000 3,872
---------- ----------
$ 208,881 $ 65,288
========== ==========
</TABLE>
See Accompanying Notes
2
<PAGE> 3
MEXICAN PATIO CAFES, INC. AND SUBSIDIARY
Consolidated Balance Sheets - Continued
<TABLE>
<CAPTION>
(UNAUDITED)
June 30, 1996 December 31, 1995
------------- -----------------
LIABILITIES AND STOCKHOLDERS
EQUITY
<S> <C> <C>
Current Liabilities:
Notes payable $ 209,105 $ 134,404
Accounts payable 238,106 178,537
Accrued expenses 33,470 --
Deferred revenues -- $ 16,728
------------ ------------
Total Current Liabilities $ 480,681 $ 329,669
Long Term Debt 50,000
Stockholders Equity:
Preferred Stock, Series A,
$.05 par value 10% convertable
authorized, 5,000,000 shares;
issued and outstanding,
339,440 in 1996, 169,440 in 1995 16,972 8,472
Preferred Stock, Series B,
$.05 par value 10% convertable
authorized, 5,000,000 share;
issued and outstanding 50,000 2,500 2,500
Common stock, $.005 par value;
authorized, 25,000,000 shares;
issued and outstanding, 8,377,986 41,890 41,890
Additional paid-in-capital 2,357,489 2,251,089
Accumulated deficit (2,740,651) (2,568,332)
------------ ------------
(321,800) (264,381)
------------ ------------
$ 208,881 $ 65,288
============ ============
</TABLE>
See Accompanying Notes
3
<PAGE> 4
MEXICAN PATIO CAFES, INC. AND SUBSIDIARY
Consolidated Statement of Operations
Unaudited
<TABLE>
<CAPTION>
Unaudited Unaudited
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues
Restaurant Sales -- 114,993 -- 226,779
Advertising Fees 153,802 41,317 234,949 85,306
Interest Income and Other Income 190 5,991 5,735 7,862
--------- --------- --------- ----------
Gross Revenue 153,992 162,301 240,684 319,947
Costs and Expenses
Salaries, wages, and commissions 107,729 23,996 181,990 55,993
Printing and production 51,513 9,773 83,870 24,589
Costs of restaurant sales -- 39,673 -- 78,476
Restaurant operating expenses -- 89,733 -- 173,074
General and administrative 73,139 58,668 122,410 118,926
Depreciation and amortization 3,852 3,613 7,324 8,783
Interest expense 10,130 5,000 17,409 5,000
-------- --------- --------- ---------
Total Expenses 246,363 230,456 413,003 464,841
Net Loss (92,371) (68,155) (172,319) (144,894)
Net Loss Per Share (0.01) (0.01) (0.01) (0.01)
Weighted average shares 8,377,986 8,377,986 8,377,986 8,377,986
</TABLE>
See Accompanying Notes
4
<PAGE> 5
MEXICAN PATIO CAFES, INC. AND SUBSIDIARY
Consolidated Statement of Cash Flows
Unaudited
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Operating Activities
Net Loss (172,319) (144,894)
Adjustments to reconcile net income
to net cash provided by operating activities
Depreciation and amortization 7,324 8,783
(Increase) Decrease in Assets
Inventories -- 17,319
Accounts receivable (99,944) (20,906)
Prepaid expenses -- 8,905
Other assets 1,900 5,855
(Increase) decrease in liabilities
Accounts payable 59,569 73,791
Accrued expenses 33,470 (15,250)
Deferred revenue (16,728) (1,801)
-------- --------
Total Adjustments (14,409) 76,696
Net Cash Provided (Used) in Operating Activities (186,728) (68,198)
Investing Activities
Other investments (45,028) --
Additions to property and equipment (11,425) 4,171
-------- --------
Net Cash (Used) by Investing Activities (56,453) 4,171
Financing Activities
Advances and notes payable 124,700 10,000
Private placement of Series A Preferred Stock 114,900 --
Issuance of Common Stock -- 53,664
-------- --------
Net Cash Provided by Financing Activities 239,600 63,664
Net Increase (Decrease) in Cash (3,581) (8,705)
Cash at Beginning of Period (5,561) 29,718
-------- --------
Cash at End of Period (9,142) 21,013
</TABLE>
See Accompanying Notes
5
<PAGE> 6
MEXICAN PATIO CAFES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
As of June 30, 1996
<TABLE>
<CAPTION>
Series A Series B Retained
Preferred Preferred Common Paid-In Earnings
Stock Stock Stock Capital (Deficit) Total
<S> <C> <C> <C> <C> <C> <C>
Balance 01/01/96 $8,472 $2,500 $41,890 $2,251,089 ($2,568,332) ($264,381)
Private Placement 8,500 -- -- 106,400 -- 114,900
Net Loss -- -- -- -- (172,319) (172,319)
---------- ---------- ---------- ---------- ------------ -----------
Balance 06/30/96 16,972 2,500 41,890 2,357,489 (2,740,651) (321,800)
</TABLE>
6
<PAGE> 7
MEXICAN PATIO CAFES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting of normal
recurring accruals) necessary to present consolidated financial positions as of
June 30, 1996 and the consolidated results of operations and consolidated
statements of cash flows for the Three-month period ended June 30, 1996 and is
not necessarily indicative of the results to be expected for the full year.
2. Accounting Policies
During interim periods the Company follows the accounting policies set
forth in its consolidated financial statements included in its annual report on
Form 10-KSB. Reference should be made to such financial statements for
information on such accounting policies and further financial details.
7
<PAGE> 8
Management's Discussion and Analysis or Plan of Operation
Results of Operations
In 1995 the Company primarily operated one Two Pesos Mexican Cafe in
Oklahoma City, Oklahoma. The Company chose not to renew its lease agreement in
June of 1995 due to unfavorable operating results.
For the period ending June 30, 1996 the Company concentrated on its
marketing and advertising program in Neighborhood Marketing, Inc. its wholly
owned subsidiary. Fees generated for the six month period increased from $85,309
last year to $234,949 this year.
Liquidity
Working capital at June 30, 1996 was a deficit of $372,482 compared to
a deficit of $317,833 at December 31, 1995. The decrease is due to operating
losses for the period offset by the collection of accounts receivable on
December 31, 1995.
8
<PAGE> 9
Part II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibits are included herein:
(11) Statements re: Computation of earnings per share.
(b) The Company did not file any reports on Form 8-K during the
quarter.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MEXICAN PATIO CAFES, INC.
Dated: 8-13-96 By: /s/ Edwin L. King
-------------------- --------------------------------
Edwin L. King
President, Treasurer and
Chief Financial Officer
10
<PAGE> 11
(11) Statement RE: Computation of Earnings Per Share
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Net loss for computing earnings
per common share. (92,371) (68,155) (172,319) (144,894)
Weighted average number of
common shares outstanding during
each period without dilution 8,377,986 8,377,986 8,377,986 8,377,986
Addition from assumed conversion
of preferred stock 5,685,292 5,535,142 5,585,142 5,535,142
---------- ---------- ---------- ----------
Net income per common share 14,063,278 13,913,128 13,963,128 13,913,128
Without dilution (0.01) (0.01) (0.02) (0.02)
Fully diluted (0.01) (0.01) (0.01) (0.01)
</TABLE>
11
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> (9,142)
<SECURITIES> 0
<RECEIVABLES> 117,341
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 108,199
<PP&E> 53,682
<DEPRECIATION> 47,000
<TOTAL-ASSETS> 208,881
<CURRENT-LIABILITIES> 480,681
<BONDS> 50,000
0
19,472
<COMMON> 41,890
<OTHER-SE> 2,357,489
<TOTAL-LIABILITY-AND-EQUITY> 208,881
<SALES> 0
<TOTAL-REVENUES> 153,992
<CGS> 0
<TOTAL-COSTS> 51,513
<OTHER-EXPENSES> 194,850
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (92,371)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.01)
</TABLE>
