SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended Commission File Number 33-39263-NY
June 30, 1995
CABARET ROYALE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 22-2993070
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
10723 Composite Drive
Dallas, Texas 75220
(214) 350-2161
(Principal Executive Offices)
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 [ 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, PAR VALUE $0.001 7,348.574 SHARES
- ------------------------------ ----------------
Class Outstanding at June 30, 1995
All currencies stated herein are in U.S. Dollars
<PAGE>
CABARET ROYALE CORPORATION
FORM 10-QSB/A
INDEX
Page
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets
June 30, 1995 and December 31, 1994 3
Consolidated Condensed Statements of operations:
Six Months Ended June 30, 1995 and 1994 5
Consolidated Condensed Statements of operations:
Six Months Ended June 30, 1995 and 1994 6
Consolidated Condensed Statements of Cash Flows
Six Months Ended June 30, 1995 and 1994 7
Notes to Consolidated Condensed Financial Statements 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II - OTHER INFORMATION AND SIGNATURES
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
2
<PAGE>
CABARET ROYALE CORPORATION
FORM 10-QSB/A
PART I - FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Consolidated Condensed Balance Sheets
June 30, 1995 and December 31, 1994
ASSETS
JUNE 30, DECEMBER 31,
1995 1994
(Unaudited)
Current assets:
Cash and cash equivalents $ (13,405) --
Federal Income Tax Refund 3,409
Accounts receivable:
Affiliates 134,845 131,809
Employees 2,287
Prepaid Insurance, Auto 604
Total current assets 124,330 135,218
Property and equipment:
Land and improvements 770,948 770,948
Building and improvements 3,738,394 3,738,394
Furniture and equipment 1,373,766 1,738,394
----------- -----------
5,883,108 5,890,347
Less accumulated depreciation (1,789,609) (1,669,212)
----------- -----------
Net property and equipment 4,093,499 4,221,135
Other assets: 7,743 18,644
----------- -----------
Total Assets $ 4,225,572 $ 4,374,997
=========== ===========
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<PAGE>
CABARET ROYALE CORPORATION
Consolidated Condensed Balance Sheet (Cont.)
June 30, 1995 and December 31, 1994
LIABILITIES AND STOCKHOLDERS' EQUITY
JUNE 30, DECEMBER 31,
1995 1994
(Unaudited)
Current liabilities:
Bank Overdraft 69,412
Accounts payable 133,992 121,684
Accrued expenses:
Interest payable 324,360 214,535
Other accrued expenses 233,116 87,298
Federal Income taxes payable (3,409)
Bridge Financing Notes Payable 2,835,010 2,835,000
Other Notes payable 65,541 79,634
Current Portion of Long Term Debt and
Capital Lease obligation 63,541 67,490
Total current liabilities $ 3,657,852 $ 3,475,053
----------- -----------
Net Liabilities of CAT Entertainment,
A discontinued operation $ 3,793,309
-----------
Notes payable, and Capital Lease Obligations
Net of current portion 1,398,277 1,434,849
Stockholders equity:
Common stock; $.001 par; 60,000,000
shares authorized, 7,298,854 outstanding 7,299 7,299
Additional paid-in capital 5,308,572 5,308,572
Retained earnings (9,644,185) (9,644,185)
Year to-date Net Income 3,497,757
Total stockholders' equity (830,557) (4,328,314)
----------- -----------
$ 4,225,572 $ 4,374,997
=========== ===========
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
CABARET ROYALE CORPORATION
Consolidated Condensed Statements of Operations
Three Months Ended Six Months Ended
June 30 June 30
----------------------- ---------------
1995 1994 1995 1994
-------- ------- -------- ------
(unaudited) (unaudited) (unaudited) (unaudited)
Revenues:
<S> <C> <C> <C> <C>
Rental income ................................. 105,926 $ 266,123 233,869 $ 490,613
Franchise fees ................................ 33,822 3,792 64,755 3,792
Operating sales ............................... 713,452 972,968
----------- ----------- -----------
139,748 983,367 298,624 1,467,373
----------- ----------- ----------- -----------
Operating costs and expenses:
Cost of sales ................................. 171,148 242,501
Operating expenses ............................ 104,663 677,765 301,770 1,139,216
General and administrative
expenses .................................... -- 563,293 -- 871,720
Depreciation and
amortization ................................ 67,776 700,258 135,549 984,025
----------- ----------- ----------- -----------
172,439 2,112,464 437,319 3,237,462
----------- ----------- ----------- -----------
Operating income (loss) ............................ (32,691) (1,129,097) (138,695) (1,770,089)
Other income (expenses):
Interest income ............................... 8.00 499 8.00 1,174
Miscellaneous Income ......................... 1,719
Gain on sale of fixed assets ................. 11,151
Interest/debt conversion
expenses .................................... (81,724) (163,554) (150,910) (318,131)
----------- ----------- ----------- -----------
Net income (loss) before
provision for income taxes ....................... (114,422) (1,292,152) (302,484) (2,087,046)
Discontinued Operation Gain
on disposal of CAT ................................ (2,241) 3,800,241
Provision (benefit) for
income taxes (Note 6) ............................ -- -- -- (10,985)
----------- ----------- ----------- -----------
Net income (loss) .................................. (116,664) (1,292,152) 3,497,757 (2,076,061)
Pro forma income (loss)
per share (Note 3) .............................. (0.02) $ (0.19) 0.48 $ (0.31)
----------- ----------- ----------- -----------
Pro forma weighted average
shares outstanding (Note 3) ...................... 7,348,574 6,681,534 7,348,574 6,681,534
=========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
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<PAGE>
<TABLE>
<CAPTION>
CABARET ROYALE CORPORATION
Consolidated Condensed Statements of Changes in Stockholders' Equity
June 30, 1995
(Unaudited)
COMMON STOCK
------------
NUMBER ADDITIONAL TOTAL
OF PAID-IN RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
------ ------ ------- -------- ------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994 ........... 7,348,574 $ 7,299 $ 5,308,572 $(9,644,185) $(4,328,314)
Net income (loss) ..................... -- -- -- $ 3,497,757 $ 3,497,757
----------- ----------- ----------- ----------- -----------
Balance at June 30, 1995 ............... 7,348,574 $ 7,299 $ 5,308,572 $(6,146,428) $ (830,557)
=========== =========== =========== =========== ===========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
<TABLE>
<CAPTION>
CABARET ROYALE CORPORATION
Consolidated Statements of Cash Flows
Six months ended June 30,
1995 1994
----------- -------
Cash flows from operating activities:
<S> <C> <C>
Net income (loss) .............................. $ (302,484) $(2,076,061)
Noncash revenues, expenses, gains
and losses included in net income (loss):
Loan origination expense ....................... -- 69,000
Debt conversion expense ........................ -- 75,000
Depreciation and amortization .................. 135,549 984,025
Gain on sale of fixed assets ................... (11,151) --
Changes in assets and liabilities:
Accounts receivable ........................ 13,213 (89,694)
Inventories ................................ -- (41,995)
Other assets ............................... -- (17,791)
Prepaid Expenses ........................ 1,207
Accounts payable ........................... 12,308 530,668
Accrued expenses ........................... -- 267,224
Other accrued expenses ..................... 151,518 --
Interest payable ........................... 109,825 --
Other note payable ......................... (14,083) --
Federal income taxes payable ............... -- (10,985)
-----------
Net cash provided (used in) by operating activities . 95,901 (310,609)
----------- -----------
Gain from discontinued operations ................... 3,800,241 --
Net adjustments ot reconcile gain from
Discontinued operations to cash received
From discontinued operations: .................... (3,811,945) --
Net cash used in discontinued operations ............ (11,705) --
Net cash used in investing activities:
Purchase of leasehold improvements ............. -- (2,364,649)
Payment of rent arrearage ...................... -- (141,000)
-----------
Net cash used in investing activities ............... -- (2,505,649)
-----------
Net cash provided by (used in) financing activities:
Payment of mortgages and notes payable ......... -- (59,726)
Proceeds from bridge loan ...................... -- 2,685,000
Loans from stockholders ........................ -- 188,000
Payment on long term debt ........................... (28,190) --
Net cash provided by (used in) financing activities . (28,190) 2,813,274
----------- -----------
Net increase (decrease) in cash and cash equivalents 56,006 (2,984)
Cash and cash equivalents at beginning of year ...... (69,412) 39,319
----------- -----------
Cash and cash equivalents at end of period .......... (13,405) $ 36,335
=========== ===========
Supplemental information:
Interest paid ................................. $ 25,816 $ 84,220
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
-7-
<PAGE>
CABARET ROYALE CORPORATION
Notes to Consolidated Financial Statements
1. CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements included herein have been
prepared by the Company and are unaudited. Certain information and footnote
disclosures normally include in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
Management believes the disclosures are adequate to prevent the financial
information from being misleading and believes all adjustments deemed necessary
for a fair presentation of the consolidated financial position and operating
results for the interim period have been reflected. Consolidated operating
results through June 30, 1995, are not necessarily indicative of operating
results for the year ending December 31, 1995.
2. ORGANIZATION AND BUSINESS OPERATIONS
On September 30, 1993, Walhill Partners, Ltd. (Walhill) was acquired by
Exceptional Enterprises Inc. (Exceptional). After the acquisition, Exceptional
changed its name to Cabaret Royale Corporation (the Company). Walhill was
originally formed for the purpose of owning a restaurant, bar and cabaret club
in Dallas, Texas. Exceptional had been an inactive company whose stock was
registered under the Securities Exchange Act of 1933.
The acquisition of Walhill by Exceptional was accounted for as a
reverse acquisition. Under the reverse acquisition, Walhill was effectively the
acquiror of Exceptional. Therefore, the accompanying consolidated financial
statements are those of Walhill for all periods presented, adjusted to reflect
the reverse acquisition. As part of that adjustment, partners' net capital in
Walhill was allocated between common stock, additional paid-in-capital and
retained earnings.
During 1993 and 1994, the Company's operations consisted of leasing the
Dallas facility to an affiliated company, operating under the name of Cabaret
Royale. On February 24, 1994, the Company acquired the outstanding common stock
of an entity which owned leasehold improvements in a leased facility in New York
City. The acquisition was made through a wholly owned subsidiary of the Company.
On March 14, 1994, the facility opened and began operating as a restaurant, bar
and cabaret club. During the first quarter of 1994, the Company issued an
aggregate of $2,655,000 in 8% convertible subordinated notes. An additional
$30,000 in 8% convertible subordinated notes was issued during the second
quarter of 1994. Proceeds from the notes were partially used for improvements in
the New York facility.
On December 23, 1995, the Company sold its major asset, the
restaurant/bar/nightclub facility located at 10723 Composite Drive, Dallas,
Texas, to AAI Investments, Inc., a Florida corporation, and vacated the
referenced premises on December 30, 1995. The Company's other assets, including
a franchise operation in Mexico City, Mexico, were unaffected.
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation - The consolidated financial statements
include the accounts of Cabaret Royale Corporation and its wholly owned
subsidiary. Intercompany accounts and transactions have been eliminated in
consolidation.
-8-
<PAGE>
CABARET ROYALE CORPORATION
Notes to Consolidated Financial Statements
3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Property, equipment, depreciation and amortization - Property and
equipment are stated at cost. Depreciation and amortization are computed over
the estimated useful lives of the assets, primarily on a straight-line basis for
financial statement purposes, as follows:
Years
-----
Buildings and improvement 31.5
Furniture and equipment 5-7
OTHER ASSETS - Other assets are stated at cost and consist primarily of
deferred costs, loan origination fees, deposits and goodwill. Deferred costs
include costs related to site selections for future facilities. Costs related to
abandoned future facilities and general facility selection costs which cannot be
identified with specific locations are charged to operations.
Loan origination fees of $115,000 related to the issuance of
convertible subordinated notes, are being amortized using the interest method
between April 1, 1994 and August 31, 1994, the maturity date of the notes.
Interest expense charged to operations for the six month period ended June 30,
1994 was $69,000.
Goodwill represents the aggregate excess of the cost of companies
acquired over the fair value of their net assets at dates of acquisition and is
being amortized on the straight line method over two years from the date of
acquisition. Amortization expense charged to operations for the six month period
ended June 30, 1994 and 1993 was $331,803 and -0-, respectively.
INCOME TAXES - Concurrent with the acquisition by Exceptional, the
Company adopted Statement of Financial Accounting Standards No. 109 (SFAS 109),
"Accounting for Income Taxes." SFAS 109 requires an asset and liability approach
to financial accounting for income taxes. In the event differences between the
financial reporting basis and the tax basis of the Company's assets and
liabilities result in deferred tax assets, SFAS 109 requires an evaluation of
the probability of being able to realize the future benefits indicated by such
assets. A valuation allowance is provided for a portion or all of the deferred
tax assets when there is an uncertainty regarding the Company's ability to
recognize the benefits of the assets in future years.
Pro forma income taxes assume SFAS 109 was adopted as of January 1,
1993 and that the Company operated as a taxable corporation for all periods
represented (See Note 6).
PRO FORMA INCOME (LOSS) PER SHARE - Pro forma income (loss) per share
are computed by dividing the pro forma net income (loss) by the pro forma
weighted average number of common shares outstanding, plus common stock
equivalents. Common stock equivalents represent warrants with an exercise price
below fair market value for any of the years presented (see Note 7). The pro
forma income (loss) per share calculations were made as though the Exceptional
acquisition took place on January 1, 1993.
-9-
<PAGE>
CABARET ROYALE CORPORATION
Notes to Consolidated Financial Statements
4. CONVERTIBLE DEBT
During 1994, the Company borrowed an aggregate of $2,685,000 of 8%
convertible subordinated notes. The notes and related accrued interest are
payable on August 31, 1994. Each note is convertible, at the option of the
holder, into Class A common stock at the price then offered by the Company in
any private or public offering. In connection with the issuance of the
convertible subordinated notes, the Company issued 2,685,000 warrants to
purchase Class A common stock, exercisable at $2.50 per share. The warrants
provide that if the related note is not repaid by May 31, 1994, the number of
shares subject to warrants doubles. The warrants further provide that if the
related note is not repaid by July 31, 1994, the exercise price decreases to
$1.25 a share. The warrants expire three years from the date of issuance.
5. NEW YORK ACQUISITION
On February 24, 1994, the Company acquired the outstanding common stock
of an entity which owned leasehold improvements, furniture, fixtures and
equipment in a leased facility in New York City. As consideration for the
acquisition, the Company issued 2,400,000 shares of Class A common stock,
1,000,000 warrants to purchase Class A common stock at $2.50 a share and
1,000,000 warrants to purchase Class A common stock at $5.00 a share. The
warrants are subject, under certain circumstances, to adjustments corresponding
to those in the convertible note warrants described above. The warrants expire
two years from the date of issuance. The following sets forth assets acquired
and liabilities assumed in the acquisition:
Assets:
Inventory $ 3,879
Property and equipment 3,493,647
Goodwill 4,933,860
Other assets 308,194
----------
$ 8.739,580
Liabilities:
Accounts payable $ 724,651
Notes payable 5,014,929
---------
5,739,580
Common stock 3,000,000
$ 8,739,580
===========
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<PAGE>
6. INCOME TAXES
Prior to September 30, 1993 and the acquisition by Exceptional, the
Company was organized as a limited partnership. As a limited partnership, income
and losses were reported in the income tax returns of the individual partners.
Accordingly, no provision was made for income taxes related to partnership
operations.
Pro forma income taxes give effect to corporate taxes as though the
Company were taxed as a corporation under the provisions of SFAS 109 during all
operating periods reflected.
CABARET ROYALE CORPORATION
Notes to Consolidated Financial Statements
7. COMMON STOCK WARRANTS
At June 30, 1994, the Company had 10,170,000 common stock warrants
outstanding. Each warrant is currently exercisable for one share of Class A
common stock at prices ranging between $1.00 and $2.50 a share. The warrants
expire between February 1996 and July 1998.
8. RELATED PARTY TRANSACTIONS
Effective April 1, 1994, the lease with an affiliated company was
amended to increase the rent from 16% to 21% of its adjusted gross receipts
(minimum $30,000 per month). This was to compensate the Company for management
advisory services and use of the trademark. This lease was terminated as part of
the sale of the Dallas facility and is no longer in effect.
9. COMMITMENTS AND CONTINGENCIES
An affiliate of the Company, which was the former lessee of the Dallas
facility, is the defendant in a lawsuit filed in Federal district court by the
U.S. Department of Labor. The lawsuit claims certain independent contractors
were employees of such affiliate, rather than independent contractors. The
lawsuit was vigorously defended by such affiliate; however, the defense was
unsuccesful. Further, the Internal Revenue Service (IRS) informed such affiliate
that, if the lawsuit was successful, the IRS will pursue a claim for payroll tax
arrearages. Although the Company is not a party to the above mentioned lawsuit,
the results of the suit could negatively impact the operations of the Dallas
facility and the collectibility of related rental income.
The Company has been notified by the State of New York of a $41,000
sales tax assessment against the New York facility (see Note 5). This assessment
relates to operations by the previous owner and is currently being appealed.
10. NON CASH INVESTING AND FINANCING ACTIVITIES:
On February 24, 1994, the Company made a non-cash acquisition of a
company which held a lease and owned leasehold improvements in a New York City
facility. The Company issued as consideration for the acquisition, 2,400,000
shares of Class A common stock and 2,000,000 warrants to purchase Class A common
stock.
-11-
<PAGE>
On April 1, 1994, the Company made a non-cash conversion of debt and
accrued interest to 51,358 shares of Class A Common Stock.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS
OF OPERATIONS
Introduction
------------
During 1994, the primary effort of the Company will be to bring to full
operational status the New York City facility, the newly franchised Mexico City
facility, and the location and evaluation of potential new facilities for
expansion. The acquisition of the New York City facility occurred on February
24, 1994 and began operations on March 14, 1994. Extensive advertising was run
during the first several weeks of operations, the benefit of which can be seen
in the second quarter of 1994 and will continue to be evidenced during
succeeding quarters of 1994. Since the acquisition was of an existing
corporation, the Company is currently in the process of streamlining the
operations to conform to operating policies and procedures currently in use at
the Dallas facility, resulting in reduced operating costs in the future. The New
York facility was placed in bankruptcy in January 1995 and was administered as a
"no-asset" Chapter 7. The franchised facility in Mexico City opened on May 23,
1994. Sales have been better than budgeted and should continue to be higher than
initially projected by the Company.
Results of operations
---------------------
The following table sets forth the percentages which the items in the
statements of operations bear to revenues for each period presented:
<TABLE>
<CAPTION>
Period ended June 30,
1995 1994
Revenues:
<S> <C> <C>
Rental income ........................................ 78.3 33.4
Franchise fees ....................................... 21.7 0.3
Operating sales ...................................... -- 66.3
----- -----
100.0% 100.0%
Operating costs and expenses:
Cost of sales ........................................ -- 16.5
Operating expenses ................................... 101.0 77.6
General and administrative ........................... -- 59.4
Depreciation and amortization ........................ 45.4 67.1
----- -----
Operating income (loss) ................................... 146.4 (120.6)
Interest income ........................................... 0 0
Interest expense .......................................... (50.6) (21.7)
----- -----
Income (loss) before provision for income taxes ........... -- (142.3)
Benefit for income taxes .................................. -- 0.8
Net income (loss) from continuing operations .............. (101.3) --
Gain on disposal of CAT ................................... 1272.6 --
Net income (loss) from discontinued operations ............ 1272.6 --
Net income (loss) ......................................... 1171.3 (141.5%)
====== =====
</TABLE>
-12-
<PAGE>
June 30, 1995 compared to June 30, 1994
- ---------------------------------------
REVENUES - Rent income from the Dallas facility for the six months ended June
30, 1994 increased $78,089, or 18.9%, compared with the same period for the six
months ended June 30, 1993. This increase was due to a slight improvement in
economic conditions of the Dallas market area and a 5% increase in the rent
percent charged to the lessee of the Dallas facility, effective April 1, for
management advisory services and use of the trademark. The new facility in New
York City contributed operating sales of $972,968. The 5% franchise fee from the
facility in Mexico City resulted in $53,792 for the first six weeks of
operations, of which $50,000 was paid to the previous holder of the trademark.
All future franchise fees will be paid to the Company.
COST OF SALES - Cost of sales were the result of continuing operations of the
New York City facility.
OPERATING EXPENSES - Operating expenses consist of salaries, payroll taxes,
supplies, utilities, advertising and other expenses associated with the opening
and operation of the New York City facility.
GENERAL AND ADMINISTRATIVE EXPENSES - General and administrative expenses
increased $851,300, or 590.4%, due primarily to the marked increase in executive
salaries and professional services related to the acquisition of the new
facility in New York as well as reporting requirements as a public company.
DEPRECIATION AND AMORTIZATION - The increase in depreciation and amortization
expense of $859,850, or 692.5%, was due primarily to the amortization of
goodwill associated with the acquisition of the New York City facility.
INTEREST INCOME - Interest income arising from a receivable from the previous
operating company of the Dallas facility decreased $11,960, or 91.1% during the
six months, as a result of that company's insolvency.
INTEREST/DEBT CONVERSION EXPENSES - Interest/debt conversion expenses increased
$212,821, or 202.1% for the six months, due to the assumption of additional
liabilities associated with the transfer of assets from the previous operating
company of the Dallas facility. In addition, warrants to purchase shares of
Class A Common Stock of the Company valued at $.025 each were issued to an
individual assisting with the raising of funds by the Company through 8%
Convertible Subordinated Notes. The write off of loan origination fees also
contributed to the increase.
PROVISION (BENEFIT) FOR INCOME TAXES - A tax benefit of $10,985 relates to net
operating losses carried back to taxes incurred in the last quarter of 1993.
Prior to the Exceptional acquisition, income or losses of Walhill were reported
in the income tax returns of the individual partners. Accordingly, no provision
was made for income taxes relating to those operations.
NET INCOME (LOSS) - The June 30, 1994 net loss of $1,576,461, a decrease in net
income of $1,758,205, was due primarily to the acquisition and start up of the
New York City facility.
LIQUIDITY AND CAPITAL RESOURCES - The Company has operated with a working
capital deficiency during the first half of the year but continues to have break
even cash flows and does not anticipate any problems meeting current
liabilities.
-13-
<PAGE>
The Company will continue to move forward with plans to open other facilities in
other cities and will be seeking to raise capital to finance any such expansion.
The acquisition of the New York City facility was accomplished through issuance
of shares of Class A common stock and warrants to purchase Class A common stock,
in exchange for the stock of the entity owning the New York City facility. The
Company loaned $2,000,000 which was used by that entity for renovations to the
New York City facility. Funds for the renovation loan came from borrowing
$2,685,000 on 8% convertible subordinated notes of the Company. Those notes will
either be converted to Class A common stock of the Company or refinanced before
the maturity date of August 31, 1994. The Company expects to borrow an
additional $300,000 of the 8% convertible subordinated notes to complete
renovations to the New York facility. The Company is currently negotiating to
extend the maturity date of the 8% convertible subordinated notes to allow time
to explore additional sources of equity investments.
A franchised Mexico City facility had a soft opening on May 17, 1994 and opened
for regular business on May 23, 1994. The first year franchise fees will be 5%
of gross revenues and subsequent years will be a variable percentage, not less
than 5% of gross revenues.
-14-
<PAGE>
Part II - Other Information
Exhibits and Reports on Form 8-K
- --------------------------------
(a) Exhibits - None
(b) Form 8-K's filed: - none
-15-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereupon duly authorized.
CABARET ROYALE CORPORATION
Junw 30, 1995
/s/ Salah Izzedin
-----------------
Salah Izzedin
President
-16-
