<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1996
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number: 0-20528
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AUSTIN'S INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 65-0322000
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2400 E. Commercial Boulevard, Suite 800, Fort Lauderdale, Florida 33308
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(Address of Principal Executive Office)
(954) 772-0980
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(Issuer's Telephone Number)
Not Applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
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APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes _______ No ______
Not Applicable
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:
Common Stock $.01 Par Value - 10,003,550 shares as of June 30, 1996
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Transitional Small Business Disclosure Format (check one) Yes X No ___
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PART I: FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS
The following unaudited financial statements and documents required by Item
310(b) of Regulation S-B are attached hereto as Exhibits "A - D":
Consolidated Balance Sheet - As of
June 30, 1996, and March 31, 1996 Exhibit "A"
Consolidated Statements of Changes
in Shareholder's Equity - For the
Period from March 31, 1996
through June 30, 1996 Exhibit "B"
Consolidated Statements of Operations -
For the three months ended
June 30, 1996, and June 30, 1995 Exhibit "C"
Consolidated Statements of Cash Flows -
For the three months ended
June 30, 1996, and June 30, 1995 Exhibit "D"
Notes to Consolidated Financial Statements
2
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EXHIBIT "A"
AUSTIN'S INTERNATIONAL, INC.
Consolidated Balance Sheet
as of June 30, 1996
and June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
YEAR END
06/30/96 3/31/96
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(UNAUDITED) (AUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
CASH AND EQUIVALENTS $ 367,197 $ 446,497
ACCOUNTS RECEIVABLE $ 45,451 $ 66,653
INVENTORIES $ 162,540 $ 137,789
OTHER CURRENT ASSETS $ 138,625 $ 135,457
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TOTAL CURRENT ASSETS $ 713,813 $ 786,396
PROPERTY AND EQUIP
LEASEHOLD IMPROVEMENTS $ 2,884,874 $ 2,867,874
RESTAURANT & EQUIP $ 1,170,356 $ 1,047,447
OTHER EQUIPMENT $ 120,586 $ 112,162
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$ 4,175,816 $ 4,027,483
LESS ACCUM DEPR & AMORT $ (1,205,152) $ (1,111,175)
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$ 2,970,664 $ 2,916,308
SECURITY DEPOSITS $ 37,764 $ 49,061
PRE-OPEN COSTS - NET OF: ACCUM AMMORT
OF $8,806 FOR QTR END 6/96 $ 99,660
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TOTAL ASSETS $ 3,821,901 $ 3,751,765
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 269,173 $ 356,598
NOTES PAYABLE $ 0 $ 0
ACCRUED EXPENSES $ 140,932 $ 204,168
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TOTAL CURRENT LIABILITIES 410,105 560,766
NOTES PAYABLE 868,000 2,013,000
OTHER NON-CURRENT LIABILITIES 137,872 137,409
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TOTAL LIABILITIES $ 1,415,977 $ 2,711,175
SHAREHOLDERS' EQUITY:
COMMON STOCK, $.01 PAR, 50,000,000 $ 100,035 $ 67,135
ADDITIONAL PAID-IN CAPITAL $ 8,471,553 $ 6,859,453
ACCUMULATED DEFICIT $ (6,165,664) $ (5,885,998)
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TOTAL SHAREHOLDERS' EQUITY 2,405,924 1,040,590
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TOTAL LIABILITIES AND EQUITY $ 3,821,901 $ 3,751,765
</TABLE>
3
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EXHIBIT "B"
AUSTIN'S INTERNATIONAL, INC.
Consolidated Statement of Changes
in Shareholder's Equity
For the Period from
March 31, 1996 through June 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL
PAID-IN
ACCUMULATED SHAREHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT EQUITY
*********************************************************************************************************
<S> <C> <C> <C> <C> <C>
BALANCE MARCH 31,1996 (AUDITED) 6,713,550 $ 67,135 $6,859,453 ($5,885,998) $1,040,590
CONVERSION OF DEBT TO COMMON STOCK 3,290,000 $ 32,900 $1,612,100 $1,645,000
NET LOSS ($279,666) ($279,666)
---------- -------- ---------- ----------- ----------
BALANCE JUNE 30, 1996 (UNAUDITED) 10,003,550 $100,035 $8,471,553 ($6,165,664) $2,405,924
========== ======== ========== =========== ==========
</TABLE>
4
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AUSTIN'S CONSOLIDATED STATEMENT OF OPERATIONS
EXHIBIT C
<TABLE>
<CAPTION>
3 MO ENDED 3 MO ENDED
06/30/96 06/30/95
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(UNAUDITED) (UNAUDITED)
<S> <C> <C>
REVENUES:
NET SALES $1,904,096 $1,762,004
OTHER REVENUES 10,706 812
INTEREST 2,811 2,860
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TOTAL REVENUES $1,917,613 $1,765,676
COSTS AND EXPENSES:
FOOD AND BEVERAGE COSTS $ 700,026 $ 661,990
PAYROLL AND RELATED COSTS 667,899 593,624
OTHER RESTAURANT OPERATING EXP 543,353 535,898
GENERAL AND ADMIN EXPENSES 154,868 147,475
DEPRECIATION AND AMORTIZATION 102,783 87,294
INTEREST EXPENSE 28,350 33,399
TOTAL EXPENSES $2,197,279 $2,059,680
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NET LOSS $ (279,666) $ (294,004)
NET LOSS PER SHARE $(O.033) $(O.044)
WEIGHTED AVE SHARES OUTSTANDING 8,593,550 6,713,550
</TABLE>
5
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AUSTIN'S CONSOLIDATED STATEMENT OF CASH FLOW
EXHIBIT D
<TABLE>
<CAPTION>
3 MO ENDED 3 MO ENDED
06/30/96 06/30/95
***************************************************************************************************************
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $(279,666) $(294,004)
Adjustments to reconcile net income to net cash from operations:
Depreciation and amortization 102,783 87,294
Changes in assets and liabilities:
Accounts receivable 21,202 (808)
Inventories (24,751) (9,741)
Other current assets 10,356 12,775
Security deposits and other assets (4,301) (275)
Pre-opening costs (106,393) 0
Accounts payable and accrued expenses (150,661) (89,657)
Other non-current liabilities 463 15,815
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Net cash used by operating activities $(430,968) $(278,601)
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment $(148,332) $ (31,697)
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Net cash used by investing activities $(148,332) $ (31,697)
CASH FLOWS FROM FINANCING ACTIVITIES:
Long Term Borrowings $ 500,000 $ 241,000
Repayment of long-term borrowings
Proceeds from sale of stock options & warrants 0 0
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Net cash provided by financing activities $ 500,000 $ 241,000
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NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS $ (79,300) $ (69,298)
CASH, CASH EQUIVALENTS, AND MKTBLE SECURITIES, BEGINNING OF PERIOD $ 446,497 $ 497,986
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CASH, CASH EQUIVALENTS, AND MKTBLE SECURITIES, AT END OF PERIOD $ 367,197 $ 428,688
========== =========
</TABLE>
6
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AUSTIN'S INTERNATIONAL, INC.
Notes to Financial Statements
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(Unaudited)
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Note 1 - Financial Statements
- -----------------------------
In the opinion of the Company's management, the accompanying unaudited
consolidated financial statements contain all adjustments necessary to present
fairly the financial position of the Company as of June 30, 1996, and March 31,
1996, and the results of operations and the cash flows for the periods ending
June 30, 1996, and June 30, 1995.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. These statements should be read in conjunction
with the audited consolidated financial statements for the fiscal year ended
March 31, 1996, and notes thereto contained in the Company's 1996 Form 10-KSB
filed with the Securities and Exchange Commission on July 15, 1996. The results
of operations for the three months ended June 30, 1996 are not necessarily
indicative of operating results to be expected for the full fiscal year.
Note 2 - Initial Public Offering
- --------------------------------
In July, 1992, the Company completed its initial public offering of common
stock. The offering consisted of the sale of 950,000 shares of the Company's
common stock and provided net proceeds to the Company of $4,125,939. The
Company utilized approximately $305,000 of the proceeds for the repayment of
debt and used the remainder for expansion and working capital.
Note 3 - Restaurant Operations
- ------------------------------
The Company currently operates five restaurants, one in Fort Lauderdale,
Florida, which also functions as its training center, one in Coral Springs,
Florida, one in Orlando, Florida, one in Pembroke Pines, Florida, and one in
Merritt Island, Florida, about five miles from the Kennedy Space Center, opened
June 1, 1996.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
The Company has developed and owns and operates a chain of full-service
restaurants specializing in Texas-style American cuisine. It currently offers a
wide variety of appetizers, salads and award-winning babyback ribs, a Texas
cowboy steak, and recent additions of Ostrich and Buffalo steaks. As a unique
and special service, Austin's steaks can be "branded" at tableside for patrons.
The company is currently engaged in an active and aggressive marketing campaign
and is also planning to expand its business by establishing additional
restaurants.
In April, 1996, the Company hired Edwin M. Freakley as its Chairman and
Chief Executive Officer. Mr. Freakley is C.E.O. of Worrell Enterprises, Inc., a
management and investment company, and will continue in this position as well.
Part of the charge to Mr. Freakley, by Austin's Board of Directors, is to
increase market awareness of Austin's and to put together both a short and long-
term business plan to include capitalization sources for expansion.
ADDITIONAL CAPITAL
The Company, during the last quarter, raised $500,000 from a Private
Offering utilizing a two-year convertible note paying 8% interest. The new
notes, along with another $1,145,000 in existing convertible notes, were
converted to 3,290,000 shares of unregistered common stock.
NET SALES
Net sales for the three months ended June 30, 1996, were $1,904,096 as
compared to $1,762,004 for the three months ended June 30, 1995, or an 8.1%
increase. Improvement in sales is attributable to the contribution made by the
new Merritt Island restaurant opened June 1, 1996.
FOOD AND BEVERAGE COSTS
Food and beverage costs for the three months ended June 30, 1996, were
$700,026 or 36.8% of sales as compared to $661,990, or 37.5% of sales for the
period ending June 30, 1995.
PAYROLL AND RELATED COSTS
Payroll and related costs for the three months ended June 30, 1996 were
$667,899 or 35.1% of sales as compared to $593,624 or 33.7% of sales for the
period ending June 30, 1995. Much of this increase was attributable to the
intentional high staffing during the initial month of operation for the new
restaurant.
8
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OTHER RESTAURANT OPERATING EXPENSES
Other restaurant operating expenses for the three months ended June 30,
1996 were $543,353 or 28.5% of sales as compared to $535,898 or 30.4% of sales
for the period ending June 30, 1995. This decrease reflects the progress being
achieved through management's cost reduction programs.
GENERAL AND ADMINISTRATIVE EXPENSES
General and Administrative expenses for the three months ended June 30,
1996 were $154,868 or 8.1% of sales, as compared to $147,475 or 8.4% of sales
for the period ending June 30, 1995.
NET PROFIT/LOSS
The Company's net loss per share for the three months ended June 30, 1996
was 3.3 cents as compared to 4.4 cents per share for the three months ended June
30, 1995, or a 25% improvement, primarily due to the increase in shares
outstanding as a result of the conversion of $1,645,000 in convertible debt to
3,290,000 shares of common stock on May 9, 1996.
9
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. EXHIBITS.
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10(p) Form of Two-Year 8% Convertible Note
Incorporated by reference from Registrant's Form 10-KSB
filed with the Commission on July 15, 1996
10(q) Form of Subscription Agreement for Two-Year 8% Convertible
Note
Incorporated by reference from Registrant's Form 10 KSB
filed with the Commission on July 15, 1996
10(r) Agreement dated April 1, 1996 between Austin's
International, Inc. and Worrell Enterprises, Inc.
Incorporated by reference from Registrant's Form 10-KSB
filed with the Commission on July 15, 1996
10(s) Austin's International, Inc. 1995 Employee Incentive Stock
Option Plan
Incorporated by reference from Registrant's Form 10-KSB
filed with the Commission on July 15, 1996
10(t) Lease for Merritt Island restaurant
Incorporated by reference from Registrant's Form 10-KSB
filed with the Commission on July 15, 1996
*27(1) Financial Data Schedule
*Filed as exhibits to this Report.
10
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B. REPORTS ON FORM 8-K.
-------------------
The Company filed an 8-K dated May 10, 1996 with the Commission in paper form
on May 14, 1996 and electronically on May 21, 1996. The report covered the
Company's issuance of $500,000 of convertible debt and the conversion of
$1,645,000 of convertible debt into 3,290,000 shares of the Company's common
stock.
In accordance with the requirements of the Exchange Act, the Registrant has
duly caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized.
AUSTIN'S INTERNATIONAL, INC.
DATED: /s/ Larry E. Graybill
--------------------------------
August 10, 1996 Larry E. Graybill, C.F.O.
11
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE FIRST QUARTER ENDED JUNE 30,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 367,197
<SECURITIES> 0
<RECEIVABLES> 45,451
<ALLOWANCES> 0
<INVENTORY> 162,540
<CURRENT-ASSETS> 713,813
<PP&E> 4,175,816
<DEPRECIATION> 1,205,152
<TOTAL-ASSETS> 3,821,901
<CURRENT-LIABILITIES> 410,105
<BONDS> 868,000
0
0
<COMMON> 100,035
<OTHER-SE> 2,305,889
<TOTAL-LIABILITY-AND-EQUITY> 3,821,901
<SALES> 1,904,096
<TOTAL-REVENUES> 1,917,613
<CGS> 700,026
<TOTAL-COSTS> 1,911,278
<OTHER-EXPENSES> 257,651
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,350
<INCOME-PRETAX> (279,666)
<INCOME-TAX> 0
<INCOME-CONTINUING> (279,666)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (279,666)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)<F1>
<FN>
<F1>Note (A): See Notes to Consolidated Financial Statements for Fiscal Year ended
March 31, 1996 - NOTE 2 - Loss Per Common Share.
</FN>
</TABLE>
