<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10Q
Quarterly Report Under Section 13 or 15(d)
of the Securities and Exchange Act of 1934
[x ] Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended September 30, 1996.
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the Transition period from_______ to _______ .
Commission file number 0-19522
N.U. PIZZA HOLDING CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 95-365327
- ------------------------------ ------------------
(State or other jurisdiction of ( I.R.S. Employer
incorporation or organization) Identification No.)
15414 Cabrito Road, Suite A Van Nuys, California 91406-1419
- ------------------- ------- -------------------- ----------
(Address of principal executive offices)
(818) 779-8600
--------------------------------------------------
(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 and
Exchange Act of 1934 during the preceding 12 months (or 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.
[x] Yes [ ] No
As of September 30, 1996 there were 27,539,008 shares of Common Stock
outstanding. Par value is $.001.
<PAGE> 2
PART I - FINANCIAL STATEMENTS
N.U. Pizza Holding Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
1996 1996
Unaudited Audited
------------ ------------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $243,700 $255,100
Restricted Cash 10,700 44,900
Franchisee Advertising Receivable 75,800 70,600
Receivables, net of allowance for doubtful
accounts of $48,000 100,800 80,200
Current Portion of Notes Receivable, net of
allowance for possible future losses
of $547,300 250,300 254,800
Inventories 14,200 16,800
Prepaid Expenses 99,200 74,800
------------ ------------
Total Current Assets 794,700 797,200
------------ ------------
Other Assets:
Notes Receivable, net of
current portion 315,900 329,400
Intangibles, net of accumulated amortization
of $195,000 and $180,000, respectively 105,000 120,000
Deposits and Other Assets 25,400 21,800
------------ ------------
446,300 471,200
------------ ------------
Leasehold Improvements, Property and
Equipment, and Construction in Progress,
net of accumulated depreciation and
amortization of $305,000 and $254,000 1,562,600 1,611,900
------------ ------------
$2,803,600 $2,880,300
============ ============
</TABLE>
See accompanying notes to financial statements and management's
discussion and analysis of financial condition and results of operations.
2
<PAGE> 3
N.U. Pizza Holding Corporation and Subsidiaries
Consolidated Balance Sheets
<TABLE>
<CAPTION>
LIABILITIES AND
STOCKHOLDERS' EQUITY September 30, June 30,
1996 1996
Unaudited Audited
------------ ------------
<S> <C> <C>
Current Liabilities:
Current Portion of Long-Term Debt 631,100 631,100
Accounts Payable and Accrued Expenses 522,900 576,400
Accrued Franchise Advertising 86,500 115,500
Current Portion-Accrued Litigation
Settlement 50,000 50,000
Loans Payable to Officer 10,800 3,300
------------ ------------
Total Current Liabilities 1,301,300 1,376,300
Long-Term Debt, net of current
portion 187,100 338,000
Accrued Litigation Settlement, net of
current portion 344,800 445,800
Deferred Franchise Fee Income 151,400 164,900
------------ ------------
1,984,600 2,325,000
------------ ------------
Stockholders' Equity:
Preferred Stock, Series B, $.10 par value per
share, authorized 10,000,000 shares,
80,000 shares issued and outstanding
(aggregate liquidation preference $400,000) 8,000 8,000
Preferred Stock, Series C, $.10 par value per
share, authorized 44,000 shares, 44,000
shares issued and outstanding (aggregate
liquidation preference $220,000) 4,400 4,400
Common Stock $.001 par value per
share, authorized 50,000,000 shares,
issued, subscribed and outstanding
27,539,008 and 24,039,008 respectively 27,500 24,000
Additional Paid-in Capital 5,775,700 5,429,200
Notes Receivable Arising From Stock
Purchase Agreements (441,200) (350,000)
Accumulated Deficit (4,555,400) (4,560,300)
------------ ------------
819,000 555,300
------------ ------------
$2,803,600 $2,880,300
============ ============
</TABLE>
See accompanying notes to financial statements and management's
discussion and analysis of financial condition and results of operations.
3
<PAGE> 4
N.U. Pizza Holding Corporation and Subsidiaries
Consolidated Statements of Operations and Accumulated Deficit
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------------------
FRANCHISE OPERATIONS: Unaudited
REVENUES: 1996 1995
------------ ------------
<S> <C> <C>
Initial Franchise Fees $13,500 $18,500
Royalties 122,400 152,100
Rental Income 56,400 47,200
Interest Income 9,400 11,300
Rebate Income 42,900 37,600
Loss on Sales of Restaurants and Equipment 0 (172,000)
Other Income 19,500 6,100
------------ ------------
264,100 100,800
------------ ------------
COSTS AND EXPENSES:
Rent 64,800 54,300
General and Administrative 167,100 228,300
Interest Expense 10,100 10,000
------------ ------------
242,000 292,600
------------ ------------
Franchise Operating Income (Loss) 22,100 (191,800)
------------ ------------
COMPANY-OWNED RESTAURANT
OPERATIONS:
Sales 352,500 250,200
------------ ------------
COSTS AND EXPENSES:
Cost of Sales 107,400 82,400
Operating 143,300 177,600
General and Administrative 119,000 75,300
------------ ------------
369,700 335,300
------------ ------------
Company-Owned Restaurant Loss (17,200) (85,100)
------------ ------------
Income (Loss) Before Income Tax
Provision 4,900 (276,900)
Income Tax Provision 0 800
------------ ------------
Net Income (Loss) 4,900 (277,700)
Accumulated Deficit, Beginning of Period (4,560,300) (3,286,500)
------------ ------------
Accumulated Deficit, End of Period ($4,555,400) ($3,564,200)
============ ============
Net Income (Loss) Per Share $0.00 ($0.02)
============ ============
Weighted average number of shares
outstanding 24,115,095 15,079,389
============ ============
</TABLE>
See accompanying notes to financial statements and management's
discussion and analysis of financial condition and results of operations.
4
<PAGE> 5
N.U. Pizza Holding Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30, September 30,
1996 1995
Unaudited Unaudited
------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $4,900 ($277,700)
------------------------------
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 66,100 41,600
Loss on sales of restaurants and equipment 0 172,000
Realization of deferred license fee (13,500) (13,500)
Changes in assets and liabilities:
Receivables, net (20,600) (17,800)
Inventories 2,600 3,100
Prepaid expenses and other current assets (24,400) 1,000
Accounts payable and accrued expenses (53,500) 58,000
Deposits (3,600) 28,700
Income taxes payable 0 (3,200)
----------------------------
Total adjustments (46,900) 269,900
----------------------------
Net cash used in operating activities (42,000) (7,800)
----------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments received on notes receivable 18,000 37,800
Capital expenditures (1,800) (1,000)
----------------------------
Net cash provided by investing activities 16,200 36,800
----------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in loans payable to officer 7,500 17,100
Issuance of common stock 258,800 25,200
Principal payments on long-term debt (251,900) (56,800)
Net cash provided by (used in) ----------------------------
financing activities 14,400 (14,500)
NET (DECREASE) INCREASE IN CASH (11,400) 14,500
----------------------------
CASH, beginning of period 255,100 15,100
----------------------------
CASH, end of period $243,700 $29,600
============================
</TABLE>
See accompanying notes to financial statements and management's discussion
and analysis of financial condition and results of operations
5
<PAGE> 6
N.U. Pizza Holding Corporation and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30, September 30,
1996 1995
Unaudited Unaudited
--------------------------------
<S> <C> <C>
SUPPLEMENTAL INFORMATION:
Cash paid for interest, (net of $8,400 $10,000
capitalized amounts)
Cash paid for taxes $0 $3,200
NON-CASH TRANSACTIONS:
Notes receivable issued in exchange for fixed
assets. $0 $284,500
Notes payable forgiven in exchange for fixed
assets. $0 $31,900
Forgiveness of receivables in exchange for
fixed assets $0 $103,000
Notes receivable issued for stock $91,200 $43,800
Conversion of debt to equity $0 $151,800
Issuance of stock for future services $0 $23,200
</TABLE>
See accompanying notes to financial statements and management's discussion
and analysis of financial condition and results of operations
6
<PAGE> 7
N.U. Pizza Holding Corporation and Subsidiaries
Notes to Financial Statements
Three Months Ended September 30, 1996 and 1995
(Unaudited)
In the opinion of management of N.U. Pizza Holding Corporation and Subsidiaries
(the "Company"), the accompanying unaudited financial statements reflect all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the financial position of the Company as of September 30, 1996 and the
results of its operations and changes in its cash flows for the three month
periods presented.
The financial statements and notes are presented as permitted by Form 10-Q and
do not contain certain information included in the annual financial statements
and notes.
These unaudited financial statements should be read in conjunction with the
Company's annual report on Form 10-K for the year ended June 30, 1996.
Note 1 - A summary of significant accounting policies is currently on
file with the Securities and Exchange Commission on Form-10K.
Note 2 - Prepayments:
During the year ended June 30, 1996, the Company entered into
agreements for legal services to be provided by two law firms
in exchange for the issuance of 700,000 shares of common stock
at $.25 per share for a total of $175,000. The stock issuance
satisfied $153,600 of debt incurred and payable to these firms
and a balance of $21,400 remains as prepaid legal fees for
future services to be rendered. An additional amount of
$77,800, representing prepaid rent, insurance, licenses and
property taxes is also in included in prepaid expenses at
September 30, 1996.
Note 3 - Stockholders' Equity:
During the three months ended September 30, 1996, the Company
raised $350,000 in capital via a Regulation S-8 offering;
3,500,000 shares of common stock were issued at $.10 per share
in exchange for a subscription note receivable of $350,000.
The Company collected $258,800 on this receivable and $91,200
remained uncollected at September 30, 1996. Additionally, a
$350,000 subscription note receivable outstanding at June 30,
1996 remained uncollected for a total of $441,200 of
subscriptions notes receivable at September 30, 1996.
7
<PAGE> 8
Note 4 - Litigation
In October of 1985, the Company entered into a franchise
agreement with the plaintiffs (franchisee) for a full service unit to be
located in Winnetka, California. In June, 1993, a dispute arose between the
plaintiffs and the Company relating to the nature of the plaintiffs' delivery
rights and the geographic territory originally allocated to them. Pursuant to
the franchise agreement, the plaintiffs' right to delivery into the originally
allocated area was non-exclusive and, upon the occurrence of certain
conditions, was subject to termination followed by renegotiation of an
alternate delivery area with a new one. The plaintiffs denied that they had
agreed to a replacement delivery area and, further, alleged that, by separate
agreement, their delivery area was expressly agreed to. The plaintiffs sought
compensatory and punitive damages, and other relief based on claims of breach
of contract, breach of covenant of good faith and fair dealing, intentional
interference with prospective advantage, intentional infliction of emotional
distress, and violations of the Racketeer Influenced and Corrupt Organizations
Act ("R.I.C.O."). On September 27, 1994, the parties settled the lawsuit. The
Company agreed to a royalty abatement which commenced on October 1, 1994 and
continues for five years thereafter.
An action was filed for breach of contract on October 20, 1993
against the Company and its president. The matter arises out of a promissory
note executed by the Company on October 1, 1991, in the original principal
amount of $130,000, and which was secured by a security agreement. The
plaintiff alleges that the Company breached the security agreement and
therefore the entire amount of the promissory note is accelerated. At an
arbitration hearing on December 8, 1995, the matter was resolved in favor of
the Company. The Company was held not to be liable for any portion of the note.
On January 29, 1982, the defendants subleased premises from
the Company (Plaintiff) and on March 20, 1992, the defendants assigned their
right, title and interest to the sublease to other assignees. The assignment
specifically stated that it "shall not release the originally named sublessees
from liability for the continued performance on the terms and provisions on the
part of the sublessee to keep informed." On January 1, 1994, the new sublessees
failed and continued to fail to pay rent to the Company's lessor or the
Company. As a result of the failure to pay rent, the lessor brought an action
against the Company to recover damages for breach of lease in the sum of
$15,086.00. The Company stipulated with the lessor in August 1994 to payment
of $43,644.78 in monthly installments of $2,011.94. A judgment may be entered
against the Company if it fails to meet its monthly payment obligation. The
Company has performed all of the conditions and obligations to be performed
under the sublease and believes that it is entitled to indemnification from the
defendants in the same amount for which the Company is obligated. The
8
<PAGE> 9
Company entered into a judgment where by the defendants agreed to pay the
Company $31,000.00 in monthly installments of $750.00 which began on October
15, 1994.
A complaint was filed against the Company on July 21, 1995 for
$50,943.02 due on a promissory note and guarantees. The Company guaranteed a
franchisee's note payments. The franchisee defaulted on payments under the
promissory note due to the plaintiff beginning in April 1995 and continuing
thereafter. The parties settled the matter. The Company agreed to pay the
plaintiff the sum of $56,723.43 in monthly installments until paid in full.
An action was filed on October 12, 1994 against the Company for
breach of a settlement agreement. This matter arises out of the settlement of
a previous lawsuit filed by the plaintiff against the Company in 1987. As part
of that settlement, the Company entered into a written agreement with the
plaintiff for the purchase and payment of merchandise. The plaintiff alleges
that the Company breached that agreement by failing to purchase all the
required items and also failed to pay for some items which were delivered under
the settlement agreement. The Company contends that the Plaintiff breached the
settlement agreement. After a settlement conference was held, the parties
settled the matter. As part of the settlement agreement, the Company agreed to
pay the plaintiff an irrevocable consulting fee of $500,000, payable in monthly
installments of $4,166.66 for a period of ten years commencing on June 15,
1996, and to use the plaintiff as exclusive supplier of various paper products
used by the Company in Numero Uno Restaurants for a period of five years.
Subsequently, the Company filed a Demand for Arbitration before JAMS/Endispute,
Inc. alleging that the plaintiff violated the terms of the Settlement
Agreement. The Company intends to vigorously prosecute the matter in
Arbitration and expects to obtain a favorable ruling.
An action for breach of lease was filed against the Company on June
26, 1995 by the landlord of premises leased by Numero Uno Take Out and Delivery
in Huntington Beach, California. In March of 1995, Numero Uno Takeout and
Delivery vacated the premises. The plaintiffs are seeking rent in the sum of
$20,512.00 and other amounts for damages according to proof. Numero Uno Take
Out and Delivery is a defunct entity. There is no contractual liability on
behalf of the Company. The Company answered the complaint on August 16, 1995.
An arbitration hearing was held on June 20, 1996. Thereafter, the arbitrator
awarded plaintiffs the sum of $31,781.05. The Company does not agree with the
award of the arbitrator and filed a Request For Trial De Novo with the Court.
Subsequently the Court set a trail date for November 26, 1996. The Company
believes that it will obtain a favorable outcome at the trial.
9
<PAGE> 10
An action was filed on August 8, 1995 against the Company and alleged breach of
contract arising out of lease agreement entered into in June of 1990.
The plaintiffs sued for back rent and other damages. The parties agreed to
settle this matter by the Company paying the plaintiff $12,912.50. The
settlement was paid in full on March 5, 1996.
A suit was filed against the Company on November 14, 1994 alleging breach of
contract and various other causes of action. The plaintiff was a franchisee of
the Numero Uno location in Northridge, California. The Company filed a
cross-complaint for amounts owing on a note by the plaintiff under the
franchise agreement. The case is presently in the discovery stage with a Status
Conference scheduled for December 5, 1996. The restaurant is closed. The
plaintiff would like to get out of the long-term lease, which has another nine
years to run. In addition, the plaintiff franchisee owes the Company
approximately $150,000. The Company has no interest in assuming the lease,
even at a reduced rent. The Company believes that the matter will eventually
be settled with the plaintiff on terms favorable to the Company.
An action for breach of contract and foreclosure of mechanics liens was filed
on September 22, 1995 against the Company. The dispute centers around a parcel
of real property located in Santa Ana, California, for which the Company
contracted with the plaintiff to perform improvements. The plaintiff sought
$15,764, the outstanding balance owed on the contract. The matter was settled.
The Company agreed to pay the plaintiff the sum of $15,129.00 at the rate of
$500.00 a month until paid in full.
On July 28, 1995, an action was filed against the Company for money due on a
promissory note. The plaintiffs allege that the Company is in arrears on an
installment note made on July 16, 1993 for approximately $107,900. The Company
settled the matter on April 4, 1996, for the sum of $96,000 which has been paid
in full.
An action was filed on November 2, 1995 against the Company for unlawful
detainer for one of the Numero Uno restaurant locations. The landlord sought
approximately $58,000 in past due rent. The matter was settled with the Company
agreeing to pay the landlord the sum of $30,000.00 in monthly installments
until approximately mid-1997 for prior rent arrearages and by the Company
entering into a new lease agreement for the premises. Upon payment in full,
the plaintiff has agreed to dismiss the action.
10
<PAGE> 11
An action was filed on September 18, 1995 against the Company for breach of a
Promissory Note and Security Agreement made by the Company. The plaintiffs
allege that the Company defaulted on amounts owing to them in the sum of
$77,916.51. The Company settled the matter in October, 1996 and agreed to pay
to pay the sum requested by the plaintiffs. The Company will pay $14,000
initially and make monthly payments of $2,500 until paid in full.
An action was filed against the Company for breach of contract for the failure
of Numero Uno Takeout and Delivery, Inc. to make payments on a Promissory Note.
The plaintiffs are seeking the sum of $12,603.91. The action was filed on
September 28, 1995. The Company subsequently made a settlement offer to the
plaintiffs but plaintiffs' counsel has not pursued settlement. Currently the
case is dormant. The Company believes that the matter will eventually be
settled for no more than the balance due on the original Promissory Note.
A complaint was filed by the Company on January 17, 1996 for damages and
injunctive relief for service mark infringement, dilution of mark, common law
trademark and service mark infringement, unfair competition and breach of
contract. One of the defendants, a former franchisee of the Company, sold his
restaurant to the remaining defendants. Specifically excluded from the assets
sold to the defendants was the right to use the name Numero Uno. The
defendants continued, however, to use the name and Numero Uno's other
trademarks. The Court held the defendants in contempt and issued a bench
warrant and ordered the defendants to appear in Court again on April 2, 1996.
The defendants still have not appeared before the Court and the Company intends
to file a Request for Default Judgment in the near future.
11
<PAGE> 12
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Three Months Ended September 30, 1996:
Liquidity and Capital Resources.
For the three months ended September 30, 1996, the Company used $42,000 of cash
in operations. The Company has attained satisfactory cash flows from
additional capital financing. The Company collected $258,800 via an S-8
offering.
Operating Activities.
Accounts receivable increased $20,600 to $100,800, at September 30, 1996
primarily due to franchisees not paying their royalties on a timely basis.
Prepaid expenses increased $24,400 to $99,200 at September 30, 1996. The
increase is due to the prepayment of rent, licenses, insurance and property
taxes.
Inventories decreased $2,600 to $14,200 at September 30, 1996 due to normal
business fluctuations.
Deposits increased $3,600 to $25,400 at September 30, 1996 due to the purchase
of four Company-owned restaurants.
Accounts payable and accrued expenses decreased $53,500 to $522,900 at
September 30, 1996, primarily due to the increased payment of outstanding trade
payables.
Accrued franchise advertising payable decreased $29,000 during the three months
ended September 30, 1996. This decrease is offset by an increase to
advertising fund receivables of $5,200 and a decrease in advertising cash of
$34,200.
Deferred license fees of $13,500 were recognized as income during the three
months ended September 30, 1996.
Investing Activities:
Notes receivable decreased $18,000 to $566,200 at September 30, 1996 due to the
collection of outstanding amounts due to the Company.
12
<PAGE> 13
Net leasehold improvements, property, equipment and construction in progress
decreased $49,300 to $1,562,600 at September 30, 1996. The decrease was due
primarily to normal monthly depreciation and amortization of $51,100 and was
offset by the purchase of assets for $1,800.
Financing Activities.
Long-term debt decreased $150,900 to $818,200 and Accrued litigation settlement
decreased $101,000 to $394,800, respectively, at September 30, 1996 due to
payments of $251,900 on outstanding obligations. This decrease was offset by a
loan of $7,500 to the president of the Company.
Common stock and additional paid-in capital increased $3,500 and $346,500,
respectively, during the three months ended September 30, 1996 via funds raised
from a S-8 offering.
Results of Operations.
Three Months Ended September 30, 1996
As Compared to Three Months Ended September 30, 1995
Franchise Operations.
For the three months ended September 30, 1996, the Company recognized initial
franchise fees of $13,500 from one international license contract, a 27.0%
decrease from the same period in 1995.
The Company recognized $122,400 of royalty income during the three months ended
September 30, 1996, a 19.5% ($29,700) decrease from royalty income of $152,100
for the comparable period in 1995. The decrease was due primarily to a decline
in system-wide sales caused by the continual poor economy in Southern
California and increased competition from other national and regional pizza
chains.
Rental income increased $9,200 (19.5%), compared to the three months ended
September 30, 1995, due to an increase in rental receipts from franchisees who
pay their rent to the Company as a pass through to the landlord. Similarly,
rent expense increased by approximately the same amount. Historically, the
Company's only source of rental income was from franchisees who purchased
restaurants that were previously owned by the Company. The Company, who
remained obligated on the lease, would collect rent from the franchisees
(subleases) and pay it directly to the landlord. This trend is expected to
continue until all franchisees negotiate their own leases directly with
lessors.
Rebate income increased $5,300 (14.1%), compared to the three months ended
September 30, 1995, due to the Company's negotiation with its paper goods
supplier to receive rebates on all pizza boxes sold system-wide.
13
<PAGE> 14
General and administrative expenses decreased $61,200 to $167,100 or 26.8%
during the three months ended September 30, 1996 compared to the three months
ended September 30, 1995 due primarily to an overall reduction in
administrative and management staff.
Company-owned Restaurant Operations.
Company-owned restaurant revenues increased $102,300 or 40.8% during the three
months ended September 30, 1996 compared to the comparable period in 1995. The
Company-owned three new operating restaurants during the three months ended
September 30, 1996 as compared to six older unprofitable restaurants during the
three months ended September 30, 1995. The overall Company-owned restaurant
costs and expenses increased $34,400 or 10.3% compared to the same period in
1995 as a result of the sales increase.
Management Discussion:
During the year ended June 30, 1996, the Company showed dramatic improvement.
The Company was able to implement and complete its short-term strategic plan.
The objectives of the strategic plan were as follows: decrease negative cash
flow; dispose of all unprofitable or under-performing Company-owned
restaurants; and strengthen the financial position of the Company through the
payment of most long-term debt obligations or conversion of such long-term debt
to equity.
Having achieved its short-term objectives, the Company is now concentrating its
efforts to develop the Numero Uno concept of the future and to achieve rapid
growth, enhanced revenues and profitability. In order to accomplish these
goals, the Company has taken the following steps:
1. The Company has purchased three existing Numero Uno franchised
restaurants, remodeled them, and is now operating them as
Company-owned restaurants. All three restaurants are meeting or
exceeding the Company's sales projections and are producing positive
cash flow.
2. The Company has entered into a non-specific letter of intent
to purchase the assets of an Oregon restaurant chain known as Oregon's
Original Sandwich Express and Bakery ("Sandwich Express"). The Company
intends to retrofit the Sandwich Express chain into a new dual
concept. The concept will be a limited service, waiter assisted,
sit-down restaurant featuring Numero Uno's award winning thick and
thin pizza, pastas and salads, as well as specialty sandwiches and
bread products. This represents an excellent opportunity to increase
sales as 80% of Sandwich Express' business is derived from lunch
business and approximately 80% of Numero Uno's business is derived
from evening business. Furthermore, the menus complement each
14
<PAGE> 15
other as Numero Uno's cuisine appeals to customers during the Spring,
Fall and Winter months and Sandwich Express' fare is popular during
the Spring and Summer months.
The name for the new concept has already been registered and the
prototype plan developed. Management believes that the revenues of the
acquired Sandwich Express restaurants will increase dramatically after
the proposed acquisition and that the new concept will generate sales
in excess of industry averages. The Company intends to begin
developing Company-owned restaurants and to sell idividual and
territorial franchises outside the State of California hopefully in
early 1997.
3. The international marketplace is growing very rapidly and the
Company now has 10 restaurants open and operating in South Korea, 4 in
Kuwait and 1 in China. Four more restaurants are expected to open in
Korea, 2 in Kuwait and 1 in Indonesia during the year ending June 30,
1997. In addition, the Company has entered into a license agreement
for the Philippines requiring 6 restaurants to be opened during the
next 36 months.
The new Company-owned restaurants, the proposed acquisition of Sandwich Express
and the rapidly expanding international marketplace leads management to believe
that the Company will have profitable operations in the year ending June 30,
1997.
Management feels that the Company is in the best position that it has been in
since the late 1980's. It is positioned to achieve ongoing profitability and
rapid growth.
PART II - OTHER INFORMATION
Item 1 None
Item 2 None
Item 3 None
Item 4 None
Item 5 None
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits - none
b) No reports on Form 8-K were filed during the quarter
ended September 30, 1996
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Van Nuys,
State of California on November 12, 1996.
N.U. PIZZA HOLDING CORPORATION
By: /s/
---------------------------
Ronald J. Gelet
President
Pursuant to requirements of the Securities Exchange Act of 1934, this report
has been signed by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
/s/ Dated: 11/12/96
- ------------------------------ -------------------
Ronald J. Gelet
Director, President and Chief
Executive Officer
/s/ Dated: 11/12/96
- ------------------------------ -------------------
Gloria Gelet
Director
/s/ Dated: 11/12/96
- ------------------------------ -------------------
Jane Yennie
Controller
/s/ Dated: 11/12/96
- ------------------------------ -------------------
Dan Rouse
Director
16
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> SEP-30-1996
<CASH> 254,400
<SECURITIES> 0
<RECEIVABLES> 1,022,200
<ALLOWANCES> 595,300
<INVENTORY> 14,200
<CURRENT-ASSETS> 794,700
<PP&E> 1,867,600
<DEPRECIATION> 305,000
<TOTAL-ASSETS> 2,803,600
<CURRENT-LIABILITIES> 1,301,300
<BONDS> 0
0
12,400
<COMMON> 27,500
<OTHER-SE> 779,100
<TOTAL-LIABILITY-AND-EQUITY> 2,803,600
<SALES> 352,500
<TOTAL-REVENUES> 616,600
<CGS> 107,400
<TOTAL-COSTS> 494,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,100
<INCOME-PRETAX> 4,900
<INCOME-TAX> 0
<INCOME-CONTINUING> 4,900
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4,900
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
