<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities 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, 1999.
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
--------------------------------------------------------------
(State or other jurisdiction of incorporation or organization)
95-3656327
------------------------------------
(I.R.S. Employer Identification No.)
16800 DEVONSHIRE ST., SUITE 305 GRANADA HILLS, CA 91344
-------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(818) 368-2616
----------------------------------------------------
(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, 1999, there were 49,164,008 shares of common stock
outstanding. Par value is $.001.
1
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------------- --------
(Unaudited) (Audited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 70,300 $ 60,600
Restricted cash 10,000 16,800
Franchisee advertising receivable 58,000 35,600
Receivables, net of allowance for
doubtful accounts of $21,100 62,800 54,000
Advances to affiliated corporations 95,400 42,400
Current portion of related party
notes receivable, net of allowances
of $150,300 96,700 96,700
Current portion of notes receivable -
franchisees, net of allowances of
$295,700 125,500 130,500
Prepaid expenses 18,300 15,700
-------- --------
Total current assets 537,000 452,300
-------- --------
Other assets:
Notes receivable - franchisees,
net of allowances of $118,600 418,200 423,100
Intangibles assets, net of
accumulated amortization of $3,600 8,300 8,300
Deposits 23,200 22,900
-------- --------
449,700 454,300
-------- --------
$986,700 $906,600
======== ========
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
2
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
------------- --------
(Unaudited) (Audited)
LIABILITIES AND STOCKHOLDERS' DEFICIT
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 379,900 $ 350,500
Accrued franchise advertising 68,000 52,400
Current portion of long-term debt 117,000 167,700
Current portion of litigation settlements 110,000 164,800
Loans payable to related parties 655,100 486,400
----------- -----------
Total current liabilities 1,330,000 1,221,800
----------- -----------
Long-term debt, net of current portion 114,400 161,300
Litigation settlements, net of current
portion 73,400 76,500
Deferred franchise fee income 13,100 22,900
Stockholders' deficit:
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 100,000,000 and
50,000,000 shares, shares issued,
subscribed and outstanding
49,164,008, and 48,164,008 49,400 48,400
Additional paid-in capital 6,211,100 6,182,100
Accumulated deficit (6,817,100) (6,818,800)
----------- -----------
(544,200) (575,900)
----------- -----------
$ 986,700 $ 906,600
=========== ===========
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
3
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
FRANCHISE OPERATIONS:
REVENUES:
Initial franchise fees $ 9,800 $ 14,800
Royalties 89,000 99,300
Rental income - 4,600
Interest income 10,200 10,600
Rebate income 34,300 31,400
Other income 20,000 20,400
Forgiveness of debt 5,600 -
---------- ----------
168,900 181,100
---------- ----------
COSTS AND EXPENSES:
General and administrative 157,400 165,900
Interest expense 9,000 2,300
---------- ----------
166,400 168,200
---------- ----------
Franchise operating income 2,500 12,900
---------- ----------
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
4
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND
ACCUMULATED DEFICIT (CONTINUED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
COMPANY-OWNED RESTAURANT
OPERATIONS:
Sales $ - $ 106,800
------------ ------------
COSTS AND EXPENSES:
Cost of sales - 34,000
Operating - 52,000
General and administrative - 28,300
------------ ------------
- 114,300
------------ ------------
Company-owned restaurant loss - (7,500)
------------ ------------
Income before income tax provision 2,500 5,400
Income tax provision 800 1,700
------------ ------------
Net income 1,700 3,700
Accumulated deficit,
beginning of period (6,818,800) (4,825,700)
------------ ------------
Accumulated deficit, end of period $ (6,817,100) $ (4,822,000)
============ ============
Net income per share - basic $ - $ -
============ ============
Weighted average number
of shares outstanding - basic 48,229,225 32,139,008
============ ============
Net income per share - diluted $ - $ -
============ ============
Weighted average number
of shares outstanding - diluted 48,229,225 32,139,008
============ ============
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
5
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,700 $ 3,700
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization - 15,300
Forgiveness of debt (5,600) -
Realization of deferred franchise
fee income (9,800) (9,800)
Changes in assets and liabilities:
Receivables, net (8,800) (3,800)
Inventories - (100)
Prepaid expenses (2,600) 3,600
Accounts payable and accrued expenses 35,000 (18,800)
Accrued expenses due to related party 7,500 7,500
Deposits (300) -
-------- --------
Net cash provided (used)
by operating activities 17,100 (2,400)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collections on notes receivable -
franchisees 9,900 26,600
Advances to affiliated corporations (53,000) -
-------- --------
Net cash (used) provided
by investing activities (43,100) 26,600
-------- --------
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
6
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
September 30, September 30,
1999 1998
------------- -------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loans payable
to related parties $ 161,200 $ -
Principal payments on long-term debt (155,500) (30,700)
Proceeds from issuance of
common stock 30,000 -
--------- ---------
Net cash provided (used)
by financing activities 35,700 (30,700)
--------- ---------
Net increase (decrease) in
cash and cash equivalents 9,700 (6,500)
Cash and cash equivalents,
beginning of period 60,600 54,800
--------- ---------
Cash and cash equivalents,
end of period $ 70,300 $ 48,300
========= =========
Supplemental information:
Cash paid for interest $ 46,100 $ 2,300
Cash paid for income taxes $ 800 $ -
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
7
<PAGE>
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
(Unaudited)
In the opinion of management of N. U. Pizza Holding Corporation and
Subsidiaries (the "Company"), the accompanying unaudited consolidated
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, 1999 and the results of its operations and
changes in its cash flows for the three month periods presented.
The consolidated financial statements and notes are presented as permitted by
Form 10-Q and do not contain certain information included in the consolidated
annual financial statements and notes.
These unaudited consolidated financial statements should be read in
conjunction with the Company's annual report on Form 10-K for the year ended
June 30, 1999.
Note 1.
A summary of significant accounting policies is currently on file with the
Securities and Exchange Commission on Form 10-K.
The accompanying consolidated financial statements include the accounts of N.
U. Pizza Holding Corporation and its wholly-owned subsidiaries, Numero Uno
Franchise Corporation and Formaggi Inc.. Intercompany transactions have been
eliminated in consolidation.
Certain prior period balances have been reclassified in the consolidated
financial statements to conform to the current period's presentation.
Note 2. Common Stock
In August 1999, the Company's Board of Directors approved an increase from
50,000,000 to 100,000,000 authorized shares of common stock.
On July 23, 1999, the Company entered into agreements with two consultants.
The agreements are for a fourteen month period and are scheduled to expire on
September 30, 2000. The consultants are to assist the Company with the
expansion of its operations by identifying, evaluating and structuring
acquisitions of other companies. The consultants will also provide ongoing
consulting services in the areas of management, strategic planning, corporate
8
<PAGE>
financing and marketing in connection with the Company's line of business.
In consideration for their efforts, the Company granted each consultant an
option to purchase 1,000,000 shares of the Company's common stock at an
exercise price of $.03 per share. On September 22, 1999, one of the
consultants exercised his option by paying the Company $30,000 in exchange
for 1,000,000 shares of the Company's common stock, and on September 30,
1999, the option for the other consultant expired without being exercised.
Note 3. Litigation
PENDING LITIGATION
During the year ended June 30, 1999, an action was filed for breach of
contract against the Company, as lessee, by a landlord of a leased restaurant
location that the Company subleased to a franchisee who subsequently vacated
the premises. The plaintiff is claiming damages of $80,000. The Company had
reached a tentative settlement of $65,000 with the plaintiff which is being
renegotiated by the parties. Management is confident that settlement of the
matter will not be materially different than $65,000 which has been recorded
in accrued litigation settlements at September 30, 1999.
During the year ended June 30, 1999, an action was filed against the Company
in the State of Oregon for breach of contract, violation of The Franchise Act
and fraud. The plaintiff is seeking $100,000 plus attorney's fees. At
September 30, 1999, the plaintiff was not moving forward with the case and is
presently in bankruptcy. The Company intends to file a motion for summary
judgment, and management believes that the Company will ultimately prevail at
trial should a summary judgment not be granted.
In June 1993, a dispute arose between a franchisee and the Company relating
to the termination of the franchisee's delivery rights and the exclusivity of
the franchisee's original geographic territory. The plaintiff franchisee
sought compensatory and punitive damages of approximately $130,000, alleging
that its geographic territory was exclusive and its delivery rights
nonterminable by the Company. The Company strongly disagreed and contended
that the geographic territory assigned to the franchisee was nonexclusive and
terminable by the Company and that a replacement delivery area was agreed to
by the franchisee. In September 1994, the parties settled the matter. The
settlement agreement granted the franchisee an abatement of the payment of
royalties to the Company for a five year period and a one-time waiver of the
transfer fee should the franchisee decide to sell its franchise. The parties
established the boundaries of the franchisee's geographic territory and
delivery rights.
9
<PAGE>
As part of the settlement agreement, one of the plaintiffs entered into a new
franchise agreement with the Company in October 1995. Subsequently, the
plaintiff breached his obligations under the franchise agreement by failing
to pay required fees and his franchise was terminated by the Company. The
plaintiff refused to vacate the restaurant he was subleasing from the
Company, continued to use Company trademarks and breached his building lease
with the landlord by failing to pay rent which was due. The Company was
forced to pay back rent to the landlord and utilities.
The plaintiff and the Company agreed to arbitrate their claims. The plaintiff
filed a claim against the Company and its former president for fraud,
intentional infliction of emotional distress and breach of fiduciary duty in
the amount of $418,000. The Company filed a cross claim against the plaintiff
for breach of contract and trademark infringement for $100,000. The Company
is also seeking indemnification for rents and utilities paid on behalf of the
plaintiff and damages for trademark infringement and unfair competition
claims in the amount of $7,000.
Management believes that the Company will prevail in arbitration, because the
plaintiff's claims are without merit, and at best, the plaintiff can only
seek damages for breach of his franchise agreement since the September 1994
settlement agreement was reached between the parties. Management also
believes that the outcome will not have a material adverse effect on the
Company's financial position.
In September 1995, an action was filed against the Company for breach of
contract for failure to make payments on a promissory note totaling
approximately $12,800. The Company filed an answer on December 6, 1995 and
made a settlement offer to the plaintiffs but the plaintiffs' counsel has not
pursued settlement. Currently, the case is dormant and the Company believes
that the matter will eventually be settled for no more that the current
balance due on the original promissory note of approximately $12,800, which
has been classified as a current liability at September 30, 1999.
LITIGATION SETTLEMENTS
During the year ended June 30, 1996, the Company purchased a restaurant in
exchange for shares of its common stock. The seller (plaintiff) was unable to
subsequently sell the Company's common stock at the value established by the
parties in connection with the Company's acquisition of the restaurant.
During the year ended June 30, 1999, the plaintiff filed an action against
the Company alleging breach of contract, fraud and various other causes of
action. In May 1999, the parties resolved their differences by entering into
a settlement agreement. Pursuant to the terms of the settlement agreement,
the Company agreed to pay the
10
<PAGE>
plaintiff a total sum of $158,500, consisting of two monthly payments of
$29,250 which were made in May and June, 1999 and the balance of $100,000 in
twenty-five monthly installments of $4,000 plus interest at 9% per annum.
Pursuant to the settlement agreement, the Company made its initial $4,000
payment to the plaintiff on May 1, 1999 and began making scheduled monthly
payments of $4,000 on August 1, 1999. All unpaid principal and interest is
expected to be repaid in installments by the Company by November 1, 2001.
During the year ended June 30, 1999, an action was filed against the Company
in the Circuit Court of the State of Oregon alleging breach of contract,
violation of the Franchise Act and fraud. The plaintiff sued for $100,000
plus attorney's fees. The Company settled the matter for $15,000 which was
paid during the three months ended September 30, 1999.
During the year ended June 30, 1994, an action was filed by a vendor against
the Company for breach of a 1987 settlement agreement which obligated the
Company to purchase certain restaurant supply items exclusively from the
vendor and to pay for some items which were delivered under the 1987
settlement agreement.
During the year ended June 30, 1996, the parties settled the matter out of
court and the Company agreed to pay the vendor an irrevocable consulting fee
of $500,000, payable in monthly installments of $4,200 for a period of ten
years which began on June 15, 1996. The Company also agreed to use the
plaintiff vendor as the exclusive supplier of various paper products used in
its restaurants for a five year period. The former president of the Company
personally guaranteed the Company's obligations under the agreement.
During the year ended June 30, 1997, the Company filed a demand for
arbitration alleging that the vendor violated the terms of the settlement
agreement reached during the year ended June 30, 1996.
In November 1996, the parties entered into a third settlement agreement which
superseded both previous agreements. Pursuant to the terms of the new final
settlement agreement, the Company was required to pay the plaintiff a total
sum of $238,000 consisting of an immediate lump sum payment of $101,000 to
the vendor, monthly installment payments totaling $37,000 plus interest at 8%
per annum through November 1, 1998 and $100,000 (reduced to $75,000 by the
plaintiff during the year ended June 30, 1998) payable in sixty monthly
installments of $1,250.
In May 1987, the Company guaranteed the payments on a note payable to a
former franchisee by the party to whom the franchise was sold. In April 1995,
the outside party defaulted on the note payable and the plaintiff note holder
filed a complaint for approximately $50,900, the balance remaining on the
note. The parties settled the
11
<PAGE>
matter; the Company agreed to pay the plaintiff $56,700 in monthly
installments of $2,500 and the entire balance was paid in full during the
year ended June 30, 1999.
In June 1995, the landlord of premises leased by Numero Uno Takeout and
Delivery Corporation filed a complaint against the Company and other
defendants for breach of a lease agreement in the amount of approximately
$20,500. The plaintiffs contended that the premises were vacated in March
1995 and that the Company and other defendants are responsible for the unpaid
rent. The Company contended that Numero Uno Takeout and Delivery Corporation
was a defunct entity and that there was no contractual liability on behalf of
the Company and the other named defendants. After the discovery stage, the
Court assigned the case to nonbinding arbitration which was held on June 20,
1996. Thereafter, the arbitrator awarded the plaintiffs the sum of $31,800.
The Company did not agree with the award of the arbitrator and filed a
Request For Trial De Novo with the Court. Subsequently, the Court set a trial
date for March 31, 1997. Prior to trial, the parties entered into a
settlement agreement which provides for a stipulation for judgment should the
Company fail to pay installments pursuant to the terms of the settlement. The
Company agreed to pay $16,500 plus interest in monthly installments which was
paid in full during the year ended June 30, 1998.
In September 1995, an action was filed against the Company for breach of
contract for failure to make payments under the terms of a promissory note
and Security Agreement. The plaintiffs alleged that the Company defaulted on
amounts due them totaling approximately $77,900. A tentative settlement was
reached with the plaintiff's attorney but the plaintiffs did not agree to the
terms. A Settlement Conference was held on June 29, 1996. The parties were
unable to settle the matter at the Conference and the Court scheduled a trial
date for October 16, 1996. However, prior to the trial date, the parties
settled the matter with the Company agreeing to pay the sum of approximately
$54,500 plus interest at 10% per annum in monthly installments until paid in
full. The Company has made regular monthly installment payments and the
unpaid balance was paid in full during the year ended June 30, 1999.
In October 1996, an action was filed against the Company for sexual battery,
intentional infliction of emotional distress and other allegations concerning
sexual discrimination. The matter arose out of an alleged incident between an
employee of the Company and the plaintiff. The Company resolved the matter by
paying the plaintiff a settlement of $5,000 during the year ended June 30,
1998.
Note 4. Income Taxes
The Company's federal income tax provisions for the three month periods
presented have been eliminated by the utilization of net
12
<PAGE>
operating loss carryforwards. The Company would have been required to pay
federal income taxes in these periods had it not been able to utilize these
carryforwards. A provision for minimum state income taxes has been provided
in the consolidated financial statements.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999:
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 1999, the Company had positive cash
flow of $9,700. The Company has continued to make principal payments on its
long-term debt which were offset by additional loans from related parties and
cash received from the issuance of common stock. Cash and cash equivalents at
September 30, 1999 were $70,300.
OPERATING ACTIVITIES
Accounts receivable have increased $8,800 to $62,800 at September 30, 1999
due to franchisees not making timely royalty payments.
Prepaid expenses increased $2,600 to $18,300 at September 30, 1999 primarily
due to the prepayment of general liability insurance.
Deposits increased by a $300 to $23,200 at September 30, 1999 due to normal
business fluctuations.
Accounts payable and accrued expenses increased $29,400 to $379,900 at
September 30, 1999. This was due primarily to the Company's limited ability
to generate cash flow to pay its obligations.
Deferred franchise fee income of $9,800 was realized during the three months
ended September 30, 1999.
Accrued franchise advertising payable increased $15,600 to $68,000 at
September 30, 1999. Correspondingly, franchisee advertising receivable has
increased $22,400 to $58,000 and restricted cash has decreased $6,800 to
$10,000 at September 30, 1999.
INVESTING ACTIVITIES
Advances to affiliated corporations increased $53,000 to $95,400 at September
30, 1999.
13
<PAGE>
Notes receivable - franchisees decreased $9,900 to $543,700 at September 30,
1999 due to the collection of outstanding amounts due to the Company.
FINANCING ACTIVITIES
Long-term debt and litigation settlements decreased $97,600 and $57,900,
respectively, to $231,400 and $183,400, respectively, at September 30, 1999
due to principal payments made by the Company.
Loans payable to related parties increased $168,700 to $655,100 at September
30, 1999. During the three months ended September 30, 1999, the Company
borrowed $161,200 from its former president, and accrued additional
obligations to him of $7,500.
Common stock and additional paid-in capital increased $1,000 and $29,000,
respectively, to $49,400 and $6,211,100, respectively, at September 30, 1999.
The Company issued 1,000,000 shares of common stock at $.03 per share upon
the exercise of an option granted in connection with a consulting agreement
entered into on July 23, 1999.
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999 AS COMPARED TO THE THREE MONTHS ENDED
SEPTEMBER 30, 1998
FRANCHISE OPERATIONS
For the three months ended September 30, 1999, the Company recognized initial
franchise fees of $9,800 from one international license agreement as compared
to $14,800 in initial franchise fees for the three months ended September 30,
1998, a 33.8% decrease in fees.
The Company recognized $89,000 of royalty income during the three months
ended September 30, 1999, a $10,300 (10.4%) decrease from royalty income of
$99,300 recognized for the comparable period in 1998. The decrease was due
primarily to a reduction in the total number of operating franchised
restaurants during the three months ended September 30, 1999 as compared to
the same period in 1998.
No rental income was recognized during the three months ended September 30,
1999 as compared to $4,600 of rental income recognized during the same period
in 1998. This decrease is due to the franchisees paying their rent directly
to the landlord instead of rents being passed through the Company as in prior
years.
Interest income decreased $400 (3.8%) to $10,200 for the three months ended
September 30, 1999 as compared to $10,600 for the three
14
<PAGE>
months ended September 30, 1998. This decrease is due to a decrease in
interest bearing notes receivable outstanding during the three months ended
September 30, 1999.
Rebate income increased $2,900 (9.2%) to $34,300 for the three months ended
September 30, 1999 as compared to $31,400 for the three months ended
September 30, 1998 due to the favorable renegotiation of certain rebate
agreements.
Other income decreased $400 (2.0%) to $20,000 for the three months ended
September 30, 1999 as compared to $20,400 for the three months ended
September 30, 1998. The decrease in other income is primarily related to
fluctuations in payments received from the Company's exclusive soft drink
supplier.
The Company recognized $5,600 of forgiveness of debt income for the three
months ended September 30, 1999 due to the writeoff of previously accrued
accounts payable. There were no such writeoffs during the three months ended
September 30, 1998.
General and administrative expenses consist of corporate payroll and related
benefits, insurance, professional fees, license fees and depreciation and
amortization. These expenses decreased $8,500 (5.1%) to $157,400 for the
three months ended September 30, 1999 as compared to $165,900 for the three
months ended September 30, 1998. This decrease is due primarily to an overall
reduction in administrative and management staff expenses.
Interest expense increased by $6,700 (291.3%) to $9,000 for the three months
ended September 30, 1999 as compared to $2,300 for the three months ended
September 30, 1998 due to an increase in the amount of interest-bearing notes
payable and interest-bearing litigation settlements.
COMPANY-OWNED RESTAURANT OPERATIONS
There were no Company-owned restaurant operations during the three months
ended September 30, 1999. For the three months ended September 30, 1998,
Company-owned restaurant revenues totaled $106,800 and Company-owned
restaurant costs and expenses totaled $114,300, resulting in a Company-owned
restaurant loss of $7,500.
PRESIDENT'S COMMENTS
For the first quarter of the year ended June 30, 2000, the Company showed a
slight profit. Considerable capital resources were advanced to an affiliated
investment group and utilized in developing a new dual concept restaurant,
Numero Uno Pizza and Salsa Fresh Grill healthy Mexican food, which recently
opened. Both
15
<PAGE>
concepts have very high product quality and one is designed for lunchtime
sales and the other is geared toward nighttime dining, conceptually making
for an excellent fit.
The investment group's second dual concept restaurant will be opening during
the second quarter of the year ended June 30, 2000 in Sherman Oaks,
California. The Company's management feels that the dual branding concept
will open up new avenues for the Company.
The future and profitability of the Company look very promising.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE
PRIVATE SECURITIES REFORM ACT OF 1995
During the year ended June 30, 1999, the Company began the process of
identifying, evaluating and implementing changes to computer programs
necessary to address the year 2000 issue. This issue affects computer systems
that have time-sensitive programs that may not properly recognize the year
2000. This could result in system failures or miscalculations. The Company is
currently addressing its internal year 2000 issue with modifications to
existing programs and conversions to new programs. The Company is also
communicating with franchisees, vendors and other with which it conducts
business to help them identify and resolve the year 2000 issue.
The total cost associated with the required modifications and conversions is
not expected to be material to the Company's consolidated results of
operations and financial position and is being expensed as incurred.
If necessary modifications and conversions by the Company and those with
which it conducts business are completed in a timely manner, the year 2000
issue is not expected by management of the Company to have a material adverse
effect on the Company's consolidated results of operations and financial
position.
Certain statements in this report may be forward-looking in nature or
forward-looking statements as defined in the Private Securities Litigation
Reform Act of 1995. Forward-looking statements in this Form 10-Q relate to
the Company's year 2000 compliance efforts, including expectations about
compliance timetables and costs.
Actual results may differ from those expressed or implied in forward-looking
statements. With respect to any forward-looking statements contained in this
report, the Company believes that its results are subject to a number of risk
factors, including the ability of the Company to identify and address
successfully year 2000 issues in a timely manner, and at costs that are
reasonably in line with projections, and the ability of the Company's vendors
to
16
<PAGE>
identify and address successfully their own year 2000 issues in a timely
manner.
Any forward-looking statements in this report should be evaluated in light of
these important risk factors.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK - None
Part II. OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Changes in Securities and Use of Proceeds - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K - None
17
<PAGE>
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
Los Angeles, State of California on November 12, 1999.
N. U. Pizza Holding Corporation
By: /s/ Daniel A. Rouse
----------------------------
Daniel A. Rouse, 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: November 12, 1999
- --------------------------------------- -----------------
Daniel A. Rouse,
Chairman of the Board,
President and Director
/s/ Dated: November 12, 1999
- --------------------------------------- -----------------
Deborah Murphy,
Vice President, Secretary and
Director
/s/ Dated: November 12, 1999
- --------------------------------------- -----------------
Jane Yennie,
Treasurer and Controller
/s/ Dated: November 12, 1999
- --------------------------------------- -----------------
Michael Lorella,
Director
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 80,300
<SECURITIES> 0
<RECEIVABLES> 563,100
<ALLOWANCES> 316,800
<INVENTORY> 0
<CURRENT-ASSETS> 537,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 986,700
<CURRENT-LIABILITIES> 1,330,000
<BONDS> 187,800
0
12,400
<COMMON> 49,400
<OTHER-SE> (606,000)
<TOTAL-LIABILITY-AND-EQUITY> 986,700
<SALES> 0
<TOTAL-REVENUES> 168,900
<CGS> 0
<TOTAL-COSTS> 157,400
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,000
<INCOME-PRETAX> 2,500
<INCOME-TAX> 800
<INCOME-CONTINUING> 1,700
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,700
<EPS-BASIC> 0
<EPS-DILUTED> 0
</TABLE>
