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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, 2000.
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
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(Exact name of registrant as specified in its charter)
NEVADA
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(State or other jurisdiction of incorporation or organization)
95-3656327
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(I.R.S. Employer Identification No.)
3550 WILSHIRE BLVD., SUITE 1725 LOS ANGELES, CA 90010
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(Address of principal executive offices) (Zip Code)
(213) 252-9991
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(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, , there were 51,164,008 shares of common stock outstanding.
Par value is $.001.
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Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 31,700 $ 43,200
Restricted cash 22,100 22,100
Franchisee advertising receivable - -
Receivables, net of allowance for
doubtful accounts of $21,100 - -
Advances to affiliated corporations - -
Current portion of related party
notes receivable, net of allowances
of $150,300 - -
Current portion of notes receivable -
franchisees, net of allowances of
$57,900 and $295,700 41,500 61,700
Prepaid expenses - -
------------ ------------
Total current assets 95,300 127,000
------------ ------------
Other assets:
Notes receivable - franchisees,
net of allowances of $389,400 577,500 577,500
Deposits 1,300 1,300
------------ ------------
578,800 578,800
------------ ------------
$ 674,100 $ 705,800
============ ============
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
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N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (CONTINUED)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 20,100 $ 2,700
Accrued franchise advertising - -
Current portion of long-term debt 84,700 118,800
Current portion of litigation settlements - -
Loans payable to related parties 592,800 592,800
------------ ------------
Total current liabilities 697,600 714,300
------------ ------------
Long-term debt, net of current portion 236,000 236,000
Liabilities Subject to Compromise 723,800 -
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
51,164,008 51,900 51,400
Additional paid-in capital 6,283,600 6,269,100
Accumulated deficit (7,331,200) (7,301,200)
------------ ------------
(983,300) (968,300)
------------ ------------
$ 674,100 $ 705,800
============ ============
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
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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,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
FRANCHISE OPERATIONS:
REVENUES:
Initial franchise fees $ 5,000 $ 9,800
Royalties 87,000 89,000
Rental income - -
Interest income 21,900 10,200
Rebate income 28,100 34,300
Other income 13,100 20,000
Forgiveness of debt - 5,600
------------ ------------
155,100 168,900
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COSTS AND EXPENSES:
General and administrative 175,400 157,400
Interest expense 8,900 9,000
------------ ------------
184,300 166,400
------------ ------------
Franchise operating income(loss) (29,200) 2,500
------------ ------------
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
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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,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
COMPANY-OWNED RESTAURANT
OPERATIONS:
Sales $ - $ -
------------ ------------
COSTS AND EXPENSES:
Cost of sales - -
Operating
General and administrative - -
------------ ------------
- -
------------ ------------
Company-owned restaurant loss - -
------------ ------------
Income(loss)before income
tax provision (29,200) 2,500
Income tax provision 800 800
------------ ------------
Net income (loss) (30,000) 1,700
Accumulated deficit,
beginning of period (7,301,200) (6,818,800)
------------ ------------
Accumulated deficit, end of period $ (7,331,200) $ (6,817,100)
============ ============
Net income per share - basic $ - $ -
============ ============
Weighted average number
of shares outstanding - basic 49,413,323 48,229,225
============ ============
Net income per share - diluted $ - $ -
============ ============
Weighted average number
of shares outstanding - diluted 49,413,323 48,229,225
============ ============
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
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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,
2000 1999
------------ ------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (30,000) $ 1,700
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization - -
Forgiveness of debt - (5,600)
Realization of deferred franchise
fee income - (9,800)
Changes in assets and liabilities:
Receivables, net - (8,800)
Inventories - -
Prepaid expenses - (2,600)
Accounts payable and accrued expenses 17,400 35,000
Accrued expenses due to related party - 7,500
Deposits - (300)
------------ ------------
Net cash provided (used)
by operating activities (12,600) 17,100
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Collections on notes receivable -
franchisees 20,200 9,900
Advances to affiliated corporations - (53,000)
------------ ------------
Net cash (used) provided
by investing activities 20,200 (43,100)
------------ ------------
</TABLE>
See accompanying notes to financial statements and management's discussion and
analysis of financial condition and results of operations.
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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,
2000 1999
------------ ------------
(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 (34,100) (155,500)
Proceeds from issuance of
common stock 500 30,000
Increase in Additional Paid in Capital 14,500 -
------------ ------------
Net cash provided (used)
by financing activities (19,100) 35,700
------------ ------------
Net increase (decrease) in
cash and cash equivalents (11,500) 9,700
Cash and cash equivalents,
beginning of period 43,200 60,600
------------ ------------
Cash and cash equivalents,
end of period $ 31,700 $ 70,300
============ ============
Supplemental information:
Cash paid for interest $ 8,900 $ 46,100
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.
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N. U. PIZZA HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(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, 2000
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, 2000.
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
inactive 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
On July 23, 1999, the Company entered into agreements with two consultants. The
agreements are for a fourteen month period and expired on September 30, 2000.
The consultants assisted the Company with the expansion of its operations by
identifying, evaluating and structuring acquisitions of other companies. The
consultants also provided ongoing consulting services in the areas of
management, strategic planning, corporate 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 2,000,000 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
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Company $30,000 in exchange for 1,000,000 shares of the Company's common stock.
On February 28, 2000, the second consultant exercised his option by paying the
Company $60,000 in exchange for 2,000,000 shares of the Company's common stock.
Note 3. Litigation
PENDING
1. N.U. PIZZA HOLDING CORPORATION VS. RENO IANNINI, ET AL, U.S. BANKRUPTCY
COURT, CENTRAL DISTRICT OF CALIFORNIA, ADVERSARY NO. 00-01563. In September,
1998, The Company entered into a lease, as lessee, for property located in
laguna Niguel, CA. In December, 1999 the Company entered into an agreement
whereby the defendant agreed to take over the operation of the restaurant,
assume the real property lease and assume two equipment leases under which the
Company was liable. On February 1, 2000, The defendant took over physical
possession of the real property and, breached the terms of the agreement with
the Company by failing, among other things, to pay the landlord and equipment
lessors. The Company initiated an adversary action on October 10, 2000 against
the defendant, seeking damages according to proof, no less than $50,000 plus
exemplary and punitive damages. A Status Conference is scheduled for December
21, 2000.
2. VENTURA TAFT VS. N. U. PIZZA HOLDING CORPORATION, VAN NUYS SUPERIOR
COURT CASE NO. LC042907. 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 was confident that
settlement of the matter will not be materially different than $65,000 which has
been recorded in accrued litigation settlements at June 30, 2000.
3. JASVIR SINGH BASI AKA DAVID BASI, RAVINDER K. BASI AKA LINDA BASI, AND
BASI FOOD COMPANY, INC. VS. RONALD J. GELET, NUMERO UNO FRANCHISE CORPORATION,
NUMERO UNO, INC., GREGORY GOLEM AND DOES 1 THROUGH 100, INCLUSIVE, Superior
Court of the State of California for the County of Los Angeles, Case No.
LC023294. In October 1985, the Company entered into a franchise agreement with
Jasvir Singh Basi and Ravinder Kaur Basi for a full service restaurant located
in Winnetka, California. In or about June 1993, a dispute arose between the
Basis and the Company relating to the nature of the Basis' delivery rights and
the geographic territory originally allocated to them. Pursuant to the franchise
agreement, the Basis' 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 Basis 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 Basis responded with a cross- complaint which sought
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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."). The Company filed a demurrer to the cross complaint and the
Basis filed a first amended cross complaint in January 1994. 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. The
Company also agreed to a one-time waiver of the transfer fee should the
franchisee decide to sell its franchise. In addition, the parties established
the boundaries of the franchisee's geographic territory and delivery rights.
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. A trial date for this arbitration has not been set, but is
presently anticipated to be in January or February 2001.
4. MICHAEL MCDONNELL AND SANDRA MCDONNELL VS. N.U. PIZZA HOLDING
CORPORATION, NUMERO UNO FRANCHISE CORPORATION, DAN ROUSE, ET AL., in the Circuit
Court of the State of Oregon for the County of Marion, Case No. 97C13097. 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 June 30, 2000,
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.
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SETTLED
5. SALEEM BAAKZA VS. RONALD J. GELET, NUMERO UNO FRANCHISE CORPORATION AND
N. U. PIZZA HOLDING CORPORATION, Superior Court of the State of California,
County of Ventura Case No. SC021983. 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 has agreed to pay the 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 made monthly payments
from August 1, 1999 through December 31, 1999. The remaining unpaid balance is
subject to outcome of the bankruptcy filing.
6. FEIRING VS. N. U. PIZZA HOLDING CORPORATION, NUMERO UNO FRANCHISE
CORPORATION, RON GILLETTE, DAN ROUSE, ET AL., in the Circuit Court of the State
of Oregon for the County of Polk, Case No. 97P1233. 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 year ended June 30, 2000.
7. FILET MENU, INC. VS. NUMERO UNO, INC., GELET ENTERPRISES, INC. AND
RONALD J. GELET, Los Angeles Superior Court Case No. DC114313. This is an action
filed on October 12, 1994 against the Company for breach of a settlement
agreement. This matter arose out of the settlement of a previously filed lawsuit
filed by the plaintiff against the Company in 1987. As part of that settlement
agreement, the Company entered into a written agreement with the plaintiff for
the purchase and payment of merchandise. The plaintiff alleged 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 contended that Filet Menu breached the settlement
agreement. The Company answered the complaint and the Superior Court referred
the matter to the Joint Association Settlement Program. After a settlement
conference was held, the parties settled the matter. As part of the second
settlement agreement, the Company agreed to pay the plaintiff an irrevocable
consulting fee of $500,000, payable in monthly installments of $4,167 for a
period of
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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, Numero Uno Franchise Corporation filed
a Demand for Arbitration before JAMS/Endispute, Inc. alleging that Filet Menu
violated the terms of the second settlement agreement. In November 1996, the
parties entered into a new third settlement agreement which superseded both
previous agreements referenced above. This final settlement agreement required
the Company to pay the supplier a total of $238,000 consisting of immediate cash
payment of $101,000, subsequent installment payments totaling $37,000 plus
interest of 8% on or before November 1, 1998 and $100,000 (reduced by the
plaintiff to $75,000 during the year ended June 30, 1998) payable in sixty
monthly installments of $1,250.
8. MAURICE PACK VS. MISSION GORGE PIZZA, INC., NUMERO UNO FRANCHISE
CORPORATION AND N. U. PIZZA HOLDING CORPORATION, Los Angeles Superior Court Case
No. LC033111. This was a complaint filed on July 21, 1995 for $50,943 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. A status
conference had been set for May 17, 1996 but was taken off the calendar when the
parties settled the matter. The Company agreed to pay the plaintiff $56,723 in
monthly installments which were paid in full during the year ended June 30,
1999.
9. JANET TSENG-LAW AND RONALD E. LAW VS. NUMERO UNO FRANCHISE CORPORATION,
N. U. PIZZA HOLDING CORPORATION AND NUMERO UNO TAKEOUT AND DELIVERY, INC.,
Whittier Municipal Court Case No. 95C03094. This is an action for breach of
contract for failure of Numero Uno Takeout and Delivery, Inc. to make payments
on a promissory note. The plaintiffs are seeking $12,604. The action was filed
on September 28, 1995 and an answer was filed on behalf of Numero Uno Franchise
Corporation and N. U. Pizza Holding Corporation on December 6, 1995. The Company
subsequently made a settlement offer to the plaintiffs but the plaintiffs'
counsel has not pursued settlement. The Court on its own motion dismissed the
case without prejudice for failure to prosecute the action by plaintiffs on
April 10, 1998.
10. ROBERT AND FRANCES CLAYTON VS. NUMERO UNO TAKEOUT AND DELIVERY, INC.,
GELET ENTERPRISES, INC., NUMERO UNO FRANCHISE CORPORATION, RONALD J. GELET,
GREGORY R. GOLEM AND BRADLEY HARRINGTON, Orange County Superior Court Case No.
749134. This action for breach of lease was filed June 26, 1995 by the landlord
of premises leased by Numero Uno Takeout and Delivery in Huntington Beach,
California. In March 1995, Numero Uno Takeout and Delivery vacated the premises.
The plaintiffs sought rent in the amount of $20,512 and other amounts for
damages according to proof. The Company contended that Numero Uno Takeout and
Delivery was a defunct entity and there was no contractual liability on behalf
of the Company and other named defendants. Defendants Gelet Enterprises, Inc.,
Numero Uno Franchise Corporation, Ronald J. Gelet and Gregory
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R. Golem answered the complaint on August 16, 1995. After some discovery, the
Court assigned the case to non binding arbitration. An arbitration hearing was
held on June 20, 1996 and the arbitrator awarded the plaintiffs $31,781. Numero
Uno Franchise Corporation did not agree with the award and filed a Request For
Trial De Novo with the Court and a court date was set for October 28, 1996.
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 agreement. The Company agreed to pay
$16,500 plus interest in monthly installments which were paid in full during the
year ended June 30, 1998.
11. BRIAN MOORE AND LINDA MOORE VS. NUMERO UNO FRANCHISE CORPORATION AND N.
U. PIZZA HOLDING CORPORATION, Orange County Superior Court Case No. 752894. This
action was filed on September 18, 1995 for breach of a promissory note and
security agreement made by the Company to Brilinca Corporation. The plaintiffs,
Brian and Linda Moore are the assignees of Brilinca Corporation. The Moores
alleged that the Company defaulted on amounts owing to them of $77,917. In
addition to Numero Uno Franchise Corporation, the plaintiffs have sued N. U.
Pizza Holding Corporation as guarantor of Numero Uno Franchise Corporation's
obligations. A tentative settlement was reached with the Moores' attorney but
the Moores did not agree with the terms. Because the parties were in settlement
negotiations, the Court took the hearing on the Right to Attach Order and the
Settlement Conference off the calendar. The Settlement Conference, however, was
held on June 28, 1996. The parties were unable to settle the matter and a trial
date was scheduled for October 16, 1996. Prior to the trial date, the parties
settled the matter with the Company agreeing to pay approximately $54,500 plus
interest at 10% per annum in monthly installments which were paid in full during
the year ended June 30, 1999.
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 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.
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Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 2000:
LIQUIDITY AND CAPITAL RESOURCES
For the three months ended September 30, 2000, the Company had negative cash
flow of $11,500. The Company has continued to make some of the principal
payments on its long-term debt. Cash and cash equivalents at September 30, 2000
were $31,700.
OPERATING ACTIVITIES
Accounts payable and accrued expenses increased $17,400 to $20,100 at September
30, 2000.
INVESTING ACTIVITIES
No advances were made to affiliated corporations during the three months ended
September 30, 2000.
Notes receivable - franchisees decreased $20,200 to $619,000 at September 30,
2000 due to the collection of outstanding amounts due to the Company.
FINANCING ACTIVITIES
Long-term debt decreased $34,100 to $320,700 at September 30, 2000 due to
principal payments made by the Company.
Common stock and additional paid-in capital increased $500 and $14,500,
respectively, to $51,900 and $6,283,600, respectively, at September 30, 2000.
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, 2000 AS COMPARED TO THE THREE
MONTHS ENDED SEPTEMBER 30, 1999
FRANCHISE OPERATIONS
For the three months ended September 30, 2000, the Company recognized initial
franchise fees of $5,000 from one domestic license agreement as compared to
$9,800 in initial franchise fees for the three months ended September 30, 1999,
a 49.0% decrease in fees.
The Company recognized $87,000 of royalty income during the three
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months ended September 30, 2000, a $2,000 (2.2%) decrease from royalty income of
$89,000 recognized for the comparable period in 1999. The decrease was due
primarily to a reduction in the total number of operating franchised restaurants
during the three months ended September 30, 2000 as compared to the same period
in 1999.
No rental income was recognized during the three months ended September 30, 2000
and 1999. This 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 increased $11,700 (114.7%) to $21,900 for the three months ended
September 30, 2000 as compared to $10,200 for the three months ended September
30, 1999.
Rebate income decreased $6,200 (18.1%) to $28,100 for the three months ended
September 30, 2000 as compared to $34,300 for the three months ended September
30, 1999 due primarily to a reduction in the total number of operating
franchised restaurants during the three months ended September 30, 2000 as
compared to the same period in 1999.
Other income decreased $6,900 (34.5%) to $13,100 for the three months ended
September 30, 2000 as compared to $20,000 for the three months ended September
30, 1999. The decrease in other income is primarily related to fluctuations in
payments received from the Company's exclusive soft drink supplier.
The Company recognized no forgiveness of debt income for the three months ended
September 30, 2000 as compared to $5,600 of forgiveness of debt income for the
three months ended September 30, 1999.
General and administrative expenses consist of corporate payroll and related
benefits, insurance, professional fees, license fees and depreciation and
amortization. These expenses increased $26,900 (17.1%) to $184,300 for the three
months ended September 30, 2000 as compared to $157,400 for the three months
ended September 30, 1999. This increase is due primarily to an increase in legal
and professional fees.
Interest expense increased by $6,600 (287.0%) to $8,900 for the three months
ended September 30, 2000 as compared to $2,300 for the three months ended
September 30, 1999 due to an increase in the amount of interest-bearing notes
payable.
COMPANY-OWNED RESTAURANT OPERATIONS
There were no Company-owned restaurant operations during the three months ended
September 30, 2000 and 1999.
PRESIDENT'S COMMENTS
15
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This quarter the Company focused on implementing a new accounting system.
Management increased chain wide advertising to help build customer awareness and
sales.
One new Numero Uno unit opened in West Hills California. The new store is
smaller in size and geared towards take-out and delivery business.
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
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 14, 2000.
N. U. Pizza Holding Corporation
By: /s/ Daniel A. Rouse
---------------------------
Daniel A. Rouse, President
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<PAGE>
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/ DANIEL A. ROUSE Dated: November 14, 2000
------------------------------ -----------------
Daniel A. Rouse,
Chairman of the Board, President,
Treasurer, Secretary and Director
/s/ MICHAEL LORELLA Dated: November 14, 2000
------------------------------- -----------------
Michael Lorella,
Director
17
