US SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
33-76422
(Commission file number)
Linda's Diversified Holdings Inc.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
22-3280395
(Incorporation or organization identification number)
11 Commerce Drive, Cranford, NJ 07016
(Address of principal executive offices)
(908) 276-2080
(Issuer's telephone number)
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities and Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes (X)
No ( )
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: August 8, 1997
Class A Common Stock, $.001 par value: 2,065,000 shares
Class B Common Stock, $.001 par value: 800,000 shares
Transitional Small Business Disclosure Format (Check one): Yes ( ) No (X)
<PAGE>
LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
ASSETS 1997 1996
----------- ------------
(unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 78,075 $ 1,331,582
Inventories 8,103 15,065
Retail loans receivable 117,714 42,691
Notes receivable, current portion -- 10,000
Net assets held for sale 79,000 --
Prepaid expenses and other current assets 170,863 84,049
----------- -----------
Total Current Assets 453,755 1,483,387
----------- -----------
PROPERTY AND EQUIPMENT 317,153 432,289
----------- -----------
OTHER ASSETS:
Restricted cash 212,500 162,500
Notes receivable, less current portion -- 150,155
Intangible assets 30,345 39,299
Deposits and other assets 15,292 19,923
----------- -----------
258,137 371,877
----------- -----------
$ 1,029,045 $ 2,287,553
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Long term debt, current portion $ 29,074 $ 51,926
Accounts payable and accrued expenses 407,985 295,119
Accrued payroll and payroll taxes 62,498 5,969
Sales tax payable 3,392 4,866
Deferred franchise fees 160,000 85,000
----------- -----------
Total Current Liabilities 662,949 442,880
----------- -----------
LONG TERM LIABILITIES:
Long term debt, less current portion -- 2,709
Deferred rent 41,949 42,519
----------- -----------
41,949 45,228
----------- -----------
COMMITMENTS
STOCKHOLDERS' EQUITY:
Preferred stock, Series A, $.001 par value;
2,500,000 shares authorized; 120,000
shares issued and outstanding 120 120
Common stock, Class A, $.001 par value;
15,000,000 shares authorized; 2,065,000
shares issued and outstanding 2,065 2,065
Common stock, Class B, $.001 par value;
800,000 shares authorized; 800,000
shares issued and outstanding 800 800
Capital in excess of par value 8,096,818 8,096,818
Accumulated deficit (7,775,656) (6,300,358)
----------- ------------
Total Stockholders' Equity 324,147 1,799,445
----------- ------------
$ 1,029,045 $ 2,287,553
=========== ===========
See accompanying notes to consolidated financial statements.
- 2 -
<PAGE>
LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
--------------------------- --------------------------
1997 1996 1997 1996
------------- ------------- --------------------------
<S> <C> <C> <C> <C>
REVENUES:
Restaurant sales, net $ 436,407 $ 611,037 $ 214,890 $ 319,677
Initial franchise fees 25,000 25,000 -- 25,000
Franchise royalties 21,621 14,458 8,863 9,816
Contract fee income 35,352 15,944 24,511 15,944
Loan origination fees 7,026 7,500 6,346 7,500
Loan participation premiums 22,598 712 19,503 712
----------- ----------- ----------- -----------
548,004 674,651 274,113 378,649
----------- ----------- ----------- -----------
COSTS AND EXPENSES:
Restaurant Operations:
Food and paper costs 175,435 250,553 85,722 128,566
Restaurant labor and related expenses 142,056 226,997 68,490 107,405
Operating expenses 20,648 51,187 10,502 25,240
Occupancy expenses 87,387 145,463 44,341 71,127
Depreciation and amortization 52,651 66,690 24,134 35,113
Loan Operations:
Payroll and related expenses 437,835 215,546 255,225 157,053
Media and advertising costs 289,105 256,606 235,412 256,606
Operating expenses 197,331 144,591 102,356 122,515
Corporate and Franchising:
General and administrative 409,422 512,696 203,781 275,893
Bad debt expense 150,155 -- 150,155 --
Restructuring charge 44,812 266,987 44,812 266,987
----------- ----------- --------- ------------
2,006,837 2,137,316 1,224,930 1,446,505
----------- ----------- --------- ------------
LOSS FROM OPERATIONS (1,458,833) (1,462,665) (950,817) (1,067,856)
OTHER INCOME (EXPENSE):
Interest and other income 29,395 35,307 19,249 21,323
Interest expense (3,860) (8,107) (1,609) (3,789)
----------- ----------- --------- ------------
25,535 27,200 17,640 17,534
----------- ----------- --------- ------------
NET LOSS (1,433,298) (1,435,465) (933,177) (1,050,322)
PREFERRED STOCK DIVIDENDS 42,000 -- 21,000 --
----------- ----------- ----------- ------------
NET LOSS APPLICABLE TO COMMON STOCK $(1,475,298) $(1,435,465) $ (954,177) $(1,050,322)
=========== =========== =========== ============
NET LOSS PER COMMON SHARE $ (0.61) $ (0.75) $ (0.40) $ (0.48)
=========== =========== =========== ===========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,415,000 1,907,000 2,415,000 1,615,000
=========== =========== =========== ============
</TABLE>
See accompanying notes to consolidated financial statements.
- 3 -
<PAGE>
LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
-----------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,433,298) $ (1,435,465)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 52,651 66,690
Restructuring charge 44,812 266,987
Bad debt expense 150,155 -
Changes in operating assets and liabilities:
Decrease in inventories 6,962 2,912
(Increase) in prepaid expenses and other assets (86,814) 13,083
(Increase) in restricted cash (50,000) (162,500)
(Increase) decrease in deposits and other assets 4,631 (41,149)
Increase in accounts payable and accrued expenses 112,866 116,029
Increase in accrued payroll and payroll taxes 56,529 14,487
Decrease in sales tax payable (1,474) (1,453)
Increase in deferred franchise fees 75,000 25,000
Increase (decrease) in deferred rent (570) 8,262
--------------- ----------------
Net cash used in operating activities (1,068,550) (1,127,117)
--------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from redemption of cash investments - 809,000
Acquisition of cash investments - (88,000)
Funds advanced under notes receivable - (216,591)
Proceeds from notes receivable 10,000 5,009
Disbursements for retail loans receivable (896,140) (397,404)
Proceeds from sale of retail loans receivable 821,117 14,244
Acquisition of property and equipment (52,373) (124,618)
--------------- ----------------
Net cash provided by (used in) investing activities (117,396) 1,640
--------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock, net of expenses - 1,654,311
Payments of preferred stock dividends (42,000) -
Payments of long-term debt (25,561) (21,941)
--------------- ----------------
Net cash used in financing activities (67,561) 1,632,370
--------------- ----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS (1,253,507) 506,893
CASH AND CASH EQUIVALENTS, Beginning of period 1,331,582 558,013
--------------- ----------------
CASH AND CASH EQUIVALENTS, End of period $ 78,075 $ 1,064,906
================ =================
SUPPLEMENTAL INFORMATION:
Interest paid $ 3,860 $ 8,107
================ ================
See accompanying notes to consolidated financial statements.
-4-
</TABLE>
<PAGE>
LINDA'S DIVERSIFIED HOLDINGS INC. AND SUBSIDIARIES
Notes to consolidated financial statements
(Unaudited)
(1) The consolidated balance sheet of Linda's Diversified Holdings Inc. (the
"Company") as of December 31, 1996 has been derived from the audited
consolidated balance sheet contained in the Company's Form 10-KSB as of
December 31, 1996 and is presented for comparative purposes. All other
financial statements are unaudited. All adjustments which are of a normal
and recurring nature and in the opinion of management necessary for a fair
presentation, have been included. The results of operations for interim
periods are not necessarily indicative of the operating results for the
full year. Footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have
been omitted in accordance with the published rules and regulations of the
Securities and Exchange Commission. These consolidated financial statements
should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-KSB for the most recent fiscal
year.
(2) On June 5, 1997, the Company closed its restaurant in Summit, New Jersey
and subsequetly sold its leasehold interest for $70,000, of which $1,000
was received as a deposit in June and an additional $6,000 was received in
July. The Company additionally sold its remaining equipment at this
location for approximately $10,000, payments of which were received in July
and August. The $79,000 of receivables due from these sales at June 30,
1997 are reported as net assets held for sale on the balance sheet at June
30, 1997. Losses from this store closing, consisting substantially of the
writeoff of equipment and excess inventory and totalling approximately
$45,000, are reported as a restructuring charge in the June 30, 1997
financial statements.
(3) On June 2, 1997, the Company closed a franchised restaurant in Colonia, New
Jersey and subsequently recorded a charge of approximately $130,000
relating to the writeoff of a note receivable from the franchisee which was
deemed uncollectible. Additionally, the Company recorded a charge of
$20,000 relating to the writeoff of a note receivable deemed uncollectible
from its Westwood franchisee. These charges are reported as bad debt
expense in the June 30, 1997 financial statements.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation - The consolidated financial statements include
the accounts of Linda's Diversified Holdings, Inc. and its wholly-owned
subsidiaries. All significant intercompany transactions and balances have
been eliminated in consolidation.
Franchise Related Income and Deferred Franchise Fees - In connection with
its franchising operations, the Company receives initial franchise fees,
royalties and advertising fees from its franchisees. Initial fees are
recognized when the franchisee commences operations. Royalties and
advertising fees, as defined in the underlying franchise agreements, are
recognized in the period that the related franchise store revenue is
generated.
Restricted Cash - In connection with regulatory banking requirements in
certain states, National Home Guaranty,a wholly-owned subsidiary of the
Company, is required to post mortgage surety bonds which are collateralized
by irrevocable letters of credit. The collateralization underlying these
letters of credit is shown as restricted cash in the June 30, 1997
financial statements.
- 5 -
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
- ---------------------
OVERVIEW
- --------
The Company is a holding corporation consisting of restaurant operations,
restaurant franchising, and home-equity loan operations. The restaurant
entities, operating under the name Linda's Rotisserie & Kitchen (formerly
Linda's Flame Roasted Chicken), consist of five restaurants, one of which is
Company-owned and operated, four of which are franchised, and a master license
for the Philippines . The loan operations are conducted through National Home
Guaranty ("NHG"), a wholly-owned subsidiary, which commenced operations in April
1996, providing both conventional and federally-guaranteed financing for
single-family homeowners and lead-generation services for contractors with
respect to home-improvement services in the subprime housing markets. NHG is
approved by the US Department of Housing and Urban Development to originate
federally-guaranteed Title I loans, and is currently a licensed lender in seven
states including New Jersey, Massachusetts, Rhode Island, Delaware, Maryland,
New Hampshire and Connecticut. NHG also operates on a limited-basis in
Pennsylvania and New York which do not require a special license for the
services in which NHG are currently providing in those states. NHG currently has
an application for a second mortgage license pending in New York.
In order to improve its liquidity and provide additional working capital during
the start-up phase of NHG's business, the Company requires and is actively
seeking additional financing through a private placement of debt or equity, or a
joint venture. However, there can be no assurance of success. The Company
believes that additional funding is required for it to meet its cash
requirements for the next twelve months. If such financing is not secured, the
Company will be required to further curtail its activities (which the Company
does not believe will provide a solution to the problem), sell NHG or its
lending business, or in the absence of a viable alternative, discontinue
operations.
RESTAURANT OPERATIONS
- ---------------------
In order to focus future resources on its loan operations, the Company has been
exploring the possibility of selling its restaurant business or terminating its
existing franchisees. There can be no assurance that these efforts will be
successful.
Gross restaurant sales for the six months ended June 30, 1997 decreased $179,000
(28%) as compared to the six months ended June 30, 1996. Comparable store gross
sales (for locations opened at least one year) decreased $36,000 (9%). The total
sales decreases were due to the Company having three Company-owned locations in
the six months of 1996 compared with two such locations in 1997 (one at June 30,
1997). The Company closed restaurants in June 1997 and June 1996 to reduce its
losses and preserve its working capital. The same store sales decreases were due
to the increased saturation of, and intense competition from, similar restaurant
concepts throughout New Jersey. Gross sales for the quarter ended June 30, 1997
decreased $105,000 (32%) as compared to the quarter ended June 30, 1996.
Comparable store gross sales for this period decreased $26,000 (12%).
Food and paper costs collectively decreased as a percentage of gross sales for
the six months ended June 30, 1997 compared to 1996 to $175,000 (38% of gross
sales) from $251,000 (40% of gross sales), respectively, due to lower poultry
costs in 1997. Additional cost reductions were a result of the continued
shifting of the restaurants' menu mix to gourmet sandwiches, which have lower
food costs than other meals.
- 6 -
<PAGE>
Restaurant labor and related expenses decreased to $142,000 (31% of gross sales)
for the six months ended June 30, 1997 as compared to $227,000 (36% of gross
sales) for 1996. This decrease, as a percentage of gross sales, is due to the
closing, in June 1996, of the Company's Livingston, New Jersey location which
had its highest labor costs, as well as the Company's continued focus on
correlating hourly labor to projected sales.
Operating expenses, including such items as local promotion, repairs and
maintenance and store supplies, totalled $21,000 (5% of gross sales) for the
first six months of 1997 compared to $51,000 (8% of gross sales) for the
comparable period in 1996.
Occupancy costs, including such fixed and recurring items as rent, common area
maintenance charges and utilities, totalled $87,000 (19% of gross sales) and
$145,000 (23% of gross sales) for the six months ended June 30, 1997 and 1996,
respectively. This decrease as a percentage of gross sales is due to the closing
of the Company's Livingston, New Jersey location which had the Company's highest
occupancy costs.
Depreciation and amortization decreased to $53,000 for the six months ended June
30, 1997 from $67,000 for 1996. This decrease is attributable to the fact that
the Company had equipment and leasehold improvements at one additional location
in 1996 which was closed in June 1996.
RESTAURANT FRANCHISING
- ----------------------
In order to focus future resources on its loan operations, the Company has been
exploring the possibility of selling its restaurant business or terminating its
franchise agreements. There can be no assurance that these efforts will be
successful.
The Company's franchising operations are administered through its subsidiary,
Linda's Chicken International. As of June 30, 1997, four franchises were open.
Franchise royalty income, amounted to $22,000 for the six months ended June 30,
1997 compared with $14,000 for the comparable period in 1996. This increase is
due to the Company having four franchises opened at June 30, 1997 compared with
two at June 30, 1996.
The Company maintains an advertising fund to be used for regional advertising
expenditures which benefit all locations. Franchisees are required to contribute
a percentage of their net sales to this fund. The Company also contributes to
the fund promotional rebates received from suppliers. For the six months ended
June 30, 1997, this fund had an equal amount of revenues and expenditures.
Expenses related to the franchising operation, consisting of such items as
franchise support personnel, legal fees and advertising, are included in general
and administrative expenses in the Company's financial statements, and totalled
$59,000 and $110,000 for the six months ended June 30, 1997 and 1996,
respectively. This decrease is due, in part, to the elimination of the franchise
director position which existed in 1996.
LOAN OPERATIONS
- ---------------
The Company's loan operations are conducted through its subsidiary, NHG. These
operations include providing single-family homeowners, primarily in the suprime
market, with a single source for both home improvement loans (conventional and
federally-guaranteed) and qualified contractors. NHG derives its revenue on
contractor loans from marketing fees received from participating contractors
representing a percentage of each completed contract, and on direct loans from
loan origination fees charged to borrowers. The Company additionally derives
revenue on each type of loan from loan participation premiums paid by
third-party end investors which buy its loans.
- 7 -
<PAGE>
NHG first began receiving revenue in May 1996 which resulted from the Company's
test marketing efforts. Gross revenue for the six months ended June 30, 1997
totalled $65,000 including $35,000 in completed contract fee income, $7,000 in
loan origination fees and $23,000 in loan participation premiums. For the
quarter ended June 30, 1997, gross revenue totalled $50,000 including $25,000 in
completed contract fee income, $6,000 in loan origination fees and $19,000 in
loan participation premiums. The Company recognizes contract fee income when the
related contract is completed by the contractor. Loan origination fees and loan
participation premiums are recognized when the related loan is disbursed.
NHG had expenses of $925,000 for the six months ended June 30, 1997, as
described below, relating to its operations.
Payroll and related expenses, consisting of management, telemarketing and field
marketing representatives, credit analysts and processors, totalled $438,000
(48% of total expenses) for the six months ended June 30, 1997. While management
labor is a fixed expense, NHG has the ability to correlate the amount of its
other operations personnel to the loan request volume it receives. All
telemarketing representatives and field marketing employees are paid hourly, and
most are part-time employees.
Media and advertising costs, consisting of media time bought on television,
production and distribution of direct mail and mall kiosk operating costs,
totalled $289,000 (31% of total expenses) for the six months ended June 30,
1997. In March, the Company began a field marketing program consisting of
information kiosks placed in high traffic shopping malls. Each kiosk is staffed
by trained representatives who assist homeowners in getting information about a
home improvement loan, debt consolidation or home equity loan. In March 1997,
NHG opened the first of such kiosks in Woodbridge, New Jersey. The Company
opened an additional kiosk in Staten Island, New York in April 1997, and a third
kiosk in southern New Jersey in May 1997. If successful, the Company expects to
continue to expand its field marketing program to additional markets since it
provides the Company with prospects at a lower cost than television advertising.
The Company expects overall media costs to be one of the larger expense items in
future operations and to have a significant impact on the generation of future
revenues.
Operating expenses, consisting of expenses necessary to operate the Company's
main office in New Jersey and its branch office in Massachusetts, as well as
legal and consulting fees and expenses related to obtaining licenses and
permits, totalled $197,000 (21% of total expenses) for the six months ended June
30, 1997. Typically, most of these expenses are of a fixed and recurring nature
and will decrease as a percentage of revenue as revenue increases.
CORPORATE
- ---------
General and administrative expenses decreased to $409,000 for the first six
months of 1997 from $513,000 in 1996. This is as a result of continued
reductions in overhead as a result of the elimination of several corporate
positions. While the Company anticipates that cost containment will continue to
take place in this expense category, general and administrative expenses will
continue to represent a large percentage of revenues until the Company's
subsidiaries can develop gross revenue volume sufficient to absorb these costs.
Bad debt expense represents the writeoff of certain notes receivable from
franchisees as more fully described in Note 3 to the financial statements.
Restructuring costs relate to the closing of a Company-owned restaurant in
Summit, New Jersey as more fully described in Note 2 to the financial
statements.
- 8 -
<PAGE>
Interest income decreased to $29,000 from $35,000 for the six months ended June
30, 1997 and 1996, respectively. Investment earnings in 1996 were principally
from the Company's investments in short-term United States government-backed
obligations. This source of income has decreased as the Company has expended
funds which were invested in 1996 on the expansion of its operations. Interest
income in 1997 is substantially from the receipt of interest income from loans
that NHG sells to third-party end investors representing the period from when
NHG disburses funds to the time that the related loan is sold.
Liquidity and Capital Resources
- -------------------------------
Current assets at June 30, 1997 were $454,000 compared to $1,483,000 at December
31, 1996 and current liabilities were $662,000 at June 30, 1997 compared to
$443,000 at December 31, 1996. The Company's restaurants sell to consumers in
what are substantially all cash transactions. Any credit and debit card business
transacted is electronically credited to the Company's accounts within 48 hours.
The Company's debt at June 30, 1997, consisted of obligations owed under
capitalized leases for point-of-sale terminals at each of the restaurants
totalling $19,000. Additionally, the Company issued a note payable, with a
remaining balance of $10,000 at June 30, 1997, in conjunction with its
acquisition of the restaurant in Summit, NJ. The Company currently has no bank
borrowings. The Company is obligated to pay quarterly dividends on its Series A
preferred stock totalling $21,000 per quarter.
The Company requires capital principally to expand the operations of NHG. The
Company is not pursuing new franchisees for its restaurant business and does not
intend to open additional Company-owned restaurants. Funds, which are extremely
limited, will be used primarily for NHG to continue to develop and refine its
marketing programs, buy media time, and expand its operations into other
metropolitan areas. Due to the shortage of working capital, the Company will be
required to curtail NHG's operations shortly unless additional financing is
secured. The Company expects that its future results will be predominantly
affected by the success or failure of NHG.
The Company's franchising operation currently has four franchisees.
Additionally, the Company has a master license agreement with a licensee for
territory rights to develop a minimum of 20 restaurants in the Philippines over
a ten year term.
In order to focus its future resources on its loan operations, the Company has
been exploring the possibility of selling its restaurant business, terminating
its existing franchise agreements or entering into a strategic alliance with
respect to its restaurant business. There can be no assurance that these efforts
will be successful.
For the six months ended June 30, 1997, NHG disbursed loans totalling $896,000,
of which $778,000 had been sold to third-party end investors. Thus, retail loans
receivable amounted to $118,000 at June 30, 1997. The Company sold all such
retail loans in July 1997.
The Company anticipates that its current trend of losses will continue. NHG,
whose business is based upon the home improvement and subprime lending
industries, experiences a decrease in potential revenues during the winter
months due to a significant slowdown in home improvement requests and contractor
ability to complete projects during adverse winter weather in the Northeast, the
primary area where NHG currently lends. In order to offset the seasonal
decreases expected in its business in the future, the Company will attempt, if
funds become available for the purpose, to initiate lending activities in
southeastern states to improve its ability to generate loan volume during the
winter, and expand its direct lending efforts to include more debt consolidation
and home equity loans. License application processes are lengthy, however, and
there is no assurance as to when the Company will actually obtain the requisite
licenses in any state.
- 9 -
<PAGE>
In order to improve its liquidity and provide additional working capital during
the start-up phase of NHG's business, the Company requires, and is actively
seeking additional financing through a private placement of debt or equity.
However, there can be no assurance of success. The Company believes that
additional funding is required for it to meet its cash requirements for the next
twelve months. If such financing is not secured, the Company will be required to
further curtail its activities (which the Company does not believe will provide
a solution to the problem), sell NHG or its lending business, or in the absence
of a viable alternative, discontinue operations.
Forward-Looking Information May Prove Inaccurate
- ------------------------------------------------
This report contains forward-looking statements and information that are based
on management's beliefs as well as assumptions made by, and information
currently available to, management. When used in this document, the words
"anticipate", "believe", "estimate", "expect" and similar expressions are
intended to identify forward-looking statements. Such statements involve a
number of risks and uncertainties. Among the factors that could cause actual
results to differ materially are the following: business conditions and growth
in the industry, general economic conditions, product development, competition,
government regulations, rising costs for food and paper supplies, the risk of
franchising, and all the risks associated with start-up businesses as it relates
to the activities of NHG, and the risk factors listed from time to time in the
Company's SEC reports, including, but not limited to, the Company's annual
report on Form 10-KSB for the year fiscal year ended December 31, 1996.
Part II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
The Company has been notified by Nasdaq that it no longer satisfies
the requirements for listing on the Nasdaq SmallCap Market. While the
Company is exploring opportunities to satisfy the listing
requirements, and is communicating with Nasdaq with respect to these
issues, the Company believes it likely that it will not maintain the
SmallCap listing in which case, the Company will seek to have its
securities trade on the OTC Bulletin Board.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits: Exhibit 27 (Financial Data Schedule for Second
Quarter of 1997)
b) Reports on Form 8-K
No reports on Form 8-K have been filed during the quarter for
which this report is filed.
- 10 -
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Linda's Diversified Holdings Inc.
(Registrant)
/s/ Peter Weissbrod
------------------------------------------
August 13, 1997 Peter Weissbrod, President
(Principal Executive and Financial Officer)
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND THE BALANCE
SHEET FOR THE PERIOD THEN ENDED, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 78,075
<SECURITIES> 0
<RECEIVABLES> 117,714
<ALLOWANCES> 0
<INVENTORY> 8,103
<CURRENT-ASSETS> 453,755
<PP&E> 529,790
<DEPRECIATION> (212,637)
<TOTAL-ASSETS> 1,029,045
<CURRENT-LIABILITIES> 662,949
<BONDS> 0
0
120
<COMMON> 2,865
<OTHER-SE> 321,162
<TOTAL-LIABILITY-AND-EQUITY> 1,029,045
<SALES> 436,407
<TOTAL-REVENUES> 548,004
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</TABLE>
