<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____ to ____
Commission File Number 000-02290
EFFICIENCY LODGE, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Georgia 58-0898219
- ---------------------------- --------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)
5342 Old Floyd Road, P.O. Box 635, Mableton, Georgia 30059
----------------------------------------------------------
(Address of principal executive offices)
(770) 819-0039
------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 / /
Shares outstanding of each of the issuer's classes of common equity at
April 1, 1997: 1,026,880 shares of Common Stock, $0.10 par value share.
Transitional Small Business Disclosure Format (check one)
Yes / / No /x/
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Efficiency Lodge, Inc.
CONSOLIDATED BALANCE SHEETS
ASSETS
March 31, 1997 December 31, 1996
-------------- -----------------
(Unaudited)
Property and equipment, net $10,679,398 $ 8,844,764
Cash 152,636 159,944
Other assets 1,355,148 1,532,390
---------- ----------
$12,187,182 $10,537,098
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Mortgage notes payable $11,634,196 $10,038,389
Other liabilities 616,969 503,251
---------- ----------
Total liabilities 12,251,165 10,541,640
Stockholders' deficit
Common stock 102,688 102,688
Additional paid-in capital 52,674 52,674
Accumulated deficit (219,345) (159,904)
---------- ----------
Total stockholders' deficit (63,983) (4,542)
---------- ----------
$12,187,182 $10,537,098
========== ==========
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended March 31,
1997 1996
Revenues $ 859,902 $ 973,927
Operating expenses 683,087 550,879
--------- ---------
Operating income 176,815 423,048
Other (income) expense, net 271,256 264,664
--------- --------
Earnings (loss) before income taxes (94,441) 158,384
Provision for income taxes 35,000 -
--------- --------
Net Earnings (loss) $ (59,441) $ 158,384
========== ========
Net earnings (loss) per common share $ (0.06) $ 0.16
========== ========
Weighted average number of common
shares outstanding 1,026,880 992,390
========== ========
Historical earnings before income taxes $ 158,384
Pro forma income tax expense 60,000
--------
Pro forma net earnings $ 98,384
========
Pro forma earnings per share $ .10
========
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
(Unaudited)
Three months ended March 31, 1997
<TABLE>
<CAPTION>
Additional
Common paid-in Accumulated
stock capital deficit Total
-------- -------- ---------- ---------
<S> <C> <C> <C> <C>
Balance at January 1, 1997 $102,688 $ 52,674 $ (159,904) $ (4,542)
Net loss for the quarter - - (59,441) (59,441)
------- ------- --------- -------
Balance at March 31, 1997 $102,688 $ 52,674 $ (219,345) $(63,983)
======= ======= ========= =======
/TABLE
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three months ended March 31,
<TABLE>
<CAPTION>
1997 1996
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ (59,441) $ 158,384
Adjustments to reconcile net earnings (loss)
to net cash provided by operating activities:
Depreciation 92,477 89,525
Amortization 3,070 4,221
Changes in assets and liabilities:
Other assets (90,923) (68,122)
Other liabilities 113,718 135,952
---------- --------
Net cash provided by operating activities 58,901 319,960
Cash flows from investing activities:
Capital expenditures (1,662,016) (5,058)
Increase in due from stockholder - (26,977)
---------- --------
Net cash used for investing activities (1,662,016) (32,035)
Cash flows from financing activities:
Principal payments on long-term debt (104,193) (92,795)
Proceeds from issuance of debt 1,700,000 -
Cash distributions to stockholders - (10,000)
---------- --------
Net cash provided (used) by financing
activities 1,595,807 (102,795)
---------- --------
Increase (decrease) in cash and cash
equivalents (7,308) 185,130
Cash and cash equivalents, beginning of
period 159,944 84,064
---------- --------
Cash and cash equivalents, end of period $ 152,636 $ 269,194
========== ========
Cash paid during the period for interest $ 271,061 $ 196,427
========== ========
</TABLE>
During the three month period ended March 31, 1997, advances to
an affiliate totaling $265,095 were forgiven in connection with
the purchase of a facility from the affiliate.
<PAGE>
Efficiency Lodge, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 1997
NOTE A - BASIS OF PREPARATION
The accompanying unaudited interim consolidated financial statements of
Efficiency Lodge, Inc. (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
statements and with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included.
The results of operations for the quarter ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the full
year. The interim consolidated financial statements should be read in
conjunction with the Company's 1996 consolidated financial statements and
related notes.
NOTE B - NEW ACCOUNTING PRONOUNCEMENT
The FASB has issued Statement of Financial Accounting Standards No.
128, Earnings Per Share, which is effective for financial statements
issued after December 15, 1997. Early adoption of the new standard is
not permitted. The new standard eliminates primary and fully diluted
earnings per share and requires presentation of basic and diluted
earnings per share together with disclosure of how the per share
amounts were computed. The adoption of this new standard is not
expected to have a material impact on the disclosure of earnings per
share in the financial statements.
NOTE C - PRO FORMA RESULTS OF OPERATIONS
On December 31, 1996, the Company merged with Southern Acceptance
Corporation, Inc. (SAC). The merger was recorded under the purchase
method of accounting with ELI being considered the acquiring company.
SAC's results of operations have been included in the Company's
statement of operations from the date of acquisition. Accordingly, the
accompanying historical results of operations for the three months
ended March 31, 1996 do not include SAC's results of operations.
The following pro forms results of operations for the three months
ended March 31, 1996 are unaudited and were prepared under the
assumption that the merger with SAC occurred on January 1, 1996 and
that the Company was a taxable entity. These pro forma amounts are not
necessarily indicative of what the actual results of operations might
have been if the merger had occurred at the beginning of fiscal year
1996.
Revenue $984,000
Net earnings $ 79,000
Earnings per share $ .08<PAGE>
Item 2 - Management's Discussion and Analysis or Plan of Operation
Comparison of fixed assets from December 31, 1996, shows an
increase of $1,927,112 because of the acquiring an equipping of
Dekalb Lodge which opened on March 1, 1997. The assumption of
the Dekalb debt at Columbus Bank and Trust was also the reason
for the increase in mortgage debt in the amount of $1,595,807 as
compared to December 31, 1996. The increase of other liabilities
in the amount of $113,718 as compared to December 31, 1996, was
the result of expenses incurred in the opening of Dekalb Lodge
and as a result of the merger with Southern Acceptance and the
additional costs incurred therein.
Revenue declined in the first quarter as compared to the same
quarter in 1996 as the result of a wet winter and cool spring
which affected construction workers at primarily 3 lodges where
construction crews generally stay. The completion of the
Olympics and fewer construction crews also contributed to the
loss of revenue at these lodges. The loss of revenue as compared
to the same month in 1996 was greatest in January and has
improved each month in the first quarter. Dekalb Lodge opened on
March 1, 1997 and by the end of March was 95% occupied. Land has
been acquired in Columbus, Georgia for the construction of a
lodge there, and it is anticipated that the construction loan
will be closed during the week of May 12, 1997, which will allow
construction to begin on the Columbus facility. A fall 1997
opening is anticipated.
Operating expenses increased in the first quarter as compared to
the first quarter in 1996 by $132,208 which was the result of
several factors. First, as a result of the merger with Southern
Acceptance the operating expenses of Southern Acceptance are now
included in the operating expenses of Efficiency Lodge, Inc.
Secondly, the opening of Dekalb Lodge added certain operating
expenses such as $32,000 additional costs of bedding and other
miscellaneous expenses.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are filed as of part of this
report:
Exhibit
Number Description
-------- -----------------------
27.1 Financial Data Schedule - (for SEC use only)
<PAGE>
(b) (1) Current Report on Form 8-K filed on January 15,
1997, reporting a change of control (Item 1) and
approval of a merger (Item 2) and incorporating
financial statements and pro forma financials from the
issuer's proxy statement filed with the Commission on
October 8, 1996.
(2) Amendment No. 1 to Current Report on Form 8-K
filed on February 18, 1997 filing (i) financial
statements of the business acquired at December 31,
1995 and as of the years ended December 31, 1994 and
1995, (ii) unaudited financial statements of the
business acquired at September 30, 1996 and for the
nine months ended September 30, 1995 and 1996, (iii)
unaudited pro forma financial information, including a
balance sheet at September 30, 1996 and statements of
operations for the year ended December 31, 1995 and the
nine months ended September 30, 1996, and (iv) notes
thereto (Item 7).<PAGE>
SIGNATURE
In accordance with the requirements of the Exchange
Act, the Registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
EFFICIENCY LODGE, INC.
DATE: May 13, 1997 By: /s/ W. Ray Barnes
W. Ray Barnes
President and Chief Executive
Officer
DATE: May 13, 1997 By: /s/ Roy E. Barnes
Roy E. Barnes
Secretary/Treasurer
(Principal Financial and Accounting
Officer)<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> EFFICIENCY LODGES OF AMERICA, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 152,636
<SECURITIES> 0
<RECEIVABLES> 929,618
<ALLOWANCES> 0
<INVENTORY> 37,221
<CURRENT-ASSETS> 0
<PP&E> 13,212,446
<DEPRECIATION> 2,533,048
<TOTAL-ASSETS> 12,187,182
<CURRENT-LIABILITIES> 0
<BONDS> 11,634,196
0
0
<COMMON> 102,688
<OTHER-SE> (166,671)
<TOTAL-LIABILITY-AND-EQUITY> 12,187,182
<SALES> 0
<TOTAL-REVENUES> 859,902
<CGS> 0
<TOTAL-COSTS> 683,087
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 271,256
<INCOME-PRETAX> (94,441)
<INCOME-TAX> (35,000)
<INCOME-CONTINUING> (59,441)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (59,441)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
