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, 1998
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
December 31, 1997: 1,043,683 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 SHEET
<TABLE>
<CAPTION>
ASSETS
March 31, 1998 December 31, 1997
-------------- -----------------
(Unaudited)
<S> <C> <C>
Property and equipment, net $10,471,252 $10,197,674
Cash 406,893 169,246
Other assets 1,169,370 1,479,390
----------- -----------
$12,047,515 $11,846,310
=========== ===========
LIABILITIES AND STOCKHOLDERS EQUITY
Mortgage notes payable $11,087,713 $11,222,325
Other liabilities 665,688 519,549
----------- -----------
Total liabilities 11,753,401 11,741,874
Stockholders' equity
Common stock 104,368 104,368
Additional paid-in capital 52,674 52,674
Accumulated earnings 137,072 (52,606)
----------- -----------
Total stockholders' equity 294,114 104,436
----------- -----------
$12,047,515 $11,846,310
=========== ===========
/TABLE
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31, 1998
Additional
Common paid-in Accumulated
stock capital earnings Total
-------- ----------- ----------- --------
<S> <C> <C> <C> <C>
Balance at January 1, 1998 $104,368 $ 52,674 $ (52,606) $104,436
Net income for the three months -- -- 189,678 189,678
-------- --------- --------- --------
Balance at March 31, 1998 $104,368 $ 52,674 $ 137,072 $294,114
======== ========= ========== ========
/TABLE
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ending March 31, 1998 and 1997
For the Three Months Ended March 31, 1998 and 1997
Quarter Ended Three Months Ended
March 31, March 31,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,194,198 $ 859,902 $1,194,198 $ 859,902
Operating expenses 653,259 683,087 653,259 683,087
---------- ---------- ---------- ----------
Operating income 540,939 176,815 540,939 176,815
Other (income) expense, net 299,144 271,256 299,144 271,256
---------- ---------- ---------- ----------
Earning (loss) before income
taxes 241,795 (94,441) 241,795 (94,441)
Provision for income taxes 52,117 35,000 52,117 35,000
---------- ---------- ---------- ----------
Net earnings (loss) $ 189,678 $ (59,441) $ 189,678 $ (59,441)
========== ========== ========== ==========
Net earnings (loss) per common
share $ .18 $ (0.06) $ .18 $ (0.06)
========== ========== ========== ==========
Weighted average number of
common shares outstanding 1,043,683 1,026,800 1,043,683 1,026,880
========== ========== ========== ==========
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
</TABLE>
<TABLE>
<CAPTION>
Three months ended March 31,
1998 1997
---------- --------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) $ 189,678 $ (59,441)
Adjustments to reconcile net earnings (loss) to
to net cash provided by operating activities:
Depreciation and amortization 106,048 95,547
Changes in assets and liabilities:
Other assets (31,816) (90,923)
Other liabilities 146,138 113,718
---------- ----------
Net cash provided by operating activities 410,048 58,901
Cash flows from investing activities:
Capital expenditures (37,789) (1,662,016)
Net cash used for investing activities (37,789) (1,662,016)
---------- ----------
Cash flows from financing activities:
Principal payments on long-term debt (134,612) (104,193)
Proceeds from issuance of debt -- 1,700,000
Net cash provided (used) be financing activities (134,612) 1,595,807
---------- ----------
Increase (decrease) in cash and cash equivalents 237,647 (7,308)
Cash and cash equivalents, beginning of period 169,246 159,944
---------- ----------
Cash and cash equivalents, end of period $ 406,893 $ 152,636
========== ==========
Cash paid during the period for interest $ 311,740 $ 271,061
========== ==========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Three months ended March 31, 1998
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, 1998 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 1997 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
primarily and fully diluted earnings per share and requires
presentation of basic and diluted earnings per share together with
disclosures 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
The following pro forma results of operations for the three months
ended March 31, 1998 are unaudited and were prepared under the
assumption that the Company was a taxable entity.
Net earnings $ 189,678
Earnings per share $ .18
<PAGE>
Item 2. Management Discussion and Analysis
Total assets increased during the first quarter from
$11,846,310 on December 31, 1997 to $12,047,535 on March 31, 1998.
This increase is primarily the result of increase in cash from
$169,246 to $406,893 during the same period.
Revenue increased during the first quarter from $859,902 in the
first quarter of 1997 to $1,194,198 in 1998. This increase can be
attributed to two factors. First, increased occupancies in existing
facilities and secondly, the addition of a new lodge in DeKalb
County, Georgia that had revenue only for one month in the first
quarter during 1997. Operating expenses decreased in the first
quarter from $683,087 in 1997 to $653,259 in 1998. This decrease is
primarily attributable to the one time start up expenses of DeKalb
Lodge in 1997. As a result of the increased revenue and decreased
expenses, operating income during the first quarter of 1998 was
$540,939 compared to $176,815 for the same period in 1997. Other
expenses increased from $271,256 in the first quarter of 1997 to
$299,144 in 1998 which was primarily attributable to the increased
expense of the additional lodge. Earnings before taxes was $241,795
compared to ($84,441) during the same period in 1997. Net earnings
was $189,678 for the first quarter of 1998 compared to ($59,441) in
the first quarter of 1997. Improved earnings was again the result
of increased revenue and decreased operating expenses.
Occupancies continue to be strong after recovery during the
year 1997. A new lodge is substantially complete in Columbus,
Georgia. Wet weather has delayed construction and especially the
paving of the parking lot. It is anticipated that the Columbus
lodge will be open within 60 days. The costs incurred in the
construction of the Columbus lodge have been incurred by a
corporation owned by the two controlling shareholders of the
Company, except for $178,747 which has been loaned by the Company.
Upon completion and a permanent financing, the ownership of such
corporation will be transferred to the Company at no profit to the
controlling shareholders. A contract has been entered into by the
Company to purchase for cash an existing lodge and to purchase an
additional lodge for cash and stock. These transactions are
contingent on financing and no closing date has been set.
<PAGE>
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 Financial Data Schedule - (for SEC use only)
<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 15, 1998 By: _______________________________
W. Ray Barnes
President and Chief Executive
Officer
DATE: May 15, 1998 By: _______________________________
Roy E. Barnes
Secretary/Treasurer
(Principal Financial and Accounting
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> EFFICIENCY LODGE, INC.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 406,893
<SECURITIES> 0
<RECEIVABLES> 970,286
<ALLOWANCES> 0
<INVENTORY> 48,089
<CURRENT-ASSETS> 0
<PP&E> 13,668,098
<DEPRECIATION> 2,997,465
<TOTAL-ASSETS> 12,047,515
<CURRENT-LIABILITIES> 0
<BONDS> 11,087,713
0
0
<COMMON> 104,368
<OTHER-SE> 52,674
<TOTAL-LIABILITY-AND-EQUITY> 12,047,515
<SALES> 0
<TOTAL-REVENUES> 1,194,198
<CGS> 0
<TOTAL-COSTS> 652,509
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 311,740
<INCOME-PRETAX> 241,795
<INCOME-TAX> 52,117
<INCOME-CONTINUING> 189,678
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 186,678
<EPS-PRIMARY> .18
<EPS-DILUTED> .18
</TABLE>
