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 September 30, 1999
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 30126
----------------------------------------------------------
(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 /_/ No /X/
Shares outstanding of each of the issuer's classes of common equity at
September 30, 1999: 18,242 shares of Common Stock, no par value.
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
ASSETS
September 30, 1999 December 31, 1999
------------------ -----------------
(Unaudited)
Property and Equipment, net $ 18,509,244 $ 15,121,958
Cash 993,608 921,220
Other Assets 2,008,833 1,485,114
------------ ------------
$ 21,511,685 $ 17,528,292
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage Notes Payable $ 20,384,367 $ 18,584,016
Other Liabilities 798,889 255,705
------------ ------------
Total Liabilities 21,183,256 18,839,721
Stockholders' Equity
Common Stock 1,104,251 104,368
Additional Paid-In Capital -- 52,674
Accumulated Earnings 895,974 179,206
Treasury Stock (1,671,796) (1,647,677)
------------ ------------
Total Stockholders' Equity 328,429 (1,311,429)
------------ ------------
$ 21,511,685 $ 17,528,292
============ ============
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter Ended September 30, 1999 and 1998 For the Nine Months Ended
September 30, 1999 and 1998
Quarter Ended Nine Months Ended
September 30, September 30,
------------------------- --------------------------
1999 1998 1999 1998
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,734,327 $1,430,502 $4,967,998 $3,839,287
Operating Expenses 1,133,482 808,258 2,783,185 2,094,951
---------- ---------- ---------- ----------
Operating Income 600,845 622,244 2,184,813 1,744,336
Other (Income) Expense, net 391,208 307,800 1,005,869 884,940
---------- ---------- ---------- ----------
Earnings before Income Taxes 209,637 314,444 1,178,944 859,396
Provision for Income Taxes 112,562 94,155 462,176 253,843
---------- ---------- ---------- ----------
Net Earnings $ 97,075 $ 220,289 $ 716,768 $ 605,553
========== ========== ========== ==========
Net Earnings per common share $ 5.32 $ 6.33 $ 39.29 $ 17.41
========== ========== ========== ==========
Weighted Average Number of Common
Shares Outstanding 18,242 34,789 18,242 34,789
========== ========== ========== ==========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Additional
Common Paid-In Accumulated Treasury
Stock Capital Earnings Stock Total
-------- -------- -------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1999 $104,368 $ 52,674 $179,206 ($1,647,677) ($1,311,429)
Capital Contributions -- 947,209 -- -- 947,209
Increase in Treasury Stock -- -- -- (24,119) (24,119)
Reclass no par value
common stock 999,883 (999,883) -- -- --
Net Income for the Nine Months -- -- 716,768 -- 716,768
---------- -------- -------- ----------- -----------
Balance at September 30, 1999 $1,104,251 $ -- $895,974 ($1,671,796) $ 328,429
========== ======== ======== =========== ===========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
<TABLE>
<CAPTION>
1999 1998
------------ -------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings (Loss) $ 716,768 $ 605,553
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 593,766 381,886
Changes in Assets and Liabilities:
Other Assets (313,502) (160,008)
Other Liabilities 542,619 330,284
----------- ------------
Net Cash Provided by Operating Activities 1,539,651 1,157,715
Cash Flows from Investing Activities:
Loans to Others (149,059) --
Investment Purchases (288,175) --
Capital Expenditures (1,271,833) (5,963,056)
----------- ------------
Net Cash Used by Investing Activities (1,709,067) (5,963,056)
Cash Flows from Financing Activities:
Purchase of Treasury Stock (24,119) --
Principal Payments on Long-Term Debt (234,077) (5,064,880)
Proceeds from Issuance of Debt 500,000 10,460,000
----------- ------------
Net Cash Provided by Financing Activities 241,804 5,395,120
----------- ------------
Increase in Cash and Cash Equivalents 72,388 589,779
Cash and Cash Equivalents, beginning of period 921,220 169,246
----------- ------------
Cash and Cash Equivalents, end of period $ 993,608 $ 759,025
=========== ============
Cash Paid during the Period for:
Interest $ 1,107,141 $ 931,180
=========== ============
Income Taxes $ 127,466 $ 107,961
=========== ============
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Nine Months Ended September 30, 1999
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 September 30, 1999 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 1998 consolidated financial
statements and related notes.
NOTE B -- COMMON STOCK
On August 5, 1999 the shareholders authorized a reverse stock split
of one for thirty of common stock. The reverse stock split has been
presented retroactively in the financial statements. The articles of
incorporation were also amended to change the common stock to no par
value.
<PAGE>
Item 2. Management Discussion and Analysis
Total assets increased during the third quarter from $17,528,292 on
December 31, 1998 to $21,511,685 on September 30, 1999. This increase is
primarily the result of the purchase of a lodge in March 1999 and the purchase
of rental property in August 1999. The Company purchased an existing lodge in
Lousiville, Georgia on March 11, 1999 for the total purchase price of nine
hundred seventy-five thousand dollars ($975,000). The Company paid $475,000 cash
and obtained a $500,000 loan from Georgia State Bank. The Company purchased the
rental property with a cost totalling $3,009,998. Mortgages totalling $1,537,564
were assumed, note receivables totalling $525,225 were cancelled and capital
contribuitons of $947,209 were recorded. Other assets also increased due to the
capitalization of closing costs related to the lodge acquisition.
Revenue increased during the third quarter from $1,430,502 in the third
quarter of 1998 to $1,734,327 in 1999. This increase can be attributed to the
addition of three lodges. Two lodges began operation during the third quarter of
1998. One lodge is located in Kennesaw, Georgia (Town Center Lodge) and the
other is located in Columbus, Georgia. The third lodge located in Louisville,
Georgia began operations in March 1999.
Operating expenses increased in the third quarter from $808,258 in 1998
to $1,133,482 in 1999. When a portion of the refinancing closed in August of
1998 the next interest payment was not due and paid until October 1. Absent the
refinancing, under a normal monthly payment schedule, approximately $100,000 of
interest expense would have been paid in third quarter. Third quarter expenses
in 1998, had this been paid, would have been approximately $908,258 compared to
$1,133,482 in 1999.
<PAGE>
Part II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Company held a special meeting of shareholders on August 5, 1999 to
consider a proposal to reduce the number of outstanding shares of the Company's
Common Stock through a one-for-thirty reverse split of such outstanding shares,
and to consider and vote upon an amendment to the Company's Articles of
Incorporation to effect such a reverse stock split. Of 572,681 shares
outstanding, 526,012 were represented at the meeting and voted in favor of the
proposal and Articles Amendment. No shares were voted against the proposal,and
there were no abstentions.
Item 5. Other Information
On August 1, 1999 the Company purchased rental properties from W. Ray
Barnes, the Company's president, a director and majority shareholder. The
properties consisted of fifty-three single family residences, four duplex
residential properties and one commercial property occupied by a convenience
store and an automobile repair shop. Total consideration given by the Company
was its assumption of approximately $1,538,000 in mortgages on the properties
and its cancellation of approximately $789,000 of notes payable from Mr. Barnes
and his affiliated business. The Company received an appraisal of the properties
which reflected a valuation exceeding the consideration paid. The Company
intends to continue operating the properties as rental properties.
Item 6. Exhibits and Reports on Form 8-K
(a) The following Exhibits are filed as 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: November 10, 1999 By: /s/ W. Ray Barnes
W. Ray Barnes
President and Chief Executive Officer
DATE: November 10, 1999 By: /s/ Bonnie L. Byers
Bonnie Byers
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> EFFICIENCY LODGE, INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 993,608
<SECURITIES> 0
<RECEIVABLES> 247,867
<ALLOWANCES> 0
<INVENTORY> 129,732
<CURRENT-ASSETS> 0
<PP&E> 22,523,524
<DEPRECIATION> 4,014,280
<TOTAL-ASSETS> 21,511,685
<CURRENT-LIABILITIES> 0
<BONDS> 20,384,367
0
0
<COMMON> 1,104,251
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 21,511,685
<SALES> 0
<TOTAL-REVENUES> 4,967,998
<CGS> 0
<TOTAL-COSTS> 2,783,185
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,107,141
<INCOME-PRETAX> 1,178,944
<INCOME-TAX> 462,176
<INCOME-CONTINUING> 716,768
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 716,768
<EPS-BASIC> 39.29
<EPS-DILUTED> 39.29
</TABLE>
