EFFICIENCY LODGE, INC. FORM 10-Q
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 June 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 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 June 30,
1999: 572,918 shares of Common Stock, $0.44 per value share.
Transitional Small Business Disclosure Format (check one)
Yes / / No / X /
<PAGE>
PART I
ITEM 1
Efficiency Lodge, Inc.
CONSOLIDATED BALANCE SHEET
ASSETS
<TABLE>
<CAPTION>
June 30, 1999 December 31, 1998
------------- ------------------
(Unaudited)
<S> <C> <C>
Property and Equipment, net $ 15,463,258 $ 15,121,958
Cash 1,114,597 921,220
Other Assets 2,482,740 1,485,114
------------ ------------
$ 19,060,595 $ 17,528,292
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Mortgage Notes Payable $ 18,960,270 $ 18,584,016
Other Liabilities 792,061 255,705
------------ ------------
Total Liabilities 19,752,331 18,839,721
Stockholders' Equity
Common Stock 104,368 104,368
Additional Paid-In Capital 52,674 52,674
Accumulated Earnings 798,899 179,206
Treasury Stock (1,647,677) (1,647,677)
------------ ------------
Total Stockholders' Equity (691,736) (1,311,429)
------------ ------------
$ 19,060,595 $ 17,528,292
============ ============
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended June 30, 1999 and 1998
For the Six Months Ended June 30, 1999 and 1998
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues $1,677,912 $1,214,586 $3,233,670 $2,408,784
Operating Expenses 893,093 633,433 1,649,703 1,286,692
---------- ---------- ---------- ----------
Operating Income 784,819 581,153 1,583,967 1,122,092
Other (Income) Expense, net 385,336 280,712 614,660 577,140
---------- ---------- ---------- ----------
Earnings (Loss) before Income Taxes 399,483 300,441 969,307 544,952
Provision for Income Taxes 148,203 107,571 349,614 159,688
---------- ---------- ---------- ----------
Net Earnings (Loss) $ 251,280 $ 192,870 $ 619,693 $ 385,264
========== ========== ========== ==========
Net Earnings (Loss) per common share $ 0.44 $ 0.18 $ 1.08 $ 0.37
========== ========== ========== ==========
Weighted Average Number of Common
Shares Outstanding 572,918 1,043,683 572,918 1,043,683
========== ========== ========== ==========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Six Months Ended June 30, 1999
<TABLE>
Additional
Common Paid-In Accumulated Treasury
Stock Capital Earnings Stock Total
----- ------- -------- ----- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 $104,368 $ 52,674 $179,206 ($1,647,677) ($1,311,429)
Net Income for the Six Months 619,693 619,693
-------- -------- -------- ----------- -----------
Balance at June 30, 1999 $104,368 $ 52,674 $798,899 ($1,647,677) ($ 691,736)
======== ======== ======== =========== ===========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
<TABLE>
<CAPTION>
1999 1998
----------- ---------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Earnings (Loss) $ 619,693 $ 385,264
Adjustments to Reconcile Net Earnings (Loss)
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 380,129 213,626
Changes in Assets and Liabilities:
Other Assets (467,616) (69,279)
Other Liabilities 535,791 209,727
----------- ---------
Net Cash Provided by Operating Activities 1,067,997 739,338
Cash Flows from Investing Activities:
Investment Purchases (213,737) --
Capital Expenditures (1,037,702) (102,456)
----------- ---------
Net Cash Used by Investing Activities (1,251,439) (102,456)
Cash Flows from Financing Activities:
Principal Payments on Long-Term Debt (123,181) (245,014)
Proceeds from Issuance of Debt 500,000 --
----------- ---------
Net Cash Provided (Used) by Financing Activities 376,819 (245,014)
----------- ---------
Increase (Decrease) in Cash and Cash Equivalents 193,377 391,868
Cash and Cash Equivalents, beginning of period 921,220 169,246
----------- ---------
Cash and Cash Equivalents, end of period $ 1,114,597 $ 561,114
=========== =========
Cash Paid during the Period for Interest $ 674,727 $ 605,831
=========== =========
</TABLE>
<PAGE>
Efficiency Lodge, Inc.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Six Months Ended June 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 June 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.
<PAGE>
Item 2. Management Discussion and Analysis
Total assets increased during the first quarter from $17,528,292 on
December 31, 1998 to $19,060,595 on June 30, 1999. This increase is primarily
the result of the purchase of a lodge in March 1999.
Revenue increased during the second quarter from $1,214,586 in the
second quarter of 1998 to $1,677,912 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 had operations for the last half of March 1999.
Operating expenses increased in the second quarter from $633,433 in
1998 to $893,093 in 1999. This increase is primarily attributable to the one
time start up expenses of the three new lodges. Operating income increased from
$581,153 in 1998 to $784,819 for the same period in 1999. Other expenses
increased from $280,712 in the second quarter of 1998 to $385,336 in 1999 wihch
was primarily attributable to the refinancing of five lodges. Earnings before
taxes were $399,483 for the second quarter of 1999 compared to $300,441 during
the same period in 1998. Net earnings were $251,280 for the second quarter of
1999 compared to $192,870 in the second quarter of 1998. The Company continued a
favorable trend in occupancy and revenue for the quarter.
The Company purchased an existing motel in Louisville, Georgia on March
11, 1999 for a total purchase price of nine hundred seventy-five thousand
dollars ($975,000). The Company paid $475,000 in cash and obtained a $500,000
loan from Georgia State Bank.
<PAGE>
Part II - OTHER INFORMATION
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: August 6, 1999 By: /s/ W. Ray Barnes
W. Ray Barnes
President and Chief Executive Officer
DATE: August 6, 1999 By: /s/ Bonnie Byers
Bonnie Byers
Secretary/Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000092066
<NAME> EFFICIENCY LODGE, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 1,114,597
<SECURITIES> 0
<RECEIVABLES> 622,604
<ALLOWANCES> 0
<INVENTORY> 90,804
<CURRENT-ASSETS> 0
<PP&E> 19,279,394
<DEPRECIATION> 3,816,136
<TOTAL-ASSETS> 19,060,595
<CURRENT-LIABILITIES> 0
<BONDS> 18,960,270
0
0
<COMMON> 104,369
<OTHER-SE> 52,674
<TOTAL-LIABILITY-AND-EQUITY> 19,060,595
<SALES> 0
<TOTAL-REVENUES> 3,233,670
<CGS> 0
<TOTAL-COSTS> 1,649,703
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 674,727
<INCOME-PRETAX> 969,307
<INCOME-TAX> 349,614
<INCOME-CONTINUING> 619,693
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 619,693
<EPS-BASIC> 1.08
<EPS-DILUTED> 1.08
</TABLE>
