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, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
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Commission File Number 000-02290
EFFICIENCY LODGE, INC.
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(Exact name of small business issuer as specified in its charter)
Georgia 58-0898219
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(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
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(Address of principal executive offices)
(770) 819-0039
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(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,
2000: 21,697 shares of Common Stock, no par value.
Transitional Small Business Disclosure Format (check one)
Yes / / No / X /
<PAGE>
Efficiency Lodge, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
June 30, 2000 December 31, 1999
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(Unaudited)
<S> <C> <C>
Property and Equipment, net $25,185,457 $25,658,617
Cash 522,610 237,091
Other Assets 1,524,907 1,567,053
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$27,232,974 $27,462,761
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Mortgage Notes Payable $26,857,355 $27,703,427
Other Liabilities 486,829 722,950
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Total Liabilities 27,344,184 28,426,377
STOCKHOLDERS' EQUITY:
Common Stock - no par, 250,000 shares 280,534 159,613
authorized; 34,790 shares issued;
21,697 and 18,364 shares outstanding
at June 30, 2000 and December 31,
1999, respectively
Retained Earnings 1,149,561 797,105
Accumulated Other Comprehensive Loss (52,427) (52,427)
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1,377,668 904,291
Less 13,093 and 16,426 shares of common
stock in treasury at cost at June 30, 2000
and December 31, 1999, respectively (1,488,878) (1,867,907)
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(111,210) (963,616)
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$27,232,974 $27,462,761
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</TABLE>
<PAGE>
Efficiency Lodge, Inc. and Subsidiaries
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
Six Months Ended June 30, 2000
<TABLE>
<CAPTION>
Accumulated
Other
Shares Common Retained Comprehensive Treasury
Outstanding Stock Earnings Loss Stock Total
----------- ----------- ------------ --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 18,364 $159,613 $797,105 ($52,427) ($1,867,907) ($963,616)
Exchange of Treasury Shares 3,333 120,921 - - 379,029 499,950
for Note Payable
Net Income for the Six Months - - 352,456 - - 352,456
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Balance at June 30, 2000 21,697 $280,534 $1,149,561 ($52,427) ($1,488,878) ($111,210)
======== ========== ============ ========== ============ ==========
</TABLE>
<PAGE>
Efficiency Lodge, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Quarter Ended June 30, 2000 and 1999
For the Six Months Ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
Quarter Ended Six Months Ended
June 30, June 30,
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Revenues $2,038,389 $1,677,912 $4,060,480 $3,233,670
Operating Expenses 1,207,027 893,093 2,341,753 1,649,703
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Operating Income 831,362 784,819 1,718,727 1,583,967
Other (Income) Expense, net 571,014 385,336 1,171,183 614,660
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Earnings before Income Taxes 260,348 399,483 547,544 969,307
Provision for Income Taxes 85,088 148,203 195,088 349,614
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Net Earnings $175,260 $251,280 $352,456 $619,693
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Net Earnings per common share $9.00 $13.16 $18.64 $32.45
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Weighted Average Number of Common
Shares Outstanding 19,463 19,097 18,913 19,097
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</TABLE>
<PAGE>
Efficiency Lodge, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
Increase (Decrease) in Cash
Cash Flows from Operating Activities:
Net Earnings $352,456 $619,693
Adjustments to Reconcile Net Earnings
to Net Cash Provided by Operating
Activities:
Depreciation and Amortization 570,812 380,129
Gain on Sale of Fixed Assets (43,753) -
Changes in Assets and Liabilities:
Other Assets 6,897 (467,616)
Other Liabilities (192,550) 535,791
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Net Cash Provided by Operating Activities 693,862 1,067,997
Cash Flows from Investing Activities:
Investment Purchases - (213,737)
Capital Expenditures (130,745) (1,037,702)
Proceeds from Sale of Fixed Assets 112,000 -
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Net Cash Used by Investing Activities (18,745) (1,251,439)
Cash Flows from Financing Activities:
Payments for Purchase of Treasury Stock (43,475) -
Principal Payments on Long-Term Debt (346,123) (123,181)
Proceeds from Issuance of Debt - 500,000
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Net Cash Provided (Used) by Financing Activities (389,598) 376,819
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Increase in Cash and Cash Equivalents 285,519 193,377
Cash and Cash Equivalents, beginning of period 237,091 921,220
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Cash and Cash Equivalents, end of period $522,610 $1,114,597
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Cash Paid during the Period for Interest $1,224,069 $674,727
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Cash Paid during the Period for Income Taxes $195,088 $40,764
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</TABLE>
SUPPLEMENTAL DISCLOSURE OF NON-CASH FINANCING ACTIVITIES
On June 1, 2000, the Company exchanged $499,950 of a note payable for 3,333
shares of common stock, which were previously held in treasury.
<PAGE>
Efficiency Lodge, Inc. and Subsidiaries
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Six Months Ended June 30, 2000
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, 2000 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 1999 consolidated financial statements
and related notes.
NOTE B -- BASIC EARNINGS PER SHARE
Basic earnings per share is computed using the weighted average number
of shares of common stock outstanding. The weighted average number of
shares of common stock have been retroactively restated to account for
the 1 for 30 reverse stock split effective August 5, 1999.
<PAGE>
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
Total assets decreased during the second quarter from $27,462,761 on
December 31, 1999 to $27,232,974 on June 30, 2000. This decrease is primarily
the net of two items. During the second quarter cash increased approximately
$285,500 due to the decrease in the capital expenditures. Also accumulated
depreciation increased approximately $535,750. Total liabilities decreased
during the second quarter from $28,426,377 on December 31, 1999 to $27,344,184
on June 30, 2000. Mortgage notes payable decreased due to the reduction of a
note for $499,950 in exchange for 3,333 shares of common stock previously held
in treasury. Other liabilities decreased approximately $236,100 due to the
reduction in the federal and state income tax liability. Income taxes for the
second quarter were paid during the quarter resulting in no liability at June
30, 2000.
Revenue increased during the second quarter from $1,677,912 in 1999 to
$2,038,389 in 2000. The increase is due to the revenue generated by the new
properties acquired since the second quarter of 1999. Since the second quarter
of 1999, the Company has acquired two lodges, 53 single family residences, four
duplex residential properties and one commercial property occupied by a
convenience store and an automobile repair shop.
Operating expenses increased in the second quarter from $893,093 in 1999 to
$1,207,027 in 2000. An increase in depreciation expense, personnel cost and
repair and maintenance account for the majority of the increase. These expenses
increased due to the new properties acquired since second quarter 1999. Net
other expense also increased from $385,336 in 1999 to $571,014 in 2000. The
increase is primarily due to the increase in interest expense in the second
quarter 2000 of approximately $195,600. Interest expense increased in 2000
because of the debt on the properties acquired since the second quarter of 1999.
<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
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27 Financial Data Schedule - (for SEC use only)
(b) Reports on Form 8-K:
None.
<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 14, 2000 By: /s/ W. Ray Barnes
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W. Ray Barnes
President and Chief Executive Officer
DATE: August 14, 2000 By: /s/ Bonnie Byers
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Bonnie Byers
Secretary/Treasurer
<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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27 Financial Data Schedule - (for SEC use only)
