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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 06, 1999
OR
[ ] TRANSITION RPEORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
COMMISSION FILE NUMBER 0-24788
MACHEEZMO MOUSE RESTAURANTS, INC.
(Exact name of small business issuer as specified in its charter)
OREGON 93-0929139
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1020 SW TAYLOR STREET, SUITE 685
PORTLAND, OREGON 97205
(Address of principal executive offices)
503-274-0001
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Securities Exchange Act 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__
Number of shares of Common Stock outstanding at August 01, 2000: 3,985,630
Transitional Small Business Disclosure Format: Yes __ No X
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MACHEEZMO MOUSE RESTAURANTS, INC
FORM 10-QSB
INDEX
PART 1 - FINANCIAL INFORMATION
PAGE
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<S> <C> <C>
Item 1. Financial Statements
Balance Sheets - April 06, 1999 2
Statements of Operations - Twelve Weeks and Forty Weeks
Ended April 06, 1999 and April 07, 1998 3
Statements of Cash Flows - Twelve Weeks and Forty Weeks
Ended April 06, 1999 and April 07, 1998 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis or Plan of Operation 5
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8 - K
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MACHEEZMO MOUSE RESTAURANTS, INC.
BALANCE SHEETS
(IN THOUSANDS)
(UNAUDITED)
6-APR
1999
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ASSETS
<S> <C>
Current assets
Cash and cash equivalents $ 47
Short-term investments in marketable securities 302
Accounts receivable 44
Inventories of food and paper 137
Other current assets 32
-----------------
Total current assets 562
Equipment and Leasehold Improvements net of depreciation 593
Other assets 20
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$ 1,175
=================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable 214
Notes payable 61
Accrued payroll and payroll related expenses 101
Accrued expenses and other current liabilities 24
-----------------
Total current liabilities 400
Other deferred liabilities
Deferred rent expense 68
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Total liabilities 468
Shareholders' equity
Preferred stock, undesignated, 5000 shares
authorized, none issued
Common stock, 10,000 shares
authorized, 3,986 shares issued and outstanding 10,178
Accumulated deficit (9,471)
Total shareholders' equity 707
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$ 1,175
=================
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MACHEEZMO MOUSE RESTAURANTS, INC.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
TWELVE WEEKS ENDED FORTY WEEKS ENDED
----------------------------------- ----------------------------------
APRIL 06, APRIL 07, APRIL 06, APRIL 07,
1999 1998 1999 1998
--------------- ----------------- --------------- ----------------
<S> <C> <C> <C> <C>
REVENUES
Restaurant Sales $ 977 $ 1,319 $ 3,772 $ 4,556
Retail Sales $ - $ - $ 244 $ -
--------------- ----------------- --------------- ----------------
977 1,319 4,016 4,556
--------------- ----------------- --------------- ----------------
RESTAURANT OPERATING COSTS:
Food, beverage and packaging costs 269 389 1,072 1,510
Restaurant labor 373 481 1,385 1,653
Other restaurant operating expenses 260 295 940 1,029
--------------- ----------------- --------------- ----------------
902 1,165 3,397 4,192
--------------- ----------------- --------------- ----------------
RETAIL OPERATING COSTS:
Food, beverage and packaging costs - - 133 -
Other operating expenses - 71 41 96
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- 71 174 96
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DEPRECIATION AND AMORTIZATION 45 22 131 130
GENERAL AND ADMINISTRATIVE EXPENSES 269 292 810 978
--------------- ----------------- --------------- ----------------
314 314 941 1,108
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OPERATING LOSS $ (239) $ (231) $ (496) $ (840)
--------------- ----------------- --------------- ----------------
OTHER INCOME (EXPENSE)
Interest income 9 5 46
Interest expense (4) (4)
Other (13) 21 (13) 21
--------------- ----------------- --------------- ----------------
NET LOSS $ (256) $ (201) $ (508) $ (773)
=============== ================= =============== ================
BASIC AND DILUTED LOSS PER COMMON SHARE $ (0.06) $ (0.05) $ (0.13) $ (0.19)
=============== ================= =============== ================
BASIC AND DILUTED WEIGHTED AVERAGE
NUMBER OF COMMON SHARES OUTSTANDING 3,985 3,985 3,985 3,985
=============== ================= =============== ================
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MACHEEZMO MOUSE RESTAURANTS, INC.
STATEMENT OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
FORTY WEEKS ENDED
-----------------------------------------
APRIL 06, APRIL 07,
1999 1998
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Cash flows from operating activities:
Net loss $ (508) $ (773)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 87 149
Loss on disposal of equipment 13
Net changes in operating assets and liabilities:
Inventories 28 5
Non-trade receivables (4) 80
Trade receivables (40) -
Other current assets (76) (45)
Accounts payable, accrued payroll and expenses,
deferred rent and other liabilities (107) (196)
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Net cash used in operating activities (620) (767)
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Cash flows from investing activities:
Acquisition of property and equipment (40)
Purchase of marketable securities (510)
Sale of marketable securities 209 498
Increase (decrease) in other assets (1) (5)
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Net cash (used in) provided by investing activities 208 (57)
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Cash flows from financing activities:
Borrowing on Line of Credit 51 -
Other 57 -
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Net cash provided by financing activities 118 -
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Net decrease in cash and cash equivalents (294) (824)
Cash and cash equivalents at beginning of period 341 1306
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Cash and cash equivalents at end of period $ 47 $ 482
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MACHEEZMO MOUSE RESTAURANTS, INC
NOTES TO FINANCIAL STATEMENTS
(IN THOUSANDS)
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements as of and for the twelve and
forty week periods ended April 06, 1999 and April 07, 1998 have been prepared in
conformity with generally accepted accounting principles. The financial
information as of June 30, 1998 is derived from the Macheezmo Mouse Restaurants,
Inc. (the "Company") financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended June 30, 1998 (fiscal 1998). Certain
information or footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted, pursuant to the rules and regulations of the Securities
and Exchange Commission. In the opinion of management, the accompanying
unaudtied financial statements include all adjustments necessary (which are of a
normal and recurring nature) for the fair presentations of the results of the
interim period presented. The accompanying unaudited financial statements should
be read in conjunction with the Company's audited financial statements for
fiscal 1998, as included in the Company's Annual Report on Form 10-KSB for the
year then ended. Operating results for the twelve and forty week periods ended
April 06, 1999 and April 07, 1998 are not necessarily indicative of the results
that may be expected for the entire fiscal year ending June 29, 1999 (fiscal
1999), or any portion thereof.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
INTRODUCTION
The Company commenced operations in 1981 with the opening of the first
restaurant in Portland, Oregon. As of April 06, 1999 the Company owned and
operated 11 restaurants. Two restaurants were closed in Fiscal 1999. The closing
of restaurants affects the comparability of results of operations from period to
period.
The company prepares statements of operations for 13 periods each year. The
first fiscal quarter, generally consisting of the months of July through
mid-October, includes four periods (sixteen weeks) and each of the following
three-quarters includes three such periods (twelve or thirteen weeks). Because
of the longer first fiscal quarter and the seasonality of its business, the
Company's sales and operating income are typically highest in the first fiscal
quarter. The Company's fiscal year ends on the Tuesday closet to June 30; June
29, 1999 for fiscal 1999. Fiscal 1998 was a 52-week period and fiscal 1999 will
also be a 52- week period.
QUARTERLY VARIABILITY
The Company's restaurants have historically experienced higher average weekly
sales in the first and fourth fiscal quarters. Accordingly, operating income
margins and net income margins have been and are expected to continue to be
higher in each of those quarters than in second and third fiscal quarters. In
addition, the first quarter includes 16 weeks of operations, compared with 12 or
13 weeks for each of the remaining three-quarters. Consequently, consecutive
quarter-to-quarter comparisons of the company's results of operations may not be
meaningful and results of any quarter are not necessarily indicative of the
actual results for a full fiscal year.
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FORWARD - LOOKING INFORMATION.
The statements concerning expected future financing requirements, cost reduction
and retail activities constitutes forward -looking statements that are subject
to risks and uncertainties. Factors that could materially affect future
financing in the event of lower than expected retail and restaurant sales,
increased competitive factors ( including increased competition, new product
offerings by competitors and price pressures), in sales volume, changes in menu
offerings, a longer than expected period to achieve market acceptance of any new
menu or retail offerings, a longer than expected period to achieve market
acceptance of any new menu or retail offerings and difficulties implementing new
menu and retail offerings, as well as unfavorable business conditions and
disruptions in the restaurant industry and general economy. Factors that could
adversely affect cost reduction and retail activities include, but are not
limited to, the industry factors and general business conditions noted above.
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RESULTS OF OPERATIONS
The following is a discussion of the results of operations for the 12 and 40
week periods ended April 06, 1999 and April 07, 1998. The statement of
operations table sets forth the percentage relationship to net sales, unless
otherwise indicated, of certain statement of operations data. The restaurant
operating Data table sets forth certain restaurant data for the periods
indicated.
STATEMENT OF OPERATIONS DATA
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TWELVE WEEKS ENDED FORTY WEEKS ENDED
----------------------------------- ------------------------------------
APRIL 06, APRIL 07, APRIL 06, APRIL 07,
1999 1998 1999 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
REVENUES
Restaurant operations 100.0% 100.0% 93.9% 100.0%
Retail operations 6.1%
------- ------- ------- -------
100.0 100.0 100.0 100.0
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RESTAURANT OPERATING COSTS:
Food, beverage and packaging costs 27.5 29.6 26.6 33.1
Restaurant labor 38.1 36.5 34.4 36.3
Other restaurant operating, expenses 26.6 22.2 23.4 22.6
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92.2 88.3 84.3 92.0
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RETAIL OPERATING COSTS:
Food, beverage and packaging costs -- 3.3
Other operating expenses -- 5.4 1.0 2.1
------- ------- ------- -------
-- 5.4 4.3
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DEPRECIATION AND AMORTIZATION 4.6 1.7 3.3 2.9
GENERAL AND ADMINISTRATIVE EXPENSES 27.5 22.1 20.1 21.5
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32.1 23.8 23.4 24.4
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OPERATING LOSS (24.3) (17.5) (12.1) (18.4)
------- ------- ------- -------
OTHER INCOME (EXPENSE)
Interest income 0.8 0.1 1.0
Interest expense (0.1)
Other (1.7) 1.6 (0.3) 0.5
------- ------- ------- -------
NET LOSS (26.0) (15.1) (12.4) (17.0)
======== ======== ======= =======
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TWELVE WEEKS (THIRD QUARTER) AND FORTY WEEKS (THREE QUARTERS) ENDED APRIL 06,
1999 COMPARED TO TWELVE WEEKS (THIRD QUARTER) AND FORTY WEEKS (THREE QUARTERS)
ENDED APRIL 07, 1998.
SALES, RESTAURANTS. Restaurant sales decreased in the third quarter of fiscal
1999 by 25.9% in comparison to third quarter of fiscal 1998, and decreased in
the three-quarters ending of fiscal 1999 in comparison to fiscal 1998 by 11.8%.
RESTAURANTS OPERATING COSTS
Food, beverage and packaging costs decreased as a percentage of sales by 2.1% in
the third quarter of fiscal 1999 compared to same quarter in fiscal 1998, and
decreased as a percentage of sales by 6.5% in the three-quarters ending of
fiscal 1999 in comparison to fiscal 1998. The Company is aggressively managing
its cost of sales and the purchasing relationships with our vendors. This
aggressive management has resulted in greatly improved COS numbers.
Restaurant labor expenses consists primarily of restaurant management and hourly
employee wages, payroll taxes, worker's compensation and group insurance. Labor
expenses Increased as a percentage of sales by 1.6% in the third quarter of
fiscal 1999 in comparison to same quarter ending in fiscal 1998, and decreased
as a percentage of sales by 1.9% in the three-quarters ending of fiscal 1999 in
comparison to fiscal 1998. The decreases were due to efficiencies in operations
and salary and hourly management. As reflected in the management of COS, the
Company is aggressively managing store level labor costs while at the same time
improve the level of customer service for our patrons. The Company's current
stores are located in the Portland, Oregon metropolitan area where unemployment
is low, which has the effect of increasing wage levels required to attract and
retain qualified employees.
Other restaurant operating expenses consist primarily of rent, utilities and
miscellaneous supplies and services. Other restaurant operating expenses
Increased as a percentage of sales by 4.2% in the third quarter of fiscal 1999
compared to third quarter of fiscal 1998, and Increased as a percentage of sales
by 0.8% in the three-quarters ending of fiscal 1999 in comparison to fiscal
1998.
Retail operating costs consists of food, packaging and other operating expenses.
Retail costs decreased in the third quarter of fiscal 1999 by 5.4% in comparison
to same quarter ending in fiscal 1998, this decrease in expenses was due to sale
of retail division earlier in the year, However retail expenses increased as a
percentage of sale by 2.2% for the three-quarters ending of fiscal 1999 in
comparison to fiscal 1998.
OTHER COSTS
Depreciation and amortization expenses Increased 2.9% in the third quarter of
fiscal 1999 compared to third quarter of fiscal 1998, and Increased 0.3% in the
three-quarters ending of fiscal 1999 in comparison to fiscal 1998. In the fourth
quarter of both fiscal 1997 and 1996 the company wrote down closed and existing
restaurant assets to their estimated fair market values in accordance with the
adoption of Statement of Financial Accounting Standards No. 121, "ACCOUNTING FOR
THE IMPAIRMENT OF LONG-LIVED ASSETS TO BE DISPOSED OF" (SFAS No. 121), thereby
decreasing the amount of related depreciation expenses.
General and administrative expenses Increased as a percentage of sales by 5.4%
in the third quarter of fiscal 1999 compared to third quarter of fiscal 1998,
and decreased as a percentage of sales by 1.4% in the three-quarters ending of
fiscal 1999 in comparison to fiscal 1998.
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INCOME TAXES
The Company is in a net deferred tax position and has generated 100% net
operating losses in the current period. Accordingly, no provision for benefit
from income taxes has been recorded in the accompanying statements of
operations. The Company will continue to provide a valuation allowance for it's
deferred tax assets until it becomes more likely than not, in management's
assessment, that the Company's deferred tax assets will be realized.
NASDAQ MATTERS
Since October 1, 1997 trading in the Company's Common Stock has been conducted
in the over the counter market on an electronic bulletin board established for
securities that do not meet Nasdaq requirements, or in what are commonly
referred to as "Pink Sheets". As a result, an investor may likely find it more
difficult to dispose of or to obtain accurate quotations as to the price of the
Company's Common Stock than was the case when the Company's Common Stock was
listed on the Nasdaq NMS. In addition, after October 1, 1997, the Company's
Common Stock is subject to "Penny Stock" rules that impose additional sales
practice requirements on broker-dealers who sell such securities. The delisting
of the Company's Common Stock from Nasdaq NMS could adversely affect the ability
or willingness of broker-dealers to sell the Company's Common Stock and the
ability of purchasers of the Company's Common Stock to sell their securities in
the secondary market.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The exhibit filed as part of this report is listed below:
Exhibit No.
-----------
27 Financial Date Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed.
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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.
Dated: August 01, 2000
MACHEEZMO MOUSE RESTAURANTS, INC
By: Michael R Swartz
President
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