SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
----------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 28, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _________________
Commission File No. 1-13818
THE RATTLESNAKE HOLDING COMPANY, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1369616
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
439 East 82nd Street, New York, NY 10028
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 452-2359
________________________________________________________________________________
Former name, former address and former fiscal year, if changed
since last report.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 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___
2,650,227 Common Shares, par value $.001 per share were outstanding as of
December 31, 1997.
<PAGE>
FORM 10-QSB
THE RATTLESNAKE HOLDING COMPANY, INC.
September 28, 1997
INDEX
Page No.
--------
Part I - Financial Information
Consolidated Balance Sheet September 28, 3
1997 (Unaudited) and June 29, 1997
Consolidated Statements of Operations 4
for three months ended September 28, 1997
and September 29, 1996 (Unaudited)
Consolidated Statements of Cash Flows for 5
three months ended September 28,1997
and September 29, 1996 (Unaudited)
Notes to Consolidated Financial Statements 6
(Unaudited)
Safe Harbor Statement 10
Management's Discussion and Analysis 11
Liquidity 14
Part II - Other Information
Item 2: Defaults Upon Senior Securities 17
Item 3: Recent Sales of Unregistered Securities 17
Item 5: Other Information 17
Item 6: Exhibits and Reports on Form 8-K 18
Signatures 19
2
<PAGE>
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
September 28,
1997 June 29,
ASSETS (Unaudited) 1997
------------ ------------
<S> <C> <C>
Current assets:
Cash $ 40,223 $ 68,022
Accounts receivable, net 53,325 13,287
Inventory 41,045 42,119
Prepaid expenses and other current assets 61,261 23,272
Assets held for sale 344,284 679,544
------------ ------------
Total current assets 540,138 826,244
Property and equipment, net 911,758 1,007,092
Intangible assets, net 288,267 299,102
Other assets, net 123,051 129,457
------------ ------------
$ 1,863,214 $ 2,261,895
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current maturities of notes payable $ 1,080,233 $ 835,335
Accounts payable 366,673 280,528
Liabilities related to assets held for sale 764,162 1,133,257
Accrued expenses 336,662 357,407
Dividends payable 103,818 103,818
Other current liabilities 174,134 218,220
------------ ------------
Total current liabilities 2,825,682 2,928,565
Notes payable, net of current maturities 539,998 545,006
------------ ------------
Stockholders' equity
Preferred stock, $.10 par value, 5,000,000 shares
authorized, 56,500 issued and outstanding,
at September 28, 1997 and June 29, 1997. 5,650 5,650
Common Stock, $.001 par value - 20,000,000 shares authorized,
2,650,227 issued and outstanding at September 28, 1997 and
June 29, 1997 2,651 2,651
Additional paid-in capital 11,072,857 11,072,857
Accrued Dividends (103,818) (103,818)
Accumulated deficit (12,479,806) (12,189,016)
------------ ------------
(1,502,466) (1,211,676)
$ 1,863,214 $ 2,261,895
============ ============
</TABLE>
See accompanying notes to unaudited financial statements.
3
<PAGE>
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
Three months ended
(Unaudited)
------------------------------
September 28, September 29,
1997 1996
------------- -------------
<S> <C> <C>
Restaurant sales $ 1,265,581 $ 2,679,539
Less: promotional sales 49,170 111,010
----------- -----------
Net restaurant sales 1,216,411 2,568,529
Costs and expenses:
Cost of food and beverage sales 390,414 825,601
Restaurant salaries and benefits 385,791 949,439
Occupancy and other 333,618 622,861
Depreciation and amortization expense 106,667 204,472
----------- -----------
Total restaurant costs and operating expenses 1,216,490 2,602,373
General and administration 233,837 723,604
Interest expense, net 51,701 26,536
Miscellaneous expenses 5,173 4,665
----------- -----------
Net loss (290,790) (788,649)
Per share:
Net loss $ (0.11) $ (0.30)
=========== ===========
Weighted average number of common
and common equivalent shares
outstanding 2,645,335 2,643,734
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
<PAGE>
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Three months ended
(Unaudited)
-----------------------------
September 28, September 29,
1997 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (290,790) $ (788,649)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 106,169 221,343
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (40,038) 22,779
Decrease (increase) in inventory 1,074 (15,408)
(Increase) in prepaids and other assets (31,583) (96,559)
Increase (decrease) in accounts payable and accrued expenses 31,565 (146,582)
(Decrease) increase in other current liabilities (44,086) 336,892
----------- -----------
Net cash used in operating activities (267,689) (466,184)
----------- -----------
Cash flows from investing activities:
Capital expenditures 0 (240,689)
Payments for acquisitions of leaseholds 0 (204,403)
----------- -----------
Net cash used in investing activities 0 (445,092)
----------- -----------
Cash flows from financing activities:
Net proceeds from private placement of preferred stock 0 1,237,625
Proceeds from issuance of preferred stock 0 50,000
Deferred financing costs 0 (15,000)
Proceeds from borrowing 250,000 0
Principal repayment of borrowings (10,110) (219,193)
----------- -----------
Net cash provided by financing activities 239,890 1,053,432
----------- -----------
Net (decrease) increase in cash (27,799) 142,156
Cash beginning of period 68,022 684,414
----------- -----------
Cash end of period $ 40,223 $ 826,570
=========== ===========
Cash paid during the period for:
Interest $ 6,560 $ 62,424
=========== ===========
Income taxes $ 5,173 $ 4,665
=========== ===========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
THE RATTLESNAKE HOLDING COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 28, 1997
(Unaudited)
1. Principles of consolidation
The consolidated financial statements include the accounts of The
Rattlesnake Holding Company, Inc. and subsidiaries (the "Company"). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
2. Consolidated financial statements
The accompanying unaudited consolidated financial statements as shown in
the index were prepared in accordance with generally accepted accounting
principles and include all adjustments which, in the opinion of management, are
necessary to present fairly the consolidated financial position of the Company
as of September 28, 1997 and June 29, 1997, and the results of operations and
cash flows for the periods ended September 28, 1997 and September 29, 1996. In
the opinion of management, all necessary adjustments that were made are of a
normal recurring nature.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed, reclassified or omitted. It is suggested that these
consolidated financial statements be read in conjunction with the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for fiscal year end June 29, 1997. The results of operations for
the period ended September 28, 1997 are not necessarily indicative of the
operating results which may be achieved for the full year.
3. Basis of presentation
The accompanying consolidated financial statements have been prepared on a
going concern basis which contemplates the realization of assets and the
satisfaction of liabilities and commitments in the normal course of business.
However, due to the matters discussed below, its continuation as a going concern
cannot be reasonably assured.
The Company has incurred aggregate losses since inception of $12,479,806,
inclusive of a net loss for the quarter ended September 28, 1997 of $290,790.
Based upon interim financial information prepared by management, the Company has
continued to incur losses in fiscal 1998. Additionally, $303,749 of Series C
subordinated notes payable matured on August 6, 1997, of which note holders with
principal balances aggregating $62,499 have
6
<PAGE>
extended the repayment date to December 15, 1997, $500,000 convertible
subordinated notes payable matured September 4, 1997 and a $425,000 note payable
associated with the acquisition of a restaurant matured on January 2, 1997, all
of which were not satisfied by the Company and are in default.
4. Financing arrangements
On December 8, 1997, the Company entered into a refinancing arrangement in
which it raised $500,000. Four hundred thousand dollars of the proceeds
therefrom were applied to reduce the approximately $550,000 of indebtedness
(including accrued interest) resulting from a financing the company conducted in
March 1997. The $150,000 balance from the March refinancing was restructured as
follows: $50,000 shall be paid on or before March 15, 1998 or earlier in certain
events, $50,000 on or before May 1, 1998 and $50,000 on or before July 1, 1998.
If the private placement is closed prior to March 15, 1998 and if the price is
$.50 or less per share, the Company, at it's option, may pay the $50,000 due
March 15, 1998 in cash or may satisfy the entire $150,000 obligation in stock at
a price per share equal to eighty percent (80%) of the per share price sold in
the private placement. If the private placement price is more than fifty cents
($.50) per share the note holders may request payment of the remaining two
installments in stock rather than cash at 100% of the per share price sold at
the proposed private placement.
5. Restaurant closing costs
In fiscal 1997 the Board of Directors authorized the closing of the
Rattlesnake Southwestern Grill Restaurant located in Fairfield Connecticut. The
facility was closed on January 4, 1997. The fixed assets, leasehold improvements
and intangibles at the facility have been written off. The building is reflected
at the estimated realizable value and is currently accounted for in the
financial statements in "net assets held for sale." A net loss of $394,941
relating to the closing of the Fairfield location, was recorded in fiscal year
1997.
In fiscal 1997, the Board of Directors authorized the closing of the
Rattlesnake at White Plains, New York. The facility was closed on March 1, 1997
and sold on July 16, 1997. The Company recorded a loss of $224,135 related to
the closing of this location in 1997. The Company sold all of the assets of
White Plains except for cash, receivables and certain items specified in the
Asset Purchase Agreement in exchange for a release from its note payable to the
landlord of $276,499, the purchaser's assumption of food credits and other
miscellaneous liabilities totaling $39,017, and the receipt of a $23,500 note
receivable from the purchaser during the first quarter of fiscal 1998. The
facility was sold to a group which includes the Company's Chairman of the Board.
7
<PAGE>
In fiscal 1997 the Board of Directors authorized the closing of the
Rattlesnake Southwestern Grill Restaurant located in Yorktown Heights, New York.
The facility was closed on June 9, 1997 and sold on June 27, 1997. The purchaser
assumed the remaining outstanding balance of the notes payable to the landlord
and related lease obligations. A net loss of $362,091 relating to the closing of
the Yorktown Heights location, was recorded in fiscal year 1997.
The Restaurant location on 86th Street in New York was never opened and
on May 29, 1997 the Company sold the fixed assets and transferred its interest
in the lease at the location in exchange for total consideration aggregating
$289,387. The company continues to guarantee the lease obligation. A net loss of
$306,456, relating to the sale of the 86th Street location, was recorded in
fiscal year 1997.
In fiscal 1997, the Board of Directors authorized the disposition of the
Rattlesnake Southwestern Grill Restaurant located in Lynbrook, New York. On
September 17, 1997, the Company closed the restaurant and wrote-off the related
assets to its estimated realizable value. A net loss of $374,852 relating to the
closing of this location was recorded in fiscal 1997.
As of September 28, 1997, consistent with the Board's approval for the
closure of the Fairfield and Lynbrook locations the assets held for sale and
related liabilities have been reclassified as "assets held for sale" and
"liabilities related to assets held for sale". The accompanying September 28,
1997 consolidated balance sheet includes the following components:
Fairfield restaurant facility $318,559
Lynbrook equipment 25,725
--------
Assets held for sale $344,284
========
Notes payable $468,312
Accounts payable 128,581
Accrued expenses 33,922
Other current liabilities 133,347
--------
Liabilities related to assets
held for sale $764,162
========
6. Recent Accounting Pronouncements
The Financial Accounting Standards Board has issued Statement 128,
"Earnings Per Share" (Statement 128). Statement 128 establishes standards for
computing and presenting earnings
8
<PAGE>
per share (EPS). The Statements simplifies the standards for computing EPS and
makes them comparable to international EPS standards. The provisions of
Statement 128 are effective for financial statements issued for periods ending
after December 15, 1997, including interim periods. The Statement does not
permit early application and requires restatement of all prior period EPS data
presented. In the opinion of management, adoption of Statement 128 will not have
a material effect of the Company's financial position, results of operation or
previously reported EPS.
7. Dividends in arrears
The Company's preferred stock bears a dividend rate of 7-1/2% per annum.
These dividends are payable semi-annually in arrears on May 15 and November 15
of each year, commencing November 15, 1996. At September 28, 1997 there are
$103,818 dividends accrued.
9
<PAGE>
SAFE HARBOR STATEMENT
Certain statements in this Form 10-QSB, including information set forth
under "Management's Discussion and Analysis" constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Act"). The Company desires to avail itself of certain "safe
harbor" provisions of the Act and is therefore including this special note to
enable the Company to do so. Forward-looking statements included in this Form
10-QSB or hereafter included in other publicly available documents filed with
the Securities and Exchange Commission, reports to the Company's stockholders
and other publicly available statements issued or released by the Company
involve known and unknown risks, uncertainties, and other factors which could
cause the Company's actual results, performance (financial or operating) or
achievements to differ from the future results, performance (financial or
operating) achievements expressed or implied by such forward looking statement.
Such future results are based upon management's best estimates based upon
current conditions and the most recent results of operations. These risks
include, but are not limited to, risks associated with potential acquisitions,
successful implementation of the Company's cost containment plan and new
operating strategy, immediate need for additional capital, competition, and
other risks detailed in the Company's Securities and Exchange Commission
filings, including its Annual Report on Form 10-KSB for the fiscal year 1997,
each of which could adversely affect the Company's business and the accuracy of
the forward looking statements contained herein.
10
<PAGE>
MANAGEMENT DISCUSSION and ANALYSIS
The following discussion of the results of operations and financial
condition should be read in conjunction with the Company's audited consolidated
financial statements and notes thereto.
OPERATING RESULTS FOR THE QUARTER ENDED SEPTEMBER 28, 1997 AS COMPARED WITH
SEPTEMBER 29, 1996
Gross restaurant sales decreased 52.8% to $1,265,581 for the quarter ended
September 28, 1997 from $2,679,539 for quarter ended September 29, 1996.
Likewise, net restaurant sales decreased 52.6% to $1,216,411 in 1997 from
$2,568,529 in 1996. The decrease in restaurant sales resulted from a decrease in
the number of restaurants operating during the period. Three restaurants were
operating for the entire quarter ended September 28, 1997 as compared to seven
during the quarter ended September 29, 1996. For the three restaurants operating
for both periods, same store sales declined 19.4%. The decrease in sales
resulted from the transition of management and the maturity of the concept in
the markets being served. The decrease in restaurant sales was also attributable
to the closing of the Lynbrook location on September 17, 1997.
Promotional sales decreased as a percentage of gross sales from 4.1% for
the three months ended September 29, 1996 to 3.9% for the quarter ended
September 28, 1997. No new units were opened and one unit closed during the
first quarter ended September 28, 1997. Also contributing to this slight decline
is a concentrated focus to reduce manager complimentary sales at the units.
For the three months ended September 28, 1997, the Company's cost of food
and beverage sales remained constant as a percentage of sales. As a percentage
of net sales for the quarter ended September 28, 1997 and September 29, 1996
cost of sales was 32.1%. The cost of food and beverage sales decreased to
$390,414 for the three months ended September 28, 1997 from $825,601 for the
three months ended September 29, 1996. The Company has maintained this cost of
sales rate despite higher food costs for items such as beef, poultry and fish,
due to inflation trends. The Company has attempted to diminish the effect of
these increased prices through changes to the Company's menu, centralized
purchasing and low food cost specials.
11
<PAGE>
Restaurant salaries and fringe benefits, which consist of direct salaries
of restaurant managers, hourly employee wages and related fringe benefits,
decreased to $385,791 for the three months ended September 28, 1997 as compared
to $949,439 for the three months ended September 29, 1996. As a percentage of
net restaurant sales, these costs decreased to 31.7% in 1997 as compared to
37.0% in 1996. This decrease is attributed to a reduction in restaurant
managers.
Occupancy and other related expenses, which include linen, repairs,
maintenance, utilities, rent, insurance and other occupancy related expenses,
decreased to $333,618 for the three months ended September 28, 1997 from
$622,861 for the three months ended September 29, 1996. As a percentage of net
restaurant sales, these costs increased to 27.4% in the three months ended
September 28, 1997 from 24.3% in the three months ended September 29, 1996. The
increase was due to occupancy costs relating to the closed units which were paid
during the quarter ended September 28, 1997.
Depreciation and amortization expenses, decreased to $106,667 or 8.8% of
net restaurant sales for the three months ended September 28, 1997 from $204,472
or 8.0% for the three months ended September 29, 1996. This decrease is
attributed to less units in operation as compared to the prior period.
General and administrative expenses decreased as a percentage of net sales
from 28.2% for the three months ended September 29, 1996 to 19.2% for the three
months ended September 28, 1997. General and administrative expenses decreased
from $723,604 for the three months ended September 29, 1996 to $233,837 for the
three months ended September 28, 1997. The decrease is primarily attributed to
the Company's implementation of its cost reduction plan. General and
administrative expenses on the restaurant level have decreased from 6.1% of net
restaurant sales for the three months ended September 29, 1996 to 2.6% for the
same three months ended September 28, 1997. These decreases resulted from a
decrease in the rent expense for Corporate headquarters; reductions in staffing
at the Corporate level; reductions in phone, mail and other expenses. This
decrease in restaurant general and administrative expenses is also attributed to
management's focus on reducing controllable costs at the units, including
reductions of management and staff positions. The Company has implemented cost
reduction measures which should further reduce general and administrative costs
at both the corporate and unit levels.
Interest expense increased to $51,701 for the three months ended September
28, 1997 from $26,536 for the three months ended September 29, 1996. The
increase in interest
12
<PAGE>
expense is attributable to the Company's additional financing arrangements.
The net loss as a percentage of net sales decreased from 30.7% for the
three months ended September 29, 1996 to 23.9% for the three months ended
September 28, 1997. This improvement in net loss is primarily due to the
decrease in general and administrative costs at the corporate and unit level and
the reduction of the restaurant salaries and benefits.
13
<PAGE>
LIQUIDITY
At September 28, 1997, the Company had a working capital deficit of
$2,285,544 (inclusive of $103,818 of accrued dividends, the payment of which is
currently prohibited by the Delaware General Corporate Law). At such date (but
after giving effect to the December 1997 Refinancing described herein),
(i)$500,000 of notes payable (inclusive of $52,500 of accrued interest) had been
declared in default, (ii)$303,749 of notes payable (inclusive of $60,749 of
accrued interest) had become due and payable but had not yet been declared in
default (note holders with principal balances aggregating $62,499 have extended
the repayment date to December 15, 1997), (iii)$276,484 of notes or similar
obligations becomes due in the period ending September 27, 1998, and
(iv)$366,673 was owed or owing to the Company's suppliers. A $425,000 note
payable associated with the acquisition of a restaurant matured on January 2,
1997, and has not been satisfied by the Company and is currently in default.
Accrued interest totaling $31,875 is also in default for non payment. (This
obligation is included in liabilities related to assets held for sale).
Management intends to address these liquidity and capital resource
shortfalls through one or more of the following: (a) an equity or debt
financing; (b) deferring the payment of accounts payable (c ) the conversion of
certain indebtedness into equity; (d) the application of the cash proceeds, if
any, from the sale of the Fairfield facility; and (e) the implementation of
certain cost containment steps including reducing the general and administrative
expenses at the corporate and unit levels in fiscal 1998. No assurance can be
given that any or all of such steps will be accomplished or that they will be
sufficient to overcome these financial problems. The failure to address these
shortfalls would have a material adverse effect on the Company. Additional funds
may be required in connection with the Ottomanelli transaction and the
transactions contemplated thereby. No assurance can be given that such funds
will be available.
The Company's cash position decreased by $27,799 during the three months
ended September 28, 1997, principally as a result of the net cash used in
operating activities exceeded the borrowing proceeds.
Net cash used in operating activities was $267,689, principally relating to
the Company's net loss, increases in accounts receivable, prepaid and other
assets and decrease in other current liabilities offset by depreciation and
amortization expenses and an increase in accounts payable
14
<PAGE>
and accrued expenses. The Company generated $239,890 from financing activities
principally relating to the receipt of proceeds from bridge financing
borrowings, offset by repayments of outstanding indebtedness.
On August 21, 1997 the Company signed a Reorganization and Stock Exchange
Agreement (the Agreement) with the Ottomanelli Group, which includes the
following four restaurants and food service companies affiliated through common
control: 34th Street Cafe Associates, Inc., Garden Street Cafe Corporation,
Ottomanelli Brothers West, Ltd. and Ottomanelli's Cafe Franchising Corporation.
The Ottomanelli Group Companies will contribute one hundred percent (100%)of
it's outstanding common stock in exchange for thirty seven and one half percent
(37 1/2%)of all outstanding potentially dilutive securities, including options,
warrants, preferred stock and convertible debt. The parties to such agreement
are currently negotiating modifications thereto and no assurance can be given
that such transaction or any modified transaction will be closed. The
Departmental Licensing Agreements for 34th Street Cafe Associates, Inc. and
Ottomanelli Brothers West, Ltd. in the Macy's Herald Square, New York store have
been terminated as of March 9, 1998.
During September 1997, the Company entered into a private financing
arrangement to provide $250,000 of bridge financing at 10% interest per annum
and with a due date of December 31, 1997 or earlier, under certain
circumstances.
Management of the Company is continuing the implementation of its cost
reduction plan, which addresses the restaurant operating losses. Such plan
included the closing and sale of the Yorktown Heights and White Plains, New York
locations as well as the sale of its New York City property. The Company has
closed it Fairfield, Connecticut location and is holding this property for sale.
In September 1997, the Company has closed its Lynbrook, New York location. The
Company has reduced its work force and is implementing other cost containment
measures designed to reduce operating expenses and improve restaurant operating
performance. The sales of the above mentioned locations were completed in the
fourth quarter of fiscal year 1997 and first quarter of fiscal year 1998;
therefore the Company anticipates recognizing the impact of these reductions in
the first and second quarters of fiscal 1998.
December 1997 Refinancing
On December 8, 1997, the Company entered into a refinancing arrangement in
which it raised $500,000. Four hundred thousand dollars of the proceeds
therefrom were applied to reduce the approximately $550,000 of indebtedness
(including accrued
15
<PAGE>
interest) resulting from a financing the Company conducted in March 1997. The
$150,000 balance from the March refinancing was restructured as follows: $50,000
is to be paid on or before March 15, 1998 or earlier in certain events, $50,000
on or before May 1, 1998 and $50,000 on or before July 1, 1998.
16
<PAGE>
PART II
OTHER INFORMATION
Item 2 - Defaults Upon Senior Securities
$303,749 of Series C subordinated notes payable matured on August 6, 1997,
of which note holders with principal balances aggregating $62,499 have extended
the repayment date to December 15, 1997. These Series C notes and accrued
interest of $60,749 are in default for non payment. $500,000 convertible
subordinated notes dated March 4, 1997, matured September 4, 1997. These notes
were in default for non payment, but were restructured on December 8, 1997, and
are no longer in default. A $425,000 note payable associated with the
acquisition of a restaurant matured on January 2, 1997, and has not been
satisfied by the Company and is currently in default. Accrued interest totaling
$31,875 is also in default for non payment. The Company is currently prohibited
from paying cash dividends by virtue of the Delaware General Corporation Law.
Item 3. - Recent Sales of Unregistered Securities
On September 1997 the Company received $250,000 in connection with the sale
of notes and warrants of the same amount. No underwriting discount or
commissions were paid in connection with the sale. The sale was exempt from the
registration requirements of the Securities Act of 1933, as amended, pursuant to
Section 4(6) of such act and Rule 506 promulgated under the Act, as all of the
investors were accredited investors.
On December 8, 1997, the Company entered into a refinancing arrangement in
which it raised $500,000 with the sale of a note in the same amount. No
underwriting discount or commissions were paid in connection with the sale. The
sale was exempt from the registration requirements of the Securities Act of
1933, as amended, pursuant to Section 4(6) of such act and Rule 506 promulgated
under the Act. The investor is an accredited investor.
Item 5. - Other Information
The Company's Common Stock is not listed on the NASDAQ SmallCap Market and
as of November 4, 1997 was suspended from trading on the Boston Stock Exchange
(the "BSE"). The BSE has applied for the delisting of the Company common stock
from such exchange pursuant to Rule 12d-2f2.
The Company securities are traded on the "pink sheets" or the NASD's
Electronic Bulletin Board. Due to the nature of such markets and the "penny
stock' rules to which the common
17
<PAGE>
stock trades (Rule 15g-9 promulgated under the SEC Act) there may not be a
liquid trading market in the common stock.
Item 6. - Exhibits and Reports on Forms 8-K.
(b) Reports on Form 8-K
During the quarter ended September 28 1997, the Company filed no reports on Form
8-K.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE RATTLESNAKE HOLDING COMPANY, INC.
(Registrant)
By: /s/ Louis R. Malikow
-----------------------------
Louis R. Malikow
Acting Co-CEO, and Principal
Accounting Officer
By: _____________________________
Stephen Stein
Acting Co-CEO
Date: December 31, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-28-1998
<PERIOD-START> JUN-30-1997
<PERIOD-END> SEP-28-1997
<CASH> 40,223
<SECURITIES> 0
<RECEIVABLES> 53,325
<ALLOWANCES> 0
<INVENTORY> 41,045
<CURRENT-ASSETS> 540,138
<PP&E> 1,018,425
<DEPRECIATION> (106,667)
<TOTAL-ASSETS> 1,863,214
<CURRENT-LIABILITIES> 2,825,682
<BONDS> 0
0
5,650
<COMMON> 2,651
<OTHER-SE> (1,510,767)
<TOTAL-LIABILITY-AND-EQUITY> 1,863,214
<SALES> 1,265,581
<TOTAL-REVENUES> 1,216,411
<CGS> 390,414
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<INTEREST-EXPENSE> 51,701
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (290,790)
<EPS-PRIMARY> (.11)
<EPS-DILUTED> (.11)
</TABLE>
