U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended March 31, 2001
Commission File Number: 0-24058
ATOMIC BURRITO, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1571194
---------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1601 NW Expressway, Suite 1910
Oklahoma City, Oklahoma 73118
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (405) 848-0996
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 at least the
past 90 days. Yes [X] No [ ]
Shares of Common Stock, $.001 par value,
outstanding as of May 14, 2001 5,107,121
Traditional Small Business Disclosure Format: Yes [X] No [ ]
ATOMIC BURRITO, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheets - March 31, 2001 (unaudited)
and December 31, 2000...................................... 4-5
Consolidated Statements of Income (unaudited) -
For the Three Months Ended March 31, 2001 and 2000......... 6
Consolidated Statements of Stockholders' Equity (unaudited) -
For the Three Months Ended March 31, 2001 and 2000........ 7
Consolidated Statements of Cash Flows (unaudited) -
For the Three Months Ended March 31, 2001 and 2000........ 8-9
Notes to Consolidated Financial Statements................ 10-13
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 13-16
PART II. OTHER INFORMATION
Item 1 Legal Proceedings......................................... 17
Item 2 Exhibits and Reports on Form 8-K.......................... 17
2
ATOMIC BURRITO, INC.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
March 31, 2001 and 2000
Forming a part of Form 10-QSB Quarterly Report to the
Securities and Exchange Commission
This quarterly report on Form 10-QSB should be read in conjunction with Atomic
Burrito, Inc.'s Annual Report on Form 10-KSB for the year ended December 31,
2000.
3
ATOMIC BURRITO, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND DECEMBER 31, 2000
Page 1 of 2
March 31, December 31,
2001 2000
(Unaudited)
---------- ----------
ASSETS
CURRENT ASSETS:
Cash $ 66,761 $ 78,925
Accounts receivable 17,829 1,918
Accounts receivable due from related party 24,509 9,514
Current portion of notes receivable 37,266 37,266
Inventories 61,815 61,815
Prepaid expenses 73,846 64,169
Deferred income taxes 100,000 100,000
---------- ---------
Total current assets 382,026 353,607
---------- ---------
PROPERTY AND EQUIPMENT 2,899,795 2,900,795
Accumulated depreciation and valuation reserve (1,946,237) (1,901,884)
---------- ---------
953,558 998,911
---------- ---------
OTHER ASSETS:
Notes receivable from affiliate 630,000 630,000
Notes receivable, net of current portion shown above 367,734 367,734
Goodwill, net of accumulated amortization of $13,456 76,248 80,734
Covenant not to compete, net of accumulated
amortization of $18,333 41,668 46,667
Deposits and other 62,938 62,938
Investments 177,400 177,400
---------- ---------
1,355,988 1,365,473
---------- ---------
$2,691,572 $2,717,991
========== =========
The accompanying notes are an integral part of these financial statements.
4
ATOMIC BURRITO, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 2001 AND DECEMBER 31, 2000
Page 2 of 2
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, December 31,
2001 2000
(Unaudited)
---------- ----------
CURRENT LIABILITIES:
Accounts payable $ 727,681 $ 573,067
Accrued liabilities 174,722 196,010
Note payable 40,007 -
Note payable - related party 28,005 28,005
Current portion of long-term debt 798,290 798,290
Current portion of capital leases 45,692 45,692
---------- ---------
Total current liabilities 1,814,397 1,641,064
---------- ---------
LONG-TERM DEBT, net of current portion shown above 366,612 366,612
---------- ---------
OBLIGATION UNDER CAPITAL LEASE,
net of current portion shown above 140,325 146,648
---------- ---------
MINORITY INTERESTS 4,962 4,962
---------- ---------
COMMITMENTS AND CONTINGENCIES - -
---------- ---------
STOCKHOLDERS' EQUITY:
10% convertible preferred stock, Series A, $10 par
value, 500,000 shares authorized, 40,000 shares
issued and outstanding at March 31, 2001 and
December 31, 2000 400,000 400,000
10% convertible preferred stock, Series B, $10 par
value, 100,000 shares authorized, no shares
issued and outstanding at March 31, 2001 and
December 31, 2000 - -
10% convertible preferred stock, Series C, $10 par
value, 6,000 shares authorized, 6,000 shares
issued and outstanding at March 31, 2001 and
December 31, 2000 60,000 60,000
10% convertible preferred stock, Series D, $10 par
value, 80,000 shares authorized, no shares
issued and outstanding at March 31, 2001 and
December 31, 2000 - -
Common stock, $.001 par value, 25,000,000 shares
authorized; 5,107,121 and 4,915,621 shares issued
and outstanding as of March 31, 2001 and
December 31, 2000, respectively 5,107 4,916
Additional paid-in capital 5,120,129 5,106,595
Accumulated deficit (5,219,960) (5,012,806)
---------- ---------
Total stockholders' equity 365,276 558,705
---------- ---------
$2,691,572 $2,717,991
========== =========
The accompanying notes are an integral part of these financial statements.
5
ATOMIC BURRITO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
2001 2000
(Unaudited) (Unaudited)
---------- ----------
REVENUES:
Beverage and food sales $ 914,338 $1,099,729
Admission fees 119,541 151,018
Other income 75,464 85,728
---------- ----------
1,109,343 1,336,475
---------- ----------
COSTS AND EXPENSES:
Cost of products and services 1,088,073 1,077,002
General and administrative expense 133,670 197,489
Depreciation and amortization 53,838 75,467
Interest expense 40,916 25,704
---------- ----------
1,316,497 1,375,662
---------- ----------
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTERESTS (207,154) (39,187)
INCOME TAX (EXPENSE) - -
---------- ----------
INCOME (LOSS) BEFORE MINORITY INTERESTS (207,154) (39,187)
MINORITY INTERESTS IN (INCOME) LOSS OF
CONSOLIDATED SUBSIDIARIES - 11,575
---------- ----------
NET INCOME (LOSS) BEFORE DISCONTINUED OPERATIONS (207,154) (27,612)
LOSS ON DISCONTINUED OPERATIONS - (107,717)
---------- ----------
NET INCOME (LOSS) (207,154) (135,329)
PREFERRED STOCK DIVIDENDS - -
---------- ----------
NET INCOME (LOSS) APPLICABLE TO COMMON STOCK $ (207,154) $ (135,329)
========== ==========
BASIC EARNINGS PER SHARE $ (0.04) $ (0.03)
========== ==========
DILUTED EARNINGS PER SHARE N/A N/A
========== ==========
AVERAGE COMMON AND COMMON EQUIVALENT:
BASIC SHARES 5,107,121 4,277,313
========== ==========
See accompanying notes and accountants' report.
6
ATOMIC BURRITO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
(UNAUDITED)
Series A Series B Series C Series D
10% 10% 10% 10% Common
Preferred Preferred Preferred Preferred Stock
Value Value Value Value 0.001 Additional Total
of of of of par Paid-In Accumulated Stockholders'
Shares Shares Shares Shares Value (1) Capital Deficit Equity
------------------------------------------------------------------------------------------------------------
Balance,
December 31, 1999 $400,000 $ - $ - $ - $4,236 $4,754,851 $(3,427,127) $ 1,731,960
Exercise of stock - - - - 53 39,696 - 39,749
Cash dividends:
Preferred -
$1 per share - - - - - - (10,000) (10,000)
Net loss for the
three months
March 31, 2000 - - - - - - (135,329) (135,329)
-----------------------------------------------------------------------------------------------------------
Balance,
March 31, 2000 $400,000 $ - $ - $ - $4,289 $4,794,547 $(3,572,456) $ 1,626,380
===========================================================================================================
Balance,
December 31, 2000 $400,000 $ - $60,000 $ - $4,916 $5,106,595 $(5,012,806) $ 558,705
Common stock issued
to purchase interest
in Boots, Inc. - - - - 100 (100) - -
Issuance of stock for
services rendered - - - - 91 13,634 - 13,725
Net loss for the
three months ended
March 31, 2001 - - - - - - (207,154) (207,154)
-----------------------------------------------------------------------------------------------------------
Balance,
March 31, 2001 $400,000 $ - $60,000 $ - $5,107 $5,120,129 $(5,219,960) $ 365,276
===========================================================================================================
The accompanying notes are an integral part of these financial statements.
7
ATOMIC BURRITO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Page 1 of 2
2001 2000
(Unaudited) (Unaudited)
------------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(207,154) $ (135,329)
Adjustments to reconcile net loss to net cash
used in operating activities -
Depreciation and amortization 53,838 141,617
Minority interests in earnings of subsidiaries - (11,575)
Changes in assets (increase) decrease -
Accounts receivable (15,911) (5,515)
Due from related parties (14,995) -
Inventories - 5,456
Prepaid expenses 4,048 11,289
Deposits and other assets - (52,470)
Changes in liabilities increase (decrease) -
Accounts payable 154,614 (74,634)
Accrued expenses (21,289) 42,386
------------- -----------
Net cash (used in)
operating activities (46,849) (78,775)
------------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Disposal of property and equipment 1,000
Acquisition of property and equipment - (174,940)
------------- -----------
Net cash provided by (used in) investing activities 1,000 (174,940)
CASH FLOWS FROM FINANCING ACTIVITIES:
Partnership distributions to minority interests - (1,249)
Sale of common stock - 39,750
Repayments of notes payable, related parties - (67,260)
Borrowings under notes payable and capital leases 214,280 303,243
Repayments of notes payable and capital leases (180,595) (2,634)
------------- -----------
Net cash provided by financing activities 33,685 271,850
------------- -----------
NET (DECREASE) INCREASE IN CASH (12,164) 18,135
CASH, BEGINNING OF PERIOD 78,925 172,622
------------- -----------
CASH, END OF PERIOD $ 66,761 $ 190,757
============= ===========
The accompanying notes are an integral part of these financial statements.
8
ATOMIC BURRITO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2001 AND 2000
Page 2 of 2
2001 2000
(Unaudited) (Unaudited)
------------- -----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest $ 40,916 $ 29,980
============= ===========
SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS
During January 2001, the Company issued 91,500 shares of common stock for public
relations services to be rendered. This transaction was valued at $13,725.
During January 2001, the Company issued an additional 100,000 shares of its
common stock to complete the exchange for the 20% interest in Incahoots, Ltd.
not owned by the Company. This transaction resulted in a reduction of additional
paid-in capital of $100.
The accompanying notes are an integral part of these financial statements.
9
ATOMIC BURRITO, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - GENERAL
In the opinion of Atomic Burrito, Inc. (the "Company"), the accompanying
unaudited consolidated financial statements contain all adjustments (consisting
of only normal recurring accruals) necessary to present fairly the Company's
financial position as of March 31, 2001 and the results of its operations and
cash flows for the three months ended March 31, 2001 and 2000. These statements
are condensed and, therefore, do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. The statements should be read in conjunction with the
consolidated financial statements and footnotes included in the Company's Annual
Report on Form 10KSB for the year ended December 31, 2000. The results of
operations for the three months ended March 31, 2001 and 2000 are not
necessarily indicative of the results to be expected for the full year.
Operating results were reclassified for 2000 to segregate the discontinued
operations of the Atomic Burrito Restaurants from continuing operations.
Note 2 - NOTES RECEIVABLE
The Company had the following notes receivable at March 31, 2001:
9% note receivable due from a
corporation, due October 2005 $ 75,000
9% note receivable due from a
corporation, due October 2005 150,000
9% note receivable due from a
corporation, due October 2005 160,000
8% note receivable due from
an individual, payable in monthly
installments of $3,536, including
interest, due September 2007 370,000
----------
755,000
Less: Reserve for doubtful
collectibility (350,000)
----------
Total, net of reserve for collectibility 405,000
Current portion 37,266
----------
Long-term portion $ 367,734
===========
10
Note 3 - NOTES RECEIVABLE FROM AFFILIATES
The Company had the following notes receivable due from affiliates as
of March 31, 2001:
6% note receivable due from a
corporation in March 2001 $ 100,000
6% note receivable due from
a corporation in April 2002 50,000
8% note receivable due from a
corporation in April 2001 480,000
---------
Total notes receivable - affiliates $ 630,000
=========
As approved by the Board of Directors, interest income on these notes
has been waived through April, 2003, contingent upon the continued
waiver of dividends on the 40,000 shares of 10% convertible series A
preferred stock held by the affiliate. The Company may also accept the
conversion of a $35,000 note payable to the affiliate to equity in the
Company, or the waiver of interest due by the affiliate to the Company
on the said note. The Board of Directors has approved a plan by the
affiliate to pay, offset, or otherwise reduce amounts owed by it to the
Company during the second quarter of 2001, in addition to a previous
agreement to pay at least 5% of the principle balance on the $480,000
receivable note annually beginning in 2002 until maturity.
Note 4 - PROPERTY AND EQUIPMENT
Property and equipment as of March 31, 2001, include the following:
Leasehold and other improvements $1,832,453
Restaurant and club equipment 653,155
Furniture and fixtures 328,785
Signage 85,402
----------
2,899,795
Less accumulated depreciation (1,946,237)
----------
Total property and equipment $ 953,558
==========
Certain property and equipment located at the AB of OKC-I restaurant has
been reduced to net realizable value by a reserve of $200,000
established by management.
11
Note 5 - DISCONTINUED OPERATIONS
On August 30, 2000, the Company announced its intentions to discontinue
its Atomic Burrito Restaurant operations. Accordingly the following
sales occurred prior to December 31, 2000:
(1)The Company president resigned and formed Three B's Restaurant Group,
Inc.(Three B's), which bought from the Company its subsidiary
company, which held the restaurant concept, Atomic Development,
Inc.(Development) and two companies which held the majority interest
in two restaurant locations, AB of Tulsa-I, L.L.C.(Tulsa) and AB of
Wichita-I, L.L.C.(Wichita) for $425,000 on November 30, 2000. Three
B's acquired the leases for the two restaurant locations and all
assets and liabilities of the entities sold. However, the Company was
required to reduce accounts payable of Tulsa by $40,000 and loan
Wichita $40,000 which is to be repaid beginning May 30, 2001 at an
interest rate of 9% per annum with a first payment of $4,000 and $550
monthly thereafter until October 31, 2005 with the remaining balance
being due at that time. At December 31, 2000, no funds had been
advanced to Three B's on this note.
Three B's issued three notes as consideration for the sale of the
above mentioned entities, as follows: Development - $75,000, Tulsa -
$160,000 and Wichita - $150,000. All notes bear interest at a rate of
9% per annum, have monthly payments scheduled to commence June 1,
2001 with final payment due on October 31, 2005. The notes are
collateralized by all of the assets of the entities acquired by Three
B's with requirements of the Company to provide satisfaction on
certain liabilities of the entities sold to Three B's. In connection
with this transaction, the Company has provided for a reserve of
$250,000 to cover future possible losses which could arise from
disputes resulting in adjustments in amounts paid on the notes
receivable.
(2)The Company sold its Norman restaurant location to Atomic Restaurant
Group, L.L.C. (ARG) on September 15, 2000. The sales price was a
$370,000 note payable in installments at 8% beginning November 15,
2000 for $3,535.91 until paid in full on September 15, 2007. The
Company sold all its assets at the Norman location but was still
liable for the liabilities in the AB of Norman-I, L.L.C. entity,
which included the obligations on the Norman location equipment. The
Company has provided a $100,000 reserve to cover future possible
losses, which could arise from disputes resulting in adjustments in
amounts paid on the note receivable.
The Houston location and the Oklahoma City locations ceased operations
and the equipment at the Houston location has been written down to
$120,000, which is the anticipated sales price of the equipment to Three
B's. The Oklahoma City property has been written down by $200,000 and
the Company is currently paying the rental on this location and is
responsible for the liabilities of the Oklahoma City location.
12
Note 6 - SUBSEQUENT EVENTS
On March 7, 2001, the Company agreed to the sale of its nightclub
business in Wichita, Kansas for $1,200,000 in cash. The sale includes
the equipment and improvements, the lease, permits and licenses at this
location together with certain other assets at this location. The
Company closed on this sale on April 11, 2001, realizing a gain of
approximately $682,000 in connection with this transaction.
PART 1 - Item 2
Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART I
Special Note Regarding Forward-Looking Statements
Certain statements in this Form 10-QSB under "Item 1. Description of Business",
"Item 3. Legal Proceedings", "Item 6. Management's Discussion and Analysis" and
elsewhere constitute "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"). Such
forward-looking statements involve known and unknown risks, uncertainties and
other facts which may cause the actual results, performance or achievements of
Western Country Clubs, Inc. (the "Company") and its subsidiaries and affiliated
partnerships to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Such
factors include, among others, the following: general economic and business
conditions; competition; success of operating initiatives; development and
operating costs; advertising and promotional efforts; adverse publicity;
customer appeal and loyalty; availability, locations and terms of sites for
nightclub development; changes in business strategy or development plans;
quality of management; availability, terms and development of capital; business
abilities and judgment of personnel; availability of qualified personnel; food,
labor and employee benefit costs; changes in, or the failure to comply with
government regulations; regional weather conditions; construction schedules; and
other factors referenced in the Form 10-QSB. The use in this Form 10-KSB of such
words as "believes", "anticipates", "expects", "intends" and similar expressions
are intended to identify forward-looking statements, but are not the exclusive
means of identifying such statements. The success of the Company is dependent on
the efforts of the Company and its management and personnel and the manner in
which they operate and develop stores.
13
General
The Company owns and operates two country and western nightclubs, one in St
Louis, Missouri and one in Wichita Kansas.
In June 1998, the Company formed a subsidiary corporation, Atomic Burrito, Inc.,
through which to develop a new restaurant concept. Subsequently, Atomic Burrito,
Inc. entered into license agreements for two "Atomic Burrito" restaurants to be
located in Stillwater and Norman, Oklahoma, and entered into a third license
agreement for a restaurant in Longview, Washington. In addition, in October
1998, the Company entered into a joint venture agreement with New York Bagel
Enterprises, Inc., ("New York Bagel") for the joint development of "Atomic
Burrito" restaurants. The agreement provides for New York Bagel to contribute
certain of its restaurant locations, including leases, leasehold improvements,
and equipment for a 40% interest in the operation, while the Company would
contribute up to $150,000 for the remodel and conversion costs, as well as for
additional equipment. The first unit opened in March 1999 in Tulsa, Oklahoma,
while the second unit opened in April 1999 in Wichita, Kansas.
In September 1999, the Company and New York Bagel agreed to terminate the joint
venture agreement as it related to additional development, and New York Bagel
agreed to sell its interest in the two operations in Tulsa and Wichita to the
Company. New York Bagel's stated reasons or the termination were the lack of
expansion capital on the part of either of the parties, and their desire to move
in a different direction. Subsequently, New York Bagel filed for protection
under Chapter 13 of the Federal Bankruptcy Statutes. The Company did not
exercise its option to purchase New York Bagel's interest in these restaurants
and as described below, subsequently sold its interest in these operations to
its former president.
In December, 1999, the original licensees who had previously opened Atomic
Burrito units in Stillwater and Norman, Oklahoma, approached the Company with a
plan to sell their Norman restaurant to the Company. They had previously closed
their Stillwater restaurant and were in the process of expanding their other
restaurant and brew pub operations in both Oklahoma and Texas. Thereafter, the
Company entered into an agreement, effective December 31, 1999, to purchase the
Norman restaurant from the licensee for the issuance of 360,000 (valued at
$270,000) shares of the Company's common stock as well as the assumption of
certain liabilities totaling $60,967, giving the transaction a total value of
$330,967.
During February, 2000, the Company opened an Atomic Burrito restaurant in
Oklahoma City in which it owned a 100% interest.
During September, 1999, the Company opened an Atomic Burrito restaurant in
Houston, Texas in which it owned a 50% interest.
During September, 2000, The Company's Board of Directors decided to discontinue
its efforts to develop and expand the Atomic Burrito Restaurant concept.
14
In September 2000, the Company sold the property, equipment, and leasehold
improvements on its Norman Atomic Burrito restaurant to an LLC in which one of
the principals is a former Company employee. In connection with the sale of
these assets, the LLC agreed to sublease land and building associated with this
restaurant. This property was sold in exchange for a $370,000 8% note
receivable.
In November, the Company sold its interest in the Tulsa and Wichita Atomic
Burrito restaurant operations to a company controlled by the Company's former
president for $180,000 and $170,000 respectively. The sale was consummated with
a $40,000 down payment and the issuance of 8% notes receivable in the amounts of
$160,000 for the Tulsa operations and $150,000 for the Wichita operations.
Also in November the Company sold its stock in Atomic Development, Inc., a
wholly owned subsidiary established to oversee the development and franchise of
the Atomic Burrito concept, for $75,000, to the same company that purchased the
Tulsa and Wichita Atomic Burrito restaurants.
At December 31, 2000, the Company recorded an allowance for bad debts in the
amount of $350,000 associated with the above described notes. This charge was
taken to the losses on discontinued operations for financial reporting purposes.
In September, 2000, the Company closed its Houston Atomic Burrito location. The
leasehold improvements on this location were forfeited to the landlord in
release from any future lease obligations. The Company is attempting to sell or
lease this equipment as of year-end.
In September, 2000, the Company closed its Oklahoma City Atomic Burrito location
and is currently seeking a buyer to take over this location and assume the
lease. As of December 31, 2000, the Company has reduced the carrying value of
these assets by an additional $150,000 to reflect the anticipated loss on
ultimate disposition. This charge was also taken to the loss on discontinued
operations.
Liquidity and Capital Resources
As of March 31, 2001, the Company had cash of $66,731, which was generated from
operating activities, financing activities and investing activities. This amount
represented a decrease $12,164 or 6.38% from cash at year-end 2000, and a
decrease of $123,996 from the first quarter of 2000. The decrease in cash from
year-end is a result of operating losses incurred during the first quarter of
2001.
As of March 31, 2001, the Company's working capital position (current assets
minus current liabilities) was a negative $(1,432,371) compared to a negative
$(1,287,457) at year-end 2000. The decrease of $144,914 was due to operating
losses incurred during the first quarter of 2001. Because of the sale of the In
Cahoots night club in Wichita, Kansas, as discussed in the Notes to the
Financial Statements, management does not believe the decrease in working
capital position will have any material effect on its ability to service its
debts and continue the expansion of its restaurant division.
15
Property and equipment is made up primarily of assets required to operate the
St. Louis and Wichita clubs and certain restaurant equipment which the Company
was attempting to dispose of.
The deferred income tax asset remains at a balance of $100,000. This asset
resulted from the net operating loss carryforwards from the loss on the
write-off of the Tucson nightclub in a prior year, as well as from other
operating losses contributing to the net operating loss carryforward. The
Company anticipates that this credit will be utilized upon the sale of the
Wichita night club which occurred on April 10, 2001. At December 31, 2000 the
Company had approximately an additional $2,800,000 in deferred tax assets which
were fully reserved and not reflected on the Company's balance sheet at that
date. At December 31, 2000 the Company had approximately $4,400,000 in net
operating losses which will expire commencing in 2013 if not utilized.
On April 10, 2001, the Company sold its Wichita Kansas night club operations for
$1,200,000. This sale resulted in a gain of approximately $682,000 and provided
cash of approximately $1,100,000 to pay down existing debts and to finance
future expansions of the night club operations.
In April, 2001, certain notes receivable totaling $480,000 from an affiliated
company become due. Management anticipates that the interest due will be
received and that the notes will be renewed.
Results of Operations - Quarter Ended March 31, 2001, Compared to the Quarter
Ended March 31, 2000
For the period ended March 31, 2001, total revenue of the Company decreased by
$185,391 or 17% to $1,109,343 compared with total revenues of $1,336,475 for the
first quarter of 2000. This decrease in revenue reflects decreasing beverage and
food sales at the Company's two nightclubs of $185,391, a reduction in admission
fees of $31,477, and a reduction in other income of $10,264.
Total costs and expenses during the current period decreased from $1,375,662 for
the first quarter of 2000 to $1,316,497. Costs of products and services
increased by $11,071 to $1,088,073 for the period compared to $1,077,002 for the
same period in 2000.
Depreciation and amortization decreased by $21,629 or 29% to $53,838 compared to
$75,467 for the same period in 2000. This decrease was due primarily to the
disposition of restaurant leasehold improvements and equipment associated with
restaurants sold during the fall of 2000.
Interest expense increased by $15,212 to $40,916 from $25,704 for the first
quarter of 2000. This increase is a result of additional borrowings incurred
subsequent to March 31, 2000.
16
General and administrative expense decreased by $63,819 to $133,670 as compared
to $197,489 for the same period in 2000. This is a result of managements efforts
to cut general and administrative costs.
During the quarter ended March 31, 2000, the Company accrued $107,717 in losses
associated with the discontinuance of its Atomic Burrito restaurant operations.
The Company's net loss for the current period was a $(207,154) compared to a net
loss of $(135,329) for the same period in 2000.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
Special Note: Certain statements set forth below under this caption constitute
forward-looking statements" within the meaning of the Reform Act. See "Special
Note Regarding Forward Looking Statements" for additional factors relating to
such statements.
The Company is involved in various legal actions associated with the normal
conduct of its business operations. No such actions involve known material gain
or loss contingencies not reflected in the consolidated financial statements of
the Company.
Item 4 - Submission of Matters to a Vote of Security Holders
During the first quarter of 2001, the Company did not submit any matter to a
vote of its shareholders.
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits:
11. Statement Re: Computation of Per Share Earnings
(b) Reports on Form 8-K
No reports 8-K were filed during the quarter ended March 31, 2001.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
May 21, 2001 Atomic Burrito, Inc.
By:/s/ Don W. Grimmett
------------------------
Don W. Grimmett, President
17
EX-11
Computation of Earnings per Share
ATOMIC BURRITO, INC.
COMPUTATION OF EARNINGS PER SHARE
(UNAUDITED)
Three Months Ended March 31,
2000 1999
---------- ----------
BASIC EARNINGS PER SHARE:
Net income $(207,154) $ (135,329)
Dividends on preferred stock - -
---------- ----------
Net income applicable to
common stock $(207,154) $ (135,329)
========== ==========
Shares used in computing basic earnings
per share 5,107,121 4,277,313
Basic earnings per common share $(0.04) $ (.03)
========== ==========
DILUTED EARNINGS PER SHARE:
Net income N/A N/A
========== ==========
18