RAVE Restaurant (RAVE) 8-K/A Results of Operations and Financial Condition

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
	Three Months Ended
	September 23,			September 24,
	2018			2017
REVENUES:	$	2,991		$	5,433
COSTS AND EXPENSES:
Cost of sales		159			2,086
General and administrative expenses		1,414			2,055
Franchise expenses		1,061			640
Pre-opening expenses		—			115
Loss/(Gain) on sale of assets		(4	)		2
Impairment of long-lived assets and other lease charges		15			148
Bad debt		24			124
Interest expense		25			68
Depreciation and amortization expense		139			314
Total costs and expenses		2,833			5,552
INCOME/(LOSS) FROM CONTINUING OPERATIONS BEFORE TAXES		158			(119	)
Income tax expense		50			12
INCOME/(LOSS) FROM CONTINUING OPERATIONS		108			(131	)
Loss from discontinued operations, net of taxes		—			(225	)
NET INCOME / (LOSS)	$	108		$	(356	)
INCOME / (LOSS) PER SHARE OF COMMON STOCK - BASIC:
Income / (loss) from continuing operations	$	0.01		$	(0.01	)
Loss from discontinued operations		—			(0.02	)
Net income / (loss)	$	0.01		$	(0.03	)
INCOME / (LOSS) PER SHARE OF COMMON STOCK - DILUTED:
Income / (loss) from continuing operations	$	0.01		$	(0.01	)
Loss from discontinued operations		—			(0.02	)
Net income / (loss)	$	0.01		$	(0.03	)
Weighted average common shares outstanding - basic		15,064			11,159
Weighted average common and
potential dilutive common shares outstanding		15,897			11,159

1 

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
		September 23,			June 24,
		2018(Unaudited)			2018
ASSETS
CURRENT ASSETS
Cash and cash equivalents	$	2,006		$	1,386
Accounts receivable, less allowance for bad debts
of $179 and $158, respectively		1,357			1,518
Other receivable		—			300
Notes receivable		939			712
Inventories		6			6
Income tax receivable		4			5
Property held for sale		467			539
Deferred contract charges		15			—
Prepaid expenses and other		351			273
Total current assets		5,145			4,739
LONG-TERM ASSETS
Property, plant and equipment, net		1,391			1,510
Intangible assets definite-lived, net		202			212
Long-term notes receivable		791			803
Deferred tax asset, net		3,462			3,479
Long-term deferred contract charges		221			—
Deposits and other		243			243
Total assets	$	11,455		$	10,986
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade	$	797		$	774
Accrued expenses		836			1,109
Deferred rent		34			32
Deferred revenues		428			65
Total current liabilities		2,095			1,980
LONG-TERM LIABILITIES
Convertible notes		1,567			1,562
Deferred rent, net of current portion		424			433
Deferred revenues, net of current portion		2,399			670
Other long-term liabilities		48			42
Total liabilities		6,533			4,687
SHAREHOLDERS' EQUITY
Common stock, $.01 par value; authorized 26,000,000
shares; issued 22,190,515 and 22,166,674 shares, respectively;
outstanding 15,071,311 and 15,047,470 shares, respectively		222			222
Additional paid-in capital		33,343			33,206
Accumulated deficit		(4,007	)		(2,493	)
Treasury stock at cost
Shares in treasury: 7,119,204		(24,636	)		(24,636	)
Total shareholders' equity		4,922			6,299
Total liabilities and shareholders' equity	$	11,455		$	10,986

2 

RAVE RESTAURANT GROUP, INC.
ADJUSTED EBITDA
(In thousands)
	Three Months Ended
	September 23,			September 24,
	2018			2017
Net income (loss)	$	108		$	(356	)
Interest expense		25			68
Income taxes		50			12
Depreciation and amortization		139			314
EBITDA	$	322		$	38
Stock compensation expense		101			10
Pre-opening costs		—			115
(Gain)/Loss on sale/disposal of assets		(4	)		2
Impairment of long-lived assets and other lease charges		15			148
Discontinued operations, excluding taxes		—			227
Closed and non-operating store costs		22			136
Adjusted EBITDA	$	456		$	676

3 

RAVE RESTAURANT GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
	Three Months Ended
	September 23,			September 24,
	2018			2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	108		$	(356	)
Adjustments to reconcile net inome/(loss) to cash
provided by (used in) operating activities:
Impairment of fixed assets and other assets		—			148
Stock compensation expense		101			10
Depreciation and amortization		129			304
Amortization of intangible assets definite-lived		10			10
Amortization of debt issue costs		5			11
Gain/loss on the sale of assets		(4	)		2
Provision for bad debt		24			124
Changes in operating assets and liabilities:
Accounts receivable		296			529
Inventories		—			(12	)
Prepaid expenses, deposits and other, net		(79	)		(194	)
Deferred revenue		234			(534	)
Accounts payable - trade		23			(907	)
Deferred tax assets		17			—
Accrued expenses, deferred rent and other		(274	)		(183	)
Cash provided by (used in) operating activities		590			(1,048	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of assets		4			—
Purchase of intangible assets definite-lived		—			(7	)
Capital expenditures		(10	)		(363	)
Cash used in investing activities		(6	)		(370	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of stock		36			4,943
Cash provided by financing activities		36			4,943
Net increase in cash and cash equivalents		620			3,525
Cash and cash equivalents, beginning of period		1,386			451
Cash and cash equivalents, end of period	$	2,006		$	3,976
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
CASH PAID FOR:
Interest	$	2		$	—
Income taxes	$	4		$	—
Non-cash activities:
Capital expenditures included in accounts payable	$	—		$	164
Conversion of notes to equity	$	—		$	—