FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For Fiscal Year Ended January 27, 2002
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-12145
AMARILLO MESQUITE GRILL, INC.
(formerly Maverick Restaurant Corporation)
(Exact name of Registrant as specified in its charter)
Kansas 48-0936946
(State of Incorporation) (IRS Employer Identification No.)
302 North Rock Road, Suite 200
Wichita, Kansas 67206
(Principal executive offices, including zip code)
Registrant's telephone number including area code: (316) 685-7286
Securities Registered Pursuant to Section 12(b) of the Act: None
Securities Registered Pursuant to Section 12(g) of the Act:
Common Stock $0.01 Par Value
Indicate by check mark whether the Registrant (i) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding twelve (12) months (or such shorter period that
the Registrant was required to file such reports), and (ii) has been subject
to such filing requirements for the past ninety (90) days.
Yes X No ___
Insert by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of April 1, 2002, 8,241,137 common shares (not including 60,000 shares held
as treasury stock) were outstanding, and the aggregate market value of the
common shares (based upon the closing price of these shares ($.25) as of such
date on the OTC Bulletin Board) of Amarillo Mesquite Grill, Inc. held by
non-affiliates was approximately $864,090 (For purposes of this valuation
"affiliates" are the officers, directors and 5% shareholders of the Company.)
DOCUMENTS INCORPORATED BY REFERENCE:
Proxy Statement for the fiscal year ended January 27, 2002
(Items 10, 11, 12 and 13 of PART III)
AMARILLO MESQUITE GRILL, INC.
Annual Report on Form 10-K
For the Fiscal Year Ended January 27, 2002
PART I. PAGE
Item 1. Business....................................................... 1
Item 2. Properties..................................................... 5
Item 3. Legal Proceedings.............................................. 6
Item 4. Submission of Matters to a Vote of Security Holders............. 6
PART II.
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters....................................... 7
Item 6. Selected Financial Data........................................ 8
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................... 9
Item 7A. Quantitative and Qualitative Disclosures About Market Risk..... 12
Item 8. Financial Statements and Supplementary Data................... 12
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure...................... 12
PART III.
Item 10. Directors and Executive Officers of the Registrant........... 12
Item 11. Executive Compensation....................................... 12
Item 12. Security Ownership of Certain Beneficial Owners and
Management............................................... 12
Item 13. Certain Relationships and Related Transactions............... 12
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K.............................................. 13
Signatures............................................................. 15
Financial Statements................................................. F-1
PART I
Item 1. BUSINESS
A) General Development of Business.
Amarillo Mesquite Grill, Inc., formerly Maverick Restaurant
Corporation (the "Company"), was incorporated under the laws of
the State of Kansas on May 5, 1982. From the date of its
incorporation until 1993, the Company operated Grandy's
restaurants. Grandy's restaurants featured "home-cooked" type
meals, such as southern-fried chicken, country-fried steak and
mashed potatoes and gravy, in a fast food setting.
In 1993, the Company began the process of selling its existing
Grandy's restaurants or converting the buildings which these
restaurants were located in, to Cotton Patch Cafe restaurants.
Cotton Patch Cafe featured a southern home-style menu and offered
full table service in a relaxed, family oriented environment.
On June 17, 1996, the Company acquired the assets of the Amarillo
Mesquite Grill restaurant chain from Homestead West, Inc. and
Amagril, Inc. for 1,000,000 shares of the Company's restricted
common stock and cash in the amount of $1,500,000. The Amarillo
Mesquite Grill restaurant chain consisted of four restaurants at
the date of purchase: two located in Wichita, Kansas, one located
in Hutchinson, Kansas and one located in Overland Park, Kansas.
Since the date of this acquisition, the Company has converted its
Cotton Patch Cafe restaurants to Amarillo Mesquite Grill
restaurants.
The Company had in operation thirteen Amarillo Mesquite Grill
restaurants in Kansas, Oklahoma, Missouri and Arkansas at the end
of fiscal 2002. Amarillo Mesquite Grill restaurants offer a
casual dining environment serving prime rib, steaks, chicken and
seafood grilled over mesquite wood. The Company intends to focus
its business activities on the development of additional Amarillo
Mesquite Grill restaurants.
During fiscal 2002, the Company closed its restaurants in Wichita
Falls, Texas and McAlester, Oklahoma. The Company has entered
into subleases on these restaurant facilities. The Company
relocated one of its Wichita, Kansas locations to a higher traffic
area within 3 miles of its former location. On March 3, 2002,
the Company closed its Springfield, Missouri restaurant and
entered into a sublease with a third party to sublease the
restaurant facilities.
B) Financial Information About Industry Segments.
Not Applicable
C) Narrative Description of Business.
i) Principal Products and Services.
Amarillo Mesquite Grill. Amarillo Mesquite Grill restaurants
are open for lunch and dinner. Amarillo Mesquite Grill is a
moderately priced casual dining restaurant that specializes
in aged prime rib and steaks, along with barbecued ribs,
chicken and seafood, all uniquely grilled over an open flame
of mesquite wood. Appetizers and desserts, as well as a
children's menu with lower-priced selections, are also
available.
The Amarillo Mesquite Grill concept, founded in 1982, is
designed to appeal to a broad spectrum of casual dining
customers who are seeking a consistent and high-quality
dining experience attentively served in a distinctive,
relaxed atmosphere for a moderate price. Amarillo Mesquite
Grill provides a casual and comfortable environment and well-
trained, enthusiastic service to its customers.
The Company believes that the Amarillo Mesquite Grill
restaurant concept and menu are designed to attract loyal
clientele who return with a high degree of frequency at both
lunch and dinner. The decor of the Company's restaurants
features a variety of western and country artifacts, giving
it a relaxed friendly feel. Amarillo Mesquite Grill is
further distinguished by requiring from its meat purveyors
high- quality, USDA choice or better graded steaks, many of
which are hand-cut fresh daily on site. High-quality
ingredients are used for all menu items. All meals are
served in generous portions by a well-trained friendly staff.
The Amarillo Mesquite Grill restaurant is a free-standing
building. The Company owns the furniture, fixtures and
equipment used in its restaurants. Each restaurant serves
alcoholic beverages and features a bar area located adjacent
to the dining room primarily to accommodate customers waiting
for tables.
The average cost of a meal at the Company's Amarillo Mesquite
Grill restaurant is approximately $7.50 for lunch and $13.00
for dinner. Alcoholic beverage service accounts for
approximately 8% of the Company's net sales at each
restaurant. The Company's restaurants are open seven days a
week.
The following table sets forth the location and opening or
acquisition date of the Company's Amarillo Mesquite Grill
restaurants in operation at the end of the 2002 fiscal year:
DATE OPENED
LOCATION OR PURCHASED
Wichita, Kansas #1 June 17, 1996
Wichita, Kansas #2 June 17, 1996
Hutchinson, Kansas June 17, 1996
Ponca City, Oklahoma December 9, 1996
Rogers, Arkansas February 17, 1997
Salina, Kansas April 21, 1997
*Springfield, Missouri June 23, 1997
Enid, Oklahoma August 1, 1997
Muskogee, Oklahoma November 12, 1997
Wichita, Kansas #3 January 14, 1998
Manhattan, Kansas February 2, 1998
Bartlesville, Oklahoma July 27, 1998
Topeka, Kansas December 3, 1999
___________________
* Closed on March 3, 2002
The Company seeks to locate its restaurants in smaller cities
and suburban areas where they fill a significant market niche.
Amarillo Mesquite Grill restaurants are distinguished from
other family-oriented steakhouses in these smaller markets
(many of which are cafeteria-style) by their full table
service and attentive wait staff, full bar service,
entertaining atmosphere, distinctive decor and consistently
high-quality food. The Company distinguishes its restaurants
from other full-service restaurants through their family
orientation which is accomplished by offering lower priced
food (such as hamburgers and sandwiches) at dinner, placing
less emphasis on alcohol sales as compared to most competitors
and offering features designed to appeal to children.
ii) Developing Products and Industry Segments.
Not Applicable
iii) Sources and Availability of Raw Materials.
The Company's food costs are closely tied to market
conditions. The Company attempts to maintain its cost of
sales percentages by refining cost controls, directing
marketing activities to re-emphasize low-cost menu items, and
selectively increasing menu prices. The Company monitors the
cost of ingredients and attempts to adjust prices wherever
possible to maintain desired margins.
iv) Trademarks.
The Company acquired two service marks registered with the
United States Patent and Trademark Office for the words
"Amarillo Grill." Both of these registrations expire in
January 2005, however, they are subject to renewal. The
Company has also obtained from the United States Patent and
Trademark Office a registration for the words "Amarillo
Mesquite Grill" which expires in May 2009. The Company
considers all of these service marks to contribute
significantly to its operations.
v) Seasonality.
The Company experiences increased sales during holiday
periods in its restaurants during the months of November
and December. The third quarter consisting of the months
of August, September and October experience the lowest
amount of sales.
vi) Practices Relating to Working Capital.
See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."
vii) Dependence upon a Single Customer.
Not Applicable
viii) Backlog Orders.
Not Applicable
ix) Business Subject to Renegotiation at Election of Government.
Not Applicable
x) Competition.
The Company competes with mid-priced, full service restaurants
primarily on the basis of quality of food and service,
ambiance, location and price-value relationship. The Company
also competes with a number of other restaurants within its
markets, including both locally owned restaurants and regional
or national chains. The Company believes that its mesquite
grill concept, attractive price-value relationship and quality
of food and service enable it to differentiate itself from its
competitors. While the Company believes that its mesquite
grill restaurants are distinctive in design and operating
concept, it is aware of restaurants that operate with similar
concepts. Many of the Company's competitors are well-
established in the mid-priced dining segment and have
substantially greater financial, marketing and other resources
than the Company. The Company believes that its ability to
compete effectively will continue to depend upon its ability
to offer high quality, moderately priced food in a full
service, distinctive dining environment.
xi) Research and Development.
Not Applicable
xii) Compliance with Environmental Regulation.
Not Applicable
xiii) Employees.
As of April 1, 2002, the Company employed approximately 500
persons, including 5 administrative, 57 managerial, 80 full-
time and 347 part-time restaurant employees.
D) Financial Information About Foreign and Domestic Operations and
Export Sales.
Not Applicable
Item 2. PROPERTIES
The Company's principal executive office is located at 302 North Rock Road,
Suite 200, Wichita, Kansas 67206. This office space is leased from an
unrelated third party.
The land and buildings for the Company's twelve of the thirteen restaurants
are leased pursuant to long-term leases with unrelated third parties. The
initial lease terms are for a period of ten to twenty years with provisions
for two additional five year extensions. The building for the Springfield
restaurant, which was closed subsequent to year end, is owned but subject
to a 15 year land lease with four five year renewal options. Upon closure
of the restaurant, this building was leased to a new tenant who assumed the
land lease obligation. The Company pays minimum annual rentals for the land
and building of each restaurant in amounts ranging from approximately $33,000
to $129,187. In some cases, the rental rates escalate in accordance with
sales volume in excess of specified amounts. Each lease obligates the Company
to pay the real estate taxes and utilities applicable to the particular
location, to maintain casualty and liability insurance, and to keep the
property in general repair. The Company also owns two buildings that are
being leased to third parties.
The Company's restaurants encompass approximately 4,000 to 6,000 square feet.
These restaurants seat approximately 140 to 280 persons and have on-site
parking for an average of 70 cars. Typical capital costs for a restaurant
facility are approximately $400,000 for land, $600,000 for the building and
$300,000 for equipment and furnishings. The Company has historically leased
the land and buildings used pursuant to long-term lease arrangements.
Item 3. LEGAL PROCEEDINGS
On September 18, 2000, Casey M. Bachrodt and Kelly J. Bachrodt filed a
petition in the District Court, Sedgwick County, Kansas naming the Company
as defendant. The petition alleges that the Company interfered with a
contract and interfered with a prospective business advantage when it
purchased the Amarillo Grill Restaurants from Alan Bundy in June 1996.
The plaintiffs are seeking damages in the amount of $9,000,000. The
proceedings are in the discovery process, however, the Company believes
it will be successful in its defense of this lawsuit.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this Report.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
A) Market Information.
Stock quotations for the Company's stock are currently available
on the OTC Bulletin Board under the symbol "MESQ". The following
tabulation sets forth the high and low closing bid quotations for
the calendar quarters shown as reported by the OTC Bulletin Board.
The prices quoted represent prices between dealers in securities
without adjustment for mark-ups, mark-downs, or commissions and
do not necessarily reflect actual transactions.
Bid Price
Quarter Ended High Low
April 30, 2000 $ .75 $ .531
July 30, 2000 1.625 .625
October 29, 2000 .938 .5625
January 28, 2001 .75 .156
Bid Price
Quarter Ended High Low
April 28, 2001 $ 1.01 $ .375
July 29, 2001 .85 .21
October 28, 2001 .42 .25
January 27, 2002 .31 .17
B) Holders of Company's Common Stock.
The number of holders of record of the Company's common stock as
of January 27, 2002, was approximately 420, as determined by an
examination of the Company's transfer book. However, because a
number of shares of stock are held in "street name," the actual
number could not be determined more precisely.
C) Dividends.
The Company has not paid dividends to its stockholders since its
inception. For the foreseeable future, it is anticipated that
any earnings which may be generated from operations of the
Company will be used to finance the growth of the Company, and
that dividends will not be paid to stockholders.
Item 6. SELECTED FINANCIAL DATA
Years Ended January 27, January 28, January 30, January 31, January 25,
2002 2001 2000 1999 1998
Operating Data:
Net sales $ 18,696,306 $ 20,808,604 $ 18,355,305 $ 20,509,882 $16,022,471
Net loss $ (2,911,895) $ (639,526) $ (369,097) $ (490,039) $(1,270,293)
Net loss per share $ (.35) $ (.08) $ (.05) $ (.06) $ (.18)
Balance Sheet Data:
Current assets $ 609,242 $ 700,672 $ 768,758 $ 516,789 $ 965,335
Property and equipment 4,495,216 6,746,428 7,377,764 7,466,707 7,442,598
Other assets 589,938 651,800 726,929 798,014 873,408
Total assets $ 5,694,396 $ 8,098,900 $ 8,873,451 $ 8,781,510 $ 9,281,341
Current liabilities $ 2,623,879 $ 2,376,466 $ 2,572,100 $ 3,456,306 $ 3,198,960
Long-term debt, less
current portion 5,904,586 5,904,586 5,904,586 5,164,077 5,618,279
Obligation under capital
leases, less current
portion 860,011 910,873 961,104 1,006,142 1,046,525
Advances from affiliates - - - 81,587 -
Stockholders' equity
(deficit) (3,694,080) (1,093,025) (564,339) (926,602) (582,423)
Total liabilities and
stockholders' equity
(deficit) $ 5,694,396 $ 8,098,900 $ 8,873,451 $ 8,781,510 $ 9,281,341
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
For the year ended January 27, 2002, sales were $18,696,306 as compared to
$20,808,604 and $18,355,305 for fiscal 2001 and 2000, respectively. Cost of
sales, as a percentage of total sales, was 37.0%, 34.6%, and 34.7% for fiscal
2002, 2001 and 2000, respectively. The increase in cost of sales from fiscal
2001 to fiscal 2002, as a percentage of sales, was the result of higher costs
in meat and poultry, dairy and groceries.
Operating expenses include all direct and indirect labor costs incurred at the
store level and all other store level operating costs, the major component of
which are operating supplies, rent, repairs and maintenance, advertising,
utilities and other occupancy costs. Operating expenses, as a percentage of
total sales, were 54.3%, 52.8% and 49.9% for fiscal 2002, 2001 and 2000,
respectively. The increase in operating expense from fiscal 2001 to fiscal
2002, as a percentage of total sales, is the result of higher labor costs
combined with decreased sales.
General and administrative expenses include area management personnel and
recruiting and training expenses relating to the development of management
personnel for future restaurants as well as home office costs for
administration, accounting, support personnel, rent and other costs of
maintaining a central office. General and administrative expenses, as a
percentage of total sales, were 5.6%, 6.0% and 7.6% for fiscal 2002, 2001
and 2000, respectively. The decrease in general and administrative expenses
from fiscal 2001 to fiscal 2002, as a percentage of sales, can be attributed
to a reduction in recruiting and training costs and an increase in overall
efficiency in operations by the Company.
Interest expense for fiscal 2002, 2001 and 2000 was $516,484, $665,080 and
$642,724, respectively. Interest expense is directly related to the amount of
borrowings and the interest rate.
The Company incurred noncash expenses of $97,840 in fiscal 2002, 2001 and 2000,
respectively related to the issuance of stock options pursuant to debt
guarantees as disclosed in note 3 to the financial statements.
A significant part of the Company's loss for the current year ended January 27,
2002 can be attributed to the Company's closure of its Wichita Falls, Texas
restaurant and its decision to close its Springfield, Missouri restaurant on
March 3, 2002. The Company incurred a non-cash write-off of approximately
$564,600 relating to the closure or anticipated closure of these restaurants.
In addition, the Company was required to classify certain assets of its
Salina, Kansas, Muskogee, Oklahoma and Springfield, Missouri restaurants
as impaired, resulting in a non-cash write-off of $1,144,654.
As of January 28, 2002, the Company has federal net operating loss
carryforwards for income tax purposes of approximately $7,631,000 which,
if not used, will expire, $1,193,000 in fiscal 2003, $434,000 in fiscal 2004,
$134,000 in fiscal 2005, $6,000 in fiscal 2006, $180,000 in fiscal 2008,
$45,000 in fiscal 2009, $114,000 in fiscal 2011, $1,524,000 in fiscal 2012,
$1,706,000 in fiscal 2013, $567,000 in fiscal 2019, $233,000 in fiscal 2020
and $88,000 in fiscal year 2021, and $1,407,000 in fiscal year 2022.
The Company's loss for the current year ended January 27, 2002, can in part
be attributed to higher costs of food in combination with lower sales and the
write-off of assets associated with closed or impaired restaurants.
Liquidity and Capital Resources
The Company's primary sources of funds to finance its business have been its
cash flow from operations and, principally during the past three years,
proceeds from long-term debt. On January 27, 2002 and January 28, 2001,
the Company had an excess of current liabilities over current assets of
$2,014,637 and $1,675,794, respectively. Cash flow from operations was
$205,123, $818,763 and $762,797 for fiscal 2002, 2001 and 2000, respectively.
Management anticipates higher cash flow from restaurant operations in fiscal
2003 and that such higher operating cash flow will enable the Company to meet
its financial obligations in fiscal 2003 as they come due.
Management anticipates cash flow from operations for the full fiscal year of
2003 will enable the Company to meet its financial obligations as they come
due. However, it is reasonably possible that there may be periods during
the year when cash flow is insufficient and additional debt or equity
investment may be necessary. There is no assurance that such additional
debt or equity will be available to the Company.
On September 28, 2001, two majority stockholders of the Company contributed an
aggregate amount of $200,000 to the Company. This contribution was recorded
as additional paid-in capital on the Company's balance sheet and no additional
shares of stock were issued. There is no assurance that additional
contributions will be made by these individuals in the future.
Management evaluates store performance and cash flows weekly. On a long-term
basis, if cash flows from operations are not sufficient to meet working
capital needs, management will consider menu modifications and price
adjustments to increase margins. Management will also take actions to
reduce store-level operating costs where possible. Additionally, management
would consider closing underperforming locations where it believes the long
term prospect of obtaining positive cash flow would not be possible.
Substantially all of the Company's revenues are derived from cash sales. The
Company does not maintain significant receivables and inventories; therefore,
working capital requirements for receivables and inventories are not
significant. During fiscal year 2002, the Company's obligations to its
trade creditors increased by $143,167 to $1,202,836. This increase provided
significant cash flow to operating activities, and it is not expected to recur
in the future. Instead, supplier relations are expected to dictate a reduction
in accounts payable, reducing cash flow accordingly. The expected reduction
in accounts payable is planned to occur through cash flow generated by
operations; there is no assurance that such cash flow will occur.
Additions to property and equipment and the acquisition of restaurants have
historically represented the single largest use of funds by the Company. The
expenditures are primarily made for the purchase and development of new
restaurants. Capital expenditures were $291,686 for the year ended January 27,
2002, compared to $522,550 for the year ended January 28, 2001. Capital
expenditures during fiscal 2002 were primarily for replacement equipment for
moving the west Wichita restaurant to a new location. The Company expects to
minimize its capital expenditures for fiscal 2003.
The Company has renewed its long-term bank debt that provides for interest only
payments through April 15, 2003. The Company intends to use its cash flow from
operations in 2003 to pay in full a promissory note payable entered into for
purchase of equipment for its relocation restaurant in Wichita, Kansas, in the
amount of $83,333, and to make a partial reduction in its $163,799 note payable
to a bank (see note 4 to the financial statements). The Company expects to
renew the balance of the note payable to the bank. There is no assurance
that this renewal will occur.
This report contains certain forward-looking statements, including those
relating to expected future cash flow from operations. Although the Company
believes that the assumptions underlying the forward-looking statements
contained herein are reasonable, actual results could differ materially from
such forward-looking statements. In light of the significant uncertainties
inherent in the forward-looking statements included herein, the inclusion of
such information should not be regarded as a representation by the Company
that objectives and plans of the Company will be achieved.
Pronouncements Issued Not Yet Adopted. In July 2001, the Financial Accounting
Standards Board issued Statement 142, "Goodwill and Other Intangible Assets,"
which will potentially impact the Company's accounting for its reported
goodwill and other intangible assets. Statement 142: (a) eliminates the
amortization of goodwill and other intangibles that are determined to have
an indefinite life, and (b) requires, at a minimum, annual impairment tests
for goodwill and other intangible assets that are determined to have an
indefinite life.
Upon adoption of this Statement, the Company will be required to re-evaluate
goodwill and other intangible assets that arose from business combinations
entered into before July 1, 2001.
The Company has not yet completed its full assessment of the effects of these
new pronouncements on its financial statements and so is uncertain as to the
impact. As of January 27, 2002, the Company has $540,637 recorded for
goodwill that could potentially be affected by this statement. The Company
is required to implement this standard with its fiscal year beginning on
January 28, 2002 and is required to have its initial impairment test for
goodwill completed by July 2002.
In August 2001, the Financial Accounting Standards Board issued Statement 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets to be Disposed
Of." This statement is effective for the Company with its fiscal year
beginning January 28, 2002 and supercedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of."
The Company estimates that Statement 144 will not have a material impact on
its process for reviewing and recognizing impairments on its long-lived assets.
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements that the Company is required to file under
Item 8 of this Form 10-K are presented on pages F-1 through F-25
of this Report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information relating to this Item is included in the Company's
Annual Proxy Statement for the 2002 Annual Meeting of Stockholders
under the section entitled "Election of Directors" and under the
section entitled "Section 16(a) Beneficial Ownership Reporting
Compliance" and these portions of such Proxy Statement are
herein incorporated by reference.
Item 11. EXECUTIVE COMPENSATION
The information relating to this Item is included in the Company's Annual
Proxy Statement for the 2002 Annual Meeting of Stockholders under the
section entitled "Executive Compensation" and "Directors' Fees" and these
portions of such Proxy Statement are herein incorporated by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information relating to this Item is included in the Company's Annual
Proxy Statement for the 2002 Annual Meeting of Stockholders under the
section entitled "Principal Holders of Securities" and that portion of such
Proxy Statement is herein incorporated by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information relating to this Item is included in the Company's Annual
Proxy Statement for the 2002 Annual Meeting of Stockholders under the section
entitled "Certain Relationships and Related Transactions" and that portion
of such Proxy Statement is herein incorporated by reference.
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
A) Documents Filed as a Part of this Report.
i) Financial Statements
See "Index to Financial Statements" on Page F-1 of this
Report
ii) Financial Statement Schedules
Not Applicable
iii) Exhibits
See Item 14(c), "Exhibits" below.
B) Reports on Form 8-K.
No reports on Form 8-K were filed by the Company during the
quarter ended January 27, 2002.
C) Exhibits.
3.1 Restated Articles of Incorporation of Grandy's of El Paso, Inc.
and Change of Corporate Name to Maverick Restaurant Corporation
and Certificate of Correction to Restated Articles of
Incorporation of Grandy's of El Paso, Inc. changing the
Corporate Name to Maverick Restaurant Corporation as filed
with the Secretary of State of the State of Kansas on July 28,
1983 and August 18, 1983, respectively (filed as Exhibit 3.1
to Registration No. 2-86266-FW and such exhibit is hereby
incorporated by reference).
3.2 Certificate of Amendment to Articles of Incorporation as filed
with the Secretary of State of the State of Kansas on May 22,
1984 (filed as Exhibit 3.2 to the Company's Form 10-K for the
fiscal year ended January 31, 1985, and such exhibit is hereby
incorporated by reference).
3.3 Certificate of Amendment to Articles of Incorporation as filed
with the Secretary of State of the State of Kansas on May 27,
1997 changing the corporate name to Amarillo Mesquite Grill,
Inc. (filed as Exhibit 3.3 to the Company's Form 10-K for the
fiscal year ended January 25, 1998, and such exhibit is hereby
incorporated by reference).
3.4 Bylaws of the Company (filed as Exhibit 3.2 to Registration
No. 2-86266-FW and such exhibit is hereby incorporated by
reference).
10.1 1994 Incentive Stock Option Plan (filed as Exhibit 10.9 to
the Company's Form 10-K for the fiscal year ended January 31,
1995 and such exhibit is hereby incorporated by reference).*
10.2 1997 Incentive Stock Option Plan (filed as Exhibit A to the
Company's Proxy Statement dated April 23, 1997 and such
exhibit is hereby incorporated by reference).*
10.3 Promissory Note with Intrust Bank dated April 15, 2001 (filed
as Exhibit 10.1 to the Company's Form 10-Q for the fiscal
quarter ended October 28, 2001 and such exhibit is hereby
incorporated by reference).
23 Consent of Allen, Gibbs & Houlik, L.C. (filed herewith).
________________
*Management's Compensation Plan
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
AMARILLO MESQUITE GRILL, INC.
By: /s/ Chris F. Hotze
Chris F. Hotze, President
Date: April 27, 2002
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below by the following persons of the Registrant
and in the capacities and on the date indicated.
Signature Title Date
/s/ Chris F. Hotze President, Chairman of April 27, 2002
Chris F. Hotze the Board and Director
(Principal Executive
Officer and Principal
Financial and Accounting
Officer)
/s/ Alan L. Bundy Executive Vice President April 27, 2002
Alan L. Bundy and Director
/s/ C. Howard Wilkins, Jr. Director April 27, 2002
C. Howard Wilkins, Jr.
EXHIBIT INDEX
3.1 Restated Articles of Incorporation of Grandy's of El Paso,
Inc. and Change of Corporate Name to Maverick
Restaurant Corporation and Certificate of Correction to
Restated Articles of Incorporation of Grandy's of El
Paso, Inc. changing the Corporate Name to Maverick
Restaurant Corporation as filed with the Secretary of
State of the State of Kansas on July 28, 1983 and
August 18, 1983, respectively (filed as Exhibit 3.1 to
Registration No. 2-86266-FW and such exhibit is hereby
incorporated by reference).
3.2 Certificate of Amendment to Articles of Incorporation as
filed with the Secretary of State of the State of
Kansas on May 22, 1984 (filed as Exhibit 3.2 to the
Company's Form 10-K for the fiscal year ended January
31, 1985, and such exhibit is hereby incorporated by
reference).
3.3 Certificate of Amendment to Articles of Incorporation as
filed with the Secretary of State of the State of
Kansas on May 27, 1997 changing the corporate name to
Amarillo Mesquite Grill, Inc. (filed as Exhibit 3.3 to
the Company's Form 10-K for the fiscal year ended
January 25, 1998, and such exhibit is hereby
incorporated by reference
3.4 Bylaws of the Company (filed as Exhibit 3.2 to Registration
No. 2-86266-FW and such exhibit is hereby incorporated
by reference).
10.1 1994 Incentive Stock Option Plan (filed as Exhibit 10.9 to
the Company's Form 10-K for the fiscal year ended
January 31, 1995 and such exhibit is hereby
incorporated by reference).*
10.2 1997 Incentive Stock Option Plan (filed as Exhibit A to the
Company's Proxy Statement dated April 23, 1997 and such
exhibit is hereby incorporated by reference).*
10.3 Promissory Note with Intrust Bank dated April 15, 2001
(filed as Exhibit 10.1 to the Company's Form 10-Q for
the fiscal quarter ended October 28, 2001 and such
exhibit is hereby incorporated by reference).
23 Consent of Allen, Gibbs & Houlik, L.C. (filed herewith).
________________
*Management's Compensation Plan
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
Independent Auditors' Reports.................................... F-2
Financial Statements:
Consolidated Balance Sheets.................................... F-3 - F-4
Consolidated Statements of Operations.......................... F-5
Consolidated Statements of Stockholders' Equity (Deficit)...... F-6
Consolidated Statements of Cash Flows.......................... F-7
Notes to Consolidated Financial Statements..................... F-8 - F-25
INDEPENDENT AUDITORS' REPORT
To the Board of Directors
Amarillo Mesquite Grill, Inc. and Subsidiary
We have audited the accompanying consolidated balance sheets of Amarillo
Mesquite Grill, Inc. and Subsidiary as of January 27, 2002 and January 28,
2001 and the related consolidated statements of operations, stockholders'
equity (deficit), and cash flows for the years ended January 27, 2002,
January 28, 2001, and January 30, 2000. These financial statements are the
responsibility of the Companies' management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Amarillo
Mesquite Grill, Inc. and Subsidiary as of January 27, 2002 and January 28,
2001, and the results of their operations and their cash flows for the years
ended January 27, 2002, January 28, 2001, and January 30, 2000 in conformity
with accounting principles generally accepted in the United States of
America.
Allen, Gibbs & Houlik, L.C.
March 21, 2002, except for Note 4, as to
which the date is April 12, 2002
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
January 27, 2002 and January 28, 2001
ASSETS
2002 2001
CURRENT ASSETS
Cash $ 259,050 $ 348,182
Accounts receivable 20,381 17,248
Note receivable 13,047 --
Advances to affiliates 13,364 35,868
Inventories 150,867 168,953
Prepaid expenses and other current assets 152,533 130,421
Total current assets 609,242 700,672
PROPERTY AND EQUIPMENT
Buildings 682,829 1,122,019
Leasehold improvements 2,193,445 2,758,064
Equipment and fixtures 4,030,661 5,346,363
Transportation equipment 18,999 18,999
Property under capital leases 848,822 1,234,626
7,774,756 10,480,071
Less accumulated depreciation and amortization 3,279,540 3,733,643
Total property and equipment 4,495,216 6,746,428
OTHER ASSETS
Cost in excess of net tangible assets
of purchased businesses, net of
accumulated amortization of $406,644
and $333,824 540,367 613,187
Deposits and other 35,123 38,613
Note receivable 14,448 --
Total other assets 589,938 651,800
Total assets $ 5,694,396 $ 8,098,900
LIABILITIES AND STOCKHOLDERS' DEFICIT
2002 2001
CURRENT LIABILITIES
Notes payable $ 241,299 $ 220,284
Current portion of obligations under capital
leases 56,024 50,231
Accounts payable 1,202,836 1,059,669
Accrued payroll 180,076 213,338
Accrual for gift certificates 402,754 339,815
Other accrued liabilities 449,003 457,279
Accrual for restaurant closings 91,887 35,850
Total current liabilities 2,623,879 2,376,466
LONG-TERM LIABILITIES
Short-term debt, subsequently refinanced 5,904,586 5,904,586
Obligations under capital leases, less
current portion 860,011 910,873
Total liabilities 9,388,476 9,191,925
COMMITMENTS
STOCKHOLDERS' DEFICIT
Preferred stock, $.01 par value;
authorized 10,000,000 shares; none issued -- --
Common stock, $.01 par value; authorized
20,000,000 shares; issued 8,301,137 shares
at January 27, 2002 and January 28, 2001 83,011 83,011
Additional paid-in capital 7,954,302 7,643,462
Accumulated deficit (11,461,393) (8,549,498)
Treasury stock, 60,000 shares of common stock,
at cost (270,000) (270,000)
Total stockholders' deficit (3,694,080) (1,093,025)
Total liabilities and stockholders'
deficit $ 5,694,396 $ 8,098,900
<FN>
The accompanying notes are an integral
part of these financial statements.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
Years ended January 27, 2002, January 28, 2001, and January 30, 2000
2002 2001 2000
Net sales $ 18,696,306 $ 20,808,604 $ 18,355,305
Costs and expenses:
Cost of sales 6,918,010 7,189,569 6,374,037
Restaurant operating expenses 10,159,114 10,988,848 9,163,419
General and administrative 1,047,093 1,238,500 1,389,528
Depreciation and amortization 944,403 1,020,398 934,614
Asset impairment 1,144,654 -- --
Provision for restaurant closings 564,600 247,895 --
Total costs and expenses 20,777,874 20,685,210 17,861,598
Operating (loss) income (2,081,568) 123,394 493,707
Other income (expense):
Interest expense (516,484) (665,080) (642,724)
Litigation expense -- -- (122,240)
Non-cash expense from issuance of
stock options to related parties
pursuant to debt guarantees (97,840) (97,840) (97,840)
Loss on disposal of property and
equipment (216,003) -- --
Total other expense (830,327) (762,920) (862,804)
Loss before income taxes (2,911,895) (639,526) (369,097)
Income taxes -- -- --
Net loss $ (2,911,895) $ (639,526) $ (369,097)
Net loss per common share & basic
and diluted $ (.35) $ (.08) $ (.05)
Average shares outstanding & basic
and diluted 8,241,137 8,241,137 7,908,111
<FN>
The accompanying notes are an integral
part of these financial statements.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Years Ended January 27, 2002, January 28, 2001, and January 30, 2000
Additional
Common Paid-In Accumulated Treasury
Stock Capital Deficit Stock Total
Balance, January 31, 1999 $ 77,059 $ 6,807,214 $ (7,540,875) $ (270,000) $ (926,602)
Contributed capital -- 9,000 -- -- 9,000
Non-cash expense from issuance of
stock options to related parties
pursuant to debt guarantees -- 97,840 -- -- 97,840
Issuance of 78,000 shares of common
stock pursuant to stock option
plans 780 23,740 -- -- 24,520
Issuance of 517,242 shares of common
stock to related parties 5,172 594,828 -- -- 600,000
Net loss -- -- (369,097) -- (369,097)
Balance, January 30, 2000 83,011 7,532,622 (7,909,972) (270,000) (564,339)
Contributed capital -- 13,000 -- -- 13,000
Non-cash expense from issuance of
stock options to related parties
pursuant to debt guarantees -- 97,840 -- -- 97,840
Net loss -- -- (639,526) -- (639,526)
Balance, January 28, 2001 83,011 7,643,462 (8,549,498) (270,000) (1,093,025)
Contributed capital -- 213,000 -- -- 213,000
Non-cash expense from issuance of
stock options to related parties
pursuant to debt guarantees -- 97,840 -- -- 97,840
Net loss -- -- (2,911,895) -- (2,911,895)
Balance, January 27, 2002 $ 83,011 $ 7,954,302 $ (11,461,393 ) $ (270,000) $ (3,694,080)
<FN>
The accompanying notes are an integral
part of these financial statements.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended January 27, 2002, January 28, 2001, and January 30, 2000
2002 2001 2000
Cash flows from operating activities:
Net loss $ (2,911,895) $ (639,526) $ (369,097)
Adjustments to reconcile net loss to
net cash provided by operating
activities:
Depreciation and amortization 944,403 1,020,398 934,614
Loss on disposal of fixed assets 216,003 -- --
Provision for restaurant closings 564,600 247,895 --
Asset impairment 1,144,654 -- --
Non-cash compensation expense 13,000 13,000 9,000
Non-cash expense from issuance
of stock options to related parties
pursuant to debt guarantees 97,840 97,840 97,840
Increase (decrease) in cash, net
of effects of acquisitions and
dispositions:
Accounts receivable (3,133) 3,889 (4,225)
Advances to affiliate 22,504 9,787 (45,655)
Notes receivable 2,505 -- --
Inventories 18,086 74 (28,613)
Prepaid expenses (22,112) (5,192) 19,721
Accounts payable 143,167 30,422 107,416
Accrued expenses 21,401 43,604 43,531
Accrual for restaurant closings (49,390) -- --
Other 3,490 (3,428) (1,735)
Net cash provided by operating
activities 205,123 818,763 762,797
Cash flows from investing activities:
Additions to property and equipment (291,686) (522,550) (772,851)
Proceeds from sale of fixed assets 8,650 -- --
Net cash used in investing
activities (283,036) (522,550) (772,851)
Cash flows from financing activities:
Issuance of common stock to related parties -- -- 600,000
Issuance of common stock pursuant to stock
option plan -- -- 24,520
Additional paid-in capital from related
parties 200,000 -- --
Repayment of note payable and note payable,
related party -- (274,628) (55,088)
Repayment of affiliate -- -- (81,587)
Repayment of long-term debt and capital
lease obligations (211,219) (81,113) (284,594)
Net cash (used in) provided by
financing activities (11,219) (355,741) 203,251
(Decrease) increase in cash (89,132) (59,528) 193,197
Cash at beginning of year 348,182 407,710 214,513
Cash at end of year $ 259,050 $ 348,182 $ 407,710
Non-cash activity
Sale of assets in exchange of a note
receivable $ 30,000 $ -- $ --
Debt incurred for acquisition of
fixed assets $ 187,165 $ -- $ --
Cash paid during the year for:
Interest $ 516,484 $ 665,080 $ 666,776
Income taxes -- -- --
<FN>
The accompanying notes are an integral
part of these financial statements.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. OPERATIONS
Amarillo Mesquite Grill, Inc. and Subsidiary (Company) own and operate
13 Amarillo Grill restaurants in Kansas, Oklahoma, Missouri, and
Arkansas. Amarillo Grill is a casual, full-service restaurant
specializing in mesquite-grilled steaks. During fiscal 2001, the
Company formed a wholly-owned subsidiary, Amarillo Mesquite Grill of
Texas, Inc., which operated the restaurant located in Wichita Falls,
Texas. This location was closed during fiscal year 2002.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Fiscal Year - The Company's fiscal year is the 52- or 53-week period
ending on the last Sunday in January.
Principles of Consolidation - The consolidated financial statements
include the accounts of the Company and its wholly-owned subsidiary.
All material intercompany accounts and transactions are eliminated in
consolidation.
Cash - The Company maintains cash in bank deposit accounts that, at
times, may exceed federally insured limits. The Company has not
experienced any losses in such accounts. The Company believes it is
not exposed to any significant credit risk on cash and cash
equivalents.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property and Equipment - Property and equipment is recorded at cost.
Depreciation is computed by the straight-line method based on the
estimated useful life of the asset. Leasehold improvements are
amortized over the lesser of the useful life of the asset or the
remaining lease term. Maintenance and repairs are charged to expense
as incurred; renewals and betterments are capitalized. Estimated
useful lives are as follows:
Buildings 98 months - 20 years
Leasehold improvements 3 - 20 years
Equipment and fixtures 5 - 10 years
Autos 3 years
Property under capital leases 20 years
The Company owns three buildings, all of which are leased to third
parties. One building is the Springfield restaurant location, which is
subject to a land lease, beginning in 1997, for 15 years, with four
five-year renewal options. See also Note 5.
<FN>
The accompanying notes are an integral
part of these financial statements.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Impairment of Long-lived Assets - Long-lived assets and certain
identifiable intangibles are reviewed for impairment whenever events or
changes in circumstances indicate the carrying amount of an asset may
not be recoverable. A two-year history of restaurant operating losses
is used as a primary indicator of potential impairment. Recoverability
of assets to be held and used is measured on a restaurant-by-restaurant
basis through comparison of the carrying amount of an asset to future
net cash flows expected to be generated by the asset. If such assets
are considered to be impaired, the impairment to be recognized is
measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value, less costs
to sell. See also Note 8.
Intangible Assets - Cost in excess of net tangible assets of purchased
businesses is amortized on a straight-line basis over the remaining
lives of the building leases. The Company periodically assesses the
recoverability of intangible assets on a restaurant-by-restaurant basis
by determining whether the amortization of the intangible asset balance
over its remaining life can be recovered through undiscounted future
operating cash flows of the acquired operation. The amount of goodwill
impairment, if any, is measured based on projected discounted future
operating cash flows. No intangible assets were considered impaired at
January 27, 2002. The assessment of the recoverability of intangible
assets will be impacted if estimated future operating cash flows
associated with the intangible assets are not achieved.
Pre-Opening Costs - Pre-opening costs are charged to operations as
incurred.
Advertising - The Company expenses advertising costs as incurred.
Advertising expense was $428,987, $186,297, and $293,987 during fiscal
years 2002, 2001, and 2000, respectively.
Income Taxes - Deferred income taxes are provided on a liability method
whereby deferred tax assets are recognized for deductible temporary
differences and operating loss and tax credit carryforwards; deferred
tax liabilities are recognized for taxable temporary differences.
Temporary differences are the differences between the reported amounts
of assets and liabilities and their tax bases. Deferred tax assets are
reduced by a valuation allowance when, in the opinion of management, it
is more likely than not that some portion or all of the deferred tax
assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effect of changes in tax laws and rates on the date of
enactment.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Use of Estimates - The preparation of financial statements requires
management to make estimates and assumptions that affect: (1) the
reported amounts of assets and liabilities, (2) disclosures such as
contingencies, and (3) the reported amounts of revenues and expenses
included in such financial statements. Actual results could differ
from those estimates.
Earnings Per Share - Earnings per common share has been computed on the
basis of the weighted-average number of common shares outstanding
during each period presented. The Company is also required to present
diluted earnings per share, which assumes the conversion, exercise, or
issuance of all potential common stock instruments unless the effect is
to reduce a loss or increase the income per common share from
continuing operations.
Options to purchase common stock were not included in the computation
of diluted earnings (loss) per common share because the Company had a
net loss available to common stockholders and the inclusion of such
options would be antidilutive. As of January 27, 2002, there were
1,288,100 options outstanding at a weighted average exercise price of
$1.87 that may be dilutive in the future. As of January 28, 2001,
there were 1,325,475 options outstanding at a weighted average exercise
price of $1.93. As of January 30, 2000, there were 1,277,937 options
outstanding at a weighted average exercise price of $2.04.
Stock Awards - The Company accounts for its stock options in accordance
with the provisions of Accounting Principles Board (APB) Opinion No.
25, Accounting for Stock Issued to Employees. As such, compensation
expense is recorded on the date of grant only if the current market
price of the underlying stock exceeds the exercise price. In addition,
SFAS No. 123, Accounting for Stock-Based Compensation, requires that
pro forma net income and pro forma income per share disclosures for
employee stock option grants made in fiscal years that begin after
December 15, 1994 be provided as if the fair-value-based cost
measurement method defined in SFAS No. 123 had been applied.
The Company accounts for its stock options issued to persons other than
employees in accordance with the provisions of SFAS No. 123. As such,
expense is determined on the date of grant and is charged to operations
over the period the services are provided, based on the fair-value-
based cost measurement method defined in SFAS No. 123 (see Note 6).
Reclassifications - Certain amounts on the January 28, 2001 financial
statements have been reclassified, with no effect on net income or
earnings per common share, to be consistent with the classifications
adopted for the year ended January 27, 2002.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Pronouncements Issued Not Yet Adopted - In July 2001, the Financial
Accounting Standards Board issued Statement 142, "Goodwill and Other
Intangible Assets," which will potentially impact the Company's
accounting for its reported goodwill and other intangible assets.
Statement 142: (a) eliminates the amortization of goodwill and other
intangibles that are determined to have an indefinite life and (b)
requires, at a minimum, annual impairment tests for goodwill and other
intangible assets that are determined to have an indefinite life.
Upon adoption of this Statement, the Company will be required to re-
evaluate goodwill and other intangible assets that arose from business
combinations entered into before July 1, 2001.
The Company has not yet completed its full assessment of the effects of
these new pronouncements on its financial statements and so is
uncertain as to the impact. As of January 27, 2002, the Company had
$540,367 recorded for goodwill that could potentially be affected by
this statement. The Company is required to implement this standard
with its fiscal year beginning on January 28, 2002 and is required to
have its initial impairment test for goodwill completed by July 2002.
In August 2001, the Financial Accounting Standards Board issued
Statement 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets to be Disposed Of." This statement is effective for the Company
with its fiscal year beginning January 28, 2002 and supercedes SFAS
121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of." The Company estimates that Statement
144 will not have a material impact on its process for reviewing and
recognizing impairments on its long-lived assets.
3. RELATED PARTY TRANSACTIONS
The Company shares office space and certain administrative employees
with affiliated companies owned in part by certain stockholders of the
Company. Rent expense, utilities, and other office expenses are
allocated between the companies based on estimated usage.
Advances to/from Affiliates - At January 27, 2002, the Company had a
receivable from Red Apple Corporation of $10,973 and a receivable from
Maverick Development Corp. of $2,391. The Company had a receivable
from Red Apple Corporation for $29,418 and a receivable from Maverick
Development Corp. of $6,450 at January 28, 2001. The notes have an
implied interest rate of 8%.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
3. RELATED PARTY TRANSACTIONS (CONTINUED)
Contributed Capital - During the third quarter of fiscal 2002, two
major stockholders invested $200,000 in the Company, which was recorded
as additional paid-in capital.
Stockholders' Equity - The Company's president is also employed by
another corporation owned by a major stockholder of the Company, and
his salary is paid by that corporation. He received no compensation
from the Company during 2002, 2001, or 2000. The Company determined
that the president performed services valued at $13,000 in 2002 and
2001 and $9,000 in 2000, and accordingly, such amounts have been
recorded as compensation expense with a corresponding credit to
additional paid-in-capital in the accompanying financial statements.
On June 17, 1996, the Company entered into Stock Option Agreements with
a director of the Company and a principal stockholder of the Company,
whereby it agreed to grant stock options as consideration for the
guarantee of a note payable to bank by such individuals for the benefit
of the Company. These two individuals were each granted options to
purchase 250,000 shares of the Company's common stock. The exercise
price of the options granted pursuant to this agreement is $2.19 per
share, and all options granted are exercisable immediately and expire
seven years from the date of grant. Total non-cash debt guarantee
expense aggregating $684,875 is based on the fair value of the stock
options granted pursuant to the Stock Option Agreements, which is being
recognized as expense over the period of time the related debt is
outstanding. The amount of non-cash expense recorded was $97,840 for
each of the three years ended January 27, 2002.
The per share weighted average fair value of stock options granted
under the Stock Option Agreements during fiscal 1997 was $1.37 on the
date of grant using the Black Scholes option-pricing model and the
following weighted average assumptions: expected dividend yield 0%,
expected volatility of 145.0%, risk-free interest rate of 6.72% and an
expected life of five years.
At January 27, 2002, the weighted average remaining contractual life of
the 500,000 outstanding options under the Stock Option Agreements was
1.375 years.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
4. FINANCING ARRANGEMENTS
Notes Payable - As of January 27, 2002, the Company has a 7.0% note
payable to a bank in the amount of $163,799, which is due June 18,
2002, and another note payable to an unrelated third party in the
amount of $83,333 due in June 2002. This note did not have a stated
interest rate. The present value of the total future payments on the
note was determined using an imputed interest rate of 11%. This
resulted in a discount, which totaled $5,833 at January 27, 2002.
Long-term Debt - As of January 27, 2002 and January 28, 2001, long-term
debt consisted of the following:
2002 2001
Note payable to bank, with interest only due
monthly at the Wall Street Journal prime
rate less 1/2% (4.25% at January 27, 2002)
with principal due April 2002. $ 5,904,586 $ 5,904,586
Less current portion -- --
Long-term debt, less current portion $ 5,904,586 $ 5,904,586
In October 1999, the Company negotiated with its bank to consolidate
four of its notes payable into one new note. Interest-only payments
are to be made on this note through April 2002. In April 2002, the
terms of this note were extended, with final maturity due in April
2003.
Maturities of long-term debt are as follows:
2004 $ 5,904,586
The note is secured by substantially all the Company's assets, and the
loan agreement has been personally guaranteed by certain stockholders,
officers, and directors of the Company. The stockholders' guarantees
are limited to $5,585,000 of debt.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. LEASE AGREEMENTS
The Company leases all of its restaurant facilities except the
Springfield location under agreements with initial lease terms of 10 to
20 years generally with a provision for one or two renewal options of
five years each. The Springfield location, which was closed in March
2002, is owned but subject to a land lease. These agreements provide
for minimum annual rentals and, in certain instances, contingent
rentals based on sales performance. The Company is obligated to pay
real estate taxes, insurance, and maintenance.
The Company has also entered into a lease agreement for its corporate
offices. The lease agreement has a term of five years with a provision
for two renewal options of three years each. The lease agreement
provides for minimum annual rentals and additional rentals based on
operating costs incurred by the lessor. The Company is obligated to
pay real estate taxes, insurance, and maintenance.
Future minimum lease payments required for the years subsequent to
January 27, 2002, under operating leases, including amounts accrued for
restaurant closings, are as follows:
2003 $ 1,023,581
2004 975,766
2005 828,997
2006 644,402
2007 512,779
Thereafter 4,007,877
$ 7,993,402
Annual rent expense under operating leases was $979,751, $1,013,712,
and $906,208 for the fiscal years ended January 27, 2002, January 28,
2001, and January 30, 2000, respectively. This included percentage
rental payments in the amount of $4,254, $7,010, and $5,709 for the
fiscal years ended January 27, 2002, January 28, 2001, and January 30,
2000, respectively.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
5. LEASE AGREEMENTS (CONTINUED)
Property and accumulated depreciation accounts at January 27, 2002
include $848,822 and $451,883, respectively, for leases that have been
capitalized. Generally, the building portions of such leases are
capitalized whereas the land portion of such leases are considered
operating leases. The future minimum lease payment obligations under
capital leases for the years subsequent to January 27, 2002 are as
follows:
2003 $ 151,102
2004 151,102
2005 151,102
2006 151,102
2007 121,402
Thereafter 909,213
1,635,023
Less amount representing interest 718,988
Total obligations under capital leases 916,035
Less current portion 56,024
Obligations under capital leases,
less current portion $ 860,011
The Company, as lessor, subleased three properties to outside third
parties in fiscal 2002. Subsequent to fiscal 2002, the Company
subleased one additional property to an unrelated third party.
Property and accumulated depreciation accounts at January 27, 2002
include $1,326,910 and $426,477, respectively, related to these
properties.
Future minimum lease payments to be received subsequent to January 27,
2002 are as follows:
2003 $ 238,333
2004 274,000
2005 216,500
2006 86,500
2007 50,000
Thereafter 16,667
$ 882,000
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY
In March 1984, the Company adopted an Employee Incentive Stock Option
Plan (1984 Plan) for a 10-year term to grant options for the purchase
of up to 475,000 shares of common stock. The 1984 Plan provides the
Company may grant options to certain employees at the fair market value
of the stock at the grant date. One-half of the option is exercisable
6 months after the grant date and one-half is exercisable 18 months
after the grant date. Following is a summary of the activity in the
1984 Plan for the three years ended January 27, 2002:
Per Share
Number Exercise Price
of Weighted
Shares Range Average
Balance, January 31, 1999 77,000 $ .29 $ .29
Exercised (77,000) .29 .29
Balance, January 30, 2000 -- $ -- $ --
Exercised -- -- --
Balance, January 28, 2001 -- $ -- $ --
Exercised -- -- --
Balance, January 27, 2002 -- $ -- $ --
Exercisable at January 30, 2000 -- $ -- $ --
Exercisable at January 28, 2001 -- $ -- $ --
Exercisable at January 27, 2002 -- $ -- $ --
At January 27, 2002, there were no additional shares available for
grant under the 1984 Plan.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY (CONTINUED)
On July 25, 1994, the Company adopted an Employee Incentive Stock
Option Plan (1994 Plan) for a 10-year term to grant options for the
purchase of up to 600,000 shares of common stock. The 1994 Plan
provides the Company may grant options to certain employees at the fair
market value at the grant date. The vesting period is at the sole
discretion of the Board of Directors. Generally, 10% of the option can
be exercised after one year, an additional 15% after the second year,
and 25% in each of the next three years. Following is a summary of the
activity in the 1994 Plan for the three years ended January 27, 2002:
Per Share
Number Exercise Price
of Weighted
Shares Range Average
Balance, January 31, 1999 480,703 $1.81 - 4.25 $ 2.70
Granted 210,950 .90 - 2.09 1.52
Canceled (121,466) 1.50 - 4.06 2.84
Exercised (1,000) 2.19 2.19
Balance, January 30, 2000 569,187 $ .90 - 2.19 $ 1.96
Granted -- -- --
Canceled (65,462) .90 - 2.19 1.72
Balance, January 28, 2001 503,725 $1.50 - 2.19 $ 1.99
Granted 71,750 .35 .35
Canceled (62,275) .35 - 2.19 1.32
Balance, January 27, 2002 513,200 $ .35 - 2.19 $ 1.85
Exercisable at January 30, 2000 318,712 $ 2.19 $ 2.19
Exercisable at January 28, 2001 392,637 $1.50 - 2.19 $ 2.08
Exercisable at January 27, 2002 426,200 $1.50 - 2.19 $ 2.04
At January 27, 2002, there were 43,363 additional shares available for
grant under the 1994 Plan, and the weighted average remaining
contractual life of outstanding options was 5.8 years.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY (CONTINUED)
On January 1, 1997, the Company adopted an Employee Incentive Stock
Option Plan (1997 Plan) for a 10-year term to grant options for the
purchase of up to 700,000 shares of stock. The 1997 Plan provides the
Company may grant options to certain employees at the fair market value
at the grant date. The vesting period is at the sole discretion of the
Board of Directors. Generally, 10% of the option can be exercised
after one year, an additional 15% after the second year, and 25% in
each of the next three years. Following is a summary of the activity
in the 1997 Plan for the three years ended January 27, 2002:
Per Share
Number Exercise Price
of Weighted
Shares Range Average
Balance, January 31, 1999 231,750 $2.63 - 4.13 $ 3.43
Granted 60,000 .97 - 1.34 1.22
Canceled (83,000) 2.63 - 4.13 3.43
Balance, January 30, 2000 208,750 $ .97 - 2.19 $ 1.91
Granted 161,500 .66 - 1.31 .90
Canceled (48,500) .66 - 2.19 1.76
Balance, January 28, 2001 321,750 $ .66 - 2.19 $ 1.43
Granted 85,000 .24 - 1.00 .61
Canceled (131,850) .38 - 2.19 1.06
Balance, January 27, 2002 274,900 $ .24 - 2.19 $ 1.35
Exercisable at January 30, 2000 66,500 $ 2.19 $ 2.19
Exercisable at January 28, 2001 80,500 $ .97 - 2.19 $ 2.13
Exercisable at January 27, 2002 114,700 $ .82 - 2.19 $ 1.83
At January 27, 2002, there were 424,600 additional shares available for
grant under the 1997 Plan, and the weighted average remaining
contractual life of outstanding options was 7.5 years.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
6. STOCKHOLDERS' EQUITY (CONTINUED)
The per share weighted average fair value of stock options granted
under the 1994 and 1997 Plans during fiscal 2002, 2001, and 2000 was
$.34, $.72, and $1.23, respectively, on the date of grant using the
Black Scholes option-pricing model using the following weighted average
assumptions:
2002 2001 2000
Expected dividend yield 0% 0% 0%
Volatility factor 83.07% 107.28% 120.82%
Risk free interest rate 4.66% 6.39% 5.85%
Expected life 5 years 5 years 5 years
In December 1999, the Company adopted a resolution to reprice all stock
options granted to employees under the 1994 or 1997 Plans. The
exercise price of all options granted that exceeded $2.19 per share was
repriced to $2.19 per share. The pro forma income per share
disclosures below were modified in accordance with SFAS No. 123.
The Company applies APB Opinion No. 25 in accounting for its stock
options issued to employees, and accordingly, no compensation cost has
been recognized for its stock options in the financial statements. Had
the Company determined compensation cost for the 1994 Plan and 1997
Plan based on the fair value at the grant date for its stock options
under SFAS No. 123, the Company's fiscal 2002, 2001, and 2000 pro forma
net loss and pro forma net loss per common share would have been
adjusted to the pro forma amounts indicated below:
2002 2001 2000
Net loss: As reported $ (2,911,895) $ (639,526) $ (369,097)
Pro forma for SFAS No. 123 (3,044,839) (804,671) (512,873)
Loss per share: As reported $(.35) $ (.08) $ (.05)
Pro forma for SFAS No. 123 (.37) (.10) (.06)
The above pro forma disclosure reflects only options granted during
fiscal years 2002, 2001, and 2000. Therefore, the full impact of
calculating compensation cost for stock options under SFAS No. 123 is
not reflected in the pro forma net loss amounts presented above because
compensation cost is reflected over the options' vesting period of five
years and compensation cost for options granted prior to February 1,
1999 is not considered.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. INCOME TAXES
As of January 27, 2002, the Company has net operating loss
carryforwards for federal and state income tax purposes. These result
in net operating loss carryforwards that, if not used, expire as
follows:
Fiscal Year Operating Loss Carryforwards
Ending Federal Kansas Oklahoma Missouri Arkansas Virginia
2003 $1,193,000 $ 11,000 $ 401,000 $ 139,000 $ 151,000 $ 84,000
2004 434,000 8,000 163,000 60,000 30,000 48,000
2005 134,000 -- 52,000 -- 14,000 18,000
2006 6,000 4,500 2,000 -- 5,000 --
2007 -- 470,000 -- -- 80,000 --
2008 180,000 811,000 -- -- -- --
2009 45,000 330,000 60,000 -- -- --
2010 -- 125,000 -- -- -- --
2011 114,000 47,000 51,000 -- -- --
2012 1,524,000 758,000 518,000 -- -- 72,000
2013 1,706,000 -- 598,000 103,000 -- 13,000
2014 -- -- 152,000 -- -- --
2015 -- -- 75,000 -- -- --
2016 -- -- 30,000 -- -- --
2017 -- -- -- -- -- --
2019 567,000 -- -- 49,000 -- 13,000
2020 233,000 -- -- 19,000 -- 2,000
2021 88,000 -- -- 7,000 -- --
2022 1,407,000 -- 421,000 110,000 -- 4,000
$7,631,000 $2,564,500 $2,523,000 $ 487,000 $ 280,000 $ 254,000
The Company also has approximately $447,000 of certain general business
credit carryforwards that, if not used, will expire in years through
2022.
The total provision for income taxes varied from the federal statutory
rate for the following reasons:
2002 2001 2000
Computed "expected" tax benefit (34.0)% (34.0)% (34.0)%
Increase in income taxes resulting from:
Losses producing no financial
statement tax benefit 34.0% 34.0% 34.0%
--% --% --%
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
7. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
January 27, 2002 and January 28, 2001 are presented below:
2002 2001
Deferred tax assets:
Net operating loss carryforwards $ 2,965,000 $ 2,806,000
General business credits 538,000 379,000
Capital leases 197,000 87,700
Debt guarantee expense 209,000 172,000
Property and equipment 79,000 --
Other 55,000 16,900
Total gross deferred tax assets 4,043,000 3,461,600
Less valuation allowance (4,043,000) (3,289,500)
Net deferred tax assets -- 172,100
Deferred tax liabilities:
Property and equipment -- (172,100)
Net deferred tax assets $ -- $ --
8. RESTAURANT CLOSINGS AND ASSET IMPAIRMENTS
Fiscal 2002 - The Company closed its Wichita Falls, Texas, store, moved
its Wichita, Kansas - West store to a new location, and made the
decision to close its Springfield, Missouri, store effective March
2002. The two stores that were closed had recurring operating losses.
Subsequent to year-end, the Company entered into sublease agreements
for both closed stores. Store closure costs have been recorded as of
January 27, 2002 for accrued estimated future lease costs of $105,427.
This includes contractual lease obligations management estimates it
will incur during the time prior to the sublessee agreements taking
effect, and an accrual for the difference between the Company's
contractual lease obligations and what they estimate to be receiving as
rental income. The provision for restaurant closings also includes
$459,173 of impairment losses from leasehold improvements and other
equipment. Management believes these assets would have no significant
fair value or use outside the two closed restaurants and the one
restaurant moved to a new location. The Company incurred operating
losses on the two closed stores of $151,529 in fiscal 2002 and
operating income of $101,216 in fiscal 2001.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. RESTAURANT CLOSINGS AND ASSET IMPAIRMENTS (CONTINUED)
In connection with its decision to close the Springfield store,
management reviewed the building for impairment. Management estimates
the future cash flow will not be sufficient to recover the carrying
value of the building. Therefore, the building was considered to be
impaired and was written down to its estimated fair value. Fair value
was estimated at $500,000, which is equivalent to the purchase price
offered to the sublessee as dictated in the lease agreement.
Also during 2002, management identified two stores that had incurred
their second consecutive year of operating losses. Management
estimates the future cash flow will not be sufficient to recover the
carrying value of the long-lived assets related to each store.
Therefore, the assets were considered to be impaired and were written
down to their estimated fair values. The fair value of leasehold
improvements and costs capitalized under capital leases was estimated
at $-0-. Management estimated the fair value of restaurant equipment
at 20% of its cost. This is based on historical experience with sales
of similar equipment. The total amount of the non-cash write-off for
impairment of all locations was $1,144,654.
Provision for
Restaurant Asset
Closings Impairment
Store 1 $ 404,794 $ --
Store 2 47,771 --
Store 3 112,035 336,148
Store 4 -- 273,163
Store 5 -- 535,343
Total $ 564,600 $1,144,654
A number of management's judgments are inherent in the estimates of
fair value of the assets, including time needed to find sublessees,
future performance of leases, and other future events. Accordingly,
actual results will vary from such estimates, and the variances could
be material.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
8. RESTAURANT CLOSINGS AND ASSET IMPAIRMENTS (CONTINUED)
Fiscal 2001 - During the last quarter of fiscal 2001, management
decided that the McAlester, Oklahoma store, which had generated
operating losses for two years, would be closed during fiscal 2002.
Management closed the store May 1, 2001, and certain costs related to
the store closure were recorded as an "accrual for restaurant closings"
in the accompanying consolidated balance sheet as of January 28, 2001.
These closure costs included accrued lease costs of $35,850 to be
incurred during the time management estimated it would need to find a
sublessee for the facility after store closure, and a $212,045
impairment loss from leasehold improvements and other equipment
management believed would have no fair value or use outside the
restaurant. The Company incurred operating losses on this store of
$68,194 and $46,017 in fiscal years 2001 and 2000, respectively.
Fiscal 2000 - During fiscal 2000, the Company converted its last Cotton
Patch Cafe restaurant to an Amarillo Grill. The Company incurred an
operating loss of $60,000 in 2000 on the Cotton Patch Cafe prior to its
closure. These costs are included in the results from operations in
the statement of operations.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company has determined the fair value of its financial instruments
in accordance with SFAS No. 107, Disclosures About Fair Value of
Financial Instruments. The carrying amounts of variable rate debt
instruments approximate their fair value because the interest rates on
these instruments change with market interest rates. For all other
financial instruments, including cash, accounts receivable, accounts
payable, and other accrued liabilities, the carrying amounts
approximate fair value because of the short maturity of these
instruments.
10. UNCERTAINTIES AND ESTIMATES RELATED TO LIQUIDITY
At January 27, 2002, the Company had current liabilities in excess of
current assets of $2,014,637 and a stockholders' deficit of $3,694,080.
The Company reported a net loss of $2,911,895 and cash provided by
operating activities of $205,123 for fiscal 2002. Also, as indicated
in the statements of cash flows, over $400,000 of fiscal 2002 liquidity
requirements were met through: (1) increase of operating accounts
payable and accruals and (2) non-reciprocal contributions of paid-in
capital from two major stockholders. There is no assurance that either
of those two sources of cash will be available in the future. Further,
as indicated in the statement of cash flows, cash provided by operating
activities suffered a material decline during fiscal 2002.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
10. UNCERTAINTIES AND ESTIMATES RELATED TO LIQUIDITY (CONTINUED)
Based on its analysis of operations and expected economic conditions
relevant to the Company's operations, and in connection with its annual
budgeting process, management estimates the Amarillo Grill restaurants
will generate sufficient cash flow from operations to enable the
Company to meet its financial obligations in fiscal 2003 as they come
due. However, management estimated an increased cash flow in 2002 that
did not materialize due to economic and operating conditions
encountered during 2002. Accordingly, due to uncertainties inherent in
the process of estimating future results from operations, it is
reasonably possible that cash flow from operations will not be
sufficient to enable the Company to meet its financial obligations
during 2003. The effects on the Company's future financial statements,
in the event it is unable to meet its current financial obligations,
have not been determined.
As explained in Note 4, the Company refinanced its note payable to
bank, originally due in April 2002, to extend its term through April
2003. The Company's ability to refinance this note is dependent on
obtaining certain stockholders' guarantees. There is no assurance the
guarantors will continue their commitments on the debt beyond future
maturity dates.
11. LITIGATION
The Company is a party to various litigation arising in the normal
course of conducting business in the litigious U.S. business
environment. Management does not expect any material amounts of future
loss as a result of such litigation.
AMARILLO MESQUITE GRILL, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
12. QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
Year Ended January 27, 2002
First Second Third Fourth
Quarter Quarter Quarter Quarter
Net sales $ 5,025,645 $ 4,653,177 $ 4,634,634 $ 4,382,850
Operating income (loss) 120,085 (221,979) (595,215) (1,384,459)
Net loss (58,048) (379,020) (865,685) (1,609,142)
Net loss per share (0.01) (0.05) (0.10) (0.19)
Year Ended January 28, 2001
First Second Third Fourth
Quarter Quarter Quarter Quarter
Net sales $ 5,629,353 $ 5,127,450 $ 5,260,497 $ 4,791,304
Operating income (loss) 288,808 109,230 80,570 (355,214)
Net income (loss) 104,842 (81,834) (114,431) (548,103)
Net income (loss) per share 0.01 (0.01) (0.01) (0.07)
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Amarillo Mesquite Grill, Inc:
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (nos. 33-95480 and 333-44227), of our report, dated
March 21, 2002, relating to the financial statements of Amarillo Mesquite
Grill, Inc., included in the annual report on Form 10-K, as of and for the
year ended January 27, 2002.
Allen, Gibbs & Houlik, L.C.
Wichita, Kansas
April 26, 2002