FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended April 28, 2002
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to ________________
Commission file number 0-12145
AMARILLO MESQUITE GRILL, INC.
(Exact name of registrant as specified in its charter)
Kansas 48-0936946
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) identification No.)
Suite 200
302 North Rock Road
Wichita, Kansas 67206
(Address of principal executive offices)
(Zip Code)
(316) 685-7286
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes x No ___.
As of April 28, 2002, 8,241,137 shares of common stock $.01 par value were
outstanding.
AMARILLO MESQUITE GRILL, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include
all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the
opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the thirty-nine week period
ended April 28, 2002 are not necessarily indicative of the results
that may be expected for the year ended January 26, 2003. For
further information, refer to the consolidated financial statements
and footnotes thereto included in the Company's 10-K and Annual
Report to Stockholders as filed on April 25, 2002.
(2) Net Earnings Per Share
The Company, as required under FASB Statement No. 128, Earnings Per
Share, calculates and presents both a basic and diluted earnings per
share in the financial statements. Earnings per common share is
computed on the basis of the weighted-average number of common shares
outstanding during each period presented. The Company has granted
options to employees to purchase 1,303,100 shares of common stock
at a weighted average exercise price of $1.85 per share. These
options were not included in the computation of diluted earnings
per share because the exercise price of those options exceeded the
average market price of the common shares during the quarter. Also
since the Company had a net loss available to common stockholders,
inclusion of these options would be antidilutive to earnings per share.
Item 1. Financial Statements
Amarillo Mesquite Grill, Inc.
Balance Sheets
(Unaudited)
ASSETS April 28, 2002 January 27, 2002
Current Assets:
Cash $ 272,759 $ 259,050
Accounts Receivable 6,354 20,381
Note Receivable 13,585 13,047
Advances to affiliate 21,583 13,364
Inventories 175,000 150,867
Prepaid expenses and other current assets 94,431 152,533
Total current assets 583,712 609,242
Property & Equipment:
Buildings 682,829 682,829
Leasehold improvements 2,193,445 2,193,445
Equipment & fixtures 4,052,239 4,030,661
Transportation Equipment 18,999 18,999
Property under capital leases 848,822 848,822
7,796,334 7,774,756
Less: accumulated depreciation &
amortization (3,465,883) (3,279,540)
Total property and equipment 4,330,451 4,495,216
Other Assets
Cost in excess of net tangible assets
of purchased business, net of
amortization of $406,644 540,367 540,367
Deposits and other 55,123 35,123
Note Receivable 10,398 14,448
Total other assets 605,888 589,938
Total assets $ 5,520,051 $ 5,694,396
LIABILITIES & STOCKHOLDERS EQUITY (DEFICIT)
Current Liabilities:
Notes payable $ 6,084,021 $ 241,299
Current portion of obligation under
capital lease 50,231 56,024
Accounts Payable 1,244,798 1,202,836
Accrued payroll 163,740 180,076
Accrual for Gift Certificates 334,815 402,754
Other Accrued liabilities 413,200 449,003
Accrual for Restaurant Closing 78,387 91,887
Total current liabilities 8,369,192 2,623,879
LONG TERM LIABILITIES
Long-term debt, less current portion - 5,904,586
Obligation under capital lease, less
current portion 854,537 860,011
Total liabilities 9,223,729 9,388,476
Stockholders' equity (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 April 28, 2002 and at
January 27, 2002 83,011 83,011
Additional paid-in capital 7,981,012 7,954,302
Accumulated deficit (11,497,701) (11,461,393)
Treasury stock, 60,000 shares of common
stock at cost (270,000) (270,000)
Total stockholders' equity (deficit) (3,703,678) (3,694,080)
Total liabilities and stockholder's
deficit $ 5,520,051 $ 5,694,396
Amarillo Mesquite Grill, Inc.
Statement of Operations
(Unaudited)
Thirteen Weeks Thirteen Weeks
04/28/2002 04/29/2001
Sales $ 4,194,252 $ 5,025,645
Costs and expenses
Cost of goods sold 1,499,770 1,783,214
Operating expenses 2,153,201 2,620,678
Depreciation and amortization 186,343 236,543
General and administrative 271,261 265,125
Total costs and expenses 4,110,575 4,905,560
Operating income 83,677 120,085
Other income (expense)
Interest expense (95,525) (153,673)
Non cash expense from issuance of stock
options to related parties pursuant
to debt guarantees (24,460) (24,460)
Total other expense (119,985) (178,133)
Loss before income taxes $ (36,308) $ (58,048)
Net loss per common share - basic
and diluted $ (0.00) $ (0.01)
Average shares outstanding - basic and diluted 8,241,137 8,241,137
Amarillo Mesquite Grill, Inc
Statement of Cash Flows
(Unaudited)
Thirteen Weeks Ended
April 28, 2002 April 29, 2001
Cash flows from operating activities
Net earnings $ (36,308) $ (58,048)
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 186,343 236,543
Non cash expense from issuance of stock
options to related parties pursuant to
debt guarantees 24,460 24,460
Non cash compensation expense 2,250 -
Changes in assets and liabilities
(Increase) decrease in accounts receivable 5,808 12,756
(Increase) decrease in notes receivable 3,512 -
(Increase) decrease in inventories (24,133) 12,575
(Increase) decrease in prepaid expenses
and other assets 38,102 53,259
Increase (decrease) in accounts payable 41,962 (166,858)
Increase (decrease) in accrued expenses (120,078) (87,325)
Increase (decrease) in accrual for
restaurant closings (13,500) -
Net cash provided by operating
activities 108,418 27,362
Cash flows from investing activities:
Purchase of property and equipment (21,578) (14,292)
Net cash used in investing activities (21,578) (14,292)
Cash flows from financing activities:
Repayment of notes payable and
note payable related party - (13,007)
Repayment of long-term borrowings
and capital lease obligations (73,131) (11,267)
Net cash used in financing activities (73,131) (24,274)
Increase in cash 13,709 (11,204)
Cash at beginning of period 259,050 348,182
Cash at the end of period $ 272,759 $ 336,978
Supplemental disclosure of cash flow information:
Cash paid for interest $ 95,525 $ 153,673
Cash paid for income taxes 0 0
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operation.
Results of Operations
Three Months Ended April 28, 2002 Compared to Three Months Ended April 29,
2001.
For the three months ended April 28, 2002, sales decreased 16.5% to
$4,194,252 as compared to $5,025,645 for the first quarter of the prior year.
The sales decrease for the quarter ended April 28, 2002 was attributed to the
closing of stores as compared to the same quarter last year. As of April 28,
2002 the Company operated twelve Amarillo Mesquite Grills as compared to
fourteen restaurants at the same period last year.
Cost of sales, as a percentage of total sales, was 35.8% for the quarter
ended April 28, 2002 as compared to 35.5% for the first quarter of the prior
year. The costs of sales as a percentage of total sales was up due to the
increase in the cost of produce. All other food costs were steady to down
during the quarter ended April 28, 2002 as compared to the quarter ended
April 29, 2001.
Operating expenses, as a percentage of total sales, were 51.3% and 52.1% for
the 2002 and 2001 periods respectively. The decrease in operating expenses
is due to lower labor costs for the quarter ended April 28, 2002 as compared
to the quarter ended April 29, 2001.
General and Administrative expenses, as a percentage of sales, was 6.5% for
the quarter ended April 28, 2002 as compared to 5.3% for the first quarter of
the prior year. The increase in general and administrative expense, as a
percentage of sales, is the result of the decrease in sales.
Depreciation and amortization is directly related to the acquisition and
disposition of fixed assets. The net investment in fixed assets decreased
approximately $2,212,000 from the end of the first quarter last year to the
end of the first quarter of the current year. Depreciation and amortization
decreased due to the closing of stores as well as items becoming fully
depreciated.
Interest expense was $95,525 for the quarter ended April 28, 2002 as compared
to $153,673 for the same period a year ago. Interest expense is a function
of the interest rate and the amount of debt. The interest rate has decreased
over the past few months as well as a reduction in the short term and long
term debt. Consequently interest expense is lower this quarter as compared
to the same quarter last year.
The Company incurred noncash expenses of $24,460 for the 2002 and 2001
periods respectively, relating to the issuance of stock options pursuant to
debt guarantees.
Liquidity and Capital Resources
The Company's primary sources of funding to finance its business have been
its cash flow from operations, and proceeds from bank debt. On April 28,
2002 and January 27, 2002, the Company had an excess of current liabilities
over current assets of $7,785,480 and $2,014,637 respectively. However,
included as a current liability as of April 28, 2002 is a bank note payable
in the amount of $5,904,586 which is due April 15, 2003. Cash flow
from operations was $108,418 and $27,362 for 2002 and 2001 respectively.
Management anticipates higher cash flow from 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.
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 requirement for receivables and inventories are not
significant.
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 the purchase of equipment for its relocation restaurant in Wichita,
Kansas, in the amount of $31,000 during the month of June, and to make a
partial reduction in its $148,435 note payable to a bank. The Company
expects to renew the balance of the note payable to the bank in June 2002.
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 April 28, 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.
Part II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports of From 8-K
10.1 Promissory Note Dated April 15, 2002 between the Company and
Intrust Bank
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Amarillo Mesquite Grill, Inc.
(Registrant)
Date: May 31, 2002 /s/CHRIS F. HOTZE
Chris F. Hotze - President
Exhibit 10.1
PROMISSORY NOTE
Principal Loan Date Maturity Loan No Call/Coll Account Officer Initials
$5,904,586.21 04-15-2002 04/15/2003 35418 04AQ/27 R-186943 JL23
References in the shaded area are for Lender's use only and do not limit the
applicability of this document to any particular loan or item.
Any item above containing ******* has been omitted due to text length limitations
Borrower: Amarillo Mesquite Grill, Inc. (TIN: 48-0936946 Lender: INTRUST Bank, N.A.
P.O. Box 2817 105 N. Main
Wichita, KS 67201-2817 P.O. Box One
Wichita, KS 67202
(316) 383-1111
Principal Amount: $5,904,586.21 Initial Rate: 4.75% Date of Note: April 15, 2002
PROMISE TO PAY. Amarillo Mesquite Grill, Inc. ("Borrower") promises to pay
to INTRUST Ban, N.A. ("Lender") or order, in lawful money of the United State
of America, the principal amount of Five Million Nine Hundred Four Thousand
Five Hundred Eighty-six & 21/100 Dollars ($5,904,586.21), together with
interest on the unpaid principal balance from April 15, 2002, until paid in
full.
PAYMENT: Borrower will pay this loan in one principal payment of
$5,904,586.21 plus interest on April 15, 2003. This payment due on April 15,
2003, will be for all principal and all accrued interest not yet paid. In
addition, Borrower will pay regular monthly payments of all accrued unpaid
interest due as of each payment date, beginning May 15, 2002, with all
subsequent interest payments to be due on the same day of each month after
that. Unless otherwise agreed or required by applicable law, payments will
be applied first to accrued unpaid interest, then to principal, and any
remaining amount to any unpaid collection costs and late charges. The annual
interest rate for this Note is computed on a 365/360 basis; that is, by
applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding. Borrower will pay
Lender at Lender's address shown above or at such other place as Lender may
designate in writing.
VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the Prime
Rate as published in the Wall Street Journal Southwestern Edition (the
"Index"). The index is not necessarily the lowest rate charged by Lender on
its loans. If the Index becomes unavailable during the term of his loan,
Lender may designate a substitute index after notice to Borrower. Lender
will tell Borrower the current index rate upon Borrower's request. The
interest rate change will not occur more often than each month on the first
day of the month following the change of the index. Borrower understands
that Lender may make loans based on other rates as well. The Index currently
is 4.75% per annum. The Interest rate to be applied to the unpaid principal
balance of the Note will be at a rate equal to the Index, rustling in an
initial rate of 4.75% per annum. NOTICE: Under no circumstances will the
interest rate on this Note be more than the maximum rate allowed by
applicable law.
PREPAYMENT. Borrower agrees that all loan fees and other prepaid finance
charges are earned fully as of the date of the loan and will not be subject
to refund upon early payment (whether voluntary or as a result of default),
except as otherwise required by law. Except for the foregoing, Borrower may
pay without penalty all or a portion of the amount owed earlier than it is
due. Early payments will not, unless agreed to by Lender in writing, relieve
Borrower of Borrower's obligation to continue to make payments under the
payment schedule. Rather, early payments will reduce the principal balance
due. Borrower agrees not to continue to make payments under the payment
schedule. Rather, early payments will reduce the principal balance due.
Borrower agrees not to send Lender payments marked "paid in full", without
recourse", or similar language. If Borrower sends such a payment, Lender may
accept it without losing any of Lender's rights under this Note, and Borrower
will remain obligated to pay any further amount owed to Lender. All written
communications concerning disputed amounts, including any check or other
payment instrument that indicates that the payment constitutes "payment in
full" of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of disputed amount must be mailed or
delivered to: INTRUST Bank, N.A. Commercial Loans Dept., Attn.: Final Payment
Clerk, 105 N. Main Wichita, KS 67202.
LATE CHARGE. If a payment is 10 days or more late, Borrower will be charged
5.000% of the unpaid portion of the regularly schedule payment or $100.00,
whichever is less.
INTERST AFTER DEFAULT. Upon default, including failure to pay upon final
maturity, Lender, at its option, may, if permitted under applicable law,
increase the variable interest rate on this Note to 2.000 percentage points
over the Index. The interest rate will not exceed the maximum rate permitted
by applicable law.
DEFAULT: Each of the following shall constitute an event of default ("Event
of Default") under this Note:
Payment Default. Borrower fails to make any payment when due under this
Note.
Other Defaults. Borrower fails to comply with or to perform any other
term, obligation, covenant or condition contained in this Note or in any of
the related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default in Favor of Third Parties. Borrower or any Grantor defaults under
any loan, extension of credit, security agreement, purchase or sales
agreement, or any other agreement, in flavor of any other creditor or
person that may materially affect any of Borrower's property or Borrower's
ability to repay this Note or perform Borrower's obligations under this
Note or any of the related documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower's behalf under this Note or
the related documents is false or misleading in any material respect,
either now or at the time made or furnished or become false or misleading
at any time thereafter.
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This
includes a garnishment of any of Borrower's accounts, including deposit
accounts, with Lender. However, this Event of Default shall not apply if
there is a good faith dispute by Borrower as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Borrower give Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a
surety bond for the creditor or forfeiture proceeding, in an amount
determined by Lender, in its sole discretion, as being an adequate reserve
or bond for the dispute.
Events Affecting Guarantor. Any of the preceding events occurs with
respect to any Guarantor of any of the indebtedness or any Guarantor dies
or become incompetent, or revokes or disputes the validity of, or liability
under, any guaranty of the indebtedness evidenced by the Note.
Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
this Note is impaired.
Insecurity. Lender in good faith believes itself insecure.
PROMISSORY NOTE
Loan No: 35418 (Continued) Page 2
LENDER'S RIGHTS. Upon default, Lender may declare the entire unpaid
principal balance on this Note and all accrued unpaid interest immediately
due, and then Borrower will pay that amount.
EXPENSES. If Lender institutes any suit or action to enforce any of the
terms of this Note, Lender shall be entitled to recover Lender's reasonable
expenses that Lender incurs in realizing on the Collateral. Whether or not
any court action is involved, all reasonable expenses Lender incurs that in
Lender's opinion are necessary at any time for the protection of its interest
or the enforcement of its rights shall become a part of the loan payable on
demand and shall bear interest at the Note rate from the date of the
expenditure until repaid. Expenses covered by this paragraph include,
without limitation, Lender's legal expenses whether or not there is a
lawsuit, including expenses for bankruptcy proceedings (including efforts to
modify or vacate and automatic stay or injunction), and appeals, and any
court costs and collection agency fees.
JURY WAIVER. Lender and Borrower hereby waive the right to any jury trial in
any action, proceeding, or counterclaim brought by either Lender or Borrower
against the other.
GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Kansas. This Note
has been accepted by Lender in the State of Kansas.
DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $10.00 if Borrower
makes a payment on Borrower's loan and the check or preauthorized charge with
which Borrower pays is later dishonored.
RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves
a right of setoff in all Borrower's accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust
accounts for which setoff would be prohibited by law. Borrower authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all
sums owing on the indebtedness against any and all such accounts, and. At
Lender's option, to administratively freeze all such accounts to allow Lender
to protect Lender's charge and setoff rights provided in this paragraph.
COLLATERAL. Borrower acknowledges this Note is secured by Security Agreement
dated 6/10/97 covering all tangible and intangible property of Amarillo
Mesquite Grill, Inc.: all equipment, utensils, small wares, furniture,
inventory, accounts, contract rights, general intangibles, fixtures and
machinery located at various locations listed on the attached Exhibit "A".
FINANCIAL STATEMENTS. Borrower covenants and agrees with Lender that
Borrower will furnish to Lender, in a form satisfactory to Lender, such
financial information and statements as Lender may request from time to time,
including, without limitation, balance sheet and income statements on a
periodic basis, tax returns, and listings of inventory, accounts or other
assets. Borrower further covenants and agrees with Lender that all financial
information and statements provided to Lender shall be prepared in accordance
with generally accepted accounting principles, consistently applied, and
shall be certified by Borrower as being true and correct. Borrower agrees to
deliver financial information and statements requested by Lender no later
that thirty (30) days after Lender's request for such information.
TERMS AND FEES IF REFINANCED. Borrower acknowledges that Lender is under no
obligations to refinance this Note upon its maturity. Any refinance shall be
at Lender's sole option and may include terms and conditions that differ
materially from those contained in this Note. Upon refinance, Bank may
impose such fees and charges as the Bank deems appropriate, including,
without limitation, a refinance fee, and if this Note evidences a line of
credit, an unused commitment fee.
PRIOR NOTE. Refinance of Promissory Note # 186943-35418.
SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower,
and upon Borrower's heirs, personal representatives, successors and assigns
and shall inure to the benefit of Lender and its successors and assigns.
GENERAL PROVISIONS. Lender may delay or forgo enforcing any of its rights or
remedies under this Note without losing them. Borrower and any other person
who signs, guarantees or endorses this Note, to the extent allowed by law,
waive presentment, demand for payment, protest and notice of dishonor. Upon
any change in the terms of this Note, and unless otherwise expressly state in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length
of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender's security interest in the
collateral; and take any of the action deemed necessary by Lender without the
consent of or notice to anyone. All such parties also agree that Lender may
modify this loan without the consent of or notice to anyone other than the
party with whom the modification is made. The obligations under this Note
are joint and several.
PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS
OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER
AGREES TO THE TERMS OF THE NOTE.
BORROWER ACKNOWLEDGS RECEIPT OF A COMPLTED COPY FO THE PROMISSORY NOTE.
BORROWER:
AMARILLO MESQUITE GRILL, INC.
By:_____________________________________________________ By:_____________________________________________________
Chris F. Hotze, President of Amarillo Mesquite Grill, Inc. Alan Bundy, Vice President of Amarillo Mesquite Grill, Inc.