SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 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 0-12226
CALIFORNIA BEACH RESTAURANTS, INC.
----------------------------------
(Exact name of Company as specified in its charter)
CALIFORNIA 95-2693503
- ------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
17383 Sunset Boulevard, Suite 140, Pacific Palisades, CA 90272
--------------------------------------------------------------
(Address and zip code of Principal executive offices)
(310) 459-9676
--------------
(Company's telephone number, including area code)
Indicate by check mark whether the Company (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 Company was
required to file such reports) and (2) has been subject to the filing
requirements for at least the past 90 days.
Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date:
Number of Shares Outstanding
Class at September 6, 2002
----- --------------------
Common Stock, $.01 par value 3,400,865
1
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
JULY 31, 2002
INDEX
Part I - FINANCIAL INFORMATION Page Number
- ------------------------------ -----------
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at July 31, 2002
and April 30, 2002................................................3
Consolidated Statements of Income for the
Three Months Ended July 31, 2002 and 2001.........................5
Consolidated Statements of Cash Flows for the
Three Months Ended July 31, 2002 and 2001.........................6
Notes to Consolidated Financial Statements........................7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations...............................9
Item 3. Quantitative and Qualitative Disclosures about Market Risk.......13
Part II - OTHER INFORMATION
Item 1. Legal Proceedings................................................14
Item 2. Changes in Securities and Use of Proceeds .......................14
Item 3. Defaults Upon Senior Securities..................................14
Item 4. Submission of Matters to a Vote of Security Holders..............14
Item 5. Other Information................................................14
Item 6. Exhibits and Reports on Form 8-K.................................14
Signature Page..............................................................15
Certification Page..........................................................18
2
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
July 31, 2002 April 30, 2002
----------- -----------
(Unaudited) (1)
Current Assets:
Cash $ 496,000 $ 284,000
Trade and other receivables 62,000 48,000
Inventories 191,000 234,000
Prepaid expenses 343,000 349,000
----------- -----------
Total current assets 1,092,000 915,000
Fixed Assets (at cost) - net of accumulated
depreciation and amortization 2,223,000 2,387,000
Other Assets
65,000 138,000
----------- -----------
$3,380,000 $3,440,000
=========== ===========
The accompanying notes to consolidated financial statements are an integral part
of this statement.
(1) The April 30, 2002 amounts have been extracted from the Company's Annual
Report on Form 10-K for the year ended April 30, 2002.
3
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' DEFICIT
July 31, 2002 April 30, 2002
------------- -------------
(Unaudited) (1)
Current Liabilities:
Revolving line of credit - bank $ 37,000 $ 37,000
Current portion of note payable 234,000 228,000
Note payable- related party 440,000 --
Accounts payable 987,000 965,000
Accrued liabilities 746,000 623,000
Accrual for disposal of location 26,000 318,000
------------- -------------
Total current liabilities 2,470,000 2,171,000
Note payable, less current portion 305,000 365,000
Note payable- related party -- 440,000
Deferred rent 334,000 339,000
Other liabilities 7,000 8,000
Subordinated convertible notes 1,985,000 1,985,000
Stockholders' Deficit:
Preferred stock, no par value, authorized -- --
1,818,755 shares, none issued and
outstanding at July 31, 2002 and 2001
Common stock, $.01 par value, authorized
25,000,000 shares, issued and outstanding
3,401,000 shares at July 31, 2002
and at April 30, 2002 34,000 34,000
Additional paid-in capital 13,175,000 13,175,000
Accumulated deficit (14,930,000) (15,077,000)
------------- -------------
Total stockholders' deficit (1,721,000) (1,868,000)
------------- -------------
$ 3,380,000 $ 3,440,000
============= =============
The accompanying notes to consolidated financial statements are an integral part
of this statement.
(1) The April 30, 2002amounts have been extracted from the Company's Annual
Report on Form 10-K for the year ended April 30, 2002.
4
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
Three Months Ended July 31,
---------------------------
2002 2001
------------ ------------
Sales $ 3,409,000 $ 3,896,000
Costs and Expenses:
Cost of goods sold 2,902,000 3,344,000
Selling, general and administrative 199,000 220,000
Depreciation and amortization 97,000 105,000
------------ ------------
211,000 227,000
Other income (expenses):
Interest expense (64,000) (47,000)
------------ ------------
Income before income taxes 147,000 180,000
Provision for income taxes -- (1,000)
------------ ------------
Net income $ 147,000 $ 179,000
============ ============
Net income per common share:
Basic $ .04 $ .05
============ ============
Diluted $ .03 $ .04
============ ============
Weighted average number of common shares outstanding:
Basic 3,401,000 3,401,000
Diluted 5,386,000 5,291,000
The accompanying notes to consolidated financial statements are an integral part
of this statement.
5
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended July 31,
---------------------------
2002 2001
---------- ----------
Operating activities:
Net income $ 147,000 $ 179,000
Adjustments to reconcile net income to cash provided by operations:
Depreciation and amortization 97,000 105,000
Changes in operating assets and liabilities:
Trade and other receivables (25,000) (83,000)
Inventories 3,000 (21,000)
Prepaid expenses 6,000 (15,000)
Other assets 3,000 1,000
Accounts payable 24,000 298,000
Accrued liabilities 123,000 65,000
Deferred rent (5,000) (5,000)
Accrual for disposal of location (70,000) --
Other liabilities (2,000) (9,000)
---------- ----------
Cash provided by operations 301,000 515,000
---------- ----------
Investing activities:
Additions to fixed assets (35,000) (18,000)
---------- ----------
Net cash used in investing activities (35,000) (18,000)
Financing activities:
Principal payments on borrowings (54,000) (106,000)
---------- ----------
Net cash used in financing activities (54,000) (106,000)
---------- ----------
Net increase in cash 212,000 391,000
Cash at beginning of period 284,000 221,000
---------- ----------
Cash at end of period $ 496,000 $ 612,000
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 10,000 $ 21,000
========== ==========
Income taxes $ 2,000 $ 1,000
========== ==========
The accompanying notes to consolidated financial statements are an integral part
of this statement.
6
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The unaudited consolidated financial statements presented herein include the
accounts of California Beach Restaurants, Inc., and its wholly-owned
subsidiaries (the "Company"). All significant intercompany accounts and
transactions have been eliminated.
Restaurant operations include the results of Gladstone's 4 Fish in Pacific
Palisades, California, and RJ's - Beverly Hills in Beverly Hills, California.
Effective June 21, 2002, the Company ceased operations at RJ's. The Company
reviewed the on going results at RJ's and determined that the negative
contribution over the last several years was likely to continue. Given the
continuing losses at RJ's, which amounted to $265,000 in fiscal year 2002, and
$27,000 in the quarter ended July 31, 2002, combined with current working
capital constraints, the Company negotiated with the landlord to vacate the
premises. The landlord has sublet the property at a rent equivalent to the
Company's current lease rate. The Company has a guarantee through December 31,
2004 requiring payment of the monthly rental payments in the event that the new
lessee fails to make payments and the new lessee's deposits are inadequate to
cover the remaining payments. The Company has sold the RJ's trademark to the new
tenant. For the year ended April 30, 2002, the Company recorded a loss of
$318,000 related to provision for closing RJ's, including accruing for costs
associated with shutting down the restaurant including fees to the landlord and
other professionals. The revenues and operating loss for RJ's were $1,401,702
and $265,000 in 2002, $1,715,650 and $146,000 in 2001, and $1,643,274 and
$108,000 in 2000, respectively. Revenues and operating losses for RJ's were
$168,490 and $2,132 in the first quarter of fiscal 2003, and $365,979 and
$57,427 in the first quarter of fiscal 2002, respectively.
The unaudited consolidated financial statements presented herein have been
prepared in accordance with generally accepted accounting principles and the
instructions to Form 10-Q and article 10 of Regulation S-X and do not include
all of the information and footnote disclosures required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying financial statements include all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
the Company's financial position and results of operations. The results of
operations for the three month period ended July 31, 2002 may not be indicative
of the results that may be expected for the year ending April 30, 2003. These
statements should be read in conjunction with the financial statements and notes
thereto included in the Company's Form 10-K for the year ended April 30, 2002.
NOTE B - ACCOUNTING PERIODS
The Company's restaurant operations are conducted through its wholly owned
subsidiary, Sea View Restaurants, Inc. ("Sea View"). The Company's consolidated
financial statements for the three months ended July 31, 2002 and 2001 include
Sea View's operations for the twelve weeks ended July 25, 2002 and July 26,
2001, respectively.
7
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE C - FIXED ASSETS
July 31, 2002 April 30, 2002
------------ ------------
Leasehold improvements 4,010,000 4,656,000
Furniture and equipment 1,876,000 2,184,000
------------ ------------
5,886,000 6,840,000
Less accumulated depreciation and amortization (3,663,000) (4,453,000)
------------ ------------
$ 2,223,000 $ 2,387,000
============ ============
NOTE D - BASIC AND DILUTED EARNINGS PER COMMON SHARE
The Company presents two earnings per share amounts, basic earnings per common
share and diluted earnings per common share. Basic earnings per common share
includes only the weighted average shares outstanding and excludes the dilutive
effect of options, warrants and convertible securities. The following table sets
forth the computation of basic and diluted earnings per common share for the
three months ended July 31, 2002 and 2001:
July 31, 2002 July 31, 2001
------------ ------------
BASIC EARNINGS PER COMMON SHARE:
Net income available to common shareholders $ 147,000 $ 179,000
Weighted average shares outstanding 3,401,000 3,401,000
------------ ------------
Basic earnings per common share $ 0.04 $ 0.05
============ ============
DILUTED EARNINGS PER COMMON SHARE:
Net income available to common shareholders $ 147,000 $ 179,000
Interest on convertible debt, net of tax 31,000 24,000
------------ ------------
Adjusted net income available to common
shareholders assuming conversion 178,000 203,000
------------ ------------
Weighted average shares outstanding 3,401,000 3,401,000
Effect of dilutive securities (convertible debt) 1,985,000 1,890,000
------------ ------------
Adjusted weighted average shares and assumed
conversions
5,386,000 5,291,000
============ ============
Diluted earnings per share $ 0.03 $ 0.04
============ ============
8
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
BASIC AND DILUTED EARNINGS PER COMMON SHARE (CONTINUED)
The shares related to the stock options are excluded due to their anitdilutive
effect as a result of the option's exercise price being greater than the average
market price of the common shares for the three months ended July 31, 2002 and
2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
- ----------------------------
On December 12, 2001, the Securities and Exchange Commission (SEC)
issued a financial reporting release, "Cautionary Advice Regarding Disclosure
about Critical Accounting Policies" ("FR-60"). The SEC alerted public companies
to the need for improved disclosures about critical accounting policies. FR-60
defines "critical accounting policies" as those most important to the financial
statement presentation and that require the most difficult, subjective, complex
judgments. The SEC announced an expectation that public companies would provide
disclosures responsive to FR-60, including disclosures in Management's
Discussion and Analysis, in annual reports for fiscal years ending on or after
December 31, 2001.
Due to the nature of the business, few accounting policies are
applicable and no critical estimates are made by the Company.The critical
accounting policies of the Company are disclosed in Note 2 to the Consolidated
Financial Statements included in the Company's Annual Report on Form 10K for the
year ended April 30, 2002.
RESTAURANT OPERATIONS
- ---------------------
Restaurant operations include the results of Gladstone's 4 Fish in
Pacific Palisades, California, and RJ's - Beverly Hills in Beverly Hills,
California.
Effective June 21, 2002, the Company ceased operations at RJ's. The Company
reviewed the on going results at RJ's and determined that the negative
contribution over the last several years was likely to continue. Given the
continuing losses at RJ's, which amounted to $265,000 in fiscal year 2002,
combined with current working capital constraints, the Company negotiated with
the landlord to vacate the premises. The landlord has sublet the property at a
rent equivalent to the Company's current lease rate. The Company has sold the
RJ's trademark to the new tenant. For the year ended April 30, 2002, the Company
recorded a loss of $318,000 related to the impairment of the remaining assets of
RJ's as well as accruing for costs associated with shutting down the restaurant
including fees to the landlord and other professionals.
9
RESTAURANT REVENUES
- -------------------
Total sales for the twelve weeks ending July 25, 2002 were $3,409,000 compared
with $3,896,000 for the same period last year, a decrease of $487,000 or 12.5%
less. Gladstone's sales were $3,221,493 for the twelve weeks ending July 25,
2002 a decrease of $292,286 or 8.3%. For the twelve weeks ending July 25, 2002
guest counts were 136,521 compared with 132,374 for the same period last year,
an increase of 4,147 or 3.1%. While overall customer counts increased, the
reduction in high spending business and tourist air travellers, resulted in an
average sales per customer decrease of 9.0%.
As a result of typically more favorable weather and higher tourism during the
summer months from May through September, the Company's sales and operating
profits have historically been higher in the first and second quarters of its
fiscal year.
COST OF GOODS SOLD
- ------------------
Cost of goods sold includes all food, beverages, liquor, direct labor and other
operating expenses, including rent, of the Company's restaurant operations.
Cost of goods sold for the twelve weeks July 25, 2002 was $2,902,000, or 85.2%
as a percentage of sales, compared with $3,344,000, or 85.8% as a percentage of
sales, during the same period last year. The decrease in cost of goods sold as a
percentage of sales for the twelve weeks ending July 25, 2002,as compared to the
comparable period in 2001, is primarily the result of the elimination of RJ's
operations and costs related to it. RJ's cost of goods sold for the twelve weeks
ended July 25, 2002 were $402,000 and $409,000 for same period in the prior
year.
Cost of goods sold as a percentage of sales have historically been slightly
lower during the first and second quarters due to additional economies of scale
that can be achieved with labor when sales levels are higher. For the fiscal
year ended April 30, 2002, cost of goods sold, as a percentage of sales, was
93.6%.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
- --------------------------------------------
Selling, general and administrative expenses decreased by $21,000 or 9.5% to
$199,000 during the three months ended July 31, 2002, as compared to $220,000
during the comparable period in the prior fiscal year. The decrease is
attributable primarily to the reduction in the Company's legal fees and clerical
salaries in the current period as compared to the same period in the prior year.
10
DEPRECIATION AND AMORTIZATION EXPENSE
- -------------------------------------
Depreciation and amortization expense for fixed assets decreased by $8,000 or
7.6% from $105,000 during the three months ended July 31, 2001 to $97,000 for
the three months ended July 31, 2002. The decrease is attributable to the
reduction of RJ's depreciation during the three months ended July 31, 2002, as
compared to the three months ended in prior year. The decrease was partially
offset by depreciation on fixed assets additions subsequent to July 31, 2001.
INTEREST EXPENSE
- ----------------
Interest expense increased $17,000 or 36.2% from $47,000 for the three months
ended July 31, 2001 to $64,000 for the three months ended July 31, 2002. This
was due primarily to additional borrowings from a related party in December
2001.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Effective June 21, 2002, the Company ceased operations at RJ's. The
Company reviewed the on going results at RJ's and determined that the negative
contribution over the last several years was likely to continue. The losses at
RJ's in fiscal 2002 were $265,000 in fiscal 2002 and for the first quarter of
fiscal 2003 were $2000.
The Company believes the elimination of the RJ's losses will allow it
to generate positive operating cash flow in 2003. Additionally, management
believes it will be able to replace the current $475,000 bank line of credit and
make all scheduled debt payments in fiscal 2003, or renegotiate the terms
accordingly. The Company believes it has access to additional sources of debt to
fund working capital needs through July 31, 2003. There can be no assurance the
Company will be able to effectively accomplish these objectives.
On March 30, 1999, the Company completed a private offering of
$1,800,000 of subordinated, convertible notes ("Subordinated Notes") to a
limited number of existing shareholders of the Company who are "accredited
investors" within the meaning of Regulation D promulgated under the Securities
Act of 1933, as amended. The proceeds of the offering were used to retire
existing indebtedness to Outside LLC (as defined therein), and to finance the
renovations at Gladstone's. The Subordinated Notes are immediately convertible
into common stock of the Company at a rate of $1 per share, and pay interest at
5% per annum, except as adjusted as described below. The Company may pay
interest on the Subordinated Notes in cash or in kind. All interest due as of
March 30, 2001 and March 30, 2002 was paid in kind by issuing notes with
identical terms to the Subordinated Notes. On March 6, 2002 an amendment to the
note purchase agreement was entered into to provide that the Subordinated Notes
may not be voluntarily prepaid by the Company as to principal and interest
without the consent of noteholder and will mature as to principal and accrued
interest on October 1, 2003 instead of March 25, 2003. Also, the interest rate
was increased to 7.5% per annum (1) with respect to 50% of the principal amount
of the Subordinated Notes, for the period commencing April 1, 2002 until March
31, 2003; and (2) with respect to one hundred percent (100%) of the principal
amount of the Subordinated Notes for the period commencing April 1, 2003 until
the maturity date. The payment of the principal and interest on the Subordinated
Notes is junior and subordinate to the prior payment in full of all indebtedness
of the Company to Lyon Credit Corporation (Senior Debt). The Company does not
anticipate that it will be able to repay the Subordinated Notes when they
mature. The Company will seek to extend or renew the Subordinated Notes or
convert the Subordinated Notes into equity. Currently the Company has not begun
these negotiations. There can be no assurance the Company will be able to
successfully negotiate these revised terms.
11
On October 19, 1999, the Company entered into an agreement for tenant
improvement and equipment financing with Lyon Credit Corporation ("TI Facility")
of $1,089,000 to be repaid over a 5-year period with interest at the rate of
9.94%. The Company paid $54,000 on the principal balance in the quarter ended
July 31, 2002. At July 31, 2002, the balance due under the TI Facility was
$539,000.
On December 6, 2001, the Company entered into a senior subordinated
agreement with RLH Surf, an entity affiliated with J. Christopher Lewis who is
the general Partner and limited partner of Sand and Sea Partners and Sea Fair
Partners, the Company's largest shareholder. The agreement provides for a loan
in the amount of up to $500,000 with annual interest rate of 15% on the
outstanding principal balance of the note. The payment of the principal and
interest on this note is junior and subordinate to the prior payment in full of
all indebtedness of the Company to Lyon Credit Corporation and the due date has
been extended from September 2002 to May 2003. As of July 31, 2002 the Company
owed $440,000 of principal plus accrued interest. Given Company's cash flow it
may not have enough cash to pay obligation and will sick to change maturity
On March 19, 2002, the Company and U.S. Bank amended the terms of the
revolving line of credit agreement decreasing the maximum borrowing amount from
$500,000 to $475,000. The agreement also calls for interest of the prime rate
plus 3% on the unpaid principal balance, and is secured by certain assets of the
Company, including its license agreement with MCA for use of the name
Gladstone's. It is also guaranteed by Sea View Restaurants. The agreement
requires the Company to comply with certain cash flow and liquidity covenants,
and includes a 60 consecutive days out of debt requirement. The Company utilized
$437,500 of the capacity of the revolving line of credit as collateral support
for a letter of credit issued by U.S. Bank pursuant to the Concession Agreement.
The letter of credit was to expire on September 15, 2002. This has been extended
until December 15, 2002. As of July 31, 2002, the Company owed $37,500 under
this agreement which was paid in August 2002. The Company was in violation of a
covenant and obtained forbearance from the bank through December 15, 2002
provided the Company makes cash collateral payments. The Company currently is
looking for a new bank to have its letter of credit obligation fulfilled.
The Company is exploring various opportunities to expand its operations. The
Company's ability to expand is subject to the availability of debt or equity
financing on terms that is acceptable to the Company. There can be no assurance
that such financing will be available.
The timing of the Registrant's future contractual obligations and other
commercial commitments are summarized in the following table.
CONTRACTUAL OBLIGATIONS PAYMENTS DUE BY PERIOD
- --------------------------------- ---------------------------------------------------------------------------------------
Total Remaining 9 1-3 years 3 - 5 years After 5 years
month FY 2003
- --------------------------------- ------------------- ---------------- --------------- ------------- --------------------
Subordinated convertible notes $1,985,000 - $1,985,000 - -
- --------------------------------- ------------------- ---------------- --------------- ------------- --------------------
Long Term Debt $979,000 234,000 745,000 - -
- --------------------------------- ------------------- ---------------- --------------- ------------- --------------------
Operating Leases $26,916,000 1,324,000 3,530,000 3,530,000 18,532,000
- --------------------------------- ------------------- ---------------- --------------- ------------- --------------------
12
OTHER COMMERCIAL COMMITMENTS TOTAL AMOUNTS AMOUNT OF COMMITMENT EXPIRATION PER PERIOD
COMMITTED
- ------------------------------------ ------------------ ---------------------------------------------------------------
REMAINING 9 1 - 3 YEARS 3 - 5 YEARS OVER 5 YEARS
MONTH FY
2003
- ------------------------------------ ------------------ --------------- --------------- --------------- ---------------
Lines of Credit $37,500 37,500 - - -
- ------------------------------------ ------------------ --------------- --------------- --------------- ---------------
Standby Letters of Credit $437,500 437,500 - - -
- ------------------------------------ ------------------ --------------- --------------- --------------- ---------------
Guarantee for RJ's lease $406,000 126,000 280,000 - -
- ------------------------------------ ------------------ --------------- --------------- --------------- ---------------
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
Except for the historical information contained herein, certain statements in
this Form 10-Q, including statements in this Item are "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors, which may cause the actual results, performance
or achievement of the Company, or industry results, to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such factors include, among others, the
following: the Company's ability to generate an operating profit based on the
terms of the Concession Agreement; that its principal source of cash is funds
generated from operations; that restaurants historically have represented a high
risk investment in a very competitive industry; general and local economic
conditions, which can, among other things, impact tourism, consumer spending and
restaurant revenues; weather and natural disasters, such as earthquakes and
fires, which can impact sales at the Company's restaurants; quality of
management; changes in, or the failure to comply with, governmental regulations;
unexpected increases in the cost of key food products, labor and other operating
expenses in connection with the Company's business; and other factors referenced
in this Form 10-Q and the Company's other filings with the SEC.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
From time to time the Company is involved in litigation and threatened
litigation arising in the ordinary course of business. Management of
the Company is unaware of any material litigation as of July 31, 2002.
Item 2. Changes in Securities and Use of Proceeds.
------------------------------------------
None
Item 3. Defaults Upon Senior Securities.
--------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
Not applicable.
Item 5. Other Information.
------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
(a) Exhibits
None
(b) Reports on Form 8-K
None
14
CALIFORNIA BEACH RESTAURANTS, INC. AND SUBSIDIARIES
Signature(s)
------------
Pursuant to the requirements of the Securities Exchange Act of 1934, Company has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
California Beach Restaurants, Inc. (Company)
Dated: September 13, 2002 By: /s/ Alan Redhead
---------------------------
Alan Redhead
Chief Executive Officer
Chief Financial Officer
15
CERTIFICATION
I, Alan Redhead, certify that:
1. I have reviewed this quarterly report on Form 10-Q of California Beach
Restaurants, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
Company as of, and for, the periods presented in this quarterly report.
[Items 4, 5 and 6 omitted pursuant to the transition provisions of Release No.
34-46427.]
Dated: September 13, 2002
/s/ Alan Redhead
--------------------------------
Alan Redhead
Chief Executive Officer
& Chief Financial Officer
INDEX TO EXHIBITS
ITEM
NUMBER DESCRIPTION
- ------ -----------
99.1 Certification of Chief Executive Officer and Chief Financial
Officer (A)
(A) FILED HEREWITH ELECTRONICALLY
All filings were made at the commission's office in Washington
D.C.; The Company's SEC file number is 0-12226.
17