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EX-32.2 - EXHIBIT 32.2 - STAR BUFFET INCex32-2.htm
EX-32.1 - EXHIBIT 32.1 - STAR BUFFET INCex32-1.htm
EX-31.2 - EXHIBIT 31.2 - STAR BUFFET INCex31-2.htm
EX-31.1 - EXHIBIT 31.1 - STAR BUFFET INCex31-1.htm

 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: May 20, 2013

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: 0-6054

 

                           STAR BUFFET, INC.                       

  (Exact name of registrant as specified in its charter)

 

DELAWARE

 

84-1430786

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer Identification Number) 

 

2501 N. Hayden Road, Suite 103

Scottsdale, AZ 85257      

(Address of principal executive offices) (Zip Code)

 

 (480) 425-0397

(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                No      X     

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

                                                       Yes              No     X      

 

Indicated by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-3 of the Exchange Act. (check one)

 Large accelerated filer ☐ 

Accelerated filer  ☐

 Non-accelerated filer ☐

Smaller reporting company ☒

 

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                                                       Yes             No     X     

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. As of August 8, 2016 there were 3,213,075 shares of Common Stock, $ .001 par value, outstanding.

 

 
 

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

 

INDEX

 

  Page

PART I. FINANCIAL INFORMATION  

 
     

Item 1. Condensed Consolidated Financial Statements:

 
     
 

Unaudited Condensed Consolidated Balance Sheets as of May 20, 2013 and January 28, 2013

2
     
 

Unaudited Condensed Consolidated Statements of Operations for the 16 weeks ended May 20, 2013 and May 21, 2012

3
     
 

Unaudited Condensed Consolidated Statements of Cash Flows for the 16 weeks ended May 20, 2013 and May 21, 2012 

4
     
 

Notes to Unaudited Condensed Consolidated Financial Statements

5
     

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

13
     

Item 4. Controls and Procedures

21
     

PART II. OTHER INFORMATION

 
     

Item 1. Legal Proceedings

23
     

Item 1A. Risk Factors

23
     

Item 5. Other Information

24
     

Item 6. Exhibits and Reports on Form 8-K

24
     

Signatures

25

 

 

EXPLANATORY NOTE

 

 

Star Buffet, Inc. and its subsidiaries (the “Company”) own and operate 23 full-service restaurants located throughout the United States as of August 8, 2016. As a consequence of its bankruptcy filing and proceedings described in this report and a lack of available resources, the Company has not previously filed this report on Form 10-Q with the Securities and Exchange Commission. In an attempt to bring it reporting obligations current, the Company is in the process of filing a number of historical reports.

 

 
 i

 

 

PART I: FINANCIAL INFORMATION

 

Item 1: Condensed Consolidated Financial Statements

 

STAR BUFFET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

 

 

May 20,

2013

   

January 28,

2013

 
ASSETS                 
                 

Current assets:

               

Cash and cash equivalents

  $ 434,000     $ 243,000  

Receivables, net

    104,000       171,000  

Inventories

    378,000       405,000  

Prepaid expenses

    185,000       54,000  
                 

Total current assets

    1,101,000       873,000  
                 

Property, buildings and equipment, net

    15,775,000       16,492,000  
                 

Other assets, net

    181,000       196,000  
                 

Intangible assets, net

    33,000       25,000  
                 

Total assets

  $ 17,090,000     $ 17,586,000  
                 

LIABILITIES AND STOCKHOLDERS’ EQUITY

               
                 

Current liabilities:

               

Accounts payable-trade

  $ 1,092,000     $ 790,000  

Checks written in excess of bank balance

    203,000       -  

Payroll and related taxes

    1,539,000       1,615,000  

Sales and property taxes

    1,988,000       1,945,000  

Rent, licenses and other

    2,242,000       2,293,000  

Income tax payable

    22,000       22,000  

Current maturities of obligations under long-term debt

    1,562,000       1,223,000  
                 

Total current liabilities

    8,648,000       7,888,000  
                 

Deferred rent payable

    45,000       45,000  

Other long-term liabilities

    1,915,000       2,144,000  

Note payable to officer

    1,992,000       1,992,000  

Long-term debt, net of current maturities

    7,987,000       8,942,000  
                 

Liabilities not subject to compromise

    20,587,000       21,011,000  

Liabilities subject to compromise

    1,387,000       1,565,000  
                 

Total liabilities

    21,974,000       22,576,000  
                 

Stockholders’ equity:

               
Preferred stock, $.001 par value; authorized 1,500,000 shares; none issued or outstanding            

Common stock, $.001 par value; authorized 8,000,000 shares; issued and outstanding 3,213,075 and 3,213,075 shares

    3,000       3,000  

Additional paid-in capital

    17,743,000       17,743,000  

Accumulated deficit

    (22,630,000 )     (22,736,000 )
                 

Total stockholders’ equity

    (4,884,000 )     (4,990,000 )
                 

Total liabilities and stockholders’ equity

  $ 17,090,000     $ 17,586,000  

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 
2

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

   

Sixteen Weeks Ended

 
   

May 20,

   

May 21,

 
   

2013

   

2012

 

Total revenues

  $ 9,797,000     $ 12,051,000  
                 

Costs, expenses and other

               

Food costs

    3,752,000       4,494,000  

Labor costs

    3,573,000       4,188,000  

Occupancy and other expenses

    1,483,000       1,975,000  

General and administrative expenses

    264,000       573,000  

Depreciation and amortization

    348,000       387,000  

Impairment of long-lived assets

    9,000       -  
                 

Total costs, expenses and other

    9,429,000       11,618,000  
                 

Income from operations

    368,000       433,000  
                 

Interest expense

    332,000       203,000  

Gain on sale of assets

    5,000       -  

Other income

    111,000       70,000  
                 

Income (loss) before income taxes (benefit) and reorganization items

    152,000       300,000  

Reorganization items, net

    (39,000 )     (92,000 )

Income tax (benefit) provision

    7,000        
                 

Net income

  $ 106,000     $ 208,000  
                 

Net income per common share – basic and diluted

  $ 0.03     $ 0.06  
                 

Weighted average shares outstanding – basic and diluted

    3,213,075       3,213,075  

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 
3

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

   

Sixteen Weeks Ended

 
   

May 20, 2013

   

May 21, 2012

 

Cash flows from operating activities:

               

Net income

  $ 106,000     $ 208,000  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation

    348,000       363,000  

Amortization of franchise, loan cost and licenses

    1,000       24,000  

Gain on sale of assets

    5,000        

Impairment of long-lived assets

    9,000        

Change in operating assets and liabilities:

               

Receivables, net

    67,000       14,000  

Inventories

    27,000       (7,000 )

Prepaid expenses

    (131,000 )     19,000  

Deposits and other

    9,000       (37,000 )

Deferred rent payable

    5,000        

Accounts payable-trade

    302,000       (143,000 )

Income taxes receivable

          (4,000 )

Other accrued liabilities

    (312,000 )     (223,000 )

Net cash provided by operating activities before reorganization items

    436,000       214,000  

Reorganization items:

               

Other accrued liabilities

    (178,000 )      

Net cash provided by operating activities

    258,000       214,000  
                 

Cash flows from investing activities:

               

Acquisition of intangible assets

    (8,000 )      

Proceeds from the sale of assets

    590,000        

Acquisition of property, buildings and equipment

    (235,000 )     (56,000 )

Net cash provided (used) in investing activities

    347,000       (56,000 )
                 

Cash flows from financing activities:

               
                 

Checks written in excess of bank balance

    203,000        

Proceeds from the issuance of long-term debt

    28,000        

Payments on long term debt

    (72,000 )     (104,000 )

Net cash provided (used) in financing activities before reorganization items

    159,000       (104,000 )

Reorganization items:

               

Payments on long term debt

    (573,000 )        

Net cash used by financing activities

    (414,000 )     (104,000 )
                 

Net change in cash and cash equivalents

    191,000       54,000  
                 

Cash and cash equivalents at beginning of period

    243,000       712,000  
                 

Cash and cash equivalents at end of period

  $ 434,000     $ 766,000  
                 

Supplemental disclosures of cash flow information:

               

Cash paid during the period for:

               

Interest

  $ 173,000     $ 111,000  
                 

Income taxes

  $ 7,000     $ 4,000  

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

 
4

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 1 – Description of Business and Nature of Operations

 

Star Buffet, Inc., a Delaware corporation (“Star” and collectively with its subsidiaries, the “Company”), is a multi-concept restaurant holding company. The Company as of August 8, 2016 owns and operates 23 full-service restaurants located throughout the United States. At May 20, 2013 it owned and operated 25 full-service restaurants. The Company’s restaurants operate under trade names including 4B’s, JB’s, Casa Bonita and BuddyFreddys. The Company has an executive and an accounting office in Scottsdale, Arizona, and an accounting office in Salt Lake City, Utah.

 

 

Chapter 11 Reorganization

 

On September 28, 2011, Star Buffet, Inc. (the “Company” or “Star”) filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”), in the proceeding titled In re: Star Buffet, Inc., Case No.2:11-bk-27518-GBN (the “Chapter 11 Case”). Star’s wholly owned subsidiary, Summit Family Restaurants Inc. (“Summit”) also filed a voluntary petition for reorganization under Chapter 11 on September 29, 2011 in the Bankruptcy Court, in the proceeding titled In re: Summit Family Restaurants Inc., Case No. 2:11-bk-27713-GBN. The cases for Star Buffet, Inc. and Summit Family Restaurants Inc. (collectively the “Debtors”) were consolidated and jointly administered. None of the Company’s other subsidiaries were included in the bankruptcy filings. The Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.  Under the Bankruptcy Code, certain claims against the Debtors that were in existence prior to the filing of the bankruptcy petition were stayed during the pendency of the Chapter 11 Reorganization.  The balance of the unresolved claims are reflected in the May 20, 2013 balance sheet as “Liabilities subject to compromise.”

 

On December 17, 2012, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Company’s plan of reorganization (the “Plan”), which provided for the payment in full of all approved claims. A copy of the Confirmation Order and the Plan as confirmed are attached as Exhibits 2.1 and 2.2, to the Company’s Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2012. The Plan became effective on January 17, 2013 and the Company emerged from bankruptcy. The payment obligations under the Amended Plan were estimated to be in excess of $10 million.  The Plan provided for these obligations to be discharged from operating income derived from the restaurants operated by its affiliates, an exit loan of $300,000 from Suzanne H. Wheaton, the wife of CEO Robert E. Wheaton and proceeds from sale of certain restaurant properties.

 

Since filing for reorganization, the Debtors have sold fifteen properties, $5.8 million of the proceeds were used to pay off the obligation to Wells Fargo, the Company’s primary secured creditor in full, $1.9 million was used to pay the other secured creditors and $801,000 was used to pay unsecured creditors, pursuant to the Plan. As of January 26, 2015, the Company has reduced its liabilities subject to compromise to $800,000 and has made all payments required under the Plan. Resolution and payment of the remaining liabilities subject to compromise will result of payment in full of all of the Company’s creditors at the time of the bankruptcy filing and a complete discharge of the Company.

 

Note 2 – Significant Accounting Policies

 

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with United States generally accepted accounting principles (“US GAAP”), the instructions to Form 10-Q and Article 10 of Regulation S-X. These financial statements should be read in conjunction with the audited consolidated financial statements, and the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2013. The accounting policies used in preparing these condensed consolidated financial statements are the same as those described in that Form 10-K. The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. In the opinion of the Company’s management, all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the interim financial statements have been included.

 

 
5

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

a) Principles of Consolidation

 

The condensed consolidated financial statements include the consolidated operations of the company and its subsidiaries through May 20, 2013. The Company utilizes a 52/53 week fiscal year which ends on the last Monday in January. The first quarter of each year contains 16 weeks while the other three quarters each contain 12 weeks, except the fourth quarter has 13 weeks if the fiscal year has 53 weeks. All significant intercompany balances and transactions have been eliminated in consolidation.

 

b) Earnings or Loss Per Common Share

 

Basic earnings or loss per common share is computed on the basis of the weighted average number of shares outstanding during the periods. Diluted earnings or loss per common share is calculated based on the weighted-average number of common shares outstanding during the period plus the effect of dilutive common stock equivalents outstanding during the period. Dilutive stock options are considered to be common stock equivalents and are included in the diluted calculation using the treasury stock method. The Company did not have any dilutive stock options as of May 20, 2013 or May 21, 2012. Outstanding options for common shares not included in the computation of diluted net loss per common share, because they were anti-dilutive, totaled 22,000 shares for the fiscal quarters ending May 20, 2013 and May 21, 2012. For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive. Therefore, basic loss per common share is the same as diluted loss per common share for all periods presented. Weighted-average common shares outstanding for the fiscal quarters ending May 20, 2013 and May 21, 2012 used to calculate diluted earnings per share exclude stock options to purchase 22,000 shares of common stock due to the market price of the underlying stock being less than the exercise price.

 

c) Fair Value of Financial Instruments

 

The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

 

 

Level 1 Inputs: Quoted prices for identical instruments in active markets.

 

 

Level 2 Inputs: Quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-derived valuation in which all significant inputs and significant value drivers are observable in active markets.

 

 

Level 3 Inputs: Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

  

The carrying amounts of the Company’s cash and cash equivalents, receivables, accounts payable and accrued expenses approximates fair value because of the short maturity of these instruments. The carrying amounts of the Company’s notes receivable and long-term debt approximate fair value and are based on discounted cash flows using market rates at the balance sheet dates. The Company does not estimate the fair value of the note payable to officer because of the related party nature of the transaction.

 

d) Inventories

 

Inventories consist of food, beverage, gift shop items and certain restaurant supplies and are valued at the lower of cost or market, determined by the first-in, first-out method.

 

e) Impairments

 

 

Impairment of Goodwill

 

Goodwill primarily represents the excess of the purchase price paid over the fair value of the net assets acquired in connection with business acquisitions. The Company reviews goodwill for possible impairment on an annual basis or when triggering events occur in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350.  ASC 350 requires goodwill to be tested for impairment at the reporting unit level, which is an operating segment or one level below an operating segment. The Company aggregates stores by concept or by geographic region when determining reporting units. The Company did not have any goodwill assets recorded for fiscal quarters ending May 20, 2013 and May 21, 2012.

 

 
6

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 Impairment of Long-Lived Assets

 

The Company evaluates impairment of long-lived assets in accordance with ASC 360, “Property, Plant and Equipment”.  The Company assesses whether an impairment write-down is necessary whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If such asset is considered to be impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Any impairment is recognized as a charge to earnings, which would adversely affect operating results in the affected period.

 

Judgments made by the Company related to the expected useful lives of long-lived assets and the ability of the Company to realize undiscounted net cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, and changes in operating performance. As the Company assesses the ongoing expected net cash flows and carrying amounts of its long-lived assets, these factors could cause the Company to realize a material impairment charge and could adversely affect operating results in any period.  The Company recorded impairment losses of $9,000 and $0, respectively, associated with certain restaurant facilities for the sixteen weeks ended May 20, 2013 and May 21, 2012.

 

 

f) Properties, Building and Equipment

 

Property, building and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the following useful lives:

 

   

Years

 

Buildings

      40    

Building and leasehold improvements

    15 - 20  

Furniture, fixtures and equipment

    5 - 8  

 

 

Building and leasehold improvements are amortized over the lesser of the life of the lease or the estimated economic life of the assets. The life of the lease includes renewal options determined by management at lease inception as reasonably likely to be exercised. If a previously scheduled lease option is not exercised, any remaining unamortized leasehold improvements may be required to be expensed immediately which could result in a significant charge to operating results in that period.

 

Property and equipment in non-operating units or stored in warehouses, which is held for remodeling or repositioning, is depreciated and is recorded on the balance sheet as property, building and equipment held for future use.

 

Property and equipment placed on the market for sale is not depreciated and is recorded on the balance sheet as property held for sale and recorded at the lower of cost or market.

 

Repairs and maintenance are charged to operations as incurred. Major equipment refurbishments and remodeling costs are generally capitalized.

 

The Company's accounting policies regarding buildings and equipment include certain management judgments regarding the estimated useful lives of such assets, the residual values to which the assets are depreciated and the determination as to what constitutes the life of existing assets. These judgments and estimates may produce materially different amounts of depreciation and amortization expense than would be reported if different assumptions were used.

 

 
7

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

The components of property, buildings and equipment as of May 20, 2013 consist of 25 operating restaurant properties, four restaurant properties that are leased to third parties, one non-operating restaurant that remain closed for remodeling and repositioning which is held for sale and two non-operating properties that are used as warehouses for equipment. The components of property, buildings and equipment as of January 28, 2013 consist of 27 operating restaurant properties, four restaurant properties that are leased to third parties, two non-operating restaurants that remain closed for remodeling and repositioning with both being held for sale and two non-operating properties that are used as warehouses for equipment. The Company recorded depreciation expense of $348,000 and $363,000 for the sixteen weeks ended May 20, 2013 and May 21, 2012, respectively

 

   

May 20, 2013

   

January 28, 2013

 
                                                 

Property, building and equipment:

         

Accum.

                   

Accum.

         

(Dollars in Thousands)

 

Cost

   

Depr.

   

Net

   

Cost

   

Depr.

   

Net

 

Operating

    27,843       (15,100 )     12,743       25,531       (14,102 )     11,429  

Leased

    4,317       (1,656 )     2,661       4,297       (1,601 )     2,696  

Held for Future Use

    460       (89 )     371       460       (86 )     374  

Held for Sale

    -       -       -       4,522       (2,529 )     1,993  

Total

    32,620       (16,845 )     15,775       34,810       (18,318 )     16,492  

 

 

g) Other Assets

 

Other assets consist of deposits and deferred financing fees. Deferred financing fees are amortized to interest expense over the life of the loan.

 

h) Intangible Assets 

 

The Company’s other assets consist of intangible assets as of May 20, 2013 and January 28, 2013. The Company’s intangible assets consist of franchise fees, license agreements and trademarks. Franchise fees and license agreements are amortized using the straight-line method over the terms of the agreements, which typically range from 10 to 20 years. Trademark assets have an indefinite asset life.

 

i) Segment Reporting

 

All of the brands the Company operates are in the U.S. within the full-service dining industry and provide similar products to similar customers and therefore, are considered to be one segment for reporting purposes. The brands also possess similar economic characteristics, resulting in similar long-term expected financial performance characteristics. Sales to external customers are derived principally from food and beverage sales. We do not rely on any major customers as a source of sales. We believe we meet the criteria for aggregating our operating segments into a single reporting segment.


j) Income Taxes

 

Our current provision for income taxes is based on our estimated taxable income in each of the jurisdictions in which we operate, after considering the impact on our taxable income of temporary differences resulting from disparate treatment of items, such as depreciation, estimated liability for closed restaurants, estimated liabilities for self-insurance, tax credits and net operating losses (“NOL”) for tax and financial reporting purposes. Deferred income taxes are provided for the estimated future income tax effect of temporary differences between the financial and tax bases of assets and liabilities using the asset and liability method. Deferred tax assets are also provided for NOL and income tax credit carryforwards. A valuation allowance to reduce the carrying amount of deferred income tax assets is established when it is more likely than not that we will not realize some portion or all of the tax benefit of our deferred income tax assets. We evaluate, on a quarterly basis, whether it is more likely than not that our deferred income tax assets are realizable based upon recent past financial performance, tax reporting positions, and expectations of future taxable income. The determination of deferred tax assets is subject to estimates and assumptions. We periodically evaluate our deferred tax assets to determine if our assumptions and estimates should change. Currently, because there can be no assurance that the Company will generate any specific level of earnings in the future years to realize the benefit of the deferred tax assets existing as of May 20, 2013 and January 28, 2013 the Company has a full valuation allowance against its deferred tax assets, net of expected reversals of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

 

 
8

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

k) Recent Accounting Pronouncements

 

During 2014, the FASB issued Accounting Standards Update 2014-09 and 2015-14, Revenue from Contract with Customers (Topic 606), respectively, which revises previous revenue recognition standards to improve guidance on revenue recognition requirements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides additional disclosure requirements. This new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted. The Company has not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

 

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update, which is part of the FASB's larger Simplification Initiative project aimed at reducing the cost and complexity of certain areas of the accounting codification, requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position, which eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. This update does not affect the current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount on the balance sheet. This amendment applies to all entities with a classified statement of financial position. For public business entities, this update is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The Company notes this guidance will apply to its reporting requirements and will implement the new guidance accordingly.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of fiscal 2020 using a modified retrospective approach. Early adoption is permitted. The Company has not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

 

Note 3 – Management Update

 

The Company filed Chapter 11 Reorganization on September 28 and September 29, 2011; the Plan was confirmed on December 17, 2012; and became effective on January 17, 2013.  The Company’s payment obligations under the Plan are estimated to be in excess of $10.0 million.   The Company intends to discharge all Plan obligations from income derived from the restaurants operated by the Company’s subsidiaries, an exit loan from Suzanne H. Wheaton, wife of CEO Robert E. Wheaton, and proceeds from sale of restaurant properties. Since filing for reorganization, the Debtors have sold fifteen properties, $5.8 million of the proceeds were used to pay off the obligation to Wells Fargo, the Company’s primary secured creditor in full, $1.9 million was used to pay the other secured creditors and $801,000 was used to pay unsecured creditors, pursuant to the Plan. As of January 26, 2015, the Company has reduced its liabilities subject to compromise to $800,000 and has made all payments required under the Plan. Resolution and payment of the remaining liabilities subject to compromise will result of payment in full of all of the Company’s creditors at the time of the bankruptcy filing and a complete discharge of the Company.

 

 

Note 4 – Related Party Transactions

 

During fiscal 2008, the Company borrowed approximately $1,400,000 from Mr. Robert E. Wheaton, a principal shareholder, officer and director of the Company.  This secured loan dated June 15, 2007 was subordinated to the obligation to Wells Fargo Bank, N.A., which was subsequently paid in full. to Wells Fargo Bank, N.A. In June 2008, the Company borrowed an additional $592,000 from Mr. Wheaton under the same terms. This resulted in an increase in the subordinated note balance from $1,400,000 to $1,992,000, the balance as of May 21, 2012 and January 28, 2013. The Company expensed $20,000 and $0 for interest related to its loans from Mr. Wheaton during the first 16 weeks of fiscal 2014 and fiscal 2013. The principal balance and any unpaid interest was due and payable in full on June 5, 2012. The loan was subsequently modified as a result of Star’s bankruptcy filing and pursuant to the approved Plan of Reorganization is not eligible to be repaid until all obligations owed to other creditors have been fully satisfied. Interest will accrue on the principal amount of $1,991,936 and the interest of $196,957 from January 17, 2013 until paid at the rate of 3.25%. The interest rate of 3.25% will increase 1% each year on January 17 until paid per Plan of Reorganization. Interest accrued on the principal amount of $1,991,936 and the interest of $196,957 from September 28, 2011 to January 16, 2013 at the bankruptcy plan rate. Quarterly interest-only payments on the principal portion will commence when the principal amount owing on the Wells Fargo Loan has been reduced to $1.5 million and continue until paid, provided that Debtors are current on all payments required by the Plan. If Debtors are not current on all payments required by the Plan, the quarterly interest-only payments will not begin until Company bring such payments current. The Company used the funds borrowed from Mr. Wheaton for working capital requirements.

 

 
9

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 5 - Long-Term Debt

 

The following table is a summary of the Company’s outstanding debt obligations.

 

   

May 20,

   

May 20,

   

January 28,

   

January 28,

 
   

2013

   

2013

   

2013

   

2013

 

Type of Debt

 

Total Debt

   

Current Portion

   

Total Debt

   

Current Portion

 

Real Estate Mortgages

  $ 5,150,000     $ 250,000     $ 5,196,000     $ 239,000  

Bank Debt-Revolver

    1,626,000       1,312,000       1,869,000       984,000  

Bank Debt-Term

    2,773,000       -       3,100,000       -  

Note Payable to Officer

    1,992,000       -       1,992,000       -  

Total Debt

  $ 11,541,000     $ 1,562,000     $ 12,157,000     $ 1,223,000  

 

The Company had a Credit Facility with Wells Fargo Bank, N.A. The Credit Facility includes an $8,000,000 term loan and a $2,500,000 revolving line of credit. On December 17, 2012, the Bankruptcy Court entered an order confirming the Second Amended Plan. The Confirmation Order required the Company to pay the Wells Fargo Secured Claim. The Wells Fargo Loan was paid in full in July 2014.

 

Note 6 - Commitments and Contingencies

 

In connection with the Company’s employment contract with Robert E. Wheaton, the Company’s Chief Executive Officer and President, the Company has agreed to pay Mr. Wheaton six years of his salary plus bonus if he resigns related to a change of control of the Company or is terminated, unless the termination is for cause.

 

In connection with the purchase of certain K-BOB restaurant locations, the Company entered into license agreements which require the payment of certain fees to K-BOB’S based on the restaurants gross sales that was subject to subsequent litigation. In April 2013, the Company settled all litigation by terminating three restaurants leases including returning certain restaurant equipment. The Company did not have to pay any additional consideration in connection with the agreed upon settlement.

 

On August 4, 2010 Spirit Master Funding, LLC (‘Spirit”) , a landlord of a Company subsidiary, filed case number CV-2010-022169 in the Superior Court of the State of Arizona for the failure of the subsidiary to pay $3.7 million in rent and accelerated rent for four restaurants leased to the subsidiary. During the bankruptcy, Spirit filed a proof of claim as an unsecured creditor for approximately $1.5 million. The Company believes they owe Spirit less than their claim amount and has filed an objection to this claim with the bankruptcy court arguing that the allowed claim should be approximately $500,000. The outcome of this matter is still pending.

 

The Company or its subsidiaries are, from time to time, the subject of complaints or litigation from customers, employees, vendors, regulatory authorities and landlords. Adverse publicity resulting from such complaints or litigation may materially, adversely affect the Company and its subsidiaries, regardless of whether such allegations are valid. The Company believes that generally the lawsuits, claims and other legal matters brought in the ordinary course of business are not material to the Company’s business, financial condition or results of operations. However, an existing or future lawsuit or claim could result in an adverse decision against the Company that could have a material adverse effect on the Company’s business, financial condition and results of operations.

 

 
10

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Note 7 - Subsequent Events

 

The Company has evaluated subsequent events through the date that these financial statements were filed with the Securities and Exchange Commission.

 

On May 31, 2013 the Company closed and sold the JJ North’s Country Buffet in Yuma, Arizona for net sales proceeds of $1,247,000 with all of the sales proceeds paying Wells Fargo pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On June 28, 2013, the Company closed the JJ North’s Country Buffet in Scottsdale, Arizona.

 

On July 29, 2013, the Company closed the Barnhill’s Buffet in Tupelo, Mississippi. The Company accrued for all anticipated lease termination expenses.

 

On September 4, 2013, the Company sold the former Hometown Buffet building in Layton, Utah and restructured its loan from the Bank of Utah. Net proceeds of $998,000 from this sale were paid to Bank of Utah in connection with restructuring the loan agreement.

 

On September 21, 2013, the Company closed the JB’s Restaurant in Billings, Montana. The Company had a month-to-month lease which was fully paid.

 

On September 30, 2013, the Company closed the Big Rock Café in Marysvale, Utah. The Company accrued for all anticipated lease termination expenses.

 

On November 3, 2013, the Company closed the 4B’s Restaurant in Butte, Montana. The Company accrued for all anticipated lease termination expenses.

 

On January 5, 2014 the Company closed the 4B’s Restaurant in Missoula, Montana. The Company accrued for all anticipated lease termination expenses.

 

On March 20, 2014, the Company sold the 4B’s Restaurant in Great Falls, Montana. Net proceeds of $157,000 from this sale were paid to Wells Fargo pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On March 28, 2014 the Company sold the property in South Daytona, Florida for net proceeds of $916,000 with all of the sales proceeds paid to Wells Fargo pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On April 28, 2014, the Company sold the Pecos Diamond Steakhouse in Artesia, New Mexico. Net proceeds of $367,000 from this sale were paid to Wells Fargo pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On July 14, 2014, the Company sold the former BuddyFreddys Restaurant in Kissimmee, Florida. Net proceeds of $449,000 from this sale were paid to Wells Fargo pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On August 4, 2014, the Company sold the JB’s Restaurant in Rexburg, Idaho. Net proceeds of $307,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On August 5, 2014 the Company closed the Barnhill’s Restaurant in Jackson, Tennessee. The Company accrued for all anticipated lease termination expenses.

 

On August 8, 2014, the Company sold the former BuddyFreddys Restaurant in Ocala, Florida. Net proceeds of $279,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On October 14, 2014, the Company sold the former Hometown Buffet building in Scottsdale, Arizona using seller financing of $1,550,000. The Company collected the mortgage in April 2015.

 

 
11

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

On October 31, 2014, the Company sold the JB’s Restaurant in Great Falls, Montana. Net proceeds of $232,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On November 1, 2014 the Company opened a 4B’s Restaurant in Dillon, Montana.

 

On November 19, 2014, the Company sold the JB’s Restaurant in Vernal, Utah. Net proceeds of $203,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On March 2, 2015, the Company sold the former Whistle Junction Restaurant in Titusville, Florida. Net proceeds of $1,044,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On April 24, 2015, the Company sold the BuddyFreddys Restaurant in Plant City, Florida. Net proceeds of $669,000 from this sale were paid pursuant to the Company’s reorganization plan that was approved by the Bankruptcy Court.

 

On June 1, 2015 the Company opened a JB’s Restaurant in Evanston, Wyoming.

 

On June 15, 2015 the Company opened a 4 Aces in Lewistown, Montana.

 

On August 1, 2015 the Company opened a JB’s Restaurant in Kingman, Arizona.

 

On November 18, 2015 the Company opened the Original 4B’s Café in Deer Lodge, Montana.

 

On April 18, 2016 the Company purchased property in Missoula, Montana. The Company intends to open a 4B’s restaurant.

 

On May 3, 2016 the Company opened a Whistle Junction restaurant in Keystone, South Dakota.

 

On May 16, 2016 the Company opened a Finnegan’s Restaurant in Kalispell, Montana.

 

On June 1, 2016 the Company leased property in Billings, Montana. The Company intends to open a 4B’s restaurant.

 

 
12

 

 

STAR BUFFET, INC. AND SUBSIDIARIES

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

The following Management’s Discussion and Analysis should be read in conjunction with the unaudited condensed consolidated financial statements, and the notes thereto, presented elsewhere in this report and the Company’s audited consolidated financial statements and Management’s Discussion and Analysis included in the Company’s Annual Report on Form 10-K. Comparability of periods may be affected by the closure of restaurants or the implementation of the Company’s acquisition and strategic alliance strategies. The costs associated with integrating new restaurants or under-performing or unprofitable restaurants, if any, acquired or otherwise operated by the Company may have a material adverse effect on the Company’s results of operations in any individual period.

 

This quarterly report on Form 10-Q contains forward looking statements, which are subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance, or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions; success of integrating newly acquired under-performing or unprofitable restaurants; the impact of competitive products and pricing; success of operating initiatives; advertising and promotional efforts; adverse publicity; changes in business strategy or development plans; quality of management; availability, terms and deployment of capital; changes in prevailing interest rates and the availability of financing; food, labor, and employee benefits costs; changes in, or the failure to comply with, government regulations; weather conditions; construction schedules; implementation of the Company’s acquisition and strategic alliance strategy; the effect of the Company’s accounting policies and other risks detailed in the Company’s Form 10-K for the fiscal year ended January 28, 2013, and other filings with the Securities and Exchange Commission.

 

Chapter 11 Reorganization

 

On September 28, 2011, Star Buffet, Inc. (the “Company” or “Star”) filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code (“Bankruptcy Code”) in the United States Bankruptcy Court for the District of Arizona (the “Bankruptcy Court”), in the proceeding titled In re: Star Buffet, Inc., Case No.2:11-bk-27518-GBN (the “Chapter 11 Case”). Star’s wholly owned subsidiary, Summit Family Restaurants Inc. (“Summit”) also filed a voluntary petition for reorganization under Chapter 11 on September 29, 2011 in the Bankruptcy Court, in the proceeding titled In re: Summit Family Restaurants Inc., Case No. 2:11-bk-27713-GBN. The cases for Star Buffet, Inc. and Summit Family Restaurants Inc. (collectively the “Debtors”) were consolidated and jointly administered. None of the Company’s other subsidiaries were included in the bankruptcy filings. The Debtors continued to operate their businesses as “debtors-in-possession” under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code.  Under the Bankruptcy Code, certain claims against the Debtors that were in existence prior to the filing of the bankruptcy petition were stayed during the pendency of the Chapter 11 Reorganization.  The balance of the unresolved claims are reflected in the May 20, 2013 balance sheet as “Liabilities subject to compromise.”

 

On December 17, 2012, the Bankruptcy Court entered an order (the “Confirmation Order”) confirming the Company’s plan of reorganization (the “Plan”), which provided for the payment in full of all approved claims. A copy of the Confirmation Order and the Plan as confirmed are attached as Exhibits 2.1 and 2.2, to the Company’s Report on Form 8-K filed with the Securities and Exchange Commission on December 20, 2012. The Plan became effective on January 17, 2013 and the Company emerged from bankruptcy. The payment obligations under the Amended Plan were estimated to be in excess of $10 million.  The Plan provided for these obligations to be discharged from operating income derived from the restaurants operated by its affiliates, an exit loan of $300,000 from Suzanne H. Wheaton, the wife of CEO Robert E. Wheaton and proceeds from sale of certain restaurant properties.

 

Since filing for reorganization, the Debtors have sold fifteen properties, $5.8 million of the proceeds were used to pay off the obligation to Wells Fargo, the Company’s primary secured creditor in full, $1.9 million was used to pay the other secured creditors and $801,000 was used to pay unsecured creditors, pursuant to the Plan. As of January 26, 2015, the Company has reduced its liabilities subject to compromise to $800,000 and has made all payments required under the Plan. Resolution and payment of the remaining liabilities subject to compromise will result of payment in full of all of the Company’s creditors at the time of the bankruptcy filing and a complete discharge of the Company.

 

 
13

 

 

Executive Summary

 

As noted above, the Chapter 11 Reorganization was filed on September 28 and September 29, 2011; the Plan was confirmed on December 17, 2012 and became effective on January 17, 2013.  The Company’s payment obligations under the Plan are estimated to be in excess of $10.0 million.   The Company intends to discharge all plan obligations from operating income derived from the restaurants operated by the Company’s subsidiaries, an exit loan from Suzanne H. Wheaton, wife of CEO Robert E. Wheaton, and proceeds from liquidation of restaurant properties. Since filing for reorganization, the Debtors have sold fifteen properties, $5.8 million of the proceeds were used to pay off the obligation to Wells Fargo, the Company’s primary secured creditor in full, $1.9 million was used to pay the other secured creditors and $801,000 was used to pay unsecured creditors, pursuant to the Plan. As of January 26, 2015, the Company has reduced its liabilities subject to compromise to $800,000 and has made all payments required under the Plan. Resolution and payment of the remaining liabilities subject to compromise will result of payment in full of all of the Company’s creditors at the time of the bankruptcy filing and a complete discharge of the Company.

 

Recent Developments

 

As a result of the continued weakness in the U.S. economy the Company’s comparable restaurant sales declined again in the periods ended May 20, 2013 as compared to the prior year periods. The Company continues to evaluate the local geographic markets in which it operates and individual restaurant units for trends and changes in operating metrics. Over the past two years May 20, 2013, the Company has closed stores that have experienced deterioration of operating results and for which Management has assessed low probability of near term prospects of reversing such trends. The Company may rebrand restaurants where management believes that the local market remains desirable but that the existing brand is not performing well in that unit. There may be further restaurant unit closures in the future as Management continues to evaluate operating results. The Company continues to explore the expansion of its non-buffet brands as those recently have generally performed better. As a result of the store closings, the Company will experience significantly lower revenue levels than those in the recent past. Management believes the Company will generate sufficient cash flows from operations at these lower revenue levels to support its operations and pay its scheduled debt repayments.

 

Please refer to Note 7 – Subsequent Events in the Company’s Notes to Unaudited Condensed Consolidated Financial Statements for other recent developments.

 

 
14

 

 

Results of Operations

 

The following table summarizes the Company’s results of operations as a percentage of total revenues for the 16 weeks ended May 20, 2013 and May 21, 2012.

   

Sixteen Weeks Ended

 
   

May 20,

   

May 21,

 
   

2013

   

2012

 

Total revenues

    100.0 %       100.0 %  
                     

Costs, expenses and other

                   

Food costs

    38.3         37.3    

Labor costs

    36.5         34.8    

Occupancy and other expenses

    15.1         16.4    

General and administrative expenses

    2.7         4.8    

Depreciation and amortization

    3.5         3.2    

Impairment of long-lived assets

    0.1            

Total costs, expenses and other

    96.2         96.5    
                     

Income (loss) from operations

    3.8         3.5    
                     

Interest expense

    3.4         1.7    

Gain on sale of assets

    0.0            

Other income

    1.1         0.6    

Income before income taxes and reorganization items

    1.5         2.4    
                     

Reorganization item, net

    (0.4 )       (0.7 )  
                     

Income tax provision

    0.0            
                     

Net income (loss)

    1.1 %       1.7 %  

 

 
15

 

 

The table below outlines the number of restaurants operated by the Company by concept as well as the number of non-operating restaurants that are leased to third party operators, used as warehouse facilities, and are being held for repositioning and remodeling as of May 20, 2013 and January 28, 2013, respectively.

 

 

 

Concept

 

May 20,

2013

   

January 28,

2013

 
                     

Operating Restaurants

                   

4B’s

    7         7    

JB’s

    5         5    

Barnhill’s Buffet

    3         3    

Western Sizzlin

    2         2    

HomeTown Buffet

    2         2    

Pecos Diamond Steakhouse

    2         1    

BuddyFreddys

    1         1    

Casa Bonita

    1         1    

Bar-H Steakhouse

    1         1    

Big Rock Cafe

    1         -    

K-BOB’S Steakhouse

    -         4    
      25         27    

Non-operating Restaurants

                   

Leased to third parties

    4         4    

Warehouse

    2         2    

Held for Future Use

    1         2    
      7         8    

Total

    32         35    

 

 

 

 

Sixteen Weeks Ended May 20, 2013 compared to Sixteen Weeks Ended May 21, 2012

 

Overview - The Company has a consolidated net income for the 16-week period ended May 20, 2013 of $106,000 or $0.03 per diluted share as compared with net income of $208,000 or $0.06 per diluted share for the comparable prior year period, a decrease of approximately $102,000 from the prior year period. The decrease in net income is due to a an increase in interest expense and decrease in income from operations of approximately $65,000 which primarily resulted from higher food and labor as a percent of revenue offset by lower reorganizational costs and higher other income as compared to the prior year period.

 

Revenues - Total revenues decreased approximately $2.3 million or 18.7% from $12.1 million in the 16 weeks ended May 21, 2012 to $9.8 million in the 16 weeks ended May 20, 2013. The decrease in revenues was primarily attributable to the closure of six restaurants in fiscal 2013 and three restaurants in the first quarter of fiscal 2014 resulting in a sales decline of approximately $1.7 million and sales declines of approximately $700,000 or approximately 6.9% in comparable same store sales. The decline in sales was partially offset by a $100,000 increase attributable to one new restaurant.

 

Food Costs - Food costs as a percentage of total revenues increased from 37.3% during the 16-week period ended May 21, 2012 to 38.3% during the 16-week period ended May 20, 2013. The food cost increased in the current fiscal year as compared to the same period in the prior year as a percentage of sales primarily from higher wholesale food prices. Food costs decreased by approximately $742,000 in the 16-week period ended May 20, 2013, primarily due to a $2.3 million decline in revenues.

 

 
16

 

 

Labor - Labor costs as a percentage of total revenues increased from 34.8% during the 16-week period ended May 21, 2012 to 36.5% during the 16-week period ended May 20, 2013. The increase as a percentage of total revenues was primarily attributable to a generally lower revenue base and higher minimum wages. Labor costs decreased by approximately $600,000 in the 16-week period ended May 20, 2013, primarily due to a $2.3 million decline in revenues.

 

Occupancy and Other Expenses - Occupancy and other expenses as a percentage of total revenues decreased from 16.4% during the 16-week period ended May 21, 2012 to 15.1% during the 16-week period ended May 20, 2013. Occupancy and other expense decreased approximately $500,000 in the 16-week period ended May 20, 2013 primarily due to a $2.3 million decline in revenues.

 

General and Administrative Expenses - General and administrative expense as a percentage of total revenues decreased from 4.8% during the 16-week period ended May 21, 2012 to 2.7% during the 16-week period ended May 20, 2013. The decrease for the 16 week period ended May 21, 2012 as a percentage of total revenues was primarily attributable to a decrease in the costs related to insurance and legal. Total General and administrative expense decreased approximately $300,000 in the 16-week period ended May 20, 2013 as compared to the prior year.

 

Depreciation and Amortization - Depreciation and amortization expense decreased from $387,000 during the 16-week period ended May 21, 2012 to $348,000 during the 16-week period ended May 20, 2013. The decrease was primarily attributable to fewer restaurants in the current quarter compared to the same quarter in the prior fiscal year.

 

Interest Expense - Interest expense increased from $203,000 during the 16-week period ended May 21, 2012 to $332,000 during the 16-week period ended May 20, 2013. The increase was attributable to higher average interest rates on unsecured creditors claims in the 16-week period ended May 20, 2013 compared to the prior year.

 

Other Income - Other income is primarily rental income from the Company’s properties leased to third parties. Rental income was $111,000 for five properties leased for the 16-week period ended May 20, 2013. Rental income was approximately $70,000 for three properties leased for the 16-week period ended May 21, 2012.

 

Income Taxes - The income tax provision totaled $7,000 and $0, respectively, of pre-tax income for the first fiscal quarter of 2014 and 2013. The Company has deferred income tax assets of $0 on May 20, 2013 and January 28, 2013, respectively. The Company has a net operating losses for tax and financial reporting purposes. The Company has full valuation against its existing deferred tax assets as of May 20, 2013.

 

Reorganization Items, Net - Star and Summit both filed for bankruptcy in September 2011. During the 16-weeks ended May 20, 2013 and May 21, 2012, the Company incurred professional fees and bankruptcy costs related to the bankruptcy totaling $39,000 and $92,000, respectively.

 

Impact of Inflation

 

The impact of inflation on the cost of food, labor, equipment and construction and remodeling of stores could affect the Company’s margins. Many of the Company’s employees are paid hourly rates related to the federal and state minimum wage laws so that changes in these laws would result in higher labor costs to the Company. In addition, food items purchased by the Company are subject to market supply and demand pressures. Changes in these costs may have an impact on the Company’s margins. The Company believes that modest increases in these costs can be offset through pricing and other cost control efforts. However, there is no assurance that the Company would be able to pass more significant costs on to its customers, or if it were able to do so, could do so in a short period of time.

 

Liquidity and Capital Resources

 

In recent years, the Company has financed operations through a combination of cash on hand, cash provided from operations, available borrowings under bank lines of credit and loans from our principal shareholder.

 

As of May 20, 2013, the Company had $434,000 in cash.  Cash and cash equivalents increased by $191,000 during the 16-weeks ended May 20, 2013. The net working capital deficit was $7.5 million and $7.0 million at May 20, 2013 and January 28, 2013, respectively. The Company spent approximately $235,000 on capital expenditures and had proceeds from the sale of an Arizona property of $590,000 during the 16-weeks ending May 20, 2013. The Company generates cash flow daily from sales in its restaurants and manages its cash balances to meet its current operating obligations.

 

 
17

 

 

Cash provided by operations was approximately $258,000 for the 16-weeks ending May 20, 2013 and $214,000 for the 16-weeks ending May 21, 2012. The increase in cash generated from operating activities for the 16-week period ending May 20, 2013 was primarily due to lower general and administrative expenses in the current fiscal year as compared to the prior year.

 

Cash used by financing activities was approximately $414,000 for the 16-weeks ending May 20, 2013 compared to $104,000 for the 16-weeks ending May 21, 2012. During the periods, the Company made net debt payments of approximately $645,000 and $104,000, respectively.

 

The following table is a summary of the Company’s outstanding debt obligations.

 

   

May 20,

   

May 20,

   

January 28,

   

January 28,

 
   

2013

   

2013

   

2013

   

2013

 

Type of Debt

 

Total Debt

   

Current Portion

   

Total Debt

   

Current Portion

 

Real Estate Mortgages

  $ 5,150,000     $ 250,000     $ 5,196,000     $ 239,000  

Bank Debt-Revolver

    1,626,000       1,312,000       1,869,000       984,000  

Bank Debt-Term

    2,773,000       -       3,100,000       -  

Note Payable to Officer

    1,992,000       -       1,992,000       -  

Total Debt

  $ 11,541,000     $ 1,562,000     $ 12,157,000     $ 1,223,000  

 

The Company had a Credit Facility with Wells Fargo Bank, N.A. The Credit Facility includes an $8,000,000 term loan and a $2,500,000 revolving line of credit. On December 17, 2012, the Bankruptcy Court entered an order confirming the Second Amended Plan. The Confirmation Order required the Company to pay the Wells Fargo Secured Claim. The Wells Fargo Loan was paid in full in July 2014.

 

During fiscal 2008, the Company borrowed approximately $1,400,000 from Mr. Robert E. Wheaton, a principal shareholder, officer and director of the Company.  This secured loan dated June 15, 2007 was subordinated to the obligation to Wells Fargo Bank, N.A., which was subsequently paid in full. to Wells Fargo Bank, N.A. In June 2008, the Company borrowed an additional $592,000 from Mr. Wheaton under the same terms. This resulted in an increase in the subordinated note balance from $1,400,000 to $1,992,000, the balance as of May 20, 2013 and January 28, 2013. The Company expensed $20,000 and $0 for interest related to its loans from Mr. Wheaton during the first 16 weeks of fiscal 2014 and fiscal 2013. The principal balance and any unpaid interest was due and payable in full on June 5, 2012. The loan was subsequently modified as a result of Star’s bankruptcy filing and pursuant to the approved Plan of Reorganization is not eligible to be repaid until all obligations owed to other creditors have been fully satisfied. Interest will accrue on the principal amount of $1,991,936 and the interest of $196,957 from January 17, 2013 until paid at the rate of 3.25%. The interest rate of 3.25% will increase 1% each year on January 17 until paid per Plan of Reorganization. Interest accrued on the principal amount of $1,991,936 and the interest of $196,957 from September 28, 2011 to January 16, 2013 at the bankruptcy plan rate. Quarterly interest-only payments on the principal portion will commence when the principal amount owing on the Wells Fargo Loan has been reduced to $1.5 million and continue until paid, provided that Debtors are current on all payments required by the Plan. If Debtors are not current on all payments required by the Plan, the quarterly interest-only payments will not begin until Company bring such payments current. The Company used the funds borrowed from Mr. Wheaton for working capital requirements.

 

Critical Accounting Policies and Judgments 

 

The Company prepares its condensed consolidated financial statements in conformity with US GAAP. The Company's condensed consolidated financial statements are based on the application of certain accounting policies, the most significant of which are described in Note 1—Summary of Significant Accounting Policies to the audited financial statements for the year ended January 28, 2013 included in the Company’s annual report filed on Form 10-K. Certain of these policies require numerous estimates and strategic or economic assumptions that may prove inaccurate or be subject to variations and which may significantly affect the Company's results and financial position for the reported period or in future periods. Changes in underlying factors, assumptions or estimates in any of these areas could have a material impact on the Company's future financial condition and results of operations. The Company considers the following policies to be the most critical in understanding the judgments that are involved in preparing its consolidated financial statements.

 

 
18

 

 

Management Update

 

The Company filed Chapter 11 Reorganization on September 28 and September 29, 2011; the Plan was confirmed on December 17, 2012; and became effective on January 17, 2013.  The Company’s payment obligations under the Plan are estimated to be in excess of $10.0 million.   The Company intends to discharge all Plan obligations from income derived from the restaurants operated by the Company’s subsidiaries, an exit loan from Suzanne H. Wheaton, wife of CEO Robert E. Wheaton, and proceeds from sale of restaurant properties. Since filing for reorganization, the Debtors have sold fifteen properties, of which $5.8 million of the proceeds were used to pay off the obligation to Wells Fargo, the Company’s primary secured creditor in full, $1.9 million to the other secured creditors and $801,000 to unsecured creditors, pursuant to the Plan. Currently, one unsecured creditor claim remains unsettled and has not been paid. To date, the Debtors have made all payments required under the Plan.

 

Earnings or Loss Per Common Share

 

Net (loss) income per common share - basic is computed based on the weighted-average number of common shares outstanding during the period. Net (loss) income per common share – diluted is computed based on the weighted-average number of common shares outstanding during the period plus the effect of dilutive common stock equivalents outstanding during the period. Dilutive stock options are considered to be common stock equivalents and are included in the diluted calculation using the treasury stock method.

 

Basic earnings or loss per common share is computed on the basis of the weighted average number of shares outstanding during the periods. Diluted earnings or loss per common share is calculated based on the weighted-average number of common shares outstanding during the period plus the effect of dilutive common stock equivalents outstanding during the period. Dilutive stock options are considered to be common stock equivalents and are included in the diluted calculation using the treasury stock method. For periods in which a net loss is reported, potential dilutive shares are excluded because they are antidilutive. Therefore, basic loss per common share is the same as diluted loss per common share for all periods presented. Weighted-average common shares outstanding for the fiscal quarters ending May 20, 2013 and May 21, 2012 used to calculate diluted earnings per share exclude stock options to purchase 22,000 shares of common stock due to the market price of the underlying stock being less than the exercise price.

 

Impairment of Goodwill

 

Goodwill primarily represents the excess of the purchase price paid over the fair value of the net assets acquired in connection with business acquisitions. The Company reviews goodwill for possible impairment on an annual basis or when triggering events occur in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350.  ASC 350 requires goodwill to be tested for impairment at the reporting unit level, which is an operating segment or one level below an operating segment. The Company aggregates stores by concept or by geographic region when determining reporting units. The Company did not have any goodwill assets recorded for fiscal quarters ending May 20, 2013 and May 21, 2012.

 

 Impairment of Long-Lived Assets

 

The Company evaluates impairment of long-lived assets in accordance with ASC 360, “Property, Plant and Equipment”.  The Company assesses whether an impairment write-down is necessary whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.  Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset.  If such asset is considered to be impaired, the impairment loss to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Any impairment is recognized as a charge to earnings, which would adversely affect operating results in the affected period.

 

Judgments made by the Company related to the expected useful lives of long-lived assets and the ability of the Company to realize undiscounted net cash flows in excess of the carrying amounts of such assets are affected by factors such as the ongoing maintenance and improvements of the assets, changes in economic conditions, and changes in operating performance. As the Company assesses the ongoing expected net cash flows and carrying amounts of its long-lived assets, these factors could cause the Company to realize a material impairment charge and could adversely affect operating results in any period. 

 

 
19

 

 

Property, Buildings and Equipment

 

Property, building and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are provided using the straight-line method over the following useful lives:

 

   

Years

 

Buildings

      40    

Building and leasehold improvements

    15 - 20  

Furniture, fixtures and equipment

    5 - 8  

 

 

Building and leasehold improvements are amortized over the lesser of the life of the lease or the estimated economic life of the assets. The life of the lease includes renewal options determined by management at lease inception as reasonably likely to be exercised. If a previously scheduled lease option is not exercised, any remaining unamortized leasehold improvements may be required to be expensed immediately which could result in a significant charge to operating results in that period.

 

Property and equipment in non-operating units or stored in warehouses, which is held for remodeling or repositioning, is depreciated and is recorded on the balance sheet as property, building and equipment held for future use.

 

Property and equipment placed on the market for sale is not depreciated and is recorded on the balance sheet as property held for sale and recorded at the lower of cost or market.

 

Repairs and maintenance are charged to operations as incurred. Major equipment refurbishments and remodeling costs are generally capitalized.

 

The Company's accounting policies regarding buildings and equipment include certain management judgments regarding the estimated useful lives of such assets, the residual values to which the assets are depreciated and the determination as to what constitutes the life of existing assets. These judgments and estimates may produce materially different amounts of depreciation and amortization expense than would be reported if different assumptions were used.

 

 

 

Income Taxes

 

Our current provision for income taxes is based on our estimated taxable income in each of the jurisdictions in which we operate, after considering the impact on our taxable income of temporary differences resulting from disparate treatment of items, such as depreciation, estimated liability for closed restaurants, estimated liabilities for self-insurance, tax credits and net operating losses (“NOL”) for tax and financial reporting purposes. Deferred income taxes are provided for the estimated future income tax effect of temporary differences between the financial and tax bases of assets and liabilities using the asset and liability method. Deferred tax assets are also provided for NOL and income tax credit carryforwards. A valuation allowance to reduce the carrying amount of deferred income tax assets is established when it is more likely than not that we will not realize some portion or all of the tax benefit of our deferred income tax assets. We evaluate, on a quarterly basis, whether it is more likely than not that our deferred income tax assets are realizable based upon recent past financial performance, tax reporting positions, and expectations of future taxable income. The determination of deferred tax assets is subject to estimates and assumptions. We periodically evaluate our deferred tax assets to determine if our assumptions and estimates should change. Currently, because there can be no assurance that the Company will generate any specific level of earnings in the future years to realize the benefit of the deferred tax assets existing as of May 20, 2013 and January 28, 2013 the Company has a full valuation allowance against its deferred tax assets, net of expected reversals of existing deferred tax liabilities, as it believes it is more likely than not that these benefits will not be realized.

 

 
20

 

 

Adopted and Recently Issued Accounting Standards

 

During 2014, the FASB issued Accounting Standards Update 2014-09 and 2015-14, Revenue from Contract with Customers (Topic 606), respectively, which revises previous revenue recognition standards to improve guidance on revenue recognition requirements. The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also provides additional disclosure requirements. This new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Early adoption is permitted. The Company has not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

 

In November 2015, the FASB issued ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes. This update, which is part of the FASB's larger Simplification Initiative project aimed at reducing the cost and complexity of certain areas of the accounting codification, requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position, which eliminates the requirement that an entity separate deferred tax liabilities and assets into current and non-current amounts. This update does not affect the current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount on the balance sheet. This amendment applies to all entities with a classified statement of financial position. For public business entities, this update is effective for fiscal years beginning after December 15, 2016, and interim periods within those annual periods. The Company notes this guidance will apply to its reporting requirements and will implement the new guidance accordingly.

 

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This update requires a lessee to recognize on the balance sheet a liability to make lease payments and a corresponding right-of-use asset. The guidance also requires certain qualitative and quantitative disclosures about the amount, timing and uncertainty of cash flows arising from leases. This update is effective for annual and interim periods beginning after December 15, 2018, which will require us to adopt these provisions in the first quarter of fiscal 2020 using a modified retrospective approach. Early adoption is permitted. The Company has not yet selected a transition date nor have we determined the effect of the standard on our ongoing financial reporting.

 

 

Item 4. Controls and Procedures

 

Management’s Report on Internal Control over Financial Reporting

 

Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the periods covered by this report and as of the most recent fiscal year end which was January 28, 2013. In making this assessment, management used the criteria established in Internal Control–Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this evaluation, our principal executive officer and principal accounting officers have concluded that the internal control over financial reporting was not effective as of January 28, 2013 and that two material weaknesses and one significant deficiency existed for the periods covered. The material weaknesses and significant deficiency identified included:

 

 

Untimely account reconciliations (material weakness).

 

Record retention (material weakness).

 

Segregation of duties (significant deficiency).

 

A material weakness is a deficiency or a combination of deficiencies in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected on a timely basis.

 

 
21

 

 

Changes in Internal Control Over Financial Reporting

 

We have undertaken certain measures to remediate the material weakness involving untimely account reconciliations and inadequate record retention that are discussed in our report on Form 10-K for the year ended January 28, 2013 and incorporated herein by this reference.

 

We have been working to ensure that account reconciliations are completed earlier in the accounting cycle.  The Company has dedicated staff to prepare account reconciliations prior to each quarter end. This measure is being implemented during fiscal year 2016, and is expected to materially affect, or is reasonably likely to materially affect, our internal control over financial reporting.  

 

The Company is also going to seek to eliminate its material weakness with regard to record retention by implementing a decentralized document management system to alleviate some of the challenges of retaining and locating paper documents. Given that the Company is decentralized with each of its restaurant locations generating source documents that are core to our accounting function, management believes that having the accounting documents stored at each restaurant location will provide the Company with better ability to properly manage, account, and provide appropriate support for its business activities.

 

The Company is a small public company. Effective internal control contemplates segregation of duties so that no one individual handles a transaction from inception to completion. Currently, there are not enough accounting personnel to permit an adequate segregation of duties in all respects and thus a significant deficiency in our internal control exists. Management continues an evaluation of staffing levels and responsibilities in light of resources available to the Company so as to seek a solution with regard to the segregation of duties requirements.

 

Other than as described above, there have been no changes in our internal control over financial reporting during the fiscal year 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements.  Further, because of changes in conditions, effectiveness of internal controls over financial reporting may vary over time.  

 

 
22

 

 

PART II: OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In connection with the purchase of certain K-Bob restaurant locations, the Company entered into license agreements which require the payment of certain fees to K-BOB’S based on the restaurants gross sales. On September 2, 2010 K-BOB’s filed a Complaint against the Company for, among other things, alleged damages for breaches under the License Agreements in the106th District Court of Dawson County, Texas. On January 12, 2012, K-BOB’S initiated similar litigation before the bankruptcy court. In April 2013, the Company settled all litigation by terminating three restaurants leases including certain restaurant equipment.

 

On August 4, 2010 Spirit Master Funding, LLC (‘Spirit”) , a landlord of a Company subsidiary, filed case number CV-2010-022169 in the Superior Court of the State of Arizona for the failure of the subsidiary to pay $3.7 million in rent and accelerated rent for four restaurants leased to the subsidiary. During the bankruptcy, Spirit filed a proof of claim as an unsecured creditor for approximately $1.5 million. The Company believes they owe Spirit less than their claim amount and has filed an objection to this claim with the bankruptcy court arguing that the allowed claim should be approximately $500,000. The outcome of this matter is still pending.

 

The Company or its subsidiaries are, from time to time, the subject of complaints or litigation from customers, employees, vendors, regulatory authorities and landlords. Adverse publicity resulting from such complaints or litigation may materially, adversely affect the Company and its subsidiaries, regardless of whether such allegations are valid. The Company believes that generally the lawsuits, claims and other legal matters brought in the ordinary course of business are not material to the Company’s business, financial condition or results of operations. However, an existing or future lawsuit or claim could result in an adverse decision against the Company that could have a material adverse effect on the Company’s business, financial condition and results of operations.

 

Item 1A. Risk Factors

 

The following risk factors represent new factors that affect the Company as a result of the Company’s emerging from Chapter 11 bankruptcy in January of 2013. These factors should be read in conjunction with other risk factors described in Part 1, Item 1A “Risk Factors” in our Annual Report on Form 10-K. Our business activities and the food industry in general, are subject to a variety of risks. If any of the following risk factors or those described in our Annual report on Form 10-K should occur, our profitability, financial condition or liquidity could be materially impacted.

 

Risks Related to Our Emergence from Bankruptcy

 

Our actual financial results may vary significantly from the projections filed with the Bankruptcy Court.

 

In connection with the Chapter 11 Reorganization, we were required to prepare financial projections of the Parent Company and one subsidiary to demonstrate the feasibility of the Plan and our ability to continue operations upon emergence from bankruptcy. The financial projections, which were included in the disclosure statement and were approved by the Bankruptcy Court, reflected numerous assumptions concerning anticipated future performance and anticipated market and economic conditions that were and continue to be beyond our control and that may not materialize.  Projections are inherently subject to uncertainties and to a wide variety of significant business, economic and competitive risks.  Our actual results will vary from those contemplated by the projections for a variety of reasons.  The projections have not been incorporated by reference into this report and neither those projections nor any version of the disclosure statement should be considered or relied upon in connection with any investment decision concerning our common stock.

 

Our actual financial results after emergence from bankruptcy under Chapter 11 may not be comparable to our historical financial information.

 

As a result of the implementation of the Plan and the transactions contemplated thereby, our financial condition and results of operations may not be comparable to the financial condition or results of operations reflected in the Company’s historical financial statements.

 

 
23

 

 

We cannot be certain that the Chapter 11 Reorganization will not adversely affect our operations going forward.

 

Although the Parent Company emerged from bankruptcy under Chapter 11 on January 17, 2013, the effective date of the Plan, we cannot assure you that having been subject to bankruptcy protection will not adversely affect our operations going forward, including our ability to negotiate favorable terms from suppliers, partners and others and to attract and retain customers. The failure to obtain such favorable terms and attract and retain customers could adversely affect our financial performance.

 

Our ability to service our payment obligations under the Amended Plan will depend upon, among other things, our future operating performance and the ability to enter into financing transactions.

 

These factors depend partly on economic, financial, competitive and other factors beyond our control. In addition, if we need to obtain additional financing or sell assets or equity, we may not be able to do so on commercially reasonable terms, if at all.  Failure to service our payment obligations may result in the Plan Agent selling one or more of our assets, as described above.

 

Other than as set forth above, there have been no material changes from the risk factors disclosed in Part 1, Item 1A of our Form 10-K for the fiscal year ended January 28, 2013.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

(a)

 

The following exhibits are attached to this report unless noted as previously filed:

     

Exhibit

 

Description

Number

 

of Exhibit

     

3.1

 

Certificate of Incorporation*

3.2

 

Bylaws, as amended on September 22, 1997*

4.1

 

Form of Common Stock Certificate**

31.1

 

Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

31.2

 

Certification of Principal Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

     

32.1

 

Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     

32.2

 

Certification of Principal Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

                                                             

101.INS***

 

XBRL Instance Document 

101.SCH***

 

XBRL Taxonomy Extension Schema Document

101.CAL***

 

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF***

 

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB***

 

XBRL Taxonomy Extension Label Linkbase Document

101.PRE***

 

XBRL Taxonomy Extension Presentation Linkbase Document

                                                                                

                                                                                         
   

* Previously filed as an exhibit to the Registration Statement on Form S-1, Amendment No. 1 (Registration No. 333- 32249).

   

** Previously filed as an exhibit to the Registration Statement on Form S-1, Amendment No. 2 (Registration No. 333- 32249).

    *** XBRL information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.

 

 
24

 

  

SIGNATURES

 

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

Star Buffet, Inc.

 

 
   

Date: August 17, 2016       

By:   /s/ Robert E. Wheaton

 

Robert E. Wheaton, Chief Executive Officer,

President and Chairman

 

 

 

 

  August 17, 2016   

By:     /s/ Ronald E. Dowdy

 

Ronald E. Dowdy

Group Controller,

Treasurer, Secretary and

Principal Accounting Officer

 

 

25