HUDSON'S GRILL INTERNATIONAL, INC.
2004 ANNUAL REPORT
LETTER TO THE SHAREHOLDERS
To the Shareholders of Hudson's Grill International, Inc.:
In 2004, Hudson's Grill International, Inc. (the "Company"), signed up two new franchisees, and one existing franchise closed. A new franchise in Iowa was signed in early 2004, and it will probably be open this month. Another new franchisee signed in October 2004, and it has been open in De Pere, Wisconsin, since February 2005. Additionally, the Company has signed a new franchise agreement in February 2005 for a restaurant in Appleton, Wisconsin. Its franchises open more than a year were stable, and the Company's revenues show that. Revenues from the new franchisees will not be reflected in the Company's earnings until 2005. The Company hired a representative on a commission basis to monitor and sell franchises in Wisconsin, Michigan and Iowa, and believes that this representative will be able to recruit several new franchisees in the next couple of years. The Company continues solely to franchise restaurants. If all goes well, the Company will soon begin to accumulate cash. The Company currently has operating franchises in California, Texas, Michigan, and Wisconsin, and one is about to open this month in Iowa.
Substantial progress has been made in paying off debts during 2004. The Company had assumed debts due to an affiliated entity that is now closed, but with the cash flow from operations in 2004, the Company has continued its progress toward paying off almost all its debts. It is now down to its last two long-term debts, which are owed to persons affiliated with the Company. The Company estimates that it will take about two months to pay off these last two long-term debts.
Although there have been considerable costs associated with all of these activities, the Company appears to be poised to show continuing, steady progress in the coming months, provided that its franchisees don't face harsh economic times like those that were prevalent just a couple of years ago. Also, profits should improve provided that additional costs associated with compliance with the Sarbanes Oxley Act do not offset growth in revenues.
David L. Osborn
President and Chief Executive Officer
With trading you must conquer your emotions and be very disciplined about your goals.
