History
I went back to ensure I was correct Re the Brewery bankructy from my earlier post "The original idea was a brewery that they took public and it went bankrupt (if I recall right?)"
From the company SEC fuling:
Overview. The Company was capitalized in 1996 to develop, own, and operate
theme brewpub/microbrewery restaurants. Until March of 1997 when the Company
acquired, and July 1, 1997 when the Company began operating, the former Hubcap
Brewery & Kitchen in Dallas, Texas, the Company had no operations or revenues
and its activities were devoted solely to development. However, since the
acquisition was accounted for as a pooling of interests, the results of
operations of Hubcap Brewery & Kitchen were carried forward into the Company's
financial statements and accordingly the 1997 financial statements reflect a
full year of operations of that business.
In January, 1999, the Company terminated its brewpub/microbrewery
restaurant operations. Future revenues and profits will depend upon various
factors, including market acceptance of 'Net GameLink(TM), and general economic
conditions. The Company's present sole source of revenue is the future sale of
'Net GameLink(TM) systems and from associated royalties. There can be no
assurances that the Company will successfully implement its expansion plans,
including the 'Net GameLink(TM) entertainment concept. The Company also faces
all of the risks, expenses, and difficulties frequently encountered in
connection with the expansion and development of a new business. Furthermore, to
the extent that the Company's expansion strategy is successful, it must manage
the transition to multiple sites, higher volume operations, control of overhead
expenses, and the addition of necessary personnel.
Results of Operations.
Fiscal year ended December 31, 1998 compared to fiscal year ended December
31, 1997.
The Company had no revenues from the date of inception through July 1,
1997, when it began operating the former Hubcap Brewery & Kitchen, through its
wholly-owned Texas subsidiary corporation, First Brewery of Dallas, Inc.
However, as noted above, results for the year reflect operations of the acquired
Company prior to the acquisition. Prior to July 1, 1997, the Company had
received $391,351.00 in paid-in capital, and had incurred $237,478.54 in
start-up, consulting, and legal expenses associated with the formation of the
Company and its development activities.
For the 12 months ended December 31, 1998, the Company, through its
wholly-owned subsidiary, First Brewery of Dallas, Inc., had a net loss of
$681,018, compared to a loss of $576,520 for the 12 months ended December 31,
1997. First Brewery of Dallas, Inc. ceased operations on January 10, 1999. Line
by line comparisons of the individual items contributing to the Company's
results for these two years is of little or no significance in view of the
decision to terminate the Company's brewpub/microbrewery operations. Increases
in revenues and the related increases in costs of sales from the 1997 to the
1998 fiscal years generally reflect the Company's moderate degree of success in
expanding its restaurant operations. However, as the 1998 fiscal year drew to a
close it became clear to the Company's management that Texas's liquor control
laws were such that the Company would not be able to obtain approval for the
microbrewery operations which it regarded as the key to achieving
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profitable operations. Probably the most significant items in the Statement of
Operations for the two years are the increase in interest expense from $12,776
in fiscal 1997 to $39,026 in fiscal 1998, reflecting an increased level of
borrowing, primarily from shareholders., and the $132,545 provision taken in
fiscal 1998 for losses from discontinued operations, reflecting the
determination to shut down the brewpub/microbrewery activities. Interest expense
is expected to be substantially lower for the immediate future as a result of
the forgiveness of certain debt in connection with termination of the Company's
brewpub/microbrewery operations in January, 1999 as described below, and the
one-time issuance of stock in lieu of future interest as described under
"Certain Transactions."
Nine months ended September 30, 1999 compared to nine months ended
September 30, 1998.
These two periods are in no way comparable, since the nine months ended
September 30, 1998 reflect the Company's unsuccessful efforts to develop its
brewpub/microbrewery business, whereas the corresponding nine months of 1999
reflect a redirection of the Company's efforts from the discontinued business to
the development of the Company's 'Net GameLink(TM) System. For the first nine
months of 1999, the Company had essentially no revenues. Administrative costs of
$224,381 for the nine months ended September 30, 1999 compared to $368,757 for
the nine months ended September 30, 1998 reflect the $132,545 charge reflecting
the decision in January, 1999 to terminate the brewpub/microbrewery operations.
The Company recorded a $67,849 gain on the sale of equipment for the nine months
ended September 30, 1999. This gain reflects the fact that, as described below,
the guarantors of the Company's bank debt secured by that equipment foregave
approximately $65,000 in indebtedness when they acquired the bank's security
interest in that equipment upon payment of that indebtedness, and later disposed
of the equipment to reimburse themselves for a portion of these payments. The
reduction in interest charges for the nine months ended September 30, 1999
reflects an agreement by holders of that indebtedness to accept a one-time
issuance of common stock in lieu of accrued and future interest.
Liquidity and Capital Resources. As of September 30, 1999 the Company's
liquidity position was extremely precarious. The Company had current liabilities
of $908,780, including $524,111 in trade payables, most of which were overdue,
short-term notes payable of $360,500, all of which were either demand
indebtedness or were payable at an earlier date and were in default, and related
accrued interest on the notes. Current assets available to meet those
liabilities were only $4,709.
To date the Company and First Brewery of Dallas I, Ltd., the predecessor
to First Brewery of Dallas, Inc., the Company's wholly-owned Texas subsidiary
corporation, met their capital requirements through capital contributions, loans
from principal shareholders and officers, bank borrowings, and certain private
placement offerings. At the time the operations of First Brewery of Dallas, Inc.
were terminated, all of that subsidiary's assets were pledged to secure
indebtedness to SecurityBank of Arlington, Texas. That indebtedness had been
personally guaranteed by the Company's directors and by another individual. Upon
termination of the brewpub/microbrewery operations the guarantors were required
to repay that indebtedness to the bank, and upon such payment the bank assigned
the Company's notes and the related security to the guarantors. The guarantors
subsequently foregave the indebtedness and disposed of the assets securing the
indebtedness to third parties at a loss.
It is anticipated that the Company will in the near future place First
Brewery into voluntary liquidation under Chapter 7 on the Bankruptcy Act. Upon
the anticipated conclusion of that
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proceeding, the Company's consolidated balance sheet will be improved by the
elimination of $431,111 in trade payables, as those amounts are owed solely by
the subsidiary.
Even with the expected elimination of the First Brewery indebtedness, the
Company will be unable to continue its operations or to complete the development
of its 'Net GameLink(TM) hardware in the absence of substantial additional
financing. The Company is registering its outstanding common stock under the
Securities Exchange Act of 1934 with a view toward making its equity securities
more attractive to potential investors, but at the present time it has not
completed any arrangements to obtain additional financing and there can be no
assurance that it will be able to raise the necessary funds. In that connection,
it should be noted that the Company intends to place its First Brewery of
Dallas, Inc. subsidiary into voluntary bankruptcy. The Company is unable to
predict the effect of the anticipated bankruptcy on its ability to raise
additional funds to develop its gaming operations, but efforts to raise these
funds could be adversely affected by the bankruptcy.
