-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BqUyVGpvFoqjH8OOh1XJxALyz1KCr+cVB/Z9y7OIqgJRwxkYZVUPR8fepahjbeIM 1z2CS8MY8ZYadXADgA76Rw== 0000912057-96-025397.txt : 19961113 0000912057-96-025397.hdr.sgml : 19961113 ACCESSION NUMBER: 0000912057-96-025397 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960928 FILED AS OF DATE: 19961112 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERNATIONAL FOOD & BEVERAGE INC /DE/ CENTRAL INDEX KEY: 0000880584 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FOOD PREPARATIONS & KINDRED PRODUCTS [2090] IRS NUMBER: 330307734 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-43621 FILM NUMBER: 96657830 BUSINESS ADDRESS: STREET 1: 30152 AVENTURA STREET 2: PO BOX 80609 CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92668 BUSINESS PHONE: 7148588800 MAIL ADDRESS: STREET 1: 30152 AVENTURA STREET 2: PO BOX 80609 CITY: RANCHO SANTA MARGARI STATE: CA ZIP: 92688 10-Q 1 10-Q UNITED STATES 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 September 28, 1996 ---------------------------- OR / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 33-43621 ---------------- INTERNATIONAL FOOD AND BEVERAGE, INC. (Exact name of registrant as specified in its charter) Delaware 33-0307734 - ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 30152 Aventura, Rancho Santa Margarita, California 92688 - ----------------------------------------------------- ------------------- (Address of principal executive offices) (Zip Code) (714) 858-8800 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No ------ ------ The number of shares of Common Stock outstanding as of October 31, 1996 was: 156,589,351 ----------------- INTERNATIONAL FOOD AND BEVERAGE, INC. FINANCIAL STATEMENTS AND OTHER INFORMATION INDEX PAGE NUMBER ----------- PART I - FINANCIAL INFORMATION Item 1. Financial Statements Statements of Operations for the three months ended September 28, 1996 and September 30, 1995 1 Balance Sheets as of September 28, 1996 and June 29, 1996 2 Statements of Cash Flows for the three months ended September 28, 1996 and September 30, 1995 3 Notes to Financial Statements 4 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 5 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 6 SIGNATURES 6 INTERNATIONAL FOOD AND BEVERAGE, INC. PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS STATEMENTS OF OPERATIONS THREE MONTHS ENDED ---------------------------- (Unaudited) SEPTEMBER 28, SEPTEMBER 30, 1996 1995 ------------- ------------- REVENUES $ 1,993,000 $ 1,576,000 COST OF SALES 1,603,000 1,229,000 ------------ ------------ GROSS PROFIT 390,000 347,000 OPERATING EXPENSES: Selling and distribution 334,000 259,000 General and administrative 141,000 137,000 Interest expense 31,000 4,000 ------------ ------------ 506,000 400,000 ------------ ------------ NET LOSS $ (116,000) $ (53,000) ------------ ------------ ------------ ------------ NET LOSS PER COMMON SHARE $ (.00) $ (.00) ------------ ------------ ------------ ------------ WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 155,666,362 154,029,569 ------------ ------------ ------------ ------------ See accompanying notes. -1- INTERNATIONAL FOOD AND BEVERAGE, INC. BALANCE SHEETS SEPTEMBER 28, JUNE 29, 1996 1996 ------------- ------------ (Unaudited) ASSETS CURRENT ASSETS: Cash and cash equivalents $ 15,000 $ 20,000 Accounts receivable 326,000 505,000 Inventories 604,000 643,000 Prepaid expenses 4,000 7,000 ---------- ---------- Total current assets 949,000 1,175,000 FIXED ASSETS 871,000 905,000 ---------- ---------- $1,820,000 $2,080,000 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) CURRENT LIABILITIES: Notes payable and current maturities of long-term debt $ 359,000 $ 429,000 Accounts payable 838,000 840,000 Accrued wages and benefits 344,000 373,000 Accrued commissions and marketing 174,000 181,000 Other accrued expenses 90,000 118,000 ---------- ---------- Total current liabilities 1,805,000 1,941,000 LONG-TERM DEBT 730,000 756,000 SHAREHOLDERS' EQUITY (DEFICIENCY) (715,000) (617,000) ---------- ---------- $1,820,000 $2,080,000 ---------- ---------- ---------- ---------- See accompanying notes. -2- INTERNATIONAL FOOD AND BEVERAGE, INC. STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED ---------------------------- (Unaudited) SEPTEMBER 28, SEPTEMBER 30, 1996 1995 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $(116,000) $(53,000) Adjustments to reconcile net loss to net cash used by operating activities Depreciation and amortization 39,000 42,000 Issuance of Common Stock under distribution agreement 18,000 Changes in assets and liabilities: Accounts receivable 179,000 (93,000) Inventories 39,000 (40,000) Prepaid expenses 3,000 13,000 Accounts payable (2,000) 227,000 Accrued wages and benefits (29,000) (65,000) Accrued commissions and marketing (7,000) (88,000) Accrued expenses (28,000) 10,000 --------- --------- Net cash provided by (used in) operating activities 96,000 (47,000) --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Additions to fixed assets (5,000) (14,000) --------- --------- Net cash used by investing activities (5,000) (14,000) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Principal payments on notes payable (96,000) (24,000) --------- --------- Net cash provided by (used in) financing activities (96,000) (24,000) --------- --------- NET INCREASE (DECREASE) IN CASH (5,000) (85,000) CASH AND CASH EQUIVALENTS, beginning of year 20,000 192,000 --------- --------- CASH AND CASH EQUIVALENTS, end of period $ 15,000 $107,000 --------- --------- --------- --------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest $ 19,000 $ 3,000 Income taxes 0 0
See accompanying notes. -3- INTERNATIONAL FOOD AND BEVERAGE, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1 - FINANCIAL STATEMENTS In the opinion of management, the accompanying financial statements, which have not been audited by independent public accountants, reflect all adjustments necessary to present fairly the data for the periods presented therein. The results of operations for the three month period ended September 28, 1996 are not necessarily indicative of the results that may be expected for the entire fiscal year ending June 28, 1997. NOTE 2 - CHANGE IN CONTROL A change in control transaction occurred December 31, 1994 and was recorded in conformity with Accounting Principles Board Opinion No. 16. Accordingly, assets and liabilities as of January 1, 1995 were restated and the results of operations since that time reflect the "push-down" of the new controlling shareholder's basis, minority interest at its historical basis, and the consideration received from the former controlling shareholder. See footnotes to the audited financial statements for a more detailed description of the transaction. -4- INTERNATIONAL FOOD AND BEVERAGE, INC. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS Revenues for the three month period ended September 28, 1996 of $1,993,000 increased approximately 26% when compared with revenues of $1,576,000 in the prior year comparable period. This revenue increase resulted primarily from the addition late in fiscal 1996 of new foodservice customers and an increase in revenues in contract manufacturing for a customer who sells to both domestic retail chains and export customers. The Company continues to market its pizzas and crusts nationally to retail supermarket service delicatessen customers and major foodservice accounts. Beginning in May 1996, the Company began a private label program producing a line of pizzas being sold in the frozen food section of a major national grocery retailer. The gross profit margin of 19.6% for the three months ended September 28, 1996 declined versus the prior year comparable period gross margin of 22.0%. The current year margin reflects higher material costs (principally in cheese) offset only partially by improvements realized in operating efficiencies and a higher level of overhead absorption. In the first quarter of fiscal 1997 cheese, the Company's most significant ingredient cost, was at unprecedented high levels with prices that were approximately 25% higher than during the comparable prior year period. To offset the higher material costs the Company has, where possible, raised prices. These price increases however were primarily affected beginning late in fiscal 1996 and in certain cases not until late September 1996. In addition, fixed overhead per unit sold remains high at the Company's low level of production. The Company projects an increase in its gross profit contribution rate given recent price increases and assuming the Company achieves increased production volume. Additionally, gross profit would be further benefited if cheese prices return to historical price levels. In late October 1996 the price of cheese did begin a downward trend but prices remain unpredictable. Selling, general and administrative expenses for the quarter ended September 28, 1996 decreased as a percent of sales versus the prior year comparable period to 23.8% from 25.1% primarily due to the increased revenues. The Company does not anticipate having to add substantially to fixed overhead costs to support revenue growth of fifty to one hundred percent of its current revenue level assuming a similar mix of products and customers. As a result of higher borrowings interest expense increased from $4,000 to $31,000 for the current fiscal first quarter versus the comparable prior year period. The resulting loss for the three month period ended September 28, 1996 was $116,000 versus a reported loss for three months ended September 30, 1995 of $53,000. LIQUIDITY AND CAPITAL RESOURCES Net cash provided by operating activities was $96,000 for the three month period ended September 28, 1996 versus cash used in operating activities of $47,000 in the comparable prior year period. The cash provided by operations was generated primarily from the reduction in accounts receivable and inventories since June 29, 1996, the proceeds of which were used to satisfy accounts payable and accrued expenses as well as pay down the Company's revolving line of credit. Management believes that the Company becomes cash positive from operations if it achieves a sustained average monthly revenue rate of approximately $700,000 at current sales prices and product mix. In March 1996 the Company entered into a $500,000 revolving line of credit agreement collateralized by eligible accounts receivable and inventories. Throughout most of September and October 1996 the outstanding borrowing under this credit facility averaged approximately $300,000. The Company believes that this credit facility will be adequate to fund the Company's short term working capital requirements. The Company's primary emphasis remains revenue generation through increased sales to existing and new customers. It is also aggressively evaluating opportunities ranging from contract manufacturing for others to the acquisition of a synergistic product line or company. -5- INTERNATIONAL FOOD AND BEVERAGE, INC. LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) The foregoing Management's Discussion and Analysis contains "forward looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, regarding management's expectations concerning gross profit contribution, cheese prices, volume, the adequacy of funds from the existing credit facility and the level at which the Company's operations become cash positive. The Company cautions that these statements are further qualified by important factors that could cause actual results to differ materially from those in the forward looking statements, including, among others, the following: reduced or lack of increase in demand for the Company's products, competitive pricing pressures, changes in the market price of ingredients used in the Company's products and the level of expenses incurred in the Company's operations. PART II - OTHER INFORMATION ITEM 6. - EXHIBITS AND REPORTS ON FORM 8-K (a) None. (b) No reports on Form 8-K were filed during the three months ended September 28, 1996. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Date: November 7, 1996 INTERNATIONAL FOOD AND BEVERAGE, INC. -------------------- /s/ Michael W. Hogarty ------------------------------------- Michael W. Hogarty President and Chief Executive Officer /s/ Ann M. Gooch ------------------------------------- Ann M. Gooch Vice President of Finance (Principal Financial and Accounting Officer) -6- EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SEPTEMBER 28, 1996 FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS JUN-28-1997 JUN-30-1996 SEP-28-1996 15 0 396 70 604 949 1,159 288 1,820 1,805 0 0 0 413 (1,128) 1,820 1,993 1,993 1,603 475 0 0 31 (116) 0 (116) 0 0 0 (116) (.00) (.00)
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