-----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, EXG4RSPHA3IkP5Vv/xaI2nEGfmiVc8w9fq4I8K8ikdSrp0nSVCgSJe2LU0X0hRk9 gKG0ujWKWbhN4kmmIOzj2Q== 0000950117-01-500408.txt : 20010521 0000950117-01-500408.hdr.sgml : 20010521 ACCESSION NUMBER: 0000950117-01-500408 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010331 FILED AS OF DATE: 20010518 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CREATIVE BAKERIES INC CENTRAL INDEX KEY: 0000949721 STANDARD INDUSTRIAL CLASSIFICATION: BAKERY PRODUCTS [2050] IRS NUMBER: 133832215 STATE OF INCORPORATION: NY FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13984 FILM NUMBER: 1643728 BUSINESS ADDRESS: STREET 1: 20 PASSAIC AVE CITY: FAIRFIELD STATE: NJ ZIP: 07004 BUSINESS PHONE: 9738088248 MAIL ADDRESS: STREET 1: 20 PASSAIC AVE CITY: FAIRFIELD STATE: NJ ZIP: 07004 FORMER COMPANY: FORMER CONFORMED NAME: WILLIAM GREENBERG JR DESSERTS & CAFES INC DATE OF NAME CHANGE: 19950918 10QSB 1 a29751.txt CREATIVE BAKERIES, INC. 10QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2001 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1939 For the transition period from to ----------- ----------- Commission File Number: 1-13984 CREATIVE BAKERIES, INC. (Exact name of small business issuer as specified in its charter) New York 22-3576940 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 20 Passaic Avenue, Fairfield, NJ 07004 ----------------------------------------------------- (Address of principal executive offices) Issuer's telephone number, including area code: (973) 808-9292 ------------------- Former name: William Greenberg Jr. Desserts and Cafes, Inc. Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 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 --- --- Indicate the number of Shares outstanding of each of the Issuer's classes of common stock, as of the latest practicable date. Class Outstanding at March 31, 2001 - ------------------------------ ------------------------------- Common Stock, par value $0.001 per share 5,245,250 INDEX Part I. Financial information Item 1. Condensed consolidated financial statements: Balance sheet as of March 31, 2001 F-2 Statement of operations for the three months ended March 31, 2001 and 2000 F-3 Statement of cash flows for the three months ended March 31, 2001 and 2000 F-4 Notes to condensed consolidated financial statements F-5 - F-10 Item 2. Management's discussion and analysis of financial condition
Signatures CREATIVE BAKERIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET - MARCH 31, 2001 (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 11,506 Accounts receivable, less allowance for doubtful accounts of $15,500 282,784 Inventories 226,752 Prepaid expenses and other current assets 39,173 ----------- Total current assets 560,215 ----------- Property and equipment, net 458,998 ----------- Other assets: Goodwill, net of amortization 788,801 Security deposits 5,464 ----------- 794,265 ----------- $ 1,813,478 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable, bank $ 94,631 Accounts payable 415,145 Accrued expenses 222,337 ----------- Total current liabilities 732,113 ----------- Other liabilities: Deferred rent 109,348 Net liabilities of discontinued operations less assets to be disposed of 374,050 ----------- 483,398 ----------- Stockholders' equity: Preferred stock $.001 par value, authorized 2,000,000 shares, no shares issued and outstanding Common stock, $.001 par value, authorized 10,000,000 shares, issued and outstanding 5,245,250 shares 5,245 Additional paid in capital 11,364,073 Deficit (10,652,322) ----------- 716,996 Common stock held in treasury, 208,500 shares (119,029) ---------- 597,967 ---------- $1,813,478 ==========
See notes to condensed consolidated financial statements. F-2 CREATIVE BAKERIES, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited)
2001 2000 ---- ---- Net sales $768,628 $824,603 Cost of sales 595,432 681,457 -------- -------- Gross profit 173,196 143,146 Selling, general and administrative expenses 225,440 238,605 -------- -------- Loss from operations (52,244) (95,459) -------- -------- Other income (expenses): Interest income 742 1,415 Miscellaneous income 4,500 Interest expense (2,964) (3,243) -------- -------- (2,222) 2,672 -------- -------- Loss from continuing operations (54,466) (92,787) Discontinued operations: Income (loss) from operations of New York facility to be disposed of 3,138 (21,977) -------- -------- Net loss ($51,328) ($114,764) ======== ======== Earnings per share information: Basic and fully diluted: Continuing operations ($0.01) ($0.02) Discontinued operations 0.00 (0.00) -------- ------- Net loss per share ($0.01) ($0.02) ======== =======
See notes to condensed consolidated financial statements. F-3 CREATIVE BAKERIES, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (Unaudited)
2001 2000 ---- ---- Operating activities: Loss from continuing operations ($54,466) ($ 92,787) Adjustments to reconcile net loss from continuing operations to cash used in continuing operations: Depreciation and amortization 51,051 53,615 Changes in other operating assets and liabilities from continuing operations: Accounts receivable 62,997 38,334 Inventory 14,374 20,326 Prepaid expenses and other current assets 10,271 52,689 Accounts payable (206,037) (69,652) Accrued expenses and other current liabilities 2,385 (80,618) Deferred rent (6,683) (5,361) --------- -------- Net cash used in continuing operations (126,108) (83,454) Net cash provided by discontinued operations 20,932 (21,577) --------- -------- Net cash used in operating activities (105,176) (105,031) --------- -------- Financing activities: Proceeds from issuance of common stock and warrants 182,000 Purchase of treasury stock (70,630) Payment of debt (12,638) (1,364) --------- -------- Net cash provided by (used in) financing activities (12,638) 110,006 --------- --------- Net increase (decrease) in cash and cash equivalents (117,814) 4,975 --------- --------- Cash and cash equivalents, beginning of period 129,320 114,971 --------- -------- Cash and cash equivalents, end of period $11,506 $119,946 ========= ======== Supplemental disclosures: Cash paid during the period for: Interest: Continuing operations $2,964 $ 1,136 ========= ======== Discontinued operations $ 0 $ 0 ========= ========
See notes to condensed consolidated financial statements. F-4 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 1. The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-QSB. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. The results of operations for the three months ended is not necessarily indicative of the results to be expected for the full year. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report for the year ended December 31, 2000 included in its Annual Report filed on Form 10-KSB. 2. Principles of consolidation: The accompanying consolidated financial statements include the account of the Company and all of its wholly owned subsidiaries. Intercompany transactions and balances have been eliminated in consolidation. 3. Nature of operations, risks and uncertainties: The Company is a manufacturer of baking and confectionery products which are sold to supermarkets, food distributors, educational institutions, restaurants, mail order and to the public. Although the Company sells its products throughout the United States, its main customer base is on the East Coast of the United States. The process of preparing financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions regarding certain types of assets, liabilities, revenues and expenses. Such estimates primarily relate to unsettled transactions and events as of the date of the financial statements. Accordingly, upon settlement, actual results may differ from estimated amounts. The Company maintains all of its cash balances in New Jersey financial institutions. The balances are insured by the Federal Deposit Insurance Company (FDIC) up to $100,000. At March 31, 2001, the Company had no uninsured cash balances. F-5 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 4. Accounts receivable: Following is a summary of receivables at March 31, 2001: Trade accounts $298,284 Less allowance for doubtful accounts (15,500) -------- $282,784 ========
At March 31, 2001, accounts receivable in the amount of $298,284 was pledged as collateral in connection with the Company's line of credit. 5. Inventories: Inventories at March 31 consist of : Finished goods $ 83,702 Raw materials 59,956 Supplies 83,094 -------- $226,752 ========
6. Property and equipment: Baking equipment $1,280,226 Furniture and fixtures 78,864 Leasehold improvements 180,422 ---------- 1,539,512 Less: Accumulated depreciation and amortization 1,080,514 ---------- $ 458,998 ==========
F-6 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 6. Property and equipment (continued): Depreciation expense charged to operations was $24,573 and $27,137 in 2001 and 2000, respectively. Machinery and equipment with a cost of $197,000 is pledged as collateral for the Company's line of credit. The useful lives of property and equipment for purposes of computing depreciation are:
Years ----- Machinery and equipment 10 Furniture and computers 5 Leasehold improvements 10-15
7. Intangible assets: The acquisition agreement of Greenberg's - L.P. contained a provision for a covenant not to compete of $125,000 which management is amortizing over its five year term. Amortization of the covenant charged to operations was $6,250 in 2001 and 2000. The excess cost over the fair value of the net assets acquired from J.M. Specialties, Inc. aggregated $1,213,565. This goodwill has been amortized over its estimated useful life of fifteen years. Amortization charged to operations amounted to $20,228 in 2001 and 2000. 8. Note payable, bank: As of March 31, 2001, the Company had an available revolving line of credit with Hudson United Bank in the amount of $150,000, of which $94,631 had been utilized at March 31, 2001. The interest rate was 9.50%. F-7 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 9. Commitments and contingencies: The Company is obligated under a triple net lease for use of 29,362 square feet of office and plant space in New Jersey with the lease commencing January 31, 1994 and expiring December 31, 2004. The minimum future rentals on the baking facility is as follows:
Facility --------- March 31, 2002 $200,000 March 31, 2003 200,000 March 31, 2004 200,000 March 31, 2005 150,000 -------- $750,000 ========
Rent expense for all operating leases amounted to $52,357 in 2001 and $77,421 in 2000. 10. Income taxes: The Company accounts for income taxes in accordance with Statement of Financial Accounting Standards ("SFAS No. 109") "Accounting for Income Taxes", which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred income tax assets and liabilities are computed annually for differences between the financial statement and income tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. Income tax expense is the tax payable or refundable for the period, plus or minus the change during the period in deferred tax assets and liabilities. There was no cumulative effect of adoption or current effect in continuing operations mainly because the Company has accumulated a net operating loss. The Company has made no provision for a deferred tax asset due to the net operating loss carryforward because a valuation allowance has been provided which is equal to the deferred tax asset. It cannot be determined at this time that a deferred tax asset is more likely than not to be realized. The Company has a loss carryforward of $7,897,694 that may be offset against future taxable income. The carryforward losses expire at the end of the years 2006 through 2018. F-8 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 11. Earnings per share: Primary earnings per share is computed based on the weighted average number of shares actually outstanding plus the shares that would have been outstanding assuming conversion of the common stock purchase warrants which are considered to be common stock equivalents. However, according to FASB 128, effective for financial statements issued and annual periods beginning after December 15, 1997, entities with a loss from continuing operations should not include the exercise of potential shares in the calculation of earnings per share since the increase would result in a lower loss per share. Thus, common stock purchase warrants are excluded from the calculation of earnings per share. Common stock purchase warrants were 0 in 2001 and $1,339,575 in 2000. Reconciliation of shares used in computation of earnings per share:
2001 2000 ---- ---- Weighted average of shares actually outstanding 5,245,250 5,245,250 Common stock purchase warrants --------- --------- Primary and fully diluted weighted average common shares outstanding 5,245,250 5,245,250 ========= =========
12. Discontinued operations: In 1998, the Company adopted a formal plan to close WGJ Desserts and Cafes, Inc., its New York manufacturing facility, which was done in July of 1998 and to dispose of its one remaining retail store, which was accomplished in November 1998. The New Jersey facility was unaffected and still continues to sell and manufacture. On November 3, 1998, the Company sold its one remaining retail facility for $405,000 which represented disposition of equipment and a license to sell under the "William Greenberg, Jr. Desserts and Cafes" name. The agreement called for a cash down payment of $110,000 with the remainder being paid on a note receivable due in semi-annual installments of $36,875 plus interest at prime. The maturities of the notes are as follows: March 31, 2002 $ 73,750 March 31, 2003 73,750 -------- $147,500 ========
F-9 CREATIVE BAKERIES, INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS THREE MONTHS ENDED MARCH 31, 2001 AND 2000 12. Discontinued operations (continued): In the event that the licensee opens and operates any additional retail store(s) utilizing the license (other than the original retail store) and the annual gross retail sales of any such store(s) exceeds $400,000, then the licensee shall pay the licensor (the Company) a five percent royalty on all sales in excess of the $400,000 of sales in each store. The licensee shall pay the licensor a royalty on a semi-annual basis of 3% of all mail order sales in excess of $100,000. Net liabilities, less assets to be disposed of, of WGJ Desserts, Inc. consisted of the following as of March 31, 2001: Liabilities: Accounts payable $172,221 Accrued expenses 403,911 -------- 576,132 -------- Assets: Notes receivable 197,500 Interest receivable 4,582 -------- 202,082 -------- $374,050 ========
On December 28, 2000, the Company sold all trademarks relating to "William Greenberg Jr.", "Wm. Greenberg Jr.", "William Greenberg Jr. Desserts", and "William Greenberg Jr. Desserts & Cafes", as well as the trade name and know how, for $75,000. The agreement called for a cash down payment of $25,000, with the remainder being paid on March 31, 2001. The Company received the down payment of $25,000 January 5, 2001 and had not received the final payment as of March 31, 2001. Information relating to discontinued operations for WGJ Desserts and Cafes, Inc. for the three months ended March 31, 20010 and 2000 is as follows:
2001 2000 ------ ------ Operating expenses $ 0 $26,665 ------ ------- Loss from operations 0 (26,665) Interest income 3,138 4,688 ------ ------- Income (loss) from discontinued operations $3,138 ($21,977) ====== ========
F-10 Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operation: The Company is in the process of reconfiguring its product mix and cost structure to ensure adequate margin. Presentations have been made to a number of major supermarket chains on our new single serve mini cakes. The reception has been extremely encouraging and future plans call for producing similar size sugar free items for consumers requiring special diets. This is an expanding market and the company has received many requests for this category of products. At March 31, 2001 to the extent the Company may have taxable income in future periods, there is available a net operating loss for federal income tax purposes of approximately $7,897,694 which can be used to reduce the tax on income up to that amount through the year 2018. b. Results of Operations (continuing) for three months ending March 31, 2001 vs. three months ended March 31, 2000: The Company's consolidated revenues aggregated $768,628 vs. $824,603. The cost of goods sold was $595,432 vs. $681,457. Operating expenses were $225,440 vs. $238,605. As a result, the loss from operations for the first quarter 2001 and 2000 was $52,244 and $95,459 respectively. The net interest expense for the quarter was $2,964. The resulting net loss from continuing operations aggregated $54,466 for 2001 ($0.1) per share and $92,787 for 2000 ($0.02) per share. Net income from discontinued operations for 1st quarter 2001 was $3,138 vs. net loss of $21,977 for 1st quarter 2000. Batter Bake-Chatterly Inc., (the BBC subsidiary) offers a line of batter and frozen finished cakes, muffins, tart shells and other desserts. BBC's financial records are kept separate from the parent but included in the consolidated financial statement at March 31, 2001 and 2000. c. Plan of Operations: A new CEO was appointed on May 1, 2001. Ron Schutte has twenty years experience in owning and operating high volume bakeries, which produced quality frozen products for both domestic, and export markets. Schutte intends to streamline product lines and concentrate on products yielding highest profits. Marketing efforts will include establishing a national broker network and targeting chain restaurants and selective supermarket chains to purchase products. The fat free and sugar free lines will be further developed. Private label business (producing product under another company's name) will be aggressively sought after. SIGNATURES In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on April 14, 1999. CREATIVE BAKERIES, INC. By: /s/ Philip Grabow ------------------------------ Philip Grabow President and Chief Executive Officer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities indicated on May 18, 2001.
Signatures Title ----- /s/Philip Grabow President, Chief Executive Officer/Director - -------------------------------- Philip Grabow - -------------------------------- Director - -------------------------------- Richard Fechtor /s/Raymond J. McKinstry Director - -------------------------------- Raymond J. McKinstry /s/Kenneth Sitomer Director - -------------------------------- Kenneth Sitomer /s/Karen Brenner Director - -------------------------------- Karen Brenner /s/Yona Abrahami Director - -------------------------------- Yona Abrahami
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