U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998.
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 FOR THE TRANSITION PERIOD FROM _____________ TO _____________
Commission file number 0-27132
Terrace Food Group, Inc.
------------------------------------------------
(Exact name of Small Business Issuer in its Charter)
Delaware 65-0594270
- ------------------------------------------ ---------------------------
(State or Other Jusisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1351 N.W. 22nd Street, Pompano Beach, Florida 33069
- --------------------------------------------- ---------------------------
(Address of Principal Executive Office) (Zip Code)
(954) 917-7272
------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
Terrace Holdings, Inc.
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
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 past 90 days. Yes X No
------- -------
Applicable only to issuers involved in bankruptcy proceedings during the
preceding five years:
Check whether the registrant filed all documents and reports required to be
filed by Section 12 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes No
------- -------
Applicable only to corporate issuers:
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. As of the date of this report, the
issuer had 8,548,905 shares of its common stock issued and outstanding.
Transitional Small Business Disclosure Format:
Check one: Yes No X
-------- --------
This is page 1 of 14 sequentially numbered pages.
<PAGE>
TERRACE FOOD GROUP, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
FORM 10-QSB
QUARTERLY REPORT
For the Three Months Ended September 30, 1998
- --------------------------------------------------------------------------------
INDEX
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page
----
Part I. FINANCIAL INFORMATION
Item 1: Financial Statements
<S> <C>
Consolidated Balance Sheet as at September 30, 1998 (Unaudited).... 3
Statements of Operations for the three and nine month periods
ended September 30, 1998 and 1997 (Unaudited)...................... 4
Statements of Cash Flow for the nine months ended
September 30, 1998 and 1997 Unaudited.............................. 5 & 6
Notes to Financial Statements...................................... 7 - 10
Item 2: Management's Discussion and Analysis............................... 11 & 12
Part II. OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K................................... 13
Signatures......................................................... 14
</TABLE>
. . . . . . . . . . . .
2
<PAGE>
Item 1.
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Assets:
Current Assets:
<S> <C>
Accounts Receivable (Less Reserve for Doubtful Accounts of $131,738) $ 4,020,933
Inventory 1,536,189
Restricted Cash 34,893
Current Portion of Note Receivable 53,000
Other Current Assets 550,476
------------
Total Current Assets 6,195,491
Equipment, Furniture and Fixtures - At Cost
(Net of Accumulated Depreciation of $2,801,520) 3,649,722
Intangible Assets (Net of Accumulated Amortization of $312,700) 4,834,933
Note Receivable 106,000
------------
Total Assets $ 14,786,146
============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable $ 3,659,046
Bank Overdraft 445,421
Accrued Expenses 866,249
Current Portion of Long-Term Debt 471,826
Line of Credit 1,898,494
------------
Total Current Liabilities 7,341,036
Long-term Debt 2,018,982
Convertible Subordinated Notes 2,625,000
------------
Total Liabilities 11,985,018
------------
Commitments and Contingencies
Stockholders' Equity:
Common Stock - $.001 Par Value, 25,000,000 Shares
Authorized, 8,498,905 Issued and Outstanding 8,499
Additional Paid-in Capital 9,725,757
Accumulated Deficit (6,933,128)
------------
Total Stockholder's Equity 2,801,128
------------
Total Liabilities and Stockholders' Equity $ 14,786,146
============
</TABLE>
See Notes to Financial Statements
3
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three months ended Nine months ended
------------------ -----------------
September 30, September 30,
------------- -------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 7,960,569 $ 3,574,304 $ 21,390,087 $ 3,574,304
Cost of Sales 6,219,064 2,671,090 15,944,242 2,671,090
------------ ------------ ------------ ------------
Gross Profit 1,741,505 903,214 5,445,845 903,214
------------ ------------ ------------ ------------
Operating Expenses:
Selling, General & Administrative 2,509,499 1,130,960 6,073,212 1,538,664
Provision for Doubtful Accounts 32,000 -- 137,608 --
------------ ------------ ------------ ------------
Total Operating Expenses 2,541,499 1,130,960 6,210,820 1,538,664
------------ ------------ ------------ ------------
Loss from Operations (799,994) (227,746) (764,975) (635,450)
------------ ------------ ------------ ------------
Other Income (Expense)
Royalty Income 27,500 -- 53,500 --
Interest Income 4,189 2,105 7,369 23,817
Interest Expense (160,767) (28,556) (320,692) (32,502)
------------ ------------ ------------ ------------
Other (Expense), Net (129,078) (26,451) (259,823) (8,685)
------------ ------------ ------------ ------------
Loss from Continuing Operations (929,072) (254,197) (1,024,798) (644,135)
Income (Loss) from Discontinued Operations (14,911) (128,821) (14,882) 60,746
------------ ------------ ------------ ------------
Net Loss $ (943,983) $ (383,018) $ (1,039,680) $ (583,389)
============ ============ ============ ============
Income (Loss) Per Share of Common Stock
Loss from Continuing Operations $ (.13) $ (.06) $ (.18) $ (.14)
Income (Loss) from Discontinued Operations -- (.03) -- .01
------------ ------------ ------------ ------------
Basic and Diluted Net Income (Loss) Per Share
of Common Stock $ (.13) $ (.09) $ (.18) $ (.13)
============ ============ ============ ============
Weighted Average Shares of Common Stock 7,153,976 4,498,066 5,675,127 4,498,066
</TABLE>
See Notes to Financial Statements.
4
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOW
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
-----------------
September 30,
-------------
1998 1997
---------- ----------
Operating Activities:
<S> <C> <C>
Loss from Continuing Operations $ (1,024,798) $ (254,197)
---------- ----------
Adjustments to Reconcile (Loss) to Net Cash
(Used For) Provided by Operating Activities
Depreciation and Amortization 425,669 117,761
Increase in Reserve for Doubtful Accounts 71,738 --
Changes in Assets and Liabilities:
(Increase) Decrease in:
Accounts Receivable (1,788,726) (1,226,503)
Inventory (457,198) (997,429)
Other Current Assets (382,084) (1,116,118)
Due from Related Party 122,752 --
Notes Receivable (159,000) --
Due on Sale of Discontinued Operations 90,000
Other Assets 14,442 (468,241)
Increase (Decrease) in:
Accounts Payable 2,101,003 1,749,240
Accrued Expenses and other Current Liabilities 93,431 80,380
Deferred Revenue -- (130,112)
---------- ----------
Total Adjustments 132,027 (1,991,022)
Net Cash - Operating Activities (892,771) (2,245,219)
---------- ----------
Investing Activities:
Acquisition of Equipment, Furniture & Fixtures (991,160) (1,221,445)
Purchase of Business Net of Cash Acquired (3,199,440) (3,108,708)
Increase in Intangible Assets (693,573) (19,699)
---------- ----------
Net Cash - Investing Activities (4,884,173) (4,349,852)
Financing Activities:
Reduction in Restricted Cash 102,808 --
Proceeds from Subordinated Convertible Notes 2,625,000 --
Cash Overdrafts 53,400 --
Net Borrowings Under Line of Credits 544,410 --
Proceeds From Warrants Exercised 218,750 --
Net Long-term Debt Borrowing 2,247,058 --
Proceeds from Demand Notes Payable -- 2,492,713
Proceeds from Issuance of Common Stock -- 2,800,000
---------- ----------
Net Cash-Financing Activities 5,791,426 5,292,713
---------- ----------
Net (Decrease) Increase in Cash and Cash
Equivalents - Operations 14,482 (1,302,358)
---------- ----------
</TABLE>
5
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
STATEMENTS OF CASH FLOW, Sheet #2
(UNAUDITED)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Nine months ended
-----------------
September 30,
-------------
1997 1998
---------- ----------
<S> <C> <C>
Net (Decrease) Increase in Cash and Cash Equivalents -
Discontinued Operations (14,482) (111,259)
Cash and Cash Equivalents - Beginning of Period $ - 0 - 1,570,907
------------ -----------
Cash and Cash Equivalents - End of Period $ - 0 - $ 157,290
============ ===========
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Periods For:
Interest $233,112 $149,177
Taxes - 0 - - 0 -
</TABLE>
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
During the nine months ended September 30, 1998, the Company issued 138,948
shares of common stock in connection with the acquisition of Fresh, Inc., 30,000
shares of common stock associated with the acquisition of Banner Beef and
100,907 of common stock to satisfy an outstanding liability incurred in
conjunction with the acquisition of Down East Frozen Desserts.
See Notes to Financial Statements.
6
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- --------------------------------------------------------------------------------
(1) Basis of Reporting
The accompanying unaudited consolidated and combined financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB and Item
310(b) of Regulation S-B. 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, such statements include all adjustments
(consisting only of normal recurring items) which are considered necessary in
order to make the financial statements not misleading. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year.
The accompanying unaudited consolidated financial statements include the
accounts of Terrace Food Group, Inc. and subsidiaries. All significant
intercompany balances and transactions have been eliminated in consolidation.
It is suggested that these financial statements be read in conjunction with the
financial statements and notes for the period ended December 31, 1997 included
in the Terrace Holdings, Inc. 10-KSB.
(2) Name Change
In August, 1998 the Company's shareholders approved the change of the Company's
name to Terrace Food Group, Inc.
(3) Income Per Share
Income per share of common stock is based on weighted average number of common
shares outstanding for each period presented. There were no potential common
shares included as they were all considered to be anti-dilutive. Securities that
could potentially dilute earnings per share in the future include common stock
purchase warrants and options to purchase common stock representing
approximately 7,888,000 Common Shares. The Company has 8,498,905 shares of
Common Stock issued and outstanding at September 30, 1998. On July 31, 1998, all
of the Company's outstanding Preferred Stock, 1,523,825 shares, automatically
converted at the rate of two Common Shares for each Preferred Share into
3,047,650 shares of the Company's Common Stock.
(4) Inventories
Inventories for the Company's Foodservice distribution and vegetable precut
business include produce, grocery dry goods, and dairy products. Banner Beef &
Seafood, Inc. inventories include raw meat and seafood, other ingredients and
processed products. Inventories are stated at the lower of cost (determined on a
first-in, first-out basis) or market.
7
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, Sheet #2
(UNAUDITED)
- --------------------------------------------------------------------------------
(5) Convertible Subordinated Notes
On June 25, 1998, the Company issued to a private investor $2,625,000 principal
amount of 12% Convertible Subordinated Notes ("Notes), and warrants to purchase
400,000 shares of Common Stock of the Company. The proceeds of the Notes have
been added to the working capital of the Company. The Notes will be repaid from
the first net proceeds, if any, received by the Company from the exercises of
its $4.00 warrants at the temporarily reduced exercise price of $1.00, during
the 60-day period ending December 4, 1998. At any time after December 4, 1998,
the Notes are convertible at the option of the private investor, into Common
Stock of the Company at a rate of the lower of $1.00 per share, or a rate based
on the market price of the Company's Common Stock during the 30 trading days
prior to that date. The exercise price of the Warrants is calculated identically
to the conversion rate of the Notes. At any time subsequent to the Temporary
Exercise Period, any Notes not then converted or repaid, will be converted by
the Company, into $1.25 Redeemable Convertible 8% Cumulative Preferred Stock
("Preferred Stock") of the Company. The Notes, Warrants and Preferred Stock
issued to the private investor are subject to anti-dilution adjustments,
registration rights, interest and dividend adjustments and payment by the
Company of certain fees and expenses in connection with the transaction. In
addition, the Company has granted to such private investor an option expiring no
later than December 31, 1998 to purchase 500,000 shares of the Company's Common
Stock.
(6) Acquisition of Banner Beef and Seafood
On July 15, 1998, the Company acquired the assets and substantially all the
liabilities of Banner Beef and Seafood Co., Inc. ("Banner") a South Florida
company engaged in the business of processing meat, seafood and poultry. The
base cash purchase price was $1,800,000 plus the assumption of debt of $670,536,
which was immediately paid off. The acquisition was accounted for as a purchase
effective July 17, 1998. The operations of Banner Beef and Seafood Co., Inc.
have been included in the Company's results of operations from that date. The
excess purchase price is allocated to property and equipment based upon
independent appraisals.
As part of the acquisition, the Company entered into a five year Employment
Agreement with its Operations Vice President at an annual base salary of
$200,000.
In addition, the Company has entered into a five-year lease for a building
located in Hialeah, Florida, which Banner uses as a processing facility. During
the term of the lease, the Company has an option to purchase this property for
the lesser of $1,270,000 or its independently appraised value.
The following pro forma information presents the results of the combined
operations of Terrace Food Group, Inc. and Banner as if the acquisition had
occurred at the beginning of each fiscal year and were carried forward through
the period presented. The amounts presented for 1997 include the results of
operations of A-One-A Produce and Provisions, Inc. on a pro forma basis for the
first six months of that year. The pro forma information may not be indicative
of the results that actually would have occurred had the acquisitions been
effective January 1, 1997 or may be obtained in the future.
8
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, Sheet #3
(UNAUDITED)
- --------------------------------------------------------------------------------
Nine months ended
-----------------
September 30,
-------------
1997 1998
------------ ------------
Total Revenue $ 24,211,390 $ 16,486,919
Net Loss $ (1,476,319) $ (1,363,701)
Net Loss Per Share $ (.26) $ (.30)
============ ============
(7) Financing Arrangements
In July 1998, the Company and its subsidiaries secured a financing agreement
with a bank under which the bank agreed to provide a revolving loan subject to
available collateral to a maximum of $4,000,000. The loan is collateralized by
virtually all assets of the Company and accrues interest at .5% over the bank's
prime lending rate. The Company and its subsidiaries also obtained a term loan
from the same bank in the principal amount of $2,000,000. The loan is payable in
thirty-six monthly installments of $23,810 plus annual interest of 1% above the
bank's prime rate through July 2001, with the remaining balance then due. The
loan is collateralized by virtually all assets of the Company. At September 30,
1998 the Company is not in conformity with two convenants of the financing
agreement. The Company is currently negotiating with the bank to amend the loan
and security agreement to provide a waiver of these covenants.
(8) Incorporation of New Subsidiary
On June 4, 1997 the Company incorporated Terrace Fresh, Inc. as a wholly owned
subsidiary to operate the business of A-One-A's affiliate, Fresh, Inc. The
Registrant consummated its purchase of Fresh, Inc. on February 2, 1998,
effective as of January 1, 1998. In consideration for the purchase, the Company
paid $105,000 in cash and issued 138,948 shares of common stock valued at
$270,000.
The acquisition of Fresh, Inc. was accounted for as a purchase effective January
1, 1998. The operations of Fresh, Inc. are included in the Company's results of
operations from that date.
The cost in excess of net assets acquired recorded for the acquisition is to be
amortized over 20 years using the straight-line method.
9
<PAGE>
TERRACE FOOD GROUP, INC.
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS, Sheet #4
(UNAUDITED)
- --------------------------------------------------------------------------------
(9) Commitments
In connection with the acquisition of A-One-A Produce & Provisions, Inc., the
Company entered into 5-year employment agreements with two of its officers,
effective July 1, 1997. The employment agreements call for aggregate annual
compensation of $240,000.
The Company has an employment agreement with Jonathan S. Lasko, Executive Vice
President, through August 31, 2000, for a base salary of $125,000 per year.
Additionally, the agreement provides that certain other benefits be made
available to the Executive.
(10) Limited Comparable Results for 1997 Periods
In November 1997, the Company decided to dispose of certain of its subsidiaries:
including its Restaurant, Catering and Hospitality businesses. These operations,
which represented all of the Company's operations for the first two quarters of
1997 were discontinued as of year-end. Therefore, the only comparable results
for 1997 periods are for the operations of A-One-A Produce and Provision
business which was acquired as of July 1, 1997.
(11) Subsequent Event
Effective October 5, 1998, the Company temporarily reduced the price of its
outstanding $4.00 warrants to $1.00 for a sixty day period expiring December 4,
1998. As of November 18, 1998, approximately $138,000 was invested pursuant to
the temporary price reduction of the $4.00 warrants. In addition, as of November
18, 1998, the Company has raised additional equity of approximately $797,000
from private investors, directors, officers and other key management of the
Company.
10
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
- ------------------------------------
The Company operates in two segments of the Food Industry. It's A-One-A Produce
and Provisions, Inc. subsidiary sells and distributes fresh produce and dairy
products to Foodservice, export and cruise ship customers throughout South
Florida. Fresh, Inc. operates a pre-cut ready to eat produce-processing facility
nearby A-One-A's warehouse facility and sells its products primarily through
A-One-A's marketing organization. In July of this year, the Company purchased
Banner Beef and Seafood, Inc., a processor of value added meat and seafood
products selling primarily to Foodservice institutional customers. The Company,
in continuing with its strategy to become a major force in the distribution and
processing of fresh produce, beef and seafood has positioned itself to realize
profitability through continued sales growth and resulting economies of scale.
Results of Operations - Distribution
- ------------------------------------
A-One-A Produce and Provisions, Inc. - Three months ended September 30, 1998
compared to the three months ended September 1997.
Revenues for the period ended September 30, 1998 were approximately $6,623,000
versus $3,574,000 for the same period in 1997. This increase of approximately
85% is attributable to several factors. Management has been extremely aggressive
in its selling efforts during 1998 in an attempt to gain greater market share of
the Foodservice produce business in its South Florida distribution area. The
Company's Foodservice sales increased by approximately 46% from the prior year.
As well in July, A-One-A created a cruise ship division to service South
Florida's rapidly growing cruise market. Revenues during its first three months
of operation were approximately $865,000. A-One-A's operating loss for the
period ended September 30, 1998 was approximately $380,000 compared to
approximately $66,000 for the year prior period. This increase of $314,000 from
the year prior period is a result of a large increase in the selling, marketing
and operational costs incurred in accordance with its program to build a larger
sales base. In September of 1997, the Company moved into its new facility and
continued to incur costs associated with the larger facility. In order to
realize profitability from A-One-A, the sales volume has to reach a level that
will profitably support its fixed expenses in the new facility. Although the
sales growth has taken longer than expected, the current sales run rate has put
A-One-A in a position to realize profit from its operation for the fourth
quarter of 1998 and into the future.
Processing Operations
- ---------------------
Fresh, Inc. - In January of 1998, the Company finalized its purchase of Fresh,
Inc. a "value added" processor of fresh fruits and vegetables. Fresh, Inc.
operates a processing plant in close proximity to the A-One-A's distribution
facility. This subsidiary custom cuts produce to individual customer
specifications on a "just in time" basis. There is a positive trend within the
Foodservice sector to reduce labor and associated costs by buying ready to use
produce. Management is currently in negotiations to relocate Fresh, Inc. to a
state of the art processing plant, which it feels will greatly enhance its
market penetration. Management expects a positive earnings contribution from
this subsidiary as revenue continues to grow.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS, Sheet #2
- --------------------------------------------------------------------------------
Banner Beef and Seafood, Inc. - In July of 1998, the Company purchased this
Miami based processor of chicken, beef and seafood. With this acquisition, the
Company has shown its commitment to rapid growth in the manufacturing and sales
of value added food items to its customers. The Company invested capital
resources in the third quarter to participate in the Country's newest and
fastest growing food industry segment Home Meal Replacement (HMR). In September
Banner introduced a nationwide twelve item HMR program into one of the nations
largest club store chains. Management believes that although it has experienced
extensive start up costs in order to roll out this program, the long term growth
potential of this and other retail and institutional programs will more than
overcome these initial increased expenses. Ready to eat food products and
complete meals appears to be one of the fastest growing segments in the food
industry. With more and more dual working households than ever before,
convenience plays a major role in the dining decision. Banner with its two
manufacturing facilities is currently working on other HMR programs in addition
to its current products. Banner's manufacturing programs are "value added" and
carry higher margins than the Company's other operations. Management believes
that as the market penetration of its HMR programs, and other products currently
in the retail and institutional marketplace continue to grow, Banner's
contribution will have a positive impact on the Company's earnings.
Terrace Food Group (Consolidated)
- ---------------------------------
Sales for the three months ended September 30, 1998 were approximately
$8,000,000 with a loss from continuing operations of approximately $929,000. The
loss incurred by the Company during this period resulted from several factors.
The Company's A-One-A subsidiary experienced much higher operating costs and
lower gross profit margin resulting from its moving to its new facility its
first summer season in the larger building, and the rollout of its higher volume
lower margin cruise ship division. As sales reach higher levels and economies of
scale are realized, the Company expects to realize immediate profits from its
distribution business. In addition, the Company experienced significant startup
and rollout cost associated with its recent acquisition of Banner Beef and
Seafood's new Home Meal Replacement Program. The Company expects to recoup these
costs and realize profitability from this and other retail programs in future
periods.
Management believes that with all of its efforts and resources now clearly
focused on the Company's core businesses, the short term effects it has endured
from the rapid growth and expansion will ultimately result in positive net
income and greater shareholder value.
12
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(3)(i) Articles of Incorporation *
----------------------------------
(3)(ii) By-laws *
-----------------
(4) Instruments defining the rights of holders *
------------------------------------------------
(10) Material Contracts **
--------------------------
=======================================================
* Incorporated by this reference to the Registrant's registration statements
#33-96892-A and 333-45195
** All material contracts presently in full force and effect have been
heretofore filed with the Commission is hereby incorporated by this
reference to Registrant's registration statement #33-96892-A, and to its
Form 10-KSB, which was filed with the Commission April 15, 1996.
(b) Reports on Form 8-K
The Registrant filed a Report on Form 8-K dated July 30, 1998, for the
purpose of reporting its purchase of all of the operating assets and liabilities
of Banner Beef and Seafood Co., Inc. The Registrant also filed two reports on
Form 8-K/A both dated April 28, 1998, for the purpose of reporting pro forma
financial information as it related to the 1997 acquisition of A-One-A Produce
and the sale of the Deering Ice Cream business in December 1997, respectively.
13
<PAGE>
SIGNATURES
- --------------------------------------------------------------------------------
In accordance with the requirements of the Exchange Act, the Registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
TERRACE FOOD GROUP, INC.
(Registrant)
Dated: November 18, 1998 By: /s/Jonathan S. Lasko
------------------------------
Jonathan S. Lasko,
Executive Vice President &
Chief Operating Officer
Dated: November 18, 1998 By: /s/William P. Rodrigues, Jr.
------------------------------
William P. Rodrigues, Jr.,
Principal Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE BALANCE SHEET AS
OF SEPTEMBER 30, 1998 AND THE STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 4,152,671
<ALLOWANCES> 131,738
<INVENTORY> 1,536,189
<CURRENT-ASSETS> 6,195,491
<PP&E> 6,451,242
<DEPRECIATION> 2,801,520
<TOTAL-ASSETS> 14,786,146
<CURRENT-LIABILITIES> 7,341,036
<BONDS> 0
0
0
<COMMON> 8,499
<OTHER-SE> 2,792,629
<TOTAL-LIABILITY-AND-EQUITY> 14,786,146
<SALES> 21,390,087
<TOTAL-REVENUES> 21,390,087
<CGS> 15,944,242
<TOTAL-COSTS> 15,944,242
<OTHER-EXPENSES> 6,012,343
<LOSS-PROVISION> 137,608
<INTEREST-EXPENSE> 320,692
<INCOME-PRETAX> (1,024,798)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,024,798)
<DISCONTINUED> (14,882)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,039,680)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
