UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended June 30, 1996 Commission File Number 33-53748C
PERRY'S MAJESTIC BEER, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3769323
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
134 Morgan Avenue
Brooklyn, New York 11237
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (718) 894-4300
----------------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 of 15(d) of the Securities and 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
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of September 11, 1996 was 3,083,335.
<PAGE>
PERRY'S MAJESTIC BEER, INC.
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INDEX
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Page to Page
PART I
Item 1. Financial Statements
Balance Sheet as of June 30, 1996 [Unaudited]............... 1.....
Statements of Operations for the three months ended
June 30, 1996 [Unaudited]................................... 2.....
Statement of Stockholders' Equity for the three months ended
June 30, 1996 [Unaudited]................................... 3.....
Statements of Cash Flows for the three months ended
June 30, 1996 [Unaudited]................................... 4.....
Notes to Financial Statements [Unaudited]................... 5.....7
Item 2. Managements' Discussion and Analysis of the Financial
Condition and Results of Operations................... 8......9
Signature......................................................10......
. . . . . . . . . . . . . . .
<PAGE>
<TABLE>
Item 1: Financial Statements
PERRY'S MAJESTIC BEER, INC.
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BALANCE SHEET AS OF JUNE 30, 1996.
[UNAUDITED]
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<S> <C>
Assets:
Current Assets:
Cash $ 38,816
Inventory 125,141
Accounts Receivable 40,822
Note Receivable - Related Party [3] 75,000
-----------
Total Current Assets 279,779
Non-Current Assets:
Investment in Riverosa [2] 250,000
Investment in Bev-Tyme, Inc. - Preferred Stock - Related Party [3] 2,000,000
-----------
Total Non-Current Assets 2,250,000
Total Assets $ 2,529,779
===========
Liabilities and Stockholders' Equity:
Current Liabilities:
Bridge Loan Payable [6] $ 150,000
Note Payable Acquisition [2] 100,000
Accounts Payable 79,189
-----------
Total Current Liabilities 329,189
Commitments and Contingencies --
Stockholders' Equity:
Preferred Stock, $.001 Par Value Per Share, 15,000,000 Blank Check Shares
Authorized, Convertible Class A - Issued and Outstanding, 500,000 Shares;
Non-Convertible Class B - Issued and Outstanding, 7,000,000 Shares [3] 7,500
Additional Paid-in Capital - Preferred Stock [3] 2,142,500
Common Stock - $.0001 Par Value, Authorized 25,000,000 Shares,
Issued and Outstanding, 2,500,000 Shares [1B] 250
Additional Paid-in Capital - Common Stock [1B] 49,750
Retained Earnings 590
Total Stockholders' Equity 2,200,590
Total Liabilities and Stockholders' Equity $ 2,529,779
===========
See Notes to Financial Statements.
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1
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<TABLE>
PERRY'S MAJESTIC BEER, INC.
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STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1996.
[UNAUDITED]
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<S> <C>
Sales - Net $ 255,293
Cost of Goods Sold 209,341
Gross Profit 45,952
Selling, General and Administrative Expenses 41,594
Income from Operations 4,358
Other [Income] Expense:
Interest Expense 4,952
Interest Income (1,184)
Other Expense - Net 3,768
-----------
Income Before Income Taxes 590
Provision for Income Taxes --
Net Income $ 590
===========
Number of Shares 3,000,000
Net Income Per Share $ --
===========
</TABLE>
See Notes to Financial Statements.
2
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<TABLE>
PERRY'S MAJESTIC BEER, INC.
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STATEMENT OF STOCKHOLDERS' EQUITY
[UNAUDITED]
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Additional Total
Preferred Stock Common Stock Paid-in RetaineStockholders'
Shares Amount Shares Amount Capital Earnings Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1996 -- $ -- -- $ -- $ -- $ $ --
Common Stock Issued for Cash -- -- 2,500,000 250 49,750 -- 50,000
500,000 Shares of Series A and
7,000,000 Shares of Series B
Preferred Stock Issued for Cash
and Investment in Bev-Tyme,
Inc. [Series C Preferred] 7,500,000 7,500 -- -- 2,142,500 -- 2,150,000
--------- ----- ----- ------- -------- -- ---------
Balance - March 31, 1996 7,500,000 7,500 2,500,000 250 2,192,250 -- 2,200,000
Net Income for the three
months ended June 30, 1996 -- -- -- -- -- 590 590
---- ---- ---- ---- ---- ----- ---------
Balance - June 30, 1996
[Unaudited] 7,500,000$ 7,500 2,500,000$ 250 $2,192,250 590 $2,200,590
=========== ===== ============ ==== ========== ====== ==========
See Notes to Financial Statements.
</TABLE>
3
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<TABLE>
PERRY'S MAJESTIC BEER, INC.
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STATEMENT OF CASH FLOWS FOR THE THREE MONTHS ENDED JUNE 30, 1996.
[UNAUDITED]
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<S> <C>
Net Cash - Operating Activities $ (86,184)
-----------
Investing Activities:
Loan to Bev-Tyme, Inc. (75,000)
Financing Activities:
Proceeds from Sale of Preferred Stock to Bev-Tyme, Inc. 75,000
Proceeds from Sale of Common Stock - Stock Subscription 4,800
Proceeds from Bridge Loans 60,000
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Net Cash - Financing Activities 139,800
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Net [Decrease] in Cash (21,384)
Cash - Beginning of Period 60,200
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Cash - End of Period $ 38,816
===========
Supplemental Disclosures of Cash Flow Information:
Cash paid for the period for:
Interest $ --
Income Taxes $ --
Supplemental Disclosures of Non-Cash Investing and Financing Activities:
None
See Notes to Financial Statements.
4
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PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS
[UNAUDITED]
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[1] Summary of Significant Accounting Policies
[A] Nature of Operations - Perry's Majestic Beer, Inc., a Delaware corporation
[the "Company" or "Perry's"], was formed in December 1995. There were no revenue
or expense activities through March 31, 1996. The Company became a subsidiary of
Bev-Tyme, Inc. as of March 29, 1996 [See Note 3].
[B] Capital Stock - In January 1996, the Company issued 2,500,000 shares of
common stock to seven [7] parties for a total consideration of $50,000. At March
31, 1996, $45,200 was collected and the balance of $4,800 was received April 4,
1996.
[C] Earnings Per Share - The number of shares to be used for earnings per share
calculation purposes is based on the number of shares issued and outstanding
for the period presented. Convertible PreferredStock shares are included if
dilutive.
[D] Cash Equivalents - The Company's policy is to classify all highly liquid
debt instruments purchased with an initial maturity of three months or less to
be cash equivalents. There were no cash equivalents at June 30, 1996.
[E] Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period.
Actual results could differ from those estimates.
[F] Goodwill - Amounts paid in excess of the estimated value of net assets
acquired of Riverosa will be charged to goodwill. Goodwill relates to revenues
the Company anticipates realizing in future years. The Company has decided to
amortize its goodwill over a period of up to five years under the straight-line
method. The Company's policy is to evaluate the periods of goodwill amortization
to determine whether later events and circumstances warrant revised estimates of
useful lives. The Company will also evaluate whether the carrying value of
goodwill has become impaired by comparing the carrying value of goodwill to the
value of projected undiscounted cash flows from acquired assets or businesses.
Impairment is recognized if the carrying value of goodwill is less than the
projected undiscounted cash flow from the acquired assets or business.
[G] Stock Options and Similar Equity Instruments Issued to Employees - The
Company uses the intrinsic value method to recognize cost for stock issued to
employees.
[2] Business Combination
On March 29, 1996, the Company entered into an agreement to acquire all of the
stock of Riverosa Company, Inc. for $250,000 of which $150,000 in cash was put
into escrow as of March 31, 1996 and a note payable was issued for $100,000. The
note was payable with interest of 8% and was paid in August of 1996 with
proceeds from the Company's initial public offering. The combination will be
accounted for by the purchase method.
Goodwill of approximately $246,000 will be amortized over five years under the
straight-line method.
Interest expense for the three months ended June 30, 1996 was $2,000.
5
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PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #2
[UNAUDITED]
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[2] Business Combination [Continued]
The Company completed this acquisition in August of 1996. The following
unaudited pro forma results of operations account for the acquisition as if it
had occurred on April 1, 1996. The pro forma results give effect to the
amortization of goodwill.
Three months ended
June 30,
1 9 9 6
Total Revenues $ 278,979
==========
Net [Loss] $ (20,563)
==========
[Loss] Per Share $ (.01)
==========
Results of operations of Riverosa will be included with those of the Company
from date of acquisition onward.
[3] Investment - Related Party
On March 29, 1996, the Company issued to Bev-Tyme, Inc. [a public corporation]
500,000 shares of convertible Class A Preferred Stock and 7,000,000 shares of
non-convertible Class B Preferred Stock for 400,000 shares of Series C Preferred
Stock of Bev-Tyme, Inc. [valued at $2,000,000] and $150,000. As of March 31,
1996, $75,000 of cash was collected and the balance of $75,000 was received on
April 4, 1996. Each share of Class A Preferred Stock may be convertible by the
holder into one [1] share of Common Stock. Each share of Class A Preferred Stock
and Class B Preferred Stock has attached to it the right to vote on all matters
submitted to the Company.
On April 19, 1996, the Company lent $75,000 to Bev-Tyme, Inc., which was repaid
September 9, 1996.
Interest income for this loan for the period ended June 30, 1996 was $1,184.
The investment in Bev-Tyme, Inc. is classified as "available for sale" and is
presented at estimated fair value.
[4] 1996 Stock Option Plan
In March 1996, the Board of Directors of the Company adopted, and the
stockholders of the Company approved the adoption of the 1996 Stock Option Plan.
The maximum number of shares of common stock with respect to which awards may be
granted pursuant to the 1996 Plan is initially 2,000,000 shares.
[5] Public Offering of Common Stock
The Company filed a registration statement for 583,335 shares of common stock at
$6.00 per share. The net proceeds from this offering of $2,548,009 were paid in
August of 1996.
[6] Bridge Loan
On March 31, 1996, the Company borrowed an aggregate of $150,000 from seven [7]
unaffiliated lenders [the "Bridge Lenders"]. In exchange for making loans to the
Company, each Bridge Lender received a promissory note [the "Bridge Note"]. Each
of the Bridge Notes bears interest at the rate of eight percent [8%] per annum.
The Bridge Notes were paid at the closing of the initial public offering of the
Company's securities in August of 1996. As of March 31, 1996, $90,000 was
received in cash from the bridge loan and $60,000 was received April 4, 1996.
Interest expense for the three months ended June 30, 1996 was $2,952 and was
paid in August of 1996.
6
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PERRY'S MAJESTIC BEER, INC.
NOTES TO FINANCIAL STATEMENTS, Sheet #3
[UNAUDITED]
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[7] New Authoritative Pronouncements
The Financial Accounting Standards Board ["FASB"] issued Statement of Financial
Accounting Standards ["SFAS"] No. 123, "Accounting for Stock-Based
Compensation," in October 1995. SFAS No. 123 uses a fair value based method of
accounting for stock options and similar equity instruments as contrasted to the
intrinsic valued based method of accounting prescribed by Accounting Principles
Board ["APB"] Opinion No. 25, "Accounting for Stock Issued to Employees." The
Company has decided to apply APB Opinion No. 25 for financial reporting
purposes. SFAS No. 123 has been adopted for financial note disclosure purposes
in any event. The accounting requirements of SFAS No. 123 are effective for
transactions entered into in fiscal years that begin after December 15, 1995;
the disclosure requirements of SFAS No. 123 are effective for financial
statements for fiscal years beginning after December 15, 1995.
[8] Financial Instruments
The carrying amount of cash, notes receivable and payable approximates fair
value because of their short maturities.
[9] Employment Agreements
In April of 1996, the Company entered into a three [3] year employment agreement
with Mark Butler pursuant to which Mr. Butler serves as the Company's Vice
President of Sales. The agreement provides for Mr. Butler to receive a salary of
$25,000 per annum until the closing of this offering and thereafter $75,000 per
annum. In addition, on each of March 31, 1997, March 31, 1988, and March 31,
1999, the Company has agreed to grant Mr. Butler an option to purchase 100,000
shares of common stock exercisable at fair market value on the date of issuance.
Also in April of 1996, the Company entered into a three [3] year employment
agreement with Robert Sipper pursuant to which Mr. Sipper serves as the
Company's President. The agreement provides for Mr.
Sipper to receive a salary of $52,000 per annum.
[10] Subsequent Event
In August of 1996, the Company entered into a letter of intent to acquire a
brewery for $50,000.
. . . . . . . . . . . . . . . . . . .
7
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Item 2:
PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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OVERVIEW
Perry's Majestic Beer, Inc. [the "Company" or "Perry's"] was formed in December
of 1995. There were no operations prior to the formation of Perry's for the
period December 1995 to March 1996 nor any revenue or expense activities for
Perry's through March 31, 1996. The primary activities for Perry's prior to the
proposed acquisition of Riverosa Company, Inc. ["Riverosa"] were investing and
financing activities through March 31, 1996 [See "Liquidity and Capital
Resources"]. In March of 1996, the Company entered into an agreement to acquire
Riverosa, which was formed in November of 1993. Riverosa is engaged in the
manufacture and distribution of microbrewed beers and ales. Management of
Riverosa consisted of Mark Butler and Ron Zagha. Mark Butler is the Vice
President of the Company and Robert J. Sipper is the President of the Company
and will be responsible for the management functions of the Company.
Bev-Tyme, who is the Company's controlling shareholder and parent, through its
wholly owned subsidiary, shall be the distributor of Perry's Majestic Beer, in
New York City. Besides, Robert J. Sipper, who is the President and Chief
Executive Officer of Bev-Tyme, Inc. and the Company and Robert Forst, the Chief
Financial Officer of Bev-Tyme, it is not anticipated that any other employees of
Bev-Tyme or its subsidiaries will be involved with the Company's operations. It
is anticipated that the two companies will be run independently of each other.
The Board of Directors of Perry's consist of three people, two of whom have no
interest [not an employee, officer or director] in Bev-Tyme. Accordingly, all
potential conflicts of interest shall be decided by an impartial Board.
Results of Operations
The Company had income from operations of $4,358 and net income of $590 for the
three months ended June 30, 1996.
The sales for the Company for the three months ended June 30, 1996 were
$255,293. The Company believes its customers base will increase in 1997. The
Company intends to introduce at least one new style beer within the next twelve
months and explore changing the label of the bottle. Emphasis will be placed on
building businesses in bars and restaurants as well as retail and supermarket
outlets. The Company will attempt to increase its distribution base by adding
new distributors and design incentive and price promotion programs.
The Company's selling, general and administrative expenses for the three months
ended June 30, 1996 were $41,594.
The Company's interest expense for the three months ended June 30, 1996 was
$4,952. The interest expense was attributable to the bridge loans and the
acquisition note for Riverosa.
8
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PERRY'S MAJESTIC BEER, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
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Liquidity and Capital Resources
Perry's had a working capital deficit at June 30, 1996 of $49,410. For the three
months ended June 30, 1996, the Company utilized $86,184 in cash for operations.
The Company utilized $150,000 in investing activities for the acquisition of
Riverosa as of March 31, 1996 and expended another $75,000 as a loan to
Bev-Tyme, Inc. which was repaid in September of 1996. The Company generated
$139,000 in cash from financing activities for the three months ended June 30,
1996 resulting from the sale of preferred stock to Bev-Tyme, Inc. with
additional cash proceeds of $75,000 being received in April of 1996, the sale of
common stock with additional cash proceeds of $4,800 being received in April of
1996 and additional proceeds from bridge loans of $60,000 being received in
April of 1996. The $150,000 bridge loans from the seven unaffiliated lenders
have an interest rate of 8% per annum. These loans were repaid at the close of
the initial public offering on August 4, 1996. The cash balance at June 30, 1996
was $38,816.
In April of 1996, the Company entered into a three [3] year employment agreement
with Mark Butler pursuant to which Mr. Butler serves as the Company's Vice
President of Sales. The agreement provides for Mr. Butler to receive a salary of
$25,000 per annum until the closing of this offering and thereafter $75,000 per
annum. In addition, on each of March 31, 1997, March 31, 1988, and March 31,
1999, the Company has agreed to grant Mr. Butler an option to purchase 100,000
shares of common stock exercisable at fair market value on the date of issuance.
Also in April of 1996, the Company entered into a three [3] year employment
agreement with Robert Sipper pursuant to which Mr. Sipper serves as the
Company's President. The agreement provides for Mr.
Sipper to receive a salary of $52,000 per annum.
The Company anticipates that the net proceeds of $2,548,009 from the initial
public offering will generate along with cash generated from Riverosa's
operating activities will be sufficient to satisfy its cash requirements for the
next twelve [12] months and enable it to market and advertise its products,
expand the market as well as to develop a brewpub/restaurant and microbrewery in
the New York metropolitan area.
In August of 1996, the Company entered into a letter of intent to acquire a
brewery for $50,000.
9
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SIGNATURE
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Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report on Form 10-QSB to be signed on its behalf
by the undersigned thereon duly authorized.
PERRY'S MAJESTIC BEER, INC.
By: /s/ Robert J. Forst
Robert J. Forst
Chief Financial Officer
September 11, 1996
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 38,816
<SECURITIES> 0
<RECEIVABLES> 40,822
<ALLOWANCES> 0
<INVENTORY> 125,141
<CURRENT-ASSETS> 279,779
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 2,250,000
<CURRENT-LIABILITIES> 329,189
<BONDS> 0
0
7,500
<COMMON> 250
<OTHER-SE> 2,192,840
<TOTAL-LIABILITY-AND-EQUITY> 2,529,779
<SALES> 255,293
<TOTAL-REVENUES> 255,293
<CGS> 209,341
<TOTAL-COSTS> 41,594
<OTHER-EXPENSES> 1,184
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,952)
<INCOME-PRETAX> 590
<INCOME-TAX> 0
<INCOME-CONTINUING> 590
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 590
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
