<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED):
DECEMBER 8, 1997 (SEPTEMBER 23, 1997)
- --------------------------------------------------------------------------------
ALL AMERICAN FOOD GROUP, INC.
- --------------------------------------------------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW JERSEY
- --------------------------------------------------------------------------------
STATE OR OTHER JURISDICTION OF INCORPORATION
333-4490 22-3259558
- --------------------------------------------------------------------------------
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER DENTIFICATION NO.)
104 NEW ERA DRIVE, SOUTH PLAINFIELD, NJ 07080
- --------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(908) 757-3022
- --------------------------------------------------------------------------------
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
1
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On October 8, 1997, All American Food Goup, Inc., a New Jersey corporation
("AAFG") filed a Current Report on Form 8-K with respect to the consummation on
September 23, 1997, of the Agreement and Plan of Merger, dated September 19,
1997 (the "Acquisition"), by and among AAFG (the "Registrant"), St. Pete Bagels
Acquisition Corp., a wholly owned subsidiary of the Registrant (the
"Subsidiary"), Sam & Son, Inc. ("Sam & Son"), Bagel Man, Inc. ("Bagel Man") and
St. Pete Bagel Co., Inc. ("St.Pete"), (St.Pete, Sam & Son and Bagel Man are
herein collectively referred to as "St. Pete Bagels") whereby the Registrant
acquired St. Pete Bagels through the merger of St. Pete Bagels with and into
Subsidiary in exchange for $220,000 and 479,800 shares of the Registrant's
common stock.
Such 8-K was filed without the financial statement and pro forma financial
information required by Item 7 of Form 8-K, as such financial information was
unavailable at the time. This Current Report on Form 8-K/A provides such
required information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) The audited combined financial statements of St. Pete Bagels, including
independent auditors' report thereon, as of September 22, 1997, and for the
period November 1, 1996 through September 22, 1997, and as of October 31,
1996 and for the year then ended, and the unaudited financial statements of
St. Pete Bagels for the nine month periods ended July 31, 1997 and 1996.
b) Pro forma unaudited financial statement information for AAFG giving effect
to the Acquisition as of and for the nine months ended July 31, 1997 and
for the fiscal year ended October 31, 1996.
SIGNATURE
Pursuant to the requirement 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: December 8, 1997 All American Food Group, Inc.
/s/ Andrew Thorburn
Andrew Thorburn
Chairman and Chief Executive Officer
2
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED FINANCIAL STATEMENTS For the
Period November 1, 1996 through September 22, 1997
3
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INDEPENDENT AUDITORS' REPORT
To The Boards of Directors
St. Pete Bagel Co., Inc.
Sam and Son, Inc.
Bagel Man, Inc.
St. Petersburg, Florida
We have audited the accompanying combined balance sheet of ST. PETE BAGEL CO.,
INC., SAM and SON, INC., and BAGEL MAN, INC. as of September 22, 1997 and the
related combined statements of income and retained earnings and cash flows for
the period November 1, 1996 through September 22, 1997. These financial
statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of ST. PETE BAGEL CO.,
INC., SAM and SON, INC., and BAGEL MAN, INC. as of September 22, 1997, and the
combined results of its operations and its cash flows for the period November 1,
1996 through September 22, 1997 in conformity with generally accepted accounting
principles.
St. Petersburg, Florida
November 20, 1997
4
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED BALANCE SHEET
SEPTEMBER 22, 1997
ASSETS
------
Current Assets
Cash $ 578
Accounts Receivable net of allowances for
Doubtful accounts 16,237
Note receivable, current portion 6,879
Inventories 31,818
---------
Total Current Assets 55,512
Property, Plant & Equipment
Cost less accumulated depreciation
of $167,234 198,135
Security Deposits 6,944
Note receivable - long-term 29,414
---------
Total Assets $ 290,005
=========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
Accounts payable & accrued expenses $ 64,593
Notes payable 81,532
Capitalized lease obligations - current maturity 42,183
---------
Total Current Liabilities 188,308
Capitalized Lease Obligations 69,630
---------
Total Liabilities 257,938
---------
Stockholders' Equity (Deficit)
Common Stock, par value 650
Additional Paid-In Capital 129,403
Retained earnings (97,986)
---------
Total Stockholders' Equity 32,067
---------
Total Liabilities & Equity $ 290,005
=========
The accompanying notes to combined financial statements are an integral part of
these financial statements.
5
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Period November 1, 1996 through September 22, 1997
REVENUES
Sales $ 1,489,387
-----------
Total Revenues 1,489,387
OPERATING EXPENSES
Cost of Sales - production costs and raw materials,
exclusive of depreciation 783,924
Selling, distribution and administrative expenses 678,871
Depreciation 57,549
-----------
Total Operating Expenses 1,520,344
Net Operating Income ( 30,957)
Interest Expense ( 23,793)
-----------
Net Loss ( 54,750)
Beginning Retained Earnings ( 43,236)
-----------
Ending Retained Earnings ($ 97,986)
===========
The accompanying notes to combined financial statements are an integral part of
these financial statements.
6
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENT OF CASH FLOWS
For the Period November 1, 1996 through September 22, 1997
Cash Flows from Operating Activities:
Net Loss ($54,750)
Adjustments to reconcile net loss to net cash
(Used in) provided by operating activities
Depreciation 57,549
Decrease (increase) in:
Accounts receivable ( 2,260)
Inventories 2,864
Decrease (increase) in notes receivable ( 36,293)
Increase (decrease) in:
Accounts payable & accrued expenses 16,620
--------
Total adjustments 38,480
--------
Net Cash (Used By) Operating Activities ( 16,270)
Cash Flows from Investing Activities:
Capital Expenditures ( 6,483)
Disposition of assets 1,800
--------
Net Cash (Used By) Investing Activities ( 4,683)
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable 13,754
Proceeds from capitalized lease obligations 24,000
Payments of capitalized lease obligations ( 31,028)
Decrease in paid-in capital ( 815)
--------
Net Cash Provided by Financing Activities 5,911
--------
Net increase (decrease) in cash ( 15,042)
Cash - beginning of period 15,620
--------
Cash - end of period $ 578
========
Supplemental Disclosures:
Operating activities reflect interest paid of $23,793 and income taxes paid
of $0.
The accompanying notes to combined financial statements are an integral part of
these financial statements.
7
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS
September 22, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The three companies whose combined financial information is shown in these
financial statements are in the business of producing and selling bagels and
bagel related foods and beverages. They operate from two retail stores in Tampa,
Florida and two retail stores and a production plant in St. Petersburg, Florida.
The production plant sends daily shipments of products to the four retail stores
and to other customers. There have also been two stores sold as franchises.
Combined Financial Statements
The combined financial statements are for St. Pete Bagel Co., Inc., Sam and Son,
Inc., and Bagel Man, Inc., three Florida corporations. All significant
intercompany accounts and transactions have been eliminated.
Allowance for doubtful accounts
Based upon the experience of not incurring any bad debts, there is no
expectation of not collecting the accounts receivable in full, and accordingly
there has been no allowance made for doubtful accounts.
Inventories
Inventories consist primarily of raw materials and are stated at the lower of
cost (first-in, first-out) or market value.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes and amounted to $57,549 for the period November 1, 1996 through
September 22, 1997. Accelerated methods are used for federal income tax
purposes.
8
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENT (CONTINUED)
September 22, 1997
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
There have been no income taxes charged to these entities since the tax effects
of the entities are expected to flow through to the shareholders. The entities
are S Corporations.
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
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classifications as follows:
Machinery, equipment & furniture $ 283,933
Leasehold improvements 51,381
Vehicles 30,055
--------
365,369
Less: accumulated depreciation (167,234)
--------
$ 198,135
========
9
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 22, 1997
NOTE 3 - NOTE RECEIVABLE
The note receivable of $36,293 was created on January 29, 1997 from the sale of
various bagel store equipment and supplies to a franchise store. The original
amount of the note was for $40,000, payable at $850 per month including
principal and interest at 10% for 60 months commencing March 1, 1997. The note
is secured by the various equipment.
NOTE 4 - CAPITALIZED LEASE OBLIGATIONS
The companies lease certain vehicles and equipment that is required to be
capitalized on the balance sheet. The imputed interest rates range from 10% to
15%.
Balance
Sheet Current
Liability Portion
--------- -------
A) Barnett Bank; various equipment;
June 1996; 48 monthly @ $412
through May 2000 $ 11,274 $ 3,258
B) Barnett Bank; freezer truck;
March 1996; 36 monthly @ $539
through February 1999 8,791 5,563
C) Barnett Bank; mixer
March 1996; 36 monthly @ $525
through February 1999 8,424 5,263
D) Unicyn Fdg; various equipment;
February 1997; 48 monthly @ $611
through January 2001 21,123 5,478
E) Colonial Lsg; various equipment;
August 1995; 60 monthly @ $1700
through July 2000 52,163 17,363
F) Colonial Lsg; rack oven;
July 1995; 48 monthly @ $467
through June 1999 10,038 5,258
-------- --------
TOTALS $111,813 $ 42,183
======== ========
Total capitalized property and equipment at the balance sheet date is $145,200,
with accumulated depreciation of $59,415.
10
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 22, 1997
NOTE 4 - CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
The following is a schedule of future minimum lease payments and the amount of
interest imputed in each year's payments:
Present
Total Value
Lease Imputed Lease
Year Ended Payments Interest Payments
- ---------- -------- -------- --------
September 22, 1998 $ 51,048 $ 8,865 $ 42,183
September 22, 1999 43,730 4,714 39,016
September 22, 2000 29,740 2,033 27,707
September 22, 2001 3,055 148 2,907
September 22, 2002 -0- -0- -0-
Thereafter -0- -0- -0-
-------- -------- --------
$127,573 $ 15,760 $111,813
======== ======== ========
Stockholders have personally guaranteed substantially all indebtedness.
NOTE 5 - NOTES PAYABLE
Notes payable in the amount of $81,532 consist of two demand notes with
financial institutions. Stockholders have personally guaranteed substantially
all indebtedness.
NOTE 6 - LEASED PREMISES
The companies have long-term leases at all five of their locations. The details
of each lease is as follows:
A) 3244-44th Ave. N., St. Petersburg
June 1, 1995 - May 21, 2000;
additional five-year option available
B) 210 E. Madison St., Tampa
October 15, 1994 - October 14, 1999;
additional five-year option available
C) 4329-4331 W. Kennedy, Tampa
July 1, 1996 - August 31, 1998;
additional two-year followed by
additional three-year renewal available
11
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 22, 1997
NOTE 6 - LEASED PREMISES (CONTINUED)
D) 7043 - 4th St. N., St. Petersburg
Original lease May 1, 1992 - April 30, 1995;
currently in a three-year option expiring
April 30, 1998, with one additional three-year
option available
E) 249 Central Ave., St. Petersburg
Original lease March 1, 1990 - February 29,
1992; last option period November 1, 1997
through October 31, 1998
During the period covered by these financial statements, the rent expense paid
for leased premises was $71,406.
The following is a schedule of future minimal rental payments required under the
above operating leases (excluding renewal options in the future):
Year Ended Sept. 22, 1998 $ 74,561
Year Ended Sept. 22, 1999 35,153
Year Ended Sept. 22, 2000 15,011
Year Ended Sept. 22, 2001 -0-
Year Ended Sept. 22, 2002 -0-
--------
$124,725
========
NOTE 7 - SUBSEQUENT EVENT
On September 23, 1997 the three corporations, under a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
merged into St. Pete Bagel Acquisition Corp. (surviving corporation), a Florida
corporation which is a subsidiary of All American Food Group, Inc., a New Jersey
corporation. Stockholders of the three corporations being reported upon in these
financial statements are not controlling stockholders of the "surviving
corporation".
12
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
September 22, 1997
NOTE 8 - CAPITAL STOCK
Sam and Son, Inc.:
ten cents per share par value
7,500 shares common stock authorized
500 shares issued and outstanding
Bagel Man, Inc.:
ten cents per share par value
10,000 shares common stock authorized
1,000 shares issued and outstanding
St. Pete Bagel Co., Inc.:
one dollar per share par value
10,000 shares common stock authorized
500 shares issued and outstanding
NOTE 9 - RELATED PARTY TRANSACTIONS
Mazzaro Coffee and Italian Market from whom the corporations purchase coffee
beans, is owned by the stockholders' parents. Total purchases from the vendor
for the year were 24,977, while the total amount due at the balance sheet date
is $10,007.
13
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED FINANCIAL STATEMENTS
Year Ended October 31, 1996
14
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INDEPENDENT AUDITORS' REPORT
To The Boards of Directors
St. Pete Bagel Co., Inc.
Sam and Son, Inc.
Bagel Man, Inc.
St. Petersburg, Florida
We have audited the accompanying combined balance sheet of ST. PETE BAGEL CO.,
INC., SAM AND SON, INC., and BAGEL MAN, INC. as of October 31, 1996 and the
related combined statements of income and retained earnings and cash flows for
the year then ended. These financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the combined financial position of ST. PETE BAGEL CO.,
INC., SAM AND SON, INC., and BAGEL MAN, INC. as of October 31, 1996, and the
combined results of its operations and its cash flows for the year then ended in
conformity with generally accepted accounting principles.
St. Petersburg, Florida
November 20, 1997
15
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED BALANCE SHEET
October 31, 1996
ASSETS
------
Current Assets
Cash $ 15,620
Accounts Receivable net of allowances for
Doubtful accounts 13,977
Inventories 34,682
---------
Total Current Assets 64,279
Property, Plant & Equipment
Cost less accumulated depreciation
of $108,781 251,002
Security Deposits 6,944
---------
Total Assets $ 322,225
=========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
Accounts payable & accrued expenses $ 47,974
Notes payable 67,778
Capitalized lease obligations - current maturity 32,088
---------
Total Current Liabilities 147,840
Capitalized Lease Obligations 86,753
---------
Total Liabilities 234,593
---------
Stockholders' Equity (Deficit)
Common Stock, par value 650
Additional Paid-In Capital 130,218
Retained earnings ( 43,236)
---------
Total Stockholders' Equity 87,632
---------
Total Liabilities & Equity $ 322,225
=========
The accompanying notes to combined financial statements are an integral part of
these financial statements.
16
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Year Ended October 31, 1996
REVENUES
Sales $ 1,702,287
-----------
Total Revenues 1,702,287
OPERATING EXPENSES
Cost of Sales - production costs and raw materials,
exclusive of depreciation 867,211
Selling, distribution and administrative expenses 762,266
Depreciation 62,865
-----------
Total Operating Expenses 1,692,342
Net Operating Income 9,945
Interest Expense ( 18,180)
-----------
Net Loss ( 8,235)
Beginning Retained Earnings ( 35,001)
-----------
Ending Retained Earnings ($ 43,236)
===========
The accompanying notes to combined financial statements are an integral part of
these financial statements.
17
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENT OF CASH FLOWS
For the Year Ended October 31, 1996
Cash Flows from Operating Activities:
Net Loss ($ 8,235)
Adjustments to reconcile net loss to net cash
(Used in) provided by operating activities
Depreciation & amortization 62,865
Decrease (increase) in:
Accounts receivable 3,217
Security deposits 1,260
Increase (decrease) in:
Accounts payable & accrued expenses ( 40,384)
--------
Net Cash Provided By Operating Activities 18,723
Cash Flows from Investing Activities:
Capital Expenditures ( 39,891)
--------
Net Cash (Used By) Investing Activities ( 39,891)
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable 49,489
Proceeds from capitalized lease obligations -0-
Payments of capitalized lease obligations ( 30,859)
Increase in paid-in capital 10,349
--------
Net Cash Provided by Financing Activities 28,979
--------
Net increase (decrease) in cash 7,811
Cash - beginning of period 7,809
--------
Cash - end of period $ 15,620
========
Supplemental Disclosures:
Operating activities reflect interest paid of
$18,180 and income taxes paid of $0.
Noncash investing and financing transaction:
Acquisition of equipment
Cost of equipment $ 46,700
Capitalized lease ( 46,700)
--------
Cash down payment for equipment $ -0-
========
The accompanying notes to combined financial statements are an integral part of
these financial statements.
18
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ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The three companies whose combined financial information is shown in these
financial statements are in the business of production and selling bagels and
bagel related foods and beverages. They operate from two retail stores in Tampa,
Florida and two retail stores and a production plant in St. Petersburg, Florida.
The production plant sends daily shipments of products to the four retail stores
and to other customers. There has been one store sold as a franchise.
Combined Financial Statements
The combined financial statements are for St. Pete Bagel Co., Inc., Sam and Son,
Inc., and Bagel Man, Incorporated, three Florida corporations. All significant
intercompany accounts and transactions have been eliminated.
Allowance for doubtful accounts
Based upon the experience of not incurring any bad debts, there is no
expectation of not collecting the accounts receivable in full, and accordingly
there has been no allowance made for doubtful accounts.
Inventories
Inventories consist primarily of raw materials and are stated at the lower of
cost (first-in, first-out) or market value.
Property and Equipment
Property and equipment are carried at cost. Depreciation of property and
equipment is provided using the straight-line method for financial reporting
purposes and amounted to $62,865 for the year ended October 31, 1996.
Accelerated methods are used for federal income tax purposes.
19
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income Taxes
There have been no income taxes charged to these entities since the tax effects
of the entities are expected to flow through to the shareholders. The entities
are S Corporations.
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.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are summarized by major classifications as follows:
Machinery, equipment & furniture $278,347
Leasehold improvements 51,381
Vehicles 30,055
------
359,783
Less: accumulated depreciation (108,781)
--------
$251,002
========
20
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 3 - CAPITALIZED LEASE OBLIGATIONS
The companies lease certain vehicles and equipment that is required to be
capitalized on the balance sheet. Imputed rates of interest range from 10% to
15%.
Balance
Sheet Current
Liability Portion
--------- -------
A) Barnett Bank; various equipment;
June 1996; 48 monthly @ $412
through May 2000 $ 14,408 $ 3,122
B) Barnett Bank; freezer truck;
March 1996; 36 monthly @ $539
through February 1999 13,441 5,012
C) Barnett Bank; mixer
March 1996; 36 monthly @ $525
through February 1999 13,105 4,880
D) Colonial Lsg; various equipment;
August 1995; 60 monthly @ $1700
through July 2000 64,200 14,639
E) Colonial Lsg; rack oven;
July 1995; 48 monthly @ $467
through June 1999 13,687 4,435
-------- -------
TOTALS $118,841 $32,088
======== =======
Total capitalized property and equipment at the balance sheet date is $145,200,
with accumulated depreciation of $33,585.
21
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 3 - CAPITALIZED LEASE OBLIGATIONS (CONTINUED)
The following is a schedule of future minimum lease payments and the amount of
interest imputed in each year's payments:
Present
Total Value
Lease Imputed Lease
Year Ended Payments Interest Payments
- ---------- -------- -------- --------
October 31, 1997 $ 43,716 $ 11,319 $ 32,397
October 31, 1998 43,716 7,798 35,918
October 31, 1999 34,867 3,731
31,136
October 31, 2000 20,296 906
19,390
October 31, 2001 -0- -0- -0-
Thereafter -0- - 0- -0-
-------- -------- --------
$142,595 $ 23,754 $118,841
======== ======== ========
Stockholders have personally guaranteed substantially all indebtedness.
NOTE 4 - NOTES PAYABLE
Notes payable in the amount of $67,778 consist of two demand notes with
financial institutions. Stockholders have personally guaranteed all
indebtedness.
NOTE 5 - LEASED PREMISES
The companies have long-term leases at all five of their locations. The details
of each lease is as follows:
A) 3244-44th Ave. N., St. Petersburg
June 1, 1995 - May 21, 2000;
additional five-year option available
B) 210 E. Madison St., Tampa
October 15, 1994 - October 14, 1999;
additional five-year option available
C) 4329-4331 W. Kennedy, Tampa
July 1, 1996 - August 31, 1998;
additional two-year followed by
additional three-year renewal available
22
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 5 - LEASED PREMISES (CONTINUED)
D) 7043 - 4th St. N., St. Petersburg
Original lease May 1, 1992 - April 30, 1995;
currently in a three-year option expiring
April 30, 1998, with one additional three-year
option available
E) 249 Central Ave., St. Petersburg
Original lease March 1, 1990 - February 29,
1992; last option period November 1, 1997
through October 31, 1998
During the period covered by these financial statements, the rent expense paid
for leased premises was $78,713.
The following is a schedule of future minimum rental payments required under the
above operating leases (excluding renewal options in the future):
Year Ended October 31, 1997 $ 81,873
Year Ended October 31, 1998 71,586
Year Ended October 31, 1999 34,080
Year Ended October 31, 2000 12,171
Year Ended October 31, 2001 -0-
---------
$ 199,710
NOTE 6 - SUBSEQUENT EVENT
On September 23, 1997 the three corporations, under a plan of reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986,
merged into St. Pete Bagel Acquisition Corp. (surviving corporation), a Florida
corporation which is a subsidiary of All American Food Group, Inc., a New Jersey
corporation. Stockholders of the three corporations being reported upon in these
financial statements are not controlling stockholders of the "surviving
corporation".
23
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
October 31, 1996
NOTE 7 - CAPITAL STOCK
Sam and Son, Inc.:
ten cents per share par value
7,500 shares common stock authorized
500 shares issued and outstanding
Bagel Man, Inc.:
ten cents per share par value
10,000 shares common stock authorized
1,000 shares issued and outstanding
St. Pete Bagel Co., Inc.:
one dollar per share par value
10,000 shares common stock authorized
500 shares issued and outstanding
NOTE 8 - RELATED PARTY TRANSACTIONS
Mazzaro Coffee and Italian Market from whom the corporations purchase coffee
beans, is owned by the stockholders' parents. Total purchases from the vendor
for the year were 30,163, while the total amount due at the balance sheet date
is ($1,674).
24
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED FINANCIAL STATEMENTS
Nine Months Ended July 31, 1997
25
<PAGE>
ACCOUNTANTS' COMPILATION REPORT
To The Boards of Directors
St. Pete Bagel Co., Inc.
Sam and Son, Inc.
Bagel Man, Inc.
St. Petersburg, Florida
We have compiled the accompanying combined balance sheet of St. Pete Bagel Co.,
Inc., Sam and Son, Inc., and Bagel Man, Inc. as of July 31, 1997 and the related
combined statements of income and retained earnings for the nine months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying combined financial statements and, accordingly, do not
express an opinion or any other form of assurance on them. However, we did
become aware of a departure from generally accepted accounting principles that
is described in the following paragraph.
A statement of cash flows for the nine months ended July 31, 1997 has not been
presented. Generally accepted accounting principles require that such a
statement be presented when financial statements purport to present financial
position and results of operations.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position and results of operations.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
St. Petersburg, Florida
November 20, 1997
26
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED BALANCE SHEET
July 31, 1997
ASSETS
------
Current Assets
Cash $ 23,152
Accounts Receivable net of allowances for
doubtful accounts 17,321
Note receivable, current portion 6,766
Inventories 31,832
---------
Total Current Assets 79,071
Property, Plant & Equipment
Cost less accumulated depreciation
of $164,332 199,892
Security Deposits 7,944
Note receivable - long-term 29,527
---------
Total Assets $ 316,434
=========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current Liabilities
Accounts payable & accrued expenses $ 65,399
Notes payable 81,265
Capitalized lease obligations - current maturity 40,079
---------
Total Current Liabilities 186,743
Capitalized Lease Obligations 76,049
---------
Total Liabilities 262,792
---------
Stockholders' Equity (Deficit)
Common Stock, par value 650
Additional Paid-In Capital 128,403
Retained earnings ( 75,411)
---------
Total Stockholders' Equity 53,642
=========
Total Liabilities & Equity $ 316,434
=========
See Accountants' Compilation Report
27
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Nine Months Ended July 31, 1997
REVENUES
Sales $ 1,327,239
-----------
Total Revenues 1,327,239
OPERATING EXPENSES
Cost of Sales - production costs and raw materials,
exclusive of depreciation 705,169
Selling, distribution and administrative expenses 585,474
Depreciation 54,646
-----------
Total Operating Expenses 1,345,289
Net Operating Income (Loss) ( 18,050)
-----------
Interest Expense 14,125
Net Loss ( 32,175)
Beginning Retained Earnings ( 43,236)
-----------
Ending Retained Earnings ($ 75,411)
===========
See Accountants' Compilation Report
28
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED FINANCIAL STATEMENTS
Nine Months Ended July 31, 1996
29
<PAGE>
ACCOUNTANTS' COMPILATION REPORT
To The Boards of Directors
St. Pete Bagel Co., Inc.
Sam and Son, Inc.
Bagel Man, Inc.
St. Petersburg, Florida
We have compiled the accompanying combined balance sheet of St. Pete Bagel Co.,
Inc., Sam and Son, Inc., and Bagel Man, Inc. as of July 31, 1996 and the related
combined statements of income and retained earnings for the nine months then
ended, in accordance with Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. We have not audited or
reviewed the accompanying combined financial statements and, accordingly, do not
express an opinion or any other form of assurance on them. However, we did
become aware of a departure from generally accepted accounting principles that
is described in the following paragraph.
A statement of cash flows for the nine months ended July 31, 1996 has not been
presented. Generally accepted accounting principles require that such a
statement be presented when financial statements purport to present financial
position and results of operations.
Management has elected to omit substantially all of the disclosures required by
generally accepted accounting principles. If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial position and results of operations.
Accordingly, these financial statements are not designed for those who are not
informed about such matters.
St. Petersburg, Florida
November 20, 1997
30
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED BALANCE SHEET
July 31, 1996
ASSETS
Current Assets
Cash $ 18,130
Accounts Receivable net of allowances for
doubtful accounts 35,129
Inventories 35,836
---------
Total Current Assets 89,095
Property, Plant & Equipment
Cost less accumulated depreciation & amortization
Of $98,496 258,978
Security Deposits 7,004
---------
Total Assets $ 355,077
=========
LIABILITIES & STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable & accrued expenses $ 51,000
Notes payable 68,969
Capitalized lease obligations - current maturity 30,484
---------
Total Current Liabilities 150,453
Capitalized Lease Obligations 95,343
---------
Total Liabilities 245,796
Stockholders' Equity (Deficit)
Common Stock, par value 650
Additional Paid-In Capital 130,322
Retained earnings (21,691)
---------
Total Stockholders' Equity 109,281
---------
Total Liabilities & Equity $ 355,077
=========
See Accountants' Compilation Report
31
<PAGE>
ST. PETE BAGEL CO., INC.
SAM AND SON, INC.
BAGEL MAN, INC.
St. Petersburg, Florida
COMBINED STATEMENTS OF INCOME AND RETAINED EARNINGS
For the Nine Months Ended July 31, 1996
REVENUES
Sales $ 1,296,801
-----------
Total Revenues 1,296,801
OPERATING EXPENSES
Cost of Sales - production costs and raw materials,
exclusive of depreciation 681,704
Selling, distribution and administrative expenses 542,183
Depreciation 52,580
-----------
Total Operating Expenses 1,276,467
Net Operating Income 20,334
-----------
Interest Expense 7,024
-----------
Net Income 13,310
Beginning Retained Earnings ( 35,001)
-----------
Ending Retained Earnings ($ 21,691)
===========
See Accountants' Compilation Report
32
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed financial statements give effect
to the acquisition of ST. PETE BAGEL CO., INC., SAM AND SON, INC., and BAGEL
MAN, INC., a group of corporations under common control, (collectively herein
referred to as "ST. PETE BAGELS") as described below.
Effective September 23, 1997, ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
("AAFG") acquired all of the outstanding common stock of ST. PETE BAGELS in
exchange for 479,800 shares of common stock of AAFG, cash consideration of
$220,000. The acquisition has been accounted for as a purchase, and accordingly,
the total purchase price has been allocated to the acquired assets and
liabilities assumed at their estimated fair values in accordance with the
provisions of Accounting Principles Board Opinion No. 16. The estimated excess
of the purchase price over the net assets acquired is being carried as goodwill
and will be amortized over its estimated life of 15 years.
Both AAFG's and ST. PETE BAGEL's fiscal years end on October 31. The unaudited
pro forma condensed consolidated balance sheet of AAFG as of July 31, 1997, has
been prepared by combining the consolidated balance sheet of AAFG as July 31,
1997, with the combined balance sheet of ST. PETE BAGELS as of July 31, 1997.
The unaudited pro forma condensed consolidated statement of operations for the
fiscal year ended October 31, 1996, has been prepared by combining AAFG's
consolidated statement of operations for the fiscal year ended October 31, 1996,
with ST. PETE BAGELS combined statement of income for the fiscal year ended
October 31, 1996. The unaudited pro forma condensed consolidated statement of
operations for the nine months ended July 31, 1997, has been prepared by
combining AAFG's consolidated statement of operations for the nine month period
ended July 31, 1997, with ST. PETE BAGELS combined statement of income for the
nine month periods ended July 31, 1997. AAFG and ST. PETE BAGELS, on a combined
basis, are referred to herein as the "Company".
The pro forma information is based on the historical financial statements of the
Company, giving effect to the transactions under the purchase method of
accounting and the assumptions and adjustments described in the accompany notes
to the unaudited pro forma financial statements.
The unaudited pro forma condensed consolidated financial statements have been
prepared by AAFG's management and should be read in conjunction with the
historical financial statements of AAFG and ST. PETE BAGELS and the related
noted hereto. The unaudited pro forma condensed consolidated statements of
operations are not necessarily indicative of the results of operations that may
have actually occurred had the acquisition occurred on the date specified, or of
the future results of the combined company. The pro forma adjustments are based
upon available information and certain adjustments the management of AAFG
believes are reasonable. In the opinion of management, all adjustments have been
made that are necessary to present fairly the unaudited condensed consolidated
financial statements.
33
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ST. PETE
AAFG BAGELS
HISTORICAL HISTORICAL (A)
----------- --------------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ 458,384 $ 23,152
Accounts receivable 354,846 17,321
Notes receivable, current portion 153,215 6,766
Notes receivable - officer 97,000 --
Inventories 119,788 31,832
Deferred interest and financing costs 360,811 --
Prepaid expenses 468,896 --
----------- -----------
Total Current Assets 2,012,940 79,071
Property, Plant and Equipment, net of accumulated depreciation and amortization 1,290,018 199,892
Intangible Assets, net of accumulated amortization 335,445
Security Deposits 94,479 7,944
Notes receivable - long-term 106,119 29,527
----------- -----------
Total Assets $ 3,839,001 $ 316,434
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ 1,043,459 $ 65,399
Notes payable -- 81,265
Capitalized lease obligations - current maturities 27,059 40,079
Loans from stockholders - current maturities 4,703 --
Current maturities of long-term debt 160,782 --
Deferred franchising revenue, current portion 173,215 --
----------- -----------
Total Current Liabilities 1,409,218 186,743
Capitalized Lease Obligations 4,753 76,049
Loans from stockholders 2,431 --
Convertible debentures 900,000 --
Long-term debt 152,704 --
Deferred franchising revenue 106,119 --
----------- -----------
Total Liabilities 2,575,225 262,792
----------- -----------
Commitments and contingencies
Redeemable preferred stock 262,022 --
----------- -----------
Stockholders' Equity (Deficit):
Non-redeemable convertible preferred stock 495,532 --
Common stock 7,577,281 650
Additional Paid-In Capital -- 128,403
Accumulated deficit (7,071,059) (75,411)
----------- -----------
1,001,754 53,642
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 3,839,001 $ 316,434
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS COMBINED
------------ -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash $ -- $ 481,536
Accounts receivable 372,167
Notes receivable, current portion 159,981
Notes receivable - officer 97,000
Inventories 151,620
Deferred interest and financing costs 360,811
Prepaid expenses -- 468,896
----------- -----------
Total Current Assets -- 2,092,011
Property, Plant and Equipment, net of accumulated depreciation and amortization 220,899 (B),(F) 1,710,809
Intangible Assets, net of accumulated amortization 945,459 (C),(F) 1,280,904
Security Deposits 102,423
Notes receivable - long-term 135,646
----------- -----------
Total Assets $ 1,166,358 $ 5,321,793
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable and accrued expenses $ -- $ 1,108,858
Notes payable 81,265
Capitalized lease obligations - current maturities 67,138
Loans from stockholders - current maturities 4,703
Current maturities of long-term debt 160,782
Deferred franchising revenue, current portion -- 173,215
----------- -----------
Total Current Liabilities -- 1,595,961
Capitalized Lease Obligations 80,802
Loans from stockholders 2,431
Convertible debentures 900,000
Long-term debt 152,704
Deferred franchising revenue -- 106,119
----------- -----------
Total Liabilities -- 2,838,017
----------- -----------
Commitments and contingencies
Redeemable preferred stock -- 262,022
----------- -----------
Stockholders' Equity (Deficit):
Non-redeemable convertible preferred stock 495,532
Common stock 1,219,350 (E) 8,797,281
Additional Paid-In Capital (128,403)(D) --
Accumulated deficit 75,411 (D) (7,071,059)
----------- -----------
1,166,358 2,221,754
----------- -----------
Total Liabilities and Stockholders' Equity (Deficit) $ 1,166,358 $ 5,321,793
=========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
34
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
JULY 31, 1997
(A) Information obtained from the July 31, 1997 unaudited combined balance
sheet of the combined entities of ST. PETE BAGELS.
(B) Represents the adjustment necessary to assign values of fixed assets
resulting from the allocation of the purchase price using the purchase
method of accounting for the transaction.
(C) Reflects goodwill and other intangibles originating form the purchase of
all of the outstanding stock of ST. PETE BAGELS. Represents the allocation
of the excess purchase price using the purchase method of accounting for
the transaction after adjusting the assets acquired and the liabilities
assumed to their respective fair values.
(D) Eliminates the equity of ST. PETE BAGELS upon consolidation with AAFG.
(E) To record the acquisition of ST. PETE BAGELS as if it was consummated on
July 31, 1997 as follows:
Purchase price $1,220,000
Net assets acquired (as of July 31, 1997) (53,642)
----------
Purchase price to be allocated 1,166,358
Less elimination of Paid-In-Capital 128,403
Less elimination of accumulated deficit (75,411)
----------
Adjustment to common stock $1,219,350
==========
(F) Allocation of net purchase price:
Fixed assets $ 220,899
Goodwill and other intangibles 945,459
----------
Total $1,166,358
==========
35
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
ST. PETE
AAFG BAGELS PRO FORMA
HISTORICAL HISTORICAL (A) ADJUSTMENTS COMBINED
----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues: $ 2,094,446 $1,327,239 $ -- $ 3,421,685
Operating Expenses:
Cost of sales 1,511,247 705,169 2,216,416
Selling, general and adminsitrative expenses 2,835,323 585,474 3,420,797
Loss on disposal of equipment 72,399 -- 72,399
Depreciation and amortization 241,086 54,646 70,941 (B),(C) 366,673
Settlement costs 47,010 -- -- 47,010
----------- ---------- ---------- -----------
4,707,065 1,345,289 70,941 6,123,295
----------- ---------- ---------- -----------
Operating loss (2,612,619) (18,050) (70,941) (2,701,610)
Interest expense 172,945 14,125 -- 187,070
----------- ---------- ---------- -----------
Net loss $(2,785,564) ($ 32,175) $ (70,941)(D) $(2,888,680)
=========== ========== ========== ===========
Adjusted net loss for net loss per common share calculations:
Net Loss $(2,785,564) ($ 32,175) $ (70,941) (2,888,680)
Increase in carrying amount of redeemable preferred stock (42,373) -- -- (42,373)
----------- ---------- ---------- -----------
Net loss attributable to common stock $(2,827,937) ($ 32,175) $ (70,941) $(2,931,053)
=========== ========== ========== ===========
Pro forma shares outstanding:
Weighted average number of common shares outstanding 3,091,402 -- 479,800 3,571,202
Additional shares -- -- -- --
----------- ---------- ---------- -----------
Pro forma adjusted shares outstanding 3,091,402 -- 479,800 3,571,202
=========== ========== ========== ===========
Pro forma net loss per common share $ (0.91) $ -- -- $ (0.82)
=========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
36
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1997
(A) Information obtained from the combined statement of income for the nine
months ended July 31, 1997 of the combined entities of ST. PETE BAGELS.
(B) Amortization of goodwill and other intangibles have been provided on a
straight-line basis over periods ranging from two to 15 fifteen years.
(C) Depreciation of fixed assets on a straight-line basis over seven years.
(D) ST. PETE BAGELS, formerly Subchapter "S" corporations, will become taxable
corporations upon the consummation of the acquisition by AAFG. The
historical results of operations for the period presented is a loss.
Accordingly, no pro forma information is presented to show the effects on
past operating results of becoming a tax-paying entity.
37
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ST. PETE
AAFG BAGELS PRO FORMA
HISTORICAL HISTORICAL (A) ADJUSTMENTS COMBINED
----------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues: $ 2,240,187 $ 1,702,287 $ -- $ 3,942,474
Operating Expenses:
Cost of sales 1,572,185 867,211 2,439,396
Selling, general and adminsitrative expenses 2,132,072 762,266 2,894,338
Loss on disposal of equipment -- -- --
Depreciation and amortization 251,741 62,865 94,588 (B),(C) 409,194
Settlement costs 224,341 -- -- 224,341
----------- ----------- ----------- -----------
4,180,339 1,692,342 94,588 5,967,269
----------- ----------- ----------- -----------
Operating loss (1,940,152) 9,945 (94,588) (2,024,795)
Interest expense 33,440 18,180 -- 51,620
----------- ----------- ----------- -----------
Net loss $(1,973,592) $ (8,235) $ (94,588)(D) $(2,076,415)
=========== =========== =========== ===========
Adjusted net loss for net loss per common share calculations:
Net Loss $(1,973,592) $ (8,235) $ (94,588) (2,076,415)
Increase in carrying amount of redeemable preferred stock (562,678) -- -- (562,678)
----------- ----------- ----------- -----------
Net loss attributable to common stock $(2,536,270) $ (8,235) $ (94,588) $(2,639,093)
=========== =========== =========== ===========
Pro forma shares outstanding:
Weighted average number of common shares outstanding 943,150 -- 479,800 1,422,950
Additional shares 430,558 -- -- 430,558
----------- ----------- ----------- -----------
Pro forma adjusted shares outstanding 1,373,708 -- 479,800 1,853,508
=========== ----------- =========== ===========
Pro forma net loss per common share $ (1.85) $ 0.00 $ 0.00 $ (1.42)
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
condensed consolidated financial statements.
38
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED OCTOBER 31, 1996
(E) Information obtained from the combined statement of income for the year
ended October 31, 1996 of the combined entities of ST. PETE BAGELS.
(F) Amortization of goodwill and other intangibles have been provided on a
straight-line basis over periods ranging from two to 15 fifteen years.
(G) Depreciation of fixed assets on a straight-line basis over seven years.
(H) ST. PETE BAGELS, formerly Subchapter "S" corporations, will become taxable
corporations upon the consummation of the acquisition by AAFG. The
historical results of operations for the period presented is a loss.
Accordingly, no pro forma information is presented to show the effects on
past operating results of becoming a tax-paying entity.
39
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Current Report on
Form 8-K Amendment No. 1 of All American Food Group, Inc. and Subsidiaries of
our reports dated November 20, 1997, with respect to the combined financial
statements of St. Pete Bagel Co., Inc., Sam and Son, Inc. and Bagel Man, Inc.
- -----------------------------
JOHN RALPH & ASSOCIATES, P.A.
St. Petersburg, Florida
December 8, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
- --------------------------------------------------------------------------------
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B)
-----------------------
- --------------------------------------------------------------------------------
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-START> NOV-01-1995
<PERIOD-END> OCT-31-1996
<CASH> 84,302
<SECURITIES> 0
<RECEIVABLES> 397,039
<ALLOWANCES> 12,000
<INVENTORY> 66,580
<CURRENT-ASSETS> 783,003
<PP&E> 1,170,103
<DEPRECIATION> 249,533
<TOTAL-ASSETS> 2,188,474
<CURRENT-LIABILITIES> 1,822,062
<BONDS> 0
562,678
537,905
<COMMON> 3,360,136
<OTHER-SE> 4,285,495
<TOTAL-LIABILITY-AND-EQUITY> 2,188,474
<SALES> 1,962,333
<TOTAL-REVENUES> 2,240,187
<CGS> 1,572,185
<TOTAL-COSTS> 4,180,339
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33,440
<INCOME-PRETAX> (1,973,592)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,973,592)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,973,592)
<EPS-PRIMARY> (1.85)
<EPS-DILUTED> (1.21)
</TABLE>
