<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) : January 1, 1999
ALL AMERICAN FOOD GROUP, INC.
-----------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-3259558
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
4475 South Clinton Avenue
South Plainfield, NJ 07080
--------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 908-757-3022
104 New Era Drive, South Plainfield, NJ 07080
----------------------------------------------
(Former name, former address, if changed since last report)
</PAGE>
<PAGE>
Item 2. Acquistion or Disposition of Assets
Reference is made herein to Item 7. Financial
Statements and Exhibits, together with the notes and Basis
of Presentation set forth below, with respect to the
Registrant's voluntary petition under Chapter XI of the U.S.
Bankruptcy Code. The Registrant entered into several
transactions which resulted in a substantial reduction in
the carrying costs of the Registrant's assets or the
realization of proceeds substantially below the carrying
value of such assets.
Item 5. Other Events
Registrant, effective January 5, 1999, in response to
its recent filing for protection from certain creditors
under Chapter XI of the Federal Bankruptcy laws, has filed
amended unaudited pro forma condensed consolidated financial
statements for the fiscal year ended October 31, 1997, and
the nine month period ended July 31, 1998. These financial
statements for the respective periods are attached as an
exhibit to this Current Report on Form 8-K. See Item 7
below.
In addition, Registrant has relocated its principal
executive offices from 104 New Era Drive, South Plainfield,
NJ 07080, to 4475 South Clinton Avenue, South Plainfield, NJ
07080. Registrant's telephone and fax numbers continue to be
908-757-3022 and 908-757-8857, respectively.
In connection with the several steps that Registrant
intends to undertake in connection with the contemplated
plan of reorganization, the Registrant has entered into a
consulting agreement with Interbras Global Trading Co.,
Ltd., dated effective November 25, 1998, which provided for
the issuance of shares in a registration statement on Form S-
8 filed with the Commission on December 3, 1998. As a
further step toward its planned reorganization, the
Registrant entered into an agreement with InterEuro Import &
Trading Corp. The former consulting agreement was filed as
an exhibit to the above referenced registration statement on
Form S-8 dated December 3, 1998. The latter agreement has
been filed as an exhibit to post effective amendment no. 1
to said registration statement, filed with the Commission on
January 5, 1999. In connection with the post effective
amendment no. 1 to the registration statement, the
Registrant reregistered the shares included in the December
5, 1998 Form S-8, in order to reflect the filing of the
amended unaudited pro forma condensed consolidated financial
statements for the fiscal year ended October 31, 1997, and
the nine month period ended July 31, 1998, referenced above.
Item 7. Financial Statements and Exhibits
Registrant has filed herewith the following:
(i) amended unaudited pro forma condensed consolidated
financial statements for the fiscal year ended October 31,
1997;
(ii) amended unaudited pro forma condensed consolidated
financial statements for the nine month period ended July
31, 1998.
</PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of The Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
South Plainfield, New Jersey
January 6, 1999
ALL AMERICAN FOOD GROUP, INC.
/s/ Andrew Throburn, President/CEO
Name (Title)
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The accompanying unaudited pro forma condensed consolidated
financial statements of All American Food Group, Inc and
Subsidiaries, (the Company), at October 31, 1997 and July
31, 1998 give effect to certain transactions as described
below.
On November 30, 1998, the Company filed a voluntary petition
under Chapter 11 of the U.S. Bankruptcy Code. During the
current fiscal year, the Company entered into several
transactions which resulted in a substantial reduction in
the carrying costs of the Company's assets or the
realization of proceeds substantially below the carrying
value of such assets.
On February 20, 1998 the Company completed a reverse split
of its common stock in which one new share was issued for
every ten old shares then outstanding.
In June, 1998, the company rescinded its acquisition of four
bagel stores located in Toledo, Ohio, which transaction had
been accounted for as a purchase on December 9, 1997. The
purchase price had originally been paid in stock and
resulted in the recording of approximately $500,000 of
goodwill. As a result of the rescission of the purchase
contract, such goodwill was removed from the Company's
balance sheet.
During the current fiscal year, the Company closed its
Company owned and operated stores in Manhattan, New York,
Nanuet, New York and Columbus, Ohio and disposed of the
physical assets of these stores in various transactions.
The closing of these stores and the disposition of the
associated assets resulted in the Company reducing the
carrying amount of its property, plant and equipment by
approximately $800,000 and incurring a loss of approximately
$760,000.
During the two most recent fiscal quarters, the Company also
disposed of certain property, plant and equipment. As a
result of these dispositions, the Company reduced the
carrying amount of its property, plant and equipment by
approximately $225,000 and incurred a loss of approximately
$190,000.
During the current fiscal year, the Company issued
approximately $1,875,000 of Convertible securities for total
cash consideration of approximately $1,645,000 in proceeds.
A portion of these securities holders exercised their rights
to convert their securities into common stock at a discount
to the market price of the Company's common stock. This
resulted in a substantial increase in the total outstanding
stock of the Company. Furthermore, the price of the
Company's common stock declined to a point at which further
conversions would have been substantially in excess of the
Company's authorized stock issuance. Accordingly, the
Company was no longer able to honor any subsequent
conversion requests from these security holders. Pr esently,
the Company has authorized, issued and outstanding common
stock of 20,000,000, 12,000,000 and 12,000,000,
respectively
</PAGE>
<PAGE>
In July, 1998, the Company abandoned its bagel production
facility in South Plainfield, New Jersey. The Company
entered into a joint venture production contract and shifted
its bagel production to an unaffiliated bagel producer.
This resulted in the Company reducing the carrying amount of
its property, plant and equipment by approximately $205,000
and incurring a loss of approximately $200,000.
On November 4, 1998, the Company defaulted on certain
contractual provisions of the acquisition of certain bagel
stores and related assets collectively referred to as "St.
Pete Bagels". Under the terms of the original transaction,
which was accounted for by the purchase method, the Company
was liable for certain monthly payments to the seller.
Under the terms of the Security and Stock Escrow Agreements
of that transaction, the Seller retained the right to
recapture the assets in the event of the Company's default
on those monthly payments. Accordingly, on November 4,
1998, the Seller exercised the remedies under the default
provisions of the original transaction and, accordingly,
ownership of the St. Pete Bagels assets reverted back to the
original owner. This resulted in the Company reducing the
carrying amount of its property, plant and equipment and
goodwill by approximately $415,000 and $ 960,000
respectively.
The unaudited pro forma condensed consolidated balance sheet
of All American Food Group, Inc and Subsidiaries as of
October 31, 1997 has been prepared by eliminating the
balance sheets of the following subsidiaries as of October
31, 1997: St. Pete Bagel Acquisition Corp., G.I.D.
Distributors, Inc., Bleeker Street Bagels Inc. and Sammy's
NY Bagels, Inc. and by recording the effects of the
aforementioned transactions as if these transactions
occurred at October 31, 1997. The unaudited pro forma
condensed consolidated statement of operation of All
American Food Group, Inc and Subsidiaries for the fiscal
year ended October 31, 1997 has been prepared by eliminating
the statements of operations for the fiscal year ended
October 31, 1997 of the following subsidiaries: St. Pete
Bagel Acquisition Corp, G.I.D. Distributors, Inc., Bleeker
Street Bagels Inc. and Sammy's NY Bagels, Inc. and by
recording the effects of the aforementioned transactions as
if these transactions occurred in the fiscal year ended
October 31, 1997. The unaudited pro forma
condensed consolidated balance sheet of All American Food
Group, Inc and Subsidiaries as of July 31, 1998 has been
prepared by eliminating the balance sheets of the following
subsidiaries as of July 31, 1998: St. Pete Bagel Acquisition
Corp, G.I.D. Distributors, Inc., Bleeker Street Bagels Inc.
and Sammy's NY Bagels, Inc. and by recording the cumulative
effects of the aforementioned transactions as if these
transactions occurred prior to and during the current
fiscal year. The unaudited pro forma condensed consolidated
statement of operation of All American Food Group, Inc and
Subsidiaries for the nine months ended July 31, 1998 has
been prepared by eliminating the statements of operations
for the nine months ended July 31, 1998 of the following
subsidiaries as of October 31, 1997: St. Pete Bagel
Acquisition Corp, G.I.D. Distributors, Inc., Bleeker Street
Bagels Inc. and Sammy's NY Bagels, Inc. and by recording the
effects of the aforementioned transactions as if these
transactions occurred prior to and during the current
fiscal year.
The pro forma information is based on the historical
financial statements of the Company, giving effect to the
aforementioned transactions and the assumptions and
adjustments described in the accompanying notes to the
unaudited pro forma condensed consolidated financial
statements.
</PAGE>
<PAGE>
The unaudited pro forma condensed consolidated financial
statements have been prepared by the Company's management
and should be read in conjunction with the historical
financial statements of the Company and the related notes
thereto. The unaudited pro forma condensed consolidated
statements of operations are not necessary indicative of the
results of operations that may have actually occurred had
the aforementioned transactions occurred at the beginning of
the respective fiscal years. The unaudited pro forma
condensed consolidated statements of operations are also not
necessary indicative of the future results of operations of
the Company. The pro forma adjustments are based upon
available information the management of the Company believes
is reasonable. In the opinion of management of the Company,
all adjustments have been made that are necessary to present
fairly the unaudited pro forma condensed consolidated
financial statements.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND
SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
AAFG PRO FORMA ADJUSTED
HISTORICAL ADJUSTMENTS HISTORICAL
ASSET
<S> <C> <C> <C>
Current Assets:
Cash $ 326,603 $ (58,151)A $ 268,452
Accounts receivable, net of
allowances for possible losses 284,645 (117,805)A 166,840
Notes receivable, current portion 20,441 (6,936)A 13,505
Notes receivable - officer 127,000 (127,000)B -
Inventories 133,810 (121,421)C 12,389
Prepaid expenses 918,775 (918,775)D -
---------- ----------- ----------
Total Current Assets 1,811,274 (1,350,088) 461,186
Property, Plant and Equipment, net of
accumulated depreciation and amortiz. 2,025,387 (1,632,470)A,E 392,917
Intangible Assets, net of accumulated
amortization 1,261,146 (1,236,113)A,F 25,033
Security Deposits 90,028 (88,975)A,G 1,053
Notes receivable - long-term 55,099 (28,809)A 26,290
---------- ----------- ------
Total Assets $5,242,934 $(4,336,455) $906,479
========== ============ ========
</TABLE>
<TABLE>
CAPTION>
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
<S> <C> <C> <C>
Current Liabilities:
Notes payable $ 80,693 $ (80,693)A $ -
Accounts payable and accrued
expenses 1,568,659 760,151 A,H 2,328,810
Capitalized lease obligations -
current maturities 62,710 (57,320)A 5,390
Loans from stockholders - current
maturities 4,757 - 4,757
Current maturities of long-term
debt 58,378 (48,970)A 9,408
Deferred franchising revenue,
current portion 33,505 (8,283)A 25,222
----------- ------------ --------------
Total Current Liabilities 1,808,702 564,885 2,373,587
Capitalized Lease Obligations 69,478 (66,958)A 2,520
Loans from stockholders 1,398 - 1,398
Convertible debentures 1,300,000 - 1,300,000
Long-term debt 299,908 - 299,908
Deferred franchising revenue 26,290 - 26,290
----------- ------------ --------------
Total Liabilities 3,505,776 497,927 4,003,703
----------- ------------ --------------
Commitments and contingencies
Redeemable preferred stock 268,033 - 268,033
----------- ------------ --------------
Stockholders' Equity (Deficit):
Non-redeemable convertible
prefeered stock 322,470 - 322,470
Common stock 11,130,669 (1,460,000)A 9,670,669
Additional paid in stock - (37,500)A (37,500)
Accumulated deficit (9,984,014) (3,336,882) (13,320,896)
----------- ------------ --------------
1,469,125 (4,834,382) (3,365,257)
----------- ------------ ---------------
Total Liabilities and Stockholders'
Equity (Deficit) $5,242,934 $(4,336,455) $906,479
=========== ============ ===============
</TABLE>
The accompanying notes are an integral part of these
unaudited pro forma condensed consolidated financial
statements.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND
SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED OCTOBER 31, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
AAFG PRO FORMA ADJUSTED
HISTORICAL ADJUSTMENTS HISTORICAL
<S> <C> <C> <C>
Revenues:
Store sales $ 1,777,274 $ (734,532)A $ 1,042,742
Franchising revenue 284,829 - 284,829
Equipment and product sales 747,782 (702,024)A 45,758
----------- ------------- -------------
2,809,885 (1,436,556) 1,373,329
----------- ------------- -------------
Operating Expenses:
Cost of sales 2,094,008 (1,384,890)A,C 709,118
Selling, general and adminsitrative 4,974,666 405,087 A,B,D 5,379,753
Discontinued operations 72,397 - 72,397
Loss on abandonment - 433,854 E,G 433,854
Loss on disposition - 434,169 E,G 434,169
Litigation losses - 1,000,000 H 1,000,000
Loss on intercompany balances - 1,623,763 I 1,623,763
Depreciation and amortization 336,430 76,164 A,F 412,594
Settlement costs - employment contracts 47,010 - 47,010
----------- ------------ -------------
7,524,511 2,588,147 10,112,658
----------- ------------ -------------
Operating loss (4,714,626) (4,024,703) (8,739,329)
Interest expense 983,893 (12,808)A 971,085
----------- ------------ -------------
Net loss $(5,698,519) $(4,011,895) $(9,710,414)
=========== ============ =============
Adjusted net loss for net loss per common
share calculations:
Net loss $(5,698,519) $(4,011,895) $(9,710,414)
Increase in carrying amount of redeemable
preferred stock (48,385) - (48,385)
----------- ----------- -------------
Net loss attributable to common stock $(5,746,904) $(4,011,895) $(9,758,799)
=========== =========== =============
Pro forma shares outstanding:
Weighted average number of common shares
outstanding $ 3,634,442 $(3,270,998) $363,444
Additional shares - - -
----------- ----------- -------------
Pro forma adjusted shares outstanding 3,634,442 (3,270,998) 363,444
=========== =========== =============
Pro forma net loss per common share $(1.58) $ - $(26.85)
=========== =========== =============
</TABLE>
The accompanying notes are an integral part of these
unaudited pro forma condensed consolidated financial
statements.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
OCTOBER 31, 1997
(A) Adjustment represents the elimination of the balance
sheets of the following subsidiaries as of October 31, 1997:
St. Pete Bagel Acquisition Corp., G.I.D. Distributors, Inc.,
Bleeker Street Bagels Inc. and Sammy's NY Bagels, Inc..
(B) Represents the reclassification to compensation of a
$127,000 note receivable due from an officer.
(C) Represents approximately $38,000 write-off for
inventory disposition.
(D) Prepaid expenses comprised primarily of various short-
term consulting contracts originally paid for through the
issuance of the Company's common stock. The Company has
abandoned these contracts which has resulted in a $918,000
charge to consulting expense.
(E) The Company has recognized losses from the disposition
and abandonment of various fixed assets approximating
$800,000 in the aggregate. Additionally, the elimination of
the subsidiaries disclosed in Note (A) above resulted in the
reduction of $845,000 of fixed assets.
(F) The Company has recognized additional amortization of
intangible assets approximating $195,000 in the aggregate.
Additionally, the elimination of the subsidiaries disclosed
in Note (A) above resulted in the reduction of $1,015,000
of intangible assets recorded from previous business
acquisitions.
(G) The Company has recognized a loss of security deposits
from the abandonment of various leases approximating $70,000
in the aggregate. Additionally, the elimination of the
subsidiaries disclosed in Note (A) above resulted in the
reduction of $20,000 of security deposits.
(H) The Company has had various adverse judgements entered
against it. The Company has accrued $1,000,000 for
satisfaction of these judgements. Additionally, the
elimination of the subsidiaries disclosed in Note (A) above
resulted in the reduction of $240,000 of accounts payable.
(I) The elimination of the balance sheets of the St. Pete
Bagel Acquisition Corp., G.I.D. Distributors, Inc., Bleeker
Street Bagels Inc. and Sammy's NY Bagels, Inc. subsidiaries
as of October 31, 1997 resulted in a net accounts receivable
due from these subsidiaries. St. Pete Bagel Acquisition
Corp. has forfeited its assets as a result of defaults on
various contracts and the assets of G.I.D. Distributors,
Inc., Bleeker Street Bagels Inc. and Sammy's NY Bagels, Inc
have been disposed of or abandoned. Accordingly, there does
not exist any assets to satisfy the receivable. Therefore,
the Company has taken a charge for the loss on such
receivables.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND
SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE
SHEET
JULY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
AAFG PRO FORMA ADJUSTED
HISTORICAL ADJUSTMENTS HISTORICAL
ASSETS
<S> <C> <C> <C>
Current Assets:
Cash $ 96,916 $ (5,252)J $ 91,664
Accounts receivable, net of allowances
for possible losses 449,019 (221,077)J 227,942
Notes receivable, current portion 75,384 (30,415)J 44,969
Notes receivable - officer 129,000 (129,000)K -
Inventories 109,770 (99,543)J,L 10,227
Prepaid expenses 820,001 (820,001)M -
--------- ------------ ---------
Total Current Assets 1,680,090 (1,305,288) 374,802
Property, Plant and Equipment, net of
accumulated depreciation and amortization 1,980,071 (1,617,088)J,N 362,983
Intangible Assets, net of accumulated
amortization 1,397,876 (1,386,262)J,O 11,614
Security Deposits 74,998 (73,945)J,P 1,053
Notes receivable - long-term 24,890 - 24,890
--------- ---------- ---------
Total Assets $5,157,925 $(4,382,583) $775,342
========== =========== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT)
Current Liabilities:
Notes payable $ 202,514 $ (152,514)J $ 50,000
Accounts payable and accrued expenses 1,741,776 825,383 J,Q 2,567,159
Capitalized lease obligations - current
maturities 62,622 (62,622)J -
Loans from stockholders - current
maturities - - -
Current maturities of long-term debt 285,116 - 285,116
Deferred franchising revenue, current
portion - - -
--------- ----------- -----------
Total Current Liabilities 2,292,028 610,247 2,902,275
Capitalized Lease Obligations - - -
Loans from stockholders 3,336 - 3,336
Long-term debt 6,036 (6,036)J -
Convertible debentures 586,000 - 586,000
Deferred franchising revenue 26,290 - 26,290
--------- ----------- -----------
Total Liabilities 2,913,690 604,211 3,517,901
--------- ----------- -----------
Commitments and contingencies
Redeemable preferred stock 286,779 - 286,779
--------- ----------- -----------
Stockholders' Equity (Deficit):
Non-redeemable convertible preferred
stock 1,353,726 - 1,353,726
Common stock 13,403,147 (1,460,000)J 11,943,147
Additional paid in capital - (37,500)J (37,500)
Accumulated deficit (12,799,417 (3,489,294) (16,288,711)
----------- ---------- -----------
1,957,456 (4,986,794) (3,029,338)
----------- ---------- -----------
Total Liabilities and Stockholders'
Equity (Deficit) $5,157,925 $(4,382,583) $775,342
=========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these
unaudited pro forma condensed consolidated financial
statements.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND
SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
NINE MONTHS ENDED JULY 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
AAFG PRO FORMA ADJUSTED
HISTORICAL ADJUSTMENTS HISTORICAL
<S> <C> <C> <C>
Revenues:
Store sales $ 1,555,540 $ (937,484)J $ 618,056
Franchising revenue 108,074 (5,000)J 103,074
Equipment and product sales 839,117 (660,576)J 178,541
------------ -------------- ------------
2,502,731 (1,603,060) 899,671
------------ -------------- ------------
Operating Expenses:
Cost of sales 2,101,490 (1,438,174)J,L 663,316
Selling, general and adminsitrative 2,163,331 (363,621)J,K 1,799,710
Loss of disposal of
equipment/discontinued operations 282,626 (109,956)J 172,670
Loss on abandonment - 130,510 N 130,510
Loss on intercompany balances - 358,329 R 358,329
Depreciation and amortization 284,894 105,742 O 390,636
Non-recurring consultant expenses 333,750 (98,793)M 234,957
----------- -------------- ------------
5,166,091 (1,415,963) 3,750,128
----------- -------------- ------------
Operating loss (2,663,360) (187,097) (2,850,457)
Interest expense 152,043 (27,086)J 124,957
----------- ------------- ------------
Net loss $(2,815,403) $ (160,011) $(2,975,414)
=========== ============= ============
Adjusted net loss for net loss per common
share calculations:
Net loss $(2,815,403) $ (160,011) $(2,975,414)
Increase in carrying amount of redeemable
preferred stock (18,744) - (18,744)
----------- ---------- ------------
Net loss attributable to common stock $(2,834,147) $ (160,011) $(2,994,158)
=========== ========== ============
Pro forma shares outstanding:
Weighted average number of common shares
outstanding 3,051,192 (2,746,073) 305,119
Additional shares - - -
----------- ---------- ------------
Pro forma adjusted shares outstanding 3,051,192 (2,746,073) 305,119
=========== ========== ============
Pro forma net loss per common share $(0.93) - $(9.81)
=========== ========== ============
</TABLE>
The accompanying notes are an integral part of these
unaudited pro forma condensed consolidated financial
statements.
</PAGE>
<PAGE>
ALL AMERICAN FOOD GROUP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
JULY 31, 1998
(A) Adjustment represents the elimination of the balance
sheets of the following subsidiaries as of October 31, 1997:
St. Pete Bagel Acquisition Corp., G.I.D. Distributors, Inc.,
Bleeker Street Bagels Inc. and Sammy's NY Bagels, Inc.
(B) Represents the reclassification to compensation of a
note receivable due from an officer.
(C) Represents approximately $29,000 write-off for
inventory disposition.
(D) Prepaid expenses comprised primarily of various short
term consulting contracts originally paid for through the
issuance of the Company's common stock. The Company has
abandoned these contracts which has resulted in a $100,000
charge to consulting expense in this nine month period ended
July 31, 1998 and a charge of $720,000 to accumulated
deficit in the accompanying pro forma condensed consolidated
financial statements.
(E) The Company has recognized losses from the disposition
and abandonment of various fixed assets approximating
$145,000 in the aggregate and a charge of $800,000 to
accumulated deficit in the accompanying pro forma condensed
consolidated financial statements. Additionally, the
elimination of the subsidiaries disclosed in Note (J) above
resulted in the reduction of $690,000 of fixed assets.
(F) The Company has recognized additional amortization of
intangible assets approximating $228,000 in the aggregate
and a charge of $195,000 to accumulated deficit in the
accompanying pro forma condensed consolidated financial
statements. Additionally, the elimination of the
subsidiaries disclosed in Note (J) above resulted in the
reduction of $965,000 of intangible assets recorded from
previous business acquisitions.
(G) The Company has recognized a charge of $50,000 to
accumulated deficit in the accompanying pro forma condensed
consolidated financial statements. Additionally, the
elimination of the subsidiaries disclosed in Note (J) above
resulted in the reduction of $20,000 of security deposits.
(H) The Company has had various adverse judgements entered
against it. The Company has accrued $1,000,000 for
satisfaction of these judgements. Additionally, the
elimination of the subsidiaries disclosed in Note (J) above
resulted in the reduction of $175,000 of accounts payable.
(I) The elimination of the balance sheets of the St. Pete
Bagel Acquisition Corp., G.I.D. Distributors, Inc., Bleeker
Street Bagels Inc. and Sammy's NY Bagels, Inc. subsidiaries
as of July 31, 1998 resulted in the recording of a net
accounts receivable due from the subsidiaries. St. Pete
Bagel Acquisition Corp. has forfeited its assets as a result
of defaults on various contracts and the assets of G.I.D.
Distributors, Inc., Bleeker Street Bagels Inc. and Sammy's
NY Bagels, Inc have been disposed of or abandoned.
Accordingly, there does not exist any assets to satisfy the
receivable. Therefore the Company has taken a charge for
the loss on such receivables.
