SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE OF 1934
For the quarterly period ended June 30, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 000-21093
INTERFOODS OF AMERICA, INC.
---------------------------
(Exact name of registrant as specified in this charter)
NEVADA 59-3356011
- ---------------------------- -------------------
(State of other jurisdiction (IRS Employer
of incorporation) Identification No.)
9400 SOUTH DADELAND BOULEVARD, SUITE 720, MIAMI, FL 33156
---------------------------------------------------------
Address of principal executive offices
Registrant's telephone number, including area code (305) 670-0746
Check whether the issuer (1) has filed all reports required to be filed by
section 13 or 15(d) of the Securities 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 ___
As of June 30, 1997 there were 6,337,663 shares of the Issuer's Common
Stock outstanding.
<PAGE>
INTERFOODS OF AMERICA, INC.
FORM 10-QSB
INDEX
Part I. Financial Information Page(s)
Item 1. Financial Statements
Consolidated Balance Sheets at June 30, 1997 (unaudited) 1
and September 30, 1996 (audited)
Consolidated Statements of Operations for the three and nine 2
months ended June 30, 1997 and 1996 (unaudited)
Consolidated Statements of Stockholders' equity for the nine 3
months ended June 30, 1997 (unaudited) and for the year
ended September 30, 1996
Consolidated Statements of Cash Flows for the nine months 4
ended June 30, 1997 and 1996 (unaudited)
Notes to the Consolidated Financial Statements (unaudited) 5-6
Item 2. Management's Discussion and Analysis or Plan of Operation 7-8
Part II. Other Information
Signatures 9
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Balance Sheets
June 30, 1997 and September 30, 1996
June 30, September 30,
1997 1996
----------- -------------
(Unaudited) (Audited)
<S> <C> <C>
ASSETS:
Current assets:
Accounts receivables, net $101,771 93,110
Inventory 50,879 38,946
Prepaid expenses 26,300 30,707
---------- ----------
Total current assets 178,949 162,763
Furniture and equipment, net 3,131,516 2,573,737
Other assets:
Deposits 64,842 85,487
Goodwill, less accumulated amortization of $73,800 and $28,769 2,256,551 2,301,582
Other intangible assets, less accumulated amortization of $172,394 and
$169,929 117,181 99,646
Due from affiliates 108,570 54,778
---------- ----------
Total assets 5,857,611 $5,277,993
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued expenses 1,180,249 1,011,343
Current portion of long term debt 192,371 376,270
Notes payable to stockholders 0 13,150
---------- ----------
Total current liabilities 1,372,621 1,400,763
Deferred income 395,375 309,741
Long-term debt, excluding current portion (Note 3) 341,994 204,175
---------- ----------
Total liabilities 2,109,989 1,914,679
---------- ----------
Stockholders' equity
Capital stock, 25,000,000 shares authorized at $.001 par value;
6,337,663 and 7,392,663 shares issued and outstanding. 7,393 7,393
Additional paid-in capital 3,797,876 3,797,876
Preferred Class A stock, 228,640 shares issued and 171,480 shares
outstanding, 6% annual dividend (Note 2) 300,000 0
Preferred Class B stock, 430,000 shares issued and 420,000 shares
outstanding, (Note 2) 420,000
Accumulated deficit (257,379) (376,687)
Treasury common stock at cost, 1,415,833 and 348,333 shares, (Note 2) (520,268) (65,268)
---------- ----------
Total stockholder's equity 3,747,622 3,363,314
---------- ----------
Total liabilities and stockholders' equity $5,857,611 $5,277,993
========== ==========
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in the Company's Form 10-KSB for the year
ended September 30, 1996, are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Statements of Operations
For the three and nine months ended June 30, 1997 and 1996
(Unaudited)
THREE MONTHS NINE MONTHS THREE MONTHS NINE MONTHS
ENDED 6/30/97 ENDED 6/30/97 ENDED 6/30/96 ENDED 6/30/96
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Restaurant sales $3,431,552 $10,413,932 $2,987,121 $3,040,021
Royalties and fees 66,940 202,473 161,916 252,379
---------- ----------- ---------- ----------
Total revenues 3,498,492 10,616,405 3,149,037 3,292,400
---------- ----------- ---------- ----------
Cost and expenses:
Cost of sales-restaurant 2,947,438 9,276,866 2,105,366 2,132,456
General and administrative
expenses 450,369 1,130,809 1,115,376 1,309,670
Depreciation and amortization 40,343 122,009 104,191 117,106
---------- ----------- ---------- ----------
Operating profit (loss) 60,341 86,721 (175,896) (266,832)
Other income (expense):
Other income/Interest, net 33,186 48,338 (28,781) (28,781)
---------- ----------- ---------- ----------
Net income (loss) $93,528 $135,058 ($204,677) ($295,613)
========== =========== ========== ==========
Net earnings (loss) per share $0.01 $0.02 $(0.04) $(0.06)
========== =========== ========== ==========
Weighted average shares
outstanding 6,602,195 7,129,174 4,696,361 4,696,361
========== =========== ========== ==========
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in the Company's Form 10-KSB for the year
ended September 30, 1996, are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Statements of Stockholders' Equity
For the nine months ended June 30, 1997 and for the year ended September 30, 1996.
RETAINED
ADDITIONAL PREFERRED EARNINGS
COMMON COMMON PAID-IN STOCK $ (ACCUMULATED TREASURY
STOCK $ AMOUNT CAPITAL AMOUNT DEFICIT) STOCK TOTAL
--------- -------- ---------- ---------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, SEPTEMBER 30, 1995 2,000,070 $2,000 $65,160 $0 $32,666 $(50,268) $49,558
Net Income 0 0 0 0 (409,353) 0 (409,353)
Purchase of treasury stock 0 0 0 0 0 (15,000) (15,000)
Common stock issued 5,392,593 5,393 3,732,716 0 0 0 3,738,109
---------- ------ ---------- --------- --------- --------- ----------
BALANCES, SEPTEMBER 30, 1996 7,392,663 7,393 3,797,876 0 (376,687) (65,268) 3,363,314
Net Income 0 0 0 0 135,058 0 135,058
Preferred Stock A Dividend 0 0 0 0 (15,750) 0 (15,750)
Purchase of treasury stock 1,055,000 0 0 0 0 (455,000) (455,000)
Issuance of Class A Preferred Stock 0 0 0 400,000 0 0 400,000
Redemption of Preferred stock 0 0 0 (100,000) 0 0 (100,000)
Issuance of Class B Preferred stock 0 0 0 430,000 0 0 430,000
Redemption of Class B Preferred stock 0 0 0 (10,000) 0 0 (10,000)
---------- ------ ---------- --------- --------- ---------- ----------
BALANCES, JUNE 30, 1997 $6,337,663 $7,393 $3,797,876 $ 720,000 $(257,379) $(520,268) $3,747,622
</TABLE>
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in the Company's Form 10-KSB for the year
ended September 30, 1996, are an integral part of these financial statements.
<PAGE>
<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Statements of Cash Flows
For the nine months ended June 30, 1997 and 1996
1997 1996
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $135,058 $(295,613)
Adjustments to reconcile net income to net cash (used in) provided by
operating activities:
Depreciation and amortization 122,009 116,500
Gain on sale of property and equipment (100,000) 0
Cash provided by (used for) changes in assets and liabilities,
net of effects from purchase of Sailormen:
Accounts receivable (8,861) 162,512
Deposits 20,645 13,725
Inventories (11,933) 2,637
Accounts payable and accrued expenses 168,906 (64,193)
Prepaid expenses (4,408) 24,363
Due from affiliates (53,792) 0
Intangible assets 17,535 0
Deferred income 85,634 0
-------- ---------
Net cash (used in) provided by operating activities 379,809 (40,069)
-------- ---------
Cash flows from investing activities:
Purchase of property and equipment, net (253,456) (197,179)
Purchase of treasury stock (35,000) 0
Redemption of Class B Preferred stock (10,000) 0
Net Proceeds from sale of property and equipment 48,353 0
Dividend on Preferred Class A stock (15,750) 0
-------- ---------
Net cash provided by investing activities (265,853) (197,179)
-------- ---------
Cash flows from financing activities:
Principal payment of long-term debt (46,080) (5,000)
Repayment of notes payable, stockholders (13,150) (42,350)
Proceeds from common stock issued 0 279,025
-------- ---------
Net cash provided by (used in) financing activities (59,230) 231,675
-------- ---------
Net increase (decrease) in cash and cash equivalents 0 (5,573)
-------- ---------
Cash and cash equivalents:
Beginning of period 0 5,573
-------- ---------
End of period $0 $0
======== =========
</TABLE>
Continued
<PAGE>
INTERFOODS OF AMERICA, INC.
Consolidated Statements of Cash Flows
For the nine months ended June 30, 1997 and 1996
Continued,
Supplemental disclosure of noncash financing and investing activities:
1. During the year ended September 30, 1996, the Company exchanged
2,500,000 shares of common stock for 100% of the outstanding common
stock of an entity known as Sailormen, Inc. which was valued at
$3,000,000.
2. In October 1996, the company purchased four Popeyes restaurants for $450,000
of which $50,000 was paid in cash and 228,640 preferred class A shares
of stock were issued valued at $400,000. Year to date 57,160 shares
were redeemed for $100,000.
3. In April 1997, 1,030,000 common shares were put in treasury for 430,000
non-voting Class B Preferred shares valued @ $430,000. Redeemed @ 5,000
shares/month for 86 months. (See Note 4).
1997 1996
------- -------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $23,374 $12,000
======= =======
The accompanying notes, together with the Notes to the Consolidated Financial
Statements incorporated by reference in the Company's Form 10-KSB for the year
ended September 30, 1996, are an integral part of these financial statements.
<PAGE>
INTERFOODS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Certain information and footnote disclosures, normally included in
financial statements prepared in accordance with generally accepted
accounting principles, have been condensed or omitted in this Form
10-QSB in compliance with the Rules and Regulations of the Securities
and Exchange Commission. However, in the opinion of Interfoods of
America, Inc. ("the Company"), the disclosures contained in this Form
10-QSB are adequate to make the information presented fairly. See
Report 10-KSB for the year ended September 30, 1996 for additional
information relevant to significant accounting policies followed by the
Company.
BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited consolidated
financial statements reflect all adjustments (consisting of normal
recurring accruals) necessary to present fairly the financial position
as of June 30, 1997 and the results of operations for the three and
nine month periods ended June 30, 1997 and 1996 and cash flows for each
of the three and nine month periods ended June 30, 1997 and 1996. The
results of operations for the three and nine month periods ended June
30, 1997 are not necessarily indicative of the results which may be
expected for the entire year. Certain 1996 amounts have been
reclassified to conform to the 1996 presentation.
In 1996, the Company purchased all of the outstanding stock of
Sailormen, Inc. (Sailormen), an operator of eleven Popeye's Chicken and
Biscuits restaurants in South Florida. The purchase price consisted of
2,500,000 shares of the Company's stock.
2. PURCHASE OF RESTAURANTS
Interfoods acquired the assets of a company which operated four (4)
Popeye's Chicken and biscuits restaurants in Birmingham, Alabama. The
purchase price consisted of $50,000 cash plus 228,640 shares of the
Company's restricted Class A preferred stock. The preferred shares are
convertible into common shares on a one for one basis at the
shareholders election in equal amount or increments of $50,000 cash,
over a period of eight quarters, beginning three months from date of
acquisition. The preferred shares have no voting rights until converted
to common, and are entitled to quarterly dividend at an annual rate of
6%.
As of June 30, 1997, 57,160 shares of Class A preferred stock were
redeemed for $100,000.
3. ROLLOVER OF LINE OF CREDIT
During the quarter the Company rolled over its line of credit and
classified it as long term debt. The Company's practice is to pay down
the line of credit and draw upon it and intends to hold it long term or
until other business opportunities are presented. The line of credit is
secured by a certificate of deposit held by an affiliated company.
<PAGE>
INTERFOODS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(Continued),
4. REPURCHASE OF FORMER DIRECTORS COMMON SHARES -
On April 22, 1997, the Company entered into an agreement with Norm
Kaufman and James Byrd to repurchase, from them, collectively 2.18
million shares of the Company's stock. The terms and conditions are as
follows:
Norman Kaufman: 1) Sells 1.15 million shares for $205,000. These shares
were assigned to a third parties for $205,000 with an
option for the company to repurchase. The proceeds were
used to payoff Norman Kaufman in accordance with the
agreement.
James Byrd: 1) Sells 1.03 million shares for 430,000 shares of
preferred class "B" stock valued at $430,000 which is
redeemable monthly at a rate of 5,000 shares for $5,000
per month for 86 months.
2) The remaining 200,000 shares of common stock
retained by Byrd shall be free trading without
restriction. The Company has the right of first refusal
in the event Byrd sells his common shares.
Under this repurchase agreement both Kaufman and Byrd resign from the Board of
Directors and this agreement supersedes all prior agreements.
As of June 30, 1997 420,000 Preferred Class B shares are outstanding.
5. SUBSEQUENT EVENTS -
$1.32 Million Loan - On July 17th, 1997, the company was funded for a
loan by a financial institution secured by the cash flow operations and
business values of three Popeye's Chicken and Biscuit locations. The
loan proceeds will be used for the continued expansion of the company.
<PAGE>
INTERFOODS OF AMERICA, INC.
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEE ATTACHED FINANCIAL STATEMENTS OF THE ISSUER.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS.
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto appearing elsewhere in this
report and together with the Company's Form 10-KSB for the year ended September
30, 1996.
RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED JUNE 30, 1997 COMPARED TO JUNE 30, 1996
For the three and nine months ended June 30, 1997, ("third quarter
fiscal 1997"), the Company had total revenues of $3,431,552 and $10,413,932
compared to total revenues of $2,987,121 and $3,040,021 for the three and nine
months ended June 30, 1996. This increase in revenues was attributable to the
Company's acquisition of Sailormen in fiscal year 1996, and the acquisition of
the four Popeyes restaurants in Birmingham, Alabama, during this year. The
annualized Sailormen revenues are estimated to be approximately $13,700,000. The
company anticipates that 20% (3 of 15 stores) of the Popeyes restaurants each to
have over $1,000,000 in annual sales.
The company had an operating profit of $60,341 and $86,721 for the
three and nine months ended June 30, 1997 compared to an operating loss of
($175,896) and ($266,832) for the three and nine months ended June 30, 1996. The
profitable turn around during this quarter is attributable to the increase in
top line revenues and cost savings from the consolidation of the corporate
offices to one location in Miami, Florida. Additionally, the operating profit
for this quarter and year to date was offset by some one time expenses
associated with the four store acquisition in October 1996. The Company's profit
for the three and nine months ended June 30, 1997 was equivalent to an earnings
per share of $0.01 and $0.02 as compared to a loss per share of ($0.04) and
($0.06) for the three and nine months ended June 30, 1996.
The Company's cost of sales for the three and nine months ended June
30, 1997 was $2,947,438 and $9,276,866 compared to $2,105,366 and $2,132,456 for
the three and nine months ended June 30, 1996. The increase is attributable to
the acquisition of Sailormen in fiscal 1996 and the four Popeye's Chicken store
acquisition in Alabama this year. The four store acquisition had some one-time
repairs and maintenance costs resulting in higher cost of sales for the period
ended June 30, 1997.
The Company's general and administrative costs was $450,369 and
$1,130,809 compared to $1,115,376 and $1,309,670 during the three and nine
months ended June 30, 1997 and 1996, respectively. However, as a percentage of
revenues the general and administrative costs were 12.8% and 10.6% compared to
35.4% and 39.8% for the three and nine months ended June 30, 1997 and 1996,
respectively. The significant percentage decrease is due to the higher top line
revenues and the consolidation of the corporate offices to one location in
Miami, Florida.
<PAGE>
INTERFOODS OF AMERICA, INC.
PART I
FINANCIAL INFORMATION
(Continued),
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the nine months ended June 30, 1997
was $379,809 compared to net cash used by operations of ($40,069) for the nine
months ended June 30, 1996. The net cash provided this period was primarily
attributable to net income of $135,058 and the increase in accounts payable of
$168,906 from year end September 30, 1996 off set by a gain in sale of
properties of ($100,000).
At June 30, 1997, the Company had total current assets of $178,949 and
total assets of $5,857,611 as compared to total current assets of approximately
$162,763 and total assets of approximately $5,277,993 at September 30, 1996. The
increase primarily relates to the four Popeye's store acquisition in Birmingham,
Alabama for $400,000 in preferred Class A stock and $50,000 in cash offset by
the selling of one store in a sale lease-back transaction. During the nine
months ended June 30, 1997, 57,160 shares of preferred class "A" stock was
redeemed for $100,000 to bring the cash portion of the Alabama purchase to
$150,000.
Net cash used by financing activities was ($59,230) for the nine months
ended June 30, 1997 compared to net cash provided by financing activity for the
nine months ended June 30, 1996 of $231,675. The company paid off its primary
debt as of September 30, 1996 in the amount of approximately $1,400,000 and is
continuing to pay down its remaining outstanding notes. The Company obtained
$1,320,000 in financing during July 1997 to be used for its continued expansion
plan.
The Company will obtain the necessary capital to continue its future
expansion plans as each acquisition presents itself and the terms and conditions
of the capital meet the Company's requirements. The company will continue to
manage its current cash flows from operations in order to position itself for
the planned growth.
FUTURE GROWTH AND EXPANSION:
The Company continues with its plan to acquire other food brands to
match with its Sobik's Subs brand in a co-branding environment. Additionally,
the Company will acquire more Popeyes Chicken restaurants as opportunities
present themselves. See the September 30, 1996 annual 10-KSB for further
discussion on the Company's future growth and plans of expansion.
<PAGE>
INTERFOODS OF AMERICA, INC.
PART II. OTHER INFORMATION
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 thereunto duly authorized.
INTERFOODS OF AMERICA, INC.
Date: August 12, 1997 By: /s/ ROBERT BERG
-----------------------------------
Robert S. Berg, Chief Executive Officer
By: /s/ STEVEN WEMPLE
-----------------------------------
Steven M. Wemple, President
<PAGE>
EXHIBIT INDEX
EXHIBIT PAGE
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
10QSB 3rd Fiscal Qtr
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> $151,771
<ALLOWANCES> $50,000
<INVENTORY> $50,079
<CURRENT-ASSETS> $178,949
<PP&E> $3,131,516
<DEPRECIATION> $122,009
<TOTAL-ASSETS> $5,857,611
<CURRENT-LIABILITIES> $1,372,621
<BONDS> 0
0
$720,000
<COMMON> $3,745,269
<OTHER-SE> (717,147)
<TOTAL-LIABILITY-AND-EQUITY> $5,857,611
<SALES> $10,413,932
<TOTAL-REVENUES> $10,616,405
<CGS> $9,276,866
<TOTAL-COSTS> $10,529,684
<OTHER-EXPENSES> (48,338)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> $135,058
<EPS-PRIMARY> $0.02
<EPS-DILUTED> $0.02
</TABLE>
