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 December 31, 1996
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
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(State of other jurisdiction (IRS Employer
of incorporation) Identification No.)
9400 SOUTH DADELAND BOULEVARD, SUITE 720, MIAMI, FL 33156
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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 January 28, 1997 there were 7,392,663 shares of the Issuer's
Common Stock outstanding.
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INTERFOODS OF AMERICA, INC.
FORM 10-QSB
INDEX
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Part I. Financial Information Page(s)
Item 1. Financial Statements
Consolidated Balance Sheets at December 31, 1996
(unaudited) and September 30, 1996 1
Consolidated Statements of Operations for the three months ended 2
December 31, 1996 and 1995 (unaudited)
Consolidated Statements of Stockholders' equity for the
three months 3 ended December 31, 1996 (unaudited)
and for the year ended September 30, 1996
Consolidated Statements of Cash Flows for the three months 4
ended December 31, 1996 and 1995 (unaudited)
Notes to the Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis or Plan of Operation 6-7
Part II. Other Information
Signatures 8
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<TABLE>
<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Balance Sheets
December 31, and September 30, 1996
DECEMBER 31, SEPTEMBER 30,
1996 1996
---- ----
(UNAUDITED) (AUDITED)
ASSETS:
<S> <C> <C>
Current assets:
Accounts receivables, net 88,703 93,110
Inventory 41,464 38,946
Prepaid expenses 58,009 30,707
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Total current assets 188,176 162,763
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Furniture and equipment, net 3,029,299 2,573,737
Other assets:
Deposits 42,392 85,487
Goodwill, less accumulated amortization 2,286,572 2,301,582
of $43,779 and $28,769
Other intangible assets, less accumulated 121,928 99,646
amortization of $172,647 and $169,929
Due from affiliates 54,000 54,778
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Total assets $5,722,368 $5,277,993
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LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued expenses 980,173 1,011,343
Current portion of long term debt 376,270 376,270
Notes payable to stockholders 13,150 13,150
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Total current liabilities 1,369,593 1,400,763
Deferred income 406,652 309,741
Long-term debt, excluding current portion 187,996 204,175
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Total liabilities 1,964,241 1,914,679
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Stockholders' equity
Capital stock, 8,333,333 shares
authorized at $.001 par value; 7,392,663
and 2,000,070 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 outstanding, 6% annual dividend (Note 2) 400,000 0
Accumulated deficit (366,874) (376,687)
Treasury common stock at cost, 363,333 and 348,333 shares (80,268) (65,268)
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Total stockholder's equity 3,758,127 3,363,314
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Total liabilities and stockholders' equity $5,722,368 $5,277,993
========== ==========
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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.
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INTERFOODS OF AMERICA, INC.
Consolidated Statements of Operations
For the three months ended December 31, 1996 and 1995
(Unaudited)
1996 1995
---- ----
Revenues:
Restaurant sales $3,424,795 $60,123
Royalties and fees 69,155 65,000
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Total revenues 3,493,950 125,123
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Cost and expenses:
Cost of sales-restaurant 3,116,366 24,866
General and administrative expenses 334,041 197,232
Depreciation and amortization 38,485 12,565
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Operating profit (loss) 5,057 (109,540)
Other income (expense):
Interest, net 4,756 0
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Net income (loss) $9,813 $(109,540)
========== =========
Net earnings (loss) per share $0.00 $(0.06)
========== =========
Weighted average shares outstanding 6,741,978 2,000,245
========== =========
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.
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INTERFOODS OF AMERICA, INC.
Consolidated Statements of Stockholders' Equity
For the three months ended December 31, 1996 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
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<S> <C> <C> <C> <C> <C> <C> <C>
Balances, September 30, 1995 2,000,270 $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 O 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 9,813 0 9,813
Purchase of treasury stock 0 0 0 0 0 (15,000) (15,000)
Issuance of Preferred stock 0 0 0 400,000 0 0 400,000
---------- ------ ---------- -------- --------- -------- ----------
Balances, December 31, 1996 7,392,663 $7,393 $3,797,876 $400,000
$(366,874) $(80,268) $3,758,127
========== ====== ========== ======== ========= ======== ==========
</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.
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<CAPTION>
INTERFOODS OF AMERICA, INC.
Consolidated Statements of Cash Flows
For the three months ended December 31, 1996 and 1995
1996 1995
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Cash flows from operating activities:
Net income (loss) $9,813 $(109,540)
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 38,485 12,565
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 4,407 1,000
Deposits 43,095 (2,000)
Inventories (2,518) (6,750)
Accounts payable and accrued expenses (31,170) 54,040
Prepaid expenses (27,302) (1,552)
Due from affiliates 788 0
Intangible assets (22,282) 0
Deferred income 100,000 0
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Net cash (used in) provided by operating activities 13,316 (52,237)
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Cash flows from investing activities:
Purchase of property and equipment (50,000) (278,236)
Purchase of treasury stock (15,000) 0
Net Proceeds from sale of property and equipment 67,863 0
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Net cash provided by (used in) investing activities 2,863 (278,236)
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Cash flows from financing activities:
Principal payment of long-term debt (16,179) (5,000)
Repayment of notes payable, stockholders (42,000)
Proceeds from common stock issued 383,046
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Net cash provided by financing activities (16,179) 336,046
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Net increase (decrease) in cash and cash equivalents 0 (5,573)
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Cash and cash equivalents:
Beginning of period 0 5,573
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End of period $ 0 $ 0
======= =======
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
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 6,813
=======
</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>
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 December 31, 1996 and the results of operations for the three
month period ended December 31, 1996 and 1995 and cash flows for each of
the three month periods ended December 31, 1996 and 1995. The results of
operations for the three month period ended December 31, 1996 are not
necessarily indicative of the results which may be expected for the
entire year. Certain 1995 amounts have been reclassified to conform to
the 1996 presentation.
In May, 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 an annual dividend of 6%.
<PAGE>
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 MONTHS ENDED DECEMBER 31, 1996 COMPARED TO DECEMBER 31,
1995
For the three months ended December 31, 1996, ("first quarter
fiscal 1997"), the Company had total revenues of $3,493,950 compared to
total revenues of $125,123 for the three months ended December 31, 1995.
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 quarter. 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 $5,057 for the three months ended
December 31, 1996 compared to an operating loss of $(109,540) for the
three months ended December 31, 1995. 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 was offset by some one time expenses associated with the four
store acquisition in October 1996. The Company's profit for the three
months ended December 31, 1996 was equivalent to an earnings per share
of $.00 as compared to a loss per share of $(.06) for the three months
ended December 31, 1995.
The Company's cost of sales for the three months ended December
31, 1996 increased to $3,116,366 compared to $24,866 for the three
months ended December 31, 1995. The increase is attributable to the
acquisition of Sailormen in fiscal 1996 and the four Popeye's Chicken
store acquisition in Alabama this quarter. The four store acquisition
had some one-time repairs and maintenance costs resulting in higher cost
of sales for the period ended December 31, 1996.
The Company's general and administrative costs increased to
$372,526 compared to $209,797 during the three months ended December 31,
1996 and 1995, respectively.
<PAGE>
However, as a percentage of revenues the general and administrative
costs were 11% compared to 168% for the three months ended December 31,
1996 and 1995, 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.
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the three months ended
December 31, 1996 was $13,316 compared to net cash used by operations of
$(52,237) for the three months ended December 31, 1995. The net cash
provided this period was primarily attributable to the reduction of
deposits $43,095 from year end September 30, 1996 off set by a reduction
in accounts payable by ($31,170). This is part of a continuing effort of
the company to pay down all its short and long term liabilities.
At December 31, 1996, the Company had total current assets of
$188,176 and total assets of $5,722,368 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.
Net cash used by financing activities was $(16,179) for the three
months ended December 31, 1996 compared to net cash provided by
financing activity for the months ended December 31, 1995 of $336,046.
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 will obtain the necessary capital to continue its
future expansion plans as each acquisition presents itself. 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 Sobiks 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: January 28, 1997 By: /s/ ROBERT S. BERG
---------------------------------------
Robert S. Berg, Chief Executive Officer
By: /s/ STEVEN M. WEMPLE
---------------------------------------
Steven M. Wemple, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JUL-01-1995
<PERIOD-END> SEP-01-1994
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 88,703
<ALLOWANCES> 0
<INVENTORY> 41,464
<CURRENT-ASSETS> 188,176
<PP&E> 3,029,299
<DEPRECIATION> (159,677)
<TOTAL-ASSETS> 5,722,368
<CURRENT-LIABILITIES> 1,369,593
<BONDS> 0
0
400,000
<COMMON> 3,805,269
<OTHER-SE> (447,142)
<TOTAL-LIABILITY-AND-EQUITY> 5,722,368
<SALES> 3,493,950
<TOTAL-REVENUES> 3,493,950
<CGS> 3,116,366
<TOTAL-COSTS> 3,488,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (4,756)
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 9,814
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,814
<EPS-PRIMARY> $0.00
<EPS-DILUTED> 0
</TABLE>
