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 March 31, 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 March 31, 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
Part I. Financial Information Page(s)
- ------------------------------ -------
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets at March 31, 1997 (unaudited) 1
and September 30, 1996 (audited)
Consolidated Statements of Operations for the three and six months 2
months ended March 31, 1997 and 1996 (unaudited)
Consolidated Statements of Stockholders' equity for the six months 3
ended March 31, 1997 (unaudited) and for the year ended
September 30, 1996
Consolidated Statements of Cash Flows for the six months 4
ended March 31, 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
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INTERFOODS OF AMERICA, INC.
Consolidated Balance Sheets
March 31, 1997 and September 30, 1996
MARCH 31, SEPTEMBER 30,
1997 1996
----------- ----------
(Unaudited) (Audited)
ASSETS:
<S> <C> <C>
Current assets:
Accounts receivables, net
Inventory $ 122,030 93,110
Prepaid expenses 44,247 38,946
45,456 30,707
----------- ----------
Total current assets 211,733 162,763
Furniture and equipment, net 3,044,585 2,573,737
Other assets:
Deposits 56,525 85,487
Goodwill, less accumulated amortization of $58,779 and $28,769 2,271,562 2,301,582
Other intangible assets, less accumulated amortization of $175,365 and 119,209 99,646
$ 169,929
Due from affiliates 53,222 54,778
----------- ----------
Total assets 5,753,836 $5,277,993
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued expenses 1,108,195 1,011,343
Current portion of long term debt 144,770 376,270
Notes payable to stockholders 0 13,150
----------- ----------
Total current liabilities 1,252,965 1,400,763
Deferred income 369,137 309,741
Long-term debt, excluding current portion (Note 3) 404,888 204,175
----------- ----------
Total liabilities 2,026,990 1,914,679
----------- ----------
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 200,060 shares
outstanding, 6% annual dividend (Note 2) 350,000 0
Accumulated deficit (335,156) (376,687)
Treasury common stock at cost, 373,333 and 348,333 shares (90,268) (65,268)
----------- ----------
Total stockholder's equity 3,729,845 3,363,314
----------- ----------
Total liabilities and stockholders' equity $ 5,756,835 $5,277,993
=========== ==========
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 and six months ended March 31, 1997 and 1996
(Unaudited)
THREE MONTHS SIX MONTHS THREE MONTHS SIX MONTHS
ENDED 3/31/97 ENDED 3/31/97 ENDED 3/31/96 ENDED 3/31/96
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Restaurant sales $3,557,585 $6,982,380 $ 52,900 $ 113,023
Royalties and fees 66,378 135,533 90,463 155,463
------------- ------------- ------------- -------------
Total revenues 3,623,963 7,117,913 143,363 268,486
------------- ------------- ------------- -------------
Cost and expenses:
Cost of sales-restaurant 3,213,061 6,329,427 27,090 51,956
General and administrative 346,398 680,440 194,294 391,526
expenses
Depreciation and amortization 40,833 81,667 12,915 25,480
------------- ------------- ------------- -------------
Operating profit (loss) 23,671 26,379 (90,936) $(200,476)
Other income (expense):
Interest, net 8,047 15,152 0 0
------------- ------------- ------------- -------------
Net income (loss) $31,718 $41,531 $(90,936) $(200,476)
============= ============= ============= =============
Net earnings (loss) per share $ 0.00 $ 0.01 $ (0.03) $ (0.06)
============= ============= ============= =============
Weighted average shares
outstanding 7,392,663 7,392,663 3,283,064 3,283,064
============= ============= ============= =============
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 six months ended March 31, 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 41,531 0 41,531
Purchase of treasury stock 0 0 0 0 0 (25,000) (25,000)
Issuance of Preferred stock 0 0 0 400,000 0 0 400,000
Redemption of Preferred stock 0 0 0 (50,000) 0 0 (50,000)
---------- --------- ---------- ---------- ----------- ---------- ----------
BALANCES, MARCH 31, 1997 7,392,663 $7,393 $3,797,876 $350,000 $(335,156) $(90,268) $3,729,845
========== ========= ========== ========== =========== ========== ==========
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 Cash Flows
For the six months ended March 31, 1997 and 1996
1997 1996
--------- ---------
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Cash flows from operating activities:
Net income (loss) $ 41,531 $(200,476)
Adjustments to reconcile net income to net cash (used in) provided
by operating activities:
Depreciation and amortization 81,667 25,480
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 (28,920) 9,909
Deposits 28,962 (4,310)
Inventories (5,301) (13,600)
Accounts payable and accrued expenses 96,852 146,698
Prepaid expenses (14,748) (3,770)
Due from affiliates 1,556 0
Intangible assets (19,563) 0
Deferred Income 59,396 0
--------- ---------
Net cash (used in) provided by operating activities 141,432 (40,059)
Cash flows from investing activities:
Purchase of property and equipment, net (120,848) (197,179)
Purchase of treasury stock (25,000) 0
Net Proceeds from sale of property and equipment 48,353 0
--------- ---------
Net cash provided by investing activities (97,495) (197,179)
--------- ---------
Cash flows from financing activities:
Principal payment of long-term debt (30,787) (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 (43,937) 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
========= =========
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. On January 1, 1997,
28,580 shares were redeemed for $50,000
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 20,967
=========
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.
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 March 31, 1997 and the results of operations for the three and
six month periods ended March 31, 1997 and 1996 and cash flows for each
of the three and six month periods ended March 31, 1997 and 1996. The
results of operations for the three and six month periods ended March
31, 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 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 quarterly dividend at an annual rate of
6%.
As of March 31, 1997, 28,580 shares of preferred stock were redeemed
for $50,000.
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.
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INTERFOODS OF AMERICA, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Continued),
4. SUBSEQUENT EVENTS
REPURCHASE OF 2.18 MILLION SHARES OF COMMON STOCK - 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 payable in 60 days.
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.
The net effect of this transaction reduces the outstanding shares to
5,212,662 of which 2,587,500 shares are beneficially owned by the
Chairman of the Board/C.E.O. and President/C.O.O.of the Company.
$1.32 MILLION LOAN PROPOSAL - On April 16, 1997, the Company signed a
loan proposal for $1,319,500 secured by the cash flow operations and
business values of three Popeye's stores. The loan proceeds will be
used for the continued expansion program of the Company. The Company
expects to close the loan before the end of the fiscal third quarter,
June 30, 1997.
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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 SIX MONTHS ENDED MARCH 31, 1997 COMPARED TO MARCH
31, 1996
For the three and six months ended March 31, 1997, ("second
quarter fiscal 1997"), the Company had total revenues of $3,623,963 and
$7,117,913 compared to total revenues of $143,363 and $268,486 for the
three and six months ended March 31, 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 $23,670 and $26,379 for the
three and six months ended March 31, 1997 compared to an operating loss
of $(90,936) and $(200,476) for the three and six months ended March
31, 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 six months ended March 31, 1997 was equivalent to an earnings per
share of $0.00 and $0.01 as compared to a loss per share of $(0.03) and
$(0.06) for the three and six months ended March 31, 1996.
The Company's cost of sales for the three and six months ended
March 31, 1997 increased to $3,213,061 and $6,329,427 compared to
$27,090 and $51,956 for the three and six months ended March 31, 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 March 31, 1997.
The Company's general and administrative costs increased to
$346,398 and $680,440 compared to $194,294 and $391,526 during the
three and six months ended March 31, 1997 and 1996, respectively.
However, as a percentage of revenues the general and administrative
costs were 9.5% and 9.6% compared to 136% and 146% for the three and
six months ended March 31, 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.
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INTERFOODS OF AMERICA, INC.
PART I
FINANCIAL INFORMATION
(Continued),
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the six months ended
March 31, 1997 was $141,482 compared to net cash used by operations of
$(40,059) for the six months ended March 31, 1996. The net cash
provided this period was primarily attributable to the increase in
accounts payable of $96,852 from year end September 30, 1996 off set by
a gain in sale of properties of $(100,000).
At March 31, 1997, the Company had total current assets of
$211,733 and total assets of $5,756,836 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 three months
ended March 31, 1997, 28,580 shares of preferred class "A" stock was
redeemed for $50,000 to bring the cash portion of the Alabama purchase
to $100,000.
Net cash used by financing activities was $(43,937) for the
six months ended March 31, 1997 compared to net cash provided by
financing activity for the six months ended March 31, 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 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 Sobiks Subs brand in a co-branding
environment. Additionally, the Company will acquire more Popeyes
Chicken restaurants as opportunities present themselves. As of April
1997, the Company has a loan proposal of $1.32 million, and repurchased
2.18 million shares of the Company's stock, to position itself for the
future growth and expansion expected as the plan continues to be
implemented. See the September 30, 1996 annual 10- KSB for further
discussion on the Company's future growth and plans of expansion.
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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: May 5, 1997 By: /s/ ROBERT BERG
--------------------------------------------
Robert S. Berg, Chief Executive Officer
By: /s/ STEVEN WEMPLE
--------------------------------------------
Steven M. Wemple, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 172030
<ALLOWANCES> (50,000)
<INVENTORY> 44,247
<CURRENT-ASSETS> 211,733
<PP&E> 3,044,585
<DEPRECIATION> 0
<TOTAL-ASSETS> 5,753,836
<CURRENT-LIABILITIES> 1,252,965
<BONDS> 0
0
350,000
<COMMON> 3,805,269
<OTHER-SE> (425,424)
<TOTAL-LIABILITY-AND-EQUITY> 3,729,845
<SALES> 7,117,913
<TOTAL-REVENUES> 7,117,913
<CGS> 6,329,427
<TOTAL-COSTS> 7,091,534
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 41,531
<INCOME-TAX> 0
<INCOME-CONTINUING> 41,531
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 41,531
<EPS-PRIMARY> $0.01
<EPS-DILUTED> $0.01
</TABLE>
