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, 2000
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. AND SUBSIDIARIES
--------------------------------------------
(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 May 4, 2000, there were 5,637,132 shares of the Issuer's Common Stock
outstanding.
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
<TABLE>
<CAPTION>
Part I Financial Information
PAGE(S)
<S> <C> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at March 31, 2000 1
(unaudited) and September 30, 1999
Condensed Consolidated Statements of Operations for the three and six 2
months ended March 31, 2000 and 1999 (unaudited)
Condensed Consolidated Statements of Stockholders' Equity for 3
the six months ended March 31, 2000 (unaudited)
and for the year ended September 30, 1999
Condensed Consolidated Statements of Cash Flows for the six 4-5
months ended March 31, 2000 and 1999 (unaudited)
Notes to the Condensed Consolidated Financial Statements (unaudited) 6-7
Item 2. Management's Discussion and Analysis 8-10
Part II. Other Information
Item 1. Legal Proceedings 11
Signatures 11
</TABLE>
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS:
March 31, SEPTEMBER 30,
2000 1999
(UNAUDITED)
----------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,717,897 $ 367,910
Loans to officers 600,000 --
Accounts receivable 112,312 17,198
Inventories 500,556 278,169
Prepaid expenses 117,617 70,193
------------ ------------
Total current assets 4,048,382 733,470
------------ ------------
Property and equipment, net 44,086,915 11,303,129
------------ ------------
Other assets:
Deposits 218,203 342,832
Goodwill, less accumulated amortization of
$384,442 and $285,682, respectively 8,067,884 6,998,611
Other intangible assets, less accumulated
amortization of $244,277 and $220,247, respectively 1,076,089 427,119
Investment in JRECK 94,431 217,191
Debt issuance costs 1,339,708 310,590
Other assets 48,125 55,000
------------ ------------
Total other assets 10,844,440 8,351,343
------------ ------------
Total assets $ 58,979,737 $ 20,387,942
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable and accrued expenses $ 4,819,169 $ 3,149,618
Current portion of advanced vendor rebates 622,440 --
Current portion of long term debt 1,154,358 794,923
Current portion of deferred income on sale and leaseback transactions 45,248 45,248
------------ ------------
Total current liabilities 6,641,215 3,989,789
Long-term debt, excluding current portion 46,276,272 12,043,867
Advanced vendor rebates, net of current portion 928,200 --
Deferred taxes 397,001 79,565
Deferred income on sale and leaseback transactions, net of current portion 731,039 753,665
------------ ------------
Total liabilities 54,973,727 16,866,886
------------ ------------
Mandatory redeemable preferred stock class B 255,000 285,000
------------ ------------
Stockholders' equity:
Common stock, 25,000,000 shares authorized at $.001 par value;
8,270,817 shares issued, 5,637,132 and 5,717,484
shares outstanding, respectively 8,271 8,271
Additional paid-in capital 4,349,093 4,349,093
Retained earnings and accumulated deficit 202,075 (393,040)
Treasury stock at cost, 2,633,685 and 2,553,333 shares, respectively (808,429) (728,268)
------------ ------------
Total stockholder's equity 3,751,010 3,236,056
------------ ------------
Total liabilities and stockholder's equity $ 58,979,737 $ 20,387,942
============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS SIX MONTHS SIX MONTHS
ENDED 3/31/00 ENDED 3/31/99 ENDED 3/31/00 ENDED 3/31/99
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues: $ 19,965,480 $ 7,432,948 $ 32,460,164 $ 13,475,821
------------ ------------ ------------ ------------
Operating expenses:
Cost of restaurant operations 15,947,518 6,092,424 26,016,279 11,335,012
General and administrative expenses 1,675,933 835,975 2,949,335 1,643,263
Depreciation and amortization 550,346 165,036 843,990 244,858
------------ ------------ ------------ ------------
Total operating expenses 18,173,797 7,093,435 29,809,604 13,223,133
------------ ------------ ------------ ------------
Operating income 1,791,683 339,513 2,650,560 252,688
------------ ------------ ------------ ------------
Other income (expense):
Interest expense (1,173,384) (107,128) (1,485,067) (185,414)
Write down of investment in JRECK stock -- (12,988) (122,760) (76,910)
Other (expense) (169,814) (485,099) (130,182) (499,067)
------------ ------------ ------------ ------------
Total other expense (1,343,198) (605,215) (1,738,009) (761,391)
------------ ------------ ------------ ------------
Income (loss) before income tax (provision) benefit 448,485 (265,702) 912,551 (508,703)
Income tax (provision) benefit (159,654) 76,311 (317,436) 158,931
------------ ------------ ------------ ------------
Net income (loss) $ 288,831 $ (189,391) $ 595,115 $ (349,772)
============ ============ ============ ============
Net earnings (loss) per share, basic and diluted $ 0.05 $ (0.03) $ 0.10 $ (0.06)
============ ============ ============ ============
Weighted average shares outstanding 5,700,803 5,709,812 5,700,803 5,709,812
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
2
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity
For the six months ended March 31, 2000 (unaudited)
and for the year ended September 30, 1999
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
----------------- PAID-IN ACCUMULATED TREASURY
SHARES AMOUNT CAPITAL DEFICIT STOCK TOTAL
------ ------ ------- -------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
BALANCE, SEPTEMBER 30, 1998 8,262,405 $ 8,262 $ 4,321,727 $ (245,966) $ (728,268) $ 3,355,755
Net loss -- -- -- (146,324) -- (146,324)
Preferred stock - Class A dividend -- -- -- (750) -- (750)
Common stock issued to employees 8,412 9 27,366 -- -- 27,375
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, SEPTEMBER 30, 1999 8,270,817 8,271 4,349,093 (393,040) (728,268) 3,236,056
Net income -- -- -- 595,115 -- 595,115
Purchase of treasury stock -- -- -- -- (80,161) (80,161)
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, MARCH 31, 2000 8,270,817 $ 8,271 $ 4,349,093 $ 202,075 $ (808,429) $ 3,751,010
=========== =========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
3
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the six months ended March 31, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 595,115 $ (349,772)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 843,990 244,858
Deferred income tax expense (benefit) 317,436 (173,244)
Amortization of deferred income (22,626) (16,348)
Amortization of debt issuance costs 25,817 50,562
Write down of investment in JRECK stock 122,760 76,910
Common stock issued to employees -- 27,375
Changes in assets and liabilities:
Accounts receivable (95,114) (121,125)
Deposits 124,629 36,746
Inventories (222,387) (143,841)
Prepaid expenses (47,424) (165,076)
Advanced vendor rebates 1,550,640 --
Accounts payable and accrued expenses 1,669,551 1,482,879
------------ ------------
Net cash provided by operating activities 4,862,387 949,924
------------ ------------
Cash flows from investing activities:
Capital expenditures (498,111) (4,265,218)
Loans to officers (600,000) --
Proceeds from sale of real estate -- 12,900,000
Acquisition of restaurants (34,841,033) (19,851,129)
Addition of other intangible assets -- (75,875)
------------ ------------
Net cash used in investing activities (35,939,144) (11,292,222)
------------ ------------
Cash flows from financing activities:
Proceeds from long-term debt 36,139,992 9,728,175
Repayment of long-term debt (1,548,152) (82,733)
Purchase of treasury stock (80,161) --
Debt issuance costs (1,054,935) --
Redemption of Class A Preferred Stock -- (50,000)
Redemption of Class B Preferred Stock (30,000) (25.000)
Preferred Stock Class A dividend -- (750)
------------ ------------
Net cash provided by financing activities 33,426,744 9,569,692
------------ ------------
Net increase (decrease) in cash and cash equivalents 2,349,987 (772,606)
Cash and cash equivalents:
Beginning of period 367,910 1,523,915
------------ ------------
End of period $ 2,717,897 $ 751,309
------------ ------------
</TABLE>
(continued)
4
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
For the six months ended March 31,2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
Supplemental disclosures of cash flow information: 2000 1999
---- ----
<S> <C> <C>
Income taxes paid - $ 10,000
=========== ========
Interest paid $ 1,165,067 $185,414
=========== ========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
statements.
5
<PAGE>
INTERFOODS OF AMERICA, INC. AND SUBSIDIARIES
NOTES TO THE CONDENSED 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. and Subsidiaries ("the Company"), the disclosures
contained in this Form 10-QSB are adequate to make the information
fairly presented. See Form 10-KSB for the year ended September 30, 1999
for additional information relevant to significant accounting policies
followed by the Company.
BASIS OF PRESENTATION
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments (consisting
of normal recurring accruals) necessary to present fairly the financial
position as of March 31, 2000 and the results of operations for the six
month periods ended March 31, 2000 and 1999 and cash flows for each of
the six-month periods ended March 31, 2000 and 1999. The results of
operations for the six months ended March 31, 2000 are not necessarily
indicative of the results which may be expected for the entire year.
The Company sold its subsidiaries, SBK Franchise Systems, Inc and
Sobik's Restaurant Corporation in December 1997 for consideration of
$1.1 million, comprised of a $500,000 promissory note due December 4,
1998, $500,000 worth of acquirer's ("JRECK") common stock and $100,000
cash. The $500,000 promissory note was not repaid. An extension was
negotiated with JRECK, which extended the maturity date until June 30,
1999. The Company received an additional 56,857 shares of JRECK stock
as an extension fee. Accordingly, in the fourth quarter of 1998, the
promissory note was fully reserved with a corresponding reduction of
the gain on sale. The resulting net gain of $536,237 was included as a
component of other income (expense) in the fiscal 1998 consolidated
statement of operations. On June 11,1999, a new agreement was reached
with JRECK relating to the promissory note and stock options. A new
note for $200,000 was signed. The existing investment in JRECK stock
was written down to market value and the Company also received an
additional 700,187 shares of JRECK stock. Management has elected to
fully reserve the $200,000 note. The September 30, 1999 financial
statements included expenses of $182,809 reflecting the adjustment for
the impairment in the Company's investment in JRECK, as required by
Statement of Financial Accounting Standard No ("SFAS") 115 "Accounting
for Certain Investments in Debt and Equity Securities." As of March
31,2000 an additional $122,760 adjustment to other expense was made to
reflect the current market value.
2. LOANS TO OFFICERS
The Company has advanced unsecured loans to officers in the amount of
$600,000. Each loan bears interest of 6% per annum with principal and
interest payable February 28, 2001.
3. ACQUISITIONS
On January 11, 2000, the Company, through an asset purchase agreement,
acquired 37 Popeye's restaurants located in Mississippi and Louisiana
for approximately $34 million in cash and financed with $35.7 million
in debt.
In March, 1999 the Company acquired nineteen Popeye's restaurants in St
Louis, Mo. and Baton Rouge, La. for approximately $19.85 million in
cash and financed with $8.0 million of debt.
The following table sets forth the estimated fair value of the assets
acquired for the above acquisitions (in thousands):
2000 1999
---- ----
Assets, including cash $33,000 $15,461
Goodwill 1,168 4,494
Other intangibles 673 159
Liabilities assumed - (263)
------- ----
$34,841 $19,851
------- -------
6
<PAGE>
The following table sets forth the unaudited pro forma consolidated
results of operations for the six months ended March 31, 2000 and March
31, 1999, giving effect to the above acquisitions as if such
acquisitions had occurred on October 1, 1999 and 1998 (in thousands,
except per share data):
2000 1999
---- ----
Revenues $42,754 $37,129
Net income 1,323 108
Basic and diluted earnings per share 0.23 0.02
The above unaudited pro forma consolidated results are based upon
certain assumptions and estimates, which the Company believes are
reasonable. The unaudited pro forma consolidated results of operations
may not be indicative of the operating results that actually would have
been reported had the Company been in existence and had the
acquisitions been consummated on October 1, 1999 and 1998,
respectively, nor are they necessarily indicative of results which will
be reported in the future.
4. ADVANCED VENDOR REBATES
The Company has entered into a seven year contractual agreement with a
vendor to receive rebates for future use of its products. As rebates
are earned, the cost of restaurant operations is reduced in the
condensed Consolidated Statement of Operations and an corresponding
decrease is recorded to deferred revenue in the condensed Consolidated
Balance Sheet.
5. MANDATORILY REDEEMABLE CLASS B PREFERRED STOCK
MARCH 31, SEPTEMBER 30,
2000 1999
---- ----
Restricted Class B preferred
stock, nonvoting, 430,000
shares authorized, 255,000 and
285,000 shares issued and
outstanding $255,000 $285,000
======== ========
6. SUBSEQUENT EVENT
The Company announced on April 10, 2000 that it will, from time to
time, purchase on the open market, subject to market conditions and
price levels, up to 10% percent of the company's common stock,
utilizing general corporate funds to effect such purchases. As of May
4, 2000 the Company has purchased an additional 491,700 shares.
7
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SEE ATTACHED FINANCIAL STATEMENTS OF THE ISSUER
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
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, 1999.
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED MARCH 31, 2000 COMPARED TO MARCH 31, 1999
For the three and six months ended March 31, 2000, the Company had total
revenues of $19,965,480 and $32,460,164 compared to total revenues of $7,432,948
and $13,475,821 for the three and six months ended March 31, 1999. The increase
in revenues was primarily attributable to the sales generated by the Company's
acquisition of thirty-seven stores in Mississippi and Louisiana on January 11,
2000, ten stores in Baton Rouge, LA, on March 8, 1999, nine stores in St. Louis,
Mo., on March 22,1999 and five additional new store openings during the year
ended September 30, 1999. The remaining sales increase was due to an increase in
comparable sales of 21.6% for the three months and 16.9% for the six months
ended March 31, 2000.
Cost of restaurant operations for the three and six months ended March 31, 2000
were $15,947,518 and $26,016,279 as compared to $6,092,424 and $11,335,012 for
the three and six months ended March 31,1999. The increase is attributable to
the number of stores and the additional expenses that were incurred to integrate
the Company's procedures and systems into the acquired stores.
General and administrative expenses for the three and six months ended March 31,
2000 were $1,675,933 and $2,949,335 as compared to $835,975 and $1,643,263 for
the three and six months ended March 31,1999. The increase is primarily
attributable to the expenses related to the indirect costs of 1999 and 2000
acquisition of stores and the costs of additional personnel hired to support the
current growth.
Depreciation and amortization for the three and six months ended March 31, 2000
were $550,346 and $843,990 as compared to $165,036 and $244,858 for the three
and six months ended March 31,1999. The increase was primarily attributable to
the acquisition of additional restaurants and the capital expenditures related
to the existing restaurant's remodeling program.
Operating income of the Company was $1,791,683 and $2,650,560 for the three and
six months ended March 31, 2000 as compared to $339,513 and $252,688 for the
three and six months ended March 31, 1999. The increase in operating income is
attributable to the increase in number of stores and increase in existing store
level profits resulted from the favorable comparable sales.
The write down of the investment in JRECK stock was $0 and $122,760 for the
three and six months ended March 31, 2000 as compared to $12,988 and $76,910 for
the three months and six months ended March 31, 1999. As a result of a decline
in the market value, the Company has written down the stock to market value.
Interest expense increased to $1,173,384 and $1,485,067 for the three and six
months ended March 31,2000 as compared to $107,128 and $185,414 for the three
and six months ended March 31,1999. The increase was due to higher average debt
outstanding in 2000 as compared to 1999 and this was attributable to additional
borrowings made under the Company's acquisition program.
Other expenses for the three and six months ended March 31, 2000 were $169,814
and $130,182 as compared to $485,099 and $499,067 for the three and six months
ended March 31,1999. The charges in the current year were attributable to the
acquisition costs associated with the purchase of the restaurants in Mississippi
and Louisiana and the lease termination payments relating to a closed store.
8
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operations for the six months ended March 31, 2000 was
$4,862,387 compared to net cash provided by operations of $949,924 for the six
months that ended March 31,1999. The increase in operating cash flow for the
period was primarily attributable to the net income from operations of $595,115
for the six months ended March 31, 2000 as opposed to a loss of $349,772 for the
six months ended March 31,1999, and an increase in cash due to advanced vendor
rebates of $1,550,640, and increases in accounts payable and accrued expenses of
$1,669,551. Depreciation and amortization increased by $599,132 which is
attributable to the goodwill and fixed assets recorded in the acquisition of
additional restaurants. This was offset by cash outlays for receivables,
inventories, and prepaid expenses.
At March 31, 2000, the Company had total current assets of $4,048,382 and total
assets of $58,979,737 as compared to total current assets of $733,470 and total
assets of $20,387,942 at September 30, 1999. The increase was primarily due to
the $34 million acquisition of 37 restaurant in Mississippi and Louisiana and
the approximately $1.6 million of advanced rebates received from a vendor for
future use of its products in the Company's restaurants.
Net cash used in investing activities was $35,939,144 for the six months ended
March 31, 2000 as compared to $11,292,222 for the six months ended March 31,
1999. The cash was used primarily for the acquisition of Mississippi and
Louisiana restaurants in the amount of $34,841,033.
Net cash provided by financing activities was $33,426,744 for the six months
ended March 31, 2000 as compared to $9,569,692 in the six months ended March
31,1999. The increase resulted primarily from the proceeds of a new debt of
$36,139,992 from the new acquisition, which was offset by the reduction of
existing debt of $1,548,152.
The Company intends to obtain the necessary capital to continue its future
expansion plans as each acquisition presents itself. However, there can be no
assurance that the Company will be able to obtain capital under terms acceptable
to the Company.
FUTURE GROWTH AND EXPANSION:
The Company intends to continue with its plan to acquire and build additional
Popeye's Chicken and Biscuits restaurants as opportunities arise; however, there
can be no assurance the Company will acquire or build any new stores under terms
acceptable to the Company. See the September 30, 1999 Annual Report on Form
10-KSB for further discussion on the Company's future growth and plans of
expansion.
NEW ACCOUNTING PRONOUNCEMENTS
In June 1999, the Financial Accounting Standards Board ("FASB") issued SFAS No.
137, "Accounting for Derivative Instruments and Hedging Activities-Deferral of
Effective Date of FASB Statement No. 133." SFAS No. 137 defers for one year the
effective date of SFAS No. 133, "Accounting for Derivative Instruments and
Hedging Activities." SFAS No. 133 will now apply to all fiscal quarters of all
fiscal years beginning after June 15, 2000. SFAS No. 133 will require the
Company to recognize all derivatives on the balance sheet at fair value.
Derivatives that are not hedges must be adjusted to fair value through income.
Since the Company does not hold any derivative instruments, SFAS 133 is not
expected to impact the Company.
In December 1999, the Securities and Exchange issued Staff Accounting Bulletin
No. 101 (`SAB 101'), "Revenue Recognition in Financial Statements." SAB 101
provides guidance on applying accounting principles generally accepted in the
United States to revenue recognition issues in financial statements. The Company
will adopt SAB 101 as required in the quarter ended June 30, 2000. Management
does not expect the adoption of SAB 101 to have a material impact on the
Company's results of operations and financial position.
9
<PAGE>
INTANGIBLE ASSETS
Goodwill is recorded at cost and amortized on a straight-line basis
over 40 years. Other Intangible assets are recorded at cost and consist of
franchise rights, which are being amortized using the straight-line method over
20 years. The franchise agreements are for an initial term of 20 years may be
extended for an additional ten-year term upon the payment of one-half of the
then-applicable franchise fee and the execution of a renewal franchise
agreement. The franchise terms require the Company to pay royalties of 5% and
advertising of 3% of gross sales on a weekly basis.
Statement of Financial Accounting Standard No. ("SFAS") 121, "Accounting for
Impairment of long-lived Assets and for long-lived Assets to Be Disposed Of"
requires that long-lived assets and certain identifiable intangibles to be held
and used or disposed of by an entity be reviewed for impairment whenever events
or changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. Under such circumstances, SFAS 121 requires that long-lived
assets and certain identifiable intangibles to be held and used or disposed of
be reported at the lower of their carrying amount or fair value less cost to
sell. Accordingly, when events or circumstances indicate that long-lived assets
may be impaired, the Company estimates the asset's future cash flows expected to
result from the use of the asset and its eventual disposition. If the sum of the
expected future undiscounted cash flows is less than the carrying amount of the
asset, an impairment loss is recognized based on the excess of the carrying
amount over the fair value of the asset. The Company determined that no
impairment had occurred at March 31, 2000.
DEBT ISSUANCE COSTS
The costs of obtaining financing are deferred and are included as debt issuance
costs in the accompanying condensed consolidated balance sheets and are
amortized to interest expense over the term of the respective loan.
YEAR 2000
The Company had successfully completed all Year 2000 remediation, replacement,
and testing prior to January 1, 2000. Through May 1, 2000, the Company nor its
suppliers have experienced no Year 2000 problems that affected business
operations. At this time, the Company does not expect any future problems
related to Year 2000 to materialize.
10
<PAGE>
INTERFOODS OF AMERICA, INC.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In November , 1997, James Byrd, the former Chairman of the Board and Director of
the Company, filed suit against the Company and Mr. Berg for an injunction and
damages resulting from an alleged breach of contract by the Company. Mr. Byrd
alleges that the Company breached an agreement to repurchase 150,000 shares of
common stock at a price of approximately $130,000. On November 26, 1997, Mr.
Byrd's Emergency Motion for Temporary Injunction in that action was denied. The
Company believes that the suit is without merit and the Company is vigorously
defending this action.
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 4, 2000 BY: /S/ ROBERT S. BERG
----------------------
Robert S. Berg, Chairmen of the Board
Chief Executive Officer
BY: /S/ STEVEN M. WEMPLE
------------------------
Steven M. Wemple, President
Chief Operating Officer,
Secretary and Treasurer
11
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
- ------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 2,717,897
<SECURITIES> 0
<RECEIVABLES> 112,312
<ALLOWANCES> 0
<INVENTORY> 500,556
<CURRENT-ASSETS> 4,048,382
<PP&E> 44,086,915
<DEPRECIATION> 0
<TOTAL-ASSETS> 58,979,737
<CURRENT-LIABILITIES> 6,641,215
<BONDS> 0
255,000
0
<COMMON> 4,357,364
<OTHER-SE> (606,354)
<TOTAL-LIABILITY-AND-EQUITY> 58,979,737
<SALES> 32,460,164
<TOTAL-REVENUES> 32,460,164
<CGS> 26,016,279
<TOTAL-COSTS> 29,809,604
<OTHER-EXPENSES> (252,942)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,485,067)
<INCOME-PRETAX> 912,551
<INCOME-TAX> (317,436)
<INCOME-CONTINUING> 595,115
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 595,115
<EPS-BASIC> 0.10
<EPS-DILUTED> 0.10
</TABLE>
