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Previous: DEPUY INC, SC 14D9/A, 1998-08-13 |
Next: OMTOOL LTD, 10-Q, 1998-08-13 |
<PAGE>
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 ACT OF 1934
For Quarter Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-13181
CAPITAL BEVERAGE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3878747
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1111 East Tremont Avenue, Bronx, New York 10460
(Address of Principal Executive Office) (Zip Code)
(718) 409-2337
(Registrant's telephone number including area code)
Indicate by check mark whether the registrant (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
The number of shares of registrant's Common Stock, $.001 par value,
outstanding as of August 12, 1998 was 2,378,409 shares.
<PAGE>
<TABLE>
<CAPTION>
CAPITAL BEVERAGE CORPORATION
BALANCE SHEETS
June 30, 1998 December 31,
1998 1997
------------------- ------------------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 2,436,060 $ 2,843,870
Accounts receivable - trade, net of allowance for doubtful
accounts of $40,000 and $65,000, respectively 496,732 855,472
Inventories 693,019 426,290
Prepaid expenses and other 180,454 9,548
------------------- ----------------
TOTAL CURRENT ASSETS 3,806,265 4,135,180
PROPERTY AND EQUIPMENT, less accumulated depreciation
of $19,085 and $61,965, respectively 50,375 50,058
OTHER ASSETS:
Intangible assets, less accumulated amortization of
$400,000 and $320,000, respectively 1,200,000 1,280,000
Deposits 3,290 3,290
------------------- ----------------
$ 5,059,930 $ 5,468,528
=================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 146,338 $ 67,135
Accrued expenses and taxes 108,082 112,601
Current portion of long-term debt 65,244 62,480
Accrued dividends on preferred stock 228,113 186,113
------------------- ----------------
TOTAL CURRENT LIABILITIES 547,777 428,329
------------------- ----------------
LONG-TERM DEBT 594,347 627,676
------------------- ----------------
STOCKHOLDERS' EQUITY:
7% Cumulative Series B Preferred Stock, par value $.01;
issued and outstanding 300,000 shares (Liquidation value $1,200,000) 3,000 3,000
Common stock, $ .001 par value; authorized 20,000,000 shares;
issued and outstanding 2,378,409 shares 2,379 2,379
Additional paid-in capital 5,365,573 5,365,573
Accumulated deficit (1,453,146) (958,429)
------------------- ----------------
TOTAL STOCKHOLDERS' EQUITY 3,917,806 4,412,523
------------------- ----------------
$ 5,059,930 $ 5,468,528
=================== ================
See notes to financial statements
-3-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL BEVERAGE CORPORATION
STATEMENTS OF OPERATIONS
Three Months Ended June 30, Six Months Ended June 30,
------------------------------------------- -------------------------------------------
1998 1997 1998 1997
------------------- ------------------- ------------------- --------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES $ 2,488,413 $ 3,755,798 $ 4,712,128 $ 5,635,837
COST OF GOODS SOLD 2,238,127 3,293,000 4,328,669 4,915,111
------------------- ------------------- ------------------- --------------------
GROSS PROFIT 250,286 462,798 383,459 720,726
------------------- ------------------- ------------------- --------------------
OPERATING EXPENSES
Selling and delivery 50,737 103,802 104,652 147,949
General and administrative 350,899 259,450 759,261 593,071
------------------- ------------------- ------------------- --------------------
401,636 363,252 863,913 741,020
------------------- ------------------- ------------------- --------------------
LOSS FROM OPERATIONS (151,350) 99,546 (480,454) (20,294)
INTEREST EXPENSE (14,553) (28,393) (29,436) (53,960)
INTEREST INCOME 30,540 - 62,376 -
------------------- ------------------- ------------------- --------------------
LOSS BEFORE INCOME TAXES (135,363) 71,153 (447,514) (74,254)
INCOME TAXES 4,045 1,572 5,203 5,100
------------------- ------------------- ------------------- --------------------
NET INCOME (LOSS) (139,408) 69,581 (452,717) (79,354)
CUMULATIVE PREFERRED STOCK DIVIDENDS 21,000 35,625 42,000 71,250
------------------- ------------------- ------------------- --------------------
NET LOSS APPLICABLE TO COMMON
SHAREHOLDERS $ (160,408) $ 33,956 $ (494,717) $ (150,604)
=================== =================== =================== ====================
LOSS PER COMMON SHARE - BASIC $ (0.07) $ 0.03 $ (0.21) $ (0.12)
=================== =================== =================== ====================
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES 2,378,409 1,240,909 2,378,409 1,240,909
=================== =================== =================== ====================
See notes to financial statements
-4-
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CAPITAL BEVERAGE CORPORATION
STATEMENT OF CASH FLOWS
Six Months Ended June 30,
------------------------------------------
1998 1997
-------------------- -------------------
<S> <C> <C>
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (452,717) $ (79,354)
-------------------- -------------------
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 82,120 83,465
Changes in assets and liabilities:
Decrease (increase) in accounts receivable 358,740 (115,308)
Increase in inventories (266,729) (155,935)
Increase in prepaid expenses (170,906) (9,433)
Increase in accounts payable and accrued expenses 74,684 131,909
-------------------- -------------------
77,909 (65,302)
-------------------- -------------------
NET CASH USED IN OPERATING ACTIVITIES (374,808) (144,656)
-------------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,437) -
-------------------- -------------------
CASH USED IN INVESTING ACTIVITIES (2,437) -
-------------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from note payable - 153,331
Due from affiliate - 57,837
Payments of note payable (30,565) (35,916)
-------------------- -------------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (30,565) 175,252
-------------------- -------------------
NET (DECREASE) INCREASE IN CASH (407,810) 30,596
CASH - BEGINNING OF PERIOD 2,843,870 126,927
-------------------- -------------------
CASH - END OF PERIOD $ 2,436,060 $ 157,523
==================== ===================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 29,435 $ -
==================== ===================
Cash paid for taxes $ 4,839 $ 11,877
==================== ===================
See notes to financial statements
-5-
</TABLE>
<PAGE>
CAPITAL BEVERAGE CORPORATION
FORM 10-QSB
June 30, 1998
INDEX
PART I. FINANCIAL INFORMATION
PAGE
Item 1. Financial Statements (Unaudited) NUMBER
Balance sheets as of June 30, 1998 and December 31, 1997 3
Statements of Operations for the three-month periods
ended June 30, 1998 and 1997 and the six month
periods ended June 30, 1998 and 1997 4
Statements of Cash Flows for the six-month periods
ended June 30, 1998 and 1997 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operation 7
PART II.OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
2
<PAGE>
CAPITAL BEVERAGE CORPORATION, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments
which, in the opinion of management, are necessary for a fair
presentation of the financial position and the results of operations
for the interim periods presented.
Certain financial information which is normally included in
financial statements is prepared in accordance with generally accepted
accounting principles, but which is not required for interim reporting
purposes has been condensed or omitted. The accompanying financial
statements should be read in conjunction with the financial statements
and notes thereto contained in the Company's Annual Report on Form
10-KSB.
-6-
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis provides information
which management believes is relevant to an assessment and
understanding of the Company's results of operations and financial
condition. This discussion should be read in conjunction with the
financial statements and notes thereto appearing elsewhere herein.
a. Results of Operations
Sales for the six months ended June 30, 1998 were $4,712,128
as compared to sales of $5,635,837 for the six months ended June 30,
1997. Sales for the quarter ended June 30, 1998 were $2,488,413 as
compared to sales of $3,755,798 for the quarter ended June 30, 1997.
The cost of goods sold as a percentage of sales for the six month
period in 1998 period was 92% as compared to 87% for the comparable
1997 period. The increase in cost of goods sold, as a percentage of
sales for the six months ended June 30, 1998, is due primarily to
discounting which the Company needed to maintain to be competitive both
on an intrabrand and interbrand brand basis with other wholesalers.
Selling, general and administrative expenses for the six month
period ended June 30, 1998 were $863,913 as compared to $741,020 for
the respective 1997 period. The increase in the six month period ended
June 30, 1998 is due to the hiring of sales and shipping personnel for
the upcoming busy season, fees with respect to being a public company
and increases in employee benefits and payroll taxes.
Interest expense for the six month period ended June 30, 1998
was $29,436 as compared to $53,960 for the respective 1997 period. The
decrease in the six month period ended June 30, 1998 is due to the
reduction of debt. Interest income of $62,376 resulted from interest
earned on cash proceeds received from the public offering of the
Company's stock.
b. Liquidity and Capital Resources
Cash used in operations for the first quarter of 1998 was
$374,808. The increase in prepaid expenses of $170,906 and inventories
of $266,729 was offset by a $358,740 decrease in accounts receivable
and a $74,684 increase in accounts payable and accrued expenses.
Working capital decreased from $3,706,851 at December 31, 1997
to $3,113,246 at June 30, 1998 as a result of the cash required in
operating activities.
At June 30, 1998, the Company's primary sources of liquidity
were $2,436,060 in cash, $496,732 in accounts receivable, $693,019 in
inventories, and $180,454 in prepaid and other expenses.
Management believes it has sufficient sources of working
capital to adequately meet the Company's needs through the end of 1998.
-7-
<PAGE>
c. Year 2000
The Company recognizes that a challenging problem exists in
that many computer systems worldwide do not have the capability of
recognizing the year 2000 or the years thereafter. No easy
technological "quick fix" has yet been developed for this problem.
While the issue is not of significance for the Company because of its
minimal reliance on computers, this "Year 2000 Computer Problem"
creates risk for the Company from unforeseen problems in its own
computer systems and from third parties with whom the Company deals.
Such failures of third parties' computer systems could have a material
adverse effect on the Company and its ability to conduct its business
in the future.
-8-
<PAGE>
PART II - OTHER INFORMATION
Item 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
June 30, 1998.
-9-
<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 thereunto duly authorized.
CAPITAL BEVERAGE CORPORATION
Date: August 12, 1998
Carmine N. Stella, President and
Chief Executive Officer,
as Registrant's duly authorized
officer
Carol Russell,
Secretary and Treasurer
-10-
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
(Replace this text with the legend)
</LEGEND>
<CIK> 0001020186
<NAME> CAPITAL BEVERAGE CORPORATION
<MULTIPLIER> 1
<CURRENCY> DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,436,060
<SECURITIES> 0
<RECEIVABLES> 536,732
<ALLOWANCES> 40,000
<INVENTORY> 693,019
<CURRENT-ASSETS> 3,806,265
<PP&E> 69,460
<DEPRECIATION> 19,085
<TOTAL-ASSETS> 5,059,930
<CURRENT-LIABILITIES> 547,777
<BONDS> 0
0
3,000
<COMMON> 2,379
<OTHER-SE> 3,912,427
<TOTAL-LIABILITY-AND-EQUITY> 5,059,930
<SALES> 4,712,128
<TOTAL-REVENUES> 4,712,128
<CGS> 4,328,669
<TOTAL-COSTS> 4,328,669
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,436
<INCOME-PRETAX> (447,514)
<INCOME-TAX> 5,203
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (452,717)
<EPS-PRIMARY> (0.21)
<EPS-DILUTED> 0
</TABLE>
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