<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 March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-13181
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CAPITAL BEVERAGE CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3878747
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1111 East Tremont Avenue, Bronx, New York 10460
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(Address of Principal Executive Office) (Zip Code)
(718) 409-2337
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(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
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The number of shares of registrant's Common Stock, $.001 par value,
outstanding as of May 15, 2000 was 2,378,409 shares.
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CAPITAL BEVERAGE CORPORATION
FORM 10-QSB
March 31, 2000
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet as of March 31, 2000 3
Statement of Operations for the three-months
ended March 31, 2000 and 1999 4
Statement of Cash Flows for the three-months
ended March 31, 2000 and 1999 5
Note to Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of Operations 7-8
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 9
Signatures 10
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CAPITAL BEVERAGE CORPORATION
CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 781,107
Accounts receivable - trade,
net of allowance for doubtful accounts of $75,000 892,360
Inventories 1,309,970
Prepaid expenses and other 173,487
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TOTAL CURRENT ASSETS 3,156,924
PROPERTY AND EQUIPMENT, less accumulated depreciation of $37,638 107,982
OTHER ASSETS:
Intangible assets, less accumulated amortization of $680,000 920,000
Deposits 3,290
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$4,188,196
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 949,333
Accrued expenses and taxes 175,527
Current portion of long-term debt 75,918
Current portion of capital lease obligations 6,472
Accrued dividends on preferred stock 375,113
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TOTAL CURRENT LIABILITIES 1,582,363
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CAPITAL LEASE OBLIGATIONS 45,793
LONG-TERM DEBT 465,652
STOCKHOLDERS' EQUITY:
7% Cumulative Series B Preferred Stock,
par value $.01; issued and outstanding
300,000 shares (Liquidation value $1,200,000) 3,000
Common stock, $ .001 par value; authorized 20,000,000 shares;
issued and outstanding 2,378,409 shares 2,379
Additional paid-in capital 5,365,573
Accumulated deficit (3,276,564)
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TOTAL STOCKHOLDERS' EQUITY 2,094,388
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$4,188,196
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The accompanying note is an integral part of the
financial statements.
3
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CAPITAL BEVERAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31,
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2000 1999
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(Unaudited) (Unaudited)
SALES $ 4,070,820 $ 1,994,222
COST OF GOODS SOLD 3,477,796 1,628,903
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GROSS PROFIT 593,024 365,319
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OPERATING EXPENSES
Selling and delivery 375,758 158,213
General and administrative 491,183 478,691
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866,941 636,904
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LOSS FROM OPERATIONS (273,917) (271,585)
INTEREST EXPENSE (12,729) (13,516)
INTEREST INCOME 10,670 20,247
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NET LOSS (275,976) (264,854)
PREFERRED STOCK DIVIDENDS (21,000) (21,000)
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NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (296,976) $ (285,854)
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LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.12) $ (0.12)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES . 2,378,409 2,378,409
=========== ==========
The accompanying note is an integral part of the
financial statements.
4
<PAGE>
CAPITAL BEVERAGE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Three Months Ended March 31,
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2000 1999
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(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (275,976) $ (264,854)
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Adjustments to reconcile net
loss to net cash (used in) provided by
operating activities:
Depreciation and amortization 44,124 41,634
Changes in assets and liabilities:
Increase in accounts receivable (188,763) (23,592)
Increase (decrease) in inventories (353,316) 113,905
Increase (decrease) in prepaid expenses (38,389) 20,887
Decrease in other assets 36,567 --
Increase in accounts payable and accrued expenses 678,446 172,346
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178,669 325,180
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NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (97,307) 60,326
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures -- (8,386)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of capital lease obligations (1,546) --
Decrease in note payable (17,974) (16,484)
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NET CASH USED IN BY FINANCING ACTIVITIES (19,520) (16,484)
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NET (DECREASE) INCREASE IN CASH (116,827) 35,456
CASH - BEGINNING OF PERIOD 897,934 2,088,741
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CASH - END OF PERIOD $ 781,107 $2,124,197
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest $ 12,727 $ 13,516
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Cash paid for income taxes $ 30,727 $ --
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The accompanying note is an integral
part of the financial statements.
5
<PAGE>
CAPITAL BEVERAGE CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(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.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN 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.
Statements in this Form 1O-QSB that are not statements of historical
or current fact constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements involve known and unknown risks,
uncertainties and other unknown factors that could cause the actual
results of the Company to be materially different from the historical
results or from any future results expressed or implied by such
forward-looking statements. In addition to statements that explicitly
describe such risks and uncertainties, readers are urged to consider
statements labeled with the terms "believes," "belief," "expects,"
"intends," "anticipates" or "plans" to be uncertain and
forward-looking. The forward- looking statements contained erein are
also subject generally to other risks and unc ertainties that are
described from time to time in the Company's reports and registration
statements filed with the Securities and Exchange Commission.
Results of Operations
Sales for the three months ended March 31, 2000 were $4,070,820 as
compared to sales of $1,994,222 for the three months ended March 31,
1999. The increase in the three months ended March 31, 2000 resulted
from the addition of the popular Heineken brand. The cost of goods
sold as a percentage of sales for the three-month period in 2000 was
85% as compared to 82% for the comparable 1999 period. The increase in
cost of goods sold as a percentage of sales for the three months ended
March 31,2000, is due primarily to the addition of the Heineken brand
which sold as a lead item at a lower gross margin than products in our
primary brand portfolio.
Selling, general and administrative expenses for the three-month
period ended March 31, 2000 were $866,941 as compared to $636,904 for
the respective 1999 period. The increase in the three months ended
March 31, 2000 results from the increased cost to deliver the
substantially higher sales generated in this period.
Interest expense for the three-month period ended March 31,2000 was
$12,729 as compared to $13,516 for the respective 1999 period. The
decrease in the three-month period ended March 31,2000 is due to the
reduction of debt. Interest income for the three-month period ended
March 31, 2000 was $10,670 as compared to $20,247 for the respective
1999 period. The decrease in the three-month period resulted from the
decrease in average cash balance invested in the Vista account.
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<PAGE>
Liquidity and Capital Resources
Cash used in operations for the three months ended March 31, 2000 was
$97,307. The increase in inventories of $353,316 was offset by an
increase in accounts payable and accrued expenses of $678,446.
Working capital decreased from $1,812,050 at December 31, 1999 to
1,574,561 at March 31, 2000 as a result of the losses incurred in
operations.
At March 31, 2000, the Company's primary sources of liquidity were
$781,107 in cash, $892,360 in accounts receivable and $1,309,970 in
inventories.
Management believes it has sufficient sources of working capital to
adequately meet the Company's needs through the end of 2000.
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<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
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Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
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Not applicable
Item 3. DEFAULTS UPON SENIOR SECURITIES
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Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not applicable
Item 5. OTHER INFORMATION
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Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
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(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
March 31, 2000.
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<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: May 15, 2000 /s/Carmine N. Stella, President and
Chief Executive Officer,
as Registrant's duly authorized officer
/s/Carol Russell,
Secretary and Treasurer
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0001020186
<NAME> CAPITAL BEVERAGE CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S.DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 781,107
<SECURITIES> 0
<RECEIVABLES> 967,360
<ALLOWANCES> 75,000
<INVENTORY> 1,309,970
<CURRENT-ASSETS> 3,156,924
<PP&E> 112,106
<DEPRECIATION> 4,124
<TOTAL-ASSETS> 4,188,196
<CURRENT-LIABILITIES> 1,582,363
<BONDS> 0
0
3,000
<COMMON> 2,379
<OTHER-SE> 2,089,009
<TOTAL-LIABILITY-AND-EQUITY> 4,188,196
<SALES> 4,070,820
<TOTAL-REVENUES> 4,070,820
<CGS> 3,477,796
<TOTAL-COSTS> 3,477,796
<OTHER-EXPENSES> 866,941
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (12,729)
<INCOME-PRETAX> (275,976)
<INCOME-TAX> 0
<INCOME-CONTINUING> (275,976)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (275,976)
<EPS-BASIC> (0.12)
<EPS-DILUTED> (0.12)
</TABLE>
