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, 2000
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
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(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 16, 2000 was 2,378,409 shares.
<PAGE>
CAPITAL BEVERAGE CORPORATION
FORM 10-QSB
June 30, 2000
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet as of June 30, 2000 F-2
Statement of Operations for the six-months
ended June 30, 2000 and 1999 F-3
Statement of Cash Flows for the six-months
ended June 30, 2000 and 1999 F-4
Note to Financial Statements F-5
Item 2. Management's Discussion and Analysis or plan of operations F6-7
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K F-8
Signatures F-9
Financial Data Schedule F-10
<PAGE>
CAPITAL BEVERAGE CORPORATION
CONSOLIDATED BALANCE SHEET
JUNE 30, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 979,751
Accounts receivable -
trade, net of allowance for doubtful accounts of $45,000 985,834
Inventories 958,777
Prepaid expenses and other 191,574
-----------
TOTAL CURRENT ASSETS 3,115,936
PROPERTY AND EQUIPMENT,
less accumulated depreciation of $42,447 103,174
OTHER ASSETS:
Intangible assets, less accumulated amortization of $680,000 880,000
Other assets 3,290
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$ 4,102,400
============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 876,895
Accrued expenses and taxes 207,977
Current portion of long-term debt 77,576
Current portion of capital lease obligations 8,882
Accrued dividends on preferred stock 396,113
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TOTAL CURRENT LIABILITIES 1,567,443
------------
CAPITAL LEASE OBLIGATIONS 40,917
LONG-TERM DEBT 445,626
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 (3,322,538)
------------
TOTAL STOCKHOLDERS' EQUITY 2,048,414
------------
$ 4,102,400
============
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
CAPITAL BEVERAGE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------------------------- ----------------------------------
2000 1999 2000 1999
-----------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES $ 4,614,009 $ 3,366,881 $ 8,684,829 $ 5,361,103
COST OF GOODS SOLD 3,749,819 2,589,138 7,227,615 4,218,041
------------- ------------- -------------- -------------
GROSS PROFIT 864,190 777,743 1,457,214 1,143,062
------------- ------------- -------------- -------------
OPERATING EXPENSES
Selling and delivery 408,899 203,235 784,657 361,448
General and administrative 476,256 567,093 967,439 1,045,784
------------- ------------- -------------- -------------
885,155 770,328 1,752,096 1,407,232
------------- ------------- -------------- -------------
LOSS FROM OPERATIONS (20,965) 7,415 (294,882) (264,170)
INTEREST EXPENSE (12,569) (13,321) (25,298) (26,837)
INTEREST INCOME 8,560 18,560 19,230 38,807
------------- ------------- -------------- -------------
NET LOSS (24,974) (52,846) (300,950) (252,200)
PREFERRED STOCK DIVIDENDS (21,000) (21,000) (42,000) (42,000)
------------- ------------- -------------- -------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (45,974) $ (73,846) $ (342,950) $ (294,200)
============== ============== ============== =============
LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.02) $ (0.03) $ (0.14) $ (0.12)
============== ============== ============== =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 2,378,409 2,378,409 2,378,409 2,378,409
============== ============== ============== =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
CAPITAL BEVERAGE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
Six Months Ended June 30,
-------------------------
2000 1999
------------- -----------
(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (300,950) $ (252,200)
----------- -----------
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization 88,933 84,077
Changes in assets and liabilities:
Increase in accounts receivable (282,237) (93,838)
Increase in inventories (2,123) (331,315)
Increase (decrease) in prepaid expenses (56,476) 24,691
Decrease in other assets 36,567 72,372
Increase in accounts payable and accrued expenses 638,829 327,336
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423,493 83,323
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NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES 122,543 (168,877)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (20,549) (47,915)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of capital lease obligations 16,165 -
Decrease in note payable (36,342) (33,328)
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NET CASH USED IN BY FINANCING ACTIVITIES (20,177) (33,328)
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NET (DECREASE) INCREASE IN CASH 81,817 (250,120)
CASH - BEGINNING OF PERIOD 897,934 2,088,741
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CASH - END OF PERIOD 979,751 1,838,621
========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest 25,298 26,837
========== ============
Cash paid for income taxes $ - $ -
========== ============
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
CAPITAL BEVERAGE CORPORATION
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 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.
2. SUBSEQUENT EVENT
A dividend in the amount of $399,613 was declared by the Board
of Directors to be paid on July 14, 2000, for all of the outstanding
shares of the Corporation's 7% cumulative convertible preferred stock.
F-5
<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 herein are also subject generally to
other risks and uncertainties 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 six months ended June 30, 2000 were $8,684,829 as compared
to sales of $5,361,103 for the six months ended June 30, 1999. The increase in
the six months ended June 30, 2000 resulted from the addition of the popular
Heineken brand as well as the addition of the Hansen Beverage line to our
portfolio of products. The cost of goods sold as a percentage of sales for the
six-month period in 2000 was 83% as compared to 79% for the comparable 1999
period. The increase in cost of goods sold as a percentage of sales for the
six months ended June 30,2000, 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 six-month period
ended June 30, 2000 were $1,752,096 as compared to $1,407,232 for the
respective 1999 period. The increase in the six months ended June 30, 2000
results from the increased cost to deliver the substantially higher sales
generated in this period.
Interest expense for the six-month period ended June 30, 2000 was
$25,298 as compared to $26,837 for the respective 1999 period. The decrease in
the six-month period ended June 30, 2000 is due to the reduction of debt.
Interest income for the six-month period ended June 30, 2000 was $19,230 as
compared to $38,807 for the respective 1999 period. The decrease in the
six-month period resulted from the decrease in average cash balance invested
in the Vista account.
F-6
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Cash used in operations for the six months ended June 30, 2000
was $122,543. The increase in inventories of $2,123 was offset by an
increase in accounts payable and accrued expenses of $638,829.
Working capital decreased from $1,812,050 at December 31, 1999 to
1,548,493 at June 30, 2000 as a result of the losses incurred in
operations.
At June 30, 2000, the Company's primary sources of liquidity were
$979,751 in cash, $985,834 in accounts receivable and $958,777 in
inventories.
Management believes it has sufficient sources of working capital
to adequately meet the Company's needs through the end of 2000.
F-7
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
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, 2000.
F-8
<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 15, 2000 /s/Carmine N. Stella, President
Carmine N. Stella, President
and Chief Executive Officer,
as Registrant's duly authorized
officer
/s/Carol Russell
Carol Russell
Secretary and Treasurer
F-9
