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 September 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
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CAPITAL BEVERAGE CORPORATION
----------------------------
(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 November 13, 2000 was 2,678,409 shares.
<PAGE>
CAPITAL BEVERAGE CORPORATION
FORM 10-QSB
September 30, 2000
INDEX
PAGE
NUMBER
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
Balance Sheet as of September 30, 2000 F-2
Statement of Operations for the nine-months and
three months ended September 30, 2000 and 1999 F-3
Statement of Cash Flows for the nine-months
ended September 30, 2000 and 1999 F-4
Notes to Financial Statements F-5
Item 2. Management's Discussion and Analysis or Plan of Operations 1-2
PART II. OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K 3
Signatures 4
Financial Data Schedule
<PAGE>
CAPITAL BEVERAGE CORPORATION
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 2000
(UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash $ 230,963
Accounts receivable -
trade, net of allowance for doubtful accounts of $40,000 764,393
Inventories 821,177
Prepaid expenses and other 332,210
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TOTAL CURRENT ASSETS 2,148,743
PROPERTY AND EQUIPMENT,
less accumulated depreciation of $52,087 268,482
OTHER ASSETS:
Intangible assets, less accumulated amortization of $760,000 840,000
Other assets 3,290
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$ 3,260,515
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 583,433
Accrued expenses and taxes 227,362
Current portion of long-term debt 116,414
Current portion of capital lease obligations 38,960
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TOTAL CURRENT LIABILITIES 966,169
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CAPITAL LEASE OBLIGATIONS 176,157
LONG-TERM DEBT 425,156
STOCKHOLDERS' EQUITY:
Common stock, $ .001 par value; authorized 20,000,000 shares;
issued and outstanding 2,678,409 shares 2,679
Additional paid-in capital 5,368,273
Accumulated deficit (3,677,919)
------------
TOTAL STOCKHOLDERS' EQUITY 1,693,033
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$ 3,260,515
============
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 September 30, Nine Months Ended September 30,
---------------------------------------------- ----------------------------------
2000 1999 2000 1999
-----------------------------------------------------------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
SALES $ 4,560,450 $ 4,030,213 $ 13,245,279 $ 9,391,316
COST OF GOODS SOLD 4,071,027 3,267,224 11,298,642 7,485,265
------------- ------------- -------------- -------------
GROSS PROFIT 489,423 762,989 1,946,637 1,906,051
------------- ------------- -------------- -------------
OPERATING EXPENSES
Selling and delivery 406,726 333,081 1,191,383 694,529
General and administrative 527,358 509,619 1,494,797 1,555,403
------------- ------------- -------------- -------------
934,084 842,700 2,686,180 2,249,932
------------- ------------- -------------- -------------
LOSS FROM OPERATIONS (444,661) (79,711) (739,543) (343,881)
INTEREST EXPENSE (26,646) (13,544) (40,190) (40,381)
OTHER INCOME 100,000 - 100,000 -
INTEREST INCOME 9,987 17,344 27,331 56,151
------------- ------------- -------------- -------------
NET LOSS (361,320) (75,911) (652,402) (328,111)
PREFERRED STOCK DIVIDENDS (3,500) (21,000) (45,500) (63,000)
------------- ------------- -------------- -------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (364,820) $ (96,911) $ (697,902) $ (391,111)
============== ============== ============== =============
LOSS PER COMMON SHARE - BASIC AND DILUTED $ (0.14) $ (0.04) $ (0.28) $ (0.16)
============== ============== ============== =============
WEIGHTED AVERAGE NUMBER OF COMMON SHARES 2,678,409 2,378,409 2,478,409 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)
Nine Months Ended September 30,
-------------------------------
2000 1999
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(Unaudited) (Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (652,402) $ (328,111)
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Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 139,609 127,841
Changes in assets and liabilities:
Increase in accounts receivable (60,796) (341,373)
(Increase) decrease in inventories 135,477 (294,956)
(Increase) decrease in prepaid expenses (197,112) 31,843
Decrease in other assets 36,567 72,372
Increase in accounts payable and accrued expenses 364,323 303,278
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418,068 (100,995)
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NET CASH USED IN OPERATING ACTIVITIES (234,334) (429,106)
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CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures (4,121) (49,322)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of capital lease obligations (10,929) -
Payment of accrued dividends on preferred stock (399,613) -
Decrease in note payable (17,974) (50,541)
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NET CASH USED IN BY FINANCING ACTIVITIES (428,516) (50,541)
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NET DECREASE IN CASH (666,971) (528,969)
CASH - BEGINNING OF PERIOD 897,934 2,088,741
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CASH - END OF PERIOD 230,963 1,559,772
========== ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION:
Cash paid for interest 40,190 26,837
========== ============
Cash paid for income taxes $ - $ -
========== ============
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
CAPITAL BEVERAGE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 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. STOCKHOLDERS' EQUITY
On July 6, 2000, the holder of 300,000 shares of 7% Cumulative
Convertible Preferred Stock, Series B, $.01 par value of Capital
Beverage Corporation (the "Company") converted those shares into
300,000 shares of the Company's common stock, $.001 par value.
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 nine months ended September 30, 2000 were $13,245,279 as
compared to sales of $9,391,316 for the nine months ended September 30, 1999.
The increase in the nine months ended September 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 nine-month period in 2000 was 85% as compared to
80% for the comparable 1999 period. The increase in cost of goods sold as a
percentage of sales for the nine months ended September 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 nine-month period
ended September 30, 2000 were $2,686,180 as compared to $2,249,932 for the
respective 1999 period. The increase in the nine months ended September 30,
2000 results from the increased cost to deliver the substantially higher sales
generated in this period.
Interest expense for the nine-month period ended September 30, 2000 was
$40,190 as compared to $40,381 for the respective 1999 period. The decrease in
the nine-month period ended September 30, 2000 is due to the reduction of
debt. Interest income for the nine-month period ended September 30, 2000 was
$27,331 as compared to $56,151 for the respective 1999 period. The decrease in
the nine-month period resulted from the decrease in average cash balance
invested in the Vista account.
1
<PAGE>
Liquidity and Capital Resources
Cash used in operations for the nine months ended September 30,
2000 was $234,334. The decrease in inventories of $135,477 was due to the
sales volume being greater than the cost of goods available for the
period.
Working capital decreased from $1,812,050 at December 31, 1999 to
1,182,574 at September 30, 2000 as a result of the losses incurred in
operations.
At September 30, 2000, the Company's primary sources of liquidity
were $230,963 in cash, $764,393 in accounts receivable and $821,177 in
inventories.
Management believes it has sufficient sources of working capital
to adequately meet the Company's needs through the end of 2000.
2
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
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Not applicable
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
-----------------------------------------
On July 6, 2000, the holder of 300,000 shares of 7% Cumulative
Convertible Preferred Stock, Series B, $.01 par value of Capital
Beverage Corporation (the "Company") converted those shares into
300,000 shares of the Company's common stock, $.001 par value.
Item 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
Not applicable
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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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
September 30, 2000.
3
<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: November 20, 2000 /s/Carmine N. Stella, President and
Chief Executive Officer,
as Registrant's duly authorized officer
/s/Carol Russell,
Secretary and Treasurer
4
