<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1998
Commission File Number 1-12599
VITA FOOD PRODUCTS, INC.
-----------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
NEVADA #36-3171548
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2222 WEST LAKE STREET
CHICAGO, ILLINOIS 60612 (312) 738-4500
- ----------------------- -------------------------
(Address of principal Issuer's telephone number
executive offices)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
------ ------
Number of shares outstanding of Issuer's common stock, par value $.01 per
share, as of November 9, 1998 is 3,702,036.
Transitional Small Business Disclosure Format: Yes No X
------ ------
<PAGE> 2
VITA FOOD PRODUCTS, INC.
REPORT ON FORM 10-QSB FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
INDEX
I. FINANCIAL INFORMATION:
Item 1. Financial Statements (unaudited)
Balance Sheets .................................. 3
Statements of Operations......................... 5
Statements of Shareholders' Equity............... 6
Statements of Cash Flows ........................ 7
Notes to Financial Statements ................... 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ............. 8
II. OTHER INFORMATION ....................................... 10
2
<PAGE> 3
VITA FOOD PRODUCTS, INC.
BALANCE SHEETS
===============================================================================
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 38,027 $ 107,933
Accounts receivable-trade, net of allowance for discounts,
returns, and doubtful accounts of $361,141 in 1998 and 2,583,207 3,560,519
$322,000 in 1997
Federal income tax receivable 10,000 250,000
Inventories
Raw material and supplies 2,258,635 2,650,805
Work in process 131,395 135,157
Finished goods 2,123,383 1,516,246
Prepaid expenses and other current assets 252,304 262,533
Deferred income taxes 553,426 200,000
- ------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 7,950,377 8,683,193
- ------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
Building and Improvements 1,440,060 1,399,077
Machinery and Office Equipment 4,566,926 4,473,138
- ------------------------------------------------------------------------------------------------------
6,006,986 5,872,215
Less accumulated depreciation and amortization (3,910,043) (3,657,788)
- ------------------------------------------------------------------------------------------------------
2,096,943 2,214,427
Land 35,000 35,000
- ------------------------------------------------------------------------------------------------------
NET PROPERTY, PLANT & EQUIPMENT 2,131,943 2,249,427
- ------------------------------------------------------------------------------------------------------
OTHER ASSETS 341,739 215,444
- ------------------------------------------------------------------------------------------------------
$10,424,059 $11,148,064
- ------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 4
VITA FOOD PRODUCTS, INC.
BALANCE SHEETS
================================================================================
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1998 1997
(UNAUDITED) (AUDITED)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term obligations $ 348,119 $ 322,076
Accounts payable 1,595,659 1,488,241
Accrued other expenses 1,436,855 1,566,182
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 3,380,633 3,376,499
- ----------------------------------------------------------------------------------------------------------------------------
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 4,883,579 4,953,242
- ----------------------------------------------------------------------------------------------------------------------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, authorized 1,000,000
shares; none issued
Common stock, $.01 par value; authorized 10,000,000 shares;
issued and outstanding 3,702,036 shares in 1998 and 37,020 37,000
3,700,000 shares in 1997
Additional paid in capital 3,351,610 3,348,273
Retained Earnings (1,228,783) (566,950)
- ----------------------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 2,159,847 2,818,323
- ----------------------------------------------------------------------------------------------------------------------------
$10,424,059 $11,148,064
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 5
VITA FOOD PRODUCTS, INC.
STATEMENTS OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
FOR THREE MONTHS ENDED FOR NINE MONTHS ENDED
--------------------------------------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET SALES 5,159,443 5,168,857 14,753,639 13,903,421
COST OF GOODS SOLD 3,680,989 3,867,008 10,839,788 10,240,032
------------------------------------------------------------------------------------------------
Gross Margin 1,478,454 1,301,849 3,913,851 3,663,389
------------------------------------------------------------------------------------------------
SELLING, MARKETING AND
ADMINISTRATIVE EXPENSES
Selling and Marketing 1,213,998 1,147,630 3,294,681 3,162,646
Administrative 397,788 471,999 1,346,783 1,363,496
------------------------------------------------------------------------------------------------
1,611,786 1,619,629 4,641,464 4,526,142
------------------------------------------------------------------------------------------------
Operating Profit (Loss) (133,332) (317,780) (727,613) (862,753)
------------------------------------------------------------------------------------------------
OTHER (INCOME) EXPENSE
------------------------------------------------------------------------------------------------
Interest 90,761 105,134 287,646 271,403
------------------------------------------------------------------------------------------------
90,761 105,134 287,646 271,403
------------------------------------------------------------------------------------------------
Income (loss) before Income Tax
Expense (benefit) (224,093) (422,914) (1,015,259) (1,134,156)
INCOME TAX EXPENSE (BENEFIT) (115,000) (115,978) (353,426) (446,137)
------------------------------------------------------------------------------------------------
NET INCOME (LOSS) ($109,093) ($306,936) ($661,833) (688,019)
------------------------------------------------------------------------------------------------
BASIC AND DILUTED EARNINGS (LOSS)
PER SHARE (0.03) (0.08) (0.18) (0.19)
------------------------------------------------------------------------------------------------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 3,702,036 3,700,000 3,700,679 3,656,000
------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
VITA FOOD PRODUCTS, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
COMMON STOCK
--------------------------- ADDITIONAL
PAID-IN RETAINED
AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, at January 1, 1997 2,950,000 $29,500 $ 196,000 $ 360,635 $ 586,135
Net proceeds from initial public offering 750,000 $ 7,500 $3,152,273 - $ 3,159,773
Net income (loss) - - - ($688,019) ($688,019)
-------------------------------------------------------------------------------------------------------------------------------
Balance, at September 30, 1997 3 700,000 $37,000 $3,348,273 ($327,384) $ 3,057,889
-------------------------------------------------------------------------------------------------------------------------------
Balance, at January 1, 1998 3,700,000 $37,000 $3,348,273 ($566,950) $ 2,818,323
Proceeds from stock purchase and
stock option plans 2,036 $ 20 $ 3,337 $ 3,357
Net income (loss) ($661,833) ($661,833)
-------------------------------------------------------------------------------------------------------------------------------
Balance, at September 30, 1998 3,702,036 $37,020 $3,351,610 ($1,228,783) $ 2,159,847
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 7
VITA FOOD PRODUCTS, INC.
STATEMENTS OF CASH FLOWS
================================================================================
<TABLE>
<CAPTION>
FOR NINE MONTHS ENDED
-----------------------------------
SEPTEMBER 30, SEPTEMBER 30
1998 1997
(UNAUDITED) (UNAUDITED)
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) (661,833) (688,019)
Adjustments to reconcile Net Income (Loss) to
net cash provided by (used in) operating activities
Depreciation and amortization 253,722 210,691
Deferred income taxes (353,426) (446,137)
Changes in assets and liabilities:
Decrease (increase) in accounts 977,312 712,908
receivable
Federal tax receivable 240,000
Decrease (increase) in inventories (211,205) (247,189)
Decrease (increase) in prepaid expenses and 10,229 (81,484)
other current assets
Decrease (increase) in other assets (127,762) (122,733)
Increase (decrease) in accounts 107,418 (1,801,094)
payable
Increase (decrease) in accrued expenses (129,327) (105,308)
Increase (decrease) in income taxes payable 0 (249,482)
-------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 105,128 (2,817,847)
-------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital Expenditures (134,771) (493,626)
------------------------------------------------------------------------------------------------
Net cash used in investing activities (134,771) (493,626)
------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
------------------------------------------------------------------------------------------------
Net proceeds from initial public offering 0 3,772,801
Proceeds from stock purchase and stock option plans 3,357 0
Proceeds from (payments on) bank and other debt obligations (43,620) (510,831)
------------------------------------------------------------------------------------------------
Net cash provided by (used in financing
activities (40,263) 3,261,970
------------------------------------------------------------------------------------------------
Net Increase (decrease) in Cash (69,906) (49,503)
Cash, at beginning of period 107,933 88,221
------------------------------------------------------------------------------------------------
Cash, at end of Period 38,027 38,718
------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE> 8
VITA FOOD PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
The accompanying unaudited interim financial statements have been prepared in
accordance with the instructions for Form 10-QSB and do not include all the
information and footnotes required by generally accepted accounting principles
for complete financial statements and should be read in conjunction with the
financial statements and related notes included in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1997. In the opinion of
management, all adjustments necessary for a fair presentation of such interim
financial statements have been included. All such adjustments are of a normal
recurring nature.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This report contains forward-looking statements about the Company's future
growth, profitability and competitive position. Any such statements are
subject to risks and uncertainties, including changes in economic and market
conditions, industry competition, raw material prices, the success of new
product introductions, management of growth and other risks noted in the
Company's filings with the Securities and Exchange Commission. Readers are
cautioned not to place undue reliance on forward-looking statements, which
reflect management's analysis only as of the date hereof.
YEAR 2000
The Company has established an overall plan to address systems-related Year
2000 issues. The plan calls for testing, modification, or replacement of
several existing business system applications. The Company has tested all
critical information technology systems during the last 5 years and is
substantially satisfied that they are Year 2000 compliant. However, there can
be no assurances that after December 31, 1999, Year 2000 issues that would have
an adverse impact on the Company will not arise. The Company continues to
address less critical information technology systems for Year 2000 compliance
and expects to complete such verification and testing procedures in the first
half of 1999.
In addition, the Company has initiated surveys of critical suppliers and
customers to determine the status of the their Year 2000 compliance programs.
To date, the Company has not been made aware of any Year 2000 compliance issues
from its critical suppliers and customers that would have a material impact on
the Company's operations; however, there can be no guarantee that the failure
of these entities to address their own Year 2000 compliance issues would not
have an adverse impact on the Company. Accordingly, the Company intends to
continually update its surveys.
Management's best estimate of the cost to complete its plan is approximately
$20,000, of which less than $10,000 was incurred as of September 30, 1998.
COMPARISON OF THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND THE THREE MONTHS
ENDED SEPTEMBER 30, 1997
REVENUES. Net sales for the three months ended September 30, 1998 were
$5,159,000 compared to $5,169,000 for the same period in 1997, a decrease of
$10,000 or less than 1%. The slight decrease was attributable to a combination
of flat sales of both herring and core salmon products, a 10% decrease in the
sale of other specialty products, and a 108% increase in the sale of newer
products, which includes hommus, salmon burgers, and salmon nuggets. The large
increase in newer products is primarily attributable to the increasing
acceptance of the newer products by Vita's retail customers and end consumers.
8
<PAGE> 9
GROSS MARGIN. Gross margin for the three months ended September 30, 1998 was
$1,478,000 compared to $1,302,000 for the same period in 1997, an increase of
$176,000 or 14%. As a percentage of net sales, gross margin was 28.6% in the
three months versus 25.2% in the same period in 1997. The increase in the gross
margin percentage was attributable in part to improvements in herring and core
salmon product margins, and in part to production labor efficiencies created
and sustained during the quarter.
OPERATING EXPENSES. Selling, marketing and administrative expenses for the
three months ended September 30, 1998 were $1,612,000 compared to $1,620,000
for the same period in 1997, a decrease of $8,000 or 1%. As a percentage of net
sales, selling, marketing and administrative expenses decreased to 31.2% from
31.3% for the same period in 1997. The slight decrease in the selling,
marketing and administrative expense margin was attributable to a combination
of factors, including lower professional fees, and lower broker commissions and
distribution costs as a percentage of sales, offset to some extent by increased
promotional activity.
INTEREST EXPENSE. Interest and other expense, net, for the three months ended
September 30, 1998 was $91,000 compared to $105,000 for the same period in
1997, a decrease of $14,000 or 13%. This decrease was attributable to greater
than anticipated interest income from an outstanding tax receivable, offset to
some extent by a higher level of bank debt outstanding. The higher level of
debt was primarily a result of the net loss incurred in the prior twelve
months.
INCOME TAXES. The Company provided for an income tax benefit of $115,000 for
the three months ended September 30, 1998, compared to an income tax benefit of
$116,000 for the same period in 1997. The income tax benefits for each period
represents anticipated utilization of these tax benefits during the respective
fiscal years. The income tax benefit for the three months ended September 30,
1998 was higher as a percent of pretax income than the income tax benefit for
the three months ended September 30, 1997 because the Company expects a higher
pretax income for the year ending December 31, 1998 than it had as of June 30,
1998, resulting in a more substantial income tax benefit as a percentage of
pretax income for the quarter, as compared to the quarter ended September 30,
1997.
NET INCOME AND LOSS. Net loss for the three months ended September 30, 1998
was $109,000 or $0.03 per share compared to net loss of $307,000 or $0.08 per
share for the same period in 1997, a decrease in net loss of $198,000 or $0.05
per share.
COMPARISON OF THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND THE NINE MONTHS
ENDED SEPTEMBER 30, 1997
REVENUES. Net sales for the nine months ended September 30, 1998 were
$14,754,000 compared to $13,903,000 for the same period in 1997, an increase of
$851,000 or 6%. This increase was attributable to a combination of a 1%
increase in sales of herring products, a 6% increase in sales of core salmon
products, a 6% increase in the sale of other specialty products, and a 136%
increase in the sale of newer products, which includes hommus, salmon burgers,
and salmon nuggets. The overall increase was partially attributable to the
timing of certain customers' orders. Two customers which placed lower than
normal purchase orders in the first quarter of 1997 resumed their normal
purchasing pattern.
GROSS MARGIN. Gross margin for the nine months ended September 30, 1998 was
$3,914,000 compared to $3,663,000 for the same period in 1997, an increase of
$251,000 or 7%. As a percentage of net sales, gross margin was 26.5% in the
three months versus 26.3% in the same period in 1997. The increase in the gross
margin percentage was attributable in part to improved labor efficiencies
achieved and sustained in the third quarter of 1998, offset in part by
increased expenses to improve product quality and safety.
OPERATING EXPENSES. Selling, marketing and administrative expenses for the
nine months ended September 30, 1998 were $4,641,000 compared to $4,526,000 for
the same period in 1997, an increase of $115,000 or 3%. As a percentage of net
sales, selling, marketing and administrative expenses decreased to 31.5% from
32.6% for the same period in 1997. The increase in selling, marketing and
administrative expenses was attributable to increased distribution and
brokerage costs which are variable to sales. The decrease in the selling,
marketing and administrative expense margin was attributable to the various
fixed selling and administrative expenses which do not increase with an
increase in sales.
9
<PAGE> 10
INTEREST EXPENSE. Interest and other expense, net, for the nine months ended
September 30, 1998 was $288,000 compared to $271,000 for the same period in
1997, an increase of $17,000 or 6%. This increase was primarily attributable to
the higher level of bank debt outstanding. The higher level of debt was
primarily a result of the losses incurred in the prior twelve months.
INCOME TAXES. The Company provided for an income tax benefit of $353,000 for
the nine months ended September 30, 1998, compared to an income tax benefit of
$446,000 for the same period in 1997. The income tax benefits for each period
represents anticipated utilization of these tax benefits during the respective
fiscal years. The income tax benefit for the nine months ended September 30,
1998 was lower as a percent of pretax income than the income tax benefit for
the nine months ended September 30, 1997 because the Company expected higher
pretax income for the year ended December 31, 1997 and, accordingly, the
ability to take advantage of a more substantial income tax benefit, as compared
to the year ending December 31, 1998.
NET INCOME AND LOSS. Net loss for the nine months ended September 30, 1998 was
$662,000 or $0.18 per share compared to net loss of $688,000 or $0.19 per share
for the same period in 1997, a decrease in net loss of $26,000 or $0.01 per
share.
FINANCIAL CONDITION
Since December 31, 1997, the Company's current ratio decreased to 2.4 from 2.6.
The ratio of long-term debt-to-total capitalization increased to 69% from 64%,
as 1998 net losses required funding from the available credit facilities.
CASH FLOWS FROM OPERATING ACTIVITIES. Net cash provided by operating activities
was $105,000 for the nine months ended September 30, 1998, compared to net cash
used in operating activities of $2,818,000 for the same period in 1997. This
difference was primarily attributable to a small increase in accounts payable
in 1998 as compared to a large decrease in accounts payable in 1997, and the
receipt of a federal tax refund in 1998 compared to payment of federal taxes in
1997. The decreased payments of the Company's accounts payable was in part due
to the payments of expenses in 1997 related to the Company's initial public
offering.
CASH FLOWS FROM INVESTING ACTIVITIES. Net cash used in investing activities was
$135,000 for the nine months ended September 30, 1998, compared to $494,000 for
the same period in 1997. The decrease was primarily due to lower capital
spending on equipment in part due to an increase in equipment leasing rather
than direct purchasing.
CASH FLOWS FROM FINANCING ACTIVITIES. Net cash used in financing activities was
$40,000 for the nine months ended September 30, 1998, compared to net cash
provided of $3,262,000 for the same period in 1997. The increase in net cash
used in financing activities was attributable to the net proceeds from the
Company's initial public offering in 1997, offset by payments under the
Company's bank credit facilities.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
------- -------------
<S> <C>
(1) 3.1 Articles of Incorporation of the Company (Ex. 3.1)
</TABLE>
- -----------------
(1) Incorporated by reference to Form SB-2 Registration Statement (File No.
333-5738), filed with the Securities and Exchange Commission on September 23,
1996. Form SB-2 Exhibit number is included in parenthesis following the title
of the Exhibit.
10
<PAGE> 11
(1)3.2 By-laws of the Company (Ex. 3.2)
(1)4.1 Form of Common Stock Certificate (Ex. 4.1)
(1)4.2 Form of Representatives' Warrant Agreement between the Company and
National Securities Corporation and Access Financial Group, Inc., as
representative of the several Underwriters (the "Representatives"),
including Form of Representatives' Warrant (Ex. 4.2)
(2)4.3 Form of Warrant Agreement between the Company and American Stock
Transfer & Trust Company and the Representative, including form of
Warrant Certificate (Ex. 4.3)
(3)10.1 Loan and Security Agreement dated as of March 20, 1995 by and between
the Company and NBD Bank, as amended (Ex. 10.3)
(3)10.1.1 Second Amendment to Loan and Security Agreement (Ex. 10.1.1)
(3)10.1.2 Third Amendment to Loan and Security Agreement (Ex. 10.1.2)
(3)10.1.3 Form of Fourth Amendment to Loan and Security Agreement (Ex. 10.1.3)
(4)10.1.4 Fifth Amendment to Loan and Security Agreement (Ex. 10.1.4)
*10.1.5 Sixth Amendment to Loan and Security Agreement and Note
(1)10.2 Form of 1996 Employee Stock Option Plan (Ex. 10.4)(x)
(1)10.3 Form of 1996 Stock Option Plan for Non-Employee Directors (Ex. 10.5)(x)
(1)10.4 Form of Employment Agreement between the Company and Stephen D. Rubin
(Ex. 10.7)(x)
(1)10.5 Form of Employment Agreement between the Company and Clark L. Feldman
(Ex. 10.8)(x)
(1)10.6 Long Term Supply/Purchase Agreement dated as of September 1, 1992 by and
between the Company and Barry's Limited (Ex. 10.9)
(1)10.7 Exclusive Distributorship Agreement dated as of December 1, 1994 by and
between the Company and Brookside Products, Ltd. (Ex. 10.10)
(1)10.8 Employment Agreement between the Company and Jay H. Dembsky(x)(Ex. 10.8)
- --------------------------
(1) Incorporated by reference to Form SB-2 Registration Statement (File No.
333-5738), filed with the Securities and Exchange Commission on September 23,
1996. Form SB-2 Exhibit Number is included in parenthesis following the title
of the Exhibit.
(2) Incorporated by reference to Form SB-2 Registration Statement (File No.
333-5738), filed with the Securities and Exchange Commission on November 14,
1996. Form SB-2 Exhibit Number is included in parenthesis following the title
of the Exhibit.
(3) Incorporated by reference to Form 10-KSB for the fiscal year ended December
31, 1997, filed with the Securities and Exchange Commission on March 30, 1998.
Form 10-QSB Exhibit Number is included in parenthesis following the title of
the Exhibit.
(4) Incorporated by reference to Form 10-QSB for the fiscal quarter ended June
30, 1998, filed with the Securities and Exchange Commission on August 7, 1998.
Form 10-QSB Exhibit Number is included in parenthesis following the title of
the Exhibit.
* Filed herewith
(x) Indicates an employee benefit plan, management contract or compensatory plan
or arrangement in which a named executive officer participates.
11
<PAGE> 12
(2)10.9 Gorenstein Agreement dated September 20, 1996 by and among the Company,
Stephen D. Rubin, Clark L. Feldman, Sam Gorenstein, David Gorenstein and
J.B.F. Enterprises (Ex. 10.26)
*27.1 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter for which this
report is filed.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
VITA FOOD PRODUCTS, INC.
Date: November 9, 1998 By: //Stephen D. Rubin//
--------------------
Stephen D. Rubin
President
Date: November 9, 1998 By: //Jay H. Dembsky//
------------------------
Jay H. Dembsky
Vice President and Chief
Financial Officer
(Principal Financial and
Accounting Officer)
12
<PAGE> 1
EXHIBIT 10.1.5
SIXTH AMENDMENT TO LOAN AND SECURITY AGREEMENT
This Sixth Amendment to Loan and Security Agreement, dated as of September
30, 1998 (this "Sixth Amendment") by and between Vita Food Products, Inc., a
Nevada corporation, (herein the "Borrower"), and American National Bank and
Trust Company of Chicago, a national banking association, and successor to NBD
Bank (the "Bank");
WITNESSETH
WHEREAS, the Borrower and the Bank have heretofore entered into a Loan and
Security Agreement dated as of March 20, 1995 (as amended, extended, modified
or supplemented from time to time the "Credit Agreement"), pursuant to which
the Bank has agreed to consider making certain loans to the Borrower pursuant
to the terms and on the conditions set forth therein;
WHEREAS, the Borrower and the Bank mutually desire to further amend the
Credit Agreement to revise certain provisions thereof;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties hereto agree as follows:
1. (a) Section 2.1 of the Credit Agreement is amended by deleting the
number "$4,750,000" on the twelfth line thereof and inserting in its place the
number "$5,250,000."
(b) Section 2.3 of the Credit Agreement is amended by deleting the
number "$4,750,000" contained on the fourth line thereof and inserting in its
place the number "$5,250,000."
(c) Exhibit 1, of the Credit Agreement is amended and restated in its
entirety by the Amended and Restated Revolving Note appearing as Schedule I
hereto and all references to the Revolving Note contained in the Credit
Agreement shall mean and be references to said Amended and Restated Revolving
Note.
2. Borrower agrees that it shall further execute and deliver to the Bank a
replacement Revolving Note in the form of Schedule I hereto together with
additional or further documents, including without limitation, any amended or
replacement notes, necessary to further effectuate the intent and purpose of
the Credit Agreement and this Sixth Amendment.
3. Borrower represents and warrants that:
(a) The execution, delivery and performance of this Sixth Amendment and
the replacement Revolving Note by the Borrower is within its corporate powers,
has been duly authorized, and is not in contravention of any law, rule or
regulation, or any judgment, decree,
<PAGE> 2
writ, injunction, or order or award of an arbitrator, court or governmental
authority, or of the terms of its Articles of Incorporation or By-Laws or of
any contract to which it or its property may be bound or affected.
(b) The Borrower is a corporation duly organized, validly existing and
in good standing under the Laws of the State of Nevada, and is duly qualified to
do business, and is in good standing, in all additional jurisdictions where
such qualification is necessary under applicable law. Borrower has all
requisite corporate power to execute and deliver this Sixth Amendment. The
Credit Agreement, as amended by this Sixth Amendment, and the replacement
Revolving Note are each valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their terms.
(c) The most recent financial statements delivered to the Bank in
accordance with the Credit Agreement are complete and accurate in all material
respects and present fairly the financial condition of the Borrower as of such
date and the results of its operations for the periods covered thereby, in
accordance with generally accepted accounting principles. There has been no
material adverse change in the condition of the Borrower, financial or
otherwise, since the date of such statements.
(d) After giving effect to the amendments contained herein, the
representations and warranties contained in the Credit Agreement are true on
and as of the date hereof with the same force and effect as if made on and as
of the date hereof.
4. This Sixth Amendment shall be governed by and construed in accordance
with the laws of the State of Illinois without reference to conflict of laws
principles.
5. Except as specifically amended hereby, the Credit Agreement, and any
and all certificates, instruments and other documents executed pursuant thereto
shall in all respects continue in full force and effect. Except as otherwise
expressly defined herein, all terms used in this Sixth Amendment shall have the
respective meanings set forth in the Credit Agreement.
Witness the due execution hereof as of this 30th day of September, 1998, which
shall be the effective date of this Sixth Amendment, notwithstanding the day
and year first above written.
American National Bank Vita Food Products, Inc.
and Trust Company Of Chicago
By: /s/ Robin Petix By: /s/ Jay H. Dembsky
-------------------------------- -------------------------------------
Its: Assistant Vice President Its: Vice President and CFO
----------------------------- -----------------------------------
<PAGE> 3
AMENDED AND RESTATED REVOLVING NOTE
$5,250,000 September 30, 1998
Chicago, Illinois
FOR VALUE RECEIVED, VITA FOOD PRODUCTS, INC., a Nevada corporation
("Maker"), hereby promises to pay to the order of American National Bank and
Trust Company of Chicago, a national banking association, and successor to NBD
BANK, ("Lender"), the principal sum of FIVE MILLION TWO HUNDRED FIFTY THOUSAND
AND NO/1OO DOLLARS ($5,250,000), or such lesser sum as is indicated on Lender's
records, together with interest thereon and any other charges applicable
thereto, all as set forth more fully in the Loan and Security Agreement
referred to below.
This Note is delivered by Maker to Lender pursuant to and in accordance
with that certain Loan and Security Agreement dated as of March 20, 1995 (as
amended, extended, modified or supplemented from time to time, the "Loan and
Security Agreement") by and between Maker and Lender and to evidence the
Revolving Loans (this term and all other capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to them in the Loan
and Security Agreement). Reference is hereby made to the Loan and Security
Agreement, the terms and conditions of which are incorporated herein by
reference as fully and with the same effect as if set forth herein at length.
Interest shall accrue on the outstanding principal balance of the
Revolving Loans at a pre-Default rate per annum equal to the Prime Rate (the
"Note Rate"). Following a Default, the Note Rate shall be increased by three
percent (3%) on the outstanding principal balance of the Revolving Loans from
the date of Default until waived, cured or paid. The Note Rate shall be
computed on the basis of a year consisting of 360 days and actual days elapsed.
For purposes hereof, the "Prime Rate" shall mean the rate of interest
announced from time to time by Lender at its office in Chicago, Illinois as its
"Prime Rate", which rate may not be the lowest rate of interest charged by
Lender to any of its customers. Any change in the Prime Rate shall be
effective as of the effective date stated in the announcement by Lender of such
change.
All payments of principal and interest due under this Note shall be made
in accordance with the applicable provisions of the Loan and Security
Agreement.
This Note is entitled to the benefit of certain collateral security, all
as more fully set forth in the Loan and Security Agreement.
<PAGE> 4
No holder hereof shall, by any act of omission or commission, be deemed to
waive any of its rights, remedies or powers hereunder or otherwise unless such
waiver is in writing and signed by the holder hereof, and then only to the
extent specifically set forth therein. The rights, remedies and powers of the
holder hereof, as provided in this Note, in the Loan and Security Agreement and
in the other Ancillary Agreements are cumulative and concurrent, and may be
pursued singly, successively or together against Maker and any other security
given at any time to secure the repayment hereof, all at the sole discretion of
the holder hereof. If any suit or action is instituted or attorneys are
employed to collect this Note or any part thereof, Maker promises and agrees to
pay all costs of collection, including, without limitation, reasonable
attorneys' fees, fees of expert witnesses and court costs.
Maker hereby (i) waives presentment and demand for payment, notices of
nonpayment and of dishonor, protest of dishonor, and notice of protest; (ii)
waives any and all notices in connection with the delivery and acceptance
hereof and all other notices in connection with the performance, default, or
enforcement of the payment hereof or hereunder; (iii) waives any and all lack
of diligence and delays in the enforcement of the payment hereof; (iv) agrees
that the liability of Maker shall he unconditional and without regard to the
liability of any other person or entity for the payment hereof, and shall not
in any manner be affected by any indulgence or forbearance granted or consented
to by Lender with respect hereto; (v) consents to any and all extensions of
time, renewals, waivers, or modifications that may be granted by Lender with
respect to the payment or other provisions hereof, and to the release of any
security at any time given for the payment hereof, or any part thereof, with or
without substitution, and to the release of any person or entity liable for the
payment hereof; and (vi) consents to the addition of any and all other makers,
endorsers, guarantors, and other obligors for the payment hereof, and to the
acceptance of any and all other security for the payment hereof, and agrees
that the addition of any such maker , endorsers or other obligors, or security
shall not affect the liability of Maker for all or any part of the obligations
evidenced hereby.
The Revolving Loans are business loans which come within the purview of
Section 205/4, paragraph (1) (c) of Chapter 815 of the Illinois Compiled
Statutes, as amended. Maker agrees that the obligations evidenced by this Note
are an exempted transaction under the Truth In Lending Act, 15 U.S.C., Section
1601, et seg.
Time is of the essence hereof.
This Amended and Restated Revolving Note amends, restates, and
collectively re-evidences all of the terms, conditions and obligations
contained in that certain Amended and Restated Revolving Note, dated June 4,
1998, in the original principal amount of $4,750,000 payable to the order of
the Lender, and all obligations therein shall remain in full force and effect,
as re-evidenced and amended hereby, and nothing contained herein shall be
construed as a repayment or a novation of the foregoing obligations.
<PAGE> 5
This Note is governed and controlled as to validity, enforcement,
interpretation, construction, effect and in all other respects by the statutes,
laws and decisions of the State of Illinois. This Note may not be changed or
amended orally but only by an instrument in writing signed by the party against
whom enforcement of the change or amendment is sought.
The obligations and liabilities of Maker under this Note shall be binding
upon and enforceable against Maker and its successors and assigns. This Note
shall inure to the benefit of and may be enforced by Lender, its successors and
assigns.
In the event that any provision of this Note is deemed to be invalid by
reason of the operation of law, or by reason of the interpretation placed
thereon by any administrative agency or any court, Maker and Lender shall
negotiate an equitable adjustment in the provisions of the same in order to
effect, to the maximum extent permitted by law, the purpose of this Note, and
the validity and enforceability of the remaining provisions, or portions or
applications thereof, shall not be affected thereby and shall remain in full
force and effect.
IN WITNESS WHEREOF, Maker has executed this Note as of the day and year
first written above.
VITA FOOD PRODUCTS, INC., a
Nevada corporation
By: /s/ Jay H. Dembsky
----------------------------
Its: Vice President & CFO
---------------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-QSB
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 38,027
<SECURITIES> 0
<RECEIVABLES> 2,944,348
<ALLOWANCES> 361,141
<INVENTORY> 4,513,413
<CURRENT-ASSETS> 7,950,377
<PP&E> 6,041,986
<DEPRECIATION> (3,910,043)
<TOTAL-ASSETS> 10,424,059
<CURRENT-LIABILITIES> 3,380,633
<BONDS> 4,883,579
0
0
<COMMON> 37,020
<OTHER-SE> 2,122,827
<TOTAL-LIABILITY-AND-EQUITY> 10,424,059
<SALES> 5,159,443
<TOTAL-REVENUES> 5,159,443
<CGS> 3,680,989
<TOTAL-COSTS> 3,680,989
<OTHER-EXPENSES> 1,611,786
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 90,761
<INCOME-PRETAX> (224,093)
<INCOME-TAX> (115,000)
<INCOME-CONTINUING> (109,093)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (109,093)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
