<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM 10-QSB/A
AMENDMENT TO FORM 10-QSB/A FILED PURSUANT TO THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998
CVF CORPORATION
(Exact name of small business issuer as specified in its charter)
Amendment No. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Form 10-QSB for the quarter ended
June 30, 1998 as set forth in the pages attached hereto:
Part I. Item 1 - Financial Statements
Part II. Item 2 - Changes in Securities
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
CVF Corporation
Date: September 24, 1998 By: /c/ Jeffrey Dreben
-------------------------------
Name: Jeffrey Dreben
Title: Chairman of the Board
President and Chief Executive
Officer
Page 1 of 9 Pages
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
--------------------
CVF CORPORATION AND SUBSIDIARIES
--------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
June 30,
1998
-------------
ASSETS
------
<S> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,647,469
Restricted cash 670,532
Marketable securities, at market 154,242
Trade receivables 1,569,324
Inventory 647,585
Prepaid expenses and other 469,644
Income taxes receivable 1,100,000
------------
TOTAL CURRENT ASSETS 7,258,796
PROPERTY AND EQUIPMENT, net of accumulated depreciation 351,463
HOLDINGS, carried at cost or equity 1,154,487
HOLDINGS AVAILABLE FOR SALE , at market 3,049,557
GOODWILL, net of accumulated amortization 5,086,132
------------
$ 16,900,435
============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Bank indebtedness $ 801,790
Trade payables 1,362,314
Accrued expenses 1,007,774
Dividends payable 209,865
------------
TOTAL CURRENT LIABILITIES 3,381,743
------------
LONG TERM DEBT 1,259,436
DEFERRED INCOME TAXES 663,972
MINORITY INTEREST 965,167
PREFERRED STOCK OF SUBSIDIARIES 510,000
REDEEMABLE SERIES A PREFERRED STOCK 456,250
STOCKHOLDERS' EQUITY:
Common stock, $0.001 par value, authorized 50,000,000 shares,
6,132,528 issued and 370,900 in treasury 6,133
Additional paid in capital 14,178,666
Treasury stock (2,418,211)
Accumulated other comprehensive income (note 6) 976,322
Retained earnings (accumulated deficit) (3,079,043)
------------
TOTAL STOCKHOLDERS' EQUITY 9,663,867
------------
$ 16,900,435
============
</TABLE>
See notes to consolidated financial statements
<PAGE> 3
CVF CORPORATION AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
--------------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ ------------ ------------
(Restated) (Restated)
<S> <C> <C> <C> <C>
SALES $ 856,611 293,386 $ 1,504,364 $ 555,241
COST OF SALES 452,800 52,282 873,335 137,950
------------ ------------ ------------ ------------
GROSS PROFIT 403,811 241,104 631,029 417,291
------------ ------------ ------------ ------------
EXPENSES:
Selling, general and administrative 1,861,431 751,124 4,701,795 1,569,170
Research and development 0 340 0 11,919
------------ ------------ ------------ ------------
TOTAL EXPENSES 1,861,431 751,464 4,701,795 1,581,089
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS (1,457,620) (510,360) (4,070,766) (1,163,798)
------------ ------------ ------------ ------------
OTHER INCOME AND (EXPENSES):
Interest income (expense), net 98,042 91,152 388,977 167,263
Other income (expense), net (150,952) (62,061) 107,799 134,838
Income (loss) from equity affiliates (501,236) 205,664 (803,709) 39,884
Gain (loss) on sale of investments 13,968 171,798 386,262 18,332,223
Minority interest 30,296 0 358,324 0
------------ ------------ ------------ ------------
TOTAL OTHER INCOME AND (EXPENSES) (509,882) 406,553 437,653 18,674,208
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (1,967,502) (103,807) (3,633,113) 17,510,410
Provision (benefit) for income taxes (904,586) (605,460) (984,386) 6,689,430
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (1,062,916) $ 501,653 $ (2,648,727) $ 10,820,980
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE - BASIC $ (0.19) $ 0.08 $ (0.46) $ 1.82
============ ============ ============ ============
NET INCOME (LOSS) PER SHARE - DILUTED $ (0.19) $ 0.08 $ (0.46) $ 1.69
============ ============ ============ ============
WEIGHTED SHARES USED IN COMPUTATION - BASIC 5,764,628 5,928,889 5,756,583 5,928,889
============ ============ ============ ============
WEIGHTED SHARES USED IN COMPUTATION - DILUTED 5,764,628 6,395,753 5,756,583 6,395,753
============ ============ ============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE> 4
CVF CORPORATION AND SUBSIDIARIES
--------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Six Months Ended June 30,
---------------------------------
1998 1997
------------ ------------
(Restated)
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss) $ (2,648,727) $ 10,820,980
------------ ------------
Adjustments to reconcile net income (loss) to net cash from operating
activities:
Depreciation and amortization 198,106 140,081
(Income) loss from equity affiliates 803,709 (39,884)
Gain on sale of investments (386,262) (18,332,223)
Deferred tax benefit (115,614) 0
Minority interest in earnings (losses) of subsidiaries (358,324) 0
Changes in operating assets and liabilities (net of acquisitions):
(Increase) decrease in accounts receivable (467,323) 174,554
(Increase) decrease in inventory (257,460) (20,426)
(Increase) decrease in prepaid expenses and other (142,748) (328,677)
(Increase) decrease in income taxes receivable (1,100,000) 0
Increase (decrease) in accounts payable and accrued expenses (33,756) (254,663)
Increase (decrease) in income taxes payable (1,820,598) 2,761,666
------------ ------------
(3,680,270) (15,899,572)
------------ ------------
CASH PROVIDED (USED) IN OPERATING ACTIVITIES (6,328,997) (5,078,592)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (195,089) 0
Investments in and advances to equity affiliates (599,375) (724,189)
Repayments from equity affiliates 42,292 321,200
Purchase of marketable securities (118,118) 0
Proceeds from sale of investments 382,952 19,097,838
------------ ------------
CASH PROVIDED (USED) IN INVESTING ACTIVITIES (487,338) 18,694,849
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings (payments) of debt 0 42,615
Decrease in restricted cash 11,829 0
Sale of common stock 360,000 0
Borrowings (payments) of debt to related parties 0 63,135
Purchase of treasury stock (556,162) (1,133,580)
------------ ------------
CASH PROVIDED (USED) IN FINANCING ACTIVITIES (184,333) (1,027,830)
------------ ------------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS (283,769) 0
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (7,284,437) 12,588,427
CASH AND CASH EQUIVALENTS - beginning of period 9,931,906 1,895,276
------------ ------------
CASH AND CASH EQUIVALENTS - end of period $ 2,647,469 $ 14,483,703
============ ============
</TABLE>
See notes to consolidated financial statements
<PAGE> 5
CVF CORPORATION AND SUBSIDIARIES
--------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
SIX MONTHS ENDED JUNE 30, 1998
------------------------------
(UNAUDITED)
-----------
1. BASIS OF PRESENTATION
---------------------
The accompanying financial statements are unaudited, but
reflect all adjustments which, in the opinion of management, are
necessary for a fair presentation of financial position and the results
of operations for the interim periods presented. All such adjustments
are of normal and recurring nature. The results of operations for any
interim period are not necessarily indicative of the results attainable
for a full fiscal year.
2. INCOME (LOSS) PER SHARE
-----------------------
Basic earnings (loss) per share is computed by dividing net
income (loss) available to common stockholders by the weighted average
number of common shares outstanding during the period. Diluted earnings
(loss) per share reflects the per share amount that would have resulted
if diluted potential common stock had been converted to common stock,
as prescribed by SFAS 128.
3. INVESTMENTS
-----------
The following table gives certain summarized unaudited
financial information related to the Company's equity basis holdings:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1998 1997
----------------------------------------
<S> <C> <C>
Net sales $ 786,824 $ 876,183
Gross profit on sales 89,525 28,208
Income (loss) from continuing operations
(1,635,501) 1,481,996
Net income (loss) (1,635,501) 1,481,996
</TABLE>
<PAGE> 6
4. INTERIM FINANCIAL STATEMENT DISCLOSURES
---------------------------------------
Certain information and footnote disclosures normally included
in financial statements presented in accordance with generally accepted
accounting principles have been condensed or omitted from the
accompanying unaudited interim financial statements. Reference is made
to the Company's audited financial statements for the year ended
December 31, 1997 included in the Company's Annual Report on Form
10-KSB/A filed with the Securities and Exchange Commission on April 29,
1998.
5. RESTATEMENT
-----------
The financial statements for the quarter ended June 30, 1997
have been restated to reflect the retroactive adoption of SFAS No. 128,
"Earnings per Share" and for the effect of a change in accounting
previously reported in the Company's Form 10-KSB/A for the year ended
December 31, 1997.
6. COMPREHENSIVE INCOME
--------------------
During the quarter ended March 31, 1998, the Company adopted
SFAS No. 130, "Reporting Comprehensive Income". Statement No. 130
requires the reporting of comprehensive income in addition to net
income from operations. Comprehensive income is a more inclusive
financial reporting methodology that includes disclosures of certain
financial information that historically has not been recognized in the
calculation of net income. Other comprehensive income for the six
months ended June 30, 1998 consisted of $685,040 of unrealized gains
from available for sale securities and a $389,485 in loss on foreign
currency translation totaling to $1,074,525. The amounts for the six
months ended June 30, 1997 consisted of $846,441 of unrealized gains
from available for sale securities and a $277,252 in loss on foreign
currency translation, totaling to $1,123,693.
7. AMALGAMATION OF DANTEC CORPORATION
----------------------------------
Dantec Corporation (Dantec) was created on June 30, 1998 on
the amalgamation of Dantec Electronics Limited, a wholly-owned
subsidiary, with Dantec Systems Corporation, a company in which CVF had
a 41% interest. Dantec is an industrial automation company based in
Waterloo, Ontario that uses proprietary advanced process-control
algorithms to develop, manufacture and market a range of automated
precision moisture-detection, measurement and manufacturing control
systems. CVF Corporation owns, directly and indirectly, 4,845,000
common shares of Dantec, representing 54% of the total outstanding
voting securities of Dantec.
8. SUBSEQUENT EVENT
----------------
In July 1998, CVF Corporation issued 997,230
<PAGE> 7
shares pursuant to a Canadian public offering at a gross price of U.S.
$5 per share for net cash proceeds of U.S. $4,937,498.
<PAGE> 8
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
None.
Item 2. Changes in Securities.
------------------------------------------
On June 3, 1998 the Company issued 25,570 Common Shares of the
Company to C.A. Misener Enterprises, Inc., a Canadian Corporation, in exchange
for 720,000 class A shares in Gemprint. The transaction was exempt under
Regulation S under the Securities Act of 1933.
On July 31, 1998 the Company completed its public offering filed on
July 6, 1998 with security regulators in all of the provinces of Canada (except
Quebec). 997,230 common shares were sold in this offering, with the Company
receiving net proceeds from the underwriter, HSBC James Capel Canada Inc., of
U.S. $4,937,498 (Cdn. $7,355,391). Approximately U.S. $715,000 (Cdn. $1,051,000)
of estimated issue costs are yet to be paid out of the proceeds. All of the
payments, of issue costs, are direct payments, to others; none are to officers,
directors, ten percent holders or affiliates of the issuer. About half of the
proceeds would be used to fund the growth of CVF Companies in order to enable
them to meet their respective business plans and the other half will be used for
the purpose of strategic mergers and acquisitions of business that are directly
related to the existing CVF Companies. The SEC file number on this prospectus is
333-51757. In addition to the 997,230 common shares sold for the Company, 25,570
common shares were sold for C.A. Misener Enterprises Inc. for US $137,321 (Cdn
$204,560) and 100,000 common shares were sold for Murray Sinclair for US
$537,040 (Cdn $800,000). These two transactions represent the complete sale of
the secondary offering.
Item 3. Defaults Upon Senior Securities.
--------------------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders.
----------------------------------------------------
None.
<PAGE> 9
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.
DATED: September 24, 1998
CVF CORPORATION
By: /s/ Jeffrey Dreben
----------------------------------
Name: Jeffrey Dreben
Title: Chairman of the Board, President
and Chief Executive Officer
By: /s/ Robert Nally
----------------------------------
Name: Robert Nally
Title: Secretary and Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,647,469
<SECURITIES> 154,242
<RECEIVABLES> 1,569,324
<ALLOWANCES> 0
<INVENTORY> 647,585
<CURRENT-ASSETS> 7,258,796
<PP&E> 351,463
<DEPRECIATION> 0
<TOTAL-ASSETS> 16,900,435
<CURRENT-LIABILITIES> 3,381,743
<BONDS> 1,259,436
456,250
0
<COMMON> 6,133
<OTHER-SE> 9,657,734
<TOTAL-LIABILITY-AND-EQUITY> 16,900,435
<SALES> 1,504,364
<TOTAL-REVENUES> 1,504,364
<CGS> 873,335
<TOTAL-COSTS> 873,335
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,633,113)
<INCOME-TAX> (984,386)
<INCOME-CONTINUING> (2,648,727)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,648,727)
<EPS-PRIMARY> (0.46)
<EPS-DILUTED> (0.46)
</TABLE>
