<PAGE>
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Quarter Ended October 31, 1997 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 1-13365
INTERCORP EXCELLE INC.
(Exact name of registrant as specified in its charter)
ONTARIO, CANADA N/A
- --------------- ---
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1880 ORMONT DRIVE, TORONTO, ONTARIO, CANADA M9L 2V4
- ------------------------------------------- -------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 416-744-2124
------------
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 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 No X
- -
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practical date: December 15, 1997 - 4,075,000 common
stock, no par value.
Transitional Small Business Disclosure Format (check one): Yes No X
- -
<PAGE>
INTERCORP EXCELLE INC.
INDEX
PAGE
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Interim Combined Balance Sheets
as at Oct 31, 1997............................................ 1
Interim Combined Statement of cash flows for
the nine months ended October 31, 1997 and 1996............... 2
Interim Combined Statement of Stockholders'
Equity for the nine months ended October 31, 1997............. 3
Interim Combined Statement of Income for the
nine months ended October 31, 1997 and 1996................... 4
Notes to Combined Financial Statements........................ 5 - 8
Application of Proceeds of IPO Funds.......................... 9
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations.......................... 10 - 12
PART II. OTHER INFORMATION
<PAGE>
INTERCORP EXCELLE INC
INTERIM COMBINED BALANCE SHEETS
AS AT OCTOBER 31, 1997
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
OCT-97 $ OCT-96 $
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and Short Term Investments......................................................... 3,759,771 0
Accounts Receivable..................................................................... 558,777 714,449
Investment Tax Credit Receivable........................................................ 44,587 137,757
Inventory............................................................................... 932,381 1,043,586
Prepaid Expense And Sundry Assets....................................................... 70,153 106,349
---------- ----------
Total Current Assets.................................................................... 5,365,669 2,002,141
PROPERTY, PLANT AND EQUIPMENT........................................................... 3,008,880 1,263,382
---------- ----------
Total Assets............................................................................ 8,374,549 3,265,523
---------- ----------
---------- ----------
LIABILITIES
CURRENT LIABILITIES
Bank Indebtedness....................................................................... 0 310,032
Accounts Payable And Accrued Expenses................................................... 1,586,181 984,048
Income Tax Payable...................................................................... 9,698 105,605
Current Portion Of Long Term Debt....................................................... 243,537 234,130
---------- ----------
Total Current Liabilities............................................................... 1,839,416 1,633,815
LONG TERM DEBT.......................................................................... 1,558,173 612,317
DUE TO DIRECTORS........................................................................ 148,772 182,156
DEFERRED INCOME TAXES................................................................... 114,923 146,734
---------- ----------
Total Liabilities....................................................................... 3,661,284 2,575,022
---------- ----------
STOCKHOLDERS' EQUITY
CAPITAL STOCK (Note 2).................................................................. 3,798,400 160
RETAINED EARNINGS....................................................................... 953,806 694,653
CUMULATIVE TRANSLATION ADJUSTMENTS...................................................... (38,941) (4,312)
---------- ----------
Total Stockholders' Equity.............................................................. 4,713,265 690,501
---------- ----------
Total Liabilities and Stockholders' equity.............................................. 8,374,549 3,265,523
---------- ----------
---------- ----------
</TABLE>
Page: 1
<PAGE>
INTERCORP EXCELLE INC
INTERIM COMBINED STATEMENT OF CASHFLOWS
FOR THE 9 MONTHS ENDED OCTOBER 31, 1997 AND 1996
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
OCT-97 $ OCT-96 $
----------- ---------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income/(loss )....................................................................... 109,795 144,603
Items Not Affecting Cash:
Gains On Disposal Of Capital Assets...................................................... (2,887) 0
Depreciation & Amortization.............................................................. 243,897 208,952
Deferred Income Taxes.................................................................... 0 0
----------- ---------
Working Capital Provided By Operating Activities......................................... 350,805 353,555
Changes In Non-Cash Operating Items:
Accounts Receivables..................................................................... 152,150 139,913
Inventories.............................................................................. (256,725) (412,968)
Prepaid & Miscl.......................................................................... 5,866 (87,814)
Income Tax Payable....................................................................... 4,070 99,918
Accounts Payable & Accruals.............................................................. 785,397 (22,132)
----------- ---------
Cash Provided/(Used In) Operating Activities............................................. 1,041,563 70,472
----------- ---------
Investing Activities:
Net Additions To Fixed Assets............................................................ (1,942,550) (269,433)
----------- ---------
Cash Used In Investing Activities........................................................ (1,942,550) (269,433)
----------- ---------
Financing Activities:
Advance/(Repayment) of Bank Indebtedness................................................. (235,160) 132,353
Repayment of Long Term Debt.............................................................. (6,961) 0
Proceeds from Long Term Debt............................................................. 997,648 7,393
Net proceeds from issuance of common shares.............................................. 3,798,400 0
Cash Provided By(Used In) Financing Activities........................................... 4,553,927 139,746
----------- ---------
Effect of foreign currency exchange rate changes......................................... (27,526) 2,495
----------- ---------
Increase/(Decrease) In Cash.............................................................. 3,625,413 (56,720)
Bank Indebtedness, Beginning Of Period................................................... 134,357 (253,312)
----------- ---------
Cash and Short Term Investments, end of period........................................... 3,759,770 (310,032)
----------- ---------
----------- ---------
</TABLE>
Page: 2
<PAGE>
INTERCORP EXCELLE INC
INTERIM COMBINED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE 9 MONTHS ENDED OCT 31, 1997
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
COMMON STOCK CUMULATIVE TRANSLATION
NO. OF SHARES AMOUNT RETAINED EARNINGS ADJUSTMENTS
------------ ---------- ----------------- -----------
<S> <C> <C> <C> <C>
Balance at January 31, 1997 (Excelle Brands Food
Corporation and Intercorp Foods Limited)............ 844,011 (31,929)
Common shares issued at incorporation................. April 97 300 220
Foreign currency translations......................... (7,012)
Common shares issued as condition of Bridge loan...... 175,000
Common shares issued in acquiring 100% interest
ownership interests in Intercorp Foods Limited,
Kalmath Investments Limited (Parent Company of
Excelle Brands food Corporation)...................... May 97 2,899,700
Common shares issued for cash for Initial Public
Offering.............................................. Oct 97 1,000,000 5,122,475
IPO issuing cost...................................... (1,324,295)
Net Income for the 9 months ended Oct 31, 1997........ 109,795
------------ ---------- ----------------- -----------
Balance at October 31, 1997........................... 4,075,000 3,798,400 953,806 (38,941)
------------ ---------- ----------------- -----------
------------ ---------- ----------------- -----------
Balance at January 31, 1996........................... 200 160 550,050 (45,445)
Foreign currency translations......................... 41,134
Net Income for the 9 months ended Oct 31, 1996........ 144,603
------------ ---------- ----------------- -----------
Balance at October 31, 1996........................... 200 160 694,653 (4,311)
------------ ---------- ----------------- -----------
------------ ---------- ----------------- -----------
</TABLE>
Page: 3
<PAGE>
INTERIM EXCELLE INC.
INTERIM COMBINED STATEMENT OF INCOME
FOR THE 9 MONTHS ENDED OCTOBER 31, 1997 AND 1996
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
3 MONTHS ENDED 9 MONTHS ENDED 9 MONTHS ENDED
OCT-97 OCT-97 OCT-96
-------------- -------------- --------------
<S> <C> <C> <C>
GROSS SALES..................................................... 2,471,500 8,720,594 7,867,035
Trade Expenditures.............................................. 232,742 696,993 675,636
-------------- -------------- --------------
NET SALES....................................................... 2,238,758 8,023,601 7,191,399
Cost of sales................................................... 1,512,078 5,378,732 5,014,002
-------------- -------------- --------------
GROSS PROFIT.................................................... 726,680 2,644,869 2,177,397
EXPENSES
Selling......................................................... 292,654 1,264,032 986,567
General & administrative........................................ 305,200 798,530 580,365
Research & development costs.................................... 22,532 80,629 100,480
Financial....................................................... 24,781 81,857 57,213
Amortization.................................................... 66,665 248,333 208,952
-------------- -------------- --------------
TOTAL OPERATING EXPENSES........................................ 711,832 2,473,381 1,933,577
-------------- -------------- --------------
INCOME (LOSS) BEFORE INCOME TAX................................. 14,848 171,488 243,820
Income taxes.................................................... 6,683 61,693 99,217
-------------- -------------- --------------
NET INCOME (LOSS)............................................... 8,165 109,795 144,603
-------------- -------------- --------------
-------------- -------------- --------------
NET INCOME PER WEIGHTED AVERAGE COMMON SHARES (NOTE 2).......... 0.00 0.03 0.03
NET INCOME PER FULLY DILUTED NO. OF COMMON SHARES (NOTE 2)...... 0.00 0.02 0.03
BASIC WEIGHTED AVERAGE NUMBER OF COMMON SHARES (NOTE 2)......... 4,075,000 4,075,000 4,075,000
-------------- -------------- --------------
-------------- -------------- --------------
FULLY DILUTED AVERAGE NUMBER OF COMMON SHARES (NOTE 2).......... 5,674,750 5,674,750 5,674,750
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
Page: 4
<PAGE>
INTERCORP EXCELLE INC.
NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a) Basis of Presentation
These financial statements and the notes attached thereto include
the the accounts of Intercorp Excelle Inc. ("The Company") and the
the subsidiaries; Intercorp Foods Limited, Kalmath Investments
Limited and Excelle Brands Food Corporation, were prepared by the
Company pursuant to the rules and regulations the Securities and
Exchange Commission. All material inter-company adjustments and
transactions are eliminated to present a fair statement of the
results for interim periods. Certain footnotes disclosures have
been omitted pursuant to such rules and regulations, although the
Company believes that the disclosures are adequate to make the
information presented not misleading.
b) Principal activities
Intercorp Excelle Inc. was incorporated on April 16, 1997 for the
purpose of acquiring 100% control of the subsidiary companies,
i.e. Intercorp Foods Limited and Excelle Brands Food Corporation.,
which were incorporated in Canada on December 20, 1982 and
February 7, 1987 respectively. The subsidiary Companies are
principally engaged in the production of food products in Canada
and its distribution in Canada and in the U.S.
c) Cash and Short term investments
Cash and short term investments include cash on hand, amount due
from banks, and any other highly liquid investments purchased with
a maturity of three months or less. The carrying amount
approximates fair value because of the short maturity of those
instruments.
d) Other financial instruments
The carrying amount of the companies' accounts receivable and
payable approximates fair value because of the short maturity of
these instruments.
e) Inventory
Inventory is valued at lower of cost or net realizable value. Cost
is determined on the first-in, first-out basis.
f) Property, Plant and Equipment
Equipment 20% Declining Balance
Leasehold Improvement 10% Straight Line
Vehicle 30% Declining Balance
Computer Equipment 30% Declining Balance
Office Furniture 20% Declining Balance
Amortization for assets acquired during the period are recorded at
one-half of the indicated rates, which approximates when they were
put into use.
Page: 5
<PAGE>
INTERCORP EXCELLE INC.
NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g) Income Taxes
The companies account for income tax under the provisions of
Statement of Financial Accounting standard No. 109, which requires
recognition of deferred tax assets and liabilities for the
expected future tax consequences of events that have been included
in the financial statements or tax returns. Deferred income taxes
are provided using the liability method. Under the liability
method, deferred income taxes are recognized for all significant
temporary differences between the tax and financial statement
bases of assets and liabilities.
h) Foreign Currency Translation
The companies maintained their books and records in Canadian
Dollars. Foreign currency transactions are translated using the
temporal method. Under this method, all monetary items are
translated into Canadian funds at the rate of exchange prevailing
at balance sheet date. Non monetary items are translated at
historical rates. Income and expenses are translated at the rate
in effect of the transaction dates. Transaction gains and losses
are included in the determination of earnings for the period.
The translation of the financial statements from Canadian dollars
("CDN $") into United States dollars is performed for the
convenience of the reader. Balance sheet accounts are translated
using closing exchange rates in effect at the balance sheet date
and income and expenses accounts are translated using an average
exchange prevailing during each reporting period. No
representation is made that the Canadian dollar amounts could have
been or could be, converted into United States dollars at the
rates on the respective dates and or at any other certain rates.
Adjustments resulting from the translation are included in the
cumulative translation adjustments in stockholder's equity.
I) Sales
Sales represent the invoiced value of goods supplied to customers.
Sales are recognized upon delivery of goods and passage of title
to customers.
j) Government Assistance and Investment Tax Credits
Government Assistance and Investment Tax Credits are recorded on
the accrual basis and are accounted for as a reduction of the
related current or capital expenditures.
k) Net Income per Weighted Average Common Shares
Net Income per common shares is computed by dividing net income
for the period by the weighted number of common shares outstanding
during the period.
Page: 6
<PAGE>
INTERCORP EXCELLE INC.
NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
l) Use of Estimates
The preparation of financial statements required management to
make estimates and assumptions that affect certain reported
amounts of assets and liabilities and disclosures of contingent
assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
m) Accounting Changes
On February 1, 1996 the company adopted the provision of SFAS No.
121, Accounting for the Impairment of long-lived assets and for
long-lived Assets to be Disposal Of. SFAS No. 121 requires that
long-lived Assets to be held and used by an entity by an entity be
reviewed for impairment whenever events or changes in
circumstances indicates that the carrying amount of an asset may
not be recoverable. This statement is effective for for financial
statements for fiscal years beginning after December 15, 1995.
Adoption of SFAS No. 121 did not have a material impact on the
company's results of operations.
In December 1995, SFAS No. 123, Accounting for Stock-Based
Compensation, was issued. It introduces the use of a fair
value-based method of accounting for stock-based compensation. It
encourages, but does not require, companies to to recognized
compensation expenses for stock-based compensation to employees
based on the new fair value accounting rules. Companies that
choose not to adopt the new rules will continue to apply the
existing accounting rules contained in Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees. However,
SFAS No. 123 requires companies that choose not to adopt the new
fair value accounting rules to disclose pro forma net income and
earnings per share under the new method. SFAS No. 123 is effective
for financial statements for fiscal years beginning after December
15, 1995. The Company has adopted the disclosure provisions of
SFAS No. 123.
Page: 7
<PAGE>
INTERCORP EXCELLE INC.
NOTES TO INTERIM COMBINED FINANCIAL STATEMENTS
(EXPRESSED IN US DOLLARS)
(UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2 Authorized
An unlimited number of common and preference shares
The preference shares are issuable in series upon approval by the
directors with the appropriate designation, rights,
The preference shares are issuable in series upon approval by the
directors with the appropriate designation,
<TABLE>
<CAPTION>
COMMON
WARRANTS OPTIONS SHARES $
---------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Issued upon incorporation.................................. 300 220
May Issued 175000 shares as part of the condition of the
Bridge loan................................................ 175,000 175,000 --
May Issued 2899700 shares in exchange of 100% ownership
interests in Kalmath Investments Limited(parent company
of Excelle Brands Food Corporation) and Intercorp Foods
Limited from the existing shareholders..................... 2,899,700
May Options granted to five individuals including officers,
directors and key employees................................ 200,000 --
Oct. Issued $1,000,000 shares of common stock for cash @ $5.00
each....................................................... 1,000,000 5,000,000
Issued 1065000 Redeemable Common Stock Purchase
Warrants................................................... 1,065,000 106,500
Oct. Issued 159750 warrants for over-allotment.................. 159,750 15,975
Cost incurred in connection with the initial public
offering................................................... (1,324,295)
---------- --------- ---------- -----------
1,399,750 200,000 4,075,000 3,798,400
---------- --------- ---------- -----------
---------- --------- ---------- -----------
Basic weighted average number of common shares..................... 3,798,400
-----------
-----------
Fully Diluted average number of common shares (including
outstanding common shares, warrants and option)............... 5,674,750
----------
----------
</TABLE>
Page: 8
<PAGE>
APPLICATION OF PROCEEDS OF IPO FUNDS
UPDATE AS AT OCTOBER 31, 1997
(AMOUNT EXPRESSED IN U.S. DOLLARS)
<TABLE>
<CAPTION>
<S> <C>> <C>
Net proceeds from IPO Note 1 $ 3,798,180
-----------
-----------
Application of proceeds as at October 31, 1997:
Repayment of Bridge Loans (1) 655,000
Down payment for purchase of currently leased facilities (2) 417,558
Working Capital (3) 2,725,622
-----------
Total proceeds 3,798,180
-----------
-----------
(1) The Bridge Loan was repaid in October 1997 immediately after receipt of
the IPO proceeds; Principal $625,000 - plus interest $30,000.
(2) Cost of purchasing the currently leased facilities 1,415,206
Less:
Mortgage loan proceeds (997,648)
-----------
(3) Net amount of financing from IPO proceeds 417,558
-----------
-----------
(4) Unused IPO proceeds at October 31, 1997 are temporarily invested in
short term investments with maturity less than 3 months. The funds will
be used for general corporate purposes including possible strategic
acquisitions.
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
General
The statements contained in this Prospectus that are not historical are
forward looking statements, including statements regarding the Company's
expectations, beliefs or strategies regarding the future. Forward looking
statements include the Company's statements regarding liquidity, anticipated
cash needs and availability and anticipated expense levels. It is important
to note that the Company's actual results could differ materially from those
in such forward looking statements.
Results of Operations
Nine Months Ended Oct 31, 1997 Compared to Nine Months Ended Oct 31,1996.
Revenues for nine months ended October 31, 1997 were $8,720,594, a 10.8%
increase over prior year revenues of $7,867,035. This increase was due to
growth in Renee's branded business (launch of incrementally new Renee's
Gourmet Naturally Light-TM- dressings last year), food service (incremental
Scotts Hospitality/KFC business) and private label (Shaw's, Wegman's in the
United States and Horizon's launch across Canada in April 1997).
Gross profit for nine months ended October 31, 1997 was 32.9% of net
revenues, a substantial improvement as compared to the same quarter one year
ago, which was 30.3%. This positive change can be attributed to improvements
in operational efficiency and cost of goods. Lower contracted prices for
oil, cheese and other primary ingredients have contributed as well as lower
than planned factory overhead and direct labor expenses. Gross margins were
not affected by price changes, which, for the most part, remained unchanged,
as compared to the prior year.
Selling and Marketing expenses increased by $277,465 in the nine months
ended October 31, 1997 over 1996. A percentage of the increase over the
prior year reflects a continuation of incremental support costs against the
launch of Renee's Gourmet Naturally Light-TM- and a focused strategy to invest
in the growth of branded business through increased advertising and consumer
promotions. General and Administrative expenses of $798,530 were 37.6% higher
than prior year, reflecting both incremental costs associated with the
completion of the Public Offering October 9, 1997 and increased spending to
support sales growth.
Income from operations decreased $72,332 to $171,488 for the nine months
ended October 31, 1997 versus the prior year. This decrease in income from
operations is directly a result of continued sales growth and improved gross
margins, which was more than offset by investment in consumer promotions,
advertising and fixed overheads expenses year to date.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
Liquidity and Capital Resources
The Company's net increase in cash flow from operations for the quarter
ending October 31, 1997 was $3,625,413 which reflects primarily net proceeds
of the Company's Public Offering effective October 9, 1997. Increase in cash
from operating activities totalled $1,041,562. Net Income of $109,795,
traced primarily to increased sales and gross profits. Accounts payable and
accrued liabilities increased by $785,396, reflecting increased purchases and
selling, administration expenses. Excess cash balances were used to reduce
bank indebtedness during the period as well as paydown an existing bank loan
from Business Development Bank of Canada and certain unsecured creditors
which the Company owed amounts to under settlement agreements shown as long
term debt.
Cash flows used in investing activities during the nine months ending
October 31, 1997 were $1,942,550. This reflected capital additions of
$527,344 and the remainder towards the purchase of the Company's existing
facility from its landlord. This transaction was completed October 28, 1997
and was financed by a 10 year mortgage loan of $997,648 from the Company's
current banker, the National Bank of Canada. The Company believes this
transaction will secure a manufacturing site (with significant available
capacity needed for substantial growth) over a longer period of time versus
three years remaining on the previous lease agreement. The Company will also
realize substantial savings in anticipated increased lease expenses as well
as be able to take advantage of declining realty tax rates in the future.
This new loan facility bears an interest at Canadian prime rate plus
.75%, calculated daily and paid monthly in arrears. The Company has the
option to fix the interest rate at anytime for a term of 1-5 years at a fixed
rate equal to the Bank's Cost of Funds plus 1.85%. All borrowings are
collateralized by the assets of the Company under a General Security
Agreement and the assignment of a Lease between the Company, Excelle Brands
Food Corporation and Intercorp Foods Ltd. (for a minimum of ten years), and
provides for rental income sufficient to cover principal and interest
payments 1.15 times.
The Company received net proceeds of an Offering effective October 9,
1997 in a net amount of $3,798,400. Included in this amount are proceeds of
$13,898 representing underwriters exercise of an overallotment option on
159,750 warrants at .10 per warrant, completed October 28, 1997. Part of the
proceeds from the Offering were used to repay promissory notes in the
aggregate principal amount of $625,000 ("Bridge Notes"). These notes
represented commitments remaining from the Company's completion of a private
placement in May 1997 and included accrued interest of $30,000. The
remainder of those expenses incurred in order to complete the Offering
reflected underwriting fees, legal, accounting, printing and other necessary
expenditures netted against proceeds.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION (continued)
The Company believes that the proceeds of the Offering, coupled with
income from operations will fulfill the Company's working capital needs for
the next two to three years. It is the Company's intention to utilize a
significant portion of the proceeds to aggressively seek synergistic
acquisitions which would utilize currently available capacity. The Company
also intends to support its branded Renee's business through increased
marketing, advertising and distribution throughout North America. As the
Company continues to grow, bank borrowings, other debt placements and equity
offerings may be considered, in part, or in combination, as the situation
warrants.
12
<PAGE>
PART II OTHER INFORMATION
Item 2 - Changes in Securities and Use of Proceeds
The Company made an initial public offering of its common stock, no
par value, ("Common Stock") and common stock purchase warrants ("Warrants")
(the Common Stock and Warrants are collectively referred to as the
"Securities") pursuant to a registration statement declared effective by the
Commission on October 9, 1997, File No 333-7202 ("Registration Statement").
Each Warrant permits the holder, upon exercise, to receive one share of the
Company's common stock, no par value. The offering commenced on October 9,
1997. The offering did not terminate before the Securities were sold. The
underwriters of the offering were Sharpe Capital, Inc., Aegis Capital Corp,
and Klein Maus and Shire Incorporated.
In the offering the following Securities were issued on behalf of the
Company and certain selling securityholders:
<TABLE>
<CAPTION>
AMOUNT AGGREGATE PRICE AMOUNT AGGREGATE PRICE
TITLE OF SECURITY REGISTERED OF OFFERING REGISTERED SOLD SOLD TO DATE
- ----------------- ---------- ---------------------- -------- -----------------
<S> <C> <C> <C> <C>
COMPANY
- -------
Common Stock 1,000,000 $5,000,000 1,000,000 $5,000,000
Common Stock(1) 150,000 750,000 0 0
Warrants 1,065,000 106,500 1,065,000 106,500
Warrants(1) 159,750 15,975 159,750 15,975
<CAPTION>
SELLING SECURITYHOLDERS
- -----------------------
<S> <C> <C> <C> <C>
Common Stock 65,000 325,000 65,000 325,000
</TABLE>
(1) Represents the overallotment option granted to the representative of the
underwriters, of which only the overallotment option as to the Warrants was
exercised. The overallotment option has expired.
The following are the Company's expenses incurred in connection
with the issuance and distribution of the Securities in the offering from the
effective date of the Registration Statement to the ending date of the
reporting period of this 10-QSB:
EXPENSE AMOUNT
- ------- ------
Underwriters' discounts
and commissions $ 512,247
Finders fees 0
Expenses paid to or for
the underwriters 241,674
Other expenses(1) 570,374
Total Expenses $1,324,295
None of the foregoing expenses were paid, directly or indirectly, to any
director or officer of the Company or their associates, to any person who owns
10 percent or more of any class of equity securities of the Company, or to any
affiliate of the Company.
<PAGE>
(1) Estimate
The net offering proceeds to the Company after deducting for the
foregoing expenses are $3,798,180.
The following are the application of the net proceeds by the
Company's from the sale of the Securities in the offering from the effective
date of the Registration Statement to the ending date of the reporting period
of this 10-QSB:
Item Amount
Purchase of Building $ 417,558
Temporary Investments(1) 2,725,622
Repayment of Indebtedness 655,000
Total Application of Net Proceeds $ 3,798,180
(1) money market investments
None of the foregoing application of the net proceeds were paid, directly or
indirectly, to any director or officer of the Company or their associates, to
any person who owns 10 percent or more of any class of equity securities of the
Company, or to any affiliate of the Company.
The application of the net proceeds to date is not a material change in the use
of proceeds described in the prospectus in the Registration Statement.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INTERCORP EXCELLE, INC.
December 15, 1997 By: /s/ ARNOLD UNGER
------------------------
Arnold Unger
Chief Executive Officer
December 15, 1997 By: /s/ FRED BURKE
------------------------
Fred Burke
Principal Accounting Officer and
Chief Financial Officer
