<PAGE>2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended June 30, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
---------- ----------
Commission file number - 0-24093
Redneck Foods, Inc.
Exact name of Registrant as specified in its charter)
DELAWARE 56-203-5983
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
71 Turtle Creek Drive, Asheville, NC 28803
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (828) 277-5577
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 and Exchange
Act of 1934 during the preceding twelve months (or such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to file such filing requirements for the past thirty days.
Yes x No
------ ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report:
11,256,555 Shares of Common Stock ($.001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
------- -------
<PAGE>3
REDNECK FOODS, INC.
PART I: Financial Information
ITEM 1 - Financial statements
ITEM 2 - Management's' discussion and analysis of
financial condition and results of operations
PART II: Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
<PAGE>4
PART I
Item 1. Financial Statements:
REDNECK FOODS. INC
(A Development Stage Company)
Balance Sheet
(Unaudited)
June 30, 1998
<TABLE>
<CAPTION>
Assets
<S> <C>
Current assets:
Cash and cash equivalents $ 47,934
Accounts receivable 87,245
Inventories 103,924
Prepaid expenses 9,859
---------
Total current assets 248,962
Office equipment,
net of accumulated depreciation of $l.004 160,845
Other assets:
Investment in joint venture 50,000
Prepaid expenses and other assets 565,333
Total other assets 265,739
-----------
Total assets $ 1,290,879
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payables $ 62,006
Accrued expenses and other liabilities 10,702
----------
Total Current Liability $ 72,708
==========
Stockholders' equity:
Convertible Preferred stock ($.00l par value,
2,500,000 shares authorized; -0- outstanding
at December 31, 1997) 0
Common stock ($.001 par value, 100,000,000 shares
authorized; 7,592,000 shares
issued and outstanding
at December 31.1997) 11,257
Paid-in capital 2.949,854
Deficit accumulated during development stage (1,697,940)
Unearned services (45,000)
---------
Total stockholders equity 1,218,171
----------
Total liabilities and stockholders' equity $ 1,290,87
==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>5
REDNECK FOODS, INC.
(A Development Stage Company)
Statement of Operations
For the Six Months Ending June 30, 1998 and 1997
<TABLE>
<CAPTION>
June 30, 1998 June 30, 1997
<S> <C> <C>
Net Sales $ 111,629 $ -
Cost of goods sold 74,913 -
--------- --------
Gross profit 36,716 -
Expenses:
Selling, General and administrative 1,085,913 248,073
--------- --------
Loss from Operations (1,049,197) (248,073)
Other income (expenses:):
Interest income, net 2,244 -
Royalty income 5,746 -
Loss on equipment disposal 1,141 -
--------- -------
Net other expense 6,849 -
--------- -------
Income tax benefit - -
--------- -------
Net loss (1,042,348) (248,073)
========= =======
</TABLE>
See accompanying notes to financial statements.
<PAGE>6
REDNECK FOODS. INC.
(A Development Stage Company)
Statement of Cash Flows
For the Six Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
------- -------
<S> <C> <C>
Operating activities;
Net loss $ (1,042,348) $(248,073)
Adjustments to reconcile net loss to net cash
used by operating activities:
Amortization of services received from
stock issuance 13.500 0
Expense recognized for stock options granted 3,751 0
Depreciation and amortization 9,915 0
Loss on equipment disposal 1,140 0
Common Stock issued for services 202,500 137,600
Changes in operating assets and liabilities:
(Increase) decrease in accounts receivable 39,389 0
(Increase) decrease in prepaid expenses
and other assets 106,773 (16,785)
(Increase) decrease in inventories (102,244) 0
Increase (decrease) in accounts payable (87,986) 95,158
Increase (decrease) n accrued expenses (61,385) 32,100
-------- --------
Net cash used by operating activities (916,995) 0
Investing activities:
Purchase of office equipment 1,200 0
Purchase of equipment (34,326) 0
Investment in joint venture (15,000) 0
Advances to joint venture (27,777) 0
Increase in other assets (131,292) 0
-------- --------
Net cash used by investing activities (207,195) 0
Financing activities:
Net Proceeds from sale of common stock 775,000 0
Proceeds from short-term borrowings 12,000 0
Repayment of short-term borrowings (12,000) 0
-------- --------
Net cash provided by financing activities 775,000 0
======== ========
Decrease in cash and cash equivalents (349,190) 0
Cash and cash equivalents at beginning of period 397,124 0
Cash and cash equivalents at end of period 47,934 0
Noncash investing and financing transactions:
Preferred Stock converted to common stock 2,500 0
Common Stock issued for equipment
and intangible assets 670,000 0
</TABLE>
See accompanying notes to financial statements.
<PAGE>7
REDNECK FOODS, INC.
(A Development Stage Company)
Notes to Unaudited Interim Financial Statements
June 30, 1998 and 1997
1. Organization
Nature of Operations - Redneck Foods. Inc. (the "Company") is a development
stage company that was incorporated on January 31, 1997 in the state of
Delaware. The Company currently intends to acquire and operate barbecue
restaurants to be known as "Foxworthy's Smoke House Grill" or "Foxworthy's
Backyard Bar-B-Q". The Company intends to initially acquire existing
barbecue restaurants for conversion to one of the two restaurant concepts.
The Company also intends to produce, market and distribute food products
using the "Foxworthy" name.
2. Basis of Presentation
The accompanying unaudited financial statements were prepared in accordance
with instructions for Form 10-QSB and, therefore, do not include all
disclosures necessary for a complete presentation of the balance sheets,
statements of operations, and statements of cash flows in conformity with
generally accepted accounting principles. However, all adjustments which
are, in the opinion of management, necessary for the fair presentation of the
interim financial statements have been included. All such adjustments are
of a normal recurring nature. The statements of operations for the interim
periods are not necessarily indicative of the results which may be expected
for the entire year.
It is suggested that these unaudited financial statements be read in
conjunction with the audited financial statements and notes thereto for the
Company for the year ended December 31, 1997.
3. Income Taxes
The Company plans to file its federal and State income tax returns on a
calendar year basis. No provision for income tax benefit has been provided
for in the accompanying statement of operations because of the Company's
uncertainty regarding the utilization of its operating losses. Accordingly,
a valuation allowance for the deferred tax asset has been recognized at
June 30, 1998.
4. Joint Venture
The Company has entered into a joint venture with "Pigs-R-Us" (A Florida
corporation) to form a joint venture called "Redneck Pigs, LLC" (A Florida
corporation). Redneck Pigs owns and operates a barbecue restaurant under
the "Foxworthy's Backyard B-B-Q" concept. The Company has contributed
$50,000 to this joint venture as of June 30, 1998.
<PAGE>8
REDNECK FOODS, INC.
PART I (cont.)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Trends and Uncertainties. Demand for the Company's products and restaurants
will be dependent on, among other things, market acceptance of the Company's
concept, the quality of its food products and restaurant operations and
general economic conditions which are cyclical in nature. Inasmuch as a
major portion of the Company's activities is the receipt of revenues from the
sales of its products, the Company's business operations may be adversely
affected by the Company's competitors and prolonged recessionary periods.
Capital and Source of Liquidity. The Company requires substantial capital
in order to meet its ongoing corporate obligations and in order to continue
and expand its current and strategic business plans. Initial working
capital has been obtained by the sale of the Company's Common Shares in July,
1997 for $.75 per Common Share and an offering of 920,000 of its Common
Shares at $1.00 per Common Share pursuant to Regulation D, Rule 504.
Additionally, since inception the Company has issued 2,500,000 Series A
Preferred Shares (valued at $50,000) and 6,516,000 Common Shares for services
with an aggregate value of $248,700. The 2,500,000 Series A Preferred
Shares were converted into Common Stock of the Company during the period
ended June 30, 1998.
For the six months ended June 30, 1998, the Company purchased office
equipment valued at $34,326 and received proceeds from disposal of equipment
of $1,200. The Company had an increase in its investment in a joint venture
with Pigs"R"US of $15,000 and advanced $27,777 to the joint venture. The
Company had an increase in other assets of $131,292. As a result, the
Company had net cash used by investing activities of $207,195 for the six
month ended June 30, 1998.
For the six months ended June 30, 1997, the Company had no investing activities
For the six months ended June 30, 1998, the Company received
proceeds from short-term borrowings of $12,000 which was repaid. The Company
received net proceeds from the sale of its common stock of $775,000. As a
result, the Company had net cash provided by financing activities of
$775,000 for the six months ended June 30, 1998.
The Company had no financing activities for the six months ended June 30, 1997.
On a long term basis, liquidity is dependent on continuation and expansion of
operation and receipt of revenues, additional infusions of capital and debt
financing. The Company believes that additional capital and debt financing
in the short term will allow the Company to increase its marketing and sales
efforts and thereafter result in increased revenue and greater liquidity in
the long term. However, there can be no assurance that the Company will be
able to obtain additional equity or debt financing in the future, if at all.
Results of Operations. For the six months ended June 30, 1998, the Company
had a net loss of $1,042,348. The Company had amortization
of services received from stock issuance of $13,500, expense recognized for
stock options granted of $3,751 and depreciation and amortization of $9,915.
The Company issued common stock of $202,500 for services. Due to the
commencement of operations, the Company experienced a decrease in accounts
receivable of $39,389, a decrease in inventories of $102,244, a decrease in
prepaid expenses and other assets of $106,733 and an increase in accounts
payable of $87,986. Additionally, the Company had an increase in other
accrued expenses of $61,385. As a result, for the six months ended June 30,
1998, the Company had net cash used by operating activities of $916,995.
For the six months ended June 30, 1998, the Company had net sales of $111,629
and cost of sales of $74,913. For the six months ended June 30, 1998, the
Company had selling, general and administrative expenses of $1,085,913 which
consisted of compensation and employee benefits ($280,445), consulting
expenses ($297,500), contract services($88,774), insurance ($28,993),
marketing ($48,732), professional fees ($76,520) rent ($18,238) supplies and
postage ($25,295), utilities ($18,937) travel ($81,293) and miscellaneous
($121,186).
For the six months ended June 30, 1997, the Company had a net loss of
$248,073. The Company issued common stock of $137,500 for services. Due to
preparation for the commencement of operations, the Company experienced an
increase in prepaid expenses and other assets of $16,785 and an increase in
accounts payable of $95,158. Additionally, the Company had an increase in
other accrued expenses of $32,100. As a result, for the six months ended
June 30, 1998, the Company had net cash used by operating activities of $0.
For the six months ended June 30, 1997, the Company had no revenues. For
the six months ended June 30, 1997, the Company had selling, general and
administrative expenses of $248,073 which consisted of compensation and
employee benefits ($29,819), consulting expenses ($35,000), contract
services($159,540), directors fees ($10,000) supplies and postage ($1,967),
travel ($6,870) and miscellaneous ($4,877).
<PAGE>9
Plan of Operation. The Company is not delinquent on any of its obligations
even though the Company has not yet begun to generate revenue. The Company
intends to market its products utilizing cash made available from the private
and public sale of its securities. The Company is of the opinion that
revenues from the sales of its products and joint venture along with proceeds
of the sale of its securities will be sufficient to pay its expenses.
<PAGE>10
REDNECK FOODS, INC.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
None
(b) Reports on Form 8-K
None
SIGNATURE
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.
Date: August 20, 1998 /s/ David Womick
----------------------------
David Womick, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 47,934
<SECURITIES> 0
<RECEIVABLES> 87,245
<ALLOWANCES> 0
<INVENTORY> 103,924
<CURRENT-ASSETS> 248,962
<PP&E> 160,845
<DEPRECIATION> 5,943
<TOTAL-ASSETS> 1,290,879
<CURRENT-LIABILITIES> 72,708
<BONDS> 0
<COMMON> 11,257
0
0
<OTHER-SE> 1,218,171
<TOTAL-LIABILITY-AND-EQUITY> 1,290,879
<SALES> 118,629
<TOTAL-REVENUES> 111,629
<CGS> 74,913
<TOTAL-COSTS> 74,913
<OTHER-EXPENSES> 1,085,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (1,049,197)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,049,197)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,042,348)
<EPS-PRIMARY> (.09)
<EPS-DILUTED> (.09)
</TABLE>
