U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 27, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-24093
REDNECK FOODS, INC.
(Exact name of Registrant as specified in its Charter)
Delaware 56-2035983
(State or other jurisdiction (I.R.S. Employer
of incorporation Identification
or organization) number)
1280 Hendersonville Road, Asheville, North Carolina 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 Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
X Yes No
As of September 27, 1998, there were 11,258,991 shares of the Registrant's
common stock, par value $0.001 per share, outstanding. The Registrant has no
other classes of common equity outstanding.
Transitional small business disclosure format:
Yes X No
<PAGE>2
REDNECK FOODS, INC.
Asheville, North Carolina
Index
PART I. Page(s)
FINANCIAL INFORMATION
Item 1.
Financial Statements
Balance Sheet-(Unaudited) as of September 27, 1998 3
Statements of Operations - (Unaudited)
for the three and nine months
ended September 27, 1998 and September 30, 1997 4
Statements of Cash Flows - (Unaudited) for the nine months
ended September 27, 1998 and September 30, 1997 5
Notes to Unaudited Interim Financial Statements 6-8
Item 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-13
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and use of proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security 14
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
Signatures 16
<PAGE>3
REDNECK FOODS, INC.
(A Development Stage Company)
Balance Sheet
(Unaudited)
September 27, 1998
Assets
Current Assets:
Cash $ 18,320
Accounts receivable 132,132
Inventories 66,712
Prepaid expenses 28,555
---------
Total current assets 245,719
Office and restaurant equipment, net of
accumulated depreciation of $8,847 243,260
Other assets:
Investment in joint venture 50,000
Goodwill 500,000
Noncompete agreement, net of
accumulated amortization of $8,167 61,833
Prepaid expenses and other assets 1,303,788
-----------
Total assets $ 2,404,600
===========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 402,337
Note payable 15,000
Accrued expenses 43,269
----------
Total current liabilities 460,606
----------
Convertible debentures 1,275,000
Commitments and contingencies
Stockholders' equity:
Convertible Preferred stock ($.001 par value,
2,500,000 shares authorized, none outstanding) -
Common stock ($.001 par value, 100,000,000
shares authorized; 11,258,991 shares issued
and outstanding) 11,259
Paid-in capital 2,956,286
Deficit accumulated during
development stage (2,253,551)
Unearned services (45,000)
----------
Total stockholders' equity 668,994
----------
Total liabilities and stockholders' equity $ 2,404,600
==========
The accompanying notes are an integral part of these financial statements.
<PAGE>4
REDNECK FOODS, INC. AND SUBSIDIARY
(A Development Stage Company)
Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For Nine Months Ended For Three Months Ended
Sept. 27, 1998 Sept. 30, 1997 Sept. 27, 1998 Sept. 30, 1997
<S> <C> <C> <C> <C>
Net sales $ 290,346 $ - $ 178,717 $ -
Cost of sales
Interest earning deposits 193,614 - 118,701 -
-------- ----- -------- --------
Gross profit 96,732 - 60,016 -
Selling, general and
administrative expenses 1,698,217 405,796 612,304 157,723
--------- ------- ------- -------
Operating loss (1,601,485) (405,796) (552,288) (157,723)
Other income (expenses):
Interest income 2,371 203 127 203
Royalty income 10,756 - 5,010 -
Interest expense (8,460) (354) (8,460) (354)
Loss on equipment
disposal (1,141) - - -
--------- ------- ------- -------
Other income (expenses), net 3,526 (151) (3,323) (151)
Loss before income tax benefit (1,597,959) (405,947) (555,611) (157,874)
Income tax benefit - - - -
----------- --------- --------- ---------
Net loss $(1,597,959) $(405,947) $(555,611) $(157,874)
=========== ========= ========= =========
Basic and diluted loss per share $(.18) $ (.07) $ (.05) $ (.02)
Weighted average shares 9,063,701 5,712,176 11,257,127 6,670,304
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>5
REDNECK FOODS, INC. AND SUBSIDIARY
(A Development Stage Company)
Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 27, 1998 September 30, 1997
<S> <C> <C>
Operating activities:
Net loss $ (1,597,959) (405,947)
Adjustments to reconcile net loss to net cash
used by operating activities:
Recognition of unearned services 13,500 -
Expense recognized for stock options granted 5,625 -
Depreciation and amortization 16,010 250
Loss on disposal of equipment 1,141 -
Common stock issued in exchange for services 207,060 207,190
Changes in operating assets and liabilities:
Increase in accounts receivable (5,498) -
Decrease (increase) in prepaid expenses and other assets 83,567 (119,559)
Increase in inventories (65,032) -
Increase (decrease) in accounts payable 252,345 5,513
Increase (decrease ) in accrued expenses (28,818) 68,655
--------- -------
Net cash used by operating activities (1,118,059) (243,898)
--------- -------
Investing activities:
Proceeds from disposal of equipment 1,200 -
Purchase of office and restaurant equipment (119,337) (9,360)
Investment in joint venture (15,000) -
Advances to joint venture (27,777) -
Earnest money deposits for business acquisition (795,930) (50,000)
Increase in other assets (122,711) (52,419)
--------- -------
Net cash used by investing activities (1,079,555) (111,779)
--------- -------
Financing activities:
Net proceeds from sale of common stock 775,000 117,000
Proceeds from stock subscription deposits - 500,000
Proceeds from convertible debentures 1,028,810 -
Proceeds from short-term borrowings 37,000 50,000
Repayment of short-term borrowings (22,000) (50,000)
--------- -------
Net cash provided by financing activities 1,818,810 617,000
Increase (decrease) in cash and cash equivalents (378,804) 261,323
Cash and cash equivalents at beginning of period 397,124 -
--------- -------
Cash and cash equivalents at end of period $ 18,320 $ 261,323
========= ========
Noncash Investing and financing activities:
Preferred stock converted to common stock 2,500 -
Common stock issued for equipment,
goodwill and noncompete agreement $ 670,000 $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>6
REDNECK FOODS, INC.
(A Development Stage Company)
Notes to Unaudited Interim Financial Statements
September 27, 1998 and September 30,1997
1. Organization
Nature of Operations - Redneck Foods, Inc. (the "Company") is a development
stage company that was organized in January 1997 in the state of
Delaware. It 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 sheet,
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.
In the third quarter of 1998, the Company changed to a fiscal calendar based
on a 52-53 week year with the fiscal year ending on the Sunday closest to
December 31 of each year. Management does not believe this effects the
comparability of the financial statements.
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 files 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 interim unaudited statements 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 September 27, 1998.
4. Joint Venture
In March 1998 the Company has entered into a joint venture agreement to own
and operate the first barbecue restaurant under the "Foxworthy's
Backyard Bar-B-Q" concept. The Company contributed $50,000 to the joint
venture through September 27, 1998 for its 10% interest and has not yet
begun receiving any significant royalty income from the joint venture.
The Company plans to acquire the remaining interest in the joint venture
in the fourth quarter of 1998 pursuant to an agreement with its joint
venture partner whereby common shares will be issued after the
completion of an audit. The Company has agreed to manage the operations
until the final audit is complete and the shares of common stock have
been issued.
5 Prepaid Expenses and Other Assets
Prepaid expenses and other assets consist of following at September 27,
1998:
Deposits $ 13,034
Real estate deposit 42,352
Restaurant design and
architectural fees 131,282
Debt issuance cost 246,190
Earnest money deposit for
business acquisition 870,930
-----------
$1,303,788
On September 11, 1998, the Company obtained an extension relating to its
ongoing negotiations to acquire all of the stock of Woody's Bar-B-Q Holdings,
Inc.("Woody's"), a 33 unit chain of barbecue restaurants based in
Jacksonville, Florida. To obtain this extension, the Company agreed to
release to the selling shareholders of Woody's $870,930, representing the
net funds held in escrow at that time. The parties have verbally extended
the agreement until December 31, 1998 to give the Company additional
time to raise the necessary funding. The parties have also verbally agreed
to have the Company manage the business of Woody's under certain prudent
industry practices guidelines. A formal written agreement to document this
is being finalized.
<PAGE>7
6. Secured Convertible Debentures
In order to fund the cash portion of the proposed acquisition of Woody's, the
Company authorized the issuance of up to $3 million in aggregate principal
amount of Series 1 Secured Convertible Debentures due 2001 (the
"Debentures"). The Debentures bear interest at 5% per annum, payable
quarterly, and are redeemable after 2 years at 125% of the principal amount
sold. The Debentures are convertible, subject to certain adjustments, at
the lower of (1) $2.51 per share or (2) 70% of the average of the closing
bid price of the stock for the previous five (5) trading days. As of
September 27, 1998, $1,275,000 in Debentures have been sold.
7. Stockholders' Equity
In June 1998, the 2,500,000 shares of convertible preferred stock were
converted into 2,904,722 shares of common stock in accordance with the
preferred stock agreement.
During the nine months ending September 27, 1998, the Company also issued
223,333 shares of common stock under an asset purchase agreement with an
fair market value of $670,000 to the owners of a barbecue restaurant in
Asheville, North Carolina. The stock issued was in consideration for a five
year noncompete agreement valued at $70,000, goodwill valued at $500,000 and
various restaurant equipment valued at $100,000. The Company anticipates
completing the acquisition of the land, building and improvements sometime
in the fourth quarter of 1998. As of September 30, 1998, the Company had
deposited with the sellers $42,352 toward the purchase price of the real
property. This deposit is presented in other assets on the accompanying
balance sheet.
During the nine months ending September 27, 1998, the Company sold 428,500
additional shares of common stock for net proceeds of $775,000 and issued
110,436 shares in exchange for services which have been expensed at the fair
market value of the shares on the date of issuance.
8. New Accounting Pronouncement
In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Cost of Start-up
Activities". This SOP requires that the cost of start-up activities, or one-
time activities that relate to the opening of a new facility and
organizational cost be expensed as incurred instead of being capitalized.
This SOP must be implemented by no later than the first quarter of 1999 at
which time the write-off of any unamortized pre-opening costs or
organization cost will be reported as a cumulative effect of a change in
accounting principle in the statement of operations.
9. Commitments and Contingencies
The agreement with Mr. Foxworthy provided that if the Company had not raised
$2.5 million of initial capital by June 30, 1998, Mr. Foxworthy had the
right to withdraw the use of his name and likeness. As of June 7, 1998, the
initial capital had been raised and, accordingly, this contingency was
removed.
<PAGE>8
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Trends and Uncertainties. Demand for the Company's products, franchises and
success of its 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 from the initial sale of the Company's common shares in July
1997 for $.75 per share which raised $156,000, an offering netting
approximately $899,000 for 920,000 shares of common stock at $1.00 per share
pursuant to Regulation D, Rule 504, and additional capital of $775,000 from
the subsequent sale of common stock. The Company also raised a net of
$1,028,810 in August and September 1998 from the sale of Series 1 Secured
Convertible Debentures Due 2001. The Debentures bear interest at 5% per
annum, payable quarterly, and are convertible into common stock at the lesser
of $2.51 or 70% of the average closing bid price for the preceding 5
consecutive trading days.
Additionally, since inception the Company has issued 2,500,000 Series A
Convertible Preferred Shares (for promotional services valued at $50,000),
founders stock of 5,100,000 common shares and 1,526,436 common shares for
various services with an aggregate value of approximately $451,000. The
2,500,000 Series A Preferred Shares were converted into common stock by the
Company in June 1998 in accordance with the preferred stock agreement upon
obtain certain capitalization thresholds.
For the nine months ended September 27, 1998, the Company purchased office
and restaurant equipment totaling $119,337 and received proceeds from
disposal of equipment of $1,200. The Company also invested an additional
$15,000 in a joint venture with Pigs-R-Us and paid expenses of approximately
$28,000 which are to be reimbursed by the joint venture. The Company has also
paid an additional earnest money deposit of $796,000 toward a potential
restaurant chain acquisition and had an increase in other assets of $123,000.
As a result of these activities, the Company used cash for investing
activities of approximately $1,080,000 for the nine months ended September
27, 1998.
For the nine months ended September 30, 1997, the Company purchased office
and restaurant equipment of $9,000, paid an earnest money deposit of $50,000
toward the potential business acquisition, and had an increase in other
assets of $53,000. As a result of these activities, the Company used cash for
investing activities of approximately $112,000 for the nine months ended
September 30, 1997.
For the nine months ended September 27, 1998, the Company received proceeds
from short-term borrowings of $37,000 of which $22,000 has been repaid. The
Company also received proceeds of $775,000 from the sale of an additional
428,500 shares of common stock and raised $1,028,810 from the sale of
$1,275,000 of Series 1 Secured Convertible Debentures Due 2001. As a result
of these activities, the Company reported net cash provided by financing
activities of $1,818,810 for the nine months ended September 27, 1998.
For the nine months ended September 30, 1997, the Company received proceeds
from short-term borrowings of $50,000, which was repaid. The Company also
received proceeds from the sale of stock for $117,000 and $500,000 in stock
subscription deposits for shares sold pursuant to Regulation D, Rule 504
which were issued in October 1997. As a result, the Company reported net cash
provided by financing activities of $617,000 for the nine months ended
September 30, 1997.
The Company began selling its sauces through Wal-Mart Supercenters in
December 1997 and through a regional grocery chain in the third quarter of
1998. Capital is needed to finance the production of inventory and
receivables for approximately 30 days of sales.
In March 1998, the Company, through its joint venture partner, Pigs-R-Us,
opened its first restaurant, a Foxworthy's Backyard Bar-B-Q. As of September
27, 1998, the Company had contributed $50,000 to the joint venture.
Additionally, the Company has spent considerable funds in continuing to
refine the products, including the gift shop selections, at this unit. A
portion of such costs incurred directly for the benefit of the joint venture
has been billed to the joint venture. All other costs have been expensed or
have been capitalized as development costs. The Company plans to acquire the
remaining interest in the joint venture in the fourth quarter of 1998
pursuant to an agreement with its joint venture partner whereby shares of
common stock will be issued after the completion of an audit. The Company has
agreed to manage the operations until the final audit is complete and the
shares of common stock have been issued.
<PAGE>9
In March 1998, the Company entered into an agreement to acquire Woody's Bar-
B-Q restaurants, a 33-unit chain based in Jacksonville, Florida. The chain
includes seven company operated and 26 franchised and licensed locations. The
Company expects to pay $2,000,000 in cash plus issuing approximately
$3,400,000 of Convertible Promissory Notes bearing interest at 10% and
maturing in one year, subject to adjustment based upon a closing audit. The
Notes will be convertible into shares of common stock at the lower of $2.93
per share or the average daily closing bid prices for the 30 days prior to
conversion. The Company is attempting to raise the required cash through a
private placement of convertible debentures and other sources. The Company
authorized the issuance of up to $3,000,000 in aggregate principal amount of
Series 1 Secured Convertible Debentures Due 2001. The Debentures bear
interest at 5% per annum, payable quarterly, and are redeemable after two
years at 125% of the principal amount so sold. The Debentures are convertible
at the lower of $2.51 or the average closing bid price of the common stock
for the 5 previous trading days multiplied by 70%. In August and September
1998, the Company sold $1,275,000 of Series 1 Secured Convertible Debentures
Due 2001. No assurance can be made that the financing can be completed or
that the closing will occur.
In February 1998, the Company also entered into an agreement to acquire the
leasehold interest and equipment of an existing barbecue restaurant in
Asheville, North Carolina that is being converted to a Foxworthy's Smokehouse
Grill and will serve as the Company's training and product development center
for this restaurant concept. In addition, the former owners signed a five
year noncompete agreement. The Company acquired these tangible and intangible
assets by issuing $670,000 worth of Company's common stock and expects to
spend approximately an additional $210,000 on the conversion. The unit is
expected to open in the fourth quarter of 1998.
The Company needs to raise approximately $1,200,000 to complete the
acquisition of Woody's. Additionally, the Company needs working capital for
corporate expenditures of approximately $1,000,000 or more over the next 12
months to fund the ongoing development of the Company's business plan. Upon
completion of the Woody's acquisition, the Company will have completed its
capital requirements for its operations development phase. Additional capital
may be required for future restaurant development and/or future acquisitions
that may become available. The Company intends to pursue expansion by
internal growth or acquisition, as capital and business opportunities become
available.
Results of Operations. For the nine months ended September 27, 1998, the
Company had a net loss of $1,597,959. This loss resulted from continued
selling, general and administrative expenses incurred prior to the generation
of significant revenues from restaurant or franchise operations, or from
product sales. Net sales for the nine months were primarily from the sale of
food products and merchandise through various distribution networks. No
significant revenues from restaurant or franchise operations have been
produced for the period ended September 27, 1998.
In the nine months ended September 27, 1998, the Company recognized unearned
services received from stock previously issued for $13,500, expenses of
$5,625 for stock options previously granted at a discount, depreciation and
amortization expense of $16,010 and a loss on disposal of equipment of
$1,141. The Company also issued shares of common stock valued at $207,060 for
services provided and expensed. Operationally, the Company had a increase in
accounts receivable of $5,498, a decrease in prepaid expenses and other
assets of $83,567, an increase in inventories in anticipation of opening a
new unit in Asheville, NC of $65,032, and an increase in accounts payable of
$252,345 resulting from ongoing expenses, including continued product and
restaurant design and development and the administrative costs associated
with the assumption of the management of Woody's, without generating
substantial revenues. Accrued expenses decreased by $28,818 primarily from
the payment of salaries accrued in 1997 for the president and two other
officers. As a result, for the nine months ended September 27, 1998, the
Company reported net cash used by operating activities of $1,118,059.
For the nine months ended September 27, 1998, the Company has net sales of
$290,346 and cost of sales of $193,614, reflecting the expected high cost of
sales on product and food sales during the early phases. Selling, general and
administrative expenses of $1,698,217 consisted primarily of compensation and
benefits of $427,674, consulting expenses of $303,132, contract services of
$128,348, insurance of $52,506, marketing of $100,751, professional fees of
$173,612, restaurant development expense of $196,526, and travel and
stockholder relations of $200,235. These expenses continue to be significant
as the Company attempts to attract additional equity and debt financing and
to develop and implement its initial business plan.
For the nine months ended September 30, 1997, the Company had a net loss of
$405,947. This loss occurred during the initial start up period of the
Company. The Company issued shares of common stock valued at $207,190 in
exchange for services. Because of the start up nature during this period, the
Company experienced an increase in prepaid expenses and other assets of
$119,559 primarily related to prepaid insurance and consulting fees. Accounts
payable increased by $5,513 and accrued expenses increased $68,655 for
accrued payroll cost. As a result, for the nine months ended September 30,
1997, the Company reported net cash flow used by operating activities of
$243,898.
<PAGE>10
For the nine months ended September 30, 1997, the Company generated no
revenues during this initial period of operations. The Company had selling,
general and administrative expenses of $405,796, which consisted of
compensation and benefits of $102,458, consulting expenses of $80,000,
contract services of $117,349, directors' fees of $15,000, and professional
fees of $45,786. The expenses were incurred as the Company hired its initial
personnel, engaged professionals to assist with the development of its
operating concepts and started its search for potential investors.
Plan of Operation. The Company is not delinquent in any of its obligations
even though the Company has generated limited operating revenues. However,
the Company is currently outside of normal vendor terms and continues to
negotiate with vendors while the management continues its efforts to raise
capital. The Company intends to market its products utilizing cash made
available from the private and public sale of its securities. The Company's
management is of the opinion that revenues from the sale of its products, the
revenues from the opening of the Asheville, North Carolina restaurant and the
proceeds of the sales of its securities will be sufficient to pay its
expenses until additional restaurants can be added pursuant to the initial
business plan.
On a long term basis, the Company's liquidity is dependent on continuation
and expansion of operations, revenue generation, additional infusions of
capital and potential debt financing. Company management believes that
additional capital and debt financing in the short term will allow it 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 the needed additional
equity or debt financing in the future.
Year 2000 Compliance Issues. The Company has established a plan to address
Year 2000 issues. This plan encompasses the phases of awareness, assessment,
renovation, validation and implementation. These phases will enable the
Company to identify risks, develop action plans, perform adequate testing and
determine if its processing systems will be Year 2000 ready. Successful
implementation of this plan are expected to mitigate any extraordinary
expenses related to the Year 2000 issue. The Company has a reasonable basis
to preclude that the Year 2000 issue will not materially affect future
financial results, or cause reported financial information not to be
necessarily indicative of future operating results or future financial
conditions. This basis is due to the fact that the Company has or is
installing all new information technology systems, including computer
hardware and software which are Year 2000 compliant. This is the first
generation of equipment and software for the Company since it has just
recently began operations. It also plans that restaurant operations as they
begin will utilize state of the art point of sale equipment.
The Company plans to contact all material customers, vendors, suppliers and
non-information technology suppliers regarding their Year 2000 state of
readiness. This process will be conducted over the next six to nine months.
No assurance can be given that the Year 2000 compliance plan will be
completed successfully by the Year 2000. The Company's current contingency
plan is simplistic and involves operating on a manual basis for a short
period of time without interruption of service or quality.
Successful and timely completion of the Year 2000 project is based on
management's best estimates derived from various assumptions of future
events. These events are inherently uncertain, including the progress and
results of vendors, suppliers and customers Year 2000 readiness.
<PAGE>11
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company may be a party to various legal
proceedings incident to its or their business. At September 27,
1998, there were no legal proceedings to which the Company was a
party, or to which of any of their property was subject, which were
expected by management to result in a material loss.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
On July 9, 1998, the Company held its Annual Meeting of Stockholders
to elect directors and to select the firm of Crisp Hughes Evans LLP as
Independent Certified Accountants for the year ended December 31,
1998. The number of shares eligible to vote as of the Record Date,
June 15, 1998, was 7,931,999.
<PAGE>11
The following individuals were elected as directors, each for the term
indicated:
Directors
Name Term
David Womick 2 years
John P. Williams 2 years
Samuel J. Fox 2 years
Erich K. Schmid 1 year
James E. Scheifley 1 year
All directors were elected by unanimous vote of the 5,814,106 shares
represented in person or by proxy. The above individuals constitute
all of the members of the Company's Board of Directors.
The resolution to select Crisp Hughes Evans LLP as Independent
Certified Accountants for the year ended December 31, 1998 was passed
with 5,809,106 shares voting for such selection and 5,000 shares
abstaining from voting.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
No Exhibits
A current report on Form 8-K was filed on September 25, 1998 to report that
the Company had released $870,930 held in escrow to the shareholders of
Woody's Bar-B-Q Holdings, Inc. to extend the closing of the
acquisition by the Company of all of the outstanding stock of
Woody's. The Form 8-K included as exhibits the Exchange of
Stock/Purchase Agreement and extensions. No financial statements
were filed.
<PAGE>12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Redneck Foods, Inc.
Date November 11, 1998
By /s/ David Womick
----------------------------
David Womick
(President and Chief Executive Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-27-1998
<CASH> 18,320
<SECURITIES> 0
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<DEPRECIATION> 8,847
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<COMMON> 11,259
0
0
<OTHER-SE> 657,735
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<SALES> 290,346
<TOTAL-REVENUES> 290,346
<CGS> 193,614
<TOTAL-COSTS> 193,614
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<INTEREST-EXPENSE> 2,371
<INCOME-PRETAX>
(1,597,959)
<INCOME-TAX> 0
<INCOME-CONTINUING>
(1,597,959)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME>
(1,597,959)
<EPS-PRIMARY> (.18)
<EPS-DILUTED> (.18)
</TABLE>
