SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 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 000-24941
Delicious Brands, Inc.
- - --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
Delaware 06-1225882
- - -------------------------------- ---------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
2070 Maple Street, Des Plaines, Illinois 60018
- - ----------------------------------------- -------------------------------------
(Address of Principal executive offices) (Zip code)
Registrant's telephone number including area code: (847) 699-3200
----------------------------
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.
YES NO X
-------- ----------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
4,282,842 shares of Common Stock were outstanding on November 30, 1998.
<PAGE>
DELICIOUS BRANDS, INC.
FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
I N D E X
PART I: FINANCIAL INFORMATION PAGE
Balance Sheets as of September 30, 1998 and December 31, 1997 3
Statements of Operations, Three Months and Nine Months Ended 4
September 30, 1998 and 1997
Statements of Cash Flows, Nine Months Ended 5
September 30, 1998 and 1997
Notes to Consolidated Condensed Financial Statements 6
Management's Discussion and Analysis of Financial Condition 9
and Results of Operations
PART II: OTHER INFORMATION
Changes in Securities and Use of Proceeds 12
Submission of Matters to a Vote of Security Holders 12
Exhibits and Reports on Form 8-K 12
2
<PAGE>
DELICIOUS BRANDS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS
<S> <C> <C>
September 30 December 31
------------ -----------
1998 1997
------------ -----------
(unaudited)
Current Assets:
Cash $ 0 $ 808,349
Accounts receivable including $514,710 and $276,294,
respectively, due from related parties, net of allowances of
$909,395 and $575,000, respectively................................. 6,887,311 1,924,390
Inventory................................................................. 2,701,258 152,399
Due from distributors..................................................... 59,798 172,176
Prepaid expenses and other current assets................................. 436,555 141,925
------------- ------------
10,084,922 3,199,239
------------- ------------
Property and Equipment, Net of Accumulated Depreciation......................... 927,124 177,852
------------- ------------
Other Assets:
Goodwill.................................................................. 8,732,522 2,698,174
Other .................................................................... 1,181,835 411,340
------------- ------------
9,914,357 3,109,514
------------- ------------
$ 20,926,403 $ 6,486,605
============= ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities:
Bank loan payable.........................................................$ 3,242,874 $ 1,498,382
Notes payable............................................................. 5,200,000 0
Current portion of subordinated debt...................................... 393,332 0
Accounts payable and accrued expenses, including $2,314,562
and $62,530, respectively, due to related parties................. 13,725,245 4,617,552
Due to distributors....................................................... 541,222 326,012
Current portion of long-term liabilities.................................. 906,965 1,120,544
------------- ------------
24,009,638 7,562,490
------------- ------------
Long-term Liabilities:
Subordinated debt......................................................... 0 1,960,000
Restructuring liability................................................... 753,796 880,573
Packaging loss liability.................................................. 863,892 870,075
Other .................................................................... 0 1,919
------------- ------------
1,617,688 3,712,567
------------- ------------
Stockholders' Deficit:
Preferred stock, $.01 par value, 1,000,000 shares authorized, 195,834
shares issued and outstanding in 1998, no shares
issued and outstanding in 1997...................................... 1,958 0
Class A common stock, voting, $.01 par value, 25,000,000 shares
authorized, 3,331,767 and 3,191,767 shares issued in 1998
and 1997, respectively.............................................. 33,318 31,918
Additional paid-in capital................................................ 9,228,735 6,969,815
Accumulated deficit.........................................................(13,803,885) (11,629,136)
------------- ------------
(4,539,874) (4,627,403)
------------- ------------
Less, common stock in treasury at cost.................................... (161,049) (161,049)
------------- ------------
Total stockholders' deficit......................................... (4,700,923) (4,788,452)
------------- ------------
$ 20,926,403 $ 6,486,605
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
3
<PAGE>
DELICIOUS BRANDS, INC.
STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------- --------------------------------------
1998 1997 1998 1997
------------ ------- ----------- ----------------
<S> <C> <C> <C> <C>
Net Sales (including approximately
$1,282,000, $1,342,000, $5,050,000
and $3,902,000, respectively, to related
parties)................................... $ 17,491,396 $ 8,001,847 $ 39,822,411 $ 23,324,239
Cost of Sales (including approximately
$968,000, $112,000, $2,881,000 and
$301,000, respectively, from related
parties)................................... 13,241,731 6,345,059 30,688,685 18,453,664
------------- ----------- ------------ -------------
Gross Profit................................... 4,249,665 1,656,788 9,133,726 4,870,575
------------- ----------- ------------ -------------
Operating Expenses:
Promotion and selling.................... 2,984,242 983,810 6,307,400 2,562,229
General and administrative............... 1,652,344 756,887 4,158,140 2,231,915
------------- ----------- ------------ -------------
4,636,586 1,740,697 10,465,540 4,794,144
------------- ----------- ------------ -------------
Income (Loss) from Operations.................. (386,921) (83,909) (1,331,814) 76,431
------------- ----------- ------------ -------------
Other Income (Expense):
Interest expense......................... (368,837) (90,917) (883,351) (277,511)
Other, net............................... 2,611 0 40,416 0
------------- ----------- ------------ -------------
(366,226) (90,917) (842,935) (277,511)
------------- ----------- ------------ -------------
Loss before Provision for Income Taxes......... (753,147) (174,826) (2,174,749) (201,080)
Provision for Income Taxes..................... 0 0 0 0
------------- ----------- ------------ -------------
Net Loss ................................... $ (753,147) $ (174,826) $ (2,174,749) $ (201,080)
============= =========== ============ =============
Earnings per Share:
Basic:
Net loss per common share......... $ (.23) $ (.06) $ (.67) $ (.07)
============= =========== ============ =============
Weighted average number of
common shares outstanding....... 3,282,842 2,927,842 3,264,380 2,927,842
Diluted:
Net loss per common share......... $ (.23) $ (.06) $ (.67) $ (.07)
============= =========== ============ =============
Weighted average number of
common shares outstanding...... 3,282,842 2,927,842 3,264,380 2,927,842
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
DELICIOUS BRANDS, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------
1998 1997
------------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss .................................................. $ (2,174,749) $ (201,080)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization........................... 907,841 265,563
Provision for bad debts................................. 317,144 25,487
Increase (Decrease) in cash (exclusive of
Salerno acquisition) from changes in:
Accounts receivable............................... (1,562,589) (1,067,475)
Inventory......................................... (999,139) 206,080
Due from distributors............................. 112,378 0
Prepaid expenses and other current assets......... 70,779 55,295
Other assets...................................... (262,229) (14,637)
Accounts payable and accrued expenses............. 3,850,969 368,166
Due to distributors............................... 215,210 213,941
Accrued restructuring liabilities................. (146,777) 0
Other liabilities................................. (186,186) (9,560)
------------ -----------
Net cash provided by (used in) operating activities........... 142,652 (158,220)
------------ -----------
Cash Flows from Investing Activities:
Payment for purchase of assets of Salerno Foods,
L.L.C. (net of cash acquired of $12,564)................ (3,709,599) 0
Purchase of property and equipment............................ (69,539) (43,333)
------------ -----------
Net cash used in investing activities......................... (3,779,138) (43,333)
------------ -----------
Cash Flows from Financing Activities:
Payments of long-term debt.................................... (15,498) (13,972)
Payments of bank loan payable, net............................ (1,558,419) (122,439)
Checks issued in excess of funds on deposit................... 790,182 0
Proceeds from issuance of notes payable....................... 3,500,000 0
Proceeds from issuance of common stock........................ 840,000 0
Initial public offering costs................................. (583,738) 0
Payment of stock issuance costs............................... (144,390) 0
------------ -----------
Net cash provided by (used in) financing activities........... 2,828,137 (136,411)
------------ -----------
Increase (Decrease) in Cash...................................... (808,349) (337,964)
Cash, Beginning of Period........................................ 808,349 661,706
------------ -----------
Cash, End of Period.............................................. $ 0 $ 323,742
============ ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Income taxes............................................ $ 0 $ 0
============ ===========
Interest................................................ $ 663,640 $ 325,889
============ ===========
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
DELICIOUS BRANDS, INC.
STATEMENT OF CASH FLOWS -- (CONTINUED)
Supplemental Disclosure of Noncash Investing and Financing Activities:
On April 3, 1998, the Company acquired substantially
all of the assets and assumed certain liabilities
of Salerno Foods, L.L.C. In conjunction with the
acquisition, liabilities were assumed as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Fair value of assets acquired, including goodwill and transaction costs............ $12,771,886
Less: Seller notes............................................................... (1,500,000)
Cash paid (net of $220,000 purchase price adjustment)............................. (3,280,000)
Transaction costs................................................................. (497,433)
--------------
Liabilities assumed............................................................... $ 7,494,453
============
</TABLE>
During 1998, the Company incurred $200,000 in financing
fees which were included in notes payable at
September 30, 1998.
As of August 1, 1998, holders of $1,566,668 aggregate
principal amount of 9% Notes exchanged such notes
for an aggregate of 195,834 shares of Series A
Preferred Stock pursuant to an offer to exchange
made by the Company.
As of September 30, 1998, unpaid transaction costs of
approximately $275,270 were included in accounts
payable and accrued expenses.
During March and October of 1997, in satisfaction for payments
of trade accounts receivable, an aggregate $150,000 of
subordinated debt was redeemed and cancelled.
The accompanying notes are an integral part of this statement.
6
<PAGE>
DELICIOUS BRANDS, INC.
NOTES TO THE FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements included herein were prepared
pursuant to the rules and regulations for interim reporting under the Securities
Exchange Act of 1934, as amended. Accordingly, certain information and footnote
disclosures normally accompanying the annual financial statements were omitted.
The interim financial statements and notes should be read in conjunction with
the annual audited financial statements and notes thereto contained in the
prospectus of Delicious Brands, Inc. (the "Company") dated November 12, 1998.
The accompanying unaudited interim financial statements contain all adjustments,
consisting only of normal adjustments, which in the opinion of management were
necessary for a fair statement of the results for the interim periods. Results
for the interim periods are not necessarily indicative of results for the full
year.
MATTERS AFFECTING COMPARABILITY - ACQUISITION OF ASSETS
On April 3, 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. (Salerno). Accordingly, the
Company's results of operations for the three months and nine months ended
September 30, 1998 include the operating results of Salerno whereas the
comparable three months and nine months ended for the prior year do not.
The following unaudited pro forma information has been prepared assuming the
acquisition had taken place at January 1, 1997. The unaudited pro forma
information includes adjustments for interest expense that would have been
incurred to finance the purchase, additional depreciation of the property and
equipment acquired, amortization of the goodwill arising from the acquisition
and the result of conforming Salerno's accounting policy for slotting fees to
the Company's policy. The unaudited pro forma results of operations are not
necessarily indicative of what the results that would have been had the Salerno
acquisition been effected on the assumed date.
Unaudited for the Nine Months Ended
-----------------------------------
September 30, September 30,
1998 1997
------------- --------------
Net sales.......................... $ 48,927,759 $52,154,880
Loss before income taxes........... $ (2,649,792) $(1,192,222)
Net loss........................... $ (2,649,792) $(1,192,222)
Net loss per share:
Basic........................ $ (0.81) $ (0.41)
Diluted...................... $ (0.81) $ (0.41)
BUSINESS AND OWNERSHIP
On November 17, 1998 the Company consummated an initial public offering (the
"offering") of 1,000,000 shares of its common stock at $12.00 per share. Total
net proceeds to the Company of approximately $9,700,000 are being used to repay
acquisition debt and fees, reduce trade payables and for general corporate
purposes.
2. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per share and diluted net income (loss) per share have
been calculated using the weighted average number of common shares outstanding
during each period. All options and warrants were omitted from the computation
of diluted net income (loss) per share because the options and warrants are
antidilutive when net losses are reported.
7
<PAGE>
3. INVENTORY
Inventory is stated at the lower of cost or market with cost determined by the
first-in, first-out (FIFO) method.
4. SUBORDINATED DEBT
Effective August 1, 1998, $1,566,668 of the Company's 9% Subordinated
Convertible Notes was exchanged for 195,834 shares of Series A Preferred Stock
pursuant to an offer to exchange made by the Company. Upon liquidation,
dissolution or winding up, the holders of Series A Preferred Stock are entitled
to receive liquidation value and any declared but unpaid dividends prior and in
preference to any distribution to the holders of common stock, any other class
of Preferred Stock or any other class of the Company's capital stock, whether
now existing or hereafter created. Upon the exchange, the expiration date of
warrants to purchase 107,730 shares of common stock was extended to April 27,
2001 from April 27, 1999.
The holders of shares of Series A Preferred Stock are entitled to receive, when
and as declared by the Board of Directors out of the assets of the Company
legally available for payment, dividends at the rate per share of ten percent
(10%) per annum on the aggregated stated value ($8.00 per share) of the Series A
Preferred Stock.
Each holder of Series A Preferred Stock has the right to convert each of such
holder's shares of Series A Preferred Stock into one share of Common Stock until
July 31, 2001. However, on August 1, 2001, each share of Series A Preferred
Stock will automatically convert into one share of common stock.
8
<PAGE>
MANAGEMENT'S DISCUSSION ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MATTERS AFFECTING COMPARABILITY - ACQUISITION OF ASSETS
On April 3, 1998, the Company acquired substantially all of the assets and
assumed certain liabilities of Salerno Foods, L.L.C. (Salerno). Accordingly, the
Company's results of operations for the three months and nine months ended
September 30, 1998 include the operating results of Salerno whereas the
comparable three months and nine months ended for the prior year do not.
RESULTS OF OPERATIONS
Net Sales. Net sales increased 119% to $17.5 million for the three months ended
September 30, 1998. For the nine months ended September 30, 1998, net sales
increased 71% to $39.8 million. The net sales increases resulted primarily from
the inclusion of the April 3, 1998 acquisition of Salerno Foods, L.L.C. which
totaled $9.9 million and $18.4 million, respectively. During both periods
Frookie sales declined in anticipation of the 1998 fourth quarter introduction
of a new reformulated Frookie product line.
Gross Profit. Gross profit increased 147% to $4.2 million for the three months
ended September 30, 1998. For the nine months ended September 30, 1998 gross
profit increased 86% to $9.1 million. The gross profit increases resulted
primarily from the inclusion of the April 3, 1998 acquisition of Salerno Foods,
L.L.C. which totaled $2.8 million and $5.4 million, respectively. Gross profit
as a percentage of sales, excluding Salerno's gross profit, decreased 1% and
3.3% for the three and nine months ended September 30, 1998, respectively. The
decline was caused by lower sales in the higher margin Frookie product line,
discussed above, combined with higher promotional allowances required to dispose
of discontinued inventory and introduce new products. The lower margins were
partially offset by higher margins on the value-oriented product line.
Promotions, Selling and Administrative Expenses. Promotions, selling and
administrative increased 166% to $4.6 million for the three months ended
September 30, 1998. For the nine months ended September 30, 1998 promotions,
selling and administrative expenses increased 119% to $10.5 million. The
increase resulted primarily from the inclusion of the April 3, 1998 acquisition
of Salerno Foods, L.L.C. which totaled $2.7 million and $5.3 million,
respectively.
Other Income (Expense). Other expenses increased 333% to $400,000 for the three
months ended September 30, 1998 for the nine months ended September 30, 1998
other expenses increased 167% to $800,000. The increases were primarily due to
higher interest expense incurred to finance the Salerno Acquisition.
Provision for Income Tax. The provision for income tax for the three months and
nine months ended September 30, 1998 and 1997 was zero as a result of there
being a net operating loss for the period for which a valuation allowance was
provided to reduce the tax benefit of this loss. The valuation allowance for the
three months and nine months ended September 30, 1998 increased $68,000 and
$289,000, respectively. The valuation allowance increases were primarily due to
the uncertainty of the future utilization of the net operating losses generated.
The variation of the Company's effective tax rate from the federal statutory tax
rate is principally due to non-deductible amortization of intangible assets.
Net Loss. Net loss increased to $800,000 for the three months ended September
30, 1998. For the nine months ended September 30, 1998 net loss increased to
$2.2 million. The increased losses were a result of the factors discussed above.
The Company anticipates that it will continue to experience a net loss for the
three months ended December 31, 1998.
LIQUIDITY AND CAPITAL RESOURCES
In recent periods, the Company has utilized its working capital to cover
operating deficits. At September 30, 1998, the Company had accumulated a working
capital deficit of $13.5 million. Because the Company purchases its products
from co-packers, it does not intend to invest in plant or equipment relating to
the manufacture of products
9
<PAGE>
for sale. Further, the Company believes that its existing fleet of leased trucks
is sufficient for the foreseeable future. In addition, the Company's
introduction of new products represents an immaterial capital expenditure
because co-packers are responsible for the research, development and ingredients
costs. The only costs incurred by the Company are packaging design costs, which
did not exceed $100,000 in 1997 or 1998 and are not expected to increase
significantly in the future. Consequently, additions to property and equipment
are not expected to be material in future periods. The Salerno Acquisition
negatively impacted the liquidity of the Company. As of September 30, 1998, the
Company had incurred $5.2 million of short-term debt plus interest accrued
thereon at either 12% or 15% per annum. As of December 20, 1998, substantially
all of these amounts had been repaid out of the proceeds received from the
Company's initial public offering (the "offering"). The Company believes the
amount available under its revolving credit facility, together with the net
proceeds from the offering, will be sufficient for at least the next 12 months
to finance its operations, service interest payments on its debt and fund
capital expenditures.
On December 2, 1997, the Company consummated the first closing of a private
placement (the "First Closing") of a minimum of 87,500 shares of Common Stock
and a maximum of 350,000 shares of Common Stock (the "October Private
Placement"). At the First Closing, the Company issued an aggregate of 210,000
shares of Common Stock for an aggregate price of $1.3 million. The net proceeds
of $956,171 from the First closing were applied by the Company to increase cash
balances and reduce outstanding trade payables balances. On February 6, 1998,
the Company consummated a second closing of the October Private Placement (the
"Second Closing") pursuant to which it issued an aggregate of 140,000 shares of
Common Stock for an aggregate price of $840,000. The net proceeds of $695,610
from the Second Closing, were applied by the Company to increase cash balances
and reduce outstanding trade payables balances.
On April 3, 1998, the Company entered into an amendment to a revolving credit
facility with Republic Acceptance Corporation for a revolving line of credit of
up to $7.0 million. Borrowings under the revolving credit facility are due upon
demand and bear interest at 1.50% per annum above the reference rate of interest
publicly announced from time to time by U.S. Bank National Association (8.5% at
September 30, 1998). Borrowings under the revolving credit facility at September
30, 1998 was $3.2 million. Borrowings under the revolving credit facility are
collateralized by a first lien on substantially all of the assets of the
Company.
On April 3, 1998, the Company consummated the Salerno Acquisition. The purchase
price for Salerno consisted of (i) $3.3 million in cash, (ii) a $1.5 million
promissory note from the Company to Salerno (the "Salerno Promissory Note"),
bearing interest at a rate of 12% per annum, secured by a second lien on
substantially all of the Company's assets, and (iii) the assumption of
substantially all of the liabilities of Salerno. In connection therewith, the
Company entered into a loan agreement with American Pacific Financial
Corporation ("APFC") pursuant to which the Company borrowed $4.6 million,
bearing interest at a rate of 12% per annum through August 3, 1998 and 15% per
annum thereafter, from APFC (the "APFC Loan") consisting of $3.0 million in cash
used by the Company to fund a portion of the cash purchase price for Salerno,
$1.5 million in the form of APFC assuming the Salerno Promissory Note and
$100,000 as a fee for the APFC Loan. In addition, the Company issued to APFC a
promissory note in the principal amount of $100,000, bearing interest at a rate
of 12% per annum, as a fee for assuming the Salerno Promissory Note. The notes
and accrued interest thereon were repaid from the proceeds of the Offering.
As of August 1, 1998, holders of approximately $1.6 million aggregate principal
amount of 9% Notes exchanged such notes for an aggregate of 195,834 shares of
Series A Preferred Stock pursuant to an offer to exchange made by the Company.
Annual dividends of 10% paid semi-annually are payable on the shares of Series A
Preferred Stock out of the assets of the Company legally available for payment
thereof. The expiration date of warrants to purchase 107,730 shares of Common
Stock collectively held by the holders of the 9% Notes exchanged for the Series
A Preferred Stock was extended to April 27, 2001 from April 27, 1999.
On November 17, 1998 the Company consummated an initial public offering of
1,000,000 shares of common stock, at a price of $12.00 per share. After
deducting underwriting discounts and expenses the Company received approximately
$9.7 million of net proceeds from the offering.
10
<PAGE>
FORWARD-LOOKING STATEMENTS
Statements contained in this filing that are not historical facts are
forward-looking statements as that term is defined in the Private Securities
Litigation Reform Act of 1995. All Forward-Looking Statements are subject to
risks and uncertainties that could cause actual results to differ from those
projected. Other factors may cause results to differ from the forward-looking
statements contained in this filing and may affect the Company's prospects in
general and readers are urged to carefully review and consider the various
disclosures made by the Company.
YEAR 2000 PROGRAM
Many computer systems used in the current business environment were designed to
use only two digits in the date field and thus may experience difficulty
processing dates beyond the year 1999 and, as such, some computer hardware and
software will need to be modified prior to the Year 2000 to remain functional.
The Company's core internal systems that have been recently implemented are Year
2000 compliant. The Company is also completing a preliminary assessment of Year
2000 issues not related to its core systems, including issues with third-party
suppliers and warehouse communications. Based on its initial evaluation, the
Company does not believe that the cost of remedial actions will have a material
adverse effect on the Company's results of operations, liquidity or financial
condition. However, due to the general uncertainty of the Year 2000 readiness of
third-party suppliers and customers, the Company is unable to determine at this
time whether the consequences of Year 2000 failures will have a material impact
on the Company's results of operations, liquidity or financial condition. The
Company believes that, with the implementation of new business systems and
completion of projects as scheduled, the possibility of significant
interruptions of normal operations should be reduced.
11
<PAGE>
PART II: Other Information
ITEM 2: Changes in Securities and Use of Proceeds
(F) USE OF PROCEEDS
1. Effective date: November 12, 1998
2. Offering date: November 13, 1998
3. Not applicable
4. (i) The offering terminated November 17, 1998
(ii) Managing Underwriter: Network 1 Financial Securities,
Inc.
(iii) Title of Securities Registered: Common Stock, $.01 par
value per share
(iv) Amount Registered: 1,150,000 shares by the issuer,
1,042,000 shares by selling security holders Aggregate
Offering Price: $13,800,000 by the issuer, $12,504,000
by selling security holders Amount Sold: 1,000,000
shares Aggregate Offering Price of Amount Sold to Date:
$12,000,000
(v) No expenses were incurred during the period from the
effective date of the Securities Act registration
statement (November 12, 1998) and ending on the ending
date of the reporting period (September 30, 1998)
because the ending date of the reporting period
occurred prior to the effective date of the Securities
Act registration statement.
(vi) Not applicable
(vii) Not applicable
(viii) Not applicable
ITEM 4: Submission of Matters to a Vote of Security Holders
In the three months ended September 30, 1998, the following actions were taken
by written consent of the stockholders of the Company pursuant to Section 228 of
the General Corporation Law of the State of Delaware:
No. of Shares
Approving
ACTION TAKEN ACTION TAKEN DATE OF APPROVAL
1. Changing Company name to 3,774,507 (pre-split shares) July 9, 1998
"Delicious Brands, Inc."
2. Approving a 1-for-2 reverse 3,774,507 (pre-split shares) July 9, 1998
stock split of the Common
Stock of the Company
There were 6,565,656 shares of Common Stock outstanding during the period in
which written consents were delivered to the Company. Written notice of the
actions described above was sent to all stockholders on July 16, 1998.
ITEM 6: Exhibits and reports on Form 8-K:
a) Exhibits: 27 - Financial Data Schedule
b) Form 8-K: None
12
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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.
DELICIOUS BRANDS, INC.
(Registrant)
December 28, 1998 /s/ Michael J. Kirby
- - --------------------------------- --------------------------------
Date Michael J. Kirby
President, Director and
Chief Executive Officer
December 28, 1998 /s/ Jeffrey W. Weiner
- - --------------------------------- --------------------------------
Date Jeffry W. Weiner
Vice President and
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DELICIOUS
BRANDS, INC. CONSOLIDATED FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
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<BONDS> 1,617,688
0
1,958
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<EPS-DILUTED> (.67)
</TABLE>
