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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER PERIOD ENDED APRIL 30, 1999
Commission File No. 0-25109
Integrated Food Resources, Inc.
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(Name of Small Business Issuer in Its Charter)
State of Nevada 93-1255001
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6700 S.W. Sandburg Street, Tigard, Oregon 97223
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(Address of Principal Executive Offices)
503-598-4375
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(Issuer's Telephone No.)
Issuer has (1) filed all reports required to be filed by Section 13 or 15(d)
of the Exchange Act 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.
As of April 30, 1999, there were 16,184,643 shares of Class A Common
Stock issued and outstanding.
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INTEGRATED FOOD RESOURCES, INC.
FORM 10-QSB
3RD QUARTER, FISCAL YEAR 1999
FEBRUARY 1, 1999 - APRIL 30, 1999
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PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
UNAUDITED
FOR THE PERIOD ENDING APRIL 30, 1999
<TABLE>
<CAPTION>
Assets
Current Assets
<S> <C>
Cash $ 27,495
Accounts Receivable $ 154,223
Note Receivable $ 7,500
Inventory $ 139,336
Prepaid Expenses $ 123,997
Prepaid Interest $ -
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Total Current Assets $ 452,551
Fixed Assets
Office and Fact. Equip $ 453,864
Tuna Packing Plant $ 918,735
Less Accumulated Depreciation $ (185,579)
Land Held for Development $ 74,498,400
Valuation Adj-Foreign Land Grant $ (74,498,400)
Other Assets $ 16,241
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Total Fixed Assets $ 1,203,261
Intangible Assets
Goodwill $ 4,591,035
Less: Amortization $ (225,746)
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Total Intangible Assets $ 4,365,289
TOTAL ASSETS $ 6,021,090
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Liabilities
Current Liabilities
Accounts Payable $ 300,146
Accrued Liabilities $ -
Notes Payable (Stockholder) $ 420,794
Short Term Notes Payable $ 10,022
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Total Current Liabilities $ 730,962
Long Term Liabilities
Longterm Capital Lease $ 19,006
Long Term Note Payable - Stockholder $ 98,240
Long Term Note Payable - Third Party $ 628,230
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Total Long Term Liabilities $ 745,476
TOTAL LIABILITIES $ 1,476,438
Equities
Preferred Stock, $.001 par
value 10,000,000 shares
authorized, 800 issued and
outstanding $ 4,051
Additional Paid-in-capital(Preferred) $ 4,045,950
Common Stock, $.001 par value,
50,000,000 shares authorized,
16,184,643 issued and outstanding $ 16,800
Additional Paid-in-capital(Common) $ 4,145,596
Retained Earnings $ (2,505,732)
Net Income $ (1,161,382)
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Total Equity Accounts $ 4,544,663
Total Liabilities & Owners Equity $ 6,021,101
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</TABLE>
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CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
FOR THE PERIODS ENDING APRIL 30
<TABLE>
<CAPTION>
Quarter Ended April 30 Six Months Ended April 30
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Gross Sales $ 260,478 $971,873 $ 693,723 $ 3,785,250
Cost of Goods Sold $ 213,699 $1,087,128 $ 362,446 $ 3,866,280
SELLING, GENERAL AND ADMIN EXPENSES
Administrative/Consulting $ 231,804 $234,408 $ 574,585 $ 830,029
Other selling and general $ 109,986 $ 58,944 $ 424,384 $ 257,075
Depreciation & Amortization $ 119,052 $ 9,270 $ 374,567 $ 24,397
Interest Expense $ 6,968 $ 65,857 $ 119,041 $ 183,719
Miscellaneous Expense $ - $ - $ - $ -
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Total Operating Exp. $ 467,810 $368,478 $ 1,492,578 $ 1,294,719
Total Income $(421,031) $ (483,734) $(1,161,302) $(1,375,749)
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Other Income
Interest Income $ - $ - $ - $ 860
Miscellaneous Income $ - $ - $ - $ -
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Total Other Income $ - $ - $ - $ 860
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Net Income $(421,031) $ (483,734) $(1,161,302) $(1,374,889)
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</TABLE>
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CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
FOR THE PERIOD ENDING APRIL 30, 1999
<TABLE>
<CAPTION>
CASH FLOWS RELATED TO
OPERATING ACTIVITIES
<S> <C>
Net Loss $ (421,031)
Adjustments to reconcile net loss to cash from
operating activities
Depreciation and Amortization $119,051
Increase/Decrease in:
Receivables $(21,656)
Note Receivable $ 20,025
Inventories $ 70,119
Prepaid Expenses $ 52,216
Accounts Payable $(15,055)
Accrued Liabilities $ -
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Net Cash from Operating Activities $224,700
CASH FLOWS RELATED TO
INVESTING ACTIVITIES
Purchase of Equipment $(45,516)
Tuna Packing Plant Costs $ -
Other Assets $ -
Goodwill $ -
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Net Cash from Investing Activities $(45,516)
CASH FLOWS RELATED TO
FINANCING ACTIVITIES
Repayment of Related Party Notes Payable $167,628
Repayment of Third Party Notes Payable $(98,435)
Proceeds from Long Term Capital Lease $ -
Proceeds from Long Term Notes Payable - Third Party $ 63,174
Proceeds from Long Term Notes Payable - Related Party $ 98,240
Issuance of Preferred Stock $ -
Additional Paid-in-Capital-Preferred $ 25,000
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Net Cash from Financing Activities $255,607
Net Increase (Decrease) in Cash $ 13,759
CASH, BEGINNING OF PERIOD $ 13,735
CASH, END OF PERIOD $ 27,494
</TABLE>
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CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
UNAUDITED
FOR THE PERIOD ENDING APRIL 30, 1999
<TABLE>
<CAPTION>
Common Stock Preferred Stock Total
------------ --------------- Additional Paid-in-Capital Accumulated Stockholders'
Shares Amount Shares Amount Common Preferred Deficit Equity
------ ------ ------ ------ ------ --------- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance January 31, 1999 16,184,643 $16,180 4,050,799 $4,051 $4,120,596 $4,045,950 $(3,246,083) $ 4,940,694
Contributed Capital $ 25,000 $ 25,000
Net Loss $ (421,031) $ (421,031)
Balance April 30, 1999 16,184,643 $19,180 4,050,799 $4,051 $4,145,596 $4,045,950 $(3,667,114) $ 4,544,663
</TABLE>
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS
AND RESULTS OF OPERATIONS
REVIEW OF OPERATING RESULTS
CLIPPERNET CORPORATION, INC. (CLIPPERNET)
During the quarter February 1, 1999 to April 30, 1999, ClipperNet
had a loss of $309,657 on sales of $200,003. At the current annualized
revenue levels, ClipperNet is operating in a single regional market at the
EBITDA level of ($220,326). As ClipperNet continues to expand its market
dominance as the provider of high-speed microwave Internet transport in the
Eugene/Springfield, Oregon market and reaches demonstrated profitability and
operational stability, this regional business model will be duplicated in a
nationwide roll-out achieved through licensing, acquisition of local Internet
Service Providers (ISP), joint ventures and internally-funded deployment of
the technology.
ClipperNet intends to continue following its growth strategy which
has been formulated along three primary fronts: organic growth of its network
and marketing influence, acquisition of ISPs in markets where the
implementation of its high-speed microwave technology is practical and
through strategic alliances with companies that enhance ClipperNet's ability
to address its primary markets. Additional tower sites have been identified
and contracts are being negotiated for equipment space and continued
expansion. Growth and expansion of ClipperNet's operations continued on
target with previous forecasts. ClipperNet is focusing on expanding its
business customer base of Internet users by utilizing advertisement credits
with local media, and it expects to capture a substantial share of high-speed
business-to-business transport customers in the Eugene/Springfield market.
New commercial accounts and private subscriptions continue to be added in
several locations in the Willamette Valley, and
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ClipperNet's sales activities throughout the Western States Region continue
according to plans.
SEABOURNE VENTURES, INC. (SEABOURNE)
During the quarter February 1, 1999 to April 30, 1999, Seabourne had
a loss of $111,374 on sales of $60,475. This compares with a loss of
($483,734) on sales of $1,791, $971,873 from the same period from the
previous fiscal year.
As previously disclosed in Form 10-QSB for the quarter ended January
31, 1999, all tuna packing operations have been suspended while Company
management identifies and establishes the necessary means to take full
control of the sourcing operation for raw material. The key to being able to
assert this control is the deployment of its own fleet of fishing and factory
processing vessels. Securing the financing to build and operate this fleet is
senior management's top daily priority, and the expectations for a successful
closure remains high. Negotiations also remain underway towards finalization
of construction contracts with a European shipyard for up to six 79 meter
vessels.
CAPITAL NEEDS AND FUTURE REQUIREMENTS
CLIPPERNET
Anticipated funding of ClipperNet's growth will be through private
placement to institutional and accredited investors for a combination of
convertible preferred stock and warrants issued at the parent company level.
Presentations of ClipperNet's high-speed microwave technology have been made to
investors. Significant progress has been made with regard to assessment of
milestones and implementation.
SEABOURNE
The ships will be financed through pre-sold contracts to major U.S.
food retailers, export loans, grants and local government subsidies. The company
expects to finance most of the cost of the vessels.
CAPITAL-INTENSIVE PROJECTS
The Company remains actively engaged in the development of Project
Harvest-Registered Trademark-. Project Harvest-Registered Trademark- is a
software-driven technology that links global buyers and sellers of food
products via secure internet connections, and it will enable them to
consummate business to business E-commerce transactions.
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Buyers will be able to identify specific suppliers who meet their customized
requirements for hazard control, food safety, process control, hygiene,
manufacturing practices, financial stability and product quality. Project
Harvest-Registered Trademark- will create the first global standard for the
rating of factories and product quality. This business to business E-Commerce
technology is expected to revolutionize the way food products are bought and
sold worldwide.
The Company's expected funding requirements to finish the software
development, hire the management team and complete the business plan remains as
previously disclosed at $10 million. These funds are expected to be provided
through the Company's sale of convertible preferred stock.
CLIPPERNET
ClipperNet continues to develop Points-of-Presence (PoP) in selected
regional markets in early implementation of its "x"/PoP rollout plan. The
"x"/PoP plan includes Z/PoPs (Zone Points-of-Presence, e.g., the Zone office
located in Eugene, Oregon - functioning alongside ClipperNet corporate),
M/PoPs (Metro Points-of-Presence, e.g., Tigard, Oregon), A/PoPs (Area
Points-of-Presence, e.g., Lebanon, Albany & Corvallis, Oregon) and B/PoPs
(Broadcast Points-of-Presence, e.g., KUGN AM/FM radio station, Eugene,
Oregon). Revised estimates for the "x"/PoP rollout strategy are anticipated
at $10 to $15 million for the initial milestone of Z/PoPs in each time zone
with appropriate staffing and network infrastructure.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Kennedy Funding, Inc. (KFI), as defendant, has responded to the
previously disclosed civil action filed by the Company, as plaintiff, in the
Superior Court of New Jersey, Bergen County Law Division, docket no. BER-L,
by filing a counterclaim. KFI alleges the Company failed to meet the terms
of the loan commitment, and they have filed for a judgement for $375,000.00
plus attorney's fees. The Company will continue to vigorously defend its
position in this matter, and it remains confident it will receive a favorable
final judgment. No adverse material outcome is expected.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
During the covered period, there were no changes in the number of
issued and outstanding shares in any class of the Company's securities. The
total of Class A Common Stock issued and outstanding as of the end of the
Company's third fiscal quarter is 16,184,643 shares.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
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During the covered period, there were no defaults on any senior
securities.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the covered period, no matters were submitted to a vote of the
shareholders.
ITEM 5 - OTHER INFORMATION
The following additional matters of interest occurred during the
covered period.
On February 11, 1999, the Board of Directors accepted the
resignation of Phillip M. Chrusz as a Director.
On March 18, 1999, the Board of Directors accepted the resignation
of Brian E. Bittke as Executive Vice President and a Director.
ITEM 6 - EXHIBITS
All relevant and previously disclosed exhibits incorporated by
reference. Financial Data Schedule will file by amendment.
