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 JANUARY 31, 2000
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 (of 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 January 31, 2000, there were 16,198,966 shares of Class A Common Stock
issued and outstanding.
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
UNAUDITED
AS OF JANUARY 31, 2000
Assets
Current Assets
Cash $ 103,070
Accounts Receivable 38,895
Intercompany Receivable -
Inventory -
Prepaid Expenses 100,000
Prepaid Interest -
------------
Total Current Assets 241,965
Fixed Assets
Office and Fact. Equip 12,582
Tuna Packing Plant -
Less Accumulated Depreciation (8,164)
Land Held for Development 74,498,400
Valuation Adj-Foreign Land Grant (74,498,400)
Other Assets 5,100
------------
Total Fixed Assets 9,518
Intangible Assets
Goodwill -
Less: Amortization -
------------
Total Intangible Assets -
Total Assets $ 251,483
============
Liabilities
Current Liabilities
Accounts Payable $ 84,269
Due from IFR -
Notes Payable (Stockholder) 437,425
Short Term Notes Payable 125,000
------------
Total Current Liabilities 646,694
Long Term Liabilities
Longterm Capital Lease -
Long Term Note Payable - Stockholder -
Long Term Note Payable - Third Party -
------------
Total Long Term Liabilities -
Total Liabilities 646,694
Equities
Preferred Stock, $.001 par value 10,000,000 shares
authorized, 4,067,087 issued and outstanding 4,067
Additional Paid-in-capital(Preferred) 8,062,222
Class A Common Stock, $.001 par value, 50,000,000
shares authorized, 16,198,966 issued and outstanding 16,199
Additional Paid-in-capital(Common) 213,352
Contributed Capital -
Retained Earnings (8,439,693)
Net Income (251,359)
------------
Total Equity Accounts (395,212)
Total Liablilities & Owners Equity $ 251,483
============
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
FOR THE PERIOD ENDING JANUARY 31, 2000
Quarter Ended January 31 Six Months Ended January 31
2000 1999 2000 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Gross Sales $ - $ 266,155 $ - $ 433,245
Cost of Goods Sold - 85,536 - 148,746
Selling, General and Admin Expenses
Administrative/Consulting 187,090 182,512 236,203 327,851
Other selling and general - 182,565 - 316,623
Depreciation & Amortization 871 127,136 1,742 255,518
Interest Expense 6,434 4,184 13,414 110,968
Miscellaneous Expense - - - -
------------- ------------- ------------- -------------
Total Operating Exp. 197,395 496,398 251,359 726,462
Total Income (194,395) (315,780) (251,359) (726,462)
------------- ------------- ------------- -------------
Other Income
Interest Income - - - -
Miscellaneous Income - - - -
------------- ------------- ------------- -------------
Total Other Income - - - -
------------- ------------- ------------- -------------
Net Income $ (194,395) $ (315,780) (251,359) (726,462)
============= ============= ============= =============
</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
FOR THE PERIOD ENDING JANUARY 31, 2000
CASH FLOWS RLATED TO OPERATING ACTIVITIES
Net Loss $ (251,359)
Adjustments to reconcile net loss to cash from
operating activities:
Depreciation and Amortization 1,742
Increase/Decrease in:
Receivables (5,042)
Note Receivable -
Inventories -
Prepaid Expenses 2,217
Accounts Payable 23,890
Accrued Liabilities -
-------------
Net Cash From Operating Activities 22,807
Cash Flows Related Investing Activites
Purchase of Equipment (231)
Tuna Packing Plant Costs -
Other Assets -
Goodwill -
-------------
Net Cash from Investing Activities (231)
CASH FLOWS RELATED TO FINANCING ACTIVITIES
Proceeds from Short-Term Related-Party Notes Payable 205,325
Proceeds from Third-Party Notes Payable 125,000
Proceeds from Long-Term Capital Lease -
Proceeds from Long-Term Third-Party Notes Payable -
Proceeds from Long Term Stockholders Notes Payable -
Issuance of Preferred Stock -
Issuance of Common Stock -
Additional Paid-in-Capital-Preferred -
-------------
Net Cash from Financing Activities 330,325
Net Increase (Decrease) in Cash 101,542
CASH, BEGINNING OF PERIOD 1,527
CASH, END OF PERIOD $ 103,069
<PAGE>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
UNAUDITED
FOR THE PERIOD ENDING JANUARY 31, 2000
<TABLE>
<CAPTION>
Common Stock Preferred Stock Total
------------ --------------- Additional Accumulated Stockholders'
Shares Amount Shares Amount Paid-in-Capital Deficit Equity
---------- -------- --------- --------- --------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance July 31, 1999 16,198,966 $ 16,199 4,067,087 $ 4,067 $ 8,275,574 $(8,439,693) $ (143,853)
Contributed Capital -
Net Loss (251,359) (251,359)
Balance January 31, 2000 16,198,966 $ 16,199 4,067,087 $ 4,067 $ 8,275,574 $(8,691,052) $ (395,212)
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS
- ---------------------
Review of Operating Results
Seabourne Ventures, Inc. (Seabourne)
As previously disclosed in Form 10-QSB for the 2nd quarter of Fiscal
Year 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 asserting this control
remains the deployment of the Company's own fleet of fishing and factory
processing vessels.
Integrated Food Finance Corp. (IFFC)
Morningstar Finance, Inc., an Oregon corporation, was organized by the
Company as a wholly owned subsidiary to obtain debt financing for the Company's
projects. On September 7, 1999, it filed Restated Articles of Incorporation
changing its name to Integrated Food Finance Corp.
The Company received a Letter of Commitment dated November 17, 1999
from CDC Capital, Inc., an institutional lender and the U.S. affiliate of a
major European financial institution, for $201,816,000. The loan will be made to
IFFC, and when the commitment is funded, IFFC will issue its 7% Senior Notes due
in December 2001 to this institutional lender. The loan will be collateralized
by a stand-by letter of credit issued by a major European bank. It is the
Company's intent to apply the proceeds from this funding arrangement to the
construction of the fishing vessels and to the development of Project
Harvest(R). The Company anticipates that the financing will be completed before
the end of the 3rd quarter of fiscal year 2000.
"Safe Harbor" Statement under the Private Securities Litigation Reform
Act of 1995: Statements in this disclosure regarding IFR's business which are
not historical facts are "forward-looking statements" that involve risks and
uncertainties. These potential risks and uncertainties could cause actual
results to differ from those contained in the forward-looking statements and
include, without limitation, IFR's ability to prove its business model and gain
operating efficiencies, its ability to enter different and diverse vertical
markets, the effects of government regulation, its dependence on a limited
number of enterprise customers and our limited relationships with buyers and
sellers. These and other risk factors are described in detail the company's
filings with the Securities and Exchange Commission.
Capital Needs and Future Requirements
Seabourne
The Company's vision for Seabourne includes the construction of six
combination fishing/factory ships at an approximate cost of $180 million. The
design of these fishing vessels has been completed. It is anticipated that the
first vessels will be operational by the fourth quarter of fiscal year 2001.
IFFC
IFFC continues to pursue and investigate global funding opportunities
in order to support the development and implementation of the Company's various
projects. To date, IFFC's efforts have produced the Letter of Commitment. No
other funding arrangements have been finalized.
<PAGE>
Capital-Intensive Projects
Project Harvest(R) continues to advance through the development and
planning process. Project Harvest(R) is the Company's business-to-business,
e-commerce platform. It will link global buyers and sellers of food products
with each other, and enable them to conduct secure internet transactions. Buyers
will be empowered to identify specific suppliers who meet their customized
requirements for hazard control, food safety, process control, hygiene,
manufacturing practices, financial stability and product quality. The Project
Harvest(R) technology will enable suppliers to create a global customer base by
broadening the reach of their marketing programs. Project Harvest(R) will create
the first global rating standards for production facilities and product quality.
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 approximately $10 million. These funds will be provided
from the proceeds of the Letter of Commitment.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company's previously disclosed civil action against Kennedy
Funding, Inc. (KFI) has been resolved through out-of-court settlement. Previous
indications throughout the course of this action pointed to a judgement in the
Company's favor. The Company has now been lead to believe that its position in
this case has been impinged by factors beyond the its control. Given this change
in circumstances, Management made the decision to pursue a negotiated settlement
rather than continue to expend resources in this matter. The Company received a
settlement from KFI in the amount of $27,000.
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 first fiscal quarter is 16,198,966 shares.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
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 October 8, 1999, the Board reappointed Oxford Transfer & Registrar
as the Company's stock transfer agent.
On December 1, 1999, Mr. Hugh Latif tendered without reservation or
disagreement his resignation from the Board of Directors.
<PAGE>
ITEM 6 - EXHIBITS
<TABLE>
<CAPTION>
INDEX TO EXHIBITS
Incorporated by
Filed Referenced from
No. Exhibit Description Here Form Date Exhibit
<S> <C> <C> <C> <C> <C>
3.8 Restated Articles of Incorporation
of Morningstar Finance, Inc. No 10-KSB 12/20/99 3.8
27 Financial Data Schedule Yes
99.1 Letter of Commitment from CDC
Capital, Inc. dated November 17, 1999 No 10-SB 12/15/99 99.1
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Integrated Food Resources, Inc.
----------------------------------
(Registrant)
/s/Alain L. de la Motte
----------------------------------
Alain L. de la Motte
Chief Executive Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S UNAUDITED FINANCIAL STATEMENTS FOR THE QUARTER ENDED JANUARY 31, 2000
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 103,070
<SECURITIES> 0
<RECEIVABLES> 38,895
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 12,582
<DEPRECIATION> 8,164
<TOTAL-ASSETS> 251,483
<CURRENT-LIABILITIES> 646,694
<BONDS> 0
0
4,067
<COMMON> 16,199
<OTHER-SE> (415,478)
<TOTAL-LIABILITY-AND-EQUITY> 251,483
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 187,090
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,434
<INCOME-PRETAX> (194,395)
<INCOME-TAX> 0
<INCOME-CONTINUING> (194,395)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (194,395)
<EPS-BASIC> (0.012)
<EPS-DILUTED> (0.012)
</TABLE>
