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, 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 April 30, 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 APRIL 30, 2000
Assets
Current Assets
Cash $ 42,492
Accounts Receivable 39,607
Intercompany Receivable 0
Inventory 0
Prepaid Expenses 15,000
Prepaid Interest 0
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Total Current Assets $ 97,099
Fixed Assets
Office and Factory Equip $ 13,663
Tuna Packing Plant 0
Less Accumulated Depreciation (9,035)
Land Held for Development 74,498,400
Valuation Adj-Foreign Land Grant (74,498,400)
Other Assets 5,100
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Total Fixed Assets $ 9,728
Intangible Assets
Goodwill $ -
Less: Amortization 0
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Total Intangible Assets $ -
Total Assets $ 106,828
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Liabilities
Current Liabilities
Accounts Payable $ 138,231
Due from IFR 0
Notes Payable (Stockholder) 437,425
Short Term Notes Payable $ 125,000
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Total Current Liabilities $ 700,656
Long Term Liabilities
Longterm Capital Lease $ -
Long Term Note Payable - Stockholder 0
Long Term Note Payable - Third Party 0
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Total Long Term Liabilities $ -
Total Liabilities $ 700,656
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 0
Retained Earnings (8,439,693)
Net Income (449,975)
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Total Equity Accounts $ (593,828)
Total Liablilities & Owners Equity $ 106,828
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<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
FOR THE PERIOD ENDING APRIL 30
Quarter Ended April 30 Nine Months Ended April 30
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Gross Sales $ - $ 260,478 $ - $ 693,723
Cost of Goods Sold $ - $ 213,699 $ - $ 362,446
Selling, General and Admin Expenses
Administrative/Consulting $ 183,039 $ 231,804 $ 370,129 $ 574,586
Other selling and general 0 109,986 0 424,384
Depreciation & Amortization 1,742 119,052 2,613 374,567
Interest Expense 13,299 6,968 19,733 119,041
Bad Debt Expense 57,500 0 57,500 0
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Total Operating Exp. $ 255,580 $ 467,810 $ 449,975 $1,492,578
Total Income $ (255,580) $ (421,031) $ (449,975) $(1,161,301)
----------- ----------- ----------- -----------
Other Income
Interest Income $ - $ - $ - $ -
Miscellaneous Income 0 0 0 0
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Total Other Income $ - $ - $ - $ -
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Net Income $ (255,580) $ (421,031) $ (449,975) $(1,161,301)
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</TABLE>
<PAGE>
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
FOR THE PERIOD ENDING APRIL 30, 2000
Cash Flows Related to Operating Activities
Net Loss $ (449,975)
Adjustments to Reconcile Net Loss to
Cash from Operating Activities
Depreciation and Amortization 2,613
Increase/Decrease in:
Receivables (5,754)
Note Receivable -
Inventories -
Prepaid Expenses 87,217
Accounts Payable 77,852
Accrued Liabilities -
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Net Cash from Operating Activities 161,928
Cash Flows Related to Investing Activites
Purchase of Equipment (1,312)
Tuna Packing Plant Costs -
Other Assets -
Goodwill -
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Net Cash from Investing Activities (1,312)
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 -
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Net Cash from Financing Activities 330,325
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Net Increase (Decrease) in Cash 40,966
Cash, Beginning of Period 1,527
Cash, End of Period $ 42,493
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<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
UNAUDITED
FOR THE PERIOD ENDING APRIL 30, 2000
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 (449,975) (449,975)
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Balance April 30, 2000 16,198,966 $ 16,199 4,067,087 $4,067 $ 8,275,574 $(8,889,668) $ (593,828)
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</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 Company's acquisition and deployment of its own fleet of
state-of-the-art fishing and factory processing vessels. Discussions with
shipyards and naval architects/engineers continues.
Integrated Food Finance Corp. (IFFC)
IFFC, the Company's wholly owned subsidiary, was formed to secure debt
financing for the Company's subsidiaries and projects. IFFC signed a Senior Note
and Note Purchase Agreement within favor of CDC Financial Products, Inc. (CDC)
for $201,816,000. CDC and IFFC executed an Escrow agreement with Citibank, N.A.
for closing to take place in escrow, and CDC deposited the funds for closing
within a 10 day period. Simultaneously, IFFC had entered into a contractual
agreement with Mid-State Land Developers, Inc. (MSLD) for the issuance of a
standby letter of credit in favor of CDC as an instrument designed to enhance
the credit risk of IFFC's Note.
After funds were deposited in escrow and IFFC paid all escrow closing
fees, the credit enhancement group failed to meet its obligations within the
required time frame. As a result, this transaction did not close as anticipated.
The opportunity exists to reopen the negotiations with CDC at a later time,
however IFFC has now turned its attention to identifying other sources of
long-term debt and equity financing. The company is close to completing
negotiations with third party investors, and appropriate announcements will be
made in due course
The failure to close as anticipated has resulted in a net loss to the
company of approximately $500,000 including interest, legal fees, escrow fees
and miscellaneous expenses. The Company is evaluating the possibility of legal
action against MSLD for the recovery of its expenses. A decision has not been
made yet.
In Form 10-QSB for the second quarter of fiscal year 2000, the Company
reported it had reached a $27,500 out-of-court settlement in its previously
disclosed lawsuit against Kennedy Funding Inc. (KFI). During the period covered
by this report, the Company has taken a one-time bad debt expense totalling
$57,500 to account for the loss of the unrecovered portion of the funds paid to
KFI.
"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.
<PAGE>
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. While prospects remain optimistic, no funding arrangements have yet
been finalized. Without a fresh injection of equity, the Company does not have
sufficient liquidity to continue operation past the end of its fiscal year end.
Management's entire time is now focussed on the negotiation of fresh equity
and/or credit-enhanced debt.
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 long-term financing currently being pursued by IFFC.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
During the covered period, no legal proceedings were initiated by the
Company, nor were there any such proceedings brought against the Company.
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 16,198,966 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.
<PAGE>
In anticipation of the transaction with MSLD, the Board of IFFC on
February 22, 2000 appointed Kenneth Don Henry as a director of IFFC to represent
the credit enhancement group on the Board of Directors. Due to MSLD's failure to
perform, Mr. Henry was asked to resign his position as a director and officer of
IFFC, and on April 4, 2000, the Board of IFFC accepted his resignation.
On March 2, 2000, the Company's Board of Directors approved a stock
option program. The salient points of this program are:
- covered directors of the Company: Alain de la Motte, Alan Resnik,
Jim McKenzie
- covered directors of IFFC: Bob West, Dave Ramer
- covered director of Seabourne: Harald Kvalo
- covered individuals to be issued options for 100,000 shares with
vesting to occur over 2 years at the rate of 50,000 per year; Bob
West to be issued options for 150,000 shares with vesting to occur
over 2 years at the rate of 75,000 per year
- 650,000 shares of the Company's common stock allocated for the
program
- options set to expire on March 15, 2005
- exercise price of the options set at $1.00 (the trading price at
the time of the Board's decision)
- option plan subject to review by corporate legal counsel
Item 6 - Exhibits
On March 28, 2000 Form 8-K Current Report was filed regarding the
Execution of Note Agreement, Note and Escrow Agreement between IFFC and CDC. All
relevant and previously disclosed exhibits incorporated by reference.
INDEX TO EXHIBITS
No. Exhibit Description Filed Here
27 Financial Data Schedule Yes
<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.
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(Registrant)
June 19, 2000 /s/Alain L. de la Motte
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Alain L. de la Motte
Chief Executive Officer
