UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: June 30, 2000 Commission File Number 0-28447
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VILLA PASTA, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 84-1313551
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
581 County Line Road, Suite B, Palmer Lake, Colorado 80133
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(Address of principal executive offices) (Zip code)
(719) 481-6815
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(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if
changed since last report.)
Indicate by check 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 X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, no par value 1,155,000
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Class Number of shares outstanding at August 9, 2000
This document is comprised of 10 pages.
<PAGE>
FORM 10-QSB
2ND QUARTER
INDEX
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements *
Condensed balance sheet, June 30, 2000 (Unaudited)..................... 3
Condensed statements of operations, three months ended
June 30, 2000 and 1999 (Unaudited) and six months ended
June 30, 2000 and 1999 (Unaudited).................................. 4
Condensed statements of cash flows, six months ended
June 30, 2000 and 1999 (Unaudited).................................. 5
Notes to condensed financial statements (Unaudited).................... 6
Item 2. Management's Discussion and Analysis.......................... 7
PART II - OTHER INFORMATION............................................ 8
Item 1. Legal Proceedings
Item 2. Changes In Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters To A Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures............................................................. 9
* The accompanying financial statements are not covered by an Independent
Certified Public Accountant's report.
2
<PAGE>
Part I. Item 1. Financial Information
VILLA PASTA, INC.
CONDENSED BALANCE SHEET
(Unaudited)
June 30, 2000
ASSETS
Current assets:
Cash...............................................................$ 18,223
Accounts receivable................................................ 7,971
Inventories at lower of cost or market............................. 17,360
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Total current assets 43,554
Property and equipment, less accumlated depreciation
of $17,711......................................................... 3,650
Other assets......................................................... 1,195
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$ 48,399
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable...................................................$ 848
Due to officer (Note B)............................................ 1,293
Accrued Expenses................................................... 2,180
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Total current liabilities 4,321
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Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized;
-0- shares issued and outstanding............................... -
Common stock, no par value; 50,000,000 shares authorized;
1,155,000 shares issued and outstanding......................... 84,775
Retained deficit................................................... (40,697)
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Total shareholders' equity 44,078
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$ 48,399
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See accompanying notes to condensed financial statements
3
<PAGE>
<TABLE>
VILLA PASTA, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
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2000 1999 2000 1999
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Net sales............................... $ 16,360 $ 7,162 $ 32,000 $ 25,251
Cost of sales........................... 5,485 2,148 9,157 7,639
----------- ----------- ------------ ------------
Gross profit 10,875 5,014 22,843 17,612
Selling, general and
administrative expenses............... 20,797 29,485 35,587 42,047
----------- ----------- ------------ ------------
Operating (loss) income (9,922) (24,471) (12,744) (24,435)
Interest income......................... 329 - 599 -
----------- ----------- ------------ ------------
Loss before income taxes (9,593) (24,471) (12,145) (24,435)
Income taxes (Note C)................... - - - -
----------- ----------- ------------ ------------
Net loss $ (9,593) $ (24,471) $ (12,145) $ (24,435)
=========== =========== ============ ============
Pro forma information (Note A):
Historical (loss) income before
income taxes....................... $ (9,593) $ (24,471) $ (12,145) $ (24,435)
Pro forma provision for income taxes:
Current............................. - - - 4,691
Deferred............................ - - - (4,691)
----------- ----------- ------------ ------------
Pro forma net (loss) income $ (9,593) $ (24,471) $ (12,145) $ (24,435)
=========== =========== ============ ============
Basic loss per common share............. $ * $ (0.03) $ (0.01) $ (0.02)
=========== =========== ============ ============
Weighted average common
shares outstanding.................... 1,155,000 900,000 1,155,000 1,027,500
=========== =========== ============ ============
Basic pro forma loss per common share... $ * $ (0.03) $ (0.01) $ (0.02)
=========== =========== ============ ============
Pro forma weighted average common
shares outstanding.................... 1,155,000 900,000 1,155,000 1,027,500
=========== =========== ============ ============
* Less than $.01 per common share
</TABLE>
See accompanying notes to condensed financial statements
4
<PAGE>
VILLA PASTA, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
June 30,
---------------------------
2000 1999
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NET CASH (USED IN) PROVIDED BY
OPERATING ACTIVITIES $ (17,861) $ 7,337
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FINANCING ACTIVITIES
Proceeds from common stock sales............... - 38,750
Advances from members/officers (Note B) 311 -
Repayments to members/officers (Note B)........ - (10,828)
NET CASH (USED IN) ----------- -----------
FINANCING ACTIVITIES - 27,922
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NET CHANGE IN CASH............................... (17,861) 35,259
Cash, beginning of period........................ 36,084 4,010
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CASH, END OF PERIOD.............................. $ 18,223 $ 39,269
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SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest........................... $ - $ -
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Cash paid for income taxes....................... $ - $ -
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See accompanying notes to condensed financial statements
5
<PAGE>
VILLA PASTA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
Note A: Presentation and reorganization
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Basis of presentation
----------------------
The financial statements presented herein have been prepared by Villa Pasta,
Inc. (the "Company") in accordance with the accounting policies in its Form
10-KSB dated December 31, 1999 and should be read in conjunction with the notes
thereto.
In the opinion of management, all adjustments (consisting only of normal
recurring adjustments) which are necessary to provide a fair presentation of
operating results for the interim period presented have been made. The results
of operations for the periods presented are not necessarily indicative of the
results to be expected for the year.
Interim financial data presented herein are unaudited.
Description of operations and recent reorganization
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Villa Pasta, Inc. (the "Company") was incorporated in Colorado on April 6, 1999
to act as the successor to Villa Pasta, LLC (the "LLC"). Effective April 1,
1999, the LLC reorganized (the "Reorganization") and the existing members
exchanged 100 percent of their membership interests for 900,000 common shares of
the Company. This transaction was a reorganization of entities under common
control, and accordingly, it was accounted for at historical cost.
Pro forma financial information
-------------------------------
Pro forma provision for income taxes and pro forma net income.
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Prior to the reorganization, Villa Pasta was organized as a limited liability
company and consequently, was not subject to income tax. A pro forma provision
for income taxes for the six months ended June 30, 1999 has been presented for
purposes of comparability as if the Company had been a taxable entity for all
periods presented.
Pro forma weighted average shares outstanding at December 31, 1999 and 1998.
----------------------------------------------------------------------------
Pro forma weighted average common shares outstanding for June 30, 1999
represents the weighted average number of common shares issued in the
Reorganization.
Note B: Related party transactions
--------------------------
At December 31, 1999, $1,822 was owed to an officer of the Company. During the
six months ended June 30, 2000, the Company received additional advances of $311
and repaid the officer $840, which reduced the obligation to $1,293 at June 30,
2000.
6
<PAGE>
VILLA PASTA, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2000
Note C: Income taxes
------------
The Company records its income taxes in accordance with Statement of Financial
Accounting Standard No. 109, "Accounting for Income Taxes". The Company incurred
net operating losses during the six months ended June 30, 2000 resulting in a
deferred tax asset, which was fully allowed for; therefore, the net benefit and
expense resulted in $-0- income taxes.
7
<PAGE>
Part I. Item 2. Management's Discussion and Analysis
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VILLA PASTA
June 30, 2000
RESULTS OF OPERATIONS
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The Company operates in the specialty food industry as a maker of fine pasta and
related products, which are sold in supermarkets and specialty stores in
Colorado and other locations in the United States.
During the six months ended June 30, 2000, the Company realized a net loss of
$12,145 on revenues of $32,000. That represents a decrease in the net loss from
the six months ended June 30, 1999, when the Company recognized a net loss of
$24,435. Sales increased from the first six months of 1999 as compared to the
same period for 2000, approximately 26.7 percent. Management believes
substantial additional marketing is necessary to raise sales significantly.
However, the Company currently has little capital available for that purpose. It
is anticipated that sales will remain at a constant level for the foreseeable
future.
The Company's gross margin remained constant at approximately 69 percent for the
first two quarters of 2000 and 1999. The Company recognized a $25,000 expense
during the three months ended June 30, 1999, which was related to stock-based
compensation. This charge accounted for the higher losses in 1999. However,
increases in manufacturing and officer wages and professional fees related to
the Company's filings contributed to higher expenses in 2000, which offset some
of the effects of the stock-based compensation recognized in 1999.
FINANCIAL CONDITION
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At June 30, 2000, management believed the Company had sufficient liquidity and
capital to meet its needs for the next twelve months. This assumes limited funds
are spent on marketing and promotion. In order for the Company to become
profitable, management believes marketing must be increased. At June 30, 2000,
the Company had working capital of $39,233, consisting of current assets of
$43,554 and current liabilities of $4,321. Working capital at June 30, 2000
represented a decrease of $10,023 from December 31, 1999 and a decrease of
$13,932 from June 30, 1999. The decreases resulted from net losses following the
private placement conducted by the Company during the second quarter of 1999.
Capital requirements for the next twelve months include cash to pay vendors,
employees and other general and administrative expenses. Sources of cash will
include sales and collection of accounts receivable. Most of the Company's
customers are large supermarket chains or established specialty food stores, so
collection of accounts receivable has not been an issue for the Company to date.
8
<PAGE>
Management's Discussion and Analysis, Continued
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VILLA PASTA
June 30, 2000
FINANCIAL CONDITION, continued
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Liabilities of the Company at June 30, 2000 consisted of trade accounts payable,
indebtedness to an officer and other accrued expenses in the ordinary course of
business. The Company has no long-term debt, and it is not expected that
borrowing will be necessary in the foreseeable future. Historically, the Company
has relied on periodic advancements from a shareholder, who is also an officer
of the Company, to finance short-term capital requirements.
PART II - OTHER INFORMATION Items 1 through 5 - No response required.
Item 6 - Exhibits and reports on Form 8-K.
(a) Exhibits 27 - Financial Data Schedule
There were no reports on Form 8-K.
<PAGE>
SIGNATURES
The financial information furnished herein has not been audited by an
independent accountant; however, in the opinion of management, all adjustments
(only consisting of normal recurring accruals) necessary for a fair presentation
of the results of operations for the three months and six months ended June 30,
2000 have been included.
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VILLA PASTA, INC.
(Registrant)
DATE: August 9, 2000 BY: /s/ Craig Van Scoten
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Craig Van Scoten
President
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