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, 1996
Commission File No. 1-10825
NEW GENERATION FOODS, INC.
- - -----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 36-2972588
- - -----------------------------------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
45 Graham Road
Scarsdale, New York 10583
- - -----------------------------------------------------------------
(Address of Principal Executive Office)
(Zip Code)
52 Barry Road
Scarsdale, New York 10583
- - -----------------------------------------------------------------
(Former address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code (914) 722-2410
Indicate by check mark whether the issuer (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities and Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the issuer was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Common stock $.01 par value -- 399,830 shares outstanding as of
June 30, 1996.
Page 1 of 12
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial statements
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
_______________________________________________________________________
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
Assets (unaudited)
(audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $2,006,134 $1,265,756
Marketable investment securities at
market value 10,638 27,789
Notes receivable, less deferred gain
of $543,158 in 1995 - 223,501
Interest receivable 8,375 6,808
Total current assets $2,025,147 $1,523,854
Property, plant and equipment, at cost 36,649 30,816
Less accumulated depreciation and
amortization 18,054 18,669
Net property, plan and equipment 18,595 12,147
Total assets $2,043,742 $1,536,001
<FN>
See accompanying condensed notes to consolidated financial
statements.
</TABLE>
(Continued)
<PAGE>
NEW GENERATION FOOD,INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
_________________________________________________________________
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
Liabilities and Stockholders'Equity (unaudited) (audited)
<S> <C> <C>
Current liabilities:
Accrued compensation $ 10,126 $ 11,500
Accrued franchise taxes 45,200 45,200
Accrued expenses 8,675 4,239
Total current liabilities 64,001 60,939
Stockholders' equity:
Cumulative Convertible Voting
Preferred Stock, $.01. par value:
Series A (stated at liquidation
value of $.75 per share).
Authorized 2,333,333 shares;
issued and outstanding 2,333,333 1,750,000 1,750,000
Series B (stated at liquidation value
of $1.00 per share). Authorized
350,000 shares; issued and
outstanding 310,000 310,000 310,000
Common stock, $.01 par value.
Authorized 25,000,000 shares;
issued 399,830 3,998 3,998
Additional paid in capital 22,818,930 22,818,930
Retained deficit (22,903,187) (23,407,866)
Total stockholders equity 1,979,741 1,475,062
Commitments and contingencies - -
Total liabilities and
stockholders' equity $ 2,043,742 $ 1,536,001
<FN>
See accompanying condensed notes to consolidated financial
statements.
</TABLE>
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
__________________________________________________________________
<TABLE>
<CAPTION>
For the three
months ended
June 30,
1996 1995
<S> <C> <C>
Net Sales $ - $ -
Cost of sales - -
Gross profit - -
Operating expenses:
General and administrative: 42,118 43,609
Total operating expenses 42,118 43,609
Operating loss 42,118 (43,609)
Other income (deductions)
Interest and dividend income 29,675 25,177
Interest expense - -
Prior year overaccrual - 25,315
Miscellaneous income 2,838 -
Unrealized gain (loss) on
marketable investment securities (15,640) 661
Gain on sale of assets 34 35,403
Total other income (deductions) 16,927 86,556
Net income (loss) before taxes (25,192) 42,947
Corporate income taxes - -
Net income (loss) $ (25,192) $ 42,947
Net income (loss) per share of common
stock $ (.06) $ .11
Weighted average number of common
shares outstanding 399,830 399,830
<FN>
No dividends were paid by the company during the three-month
periods ended June 30, 1996 and 1995.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statement of Operations
(Unaudited)
_________________________________________________________________
<TABLE>
<CAPTION>
For the six
months ended
June 30,
1996 1995
<S> <C> <C>
Net sales $ - $ -
Cost of sales - -
Gross profit - -
Operating expenses:
General and administrative: 82,293 125,136
Total operating expenses 82,293 125,136
Operating loss (82,293) (125,136)
Other income (deductions)
Interest and dividend income 60,724 56,698
Interest expense - (159)
Prior year overaccrual - 25,315
Miscellaneous income 2,838 -
Unrealized loss on marketable
investment securities (17,151) (6,671)
Gain on sale of assets 543,302 70,806
Total other income (deductions) 589,713 145,989
Net income before taxes 507,420 20,853
Corporate income taxes 2,741 7,021
Net income (loss) $ 504,679 $ 13,832
Net income (loss) per share of
common stock $ 1.26 $ .03
Weighted average number of common shares
outstanding 399,830 399,830
<FN>
No dividends were paid by the company during the six months ended
June 20, 1996
and 1995.
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the six
months ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 504,679 $ 13,832
Adjustments to reconcile net income (loss)
to net cash
provided by (used in) operating
activities:
Depreciation 2,340 2,954
Gain on sale of assets (543,302) (70,806)
Realized loss on sale of marketable
investment securities - 5,358
Unrealized loss on marketable
investment securities 17,151 1,313
Change in assets and liabilities:
Decrease (increase) in receivables (1,567) 1,270
Increase (decrease) in accounts
payable and various other
accrued expenses 3,062 (58,474)
Total adjustments (522,316) (118,385)
Net cash provided by (used in)
operating activities (17,637) (104,553)
<PAGE>
</TABLE>
<TABLE>
<S> <C> <C>
Cash flows from investing activities:
Proceeds from sale of marketable
securities - 511,358
Net cash provided by investing
activities - 511,358
Cash used for capital expenditures:
Sale of automobile 5,200 -
Purchase of automobile and equipment (13,954) (244)
Net cash provided by (used for)
capital costs (8,754) (244)
Cash flows from financing activities:
Collections on note receivable 766,769 100,002
Net increase in cash and
cash equivalents 740,378 506,563
Cash and cash equivalents at beginning
of period 1,265,756 225,127
Cash and cash equivalents at end of
period (note A) $2,006,134 $ 731,690
Supplemental disclosures of cash flow
information:
Cash paid during the period for interest $ - $ 159
<FN>
See accompanying condensed notes to consolidated financial
statements.
</TABLE>
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statement of Cash Flows
(Unaudited)
(1)Basis of Presentation
The financial information is prepared in conformity with
generally accepted accounting principles and such principles are
applied on a basis consistent with those reflected in the 1995
annual report filed with the Securities and Exchange Commission.
The financial information included herein has been prepared by
management. The consolidated balance sheet as of December 31, 1995
has been derived from, and does not include, all the disclosures
contained in the audited consolidated financial statements for the
year ended December 31, 1995.
The Company adopted the provisions of Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments
in Debt and Equity Securities (Statement 115) at January 1, 1994.
Under Statement 115, the Company classifies its securities in one
of three categories: trading, available-for-sale, or
held-to-maturity. Trading securities are bought and held
principally for the purpose of selling them in the near future.
Held-to-maturity securities are those securities in which the
Company has the ability and intent to hold the security until
maturity. All other securities not included in trading or
held-to-maturity are classified as available-for-sale.
The information furnished includes all adjustments and
accruals consisting only of normal recurring accrual adjustments
which are, in the opinion of management, necessary for a fair
statement of results for the interim periods.
Results of operations for the six-month periods ended June 30,
1996 and 1995 are not necessarily indicative of the results of a
full year.
These financial statements should be read in conjunction with
the Company's consolidated financial statements included in the
December 31, 1995 Form 10-KSB Report. Mangement believes that the
disclosures are adequate to make the information presented herein
not misleading.
<PAGE>
(2) Net Income Per Share
Net income per share is computed by dividing net income by the
weighted average number of shares of common stock and common stock
equivalents outstanding during each period. The computation
excludes the common stock equivalents consisting of warrants and
stock options because their inclusion would have had an
antidilutive effect. The cumulative convertible voting preferred
stock is not considered common stock equivalents.
________________________________________________________________
Income (Loss) Per Share Computation
For the six months ended June 30, 1996
_______________________________________________________________
$ 504,679 -- 399,830 1.26
_______________________________________________________________
For the six months ended June 30, 1996
______________________________________________________________
$ 13,832 -- 399,830 = (.03)
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Financial Condition
As a result of the Asset Sale in October 1993, previously
reported, the Company has ceased its business operations. The
remaining note receivable from the Asset Sale, in the amount of
$716,658, was paid in full in April 1996, with accrued interest.
The Company intends to use a portion of its present cash and
investment holdings (approximately $2,005,000 as of June 30, 1996,
to repay certain accounts payable and to satisfy other liabilities
of the Company (aggregating approximately $64,000 at June 30,
1996). The Company has no current intentions with regard to use of
the remaining proceeds of the Asset Sale. The Company will
consider the options it currently has available to it; namely, (i)
to reinvest the proceeds, (ii) to make acquisitions of or merge
with an operating business, or (iii) to liquidate the Company and
distribute such proceeds.
In the event that the Company proposes to engage primarily in
the business of investing, reinvesting or trading in securities, or
otherwise reinvests the proceeds of the Asset Sale in investment
securities having a value in excess of 40% of its total assets
(exclusive of Government Securities, certificates of deposit and
other cash items), the Company may be deemed an investment company
and therefore may be required to register under and become subject
to the Investment Company Act of 1940.
In addition to considering the reinvestment of the proceeds of
the Asset Sale, the Company may also consider seeking a merger,
exchange of capital stock, asset acquisition or other similar
business combination with an operating business. In addition to
having some funds available for such an acquisition or similar
transaction, the Company's potential attraction to someone seeking
an acquisition or merger is that the Company will be a publicly
held corporation. Thus, a merger or acquisition could enable the
other entity to become a publicly traded corporation without
experiencing the time requirements and financial expenditures
usually associated with going public. If the Company decides to
pursue such a transaction it will encounter intense competition
from other entities having similar objectives. Further, there is
a large number of established and well financed entities, including
venture capital firms, that have increased their merger and
acquisition activities. Nearly all such entities will have
significantly greater financial resources and management
capabilities than the Company, and consequently the Company will be
at a competitive disadvantage in identifying suitable merger or
acquisition candidates and successfully concluding a proposed
merger, acquisition or similar transaction. To date, the Company
has given limited consideration to the types of entities that it
may seek to merge with or acquire in the event it decides to merge
with or acquire an operating company, but has not identified a
<PAGE>
suitable candidate.
To the extent the Preferred Stockholders demand payment of all
or a part of the amounts due them, as previously reported, the
Company's ability to invest the proceeds of the Asset Sale, engage
in a merger, exchange of capital stock, asset acquisition or other
similar business combination will be limited, if at all possible.
No such demand has as yet been received.
Another alternative that may be considered by the Company may
be the liquidation of the Company with a distribution to its then
holders of Common Stock of all assets remaining available for
distribution after payment of liabilities and after having made
appropriate provisions for the payment of liquidating distributions
upon each class of stock having preference over the Common Stock.
Since most, if not all, of the proceeds received from the Asset
Sale will be used to satisfy required payments to the Preferred
Stockholders in the event of liquidation, it is not likely that the
Company will have significant assets, if any, available for
distribution to minority Stockholders following such required
payments.
The Company has made no decision to do any of the foregoing
and, over the next several months, will evaluate the course of
action it will take with regard to the best interests of the
Company and the Company's stockholders. In the event the Company
chooses to merge with or acquire another company, its assets or
capital stock, or liquidate the Company, it will have to obtain the
approval of a majority of the voting power of the Company prior to
taking such action.
Proceeds received from the Asset Sale not immediately required
for the purposes set forth above are being invested as management
of the Company deems prudent, which may include, but will not be
limited to, certificates of deposit, mutual funds, money-market
accounts, stocks, options, bonds or United States Government or
municipal securities, provided, however, that the Company will
attempt to invest the net proceeds in a manner which will not
result in the Company being deemed to be an investment company
under the Investment Company Act of 1940. In this regard, while
the foregoing investments are intended to be temporary (i.e. for
the period during which the Company is determining its future
course of action with regard to the business or liquidation of the
Company), any such investments deemed by the Securities and
Exchange Commission not to be temporary, may result in the Company
being required to register as an investment company. The Company
believes that to the extent a significant portion of such proceeds
is not used in evaluating prospective business options, the
interest income thereon should be sufficient to defray continuing
general and administrative expenses, as well as costs relating to
compliance with securities laws and regulations.
At June 30, 1996, the Company had cash and cash
equivalents of approximately $2,006,000, compared to $1,293,000 of
<PAGE>
liquid assets at December 31, 1995, and had working capital of
$1,961,146, compared to working capital of $1,462,195 at December
31, 1995. The Company had no commitments to acquire additional
capital assets at June 30, 1996 and currently has no such
commitments. The Company has no bank lines of credit or other
currently available credit sources. The increase in liquid assets
and working capital is attributable to the collection of the
remaining note receivable from the Asset Sale, in 1996.
Operations
As a result of the Asset Sale and the operation by
American Pacific of the Company's business from October 22, 1993,
the Company's business operations as a food manufacturer were
terminated on that date. Accordingly, no operations were conducted
in the quarters ending June 30, 1996 and June 30, 1995.
Net loss was $(25,192), or $(.06) per share, in the 1996
second quarter compared to net income of $42,947, or $.11 per
share, in the 1995 second quarter, reflecting principally the
reversal of a prior year overaccrual and a gain on the Asset Sale
which were recorded in 1995 second quarter.
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K have been filed during the
quarter.
<PAGE>
Signatures
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly cause this report to be signed on its
behalf by the undersigned thereunto duly authorized.
NEW GENERATION FOODS, INC.
By: /s/ Jerome S. Flum
Jerome S. Flum
Chairman of the Board and
Principal Financial Officer
Dated: August 14, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,006,134
<SECURITIES> 10,638
<RECEIVABLES> 8,375
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,025,147
<PP&E> 36,649
<DEPRECIATION> 18,054
<TOTAL-ASSETS> 2,043,742
<CURRENT-LIABILITIES> 64,001
<BONDS> 0
0
2,643,333
<COMMON> 399,830
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,043,742
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 42,118
<LOSS-PROVISION> (42,118)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (25,192)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (25,192)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
