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: March 31, 1998
Commission File No. 1-10825
NEW GENERATION FOODS, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 36-2972588
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(State of Incorporation) (I.R.S. Employer Identification No.)
45 Graham Road
Scarsdale, New York 10583
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(Address of Principal Executive Office)
(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 March 31, 1998.
Page 1 of 11
<PAGE>
New Generation Foods, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997
<TABLE>
<CAPTION>
March 31, Dec. 31,
1998 1997
(Unaudited) (Audited)
--------- -------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $102,425 $ 1,399,274
Marketable investment security
at market value 777 777
--- ---
TOTAL ASSETS $103,202 $1,400,051
======== ==========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
(Continued)
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets, Continued
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
LIABILITIES AND STOCKHOLDERS'EQUITY (DEFICIT) (unaudited) (audited)
- -------------------------------------------- ----------- -----------
<S> <C> <C>
Current Liabilities:
Accounts payable-shareholder $ 0 $ 460,000
Dividends payable 0 840,000
Accrued franchise taxes 45,200 45,200
Accrued expenses 784 784
---------------- --- ---
Total current liabilities 45,984 1,345,984
------ ---------
Redeemable Convertible Voting
Senior Preferred Stock, $.01 par
value (stated at liquidation value
of $1.00 per share). Authorized 2,333,333
shares; issued and outstanding 1,100,000
shares 1,100,000 1,100,000
--------- ---------
Stockholders' Equity (Deficit)
Common stock, $.01 par value.
Authorized 25,000,000 shares;
issued and outstanding 399,830 3,998 3,998
Additional paid-in capital 22,818,930 22,818,930
Retained deficit (23,865,710) (23,868,861)
------------ ------------
Total stockholders' equity (deficit) (1,042,782) (1,045,933)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $103,202 $1,400,051
======== ==========
</TABLE>
See accompanying condensed notes to consolidated financial statements.
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the three
months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
OPERATING EXPENSES
Selling, general and administrative $1,713 $ 39,976
------ -------
Total operating expenses 1,713 39,976
----- ------
Operating loss (1,713) (39,976)
------- --------
OTHER INCOME (DEDUCTIONS)
Interest and dividend income 5,239 24,220
Loss on investments 0 (3,001)
-- -------
5,239 21,219
----- -------
Income (loss) before income tax 3,526 (18,757)
INCOME TAXES 375 373
--- ---
NET EARNINGS (LOSS) $3,151 ($19,130)
====== =========
Net income (loss) per share of common stock:
basic $0.01 ($0.16)
dilutive $0.00 ($0.16)
Weighted average number of common
shares outstanding:
basic 399,830 399,830
dilutive 3,998,128 399,830
</TABLE>
No dividends were paid by the company during the three-month periods ended
March 31, 1998 and 1997.
See accompanying condensed notes to consolidated financial statements.
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the three
months ended
March 31,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,151 $ (19,130)
----------------- ----- --------
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation 0 1,315
Loss on marketable investment securities 0 3,001
Change in assets and liabilities:
Decrease in receivables 0 (3,150)
Increase (decrease) in accounts
payable and accrued expenses (1,300,000) (9,978)
----------- -------
Total adjustments (1,300,000) (2,512)
----------- -------
Net cash used in operating activities (1,296,849) (21,642)
----------- --------
Net decrease in cash and
cash equivalents (1,296,849) (21,642)
----------- --------
Cash and cash equivalents at beginning
of period 1,399,274 1,963,394
--------- ---------
Cash and cash equivalents at end of period $ 102,425 $ 1,941,752
========= ==========
</TABLE>
See accompanying condensed notes to consolidated financial statements
<PAGE>
NEW GENERATION FOODS, INC. AND SUBSIDIARIES
Condensed Notes to Consolidated Financial Statements
(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 1997 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, 1997 has been
derived from, and does not include, all the disclosures contained in the audited
financial statements for the year ended December 31, 1997.
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 three month periods ended March 31, 1998 and 1997
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, 1997 Form 10-KSB
Report. Management believes that the disclosures are adequate to make the
information presented herein not misleading.
(2) NET INCOME (LOSS) PER SHARE
Net income (loss) per share - basic is computed by dividing net income (loss) by
the weighted average number of shares of common stock outstanding during each
period. The 1997 computation of dilutive net income (loss) per share excludes
the convertible preferred stock and stock options because their inclusion would
have had an antidilutive effect. In the fourth quarter of 1997, the Company
adopted Statement of Financial Accounting Standards No. 128, Earnings Per Share.
Net loss per share for the three months ended March 31, 1997 has been restated
to comply with Statement of Financial Accounting Standards No. 128.
<PAGE>
Net income (loss) per share computation
March 31,
1998 1997
---- ----
Net earnings (loss) $ 3,151 $(19,130)
Dividends on cumulative
preferred stock - (46,350)
---------- ---------
Net earnings (loss)
applicable to common stock $ 3,151 $(65,480)
========== =========
Basic average common
shares outstanding 399,830 399,830
========== =========
Dilutive average common
shares outstanding 3,998,128 399,830
========== =========
Earnings (loss) per share - basic $ 0.01 $ (0.16)
========== =========
Earnings (loss) per share - dilutive $ 0.00 $ (0.16)
========== =========
The redeemable convertible voting senior preferred stock is convertible into
3,598,298 shares of common stock at March 31, 1998.
The effect of dilutive securities (convertible preferred stock and options) is
anti-dilutive for 1997; therefore, basic and dilutive earnings (loss) per share
are the same for the first quarter of 1997.
<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 Sale, in the amount of $716,658 was paid in full in April 1996, with accrued
interest.
Under the terms of the Company's previously outstanding Series A Preferred
Stock and Series B Preferred Stock, a sale or transfer of substantially all of
the assets of the Company was deemed to be a liquidation, dissolution or winding
up of the Company for purposes of determining the payment of the liquidation
preferences on the Series A Preferred Stock and Series B Preferred Stock.
Accordingly, the Asset Sale entitled Flum Partners, the holder of all of the
outstanding Series A Preferred Stock and Series B Preferred Stock, to payment of
the applicable liquidation preferences and accrued and unpaid dividends.
As previously reported, the Company issued to Flum Partners at the end of
1997 and in the first quarter of 1998 a total of 1,100,000 shares of the Senior
Preferred Stock and $1.8 million of cash in payment of the liquidation
preferences and accrued dividends on the Series A Preferred Stock and Series B
Preferred Stock. In addition, Mr. Flum's employment contract was terminated
effective December 1, 1997, and he agreed, for a twelve-month period, to attempt
to identify and consummate a transaction which would increase the value of the
Company.
At March 31, 1998, the Company had cash, cash equivalents and other liquid
assets of $103,202, compared to $1,400,051 of liquid assets at December 31,
1997, and had working capital of $57,218, compared to working capital of $54,067
at December 31, 1997. The Company has no bank lines of credit or other currently
available credit sources. The decrease in liquid assets reflects the payment in
the 1998 quarter to Flum Partners described above.
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 March 31, 1998 and March 31, 1997.
Net income was $3,151, or $.01 per share, in the 1998 first quarter,
compared to a net loss of $19,130, or $.05 per share (before giving effect to
preferred stock dividends in the 1997 first quarter), in the 1997 first quarter,
reflecting principally the termination of Mr. Flum's employment contract
effective December 1, 1997, offsetting a decrease in interest and dividend
income.
<PAGE>
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.
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: May 15, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
<CASH> 102,425
<SECURITIES> 777
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 103,202
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 103,202
<CURRENT-LIABILITIES> 45,984
<BONDS> 0
1,100,000
0
<COMMON> 3,998
<OTHER-SE> (1,046,780)
<TOTAL-LIABILITY-AND-EQUITY> 103,202
<SALES> 0
<TOTAL-REVENUES> 5,239
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,713
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,526
<INCOME-TAX> 375
<INCOME-CONTINUING> 3,151
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,151
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.00
</TABLE>
