FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
UNDER REPORT UNDER SECTION 13 or 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
For the Fiscal Year Ended: June 30, 1996 Commission File No.
2-78287-NY
FOOD CONCEPTS, INC.
exact name of registrant as specified in its charter
NEVADA 13-3124057
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6601 Lyons Road
Suite C-12
Coconut Creek, Florida 33073
address of principal executive office
Registrant's telephone number, including area code: (954) 420-0882
Indicate by check mark whether the registrant has filed all annual, quarterly
and other reports required to be filed with the Commission within the past
ninety days and in addition, has filed the most recent annual report required
to be filed.
Yes x No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check marks whether the registrant has filed all documents and
reports required to be filed by Sections 2, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock $.0001 par value, 3,894,744
(Title of Class) (Shares outstanding at June 30, 1996)
<PAGE>
Item 1. BUSINESS
General
Food Concepts, Inc., the Company, formerly known as Granite, Ltd. and
then Savon Coffee, Inc. was incorporated under the law of the State of Nevada
on June 16, 1982.
The Company was founded to provide gourmet and specialty coffees to
consumers. Food Concepts is a roaster, packer and seller of roasted coffees
and produces over 70 flavored coffees. It distributes it's products through
sales representatives advertising specialty companies and the United States
Army. In addition, the Company sells orders obtained directly from customers
such as restaurants, coffee houses and retailers.
The Company has approximately 700 accounts and a market that is very
diversified. Two customers account for more than 10 percent of the Company's
present revenues. They are Christmas Tree Shop and Anron Coffee and Tea,
Inc.
The Company purchases its coffee beans through coffee importers and
agents. The principal sources for such raw materials are South America,
Central America and Africa as well as any other areas where coffee beans are
grown and exported. It is the Company's opinion that sources of raw materials
while their prices do fluctuate are plentiful on the world market. The
Company faces a great deal of competition within this area especially over the
last three years due to the immense growth of the coffee market of wholesale
and retail.
The Company however has been able to compete successfully by offering
very competitive prices and service to its customers.
The Company presently employs seven individuals, two in management, one
clerical and four warehouse personnel. The Company considers their labor
relations to be excellent and none of the persons presently employed are
represented by organized labor.
Food Concepts owns the registered intellectual property right charters
listed as follows:
"Coffee Lovers Six Pack" (registered mark number 151,553,926, said mark
having been registered with United States Patent Office and the mark was
issued on August 29, 1989 and is valid for 20 years).
"Coffee Lovers Coffee" (registered mark number 1,673566 registered in the
United States Patent Office and issued on January 28, 1992 and valid for 10 year
s).
<PAGE>
The above marks have been registered in applicable states where
necessary.
Item 2. PROPERTIES
The Company presently leases 6800 square feet of warehouse and office
space at 6601 Lyons Road, Suite C-12, Coconut Creek, Florida 33073. The term
of said lease is for five years and two months commencing the 12th day of
February, 1996. The rent for the first 26 months is fixed and the remaining
36 months is subject to a formula which is provided in the lease. Included
within the warehouse facilities are coffee roasters and packaging equipment to
prepackage and customize the packaging seventy flavored coffees.
Item 3. LEGAL PROCEEDINGS
Coffee House Holding Company has filed a law suit against Savon Coffee in
the amount of $7,524 plus a percentage of gross profit for not fulfilling an
agreement to purchase coffee exclusively from Coffee House Holding. This
action was instituted against Savon Coffee, Inc. on March 16, 1994 in the
Supreme Court of the State of New York, County of Kings, for not fulfilling an
agreement to purchase coffee exclusively from Coffee Holding Company. The
Company expects to be successful in this matter.
On July 3, 1996, the Company commenced an action in the Circuit Court of
the Seventeenth Judicial Circuit in and for Broward County, Florida bearing
docket number 96-09431-11 entitled Food Concepts, Inc. vs. Lasorda's Dug Out,
Inc., a Florida corporation, et al. The Company is seeking damages in the
amount of $200,000 resulting from the non payment of outstanding loans and
other payments assigned to the Company under the rights of an oral contract.
The Company expects to be successful in this matter.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
PART II
Item 5. MARKET FOR THE COMPANY'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
On October 25, 1995 Granite, Ltd. the predecessor of Food Concepts, Inc.
acquired all of the outstanding stock of Savon Coffee, Inc. for 20,000,000
shares of Granite common stock $.0001 par value which was subsequently reverse
split one for ten leaving 2,000,000 shares $.001 par value which then
constituted approximately 85.6 percent of the corporation Granite reserved or
issued outstanding securities in consideration for the conveyance of all
shares of Savon stock which then constituted 100 percent of Savon's authorized
issued and outstanding securities. In conjunction therewith the Certificate
of Incorporation of Granite was amended affecting a one for ten reverse split
of the corporations common stock $.0001 par value (converting the 50,000,000
shares then authorized into 5,000,000 shares, $.001 par value, and the
3,327,300 then outstanding into 332,700 shares, $.0001 par value, followed by
an increase in the resulting authorized capitalization of Granite from
5,000,000 shares, $.0001 par value to 20,000,000, $0001 par value. Subsequent
thereto the name of the Company was changed from Granite, Ltd. to Savon
Coffee, Inc. a Nevada corporation and said Savon subsequently had its name
changed to Food Concepts, Inc. a Nevada corporation on March 26, 1996. The
common stock and warrants are traded in the over the counter market on a
National Association of Security Dealers Automatic Quotation System (NASDAQ).
There is no other established market for the Company's securities. The
following table sets forth the range of high and low bid prices for the
Company's common stock as quoted by NASDAQ. These quotations set forth below
represent prices between dealers in securities and do not reflect retail
markups, markdowns, or commissions and do not necessarily represent actual
transactions.
SHARES OVER THE COUNTER
BID OFFER
Quarter Ending High 1 cent 1 cent
June 30, 1995 Low 1 cent 1 cent
Quarter Ending High 1 cent 1 cent
October 31, 1995 Low 1 cent 1 cent
Quarter Ending High $1.00 $1.125
February 28, 1996 Low 75 cents $1.00
Quarter Ending High .968 cents .9375 cents
June 30, 1996 Low .85 cents .83 cents
Number of Shareholders - 374
Dividends - None
As of June 30, 1996 there were in excess of 350 shareholders (based on
the number of shareholders of record and an approximation of the number of
beneficial owners of common stock). Holders of common stock are entitled to
dividends when, as, and if declared by the Board of Directors out of funds
legally available therefore. The Company has not paid any cash dividends on
its common stock and, for the immediate future, intends to retain earnings, if
any, to finance development and expansion of its business. Future dividends
policy is subject to the discretion of the Board of Directors.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
Operating Income $(74,896.00)
Income from Continuing Operations $(74,896.00)
Total Income $(95,482.00)
Loss per Share $ (.041)
Total Assets $340,332.00
Current Liabilities $198,523.00
Long Term Obligations $ -0-
Dividends $ -0-
ITEM 7. MANAGEMENTS DISCUSSIONS AND ANALYSIS OF FINANCIAL CONDITION AS A
RESULT OF OPERATIONS.
Liquidity and capital resources
OPERATIONS. The operating entities of the company, Savon Coffee, Inc. and
Palm Beach Coffee, Inc., represents 100 percent of the total revenue of the
Company with Savon contributing 80 percent and Palm Beach 20 percent. The
cost of operating both companies is similar and neither one results in any
disparate expense to the Company. The Company, Food Concepts, Inc., which
evolved from Savon Coffee, Inc. was originally founded by its now president
and vice president Herbert Glaubman and Francis Resnick respectively in August
of 1986. The Company was originally located at 5197 Northwest 15th Street,
Margate, Florida. The Company has maintained various locations from August
1986 through 1993 during which time the Company was a development stage
enterprise funded primarily by the founders. On October 27, 1995 the Company
by virtue of a reorganization agreement wherein Granite, Ltd., a publically
traded Nevada corporation, acquired Savon Coffee, Inc. which subsequently
changed its name to Food Concepts, Inc. became a public company trading its
stock on the OTC bulletin board.
The Company does not presently have any specific plan or arrangement for
alternate financing and there is no assurance that any will be available to
the Company. The Company is presently indebted to the First Union Bank in the
approximate amount of $14,000. Said note is secured by the inventory and
equipment of the Company. The Company does not now have any specific need to
arrange for additional credit lines.
Due to the nature of the Company's business, a large amount of inventory
is necessary. The Company presently roasts and ships approximately 70
different types of flavored coffees. This in and of itself necessitates a
large inventory. In addition, substantial inventory is also necessary as the
Company is dependent upon foreign growers for coffee beans. Management sees
no detriment to the maintaining of a large inventory as it pertains to their
cash flow and working capital.
ACQUISITIONS
On October 27, 1995, the Company acquired all of the issued and
outstanding common stock of Savon Coffee, Inc. whose principal business
consists of manufacture and direct sales distributing of Gourmet Coffee, for
20,000,000 shares (pre-split) of common stock.
On January 1, 1996, the Company acquired all of the issued and
outstanding common stock of Palm Beach Gourmet Coffee, Inc., whose principal
business is direct sales of Gourmet Coffee, in exchange for 50,000 shares of
common stock of the Company.
ITEM 8. SELECTED FINANCIAL DATA
See Item 14 herein.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
<PAGE>
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Directors and Executive Officers
Directors of the Company hold office until the next annual meeting of
Stockholders (which is expected to be held in July, 1997) and until their
successors have been elected and shall qualify or until their death,
resignation or removal from office. The officers of the Company are elected by
the Board of Directors at the first meeting after each annual meeting of the
Company's Stockholders, and hold office until their successors are chosen and
qualified, or until their death, resignation or removal from office. The
directors and officers of the Company are as follows:
NAME TITLE
Herbert Glaubman
Director since October 1995 Director, President and CEO
Francis Glaubman
Director since October 1995 Director and Secretary
Harold Strulowitz
Director since March 1996 Director
The following information is provided with respect to the directors.
HERBERT GLAUBMAN
Age 66 Founder of the Company
FRANCIS GLAUBMAN
Age 52 Co-founder of the Company
HAROLD STRULOWITZ
Age 53 Certified public account and president
of Palm Beach Gourmet
Officer-Directors do not presently receive compensation for serving on
the Board. At present, there are no pension, profit sharing or other forms of
deferred compensation presently available to any employee of the Company.
Item 11. EXECUTIVE COMPENSATION
The following table sets forth the aggregate cash compensation paid by
the Company during the fiscal year ended June 30, 1996 to all executive
officers of the Company as a group and to all executive officers of the
Company each of whose total cash compensation exceeded $60,000.00 for services
in all capacities.
Name of Individual Capacities in Cash
or Group which served Compensation
Herbert Glaubman President and CEO $-0-
Francis Glaubman Vice President and
Secretary $55,000.00
All executive officers
as a group including
individuals named above
(2 persons)
$55,000.00
All executive officers are not covered by the Company's major medical
insurance and disability plans. The officers of the Company presently have use
of an automobile leased by the Company.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number and percentage, as of June 30,
1996 of the company's Common Shares owned of record and/or beneficially by
each person owning more than 5% of such Common Shares, by each Director who
owns any shares of the Company and by all officers and directors as a group.
Name Percentage Owned Number of Shares Owned
Herbert Glaubman 48.784% 1,900,000
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
<PAGE>
PART IV
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
I. Financial Statements and Schedules
Report of Independent Certified Public Accountants.
Consolidated Financial Statements:
Balance Sheets
Statements of Operations
Statements of Changes in Stockholders Equity
Statements of Cash Flow
Notes to Financial Statements
<PAGE>
FOOD CONCEPTS, INC.
AND SUBSIDIARIES
AUDITED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
<PAGE>
Joel Baum & Company, P.A.
Certified Public Accountant
1515 University Drive - Suite 209
Coral Springs, Florida 33071
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Food Concepts, Inc. and Subsidiaries
We have audited the accompanying consolidated balance sheets of Food Concepts,
Inc and Subsidiaries as of June 30, 1996 and 1995 and the related consolidated
statements of operations, stockholders' equity (deficiency) and cash flows for
the year ended June 30, 1996 and six months ended June 30, 1995. We have also
audited the accompanying consolidated statements of operations, stockholders'
equity (deficiency) and cash flows for the years ended December 31, 1994 and
1993. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects the financial position of Food Concepts, Inc. and
Subsidiaries as of June 30, 1996 and 1995, and the results of its operations
and cash flows for the year ended June 30, 1996, the six months June 30, 1995,
and the years ended December 31, 1994 and 1993 in conformity with generally
accepted accounting principles.
/s/ Joel Baum
Coral Springs, Florida
September 1, 1996
<PAGE>
FOOD CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
JUNE 30, 1996 and 1995
1996 1995
ASSETS
Current Assets
Cash and Cash Equivalents (overdraft) $ (11,201) $ (9,747)
Accounts Receivable (Note 3) 127,387 83,082
Inventory (Notes 1 and 3) 180,946 67,987
Prepaid Expenses 375 375
Total Current Assets 297,507 141,697
Property, Plant & Equipment (Notes 2 and 3)
(Net of Accumulated Depreciation of
$26,720 and $16,751) 36,666 25,070
Other Assets
Refundable Deposits 6,660 6,135
Total Assets $ 340,833 $ 172,902
LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIENCY)
Current Liabilities
Accounts Payable $ 134,988 $ 52,873
Accrued Expenses 11,743 45,418
Notes Payable - Short-Term (Note 3) 59,611 119,558
Total Current Liabilities 206,342 217,849
Long-Term Liabilities
Loan Payable Affiliated Company - 0 - 79,774
Loan Payable Officer - 0 - 39,600
Total Long-Term Liabilities - 0 - 119,374
Total Liabilities 206,342 337,223
Shareholders' Equity
Common Stock - $.001 par value;
authorized 20,000,000; issued and
outstanding - 3,894,744 shares at
June 30, 1996, 333,000 at June 30, 1995 3,895 333
Additional Paid-In-Capital 895,219 455,810
Accumulated Deficit (764,623) (620,464)
Total Shareholders' Equity
(Deficiency) 134,491 (164,321)
Total Liabilities & Shareholders'
Equity (Deficiency) $ 340,833 $ 172,902
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
FOOD CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIODS INDICATED BELOW
SIX MONTHS YEARS ENDED
YEAR ENDED ENDED DECEMBER 31,
JUNE 30, 1996 JUNE 30, 1995 1994 1993
Sales $ 745,671 $ 320,780 $ 464,466 $ 488,553
Cost of Sales 363,061 205,294 217,368 267,720
Gross Profit 382,610 115,486 247,098 220,833
Operating Expenses:
Selling, General
and Administrative 457,506 150,679 261,646 188,837
Income (Loss) Before
Interest Expense (74,896) (35,193) (14,548) 31,996
Interest Expense 20,586 6,974 21,278 12,091
Income (Loss) Before
Income Taxes (95,482) (42,167) (35,826) 19,905
Provision for Income
Taxes (Note 1) - 0 - - 0 - - 0- - 0 -
Net Income (Loss) $ (95,482) $ (42,167) $ (35,826) $ 19,905
Income (Loss) Per
Common Share (Note 1) (.041) (.127) (.108) .060
Weighted Average Common Shares
Outstanding (Note 1) 2,308,900 333,000 333,000 333,000
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
FOOD CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIENCY)
FOR THE YEAR ENDED JUNE 30, 1996, SIX MONTHS ENDED JUNE 30, 1995
AND YEARS ENDED DECEMBER 31, 1994 AND 1993
ADDITIONAL
COMMON PAID-IN ACCUMULATED
STOCK CAPITAL DEFICIT
Balance January 1, 1993 333 $455,810 $(515,996)
Net Income December 31,
1993 - 0 - - 0 - 19,905
Dividends - 0 - - 0 - (43,680)
Balance December 31,
1993 333 455,810 (539,771)
Net Loss December 31,
1994 - 0 - - 0 - (35,826)
Balance December 31,
1994 333 455,810 (575,597)
Net Loss June 30, 1995 - 0 - - 0 - (42,167)
Dividends - 0 - - 0 - (2,700)
Balance June 30, 1995 333 455,810 (620,464)
Additional Stock Issued
For Acquisition of
Subsidiary
October 27, 1995 1,900 - 0 - - 0 -
Additional Stock Issued
for Acquisition of
Subsidiary
January 1, 1996 50 - 0 - (48,677)
Additional Stock Issued
for S-8 Offering
January 4, 1996 600 - 0 - - 0 -
Additional Stock Issued
for S-8 Offering
May 2, 1996 900 - 0 - - 0 -
Additional Stock Issued
For Shareholders'
Contribution 112 439,409 - 0 -
Net Loss June 30, 1996 - 0 - - 0 - (95,482)
Balance June 30, 1996 3,895 $895,219 $ (764,623)
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
FOOD CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIODS INDICATED BELOW
SIX MONTHS
YEAR ENDED ENDED
JUNE 30,1996 JUNE 30, 1995
Cash Flows From Operations:
Net Income (Loss) $ (95,482) $ (42,167)
Adjustments to Reconcile Net Income To
Net Cash Used for Operating Activities:
Depreciation 9,876 1,495
Excess Liabilities over Assets of
Acquired Subsidiary (48,584) - 0 -
Changes in Assets and Liabilities:
(Increase) Decrease in Prepaid Expenses - 0 - (375)
(Increase) Decrease in Accounts Receivable (44,305) (15,492)
(Increase) Decrease in Inventory (112,959) 5,620
(Increase) Decrease in Other Assets (525) (250)
Increase (Decrease) in Accounts Payable 82,115 27,761
Increase (Decrease) in Accrued Expenses (33,675) 7,649
Increase (Decrease) in Notes Payable (59,947) (16,520)
Net Cash (Used in) Operations (303,486) (32,279)
Cash Flows From Investing Activities:
Purchase of Property, Plant & Equipment (21,565) - 0 -
Issuance of Common Stock 3,562 - 0 -
Additional Paid-In Capital generated as a
result of issuance of Common Stock 439,409 - 0 -
Net Cash Provided By
Investing Activities 421,406 - 0 -
Cash Flows from Financing Activities:
Dividends Paid to Stockholders - 0 - (2,700)
Increase (Decrease) in Loan Payable
Affiliated Company (79,774) 79,774
Increase (Decrease) in Officer Loans
Payable (39,600) (50,379)
Net Cash Provided by (Used in)
Financing Activities (119,374) 26,695
Net Increase (Decrease) in Cash (1,454) (5,584)
Cash (Overdraft) - Beginning of Period (9,747) (4,163)
Cash (Overdraft) - End of Period $ (11,201) $ (9,747)
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
FOOD CONCEPTS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1994 AND 1993
1994 1993
Cash Flows From Operations:
Net Income (Loss) $ (35,826) $ 19,905
Adjustments to Reconcile Net Income To
Net Cash Used for Operating Activities:
Depreciation 5,903 6,403
Changes in Assets and Liabilities:
Decrease (Increase) in Accounts
Receivable 19,275 (34,967)
Decrease in Inventory (18,447) (16,261)
Decrease (Increase) in Receivable
from Affiliate (250) - 0 -
Decrease (Increase) in Deposits - 0 - (5,605)
Decrease (Increase) in Prepaid Expenses - 0 - 999
Increase (Decrease) in Accounts
Payable and Accrued Expenses (7,080) 12,265
Increase in Advances Payable
to Factor 45,450 64,820
Increase in Current Portion
of Bank Note 7,000 5,470
Net Cash Provided By Operating
Activities 16,025 53,029
Cash Flows From Investing Activities:
Acquisition of Property, Plant
and Equipment - 0 - (500)
Cash Flows Used for Financing Activities:
(Decrease) in Loan Payable
to Affiliated Company (23,629) (951)
Increase in Officer Loans Payable 8,434 - 0 -
Dividends Paid to Stockholders - 0 - (43,680)
(Decrease) in Long-Term Note (7,374) (6,674)
Net Cash Used in Financing Activities (22,569) (51,305)
Net Increase (Decrease) in Cash (6,544) 1,224
Cash - Beginning of Year 2,381 1,157
Cash (Overdraft) - End of Year $ (4,163) $ 2,381
See Accompanying Notes to Consolidated Financial Statements.
<PAGE>
FOOD CONCEPTS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 1 -BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Organization and Business
Food Concepts, Inc. was organized under the laws of the State of Nevada on
June 16, 1982. On October 27, 1995 the Company reorganized and acquired Savon
Coffee, Inc. as a wholly owned subsidiary. On January 1, 1996, the Company
acquired Palm Beach Gourmet Coffee, Inc. as a wholly owned subsidiary. The
principal business of the Company is direct sales distributing of Gourmet
Coffee, offering more than seventy coffee blends as well as gift coffee
packages, private label coffee and special coffee roasting services.
B. Significant Accounting Policies
Basis of Accounting
The Company policy is to prepare its financial statements using the accrual
basis of accounting in accordance with generally accepted accounting
principles.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the period. Actual
results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, cash in banks, and any highly
liquid investments with a maturity of three months or less at the time of
purchase.
The Company and its Subsidiaries maintain cash and cash equivalent balances at
several financial institutions which are insured by the Federal Deposit
Insurance Corporation up to $100,000. At June 30, 1996 and 1995 there is no
concentration of credit risk from uninsured bank balances.
Inventory
Inventory is valued at the lower of cost or market determined by the weighted
average method. At June 30, 1996 and 1995, the Company's inventory is largely
held in various coffee blends, flavorings and supplies, approximately as
follows:
1996 1995
Raw Materials $134,225 $ 57,789
Finished Goods 46,721 10,198
Total $180,946 $ 67,987
<PAGE>
FOOD CONCEPTS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 1 -BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Con't)
Property, Equipment and Depreciation
Property and equipment are recorded at cost. The Company charges expenditures
for additions or major replacements to the asset accounts. The Company
provides for depreciation using the straight-line method over the estimated
useful lives of the assets (5-10 years).
Income Taxes
In February 1992, the Financial Accounting Standards Board issued Statement on
Financial Accounting Standards 109 of "Accounting for Income Taxes." Under
Statement 109, deferred tax assets and liabilities are recognized for the
estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax basis.
Deferred tax assets and liabilities are measured using enacted tax
rates in effect for the year in which those temporary differences are expected
to be recovered or settled. Under Statement 109, the effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
Net Income (Loss) Per Common Share
Net income (loss) per common share is computed by dividing net income (loss)
by the weighted average number of common shares outstanding during the
period. For the year ended June 30, 1996 and six months ended June 30, 1995,
the Company's weighted average common shares outstanding were 2,308,900 and
333,000 respectively. For the years ended December 31, 1994 and 1993 the
Company's weighted average common shares outstanding were 333,000.
NOTE 2 -PROPERTY, PLANT AND EQUIPMENT
1996 1995
Consists of the Following:
Equipment $ 55,118 $ 40,012
Office Furniture and
Equipment 1,235 - 0 -
Leasehold Improvements 7,033 1,809
Total 63,386 41,821
Less: Accumulated
Depreciation (26,720) (16,751)
$ 36,666 $ 25,070
Depreciation expense for the year ended June 30, 1996 and six months ended
June 30, 1995 amounted to $9,876 and $1,495, respectively.
<PAGE>
FOOD CONCEPTS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 3 - NOTES PAYABLE
1996 1995
Note due to First Union
secured by inventory & equipment $ 21,608 $ 21,808
Loan factor 38,003 97,750
Total Notes Payable $ 59,611 $119,558
NOTE 4 -MAJOR CUSTOMERS
Major customer sales are presented in tabular form as follows:
Period Ended Christmas Tree Shop Anron Coffee & Tea, Inc.
June 30, 1996 $208,800 28% $186,400 25%
June 30, 1995 $ 86,600 27% $ 38,500 12%
NOTE 5 -LEGAL PROCEEDINGS
Coffee Holding Company, Inc. has filed a lawsuit against Savon Coffee, Inc. in
the amount of $7,524 plus a percentage of gross profit in the amount of 18%
for the period from January 1993 to August, 1993. This action was instituted
against Savon Coffee, Inc. on March 16, 1994 in the Supreme Court of the State
of New York, County of Kings, for not fulfilling an agreement to purchase
coffee exclusively from Coffee Holding Company.
On July 3, 1996 the Company commenced an action in the Circuit Court of the
Seventeenth Judicial Circuit in and for Broward County, Florida bearing docket
number 96-09431-11 entitled Food Concepts, Inc. vs Lasorda's Dug Out, Inc., a
Florida corporation, et al. The Company is seeking damages in the amount of
$200,000 resulting from the non payment of outstanding loans and other
payments assigned to the Company under the rights of an oral contract.
NOTE 6 -ACQUISITIONS
A.On October 27, 1995, the Company acquired all of the issued and outstanding
common stock of Savon Coffee, Inc., whose principal business consists of
manufacture and direct sales distributing of Gourmet Coffee, for 20,000,000
shares (pre-split) of common stock (85.6% of the Company's shares). This
business combination has been treated as a reverse acquisition that was
accounted for as a recapitalization of Savon Coffee, Inc. using purchase
method accounting.
B.On January 1, 1996, the Company acquired all of the issued and
outstanding common stock of Palm Beach Gourmet Coffee, Inc., whose principal
business is direct sales of Gourmet Coffee, in exchange for 50,000 shares of
common stock of the Company. The acquisition was accounted for under the
purchase method of accounting. Under the purchase method of accounting the
acquired company's activity is included in the financial statements from the
date of acquisition.
<PAGE>
FOOD CONCEPTS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 7 -LEASING ARRANGEMENTS
Operating Lease
The Company conducts it operation from facilities that are leased under a five
year lease ending April 30, 2001. The lease calls for monthly rent payments
starting in February, 1996 of $2,692.00 per month plus a pro-rata share of
real property taxes. The Company also has various leases with various
expiration dates.
Future Minimum Lease Payments
Future minimum lease payments for operating leases at June 30, 1996 are:
Year Ended Operating
June 30 Leases
1997 $ 47,841
1998 50,391
1999 45,663
2000 41,789
2001 30,758
Total Minimum Payments $216,442
NOTE 8 -COMMITMENTS AND CONTINGENCIES
A Subsidiary of the Company has incurred approximately $5,210 plus interest
and penalties of unpaid payroll tax liabilities to the Internal Revenue
Service. A payment plan of $500 per month has been worked out with the
government on the satisfaction of this outstanding liability. It is to begin
September 15, 1996.
NOTE 9 -DEFERRED INCOME TAXES
As discussed in Note 1, the Company has applied the provision of Statement
109. The significant components of deferred income tax benefit arising from
net operating loss carry forwards of approximately $149,000 is as follows at
June 30, 1996:
Deferred Tax Benefit $ 37,250
Valuation Allowance (37,250)
$ - 0 -
The valuation allowance has been estimated at 100%.
<PAGE>
FOOD CONCEPTS, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996 AND 1995
NOTE 10-SUPPLEMENTAL CASH FLOW INFORMATION
Six Months
Year Ended Ended
June 30, 1996 June 30, 1995
Taxes Paid $ - 0 - $ - 0 -
Interest Paid $ 20,586 $ 6,974
<PAGE>
II. Reports on Form 8-K:
One report on Form 8-K was filed during the second quarter of the fiscal
year covered by this report.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
FOOD CONCEPTS, INC.FOOD CONCEPTS, INC.
BY:/s/ Francis Glaubman BY:/s/ Herbert Glaubman
FRANCIS GLAUBMAN HERBERT GLAUBMAN
Vice President President
Dated: July 10, 1997 Dated: July 10, 1997
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<PERIOD-TYPE> YEAR 6-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995
<PERIOD-END> JUN-30-1996 JUN-30-1995
<CASH> (11,201) (9,747)
<SECURITIES> 0 0
<RECEIVABLES> 127,387 83,082
<ALLOWANCES> 0 0
<INVENTORY> 180,946 67,687
<CURRENT-ASSETS> 297,507 141,697
<PP&E> 63,386 41,821
<DEPRECIATION> 26,720 25,070
<TOTAL-ASSETS> 340,833 172,902
<CURRENT-LIABILITIES> 206,342 217,849
<BONDS> 0 0
0 0
0 0
<COMMON> 3,895 333
<OTHER-SE> 130,596 (164,654)
<TOTAL-LIABILITY-AND-EQUITY> 340,833 172,902
<SALES> 745,671 320,780
<TOTAL-REVENUES> 745,671 320,780
<CGS> 363,061 205,294
<TOTAL-COSTS> 363,061 205,294
<OTHER-EXPENSES> 457,506 150,679
<LOSS-PROVISION> (74,896) (35,193)
<INTEREST-EXPENSE> 20,586 6,974
<INCOME-PRETAX> (95,482) (42,167)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (95,482) (42,167)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (95,482) (42,167)
<EPS-PRIMARY> (.041) (.127)
<EPS-DILUTED> (.041) (.127)
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