<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[xx] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-12775
Odessa Foods International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 75-1613360
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Evertrust Plaza, 3rd Floor, Jersey City, NJ 07302
(Address of principal executive offices) (Zip Code)
(718) 646-4175
(Registrant's telephone number, including area code)
________________________________________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark 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.
[x] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's class of
common stock, as of the latest practicable date.
The number of shares outstanding of each of the registrant's classes of common
stock, as of May 20, 1996 is 10,982,277 shares, all of one class of $.00001 par
value common stock.
1
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TABLE OF CONTENTS
Page No.
--------
PART I
Item 1. Financial Statements F1-F4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations and Plan of Operations 3-5
PART II
Item 1. Legal Proceedings 6
Item 2. Changes in Securities 6
Item 3. Defaults Upon Senior Securities 6
Item 4. Submission of Matters to a
Vote of Security Holders 6
Item 5. Other Information 6
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
2
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ODESSA FOODS INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1996
(UNAUDITED)
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS:
Cash $ 116,840
Accounts receivable, less allowance for doubtful
accounts of $2,834 25,504
Inventory 24,948
Prepaid expenses and sundry receivables 7,692
-----------
TOTAL CURRENT ASSETS 174,984
-----------
PROPERTY AND EQUIPMENT, less accumulated
depreciation of $444,135 2,690,143
-----------
OTHER ASSETS:
Start-up costs, less amortization of $72,000 288,000
Prepaid lease costs 391,734
-----------
TOTAL OTHER ASSETS 679,734
-----------
$ 3,544,861
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 184,263
Note payable - bank 75,000
Loans payable - related parties 192,404
-----------
TOTAL CURRENT LIABILITIES $ 451,667
-----------
STOCKHOLDERS' EQUITY:
Common stock, $.00001 par value; authorized
25,000,000 shares; issued and outstanding 10,814,047 shares 108
Additional paid-in capital 7,114,354
Accumulated deficit (4,026,640)
Foreign currency translation adjustment 5,372
-----------
TOTAL STOCKHOLDERS' EQUITY 3,093,194
-----------
$ 3,544,861
===========
</TABLE>
See note to financial statements.
F1
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ODESSA FOODS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
-------------------------------------------------------------------------
1996 1995 1996 1995
-------------------------------------------------------------------------
<S> <C> <C> <C> <C>
SALES $ 141,978 $ 55,675 $ 411,732 $ 137,399
COST OF SALES 109,749 51,772 335,950 119,603
-------------------------------------------------------------------------
GROSS PROFIT 32,229 3,903 75,782 17,796
-------------------------------------------------------------------------
OPERATING EXPENSES:
Selling, general & administrative expenses 141,189 118,277 354,404 144,823
Depreciation and amortization 68,000 75,606 203,000 214,221
-------------------------------------------------------------------------
209,189 193,883 557,404 359,044
-------------------------------------------------------------------------
NET LOSS $ (176,960) $ (189,980) $ (481,622) $ (341,248)
=========================================================================
NET LOSS PER SHARE $ (.02) $ (.02) $ (.05) $ (.04)
=========================================================================
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 10,724,229 9,658,039 10,359,284 9,562,483
=========================================================================
</TABLE>
See note to financial statements.
F2
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ODESSA FOODS INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended March 31,
-------------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FROM OPERATING ACTIVITIES
Net loss $ (481,622) $ (341,248)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization 203,000 214,221
Sundry other items 955 1,402
Changes in assets and liabilities:
Accounts receivable (9,552) (9,124)
Inventory (6,664) (39,683)
Prepaid expenses and sundry receivables (305,471) 23,039
Accounts payable (31,500) 106,395
-------------------------------
NET CASH USED IN OPERATING ACTIVIES (630,854) (44,998)
-------------------------------
CASH FLOWS USED IN INVESTING
ACTIVITIES:
Purchases of property and equipment (638,665) (296,665)
-------------------------------
CASH FLOWS PROVIDED BY FINANCING
ACTIVITIES:
Issuance of common stock 1,162,614 405,000
Advances from stockholders 142,404 48,702
-------------------------------
1,305,018 453,702
-------------------------------
INCREASE IN CASH 35,499 112,039
CASH - BEGINNING OF PERIOD 81,341 9,064
-------------------------------
CASH - END OF PERIOD $ 116,840 $ 121,103
===============================
NON-CASH INVESTING AND FINANCING
ACTIVITIES:
Common shares issued to repay stockholder loans $ -- 0 -- $ 2,706,341
===============================
</TABLE>
See note to financial statements.
F3
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ODESSA FOODS INTERNATIONAL, INC.
NOTE TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
BASIS OF PRESENTATION
The accompanying financial statements reflect all adjustments which, in
the opinion of management, are necessary for a fair presentation of the
financial position and the results of operations for the interim periods
presented. All such adjustments are of a normal and recurring nature. The
results of operations for any interim period are not necessarily indicative of a
full year.
Certain financial information which is normally included in the
financial statements prepared in accordance with generally accepted accounting
principles, which is not required for interim reporting purposes, has been
condensed or omitted. The accompanying financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the company's annual report on Form 10-KSB for the year ended June
30, 1995.
F4
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS AND PLAN OF OPERATIONS
Odessa Foods International, Inc. (the "Registrant") is
engaged, through its subsidiaries (Odessa Foods, Inc. and Hilmac
Gmbh) in the manufacture of sausages, pastas and related food
products in Odessa, Ukraine.
Consolidated Statements of Operations:
(a) Comparative three month periods ended March 31, 1995 and
March 31, 1996
Net loss for the three months ended March 31, 1996 was $(176,960) as
compared to a net loss of $(189,980) for the comparative three month period
ended March 31, 1995. The principal differences between the net losses
heretofore indicated (and the fact that net losses decreased by $13,020) relate
to the facts that during the three month period ended March 31, 1996 operating
expenses increased by $15,306 (as compared to the three month period ended March
31, 1995) while gross profit only increased by $28,326 (as compared to the three
month period ended March 31, 1995); thereby accounting for the aforesaid net
loss decrease of $13,020. The principal operating expense increase for the
comparative three month periods indicated was in selling, general and
administrative expenses which increased by $22,912 while depreciation and
amortization decreased by $7,606.
Sales increased by $86,303 while gross profits increased by $28,326
during the three month period ended March 31, 1996. When taking into account the
above referenced increase in operating expenses of $15,306 and deducting
therefrom the increase in gross profit of $28,326 the increase in net loss of
$13,020 is accounted for.
(b) Comparative nine month periods ended March 31, 1995 and
March 31, 1996
Net loss for the nine months ended March 31, 1996 was $(481,622) as
compared to a net loss of $(341,248) for the comparative nine month period ended
March 31, 1995. The principal differences between the net losses heretofore
indicated (and the fact that net losses increased by $140,374) relate to the
facts that during the nine month period ended March 31, 1996 operating expenses
increased by $198,360 (as compared to the nine month period ended March 31,
1995) while gross profit only increased by $57,986 (as compared to the nine
month period ended March 31, 1995); thereby accounting for the aforesaid net
loss increase of $140,374. The principal operating expense increase for the
comparative nine month periods indicated was in selling, general and
administrative expenses which increased by $209,581 while depreciation and
amortization decreased by $11,221.
3
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Sales increased by $274,333 while gross profits increased by $57,986
during the nine month period ended March 31, 1996. When taking into account the
above referenced increase in operating expenses of $198,360 and deducting
therefrom the increase in gross profit of $57,986 the increase in net loss of
$140,374 is accounted for.
The net loss for quarter ended March 31, 1996 of $(176,960) resulted
from the fact that total operating expenses of $209,189 were offset by only
$32,229 in gross profits while net loss for the nine months ended March 31, 1996
of $(481,622) resulted from the fact that total operating expenses of $557,404
were offset by only $75,782 in gross profit.
Consolidated Balance Sheets: (1)
Total assets of the Registrant at quarter ended March 31, 1996 and
fiscal year ended June 30, 1995 were $3,544,861 and $2,752,965 respectively,
i.e. an increase of $791,896. Such increase is primarily attributable to an
increase in (a) current assets of $50,760 (as a result of increases in (i) cash
of $35,499, (ii) accounts receivable of $8,597 and (iii) inventory of $6,664),
(b) property and equipment of $462,665 (after taking into account accumulated
depreciation) and (c) other assets of $278,471 (i.e. increase in prepaid lease
costs of $305,471 offset by decrease in start-up costs less amortization of
$27,000).
Current liabilities of the Registrant at quarter ended March 31, 1996
and fiscal year ended June 30, 1995 were $451,667 and $340,763 respectively. The
increase in total current liabilities of $110,904 for the comparative periods is
primarily attributable to the fact that while accounts payable and accrued
expenses decreased by $31,500 loan(s) payable - related parties increased by
$142,404.
Primarily as a result of total paid-in capital having increased by
$1,162,614 and accumulated deficit having increased by $481,622, stockholders'
equity increased from $2,412,202 at June 30, 1995 to $3,093,194 at March 31,
1996; an increase of $680,992. The aforesaid increase in additional paid-in
capital resulted from Registrant's sale of shares of its common stock during the
nine month period ended March 31, 1996; the Registrant having sold 1,026,670
shares of its common stock during such nine month period for an aggregate net to
the Registrant of $1,162,614. A significant portion of such funds were utilized
for an investment of $638,665 in the purchase of property and equipment during
the nine months ended March 31, 1996; the Registrant having previously expended
$296,665 for such purposes during the comparative nine month period ended March
31, 1995.
(1) Comparative information as same relates to fiscal year ended June 30,
1995 is based upon audited financial statements as same appear in
Registrant's Form 10-KSB for fiscal year ended June 30, 1995.
4
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Notwithstanding the working capital deficit heretofore referred to,
Company management nevertheless continues to believe that the Company will be
able to continue its operations through (a) the raising of additional capital
through debt and/or equity financing when, as and if necessary and/or (b) its
belief that Registrant's operations will eventually improve sufficiently through
utilization of property and equipment recently purchased so as to enable
Registrant to increase productivity.
The Registrant's Plan of Operations for the next 12 months continues to
revolve around its aforesaid manufacture of sausages, pastas and related food
products.
5
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PART II
Item 1. Legal Proceedings - None
Item 2. Changes in Securities - None
Item 3. Defaults Upon Senior Securities - None
Item 4. Submission of Matters to a
Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - None
(b) Reports on Form 8-K -
(i) 8-K with date of report of February 1, 1996 as executed
February 29, 1996 and filed March 8, 1996 - so as to
report, in Item 4 thereof, change in certifying
accountant.
6
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ODESSA FOODS INTERNATIONAL, INC.
By /s/ Leon Golden/
--------------------------------------
Leon Golden, President
Dated: May 31, 1996
7
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EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 116,840
<SECURITIES> 0
<RECEIVABLES> 28,338
<ALLOWANCES> 2,834
<INVENTORY> 24,948
<CURRENT-ASSETS> 174,984
<PP&E> 3,134,278
<DEPRECIATION> 444,135
<TOTAL-ASSETS> 3,544,861
<CURRENT-LIABILITIES> 451,667
<BONDS> 0
0
0
<COMMON> 108
<OTHER-SE> 3,093,086
<TOTAL-LIABILITY-AND-EQUITY> 3,544,861
<SALES> 411,732
<TOTAL-REVENUES> 411,732
<CGS> 335,950
<TOTAL-COSTS> 335,950
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (481,622)
<INCOME-TAX> 0
<INCOME-CONTINUING> (481,622)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (481,622)
<EPS-PRIMARY> (.05)
<EPS-DILUTED> (.05)
</TABLE>
