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<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
Commission file number 01-15109
--------
MAGNOLIA FOODS, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1251800
- --------------------------------------------------------------------------------
(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1119 N.W. 63rd Street Oklahoma City, Okla. 73116
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(405) 840-9655
--------------
(Registrant's telephone number, including area code)
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. Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Common Stock, 20,811,926
Par Value $0.01 Shares outstanding as of
per share September 30, 1995
Transitional Small Business Disclosure Format Yes No X
--- ---
<PAGE> 2
MAGNOLIA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------------- -------------
(unaudited)
<S> <C> <C>
ASSETS
- ------
CURRENT ASSETS
Cash and Temporary Cash
Investments $ 12,007 $ 127,243
Accounts Receivable 90,934 16,629
Inventories 48,895 89,033
Prepaid Expense 50,755 16,635
Short Term Investment -0- 100,000
--------------- ------------
Total current assets 202,591 349,540
PROPERTY AND EQUIPMENT
Leasehold Improvements 396,661 502,682
Furniture and Equipment 310,063 419,976
Equipment Not in Use 105,566 105,566
--------------- ------------
812,290 1,028,224
Less Accumulated Depreciation (167,931) (95,634)
--------------- ------------
644,359 932,590
OTHER ASSETS
Franchise Rights (Net) 398,438 414,375
Other Investments 89,871 2,500
Organization Costs (Net) 15,582 18,698
Deposits 34,675 46,825
Receivable from Related Parties 53,954 53,954
--------------- ------------
592,520 536,372
--------------- ------------
TOTAL ASSETS $ 1,439,470 $ 1,818,502
--------------- ------------
--------------- ------------
</TABLE>
See Accompanying Notes
-2-
<PAGE> 3
MAGNOLIA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ -------------
(unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S
EQUITY
CURRENT LIABILITIES
Accounts Payable $ 369,675 $ 256,199
Accrued Expense 63,764 153,661
Reserve for Closed Stores 50,873 138,752
Notes Payable 343,993 280,183
----------- ------------
TOTAL CURRENT LIABILITIES 828,305 828,795
STOCKHOLDERS' EQUITY
Series B 10% cumulative convertible
Preferred Stock, par value $.10
per share-25,000 shares authorized,
issued and outstanding 2,500 2,500
Common stock, par value $.01 per
share; 25,000,000 shares authorized,
20,816,456 and 16,375,456 shares
issued in 1995 and 1994 and
20,811,926 and 16,370,926 shares
outstanding in 1995 and 1994. 208,165 163,755
Additional paid-in capital 4,127,309 3,976,089
Retained Earnings (Deficit) (3,725,607) (3,151,435)
----------- ------------
612,367 990,909
Less Treasury stock - 4,530
Shares at Cost 1,202 1,202
----------- ------------
611,165 989,707
----------- ------------
TOTAL LIABILITIES AND STOCK- $ 1,439,470 $ 1,818,502
HOLDERS EQUITY ----------- ------------
----------- ------------
</TABLE>
See Accompanying Notes
-3-
<PAGE> 4
MAGNOLIA FOODS, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
------------------ -----------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Revenues:
Food & Beverage Sales $ 614,034 $ 1,359,822 $ 2,199,059 $ 1,699,818
Interest and other 292 3,354 23,324 3,634
---------- ----------- ----------- -----------
Total Operating Revenues 614,326 1,363,176 2,222,383 1,703,452
Costs and Expenses
Cost of Sales 209,613 468,030 793,194 590,416
Restaurant Operations 366,105 873,824 1,307,285 1,075,253
General & Administrative 198,416 159,085 426,828 178,770
Interest 6,018 6,631 18,663 17,739
Depreciation & Amortization 36,703 34,542 129,694 39,676
Loss on Restaurant Sale 14,869 -0- 120,891 -0-
Minority Interest -0- (1,677) -0- 133
Loss on issuance of Treas. Stock -0- -0- -0- 20,625
---------- ----------- ----------- -----------
Total Costs & Expenses 831,724 1,540,435 2,796,555 1,922,612
Net Income (Loss) before
extraordinary gain $ (217,398) $ (177,259) $ (574,172) $ (219,160)
Extraordinary Item
Forgiveness of Debt -0- 8,115 -0- 32,139
---------- ----------- ----------- -----------
Net Income (Loss) (217,398) (169,144) (574,172) (187,021)
Earnings (Loss) per common share
Before extraordinary item $ (0.01) $ (0.02) $ (0.03) $ (0.02)
Extraordinary Gain $ -- $ (0.00) $ -- $ (0.00)
---------- ----------- ----------- -----------
Total $ (0.01) $ (0.02) $ (0.03) $ (0.02)
Average Number of Common
Shares Outstanding 19,684,426 10,363,754 18,932,759 9,035,360
</TABLE>
See Accompanying Notes
-4-
<PAGE> 5
MAGNOLIA FOODS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30
-------------------------------------
1995 1994
-------------------------------------
<S> <C> <C>
Operating Activities
- --------------------
Net Income (Loss) $ (574,172) $ (187,021)
Items not Affecting Cash from
Operating Activities:
Depreciation and amortization 129,694 39,676
Loss on Sale of Restaurant 120,891 --
Issuance of Treasury Stock -- 20,625
Issuance of Stock for Services 115,320 --
Changes in Operating Assets &
Liabilities:
Receivables (74,305) (5,199)
Inventories 40,138 (99,283)
Other Assets (21,970) (13,815)
Payables & Accruals (98,111) 173,474
------------ -----------
Net cash provided (used) in $ (362,515) $ (71,543)
Operating Activities
Investing Activities:
- ---------------------
Additions to Property and
Equipment $ (15,681) $ (659,809)
Acquisitions of Investments (81,371) (497,826)
Sale/Return of Investment 100,000 --
Sale of Equipment 6,212 --
------------ -----------
Net cash provided (used) by
investing activities $ 9,160 $(1,157,635)
Financing Activities:
- ---------------------
Proceeds from Notes $ 250,000 $ 998,735
Payments of Notes (9,190) (44,816)
Offering Costs (2,691) --
Issuance of Common Stock -- $ 657,803
------------ -----------
Net cash provided (used) by
financing activities $ 238,119 $ 1,611,722
Increase(Decrease) in Cash $ (115,236) 382,544
Cash - Beginning of Period 127,243 (2,282)
------------ -----------
Cash - End of Period $ 12,007 $ 380,262
------------ -----------
</TABLE>
See Accompanying Notes
-5-
<PAGE> 6
MAGNOLIA FOODS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1995
(unaudited)
<TABLE>
<CAPTION>
Series B Additional
Preferred Common Paid-in Accumulated Treasury
Stock Stock Capital (Deficit) Stock Total
<S> <C> <C> <C> <C> <C> <C>
Balance January 1, 1995 $2,500 $163,755 $3,976,089 $3,151,435 $(1,202) $987,707
Offering Costs (2,691) (2,691)
Stock Issued for
Services/Debt 44,410 153,911 198,321
Net Loss (574,172) (574,172)
------ -------- ---------- ----------- ------- --------
Balance Sept. 30, 1995 $2,500 $208,165 $4,127,309 $(3,725,607) $(1,202) $611,165
------ -------- ---------- ----------- ------- --------
------ -------- ---------- ----------- ------- --------
</TABLE>
See accompanying notes
-6-
<PAGE> 7
MAGNOLIA FOODS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
In the opinion of the Company, the accompanying unaudited condensed
consolidated financial statements contain all adjustments (consisting only of
normal recurring accruals) necessary to present consolidated financial position
as of September 30, 1995 and the consolidated results of operations and the
consolidated statements of cash flows for the nine-month period ended September
30, 1995 and is not necessarily indicative of the results to be expected for
the full year.
2. Accounting Policies
During interim periods the Company follows the accounting policies set
forth in its consolidated financial statements included in its annual report on
Form 10-KSB. Reference should be made to such financial statements for
information on such accounting policies and further financial details.
-7-
<PAGE> 8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATION
Revenues and Operations
Revenues for the period reflect operations of five Skolniks Bagel Bakery
restaurants. Revenues for the same period in 1994 reflect sales from ten
Skolniks Bagel Bakery restaurants and a joint venture restaurant that is no
longer a part of the consolidated financial statements but is now accounted for
under the equity method.
For the quarter, cost of sales in the Skolniks restaurants was 34.1% of
sales with restaurant operating expenses running 59.6%. Net income from those
operations before depreciation and corporate supervision was approximately
$38,000.
Corporate expenditures of $198,416 during the three month period include
costs necessary to supervise the current operations and are being reviewed and
reduced by the company on an on-going basis.
Liquidity
Working capital at September 30, 1995 was a deficit of $625,714 compared
to a deficit of $479,255 at December 31, 1994. The deficit increase is due in
part to the issuance of short term debt.
The company intends to concentrate on improving profitability of existing
restaurants while reducing corporate overhead to manageable levels. Management
shall also continue in its efforts to convert short term debt into equity thus
improving its working capital position.
-8-
<PAGE> 9
PART II OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8--K
The following exhibits are included herein:
(11) Statement re: computation of earnings per share.
(27) Financial Data Schedule
(b) The Company did not file any reports on Form 8-K
during the quarter.
-9-
<PAGE> 10
Signatures
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.
MAGNOLIA FOODS,INC.
Dated: November 9, 1995 BY: /s/ JOSEPH J. JOHNSTON
---------------- -----------------------------
Joseph J. Johnston
President and Chief Financial
Officer
-10-
<PAGE> 11
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
(11) Statement re: computation of earnings per share.
(27) Financial Data Schedule
</TABLE>
<PAGE> 1
(11) STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPT. 30 SEPT. 30
----------------- -------------------
1995 1994 1995 1994
<S> <C> <C> <C> <C>
Net Income (Loss) for Company
Earnings per Common Share $ (217,398) $ (169,144) $ (574,172) $ (187,021)
Weighted Average Number of
Common Shares Outstanding
During Each Period Without
Dilution 19,684,426 10,363,754 18,932,759 9,035,360
Addition from Assumed Exercise
of Common Stock Warrants 1,120,000 -0- 1,120,000 -0-
Addition from Assumed
Conversion of Preferred Stock 300,000 300,000 300,000 300,000
---------- ---------- ---------- ----------
21,104,426 10,663,754 20,352,759 9,335,360
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net Income per Common Share
Without Dilution $ (0.01) $ (0.02) $ (0.03) $ (0.02)
Fully Diluted $ (0.01) $ (0.02) $ (0.03) $ (0.02)
</TABLE>
-11-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 12,007
<SECURITIES> 0
<RECEIVABLES> 90,934
<ALLOWANCES> 0
<INVENTORY> 48,895
<CURRENT-ASSETS> 202,591
<PP&E> 812,290
<DEPRECIATION> 167,931
<TOTAL-ASSETS> 1,439,470
<CURRENT-LIABILITIES> 828,305
<BONDS> 0
<COMMON> 208,165
0
2,500
<OTHER-SE> 400,500
<TOTAL-LIABILITY-AND-EQUITY> 1,439,470
<SALES> 2,199,059
<TOTAL-REVENUES> 2,222,383
<CGS> 793,194
<TOTAL-COSTS> 2,777,892
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,663
<INCOME-PRETAX> (574,172)
<INCOME-TAX> 0
<INCOME-CONTINUING> (574,172)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (574,172)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
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