<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1996
Commission file No. 0-15320
The Fresh Juice Company, Inc.
(Exact name of registrant as specified in its charter)
Delaware 11-2771046
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
350 Northern Boulevard
Great Neck, New York 11021
(Address of principal Executive offices) (Zip Code)
Registrant's telephone number, including area code (516) 482-5190
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 / /
The number of shares of $.01 par value Common Stock outstanding as of July 12,
1996 was 4,690,062.
<PAGE> 2
Part I
Item 1. Financial Statements
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
MAY 31, 1996 AND NOVEMBER 30, 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 901,989 $ 1,998,063
Trade accounts receivable 1,867,870 591,727
Inventories 2,304,358 1,544,821
Note receivable - Ultimate Juice -- 120,000
Note receivable - Clear Springs Citrus 150,000 --
Other 53,519 3,747
----------- -----------
Total Current Assets 5,277,736 4,258,358
Property, Plant and Equipment, at Cost:
Land 30,000 30,000
Building 1,413,926 597,155
Leasehold improvements 33,195 --
Equipment 1,743,475 353,794
Molds 224,333 196,338
Automobiles 112,446 103,058
Construction in progress -- 1,437,887
----------- -----------
3,557,375 2,718,232
Less accumulated depreciation 667,015 499,256
----------- -----------
Net Property, Plant and Equipment 2,890,360 2,218,976
Goodwill, Net of Accumulated Amortization of
$27,790 at May 31, 1996 3,258,866 --
Note Receivable - Ultimate Juice -- 20,000
Intangible Assets, Net of Accumulated Amortization of
$27,311 at May 31, 1996 and $11,059 at November 30, 1995 121,423 10,903
Other Assets 15,571 --
----------- -----------
TOTAL ASSETS $11,563,956 $ 6,508,237
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current installments of long-term debt $ 186,347 $ 45,832
Accounts payable and accrued expenses 1,231,308 244,697
Income taxes payable 158,893 48,239
----------- -----------
Total Current Liabilities 1,576,548 338,768
Long-Term Debt, Net of Current Installments 1,388,653 1,529,168
Commitments and Contingency
Shareholders' Equity:
Series preferred stock, par value $10; authorized
200,000 shares; none issued -- --
Common stock, par value $.01; authorized 5,000,000
shares; issued 4,902,000 shares at May 31, 1996 and 3,762,000 shares at
November 30, 1995; outstanding 4,690,062 shares at May 31, 1996 and
3,550,062 shares at November 30, 1995 49,020 37,620
Additional paid-in capital 6,232,590 2,396,490
Retained earnings 2,600,438 2,489,484
----------- -----------
8,882,048 4,923,594
Less cost of common shares held in treasury:
211,938 shares at May 31, 1996 and November 30, 1995 283,293 283,293
----------- -----------
Total Shareholders' Equity 8,598,755 4,640,301
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $11,563,956 $ 6,508,237
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 3
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
SIX MONTHS ENDED MAY 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 7,779,639 $ 5,143,835
Cost of Goods Sold 5,649,215 3,376,647
----------- -----------
2,130,424 1,767,188
Selling, General and Administrative Expenses 1,906,123 1,460,823
----------- -----------
Earnings From Operations 224,301 306,365
Interest Income 27,976 53,486
Interest Expense (65,285) --
Other 4,962 25,113
----------- -----------
Earnings Before Income Taxes 191,954 384,964
Income Taxes 81,000 159,844
----------- -----------
Net Earnings 110,954 225,120
Retained Earnings, Beginning of Period 2,489,484 2,218,441
----------- -----------
Retained Earnings, End of Period $ 2,600,438 $ 2,443,561
=========== ===========
Net Earnings Per Common Share $ .03 $ .06
=========== ===========
Weighted Average Number of Shares Outstanding 3,982,231 3,606,896
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 4
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED MAY 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net earnings $ 110,954 $ 225,120
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Depreciation and amortization 214,339 25,050
Changes in assets and liabilities, net of assets
acquired and liabilities assumed:
Increase in trade accounts receivable (496,964) (79,074)
Increase in inventories (623,877) (1,716,136)
Increase in other current assets (48,623) (4,491)
Increase in other assets (1,830) --
Increase in accounts payable and accrued expenses 449,247 2,001,579
Increase in income taxes payable 79,983 155,844
Increase in other current liabilities -- 6,354
----------- -----------
Net Cash (Used In) Provided By Operating Activities (316,771) 614,246
Cash Flows From Investing Activities:
Installments from note receivable 30,000 60,000
Decrease in investments -- (27,786)
Acquisitions of property, plant and equipment (856,994) (108,131)
Acquisitions of trademarks and patents (1,245) --
Cash acquired in Ultimate Juice merger 70,936 --
----------- -----------
Net Cash Used In Investing Activities (757,303) (75,917)
Cash Flows From Financing Activities:
Purchase of treasury stock -- (9,933)
Payments of note payable to related party (22,000) --
----------- -----------
Net Cash Used In Financing Activities (22,000) (9,933)
----------- -----------
Net (Decrease) Increase in Cash and Cash Equivalents (1,096,074) 528,396
Cash and Cash Equivalents at Beginning of Period 1,998,063 1,739,584
----------- -----------
Cash and Cash Equivalents at End of Period $ 901,989 $ 2,267,980
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 5
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MAY 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 5,566,796 $ 2,671,539
Cost of Goods Sold 4,383,700 1,784,764
----------- -----------
1,183,096 886,775
Selling, General and Administrative Expenses 829,167 765,363
----------- -----------
Earnings From Operations 353,929 121,412
Interest Income 14,218 32,691
Interest Expense (32,643) --
Other (459) 29,035
----------- -----------
Earnings Before Income Taxes 335,045 183,138
Income Taxes 80,336 78,309
----------- -----------
Net Earnings 254,709 104,829
Retained Earnings, Beginning of Period 2,345,729 2,338,732
----------- -----------
Retained Earnings, End of Period $ 2,600,438 $ 2,443,561
=========== ===========
Net Earnings Per Common Share $ .06 $ .03
=========== ===========
Weighted Average Number of Shares Outstanding 4,373,990 3,609,174
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1996 AND NOVEMBER 30, 1995
(UNAUDITED)
(1) The consolidated financial information of The Fresh Juice Company, Inc.
and Subsidiaries (the Company), included herein has been prepared by the
Company and is unaudited; however, such information reflects all
adjustments (consisting solely of normal recurring adjustments) which
are, in the opinion of management, necessary for a fair statement of the
financial position, results of operations, and cash flows for the interim
periods to which the report relates. The results of operations for the
period ended May 31, 1996 are not necessarily indicative of the operating
results which may be achieved for the full year. All material
intercompany accounts and transactions have been eliminated in
consolidation.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's November 30, 1995 consolidated financial statements.
(2) Inventories at May 31, 1996 and November 30, 1995 consist of the
following:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Raw Materials $ 36,106 $ --
Packaging materials 167,076 138,062
Finished goods 2,101,176 1,406,759
---------- ----------
$2,304,358 $1,544,821
========== ==========
</TABLE>
(3) In January 1996, Fresh Pik't Natural Foods, Inc., a wholly-owned
subsidiary, was named as a defendant in a legal matter which seeks
damages in excess of $250,000. Management of the company believes that
the ultimate resolution of this matter will not have a material impact on
financial position or earnings of the Company.
(4) Effective April 1, 1996, the Company merged a newly formed wholly-owned
subsidiary with and into The Ultimate Juice Company, Inc. (Ultimate), a
privately-held Company which markets and distributes fresh squeezed juice
primarily on the east coast. In exchange for all of the outstanding
shares of Ultimate, the Company issued to the Ultimate shareholders
1,140,000 of previously unissued shares of its common stock. The merger
has been accounted for as a purchase.
The following table presents selected financial information (unaudited)
for the Company and Ultimate on a pro-forma basis assuming the two
companies had been combined for the six months ended May 31, 1996 and
1995. Pro-forma results for the six months ended May 31, 1996 include the
results of the Company and Ultimate for the six months ended May 31,
1996. Pro-forma results for the six months ended May 31, 1995 include the
results of the Company for the six months ended May 31, 1995 combined
with the results of Ultimate for the six months ended December 31, 1994.
Pro-forma results in each period include necessary pro-forma adjustments:
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Net Sales $11,256,414 $10,492,304
Net Earnings $ 70,033 $ 181,594
Net Earnings Per Common Share $ .01 $ .04
</TABLE>
Such pro-forma data reflects preliminary adjustments to the fair value of
the assets purchased as the Company has not had an opportunity to obtain
appraisals or other independent verifications of the fair value of the
assets purchased. When such information is obtained, the Company will
make appropriate adjustments to the fair value of the assets purchased as
necessary.
In connection with the merger noted above, the Company entered into
employment agreements with two of its executive officers which generally
provide for, among other things, annual compensation aggregating a
minimum of $720,000, subject to annual increases, as defined, for a term
of 3 years.
<PAGE> 7
THE FRESH JUICE COMPANY, INC.
AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1996 AND NOVEMBER 30, 1995
(UNAUDITED)
(5) On March 31, 1996, the Company entered into a merger agreement to merge
Clear Springs Citrus, Inc. (Clear Springs), the primary producer of fresh
squeezed juice for Ultimate, with and into The Fresh Juice Company of
Florida, Inc., a wholly-owned subsidiary of the Company. Under terms of
the merger agreement, the company will exchange 1,160,000 shares of its
common stock for all of the outstanding common stock of Clear Springs,
subject to the approval by the Company's stockholders to increase the
number of authorized shares of common stock to 20,000,000. The Company,
the Company's President and the shareholders of Ultimate (as of March 31,
1996) have entered into a Voting Agreement, dated March 31, 1996, whereby
each shall vote their respective shares in favor of the increase in
authorized shares and the merger with Clear Springs. This merger is
expected to be accounted for under the purchase method.
(6) The following is supplemental noncash disclosures:
<TABLE>
<CAPTION>
Supplemental disclosure of cash flow information
Cash paid during the six months for: 1996
-------
<S> <C>
Interest $65,285
Income Taxes $36,721
</TABLE>
Supplemental disclosure of non cash financing activity:
During the six month period ended May 31, 1996, the Company purchased all
of the outstanding common stock of Ultimate in exchange for 1,140,000
shares of its common stock. The fair value of Ultimate's assets and
liabilities at the date of acquisition are presented below:
<TABLE>
<S> <C>
Cash $ 70,936
Trade accounts receivable 779,179
Inventory 135,660
Other assets 54,890
Property, plant and equipment 44,657
Goodwill 3,286,656
Intangible assets 65,557
Accounts payable and accrued expenses (503,061)
Income taxes payable (64,974)
Note payable - related party (22,000)
-----------
Total purchase price $ 3,847,500
===========
</TABLE>
<PAGE> 8
Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
As set forth in the Company's Notes to Consolidated Financial
Statements (Note 4) and the Quarterly Report on Form 10-QSB filed by the Company
for the quarter ending February 29, 1996, effective April 1, 1996, the Company
merged a newly formed wholly-owned subsidiary with and into The Ultimate Juice
Company, Inc. ("Ultimate"), a privately-held company which markets and
distributes fresh squeezed juice primarily on the east coast. Since the merger
transaction with Ultimate became effective on April 1, 1996, Ultimate closed its
previous fiscal year on March 31, 1996 and began its new fiscal year on April 1,
1996. Accordingly, the Consolidated Statements of Operations for the three
months ended May 31, 1996 consist of a consolidation of two months of operations
(April and May) for Ultimate and three months (March-May) for the Company.
The consolidation of this additional wholly-owned subsidiary has
increased the Company's net sales for the quarter ended May 31, 1996 to
$5,566,796 or 108% more than net sales of $2,671,539 in the corresponding
quarter of the preceding year. For the six months ended May 31, 1996, net sales
have increased to $7,779,639 or 51% over net sales of $5,143,835 for the
corresponding six month period in the preceding year. As a result of the
acquisition of Ultimate, a reclassification of freight costs from selling,
general and administrative expenses to costs of goods sold and an increase in
the cost of fruit, costs of goods sold have increased (a) to $4,383,700 for the
quarter ending May 31, 1996, an increase of 146% from $1,784,764 for the quarter
ending May 31, 1995, and (b) to $5,649,215 for the six months ending May 31,
1996, an increase of 67% from $3,376,647 for the six months ending May 31, 1995.
The acquisition of Ultimate and the Winter Haven Plant have also caused
selling, general and administrative expenses to increase (a) to $829,167 for the
quarter ending May 31, 1996, an increase of 8% from $765,363 for the quarter
ending May 31, 1995, and (b) to $1,906,123 for the six months ending May 31,
1996, an increase of 30% from $1,460,823 for the six months ending May 31, 1995.
In addition, the interest paid on the outside financing obtained in connection
with purchasing and equipping the Winter Haven Plant has caused interest expense
for the quarter and six months ending May 31, 1996 to increase to $32,643 and
$65,285, respectively. The Company reported no interest expense in the
corresponding periods in the preceding year.
Although fruit prices have increased during the three months ending May
31, 1996, the Company and Ultimate have been able to maintain margins while
increasing sales volume during a quarter in which demand for the Company's
products is typically strong. This has resulted in an increase in earnings from
operations to $353,929 for the quarter ended May 31, 1996, an increase of 192%
over the $121,412 of earnings from operations for the corresponding quarter in
the preceding year. However, as a result of the loss sustained by the Company in
the first quarter of 1996 ($129,628), earnings from operations for the six
months ended May 31, 1996 were $224,301, a 27% decrease as compared to the
$306,365 earned in the corresponding six month period in the preceding year.
Similarly, while the earnings per share for the quarter ended May 31, 1996 have
increased to $.06 per share as compared $.03 per share for the corresponding
quarter in the preceding year, the loss sustained in the first quarter has
resulted in an overall decrease in earnings per share of $.03 per share for the
six month period ended May 31, 1996 as compared to $.06 per share for the
corresponding six month period in the preceding year. Net earnings per common
share for the period ended May 31, 1996 were impacted by the higher number of
shares outstanding resulting from the Ultimate transaction as well as the
earnings from Ultimate's operations.
Financial Condition
As set forth in the Company's Annual Report on Form 10-KSB for the
Company's fiscal year ended November 30, 1995, on August 3, 1995, the Company
acquired a vacant 70,000
<PAGE> 9
square foot warehouse building in Winter Haven, Florida for the purpose of
constructing a state of the art juice processing plant. In connection therewith,
the Company, through its wholly-owned subsidiary The Fresh Juice Company of
Florida, Inc., purchased approximately $2,300,000 of fixtures and equipment
which have been installed in the Winter Haven Plant. Approximately
$1,200,000 of such costs have been financed from the Company's working capital,
and the balance was financed through a bank loan. Primarily as a result of these
construction and equipment costs, the Company's cash balance as of May 31, 1996
has decreased to $901,989 as compared to $1,998,063 as of November 30, 1995.
As a result of the consolidation of the Company's additional
wholly-owned subsidiary, both the current and total assets of the Company have
increased to $5,277,736 and $11,563,956, respectively, as of May 31, 1996, as
compared to $4,258,358 and $6,508,237, respectively, as of November 30, 1995.
Specifically, the Company's trade accounts receivable as of May 31, 1996
increased to $1,867,870 as compared to $591,727 as of November 30, 1995. In
addition, as is consistent with the Company's past practices, during the six
months ended May 31, 1996, the Company has increased its level of "fresh-frozen"
juice inventory to take advantage of the high quality of fruit available during
the harvest season and to meet expected future demand for such products. As a
result, the Company's inventory has increased to $2,304,358 as of May 31, 1996
as compared to $1,544,821 as of November 30, 1995. The completion of
construction of the Winter Haven Plant and the installation of the additional
equipment have increased the Company's balances for building and equipment,
while reducing construction in progress from $1,437,887 as of November 30, 1995
to $0 as of May 31, 1996. As a result, the Company's combined balance for
building, leasehold improvements and equipment as of May 31, 1996 has increased
to $3,190,596 as compared to $950,949 as of November 30, 1995. Even after taking
into consideration the $1,437,887 reduction in construction in progress, this
represents a net increase in building, leasehold improvements and equipment of
$801,760, representing over ninety five percent (95%) of the increase in the
gross property plant and equipment balance as of May 31, 1996 ($3,557,375) as
compared to the balance as of November 30, 1995 ($2,718,232). Accounts payable
and accrued expenses increased to $1,231,308 for the six months ended May 31,
1996 as compared to $244,697 as of November 30, 1995. This increase results
primarily from the consolidation of Ultimate's accounts payable into the
Company's financial statements (approximately $500,000) and increased accounts
payable relating to the increased inventory levels as described above.
The merger transaction with Ultimate has been accounted for as a
purchase transaction resulting in goodwill net of accumulated amortization as of
May 31, 1996 of $3,258,866. The Company reported no goodwill as of November 30,
1995. As described in Note 4 and Note 6 to Consolidated Financial Statements,
the merger transaction required the Company to issue 1,140,000 shares of its
common stock par value $.01 resulting in a substantial increase in paid in
capital, which increased to $6,232,590 as of May 31, 1996 as compared to
$2,396,490 as of November 30, 1995.
Material Commitments
In connection with the anticipated merger between The Fresh Juice
Company of Florida, Inc. and Clear Springs Citrus, Inc., described in Note 5 to
the Consolidated Financial
<PAGE> 10
Statements, the Company has arranged for additional renovations to the Winter
Haven Plant so that the plant can properly accommodate the Company's anticipated
increased volume and the equipment and production requirements that will be
transferred from Clear Springs Citrus, Inc.'s Winter Garden facility to the
Winter Haven Plant following consummation of the merger. The anticipated costs
of the labor and equipment purchased for these renovations is approximately
$600,000 and is expected to be paid from the Company's cash flow. It is
anticipated that the cost-savings associated with the consolidation of the
production plants will serve to offset a substantial portion of this expense
over time.
Liquidity
The Company had working capital of $3,701,188 at May 31, 1996 compared
to $3,919,590 at November 30, 1995. The Company requires capital to support its
capital improvements and the level of inventory required to meet current demand
as well as expected future increases in demand for its product. Additional
financing may be required to support the capital improvements and levels of
inventory. During the 1996 harvesting season, which ends in August 1996, the
Company believes it is processing sufficient product to meet its current demand.
A lack of availability of quality fruit and higher cost of citrus would hamper
the Company's ability to maintain its rate of growth and its current gross
profit level.
PART II - Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on Form 8-K
The Company filed the following Current Reports on Form 8-K during the
quarter for which this report on Form 10-QSB is filed:
<PAGE> 11
<TABLE>
<CAPTION>
Date of Report Items Reported Financial Statements Filed
- -------------- -------------- --------------------------
<S> <C> <C>
March 31, 1996 Merger with The Ultimate Audited Financial Statements
Juice Company, Inc.; Merger of The Ultimate Juice
Agreement with Clear Springs Company, Inc. for the year
Citrus, Inc.; Employment ended 1995 and 1994,
Agreements with Certain unaudited interim financial
Employees; Supply statements of The Ultimate
Agreement with Natural Juice Juice Company, Inc. for the six
Company months ended December 31,
1995 and 1994
</TABLE>
<PAGE> 12
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant had duly caused this report to be signed on its behalf of by the
undersigned, thereunto duly authorized.
THE FRESH JUICE COMPANY, INC.
Date: July 15, 1996 By: /s/ Steven M. Bogen
--------------------------------------
Steven M. Bogen
Co-Chairman of the Board and Chief
Executive Officer
Date: July 15, 1996 By: /s/ Mark Feldman
----------------------------------------
Mark Feldman
Treasurer (principal financial officer
and principal accounting officer)
<PAGE> 13
EXHIBIT INDEX
-------------
Exhibit 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-START> DEC-01-1995
<PERIOD-END> MAY-31-1996
<CASH> 901,989
<SECURITIES> 0
<RECEIVABLES> 1,867,870
<ALLOWANCES> 0
<INVENTORY> 2,304,358
<CURRENT-ASSETS> 5,277,736
<PP&E> 3,557,375
<DEPRECIATION> 667,015
<TOTAL-ASSETS> 11,563,956
<CURRENT-LIABILITIES> 1,576,548
<BONDS> 1,388,653
0
0
<COMMON> 49,020
<OTHER-SE> 8,549,735
<TOTAL-LIABILITY-AND-EQUITY> 11,563,956
<SALES> 7,779,639
<TOTAL-REVENUES> 7,779,639
<CGS> 5,649,215
<TOTAL-COSTS> 5,649,215
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 65,285
<INCOME-PRETAX> 191,954
<INCOME-TAX> 81,000
<INCOME-CONTINUING> 110,954
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 110,954
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
