<PAGE> 1
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): DECEMBER 2, 1996
THE FRESH JUICE COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 0-15320 11-2771046
(STATE OR OTHER (COMMISSION FILE (IRS EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
</TABLE>
35 WALNUT AVENUE, SUITE 4, CLARK, NEW JERSEY 07066
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (908) 396-1112
================================================================================
<PAGE> 2
ITEM 7 -- FINANCIAL STATEMENTS AND EXHIBITS.
By Current Report on Form 8-K, filed by the Registrant on December 16,
1996, the Registrant reported the acquisition of Hansen's Juices, Inc. by merger
into the Registrant's wholly owned subsidiary, The Fresh Juice Company of
California, Inc., a Delaware corporation. At the time the Current Report on Form
8-K was filed, the financial statements of the business acquired and the pro
forma financial information required to be presented under Item 7 were not
available. The required financial statements and pro forma financial information
are being reported herein.
(a) Financial statements of business acquired.
See Index to Financial Statements and Pro Forma Financial Information
beginning on page F-1 of this Report.
(b) Pro forma financial information.
See Index to Financial Statements and Pro Forma Financial Information
beginning on page F-1 of this Report.
(c) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- ----------------------------------------------------------------
<C> <S>
23 Consent of Miller, Kaplan, Arase & Co., Certified Public
Accountants.
</TABLE>
2
<PAGE> 3
SIGNATURE
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.
THE FRESH JUICE COMPANY, INC.
By: /s/ STEVEN M. BOGEN
------------------------------------
Steven M. Bogen, Chief Executive
Officer
Dated: February 16, 1997
3
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE
NUMBER
------
<S> <C> <C>
Financial Statements of Hansen's Juices, Inc.
A. Independent Auditors' Report Dated September 30, 1996........................... F-2
Financial Statements of Hansen's Juices, Inc.:
Balance Sheets, June 30, 1996 and 1995.......................................... F-3
Statements of Operations for the Years Ended June 30, 1996 and 1995............. F-4
Statements of Changes in Shareholder's Deficit Retained Earnings for the Years
Ended June 30, 1996 and 1995.................................................... F-5
Statements of Cash Flow for the Years Ended June 30, 1996 and 1995.............. F-6
Notes to Financial Statements................................................... F-7
Financial Statements of Hansen's Juices, Inc.:
B. Unaudited Interim Financial Statements of Hansen's Juices, Inc.:
Balance Sheet, September 30, 1996............................................... F-15
Statements of Operations for the Three Months Ended September 30, 1996.......... F-17
Statements of Cash Flows for the Three Months Ended September 30, 1996.......... F-18
Notes to Unaudited Financial Statements......................................... F-19
Unaudited Pro Forma Consolidating Financial Information
Unaudited Pro Forma Condensed Consolidated Balance Sheet as of August 31,
1996............................................................................ F-20
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Nine
Month Period Ended August 31, 1996.............................................. F-21
Unaudited Pro Forma Condensed Consolidated Statement of Operations for the
Year Ended November 30, 1995.................................................... F-22
Notes to Unaudited Pro Forma Condensed Consolidated Financial Information....... F-23
</TABLE>
F-1
<PAGE> 5
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Hansen's Juices, Inc.
Azusa, California
We have audited the accompanying balance sheet of Hansen's Juices, Inc. as
of June 30, 1996, and the related statements of operations, changes in
shareholders' deficit and cash flows for the year then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit 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 in the first paragraph
present fairly, in all material respects, the financial position of Hansen's
Juices, Inc. as of June 30, 1996, and the results of its operations and its cash
flows for the year then ended in conformity with the generally accepted
accounting principles.
Our audit was conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The schedules of operating expenses for
the year ended June 30, 1996 on page 14 are presented for the purposes of
additional analysis and are not a required part of the basic financial
statements. Such information has been subjected to the auditing procedures
applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
The June 30, 1995 financial statements were reviewed by us, and our report
thereon, dated August 10, 1995, stated that we were not aware of any material
modifications that should be made to those statements for them to be in
conformity with generally accepted accounting principles. However, a review is
substantially less in scope than an audit, and does not provide a basis for the
expression of an opinion on the financial statements taken as a whole.
MILLER, KAPLAN, ARASE & CO.
September 30, 1996
F-2
<PAGE> 6
HANSEN'S JUICES, INC.
BALANCE SHEETS -- JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash................................................................................... $ 198,092 $ 85,453
Accounts receivable, net of allowance for doubtful accounts of $40,871 in 1996 and
$9,500 in 1995....................................................................... 935,102 859,954
Interest receivable, shareholders (Note 4)............................................. 47,001 25,466
Inventories (Note 2)................................................................... 563,464 424,418
Prepaid expenses....................................................................... 30,080 7,513
Prepaid insurance...................................................................... 26,455 48,649
Prepaid taxes.......................................................................... -- 30,818
Notes receivable, shareholders, current portion (Note 4)............................... 24,000 24,000
Notes receivable, distributors, current portion........................................ 5,410 21,079
---------- ----------
Total current assets............................................................. 1,829,604 1,527,350
---------- ----------
Property, plant and equipment:
Autos and trucks....................................................................... 236,355 182,359
Machinery.............................................................................. 1,670,699 1,640,891
Office furniture and equipment......................................................... 137,383 156,312
Cooler equipment....................................................................... 271,205 256,720
Leasehold improvements................................................................. 1,397,039 1,391,079
Bottle molds........................................................................... 55,021 55,021
---------- ----------
3,767,702 3,682,382
Less accumulated depreciation.......................................................... 1,444,493 1,115,800
---------- ----------
2,323,209 2,566,582
---------- ----------
Other assets:
Deposits............................................................................... 12,749 14,602
Receivable -- Hansen's Trust........................................................... 10,205 --
Investment in joint venture............................................................ 70,723 10,724
Notes receivable, shareholders, net of current portion (Note 4)........................ 293,333 301,333
Notes receivable, distributors, net of current portion................................. -- 6,140
Cash surrender value of officers' life insurance policies.............................. 21,008 14,774
Covenants not to compete, net of accumulated amortization of $11,130 in 1996 and
$23,600 in 1995...................................................................... 20,670 27,675
Customer lists, net of accumulated amortization of $50,652 in 1996 and $112,900 in
1995................................................................................. 331,042 253,612
---------- ----------
759,730 628,860
---------- ----------
$ 4,912,543 $ 4,722,792
========== ==========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable....................................................................... $ 1,146,111 $ 1,294,241
Accrued expenses....................................................................... 212,924 66,738
Notes payable, related parties, current portion (Note 4)............................... 189,218 103,315
Current portion, notes payable (Note 3)................................................ 1,006,975 679,731
Current portion, capital lease obligations (Note 5).................................... 47,543 45,176
Income taxes payable................................................................... 22,265 --
Deferred income taxes payable.......................................................... 63,228 101,150
---------- ----------
Total current liabilities........................................................ 2,688,264 2,290,351
---------- ----------
Notes payable, related parties, net of current portion (Note 4).......................... 2,550,311 2,725,297
Notes payable, net of current portion (Note 3)........................................... 117,328 379,530
Capital lease obligations, net of current portion (Note 5)............................... 223,262 245,145
Deferred building rent................................................................... 136,103 130,351
---------- ----------
Total long-term liabilities...................................................... 3,027,004 3,480,323
---------- ----------
Total liabilities................................................................ 5,715,268 5,770,674
---------- ----------
Commitments and contingencies (Note 6)
Shareholders' deficit:
Common stock, no par value; 2500 shares authorized, 34.22 (1996) and 31.48 (1995)
shares issued and outstanding........................................................ 3,422 3,148
Additional paid-in capital............................................................. 259,726 --
Accumulated deficit.................................................................... (1,065,873) (1,051,030)
---------- ----------
Total shareholders' deficit...................................................... (802,725) (1,047,882)
---------- ----------
$ 4,912,543 $ 4,722,792
========== ==========
</TABLE>
See notes to financial statements.
F-3
<PAGE> 7
HANSEN'S JUICES, INC.
STATEMENTS OF OPERATIONS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
<TABLE>
<CAPTION>
1996 1995
-------------------------- --------------------------
YEAR PERCENTAGE YEAR PERCENTAGE
TO OF TO OF
DATE NET SALES DATE NET SALES
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Net sales.................................. $11,554,829 100.0% $10,652,532 100.0 %
----------- ----- ----------- -----
Cost of sales:
Beginning inventory...................... 424,418 263,383
Purchases................................ 6,790,953 6,211,831
Freight-in............................... 155,061 150,514
Less ending inventory.................... (563,464) (424,418)
----------- -----------
6,806,968 58.9 6,201,310 58.2
Factory labor............................ 1,048,477 9.1 980,749 9.2
----------- ----- ----------- -----
Total cost of sales........................ 7,855,445 68.0 7,182,059 67.4
----------- ----- ----------- -----
Gross profit............................... 3,699,384 32.0 3,470,473 32.6
Operating expenses......................... 3,375,158 29.2 3,273,079 30.7
----------- ----- ----------- -----
Income from operations..................... 324,226 2.8 197,394 1.9
----------- ----- ----------- -----
Other income (expense):
Interest income (Note 4)................. 23,145 .2 26,226 .3
Miscellaneous income..................... 40,121 .3 72,998 .6
Contractual fees......................... -- -- 15,589 .1
Interest expense (Note 4)................ (379,328) (3.2) (390,900) (3.6)
Gain (loss) on sale of assets............ 11,008 .1 (474) --
----------- ----- ----------- -----
(305,054) (2.6) (276,561) (2.6)
----------- ----- ----------- -----
Income (Loss) before income taxes and
extraordinary item....................... 19,172 .2 (79,167) (.7)
----------- ----- ----------- -----
Income tax provision (benefit):
Current.................................. 71,937 .6 (27,637) (.2)
Deferred................................. (37,922) (.3) 29,332 .2
----------- ----- ----------- -----
34,015 .3 1,695 --
----------- ----- ----------- -----
Loss before extraordinary item............. (14,843) (.1) (80,862) (.7)
Extraordinary item:
Gain on early extinguishment of debt; net
of $45,000 in taxes (Note 4).......... -- -- 83,469 .7
----------- ----- ----------- -----
Net income (loss).......................... $ (14,843) (.1)% $ 2,607 --
=========== ===== =========== =====
</TABLE>
See notes to financial statements.
F-4
<PAGE> 8
HANSEN'S JUICES, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED
----------------- PAID-IN EARNINGS
SHARES AMOUNT CAPITAL (DEFICIT) TOTAL
------ ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance (deficit), July 1, 1994..... 31.48 $3,148 $ -- $(1,053,637) $(1,050,489)
Net income for the year ended June
30, 1995.......................... -- -- -- 2,607 2,607
----- ------ -------- ----------- -----------
Balance (deficit), June 30, 1995.... 31.48 $3,148 $ -- $(1,051,030) $(1,047,882)
Issuance of common stock............ 2.74 274 159,726 -- 160,000
Contribution to capital............. -- -- 100,000 -- 100,000
Net (loss) for the year ended June
30, 1996.......................... -- -- -- (14,843) (14,843)
----- ------ -------- ----------- -----------
34.22 $3,422 $ 259,726 $(1,065,873) $ (802,725)
===== ====== ======== =========== ===========
</TABLE>
See notes to financial statements.
F-5
<PAGE> 9
HANSEN'S JUICES, INC.
STATEMENTS OF CASH FLOWS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers................................... $ 11,549,670 $ 10,693,826
Cash paid to suppliers and employees........................... (10,931,880) (9,948,097)
Interest paid.................................................. (379,328) (390,900)
Taxes refunded (paid).......................................... (18,854) 62,989
Interest received.............................................. 1,610 13,592
------------ ------------
Net cash provided by operating activities........................ 221,218 431,410
------------ ------------
Cash flows from investing activities:
Purchase of property, plant and equipment...................... (145,660) (189,701)
Proceeds from sale of property, plant and equipment............ -- 4,813
Proceeds from note receivable, shareholders.................... 8,000 21,335
Investment in joint venture.................................... (59,999) (10,724)
Acquisition of covenants not to compete........................ -- (29,363)
Purchase of customer list...................................... -- (196,517)
Advances to Hansen's trust..................................... (10,205)
Decrease (increase) in cash surrender value of life insurance
policies.................................................... (6,234) 22,985
------------ ------------
Net cash used in investing activities............................ (214,098) (377,172)
------------ ------------
Cash flows from financing activities:
Principal payments on notes payable, related parties........... (89,083) (14,426)
Proceeds from notes payable.................................... 1,000,000 --
Principal payments on notes payable............................ (1,045,882) (53,503)
Proceeds from capital lease obligations........................ 30,000 100,365
Principal payments on capital lease obligations................ (49,516) (36,869)
Proceeds from issuance of common stock and contribution of
additional paid-in-capital.................................. 260,000 --
------------ ------------
Net cash provided by (used in) financing activities.............. 105,519 (4,433)
------------ ------------
Net increase in cash............................................. 112,639 49,805
Cash, beginning.................................................. 85,453 35,648
------------ ------------
Cash, ending..................................................... $ 198,092 $ 85,453
============ ============
Reconciliation of net income (loss) to net cash provided by
operating activities:
Net income (loss).............................................. $ (14,843) $ 2,607
------------ ------------
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation................................................ 378,415 365,030
Amortization................................................ 41,315 28,593
Gain on early extinguishment of debt........................ -- (128,469)
(Gain) loss on sale of assets............................... (11,008) 474
Changes in assets and liabilities:
Increase in accounts receivable, net........................ (75,148) (60,021)
Increase in inventory....................................... (139,046) (161,035)
Increase in prepaid expenses................................ (373) (10,059)
Increase in interest receivable, shareholders............... (21,535) (12,634)
Decrease in notes receivable, distributors.................. 58,869 43,843
Decrease in prepaid income taxes............................ 30,818 80,352
Decrease in deposits........................................ 1,853 100
Increase (decrease) in accounts payable and accrued
expenses.................................................. (18,194) 231,375
Increase (decrease) in deferred income taxes payable........ (37,922) 29,332
Increase in deferred rent payable........................... 5,752 21,922
Increase in income taxes payable............................ 22,265 --
------------ ------------
Total adjustments......................................... 236,061 428,803
------------ ------------
Net cash provided by operating activities........................ $ 221,218 $ 431,410
============ ============
</TABLE>
See notes to financial statements.
F-6
<PAGE> 10
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Nature of business:
Hansen's Juices, Inc. (the "Company"), was incorporated in the state of
California on July 1, 1971. The Company manufactures fresh fruit and vegetable
juices and distributes its products through retail stores and authorized
distributors in California, Arizona, Nevada, New Mexico and Hawaii.
Inventories:
Inventories are valued at the lower of cost or market. Cost is determined
by the first-in, first-out method.
Property, plant and equipment:
Property, plant and equipment are recorded at cost. Depreciation is being
provided for by the straight-line method over the estimated useful lives of the
related assets.
Depreciation expense for the years ended June 30, 1996 and 1995 was
$378,415 and $365,030, respectively.
Maintenance and repairs are charged to operations when incurred.
Betterments and renewals are capitalized. When property and equipment are sold
or otherwise disposed of, the asset account and related accumulated depreciation
account are reduced, and any gain or loss is included in operations.
Covenants not to compete:
The costs of covenants not to compete are amortized by the straight-line
method over five years, the term of the agreements.
Amortization expense, relating to the covenants not to compete, was $7,253
and $9,000 for the years ended June 30, 1996 and 1995, respectively.
Customer lists:
The costs of the customer lists are amortized when the customer ceases to
purchase juices from the Company.
Amortization expense, relating to the customer lists, was $34,062 and
$19,600 for the years ended June 30, 1996 and 1995, respectively.
Concentration of credit risk:
The Company maintains its cash balances in two financial institutions
located in Los Angeles, California. The balances are insured by the Federal
Deposit Insurance Corporation up to $100,000. At June 30, 1996, the Company's
uninsured cash balances were approximately $94,000.
A significant portion of the Company's accounts receivable are due from
retail food stores located in California.
F-7
<PAGE> 11
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
Nondirect response advertising:
Nondirect response advertising costs are expensed the first time the
advertising takes place. Total advertising costs charged to expense were $30,818
and $31,807 for the years ending June 30, 1996 and 1995, respectively.
Income taxes:
Deferred income taxes arise from timing differences resulting from income
and expense items reported for accounting and tax purposes in different periods.
The principal differences arise from different depreciation methods,
capitalization of costs in inventory, and deduction of state franchise taxes.
The net deferred tax liability as presented in the accompanying balance
sheets consist of the following amounts of deferred tax assets and liabilities:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Deferred tax assets.......................................... $ 61,376 $ 31,696
Deferred tax liabilities..................................... (124,604) (132,846)
-------- ---------
$ (63,228) $(101,150)
======== =========
</TABLE>
As of June 30, 1995, the Company had state loss carryforwards of
approximately $82,000 which were completely used to offset against taxable
income for the year ended June 30, 1996.
Non-cash investing activities:
During the year ended June 30, 1995, the Company sold covenants not to
compete and customer lists related to distribution territory with a cost basis
of $21,900 and $130,000, respectively, in exchange for a note receivable with a
face value of $54,000. The Company also sold an automobile with a cost basis of
$1,247 in exchange for a note receivable with consideration valued at $3,500
during the year ended June 30, 1996.
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
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results may differ from those estimates. Accordingly,
actual results may differ from those estimates.
2. INVENTORIES:
Inventories at June 30, consisted of:
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Fruit and other ingredients.................................... $218,732 $209,669
Cartons, bottles, caps, labels and dairy cases................. 236,255 162,439
Bottled fruit juices and other beverages....................... 108,477 52,310
-------- --------
$563,464 $424,418
======== ========
</TABLE>
F-8
<PAGE> 12
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
3. NOTES PAYABLE:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Line of credit with interest at .75% above bank's prime rate of
interest (8.25% at June 30, 1996) maturing in May 1997,
collateralized by substantially all of the Company's assets
including receivables, inventory, equipment and vehicles. The
maximum borrowing is $250,000................................... $ 199,926 $ --
Note payable, bank, with principal and interest at 9.25% are
payable in monthly installments of $15,771, collateralized by
substantially all of the Company's assets including receivables,
inventory, equipment and vehicles. The loan is to mature on June
2001............................................................ 738,143 --
Note payable at 9% interest, principal and interest are payable in
monthly installments of $2,506, collateralized by the
distribution territory purchased, maturity in April 2000........ 95,400 --
Line of credit with interest at .75% above Bank's prime rate of
interest (9.25% at June 30, 1995) maturing in November 1995. The
maximum borrowings are $750,000 or, if less, 80% of eligible
accounts receivable. This note was paid in full in May 1996..... -- 487,993
Note payable at 7.60% interest, principal and interest are payable
in monthly installments of $9,985, collateralized by all
accounts receivable, intangibles, inventory and equipment owned
by the Company. This note was paid in full in May 1996.......... -- 327,809
Note payable at 10% interest, principal and interest are payable
in monthly installments of $564, collateralized by the
distribution territory purchased, maturing in March 1996........ -- 4,336
Note payable at 10% interest, principal and interest are payable
in monthly installments of $2,443, collateralized by the
distribution territory purchased, maturing in March 1996........ -- 18,833
Note payable at 10% interest, principal and interest are payable
in monthly installments of $972, collateralized by the
distribution territory purchased, maturing in June, 1998........ 20,272 29,409
Note payable at 7.95% interest, principal and interest are payable
in monthly installments of $415, collateralized by the truck
purchased, maturing in June 1998................................ 9,168 13,238
Note payable at 10% interest, principal and interest are payable
in monthly installments of $2,232, collateralized by the
distribution territory purchased, maturing in September,
1998............................................................ 51,983 72,443
Note payable at 7.60% interest, principal and interest are payable
in monthly installments of $1,476, collateralized by a fruit
juice extractor, maturing August 1998........................... -- 48,461
Note payable at 1.125% above the Bank's prime rate of interest
(9.0% at June 1995), principal of $1,660 and interest are
payable in monthly installments collateralized by computer
equipment maturing March, 1997.................................. -- 33,208
Note payable with monthly payments of $1,486 collateralized by
bottle molds, maturing February, 1997........................... 9,411 23,531
-------- --------
1,124,303 1,059,261
Less current portion.............................................. 1,006,975 679,731
-------- --------
$ 117,328 $ 379,530
======== ========
</TABLE>
F-9
<PAGE> 13
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
3. NOTES PAYABLE: (CONTINUED)
Future aggregate debt maturities are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30, AMOUNT
--------------------------------------------------------------- ----------
<S> <C>
1997........................................................... $1,006,975
1998........................................................... 64,402
1999........................................................... 31,198
2000........................................................... 21,728
----------
$1,124,303
==========
</TABLE>
Interest expense of $97,369 and $98,465 was incurred on these notes payable
during the years ended June 30, 1996 and 1995, respectively.
The line of credit and note payable to bank are subject to covenants
including maintenance of specified tangible net worth, debt, profitability and
liquidity levels. The Company did not meet these covenants at June 30, 1996.
Accordingly, these amounts are classified as a current liability. Both the line
of credit and the note are guaranteed by an officer/shareholder of the Company.
Management estimates the fair value of notes payable to approximate the
carrying value of the notes. 4. RELATED-PARTY TRANSACTIONS:
A shareholder of the company at June 30, 1996, is associated with a law
firm that rendered professional services to the Company. Fees incurred by the
company to this law firm were approximately $99,000 during the year ended June
30, 1996.
Notes receivable:
The Company transferred stock to a shareholder on January 26, 1987 in
exchange for a note at 9% interest per annum, collateralized by real estate
pursuant to a security agreement dated January 4, 1994. Principal is receivable
in annual installments of $8,000 plus interest. Total interest earned during the
years ended June 30, 1996 and 1995 was $1,140 and $1,860, respectively.
The Company transferred stock to a shareholder on July 1, 1992 in exchange
for a note at prime plus one percent interest per annum, collateralized by real
estate pursuant to a security agreement dated January 4, 1994. Principal is
receivable in annual installments of $5,333 plus interest. Total interest earned
during the years ended June 30, 1996 and 1995 was $7,109 and $7,031,
respectively.
The Company transferred stock to a shareholder on January 1, 1994 in
exchange for a note at prime plus one percent interest per annum, collateralized
by real estate pursuant to a security agreement dated January 4, 1994. Principal
is receivable in annual installments of $5,333 plus interest. Total interest
earned during the years ended June 30, 1996 and 1995 was $7,109 and $7,533,
respectively.
The Company transferred stock to a shareholder on January 1, 1994 in
exchange for a note at prime plus one percent interest per annum, collateralized
by real estate pursuant to a security agreement dated January 4, 1994. Principal
is receivable in annual installments of $5,333 plus interest beginning June
1995. Total interest earned during the years ended June 30, 1996 and 1995 was
$7,617 and $7,533, respectively.
F-10
<PAGE> 14
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
4. RELATED-PARTY TRANSACTIONS: (CONTINUED)
Notes receivable: (Continued)
The Company transferred stock to a shareholder on January 1, 1994 in
exchange for a note at prime plus one percent interest per annum, beginning
November 1996. Principal is receivable in annual installments of $5,333 plus
interest. The note is collateralized by a personal guarantee pursuant to a
security agreement dated January 4, 1994.
The Company does not believe it is practicable to estimate the fair value
of the notes receivable from shareholders since the timing of repayments of the
notes, which in the past has been accomplished through bonuses, could be
dependent on the Company's profitability.
Notes payable:
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Unsecured note payable to a former shareholder at 8% interest,
interest only is payable monthly until August 20, 2002 when
principal is due. .......................................... $ 203,233 $ 203,233
Unsecured note payable to a former shareholder at 12%
interest, principal and interest are payable in monthly
installments of $7,522, maturing in August 2002. ........... 301,520 343,501
Unsecured note payable to a former shareholder at 8% interest,
interest is payable in weekly installments of $1,706,
beginning December 1997, principal and interest are payable
in monthly installments of $11,473. The note matures
September 2005. ............................................ 876,150 888,828
Unsecured note payable to a former shareholder at 8% interest,
principal and interest are payable in weekly installments of
$2,340. Beginning January 1997, principal of $100 and
interest are payable in weekly installments. The note
matures January 2018. ...................................... 1,212,750 1,230,730
Unsecured note payable to former shareholders at 12% interest,
principal and interest are payable in monthly installments
of $2,400, maturing December 2000. ......................... 98,376 114,320
Unsecured note payable to former shareholder at 2.2% interest,
interest is payable monthly until the note matures in
August, 1996. .............................................. 10,000 10,000
Unsecured note payable to former shareholder at 7.5% interest.
Interest is payable monthly until the note matures in
August, 1996. .............................................. 37,500 38,000
---------- ----------
2,739,529 2,828,612
Less current portion.......................................... 189,218 103,315
---------- ----------
$2,550,311 $2,725,297
========== ==========
</TABLE>
F-11
<PAGE> 15
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
4. RELATED-PARTY TRANSACTIONS: (CONTINUED)
Notes payable: (Continued)
Future aggregate debt maturities are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30, AMOUNT
----------------------------------------------------------------- ----------
<S> <C>
1997............................................................. $ 189,218
1998............................................................. 191,903
1999............................................................. 236,588
2000............................................................. 255,253
2001............................................................. 193,253
Thereafter....................................................... 1,673,314
----------
$2,739,529
==========
</TABLE>
Total interest expense incurred on notes between the Company and related
parties during the years ended June 30, 1996 and 1995 was $250,617 and $268,512,
respectively. These notes are subordinated to notes payable to banks aggregating
$938,069 at June 30, 1996.
Notes payable to related parties in the amount of $128,469 were forgiven
during year ended June 30, 1995.
Management estimates the fair value of notes payable, related parties, to
approximate the carrying value of the notes.
5. CAPITAL LEASE OBLIGATIONS:
Capital lease obligations have varying interest rates from 9.1% to 19.3%.
Interest and principal are payable in monthly installments of approximately
$6,100, maturing at various dates through February 2003, and are collateralized
by the related leased equipment. All operating costs, including insurance, are
paid for by the Company.
The following is an analysis by major category of the leased property under
capital lease obligations included in property, plant and equipment:
<TABLE>
<S> <C>
Leasehold improvements............................................ $200,000
Machinery......................................................... 27,457
Autos and trucks.................................................. 120,212
Office furniture and equipment.................................... 25,446
--------
373,115
Less accumulated depreciation..................................... 103,287
--------
$269,828
========
</TABLE>
F-12
<PAGE> 16
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
5. CAPITAL LEASE OBLIGATIONS: (CONTINUED)
The following is a schedule of future minimum lease payments under capital
lease obligations together with the present value of the net minimum lease
payments as of June 30, 1996:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30, AMOUNT
------------------------------------------------------------------ --------
<S> <C>
1997.............................................................. $ 73,230
1998.............................................................. 68,043
1999.............................................................. 59,607
2000.............................................................. 63,468
2001.............................................................. 37,413
Thereafter........................................................ 51,631
--------
Total future minimum lease payments............................... $353,392
Less amount representing interest................................. 82,587
--------
Present value of net minimum lease payments....................... 270,805
Less current portion.............................................. 47,543
--------
$223,262
========
</TABLE>
6. COMMITMENTS AND CONTINGENCIES:
Each year, the Company enters into contracts with fruit growers to purchase
certain fruits at fixed prices for juice production. As of June 30, 1996 and
1995, the Company's commitments under these contracts for fruit purchases over
the following year, were approximately $745,000 and $421,000, respectively.
The Company leases its operating facilities under an operating lease
expiring on May 31, 2003. The lease has an option to be extended for a five year
period at the then current fair rental.
The following is a schedule of future minimum lease payments under this
lease as of June 30, 1996:
<TABLE>
<CAPTION>
YEAR ENDING
JUNE 30, AMOUNT
----------------------------------------------------------------- ----------
<S> <C>
1997............................................................. $ 160,428
1998............................................................. 171,985
1999............................................................. 180,240
2000............................................................. 182,099
2001............................................................. 202,548
Thereafter....................................................... 388,217
----------
$1,285,517
==========
</TABLE>
Total rental expense for the years ended June 30, 1996 and 1995 was
$258,550 and $255,524, respectively.
Under the terms of an agreement with a chain of retail stores, the Company
is committed to provide a discount of 5% on sales to those stores up to a
maximum discount of approximately $725,000. The sales discounts are accrued and
included in accrued expenses. Total sales discounts payable to this chain of
retail stores at June 30, 1996 and 1995, were $66,700 and $13,200, respectively.
The Company has entered into contracts with certain retail stores whereby
the Company has guaranteed to issue the retail store credits for unsold
products. The Company had a similar program with certain distributors which
expired May 7, 1996.
F-13
<PAGE> 17
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
6. COMMITMENTS AND CONTINGENCIES: (CONTINUED)
Effective January 31, 1996, the Corporation has agreed to purchase the
stock of any shareholder upon their retirement or death. The purchase price
shall be based upon the valuation of the total outstanding stock at the time of
death according to a predetermined formula. Such purchases will be funded
through life insurance policies owned by the Company.
The Company is a defendant in a class action lawsuit alleging unfair
pricing practices. It is not possible to estimate at this time the extent of the
Company's liability, if any.
The Company also is involved in various litigation arising from normal
business activities. If a judgment is made against the Company, management does
not expect that this amount will materially exceed the amount recoverable
through the Company's insurance carrier. Therefore, management does not believe
the current litigation will materially affect the Company's financial condition
or earnings.
These statements are presented on the basis that the Company is a going
concern. Going concern contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business over a reasonable
length of time. The accompanying financial statements at June 30, 1996 show a
net loss of $14,843 and a stockholders' deficit of $802,725. Additionally, the
company is in violation of its bank loan covenants (Note 3).
Management will seek to have its violation of bank loan covenants waived,
and if necessary, restructure its notes payable.
7. SUBSEQUENT EVENT:
On August 20, 1996, the Company entered into a non-binding indication of
interest to sell all of its issued and outstanding shares of common stock in
exchange for shares of common stock of a subsidiary of the acquirer and cash
totaling approximately $3,000,000.
F-14
<PAGE> 18
HANSEN'S JUICES, INC.
SCHEDULES OF OPERATING EXPENSES
YEARS ENDED JUNE 30, 1996 (AUDITED) AND 1995 (REVIEWED)
(SEE ACCOUNTANTS' REPORT)
<TABLE>
<CAPTION>
1996 1995
----------------------- -----------------------
YEAR PERCENTAGE YEAR PERCENTAGE
TO OF TO OF
DATE NET SALES DATE NET SALES
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Advertising........................................ $ 30,818 .3% $ 31,807 .3%
Amortization....................................... 41,315 .4 28,593 .3
Automobile......................................... 52,004 .4 23,593 .2
Bad debts.......................................... 29,602 .2 31,115 .3
Bank charges....................................... 6,639 .1 7,799 .1
Commissions........................................ 88,131 .8 116,866 1.1
Delivery........................................... 209,858 1.8 209,978 2.0
Depreciation....................................... 378,415 3.3 365,030 3.4
Donations.......................................... 3,699 -- 2,679 --
Dues and subscriptions............................. 3,420 -- 730 --
Entertainment...................................... 3,425 -- 8,063 .1
Equipment rental................................... 36,467 .3 45,546 .4
Insurance.......................................... 226,794 2.0 198,468 1.9
Legal and accounting............................... 140,519 1.2 107,589 1.0
Meetings and conventions........................... 2,112 -- 408 --
Office............................................. 41,041 .4 60,028 .6
Outside services................................... 68,583 .6 43,828 .4
Payroll processing................................. 8,901 .1 8,279 .1
Payroll taxes...................................... 166,339 1.4 159,075 1.5
Postage............................................ 8,913 .1 5,404 .1
Promotions......................................... 105,264 .9 116,194 1.1
Property taxes..................................... 48,104 .4 40,661 .4
Rent............................................... 258,550 2.2 255,524 2.2
Repairs and maintenance............................ 162,384 1.4 188,349 1.8
Rubbish disposal................................... 46,317 .4 46,014 .4
Salary, driver..................................... 231,792 2.0 174,021 1.6
Salary, office..................................... 268,669 2.3 285,409 2.7
Salary, officers................................... 384,593 3.3 410,369 3.9
Security........................................... 6,884 .1 15,978 .1
Shop supplies...................................... 86,764 .8 96,276 .9
Taxes and licenses................................. 25,683 .2 12,796 .1
Travel............................................. 20,257 .2 9,417 .1
Utilities.......................................... 182,902 1.6 167,193 1.6
---------- ---- ---------- ----
$3,375,158 29.2% $3,273,079 30.7%
========== ==== ========== ====
</TABLE>
F-15
<PAGE> 19
HANSEN'S JUICES, INC.
BALANCE SHEET -- SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash.......................................................................... $ 126,857
Accounts receivable, net of allowance for doubtful accounts of $142,086....... 917,100
Interest receivable, shareholders............................................. 52,672
Inventories................................................................... 450,452
Prepaid expenses.............................................................. 34,771
Prepaid insurance............................................................. 26,644
Notes receivable, shareholders, current portion............................... 24,000
Notes receivable, distributors, current portion............................... 4,600
-----------
Total current assets.................................................. 1,637,096
-----------
Property, plant and equipment:
Autos and trucks.............................................................. 222,355
Machinery..................................................................... 1,701,990
Office furniture and equipment................................................ 140,822
Cooler equipment.............................................................. 281,194
Leasehold improvements........................................................ 1,404,444
Bottle molds.................................................................. 55,021
-----------
3,805,826
Less accumulated depreciation................................................. 1,526,392
-----------
2,279,434
-----------
Other assets:
Accounts receivable -- Trust.................................................. 10,933
Deposits...................................................................... 12,749
Investment in joint venture................................................... 76,348
Notes receivable, shareholders, net of current portion........................ 293,333
Notes receivable, distributors, net of current portion........................ 6,259
Cash surrender value of officers' life insurance policies, net of loans....... 20,972
Covenants not to compete, net of accumulated amortization of $12,720.......... 19,080
Customer lists, net of accumulated amortization of $59,694.................... 322,000
-----------
761,674
-----------
Total assets.......................................................... $ 4,678,204
===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable.............................................................. $ 1,089,614
Accrued expenses.............................................................. 178,771
Income taxes payable.......................................................... 3,265
Notes payable, related parties, current portion............................... 164,405
Current portion, notes payable................................................ 385,703
Current portion, capital lease obligations.................................... 48,072
Deferred income taxes payable................................................. 63,228
-----------
Total current liabilities............................................. 1,933,058
-----------
Notes payable, related parties, net of current portion.......................... 2,511,404
Notes payable, net of current portion........................................... 684,940
Capital lease obligations, net of current portion............................... 211,251
Deferred building rent.......................................................... 137,541
-----------
Total long-term liabilities........................................... 3,545,136
-----------
Total liabilities..................................................... 5,478,194
-----------
Shareholders' deficit:
Common stock, no par value; 2,500 shares authorized, 34.22 shares issued and
outstanding................................................................ 3,422
Additional paid-in capital.................................................... 259,726
Retained deficit.............................................................. (1,063,138)
-----------
Total shareholders' deficit........................................... (799,990)
-----------
Total liabilities and shareholder's deficit........................... $ 4,678,204
===========
</TABLE>
See notes to financial statements.
F-16
<PAGE> 20
HANSEN'S JUICES, INC.
STATEMENT OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
------------ ------------
<S> <C> <C>
Net sales......................................................... $2,815,556 2,848,114
---------- ----------
Cost of sales:
Beginning inventory............................................. 563,464 424,418
Purchases....................................................... 1,450,796 1,665,017
Freight-In...................................................... 32,673 38,804
Less ending inventory........................................... (450,452) (465,404)
---------- ----------
1,596,481 1,662,835
Factory labor................................................... 269,652 256,893
---------- ----------
Total cost of sales............................................... 1,866,133 1,919,728
---------- ----------
Gross profit...................................................... 949,423 928,386
Operating expenses................................................ 872,090 884,989
---------- ----------
Income from operations............................................ 77,333 43,397
---------- ----------
Other income (expense):
Gain on sale of assets.......................................... 3,933 18,127
Interest income................................................. 5,787 5,950
Miscellaneous income............................................ 6,695 15,243
Interest expense................................................ (90,013) (102,112)
---------- ----------
(73,598) (62,792)
---------- ----------
Income (loss) before income taxes................................. 3,735 19,395
---------- ----------
Income tax provision (benefit):
Federal......................................................... 700 (6,000)
State........................................................... 300 (1,800)
---------- ----------
1,000 (7,800)
---------- ----------
Net income (loss)................................................. $ 2,735 (11,595)
========== ==========
</TABLE>
See notes to financial statements.
F-17
<PAGE> 21
HANSEN'S JUICES, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER SEPTEMBER
30, 30,
1996 1995
----------- ----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers............................................... $ 2,840,604 2,801,536
Cash paid to suppliers and employees....................................... (2,614,639) (2,695,571)
Interest paid.............................................................. (90,013) (102,112)
Taxes (paid) refunded...................................................... (20,000) 20,000
Interest received.......................................................... 116 --
----------- ----------
Net cash provided by operating activities.................................... 116,068 23,853
----------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment.................................. (52,124) (45,825)
Investment in joint venture................................................ (5,625) (9,138)
Advances to Hansen's trust................................................. (728) --
Decrease in cash surrender value of life insurance policies................ 36 --
----------- ----------
Net cash used in investing activities........................................ (58,441) (54,963)
----------- ----------
Cash flows from financing activities:
Principal payments on notes payable, related parties....................... (63,720) (11,228)
Principal payments on notes payable........................................ (53,660) (67,386)
Principal payments on capital lease obligations............................ (11,482) (12,438)
Proceeds from notes payable................................................ -- 70,000
Proceeds from capital lease obligations.................................... -- 30,000
----------- ----------
Net cash (used in) provided by financing activities.......................... (128,862) 8,948
----------- ----------
Net decrease in cash......................................................... (71,235) (22,162)
Cash, beginning.............................................................. 198,092 85,453
----------- ----------
Cash, ending................................................................. $ 126,857 63,291
=========== ==========
Reconciliation of net income (loss) to net cash provided by operating
activities:
Net income (loss).......................................................... $ 2,735 (11,595)
----------- ----------
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation............................................................... 94,032 95,493
Amortization............................................................... 10,632 9,418
Loss on sale of assets..................................................... (3,933) (18,127)
Changes in assets and liabilities:
Decrease (increase) in accounts receivable, net.......................... 18,002 (66,028)
Decrease (increase) in inventory......................................... 113,012 (40,986)
Increase in prepaid expenses............................................. (4,880) (3,563)
Increase in interest receivable, shareholders............................ (5,671) (5,950)
Decrease in notes receivable, distributors............................... 351 4,207
(Decrease) increase in accounts payable and accrued expenses............. (90,650) 12,200
Increase in deferred rent payable........................................ 1,438 47,346
(Decrease) increase in income taxes payable.............................. (19,000) 1,438
----------- ----------
Total adjustments................................................... 113,333 35,448
----------- ----------
Net cash provided by operating activities.................................... $ 116,068 23,853
=========== ==========
Non cash investing activities:
1996
- -----------------------------------------------------------------------------
The Company sold a truck with an original cost of $14,000 in exchange for a note receivable with a face
value of $5,800.
1995
- -----------------------------------------------------------------------------
The Company sold covenants not to compete and customer lists related to distribution territory with a
cost basis of $21,900 and $130,000, respectively, in exchange for a note receivable with a face value
of $54,000 during the three months ended September 30, 1995.
The Company also purchased covenants not to compete and customer lists related to distribution
territory with a cost basis of $2,437 and $13,813, respectively, in exchange for a note payable with a
face value of $16,250.
</TABLE>
See notes to financial statements.
F-18
<PAGE> 22
HANSEN'S JUICES, INC.
NOTES TO FINANCIAL STATEMENTS
SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1
The accompanying financial statements have been prepared by Hansen's
Juice's, Inc. without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at September 30,
1996 and for the three months ended September 30, 1996 and 1995 have been made.
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 financial statements
be read in conjunction with the June 30, 1996 financial statements and notes
thereto of Hansen's Juices's, Inc. filed as part of the Current Report on Form
8-K/A of The Fresh Juice Company, Inc. The results of operations for the period
ended September 30, 1996 are not necessarily indicative of operating results
which may be achieved for the full year.
F-19
<PAGE> 23
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AUGUST 31, 1996
<TABLE>
<CAPTION>
HISTORICAL(4)
------------------------------------------------
THE FRESH JUICE
COMPANY, INC. PRO FORMA
AND CLEAR SPRINGS HANSEN'S -------------------------------
SUBSIDIARIES CITRUS, INC. JUICES, INC. ADJUSTMENTS(5) CONSOLIDATED
--------------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents................. $ 342,733 11,898 126,857 (150,000) a 331,488
Trade accounts receivable................. 1,768,228 494,458 917,100 (153,063) b 3,026,723
Inventories............................... 2,136,979 180,681 450,452 2,768,112
Note receivable -- Clear Springs Citrus,
Inc..................................... 150,000 (150,000) b
Advances to -- Clear Springs Citrus,
Inc..................................... 393,932 (393,932) b
Other..................................... 127,317 33,650 142,687 303,654
----------- --------- --------- --------- ----------
Total Current Assets............... 4,919,189 720,687 1,637,096 (846,995) 6,429,977
Property, plant and equipment -- net of
accumulated depreciation and
amortization.............................. 3,378,506 644,604 2,279,434 6,302,544
Excess cost over fair value of net assets
acquired, net of accumulated
amortization.............................. 3,218,184 4,758,947c 7,977,131
Note receivable -- shareholders............. 293,333 293,333
Other assets................................ 121,118 120,653 468,341 710,112
----------- --------- --------- --------- ----------
TOTAL ASSETS....................... $11,636,997 1,485,944 4,678,204 3,911,952 21,713,097
=========== ========= ========= ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Note payable to bank...................... $ 405,000 385,703 790,703
Current installments of long-term debt.... 257,572 257,572
Current installments of obligations under
capital lease........................... 48,072 48,072
Accounts payable and accrued expenses..... 1,136,908 1,009,452 1,268,385 (153,063) b 3,261,682
Income taxes payable...................... 36,592 3,265 39,857
Deferred income taxes payable-current..... 63,228 63,228
Note payable -- The Fresh Juice Company,
Inc..................................... 150,000 (150,000) b
Advances from -- The Fresh Juice Company,
Inc..................................... 393,932 (393,932) b
Advances from stockholders................ 209,632 164,405 374,037
----------- --------- --------- --------- ----------
Total Current Liabilities.......... 1,836,072 1,763,016 1,933,058 (696,995) 4,835,151
Long-term debt.............................. 1,317,428 18,467 3,196,344 (100,452) d 4,431,787
Obligations under capital lease, net of
current installments...................... 211,251 211,251
Other Liabilities........................... 137,541 137,541
----------- --------- --------- --------- ----------
Total Liabilities.................. 3,153,500 1,781,483 5,478,194 (797,447) 9,615,730
Stockholders' Equity (Deficit):
Common stock.............................. 49,020 94 3,422 14,261e 66,797
Additional paid-in capital................ 6,232,590 544,964 259,726 2,775,371e 9,812,651
Retained earnings (accumulated deficit)... 2,485,180 (297,749) (1,063,138) 1,376,919ce 2,501,212
----------- --------- --------- --------- ----------
8,766,790 247,309 (799,990) 4,166,551 12,380,660
Less treasury stock......................... 283,293 542,848 (542,848) e 283,293
----------- --------- --------- --------- ----------
Total stockholders' equity
(deficit)........................ 8,483,497 (295,539) (799,990) 4,709,399 12,097,367
----------- --------- --------- --------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY........................... $11,636,997 1,485,944 4,678,204 3,911,952 21,713,097
=========== ========= ========= ========= ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-20
<PAGE> 24
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
[/TABLE]
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED AUGUST 31, 1996
<TABLE>
<CAPTION>
HISTORICAL(4)
------------------------------------------------------------
THE FRESH
JUICE
COMPANY, INC. THE ULTIMATE PRO FORMA
AND JUICE CLEAR SPRINGS HANSEN'S ---------------------------------
SUBSIDIARIES COMPANY, INC. CITRUS, INC. JUICES, INC. ADJUSTMENTS(5) CONSOLIDATED
------------- ------------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales......... $ 13,350,162 3,476,776 9,786,399 8,793,837 (3,496,780) e 31,910,394
Cost of Goods
Sold............ 9,856,841 2,228,759 8,986,723 5,862,659 (3,496,780) e 23,438,202
----------- ---------- ---------- ---------- ----------- -----------
3,493,321 1,248,017 799,676 2,931,178 8,472,192
Selling, General &
Administrative
Expenses........ 3,398,806 1,318,618 987,098 2,553,987 152,639 f 8,411,148
----------- ---------- ---------- ---------- ----------- -----------
Earnings (Loss)
From
Operations... 94,515 (70,601) (187,422) 377,191 (152,639) 61,044
Interest Income... 38,733 8,711 17,032 (14,625) g 49,851
Interest
Expense......... (96,462) (1,804) (59,485) (268,547) (6,068) g (432,366)
Other Income,
net............. 8,410 80,000 12,397 (80,000) h 20,807
----------- ---------- ---------- ---------- ----------- -----------
Income (Loss)
Before Income
Taxes........ 45,196 16,306 (246,907) 138,073 (253,332) (300,664)
Provision For
Income Taxes.... 49,500 2,449 75,000 60,943 (156,892) i 31,000
----------- ---------- ---------- ---------- ----------- -----------
Net Income
(Loss).......... $ (4,304) 13,857 (321,907) 77,130 (96,440) (331,664)
=========== ========== ========== ========== =========== ===========
Net Income (Loss)
Per Share....... $ (0.00) (0.00)
=========== ===========
Weighted Average
Shares.......... 4,184,316 505,746 1,160,000 617,669 6,467,731
=========== ========== ========== ========== ===========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-21
<PAGE> 25
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED NOVEMBER 30, 1995
<TABLE>
<CAPTION>
HISTORICAL(4)
------------------------------------------------------------
THE FRESH
JUICE
COMPANY, INC. THE ULTIMATE PRO FORMA
AND JUICE CLEAR SPRINGS HANSEN'S -------------------------------
SUBSIDIARIES COMPANY, INC. CITRUS, INC. JUICES, INC. ADJUSTMENTS(5) CONSOLIDATED
------------- ------------- ------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net Sales.................... $ 9,219,184 11,967,936 12,775,884 11,289,469 (4,442,854) e 40,809,619
Cost of Goods Sold........... 6,035,483 8,311,211 11,420,358 7,760,676 (4,442,854) e 29,084,874
---------- ---------- ---------- ---------- ---------- ----------
3,183,701 3,656,725 1,355,526 3,528,793 11,724,745
Selling, General &
Administrative Expenses.... 2,820,356 3,326,684 1,367,525 3,474,896 285,479 f 11,274,745
---------- ---------- ---------- ---------- ---------- ----------
Earnings (Loss) From
Operations.............. 363,345 330,041 (11,999) 53,897 285,479 449,805
Interest Income.............. 104,104 23,260 24,683 (26,596) g 125,451
Interest Expense............. (24,355) (12,441) (88,024) (406,602) (994) g (532,416)
Other income, net............ 121,150 8,625 97,843 (116,000) h 111,618
---------- ---------- ---------- ---------- ---------- ----------
Income (Loss) Before Income
Taxes................... 443,094 462,010 (91,398) (230,179) (429,069) 154,458
Provision (Benefit) For
Income Taxes............... 172,051 147,434 (17,000) (46,233) 13,748 i 270,000
---------- ---------- ---------- ---------- ---------- ----------
Net Income (Loss)............ $ 271,043 314,576 (74,398) (183,946) (442,817) (115,542)
========== ========== ========== ========== ========== ==========
Net Income (Loss) Per
Share...................... $ 0.07 (0.02)
========== ==========
Weighted Average Shares...... 3,889,740 1,140,000 1,160,000 617,669 6,807,409
========== ========== ========== ========== ==========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.
F-22
<PAGE> 26
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 -- MERGER WITH THE ULTIMATE JUICE COMPANY, INC.:
Effective April 1, 1996, the Company acquired all of the outstanding
capital stock of The Ultimate Juice Company, Inc. ("Ultimate") in exchange for
1,140,000 shares of the Company's common stock valued at $3,078,000 (see Note
5(c)). This merger has been accounted for as a purchase.
NOTE 2 -- MERGER WITH CLEAR SPRINGS CITRUS, INC.:
Effective September 1, 1996, the Company acquired all of the outstanding
capital stock of Clear Springs Citrus, Inc. ("Clear Springs") in exchange for
1,160,000 shares of the Company's common stock valued at $3,132,000 (see Note
5(c)). This merger has been accounted for as a purchase.
NOTE 3 -- MERGER WITH HANSEN'S JUICES, INC.:
Effective December 2, 1996, the Company acquired all of the outstanding
capital stock of Hansen's Juices, Inc. ("Hansen's") in exchange for $90,000 in
cash, 567,443 shares of the Company's common stock, warrants to purchase 300,000
shares of the Company's common stock for $3.00 per share and assumption of debt,
for a total investment of $1,284,886 (see Note 5(c)). This merger has been
accounted for as a purchase. Simultaneously with the merger, the Company also
restructured a portion of Hansen's existing debt obligations owed to Hansen's
former stockholders and in connection therewith delivered $60,000 in cash and
20,226 shares of the Company's common stock to a former Hansen's stockholder.
NOTE 4 -- BASIS OF PRESENTATION:
The unaudited pro forma condensed consolidated financial statements are
presented for illustrative purposes only, giving effect to the consolidation of
the Company, Ultimate, Clear Springs and Hansen's accounted for using the
purchase method. The pro forma condensed consolidated financial statements are
presented for illustrative purposes only and are based on certain preliminary
Management estimates, and therefore, are not necessarily indicative of the
operating results and financial position that might have occurred as of an
earlier date, nor are they necessarily indicative of the operating results and
financial position which may occur in the future.
The pro forma periods are dated in terms of the Company's historical
financial reporting periods. A pro forma condensed consolidated balance sheet is
provided as of August 31, 1996, giving effect to the Clear Springs and Hansen's
transaction as though they had been consummated on that date. The historical
consolidated balance sheet of the Company as of August 31, 1996 reflects the
Ultimate merger, which was effective April 1, 1996. Pro forma condensed
consolidated statements of operations are provided for the nine months ended
August 31, 1996 and the twelve months ended November 30, 1995 giving effect to
the Ultimate, Clear Springs and Hansen's transactions as though they had
occurred at the beginning of the earliest period presented.
F-23
<PAGE> 27
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 4 -- BASIS OF PRESENTATION: (CONTINUED)
For presentation purposes, the historical financial statements have been
consolidated as follows:
<TABLE>
<CAPTION>
THE FRESH THE
PRO FORMA CONDENSED JUICE COMPANY, ULTIMATE HANSEN'S
CONSOLIDATED INC. AND JUICE CLEAR SPRINGS JUICES,
FINANCIAL STATEMENTS SUBSIDIARIES COMPANY, INC. CITRUS, INC. INC.
- ---------------------------------------- ---------------- --------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Consolidated Balance Sheet -- August 31, As of As of As of
1996.................................. August 31, 1996 Not applicable August 31, 1996 September 30, 1996
Nine Months Four Months Nine Months Nine Months
Consolidated Statement of Operations -- Ended Ended Ended Ended
Nine months ended August 31, 1996..... August 31, 1996 March 31, 1996 June 30, 1996 September 30, 1996
Twelve Months
Year Ended Ended Year Ended Year Ended
Consolidated Statement of Operations -- November 30, December 31, December 31, December 31,
Year ended November 30, 1995.......... 1995 1995 1995 1995
</TABLE>
During the periods presented in the pro forma condensed consolidated
financial statements the transition plans related to some or all of the mergers
were in the process of being developed. Therefore, transaction costs and other
non-recurring costs and expenses expected to be incurred in connection with the
integration of the companies' business operations and potential cost savings
could only be estimated at such time. Consequently, the following have been
excluded from the pro forma condensed consolidated statements of operations: (i)
the positive effects of potential cost savings which may be achieved upon
combining the resources of the companies; (ii) legal and miscellaneous costs
relating to the mergers, currently estimated to be $150,000 to $250,000 in
excess of those amounts already included in the pro forma condensed consolidated
financial statements and (iii) other non-recurring costs and expenses incurred
or expected to be incurred subsequent to the periods presented, including
$400,000 to $600,000 in connection with the integration of the companies'
operations, and approximately $50,000 to $75,000 related to termination benefits
which may be paid to employees.
The results of operations of Ultimate for the month ended December 31, 1995
reflected net sales of $925,414 and net income of $303,304, which are included
in the unaudited pro forma condensed consolidated statements of operations for
both the nine month period ended August 31, 1996 and the year ended November 30,
1995.
The results of operations of Clear Springs for the three month period ended
December 31, 1995 reflected net sales of $2,957,427 and a net loss of $416,227,
which are included in the unaudited pro forma condensed consolidated statements
of operations for both the nine month period ended August 31, 1996 and the year
ended November 30, 1995.
NOTE 5 -- PRO FORMA ADJUSTMENTS:
The pro forma condensed consolidated financial statements have been
adjusted for the items set forth below. Such adjustments presently reflect
Management's preliminary estimates of the fair value of the assets acquired, the
liabilities assumed, and the estimated preliminary values of the equity
securities issued relating to the Ultimate, Clear Springs and Hansen's
acquisitions. The amounts of the adjustments are noted in the adjustment column
of the pro forma condensed consolidated financial statements:
(a) To adjust for cash utilized to acquire Hansen's.
(b) To eliminate all related intercompany receivables/payables, notes,
and advances.
F-24
<PAGE> 28
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- PRO FORMA ADJUSTMENTS: (CONTINUED)
(c) To record the excess cost over fair value of assets acquired of
$3,427,539 and $2,084,876, respectively, for the Clear Springs and Hansen's
acquisitions, less an adjustment to the previously recorded cost of the
acquisition of Ultimate. In each of the Company's aforementioned
acquisitions, the common stock given as consideration is unregistered and
contains certain restrictions as well as having several large blocks of
stock being issued to certain sellers in the transactions. Management is in
the process of evaluating the fair values of the assets acquired and
liabilities assumed, and has previously made preliminary assessments of the
fair values of assets acquired and liabilities assumed in connection with
the Ultimate merger. Management of the Company, upon receiving advice from
its investment banker, has recently made an updated, but preliminary
assessment to discount the restricted common stock issued in connection
with the Ultimate, Clear Springs and Hansen's mergers by twenty percent
(for purposes of the purchase accounting method) in relation to the market
price of the Company's publicly traded common stock at the approximate
dates of the merger agreements. Management, with the assistance of outside
advisors, continues to evaluate the aforementioned restricted stock
discounts. At this time, based upon Managements' preliminary assessment to
discount the restricted common stock of the mergers, Management expects to
report an adjustment to the previously recorded goodwill related to the
Ultimate acquisition (made effective April 1, 1996) as a fourth quarter
adjustment. This adjustment has been reflected as a reduction to
historically reported goodwill amortization of approximately $16,000 in the
unaudited pro forma condensed consolidated statement of operations for the
nine month period ended August 31, 1996.
Management is in the process of evaluating the fair values of certain
of the property, plant and equipment acquired in connection with the
mergers. No adjustments to fair value amounts have been included in the pro
forma condensed consolidated financial statements with respect to property,
plant and equipment. The fair values of property, plant and equipment
acquired in the mergers will be determined by Management upon the
completion of the independent appraisal process, which is in progress.
Management's preliminary assessments of fair values for assets
acquired and liabilities assumed to date result in tentative allocation
amounts to the excess costs over the fair values of net assets or net
liabilities acquired. Management continues to be in a discovery period and
assessment, and is evaluating the existence of possible other identifiable
intangible assets that may exist. No adjustments have been made to the pro
forma condensed consolidated financial statements with respect to a final
determination as to the existence and fair values of other identifiable
intangible assets, should any exist.
In connection with the Hansen's merger, the Company issued warrants as
part of the merger consideration to sellers, and certain bank debt and debt
to former shareholders was assumed. Management is in the process of
evaluating the fair values of the warrants issued and debt assumed. No
adjustments have been included in the pro forma condensed consolidated
financial statements for these matters.
(d) To record discount for certain debt assumed in connection with the
Hansen's acquisition.
(e) To record the issuance of 1,160,000 shares and 617,699 shares,
respectively, of the Company's common stock for the Clear Springs and
Hansen's acquisitions and the elimination of the historical equity/deficit
of Clear Springs and Hansen's.
(f) To eliminate all related intercompany sales and related costs of
sales.
(g) To record $232,639 of amortization of the excess cost over the
fair value of net assets acquired (amortized straight-line over twenty
years) for the nine month period ended August 31, 1996 offset by the
elimination of related management fees of $80,000 for the same period; and
to record $401,479 of
F-25
<PAGE> 29
THE FRESH JUICE COMPANY, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
NOTE 5 -- PRO FORMA ADJUSTMENTS: (CONTINUED)
amortization of the excess cost over the fair value of net assets acquired
for the year ended November 30, 1995 offset by the elimination of related
management fees of $116,000 for the same period.
(h) To eliminate intercompany interest income/expense of $9,000 and
$19,096, respectively, for the nine month period ended August 31, 1996 and
the year ended November 30, 1995; and to reduce interest income by $5,625
and $7,500, respectively, for the nine month period ended August 31, 1996
and for the year ended November 30, 1995 related to the use of $150,000 of
cash to acquire Hansen's. Additionally, interest expense has been adjusted
by $15,068 and $20,090, respectively, for the nine month period ended
August 31, 1996 and the year ended November 30, 1995 for the amortization
of the debt discount recorded (over a five year period) against the assumed
debt related to a certain former Hansen's shareholder discussed in note 3.
(i) To eliminate related management fees.
(j) To adjust income taxes to record the appropriate effective tax
rate.
F-26
<PAGE> 30
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. DESCRIPTION PAGE
- ----------- --------------------------------------------------------------------- ------------
<C> <S> <C>
23 Consent of Miller, Kaplan, Arase & Co., Certified Public Accountants.
</TABLE>
<PAGE> 1
EXHIBIT 23
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
The Fresh Juice Company, Inc.
As independent public accountants, we hereby consent to the inclusion of
our report dated September 30, 1996, on the financial statements of Hansen's
Juices, Inc. as of June 30, 1996 and for the year then ended, in this Form
8-K/A.
MILLER, KAPLAN, ARASE & CO.
North Hollywood, California
February 11, 1997
