FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
For the Quarter Ended November 30, 1995
Commission File Number 0-15076
VALUE HOLDINGS, INC.
(Exact name of registrant as specified in its charter)
Florida 59-2388734
(State of jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
3211 Ponce de Leon Blvd., Ste 201, Coral Gables, Florida, 33134
(Address of principal executive offices) (Zip Code)
(305) 666-3165
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
YES X NO _____
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
Common Stock, $0.0001 Par Value - 24,698,538 Shares as of
November 30, 1995
The Exhibit Index is on Page 17
This document contains 18 pages.
VALUE HOLDINGS, INC.
AND SUBSIDIARIES
INDEX
- -------------------------------------------------------------------
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheet for November 30, 1995
and February 28, 1995................................3
Consolidated Statement of Operations for the three
months ended November 30, 1995 and 1994..............5
Consolidated Statement of Operations for the nine
months ended November 30, 1995 and 1994..............6
Consolidated Statement of Cash Flows for the three
months ended November 30, 1995 and 1994..............7
Consolidated Statement of Cash Flows for the three
months ended November 30, 1995 and 1994..............8
Notes to Consolidated Financial Statements............9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.......15
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.....................17
SIGNATURES...........................................18
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
November 30, February 28,
1995 1995
---------- ------------
Current Assets
Cash $ 397,566 $ -0-
Certificate of deposit, restricted -0- 750,000
Accounts receivable trade 225,942 -0-
Inventories 2,705 58,693
Prepaid expenses and other assets 109,477 123,181
--------- ---------
735,690 931,874
Receivable from Stockholders 52,533 3,533
Investment in and Advances to
Unconsolidated Subsidiaries (13,197) 6,594,400
Property and Equipment - Net of
Accumulated Depreciation 651,377 844,321
Costs in Excess of Net Assets
of Business Acquired 3,317,496 1,020,000
Intangible Assets 440,531 517,665
Other Assets 541,795 64,773
--------- ---------
$ 5,726,225 $ 9,976,566
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Obligation to acquire unconsolidated
subsidiary $ -0- $ 1,950,000
Note payable, bank 46,653 735,000
Note payable, other 43,500 52,181
Notes payable, stockholders and
directors 366,808 502,728
Accounts payable 329,152 618,213
Payroll and sales taxes payable 859,877 1,059,908
Accrued liabilities, other 231,188 536,200
--------- ---------
1,877,178 5,454,230
--------- ---------
Long - Term Liabilities
Stockholders 287,875 287,875
Minority interest -0- -0-
--------- ---------
287,875 287,875
--------- ---------
See accompanying notes.
Note: The balance sheet at February 28, 1995 has been taken from
the audited financial statement at that date.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
LIABILITIES AND STOCKHOLDERS' EQUITY
November 30, February 28,
1995 1995
----------- ------------
Stockholders' Equity
Series A preferred stock, par value
$.0001, 20,000,000 shares authorized,
750,000 issued and outstanding at
August 31, 1995 and February 28,
1995, at liquidation value 750,000 750,000
Common stock, par value $.0001,
180,000,000 shares authorized;
issued and outstanding
24,698,538 and 14,471,732 at
November 30, 1995 and February 28,
1995 respectively 2,470 1,447
Common stock conversion rights under
exchange agreement 2,400,000 4,535,000
Capital in excess of par 10,519,742 9,133,971
Deficit (10,084,772) (10,053,157)
Deferred consulting agreements (26,268) (132,800)
----------- ----------
3,561,172 4,234,461
----------- ----------
$ 5,726,225 $ 9,976,566
=========== ==========
See accompanying notes.
Note: The balance sheet at February 28, 1995 has been taken from
the audited financial statement at that date.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
QUARTER ENDED
November 30, November 30,
1995 1994
REVENUES ---------- ---------
Restaurant sales $ -0- $ 1,683,352
Equity in income (loss) of
unconsolidated subsidiaries 81,752 -0-
Licensing fee 51,320 -0-
Management fee -0- -0-
Gain on disposition of unconsolidated
subsidiary 111,791 -0-
Interest and other 36,293 122,822
---------- ----------
281,156 1,806,174
---------- ----------
COSTS AND EXPENSES, Other than
Cost of restaurant sales -0- 735,836
Payroll and related costs -0- 642,184
Occupancy -0- 195,366
Other restaurant operating expenses -0- 218,122
Selling, general and administrative 4,630 297,963
---------- ----------
4,630 2,089,471
---------- ----------
INCOME (LOSS) BEFORE DEPRECIATION AND
AMORTIZATION, OTHER CHARGES AND
MINORITY INTEREST 276,526 (283,297)
--------- ----------
DEPRECIATION AND AMORTIZATION
Amortization consulting agreements 38,080 220,955
Depreciation 49,720 105,178
Amortization intangible assets 57,586 86,948
---------- ----------
145,386 413,081
---------- ----------
INCOME (LOSS) BEFORE OTHER CHARGES AND
MINORITY INTEREST 131,140 (696,378)
--------- ---------
OTHER CHARGES
Interest expense (63,961) 33,745
---------- ----------
INCOME (LOSS) BEFORE MINORITY INTEREST 195,101 (730,123)
Minority Interest -0- 24,100
---------- ----------
NET INCOME (LOSS) $ 195,101 $ (706,023)
========== ==========
NET INCOME (LOSS) PER SHARE $ 0.008 $ (0.057)
========== ==========
See accompanying notes.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED
November 30, November 30,
1995 1994
REVENUES ---------- ---------
Restaurant sales $ 1,232,547 $ 5,178,972
Equity in income (loss) of
unconsolidated subsidiaries 19,536 -0-
Licensing fee 99,424 -0-
Management fee 45,000 -0-
Gain on disposition of unconsolidated
subsidiary 111,791
Interest and other 129,869 182,868
---------- ----------
1,638,167 5,361,840
---------- ----------
COSTS AND EXPENSES, Other than
Cost of restaurant sales 518,694 2,181,082
Payroll and related costs 358,122 1,703,641
Occupancy 84,777 508,923
Other restaurant operating expenses 78,258 799,670
Selling, general and administrative 187,222 904,970
---------- ----------
1,227,073 6,098,286
---------- ----------
INCOME (LOSS) BEFORE DEPRECIATION AND
AMORTIZATION, OTHER CHARGES AND
MINORITY INTEREST 411,094 (736,446)
--------- ----------
DEPRECIATION AND AMORTIZATION
Amortization consulting agreements 117,782 476,427
Depreciation 142,261 249,238
Amortization intangible assets 140,884 263,403
---------- ----------
400,927 989,068
---------- ----------
INCOME (LOSS) BEFORE OTHER CHARGES AND
MINORITY INTEREST 10,167 (1,725,514)
OTHER CHARGES
Interest expense 9,497 113,803
---------- ----------
INCOME (LOSS) BEFORE MINORITY INTEREST 670 (1,839,317)
Minority Interest -0- 69,876
---------- ----------
NET INCOME (LOSS) $ 670 $ (1,769,441)
========== ==========
NET INCOME (LOSS) PER SHARE $ 0.000 $ (0.152)
========== ==========
See accompanying notes.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
QUARTER ENDED
November 30, November 30,
1995 1994
Cash Flows From Operating Activities: --------- ---------
Net income (loss) $ 195,101 $ (684,347)
Adjustments to reconcile net loss
to net cash used by operating activities:
Stock issued for services 30,000 -0-
Depreciation 49,720 105,178
Amortization, intangible assets 57,586 86,948
Amortization, consulting agreements 38,080 220,955
Equity earnings unconsolidated subsidiary (81,752) -0-
Gain on disposition unconsolidated sub. (111,791) -0-
Minority interest -0- (45,776)
(Increase) decrease in current assets:
Inventory -0- (8,875)
Prepaid expenses and other assets (8,466) 31,193
Increase (decrease) in current liabilities:
Accounts payable (73,600) 171,215
Accrued liabilities (239,288) 92,721
Other (23,465) -0-
---------- ----------
Net cash provided (used) by operating (167,875) (30,788)
activities ---------- ----------
Cash Flows From Investing Activities:
(Additions) dispositions of property
and equipment -0- (119,136)
Cashing of Certificate of Deposit -0- -0-
Proceeds disposition unconsolidated sub. 297,360 -0-
Investment and advances to uncons. sub. 216,316 -0-
Disposition of lease -0- 67,441
Advances (repayments) to stockholders -0- -0-
---------- ----------
Net cash used by investing activities 513,676 (51,695)
Cash Flows From Financing Activities: ---------- ----------
Proceeds (repayments) stockholder loans (98,235) (21,876)
Proceeds borrowings - others -0- 50,000
Issuance of common stock -0- -0-
Deposit on sale of stock 150,000 -0-
Dividends paid -0- -0-
Payments on bank and long term debt -0- (5,409)
Minority interest -0- 57,500
---------- ----------
Net cash used by financing activities 51,765 80,215
---------- ----------
Increase (Decrease) in Cash 397,566 (2,268)
Cash and Cash Equivalents at Beginning -0- 6,821
of Period ---------- ----------
Cash and Cash Equivalents at End
of Period $ 397,566 $ 4,553
See accompanying notes. ========== ==========
VALUE HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
NINE MONTHS ENDED
November 30, November 30,
1995 1994
Cash Flows From Operating Activities: --------- ---------
Net income (loss) $ 670 $(1,769,441)
Adjustments to reconcile net loss
to net cash used by operating activities:
Stock issued for services 32,500 18,750
Depreciation 142,261 249,238
Amortization, intangible assets 140,884 263,402
Amortization, consulting agreements 117,782 476,427
Equity earnings unconsolidated subsidiary (19,536) -0-
Gain on disposition unconsolidated sub. (111,791) -0-
Minority interest -0- (69,876)
(Increase) decrease in current assets:
Inventory 31,780 (38,155)
Prepaid expenses and other assets (11,275) 77,100
Increase (decrease) in current liabilities:
Accounts payable (279,559) 166,703
Accrued liabilities (583,538) 225,911
Other (23,465) -0-
---------- ----------
Net cash provided (used) by operating (563,287) (399,940)
activities ---------- ----------
Cash Flows From Investing Activities:
(Additions) dispositions of property
and equipment 17,890 (365,050)
Cashing of Certificate of Deposit 750,000 -0-
Proceeds disposition unconsolidated sub. 297,360 -0-
Investment and advances to uncons. sub. (100,000) -0-
Disposition of lease -0- 67,441
Advances (repayments) to stockholders (1,500) (7,980)
---------- ----------
Net cash used by investing activities 963,750 (305,589)
Cash Flows From Financing Activities: ---------- ----------
Proceeds (repayments) stockholder loans (203,725) 398,650
Proceeds borrowings - others -0- 105,000
Issuance of common stock 826,794 80,000
Deposit on sale of stock 150,000 -0-
Dividends paid (32,285) -0-
Payments on bank and long term debt (743,681) (32,117)
Minority interest -0- 126,710
---------- ----------
Net cash used by financing activities (2,897) 678,243
---------- ----------
Increase (Decrease) in Cash 397,566 (27,286)
Cash and Cash Equivalents at Beginning -0- 31,839
of Period ---------- ----------
Cash and Cash Equivalents at End
of Period $ 397,566 $ 4,553
See accompanying notes. ========== ==========
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instruc-
tions to Form 10Q and Article 10 of regulation S-X. Accordingly,
they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consist-
ing of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three
and nine month periods ended November 30, 1995 and 1994 are not
necessarily indicative of the results that may be expected for the
year ending February 29, 1996. For further information, refer to
the consolidated financial statements and footnotes thereto
included in the Company's annual report on Form 10-K for the year
ended February 28, 1995.
NOTE 2: GOING CONCERN
The accompanying consolidated financial statements assume the
continuity of the Company as a going concern. However, as reflected
in the consolidated financial statements, the Company had net
income of $670 for the nine months ended November 30, 1995, but
incurred net losses of $(1,769,441) for the nine months ended
November 30, 1994, and suffered a net loss of $(4,830,716) for the
fiscal year ended February 28, 1995. In addition, the Company's
consolidated financial position reflects a working capital
deficiency of $1,141,488 at November 30, 1995 and $4,522,356 at
February 28, 1995.
Additionally, the Company has accumulated unpaid payroll and sales
taxes payable of $859,877 at November 30, 1995 and $1,059,908 at
February 28, 1995 and has significant investment in goodwill and
other intangible assets , the recoverability of which is dependent
upon the success of forecasted future operations.
These conditions, absent successful effectuation of management's
plans, raise substantial doubt as to the ability of the Company to
continue as a going concern.
Management's plans with regard to these matters encompass the
following actions:
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 2: GOING CONCERN (Continued)
1. Acquisition of businesses
The Company plans to make strategic acquisitions of other
profitable businesses as these opportunities develop. In this
connection, the Company acquired Readyfoods Limited and certain
affiliated companies in late February 1995, and disposed of this
investment on October 31, 1995 (See note 3). It acquired Upper
Canada Beverage Corp. on November 30, 1995 (See note 3), and
invested in Equashare Management, Inc. on December 1, 1995 (See
note 11). It has entered into letters of intent to acquire Holly
Foods Company and Don Valley Brewing Limited (See note 10). The
Company has also entered into letters of intent with two different
Companies to acquire the distribution rights to new products (See
note 11).
2. Licensing of restaurant operations
Effective June 1, 1995, the Company entered into a licensing
agreement whereby it licensed the operations of its restaurant
operations to an independent operator (See note 4). The company
expects that this licensing agreement should result in net earnings
and cash flows from operating activities of approximately $300,000
annually over the term of the agreement.
3. Equity infusion from sale of securities
The Company has raised, and plans to continue to raise, equity
funds from private placements of its common stock, and plans to
sell additional shares of common stock in a proposed public
offering.
4. Stockholder financing
Certain stockholders of the Company have provided financing by
means of debt financing. The Company expects that these
stockholders will continue to provide financing for the Company, by
means of additional debt or equity financing.
The eventual outcome of the success of management's plans cannot be
ascertained with any degree of certainty. The accompanying
consolidated statements do not include any adjustments that might
result from the outcome of this uncertainty.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 3: BUSINESS ACQUISITIONS
Readyfoods, Inc. -
On February 24, 1995 the Company, through a newly established
subsidiary, Readyfoods Acquisition Corp. ("RAC"), acquired all of
the outstanding capital stock of Readyfoods Limited and certain
affiliated companies ("Readyfoods"). Readyfoods and its affiliated
companies both import and process poultry products for sale to
retail chains, specialty stores and institutions in the Canada and
U.S. markets.
On October 31, 1995 the Company sold its interest in Readyfoods,
Inc. and realized a gain of $111,791 on the disposition.
Upper Canada Beverage Company -
On November 30, 1995 the Company, through its wholly owned
subsidiary Value Beverage Company, Inc., acquired all the
outstanding capital stock of The Trade Group, Inc., a shell company
that holds the shares of Upper Canada Beverage Corp. The purchase
was for $2.5 million, with $100,000 paid in cash and the balance in
stock of a wholly owned subsidiary of Value Holdings valued at $1
per share and convertible into shares of Value Holdings, Inc. The
transaction has been accounted for as a purchase.
Upper Canada Beverage Corp. is an established importer, marketer,
and distributor of high margin alcoholic and nonalcoholic
beverages.
Following is a proforma statement of operations of Upper Canada
Beverage Corp. for the eleven months ended November 30, 1995:
Sales $ 852,801
Cost of sales 208,865
Expenses 70,211
Net Income $ 138,654
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 4: JOINT VENTURE AGREEMENT
On June, 1994 the Company entered into a joint venture agreement
with Family Steak Houses of Miami, Inc. to convert two of Family's
8 Sizzler restaurants to the Cami concept and operate them. The
Company has a 51% interest in the joint venture and had been
accounting for same on a consolidated basis. The joint venture
agreement will be terminated on December 31, 1995, for which the
Company has decided to account for its interest in the operations
of the joint venture for the current fiscal year on an equity
basis.
NOTE 5: PENDING LITIGATION
In June, 1994 a lawsuit was filed in the Circuit Court for Dade
County, Florida in which the plaintiff alleges that the Company's
wholly-owned subsidiary corporation, Cami Restaurant Corp., and
certain indirect wholly-owned subsidiary corporations of the
Company breached a certain agreement for and failed to make certain
payments on a promissory note given in connection with, the
purchase of certain assets by Cami Restaurant Corp. in 1991. The
plaintiff also alleges that certain present and former officers of
the Company or Cami Restaurant Corp., including the President of
the Company and of Cami Restaurant Corp., defrauded the plaintiff,
engaged in conspiracy to defraud the plaintiff and breached
certainfiduciary duties to the plaintiff. The plaintiff seeks
damages in excess of $4,600,000, interest and attorneys' fees, as
well as an order declaring the purchase of assets void. Management
of the Company believes this suit to be without merit and intends
to contest it vigorously; however, an estimate of the likelihood of
an unfavorable result cannot be made at this time.
NOTE 6: OTHER INCOME
Other income for the three and nine months ended November 30, 1995
includes $35,833 and $111,833 respectively representing the
reversal of rents accrued during last fiscal for the Company's
store in Cocoa Beach, Florida, which was closed in 1994 as part of
the Company's restructuring plan. The Company is currently
negotiating a settlement with Holiday Inn, the landlord, for past
due rents and liens in exchange for monies due them by landlord for
room and other charges; and firmly believes that the settlement
will result in this reduction of amount due landlord.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 7: LICENSING AGREEMENT:
One June 1, 1995, the Company entered into a licensing agreement
effective as of that date, whereby it licensed the operatio ns of
its restaurant facilities to an independent operator who is
involved as a joint venture partner in one of the Company's other
restaurant locations. The Company is to receive a monthly license
fee ranging from 3% to 6% based upon monthly revenues of the
restaurants ranging from $100,000 to over $200,000. The licensing
agreement is for an initial term of three years, with an option on
the part of the licensee to renew the agreement for an additional
three years.
Licensing fee income for the three and nine months ended November
31, 1995 was $ 51,320 and $99,424 respectively.
NOTE 8: RESTAURANT OPERATIONS:
There were no restaurant operations for the quarter ended November
30, 1995, since the restaurants were operated under a licensing
agreement as per note 7 above, and under a joint venture agreement
as per note 4 above.
NOTE 9: GENERAL AND ADMINISTRATIVE EXPENSES:
General and administrative expenses for the three months ended
November 30, 1995 reflect the reversal and write-off of charges
accrued in prior quarters which are no longer due, totalling
$212,404.
NOTE 10: PENDING ACQUISITIONS
On June 23, 1995, the Company rescinded the purchase agreement of
Excelle Brand Foods, Inc. which it had entered into on April 6,
1995, due to unexpected losses recorded by Excelle for their first
quarter of 1995, and their inability to provide satisfactory
business, contingency plans and cash flows.
On July 27, 1995, the Company and Holly Foods accepted a letter of
intent to purchase 100% of the shares of Holly Foods, a company
which manufactures fine cheese products. The purchase will be for
$750,000 cash and shares. The actual purchase price will be
determined by the 1995 year end profits of Holly Foods
VALUE HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995, NOVEMBER 30, 1994 AND FEBRUARY 28, 1995
NOTE 10: PENDING ACQUISITIONS (CONTINUED):
On November 5, 1995, the Company entered into a letter of intent
with Don Valley Brewing Company, Limited to purchase up to 100% but
not less than 80% of the capital stock of the Company. The purchase
price will be C$2,000,000, payable C$500,000 in cash at closing and
the balance in common shares of Value Holdings, Inc., the number of
shares to be determined at closing. Don Valley Brewing Company,
Limited operates Conners Brewery in Ontario, Canada, which
manufactures and distributes premium beers throughout Canada and
the U.S.
NOTE 11: SUBSEQUENT EVENTS
On October 6, 1995 Value Holdings received a letter form Indian
Manufacturing Limited carrying on business as Indian Motorcycle
regarding the granting of a non transferable exclusive license to
Indian Brewing Corporation, a wholly owned subsidiary of Value
Holdings, Inc., to manufacture package and distribute a new line of
beer. The license was signed on January 8, 1996.
On December 20, 1995 the Company executed an agreement with MPS
International Food Works Incorporated wherein The Trade Group,
Inc., a wholly owned subsidiary of Value Holdings, Inc., paid a
$5,000 deposit in return for the license of the product known as
Libido for the United States and Mexico. A further sum of $45,000
is due 30 days from the date of closing. Furthermore, on December
21, 1995 the Company executed an agreement for the license of the
product in Europe, paying $20,000 cash for that license plus an
additional $20,000 in shares of Value Holdings, Inc. which is due
90 days after closing. The Company plans to develop an isotonic
beverage using the product.
On December 1, 1995 the Company acquired approximately 14% of the
outstanding shares of a public company called Equashare Management,
Inc., which trades its shares over the counter in Toronto. This
Company is licensed to sell all the optical and hearing aids and
home improvements in the Hudson Bay department stores, Canada's
largest retailer, with annual sales of over C$11,000,000.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company's results of operations reflect a net income of
$195,101 for the quarter ended November 30, 1995 compared to a loss
of ($706,023) for the same period in 1994; and net income of $670
for the nine months ended November 30, 1995 compared to
$(1,769,441) in 1994. Effective June 1, 1995 the restaurant
operations were licensed to an independent operator (See note
7),therefore the Company shows no restaurant sales for the quarter
ended November 30, 1995. Licensing fee revenue for the three and
nine months ended November 30, 1995 were $51,320 and $99,424
respectively.
For the nine months ended November 30, 1995, the Company reflects
management fee revenue of $45,000, which consists of a fee charged
to Readyfoods Acquisition Corp., for the period from June 1, 1995
to August 31, 1995.
For the three and nine months ended November 30, 1995, the Company
reflects a gain of $111,791 realized on the disposition of the
investment in Readyfoods, Inc. (See note 3).
Other income for the three and nine months ended November 30, 1995
include $35,833 and $111,833 respectively representing the reversal
of rents accrued in fiscal year ended February 28, 1995, for the
Company's store in Cocoa Beach (See note 6).
COSTS AND EXPENSES
During the quarter ended August 31, 1995, there were no costs or
operating expenses for the restaurants as a result of the licensing
agreement which commenced on June 1, 1995 (See note 7).
Selling, general and administrative expenses for the quarter
decreased from $297,963 in 1994 to $4,630 in 1995; and for the nine
months decreased from $904,970 in 1994 to $187,222 in 1995. The
decrease resulted in part from the reversal and write-off during
the quarter of charges accrued in prior periods which are no longer
due (See note 9) and to a significant reduction in administrative
expenses and overhead as part of management plan to reduce expenses
and increase cash flows from operations.
The Company has entered into a number of Consulting agreements for
professional services. These agreements are being amortized over
their term. The amortization relating to such agreements was
$38,080 for the three months ended November 30, 1995 versus
$220,955 for the comparable period in 1994; and $140,884 for the
nine months ended November 30, 1995 versus $476,427 for the same
period in 1994.
LIQUIDITY AND CAPITAL RESOURCES
The Company's current objective is to grow through the
acquisitionof other profitable businesses (see Note 3, 10 and 11)
and to reduce its overhead expenses through the licensing of its
restaurant operations (see Note 4 and 7). The Company also plans to
continue raising equity funds from private placements of its common
stock and through a proposed public offering (see Note 2).
As of November 30, 1995, the Company had outstanding payroll and
sales taxes payable in the amount of $859,877, which represent
outstanding payroll and sales tax liability, plus accrued penalties
and interest, for periods prior to 1995. The Company has been
paying the payroll and sales taxes for 1995 on a current basis. In
February, 1995 the Company submitted an offer in compromise to the
Internal Revenue Service and the Florida Department of Revenue,
proposing to settle the amount of payroll and sales taxes payable
through December 31, 1994 for approximately $365,000 and $270,000,
respectively; payment to be made on October 1, 1995 or within
acceptance of the offer, whichever is later. Neither entities have
completed their review and consideration of the pending offers. The
Company expects to obtain the funds necessary to satisfy these
obligations from a proposed public offering of its securities.
CAPITAL EXPENDITURES AND DEPRECIATION
The Company did not make any major capital expenditure during the
quarter ended November 30, 1995.
PART II - OTHER INFORMATION
Item 6. Exhibits and reports on Form 8-K
(a) Exhibits
(b) The Company filed two reports on form 8-K during the
quarter ended November 30, 1995, one on October 31, 1995
and another on November 30, 1995.
VALUE HOLDINGS, INC. AND SUBSIDIARIES
FORM 10 Q
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1995
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
VALUE HOLDINGS, INC.
DATE: January 14, 1996 By: /s/ Alison Cohen
Alison Rosenberg Cohen
Vice-President
DATE: January 14, 1996 By: /s/ Ida C. Ovies
Ida C. Ovies
Chief Financial Officer
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