UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-Q/A
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE QUARTER ENDED COMMISSION FILE NUMBER
--------------------- ----------------------
September 30, 1995 33-10236
BAYWOOD INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
Nevada 77-0125664
(state or other jurisdiction of incorporation or (I.R.S. Employer Identification Number)
organization)
</TABLE>
14950 North 83rd Place, Suite 1
Scottsdale, Arizona 85260
(Address of principal office) (Zip code)
Registrant's telephone number, including area code: (602)951-3956
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
$.001 par value common stock
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 and Exchange Act of
1934 during the preceding 12 months (or for such shorter periods 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
--- ---
As of September 30, 1995, there were 14,178,468 shares of Baywood International,
Inc. common stock, $.001 par value outstanding.
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BAYWOOD INTERNATIONAL, INC.
INDEX
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<TABLE>
<CAPTION>
Page
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<S> <C>
SUMMARY OF CHANGES FILED WITH FORM 10-Q/A 3
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet as of September 30, 1995 and December 31, 1994 4
Statements of Operations for the three and nine months ended September
30, 1995 and 1994 5
Statements of Cash Flows for the three and nine months ended September
30, 1995 and 1994 6
Statement of Information Furnished 7
Item 2 - Management's Discussion and Analysis or Plan of Operation 8-9
Factors That May Effect Future Results 10
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 11
Item 2 - Changes in Securities 11
Item 3 - Defaults Upon Senior Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES 12
</TABLE>
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
SUMMARY OF CHANGES FILED WITH FORM 10-Q/A
-----------------------------------------
FOR THE QUARTER ENDED SEPTEMBER 30, 1995
----------------------------------------
The Company is amending Form 10-Q for the quarter ended September 30,
1995 as previously filed due to adjustments on income statement accounts and
prior period adjustments that affected the opening balances of intangibles
assets, accumulated amortization, retained earnings, accounts receivable and
inventory. These adjustments resulted from the audit of the annual financial
statements for the year ended December 31, 1995 by the Company's independent
accountants. As previously reported, net loss was $(649,409) and $(2,022,374)
for the three and nine months ended September 30, 1995, respectively. The effect
of these adjustments resulted in a net loss of $(450,861) and $(1,458,251) for
the same periods ended September 30, 1995.
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BAYWOOD INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
-------------
UNAUDITED
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<CAPTION>
ASSETS
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September 30, 1995 December 31, 1994
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<S> <C> <C>
CURRENT ASSETS
Cash $ 83,062 $ 254,867
Accounts receivable (net of allowance) 17,315 8,936
Inventories 427,828 227,887
Current portion of related party receivable 18,260 16,895
Interest receivable 4,129 9,102
Prepaid expenses and other current assets 48,667 2,000
----------- -----------
Total current assets 599,261 519,688
----------- -----------
PROPERTY & EQUIPMENT
Furniture, fixtures, computers and equipment
(net of accumulated depreciation) 70,365 83,715
----------- -----------
OTHER ASSETS
Long-term related party receivable 146,891 165,151
Contracts & marketing rights
(net of accumulated amortization) 338,678 350,296
Formulas & product lines
(net of accumulated amortization) 338,677 350,296
----------- -----------
Total other assets 824,246 865,742
----------- -----------
Total assets $ 1,493,872 $ 1,469,145
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 114,653 $ 186,407
Notes payable 580,000 1,000,000
Accrued interest 234,345 44,991
----------- -----------
Total current liabilities 928,998 1,231,398
----------- -----------
STOCKHOLDERS' DEFICIT
Preferred Stock, $1 par value,
10,000,000 shares authorized, 1,210,500
shares issued and outstanding 1,210,500 1,210,500
Common stock, $.001 par value, 50,000,000
shares authorized, 14,178,468 shares
issued and outstanding at September 30, 1995 14,178 12,539
Additional paid-in capital 4,667,813 2,821,573
Treasury stock at cost (62,500) --
Accumulated deficit (5,265,117) (3,806,865)
----------- -----------
Total stockholders' equity 564,874 237,747
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Total liabilities and stockholders' equity $ 1,493,872 $ 1,469,145
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BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
------------------------
UNAUDITED
<TABLE>
<CAPTION>
3 months ended September 30, 9 months ended September 30,
1995 1994 1995 1994
-------------- --------------- ------------ --------------
(as restated) (as restated)
<S> <C> <C> <C> <C>
NET SALES $ 429,209 $ 705,564 $ 1,167,853 $ 2,020,392
COST OF SALES 294,555 362,252 755,990 1,053,747
------------ ------------ ------------ ------------
Gross profit 134,654 343,312 411,863 966,645
------------ ------------ ------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Marketing expenses 198,227 244,386 645,255 508,830
General and administrative expenses 319,947 110,742 996,589 234,345
Depreciation and amortization 13,772 59,220 41,034 118,172
------------ ------------ ------------ ------------
Total selling, general and administrative expenses 531,946 414,348 1,682,878 861,346
------------ ------------ ------------ ------------
Operating profit (loss) (397,292) (71,036) (1,271,015) 105,299
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 3,917 731 12,597 1,463
Miscellaneous income 16,289 -- 16,553 --
Interest expense (73,775) (12,500) (293,128) (25,000)
------------ ------------ ------------ ------------
Total other (expense) (53,569) (11,769) (263,978) (23,538)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (450,861) (82,805) (1,534,993) 81,761
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (450,861) (82,805) (1,534,993) 81,761
EXTRAORDINARY GAIN:
EXTINGUISHMENT OF DEBT -- -- 76,742 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (450,861) $ (82,805) $ (1,458,251) $ 81,761
============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE AND COMMON
EQUIVALENT SHARE:
Before extraordinary item $ (0.028) $ (0.006) $ (0.098) $ 0.006
Extraordinary item -- -- 0.005 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (0.028) $ (0.006) $ (0.093) $ 0.006
============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE -
ASSUMING FULL DILUTION:
Before extraordinary item $ (0.028) $ (0.006) $ (0.098) $ 0.006
Extraordinary item -- -- 0.005 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (0.028) $ (0.006) $ (0.093) $ 0.006
============ ============ ============ ============
WEIGHTED AVERAGE OF COMMON SHARES
OUTSTANDING 13,398,240 12,012,690 12,964,030 12,099,607
============ ============ ============ ============
</TABLE>
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BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
------------------------
UNAUDITED
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<CAPTION>
3 months ended September 30, 9 months ended September 30,
1995 1994 1995 1994
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<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (450,861) $ (82,805) $(1,458,251) $ 81,761
Adjustments to reconcile net income (loss) to cash used in
operating activities:
Depreciation and amortization 13,772 59,220 41,034 118,172
Issuance of common stock as payment for services performed 72,800 1,128 541,199 46,426
Extraordinary gain on extinguishment of debt -- -- (76,742) --
Inventory writedown for samples and shrinkage 13,716 -- 13,716 --
Common stock issued as part of debt conversion expense -- -- 33,222 --
Common stock issued as payment for interest on notes payable 14,000 -- 165,756 --
(Decrease) in miscellaneous accounts -- (1,056) -- --
Changes in assets and liabilities:
(Increase) decrease in accounts receivable 121,218 (24,598) (8,378) (133,265)
(Increase) decrease in interest receivable 14,076 (731) 4,973 (1,463)
(Increase) in inventory (13,875) (3) (213,657) (24,530)
(Increase) decrease in prepaid expenses (45,545) 12,500 (46,667) (4,167)
Increase in interest payable 149,721 -- 189,354 --
Increase (decrease) in accounts payable and accrued liabilities (346,515) (58,930) (71,755) 215,430
Net cash provided (used) in operating activities (457,493) (95,274) (886,196) 298,365
INVESTING ACTIVITIES:
Purchase of furniture, computers and equipment (2,449) (14,038) (4,449) (19,271)
Decrease in note receivable 16,896 -- 16,896 --
---------- ----------- ----------- -----------
Net cash provided (used) by investing activities 14,447 (14,038) 12,447 (19,271)
---------- ----------- ----------- -----------
FINANCING ACTIVITIES:
Issuance of common stock for cash 512,222 -- 734,444 --
Purchase of treasury stock -- -- (62,500) --
Proceeds from notes payable -- -- 480,000 --
Principal payments on notes payable (50,000) -- (450,000) --
---------- ----------- ----------- -----------
Net cash provided by financing activities 462,222 -- 701,944 --
---------- ----------- ----------- -----------
CASH (USED) PROVIDED DURING PERIOD 19,176 (109,313) (171,805) 279,094
CASH, BEGINNING OF PERIOD 63,886 604,207 254,867 215,800
---------- ----------- ----------- -----------
CASH, END OF PERIOD $ 83,062 $ 494,894 $ 83,062 $ 494,894
========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ -- $ 61,200 $ --
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable with common stock: $ -- $ -- $ 450,000 $ --
</TABLE>
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BAYWOOD INTERNATIONAL, INC.
Statement of Information Furnished
The accompanying financial statements have been prepared in accordance
with Form 10-Q instructions and in the opinion of management contain all
adjustments (consisting of only normal and recurring accruals) necessary to
present fairly the financial position as of September 30, 1995 and the results
of operations for the three and nine months ended September 30, 1995 and 1994
and the cash flows for the three and nine months ended September 30, 1995 and
1994. These results have been determined on the basis of generally accepted
accounting principles and practices applied consistently with those used in the
preparation of the Company's 1994 Annual Report on Form 10-K.
Certain information and footnote disclosures normally included in
financial statements presented in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that the accompanying
financial statements be read in conjunction with the financial statements and
notes thereto incorporated by reference in the Company's 1994 Annual Report on
Form 10-K.
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
Item 2 - Management's Discussion and Analysis or Plan of Operation
- ------------------------------------------------------------------
General
Since inception, the Company has directed most of its efforts on
international business and has established distribution or registration of its
products into network marketing, retail or wholesale companies in the Pacific
Rim, Europe and South America. Products that are not necessarily new to the
market such as aloe based products, bee pollen, royal jelly and propolis are the
types that have generated particular interest mostly in the Pacific Rim. Most of
the Company's sales are generated from the Pacific Rim. Establishing
distribution domestically into chain drug stores, grocery chains, network
marketing companies and warehouse distributors in the United States is a major
part of the Company's marketing strategy. The Company feels that the domestic
market is potentially very lucrative and although the Company views this market
as very challenging due to its competitive nature, it feels confident it can
open distribution with new, natural products for different applications.
Results of Operations
Revenues for the three months ended September 30, 1995 decreased to
$429,209 from $705,564 for the same period last year, a decrease of $276,355 or
39.2%. Revenues for the nine months ended September 30, 1995 decreased to
$1,167,853 from $2,020,392 for the same period last year, a decrease of $852,539
or 42.2%. The sales decrease was mainly due to decreased orders from
international customers for the Company's nutrition, dietary and skin care
products. International registration requirements for the Company's cholesterol
reduction product in Europe, the Pacific Rim and also the Latin American
countries delayed orders for this product by the Company's international
customers.
Cost of sales during the nine month period ended September 30, 1995
were 64.7% compared to 52.2% for the same period last year. This is primarily
due to higher cost of sales on the aloe vera based product shipped to the Far
East of 59% as compared to products with higher margins shipped overseas last
year.
Marketing expenses increased from $508,830 to $645,255 for the nine
months ended September 30, 1995 compared to the same period in 1994. For the
three month period ended September 30, 1995, marketing expenses increased
$46,159 from the same period in 1994. The overall increase in 1995 is due to the
value of common stock issued as part of consulting fee expenses.
General and administrative expenses increased to $319,947 for the three
months ended September 30, 1995 from $110,742, an increase of $209,205. The
total value of stock issued in lieu of cash for services performed for the nine
month period ended September 30, 1995 was $541,199 as compared to $46,426 in the
same period last year. This increase is primarily due to more common shares
being issued in lieu of cash for services performed.
Other expenses increased $41,800 from $11,769 for the three month
period ended June 30, 1994 to $53,569 for the three month period ended September
30, 1995. For the nine month period ended September 30, 1995, other expenses
increased to $263,978 from $23,538 for the same six month period in 1994. These
increases are primarily attributed to stock to be issued as part of notes
payable. Net loss for the three month period ended September 30, 1995 was
$(450,861), or $(.028) per common share compared to $(82,805), or
- 8 -
<PAGE>
BAYWOOD INTERNATIONAL, INC.
$(.006) for the same period last year. Net loss for the nine month period ended
September 30, 1995 was $(1,458,251), or $(.093) per common share compared to a
net income of $81,761, or $.006 for the same period last year.
Other Information
The majority of the Company's interest revenue was generated by the
interest due from contracts with the sale of the right to distribute and use the
products in the Aurore-B Line to Royal Products, Inc.
Capital Expenditures
During the three months ended September 30, 1995, the Company had not
incurred material expenditures for property and equipment.
Liquidity and Capital Resources
As of September 30, 1995, the Company still was seeking a capital
injection in excess of $2,000,000 to fund the marketing and inventory
requirements of new products in the cholesterol reduction and skin care product
lines as well as the repayment of short-term debt incurred in the last six
months of 1994 and first three months of 1995. With the onset of increasing
demand for new private labelled products, this amount of capital is essential to
continue to supply the market, build a sales base that can support normal and
non-cash operational expenses and fund the development of the new and innovative
products to build the future of the Company.
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BAYWOOD INTERNATIONAL, INC.
Factors That May Affect Future Results
The Company believes that results of operations in any quarterly period
may be impacted by factors such as delays in the shipment of new or existing
products, difficulty in the manufacturer acquiring critical product components
of acceptable quality and in required quantity, timing of product introductions,
increased competitions, the effect of announcements and marketing efforts of new
competitive products, a slower growth rate in the Company's target markets, lack
of market acceptance of new products and adverse changes in economic conditions
in any of the countries in which the company does business. Specifically, the
timing of registration of new or existing products in different countries in
which the Company is doing business or may do business could delay orders. Also,
the significant portion of sales and net income contributed by international
operations, specifically by one customer, could affect the Company's results of
operations and financial condition in a particular quarter. Due to the factors
noted above, the Company's future earnings and stock price may be subject to
significant volatility. Any shortfall in revenues or earnings from levels
expected by the investing public or securities analysts could have an immediate
and significant adverse effect on the trading price of the Company's common
stock.
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BAYWOOD INTERNATIONAL, INC.
PART II - OTHER INFORMATION
(NO CHANGE FROM PREVIOUS FILING)
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<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BAYWOOD INTERNATIONAL, INC.
(Registrant)
/s/ Harvey Turner Date: December 19, 1996
- -------------------------------------
Harvey Turner
Chairman, President and C.E.O.
/s/ Neil Reithinger Date: December 19, 1996
- -------------------------------------
Neil Reithinger
Chief Financial Officer, Secretary and
Treasurer
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<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 806175
<NAME> Baywood International, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 83,062
<SECURITIES> 0
<RECEIVABLES> 17,315
<ALLOWANCES> 0
<INVENTORY> 427,828
<CURRENT-ASSETS> 599,261
<PP&E> 70,365
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,493,872
<CURRENT-LIABILITIES> 928,998
<BONDS> 0
0
1,210,500
<COMMON> 14,178
<OTHER-SE> (659,804)
<TOTAL-LIABILITY-AND-EQUITY> 1,493,872
<SALES> 1,167,853
<TOTAL-REVENUES> 1,167,853
<CGS> 755,990
<TOTAL-COSTS> 1,682,878
<OTHER-EXPENSES> 263,978
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 293,128
<INCOME-PRETAX> (1,534,993)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,271,015)
<DISCONTINUED> 0
<EXTRAORDINARY> 76,742
<CHANGES> 0
<NET-INCOME> (1,458,251)
<EPS-PRIMARY> (0.093)
<EPS-DILUTED> (0.093)
</TABLE>
