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
--------------------- ----------------------
June 30, 1995 33-10236
BAYWOOD INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Nevada 77-0125664
(state or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
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 June 30 1995, there were 13,083,394 shares of Baywood International, Inc.
common stock, $.001 par value outstanding.
<PAGE>
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 June 30, 1995 and December 31, 1994 4
Statements of Operations for the three and six months ended June 30, 1995
and 1994 5
Statements of Cash Flows for the three and six months ended June 30, 1995
and 1994 6
Statement of Information Furnished 7
Item 2 - Management's Discussion and Analysis or Plan of Operation 8-10
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 JUNE 30, 1995
-----------------------------------
The Company is amending Form 10-Q for the quarter ended June 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 $(745,728) and $(1,051,769) for the three and
six months ended June 30, 1995, respectively. The effect of these adjustments
resulted in a net loss of $(415,334) and (1,007,390) for the same periods ended
June 30, 1995.
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
PART I - FINANCIAL INFORMATION
BALANCE SHEET
-------------
UNAUDITED
ASSETS
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<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
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<S> <C> <C>
CURRENT ASSETS
Cash $ 63,886 $ 254,867
Accounts receivable (net of allowance) 138,532 8,936
Inventories 416,573 227,887
Current portion of related party receivable 16,895 16,895
Interest receivable 18,205 9,102
Prepaid expenses and other current assets 3,122 2,000
----------- -----------
Total current assets 657,213 519,688
----------- -----------
PROPERTY & EQUIPMENT
Furniture, fixtures, computers and equipment
(net of accumulated depreciation) 73,943 83,715
----------- -----------
OTHER ASSETS
Long-term related party receivable 165,151 165,151
Contracts & marketing rights
(net of accumulated amortization) 342,551 350,296
Formulas & product lines
(net of accumulated amortization) 342,551 350,296
----------- -----------
Total other assets 850,253 865,742
----------- -----------
Total assets $ 1,581,409 $ 1,469,145
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
-------------------------------------
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 456,057 $ 186,407
Notes payable 980,000 1,000,000
Accrued interest 177,570 44,991
----------- -----------
Total current liabilities 1,613,627 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, 13,083,394 shares
issued and outstanding at June 30, 1995 13,083 12,539
Additional paid-in capital 3,620,954 2,821,573
Treasury stock at cost (62,500) --
Accumulated deficit (4,814,255) (3,806,865)
----------- -----------
Total stockholders' deficit (32,218) 237,747
----------- -----------
Total liabilities and stockholders' deficit $ 1,581,409 $ 1,469,145
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</TABLE>
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
------------------------
UNAUDITED
<TABLE>
<CAPTION>
3 months ended June 30, 6 months ended June 30,
1995 1994 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 575,722 $ 705,564 $ 738,644 $ 2,020,392
COST OF SALES 348,906 362,252 461,435 1,053,747
------------ ------------ ------------ ------------
Gross profit 226,816 343,312 277,209 966,645
------------ ------------ ------------ ------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES:
Marketing expenses 288,445 244,386 447,028 508,830
General and administrative expenses 292,514 110,742 676,642 234,345
Depreciation and amortization 13,631 59,220 27,262 118,172
------------ ------------ ------------ ------------
Total selling, general and administrative expenses 594,590 414,348 1,150,932 861,346
------------ ------------ ------------ ------------
Operating profit (loss) (367,774) (71,036) (873,723) 105,299
------------ ------------ ------------ ------------
OTHER INCOME (EXPENSE)
Interest income 4,340 731 8,680 1,463
Miscellaneous income 264 -- 264 --
Interest expense (113,790) (12,500) (219,353) (25,000)
------------ ------------ ------------ ------------
Total other (expense) (109,186) (11,769) (210,409) (23,538)
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE INCOME TAXES AND
EXTRAORDINARY ITEM (476,960) (82,805) (1,084,132) 81,761
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE EXTRAORDINARY ITEM (476,960) (82,805) (1,084,132) 81,761
EXTRAORDINARY GAIN:
EXTINGUISHMENT OF DEBT 61,626 -- 76,742 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (415,334) $ (82,805) $ (1,007,390) $ 81,761
============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE:
Before extraordinary item $ (0.038) $ (0.006) $ (0.085) $ 0.006
Extraordinary item 0.005 -- 0.006 --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (0.033) $ (0.006) $ (0.079) $ 0.006
============ ============ ============ ============
WEIGHTED AVERAGE OF COMMON SHARES
OUTSTANDING 12,439,482 12,012,690 12,739,130 12,099,607
============ ============ ============ ============
</TABLE>
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
------------------------
UNAUDITED
<TABLE>
<CAPTION>
3 months ended June 30, 6 months ended June 30,
1995 1994 1995 1994
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (415,334) $ (82,805) $(1,007,390) $ 81,761
Adjustments to reconcile net income (loss) to cash used in
operating activities:
Depreciation and amortization 13,631 59,220 27,262 118,172
Issuance of common stock as payment for services performed 41,966 1,128 330,328 46,426
Extraordinary gain on extinguishment of debt (61,626) -- (76,742) --
Common stock issued as payment for interest on notes payable 108,870 -- 211,953 --
Common stock issued as payment on notes payable -- -- 100,000 --
Increase (decrease) in miscellaneous accounts -- (1,056) -- --
Changes in assets and liabilities:
(Increase) in accounts receivable (103,198) (24,598) (129,596) (133,265)
(Increase) in interest receivable (4,551) (731) (9,103) (1,463)
(Increase) in inventory (95,347) (3) (188,686) (24,530)
(Increase) in prepaid expenses 700 12,500 (1,122) (4,167)
(Decrease) in interest payable 27,900 -- 39,633 --
Increase (decrease) in accounts payable and accrued liabilities 311,835 (58,930) 274,760 215,430
----------- ----------- ----------- ---------
Net cash used in operating activities (175,154) (95,274) (428,703) 298,365
----------- ----------- ----------- ---------
INVESTING ACTIVITIES:
Purchase of furniture, computers and equipment (2,000) (14,038) (2,000) (19,271)
----------- ----------- ----------- ---------
Net cash used by investing activities (2,000) (14,038) (2,000) (19,271)
----------- ----------- ----------- ---------
FINANCING ACTIVITIES:
Issuance of common stock for cash 222,222 -- 222,222 --
Purchase of treasury stock -- -- (62,500) --
Proceeds from notes payable 180,000 -- 480,000 --
Principal payments on notes payable (175,000) -- (400,000) --
----------- ----------- ----------- ---------
Net cash provided (used) by financing activities 227,222 -- 239,722 --
----------- ----------- ----------- ---------
CASH (USED) PROVIDED DURING PERIOD 50,068 (109,313) (190,981) 279,094
CASH, BEGINNING OF PERIOD 13,818 604,207 254,867 215,800
----------- ----------- ----------- ---------
CASH, END OF PERIOD $ 63,886 $ 494,894 $ 63,886 $ 494,894
=========== =========== =========== =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 46,200 $ -- $ 61,200 $ --
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Conversion of notes payable with common stock: $ -- $ -- $ 100,000 $ --
</TABLE>
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<PAGE>
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 June 30, 1995 and the results of
operations for the three and six months ended June 30, 1995 and 1994 and the
cash flows for the three and six months ended June 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 June 30, 1995 decreased to $575,722
from $705,564 for the same period last year, a decrease of $129,842 or 18.4%.
Revenues for the six months ended June 30, 1995 decreased to $738,644 from
$2,020,392 for the same period last year, a decrease of $1,281,748 or 63.4%. 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 six month period ended June 30, 1995 were
62.5% 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 decreased from $508,830 to $447,028 for the six
months ended June 30, 1995 compared to the same period in 1994. For the three
month period ended June 30, 1995, marketing expenses increased $44,059 from the
same period in 1994. The decrease in 1995 is due to lower international travel,
promotional and salary expenses associated with running the Company's offices in
Europe and the Far East for the six months ended June 30, 1995. These offices
are run locally and more inexpensively overseas in Europe and the Far East
rather than out of the Company's domestic offices.
General and administrative expenses increased to $292,514 for the three
months ended June 30, 1995 from $110,742, an increase of $181,772. The total
value of stock issued in lieu of cash for services performed for the six month
period ended June 30, 1995 was $330,328 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 in the second quarter.
Other expenses increased $97,417 from $11,769 for the three month
period ended June 30, 1994 to $109,186 for the three month period ended June 30,
1995. For the six month period ended June 30, 1995, other expenses increased to
$210,409 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
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<PAGE>
BAYWOOD INTERNATIONAL, INC.
payable. Net loss for the three month period ended June 30, 1995 was $(415,334),
or $(.033) per common share compared to $(82,805), or $(.006) for the same
period last year. Net loss for the six month period ended June 30, 1995 was
$(1,007,390), or $(.079) 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.
During January 1992, the Company issued options to purchase 1,600,000
shares of common stock to officers and directors at an exercise price of $0.25.
As of June 30, 1995, none of these options have been exercised. The options
expire in January 1997. No compensation expense was recorded on the financial
statements for these options because at the time, the stock was not trading and
was considered to have a value of less than $0.25 per share. The information on
these options was inadvertently not disclosed in previously issued financial
statements which slightly changed the originally reported earnings (loss) per
share. The restated earnings (loss) per share for the three and six month
periods ended June 30, 1994 are $(.006) and $.006, respectively.
Capital Expenditures
During the three months ended June 30, 1995, the Company had not
incurred material expenditures for property and equipment.
Liquidity and Capital Resources
During 1994 the Company borrowed $1,000,000 from four (4) unrelated
individuals and one (1) unrelated company to be repaid within one year. 150,000
shares of common stock are to be issued as part of interest due on $500,000 of
the notes due in one year. 25,000 shares of common stock are to be issued as
part of interest due on $150,000 of the notes due in less than one year. No
common stock is to be issued as part of interest on the remaining $350,000 in
notes payable. Interest on these notes accrues monthly at the rate of 12% per
annum.
During the six month period ended June 30, 1995, the Company borrowed
$480,000 from five (5) unrelated individuals to be repaid within one year.
30,000 shares of common stock are to be issued as part of interest due on
$150,000 of the notes due in one year. No common stock is due as part of
interest on the remaining $330,000 in notes payable that are due in less than
one year.
As of June 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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<PAGE>
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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<PAGE>
BAYWOOD INTERNATIONAL, INC.
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings
-----------------
None
Item 2 - Changes in Securities
---------------------
None
Item 3 - Defaults upon Senior Securities
-------------------------------
None
Item 4 - Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None
Item 5 - Other Information
-----------------
None
Item 6 - Exhibits and Reports on Form 8-K
--------------------------------
None
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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: September 16, 1996
- -----------------------------------------
Harvey Turner
Chairman, President, C.E.O. and Principal
Accounting Officer
- 12 -
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 806175
<NAME> Baywood International, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 63,886
<SECURITIES> 0
<RECEIVABLES> 138,532
<ALLOWANCES> 0
<INVENTORY> 416,573
<CURRENT-ASSETS> 657,213
<PP&E> 73,943
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,581,409
<CURRENT-LIABILITIES> 1,613,627
<BONDS> 0
0
1,210,500
<COMMON> 13,083
<OTHER-SE> (1,255,801)
<TOTAL-LIABILITY-AND-EQUITY> 1,581,409
<SALES> 738,644
<TOTAL-REVENUES> 738,644
<CGS> 461,435
<TOTAL-COSTS> 1,150,932
<OTHER-EXPENSES> (8,944)
<LOSS-PROVISION> 1,084,132
<INTEREST-EXPENSE> 219,353
<INCOME-PRETAX> (1,084,132)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,084,132)
<DISCONTINUED> 0
<EXTRAORDINARY> 76,742
<CHANGES> 0
<NET-INCOME> (1,007,390)
<EPS-PRIMARY> (0.079)
<EPS-DILUTED> 0
</TABLE>
