<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
(Mark One)
[ X ] Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the fiscal year ended December 31, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
Commission file number 0-14784
Cable Car Beverage Corporation
-----------------------------------------------------
Exact name of Registrant as specified in its charter)
DELAWARE 52-0880815
-------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization Identification No.)
717 17th Street, Suite 1475, Denver, Colorado 80202
- - --------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303) 298-9038
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
None None
------- --------
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $.01 Par Value
- - -----------------------------------------------------------------------
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes X No
-------- -------
The aggregate market value of equity securities held by non-affiliates
of the Registrant on March 27, 1996 was approximately $11,230,210.
As of March 27, 1996 there were 8,658,349 shares of common stock
outstanding.
-1-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
1995 FORM 10-K ANNUAL REPORT
----------------------------
Table of Contents
-----------------
Page
PART I
Item 1. Business............................................. 3
Item 2. Properties........................................... 6
Item 3. Legal Proceedings.................................... 6
Item 4. Submission of Matters to a Vote of Security Holders.. 6
PART II
Item 5. Market for the Registrant's Common Stock and
Related Stockholder Matters......................... 7
Item 6. Selected Financial Data............................. 7
Item 7. Management's Discussion and Analysis of
Financial Condition and Results of Operations....... 9
Item 8. Financial Statements and Supplementary Data........ 13
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure................ 13
PART III
Item 10. Directors and Executive Officers of the
Registrant........................................ 14
Item 11. Executive Compensation............................. 15
Item 12. Security Ownership of Certain Beneficial
Owners and Management.............................. 17
Item 13. Certain Relationships and Related Transactions..... 17
PART IV
Item 14. Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................ 18
-2-
<PAGE>
PART I
ITEM 1. BUSINESS.
- - ------------------
GENERAL
- - -------
Cable Car Beverage Corporation, (the "Company") was incorporated under
the laws of Delaware on April 1, 1968. The Company's business consists
of marketing its line of proprietary soft drinks and waters throughout
the United States and in Canada. As discussed in more detail below, the
Company's product line consists of Stewart's brand soft drinks (Root Beer,
Orange N' Cream, Cream Ale and Ginger Beer), Fountain Classics Seltzer,
San Francisco Seltzer, Aspen Mountain Spring Water and ASPEN EXTREME.
During 1995, the Company began marketing a new Stewart's flavor (Stewart's
Country Orange N' Cream) as well as a new line of non-carbonated, fruit
flavored beverages under the name of ASPEN EXTREME. The ASPEN product line
also includes a non-carbonated spring water.
Proprietary Products Marketing:
General: The Company initially entered its current business of marketing
beverages on August 27, 1987 when it acquired, through its subsidiary
Old San Francisco Seltzer, Inc. ("SFS"), the assets and business of Old San
Francisco, Inc. ("Old SF"), a California corporation that marketed a product
line of flavored seltzers.
The Company added to its line of beverages when, on July 11, 1989, it entered
into a licensing agreement with Stewart's Restaurants, Inc. ("Stewart's"),
a New Jersey based franchiser of Stewart's Drive-In Root Beer Stands,
pursuant to which the Company has the exclusive right to produce and
market Stewart's brand beverages for the entire United States. Pursuant
to an addendum to the Stewart's licensing agreement dated April 11, 1994,
the Company was granted the exclusive rights for Canada, and once the
Company achieves cumulative sales of 4,000,000 cases, the license becomes
worldwide provided the Company maintains annual sales of 1,000,000 cases.
The agreement provides for a sliding scale royalty with a minimum annual
royalty of $50,000 beginning with the twelve-month period ending July 11,
1992. For the year ended December 31, 1995, the royalty payments exceeded
the minimum royalty due and the Company expects the same in future years.
Termination of the agreement may occur if the Company's annual sales of
Stewart's Root Beer are less than 500,000 cases for each year commencing
after July 11, 1991 or the minimum royalty is not paid.
On December 1, 1993, the Company entered into a separate licensing agreement
with Stewart's, whereby the Company has the exclusive right to market
Stewart's brand beverages as a fountain product in 15 states. The agreement
provides for a licensing fee of $29,250 and payment of a sliding scale
royalty. The Company is marketing the Stewart's fountain product through a
newly formed, wholly-owned subsidiary, Fountain Classics, Inc. ("FCI"). The
Company is currently test-marketing Stewart's fountain beverages in selected
markets.
-3-
<PAGE>
On November 22, 1989, the Company acquired the assets and business of Aspen
Mineral Water Corporation ("Aspen"), a Colorado corporation that marketed a
sparkling water. Currently, the Company markets a line of non-carbonated
fruit flavored beverages under the name ASPEN EXTREME. The Company also
markets a non-carbonated spring water under the Aspen name.
Proprietary Products: The Company's proprietary product line currently
consists of Stewart's premium soft drinks (Root Beer, Orange N' Cream,
Cream Ale and Ginger Beer), Fountain Classics Seltzer, San Francisco
Seltzer, Aspen Mountain Spring Water and ASPEN EXTREME. Stewart's
products are packaged in original and diet and are sweetened using
non-sugar sweeteners - fructose in the original line and NutraSweet brand
sweetener in the diet line. Fountain Classics Seltzer is a naturally
flavored, carbonated water available in Original, Black Cherry and Lime.
San Francisco Seltzer is a naturally flavored soft drink which contains no
sodium or preservatives and is available in regular and diet flavors that
are sweetened with fructose and NutraSweet, respectively. Aspen Mountain
Spring Water is a non- carbonated water. ASPEN EXTREME is a non-carbonated,
fruit flavored beverage.
For the years ended December 31, 1995 and 1994, the Stewart's brand
accounted for approximately 96% and 98% of the Company's proprietary
brand sales, respectively. The Company anticipates that the Stewart's brand
will continue to account for a significant portion of sales for the year
ended December 31, 1996.
Marketing and Distribution: The brand products business consists of both
sales of concentrate to regional soft drink bottlers and the sale of
finished goods to distributors. Where the Company sells concentrate to
bottlers, the bottlers produce finished goods and sell through their own
distribution network. When the Company sells finished goods directly to
distributors, the Company has product produced for it by contract
manufacturers. The Company does not directly manufacture any of the
products it sells. The Company's products are retailed primarily in
grocery, convenience and liquor stores and food service accounts.
Consumer marketing consists of newspaper, magazine, outdoor, and radio
advertising, along with in-store product demonstrations and point of sale
advertising. The Company presently sells product to numerous bottlers and
distributors in the United States and Western Canada.
Competition: The soft drink business is extremely competitive and there
are numerous competing products. Most competitors are larger and have
greater financial resources than the Company. The Company's principal means
for competing within this category are with its product line and flavors and
through its advertising, packaging and promotions.
Trademarks: The Company owns the trademark "San Francisco Seltzer" which
was registered with the United States Patent and Trademark Office on March
1, 1988. The Company also owns the trademark "Fountain Classics" which
is used on the Stewart's Premium Sodas line of products. The "Fountain
Classics" trademark was registered with the United States Patent and Trademark
Office on June 18, 1991. The Company owns the trademark "Aspen" which was
-4-
<PAGE>
registered on May 31, 1994 with the United States Patent and Trademark Office.
The foregoing trademarks are registered for a 10-year period and may be
extended thereafter for additional 10-year periods subject to compliance with
federal statutory and regulatory provisions. Management is of the view that its
trademarks are of significant importance to its operations and loss of such
trademarks could adversely affect the Company to an indeterminable extent.
The Company is taking appropriate steps to protect its trademarks. Stewart's
Restaurants, Inc. owns the trademark "Stewart's" which is registered with
the United States Patent and Trademark Office. The Company has an exclusive
trademark license agreement with Stewart's Restaurants. (See "Proprietary
Products Marketing - General".)
On March 9, 1995, the Company filed an Intent to Use trademark application
with the United States Patent and Trademark Office for the mark "Aspen
Extreme". It will be several months before the Company learns if this
application will be approved by the United States Patent and Trademark
Office.
Wholesale Distribution - Divested on June 7, 1993
General: From 1987 until 1993, the Company was also engaged in the business
of wholesale distribution of beverages. The Company entered into the
business of wholesale distribution of beverages through its former
subsidiary, Sheya Brothers Specialty Beverages, Inc. ("SBSB"), with the
acquisition of the assets and business of Sheya Bros. Dist., Inc. ("Sheya"), a
distributor of non-alcoholic beverages, on June 30, 1987. On June 2, 1989,
the Company acquired a beer distributor, Arrowood Distributing, Inc.
("Arrowood") of Denver, Colorado, through its subsidiary SBSB. Both Sheya
and Arrowood were located in Denver, Colorado. Through SBSB, the Company
distributed soft drinks, beer, juices and water products in the Denver
metropolitan area. As described below, the Company divested SBSB during 1993.
Merger - SBSB into AMCON Distributing Company
On June 7, 1993, the Company's wholly-owned subsidiary, SBSB, was merged
into AMCON Distributing Company ("AMCON"), a privately-held, Omaha-based
wholesale distributor.
In connection with the merger of SBSB into AMCON, the Company received
306,143 shares of common stock of AMCON which it held as an investment.
Pursuant to the Agreement and Plan of Merger with AMCON, on July 31, 1995, the
Company distributed 266,469 AMCON shares to shareholders of the Company on a
prorata basis. As of December 31, 1995, the Company held 39,674 shares of
AMCON.
Seasonality:
Due to the seasonality of the beverage industry, the Company's sales volumes
are normally at their highest in the second and third calendar quarters.
-5-
<PAGE>
Prospective Products and Acquisition Activities:
The Company continues to develop line extensions under its various brand
names, primarily by adding new packages and flavors. As described above,
the Company introduced the following new products during 1995: Stewart's
Country Orange N' Cream, an orange flavored carbonated soft drink; Aspen
Extreme, a line of non-carbonated, fruit flavored beverages; and Aspen
Spring Water, a non-carbonated spring water. The Company also intends to
expand into beverage products that are compatible with its existing brands
and can be sold through the Company's existing bottling and distribution
network.
The Company is not currently contemplating any acquisitions, although it may
consider potential acquisitions in the future.
Major Customers:
For the year ended December 31, 1995, and for the comparable twelve months
ended December 31, 1994, two customers, K.O. Lester Company, Lebanon, TN and
Mid-State Beverage Company, New Brunswick, NJ, each accounted for
approximately 20% of the Company's net sales.
Company Employees:
As of December 31, 1995, the Company and its subsidiary had 13 employees. In
addition, the Company has used certain consultants on an "as needed" basis.
ITEM 2. PROPERTIES.
- - --------------------
The Company is currently leasing, through December 1996, approximately 3,024
square feet of office space at 717 17th Street, Denver, Colorado 80202,
at an annual cost of approximately $33,000.
ITEM 3. LEGAL PROCEEDINGS.
- - ---------------------------
The Company and its subsidiaries are not parties to, nor are any of their
properties subject to, any pending legal proceedings which are expected
to have any materially adverse effect on the Company's results of operations
or financial position. Additionally, to the best of management's knowledge,
no material legal proceeding is contemplated or has been threatened against
the Company and its subsidiaries.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS.
- - ----------------------------------------------------
There were no matters submitted to a vote of all security holders during the
quarter ended December 31, 1995.
-6-
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND
RELATED STOCKHOLDER MATTERS.
- - -----------------------------------------------------
The Company's Common Stock trades on the NASDAQ Small-Cap Market under the
symbol DRNK. The following table reflects the range of the high and low
bid prices per share of the Company's Common Stock as reported by NASDAQ
through December 31, 1995. These quotations represent inter-dealer
quotations, without adjustment for retail mark-ups, mark-downs or commissions
and may not necessarily represent market transactions. As of March 27, 1996,
the Company had approximately 1,144 holders of record of its shares and the
Company is informed that approximately 1,600 additional persons hold shares
beneficially.
<TABLE>
<CAPTION>
COMMON STOCK
High Low
<S> <C> <C>
Year Ended December 31, 1995:
December 1995 Quarter $1.66 $1.19
September 1995 Quarter 1.81 1.38
June 1995 Quarter 2.00 1.09
March 1995 Quarter 1.41 1.00
Year Ended December 31, 1994:
December 1994 Quarter $1.63 $1.00
September 1994 Quarter 1.81 .72
June 1994 Quarter .81 .56
March 1994 Quarter .78 .53
</TABLE>
The Company has never declared or paid a cash dividend on its common stock and
does not anticipate a change in this policy in the foreseeable future. The
Board of Directors currently intends to retain earnings to finance the
acquisition and development of new products, expansion of markets and for
other corporate purposes.
ITEM 6. SELECTED FINANCIAL DATA.
- - ---------------------------------
The following data, insofar as they relate to the fiscal years ended December
31, 1995 and 1994; the six-month period ended December 31, 1993; and the
fiscal year ended June 30, 1993 (except for the balance sheet data as of
December 31, 1993 and June 30, 1993, 1992 and 1991), have been derived
from the consolidated financial statements appearing elsewhere herein,
including the Consolidated Balance Sheet as of December 31, 1995 and 1994; and
the related Consolidated Statement of Operations for each of the two years in
the period ended December 31, 1995; the six-months ended December 31, 1993;
and the year ended June 30, 1993, and notes thereto. The consolidated
statement of operations data for the fiscal years ended June 30, 1992 and
1991; and the consolidated balance sheet data as of December 31, 1993 and
June 30, 1993, 1992 and 1991 have been derived from the historical
consolidated financial statements of the Company for such periods.
-7-
<PAGE>
The following table data should be read in conjunction with the consolidated
financial statements and notes thereto.
<TABLE>
<CAPTION>
SIX-MONTHS
ENDED
DECEMBER
YEAR ENDED DECEMBER 31, 31(1) YEAR ENDED JUNE 30,
----------------------- -------- ----------------------------
1995 1994 1993 1993 1992 1991
---------- ---------- ---------- ----------- ----------- -----------
STATEMENT OF OPERATIONS DATA:
<S> <C> <C> <C> <C> <C> <C>
Revenue $12,843,620 $8,322,301 $3,030,982 $15,537,997 $14,838,598 $12,071,976
=========== ========== ========== =========== =========== ===========
Income
(loss)
before
extra-
ordinary
credit $882,600 $721,695 $143,449 $(348,176) $(29,384) $(486,164)
======== ======== ======== ========== ========= ==========
Net income
(loss) $882,600 $721,695 $143,449 $(348,176) $(22,384) $(486,164)
======== ======== ======== ========== ========= ==========
Earnings
(loss) per
common share:
Income (loss)
before extra-
ordinary
credit $ .10 $ .09 $ .02 $ (.05) $ $ (.08)
====== ======= ====== ======= ======= =======
Net income
(loss) $ .10 $ .09 $ .02 $ (.05) $ $ (.08)
====== ======= ====== ======= ======= =======
Weighted
average
common
and
equivalent
shares
outstanding 8,948,449 8,318,909 7,796,799 7,640,780 7,057,416 6,206,726
========= ========= ========= ========= ========= =========
<CAPTION>
BALANCE SHEET DATA:
<S> <C> <C> <C> <C> <C> <C>
Total assets $5,360,700 $4,448,832 $3,920,799 $4,054,120 $5,266,381 $4,367,767
========== ========== ========== ========== ========== ==========
Long-term
debt $ 0 $ 5,970 $ 10,099 $ 2,817 $ 108,476 $ 200,427
========== ========= ========= ========== ========= =========
Stockholders'
equity $4,402,421 $3,944,778 $3,096,886 $2,953,347 $3,066,613 $1,987,097
========== ========== ========== ========== ========== ==========
</TABLE>
The above selected consolidated financial data contain certain
reclassifications in prior year financial data to conform to the current year
presentation and should be read in conjunction with the Consolidated
Financial Statements and related notes thereto and management's commentary
thereon contained in Item 7 of this report.
(1) See the discussion in Note 1 to the Consolidated Financial Statements
under "Change in Fiscal Year".
-8-
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
- - -----------------------------------------------------------
GENERAL
- - -------
The Company entered into the business of non-alcoholic beverage marketing
and wholesale distribution in fiscal 1988 when it acquired the assets
and businesses of Old San Francisco Seltzer, Inc. and Sheya Bros. Dist., Inc.
respectively. During fiscal 1990, the Company added Stewart's Root Beer and
Aspen Sparkling Mountain Spring Water to the proprietary brands that it
markets nationally.The Company also expanded its business into the wholesale
distribution of beer and malt beverages in the metro Denver area with the
acquisition of Arrowood Distributing, Inc. on June 2, 1989. On June 7,
1993, the Company's distribution subsidiary was merged into a non-affiliated
entity, AMCON Distributing Company of Omaha, Nebraska.
The Company has continued to experience growth of its line of Stewart's soft
drinks (Root Beer, Orange N' Cream, Cream Ale and Ginger Beer). Stewart's
soft drinks are currently sold in over 40 states and western Canada. In
December 1993, the Company entered into a licensing agreement with
Stewart's Restaurants, Inc., whereby the Company has the exclusive right
to sell Stewart's brand beverages as a fountain product in 15 states. The
Company is currently test marketing Stewart's fountain beverages in selected
markets.
FINANCIAL CONDITION
- - -------------------
The Company's current ratio at December 31, 1995 is 4.0 to 1 as compared to
4.06 to 1 at December 31, 1994.
Stockholders' equity at December 31, 1995 increased by $457,643 as a result
of net income for the year ended December 31, 1995 and the issuance of
common stock, and was partially offset by the disbursement of the AMCON
stock dividend.
LIQUIDITY AND CAPITAL RESOURCES
- - -------------------------------
For the year ended December 31, 1995, cash decreased by $4,467. Operating
activities used cash of $384,123 primarily as a result of the following:
increases in inventory and accounts receivable of $1,209,320 and $401,554,
respectively; increases in accounts payable and other current liabilities of
$276,716 and $186,308, respectively; and, net income of $882,600 adjusted for
depreciation and amortization charges, the loss recorded on the investment in
AMCON, and the release of the deferred tax asset valuation allowance of
$66,388, $848,342, and $953,243, respectively. Investing activities provided
cash of $14,004, primarily from the proceeds of short-term investments, less
cash used for the acquisition of property and equipment. Financing activities
generated $365,652, primarily from the exercise of stock options and warrants.
Working capital increased $1,346,407 to a ratio of 4.0 to 1.
-9-
<PAGE>
For the comparable twelve month period ended December 31, 1994, operating and
financing activities generated $340,269 and $55,858, respectively and
investing activities used $188,652 for a net increase in cash of $207,475.
The Company intends to utilize cash from operations to meet its ongoing
obligations. The Company has also established a bank line of credit in the
amount of $500,000 which it may utilize from time to time to meet seasonal
cash needs. Management does not expect liquidity problems during 1996
assuming the Company can maintain or exceed its current sales volume, and
expenses as a percentage of sales remain relatively constant.
RESULTS OF OPERATIONS
- - ---------------------
Comparison of the year ended December 31, 1995 to the comparable twelve
month period ended December 31, 1994:
The Company had net income of $882,600 for the year ended December 31, 1995
versus net income of $721,695 for comparable twelve month period ended
December 31, 1994. The following table reflects certain financial information
for the Company for the year ended December 31, 1995 and for the comparable
twelve month period ended December 31, 1994:
<TABLE>
<CAPTION>
1995 1994
----------- ----------
<S> <C> <C>
Revenue $12,843,620 $8,322,301
Cost of goods sold 9,619,160 6,030,547
General and administrative expense 811,108 710,920
Selling expense 1,400,222 804,687
Depreciation and amortization 66,388 57,485
Other (income) expense 798,051 (18,133)
Net income 882,600 721,695
</TABLE>
Revenue from the sale of products increased to $12,843,620 in 1995 from
$8,322,301 in 1994. This increase of $4,521,319 or 54% was due primarily
to an expanded customer base for the Stewart's brand products.Cost of
goods sold was $3,588,613 greater in 1995 than in 1994 due to higher revenue.
The cost of goods sold as a percentage of sales, however, increased from 73%
to 75% primarily due to increased costs of product sold.
General and administrative expense increased $100,188 from 1994 to 1995, but
decreased as a percentage of total revenue from 9% to 6%. This percentage
decrease is primarily a result of increased sales with nominal increases in
corporate overhead.
-10-
<PAGE>
Selling expense increased $595,535 from 1994 to 1995, and increased as a
percentage of sales from 10% to 11%. The increase is primarily due to
increased promotional expenses used to introduce new brands and products,
and the addition of two new sales representatives during 1995.
Net income was impacted in the year 1995 by two non-recurring and unrelated
items: a write-down of an investment and the recording of a deferred income
tax benefit. During the third quarter 1995, the Company wrote-down its
investment in AMCON Distributing Company, Inc. to the market price of
AMCON common stock as reported by NASDAQ on August 4, 1995, the date upon
which the stock was initially included on NASDAQ. The write-down resulted in
a charge of $848,342.
During the third quarter of 1995, the Company recorded an income tax benefit
of $936,440 which primarily represents the future tax benefits associated
with the Company's net operating loss carryforwards. The Company recorded
the tax benefit based on management's determination in the third quarter that
it was more likely than not that the Company would utilize its future income
tax benefits.
Comparison of the year ended December 31, 1994 to the comparable twelve month
period ended December 31, 1993:
- - -----------------------------------------------------------------------------
The Company had net income of $721,695 for the year ended December 31, 1994
versus net income of $73,357 for the comparable twelve-month period ended
December 31, 1993.
Revenue from the sale of products increased to $8,322,301 in 1994 from
$5,733,993 in 1993. This increase of $2,588,308 or 45% was due primarily
to an expanded customer base for the Stewart's brand products.
Cost of goods sold was $1,629,985 greater in 1994 than in 1993 due to higher
revenue. The cost of goods sold as a percentage of sales, however,
decreased from 77% to 73% primarily due to a higher price per case sold.
General and administrative expense increased $80,213 from 1993 to 1994 and
decreased as a percentage of total revenue from 11% to 9%. The decrease
is primarily a result of increased sales with nominal increases in corporate
office personnel.
Selling expense increased $196,130 from 1993 to 1994, and decreased as a
percentage of sales from 11% to 10%. The decrease is primarily due to
increased sales with nominal increases in sales personnel.
-11-
<PAGE>
Comparison of the six-month periods ended December 31, 1993 to December
31, 1992:
- - ------------------------------------------------------------------------
The Company had net income of $143,449 for the six-months ended December 31,
1993 versus a net loss of $263,789 for the same period in the prior year.
Since the Company had significant changes in its operations from the
disposition of its former wholly-owned subsidiary, SBSB, a comparison of
the two periods has been made excluding the results of SBSB for the six-month
period ended December 31, 1992. The following table reflects certain
financial information for the Company for the six-months ended December 31,
1993 and unaudited financial information for the Company, exclusive of the
SBSB operations, for the six-month period ended December 31, 1992:
<TABLE>
<CAPTION>
1993 1992
---------- ----------
<S> <C> <C>
Revenue $3,030,982 $2,785,069
Cost of goods sold 2,243,835 2,005,470
General and administrative expense 299,283 392,849
Selling expense 334,937 359,493
Depreciation and amortization 24,481 25,898
Other (income) expense (15,003) (11,770)
Net income 143,449 13,129
</TABLE>
Revenue from the sale of products increased to $3,030,982 in 1993 from
$2,785,069 in 1992. This increase of $245,913 or 9% was due primarily to an
expanded customer base for the Stewart's brand products.Cost of goods sold
was $238,365 greater in 1993 than in 1992 due to higher revenue. The
cost of goods sold as a percentage of sales, however, increased from 72%
to 74% primarily due to higher sales of proprietary products sold as
finished goods versus concentrate in 1993 as compared to 1992.
General and administrative expense decreased $93,567 from 1992 to 1993 and
decreased as a percentage of total revenue from 14% to 10%. The decrease is
primarily a result of reductions in corporate office personnel and other
corporate related expenses.
Selling expense decreased $24,556 from 1992 to 1993, and decreased as a
percentage of sales from 13% to 11%. The decrease is primarily due to a
reduction in sales personnel and the elimination of selected promotional
programs in 1993.
Interest expense decreased $11,086 from 1992 to 1993, as the Company paid off
its note to individual lenders of $150,000 in June of 1993.
UNCERTAINTIES THAT MAY AFFECT FUTURE RESULTS
- - --------------------------------------------
The Company's future operating results are subject to a number of
uncertainties, including the ability of the Company to market its beverage
products and to develop and introduce new products; and the number, quantity
-12-
<PAGE>
and marketing forces behind products introduced by competitors. The Company
expects the level of competition in the beverage industry to become even more
intense and large beverage companies with greater resources have a
competitive advantage over the Company. In addition, general economic
conditions, the cost of raw materials and general conditions in the beverage
business may have an impact on the Company's future operations. There can be
no assurance the Company will continue to be successful nor that it will not
encounter difficulties in retaining its current market niche due to a variety
of factors such as market acceptance, costs of manufacturing and marketing,
and competition in the beverage industry, all of which are largely beyond the
Company's ability to reasonably predict, much less control.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- - ------------------------------------------------------
See financial statements listed in the index on page F1.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.
- - -----------------------------------------------------------
None.
-13-
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT.
- - --------------------------------------------------
MANAGEMENT
- - ----------
Directors and Executive Officers
The executive officers and directors of the Company are as follows:
<TABLE>
<CAPTION>
Year Became
Name Age Director Position
- - ------------------- ----- ------------ ---------------------
<S> <C> <C> <C>
Samuel M. Simpson 43 1986 President, Director
James P. McCloskey 45 1992 Director
William H. Rutter 44 1995 Director
Myron D. Stadler 29 N/A Chief Accounting Officer
</TABLE>
Set forth below is certain information regarding the directors and executive
officers:
Samuel M. Simpson has been President, Chief Executive Officer and a director
of the Company since 1986. He has served as Chairman of the Board since
1992. He was employed as a consultant to reorganize the Company during 1983
prior to joining the Company first as its Vice President in 1984 and later as
its President and Chief Executive Officer in 1986. From 1979 to 1984 Mr.
Simpson was President of Energy Prospects, Inc. a Denver based privately
owned oil and gas company.
James P. McCloskey has been a director of the Company since 1992. From April
1994 to February 1996, Mr. McCloskey was the Chief Financial Officer for
Avalon Software Company, in Tucson, Arizona. From 1988 until April 1994, he
was Chief Financial Officer of the Famous Amos Chocolate Chip Cookie
Corporation, San Francisco, California. From 1985 to 1988 he was Chief
Financial Officer and President, respectively, of the William J. Ash
Corporation and The James P. McCloskey Corporation, Denver, Colorado, both
privately owned real estate development companies. Mr. McCloskey is a
certified public accountant.
William H. Rutter is a private investor and has been a director of the Company
since 1995. From 1991 to 1993, Mr. Rutter was the president of Capstone
Management Corporation which owns and operates restaurants in the Denver area.
From 1984 to 1990, he was a partner in Sherman & Howard, a Denver, Colorado
law firm.
-14-
<PAGE>
Myron D. Stadler has been employed by the Company since 1992 and was elected
Chief Accounting Officer and Secretary in 1995. Prior to 1992, Mr. Stadler
was a financial analyst for the City and County of Denver at Stapleton
International Airport.
ITEM 11. EXECUTIVE COMPENSATION.
- - ---------------------------------
The following table provides summary information concerning compensation paid
to or earned by the Company's Chief Executive Officer for the years ended
December 31, 1995 and 1994, the six-month period ended December 31, 1993
and for the fiscal years ended June 30, 1993, and 1992. No other employee
earned a salary and bonus which exceeded $100,000.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION
--------------------
Long-Term Compensation
-------------------------
Annual Compensation Awards Payouts
Name & ------------------- --------------- --------
Principal Other Annual Restricted LTIP All Other
Position Year Salary Bonus Compensation(1) Stock Options # Payouts Comp.
- - -------- ---- ------ ----- -------------- ----- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Samuel M.
Simpson 1995 $120,000 $75,000 $0 $0 0 $0 $0
President
& Chairman 1994 115,137 40,000 0 0 0 0 0
of the
Board 1993* 64,700 12,500 0 0 0 0 0
1993 112,900 0 0 0 0 0 0
</TABLE>
(1) As permitted by Commission rules, no amounts are shown for certain
perquisites, where such amounts do not exceed the lesser of 10% of bonus
plus salary or $50,000.
* For the six-months ended December 31, 1993.
-15-
<PAGE>
The following table provides information with respect to the Chief
Executive Officer, concerning unexercised stock options held as of
December 31, 1995.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR END OPTION VALUES
<TABLE>
<CAPTION>
# Of
Unexercised Value of Unexercised
Shares Options at In-The-Money-Options
Acquired On Value Dec. 31, 1995 At Dec. 31, 1995
Name Exercise (#) Realized All Exercisable All Exercisable(1)
<S> <C> <C> <C> <C>
Samuel M.
Simpson
President &
Chairman of
the Board 0 $0 301,666 $470,599 (1)
</TABLE>
(1) Based on the closing bid price of the Company's common stock at December
29, 1995 as reported by the NASDAQ system.
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
---------------------------------
Number of % Of Total
Securities Options
Underlying Granted to Exercise or Grant Date
Options Employees in Base Price Present
Name Granted (#) Fiscal Year ($/Sh) Expiration Date Value $
<S> <C> <C> <C> <C> <C>
Simpson,
Samuel M. 100,000 32% $1.25 12/31/99 $1.19
Stadler,
Myron D. 10,000 3.2% $1.10 12/31/98-12/31/01 $1.13
Stadler,
Myron D. 25,000 8% $1.25 12/31/99-12/31/02 $1.19
</TABLE>
Compensation Pursuant to Plans
- - ------------------------------
The Company presently has no proposed compensation plans such as pension,
profit sharing, retirement plans, or other similar forms of executive
compensation.
Employment Agreement
- - --------------------
The Company's President and Chief Executive Officer, Samuel M. Simpson, has
an employment agreement with the Company which currently runs through
December 31, 1998.
Directors
- - ---------
The Company compensates outside directors at the rate of $1,000 per quarter
plus direct expenses associated with attending meetings. The Board of
Directors does not have committees.
-16-
<PAGE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT.
- - ----------------------------------------------------------
The table below sets forth information as of March 27, 1996 with respect to
beneficial ownership of the Common Stock by all directors and officers,
both individually and as a group, and by each person known by the Company
to be the beneficial owner of more than five percent of the outstanding
shares of the Common Stock. As of March 27, 1996 the Company had 8,658,349
shares of common stock outstanding.
<TABLE>
<CAPTION>
Amount and Nature of Percent of
Name Beneficial Ownership(1) Class Owned
- - ----------------------- ----------------------- -----------
Officers & Directors
- - --------------------
<S> <C> <C>
Samuel M. Simpson 1,239,877 13.84%
James P. McCloskey 100,000 1.14%
William H. Rutter 723,732 8.31%
Myron D. Stadler 50,000 0.57%
Officers and Directors
as a Group (4 persons) 2,113,609 23.07%
=========
5% Shareholders
- - ---------------
None
</TABLE>
(1) Includes presently outstanding options to purchase shares of the
Company's Common Stock held by each of the foregoing.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- - ---------------------------------------------------------
AMCON Distributing Company
- - --------------------------
During 1995, the Company distributed 266,469 shares of AMCON common stock as a
dividend to the Company's shareholders of record as of July 5, 1995. This
distribution of 266,469 shares of AMCON represented 87% of the Company's
holdings in AMCON. At December 31, 1995, the Company holds 39,674 shares
of AMCON common stock.
-17-
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND
REPORTS ON FORM 8-K.
- - -----------------------------------------------------
(a) The following documents are filed as a part of this report:
Financial Statements and Financial Statement Schedules
- - ------------------------------------------------------
The financial statements and financial statement schedules filed with this
report are listed in the Index to Financial Statements appearing on page F1.
Exhibits
- - --------
The documents listed below have been filed as exhibits to this report:
Exhibit Number Exhibits
(3)-A Certificate of Incorporation, as amended (Filed as Exhibit
(3) with and incorporated by reference from Form 10-K dated
October 9, 1987)
(3)-B Certificate of Amendment - July 20, 1989, changing name *
(3)-C Bylaws, as amended (Filed as Exhibit (3) with and
incorporated by reference from Form 10-K dated October 9,
1987)
(10)-G Stewart's Master Agreement - Stewart's Restaurants, Inc. as
amended by Addendum, dated April 11, 1994 and incorporated
by reference from Form 10-K dated May 4, 1994
(10)-O Agreement and Plan of Merger - AMCON Distributing
Company -incorporated by reference to Form 10-Q ended
December 31, 1992 - SEC File No. 0-14784 filed on or about
February 14, 1993
(10)-P Supplemental Agreement - AMCON Distributing Company -
incorporated by reference to Form 10-Q ended December 31,
1992 - SEC File No. 0-14784 filed on or about February 14,
1993
-18-
<PAGE>
Exhibit Number Exhibits
(10)-Q Articles of Merger (Colorado) - Sheya Brothers Specialty
Beverages, Inc. into AMCON Distributing Company -
incorporated by reference to Form 8-K filed June 8, 1993 -
SEC File No. 0-14784
(10)-R Certificate of Merger (Delaware - Sheya Brothers Specialty
Beverages, Inc. into AMCON Distributing Company) and
incorporated by reference to Form S-1, Post-Effective
Amendment 1, filed September 2, 1993, SEC file #33-47771
(10)-S Employment Agreement with executive, Samuel M. Simpson
(21) Subsidiaries of the Company (Filed as Exhibit (22) with
and incorporated by reference to the current Form 10-K,
Note 1to the Consolidated Financial Statements.)
* Incorporated by reference to Form S-1 filed September 25, 1989, SEC file
#33-30480.
(b) Reports on Form 8-K
None.
-19-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, Cable Car Beverage Corporation has duly caused this report
to be signed on its behalf by the undersigned, hereunto duly authorized.
(Registrant) CABLE CAR BEVERAGE CORPORATION
(Date) March 27, 1996
BY (Signature) /s/Samuel M. Simpson
(Name and Title) Samuel M. Simpson, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
BY (Signature) /s/Samuel M. Simpson
(Name and Title) Samuel M. Simpson, Chairman of the Board & President
(Date) March 27, 1996
BY (Signature) /s/James P. McCloskey
(Name and Title) James P. McCloskey, Director
(Date) March 27, 1996
BY (Signature) /s/William H. Rutter
(Name and Title) William H. Rutter, Director
(Date) March 27, 1996
BY (Signature) /s/Myron D. Stadler
(Name and Title) Myron D. Stadler, Chief Accounting Officer
(Date) March 27, 1996
-20-
<PAGE>
CABLE CAR BEVERAGE
CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS
PAGE
Report of independent accountants F2
Consolidated balance sheet at December 31, 1995,
and 1994 F3
Consolidated statement of operations for the years ended
December 31, 1995 and 1994, six months ended December 31,
1993 and the year ended June 30, 1993 F4
Consolidated statement of cash flows for the years ended
December 31, 1995 and 1994, six months ended December 31,
1993 and the year ended June 30, 1993 F5
Consolidated statement of changes in stockholders'
equity for the years ended December 31, 1995 and 1994, six
months ended December 31, 1993 and the year ended June 30,
1993 F6
Notes to consolidated financial statements F7
No financial statement schedules are required.
-F1-
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
and Stockholders of Cable
Car Beverage Corporation
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the financial
position of Cable Car Beverage Corporation and its subsidiaries (the
"Company") at December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years ended December 31, 1995 and
1994, the six-months ended December 31, 1993 and for the year ended June
30, 1993, in conformity with generally accepted accounting principles.
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 audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
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, assessing the
accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for the opinion
expressed above.
PRICE WATERHOUSE LLP
Denver, Colorado
March 21, 1996
-F2-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEET
--------------------------
December 31, December 31,
1995 1994
------------ ------------
ASSETS
------
CURRENT ASSETS
Cash and cash equivilants $576,191 $580,658
Short-term investments 0 151,876
Accounts receivable, net of allowance for
doubtful accounts of $55,949 at Dec. 31,
1995 and $59,611 at Dec. 31, 1994 1,063,040 657,824
Inventories 1,808,257 598,937
Prepaid expenses and other current assets 40,394 32,374
Deferred income tax assets 340,389 0
--------- ---------
Total current assets 3,828,271 2,021,669
PROPERTY AND EQUIPMENT, NET
Property and equipment less accumulated
depreciation of $99,231 at Dec. 31, 1995
$71,670 at Dec. 31, 1994 116,466 46,155
OTHER ASSETS
Goodwill and other intangibles, less
accumulated amortization of $347,007 at
Dec. 31, 1995 and $308,180 at Dec. 31,
1994 631,426 630,253
Investment in AMCON Distributing Co. 99,185 1,746,934
Other assets 72,498 3,821
Deferred income tax assets 612,854 0
---------- ----------
$5,360,700 $4,448,832
========== ==========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $380,198 $103,484
Other current liabilities 572,121 385,814
Current portion of long-term debt 5,960 8,786
-------- --------
Total current liabilities 958,279 498,084
-------- --------
LONG-TERM DEBT 0 5,970
-------- --------
STOCKHOLDER'S EQUITY
Common stock, $.01 par value;
25,000,000 shares authorized;
8,658,349 shares issued at Dec. 31,
1995, and 8,154,618 issued at
Dec. 31, 1994 86,584 81,547
Additional paid-in capital 9,502,877 9,133,464
Accumulated Deficit (5,158,405) (5,241,598)
Less-76,357 common shares in treasury (28,635) (28,635)
----------- -----------
4,402,421 3,944,778
----------- -----------
$5,360,700 $4,448,832
=========== ===========
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
-F3-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
------------------------------------
<TABLE>
<CAPTION>
YEAR SIX-MONTH YEAR
ENDED DECEMBER 31, ENDED ENDED
----------------------- DECEMBER 31, JUNE 30,
1995 1994 1993 1993
------------ ----------- ------------ ----------
<S> <C> <C> <C> <C>
REVENUE:
Sales $12,843,620 $8,322,301 $3,030,982 $15,537,997
COST AND EXPENSES:
Cost of goods sold 9,619,160 6,030,547 2,243,835 12,168,477
General and administrative 811,108 710,920 299,283 1,011,203
Selling and distribution 1,400,222 804,687 334,937 2,541,154
Depreciation and
amortization 66,388 57,485 24,481 167,063
----------- ---------- ---------- -----------
11,896,878 7,603,639 2,902,536 15,887,897
----------- ---------- ---------- -----------
INCOME FROM OPERATIONS 946,742 718,662 128,446 (349,900)
OTHER INCOME AND (EXPENSES):
Interest income and other
non-operating income 51,405 20,479 15,860 56,964
Interest expense (1,114) (2,346) (857) (55,240)
Loss on AMCON stock (848,342) 0 0 0
------------ ----------- ----------- ------------
INCOME (LOSS) BEFORE
INCOME TAXES 148,691 736,795 143,449 (348,176)
PROVISION (BENEFIT) FOR
INCOME TAXES (733,909) 15,100 0 0
------------ ----------- ----------- ------------
NET INCOME (LOSS) $882,600 $721,695 $143,449 ($348,176)
=========== ========== ========== ============
NET INCOME (LOSS) PER
COMMON SHARE $0.10 $0.09 $0.02 ($0.05)
=========== ========== ========== ============
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES 8,915,666 8,318,909 7,796,799 7,640,780
</TABLE>
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
-F4-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
<TABLE>
<CAPTION>
SIX-MONTHS YEAR
YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, JUNE 30,
1995 1994 1993 1993
---------- --------- ----------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C> <C> <C>
Net income (loss) $882,600 $721,695 $143,449 ($348,176)
Adjustment to reconcile net
income (loss) to net cash
from operating activities:
Loss on investment in ANCOM 848,342
Depreciation and amortization 66,388 57,486 24,481 167,063
Provision for loss on
accounts receivable (3,662) 32,111 7,589 110,538
Change in current assets and
liabilities:
Accounts receivable (401,554) (163,477) 189,004 (317,348)
Inventories (1,209,320) (99,703) 105,139 20,954
Prepaid expenses and
other current assets (8,020) (21,359) (346) (16,323)
Other assets (68,677) 10,246 (13,299) (19,721)
Deferred income tax assets (953,243) 0 0 0
Accounts payable and
accrued liabilities 276,714 (269,146) (276,315) 183,446
Other current liabilities 186,308 72,416 (13,054) 140,409
--------- --------- --------- -------
NET CASH FROM OPERATING
ACTIVITIES: (384,124) (340,269) 166,648 (79,158)
---------- --------- --------- --------
<CAPTION>
CASH FLOWS FROM INVESTING ACTIVITIES:
<S> <C> <C> <C> <C>
Cash paid for short-term
investments (151,876)
Proceeds from short-term
investments 151,876 100,000
Cash paid for investment in
Amcon Distibution Co. (191,499)
Property and equipment
acquisitions (97,872) (24,276) (6,043) (66,991)
Other (40,000) (12,500) (16,750)
--------- --------- -------- ---------
NET CASH FROM INVESTING ACTIVITIES 14,004 (188,652) (22,793) (158,490)
--------- --------- -------- ---------
<CAPTION>
CASH FLOW FROM FINANCING ACTIVITIES:
<S> <C> <C> <C> <C>
Principle payments on debt (8,796) (11,339) (3,960) (213,381)
Proceeds from debt 150,000
Sale and issuance of stock
and/or warrents, net 374,449 67,197 235,000
------- -------- ------- -------
NET CASH FROM FINANCING ACTIVITIES 365,653 55,858 (3,960) 171,619
------- -------- ------- -------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALANTS (4,467) 207,475 139,895 (66,029)
CASH AND CASH EQUIVALANTS AT
BEGINNING OF PERIOD 580,658 373,183 233,288 299,317
------- ------- ------- -------
CASH AND CASH EQUIVALANTS AT
END OF PERIOD $576,191 $580,658 $373,183 $233,288
======== ======== ======== ========
</TABLE>
SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING AND INVESTING ACTIVITIES:
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Property dividend of investment in AMCON stock $799,407
Conversion of debt to equity $59,000
Capital lease obligations $7,000 $17,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
-F5-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------------------
COMMON STOCK TREASURY STOCK
--------------- ADDITIONAL ACCUMU- ----------------
NUMBER OF PAID-IN LATED NUMBER OF
SHARES AMOUNT CAPITAL DEFICIT SHARES AMOUNT
-------- ------ ------- ------- --------- ------
Balance,
June 30,1992 7,706,156 $77,062 $8,776,752 ($5,758,566) 76,357 ($28,635)
Sale and
issuance of
stock 167,000 1,670 233,330
Net loss (348,176)
--------- ------- ----------- ---------- ------- --------
Balance,
June 30,1993 7,873,156 78,732 9,010,082 (6,106,742) 76,357 (28,635)
Net income 143,449
--------- ------ --------- ---------- ------ --------
Balance,
Dec. 31,1993 7,873,156 78,732 9,010,082 (5,963,293) 76,357 (28,635)
Exercise of
stock options
and warrents,
net 131,462 1,315 65,882
Conversion of
debt to equity 100,000 1,000 58,000
Issuance of
stock to retire
warrents 50,000 500 (500)
Net Income 721,695
-------- ------- ---------- ---------- ------- -------
Balance,
Dec. 31,1994 8,154,618 81,547 9,133,464 (5,241,598) 76,357 (28,635)
Exercise of
stock options
and warrents,
net 503,731 5,037 369,413
Dividend of
AMCON stock (799,407)
Net income 882,600
--------- ------- ----------- ------------ ------ --------
Balance,
Dec. 31,1995 8,658,349 $86,584 $9,502,877 ($5,158,405) 76,357 (28,635)
========= ======= ========== ============ ====== ========
THE ACCOMPANYING NOTES ARE AN
INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS
-F6-
<PAGE>
CABLE CAR BEVERAGE CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - ORGANIZATION AND OPERATIONS AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES:
Organization and operations - Cable Car Beverage Corporation (the "Company"),
formerly Great Eastern International, Inc., was incorporated under the laws
of Delaware on April 1, 1968. The Company's name was changed from Great
Eastern International, Inc. to Cable Car Beverage Corporation on July 20,
1989.
Since 1987, the Company's primary business has been the marketing and
distribution of beverages and it has been engaged in the food and beverage
business since 1986.
Summary of significant accounting policies:
PRINCIPLES OF CONSOLIDATION - The Company's consolidated financial
statements include the accounts of its wholly-owned subsidiary Old San
Francisco Seltzer, Inc. ("SFS") and Fountain Classics, Inc. ("FCI"). All
significant intercompany accounts and transactions have been eliminated.
Prior to May 28, 1993, the Company's consolidated financial statements
included the accounts of its wholly-owned subsidiary, Sheya Brothers
Specialty Beverages, Inc. ("SBSB"). Effective June 7, 1993, SBSB was
merged into AMCON Distributing Company, a privately held, Omaha-based
wholesale distributor (see Note 2).
REVENUE RECOGNITION - Revenue from beverage finished product and
concentrate sales are recorded at the time of receipt and acceptance by the
customer.
CONCENTRATION OF CREDIT RISK - The Company's customers consist primarily of
beverage distributors. Financial instruments which potentially subject the
Company to concentrations of credit risk are primarily accounts receivable,
short-term investments and cash equivalents. The Company performs ongoing
credit evaluations of its customers' financial condition and generally
requires no collateral from its customers. The Company's sales to major
customers are discussed in Note 10. The Company has a cash investment
policy which generally restricts investments to ensure preservation of
principal and maintenance of liquidity.
INVENTORIES - Inventories are recorded at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
PROPERTY AND EQUIPMENT - Property and equipment, primarily consisting of
furniture and office equipment, is stated at cost and is generally
depreciated on a straight-line method over the estimated useful lives of
the respective depreciable assets of three to five years. Maintenance and
repairs are expensed as incurred and improvements are capitalized.
-F7-
<PAGE>
GOODWILL - Goodwill is recorded for the excess of the purchase price over
the fair value of net tangible assets acquired. Goodwill is amortized on a
straight-line basis over a 25-year period. The recoverability of goodwill
is assessed quarterly, based on undiscounted projected related revenue less
undiscounted related costs, with impairment loss recorded to the extend
such profits do not exceed the net carrying value of the goodwill.
INCOME (LOSS) PER COMMON SHARE - Income (loss) per common share is computed
under the treasury stock method using the weighted average number of common
shares and dilutive common stock equivalent shares outstanding during the
year. In net loss periods, common stock equivalent shares are excluded
because the effect is antidilutive.
CASH EQUIVALENTS - Generally, only highly liquid investments purchased with
original maturities of three months or less are considered to be cash
equivalents. Cash equivalents included in cash and cash equivalents at
December 31, 1995 and 1994 are certificates of deposit which aggregated
approximately $318,694 and $100,000, respectively. Cash equivalents are
carried at cost which approximates fair value.
SHORT-TERM INVESTMENTS - Short-term investments are stated at amortized
cost which, at December 31, 1995, approximates market value.
RECLASSIFICATIONS - Certain reclassifications have been reflected in the
prior year amounts to conform to the current period presentations.
CHANGE IN FISCAL YEAR END - During 1993, the Company elected to change its
year end from June 30 to December 31. The following table reflects certain
unaudited financial information for the Company for the year ended December
31, 1995 and for the comparable twelve month period ended
December 31, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
-----------------------------------------
<S> <C> <C> <C>
Revenue $ 12,843,620 $ 8,322,301 $ 5,733,993
Cost of goods sold 9,619,160 6,030,547 4,400,562
General and administrative expense 811,108 710,920 630,707
Selling and distribution expense 1,400,222 804,687 608,557
Net income 882,600 721,695 73,357
</TABLE>
SIGNIFICANT ESTIMATES - Certain estimates and assumptions that affect the
reported amounts of assets and liabilities, and the reported amounts of
revenue and expenses are made by management in the preparation of financial
statements in conformity with generally accepted accounting principles.
Actual results could differ from these estimates.
RECENTLY ISSUED ACCOUNTING STANDARD - In October 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting
Standards (SFAS ) No. 123, "Accounting for Stock-Based Compensation." SFAS
123, which is effective for fiscal years beginning after December 15, 1995,
encourages, but does not require, companies to recognize compensation
expense for the theoretical fair value of grants to employees of equity
instruments based on mathematical formulas. Companies that choose not to
adopt the new accounting rules will continue to apply the existing
-F8-
<PAGE>
accounting contained in Accounting Principles Board Opinion (APBO) No. 25,
"Accounting for Stock Issued to Employees." SFAS 123 requires companies
that choose not to adopt the new fair value accounting rules to disclose
the pro forma net income and earnings per share as if the fair value rules
had been adopted.
The Company will adopt SFAS 123 in 1996 and anticipates it will elect to
continue accounting for stock-based compensation in accordance with APBO 25
and provide the disclosures required by SFAS 123. Accordingly, the adoption
of SFAS 123 will not have any effect on the Company's consolidated
financial position or results of operations.
NOTE 2 - MERGER OF SHEYA BROTHERS SPECIALTY BEVERAGES, INC. AND INVESTMENT
IN AMCON STOCK:
On June 7, 1993, the Company merged its wholly-owned subsidiary, Sheya
Brothers Specialty Beverages, Inc. ("SBSB"), into AMCON Distributing
Company ("AMCON"), a privately held, Omaha-based wholesale distributor.
The measurement date for the transaction was May 28, 1993. In exchange for
the net assets of SBSB, the Company received 12.5% of the issued and
outstanding common stock of AMCON. As part of the transaction, the Company
agreed to distribute a minimum of two-thirds of the AMCON shares to its
shareholders, representing approximately an 8% ownership interest in AMCON.
Pursuant to a separate agreement, the Company also issued AMCON 167,000
shares of its restricted common stock and a warrant through May 28, 1996 to
purchase up to 100,000 shares of common stock at $1.50 per share. The
Company netted proceeds of $235,000 on the issuance of the stock, a portion
of which was used to pay a $150,000 note payable to a private investor.
AMCON has registration rights with respect to the purchased shares. During
1994, the warrant to purchase 100,000 shares of common stock was canceled
and returned to the Company.
During the third quarter of 1995, the Company wrote-down its investment in
to the market price of AMCON common stock as reported by NASDAQ on August
4, 1995, the date upon which the stock was initially included on NASDAQ,
which resulted in a charge of $848,342. The Company then distributed
266,469 shares of AMCON common stock as a dividend to the Company's
shareholders of record as of July 5, 1995. This distribution of 266,469
shares of AMCON represented 87% of the Company's holdings in AMCON. At
December 31, 1995, the Company continued to hold 39,674 shares of AMCON
common stock.
NOTE 3 - INVENTORIES:
Inventories consist of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Finished Goods $ 1,009,223 $ 398,470
Raw Materials 799,034 200,467
------------- ------------
$ 1,808,257 $ 598,937
============ ===========
</TABLE>
-F9-
<PAGE>
NOTE 4 - OTHER CURRENT LIABILITIES:
Other current liabilities consist of the following:
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------ ------------
<S> <C> <C>
Commitments for marketing and
promotional programs $ 218,621 $ 229,132
Unbilled inventory receipts 106,808
Bonuses 75,000
Travel and entertainment 53,500
Other, individually not material 118,192 156,682
---------- ----------
$ 572,121 $ 385,814
========== ==========
</TABLE>
NOTE 5 - LINE OF CREDIT:
During 1995, the Company obtained a $500,000 revolving line of credit
collateralized by the Company's accounts receivable and inventory. No
borrowings were outstanding under the line as of December 31, 1995.
Borrowings made under the agreement bear interest at a variable rate (9% at
December 31, 1995). The line of credit agreement also includes certain
financial and other covenants. The agreement is currently scheduled to
expire in June 1996.
NOTE 6 - INCOME TAXES:
The Company's net deferred income tax asset consists of the following:
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Net operating loss carryforwards $ 742,000 $ 951,000
Accrued liabilities and reserves 145,000 115,000
Other assets 45,000 51,000
Allowance for doubtful accounts 21,000 22,000
Less: Valuation allowance 0 (1,139,000)
----------- ------------
$ 953,000 $ 0
=========== ===========
</TABLE>
The net operating loss carryforwards are subject to certain annual
utilization limits. Previously, the Company had recorded a valuation
allowance equal to the deferred income tax assets due to management's
uncertainty about the likelihood that the Company would fully utilize these
benefits. However, it was determined by the Company during 1995 that,
based upon the Company's recent and expected future operating results, it
was then more likely than not that the Company would realize its future
income tax benefits. Based on this determination, the Company has released
the valuation allowance and provided an income tax benefit of $936,440
during 1995.
-F10-
<PAGE>
The provision (benefit) for income taxes is comprised of the following:
<TABLE>
<CAPTION>
December 31, 1995 December 31, 1994
----------------- -----------------
<S> <C> <C>
Current $ 219,000 $ 15,100
Deferred (953,000) 0
----------- ----------
$ (734,000) $ 15,100
=========== ==========
</TABLE>
For the six-months ended December 31, 1993 and the year ended June 30, 1993,
the Company had no provision (benefit) for income taxes.
The provision for income taxes differs from the amount computed by applying
the U.S. federal income tax rate of 34% to pretax earnings for the years
ended December 31, 1995 and 1994, the six-months ended December 31, 1993
and the year ended June 30, 1993 as follows:
<TABLE>
<CAPTION>
SIX-
YEAR YEAR MONTHS
ENDED ENDED ENDED YEAR
DECEMBER DECEMBER DECEMBER ENDED
31, 31, 31, JUNE 30,
-------- -------- -------- --------
1995 1994 1993 1993
-----------------------------------------
<S> <C> <C> <C> <C>
Income (loss) before income taxes $ 148,691 $737,000 $143,449 $(348,176)
======== ======== ======== ==========
U.S. federal income tax at
statutory rate $ 50,600 $251,000 $ 48,800 $(118,400)
Differences: State income taxes 5,200 6,400
Loss on dividend of AMCON stock 318,100
Increase (decrease) in
unrecognized net operating losses
and future deductions (1,139,000) (271,000) (53,400) 85,000
Non-deductible items
and other, net 31,100 35,100 (1,800) 33,400
----------- --------- -------- ---------
Provision for income taxes $ (734,000) $ 15,100 $ 0 $ 0
=========== ======== ======= =========
</TABLE>
As of December 31, 1995, the Company has net operating loss carryforwards
of approximately $1,978,000 which expire from 1997 through 2005. Pursuant
to Section 382 of the Internal Revenue Code, the Company is limited in the
amount of net operating loss carryforwards it may use each year to offset
taxable income. The Company's consolidated Section 382 annual limitation
is approximately $343,000.
-F11-
<PAGE>
NOTE 7 - OPTIONS AND WARRANTS:
The Company's stock option activity is as follows:
<TABLE>
<CAPTION>
OPTION
NUMBER PRICE PER EXERCISABLE
OF SHARES SHARE THROUGH
--------- ----------- -----------
<S> <C> <C> <C>
Outstanding at June 30, 1992 750,329 $.45 - $3.00 December 1996
Granted in June 1993 70,000 $.75 June 1996
Expired during 1993 (60,333) $.45 - $1.00
--------
Outstanding at June 30, 1993 759,996 $.45 - $3.00 December 1996
Granted in December 1993 465,000 $.70 - $.75 December 1996
------- through
December 2003
Outstanding at December 31,
1993 1,224,996 $.45 - $3.00 December 2003
Granted in May 1994 100,000 $.75 December 1996
through
December 2001
Exercised in June 1994 (110,000) $.45
Expired/Cancelled in 1994 (15,000) $.75
---------
Outstanding at December 31,
1994 1,199,996 $.45 - $3.00 December 2003
---------
Granted in March 1995 40,000 $1.10 December 1995
through
December 1998
Granted in December 1995 272,500 $1.25 December 1996
through
December 1999
Exercised in February 1995 (35,000) $.67
Exercised in June 1995 (66,666) $.45 - $.75
Expired/Cancelled in 1995 (275,000) $.75
Outstanding at December 31,
1995 1,135,830 $.45 - $3.00 December 2002
=========
Options Exercisable at
December 31, 1995 973,330 $.45 - $3.00
=========
</TABLE>
See Note 9 relating to the Company's wholly-owned subsidiary, Fountain
Classics, Inc.
-F12
<PAGE>
During 1995, 100,000 warrants which were previously issued to an
underwriter were exercised. These warrants were issued at an exercise
price of $1.20 per share and were exercised at $1.18 per share based on
adjustments for certain antidilution provisions.
On January 4, 1991, in connection with a loan received by the Company, the
Company sold warrants for $3,000 that gave the holder the right to
purchase, through January 1996, 300,000 shares of the Company's Common
Stock at an exercise price of $.67 per share. During 1995, the Company
reduced the exercise price from $.67 per share to $.62 per share and all
300,000 warrants were exercised for aggregate proceeds to the Company of
approximately $186,000.
NOTE 8 - COMMITMENTS:
The Company has commitments to lease office space through December 31,
1996. Rental expense of $39,139, $37,901, $9,729, and $255,871 has been
recognized for the years ended December 31, 1995 and 1994, the six-months
ended December 31, 1993 and the year ended June 30, 1993, respectively. At
December 31, 1995, the minimum annual rental commitments under noncancellable
operating leases were approximately $34,000 through the year 1996.
In addition to a lease for office space the Company has purchased, through
capital leases, certain equipment and software which it has reported as
long-term debt.
The Company has outstanding commitments to purchase raw materials
(primarily glass) which aggregate approximately $1.5 million at December
31, 1995.
NOTE 9 - STEWART'S LICENSING AGREEMENT
On December 1, 1993, the Company entered into a licensing agreement with
Stewart's Restaurants, Inc. whereby the Company has the exclusive right
to market Stewart's brand beverages as a fountain product in 15 Western
states. The licensing agreement provided for a licensing fee of $29,750
and a sliding scale royalty, with certain minimums to be paid quarterly
to maintain the agreement.
NOTE 10 - MAJOR CUSTOMERS:
Two customers each accounted for approximately 20% of net sales for the
years ended December 31, 1995 and 1994. One customer accounted for
approximately 25% of net sales for the six-months ended December 31, 1993.
No customer accounted for over 10% of net sales for the year ended June 30,
1993.
-F13-
<PAGE>
NOTE 11 - QUARTERLY INFORMATION (UNAUDITED) 1
The following interim financial information represents the 1995 and 1994
consolidated results of operations on a quarterly basis:
<TABLE>
<CAPTION>
Per Common Share
Quarter Gross Net Net
Ended Revenue Profit Income Income Income Income
- - -------------- ---------- ---------- -------- -------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
December 1995 $3,214,852 $ 699,116 $102,054 $102,054 $.01 $.01
September 1995 4,286,294 1,060,199 355,763 355,763 .04 .04
June 1995 3,453,111 957,094 322,001 322,001 .04 .04
March 1995 1,889,363 508,051 102,782 102,782 .01 .01
December 1994 1,796,626 455,152 73,129 73,129 .01 .01
September 1994 2,759,084 797,966 347,230 347,230 .04 .04
June 1994 2,521,483 706,949 259,079 259,079 .03 .03
March 1994 1,245,108 331,687 42,257 42,257 .01 .01
</TABLE>
1) The Unaudited Supplementary Financial Information was not reviewed by the
Company's independent accountants in accordance with standards established
for such reviews. Certain reclassifications were made in prior year
financial data to conform to the current year presentation.
-F14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> DEC-31-1995
<CASH> 576,191
<SECURITIES> 99,185
<RECEIVABLES> 1,118,989
<ALLOWANCES> 55,949
<INVENTORY> 1,808,257
<CURRENT-ASSETS> 3,828,271
<PP&E> 215,697
<DEPRECIATION> 99,231
<TOTAL-ASSETS> 5,360,700
<CURRENT-LIABILITIES> 958,279
<BONDS> 0
<COMMON> 8,658,349
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 5,360,700
<SALES> 12,843,620
<TOTAL-REVENUES> 12,843,620
<CGS> 9,619,160
<TOTAL-COSTS> 11,896,878
<OTHER-EXPENSES> 798,051
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,114
<INCOME-PRETAX> 148,691
<INCOME-TAX> (733,909)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 882,600
<EPS-PRIMARY> .10
<EPS-DILUTED> .09
</TABLE>
