<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________________________________________________
[X] QUARTERLY REPORT PURSUANT TO SECTION
13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For The Quarterly Period Ended September 30, 1996
___________________________________________________________
Commission File Number 0-16251
GALAXY FOODS COMPANY
(Exact name of registrant as specified in its charter)
Delaware 25-1391475
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2441 Viscount Row
Orlando, Florida 32809
(Address of principal executive offices) (Zip Code)
407-855-5500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for 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_____
On October 23, 1996, there were 55,225,372 Shares of Common
Stock, $.01 par value per Share, outstanding.
<PAGE>
GALAXY FOODS COMPANY
Index to Form 10-QSB
For Quarter Ended September 30, 1996
<TABLE>
<CAPTION>
PAGE NO.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
Statements of Operations 4
Statements of Stockholders' Equity 5
Statements of Cash Flows 6-7
Notes to Financial Statements 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-12
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 13-17
SIGNATURES 18
</TABLE>
<PAGE> 2
PART I. FINANCIAL STATEMENTS
GALAXY FOODS COMPANY
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
(unaudited) __________
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 579,440 $ 127,936
Marketable securities 2,044,949 --
Trade receivables, net 2,219,824 717,437
Inventories 1,708,831 1,188,674
Prepaid expenses 310,753 289,317
Total current assets 6,863,797 2,323,364
PROPERTY & EQUIPMENT, NET 6,075,612 5,286,452
OTHER ASSETS 498,634 422,156
TOTAL $ 13,438,043 $ 8,031,972
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable - trade $ 433,955 $ 283,527
Accrued liabilities 320,102 323,594
Current portion of note payable -- 63,451
Current portion of obligations
under capital leases 42,440 56,788
Total current liabilities 796,497 727,360
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion 41,814 35,926
Total liabilities 838,311 763,286
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Convertible preferred stock 40 --
Common stock 550,293 534,218
Additional paid-in capital 41,272,750 35,452,644
Accumulated deficit (16,451,151) (15,921,976)
25,371,932 20,064,886
Less: Notes receivable arising from
the exercise of stock options and
sale of common stock 12,772,200 12,796,200
Total stockholders' equity 12,599,732 7,268,686
TOTAL $ 13,438,043 $ 8,031,972
See accompanying notes to the financial statements.
</TABLE>
<PAGE> 3
GALAXY FOODS COMPANY
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
(unaudited) (unaudited)
1996 1995 1996 1995
<S> <C> <C> <C> <C>
NET SALES $ 5,133,456 $ 511,301 $ 8,488,436 $ 1,268,880
COST OF GOODS SOLD 4,279,885 612,963 7,231,501 1,284,627
Gross Margin 853,571 (101,662) 1,256,935 (15,747)
OPERATING EXPENSES:
Selling 475,122 308,258 840,079 500,828
Delivery 153,293 97,155 270,269 147,319
General and administrative 312,834 290,235 649,047 550,162
Research and development 47,062 13,788 105,603 43,211
Total 988,311 709,436 1,864,998 1,241,520
OPERATING LOSS (134,740) (811,098) (608,063) (1,257,267)
OTHER INCOME (EXPENSE):
Interest expense (2,303) (5,950) (9,881) (26,322)
Interest income 44,652 35,777 83,668 46,471
Other income 2,449 10,580 5,101 34,267
Total 44,798 40,407 78,888 54,416
NET LOSS (89,942) (770,691) (529,175) (1,202,851)
PREFERRED STOCK DIVIDENDS -- (69,801) -- (69,801)
NET LOSS APPLICABLE TO
COMMON STOCK $ (89,942) $ (840,492) $ (529,175) $ (1,272,652)
LOSS PER COMMON
SHARE $ 0.00 $ (.03) $ (.02) $ (.06)
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 34,459,093 27,602,795 34,302,404 21,838,551
</TABLE>
See accompanying notes to the financial statements.
<PAGE> 4
GALAXY FOODS COMPANY
Statements of Stockholders' Equity
<TABLE>
<CAPTION> Convertible
Common Stock Preferred Stock Additional Notes Rec &
Par Par Paid-In Accumulated Subs. for
Shares Value Shares Value Capital Deficit Common Stock Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1995 14,024,826 $ 140,248 -- $ -- $ 15,530,314 $ (12,501,401) $ (1,200,000) $ 1,969,161
Exercise of options 64,000 640 -- -- 31,360 -- (24,000) 8,000
Issuance of common stock
through Reg S offering 3,978,464 39,785 -- -- 1,780,393 -- -- 1,820,178
Issuance of convertible preferred
stock through Reg S offering -- -- 353,755 3,537 5,990,557 -- -- 5,994,094
Stock dividends paid 135,753 1,358 -- -- 136,619 (137,977) -- 0
Conversion of convertible preferred
stock into common stock 16,760,458 167,604 (353,755) (3,537) (164,067) -- -- 0
Reversal to unissued stock (4,153) (42) -- -- (5,928) -- -- (5,970)
Issuance of common stock
per employment agreement 18,000,000 180,000 -- -- 11,392,200 -- (11,572,200) 0
Issuance of common stock in
payment of consulting fees 200,000 2,000 -- -- 108,500 -- -- 110,500
Exercise of warrants 240,000 2,400 -- -- 181,850 -- -- 184,250
Issuance of common stock under
employee stock purchase plan 22,500 225 -- -- 11,025 -- -- 11,250
Issuance of warrants -- -- -- -- 459,821 -- -- 459,821
Net loss -- -- -- -- -- (3,282,598) -- (3,282,598)
Balance at March 31, 1996 53,421,848 $ 534,218 -- $ -- $ 35,452,644 $ (15,921,976) $(12,796,200) $ 7,268,686
Exercise of options 24,500 245 -- -- 12,005 -- -- 12,250
Issuance of common stock under
employee stock purchase plan 65,415 654 -- -- 68,686 -- -- 69,340
Collection of note receivable -- -- -- -- -- -- 24,000 24,000
Issuance of common stock
through Reg D offering 1,337,524 13,376 -- -- 1,846,095 -- -- 1,859,471
Issuance of convertible
preferred stock through
Reg D offering -- -- 4,000 40 3,733,901 -- -- 3,733,941
Issuance of warrants -- -- -- -- 57,500 -- -- 57,500
Exercise of warrants 180,000 1,800 -- -- 101,919 -- -- 103,719
Net loss -- -- -- -- -- (529,175) -- (529,175)
Balance at September
30, 1996 (unaudited) 55,029,287 $ 550,293 4,000 $ 40 $ 41,272,750 $ (16,451,151) $ (12,772,200) $ 12,599,732
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
GALAXY FOODS COMPANY
Statements of Cash Flows
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30,
(unaudited)
1996 1995
<S> <C> <C>
CASH FLOWS FROM/(USED IN)
OPERATING ACTIVITIES:
Net Loss $ (529,175) $ (1,202,851)
ADJUSTMENTS TO RECONCILE NET
LOSS TO NET CASH USED IN
OPERATING ACTIVITIES:
Depreciation expense 194,924 142,281
Gain on sale of assets -- (20,709)
Provision for losses on trade
receivables -- 2,351
Issuance of common stock warrants
in payment of consulting services 26,469 --
Reversal to unissued stock -- (5,970)
(Increase) decrease in:
Trade receivables (1,502,387) (157,311)
Inventories (520,157) (275,507)
Prepaid expenses (21,436) 229,481
Increase (decrease) in:
Accounts payable 150,428 (494,774)
Accrued liabilities (3,492) (85,950)
NET CASH USED IN OPERATING
ACTIVITIES (2,204,826) (1,868,959)
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES:
Proceeds from sale of property
and equipment -- 29,668
Purchase of marketable securities (2,044,949) --
Purchase of property and equipment (957,979) (58,676)
(Increase) decrease in other assets (45,447) (9,079)
Increase in deposits on equipment -- (1,002,599)
NET CASH USED IN INVESTING
ACTIVITIES (3,048,375) (1,040,686)
CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES:
Principal payments on stockholder notes -- (2,697,388)
Principal payments on note payable (63,451) --
Principal payments on capital
lease obligations (34,565) (37,827)
Proceeds from issuance of common
stock, net of offering costs 1,928,811 1,895,189
Proceeds from issuance of convertible
preferred stock, net of offering
costs 3,733,941 6,322,089
Proceeds from exercise of common
stock options 12,250 500
Proceeds from exercise of common
stock warrants 103,719 --
Collection of note receivable for
common stock 24,000 --
NET CASH FROM FINANCING
ACTIVITIES 5,704,705 5,482,563
See accompanying notes to the financial statements.
<PAGE> 6
GALAXY FOODS COMPANY
STATEMENTS OF CASH FLOWS (continued)
SIX MONTHS ENDED
SEPTEMBER 30,
(unaudited)
1996 1995
NET INCREASE IN CASH AND
CASH EQUIVALENTS 451,504 2,572,918
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 127,936 16,205
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 579,440 $ 2,589,123
</TABLE>
See accompanying notes to the financial statements.
<PAGE> 7
GALAXY FOODS COMPANY
NOTES TO FINANCIAL STATEMENTS
(1) Management representation
The interim financial statements of Galaxy Foods Company (the
"Company") included herein are unaudited. In the opinion of
management, the financial statements include all adjustments that
are necessary for a fair presentation of such information for the
periods presented.
(2) Reclassifications
Certain items in the financial statements of prior periods have
been reclassified to conform to current period presentation.
(3) Change in Method of Accounting for Stock-Based Compensation
Effective April 1, 1995, the Company adopted the Statement of
Financial Accounting Standards No. 123 ("SFAS 123"),
"Accounting for Stock-Based Compensation" which establishes
fair value as the measurement basis for transactions in which an
entity acquires goods or services from nonemployees in exchange
for equity instruments. Under the provisions of SFAS 123, the
Company has elected not to adopt the fair value method for stock
issued to employees, but will instead account for all employee
stock transactions under APB Opinion No. 25, "Accounting for
Stock Issued to Employees."
(4) Inventories
Inventories are summarized as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1996 1996
(unaudited) ___________
<S> <C> <C>
Raw materials $ 1,136,681 $ 770,940
Finished goods 572,150 417,734
Total $ 1,708,831 $ 1,188,674
</TABLE>
(5) Sale of Securities
On April 16, 1996, the Company completed a private placement
of 1,337,524 shares of the Company's common stock at an
aggregate price of $2,000,000, and 4,000 shares of the Company's
convertible preferred stock at an aggregate price of $4,000,000.
The convertible preferred stock has a liquidation preference of
$1,000 per share. The holders of the convertible preferred stock
have the right to convert such shares into shares of the
Company's common stock at any time after June 30, 1996 at a
conversion price equal to 71.5% of the average market price of the
common stock for the five consecutive trading days ending one
trading day prior to the date of the Company's receipt of a notice
of conversion from the holder; provided that none of the buyers'
aggregate shares of the Company's common stock exceed 4.9% of
the then outstanding shares of common stock. As of October 23,
1996, 164 shares of the convertible preferred stock have been
converted into 171,085 shares of the Company's common stock at
an average conversion price of $.96 per share.
(6) Net Loss per Share
Loss per share is computed based on the weighted average number
of shares outstanding during the period. Common stock
equivalents have not been included since the effect would be
antidilutive.
<PAGE> 8
GALAXY FOODS COMPANY
NOTES TO FINANCIAL STATEMENTS
(Continued)
(7) Note Payable
Note payable consisted of an unsecured note payable to a third
party, bearing interest at prime plus 3% (11.25% at March 31,
1996). The entire balance plus accrued interest was paid in full
by June 30, 1996.
(8) Common Stock Options and Warrants Issued for Consulting
During the six months ended September 30, 1996, consulting
expense of $48,969 was recognized on common stock warrants
granted to consultants. In addition, $369,281 has been recorded
in other assets as of September 30, 1996 for the value of warrants
issued for future services. All such options and warrants were
recorded as additional paid-in capital during the six months ended
September 30, 1996.
(9) Supplemental Cash Flow Information
For purposes of the statement of cash flows, all highly liquid
investments with a maturity date of three months or less are
considered to be cash equivalents. Cash and cash equivalents
include checking accounts, money market funds and certificates of
deposits.
<TABLE>
<CAPTION>
For the six months ended September 30, 1996 1995
<S> <C> <C>
Noncash financing and investing activities:
Deferred public offering costs applied
to the proceeds $ -- $ 403,164
Purchase of equipment under capital
lease obligation 26,105 --
Warrants issued for consulting services 57,500 --
Cash paid for:
Interest 16,860 26,322
</TABLE>
<PAGE> 9
GALAXY FOODS COMPANY
Management's Discussion and Analysis of
Financial Conditions and Results of Operations
Results of Operations
Net Sales increased 904% to $5,133,456 in the quarter ended September
30, 1996, compared to net sales of $511,301 for the quarter ended
September 30, 1995. In addition, net sales for the six months ended
September 30, 1996 increased $7,219,556 or 569% over net sales for the
six months ended September 30, 1995. This large increase in sales was
attributed to the introduction of new and improved products to the retail
market, as well as the escalation of orders from major foodservice and
retail customers at the end of fiscal 1996 and throughout fiscal 1997.
Also, there was a large increase in marketing activities promoting these
new products. In addition, the Company was able to improve its cash flow
position through financing activities, which allowed it to fill customer
orders on a timely basis. The inability to fill orders on time was a problem
in the first two quarters of fiscal 1996. (See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations - Liquidity and
Capital Resources").
Cost of Goods Sold was 83% of net sales for the quarter ended September
30, 1996, compared to 120% of net sales for the same period ended
September 30, 1995. Cost of goods sold was 85% of net sales for the six
months ended September 30, 1996, compared to 101% of net sales for the
same period ended September 30, 1995. This vast improvement in cost is
mainly a result of longer production runs creating greater production
efficiencies and sales volume increasing enough to cover the Company's
fixed costs . Management will continue to focus on reducing cost of goods
sold as a percentage of net sales in the coming quarters through production
efficiencies, price control and changes in the product mix.
Selling expenses were 54% higher for the quarter ended September 30,
1996, compared with selling expenses of $308,258 for the same period
ended September 30, 1995. Selling expenses for the six months ended
September 30, 1996 were $339,251 or 68% higher than the expense for the
six months ended September 30, 1995. This increase in selling expenses
over the same period a year ago is mainly attributed to an increase in
marketing efforts resulting in initial product introduction charges, and
increased wages, advertising and brokerage costs. For the comparable
periods one year ago, strict cost reductions were put into place due to a lack
of working capital; therefore, the Company's marketing, advertising and
brokerage expenditures were considerably less.
Delivery expenses were $153,293 and $270,269 for the quarter and the six
months, respectively, ended September 30, 1996, compared with expenses
of $97,155 and $147,319 for the same respective periods ended September
30, 1995. The increase in delivery costs is a direct result of the increase
in sales shipments to customers. However, the ratio of delivery expense to
net sales is decreasing due to more favorable shipping rates and customers
absorbing more of the delivery costs.
General and Administrative expenses increased 7.8% or $22,599 for the
quarter ended September 30, 1996, compared with the same period ended
September 30, 1995. G&A expenses were $649,047 for the six months
ended September 30, 1996 compared to $550,162 for the six months ended
September 30, 19995. The increase is attributed mostly to charges for
consulting services and increased salary expenses.
Research and Development expenses increased $33,274 for the quarter
ended September 30, 1996 when compared to the same period for the prior
year. For the six months ended September 30, 1996, R&D expense
increased $62,392 or 144%. This increase in expense is due largely to
employee relocation allowances paid during the first quarter of fiscal 1997,
increased wage expense and a change in expense allocations between
divisions. The Company does not expect to pay any further relocation
allowances this fiscal year.
<PAGE> 10
GALAXY FOODS COMPANY
Management's Discussion and Analysis of
Financial Conditions and Results of Operations
(Continued)
Other Income and Expense for the quarter ended September 30, 1996
resulted in income of $44,798 compared to income of $40,407 for the same
period last year. Income for the six months ended September 30, 1996
increased $24,472 or 45% over the same period ended September 30, 1995.
This increase in income resulted from an increase in interest income due to
the additional cash reserves produced by the sale of the Company's
securities and a decrease in interest expense due to little or no debt during
fiscal 1997 compared to fiscal 1996. (See "Management's Discussion and
Analysis of Financial Conditions and Results of Operations - Liquidity
and Capital Resources").
Liquidity and Capital Resources
Operating Activities -- Net cash used in operating activities was
$2,204,826 for the six months ended September 30, 1996 compared to net
cash used of $1,868,959 for the same period in 1995. This increase
resulted from the build-up of inventory and receivables over prior year
levels as a result of the increase in the Company's sales.
Investing Activities -- Net cash used in investing activities totaled
$3,048,375 for the six months ended September 30, 1996 compared to net
cash used of $1,040,686 for the same period in 1995. This large increase
was the result of the Company investing its cash reserves from its
financing activities into marketable securities during the first quarter of
fiscal 1997.
Financing Activities -- Net cash flows from financing activities were
$5,704,705 for the six months ended September 30, 1996 compared to
$5,482,563 for the same period in 1995. The large cash flows from
financing activities resulted from a Regulation D offering of the
Company's stock in fiscal 1997 and a Regulation S offering of the
Company's stock in fiscal 1996.
On April 16, 1996, the Company completed a Regulation D private placement of
1,337,524 shares of the Company's common stock at an aggregate price of
$2,000,000, and 4,000 shares of the Company's convertible preferred
stock at an aggregate price of $4,000,000.
On March 3, 1995, the Company began to offer certain of its securities to
non-US. persons under Regulation S promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended.
These sales of securities continued through the beginning of September
1995 with sales totaling 5,590,372 shares of Common Stock at the average
price of $0.92 per share. Additionally, the Company sold 353,755 shares
of the Company's convertible preferred stock at an average price of $20.06
per share for total gross proceeds of $7,095,700. The resulting proceeds
from all securities sold during the offering were approximately $12.2
million, of which $2,088,360 was used to pay investment brokerage
commissions and related offering fees and over $3 million was used to
eliminate the principal and accrued interest on all debt owed to
stockholders.
The Company does not currently have a bank line of credit; therefore,
management finds it necessary to fund all operations through working
capital, internally generated cash flow, private placements and short-term
financing obtained from the Company's shareholders. A bank line of credit
is an essential source of working capital for the Company in order to
continue rapid expansion and to introduce new products into the market
place. As of October 23, 1996, the Company is in the final stages of
negotiation with a major lender for a $2 million line of credit.
<PAGE> 11
GALAXY FOODS COMPANY
Management's Discussion and Analysis of
Financial Conditions and Results of Operations
(Continued)
Currently, the Company maintainse a factoring agreement with
J.T.A. Factors, Inc. ("J.T.A.") of Greenville, South Carolina, whereby the
Company may sell certain of its accounts receivable to J.T.A. on a pre-
approved full recourse basis. The factoring charge equals .73% of the
receivables sold. The Company is permitted to receive advances up to 85%
of uncollected accounts factored at the time the receivables are placed with
J.T.A., with the remaining 15%, less the .73% factoring charge, being paid
to the Company upon collection. At September 30, 1996, the Company
was not factoring any of its accounts receivable.
Additionally, the Company is negotiating with several of its vendors and
suppliers to obtain favorable terms with respect to the Company's purchase
of materials and supplies. In exchange for such favorable terms, the Company
has established letters of credit and certificates of deposit in favor of
these vendors to secure the Company's purchase of certain materials and
supplies.
<PAGE> 12
PART II. OTHER INFORMATION
GALAXY FOODS COMPANY
ITEM 6. Exhibits and Reports on Form 8-K
The following exhibits are filed as part of this Form 10-QSB.
(a) Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
No reports on Form 8-K were filed by Galaxy Foods Company
during the quarter ended September 30, 1996.
<PAGE> 13
Item 13. Exhibits and Reports on Form 8-K.
The following Exhibits are filed as part of this Form 10-QSB.
Exhibit No. Exhibit Description
* 3.1 Certificate of Incorporation of the Company, as amended
(Filed as Exhibit 3.1 to the Company's Registration Statement
on Form S-18, No. 33-15893-NY, incorporated herein by
reference.)
* 3.2 Amendment to Certificate of Incorporation of the Company,
filed on February 24, 1992 (Filed as Exhibit 4(b) to the
Company's Registration Statement on Form S-8, No. 33-
46167, incorporated herein by reference.)
* 3.3 By-laws of the Company, as amended (Filed as Exhibit 3.2 to
the Company's Registration Statement on Form S-18, No. 33-
15893-NY, incorporated herein by reference.)
* 3.4 Amendment to Certificate of Incorporation of the Company,
filed on January 19, 1994 (Filed as Exhibit 3.4 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
* 3.5 Amendment to Certificate of Incorporation of the Company,
filed on July 11, 1996 (Filed as Exhibit 3.5 on report 10-KSB
for the fiscal year ended March 31, 1996, and incorporated
herein by reference.)
* 3.6 Amendment to Certificate of Incorporation of the Company,
filed on January 31, 1996 (Filed as Exhibit 3.6 on report 10-
KSB for the fiscal year ended March 31, 1996, and
incorporated herein by reference.)
* 4.1 Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of Galaxy Foods Company, as
filed with the Secretary of State of Delaware on April 16,
1996 (Filed as Exhibit 4.1 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
*10.1 1987 Stock Plan of the Company, as amended (Filed as
Exhibit 4(d) to the Company's Registration Statement on
Form S-8, No. 33-46167, incorporated herein by reference.)
*10.2 Form of Non-Qualified Stock Option Agreement between the
Company and certain directors (Filed as Exhibit 10 (n) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1988, and incorporated herein by reference.)
*10.3 Form of Incentive Stock Option Agreement issued pursuant to
the Company's 1987 Stock Plan (Filed as Exhibit 10 (o) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1988, and incorporated herein by reference.)
*10.4 1991 Non-Employee Director Stock Option Plan of the
Company (Filed as Exhibit 4 (g) to the Company's
Registration Statement on Form S-8, No. 33-46167,
incorporated herein by reference.)
* - Previously filed
<PAGE> 14
*10.5 1991 Employee Stock Purchase Plan of the Company (Filed as
Exhibit 4 (h) to the Company's Registration Statement on
Form S-8, No. 33-46167, incorporated herein by reference.)
*10.6 Lease Agreement between ANCO Company and Company
dated as of November 13, 1991 (Filed as Exhibit 10 (bb) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1992, and incorporated herein by reference.)
*10.7 Factoring Agreement, Assignment and Repurchase
Agreement, Security Agreement and Power of Attorney, dated
as of June 1, 1993, between the Company and J.T.A. Factors,
Inc. (Filed as Exhibit 10 (nn) to the Company's Report on
Form 10-QSB for the quarterly period ended June 30, 1993.)
*10.8 Company's Registration Statement on Form S-8, Number 33-
69546, filed September 28, 1993 (Filed as Exhibit 10.40 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
*10.9 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-69546, filed October 28, 1993
(Filed as Exhibit 10.41 to the Company's Registration
Statement on Form SB-2, No. 33-80418, and incorporated
herein by reference.)
*10.10 Company's Registration Statement on Form S-8, No. 33-
78684, filed May 6, 1994 (Filed as Exhibit 10.42 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
*10.11 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-78684 (Filed June 6, 1994,
and incorporated herein by reference.)
*10.12 Company's Registration Statement on Form S-8, No. 33-
81636 (Filed July 18, 1994, and incorporated herein by
reference.)
*10.13 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-81636 (Filed August 10,
1994, and incorporated herein by reference.)
*10.14 Subscription for shares and investment letter, dated
November 4, 1994, between the Company and Angelo S.
Morini (Filed as Exhibit 10.122 on report 10-QSB, for the
quarterly period ended December 31, 1994, and incorporated
herein by reference.)
*10.15 Balloon promissory note, dated November 4, 1994 (Filed as
Exhibit 10.123 on report 10-QSB, for the quarterly period
ended December 31, 1994, and incorporated herein by
reference.)
*10.16 Stock pledge and security agreement dated November 4,
1994 (Filed as Exhibit 10.124 on report 10-QSB, for the
quarterly period ended December 31, 1994, and incorporated
herein by reference.)
* - Previously filed
<PAGE> 15
*10.17 First Amendment to Lease Agreement between ANCO
Company and the Company dated as of April 1, 1994 (Filed
as Exhibit 10.76 on report 10-KSB for the fiscal year ended
March 31, 1995, and incorporated herein by reference.)
*10.18 Consulting Agreement, dated March 15, 1995, between Lee
Chira and the Company (Filed as Exhibit 10.77 on report
10-KSB for the fiscal year ended March 31, 1995, and
incorporated herein by reference.)
*10.19 Consulting Agreement, dated March 15, 1995, between
Martin Consulting, Inc. and the Company (Filed as Exhibit
10.78 on report 10-KSB for the fiscal year ended March 31,
1995, and incorporated herein by reference.)
*10.20 Selling Agreement, dated February 6, 1995, between Sands
Brothers & Co., Ltd. and the Company (Filed as Exhibit
10.79 on report 10-KSB for the fiscal year ended March 31,
1995, and incorporated herein by reference.)
*10.21 Amendment Number 1 to Selling Agreement, dated February
14, 1995, between Sands Brothers & Co., Ltd. and the
Company (Filed as Exhibit 10.80 on report 10-KSB for the
fiscal year ended March 31, 1995, and incorporated herein by
reference.)
*10.22 Amendment Number 2 to Selling Agreement, dated March
8, 1995, between Sands Brothers & Co., Ltd. and the
Company (Filed as Exhibit 10.81 on report 10-KSB for the
fiscal year ended March 31, 1995, and incorporated herein
by reference.)
*10.23 Consulting agreement between the Company and Koi
Communications Corporation, dated June 1, 1995. (Filed as
Exhibit 10.82 on report 10-QSB for the quarterly period
ended June 30, 1995, and incorporated herein by reference.)
*10.24 Employment Agreement dated as of October 10, 1995, by
and between the Company and Angelo S. Morini (Filed as
Exhibit 10.83 on report 8-K, filed for events occurring as of
October 11, 1995 and incorporated herein by reference.)
*10.25 Balloon Promissory Note dated as of October 11, 1995, by
Angelo S. Morini in favor of the Company (Filed as Exhibit
10.84 on report 8-K, filed for events occurring as of October
11, 1995, and incorporated herein by reference.)
*10.26 Stock Pledge and Security Agreement dated as of October 11,
1995, by and between the Company and Angelo S. Morini
(Filed as Exhibit 10.85 on report 8-K, filed for events
occurring as of October 11, 1995, and incorporated herein by
reference.)
*10.27 Consulting agreement between the Company and Marshall
K. Luther dated August 28, 1995 (Filed as Exhibit 10.86 on
Form 10-QSB/A for the nine months ended December 31,
1995, and incorporated herein by reference.)
* - Previously filed
<PAGE> 16
*10.28 Amendment to Factoring Agreement (original agreement
dated June 1, 1993) dated January 29, 1996 between the
Company and J.T.A. Factors, Inc. (Filed as Exhibit 10.28 on
report 10-KSB for the fiscal year ended March 31, 1996, and
incorporated herein by reference.)
*10.29 Securities Purchase Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto
(Filed as Exhibit 10.74 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
*10.30 Registration Rights Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto
(Filed as Exhibit 10.75 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
27 Financial Data Schedule (Filed herewith.)
*99.1 Press Release issued by the Company dated April 17, 1996
(Filed as Exhibit 99.1 on report 8-K, filed for events occurring
as of April 16, 1996 and incorporated herein by reference.)
* - Previously filed
<PAGE> 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GALAXY FOODS COMPANY
Date: October 23, 1996 /s/ Angelo S. Morini
Angelo S. Morini
Chairman and President
(Principal Executive Officer)
Date: October 23, 1996 /s/LeAnn H. Davis, CPA
LeAnn H. Davis, CPA
Chief Financial Officer
(Principal Financial and
Accounting Officer)
<PAGE> 18
Item 13. Exhibits and Reports on Form 8-K.
The following Exhibits are filed as part of this Form 10-QSB.
Exhibit No. Exhibit Description
* 3.1 Certificate of Incorporation of the Company, as amended
(Filed as Exhibit 3.1 to the Company's Registration Statement
on Form S-18, No. 33-15893-NY, incorporated herein by
reference.)
* 3.2 Amendment to Certificate of Incorporation of the Company,
filed on February 24, 1992 (Filed as Exhibit 4(b) to the
Company's Registration Statement on Form S-8, No. 33-
46167, incorporated herein by reference.)
* 3.3 By-laws of the Company, as amended (Filed as Exhibit 3.2 to
the Company's Registration Statement on Form S-18, No. 33-
15893-NY, incorporated herein by reference.)
* 3.4 Amendment to Certificate of Incorporation of the Company,
filed on January 19, 1994 (Filed as Exhibit 3.4 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
* 3.5 Amendment to Certificate of Incorporation of the Company,
filed on July 11, 1996 (Filed as Exhibit 3.5 on report 10-KSB
for the fiscal year ended March 31, 1996, and incorporated
herein by reference.)
* 3.6 Amendment to Certificate of Incorporation of the Company,
filed on January 31, 1996 (Filed as Exhibit 3.6 on report 10-
KSB for the fiscal year ended March 31, 1996, and
incorporated herein by reference.)
* 4.1 Certificate of Designations, Preferences and Rights of Series
A Convertible Preferred Stock of Galaxy Foods Company, as
filed with the Secretary of State of Delaware on April 16,
1996 (Filed as Exhibit 4.1 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
*10.1 1987 Stock Plan of the Company, as amended (Filed as
Exhibit 4(d) to the Company's Registration Statement on
Form S-8, No. 33-46167, incorporated herein by reference.)
*10.2 Form of Non-Qualified Stock Option Agreement between the
Company and certain directors (Filed as Exhibit 10 (n) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1988, and incorporated herein by reference.)
*10.3 Form of Incentive Stock Option Agreement issued pursuant to
the Company's 1987 Stock Plan (Filed as Exhibit 10 (o) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1988, and incorporated herein by reference.)
* - Previously filed
<PAGE> 1
*10.4 1991 Non-Employee Director Stock Option Plan of the
Company (Filed as Exhibit 4 (g) to the Company's
Registration Statement on Form S-8, No. 33-46167,
incorporated herein by reference.)
*10.5 1991 Employee Stock Purchase Plan of the Company (Filed as
Exhibit 4 (h) to the Company's Registration Statement on
Form S-8, No. 33-46167, incorporated herein by reference.)
*10.6 Lease Agreement between ANCO Company and Company
dated as of November 13, 1991 (Filed as Exhibit 10 (bb) to the
Company's Report on Form 10-K for fiscal year ended March
31, 1992, and incorporated herein by reference.)
*10.7 Factoring Agreement, Assignment and Repurchase
Agreement, Security Agreement and Power of Attorney, dated
as of June 1, 1993, between the Company and J.T.A. Factors,
Inc. (Filed as Exhibit 10 (nn) to the Company's Report on
Form 10-QSB for the quarterly period ended June 30, 1993.)
*10.8 Company's Registration Statement on Form S-8, Number 33-
69546, filed September 28, 1993 (Filed as Exhibit 10.40 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
*10.9 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-69546, filed October 28, 1993
(Filed as Exhibit 10.41 to the Company's Registration
Statement on Form SB-2, No. 33-80418, and incorporated
herein by reference.)
*10.10 Company's Registration Statement on Form S-8, No. 33-
78684, filed May 6, 1994 (Filed as Exhibit 10.42 to the
Company's Registration Statement on Form SB-2, No. 33-
80418, and incorporated herein by reference.)
*10.11 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-78684 (Filed June 6, 1994,
and incorporated herein by reference.)
*10.12 Company's Registration Statement on Form S-8, No. 33-
81636 (Filed July 18, 1994, and incorporated herein by
reference.)
*10.13 Post-Effective Amendment No. 1 to Company's Registration
Statement on Form S-8, No. 33-81636 (Filed August 10,
1994, and incorporated herein by reference.)
*10.14 Subscription for shares and investment letter, dated
November 4, 1994, between the Company and Angelo S.
Morini (Filed as Exhibit 10.122 on report 10-QSB, for the
quarterly period ended December 31, 1994, and incorporated
herein by reference.)
* - Previously filed
<PAGE> 2
*10.15 Balloon promissory note, dated November 4, 1994 (Filed as
Exhibit 10.123 on report 10-QSB, for the quarterly period
ended December 31, 1994, and incorporated herein by
reference.)
*10.16 Stock pledge and security agreement dated November 4,
1994 (Filed as Exhibit 10.124 on report 10-QSB, for the
quarterly period ended December 31, 1994, and incorporated
herein by reference.)
*10.17 First Amendment to Lease Agreement between ANCO
Company and the Company dated as of April 1, 1994 (Filed
as Exhibit 10.76 on report 10-KSB for the fiscal year ended
March 31, 1995, and incorporated herein by reference.)
*10.18 Consulting Agreement, dated March 15, 1995, between Lee
Chira and the Company (Filed as Exhibit 10.77 on report
10-KSB for the fiscal year ended March 31, 1995, and
incorporated herein by reference.)
*10.19 Consulting Agreement, dated March 15, 1995, between
Martin Consulting, Inc. and the Company (Filed as Exhibit
10.78 on report 10-KSB for the fiscal year ended March 31,
1995, and incorporated herein by reference.)
*10.20 Selling Agreement, dated February 6, 1995, between Sands
Brothers & Co., Ltd. and the Company (Filed as Exhibit
10.79 on report 10-KSB for the fiscal year ended March 31,
1995, and incorporated herein by reference.)
*10.21 Amendment Number 1 to Selling Agreement, dated February
14, 1995, between Sands Brothers & Co., Ltd. and the
Company (Filed as Exhibit 10.80 on report 10-KSB for the
fiscal year ended March 31, 1995, and incorporated herein by
reference.)
*10.22 Amendment Number 2 to Selling Agreement, dated March
8, 1995, between Sands Brothers & Co., Ltd. and the
Company (Filed as Exhibit 10.81 on report 10-KSB for the
fiscal year ended March 31, 1995, and incorporated herein
by reference.)
*10.23 Consulting agreement between the Company and Koi
Communications Corporation, dated June 1, 1995. (Filed as
Exhibit 10.82 on report 10-QSB for the quarterly period
ended June 30, 1995, and incorporated herein by reference.)
*10.24 Employment Agreement dated as of October 10, 1995, by
and between the Company and Angelo S. Morini (Filed as
Exhibit 10.83 on report 8-K, filed for events occurring as of
October 11, 1995 and incorporated herein by reference.)
*10.25 Balloon Promissory Note dated as of October 11, 1995, by
Angelo S. Morini in favor of the Company (Filed as Exhibit
10.84 on report 8-K, filed for events occurring as of October
11, 1995, and incorporated herein by reference.)
* - Previously filed
<PAGE> 3
*10.26 Stock Pledge and Security Agreement dated as of October 11,
1995, by and between the Company and Angelo S. Morini
(Filed as Exhibit 10.85 on report 8-K, filed for events
occurring as of October 11, 1995, and incorporated herein by
reference.)
*10.27 Consulting agreement between the Company and Marshall
K. Luther dated August 28, 1995 (Filed as Exhibit 10.86 on
Form 10-QSB/A for the nine months ended December 31,
1995, and incorporated herein by reference.)
*10.28 Amendment to Factoring Agreement (original agreement
dated June 1, 1993) dated January 29, 1996 between the
Company and J.T.A. Factors, Inc. (Filed as Exhibit 10.28 on
report 10-KSB for the fiscal year ended March 31, 1996, and
incorporated herein by reference.)
*10.29 Securities Purchase Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto
(Filed as Exhibit 10.74 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
*10.30 Registration Rights Agreement, dated April 16, 1996, by and
among Galaxy Foods Company and the buyers party thereto
(Filed as Exhibit 10.75 on report 8-K, filed for events
occurring as of April 16, 1996 and incorporated herein by
reference.)
27 Financial Data Schedule (Filed herewith.) 5
*99.1 Press Release issued by the Company dated April 17, 1996
(Filed as Exhibit 99.1 on report 8-K, filed for events occurring
as of April 16, 1996 and incorporated herein by reference.)
* - Previously filed
<PAGE> 4
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<INTEREST-EXPENSE> 2,303 9,881
<INCOME-PRETAX> (89,942) (529,175)
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<INCOME-CONTINUING> (89,942) (529,175)
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