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 June 30, 1997
_____________________________
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 June 30, 1997, there were 58,583,332 shares of
Common Stock $.01 par value per share, outstanding.
<PAGE> 2
GALAXY FOODS COMPANY
Index to Form 10-QSB
For Quarter Ended June 30, 1997
PAGE
NO. PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Stockholders' Equity 5
Condensed Statements of Cash Flows 6-7
Notes to Condensed Financial Statements 8-9
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-11
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 12-15
SIGNATURES 16
<PAGE> 3
PART I. FINANCIAL INFORMATION
GALAXY FOODS COMPANY
CONDENSED BALANCE SHEETS
JUNE 30, MARCH 31,
1997 1997
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 19,384 $ 16,485
Marketable securities -- 298,671
Trade receivables, net 2,372,258 1,631,268
Inventories 2,291,512 1,802,244
Prepaid expenses 262,976 346,082
Total current assets 4,946,130 4,094,750
PROPERTY & EQUIPMENT, NET 8,656,099 8,186,009
OTHER ASSETS 198,955 211,687
TOTAL $13,801,184 $12,492,446
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Line of credit $1,396,670 $1,370,953
Accounts payable - trade 1,714,370 449,227
Accrued liabilities 407,703 418,968
Current portion of obligations
under capital leases 22,104 24,396
Total current liabilities 3,540,847 2,263,544
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion 25,232 32,668
Total liabilities 3,566,079 2,296,212
COMMITMENTS AND CONTINGENCIES -- --
STOCKHOLDERS' EQUITY:
Convertible preferred stock 18 26
Common stock 585,833 571,282
Additional paid-in capital 45,781,669 45,780,462
Accumulated deficit (23,360,215) (23,383,336)
23,007,305 22,968,434
Less: Notes receivable arising from
the exercise of stock options
and sale of common stock 12,772,200 12,772,200
Total stockholders' equity 10,235,105 10,196,234
TOTAL $13,801,184 $12,492,446
See accompanying notes to condensed financial statements.
<PAGE> 4
GALAXY FOODS COMPANY
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
JUNE 30,
1997 1996
(Unaudited) (Unaudited)
NET SALES $ 5,883,454 $ 3,354,980
COST OF GOODS SOLD 4,769,957 2,951,616
Gross margin 1,113,497 403,364
OPERATING EXPENSES:
Selling 413,197 364,957
Delivery 217,726 116,976
General and administrative 385,766 336,213
Research and development 43,759 58,541
Total operating expenses 1,060,448 876,687
INCOME (LOSS) FROM OPERATIONS 53,049 (473,323)
OTHER INCOME (EXPENSE):
Interest expense (31,945) (7,578)
Interest income 2,308 39,016
Other income (expense) (291) 2,652
Total (29,928) 34,090
NET INCOME (LOSS) 23,121 (439,233)
PREFERRED STOCK DIVIDENDS -- (1,594,406)*
NET INCOME (LOSS) APPLICABLE TO
COMMON STOCK $ 23,121 $(2,033,639)*
INCOME (LOSS) PER COMMON SHARE $ .00 $ (.06)*
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 61,700,259 34,144,011
* Amounts have been restated to reflect a stock dividend on
preferred stock which is convertible at a discount from market
value at the date of issuance (See Note 3).
See accompanying notes to condensed financial statements.
<PAGE> 5
GALAXY FOODS COMPANY
<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, 1996,
as restated 53,421,848 $ 534,218 -- $ -- $ 38,582,938* $ (19,052,270) $(12,796,200) $ 7,268,686
Exercise of options 96,166 962 -- -- 47,321 -- -- 48,283
Exercise of warrants 215,000 2,150 -- -- 120,163 -- -- 122,313
Issuance of common stock
under employee stock
purchase plan 91,879 919 -- -- 86,681 -- -- 87,600
Collection of note receivable -- -- -- -- -- -- 24,000 24,000
Issuance of common stock
through Reg D offering 1,337,524 13,375 -- -- 1,846,096 -- -- 1,859,471
Issuance of convertible
preferred stock through Reg
D offering -- -- 4,000 40 3,733,901 -- -- 3,733,941
Conversion of preferred
stock into common stock 1,965,824 19,658 (1,443) (14) (19,644) -- -- --
Issuance and revaluation
of warrants -- -- -- -- (211,400) -- -- (211,400)
Preferred stock dividend -- -- -- -- 1,594,406 (1,594,406) -- --
Net loss -- -- -- -- -- (2,736,660) -- (2,736,660)
Balance at March 31, 1997 57,128,241 $ 571,282 2,557 $ 26 $ 45,780,462 $ (23,383,336) $(12,772,200) $ 10,196,234
Exercise of options 78,166 782 -- -- 38,501 -- -- 39,283
Conversion of preferred
stock into common stock 1,455,091 14,551 (768) (8) (14,543) -- -- --
Issuance of warrants -- -- -- -- 7,000 -- -- 7,000
Refund of stock issuance costs -- -- -- -- 8,750 -- -- 8,750
Net income -- -- -- -- -- 23,121 -- 23,121
Balance June 30, 1997 58,583,332 $ 585,833 1,789 $ 18 $ 45,781,669 $ (23,360,215) $ (12,772,200) $ 10,235,105
</TABLE>
* Amounts have been restated to reflect a stock dividend on preferred stock
which is convertible at a discount from market value at the date of issuance
(See Note 3).
See accompanying notes to condensed financial statements.
<PAGE> 6
GALAXY FOODS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
JUNE 30,
1997 1996
(Unaudited) (Unaudited)
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES:
Net Income (Loss) $ 23,121 $(439,233)
ADJUSTMENTS TO RECONCILE NET INCOME
(LOSS) TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation expense 157,497 96,393
Gain on sale of assets (1,329) --
Consulting and director fee expense
paid through issuance of
common stock warrants 8,346 16,500
(Increase) decrease in:
Trade receivables (740,990) (624,786)
Inventories (489,268) (480,190)
Prepaid expenses 83,106 (55,863)
Increase (decrease) in:
Accounts payable 1,265,143 3,544
Accrued liabilities (11,265) (24,207)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 294,361 (1,507,842)
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES:
Purchase of marketable securities -- (2,013,742)
Purchase of property and equipment (627,587) (404,607)
(Increase) decrease in other assets 11,386 (46,441)
Sale of marketable securities 300,000 --
NET CASH USED IN INVESTING
ACTIVITIES (316,201) (2,464,790)
CASH FLOWS FROM/(USED IN) FINANCING
ACTIVITIES:
Net borrowings on line of credit 25,717 --
Principal payments on note payable -- (63,451)
Principal payments on capital lease
obligations (9,728) (16,711)
Proceeds from issuance of common stock,
net of offering costs -- 1,859,471
Proceeds from issuance of convertible
preferred stock, net of offering costs -- 3,733,941
Proceeds from exercise of common stock
options -- 7,500
Refund of stock issuance costs 8,750 --
Collection of note receivable for
common stock -- 24,000
NET CASH FROM FINANCING
ACTIVITIES 24,739 5,544,750
<PAGE> 7
GALAXY FOODS COMPANY
CONDENSED STATEMENTS OF CASH FLOWS (continued)
THREE MONTHS ENDED
JUNE 30,
1997 1996
(Unaudited) (Unaudited)
NET INCREASE IN CASH AND
CASH EQUIVALENTS 2,899 1,572,118
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 16,485 127,936
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 19,384 $1,700,054
See accompanying notes to condensed financial statements.
<PAGE> 8
GALAXY FOODS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(1) Management Representation
In the opinion of Galaxy Foods Company (the "Company"), the
accompanying unaudited financial statements contain all adjustments
necessary to present fairly the Company's financial position, results
of operations and cash flows for the periods presented. The results
of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
The condensed financial statements should be read in conjunction
with the financial statements and the related disclosures contained
in the Company's Form 10-KSB dated June 20, 1997, filed with the
Securities and Exchange Commission.
(2) Reclassifications
Certain items in the financial statements of prior periods have
been reclassified to conform to current period presentation.
(3) Restatement of Stockholders' Equity
In March 1997, the Securities and Exchange Commission Staff
(the "Staff") announced its position on accounting for
preferred stock which is convertible into common stock at
a discount from the market rate at the date of issuance. The
Staff's position is that a preferred stock dividend should
be recorded for the difference between the conversion price
and the quoted market price of common stock at the date of
issuance. To comply with this position, the Company restated
its prior year's financial statements to reflect a dividend
of $3,130,294 related to the fiscal 1996 sales of convertible
preferred stock. In compliance with the Staff's position, the
Company also recorded a preferred stock dividend in the amount of
$1,594,406 in fiscal 1997, for the April 1996 sale of convertible
preferred stock.
(4) Inventories
Inventories are summarized as follows:
JUNE 30, MARCH 31,
1997 1997
(unaudited)
Raw materials $1,557,282 $1,136,269
Finished goods 734,230 665,975
Total $2,291,512 $1,802,244
(5) Net Income (Loss) per Share
Net income per share is computed based on the weighted average
number of shares outstanding during the period, plus common
equivalent shares arising from the effect of convertible preferred
stock and the assumed exercise of dilutive common stock warrants
and employees' stock options, less the number of treasury shares
assumed to be purchased from the proceeds under the treasury stock
method and the per share market value of the common stock. The
difference between shares for primary and fully diluted income per
share was not material; accordingly, fully diluted income
per share is not presented.
Net loss per share is computed based on the weighted average
number of shares outstanding during the period. Common
stock equivalents have not been included in the calculation
of net loss per share as the effect would be antidilutive.
<PAGE> 9
GALAXY FOODS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
(5) Net Income (Loss) per Share - Continued
In February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 128
"Earnings Per Share" ("SFAS 128"). SFAS 128 establishes new
standards for computing and presenting earnings per share
("EPS"). Specifically, SFAS 128 replaces the presentation
of primary EPS with a presentation of basic EPS, requires
dual presentation of basic and diluted EPS on the face of
the income statement for all entities with complex capital
structures and requires a reconciliation of the numerator
and denominator of the basic EPS computation to the
numerator and denominator of the diluted EPS computation.
SFAS 128 is effective for financial statements issued for periods
ending after December 15, 1997; earlier application is not permitted.
EPS for the quarters ended June 30, 1997 and June 30, 1996
computed under SFAS 128 would not be materially different than
previously computed.
(6) 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.
For the three months ended June 30, 1997 1996
Noncash financing and investing activities:
Consulting and directors fees paid
through issuance of common stock
warrants 8,346 16,500
Cash paid for:
Interest 31,945 14,557
<PAGE> 10
GALAXY FOODS COMPANY
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion and analysis should be read in
conjunction with the Condensed Financial Statements and
Notes thereto appearing elsewhere in this report.
The following discussion contains certain forward-
looking statements, within the meaning of the "safe-harbor"
provisions of the Private Securities Reform Act of 1995, the
attainment of which involves various risks and uncertainties.
Forward-looking statements may be identified by the use of
forward-looking terminology such as "may", "will",
"expect", "believe", "estimate", "anticipate", "continue",
or similar terms, variations of these terms or the negative
of those terms. The Company's actual results may differ materially
from those described in these forward-looking statements due to among
other factors, competition in the Company's product markets,
dependence on suppliers, the Company's manufacturing
experience, and production delays or inefficiencies.
Galaxy Foods Company (the "Company") is principally engaged
in the development, manufacturing and marketing of a variety
of healthy cheese and dairy related products, as well as
other cheese alternatives. These healthy cheese and dairy
related products include low or no fat, low or no cholesterol
and lactosefree varieties. These products are sold throughout
the United States and internationally to customers in the
retail, food service and industrial markets. The Company's
headquarters and manufacturing facilities are located in
Orlando, Florida.
Results of Operations
Net Sales were $5,883,454 in the quarter ended June 30,
1997, compared to net sales of $3,354,980 for the quarter
ended June 30, 1996. The 75% increase in sales was attributed
to the introduction of new products to the retail market and an
increase in marketing activities to promote these new
products. In addition, there has been an escalation of orders from
major retail and food service customers throughout fiscal
1997 and through the first quarter of fiscal 1998. The
Company expects this trend in sales volume to continue throughout
fiscal 1998.
Cost of Goods Sold were $4,769,957 representing 81% of net
sales for the quarter ended June 30, 1997, compared with
$2,951,616 or 88% of net sales for the same period ended June 30, 1996.
The Company was able to improve gross margin by focusing on
production efficiencies, price control and changes in the product mix.
Selling expenses were $413,197 for the quarter ended June
30, 1997, compared with $364,957 for the same period ended
June 30, 1996. The 13% increase in 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 advertising and brokerage costs
associated with the increase in sales volume.
Delivery expenses were $217,726 for the quarter ended June
30, 1997, compared with $116,976 for the same period ended
June 30, 1996. The 86% increase in delivery costs is a
direct result of the increase in sales shipments to
customers for the quarter ended June 30, 1997 as compared
with the same period in the prior year.
General and Administrative expenses were $385,766 for the
quarter ended June 30, 1997, compared with $336,213 for the
same period ended June 30, 1996. The 15% increase is
primarily attributed to increased expenses for consulting
services and employee salaries.
<PAGE> 11
Research and Development expenses were $43,759 for the
quarter ended June 30, 1997, compared with $58,541 for the
quarter ended June 30, 1996. This decrease in expenses is
largely due to employee relocation allowances paid during
the first quarter of fiscal 1997. No such allowances were
paid in the first quarter of fiscal 1998.
Other Income and Expenses netted to $29,928 in expense for
the quarter ended June 30, 1997 as compared to $34,090 in
income for the quarter ended June 30, 1996. During the
first quarter of fiscal 1998, interest expense was increased
due to the line of credit secured by the Company on November
1, 1997. During the first quarter of fiscal 1997, the
Company held marketable securities which earned interest
income; these marketable securities were partially sold
during fiscal 1997 and were completely liquidated as of
June 30, 1997.
Liquidity and Capital Resources
Operating Activities -- Net cash provided by operating
activities was $294,361 for the period ended June 30, 1997
compared to net cash used of $1,507,842 for the same period in
1996. This change in operating activities is the result of
increased sales combined with a decline in general and
administrative costs as a percentage of sales and an
improvement in gross margin. In addition, accounts payable has
increased due to large customer orders and expanded production volume.
Investing Activities -- Net cash used in investing
activities totaled $316,201 for the period ended June 30, 1997
compared to net cash used of $2,464,790 for the same period
in 1996. The decline in cash used for investing activities resulted from
the purchase of marketable securities with cash reserves
from financing activities in the first quarter of fiscal 1997.
As of June 30, 1997, all marketable securities had been sold
by the Company.
Financing Activities -- Net cash flows from financing
activities were $24,739 for the three months ended June 30,
1997 compared to $5,544,750 for the same period in 1996. The
large cash flows from financing activities in the three
months ended June 30, 1996 resulted from a Regulation S
offering of the Company's stock.
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.
On November 1, 1997, the Company secured a $2 million line
of credit with Finova Capital Corporation with interest at the
prime rate plus two percent. At June 30, 1997, the balance
outstanding under this line of credit agreement was $1,396,670.
On June 27, 1997, the Company secured a $1.5 million
Purchase Money Machinery and Equipment Accommodation with
Finova Capital Corporation to finance the acquisition of
certain production equipment. The agreement calls for
interest at the prime rate plus two percent. As of June 30, 1997,
no amounts were outstanding under this agreement.
Outlook
Management is not aware of any adverse trends that
would materially affect the Company's projected financial
growth. It is expected that fiscal 1998 will be another year of
continued improvement for the Company.
<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.
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 S8, 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 SB2, No. 33-80418, and incorporated herein by
reference.)
*3.5 Amendment to Certificate of Incorporation of the
Company, filed on July 11, 1995 (Filed as Exhibit 3.5
on Form 10-KSB for 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 Form 10-KSB for fiscal year ended
March 31, 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-KSB 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-KSB 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.)
*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.)
* Previously filed
<PAGE> 13
Exhibit No Exhibit Description
*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-KSB 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 Exhibit10.40 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. 3380418, 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.)
*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.)
* Previously filed
<PAGE> 14
Exhibit No Exhibit Description
*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 10KSB 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, 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, 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, and incorporated herein by reference.)
*10.27 Consulting agreement between the Company and
Marshall K. Luther dated August 28, 1995 (Filed
as Exhibit10.86 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 Form 10-KSB for fiscal year ended
March 31, 1996, and incorporated herein by
reference.)
*10.29 1996 Amendment and Restatement of the 1991 Non-
Employee Director Stock Option Plan (Filed as
Exhibit 10.29 on Form 10-KSB for fiscal year ended
March 31, 1997, and incorporation herein by
reference.)
*10.30 1996 Stock Plan (Filed as Exhibit 10.30 on Form 10-
KSB for fiscal year ended March 31, 1997, and
incorporation herein by reference.)
* Previously filed
<PAGE> 15
Exhibit No Exhibit Description
*10.31 Line of Credit Agreement with Finova Financial
Services (Filed as Exhibit 10.31 on Form 10-KSB
for fiscal year ended March 31, 1997, and
incorporation herein by reference.)
*10.32 Second Amendment to the Lease Agreement between
ANCO Company and the Company dated as April 1,
1994 (Filed as Exhibit 10.32 on Form 10-KSB for
fiscal year ended March 31, 1997, and
incorporation herein by reference.)
10.33 Purchase Money Accommodation for the Purchase of
Specific Equipment with FINOVA Financial Services
(Filed herewith.)
27 Financial Data Schedule (Filed herewith.)
Reports on Form 8-K
No reports on Form 8-K were filed during the
three months ended June 30, 1997.
* - Previously filed
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
GALAXY FOODS COMPANY
Date: July 22, 1997 /s/ Angelo S. Morini
Angelo S. Morini
Chairman and President
(Principal Executive
Officer)
Date: July 22, 1997 /s/ Cynthia L. Hunter
Cynthia L. Hunter, CPA
Chief Financial Officer
(Principal Financial and
Accounting Officer)
Exhibit 10.33
Purchase Money Accommodation
for the Purchase of Specific
Equipment with FINOVA Financial
Services
June 27, 1997
Galaxy Food Corporation
2441 Viscount Row
Orlando, FL 32809
Gentlemen:
Reference is made to that certain Security Agreement (Accounts
Receivable, Inventory and Equipment) dated November 1, 1996
(the "Security Agreement") by and between FINOVA Capital
Corporation ("FINOVA") and Galaxy Foods Company ("Borrower").
Borrower has requested and FINOVA has agreed to make certain
loans and advances for the purchase of machinery and equipment
more specifically described in Schedule "A" annexed hereto and
made a part hereof in the amount of $1,500,000 (the "Purchase
Money M&E Advance"). Accordingly, FINOVA and Borrower hereby
agree to the following amendments and modifications to the
Security Agreement effective upon the execution and delivery
of this Agreement to
FINOVA:
1.The line of credit defined in paragraph 1.10 of the Security
Agreement is changed from $2,000,000 to $3,500,000;
2.Paragraph 2.1 of the Security Agreement shall be modified
by inserting the following language before the final period
("."):
"and FINOVA shall make a loan or loans for the benefit of
Borrower in the amount of $1,500,000 (the "Purchase Money M&E
Advance"). The Purchase Money M&E Advance (whether made in
one or more advances) shall be used by Borrower solely to pay
Hart Design & MFG, Inc., FMS Manufacturing Company, Serpa
Packaging Solutions, Tile BY Charles, Inc., Blentech
Corporation, and Midwest Refrigeration, Inc. (collectively,
the "Supplier") for the purchase of the equipment described
on Schedule "A" annexed hereto (the "Equipment") in
accordance with the terms of the agreements between Borrower
and Supplier, and where that Equipment shall be located
solely at the Borrower's premises set forth on the cover page
to this Agreement (as such premises may change in accordance
with this Agreement). The Purchase Money M&E Advance shall
be repaid in arrears to FINOVA in principal installments in
the amount of $12,500 per month and shall be charged against
the account in Borrower's name on the last day of the first
month immediately following the month in which the initial
Purchase Money M&E Advance is made by FINOVA and on the last
day of each month thereafter until the date that this
Agreement is terminated (whether at the end of the initial
term, the end of any renewal term, or upon the occurrence of
an event of default) at which time the entire balance of the
Purchase Money M&E Advance together with all interest and
costs thereon shall be due and payable to FINOVA.
Notwithstanding the foregoing, if the term set forth in
paragraph 9.1 of this Agreement is extended either by
amendment to this Agreement or by renewal of the term as
provided for hereunder the Borrower shall continue to make
monthly principal installments of $12,500 per month through
and including June 1, 1999 and commencing on July 1, 1999,
the principal monthly installments shall be in the amount of
$100,000 per month and shall continue on the last day of each
month thereafter until the earlier of: (a) the costs thereon
shall have been paid to FINOVA; or (b) the termination of
this Agreement (whether at the end of any term, or upon the
occurrence of an event of default). Notwithstanding the
foregoing, FINOVA shall have the right at any time to demand
and receive the immediate repayment of the entire balance of
the Purchase Money M&E Advance in the event (a) of any
default or termination under this Agreement; (b) of any
reduction in the value of the Borrower's machinery and
equipment; or (c) that FINOVA, in its sole and absolute
discretion, shall consider the Purchase Money M&E Advance
insecure."; and
3.The facility fee provided for in paragraph 3.5 of the
Security Agreement shall be adjusted to reflect the increase in
the line of credit provided for in paragraph 1 of this letter,
effective as of the contract year commencing November 1, 1997.
Except as modified herein, all of the terms and conditions
contained in the Security Agreement shall remain in full force
and effect and in all respects unchanged.
FINOVA CAPITAL CORPORATION
/s/ Philip Conimaccio
Philip Conimaccio, Vice President
ACCEPTED AND AGREED TO
THIS 27TH DAY OF JUNE, 1997;
GALAXY FOODS COMPANY
/s/Angelo S. Morini
Angelo S. Morini, President
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<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 19384
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0
18
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