FORM 10-Q
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, 1998
_____________________________
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 September 30, 1998, there were 61,755,267 shares of
Common Stock $.01 par value per share, outstanding.
<PAGE> 2
GALAXY FOODS COMPANY
Index to Form 10-Q
For Quarter Ended September 30, 1998
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Balance Sheets 3
Statements of Income 4
Statements of Cash Flows 5
Notes to Financial Statements 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-11
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
BALANCE SHEETS
SEPTEMBER 30, MARCH 31,
1998 1998
(Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 598 $ 20,069
Trade receivables, net 3,779,366 2,646,667
Inventories 5,351,270 2,458,743
Prepaid expenses 792,876 464,701
Total current assets 9,924,110 5,590,180
PROPERTY & EQUIPMENT, NET 10,854,687 10,668,155
OTHER ASSETS 129,819 190,717
TOTAL $20,908,616 $ 16,449,052
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Book overdrafts $ 634,080 $ 836,762
Line of credit 3,532,413 1,840,757
Accounts payable - trade 1,958,796 1,088,658
Accrued liabilities 388,517 453,662
Current portion of term note payable 150,000 150,000
Current portion of obligations
under capital leases 18,944 21,517
Total current liabilities 6,682,750 4,391,356
TERM NOTE PAYABLE, less current portion 2,825,847 1,276,847
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion 8,106 11,152
Total liabilities 9,516,703 5,679,355
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Common stock 617,553 617,065
Additional paid-in capital 45,957,387 45,930,645
Accumulated deficit (22,410,827) (23,005,813)
24,164,113 23,541,897
Less: Notes receivable arising from
the exercise of stock options and sale of
common stock 12,772,200 12,772,200
Total stockholders' equity 11,391,913 10,769,697
TOTAL $20,908,616 $16,449,052
See accompanying notes to condensed financial statements.
<PAGE> 4
GALAXY FOODS COMPANY
STATEMENTS OF INCOME
SIX MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997 1998 1997
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
NET SALES $13,346,376 $10,915,451 $7,583,838 $5,031,997
COST OF GOODS SOLD 9,555,899 8,551,410 5,224,605 3,781,453
Gross margin 3,790,477 2,364,041 2,359,233 1,250,544
OPERATING EXPENSES:
Selling 1,454,906 940,190 877,045 526,993
Delivery 654,706 439,867 380,660 222,141
General and administrative 937,094 721,965 554,182 336,199
Research and development 87,872 96,147 47,354 52,388
Total operating expenses 3,134,578 2,198,169 1,859,241 1,137,721
INCOME FROM OPERATIONS 655,899 165,872 499,992 112,823
OTHER INCOME (EXPENSE):
Interest expense (96,297) (39,830) (53,832) (7,885)
Interest income - 2,547 - 239
Other income 35,384 19,924 1,342 20,215
Total (60,913) (17,359) (52,490) 12,569
NET INCOME $ 594,986 $ 148,513 $ 447,502 $ 125,392
BASIC NET EARNINGS PER
COMMON SHARE $ 0.01 $ - $ 0.01 $ -
DILUTED NET EARNINGS PER
COMMON SHARE $ 0.01 $ 0.01
See accompanying notes to condensed financial statements.
<PAGE> 5
GALAXY FOODS COMPANY
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
SEPTEMBER 30,
1998 1997
(Unaudited) (Unaudited)
CASH FLOWS FROM/(USED IN) OPERATING
ACTIVITIES:
Net Income $ 594,986 $ 148,513
ADJUSTMENTS TO RECONCILE NET INCOME
TO NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES:
Depreciation expense 176,188 320,463
Gain on sale of assets - (1,329)
Provision for losses on trade receivables 89,607 -
Consulting and director fee expense paid through
issuance of common stock warrants 15,560 39,813
(Increase) decrease in:
Trade receivables (1,222,306) (205,596)
Inventories (2,892,527) (763,715)
Prepaid expenses (282,837) (38,154)
Increase (decrease) in:
Accounts payable 870,138 961,587
Accrued liabilities (65,145) (23,370)
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (2,716,336) 438,212
CASH FLOWS FROM/(USED IN) INVESTING
ACTIVITIES:
Purchase of property and equipment (362,720) (534,635)
Sale of marketable securities - 300,000
NET CASH USED IN INVESTING ACTIVITIES (362,720) (234,635)
CASH FLOWS FROM/(USED IN) FINANCING ACTIVITIES:
Net borrowings (repayments) on line of credit 1,691,656 (1,457,849)
Net draws on term note payable 1,549,000 1,208,632
Book overdrafts (202,682) -
Principal payments on capital lease obligations (5,619) (17,272)
Proceeds from issuance of common stock, net of
offering costs 25,730 16,521
Proceeds from exercise of common stock options 1,500 45,234
Refund of stock issuance costs - 8,750
NET CASH FROM/(USED IN) FINANCING ACTIVITIES 3,059,585 (195,984)
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (19,471) 7,593
CASH AND CASH EQUIVALENTS, BEGINNING
OF PERIOD 20,069 16,485
CASH AND CASH EQUIVALENTS, END
OF PERIOD $ 598 $ 24,078
See accompanying notes to condensed financial statements.
<PAGE> 6
GALAXY FOODS COMPANY
NOTES TO 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 financial statements should be read in conjunction with
the financial statements and the related disclosures
contained in the Company's Form 10-KSB dated May 29, 1998,
except for Note 10 which is as of June 3, 1998, 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) Inventories
Inventories are summarized as follows:
SEPTEMBER 30, MARCH 31,
1998 1998
(unaudited)
Raw materials $ 2,493,103 $ 1,277,783
Finished goods 2,858,167 1,180,960
Total $ 5,351,270 $ 2,458,743
(4) Earnings per Share
The following is a reconciliation of basic net earnings per
share to diluted net earnings per share for the three month
and six month periods ended September 30, 1998:
Three months Six months
ended September 30, 1998
Basic net earnings per share $ .01 $ .01
Weighted average shares outstanding -
basic 61,717,045 61,716,800
Potential shares exercisable under
stock option plans 1,114,000 1,114,246
Potential shares exercisable under
warrant agreements 7,738,961 7,738,961
Less: Shares assumed repurchased under
Treasury stock method (6,909,735) (6,909,489)
Average shares outstanding - diluted 63,660,271 63,660,518
Diluted earnings per share $ .01 $ .01
<PAGE> 7
GALAXY FOODS COMPANY
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Continued)
(5) 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 six months ended September 30, 1998 1997
Noncash financing and investing activities:
Consulting and directors fees paid through
issuance of common stock warrants $ 15,560 $ 39,813
Cash paid for:
Interest $ 96,297 $ 39,830
<PAGE> 8
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 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
lactose-free 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 $7,583,838 in the quarter ended September 30,
1998, compared to net sales of $5,031,997 for the quarter ended
September 30, 1997, an increase of 51%. Net sales were $13,346,376
for the six months ended September 30, 1998 as compared to $10,915,451
for the same period one year ago, an increase of 22%. The increase in
sales was attributed to an increase in marketing activities to promote the
Company's Veggie brand of products. In addition, as a result of
increased brand awareness and marketing activities, there has
been an escalation of orders from major retail and food service
customers throughout fiscal 1998 and through the second quarter
of fiscal 1999. The Company expects this trend in sales volume to
continue throughout fiscal 1999.
Cost of Goods Sold were $5,224,605 representing 69% of net sales
for the quarter ended September 30, 1998, compared with
$3,781,453 or 75% of net sales for the same period ended
September 30, 1997. Cost of Goods Sold were $9,555,899 for the
six months ended September 30, 1998, representing 71.5% of net
sales as compared to $8,551,410 or 78% of net sales for the six
months ended September 30, 1997. The Company was able to improve
gross margin by focusing on production efficiencies, price
control and changes in the product mix to focus on sales of
higher margin, branded products.
Selling expenses were $877,045 for the quarter ended September
30, 1998, compared with $526,993 for the same period ended
September 30, 1997, an increase of 66%. For the six months ended
September 30, 1998, selling expenses were $1,454,906 as compared
to $940,190 for the same period one year ago. The increase in
expenses over the same period a year ago is mainly attributed to
a new advertising campaign to promote the Company's flagship line
of products, Veggie. In addition, there are variable expenses,
including brokerage commissions that increase in proportion to
the increase in sales.
Delivery expenses were $380,660 for the quarter ended September
30, 1998, compared with $222,141 for the same period ended
September 30, 1997, a 71% increase. Delivery expenses were
$654,706 for the six months ended September 30, 1998 as compared
to $439,867 for the six months ended September 30, 1997. The
increase in delivery costs is a result of the increase in sales
shipments to customers for the periods ended September 30, 1998
as compared with the same periods in the prior year. In
addition, shipping rates experienced an increase during this
quarter over the same quarter a year ago.
<PAGE>9
General and Administrative expenses were $554,182 for the quarter
ended September 30, 1998, compared with $336,199 for the same
period ended September 30, 1997, a 65% increase. General and
administrative expenses increased 30% to $937,094 for the six
months ended September 30, 1998 as compared to $721,964 for the
same period on year ago. This change is primarily attributed to
increased expenses for consulting services and employee salaries.
Research and Development expenses were $47,354 for the quarter
ended September 30, 1998, compared with $52,388 for the quarter
ended September 30, 1997. These expenses were $87,872 for the
six months ended September 30, 1998 as compared to $96,147 for
the same period one year ago. This decrease in expenses is
largely due to a reduction in costs related to fewer new products
in the development stage during fiscal 1999 as compared to the
same period in fiscal 1998
Other Income and Expenses netted to $52,490 in expense for the
quarter ended September 30, 1998 as compared to $12,569 in income
for the quarter ended September 30, 1997. These expenses netted
to $60,913 for the six months ended September 30, 1998 as
compared to $17,359 for the same period in fiscal 1998. Interest
expense increased due to additional draws on the line of credit
and the capitalization of interest expense to the equipment line
of credit during fiscal 1998.
Liquidity and Capital Resources
Operating Activities -- Net cash used by operating activities was
$2,716,336 for the six months ended September 30, 1998 compared
to net cash provided of $438,212 for the same period in 1997.
This change in operating activities is the result of a build-up
of inventory and accounts receivable associated with an increase
in sales during the latter portion of the quarter ended September
30, 1998. In addition, in an effort to increase response time to
customer orders, the Company is accumulating an inventory of
finished goods for their most post popular product lines.
Investing Activities -- Net cash used in investing activities
totaled $362,750 for the period ended September 30, 1998 compared
to net cash used of $234,635 for the same period in 1997. The
increase in cash used for investing activities resulted from the
sale of marketable securities during fiscal 1998. As of
September 30, 1997, all marketable securities had been sold by
the Company.
Financing Activities -- Net cash flows from financing activities
were $3,059,585 for the six months ended September 30, 1998
compared to cash flows used in financing activities of $195,984
for the same period in 1997. This increase is attributed to
increased draws on the Company's line of credit to finance the
increase in accounts receivable and inventory.
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. The availability under this line of
credit arrangement is calculated on a borrowing base of eligible
inventory and accounts receivable. This line of credit was
increased to $3 million during February 1998.
On June 27, 1997, the Company secured a $1.5 million term note
payable 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 March 31,
1998, the balance outstanding under this agreement was
$1,426,847.
<PAGE> 10
During June 1998, the Company signed an amendment to the above
contract which expanded the line of credit availability to $3.5
million and the term not payable to $3 million. The amendment
also reduced the interest on the line of credit and term note to
prime plus one percent.
On October 8, 1998, the Company entered into an agreement
whereby the Company would issue 2,500,000 shares of the Company's common
stock to an individual in a private placement. The shares were issued at
a price equal to the Common Stock's closing bid price on the date of the
agreement. The per share price was $0.375, resulting in $937,500 in net
proceeds. The Company intends to utilize the proceeds for working capital
needs of the Company such as to increase inventory levels, expand marketing
efforts and for general corporate purposes.
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.
Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (the
"FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income" ("FAS 130")
and No. 131. "Disclosure about Segments of an Enterprise and
Related Information" ("FAS 131"). FAS 130 establishes standards
for the way that public companies report information about
operating segments in annual financial statements and requires
reporting of selected information about operating segments in
interim financial statements issued to the public. Both FAS 130
and FAS 131 are effective for periods beginning after December
15, 1997. Because of the recent issuance of the standards,
management has been unable to fully evaluate the impact, if any,
they may have on future financial statement disclosures.
In June 1998, the FASB issued SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("FAS 133"). FAS
133 requires companies to recognize all derivative contracts as
either assets of liabilities in the balance sheet and to measure
them at fair value. If certain conditions are met, a derivative
may specifically be designated as a hedge, the objective of which
is to match the timing of gain or loss recognition of: (I) the
changes in the fair value of the hedged asset or liability that
are attributable to the hedged risk; or (ii) the earnings effect
of the hedged transaction. For a derivative not designated as a
hedging instrument, the gain or loss is recognized as income in
the period of change. FAS 133 is effective for all fiscal year
quarters of fiscal years beginning after June 15, 1999.
Historically, the Company has not entered into any derivative
contracts either to hedge existing risks or for speculative
purposes. Accordingly, the Company does not expect adoption of
the new standard on April 1, 2001 to affect its financial
statements.
Year 2000 Compliance
The Year 2000 problem is the result of information technology
systems and embedded systems (products that are made with
microprocessor (computer) chips) using a two-digit format, as
opposed to four digits, to indicate the year. Such information
technology and embedded systems may be unable to properly
recognize and process date-sensitive information beginning
January 1, 2000.
The Company has undertaken an assessment of the potential impact
of the Year 2000 issue to its internal operations. Such
assessment has included a review of the impact primarily in the
following areas: production and manufacturing systems, business
systems, including sales and marketing, billing, and
infrastructure consists of a network of personal computers and
servers that were obtained from major suppliers. The Company
also utilizes various business, administrative and financial
software applications on the infrastructure to perform the
business functions of the Company. The Company is in the process
of testing and upgrading its information technology systems and
embedded systems, which may be affected by the Year 2000 issue.
Based on the progress the Company has made in identifying and
addressing the Company's Year 2000 issues and the plan and
timeline to complete the compliance program, management does not
foresee significant risks associated with the Company's Year 2000
compliance at this time. Management estimates that the testing,
upgrading, and replacement of affected systems will be completed
by June 30, 1999. However, the inability of the Company to
identify and timely correct material Year 2000 deficiencies in
the software and/or infrastructure could result in an
interruption in, or failure of, certain of the Company's business
activities or operations.
<PAGE> 11
The Company has established a team dedicated to periodically
reviewing not only the internal information technology and
embedded systems used in the operation of the Company, but also
the information technology and embedded systems and the Year 2000
compliance plans of the Company's significant customers and
suppliers, shipper, utilities, financial institutions and
transfer agent. The Company has material third party
relationships with its customers, suppliers, shippers, utilities,
financial institutions, and transfer agent. If the operations of
any of these third parties are adversely impacted by Year 2000
deficiencies, it may have a material impact on the Company.
Accordingly, the Company is in the process of requesting
information and documentation from the Company's significant
customers and suppliers, shippers, utilities, financial
institutions, and transfer agent relating to their Year 2000
compliance plans. At this time, the Company has not yet received
sufficient certifications to be assured that its customer,
suppliers, shippers, utilities, financial institutions, and
transfer agent have fully considered and mitigated any potential
material impact of the Year 2000 deficiencies. Therefore,
management does not, at this time, know of the potential costs to
the Company of any adverse impact or effect of any Year 2000
deficiencies by these third parties.
Because the Company is still evaluating the status of the systems
used in business activities and operations of the Company and the
systems of the third parties with which the Company conducts its
business, management has not yet developed a comprehensive
contingency plan and are unable to identify "the most reasonably
likely worst case scenario" at this time. As management
identifies significant risks related to the Company's Year 2000
compliance or if the Company's Year 2000 compliance program's
progress deviates substantially from the anticipated timeline,
management will develop appropriate contingency plans.
<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 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, 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 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.)
*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 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, 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
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 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 as exhibit 10.33 on Form 10-QSB for quarter
ended June 30, 1997, and incorporation herein by
reference.)
27 Financial Data Schedule (Filed herewith.)
Reports on Form 8-K
Form 8-K filed on September 11, 1998 to disclose
possible Nasdaq delisting of the Company's common stock
from the Small-Cap Exchange.
* - 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: October 28, 1998 /s/Angelo S. Morini
Angelo S. Morini
Chairman and President
(Principal Executive Officer)
Date: October 28, 1998 /s/Cynthia L. Hunter
Cynthia L. Hunter, CPA
Chief Financial Officer
(Principal Financial and
Accounting Officer)
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] MAR-31-1999
[PERIOD-END] SEP-30-1998
[CASH] 598
[SECURITIES] 0
[RECEIVABLES] 3779366
[ALLOWANCES] 0
[INVENTORY] 5351270
[CURRENT-ASSETS] 792876
[PP&E] 10854687
[DEPRECIATION] 0
[TOTAL-ASSETS] 20908616
[CURRENT-LIABILITIES] 6682750
[BONDS] 0
[COMMON] 617553
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 10774360
[TOTAL-LIABILITY-AND-EQUITY] 20908616
[SALES] 7583838
[TOTAL-REVENUES] 7583838
[CGS] 5224605
[TOTAL-COSTS] 1859241
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 53832
[INCOME-PRETAX] 447502
[INCOME-TAX] 0
[INCOME-CONTINUING] 0
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 447502
[EPS-PRIMARY] .01
[EPS-DILUTED] 0
</TABLE>
