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: 0-17264
ALFA International Corp.
(Exact name of registrant as specified in its charter)
New Jersey 22-2216835
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
50 South Buckhout Street, Irvington, New York, 10533
(Address of principal executive offices)
(914) 591-1994
Registrant's telephone number, including area code
Indicate by check number 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. [x] Yes [ ] No
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
[x] Yes [ ] No
As of August 12, 1997, the registrant had outstanding 3,693,898
shares of Common Stock, par value $.01 per share, of which
1,250,000 of such shares will be returned to the Company for
cancellation in accordance with the Redemption Agreement. (See:
Item 2)
ALFA INTERNATIONAL CORP.
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
DECEMBER 31, 1996
JUNE 30, 1997
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1996
THREE MONTHS ENDED JUNE 30, 1997
SIX MONTHS ENDED JUNE 30, 1996
SIX MONTHS ENDED JUNE 30, 1997
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30,1997
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1996
SIX MONTHS ENDED JUNE 30, 1997
NOTES TO FINANCIAL STATEMENTS
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
ITEM 2: CHANGES IN SECURITIES
ITEM 6: EXHIBITS AND REPORT ON FORM 8-K
ALFA INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS June 30, December 31,
1997 1996
CURRENT ASSETS: (Unaudited) ( Note 1)
----------- -----------
Cash and equivalents $ 997 $ 57
Accounts receivable 363 0
Inventory 23,619 0
Prepaid expenses and other
current assets 15,150 0
----------- ---------
Total Current Assets 40,129 57
PROPERTY AND EQUIPMENT:
Office & Computer Equipment 14,014 0
Furniture & Fixtures 11,459 0
----------- -----------
25,473 0
Less: Accumulated depreciation (10,783) 0
----------- -----------
14,690 0
Other Assets:
Due From Affiliate 0 49,511
Deferred Offering Cost 12,500 12,500
Investment in API 60,000 0
Goodwill 243,283 0
Deposits 4,128 0
Total Assets $ 374,730 $ 62,068
LIABILITIES AND STOCKHOLDERS' EQUITY (Note 2)
CURRENT LIABILITIES:
Accounts payable - trade: $ 144,302 4,286
Note payable 133,828 100,000
Current Portion - Long Term Debt 40,897 0
Accrued expenses and other current
liabilities 36,900 0
Total Current Liabilities 355,927 104,286
----------- -----------
LONG TERM DEBT 129,048 0
STOCKHOLDERS EQUITY:
Common Stock - $ .01 par value
Authorized - 15,000,000 shares
Issued - 3,693,898 shares at 6/30/97
and 2,559,488 at 12/31/96 36,939 25,595
Undesignated preferred stock:
Authorized - 978,400 shares
Issued and outstanding - none
Capital in excess of par value 3,262,867 3,053,721
Retained earnings (deficit) (3,189,561) (3,121,534)
----------- ----------
Total Stockholder's Equity (110,245) (42,218)
----------- ----------
$ 374,730 $ 62,068
ALFA INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED
June 30 June 30
1997 1996 1997 1996
--------- --------- --------- -------
REVENUES:
Net sales $ 1,058 $ 0 $ 3,737 $ 0
Interest Income 0 0 0 0
Other income 0 0 0 0
--------- --------- --------- -------
1,058 0 3,737 0
COST AND EXPENSES:
Cost of sales 36 0 286 0
Selling, general
& administrative 21,570 2,379 68,717 2,864
Interest expense 86 0 2,761 0
--------- --------- --------- -------
21,692 2,379 71,764 2,864
LOSS BEFORE INCOME
TAXES (20,634) (2,379) (68,027) (2,864)
INCOME TAXES
(CREDITS):
Federal - - - -
State - - - -
NET LOSS $ (20,634) $ (2,379) $ (68,027) $ (2,864)
WEIGHTED AVERAGE
NUMBER OF SHARES
OUTSTANDING 3,693,898 1,085,313 3,693,898 1,085,313
NET INCOME (LOSS) PER
SHARE EXCLUDING
EXTRAORDINARY ITEM $ ( - ) $ ( - ) $ ( - ) $ ( - )
ALFA INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Preferred Common Stock
Stock Capital in Retained
------------- ----------------- Excess of Earnings
Stated Par Par Value (Deficit)
Shares Value Shares Value ---------- --------
------ ------ --------- -------
BALANCE AT
DECEMBER 31,
1996 - - 2,559,488 $25,595 $3,053,721 $(3,121,534)
Issuance of
Common
Stock per
Merger And
Private
Placement - - 1,134,410 $11,344 209,146 -
Net loss for
the Six
Months ended
June 30, 1997 - - - - - (68,027)
BALANCE AT
June 30, 1997 -0- -0- 3,693,898 $36,939 $3,262,867 $(3,189,561)
----- ----- --------- ------- ---------- --------
ALFA INTERNATIONAL CORP.("Alfa") AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The balance sheet at the end of the preceding fiscal year has
been derived from the audited balance sheet and notes thereto
contained in the Company's annual report on Form 10-KSB for the
fiscal year ended December 31, 1996 and is presented herein for
comparative purposes. All other financial statements are unaudited.
In the opinion of management, with the exception of adjustments
necessary to reflect the acquisition on January 23, 1997 of
Ty-Breakers (NY) Corp. ("Ty-Breakers") by the Company, all
adjustments which include only normal recurring adjustments
necessary to present fairly the financial position, results of
operations and changes in financial position for all periods
presented have been made. The results of operations for interim
periods are not necessarily indicative of operating results for
the full year. Alfa presently has one wholly-owned subsidiary -
Ty-Breakers - through which it conducts all operations. All
intercompany transactions have been eliminated in its consolidation
with Alfa.
Footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the published rules
and regulations of the Securities and Exchange Commission. These
financial statements should be read in conjunction with the
financial statements and notes thereto included in the Company's
annual report on Form 10-KSB for the fiscal year ended December
31, 1996.
ITEM 2 - Management's Discussion and Analysis and Plan of Operation
On November 13, 1996 Old Dominion Growth Fund Limited ("Old
Dominion") loaned the Company $100,000 (the "Bridge Loan")
for use by the Company for, among other things, funding the ongoing
operations of Ty-Breakers (NY) Corp.("TYNY") and the acquisition
of TYNY which Old Dominion wished the Company to acquire. The
Bridge Loan is evidenced by a promissory note ("Note") dated
November 13, 1996. The Company's president, Frank J. Drohan, has
pledged 605,201 shares of Alfa's Common Stock owned by him as
collateral for the payment in full by the Company of all amounts
owing under the Note. The Note is payable on the earlier of (a) ten
business days after the consummation of the initial sale or sales
of securities of Alfa for cash next following January 23, 1997, of
which sale the net proceeds to Alfa are in at least the amount then
due and owing under the Note, or (b) on November 13, 1997.
On December 6, 1996 the Company, Frank J. Drohan and Auto-Pilot,
Inc., a Delaware corporation ("API"), entered into an
investment banking agreement ("I.B. Agreement") with Old Dominion.
The I.B. Agreement contemplated, among other things, an offering
by the Company of up to $1,500,000 of its securities ("Offering")
with Old Dominion acting as placement manager for such Offering.
Additionally on December 6, 1996 the Company and Old Dominion
entered into a stock redemption agreement ("Redemption Agreement")
requiring Old Dominion, depending upon the amount of proceeds the
Company received in the Offering, to contribute all, some or none
of the 1,250,000 shares (the "Shares") of Common Stock owned by it
to the Company. The Offering never occurred and the Company has
received no such proceeds. The acquisition of Ty-Breakers
by the Company was the only condition precedent to Old Dominion's
obligation to conduct the Offering. The Company acquired
Ty-Breakers on January 23, 1997 (the "Merger Date"). In accordance
with the provisions of the I.B. Agreement, Old Dominion was
required to deliver a minimum of $500,000 in proceeds from the
Offering to the Company within sixty (60) days after the Merger
Date. Old Dominion failed to deliver such $500,000 to the Company
resulting in the Company being placed in a precarious financial
position - unable to generate revenues by executing the Ty-Breakers
marketing plan and unable to repay the Note. The I.B. Agreement
expired on March 24, 1997.
Since the I.B. Agreement has expired and the Offering has not and
will not occur, Old Dominion is obligated, in accordance with the
terms of the Redemption Agreement, to return the 1,250,000 Shares
to the Company for cancellation. As previously reported the
Company was in negotiations with Old Dominion regarding an
extension of the I.B. Agreement, thereby extending both the time
within which the Offering may be made and the date the Shares must
be returned to the Company. Old Dominion ultimately informed the
Company that it was unwilling and/or unable to conduct the Offering
and inquired as to when the Company planned to repay the Note. The
negotiations with Old Dominion have been terminated and the Company
has notified Old Dominion to return the Shares for cancellation in
accordance with the terms of the Redemption Agreement. The Company
is awaiting the return of the Shares.
All of the Company's operations are conducted through its wholly
owned subsidiary, Ty-Breakers, which the Company - in accordance
with the terms of the I.B. Agreement - acquired on January 23,
1997. Ty-Breakers is engaged in the business of manufacturing and
marketing apparel, mostly jackets, made from Tyvek (R) and Kensel.
Tyvek is a registered trademark of the DuPont Company. Kensel is
a trademark of Ty-Breakers used to identify Ty-Breakers' patented
fabric material. Ty-Breakers is unable to market its Tyvek or
Kensel products without financing from the Company.
It was managements' intention to conduct the Offering and use the
proceeds to implement Ty-Breakers' sales and marketing plan for its
Tyvek (R) and Kensel jackets. The failure by Old Dominion to conduct
the Offering prevented this from happening and placed the Company
in a precarious financial position. Management sought alternate
sources of financing to carry out its sales and marketing plan. In
June 1997, the Company, Ty-Breakers and API entered into an
investment banking agreement (the "Continental Agreement") with
Continental International Trading Corp. ("Continental"). The
Continental Agreement contemplates, among other things, a private
placement offering (the "Private Placement") by the Company of
up to $1,500,000 of its securities in the form of units ("Units")
consisting of Common Stock and Warrants, with Continental acting
as placement manager. The Company will pay Continental a commission
equal to 50% of the gross proceeds received from Units sold by
Continental. The Company need not pay any commission to Continental
on Units sold by the Company directly to investors without
Continental's participation. The Company also agreed to issue
400,000 shares of Common Stock to Continental if the Company sells,
through Continental's efforts, all 60 Units offered. If the Company
sells, through Continental's efforts, less than 60 Units, the
Company will adjust the number of shares to be issued to
Continental proportionately. As of the date hereof, twenty-six
Units have been sold in the Private Placement. The Company intends
to use the net proceeds from the Private Placement to begin
operations and to fund the Ty-Breakers' marketing plan. The
marketing plan is targeted at retail stores and catalog companies
with the intention of selling them jackets made from Tyvek and from
Ty-Breakers' patented Kensel material. Ty-Breakers presently
markets its products almost exclusively to the premium and
incentive market on a custom basis and has not yet introduced
products made from its patented Kensel material.
Although preliminary discussions with respect to its acquisition
by Alfa have been held with Auto-Pilot,Inc. ("API"), a Delaware
corporation involved in the development of micro-computer products,
no assurance can be given at this time that such an acquisition can
or will be consummated. Management is presently focussed on
completing the Private Placement and launching the Ty-Breakers
marketing effort in order to generate sales and earnings for the
Company. Any acquisition by the Company of API is contingent upon
many factors, including the sale of the 60 Units in the Private
Placement and the exercise of the warrants contained in those
Units. If and when those warrants are exercised, the Company may
be in a position to provide the financing necessary for API to
carry out its business plan and may then be in a position,
depending on business conditions and the Company's sales and
earnings at the time, to conclude the API acquisition. API is
controlled by the Company's president and members of his family.
Any potential business combination with API is conditional upon,
among other things, the successful conclusion of the Private
Placement, the exercise of the warrants contained in the Units,
the successful execution of the Ty-Breakers' marketing plan, the
Company's record of sales and earnings at the time and general
business and economic conditions at the time.
As a result of funds received to date from the Private Placement,
management believes that the Company will have sufficient cash to
meet its requirements, including the repayment of the Bridge Loan,
for the next twelve months. If the Company and Continental are able
to successfully conclude the Private Placement, management believes
that the Company will have sufficient cash to fund the Ty-Breakers'
marketing plan, thereby generating sales and earnings for the
Company. If the Company and Continental are not able to
successfully conclude the Private Placement, management believes
that the Company may not have sufficient cash to fund the
Ty-Breakers' marketing plan and Ty-Breakers therefore will not have
sufficient funds to meet its requirements for the next twelve
months or to continue as a going concern. The Company had been
continually assured by Old Dominion, first - that immediately after
the Merger was consummated, and then - that immediately after a
price for the Company's Common Stock was entered on the OTC
Electronic Bulletin Board by any market maker, - that Old Dominion
would conduct the Offering. The Company consummated the Merger and
then the Company - not Old Dominion - succeeded in having a market
maker sponsor its Common Stock on the OTC Electronic Bulletin Board
( OTC Symbol: TYBR). As of the date hereof, at least two market
makers are making a market in the Company's Common Stock. Although
the Company was successful in its efforts to consummate the Merger
and to get its Common Stock quoted on the OTC Electronic Bulletin
Board, Old Dominion still failed to conduct the Offering of the
Company's securities. In order to preserve the Company as a going
concern, management entered into the Continental Agreement. The
Company is unable to predict the outcome of the uncertainty
surrounding the completion of the Private Placement at this time.
As of the date hereof, the Company has two employees. Upon the
successful conclusion of the Private Placement, the Company intends
to hire several additional employees and to execute the Ty-Breakers
marketing plan.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED JUNE 30,1997 vs.
THREE MONTHS ENDED JUNE 30,1996
Net sales revenue was $1,058 during the second quarter of 1997
versus zero for the second quarter of 1996. The Company had minimal
sales during the second quarter of 1997 because it was unable to
launch its marketing program for its Ty-Breakers subsidiary due to
lack of financing resulting from the failure of the Offering to
occur. During the second quarter of 1996 the Company was inactive
as previously reported. The Company realized a net loss of $20,634
during the second quarter of 1997.
SIX MONTHS ENDED JUNE 30,1997 vs.
SIX MONTHS ENDED JUNE 30,1996
Net sales revenue was $3,737 during the first six months of 1997
versus zero for the first six months of 1996. The Company had
minimal sales during the first six months of 1997 because, due to
the failure of the Offering to occur, it was unable in March 1997
to launch its Ty-Breakers' marketing program as planned. During and
after the termination of the Old Dominion negotiations,
management's efforts were devoted exclusively to securing an
alternate source of financing for the Company. During the first six
months of 1996 the Company was inactive as previously reported. The
Company realized a net loss of $68,027 for the six month period
ended June 30, 1997. The Company is making initial preparations
to launch its Ty-Breakers marketing plan as funds become available
from sales of Units in the Private Placement.
LIQUIDITY AND CAPITAL RESOURCES:
The Company had a working capital deficit of ($315,798) at June 30,
1997 as compared to a deficit of ($104,229) at December 31, 1996.
This represents an increase in the working capital deficit of
$211,569 and is attributable to the Company's consolidated
operating loss for the six month period, the acquisition of
Ty-Breakers and the failure of the Offering to occur. The
successful conclusion of the Private Placement will be necessary
to allow the Company to pursue its marketing plan for its
Ty-Breakers subsidiary. As of the date hereof the Private Placement
is ongoing and 26 Units representing $325,000 of net proceeds to
the Company, have been sold.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
The Company's wholly owned subsidiary Ty-Breakers was acquired on
January 23, 1997. Ty-Breakers presently has certain past due
accounts payable and the Company has been providing advances to
Ty-Breakers to pay certain of these amounts and to begin initial
preparation of its marketing plan. As of the date hereof,
Ty-Breakers has paid the two settlement stipulations to which it
was a party and these two matters are now settled. Should the
Company be successful in selling all or a sufficient number of
Units in the Private Placement and thereby be in a position to fund
its subsidiary's operations, these matters will be of no
consequence. Should the Company be unsuccessful in selling all or
a sufficient number of Units in the Private Placement these matters
will be significant, possibly sufficient to cause Ty-Breakers
to cease operations temporarily or permanently.
ITEM 2: Changes in Securities
(c) On April 28, 1997 the Company sold in a private placement
150,000 shares of its Common Stock directly to a non-
affiliated shareholder who is also an accredited investor at a
price of $0.125 per share for a total cash consideration of
$18,750. No sales commission was paid on this transaction and the
Company relied on Rule 506 of Regulation D in consummating this
transaction. Between July 1997 and the date hereof the Company sold
26 Units of its securities in the Private Placement. Each Unit
consists of 50,000 shares of Common Stock and 25,000 common stock
purchase warrants. Each warrant is exercisable at $1.00 per share.
The price of each Unit is $25,000 and the Company paid Continental
a commission of 50% of the sales price of the 26 Units. The Units
are being offered without any registration pursuant to the
exemptions from registration contained in Rule 506 of Regulation
D promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended.
ITEM 6: EXHIBITS AND REPORT ON FORM 8-K
(B) Reports on Form 8 - K
None
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.
DATED: August 12, 1997 ALFA INTERNATIONAL CORP.
(Registrant)
By: /s/ Frank J. Drohan
-------------------
Frank J. Drohan
Chief Executive Officer
and Chief Financial Officer
