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, 1998
Commission File Number: 0-17264
ALFA International Corp.
(Exact name of registrant as specified in ts 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
(Address of principal executive offices)
10533
(Zip Code)
(914) 591-1994
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
requiredto 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 November 19, 1998, the registrant had outstanding 6,441,398 shares of
Common Stock, par value $.01 per share.
<PAGE>
ALFA INTERNATIONAL CORP.
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
DECEMBER 31, 1997
SEPTEMBER 30, 1998
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1997
THREE MONTHS ENDED SEPTEMBER 30, 1998
NINE MONTHS ENDED SEPTEMBER 30, 1997
NINE MONTHS ENDED SEPTEMBER 30, 1998
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1998
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1997
NINE MONTHS ENDED SEPTEMBER 30, 1998
NOTES TO FINANCIAL STATEMENTS
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS September 30, December 31,
1998 1997
(Unaudited) Note 1
____________ _____________
<S> <C> <C>
CURRENT ASSETS
Cash and equivalents $ 75,351 $ 42,088
Accounts receivable 2,974 1,143
Inventory 99,757 96,045
Prepaid expenses and other
current assets 32,453 18,097
_______ ________
Total Current Assets 210,535 157,373
_______ ________
PROPERTY AND EQUIPMENT:
Office & Computer Equipment 35,841 35,296
Furniture & Fixtures 33,529 25,883
______ _______
69,370 61,179
Less:Accum. depreciation (31,898) (25,675)
_______ ________
37,472 35,504
_______ ________
Other Assets:
Goodwill 56,023 68,952
Other Assets 4,698 4,398
______ _______
60,721 73,350
Total Assets $ 308,728 $ 266,227
__________ ___________
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 104,656 $ 119,080
Royalties Payable 0 24,000
Accrued expenses and other
Current liabilities 0 1,840
_________ ____________
Total Current Liabilities 104,656 144,920
_________ ____________
Other Liabilities 0 12,903
_________ ___________
STOCKHOLDERS EQUITY:
Common Stock - $ .01 par value
Authorized - 15,000,000 shares
Issued 6,441,398 shares at 9/30/98
and 6,018,898 shares at 12/31/97 64,414 60,189
Capital in excess of par value 4,168,703 3,886,677
Retained earnings (deficit) (4,029,045) (3,838,462)
__________ ___________
Total Stockholders' Equity 204,072 108,404
__________ __________
Total Liabilities & Equity $ 308,728 $ 266,227
__________ __________
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
September 30 September 30
______________________ _______________________
1998 1997 1998 1997
____ ____ ____ ____
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 6,750 $ 2,145 $ 48,807 $ 5,882
Interest Income 613 1,327 1,398 1,327
Other income 4,101 14,784 25,060 14,784
______ ______ ______ _______
11,464 18,256 75,265 21,993
______ ______ ______ _______
COST AND EXPENSES:
Cost of sales 1,195 3,385 18,321 3,671
Selling, general and
administrative 63,698 95,379 247,527 164,096
Interest expense 0 975 0 3,736
______ _______ ________ ________
64,893 99,739 265,848 171,503
______ ______ _______ ________
NET LOSS $ (53,429) $(81,843) $(190,583) $(149,510)
__________ ________ __________ __________
WEIGHTED AVG. NUMBER
OF SHARES OUTSTANDING 6,441,398 4,418,893 6,441,398 4,418,893
NET LOSS PER SHARE $ (.01) $ ( - ) $ (.03) $ ( - )
_______ ________ _______ ________
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Capital in Retained
Par Excess of Earnings
Shares Value Par Value (Deficit
______ ______ _________ _________
<S> <C> <C> <C> <C>
Balances At
December 31,
1997 6,018,898 $ 60,189 $ 3,886,677 $ (3,838,462)
Issuance of
Common Stock 422,500 $ 4,225 $ 282,026
Net (loss) for
the Nine
Months ended
September 30, 1998 $ ( 190,583)
_________ _________ ____________ ______________
Balances At
Sept. 30, 1998 6,441,398 $ 64,414 $ 4,168,703 $ ( 4,029,045)
__________ ________ ___________ _____________
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine Months Ended
September 30
______________________
1998 1997
____ ____
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (190,583) $ 68,027)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization 19,152 8,614
Changes in operating assets and liabilities:
Accounts receivable (1,831) (363)
Inventories (3,712) (23,619)
Other current assets (14,356) (15,150)
Accounts payable (14,424) 180,913
Royalties Payable (24,000) -
Other assets (300) 4,128
Other Liabilities (12,903) -
Accrued expenses (1,840) 36,900
________ _______
Net cash flows from operating activities (244,797) 123,396
________ _______
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash Received in Acquisition - 874
Acquisitions of property and equipment (8,190) 14,690
_______ _______
Net cash flows from investing activities (8,190) 15,564
_______ _______
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 286,250 (170,795)
Collection of Subscription Receivable - 25,000
Advance to Affiliate, net of Investment - (10,489)
Proceeds of Note Payable - 33,828
________ ________
Net cash flows from financing activities 286,250 (122,456)
________ ________
NET CHANGE IN CASH AND EQUIVALENTS 33,263 940
_______ ________
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 42,088 57
_______ _______
CASH AND EQUIVALENTS, END OF PERIOD $ 75,351 $ 997
_______ _______
SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (refunded) 0 0
_________ ________
Interest paid $ 0 $ 0
_________ ________
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION:
The balance sheet for Alfa International Corp. ("Alfa" or ,the "Company") 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, 1997 and is presented herein for
omparative purposes. All other financial statements are unaudited. In the
opinion of management 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 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, 1997.
NOTE 2 - COMMON STOCK
During the third quarter of 1998, the Company issued 12,500 shares of its
Common Stock and 6,250 warrants as a result of the sale of one-half of a unit
("Unit") of its securities in a private placement ("Private Placement") as
described in the Company's Report on Form 10-KSB for the fiscal year ended
December 31, 1997. During the third quarter of 1998, the Company also issued
150,000 shares of its Common Stock to a shareholder as a result of the exercise
by that shareholder of 150,000 warrants. The Company has engaged the services
of Continental International Trading Corp. ("Continental") as non-exclusive
placement agent for the Private Placement as described in the Company's Report
on Form 10-KSB for the fiscal year ended December 31, 1997. The Company is not
obligated to pay any fees to Continental on any sale of Units to investors not
directly introduced to the Company by Continental, nor are any fees due to
Continental as a result of the exercise of any warrants contained in previously
sold Units. The price of each Unit is $25,000 and each Unit consists of 25,000
shares of Common Stock and 12,500 Warrants. Each Warrant is exercisable for the
purchase of one share of Common Stock.
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
ITEM 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
All of the Company's operations are conducted through its wholly owned
subsidiary, Ty-Breakers Corp.("Ty-Breakers").Ty-Breakers is engaged in the
business of manufacturing and marketing apparel, mostly jackets, made from
Tyvek and Kensel. Tyvek is a registered trademark of the Du Pont Company.
Kensel is a trademark of Ty-Breakers used to identify Ty-Breakers' patented
fabric material. During the third quarter of 1998, Ty-Breakers began developing
a tee shirt and gift item line, which will bear artwork designed by two artists
with whom Ty-Breakers has contracted. All copyrights to such artwork are owned
by Ty-Breakers. Ty-Breakers plans to sell these items, along with its Tyvek
apparel, into the distribution channel it is developing with retail apparel and
gift stores.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30,1998 vs
THREE MONTHS ENDED SEPTEMBER 30,1997
The Company experienced a decrease in net revenue of $ 6,792 for the third
quarter of 1998 as compared to the same period in the previous year. This
revenue decrease resulted from an increase in Ty-Breakers' sales of $4,605,
interest income and a decrease of $10,683 in other income .
Selling , general and administrative expenses decreased by $ 31,681 during the
third quarter of 1998 compared to the same period in the previous year. This
decrease is attributable to decreased marketing expenses associated with the
Ty-Breakers' catalog mailing in the prior period.
The Company experienced a net loss of $ 53,429 for the third quarter of 1998
as compared to a net loss of $ 81,843 during the same period in the previous
fiscal year. This decrease of $ 28,414 is attributable to the decreased
expenses mentioned above and the failure to attain a sufficient level of sales.
NINE MONTHS ENDED JUNE 30,1998 vs.
NINE MONTHS ENDED JUNE 30,1997
The Company experienced an increase in net revenue of $ 53,272 for the first
nine months of 1998 as compared to the same period in the previous year. This
revenue increase resulted from an increase in Ty-Breakers' sales of $ 42,925,
interest income and other income of $ 25,060. The gross profit percentage for
the first nine months of 1998 was in excess of 60 %.
Selling , general and administrative expenses increased by $ 83,431 during the
first nine months of 1998 compared to the same period in the previous year.
This increase is attributable to the increase in personnel and marketing
expenses and to the Company's relative inactivity in the prior period as
previously reported.
The Company experienced a net loss of $ 190,583 for the first nine months of
1998 as compared to a net loss of $ 149,510 during the same period in the
previous fiscal year. This increase of $ 41,073 is attributable to the
increased expenses mentioned above and the failure of Ty-Breakers to attain a
sufficient level of sales.Management believes that a profitable level of sales
will be attained if the Company continues its marketing efforts and new product
development and introduction. The continuation of these marketing efforts is
contingent upon the successful conclusion of the Company's ongoing Private
Placement or other such financing, the outcome of which can not be predicted at
this time.
LIQUIDITY AND CAPITAL RESOURCES:
At September 30, 1998 the Company had working capital of $ 105,879 as compared
to $ 12,453 at December 31, 1997. This increase is attributable to the
Company's loss from operations during the nine month period net of the receipt
during the period by the Company of the net proceeds of $286,250 from the sale
of 10.9 Units in the Private Placement and the exercise of 150,000 warrants. On
August 14, 1998, the Company received $150,000, which were the proceeds from
the exercise of 150,000 warrants held by an investor. Approximately 47 % of
current assets are invested in inventory. The Company is continuing the Private
Placement and will use the net proceeds therefrom to finance further marketing
efforts and new product development for its Ty-Breakers subsidiary. A
successful completion of the Private Placement or alternate financing and / or
an increase in Ty-Breakers' level of sales is necessary to continue to carry
out the Ty-Breakers' sales and marketing plan. It is necessary for the Company
to increase its levels of sales as well as succeed in selling additional equity
in order to allow continued operations. No assurances can be given, however,
that adequate financing can be obtained from the Private Placement or other
such sources or generated from operations in order to allow the Company to
pursue its marketing and product development plans.
PART II - OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
Between July 1st and September 30th of 1998, the Company sold 0.5 Unit in the
Private Placement. Each Unit consists of 25,000 shares of Common Stock and
12,500 common stock purchase warrants. Each warrant is exercisable for the
purchase of one share of Common Stock at a price of $2.00 per share. The price
of each Unit is $25,000 and the Company paid Continental a placement fee of 50%
of the sale price of the four-tenths of a Unit sold. The Units in the Private
Placement are being offered without any registration pursuant to the exemptions
from registration contained in Rule 506 of Regulation D promulgated by the
Securities & Exchange Commission under the Securities Act of 1933, as amended.
On August 14, 1998 outstanding warrants were exercised to purchase 150,000
shares of Common Stock.
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: November 19, 1998 ALFA INTERNATIONAL CORP
(Registrant)
By: /s/ Frank J. Drohan
Frank J. Drohan
Chief Executive Officer
and Chief Financial
Officerer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 75,351
<SECURITIES> 0
<RECEIVABLES> 2,974
<ALLOWANCES> 0
<INVENTORY> 99,757
<CURRENT-ASSETS> 210,535
<PP&E> 69,370
<DEPRECIATION> (31,898)
<TOTAL-ASSETS> 308,728
<CURRENT-LIABILITIES> 104656
<BONDS> 0
0
0
<COMMON> 64,414
<OTHER-SE> 204,072
<TOTAL-LIABILITY-AND-EQUITY> 308,728
<SALES> 48,807
<TOTAL-REVENUES> 75,265
<CGS> 18,321
<TOTAL-COSTS> 265,848
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (190,583)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (190,583)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
