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, 1998
_____________
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
(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 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 13, 1998, the registrant had outstanding 6,278,898
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
JUNE 30, 1998
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1997
THREE MONTHS ENDED JUNE 30, 1998
SIX MONTHS ENDED JUNE 30, 1997
SIX MONTHS ENDED JUNE 30, 1998
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30,1998
STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1997
SIX MONTHS ENDED JUNE 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>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
---------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
ASSETS June 30, December 31,
1998 1997
CURRENT ASSETS: (Unaudited) Note 1
---------- ----------
Cash and equivalents $ 1,673 $ 42,088
Accounts receivable 2,277 1,143
Inventory 100,578 96,045
Prepaid expenses and other
current assets 23,759 18,097
--------- ---------
Total Current Assets
128,287 157,373
PROPERTY AND EQUIPMENT:
Office & Computer Equipment 35,841 35,296
Furniture & Fixtures 33,529 25,883
---------- ---------
69,370 61,179
Less:Accumulated depreciation (29,824) (25,675)
---------- ----------
39,546 35,504
Other Assets:
Goodwill 60,332 68,952
Other Assets 4,698 4,398
---------- ---------
65,030 73,350
Total Assets $ 232,863 $ 266,227
---------- ----------
LIABILITIES AND STOCKHOLDERS
EQUITY
CURRENT LIABILITIES:
Accounts payable $ 102,527 $ 119,080
Royalties Payable 24,000 24,000
Accrued expenses and other
Current liabilities 86 1,840
---------- ---------
Total Current Liabilities 126,613 144,920
---------- ---------
Other Liabilities 5,000 12,903
---------- ---------
STOCKHOLDERS EQUITY:
Common Stock - $ .01 par value
Authorized - 15,000,000 shares
Issued - 6,278,898 shares at
6/30/98 and 6,018,898 shares at
12/31/97 62,789 60,189
Capital in excess of par value 4,014,077 3,886,677
Retained earnings (deficit) (3,975,616) (3,838,462)
----------- ----------
Total Stockholders' Equity 101,250 108,404
---------- ----------
Total Liabilities & Equity 232,863 266,227
---------- ----------
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
June 30 June 30
1998 1997 1998 1997
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 20,044 $ 1,058 $ 42,057 $ 3,737
Interest Income 87 0 785 0
Other income 2,851 0 20,959 0
----------- ---------- ----------- ----------
22,982 1,058 63,801 3,737
----------- ---------- ----------- ----------
COST AND EXPENSES:
Cost of sales 7,240 36 17,126 286
Selling, general and
administrative 82,440 21,570 183,829 68,717
Interest expense 0 86 0 2,761
----------- ---------- ----------- ----------
89,680 21,692 200,955 71,764
----------- ---------- ----------- ----------
NET LOSS $ (66,698) $ (20,634) $ (137,154) $ (68,027)
----------- ---------- ----------- ----------
WEIGHTED AVG. NUMBER
OF SHARES OUTSTANDING 6,268,018 3,693,898 6,278,018 3,693,898
NET LOSS PER SHARE $(.01) $(.01) $(.02) $(.02)
------ ------ ------ ------
</TABLE
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</TABLE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
---------------------------------------------------------
<CAPTION>
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 260,000 $ 2,600 $ 127,400
Net (loss) for
the Six
Months ended
June 30, 1998 _________ _______ ___________ $ ( 137,154)
-----------
Balances At
June 30, 1998 6,278,898 $ 62,789 $ 4,014,077 $ (3,975,616)
--------- -------- ----------- -------------
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------
(UNAUDITED)
<CAPTION>
Six Months Ended
June 30
------------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (137,154) $ (68,027)
Adjustments to reconcile net loss to net cash
flows from operating activities:
Depreciation and amortization 12,768 8,614
Changes in operating assets and liabilities:
Accounts receivable (1,134) (363)
Inventories (4,533) (23,619)
Other current assets (5,662) (15,150)
Accounts payable (16,553) 180,913
Royalties Payable - -
Other assets (300) 4,128
Other Liabilities (7,903) -
Accrued expenses (1,754) 36,900
----------- -----------
Net cash flows from operating activities (162,225) 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 130,000 (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 130,000 (122,456)
----------- ------------
NET CHANGE IN CASH AND EQUIVALENTS (40,415) 940
----------- -----------
CASH AND EQUIVALENTS, BEGINNING OF PERIOD 42,088 57
----------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 1,673 $ 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
comparative 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 second quarter of 1998, the Company issued 10,000
shares of its Common Stock and 5,000 warrants as a result of the
sale of four-tenths 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. The Company has engaged the services of
Continental International Trading Corp. ("Continental") as non-
exclusive placement agent for the Private Placement. 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. The Company began implementing its sales and
marketing plan for its Ty-Breakers subsidiary in July of 1997.
These marketing efforts continue to date.
<PAGE>
RESULTS OF OPERATIONS:
THREE MONTHS ENDED JUNE 30,1998 vs.
THREE MONTHS ENDED JUNE 30,1997
The Company experienced an increase in net revenue of $ 21,924
for the second quarter of 1998 as compared to the same period in
the previous year. This revenue increase resulted from an
increase in Ty-Breakers' sales of $ 18,986 as a result of
orders received from Ty-Breakers' initial direct mail campaign to
retail stores which was initiated in November 1997, interest
income and other income. The cost of sales percentage for the
second quarter of 1998 was 36% and the gross profit percentage
was 64%.
Selling , general and administrative expenses increased by
$ 60,870 during the second quarter of 1998 compared to the same
period in the previous year. This increase is attributable to the
increase in personnel and marketing expenses associated with Ty-
Breakers' marketing efforts.
The Company experienced a net loss of $ 66,698 for the second
quarter of 1998 as compared to a net loss of $ 20,634 during the
same period in the previous fiscal year. This increase of
$ 46,064 is attributable to the increased expenses mentioned
above and the failure to attain a sufficient level of sales.
SIX MONTHS ENDED JUNE 30,1998 vs.
SIX MONTHS ENDED JUNE 30,1997
The Company experienced an increase in net revenue of $ 60,064
for the first six 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 $ 38,320 as a result of
orders received from Ty-Breakers' initial direct mail campaign to
retail stores which was initiated in November 1997, interest
income and other income of $20,959. The gross profit percentage
for the first six months of 1998 was 60%.
Selling , general and administrative expenses increased by
$ 115,112 during the first six months of 1998 compared to the
same period in the previous year. This increase is attributable
to the increase in personnel and marketing expenses associated
with Ty-Breakers' marketing efforts in support of sales to
retail stores which were first introduced during the fourth
quarter of 1997 and to increased professional fees.
The Company experienced a net loss of $ 137,154 for the first
six months of 1998 as compared to a net loss of $ 68,027 during
the same period in the previous fiscal year. This increase of
$ 69,127 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.
The continuation of these marketing efforts is contingent upon
the successful conclusion of the Company's ongoing Private
Placement, the outcome of which can not be predicted at this
time.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES:
At June 30, 1998 the Company had working capital of $ 1,674 as
compared to $ 12,453 at December 31, 1997. This decrease is
attributable to the Company's loss from operations during the
period net of the receipt during the period by the Company of the
net proceeds of $130,000 from the sale of 10.4 Units in the
Private Placement. 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 78% 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 for
its Ty-Breakers subsidiary. A successful completion of the
Private Placement 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.
PART II - OTHER INFORMATION
ITEM 2: CHANGES IN SECURITIES
Between April 1st and March 31st of 1998, the Company sold
0.4 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: August 14, 1998 ALFA INTERNATIONAL CORP.
(Registrant)
By: /s/ Frank J. Drohan
________________________
Frank J. Drohan
Chief Executive Officer
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 1,673
<SECURITIES> 0
<RECEIVABLES> 2,277
<ALLOWANCES> 0
<INVENTORY> 100,578
<CURRENT-ASSETS> 128,287
<PP&E> 69,370
<DEPRECIATION> (29,824)
<TOTAL-ASSETS> 232,863
<CURRENT-LIABILITIES> 126,613
<BONDS> 0
0
0
<COMMON> 62,789
<OTHER-SE> 38,461
<TOTAL-LIABILITY-AND-EQUITY> 232,863
<SALES> 42,057
<TOTAL-REVENUES> 63,801
<CGS> 17,126
<TOTAL-COSTS> 200,955
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (137,154)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,154)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
