[LIVE]
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, 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 S. Buckhout Street, Irvington, New York 10533
(Address of principal executive offices) (Zip Code)
(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.
Yes [X] 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 acourt.
[x] Yes [ ] No
As of November 18, 1997, the registrant had outstanding 4,418,893
shares of Common Stock, par value $.01 per share, after giving
effect to the cancellation by the Company of 1,125,000 shares in
accordance with the "Settlement Agreement". (See: Item 2)
<PAGE>
ALFA INTERNATIONAL CORP.
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
BALANCE SHEETS
DECEMBER 31, 1996
SEPTEMBER 30, 1997
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996
THREE MONTHS ENDED SEPTEMBER 30, 1997
NINE MONTHS ENDED SEPTEMBER 30, 1996
NINE MONTHS ENDED SEPTEMBER 30, 1997
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 1997
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996
NINE MONTHS ENDED SEPTEMBER 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
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
Sep 30, 1997 Dec 31, 1996
(Unaudited) (Note 1)
____________ ____________
<S> <C> <C>
ASSETS:
Current Assets:
Cash and equivalents $ 188,230 $ 57
Accounts receivable-trade 1,582 0
Inventory 8,367 0
Prepaid expenses and other
current assets 30,835 0
_______ ________
Total Current Assets: 229,014 57
Property and Equipment:
Office & Computer Equipment 19,440 0
Furniture & Fixtures 12,129 0
____________ ____________
31,569 0
Less: Accumulated depreciation 11,062 0
____________ ____________
20,507 0
Other Assets:
Due From Affiliate 0 49,511
Deferred Offering Cost 13,038 12,500
Investment in API 60,000 0
Goodwill 229,767 0
Deposits 13,088 0
________ ______
Total Other Assets $ 315,893 $ 62,068
TOTAL ASSETS 565,414 62,125
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current Liabilities:
Accounts payable - trade $ 149,223 $ 4,286
Note Payable 124,250 100,000
Current Portion-Long term debt 0 0
Accrued expenses and other
current liabilities 33,393 0
____________ ____________
Total Current Liabilities $ 306,866 $ 104,286
Long Term Debt 0 0
<PAGE>
STOCKHOLDERS EQUITY:
Common Stock - $ .01 par value
Authorized - 15,000,000 shares
Issued - 4,418,893 shares at 9/30/97
and 2,559,488 at 12/31/96 44,189 25,595
Undesignated preferred stock:
Authorized - 978,400 shares
Issued and outstanding - none
Capital in excess of par value 3,485,403 3,053,721
Retained earnings (deficit) (3,271,044) (3,121,534)
____________ ____________
Total Stockholder's Equity: 258,548 (42,218)
____________ ____________
$ 565,414 $ 62,068
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
__________________ _________________
1997 1996 1997 1996
<S> <C> <C> <C> <C>
REVENUES:
Net sales $ 2,145 $ 0 $ 5,882 $ 0
Interest Income 1,327 0 1,327 0
Other income 14,784 0 14,784 0
________ ________ ________ _______
18,256 0 21,993 0
COST AND EXPENSES:
Cost of sales 3,385 0 3,671 0
Selling,general and
administrative 95,379 7,594 164,096 8,902
Interest expense 975 0 3,736 0
________ ________ ________ _______
99,739 7,594 171,503 8,902
Loss from Operations
Before Income Taxes (81,483) (7,594) (149,510) (8,902)
Net Loss $ (81,483) $ (7,594) $(149,510) $ (8,902)
Weighted Average
Number of Shares
Outstanding 4,418,893 1,085,313 4,418,893 1,085,313
Net Income (Loss)
per share $ (.02) $ (-) $ (.03) $ (-)
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<CAPTION>
Preferred Common Stock Capital in Retained
Stock Excess of Earnings
Par Value (Deficit)
---------- ------------- --------- --------
Stated Par
Shs Value Shares Value
---------- --------------
<S> <C> <C> <C> <C> <C>
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 - - 2,984,405 29,844 431,682 -
Redemption of Old
Dominion shares - - (1,125,000) (11,250)
Net loss for
the Nine
Months ended
September 30, 1997 - - - - - (149,510)
BALANCE AT
September 30, 1997 0 0 4,418,893 $44,189 $3,485,403 $(3,271,044)
----- ---- --------- -------- ---------- -------
<FN>
See accompanying Notes to Financial Statements.
</TABLE>
<PAGE>
<PAGE>
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. 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. The Company has negotiated a
"Settlement Agreement" with Old Dominion which it expects
to execute by November 30, 1997. In accordance with the terms of
the proposed Settlement Agreement, the Company will pay Old
Dominion $50,000 in cash and Old Dominion will return to the
Company for cancellation 1,125,000 of the 1,250,000 Shares of
Common Stock owned by Old Dominion.
All of the Company's operations are conducted through its wholly
owned subsidiary, Ty-Breakers, which the Company 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. The Company is providing
Ty-Breakers with the financing to market its Tyvek and Kensel
products and to conduct its business.
It was managements' intention to conduct the Offering and use the
proceeds to implement Ty-Breakers' sales and marketing plan 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.
As previously reported, in June 1997, the Company, Ty-Breakers and
API entered into an investment banking and consulting 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 Private Placement has been successfully completed. As
of the date hereof, the Company has received the $1,500,000
proceeds therefrom and has issued 3,000,000 shares of its Common
Stock and 1,500,000 warrants to investors in the Private Placement.
The Company has paid Continental a fee equal to 50% of the gross
proceeds received in the Private Placement. The Company also agreed
to issue 400,000 shares of Common Stock to Continental. The Company
has used the net proceeds from the Private Placement to begin
operations and to fund the Ty-Breakers' marketing plan for its
Tyvek(R) and Kensel jackets. 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 to the premium
and incentive market on a custom basis and to retail stores and
catalog companies. During October and November of 1997 Ty-Breakers
produced and mailed approximately 150,000 of its catalogs to such
retail establishments across the U.S. introducing 30 new designs
of jackets made from Tyvek and 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
responding to 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 new
equity by the Company to finance API's operations. If and when such
equity is sold, 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 sale of additional equity by the Company,
the successful resolution 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.
Management believes that the Company will have sufficient cash to
meet its and Ty-Breakers' requirements for the next twelve months.
As of the date hereof, the Company has three employees. The Company
intends to hire several additional employees as the results from
the ongoing Ty-Breakers marketing campaign become more apparent.
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30,1997 vs.
THREE MONTHS ENDED SEPTEMBER 30,1996
Net sales revenue was $ 2,145 during the third quarter of 1997
versus zero for the third quarter of 1996. Although the Company had
minimal sales during the third quarter of 1997 it launched its
marketing program for its Ty-Breakers subsidiary during this
quarter and Ty-Breakers is now receiving orders from retail store
customers as a result of that effort. Additionally, in November
1997, the Company hired a National Account Manager to sell
Ty-Breakers' products to the larger retail stores and department
stores. In October and November of 1997 the Company mailed
approximately 150,000 catalogs to retail establishments across the
U.S. These catalogs include over 30 new jacket designs for
Ty-Breakers Kensel and Tyvek jackets and represent the first
introduction into the marketplace of Ty-Breakers' patented Kensel
fabric material. Ty-Breakers continued to expend funds during the
fourth quarter of 1997 for sales,marketing and advertising efforts
associated with its ongoing marketing campaign. During the third
quarter of 1996 the Company was inactive as previously reported.
The Company realized a net loss of $ 81,483 during the third
quarter of 1997 attributable to expenses associated with the
launch of its Ty-Breakers' marketing campaign.
NINE MONTHS ENDED SEPTEMBER 30,1997 vs.
NINE MONTHS ENDED SEPTEMBER 30,1996
Net sales revenue was $ 5,882 during the first nine months of 1997
versus zero for the first nine months of 1996. The Company had
minimal sales during the first nine months of 1997 because, due to
the failure of the Old Dominion Offering to occur, it was unable
in March 1997 to launch its Ty-Breakers' marketing program as
planned. During the first nine months of 1996 the Company was
inactive as previously reported. The Company realized a net loss
of $ 149,510 for the nine month period ended September 30, 1997.
The Company has utilized and continues to utilize funds from the
Private Placement to launch its Ty-Breakers marketing plan and has
spent heavily on sales and marketing expenses. Sales and earnings
results from these expenditures are expected to be realized in the
first quarter of 1998 and thereafter.
LIQUIDITY AND CAPITAL RESOURCES:
The Company had a working capital deficit of approximately $ 77,852
at September 30, 1997 as compared to a working capital deficit of
($104,229) at December 31,1996. This represents an increase in
working capital of $ 26,377 and is attributable to cash receipts
from the Units in the Private Placement received through September
30, 1997, the Company's consolidated operating loss for the nine
month period and the acquisition of Ty-Breakers.
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
NONE
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 60 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 fee of 50%
of the sales price of the 60 Units. The Units were 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
<PAGE>
ALFA INTERNATIONAL CORP.
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, 1997 ALFA INTERNATIONAL CORP.
(Registrant)
By: /s/ Frank J. Drohan
Frank J. Drohan
Chief Executive and
Financial Officer
