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, 2000
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Commission File Number: 0-17264
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ALFA International Corp.
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(Exact name of registrant as specified in its charter)
New Jersey 22-2216835
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
107 Industrial Drive, Jersey City, New Jersey 07305
(Address of principal executive offices)
(201) 332-2200
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(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 November 10, 2000, the registrant had outstanding 8,197,148
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, 1999
SEPTEMBER 30, 2000
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1999
THREE MONTHS ENDED SEPTEMBER 30, 2000
NINE MONTHS ENDED SEPTEMBER 30, 1999
NINE MONTHS ENDED SEPTEMBER 30, 2000
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
NINE MONTHS ENDED SEPTEMBER 30, 2000
STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1999
NINE MONTHS ENDED SEPTEMBER 30, 2000
NOTES TO FINANCIAL STATEMENTS
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART II - OTHER INFORMATION
ITEM 5: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
---------------------------------------
See Accompanying Note to Financial Statements
<CAPTION>
September 30, December 31,
2000 1999
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ASSETS (Unaudited) Note 1
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<S> <C> <C>
CURRENT ASSETS:
Cash and equivalents $ 342,573 $ 284,912
Accounts receivable -0- 8,664
Inventory 50,355 41,297
Prepaid expenses and other
current assets 87,487 4,452
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Total Current Assets 480,395 339,325
PROPERTY AND EQUIPMENT:
Office & Computer Equipment 39,571 37,720
Furniture & Fixtures 28,111 27,604
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67,682 65,324
Less: Accumulated depreciation (55,870) (49,870)
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11,812 15,454
Total Assets $ 492,207 $ 354,779
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ - $ 519
Accrued expenses and other current
liabilities - 5,301
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Total Current Liabilities - 5,820
STOCKHOLDERS' EQUITY:
Common Stock - $ .01 par value
Authorized - 15,000,000 shares
Issued and to be issued - 8,197,148
shares at September 30, 2000 and
7,641,398 at December 31, 2000 81,972 76,414
Capital in excess of par value 5,487,321 5,181,703
Retained earnings (deficit) (5,077,086) (4,909,158)
--------- ---------
Total Stockholders Equity 492,207 348,959
Total Liabilities & Equity $ 492,207 $ 354,779
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
---------------------------------------
(UNAUDITED)
See Accompanying Notes To Financial Statements
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
September 30, September 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
REVENUES:
Net Sales $ 2,144 $ 86,280 $ 146,144 $ 106,555
Interest Income 2,758 568 7,783 659
Other Income 126 3,000 260 12,090
--------- --------- --------- ---------
5,028 89,848 154,187 119,304
COSTS AND EXPENSES:
Cost of Sales 887 55,934 74,673 64,574
Selling, general and
Administrative 83,756 55,705 247,442 637,385
--------- --------- --------- ---------
NET LOSS $ 79,615 21,791 167,928 582,655
--------- --------- --------- ---------
WEIGHTED AVERAGE NUMBER
OF SHARES OUTSTANDING 7,919,273 6,441,398 7,734,023 6,441,398
NET LOSS PER SHARE $ (.01) $ (.01) $ (.02) $ (.09)
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
----------------------------------------------------------
(UNAUDITED)
See Accompanying Notes To Financial Statements
<CAPTION>
Common Stock Capital in Retained
Par Excess of Earnings
Shares Value Par Value (Deficit)
--------- --------- ---------- -----------
<S> <C> <C> <C> <C>
Balances At
December 31, 1999 7,641,398 $ 76,414 $ 5,181,703 $(4,909,158)
Issuances of Common
Stock 555,750 $ 5,558 $ 305,618
Net loss for the
Nine Months ended
September 30, 2000 $ (167,928)
--------- --------- ---------- -----------
Balances At
September 30, 2000 8,197,148 $ 81,972 $ 5,487,321 $(5,077,086)
--------- --------- ----------- ------------
--------- --------- ----------- ------------
</TABLE>
<PAGE>
<TABLE>
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
---------------------------------------
(UNAUDITED)
See Accompanying Notes to Financial Statements
<CAPTION>
Nine Months Ended
September 30,
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2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (167,928) $ (582,655)
Adjustments to reconcile net loss to
net cash flows from operating activities:
Depreciation and amortization 6,000 7,000
Issuance of Stock Options - 500,000
Changes in operating assets and liabilities:
Accounts receivable 8,664 338
Inventories (9,038) (1,183)
Other current assets (83,035) 1,538
Accounts payable (519) (54,717)
Customer Deposits - 2,503
Other assets - 4,317
Accrued expenses & other liabilities (5,301) (4,657)
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Net cash flows from operating activities (251,157) (127,484)
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisitions of property and equipment (2,358) (239)
Disposition of Leasehold Improvements - (497)
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Net cash flows from investing activities (2,358) (736)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of Common Stock 311,176 325,000
Loan from Officer - 18,000
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Net cash flows from financing activities 311,176 343,000
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NET CHANGES IN CASH AND EQUIVALENTS 57,661 214,780
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CASH AND EQUIVALENTS, BEGINNING OF PERIOD 248,912 9,897
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CASH AND EQUIVALENTS, END OF PERIOD 342,573 224,677
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SUPPLEMENTAL CASH FLOW INFORMATION:
Income taxes paid (refunded) $ - $ -
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Interest paid $ - $ -
</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, 1999 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
as one wholly owned subsidiary through which it conducts all
operations. All inter-company 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, 1999.
NOTE 2 - STOCK BASED COMPENSATION - CONSULTING AGREEMENT:
Under a consulting agreement dated January 20, 1999, the Company
granted a total of 2,000,000 stock options ("Options"), 500,000
each at exercise prices of $.25; $.50; $.75 and $1.00. The
Options expire at the earlier of January 20, 2002 or the date of
termination of the consulting agreement. Using the Black-Scholes
option valuation model to compute the fair value of the Options
on the date of grant, the Company booked a $500,000 non-cash
charge to earnings in January 1999 to reflect this stock based
compensation to the consultants ("Consultants"). During August,
September, October and November 1999, a total of 1,200,000
Options were exercised, 500,000 at $.25; 500,000 at $.50 and
200,000 at $.75. The Company received proceeds totaling $525,000.
NOTE 3 - COMMON STOCK
During the third quarter of 2000, the Company sold and will
subsequently issue 555,750 shares of its Common Stock and
received net proceeds totaling $277,875 after payment of
placement fees of an equal amount as a result of the sale of
27.7875 units ("Units") [each Unit consisting of 20,000 shares of
Common Stock] in a private placement ("Private Placement") which
<PAGE>
commenced on August 4, 2000. The Company has engaged the
services of Continental Consulting Corp. ("Continental") as
placement manager for the Private Placement. The principals
of Continental are also the Consultants referred to in Note 2
above.
NOTE 4 - MANAGEMENT PLANS:
The Company has incurred significant operating losses raising
substantial doubt about its ability to continue as a going
concern. The continued existence of the Company is dependent
upon, its ability to raise additional financing and eventually
upon obtaining profitable operations. There can be no assurance
that such financing will be available to the Company upon
acceptable terms. In an effort to obtain profitable operations,
the Company will attempt to increase sales by aggressive
marketing of its new product line, recruiting additional
employees and sales representatives, attending trade shows,
updating and redistributing existing merchandise catalogs, and
pursuing a more aggressive internet based marketing strategy.
Additionally the Company is attempting to acquire certain
business assets of a publicly traded company introduced to it by
the Consultants.
ALFA INTERNATIONAL CORP. AND SUBSIDIARY
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
The balance sheet for the Company at the end of fiscal year 1999
contained herein has been derived from the balance sheet audited
by the Company's independent certified public accountants which
is contained in the Company's annual report on Form 10-KSB for
the fiscal year ended December 31, 1999. All other financial
statements are unaudited.
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. Ty-Breakers
also manufactures, imports and markets a line of gift items and
tee-shirts under the brand "Extreme Tease" bearing proprietary
art. Ty-Breakers maintains a website at www.ty-breakers.com for
its Tyvek & Kensel apparel and has a website under development at
www.extremetease.com for its gift items.
Tyvek is a registered trademark of the Du Pont Company. While
Tyvek is exceptionally strong, water resistant, wind proof and
printable, the Company believes that the most important
characteristic of Tyvek is its reproductive print quality.
<PAGE>
Kensel is the trade name used to identify the patented fabric
material, which is the proprietary product of Ty-Breakers. Kensel
is made by laminating a poly-cotton material to Tyvek. Products
made from Kensel can also be printed with the color and clarity
of a Kodak photograph as Tyvek products can be printed, but
they have a more substantial "feel" than products made from
Tyvek.
Ty-Breakers purchases all of its Tyvek requirements directly from
Du Pont in the United States or from DuPont's Asian agent. The
inability or failure of Du Pont to deliver this material to Ty-
Breakers would have a material adverse effect upon the operations
of Ty-Breakers. To date, Ty-Breakers has not had any significant
problems in obtaining Tyvek from Du Pont or its agent nor does it
anticipate a shortage in the near future. Ty-Breakers believes it
maintains a good working business relationship with Du Pont, who
presently produces all of the Tyvek material. Ty-Breakers uses
Tyvek to manufacture its patented Kensel fabric material. Ty-
Breakers is presently negotiating a licensing agreement (which
has not yet been concluded) with Du Pont whereby Ty-Breakers
would grant Du Pont an exclusive license to manufacture and
market the Ty-Breakers' Kensel fabric and to utilize the Kensel
brand name. Under the proposed agreement, Ty-Breakers would
receive royalty payments from Du Pont on sales by Du Pont of the
Kensel fabric, as well as price concessions from Du Pont on
purchases by Ty-Breakers of the Kensel material from Du Pont.
Ty-Breakers has its Tyvek and Kensel apparel products
manufactured and printed by unaffiliated third parties in the
United States and Asia. Extreme Tease is the brand name used by
Ty-Breakers to identify its brand of gift items, which are also
printed and manufactured by unaffiliated parties in the United
States and Asia. An application by the Company to register the
Kensel trademark is presently pending before the U.S. Office of
Trademarks.
Ty-Breakers markets Tyvek and Kensel apparel for use primarily as
corporate identity, advertising or promotional products (the
"Custom Business") for major national commercial enterprises,
fashion designers, sporting events and athletic associations. The
custom printed apparel (which usually bears the customer's logo
or design) is frequently used as premiums, incentives,
advertising and marketing items; or resold as retail items by
these organizations. Ty-Breakers also markets its Extreme Tease
gift products and Tyvek and Kensel apparel (bearing Ty-Breakers'
own proprietary or licensed images) to retail stores and catalog
companies. Ty-Breakers also sells Tyvek and Kensel jackets
directly to consumers through its worldwide website on the
internet. Ty-Breakers anticipates selling its Extreme Tease gift
items to consumers through the Extreme Tease worldwide website
upon completion of that site.
<PAGE>
Tyvek and Kensel apparel products for Ty-Breakers' Custom
Business are sold and manufactured pursuant to specific purchase
orders. Significant inventories are not maintained for products
associated with the Custom Business. Inventories are maintained
for items associated with sales to retail stores and catalog
companies and Ty-Breakers' investment in inventory is expected to
grow relative to its sales growth in this segment.
The Ty-Breakers marketing plan is particularly directed at
increasing sales to retail outlets. Ty-Breakers has developed and
introduced a new product line of gift items marketed to retailers
under the brand name Extreme Tease to complement its marketing
efforts for Tyvek and Kensel products.
Beginning in June 2000, Alfa began negotiations and due diligence
to acquire the assets and business of a publicly traded company.
While the Company has expended, and continues to spend,
significant sums on legal and travel expenses for its due
diligence investigation of this business opportunity, no
assurances can be given at this time that the acquisition of the
assets will be consummated. The Company believes it will have a
final resolution of these ongoing negotiations by November 30,
2000.
The Company continues to pursue an investment and/or acquisition
in an internet related business which is controlled by Alfa's
president. Further investigation of this opportunity was
postponed during the third quarter of 2000 pending the resolution
of the negotiations mentioned above.
During 1999 the Consultants (who introduced Alfa to the publicly
traded Company with which it is presently negotiating an asset
purchase) exercised options for 1,200,000 shares of Common Stock
and the Company received proceeds of $525,000. Based upon
conversations with the Consultants, the Company expects them to
exercise the remaining 800,000 Options from which the Company
would receive proceeds of $775,000 but no assurance can be given
at this time that such remaining Options will actually be
exercised.
As previously disclosed in its Report on Form 10-QSB for the
period ended June 30, 2000, the Company is presently conducting a
private placement offering ("Private Placement") of up to
$2,000,000 of its securities in the form of units ("Units") of
its Common Stock with Continental acting as the placement
manager. The Company has agreed to pay Continental a placement
fee equal to fifty percent (50%) of the gross proceeds received
from sales of Units to investors introduced to the Company by
Continental. The Company will not pay any fees to Continental
from the proceeds of sales of Units to investors not introduced
to the Company by Continental. Net proceeds (after placement
fees) from sales of Units will be used for general working
<PAGE>
capital requirements and to expand Ty-Breakers' sales and
marketing activities for its apparel and gift business segments,
and otherwise at the sole discretion of management. Depending on
future events such other possible uses could include: (i)
providing working capital to the business Alfa is attempting to
acquire should such acquisition be consummated, (ii) acquiring
and/or developing new product lines to complement Ty-
Breakers' core apparel and gift lines, (iii) an investment in, or
acquisition of, an internet related business, or (iv) other
acquisition targets that may be in the best interests of the
Company. To date the Company has sold 27.7875 Units in the
Private Placement.
The Company and Ty-Breakers lease their present facility in
Jersey City, New Jersey on a month to month basis from an
unaffiliated third party. As Alfa's and Ty-Breakers' business
plans unfold, and depending upon future events, the Company may
move Alfa and/or Ty-Breakers to different locations.
The "Extreme Tease" line of gift items and tee shirts bearing
proprietary art commissioned by Ty-Breakers was first shown at
the Dallas Gift Show in January 2000 and at the Chicago Gift Show
in February 2000. In March 2000 Ty-Breakers leased permanent
showroom space for its Extreme Tease line at the Atlanta Gift
Mart, one of the largest gift markets in the U.S. As a result,
the Extreme Tease product line will be exhibited at the four
annual gift shows held at the Atlanta Mart and will be marketed
by the Ty-Breakers' sales representative in Atlanta. One of the
smaller of the four annual gift shows took place during the
second quarter of 2000 without any Extreme Tease sales being
recorded. Ty-Breakers plans to hire additional employees for the
purpose of aggressively expanding its efforts to recruit a
nationwide independent sales representative force to sell its
Extreme Tease line - and later its Tyvek and Kensel apparel - to
retail stores and catalog companies. Ty-Breakers is also
developing a website for its Extreme Tease line at
www.extremetease.com for use in marketing. Copyrights for all the
art commissioned for the Extreme Tease line are owned by Ty-
Breakers.
Alfa intends to build its Ty-Breakers subsidiary around its core
products of Tyvek and Kensel apparel by acquiring and/or
developing new lines (such as the Extreme Tease gift line). Alfa
will shortly conclude its due diligence examination and
negotiations concerning the possible sale of a business and
certain assets to Alfa. Depending on the outcome of the
foregoing, Alfa may accelerate or abandon its investigation of
the business prospects of an internet related business in which
Alfa is considering making an investment.
<PAGE>
RESULTS OF OPERATIONS:
THREE MONTHS ENDED SEPTEMBER 30, 2000 vs.
THREE MONTHS ENDED SEPTEMBER 30, 1999
The Company experienced a decrease in net revenue of $84,820
(94%) in the third quarter of 2000 as compared to the same period
in the previous year. This revenue decrease resulted virtually
entirely from a decrease in Ty-Breakers' sales of $84,136 (97%)
attributable to the decrease in custom sales during the third
quarter of 2000 (i.e. sales for which customers have contracted
with Ty-Breakers for customized products) and a slight increase
in Extreme Tease sales. During the current quarter an increase in
interest income approximately offset a decrease in other income
recorded in the same quarter in the previous year. Ty-Breakers
will continue to focus on custom sales while attempting to
systematically increase its marketing efforts directed at retail
stores and catalog companies. The cost of sales percentage for
the third quarter of 2000 was 41.4% and the gross profit
percentage was 58.6%. Custom sales generally have a lower gross
profit margin than sales to retailers.
Selling, general and administrative expenses increased by $28,051
(50%) during the third quarter of 2000 compared to the same
period in the previous year. This increase is attributable to the
Company's increased marketing and due diligence expenses (legal &
travel) during the third quarter of 2000.
The Company experienced a net loss of $79,615 for the third
quarter of 2000 as compared to a net loss of $21,791 during the
same period in the previous fiscal year. This increase in the
Company's loss of $57,824 (265%) is primarily attributable to the
decrease in custom sales during the quarter and the increases in
selling, general and administrative expenses mentioned above.
The continued losses for the Company are attributable to Ty-
Breakers' failure to attain a sufficient level of sales. The
Company will need to hire additional personnel to further
increase sales of its Ty-Breakers subsidiary in order to attain
profitability - a goal which was previously expected to be met in
fiscal year 2000, but now - because of the Company's poor results
for the current quarter - is not likely to be achieved until
fiscal year 2001. Management believes that a profitable level of
Ty-Breakers' sales can be attained in its custom business in the
present low overhead environment but that consistent sales
results will only be attained after Ty-Breakers recruits
additional employees to focus exclusively on recruiting
independent sales representatives to sell Ty-Breakers'
products to retail stores. Additional revenue should accrue to
the Company from increasing its internet and other marketing
efforts and from the Du Pont license agreement - should it be
finalized. The proceeds which the Company has received from the
<PAGE>
Private Placement will assist the Company in its marketing
efforts and acquisition objectives.
No significant increases in capital expenditures occurred during
the third quarter of 2000.
NINE MONTHS ENDED SEPTEMBER 30, 2000 vs.
NINE MONTHS ENDED SEPTEMBER 30, 1999
The Company experienced an increase in net revenue of $34,883
(29%) for the first nine months of 2000 as compared to the same
period in the previous year. This revenue increase resulted
primarily from the $39,589 (37%) increase in Ty-Breakers' sales
for the nine-month period - the majority of which were custom
sales which occurred in the first two quarters of 2000 - net of a
$4,706 decrease in other components of revenue. The cost of sales
percentage for the first nine months of 1999 was 51.1 % and the
gross profit percentage was 48.9%. Custom sales generally have a
lower gross profit margin than sales to retailers.
Selling, general and administrative expenses decreased by
$389,943 (61.2%) during the first nine months of 2000 compared to
the same period in the previous year. This decrease is primarily
attributable to the non-recurring $500,000 non-cash compensation
expense incurred by the Company during the first quarter of 1999
to account for the fair market value of the Options granted to
the Consultants. Excluding this non-cash charge, SG&A actually
increased by $110,057 (80.1%) during the first nine months of
2000 as compared to the same period in the previous year. This
increase is attributable to the Company's increased salary,
marketing and due diligence expenses (legal & travel) during the
first nine months of 2000.
The Company experienced a net loss of $167,928 for the first nine
months of 2000 as compared to a net loss of $582,655 during the
same period in the previous fiscal year. This decrease of
$414,727 (71.2%) is primarily attributable to the non-recurring
$500,000 non-cash compensation expense referred to above.
Excluding this non-cash charge, the Company's loss for the first
nine months of 2000 actually increased by $85,273 (103%) as
compared to the same period in the previous year. The continued
losses for the Company are attributable to Ty-Breakers' failure
to attain a sufficient level of sales. The Company will need to
hire additional personnel to further increase sales of its Ty-
Breakers subsidiary in order to attain profitability - a goal
which was previously expected to be met in fiscal year 2000, but
because of the Company's poor results during the third quarter
of 2000 - is not likely to be achieved until fiscal year 2001.
Management believes that a profitable level of Ty-Breakers' sales
can be attained in its custom business in the present low
overhead environment but that consistent sales results will only
be attained after Ty-Breakers recruits additional employees to
<PAGE>
focus exclusively on recruiting independent sales representatives
to sell Ty-Breakers' products to retail stores. Additional
revenue should accrue to the Company from increasing its internet
and other marketing efforts and from the Du Pont license
agreement - should it be finalized. The proceeds which the
Company has received from the Private Placement will assist the
Company in its marketing efforts and acquisition objectives.
No significant increases in capital expenditures occurred during
the first nine months of 2000. Prepaid expenses increased
significantly during the nine month period ended September 30,
2000 due to prepaid trade show expenses, legal retainers, travel
advances, and fees associated with the Private Placement.
Liquidity And Capital Resources:
The Company experienced negative cash flow from operations during
the first nine months of 2000 primarily due to its operating
loss during the period as well as to increased investments in
inventory and prepaid expenses. Decreases in accounts payable and
accrued expenses during the period also contributed to the
negative cash flow. At September 30, 2000 the Company had
working capital of $480,395 as compared to working capital of
$333,505 at December 31, 1999. This increase of $146,890 (44%)
is primarily attributable to the proceeds received by the Company
from the Private Placement net of (a) the Company's loss during
the period, and (b) the increase in prepaid assets. Approximately
10% of current assets are invested in inventory, 70% is held in
cash and the balance invested in prepaid expenses.
Management plans to continue its ongoing efforts to pursue Ty-
Breakers' sales and marketing plan directed at aggressively
marketing its products (both Tyvek and Kensel apparel and Extreme
Tease products) to retailers while concurrently marketing its
custom printed Tyvek products into the (premium and incentive)
Custom Market. Efforts to recruit additional qualified
independent sales representatives to sell Ty-Breakers' products
are being accelerated. Negotiations with Du Pont are ongoing
with respect to the proposed agreement under which Du Pont would
license the rights to Ty-Breakers' patent for the Kensel fabric
material. While no assurances can be given at this time,
management believes that its efforts will successfully increase
Ty-Breakers' sales and will turn Ty-Breakers profitable during
fiscal year 2001. Projected revenue and associated sales and
marketing expenses are expected to increase significantly in
fiscal 2001 It is essential for Ty-Breakers to increase its
level of sales in order to allow continued operations. Management
is currently pursuing the purchase of a business and certain
assets. Other parties are also competing with Alfa for this
business. No assurances can be given at this time as to whether
Alfa will be successful or not in its attempt to consummate this
<PAGE>
transaction. Should Alfa be successful however, it will be
necessary for Alfa to supply significant working capital to the
acquired business.
During the third quarter of 2000, the Company sold 555,750 shares
of its Common Stock and received net proceeds totaling $277,875
after payment of placement fees of an equal amount as a result of
the sale of 27.7875 Units in the Private Placement.
Forward Looking Statements
Certain statements made in this report on Form 10-QSB are
"forward looking" statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements of the Company
to be materially different from any future results implied by
such forward-looking statements. Although the Company believes
that the expectations reflected in such forward looking
statements are based upon reasonable assumptions, the Company's
actual results could differ materially from those set forth in
the forward looking statements. Certain factors that might cause
such a difference might include: the success or failure of Alfa's
current attempt to purchase a business and certain assets; the
acceptance in the marketplace of Ty-Breakers's planned
ExtremeTease product line; the growth of the market for the Ty-
Breakers's products; the consummation of the license agreement
with Du Pont; the ability of Ty-Breakers to continue to secure
custom orders; the ultimate decision by Alfa whether or not to
invest in an internet related business or the success of Ty-
Breakers's various domestic and international marketing
initiatives.
Year 2000 Compliance
The Year 2000 issue is the result of computer programs being
written using two digits rather than four to define the
applicable year. Any computer program that has date-sensitive
software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in a system failure or mis-
calculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send
invoices or engage in similar normal business activities.
Based on assessments made in fiscal years 1997 and 1998, the
Company updated all versions of operating and financial &
accounting software to be Year 2000 compliant so that all of its
systems recognize and utilize dates beyond December 31, 1999
properly. The Company believes that the modifications and
conversions it has completed will allow it to mitigate any
<PAGE>
problems associated with the Year 2000 issue.
The Company has also received formal communications from its
bank, transfer agent, and major suppliers that their systems are
also Year 2000 compliant. Based on the foregoing and the
Company's own research, the Company does not believe that it is
vulnerable to any third parties' failure to remediate their own
Year 2000 issues. The financial impact on the Company of bringing
its equipment and systems into Year 2000 compliance was not
material to the Company's financial position or results of
operations.
PART II - OTHER INFORMATION
During the third quarter of 2000, the Company sold and will
subsequently issue 555,750 shares of its Common Stock. The
Company received proceeds totaling $277,875 net of placement fees
of an equal amount as a result of the sale of 27.7875 Units in
the Private Placement which commenced on August 4, 2000. The
Company has engaged the services of Continental as placement
manager for the Private Placement and has agreed to pay
Continental the fees as indicated above.
ITEM 5: Other Information:
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits numbered in accordance with Item 601(a) of
Regulation S-B.
Exhibit Page
Numbers Description Number
-------
3.1 Articles of Incorporation, as amended *
3.2 By-laws *
27 Financial Data Schedule E-01
______________
<PAGE>
* Previously filed as exhibits to the Company's Registration
Statement on Form S-1 (File No. 33-18591) filed with the
Securities and Exchange Commission and incorporated herein by
reference thereto.
(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: November 20, 2000 ALFA INTERNATIONAL CORP.
(Registrant)
By: /s/ Frank J. Drohan
-----------------------
Frank J. Drohan
Chief Executive Officer
And Chief Financial Officer
