U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________
COMMISSION FILE NUMBER: 33-43621
INTERNATIONAL FOOD & BEVERAGE, INC. (1)
(Exact name of registrant as specified in its charter)
Delaware 33-0307734
(State or jurisdiction of incorporation I.R.S. Employer
or organization) Identification No.)
30152 Aventura, Rancho Santa Margarita, California (2) 92688
(2)
(Address of principal executive offices) (Zip Code)
Registrant s telephone number: (714) 858-8800 (2)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
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) been subject to such filing requirements for
the past 90 days. Yes X No .
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of registrant s knowledge, in
definitive proxy or information statements incorporated by reference
in Part III of this Form 10-K or any amendment to this Form 10-K [
]. Not Applicable.
The aggregate market value of the voting stock held by non-
affiliates of the registrant as of May 10, 1999: Common Stock, par
value $0.001 per share -- $27,085,595. As of May 10, 1999, the
registrant had 177,302,997 shares of common stock issued and
outstanding.
(1)As of February 17, 1999, the name was change to: Internet
Business s International, Inc.
(2) As of March 1, 1999, the address and telephone number was
changed to: 3900 Birch Street, Suite 111, Newport Beach, California
92660; (949) 833-0261.
TABLE OF CONTENTS
PART I PAGE
ITEM 1. BUSINESS 3
ITEM 2. PROPERTIES 7
ITEM 3. LEGAL PROCEEDINGS 7
ITEM 4. SUBMISSION TO MATTERS TO VOTE
OF SECURITY HOLDERS 7
PART II
ITEM 5. MARKET FOR REGISTRANT S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS 7
ITEM 6. SELECTED FINANCIAL DATA 8
ITEM 7. MANAGEMENT S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS 9
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12
ITEM 9. CHANGES IN AND DISAGREEMENTS
WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE 12
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANT 12
ITEM 11. EXECUTIVE COMPENSATION 14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES,
AND REPORTS ON FORM 8-K 17
SIGNATURES 18
PART I.
ITEM 1. BUSINESS.
Introduction.
International Food and Beverage, Inc. (Company) manufactured a
complete line of pizzas, pizza components, and specialty baked
products and marketed them nationally through foodservice customers
which include retail supermarket service delicatessens as well as
restaurants, hotels, sport and theme parks, and other catering
locations. The Company utilized its proprietary manufacturing
process to produce premium quality HAND-TOSSED crusts that deliver
the unique taste, texture and appearance of fresh pizzeria pizzas.
Since 1986 the Company continued to develop its distinctive product
line and strong industry relationships. From 1986 through early
1990 the Company relied solely on a number of outside contract
manufacturers for production but in 1990 opened the bakery section
of its state-of-the-art 50,000 sq. ft. facility. The Company s
manufacturing plant was completed in mid-1993 with the addition of a
USDA certified pizza topping section, providing the capacity to
produce a much improved line of premium quality pizzas at a
significantly reduced cost.
In July 1995 the Company entered into an agreement with a marketing
and sales organization under which the Company provides
manufacturing and distribution services. Pizzas were produced for
shipment to domestic customers and for export to Pacific Rim
countries. However, the Company ceased operations as of December
31, 1997.
Market.
Pizza is America s favorite food according to the trade press with
estimated annual sales at $30 billion within the United States.
Over the past decade, pizza has become the nation s leading take-
home and home-delivered food while category growth continues.
American-style pizza has also become popular around the world as
various cultures accept the value, convenience, nutrition and, most
of all, fun of eating pizza!
The Company sold primarily to customers within the retail
supermarket and the foodservice/catering segments of this market.
SUPERMARKET BUSINESS MAGAZINE and Chicago-based Information
Resources, Inc. estimate that 1995 annual sales of pizza at retail
supermarkets reached nearly $3 billion and that over the past five
years pizza has been one of the supermarkets fastest growing
categories.
The Company believes the sales of pizza at foodservice locations
(other than pizzeria restaurants or institutional feeding locations)
exceeds $5 billion annually and that pizza sales continue to grow in
these locations.
Products.
The Company s product line consisted of fully prepared pizzas
(cheese pizzas or pizzas complete with assorted meat and/or
vegetable toppings) available on a variety of crusts; various sizes,
shapes and styles of hand-made pizza crusts; and a variety of
cheeses, topping ingredients, and packaging supplies which are
purchased for resale to customers. Additionally, the Company
manufactured Gourmet Italian Cheese Crusts (similar to the Boboli-
Registered Trademark-product from CPC International) and other
specialty flavored bread products.
The Company manufactured and distributed nationally a line of HAND-
TOSSED pizzas. Unlike competitive products which are either stamped
into a mold or die cut from a sheet of dough, the Company s crusts
were hand-formed and then hearth baked to provide the taste, texture
and appearance of fresh pizzeria quality. Utilizing a variety of
dough recipes, the Company produced its crusts and baked products in
a highly automated manufacturing process that nearly replicated the
steps performed in a pizzeria restaurant. A number of products
involved hand-stretching and hand-tossing of dough pieces to form
desired shapes while preserving the naturally fermented gases that
contribute to product taste and texture. While costing slightly
more than competitive pizza crusts, the Company s products were
viewed by executive chefs and service deli merchandisers as superior
in quality to either stamped or die cut crusts available from
competitive suppliers. The Company s proprietary baking process
evolved over the years with an important breakthrough achieved late
in 1994 that ensured a significantly crispier crust with more yeasty
flavor and fresh made texture.
Many of the Company s products had been developed after
collaborative efforts with executive chefs and research and
development personnel of the Company s major customers. The Company
offered a custom development service to these large customers
whereby premium quality products can be designed to meet specific
operator requirements for serving application, taste and
distinctiveness, and to satisfy preparation constraints. These
signature products satisfied the customers need for unique
offerings while adding to the Company s capability and technical
expertise.
The Company s products and programs were generally designed to
replace or be alternatives to traditional component programs which
are more labor, ingredient and space intensive. In addition, these
other programs resulted in products which are inconsistent in
appearance and sometimes lacking in availability due to peaks and
valleys in consumption demand. Increasingly, customers are
searching for labor friendly alternatives that offer ready-to-top
or fully prepared pizzas that are hand-made in appearance and
deliver pizzeria quality in taste and texture.
Sales and Marketing.
The Company marketed products under its own brand names (JUKEBOX-
Registered Trademark-, MAMA MIA ITALIANO-TM-, MAMA MIA HOMESTYLE-TM-
and MAMMA GINA S); sold its products under foodservice distributor
private labels, including Sysco Corporation s IMPERIAL and ARREZZIO
labels and S.E. Rykoff/John Sexton and Company s BELLAGIO-Registered
Trademark- label; and is the primary supplier to Safeway, Inc. under
a controlled PIZZERIA FRESCA label and SAFEWAY Brand private label.
The Company s sales efforts were conducted by an in-house sales
management team together with field merchandisers assigned to
specific accounts. The Company s sales organization directed its
primary efforts at identifying large regional or national accounts
and distributor organizations, presenting product and program
offerings tailored to each user and managing the resulting
implementation and customer relationships. Additionally, the sales
organization managed independent food brokers in various regions
throughout the United States and also worked in concert with sales
organizations provided by full-line foodservice distributors who
service individual end user customers.
The majority of the Company s foodservice business was conducted
through traditional foodservice distribution channels. Sales to
retail customers were made direct or with the assistance of
specialized brokers, with shipments generally made directly to the
customers warehouses.
The Company generally sold its products pursuant to customer
purchase orders and filled orders within ten days of receipt.
Because purchase orders were filled shortly after receipt, backlog
was not material to the Company s retail or foodservice businesses.
Substantially all of the Company s domestic products were delivered
to customers by independent trucking companies or picked up by
customers at one of the Company s warehouses. With regard to the
Company s export sales (to Korea only), backlog of orders were
normal and the Company received payment in full at time of shipment.
Seasonality.
The Company s retail pizza business experienced moderate seasonality
with the highest sales periods occurring between fall and early
spring. Foodservice sales are comparatively stable throughout the
calendar year.
Customers.
The Company sold its products to full line foodservice distributors,
direct to major foodservice customer s warehouses, and to retail
grocery warehouses and distributors throughout the United States.
Products sold to foodservice distributors were resold to end user
customers ranging in size from national accounts to multi-unit
regional organizations to single location accounts. Given the fact
that the Company focused its own selling efforts on national and
multi-unit regional accounts, the majority of its foodservice sales
were to these types of organizations.
The Company s retail customers included, among others, Safeway Inc.,
Von s Grocery Company and Albertson s. Its principal foodservice
distributor customers were Sysco Corporation, U.S. Foodservice
(recently acquired S.E. Rykoff/John Sexton and Company), Martin-
Brower, MBM Foodservice and Alliant Foodservice (formerly Kraft
Foodservice). These distributor organizations in turn sold to end
user customers of the Company including restaurant chains such as
Friendly s Ice Cream, Golden Corral Restaurants, Marie Callender s
Restaurants, Old Country Buffet Restaurants, and Tony Roma s; hotel
chains such as Marriott, Radisson and Doubletree; theme and event
centers such as Knott s Berry Farm, Anaheim Stadium and the Great
Western Forum; transportation terminals such as Host Airport
locations; and military locations such as Camp Pendleton.
Suppliers.
The Company believed that the raw materials utilized in
manufacturing its products, which principally included flour,
cheese, tomatoes, spices, meat products, and packaging materials,
were readily available from a number of potential suppliers. The
Company utilized at least two sources of supply for each of its key
raw material categories although pricing and production volumes
dictated that the majority of purchases for an item be made from a
single principal supplier. Although the Company did not maintain
contracts with most of its suppliers, the Company believed that
there were numerous alternative sources of supply available to meet
production requirements.
Many of the Company s raw materials were agricultural commodities;
consequently, the prices the Company paid for its materials vary
over time due to commodity market conditions including demand, crop
yield and weather. The Company believed that normal historical
commodity price variations would not have a material effect on gross
profit margins beyond the extent to which raw material cost
increases could be passed on to the Company s customers.
Competition.
The Company faced significant competition in the marketing and sale
of its products. The Company competed with a number of national
organizations and numerous regional companies, which have
significantly greater financial, manufacturing, marketing and
distribution resources than the Company. The Company believed that
the principal competitive factors in the marketing of pizza and
specialty baked products are quality, price, ease of preparation,
and variety of product offerings. See Management s Discussion and
Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources .
Regulation.
The Company s manufacturing facility and its products were subject
to extensive regulation by the United States Food and Drug
Administration, the United States Department of Agriculture, and by
other state and local authorities in jurisdictions in which the
Company s products were processed or sold. The manufacturing
facility was subject to periodic inspection by federal, state and
local authorities. The Company believed that its manufacturing
facility was in substantial compliance with all material
governmental laws and regulations and that all material permits and
licenses relating to their operations had been maintained.
Employees.
The Company currently employs no employees.
ITEM 2. PROPERTIES.
The Company s principal executive offices and 50,000 square feet
manufacturing facility were located at 30152 Aventura, Rancho Santa
Margarita, California 92688. The Company leased that facility
pursuant to a ten year lease, with two 5-year renewal options, at a
monthly rent of $25,000 exclusive of insurance and taxes. The
Company also utilized public warehouses for finished goods storage.
Utilization of these warehouses was the result of arrangements with
large distributor organizations to facilitate mixed load shipments
of private label products, accommodation to certain customers to
ensure convenient small lot shipments to local operating units or
temporary storage for finished goods inventory when levels exceed
the storage capacity of the Company s own on-site freezer.
This lease ceased on the eviction of the Company from these
facilities on January 1, 1998. All assets of the Company were sold
at auction on March 13, 1998 and the proceeds used to reduce
liability to secured creditors. During the week of the auction on
March 13, 1998, the tenant improvements were either auctioned or
reverted to the landlord.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no such action by or against the
company has been threatened.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to a vote of the Company s stockholders
during the fourth quarter of the fiscal year covered by this report.
PART II.
ITEM 5. MARKET FOR REGISTRANT S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
The Company s Common Stock is not quoted on NASDAQ but has been
traded in the over-the-counter market since approximately October
1987. There has been relatively little trading in the Company s
Common Stock and there can be no assurance that a more active market
will develop or be sustained. Throughout the two years ended June
30, 1998 the high and low bid quotations for the Company s Common
Stock has been less than or equal to $.01 per share. The high and
low bid quotations represent prices between dealers and do not
include retail markups, markdowns or commissions, and may not
represent actual transactions. The market price for shares of the
Company s Common Stock may be highly volatile, with a limited public
float.
The approximate number of holder of records of the Company s Common
Stock on September 1, 1998 was 618. The Company has not and does
not expect to pay cash dividends on its Common Stock in the
foreseeable future.
ITEM 6. SELECTED FINANCIAL DATA.
The selected financial data for the years ended June 30, 1998, 1997,
and 1996, for the six months ended June 30, 1995 and December 31,
1994, and for the year ended June 30, 1994 are derived from the
audited financial statements of the Company and should be read in
conjunction with the audited financial statements included herein.
The selected financial data for the year ended June 30, 1996, the
six months ended June 30, 1995 and December 31, 1994, and the year
ended June 30, 1994 are derived from the audited financial
statements of the Company which are not included herein.
Year ended Six Months Ended (1) Years Ended
June 30 December 31 June 30 June 30
1994 1994 1995 1996 1997 1998
Statement of Operations Data:
(In thousands, except per share data)
Revenues
$10,703 $ 3,580 $2,718 $6,572 $7,358 $2,378
Cost of sales
8,385 3,279 2,212 5,374 5,847 2,248
Gross profit
2,318 301 506 1,198 1,511 30
Selling and distribution expense
2,927 1,412 702 1,135 1,512 525
General and administrative expense
1,841 361 29 524 407 297
Interest expense, net
113 111 3 54 122 69
Net income (loss)
(2,563) (1,583) (497) (515) (530) (1,160)
Net income (loss) applicable to common shareholders
(2,563) (1,583) (497) (515) (530) (1,160)
Net income (loss) per common share
(0.02) (0.01) nil nil nil nil
Weighted average shares outstanding
153,924 153,924 153,924 154,145 154,763 158,060
June 30,
1994 1995 1996 1997 1998
Balance Sheet Data:
(In thousands)
Current assets
$2,019 $ 922 $1,175 $ 711 $ 1
Fixed assets
1,760 1,053 905 800 0
Total assets
4,547 1,975 2,080 1,511 1
Current liabilities
2,396 1,711 1,941 1,947 1,820
Long-term debt
2,316 373 756 677 455
Shareholders equity (deficiency)
(165) (109) (617) (1,113) (2,273)
(1) A change in control transaction occurred December 31, 1994 and
was recorded in conformity with Accounting Principles Board Opinion
No. 16. Accordingly, assets and liabilities as of January 1, 1995,
and the results of operations for the six months ended June 30,1995,
reflect the push-down of the new controlling shareholder s basis,
minority interest at its historical basis, and the consideration
received from BT Capital Corporation. See accompanying footnotes to
the audited financial statements for a description of the
transaction.
The company has not paid dividends in any of the periods presented.
ITEM 7. MANAGEMENT S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with the
financial statements of the Company and notes thereto contained
elsewhere in this report.
Results of Operations.
Fiscal 1998 Compared To Fiscal 1997
Revenues for the twelve month period ended June 30, 1998 of
$2,378,000 decreased approximately 68% when compared with revenues
of $7,358,000 in the prior year. This revenue decrease in due to
the shut down of Company operations and closing of the business on
January 18, 1998.
The gross profit margin of 1.3% for the twelve months ended June 30,
1998 is a significant decrease from the gross margin of 20.5%
reported for twelve months ended June 30, 1997. Current year
margins in the past twelve months reflect decrease and shutdown of
operations at the end of calendar year 1997. Selling, general and
administrative expenses for the 1998 fiscal year were almost half
those of fiscal year 1997 due to the slowdown of operations of the
Company approaching the close of operations as of January 1, 1998.
The resulting loss for the twelve month period ended June 30, 1998
was $1,160,542 versus a reported loss for the year ended June 30,
1997 of $530,000.
Fiscal 1997 Compared To Fiscal 1996
Revenues for the twelve month period ended June 30, 1997 of
$7,358,000 increased approximately 11% when compared with revenues
of $6,572,000 in the prior year. This revenue increase is due to a
full year of contract manufacturing for a marketing company that
sells to both domestic retail chains and export customers. The
Company continues to market its pizzas and crusts nationally to
retail supermarket service delicatessen customers and major
foodservice accounts. Beginning in May 1996, the Company began a
private label program producing a line of pizzas being sold in the
frozen food section of a major national grocery retailer.
The gross profit margin of 20.5% for the twelve months ended June
30, 1997 was roughly comparable to the gross margin of 18.2%
reported for twelve months ended June 30, 1996. Current year
margins in the past twelve months reflect cost reduction
improvements combined with gains in operating efficiencies.
Fixed overhead per unit sold remains high at the Company s low level
of production. The Company anticipates an increase in its gross
profit contribution rate given recent price increases and assuming
the Company is able to achieve increased production volume.
Additionally, gross profit would be further benefited if cheese
prices return to historical price levels.
The improvement as a percent of sales in fiscal 1997 versus the
fiscal year 1996 reflects the impact of a full year of operations
following restructuring and cost containment efforts that were
initiated early in calendar 1995. The Company does not anticipate
having to add substantially to fixed overhead costs to support
revenue growth of fifty to one hundred percent of its current
revenue level assuming a similar mix of products and customers.
The resulting loss for the twelve month period ended June 30, 1997
was $530,000 versus a reported loss for the year ended June 30, 1996
of $515,000.
Inflation.
The moderate rate of inflation over the past few years has had an
insignificant impact on the Company s sales and results of
operations during the period.
Liquidity and Capital Resources.
Net cash used by operating activities was $197,553 for the twelve
month period ended June 30, 1998. This cash results largely from
(i) accounts receivable of $254,000, (ii) inventories of $423,000,
and (iii) accounts payable of $901,226.
Capital Expenditures.
There were no material capital expenditures during the 1998
fiscal year.
Net Operating Loss Carryforwards.
For the fiscal year ended June 30, 1998, the Company had net
operating loss carryforwards for federal and state purposes of
approximately $1,263,675 and $1,262,857, respectively. These
carryforwards begin to expire in 2011 and 2001, respectively.
Year 2000 Issue.
The Year 2000 issue arises because many computerized systems
use two digits rather than four to identify a year. Date sensitive
systems may recognize the year 2000 as 1900 or some other date,
resulting in errors when information using the year 2000 date is
processed. In addition, similar problems may arise in some systems
which use certain dates in 1999 to represent something other than a
date. The effects of the Year 2000 issuue may be experienced
before, n, or after January 1, 2000, and if not addressed, the
impact on operations and financial reporting may range from minor
errors to significant system failure which could affect the
Company s ability to conduct normal business operations. This
creates potential risk for all companies, even if their own computer
systems are Year 2000 compliant. It is not possible to be certain
that all aspects of the Year 2000 issue affecting the Company,
including those related to the efforts of customers, suppliers, or
other third parties, will be fully resolved.
The Company was in the process of developing an ongoing
program of communication with suppliers and vendors to determine the
extent to which those companies are addressing Year 2000 compliance
issues.
Forward Looking Statements.
The foregoing Management s Discussion and Analysis contains forward
looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the
Securities Act of 1934, as amended, and as contemplated under the
Private Securities Litigation Reform Act of 1995, including
statements regarding, among other items, the Company s business
strategies, continued growth in the Company s markets, projections,
and anticipated trends in the Company s business and the industry in
which it operates. The words believe, expect, anticipate,
intends, forecast, project, and similar expressions identify
forward-looking statements. These forward-looking statements are
based largely on the Company s expectations and are subject to a
number of risks and uncertainties, certain of which are beyond the
Company s control. The Company cautions that these statements are
further qualified by important factors that could cause actual
results to differ materially from those in the forward looking
statements, including, among others, the following: reduced or lack
of increase in demand for the Company s products, competitive
pricing pressures, changes in the market price of ingredients used
in the Company s products and the level of expenses incurred in the
Company s operations. In light of these risks and uncertainties,
there can be no assurance that the forward-looking information
contained herein will in fact transpire or prove to be accurate.
The Company disclaims any intent or obligation to update forward
looking statements .
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Information with respect to this Item is set forth in Index to
Financial Statements.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
On March 15, 1998, the Company engaged the services of Henry
Schiffer C.P.A., a P.C., of Beverly Hills, California to provide an
audit of its financial statements for the fiscal years ended June
30, 1998 and 1997. Mr. Schiffer is not associated with the June 30,
1995 audited financial statements nor any other financial statements
prior to the June 30, 1996 financial statements. The former
accountants, Coopers & Lybrand of Newport Beach, California,
declined to stand for re-election for the 1997 engagement. The
decision to change accountants was approved by the Company s Board
of Directors with the selection of the successor accountant. The
Company and its current accountant had no disagreements during the
fiscal year ended June 30, 1998 or any prior periods.
PART III.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The directors and executive officers of the Company and their ages
as of September 1, 1998 are as follows:
Name Age Position
Michael W. Hogarty 55 President, Chief
Executive Officer
and Director
Daniel E. Ferrari 49 Vice President of Sales
Patrick A. Cusack 50 Vice President of
Operations
David R. Newstadt (1) 68 Director
(1) Member of the audit and compensation committees.
Each member of the Board of Directors of the Company is elected for
a one-year term and until his successor is elected and qualified.
Michael W. Hogarty.
Mr. Hogarty has been President and Chief Executive Officer and a
director of the Company since March 1988. From December 1984 to
December 1987, Mr. Hogarty was the President and Chief Executive
Officer of Edy s Grand Ice Cream, Dreyer s Grand Ice Cream s midwest
and eastern subsidiary, a manufacturer and marketer of ice cream and
related products. From July 1978 to December 1984, Mr. Hogarty was
President and Chief Executive Officer of S.B. Thomas, Inc., the
specialty baking subsidiary of CPC International, a food processing
corporation and Executive Vice President of S.B. Thomas, Inc., from
1974 to 1978. Mr. Hogarty previously served as a Vice President of
Johnson and Johnson.
Daniel E. Ferrari.
Mr. Ferrari joined the Company in January 1995 as Vice President of
Sales. From January 1994 to December 1994, Mr. Ferrari served as
District Manager for Kraft USA products in the Southern California
market area. From 1989 through 1993 while at Kraft USA he held the
positions of Director of Sales for Kraft s Western Dairy Group and
was District Manager at Kraft s Knudsen Division of Los Angeles.
From 1984 to 1988, Mr. Ferrari was Western Regional Sales Manager
for No Nonsense Fashions and from 1976 to 1984 he held various sales
positions with Proctor & Gamble.
Patrick A Cusack.
Mr. Cusack joined the Company in July 1994 as Vice President of
Operations. From April 1989 to July 1994, Mr. Cusack held positions
as Plant Manager and Division Service/Quality Manager of Operations
for International Multifoods, Frozen Specialty Division in
Riverside, California. Prior to that time, Mr. Cusack held various
operational management positions with Pillsbury, Van De Kamps
Division and North Consumer Products, a division of Siebe North,
Inc., a manufacturer of personal safety products.
David R. Newstadt.
Mr. Newstadt has been a director of the Company since 1989. Mr.
Newstadt is currently retired. From May 1986 through July 1987, Mr.
Newstadt served as President and Chief Executive Officer of Sun-
Diamond Growers of California, a cooperative of growers. From 1981
to 1985, he was President of the Best Foods Division of CPC
International, a food processing corporation.
Subject to modification by the Board of Directors, Mr. Newstadt
receives an annual retainer of $2,500. In addition, this director
has been granted an option to purchase up to 800,000 shares of the
Company s Common Stock at the fair market value of the Common Stock
on the date of individual grants. Options granted to these
directors become exercisable ratably over the period during the
continuing service as a director and expire seven years from the
date of grant. All directors are reimbursed for expenses incurred
on behalf of the Company.
ITEM 11. EXECUTIVE COMPENSATION.
The following table sets forth the cash compensation paid by the
Company during its fiscal year ended June 30, 1998 to (i) the four
most highly compensated current executive officers of the Company
and (ii) all executive officers of the Company as a group:
Name of Individual
or Number of Capacities in Cash
Persons in Group Which Served Compensation (1) (2)
Michael W. Hogarty President and Chief
Executive Officer $150,000
Daniel E. Ferrari Vice President of Sales $ 95,000
Patrick A. Cusack Vice President
of Operations $ 70,000
All executive officers
as a group (3 persons) All capacities $315,000
(1) The Company provided executive officers with certain personal
benefits which do not exceed in value 10% of the officer s cash
compensation or, as to all executive officers as a group, 10% of the
aggregate cash compensation for the group.
(2) The Company was paying the executive officers compensation at
this annual rate until the Company ceased operations on January 1,
1998. Therefore, the actual compensation paid was approximately 50%
of the amounts shown.
Employment Agreements.
Mr. Hogarty had an employment agreement with the Company that
provides for a minimum base salary of $150,000 per year. The
employment agreement continued until the Company ceased operations
on January 1, 1998.
Bonus Plan.
The Board of Directors had approved a bonus plan that provided for
management bonuses. The bonus pool was allocated to key members of
the management in accordance with a plan approved by the Board of
Directors. The Company made no payments of bonuses.
Stock Option Plan.
The Company has adopted the 1988 Stock Option Plan for Key Employees
(the Plan ). All employees of the Company are eligible to receive
options under the Plan. The maximum aggregate amount of stock to be
issued upon exercise of all options granted under the Plan may not
exceed 1,800,000 shares, subject to adjustment upon the occurrence
of certain events such as a stock split, stock dividend,
reorganization, merger or similar corporate change. Unless earlier
terminated by the Board of Directors, the Plan will terminate in
November 1998.
The Plan provides for administration by the Board of Directors or if
the Board of Directors authorizes, by a committee appointed by the
Board (the Committee ). The Board of Directors has a Compensation
Committee of disinterested directors who, among their duties, will
make recommendations to the Board of Directors regarding grants of
options under the Plan. The Board of Directors has the authority,
subject to the express provisions of the Plan, to determine the
persons to be granted options, to determine whether options granted
under the Plan are intended to be non-statutory stock options or
incentive stock options, to determine the terms and provisions of
options, including the times at which such options shall be granted,
the number of shares subject to each option, the option price and
the duration of each option, to interpret and construe the Plan, to
prescribe, amend and rescind rules and regulations relating to the
Plan and to make all other determinations necessary or advisable for
the administration of the Plan.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth information regarding the beneficial
ownership of shares of the Company s Common Stock as of September 1,
1998 by (i) all stockholders known to the Company to be beneficial
owners of more than 5% of the outstanding Common Stock; (ii) each
director; and (iii) all officers and directors of the Company as a
group. Except as may be otherwise indicated in the footnotes to the
table, each person has sole voting power and sole dispositive power
as to all of the shares shown as beneficially owned by them.
Shares of
Name of Common Stock Percent
Beneficial Owner (1)(2) Beneficially Beneficially
Owned Owned
Michael W. Hogarty (3) 108,252,272 68.49%
BT Capital Corporation (4) 18,000,000 11.38
Daniel E. Ferrari (5) 3,078,471 1.95
Patrick A. Cusack (6) 3,078,471 1.95
Shares of
All directors and
executive officers as
a group (3 persons) (7) 132,409,214 83.77
(1) Unless otherwise indicated in these footnotes, the address of
each person listed is c/o International Food & Beverage, Inc.,
30152 Aventura, Rancho Santa Margarita, California 92688.
(1) Does not give effect to the potential issuance of shares upon
the exercise of (i) 316,666 shares granted to other members of
management under the Company s Stock Option Plan (exercise
prices between $.00177 and $.40 per share) and (ii) other
options and warrants to acquire up to 122,000 shares (exercise
price $.35 per share).
(1) Included in Mr. Hogarty s beneficially owned shares are
18,000,000 shares of Common Stock which BT Capital Corporation
has the right to purchase under an option agreement received in
connection with the change in control transaction in December
1994 (exercise price of $.00177) expiring December 1999.
(1) The address of BT Capital Corporation is 280 Park Avenue, 32
West, New York, New York 10017. Represents shares owned by Mr.
Hogarty over which BT Capital Corporation has an option. The
exercise price is $.00177 and the option expires in December
1999.
(1) Includes 4,309,860 shares which under a Stock Purchase
Agreement with Mr. Hogarty are subject to certain purchase
rights by him which expire in December 1998.
(1) Includes 4,309,860 shares which under a Stock Purchase
Agreement with Mr. Hogarty are subject to certain purchase
rights by him which expire in December 1998.
(1) Includes currently vested options held by directors and
officers of the Company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On various dates during the first six months of fiscal 1995 BT
Capital Corporation ( BTCC ) loaned a total of $700,000 to the
Company pursuant to notes and a Security Agreement collateralized by
the Company s accounts receivable and inventories. The proceeds
were used primarily for working capital.
On December 31, 1994 BTCC, MH Investments, Inc., a California
corporation wholly-owned by Michael W. Hogarty, the Chief Executive
Officer and President of the Company, and Michael W. Hogarty entered
into agreements which provided for the sale by BTCC of 91.8% of the
outstanding shares of Common Stock of the company to MH Investments,
Inc. for $250,000. Concurrent with the foregoing transaction, the
Company entered into a Tax Allocation Agreement with BTCC. The
parties elected under Section 338(h)(10) of the Internal Revenue
Code to treat the transaction as an asset acquisition for tax
purposes. Under the terms of the Tax Allocation Agreement, BTCC
agreed to pay to the Company $3,475,000 as full consideration for
the potential tax benefits which have or may in the future inure to
the benefit of BTCC and its affiliates with such amount paid by (i)
elimination of $2,675,000 of debt and interest owed to BTCC by the
Company, and (ii) payment of $800,000 in cash and short term notes
receivable. As a result of the Section 338(h)(10) election, BTCC
and its affiliates will be entitled to use, subject to applicable
limitations and restrictions, any net operating losses of the
Company existing as of December 31, 1994. In connection with the
foregoing transaction, MH Investments, Inc. has given BTCC a five
year option to purchase up to 18,000,000 shares of Common Stock of
the Company from MH Investments, Inc. at the same price per share
paid by MH Investments, Inc.
On various dates from June 1995 through January 1996 Mr. Hogarty
loaned a total of $455,000 to the Company pursuant to notes and a
Security Agreement collateralized by the Company s accounts
receivable and inventories, subordinated in March 1996 to the
Revolving Credit Agreement Lender. See accompanying footnotes to
the audited financial statements for a description of the Agreement.
The proceeds were used primarily for working capital.
In February 1996, the Company entered into a Manufacturing Services
and Marketing Agreement as amended, (the Agreement ) with Sunset
Specialty Foods, Inc. ( Sunset ) and James R. Tolliver, the sole
owner of Sunset. The Agreement provides the terms by which the
Company will contract manufacture product for Sunset, who heretofore
has purchased product for sale to both domestic retail chains and
export customers. Pursuant to the Agreement the Company is
obligated to issue as a commission to Sunset at the completion of
each quarter Common Stock of the Company equal to four shares of
Common Stock for each $1.00 of pizza finished product produced and
purchased during the period from February 1, 1996 through June 30,
1996, and three shares of Common Stock for each $1.00 of pizza
finished product produced and purchased during the two quarters
ending December 31, 1996. Effective July 1, 1996 the Agreement was
amended to exclude the stock commission on purchases by Sunset for
export. Through the quarter ended June 30, 1996 the Company issued
or was obligated to issue 2,555,782 shares.
With respect to each of the major transactions described above, the
transactions were approved by a majority of the disinterested
directors of the Company.
PART IV.
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) Index to Financial Statements and Schedules Page
Report of Independent Accountant . . . . . . . . . . . . F-1
Balance Sheets of the Company as
of June 30, 1998 and June 30, 1997 . . . . . F-2
Statements of Operations for the
year ended June 30, 1998, the year
ended June 30, 1997, and the year
ended June 30, 1996 . . . . . . . . . . . . . F-3
Statement of Shareholders Equity (Deficiency)
for the year ended June 30, 1998, the
year ended June 30, 1997, and the year
ended June 30, 1996 . . . . . . . . . . . . . . . . F-4
Statements of Cash Flows for the year ended
June 30, 1998, the year ended
June 30, 1997, and the year ended
June 30, 1996 . . . . . . . . . . . . . . . . . . . F-5
Notes to Financial Statements. . . . . . . . . . . F-6
(b) Reports on Form 8-K. There are no reports
on Form 8-K filed during the last quarter
of the fiscal year covered by this report.
(c) Exhibits included or incorporated by reference herein See
Exhibit Index
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
INTERNET BUSINESS S
INTERNATIONAL, INC.
(formerly known as International
Food & Beverage, Inc.)
Dated: May 10, 1999 By: /s/ Albert R. Reda
Albert R. Reda
Chief Executive Officer,
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the date indicated.
/s/ Albert R. Reda
Albert R. Reda
Chief Executive Officer,
Secretary, and Director
May 10, 1999
/s/ Arnold Sock
Arnold Sock
President and Director
May 10, 1999
/s/ Louis Cherry
Louis Cherry
Chairman of the Board and
Treasurer (Principal Financial and
Accounting Officer)
May 10, 1999
/s/ Greg Stack
Greg Stack
Director
May 10, 1999
REPORT OF INDEPENDENT ACCOUNTANT
To the Board of Directors and Stockholders of
International Food & Beverage, Inc.
I have audited the accompanying balance sheets of International Food
& Beverage, Inc. at June 30, 1998 and 1997, and the related
statements of income, stockholders deficiency and cash flows for
the years then ended. These financial statements are the
responsibility of the Company s management. My responsibility is to
express an opinion on these financial statements based on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides
a reasonable basis for my opinion.
The accompanying financial statement have been prepared assuming
that the Company will continue as a going concern. The Company
ceased operations on January 18, 1998 and will not resume until
management has successfully raised the funds needed to acquire the
necessary working capital.
In my opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
International Food & Beverage, Inc. at June 30, 1998 and 1997, and
the results of its operations and its cash flows for the years then
ended in conformity with generally accepted accounting principles.
/s/ Henry Schiffer C.P.A., a P.C.
Beverly Hills, California
May 5, 1999
INTERNATIONAL FOOD & BEVERAGE, INC.
BALANCE SHEETS
June 30, 1997 June 30, 1998
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 28,000 $ 1,102
Accounts receivable, net
of allowance for doubtful
accounts of $40,000 at 6-30-97 254,000 0
Inventories 423,000 0
Prepaid expenses 6,000 0
Total current asset 711,000 1,102
FIXED ASSETS: 800,000 0
Total Assets $1,511,000 $ 1,102
LIABILITIES AND SHAREHOLDERS EQUITY (DEFICT)
CURRENT LIABILITIES:
Notes payable and current
maturities of long-term debt $ 408,000 $ 0
Accounts payable 918,000 1,819,644
Accrued wages and benefits 207,000 0
Accrued commissions
and marketing 261,000 0
Other accrued expenses 153,000 0
Total current liabilities 1,947,000 1,819,644
LONG TERM DEBT: 677,000 455,000
SHAREHOLDERS EQUITY (DEFICT):
Preferred Stock, par value
$0.01 per share; 1,000,000
shares authorized Common
Stock, par value $0.01 per
share; 199,000,000 shares
authorized, 158,060,194, and
154,763,438 shares issued and
outstanding at June 30, 1998
and 1997, respectively 428,000 428,000
Additional paid-in capital 1,000 1,000
Retained earnings (deficit) (1,542,000) (2,702,542)
Total Shareholders Equity
(Deficit) (1,113,000) (2,273,542)
Total Liabilities &
Shareholders Equity
(Deficit) $1,511,000 $ 1,102
See Accompanying Notes to Financial Statement
INTERNATIONAL FOOD & BEVERAGE, INC.
STATEMENTS OF OPERATIONS
Year Ended Year Ended Year Ended
June 30, 1996 June 30, 1997 June 30, 1998
REVENUES
$6,572,000 $7,358,000 $ 2,378,000
COST OF SALES
5,374,000 5,847,000 2,247,839
GROSS PROFIT
1,198,000 1,511,000 30,161
OPERATING EXPENSES:
Selling and distribution
1,135,000 1,512,000 524,998
General and administration
524,000 407,000 297,002
Interest expense
54,000 122,000 69,000
Total operating expenses
1,713,000 2,041,000 891,000
GAIN (LOSS) ON DISPOSITION
(299,703)
NET INCOME (LOSS)
$ (515,000) $ (530,000) $(1,160,542)
NET INCOME (LOSS) PER COMMON SHARE
$(nil) $(nil) $(nil)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING
154,144,914 154,763,438 158,060,194
See Accompanying Notes to Financial Statement
INTERNATIONAL FOOD & BEVERAGE, INC.
STATEMENTS OF SHAREHOLDERS EQUITY (DEFICIT)
Year Ended Year Ended Year Ended
June 30, 1996 June 30, 1997 June 30, 1998
Common Stock:
Balance, beginning of year
$ 387,000 $ 394,000 $ 428,000
Common Stock issued and contributions
7,000 34,000 0
Balance, end of year
394,000 428,000 428,000
Additional Paid In Capital Balance, beginning of year
1,000 1,000 1,000
Common Stock issued and capital contributions
0 0 0
Balance, end of year
1,000 1,000 1,000
Retained Earnings (Deficit) Balance, beginning of year
(497,000) (1,012,000) (1,542,000)
Net income (loss)
(515,000) (530,000) (1,160,542)
Balance, end of year
(1,012,000) (1,542,000) (2,702,542)
Total stockholders equity (deficit)
$ (617,000) $(1,113,000) $(2,273,542)
See Accompanying Notes to Financial Statements
INTERNATIONAL FOOD & BEVERAGE, INC.
STATEMENTS OF CASH FLOWS
Year Ended Year Ended Year Ended
June 30, 1996 June 30, 1997 June 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss)
$(515,000) $(530,000) $(1,160,542)
Adjustments to reconcile net income (loss)
to net cash provided by (used in) operating activities:
Depreciation and amortization
165,000 166,000 0
Issuance of Common Stock under
distribution agreement
7,000 34,000 0
Deferred interest on debt
2,000
Changes in assets and liabilities:
Accounts receivable
(319,000) 251,000 254,000
Inventories
(139,000) 220,000 423,000
Prepaid expenses
33,000 1,000 6,000
Accounts payable
338,000 8,000 901,226
Accrued wages and benefits
(40,000) (166,000) (207,000)
Accrued commissions and marketing
(265,000) 80,000 (261,000)
Other accrued expenses
8,000 35,000 (153,000)
Net cash provided by (used in) operating activities
(727,000) 169,000 (197,316)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to, and reduction of, fixed assets
(17,000) (61,000) 800,000
Net cash provided by (used in) investing activities
(17,000) (61,000) 800,000
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of notes payable
684,000 0 (629,582)
Principal payments on notes payable
(112,000) (100,000) 0
Net cash provided by (used in) financing activities
572,000 (100,000) (629,582)
NET INCREASE (DECREASE) IN CASH
(172,000) 8,000 (26,898)
CASH AND CASH EQUIVALENTS, beginning of period
192,000 20,000 28,000
CASH AND CASH EQUIVALENTS, end of period
$ 20,000 $ 28,000 $ 1,102
See Accompanying Notes to Financial Statement
INTERNATIONAL FOOD AND BEVERAGE, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1997
Note 1. Description of the Business
International Food & Beverage, Inc. (the Company ), was in the
business of the manufacturing and marketing of fully prepared
pizzas, pizza components and specialty baked products to customers
within the food service industry including retail supermarket
service delicatessens, restaurants, hotels, sports and theme parks,
and catering locations. These operations ceased as of December 31,
1997.
Note 2. Change in Control
On December 31, 1994, BT Capital Corporation ( BTCC ), MH
Investments, Inc., a California corporation wholly owned by Michael
W. Hogarty, the Chief Executive Officer and President of the
Company, and Michael W. Hogarty entered into agreements which
provided for the sale of 91.8% by BTCC of the outstanding shares of
Common Stock of the company to MH Investments, Inc. for $250,000.
Concurrent with the foregoing transaction the Company entered into a
Tax Allocation Agreement with BTCC. The parties elected under
Section 338(h)(10) of the Internal Revenue Code to treat the
transaction as an asset acquisition for tax purposes. Under the
terms of the tax Allocation Agreement, BTCC agreed to pay to the
company $3,475,000 as full consideration for the potential tax
benefits which have or may in the future inure to the benefit of
BTCC and its affiliates with such amount paid by (i) elimination of
$2,675,000 of debt and interest owed to BTCC by the Company, and
(ii)payment of $800,000 in cash and short term notes receivable. As
a result of the Section 338(h)(10) election, BTCC and its affiliates
will be entitled to use, subject to applicable limitations and
restrictions, any net operating losses of the company existing as of
December 31, 1994.
In connection with the foregoing transaction, MH Investments, Inc.
has given BTCC a five year option to purchase up to 18,000,000
shares of Common Stock of the Company from MH Investments, Inc. at
the same price per share paid by MH Investments, Inc.
For financial reporting purposes this transaction was recorded in
conformity with Accounting Principles Board Opinion No. 16.
Accordingly, the assets and liabilities as of January 1, 1995, and
the results of operations for the six months ended June 30, 1995,
reflect the push-down of the new controlling shareholder s basis,
minority interest at its historical basis, and the consideration
received from BTCC.
Note 3. Summary of Significant Accounting Policies
Fiscal Year
The Company s fiscal year is the 52-53 week period ending on the
Saturday closest to June 30. The fiscal year end and period end
dates for the periods being reported on herein are June 28, 1997 and
June 27, 1998. For clarity of presentation, fiscal year end and
period end dates in the accompanying financial statements and notes
are referred to as June 30 for the applicable period presented.
Accounts Receivable and Revenues
Substantially all of the Company s sales are made to full-line food
service distributors, national food service chains major regional
supermarket chains or a related party who sells to such
organizations. Concentrations of credit risk exist because of the
concentration of the Company s customers within these industries and
its dependence on a limited number of customers for a large portion
of annual revenues. Such risk, however, is mitigated by the
longevity of the Company s customer relationships and is considered
a normal part of the food service, institutional and retail grocery
industries.
Inventories
Inventories consist of finished goods and raw materials and are
stated at the lower of cost (first-in, first-out method) or market.
As of June 30, 1998 all inventories had been liquidated.
Fixed Assets
Substantially all of the Company s fixed assets were acquired within
the past six years. The historical acquisition cost of these assets
was approximately $4,000,000, however, as a result of the
application of push-down accounting in connection with the change
of control these assets are reported currently on the Company s
financial statements with a cost before accumulated depreciation and
amortization of $1,154,000. Asset additions subsequent to December
31, 1994 are stated at cost. Depreciation is provided using the
straight-line methods over the shorter of the estimated useful life
of an asset or the remaining lease term for leasehold improvements
(three to seven years). All assets of the company were sold at
auction on March 13, 1998 and the proceeds used to reduce liability
to secured creditors.
Significant improvements are capitalized. All maintenance and
repair costs are charged to operations as incurred. When assets are
sold or otherwise disposed of, the costs and accumulated
depreciation or amortization are removed from the accounts and any
resulting gain or loss is reflected in operations. During the week
of the auction on March 13, 1998 the improvements were either
auctioned or reverted to the landlord.
Other Assets
Other assets consisted primarily of cost capitalized in connection
with a June 1990 debt restructuring. These costs were being
amortized using the interest method over seven years, and were
reduced to zero, effective January 1, 1995, in connection with the
change in control of the Company.
Goodwill
The excess of cost over the fair value of net assets acquired by the
predecessor company was recorded as goodwill and amortized using the
straight-line method over twenty-five years. The goodwill was
reduced to zero effective January 1, 1995, in connection with the
change on control of the Company.
Income Taxes
The Company follows Statement of Financial Accounting Standards
( SFAS ) No. 109, Accounting for Income Taxes . Under this method,
deferred income taxed are recognized for the tax consequences in
future years of difference between the tax bases of assets and
liabilities, and their financial reporting amounts at each year-end
based on enacted tax laws and statutory tax rates applicable to the
periods in which the differences are expected to affect taxable
income. Valuation allowances are established, when necessary, to
reduce deferred tax assets to the amount expected to be realized.
Under this standard the provision for income taxes represents the
tax payable for the period and the change during the period in
deferred tax assets and liabilities.
Net Loss Per Common Share
Net loss per common share is based on the reported net loss divided
by the weighted average number of common shares outstanding. Shares
issuable under options have been excluded from the calculation in
each period presented because of their anti-dilutive effect.
Cash and Cash Equivalents
The Company considers highly liquid debt instruments purchased with
a maturity of three months or less to be cash equivalents.
Fair Value of Financial Instruments
The carrying value of the Company s cash and cash equivalents,
accounts receivable, accounts payable, accrues expenses and notes
payable approximates fair value.
Management Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimated
and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
Note 4. Commitments
Leases
The company has an operating lease for its manufacturing and
corporate office facility. The lease ceased on the eviction of the
company from the facilities on January 1, 1998.
Note 5. Stock Issuance
In February 1996, the Company entered into a Manufacturing Service
and Marketing Agreement as amended, (the Agreement ) with Sunset
Specialty foods, Inc. ( Sunset ) and James R. Tolliver, the sole
owner of Sunset. The Agreement the Company is obligated to issue as
a commission to Sunset at the completion of each quarter Common
Stock of the Company equal to four shares of Common Stock for each
$1.00 of pizza finished product produced and purchased during the
period from February 1, 1996 through June 30, 1996, and three shares
of Common Stock for each $1.00 of pizza finished product produced
and purchased during the two quarters ending December 31,1996.
Effective July 1, 1996 the Agreement was amended to exclude the
stock commission on purchases by Sunset for export. Through the
quarter ended June 30, 1996 the Company has issued 729,869 shares of
Common Stock and is accounted for as a non-cash transaction on the
Statement of Cash Flows. In August 1996 the Company issued an
additional 1,825,913 shares of Common Stock in satisfaction of the
commissions earned as of June 29, 1996. Since that date there have
been no further stock issuances, and the agreement has been
terminated.
EXHIBIT INDEX
Exhibit No. Description
3.01 Certificate of Incorporation, as amended
(incorporated by reference to
Exhibit 3.01 of the Registrant s Annual
Report on Form 10-K for the
fiscal year ended June 26, 1993).
3.02 Bylaws (incorporated by reference to Exhibit 3.02
to the Company s registration statement on Form S-1
filed with the Securities and Exchange Commission on
October 29, 1991, the Registration Statement ).
4.01 Specimen Common Stock Certificate (incorporated by
reference to Exhibit 4.01 to the Registration
Statement).
10.1 Employment Agreement, dated March 15, 1988, as
amended January 5, 1989, and November 9, 1990 between
Michael W. Hogarty and the Company (incorporated by
reference to Exhibit 10.11 to the Registration
Statement).
10.2 Standard Form Industrial Lease, dated August 31,
1989, between Tijeras Partnership, as landlord, and the
Company (incorporated by reference to Exhibit 10.13 to
the Registration Statement).
10.3 1988 Stock Option Plan for Key Employees of
International Food & Beverage, Inc. (incorporated by
reference to Exhibit 10.19 to the Registration
Statement).
10.4 Lease Amendment, dated December 8, 1992 to the
Standard Form Industrial Lease, dated August 31, 1989,
between Tijeras Partnership, as landlord, and the
Company (incorporated by reference to Exhibit
10.8 of the Registrant s Annual Report on Form 10-K
for the fiscal year ended June 26, 1993).
10.5 Promissory Note of the Company dated June 29, 1995,
in the principal amount of $100,000 in favor of
Michael W. Hogarty. Promissory Notes of the Company
in substantially the same form as
in Exhibit 10.5 herein were issued at various times
between October 16, 1995 and January 31,
1996 in the total principal amount of $355,000 in favor
of Michael W. Hogarty (incorporated by reference to
Exhibit 10.6 of the Registrant s Annual Report on Form
10-K for the fiscal year ended June 30, 1995).
10.6 Loan and Security Agreement, dated June 29, 1995
between the Company and Michael W. Hogarty (incorporated
by reference to Exhibit 10.7 of the Registrant s Annual
Report on Form 10-K for the fiscal year ended
June 30, 1995).
10.7 Loan and Security Agreement, dated March 15, 1996
between Fremont Business Credit and the Company and
related documents and agreements executed in connection
therewith (incorporated by reference to Exhibit 10.7 of
the Registrant s Annual Report on Form 10-K for the
fiscal year ended June 30, 1996).
10.8 Building lease Estoppel Certificate dated December
11, 1995 to Ms. Nancee Ehlers Boldman and Ms. Sally
Ehlers Stillion as Purchasers of the real property
subject to the building lease included in this
Exhibit Index as Exhibit 10.2 and Exhibit 10.4
(incorporated by reference to Exhibit 10.8 of the
Registrant s Annual Report on Form 10-K for the
fiscal year ended June 30, 1996).
22.1 Subsidiaries (incorporated by reference to Exhibit
22.1 to the Registration Statement).
27 Financial Data Schedule.
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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