SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 4, 1997
ATLANTIC PREMIUM BRANDS, LTD.
(Exact name of registrant as specified in its
charter)
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<S> <C>
Delaware 0-22614 36-3761400
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
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650 Dundee Road, Suite 370
Northbrook, Illinois
(Address of principal executive offices)
60062
(Zip Code)
(Registrant's telephone number, including area code)
(847) 480-4000
ATLANTIC BEVERAGE COMPANY, INC.
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(Former name or former address, if changed since last report)
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Exhibit Index is on page 6.
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ITEM 5. OTHER EVENTS
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, Atlantic Premium Brands, Ltd. (the
"Company") is hereby filing cautionary statements identifying important factors
that could cause the Company's actual results to differ materially from those
projected in forward-looking statements made by or on behalf of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(99) Additional Exhibits
99.1 Cautionary Statements for Purposes of the "Safe
Harbor" Provisions of the Private Securities
Litigation Reform Act of 1995.
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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.
ATLANTIC PREMIUM BRANDS, LTD.
Date: June 4, 1997 By: /s/ Merrick M. Elfman
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Merrick M. Elfman,
Chairman of the Board
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EXHIBIT 99.1
CAUTIONARY STATEMENTS FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE
PRIVATE SECURITIES REFORM ACT OF 1995
The Company desires to take advantage of the new "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 (the "Act")
and is filing this Form 8-K in order to do so. Many of the following important
factors discussed below have been discussed in the Company's prior SEC filings.
The Company wishes to caution readers that the following
important factors, among others, in some cases have affected, and in the future
could affect, the Company's actual results, and could cause the Company's actual
results for the financial periods ending after the date hereof to differ
materially from those expressed in any forward-looking statements made by or on
behalf of the Company. The filing of this list should not be construed as
constituting all factors which investors should consider prior to making an
investment decision in the Company's securities, nor should investors assume
that the information contained herein is complete or accurate in all respects
after the date of this filing. The Company disclaims any duty to update the
statements contained herein.
Price Volatility, Illiquidity and Company Preferred Stock. No
predictions can be made as to stability or volatility of the stock price of
Common Stock. Further, because there are relatively few shareholders and a
substantial percentage of the shares of Common Stock are held by a few persons,
the Common Stock is relatively illiquid. As a result, a shareholder wishing to
sell may find it difficult to do so expeditiously. In addition, the Company's
Certificate of Incorporation permits shares of Company common or preferred stock
to be issued in the future without stockholder approval and upon such terms and
conditions, and having such rights, privileges and preferences, as the Company's
Board of Directors may determine in the exercise of its business judgment. The
rights of holders of Common Stock will be subject to, and may be diluted or
otherwise adversely affected by, any Common Stock or preferred stock that may be
issued in the future.
Dilution. The issuance of Common Stock in connection with any future
offering of Common Stock will dilute the Common Stock of the Company previously
issued. Further, the Company may consider further expansion of its business
through acquisition of other assets or entities. Such acquisitions may likely be
accomplished through the issuance of additional shares of the Company's common
or preferred stock, or rights thereto. There can be no assurance that the
consideration received for such future issuances of such stock will not be
further dilutive of the Common Stock held by the then existing shareholders.
Liabilities of Frozen Beverage Division. In connection with the prior
discontinuation of the Company's frozen beverage division, the Company has
remained responsible for the liabilities of its former division. These
liabilities include a breach of contract lawsuit seeking at least $550,000. The
claim relates to the manufacture of the dispensing machines used in connection
with the division's product. The Company believes that this claim is without
merit and has defended, and will continue to vigorously defend, its position.
Due to the uncertain nature of litigation in general, the outcome of the case
cannot be guaranteed. A judgment against the Company in the case may have a
material adverse effect on the Company's financial condition.
Unregistered and Legended Common Stock. The Company Stock that may be
issued by the Company in the future may not be registered for public sale under
the United States Securities Act of 1933, as amended (the "Act") at the time of
such issuance. In such event, the certificates representing such Common Stock
will contain legends stating that such stock is unregistered and cannot be sold
or otherwise transferred absent such public registration, or an appropriate
exemption from such registration, or compliance with Rule 144 under the Act.
Rule 144, as currently in effect, provides, inter alia, that shares of stock
acquired in a private offering may not be resold by the purchaser thereof for
a period of one (1) year after such acquisition, and then may only be sold in
conformance with the other requirements of such
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Rule. Shareholders should consult with their legal advisors concerning the full
impact of Rule 144 in their specific circumstances.
Lack of Control/Concentration of Ownership/Staggered Board/Antitakeover
Effect. As of March 31, 1997, in excess of 30% of the Common Stock is held by
affiliates (or their family members) of the Company who thereby have the ability
to control the Company's Board of Directors. In addition, the Company's Board of
Directors is divided into three classes having staggered terms, and thus no more
than a minority of the Company's Board of Directors is subject to election in
any given year. There are no provisions for cumulative voting by holders of
Common Stock and, accordingly, each year the holders of a majority of the
outstanding shares of Common Stock can elect all of the directors eligible for
election. These facts may tend to discourage attempts to acquire control of the
Company and to make such attempts more difficult to succeed.
Seasonality. Sales in both the Company's beverage products division
("Beverage Division") and food products division ("Food Division") traditionally
have been seasonal, with both divisions experiencing higher sales in warm
weather months (April through September) and lower sales at other times of the
year. As a result, the Company's second and third quarter financial results have
historically outperformed the first and fourth quarter financial results, and
such seasonality of financial results can be expected to continue for the
foreseeable future.
Dependence on Major Suppliers/Customers. For 1996, approximately 58% of
the Beverage Division's total case sales represented Mistic(R) brands, and a
decline in sales of those brands, could have a materially adverse effect on the
Company. None of the Beverage Division's other suppliers accounted for more than
5% of the Beverage Division's total case sales during such period. The Beverage
Division is highly dependent on the Mistic(R) supplier's marketing efforts to
generate consumer demand and brand identity. There can be no assurance that the
supplier of Mistic(R) will continue to market its products aggressively, or that
strong consumer demand for such products will continue absent such marketing
efforts.
Evolving Consumer Preferences. Specialty non-alcoholic beverages,
including the products that the Beverage Division distributes, are subject to
changes in consumer preferences and in nutritional and health-related concerns.
Likewise, the Food Division's business relies on consumer demand for meat
products, which vary based particularly on health-related issues. Business of
each of the divisions is dependent upon continued growth in consumer interest
for their products. There can be no assurance that the demand for the products
which the divisions produce and/or distribute can be sustained in the future. In
addition, competitors may have a significant advantage over the Company if
consumer choice favors products not distributed by the Company's and the Company
is unable to secure distribution rights to, or does not produce, the favored
products.
Product Availability; Pricing. The suppliers of products distributed by
the Beverage Division generally use independent bottlers to produce their
products. Similarly, the Food Division is dependent on a reliable supply of
beef, chicken and pork as well as filler products, to produce its sausage and
other packaged and processed meats. There can be no assurance that the suppliers
will correctly anticipate demand for their products and order a sufficient
amount of product, that meat availability will be maintained at a sufficient
level, that the independent bottlers will produce sufficient quantities of the
suppliers' products to satisfy the Company's demand, or that any of the
suppliers will make timely delivery of the suppliers' products to the Company.
Failure to receive products in a timely manner for these or other reasons could
have a materially adverse effect on the Company. Further, the profitability of
the Food Division is largely dependent on the wholesale price of raw meat
products such a pork bellies and sows. Such wholesale pricing in turn is
determined in the marketplace based on factors beyond the control of the
Company. Any rise in the prices of such products in the marketplace could have a
materially adverse effect on the profitability of the Company.
Competition. The Beverage Division competes both with other independent
distributors of specialty beverages, and, more broadly, with the distributors of
other categories of traditional and other beverages. The Food Division competes
with other small, regional and large national producers
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and distributors of packaged meat products. Both divisions operate in the highly
competitive environment of specialty beverage and food sales, where factors such
as consumer preferences and successful marketing efforts can cause products to
gain or lose market share rapidly. In some cases, competitors are larger and
possess greater financial resources. There are several other distributors of
specialty beverages and packaged meats in each of the divisions' current
territories, as well as distributors and manufacturers of more traditional
beverages and other meat products or meat substitutes. There can be no assurance
that the Company will be able to continue to compete successfully with these or
other distributors to obtain new product distribution agreements, or that the
Company's current distribution and supply agreements will be renewed on terms
acceptable to the Company. In addition, increased competition, both within the
specialty beverage or packaged meat market and within the beverage or meat
market generally, could result in pressure on prices and the Company's margins.
Risks in Business Strategy. The Company's business strategy includes
the Beverage Division acquiring new distribution rights and the Food Division
expanding its customer bases and product lines, acquiring additional companies
and integrating the new acquisitions from a business, accounting and control
function. There can be no assurance that the Company will be successful in
pursuing any element of this strategy. In addition, the Beverage Division's
distribution agreement with the supplier of Mistic(R) restricts the Company's
ability to distribute competing products, and may be terminated if the Company
fails to perform under the agreement.
General Business Risks. The Company is subject to all of the risks
generally associated with the operation of its businesses, including, but not
limited to, adverse developments in the national and local economies, changes in
consumer preferences, fluctuations in the availability and cost of raw materials
and the ability to obtain and retain qualified employees at affordable wages.
Risks Involved in the Food and Beverage Industries. The Company's
business is subject to all of the risks generally associated with the food
industry. These risks include, among other things, that (i) product tampering or
production defects may occur which may require a recall of a product, (ii) an
ingredient in a product may be banned or its use limited or declared
unhealthful, and (iii) sales of a product may decline due to perceived health
concerns, changes in consumer tastes or other reasons beyond the control of the
Company. The Company is also exposed to potential product liability claims, and
has been a party to product liability lawsuits in the past. The Company is
generally not contractually indemnified by its suppliers or customers for these
types of risks. There can be no assurance that the Company's current level of
product liability insurance will be adequate to protect the Company, or that the
suppliers' or customer's liability insurance will be available to the Company,
and, if available, adequate to protect the Company. It is uncertain whether the
Company will be able to obtain increased levels of insurance as the Company
grows, that any level of insurance would be economically practical or that it
would be able to renew its current or future policies. While the Beverage
Division operates within its exclusive territory under the Mistic(R)
distribution agreement, its sales have been affected in the past by shipping of
Mistic(R) products into the Beverage Division's exclusive territory by other
distributors of these products from other territories. Although the Company has
been advised by the supplier of Mistic(R) that it intends to enforce the
transshipping restrictions in its distribution agreements with others, there can
be no assurance that it will do so. The Beverage Division's business also could
be significantly affected if state or federal legislative proposals regarding
mandatory container deposit laws are adopted. Both of the divisions' business
have been and could in the future be significantly affected by state or federal
legislation mandating certain labeling requirements for the Company's products.
Such laws may have the effect of increasing operating costs if the Company is
required to bear responsibility for the return of empty containers from its
customers or continually change its labeling.
No Cash Dividends. The Company has never paid dividends and anticipates
that its future earnings, if any, will be retained for use in the business or
for other corporate purposes, and it is not anticipated that any cash dividends
on Common Stock will be paid in the foreseeable future.
Dependence on Management. The Company's future success is dependent in
large measure on its senior management. There can be no assurance that the
Company will be able to
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retain the Company's present key personnel, or attract and retain the additional
skilled employees required for the operation of the Company's businesses. Such
inability could have a material adverse effect on the Company's business
success.
Certain Transactions. Effective March 15, 1996, the Company entered
into a consulting agreement with Sterling Advisors, L.P. ("Sterling Advisors")
and Elfman Venture Partners, Inc. ("EVP" and with Sterling Advisors, the
"Managers"), entities controlled or affiliated with persons owning in excess of
30% of the Company's Common Stock. In 1996, the Company paid aggregate
investment fees of $400,000.00 to the Managers in connection with acquisitions.
In addition, the Company pays the Managers an aggregate of approximately
$35,000.00 per month for consulting management fees pursuant to the agreement.
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