<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM 10-Q/A
(Mark One)
/X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996.
/ / 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 0-22534-LA
MONTEREY PASTA COMPANY
(Exact name of registrant as specified in its charter)
DELAWARE 77-0227341
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1528 Moffett Street
Salinas, California 93905
(Address of principal executive offices)
TELEPHONE: (415) 397-7782
(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.
Yes X No
At April 12, 1996, 7,792,588 shares of common stock, no par value, of the
registrant were outstanding.
1
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MONTEREY PASTA COMPANY
FORM 10-Q/A
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets
March 31, 1996 and December 31, 1995 (unaudited) 3
Condensed Consolidated Statements of Operations
(unaudited)
Three months ended March 31, 1996 and April 2, 1995 4
Condensed Consolidated Statements of Cash Flows
(unaudited)
Three months ended March 31, 1996 and April 2, 1995 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signature Page 12
Exhibit Index 13
2
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PART I. FINANCIAL INFORMATION
MONTEREY PASTA COMPANY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, 1996 DECEMBER 31, 1995
-------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . $ 424,171 $ 1,937,884
Accounts receivable, net . . . . . . 1,929,636 1,241,248
Inventories. . . . . . . . . . . . . 972,857 1,094,976
Prepaid expenses and other . . . . . 2,247,038 1,652,381
------------- ----------------
Total current assets. . . . . . 5,573,702 5,926,489
Property and equipment, net. . . . . . 5,430,676 5,338,968
Intangible assets, net . . . . . . . . 165,430 295,320
Deposits and other . . . . . . . . . . 180,005 130,240
------------- ----------------
Total assets. . . . . . . . . . $ 11,349,813 $ 11,691,017
------------- ----------------
------------- ----------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . $ 1,316,254 $ 1,511,592
Accrued liabilities. . . . . . . . . 1,297,946 852,815
Current portion of long-term debt. . --- ---
Net liability from discontinued
operations . . . . . . . . . . . . 1,566,281 2,964,415
------------- ----------------
Total current liabilities . . . 4,180,481 5,328,822
------------- ----------------
Long-term debt . . . . . . . . . . . . 2,929,878 4,130,599
Commitments and contingencies. . . . . --- ---
Stockholders' equity:
Common stock . . . . . . . . . . . . 29,985,971 27,268,263
Accumulated deficit. . . . . . . . . (25,746,517) (25,036,667)
------------- ----------------
Total stockholders' equity . . . . . 4,239,454 2,231,596
------------- ----------------
Total liabilities and
stockholders' equity. . . . . $ 11,349,813 $ 11,691,017
------------- ----------------
------------- ----------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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MONTEREY PASTA COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, 1996 APRIL 2, 1995
-------------- -------------
<S> <C> <C>
Net revenues from continuing
operations. . . . . . . . . . . . . . $ 6,133,087 $ 3,840,535
Cost of sales. . . . . . . . . . . . . 3,529,415 2,370,602
------------ --------------
Gross profit . . . . . . . . . . . . . 2,603,672 1,469,933
Selling, general and administrative. . 3,043,456 1,271,820
Loss on disposition of assets . . . . 41,867 ---
------------ --------------
Operating income (loss). . . . . . . . (481,651) 198,113
Interest expense . . . . . . . . . . . 228,199 ---
------------ --------------
Income (loss) from continuing
operations before provision for
income taxes. . . . . . . . . . . . . (709,850) 198,113
Provision for income taxes. . . . . . --- ---
------------ --------------
Net income (loss) from continuing
operations. . . . . . . . . . . . . . (709,850) 198,113
------------ --------------
Loss from discontinued operations. . . --- (1,986,917)
Net loss . . . . . . . . . . . . . . . $ (709,850) $ (1,788,804)
------------ --------------
------------ --------------
Net income (loss) per share -
Primary and fully diluted:
Continuing operations . . . . . . $ (0.10) $ 0.03
Discontinued operations . . . . . $ (0.00) $ (0.32)
------------ --------------
Total net income (loss) per share. . . $ (0.10) $ (0.29)
------------ --------------
------------ --------------
Weighted average common shares
outstanding . . . . . . . . . . . . . 7,313,925 6,070,809
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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MONTEREY PASTA COMPANY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------
MARCH 31, 1996 APRIL 2, 1995
-------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss . . . . . . . . . . . . . . . $ (709,850) $ 198,113
Adjustments to reconcile net loss to
net cash from operating activities:
Depreciation and amortization. . . 196,418 191,695
Loss on sale of assets . . . . . . 41,867 ---
Discount on convertible debt . . . 172,907 ---
Unrealized interest income from:
Held-to-maturity securities. . . --- (14,767)
Changes in assets and liabilities:
Accounts receivable. . . . . . . (688,388) 346,276
Inventories. . . . . . . . . . . 122,119 (223,836)
Prepaid expenses,
intangible assets and other. . . (554,268) (1,399,819)
Accounts payable . . . . . . . . (195,338) 154,382
Accrued liabilities. . . . . . . 445,131 416,009
Deferred income taxes. . . . . . --- (37,400)
------------- ---------------
Net cash used in continuing
operations. . . . . . . . . . . . (1,169,402) (369,347)
Net cash used in discontinued
operations. . . . . . . . . . . . (1,398,473) (2,353,923)
Cash flows from investing activities:
Proceeds from sale of assets . . . 8,821 ---
Purchase of intangibles and
other assets. . . . . . . . . . . (59,445) ---
Redemption of held-to-maturity
securities. . . . . . . . . . . . --- 204,247
Purchase of property and
equipment . . . . . . . . . . . . (319,294) (462,700)
------------- ---------------
Net cash used in investing
activities. . . . . . . . . . . (369,918) (258,453)
Cash flows from financing activities:
Repayment of long-term debt and
capital lease obligations . . . . (684) (14,054)
Proceeds from issuance of common
stock . . . . . . . . . . . . . . --- 91,976
Credit facilities borrowings . . . 1,424,764 78,294
------------- ---------------
Net cash provided by financing
activities. . . . . . . . . . . . 1,424,080 156,216
Net decrease in cash . . . . . . . . . (1,513,713) (2,825,507)
Cash and cash equivalents at
beginning of period . . . . . . . . . 1,937,884 3,117,566
------------- ---------------
Cash and cash equivalents at
end of period . . . . . . . . . . . . $ 424,171 $ 292,059
------------- ---------------
------------- ---------------
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
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MONTEREY PASTA COMPANY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The condensed consolidated financial statements have been prepared by Monterey
Pasta Company (the "Company") and are unaudited. Certain amounts shown in the
1995 financial statements have been reclassified to conform with the current
presentation. The financial statements have been prepared in accordance with
the instructions for Form 10-Q and, therefore, do not necessarily include all
information and footnotes required by generally accepted accounting principles
and should be read in conjunction with the Company's 1995 Annual Report on Form
10-K, as amended by Form 10-K/A. In the opinion of the Company, all adjustments
(consisting only of normal recurring adjustments) necessary to present fairly
the Company's consolidated financial position, results of operations and cash
flows as of March 31, 1996 and for all periods presented have been recorded. A
description of the Company's accounting policies and other financial information
is included in the audited consolidated financial statements as filed with the
Securities and Exchange Commission in the Company's Form 10-K for the year ended
December 31, 1995, as amended by Form 10-K/A. The consolidated results of
operations for the interim quarterly periods are not necessarily indicative of
the results expected for the full year.
2. STATEMENT OF CASH FLOWS
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Additions to property, plant and equipment during the quarter ended March 31,
1996, included $91,629 that were financed by advances from the equipment
revolving line of credit. Also, during the quarter ended March 31, 1996,
debt totaling $2,666,666 plus interest representing guaranteed conversion
discount of $172,907 was converted into common stock (refer to footnote 6).
3. NEW ACCOUNTING PRONOUNCEMENTS
In October 1995, Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation", which requires adoption of the disclosure provisions no later
than fiscal years beginning after December 15, 1995. The new standard defines a
fair value method of accounting for stock options and other equity instruments.
Under the fair value method, compensation is measured at the grant date based on
the fair value of the award and is recognized over the service period, which is
usually the vesting period.
Pursuant to the new standard, companies are encouraged, but are not required, to
adopt the fair value method of accounting for employee stock-based transactions.
Companies are also permitted to continue to account for employee stock-based
transactions under Accounting Principles Board Opinion ("APBO") No. 25,
"Accounting for Stock Issued to Employees", but would be required to disclose in
a note to the financial statements pro forma net income and, if presented,
earnings per share as if the Company had applied the new method of accounting.
The accounting requirements of the new standard are effective for all employee
awards granted after the beginning of the fiscal year of adoption. The Company
has elected to continue to account for stock-based compensation under APBO No.
25 and will adopt the disclosure requirements of SFAS No. 123 in 1996.
4. INVENTORIES
Inventories consist of the following:
March 31, 1996 December 31, 1995
-------------- -----------------
Production-ingredients............... $ 418,039 $ 530,511
Production-finished goods............ 323,229 353,484
Paper goods and packaging materials.. 231,589 210,981
-------------- -----------------
$ 972,857 $ 1,094,976
-------------- -----------------
-------------- -----------------
6
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5. PROPERTY AND EQUIPMENT
Investments in property, plant and equipment are comprised of the following;
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Leasehold improvements............... $ 1,509,334 $ 1,550,963
Machinery and equipment.............. 3,507,550 3,398,749
Office furniture and equipment....... 705,238 522,902
Vehicles............................. 718,961 732,424
-------------- -----------------
6,441,083 6,205,038
Less accumulated depreciation and
amortization......................... (1,206,474) (1,049,380)
-------------- -----------------
5,234,609 5,155,658
Construction in progress............. 196,067 183,308
-------------- -----------------
$ 5,430,676 $ 5,338,968
-------------- -----------------
-------------- -----------------
</TABLE>
6. LONG-TERM DEBT
Components of long-term debt included the following:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Credit Facility:
Receivable and inventory revolver... $ 1,427,375 $ 52,375
Equipment revolver.................. 154,807 63,178
7% Convertible note payable, due
October 1997.......................... 1,333,334 4,000,000
Other................................. 14,362 15,046
-------------- -----------------
2,929,878 4,130,599
Less current portion of
long-term debt........................ --- ---
-------------- -----------------
$ 2,929,878 $ 4,130,599
-------------- -----------------
-------------- -----------------
</TABLE>
During the first quarter of 1996, two-thirds of the 7% convertible note
payable plus interest representing guaranteed conversion discount was
converted into 611,058 shares of common stock of the Company. The remaining
one-third of the note was converted into 322,563 shares of common stock on
April 4, 1996, including accrued interest of $17,390. The average conversion
price, including accrued interest and net of offering costs, was $4.21 per
share.
7. INCOME TAXES
The net operating loss carryforwards generated for the quarter ended March 31,
1996 were fully offset with a valuation allowance due to uncertainties about
their realization.
7
<PAGE>
8. DISCONTINUED OPERATIONS
Subsequent to year-end 1995, the Company decided to discontinue the operations
of its restaurant and franchise subsidiaries. As a result of this decision the
Company wrote off its entire investment in its restaurant and franchise
subsidiaries. Net liabilities of the discontinued operations were as follows:
<TABLE>
<CAPTION>
March 31, 1996 December 31, 1995
-------------- -----------------
<S> <C> <C>
Current assets...................... $ 1,443,462 $ 1,445,345
Current liabilities................. 8,757,669 10,283,650
Non-current assets.................. 5,842,326 5,968,290
Non-current liabilities............. 94,400 94,400
-------------- -----------------
Net liabilities..................... $ 1,566,281 $ 2,964,415
-------------- -----------------
-------------- -----------------
</TABLE>
Net revenues for the restaurant and franchise subsidiaries were $648,184 and
$1,893,494 for the first quarters of 1996 and 1995.
On April 19, 1996, the Company closed a transaction pursuant to a Stock Purchase
Agreement between itself and Upscale Acquisitions, Inc., a California
corporation ("Upscale"), dated as of April 1, 1996 (the "Agreement"). Pursuant
to the Agreement, the Company sold its shares in a wholly-owned subsidiary,
Upscale Food Outlets, Inc., a California corporation ("UFO"), which owns and
operates restaurants in California, Colorado and Washington which feature pasta
products under the name of "Monterey Pasta Company". The purchase price of the
shares was $1,000 in cash and a note executed by Upscale in the principal amount
of $2,500,000. Lance H. Mortensen, former Chairman of the Board, Chief
Executive Officer and President of the Company, is a director of the Company.
Mr. Mortensen is also the sole shareholder, Chief Executive Officer, President
and a director of Upscale.
9. STOCKHOLDERS' EQUITY
On April 23, 1996, the Company announced that it had received commitments to
purchase approximately $4 million of its common stock in a private offering to
accredited investors at $4.375 per share. The shares of common stock are
restricted securities with registration rights. Purchasers of the common stock
agreed not to sell such shares for one year from the date of purchase without
the consent of the placement agent. Spelman & Co. acted as placement agent (the
"Placement Agent") on a "best efforts", "any or all" basis. The Placement Agent
received no cash commissions in the offering but will receive warrants to
purchase one share of common stock for each $10 in shares sold, exercisable at a
price of $6.50 per share, for a term of seven years. The net proceeds from the
offering will be used by the Company for advertising, marketing, promotion,
capital equipment and working capital.
10. CONTINGENCIES
See footnote 10 of the Company's audited consolidated financial statements which
are included in the Company's Annual Report filed on Form 10-K for the year
ended December 31, 1995, as amended by Form 10-K/A, for a description of such
items.
8
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
The following discussion should be read in conjunction with the financial
statements and related notes and other information included in this report. The
financial results reported herein do not indicate the financial results that may
be achieved by the Company in any future period.
BACKGROUND
Monterey Pasta Company produces and markets premium quality fresh gourmet
pasta and pasta sauces, emphasizing all natural ingredients. Monterey Pasta
seeks to build brand recognition and customer loyalty by employing an aggressive
marketing program that focuses on developing complementary channels of
distribution and multiple points of sale for the Company's products. The
Company markets and sells its products through grocery and club stores, national
food service distributors/contract feeders and nontraditional venues such as
sports coliseums and universities.
Monterey Pasta currently offers 32 varieties of contemporary gourmet pasta
products that are produced using the Company's proprietary recipes, including
refrigerated cut pasta, ravioli, tortelloni, tortellini and pasta sauces.
Examples of the Company's pasta and pasta sauces include Snow Crab Ravioli,
Smoked Salmon Ravioli, Gorgonzola Roasted Walnut Ravioli, Sweet Red Pepper
Fettuccini, Santa Fe Linguini, Sun Dried Tomato Pesto Sauce and Roasted Garlic
Artichoke Sauce. Monterey Pasta believes its pasta products appeal to health-
conscious consumers who are seeking excellent quality, convenience and value.
The Company sells its pasta and pasta sauces through leading grocery store
chains, including Safeway, Vons, Albertsons, Giant Foods, Stop & Shop, Hannaford
Bros., QFC, King Sooper, Cala/Bell, Abco, Smitty's, Nob Hill and Petrini's; and
club store chains such as Price/Costco. As of March 31, 1996, more than 5200
grocery and club stores offered Monterey Pasta's products.
Subsequent to the year ended December 31, 1995, the Company decided to
discontinue the business of its restaurant and franchise subsidiaries. In 1995,
the Company wrote off its entire investment in its restaurant and franchise
subsidiaries and reclassified these susidiaries as discontinued operations. On
April 19, 1996, the Company closed a transaction pursuant to a Stock Purchase
Agreement between itself and Upscale Acquisitions, Inc., a California
corporation ("Upscale"), dated as of April 1, 1996 (the "Agreement"). Pursuant
to the agreement, the Company sold its shares in a wholly-owned subsidiary,
Upscale Food Outlets, Inc., a California corporation ("UFO"), which owns and
operates restaurants in California, Colorado and Washington which feature pasta
products under the name of "Monterey Pasta Company". The purchase price of the
shares was $1,000 in cash and a note executed by Upscale in the principal amount
of $2,500,000. Lance H. Mortensen, former Chairman of the Board, Chief
Executive Officer and President of the Company, is a director of the Company.
Mr. Mortensen is also the sole shareholder, Chief Executive Officer, President
and a director of Upscale.
There can be no assurance that these changes and the sale will lead to
improved operating results for the Company. The success of the Company's efforts
will depend on a number of factors, including whether grocery and club store
chains will continue to expand the number of their stores offering the Company's
products and whether the Company can continue to increase the number of grocery
and club store chains offering its products. Grocery and club store chains
continually re-evaluate the products carried in their stores and no assurances
can be given that the chains currently offering the Company's products will
continue to do so in the future.
RESULTS OF OPERATIONS
Net revenues increased 60% to $6,133,087 for the quarter ended March 31,
1996 as compared to $3,840,535 for the quarter ended April 2, 1995. This
increase is the result of distribution to approximately 5,200 individual grocery
and club stores at March 31, 1996 as compared to approximately 1,600 at April 2,
1995. Future revenues are expected to increase as the full effect of the
additional store participation has been fully assimilated into the Company's
distribution system.
9
<PAGE>
Gross profit was $2,603,672, or 42% of net revenues for the first quarter
of 1996, compared to $1,469,933, or 38% for the first quarter of 1995. Gross
profit has increased in 1996 as sales volumes have increased, primarily due
to gains associated with processing larger production quantities and the
positive impact experienced due to the upgrade and expansion of the Company's
plant. Cost of sales includes raw ingredients, packaging materials, direct
production labor and fixed and variable production overhead. Increases
associated with the cost of raw ingredients and packaging materials were more
than offset by gains in direct production labor and production overhead
associated with increased sales volumes.
Selling, general and administrative expenses increased 139%, to
$3,043,456 for the quarter ended March 31, 1996 as compared to $1,271,820 for
the first quarter of 1995. These increases are attributable to the expansion
of the Company's infrastructure which has required additional costs such as
administrative and management salaries, recruiting and training of new
personnel and related indirect costs which are necessary to support the
Company's growth. In March 1996, the Company moved its corporate office from
Danville, California to San Francisco, California and incurred lease
termination charges totalling $103,000. Additionally, selling costs,
particularly costs related to grocery store trade promotions, slotting fees
and club store demonstrations, were higher as a result of the Company's
efforts to obtain new customers and enter new geographic markets.
Depreciation and amortization expense, included in cost of sales and
selling, general and administrative expenses, was $196,418, or 3% of net
revenues for the quarter ended March 31, 1996 compared to $191,695, or 5% of
net revenues for the first quarter of 1995. These expenses relate primarily
to capital expenditures in our Monterey County production facility. The
Company anticipates increases in depreciation and amortization in future
periods as additional equipment is purchased and placed into service.
Loss on disposition of assets in the first quarter of 1996 primarily
related to abandonment of leasehold improvements in Danville, California.
IMPACT OF INFLATION
The Company believes that inflation has not had a material impact on its
operations to date. Substantial increases in labor, employee benefits,
ingredients and packaging, rents and other operating expenses could adversely
affect the operations of the Company's business in future periods. The Company
cannot predict whether such increases will occur.
LIQUIDITY AND CAPITAL RESOURCES
During the three month period ended March 31, 1996, $2,567,875 of cash was
used in the Company's operations. The use of this cash primarily related to the
funding of wind down activities associated with the Company's discontinued
restaurant and franchise subsidiaries, investments in retail slotting fees and
general working capital requirements.
On April 23, 1996, the Company announced that it had received commitments
to purchase approximately $4 million of its common stock in a private offering
to accredited investors at $4.375 per share. The shares of common stock are
restricted securities with registration rights. Purchasers of the common stock
agreed not to sell such shares for one year from the date of purchase without
the consent of the placement agent. Spelman & Co. acted as placement agent (the
"Placement Agent") on a "best efforts", "any or all" basis. The Placement Agent
received no, cash commissions in the offering but will receive warrants to
purchase one share of common stock for each $10 in shares sold, exercisable at a
price of $6.50 per share, for a term of seven years.
The Company plans to use approximately $1,500,000 of the net proceeds for
advertising, marketing and promotion. In addition, approximately $1,000,000 of
the net proceeds will be used for capital equipment. The balance will be added
to working capital and used for general corporate purposes. Pending such uses,
the net proceeds will be invested in short-term, interest-bearing securities or
accounts.
10
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The exhibits listed in the accompanying exhibit index
on page 13 are sequentially numbered and are filed or
incorporated by reference as part of this report.
(b) Reports on Form 8-K:
(1) Report on Form 8-K filed on February 9, 1996, reported the
execution of the Company's letter of intent to sell its wholly-
owned subsidiary, Upscale Food Outlets, Inc., a California
corporation ("UFO"), which owns and operates restaurants in
California, Colorado and Washington.
(2) Report on Form 8-K filed on May 3, 1996, reported (i) the
closing of the sale of UFO to Upscale Acquisitions, Inc., and (ii) the
Company's receipt of commitments to purchase approximately $4 million of
its common stock in a private offering to accredited investors.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MONTEREY PASTA COMPANY
Date: May 13, 1997 By: /s/ KENNETH S. STEEL, JR.
-------------------------------
Kenneth S. Steel, Jr.
Chief Executive Officer
By: /s/ JAMES S. SERBIN
-------------------------------
James S. Serbin
Chief Financial Officer
12
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
2.1 Agreement and Plan of Merger dated August 7, 1996 by and between
Monterey Pasta Company, a California corporation and Monterey
Pasta Company, a Delaware corporation (incorporated by reference
from Exhibit A to the Company's Proxy Statement for the Special
Meeting of Shareholders held on August 1, 1996, filed with the
Securities and Exchange Commission on June 27, 1996)
3.1 Certificate of Incorporation dated August 1, 1996 (incorporated
by reference from Exhibit 5 to the Company's Proxy Statement for
the Special Meeting of Shareholders held on August 1, 1996, filed
with the Securities and Exchange Commission on June 27, 1996)
3.2 Certificate of Designations of Series A Convertible Preferred
Stock (incorporated by reference from Annex I to the Subscription
Agreement dated July 31, 1996, filed as Exhibit 4.1 to the
Company's Annual Report on Form 10-K on April 14, 1997 ("1996
Form 10-K"))
3.3 Certificate of Designations of Series B Convertible Preferred
Stock (incorporated by reference from Annex I to the Subscription
Agreement dated August 9, 1996, filed as Exhibit 4.3 to the
Company's Annual Report on Form 10-K on April 14, 1997 ("1996
Form 10-K"))
3.4 Bylaws of the Company (incorporated by reference from Exhibit C
to the Company's Proxy Statement for the Special Meeting of
Shareholders held on August 1, 1996, filed with the Securities
and Exchange Commission on June 27, 1996)
3.5 Certificate of Designations of Series A-1 Convertible Preferred
Stock (incorporated by reference from Exhibits with corresponding
numbers filed with the Company's Annual Report on Form 10-K/A on
April 29, 1997 ("1996 Form 10-K/A"))
3.6 Certificate of Designations of Series B-1 Convertible Preferred
Stock (incorporated by reference from Exhibits with corresponding
numbers filed with the Company's 1996 Form 10-K/A)
4.1 Subscription Agreement, dated as of July 31, 1996 (incorporated
by reference from Exhibits with corresponding numbers filed with
the Company's Registration Statement on Form S-3 on August 23,
1996)
4.2 Registration Rights Agreement, dated as of July 31, 1996
(incorporated by reference from Exhibits with corresponding
numbers filed with the Company's Registration Statement on Form
S-3 on August 23, 1996)
4.3 Subscription Agreement dated as of August 9, 1996 (incorporated
by reference from Exhibits with corresponding numbers filed with
the Company's Registration Statement on Form S-3 on August 23,
1996)
4.4 Registration Rights Agreement, dated as of August 9, 1996
(incorporated by reference from Exhibits with corresponding
numbers filed with the Company's Registration Statement on Form
S-3 on August 23, 1996)
4.5 Form of Warrant for purchase of the Company's Common Stock dated
as of July 1, 1996 (incorporated by reference from Exhibits with
corresponding numbers filed with the Company's Registration
Statement on Form S-3 on August 23, 1996)
4.6 Form of Registration Rights Agreement dated April 1996, among the
Company, Spelman & Co., Inc. and investor (incorporated by
reference from Exhibits with corresponding numbers filed with the
Company's Quarterly Report on Form 10-Q on June 21, 1996).
4.7 Shareholder Rights Agreement dated as of May 15, 1996 between the
Company and Corporate Stock Transfer, as rights agent
(incorporated by reference from Item 2 of Form 8-A filed with the
Securities and Exchange Commission on May 28, 1996)
4.8 Form of Subscription Agreement dated April 1996, among the
Company, Spelman & Co., Inc. and investor (incorporated by
reference from Exhibits with corresponding numbers filed with the
Company's 1996 Form 10-K/A)
4.9 Form of Amendment to Registration Rights Agreement dated as of April
20, 1997 among the Company, Spelman & Co., Inc. and investor,
amending the Registration Rights Agreement entered into as of April
1996 (incorporated by reference from Exhibits with corresponding
numbers filed with the Company's 1996 Form 10 K/A)
<PAGE>
4.10 Series A Convertible Preferred Stock Exchange Agreement dated as of
March 10, 1997 by and between the Company and GFL Performance
Fund Limited (incorporated by reference from Exhibits with
corresponding numbers filed with the Company's 1996 Form 10-K/A)
4.11 Series B Convertible Preferred Stock Exchange Agreement dated as of
April 2, 1997 by and between the Company and Pangaea Fund Limited
(incorporated by reference from Exhibits with corresponding numbers
filed with the Company's 1996 Form 10-K/A)
4.12 Registration Rights Agreement dated as of December 31, 1996 among the
Company, Sentra Securities Corporation and investor (incorporated by
reference from Exhibits with corresponding numbers filed with the
Company's 1996 Form 10-K/A)
4.13 Form of Warrant ("Sentra Warrant") for purchase of Company's Common
Stock dated March 1997 issued in connection with the Company's March
1997 private placement (incorporated by reference from Exhibits with
corresponding numbers filed with the Company's Pre-Effective Amendment
No. 1 to the Registration Statement on Form S-3 on May 6, 1997)
4.14(*) Stock Purchase Agreement between the Company and Kenneth A. Steel, Jr.
dated April 29, 1997 (incorporated by reference from Exhibits with
corresponding numbers filed with the Company's Pre-Effective Amendment
No. 1 to the Registration Statement on Form S-3 on May 6, 1997)
10.1(*) Second Amended and Restated 1993 Stock Option Plan (as amended on
August 1, 1996) (incorporated by reference to the Company's 1996 Form
10-K)
10.2(*) 1995 Employee Stock Purchase Plan (incorporated by reference from
Exhibit 10.15 to the Company's 1994 Form 10-K)
10.3 Blackhawk Plaza Lease of the Company (incorporated by reference from
Exhibit 10.02 to the Company's Registration Statement No. 33-69590-LA
on Form SB-2 (the "SB-2")
10.4 353 Sacramento Street Office Lease dated as of December 27, 1995 with
John Hancock Mutual Life Insurance Company, together with letter
agreement dated March 20, 1996 regarding basement storage
(incorporated by reference to the Company's Annual Report on Form 10-K
filed April 1, 1996 (the "1995 Form 10-K")
10.5 Monterey County Production Facility Lease of the Company, as amended
(incorporated by reference from Exhibit 10.03 to the SB-2)
10.6 Amendment No. 1 dated February 1, 1995 and Amendment No. 2 dated March
1, 1995 to Monterey County Production Facility Lease of the Company
(incorporated by reference from Exhibits with corresponding numbers
filed with the 1995 Form 10-K)
10.7 Christie Avenue Warehouse Lease of the Company (incorporated by
reference from Exhibit 10.04 to the SB-2)
10.8 Loan and Security Agreement dated December 8, 1995 with Coast Business
Credit, a Division of Southern Pacific Thrift and Loan Association,
and Schedule thereto (incorporated by reference from Exhibits with
corresponding numbers filed with the 1995 Form 10-K)
10.9 Equipment Collateral Security Agreement dated December 8, 1995 with
Coast Business Credit (incorporated by reference from Exhibits with
corresponding numbers filed with the 1995 Form 10-K)
10.10 Secured Promissory Note dated December 8, 1995 in the original
principal amount of $500,000 in favor of Coast Business Credit
(incorporated by reference from Exhibits with corresponding numbers
filed with the 1995 Form 10-K)
10.11 Secured Promissory Note dated December 8, 1995 in the original
principal amount of $750,000 in favor of Coast Business Credit
(incorporated by reference from Exhibits with corresponding numbers
filed with the 1995 Form 10-K)
10.12 Investment Agreement dated July 12, 1995 with The Seychelles Fund,
Ltd. (incorporated by reference from Exhibits with corresponding
numbers filed with the 1995 Form 10-K)
10.13 Master Lease dated August 1, 1995 with Sentry Financial Corporation
(incorporated by reference from Exhibits with corresponding numbers
filed with the 1995 Form 10-K)
10.14 Letter Agreement dated July 26, 1995 between Monterey Pasta
Development Company and California Pasta Company (incorporated by
reference from Exhibit 10.21 to the Company's Quarterly Report on Form
10-Q for the quarter ended October 2, 1995 ("Q3 10-Q"))
10.15 Asset Purchase Agreement dated July 26, 1995 between Upscale Food
Outlets, Inc. and California Pasta Company (incorporated by
reference from Exhibit 10.22 to the Company's Q3 10-Q)
<PAGE>
10.16 Franchise Termination Agreement and Release dated March 8, 1996 among
the Company, Upscale Food Outlets, Inc., Monterey Pasta
Development Company, The Lance H. Mortensen Unitrust dated December 3,
1994, and LBJ Restaurants, LLC (incorporated by reference from
Exhibits with corresponding numbers filed with the 1995 Form 10-K)
10.17 Acquisition Agreement between the Company and Upscale Food Outlets,
Inc. (incorporated by reference from Exhibit 10.05 to the
SB-2)
10.18* Employment Agreement with Lance H. Mortensen (incorporated by
reference from Exhibit 10.06 to the SB-2)
10.19* Employment Agreement dated September 5, 1995 with Mr. Norman E. Dean
(incorporated by reference from Exhibit 10.20 to the Company's Q3
10-Q)
10.20* Consulting Agreement dated May 25, 1995 with Daniel J. Gallery
(incorporated by reference from Exhibit 10.18 to the Company's
Quarterly Report on Form 10-Q for the quarter ended July 2, 1995 ("Q2
10-Q"))
10.21* Employment Agreement dated June 30, 1993 with Anthony W. Giannini
(incorporated by reference from Exhibits with corresponding numbers
filed with the 1994 Form 10-K.
10.22* Employment Agreement with Mr. David J. Massara (incorporated by
reference from Exhibit 10.18 to the Company's 1994 Form 10-K)
10.23 Trademark Registration -- MONTEREY PASTA COMPANY, under Registration
No. 1,664,278, registered on November 12, 1991 with the U.S. Patent
and Trademark Office (incorporated by reference from Exhibit 10.09 to
the SB-2)
10.24 Trademark Registration -- MONTEREY PASTA COMPANY, under Registration
No. 1,943,602, registered on December 26, 1995 with the U.S. Patent
and Trademark Office (incorporated by reference from Exhibits with
corresponding numbers filed with the 1995 Form 10-K)
10.25 Trademark Registration -- MONTEREY PASTA COMPANY and Design, under
Registration No. 1,945,131, registered on January 2, 1996 with the
U.S. Patent and Trademark Office (incorporated by reference from
Exhibits with corresponding numbers filed with the 1995 Form 10-K)
10.26 Trademark Registration -- MONTEREY PASTA COMPANY and Design, under
Registration No. 1,951,624, registered on January 23, 1996 with the
U.S. Patent and Trademark Office (incorporated by reference from
Exhibits with corresponding numbers filed with the 1995 Form 10-K)
10.27 Trademark Registration -- MONTEREY PASTA COMPANY, under Registration
No. 1,953,489, registered on January 30, 1996 with the U.S. Patent and
Trademark Office (incorporated by reference from Exhibits with
corresponding numbers filed with the 1995 Form 10-K)
10.28 Subscription Agreement dated as of June 21, 1995 with GFL Advantage
Fund Limited (incorporated by reference from Exhibit 10.19 to the
Company's Q2 10-Q)
10.29 Registration Rights Agreement dated as of June 15, 1995 with GFL
Advantage Fund Limited, as amended on October 13 and 19, 1995,
respectively (incorporated by reference from Exhibit 10.2 to the
Company's Q2 10-Q, and Exhibits 10.6 and 10.7 to the Company's S-3
Registration Statement No. 33-96684, filed on December 12, 1995 (the
"S-3"))
10.30 Joint Escrow Instructions dated as of October 1995 (incorporated by
reference from Exhibit 10.5 to the Company's 1995 S-3)
<PAGE>
10.31 Note Purchase Agreement dated as of October 19, 1995 with GFL
Advantage Fund Limited (incorporated by reference from Exhibit 10.3 to
the Company's 1995 S-3)
10.32 Convertible Note dated as of October 25, 1995, executed by the Company
in favor of GFL Advantage Fund Limited (incorporated by reference from
Exhibits with corresponding numbers filed with the 1995 Form 10-K)
10.33 Trademark Purchase (Burns) (incorporated by reference from Exhibit
10.12 of the SB-2)
10.34 Purchase of Stock and Exhibits (Burns- Mortensen-Hill) (incorporated
by reference from Exhibit 10.13 of the SB-2)
10.35 Non-Recourse Promissory Note (Hill-Mortensen) (incorporated by
reference from Exhibit 10.15 of the SB-2)
10.36 Asset Purchase Agreement dated March 1, 1994 between Upscale Food
Outlets, Inc., Lucca's Pasta Bar, Inc., Timothy John
Morris and Marian Kathryn Morris (incorporated by reference from
Exhibit 10.16 to the Company's 1993 Form 10-K)
10.39 Franchise Termination Agreement and Release dated as of March 27,
1996, among the Company, Upscale Food Outlets, Inc., Monterey
Pasta Development Company, California Pasta Company, and James G.
Schlicher (incorporated by reference from Exhibits with corresponding
numbers filed with the Company's Quarterly Report on Form 10-Q on
August 23, 1996)
10.40 Stock Purchase Agreement dated April 1, 1996 between Upscale
Acquisitions, Inc. and the Company (incorporated by reference
from Exhibits with corresponding numbers filed with the Company's
Quarterly Report on Form 10-Q on August 23, 1996).
10.41 Placement Agent Agreement dated April 12, 1996 between the Company and
Spelman & Co., Inc. (incorporated by reference from Exhibits
with corresponding numbers filed with the Company's Quarterly Report
on Form 10-Q on August 23, 1996).
10.44* The Company's 401(k) Plan, established to be effective as of January
1, 1996, adopted by the Board of Directors on June 7, 1996
(incorporated by reference from Exhibit 10.24 to the Company's
Quarterly Report on Form 10-Q filed August 23, 1996)
10.45* Directed Employee Benefit Trust Agreement dated June 17, 1996 between
the Company and The Charles Schwab Trust Company, as Trustee of the
Company's 401(k) Plan (incorporated by reference from Exhibit 10.24 to
the Company's Quarterly Report on Form 10-Q filed August 23, 1996)
10.46* Employment Agreement dated February 12, 1996 with Mr. Robert J. Otto
(incorporated by reference from Exhibit 10.24 to the Company's
Quarterly Report on Form 10-Q filed August 23, 1996).
16.1 Letter from Deloitte & Touche LLP dated October 31, 1996 (incorporated
by reference to the Company's Report on Form 8-K/A filed November 8,
1996)
21.1 Subsidiaries of the Company (incorporated by reference to the
Company's 1996 Form 10-K)
27.1 Financial Data Schedule
- ---------------------
* Management contract or compensatory plan or arrangement covering
executive officers or directors of Monterey Pasta Company.
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<PAGE>
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<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
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<RECEIVABLES> 1,979,636
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<CURRENT-ASSETS> 5,573,702
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0
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<TOTAL-LIABILITY-AND-EQUITY> 11,349,813
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