<PAGE>
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 23, 1997
WILLIAM GREENBERG, JR. DESSERTS AND CAFES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
1-13984 13-3832215
- --------------------------------------------------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)
533 W. 47th Street, New York, NY 10036
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 586-7600
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
<PAGE>
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K filed
February 2, 1997 with repect to the registrant's acquisition of all the
outstanding shares of J.M. Specialties, Inc. as set forth in the pages attached
hereto:
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersiged thereunto duty authorized.
William Greenberg Jr. Desserts and Cafes, Inc.
Dated: April 21, 1997 By: /s/ Philip Grabow
____________________________________________
Philip Grabow, President and Chief
Executive Officer
-2-
<PAGE>
<PAGE>
The Current Report on Form 8-K filed with the Securities and Exchange
Commission on February 2, 1997 by William Greenberg Jr. Desserts and Cafes, Inc.
pursuant to Rule 13a-11 is hereby amended in the following respects:
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
<TABLE>
<CAPTION>
Page No.
________
<C> <S> <C>
(a) Financial Statements of Business acquired. The
historical financial statements of JMS at December 31,
1995 and 1994, and for each of the two years in the
period ended December 31, 1995, and the auditors' report
thereon..............................................................F-1
(b) Pro Forma Financial Information. Pro Forma
Consolidating Financial Statements (unaudited) of
William Greenberg Jr. Desserts and Cafes, Inc. and
Subsidiary..........................................................FB-1
</TABLE>
-3-
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
YEARS ENDED DECEMBER 31, 1995 AND 1994
CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Independent auditors' report 1
Financial statements:
Balance sheet 2
Statement of income 3
Statement of shareholders' equity 4
Statement of cash flows 5
Notes to financial statements 6 - 11
Independent auditors' report on supplementary information 12
Supplementary information to financial statements:
Cost of sales 13
Operating expenses 14
</TABLE>
<PAGE>
<PAGE>
[LETTERHEAD OF ZELLER WEISS & KAHN]
INDEPENDENT AUDITORS' REPORT
Board of Directors
J. M. Specialties, Inc.
Parsippany, New Jersey
We have audited the accompanying balance sheets of J. M. Specialties, Inc.
as of December 31, 1995 and 1994 and the related statements of income,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to in the above paragraph
present fairly, in all material respects, the financial position of J. M.
Specialties, Inc. and the results of its operations and cash flows for the years
then ended in conformity with generally accepted accounting principles.
/s/ Zeller Weiss & Kahn
January 9, 1997
Mountainside, New Jersey
1
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
BALANCE SHEET - DECEMBER 31, 1995 AND 1994
ASSETS
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Current assets:
Cash $ 79,662 $ 144,510
Accounts receivable (Note 4) 203,925 298,946
Notes receivable, related parties (Note 3) 171,000 226,000
Note receivable, other 8,250
Interest receivable 9,264 2,865
Inventory (Notes 4 and 8) 330,151 284,973
Loans to employees 2,296
Prepaid expenses 20,105 335
---------- ----------
Total current assets 824,653 957,629
---------- ----------
Property and equipment (Note 4):
Machinery and equipment 615,994 551,675
Furniture and computers 38,817 37,617
Leasehold improvements 70,078 70,078
---------- ----------
724,889 659,370
Less accumulated depreciation 423,265 352,225
---------- ----------
301,624 307,145
---------- ----------
Other assets:
Trademark costs, net of amortization 380 750
Security deposits 27,988 20,563
Covenant not to complete, net of amortization
(Note 7) 138,385 184,514
---------- ----------
166,753 205,827
---------- ----------
$1,293,030 $1,470,601
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current portion of long-term debt (Note 4) $ 63,019 $ 77,497
Note payable, bank 15,278
Note payable, shareholder (Note 3) 162,925 135,416
Accounts payable 200,197 229,859
Accrued profit sharing 20,000 20,000
Payroll taxes payable 29,191 34,308
Accrued expenses 3,982 22,599
---------- ----------
Total current liabilities 494,592 519,679
---------- ----------
Long-term debt, net of current portion (Note 4) 122,653 200,684
---------- ----------
Commitments (Note 6)
Shareholders' equity:
Common stock, no par; authorized 2,000
shares; issued and outstanding 200 shares 2,000 2,000
Retained earnings 673,785 748,238
---------- ----------
675,785 750,238
---------- ----------
$1,293,030 $1,470,601
========== ==========
</TABLE>
See notes to financial statements.
2
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
STATEMENT OF INCOME
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Sales $3,648,110 $4,398,532
Cost of sales 2,575,486 3,081,745
---------- ----------
Gross profit 1,072,624 1,316,787
Operating expenses 1,049,447 1,089,992
---------- ----------
Income from operations 23,177 226,795
---------- ----------
Other charges (credits):
Interest expense 11,023 24,266
Interest income ( 16,320) ( 13,494)
Gain on sale of fixed assets ( 422)
---------- ----------
( 5,297) 10,350
---------- ----------
Income before income taxes 28,474 216,445
Income taxes (Note 10) 1,625 5,952
---------- ----------
Net income $ 26,849 $ 210,493
========== ==========
Net income per weighted average shares of
common stock outstanding $ 134.25 $ 1,052.47
========== ==========
Weighted average number of shares of common
stock outstanding 200 200
========== ==========
</TABLE>
See notes to financial statements.
3
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common stock Retained
Shares Amount Earnings Total
------ ------ -------- -----
<S> <C> <C> <C> <C>
Balance at January 1, 1994 200 $2,000 $643,945 $645,945
Dividends paid 1994 ( 106,200) ( 106,200)
Net income for the year ended
December 31, 1994 210,493 210,493
--- ------ -------- --------
Balance at December 31, 1994 200 2,000 748,238 750,238
Dividends paid 1995 ( 101,302) ( 101,302)
Net income for the year ended
December 31, 1995 26,849 26,849
--- ------ -------- --------
Balance at December 31, 1995 200 $2,000 $673,785 $675,785
=== ====== ======== ========
</TABLE>
See notes to financial statements.
4
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
STATEMENT OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 26,849 $ 210,493
Adjustments to reconcile net income to
cash provided from operating activities:
Depreciation 71,041 67,536
Amortization 46,813 47,376
Gain on sale of delivery equipment ( 422)
Changes in operating assets and liabilities:
Decrease in accounts receivable 95,021 43,616
Increase in inventory ( 45,178) ( 34,907)
Increase in prepaid expenses and other current
assets ( 28,779) ( 242)
Increase (decrease) in accounts payable and
accrued expenses ( 53,396) 33,272
-------- --------
Net cash provided by operating activities 112,371 366,722
-------- --------
Investing activities:
Sources of cash:
Decrease in notes receivable 46,750
Proceeds from sale of delivery equipment 3,600
Use of cash:
Purchase of property and equipment ( 65,806) ( 18,810)
Increase in security deposits ( 7,139)
Increase in notes receivable ( 226,000)
-------- --------
Net cash used in investing activities ( 26,195) ( 241,210)
-------- --------
Financing activities:
Sources of cash:
Increase in notes payable, officers 27,509 207,891
Increase in long-term debt 4,380
Use of cash:
Decrease in notes payable, bank ( 14,060)
Decrease in long-term debt ( 77,231) ( 82,269)
Payment of dividends ( 101,302) ( 106,200)
-------- --------
Net cash used in financing activities ( 151,024) 9,742
-------- --------
Net increase (decrease) in cash ( 64,848) 135,254
Cash, beginning of year 144,510 9,256
-------- --------
Cash, end of year $ 79,662 $144,510
======== ========
Supplemental disclosures:
Cash paid during the year for:
Interest $ 10,545 $ 22,410
Income taxes $ 5,106 $ 2,906
</TABLE>
See notes to financial statements.
5
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
1. Organization of the Company:
The Company, J. M. Specialties, Inc., t/a Batter Bake, was incorporated in
the State of New Jersey in 1985. The Company manufactures muffin batter
and baked goods which sell to supermarkets, food distributors,
educational institutions and restaurants. The Company has expanded its
product line to include yogurt and fat free items. Although the Company
sells its products throughout the United States, its main customer base
is on the east coast of the United States.
2. Summary of significant accounting policies:
Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles required management to make assumptions
that effect the reported amounts of assets and liabilities and disclosure
of contingent 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.
Inventories:
Inventories are stated at the lower of cost (first-in, first-out) or
market.
Property and equipment and depreciation:
Property and equipment are stated at cost. Depreciation of property and
equipment is provided using the straight-line method over the following
useful lives:
Years
-----
Machinery and equipment 10
Furniture and computers 5
Leasehold improvements 10
Expenditures for major renewals and betterment that extend the useful
lives of property and equipment are capitalized. Expenditures for
maintenance and repairs are charged to expenses as incurred.
Allowance for doubtful accounts:
An allowance for doubtful accounts has not been established as it has been
determined that the accounts receivable are fully collectible.
Deferred costs and amortization:
The Company amortizes the cost of a covenant not to complete over a five
year period, the term of the agreement. The Company amortizes trademark
costs over ta fifteen year period. The Company uses the straight-line
method to amortize both assets.
Cash and cash equivalents:
For purposes of the statement of cash flows, the Company considers all
short-term debt securities purchased with the maturity of three months or
less, as well as money market funds, to be cash equivalents.
6
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
2. Summary of significant accounting policies (continued):
Profit sharing plan:
The Company has a non-contributory profit sharing plan where the
contributions are at the discretion of management.
3. Related party transactions:
The Company shares warehouse facilities with J. P. Veggies, Inc. Mr.
Grabow, the sole shareholder in J. M. Specialties, Inc., and his family,
own 40 percent of J. P. Veggies, Inc. The Company charges J. P. Veggies,
Inc. for the manufacturing and packing of product and for certain sales
and administrative support provided by J. M. Specialties, Inc. These
billings were included in the Company's net sales and amounted to
$174,814 in 1995 and $57,074 in 1994.
The Company has three demand notes receivable with related parties that
carry interest at five to six percent as follows:
1995 1994
---- ----
Russell Homes, Inc. $110,000 $140,000
Auto Spa, Inc. 16,000 11,000
Parts Plus Industrial, Inc. 45,000 75,000
-------- --------
$171,000 $226,000
======== ========
The Company was advanced funds from Mr. Philip Grabow, the sole
shareholder, on a short term basis. These notes amounted to $162,925 in
1995 and $135,416 in 1994.
As of the date of this report, the note to Auto Spa, Inc. has been
distributed to Phil Grabow in lieu of a cash dividend, the Parts Plus
Industrial, Inc. note had been collected in full and the note to Russell
Homes, Inc. had been reduced to $60.000.
4. Long-term debt:
<TABLE>
<CAPTION>
1995 1994
-------------------- --------------------
Interest Current Long-term Current Long-term
Rate Portion Portion Portion Portion
---- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Urban Nat'l Bank (a) Prime+1% $16,999 $ 23,607 $33,667 $ 55,885
John McDonough (b) 4.875% 52,000 104,000 52,000 156,000
------- -------- ------- --------
68,999 127,607 85,667 211,885
Less unamortized debt cost 5,980 4,954 8,170 11,201
------- -------- ------- --------
$63,019 $122,653 $77,497 $200,684
======= ======== ======= ========
</TABLE>
7
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
4. Long-term debt (continued):
(a) Notes payable are secured by machinery and equipment with a cost of
$122,000 and payable in monthly installments of $1,417 in 1995 and
$2,806 in 1994, excluding interest.
(b) Note payable is secured by all assets of the Company, the personal
guarentee of Philip Grabow, the sole shareholder of the Company,
and the pledge of Mr. Grabow's 200 shares of J. M. Specialties,
Inc. The note is payable in weekly installments of $1,000,
including interest. In September of 1996 the Company settled with
the Estate of John McDonough and this note was paid in full, with
the shares of the Company being released as collateral.
The total future annual payments as of December 31, 1995 are as follows:
December 31, 1995 $ 77,497
December 31, 1996 78,296
December 31, 1997 65,317
December 31, 1998 57,071
--------
$278,181
========
5. Profit sharing plan:
The Company has a non-contributory profit sharing plan which covers
substantially all full-time employees. Annual contributions are
discretionary and subject to approval of the Board of Directors. These
contributions may not exceed the maximum amount deductible for federal
income tax purposes. Contributions, which are held in the Profit Sharing
Trust Account, amounted to $20,000 in both 1995 and 1994.
6. Commitments:
The Company is obligated under a written lease agreement which began May
1, 1993 and expires April 30, 1998. Rent expense amounted to $58,275 in
1995 and 1994. The Company is also obligated to pay a proportionate share
of real estate taxes, common maintenance and insurance.
Future minimum lease payments required under this non-cancelable operating
lease are as follows:
1995 $ 58,275
1996 58,275
1997 58,275
1998 19,425
--------
$194,250
========
Rent expense amounted to $58,275 in 1995 and 1994.
8
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
6. Commitments (continued):
On December 5, 1995, the Company entered into a lease agreement for the
warehouse and office space adjacent to the original leased facility. The
lease term begins January 1, 1996 and expires August 31, 1997. The lease
carries rent at $7,139 per month, or $85,668 per year. The Company is
obligated to pay its proportionate share of real estate taxes, common
maintenance and insurance.
Future minimum lease payments required under this non-cancelable operating
lease are as follows:
1996 $ 85,667
1997 57,112
--------
$142,779
========
Consulting and brokerage agreements:
The Company has entered into several verbal brokerage agreements with
various commission agents. These agreements are cancelable by either
party with 30 days written notice. The commission rates vary from five
percent of gross sales, less freight, of specified territories.
On October 17, 1995, the Company entered into a consulting agreement with
Twin Enterprises D/B/A Midges Gourmet and its owner, Kurt Cahill. Mr.
Cahill is to act as a consultant to J. M. Specialties, Inc. for a one
year period ending October 17, 1996, and compensated at a rate of $250
per day. In 1995 this amounted to $6,500. The Company has an option to
purchase all accounts, formulas, receipts, etc. from Midges Gourmet for
$280,000 at the end of the one year period, with Mr. Cahill staying on to
head up all research and development for J. M. Specialties, Inc. under a
separate three year contract for $20,000 per year.
In July of 1996, the agreement was automatically terminated when Mr.
Cahill violated the terms of the contract by taking employment with a
direct competitor of J. M. Specialties, Inc. Mr. Cahill was notified in
writing that the agreement was no longer in force.
7. Covenant not to complete:
On December 30, 1993, John McDonough, a fifty percent shareholder in J. M.
Specialties, Inc., sold 100 shares of the Company's common stock to
Philip Grabow, making Mr. Grabow the owner of all of the Company's
outstanding shares. As part of this transaction, J. M. Specialties, Inc.
entered into a covenant not to complete with Mr. McDonough, whereby Mr.
McDonough agreed not to manage, operate, join, control, or participate,
in or be consulted as an officer, employee, sole proprietor, partner,
shareholder or otherwise, with or for any business which in any such
matter, directly or indirectly, has competed or will compete with J. M.
Specialties, Inc. As consideration for entering into this agreement, the
Company agreed to pay Mr. McDonough $1,000 per week,
9
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
7. Covenant not to complete (continued):
commencing the first week of January, 1994 and continuing through
December 31, 1998 until a total of $260,000 has been paid. Because no
interest rate was stated in this agreement, $29,358 was deemed to be
interest, as per Accounting Principles Board Opinion No. 21, leaving a
value of $230,642 to be assigned to the covenant not to complete.
In April of 1996, Mr. McDonough passed away, Leaving the remaining balance
of the note to his estate. In October of 1996, J. M. Specialties, Inc.
negotiated with the Estate of Mr. John McDonough and paid the remaining
balance of the note of $147,157 with a lump sum payment of $115,000.
Amortization expense amounted to $46,128 in both 1995 and 1994.
8. Inventories:
1995 1994
---- ----
Raw materials $116,761 $151,200
Finished goods 152,031 113,700
Packaging and shipping materials 61,359 20,073
-------- --------
$330,151 $284,973
======== ========
9. Concentration of credit risk:
The Company maintains all of its cash balances in financial institutions
in Wayne, New Jersey. The balances are insured by the Federal Deposit
Insurance Company of to $100,000. At December 31, 1995, the Company's
uninsured cash balance totaled $41,852.
In 1995, the Company had one customer which accounted for $404,000 or 11%
of net sales. In 1994, the same customer accounted for $575,000 or 15% of
sales. There were no other customers which accounted for more than 10% of
sales.
10. Income taxes:
Noprovision has been made for federal income tax. Under Subchapter "S" of
the Internal Revenue Code, the Company has elected to include their
prorata share of income or loss in their individual returns. A provision
has been made for state income taxes.
The Company has adopted SFAS 109 for the fiscal year beginning January 1,
1994. SFAS 109 changes accounting for state income taxes from the
deferred method, required by APB-11 to the asset/liability method,
commonly referred to as the liability method. The deferred method places
primary emphasis on the matching of revenues and expenses. The
10
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1995 AND 1994
10. Income taxes (continued):
liability method places primary emphasis on the valuation of current and
deferred tax assets and liabilities. The significance of the impact that
SFAS 109 will have on the financial statements is expected to be
immaterial and will have no impact on any other significant matters of
the Company. The effect on initially adopting SFAS 109 will be reported
as the cumulative effect of a change in accounting principle in
accordance with APB-20.
11. Subsequent events:
In October of 1996, Mr. Grabow began negotiations to sell 100% of his
stock in J. M. Specialties, Inc. to William Greenberg, Jr. Desserts and
Cafes, Inc., a publicly held New York corporation. As of the date of this
report, contracts were being drawn up but had not yet been signed. Both
parties anticipate a closing date some time during the week of January
14, 1997.
12. Effect of recently issued accounting standards:
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of". "SFAS"
No. 121 requires that long-lived assets and certain identifiable
intangibles, to be held and used by the Company, be reviewed for
impairment whenever events indicated the carrying amount of an asset may
not be recoverable. The effective date of "SFAS" No. 121 is for fiscal
years beginning after December 15, 1995.
Additionally, The Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation". The effective date of "SFAS" No. 123 is for fiscal years
beginning after December 15, 1995 and established a method of accounting
for stock compensation plans based on fair value. The Company does not
believe the "SFAS" No. 121 and No. 123 will have an impact on its
financial statements.
11
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT ON SUPPLEMENTARY INFORMATION
Board of Directors
J. M. Specialties, Inc.
Parsippany, New Jersey
Our report on our audit of the basic financial statements of J. M.
Specialties, Inc. for December 31, 1995 and 1994 appears on Page 1. That audit
was made for the purpose of forming an opinion on the basic financial statements
taken as a whole.
The statements of cost of sales and operating expenses are presented for
the purpose of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
January 9, 1997
Mountainside, New Jersey
12
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
COST OF SALES
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Inventory, beginning of year $ 284,973 $ 250,066
Purchases 1,207,336 1,546,482
---------- ----------
1,492,309 1,796,548
Inventory, end of year 330,151 284,973
---------- ----------
1,162,158 1,511,575
---------- ----------
Direct labor 488,466 587,541
---------- ----------
Factory overhead:
Payroll taxes 53,731 55,503
Factory expense 42,543 53,856
Depreciation 66,181 62,178
Insurance 88,230 84,994
Real estate taxes 23,616 18,569
Rent 52,448 52,448
Repairs and maintenance 60,858 75,076
Storage 8,153 10,588
Supplies, packaging and shipping 463,799 499,866
Utilities 65,303 69,551
---------- ----------
924,862 982,629
---------- ----------
$2,575,486 $3,081,745
========== ==========
</TABLE>
13
<PAGE>
<PAGE>
J. M. SPECIALTIES, INC.
OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Salaries:
Officers $ 457,276 $ 510,925
Office 59,970 49,531
Sales 133,855 125,745
Payroll taxes 10,219 37,783
Advertising 9,349 8,669
Amortization 46,813 47,376
Automobile and delivery expense 22,972 38,919
Automobile lease expense 32,809 25,349
Bad debt expense 10,000
Commissions 61,786 55,111
Consulting 6,500
Depreciation 4,860 5,358
Employee benefits 35,399 32,932
Insurance 5,393 9,495
Office 29,552 20,654
Promotion, shows and travel 54,126 52,188
Professional fees 20,487 22,523
Profit sharing plan 20,000 20,000
Rent 5,827 5,827
Telephone 14,998 13,880
Utilities 7,256 7,727
---------- ----------
$1,049,447 $1,089,992
========== ==========
</TABLE>
14
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERT AND CAFES, INC. AND SUBSIDIARY
PRO FORMA CONSOLIDATING FINANCIAL STATEMENTS
(Unaudited)
I N D E X
- ---------
FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Pro Forma Consolidating Balance Sheet
As at December 31, 1996.........................................................FB-2
Pro Forma Consolidating Statement of Operations
For the Year Ended December 31, 1996............................................FB-3
Pro Forma Consolidating Balance Sheet
As at December 31, 1995.........................................................FB-4
Pro Forma Consolidating Statement of Operations
For the Year Ended December 31, 1995............................................FB-5
Notes to Pro Forma Consolidating Financial Statements........................FB-6, FB-7
Pro Forma Adjustments
For the Year Ended December 31, 1996......................................FB-8, FB-9
Pro Forma Adjustments
For the Year Ended December 31, 1995....................................FB-10, FB-11
</TABLE>
FB-1
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
William
Greenberg Jr. J.M. Pro Forma Adjustments
Desserts and Specialties, --------------------------
Cafes, Inc. Inc. Debt Credit Pro Forma
------------ ------------ -------- --------- ------------
(Historical) (Historical)
<S> <C> <C> <C> <C> <C>
A S S E T S
Current assets:
Cash and cash equivalents $ 204,136 $ 84,129 (A)$1,747,500 (B) 900,000 $1,027,985
(E) 107,780
Accounts receivable 275,060 224,378 499,438
Notes receivable - related party - 60,000 60,000
Inventory 75,000 274,803 349,803
Prepaid expenses 127,172 14,063 141,235
----------- ----------- -----------
Total current assets 681,368 657,373 2,078,461
----------- ----------- -----------
Property and equipment - net 850,000 233,608 (D) 250,000 (G) 35,714 1,297,894
----------- ----------- -----------
Other assets:
Investment in subsidiary - - (C) 88,000
(B) 2,215,000 (D)2,303,000
Goodwill - - (D) 1,356,565 (G) 90,438 1,266,127
Covenant not to compete 87,500 - 87,500
Security deposits 116,108 27,988 144,096
Other - 11 11
----------- ----------- -----------
Total other assets 203,608 27,999 1,497,734
----------- ----------- -----------
$1,734,976 $918,980 $4,874,089
=========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Current portion of long-term debt $ - $ 16,999 $ 16,999
Notes payable - bank - 75,000 75,000
Accounts payable 834,531 112,919 947,450
Estimated liability for restructuring 450,000 - 450,000
Accrued salaries - officers/stockholders 71,634 - 71,634
Accrued expenses and other current
liabilities 458,950 11,019 (E)$ 254,123 724,092
----------- ----------- -----------
Total current liabilities 1,815,115 215,937 2,285,175
----------- ----------- -----------
Deferred rent 68,602 - 68,602
----------- ----------- -----------
Long-term debt, net of current portion - 6,608 6,608
----------- ----------- -----------
Stockholders' equity (deficiency):
Common stock (C) 34
2,622 2,000 (D) 2,000 (B) 500 3,156
Additional paid-in capital 6,746,564 - (B)1,314,500 10,115,910
(A)1,747,500
(E) 219,380
(C) 87,966
Retained earnings (accumulated deficit) (X) 707,435
(6,897,927) 694,435 (D) 694,435 (7,605,362)
----------- ----------- -----------
Total stockholders' equity
(deficiency) ( 148,741) 696,435 2,513,704
----------- ----------- ----------- ---------- -----------
$1,734,976 $ 918,980 $ 7,060,935 $7,060,935 $ 4,874,089
=========== =========== =========== ========== ===========
</TABLE>
FB-2
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
<TABLE>
<CAPTION>
William
Greenberg Jr. J.M. Pro Forma Adjustments
Desserts and Specialties, ---------------------
Cafes, Inc. Inc. Debt Credit Pro Forma
------------ ----------- -------- -------- ----------
(Historical) (Historical)
<S> <C> <C> <C> <C> <C>
Net sales $4,232,616 $3,209,893 $ 7,442,509
---------- ---------- -----------
Costs and expenses:
Cost of sales 3,109,536 2,331,073 (G) $ 35,714 5,476,323
Selling, general and administrative expenses 3,836,193 799,458 (E) 107,780 4,743,431
---------- ---------- -------- -----------
Total costs and expenses 6,945,729 3,130,531 143,494 10,219,754
---------- ---------- -------- -----------
Income (loss) from operations ( 2,713,113) 79,362 ( 143,494) ( 2,777,245)
---------- ---------- -------- -----------
Other income (expense):
Interest income 41,767 7,804 49,571
Interest expense ( 5,555) ( 10,061) ( 15,616)
Write-off of goodwill ( 840,780) - ( 840,780)
Amortization of goodwill - - (G) 90,438 ( 90,438)
Loss on impairment of property and equipment ( 797,559) - ( 797,559)
Estimated restructuring loss ( 450,000) - ( 450,000)
Compensatory element of issuance of warrants ( 204,064) - (E) 473,503 ( 677,567)
Storage income - 6,456 6,456
---------- ---------- -------- -----------
Total other income (expense) ( 2,256,191) 4,199 563,941 ( 2,815,933)
---------- ---------- -------- -----------
Income (loss) before income taxes ( 4,969,304) 83,561 ( 707,435) ( 5,593,178)
Income taxes 8,823 3,786 12,609
---------- ---------- -------- -----------
Income (loss) before extraordinary credit ( 4,978,127) 79,775 ( 707,435) ( 5,605,787)
Extraordinary credit - 31,375 - 31,375
---------- ---------- -------- -----------
Net income (loss) ($4,978,127) $ 31,375 ($707,435) ($ 5,574,412)
========== ========= ======== ===========
Per share data:
Pro forma net income (loss) per share ($1.82) $555.75 ($1.71)
===== ======= =====
Weighted average number of shares outstanding 2,731,386 200 3,265,471
========= === =========
</TABLE>
FB-3
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED CONSOLIDATING BALANCE SHEET
DECEMBER 31,1995
(Unaudited)
<TABLE>
<CAPTION>
William
Greenberg Jr. J.M. Pro Forma Adjustments
Desserts and Specialties, ----------------------
Cafes, Inc. Inc. Debit Credit Pro Forma
------------ ----------- ----- ------ ---------
(Historical) (Historical)
A S S E T S
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $2,169,999 $ 79,662 (A)$1,747,500 (B) 900,000 $3,304,437
(C) 207,276
Accounts receivable 222,623 203,925 426,548
Notes receivable - related party - 171,000 171,000
Inventory 91,631 330,151 421,782
Prepaid expenses 100,532 39,915 140,447
---------- ---------- ----------
Total current assets 2,584,785 824,653 4,464,214
---------- ---------- ----------
Property and equipment - net 1,477,062 301,624 (D) 250,000 (G) 35,714 1,992,972
---------- ---------- ----------
Other assets:
Investment in subsidiary 88,000
- - (B)2,215,000 (D)2,303,000 -
Covenent not to compete 112,500 138,385 250,885
Goodwill 903,060 - (D)1,377,215 (G) 91,814 2,188,461
Security deposits 77,772 27,988 105,760
Other - 380 380
---------- ---------- ----------
Total other assets 1,093,332 166,753 2,545,486
---------- ---------- ----------
$5,155,179 $1,293,030 $9,002,672
========== ========== ==========
LIABILITIES AND STOCKHOLD
Current liabilities:
Current portion of long-term debt $ - $ 63,019 $ 63,019
Notes payable - stockholder - 162,925 162,925
Accounts payable 387,630 200,197 587,827
Accrued expenses and other current
liabilities 64,240 68,451 (E) 254,123 386,814
---------- ---------- ----------
Total current liabilities 451,870 494,592 1,200,585
---------- ---------- ----------
Long-term debt, net of current portion 23,207 122,653 145,860
---------- ---------- ----------
Stockholders' equity:
Common stock (C) 34
2,560 2,000 (D) 2,000 (B) 500 3,094
Additional paid-in capital 6,597,342 - (A) 1,747,500 9,966,688
(B) 1,314,500
(E) 219,380
Retained earnings (accumulated deficit) (X) 601,031 (C) 87,966
( 1,919,800) 673,785 (D) 673,785 (X) 207,276 ( 2,313,555)
---------- ---------- -----------
Total stockholders' equity 4,680,102 675,785 7,656,227
---------- ---------- ---------- ---------- -----------
$5,155,179 $1,293,030 $7,161,807 $7,161,807 $ 9,002,672
========== ========== ========== ========== ===========
</TABLE>
FB-4
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
William
Greenberg Jr. J.M. Pro Forma Adjustments
Desserts and Specialties, -------------------------
Cafes, Inc. Inc. Debt Credit Pro Forma
----------- ----------- ---------- ---------- ----------
(Historical) (Historical)
<S> <C> <C> <C> <C> <C>
Net sales $1,741,014 $3,648,110 $5,389,124
---------- ---------- ----------
Costs and expenses:
Cost of sales 1,280,963 2,575,486 (G) 35,714 3,892,163
Selling, general and administrative expenses 1,370,774 1,049,447 (F)$207,276 2,212,945
---------- ---------- -------- -------- ----------
Total costs and expenses 2,651,737 3,624,933 35,714 207,276 6,105,108
---------- ---------- -------- -------- ----------
Income (loss) from operations ( 910,723) 23,177 ( 35,714) 207,276 ( 715,984)
---------- ---------- -------- -------- ----------
Other income (expense):
Interest income 19,108 16,320 35,428
Interest expense ( 112,735) ( 11,023) ( 123,758)
Compensatory element of issuance of warrants ( 856,871) - (E) 473,503 ( 1,330,374)
Amortization of goodwill - - (G) 91,814 ( 91,814)
---------- ---------- -------- -------- ----------
Total other income (expense) ( 950,498) 5,297 565,317 - ( 1,510,518)
---------- ---------- -------- -------- ----------
Income (loss) before income taxes ( 1,861,221) 28,474 ( 601,031) 207,276 ( 2,226,502)
Income taxes - 1,625 1,625
---------- ---------- -------- -------- ----------
Income (loss) before extraordinary credit ($1,861,221) $ 26,849 ($601,031) $207,276 ($2,228,127)
========== ========== ======== ======== ==========
Per share data:
Pro forma net income (loss) per share ($1.02) $134.25 ($0.94)
===== ======= =====
Weighted average number of shares outstanding 1,828,609 200 2,362,694
========= === =========
</TABLE>
FB-5
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
(Unaudited)
Introduction:
The pro forma financial statements assumes the (i) The acquisition on
January 17, 1997 of all the outstanding capital stock of J.M. Specialties, Inc.
("JMS") in an acquisition to be accounted for as a purchase (the "Acquisition")
(ii) the proceeds of the Company's issuance of 1,875,000 common stock purchase
warrants for net cash of $1,747,500 during January 1997, as if the transactions
had occurred as at December 31, 1996 and 1995 and at the beginning of 1996 and
1995.
Per share data for the years ended December 31, 1996 and 1995 is based
upon the weighted average number of shares outstanding during each year
retroactively reflecting (i) the January 17, 1997 issuance of 534,000 common
shares issued in connection with the Acquisition, and (ii) the dilutive effect
of 34,085 shares issuable under the assumed conversion of a warrant which
expires in October, 2001. Such warrant contains anti-dilutive provisions
throughout its life which entitles the holder to 6% of the Company's capital
stock on the date the warrant is converted to capital stock.
The pro forma balance sheets as at 1996 and 1995 and the pro forma
statements of operations for the years then ended include all material
adjustments necessary to adjust the historical results to reflect these
assumptions.
The pro forma information does not purport to be indicative of the balance
sheets and the statements of operations which would have actually been obtained
if the acquisition transaction had been consummated on the dates indicated. In
addition, the pro forma financial information does not purport to be indicative
of the balance sheet or results of operations which may be obtained in the
future.
The pro forma information has been prepared by the Company's management
and all calculations and estimates have been made by management based upon
adjustments deemed appropriate. These adjustments are set forth under the
section "Pro Forma Adjustments".
Preparation of Pro Forma Financial Statements:
In the opinion of management, the pro forma financial statements are
derived from the historical financial statements of (i) William Greenberg Jr.
Desserts and Cafes, Inc. ("the Company") and (ii) JMS whose financial statements
are included elsewhere in this Form 8. These financial statements should be read
in conjunction with the accompanying pro forma financial statements. The pro
forma financial statements do not purport to be indicative of the balance sheet
and statement of operations if the Acquisition and the warrant sale had been
consummated on the dates indicated.
FB-6
<PAGE>
<PAGE>
Acquisition:
On January 17, 1997, the Company purchased 100% of the outstanding common
stock of JMS for $2,215,000 consisting of (i) $900,000 in cash; (ii) 500,000
shares of the Company's common stock valued at $1.75 per share aggregating
$875,000 and (iii) 400,000 common stock purchase warrants valued at $1.10
aggregating $440,000. The warrants are in the same form as those described under
the caption "Financing".
JMS, which was founded in 1984, offers a line of both batter and frozen
finished cakes, brownies and muffins - with muffins constituting approximately
90% of sales. These products are produced in batches using partially automated
equipment at its facility in Parsippany, New Jersey. The product is sold to
wholesale customers as well as supermarket distribution centers and is marketed
primarily through food distribution companies in New Jersey and New York. In
turn, according to JMS's management, the distributor sells approximately forty
percent of the product to supermarkets and sixty percent to food service
customers, such as hospitals, colleges, restaurants and corporate dining rooms.
In connection with the Acquisition, the Company entered into an employment
agreement with the selling shareholder pursuant to which he will serve as
president and chief executive officer of the Company at an annual salary level
of $250,000 for the first year and a minimum of $150,000 thereafter.
Subsequent to the Acquisition, the Company transferred all of the business
assets owned by it to a wholly-owned subsidiary in exchange for all of the
issued and outstanding shares of common stock of such entity (the "Subsidiary").
As a result, the Company currently acts as holding company with two wholly-owned
subsidiaries, JMS and the Subsidiary. Subject to obtaining consent of the
Company's stockholders, the Company intends to, change its name to Food
Concepts, Inc. a name more descriptive of its operations.
Financing:
In order to finance the Acquisition, the Company issued to accredited
investors 1,875,000 common stock purchase warrants ("the Placement Warrants")
(net of offering costs) of $1,747,500 of which $1,500,000 is designated for the
Acquisition and working capital of JMS. Each Placement Warrant entitles the
holder thereof to purchase one common share, par value $.001 per share, of the
common stock of the Company, at an exercise price per share of $2.50 for a term
which will expire on December 31, 2000.
The Company has the right to redeem the Placement Warrants, in
installments, at a redemption price of $.10 per warrant commencing six months
after the date of issuance if the stock trades at a designated level for at
least five trading days prior to the month preceding the date on which the
redemption right may be exercised.
The holders of the Placement Warrants have a put option pursuant to which
for a 60 day period prior to their expiration date, the holder has the right to
require the Company to repurchase the Placement Warrants for consideration
consisting of $.10 per warrant plus 40% of a share of common stock. In addition,
the Placement Warrants will have standard anti-dilution protection.
FB-7
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA ADJUSTMENTS
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(A) Cash $1,747,500
Additional paid-in capital $1,747,500
To reflect the issuance of 1,875,000 common stock purchase warrants for
cash of $1,747,500 (net of offering costs).
(B) Investment in subsidiary $2,215,000
Cash $ 900,000
Common stock 500
Additional paid-in capital 1,314,500
To reflect purchase of all the outstanding capital stock of JMS for
$2,215,000 consisting of (i) $900,000 in cash, (ii) 500,000 shares of the
Company's common stock valued at $1.75 per share aggregating $875,000, and
(iii) 400,000 common stock purchase warrants valued at $1.10 aggregating
$440,000.
(C) Investment in subsidiary $ 88,000
Capital stock $ 34
Additional paid-in capital 87,966
To reflect 34,000 shares issued for professional services relating to the
Acquisition.
(D) Capital stock $ 2,000
Retained earnings 694,435
Property and equipment 250,000
Goodwill 1,356,565
Investment in subsidiary $2,303,000
To eliminate investment in JMS.
(E) Compensatory element
of stock issuances $ 473,503
Additional paid-in capital $ 219,380
Accrued expenses 254,123
To reflect common shares issuable to InterEquity in connection with the
issuance of the 534,000 shares of common stock and 2,275,000 warrants
issued pursuant to the private placement and Acquisition.
FB-8
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA ADJUSTMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1996
(Unaudited)
(F) Selling, general and administrative $ 107,780
Cash $ 107,780
To reflect the difference between Officer's actual salary and new minimum
contractual salary of $250,000 for the first year of the contract.
(G) Depreciation expense $ 35,714
Amortization of goodwill 90,438
Goodwill $ 90,438
Accumulated depreciation 35,714
To reflect amortization of goodwill over 15 years and to record
depreciation on the step-up basis to fair market value of property assets
required.
(X) To close profit and loss adjustments into retained earnings.
FB-9
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA ADJUSTMENTS
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(A) Cash $1,747,500
Additional paid-in capital $1,747,500
To reflect the issuance of 1,875,000 common stock purchase warrants for
cash of $1,747,500 (net of offering costs).
(B) Investment in subsidiary $2,215,000
Cash $ 900,000
Common stock 500
Additional paid-in capital 1,314,500
To reflect purchase of all the outstanding capital stock of JMS for
$2,215,000 consisting of (i) $900,000 in cash, (ii) 500,000 shares of the
Company's common stock valued at $1.75 per share aggregating $875,000, and
(iii) 400,000 common stock purchase warrants valued at $1.10 aggregating
$440,000.
(C) Investment in subsidiary $ 88,000
Capital stock $ 34
Additional paid-in capital 87,966
To reflect 34,000 shares issued for professional services relating to the
Acquisition.
(D) Capital stock $ 2,000
Retained earnings 694,435
Property and equipment 250,000
Goodwill 1,377,215
Investment in subsidiary $2,303,000
To eliminate investment in JMS.
(E) Compensatory element
of stock issuances $ 473,503
Additional paid-in capital $ 219,380
Accrued expenses 254,123
To reflect common shares issuable to InterEquity in connection with the
issuance of the 500,000 shares of common stock and 2,275,000 warrants
issued pursuant to the private placement and Acquisition.
FB-10
<PAGE>
<PAGE>
WILLIAM GREENBERG JR. DESSERTS AND CAFES, INC. AND SUBSIDIARY
PRO FORMA ADJUSTMENTS (Continued)
FOR THE YEAR ENDED DECEMBER 31, 1995
(Unaudited)
(F) Cash $ 207,276
Selling, general and administrative $ 207,276
To reflect the difference between Officer's actual salary and new minimum
contractual salary of $250,000 for the first year of the contract.
(G) Depreciation expense $ 35,714
Amortization of goodwill 91,814
Goodwill $ 91,814
Accumulated depreciation 35,714
To reflect amortization of goodwill over 15 years and to record
depreciation on the step-up basis to fair market value of property assets
required.
(X) To close profit and loss adjustments into retained earnings.
FB-11
