The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of May 31, 2012, the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. All of the Company’s tax years are subject to federal and state tax examination.
The Company closely follows the provisions of Staff Accounting Bulletin No. 104 as described above. For the three and nine month periods ended May 31, 2012 and 2011 the Company has recognized $0 and $360, respectively of revenues and for the period from May 11, 2010 (inception) through May 31, 2012 the Company has recognized $360 in revenues.
Cost of goods sold includes cost of equipment.
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Certain prior period balances have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on previously reported results of operations or stockholders’ equity.
The Company operates in one segment and therefore segment information is not presented.
Dixie Foods International, Inc.
(A Development Stage Company)
May 31, 2012
Notes To Unaudited Financial Statements
Recent Authoritative Accounting Pronouncements
The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
NOTE 3 – STOCKHOLDERS’ EQUITY
Our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share, and 15,000,000 shares of preferred stock, par value $0.001 per share. As of May 31, 2012 and August 31, 2011, there are 6,671,000, and 6,200,000 shares of common stock issued and outstanding, and zero and 4,430 shares of preferred stock issued and outstanding, respectively.
Common Stock
The holders of our Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of our Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore. In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock. Holders of shares of our Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are fully paid and non-assessable.
Preferred Stock
Our board of directors has the authority, without stockholder approval, to issue up to 15,000,000 shares of preferred stock, $.001 par value. 500,000 shares of our Preferred Stock have been designated as Series A Convertible Preferred Stock. The balance of our 14,500,000 shares of authorized preferred stock may be issued by the Board of Directors in one or more series and with the rights, privileges and limitations of the preferred stock determined by the Board of Directors. The rights, preferences, powers and limitations on different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and other matters.
NOTE 4 – RELATED PARTY
A shareholder of the Company has paid expenses on behalf of the Company in exchange for a payable bearing no interest and due on demand. The balance payable to the shareholder at May 31, 2012 and August 31, 2011 was $1,944 and $4,944, respectively.
NOTE 5 – INCOME TAXES
For income tax purposes, the Company has elected to capitalize start-up costs incurred during the period from May 11, 2010 (inception) through May 31, 2012 totaling $98,908. The start-up costs are being amortized over sixty months beginning in the year of initial operations.
NOTE 6 – CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At May 31, 2012, the Company had no amounts in excess of FDIC insured limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden possible failures of such institutions.
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Dixie Foods International, Inc.
(A Development Stage Company)
May 31, 2012
Notes To Unaudited Financial Statements
NOTE 7 – NET LOSS PER SHARE
Basic loss per common share has been calculated based on the weighted average number of shares outstanding during the period after giving retroactive effect to stock splits.
The following reconciles amounts reported in the financial statements:
| | | Nine Month
Period Ended | | Nine Month
Period Ended | |
| | | May 31, 2012 | | May 31, 2011 | |
| | | | | | | | |
| Net loss | | $ | (28,282 | ) | $ | (27,565 | ) |
| | | | | | | | |
| Denominator for basic loss per share - | | | | | | | |
| Basic and diluted weighted average shares | | | 6,435,051 | | | 6,200,000 | |
| | | | | | | | |
| Basic loss per common share | | | ** | | | ** | |
** Less than $.01.
NOTE 8 – MANAGEMENT PLAN
For the next 12 months, the Company’s Plan of Operations is as follows:
Our primary focus over the course of the next 12 months will be to concentrate on introducing our initial products into the commercial marketplace including acquiring inventory for sale and establishing channels of distribution for the marketing of our products.
We were recently formed and all activity to date has been related to our formation of our business, formulation of our business plan and initial start-up operations such as formulating and testing recipes, investigating sources of supply for raw materials and services, investigating potential distribution channels for our products and development of our proposed financing. Our ability to proceed with our plan to enter the commercial marketplace with our initial product depends upon our obtaining adequate financial resources. As of May 31, 2012, we had not incurred any material costs or expenses other than those associated with the formation and financing of our company.
NOTE 9 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had a net loss for the nine month period ended May31, 2012 of $28,282, and net loss for the period from May 11, 2010 (inception) through May 31, 2012 of $98,908. For the nine month period ended May 31, 2012, the Company has no operating revenues. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and raise capital. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is currently a development stage company and its continued existence is dependent upon the Company’s ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Company’s operations may cease to exist.
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred subsequent to May 31, 2012 through July 11, 2012, the date the financial statements were issued, for potential recognition or disclosure in the accompanying financial statements. Other than the disclosures shown, the Company did not identify any events or transactions that should be recognized or disclosed in the accompanying financial statements.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING INFORMATION
The following discussion and analysis of the Company’s financial condition and results of operations should be read with the condensed financial statements and related notes contained in this quarterly report on Form 10-Q (“Form 10-Q”). All statements other than statements of historical fact included in this Form 10-Q are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, levels of activity, performance or achievements to be materially different than any expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential,” “continue,” or the negative of these terms or other comparable terminology. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: 1. General economic factors including, but not limited to, changes in interest rates and trends in disposable income; 2. Information and technological advances; 3. Cost of products sold; 4. Competition; and 5. Success of marketing, advertising and promotional campaigns. The Company is subject to specific risks and uncertainties related to its business model, strategies, markets and legal and regulatory environment. You should carefully review the risks described in this Form 10-Q and in other documents the Company files from time to time with the SEC. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q. The Company undertakes no obligation to publicly release any revisions to the forward-looking statements to reflect events or circumstances after the date of this document.
OVERVIEW
Business
The Company was formed in May 2010 as a Florida corporation to develop and market barbecue sauce and other condiments. All activity to date has been related to the formation of our business, formulation of our business plan and initial start-up operations such as formulating and testing recipes, investigating sources of supply for raw materials and services, investigating potential distribution channels for our products and financing activities. There can be no assurance that we will be able to successfully introduce our initial products or any other products into the commercial marketplace.
We were formed to develop and market barbecue sauce and other condiments. Since we are in the developmental stage and have not yet introduced any products into the marketplace, we cannot assure you that we will have profitable operations. Our initial product is a yellow mustard-based barbecue sauce. The recipe for this product was contributed to us by our founder, Michael H. Jordan.
Results of Operations
In the three months ended May 31, 2012 the Company had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $10,763 and depreciation was $168. As a result the Company lost $10,931 in the three months ended May 31, 2012.
In the three months ended May 31, 2011 the Company had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $6,081 and depreciation was $0. As a result the Company lost $6,081 in the three months ended May 31, 2011.
In the nine months ended May 31, 2012 the Company had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $27,874 and depreciation was $408. As a result the Company lost $28,282 in the nine months ended May 31, 2012.
In the nine months ended May 31, 2011 the Company had $360 in sales of products and $500 in Cost of Sales. Selling, general and administrative expenses were $27,425 and depreciation was $0. As a result the Company lost $27,565 in the nine months ended May 31, 2011.
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Liquidity and Capital Resources
During the nine months ended May 31, 2012, working capital decreased $25,120 to a surplus of $18,354 from a surplus of $43,474. The primary reason for the decrease was the decrease in cash of $42,890 and an increase in accounts payable of $894, offset by a decrease of $3,350 in accrued expenses and due to shareholder of $3,000 and an increase in inventories of $8,536 and prepaid expenses of $3,778. During this same period, stockholders’ equity decreased $24,082 to $21,243 from $45,325. The decrease in stockholders’ equity is due to the net loss for the period of ($28,282) offset by the net proceeds from the sale of the preferred stock $4,200.
Cash flows
Net cash used in operating activities was $45,644 for the nine months ended May 31, 2012. In the 2012 period cash was used by our loss from operations and increases in inventories and prepaid expenses and decreases in accrued expenses and due to shareholder offset by cash provided by our increase in accounts payable.
Net cash used in operating activities was $31,488 for the nine months ended May 31, 2011. In the 2011 period cash was used by our loss from operations and decreases in accrued expenses and accounts payable offset by cash provided by our increase in due to shareholder account.
Net cash used in investing activities was $1,446 for the nine months ended May 31, 2012 and reflects purchases of property and equipment.
Net cash provided by financing activities for the nine months ended May 31, 2012 was $4,200 and reflects preferred stock issued for cash.
Net cash used in financing activities for the nine months ended May31, 2011 was $1,800, and reflects preferred stock issued for cash less payments of offering costs.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.
Critical Accounting Policies and Estimates
Management’s discussion and analysis of its financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern. If we are unable to continue as a going concern we would experience additional losses from the write-down of assets.
Going Concern
The Company is currently a development stage company and its continued existence is dependent upon the Company’s ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Company’s operations may cease to exist.
New Accounting Pronouncements
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
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Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this report, our Principal Executive Officer who also serves as our principal accounting officer, has concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer, to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to, and its property is not the subject of, any material pending legal proceedings.
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. There have been no material changes to the risk factors previously disclosed in our Form 10-K filed November 3, 2011. You should consider carefully all of the material risks described in such registration statement before making a decision to invest in our securities. If any of the events described therein occur, our business, financial conditions and results of operations may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
Unregistered sale of equity securities.
There were no fees, commissions or expenses paid to underwriters or finders’ in connection with the offering. The offering was commenced on May 11, 2011 and concluded during the three month period ended May 31, 2012. As of May 31, 2012 the Company sold 4,710 of the 20,000 shares of Series A Convertible Preferred Stock registered in the offering and received the offering price of $70,650. We paid other expenses in connection with the offering of $17,500 and the net proceeds to us were $53,150. As of May 31, 2012 the net proceeds were used as follows:
Working capital $ 53,150
$3,000 of the net proceeds was paid directly or indirectly, to our officers, directors or their associates or to persons owning 10% or more of any class of our equity securities or to any of our affiliates.
Item 3. Defaults Upon Senior Securities
None
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Item 4. Mine Safety Disclosures
None
Item 5. Other Information
In June 2012 we finalized the labeling, packaging and recipes for our initial two barbeque sauce products and received the initial supply of the products for commercial sale.
Item 6. Exhibits
31.1 Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32.1 Certification pursuant to 18 U.S.C. Section 1350
101* XBRL data files of Financial Statements and Notes contained in this Quarterly Report on Form 10-Q.
* In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed.”
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.
| | Dixie Foods International, Inc. |
| | |
| July 12, 2012 | By:/s/ Robert E. Jordan |
| | Robert E. Jordan, President
(Principal Executive Officer and Principal Accounting Officer) |
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