The Company closely follows the provisions of Staff Accounting Bulletin No. 104 as described above. For the three and six month periods ended February 28, 2013 and February 29, 2012 the Company has recognized $384 and $0, and $1,510 and $0, respectively of revenues and for the period from May 11, 2010 (inception) through February 28, 2013 the Company has recognized $2,581 in revenues.
Cost of goods sold includes cost of inventories sold.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, and accrued expenses, approximate their fair values because of the short maturity of these instruments.
The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis. Consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value as of February 28, 2013 and August 31, 2012, nor gains or losses are reported in the statements of operations that are attributable to the change in unrealized gains or losses related to those assets and liabilities still held at the reporting date for the periods ended February 28, 2013 and August 31, 2012.
DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2013 AND 2012
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
Reclassifications
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.
Business Segments
The Company operates in one segment and therefore segment information is not presented.
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 February 28, 2013 and August 31, 2012, there are 7,506,000 and 6,671,000 shares of common stock issued and outstanding, respectively and zero 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.
During the three month period ended February 28, 2013, the Company sold 525,000 shares of Common Stock to four private investors at $0.02 per share, for a total of $10,500.
During the six month period ended February 28, 2013, the Company sold 675,000 shares of Common Stock to four private investors at $0.02 per share, for a total of $13,500.
In June 2012 our Board of Directors approved the issuance of 20,000 shares of common stock to each of our five directors, 100,000 shares in total, 40,000 shares of our common stock to our Vice President as compensation and 20,000 shares of our common stock for legal services rendered. Such issuances were subject to our common stock being approved for broker dealer market making by FINRA and initiation of trading. Such conditions were met as of December 12, 2012.
On December 12, 2012, the Company issued 20,000 shares of common stock for legal services rendered at $0.02 per share, for a total of $400.
On December 12, 2012, the Company issued 40,000 shares of common stock for services rendered to the Company’s Vice President a related party at $0.02 per share, for a total of $800.
On December 12, 2012, the Company issued 100,000 shares of common stock to directors for services rendered at $0.02 per share, for a total of $2,000.
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DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2013 AND 2012
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
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 note payable bearing no interest and due on demand. The balance payable to the shareholder at February 28, 2013 and August 31, 2012 was $1,944 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 February 28, 2013 totaling $132,165. 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 February 28, 2013, 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.
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:
| | | | | | | |
| | Six Months
Ended | | Six Months
Ended | |
| | February 28, 2013 | | February 29, 2012 | |
| | | | | | | |
Net loss | | $ | (16,565 | ) | $ | (17,351 | ) |
| | | | | | | |
Denominator for basic loss per share - | | | | | | | |
Basic and diluted weighted average shares | | | 7,105,889 | | | 6,510,198 | |
| | | | | | | |
Basic loss per common share | | | — | | | — | |
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DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE AND SIX MONTH PERIODS ENDED FEBRUARY 28, 2013 AND 2012
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
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 increasing sales of our initial products in the commercial marketplace and establishing additional channels of distribution for the marketing of our products.
NOTE 9 – GOING CONCERN
As reflected in the accompanying financial statements, the Company had a net loss for the three and six month periods ended February 28, 2013 of $10,111 and $16,565, respectively and a net loss for the period from May 11, 2010 (inception) through February 28, 2013 of $132,165, At February 28, 2013, the Company has minimal 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 increase beyond current levels, 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 February 28, 2013 through April 8, 2013, the date the financial statements were issued, for potential recognition or disclosure in the accompanying financial statements. Other than the disclosures shown below, 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
We were organized in May 2010 as a Florida corporation to operate a specialty food business for salad dressing, sauces and condiments. In August 2012 we commenced commercial production and sale of our first two products which are two versions of barbeque sauce under the DIXIE GOLD trademark. The products have achieved distribution in retail outlets in Central and South Florida.
Our offices are located at 115 N.E. 6th Blvd, Williston, FL 32696 and our phone number is (800) 366-5174.
Results of Operations
In the three months ended February 28, 2013 the Company had $384 in sales of products and $173 in Cost of Sales. Selling, general and administrative expenses were $10,154 and depreciation was $168. As a result the Company lost $10,111 in the three months ended February 28, 2013.
In the three months ended February 29, 2012 we had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $9,576 and depreciation was $144. As a result we lost $9,720 in the three months ended February 29, 2012.
In the six months ended February 28, 2013 the Company had $1,510 in sales of products and $682 in Cost of Sales. Selling, general and administrative expenses were $17,057 and depreciation was $336. As a result the Company lost $16,565 in the six months ended February 28, 2013.
In the six months ended February 29, 2012 we had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $17,111 and depreciation was $240. As a result we lost $17,351 in the six months ended February 29, 2012.
Liquidity and Capital Resources
During the six months ended February 28, 2013, working capital increased $471 to a surplus of $2,299 from a surplus of $1,828. The primary reason for the increase was the increase in cash of $691 and a decrease of $4,190 in accrued expenses offset by a decrease in inventories of $682 and an increase in accounts payable of $3,728. During this same period, stockholders’ equity increased $135 to $4,685 from $4,550. The increase in stockholders’ equity is due to the net proceeds from the sale of the common stock $13,500 and shares issued for services of $3,200 offset by the net loss for the period of ($16,565).
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Cash flows
Net cash used in operating activities was $12,809 for the six months ended February 28, 2013. In the 2013 period cash was used by our loss from operations and decreases in accrued expenses offset by cash provided by our increase in accounts payable and decreases in inventories and issuance of common stock for services.
Net cash used in operating activities was $21,941 for the six months ended February 29, 2012. In the 2012 period cash was used by our loss from operations and decreases in accrued expenses and due to shareholder offset by cash provided by our increase in accounts payable.
Net cash used in investing activities was $1,446 for the six months ended February 29, 2012 and reflects purchases of property and equipment.
Net cash provided by financing activities for the six months ended February 28, 2013 was $13,500 and reflects common stock issued for cash described below.
Net cash provided by financing activities for the six months ended February 29, 2012 was $4,200 and reflects preferred stock issued for cash.
Recent Financing Transactions
During the six months ended February 28, 2013, the Company sold 675,000 shares of Common Stock at $0.02 per share, for a total of $13,500.
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 increase significantly from current levels, 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.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
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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 29, 2012. 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.
During the three months ended February 28, 2013, the Company sold 525,000 shares of Common Stock at $0.02 per share, for a total of $10,500, to four investors.
We believe that the sales were exempt from registration under Section 4(2) of the Securities Act of 1933. The securities were not offered publicly but only to identified persons who were existing shareholders. We believe the shareholders were knowledgeable and sophisticated in investment matters. Each shareholder acknowledged that the shares were not registered under the Securities Act of 1933 and agreed to not sell or transfer the shares without complying with the registration requirements of the said Act or pursuant to an exemption from such registration requirements. The certificates or confirmation for such shares contains a legend restricting transfer of the shares without registration under the Securities Act of 1933 or an exemption from such registration and a stop transfer order has been lodged against such shares. There were no fees, commissions or expenses paid to underwriters or finders’ in connection with the offering.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosure
Not applicable.
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Item 5. Other Information
None.
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 |
__________
* To be submitted by amendment.
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, there unto duly authorized.
| |
| Dixie Foods International, Inc. |
| |
April 15, 2013 | By:/s/ Robert E. Jordan |
| Robert E. Jordan, President
(principal executive and accounting officer) |
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