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 November 30, 2013, 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 month periods ended November 30, 2013 and 2012 the Company has recognized $1,104 and $1,126, respectively of revenues and for the period from May 11, 2010 (inception) through November 30, 2013 the Company has recognized $3,905 in revenues.
Cost of goods sold includes cost of inventories sold.
DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE MONTH PERIODS ENDED NOVEMBER 30, 2013 AND 2012
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
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 November 30, 2013 and August 31, 2013, 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 November 30, 2013 and August 31, 2013.
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 November 30, 2013 and August 31, 2013, there are 8,006,000 and 7,506,000 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 November 30, 2013, the Company sold 500,000 shares of Common Stock to a private investor at $0.08 per share, for a total of $40,000.
During the three month period ended November 30, 2012, the Company sold 150,000 shares of Common Stock to a private investor at $0.02 per share, for a total of $3,000
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. The 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.
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DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE MONTH PERIODS ENDED NOVEMBER 30, 2013 AND 2012
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 4 - RELATED PARTY
A shareholder of the Company has paid expenses on behalf of the Company in exchange for a payable note bearing no interest and due on demand. During the three month period ended November 30, 2013 all expenses were repaid. The balance payable to the shareholder at November 30, 2013 and August 31, 2013 were $0 and $8,691 respectively.
NOTE 5 - 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:
| | | | | | | |
| | Three Months
Ended | | Three Months
Ended | |
| | November 30, 2013 | | November 30, 2012 | |
| | | | | | | |
Net loss | | $ | (12,338 | ) | $ | (6,454 | ) |
| | | | | | | |
Denominator for basic loss per share - | | | | | | | |
Basic and diluted weighted average shares | | | 7,667,111 | | | 6,676,000 | |
| | | | | | | |
Basic loss per common share | | | — | | | — | |
NOTE 6 - GOING CONCERN
As reflected in the accompanying financial statements, the Company had a net loss for the three month period ended November 30, 2013 of $12,338 and a net loss for the period from May 11, 2010 (inception) through November 30, 2013 of $157,093, At November 30, 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 7 - SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred subsequent to November 30, 2013 through January 8, 2014, 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 November 30, 2013 the Company had $1,104 in sales of products and $2,732 in Cost of Sales. Selling, general and administrative expenses were $10,542 and depreciation was $168. As a result the Company lost $12,338 in the three months ended November 30, 2013.
In the three months ended November 30, 2012 the Company had $1,126 in sales of products and $509 in Cost of Sales. Selling, general and administrative expenses were $6,903 and depreciation was $168. As a result the Company lost $6,454 in the three months ended November 30, 2012.
Liquidity and Capital Resources
During the three months ended November 30, 2013, working capital increased $23,080 to a surplus of $13,126 from a deficit of $9,954. The primary reason for the increase was the increase in cash of $12,507 and decreases in inventory of $2,732, accrued expenses of $1,500 accounts payable of $3,114 and due to shareholder of $8,691. During this same period, stockholders’ equity increased $22,912 to 15,007 from ($7,905). The increase in stockholders’ equity is due to the net proceeds from the sale of the common stock $35,250 offset by the net loss for the period of ($12,338).
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Cash flows
Net cash used in operating activities was $22,743 for the three months ended November 30, 2013. In the 2013 period cash was used by our loss from operations and decreases in accrued expenses and accounts payable and due to shareholder offset by cash provided by decreases in inventories.
Net cash used in operating activities was $3,478 for the three months ended November 30, 2012. In the 2012 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.
Net cash provided by financing activities for the three months ended November 30, 2013 was $35,250 and reflects common stock issued for cash net of costs of $4,750 described below.
Net cash provided by financing activities for the three months ended November 30, 2012 was $3,000 and reflects common stock issued for cash described below.
Recent Financing Transactions
During the three months ended November 30, 2013, the Company sold 500, 000 shares of Common Stock at $0.08 per share, for a total of $40,000.
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 were no changes in our internal controls over financial reporting that occurred during the quarter ended November 30, 2013 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 December 16, 2013. 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 quarter ended November 30, 2013, the Company sold 500,000 shares of Common Stock at $0.08 per share, for a total of $40,000, to one investor.
We believe that the sale was exempt from registration under Section 4(2) of the Securities Act of 1933. The securities were not offered publicly but only to one identified person. We believe the shareholder was knowledgeable and sophisticated in investment matters. The 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 certificate 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 Disclosures.
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.INS | XBRL Instance Document.* |
101.SCH | XBRL Taxonomy Extension Schema Document.* |
101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document.* |
101.DEF | XBRL Taxonomy Extension Definition Linkbase Document.* |
101.LAB | XBRL Taxonomy Extension Labels Linkbase Document.* |
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document.* |
__________
* Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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. |
| |
January 14, 2014 | By:/s/ Robert E. Jordan |
| Robert E. Jordan, President
(principal executive and accounting officer) |
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