- ---------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
QUARTERLY OR TRANSITIONAL REPORT
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 2002
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
Commission File Number 0-20549
BRAVO! FOODS INTERNATIONAL CORP.
(Exact name of registrant as specified in its amended charter)
formerly
China Premium Food Corporation
Delaware 62-1681831
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
11300 US Highway 1, North Palm Beach, Florida 33408 USA
(Address of principal executive offices)
(561) 625-1411
Registrant's telephone number
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
Check whether the issuer
(1) filed all reports required to be filed by Section 13 or 15 (d) of the
Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
The number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date is as follows:
Date Class Shares Outstanding
8/1/02 Common Stock 21,879,518
BRAVO! FOODS INTERNATIONAL CORP.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial statements F-1
Consolidated balance sheets as of F-1
June 30, 2002 (unaudited) and December 31, 2001
Consolidated statements of operations F-3
(unaudited) for the six months ended
June 30, 2002 and 2001
Consolidated statements of cash flows F-4
(unaudited) for the six months ended
June 30, 2002 and 2001
Notes to consolidated financial statements (unaudited) F-5
Item 2. Management's Discussion and Analysis of Financial 13
Condition and Results of Operations
PART II - OTHER INFORMATION
Item 2. Changes In Securities and Use of Proceeds 24
Item 6. Exhibits and reports on Form 8-K 31
SIGNATURES 31
BRAVO! FOODS INTERNATIONAL, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2001 2002
------------ --------
<s> <c> <c>
Assets
Current assets:
Cash and cash equivalents $ 232,040 $ 46,265
Accounts receivable 152,682 318,512
Other receivable 17,178 17,219
Advance to vendor 20,998 17,798
Inventories 91,403 90,799
Deferred charges 521 47,863
Prepaid expenses 23,585 39,267
------------ ------------
Total current assets 538,407 577,723
Furniture and equipment, net 123,099 101,777
License rights, net of accumulated
amortization of $661,291 and $692,779 433,709 454,681
Deposits 10,000 10,000
------------ ------------
Total assets $ 1,105,215 $ 1,144,181
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 350,000 $ 100,000
Note payable to International Paper 187,743 187,743
Note payable to Warner Brothers 473,750 370,982
Accounts payables 780,492 972,704
Accrued liabilities 575,019 476,665
------------ ------------
Total current liabilities 2,367,004 2,108,094
Dividends payable 280,370 241,905
------------ ------------
Long-term liabilities 280,370 241,905
------------ ------------
Total liabilities $ 2,647,374 $ 2,349,999
------------ ------------
See accompanying to consolidated financial statements.
F-1
BRAVO! FOODS INTERNATIONAL, CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2001 2002
------------ --------
<s> <c> <c>
Commitments and contingencies
Shareholders' Equity (Note 2):
Series B convertible, 9% cumulative, and
redeemable preferred stock, stated value
$1.00 per share, 1,260,000 shares authorized,
107,440 and 107,440 shares issued and
outstanding, redeemable at $107,440 107,440 107,440
Series D convertible, 6% cumulative and
redeemable preferred stock, stated value
$10.00 per share, 87,500 and 20,824 shares
issued and outstanding 853,432 203,108
Series F convertible and redeemable
preferred stock, stated value $10.00
per share, 174,999 and 174,999 shares
issued and outstanding 1,616,302 1,616,302
Series G convertible, 8% cumulative and
redeemable preferred stock, stated value
$10.00 per share, 93,335 and 87,416
shares issued and outstanding 829,704 777,085
Series H convertible, 7% cumulative and
redeemable preferred stock, stated value
$10.00 per share, 105,500 and 175,500
shares issued and outstanding 465,200 939,686
Series I convertible, 8% cumulative and
redeemable preferred stock, stated value
$10.00 per share, 0 and 30,000 shares
issued and outstanding - 72,192
Common stock, par value $0.001 per share,
50,000,000 shares authorized, 14,681,008
and 19,932,818 shares issued and outstanding 14,681 19,931
Additional paid-in capital 16,028,979 18,716,550
Accumulated deficit (21,457,425) (23,657,640)
Translation adjustment (472) (472)
------------ ------------
Total shareholders' equity (1,542,159) (1,205,818)
------------ ------------
Total liabilities and shareholders' equity $ 1,105,215 $ 1,144,181
============ ============
See accompanying to consolidated financial statements.
F-2
BRAVO! FOODS INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------
2001 2002 2001 2002
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<s> <c> <c> <c> <c>
Sales $ 158,683 $ 496,179 $ 330,774 $ 744,400
Cost of goods sold 20,335 72,004 143,431 76,487
----------- ----------- ----------- -----------
Gross margin 138,348 424,175 187,343 667,913
Selling expense 70,710 7,228 146,952 17,514
General and administrative expense 787,890 1,508,944 2,017,144 2,216,511
----------- ----------- ----------- -----------
Loss from operations (720,252) (1,091,997) (1,976,753) (1,566,112)
Other expense:
Interest expense, net (14,220) (10,559) (28,772) (21,664)
----------- ----------- ----------- -----------
Net loss (734,472) (1,102,556) (2,005,525) (1,587,776)
----------- ----------- ----------- -----------
Dividends accrued for Series B preferred
stock (2,417) (2,444) (4,834) (4,861)
Dividends accrued for Series D preferred
stock (16,538) (6,905) (33,076) (17,107)
Dividends accrued for Series G preferred
stock (20,000) (15,151) (40,000) (31,472)
Dividends accrued for Series H preferred
stock - (16,627) - (263,998)
Dividends accrued for Series I preferred
stock - (295,001) - (295,001)
----------- ----------- ----------- -----------
Net loss applicable to common shareholders $ (773,427) $(1,438,684) $(2,083,435) $(2,200,215)
=========== =========== =========== ===========
Weighted average number of common shares
outstanding 13,195,414 17,452,542 13,194,862 16,498,111
=========== =========== =========== ===========
Basic and diluted loss per share $ (0.06) $ (0.08) $ (0.16) $ (0.13)
=========== =========== =========== ===========
Comprehensive loss and its components
consist of the following:
Net loss $ (773,427) $(1,438,984) $(2,083,435) $(2,200,215)
Foreign currency translation adjustment 8,260 (472) 8,260 -
----------- ----------- ----------- -----------
Comprehensive loss $ (765,167) $(1,439,241) $(2,075,175) $(2,200,215)
=========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
F-3
BRAVO! FOODS INTERNATIONAL, CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
------------------------------
2001 2002
---- ----
(Unaudited) (Unaudited)
<s> <c> <c>
Cash flows from operating activities
Net loss $(2,005,525) $(1,587,776)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 188,201 283,070
Stock compensation 75,000 516,204
Amortization of deferred interest 28,500 -
Increase (decrease) from changes in:
Other receivable 12,962 (41)
Prepaids expenses and other deferred charges 1,596 (11,564)
Accounts receivable (84,207) (165,830)
Advance to vendors (11,187) 3,200
Inventories 85,961 604
License rights - (282,720)
Accrued liabilities 459,471 93,858
----------- -----------
Net cash used in operating activities (1,249,231) (1,150,995)
----------- -----------
Cash flows from investing activities
Purchase of equipment and machinery (5,125) -
Note receivable 716,000 -
----------- -----------
Net cash used in investing activities 710,875 -
----------- -----------
Cash flows from financing activities
Proceeds from stock subscription 550,000 -
Proceeds from issuance of Preferred Series H - 700,000
Proceeds from issuance of Preferred Series I - 287,988
Proceeds from exercise of stock options - 330,000
Repayments of note payable (40,000) (352,768)
----------- -----------
Net cash provided by financing activities 510,000 965,220
----------- -----------
Effect of exchange rate changes on cash 8,260 -
----------- -----------
Net increase (decrease) in cash and cash equivalents (20,096) (185,775)
Cash and cash equivalents, beginning of period 35,376 232,040
----------- -----------
Cash and cash equivalents, end of period $ 15,280 $ 46,265
=========== ===========
Cash paid during the period:
Interest $ - $ -
=========== ===========
See accompanying notes to consolidated financial statements.
F-4
BRAVO! FOODS INTERNATIONAL, CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 - Interim Periods
The accompanying unaudited consolidated financial statements include the
accounts of Bravo! Foods International, Corp. and its wholly-owned
subsidiary Bravo! Foods, Inc. (the "Company"). The Company is engaged in
the co-production, marketing and distribution of branded dairy food
products in the People's Republic of China and the United States. All
significant intercompany balances and transactions have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. All significant inter-company accounts and
transactions have been eliminated in consolidation. The consolidated
financial statements are presented in U.S. dollars. Accordingly, the
accompanying financial statements do not include all the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments
(consisting of normal recurring adjustments) considered necessary for fair
presentation have been included. Operating results for the six-month
period ended June 30, 2002 are not necessarily indicative of the results
that may be expected for the year ending December 31, 2002. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Company's annual report for the year ended December
31, 2001.
The accompanying unaudited consolidated financial statements have been
prepared assuming that the Company will continue as a going concern. As
previously reported, the Company has suffered recurring losses from
operations and has negative working capital and a stockholders' deficit.
These factors raise substantial doubt about the Company's ability to
continue as a going concern.
Note 2 - Transactions in Shareholders' Equity
On January 2, 2002, the Company issued options for 3,714 shares of common
stock having an exercise price of $0.35 and exercisable for five years,
pursuant to an employment agreement.
On January 18, 2002, the Company issued 238,334 shares of common stock to
Austinvest Anstalt Balzers, upon the conversion of 5,000 shares of Series D
Convertible Preferred.
On January 18, 2002, the Company issued 238,334 shares of common stock to
Esquire Trade & Finance, Inc., upon the conversion of 5,000 shares of
Series D Convertible Preferred.
On January 28, 2002, the Company issued 40,000 shares of common stock to
The Keshet Fund LP, upon the conversion of 883 shares of Series G
Convertible Preferred.
On January 28, 2002, the Company issued 136,038 shares of common stock to
AMRO International, S.A., upon the conversion of 2,840 shares of Series D
Convertible Preferred.
F-5
Note 2 - Transactions in Shareholders' Equity (Continued)
On January 30, 2002, the Company issued 15,000 shares of its Series H
convertible preferred stock, having a conversion price of $0.40 per share
of common stock, and warrants for 375,000 shares at $0.50 per share. The
Series H convertible preferred stock and warrants were priced at $10.00 per
unit, and resulted in proceeds of $150,000 in cash. In accordance with
EITF 00-27, the Company recorded a deemed dividend of $65,357 related to a
beneficial conversion feature.
On February 4, 2002, the Company issued 206,700 shares of common stock to
Austinvest Anstalt Balzers, upon the conversion of 4,375 shares of Series D
Convertible Preferred.
On February 4, 2002, the Company issued 206,700 shares of common stock to
Esquire Trade & Finance, Inc., upon the conversion of 4,375 shares of
Series D Convertible Preferred.
On February 5, 2002, the Company issued 20,000 shares of common stock to
The Keshet Fund LP, upon the conversion of 492 shares of Series G
Convertible Preferred.
On February 15, 2002, the Company issued 5,000 shares of its Series H
convertible preferred stock, having a conversion price of $0.40 per share
of common stock, and warrants for 125,000 shares at $0.50 per share to a
sophisticated and accredited investor. The Series H convertible preferred
stock and warrants were priced at $10.00 per unit, and resulted in proceeds
of $50,000 in cash. In accordance with EITF 00-27, the Company recorded a
deemed dividend of $15,582 related to a beneficial conversion feature.
On February 20, 2002, the Company issued 35,000 shares of common stock to
The Keshet Fund LP, upon the conversion of 832 shares of Series G
Convertible Preferred.
On February 29, 2002, the Company issued 279,795 shares of common stock to
AMRO International, S.A, upon the conversion of 7,160 shares of Series D
Convertible Preferred.
On March 1, 2002, the Company issued 20,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 536 shares of Series G Convertible
Preferred.
On March 1, 2002, the Company issued warrants for 25,000 shares of common
stock, having an exercise price of $0.40 per share. The warrants are
immediately exercisable and have an expiration date of February 28, 2007.
These warrants were issued to the lender in connection with a December 27,
2001 loan of $250,000 to the Company.
On March 15, 2002, the Company issued 20,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 532 shares of Series G Convertible
Preferred.
On March 18, 2002, the Company issued 50,000 shares of its Series H
convertible preferred stock, having a conversion price of $0.40 per share
of common stock, and warrants for 1,250,000 shares at $0.50 per share to a
sophisticated and accredited investor. The Series H convertible preferred
stock and warrants were priced at $10.00 per unit, and resulted in proceeds
of $500,000 in cash. In accordance with EITF 00-27, the Company recorded a
deemed dividend of $155,824 related to a beneficial conversion feature.
F-6
Note 2 - Transactions in Shareholders' Equity (Continued)
On April 19, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 252 shares of Series G Convertible
Preferred.
On April 19, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 234 shares of Series G Convertible
Preferred.
On April 24, 2002 the Company's Board of Directors voted to extend options
for 1,383,705 shares of common stock issued on April 29 and April 30, 1997
to Tamarind Management, Ltd. (an affiliate of Mr. Paul Downes, a founder of
the Company) and options for 700,000 shares of common stock issued on April
30, 1997 to Mr. Dale Reese (a founder of the Company), for services
rendered to the Company. These extended options, which had original
expiration dates of April 29 and April 30, 2002, respectively, retain an
exercise price of $1.00 and are exercisable upon the following conditions:
The expiration dates for these options are extended for a two year period,
commencing upon the effective date of a registration statement for the
resale of the common stock underlying the options; the options will not be
exercised during a one year lockup period commencing on the 1st day after
the Company's common stock trades during a 90 day period at a moving
average of at least $1.00; the Company has the option to call the options
commencing on the 1st day after the Company's common stock trades during a
90 day period at a moving average of at least $2.00. As a result, the
Company recorded a deferred charge of $47,409, which will be amortized for
a two-year period commencing on the effective date of a registration
statement.
On May 3, 2002, the Company issued 52,730 shares of common stock to Amro
International, S.A, upon the conversion of 1,000 shares of Series D
Convertible Preferred.
On May 7, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 215 shares of Series G Convertible
Preferred.
On May 13, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 158 shares of Series G Convertible
Preferred.
On May 13, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 158 shares of Series G Convertible
Preferred.
On May 13, 2002, the Company issued 20,000 shares of common stock to Keshet
LP, upon the conversion of 316 shares of Series G Convertible Preferred.
On May 13, 2002, the Company issued 15,000 shares of common stock to Keshet
LP, upon the conversion of 237 shares of Series G Convertible Preferred.
On May 17, 2002, the Company issued 131,239 shares of common stock to Amro
International, S.A, upon the conversion of 2,000 shares of Series D
Convertible Preferred.
On May 17, 2002, the Company issued 278,498 shares of common stock to Amro
International, S.A, upon the conversion of 4,000 shares of Series D
Convertible Preferred.
F-7
Note 2 - Transactions in Shareholders' Equity (Continued)
On May 20, 2002, the Company issued 10,000 shares of common stock to Keshet
LP, upon the conversion of 158 shares of Series G Convertible Preferred.
On May 20, 2002, the Company issued 10,000 shares of common stock to Keshet
LP, upon the conversion of 131 shares of Series G Convertible Preferred.
On May 22, 2002, the Company issued options for 1,710,000, in the
aggregate, as compensation to three consultants to assist us in management
and strategic planning issues, pursuant to consulting agreements of the
same date. These options were issued pursuant to a Form S-8 registration
statement filed June 6, 2002 and are exercisable for a one-year period. Of
the 1,710,000 options, 1,150,000 options have an exercise price of $0.33
per share and 560,000 options have an exercise price of $0.50 per share.
We have the ability to compel the exercise of these options if the trading
price of our common stock equals or exceeds $1.00 for thirty consecutive
trading days. As a result of issuing these options, the Company recorded
consulting expense of $124,859.
On May 23, 2002, the Company issued 63,454 shares of common stock to
Austinvest Anstalt Balzers, upon the conversion of 1,000 shares of Series D
Convertible Preferred.
On May 23, 2002, the Company issued 63,454 shares of common stock to
Esquire Trade & Finance, Inc., upon the conversion of 1,000 shares of
Series D Convertible Preferred.
On May 24, 2002, the Company issued 15,000 shares of common stock to Keshet
LP, upon the conversion of 237 shares of Series G Convertible Preferred.
On May 24, 2002, the Company issued 15,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 157 shares of Series G Convertible
Preferred.
On May 29, 2002, the Company issued 652,178 shares of common stock to Amro
International, S.A, upon the conversion of 9,642 shares of Series D
Convertible Preferred.
On May 29, 2002, the Company issued 652,178 shares of common stock to
Esquire Trade & Finance, Inc., upon the conversion of 9,642 shares of
Series D Convertible Preferred.
On May 30, 2002, the Company issued 652,178 shares of common stock to
Austinvest Anstalt Balzers, upon the conversion of 9,642 shares of Series D
Convertible Preferred.
On June 10, 2002, the Company issued 425,000 shares of common stock to a
consultant, upon the exercise of options issued pursuant to a consulting
agreement, as compensation for management consulting and strategic planning
services provided to the Company. These shares were issued pursuant to a
Form S-8 registration statement filed on June 6, 2002.
On June 10, 2002, the Company issued 425,000 shares of common stock to a
consultant, upon the exercise of options issued pursuant to a consulting
agreement, as compensation for management consulting and strategic planning
services provided to the Company. These shares were issued pursuant to a
Form S-8 registration statement filed on June 6, 2002.
F-8
Note 2 - Transactions in Shareholders' Equity (Continued)
On June 10, 2002, the Company issued 150,000 shares of common stock to a
consultant, upon the exercise of options issued pursuant to a consulting
agreement, as compensation for management consulting and strategic planning
services provided to the Company. These shares were issued pursuant to a
Form S-8 registration statement filed on June 6, 2002.
On June 13, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 126 shares of Series G Convertible
Preferred.
On June 13, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 130 shares of Series G Convertible
Preferred.
On June 17, 2002, the Company issued 30,000 shares of its Series I
convertible preferred stock and warrants for 2,000,000 shares at $0.50 per
share, exercisable three years from issue, to two sophisticated and
accredited investors, pursuant to Rule 506, Regulation D and Section 4(2)
of the Securities Act of 1933. The conversion of the preferred into common
stock shall be at a per common share conversion price of either $0.40 or
75% of the average of the three lowest closing bid prices for the thirty
day period immediately preceding conversion, at the option of the holder.
The conversion price is subject to a maximum of $0.50 per share and a
minimum of $0.30 per share, which minimum conversion price shall govern for
the 270 days immediately following the issue date of the Series I preferred
shares. The minimum conversion price shall be extended indefinitely upon
the occurrence of certain defined events, including the effectiveness of a
registration statement for the resale of the common stock underlying the
preferred and a trading price of the Company's common stock at $0.50 or
higher for fifteen consecutive days. The Series I convertible preferred
stock and warrants were priced at $10.00 per unit, and resulted in gross
cash proceeds of $300,000, less expenses of $12,012. According to GAAP,
the Company allocated $215,796 to the 2 million warrants and $72,192 to the
underlying preferred stock Series I and deemed dividends of $294,793.
On June 18, 2002, the Company agreed to extend the expiration dates of
warrants issued in connection with the Company's Series D and F preferred
until June 17, 2005 and to reduce the exercise price of certain of those
warrants to $1.00. In consideration for this warrant modification, the
holders of two promissory notes executed by the Company aggregating
$100,000, dated November 6 and 7, 2001, respectively, agreed to extend the
maturity dates of the notes to December 31, 2002. In addition, the holders
of the Company's Series D and F preferred stock agreed to waive all
potential penalties associated with the Series D and F preferred, including
the abandonment of a certain SB-2 registration statement filed in
connection with the resale of the common stock underlying the Series D and
F preferred. Below is a table containing the warrant modifications.
COMMON SHARES
WARRANT PURCHASABLE UNMODIFIED
WARRANTHOLDER (Series) ISSUE DATE UPON EXERCISE PURCHASE PRICE
- -------------------------------------------------------------------------------------------
<s> <c> <c> <c> <c>
Austinvest Anstalt Balzers (D) 03-09-99 16,250 $2.96
Austinvest Anstalt Balzers (D) 04-23-99 8,125 $2.96
Austinvest Anstalt Balzers (D) 02-01-00 422,500 $0.625*
Austinvest Anstalt Balzers (F) 04-07-00 1,000,000 $1.00
Austinvest Anstalt Balzers (F) 10-13-00 38,259 $0.9825*
F-9
Note 2 - Transactions in Shareholders' Equity (Continued)
Esquire Trade & Finance, Inc. (D) 03-09-99 16,250 $2.96
Esquire Trade & Finance, Inc. (D) 04-23-99 8,125 $2.96
Esquire Trade & Finance, Inc. (D) 02-01-00 422,500 $0.625*
Esquire Trade & Finance, Inc. (F) 04-07-00 1,000,000 $1.00
Esquire Trade & Finance, Inc. (F) 10-13-00 38,259 $0.9625*
Libra Finance, S.A . (F) 04-07-00 1,600,000 $0.84*
Amro International, S.A. (D) 02-01-00 455,000 $0.625*
Amro International, S.A. (F) 04-07-00 1,000,000 $1.00
Amro International, S.A. (F) 10-13-00 38,259 $0.9625*
Amro International, S.A. (D) 03-09-99 17,500 $2.96
Amro International, S.A. (D) 04-23-99 8,750 $2.96
<FN>
* Exercise price not reduced to $1.00
</FN>
As a result of extending life of these warrants and reducing exercise
prices, the Company recorded stock compensation of $391,345 as non-cash
expense.
On June 19, 2002, the Company issued 33,333 shares of restricted common
stock to Tradersbloom Limited, as a finder fee in connection with the
issuance of the Company's Series I preferred stock. Tradersbloom Limited
is a sophisticated and accredited investor.
On June 19, 2002, the Company issued 66,667 shares of restricted common
stock to Libra Finance, S.A., as a finder fee in connection with the
issuance of the Company's Series I preferred stock. Libra Finance, S.A. is
a sophisticated and accredited investor.
On June 21, 2002, the Company issued 10,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 135 shares of Series G Convertible
Preferred.
Note 3 - Adoption of New Accounting Standards
In June 2001, the Financial Accounting Standards Board finalized FASB
Statements No. 141, "Business Combinations" ("SFAS No. 141"), and No. 142,
"Goodwill and Other Intangible Assets" ("SFAS No. 142").
SFAS No. 141 requires the use of the purchase method of accounting and
prohibits the use of the pooling-of-interests method of accounting for
business combinations initiated after June 30, 2001. SFAS No. 141 also
requires that the Company recognize acquired intangible assets apart from
goodwill if the acquired intangible assets meet certain criteria. SFAS No.
141 applies to all business combinations initiated after June 30, 2001 and
for purchase business combinations completed on or after July 1, 2001. It
also requires, upon adoption of SFAS No. 142, companies to reclassify the
carrying amounts of intangible assets and goodwill based on the criteria in
SFAS No. 141.
F-10
Note 3 - Adoption of New Accounting Standards (Continued)
SFAS No. 142 requires, among other things, that companies no longer
amortize goodwill, but instead test goodwill for impairment at least
annually. In addition, SFAS No. 142 requires that the Company identify
reporting units for the purposes of assessing potential future impairments
of goodwill, reassess the useful lives of other existing recognized
intangible assets, and cease amortization of intangible assets with an
indefinite useful life. An intangible asset with an indefinite useful life
should be tested for impairment in accordance with the guidance in SFAS No.
142. SFAS No. 142 is required to be applied in fiscal years beginning
after December 15, 2001 to all goodwill and other intangible assets
recognized at that date, regardless of when those assets were initially
recognized. SFAS No. 142 requires companies to reassess the useful lives
of other intangible assets within the first interim quarter after adoption
of SFAS No. 142.
In August 2001, Financial Accounting Standard Board issued Statement of
Financial Accounting Standards, No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," ("SFAS No. 144"). SFAS No. 144 provides a
single, comprehensive accounting model for impairment and disposal of long-
lived assets and discontinued operations. The Company adopted SFAS No. 144
effective January 1, 2002. The adoption did not have a material effect on
the consolidated financial statements.
The Company adopted SFAS No. 141 and SFAS No. 142 effective January 1,
2002. Previous business combinations were accounted for using the purchase
method. The Company has no goodwill or other intangibles recorded as a
result of these business combinations and as a result adoption of SFAS No.
141 and 142 had no effect on net income or earnings per share.
As of June 30, 2002, the Company has license rights with a net book value
of $454,681. Future amortization is as follows for subsequent years ending
June 30:
Years ending June 30, Amount
- --------------------- ------
<s> <c>
2003 $247,367
2004 207,314
--------
$454,681
========
In June 2001, Financial Accounting Standard Board issued Statement of
Financial Accounting Standards, No. 143, "Accounting for Asset Retirement
Obligations," ("SFAS No. 143"). SFAS No. 143 is effective for fiscal years
beginning after June 15, 2002. SFAS No. 143 requires that any legal
obligation related to the retirement of long-lived assets be quantified and
recorded as a liability with the associated asset retirement cost
capitalized on the balance sheet in the period it is incurred when a
reasonable estimate of the fair value of the liability can be made. The
Company does not expect that the adoption of SFAS No. 143 will have a
material impact on the consolidated financial statements.
In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections". This statement eliminates the current requirement that gains
and losses on debt extinguishment must be classified as extraordinary items
in the income statement. Instead, such gains and losses will be classified
as extraordinary items only if
F-11
Note 3 - Adoption of New Accounting Standards (Continued)
they are deemed to be unusual and infrequent, in accordance with the
current GAAP criteria for extraordinary classification. In addition, SFAS
145 eliminates an inconsistency in lease accounting by requiring that
modifications of capital leases that result in reclassification as
operating leases be accounted for consistent with sale-leaseback accounting
rules. The statement also contains other nonsubstantive corrections to
authoritative accounting literature. The changes related to debt
extinguishment will be effective for fiscal years beginning after May 15,
2002, and the changes related to lease accounting will be effective for
transactions occurring after May 15, 2002. Adoption of this standard will
not have any immediate effect on the Company's consolidated financial
statements. The Company will apply this guidance prospectively.
On June 20, 2002, the FASBs Emerging Issues Task Force (EITF) reached a
partial consensus on Issue No. 02-03, "Recognition and Reporting of Gains
and Losses on Energy Trading Contracts" under EITF Issues No. 98-10,
"Accounting for Contracts Involved in Energy Trading and Risk Management
Activities," and No. 00-17, "Measuring the Fair Value of Energy-Related
Contracts in Applying Issue No. 98-10". The EITF concluded that, effective
for periods ending after July 15, 2002, mark-to-market gains and losses on
energy trading contracts (includes those to be physically settled) must be
retroactively presented on a net basis in earnings. Also, companies must
disclose volumes of physically-settled energy trading contracts.
Management believes that the consensus will have no impact on the Company's
consolidated financial statements.
In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities," which addresses accounting
for restructuring and similar costs. SFAS No. 146 supersedes previous
accounting guidance, principally Emerging Issues Task Force (EITF) Issue
No. 94-3. SFAS No. 146 requires that the liability for costs associated
with an exit or disposal activity be recognized when the liability is
incurred. Under EITF No. 94-3, a liability for an exit cost was recognized
at the date of a companys commitment to an exit plan. SFAS No. 146 also
establishes that the liability should initially be measured and recorded at
fair value. Accordingly, SFAS No. 146 may affect the timing of recognizing
future restructuring costs as well as the amount recognized. The
provisions of SFAS 146 are to be applied prospectively to exit or disposal
activities initiated after December 31, 2002. Management believes that the
adoption of this standard will not have any immediate effect on the
Company's consolidated financial statements.
Note 4 - Subsequent Events
On July 1, 2002, the Company issued 500,000 shares of common stock to
Esquire Trade & Finance, Inc., upon the conversion of 8,250 shares of
Series D Convertible Preferred.
On July 1, 2002, the Company issued 500,000 shares of common stock to
Austinvest Anstalt Balzers, upon the conversion of 8,250 shares of Series D
Convertible Preferred.
On July 23, 2002, the Company issued 475,000 shares of common stock to The
Keshet Fund LP, upon the conversion of 6,172 shares of Series G Convertible
Preferred.
On July 23, 2002, the Company issued 475,000 shares of common stock to
Keshet LP, upon the conversion of 6,172 shares of Series G Convertible
Preferred.
F-12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS - SIX MONTHS ENDED JUNE 30, 2002
FORWARD-LOOKING STATEMENTS
Statements that are not historical facts, including statements about the
our prospects and strategies and our expectations about growth contained in
this report are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements represent the present expectations or beliefs concerning future
events. We caution that such forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause our actual
results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the
uncertainty as to our future profitability; the uncertainty as to whether
our new business model can be implemented successfully; the accuracy of our
performance projections; and our ability to obtain financing on acceptable
terms to finance our operations until profitability.
OVERVIEW
Our business model includes obtaining license rights from Warner Bros.
Consumer Products, granting production and marketing rights to processor
dairies to produce Looney Tunes(TM) flavored milk and generating revenue
primarily through the sale of "kits" to these dairies. The price of
the "kits" consists of an invoiced price for a fixed amount of flavor
ingredients per kit used to produce the flavored milk and a fee charged to
the diaries for the production, promotion and sales rights for the branded
flavored milk.
Prior to 2001, our business primarily involved the production and
distribution of milk in China. In the third quarter of 2000, we began to
refocus our business away from the production - distribution aspect of the
value chain by implementing a business model that involved the branding,
marketing, packaging design and promotion of flavored fresh milk in the
United States, branded with Looney Tunes(TM) characters. The processing,
local promotion and sales of this branded flavored milk were the
responsibility of regional dairy processors, to whom we sold "kits"
pursuant to written production agreements. During the middle of 2001, this
refocused business was implemented in China and, in December 2001, in
Mexico.
The business model that relied on production agreements with regional dairy
processors for branded fresh milk, while viable, proved to have limited
sales expansion capabilities in the US owing to the inherent distribution
limitations of a product with a short shelf life. Under this business
model, we achieved market penetration in approximately 3,700 stores, which
included approximately 11% of the supermarkets on a national basis. The
advent of extended shelf life
(ESL) milk presented us with the opportunity to dramatically increase sales
on a national basis. In the third quarter of 2001 and the first quarter of
2002, we entered into production contracts with Shamrock Farms, located in
Phoenix, and Jasper Products, of Joplin, Missouri, respectively, and
entered into arrangements to supply 400 Wal-Mart stores and all 86 Super
Target stores with Looney Tunes(TM) ESL flavored milks. While our ESL
business promises greater market penetration, we intend to maintain our
existing short shelf life milk business with regional dairy processors
currently under contract.
In the first quarter of 2002, we further refined our business model by
assuming greater control over the sales and promotion of our ESL branded
flavored milk and by the addition of a new source of revenue. We are no
longer dependent upon processor dairies to promote the sale of our ESL
product. Since ESL milk sales are not limited to the accounts of regional
dairy processors by distribution issues, we have assumed responsibility for
promoting sales either directly or through food brokers who represent us
with both national and regional accounts. This refined business model,
coupled with the production capacity of these two ESL dairy processors,
allowed us to seek national accounts in an aggressive fashion, resulting in
arrangements to supply over, for example, 1,174 Win Dixie locations, 700
Publix supermarkets, 1200 Foodline stores, 335 Albertsons stores, 330 BILO
locations, 200 Krasdale stores, 100 A&Ps and 42 Gristedes supermarkets.
Currently, we have arrangements for the distribution and sale of our
branded ESL flavored milk in over 7,000 supermarkets, representing 32%
penetration of the national market, as well as an additional 1000 discount,
club and convenience stores. Our expansion from 3,700 stores into over
8,000 stores nationally in six months is a testament to the efficacy of
this new sales and promotion strategy.
Under our refined U.S. business model, our revenue source derives not only
from "kit" sales but also from a share of the differential between the cost
to us of producing the ESL product and the wholesale price to our accounts.
This new plan will gain us between $0.025 and $0.03 per unit from the
cost-price differential, in addition to the $0.05 per unit realized from
"kit" sales.
In June 2002, we entered into a production contract with a division of
Parmalat USA Corp. to produce, market and sell the Looney Tunes(TM) brand
flavored milks. Under this agreement, Parmalat will become the exclusive
producer and distributor of Bravo! Foods' new Looney Tunes(TM) brand
fortified aseptic milk, packaged in tetra-brick format under our Slammers
Fortified Reduced Fat Milk(TM) logo. Our agreement with Parmalat will give
us an expanded presence in supermarkets through the use of shelf stable
aseptic milk that is processed, sold and distributed by Parmalat. In
addition, under this agreement we have retained responsibility for aseptic
product sales in the food service sector, either directly or through food
brokers who will represent us with both national and regional accounts.
Our revenue sources from retail sales and food service sales under this
agreement are similar to our sources of revenue from the sale of kits to
regional dairies, in the case of retail sales, and our dual sources of
revenue from ESL milk products, in the case of food service sales.
In October 2001, China Premium (Shanghai) began to implement the Bravo!
"kit sales" model with the execution of a production contract with Kunming
Xuelan Dairy, located in Kunming City in Southwest China. Since October
2001, Kunming Dairy has been producing all five flavored milks in 250ml
single serve gable top packaging. The dairy is averaging a half-ton of
product for 2,000 production units per day. Kumgmin Dairy has committed to
a $75,000 print advertising campaign to increase sales.
In January 2002, Heilongjiang Wan Shan Dairy (Wonder Sun Dairy) began
producing the vanilla Looney Tunes(TM) flavored milk. This dairy is
located in Harbin City in Northeast China and has distribution rights to
Heilongjiang, Jilin, Liaoning and Hebei provinces as well as Beijing and
Tianjin municipalities. Currently, Wonder Sun has stopped production of
Looney Tunes(TM) vanilla flavored milk to develop products for public
school systems. In the second quarter 2002, the Shanghai government
approved China Premium (Shanghai) and Wonder Sun Dairy to supply Looney
Tunes(TM) flavored milks in aseptic packaging to the Shanghai public
schools, which have a student body of 1.5 million. The aseptic milk has a
shelf life of thirty days and does not require refrigeration. The parties
to this agreement anticipate that the initial sales of this school product
will be 30,000 units per day. Our gross profit has been calculated at US
$0.010 per unit.
CORPORATE GOVERNANCE
The Board of Directors
Our board has positions for ten directors that are elected as Class A or
Class B directors at alternate annual meetings of our shareholders. Seven
directors of our board are independent. Our chairman and chief executive
officer are separate. The board meets regularly, at least four times a
year, and all directors have access to the information necessary to enable
them to discharge their duties. The board, as a whole, reviews our
financial condition, performance on an estimated vs. actual basis and
financial projections as a regular agenda item at scheduled periodic board
meetings, based upon separate reports submitted by our chief executive
officer and chief financial officer. Directors are elected by our
shareholders after nomination by the board or are appointed by the board
when a vacancy arises prior to an election. We presently have one mid-term
vacancy on the board. This year we have adopted a nomination procedure based
upon a rotating nomination committee made up of those members of the director
Class not up for election. The board presently is examining whether this
procedure, as well as the make up of the audit and compensation committees,
should be the subject of an amendment to the by-laws.
Audit Committee
Our audit committee is composed of three non-executive directors and
functions to assist the board in overseeing our accounting and reporting
practices. Our financial information is booked in house by our treasurer's
office, from which independent third party accountants prepare financial
reports. These financial reports are audited or reviewed by BDO Seidman,
LLP, independent accountants and auditors. Our chief financial officer
reviews the preliminary financial and non-financial information prepared in
house, by our securities counsel and by our
third party accountants, and the reports of the auditors. The committee
reviews the preparation of our audited and unaudited periodic financial
reporting and internal control reports prepared by our chief financial
officer. The committee is available to review significant changes in
accounting policies and to address issues and recommendations presented by
our internal and external accountants as well as our auditors.
Compensation Committee
Our compensation committee is composed of three non-executive directors and
reviews the compensation structure and policies concerning executive
compensation. The committee develops proposals and recommendations for
executive compensation and presents those recommendations to the full board
for consideration. The committee periodically reviews the performance of
our other members of management and the recommendations of the chief
executive officer with respect to the compensation of those individuals.
Given the size of our company, all such employment contracts are
periodically reviewed by the board. The board must approve all
compensation packages that involve the issuance of our stock or stock
options.
Nominating Committee
The nominating committee was established in the second quarter 2002 and
consists of those members of the director Class not up for election. The
committee is charged with determining those individuals who will be
presented to the shareholders for election at the next scheduled annual
meeting. The full board fills any mid term vacancies by appointment.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our consolidated financial condition and
results of operations are based on our consolidated financial statements,
which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these
financial statements requires us to make estimates 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. On an on-going basis, we evaluate our estimates, including those
related to reserves for bad debts and valuation allowance for deferred tax
assets. We base our estimates on historical experience and on various
other assumptions that are believed to be reasonable under the
circumstances, the result of which form the basis for making judgments
about the carrying values of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these
estimates under different assumptions or conditions. Our use of estimates,
however, is quite limited, as we have adequate time to process and record
actual results from operations.
RESULTS OF OPERATIONS
Financial Condition June 30, 2002
- ---------------------------------
As of June 30, 2002, we had an accumulated deficit of $23,657,640 and cash
on hand of $46,279 and reported total shareholders' equity of $(1,205,818)
For this same period of time, we had revenue of $744,400 and general and
administrative expenses of $2,216,511. General and administrative expenses
consisted of $1,421,255 in operation expenses, depreciation and
amortization expenses of $279,052 and non-cash one time charges of $391,345
pertaining to the issuance of compensation options, the extension and re-
pricing of warrants to restructure debt and waive cash penalties, and finders
fees and non-cash consulting expenses of $124,859.
After net interest expenses of $21,664, cost of goods sold of $76,487 and
selling expenses of $17,514 incurred primarily in the operations of our
Chinese wholly owned subsidiary, we had a net loss of $1,587,776.
Six Months Ended June 30, 2002 Compared to the Six Months Ended
- ---------------------------------------------------------------
June 30, 2001
-------------
Revenue
We had revenues in for the six months ended June 30, 2002 of $774,400, with
a cost of sales of $76,487, resulting in a gross profit of $667,913, or 90%
of sales. Of the $774,400, $640,704 was from sales in the U.S. operation,
$8,816 from sales in China, $50,180 from sales in Canada and $44,700 from
sales in Mexico. Our revenue for the six months ended June 30, 2002
increased by $413,626, a 125% increase compared to revenue of $330,774 for
the same period in 2001. This increase is the result of
* moving from a production-distribution oriented business model with
limited, capabilities, to the "licensing/branding" business model;
* adding five additional processor dairies in the US during 2001;
* the opening of the Mexico market to of Looney Tunes(TM) flavored milks
* the continued expansion of sales of extended shelf life product, which
provides greater distribution flexibility; and
* greater market penetration and distribution of Looney Tunes(TM)
flavored milks.
Cost of Goods Sold
We incurred cost of goods sold of $76,487 for the six months ended June 30,
2002, most of which was incurred in our U.S. operation. Our cost of goods
sold in 2002 decreased by $66,944, a 47% decrease compared to $143,431 for
the same period in 2001.
Under the current licensing/branding U.S. business model, we do not bear
direct financial responsibility for the cost of the flavor ingredients used
to produce the Looney Tunes(TM) flavored milk, which are purchased directly
from approved suppliers by the processor dairies. Our revenue from kits
sold through our promotion agreement with Quality Chek'd is based upon the
net revenue that we receive from Quality Chek'd, which invoices its member
processor dairies and retains the balance of the kit price to cover the
cost of the kit flavor ingredients. We record revenue on a net basis and
do not book or attribute a cost of goods sold to these sales. Under our
production agreements with Neolac (Mexico), Farmers Dairy (Canada) and
Jasper (US - extended shelf life milk), we invoice the full kit price and
credit these processors with
their cost of purchasing the flavor ingredients directly from our approved
suppliers. We record as revenue the full kit price and book the
corresponding credit as a cost of goods sold for these sales.
Operating Expense
We incurred selling expenses for the six months ended June 30, 2002 of
$17,514, consisting of $14,514 incurred in China and $3,000 in our US
operation. Our selling expense decreased for the six months ended June 30,
2002 by $129,483, an 88% decrease compared to the selling expense of
$146,952 for the same period in 2001, which was incurred only in China.
The decrease in selling expense was due to the strategic refocusing of our
effort to implement our kit-sale business model to certain qualified
dairies in major cities of China. We entered the China market more than
five years ago and anticipated significant time for consumers in China to
accept a branded premium Western style flavored milk. We expect that
selling expense in China will remain at current levels as we expand our
business in China.
We incurred general and administrative expenses for the six months ended
June 30, 2002 of $2,216,511, consisting of $2,171,224 in our U.S. operation
and $45,220 in China. Our general and administrative expenses in 2002
increased by $199,367, a 10% increase compared to $2,017,144 for the same
period in 2001. The increase was due to one to one time non-cash charges
of approximately $516,000 related to the issuance of options (as a consulting
expense) and extending warrants and reducing exercise prices, and an increase
in marketing and promotional expenses in 2002, offset by a decrease in
overhead expense in China.
Interest Expense
We incurred interest expense for the six months ended June 30, 2002 of
$21,664 consisting of $21,510 in our U.S. operation and $154 in our China
operation. Our interest expense in 2002 decreased by $7,108, a 25%
decrease compared to $28,772 in 2001. The decrease came from our China
operation related to a bank loan from Fujian Bank, which was paid off in
2001, coupled with a increase in interest attributed to the restructuring
of the payment schedule in one of our Warner Bros. licenses.
Net Loss
We had a net loss for the six months ended June 30, 2002 of $1,587,776
compared with a net loss of $2,005,525 for the same period in 2001. The
net loss consisted of $57,593 in China and $1,530,183 from our US
operation. The net loss decrease in 2002 amounted to $417,749 or 21%
compared to the same period in 2001. The decrease in net loss in 2002
resulted from a reduction in general and administrative expenses in China
coupled with a 125% increase in gross revenues in 2002.
Loss Per Share
We reported a loss of $(0.13) per share for the six months ended June 30,
2002, compared to a loss of $(0.16) per share for the same period of 2001,
representing a 19% decrease.
Three Months Ended June 30, 2002 Compared to the Three Months
- -------------------------------------------------------------
Ended June 30, 2001
-------------------
Revenue
We had revenues for the three months ended June 30, 2002 of $496,179,
with a cost of sales of $72,004, resulting in a gross profit of $424,175,
or 85% of sales. Of the $496,179, $418,859 was from sales in the U.S.
operation, $2,565 from sales in China, $50,180 from sales in Canada and
$24,575 from sales in Mexico. Our revenue for the three months ended June
30, 2002 increased by $337,496, a 213% increase compared to revenue of
$158,683 for the same period in 2001. The increase was the result of our
increased customer sales base accomplished through expanded sales and
promotion efforts.
Cost of Goods Sold
We incurred cost of goods sold of $72,004 for the three months ended June
30, 2002, most of which was incurred in our U.S. operation in the second
quarter. Our cost of goods sold for this period increased by $51,669, a
254% increase compared to $20,335 for the same period in 2001. Under our
production agreements with Neolac (Mexico), Farmers Dairy (Canada) and
Jasper (US - extended shelf life milk), we invoice the full kit price and
credit these processors with their cost of purchasing the flavor
ingredients directly from our approved suppliers. We record as revenue the
full kit price and book the corresponding credit as a cost of goods sold
for these sales, which occurred primarily in the second quarter.
Operating Expense
We incurred selling expenses for the three months ended June 30, 2002 of
$7,728, all of which were incurred in China. Our selling expenses
decreased for the three months ended June 30, 2002 by $63,482, a 90%
decrease compared to the selling expense of $70,710 for the same period in
2001, with China accounting for 98% of this amount. We expect that selling
expense in China will remain at current levels as we expand our business in
China.
We incurred general and administrative expenses for the three months ended
June 30, 2002 of $1,508,944, consisting of $1,480,639 in our U.S. operation
and $28,305 in China. Our general and administrative expenses for the
three months ended June 30, 2002 increased by $721,054, a 92% increase
compared to $787,890 for the same period in 2001. This increase was due to
non-cash one-time charges of approximately $516,000 and an increase in
marketing and promotional expenses.
Interest Expense
We incurred interest expense for the three months ended June 30, 2002 of
$10,559 consisting of $10,412 in our U.S. operation and $147 in our China
operation. Our interest expense for the three months ended June 30, 2002
decreased by $3,661, a 26% decrease compared to $14,220 for the same period
in 2001.
Net Loss
We had a net loss for the three months ended June 30, 2002 of $1,102,556
compared with a net loss of $734,472 for the same period in 2001. The net
loss consisted of $35,086 in China and $1,067,470 from our US operation.
The net loss increase amounted to $368,084 or 50% compared to the same
period in 2001. The increase in net loss resulted from increased general
and administrative expenses in our U.S. operation.
LIQUIDITY AND CAPITAL RESOURCES
As of June 30, 2002, we reported that net cash used in operating activities
was $1,150,995, and net cash provided by financial activities was $965,220.
As of June 30, 2001, we reported that net cash used in operating activities
was $1,249,231, net cash used in investing activities was $710,875, and net
cash provided by financing activities was $510,000.
Net cash used in operating activities decreased by $98,236 to $1,150,995
for the six months ended June 30, 2002, representing approximately 8%
decrease, compared to $1,249,231 of net cash used in operating activities
for the same period of 2001. The decrease reflects management's efforts to
reduce operating expenses.
Net cash used in investing activities decreased by $710,875 to $0 for the
six months ended June 30, 2002, representing a full amount decrease,
compared to $710,875 for the same period of 2001.
Net cash provided by financing activities for the period ended June 30,
2002 increased 89% to $965,220 from $510,000 fro the same period in 2001.
In the six months ended June 30, 2002, we received $700,000 in net proceeds
from the issuance of Series H preferred stock, $330,000 from the exercise
of stock options, $288,000 from the issue of Series I preferred stock and
repaid loans totaling approximately $352,800.
For the period ended June 30, 2002, we had total liabilities of $2,349,999,
representing a 11% decrease from $2,647,374 at December 31, 2001. The
decrease relates primarily to the payoff of notes payable and other
liabilities.
Going forward, the our primary requirements for cash consist of (1) the
continued development of our business model in China, the United States and
on an international basis; (2) general overhead expenses for personnel to
support the new business activities; and (3) payments of guaranteed royalty
payments to Warner Bros. under existing licensing agreements. We estimate
that our need for financing to meet our cash needs for operations will
continue to the fourth quarter of 2002, when cash supplied by operating
activities will enable us to meet the anticipated cash requirements for
operation expenses. We anticipate the need for additional financing in
2003 to reduce our liabilities and return shareholder equity to a positive
status.
As of December 31, 2001, we received $1,055,000 of a $2.35 million private
offering of our Series H convertible preferred stock and, during the first
quarter of 2002, we received an additional $700,000. On June 6, 2002, we
received net proceeds of $330,000 from the exercise of stock options for
1,000,000 shares issued to three consultants for services rendered. On
June 17, 2002, we received net proceeds of $288,000 in a private offering
of our Series I convertible preferred stock for working capital.
We currently have monthly working capital needs of approximately $240,000.
We anticipate monthly revenues to exceed $250,000 per month in the fourth
quarter of 2002.
We are continuing to explore new points of sale for Looney Tunes(TM)
flavored milk. In the first and second quarters, Looney Tunes(TM) milk
products were placed in vending machines in select secondary schools in the
greater Chicago area to determine whether a school-vending program is an
appropriate point of sale for these products. Presently, we are
aggressively pursuing this market through trade/industry shows and
individual direct contracts. The implementation of such a school base
program, if viable, could have an impact on the level of our revenue during
the third and fourth quarters of 2002.
Similarly, we expect that commencement of extended shelf life ("ESL") milk
production agreements with strategically placed ESL dairy processors, the
greater control over sales with our refined business model and the cost-
wholesale price differential source of revenue will continue have a
positive impact on revenues, with the distribution of Looney Tunes(TM)
flavored milk in national chains such as Super Target, as well as large
regional supermarkets such as Publix, Krasdale, Albertsons, Foodline, A&P,
BI-LO, Walbaums and Win Dixie.
At the beginning of 2002, we began negotiations with Warner Bros. to extend
the US license agreement for an additional year on the same terms before
renewal of the license was necessary. The parties have agreed to such an
extension. In addition, a Warner Bros. Looney Tunes(TM) license for Canada
has been approved. We have executed an agreement with Farmers Dairy in
Canada to produce Looney Tunes(TM) flavored milk for distribution in
Eastern Canada.
Commencing in May 2002, we developed a new branded fortified flavored milk
product under the "Slammers Reduced Fat Fortified Milk(TM)" brand name.
Our Slammers brand is being used in conjunction with our licensed Looney
Tunes(TM) characters on vitamin fortified flavored milk. The introduction
of the Slammers Reduced Fat Fortified Milk(TM) brand was made in
conjunction with our co-sponsoring the nationwide Taz Atti-Tour, a Looney
Tunes(TM) action sports tour sponsored by Warner Bros. Consumer Products,
Warner Bros. Theatrical, Wal-Mart, Acclaim Entertainment, AOL and ASA
Events. This extreme sports tour features professional international
inline skating, skateboard and bike sport stars, who perform demonstrations
and lead interactive clinics. The 2002 Taz Atti-Tour is scheduled at Wal-
Mart stores in 19 US cities through September 20, 2002.
In June 2000, we executed an exclusive aseptic tetra-bick production
agreement with a division of Parmalat USA Corp. for Looney Tunes(TM)
flavored milk, as well as our new Slammers Reduced Fat Fortified Milk(TM).
We anticipate the launch of this new aseptic tetra-bick product in
September 2002. We expect this product to have a positive impact upon our
revenues, commencing with the fourth quarter of 2002.
DEBT STRUCTURE
Warner Bros.
We hold five licenses for Looney Tunes(TM) characters and names from Warner
Bros. Each license is structured to provide for the payment of guaranteed
royalty payments to Warner Bros. We account for these guaranteed payments
as debt and licensing rights as assets. The following is a summary of the
balances owed as of June 30, 2002 and the license expiration dates:
Amount Expiration
License Guaranty Balance Due Past Due Date
- ------- -------- ----------- -------- ----------
U.S. License $500,000 $ -0- $ -0- 12/31/03
U.S. TAZ $250,000 $166,667 $ -0- N/A
China $400,000 $172,403 $25,288 06/30/03
Mexico $145,000 $ 36,250 $ -0- 05/31/04
Canada $ 32,720 $ -0- $ -0- 03/31/04
International Paper
During the process of acquiring from American Flavors China, Inc. the 52%
of equity interest in and to Hangzhou Meilijian, we issued an unsecured
promissory note to assume the American Flavors' debt owed to a supplier,
International Paper. The face value of that note was $282,637 at interest
rate of 10.5% per annum without any collateral attached. The note has 23
monthly installment payments of $7,250 with a balloon payment of $159,862
at the maturity date of July 15, 2000. We negotiated with International
paper for the extension of this note. On July 6, 2000, International Paper
agreed to extend the note to July 1, 2001, and the principal amount was
adjusted due to different interest calculation approach. International
Paper imposed a charge of $57,000 to renegotiate the note owing the failure
of Hangzhou Meilijian to pay for certain packing material, worth more than
$57,000 made to order in 1999. The current outstanding balance on this
note is $187,743. The Company is delinquent in its payments under this
note and anticipates discharging this obligation in 2002.
Individual Loans
On November 6 and 7, 2001, respectively, we received the proceeds of two
loans aggregating $100,000 from two offshore lenders. The two promissory
notes, one for $34,000 and the other for $66,000, were payable February 1,
2002 and bear interest at the annual rate of 8%. These loans are secured
by a general security interest in all our assets. On February 1, 2000, the
parties agreed to extend the maturity dates until the completion of the
anticipated Series H financing. On June 18, 2002, the respective
promissory note maturity dates were extended by agreement of the parties to
December 31, 2002. On June 18, 2002, we agreed to extend the expiration
dates of warrants issued in connection with our Series D and F preferred
until June 17, 2005 and to reduce the exercise price of certain of those
warrants to $1.00, in partial consideration for the maturity date
extension.
On April 18, 2002, we received $50,000 in loan proceeds from a lender who
also is a holder of our Series H Convertible Preferred Stock. The $50,000
was payable May 1, 2002 with interest at
the annual rate of 8%. This maturity date for the repayment of this loan
was extended to May 15, 2002 and paid in full at that time.
EFFECTS OF INFLATION
We believe that inflation has not had material effect on its net sales and
results of operations.
EFFECT OF FLUCTUATION IN FOREIGN EXCHANGE RATES
Our Shanghai subsidiary is located in China. It buys and sells products in
China using Chinese renminbi as functional currency. Based on Chinese
government regulation, all foreign currencies under the category of current
account are allowed to freely exchange with hard currencies. During the
past two years of operation, there were no significant changes in exchange
rates. However, there is no assurance that there will be no significant
change in exchange rates in the near future.
PART II - OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
First Quarter
On January 2, 2002, we issued options for 3,714 shares of common stock
having an exercise price of $0.35 and exercisable for five years, pursuant
to an employment agreement.
On January 18, 2002, we issued 238,334 shares of common stock to Austinvest
Anstalt Balzers, upon the conversion of 5,000 shares of Series D
Convertible Preferred, at a conversion price of $0.2453. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $8,463.34.
On January 18, 2002, we issued 238,334 shares of common stock to Esquire
Trade & Finance, Inc., upon the conversion of 5,000 shares of Series D
Convertible Preferred, at a conversion price of $0.2453. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $8,463.34.
On January 28, 2002, we issued 40,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 883 shares of Series G Convertible
Preferred, at a conversion price of $0.2453. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$984.83.
On January 28, 2002, we issued 136,038 shares of common stock to Amro
International, S.A., upon the conversion of 2,840 shares of Series D
Convertible Preferred, at a conversion price of $0.2453. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $4,970.00.
On January 30, 2002, we issued 15,000 shares of its Series H convertible
preferred stock, having a conversion price of $0.40 per share of common
stock, and warrants for 375,000 shares at $0.50 per share.The Series H
convertible preferred stock and warrants were priced at $10.00 per unit,
and resulted in proceeds of $150,000 in cash.
On February 4, 2002, we issued 206,700 shares of common stock to Austinvest
Anstalt Balzers, upon the conversion of 4,375 shares of Series D
Convertible Preferred, at a conversion price of $0.2480. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $7,511.60.
On February 4, 2002, we issued 206,700 shares of common stock to Esquire
Trade & Finance, Inc., upon the conversion of 4,375 shares of Series D
Convertible Preferred, at a conversion price of $0.2480. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $7,511.60.
On February 5, 2002, we issued 20,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 492 shares of Series G Convertible
Preferred, at a conversion price of $0.2453. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$496.03.
On February 15, 2002, we issued 5,000 shares of its Series H convertible
preferred stock, having a conversion price of $0.40 per share of common
stock, and warrants for 125,000 shares at $0.50 per share to a
sophisticated and accredited investor. The Series H convertible preferred
stock and warrants were priced at $10.00 per unit, and resulted in proceeds
of $50,000 in cash.
On February 20, 2002, we issued 35,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 832 shares of Series G Convertible
Preferred, at a conversion price of $0.2949. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$952.05.
On February 29, 2002, we issued 279,795 shares of common stock to Amro
International, S.A, upon the conversion of 7,160 shares of Series D
Convertible Preferred, at a conversion price of $0.3013. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $12,711.00.
On March 1, 2002, we issued 20,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 536 shares of Series G Convertible
Preferred, at a conversion price of $0.2993. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$630.20.
On March 1, 2002, we issued warrants for 25,000 shares of common stock,
having an exercise price of $0.40 per share. The warrants are immediately
exercisable and have an expiration date of February 28, 2007. These
warrants were issued to the lender in connection with a December 27, 2001
loan of $250,000 to us.
On March 15, 2002, we issued 20,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 532 shares of Series G Convertible
Preferred, at a conversion price of $0.2973. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$633.70.
On March 18, 2002, we issued 50,000 shares of its Series H convertible
preferred stock, having a conversion price of $0.40 per share of common
stock, and warrants for 1,250,000 shares at $0.50 per share to a
sophisticated and accredited investor. The Series H convertible preferred
stock and warrants were priced at $10.00 per unit, and resulted in proceeds
of $500,000 in cash.
Second Quarter
On April 19, 2002, we issued 10,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 252 shares of Series G Convertible
Preferred, at a conversion price of $0.2840. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$320.80.
On April 19, 2002, we issued 10,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 234 shares of Series G Convertible
Preferred, at a conversion price of $0.2640. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$299.40.
On April 24, 2002 our Board of Directors voted to extend options for
1,383,705 shares of common stock issued on April 29 and April 30, 1997 to
Tamarind Management, Ltd. (an affiliate of Mr. Paul Downes, a founder of
the Company) and options for 700,000 shares of common stock issued on April
30, 1997 to Mr. Dale Reese (a founder of the Company), for services
rendered to us. These extended options, which had original expiration
dates of April 29 and April 30, 2002, respectively, retain an exercise
price of $1.00 and are exercisable upon the following conditions: The
expiration dates for these options are extended for a two year period,
commencing upon the effective date of a registration statement for the
resale of the common stock underlying the options; the options will not be
exercised during a one year lockup period commencing on the 1st day after
our common stock trades during a 90 day period at a moving average of at
least $1.00; we have the option to call the options commencing on the 1st
day after our common stock trades during a 90 day period at a moving
average of at least $2.00.
On May 3, 2002, we issued 52,730 shares of common stock to Amro
International, S.A, upon the conversion of 1,000 shares of Series D
Convertible Preferred, at a conversion price of $0.22. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $1,811.51.
On May 7, 2002, we issued 10,000 shares of common stock to The Keshet Fund
LP, upon the conversion of 215 shares of Series G Convertible Preferred, at
a conversion price of $0.2427. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $277.44.
On May 13, 2002, we issued 10,000 shares of common stock to The Keshet Fund
LP, upon the conversion of 158 shares of Series G Convertible Preferred, at
a conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $207.77.
On May 13, 2002, we issued 10,000 shares of common stock to The Keshet Fund
LP, upon the conversion of 158 shares of Series G Convertible Preferred, at
a conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $207.77.
On May 13, 2002, we issued 20,000 shares of common stock to Keshet LP, upon
the conversion of 316 shares of Series G Convertible Preferred, at a
conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $416.07.
On May 13, 2002, we issued 15,000 shares of common stock to Keshet LP, upon
the conversion of 237 shares of Series G Convertible Preferred, at a
conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $312.45.
On May 17, 2002, we issued 131,239 shares of common stock to Amro
International, S.A, upon the conversion of 2,000 shares of Series D
Convertible Preferred, at a conversion price of $0.18. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $3,623.00.
On May 17, 2002, we issued 278,498 shares of common stock to Amro
International, S.A, upon the conversion of 4,000 shares of Series D
Convertible Preferred, at a conversion price of $0.17. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $7,344.00.
On May 20, 2002, we issued 10,000 shares of common stock to Keshet LP, upon
the conversion of 158 shares of Series G Convertible Preferred, at a
conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $209.37.
On May 20, 2002, we issued 10,000 shares of common stock to Keshet LP, upon
the conversion of 131 shares of Series G Convertible Preferred, at a
conversion price of $0.1680. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $372.82.
On May 22, 2002, we issued options for 1,710,000, in the aggregate, as
compensation to three consultants to assist us in management and strategic
planning issues, pursuant to consulting agreements of the same date. These
options were issued pursuant to a Form S-8 registration statement filed
June 6, 2002 and are exercisable for a one year period. Of the 1,710,000
options,
1,150,000 options have an exercise price of $0.33 per share and 560,000
options have an exercise price of $0.50 per share. We have the ability to
compel the exercise of these options if the trading price of our common
stock equals or exceeds $1.00 for thirty consecutive trading days.
On May 23, 2002, we issued 63,454 shares of common stock to Austinvest
Anstalt Balzers, upon the conversion of 1,000 shares of Series D
Convertible Preferred, at a conversion price of $0.1787. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $7,494.00.
On May 23, 2002, we issued 63,454 shares of common stock to Esquire Trade &
Finance, Inc., upon the conversion of 1,000 shares of Series D Convertible
Preferred, at a conversion price of $0.1787. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$7,494.00.
On May 24, 2002, we issued 15,000 shares of common stock to Keshet LP, upon
the conversion of 237 shares of Series G Convertible Preferred, at a
conversion price of $0.1787. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $312.85.
On May 24, 2002, we issued 15,000 shares of common stock to The Keshet Fund
LP, upon the conversion of 157 shares of Series G Convertible Preferred, at
a conversion price of $0.1680. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $449.88.
On May 29, 2002, we issued 652,178 shares of common stock to Amro
International, S.A, upon the conversion of 9,642 shares of Series D
Convertible Preferred, at a conversion price of $0.168. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $13,146.
On May 29, 2002, we issued 652,178 shares of common stock to Esquire Trade
& Finance, Inc., upon the conversion of 9,642 shares of Series D
Convertible Preferred, at a conversion price of $0.168. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $13,146.
On May 30, 2002, we issued 652,178 shares of common stock to Austinvest
Anstalt Balzers, upon the conversion of 9,642 shares of Series D
Convertible Preferred, at a conversion price of $0.168. The conversion
included accrued and unpaid dividends on the preferred converted in the
amount of $13,146.
On June 13, 2002, we issued 10,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 126 shares of Series G Convertible
Preferred, at a conversion price of $0.1627. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$366.70.
On June 10, 2002, we issued 425,000 shares of common stock to a consultant,
upon the exercise of options issued pursuant to a consulting agreement, as
compensation for management consulting and strategic planning services
provided to us. These shares were issued pursuant to a Form S-8
registration statement filed on June 6, 2002.
On June 10, 2002, we issued 425,000 shares of common stock to a consultant,
upon the exercise of options issued pursuant to a consulting agreement, as
compensation for management consulting and strategic planning services
provided to we. These shares were issued pursuant to a Form S-8
registration statement filed on June 6, 2002.
On June 10, 2002, we issued 150,000 shares of common stock to a consultant,
upon the exercise of options issued pursuant to a consulting agreement, as
compensation for management consulting and strategic planning services
provided to we. These shares were issued pursuant to a Form S-8
registration statement filed on June 6, 2002.
On June 13, 2002, we issued 10,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 130 shares of Series G Convertible
Preferred, at a conversion price of $0.1680. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$381.12.
On June 17, 2002, we received sufficient consents to file an amended
certificate of incorporation, which increased our authorized common stock
from 20,000,000 to 50,000,000 shares.
On June 17, 2002, we issued 30,000 shares of its Series I 8% convertible
preferred stock and warrants for 2,000,000 shares at $0.50 per share,
exercisable within three years from issue, to two sophisticated and
accredited investors, pursuant to Rule 506, Regulation D and Section 4(2)
of the Securities Act of 1933. The conversion of the preferred into common
stock shall be at a per common share conversion price of 75% of the average
of the three lowest closing bid prices for the thirty day period
immediately preceding conversion. The conversion price is subject to a
maximum of $0.50 per share and a minimum of $0.30 per share, which minimum
conversion price shall govern for the 270 days immediately following the
issue date of the Series I preferred shares. The minimum conversion price
shall be extended indefinitely upon the occurrence of certain defined events,
including the effectiveness of a registration statement for the resale of the
common stock underlying the preferred and a trading price of our common stock
at $0.50 or higher for fifteen consecutive days. We have the ability to
compel the exercise of the warrants in tranches of not more than 500,000
warrants each, if the trading price of our common stock equals or exceeds
$1.00 for thirty consecutive trading days and a registration statement for
the underlying common is effective. The Series I convertible preferred stock
and warrants were priced at $10.00 per unit, and resulted in gross cash
proceeds of $300,000, less expenses of $12,000.
On June 18, 2002, we agreed to extend the expiration dates of warrants
issued in connection with our Series D and F preferred until June 17, 2005
and to reduce the exercise price of certain of those warrants to $1.00. In
consideration for this warrant modification, the holders of two promissory
notes executed by us aggregating $100,000, dated November 6 and 7, 2001,
respectively, agreed to extend the maturity dates of the notes to December
31, 2002. In addition, the holders of our Series D and F preferred stock
agreed to waive all potential penalties associated with the Series D and F
preferred, including the abandonment of a certain SB-2
registration statement filed in connection with the resale of the common
stock underlying the Series D and F preferred. Below is a table containing
the warrant modifications.
WARRANT COMMON UNMODIFIED
ISSUE SHARES UPON PURCHASE
WARRANTHOLDER (Series) DATE EXERCISE PRICE
- ---------------------- ------- ----------- ----------
Austinvest Anstalt Balzers (D) 3-9-99 16,250 $2.96
Austinvest Anstalt Balzers (D) 4-23-99 8,125 $2.96
Austinvest Anstalt Balzers (D) 2-1-00 422,500 $0.625*
Austinvest Anstalt Balzers (F) 4-7-00 1,000,000 $1.00
Austinvest Anstalt Balzers (F) 10-13-00 38,259 $0.9825*
Esquire Trade & Finance, Inc. (D) 3-9-99 16,250 $2.96
Esquire Trade & Finance, Inc. (D) 4-23-99 8,125 $2.96
Esquire Trade & Finance, Inc. (D) 2-1-00 422,500 $0.625*
Esquire Trade & Finance, Inc. (F) 4-7-00 1,000,000 $1.00
Esquire Trade & Finance, Inc. (F) 10-13-00 38,259 $0.9625*
Libra Finance, S.A . (F) 4-7-00 1,600,000 $0.84*
Amro International, S.A. (D) 2-1-00 455,000 $0.625*
Amro International, S.A. (F) 4-7-00 1,000,000 $1.00
Amro International, S.A. (F) 10-13-00 38,259 $0.9625*
Amro International, S.A. (D) 3-9-99 17,500 $2.96
Amro International, S.A. (D) 4-23-99 8,750 $2.96
* Exercise price not adjusted
On June 19, 2002, we issued 33,333 shares of restricted common stock to
Tradersbloom Limited, as a finder fee in connection with the issuance of
our Series I preferred stock. Tradersbloom Limited is a sophisticated and
accredited investor.
On June 19, 2002, we issued 66,667 shares of restricted common stock to
Libra Finance, S.A., as a finder fee in connection with the issuance of our
Series I preferred stock. Libra Finance, S.A. is a sophisticated and
accredited investor.
On June 21, 2002, we issued 10,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 135 shares of Series G Convertible
Preferred, at a conversion price of $0.1760. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$402.29.
Subsequent Events
On July 1, 2002, we issued 500,000 shares of common stock to Esquire Trade
& Finance, Inc., upon the conversion of 8,250 shares of Series D
Convertible Preferred, at a conversion price of $0.165. The conversion
did not include accrued and unpaid dividends on the preferred converted.
On July 1, 2002, we issued 500,000 shares of common stock to Austinvest
Anstalt Balzers, upon the conversion of 8,250 shares of Series D
Convertible Preferred, at a conversion price of $0.165. The conversion
did not include accrued and unpaid dividends on the preferred converted.
On July 23, 2002, we issued 475,000 shares of common stock to The Keshet
Fund LP, upon the conversion of 6,172 shares of Series G Convertible
Preferred, at a conversion price of $0.1680. The conversion included
accrued and unpaid dividends on the preferred converted in the amount of
$18,083.72.
On July 23, 2002, we issued 475,000 shares of common stock to Keshet LP,
upon the conversion of 6,172 shares of Series G Convertible Preferred, at a
conversion price of $0.1680. The conversion included accrued and unpaid
dividends on the preferred converted in the amount of $18,083.72.
Item 6. Exhibits and Reports on Form 8-K
Exhibits - Required by Item 601 of Regulation S-B:
4.1 Certificate of Designation, Series I convertible Preferred Stock,
filed with this report
20.1 Proxy Solicitation of Consent, Definitive 14A, filed June 17, 2002
99.1 Chief Executive Officer and Chief Financial Officer Certification
pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, filed with this report
Reports on Form 8-K:
Item 5 and 9 filing announcing production agreement with division of
Parmalat USA Corp., filed June 26, 2002
SIGNATURES
In accordance with the requirements of the Exchange Act of 1934, the
registrant caused this report to be signed on its behalf of the
undersigned, duly authorized.
BRAVO! FOODS INTERNATIONAL CORP. (Registrant)
Date: May 8, 2002
/s/Roy G. Warren
- --------------------------------------
Roy G. Warren, Chief Executive Officer