U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB/A
(Mark One)
[X] Quarterly Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the quarter ended October 31, 1998
or
[ ] Transition Report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934 for the transition period from ________ to _______.
Commission File Number 001-09703
SKOLNIKS, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-3074492
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7755 E. Gray Road, Scottsdale, Arizona 85260
- -------------------------------------- ---------
(Address of principal executive office) (Zip code)
(602) 443-9640
------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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 [ ]
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13, 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court. YES [ ] NO [X]
The number of shares outstanding of issuer's Common Stock, $.001 par value per
share, as of January 31, 1999 was 9,343,187.
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
SKOLNIKS, INC.
FORM 10-QSB/A
FOR THE QUARTER ENDED OCTOBER 31, 1998
TABLE OF CONTENTS
AMENDMENT EXPLANATION........................................................ 2
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
YEAR 2000 COMPLIANCE................................................. 3
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES................................................ 5
SIGNATURE.................................................................... 6
3
AMENDMENT EXPLANATION
Year 2000 Compliance was erroneously left out of the Report. This amendment adds
the Year 2000 Compliance disclosure to Management's Discussion and Analysis of
Financial Condition and Results of Operations in Part I. Part I is amended to
include the following.
Item 2. Changes in Securities was not updated to include a stock warrant grant
to Mr. Russell K. Swartz as compensation for accepting a seat on the Board of
Directors. This amendment adds such Item to the Report. This amendment replaces
Part II - Changes in Securities in its entirety.
4
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
YEAR 2000 COMPLIANCE
Many currently installed computer systems and software products are coded to
accept only two-digit entries to represent years in the date code field. These
programs and databases were designed and developed without considering the
impact of the upcoming millennium. Consequently, date sensitive computer
programs may interpret the date "00" as 1900 rather than 2000. If not corrected,
many computer systems could fail or create erroneous results in 2000.
The Company has completed an assessment of all of its internal and external
systems and processes with respect to the "Year 2000" issue. In response to this
assessment, the Company has created a Y2K Task Force to resolve any
non-compliant Year 2000 systems, processes, or other issues. As part of the
process of evaluating the Year 2000 issue, the task force has assessed the
potential impact of Year 2000 failures from vendors and outside parties upon its
business and is currently surveying outside parties with whom they interact as
to their state of readiness.
The Company has assessed its information technology systems and believes that it
will be Year 2000 compliant because the Company operates personal computers
linked together with network package software and a server, as opposed to
mainframe computer technology. With the exception of the server, new personal
computers have been purchased in the past year and run on a standard operating
system that is Year 2000 compliant. In addition, the software used by the
Company is standard, off-the-shelf applications purchased or upgraded in the
past three years, which also are Year 2000 compliant. The Year 2000 task force
has concluded that it is in the Company's best interest to remove the server
from the network setting and link the remaining personal computers with a
standard network operating system. This final phase of the internal computer
technology systems remediation program is expected to be completed prior to July
31, 1999.
The Company has taken steps to assure that the computer systems of its vendors,
customers, and banks with which the Company utilize electronic data interchange
will be Year 2000 compliant. Such vendors, customers, and banks have assured the
Company that their computer operations will be Year 2000 compliant prior to
December 31, 1999. However, there can be no assurance that computer systems
operated by all third parties with which the Company systems' interface will be
compliant on a timely basis and in that event, the Company may be adversely
affected, although the magnitude of such effect cannot be estimated.
5
The Company has also determined that its bakery equipment processors are Year
2000 compliant. Bakery equipment evaluated includes ovens, breadstick and bagel
equipment, compressors, and thermostats. None of the equipment was determined to
use date sensitive computer processors.
The cost of the Company's Year 2000 compliance program has not had, and is not
expected to have, a material impact on the Company's results of operations,
financial condition, or liquidity. The Company has not been required to
prematurely replace equipment due to Year 2000 issue, nor has the Company needed
to hire Year 2000 solution providers. Further, the company does not anticipate
the necessity of such expenses in the future. Finally, the Company anticipates
that the cost of ensuring compliance of third parties will be minimal.
In its reasonably likely worst case Year 2000 scenario, the Company anticipates
that the failure of its customers and suppliers to adequately address their own
Year 2000 issues will result in delays of payments to the Company and the
receipt of invoices from vendors.
The failure of the Company's customers' and vendors' to be Year 2000 compliant
can be minimized by using a supplemental source of communication such as fax and
mail to ensure the invoices and checks are processed accordingly. The Company
plans to implement such procedures as they become necessary.
6
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
On August 14, 1998, Russell K. Swartz was awarded 300,000 warrants to purchase
common stock at an exercise price of $.375 in exchange for his service as a
member of the Board of Directors. These warrants vest 50% immediately and 50% in
two years assuming continual service on the board. Mr. Swartz has agreed to
refrain from exercising these warrants until the authorized share capital is
increased.
7
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Skolniks, Inc.
Dated: March 16, 1999 /s/ Russell K. Swartz
--------------- -------------------------------------------
Russell K. Swartz
President and Chief Executive Officer
(Principal Executive Officer)
Dated: March 16, 1999 /s/ Anga L. Allen
--------------- -------------------------------------------
Anga L. Allen
Chief Financial Officer
(Principal Financial and Accounting Officer)
8