U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 2005
Commission File No. 0-18200
ARMANINO FOODS OF DISTINCTION, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-1041418
- ---------------------------- -------------------------------
(State or other jurisdiction (I.R.S. Employer Identification
incorporation or organization) Number)
30588 San Antonio St., Hayward, CA 94544
------------------------------------------------
(Address of principal executive office)(Zip Code)
Issuer's telephone number, including area code: (510) 441-9300
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 [ ]
There were 3,370,108 shares of the Issuer's Common Stock outstanding as of
May 12, 2005.
Transitional Small Business disclosure Format. Yes [ ] No [X]
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
ASSETS
December 31,
March 31, 2005 2004
-------------- ------------
Current Assets:
Cash and cash equivalents $ 173,836 $ 662,852
Certificates of deposit 1,869,789 1,594,747
Accounts receivable, net 1,666,933 1,915,078
Inventories 1,309,837 1,120,174
Prepaid expenses 143,957 370,052
Current portion of direct financing
lease receivable 39,158 50,942
Current deferred tax asset 67,334 67,334
----------- -----------
Total Current Assets 5,270,844 5,781,179
Property and equipment, net 1,454,450 1,559,241
Direct financing lease receivable, net 386,502 388,034
Other Assets:
Deposits 32,000 32,000
Goodwill 375,438 375,438
Indefinite life - Intangible assets 95,000 95,000
Deferred tax asset 49,773 49,773
----------- -----------
Total Other Assets 552,211 552,211
----------- -----------
Total Assets $ 7,664,007 $ 8,280,665
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable & accrued payroll and
related taxes $ 676,160 $ 748,610
Dividends payable 172,255 515,282
Income taxes payable 154,319 249,476
----------- -----------
Total Current Liabilities 1,002,734 1,513,368
Deferred income on direct financing lease 46,949 48,481
----------- -----------
Total Liabilities 1,049,683 1,561,849
Stockholders' Equity:
Preferred stock; no par value, 10,000,000
shares authorized, no shares issued and
outstanding
Common stock; no par value, 40,000,000
shares authorized, 3,445,108 shares issued
and outstanding at March 31, 2005 and
3,429,108 at December 31, 2004 8,473,319 8,431,609
Additional paid-in capital 37,911 37,911
Accumulated Deficit (1,896,039) (1,748,537)
----------- -----------
6,615,191 6,720,983
Less: Deferred compensation expense
in accordance with APB 25 (867) (2,167)
----------- -----------
Total Stockholders' Equity 6,614,324 6,718,816
----------- -----------
Total Liabilities & Stockholders' Equity $ 7,664,007 $ 8,280,665
=========== ===========
The accompanying notes are an integral part of these condensed consolidated
financial statements. The balances for December 31, 2004 were taken from the
audited financial statements at that date and condensed.
2
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Earnings
For the Quarter Ended March 31, 2005 and 2004
(Unaudited)
March 31, 2005 March 31, 2004
-------------- --------------
Net Sales $ 3,129,268 $ 3,055,659
Cost of Goods Sold 2,169,262 2,108,067
----------- -----------
Gross Profit 960,006 947,592
Operating Expenses:
General, administrative and selling 402,309 393,982
Salaries and wages 464,010 415,558
Commissions 73,886 124,057
----------- -----------
Total Operating Expenses 940,205 933,597
Operating Income 19,801 13,995
Other Income 15,062 10,181
----------- -----------
Income From Operations Before
Income Taxes 34,863 24,176
Current Tax Expense 10,110 2,837
Deferred Tax Expense - 4,174
----------- -----------
Net Earnings 24,753 17,165
Basic Income Per Common Share $ .01 $ .01
Weighted Average Common Shares Outstanding 3,433,308 3,350,603
=========== ===========
Diluted Income Per Common Share $ .01 $ .00
Weighted Average Common Shares Outstanding 3,630,407 3,585,360
=========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
3
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2005 and 2004
(Unaudited)
March 31, 2005 March 31, 2004
-------------- --------------
Cash Flows From Operating Activities:
Net income $ 24,753 $ 17,165
Adjustment to reconcile net income to net
cash provided by operations:
Depreciation and amortization 118,750 118,250
Net change in deferred taxes - 4,174
Earned revenue from direct financing lease (1,532) (2,602)
Compensation expense for stock options 1,300 1,300
Changes in assets and liabilities:
Decrease in accounts receivable 248,144 91,949
(Increase) in inventories (189,663) (99,556)
Decrease in prepaid expenses 226,096 31,901
Increase/(Decrease) in accounts payable and
accrued payroll and related taxes (168,343) 49,163
(Increase)/Decrease in income taxes payable 736 (77,887)
----------- -----------
Total Adjustments 235,488 116,692
----------- -----------
Net Cash Provided By Operating Activities 260,241 133,857
Cash Flows From Investing Activities:
Purchases of property and equipment (13,959) (93,873)
Proceeds received from direct financing lease 13,316 22,617
Purchase of certificates of deposit (275,042) (252,058)
----------- -----------
Net Cash Used in Investing Activities (275,685) (323,314)
Cash Flows From Financing Activities:
Dividends paid to common stockholders (515,282) (333,490)
Proceeds from exercise of stock options 41,710 110,813
----------- -----------
Net Cash (Used) For Financing Activities: (473,572) (222,677)
Net Decrease In Cash and Cash Equivalents (489,016) (412,134)
Cash and Cash Equivalents Beginning of Period 662,852 1,414,244
----------- -----------
Cash and Cash Equivalents End of Period $ 173,836 $ 1,002,110
=========== ===========
The accompanying notes are an integral part of these condensed financial
statements.
4
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
For the Three Months Ended March 31, 2005 and 2004
(Unaudited)
March 31, 2005 March 31, 2004
-------------- --------------
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period for
Interest $ - $ -
Income tax $ 372 $ 72,251
Supplemental Disclosures of Non-Cash Items:
For the three months ended March 31, 2005
and March 31, 2004.
During 2002, the Company issued a total of 60,000 options to a
director to purchase common stock at $2.54 per share, which was
below the current market value of the Company common stock of
$2.80. The options vest equally over 36 months. On the grant
date, in accordance with APB 25, the Company recorded additional
paid in capital and deferred compensation of $15,600. For periods
prior to December 31, 2004 the Company recognized a total of
$13,433 as compensation expense in connection with these options.
For the three months ended March 31, 2005 and 2004, the Company
recognized $1,300 and $1,300, respectively as compensation expense
in connection with these options.
5
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
of the United States of America for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles of the United States of America
for complete financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals, considered necessary for
a fair presentation have been included. It is suggested that these condensed
consolidated financial statements be read in conjunction with the December 31,
2004 audited financial statements and notes thereto for Armanino Foods of
Distinction, Inc included in the Company's 10_KSB. The results of operations
for the periods ended March 31, 2005 and 2004 are not necessarily indicative
of the operating results for the year ended December 31, 2005.
Basis of Presentation - The condensed consolidated financial statements
include the accounts of Armanino Foods of Distinction, Inc. ("Parent") and its
wholly-owned non-operating subsidiary AFDI, Inc.
Consolidation - All significant accounts and transactions between Parent
and subsidiary have been eliminated in consolidation.
Cash and Cash Equivalents - For purposes of the statement of cash flows,
the Company considers all highly liquid debt instruments (Treasury
Bills/Certificates of Deposit) purchased with a maturity of three months or
less to be cash equivalents. The Company had $20,342 in excess of federally
insured amounts in its bank accounts at March 31, 2005.
Intangible Assets - The Company acquired Alborough, Inc. during May 1996.
The Company recorded goodwill in the amount of $609,938 as part of the
purchase. During October 2002, the Company purchased proprietary
formulations, trademarks and related equipment of a product line sold under
the Garlic Zing label. In relation to this purchase the Company recorded
$95,000 for formulas and trademarks. In 2002, the Company adopted Statement
of Financial Accounting Standards No. 142, "Goodwill and Other Intangible
Assets". The Company has classified its intangible assets as indefinite-life
intangible assets and accordingly does not record amortization. The Company
has no other indefinite-life or definite-life intangible assets.
Accounts Receivable - Accounts receivable consist of trade receivables
arising in the normal course of business. At March 31, 2005, the Company has
established an allowance for doubtful accounts of $38,546 which reflects the
Company's best estimate of probable losses inherent in the accounts receivable
balance. The Company determines the allowance based on known troubled
accounts, historical experience, and other currently available evidence.
Amounts written off for the years presented are insignificant for disclosure.
6
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Revenue Recognition and Sales Incentives - The Company accounts for
revenue recognition in accordance with the Securities and Exchange Commission
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements" (SAB 101), as amended SAB 104, SFAS 48, "Revenue Recognition When
Right of Returns Exists" and EITF No. 00-14, 00-25, 01-09 "Accounting for
Consideration Given by a Vendor to a Customer". The Company recognizes
revenue when rights and risk of ownership have passed to the customer, when
there is persuasive evidence of an arrangement, product has been shipped or
delivered to the customer, the price and terms are finalized, and collection
of resulting receivable is reasonably assured. Products are primarily shipped
FOB shipping point at which time title passes to the customer. The Company's
revenue arrangements with its customers often include early payment discounts
and such sales incentives as trade allowances, promotions and co-operative
advertising. These sales incentives are recorded at the later of when revenue
is recognized or when the incentives are offered. Sales incentives that do not
provide an identifiable benefit or provide a benefit where the Company could
not have entered into an exchange transaction with a party other than the
customer are netted against revenues. Incentives providing an identifiable
benefit, where the Company could have entered into the same transaction with a
party other than the customer, are classified under "General, administrative
and selling" in the Operating Expenses section of the Consolidated Statements
of Operations.
Net sales comprised of the following for the quarter ended March 31, 2005
and 2004:
For the Quarter
Ended March 31,
------------------------
2005 2004
---------- ----------
Gross Sales $3,585,169 $3,459,790
Less: Discounts $ (58,995) $ (53,511)
Slotting $ (6,204) $ (19,631)
Promotional $ (390,702) $ (330,989)
---------- ----------
Net Sales $3,129,268 $3,055,659
========== ==========
Accounting Estimates - The preparation of financial statements in
conformity with generally accepted accounting principles in the United States
of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities, the disclosures of contingent
assets and liabilities at the date of the financial statements and the
reported amount of revenues and expenses during the reporting period. Actual
results could differ from those estimated.
7
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Share - The Company calculates earnings per share in
accordance with Statement of Financial Accounting Standards (SFAS) No. 128
"Earnings Per Share", which requires the Company to present basic and diluted
earnings per share. The computation of basic earnings per share is based on
the weighted average number of shares outstanding during the periods
presented. The computation of diluted earnings per share is based on the
weighted average number of outstanding common shares during the period plus,
when their effect is dilutive, additional shares assuming the exercise of
certain vested and non-vested stock options and warrants, reduced by the
number of shares which could be purchased from the proceeds.
The weighted average common shares and common equivalent shares
outstanding for purposes of calculating earnings per share were as follows:
For the Quarter
Ended March 31,
------------------------
2005 2004
---------- ----------
Weighted average common shares outstanding
used in basic earnings (loss) per share 3,433,308 3,350,603
Effect of dilutive stock options 150,769 234,757
Weighted average common shares and potential
dilutive common shares outstanding used in
dilutive earnings/loss per share 3,584,077 3,585,360
For the three months ended March 31, 2005 the Company had no additional
stock options that could potentially dilute earnings per share in the future
that were not included in the diluted computation.
Stock Options - The Company accounts for the stock option plans in
accordance with the recognition and measurement principles of APB Opinion No.
25, "Accounting for Stock Issued to Employees", and related Interpretations.
Under this method, compensation expense is recorded on the date of grant only
if the current market price of the underlying stock exceeds the exercise
price. The Corporation has adopted the disclosure-only provisions of Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Accordingly, no compensation cost under SFAS No. 123 has been
recognized for the stock option plans or other agreements in the accompanying
statement of operations. Had compensation cost for the Company's stock option
plans and agreements been determined based on the fair value at the grant date
for awards during the three months ended March 31, 2005 and 2004 consistent
with the provisions of SFAS No. 123, the Company's net income and earnings per
share would have been reduced to the pro forma amounts indicated below:
8
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
For the Quarter
Ended March 31,
----------------------
2005 2004
-------- --------
Net Income As reported $ 24,753 $ 17,165
Add: Stock-based employee compensation
expense included in reported net
income 1,300 1,300
Deduct: Total stock-based employee
compensation expense determined
under fair value based method (1,224) (3,425)
------- --------
Net Income Proforma $ 24,829 $ 15,040
======== ========
Basic earnings per share As reported $ .01 $ .01
Proforma $ .01 $ .00
Diluted earnings per share As reported $ .01 $ .00
Proforma $ .01 $ .01
During 2002, the Company issued a total of 60,000 options to a director
to purchase common stock at $2.54 per share, which was below the current
market value of the Company common stock of $2.80. The options vest equally
over 36 months. In accordance with APB 25, the Company recorded additional
paid in capital and deferred compensation expense of $15,600. The Company
recognized a total of $13,433 as of December 31, 2004 as compensation expense
in connection with this grant. For the three months ended March 31, 2005 and
March 31, 2004 the Company recognized $1,300 and $1,300 respectively as
deferred compensation expense.
NOTE 2 - INVENTORIES
Inventories are carried at the lower of cost or market with cost being
determined on the first-in, first-out method and consisted of the following at
March 31, 2005 and December 31, 2004:
March 31, 2005 December 31, 2004
-------------- -----------------
Raw materials & supplies $ 411,196 $ 389,364
Finished goods 898,641 730,810
---------- ----------
$1,309,837 $1,120,174
========== ==========
9
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 3 - RELATED PARTY TRANSACTIONS
The Company incurred $6,685 and $11,870 respectively, for the three
months ended March 31, 2005 and 2004, in accounting and consulting fees to
Polly, Scatena, Vasheresse & May, an accounting firm. The managing partner of
this firm, David B. Scatena, is a stockholder and director of the Company.
Services provided by the accounting firm are in the area of tax preparation
and related services, management and business consulting.
During the quarter ended March 31, 2005 the Company incurred $3,207 for
product development services performed by Fehling & Associates. Patricia
Fehling, owner of Fehling & Associates also currently serves as a director for
the Company.
NOTE 4 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
Estimated Useful December 31,
Life in Years March 31, 2005 2004
---------------- -------------- ------------
Office Equipment 3-10 $ 213,402 $ 210,802
Computer and Software 2-5 166,258 158,163
Plant Machinery & Equipment 5-20 3,812,270 3,809,006
Vehicles 7 23,061 23,061
Leasehold Improvements 3-10 1,829,422 1,829,422
----------- -----------
6,044,413 6,030,454
Accumulated Depreciation (4,589,963) (4,471,213)
----------- -----------
$ 1,454,450 $ 1,559,241
=========== ===========
During the three months ended March 31, 2005 and 2004, depreciation and
amortization expense amounted to $118,750 and $118,250, respectively.
NOTE 5 - STOCKHOLDERS' EQUITY
Common Stock:
During the quarter ended March 31, 2005, the Company issued 8,600 and
7,400 shares of stock at $2.54 and $2.69 per share, respectively, upon
exercise of stock options by employees and a former director under the 1993
stock option plan.
During the quarter ended March 31, 2004, the Company issued 15,000 and
30,000 shares of stock at $2.31 and $2.54 per share, respectively, upon
exercise of stock options by employees and a former director under the 1993
stock option plan.
10
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
Notes to Condensed Consolidated Financial Statements
March 31, 2005
(Unaudited)
NOTE 5 - STOCKHOLDERS' EQUITY (Continued)
Stock Options:
During March of 2004, the Company issued a total of 10,000 options to an
employee to purchase common stock at $3.55 per share. These options expired
partially unvested in January 2005 as the employee left the Company prior to
the options becoming vested.
As of March 31, 2005, the Company had 552,900 outstanding stock options
to purchase the Company's stock at prices ranging from $2.54 to $2.86 per
share to current and former employees, directors and former consultants,
expiring in December 2004 through August 2010.
Dividends:
On December 9, 2004, the Company's Board of Directors declared a regular
dividend of $.05 per share and a special dividend of $.10 per share that was
paid on January 31, 2005 to common stockholders of record on January 3, 2005
for a total of $515,282.
On February 2, 2005, the Board of Directors approved a regular dividend
of $0.05 per share on outstanding shares of the Company to be paid on April
29, 2005 to common stockholders of record on April 11, 2005 for a total of
$172,255.
NOTE 6 - SUBSEQUENT EVENT
On February 2, 2005, the Board of Directors approved a regular dividend
of $0.05 per share on outstanding shares of the Company to be paid on April
29, 2005 to shareholders of record on April 11, 2005 for a total of $172,255.
On April 30, 2005 340,000 stock options with an exercise price of $2.54
expired. These options had all been granted to directors and former directors
of the Company.
On May 11, 2005, the Company's board of directors resolved to rescind its
previous decision to voluntarily terminate its SEC registration and NASDAQ
listing. The board is considering its options while it awaits the outcome of
two initiatives regarding the 404 compliance section of the 2002
Sarbanes-Oxley law.
11
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
This Quarterly Report on Form 10-QSB contains forward-looking statements
(as such term is defined in the Private Securities Litigation Reform Act of
1995), and information relating to the Company that is based on beliefs of
management of the Company, as well as assumptions made by and information
currently available to management of the Company. When used in this Report,
the words "estimate," "project," "believe," "anticipate," "intend," "expect,"
and similar expressions are intended to identify forward-looking statements.
Such statements reflect the current views of the Company with respect to
future events based on currently available information and are subject to
risks and uncertainties that could cause actual results to differ materially
from those contemplated in such forward-looking statements. Readers are
cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date hereof. The Company does not undertake any
obligation to release publicly any revisions to these forward looking
statements to reflect events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.
RESULTS OF OPERATIONS
Net sales for the quarter ended March 31, 2005 were $3,129,268 compared
to $3,055,659 for the quarter ended March 31, 2004. Overall sales during the
first quarter of 2005 increased by by $73,609 over the same period in 2004.
The increase in sales is primarily attributed to higher sauce sales.
The Company continues to focus its efforts on increasing its customer
base through various sales programs, growth within our market segment and the
development of new products. Promotional and marketing programs are used with
various distributors and retail outlets to support existing sales and develop
recognition of the Company's products. The Company has recently expanded its
sales force and promotional efforts to build additional sales. The research
and development department assists the sales effort by developing new and
innovative uses for the Company's products as well as formulating products
that meet specific needs of our customers.
Cost of goods sold as a percentage of net sales was 69.3% for the quarter
ended March 31, 2005 as compared with 69.0% for the quarter ended March 31,
2004. This slight decrease is a continuance of the previous sales mix shift
to pesto products which can be produced at lower cost.
Operating expenses as a percentage of net sales were 30.0% for the
quarter ended March 31, 2005 compared to 30.6% for the quarter ended March 31,
2004. The slightly lower cost of operating is a result of management's
ability to become more efficient in its use of personnel.
Net income from continuing operations for the quarter ended March 31,
2005 was $24,753 compared to $17,165 for the quarter ended March 31, 2004.
This increase in net income is the result of sales of a more favorable product
mix, as well as a better managed production schedule taking advantage of the
resources available to the Company. The Company believes it will continue to
be able to take advantage of its current selling mix, its dedication to
manufacturing excellence at a competitive cost and by remaining competitive
through developing new products and more uses for its current product lines.
This is expected to continue to produce favorable financial results, even in
the face of ever stronger competition and a volatile purchasing environment.
12
PART I - FINANCIAL INFORMATION
ARMANINO FOODS OF DISTINCTION, INC. AND SUBSIDIARY
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 2005, the Company had working capital of $4,268,110 as
compared to $4,267,811 at December 31, 2004. The minimal change in working
capital is due primarily to management's efforts to conserve capital while
experiencing only a small increase in net income. Quick assets of $3,710,558
are comprised of cash, cash equivalents, certificates of deposit and accounts
receivable. Management believes that this level of working capital is
adequate to meet anticipated needs for liquidity as well as managed growth for
at least the next twelve months.
During the three months ended March 31, 2005, cash provided by operating
activities was $260,241, compared to $133,857 for the three months ended March
31, 2004. The increase primarily attributable to non-cash depreciation, net
income and decreases in accounts receivable and prepaid items offset by
decreases in accounts payable and increases of inventory. .
During the three months ended March 31, 2005, cash used by investing
activities of the Company totaled $275,685 compared to $323,314 for the three
months ended March 31, 2004. This decrease was primarily the result of the
Company purchasing Certificates of Deposit in order to obtain a better return
on available cash reserves. Additionally, cash used to purchase fixed assets
were almost completely offset by proceeds from the related [?] direct
financing lease.
During the three months ended March 31, 2005 cash used by financing
activities of the Company amounted to $473,572 compared to $222,677 for the
same period ended March 31, 2004. This was due to a regular and special
dividend declared in 2004 and paid in the first quarter of 2005 partially
offset by proceeds from the exercise of stock options.
Subsequent to March 31, 2005 the Company paid a dividend in the amount of
$172,255 that was declared during the first quarter of 2005.
The Company presently has no commitments for material capital
expenditures.
ITEM 3: CONTROLS AND PROCEDURES
As of March 31, 2004, under the supervision and with the participation of
the Company's Chief Executive Officer and the Principal Financial Officer,
management evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures. Based on that evaluation, the
Chief Executive Officer and Principal Financial Officer concluded that the
Company's disclosure controls and procedures were effective as of March 31,
2004. There were no changes in internal control over financial reporting that
occurred during the fiscal quarter covered by this report that have materially
affected, or are reasonably likely to affect, the Company's internal control
over financial reporting.
The Company's internal controls have continued to be monitored under the
supervision of the Company's Chief Executive Officer and the Principal
Financial Officer. Together with management, the officers believe the
Company's disclosure controls and procedures continue to be effective as of
March 31, 2005.
13
PART II
OTHER INFORMATION
II. OTHER INFORMATION
Item 1. Legal proceedings
None
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters To A Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits
31.1 Certification of Chief Filed herewith electronically
Executive Officer
Pursuant to Section 302
of the Sarbanes-Oxley Act
of 2002
31.2 Certification of Chief Filed herewith electronically
Financial Officer
Pursuant to Section 302
of the Sarbanes-Oxley Act
of 2002
32.1 Certification of Chief Filed herewith electronically
Executive Officer Pursuant
to 18 U.S.C. Section 1350
32.2 Certification of Chief Filed herewith electronically
Financial Officer Pursuant
to 18 U.S.C. Section 1350
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on behalf of the
undersigned thereunto duly authorized.
ARMANINO FOODS OF DISTINCTION, INC.
Dated: May 12, 2005 By: /s/ William J. Armanino
William J. Armanino
President
Chief Executive Officer
By: /s/ Edmond J. Pera
Edmond J. Pera
Secretary
Treasurer
Chief Operating Officer
(Principal Financial Officer)
15