U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-SB/A
(Amendment No. 4)
GENERAL FORM FOR REGISTRATION OF SECURITIES
OF SMALL BUSINESS ISSUERS UNDER SECTION 12(b)
OR 12(g) OF THE SECURITIES ACT OF 1934
Pinnacle Foods, Inc.
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(Name of Small Business Issuer in Its Charter)
Pennsylvania 23-3008972
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
980 Glasgow Street, Pottstown, PA 19464
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(Address of Principal Executive Offices) (Zip Code)
(610) 705-3620
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(Issuer's Telephone Number)
Securities to be registered under Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
to be so Registered Each Class is to be Registered
None
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Securities to be registered under Section 12(g) of the Act:
Common Stock, Par Value $0.01 per Share
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(Title of Class)
INDEX
Page
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PART I
Item 2. Management's Discussion and Analysis or Plan of Operation 3
PART II
Item 2. Legal Proceedings 4
Item 4. Recent Sales of Unregistered Securities 4
PART F/S Financial Statements 7
2
PART I
Item 2. Management's Discussion and Analysis or Plan of Operation
The discussion of the results of operation for the six months ended
June 30, 2001 is hereby amended and restated in its entirety to read as follows:
Sales for the six month period ended June 30, 2001 were $19.0 million
which represented an increase of approximately $16.9 million over sales from the
corresponding period of 2000. This increase was almost exclusively the result of
the increase in the volume of products handled, but also partially due to a
change in the mix of products sold in favor of higher priced items. As the
diversity of services that the Company offers continues to grow, customers are
increasing the range of products ordered as well as the quantity. The Company
anticipates a continuing growth in sales throughout the remainder of 2001 and
expects revenues to reach between $40 million and $45 million for the entire
year. Although the Company perceives an increasing demand for its services, its
existing facilities limit the revenues which can be generated from its
operations. Consequently, the Company has been searching for alternative or
additional production space for some time but thus far has been unsuccessful in
locating appropriate facilities.
In the six months ended June 30, 2000, the Company sold product to
seven customers. Those customers in the aggregate purchased $8.2 million more of
Company product in the first six months of 2001 than they did in the first six
months of 2000. Sales to new customers in the comparable period of 2001
accounted for the balance of the increase in Company revenues ($8.7 million).
The concentration of revenue by customer source is as follows:
Percentage of Company Revenues
Six Months Ended June 30
----------------------------------------------
2000 2001
-------------------- ----------------------
Largest single customer 72% 50%
Three largest customers 96% 93%
These percentages are generally consistent with those of prior years. See Part
I, Item 1, "Business."
Cost of sales for the six month period ended June 30, 2001 was $18.7
million which resulted in a gross profit of approximately $0.3 million. The
Company's revenues did not cover the cost of sales in the corresponding period
of 2000. Operating expense for the six month period ended June 30, 2001 was $1.6
million, approximately $1.0 million larger than in the corresponding period of
2000. At the end of the first quarter, the Company moved substantially all of
its Philadelphia operation to the Pottstown facility in an effort to control
production costs more effectively.
Interest expense, net for the six month period ended June 30, 2001, was
$0.1 million, and the net loss for the period was approximately $1.4 million.
Although the Net Loss for the six month period ended June 30, 2001 is larger
than the loss for the corresponding period last year, the Company believes that
moving its operations from Philadelphia will reduce future operating costs and
improve the Company's net income.
3
PART II
Item 2. Legal Proceedings.
The final four paragraphs of Part II, Item 2, "Legal Proceedings" are
amended and restated in their entirety to read as follows:
During 2000, the Company engaged Robert V. Matthews, a shareholder, to
assist the Company in obtaining debt financing to be used for a potential
expansion into New England and for working capital purposes. At the time the
Agreement was signed, Mr. Matthews was also the holder of a note payable by the
Company in the face amount of $0.3 million. The agreement between the Company
and Mr. Matthews provided that the Company would issue 1.1 million shares of
Company common stock to him on February 1, 2001. The agreement further provided
that, upon the closing of debt financing in the amount of at least $9.5 million
procured pursuant to the agreement, the Company would issue a second group of
1.1 million shares of Company common stock to Mr. Matthews. The Company received
two offers of financing which were individually and in the aggregate
substantially below the threshold amount required by the Agreement. Because
these proposed transactions were inconsistent with and far less attractive than
those contemplated by the Agreement, the Company rejected them. The Company
terminated the agreement in accordance with its terms on April 6, 2001.
The agreement also provided that if, prior to the completion of such
debt financing and prior to the termination of the agreement, more than 30% of
the Company's outstanding shares of common stock were sold in a single
transaction or a series of related transactions, Mr. Matthews would be entitled
to receive the second group of 1.1 million shares. The agreement further
provided that if the Company sold new shares at a price of less than $2.50 per
share at any time after Mr. Matthews became entitled to receive the second group
of 1.1 million shares, the number of shares otherwise deliverable pursuant to
the agreement would be increased in accordance with a formula that varies
inversely with the sales price for such newly sold shares. Finally, the
agreement granted Mr. Matthews an option to acquire, for no additional
consideration, up to 2,000,000 additional shares of Company common stock if any
such debt financing were forgiven by the lender(s) under specified
circumstances. Because none of the contingencies described in this paragraph
occurred, the Company does not believe it has liability to Mr. Matthews for any
shares referred to in this paragraph.
Moreover, the Company has asserted that it was improperly induced to
enter into the agreement by statements and representations made by Mr. Matthews
and disputes its obligation to deliver even the first group of 1.1 million
shares of Company common stock. Mr. Matthews contests the Company's assertions
and has threatened to commence litigation against the Company.
Under the agreement with Mr. Matthews, the Company's debt to him
stopped accruing interest and was required to be converted to shares of Company
Common Stock at a conversion price of $1 per share. This debt was treated as
converted in accordance with this agreement, but the share certificate has not
been delivered to Mr. Matthews pending resolution of the dispute.
Item 4. Recent Sales of Unregistered Securities.
Item 4. is hereby amended and restated in its entirety to read as
follows:
The following table sets forth information about all Company securities
sold for cash or property since the Company was organized in July of 1999, none
of which were registered under the Securities Act of 1933:
4
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Date Type of Securities Sold Amount of Price Total Cash
---- ----------------------- --------- ----- ----------
Securities Sold Proceeds
--------------- --------
July 21, 1999 (1) Common Stock (2) 6,000,000 shares $0.01 per share $60,000
November 1, 1999 (3) Common Stock (2) 2,250,000 shares $0.16 per share $360,000
February 1, 2000 (4) Common Stock (2) 640,000 shares $1.00 per share $640,000
May 31, 2000 (5) Convertible Debenture (6) $275,000 Par $275,000
June 29, 2000 (5) Convertible Debenture (7) $300,000 Par $300,000
June 29, 2000(5) Convertible Debenture(8) $100,000 Par $100,000
July 27, 2000 (5) Convertible Debenture (6) $370,240 Par $370,240
July 31, 2000 (9) Common Stock (2) 140,000 shares $0.95 per share _____(10)
August 10, 2000 (5) Common Stock (2) 472,000 shares $0.75 per share $354,000
September 20, 2000 (5) Convertible Debenture (11) $ 350,000 Par $350,000
October 5, 2000 (9) Common Stock (2) 62,300 shares $2.75 per share _____(12)
October 30, 2000 (5) Common Stock (2) 163,000 shares $1.50 per share $250,000
June 27, 2001 (13) Common Stock 13,003,494 shares $0.45 per share $6,000,000
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_________________
(1) Shares were sold to four founders and two early investors upon formation of
the Company in an offering exempt from registration pursuant to Section
4(2) of the Securities Act of 1933.
(2) Common Stock, par value $0.01 per share.
(3) Sale made pursuant to Rule 504 promulgated under the Securities Act of
1933. Sales were made to 56 investors in accordance with the requirements
of the rule.
(4) Sale made pursuant to Rule 506 promulgated under the Securities Act of
1933. Sales were made to 18 accredited investors in accordance with the
requirements of the Rule.
(5) Sale made pursuant to Rule 506 promulgated under the Securities Act of
1933. Sales were made to 17 accredited investors in accordance with the
requirements of the Rule.
(6) Debentures are convertible into Common Stock at a price of $0.75 per share.
(7) Debenture is convertible into Common Stock at a price of $1.00 per share
and is the subject of a dispute between the Company and Robert V. Matthews.
See Part II, Item 2, "Legal Proceedings."
(8) Debenture is convertible into Common Stock at a price of $1.50 per share.
(9) The shares were sold to a single purchaser in a transaction exempt from
registration pursuant to Section 4(2) of the Securities Act of 1933.
(10) The consideration paid for the shares was meat processing equipment valued
at fair market value based on the vendor's invoice in the amount of
$132,480.
(11) Debentures are convertible into Common Stock at a price of $1.25 per share.
(12) The consideration paid for the shares was meat processing equipment valued
at fair market value based on the vendor's invoice in the amount of
$171,325.
(13) See, Part I, Item 1, "Business -- Smithfield Transaction." The sale was
exempt from registration pursuant to Section 4(2) of the Securities Act of
1933.
5
The Company engaged no underwriters in connection with any such sales,
and no underwriting discounts or commissions were paid. All convertible
debentures (other than the $0.3 million held by Mr. Matthews) listed in the
foregoing table were converted to shares of common stock in accordance with
their terms on various dates between November 22, 2000 and December 31, 2000.
Each such conversion was exempt from registration pursuant to Section 3(a)(9) of
the Securities Act of 1933.
The Company and Robert V. Matthews, are parties to an agreement dated
November 22, 2000 under which Mr. Matthews was required to act as an independent
debt financing broker and consultant for the Company. In the agreement, the
Company agreed to issue certain shares to Mr. Matthews; however, the Company
disputes his right to receive these shares. Mr. Matthews is a shareholder of the
Company and was also the holder of a note payable in the face amount of $0.3
million. See Part II, Item 2, "Legal Proceedings." If the shares are required to
be issued to Mr. Matthews, the transaction will be exempt from registration
pursuant to Section 4 (2) of the Securities Act of 1933.
250,000 Shares of Company Common Stock were issued to each of Messrs.
Queen and Lundy in consideration for their guaranteeing the Company's bank debt
(see Part I, Item 7, "Certain Relationships and Related Transactions"). These
share transactions were exempt from registration pursuant to Section 4(2) of the
Securities Act of 1933.
The following shares were also delivered for compensation and
consulting services and for the payment of interest in lieu of cash:
Type of Number
Class of Securities of Shares
Date Recipients Issued Issued Valuation 1 Purpose
---- ---------- ------ ------ ----------- -------
January, 2000 2 Key Employees Common Stock 2 80,000 $0.16 Compensation for Services
June, 2000 1 Individual Common Stock 2 205,000 $0.16 Compensation for Services
Consultant
October, 2000 4 Individual Common Stock 2 200,000 $0.16 Compensation for Services
Consultants
October, 2000 1 Individual Common Stock 2 50,000 $0.20 Compensation for Services
Consultant
October, 2000 1 Individual Common Stock 2 25,000 $1.32 Compensation for Services
Consultant
September, 2000 1 Financial Common Stock 3 100,000 $1.32 Compensation for Services
Organization
October, 2000 1 Financial Common Stock 3 30,000 $1.32 Compensation for Services
Organization
June, 2000 and 10 Debenture Common Stock 4 209,998 _________5 Interest on Debentures
March, 2001 Holders
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Total 899,998
============
_________
1 Per Share
2 Exempt from registration under Rule 701 promulgated under the Securities
Act of 1933.
3 Exempt from registration under Section 4(2) of the Securities Act of 1933.
4 Exempt from registration under Rule 506 promulgated under the Securities
Act of 1933 and Section 3(a)(9) thereof.
5 Various prices up to $1.69 per share.
6
PART F/S
Unaudited Financial Statements for the Three and Six Month Periods
Ended June 30, 2001 and 2000
7
PINNACLE FOODS, INC.
Balance Sheet
June 30, 2001
(Unaudited)
ASSETS
Current Assets:
Cash 4,303,774
Trade Receivables, less Allowance of $25,595 2,693,716
Inventory 862,681
Prepaid Expenses 39,544
-----------
Total Current Assets 7,899,715
Fixes Assets:
Property and Equipment 3,555,911
Less Accumulated Depreciation (622,871)
-----------
Total Fixed Assets 2,893,040
Other Assets: 33,494
Total Assets: 10,826,249
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current Installments on Capital Lease Obligations 264,903
Accounts Payable 4,326,210
Notes Payable 300,000
Accrued Expenses 279,268
-----------
Total Current Liabilities 5,170,381
Capital Lease Obligations less Current Installments 824,742
Stockholders' Equity:
Common Stock 266,134
Additional Paid-in Capital 11,811,147
Deficit (6,879,837)
Deferred Compensation (366,318)
-----------
Total Stockholders' Equity 4,831,126
Total Liabilities and Stockholders' Equity 10,826,249
===========
See notes to condensed financial statements.
8
PINNACLE FOODS, INC.
Statement of Operations
(Unaudited)
For the Three Month For the Six Month
Period Ended June 30, Period Ended June 30,
----------------------------- ------------------------------
2001 2000 2001 2000
---- ---- ---- ----
Sales 10,950,870 1,359,258 18,968,494 2,116,367
Cost of Goods Sold 11,149,793 1,473,500 18,657,839 2,390,856
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Gross Profit (Loss) (198,923) (114,242) 310,655 (274,489)
Depreciation & Amortization 148,943 70,801 292,424 112,834
General & Administrative Expenses 595,298 306,084 1,297,996 457,618
---------------------------------------------------------------
Operating Expenses 744,241 376,885 1,590,420 570,452
---------------------------------------------------------------
Loss from Operations (943,164) (491,127) (1,279,765) (844,941)
Other Expenses
Interest (Net) 48,907 186,780 117,056 208,174
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Net Loss (992,071) (677,907) (1,396,821) (1,053,115)
===============================================================
Loss Per Share
Basic (0.07) (0.08) (0.11) (0.12)
Diluted (0.07) (0.08) (0.10) (0.12)
Weighted Average Shares Outstanding
Basic 13,575,076 8,667,692 12,676,285 8,461,167
Diluted 13,575,076 8,667,692 12,676,285 8,461,167
See notes to condensed financial statements.
9
PINNACLE FOODS, INC.
Statement of Cash Flows
(Unaudited)
Six Month Period Ended June 30,
----------------------------------
2001 2000
---- ----
Cash flows used for operating activities:
Net Loss (1,396,821) (1,053,115)
Adjustments:
Depreciation & Amortization 293,024 112,834
Deferred Compensation 52,332 --
Common Stock issued for:
Interest 23,818 166,000
Consulting 128,000 --
Compensation -- 125,600
Changes in assets and liabilities
Trade Receivables (1,403,522) (343,445)
Other Receivables 95,410
Inventory (384,916) (164,394)
Prepaid Expenses 10,290 --
Accounts Payable 1,438,335 622,322
Accrued Expenses 2,963 120,226
------------ ------------
Net cash used for operating activities (1,141,087) (413,972)
Net cash used for investing activities:
Purchase of property and equipment (343,561) (668,872)
Other Assets 5,204 259
------------ ------------
Net cash used for investing activities (338,357) (668,613)
Cash flows from financing activities:
Proceeds from issuance of stock, net 5,923,418 640,000
Proceeds from issuance of debt -- 795,000
Repayments on debt -- (110,645)
Repayments on capital lease obligations (140,200) (53,923)
------------ ------------
Net cash provided by financing activities 5,783,218 1,270,432
------------ ------------
Net increase in cash 4,303,774 187,847
Cash, beginning of year -- 92,271
------------ ------------
Cash, end of period $ 4,303,774 280,118
=========== ============
Supplemental disclosure of cash flow information:
Interest paid during the period $ 51,096 $ 39,301
=========== ============
Purchase of equipment under capital lease agreements $ 181,775 $ 344,507
Debt converted into common stock 100,000
See notes to condensed financial statements.
10
Pinnacle Foods, Inc.
Statement of Stockholders' Equity
Six Month Period ended June 30, 2001
(Unaudited)
Common Stock
$.01 par value
50,000,000 shares
authorized
-------------------------
Additional
Shares issued paid-in Deferred
or issuable Amount capital Deficit Compensation Total
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Balance, January 1, 2001 13,367,298 $ 133,673 $ 5,768,372 $(5,483,016) (418,650) $ 379
Net loss (1,396,821) (1,396,821)
Grant of compensatory options 52,332 52,332
Common stock issued or issuable for:
Cash, net 13,003,494 130,035 5,793,383 5,923,418
Consulting 160,000 1,600 126,400 128,000
Interest 15,879 159 23,659 23,818
Convertible Debt 66,667 667 99,333 100,000
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Balance, June 30, 2001 26,613,338 $ 266,134 $11,811,147 $(6,879,837) (366,318) $ 4,831,126
===================================================================================
See notes to condensed financial statements.
11
Pinnacle Foods, Inc.
Notes to Condensed Financial Statements
June 30, 2001
(Unaudited)
1. Basis of presentation.
The unaudited condensed financial statements have been prepared by the
Company, pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Certain information and footnote disclosures normally included
in financial statements prepared in accordance with generally accepted
accounting principles have been omitted pursuant to such SEC rules and
regulations; nevertheless, the Company believes that the disclosures are
adequate to make the information presented not misleading. These financial
statements and the notes hereto should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual Report on Form
10-SB. In the opinion of the Company, all adjustments, including normal
recurring adjustments necessary to present fairly the financial position of
Pinnacle Foods, Inc. as of June 30, 2001 and the results of its operations and
cash flows for the three and six month then ended, have been included. The
results of operations of the interim period are not necessarily indicative of
the results for the full year.
2. Accounting policies.
There have been no changes in accounting policies used by the Company
during the quarter ended June 30, 2001.
3. Summary of business.
Pinnacle Foods, Inc. (the Company), incorporated on July 20, 1999 in
the Commonwealth of Pennsylvania, prepares case-ready meat for distribution to
food retailers in the Northeastern United States. It grants credit to its
customers without requiring collateral.
4. Inventory.
The Company's inventories are valued at the lower of first-in,
first-out cost or market. Inventories consist of the following:
Beef, pork, veal, lamb 319,455
Packaging supplies 277,611
Finished Goods 265,615
-------------
862,681
5. Notes payable.
During 2001, the Company repaid $100,000 of convertible bonds with its
common stock. The conversation ratio for this borrowing $1 per share.
At June 30, 2001, the Company had another note payable for $300,000.
This note is unsecured and non-interest bearing. The note holder has the option
of converting the loan into common stock at a conversion rate of $1 a share
prior to August 1, 2001. If the conversion right has not been exercised by
August 1, the note is automatically converted at $1 per share.
12
6. Stock options.
During 2001, the Company granted 375,000 stock options with exercise
prices ranged from $1 to $1.25 per share. In addition, 25,000 shares were
forfeited.
7. Net income (loss) per share.
Basic earnings per share (EPS) is computed using the weighted average
number of common shares outstanding during the period. Diluted EPS is computed
using the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Dilutive common equivalent shares consist
of common stock issuable upon exercise of stock options. No adjustments to
earning were made for purposes of per share calculations. There were no dilutive
potential common shares in 2001 or 2000 because the assumed exercise of the
options would be anti-dilutive.
8. Stockholders' equity.
In June 2001, the Company entered into an agreement with Smithfield
Foods, Inc. ("Smithfield") in which Smithfield purchased shares of the Company
which resulted in Smithfield owning 50% of the issued shares for $6,000,000. In
addition, Smithfield provided the Company with a $30,000,000 revolving loan. The
loan will bear interest at 1% above prime and will be secured by all the
Company's assets, and will mature in five years.
9. Smithfield Transaction.
In June of 2001, the Company entered into an agreement with Smithfield
Foods, Inc. ("Smithfield") in which Smithfield purchased shares of the Company
which resulted in Smithfield's owning 50% of the issued and outstanding shares
upon completion of the transaction for a purchase price of $6,000,000. In
conjunction with the Smithfield transaction noted above, Smithfield provided the
Company with a $30,000,000 revolving line of credit. The Company's outstanding
balance under the line of credit bears interest at 1% above prime and is secured
by all of the Company's assets. The loan will mature in five years. At June 30,
2001, the Company had no outstanding balance under the line of credit. For
additional information, please see Part I, Item 1, "Business - Smithfield
Transaction."
13
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934,
the registrant caused this amended registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized.
PINNACLE FOODS, INC.
Date: December 12, 2001 By: /s/ Michael D. Queen
-------------------------------
Michael D. Queen
14