UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: January 31, 2004 Commission File Number: 1-14091
SHERWOOD BRANDS, INC.
(Exact name of Registrant as specified in its charter)
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North Carolina |
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56-1349259 |
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(State or other jurisdictions of |
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(I.R.S. Employer |
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1803 Research Boulevard, Suite 201 |
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(Address of principal executive offices) |
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Registrant’s telephone number, including area code: (301) 309-6161 |
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports and (2) has been subject to such filing requirement for the past 90 days.
Yes ý No o
Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes o No ý
The number of shares outstanding of the registrant’s Class A Common Stock, $.01 par value per share, as of March 11, 2004 was 3,021,531. The number of shares outstanding of the registrant’s Class B Common Stock, $.01 par value per share, as March 11, 2004 was 1,000,000. The Class B Common Stock is not publicly traded.
Transitional Small Business Disclosure Format (check one):
Yes o No ý
SHERWOOD BRANDS, INC.
INDEX
SHERWOOD BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
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January 31, 2004 |
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July 31, 2003 |
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(unaudited) |
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(audited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
67,959 |
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$ |
227,352 |
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Accounts receivable, less allowance of $239,000 and $92,000 |
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4,211,597 |
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899,230 |
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Inventory |
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13,068,732 |
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13,719,294 |
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Income taxes receivable |
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1,020,428 |
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1,020,379 |
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Other current assets |
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566,634 |
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578,155 |
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Deferred taxes on income |
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614,000 |
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614,000 |
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Total current assets |
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19,549,350 |
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17,058,410 |
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Net property and equipment |
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6,671,537 |
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7,129,227 |
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Goodwill |
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2,001,330 |
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2,001,330 |
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Other assets |
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150,952 |
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313,504 |
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TOTAL ASSETS |
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$ |
28,373,169 |
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$ |
26,502,471 |
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Liabilities and Stockholders’ Equity |
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Current liabilities |
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Line of credit |
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$ |
5,618,497 |
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$ |
6,260,264 |
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Current portion of long-term debt |
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530,377 |
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530,377 |
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Current portion of subordinated debt |
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2,000,000 |
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2,000,000 |
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Current portion of capital lease obligation |
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15,718 |
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15,718 |
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Accounts Payable |
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6,471,219 |
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6,257,145 |
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Accrued expenses |
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1,052,255 |
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1,325,891 |
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Total current liabilities |
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15,688,065 |
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16,389,395 |
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Deferred taxes on income |
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464,000 |
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464,000 |
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Long-term debt |
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905,553 |
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1,150,513 |
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Obligations under capital lease |
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416,150 |
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423,892 |
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TOTAL LIABILITIES |
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17,473,768 |
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18,427,800 |
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Stockholders’ equity |
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Preferred stock, $.01 par value, 5,000,000 shares authorized; no shares issued or outstanding |
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— |
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— |
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Common stock, Class A, $.01 par value, 30,000,000 shares authorized, 3,018,476 and 3,003,476 shares issued and outstanding |
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30,185 |
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30,035 |
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Common stock, Class B, $.01 par value, 5,000,000 shares authorized, 1,000,000 shares issued and outstanding |
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10,000 |
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10,000 |
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Additional paid-in-capital |
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9,877,280 |
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9,843,774 |
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Retained earnings (deficit) |
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981,936 |
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(1,809,138 |
) |
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TOTAL STOCKHOLDERS’ EQUITY |
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10,899,401 |
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8,074,671 |
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TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY |
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$ |
28,373,169 |
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$ |
26,502,471 |
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See accompanying summary of accounting policies and notes to consolidated financial statements
1
SHERWOOD BRANDS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
UNAUDITED
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Three Months Ended |
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Six Months Ended January 31, |
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2004 |
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2003 |
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2004 |
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2003 |
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Net sales |
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$ |
17,413,159 |
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$ |
19,390,601 |
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$ |
34,833,972 |
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$ |
37,852,813 |
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Cost of sales |
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12,156,930 |
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14,343,300 |
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24,541,072 |
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27,299,042 |
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Gross profit |
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5,256,229 |
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5,047,301 |
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10,292,900 |
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10,553,771 |
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Selling, general and administrative expenses |
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2,494,317 |
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2,748,809 |
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4,725,834 |
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5,312,509 |
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Salaries and related expenses |
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1,056,186 |
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1,283,401 |
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2,119,168 |
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2,458,409 |
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Pre production costs |
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— |
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880,440 |
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— |
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1,384,376 |
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Total operating expenses |
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3,550,503 |
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4,912,650 |
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6,845,002 |
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9,155,294 |
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Income from operations |
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1,705,726 |
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134,651 |
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3,447,898 |
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1,398,477 |
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Other income (expense) |
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Interest income |
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41 |
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233 |
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60 |
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2,492 |
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Interest expense |
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(293,964 |
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(196,015 |
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(530,730 |
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(337,072 |
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Other (expense)income |
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(130,729 |
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(63,711 |
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(126,191 |
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(62,175 |
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Total other (expense)income |
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(424,651 |
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(259,493 |
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