A shareholder of the Company has paid expenses on behalf of the Company in exchange for a note payable bearing no interest and due on demand. The balance payable to the shareholder at November 30, 2012 and August 31, 2012 was $1,944 respectively.
For income tax purposes, the Company has elected to capitalize start-up costs incurred during the period from May 11, 2010 (inception) through November 30, 2012 totaling $122,054. The start-up costs are being amortized over sixty months beginning in the year of initial operations.
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At November 30, 2012, the Company had no amounts in excess of FDIC insured limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden possible failures of such institutions.
Basic loss per common share has been calculated based on the weighted average number of shares outstanding during the period after giving retroactive effect to stock splits.
** Less than $0.01.
Our primary focus over the course of the next 12 months will be to concentrate on increasing sales of our initial products in the commercial marketplace and establishing additional channels of distribution for the marketing of our products.
We were recently formed and all activity to date has been related to our formation of our business, formulation of our business plan and initial start-up operations such as formulating and testing recipes, investigating sources of supply for raw materials and services, investigating potential distribution channels for our products and development of our proposed financing. Our ability to proceed with our plan to enter the commercial marketplace with our initial product depends upon our obtaining adequate financial resources through this offering. As of November 30, 2012, we had not incurred any material costs or expenses other than those associated with the formation and financing of our company.
DIXIE FOODS INTERNATIONAL, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
THREE MONTH PERIODS ENDED NOVEMBER 30, 2012 AND 2011
NOTES TO CONSOLIDATED UNAUDITED FINANCIAL STATEMENTS
NOTE 9 GOING CONCERN
As reflected in the accompanying financial statements, the Company had a net loss for the three month period ended November 30, 2012 of $6,454, and net loss for the period from May 11, 2010 (inception) through November 30, 2012 of $122,054, At November 30, 2012, the Company has minimal operating revenues. The ability of the Company to continue as a going concern is dependent on the Companys ability to further implement its business plan and raise capital. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is currently a development stage company and its continued existence is dependent upon the Companys ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products increase beyond current levels, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Companys operations may cease to exist.
NOTE 10 SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred subsequent to November 30, 2012 through December 18, 2012, the date the financial statements were issued, for potential recognition or disclosure in the accompanying financial statements. Other than the disclosures shown below, the Company did not identify any events or transactions that should be recognized or disclosed in the accompanying financial statements.
Subsequently, during December 2012 the Company sold 400,000 shares of Common Stock at $0.02 per share to three investors, for a total of $8,000.
In June 2012 our Board of Directors approved the issuance of 20,000 shares of common stock to each of our five directors, 100,000 shares in total, 40,000 shares of our common stock to our Vice President as compensation and 20,000 shares of our common stock for legal services rendered. Such issuances were subject to our common stock being approved for broker dealer market making by FINRA and initiation of trading. Such conditions were met as of December 12, 2012.
Subsequently, On December 12, 2012, the Company issued 20,000 shares of common stock for legal services rendered at $0.02 per share, for a total of $400.
Subsequently, On December 12, 2012, the Company issued 40,000 shares of common stock for services rendered to the Companys Vice President a related party at $0.02 per share, for a total of $800.
Subsequently, On December 12, 2012, the Company issued 100,000 shares of common stock to directors for services rendered at $0.02 per share, for a total of $2,000.
- 11 -
Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
FORWARD LOOKING INFORMATION
The following discussion and analysis of the Companys financial condition and results of operations should be read with the condensed financial statements and related notes contained in this quarterly report on Form 10-Q (Form 10-Q). All statements other than statements of historical fact included in this Form 10-Q are, or may be deemed to be, forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve known and unknown risks, uncertainties and other factors that may cause the Companys actual results, levels of activity, performance or achievements to be materially different than any expressed or implied by these forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, will, should, expects, plans, anticipates, believes, estimates, predicts, potential, continue, or the negative of these terms or other comparable terminology. Important factors that could cause actual results to differ materially from those discussed in such forward-looking statements include: 1. General economic factors including, but not limited to, changes in interest rates and trends in disposable income; 2. Information and technological advances; 3. Cost of products sold; 4. Competition; and 5. Success of marketing, advertising and promotional campaigns. The Company is subject to specific risks and uncertainties related to its business model, strategies, markets and legal and regulatory environment. You should carefully review the risks described in this Form 10-Q and in other documents the Company files from time to time with the SEC. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Form 10-Q. The Company undertakes no obligation to publicly release any revisions to the forward-looking statements to reflect events or circumstances after the date of this document.
We were organized in May 2010 as a Florida corporation to operate a specialty food business for salad dressing, sauces and condiments. In August 2012 we commenced commercial production and sale of our first two products which are two versions of barbeque sauce under the DIXIE GOLD trademark. The products have achieved distribution in retail outlets in Central and South Florida.
Our offices are located at 115 N.E. 6th Blvd, Williston, FL 32696 and our phone number is (800) 366-5174.
Results of Operations
In the three months ended November 30, 2012 the Company had $1,126 in sales of products and $509 in Cost of Sales. Selling, general and administrative expenses were $6,903 and depreciation was $168. As a result the Company lost $6,454 in the three months ended November 30, 2012.
In the three months ended November 30, 2011 we had $0 in sales of products and $0 in Cost of Sales. Selling, general and administrative expenses were $7,536 and depreciation was $96. As a result we lost $7,632 in the three months ended November 30, 2011
Liquidity and Capital Resources
During the three months ended November 30, 2012, working capital decreased $3,286 to a deficit of ($1,458) from a surplus of $1,828. The primary reason for the decrease was the decrease in cash of $478 and inventories of $509 and an increase in accounts payable of $6,499, offset by a decrease of $4,200 in accrued expenses During this same period, stockholders equity decreased $3,454 to $1,096 from $4,550. The decrease in stockholders equity is due to the net loss for the period of ($6,454) offset by the net proceeds from the sale of the common stock $3,000.
Net cash used in operating activities was $3,478 for the three months ended November 30, 2012. In the 2012 period cash was used by our loss from operations and decreases in accrued expenses offset by cash provided by our increase in accounts payable and decreases in inventories.
Net cash used in operating activities was $10,479 for the three months ended November 30, 2011. In the 2011 period cash was used by our loss from operations and decreases in accrued expenses offset by cash provided by our increase in accounts payable.
- 12 -
Net cash provided by financing activities for the three months ended November 30, 2012 was $3,000 and reflects common stock issued for cash described below.
Recent Financing Transactions
During the quarter ended November 30, 2012, the Company sold 150,000 shares of Common Stock at $0.02 per share, for a total of $3,000.
Off Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we are required to disclose pursuant to these regulations. In the ordinary course of business, we enter into operating lease commitments, purchase commitments and other contractual obligations. These transactions are recognized in our financial statements in accordance with generally accepted accounting principles in the United States.
Critical Accounting Policies and Estimates
Managements discussion and analysis of its financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern. If we are unable to continue as a going concern we would experience additional losses from the write-down of assets.
The Company is currently a development stage company and its continued existence is dependent upon the Companys ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Companys operations may cease to exist.
New Accounting Pronouncements
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for a smaller reporting company.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this report, our Principal Executive Officer who also serves as our principal accounting officer, has concluded that our disclosure controls and procedures were effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Principal Executive Officer, to allow timely decisions regarding required disclosure.
- 13 -
Changes in Internal Control over Financial Reporting. There have been no changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to, and its property is not the subject of, any material pending legal proceedings.
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. There have been no material changes to the risk factors previously disclosed in our Form 10-K filed November 29, 2012. You should consider carefully all of the material risks described in such registration statement before making a decision to invest in our securities. If any of the events described therein occur, our business, financial conditions and results of operations may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Item 2. Unregistered Sale of Equity Securities and Use of Proceeds.
Unregistered sale of equity securities.
During the quarter ended November 30, 2012, the Company sold 150,000 shares of Common Stock at $0.02 per share, for a total of $3,000, to one investor.
We believe that the sales were exempt from registration under Section 4(2) of the Securities Act of 1933. The securities were not offered publicly but only to identified persons who were existing shareholders. We believe the shareholders were knowledgeable and sophisticated in investment matters. Each shareholder acknowledged that the shares were not registered under the Securities Act of 1933 and agreed to not sell or transfer the shares without complying with the registration requirements of the said Act or pursuant to an exemption from such registration requirements. The certificates or confirmation for such shares contains a legend restricting transfer of the shares without registration under the Securities Act of 1933 or an exemption from such registration and a stop transfer order has been lodged against such shares. There were no fees, commissions or expenses paid to underwriters or finders in connection with the offering.
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosure
Item 5. Other Information
- 14 -
Item 6. Exhibits
Compensation Approved for Directors and Executive Officer (1)
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
Certification pursuant to 18 U.S.C. Section 1350
XBRL Instance Document.*
XBRL Taxonomy Extension Schema Document.*
XBRL Taxonomy Extension Calculation Linkbase Document.*
XBRL Taxonomy Extension Definition Linkbase Document.*
XBRL Taxonomy Extension Labels Linkbase Document.*
XBRL Taxonomy Extension Presentation Linkbase Document.*
(1) Indicates a management compensation plan or arrangement.
* Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this Quarterly Report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act), or otherwise subject to the liability of that section, and shall not be part of any registration statement or other document filed under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
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, there unto duly authorized.
Dixie Foods International, Inc.
January 11, 2013
By: /s/ Robert E. Jordan
Robert E. Jordan, President
(Principal Executive Officer and Principal Accounting Officer)
- 15 -