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Kahiki Announces Second Quarter FY07 ResultsRecord Sales and Operational Improvements Drive Double Digit Increases in Gross Profits
GAHANNA, Ohio, Nov. 10 /PRNewswire-FirstCall/ -- Kahiki Foods, Inc. (OTC: KSCI) (BULLETIN BOARD: KSCI) , Gahanna, Ohio, announced today record second quarter net sales of $5,874,977 for the period ended September 30, 2006, a 14.8% increase over the same quarter of the prior year. Income from operations for the quarter was $104,639, versus a loss from operations in the same period of the prior year of $267,958, representing an improvement of $372,597. Gross profits for the quarter were $1,129,534, a 21.7% increase compared to the same period of the prior year. Selling, general, and administrative expenses for the quarter, as a percentage of net sales, decreased from 23.3% to 17.4%. Kahiki reported a net loss for the quarter of $16,812. For the same quarter of the previous year, net income was $391,287, which included a one-time income of $750,000 from life insurance proceeds from the death of former CEO Michael Tsao. For the six months ended September 30, 2006, net sales were $11,819,853, a 16.8% increase over the same period of the prior year. Income from operations for the six-month period this year was $113,079, versus a loss from operations in the prior year of $416,880, an improvement of $529,959. Gross profits for the six-month period this year were $2,393,550, a 37.8% increase over the same period of the prior year. Selling, general, and administrative expenses for the six-month period this year, as a percentage of net sales, decreased from 21.3% to 19.3%. Kahiki reported a net loss for the six-month period this year of $82,683. For the same six-month period of the previous year, net income was $170,893, which included one-time income of $750,000 from life insurance proceeds from the death of former CEO Michael Tsao. Alan Hoover, President and CEO commented, "These results clearly demonstrate that we are starting to realize the operational improvements that we have undertaken over the past year, including moving to a new manufacturing facility and implementing lean manufacturing. We have a very clear focus on growing our business profitably through the right mix of customers and products. We remain committed to building positive earnings by executing on the fundamentals: operational improvements, cost savings, and profitable sales." About Kahiki Foods, Inc. Kahiki Foods, Inc. (OTC: KSCI) (BULLETIN BOARD: KSCI) , Gahanna, Ohio, manufactures premium, authentic Asian frozen foods and distributes to retail grocery chains, membership warehouse clubs, and food service operations in the United States and abroad. For 11 years, the Kahiki brand has been committed to delivering innovative, restaurant-quality Asian frozen foods to customers while delivering value to stakeholders. Forward-Looking Statements Statements contained in this news release that are not strictly historical are forward-looking within the meaning of the safe harbor clause of the Private Securities Litigation Reform Act of 1995. The company makes these statements based on information available to it as of the date of this news release and it assumes no responsibility to update or revise such forward- looking statements. Editors and investors are cautioned that such forward- looking statements invoke risk and uncertainties that may cause the company's actual results to differ materially from such forward-looking statements. ITEM 1. KAHIKI FOODS, INC. FINANCIAL STATEMENTS
KAHIKI FOODS, INC.
BALANCE SHEETS
September 30, 2006
(unaudited) March 31, 2006
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ASSETS
Current Assets
Cash $ -- $ 833,655
Accounts receivable, net 2,136,640 2,231,727
Inventories 1,805,673 1,543,534
Refundable income taxes 503,676 493,365
Other current assets 161,838 284,315
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Total Current Assets 4,607,827 5,386,596
Property And Equipment, Net 12,097,357 12,211,280
Other Assets
Deferred loan costs 132,502 137,366
Restricted deposits 437,241 426,394
Other deposits 20,517 22,761
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Total Other Assets 590,260 586,521
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Total Assets $ 17,295,444 $ 18,184,397
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 7,846,399 $ 9,029,071
Accounts payable 2,532,326 2,115,587
Accrued expenses 399,695 455,984
Income taxes payable -- 20,240
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Total Current Liabilities 10,778,420 11,620,882
Deferred income taxes 66,000 66,000
Long-term debt 399,154 383,991
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Total Liabilities 11,243,574 12,070,873
Stockholders' Equity
Preferred stock, no par value,
1,000,000 shares authorized;
943,491 and 930,741 shares issued
and outstanding, respectively 2,122,854 2,094,167
Common stock, no par value,
9,000,000 shares authorized;
3,831,698 and 3,811,698 shares
issued and outstanding,
respectively 2,834,489 2,813,460
Retained earnings 1,094,527 1,205,897
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Total Stockholders' Equity 6,051,870 6,113,524
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Total Liabilities And
Stockholders' Equity $ 17,295,444 $ 18,184,397
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See notes to unaudited financial statements.
KAHIKI FOODS, INC.
STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30,
2005
2006 (restated)
------------- -------------
Net sales $ 5,874,977 $ 5,115,646
Cost of sales 4,745,443 4,187,752
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Gross profit 1,129,534 927,894
Selling, general and administrative
expenses 1,024,895 1,195,852
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Income (loss) from operations 104,639 (267,958)
Other income (expense):
Interest expense (144,837) (183,445)
Interest and other income 12,470 7,690
Life insurance proceeds -- 750,000
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Total other income (expense) (132,367) 574,245
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Income (loss) before income taxes (27,728) 306,287
Income tax expense (benefit) (10,916) (85,000)
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Net income (loss) (16,812) 391,287
Less income allocable as preferred
stock dividends 26,654 --
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Income (loss) available
to common stockholders $ (43,466) $ 391,287
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Weighted average shares outstanding:
Basic 3,828,220 3,670,848
Diluted 5,084,117 3,998,731
Net income (loss) per common share:
Basic $ (0.01) $ 0.11
Diluted $ -- $ 0.10
See notes to unaudited financial statements.
KAHIKI FOODS, INC.
STATEMENTS OF INCOME (UNAUDITED)
Six Months Ended September 30,
2005
2006 (restated)
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Net sales $ 11,819,853 $ 10,123,928
Cost of sales 9,426,303 8,386,681
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Gross profit 2,393,550 1,737,247
Selling, general and administrative
expenses 2,280,471 2,154,127
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Income (loss) from operations 113,079 (416,880)
Other income (expense):
Interest expense (274,629) (255,305)
Interest and other income 17,951 8,078
Life insurance proceeds -- 750,000
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Total other income (expense) (256,678) 502,773
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Income (loss) before income taxes (143,599) 85,893
Income tax expense (benefit) (60,916) (85,000)
------------- -------------
Net income (loss) (82,683) 170,893
Less income allocable as preferred
stock dividends 52,832 --
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Income (loss) available
to common stockholders $ (135,515) $ 170,893
============= =============
Weighted average shares outstanding:
Basic 3,820,004 3,666,028
Diluted 5,075,901 3,993,911
Net income (loss) per common share:
Basic $ (0.04) $ 0.05
Diluted $ (0.02) $ 0.04
See notes to unaudited financial statements.
KAHIKI FOODS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED)
Six Months Ended September 30,
2005
2006 (restated)
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Cash Flows From Operating Activities:
Net income (loss) $ (82,683) $ 170,893
Adjustments to reconcile net
income (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 478,548 409,795
Deferred taxes -- (85,000)
Life insurance proceeds and deposits 184,205 (750,000)
Net value of property and equipment
written off -- 1,263
Compensation expense from
stock options 9,829 --
Changes in operating assets and
liabilities:
Accounts receivable 95,087 (411,319)
Inventories (262,139) (40,424)
Refundable income taxes (10,311) 44,787
Other assets (70,331) (44,903)
Accounts payable 416,739 195,318
Accrued expenses (56,289) 39,296
Income taxes payable (20,240) (5,350)
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Net cash provided by (used in)
operating activities 682,415 (475,644)
Cash Flows From Investing Activities:
Purchase of equipment and improvements (359,761) (2,208,438)
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Net cash used in investing activities (359,761) (2,208,438)
Cash Flows From Financing Activities:
Line of credit - net (793,783) 1,342,395
Proceeds from long-term debt 170,818 2,282,810
Payments on long-term debt (544,544) (478,333)
Capitalized cost of financing -- 7,750
Proceeds from the exercise of
stock options 11,200 8,430
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Net cash provided by (used in)
financing activities (1,156,309) 3,163,052
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Net increase (decrease) in cash (833,655) 478,970
Cash - beginning of period 833,655 --
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Cash - end of period $ -- $ 478,970
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KAHIKI FOODS, INC.
STATEMENTS OF CASH FLOWS (UNAUDITED) (Continued)
Six Months Ended September 30,
2005
2006 (restated)
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Supplemental Disclosures Of Cash
Flow Information:
Cash paid for:
Interest $ 275,005 $ 230,690
Income taxes (30,365) (1,057)
Non-cash transactions:
Declaration of stock dividend
on Preferred Stock (12,750 shares) 28,687 --
See notes to unaudited financial statements, located in the 10Q filing to the SEC, dated 11/9/06. Website: http://www.kahiki.com/ |
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