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| KRTF.OB > SEC Filings for KRTF.OB > Form 10-Q on 14-Aug-2009 | All Recent SEC Filings |
14-Aug-2009
Quarterly Report
The following discussion of our financial condition and results of operations should be read in conjunction with, and is qualified in its entirety by, the consolidated financial statements and notes thereto included in, Item 1 in this Quarterly Report on Form 10-Q. This item contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those indicated in such forward-looking statements.
Forward-Looking Statements
This Quarterly Report on Form 10-Q and the documents incorporated herein by reference contain forward-looking. Such forward-looking statements are based on current expectations, estimates, and projections about our industry, management beliefs, and certain assumptions made by our management. Words such as "anticipates", "expects", "intends", "plans", "believes", "seeks", "estimates", variations of such words, and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise. However, readers should carefully review the risk factors set forth herein and in other reports and documents that we file from time to time with the Securities and Exchange Commission, particularly the Report on Form 10-K, Form 10-Q and any Current Reports on Form 8-K.
Overview and History
Kurrant Food Enterprises, Inc. was incorporated in the State of Colorado on May 3, 2005. We develop, own, and operate a catering business in Colorado through our subsidiary corporation, Kurrant Cuisine Enterprises, Inc. Until 2007, we operated primarily in the Denver, Colorado metropolitan area. Since 2007, we have operated primarily in the Durango, Colorado area. We plan to expand our operations to other lines of business in the food industry, such as production of food products. However, we have no definitive plans to be involved in any other activities at the present time other than our catering business.
Through our catering business, we organize and cater a number of different events, from cocktail parties, to buffets of various kinds, to multi-course plated dinners.
Within the past fiscal quarter, we have also begun providing consulting services to those businesses within the hospitality industry. This represents an additional line of business to our traditional plan of operation.
Our headquarters are located at 194 Hermosa Circle, Durango, Colorado 81301. Our phone number at our headquarters is (303) 349-9616. Our fiscal year end is September 30th.
Results of Operations
The following discussion involves our results of operations for the three months ended June 30, 2009 and June 30, 2008 and for the nine months ended June 30, 2009 and June 30, 2008. For the three months ended June 30, 2009 we had sales of $1,529, compared to sales of $7,428 for the three months ended June 30, 2008. For the nine months ended June 30, 2009 we had sales of $1,529, compared to sales of $182,924 for the nine months ended June 30, 2008.
Costs of goods include all direct costs incurred in providing services. Direct costs consist of food, beverages, and catering supplies. Our costs of goods for the three months ended June 30, 2009 was $-0-. Our costs of goods for the three months ended June 30, 2008 was $2,068, or approximately 27.8 % of sales. Our costs of goods for the nine months ended June 30, 2009 was $-0-. Our costs of goods for the nine months ended June 30, 2008 was $96,793, or approximately 52.9 % of sales.
The difference between total sales and costs of goods is gross profit. Our gross profit for the three months ended June 30, 2009 was $1,529. Our gross profit for the three months ended June 30, 2008 was $5,360, or approximately 72.2% of sales. Our gross profit for the nine months ended June 30, 2009 was $1,529. Our gross profit for the nine months ended June 30, 2008 was $86,131, or approximately 47.1% of sales. Within the past year, we have moved more to providing consulting activities, which are reflected in the lack of cost of goods sold.
Operating expenses, which includes depreciation and general and administrative expenses for the three months ended June 30, 2009 was $5,604. Operating Expenses for the three months ended June 30, 2008 was $28,473. Operating expenses for the nine months ended June 30, 2009 was $45,709. Operating Expenses for the nine months ended June 30, 2008 was $143,241. The major component of these general and administrative expenses were payments to independent contractors, salaries and associated payroll costs, professional fees, and pre-paid expenses, and accrued receivables. While our general and administrative expenses will continue to be our largest expense item, we believe that this expense has stabilized as we continue to develop efficiencies in our operations. In addition, we have not had the level of professional fees this year as compared to last year when we were engaged in our public offering.
We had a net loss of $7,283, or $(0.00) per share, for the three months ended June 30, 2009, compared to a net loss of $12,940, or $(0.00) per share, for the three months ended June 30, 2008. We had a net loss of $44,152, or $(0.00) per share, for the nine months ended June 30, 2009, compared to a net loss of $31,410, or $(0.01) per share, for the nine months ended June 30, 2008. We continue to have losses as we attempt to increase our revenue base.
However, we believe that our operational costs should remain fairly constant as sales improve. We plan to increase certain charges to pass along the increase in food and beverage costs. As result, our gross profit margin should improve. Therefore, each additional sale and correspondingly the gross profit of such sale have minimal offsetting overhead cost. We do not expect to be profitable by the end of fiscal year 2009 but anticipate that we can be profitable some time in fiscal year 2010.
Liquidity and Capital Resources
As of June 30, 2009, we had cash or cash equivalents of $597, compared to cash or cash equivalents of $20,785 at June 30, 2008.
Net cash used for operating activities was $50,141 for the nine months ended June 30, 2009 compared to $89,749 for the nine months ended June 30, 2008. The increase is attributable additional employee advances and prepaid expenses.
Cash flows used in investing activities were $-0- for the nine months ended June 30, 2009, compared to $25,805 for the nine months ended June 30, 2008. These activities represent the purchase of equipment for our operations.
Cash flows from financing activities were $50,275 for the nine months ended June 30, 2009, compared to $13,810 for the nine months ended June 30, 2008.
Over the next twelve months our capital costs will be approximately $10,000 to $12,000 primarily to expand our current operations. We plan to buy additional equipment to be used in our operations.
We believe that our last public offering and borrowings will continue to provide sufficient capital in the short term for our current level of operations, which includes becoming profitable. The Huttner 1999 Partnership, LLC, one of our shareholders, has orally agreed to provide such additional funding as may be necessary to us through September 30, 2010. As a result, we do not anticipate needing to raise additional capital resources in the next twelve months.
Until the current operations become cash flow positive, our officers and directors will fund the operations to continue the business. At this time we have no other resources on which to get cash if needed without their assistance.
Our principal source of liquidity is our operations. Our variation in sales is based upon the level of our catering event activity and will account for the difference between a profit and a loss. Also business activity is closely tied to the economy of Durango and the U.S. economy. A slow down in entertaining activity will have a negative impact to our business. In any case, we try to operate with minimal overhead. Our primary activity will be to seek to expand the number of catering events and, consequently, our sales. If we succeed in expanding our customer base and generating sufficient sales, we will become profitable. We cannot guarantee that this will ever occur. Our plan is to build our Company in any manner which will be successful.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.
Seasonality
We have found that our sales are impacted by seasonal demands for our services, with greater sales coming at the end of the calendar year and around major holidays.
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to bad debts, impairment of intangible assets and long lived assets, contractual adjustments to revenue, and contingencies and litigation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations.
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