NCTW Nascent Wine Co Inc (CE)

Nascent Wine Co. Inc. (OTC BB: NCTW) (dba Nascent Foodservice), announced today financial results for the three and six months ended June 30, 2008. Second Quarter 2008 Financial and Operational Highlights: Net sales increased 76% to $6.5 million from $3.7 million Added 2 new brands including Rockstar Energy Drink and Fusion Energy Drink Received certification from the California Milk Board to use the �Real Cheese� logo on its private label Nery Cheese products Engaged in review of strategic options for its Palermo Italian Foods business resulting in sale of Palermo Italian Foods to AIP, Inc. After strategic review of business, classified Grupo Sur and Pasani and Eco Pak businesses as discontinued operations Company Expects to receive approximately $2.4 million over the next 6 months based on termination agreements with the discontinued business lines �The second quarter was a transitional quarter for the Company as we completed a thorough review of our strategic priorities with a focus on delivering future profitable growth,� stated Sandro Piancone, Chief Executive Officer of Nascent Foodservice. �Following this review, we completed the sale of Palermo Italian Foods to a group of investors led by Palermo�s President and classified the Pasani and Eco Pak and Grupo Sur businesses as discontinued operations which we estimate will result in the return of approximately $2.4 million based on termination agreements over the next six months. While our second quarter results were impacted by several one-time items associated with the restart of our business, through the actions taken over the past several months we are creating a more streamlined organization focused on building value in our core businesses, which we believe will improve the Company�s overall financial position over the long term. By refocusing our efforts on our initial goal of identifying and securing brands, purchasing food products globally and distributing these products in Mexico, we believe we can continue to build upon our position as the leading distributor of imported products in Mexico.� Mr. Piancone continued, �During the second quarter we entered into two new distribution agreements including Fusion Energy Drink and Rockstar Energy Drink. The addition of these well-recognizable and desirable brands to our portfolio reflects our ongoing commitment to delivering a comprehensive portfolio of high quality food and beverage products to the Mexican marketplace. With the addition of these brands to our portfolio, we will look to replicate our success in expanding the market share of other leading brands within our portfolio such as Miller Beer, Cora and Ferrarelle. While we will continue to focus our efforts on securing exclusive rights to well-recognized, desirable branded products, we recognize that our growth is somewhat limited by our current cash and working capital constraints. As such, we remain intently focused on obtaining a working capital credit facility to fund our ongoing operations and support the continued expansion of our business.� Mr. Piancone concluded, �We continue to believe that significant value exists in our current operations through the execution of our long-term business opportunities. Looking forward, we will continue to utilize our existing distribution network and technology infrastructure to leverage our operations and drive future organic and acquired growth.� Second Quarter 2008 Versus Second Quarter 2007 Sales Net sales in the second quarter of 2008 were $6.5 million compared with net sales of $3.7 million in the second quarter of 2007. The second quarter sales increase was driven by three major acquisitions completed in 2007. Gross Profit For the second quarter of 2008, gross profit decreased to a deficit of $390,000, compared to gross profit of $562,000 in the prior year period. The decrease in gross profit was largely attributable to an inventory impairment charge of approximately $0.7 million which the Company recorded in the second quarter of 2008. Selling, General and Administrative Expenses Selling, general and administrative expenses were $8.1 million in the second quarter of 2008, an increase of approximately 200% from $2.7 million in the prior year period. The increase in SG&A for the second quarter reflects the three major acquisitions completed in 2007 and additional investments made in the Company�s infrastructure including the opening of 17 distribution centers, the leasing of 48 new trucks and distribution equipment, increased professional fees, communications costs and insurance costs and strengthening the finance organization. In addition, during the second quarter of 2008, the Company recorded a reserve for bad debts of approximately $0.4 million and an impairment on its intangible assets of $5.3 million, which are included in the Company�s operating expenses for the three and sixth months ended June 30, 2008. Other Income (Expense) In the second quarter of 2008, the Company recorded other expense of $1.8 million compared to other expense of $405,000 in the prior year period. During the second quarter of 2008, the Company incurred approximately $1.0 million in management fees and recorded a reserve for notes payable of approximately $1.3 million which are included in the Company�s other income (expense) for the three and sixth months ended June 30, 2008. Operating Income (Loss) Loss from continuing operations was $10.2 million in the second quarter of 2008 compared to $2.5 million in the second quarter of 2007. Included in the Company�s loss from operations for the second quarter of 2008 are one time adjustments of $8.7 million. Net Income (Loss) Net loss was $7.2 million, or $0.04 per diluted share, in the second quarter of 2008 compared with a net loss of $2.3 million, or $0.00 per diluted share, in the prior year period. The Company�s net loss for the second quarter of 2008 includes income from discontinued operations of approximately $0.2 million, an intangible asset impairment charge of approximately $1.4 million and a gain on the sale of the Palermo Italian Food business of approximately $4.3 million. Six Months ended June 30, 2008 Versus Six Months Ended June 30, 2007 Sales Net sales in the first six months of 2008 were $12.4 million compared with net sales of $5.9 million in the first six months of 2007. This increase was primarily driven by three major acquisitions completed in 2007. Gross Profit For the six months ended June 30, 2008, gross profit decreased to approximately $807,000, compared to gross profit of $1.1 million for the sixth months ended June 30, 2007. The decrease in gross profit was largely attributable to an inventory impairment charge of approximately $700,000 which the Company recorded in the second quarter of 2008. Selling, General and Administrative Expenses Selling, general and administrative expenses were $9.8 million in the first six months of 2008, an increase of 162% from $3.8 million in the prior year period. The increase in SG&A for the first half of 2008 reflects the three major acquisitions completed in 2007 and additional investments made in the Company�s infrastructure including the opening of 17 distribution centers, the leasing of 48 new trucks and distribution equipment, increased professional fees, communications costs and insurance costs and strengthening the finance organization. In addition, during the second quarter of 2008, the Company recorded a reserve for bad debts of approximately $400,000 and an impairment on its intangible assets of $5.3 million, which are included in the Company�s operating expenses for the three and sixth months ended June 30, 2008. Other Income (Expense) In the first half of 2008 the Company recorded other expense of $1.3 million compared to other expense of approximately $950,000 in the prior year period. During the second quarter of 2008, the Company incurred approximately $1.0 million in management fees and recorded a reserve for notes payable of approximately $1.3 million which are included in the Company�s other income (expense) for the three and sixth months ended June 30, 2008. Operating Income (Loss) Operating loss for the six months ended June 30, 2008 was $10.3 million in compared to a loss of $3.6 million in the six months ended June 30, 2007. Included in the Company�s loss from operations for the first half of 2008 are one time adjustments of $8.7 million. Net Income (Loss) Net Loss was $7.2 million, or $0.04 per diluted share, in the six months ended June 30, 2008 compared with a net loss of $3.8 million, or $0.00 per diluted share, in the prior year period. The Company�s net loss for the first half of 2008 includes income from discontinued operations of approximately $0.3 million, an intangible asset impairment charge of approximately $1.4 million and a gain on the sale of the Palermo Italian Food business of approximately $4.3 million. As of June 30, 2008, the Company had cash of approximately $892,000 and a working capital of approximately $432,000. The Company is currently in discussions with several lending institutions for a working capital credit facility and additional financings. The Company believes these credit facilities in conjunction with internally generated funds should be sufficient to fund operations for the next twelve months. About Nascent Wine Company Inc. Nascent Wine Company Inc. dba Nascent Foodservice is the only nationwide distributor of imported products in Mexico, marketing and distributing over 2,000 national and proprietary brand food and non-food products. Nascent Foodservice also has the exclusive right to distribute Miller Beer in Baja California, Mexico. In addition, Nascent sells select products from Nestle, Ferrarelle Water, Cora Italian Food Products, Mitsuki Asian products, Bonet European products, Rockstar Energy Drink and Fusion Energy Drink, and Jolly Rancher Soda, Spark�s energy drink, Nery�s cheese products, among others. Nascent is focused on acquiring the most profitable and well positioned distributors in Mexico with the best food and beverage portfolios in the country. Nascent is currently servicing over 240,000 sales points including supermarkets, convenience stores and foodservice accounts like Wal-Mart, Costco, Soriana, Comercial Mexicana, AM/PM, 7-ELEVEN, OXXO and many more. Nascent Foodservice trades on the OTC Bulletin Board as Nascent Wine Company, Inc., ticker symbol NCTW.OB. For more information about Nascent Foodservice, go to www.nascentfoodservice.com. Forward Looking Statements Statements made in this press release that express the Company's or management's intentions, plans, beliefs, expectations or predictions of future events, are forward-looking statements. Those statements are based on many assumptions and are subject to many known and unknown risks, uncertainties and other factors that could cause the Company's actual activities, results or performance to differ materially from those anticipated or projected in such forward-looking statements. In light of significant risks and uncertainties inherent in forward-looking statements included herein, the inclusion of such statements should not be regarded as a representation by the Company that it will achieve such forward-looking statements. For further details and a discussion of these and other risks and uncertainties, please see our most recent reports on Form 10-KSB and Form 10-QSB, as filed with the Securities and Exchange Commission, as they may be amended from time to time. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise.