Nascent Foodservice Reports Fourth Quarter and Full Year 2007 Results

  
    
  
  
    
      Nascent Wine Co. Inc. (OTCBB: NCTW) (dba Nascent Foodservice), 
      announced today fourth quarter and full year ended December 31, 2007 
      results and 2008 growth opportunities.
    
    
      Fourth Quarter 2007 Financial Highlights:
    
    
      
        Net sales increased 5-times to $17 million compared to the same period 
        in 2006.
      
      
        Gross profit improved by $2.0 million to 14.6%.
      
    
    
      Full Year 2007 Business Highlights:
    
    
      
        Expanded branded product lines over 50% to approximately 2,000 brand 
        name items at December 31, 2007 from 1,300 brand name items at 
        December 31, 2006.
      
      
        Increased private label / proprietary product line to more than 200 
        private label items.
      
      
        Added more than 6,800 new retail accounts in 2007 including Wal-Mart, 
        Sam’s Club, Costco, HEB, Soriana, Gigante, 
        Smart and Final.
      
      
        Increased distribution centers to 21 from 4, improving efficiencies 
        and proximity to customers.
      
      
        Expanded transportation fleet approximately 800% to 48 trucks from 6.
      
      
        Added 4,700 employees.
      
      
        Increased long-term exclusive distribution contracts by 100% from 
        three to six.
      
      
        Completed three major acquisitions.
      
    
    
      “We entered 2007 with a goal of expanding our 
      platform to market and distribute food and food related products 
      throughout Mexico and based on our record fourth quarter and full year 
      2007 revenue growth and infrastructure expansion, we achieved this goal,” 
      stated Sandro Piancone, Chief Executive Officer of Nascent Foodservice. “During 
      the full year of 2007, we expanded the portfolio of products we 
      distribute (branded and private label/propriety items) by over 50%, 
      increased our distribution centers from 4 to 21 and expanded our service 
      footprint to cover all of Mexico’s major 
      metropolitan areas, making Nascent the first and only nationwide 
      distributor in Mexico.”
    
    
      “We are the first nationwide food distributor 
      in Mexico, working with all the leading accounts like Wal-Mart, Costco, 
      Soriana, Comercial Mexicana, AM/PM and 7-ELEVEN. Because of our position 
      and expertise in the Mexican market we are able to attract leading 
      brands such as Miller Beer, Nestle, Haagen-Dazs and General Mills that 
      have entrusted us to distribute and market their products.”
    
    
      Mr. Piancone continued, “In 2008, we expect to 
      improve gross and operating margins throughout the year by leveraging 
      our infrastructure, continued organic growth in branded and private 
      label products and potential strategic acquisitions. The foodservice 
      industry in Mexico is highly fragmented with over 25,000 regional food 
      distributors addressing the $46 billion foodservice market. Because of 
      our first mover advantage, management team and distribution and 
      marketing platform we have created, we are in a very strong position to 
      exploit this tremendous growth opportunity for many years to come.”
    
    
      Fourth Quarter 2007 Versus Fourth Quarter 2006
    
    
      Sales
    
    
      Net sales in the fourth quarter of 2007 were $17.0 million compared with 
      net sales of $3.5 million in the fourth quarter of 2006. The fourth 
      quarter sales increase was driven primarily by three major acquisitions 
      and overall organic growth.
    
    
      Gross Profit
    
    
      For the fourth quarter of 2007, gross profit increased $2 million to 
      14.6% compared with 14.0% in the prior year. The increase during the 
      period was due increased sales and higher sales of private label 
      products.
    
    
      Selling, General and Administrative Expenses
    
    
      Selling, general and administrative expenses were $2.8 million in the 
      fourth quarter of 2007, or 16.7% of revenue, compared with $1.3 million, 
      or 36.4% of revenue, in the prior year. The company expects continued 
      improvement in selling, general and administrative expenses as a percent 
      of sales in 2008 due to additional leverage in operating investments in 
      2007.
    
    
      Operating loss was $2.0 million in the fourth quarter of 2007 compared 
      to $0.9 million in the fourth quarter of 2006. Net Loss was $3.0 
      million, or $0.58 per diluted share, in the fourth quarter of 2007 
      compared with $0.8 million, or $1.42 million per diluted share, in the 
      prior year period.
    
    
      Full Year 2007 Versus Full Year 2006
    
    
      Sales
    
    
      Net sales were $42.4 million for the full year of 2007, a 9-times 
      increase compared with net sales of $4.7 million for the full year of 
      2006. This increase was primarily due to the following acquisitions:
    
    
      2007 Acquisition Highlights:
    
    
      
        Acquired Pasani, S.A.de C.V., a distributor of European and Asian food 
        products in Mexico, in May 2007. Through the acquisition of Pasani, 
        Nascent Foodservice added more than 200 private label and trademarked 
        items under the Bonet and Mitsuki brand names. Also received exclusive 
        distribution agreements for Reese Brand and Lee Kum Kee. Additionally, 
        the acquisition grew Nascent’s distribution 
        facilities from 7 distribution facilities to 11 distribution 
        facilities, allowing Nascent to service all of Mexico’s 
        major metropolitan areas.
      
      
        Acquired Grupo Sur Promociones de Mexico, S.A. de C. V. (Grupo Sur), a 
        leading field marketing and below the line marketing (BTL) 
        organization in Mexico, in July 2007. Through the acquisition of Grupo 
        Sur, Nascent Foodservice added 4,500 employees that service every 
        single supermarket and 240,000 retail convenience stores to its 
        customer base.
      
      
        Acquired Comercial Targa S.A de C.V (Targa), a leading imported cheese 
        distributor in Baja California, Mexico, in October 2007. With the 
        acquisition of Targa, Nascent Foodservice added 30 new product lines 
        under the brand names Nery’s and Nery’s 
        Choice to its product portfolio.
      
    
    
      Gross Profit
    
    
      Gross profit increased 10-times to $6.8 million for the full year of 
      2007 compared with $0.7 million for the full year of 2006. Gross margin 
      was 16.1% in 2007 compared to 14.9% in 2006.
    
    
      Selling, General and Administrative Expenses
    
    
      Selling, general and administrative expenses were $10.7 million, or 
      25.2% of net sales, for the full year of 2007 compared with $2.3 
      million, or 50.1% of net sales, in 2006. Selling, general and 
      administrative expenses as a percent of sales decreased by more that 
      half as the Company leveraged its operating investments over a larger 
      revenue base.
    
    
      EBITDA and Net (Loss)
    
    
      For the full year of 2007, EBITDA was a loss of $3.1 million compared 
      with a loss of $0.5 million for the full year of 2006.
    
    
      Operating loss was $5.5 million for the full year of 2007 compared with 
      a loss of $1.8 million for the full year of 2006. Net loss for the full 
      year of 2007 was $9.4 million, or $0.14 per diluted share compared with 
      net loss of $2.0 million, or $0.06 per diluted share, in 2006.
    
    
      Outlook:
    
    
      Mr. Piancone concluded, “Looking to 2008, we 
      are very excited about our long term growth prospects and believe we are 
      well positioned to build upon our position as the leading distributor of 
      imported products in Mexico. We believe our gross and operating margins 
      will continue to improve from our fourth quarter results as we leverage 
      the platform we have created.”
    
    
      The Company expects to provide full year 2008 guidance in its first 
      quarter 2008 earnings release during the latter half of May, 2008.
    
    
      Conference Call
    
    
      Nascent Foodservice will host a conference call to discuss its financial 
      results on Monday, April 21, 2008 at 8am Pacific Time. The conference 
      call may include forward-looking statements. To participate in the 
      conference call, investors should dial 800-762-8779 ten minutes prior to 
      the call. A telephone replay of the call will be available through 11:59 
      p.m. Eastern Time on May 12, 2008 by calling 800-406-7325 (passcode: 
      3869739).
    
    
      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, Haagen-Dazs, General Mills, Ferrarelle Water, Cora 
      Italian Food Products, Bonafont Water, Avasoft Ice Cream, Mitsuki Asian 
      products, Bonet European products, Kabbalah 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.
    
    
      
        
          Nascent Wine Company, Inc., and Subsidiaries
        
      
      
        
          Consolidated Balance Sheet
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          DECEMBER 31,
        
        
        
        
          DECEMBER 31,
        
      
      
        
          ASSETS
        
        
        
        
           
        
        
          2007
        
        
        
        
           
        
        
          2006
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current assets:
        
        
        
        
        
        
        
        
        
      
      
        
          Cash
        
        
        
        
          $
        
        
          1,165,814
        
        
        
        
          $
        
        
          476,376
        
      
      
        
          Accounts receivable, net of allowance for uncollectibles ($638,363 
          and $50,000 at December 31, 2007 and December 31, 2006, respectively)
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          7,763,114
        
        
        
        
        
        
          1,327,153
        
      
      
        
          Inventory
        
        
        
        
        
        
          5,504,209
        
        
        
        
        
        
          1,137,459
        
      
      
        
          Investment, current
        
        
        
        
        
        
          238,318
        
        
        
        
        
        
          -
        
      
      
        
          Prepaid
        
        
        
        
           
        
        
          1,694,084
        
        
        
        
           
        
        
          177,976
        
      
      
        
          Total current assets
        
        
        
        
        
        
          16,365,539
        
        
        
        
        
        
          3,118,964
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Property and equipment, net
        
        
        
        
        
        
          2,119,044
        
        
        
        
        
        
          593,691
        
      
      
        
          Amortizable intangible assets, net
        
        
        
        
        
        
          17,251,375
        
        
        
        
        
        
          8,110,000
        
      
      
        
          Goodwill
        
        
        
        
           
        
        
          14,166,968
        
        
        
        
           
        
        
          11,936,217
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          TOTAL ASSETS
        
        
        
        
          $
        
        
          49,902,926
        
        
        
        
          $
        
        
          23,758,872
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Current liabilities:
        
        
        
        
        
        
        
        
        
      
      
        
          Accounts payable and accrued expenses
        
        
        
        
          $
        
        
          6,967,021
        
        
        
        
          $
        
        
          2,858,645
        
      
      
        
          Capital leases
        
        
        
        
        
        
          737,222
        
        
        
        
        
        
          -
        
      
      
        
          Acquisition loans
        
        
        
        
        
        
          7,700,000
        
        
        
        
        
        
          -
        
      
      
        
          Other loans
        
        
        
        
           
        
        
          1,490,592
        
        
        
        
           
        
        
          4,069,220
        
      
      
        
          
            Total current liabilities
          
        
        
        
        
        
        
          16,894,835
        
        
        
        
        
        
          6,927,865
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Long term debt
        
        
        
        
           
        
        
          -
        
        
        
        
           
        
        
          186,672
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          TOTAL LIABILITIES
        
        
        
        
        
        
          16,894,835
        
        
        
        
        
        
          7,114,537
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total Stockholders' equity
        
        
        
        
           
        
        
          33,008,091
        
        
        
        
           
        
        
          16,644,335
        
      
      
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
        
        
        
        
          $
        
        
          
            49,902,926
          
        
        
        
        
          $
        
        
          23,758,872
        
      
    
    
    
    
      
        
          Nascent Wine Company, Inc., and Subsidiaries
        
      
      
        
          Consolidated Statement of Operations
        
      
      
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
        
           
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
        
        
        
        
          For the Year
        
        
        
        
          For the Year
        
        
        
        
          For the Three
        
        
        
        
          For the Three
        
      
      
        
        
        
        
        
          
            Ended 
          
        
        
        
        
          
            Ended 
          
        
        
        
        
          Months Ended
        
        
        
        
          Months Ended
        
      
      
        
        
        
        
        
          
            December 31, 2007
          
        
        
        
        
          
            December 31, 2006
          
        
        
        
        
          
            December 31, 2007
          
        
        
        
        
          
            December 31, 2006
          
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Revenues
        
        
        
        
          $
        
        
          42,397,534
        
        
        
        
        
        
          $
        
        
          4,679,868
        
        
        
        
        
        
          $
        
        
          
            16,981,795
          
        
        
        
        
        
        
          $
        
        
          
            3,476,042
          
        
        
        
      
      
        
          Cost of revenue
        
        
        
        
           
        
        
          35,574,092
        
        
           
        
        
        
        
           
        
        
          3,978,597
        
        
           
        
        
        
        
           
        
        
          
            14,500,069
          
        
        
           
        
        
        
        
           
        
        
          
            2,988,245
          
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Total gross profit
        
        
        
        
        
        
          6,823,442
        
        
        
        
        
        
        
        
          701,271
        
        
        
        
        
        
        
        
          2,481,726
        
        
        
        
        
        
        
        
          487,797
        
        
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Operating expenses
        
        
        
        
           
        
        
          12,317,474
        
        
           
        
        
        
        
           
        
        
          2,455,561
        
        
           
        
        
        
        
           
        
        
          4,468,891
        
        
           
        
        
        
        
           
        
        
          
            1,379,408
          
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Loss from operations
        
        
        
        
        
        
          (5,494,032
        
        
          )
        
        
        
        
        
        
          (1,754,290
        
        
          )
        
        
        
        
        
        
          (1,987,165
        
        
          )
        
        
        
        
        
        
          (891,611
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Other income and (expense)
        
        
        
        
           
        
        
          (3,912,073
        
        
          )
        
        
        
        
           
        
        
          (282,578
        
        
          )
        
        
        
        
           
        
        
          
            (1,013,835
          
        
        
          )
        
        
        
        
           
        
        
          
            75,146
          
        
        
           
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss
        
        
        
        
          $
        
        
          
            (9,406,105
          
        
        
          )
        
        
        
        
          $
        
        
          
            (2,036,868
          
        
        
          )
        
        
        
        
          $
        
        
          
            (3,001,000
          
        
        
          )
        
        
        
        
          $
        
        
          
            (816,465
          
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Net loss per share - Basic and fully diluted
        
        
        
        
          $
        
        
          (0.14
        
        
          )
        
        
        
        
          $
        
        
          (0.06
        
        
          )
        
        
        
        
          $
        
        
          (0.58
        
        
          )
        
        
        
        
          $
        
        
          (1.42
        
        
          )
        
      
      
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
           
        
      
      
        
          Weighted average number of common shares outstanding basic and fully 
          diluted
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
        
      
      
        
        
        
        
        
          68,466,011
        
        
        
        
        
        
        
        
          31,538,493
        
        
        
        
        
        
        
        
          
            5,199,562
          
        
        
        
        
        
        
        
        
          
            576,955