UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly Period Ended: July 31, 2000
Or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to
0-3255
(Commission File Number)
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1864519
(State or other jurisdiction of incorporation) (IRS Employer Identification No.)
300 Plaza Drive, Vestal, New York 13850
(Address of principal executive offices) (Zip Code)
(607) 729-9331
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Class Outstanding at July 31, 2000
Common Stock $0.01 Par Value 2,766,396
Jayark Corporation and Subsidiaries
INDEX
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets - July 31, 2000 and April 30, 2000 3
Consolidated Statements of Operations - Three Months Ended
July 31, 2000 and 1999 4
Consolidated Statements of Cash Flows - Three Months Ended
July 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-9
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
Exhibits 12-13
Part I.
Item I.
Consolidated Financial Statements
Jayark Corporation and Subsidiaries
Consolidated Balance Sheets
(unaudited)
July 31, 2000 April 30, 2000
------------- --------------
Assets
Current Assets
Cash and Cash Equivalents $114,767 $530,540
Accounts Receivable-Trade, less allowance for
doubtful accounts of $77,000 and $76,000,
respectively 2,285,610 1,384,212
Inventories 620,227 480,460
Other Current Assets 81,338 89,915
------------ ------------
Total Current Assets 3,101,942 2,485,127
Non Current Assets
Property & Equipment, less accumulated depreciation
and amortization 482,112 433,761
Goodwill and Other Intangibles less accumulated
amortization 318,140 320,238
------------ ------------
Total Non-Current Assets 800,252 753,999
------------ ------------
Total Assets $3,902,194 $3,239,126
============ ============
Liabilities
Current Liabilities
Notes Payable & Line of Credit $799,060 $368,954
Current Portion of Long Term Debt 161,332 161,332
Accounts Payable 718,166 492,375
Accrued Expenses 50,000 50,000
Accrued Salaries 597,152 445,640
Accrued Interest 504,510 504,510
Other Current Liabilities 59,597 83,363
------------ ------------
Total Current Liabilities 2,889,817 2,106,174
Long Term Debt 1,282,447 1,278,571
------------ ------------
Total Liabilities 4,172,264 3,384,745
Stockholders' Deficit
Common Stock of $.01 Par Value, Authorized 30,000,000
Shares, Issued: 2,773,896 and 2,773,860 Shares,
respectively 27,739 27,739
Treasury Stock, at cost, 7,500 shares (750) (750)
Additional Paid-In Capital 12,598,980 12,598,980
Deficit (12,896,039) (12,771,588)
------------ ------------
Total Stockholders' Deficit (270,070) (145,619)
------------ ------------
Total Liabilities & Stockholders' Deficit $3,902,194 $3,239,126
============ ============
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
July 31, 2000 July 31, 1999
------------ ------------
Net Revenues $3,928,080 $3,430,942
Cost of Revenues 3,357,328 2,883,838
------------ ------------
Gross Margin 570,752 547,104
Selling, General and Administrative
Expenses 661,248 419,392
------------ ------------
Operating Income (Loss) (90,496) 127,712
Other Income (Expense):
Net Interest Expense (33,955) (27,387)
------------ ------------
Pre Tax Earnings (Loss) (124,451) 100,325
Provision for Income Taxes -- --
------------ ------------
Net Income (Loss) $(124,451) $100,325
============ ============
Basic and Diluted Earnings (Loss) per Common Share:
Net Income (Loss) ($.04) $.04
============ ============
Weighted Average Common Shares:
Basic and Diluted 2,766,384 2,766,360
============ ============
See accompanying notes to consolidated financial statements
Jayark Corporation and Subsidiaries
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended
July 31, 2000 July 31, 1999
------------- -------------
Cash Flows From Operating Activities:
Net Income (Loss) ($124,451) $100,325
Adjustments to Reconcile Net Income (Loss) to
Cash from Operating Activities:
Depreciation and Amortization of Property and
Equipment 42,749 11,294
Amortization of Goodwill and Other Intangibles 16,861 5,340
Changes In Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (901,398) 406,637
Increase in Inventories (139,767) (166,290)
(Increase) Decrease in Other Current Assets 8,577 (2,718)
Increase (Decrease) in Accounts Payable 225,791 (71,138)
Increase in Accrued Expenses -- 2,120
Increase in Accrued Salaries 151,512 21,282
Increase (Decrease) in Other Liabilities (23,766) 4,307
------------ ------------
Net Cash Provided By (Used In) Operating Activities (743,892) 311,159
Cash Flows From Investing Activities:
Purchases of Property and Equipment (91,100) (3,706)
Purchase of Intangibles (14,763) --
------------ ------------
Net Cash Used In Investing Activities (105,863) (3,706)
Cash Flows From Financing Activities:
Proceeds From Issuance of Notes Payable and Line
of Credit 430,106 --
Proceeds From Issuance of Long Term Debt 5,000 --
Payments of Long Term Debt (1,124) (3,443)
------------ ------------
Net Cash Provided By (Used In) Financing Activities 433,982 (3,443)
Net Increase (Decrease) in Cash and Cash Equivalents (415,773) 304,010
Cash & Cash Equivalents at Beginning of Year 530,540 209,724
------------ ------------
Cash & Cash Equivalents at End of Year $114,767 $513,734
============ ============
Supplemental Disclosures of Cash Flow Information:
Cash Paid For Interest 39,122 27,573
============ ============
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements
(Unaudited)
1. Basis of Presentation
The consolidated financial statements include the accounts of Jayark Corporation
and its wholly owned subsidiaries (the "Company").
The accompanying unaudited consolidated financial statements reflect all
adjustments (consisting of only normal and recurring accruals and adjustments)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. These consolidated financial
statements are condensed and therefore do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The consolidated financial statements should be read in
conjunction with the audited financial statements and footnotes for the year
ended April 30, 2000, included on the Company's report on Form 10-K. The
Company follows the same accounting policies in preparation of interim reports.
The Company's operating results for any particular interim period may not be
indicative of results for the full year.
2. Reclassifications
Certain reclassifications have been made in the 1999 financial statements to
conform them to the presentation used in the 2000 financial statements.
3. Segment Data
The Company operates in three reportable business segments as follows:
The Company's audio-visual subsidiary, AVES Audio Visual Systems, Inc. ("AVES"),
distributes and rents a broad range of audio, video and presentation equipment,
and supplies to businesses, churches, hospitals, hotels and educational
institutions
MED Services Corp. ("Med") finances the manufacture, sales and rental of medical
equipment.
Fisher Medical Corporation ("Fisher") is in the process of developing and
manufacturing medical supplies and equipment. Its customer base includes
hospitals, nursing homes and individuals.
For the quarters ended July 31, 2000 and 1999, the net assets, net revenues and
net income of the Company are attributable primarily to the operations of AVES.
However, for the quarter ended July 31, 2000, Fisher, which was acquired in
January 2000, had net revenues of approximately $8,000 and a net loss of
approximately $263,000, primarily due to continuing research and development
activities. Fisher's net assets at July 31, 2000, are approximately $467,000.
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Three Months Ended July 31, 2000 as compared to July 31, 1999
NET REVENUES
Consolidated Revenues of $3,928,000 for the three months ended July 31,
2000, increased $497,000, or 14.5%, as compared to the same period in 1999,
primarily due to a $489,000 increase in sales at AVES. This increase at AVES
was primarily due to the Company's success at winning some larger contractual
school bids for the first quarter of fiscal 2001. Fisher had $8,000 in initial
sales of a specialty medical product introduced to the market for evaluation,
testing and trials.
COST OF REVENUES
Consolidated Cost of Revenues of $3,357,000 increased $473,000, or 16.4%,
as compared to the same period last year. The increase was a result of the
increase in sales.
GROSS MARGIN
Consolidated Gross Margin of $571,000 was 14.5% of revenues, as compared to
$547,000, or 16.0%, for the same period last year. This decrease in gross
margin percentage was a result of the lower margins typically experienced with
larger contractual bids similar to those awarded to AVES in the first quarter of
fiscal 2001.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $661,000 increased $242,000 or 57.7% as compared
to the same period last year. This increase was principally due to $221,000 in
expenses incurred by Fisher. These expenses were the result of the continued
research, development and production of specialty medical products for
introduction to the market for evaluation, testing and trials. AVES' spending
increased $13,000 as compared to the same period last year primarily due to
increased payroll expenses. Corporate expenses increased $4,000 as compared to
last year. Med's expenses increased $4,000 as compared to the same period last
year.
OPERATING INCOME (LOSS)
Consolidated Operating Loss of $90,000 increased $218,000, or 170.9%, as
compared to consolidated operating income of $128,000 for the same period last
year. This increased loss was a result of the expenses incurred by Fisher for
their research and development efforts.
INTEREST EXPENSE
Consolidated Net Interest Expense of $34,000 increased $7,000, or 24.0%.
This increase was the result of an increase in the outstanding balance on the
Company's line of credit primarily due to funds used for the new subsidiary,
Fisher.
NET INCOME (LOSS)
Consolidated Net Loss of $124,000 increased as compared to consolidated
net income of $100,000 during the same period last year. The $224,000
increased loss, or 224.0%, was essentially a result of the $221,000 in expenses
recognized at Fisher due to research, development and production activities.
The operating results of AVES continue to be consistent and strong as compared
to the first quarter of fiscal 2000.
LIQUIDITY AND CAPITAL RESOURCES
Consolidated open lines of credit available to the Company for borrowing were
$451,000 at July 31, 2000, and $881,000 at April 30, 2000. The increase in
borrowing levels is primarily due a temporary increase in accounts receivable
due to the larger contractual bids billed by AVES in the first quarter of fiscal
2001. In addition, the loss experienced at Fisher due to selling, general and
administrative expenses, resulting from research, development and production
activities, contributed to increased borrowing levels on the Company's line of
credit. It is the opinion of the Company's management that operating expenses,
as well as obligations due during the next fiscal year, will be met
primarily by cash flow generated from operations and from available borrowing
levels.
Working capital was $212,000 at July 31, 2000, compared with $379,000 at April
30, 2000. The decrease in working capital is largely due to the operating loss
incurred in the first quarter of fiscal 2001.
Net cash used by operating activities was $744,000 in 2000 as compared with net
cash provided of $311,000 in 1999. This increase in net cash used was due to
increases in net losses, resulting from increased selling, general and
administrative expenses at Fisher, increases in accounts receivable,
attributable to the larger contractual bids billed by AVES in the first quarter
of fiscal 2001, and increased inventory levels. These increases in net cash
used were partially offset by net cash provided by increases in accounts payable
and accrued salaries.
Cash flows used in investing activities were $106,000 in 2000 as compared to
$4,000 in 1999. This increase was principally due to purchases of property,
equipment and intangibles at Fisher for the development of specialty medical
products.
Net cash provided by financing activities was $434,000 in 2000, compared to cash
used of $3,000 in 1999, due to increased borrowing on the Company's line of
credit.
All per share and weighted average share amounts have been restated to reflect
the one for ten reverse stock split that was effective on January 7, 2000 at
which time each ten (10) issued and outstanding shares of Common Stock of the
Corporation, par value $.01 per share, were automatically converted into one (1)
validly issued, fully paid and nonassessable share of Common Stock of the
Corporation, par value $.01 per share.
Subsequent Events
On August 25, 2000, Fisher amended its January 5, 2000, employment
agreements with Stephen Fisher, Sr. and Stephen Fisher, II. to
provide the Employees with an equity position in the Company to
provide additional incentive to the Employees. The amendments grant
the Employees a Non-Qualified Incentive Stock Option to purchase
125,000 shares of the Common Stock of Jayark Corporation at a price
equal to $1.15, such option to be immediately exercisable and shall
expire on the expiration of the Employment Agreement.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
10(50) Amendment to Employment Agreement dated August 25,
2000, between Fisher Medical Corporation and Stephen Fisher,
Sr.
10(51) Amendment to Employment Agreement dated August 25,
2000, between Fisher Medical Corporation and Stephen Fisher,
II.
(b) Report on Form 8-K - None
Signatures
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 thereunto duly authorized.
JAYARK CORPORATION
Registrant
/s/ David L. Koffman September 12, 2000
David L. Koffman, President
Chief Executive Officer
/s/ Robert C. Nolt September 12, 2000
Robert C. Nolt
Chief Financial Officer
Exhibits
10(50)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment dated as of August 25, 2000 (the Amendment) to
that certain Employment Agreement dated as of January 5, 2000 (the
Employment Agreement) by and between Fisher Medical Corporation, a
Nevada corporation (the Company) and Stephen M. Fisher, Sr. (the
Employee)
WHEREAS, the Company and the Employee are parties to the
Employment Agreement and wish to amend the Employment Agreement as
herein provided in order to provide Employee with an equity position
in the Company to provide additional incentive for the Employee
NOW THEREFOR, in consideration of the premises, and other good
and valuable consideration the receipt and sufficiency if which is
hereby acknowledged, the parties agree as follows:
1. The Employment Agreement is amended by adding a new Section
3B, such new Section 3B to following existing Section 3 and to read
as follows:
Section 3B Equity Position. In order to allow Employee to
participate in the increased value of the Company the Company's
parent, Jayark Corporation shall, and does hereby, grant to the
Employee a Non-Qualified Incentive Stock Option to purchase 125,000
shares of the Common Stock of Jayark Corporation at a price equal
$1.15, such option to be immediately exercisable and shall expire on
the expiration of the Employment Agreement.
2. All other terms and provisions of the Employment Agreement
shall remain in full force and effect.
IN WITNESS WHEREFOR, the parties have executed and delivered
this Amendment as of the date first above written.
Agreed and consented to
JAYARK CORPORATION
By: /s/ David L. Koffman
David L. Koffman, Chief Executive Officer
FISHER MEDICAL CORPORATION
By: /s/ David L. Koffman
David L. Koffman, Vice-President
EMPLOYEE
By: /s/ Stephen M. Fisher, Sr.
Stephen M. Fisher, Sr.
10(51)
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment dated as of August 25, 2000 (the Amendment) to
that certain Employment Agreement dated as of January 5, 2000 (the
Employment Agreement) by and between Fisher Medical Corporation, a
Nevada corporation (the Company) and Stephen M. Fisher, II. (the
Employee)
WHEREAS, the Company and the Employee are parties to the
Employment Agreement and wish to amend the Employment Agreement as
herein provided in order to provide Employee with an equity position
in the Company to provide additional incentive for the Employee
NOW THEREFOR, in consideration of the premises, and other good
and valuable consideration the receipt and sufficiency if which is
hereby acknowledged, the parties agree as follows:
1. The Employment Agreement is amended by adding a new Section
3B, such new Section 3B to following existing Section 3 and to read
as follows:
Section 3B Equity Position. In order to allow Employee to
participate in the increased value of the Company the Company's
parent, Jayark Corporation shall, and does hereby, grant to the
Employee a Non-Qualified Incentive Stock Option to purchase 125,000
shares of the Common Stock of Jayark Corporation at a price equal
$1.15, such option to be immediately exercisable and shall expire on
the expiration of the Employment Agreement.
2. All other terms and provisions of the Employment Agreement
shall remain in full force and effect.
IN WITNESS WHEREFOR, the parties have executed and delivered
this Amendment as of the date first above written.
Agreed and consented to
JAYARK CORPORATION
By: /s/ David L. Koffman
David L. Koffman, Chief Executive Officer
FISHER MEDICAL CORPORATION
By: /s/ David L. Koffman
David L. Koffman, Vice-President
EMPLOYEE
By: /s/ Stephen M. Fisher, II
Stephen M. Fisher, II
[ARTICLE] 5
[CIK] 0000053260
[NAME] JAYARK CORPORATION
[PERIOD-TYPE] 3-MOS
[FISCAL-YEAR-END] APR-30-2001
[PERIOD-START] MAY-01-2000
[PERIOD-END] JUL-31-2000
[CASH] 114,767
[SECURITIES] 0
[RECEIVABLES] 2,362,610
[ALLOWANCES] (77,000)
[INVENTORY] 620,227
[CURRENT-ASSETS] 3,101,942
[PP&E] 831,974
[DEPRECIATION] 349,862
[TOTAL-ASSETS] 3,902,194
[CURRENT-LIABILITIES] 2,889,817
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 27,739
[OTHER-SE] (297,809)
[TOTAL-LIABILITY-AND-EQUITY] 3,902,194
[SALES] 3,928,080
[TOTAL-REVENUES] 3,928,080
[CGS] 3,357,328
[TOTAL-COSTS] 3,357,328
[OTHER-EXPENSES] 661,248
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 33,955
[INCOME-PRETAX] (124,451)
[INCOME-TAX] 0
[INCOME-CONTINUING] (124,451)
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] (124,451)
[EPS-BASIC] (.04)
[EPS-DILUTED] (.04)