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: January 31, 1998
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 inc.) (I.R.S. Employer Identification No.)
Post Office Box 741528, Houston, Texas 77274
(Address of principal executive offices ) (Zip Code)
(713) 783-9184
(Registrant's telephone number, including area code)
(Former name, former address and fiscal year, if changed since last report.)
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 January 31, 1998
Common Stock $0.30 Par Value 9,221,197
Part I
Item I.
Jayark Corporation And Subsidiaries
Consolidated Balance Sheets
Unaudited Audited
1/31/98 04/30/97
Assets
Cash and Cash Equivalents $236,232 $67,140
Accounts Receivable-Trade, Less Allowance For 913,698 1,838,585
Doubtful Accounts of $37,231 in January 1998
and $42,000 in April 1997
Other Accounts Receivable 5,277 2,277
Inventories 379,888 412,846
Other Current Assets 37,922 20,572
Total Current Assets 1,573,017 2,341,420
Non Current Assets
Property & Equipment, Less Accumulated 83,039 122,550
Depreciation and Amortization
Excess of Cost Over Net Assets of Businesses 274,082 290,102
Acquired, Less Accum Amortization of
$458,355 in January 1998 and $442,335
in April 1997
Total Non Current Assets 357,121 412,652
Total Assets $1,930,138 $2,754,072
Liabilities
Current Liabilities
Notes Payable & Lines of Credit $107,821 $500,000
Current Maturities of Long Term Debt - 7,394
Accounts Payable 590,476 905,407
Accrued Salaries and Deferred Compensation 199,370 106,531
Accrual Related to Loss on Discontinued 111,606 305,000
Operations - Rosalco
Accrual Related to LCL Investment 113,068 164,579
Other Current Liabilities 463,663 359,512
Total Current Liabilities 1,586,004 2,348,423
Non Current Liabilities
Long Term Debt, Excluding Current Maturities - 7,207
Notes Payable to Related Parties 2,000,000 2,000,000
Subordinated Debentures 1,400,000 1,400,000
Total Non Current Liabilities 3,400,000 3,407,207
Total Liabilities 4,986,004 5,755,630
Stockholders' Equity
Common Stock of $.30 Par Value. Authorized 2,766,359 2,766,359
10,000,000 Shares; Issued 9,221,197 Shares
in January 1997 and 9,221,197 Shares
in April 1997
Additional Paid-In Capital 8,066,122 8,066,122
Deficit (13,888,347) (13,834,039)
Total Stockholders'Equity (3,055,866) (3,001,558)
Total Liabilities & Stockholders' Equity $1,930,138 $2,754,072
See accompanying notes to consolidated financial statements
Jayark Corporation And Subsidiaries
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Six Months Ended
1/31/98 1/31/97 1/31/98 1/31/97
Net Revenues $2,636,318 $2,743,157 $9,957,922 $9,158,844
Costs & Expenses:
Cost of Revenues 2,183,880 2,283,254 8,424,280 7,655,418
Selling, General and Admin 418,099 480,145 1,277,378 1,491,813
Interest 104,897 46,835 310,572 125,065
Other Income - - - ($30,181)
Total Costs & Expenses 2,706,876 2,810,234 10,012,230 9,242,115
Income (Loss) from Cont. Oper ($70,559) (67,077) (54,308) (83,271)
Income (Loss) from Disc. Oper - (1,286,621) - (1,492,958)
Net Income (Loss) (70,559) (1,353,698) (54,308)(1,576,229)
Primary Earnings (Loss) per
Common Share:
Continuing Operations ($0.01) ($0.01) ($0.01) ($0.01)
Discontinued Operations $0.00 ($0.15) $0.00 ($0.18)
Net Income (Loss) ($0.01) ($0.16) ($0.01) ($0.19)
Weighted Average Common Shares 9,221,197 8,802,563 9,221,197 8,390,681
See accompanying notes to consolidated financial statements
Jayark Corporation And Subsidiaries
Consolidated Statements of Cash Flows
For the Nine Months Eded
(Unaudited)
1/31/98 1/31/97
Cash Flows From Operating Activities:
Net Income (Loss) ($54,308) ($1,576,229)
Adjustments to Reconcile Earnings (Loss) to
Cash From Operating Activities:
Depreciation and Amortization of Property 39,571 48,144
and Equipment
Amortization of Excess of Cost Over Net 16,020 16,020
Assets of Businesses Acquired
Net Assets of Discontinued Operations - 1,173,854
(Gain) Loss on Disposition of Assets 31,197 (11,065)
Deferred Income Tax Expense (Benefit) - 243,186
Change in Assets and Liabilities Net of Effects
From Acquisitions of Sus:
(Increase) Decrease in Accounts Receivable Net 921,887 274,473
(Increase) Decrease in Inventories 32,959 128,015
(Increase) Decrease in Other Current Assets (17,349) 37,945
Increase (Decrease) in Accounts Payable (314,931) 21,451
Increase (Decrease) in Federal & State - 695,501
Income Taxes Payable
Increase (Decrease) in Accrued Salaries and 92,839 (83,483)
Deferred Compensation
Increase (Decrease) in Other Liabilities (140,756) (58,458)
Net Cash Provided By (Used In)Operating Act. 607,129 909,354
Cash Flows From Investing Activities:
Capital Expenditures for Property and (31,257) (74,467)
Equipment
Net Cash Provided By (Used In)Investing Act. (31,257) (74,467)
Cash Flows From Financing Activities:
Payment of Notes Payable (392,179) (338,000)
Payment of Long Term Debt (14,601) (26,383)
Purchase (Repayment) of Subordinated Debentures - (940,000)
Proceeds From Issuance of Common Stock - 472,112
Net Cash Provided By (Used In) Financing Act. (406,780) (832,271)
Net Increase (Decrease) in Cash and Cash
Equivalents 169,092 2,615
Cash & Cash Equivalents at Beginning of Year 67,140 350,928
Cash & Cash Equivalents at End of Year $236,232 $353,543
Supplemental Disclosures of Cash Information:
Cash Paid For:
Interest $111,239 $157,218
Non-Cash Transactions:
Common Stock Issued in Connection With - 472,112
LCL Investment
See accompanying notes to consolidated financial statements
Notes to Consolidated Financial Statements
(Unaudited)
1. Jayark Corporation ("Jayark" or "the Company") conducts
its operations through AVES Audiovisual Systems, Inc.
("AVES"), a wholly owned subsidiary. The consolidated
balance sheet of Jayark Corporation and subsidiaries (the
"Company"), as of January 31, 1998, and the related
consolidated statements of operations and cash flows for the
periods ended January 31, 1998 and 1997 are unaudited. The
consolidated balance sheet as of April 30, 1997 has been
derived from audited financial statements. The consolidated
financial statements should be read in conjunction with the
audited financial statements and footnotes for the year
ended April 30, 1997, included in the Company's report on
Form 10-K.
2.The interim 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. The Company's operating results for any particular
interim period may not be indicative of results for the full
year.
3. Certain reclassifications have been made in the 1997
financial statements to conform them to and make them
consistent with the presentation used in the 1998 financial
statements.
Item 2.
Management's Discussion & Analysis of Results of Operations
Three Months Ended January 31, 1998 as compared to January 31, 1997
NET REVENUES
Consolidated Revenues of $2,636,000 for the period
ended January 31, 1998 decreased $107,000, or 3.9%, as
compared to the same period in 1997. The decrease is the
result of a $88,000 decrease in direct sales, and a $19,000
decrease in contract and rental sales.
COST OF REVENUES
Consolidated Cost of Revenues of $2,184,000 decreased
$99,000, or 4.4% in 1997, as compared to the same period
last year. The decrease reflects a $76,000 decrease in
direct sale cost, a $20,000 decrease in contract and rental
sale cost, and a $3,000 increase in purchase discounts.
GROSS MARGIN
Consolidated Gross Margin of $452,000 was 17.2% of
revenues, as compared to $460,000 16.8% for the same period
last year. AVES gross margin percentage increased as a
result of a 4.8% increase in contract and rental sale
margin, and a .3% increase in purchase discounts taken,
which was offset by a .1% decrease in direct sale margin.
The direct sale margin for the period ended January
31, 1998 decreased to 11.6% from 11.7% in 1997. The
contract and rental sale gross margin for the period ended
January 31, 1998 increased to 63.7% from 58.9% in 1997 due
to a change in product mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $418,000 decreased $62,000 or
12.9% as compared to the same period last year. Corporate
decreased travel and entertainment by $9,000, insurance by
$21,000, and payroll and other miscellaneous expenses by
$4,000 as a result of the Company's overall cost reductions
and the discontinued operations of Rosalco, Inc., a wholly
owned subsidiary of Jayark. AVES decreased depreciation by
$3,000, exhibit expense and freight out by $9,000, payroll
by $11,000, building repairs and other miscellaneous
expenses by $5,000.
INTEREST EXPENSE
Consolidated Interest Expense of $105,000 increased
$58,000, or 123.9%. Corporate interest increased $42,000 as
a result of the discontinued operations of Rosalco, Inc., a
wholly owned subsidiary of Jayark. This interest was
previously charged to Rosalco, Inc. through an intercompany
account. Additionally, $16,000 of the increase is based on
an increase in the borrowing.
LOSS FROM CONTINUING OPERATIONS
Consolidated Loss from Continuing Operations of
($71,000) increased $4,000 from the same period last year.
This is primarily the result of a $62,000 decrease in
Selling, General, and Administrative expenses as a result of
the Company's overall cost reduction and the discontinued
operations of Rosalco, Inc., a wholly owned subsidiary of
Jayark., which was offset by a decrease of $8,000 in gross
margin, and a $58,000 increase in interest expense.
(LOSS) FROM DISCONTINUED OPERATIONS
Consolidated Loss from Discontinued Operations of $0
decreased $1,287,000 from the same period last year. This
reflects the loss incurred by the discontinued operation of
Rosalco, Inc., a wholly owned subsidiary of Jayark.
NET INCOME (LOSS)
Consolidated Net Loss of ($71,000) decreased as
compared to a net loss of ($1,354,000) during the same
period last year. The $1,283,000 decrease is a result of a
$1,287,000 reduction in losses from the discontinued
operations of Rosalco offset by a $4,000 increase in the
loss from continuing operations.
Nine Months Ended January 31, 1998 as compared to January 31, 1997
NET REVENUES
Consolidated Revenues of $9,958,000 for the period
ended January 31, 1998 increased $799,000, or 8.7%, as
compared to the same period in 1996. The increase is the
result of a $824,000 increase in direct sales, which was
offset by a $25,000 decrease in contract and rental sales.
COST OF REVENUES
Consolidated Cost of Revenues of $8,424,000 increased
$769,000 or 10.0% in 1997, as compared to the same period
last year. The increase reflects a $766,000 increase in
direct sale costs and a $12,000 increase in contract and
rental sale costs, which was offset by a $9,000 increase in
purchase discounts.
GROSS MARGIN
Consolidated Gross Margin of $1,534,000 was 15.4% of
revenues, as compared to $1,503,000 or 16.4% for the same
period last year. AVES gross margin percentage decreased as
a result of a .5% decrease in direct sale margin, and a 8.5%
decrease in contract and rental sale margin.
The direct sale gross margin for the period ended
January 31, 1998 decreased to 11.8% from 12.3% in 1997 due
to competitive pressures in the market. The contract and
rental sale gross margin for the period ended January 31,
1998 decreased to 49.0% from 57.5% in 1996 due to
competitive pressures in the market and a change in product
mix.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $1,277,000 decreased $214,000,
or 14.4%, as compared to the same period last year.
Corporate decreased travel and entertainment by $25,000,
professional fees by $124,000, and insurance by $48,000 as a
result of the Company's overall cost reductions and the
discontinued operations of Rosalco, Inc., a wholly owned
subsidiary of Jayark. AVES decreased building repairs and
maintenance by $4,000, depreciation expense by $6,000 and
other miscellaneous expenses by $7,000.
INTEREST EXPENSE
Consolidated Interest Expense of $311,000 increased
$186,000, or 148.3%. Corporate interest increased $126,000
as a result of the discontinued operations of Rosalco, Inc.,
a wholly owned subsidiary of Jayark. This interest was
previously charged to Rosalco, Inc. through an intercompany
account. Additionally, $60,000 of the increase is based on
an increase in borrowing.
OTHER INCOME
Consolidated Other Income of $0 decreased $30,000 from
the same period last year. The decrease is a result of a
$11,000 gain in 1996 on the sale of a vehicle and a $19,000
tax refund in 1996.
LOSS FROM CONTINUING OPERATIONS
Consolidated Loss from Continuing Operations of
$54,000 decreased $29,000, or 34.8%. This $29,000
improvement is comprised of a $214,000 decrease in Selling,
General, and Administrative expenses, and a $31,000 increase
in gross margin which was offset by a $186,000 increase in
interest expense and a $30,000 decrease in other income.
(LOSS) FROM DISCONTINUED OPERATIONS
Consolidated (Loss) from Discontinued Operations
reflects losses incurred by the discontinued operation of
Rosalco, Inc., a wholly owned subsidiary of Jayark. The
($1,493,000) decrease in 1998 is a result of the operations
of Rosalco, Inc. as a discontinued operation.
NET INCOME (LOSS)
Consolidated Net (Loss) of ($54,000) as compared to a
net loss of ($1,576,000) during the same period last year
occurred primarily as a result of the write off of the
assets of Rosalco, Inc.
LIQUIDITY AND CAPITAL RESOURCES
At January 31, 1998, consolidated open lines of credit
available to the Company for borrowing, were $1,150,000 as
compared to $750,000 at April 30, 1997. It is the opinion
of the Company's management that operating expenses, as well
as obligations coming due during the next fiscal year, will
be met primarily by cash flow generated from operations and
from available borrowing levels.
Working capital amounted to a deficit of $12,987 at January
31, 1998, compared to a deficit of $7,003 at April 30, 1997.
The decrease is principally due to the operating loss
generated in the current year.
Net cash provided by operating activities was $607,000 in
1998, compared $909,000 net cash provided in 1997. The
change was due the increase in accounts receivable, and
accrued salaries. However, this was offset by decreases in
the net assets of discontinued operations, deferred income
tax expense, inventories, accounts payable and other
liabilities.
Net cash used in investing activities was $31,000 in 1998,
compared to $74,000 in 1997.
Net cash used in financing activities was $407,000 in 1998,
compared to $832,000 net cash used in 1997. The change was
principally due to the repayment of subordinated debentures
in 1997.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(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 March 17, 1998
David L. Koffman, President
Chief Executive Officer
/s/ Robert C. Nolt March 17, 1998
Robert C. Nolt
Chief Financial Officer
Financial Data Schedule
[ARTICLE] 5
[LEGEND]
[RESTATED]
[CIK] 0000053260
[NAME] Jayark Corporation
<MULIPLIER> 1000.0
[CURRENCY] USD
[FISCAL-YEAR-END] 04/30/98
[PERIOD-START] 11/01/97
[PERIOD-END] 01/31/98
[PERIOD-TYPE] 9-mos
[EXCHANGE-RATE]
[CASH] 236
[SECURITIES] -
[RECEIVABLES] 919
[ALLOWANCES] -
[INVENTORY] 380
[OTHER] 38
[CURRENT-ASSETS] 1,573
[PP&E] 83
[DEPRECIATION] -
[TOTAL-ASSETS] 2,930
[CURRENT-LIABILITIES] 1,586
[BONDS] -
[COMMON] 2,766
[PREFERRED-MANDATORY] -
[PREFERRED] -
[OTHER-SE] -
[TOTAL-LIABILITY-AND-EQUITY] 1,930
[SALES] 9,958
[TOTAL-REVENUES] 9,958
[CGS] 8,424
[TOTAL-COSTS] 9,702
[OTHER-EXPENSES] -
[LOSS-PROVISION] -
[INTEREST-EXPENSE] 311
[INCOME-PRETAX] (54)
[INCOME-TAX] -
[INCOME-CONTINUING] (54)
[DISCONTINUED] -
[EXTRAORDINARY] -
[CHANGES] -
[NET-INCOME] (54)
[EPS-PRIMARY] (0.01)