SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1 to
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the Quarterly period ended March 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-23528
J.A. INDUSTRIES, INC.
(Exact name of small business issuer as specified on its charter)
DELAWARE 13-3421337
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
34A-2755 LOUGHEED HIGHWAY, SUITE 522,
PORT COQUITLAM, B.C. V3B 5Y9 CANADA
(Address of principal executive offices)
ISSUER'S TELEPHONE NUMBER,
INCLUDING AREA CODE: 604-941-3413
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 practical date.
Common Stock, par value $0.0025 per share
CLASS
9,417,904
NUMBER OF SHARES OUTSTANDING
J.A. INDUSTRIES, INC.
CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
THIRD QUARTER
MARCH 31, 1996
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J.A. INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31
1996 1995
ASSETS
CURRENT
Cash............................................................................................... $ 2,081 $ --
Accounts receivable
Trade........................................................................................... -- 561,107
Other........................................................................................... 14,900 80,168
Inventory (note 3)................................................................................. -- 385,449
Prepaid expenses and deposits...................................................................... -- 44,803
16,981 1,071,527
Real estate held for resale.......................................................................... -- 875,000
Property and equipment (note 4)...................................................................... -- 271,224
Investments.......................................................................................... -- 200
Intangible assets (note 5)........................................................................... -- 117,775
$16,981 $2,335,726
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J.A. INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31
1996 1995
LIABILITIES
CURRENT
Bank indebtedness............................................................................. $ -- $ 102,023
Accounts payable.............................................................................. 158,576 663,380
Accrued liabilities........................................................................... 29,000 --
Due to shareholders........................................................................... 33,100 80,943
Equipment loans............................................................................... --
Current portion of long-term debt (note 7).................................................... -- 118,119
220,676 964,465
Loans from shareholders (note 6)................................................................ -- 136,940
Long-term debt (note 7)......................................................................... -- 564,180
220,676 1,665,585
Share Capital and Deficit
Capital stock:
Authorized:
20,000,000 common shares with a par value of $0.0025 per share
Issued:
9,417,904 shares (1995 -- 6,703,417)....................................................... 23,545 16,759
Additional paid-in capital...................................................................... 5,504,157 4,268,092
Accumulated deficit............................................................................. (4,904,793) (3,621,833)
Cumulative translation adjustment............................................................... (4,504) 7,124
Treasury stock, at cost......................................................................... (131,250) --
487,155 670,142
$ 707,831 $ 2,335,727
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J.A. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE NINE MONTHS ENDED
MARCH 31
1996 1995
SALES........................................................................................... $ 709,747 $ 3,452,982
Cost of sales................................................................................... 606,707 2,897,666
Gross profit.................................................................................... 103,040 555,316
Selling and marketing expenses.................................................................. 244 114,676
General and administrative expenses............................................................. 719,055 741,524
Loss from operations............................................................................ (616,259) (300,884)
Other income (expense).......................................................................... (1,395) (130,683)
Loss on disposal of subsidiary.................................................................. (73,196) --
Consolidated net loss........................................................................... $ (690,850) $ (431,567)
Loss per share.................................................................................. $ 0.07 $ 0.06
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J.A. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
FOR THE THREE MONTHS ENDED
MARCH 31
1996 1995
SALES........................................................................................... $ -- $ 1,035,397
Cost of sales................................................................................... -- 920,208
Gross profit.................................................................................... -- 115,189
Selling and marketing expenses.................................................................. -- 17,422
General and administrative expenses............................................................. 194,119 262,027
Loss from operations............................................................................ (194,119) (164,260)
Other income (expense).......................................................................... -- (76,309)
Loss on disposal of subsidiary.................................................................. -- --
Consolidated net loss........................................................................... $ (194,119) $ (240,569)
Loss per share.................................................................................. $ 0.02 $ 0.04
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J.A. INDUSTRIES, INC.
CONSOLIDATED STATEMENT OF CHANGES IN FINANCIAL POSITION
(UNAUDITED)
FOR THE NINE MONTHS ENDED
MARCH 31
1996 1995
CASH PROVIDED BY (USED IN)
Operating activities
Net loss for the period....................................................................... $ (690,850) $ (431,566)
Items not affecting cash:
Amortization............................................................................... 20,392 114,180
Issuance of stock for services............................................................. 171,475 --
Loss on sale of subsidiary................................................................. 74,591 54,470
Changes in non-cash working capital........................................................... 201,099 (117,102)
(223,293) (380,018)
Financing activities
Issue of common shares........................................................................ 170,000 473,113
Cancellation of shares on settlement of debt.................................................. -- (53,648)
Equipment Loans............................................................................... -- (119,048)
Loan from shareholders........................................................................ 10,000 4,576
Long-term debt................................................................................ -- (65,831)
180,000 239,162
Investing activities
Purchase of property and equipment............................................................ -- (4,578)
Proceeds on sale of subsidiary................................................................ 100 172,656
Proceeds on disposition of investments........................................................ -- 21,875
100 189,953
Increase (decrease) in cash position............................................................ (43,193) 49,097
Effect of currency translation on cash flow..................................................... -- 15,022
Cash position beginning of period............................................................... 45,274 (166,142)
Cash position end of period..................................................................... $ 2,081 $ (102,023)
Represented by:
Cash.......................................................................................... $ 2,081 $ --
Bank indebtedness............................................................................. -- (102,023)
$ 2,081 $ (102,023)
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J.A. INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(UNAUDITED)
FOR THE NINE MONTHS ENDED MARCH 31, 1996
AND THE YEAR ENDED JUNE 30, 1995
ADDITIONAL FOREIGN STOCK
CAPITAL STOCK PAID IN OPERATING CURRENCY SUBSCRIPTION TREASURY
SHARES AMOUNT CAPITAL DEFICIT TRANSLATION RECEIVABLE STOCK
BALANCE JUNE 30, 1994........... 6,493,778 $16,234 $3,849,152 $(3,190,267) $(7,561) $ -- $ --
Issued for cash................. 631,383 1,578 494,672 -- -- -- --
Issued for consulting fees...... 1,032,292 2,581 637,517 -- -- (144,000) --
Issued to repay debt............ 50,000 125 51,982 -- -- -- --
Issued as compensation.......... 12,600 32 12,569 -- -- -- --
Reverse equipment purchase...... (600,000) (1,500) (52,148) -- -- -- --
Shares cancelled................ (68,450) (171) 171 -- -- -- --
Aggregate adjustment resulting
from translation of financial
statements into U.S.
dollars....................... -- -- -- -- 3,057 -- --
Net loss for the year ended June
30, 1995...................... -- -- -- (1,714,526) -- -- --
Balance June 30, 1995........... 7,551,603 18,879 4,993,915 (4,904,793) (4,504) (144,000) --
Issued for cash................. 500,000 1,250 168,750 -- -- -- --
Issued for consulting fees...... 100,000 250 27,225 -- -- -- --
Services rendered as
consideration for shares...... -- -- -- -- -- 144,000 --
Reverse Hutronix, Inc.
acquisition................... -- -- -- -- -- -- (131,250)
Issued to pay debt.............. 1,266,301 3,166 314,267 -- -- -- --
Net loss for the nine months
ended March 31, 1996.......... -- -- -- $ -- -- --
Balance March 31, 1996.......... 9,417,904 $23,545 $5,504,157 $(4,904,793) $(4,504) $ -- $(131,250)
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J.A. INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996 AND 1995
1. SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of:
J.A. Industries, Inc., a Delaware corporation and the following wholly
owned subsidiaries:
J.A. Industries (Canada), Inc., a Canadian corporation. Granite Marketing
Corp., a Cayman Island corporation. Hutronix, Inc. an Arizona corporation. QDS,
de Mexico, S.A. de C.V. a Mexican corporation. and the 96% owned subsidiary,
Hutronix de Mexico, S.A. de C.V. which has been inactive since August 17, 1982.
All significant inter-company balances and transactions have been
eliminated on consolidation.
J.A. Industries (Canada), Inc. was disposed of during the year ended June
30, 1995. Hutronix, Inc. and QDS de Mexico were disposed of during the year
ended June 30, 1996 subject to shareholder approval.
Translation of Foreign Currencies
Account balances and transactions denominated in foreign currencies have
been translated into U.S. funds as follows:
Assets and liabilities at the rates of exchange prevailing at the balance
sheet date; Revenue and expenses at average exchange rates for the period in
which the transaction occurred; Exchange gains and losses arising from foreign
currency transactions are included in the determination of net earnings for the
period.
2. SALE OF SUBSIDIARY
On November 23, 1995, the Company sold all of the common shares of
Hutronix, Inc. and on and on August 15, 1995 the Company sold all of the common
share of Granite Marketing Corporation for $100. The two transaction resulted in
a loss of $73,196, which has been included in other expense for the period ended
December 31, 1995. Granite Marketing Corp. was inactive during the period.
3. INVENTORY
1995 1994
Inventory consists of:
Raw materials.................................................................... $ -- $531,321
Less: Reserve for obsolescence................................................... -- 190,000
-- 341,321
Work-in-process.................................................................. -- 104,604
Finished goods................................................................... -- 7,349
$ -- $453,274
4. PROPERTY AND EQUIPMENT
ACCUMULATED NET BOOK VALUE
COST AMORTIZATION 1995 1994
Land............................................................................. $ -- $ -- $ -- $ --
Building......................................................................... -- -- -- --
Forklift......................................................................... -- -- -- 7,410
Vehicles......................................................................... -- -- -- 81
Office equipment................................................................. -- -- -- 46,264
Computer equipment............................................................... -- -- -- 27,957
Manufacturing equipment.......................................................... -- -- -- 199,669
Leasehold improvements........................................................... -- -- -- 935
Assets not-in-service............................................................ -- -- -- 232,520
$ -- $ -- $ -- $514,836
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J.A. INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
MARCH 31, 1996 AND 1995
5. INTANGIBLE ASSETS
1995 1994
Intangible assets comprise the following:
Goodwill........................................................................................ $ -- $ 128,767
Incorporation costs............................................................................. -- 3,000
Patent costs.................................................................................... -- 8,895
-- 140,662
Amortization.................................................................................... -- 16,096
$ -- $ 124,566
6. LOANS FROM SHAREHOLDERS
Loans from shareholders comprise the following:
Loan payable to Alexander Michie, balance due on demand with no stated interest rate................... $20,000 $ --
Loan payable to 391566 B.C. Ltd., balance due on demand with no stated interest rate................... 1,064 --
Loan payable to Alexander Michie. The loan is unsecured and has no terms of repayment. The loan has a
stated interest rate of prime plus 2%................................................................ -- 138,146
$21,064 $138,146
7. LONG-TERM DEBT
1995 1994
Note payable to a bank executed through the Industrial Development Authority of the City of Douglas,
Arizona due in quarterly instalments of $12,821, plus interest at 65% of prime (9.0% as of March 31,
1995), due May 2005; secured by a deed of trust on the real estate held for sale, an irrevocable letter
of credit from a bank in the amount of the outstanding note payable balance and the assignment of a
life insurance policy owned by a related party on the president of Hutronix, Inc. At March 31, 1995 the
company was not in compliance with certain restrictive covenants contained in this note................ $ -- $564,087
Note payable to a supplier due in quarterly instalments of $8,361 plus interest at 6% unsecured, due
March 15, 1995......................................................................................... -- 8,086
Promissory note payable to a lender. The principal of $36,155 (CDN $50,000) plus accrued interest at 24%
per annum is payable on demand. The lender has stated that it is not her intention to demand repayment
of the note before March 31, 1996...................................................................... -- 51,283
Mortgage payable, on manufacturing equipment, to the Province of British Columbia, Canada due in monthly
payments of $1,787 (CDN $2,500) plus interest at 6% per annum. The principal balance is due July 1,
1995................................................................................................... -- 83,078
-- 706,534
Less: Current portion.................................................................................... -- 155,270
$ -- $551,264
8. INCOME TAX
The Company has losses for income tax purposes which may be carried forward
and applied to reduce future income taxes. The deferred tax benefit related to
these losses has not been recorded in the accounts as there is not virtual
certainty of realization.
All of the income attributable to Granite Marketing Corp. (a Cayman Island
corporation) is reported as non-taxable.
9. COMMITMENTS AND CONTIGENCIES
Under the terms of various agreements, the Company has guaranteed payment
of $18,275 in accounting fees and the $546,125 mortgage on the Douglas, Arizona
plant owned by Hutronix, Inc. The reversal of the Hutronix, Inc. purchase
included an idemnification on the above guarantees. Should the other party fail
to perform, the obligations could be asserted against the Company.
F-9
J.A. INDUSTRIES, INC.
NOTES TO FINANCIAL STATEMENTS -- CONTINUED
MARCH 31, 1996 AND 1995
10. SUBSEQUENT EVENT
On January 26, 1996 the shareholders ratified the sale of Hutronix, Inc.
and QDS, de Mexico, S.A. de C.V.
11. CORRECTION OF ERRORS IN PREVIOUSLY ISSUED FINANCIAL STATEMENTS
The Company recorded the results of operation for Hutronix, Inc. and
related subsidiaries for the period until disposition. This had been omitted
because it was the Company's intention to dispose of the subsidiary at the
beginning of the fiscal period. Furthermore, the effect of audit adjustments
from fiscal 1995 were recorded.
As a result of these changes the Company's net loss for the nine months
ended March 31, 1996 decreased by $427,711 and the net loss for the three months
ended March 31, 1996 decreased by $104,286. The Company's net loss per share for
the nine months ended March 31, 1996 decreased by $0.05 and the net loss per
share for the three months ended March 31, 1996 decreased by $0.01.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized
J.A. INDUSTRIES, INC.
per: /s/ ROBERT KNIGHT
ROBERT KNIGHT
CHIEF EXECUTIVE OFFICER
June 24, 1996
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