<PAGE>
Form 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended Commission file number: 1-12967
December 31, 1997
NEI WEBWORLD, INC.
(Exact name of registrant as specified in its charter)
TEXAS 75-2524630
(State or other jurisdiction of (IRS employer
incorporation or organization) identification no.)
4646 BRONZE WAY 75236
DALLAS, TEXAS 75236 (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code:
(214) 330-7273
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past twelve 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 ninety days.
Yes x No
----- -----
The number of shares of the registrant's common stock, $.01 par value,
outstanding as of February 10, 1998 was 3,719,778 shares.
Documents Incorporated by reference: None
Transitional Small Business Disclosure Format: Yes No x
----- ------
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 1. CONDENSED FINANCIAL STATEMENTS
NEI WEBWORLD, INC.
CONDENSED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1997
------------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash................................................... $ 76,809 $ 43,460
Account Receivable - net............................... 3,605,373 2,374,985
Inventories............................................ 694,535 731,609
Other Receivables - sale of assets..................... 417,500 -
Prepaid expenses and other............................. 145,183 16,403
----------- ----------
Total current assets................................... 4,939,400 3,166,457
PROPERTY, PLANT AND EQUIPMENT - Net..................... 9,916,196 4,580,355
INTANGIBLES AND OTHER ASSETS - Net...................... 419,638 716,520
----------- ----------
TOTAL.................................................. $15,275,234 $8,463,332
=========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable........................................... $ 2,514,518 $1,836,547
Current portion of long-term debt...................... 597,320 664,286
Accounts payable....................................... 3,231,908 1,576,858
Accrued expenses and other liabilities................. 668,433 442,412
Accrued equipment installation costs................... - 580,000
----------- ----------
Total current liabilities.............................. 7,012,179 5,100,103
LONG-TERM DEBT - Less current portion................... 5,164,663 3,218,333
SHAREHOLDERS' EQUITY:
Redeemable common stock warrants for 1,150,000 shares.. 126,875 -
Common stock: 3,719,778 and 2,719,778 shares
issued and outstanding, respectively.................. 37,198 27,198
Additional paid-in capital............................. 5,410,606 1,033,687
Accumulated deficit.................................... (2,376,287) (790,989)
Notes receivable - shareholders........................ (100,000) (125,000)
----------- ----------
Total shareholders' equity............................. 3,098,392 144,896
----------- ----------
TOTAL.................................................. $15,275,234 $8,463,332
=========== ==========
</TABLE>
See notes to condensed financial statements.
2
<PAGE>
NEI WEBWORLD, INC.
CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES................................ $ 5,749,294 $ 5,511,789 $15,266,691 $12,820,032
COST OF SALES............................ 5,607,548 4,374,998 14,065,911 10,611,446
----------- ----------- ----------- -----------
GROSS PROFIT............................. 141,746 1,136,791 1,200,780 2,208,586
OPERATING EXPENSES:
Selling, general and administrative..... 701,096 549,739 1,703,030 1,166,539
Depreciation - property................. 230,596 166,292 530,436 378,899
Amortization - intangibles.............. 39,524 54,038 133,087 157,143
Management and consulting fees.......... 32,500 32,500 83,666 138,499
----------- ----------- ----------- -----------
Total................................ 1,003,716 802,569 2,450,219 1,841,080
OPERATING INCOME (LOSS).................. (861,970) 334,222 (1,249,439) 367,506
OTHER INCOME (EXPENSE)
Interest expense........................ (203,105) (157,714) (424,580) (392,006)
Gain on fire settlement................. 0 0 0 271,265
Gain on sale of assets.................. 242,231 0 242,231 0
Asset acquisition expenses.............. 0 0 (182,632) 0
Other................................... (12,520) 1,699 (5,878) 19,413
----------- ----------- ----------- -----------
Total................................ 26,606 (156,015) (370,859) (101,328)
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME
TAX EXPENSE AND
EXTRAORDINARY ITEM...................... (835,364) 178,207 (1,620,298) 266,178
INCOME TAX (BENEFIT)
EXPENSE................................. - 60,174 - 90,000
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE
EXTRAORDINARY ITEM...................... (835,364) 118,033 (1,620,298) 176,178
EXTRAORDINARY ITEM -
Gain (loss) on debt retirement, net of
income tax benefit.................... - (72,545) 35,000 (72,545)
----------- ----------- ----------- -----------
NET INCOME (LOSS)........................ $ (835,364) $ 45,488 $(1,585,298) $ 103,633
=========== =========== ----------- -----------
EARNINGS PER SHARE - Basic and Diluted
Income (loss) before extraordinary
item.................................. $ (0.22) $ 0.04 $ (0.46) $ 0.06
=========== =========== ----------- -----------
Net Income (loss)....................... $ (0.22) $ 0.02 $ (0.45) $ 0.04
=========== =========== ----------- -----------
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING...................... 3,719,778 2,719,778 3,523,700 2,719,778
=========== =========== ----------- -----------
</TABLE>
See notes to condensed financial statements.
3
<PAGE>
NEI WEBWORLD, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
1997 1996
------------ ----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss).................................. $(1,585,298) $ 103,633
Extraordinary gain on debt retirement.............. (35,000) 108,545
Gain on fire insurance settlement.................. - (271,265)
Gain on sale of assets............................. (242,231) -
Non-cash items in net income (loss):
Depreciation and amortization................... 663,523 536,042
Amortization of debt issuance cost.............. 35,780 17,020
Deferred income taxes........................... - 18,316
Interest expense portion of notes payable
and long-term debt increase.................... 318,253 -
Cash provided by (used for) operating working
capital:
Accounts receivable............................. (1,230,388) (509,828)
Inventories..................................... 37,074 231,241
Prepaid expenses and other...................... (546,280) 19,702
Costs related to insurance claims
settlements.................................... - (83,227)
Accounts payable and accrued liabilities........ 1,881,071 215,490
Accrued equipment installation costs............ (580,000) -
Income taxes payable............................ 45,526
---------- ----------
Net cash provided by (used for) operating
activities................................... (1,283,496) 431,195
INVESTING ACTIVITIES:
Acquisition of assets.............................. - (217,063)
Additions to property, plant and equipment......... (6,009,017) (429,707)
Proceeds from disposition of property, plant
and equipment..................................... 385,000 -
Proceeds from insurance settlement................. - 578,965
Increase in intangibles and other assets........... - (90,079)
---------- ----------
Net cash used for investing activities.......... (5,624,017) (157,884)
FINANCING ACTIVITIES:
Borrowings on notes payable and long-term debt..... 6,357,114 4,711,831
Payments/retirement on notes payable and
long-term debt.................................... (4,083,031) (4,935,142)
Payments for debt issuance cost.................... (113,300) -
Net proceeds from initial public offering.......... 4,755,079 -
Redemption of warrants............................. - (50,000)
Reduction in notes receivable -shareholders........ 25,000 -
---------- ----------
Net cash provided by financing activities....... 6,940,862 (273,311)
---------- ----------
INCREASE IN CASH..................................... 33,349 -
CASH:
Beginning of period................................ 43,460 500
----------- ----------
End of period...................................... $ 76,809 $ 500
=========== ==========
</TABLE>
See notes to condensed financial statements.
4
<PAGE>
NEI WEBWORLD
NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
AS OF AND FOR THE PERIOD ENDED DECEMBER 31, 1997
Note 1: Interim Financial Statements
The unaudited interim financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and applicable SEC regulations. In the opinion of management, all
adjustments (consisting of normal recurring adjustments and accruals) considered
necessary for a fair presentation have been included. Some adjustments involve
estimates which may require revision in subsequent interim periods or at year
end. The unaudited financial statements and footnotes should be read in
conjunction with the Company's financial statements for the year ended March 31,
1997 that are included in Form 10-KSB that was filed with the Securities and
Exchange Commission on June 27, 1997. Operating results for the three month and
nine month periods are not necessarily indicative of results expected for the
remainder of the year.
Note 2: Earnings per Common Share
Basic earnings per common share is based on the weighted average shares
outstanding in each period. Common stock warrants are not included in adjusted
shares outstanding for diluted EPS in the fiscal 1998 amounts because they are
anti-dilutive in the net loss per share computation.
5
<PAGE>
PART 1 - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General: WebWorld is a high-volume commercial printer specializing in the
printing of multi-color freestanding magazines, catalogues, tabloids, inserts
and mail wraps. Historically, the Company has concentrated on the newsprint
sector of the printing industry. Contracts with local newspapers for the
printing of weekly television guides accounted for 72%, 61% and 35% of net
sales for the years ended March 31, 1995, 1996 and 1997, respectively and 23% of
net sales for the quarter and 25% for the nine months ended December 31, 1997.
In September 1996, the Company purchased certain assets of Webworks, Inc., which
allowed it to expand more rapidly into the coated and premium paper segments of
the commercial printing market. The asset acquisition also expanded the
Company's post-press production services, such as stapling, binding, sorting and
folding printed materials for mass mailing.
In June 1997, the Company increased its press production capacity through the
acquisition of an additional heatset web press and also acquired certain pre-
press equipment. In September 1997, the Company purchased certain assets of
Pelican Press, Inc. in order to again increase its press production and post-
press production capacity. Since the purchase of certain assets of Webworks,
Inc. in September 1996 the Company operated separate press and post-press
functions at the Webworks site. In September 1997, the Company vacated the
Webworks facility and, except for a press currently in storage, completed the
installation of the Webworks assets in its primary production facility. In
September 1997, the Company began operation of press and post-press functions at
a third location as a result of its acquisition of certain assets of Pelican
Press, Inc. During the quarter ended December 31, 1997, the Company incurred
press moving and installation costs of approximately $380,000, completed the
acquisition of an adjacent facility for $1.74 million, made building improvement
expenditures of $570,000 and sold its only "air-dry" press for $385,000.
Building improvement costs include the installation of electrical wiring,
emission control, and ancillary equipment which should allow more energy
efficient operation of the large presses. These actions essentially complete
the process of moving the equipment acquired since September, 1996 with the
exception of one press acquired from Webworks, Inc. which remains in storage and
is expected to be moved to the Company's facility in calendar 1998.
The performance of the Company in the most recent quarter was negatively
impacted by several factors. Material and direct labor costs increased
approximately 10% and 15% as a percent of sales, respectively from the average
of the preceeding four quarters due primarily to inefficiencies incurred during
the process of bringing the newly re-installed presses up to satisfactory
operating standards. These increases are reflected in increased paper scrap and
waste and decreased press run time availability. Another factor influencing
the increase in labor cost is a change in the customer mix, away from the long
run, press finished products to short run jobs with significant prepress and
finishing requirements. In addition to these two major expense categories,
repair and maintenance, utilities, and other manufacturing overhead expenses
were approximately 11% higher as a percentage of sales than the preceeding four
quarter average due primarily to increased repair costs incurred during the re-
installation of the presses and the increased utility requirements of the
equipment and building purchased during the quarter.
These operating problems are being addressed by management and improvement is
expected in the fourth quarter, however, management estimates that the Company
will report an additional loss in the fourth quarter.
6
<PAGE>
Selected comparable financial information:
<TABLE>
<CAPTION>
Third Quarter Nine Months
Ended Ended
December 31 December 31
1997 1996 1997 1996
-------- -------- ------- ------
<S> <C> <C> <C> <C>
Net sales........................................ 100.0% 100.0% 100.0% 100.0%
Cost of Sales.................................... 97.5% 79.4% 92.1% 82.8%
------ ------ ------ ------
Gross Profit..................................... 2.5% 20.6% 7.9% 17.2%
Selling, general & administrative expenses....... 12.2% 10.0% 11.2% 9.1%
Depreciation..................................... 4.0% 3.0% 3.5% 3.0%
Amortization of intangibles...................... 0.7% 0.9% 0.9% 1.2%
Management & consulting fees..................... 0.6% 0.6% 0.5% 1.0%
------- ------ ------ ------
Operating income (loss).......................... (15.0%) 6.1% (8.2%) 2.9%
Other income (expense)........................... 4.2% 0.0% 0.4% 2.3%
Interest expense (net)........................... (3.7%) (2.9%) (2.8%) (3.0%)
------- ------ ------ ------
Income (loss) before income taxes................ (14.5%) 3.2% (10.6%) 2.2%
Income taxes..................................... 0.0% (1.1%) 0.0% (0.7%)
------- ------ ------ ------
Net income (loss) before extraordinary item...... (14.5%) 2.1% (10.6%) 1.5%
Extraordinary item............................... 0.0% (1.3%) (0.2%) (0.7%)
------- ------ ------ ------
Net income (loss)................................ (14.5%) 0.8% (10.4%) 0.8%
======= ====== ====== ======
</TABLE>
Results of Operations: Third quarter ended December 31, 1997 compared to the
same period of the prior year (comparable quarter).
Net Sales
- ---------
Sales increased $237,000 and 4% to $5.7 million for the quarter ended December
31, 1997 as compared to the same period of the prior year. Sales to the Dallas
Morning News, comprised primarily of newsprint products, as a percentage of
total sales decreased to 23% from 28% for the prior comparable period. The
sales increase is due primarily to the addition of new customers and an increase
in sales to several existing customers. Sales to eight new customers equalled
26% of net sales for the quarter ended December 31, 1997. This increase was
partially mitigated by decreases in sales to certain other customers.
Gross Profit
- ------------
Gross profit decreased to $141,000 and 2.5% of net sales as compared to $1.1
million and 20.6% of net sales in the prior comparable period. The gross profit
margin decrease as a percentage of net sales reflects increased material, labor,
equipment repair and utilities costs.
Material costs increased to $3.6 million and 63.3% of sales as compared to $2.9
million and 52.5% for the comparable prior period. The increase is reflected in
paper cost, which increased to $2.9 million and 51% of sales as compared to $2.2
million and 40% in the comparable prior period. The paper margin in the
comparable quarter ended December 31, 1996 includes two jobs totaling $526,000
in sales in which the customer supplied the paper, which at an average paper
cost of 45% had a 4.3% effect on the profit margin. Activity in the comparable
period also included a $97,000 adjustment to decrease material costs to
recognize a change in the inventory reserve established at the time of the
acquisition of certain assets of Webworks, Inc. in September, 1996. The profit
margin effect of this adjustment is 1.7%.
7
<PAGE>
The paper cost margin in the current period reflects the negative effect of an
8% to 12% newsprint paper cost increase and higher paper waste caused by
inefficient press production. The Company encountered more problems than
expected in bringing the presses acquired from Webworks, Inc. and Pelican Press,
Inc. up to full production following the re-assembly of these presses in the
Company's primary facilities in September and October of the current year.
Additionally, the Hantscho Mark IV purchased in June, 1997 was moved and
installed in September along with production upgrades including a sheeter,
registration system and catalytic converter. The installation and "de-bugging"
of these presses had a negative effect on the available press time and the
operating efficiencies of each press in the current quarter.
Labor costs increased to $1.5 million and 26.2% of net sales as compared to $1.1
million and 20.8%. The largest labor increase was in the finishing department,
which experienced a $204,000 increase to 5.2% of sales from $97,000 and 1.8% in
the prior comparable period. A portion of this increase (approximately $35,000
and .6% of net sales) was due to the bindery demands of a non-recurring job.
The remaining increase was caused by two primary factors: (a) an increase in
finishing services required by certain newly acquired customers and (b)
inefficient finishing operation caused by the need to meet customer delivery
requirements in conjunction with delays getting product off press. Additional
labor increases occurred in pre-press, $46,000 and .8% of net sales, and press
production, $48,000 and .8% of net sales. The remaining increase was due to an
increase in personnel in the maintenance and shipping departments.
Repairs and maintenance and utilities expenses increased $77,000 and $65,000 to
3% and 3.2% of net sales, respectively. The increase in repairs and maintenance
is due to costs incurred in the installation and start up of the presses moved
from the Webworks, Inc. and Pelican Press, Inc. facilities during the current
and preceding quarters. The utilities expense increase reflects the increased
operating capacity of the new press and an increase in the cost of electrical
service.
Operating Expenses
- ------------------
Operating expenses increased $201,000 to 17.5% of sales as compared to 14.6% in
the comparable quarter of the prior period. Selling, general and administrative
expenses increased as a percent of sales to 11.3% from 10.0% in the comparable
prior period due to an increase in professional fees of $46,000 relating to the
hiring of an operations consultant and due to one-time environmental, audit and
financial consulting charges. Additional increases occurred in property taxes,
insurance and depreciation expense reflecting an increase in fixed assets.
Other Income (Expense)
- ----------------------
Interest expense increased $45,000 to 3.6% of net sales due to an increase in
the average debt balance in the current quarter as compared to the prior
comparable quarter. Other income in the current quarter includes a gain of
$242,000 from the sale of a press.
Per Share
- ---------
Net Loss per share increased to $ (0.22) as compared to Net Income of $ 0.02
for the comparable period of the prior year. The change in the weighted average
common shares outstanding is due to the completion of an initial public offering
resulting in the issuance by the Company of an additional one million shares of
common stock on May 21, 1997.
Results of Operations: Nine months ended December 31, 1997 compared to the same
period of the prior year.
Net Sales
- ---------
Sales increased $2.4 million and 19% to $15.3 million for the nine months ended
December 31, 1997 as compared to the same period of the prior year. Sales to
The Dallas Morning News as a percentage of total sales were 25%, as compared to
36% for the comparable prior period. The reduction reflects a net decrease of
8
<PAGE>
$800,000 in sales to The Dallas Morning News, including a $420,000 decrease in
gross sales for the TV magazine due primarily to a newsprint paper price
decrease. Sales to a second customer totaled 14% of net sales in the current
period as compared to 4% in the comparable prior period. No other customer
totals more than 4% of the net sales in the current period. The remaining
increase in sales is due primarily to the addition of significant new customers
and increased sales to two existing customers. Sales to eight customers
increased to 13% of net sales for the current period as compared to 2.2% in the
prior comparable period. This increase was partially mitigated by a decrease
in sales to another customer of approximately $800,000 to $400,000 in the
current period. The Company ended its relationship with this customer in
November 1997. The remaining sales increase reflects an increase in one-time or
non-recurring jobs.
Gross Profit
- ------------
Gross Profit declined to $1.2 million and 7.9% of sales as compared to 17.2% in
the prior comparable period. Material costs increased $1.8 million to $9.3
million and 60.7% of net sales. The majority of the increase is in paper costs,
which increased to $7.4 million and 48.2% of net sales as compared to $5.9
million and 45.8% in the comparable prior period. The increase is due primarily
to the variances experienced in the third quarters of fiscal 1996 and 1997.
Labor increased to $3.7 million and 24.2% of sales as compared to $2.4 million
and 18.9% for the same period in the prior year. Press labor increased $451,000
to 11.5% of net sales as compared to 10.2% in the comparable prior period. The
press labor variance is attributable to production inefficiencies caused by the
move and installation of three separate presses purchased by the Company
between September 1996 and September 1997. Pre-press labor increased to 4.1% of
net sales compared to 2.9% in the prior period, and finishing labor increased to
4.3% of net sales from 1.5%. The increase in pre-press and finishing labor is
attributable to two factors: the inefficient operation of the presses during the
current period, which contributed to scheduling difficulties in the finishing
area; and a change in the customer mix to more pre and post press intensive
customers. Sales to the Dallas Morning News decreased $800,000 and sales to a
second customer increased $2 million in the current period as compared to the
prior comparable period. The increase in pre-press and post-press ( finishing)
labor resulting from this sales mix change is 720 and 1,040 hours per month,
respectively. This equates to approximately $12,000 and $17,000 of additional
monthly labor cost in pre-press and finishing, respectively. The average
monthly increase in sales was $135,000.
Other manufacturing costs increased $346,000 to 7.3% of sales as compared to
6.0% in the comparable prior period. The increase occurred in repair and
maintenance, which increased to $332,000 and 2.2% of net sales, and in utilities
expense, which increased to $473,000 and 3.1% of net sales. These increases
represent the cost of dis-assembly and re-assembly of multiple presses and the
maintenance and operation of separate production facilities during the majority
of the current period.
Operating Expenses
- ------------------
Operating expenses increased $609,000 to 16.0% of sales as compared to 14.4% for
the comparable prior period. The increase was due primarily to an increase of
$268,000 and .8% of net sales in payroll and related costs associated with a
personnel increase in administrative support and in the sales and marketing
department and increased property tax and depreciation expense of $223,000
caused by the new equipment acquisition.
Other Income (Expense)
- ----------------------
Other Income (Expense) decreased $269,000 to a net expense of $371,000. The
current period reflects an asset acquisition expense of $183,000 relating to the
Pelican Press asset acquisition and a gain of $242,000 on the sale of a press.
The comparative period in the prior year includes a gain of $271,000 from the
settlement of an insurance claim relating to a fire which occurred at the
Company's primary production facility in March, 1996.
9
<PAGE>
Net Income (Loss)
- -----------------
Net Income (Loss) decreased $1,689,000 to a loss of $1,585,000 in the current
period. The Net Loss reflects a $35,000 extraordinary gain on early retirement
of debt relating to the acquisition of the Webworks assets.
Liquidity and Capital Resources:
In May 1997, the Company completed an initial public offering of common stock
and common stock warrants. Proceeds of the offering, less underwriting
commissions and fees and other offering expenses was $4.7 million. Proceeds were
used as follows: $3.4 million to repay existing long-term debt, $450,000 for the
cost of relocating the Webworks assets and $850,000 for capital expenditures.
Congress Financial Corporation (Southwest) ("Congress") has provided the Company
revolving credit, equipment, real estate and future capital expenditure
facilities totaling $9 million, of which $5.7 million was drawn at December 31,
1997. The capital expenditure facility's term runs concurrently with the term
of the revolving credit facility and provides financing for up to 85% of the
value of the equipment purchased. These borrowings would be payable over five
years or by the termination of the facilities.
During the nine months ended December 31, 1997 the Company completed the
purchase of pre-press and post-press equipment totaling approximately $2.6
million, including $1.3 million for the purchase in September 1997 of certain
assets of Pelican Press, Inc. and incurred cost of $1.6 million in building
improvements to upgrade its existing facility, including improvements to a
facility adjacent to its existing building. These asset acquisitions were
financed through borrowings on existing credit facilities. The adjacent building
was acquired for $1.78 million in October 1997. In conjunction with the
building acquisition, the Company financed in October 1997 both buildings for a
total of $2.7 million through a third party mortgage lender. The financing was
completed at an interest rate of 8.19% with a twenty-five year amortization of
principal and a ten year balloon. The Company expects additional capital
expenditures to be financed through internally generated funds or through funds
available under the Congress facilities.
During the recent quarter ended December 31, 1997 the Company used $945,000 in
cash for operating activities. This usage reflects a loss of $656,000 in cash
from operations and a $289,000 increase in working capital required. The working
capital change includes an increase in accounts receivable of $660,000
reflecting the change in customer mix and an increase in sales in the current
period.
Management believes its unused credit facility will be sufficient to finance
operations through the remainder of fiscal year 1998. However, should operating
losses continue at their present rate additional financing would be required to
sustain operations.
With the exception of historical information, the matters discussed under
"General Results of Operations" and "Liquidity and Capital Resources" contain
forward-looking statements. There are certain important factors which could
cause results to differ materially from those anticipated by some of the
forward-looking statements. Some of the important factors which could cause
actual results to differ materially from those in the forward-looking statements
include, among other things, changes from anticipated levels of sales, whether
due to future national or regional economic and competitive conditions, changes
in relationships with customers including, but not limited to, the Company's
relationship with its significant customers, pricing pressures due to raw
material cost increases, change of tax rates, change of interest rates,
declining conditions in the industry, casualty to or other disruption of the
Company's production facility and equipment, delays and disruptions in the
shipment of the Company's raw materials and other factors that generally affect
businesses.
10
<PAGE>
PART 2 - OTHER INFORMATION
ITEMS 1, 2, 3, 4, AND 5 ARE OMITTED FROM THIS REPORT AS INAPPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following document is filed as part of this Quarterly Report on
Form 10-QSB.
Exhibit No. Description of Exhibits
----------- -----------------------
27.1* Financial Data Schedule required by Item 601 of
Regulation S-B.
*Filed herewith.
(b) No forms 8-K have been filed.
11
<PAGE>
SIGNATURES
In accordance with the requirements of Exchange Act, the registrant caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
NEI WEBWORLD, INC.
(Registrant)
Date: February 11, 1998 By: /s/ RICHARD J. WIENCEK
-----------------------------------------
Richard J. Wiencek
Chief Executive Officer
Date: February 11, 1998 By: /s/ WILLIAM K. DANIELS
----------------------------------------
William K. Daniels
Chief Financial Officer
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 76,809
<SECURITIES> 0
<RECEIVABLES> 3,782,015
<ALLOWANCES> (176,642)
<INVENTORY> 694,535
<CURRENT-ASSETS> 4,939,400
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0
0
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</TABLE>
