UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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Commission file number 000-29171
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Med Gen Inc.
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[Exact name of small business issuer as specified in its charter]
Nevada 65-0703559
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(State of incorporation) (IRS Employer Identification No.)
7284 W. Palmetto Park Road, Suite 106, Boca Raton, FL 33433
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(Address of principal executive offices)
(561) 750-1100
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(Issuer's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 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.
Common Stock, Par Value $.001 per share
3,356,716 Shares outstanding as of March 31, 2000
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE> 1
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MED GEN, INC.
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CONDENSED BALANCE SHEET
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March 31, 2000
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ASSETS
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CURRENT ASSETS
Cash $ 76,669
Accounts Receivable, net $ 175,373
Inventory $ 48,438
Prepaid expenses $ 11,700
Due from related party $ 90,710
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Total current assets $ 402,890
FURNITURE AND EQUIPMENT, net $ 47,385
SECURITY DEPOSITS $ 92,836
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TOTAL ASSETS $ 543,111
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LIABILITIES AND STOCKHOLDERS' EQUITY
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CURRENT LIABILITIES
Accounts payable and accrued expenses $ 302,733
Notes payable $ 45,000
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Total current liabilities $ 347,733
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STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value
5,000,000 shares authorized, -0-
shares issued and outstanding $ -
Common stock, $.001 par value
15,000,000 shares authorized,
3,356,716 issued and outstanding $ 3,357
Additional paid-in-capital $ 1,539,243
Accoumulated deficit $ (1,347,222)
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Total Stockholders' Equity $ 195,378
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 543,111
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Read the accompanying notes to the financial statements
<PAGE> 2
MED GEN, INC.
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CONDENSED STATEMENTS OF INCOME
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THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999
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<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
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<S> <C> <C> <C> <C>
03/31 03/31 03/31 03/31
----- ----- ----- -----
NET SALES $ 377,909 $ 189,828 $ 885,325 $ 369,058
COST OF GOODS SOLD $ 86,382 $ 96,965 $ 248,887 $ 176,592
GROSS PROFIT $ 291,527 $ 92,863 $ 636,438 $ 192,466
------------ ------------ ------------ ------------
OPERATING EXPENSES
General and administrative $ 150,389 $ 94,743 $ 350,740 $ 137,430
Selling $ 109,832 $ 73,273 $ 218,283 $ 95,692
Total operating expenses $ 260,221 $ 168,016 $ 569,023 $ 233,122
------------ ------------ ------------ ------------
INCOME (LOSS) FROM OPERATIONS $ 31,306 $ (75,153) $ 67,415 $ (40,656)
------------ ------------ ------------ ------------
OTHER (EXPENSE) INCOME $ (1,236) $ (147) $ (1,409) $ (141)
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NET INCOME BEFORE INCOME TAX
(EXPENSE) BENEFIT $ 30,070 $ (75,300) $ 66,006 $ (40,797)
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INCOME TAX (EXPENSE) BENEFIT $ - $ - $ - $ -
------------ ------------ ------------ ------------
NET INCOME $ 30,070 $ (75,300) $ 66,006 $ (40,797)
------------ ------------ ------------ ------------
ACCUMULATED DEFICIT -
BEGINNING OF PERIOD $ (1,377,292) $ (1,153,803) $ (1,413,228) $ (1,188,306)
ACCUMULATED DEFICIT -
END OF PERIOD $ (1,347,222) $ (1,229,103) $ (1,347,222) $ (1,229,103)
</TABLE>
Read the accompanying notes to the financial statements.
<PAGE> 3
MED GEN, INC.
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CONDENSED STATEMENTS OF CASH FLOWS
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FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999
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<TABLE>
<CAPTION>
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ 65,974 $ 7,093
CASH FLOWS FROM INVESTING $ (30,036) $ (1,057)
CASH FLOWS FROM FINANCING $ 40,731 $ (19,608)
NET INCREASE (DECREASE) IN CASH $ 76,669 $ (13,572)
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CASH - BEGINNING OF PERIOD $ - $ 13,572
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CASH - END OF PERIOD $ 76,669 $ -
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</TABLE>
Read the accompanying notes to the financial statements.
MED GEN, INC.
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NOTES TO FINANCIAL STATEMENTS
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FOR THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999
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NOTE 1. BASIS OF PRESENTATION
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The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and item 310(b) of Regulation S-B. They do not include
all of the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
all adjustments (consisting only of normal recurring adjustments) considered
necessary for a fair presentation have been included. The results of operations
for the periods presented are not necessarily indicative of the results to be
expected for the full year. For further information, refer to the financial
statements of the Company as of September 30, 1999 contained in the Company's
Form 10-SB.
NOTE 2. CAPITAL STOCK
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In October, 1999, the Company sold 100,000 shares of its common stock for
$31,250.
In February, 2000, the Company authorized an increase in its common shares
from 10,000,000 to 15,000,000.
<PAGE> 4
NOTE 3. SUBSEQUENT EVENTS
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On April 1, 2000, the Company entered into an agreement with a certain
executive to provide consulting services to the Company in exchange for
performance based compensation and common stock.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This Form 10-QSB contains forward-looking statements which are made pursuant
to the safe harbor provisions of the Securities Litigation Reform Act of 1995,
and which are subject to the risks and uncertainties which could cause actual
results to differ materially from those discussed in the forward-looking
statements and from historical results of operations. Among the risks and
uncertainties which could cause such a difference, are those relating to the
Company's reliance upon suppliers, dependence upon key personnel, its ability
to manage growth, the impact of economic conditions generally and in the
nutrition and healthy lifestyle industries in particular, product demand,
market competition, risk inherent in the Company's operations and other
unknown factors. Further information is contained in the Company's Form
10-SB12G for the fiscal year ended September 30, 1999, as filed with the SEC.
RESULTS OF OPERATIONS
Three months ended March 31, 2000 compared to three months ended March 31,
1999.
Revenues increased for the comparable periods from $189,828 to $377,909. This
was an increase of $188,081 or 99% over the second quarter of fiscal 1999.
This increase in revenues was the result of expanded retail distribution, the
implementation of an internet based marketing program and the expansion of
sales territories, particularly overseas.
Gross profit increased from $92,863 to $291,527. The gross margin improved
from 48% in fiscal 1999 to 77% in the fiscal 2000 second quarter. This
improvement was partially the result of increased higher margin direct sales
through the Internet and the lack of infomercial production costs experienced
in the year ago quarter.
Operating expenses increased from $168,016 to $260,221. Expenses were higher
than would normally be expected due in part to the audit and legal fees
associated with the Company's filing of Form 10SB on January 26, 2000; and,
the funding of a double blind study to further substantiate the efficacy of
the SNORenz product. Rental expense also increased with the Company's move into
larger accommodations in December of 1999.
Net income in the current quarter was $30,070 verses a loss in the year ago
quarter of ($75,300). Management believes that net profits will continue to
<PAGE> 5
improve as some one time expenses will not be repeated and sales revenues
increase from additional retail store presence and expansion into overseas
markets.
LIQUIDITY AND CAPITAL RESOURCES
Cash on hand at the end of the quarter was $76,669. However, the Company has
drawn down on $45,000 of its $50,000 available line of revolving credit, which
was established in August 1999, and is personally guaranteed by the Chairman.
The Company intends to pay down this line of credit in the third fiscal
quarter. The Company feels it has sufficient cash resources, receivables and
cash flow to provide for all general corporate operations in the foreseeable
future.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Med Gen Inc.
(Registrant)
Date: ___5/8/00________ By: /S/ Paul B. Kravitz
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Paul B. Kravitz
Chief Executive Officer
Date: __5/8/00_________ By: /S/Paul S.Mitchell
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Paul S. Mitchell
President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
Balance Sheet, Statement of Operations, Statements of Cash Flows
and Notes to thereto incorporated in this form 10-QSB and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> SEP-30-2000 SEP-30-2000
<PERIOD-END> MAR-31-2000 MAR-31-2000
<CASH> 76,669 76,669
<SECURITIES> 0 0
<RECEIVABLES> 175,373 175,373
<ALLOWANCES> 0 0
<INVENTORY> 48,438 48,438
<CURRENT-ASSETS> 102,410 102,410
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 402,890 402,890
<CURRENT-LIABILITIES> 347,733 347,733
<BONDS> 0 0
0 0
0 0
<COMMON> 3,357 3,357
<OTHER-SE> 195,378 195,378
<TOTAL-LIABILITY-AND-EQUITY> 543,111 543,111
<SALES> 377,909 885,325
<TOTAL-REVENUES> 377,909 885,325
<CGS> 86,382 248,887
<TOTAL-COSTS> 86,382 248,887
<OTHER-EXPENSES> 261,457 570,432
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 30,070 66,006
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 30,070 66,006
<EPS-BASIC> .01 .02
<EPS-DILUTED> .01 .02
</TABLE>
