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 December 31, 1999
Commission file number ______________
Med Gen Inc.
[Exact name of small business issuer as specified in its charter]
Nevada 65-0703559
(State of incorporation) (IRS Employer Identification No.)
7284 W. Palmetto Park Road, Suite 106, Boca Raton, FL 33433
(Address of principal executive offices)
(561) 750-1100
(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 December 31, 1999
Transitional Small Business Disclosure Format (check one): Yes___ No X
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
MED GEN, INC.
CONDENSED BALANCE SHEET
-----------------------
31-Dec-99
(UNAUDITED)
1999
ASSETS --------------
------
CURRENT ASSETS
Accounts Receivable, net $ 220,680.00
Inventory $ 111,696.00
Due from related party $ 95,960.00
Prepaid expenses $ 25,020.00
--------------
Total current assets $ 453,356.00
FURNITURE AND EQUIPMENT, net $ 44,678.00
SECURITY DEPOSITS $ 84,138.00
--------------
TOTAL ASSETS $ 582,172.00
==============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Cash overdraft $ 1,807.00
Accounts payable and accrued expenses $ 353,465.00
Notes payable $ 61,592.00
--------------
Total current liabilities $ 416,864.00
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value
5,000,000 shares authorized, -0-
shares issued and outstanding
Common stock, $.001 par value
5,000,000 shares authorized,
3,256,716 issued and outstanding $ 3,357.00
Additional paid-in-capital $ 1,490,391.00
Accoumulated deficit $(1,328,440.00)
--------------
Total Stockholders' Equity $ 165,308.00
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 582,172.00
==============
Read the accompanying notes to the financial statements
<PAGE> 2
MED GEN, INC.
CONDENSED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
-------------- --------------
<S> <C> <C>
NET SALES $ 507,416.00 $ 179,230.00
COST OF GOODS SOLD $ 162,505.00 $ 79,627.00
GROSS PROFIT $ 344,911.00 $ 99,604.00
OPERATING EXPENSES
General and administrative $ 200,351.00 $ 42,687.00
Selling $ 108,451.00 $ 22,419.00
-------------- -------------
Total operating expenses $ 308,802.00 $ 65,106.00
INCOME FROM OPERATIONS $ 36,109.00 $ 34,497.00
OTHER (EXPENSE) INCOME $ (173.00) $ 6.00
-------------- --------------
NET INCOME BEFORE INCOME TAX
(EXPENSE) BENEFIT $ 35,936.00 $ 34,503.00
INCOME TAX (EXPENSE) BENEFIT $ - $ -
-------------- --------------
NET INCOME $ 35,936.00 $ 34,503.00
ACCUMULATED DEFICIT -
BEGINNING OF PERIOD $(1,364,376.00) $(1,188,306.00)
ACCUMULATED DEFICIT -
END OF PERIOD $(1,328,440.00) $(1,153,803.00)
</TABLE>
Read the accompanying notes to the financial statements.
<PAGE> 3
MED GEN, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
1999 1998
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES $ (2,939.00) $ (32,422.00)
CASH FLOWS FROM INVESTING $ - $ (19,651.00)
CASH FLOWS FROM FINANCING $ - $ 52,073.00
NET INCREASE (DECREASE) IN CASH $ (2,939.00) $ -
CASH - BEGINNING OF PERIOD $ 13,572.00 $ -
CASH - END OF PERIOD $ 10,633.00 $ -
</TABLE>
Read the accompanying notes to the financial statements
<PAGE> 4
Notes to Financial Statements
Basis of Presentation
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.
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 December 31, 1999 compared to three months
ended December 31, 1998.
Revenues increased for the comparable periods from $176,230 to
$506,416. This was an increase of $328,186 or 184% over the
first quarter of fiscal 1999. This increase in revenues was
the result of expanded retail distribution, the implementation
of an internet based marketing program and implementation of
direct sales via infomercials.
Gross profit increased from $99,603 to $344,911. The gross
margin improved from 56% in fiscal 1999 to 68% in the fiscal
2000 first quarter. This improvement was the direct result of
direct sales through the Internet and infomercials.
<PAGE> 5
Operating expenses increased from $65,06 to $308,802. The
increase resulted from increased marketing efforts, more
product development and higher administration costs as Med Gen
established its own headquarters location and began to build
a support staff.
Net income increased from $34,503 to $35,936. Management
believes that net profits will improve as many one time
expenses necessary to establish the administrative support
staff and marketing programs have been incurred and will not
be incurred again in the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
Working capital and cash balances are strained as the Company
continues to ramp up its marketing program. However, in August
1999, the Chairman personally guaranteed a line of credit of
$50,000 to ensure that sufficient liquidity is available to
fund operations.
SEASONALITY
The Company's business is seasonal, with higher sales expected
in the second and third quarters of each fiscal year.
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: February 15, 2000 By:/s/Paul B. Kravitz
Paul B. Kravitz
Chief Executive Officer
Date: February 15, 2000 By:/s/Paul S. Mitchell
Paul S. Mitchell
President
<PAGE> 6
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Summary Financial Data Schedule contains summary financial information
extracted from Balance Sheet, Statement of Operations, Statements of Cash Flows
and Notes thereto incorporated in Part I, Item 1. and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 321,640
<ALLOWANCES> (5,000)
<INVENTORY> 136,716
<CURRENT-ASSETS> 453,356
<PP&E> 142,429
<DEPRECIATION> (13,613)
<TOTAL-ASSETS> 582,172
<CURRENT-LIABILITIES> 416,864
<BONDS> 0
0
0
<COMMON> 1,493,748
<OTHER-SE> (1,328,440)
<TOTAL-LIABILITY-AND-EQUITY> 582,172
<SALES> 507,416
<TOTAL-REVENUES> 507,416
<CGS> 162,505
<TOTAL-COSTS> 162,505
<OTHER-EXPENSES> 308,802
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 173
<INCOME-PRETAX> 35,936
<INCOME-TAX> 0
<INCOME-CONTINUING> 35,936
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,936
<EPS-BASIC> 0.01
<EPS-DILUTED> 0.00
</TABLE>
