SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] Quarterly Report Under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarter Ended: January 31, 2000
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File No. 000-27119
MEDI-HUT CO., INC
(Exact name of registrant as specified in its charter)
Delaware 222-436-721
(State of incorporation) (I.R.S. Employer
Identification No.)
1935 Swarthmore Avenue
Lakewood, New Jersey 08701
(732) 901-0606
(Address and telephone number of principal executive offices and
principal place of business)
Indicate by check mark whether the registrant (1) has filed all reports
required 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 [ ]
As of March 7, 2000, the Registrant had a total of 10,472,800 shares of
common stock issued and outstanding.
<PAGE>
TABLE OF CONTENTS
PART I: FINANCIAL INFORMATION
Item 1: Financial Statements.............................................3
Item 2: Management's Discussion and Analysis or Plan of Operations.......11
PART II: OTHER INFORMATION
Item 5: Other Events......................................................12
Item 6: Exhibits and Reports filed on Form 8-K ..........................13
Signatures................................................................14
<PAGE>
In this quarterly report references to "Medi-Hut," "we," "us," and "our"
refer to Medi-Hut Co., Inc.
FORWARD LOOKING STATEMENTS
This Form 10-QSB contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. For this
purpose any statements contained in this Form 10-QSB that are not statements
of historical fact may be deemed to be forward-looking statements. Without
limiting the foregoing, words such as "may," "will," "expect," "believe,"
"anticipate," "estimate" or "continue" or comparable terminology are intended
to identify forward-looking statements. These statements by their nature
involve substantial risks and uncertainties, and actual results may differ
materially depending on a variety of factors, many of which are not within
Medi-Huts' control. These factors include but are not limited to economic
conditions generally and in the industries in which Medi-Hut may participate;
competition within Medi-Huts' chosen industry, including competition from
much larger competitors; technological advances and failure by Medi-Hut to
successfully develop business relationships.
<PAGE>
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
Medi-Hut Co., Inc.
COMPARATIVE BALANCE SHEET
January 31, 2000 and January 31, 1999
January 31, 2000 January 31, 1999
---------------- ----------------
ASSETS
CURRENT ASSETS
Checking account $ 93,354 $ 632
Money market account 159,945 60,549
Accounts Recievable 355,718 196,410
Accrued Interest Receivable 2,835 0
Investment 700,000 0
Prepaid Expenses- Current 7,836 4,208
Prepaid Insurance 14,927 9,197
Merchandise Inventory 131,515 101,782
---------------- ----------------
TOTAL CURRENT ASSETS 1,466,130 372,778
PROPERTY AND EQUIPMENT
Equipment 15,000 0
Furniture and Fixtures 27,316 27,316
Accumulated Depreciation(F&F) (27,316) (27,186)
---------------- ----------------
TOTAL PROPERTY AND EQUIPMENT 15,000 130
OTHER ASSETS
Deferred Charges 22,713 0
Auto Lease Cap Reduction 4,796 4,796
Accum Lease Amort Charge (4,401) (3,453)
Patent 32,201 32,501
Accum. Amort.-Patent (6,737) (5,127)
---------------- ----------------
TOTAL OTHER ASSETS 48,572 28,717
---------------- ----------------
TOTAL ASSETS $ 1,529,702 $ 401,625
================ ================
UNAUDITED
<PAGE>
Medi-Hut Co., Inc.
COMPARATIVE BALANCE SHEET
January 31, 2000 and January 31, 1999
January 31, 2000 January 31, 1999
---------------- ----------------
LIABILITIES AND EQUITY
CURRENT LIABILITIES
Accounts Payable $ 200,990 $ 36,623
Federal Withholding Tax Payable 648 0
State Unemployment tax payable 0 174
Medicare tax payable 595 0
State Witholding Tax Payable 529 679
Accrued Expenses 12,739 0
Line of Credit Payable 0 39,195
---------------- ----------------
TOTAL CURRENT LIABILITIES 215,501 76,671
EQUITY
Capital Stock 10,473 8,273
Additional paid in capital 2,812,317 934,767
Retained (Deficit) / Earnings (1,508,589) (618,086)
---------------- ----------------
TOTAL EQUITY 1,314,201 324,954
---------------- ----------------
TOTAL LIABILITIES AND EQUITY $ 1,529,702 $ 401,625
================ ================
UNAUDITED
<PAGE>
Medi-Hut Co., Inc.
COMPARATIVE INCOME STATEMENTS
For The Periods Ended January 31, 2000 and January 31, 1999
November 1, 1999 November 01, 1998
to to
January 31, 2000 January 31, 1999
---------------- -----------------
SALES
Sales 369,549 175,782
Sales discounts ( 1,847) (1,627)
---------------- -----------------
Total SALES 367,702 174,155
COST OF SALES
BEGINNING INVENTORY 28,500 38,739
Purchases 382,786 181,099
Purchases discounts (53) (5,967)
Freight In 2,125 1,520
Ending Inventory (131,515) (101,782)
Freight out 655 989
---------------- -----------------
Total COST OF SALES 282,498 114,598
---------------- -----------------
Total GROSS PROFIT 85,204 59,557
GENERAL & ADMINISTRATIVE
Advertising 0 0
Brochures & catalogues 308 145
Commissions 103 0
Rubbish collection 266 249
Delivery Expense 816 921
Selling Supplies 0 1,277
Insurance - General 8,250 9,876
Legal & accounting 0 290
Business Promotion 0 0
Outside services 119 2,500
Postage expense 0 0
Repairs & Maintenance 0 0
Travel & entertainment 2,201 3,070
Salaries Officers 37,023 51,100
Salaries Office 600 0
Salaries Warehouse 3,500 2,700
Accounting 12,675 6,365
Bank Charges 0 95
Burglar Alarm 142 134
UNAUDITED
<PAGE>
Medi-Hut Co., Inc.
COMPARATIVE INCOME STATEMENTS
For The Periods Ended January 31, 2000 and January 31, 1999
November 1, 1999 November 01, 1998
to to
January 31, 2000 January 31, 1999
---------------- -----------------
Cleaning 0 0
Group Life Insurance 459 440
Heat, Light, And Power 484 540
Hospitilization 7,217 3,155
Insurance 0 369
Legal 0 494
Consulting Expense 13,047 12,625
Licenses and Permits 225 200
Office supplies and expense 1,367 1,357
Payroll Tax 2,127 4,220
Car Lease 2,991 2,991
Rent 6,212 6,094
Telephone General 1,290 1,230
---------------- -----------------
Total GENERAL & ADMINISTRATIVE 101,422 112,437
Total NET OPERATING INCOME (LOSS) (16,218) (52,880)
OTHER (INCOME) AND EXPENSES
Interest Income (13,577) (865)
Interest Expense 0 728
Depreciation Expense 0 133
Amort of Organization Expense 640 640
---------------- -----------------
Total OTHER (INCOME) AND EXPENSES (12,937) 636
---------------- -----------------
NET INCOME (LOSS) BEFORE TAX (3,281) (53,516)
INCOME TAXES
Corp. Business Tax 250 225
---------------- -----------------
INCOME TAXES 250 225
---------------- -----------------
NET INCOME (LOSS) (3,531) (53,741)
================ =================
LOSS PER COMMON SHARE (0.001) (0.026)
================ =================
WEIGHTED AVERAGE OF
COMMON SHARES OUTSTANDING 2,618,225 2,068,225
================ =================
UNAUDITED
<PAGE>
Medi-Hut Company, Inc.
Cash Flows Statement
January 31, 2000
<TABLE>
<CAPTION>
January 31, October 31,
2000 1999
Description Balance Balance Amount
- ------------ ------------ ------------ -----------
<S> <C> <C> <C>
Net Loss for the period 11/1/99-1/31/00 (3,532)
Adjustments to Reconcile Net Loss
to Net Cash Provided by Operating Activities -
Depreciation & Amortization 640 640
Decrease/(Increase) in Assets
Accounts Receivable 355,718 422,590 66,872
Inventory 131,515 28,500 (103,015)
Prepaid Expenses 14,927 2,188 (12,739)
Prepaid Consulting 7,836 13,708 5,872
Accrued Interest Receivable 2,835 0 (2,835)
Investment 700,000 900,000 200,000
Increase/(Decrease) in Liabilities
Accounts Payable 200,990 470,983 (269,993)
Payroll Taxes Payable 1,772 0 1,772
Accrued Expense 12,739 0 12,739
-----------
Net Cash Provided by Operating Activities (104,219)
Cash Flows from Investing Activities -
Purchases of patent and licensing costs 32,201 32,201 0
Purchase of equipment 15,000 0 (15,000)
-----------
Net Cash Provided by Investing Activities (15,000)
Cash Flows from Financing Activities -
Cash paid for deferred charges (22,713) (20,713) (2,000)
-----------
Net Cash Provided by Financing Activities (2,000)
Net Decrease in Cash (121,219)
Cash at Beginning of Period 374,518
-----------
Cash at End of Period 253,299
==========
UNAUDITED
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Medi-Hut Company, Inc.
Cash Flows Statement
January 31, 1999
January 31, October 31,
1999 1998
Description Balance Balance Amount
- ------------ ----------- ----------- -----------
<S> <C> <C> <C>
Net Loss for the period 11/1/98-1/31/99 (53,741)
Adjustments to Reconcile Net Loss
to Net Cash Provided by Operating Activities -
Depreciation & Amortization 773 773
Decrease/(Increase) in Assets
Accounts Receivable 196,410 204,881 8,471
Inventory 101,782 38,739 (63,043)
Prepaid Expenses 9,197 4,508 (4,689)
Prepaid Consulting 4,208 16,833 12,625
Accrued Interest Receivable 0 0 0
Investment 0 0 0
Increase/(Decrease) in Liabilities
Accounts Payable 36,623 44,311 (7,688)
Payroll Taxes Payable 853 853
Accrued Expense 0
-----------
Net Cash Provided by Operating Activities (106,439)
Cash Flows from Investing Activities -
Line of Credit 39,195 39,195 0
Purchases of patent and licensing costs 32,501 32,201 (300)
Purchase of equipment 0
-----------
Net Cash Provided by Investing Activities (300)
Cash Flows from Financing Activities -
Cash paid for deferred charges 0
Net Cash Provided by Financing Activities 0
-----------
Net Decrease in Cash (106,739)
Cash at Beginning of Period 167,920
-----------
Cash at End of Period 61,181
===========
UNAUDITED
</TABLE>
Medi-Hut Co., Inc.
Notes to the Condensed Financial Statements
January 31, 2000 and 1999
BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to item 310 of
Regulation S-B. Accordingly, 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 of normal recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the three months ended
January 31, 2000 and 1999 are not necessarily indicative of the results that
may be expected for the years ended October 31, 2000 and 1999, respectively.
NOTES PAYABLE
The Company has in place a $ 50,000 working capital line of credit
under which the bank has agreed to make loans at 2% above the prime interest
rate. As of January 31, 2000 and 1999 there was $ 0 and $ 39,195 outstanding,
respectively.
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) per common share, in accordance with the provisions of
Financial Accounting Standards Board No. 128, "Earnings per Share", is
computed by dividing net income (loss) by the weighted average number of
shares of common stock outstanding during the period. Common stock
equivalents (warrants) have not been included in this computation since the
effect would be anti-dilutive.
COMMON STOCK DIVIDENDS
Common stock dividends amounting to $ 866,250 and $ 603,650 during
1999 and 1998, respectively, were recognized as to the difference between the
average high/low market price and issue price of the 527,000 and 2,200,000
common shares issued in accordance with the private placement memorandum in
1999 and 1998, respectively.
<PAGE>
Medi-Hut Co., Inc.
Notes to the Condensed Financial Statements
January 31, 2000 and 1999
SUBSEQUENT EVENT
In January of 2000, the Company entered into an agreement to acquire a
private company in the business of selling over-the-counter and name brand
pharmaceuticals to distributors and wholesalers throughout the continental
U.S. Pursuant to the agreement, the Company will issue 350,000 restricted
common shares for all of the outstanding shares of the private company, which
will become a wholly-owned subsidiary of Medi-Hut Co., Inc. The agreement was
finalized in March of 2000.
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Medi-Hut is in the business of selling wholesale medical supplies through
drug wholesalers. We realize revenue when products are shipped and title
passes to our wholesalers. Our inventory consists of finished products which
are warehoused at the third-party manufacturer's or supplier's facility or
when necessary at our own warehouse. Revenue is net of returns, which have
historically been less than 2% of gross sales. Costs of sales primarily
consist of the cost of the products purchased from third-party vendors and
shipping costs. General and administrative expenses include employee salaries
and benefits, employee travel expenses, selling expenses, office expenses and
occupancy costs and legal and accounting fees. Our fiscal year ends October
31st.
Results of Operations
Three Months Ended January 31, 2000 Compared to Three Months Ended January 31,
1999
The following table summarizes the results of our operations for the three
months ended January 31, 2000 and 1999, our first fiscal quarter.
Three Months Ended January 31,
1999 2000
---------------- ---------------
Sales $ 174,155 $ 367,702
Cost of Sales 114,598 282,498
Gross Profit 59,557 85,204
General & Administrative Expenses 112,437 101,422
Operating Income or (Loss) (52,880) (16,218)
Other (Income) and Expenses 636 (12,937)
Net Income (Loss) (53,741) (3,531)
Sales increased $193,547 for the first quarter of 2000 compared to the
first quarter of 1999. This increase in sales was primarily the result of
adding name brand pharmaceuticals to our product line.
Cost of sales increased from 65.8% of sales for the first quarter of 1999
compared to 76.8% of sales for the first quarter of 2000. The increased costs
are reflective of the smaller profit margin of the name brand pharmaceuticals
product line. While our gross profit increased by $25,647 from the first
quarter of 1999 compared to the first quarter of 2000, gross profits as a
percentage of sales were 23.17 % of sales in the first quarter of 2000
compared to 34.19 % of sales in the first quarter of 1999.
General and administrative expenses decreased $11,015 from the first
quarter of 1999 compared to the first quarter of 2000. Such expenses were
64.5% of sales for the first quarter of 1999 compared to 27.5% of sales for
the first quarter of 2000. The decrease in expenses resulted primarily from
reduction of officers salaries and related payroll liabilities.
We posted interest income of $13,577 for the first quarter of 2000
compared to $865 for the first quarter of 1999. As a result, we recorded
total other income of $12,937 for the first quarter of 2000 compared to total
other expenses of $636 for the first quarter of 1999. The interest income for
the first quarter of 2000 was primarily a result of the investment of $700,000
into short-term commercial paper from the $1 million raised from the sale of
our common stock in August, 1999.
<PAGE>
Liquidity and Capital Resources
We have funded our cash requirements primarily through revenues and
sales of our common stock. We have required little short term debt financing
and management anticipates we will meet our present requirements for working
capital and capital expenditures for the next twelve months. Our working
capital was $1,250,629 as of January 31, 2000. We recorded $253,299 in cash
reserves with total current assets of $1,466,130 and total current liabilities
of $215,501. Our principal commitments consist of office and warehouse space
with future minimum rental payments of $10,757 through the year 2000.
Net cash used by our operating activities was $104,219 and $106,434,
respectively, for the first quarter 2000 and 1999. Net cash used in investing
activities for the first quarter of 2000 was $15,000 for the first quarter of
2000 compared to $300 for the first quarter of 1999. We purchased molds for
our syringe production.
Accounts receivable were $355,718 for the first quarter of 2000 compared
to $422,590 accounts receivable posted at October 31, 1999. Our inventory at
the first quarter of 2000 was $131,515 compared to $28,500 at October 31,
1999. We had increased our inventory as a contingency plan for the Year 2000.
Year 2000 Compliance
We and, to the best of our knowledge, our third-party suppliers and
customers did not experience any disruptions to operations as a result of Year
2000. We did not expend any additional funds for Year 2000 compliance during
our first fiscal quarter.
We completed a review of our computer systems and operations during the
summer of 1999 to determine the extent to which our business would be
vulnerable to potential errors and failures as a result of the "Year 2000"
problem. Year 2000 failures could result in system failures or
miscalculations, causing disruptions of operations, including, among other
things, a temporary inability to process transactions, send invoices, provide
services or engage in similar activities. These failures, miscalculations and
disruptions could have a material adverse effect on our business, operations
and financial condition.
We concluded, based on our review of our operations and computer
systems, that our significant computer programs and operations would not be
materially affected by the Year 2000 problem. Our computer systems included a
personal computer using Write Plus software package. The computer calculates
and produces our inventory, pricing, accounting and invoicing. We completed an
in-house protocol check which demonstrated that the system was in full
compliance. Due to the minimal computer hardware and software we used, we
could modify or replace any programs that were not Year 2000 compliant at an
insignificant cost. We did not expend any funds for Year 2000 compliance.
Under a reasonably likely worst case scenario, our operations could
experience accounting or billing errors and inventory miscalculations. As a
contingency plan we placed purchase orders with our suppliers into the first
quarter of 2000. We ordered these products pursuant to the payment terms in
effect at that time.
We also made inquiries to our third-party suppliers to ascertain if
they were Year 2000 compliant. Management was satisfied that two suppliers,
H&P Industries and Calatex, Inc., were Year 2000 compliant. The remaining
suppliers made appropriate examinations and necessary upgrades to insure their
Year 2000 readiness.
PART II: OTHER INFORMATION
ITEM 5: OTHER EVENTS
In an arm's length transaction in January of 2000, we agreed to
acquire Vallar Consulting Corp., a privately held New York corporation
("Vallar Consulting"). The acquisition was structured as a tax free
stock-for-stock exchange pursuant to Section 368(a)(1)(B) of the Internal
Revenue Code of 1986 as amended. For accounting purposes the acquisition was
treated as a pooling of interests and was determined to be an insignificant
acquisition
<PAGE>
for which financial statements were not required. We currently are completing
the necessary procedures to complete this transaction.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Part I Exhibits.
Exhibit Description
------- ------------
27 Financial Data Schedule
(b) Reports on Form 8-K. On January 24, 2000, Medi-Hut filed a Form
8-K regarding the acquisition of Vallar Consulting. No financial statements
were filed.
<PAGE>
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.
Medi-Hut Co., Inc.
3-13-00 /s/ Joseph Sanpietro
Date: ______________________ By:____________________________
Joseph Sanpietro, President
3-13-00 /s/ Vincent Sanpietro
Date: ______________________ By:_____________________________
Vincent Sanpietro, Secretary
3/13/00 /s/ Robert Russo
Date: ______________________ By:_____________________________
Robert Russo, Treasurer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-2000
<PERIOD-END> JAN-31-2000
<CASH> 253,299
<SECURITIES> 700,000
<RECEIVABLES> 358,553
<ALLOWANCES> 0
<INVENTORY> 131,515
<CURRENT-ASSETS> 22,763
<PP&E> 42,316
<DEPRECIATION> 27,316
<TOTAL-ASSETS> 1,529,702
<CURRENT-LIABILITIES> 215,501
<BONDS> 0
0
0
<COMMON> 10,473
<OTHER-SE> 1,303,728
<TOTAL-LIABILITY-AND-EQUITY> 1,529,702
<SALES> 367,702
<TOTAL-REVENUES> 381,279
<CGS> 282,498
<TOTAL-COSTS> 101,422
<OTHER-EXPENSES> 640
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (3,281)
<INCOME-TAX> 250
<INCOME-CONTINUING> (3,531)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,531)
<EPS-BASIC> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
