UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES AND EXCHANGE ACT OF 1934
Commission File No. 0-27159
National Rehab Properties, Inc.
(Name of Small Business Issuer in its charter)
Nevada 65-0439467
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2921 NW Sixth Avenue, Miami, Florida 33127
(Address of principal executive offices)
(305) 573-8882
(Issuer's Telephone Number Including Area Code)
MAS Acquisition XV Corp.
1710 E. Division St., Evansville, Indiana 47711
-----------------------------------------------
(former name, former address and former fiscal year
if changed since last report)
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
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date:
Title of each class of Common Stock Outstanding at May 23, 2000
----------------------------------- ---------------------------
Common Stock, $0.001 par value 14,890,379
Transitional Small Business Disclosure Format (check one):
Yes No x
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TABLE OF CONTENTS
FORM 10-QSB REPORT - FOR QUARTER ENDED MARCH 31, 2000
National Rehab Properties, Inc.
PART I
Item 1. Financial Statements
Condensed Consolidated Balance Sheets -
March 31, 2000 (unaudited) and September 30, 1999 (audited) 3
Condensed Consolidated Statements of Operations 4
Six months ended March 31, 2000 and 1999
(unaudited)
Condensed Consolidated Statements of Operations 5
Three Months ended March 31, 2000 and 1999
(unaudited)
Condensed Consolidated Statements of Cash Flows 6
Six months ended March 31, 2000 and 1999
(unaudited)
Notes to Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 10
PART II
Item 1. Legal Proceedings 10
Item 2. Change in Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matters to a vote of Security Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURE PAGE 11
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PART I
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
National Rehab Properties, Inc. and Subsidiaries
Consolidated Condensed Balance Sheets
ASSETS
<CAPTION>
MARCH 31, SEPTEMBER 30,
2000 1999
(UNAUDITED) (AUDITED)
----------- -----------
<S> <C> <C>
Current Assets:
Cash and Cash Equivalents $ 152,721 $ 411,257
Inventory-Real Estate Holdings 1,477,550 1,216,381
Subscriptions Receivable - 500,000
Mortgages Receivable 52,377 12,358
Prepaid Expenses 5,000 57,000
----------- -----------
Total Current Assets 1,687,648 2,196,996
Property, Plant and Equipment (Net of$21,657 and $12,061
accumulated depreciation at March 31, 2000
and September 30, 1999) 37,839 47,435
Other Assets: 514,631 352,062
----------- -----------
Total Assets $ 2,240,118 $ 2,596,493
=========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable and Accrued Expenses $ 7,498 $ 82,203
Notes and Mortgages Payable 1,366,062 1,597,500
----------- -----------
Total Current Liabilities 1,373,560 1,679,703
Stockholders' Equity:
Common Stock, $.001 Par Value; authorized 100,000,000
shares; issued and outstanding 14,890,379 and 9,054,773
at March 31,000 and September 30, 1999 14,890 9,055
Common Stock Class A Voting, $.001 Par Value; authorized
2,000,000 shares; issued and outstanding 1,000,000 and
1,000,000 at March 31,000 and September 30, 1999 1,000 1,000
Additional Paid In Capital 1,565,188 1,324,190
Accumulated Deficit (714,520) (417,455)
----------- -----------
Total Stockholders' Equity
866,558 916,790
Total Liabilities and Stockholders' Equity $ 2,240,118 $ 2,596,493
=========== ===========
</TABLE>
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<TABLE>
National Rehab Properties, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
<CAPTION>
For the Six months Ended
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
---------- ----------
<S> <C> <C>
Revenues $ - $ 366,519
Cost of Goods Sold - 137,292
---------- ----------
Gross Profit - 229,227
Operating Expenses 304,250 66,688
---------- ----------
Income (Loss) Before Other Income (Expense) (304,250) 162,539
Interest Income 7,452 2,316
Interest (Expense) (267) -
---------- ----------
Net Income (Loss) (297,065) 164,855
========== ==========
Income (Loss) Per Common Share $ (0.0292) $ 0.1687
========== ==========
Weighted Average Common Shares Outstanding 10,178,307 977,370
========== ==========
</TABLE>
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<TABLE>
National Rehab Properties, Inc. and Subsidiaries
Consolidated Condensed Statements of Operations
<CAPTION>
For the Three Months Ended
March 31, 2000 March 31, 1999
(unaudited) (unaudited)
---------- ----------
<S> <C> <C>
Revenues $ - $ 366,519
Cost of Goods Sold - 137,292
---------- ----------
Gross Profit - 229,227
Operating Expenses 185,158 9,804
---------- ----------
Income (Loss) Before Other Income (Expense) (185,158) 219,423
Interest Income 1,677 2,316
Interest (Expense) (267) -
---------- ----------
Net Income (Loss) (183,748) 221,739
========== ==========
Income (Loss) Per Common Share $ (0.0181) $ 0.2269
========== ==========
Weighted Average Common Shares Outstanding 10,178,307 977,370
========== ==========
</TABLE>
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<TABLE>
National Rehab Properties, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
<CAPTION>
For the Six months Ended
March 31, 1999 March 31, 2000
(unaudited) (unaudited)
---------- ----------
<S> <C> <C>
Cash Flow from Operating Activities:
Net Income (Loss) $ (297,065) $ 164,855
Adjustments to Reconcile Net Loss to Net Cash Used For
Operating Activities:
Depreciation and Amortization 9,596 2,055
Changes in Assets and Liabilities:
(Increase) Decrease in Inventory-Real Estate Holdings (261,169) 603,813
(Increase) Decrease in Subscriptions Receivable 500,000 -
(Increase) Decrease in Mortgages Receivable (40,019) (81,233)
(Increase) Decrease in Prepaid Expenses 52,000 46,645
(Increase) Decrease in Other Assets (162,569) 2,093
Increase (Decrease) in Accounts Payable and Accrued Expenses (74,705) 21,233
Increase (Decrease) in Notes and Mortgages Payable (231,438) (994,741)
---------- ----------
Net Cash Used in Operating Activities (505,369) (235,280)
Cash Flow from Financing Activities:
Proceeds From Common Stock 246,833 227,000
Net increase (decrease) in Cash (258,536) (8,280)
Cash - Beginning 411,257 13,754
Cash - Ending $ 152,721 $ 5,474
========== ==========
</TABLE>
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<PAGE>
National Rehab Properties, Inc. and Subsidiaries
Notes to the Consolidated Financial Statements
(unaudited)
Note 1.
The summary of the Issuer's significant accounting policies are incorporated by
reference to the Company's SEC Form 8K filed February 14, 2000 which report
contained the audited financial statements as of September 30, 1999. The notes
to the audited financial statements presented with the Company's SEC Form 8K as
of September 30, 1999 are an integral part of the audited balance sheet data
presented herein. These financial statements must be read in conjunction with
the audited financial statements and notes to the financial statements for the
year ended September 30, 1999, included in the Company's Form 8K dated February
14, 2000 which has been filed with the Securities and Exchange Commission by the
Company, as said notes to the financial statements are incorporated herein by
reference. The results of the interim period are not necessarily indicative of
the results for the full year.
Note 2.
Basis of Presentation - The unaudited condensed consolidated financial
statements include the accounts of the Company and its subsidiary. Intercompany
balances have been eliminated in consolidation.
Interim Financial Information - The financial information contained herein is
unaudited but includes all normal and recurring adjustments which, in the
opinion of management, are necessary to present fairly the information set
forth. The unaudited condensed consolidated financial statements should be read
in conjunction with the consolidated financial statements, which are included in
the Company's Annual Report on Form 10-KSB for the year ended September 30,
1999.The Company's results for interim periods are not necessarily indicative of
results to be expected for the fiscal year of the Company ending September 30,
2000. The Company believes that this Quarterly Report filed on Form 10-QSB is
representative of its financial position, its results of operations and its cash
flows for the periods ended March 31, 2000 and 1999 covered thereby.
Note 3.
Comprehensive Income - In June 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 130 ("SFAS 130"),
"Reporting Comprehensive Income." SFAS 130 requires companies to disclose
comprehensive income and its components. The Company currently has no items of
other comprehensive income and therefore SFAS 130 does not apply.
Note 4.
LEGAL PROCEEDINGS
The Company has no pending legal proceedings at this time.
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<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Overview
The Company was incorporated in Florida in 1993 and completed a reverse
merger with a Nevada corporation in 1994. The Company has undergone many changes
to date as a result of certain reorganizations, acquisitions and changes of
management. Historical changes are more fully disclosed in the Company's 8-K
dated February 14, 2000. The Company is currently authorized to issue
100,000,000 common shares, $0.001 par value and 2,000,000 shares of Class A
("super voting") common stock. Our offices are located at 2921 NW 6th Avenue,
Miami, Florida 33127 and our telephone number is (305) 573-8882. Our business is
currently based in Miami, Florida. As a public Company, National Rehab
Properties, Inc. is traded over-the-counter as a bulletin board stock under the
symbol "NRPI". We believe that the Company has over 1200 stockholders.
Historically the Company has specialized in renovating or rebuilding
starter homes. In order for us to buy real estate for our business of
rehabilitating houses or building houses, construction financing is necessary.
We finance our real estate projects with first mortgages from banks at bank
rates.
(a) Plan of Operation:
FORWARD-LOOKING STATEMENTS
--------------------------
The securities of the Company are speculative and involve a high degree of
risk, including, but not necessarily limited to, the factors affecting operating
results described in the Form 8K dated February 14, 2000 and other filings with
the SEC. The statements which are not historical facts contained in this report,
including statements containing words such as "believes," "expects," "intends,"
"estimates," "anticipates," or similar expressions, are "forward looking
statements" (as defined in the Private Securities Litigation Reform Act of 1995)
that involve risks and uncertainties.
The foregoing and subsequent discussion contains certain forward-looking
statements within the meaning of Section 27A of the Securities A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934,
which are intended to be covered by the safe harbors created thereby. These
forward-looking statements include the plans and objectives of management for
future operations, including plans and objectives relating to the possible
further capitalization and future acquisitions of telecommunications, computer
related or other cash flow business. The forward-looking statements included
herein are based on current expectations that involve numerous risks and
uncertainties. Assumptions relating to the foregoing involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond the control of the
Company. Although the Company believes that the assumptions underlying the
forward-looking statements are reasonable, any of the assumptions could be
inaccurate and, therefore, there can be no assurance that the forward-looking
statements included in this Form 10-QSB will prove to be accurate. In light of
the significant uncertainties inherent in the forward-looking statements
included herein, the inclusion of such information should not be regarded as a
representation by the Company or any other person that the objectives and plans
of the Company will be achieved.
Current Status and Operations
Subsequent to the year ended September 30, 1999, the Company changed its
operational direction from that of building or remodeling relatively low cost
"starter" homes to the business of developing multifamily housing projects. As a
result of this change in operations, although projects are in the development
stage, no revenues were generated in the six month period ended March 31, 2000.
The Company's financial statements are therefore not indicative of anticipated
revenues which may be attained or expenditures which may be incurred by the
Company in future periods. The Company's ability to achieve profitable
operations is subject to the validity of its assumptions and risk factors within
the industry and pertaining to the Company. The market for real estate
development and housing construction is highly competitive and subject to
economic changes, regulatory developments and emerging industry standards. We
believe that the principal competitive factors in its markets are conformance to
building standards, reliability, safety, price and quality of its final product.
There can be no assurance that the Company will compete successfully in the
future with respect to these or other factors.
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<PAGE>
For the six months ending March 31, 2000, the Company incurred a loss from
operations of $304,250, compared to income from operations of $219,423 in the
quarter ending March 31, 1999. The net loss in the quarter ended March 2000 was
the result of change in direction from remodeling of private homes to
development of multifamily housing projects. As a result of the change in
operational direction, there were no revenues in the Quarter ended March 31,
2000. The Company's Quarter ended March 31, 2000 financial statements reflect
adjustments and nonrecurring items of both revenue and costs, as well as
development stage costs and are not indicative of anticipated revenues which may
be attained or expenditures which may be incurred by the Company in future
periods.
For the quarter ending March 31, 2000, the Company incurred a loss from
operations of $185,158, compared to income from operations of $219,423 in the
quarter ending March 31, 1999. The net loss in the quarter ended March 2000 was
the result of change in direction from remodeling of private homes to
development of multifamily housing projects. As a result of the change in
operational direction, there were no revenues in the Quarter ended March 31,
2000. The Company's Quarter ended March 31, 2000 financial statements reflect
adjustments and nonrecurring items of both revenue and costs, as well as
development stage costs and are not indicative of anticipated revenues which may
be attained or expenditures which may be incurred by the Company in future
periods.
(b) Liquidity and Capital Resources
From June 1, 2000 to the end of fiscal year ended September 30, 2000, the
Company estimates its cash needs to maintain operations under its current
negative cash flow situation is approximately $180,000. This amount is composed
of $200,000 for working capital assuming that current operations continue in its
present status. These amounts do not include offsets for anticipated amounts of
cash generated from operations. The monthly reoccurring costs of our corporate
offices are estimated to be approximately $20,000 per month. The monthly expense
of $20,000 includes payroll, payroll taxes, dues and subscriptions, utilities
for the corporate offices, health insurance for the employees, general liability
insurance, office supplies, postage and freight, professional fees for
accounting, legal and other consultants, corporate office rent, repairs and
maintenance primarily for office equipment, telephone expenses and travel and
entertainment.
The Company has limited capitalization and is dependent on the proceeds of
private or public offerings to continue as a going concern and implementing a
business plan. As of March 31, 2000, the unaudited results of the Company
indicated working capital of $314,088. All during fiscal 1999 and to the date of
this filing, the Company has had and continues to have a substantial need for
working capital for normal operating expenses associated with the Company
continuing as a going concern. This lack of cash has slowed its ability to
develop its business plan or initiate any other revenue producing operations.
Any activity in the real estate development business requires adequate financing
and on-going funding sources. The Company has entered this industry with limited
financing and funding sources.
Prior to our inception as a publicly owned company, we relied primarily
upon loans originated by the Company's founder, Richard S. Astrom. These loans
helped to finance working capital needs when operations did not provide enough
cash flow. Additionally, we have relied upon bank financing to acquire
properties and pay operational costs. The bank financing has required the
personal guarantee of Mr. Astrom. In the future, we need to acquire additional
financing for the company with the proceeds of mortgage funding or public or
private offerings of stock. However, we currently have sufficient funds to
continue operations and new acquisitions will also supply additional funds to
continue operations. Therefore, any future funding will result from business
expansion and/or improvements to our financial lending structure. Thus, we do
not have a schedule of future funds to be acquired and quantified because it is
difficult to estimate when, or if, business expansion will occur or when, if
financial lucrative opportunities present themselves. If funds are required in
the future they may be generated from stock sales or from the mortgaging of real
estate. The can be no assurance that any such funds will be available on
favorable terms and conditions when the capital is required.
In January, 1999 we completed a reverse split of our common stock on a 1
for 10 basis and proceeded to raise $557,500 from the sale and/or conversion
into common stock of senior subordinated debentures. The reverse split was done
in order to reduce the number of shares outstanding so that it would be possible
to attract investment capital through the sale of common stock. In addition, the
Company raised $211,500 from the sale of our restricted stock during the 1999
fiscal year ended September 30, 1999.
At March 31, 2000, we had $1,687,648 in cash assets and current liabilities
of $1,373,560 resulting in a working capital reserve of $314,088 at March 31,
2000. In the quarter ending March 31, 2000 we recorded a loss of $183,748. In
order to conserve cash assets, the Company's management expects to take
defensive measures,
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<PAGE>
including slowing construction, acquiring additional mortgage financing and/or
selling additional stock. Management believes that we will be able to support
ourselves with operational cash flow. However, no assurances can be given that
present factors such as favorable economy and attractive interest rates will
continue, the effect of which might severely impact the ability of the Company
to sustain itself in the future. There can be no assurances that additional
funding will be available.
At March 31, 2000 (unaudited), the following contingent stock issue
requirements were outstanding:
On March 1, 1999 Christopher Astrom was granted options to acquire
6,000,000 shares of common stock at a price of $.001 per share. Mr. Astrom has
executed a promissory note to the Company in the amount of $20,000 for these
options which were authorized and awarded to Mr. Christopher Astrom by a written
consent in lieu of combined special meeting of Directors and Shareholders held
on March 1, 1999. The options were granted to Christopher Astrom in
consideration for waiver of compensation during 1996 and 1997. There is no
stated expiration date on the option.
On June 17, 1999, by a written consent in lieu of combined special meeting
of Directors and Shareholders, a new class of common stock, "Class A common
stock" was authorized on June 17, 1999. On that same date, 1,000,000 shares
issued to Mr. Christopher Astrom. Each share of Class A common stock entitles
Mr. Astrom to the equivalent of 20 common share votes in any matter to be voted
on by the shareholders of the Company. The present principal shareholders will
maintain voting control of the Company based on the issuance of 1,000,000 class
A common shares on June 17, 1999, which entitle the holder thereof (Christopher
Astrom) to 20 votes for every Class A share held. The purpose of issuing these
shares is to ensure that current management will maintain control of the Company
despite maintaining beneficial ownership of less than a majority of the shares
of the Company's common stock. Furthermore, the disproportionate vote afforded
the class A common stock will prevent or impede potential acquirers from seeking
to acquire control of the Company, which could have a depressive effect on the
price of our common stock. An additional 1,000,000 of the authorized 2,000,000
shares of Class A common stock is available for issuance. The Class A common
stock is non-transferable except to a family member.
Richard Astrom, President, CEO and Director, is the father of Christopher
Astrom, Vice President, Secretary and Director, of the Company. Richard Astrom
and Christopher Astrom make up the Board of Directors of the Company and control
the activities and actions of the Company.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As of the date hereof, the Company's short and long term debt carries
either fixed and variable interest rates and the fair market value of this debt
is sensitive to changes in prevailing interest rates. The Company runs the risk
that market rates will decline and the required payments on fixed rate debt will
exceed those based on the current market rate as well as the risk of increases
in interest rates on variable rate debt. The Company does not use interest rate
derivative instruments to manage its exposure to interest rate changes.
Part II
ITEM 1. LEGAL PROCEEDINGS
There is no non-course of business legal proceedings, to which the Company
is a party or to which the property of the Company is subject, is pending or is
known by the Company to be contemplated.
ITEM 2. CHANGE IN SECURITIES. NONE
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. NONE
ITEM 5. OTHER INFORMATION:
As was reported on Form 8K dated February 14, 2000, pursuant to a Stock
Exchange Agreement (the "Exchange Agreement") dated as of February 10, 2000
between MRC Legal Services Corporation, a California Corporation, which entity
is the controlling shareholder of MAS Acquisition XV Corp. ("MAS XV"), an
Indiana corporation, and National Rehab Properties, Inc., a Nevada corporation,
approximately 96.8% (8,250,000 shares) of the outstanding shares
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of common stock of MAS Acquisition XV Corp. were exchanged for 1,000,000 shares
of common stock of National Rehab Properties, Inc. in a transaction in which
NRPI became the parent corporation of MAS XV. The additional shares representing
3.2% of MAS XV were subsequently acquired by the Company, making MAS XV a wholly
owned subsidiary of the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibits
27 Financial Data Schedule
(b) The Company filed the following reports on Form 8-K:
Form 8-K dated February 14, 2000 to disclose the acquisition of MAS
Acquisition XV Corp by the Company.
-----------
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Company has duly caused this report signed on its
behalf by the Undersigned, thereunto duly authorized.
NATIONAL REHAB PROPERTIES, INC.
Date: June 6, 2000 By: /s/ Richard Astrom
-------------------------------------
Richard Astrom, President and
Chief Executive Officer
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