U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the period ended September 30, 2000
Commission file number 001-13327
CENTURY INDUSTRIES, INC.
(Name of Small Business Issuer in Its Charter)
Nevada 54-1100941
(State of Incorporation) (IRS Employer Identification No.)
2106 NEW ROAD SUITE C-4 LINWOOD, NEW JERSEY 08221
(Address of Principal Executive Offices)
(609) 601-2300
Issuer's Telephone Number
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 practicable date: 23,699,712 shares of Common Stock
($.001 par value) as of November 20, 2000.
Transitional small business disclosure format: Yes [ ] No [x]
<PAGE>
CENTURY INDUSTRIES, INC.
Quarterly Report on Form 10-QSB for the
Quarterly Period Ending September 30, 2000
Table of Contents
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited).
Consolidated Balance Sheets:
September 30, 2000
Consolidated Statements of Operations:
Three Months Ended September 30,2000 and 1999
Nine Months Ended September 30, 2000 and 1999
Consolidated Statements of Cash Flows:
Nine Months Ended September 30, 2000 and 1999
Notes to Consolidated Financial Statements:
September 30, 2000
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
<TABLE>
BALANCE SHEETS
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and equivalents $ 17,039 $ 9,754
Accounts receivable 66,695
Prepaid expenses
Inventories, at cost 371,110 409,975
Total current assets 454,844 419,729
Property and equipment - net 74,626 80,111
Other Assets
Customer list - net 328,000 432,021
Total Assets 934,945 931,861
LIABILITIES AND DEFICIENCY IN STOCKHOLDERS' EQUITY
--------------------------------------------------
Current Liabilities:
Accounts payable and accrued expenses 838,872 777,388
Shareholder loans 461,291 302,923
Bonds payable 585,000 637,500
Current maturities of capital lease obligations
28,769 20,352
Capital Lease obligations, less current maturities 41,104
Stockholders' equity:
Common stock, par value, $.001 per share;
100,000,000 authorized, 23,699,712
issued at September 30, 2000 236,997 97,586
and 97,586,131 at December 31, 1999
Additional paid-in-capital 799,171 747,350
Deficiency in retained earnings (2,015,155) (1,692,342)
The accompanying notes are an integral part of these financial statements.
</TABLE>
<PAGE>
<TABLE>
CENTURY INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF LOSSES
(Unaudited)
<CAPTION>
Three months ended Nine Months ended
September 30, September 30,
------------------------ ------------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenues:
Product sales 35,399 261,297 235,333 1,002,626
Cost of sales 10,048 157,844 46,686 504,801
---------- ---------- ---------- ----------
Gross profit 25,351 103,453 188,647 497,825
Operating expenses:
Selling, general and administrative 202,797 528,658 611,315 1,276,422
---------- ---------- ---------- ----------
Operating expenses 202,797 528,658 611,315 1,276,422
---------- ---------- ---------- ----------
Net loss before taxes (177,446) (425,205) (422,668) (778,597)
Provision for income taxes - - - -
---------- ---------- ---------- ----------
Net loss (177,446) (425,205) (422,668) (778,597)
========== ========== ========== ==========
Losses per common share $ (.01) $ (.04) $ (.02) $ (.08)
(basic and assuming dilution)
Weighted average shares outstanding
Basic 23,699,712 9,758,613 20,064,032 9,758,613
Diluted 12,699,712 9,758,613 20,064,032 9,758,613
</TABLE>
The accompanying notes are an integral part of these financial statements
<PAGE>
<TABLE>
CENTURY INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Nine Months ended Sept 30
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities: (422,668) (778,597)
Net income from operating activities
Adjustments to reconcile net income to net cash:
Depreciation and amortization 109,506 178,060
Stock issued in exchange for services 101,852 -
Change in:
Inventories 38,865 (709,627)
Accounts payable and accrued expenses 54,049 389,311
--------- ---------
Net cash from operating activities (118,396) (920,853)
Cash flows used in investing activities:
Capital expenditures - -
Deposit on equipment - -
--------- ---------
Net cash used in investing activities -0- -0-
Cash flows (used in)/provided by financing activities:
Proceeds from bonds payable - 321,667
Proceeds from loans from stockholders 158,368 487,535
Repayment of Capital Lease Obligation (32,687) (27,505)
Repayment of Bank payable - -
Issuance of common stock, net - 19,650
--------- ---------
Net cash provided by financing activities 125,681 801,347
--------- ---------
Net increase in cash and cash equivalents 7,285 (119,506)
Cash and cash equivalents at January 1 9,754 99,447
--------- ---------
Cash and cash equivalents at Sept 30 $ 17,039 $(20,059)
========= =========
Supplemental Information:
Interest Paid
Income Tax Paid - -
Common stock issued in exchange for debt 314,500 12,481
Common stock issued in exchange for services 101,852 -
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
CENTURY INDUSTRIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
NOTE A - SUMMARY OF ACCOUNTING POLICIES
General
-------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB, and therefore, do not
include all the information necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles.
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 nine month period ended September 30, 2000 are not
necessarily indicative of the results that may be expected for the year ended
December 31, 2000. The unaudited condensed consolidated financial statements
should be read in conjunction with the consolidated financial statements and
footnotes thereto included in the Company's SEC Form 10-SB, as amended.
Basis of Presentation
---------------------
The consolidated financial statements include the accounts of the Company, and
its wholly-owned subsidiaries, Worldwide Industries, Inc. Significant
intercompany transactions have been eliminated in consolidation.
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion should be read in conjunction with the Company's
Consolidated Financial Statements and Notes thereto, included elsewhere within
this Report.
DESCRIPTION OF COMPANY
----------------------
Century Industries Inc. is a business service company developing its core
competency in web technology and implementing a proprietary concept called
Cybercourt. Century Industries, Inc. diversifies through strategic alliances and
joint ventures, and in exchange for technology, intellectual and financial
capital, charges fees or participates in equity or revenue sharing.
<PAGE>
FORWARD LOOKING STATEMENTS
--------------------------
This Form 10-QSB contains certain forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. All statements included
herein that address activities, events or developments that the Corporation
expects, believes, estimates, plans, intends, projects or anticipates will or
may occur in the future, are forward-looking statements. Actual events may
differ materially from those anticipated in the forward-looking statements.
Important risks that may cause such a difference include: general domestic and
international economic business conditions, increased competition in the
Corporation's markets and products. Other factors may include, availability and
terms of capital, and/or increases in operating and supply costs. Market
acceptance of existing and new products, rapid technological changes,
availability of qualified personnel also could be factors. Changes in the
Corporation's business strategies and development plans and changes in
government regulation could adversely affect the Company. Although the
Corporation believes that the assumptions underlying the forward-looking
statements contained herein are reasonable, any of the assumptions could be
inaccurate. There can be no assurance that the forward-looking statements
included in this filing 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
Corporation that the objectives and expectations of the Corporation would be
achieved.
Past Development
The following discussion and analysis of the Company's financial condition and
results of operations should be read in conjunction with the Company's Financial
Statements and Notes thereto. This document may contain forward-looking
statements that involve risks and uncertainties. The Company's actual results
may differ significantly from the results discussed in the forward-looking
statements.
The Registrant has continued implementing its Plan of Reorganization as set
forth in the 10-KSBA.
(1) Century has moved from the steel and insurance business into the business
service sector, pursuant to the Plan of Reorganization. This industry is poised
for explosive growth over the next decade primarily because of the impact of
technology and its e-business progeny, i.e. the Internet, e-commerce, and
virtual private nets.
(2) Century is a business services company that acts as an Enterprise Hub for
small businesses and professions. Century provides technology, financial and
intellectual capital in exchange for fees, revenue sharing, or equity
participation.
(3) Century's market is contained in 42% of the fastest growing businesses in
the United States, which are micro-cap companies under a $250,000,000
capitalization.
<PAGE>
(4) Century, through its skilled and experienced Management Team, establishes
strategic relationships with other businesses that are selected because of their
unique, competitive quality, products or services.
(5) Century's strategy is to keep overhead at no more than 20% and put 80% to
the bottom line before taxes.
To accomplish this, Century has created a Management Team on consulting
contracts and outsources to its strategic relationships and most of its
administrative costs as well as cost of products and services.
(6) To accomplish this marketing strategy and build a Diversified Service
Enterprise Company, Century must create an information system through Cybercourt
Systems, Inc.
(7) It is essential that Century's business strategy be aligned with technology
architecture strategy to create a Diversified Service Enterprise Company.
(8) In other words, the design of the technology and the business transactions
must fit "hand in glove" to capture efficiencies, profitability, and return
value to shareholders.
(9) In the Membership Marketing Division, the Company, through its revenue
sharing strategic alliance with IRMA, (discussed in the 10-KSBA), has entered
into agreements with several network marketing companies for distribution of its
benefits package. Century has replaced USA One as a vendor with the National
Association of Preferred Providers. Century ha negotiated a 19% ownership of
IRMA and 6% of IRMA's gross revenues.
The fortune 500 company referred to in the previous 10QSB filed on March 31,
2000 has announced in Florida the pilot program with respect to marketing the
IRMA benefits plan through the 68,000 marketing representatives in the segment
marketing operations of the Company. It has been decided to launch and
concentrate the pilot program in South Carolina.
(10) The Nutritional Division, Quantum Nutritionals, Inc., has developed
preliminary agreements for the mass marketing of the proprietary functional
drinks developed by the Company in conjunction with Aloe Commodities, Inc., as
well as private labeling of this product with multiple vendors. Century has
decided to dividend out to Century Shareholders a substantial block of its 19%
ownership in Quantum.
(11) The Web Technology Division can not be launched without raising substantial
capital or a joint venture.
Revenues for the Third Quarter have declined when compared with the Third
Quarter for 1999 in that, pursuant to the Plan of Reorganization, the network
marketing business is now a small business unit under the Nutritional Division
and an entirely new line of products is being developed as well as a new
Compensation Plan for Marketing Representatives and the creation of the
proprietary concept called "Downline Management Services". The network marketing
small business unit also requires capital to continue the "Arena Network
Marketing" program. Accordingly, since all of Century's revenues during the
Third Quarter of 1999 came from the Network Marketing Division, the downsizing
of this Division and the re-focusing of Century into a Plan of Reorganization
with an expanded (1) Nutritional Division; (2) Membership Marketing Division;
and (3) Web Technology Division, has resulted in a decrease in revenues as the
Company has refocused its core competency on larger, more productive markets and
contractual opportunities, with special emphasis on technology.
<PAGE>
RESULTS OF OPERATIONS
Three Months Ended September 30, 2000 and 1999
----------------------------------------------
REVENUES AND EXPENSES
Third Quarter 2000 revenues have decreased from $261,297 in 1999 to $35,399 in
2000 for a decrease of $225,898 or approximately 85%. The decrease in revenues
is due to the restructuring of the network marketing small business unit and
eliminating products with unfavorable margins.
Costs of sales for the three months ended September 30, 2000 decreased from
$46,685 in 1999 to $10,048 in 2000. The decrease is related to the Company's
decrease in sales volume during the same period.
Nine Months Ended September 30, 2000 and 1999
---------------------------------------------
REVENUES AND EXPENSES
Revenues for the first nine months of 2000, compared to the first nine months of
1999, showed a decrease from $1,002,626 to $235,333 and a decrease in expenses
from $1,276,422 in 1999 to $611,315 in 2000. The decrease in revenues is based
on the decrease in revenue stream from the network marketing small business
unit. The decrease in expenses is based on economies achieved in outsourcing.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
As of September 30, 2000, the Company had a working capital deficit of
$1,255,283 compared to a deficit of $1,318,434 at December 31, 1999, a deficit
increase of $63,151. The increase in the working capital deficit is attributed
to an increase in payables to the Company's trade creditors and advances from
shareholders to meet the Company's working capital requirements.
The Company generated cash flow deficits from operations of $118,396 for nine
months ended September 30, 2000 is primarily attributable to the Company's net
loss from operations, adjusted for depreciation and amortization.
The Company did not use any cash for investing activities during the nine months
ended September 30, 2000. Management anticipates investing funds during the next
12 months for property and equipment in order to implement its plan of
reorganization.
There were no financing activities during the nine months ended September 30,
2000.
While the Company has raised capital to meet its working capital and facility
and equipment financing needs, additional financing will be required in order to
implement its business plan. The Company is seeking financing in the form of
equity and debt in order to provide for these plans and for working capital.
There are no assurances the Company will be successful in raising the funds
required.
The Company has borrowed funds from significant shareholders of the Company in
the past to satisfy certain obligations. In addition, Company officers and
significant shareholders guarantee all of the Company's bank debt.
<PAGE>
The effect of inflation on the Company's revenue and operating results was not
significant. The Company's operations are in the southeastern United States and
there are no seasonal aspects that would have a material adverse effect on the
Company's financial condition or results of operations.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
On August 15, 2000, creditors filed an involuntary bankruptcy petition against
the Company in the U.S. Bankruptcy Court for the District of New Jersey. On
August 25, 2000 the court dismissed the petition. The Bankruptcy Court has
scheduled an evidentiary hearing regarding the petition on September 8, 2000. A
Consent Order was entered on September 23, 2000 which was dismissed on December
19, 2000 and the company agreed to a Voluntary Chapter 11 as a Debtor in
Possession with an Examiner. This will give Century a safe harbor from all
litigation wherein Century is a plaintiff or defendant in Ohio, New Jersey,
Maryland and Florida while Century submits a plan of reorganization and
re-financing within 90 days.
As of September 30, 2000, there was no material legal proceedings in which the
Company is involved, either as plaintiff or defendant, except for a dispute with
a vendor, Jenkon, Inc. This dispute is now in mediation and arbitration and will
not have a material effect on the Company's business. The small claims actions
that were disclosed in the 10-QSB filed for March 31, 2000 have been resolved
and are no longer pending. Legal counsel has advised an Ohio judgment is
unforceable.
In May, 2000 a default judgment was entered in the State of Florida against
Century Industries, Inc. based on a legal action that had been filed prior to
December 30, 1999 and had been dismissed as to the plaintiff. However, the
plaintiff in that action refiled a motion to reinstate the case and failed to
serve the proper registered agent for Century Industries, Inc. since Century
Industries, Inc. had designated a new registered agent in the State of Nevada on
February 12, 2000. A notice of reinstatement was sent to the former registered
agent for Century Industries, Inc. and under the District of Columbia law,
personal service was required and not effected on the former registered agent.
Under these circumstances, no appearance was filed on behalf of Century
Industries, Inc. and a default judgment was entered. This default judgment was
not an adjudication on the merits and the default judgment is in the process of
being appealed by a prestigious law firm that specializes in litigation
throughout the United States. It is the opinion of legal counsel for the Company
that this judgment will be vacated and there are meritorious defenses to the
action, and that the legal action will in no way adversely affect the financial
well being of the Company.
<PAGE>
In April 2000 Healthrite Inc., Jason Pharmaceuticals and Montana Naturals
commenced a legal action against multiple defendants including Century
Industries, Inc. in the state court of Maryland. This legal action was removed
by Century Industries, Inc. to the United State District Court and a substantial
counterclaim as well as third-party claim had been filed in the case against
Bradley MacDonald, the CEO of Healthrite, Inc. as well as Healthrite, Inc. based
on fraud, misrepresentations, deceit and breach of contract that were practiced
by Healthrite, Inc. and Bradley MacDonald with respect to the status of the
Nautilus license and Nautilus products, all of which was disclosed in the 10KSB
which was filed on December 31, 1999. Counsel for the Company believes that
there will be a substantial dollar recovery against Healthrite and Bradley
MacDonald and that the claim against Century Industries for recovery on a book
account will have no material effect on the Company's well being.
As of September 30, 2000 there were 10 legal actions filed in Atlantic County,
New Jersey on Worldwide Network Inc. bonds. Century Industries Inc., has been
incorrectly named as a party defendant in these law actions and Worldwide
Network Inc. is liable subject to the conditions in the Asset Purchase
Agreement of December 30, 1999.
Item 2. - Changes in Securities and Use of Proceeds.
NONE
Item 3. Defaults Upon Senior Securities.
Under the Asset Purchase Agreement of Worldwide Network, Inc., Century assumed
payment on bonds disclosed in the financial section of the 10-KSB filed on May
4, 2000 and this 10-QSB subject to the conditions in the Asset Purchase
Agreement.
Item 4. Submission of Matters to a Vote of Security Holders.
NONE
Item 5. Other Information
Pursuant to management's Plan of Operations disclosed in the 10-KSB filed on May
4, 2000, the Company will pursue establishing technology as its core business
and diversify strategic alliances and joint ventures in the fields of (1) health
& nutrition; (2) membership marketing; (3) tele-communications; and (4)
entertainment and leisure.
Michael Essary replaced William Money as President Director during the 4th
quarter. Mr. Money assumed a Directorship with Quantum Nutritionals Inc.
Item 6. Exhibits and Reports on Form 8-K.
Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
None
<PAGE>
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.
June 19, 2000
Carl J. Valore, CEO/Secretary - Wade Cordell, Chairman of the Board/Director
Thomas L. Murphy, CFO/Director - Joseph DeHoust, Vice President of Corporate
Strategy
Michael Essary, President/Director - Keith Dooley, CPA/Director
CENTURY INDUSTRIES, INC.
December 26, 2000 By: /s/ Carl Valore
------------------- -------------------------
Date Chief Executive Officer
