<PAGE>
UNITED STATES
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended: July 31, 1997
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
0-3255
(Commission File Number)
JAYARK CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 13-1864519
(State or other jurisdiction of Inc) (I.R.S. Employer Identification No.)
Post Office Box 741528, Houston, Texas 77274
(Address of principal executive offices ) (Zip Code)
(713) 783-9184
(Registrant's telephone number, including area code)
(Former name, former address and fiscal year, if changed since last report.)
Indicate by check mark whether the registrant (1) has filed
all reports 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 [ ] NO [X]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date:
Class Outstanding at July 31,
1997
Common Stock $0.30 Par Value 9,221,197
<PAGE>
Part. I
Item I
Jayark Corporation And Subsidiaries
Consolidated Balanc Sheets
<TABLE>
<CAPTION>
Unaudited Audited
7/31/97 04/30/97
<S> <C> <C>
Assets
Cash and Cash Equivalents $294,199 $67,140
Accounts Receivable-Trade, Less 1,765,591 1,838,585
Allowance For Doubtful Accounts
of $43,244 in July 1997 and $42,000
in April 1997
Other Accounts Receivable 15,277 2,277
Inventories 344,985 412,846
Other Current Assets 26,683 20,572
Total Current Assest 2,446,736 2,341,42
Non Current Assets
Property & Equipment, Less Accumulated 131,549 122,550
Depreciation and Amortization
Excess of Cost Over Net Assets of 284,762 290,102
Businesses Acquired, Less Accum
Amortization of $447,675 in July
1997 and $442,335 in April 1997
Total Non-Current Assets 416,311 412,652
Total Assets $2,863,047 $2,754,072
Liabilities
Current Liabilities
Notes Payable & Lines of Credit $507,263 $500,000
Current Maturities of Long Term Debt 4,896 7,394
Accounts Payable 939,303 905,407
Accrued Salaries and Deferred Compensation 137,992 106,531
Accrual Related to Loss on Discontinued
Operations - Rosalco 305,000 305,000
Accrual Related to LCL Investment 139,579 164,579
Other Current Liabilities 411,861 359,512
Total Current Liabilities 2,445,894 2,348,423
Non Current Liabilites
Long Term Debt, Excluding Current Maturities - 7,207
Notes Payable to Related Parties 2,000,000 2,000,000 0 0
Subordinated Debentures 1,400,000 1,400,000
Total Non Current Liabilites 3,400,000 3,407,207
Total Liabilities 5,845,8940 5,755,630
Stockholders'Equity
Common Stock of $.30 Par Value. 2,766,359 2,766,359
Authorized 10,000,000 Shares;
Issued 9,221,197 Shares in July 1997
and 9,221,197 Shares in April 1997
Additional Paid-In Capital 8,066,122 8,066,122
Deficit (13,815,327) (13,834,039)
Total Stockholders'Equity (2,982,847) (3,001,558)
Total Liabilities & Stockholders' Equity $2,863,047 $2,754,072
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
Jayark Corporation And Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
7/31/97 7/31/96 7/31/97 7/31/96
<S> <C> <C> <C> <C>
Net Revenues $4,172,844 $3,071,061 $4,172,844 $3,071,061
Costs & Expenses:
Cost of Revenues 3,628,614 2,590,785 3,628,614 2,590,785
Selling, Gen and Admin 424,278 449,750 424,278 449,750
Interest 101,240 36,887 101,240 36,887
Other (Income) - (11,065) - (11,065)
Total Costs & Expenses 4,154,133 3,066,358 4,154,133 3,066,358
Income from Continuing Operations $18,712 $4,703 $18,712 $4,703
(Loss) from Discontinued Oper. - (283,252) - (283,252)
Net Income (Loss) $18,712 ($278,549) $18,712 ($278,549)
Primary Earnings (Loss) per
Common Share:
Continuing Operations $0.00 $0.00 $0.00 $0.00
Discontinued Operations $0.00 ($0.03) $0.00 ($0.03)
Net Income (Loss) $0.00 ($0.03) $0.00 ($0.03)
Weighted Average Common Shares 9,221,197 7,978,799 9,221,197 7,978,799
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
Jayark Corporation And Subsidiaries
Consolidated Statements of Cash flows
For the Three Months Ended
(Unaudited)
<TABLE>
<CAPTION>
7/31/97 7/31/96
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income (Loss) $18,712 ($278,549)
Adjustments to Reconcile Earnings (Loss)
to Cash From Operating Activities:
Depreciation and Amortization of Property
and Equipment 14,336 19,315
Amortization of Excess of Cost Over Net
Assets of Businesses Acquired 5,340 5,340
Net Assets of Discontinued Operations - 1,129,701
(Gain) Loss on Disposition of Assets - (11,065)
Change in Assets and Liabilities Net Effects
From Acquisition of Subs:
(Increase) Decrease in Accts Receivable Net 59,994 330,653
(Increase) Decrease in Inventories 67,861 48,276
(Increase) Decrease in Other Current Assets (6,111) (1,531)
Increase (Decrease) in Accounts Payable 33,895 (87,043)
Increase (Decrease) in Accrued Salaries and
Deferred Compensation 31,461 (72,226)
Increase (Decrease) in Other Liabilities 27,348 (783,433)
Net Cash Provided By (Used In)Oper Activities 252,835 299,439
Cash Flows From Investing Activities:
Capital Expenditures for Property and
Equipment (23,335) (28,598)
Net Cash Provided By (Used In)Inv Activities (23,335) (28,598)
Cash Flows From Financing Activities:
Payment of Notes Payable - (272,000)
Payment of Long Term Debt (9,704) (20,063)
Proceeds From Issuance of Notes Payable and
Lines of Credit 7,263 -
Purchase (Repayment) of Subordinated
Debentures - (30,000)
Net Cash Provided By (Used In) Fin Activities (2,442) (322,063)
Net Increase (Decrease) in Cash and
Cash Equivalents: 227,059 (51,222)
Cash & Cash Equivalents at Beg. of Year 67,140 350,926
Cash & Cash Equivalents at End of Year $294,199 $299,704
Supplemental Disclosures of Cash Flow
Information:
Cash Paid For:
Interest $40,907 $54,195
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE>
Notes to Consolidated Financial Statements
(Unaudited)
1. Jayark Corporation ("Jayark" or "the Company") conducts its
operations through AVES Audiovisual Systems, Inc. ("AVES"), a
wholly owned subsidiary. The consolidated balance sheet of Jayark
Corporation and subsidiaries (the "Company"), as of July 31, 1997,
and the related consolidated statements of operations and cash
flows for the periods ended July 31, 1997 and 1996 are unaudited.
The consolidated balance sheet as of April 30, 1997 has been
derived from audited financial statements. The consolidated
financial statements should be read in conjunction with the
audited financial statements and footnotes for the year ended
April 30, 1997, included in the Company's report on Form 10-K.
2.The interim financial statements reflect all adjustments (consisting
of only normal and recurring accruals and adjustments) which are, in
the opinion of management, necessary to a fair statement of the
results for the interim periods presented. The Company's operating
results for any particular interim period may not be indicative of
results for the full year.
3. Certain reclassifications have been made in the 1996
financial statements to conform them to and make them consistent
with the presentation used in the 1997 financial statements.
<PAGE>
Item 2.
Management's Discussion & Analysis of Results of Operations
Three Months Ended July 31, 1997 as compared to July 31, 1996
NET REVENUES
Consolidated Revenues of $4,173,000 for the period ended July
31, 1997 increased $1,102,000, or 35.9%, as compared to the same
period in 1996. The increase is the result of a $1,111,000
increase in direct sales, and a decrease of $9,000 in contract and
rental sales.
COST OF REVENUES
Consolidated Cost of Revenues of $3,629,000 increased
$1,038,000, or 40.1% in 1997, as compared to the same period last
year. The increase reflects a $1,024,000 increase in direct sale
costs, and a $28,000 increase in contract and rental sale costs,
which was offset by a $14,000 increase in purchase discounts.
GROSS MARGIN
Consolidated Gross Margin of $544,000 was 13.0% of revenues,
as compared to $480,000, which was 15.6% for the same period last
year. AVES gross margin percentage decreased as a result of a
1.2% decrease in direct sale margin, a 19.0% decrease in contract
and rental sale margin. These decreases were offset by an
increase of 45.4% related to purchase discounts taken.
The direct sale gross margin for the period ended July 31,
1997 decreased to 10.9% from 12.1% in 1996 due to competitive
pressures in the market. The contract and rental sale gross
margin for the period ended July 31, 1997 decreased to 38.4% from
57.4% in 1996 due to competitive pressures in the market and a
change in product mix.
<PAGE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Consolidated Expenses of $424,000 decreased $25,000 or 5.7%
as compared to the same period last year. Corporate decreased
legal and professional fees by $3,000, insurance premiums by
$9,000, and meals & entertainment by $10,000 as a result of the
Company's overall cost reduction program and the discontinued
operations of Rosalco, Inc., a wholly owned subsidiary of Jayark.
AVES decreased advertising expense $3,000.
INTEREST EXPENSE
Consolidated Interest Expense of $101,000 increased $64,000,
or 174.51%. Corporate interest increased $42,000 as a result of
the discontinued operations of Rosalco, Inc., a wholly owned
subsidiary of Jayark. This interest was previously charged to
Rosalco, Inc. through an intercompany account. Additionally,
$22,000 of the increase is based on an increase in the borrowing.
OTHER INCOME
Consolidated Other Income of $0 decreased $11,000, or 100.0%
from the same period last year. The decrease is a result of a
$11,000 gain in 1996 on the sale of a vehicle.
INCOME FROM CONTINUING OPERATIONS
Consolidated Income from Continuing Operations of $19,000 was
incurred as compared to income of $5,000 for the same period last
year. This $14,000 improvement is comprised of the following: a
$25,000 decrease in Selling, General, and Administrative expenses
as a result of the Company's overall cost reduction program and
the discontinued operations of Rosalco, a wholly owned subsidiary
of Jayark, a $64,000 increase in gross margin, which was offset by
a increase of $64,000 in interest expense.
(LOSS) INCOME FROM DISCONTINUED OPERATIONS
Consolidated (Loss) from Discontinued Operations reflects
losses incurred by the discontinued operation of Rosalco, Inc., a
wholly owned subsidiary of Jayark. The $283,000 decrease in 1997
is a result of the operations of Rosalco as a discontinued
operation.
<PAGE>
NET INCOME (LOSS)
Consolidated Net Income of $19,000 as compared to a net loss
of $278,000 during the same period last year. The $297,000
increase is a result of a $283,000 reduction in expenses from the
discontinued operations of Rosalco, Inc., and a $14,000 increase
from continuing operations.
LIQUIDITY AND CAPITAL RESOURCES
At July 31, 1997, consolidated open lines of credit available to
the Company for borrowing, were $750,000 as compared to $750,000
at April 30, 1997. It is the opinion of the Company's management
that operating expenses, as well as obligations coming due during
the next fiscal year, will be met primarily by cash flow generated
from operations and from available borrowing levels.
Working capital amounted to $842 at July 31, 1997, compared to a
deficit of $7,003 at April 30, 1997. The increase is principally
due to the operating income generated in the current year.
Net cash provided by operating activities was $229,500 in 1997,
compared $310,505 net cash provided in 1996. The change was due
to the increase in net income, accounts payable, accrued salaries,
and other liabilities. However, this was offset by decreases in
the net assets of discontinued operations, and accounts
receivable.
Net cash used in investing activities was $23,335 in 1997,
compared to $28,598 in 1996.
Net cash used in financing activities was $2,442 in 1997, compared
to $322,063 net cash used in 1996. The change was principally due
to the repayment of notes payable 1996.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.
(a) Exhibits - None
(b) Report on Form 8-K - None
<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.
JAYARK CORPORATION
Registrant
/s/ David L. Koffman March 12, 1998
David L. Koffman, President
Chief Executive Officer
/s/ Robert C. Nolt March 12, 1998
Robert C. Nolt
Chief Financial Officer
<PAGE>
Financial Data Schedule
[ARTICLE] 5
[LEGEND]
[RESTATED]
[CIK] 0000053260
[NAME] Jayark Corporation
<MULIPLIER> 1000.0
[CURRENCY] USD
[FISCAL-YEAR-END] 04/30/98
[PERIOD-START] 05/01/97
[PERIOD-END] 07/31/97
[PERIOD-TYPE] 3-mos
[EXCHANGE-RATE]
[CASH] 294
[SECURITIES] -
[RECEIVABLES] 1,781
[ALLOWANCES] -
[INVENTORY] 345
[OTHER] 27
[CURRENT-ASSETS] 2,447
[PP&E] 132
[DEPRECIATION] -
[TOTAL-ASSETS] 2,863
[CURRENT-LIABILITIES] 2,446
[BONDS] -
[COMMON] 2,766
[PREFERRED-MANDATORY] -
[PREFERRED] -
[OTHER-SE] -
[TOTAL-LIABILITY-AND-EQUITY] 2,863
[SALES] 4,173
[TOTAL-REVENUES] 4,173
[CGS] 3,629
[TOTAL-COSTS] 4,053
[OTHER-EXPENSES] -
[LOSS-PROVISION] -
[INTEREST-EXPENSE] 101
[INCOME-PRETAX] 19
[INCOME-TAX] -
[INCOME-CONTINUING] 19
[DISCONTINUED] -
[EXTRAORDINARY] -
[CHANGES] -
[NET-INCOME] 19
[EPS-PRIMARY] 0.00
