U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
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Commission file number 1-4799
NATIONAL ENTERPRISES, INC.
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(Exact name of small business issuer as specified in its charter)
Indiana 35-0540454
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
90 Adelaide Street West, Suite 300, Toronto, Ontario, Canada M5H 3V9
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(Address of principal executive office)
416-363-8300
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(Issuer's telephone number)
N/A
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(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. [ X ] Yes [ ]
No
As of July 1, 1997, 72,587,698 shares of common stock, no par value, of the
Issuer were outstanding.
Transitional Small Business Disclosure Format (Check one): [ ] Yes [ X ] No
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Balance Sheets
as at March 31 1997 1996
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Assets
<S> <C> <C>
Current assets
Cash .................................................... $ 43,519 $ 982
Accounts receivable ..................................... 50,000 0
Security deposit ........................................ 100,000 0
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193,519 982
Mineral property and deferred exploration costs ........... 230,886 0
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$ 424,405 $ 982
============ ============
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities ................ $ 91,643 89,342
Loans payable - related parties ......................... 0 165,184
Net liabilities of discontinued operations .............. 0 49,733
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91,643 304,259
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Shareholders' equity
Preferred stock, 10,000,000 shares authorized, none
issued .................................................. 0 0
Common stock, no par value, 1,000,000,000 shares
authorized, 72,587,698 and 69,416,698 shares issued
and outstanding in 1997 and 1996 respectively .......... 47,772,890 47,183,763
Common stock transferred by affiliate ................... (46,000) 0
Accumulated deficit ..................................... (47,394,128) (47,487,040)
------------ ------------
Total shareholders' equity (deficit) ...................... 332,762 (303,277)
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$ 424,405 $ 982
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Statements of Operations and Deficit
for the three months ended March 31 1997 1996
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<S> <C> <C>
Revenues
Interest income ............................... $ 168 $ 0
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Expenses
General and administrative .................... 10,206 12,143
Legal Fees .................................... 14,527 0
Audit Fees .................................... 21,936 0
Management fees ............................... 11,005 0
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57,674 12,143
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Loss from continuing operations ................. (57,506) (12,143)
Income (loss) from discontinued operations ...... 0 5,529
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Net Income ...................................... (57,506) (6,614)
Deficit, beginning of period .................... (47,336,622) (47,480,426)
------------ ------------
Deficit, end of period .......................... $ (47,394,128) $ (47,487,040)
============ ============
Net earnings (loss) per share ................... $ 0 $ 0
============ ============
Weighted average number of shares of common stock
outstanding ..................................... 72,587,698 69,416,698
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Statements of Cash Flows
for the three months ended March 31 1997 1996
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<S> <C> <C>
Cash provided by (used in) operating activities
Net loss for the period ................................... $ (57,506) $ (12,143)
Change in non-cash working capital ........................ (2,431) (37,082)
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Cash provided by (used in) continuing operations ............ (59,937) (49,225)
Cash provided by (used in) discontinued operations .......... 0 41,670
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Net cash provided by (used in) operating activities ......... (59,937) (7,555)
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Net cash provided by (used in) investing activities ......... (30,694) 0
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Cash provided by (used in) financing activities
Loan payable - related party .............................. 0 6,600
Share issue costs ......................................... (36,000) 0
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Net cash provided by (used in) financing activities ......... (36,000) 6,600
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Increase (decrease) in cash ................................. (126,631) (955)
Cash, beginning of period ................................... 170,150 1,937
-------- --------
Cash, end of period ......................................... $ 43,519 $ 982
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
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<PAGE>
Item 2. Management's Discussion and Analysis.
When used in this Form 10-QSB, in future filings by the Company with the
Securities and Exchange Commission, in the Company's press releases and in any
oral statements made by the Company, the words or phrases "will likely result,"
"expects," "intends," "will continue," "is anticipated," "estimates,"
"projects," "plans," and similar expressions are intended to identify "forward
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. A forward looking statement is not historical fact and
whether the statement comes true is subject to risks and uncertainties. The
actual results or activities of the Company will likely differ from the
projected results or activities of the Company. Forward looking statements
include the proposed business plan of the Company, the planned development of
the Company's mining properties in Austria, the commencement dates and the costs
of diamond core drilling and exploration activities, the future acquisition of
mining properties, the procurement of future financing to fund the Company's
operations, and the compliance with environmental and other mining laws in
Austria. Factors that could cause actual results to differ materially from
projected results include, among others, risks and uncertainties relating to
general domestic and international economic and political conditions, risks
associated with mining operations in Austria, unanticipated ground and water
conditions, unanticipated grade and geological problems, metallurgical and other
processing problems, availability of materials and equipment, the timing of
receipt of necessary governmental permits, the occurrence of unusual weather or
operating conditions, force majeure events, lower than expected ore grades and
higher than expected stripping ratios, the failure of equipment or processes to
operate in accordance with specifications and expectations, labor relations,
accidents, delays in anticipated start-up dates, environmental costs and risks,
the ability of the Company to raise financing on a favorable basis to the
Company or at all, and general financial and stock market conditions. Readers
are cautioned not to put undue reliance on forward looking statements. In light
of the significant uncertainties inherent in forward looking statements, the
inclusion of any such statement should not be regarded as a representation by
the Company or any other person that the objectives or plans of the Company will
be achieved or that the Company will ever obtain significant revenue or
profitability. The Company disclaims any intent or obligation to update publicly
the forward looking statements contained in this report, whether as a result of
new information, future events or otherwise, except as required by applicable
laws.
General
Prior to December 1996, the Company derived revenues from the operation of its
real estate development business. In December 1996, the Company discontinued
such operations and commenced new operations in the mineral exploration and
development industry.
Results of Operations
Exploration expenditures, which have been capitalized as "Mineral property and
deferred development costs" on the Company's Balance Sheet, for the quarter
ended March 31, 1997 amounted to $30,694 (March 31, 1996 - nil) which
expenditures pertained to preparatory work for the drilling program on the
Company's Schellgaden property and expenditures pertaining to Company's eight
other Austrian properties.
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<PAGE>
General operating expenses for the quarter were $57,674 compared to $12,143 for
the corresponding period in 1996. The increase in these expenditures resulted
from the reactivation of the Company and the commencement of business in the
exploration and development of mineral properties.
In the quarter ended March 31, 1996, the Company earned net income from its now
discontinued real estate development operations of $5,529 (March 31, 1997 - nil)
from the sale of development resort lots.
The Company's combined net loss from continuing and discontinued operations for
the quarter amounted to $57,506 compared to $6,614 in the corresponding period
of 1996.
In the quarter the Company paid a $36,000 finders fee to an unrelated party in
connection with a private placement of 1,800,000 common shares for proceeds of
$450,000.
Liquidity and Capital Resources
As a result of the series of transactions through which the Company discontinued
its real estate development operations, a change of control of the Company was
effected and nine gold exploration properties in Austria were acquired. The
Company does not have sufficient capital with which to pursue its new business
plan. Of the Company's current assets of $193,519 at March 31, 1997, $100,000
was a security deposit pertaining to a Put\Escrow Agreement which will be repaid
to the Company on termination of the Agreement or by the controlling shareholder
in September of 1997. Of the $91,643 current liabilities of the Company $50,370
pertains to prior years over accrual of liabilities. After adjusting for the
security deposit and fees the net working capital amounted to $52,246 at March
31, 1997.
To remedy a lack of capital in amounts sufficient to pursue its new business
plan, the Company is currently considering various capital raising options,
including, but not limited to, a significant equity financing. However, there
can be no assurance that the Company will be successful in its efforts to raise
capital sufficient to enable it to pursue its new business plan.
PART II - OTHER INFORMATION
Item 2. Changes in Securities
During the quarterly period ended March 31, 1997, the Company accepted
subscriptions for the following sales of unregistered shares of common stock:
(1) On September 3, 1996, the Company sold 200,000 shares of common
stock at $0.25 per share to Florian Riedl-Riedenstein and 200,000 shares of
common stock at $0.25 per share to a private investor. The subscriptions
were accepted and the shares issued by the Company in January, 1997. The
$100,000 raised was used by the Company to pay the costs and expenses
incurred in the preparation and closing by the Company of the divestiture
of the assets of the Company, purchase of all the shares of Argosy and the
change in control of the Company. Mr. Riedl-Riedenstein has since become
the Chairman, President and Chief Executive Officer of the Company. No
underwriter or sales agent was used in this transaction and no commissions
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<PAGE>
were paid for this transaction. The shares were issued pursuant to the
exemption from registration provided by Section 4(2) of the Securities Act
of 1933, as amended (the "Securities Act"), in a private transaction to a
sophisticated purchaser and are restricted from transfer unless such
transfer is registered under the Securities Act or made pursuant to an
exemption therefrom.
(2) On December 17, 1996, the Company sold 1,800,000 shares of common
stock at $0.25 per share to a private investor. The subscription was
accepted and the shares issued by the Company in January, 1997. The
$450,000 raised was used by the Company to pay the costs and expenses
incurred in the preparation and closing by the Company of the divestiture
of the assets of the Company, purchase of all the shares of Argosy and the
change in control of the Company. A finder's fee of $36,000 was paid to an
unrelated party in connection with this transaction. The shares were issued
pursuant to the exemption from registration provided by Section 4(2) of the
Securities Act, in a private transaction to a sophisticated purchaser and
are restricted from transfer unless such transfer is registered under the
Securities Act or made pursuant to an exemption therefrom.
Item 6. Exhibits and Reports of Form 8-K
(a) Exhibits.
Exhibit Item 601
No. Category Exhibit
- ------- -------- -------
1 27 Financial Data Schedule.*
*Filed herewith.
(b) Reports on Form 8-K. During the quarter ended March 31, 1997, the Company
filed one report on Form 8-K, dated December 18, 1996 and filed on March 27,
1997, pertaining to the following items: (i) Item 1--A change of control of the
Company on December 17, 1996, in which Mercury Immobilien und Venvaltungs AG
acquired a block of shares of the common stock of the Company representing 77.7%
of the outstanding shares of common stock; (ii) Item 2--The disposition of the
interests of the Company in its wholly owned subsidiaries, NRC, Inc., Arendswood
Homes Inc., and National Building Systems Inc. through in exchange for an
assumption of a debt of the Company in the amount of US $142,874 on November 28,
1996, and the acquisition by the Company of Argosy Mining G.m.B.H. from Argosy
Mining Corp. on December 17, 1996; and (iii) Item 6--The resignation of certain
directors of the Company on December 17, 1996. Audited financial statements for
the year ended December 31, 1995, and unaudited financial statements for the
nine months ending September 30, 1996, for Argosy Mining G.m.B.H. were filed, as
Exhibits V and VI to this Form 8-K, respectively. A Form 8- K/A amending this
Form 8-K was filed by the Company on July 23, 1997, which amendment added an
unaudited Pro Forma Balance Sheet as at September 30, 1996 and unaudited Pro
Forma Income Statements for the 12 months ended December 31, 1995 and the nine
months ended September 30, 1996, as an additional exhibit to the Form 8-K.
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<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.
NATIONAL ENTERPRISES, INC.
Date: July 24, 1997 By: /s/ C. W. Leigh Cassidy
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C. W. Leigh Cassidy, Vice President, Chief
Financial Officer (Principal Financial and
Accounting Officer) and Secretary
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Enterprises Inc.'s Consolidated Balance Sheet at March 31, 1997 and Consolidated
Statement of Operations and Deficit for the three months ended March 31, 1997,
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 43,519
<SECURITIES> 0
<RECEIVABLES> 50,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 193,519
<PP&E> 230,886
<DEPRECIATION> 0
<TOTAL-ASSETS> 424,405
<CURRENT-LIABILITIES> 91,643
<BONDS> 0
0
0
<COMMON> 47,772,890
<OTHER-SE> (47,440,128)
<TOTAL-LIABILITY-AND-EQUITY> 424,405
<SALES> 0
<TOTAL-REVENUES> 168
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 57,674
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (57,506)
<INCOME-TAX> 0
<INCOME-CONTINUING> (57,506)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (57,506)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
