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 June 30, 1997
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from to .
------------------- ------------------
Commission file number 1-4799
NATIONAL ENTERPRISES, INC.
---------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Indiana 35-0540454
--------------------------- ------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
90 Adelaide Street West, Suite 300, Toronto, Ontario, Canada M5H 3V9
--------------------------------------------------------------------
(Address of principal executive office)
416-363-8300
-------------------------
(Issuer's telephone number)
N/A
---------------------------------------------------
(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
- 1 -
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Balance Sheets
as at June 30 1997 1996
- ----------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Current assets
Cash .................................................... $ 40,703 $ 643
Security deposit ........................................ 100,000 0
----------- -----------
140,703 643
Mineral property and deferred development costs ........... 318,757 0
----------- -----------
$ 459,460 $ 643
=========== ===========
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities ................ $ 185,666 $ 94,460
Loans payable - related parties ......................... 0 189,084
Net liabilities of discontinued operations .............. 0 30,775
----------- -----------
185,666 314,319
----------- -----------
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 .................................... (47,453,096) (47,497,439)
----------- -----------
Total shareholders' equity (deficit) 273,794 (313,676)
----------- -----------
$ 459,460 $ 643
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- 2 -
<PAGE>
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Statements of Operations and Deficit
for the six months ended for the three months ended
June 30 June 30
1997 1996 1997 1996
- --------------------------------------------------- ----------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues
Interest income ................................. $ 239 $ 0 $ 71 $ 0
----------- ----------- ----------- ----------
Expenses
General and administrative expenses ............. 34,503 23,801 24,297 11,658
Legal Fees ...................................... 34,961 0 20,434 0
Audit Fees ...................................... 21,936 0 0 0
Management fees ................................. 25,313 0 14,308 0
----------- ----------- ----------- ----------
116,713 23,801 59,039 11,658
----------- ----------- ----------- ----------
Loss from continuing operations ................... (116,474) (23,801) (58,968) (11,658)
Income (loss) from discontinued operations ........ 0 6,788 0 1,259
----------- ----------- ----------- ----------
Net Income ........................................ (116,474) (17,013) (58,968) (10,399)
Deficit, beginning of period ...................... (47,336,622) (47,480,426) (47,394,128) (47,487,040)
----------- ----------- ----------- ----------
Deficit, end of period ............................ $(47,453,096) $(47,497,439) $(47,453,096) $(47,497,439)
=========== =========== =========== ===========
Net earnings (loss) per share ..................... $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ===========
Weighted average number of shares of common
stock outstanding ................................. 72,587,698 69,416,698 72,587,698 69,416,698
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- 3 -
<PAGE>
<TABLE>
<CAPTION>
NATIONAL ENTERPRISES INC.
Consolidated Statements of Cash Flows
for the six months ended June 30 1997 1996
- -------------------------------------------------------------------------------------
<S> <C> <C>
Cash provided by (used in) operating activities
Net loss for the period ................................... $ (116,474) $ (23,801)
Change in non-cash working capital ........................ 141,592 (31,964)
-------- --------
Cash provided by (used in) continuing operations ............ 25,118 (55,765)
Cash provided by (used in) discontinued operations .......... 0 23,971
-------- --------
Net cash provided by (used in) operating activities ......... 25,118 (31,794)
-------- --------
Net cash provided by (used in) investing activities ......... (118,565) 0
-------- --------
Cash provided by (used in) financing activities
Loan payable - related party .............................. 0 30,500
Share issue costs ......................................... (36,000) 0
-------- --------
Net cash provided by (used in) financing activities ......... (36,000) 30,500
-------- --------
Increase (decrease) in cash ................................. (129,447) (1,294)
Cash, beginning of period ................................... 170,150 1,937
-------- --------
Cash, end of period ......................................... $ 40,703 $ 643
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
- 4 -
<PAGE>
Item 2. Management's Discussion and Analysis.
General
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.
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, amounted to $118,565
and $87,871 for the six months and the quarter ended June 30, 1997,
respectively, (June 30, 1996 - nil), which expenditures pertained to the
- 5 -
<PAGE>
Company's nine Austrian properties, particularly preparatory work for the
drilling program on the Company's Schellgaden property, and $42,000 pertaining
to investigation of potential acquisitions in the Republic of Ghana.
General operating expenses for the six months ended and the quarter ended June
30, 1997, were $116,713 and $59,039 respectively compared to $23,801 and $11,658
for the corresponding periods 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 six months ended and quarter ended June 30, 1996, the Company earned net
income from its now discontinued real estate development operations of $6,788
and $1,259 respectively (June 30, 1997 - nil) from the sale of development
resort lots.
The Company's combined net loss from continuing and discontinued operations for
the six months ended and quarter ended amounted to $116,474 and $58,968
respectively compared to $17,013 and $10,399 in the corresponding periods of
1996.
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 $140,703 at June 30, 1997, $100,000 was
a security deposit pertaining to a Put\Escrow Agreement which will be repaid to
Company on termination of the Agreement or by the controlling shareholder in
September of 1997. Of the $185,666 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 deficit amounted to $94,593 at
June 30, 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 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. No reports on Form 8-K have been filed during the
quarter ended June 30, 1997.
- 6 -
<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
----------------------------------
C. W. Leigh Cassidy, Vice President, Chief
Financial Officer (Principal Financial and
Accounting Officer) and Secretary
- 7 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Enterprises Inc.'s Consolidated Balance Sheets at June 30, 1997 and Consolidated
Statements of Operations and Deficit for the six months and three months ended
June 30, 1997, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 40,703
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 140,703
<PP&E> 318,757
<DEPRECIATION> 0
<TOTAL-ASSETS> 459,460
<CURRENT-LIABILITIES> 185,666
<BONDS> 0
0
0
<COMMON> 47,772,890
<OTHER-SE> (47,499,096)
<TOTAL-LIABILITY-AND-EQUITY> 459,460
<SALES> 0
<TOTAL-REVENUES> 239
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 116,713
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (116,474)
<INCOME-TAX> 0
<INCOME-CONTINUING> (116,474)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (116,474)
<EPS-PRIMARY> 0.00
<EPS-DILUTED> 0.00
</TABLE>
