<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES ACT OF 1934
For the quarterly period ended June 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
Commission file number 1-4799
NATIONAL ENTERPRISES, INC.
(Name of small business issuer as specified in its charter)
Indiana 35-0540454
(State of incorporation) (IRS Employer Identification Number)
P. O. Box 940846, Plano, Texas 75094-0846
(Address of principal executive office) (Zip Code)
(Issuer's telephone number) (972) 960-8844
---------------------------------------------------------------------------
(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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whither the registrant filed all documents and reports required to
be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the last practicable date: 70,005,997
Transitional Small Business Disclosure Format (Check one):
[ ] Yes [ x ] No
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
National Enterprises, Inc. and Subsidiaries
Consolidated Balance Sheet - (Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
<S> <C> <C>
ASSETS
Cash $643 $5,402
Inventory - land 111,434 421,565
Other assets 916 916
------------ ------------
Total assets $112,993 $427,883
============ ============
LIABILITIES AND SHAREHOLDERS DEFICIT
Accounts payable $69,726 $79,036
Accrued property taxes 67,087 396,154
Other accrued expenses 100,772 90,772
Loans payable - related parties 189,084 158,584
----------- -----------
Total liabilities 426,669 724,546
----------- -----------
Preferred stock, 10,000,000 shares authorized,
none issued
Common stock, no par value, 1,000,000,000 shares
authorized, 69,034,997 shares issued and
outstanding 47,183,763 47,183,763
Accumulated deficit (47,497,439) (47,480,426)
----------- -----------
Total shareholders' deficit (313,676) (296,663)
----------- -----------
COMMITMENTS AND CONTINGENCIES
Total liabilities and shareholders' deficit $112,993 $427,883
=========== ===========
</TABLE>
The accompany notes are an integral part of these consolidated financial
statements.
2
<PAGE> 3
National Enterprises, Inc. and Subsidiaries
Consolidated Statement of Operations - (Unaudited)
<TABLE>
<CAPTION>
Quarter Quarter Six Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales:
Land and shelter $229,500 $414,500 $86,988
Rental income 0 $2,225 0 6,299
Interest income 0 934 0 1,313
-------- -------- -------- --------
Total sales 229,500 3,159 414,500 94,600
-------- -------- -------- --------
Cost of sales:
Land and shelter 228,241 0 407,712 86,988
Rental cost 0 810 0 2,127
-------- -------- -------- --------
Total cost of sales 228,241 810 407,712 89,115
-------- -------- -------- --------
Operating expenses:
General and administrative 11,658 105,840 23,801 199,421
Interest 0 43,827 0 104,118
Depreciation 0 225 0 450
-------- -------- -------- --------
Total operating expenses 11,658 149,892 23,801 303,989
-------- -------- -------- --------
Net income (loss) before
extraordinary item (147,543) (298,504)
-------- --------
Extraordinary item -
Income from forgiveness of
accrued interest on note
payable 596,410 596,410
-------- --------
Net income (loss) $(10,399) $448,867 $(17,013) $297,906
======== ======== ======== ========
Weighted average number of
common shares outstanding 60,034,997 22,454,997 60,034,997 21,504,997
Net loss before extraordinary
item per common share $(0.01) $(0.01)
Net income (loss) per share $(0.01) $0.02 $(0.01) $0.01
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
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National Enterprises, Inc. and Subsidiaries
Consolidated Statement of Cash Flows - (Unaudited)
<TABLE>
<CAPTION>
Six Months Six Months
Ending Ending
June 30, 1996 June 30, 1995
------------- -------------
<S> <C> <C>
Cash flow from operating activities -
Net loss $(17,013) $297,906
Adjustments to reconcile net loss to net
cash provided (used) by operating activities:
Depreciation and amortization 450
Changes in assets and liabilities:
Decrease in land inventory 310,131 104,571
Decrease in other assets 0 3,227
Increase (decrease) in accounts payable (9,310) (7,431)
Increase (decrease) in accrued expenses (319,067) (530,010)
--------- ---------
Net cash (used) by operating activities (35,259) (131,287)
--------- ---------
Cash flows from financing activities -
Sale of common shares 95,000
Net borrowings from related parties 30,500 19,594
--------- ---------
Net cash provided from financing activities 30,500 114,594
--------- ---------
Net increase (decrease) in cash (4,759) (16,693)
Cash at beginning of period 5,402 37,985
--------- ---------
Cash at end of period $643 $21,292
========= =========
Interest paid $0 $0
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
4
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National Enterprises, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of Presentation
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of results for the interim period.
The results of operations for the six month period ended June 30, 1996 are not
necessarily indicative of the results expected for the full year.
Note 2 - Inventory
The company's land inventory consists of developed resort homesites near Lake
Travis and Lake Lyndon B. Johnson in Central Texas.
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Land $472,402 $1,439,352
Valuation reserve (360,968) 1,017,787
-------- ----------
Net book value $111,434 $421,565
======== ==========
</TABLE>
Note 3 - Emergence from Bankruptcy
The company emerged from bankruptcy proceedings under Chapter 11 of Title 11 of
the United States Code pursuant to a Plan of Reorganization which was confirmed
by the United States Bankruptcy Court for the Eastern District of Virginia on
April 2, 1992 and became effective April 14, 1992. Under the Plan of
Reorganization, substantially all the company's manufacturing and operating
assets were transferred to a liquidating trust.
Note 4 - Subsequent Events
Effective December 11, 1996, the Company transferred the ownership of its
wholly owned subsidiaries; NRC Inc., Arendswood Homes, Inc. and National
Building Systems, Inc. to Danca Investments, Inc. an affiliate of Arendscor
(Canada), Inc. as payment in full for all debts outstanding to Arendscor
(Canada), Inc. and its affiliates. The net book value of the assets
transferred and the book value of loans including interest were $2,521 and
$142,874, respectively.
5
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Effective December 12, 1996, the Company purchased all of the outstanding stock
of Argosy Mining G.m.b.H. ("Argosy") from Argosy Mining Corp. for $250,000
Canadian. Argosy is the owner of certain mineral prospecting properties and
rights in Austria. This purchase was financed by a subscription for 2,200,000
shares of the Company's common stock for $0.25 per share for a total
of $550,000.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Results of operations -
The Company has continued its efforts to sell its inventory of developed resort
lots. Expenses have been reduced by the conversion of the Arendscor note into
common stock eliminating interest accruals. The Company had net losses before
extraordinary items of $10,399 and $147,543 in the quarters ended June 30, 1996
and 1995, respectively.
Liquidity -
In the second quarter of 1996 the Company continued to rely on the proceeds
from the sale of resort property and advances from affiliates to meet its
liquidity needs.
In December 1996 the Company accepted subscriptions for 2,200,000 common shares
at $0.25 per share for a total of $550,000. This subscription was make in
conjunction with the purchase of all the outstanding stock of Argosy Mining
G.m.b.H. The Company transferred ownership of its three wholly owned
subsidiaries to Danca Investments Inc., an affiliate of Arendscor (Canada)
Inc., in full satisfaction of the outstanding debt to Arendscor (Canada) Inc.
and its affiliates. As a consequence the Company's liquidity position has
improved significantly and has the necessary working capital for the Company to
develop interests in the mineral prospecting business.
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
The Company has been delinquent in its filing of financial reports. The annual
report of Form 10-KSB for 1995 has been filed. The Quarterly Report for the
quarter ended September 30, 1996, is still delinquent. However, management
intends to have these reports filed in the near future and to stay current with
its periodic filings.
ITEM 6. EXHIBITS AND REPORTS OF FORM 8-K
No reports on Form 8-K have been filed during the quarter ended June 30, 1996.
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 /s/ D. CAMPBELL DEACON
----------------------- -------------------------------
D. Campbell Deacon
President
/s/ C.W. LEIGH CASSIDY
-------------------------------
C.W. Leigh Cassidy
Vice President,
Chief Financial Officer
and Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from National
Enterprises Inc's. Consolidated Balance Sheet at June 30, 1996 and Consolidated
Statements of Income for the three months ended June 30, 1996, 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-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 643
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 112,350
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 112,993
<CURRENT-LIABILITIES> 0
<BONDS> 0
<COMMON> 47,183,763
0
0
<OTHER-SE> (47,497,439)
<TOTAL-LIABILITY-AND-EQUITY> 112,993
<SALES> 414,500
<TOTAL-REVENUES> 414,500
<CGS> 407,712
<TOTAL-COSTS> 407,712
<OTHER-EXPENSES> 23,801
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (17,013)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (17,103)
<EPS-PRIMARY> (001)
<EPS-DILUTED> (0.01)
</TABLE>
