<PAGE> 1
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 December 31, 1998
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OR
[ ] TRANSITION REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to ____________
Commission file number 2-78335-NY
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J R CONSULTING, INC.
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(Exact name of small business issuer in its charter)
Nevada 13-3121128
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
180 Varick Street, 13th Floor, New York, New York 10014
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(Address of principal executive offices)
(212) 807-6994
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
The number of shares outstanding of the issuer's Common Stock, $.04
par value per share, as of December 31, 1998, is 13,373,257.
Transitional Small Business Disclosure Format (check one);
YES NO X
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<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED FINANCIAL INFORMATION
J R CONSULTING, INC.
CONSOLIDATED CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
12/31/98 06/30/98
(UNAUDITED) (AUDITED)
---------- ---------
$'000 $'000
----- -----
<S> <C> <C>
ASSETS
Current assets
Cash 1 41
Accounts receivable 875 659
Inventories 3 6
Other current assets 223 291
------- -------
Total current assets 1,102 997
Property plant and equipment, net of accumulated
depreciation of $87,000 and $58,000 at
09/30/98 and 06/30/98, respectively 372 323
Other assets
Goodwill and patents 762 794
Other assets 44 34
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Total other assets 806 828
Total assets 2,280 2,148
======= =======
LIABILITIES
Current liabilities
Overdraft 123 51
Accounts payable 926 542
Accrued liabilities 378 459
Other current liabilities 1,475 960
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Total current liabilities 2,902 2,012
Other liabilities
Debt payable after 12 months -- 279
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Total liabilities 2,902 2,291
SHAREHOLDERS' EQUITY
Common stock 535 535
Less 5,187,598 shares issued at discount below par value (154) (154)
Paid in capital in excess of par value 3,276 3,276
Retained earnings (4,228) (3,750)
Unrealized loss on marketable securities (56) (56)
Translation adjustment 5 6
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Total shareholders' equity (622) (143)
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2,280 2,148
======= =======
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
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<PAGE> 3
CONSOLIDATED FINANCIAL INFORMATION
J R CONSULTING, INC.
CONSOLIDATED CONDENSED STATEMENT OF INCOME
<TABLE>
<CAPTION>
3 MONTHS ENDED 6 MONTHS ENDED
--------------------------- ---------------------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
12/31/98 12/31/97 12/31/98 12/31/97
----------- ----------- ----------- -----------
$'000 $'000 $'000 $'000
----- ----- ----- -----
<S> <C> <C> <C> <C>
Sales 434 571 870 1,092
Cost of Sales 35 152 74 291
---------- ---------- ---------- ----------
Gross margin 399 419 796 801
SG&A expenses 632 515 1,236 1,049
Amortisation of goodwill & patents 16 16 31 31
---------- ---------- ---------- ----------
Operating profit (loss) (249) (112) (471) (279)
Loss (profit) on sale of assets -- (247) -- (247)
Other loss (income) 4 (39) 4 (39)
Interest expense 2 -- 3 1
---------- ---------- ---------- ----------
Pre-tax profit (loss) (255) 174 (478) 6
Income tax expenses -- -- -- --
---------- ---------- ---------- ----------
Net income (loss) (255) 174 (478) 6
========== ========== ========== ==========
Weighted average number of
common shares outstanding 13,373,257 11,695,899 13,373,257 11,453,760
Net loss per share of common stock $(0.02) $0.01 $(0.04) $0.00
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
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<PAGE> 4
CONSOLIDATED FINANCIAL INFORMATION
J R CONSULTING, INC.
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
(UNUADITED) (UNAUDITED)
6 MONTHS ENDED 6 MONTHS ENDED
12/31/98 12/31/97
--------------- --------------
$'000 $'000
----- -----
<S> <C> <C>
Operating activities
Net income (loss) (478) 6
Depreciation & amortisation 67 134
Decrease in inventory 3 23
Change in other net operating assets 87 (341)
Other 371 (86)
----------- -----------
Net cash provided by (used in)
operating activities 50 (264)
Investing activities
Capital expenditures (90) (9)
----------- -----------
Net cash provided by (used in)
investing activities (90) (9)
Financing activities
Proceeds from loans to be converted to stock -- 333
----------- -----------
Net cash provided by (used in)
financing activities 0 333
----------- -----------
Increase in cash (40) 60
Cash at July 1 41 20
Cash at December 31 1 80
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
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<PAGE> 5
J R CONSULTING, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1
The accompanying unaudited consolidated condensed financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-QSB.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
presentation have been included, and such adjustments are of a normal recurring
nature. Results for interim periods should not be considered indicative of
results for any other interim period or for future years.
NOTE 2
No income taxes were paid during the six months ended December 31, 1998.
NOTE 3
The effects of non-cash investing and financing activities have been excluded
from the statement of cash flows in accordance with SFAS 95.
NOTE 4
Translation of these financial statements at December 31, 1998, is at the
mid-market rate of(pound)1 to $1.6639, and for the three months then ended, at
an average rate of(pound)1 to $1.6647.
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<PAGE> 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The gross margin for the Issuer for the quarter ended December 31, 1998 is less
than for the corresponding period in the previous year ($399,000 compared with
$419,000). This decline is marginally larger than the gain made in the first
quarter of this financial year. As a result, the gross margin for the six
months ended December 31, 1997, is slightly less than for the corresponding
period in the previous fiscal year ($796,000 compared to $801.000).
There was also a significant increase in the operating expenses for the quarter
ended December 31, 1998 compared with the quarter ended December 31, 1997.
Therefore the net operating loss for the quarter ended December 31, 1998 is
much higher than the net loss for the corresponding period in the previous year
($249,000 compared with $112,000). For the six months ended December 31, 1998,
the net operating loss was significantly greater than the net operating loss
for the corresponding period in the previous fiscal year ($471,000 compared to
$279,000). However such direct comparisons are not indicative of the performance
of the Issuer because Que Management, Inc. ("Que") was not in existence during
the six months ended December 31, 1997.
The results of operations for each of the quarter and six months ended December
31, 1997 includes certain exceptional items relating to Prima resulting in an
additional exceptional of $286,000. These exceptional earnings were not
repeated for the quarter and six months ended December 31, 1988.
The performance of Benatone in both the last quarter and the six months ended
December 31, 1998, showed mixed results. Compared with the corresponding periods
in the previous year, losses declined by $37,000 for the last fiscal quarter but
only declined by $27,000 for the last fiscal half year. However it is difficult
to draw any meaningful conclusions from these comparisons because of the
problems created by the authorities. Early in the quarter ended December 31,
1998 the authorities made a strong recommendation to the electrical appliance
industry that all electrical components containing a fuse manufactured by the
manufacturer of the Simplug be rejected. They had also done this during the
quarter ended December 31, 1997. This restriction was lifted early in the
following quarter because the perceived problems were proven to be without
foundation (as they were in the quarter ended December 31, 1997). However the
damage was nonetheless done; Benatone was unable to sell any plugs during the
peak in the annual cycle. Consequently the performance of Benatone has been
severely damaged with little likelihood of being able to redress the position in
the immediate future with the industry being in the low part of its annual
cycle. Furthermore, the outlook for the UK economy has not improved in this
sector and Benatone has been unable to significantly reduce the cost of
manufacturing its product to allow it to be more competitive and achieve greater
gross margins. Also with the continuing competition from low labour cost
countries during the foreseeable future, management does not expect to become
competitive in the assembly activities in which it was previously involved. Thus
management decided to cease operations until the new plug now approved by the
British Standards Institution is available in commercial quantities, a
manufacturer at a significantly lower cost can be found and the market improves.
There can be no guarantee that these conditions will be met in the future.
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<PAGE> 7
As for the quarter ended September 30, 1998, the operating performance of Prima
in the quarter ended December 31, 1998, also showed a significant improvement
compared to the corresponding period in the previous year (an operating loss of
$10,000 compared with a loss of $27,000). The improvement in the six months
ended December 31, 1998 compared with corresponding period in the previous year
was also significant (an operating profit of $12,000 compared with an operating
loss of $99,000). As with the quarter ended September 30, 1998, the sales for
the quarter ended December 31, 1998 of $229,000 were significantly below the
levels achieved in the previous year of $377,000. Thus the sales for the six
months ended December 31, 1998 of $452,000 were far below the $725,000 sales
achieved in the previous year. As for the previous quarter, this was primarily
as a result of losing the head of the male model booking division earlier in
1998. The level of booking in that division is in the process of recovering to
former levels. This was more than offset by the lower SG&A expenses. They
declined from $391,000 in the quarter ended December 31, 1997 to $103,000 in
the quarter ended December 31, 1998. Similarly the SG&A expenses declined from
$800,000 in the six months ended December 31, 1997 to $392,000 in the six
months ended December 31, 1998. These low expenses are partly due to the
reduced requirement for oversight of the operations by the management of the
Issuer. Prima is in the process of operating close to break even. Once break
even is achieved Prima intends to continue to improve its efficiency and
expand. While this is expected to result in an increase in future costs of
operations, these expenses will continually be monitored to prevent any undue
increases.
Having only started on January 5, 1998 and having no established market, Que
has had to generate its sales from no base other than the experience of the
management and booking staff and its association with Prima. Management of
the Issuer forecasted that Que would not be profitable immediately. Providing
targets were achieved, the Issuer forecasted that Que would become profitable
if it could attract and become the agent for a large number of models in demand
by the fashion industry because it operates in New York, the heart of the
modeling industry. Working with Prima combined with the efforts of Que's two
experienced managers and their support staff, Que has continued to expand its
sales and is ahead of management's forecasts. In the quarter ended December 31,
1998, Que had sales of $158,000 and SG&A expenses of $281,000. The operating
loss was $104,000 after taking into account other operating income of $19,000.
A further charge of $2,000 was made to the operating loss for interest on loans
from the Issuer to give a net loss for the quarter ended December 31, 1998 of
$106,000. The corresponding figures for the six months are sales of $319,000,
SG&A expenses of $549,000 giving an operating loss of $211,000 after taking
into account the other operating income of $19,000.
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<PAGE> 8
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS - None
Item 2. CHANGES IN SECURITIES - None
Item 3. DEFAULTS UPON SENIOR SECURITIES - None
Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS - None
Item 5. OTHER INFORMATION - None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits - None
Reports on Form 8-K - None
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<PAGE> 9
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.
J R CONSULTING, INC.
Date: August 5, 1999 By: /s/ Peter Zachariou
--------------------------------
Peter Zachariou, President
-9-
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 1
<SECURITIES> 0
<RECEIVABLES> 875
<ALLOWANCES> 100
<INVENTORY> 3
<CURRENT-ASSETS> 1,102
<PP&E> 372
<DEPRECIATION> 87
<TOTAL-ASSETS> 2,280
<CURRENT-LIABILITIES> 2,902
<BONDS> 0
0
0
<COMMON> 535
<OTHER-SE> (1,157)
<TOTAL-LIABILITY-AND-EQUITY> 2,280
<SALES> 98
<TOTAL-REVENUES> 870
<CGS> 74
<TOTAL-COSTS> 86
<OTHER-EXPENSES> 1,150
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3
<INCOME-PRETAX> (471)
<INCOME-TAX> 0
<INCOME-CONTINUING> (471)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (471)
<EPS-BASIC> (0.04)
<EPS-DILUTED> (0.04)
</TABLE>
