FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............. to ............
Commission file number: 0-3338
NMC CORP.
(Exact name of registrant as specified in its charter)
Delaware 22-1558317
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
477 Madison Avenue, Suite 701
New York, New York 10022
(Address of principal executive offices)
(Zip Code)
212-207-4560
(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required 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 X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
At March 1, 1996 there were 936,677 shares of Common Stock, $.06 2/3 par
value, outstanding.
<PAGE>
NMC CORP.
INDEX
Page No.
--------
Part I -- Financial Information ...................................... 1
Item 1. Financial Statements
Consolidated Balance Sheets as of
January 31, 1996 (unaudited) and
July 31, 1995 ......................................... 2-3
Consolidated Statements of Operations
for the Six Months and Three Months
Ended January 31, 1996 and 1995
(unaudited) ........................................... 4
Consolidated Statements of Cash Flows
for the Six Months Ended January 31,
1996 and 1995 (unaudited) ............................. 5-6
Notes to Consolidated Financial
Statements (unaudited) ................................ 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations ............................................ 11-13
Part II -- Other Information
Item 4. Submission of Matters to a Vote of
Security Holders ...................................... 14
Item 6. Exhibits and Reports on Form 8-K ...................... 14
Signatures ........................................................... 15
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
--------------------
Certain information and footnote disclosures required under generally
accepted accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that the following
consolidated financial statements be read in conjunction with the year-end
consolidated financial statements and notes thereto included in the Company's
Annual Report on Form 10-K for the year ended July 31, 1995.
The results of operations for the three and six month periods ended January
31, 1996 are not necessarily indicative of the results to be expected for the
entire fiscal year or for any other period.
-1-
<PAGE>
NMC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
ASSETS
January 31, July 31,
1996 1995
----------- ----------
(Unaudited)
Current Assets:
Cash ..................................... $ 33,401 $ 14,043
Accounts receivable ...................... 308,372 152,196
Inventories .............................. 15,761 5,935
Prepaid expenses and sundry
receivables ............................. 37,496 39,250
---------- ----------
Total Current Assets ................ 395,030 211,424
---------- ----------
Property, plant and equipment - net .......... 1,079,979 147,696
Unamortized excess of cost over fair
value of assets acquired ................... 1,001,901 853,850
Deferred acquisition costs ................... 179,759 331,281
---------- ----------
TOTAL ASSETS ........................ $2,656,669 $1,544,251
========== ==========
(Continued)
See notes to consolidated financial statements.
-2-
<PAGE>
NMC CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
January 31, July 31,
1996 1995
----------- ------------
(Unaudited)
Current Liabilities:
Short-term debt .............................. $ 984,325 $ 526,324
Current portion of long-term debt ............ 24,564 6,047
Accounts payable ............................. 74,843 112,981
Accrued expenses ............................. 170,300 148,548
Customer deposits ............................ 89,421 16,000
Capital lease obligation ..................... 149,971 --
Deferred revenue ............................. 54,869 58,896
Due to officer ............................... 50,000 50,000
Income taxes payable ......................... 2,220 3,030
----------- -----------
Total Current Liabilities ............... 1,600,513 921,826
----------- -----------
Long-term debt ................................... 129,731 6,047
Deferred revenues ................................ 12,151 13,166
Minority interest ................................ 548,364 --
----------- -----------
Total Liabilities ....................... 2,290,759 941,039
----------- -----------
Stockholders' Equity:
Capital stock:
Preferred par value $1; authorized
500,000 shares (involuntary liquidation
value $777,912)
Convertible Series B, at redemption
value; issued and outstanding 65,141
shares ................................. 130,282 130,282
Cumulative Series C, par value $1,
issued and outstanding 64,763 shares ... 64,763 64,763
Common, par value $.06-2/3; authorized
20,000,000 shares; issued and outstanding
936,677 shares ............................. 62,476 62,476
Additional paid-in capital ....................... 7,351,643 7,351,643
Deficit .......................................... (7,230,131) (7,029,559)
Foreign currency translation adjustment .......... (13,123) 23,607
----------- -----------
Total Stockholders' Equity .................... 365,910 603,212
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY ...................................... $ 2,656,669 $ 1,544,251
=========== ===========
See notes to consolidated financial statements.
-3-
<PAGE>
NMC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
------------------------ ----------------------
January 31, January 31,
------------------------ ----------------------
1996 1995 1996 1995
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Revenues ..................................................... $ 513,345 $ 255,272 $ 314,381 $ 119,633
--------- --------- --------- ---------
Costs and Expenses:
Cost of sales ............................................ 105,037 77,471 51,011 40,268
Selling, general and administrative expenses ............. 548,583 390,679 349,143 179,280
Interest expense ......................................... 70,314 5,638 60,715 2,778
Other (income) ........................................... (10,017) (23,757) (10,017) --
--------- --------- --------- ---------
713,917 450,031 450,852 222,326
--------- --------- --------- ---------
(Loss) before income tax provision and minority interest ..... (200,572) (194,759) (136,471) (102,693)
Minority interest ............................................ -- -- -- --
--------- --------- --------- ---------
(Loss) before income tax provision ........................... (200,572) (194,759) (136,471) (102,693)
Income tax provision ......................................... -- -- -- --
--------- --------- --------- ---------
Net (loss) ................................................... $(200,572) $(194,759) $(136,471) $(102,693)
========= ========= ========= =========
(Loss) per common share ...................................... $ (.21) $ (.45) $ (.15) $ (.24)
========= ========= ========= =========
Weighted average number of common shares outstanding ......... 936,677 436,677 936,677 436,677
========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
-4-
<PAGE>
NMC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
January 31,
---------------------
1996 1995
-------- ----------
Cash flows from operating activities:
Net (loss) .................................... $(200,572) $(194,759)
Adjustments to reconcile net (loss) to
net cash from operating activities:
Depreciation and amortization ................ 93,741 41,259
Gain on sale of equipment (10,017) --
Changes in operating assets and liabilities
net of effect from purchase of Water Express. (110,776) 106,298
--------- ---------
Net Cash (Used in) Operating Activities .... (227,624) (47,202)
--------- ---------
Cash flows from investing activities:
Purchase of property, plant and equipment ...... (67,473) (12,486)
--------- ---------
Cash flows from financing activities:
Proceeds from borrowings ....................... 575,703 87,000
Repayments of borrowings ....................... (279,616) (33,269)
Proceeds from sale of equipment ................ 16,382 --
--------- ---------
Net cash provided by financing activities .... 312,469 (53,731)
--------- ---------
Foreign currency translation adjustment .......... (36,730) 8,541
--------- ---------
Net increase in cash and cash equivalents ........ 19,358 2,584
Cash and Cash Equivalents--beginning of period ... 14,043 911
--------- ---------
Cash and Cash Equivalents--end of period ......... $ 33,401 $ 3,495
========= =========
(Continued)
See notes to consolidated financial statements
-5-
<PAGE>
NMC CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Continued)
Six Months Ended
January 31,
-----------------------
1996 1995
---------- ----------
Changes in operating assets and liabilities:
Decrease in accounts receivable ............... $ 99,806 $ 11,650
Decrease in inventories ....................... (6,626) 1,968
(Increase) decrease in prepaid expenses and
sundry receivables .......................... 1,754 (2,113)
(Increase) in deferred acquisition costs ...... (56,478) --
(Increase) in other assets .................... -- (256)
Increase (decrease) in accounts payable ....... (38,138) 7,100
(Decrease) in accrued expenses ................ (109,678) (1,634)
(Decrease) in income taxes payable ............ (810) (729)
Increase in due to officer .................... -- 75,000
Increase (decrease) in deferred revenue ....... (4,027) 15,312
Increase in customer deposits.................. 3,421 --
--------- ---------
$(110,776) $ 106,298
========= =========
Supplemental information of non-cash investing
and financing activities:
During 1995, Krystal Fountain Water Company
Limited purchased Water Express. In
connection with this acquisition:
Fair value of assets acquired ............... $1,260,110
==========
Liabilities assumed.......................... $ 360,399
==========
Supplemental Information:
Cash paid during the year for:
Interest .................................... $ 11,360 $ 347
========== =========
Income taxes ................................ $ 810 $ --
========== =========
See notes to consolidated financial statements.
-6-
<PAGE>
NMC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The consolidated balance sheet as of January 31, 1996, the consolidated
statement of operations for the six months ended January 31, 1996 and 1995, and
the statement of cash flows for the periods then ended have been prepared by NMC
Corp. and Subsidiary ("The Company" or "NMC") and are unaudited. In the opinion
of management, all adjustments (consisting solely of normal recurring
adjustments) necessary to present fairly the financial position, results of
operations and cash flows for all periods presented have been made. Certain
items in the January 31, 1995 financial statements have been reclassified to
conform to January 31, 1996 classifications. The information for July 31, 1995
was derived from audited financial statements.
2. The Board of Directors authorized a 1-10 reverse stock split effective as of
April 17, 1995. All share and per share data for prior periods presented have
been restated to reflect the reverse stock split.
3. The accompanying consolidated financial statements have been prepared on a
going concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business.
The Company has experienced recurring losses and negative cash flows from
operations through January 31, 1996. In addition, losses and negative cash flows
from operations have continued throughout the period subsequent to January 31,
1996.
The Company's viability as a going concern is dependent upon its ability to
obtain additional financing. The Company has no operations other than those
relating to Krystal's business which will provide the Company's only source of
cash flow for the foreseeable future. Management estimates that this cash flow
should be sufficient to support Krystal's operations during the next twelve (12)
months.
On November 1, 1995, Krystal acquired substantially all of the net assets of
Water Express ("Water Express"), a company located in London, England. Water
Express is a company engaged in the sale of bottled water in five gallon
containers to be utilized in conjunction with water coolers, dispensing both hot
and cold water. It currently rents over 1,600 coolers to commercial
establishments in the London metropolitan market place. (See Note 7 of Notes to
Consolidated Financial Statements for further terms regarding the acquisition).
Krystal also executed a Letter of Intent to acquire various assets of a
second water distribution company located in the United Kingdom. The acquisition
is subject to the consummation of equity financing by the Company or Krystal.
The Company believes the cash flows from these acquisitions, one of which
is already consummated, will be sufficient to fund operations in the future
assuming the cash flows from the Krystal operations can be used to pay for the
cost of NMC's operations. The Company must receive approval from its fifty (50%)
percent equity partner of Krystal in order to permit the funds to be used by
NMC.
-7-
<PAGE>
NMC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On December 8, 1995 Krystal entered into a loan agreement with a foreign
lender obtaining a line-of-credit up to $750,000. The loan is guaranteed by the
Company and is secured by an English debenture (Security Agreement) from Krystal
which covers all of Krystal's assets in favor of the lender. The lien on this
collateral is superior to prior liens given to other lenders. At January 31,
1996, the Company has borrowed $445,900 against the line-of-credit. A previously
unreported bridge loan of $125,000 was repaid in full and the balance was used
for corporate purposes. The bridge loan was used in acquiring Water Express. The
loan is due on September 30, 1996 or sooner if the Company or its subsidiary is
able to secure financing in an amount not less than the outstanding amount due
to the lender. (See Note 8 of Notes to Consolidated Financial Statements for
further consideration given to the lender).
The Company is currently negotiating a proposed public equity financing
with an investment banking firm but as of the date hereof, no letter of intent
or other document setting forth the terms of the transaction has been executed.
Accordingly, no assurance can be given that the financing will ever be
consummated. The Company believes the cash flow from the Krystal operations will
be sufficient to repay the line-of-credit. If the lender is not repaid in
accordance with the loan agreement, the Company will lose its only revenue
generating operations.
The financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue as a going concern.
4. (Loss) per common share is computed using the weighted average number of
common shares outstanding during the year. The convertible preferred stock and
exercise of warrants are not considered common share equivalents for purposes of
the computation of earnings per share in each period presented because their
effect is antidilutive.
5. Property, plant and equipment consists of the following:
January 31, July 31,
1996 1995
---------- ----------
Machinery and equipment ...................... $1,227,799 $ 251,787
Leasehold improvements ....................... 6,197 6,197
Master tapes ................................. 20,001 20,001
---------- ----------
1,253,997 277,985
Less accumulated depreciation and
amortization ............................... 174,018 130,289
---------- ----------
Net Property, Plant and Equipment ............ $1,079,979 $ 147,696
========== ==========
-8-
<PAGE>
NMC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. DEBT
Short-term debt consists of the following:
January 31, July 31,
1996 1995
---------- ---------
7.50% Note payable to Republic Bank,
collateralized by a certificate of
deposit of an affiliate of Barbara
Greenfield, wife of the Company's
President and Chief Executive Officer .......... $ -- $100,000
18% Note payable to Ballydine Investments
Limited due September 30, 1996, collateralized
by all of the common stock of Krystal
owned by the Company ........................... 445,500 --
10% Note payable to a third party, due
October 1, 1996, collateralized by all of
the common stock of Krystal owned by the
Company subordinated to the line-of-credit ..... 200,000 200,000
5% Note payable to Barbara Greenfield, due
on demand, collateralized by all of the
common stock of Krystal owned by the
Company. No demand may be made while the
line-of-credit is outstanding. The
security interest is subordinate to the
third party lender and the line-of-credit ...... 207,441 199,672
5% Note payable to Matthew Mitchison
due on demand. No demand may be made
while the line-of-credit is outstanding......... 117,780 --
Various loans payable, due on demand
interest at 5% ................................. 13,604 26,652
-------- --------
$984,325 $526,324
======== ========
Long-term debt consists of the following:
7.50% Note payable to Republic Bank due
March 20, 1997, collateralized
by a certificate of deposit of an affiliate
of Barbara Greenfield, wife of the Company's
President and Chief Executive Officer .......... $100,000 $ --
Note payable to a financial institution,
due July 1997, interest at 9%, collateralized
by transportation equipment 54,295 12,094
-------- --------
154,295 12,094
Less current maturities 24,564 6,047
-------- --------
Long-Term Debt $129,731 $ 6,047
======== ========
-9-
<PAGE>
NMC CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
7. On November 1, 1995, Krystal acquired substantially all the net assets of
Water Express, a water distribution company in the United Kingdom in exchange
for the issuance of 363,155 shares of the common stock of Krystal, approximately
$208,000 in cash, and a promissory note of approximately $125,000. The total
purchase price approximated $914,000. As of this date the Company's ownership
equity in Krystal was reduced to fifty (50%) percent. Minority interest
represents the minority stockholder's proportionate share of the equity of
Krystal. (See Note 3 of Notes to Consolidated Financial Statements for further
information).
The acquisition has been accounted for using the purchase method of
accounting, and, accordingly the purchase price was allocated to the assets
purchased and the liabilities assumed based upon the fair values at the date of
acquisition. The fair value of the assets acquired was $1,260,000 and the
liabilities assumed totalled $360,000 resulting in goodwill of approximately
$172,000, which will be amortized over three years. The operating results of the
acquired business will be included in the consolidated statement of operations
from the date of acquisition. Proforma unaudited operating information for the
six month period ended January 31, 1996 and 1995 of NMC and Water Express,
assuming the business combination had occurred at the beginning of the
respective year in which Water Express was acquired as well as the beginning of
the immediate preceding year is as follows:
Six Months Ended
January 31,
-----------------------------
1996 1995
--------- ---------
Net sales .............................. $ 684,348 $ 571,544
Net (loss) ............................. (175,161) (157,736)
Net (loss) per share ................... $ (.19) $ (.36)
8. As additional consideration for the $750,000 line-of-credit, the Company has
issued 9.9% of the outstanding, fully diluted shares of the Company in the form
of a warrant exercisable at $.001 per share, with registration rights, in the
event an amount in excess of $500,000 is utilized. In the event only one third
(1/3) of the line-of-credit is utilized then there shall be a reduction in the
amount of the shares included in the aforementioned warrant from 9.9% to 5.0%.
In the event only two thirds (2/3) of the line-of-credit is utilized then there
shall be a reduction in the amount of shares included in said warrant from 9.9%
to 7.5%.
-10-
<PAGE>
Item 2. Managements' Discussion and Analysis of Financial Condition and Results
of Operations
-----------------------------------------------------------------------
Results of Operations
- ---------------------
Six Months January 31, 1996 vs. Six Months January 31, 1995
- -----------------------------------------------------------
The results of Krystal are included in the consolidated financial
statements of the Company from the date of acquisition. The Company has no
operations other than those relating to Krystal's business.
On November 1, 1995, Krystal acquired substantially all the net assets of
Water Express ("Water Express"), a water distribution company in the United
Kingdom. (See Liquidity and Capital Resources below for terms of the
acquisition). Water Express is a company engaged in the sale of bottled water in
five gallon containers to be utilized in conjunction with water coolers,
dispensing both hot and cold water. It currently rents over 1,600 coolers to
commercial establishments in the metropolitan London market place. The operating
results of Water Express have been included in the consolidated statement of
operations from the date of acquisition. Krystal also executed a Letter of
Intent to acquire various assets of a second water distribution company located
in the United Kingdom. This acquisition is subject to the consummation of equity
financing by the Company or Krystal, of which there can be no assurance.
Revenues from sales increased 101.1% to $513,345 during the six months
ended January 31, 1996 from $255,272 for the six months ended January 31, 1995.
The increase is primarily due to the inclusion of Water Express in the statement
of operations, an increase in the number of customers and more demand for the
Company's product.
Cost of sales increased 35.6% to $105,037 during the six months ended
January 31, 1996 from $77,471 during the six months ended January 31, 1995 due
to the reasons explained above.
Selling, general and administrative expenses increased 40.4% to $548,583
for the six months ended January 31, 1996 from $390,679 for the six months ended
January 31, 1995 due to the reasons explained above.
Interest expense increased to $70,314 for the six months ended January 31,
1996 from $5,638 for the six months ended January 31, 1995. The increase is
attributable to the increase in debt incurred by the Company in the six months
ended January 31, 1996 as discussed below in "Liquidity and Capital Resources".
Other income decreased 57.8% to $10,017 for the six months ended January
31, 1996 from $23,757 for the six months ended January 31, 1995 due to a
settlement received by Krystal for the infringement of its territorial rights by
a competitor during the six months ended January 31, 1995. This event was a
non-recurring transaction.
The net loss of $200,572 increased by approximately $5,800 for the six
months ended January 31, 1996 compared to the six months ended January 31, 1995.
The Company attributes the increase primarily to the increase in interest
expense which is offset by the improvement in the operations of Krystal.
However, the operations of Krystal have not been able to offset the overhead of
the Company at its corporate offices.
-11-
<PAGE>
Three Months January 31, 1996 vs. Three Months January 31, 1995
- ---------------------------------------------------------------
Revenues from sales increased 162.8% to $314,381 during the three months
ended January 31, 1996 from $119,633 for the three months ended January 31,
1995. The increase is due to the reasons set forth in the six month analysis.
Cost of sales increased 26.7% to $51,011 during the three months ended
January 31, 1996 from $40,268 for the three months ended January 31, 1995 due to
the reasons explained above.
Selling, general and administrative expenses increased 94.7% to $349,143
for the three months ended January 31, 1996 from $179,280 for the three months
ended January 31, 1995. The increase is primarily due to the inclusion of Water
Express in the statement of operations and an increase in amortization expenses
to write off the deferred charges relating to the acquisition of Water Express.
Interest expense increased to $60,715 for the three months ended January
31, 1996 from $2,778 for the three months ended January 31, 1995 due to the
reason set forth in the six month analysis.
Other income increased to $10,017 for the three months ended January 31,
1996 from $-0- for the three months ended January 31, 1995. The increase is due
to the gain on the sale of various equipment sold by Krystal in 1996.
The net loss of $136,471 increased by approximately $24,000 for the three
months ended January 31, 1996 compared to the three months ended January 31,
1995 due to the reasons set forth in the six month analysis.
Liquidity and Capital Resources
- -------------------------------
NMC currently has no operations other than those relating to Krystal's
business which will, therefore, provide the Company's only source of cash flow
for the foreseeable future. Management estimates that this cash flow should be
sufficient to support Krystal's operations during the next 12 months. This
estimate is based on existing water dispenser unit lease commitments and
projected water sales which, in turn, are based on historical per unit water
usage.
Krystal acquired substantially all the net assets of Water Express in
exchange for the issuance of 363,155 shares of the common stock of Krystal,
approximately $208,000 in cash, and a promissory note of approximately $125,000.
In order to make the cash payment, Krystal obtained bridge financing in the
amount of $125,000. The cash advances of $55,000 made previously to Water
Express was also applied as part of the down payment. As of this date the
Company's ownership equity in Krystal was reduced to fifty (50%) percent.
On April 19, 1995, Krystal executed a Letter of Intent with Hyrdopure Group
Limited ("Hydropure") pursuant to which it set forth the terms under which it
would acquire various assets of Hydropure. Hydropure is a distributor of
natural spring mineral water for use with water coolers for commercial
establishments located within the Greater London area. It currently services
2,200 customers. If the acquisition is consummated, Hydropure's operations will
be combined with those of Krystal.
-12-
<PAGE>
Liquidity and Capital Resources (Continued)
- -------------------------------------------
The Agreement is subject to, among other things, the consummation of the
equity financing currently being negotiated between the Company and an
investment banking firm. The acquisition is anticipated to be completed no later
than September 30, 1996, if at all.
On December 8, 1995 Krystal entered into a loan agreement with a foreign
lender obtaining a line-of-credit up to $750,000. The loan is guaranteed by the
Company and is secured by an English debenture (Security Agreement) from Krystal
which covers all of Krystal's assets in favor of the lender. This collateral is
superior to previous collateral of Krystal given to other lenders. At January
31, 1996, the Company borrowed $445,900 against the line-of-credit. The bridge
loan of $125,000 was repaid in full and the balance was used for corporate
purposes. The loan is due on September 30, 1996 or sooner if the Company or its
subsidiary is able to secure financing in an amount not less than the
outstanding amount due to the lender.
On March 15, 1995, the Company entered into a secured loan agreement in the
amount of $200,000 with a third party, secured by all of the common stock of
Krystal owned by the Company. The loan is due October 1, 1996 with interest
accruing at ten (10%) percent per year. In consideration for the loan, the
Company issued to the lender a warrant to purchase up to 100,000 shares of
Common Stock at $1.00 per share. The loan enabled the Company to finance its
operations through the end of the previous fiscal year.
The Company has experienced severe cash flow deficiencies from operations.
To alleviate these problems, the Company has received advances from certain
lenders including Barbara Greenfield, the wife of the Company's President and
Chief Executive Officer, Treasurer and Director. An affiliate of Mrs.
Greenfield has also collateralized a $100,000 loan made by a bank to the Company
with a certificate of deposit. The Company has given a security interest in the
shares of Krystal owned by the Company as collateral to Mrs. Greenfield, which
is second to the unaffiliated third party.
The Company believes the cash flows from the Water Express and Hydropure
acquisitions will be sufficient to fund operations in the future assuming the
cash flows from its Krystal operations can be used to pay for the cost of NMC's
operations. The Company must receive approval from its fifty (50%) percent
equity partner of Krystal in order to permit the funds to be used by NMC.
-13-
<PAGE>
PART II--OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits.
None.
(b) There were no Current Reports on Form 8-K filed by the
registrant during the quarter ended January 31, 1996.
-14-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned thereunto duly authorized.
NMC CORP.
(Registrant)
Date: March 18, 1996 By: /s/ Marvin Greenfield
----------------------------------------
Marvin Greenfield, President and Treasurer
Duly Authorized Officer of the Registrant
(Principal Financial Officer)
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM NMC CORP.
AND SUBSIDIARY FINANCIAL STATEMENTS AT JANUARY 31, 1996 AND THE SIX MONTHS
THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
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0
195,045
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