United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended October 31, 1996
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number: 0-18349
The MNI Group Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-2383025
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10 West Forest Avenue, Englewood, New Jersey 07631
(Address of principal executive offices) (Zip Code)
(201) 569-1188
(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. [X] Yes [ ] No
Applicable Only to Issuers Involved in Bankruptcy
Proceeding During the Preceding Five Years:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. [ ] Yes [ ] No
Applicable Only to Corporate Issuers:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
3,710,709 shares of Common Stock at December 11, 1996
<PAGE>
THE MNI GROUP, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
October 31, January 31,
1996 1996
----------- -----------
(Unaudited)
Current assets:
Cash $ 2,600 $ 11,100
Accounts receivable (net of allowance) 42,500 126,200
Inventories 79,100 84,100
Other current assets 12,800 16,400
----------- -----------
Total current assets 137,000 237,800
----------- -----------
Furniture, fixtures and leasehold improvements (net) 3,700 4,700
Other assets 15,500 15,500
----------- -----------
19,200 20,200
----------- -----------
$ 156,200 $ 258,000
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIENCY
Current liabilities:
Accounts payable $ 60,900 $ 132,800
Accrued expenses and other liabilities 304,900 303,900
Note payable 35,700 55,100
Due to officer 61,200 --
----------- -----------
Total current liabilities 462,700 491,800
----------- -----------
Long-term debt (net of current portion) 119,600 146,400
Excess of purchase price over basis of assets
acquired net of amortization 160,700 164,000
----------- -----------
280,300 310,400
----------- -----------
Stockholders' (deficiency):
Common stock, no par value; 10,000,000 shares
authorized; shares issued and outstanding -
October 31, 1996 and January 31, 1996 - 3,710,709 7,238,900 7,238,900
Accumulated deficit (7,825,700) (7,783,100)
----------- -----------
( 586,800) ( 544,200)
----------- -----------
$ 156,200 $ 258,000
=========== ===========
The accompanying notes are an integral part hereof.
<PAGE>
THE MNI GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
October 31, October 31,
------------------------- -------------------------
1996 1995 1996 1995
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Sales $ 709,700 $ 1,004,300 $ 113,300 $ 376,300
----------- ----------- ----------- -----------
Cost of sales and operating
expenses:
Cost of merchandise sales 403,000 639,100 44,500 230,100
Selling, general and
administrative expenses 334,900 373,800 108,000 114,100
Research and development -- 5,100 -- 2,100
----------- ----------- ----------- -----------
737,900 1,018,000 152,500 346,300
----------- ----------- ----------- -----------
Income (loss) from operations ( 28,200) ( 13,700) ( 39,200) 30,000
Other income (expense):
Interest expense ( 14,400) ( 15,700) ( 5,200) ( 4,700)
----------- ----------- ----------- -----------
Net income (loss) ($ 42,600) ($ 29,400) ($ 44,400) $ 25,300
=========== =========== =========== ===========
Income (loss) per
share:
Earnings (loss) per
common and common
equivalent share:
Primary ($ 01) ($ 01) ($ 01) $ 01
Assuming full
dilution -- -- -- --
Shares used in
computing earnings
per common and
common equivalent
share:
Primary 3,710,709 3,710,709 3,710,709 3,710,709
=========== =========== =========== ===========
Assuming full
dilution 6,857,209 6,857,209 6,857,209 6,857,209
=========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part hereof.
<PAGE>
THE MNI GROUP INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
October 31,
-----------------------
1996 1995
--------- ---------
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net (loss) ($ 42,600) ($ 29,400)
Adjustments to reconcile net (loss) to
net cash provided (used) by operating
activities:
Depreciation and amortization (2,300) (1,600)
Change in operating assets and liabilities:
(Increase) decrease in accounts receivable 83,700 (119,400)
Decrease in inventories 5,000 27,000
(Increase) decrease in prepaid expenses and
other assets 3,600 (3,600)
Increase (decrease) in accounts payable (71,900) 83,800
Increase in accrued expenses 1,000 28,700
--------- ---------
Net cash (used) by operating activities (23,500) (14,500)
--------- ---------
Cash flows from investing activities:
Increase in security deposits -- (500)
--------- ---------
Net cash (used) by investing activities -- (500)
--------- ---------
Cash flows from financing activities:
Reduction in notes payable (46,200) (8,900)
Increase in loans from officer 61,200 25,500
--------- ---------
Net cash provided by financing activities 15,000 16,600
--------- ---------
Increase (decrease) in cash (8,500) 1,600
Cash at beginning of period 11,100 11,900
--------- ---------
Cash at end of period $ 2,600 $ 13,500
========= =========
Supplemental information:
Interest expense paid $ 14,400 $ 10,100
Federal income tax -- --
The accompanying notes are an integral part hereof.
<PAGE>
THE MNI GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1996
In the opinion of management, the accompanying unaudited
consolidated condensed financial statements contain all adjustments
(consisting only of normal recurring adjustments) necessary to present
fairly the financial position of the company as of October 31, 1996, and
the results of its operations and cash flows for the nine months ended
October 31, 1996 and 1995. Such financial statements have been condensed
in accordance with the applicable regulations of the Securities and
Exchange Commission.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been omitted. It is suggested that these
condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
audited financial statements for the year ended January 31, 1996, which is
included in its Form 10K filed in April 1996. The results of operations
for the period ended October 31, 1996 are not necessarily indicative of
the operating results for the full year.
1. Income per Share:
(Loss) per share is computed on the weighted average number of
shares outstanding. The inclusion of common stock equivalents (warrants
and options) in this computation would be antidulutive.
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
October 31, 1996
Results of Operations
Sales for the three months ended October 31, 1996 were $113,300 as compared with
sales of $376,300 for the comparable period in 1995, a decrease of 69.9%. The
decrease was attributable to shipment deferrals of certain customer orders
approximating $125,000 from the quarter ended October 31, 1996 to the quarter
ending January 31, 1997 and the maintenance of higher than historically normal
inventory levels of the Company's products by its most significant distributor.
Cost of sales decreased from $230,100 for the three months ended October 31,
1995, or 61.1% of sales, to $44,500, or 39.2% of sales, for the comparable
period in 1996. The decrease was attributable to a more favorable product mix
with higher gross margins. Selling, general and administrative expenses
decreased 5.3% to $108,000 from $114,100.
For the three months ended October 31, 1996, the Company incurred an operating
loss of $39,200 and a net loss of $44,400, or ($.01) per share, as compared to
an operating income of $30,000 and a net income of $25,300, or $.01 per share,
for the comparable period of 1995.
Interest expense was $5,200 for the three months ended October 31, 1996 as
compared to $4,700 during the comparable period of 1995.
Sales for the nine months ended October 31, 1996 were $709,700 as compared with
sales of $1,004,300 for the comparable period in 1995, a decrease of 29.3%
attributable primarily to the reasons set forth in the discussion of operating
results for the three months ended October 31, 1996, above.
Cost of sales decreased from $639,100 for the nine months ended October 31, 1995
or 63.6% of sales, to $403,000, or 56.7% of sales, for the comparable period in
1996. Selling, general and administrative expenses decreased 10.4% to $334,900
from $373,800.
For the nine months ended October 31, 1996, the Company incurred an operating
loss of $28,200 and a net loss of $42,600 or ($.01) per share, as compared to an
operating loss of $13,700 and a net loss of $29,400 or ($.01) per share, for the
comparable period of 1995.
Interest expense was $14,400 for nine months ended October 31, 1996, as compared
to $15,700 during the comparable period of 1995.
Liquidity and Capital Resources
At October 31, 1996 the Company had cash of $2,600 as contrasted with cash of
$11,100 on January 31, 1996. The Company has experienced cash flow shortfalls
from time to time, which have been historically satisfied by cash advances from
the Company's President. Such advances aggregated $61,200 at October 31, 1996.
There is no assurance that the Company will be able to obtain sufficient cash to
fund its operations. Management believes that the Company requires additional
financing to conduct its operations on a profitable basis and to develop and
market additional products and programs. The Company is continually engaged in
an effort to obtain such funding.
<PAGE>
PART II - OTHER INFORMATION
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MNI GROUP INC.
(registrant)
December 11, 1996 By: /s/Arnold M. Gans
-----------------
Arnold M. Gans
President
(Principal Operating Officer
and Principal Accounting and
Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1997
<PERIOD-END> OCT-31-1996
<CASH> 2,600
<SECURITIES> 0
<RECEIVABLES> 42,500
<ALLOWANCES> 0
<INVENTORY> 79,100
<CURRENT-ASSETS> 12,800
<PP&E> 3,700
<DEPRECIATION> 0
<TOTAL-ASSETS> 156,200
<CURRENT-LIABILITIES> 462,700
<BONDS> 0
0
0
<COMMON> 7,238,900
<OTHER-SE> (7,825,700)
<TOTAL-LIABILITY-AND-EQUITY> 156,200
<SALES> 709,700
<TOTAL-REVENUES> 709,700
<CGS> 403,000
<TOTAL-COSTS> 737,900
<OTHER-EXPENSES> 121,800
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,400
<INCOME-PRETAX> (42,600)
<INCOME-TAX> 0
<INCOME-CONTINUING> (42,600)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (42,600)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
