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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC. 20549
FORM 10-QSB
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended July 31, 2000
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1943 for the transition period from _____________ to _______________.
1-9087
(Commission file no.)
SUMMA RX LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 75-1535372
(State or other jurisdiction (IRS employer
of incorporation or organization) identification no.)
2940 FM 3028, Mineral Wells, Texas 76067
(Address of principal executive office) (Zip Code)
(940) 325-0771
(Registrant's telephone number, including area code)
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 Act of 1934 during the
preceding 12 months (or for a 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 [ ]
As of July 31, 2000 there were 3,145,838 shares of common stock outstanding.
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SUMMA RX LABORATORIES, INC.
TABLE OF CONTENTS
FORM 10-QSB
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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Balance Sheet 3
Statement of Operations 4
Statement of Cash Flows 5
Notes to the Financial Statements 6
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION 8
Item 1 - Legal Proceedings 8
Item 2 - Changes in Securities 8
Item 3 - Defaults Upon Senior Securities 8
Item 4 - Submission of Matters to a Vote of Security Holders 8
Item 5 - Other information 8
Item 6 - Exhibits and Reports on Form 8-K 8
SIGNATURES 8
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SUMMA RX LABORATORIES, INC.
BALANCE SHEET
July 31, 2000
(Unaudited)
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ASSETS
Cash $ 1,156,111
Trade Accounts Receivable, less
allowance for doubtful accounts of $124,569 373,624
Inventory 199,995
Other Current Assets 143,458
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Total Current Assets 1,873,188
Property, plant and equipment 2,020,172
Less accumulated depreciation 769,301
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Net property, plant and equipment 1,250,871
Land 5,798
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Total assets $ 3,129,857
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LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts Payable $ 152,470
Accrued Liabilities 227,262
Customer Deposits 119,466
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Total current liabilities 499,198
Long Term Debt 380,000
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Total Liabilities 879,198
Common stock 31,458
Additional paid-in capital 3,219,379
Accumulated deficit (1,000,178)
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Shareholders' equity 2,250,659
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Total liabilities and shareholders' equity $ 3,129,857
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See accompanying notes to the financial statements.
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SUMMA RX LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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Three months ended
July 31
2000 1999
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Net Sales $ 794,806 $ 776,858
Cost of Goods sold 624,446 611,387
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Gross Profit 170,360 165,471
Selling, general and administrative 185,178 191,718
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Operating loss (14,818) (26,247)
Other income (expense):
Interest income 24,399 1,441
Interest expense (9,510) (18,569)
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14,889 (17,128)
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Net earnings (loss) $ 71 $ (43,375)
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Basic and fully diluted earnings (loss) per share .00 (.01)
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Weighted average shares outstanding 3,145,838 3,145,838
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See accompanying notes to the financial statements.
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SUMMA RX LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Three months ended
July 31
2000 1999
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Cash flows from operating activities
Net earnings (loss) $ 71 $ (43,375)
Adjustments to reconcile net earnings (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 28,016 25,822
Changes in operating assets and liabilities:
Accounts receivable 181,049 (133,607)
Inventories 62,924 (31,640)
Other current assets (60,730) (2,981)
Accounts payable and accrued expenses (407,969) 61,387
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Net cash used by operating activities (196,639) (124,394)
Cash flows from investing activities
Capital expenditures -- (29,903)
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Net decrease in cash (196,639) (154,297)
Cash at beginning of year 1,352,750 268,620
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Cash at end of year $ 1,156,111 $ 114,323
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See accompanying notes to the financial statements.
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SUMMA RX LABORATORIES, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1 - ORGANIZATION AND GENERAL
Summa Rx Laboratories, Inc. ("Summa") was formed as a Texas sole proprietorship
in 1972 and was incorporated in the State of Texas in October 1976, as Dews
Laboratories, Inc. In November 1987, Dews was merged into a Delaware corporation
and was renamed Summa Rx Laboratories, Inc.
Summa is engaged in the business of manufacturing and marketing of
pharmaceuticals, dietary supplements and nutritional products for sale under its
own label and under contract for others. Its executive offices and manufacturing
facilities are located at Mineral Wells, Texas 76067, approximately 45 miles
west of the Dallas/Fort Worth metropolitan area.
Note 2 - Basis of Presentation
The unaudited interim financial statements and related notes have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Accordingly, certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been omitted pursuant to such rules and regulations. The
accompanying unaudited interim financial statements and related notes should be
read in conjunction with the financial statements and notes thereto included in
the Summa's most recent Form 10-KSB covering fiscal year ended April 30, 2000.
The information furnished reflects, in the opinion of the management of Summa,
all adjustments necessary for a fair presentation of the financial results for
the interim period presented.
Note 3 - Earnings Per Share
The Company computes basic earnings (loss) per common share based on the
weighted average number of common shares outstanding. Diluted earnings per share
is computed based on the weighted average number of common shares outstanding
plus the number of additional common shares that would have been outstanding if
dilutive potential common shares had been issued. All potential common shares
were antidilutive in 2000 and 1999. Accordingly, singular earnings (loss) per
share amounts have been presented in the accompanying financial statements.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL CONDITION AND LIQUIDITY
On December 7, 1999 a former customer of Summa paid Summa the sum of $2,478,151
pursuant to the provisions of an Award of Arbitrator entered on November 1,
1999. Summa brought the action in arbitration seeking damages based upon the
customer's claim of termination of a manufacturing and sales agreement entered
into by it and Summa on July 11, 1997.
On December 27, 1999 Summa paid all of the principal and interest due under a
promissory note owed to Carol Petrie, a holder of 233,356 shares of Summa's
Common Stock.
In July 1999, the holders of the 12% Notes agreed to extend the due date of
those notes until July 10, 2001. On December 27, 1999 and January 15, 2000 Summa
called those notes and paid all of the principal and interest then due to the
holders of those notes.
RESULTS OF OPERATIONS
Dietary supplements traditionally experience declines in sales during the summer
months. The first quarter of the Company's fiscal year for both fiscal 2001 and
2000 reflect lower sales than what is historically expected in each of the
remaining three quarters of the year. Sales and cost of goods sold for the first
quarter ended July 31, 2000 were virtually the same as the first quarter ended
July 31, 1999. Cost of goods sold, as a percent of sales, was approximately 79%
for both quarters.
Sales expense for the first quarter of fiscal 2001 was approximately $28,900
more than the first quarter of fiscal 2000 primarily due to increased sales
commissions and an employment fee related to the hiring of a new salesman.
General and administrative expenses decreased due primarily to a $38,000
reduction in legal fees incurred in the first quarter of fiscal 2000. These
legal fees were related to the action in arbitration, which Summa prevailed and
collected in December 1999.
Interest income increased approximately $23,000 while interest expense decreased
approximately $9,000. These changes are directly related to the arbitration
award of $2,478,151 ($1,587,838 net of expenses and income taxes) which enabled
Summa to pay off certain Notes payable and invest a significant portion in
interest bearing accounts.
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PART II -- OTHER INFORMATION
Item 1 - Legal Proceedings
Not applicable
Item 2 - Changes in Securities
Not applicable
Item 3 - Defaults Upon Senior Securities
Not applicable
Item 4 - Submission of Matters to a Vote of Security Holders
Not applicable
Item 5 - Other information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
None
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.
Summa Rx Laboratories, Inc.
/s/ CHARLES H. HUGHES
September 14, 2000 ------------------------------------------
Charles H. Hughes
Chief Financial Officer
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INDEX TO EXHIBITS
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EXHIBIT
NO. DESCRIPTION
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27 Financial Data Schedule
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