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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 October 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 identification no.)
of incorporation or organization)
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 October 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
(Unaudited)
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<CAPTION>
October 31,
ASSETS 2000
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<S> <C>
Cash $ 1,205,145
Trade accounts receivable, less
allowance for doubtful accounts of $98,729 203,727
Inventory 229,252
Other current assets 120,998
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Total current assets 1,759,122
Property, plant and equipment 2,025,970
Less accumulated depreciation 800,376
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Net property, plant and equipment 1,225,594
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Total assets $ 2,984,716
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LIABILITIES AND SHAREHOLDERS' EQUITY
Notes Payable to related parties $ 380,000
Accounts Payable 160,826
Accrued Liabilities 237,746
Customer Deposits 76,144
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Total current liabilities 854,716
Common stock 31,458
Additional paid-in capital 3,219,379
Accumulated deficit (1,120,837)
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Stockholders' equity 2,130,000
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Total liabilities and stockholders' equity $ 2,984,716
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</TABLE>
See accompanying notes to the financial statements.
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SUMMA RX LABORATORIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
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<CAPTION>
Three months ended Six months ended
October 31 October 31
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net Sales $ 652,720 $ 736,290 $ 1,447,526 $ 1,513,148
Cost of Goods sold 587,189 579,870 1,234,235 1,191,259
------------ ------------ ------------ ------------
Gross Profit 65,531 156,420 213,291 321,889
Selling, general and administrative 193,571 360,479 384,954 552,197
------------ ------------ ------------ ------------
Operating loss (128,040) (204,059) (171,663) (230,308)
Other income (expense)
Interest income 13,103 925 37,503 2,366
Interest expense (9,555) (18,848) (19,066) (37,417)
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3,548 (17,923) 18,437 (35,051)
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Net (loss) $ (124,492) $ (221,982) $ (153,226) $ (265,359)
=========== ============ ============ ============
Basic and fully diluted (loss) per share $ (.04) $ (.07) $ (.05) $ (.08)
=========== ============ ============ ============
Weighted averages shares outstanding 3,145,838 3,145,838 3,145,838 3,145,838
=========== ============ ============ ============
</TABLE>
See accompanying notes to the financial statements.
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SUMMA RX LABORATORIES, INC.
STATEMENTS OF CASH FLOWS
(Unaudited)
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Six months ended
October 31
2000 1999
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Cash flows from operating activities
Net (loss) $ (153,226) $ (265,359)
Adjustments to reconcile net earnings (loss) to
net cash provided (used) by operating activities:
Depreciation and amortization 59,269 51,644
Changes in operating assets and liabilities:
Trade accounts receivable 350,946 (116,765)
Inventory 33,667 (111,713)
Other current assets 303,734 (2,840)
Accounts payable and accrued expenses (741,996) 323,548
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Net cash used by operating activities (147,606) (121,485)
Cash flows from investing activities
Capital expenditures -- (36,622)
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Net decrease in cash (147,606) (158,107)
Cash at beginning of year 1,352,751 268,620
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Cash at end of year $ 1,205,145 $ 110,513
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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, 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
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
($1,587,838 net of expenses and income taxes) 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, $104,390 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 totaling $190,000 agreed to extend
the due date of those notes until July 10, 2001. Summa called those notes and
paid all of the principal and interest then due to the holders of those notes.
Payment on $60,000 principal was paid on December 27, 1999 and payment on
$130,000 principal was paid on January 15, 2000.
On November 15, 2000 Summa called and paid the 10% Notes totaling $380,000 along
with the accrued interest due to the holders of those notes. After the payment
of those notes, Summa has no long-term debt outstanding and had approximately
$745,000 cash in the bank or in interest bearing accounts.
RESULTS OF OPERATIONS
Dietary supplements traditionally experience declines in sales during the summer
and early fall months. The first six months of the Company's fiscal year for
both fiscal 2001 and 2000 reflect lower sales than what is historically expected
in the remaining six months of the Company's fiscal year. Sales for the
six-month period ended October 31, 2000 were approximately $65,600 lower than
the same period of the previous year due to the month of September 2000 being an
unusually slow month. Cost of sales for the six-month period in FY 2001 was 85%
of sales compared to 79% for the same six months of the previous year. This was
due primarily to outside laboratory expense incurred in the first six months of
FY 2001 for stability testing required for drug products manufactured in this
period. In addition, depreciation expense was higher due to new production
equipment acquired in March 2000. Also, uniform expense, medical insurance
expense and utility expense was significantly higher in the first six months of
FY 2001.
Sales expense for the first six months of fiscal 2001 was approximately $37,700
more than the first six months 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 approximately $205,000 primarily
due to a reduction in legal fees incurred in the first six months 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 $35,000 while interest expense decreased
approximately $18,350. 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
(a) Exhibits
Exhibit 27 Financial Data Schedule
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
December 12, 2000 ----------------------------------
Charles H. Hughes
Chief Financial Officer
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INDEX TO EXHIBITS
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<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<S> <C>
27 Financial Data Schedule
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