UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For quarterly period ended October 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from August 1, 1996 to October 31, 1996
Date of Report: December 14, 1996
NEMDACO, INC.
(Exact name of small business issuer as specified in its charter)
COLORADO 0-19064 84-1027731
(State of incorporation) (Commission File No.) (I.R.S. ID No)
9 Buckskin Road, Bell Canyon, CA 91307
(Address of principal executive offices)
(Issuer's telephone number) (818) 884-4770
(Former name or former address, if changed since last report.)
Indicate by check whether issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 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
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common stock, $.01 par value 10,086,400 shares
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited)
Consolidated Balance Sheet as of October 31, 1996 3
Consolidated Statements of Operations for the
three months ended October 31, 1996 and 1995 4
Consolidated Statement of Changes in Stockholders'
Equity for the period from August 1, 1996 to
October 31, 1996 5
Consolidated Statements of Cash Flows for the three
months ended October 31, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II - OTHER INFORMATION
ITEMS 1 through 6 11
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
OCTOBER 31, 1996
(UNAUDITED)
ASSETS
Property and equipment
Furniture & fixtures $ 18,000
Less accumulated depreciation 3,000
------
Total Assets $ 15,000
======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses: $ 142,000
Accrued payroll and payroll taxes(Note 2) 264,000
-------
Total current liabilities 406,000
Commitments and contingencies (Note 5)
Stockholders' equity (deficit):
Common stock, $.01 par value; 12,000,000
shares authorized;
issued 10,086,400 shares 101,000
Additional paid-in capital 4,003,000
Receivable - shareholder (Note 3) (396,000)
Deficit (4,099,000)
---------
Total stockholders' equity (deficit) (391,000)
-------
Total Liabilities and Stockholders' Equity (Deficit) $ 15,000
========
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended Six Months Ended
October 31, October 31
1996 1995 1996 1995
Operating expenses:
General and
administrative $ 158,000 $ 238,000 $ 273,000 $ 279,000
Rent expense,
related party 3,000 7,000
------- ------- ------- -------
158,000 241,000 273,000 286,000
------- ------- ------- -------
Net income (loss) $(158,000) $(241,000) $(273,000) $(286,000)
Earnings per
common share:
Net income (loss) $ (.016) $ (.04) $ (.027) $ (.047)
Weighted average
of common shares
outstanding 10,086,400 6,095,400 10,086,400 6,095,400
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE PERIOD FROM MAY 1, 1996 TO OCTOBER 31, 1996
(UNAUDITED)
ADDITIONAL
COMMON STOCK PAID-IN
SHARES AMOUNT CAPITAL (DEFICIT)
BALANCE,
May 1, 1996 10,096,400 $ 101,000 $3,826,000 $(3,826,000)
Net loss (273,000)
---------- -------- ---------- ---------
BALANCE,
October 31, 1996 10,096,400 $ 101,000 $3,826,000 $(4,099,000)
========== ======= ========= =========
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended Six Months Ended
October 31, October 31,
1996 1995 1996 1995
Cash Flows
From Operating Activities:
Net income (loss) $(158,000) $(241,000) $(273,000) $(286,000)
Adjustments to reconcile
net income (loss) to net cash
provided by (used in)
operating activities:
Depreciation and amortization 1,000 2,000
Decrease in Prepaid Expenses 1,000
Changes in assets and liabilities:
Decrease(Increase) in
Note Receivable-Shareholder 13,000 13,000
Increase in wages and
payroll taxes payable 124,000 135,000
Increase (decrease) in
accounts payable and other
accrued expenses 20,000 238,000 123,000 209,000
------- ------- ------- -------
Total adjustments 158,000 239,000 273,000 209,000
------- ------- ------- -------
Net cash provided by
(used in) operating activities 0 (2,000) 0 (77,000)
------- ------- ------ ------
Net increase (decrease)
in cash and cash equivalents 0 (2,000) 0 (77,000)
Cash and cash equivalents,
beginning 0 2,000 0 77,000
------- -------- --------- ------
Cash and cash equivalents,
ending $ 0 $ 0 $ 0 $ 0
======= ======= ===== ====
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year
for interest $ 0 $ 0 $ 0 $ 0
<PAGE>
NEMDACO, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995
1. BASIS OF PRESENTATION:
Unaudited Information - The accompanying unaudited consolidated financial
statements have been prepared in accordance with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-QSB. They do not include all information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
except as disclosed herein, there has been no material change in the
information disclosed in the notes to consolidated financial statements
included in the Annual Report on Form 10-KSB for the year ended April 30, 1996.
In the opinion of Management, all adjustments consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three months and six months ended October 31, 1996
are not necessarily indicative of the results that may be expected for the
year ending April 30, 1997
Principles of Consolidation - The unaudited financial statements as of
October 31, 1996, include the accounts of the Company and its subsidiaries.
All intercompany accounts have been eliminated.
2. ACCRUED PAYROLL AND PAYROLL TAXES
Accrued payroll and payroll taxes include federal and state payroll taxes
payable for the first and second calendar quarters of 1996 in the amount of
$50,000; wages due officers accrued as of April 30, 1996, but not paid in an
amount of $115,000; and wages due officers and other employees for the period
August 15, 1996 to October 31, 1996, which have not been paid due to lack of
funds. Payroll taxes payable to the Internal Revenue Service for the first
and second quarters of 1996 is secured by a tax lien in an amount of $30,000.
See also note on subsequent events.
3. NOTE RECEIVABLE - SHAREHOLDER
The Company holds a Note Receivable in the amount of $396,000 due from
Coubert Dennis, Ltd., an Irish corporation and shareholder of Company.
This note as of August 1, 1996 was $409,000, and was paid down by a total of
$13,000 during the three months ended October 31, 1996. The Company has made
demand for payment from the shareholder. Since there is no assurance that
these funds will be collected, the note receivable has been deducted from
shareholders equity, consistent with the treatment in the audited financial
statements for the year ended April 30, 1996.
4. GOING CONCERN
As shown in the accompanying financial statements, the Company has
incurred a losses of $158,000, and $273,000 during the three months and six
months ended October 31, 1996, respectively, and has a $391,000 deficit in
stockholders' equity as of October 31, 1996. In addition, as of the date of
these financial statements, the Company had no continuing revenue generating
operations resulting in projected cash flow deficiencies. These factors
raise substantial doubt about the Company's ability to continue as a going
concern.
Management is attempting to resolve these deficiencies by raising financing
necessary to acquire interests in on-going businesses and to satisfy its
working capital requirements.
The Company is currently exploring various possibilities for obtaining
financing, including possible private placements and public offerings and debt
secured by assets acquired. If adequate financing can be obtained, the Company
intends to consider the possibilities of investing in various joint ventures
or acquisitions that management is currently investigating.
5. COMMITMENTS AND CONTINGENCIES:
A.
A Form 8-K have been filed due to significant changes to Company's Operations
and Business Interests. Matters covered by these 8-K included the following
subsequent events:
(1) Change in Management.
Mr. Gary Larkin and Mr. Sam Stearman resigned as officers and directors of the
company to pursue other business interests. They have been replaced by William
Daniel Dane, age 61, as President and Director, and Thomas D. Siciliano, Jr.,
as Chief Financial Officer, and Anlise Cross remains Secretary, and has been
appointed to the board of Directors to replace Mr. Larkin's position.
They will serve the unexpired terms of Mr. Larkin and Mr. Stearman.
B.
(1) WestGroup Management Resources, Inc.
WestGroup Management Resources, Inc., management terminated its agreement with
the Company in September, 1996. The Agreement for used gave either party the
right to terminate the acquisition without cause. WestGroups' management
exercised their right to terminate.
(2) Acquisitions
A. Woleko Industries, Inc.
On November 11, 1996, the Company entered into an asset acquisition agreement
with Double Eagle, LTD, a California Corporation, located in Fresno,
California. This agreement is between Nemdaco Retail Sales, a wholly owned
subsidiary of the Company, and the Seller. The purchase price of the assets
acquired is Three Million (3,000,000) shares of Nemdaco Retail Sales.
The Company has no obligation to finance the ongoing operations of the
subsidiary other than its approval of the acquisition of Thirty Two Thousand
Seven Hundred One Dollars ($32,701) of liabilities, which constitute the
majority of the outstanding liabilities of the Seller. The Company has
announced a Dividend of Three Million (3,000,000) shares of Nemdaco Retail
Sales, now owned by the Company, to its shareholders. Each Shareholder will
receive One (1) share of Nemdaco Retail Sales for every Four (4) shares of
Nemdaco, Inc., owned as of December 16, 1996. In the Agreement, the Company
agreed to change the name from Nemdaco Retail Sales to Woleko Industries, Inc.
The assets acquired consist of United States patent numbers 08\495929 and
08\415070, which describe a portable inflatable automobile safety device,
know as an airbag; Trade secrets., Customer lists, Supplier lists, trademarks
and copyrights. The Company expects that the subsidiary will be in production
of the portable airbag in February 1997. Product description: A seatbelt
mounted Airbag that inflates away from the passenger in any vehicle equipped
with seatbelts. This product reduces the potential for injury or death to
children, smaller size adults and all other passengers who may be riding in a
vehicle so equipped.
B. HYDROPONIX, INC.
The Company has entered into a letter of intent to acquire the assets and no
liabilities of Hydroponix, Inc., a Puerto Rican Corporation. The purchase
price of the assets is Three Million (3,000,000) shares of a newly formed
subsidiary. The Company, under the terms of the letter of intent, has no
obligation to provide any financing for the newly formed subsidiary. The
Company expects to close the acquisition upon the completion of an audit of
the books of the Seller. Hydroponix is a start-up grower of tomatoes and other
vine vegetables using the latest technologies available to produce quality
vegetables for human consumption.
<PAGE>
MANAGEMENT'S DISCUSSIONS
The Company has been actively seeking viable businesses with marketable
products, and desiring to be traded as public companies. The two most recent
such agreements bring real marketable products with large market segments to
the Company. The stock dividend of the Company's subsidiaries to Nemdaco
shareholders is consistent with the Company's commitment to increase
shareholder value through the "spinning off" of the subsidiary. The Company
believes that by implementing this plan in each venture, lucrative cash flow
to the Company and its shareholders is well within it's grasp.
<PAGE>
PART II - OTHER INFORMATION
ITEMS 1 THROUGH 6: NONE
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the under signed,
thereunto duly authorized.
NEMDACO, INC.
(Registrant)
Dated: December 14, 1996 By:/s/ Jeff Bender
Jeff Bender,
Chairman of The Board
<PAGE>
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<EPS-PRIMARY> (.016)
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