SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
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Commission file number 0-19082
OPTIMAX INDUSTRIES, INC.
------------------------
(Exact Name of small business issuer as Specified in its Charter)
Colorado 84-1059458
- ------------------- -----------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
132 Lincoln Street, Boston, Massachusetts 02111
- ----------------------------------------- -----------------------
(Address of Principal Offices) (Zip Code)
Registrant's telephone number, including area code: (617) 695-2950
-----------------
16361 Norris Road, Loxahatchee, Florida 33470
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(Former name, former address and dormer 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 PROCEEDINGS 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 of 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:
As of September 30, 1996, Registrant had 4,703,091 shares of common stock, $.02
Par Value, Outstanding.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets at September 30, 1996 and 1995
(Unaudited)
Consolidated Statement of Operations, Three Months
Ended September 30, 1996 and 1995
(Unaudited)
Consolidated Statement of Operations, Nine Months
Ended September 30, 1996 and 1995
(Unaudited)
Consolidated Statement of Cash Flows, Three Months
Ended September 30, 1996 and 1995
(Unaudited)
Consolidated Statement of Cash Flows, Nine Months
Ended September 30, 1996 and 1995
(Unaudited)
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
<PAGE>
OPTIMAX INDUSTRIES, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED BALANCE SHEETS
(unaudited)
ASSETS
------
September 30, December 31,
1996 1995
---- ----
CURRENT ASSETS
Cash $ 580,370 $ -
Marketable securities 201,953 -
Accounts receivable,
net of allowance
for doubtful accounts 165,773 75,852
Inventories 328,314 345,606
Other current assets 21,717 24,319
----------- -----------
Total current assets 1,298,127 445,777
Property and equipment, net of
accumulated depreciation 2,452,819 435,827
Contract retainages 17,497 18,470
Goodwill, net of
accumulated amortization - 163,661
Notes receivable 342,053 170,000
Other assets 38,095 2,324
----------- -----------
Total assets $ 4,148,591 $ 1,236,059
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable and
accrued expenses $ 773,650 $ 598,080
Notes payable and
contracts payable 445,418 441,882
Notes payable, related parties 33,591 42,256
Other current liabilities - 135,752
----------- -----------
Total current liabilities 1,252,659 1,217,970
STOCKHOLDERS' EQUITY
Preferred stock; 5,000,000 shares,
$.001 par value, authorized;
1,280,000 shares outstanding at
September 30, 1996 1,600,000 -
Common stock; 20,000,000 shares,
$.02 par value, authorized;
1,503,091 shares outstanding at
December 31, 1995 and 4,703,091
at September 30, 1996 449,557 30,062
Additional paid-in capital 8,707,093 7,160,739
Accumulated deficit (7,860,718) (7,172,712)
----------- -----------
Total stockholders' equity 2,895,932 18,089
----------- -----------
Total liabilities and
stockholders' equity $ 4,148,591 $ 1,236,059
<PAGE>
OPTIMAX INDUSTRIES, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Three Months Ended
September 30,
1996 1995
---- ----
SALES $ 131,385 $ 332,177
Cost of sales 69,277 282,983
----------- -----------
Gross profit 62,108 49,194
EXPENSES
Depreciation 2,600 22,781
Salaries and payroll taxes, not
included in cost of sales 6,701 100,707
Other expenses 54,751 99,925
----------- -----------
Total expenses 64,052 223,413
----------- -----------
Net loss before other
income (expenses) (1,944) (174,219)
Other income (expenses)
Interest income (expenses) 2,980 (8,112)
Other income 780 10,582
----------- -----------
Total other income 3,760 2,470
----------- -----------
Net income (loss) $ 1,816 $ (171,749)
Net income (loss) per share $ - $ (.11)
<PAGE>
OPTIMAX INDUSTRIES, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
(unaudited)
Nine Months Ended
September 30,
1996 1995
---- ----
SALES $ 378,326 $ 664,168
Cost of sales 233,428 566,701
----------- -----------
Gross profit 144,898 97,467
EXPENSES
Depreciation 36,653 86,640
Salaries and payroll taxes, not
included in cost of sales 139,934 273,257
Other expenses 151,768 388,479
----------- -----------
Total expenses 328,355 748,376
----------- -----------
Net loss before other
income (expenses) (183,457) ( 650,909)
Other income (expenses)
Interest expense (1,607) (51,508)
Other income (expense) 39,412 (36,336)
----------- -----------
Total other income (expenses) 37,805 (87,844)
----------- -----------
Net loss $ (145,652) $ (738,753)
Net loss per share $ (.03) $ (.49)
<PAGE>
OPTIMAX INDUSTRIES, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Three Months Ended
September 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 1,816 $ (171,749)
Adjustments to reconcile
net income (loss) to net cash
used by operating activities
Depreciation 2,600 22,781
Other changes in current assets
and current liabilities (82,961) -
----------- -----------
Net cash used by operating activities (78,545) (148,968)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (201,953) -
Disposition (acquisition) of
property and equipment (2,033,615) 12,228
Other - 6,330
----------- -----------
Net cash provided (used) by
investing activities (2,235,568) 18,558
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock and
capital contributions 2,880,681 179,600
Decrease in notes and
mortgages payable - (162,815)
----------- -----------
Net cash provided by
financing activities 2,880,681 16,785
----------- -----------
Increase (decrease) in cash 566,568 (113,625)
Cash, July 1, 13,802 62,063
----------- -----------
Cash, September 30, $ 580,370 $ (51,562)
Interest paid $ - $ 4,479
Income taxes paid $ - $ -
<PAGE>
OPTIMAX INDUSTRIES, INC. AND SUBSIDIARIES
-----------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited)
Nine Months Ended
September 30,
1996 1995
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (145,652) $ (738,753)
Adjustments to reconcile net
loss to net cash used by
operating activities
Depreciation 36,653 86,640
Other changes in current assets
and current liabilities 12,876 (116,010)
----------- -----------
Net cash used by
operating activities (96,123) (768,123)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable securities (201,953) -
Disposition (acquisition) of
property and equipment (2,007,897) 128,366
Other changes 1,756 (12,468)
----------- -----------
Net cash (used) provided by
investing activities (2,208,094) 115,898
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock and
capital contributions 2,880,681 784,950
Increase (decrease) in notes
and mortgages payable 3,906 (240,108)
----------- -----------
Net cash provided by
financing activities 2,884,587 544,842
----------- -----------
Increase (decrease) in cash 580,370 (107,383)
Cash, January 1, - 55,821
----------- -----------
Cash, September 30, $ 580,370 $ 51,562
Interest paid $ 4,587 $ 51,508
Income taxes paid $ - $ -
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The financial statements reflect the financial condition and results of
operations of Optimax Industries, Inc. and its four (4) wholly-owned operating
divisions: horticultural, giftware, truck part accessories and property
development (hereinafter referred to as the "Company"). The balance sheets at
September 30, 1996 and 1995 and the statements of operations and cash flows for
the three- and nine-month periods ended September 30, 1996 and 1995,
respectively, have been prepared by the Registrant without audit.
In the opinion of management, all adjustments (which include only normal
recurring transactions) necessary to present fairly the financial position,
results of operations and cash flows and changes in stockholders' equity for
all periods presented have been made. Balance Sheet information at
December 31, 1995 was derived from the Company's audited financial statements
contained in its Annual Report on Form 10-KSB.
On July 23, 1996, the Company acquired one hundred percent (100%) of the
outstanding shares of capital stock of Vine Street Stores, Inc. in exchange for
1,500,000 shares of the Company's Common Stock. The transaction was accounted
for as a pooling of interest. Results of operations for the three- and nine-
months ended September 30, 1996 includes the historical operations of Vine
Street Stores, Inc. for the respective periods.
On July 23, 1996, the Company also purchased certain undeveloped real property
located in Colchester, Connecticut in consideration of $400,000 in cash and the
issuance of 1,280,000 shares of Series A Convertible Preferred Stock. The
acquisition has been accounted for under the purchase method of accounting.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital at September 30, 1996 was $45,468 as compared to
$(772,193) at December 31, 1995. This increase of $817,661 is principally
attributable to the successful completion of a Private Offering ("Private
Offering") by the Company in August, 1996, in which the Company sold an
aggregate of 1,500,000 Units at a Private Offering price of $1.25 per Unit and
from which the Company realized net proceeds of $1,356,000. Of the net
proceeds, approximately $433,000 was disbursed to complete the purchase of
twelve (12) acres of real property, located in Colchester, Connecticut, to be
held for development.
Total assets at September 30, 1996 were $4,148,591 as compared to $1,236,059 at
December 31, 1995. This increase of $2,912,532 was principally attributable to
a combination of the acquisition of Vine Street Stores, Inc. and the purchase
of the Connecticut real property on July 23, 1996 and the completion of the
Private Offering by the Company.
Total liabilities at September 30, 1996 were $1,252,659 as compared to
$1,217,970 at December 31, 1995. This increase of $34,689 was principally
attributable to net increases in trade payables and accrued liabilities
incurred prior to the Company's completion of the Private Offering.
Stockholders' equity increased from $18,089 at December 31, 1995 to $2,895,932
at September 30, 1996. This increase of $2,877,843 was attributable to the
completion of the Private Offering, the issuance of preferred stock in partial
payment of the Company's purchase of the Connecticut real property and the
Company's ability to recommence previously suspended operations and undertake
new business opportunities on a profitable basis.
<PAGE>
Completion of the Company's acquisition of Vine Street Stores, Inc., the
purchase of the Connecticut real property for development and the Private
Offering had a material, positive impact upon the Company's liquidity and
capital resources and is expected to have a material positive impact upon its
future results of operations.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
The Company's sales were $131,385 and $378,326 for the three- and nine-month
periods ended September 30, 1996 compared to $332,177 and $664,168 for the
comparable periods ended September 30, 1995. The sales decreases were
principally attributable to the significantly reduced and limited operations at
the Company's Plants for Tomorrow, Inc. nursery subsidiary. Although the
Company's nursery has historically generated operating losses, resulting
primarily from cost overruns on plant installation contracts, the Company has
undertaken aggressive efforts to transform the nursery from an environmental
sciences and mitigation installer to a laterally-integrated, combined Florida
native plants, beach revegetation and mangrove restoration growing facility,
inventory products which the Company believes have greater market and profit
potential. In addition, the Company reactivated the business operations of
Taylor-Built Industries, Inc. in Dallas, Texas and has begun marketing,
initially on a regional basis, bed-cover and bed-liners, a product that the
Company has internally developed, for pick-up trucks, on both a dealer
wholesale and direct retail basis. The Company intends to add additional
complementary truck part accessories to its product base and believes, based
upon its current capitalization, principally resulting from the successful
completion of the Private Offering, that it has sufficient resources to
undertake these business activities.
Gross profits were $62,108 (47.3% of sales) and $144,898 (38.3% of sales) for
the three-and nine-month periods ended September 30, 1996 compared to $49,194
(14.8% of sales) and $97,467 (14.7% of sales) for the comparable periods ended
September 30, 1995. These increases and related percentage improvements in
gross profits were principally attributable to the operating profitability of
Vine Street Stores, Inc., a new Company subsidiary as of July 23, 1996, truck
part accessory product packages sold to truck dealers on a wholesale basis, and
the achievement of profitable sales within the Company's newly-established
giftware division.
Operating and non-operating expenses, exclusive of interest income and
expenses, were $61,452 (46.7% of sales) and $291,702 (77.1% of sales) for the
three- and nine-month periods ended September 30, 1996. The Company has
undertaken significant cost reduction and reorganization measures, specifically
at the Plants for Tomorrow, Inc. and Taylor-Built Industries, Inc. operating
subsidiaries, in order to stem continuing operating losses. The Company is
aggressively implementing, and expects to continue with, these measures in
order to further reduce the Company's operating expense to sales ratio and,
thereby, enhance operating profitability.
The Company's net income of $1,816 and net loss of $(145,652) for the three-
and nine-month periods ended September 30, 1996 compared to net losses of
$(174,219) and $(650,909) for the comparable periods ended September 30, 1995.
The Company was able to achieve profitability during the three month period
ended September 30, 1996 and reduce the net loss for the nine month period then
ended principally through significant cost reductions and reorganization
measures at the subsidiary operating levels, the operating profitability of
Vine Street Stores, Inc., a new subsidiary of the Company as of July 23, 1996,
and profitable sales resulting from new business opportunities within the truck
part accessories and giftware divisions.
<PAGE>
The Company is currently in negotiations with creditors to restructure all of
the defaulted or delinquent secured and unsecured debt obligations of its
Plants for Tomorrow, Inc. and Taylor-Built Industries, Inc. operating
subsidiaries that were outstanding prior to the Company's successful completion
of the Private Offering. The Company believes that the pending creditor
negotiations will result in a combination of long- term payment restructurings
or cash payments at significant discounts to the face amount of the debt
obligations. The Company believes that these negotiations will be completed by
December 31, 1996 and anticipates recording a substantial non-operating gain
from the restructuring or cancellation of certain creditor indebtedness.
SUBSEQUENT EVENT
The Company announced on October 15, 1996 that it had established a new
separate subsidiary to design, develop and distribute floral and non-floral
related giftware lines, such as ceramic pottery, wicker baskets and decorative
boxes, that will be marketed with the foliage and plant products grown or
consolidated for sale at the Company's existing plant nursery in Loxahatchee,
Florida. In addition, the Company also announced that it entered into a
definitive letter of intent to purchase certain assets used by a privately-held
picture framing and giftware manufacturer located in Boston, Massachusetts.
The Company believes that the purchase will be strategic in that there is an
opportunity to integrate and expand certain combined assets, namely decorative
boxes and specialty containers, and that some, if not most, of the resulting
combined product lines are purchased by the same national and regional retail
chain giftware buyers. The Company expects to complete the purchase of these
certain assets by November 18, 1996, subject to the satisfaction of certain
conditions.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
Barry K. Davis ("Plaintiff") v. Optimax Industries, Inc. and
------------------------------------------------------------
Steven Calendrella ("Defendants"), Supreme Court of the State of
----------------------------------------------------------------
New York, County of New York, Index No. 601604/96, filed March
19, 1996. The Plaintiff alleges that in September, 1995, the
Plaintiff and the Defendants entered into an oral contract
whereby the Plaintiff agreed to perform certain consulting and
advisory services for the Defendants and the Defendants
allegedly agreed to pay the Plaintiff in the form of a stock
purchase warrant for such services and that the stock purchase
warrant would grant the Plaintiff the right to purchase 146,000
shares of Optimax Industries, Inc. common stock at one dollar
($1.00) per share. The Plaintiff is seeking damages in the
amount of three hundred thousand dollars ($300,000).
The Defendants have denied the existence of any contract and are
vigorously opposing this action on the affirmative defenses that
(1) the Plaintiff has failed to state a cause of action, (2) the
cause of action purportedly alleged in the Plaintiff's complaint
is barred by the Statute of Frauds and (3) in connection with
conduct, purportedly part of the services upon which the
Plaintiff based his claim, the Plaintiff engaged in a
manipulation of the price of the publicly traded stock of
Optimax Industries, Inc. in violation of federal and state
securities laws and is barred from recovery of any sums sought
in the complaint. The Company believes this lawsuit is without
merit and expects to prevail if the case proceeds.
ITEM 2. CHANGES IN SECURITIES
---------------------
None.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
------------------------------
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
-----------------
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibits:
Reports on Form 8-K:
<PAGE>
SIGNATURE
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 hereunto duly authorized.
OPTIMAX INDUSTRIES, INC.
Dated: November 14, 1996 By: /s/ David W. Dube
------------------- ------------------------
David W. Dube, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 580,370
<SECURITIES> 201,953
<RECEIVABLES> 165,773
<ALLOWANCES> 0
<INVENTORY> 328,314
<CURRENT-ASSETS> 1,298,127
<PP&E> 2,452,819
<DEPRECIATION> 17,497
<TOTAL-ASSETS> 4,148,591
<CURRENT-LIABILITIES> 1,252,659
<BONDS> 0
0
1,600,000
<COMMON> 449,557
<OTHER-SE> 8,707,093
<TOTAL-LIABILITY-AND-EQUITY> 4,148,591
<SALES> 378,326
<TOTAL-REVENUES> 378,326
<CGS> 233,428
<TOTAL-COSTS> 328,355
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,607
<INCOME-PRETAX> (145,652)
<INCOME-TAX> 0
<INCOME-CONTINUING> (145,652)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (145,652)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> (0.03)
</TABLE>
