<PAGE>
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 June 30, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from _______________ to __________________
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
---------------------------------------------------------------
(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 June 30, 1997, Registrant had 6,020,591 shares of common stock, $ .02
par value, outstanding.
<PAGE>
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets as of June 30, 1997
(Unaudited) and December 31, 1996
Consolidated Statement of Operations, Three Months
Ended June 30, 1997 and 1996
Consolidated Statement of Operations, Six Months
Ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statement of Cash Flows, Three Months
Ended June 30, 1997 and 1996 (Unaudited)
Consolidated Statement of Cash Flows, Six Months
Ended June 30, 1997 and 1996 (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>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
ASSETS
------
June 30, December 31,
1997 1996
(unaudited)
--------------- -------------
<S> <C> <C>
Current assets
Cash $ 48,159 $ 312,867
Accounts receivable, net of allowance
for doubtful accounts of $ 0 and
$ 2,500 183,935 181,506
Inventories 734,518 300,811
Prepaid expenses 63,663 8,549
------------ ------------
Total current assets 1,030,275 803,733
Property and equipment, net of
accumulated depreciation
of $ 380,158 and $ 358,602 3,204,597 2,594,286
Goodwill, net of accumulated
amortization of $ 26,303
and $ 23,380 146,126 151,971
Organization costs, net of accumulated
amortization of $ 3,499 and $ 1,926 27,489 21,959
Security deposits and other assets 9,954 6,607
------------ ------------
Total assets $ 4,418,441 $ 3,578,556
=========== ===========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
June 30, December 31,
1997 1996
(unaudited)
------------- -------------
<S> <C> <C>
Current liabilities
Payroll taxes payable $ 173,575 $ 182,053
Accounts payable and accrued expenses 669,894 335,963
Current portion of notes payable 1,505,684 218,842
------------ ------------
Total current liabilities 2,349,153 736,858
Long-term liabilities
Notes payable, net of current portion 551,538 378,526
------------ -----------
Total liabilities 2,900,691 1,115,384
------------ ------------
Stockholders' equity
Preferred shares - $.001 par value,
5,000,000 shares authorized;
none issued and outstanding - -
Common shares - $.02 par value,
20,000,000 shares authorized;
6,020,591 issued and outstanding 120,412 120,412
Additional paid-in capital 9,863,583 9,864,750
Accumulated deficit (8,466,245) (7,521,990)
------------ ------------
Total stockholders' equity 1,517,750 2,463,172
------------ ------------
Total liabilities and
stockholders' equity $ 4,418,441 $ 3,578,556
=========== ===========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended June 30,
(unaudited)
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Sales $ 366,903 $ 40,967
Cost of sales 379,120 38,286
------------- -------------
Gross profit (12,217) 2,681
Operating expenses
Depreciation and amortization 36,344 15,100
Salaries, not included in cost of
sales 373,110 66,638
Other operating expenses 265,682 60,463
------------ ------------
Total operating expenses 675,136 142,201
------------ ------------
Net loss before other income (expenses) (687,353) (139,520)
Other income (expense)
Interest expense, net of income (22,695) (2,718)
Other non-operating income 181 17,133
------------ ------------
Total other income (expense) (22,514) 14,415
------------ ------------
Net loss $ (709,867) $ (125,105)
=========== ==========
Net loss per share $ (.12) $ (.07)
=========== ==========
Weighted average shares outstanding 6,020,591 1,703,091
========= =========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
For the six months ended June 30,
(unaudited)
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Sales $ 605,748 $ 144,369
Cost of sales 521,669 106,052
------- -------
Gross profit 84,079 38,317
Operating expenses
Depreciation and amortization 62,405 34,053
Salaries, not included in cost of sales 475,373 133,233
Other operating expenses 466,478 69,511
------------ ------------
Total operating costs 1,004,256 236,797
Net loss before other income (expenses) (920,177) (198,480)
Other income (expense)
Interest expense, net of income (24,258) (4,587)
Other non-operating income 181 38,632
------------ ------------
Total other income (expense) (24,077) 34,045
Net loss $ (944,254) $ (164,435)
=========== ==========
Net loss per share $ (.16) $ (.05)
=========== ==========
Weighted average shares outstanding 6,020,591 3,288,700
========= =========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the three months ended June 30,
(unaudited)
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (709,867) $ (125,105)
Adjustments to reconcile net loss to
net cash used in operating activities:
Depreciation and amortization 36,344 15,100
Increase in accounts payable and
accrued expenses 279,698 125,761
Increase (decrease) in accounts
receivable (27,673) 26,222
Decrease in inventories 62,122 722
Decrease (increase) in prepaid
expenses and other assets 9,667 (49,393)
------------ ------------
Net cash used in operating activities (349,709) (6,693)
------------ ------------
Cash flows from investing activities:
(Acquisition) disposition of
property and equipment (66,981) 3,788
Decrease in security deposits and
other assets 617 1,756
------------ ------------
Net cash (provided by) used in
investing activities (66,364) 5,544
------------ ------------
Cash flows from financing activities:
Issuance of notes payable 377,501 -
Repayment of notes payable (92,376) 3,906
------------ ------------
Net cash provided by financing
activities 285,125 3,906
------------ ------------
Increase (decrease) in cash (130,948) 2,757
Cash, April 1, 179,107 11,045)
------------ ------------
Cash, June 30, $ 48,159 13,802
============ ============
Interest paid $ 36,945 $ 13,802
============ ============
Income taxes paid $ - $ -
============ ============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
OPTIMAX INDUSTRIES, INC. AND CONSOLIDATED SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended June 30,
(unaudited)
<CAPTION>
1997 1996
--------------- -------------
<S> <C> <C>
Cash flows from operating activities
Net loss $ (944,254) $ (164,435)
Adjustments to reconcile net loss to
cash used in operating activities:
Depreciation and amortization 62,405 34,053
Increase in accounts payable and
accrued expenses 325,453 81,118
Increase in accounts receivable (2,429) (23,444)
(Increase) decrease in inventories (433,707) 9,199
(Increase) decrease in prepaid
expenses and other assets (55,114) 36,439
------------ ------------
Net cash used in operating activities (1,047,646) (27,070)
------------ ------------
Cash flows from investing activities:
(Acquisition) disposition of property
equipment (663,649) (25,718)
Increase in organization costs (8,734) -
(Increase) decrease in security
deposits and other assets (3,367) 1,756
------------ ------------
Net cash used in investing activities (675,750) 27,474
------------ ------------
Cash flows from financing activities:
Issuance of common stock and capital
contributions - 15,278
Payment of deferred financing costs (1,167) -
Issuance of notes payable 1,564,115 3,906
Repayment of notes payable (104,260) -
------------ ------------
Net cash provided by financing
activities 1,458,688 19,184
------------ ------------
Increase (decrease) in cash (264,708) 19,588
Cash, January 1, 312,867 (5,786)
------------ ------------
Cash, June 30, $ 48,159 $ 13,802
=========== ==========
Interest paid $ 51,662 $ 4,587
=========== ==========
Income tax paid $ - $ -
=========== ==========
/TABLE
<PAGE>
<PAGE>
FORWARD-LOOKING STATEMENTS
--------------------------
In addition to historical information, this Quarterly Report contains
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, and are thus prospective. The forward-looking
statements contained herein are subject to certain risks and uncertainties
that could cause actual results to differ materially from those reflected in
the forward-looking statements. Factors that might cause such a difference
include, but are not limited to, competitive pressures, changing economic
conditions, those discussed in the Section entitled "Management's Discussion
and Analysis of Financial Condition and Results of Operations," and other
factors, some of which will be outside the control of the Company. Readers
are cautioned not to place undue reliance on these forward-looking statements,
which reflect management's analysis only as of the date hereof. The Company
undertakes no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof. Readers
should refer to and carefully review the information in future documents the
Company files with the Securities and Exchange Commission.
<PAGE>
<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 wholly-owned operating
divisions hereinafter referred to as the "Company"). The balance sheets at
June 30, 1997 and the statements of operations and cash flows for the three
month and six month periods ended June 30, 1997 and 1996, 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, 1996 was derived from the Company's audited financial statements contained
in its Annual Report on Form 10-KSB.
LIQUIDITY AND CAPITAL RESOURCES: JUNE 30, 1997 VERSUS DECEMBER 31, 1996
- ------------------------------------------------------------------------
The Company's assets increased from $3,578,556 at December 31, 1996 to
$4,418,441 at June 30, 1997, an increase of $ 839,885. This increase was
principally attributable to the acquisition of eighteen (18) acres of real
property, to be utilized as a plant foliage nursery, located in Homestead,
Florida, and the initial purchase of an inventory of foliage plants to be
finished and sold from the Homestead, Florida nursery. The Company's
cash decreased from $312,867 at December 31, 1996 to $48,159 at June 30,
1997 resulting principally from the investment of cash resources into the
Company's various operating divisions. Accounts receivable increased from
$181,506 at December 31, 1996 to $183,935 at June 30, 1997.
Inventories increased from $300,811 at December 31, 1996 to $734,518 at
June 30, 1997, resulting from additional purchases of foliage plants at
the Loxahatchee, Florida nursery, the initial purchase of an inventory of
foliage plants at the Homestead, Florida nursery and an increase in raw
materials and work-in-process inventory at the Boston, Massachusetts
giftware facility. Current assets increased from $803,733 at December 31,
1996 to $1,030,275 at June 30, 1997, resulting from expanded business
operations and new business developments.
The Company's investment in property, plant and equipment increased from
$2,594,286 at December 31, 1996 to $3,204,597 at June 30, 1997, an
increase of $610,311. This increase was principally attributable to the
acquisition of eighteen (18) acres of real property, to be utilized as a
plant foliage nursery, located in Homestead, Florida, the purchase of
equipment and vehicles for utilization at the Homestead, Florida nursery
and continuing renovations and improvements to the Loxahatchee, Florida
nursery.
The Company's liabilities increased from $1,115,384 at December 31, 1996
to $2,900,691 at June 30, 1997, an increase of $1,785,307. This increase
is principally attributable to the issuance of various notes payables for
the acquisition of the Homestead, Florida real property, initial foliage
plant inventory at the Homestead, Florida nursery and general working
capital for the Company's operating divisions.
The Company's working capital decreased from $66,875 at December 31, 1996
to a deficit of $(1,318,878) at June 30, 1997. The Company's current
ratio decreased from 1.09 at December 31, 1996 to .4 at June 30, 1997.
Stockholders' equity decreased from $2,463,172 at December 31, 1996 to
$1,517,750 at June 30, 1997, a decrease of $945,422, attributable to the
Company's net loss for the six month period ended June 30, 1997.
<PAGE>
MATERIAL CHANGES IN RESULTS OF OPERATIONS
- -----------------------------------------
The Company's sales were $366,903 and $605,748 for the six month periods ended
June 30, 1997 compared to $40,967 and $144,369 for the comparable reporting
period ended June 30, 1996, representing increases of $325,936 and $461,379,
respectively. The sales increases were principally attributable to product
sales in 1997 of the Company's new subsidiaries, Vine Street Stores, Inc.
(horticultural products) and Art Smart, Inc. (giftware products), as of July
23, 1996 and November 15, 1996, respectively, for which there were no
operations or sales during the comparable prior reporting period.
Gross profits (loss) were $(12,217) (0.3% of sales) and $84,079 (13.8% of
sales) for the three month and six month periods ended June 30, 1997 compared
to $2,681 (6.5% of sales) and $38,317 (26.5% of sales) for the comparable
reporting periods ended June 30, 1996, representing an increase (decrease) of
$(14,898) and $45,762, respectively. The related percentage changes were
principally attributable to the introduction of new merchandise products, lower
raw material costs for inventories resulting from purchase volume discounts and
improved financial management controls.
Operating and non-operating expenses, exclusive of interest income and expense,
were $674,955 and $1,004,075 for the three month and six month periods ended
June 30, 1997 and 1996, compared to $125,068 and $198,165 for the comparable
reporting periods ended June 30, 1996, representing increases of $549,887 and
$805,910, respectively. The Company has aggressively invested its available
cash resources into sales and marketing activities for its operating divisions,
particularly for its horticulture and giftware products. The Company
aggressively implements and monitors cost and containment programs and expects
to continue with these measures in order to further control the Company's
operating expenses.
The Company's net losses were $(709,867) and $(944,254) for the three month and
six month periods ended June 30, 1997 compared to $(125,105) and $(164,435) for
the comparable reporting periods ended June 30, 1997
SUBSEQUENT EVENT
- ----------------
The Company announced on July 15, 1997 that it entered into a non-binding
letter of intent to acquire THE FORGOTTEN WOMAN, INC.(Nasdaq Bulletin Board:
TFWI), a chain of specialty retail stores operating under the name "The
Forgotten Woman" which cater to selling high-end name brand, designer and
private label dresses, women's suits and other fashions and accessories in
larger sizes.
The acquisition, if consummated, would entail the issuance of one share of the
Company's common stock for each share of capital stock of TFWI. In addition,
all outstanding warrants and options of TFWI (for approximately 2.75 million
underlying shares) will be assumed by the Company and will be convertible into
one share of the Company's common stock for each share of TFWI into which such
rights are currently convertible. The exchange ratio contemplates that the
Company will consummate an approximate 2.4 to 1 reverse stock split based upon
its current capitalization. On closing, TFWI's shareholders will own in excess
of seventy-five percent (75%) of the Company's capital stock and the Company's
Board of Directors and management will be designated by TFWI. The transaction
is subject to numerous conditions, including the execution of a definitive
agreement, approvals, if required, of Boards of Directors and shareholders of
both companies, and NASDAQ approval, including the Company's continued listing
of the NASDAQ Small Cap Market. If all conditions are satisfied, of which
there is not assurance, the Company expects to consummate the acquisition by
November, 1997.
The Company further announced on August 4, 1997 that it entered into a non-
binding letter of intent providing for a business combination with Lillie Rubin
Fashions, Inc., a privately-held chain of 38 retail stores that specializes in
better, "special occasion" women's apparel with a focus on higher-priced
fashions and accessories. If consummated, this transaction, along with the
acquisition of TFWI, as specified in the preceding paragraphs, will initially
represent businesses with 47 stores and projected annual revenues of
approximately $41 million.
The acquisition price of this transaction, if consummated, will be
approximately $8.2 million, consisting of cash and the issuance of securities
by the Company. The transaction is also subject to numerous conditions,
including the execution of a definitive agreement, approvals, if required, of
shareholders of the Company, NASDAQ approval, including the Company's continued
listing on the NASDAQ Small Cap Market, and financing. If all conditions are
satisfied, of which there is no assurance, the Company expects to consummate
this acquisition, contemporaneous with the acquisition of TFWI, by November,
1997.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
None.
ITEM 2. CHANGES IN SECURITIES
---------------------
On July 11, 1997, the Board of Directors of the Company
authorized a reduction in the exercise price of the Company's
outstanding Class BB Warrants from $3.00 per share to $1.00 per
share. All other terms of the Class BB Warrants remain
unchanged, and the BB Warrants continue to be exercisable until
April 1, 1999, the expiration date.
ITEM 3. DEFAULT UPON SENIOR SECURITIES
------------------------------
The Company is currently in default under several material
promissory notes and other obligations which, if they remain
uncured, could have a material adverse impact upon the Company's
ability to continue as a going concern.
The Company is currently in default under the SBA loan made by
its subsidiary, Plants For Tomorrow, Inc. ("Plants"). The
obligation of Plants to repay the loan is secured by a senior
mortgage encumbering the Company's nursery located in
Loxahatchee, Florida. While the SBA has not initiated
foreclosure proceedings, under the loan documents it has the
right to foreclose upon the nursery.
A separate subsidiary of the Company, Flying Cow Farms II, Inc.
("Flying Cow") is in default for non-payment under a $199,000
promissory note issued in connection with the purchase by Flying
Cow of the 18-acre nursery located in Homestead, Florida. The
obligation of Flying Cow under the promissory note is secured by
a senior mortgage against the Homestead Nursery. While the
holder of the note has not begun foreclosure proceedings, the
loan documents grant to the holder the right to foreclose upon
the Homestead property in the event of such default.
The Company is also indebted to holders of an aggregate of
$805,000 in bridge notes, all of which matured on June 30, 1997.
While the Company is in default under the bridge notes, the
Company has engaged in negotiations with the holders for an
extension of the notes. Based upon verbal agreements in
principle reached to date, the Company believes that the holders
will execute extensions of the bridge notes upon terms
acceptable to the Company. However, if the notes are not
ultimately extended, or if the Company is unable to retire the
notes on or before the revised maturity date, the Company's
default under the notes would have a material adverse impact
upon the Company's ability to continue as a going concern.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
None.
ITEM 5. OTHER INFORMATION
-----------------
None.
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
Exhibits:
Exhibit No. 27 - Financial Data Schedule
Reports on Form 8-K:
None.
<PAGE>
<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: August 19, 1997 By: /s/ David W. Dube
--------------- -----------------------------
David W. Dube, President
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND
PAGES 3, 4, 5 AND 6 FO THE COMPANY'S FORM 10-QSB FOR THE SIX MONTHS ENDED
JUNE 30, 1997 AND ITS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1997
<CASH> 48,159
<SECURITIES> 0
<RECEIVABLES> 183,935
<ALLOWANCES> 0
<INVENTORY> 734,518
<CURRENT-ASSETS> 1,030,275
<PP&E> 3,616,536
<DEPRECIATION> 411,539
<TOTAL-ASSETS> 4,418,441
<CURRENT-LIABILITIES> 2,349,153
<BONDS> 0
0
0
<COMMON> 120,412
<OTHER-SE> 9,863,583
<TOTAL-LIABILITY-AND-EQUITY> 4,418,441
<SALES> 366,903
<TOTAL-REVENUES> 366,903
<CGS> 379,120
<TOTAL-COSTS> 675,136
<OTHER-EXPENSES> 22,514
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 22,695
<INCOME-PRETAX> (709,867)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (709,867)
<EPS-PRIMARY> (.12)
<EPS-DILUTED> (.12)
</TABLE>
