<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ........ to .......
COMMISSION FILE NUMBER 33-27603
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NORTH AMERICAN INTEGRATED MARKETING, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-2942013
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
999 McBride Avenue, Suite 200A
West Paterson, New Jersey 07424
(Address of principal executive offices)
(201) 890-7330
(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 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.
YES X NO
---- ---- -
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
Please refer to the following pages for the financial statements of North
American Integrated Marketing, Inc. (the "Company") for the first quarterly
period ended March 31, 1996
NORTH AMERICAN INTEGRATED MARKETING, INC.
BALANCE SHEETS
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
3/31/96 12/31/96
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash $ 158,982 $ 520,865
Accounts receivable, less allowance for
doubtful accounts of $32,093 and $29,093 3,835,771 1,553,619
Prepaid and deferred expenses, and other assets 158,282 117,482
---------- ----------
Total current assets 4,153,035 2,191,966
FURNITURE AND EQUIPMENT, at cost less
accumulated depreciation 287,724 230,444
---------- ----------
TOTAL ASSETS $4,440,759 $2,442,410
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 111,868 $ 84,894
Accounts payable-related company 3,770,493 1,893,205
Income taxes payable 84,860 38,503
Accrued expenses and other current liabilities 106,227 93,360
Deferred revenue - 43,300
Current maturities of long-term debt 16,928 16,928
---------- ----------
Total current liabilities 4,090,376 2,170,190
LONG-TERM DEBT 3,069 7,175
SHAREHOLDERS' EQUITY
Common stock, $.00001 par value; 50,000,000 shares
authorized; 16,040,073 shares issued, of which 1,920,000
shares are held as treasury stock 160 160
Paid-in capital 55 55
Retained earnings 352,099 249,830
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352,314 250,045
Less treasury stock, at cost (5,000) (5,000)
---------- ----------
347,314 245,045
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TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $4,440,759 $2,422,410
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NORTH AMERICAN INTEGRATED MARKETING, INC.
STATEMENTS OF INCOME
FOR THE THREE MONTHS PERIOD ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Net revenue $3,229,802 $ 807,563
Costs and expenses
Cost of revenue
Related company 2,320,217 163,371
Other 415,226 236,287
---------- ----------
2,735,443 399,658
Selling, general and administrative expense 297,747 318,381
Provision for doubtful accounts 3,000 6,000
Interest expense 469 793
Depreciation and amortization 19,873 10,782
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3,056,532 735,614
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Income before income taxes 173,270 71,949
Provision for income taxes 71,000 30,700
---------- ----------
Net income $ 102,270 $ 41,249
========== ==========
Income per common share-primary
and fully diluted (14,120,073 shares)
Net Income $ 0.0072 $ 0.0029
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NORTH AMERICAN INTEGRATED MARKETING, INC.
COMPARATIVE STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED MARCH 31
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 102,270 $ 41,249
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 19,873 10,782
(Increase) decrease in:
Accounts receivable, net (2,282,152) (258,988)
Prepaid and other assets (40,800) (20,771)
Increase (decrease) in:
Accounts payable 26,974 (44,781)
Accounts payable-related company 1,877,288 130,042
Income taxes payable 46,357 (4,500)
Accrued expenses and other current liabilities 12,867 58,862
Deferred revenue (43,300) 18,938
---------- ----------
Cash used in operating activities (280,623) (69,167)
Cash flows from investing activities:
Purchase of furniture and equipment (77,154) (12,550)
Cash used in investing activities-discontinued operations - 13,073
---------- ----------
Net cash (used in) provided by investing activities (77,154) 523
---------- ----------
Cash flows from financing activities:
Repayments of long-term debt (4,106) (3,778)
---------- ----------
Net cash used in financing activities (4,106) (3,778)
---------- ----------
Net decrease in cash (361,883) (72,422)
Cash at beginning of period 520,865 275,738
---------- ----------
Cash at end of period $ 158,982 $ 203,316
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
NORTH AMERICAN INTEGRATED MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1996
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
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 month period ended March 31, 1996, are not
necessarily indicative of the results that may me expected for the year ended
December 31, 1996. For further information, refer to the financial statement
footnotes thereto included in North American Integrated Marketing, Inc.'s annual
report on Form 10-K for the year ended December 31, 1995.
NOTE 2 - DISCONTINUED OPERATIONS
In September 1994, the Company announced the closing of its production services
division in Pasadena, California. The closing of the division has been accounted
for as discontinued operations and prior year financial statements have been
restated to reflect the closing of the division. The assets (liabilities) of
discontinued operations have been classified in the balance sheet as net assets
of discontinued operations.
NOTE 3 - FURNITURE AND EQUIPMENT
Furniture and equipment consists of the following:
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
--------- ------------
<S> <C> <C>
Office furniture and equipment $ 55,373 $ 41,090
Transportation equipment 135,737 135,737
Computer equipment and software 342,282 279,417
-------- --------
533,392 456,244
Less accumulated depreciation 245,668 225,800
-------- --------
$287,724 $230,444
======== ========
</TABLE>
NOTE 4 - SUPPLEMENTAL CASH FLOW INFORMATION
Selected cash payments were as follows:
March 31
--------------
1996 1995
---- ----
Cash payments for income taxes $21,043 $35,200
======= =======
Cash payments for interest $ 469 $ 793
======= =======
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
(A) RESULTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 1996 COMPARED TO THREE
MONTHS ENDED MARCH 31, 1995
Revenue
- - -------
Net revenue increased $2,422,239 in 1996 from $807,563 to $3,229,802 as compared
to 1995. The net increase in revenue was primarily due to the growth of
advertising and marketing services provided to existing customers First USA,
Marine Midland, Bank of New York (Delaware) and sales generated from several new
customers.
Cost of Revenue
- - ---------------
The Company's cost of revenue, as a percentage of sales, was 49.4% and 84.6% in
1995 and 1996, respectively. The increase in cost of revenue resulted primarily
from costs associated with the growth of advertising and marketing services
provided and the use of a related party and outside vendors to fulfill this
demand and additional cost increases, primarily salaries, resulting from the
cost of additional staff to support the increased growth and revenue increase.
Selling, General and Administrative Expenses
- - --------------------------------------------
Selling, general and administrative expenses decreased $20,634. The decrease
resulted primarily from decreased consulting expenses in 1996 as compared to
1995, when professional recruiting services were used to fulfill additional
staffing requirements.
Depreciation and Amortization
- - -----------------------------
Depreciation and amortization increased $9,091. The increase resulted primarily
from the purchase of Company assets.
(B) LIQUIDITY AND CAPITAL RESOURCES
Liquidity
- - ---------
As of March 31, 1996 the Company had a working capital of $133,659 compared to
the related capital of $21,776 at December 31, 1995. Contributing to the 1996
increase in the Company's working capital deficit was the net income for the
period. Liquidity was enhanced in 1996 by the extended trade credit provided by
a related company, which allowed the Company to avoid any borrowing on its line
of credit. As of March 31, 1996, the amount available under the Company's line
of credit was $500,000.
From its inception the Company has funded its operating requirements through a
revolving line of credit, extended credit from related companies and revenue
generated from operations.
Capital Resources
- - -----------------
During the three months ended March 31, 1996 and 1995 the average outstanding,
short term debt was $-0-. During the three months ended March 31, 1996, the
Company did not make any material commitment for capital expenditures beyond the
replacement of vehicles and computer equipment. The Company believes the same
will hold true for the remainder of the year.
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
-----------------
There is no material litigation or other proceeding currently pending against
the registrant.
ITEM 2. CHANGE IN SECURITIES
--------------------
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
-------------------------------
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
No matters were submitted to a vote of security holders, through solicitation of
proxies or otherwise, during the quarter ended March 31, 1996.
ITEM 5. OTHER INFORMATION
-----------------
The Net Income per common share of $0.0072 for the three month period ended
March 31, 1996 is calculated as follows:
<TABLE>
<S> <C>
Common shares outstanding 16,040,073
Net Income $ 102,270
Per share - Primary and fully diluted $ 0.0072
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
The Company filed a Form 8-K on March 29, 1996, notifying the Securities and
Exchange Commission pursuant to Item 4 of Form 8-K, that the Company's
independent accountant, Wengryn, Hughan & Co., Inc., had resigned and that it
had engaged Thompson Dugan, PC as its certifying accountant for the performance
of accounting and financial reporting services.
<PAGE>
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.
NORTH AMERICAN INTEGRATED MARKETING, INC.
(REGISTRANT)
/s/ Robert Paltrow
-------------------------------------------
(signature)
Name: Robert Paltrow
Title: President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995
<PERIOD-START> JAN-01-1996 JAN-01-1995
<PERIOD-END> MAR-31-1996 MAR-31-1995
<CASH> 158,982 520,865
<SECURITIES> 0 0
<RECEIVABLES> 3,867,864 1,582,712
<ALLOWANCES> 32,093 29,093
<INVENTORY> 0 0
<CURRENT-ASSETS> 4,153,035 2,191,966
<PP&E> 533,393 456,245
<DEPRECIATION> 245,669 225,801
<TOTAL-ASSETS> 4,440,759 2,422,410
<CURRENT-LIABILITIES> 4,090,376 2,170,190
<BONDS> 0 0
0 0
0 0
<COMMON> 160 160
<OTHER-SE> 352,099 249,830
<TOTAL-LIABILITY-AND-EQUITY> 4,440,759 2,422,410
<SALES> 3,228,129 802,880
<TOTAL-REVENUES> 3,229,802 807,563
<CGS> 2,473,632 220,538
<TOTAL-COSTS> 2,735,443 399,658
<OTHER-EXPENSES> 297,747 318,381
<LOSS-PROVISION> 3,000 6,000
<INTEREST-EXPENSE> 469 793
<INCOME-PRETAX> 173,270 71,949
<INCOME-TAX> 71,000 30,700
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 102,270 41,249
<EPS-PRIMARY> .007 .002
<EPS-DILUTED> 0 0
</TABLE>
