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Previous: CYPRESS EQUIPMENT FUND LTD, 10-Q, 1996-08-14 |
Next: NATIONAL REGISTRY INC, 10-Q, 1996-08-14 |
<PAGE> 1
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 JUNE 30, 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 033-27667-FW
STELAX INDUSTRIES LTD.
----------------------
(Exact name of registrant as specified in its charter)
British Columbia NONE
- ---------------- ----
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 4287-A, Belt Line Rd., #195
Dallas, Texas 75244
-------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(214) 416-7123
______________________________________________________________________
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 ( )
The number of shares outstanding of registrant's Common Stock at June 30, 1996:
19,971,527.
<PAGE> 2
INDEX
PART I. FINANCIAL INFORMATION Page
----
ITEM 1. Financial Statements.
1
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations. 5
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K. 6
Signature Page 7
i
<PAGE> 3
PART I
ITEM 1. FINANCIAL STATEMENTS
STELAX INDUSTRIES LTD.
CONSOLIDATED BALANCE SHEETS
(Presented in United States Dollars)
<TABLE>
<CAPTION>
ASSETS
June 30, March 31,
1996 1996
Unaudited
------------ ------------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 584,323 $ 41,147
Accounts receivable-trade 85,447 --
-other 6,600 --
Inventory 85,502 3,365
------------ ------------
Total Current Assets 761,872 44,512
PROPERTY & EQUIPMENT-AT COST:
Plant & Machinery 6,974,328 6,785,493
Building 866,010 810,410
Land 270,136 270,136
------------ ------------
8,110,474 7,866,039
Accumulated Depreciation (88,313) --
------------ ------------
Total Property & Equipment 8,022,161 7,866,039
INTANGIBLE ASSETS (accumulated amortization of
$10,835 at June 30, 1996) 512,655 523,490
OTHER ASSETS 20,628 15,300
------------ ------------
TOTAL ASSETS $ 9,317,316 $ 8,449,341
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 155,354 $ 264,041
Payable to Maritime 1,033,561 1,033,561
Convertible note payable 564,179 --
Accrued interest 73,744 52,899
Payable to related parties (Note 4) 626,898 542,538
------------ ------------
Total Current Liabilities 2,453,736 1,893,039
STOCKHOLDERS' EQUITY (DEFICIT) (Note 5):
Common stock - 50,000,000 shares
authorized, no stated par value;
issued and outstanding 19,971,527 and
18,733,906 shares at June 30, 1996
and March 31, 1996, respectively 11,818,691 11,291,686
Accumulated deficit (4,955,111) (4,735,384)
------------ ------------
$6,863,580 $ 6,556,302
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 9,317,316 $ 8,449,341
============ ============
</TABLE>
See notes to financial statements.
1
<PAGE> 4
STELAX INDUSTRIES LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Presented in United States Dollars)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
June 30, June 30,
1996 1995
------------- ------------
<S> <C> <C>
Sales $ 89,248 $ --
Cost of sales 58,010 --
------------- ------------
Gross Profit 31,238 --
Selling, general and administrative
expenses (including depreciation and amortization
of $99,148 for the period ended June 30, 1996) 228,245 35,147
------------- ------------
Net loss from operations (197,007) (35,147)
Other income (expenses):
Interest expense (20,845) --
Net loss $ 217,852 $ 35,147
============= ============
Net loss per share $ (0.01) $ (0.002)
============= ============
</TABLE>
See notes to financial statements.
2
<PAGE> 5
STELAX INDUSTRIES LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Presented in United States Dollars)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
June 30, June 30,
1996 1995
-------------- -------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss $ (217,852) $ (35,147)
Adjustments to reconcile net loss
to net cash provided by operating
activities:
Depreciation and amortization 99,148 --
Changes in operating assets and
liabilities:
Decrease (increase) in receivables (92,047) --
Decrease (increase) in inventory & other assets (87,465) --
Increase (decrease) in accounts
payable & accrued interest (3,482) 35,117
Foreign currency transaction loss (1,875) --
-------------- -------------
Net cash used in operating activities (303,573) (30)
INVESTING ACTIVITIES
Purchase of property, equipment & intangibles (113,185) --
-------------- -------------
Net cash used by investiing activities (113,185) --
FINANCING ACTIVITIES:
Convertible note payable 564,179 --
Net proceeds from common stock 395,755 --
-------------- -------------
Net cash provided by financing activities 959,934 --
-------------- -------------
Increase (decrease) in cash and cash
equivalents 543,176 (30)
Cash & cash equivalents at beginning
of period 41,147 67
-------------- -------------
Cash & cash equivalents at end of period $ 584,323 $ 37
============== =============
Interest paid $ 0 $ 0
============== =============
Income taxes paid $ 0 $ 0
============== =============
Non Cash Transactions:
Investment acquired by equity issue $ 131,250 $ --
============== =============
Option to purchase investment acquired by equity
issue $ -- $ 500,000
============== =============
</TABLE>
See notes to financial statements.
3
<PAGE> 6
STELAX INDUSTRIES LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(presented in United States dollars)
(Unaudited)
(1) INTERIM FINANCIAL STATEMENTS
In the opinion of management, the interim financial statements reflect all
adjustments necessary to a fair statement of the results for the interim
periods presented. The results for the three months ended June 30, 1996 are
not necessarily indicative of results to be expected for the entire year.
These financial statements, notes and analyses should be read in conjunction
with the Company's annual financials for the fiscal year ended March 31, 1996.
(2) LOSS PER SHARE
Loss per share was based on the weighted average number of common shares,
19,390,909 and 16,166,550 outstanding during the three month period ended June
30, 1996 and 1995, respectively.
(3) INCOME TAXES
The Company has net operating loss carryforwards of approximately $420,000 for
Canada and $141,000 for the U.K.
(4) RELATED PARTY TRANSACTIONS
As of June 30, 1996, funds are owed by the Company totaling $626,898 to the
President of the Company and his affiliates. As of March 31, 1996, the Company
owed such parties $542,538.
(5) STOCKHOLDERS' EQUITY
The Company received a net $1,091,185 from the sale of convertible notes
payable and common stock. Part of the convertible notes payable was converted
by June 30, 1996. Subsequent to June 30, 1996, an additional $491,212 has been
converted.
In April, 1996, the Company granted 375,000 in common stock options at prices
ranging from $2.00 to $5.00 for corporate relation support and consideration
for the Company financing that occurred in the prior year.
(6) SUBSEQUENT EVENT
In July, 1996, the Company completed a public stock offering on the Le Nouveau
Marche, a subordinate trading board of France's Bourse stock exchange for
approximately $10.8 million.
4
<PAGE> 7
PART I
ITEM 2. Management's Discussion And Analysis Of Financial Condition And
Results Of Operations.
Results of Operation.
During the fiscal quarter ended June 30, 1996, the Company commenced
initial shipments of product from its facilty in Wales, United Kingdom.
Revenues were $89,248 with cost of sales of $58,010. The Company's selling,
general and administrative expenses were $228,245 reflecting costs incurred in
maintaining the facility pending completion of the Company's financing which
occurred in July 1996. As the Company acquired the steel mill facility in
November 1995 there are no comparable results of operations for the fiscal
quarter ended June 30, 1995.
Liquidity and Capital Resources
In July 1996 the Company raised $10,800,000 in equity. These funds
are sufficient for the Company to pursue its business objectives to increase to
full production of the Company's steel mill facility and purchase raw inventory
for sales of the Company's stainless steel products.
5
<PAGE> 8
PART II
ITEM 6. Exhibits and Reports on Form 8-K
The Company filed a report on Form 8-K (Report dated May 23, 1996) during the
first quarter for which this Form 10-Q is filed.
6
<PAGE> 9
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
STELAX INDUSTRIES LTD.
Date: August 14, 1996
/s/ Harmon Hardy
-------------------------------------
Harmon Hardy
President/Chief Financial Officer
7
<PAGE> 10
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED
FINANCIAL STATEMENTS AT JUNE 30, 1996 AND FOR THE QUARTER ENDED AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 584,323
<SECURITIES> 0
<RECEIVABLES> 91,447
<ALLOWANCES> 0
<INVENTORY> 85,502
<CURRENT-ASSETS> 761,872
<PP&E> 8,110,474
<DEPRECIATION> 88,313
<TOTAL-ASSETS> 9,317,316
<CURRENT-LIABILITIES> 2,453,736
<BONDS> 0
<COMMON> 11,818,691
0
0
<OTHER-SE> (4,955,111)
<TOTAL-LIABILITY-AND-EQUITY> 9,317,316
<SALES> 89,248
<TOTAL-REVENUES> 89,248
<CGS> 58,010
<TOTAL-COSTS> 228,245
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,845
<INCOME-PRETAX> (217,852)
<INCOME-TAX> 0
<INCOME-CONTINUING> (217,852)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (217,852)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
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