UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended October 31, 1999
Commission file number 000-23250
------------------------
MARKET AMERICA, INC.
(Exact name of registrant as specified in its charter)
------------------------------------------------------
North Carolina 56-1784094
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7605 Business Park Drive
Greensboro, North Carolina
----------------------------------------
(Address of principal executive offices)
27409
----------
(Zip Code)
(336) 605-0040
----------------------------------------------------
(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 / /
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of December 15, 1999.
19,950,000
================================================================================
1
<PAGE>
PART I
ITEM 1 Statement of Financial Position as of October 31, 1999 (Unaudited)
and April 30, 1999
Statement of Operations for the Three and Six-Month Periods Ended
October 31, 1999 and 1998 (Unaudited)
Statement of Changes in Stockholders' Equity for the Six- Month Periods
Ended October 31, 1999 and 1998 (Unaudited)
Statement of Cash Flows for the Six-Month Periods Ended October 31,
1999 and 1998 (Unaudited)
Notes to Financial Statements as of October 31, 1999 (Unaudited)
2
<PAGE>
Statement of Financial Position as of
MARKET AMERICA, INC. October 31, 1999 and April 30, 1999
- --------------------------------------------------------------------------------
(Unaudited)
October 31, 1999 April 30, 1999
---------------- --------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 39,405,120 $ 45,426,920
Securities available for sale 4,490,791 -
Advances to related parties 265,738 187,646
Notes receivable, employees
261,032 92,794
Inventories 2,128,486 1,852,487
Deferred tax assets 165,700 160,000
Other current assets 119,636 156,484
------------- -------------
Total current assets 46,836,503 47,876,331
------------- -------------
PROPERTY AND EQUIPMENT
Yacht 3,610,000 -
Furniture and equipment 1,622,760 1,234,438
Building construction in progress 474,997 33,070
Software 278,795 271,365
Leasehold improvements 23,370 6,370
------------- -------------
6,009,922 1,545,243
Less accumulated depreciation and
Amortization 818,972 653,933
------------- -------------
Total property and equipment 5,190,950 891,310
------------- -------------
OTHER ASSETS
Restricted cash 4,440,064 -
Other 1,101,006 230,856
------------- -------------
Total other assets 5,541,070 230,856
------------- -------------
TOTAL ASSETS $ 57,568,523 $ 48,998,497
============= =============
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
Statement of Financial Position as of
MARKET AMERICA, INC. October 31, 1999 and April 30, 1999
- --------------------------------------------------------------------------------
(Unaudited)
October 31, 1999 April 30, 1999
---------------- --------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $ 70,000 $ 120,000
Accounts payable - trade 1,835,278 1,107,633
Commissions payable 2,496,625 2,280,902
Sales tax payable 834,800 792,438
Income taxes payable 394,533 2,062,211
Other accrued liabilities 620,496 693,256
Unearned revenue 2,558,068 2,259,522
------------- -------------
Total current liabilities 8,809,800 9,315,962
------------- -------------
LONG TERM DEBT - 10,000
------------- -------------
STOCKHOLDERS' EQUITY
Common stock, $.00001 par value;
800,000,000 shares authorized;
19,950,000 shares issued and
outstanding 199 199
Additional paid-in-capital 39,801 39,801
Retained earnings 48,727,260 39,632,535
Other comprehensive income
Unrealized loss on marketable
securities, net (8,537) -
------------- -------------
Total stockholders' equity 48,758,723 39,672,535
------------- -------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 57,568,523 $ 48,998,497
============= =============
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
Statement of Operations for the Three and
MARKET AMERICA, INC. Six-Month Periods Ended October 31, 1999 and 1998 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Three Month Periods Ended Six Month Periods Ended
------------------------- -----------------------
October 31, 1999 October 31, 1998 October 31, 1999 October 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
SALES $ 34,794,209 $ 26,657,219 $ 65,622,913 $ 53,755,009
COST OF SALES 8,624,237 7,075,086 16,633,591 14,012,630
------------- ------------- ------------- -------------
GROSS PROFIT 26,169,972 19,582,133 48,989,322 39,742,379
------------- ------------- ------------- -------------
SELLING EXPENSES
Commissions 15,513,512 12,647,815 29,759,911 24,560,773
Sales tax 3,088 124,503 6,803 120,031
------------- ------------- ------------- -------------
15,516,600 12,772,318 29,766,714 24,680,804
------------- ------------- ------------- -------------
GENERAL and ADMINISTRATIVE
EXPENSES
Salaries 1,408,405 1,057,900 2,603,959 2,040,090
Lease expense 241,930 221,299 502,048 427,370
Consulting 130,791 47,849 216,530 93,406
Depreciation & amortization 82,683 51,875 165,039 102,194
Other operating expense 1,301,245 1,104,492 2,588,288 2,104,293
------------- ------------- ------------- -------------
3,165,054 2,483,415 6,075,864 4,767,353
------------- ------------- ------------- -------------
INCOME FROM OPERATIONS 7,488,318 4,326,400 13,146,744 10,294,222
------------- ------------- ------------- -------------
OTHER INCOME (EXPENSE)
Interest income 526,927 396,977 915,923 786,385
Interest expense (6,207) (832) (6,224) (24,298)
Dividend income 46,744 - 71,449 -
Realized gain (loss) on
Available for sale
securities 490,340 - 148,572 -
Loss on disposal of assets - - - (6,404)
Miscellaneous 206,234 252,724 343,001 414,861
------------- ------------- ------------- -------------
Total other income (expense) 1,264,038 648,869 1,472,721 1,170,544
------------- ------------- ------------- -------------
INCOME BEFORE TAXES 8,752,356 4,975,269 14,619,465 11,464,766
PROVISION FOR
INCOME TAXES 3,212,740 1,851,199 5,524,740 4,465,632
------------- ------------- ------------- -------------
NET INCOME $ 5,539,616 $ 3,124,070 $ 9,094,725 $ 6,999,134
============= ============= ============= =============
BASIC EARNINGS PER COMMON SHARE $ 0.28 $ 0.16 $ 0.46 $ 0.35
============= ============= ============= =============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 19,950,000 19,950,000 19,950,000 19,950,000
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
<TABLE>
Statement of Changes in Stockholders' Equity for the
Six-Month Period Ended October 31, 1999 and 1998
MARKET AMERICA, INC. (Unaudited)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Additional Other
Common Stock Paid-in Retained Comprehensive
Shares Amount Capital Earnings Income Total
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at
April 30,1998 19,950,000 $ 199 $ 39,801 $25,441,510 $ - $25,481,510
Net Income 6,999,134 6,999,134
---------------------------------------------------------------------------------------------
Balance at
October 30,1998 19,950,000 $ 199 $ 39,801 $32,440,644 $ - $32,480,644
=============================================================================================
Balance at
April 30,1999 19,950,000 $ 199 $ 39,801 $39,632,535 $ - $39,672,535
Comprehensive
Income:
Unrealized holding
loss on available for
sale securities, net
of deferred tax
asset of $5,700 (8,537) (8,537)
Net Income 9,094,725 9,094,725
------------
Total
Comprehensive
Income 9,086,188
------------
---------------------------------------------------------------------------------------------
Balance at
October 30,1999 19,950,000 $ 199 $ 39,801 $48,727,260 $ (8,537) $48,758,723
=============================================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
6
<PAGE>
<TABLE>
Statement of Cash Flows for the Six-
Month Periods Ended October 31, 1999 and 1998
MARKET AMERICA, INC. (Unaudited)
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
October 31, 1999 October 31,1998
---------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 9,094,725 $ 6,999,134
Adjustments to reconcile net income to net
cash provided from operating activities:
Loss on sale of assets - 6,404
Depreciation and amortization 165,039 102,194
(Gain) loss on sales of available for sale securities (148,572) -
(Increase) decrease in inventories (275,999) (271,993)
(Increase) decrease in other current assets 36,848 (12,123)
Increase (decrease) in accounts payable 727,645 106,465
Increase (decrease) in commissions payable 215,723 (744,043)
Increase (decrease) in sales tax payable 42,362 (69,278)
Increase (decrease) in income taxes payable (1,667,678) (2,259,247)
Increase (decrease) in other accrued liabilities (72,760) (62,284)
Increase (decrease) in unearned revenue 298,546 40,650
------------- ---------------
NET CASH PROVIDED FROM OPERATING ACTIVITIES 8,415,879 3,835,879
------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of available for sale securities (22,837,806) -
Proceeds from sale of available for sale securities 18,481,350 -
(Increase) decrease in short-term investments - 7,692,279
(Increase) decrease in notes receivable, employees (168,238) (51,411)
Advances to related parties (78,092) (73,611)
(Increase) decrease in other assets (870,150) 1,816
Increase in restricted cash (4,440,064) (2,625)
Proceeds from sale of assets - 23,286
Capital expenditures (4,464,679) (261,133)
------------- ---------------
NET CASH PROVIDED FROM
(USED IN) INVESTING ACTIVITIES (14,377,679) 7,328,601
------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (60,000) (110,609)
------------- ---------------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (6,021,800) 11,053,871
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 45,426,920 18,379,127
------------- ---------------
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 39,405,120 $ 29,432,998
============= ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
Notes to Financial Statements
MARKET AMERICA, INC. October 31, 1999 (Unaudited)
- --------------------------------------------------------------------------------
Interim Financial Information
The unaudited interim financial statements of Market America, Inc. (the
"Company") as of October 31, 1999 and 1998 have been prepared in accordance with
the rules and regulations of the Securities and Exchange Commission. Certain
information and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. In the opinion of
management, the accompanying interim financial statements contain all
adjustments, consisting of normal recurring adjustments, necessary to present
fairly the Company's financial statements as of October 31, 1999 and 1998 and
for the three and six-month periods ended October 31, 1999 and 1998. Management
suggests that these financial statements should be read in conjunction with the
audited financial statements and notes thereto included in the Company's latest
Annual Report on Form 10-K. The results of operations for the three and
six-month periods ended October 31, 1999 may not be indicative of the results
that may be expected for the fiscal year ending April 30, 2000.
Earnings Per Share
The Company computes earnings per share ("EPS") based upon the requirements of
Statement of Financial Accounting Standards No. 128. This statement specifies
the calculation, presentation and disclosure requirements for both basic and
diluted EPS. The Company does not have any securities or contracts outstanding
with dilutive potential for its common shares.
Reclassifications
Certain reclassifications have been made to prior period amounts to conform with
the current period financial statements presentation. Reclassifications made had
no effect on previously reported net income.
Related Party Transactions
The Company has agreements with three companies owned by Mr. & Mrs. James H.
Ridinger, officers and major stockholders of the Company. One agreement allows
the Company to lease real estate in Miami, Florida for use by Company management
when conducting business in Florida. The second agreement is for the lease of a
yacht on a per event basis. The yacht is used as an integral part of the direct
sales training and education activities of the Company. Both the lease
agreements have 5-year terms with options to renew.
The third agreement is a 33-year net ground lease for the site on which the
Company is currently constructing its new headquarters and warehouse facility in
Greensboro, North Carolina. In June 1999, the Company paid $500,000 to the
related party for a Right of First Refusal on this site which provides the
Company with the opportunity to purchase the land, should it be offered for
sale, before the land is offered for sale to other parties. The amount paid will
be applied to the purchase price of the land in the event the Company buys it.
On June 28, 1999, the Company became guarantor of a $1.6 million bank loan to
the related party for the purchase of the land. This loan and the Company's
construction loan (see Liquidity and Capital Resources included in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations section) are cross-collateralized by the land being leased from the
related company and by the building improvement to be constructed thereon by the
Company. The guaranteed loan is repayable over a five-year period following
completion of the building construction.
The amount of rent expense incurred for the three and six-month periods ended
October 31, 1999 was $29,800 and $54,800, respectively, for the real estate in
Miami, Florida, $60,000 and $120,000, respectively, for the yacht and $31,998
and $63,992, respectively, for the land in Greensboro, North Carolina. The board
of directors has determined that the above agreements are equivalent to market
rates. At October 31, 1999 these companies owed the Company $265,738.
During October 1999, the Company agreed to guarantee a future $5.3 million bank
loan to a company owned by Mr. & Mrs. James H. Ridinger, officers and major
stockholders of the Company, for the purchase of a facility in Miami, Florida.
The Company restricted cash of $2.56 million as future collateral for a bank
loan to the related party for the purchase of the facility. The Company plans to
begin leasing this facility in December 1999 for direct sales training and
education, as well as other corporate functions. The lease terms for this
facility are still being negotiated. During October 1999, the Company paid a
$420,000 deposit towards the future lease.
8
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Company had unrestricted and restricted cash on deposit with, and available
for sale debt securities held by, various financial institutions totaling $48.34
as of October 31, 1999 compared to $45.43 million as of April 30, 1999. The
$48.34 million as of October 31, 1999 was comprised of $39.40 million of
unrestricted cash, $4.44 million of restricted cash and $4.50 of available for
sale securities. The restricted cash consisted of $2.56 million in certificates
of deposit, which were restricted for use as collateral for a loan by a
financial institution to a related party (see Related Party Transactions in the
Notes to Financial Statements) and $1.88 million on deposit with a financial
institution for the costs associated with the construction of its new
headquarters and warehouse facility in Greensboro, North Carolina. The available
for sale debt securities were purchased in order to increase the Company's yield
on assets pending use in the Company's business and can be converted into cash
if the need arose.
In June 1999, the Company obtained a construction loan commitment of $2.1
million to be used for the construction of its new headquarters and warehouse
facility in Greensboro, North Carolina. The building is being constructed on
land leased from a related party and is expected to cost approximately $4.6
million. Upon completion, the Company plans to depreciate the building over the
33-year term of the ground lease. The loan will be repayable over a five-year
period following completion of construction and bears interest of 7.625%.
Management believes that the Company's unrestricted cash deposits and expected
cash flows from operations will provide sufficient working capital for the
remainder of the fiscal year.
The significant decrease in cash provided from (used in) investing activities
between the six-month periods ending October 31, 1999 and 1998 is attributed to
a decision by management during fiscal 2000 to restrict $4.44 million for the
purposes of expanding corporate facilities in both North Carolina and Florida.
The Company also expended approximately $4.2 million more on capital
expenditures during the first half of fiscal 2000 when compared to the same
period in fiscal 1999. The large increase in capital expenditures was due
primarily to the purchase of a yacht to be used for direct sales training and
education activities. The yacht was purchased to meet the increased demand by
the Company's distributors for training and education seminars. During the
six-month period ended October 31, 1999, the Company converted $4.5 million of
cash into readily marketable debt securities. During the six-month period ended
October 31, 1998, management converted $7.7 million of short-term investments to
cash.
Results of Operations
The Company's sales continued to grow during the three and six-month periods
ended October 31, 1999. Net sales increased 30.5% to $34.8 million from $26.7
million for the quarter ended October 31, 1999 compared to the same period in
1998. Net sales also increased by 22.1% to $65.6 million from $53.8 million for
the six-month period ended October 31, 1999 compared to same period in 1998.
This growth was a result of the average number of orders received each month
increasing by 14.3% during the 1999 period compared to same 1998 period.
Management believes that its shift in training focus from product retailing to
distributor recruitment partly stimulated the sales growth. The Company is also
still receiving the results of retail training done over the past eighteen
months. The Company's distributors are retailing more products as evidenced by
the Company's revenue from sales aids being at an all time high. The average
dollars spent on sales aids per distributor order increased by 28% during 1999
compared to 1998.
Commission expense was $15.5 million and $12.6 million for the three-month
periods ended October 31, 1999 and 1998, respectively. Commission expense was
$29.8 million and $24.6 million for the six-month periods ended October 31, 1999
and 1998, respectively. Commissions, as a percentage of sales, were 44.6% and
47.5% for the three-month periods ended October 31, 1999 and 1998, respectively,
and 45.4% and 45.7% for the six-month periods ended October 31, 1999 and 1998,
respectively. Management anticipates that commission expense will range from 43%
to 46% of sales during fiscal 2000.
9
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONTINUED
General and administrative expenses were $3.2 million and $2.5 million for the
three-month periods ended October 31, 1999 and 1998, respectively, and $6.1
million and $4.8 million for the six-month periods ended October 31, 1999 and
1998, respectively. As a percentage of sales, general and administrative
expenses were 9.1% and 9.3% for the three-month periods ended October 31, 1999
and 1998, respectively, and 9.3% and 8.9% for the six-month periods ended
October 31, 1999 and 1998, respectively. For the three and six-month periods
ended October 31, 1999 and 1998, other general and administrative expenses
included the following items:
Three-Months Six-Months
Ended October 31, Ended October 31,
1999 1998 1999 1998
---- ---- ---- ----
Legal and
professional fees $ 402,570 $ 340,937 $ 771,092 $ 656,436
Insurance 183,557 201,493 464,826 364,616
Other taxes and
licenses 132,228 112,086 257,257 270,759
Utilities 94,435 66,083 180,152 133,254
Other 488,455 383,893 914,961 679,228
---------- ---------- ---------- ----------
$1,301,245 $1,104,492 $2,588,288 $2,104,293
========== ========== ========== ==========
The increase in general and administrative costs as a percentage of sales for
the six-month period ended October 31, 1999 is a result of the Company's efforts
to expand human resources during the first quarter of the fiscal year to better
serve the Company's distributors. The Company had an 18% larger workforce in the
current period compared to the same period in 1998. This resulted in increased
payroll expenses and employee benefits.
Compared to the 1998 period, the Company incurred larger consulting expenses
during both the three and six-month periods ended October 31, 1999. The
increased costs were a result of the continued development of customized
apparel. Management expects consulting expenses to remain constant throughout
the remainder of fiscal 2000.
Management expects legal expenses to decline substantially during the third and
fourth quarters of fiscal 2000 as a result of the conclusion of the Securities
and Exchange Commission administrative proceeding on May 4, 1999.
Year 2000 Issue
The Year 2000 (Y2K) issue stems from the use of two digits rather than four to
define calendar dates. By using two digit dates, systems may fail or make
miscalculations due to their inability to distinguish dates in the 1900s from
dates in the 2000s. The Company continues to aggressively address the business
issues associated with the Year 2000 issue. The Company has formed a Year 2000
task force and has implemented a compliance plan.
The Company has upgraded approximately 85% of its core operating systems to be
Year 2000 compliant. The Company purchased a test system in order to run test
transactions with dates beyond January 1, 2000. This allowed the Company's task
force personnel to determine what changes were needed in the current systems.
The costs incurred by the Company for the completed upgrades were approximately
$31,000, excluding internal costs that the Company does not track. In order to
complete the conversion of the remaining 15% of the core operating systems to
Y2K compliance, the Company is currently contracting with outside vendors to
update the voice response system. Upgrades to this system are in the final stage
of implementation. The expected costs of these updates are approximately $5,000.
The Company expects that the majority of all necessary upgrades for Y2K
compliance will be completed by December 31, 1999.
10
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - CONCLUDED
Testing on application software will continue into the third quarter of fiscal
2000. Currently, the Company is converting the sales, order entry and credit
file applications with the use of internal personnel. During fiscal 1999, the
Company upgraded the following software to the current Y2K compliant version:
accounting, sales tax and shipping applications. The Company expects the
internal conversions and testing of the upgraded application software to be
completed and, therefore, Year 2000 compliant by December 31, 1999.
If the Company's systems for commission calculation and payment are not Y2K
compliant by December 31, 1999 it could have a material adverse effect on the
Company's financial statements. However, the Company has tested these systems
and believes they are compliant.
In addition, the Company has requested information regarding Year 2000
compliance plans and current status from 69 of it's most significant vendors and
financial institutions. Management has determined that the remaining vendors
would not have a significant impact on the Company's operations due to Year 2000
noncompliance. Currently, 60.1% of the parties contacted have responded, with
only 19.1% of respondents certifying in writing that they are fully Y2K
compliant. At present, the Company is not aware of any significant risk exposure
associated with the parties that have not either certified their Y2K compliance
or responded. As a result, the Company is unable to predict the impact on its
business if such parties are unable to comply. In order to reduce any such
impact, the Company has contacted backup vendors for its significant products
and may increase inventory levels during the fourth calendar quarter for
products which are obtained from vendors who have not certified their Y2K
compliance.
Forward-Looking Information
Statements in this report concerning the Company's business outlook for future
economic performance, anticipated profitability, revenues, expenses or other
financial items, together with other statements that are not historical facts,
are "forward-looking statements" as that term is defined under federal
securities laws. "Forward-looking statements" are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from those stated in such statements. Such risks, uncertainties and
factors include, but are not limited to, decreases in sales volume or number of
distributors, unfavorable regulatory action, loss of key personnel and general
economic conditions.
11
<PAGE>
PART II
ITEM 1 LEGAL PROCEEDINGS
The Company is periodically involved in routine litigation
incidental to its business, including litigation involving
distributor terminations. Management believes that any such pending
litigation will not have a material effect on the Company's
financial position or results of operations.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual meeting of the stockholders of the Company was held on
August 26, 1999. At the meeting, the Board of Directors as
previously reported to the SEC, consisting of James H. Ridinger,
Loren A. Ridinger, Dennis J. Franks and Marty Weissman, was
unanimously re-elected in its entirety. No other matters were voted
on by the stockholders at the meeting.
ITEM 5 OTHER INFORMATION
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The exhibits to this report are listed in the Exhibit Index,
which is incorporated herein by reference.
(b) REPORTS ON FORM 8-K
NONE
12
<PAGE>
- --------------------------------------------------------------------------------
SIGNATURE
- --------------------------------------------------------------------------------
Pursuant to the requirements of Section 13 or 15 (d) 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.
MARKET AMERICA, INC.
(Registrant)
Date: December 15, 1999 /s/ James H. Ridinger
- ----------------------- -----------------------------------
James H. Ridinger, President and CEO
(Principal Executive Officer and
Principal Financial Officer)
13
<PAGE>
EXHIBITS TO FORM 10-Q
EXHIBIT INDEX
Exhibit
Number Identification
- ----------- --------------
2.1 Agreement and Plan of Merger dated as of October 31, 1993 between
Atlantis Ventures, Inc. and Market America, Inc. and Addendum (to
same)dated October 1, 1993 (incorporated by reference to Exhibits
2.1 and 2.2, respectively, to the Company's Current Report on Form
8-K filed October 6, 1993, Commission File No. 000-23250)
3.1 Articles of Incorporation of the Company (incorporated by
reference to Exhibit 3.1 to the Company's Current Report on Form
8-K filed with the Commission on November 3, 1993, Commission File
No. 000-23250)
3.2 Articles of Amendment of the Company (incorporated by reference to
Exhibit 3.1 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 30, 1996 filed with the Commission on July
30, 1996, Commission File No. 000-23250)
3.3 By-laws of the Company (incorporated by reference to Exhibit 3.4
to the Company's Annual Report on Form 10-K for the fiscal year
ended April 30, 1996 filed with the Commission on July 30, 1996,
Commission File No. 000-23250)
10.1 Lease between Miracle Marine, Inc. and Market America, Inc. dated
May 1, 1998 (incorporated by reference to Exhibit 10.1 to the
Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1999 filed with the Commission on July 29, 1999,
Commission File No. 000-23250)
10.2 Vendor agreement between Market America, Inc. and Isontonix (x)
Corporation dated October 25, 1993 (incorporated by reference to
Exhibit 10.2 to the Company's Annual Report on Form 10-K for the
fiscal year ended April 13, 1998 filed with the Commission on
August 13, 1998, Commission File No. 000-23250)
10.3 Lease between Miracle Properties LLC and Market America, Inc.
dated May 1, 1998 (incorporated by reference to Exhibit 10.3 to
the Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1999 filed with the Commission on July 29, 1999,
Commission File No. 000-23250)
10.4 Lease between Miracle Holdings LLC and Market America, Inc. dated
November 1, 1998 (incorporated by reference to Exhibit 10.4 to the
Company's Annual Report on Form 10-K for the fiscal year ended
April 30, 1999 filed with the Commission on July 29, 1999,
Commission File No. 000-23250)
10.5 Right of First Refusal agreement between Market America, Inc. and
Miracle Holdings LLC dated May 20, 1999 (incorporated by reference
to Exhibit 10.5 to the Company's Annual Report on Form 10-K for
the fiscal year ended April 30, 1999 filed with the Commission on
July 29, 1999, Commission File No. 000-23250)
27* Financial Data Schedule
- -------------------------
o Filed herewith.
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Statement of Financial Position at October 31, 1999 and the Statement of
Operations for the six-month period ended October 31, 1999 and is in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000880121
<NAME> Market America, Inc.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<CASH> 39,405,120
<SECURITIES> 4,490,791
<RECEIVABLES> 526,770
<ALLOWANCES> 0
<INVENTORY> 2,128,486
<CURRENT-ASSETS> 46,836,503
<PP&E> 5,190,950
<DEPRECIATION> 818,972
<TOTAL-ASSETS> 57,568,523
<CURRENT-LIABILITIES> 8,809,800
<BONDS> 0
0
0
<COMMON> 199
<OTHER-SE> 48,758,524
<TOTAL-LIABILITY-AND-EQUITY> 57,568,523
<SALES> 65,622,913
<TOTAL-REVENUES> 65,622,913
<CGS> 16,633,591
<TOTAL-COSTS> 16,633,591
<OTHER-EXPENSES> 35,842,578
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,224
<INCOME-PRETAX> 14,619,465
<INCOME-TAX> 5,524,740
<INCOME-CONTINUING> 13,146,744
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,094,725
<EPS-BASIC> 0.46
<EPS-DILUTED> 0.46
</TABLE>
