UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------
FORM 10-QSB
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended March 31, 1998 Commission File Number 0-23236-NY
MASTER GLAZIER'S KARATE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 22-3234110
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 N. Broadway, Suite 240
Jericho, New York 11753
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (516) 932-2201
Piscataway Center, 377 Hoes Lane, Piscataway, New Jersey 08854
(Former name,former address and former 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 of 15(d) of the Securities and 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
As of May 15, 1998 there were 4,070,002 shares of $.0001 par value common stock
outstanding.
Transitional Small Business Disclosure Format
Yes No X
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MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
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INDEX TO FORM 10-QSB
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Item 1: Financial Statements:
Consolidated Balance Sheet..................................... 1.....2
Consolidated Statements of Operations.......................... 3
Consolidated Statements of Cash Flows.......................... 4
Notes to Consolidated Financial Statements..................... 5
Item 2:Management's Discussion and Analysis of Financial Condition
and Results of Operations................................. 6
Signature Page................................................... 7
. . . . . . . . .
<PAGE>
Item 1: Financial Statements
MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998.
[UNAUDITED]
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Assets:
Current Assets:
Cash and Cash Equivalents $ 1,246,645
Cash Held in Escrow 933
Marketable Securities 190,000
Accounts Receivable - Net 49,564
Inventory 380,630
Prepaid Expenses and Miscellaneous Receivables 7,718
Notes Receivable - Current Portion 102,646
Accrued Interest 7,703
-----------
Total Current Assets 1,985,839
-----------
Property and Equipment:
Office Equipment 63,567
Furniture and Fixtures 84,254
Leasehold Improvements 100,210
Vehicles 32,558
-----------
Total - At Cost 280,589
Less: Accumulated Depreciation 179,427
-----------
Property and Equipment - Net 101,162
-----------
Other Assets:
Security Deposits 70,434
Notes Receivable - Long-Term 93,334
-----------
Total Other Assets 163,768
-----------
Total Assets $ 2,250,769
===========
The Accompanying Notes are an Integral Part of These Financial Statements.
1
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MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
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CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1998.
[UNAUDITED]
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Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts Payable and Accrued Expenses $ 100,401
Deferred Revenue 133,083
-----------
Total Current Liabilities 233,484
Long-Term Liability:
Deferred Revenue 68,559
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Total Liabilities 302,043
Commitments and Contingencies --
Stockholders' Equity:
Preferred Stock, No Par Value; 1,000,000 Shares Authorized --
Common Stock, $.0001 Par Value; 40,000,000 Shares
Authorized, 4,070,002 Issued and Outstanding 407
Paid-in Capital 8,237,831
Unrealized Holding Loss (8,500)
Accumulated Deficit (6,281,012)
-----------
Total Stockholders' Equity 1,948,726
-----------
Total Liabilities and Stockholders' Equity $ 2,250,769
===========
The Accompanying Notes are an Integral Part of These Financial Statements.
2
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MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF OPERATIONS
[UNAUDITED]
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Three months ended
March 31,
1 9 9 8 1 9 9 7
------- -------
Net Sales $ 191,890 $ 190,581
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Costs and Expenses:
Costs of Accessories Sold 11,320 7,817
Salaries and Payroll Taxes 143,241 143,211
Rent Expense 41,317 40,999
Other General and Administrative Expenses 68,809 108,750
---------- -----------
Total Costs and Expenses 264,687 300,777
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[Loss] from Operations (72,797) (110,196)
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Other Income [Expense]:
Interest Income 31,127 20,494
Lease Cancellation Fee -- (76,707)
Gain on Sale of Assets -- 1,836
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Other Income [Expense] - Net 31,127 (54,377)
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[Loss] Before Federal and State Taxes (41,670) (164,573)
Provision for Income Taxes -- --
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Net [Loss] $ (41,670) $ (164,573)
========== ===========
Net [Loss] Income Per Share $ (.01) $ (.08)
========== ===========
Weighted Average Shares Outstanding 4,070,000 2,070,000
========== ===========
The Accompanying Notes are an Integral Part of These Financial Statements.
3
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MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS
[UNAUDITED]
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Three months ended
March 31,
1 9 9 8 1 9 9 7
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Operating Activities:
Net [Loss] $ (41,670) $ (164,573)
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Adjustments to Reconcile Net [Loss] to Net Cash
[Used for] Operating Activities:
Depreciation and Amortization 7,294 9,987
[Gain] on Sale of Assets -- (1,836)
Changes in Assets and Liabilities:
[Increase] Decrease in:
Accounts Receivable (35,067) 22,232
Inventory (368,300) 7,600
Prepaid Expenses 522 (9,874)
Increase [Decrease] in:
Accounts Payable and Accrued Expenses (56,725) 33,184
Deferred Revenue (60,951) (38,382)
---------- -----------
Total Adjustments (513,227) 22,911
---------- -----------
Net Cash - Operating Activities (554,897) (141,662)
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Investing Activities:
Purchase of Property and Equipment -- (1,943)
Proceeds from Sale of Property and Equipment -- 7,000
Payments Received on Notes Receivable 9,354 --
Security Deposits (16,978) 637
---------- -----------
Net Cash - Investing Activities (7,624) 5,694
---------- -----------
Financing Activities:
Proceeds from Stock Exchange Agreement -- 900,000
---------- -----------
Net [Decrease] Increase in Cash and Cash Equivalents (562,521) 764,032
Cash and Cash Equivalents - Beginning of Periods 1,809,166 1,332,776
---------- -----------
Cash and Cash Equivalents - End of Periods $1,246,645 $ 2,096,808
========== ===========
The Accompanying Notes are an Integral Part of These Financial Statements.
4
<PAGE>
MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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[1] Summary of Significant Accounting Policies
Significant accounting policies of Master Glazier's International, Inc. and
subsidiaries are set forth in the Company's Form 10-KSB for the year ended
December 31, 1997 as filed with the Securities and Exchange Commission.
[2] Basis of Reporting
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- QSB. Accordingly, they do not include all
of the information and disclosures required by generally accepted accounting
principles for completed financial statements. In the opinion of management,
such statements include all adjustments [consisting only of normal recurring
items] which are considered necessary for a fair presentation of the financial
position of the Company at March 31, 1998 and the results of their operations
and their cash flows for the three month periods ended March 31, 1998 and 1997.
It is suggested that these financial statements be read in conjunction with the
financial statements and notes for the year ended December 31, 1997 included in
the Master Glazier's Karate International, Inc. Form 10-KSB.
Earnings per share for the three months ended March 31, 1998 were not adjusted
for the exercise of options and warrants outstanding since their assumed
exercise would be anti-dilutive.
[3] Asset Purchase Agreement
During March 1997, the Company completed its closing on the sale of
substantially all of the assets of five of its karate centers located in New
Jersey and New York to Tiger Shulmann's Karate ["TSK"]. In consideration for the
purchase of the assets, TSK paid the Company an aggregate of $505,000 at
closing, consisting of $225,000 in cash, and an aggregate of $280,000 in three
promissory notes.
[4] Subsequent Events
On April 15, 1998, Master Glazier's Karate International, Inc. [the
"Registrant"] was advised by the NASDAQ Stock Market that it failed to meed the
continued listing requirements of the NASDAQ Stock Market.
In April 1998, the Registrant commenced operating a new vitamin and nutritional
supplement business [the "Supplement Business"] based in Plainview, New York,
the Supplement Business intends to distribute, market and sell vitamins,
nutritional supplements and non-pharmaceutical over-the-counter products to both
wholesale and retail markets as well as acting as a fulfillment center for the
distribution of nutritional products, for the third party companies.
The Company is currently moving its offices from its current address in Jericho,
New York to Plainview, New York. The Company has entered into a 3-year lease
with an initial annual rent of $106,452 with 4% annual increases.
. . . . . . . . .
5
<PAGE>
Item 2:
MASTER GLAZIER'S KARATE INTERNATIONAL, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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For the Three Months Ended March 31, 1998 as Compared to Three Months Ended
March 31, 1997
The Company's sales for the three months ended March 31, 1998 were $191,890. The
sales include membership and other goods sold at two of the Company's Karate
Centers. The amount of other goods sold at the Karate Centers amounted to
$18,041.
At March 31, 1997, the Company had sales of $190,581. The sales resulted
primarily from memberships sold at the Karate Centers; $14,322 resulted from the
sale of other goods.
Sales for the two schools remained relatively constant for 1997 and 1998.
The net [loss] for the three months ended March 31, 1998 and 1997 was $(41,670)
and $(164,573), respectively.
General and administrative expenses decreased by $39,593 for the three month
period ended March 31, 1998 compared to March 31, 1997. The decrease was based
on the decrease in operating expenses pertaining to the five karate centers
which were sold.
The major components of general and administrative expenses for the periods
discussed are as follows:
March 31,
1 9 9 8 1 9 9 7
Salaries and Payroll Taxes $ 143,241 $ 143,211
Rent 41,317 40,999
Other General and Administrative Expenses 68,809 108,750
---------- ----------
Totals $ 253,367 $ 292,960
------ ========== ==========
Liquidity and Capital Resources
Cash and cash equivalents [decreased]/increased for the three months ended March
31, 1998 and 1997 by $(562,521) and $764,032, respectively. Cash and cash
equivalents utilized for operations for the three months ended March 31, 1998
and 1997 was $554,897 and $141,662, respectively.
Cash and cash equivalents from investing activities for the three months ended
March 31, 1998 and 1997 was $(7,624) and $5,694, respectively.
Cash and cash equivalents from financing activities for the three months ended
March 31, 1997 was $900,000. This was a result of the proceeds from the Stock
Exchange Agreement.
6
<PAGE>
SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1994, the
Registrant has duly caused this report on form 10-QSB to be signed on its behalf
by the undersigned thereunto duly authorized.
Master Glazier's Karate International, Inc.
Date: May 22, 1998 By: /s/ Mark Glazier
----------------
Mark Glazier, Chief Financial Officer
7
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of operations and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 1,246,645
<SECURITIES> 190,000
<RECEIVABLES> 49,564
<ALLOWANCES> 0
<INVENTORY> 380,630
<CURRENT-ASSETS> 1,985,839
<PP&E> 280,589
<DEPRECIATION> 179,427
<TOTAL-ASSETS> 2,250,769
<CURRENT-LIABILITIES> 233,484
<BONDS> 0
0
0
<COMMON> 407
<OTHER-SE> 1,948,319
<TOTAL-LIABILITY-AND-EQUITY> 2,250,769
<SALES> 191,890
<TOTAL-REVENUES> 191,890
<CGS> 11,320
<TOTAL-COSTS> 264,687
<OTHER-EXPENSES> 31,127
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (41,670)
<INCOME-TAX> 0
<INCOME-CONTINUING> (41,670)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (41,670)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
