U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10 - QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from____________ to ___________
Commission file number 0-22964
________
Sel-Drum International, Inc.
____________________________
(Exact name of small business issuer as specified in its charter)
Colorado 84-1236134
________ __________
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
501 Amherst Street, Buffalo, New York 14207-2913
________________________________________________
(Address of principal executive offices)
905-335-2766
____________
(Issuer's telephone number)
Former name:________________________________________________
Former address: 601 Amherst Street, Buffalo, New York 14207-2925
________________________________________________
(Former name, former address and former fiscal year, if changed
since last report)
Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past
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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports
required to be filed by Section 12, 13 or 15(d) of the Exchange
Act after the distribution of securities under a plan confirmed
by court.
Yes [ ] No [ ] (Not Applicable)
________ _________
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date.
Class Outstanding at December 9 , 1996
_______ _________________________________
Common stock no par value 7,642,500 shares
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [ X ]
___________ __________
<PAGE>
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
_____________________________________________
INDEX
_____
PART I: FINANCIAL INFORMATION Page
Item 1. Financial Statements
Unaudited Consolidated Balance Sheet
as of October 31, 1996 3 - 4
and July 31, 1996
Unaudited Consolidated Statements of
Income for the Quarters Ended
October 31, 1996 and October 31, 1995 5
Unaudited Consolidated Statements of
Cash Flows for the Quarters Ended
October 31, 1996 and 1995 6
Notes to Unaudited Consolidated
Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 7
PART II: OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of
Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signature 9
<PAGE>
SEL-DRUM INTERNATIONAL, INC. and SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS
(U.S.$)
<TABLE>
ASSETS
<CAPTION>
CURRENT ASSETS Oct. 31, 1996 July 31, 1996<F1>
______________ _____________ _____________
<S> <C> <C>
Cash and Cash Equivalents $ 840,894 $ 1,181,396
Accounts receivable, net 2,140,793 1,769,211
Deferred Income Tax Benefit 9,400 9,400
Inventories 3,462,381 3,795,766
Loans receivable-
related parties 117,340 114,295
Other Current Assets 107,859 121,659
_________ _________
TOTAL CURRENT ASSETS 6,678,667 6,991,727
PROPERTY
________
Equipment 1,396,333 1,351,522
Vehicles 34,540 34,288
Furniture and Fixtures 39,521 38,134
Leasehold improvements 397,575 387,136
_________ _________
1,867,969 1,811,080
Less accumulated
Depreciation and Amortization 837,848 775,172
_________ _________
1,030,121 1,035,908
OTHER ASSETS
____________
Organization costs, net 10,362 10,608
Purchased and developed
technology, net 64,302 64,819
Deposits 14,402 14,475
_________ _________
89,066 89,902
_________ _________
$ 7,797,854 $ 8,117,537
========= =========
<FN>
<F1> Derived from the July 31, 1996 Form 10-KSB
</FN>
</TABLE>
The accompanying notes are an integral part of the unaudited
consolidated financial statements.
<PAGE>
SEL-DRUM INTERNATIONAL, INC. and SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED BALANCE SHEETS(CONT'D)
(U.S.$)
<TABLE>
LIABILITIES AND
SHAREHOLDERS' EQUITY
<CAPTION>
CURRENT LIABILITIES Oct. 31, 1996 July 31, 1996<F1>
___________________ _____________ _____________
<C> <S> <S>
Notes payable to banks $ 1,490,998 $ 2,074,144
Current portion of long-term debt 61,380 179,948
Accounts payable 1,341,162 1,167,461
Income tax payable 143,030 91,771
Other current liabilities 67,563 219,229
__________ _________
TOTAL CURRENT LIABILITIES 3,104,133 3,732,553
OTHER LIABILITIES
_________________
Long-term debt 132,904 129,465
Deferred income taxes 9,656 9,406
__________ _________
142,560 138,871
SHAREHOLDERS' EQUITY
____________________
Common stock 761,356 761,356
Preferred stock 4,800,180 4,800,180
Additional paid in capital 11,915 11,915
Cumulative foreign currency
translation adjustment -62,827 -110,067
<Accumulated deficit> -959,463 -1,217,271
___________ _________
4,551,161 4,246,113
___________ _________
$ 7,797,854 $8,117,537
=========== =========
<FN>
<F1> Derived from the July 31, 1996 Form 10-KSB
</FN>
</TABLE>
The accompanying notes are an integral part of the unaudited
consolidated financial statement
<PAGE>
SEL-DRUM INTERNATIONAL, INC. and SUBSIDIARIES
PART I: FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
(U.S.$)
<TABLE>
QUARTER ENDED
OCTOBER 31
_____________
<CAPTION>
1996 1995
______ ______
<S> <C> <C>
Net sales $3,937,236 $3,327,694
Cost of goods sold 2,549,255 2,231,219
_________ _________
GROSS PROFIT 1,387,981 1,096,475
Selling, operating and general
and administrative expenses 922,828 858,324
Provision for bad debts 13,697 10,975
_________ _________
INCOME FROM OPERATIONS 451,456 227,176
Other income(expense):
Interest Income 5,545 119
Interest Expense -37,675 -40,877
Foreign currency
transaction gain <loss> 10,433 -
Disposal Fixed Assets gain <loss> 1,154 20,692
_________ ________
-20,543 -20,066
_________ ________
INCOME BEFORE INCOME TAXES 430,913 207,110
Income Taxes:
Current 173,105 62,692
Deferred - -
_________ ________
173,105 62,692
_________ ________
NET INCOME $ 257,808 $ 144,418
========= ========
Number of common shares
outstanding 7,642,500 7,622,000
Net income per common share $ .03 $ .02
========= =========
</TABLE>
The accompanying notes are an integral part of the unaudited
consolidated financial statements.
<PAGE>
SEL-DRUM INTERNATIONAL, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
THREE MONTHS ENDED
OCTOBER 31
__________________
<CAPTION>
1996 1995
____ ____
<S> <C> <C>
CASH FLOWS - OPERATING ACTIVITIES
_________________________________
Net Income $ 257,808 $ 144,418
Adjustments to reconcile net
income to net cash provided
from <used for> operating
activities:
Provision for bad debts 13,697 10,975
Depreciation and amortization 47,832 48,500
Deferred income taxes - -
Gain on Disposal of Property -1,154 -
Changes in certain assets and
liabilities affecting operations:
Accounts receivable -370,461 -124,246
Inventories 333,385 416,215
Other current assets 13,800 -10,273
Deposits 73 221
Accounts payable 173,701 -142,971
Income taxes payable 51,259 -37,969
Other current liabilities -151,666 49,851
_______ _______
NET CASH PROVIDED FROM
OPERATING ACTIVITIES 368,274 354,721
CASH FLOWS - INVESTING ACTIVITIES
_________________________________
Purchases of property -11,875 -36,215
________ _______
NET CASH <USED FOR> INVESTING ACTIVITIES -11,875 -36,215
CASH FLOWS - FINANCING ACTIVITIES
_________________________________
Bank overdraft - 5,070
Loans receivable - related parties -3,045 -1,280
Short-term borrowings net -583,146 128,662
Repayments on long-term debt -115,129 -15,150
Proceeds from Disposal of Assets 2,804 -
________ _______
NET CASH <USED FOR> PROVIDED
FROM FINANCING ACTIVITIES -698,516 117,302
Effect of exchange rate changes on cash 1,615 1,055
________ _______
NET <DECREASE> INCREASE IN CASH -340,502 436,863
Cash and Cash Equivalents at
beginning of period 1,181,396 166,005
_________ _______
CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 840,894 $ 602,868
========= =======
</TABLE>
<PAGE>
SEL-DRUM INTERNATIONAL INC, AND SUBSIDIARIES
PART I: FINANCIAL INFORMATION
NOTES TO THE UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
________________________________________________________
NOTE. MANAGEMENT'S STATEMENT:
_____________________________________
In the opinion of Management the accompanying unaudited
financial statements contain all adjustments (all of which are
normal and recurring in nature) necessary to present fairly the
financial position of Sel-Drum International, Inc. and
Subsidiaries (the Company) at October 31, 1996, and the results
of operations and cash flows for the quarter ended October 31,
1996 and 1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS:
_______ _________________________________________________
1) FINANCIAL CONDITION
___________________
The first quarter results were positive. The Results of
Operations are summarized below.
2) RESULTS OF OPERATIONS
_____________________
Revenues for the first quarter ended October 31, 1996 were
$3,937,236. This was a gain from the revenues of $3,327,694.
in the corresponding quarter of the prior fiscal year.
Gross Profit for the current quarter $1,387,981. ( 35.2 %)
compared favorably with the corresponding quarter ended
October 31, 1995 of $1,096,475. (32.9%).
Administrative Expenses of $936,525.were 23.8% of revenues
for the current quarter compared with the Administrative
Expenses of $869,299 that were 26.1% of revenues for the
corresponding quarter ended October 31, 1995.
Income before taxes in the current quarter improved to
$430,913 from $207,110 earned in the quarter ended October
31, 1995, and the earnings per share increased to $0.03
during the current quarter versus $0.02 for the quarter
ended October 31, 1995.
<PAGE>
PART II: OTHER INFORMATION
__________________________
ITEM 1 LEGAL PROCEEDINGS
______ _________________
During the quarter ended October 31, 1996 litigation was
threatened by a former Sales Agent. No lawsuit has been
filed and management believes the threatened claim has no
merit.
ITEM 2 CHANGE IN SECURITIES
______ ____________________
(a) NONE
(b) NONE
ITEM 3 DEFAULT UPON SENIOR SECURITIES
______ ______________________________
(a) NONE
(b) NONE
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
______ ___________________________________________________
(a) The annual meeting of the Shareholders of the
Company was held on November 6, 1996.
(b) Brian Turnbull, Robert Asseltine, Gerald Maunder, and
Stephen Dadson were elected to serve as Directors of
the Company.
(c) The following additional matters were voted on at the
meeting:
(1) To ratify the appointment of Mengel, Metzger,
Barr and Co. C.P.A.'s as independent auditors
of the Company for the year ended July 31, 1997.
Each of the aforementioned matters was approved unanimously
by the Shareholders at the annual general shareholder's
meeting at which 7,521,194 votes were cast without
abstentions.
ITEM 5 OTHER INFORMATION
______ _________________
(a) NONE
ITEM 6 EXHIBITS AND REPORTS ON FORM 8K
______ _______________________________
(a) Exhibits - there were no new exhibits required to be
filed during the quarter
(b) Reports on Form 8-K filed during the quarter - None
(a report on Form 8K has been subsequently filed on
November 25, 1996).
<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.
SEL-DRUM INTERNATIONAL, INC.
____________________________
(Registrant)
Date: December 12, 1996
_________________________
/s/ Brian Turnbull
_______________________________
Brian Turnbull, President, C.E.O.
/s/ John Hall
_______________________________
John Hall, Financial Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000915401
<NAME> SEL-DRUM INTERNATIONAL
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-END> OCT-31-1996
<CASH> 840894
<SECURITIES> 0
<RECEIVABLES> 2131393
<ALLOWANCES> 0
<INVENTORY> 3462381
<CURRENT-ASSETS> 1867969
<PP&E> 0
<DEPRECIATION> 837848
<TOTAL-ASSETS> 1030121
<CURRENT-LIABILITIES> 3104133
<BONDS> 0
0
4800180
<COMMON> 761356
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 7797854
<SALES> 3937236
<TOTAL-REVENUES> 3937236
<CGS> 2549255
<TOTAL-COSTS> 2549255
<OTHER-EXPENSES> 922828
<LOSS-PROVISION> 13697
<INTEREST-EXPENSE> 37675
<INCOME-PRETAX> 430913
<INCOME-TAX> 173105
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 257808
<EPS-PRIMARY> .03
<EPS-DILUTED> .03
</TABLE>
