10QSB 1 k59551e10qsb.txt FORM 10-QSB 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended November 30, 2000 Commission File Number 0-7795 KNUSAGA CORPORATION (Exact name of Registrant as specified in its charter) DELAWARE (State or other jurisdiction of incorporation or organization) 62-1004034 (I.R.S.) Employer Identification Number 3578 S. VAN DYKE ALMONT, MI 48803 (Address of principal executive office and zip code) Registrant's telephone number (include area code): (810) 798-8567 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 twelve months (or 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. X YES NO ----- ----- Shares of Common Stock Par Value $.01, outstanding: 7,000,000. -1- 2 RESULTS OF OPERATIONS Net sales decreased 24.4% in the first quarter of the fiscal year ending August 2001 to $2,529,139 from $3,343,516 a year ago. This is a result of a sharp decline in both of the markets served by the registrant, heavy trucks and recreational vehicles. There did not appear to be any decline in the registrant's market share in either of these markets The registrant operated at a $99,041 loss in the first quarter of the 2000 fiscal year versus a profit of $10,185 in the first quarter a year ago. The before tax loss from operations was $31,817, but in addition the registrant wrote off $88,832 of receivables as a result of the liquidation of one of the registrant's seat track distributors. Selling, general and administrative expenses decreased 1.8% to $297,249 in the first quarter of fiscal 2001 versus $302,724 in the year ago quarter. The Company's operations are classified into two principal reportable segments that provide different products or services. Separate management of each segment is required because each business unit is subject to different marketing, production and technology strategies. Below is summarized segmental data for the three months ended November 30, 2000 and 1999.
TUBING SEAT TRACK TOTAL 2000 1999 2000 1999 2000 1999 External Revenue 1,785,058 2,353,083 744,081 990,433 2,529,139 3,343,516 Intersegment Revenue 0 0 0 0 0 0 Profit (loss) (173,464) (126,463) 36,786 136,648 (136,678) 10,185
LIQUIDITY AND SOURCES OF CAPITAL $407,253 of shareholder debt plus $517,927 of accrued interest was converted to paid in capital during the first quarter of fiscal 2001. There was no net effect on cash but equity increased by $925,180. Operations during the quarter consumed $17,879 of cash, equipment purchases consumed $43,286, and there was a reduction in bank debt of $91,670 resulting in negative cash flow of $152,835 for the quarter. CONTINGENT MATTERS There are no contingencies or consequential uncertainties known that will materially affect the financial information as presented. -2- 3 KNUSAGA CORPORATION BALANCE SHEET (UNAUDITED) NOVEMBER 30, 2000
ASSETS November 30, 2000 CASH $ 296,078 ACCOUNTS RECEIVABLE $1,600,156 ACCOUNTS RECEIVABLE - OTHER $ 144,195 INVESTMENT IN JOINT VENTURE $ 18,568 INVENTORIES $1,310,921 PREPAID EXPENSE $ 57,167 ---------- TOTAL CURRENT ASSETS $3,427,085 NET PROPERTY, PLANT AND EQUIPMENT $2,414,850 OTHER ASSETS $ 15,205 ---------- TOTAL ASSETS $5,857,140 LIABILITIES ACCOUNTS PAYABLE $1,320,107 NOTES PAYABLE $1,480,041 ACCRUED LIABILITIES $ 287,951 ---------- TOTAL CURRENT LIABILITIES $3,088,099 LONG TERM DEBT $ 364,678 TOTAL LIABILITIES STOCKHOLDERS EQUITY (DEFICIENCY) Common Stock, par value $.01 per share authorized $ 70,007 7,000,000 shares issued and outstanding Preferred stock, par value $.01 per share $ 175,000 authorized 500,000 shares, issued and outstanding 175,000 of Class A $1.00 stated value, 4% non-cumulative, non-voting ADDITIONAL PAID-IN CAPITAL $1,291,545 RETAINED EARNINGS $ 867,811 ---------- TOTAL STOCKHOLDERS EQUITY $2,404,363 ---------- TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $5,857,140
-3- 4 KNUSAGA CORPORATION STATEMENT OF INCOME (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999
(UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 2000 NOVEMBER 30, 1999 NET SALES $ 2,529,139 $ 3,343,516 COST OF GOODS SOLD $ 2,208,777 $ 2,959,677 ----------- ----------- GROSS PROFIT $ 320,361 $ 383,839 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES $ 423,338 $ 302,724 MISC. INCOME (EXPENSE) ($ 55,307) ($ 50,421) ----------- ----------- INCOME (LOSS) BEFORE TAXES ($ 158,284) $ 30,694 PROVISION FOR FEDERAL INCOME TAXES ($ 21,606) $ 20,508 ----------- ----------- NET INCOME BEFORE EXTRAORDINARY ITEMS ($ 136,678) $ 10,185 EXTRAORDINARY ITEMS: $-0- $-0- TAX BENEFIT OF OPERATING LOSS CARRYFORWARD ----------- ----------- NET INCOME ($ 99,041) $ 10,185 PAR SHARE OF COMMON STOCK AND COMMON STOCK EQUIVALENTS: AVERAGE OUTSTANDING SHARES 7,000,000 7,000,000 .00 .00 THE FINANCIAL STATEMENTS INCLUDED IN THIS 7,000,000 REPORT REFLECT ALL ADJUSTMENTS, WHICH, IN .00 THE OPINION OF MANAGEMENT, ARE NECESSARY FOR FAIR PRESENTATION.
-4- 5 KNUSAGA CORPORATION STATEMENT OF CASH FLOW (UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 2000 AND NOVEMBER 30, 1999
(UNAUDITED) THREE MONTHS ENDED NOVEMBER 30, 2000 NOVEMBER 30, 1999 CASH PROVIDED BY (USED FOR) OPERATIONS NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEMS, ($ 136,678) $ 10,185 EXCHANGE LOSS (94) NON-CASH EXPENSE INCLUDED IN NET INCOME $ 89,440 $ 85,270 DEPRECIATION (INCREASE) DECREASE IN: ACCOUNTS RECEIVABLE ($ 23,981) $427,439 INVENTORIES ($ 59,171) ($ 55,888) PREPAID EXPENSES $ 7,260 $ 3,702 OTHER ASSETS $ 501 $ 7,773 INCREASE (DECREASE) IN: ACCOUNTS PAYABLE $ 113,119 ($ 50,054) ACCRUED LIABILITIES ($ 46,005) ($125,757) --------- -------- NET CASH PROVIDED BY (USED FOR) ($ 55,515) $302,575 OPERATING ACTIVITIES CASH PROVIDED BY (USED FOR) INVESTING ACTIVITIES PURCHASES OF EQUIPMENT ($ 5,650) $ 89,604 CASH PROVIDED BY (USED FOR) BEFORE FINANCING ACTIVITIES CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES DEBT INCREASE (DECREASE) SHORT-TERM 14,122 LONG-TERM ($ 105,792) ($ 36,174) ---------- --------- NET CASH PROVIDED BY (USED FOR) FINANCING ACTIVITIES ($ 91,670) ($ 36,174) INCREASE (DECREASE) IN CASH ($ 152,835) $176,796 BALANCE AT BEGINNING OF PERIOD $ 448,913 $495,744 BALANCE AT END OF PERIOD $ 296,078 $672,541
-5- 6 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. KNUSAGA CORPORATION By: /s/ Jerry Luptak ------------------- Vice President Dated: January 12, 2001 ---------------- Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the Registrant and in the capacities and on the date indicated: By: /s/ James G. Musser Date: January 12, 2001 -------------------------------- ---------------- Director/President (Principal Executive Officer and Controller) By: /s/ Jerry D. Luptak Date: January 12, 2001 -------------------------------- ---------------- Director Vice President, Finance and General Counsel (Principal Financial Officer) By: /s/ Harold Beznos Date: January 12, 2001 -------------------------------- ---------------- Director Secretary-Treasurer