[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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 003-08955
NANTUCKET INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 58-0962699 |
| (State or other jurisdiction of | (I.R.S. Employer |
| incorporation or organization) | Identification No.) |
45 Ludlow Street, Suite 602
Yonkers, New York 10705
(Address of principal executive offices) (Zip Code)
(914) 375-7591
(Registrant''s telephone number, including area code)
Not applicable (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 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter periods 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 |
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: As of July 15, 2002 the Company had 7,836,000 shares of common stock outstanding, $0.10 par value.
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements:
Index to Financial Statements
| Table of Contents | F-2 |
| Consolidated Balance Sheets (unaudited) | F-3 |
| Consolidated Statements of Operations (unaudited) | F-4 |
| Consolidated Statements of Stockholders' Equity (unaudited) | F-5 |
| Consolidated Statements of Cash Flows (unaudited) | F-6 |
| Notes to Consolidated Financial Statements | F7 |
Nantucket Industries, Inc.
and Subsidiaries
Consolidated Balance Sheets (Unaudited)
---------------------------------------------------------------------------------------
February 28,
May 31, 2002 2002
Assets (1)
Cash and cash equivalents $ 7,400 $ 6,266
Accounts receivable 142,492 120,214
Inventories 5,940 5,125
Prepaid expenses 120,000 120,000
Other current assets 35,440 2,225
Total current assets 311,272 253,830
Property, plant and equipment, net 80,383 81,458
Other assets, net
Covenant not to compete 285,000 300,000
Customer list 295,271 311,984
Prepaid expenses 110,000 110,000
$1,081,926 $1,057,272
Liabilities and Stockholders' Equity
Line of credit $ 30,000 $ -
Accounts payable 107,806 102,635
Pre-petition taxes 3,964 3,964
Total current liabilities 141,770 106,599
Loan payable 45,000 -
Pre-petition taxes, net of current portion 19,821 19,821
Total liabilities 206,591 126,420
Stockholders' equity
Common stock, $.10 par value; authorized 20,000,000 915,100 903,600
shares; issued 9,151,000
Additional paid-in capital 13,188,261 13,180,261
Accumulated deficit (13,228,026) (13,153,009)
Total stockholders' equity 875,335 930,852
$1,081,926 $ 1,057,272
(1) Derived from audited financial statements
See accompanying notes to financial statements.
F-3
Nantucket Industries, Inc.
and Subsidiaries
Consolidated Statements of Operations (Unaudited)
---------------------------------------------------------------------------------------
Quarters ended May 31, 2002 2001
Net sales $123,245 $ -
Cost of sales 90,366 -
Gross profit 32,879 -
Selling, general and administrative expenses 68,108 -
Loss from operations (35,229) -
Other expense:
Interest expense 4,500 -
Depreciation and amortization 35,288 -
Total other expense 39,788 -
Loss before income taxes (75,017)
Income taxes - -
Net loss (75,017) -
Net loss per share - basic and diluted (.01) -
Weighted average common shares outstanding 9,113,554 3,238,796
See accompanying notes to financial statements.
F-4
Nantucket Industries, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
---------------------------------------------------------------------------------------
Quarters ended May 31, 2002 2001
Cash flows from operating activities:
Net loss $(75,017) $-
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation and amortization 35,288 -
Decrease (increase) in assets:
Accounts receivable (22,278) -
Inventories (815) -
Other current assets (33,215) -
(Decrease) increase in liabilities:
Accounts payable 5,171 -
Net cash used by operating activities (90,866) -
Cash flows from investing activities:
Additions to property, plant and equipment (2,500) -
Cash flows from financing activities:
Issue of stock for operations 19,500 -
Proceeds from loans 75,000 -
Net cash provided by financing activities 94,500 -
Net increase in cash and cash equivalents 1,134 -
Cash and cash equivalents, beginning of period 6,266 1,452
Cash and cash equivalents, end of period $7,400 $1,452
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest $4,500 $-
Income taxes $- $-
See accompanying notes to financial statements.
F-5
The following notes to the consolidated financial statements should be read in light of the following: As a result of the following, all information which appears in the financial statements included in this report, is purely historical and will have no impact on future operations and results, if any. For an explanation of our historical accounting policies and data, reference is made to the notes to the Financial Statements included in our annual report on Form 10-K for the fiscal year ended February 28, 2002.
We experienced significant losses from operations in recent years which resulted in severe cash flow deficiencies. As a result of such losses and our inability to raise financing to continue operations, we became insolvent and, finally, we terminated all business operations in October 1999.
On March 3, 2000, we filed a Voluntary Petition under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York. The goal of the projected reorganization will be for us to be merged with, or to acquire the assets or the capital stock of, existing businesses, or to effect similar business combinations. Our subsidiaries would all be dissolved. Our second amended Plan of Reorganization, dated July 5, 2001 and the Disclosure Statement thereto, was filed by Management on July 6, 2001 with the Bankruptcy Court. This Plan proposed that we acquire, in a "reverse acquisition", Accutone Inc. a Delaware Corporation ("Accutone"). In a "reverse acquisition", the shareholders of the company which is acquired (in this case, Accutone) would end up owning the preponderance of the issued and outstanding capital stock of the company which was the acquirer (in this case, Nantucket Industries, Inc.). An order approving the Disclosure Statement was presented to the Court for Settlement on October 17, 2001 and a hearing to confirm the Plan was scheduled for December 10, 2001. The a Plan of Reorganization was not confirmed by the Bankruptcy Court, management would not have been able to successfully complete a merger or acquisition, and would have ceased to exist.
Our plan of reorganization and disclosure statement was confirmed by the U.S. Federal Bankruptcy on December 10, 2001 and became effective on December 20, 2001.
On January 25, 2002, we effected a "reverse acquisition" pursuant to which we acquired all of the issued and outstanding capital stock of Accutone, Inc., a Pennsylvania corporation. The acquisition was made on a stock-for-stock basis pursuant to the terms of our Chapter 11 Plan of Reorganization. The assets of Accutone, which were acquired by us through our acquisition of the Accutone stock, include all facilities, contracts, service agreements, accounts receivable, patent rights, customer lists, and the like.
Our voluntary petition under Chapter 11 of the United States Bankruptcy Code was filed on March 3, 2000 in the U.S. Bankruptcy Court for the Southern District of New York. At the time such petition was filed until it acquired Accutone, we were a dormant Delaware corporation.
As a result of the above-described acquisition, Accutone Inc. (together with Accutone's wholly- owned subsidiary, Interstate Hearing Aid Service Inc.) is now our wholly owned subsidiary. We have no business or assets other than those which we acquired through our acquisition of Accutone. With respect to our current business, history, and prospects, Accutone is the predecessor of Nantucket.
We are directly, and indirectly through our subsidiaries, Accutone Inc. and Interstate Hearing Aid Service Inc., in the business of distributing and dispensing custom hearing aids. Our predecessor, Accutone Inc. was formed under the laws of the State of Pennsylvania in October 1996 for the purpose of engaging in the manufacture, dispensing, and distribution of hearing aids. In 1998, Accutone acquired 100% ownership of Interstate, a Pennsylvania corporation and an FDA licensed hearing aid manufacturer which has been in the hearing aid business for approximately 35 years. In the Fall of 2000, Accutone discontinued all manufacturing operations and changed the focus of its marketing to include, not only the individual, self-pay patient, but health care entities and organizations which could serve as patient referral sources for us.
SUBSEQUENT EVENTS
On June 21, 2002, we filed a Form 8-K with the SEC. The purpose of the Form 8-K filing was to announce the termination of our consulting agreement with Westminster Holdings, Ltd. Based upon the termination, we rescinded the order to issue 1,200,000 shares of our common stock to Westminster that it was to receive for the consulting agreement.
Overview
Net sales refers to fees earned by the provision of audiological testing in our offices as well as those provided on site in Nursing Homes, Assisted Living Facilities, Senior Care Facilities and Adult Day Care Centers as well as the sales and distribution of hearing aids generated in each of these venues. A majority of our sales represent reimbursement from Medicare, Medicaid and third party payors. Generally, reimbursement from these parties which can take as long as 120 to 180 days. We have recently implemented the billing of Medicare on-line which should cut reimbursement time to approximately 60 days. Medicaid reimbursements can only be billed with various submissions which are mailed on a weekly basis. While we are attempting to find a method of expediting this paper submission process it seems unlikely that we will be able to accomplish this in our near future. As a result, Medicaid payments, which constitute approximately 60% of our reimbursement will continue to take 120 to 180 days to be realized.
Primarily as a result of our contract\ to acquire the audiology practice of Park Avenue, we expect both sales and related receivables to add to our growth.
THREE MONTHS ENDED MAY 31, 2002 COMPARED TO THREE MONTHS ENDED MAY 31, 2001
Sales for the first quarter of fiscal year ended 2002 and 2001 were $123,245 and $0 respectively. Management attributes the growth to the acquisition of Accutone, Inc. as of January 25, 2002 and the inactive status of our company in that prior quarter.
Cost of sales was $90,366 and $0 revenues, respectively. The increase is due to the acquisition of Accuntone, Inc. and the inactive status of our company in that prior quarter.
General and Administrative costs were $90,366 and $0, respectively. The difference being attributable to the acquisition of Accutone, Inc. and the inactive status of our company in that prior quarter.
Liquidity and Capital Resources
Cash Flows from operating activities were $1,134 and $0 respectively. Cash Flows from financing activities were $94,500 and $0 respectively. Each of these changes were due to the acquisition of Accutone, Inc. and the inactive status of our company in that prior quarter.
Outlook
Considerable ongoing efforts have been put into key areas: increasing sales by signing contracts with additional nursing homes and assisted living facilities, increasing the sales of hearing aids at the retail level in our existing offices and facilities which we are currently contracted and to minimize the collection time related to our Medicare and third party payors.
We continue to give attention to developing a sales and marketing force to assist in the addition of those senior care facilities, hospitals, day care and senior care centers who can add to our referral base of patient and customers.
By increasing revenues generated by these increases in sales and services we expect to enjoy increased sales over the same previous periods in the foreseeable future. By increasing these revenues streams, we feel confident that our gross profit margins will also increase. The anticipated acceleration of collection time of our accounts receivable will enhance our cash flows materially. In combination these advances and improvements in these three areas will be the driving force in order that we can provide to all our shareholders a fair revenue.
Market risk represents the risk of loss that may impact our financial position, results of operations or cash flows due to adverse changes in market prices and rates. Our short-term debt bears interest at fixed rates; therefore our results of operations would not be affected by interest rate changes.
Item 1. Legal Proceedings. None
Item 2. Changes in Securities. None
Item 3. Defaults Upon Senior Securities. Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders. None
Item 5. Other Information. None
Item 6. Exhibits and Reports of Form 8-K. None
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Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on July 15, 2002.
NANTUCKET INDUSTRIES, INC.
| By: /s/ John H. Treglia
John H. Treglia, President, Secretary and CFO |