<PAGE>
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: March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to .
--------- ----------
Commission File No. 1-12021.
LINDATECH INC.
----------------------------------------------
(Exact name of Small Business Issuer as Specified in its Charter)
Delaware 13-3848652
- ------------------------------- --------------------
(State or other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
One World Trade Center, 87th Floor, New York, New York 10048
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 321-9531
- -------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
NetLive Communications, Inc., 330 16th St., Brooklyn, NY 11215
- -------------------------------------------------------------------------------
(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
------- ------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of May 19, 1999: 9,000,000
<PAGE>
LINDATECH INC.
INDEX
Page
----
Part I - Financial Information
Item 1. Consolidated Financial Statements:
Consolidated Balance Sheets at
March 31, 1999 and
June 30, 1998............................... 1
Consolidated Statements of Operations
for the Nine Months Ended
March 31, 1999 and 1998..................... 2
Consolidated Statements of Operations
for the Three Months Ended
March 31, 1999 and 1998..................... 2
Consolidated Statements of Cash Flows
for the Nine Months Ended
March 31, 1999 and 1998..................... 3
Notes to Consolidated Financial Statements..... 4
Item 2. Management's Discussion and Analysis or Plan
of Operation................................ 6
Part II - Other Information
Item 6. Exhibits and Reports on Form 8-K............... 11
Signatures
(i)
<PAGE>
LINDATECH INC. AND SUBSIDIARIES
(FORMERLY NETLIVE COMMUNICATIONS, INC.)
CONSOLIDATED BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
1999 1998
- ----------------------------------------------------------------------------------------------------------------------
(unaudited) (audited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 632 $ 311
Restricted cash - 9,099,000
Accounts receivable, net 1,953,185 2,618,952
Due from related parties 799,207 846,182
Investments 50,520 235,819
Inventories 4,622,976 3,582,617
Deferred tax asset 66,827 -
Prepaid expenses 24,606 403,101
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 7,517,953 16,785,982
Property, Plant and Equipment, net 2,079,079 1,447,790
Intangible Assets 3,199,094 3,353,347
Deferred Tax Asset 16,214 37,397
- ----------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $12,812,340 $21,624,516
======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank overdraft $ 1,187,574 $ 135,321
Note payable - bank 6,315,000 -
Accounts payable and accrued expenses 1,346,960 1,572,970
Income taxes payable 22,692 393,254
Deferred tax liability - 48,661
Current portion of capital leases 206,037 15,837
Other current liabilities 573,343 161,097
- ----------------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 9,651,606 2,327,140
Capital Leases, net of current portion 347,078 65,799
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 9,998,684 2,392,939
- ----------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
Capital stock 900 800
Convertible preferred stock 100 -
Additional paid-in capital 5,073,027 5,074,020
Retained earnings 1,133,019 17,459,071
Foreign currency translation adjustment (3,393,390) (3,302,314)
- ----------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY 2,813,656 19,231,577
- ----------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,812,340 $21,624,516
======================================================================================================================
</TABLE>
The accompanying notes should be read in conjunction with the consolidated
financial statements
1
<PAGE>
LINDATECH INC. AND SUBSIDIARIES
(FORMERLY NETLIVE COMMUNICATIONS, INC.)
CONSOLIDATED STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED THREE-MONTH PERIOD ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
(unaudited) (unaudited)
<S> <C> <C> <C> <C>
Net sales $ 5,273,802 $6,192,789 $3,039,879 $3,379,378
Cost of goods sold 4,098,460 4,116,684 2,145,423 2,167,846
- ----------------------------------------------------------------------------------------------------------------------
Gross profit 1,175,342 2,076,105 894,456 1,211,532
- ----------------------------------------------------------------------------------------------------------------------
Selling, general and administrative
expenses 2,132,097 1,254,374 1,039,416 466,730
Amortization expense 196,573 2,620 109,956 2,620
- ----------------------------------------------------------------------------------------------------------------------
Total operating expenses 2,328,670 1,256,994 1,149,372 469,350
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) from operations (1,153,328) 819,111 (254,916) 742,182
- ----------------------------------------------------------------------------------------------------------------------
Other expense (income):
Interest expense 118,631 22,988 89,761 17,467
Interest income (240,195) (429,198) (40) (127,379)
- ----------------------------------------------------------------------------------------------------------------------
(121,564) (406,210) 89,721 (109,912)
- ----------------------------------------------------------------------------------------------------------------------
Income (loss) before provision (benefit)
for income taxes (1,031,764) 1,225,321 (344,637) 852,094
Provision (benefit) for income taxes (124,441) 441,116 63,541 306,754
- ----------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (907,323) $ 784,205 $ (408,178) $ 545,340
======================================================================================================================
Basic income (loss) per common share $ (.11) $ .10 $ (.05) $ .07
======================================================================================================================
Weighted-average number of
common shares outstanding 8,333,333 8,000,000 9,000,000 8,000,000
======================================================================================================================
</TABLE>
The accompanying notes should be read in conjunction with the consolidated
financial statements
2
<PAGE>
LINDATECH INC. AND SUBSIDIARIES
(FORMERLY NETLIVE COMMUNICATIONS, INC.)
CONSOLIDATED STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NINE-MONTH PERIOD ENDED MARCH 31, 1999 1998
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Receipts from customers $ 6,150,969 $ 9,314,014
Payments to suppliers and employees (5,931,256) (8,256,602)
Interest received 249,677 434,628
Interest paid (158,556) (42,852)
Income taxes paid (259,476) (312,612)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 51,358 1,136,576
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchases of property, plant and equipment (478,540) (9,196)
Proceeds from sale of property and equipment - 1,182,916
Net proceeds from investments 119,711 458,524
Net payments from related parties (17,494) (1,120,258)
Payment for security deposit (49,048) (21,057)
Proceeds from restricted cash 9,196,500 (10,528,500)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 8,771,129 (10,037,571)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in bank overdraft 1,079,655 153,125
Dividends paid (16,496,990) -
Proceeds from note payable - bank 6,123,000 -
Repayment of note payable - seller (641,731) -
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (9,936,066) 153,125
- ----------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash 1,113,900 (1,736,093)
- ----------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents 321 (10,483,963)
Cash and cash equivalents at beginning of period 311 10,484,302
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 632 $ 339
======================================================================================================================
Reconciliation of net income (loss) to net cash provided by operating
activities:
Net income (loss) $ (907,323) $ 784,205
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 254,706 28,070
Gain on sale of property, plant and equipment (2,018) (2,561)
Changes in operating assets and liabilities:
Decrease in accounts receivable 907,797 3,481,184
Increase in inventories (427,005) (3,077,577)
Decrease in prepaid expenses 25,848 22,504
Increase in accounts payable and accrued expenses 458,829 213,363
Decrease in income taxes payable (259,476) (312,612)
- ----------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 51,358 $ 1,136,576
======================================================================================================================
</TABLE>
The accompanying notes should be read in conjunction with the consolidated
financial statements
3
<PAGE>
LINDATECH INC. AND SUBSIDIARIES
(FORMERLY NETLIVE COMMUNICATIONS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. BASIS OF The accompanying unaudited consolidated financial
PRESENTATION statements have been prepared in accordance with
AND BUSINESS generally accepted accounting principles and
COMBINATION: reflect all adjustments (consisting of normal
recurring adjustments) which, in the opinion of
management, are necessary for a fair presentation
of the results for the periods shown. The results
of operations for such periods are not necessarily
indicative of the results expected for the full
fiscal year or for any future period. The
accompanying consolidated financial statements
should be read in conjunction with the audited
financial statements of NetLive Communications,
Inc. (the "Company") as of March 31, 1998 and for
the year then ended and the notes thereto included
in the Company's Form 10-KSB and amendment thereto
and Form 8-K dated December 10, 1998. 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 the rules and regulations of the Securities and
Exchange Commission. The Company believes,
however, that the disclosures in this report are
adequate to make the information presented not
misleading in any material respect.
In December 1998, the Company formed two wholly
owned Australian subsidiaries, Linda Industries
Pty. Limited ("Linda") and Modara Oaks Pty.
Limited ("Modara").
Effective December 31, 1998, the Company, a
substantially inactive company subject to the
reporting requirements of the Securities and
Exchange Act of 1934, sold 8,000,000 shares of
common stock and 1,000,000 shares of convertible
preferred stock, as adjusted for a 1-for-3.4
reverse stock split, to several Australian
purchasers including Newton Grace Pty Limited
("Newton Grace") and the shareholders of Newton
Grace (the "Purchasers") for $10,000,000
Australian Dollars ("AUD"). Simultaneously, Linda
and Modara purchased (the "Asset Purchase") the
operating assets (excluding cash and certain
receivables) and registered trademarks
(collectively the "Assets") of Newton Grace for
AUD $21,923,060. The Asset Purchase was funded in
part by an AUD $10,000,000 loan from National
Australia Bank Limited and an AUD $1,923,060 note
payable to the seller, prior to an adjustment of
approximately AUD $700,000. The balance of the
note payable to the seller was satisfied by
payments made by Linda on behalf of the seller,
subject to adjustment.
This business combination has been accounted for
as a reverse acquisition whereby the Company is
being treated as being acquired in a purchase
transaction by Newton Grace, as control rests with
the former Newton Grace shareholders.
Although prior to its acquisition by the
Purchasers, the Company had been the registrant,
the comparative financial statements of Newton
Grace are presented since such entity is deemed to
be the purchaser in a business combination
accounted for as a purchase. Accordingly, the
registrant will now be reporting on a June 30
year-end. In addition, there have been no
significant changes of accounting policy since
June 30, 1998.
Effective in May 1999, the Company changed its
name to Lindatech Inc.
4
<PAGE>
LINDATECH INC. AND SUBSIDIARIES
(FORMERLY NETLIVE COMMUNICATIONS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
2. SUMMARY OF In accordance with Statement of Financial
SIGNIFICANT Accounting Standards ("SFAS") No. 52, Foreign
ACCOUNTING Currency Translation, the financial position and
POLICIES: results of operations of the Company are measured
using local currency as the functional currency.
Assets and liabilities have been translated at
current exchange rates, and related revenue and
expenses have been translated at average monthly
exchange rates. The aggregate effect of
translation gains and losses has been deferred and
is reflected as a separate component of
stockholders' equity until there is a sale or
liquidation of the underlying foreign investment.
The Company recognizes deferred tax liabilities
and assets for the expected future tax
consequences of temporary differences between the
carrying amounts and the tax bases of assets and
liabilities.
In February 1997, the Financial Accounting
Standards Board issued SFAS No. 128, Earnings per
Share. SFAS No. 128 requires dual presentation of
basic earnings per share ("EPS") and diluted EPS
on the face of all statements of earnings issued
after December 15, 1997 for all entities with
complex capital structures. Basic EPS is computed
as net earnings divided by the weighted-average
number of common shares outstanding for the
period. Diluted EPS reflects the potential
dilution that could occur from common shares
issuable through stock-based compensation
including stock options, restricted stock awards,
warrants and other convertible securities. Diluted
EPS is not presented since the effect would be
antidilutive.
3. NOTES PAYABLE: The note payable - bank bears interest at the
bank's lending rate (4.86% at March 31, 1999) and
additionally requires a facility fee equal to
1.25% per annum, as defined. The note is due and
payable on June 30, 1999. The note is
collateralized by all of Linda's assets and
guaranteed by the Company. The bank also provided
an AUD $1,600,000 line of credit to Linda which
expires June 30, 1999 with interest currently at
8.5% per annum plus 1% to 3.5% based on
outstanding balances, as defined.
5
<PAGE>
Item 2. Management's Discussion and Analysis
or Plan of Operation
GENERAL
On December 10, 1998, Lindatech Inc. (formerly NetLive Communications, Inc.), a
Delaware corporation (the "Registrant") sold shares of its Common Stock, $.0001
par value per share, and non-voting Series A Convertible Preferred Stock which
in the aggregate would equal, when fully issued and converted, approximately
ninety percent (90%) of the Common Stock to several Australian purchasers,
including Newton Grace Pty Limited, an Australian corporation ("Newton Grace").
Simultaneously with such purchase, Newton Grace sold all of the operating assets
of its consumer electric goods business to two wholly-owned Australian
subsidiaries of the Registrant. At a meeting held on May 11, 1999, the
stockholders of the Registrant approved these transactions. On May 18, 1999, the
Registrant effectuated a 3.4 to 1 reverse stock split and changed its trading
symbol for its shares of Common Stock on the NASD OTC Bulletin Board to LNDA.
For accounting purposes, these transactions (the "Transactions") are treated as
a reverse merger in which Newton Grace becomes the accounting acquirer and the
historical financial statements of Newton Grace replace those of the Registrant.
Accordingly, the Registrant is now reporting on a June 30 year end. The Newton
Grace financial statements presented in this report have been adjusted to
reflect the Common Stock and Preferred Stock of the Registrant as if the
Transactions were consummated and completed on December 31, 1998.
The Registrant has reorganized its Australian operations into a manufacturing
and marketing division (Linda Industries) and a research and development
division (which has been renamed Linda Technologies). Linda Technologies owns
all of the intellectual property and develops all new appliances and blanket
products.
During the quarter ended March 31, 1999 the Registrant launched a new electronic
controller for its market-leading electric blankets and produced tooling for a
new versatile appliance, the Hotpot. Management hopes that these initiatives
will benefit shareholders by increasing revenues and reducing operating costs as
a percentage of revenues.
Three new Directors were appointed to the Board during the quarter ended
March 31, 1999. Adrian D. Wischer is President, CEO and a Director; Drew A.
Ilsley and Frank D. Spencer are Directors.
The Board has commissioned a business diagnostic of the Linda business and
coordinated the preparation of a strategic plan for the Registrant. The business
diagnostic has identified some
6
<PAGE>
significant areas of sub-optimal performance, as can be deduced from the results
following.
Although the March 1999 quarter results are disappointing, they include
significant one-time or non-recurring expenses. Sales of electric blankets
(approximately 75% of revenues) have increased 8% over the prior period. This is
due to new packaging, new products and the new electronic controller. The
rationalization of the appliance division has continued, with deletions from the
range of products where we had no competitive advantage. Delays on commissioning
tooling for new kettle products resulted in a further sales decline and a
disappointing result for the quarter.
The financial statements presented in this report are expressed in United States
dollars (US Dollars or US$). To quantify the impact of foreign currency
fluctuations on the results of operations, comparative information is expressed
on a percentage basis for both US Dollars and Australian Dollars (AUD or A$).
The Australian Dollar percentages reflect operational changes between comparable
periods while differences between Australian Dollar percentages and US Dollar
percentages also reflect foreign currency fluctuations.
RESULTS OF OPERATIONS
COMPARISON OF THE NINE MONTHS ENDED MARCH 31, 1999 TO THE NINE
MONTHS ENDED MARCH 31, 1998
Sales decreased by 14.8% (4.9% in AUD) to $5,273,802 for the nine months ended
March 31, 1999 from $6,192,789 for the comparable period in 1998. This decrease
in sales is attributable to a 24% decrease in appliance sales, which was only
partially offset by an 8% increase in sales of electric blankets. Cost of goods
sold decreased by 0.4% (but increased by 11% in AUD) for the nine months ended
March 31, 1999 as compared to 1998. The cost of goods sold expressed as a
percentage of sales rose from 66.5% in 1998 to 77.7% in 1999. This increase is
primarily attributable to leasing a new warehouse, higher production costs of
electric blankets due to lower productivity, and increased production costs of
appliances due to unacceptably high rejection rates of the finished products. As
a result of the sales decline and the increased rate of cost of goods sold,
gross profit declined by 43.4% (36.5% in AUD) to $1,175,342 in 1999 from
$2,076,105 in 1998.
Operating expenses increased by $1,071,676 (85.3%) to $2,328,670 in 1999 from
$1,256,994 in 1998 due to increased amortization expenses ($193,953), the
reverse merger accounting treatment of the Transactions, which combined the
administrative and corporate costs of Lindatech Inc. ($528,038, of which
approximately $350,000 is attributable to the Transactions) with those of Newton
Grace, and a $339,769 increase in the operating costs of Linda Industries Pty
Ltd. (primarily due to $207,000 of consulting fees, $75,781 of bank fees,
$27,063 of rent, and $18,388 in overseas travel).
7
<PAGE>
Interest income in 1999 declined by 44.0% from the comparable period in 1998,
due to lower balances on deposit because of the operating expense increase. The
resulting benefit for income tax purposes ($124,441) of the net loss in 1999 as
compared to $441,116 of income tax expense in 1998 was a moderating influence so
that a net loss of ($907,323) was recognized in the 1999 period as contrasted to
net income of $784,205 in 1998.
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1999 TO THE THREE
MONTHS ENDED MARCH 31, 1998
Sales decreased by 10.0% (3.3% in AUD) to $3,039,879 for the three months ended
March 31, 1999 from $3,379,378 for the comparable period in 1998. This decrease
in sales is attributable to a decrease in sales of appliances which was offset
somewhat by an increase in sales of electric blankets. Cost of goods sold
decreased by 1.0% (but an increase of 6.4% in AUD) for the three months ended
March 31, 1999 as compared to 1998. The cost of goods sold expressed as a
percentage of sales rose from 64.1% in 1998 to 70.6% in 1999. This increase is
primarily attributable to leasing a new warehouse, higher production costs of
electric blankets due to lower productivity, and increased production costs of
appliances due to unacceptably high rejection rates of the finished products. As
a result of the sales decline and increased rate of cost of goods sold, gross
profit declined by 26.2% (20.7% in AUD) to $894,456 in 1999 from $1,211,532 in
1998.
Operating expenses increased by $680,022 (144.9%) to $1,149,372 in 1999 from
1998 due to increased amortization expenses ($107,336), the reverse merger
accounting treatment of the Transactions, which combined the administrative and
corporate costs of Lindatech Inc. ($528,038, of which approximately $350,000 is
attributable to the Transactions) with those of Newton Grace, and a $339,769
increase in the operating costs of Linda Industries Pty Ltd. (primarily due to
$207,000 of consulting fees, $75,781 of bank fees, $27,063 of rent, and $18,388
in overseas travel).
Interest income in 1999 decreased by 100% from the comparable period in 1998,
due to the use of cash balances to fund operating expenses, including the cost
of the Transactions. Registrant realized a net loss of ($408,178) in the 1999
period as contrasted to net income of $545,340 in 1998.
LIQUIDITY AND CAPITAL RESOURCES
As described above, the financial statements included in this Report are the
historical financial statements of Newton Grace, a privately-held Australian
company, adjusted to reflect the Registrant's Common Stock and Preferred Stock
as if the Transactions were completed on December 31, 1998. At March 31, 1999
the consolidated balance sheet shows current assets of $7,517,953 and cash and
cash equivalents and accounts receivable of
8
<PAGE>
$1,953,817. This contrasts to total liabilities of $9,998,684 and current
liabilities (excluding current portions of capital leases) of $9,445,569,
respectively. This balance sheet shows a working capital deficit of $2,133,653.
Net cash provided by operating activities was $51,358 and $1,136,576 for the
nine months ended March 31, 1999 and 1998, respectively. This decline is
attributable to the combination of (i) a 34.0% decrease (24.4% in AUD) in
receipts from customers more than offsetting a 28.2% decrease (17.8% in AUD) in
payments to suppliers, and (ii) a 42.6% decrease (34.2% in AUD) in interest
received. Customer receipts declined in the 1999 period from 1998 due to the
combination of lower sales and implementation of an early payment settlement
discount of four to five percent. This early payment discount had the effect of
shifting receipts to a prior reporting period. The decrease in payments to
suppliers was attributable to lower sales achieved in 1999 as compared to the
nine month period ended March 31, 1998.
Net cash provided by (used in) investing was $8,771,129 in 1999 and
($10,037,571) in 1998. This difference in comparable periods is primarily
attributable to the investment of $10,528,500 in a restricted term deposit in
1998 and the receipt of $9,196,500 of proceeds from such term deposit in 1999.
Net cash provided by (used in) financing activities was ($9,936,066) and
$153,125 for the nine months ended March 31, 1999 and 1998, respectively. Such
use of cash in 1999 is primarily due to the excess of $16,496,990 in dividends
paid to Newton Grace's shareholder over $6,123,000 in proceeds from bank debt in
connection with Newton Grace's sale of its operating assets to Linda Industries
Pty Ltd., an Australian subsidiary of the Registrant.
Pursuant to the terms of Overdraft and Multi-Option facilities (the "Overdraft
and Multi-Option Facilities"), dated February 9, 1999 between National Australia
Bank Limited (the "NAB") and Linda, as detailed in a letter of offer of the NAB
to Linda, dated February 9, 1999, Linda may borrow up to AUD $1,200,000 under
the Overdraft Facility in the form of a revolving credit line at NAB's base
variable rate (currently 8.50% per annum), plus a margin of 1.0% per annum on
balances up to AUD $500,000 and 3.5% per annum on balances over such amount,
calculated daily and payable monthly in arrears. The Overdraft Facility also
requires payment of a line fee equal to 0.8% per annum, payable semi-annually.
In addition, AUD $400,000 may be utilized by Linda under the Multi-Option
Facility in any combination of a documentary letter of credit facility, a
leasing facility or an encashment negotiation advice facility. Certain
negotiation fees were payable and ongoing annual fees are payable by Linda to
the NAB under the Overdraft and Multi-Option Facilities. The purpose of the
Overdraft and Multi-Option Facilities are to provide for day-to-day working
9
<PAGE>
capital requirements of Linda's business, enable the importing and exporting of
goods and enable the leasing of equipment used for "business purposes" and the
assignment of exiting leases from Newton Grace. The Overdraft and Multi-Option
Facilities expire on June 30, 1999. As of April 26, 1999, AUD $1,193,349 was
outstanding under the Overdraft and Multi-Option Facilities.
In order to assist Linda with the purchase of the assets of Newton Grace, the
NAB and Linda have also entered into a Bills Accepted/Discounted (Floating)
facility (the "Bill Facility"), pursuant to which Linda borrowed AUD $10
million. The interest rate payable by Linda under the Bill Facility floats at
NAB's rate for Bank Accepted Bills, which rate currently is approximately 5.0%
per annum. The Bill Facility also requires Linda to pay a facility fee of 1.25%
per annum to the NAB, payable quarterly in advance. Amounts outstanding under
the Bill Facility mature on June 30, 1999.
The Overdraft and Multi-Option Facilities and the Bill Facility (collectively,
the "NAB Facilities") are secured by (i) liens over all of the assets of Linda
(in the form of registered charges over all assets in Australia), (ii) a
guarantee and indemnity to the NAB for AUD $11.6 million from the Registrant
supported by liens over all of its assets and (iii) guarantees and indemnities
to the NAB for AUD $11.6 million from Newton Grace and affiliated persons,
certain of which are supported by liens over all of their respective assets,
including over the shares of common stock of the Registrant held by each of the
foregoing guarantors.
Registrant anticipates that it will be able to meet its cash requirements for
fiscal 1999 with a combination of cash flow from operations, current cash
balances, and/or borrowings under the NAB Facilities.
"YEAR 2000" PROBLEM. The Registrant is aware of the issues associated with the
programming code in existing computer systems acquired from Newton Grace by
Linda as the millennium (Year 2000) approaches. The "Year 2000" problem is
pervasive and complex as virtually every computer operation will be affected in
some way by the rollover of the latter two digit year value to 00. The issue is
whether computer systems will properly recognize date sensitive information when
the year changes to 2000. Systems that do not properly recognize such
information could generate erroneous data or cause a system to fail. Registrant
has upgraded its computers and believes that they are Year 2000 compliant and
that the "Year 2000" problem will not have a material adverse effect upon the
Company.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(A) EXHIBITS
27. FINANCIAL DATA SCHEDULE
(B) REPORTS ON FORM 8-K
During the quarter ended March 31, 1999, the Registrant filed
a Report on Form 8-K/A dated December 10, 1998 detailing a change in control of
the Registrant. The following financial statements of Newton Grace Pty Limited,
an Australian corporation, were filed in such Report on Form 8-K/A: Consolidated
Statements of Operations for the Years Ended June 30, 1998, 1997 and 1996
(audited); Consolidated Balance Sheets at June 30, 1998 and 1997 (audited);
Consolidated Statements of Changes in Shareholders Equity for the Years Ended
June 30, 1998, 1997 and 1996 (audited); Consolidated Statements of Cash Flows
for the Years Ended June 30, 1998, 1997 and 1996 (audited); Notes to
Consolidated Financial Statements; Consolidated Balance Sheet at December 31,
1998 (unaudited); Consolidated Statements of Operations for the Six Months Ended
December 31, 1998 and 1997 (unaudited); Consolidated Statements of Cash Flows
for the Six Months Ended December 31, 1998 and 1997 (unaudited); and Notes to
Consolidated Financial Statements.
11
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
LINDATECH INC.
(Registrant)
/s/Adrian D. Wischer
-------------------------------------
Adrian D. Wischer
President and Director
(Chief Executive Officer and
Date: May 19, 1999 Chief Financial Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from registrant's
unaudited financial statements as of and for the nine months ended March 31,
1999 and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 632
<SECURITIES> 0
<RECEIVABLES> 1,953,185
<ALLOWANCES> 0
<INVENTORY> 4,622,976
<CURRENT-ASSETS> 7,517,953
<PP&E> 2,079,079
<DEPRECIATION> 0
<TOTAL-ASSETS> 12,812,340
<CURRENT-LIABILITIES> 9,651,606
<BONDS> 0
0
100
<COMMON> 900
<OTHER-SE> 2,812,656
<TOTAL-LIABILITY-AND-EQUITY> 12,812,340
<SALES> 5,273,802
<TOTAL-REVENUES> 5,273,802
<CGS> 4,098,460
<TOTAL-COSTS> 2,328,670
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 118,631
<INCOME-PRETAX> (1,031,764)
<INCOME-TAX> (124,441)
<INCOME-CONTINUING> (907,323)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (907,323)
<EPS-PRIMARY> (0.11)
<EPS-DILUTED> (0.11)
</TABLE>
