<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended March 31, 2000
Commission file number 000-27859
Rad Source Technologies, Inc.
(Name of Small Business Issuer in its charter)
Florida 65-0882844
(State or other jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or organization)
475 Ramblewood Drive, Coral Springs, Florida 33071
(Address of principal executive offices) (Zip Code)
(954) 755-1827
(Issuer's telephone number)
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 [ ]
As of May 15, 2000, the Registrant had 2,410,040 shares of common stock, $.001
Par value per share, outstanding.
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INDEX
<TABLE>
<CAPTION>
Page
Number
------
<S> <C>
Part I. Financial Information
Item I. Financial Statements
Consolidated Balance Sheets - March 31,
2000 (Unaudited) and September 30, 1999 3
Consolidated Statements of Operations - Three Months Ended
March 31, 2000 and March 31, 1999; and Six
Months Ended March 31, 2000 and 1999 (Unaudited) 4
Consolidated Statements of Cash Flows - Six Months
Ended March 31, 2000 and 1999 (Unaudited) 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Conditions and Results of
Operations 7
Part II. Other Information 9
Signatures 9
</TABLE>
2
<PAGE> 3
RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
March 31 September 30,
2000 1999
----------- -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 5,430 $ 28,044
Accounts receivable 100,587 29,792
Inventory 125,136 121,303
Prepaid expense 1,000 5,700
----------- -----------
Total current assets 232,153 199,839
Computer equipment, less accumulated 2,426 2,888
Long-term receivable 10,430 28,087
Security deposit 500 500
----------- -----------
$ 245,509 $ 231,314
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses 398,591 262,843
Accounts payable - shareholders 85,871 87,791
Notes payable 10,000 10,000
Due to shareholders 31,800 31,800
----------- -----------
Total current liabilities 526,262 392,434
----------- -----------
Shareholders' deficit
Common stock, par value $.001; 50,000,000 shares
authorized; 2,410,040 issued and outstanding 2,410 2,410
Additional paid-in capital 4,414,652 4,414,652
Deficit (4,697,816) (4,578,182)
----------- -----------
Total shareholders' deficit (280,754) (161,120)
----------- -----------
$ 245,509 $ 231,314
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 4
RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
----------------------------- -----------------------------
2000 1999 2000 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales $ 159,575 $ -- $ 248,575 $ --
Cost of sales 98,367 -- 154,867 --
----------- ----------- ----------- -----------
Gross profit 61,208 -- 93,708 --
----------- ----------- ----------- -----------
Expenses:
Research and development -- 23,045 41,358 63,045
Selling, general and administrative 80,984 78,327 171,484 121,543
Issuance of stock for services -- 3,560,496 -- 3,560,496
----------- ----------- ----------- -----------
Total expenses 80,984 3,661,868 212,842 3,745,084
----------- ----------- ----------- -----------
Loss before other expense (19,776) (3,661,868) (119,134) (3,745,084)
Interest expense 250 3,446 500 3,446
----------- ----------- ----------- -----------
Net income $ (20,026) $(3,665,314) $ (119,634) $(3,748,530)
=========== =========== =========== ===========
Loss per share - basic and diluted $ (0.01) $ (3.00) $ (0.05) $ (3.78)
Weighted average shares outstanding 2,410,040 1,220,000 2,410,040 991,474
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
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RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
March 31,
---------------------------------
2000 1999
----------- -----------
<S> <C> <C>
Cash flow provided (used) by operating activities:
Net loss $ (119,634) $(3,748,530)
Adjustments to reconcile net loss to net cash
provided (used) by operating activities 462 3,560,586
Change in operating assets and liabilities 96,558 (14,315)
----------- -----------
Net cash provided (used) by operating activities: (22,614) (202,260)
Cash flows from investing activities -- (3,468)
Cash flows from financing activities -- 457,221
----------- -----------
Net increase (decrease) in cash (22,614) 251,493
Cash, beginning of period 28,044 2,237
----------- -----------
Cash, end of period $ 5,430 $ 253,730
=========== ===========
Supplemental disclosure:
Cash paid for interest $ -- $ --
Cash paid for Income taxes $ -- $ --
Payment of unsecured advances through issuance of
stock $ -- $ 54,500
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
RAD SOURCE TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - UNAUDITED INTERIM INFORMATION
The accompanying interim consolidated financial data are unaudited; however, in
the opinion of management, the interim data include all adjustments necessary
for a fair presentation of the results for interim periods. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
The results of operations for the three months and six months ended March 31,
2000 are not necessarily indicative of the results to be expected for the year
ended September 30, 2000.
The interim unaudited consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto for the
year ended September 30, 1999 filed as part of the Company's form 10-KSB.
NOTE 2 UNCERTAINTY - GOING CONCERN
The Company's continued existence is dependent upon its ability to resolve its
liquidity problems, principally by obtaining equity and commencing profitable
operations. While pursuing capital, the Company must continue to operate on cash
flow generated from the loans of stockholders, if necessary. Although, the
Company's losses are declining, falling from $3,748,530 in the prior comparative
six months ended March 31, to $119,634 in the current six month period ended
March 31, 2000, it has yet to generate a profit. It has a shareholders' deficit
of $280,754. These factors raise substantial doubt about the Company's ability
to continue as a going concern.
Management's plans in regards to this matter are to raise capital and increase
its marketing efforts and increase sales of units in an effort to generate
positive cash flow. The financial statements do not include any adjustment that
might result from the outcome of this uncertainty.
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<PAGE> 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis of the Company's consolidated financial
condition and consolidated results of operations should be read in conjunction
with the financial statements and notes contained herein as well as the
Company's September 30, 1999 form 10-KSB.
Statements which are not historical facts, including statements about the
Company's confidence and strategies and its expectations about new and existing
products, technologies and opportunities, market and industry segment growth,
demand and acceptance of new and existing products are forward looking
statements that involve risks and uncertainties. These include, but are not
limited to, product demand and market acceptance risks, the impact of
competitive products and pricing, the results of financing efforts, the effects
of economic conditions and trade, legal, social, and economic risks, such as
licensing, and, trade restrictions; and the results of the Company's business
plan. Such forward-looking statements are subject to risks and uncertainties.
Consequently, our actual results could materially differ from those anticipated
in these forward-looking statements.
Second Quarter Ended March 31, 2000 Compared to Second Quarter Ended
March 31, 1999
The Company sold one RS 3000 Blood Irradiator and one RS 2000 Biological
Irradiator in the most recent quarter compared to none in the same period in the
prior year. In the prior year quarter, the Company was involved in capital
raising activities and refining components to be used in its products and did
not produce any units for commercial use.
Research and development fell to zero in the current quarter as compared to the
prior year comparative quarter due to the fact that the RS3000 and RS2000 are
developed and being produced. Management's efforts have been in creating
awareness of these products in their marketplace to provide a basis for revenue
growth for the Company and a platform from which to develop similar technology
applications for other markets. Selling, general and administrative expense rose
approximately 3%. Being constrained by the Company's limited capital, salary
expense is the primary cause of the decline, offset by increased selling
expenses and the addition of product liability insurance. There was no issuance
of the Company's stock for services in the current quarter. In the prior year
comparative quarter, the Company's stock was issued primarily for financial
consulting and legal services. The Company's average outstanding balance of
interest bearing debt has been reduced, thereby causing the reduction in
interest expense.
7
<PAGE> 8
First Six Months Ended March 31, 2000 Compared to First Six Months Ended
March 31, 1999
The Company sold two RS 3000's and one RS 2000 in the most recent six months
compared to none in the same period in the prior year. In the prior year six
months, the Company was involved in capital raising activities and refining
components to be used in its products and did not produce any units for
commercial use.
Research and development fell 34% in the current six months as compared to the
prior year comparative six months due to reduced expenditures being required on
the same projects, the RS 3000 and the RS 2000. Management's efforts have been
in creating awareness of these products in their marketplace to provide a basis
for revenue growth for the Company and a platform from which to develop similar
technology applications for other markets. Selling, general and administrative
expense rose approximately 41%. This increase is attributed to the addition of
product liability insurance, sales commissions and an increase in other selling
expenses and professional fees. There was no issuance of the Company's stock for
services in the current six months. In the prior year comparative six months,
the Company's stock was issued primarily for financial consulting and legal
services. The Company's average outstanding balance of interest bearing debt has
been reduced, thereby causing the reduction in interest expense.
Management intends to continue pursuing the marketing and servicing of its
existing products, the RS 3000 and the RS 2000. This will require the Company to
increase operations, administrative capacity and marketing functions which is
expected to cause Selling, General and Administrative expenses to grow in the
future. However, even with additions to all of these functions, no assurances
can be made that they will result in creating revenues at a level profitable to
the Company from the sale of the above noted products.
The Company currently has a backlog of one RS 2000 and delivered two RS 3000's
in April 2000.
LIQUIDITY AND CAPITAL RESOURCES
The Company has been generating operating losses from its inception and has a
stockholders' deficit as of March 31, 2000 of $280,754, and its current ratio is
less than one, standing at 44%. However, the Company's net loss for the three
months and the six months ended March 31, 2000 have declined (net of Issuance of
stock for services) $84,792 and $68,400, respectively, compared to the prior
year period. Management expects sales of its existing products to increase as
its marketing efforts continue to take effect and that this increase will
improve the Company's liquidity. However, the Company's ability to continue
operations as a going concern remains dependent on the success of the Company's
existing products in the marketplace and the resulting order deposits and sales
collections, as well as continued cooperation of its subcontractors and
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the ability of the Company to raise additional capital. Although, Management
anticipates the above items can be accomplished, no assurances can be given. In
that event, operations of the Company will be significantly unfavorably
affected.
PART II OTHER INFORMATION
ITEM 1 through ITEM 5
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit
Number Description Location
- ------- ----------- --------
27 Financial Data Schedule Filed herewith electronically
(b) Reports on Form 8-K. No reports on Form 8-K were filed during the quarter
ended March 31, 2000.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Company has duly caused this Report to be signed on its behalf
by the undersigned, thereunto duly authorized.
Rad Source Technologies, Inc.
Dated: May 18, 2000 By: /s/ Randol Kirk
------------------------------------
Randol Kirk, Chief Executive Officer
9
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM
10-QSB FOR THE QUARTER ENDED MARCH 31, 2000, AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 5,430
<SECURITIES> 0
<RECEIVABLES> 100,587
<ALLOWANCES> 0
<INVENTORY> 125,136
<CURRENT-ASSETS> 232,153
<PP&E> 3,468
<DEPRECIATION> 1,042
<TOTAL-ASSETS> 245,509
<CURRENT-LIABILITIES> 526,262
<BONDS> 0
0
0
<COMMON> 2,410
<OTHER-SE> 283,164
<TOTAL-LIABILITY-AND-EQUITY> 245,509
<SALES> 248,575
<TOTAL-REVENUES> 248,575
<CGS> 154,867
<TOTAL-COSTS> 212,842
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 500
<INCOME-PRETAX> (119,634)
<INCOME-TAX> 0
<INCOME-CONTINUING> (119,634)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (119,634)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
