SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Quarterly Report
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
For the period ended March 31, 2000
QUINTEK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
California 000-29719 77-0505346
(State or other jurisdiction (Commission (IRS Employer
of incorporation or organization File Number) Identification No.)
537 Constitution Ave., Suite B
Camarillo, California 93012
(Address of principal executive office)
Issuer's telephone number: 805-383-3904
The issuer (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 for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
On May 17, 2000, 17,398,819 shares of the issuer's common stock were
outstanding.
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered to Section 12(g) of the Act:
Common Stock, par value $.01 per share
(Title of Class)
<PAGE> 2
Table of Contents
Part I. Financial Information............................................1
Item 1. Financial Statements..........................................1
Item 2. Management's Discussion and Analysis..........................6
Part II. Other Information................................................7
Item 2. Changes in Securities and Use of Proceeds.....................7
Item 6. Exhibits and Reports on Form 8-K..............................7
Exhibits..................................................................7
Reports on Form 8-K.......................................................7
Signatures................................................................8
ii
<PAGE> 3
Part I. Financial Information
Item 1. Financial Statements
QUINTEK TECHNOLOGIES, INC.
Balance Sheet
March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Assets
<S> <C> <C>
Current Assets:
Cash $ 17,763
Accounts receivable
(net of allowance for
doubtful accounts of $0
for both years) 297,095
Inventory 197,671
Other current assets 55,158
Total current assets 567,687
-----------
Property and Equipment, at Cost:
Equipment $ 138,881
Computer and office equipment 57,362
Furniture and fixtures 14,448
-----------
210,691
Less - Accumulated depreciation (151,305)
-----------
59,386
Leased property under capital
lease - net of accumulated amortization 9,436 68,822
----------- -----------
Other Assets:
Deposits 9,824
Intangible assets (net of accumulated
amortization of 15,867) 115,009
Employee receivables, net 7,673
Idle property 100,000 232,506
----------- -----------
$ 869,015
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
1
<PAGE> 4
Liabilities and Stockholders' Deficit
<TABLE>
<CAPTION>
<S> <C> <C>
Current Liabilities:
Accounts payable $ 431,077
Payroll and payroll taxes payable 16,481
Payroll taxes assumed in merger 173,784
Accrued interest payable 82,810
Other current liabilities 40,080
Investment 999
Current portion of obligations under capital lease 2,436
Convertible bonds 291,141
Unearned revenue 93,386
Note payable - related party 30,000
-----------
Total current liabilities 1,162,194
Obligations Under Capital Lease 6,164
Commitments And Contingencies --
Stockholders' Deficit:
Preferred stock - cumulative, par value
$.01 Authorized - 10,000,000 shares
Issued and outstanding - 0 shares $ --
Common stock - par value $.01
Authorized - 50,000,000 shares
Issued and outstanding - 16,939,466
shares 169,395
Additional paid-in capital 13,354,020
Retained deficit (13,822,758)
------------
Total stockholders' deficit (299,343)
-----------
$ 869,015
===========
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE> 5
QUINTEK TECHNOLOGIES, INC.
Statements of Operations
For the PERIODS Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------ ------------------------
<S> <C> <C> <C> <C>
2000 1999 2000 1999
----------- ------------ ------------ ------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
SALES $ 382,544 $ 247,548 $ 780,275 $ 547,745
COST OF SALES 289,948 393,802 511,691 594,886
----------- ------------ ------------ ------------
Gross margin 92,596 (146,254) 268,584 (47,141)
OPERATING EXPENSES 408,838 251,022 1,138,593 1,601,194
Loss from
operations (316,242) (397,276) (870,009) (1,648,335)
OTHER INCOME (EXPENSE)
Other income 177 9,947 3,197 11,398
Royalty income -- 279 -- 3,305
Interest expense (6,508) (22,607) (36,701) (51,040)
Acquisition
expense (600,000) (1,681,734) (600,000) (1,701,394)
----------- ------------ ------------ ------------
(606,331) (1,694,115) (633,504) (1,737,731)
----------- ------------ ------------ ------------
Net loss
before taxes (922,573) (2,091,391) (1,503,513) (3,386,066)
----------- ------------ ------------ ------------
PROVISION FOR
INCOME TAXES -- -- -- --
----------- ------------ ------------ ------------
Net loss $(922,573) $(2,091,391) $(1,503,513) $(3,386,066)
=========== ============ ============ ============
NET LOSS PER SHARE:
Basic and diluted $ (0.06) $ (0.19) $ (0.09) $ (0.31)
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE> 6
QUINTEK TECHNOLOGIES, INC.
Statements of Cash Flows
For the Nine Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
-------------------------
<S> <C> <C>
March 31 March 31
2000 1999
----------- -----------
(Unaudited) (Unaudited)
Net Cash Used in Operating Activities $ (48,729) $ (637,846)
Net Cash Provided by (Used In) Investing
Activities 5,655 (24,416)
Net Cash Provided by Financing Activities 21,773 789,393
----------- -----------
Net Increase (Decrease) in Cash (21,301) 127,131
Cash, Beginning of Year 39,064 885
----------- -----------
Cash, End of Year $ 17,763 $ 128,016
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 7
Quintek Technologies, Inc.
Note to the Financial Statements
March 31, 2000, and 1999
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited financial
statements of Quintek Technologies, Inc. (the Company) include all
adjustments (consisting only of normal recurring adjustments) considered
necessary to present fairly its financial position as of March 31, 2000,
the results of operations for the three and nine months ended March 31,
2000 and 1999, and cash flows for the nine months ended March 31, 2000
and 1999. The results of operations for the nine months ended March 31,
2000 and 1999 and the three months ended March 31, 2000 and 1999 are not
necessarily indicative of the results to be expected for the full year
or for any future period.
(2) Going Concern
The accompanying financial statements have been prepared in conformity
with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern; however, the Company has
sustained substantial operating losses. In view of this matter,
realization of a major portion of the assets in the accompanying balance
sheet is dependent upon continued operations of the Company, which in
turn is dependent upon the Company's ability to meet its financing
requirements, and the success of its future operations.
Management believes that actions presently being taken to revise the
Company's operating and financial requirements provide the opportunity
for the Company to continue as a going concern. Subsequent to the year
ended June 30, 1999, the Company has received $1,169,248 from the
exercise of warrants. The Company feels that this and other financing
arrangements coupled with product and services market introductions will
provide sufficient cash to meet its operating and business expansion
requirements for the year ending June 30, 2000.
(3) Net Loss per Share
Basic net loss per share is based on the weighted average number of
common shares outstanding of 15,331,351 and 10,736,027 for the nine
month periods ended March 31, 2000 and 1999, respectively. The weighted
average number of common shares outstanding for the three month periods
ended March 31, 2000 and 1999, was 16,230,084 and 11,091,307,
respectively. The basic and diluted earnings per share calculations are
the same because potential dilutive securities would have had an
antidilutive effect.
Securities that were not included in the earnings per share calculation
because they were antidilutive consist of the convertible bonds and
warrants.
5
<PAGE> 8
Item 2. Management's Discussion and Analysis
Results of operations
- ---------------------
Revenues totaled $780,275 and $547,745 for the nine months ended March 31,
2000 and 1999, respectively, an increase of $232,530 (42%) due to increased
machine sales. Revenues totaled $382,544 and $247,548 for the three months
ended March 31, 2000 and 1999, respectively, an increase of $134,996 (55%).
{State reason for increase.} The 2000 and 1999 revenues consisted largely of
sales of machines and parts, and to a lessor extent, sales of aperture cards
and software, service revenue, and machine rental fees.
Our cost of sales for the nine months ended March 31, 2000 decreased by
$83,195 (14%) from the same period in 1999, to $511,691 from $594,886. For
the three months ended March 31, 2000 and 1999, cost of sales was $289,948 and
$393,802, respectively, a decrease of $103,854 (26%). Cost of sales for both
periods consisted mostly of labor and products costs. Cost of sales and gross
margin in 1999 were greatly affected by a reserve for obsolescent inventory
that was established in that year.
Operating expenses totaled $1,138,593 for the nine month period ended March
31, 2000 as compared to $1,601,194 for the prior nine month period. The
$462,601 (29%) decrease in operating expenses is due primarily to a $143,000
decrease in bad debt expenses, a $107,000 decrease in outside services and
consulting, and a significant reduction directors' compensation and other
officer and employee expenses.
Operating expenses totaled $408,838 for the three month period ended March 31,
2000 as compared to $251,022 for the prior nine month period, in increase of
$157,816 (63%). The increase in 2000 is attributable to increased
professional fees and higher sales and marketing expenses.
We incurred acquisition expenses of $1,737,731 and $633,504 in the nine
months ended March 31, 1999 and 2000, respectively. In the quarter ended
March 31, 1999, we acquired Pacific Diagnostics Technologies (PDX), which was
a publicly held shell corporation that had filed for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. We acquired PDX as part of the
confirmation of PDX's plan of reorganization. The acquisition was made in
order to facilitate the establishment of a public trading market for our
stock.
In the quarter ended March 31, 2000, we acquired Juniper Acquisition
Corporation, a blank check corporation that was registered with the Securities
and Exchange Commission under the Securities Exchange Act of 1934. We
incurred acquisition expenses of $633,504 in the nine months ended March 31,
2000 in connection with the Juniper acquisition. We acquired Juniper in order
to comply with the OTC Bulletin Board requirement that all issuers must be
registered with the SEC under the Exchange Act, in order to continue to be
quoted on the OTC Bulletin Board.
Liquidity and capital resources
- -------------------------------
We have historically financed operations from the sale of common stock and the
conversion of common stock warrants. At March 31, 2000, we had cash on hand
of $17,763 and working capital of $(594,507) as compared to cash on hand of
$39,064 and working capital of $(954,679) at year end, June 30, 1999.
Net cash used in operating activities of $(48,729) for the nine months ended
March 31, 2000, is attributable primarily to operating losses as adjusted for
stock issued for services of $1,028,709, stock issued in connection with the
Juniper acquisition of $400,000, and depreciation of $33,247. Net cash used
in operating activities of $(637,846) for the nine months ended March 31,
1999, is attributable primarily to stock issued for services of $1,310,153 and
depreciation of $43,612.
Net cash provided by investing activities of $5,655 for the nine months ended
March 31, 2000 consists of collections on notes receivable from stockholders
netted against purchases of fixed assets. Net cash used in investing
activities of $(24,416) for the nine months ended March 31, 1999 is due
primarily to purchases of fixed assets.
Net cash provided by financing activities of $21,773 for the nine months ended
March 31, 2000 represents cash received from the exercise of common stock
warrants of $201,280, cash paid to retire bonds of $210,000, cash received
from repayment of stockholder loans of $30,000, and other miscellaneous
adjustments. Net cash provided by financing activities of $789,393 for the
6
<PAGE> 9
nine months ended March 31, 1999 consists mainly of cash received from the
exercise of common stock warrants and from the issuance of bonds.
We believe that the receipt of the net proceeds from the sale of the common
stock and the exercise of common stock warrants plus cash generated internally
from sales will be sufficient to satisfy our future operation, working capital
and other cash requirements for the remainder of the fiscal year. We believe
that we have sufficient internal and external resources to fund current
operations, develop new or enhanced products and/or services, and to respond
to competitive pressures and acquire complementary products, businesses or
technologies. However, we have yet to operate at a profit and do not know
when we may do so. Accordingly, we may require continued funding from sales
of our securities, and we cannot be sure that we will be able to raise
sufficient funds to continue operations. Our audit for the years ended June
30, 1999 and 1998, contained a going concern qualification.
Impact of year 2000
- -------------------
We experienced no interruptions in our operations when the calendar year
changed to the year 2000. We believe that our products and services, and
products which we purchase from third party vendors, are designed to operate
continuously regardless of date changes.
Part II. Other Information
Item 2. Changes in Securities and Use of Proceeds
From June 30, 1999, to March 31, 2000, we have issued 3,645,966 shares of our
common stock in transaction that were not registered under the Securities Act
of 1933. We intend to file an amendment to this Form 10-QSB to report the
consideration paid, exemptions claimed and other significant information
regarding these sales of unregistered securities.
Item 6. Exhibits and Reports on Form 8-K
Exhibits
27.1 Financial Data Schedule
Reports on Form 8-K
During the nine month period ended March 31, 2000, we filed the following
reports on Form 8-K:
1. On February 24, 2000, we acquired all of the outstanding stock of Juniper
Acquisition Corporation ("Juniper") in exchange for $200,000 and an
aggregate of 400,000 shares of common stock of the Company. As a result,
Juniper has become a wholly-owned subsidiary of our Company. Upon
effectiveness of the acquisition, pursuant to Rule 12g-3(a) of the
General Rules and Regulations of the Securities and Exchange Commission,
we elected to become the successor issuer to Juniper for reporting
purposes and elected to report under the Securities Exchange Act of 1934
effective February 24, 2000.
2. On March 3, 2000, we reported that on February 25, 2000, we dismissed
Brown, Armstrong, Randall, Reyes, Pauldin & McCown Accountancy
Corporation as its independent public accountant. Effective the same
day, we engaged Carpenter, Kuhen & Sprayberry as its principal accountant
to audit our financial statements. On March 8, 2000, we filed an
amendment to that 8-K which contained Brown, Armstrong, Randall, Reyes,
Paulding & McCown Accountancy Corporation's response to the previous
filing.
Subsequent to the end of the nine month period ended March 31, 2000, on April
26, 2000, we filed an amendment to the previously filed Form 8-K, dated
February 25, 2000, to report our Company's audited financial statements for
the years ended June 30, 1999 and 1998.
7
<PAGE> 10
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 hereunto duly authorized.
QUINTEK TECHNOLOGIES, INC.
Date: May 22, 2000 /s/ Thomas W. Sims
----------------------------------
Thomas W. Sims, President
8
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> MAR-31-2000
<CASH> 17,763
<SECURITIES> 0
<RECEIVABLES> 297,095
<ALLOWANCES> 0
<INVENTORY> 197,671
<CURRENT-ASSETS> 567,687
<PP&E> 229,276
<DEPRECIATION> 160,454
<TOTAL-ASSETS> 869,015
<CURRENT-LIABILITIES> 1,162,194
<BONDS> 291,141
0
0
<COMMON> 169,395
<OTHER-SE> (468,738)
<TOTAL-LIABILITY-AND-EQUITY> 869,015
<SALES> 780,275
<TOTAL-REVENUES> 780,275
<CGS> 511,691
<TOTAL-COSTS> 511,691
<OTHER-EXPENSES> 600,000
<LOSS-PROVISION> 2,664
<INTEREST-EXPENSE> 36,701
<INCOME-PRETAX> (1,503,513)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,503,513)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,503,513)
<EPS-BASIC> (0.10)
<EPS-DILUTED> (0.10)
</TABLE>
