<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
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 0-4123
-------
MOYCO TECHNOLOGIES, INC.
- -------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania 23-1697233
- -------------------------------- --------------------------
(State of Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
200 Commerce Drive, Montgomeryville, PA 18936
- -------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Are Code (215) 855-4300
-----------------
Indicate by check 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 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
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at February 7, 1997
- -------------------------------- -------------------------------
Common Sock, $.005 par value 4,140,340
Preferred Stock, $.005 par value 0
Page 1
<PAGE>
MOYCO TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
Part I - Financial Information
Item 1. Consolidated Financial Statements.
Consolidated Balance Sheets -
December 31, 1996 and June 30, 1996-------------- 3
Consolidated Income -
Three Months Ended December 31, 1996 and 1995---- 5
Six Months Ended December 31, 1996 and 1995------ 6
Consolidated Cash Flows -
Six Months Ended December 31, 1996 and 1995------ 7
Notes to Consolidated Financial Statements---------------- 8
Item 2. Management's Discussion and Analysis---------------------- 13
Part II - Other Information
Signatures ----------------------------------------------- 17
REMARKS:
The consolidated financial statements of Moyco Technologies, Inc. and its
subsidiaries (the "Company" or "Registrant") included herein have been prepared
by the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. 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 such
rules and regulations. In the opinion of the Company, the accompanying
statements reflect all adjustments necessary to present fairly the financial
position, results of operations and cash flows for those periods indicated, and
contain adequate disclosure to make the information presented not misleading.
Such adjustments are of a normal, recurring nature unless otherwise disclosed in
the notes to consolidated financial statements. It is suggested that these
consolidated condensed financial statements be read in conjunction with the
financial statements and notes thereto included in the Company's latest annual
report on Form 10-K.
Results of operations for any three-month period are not necessarily indicative
of the results of operations for a full year.
Page 2
<PAGE>
Part I - Financial Information
Item 1. Consolidated Financial Statements.
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
ASSETS (Substantially pledged) (Unaudited)
----------------- -------------
<S> <C> <C>
Current Assets
Cash and Cash Equivalents $ 1,406,002 $ 1,402,088
Accounts receivable, net of doubtful account
allowances of $111,710 at December 31, 1996
and $78,990 at June 30, 1996 1,902,372 1,600,764
Note Receivable-Trade -- 11,519
Other Receivable -- 8,215
Inventories 4,114,645 3,283,779
Deferred Taxes 68,856 68,856
Prepaid Taxes 41,423 117,644
Prepaid expenses 90,648 24,218
------------ ------------
Total Current Assets 7,623,946 6,517,083
------------ ------------
Property, Plant and Equipment
Land 602,433 452,433
Buildings and improvements 4,559,278 4,386,877
Automotive equipment 48,511 48,511
Machinery and equipment 5,352,282 4,822,188
Furniture and fixtures 639,413 534,068
------------ ------------
11,201,917 10,244,077
Less: Accumulated Depreciation (4,695,082) ( 4,350,226)
------------ ------------
Net Property, Plant and Equipment 6,506,835 5,893,851
------------ ------------
Other Assets 1,080,232 133,080
------------ ------------
TOTAL ASSETS $ 15,211,013 $ 12,544,014
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
Page 3
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
LIABILITIES AND SHAREHOLDERS' EQUITY (Unaudited)
------------- ------------
<S> <C> <C>
Current Liabilities
Current maturities of long-term debt $ 967,883 $ 895,408
Accounts payable 572,639 381,372
Accrued expenses:
Payroll 126,328 205,092
Interest 33,750 33,750
Other 357,470 284,086
----------- -----------
Total Current Liabilities 2,058,070 1,799,708
Long-term debt, net of current maturities 6,343,485 5,616,112
Accrued Liabilities - Long-Term 450,000 --
Deferred income taxes 371,964 152,704
----------- -----------
Total Liabilities 9,223,519 7,568,524
----------- -----------
Shareholders' Equity
Preferred stock, $.005 par value -- --
Authorized 2,500,000 shares,
None issued
Common stock, $.005 par value 24,159 23,083
Authorized 15,000,000 shares
Issued 4,732,215 shares
Additional paid-in capital 3,933,432 3,118,239
Retained Earnings 2,150,856 1,955,121
Less: Treasury stock 591,875 shares at December 31,
1996 and at June 30, 1996, at cost ( 120,953) ( 120,953)
----------- -----------
Total Shareholders' Equity 5,987,494 4,975,490
----------- -----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $15,211,013 $12,544,014
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 4
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31
------------------------
1996 1995
------------------------
<S> <C> <C>
Net Sales $3,751,015 $3,181,420
Cost of Sales 2,266,706 1,776,816
---------- ----------
Gross Profit 1,484,309 1,404,604
Operating Expenses 1,299,402 884,041
---------- ----------
Income from Operations 184,907 520,563
---------- ----------
Other Income (Expenses)
Interest Expense ( 151,131) ( 212,788)
Other Income (Expense) 19,153 ( 857)
---------- ----------
Total Other Income (Expense) ( 131,978) ( 213,645)
---------- ----------
Income Before Provision for Income Taxes 52,929 306,918
---------- ----------
Provision for Income Taxes 6,204 129,168
---------- ----------
Net Income 46,725 177,750
Retained Earnings, beginning of period 2,104,131 1,278,460
---------- ----------
Retained Earnings, end of period $2,150,856 $1,456,210
========== ==========
Earnings per Share $ 0.01 $ 0.04
========== ==========
Weighted Average Number of Common Shares 4,140,240 4,019,215
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 5
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1996 1995
-----------------------
<S> <C> <C>
Net Sales $6,996,708 $5,891,504
Cost of Sales 4,237,659 3,439,799
---------- ----------
Gross Profit 2,759,049 2,451,705
Operating Expenses 2,197,517 1,718,930
---------- ----------
Income from Operations 561,532 732,775
---------- ----------
Other Income (Expenses)
Interest Expense ( 327,057) ( 376,037)
Other Income 35,869 68,416
---------- ----------
Total Other Income (Expense) ( 291,188) ( 307,621)
---------- ----------
Income Before Provision for Income Taxes 270,344 425,154
---------- ----------
Provision for Income Taxes 74,609 178,926
---------- ----------
Net Income 195,735 246,228
Retained Earnings, beginning of period 1,955,121 1,209,982
---------- ----------
Retained Earnings, end of period $2,150,856 $1,456,210
========== ==========
Earnings per Share $ 0.05 $ 0.06
========== ==========
Weighted Average Number of Common Shares 4,129,489 4,019,215
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
Page 6
<PAGE>
MOYCO TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
DECEMBER 31
-----------------------
1996 1995
-----------------------
<S> <C> <C>
Net Cash provided by operating activities ($ 47,710) $ 325,953
Cash flows from investing activities
(Expenditures) Retirements for property, plant and
equipment ( 61,144) ( 508,252)
Expenditures for equipment deposits - ( 432,401)
---------- ----------
Net Cash (used in) investing activities ( 61,144) ( 940,653)
---------- ----------
Cash flows from financing activities
Reduction of long-term debt obligations ( 790,456) ( 347,198)
Proceeds from exercise of options 1,423 -
New borrowings of long-term debt 901,801 840,000
---------- ----------
Net Cash Provided by financing activities 112,768 492,802
---------- ----------
Net Increase (Decrease) in cash 3,914 ( 121,898)
Cash and cash equivalents, beginning of period 1,402,088 1,097,323
---------- -----------
Cash and cash equivalents, end of period $1,406,002 $ 975,425
========== ===========
Cash paid during the period for interest $ 71,620 $ -
========== ===========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
-------------------------------------------------------------------
Refinance long-term debt $ 88,199 $ -
========== ===========
Equipment sold for retirement of debt $ 18,399 $ -
========== ===========
Merger accounted for under the purchase method:
Step-up in basis of assets to fair value $ 492,579 $ -
Goodwill 874,966 -
Stock Issued ( 639,631) -
Liabilities assumed or created ( 727,913) -
</TABLE>
Page 7
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies
Nature of Business
The Company manufacturers professional Dental waxes, supplies,
instruments, mirrors, endodontic materials and equipment, medicaments,
precision abrasives, commercial abrasives, CMP materials, and is a
repacker of other disposable products for commercial and industrial use
and sells to both domestic and international customers.
Principles of Accounting
The balance sheet as of December 31, 1996 and the related statements of
operations and retained earnings, and cash flows for the six months
ended December 31, 1996 and 1995 are unaudited in the opinion of
management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted
only of normal recurring items. Interim results are not necessarily
indicative of results for the full year.
Principles of Consolidation
The consolidated financial statements include the accounts of Moyco
Technologies, Inc. and its wholly owned subsidiaries. All intercompany
accounts and transactions have been eliminated in consolidation.
The assets and liabilities of Thompson Dental Manufacturing Co., Inc.
have been consolidated with the Company as of August 8, 1996 (purchase
date).
Cash and Cash Equivalents
The Company considers all highly liquid investments with a maturity of
three months or less when purchased to be cash equivalents.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect certain reported amounts and disclosures.
Actual results may differ from those estimates.
Valuation of Inventories
Inventories are stated at the lower of cost or market. Costs of raw
materials and cartons are determined by the first-in, first-out method.
Labor and overhead included in work-in-process and finished goods are
determined at average cost. Ending inventories at interims are
estimated by the gross profit method.
Page 8
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies (Continued)
Property, Equipment and Depreciation
Property and equipment are stated at cost. Depreciation is computed by
the straight-line method over the assets expected useful lives as
follows:
Buildings and Improvements 10-25 Years
Machinery, Equipment, Furniture
and Fixtures 5-10 Years
Automotive Equipment 3 Years
Patents and Trademarks
The costs of patents and trademarks are capitalized and amortized to
operations over their estimated useful lives or statutory lives,
whichever is shorter. Amortization is computed by the straight-line
method.
Mortgage Costs
Mortgage costs are being amortized over the terms of the related
mortgages.
Income Taxes
The Company currently accounts for income taxes in accordance with the
provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes."
Reclassifications
Certain accounts in the prior-year financial statements have been
reclassified for comparative purposes to conform with the presentation
in the current-year consolidated financial statements.
Research and Development
Research and development costs are charged to expense as incurred.
Earnings Per Common Share
Earnings per common share have been computed by dividing earnings for
each period by the weighted average number of common shares outstanding
during each period.
Advertising Costs
Advertising costs are charged to expense as incurred.
Fair Value of Financial Instruments
The following notes summarize the major methods and assumptions used in
estimating the fair values of financial instruments.
Page 9
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
Note 1: Summary of Significant Accounting Policies (Continued)
Cash and Cash Equivalents
The carrying amount approximates fair value due to the relatively short
period to maturity of these instruments.
Long-Term Debt
The fair value of the Company's long-term debt is estimated based on
the quoted market prices for the same or similar issues or on the
current prices for the same or similar issues or on the current rates
offered to the Company for debt of the same remaining maturities.
The following table presents the carrying amounts and estimated fair
values of the Company's financial instruments:
December 31, 1996 June 30, 1996
--------------------------------------------------------------------
Carrying Fair Carrying Fair
Amount Value Amount Value
--------------------------------------------------------------------
Cash and Cash
Equivalents $1,406,002 $1,406,002 $1,402,088 $1,402,088
Accounts
Receivable 1,902,372 1,902,372 1,600,764 1,600,764
Accounts Payable
and Accrued
Expenses 1,090,187 1,090,187 904,300 904,300
Long-Term Debt
including
current portion 7,311,368 6,890,040 6,511,520 6,080,263
-------------------------------------------------------------------
Note 2: Inventories
The components of inventories are as follows:
December 31, June 30,
1996 1996
---------- ----------
Raw materials $ 888,344 $ 761,072
Work-in-process 1,216,022 873,884
Finished goods 1,790,236 1,450,411
Cartons 220,043 198,412
---------- ----------
$4,114,645 $3,283,779
========== ==========
Page 10
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
Note 3: Long-Term Debt
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
------------ --------
<S> <C> <C>
Mortgages Payable
Banks
Mortgage payable in monthly installments of $6,569, including
interest at .85% of prime (not to exceed 15% or be below
8.5%), which matures in August 2001. Rate at December 31,
1996 was 8.5%. $ 282,788 $ 306,827
Mortgage payable in monthly installments of $5,053 including
interest at 8.75% for five years and at prime plus 1% for the
remaining term through maturity December 1, 2009. 470,559 479,696
Mortgage payable in monthly installments of $14,950 including
interest at 9.25% for five years and at prime plus 1% for the
remaining term through maturity May 1, 2010. 1,379,728 1,403,848
Mortgages Payable
Municipal Authorities
Mortgage payable in 180 monthly installments of $1,952,
including interest at 2% which matures April 1, 2010. 269,367 278,314
Mortgage payable in 180 monthly installments of $6,371,
including interest at 2% which matures July 1, 2010. 903,812 932,735
Other
Auto loan payable in forty-eight monthly installments of
$838 plus interest at 7.75%. 13,485 18,764
Commercial term note payable in monthly installments of
$30,000 plus interest at prime rate plus 1/2% beginning August
1, 1995 which matures August 1, 2000. 1,290,000 1,470,000
Note payable in monthly installments of $2,333 plus interest
at 8.65% beginning November 1, 1995 which matures
November 1, 2000. 107,338 121,336
Note payable in quarterly interest-only payments through 1996.
Thereafter, twenty equal quarterly payments including principal
and interest at prime. (interest rate not to exceed 10% or be
below 8%). Rate at June 30, 1996 was 8.25%. Subordinated to
prime lender. 1,500,000 1,500,000
</TABLE>
Page 11
<PAGE>
MOYCO TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996
(UNAUDITED)
Note 3: Long-Term Debt (Continued)
<TABLE>
<CAPTION>
December 31, June 30,
1996 1996
------------ --------
<S> <C> <C>
Note payable to bank, due August 2002, interest at 8.25%,
interest only payable monthly through August 1997. Monthly
payments of $15,297, including interest, are due thereafter
through August 2002. $ 750,000 $ -
Mortgage payable due December 2011, interest at prime plus
1.5% (9.75% at December 31, 1996), payable $2,543 monthly,
including interest; secured by land and building. 240,000 -
Treasury stock contract payable to estate of former
shareholder, due July 1998, interest at 9%, payable $500
quarterly, including interest. 3,036 -
Capital lease obligation, due October 2001, interest at 10%,
payable $2,209 monthly, including interest, through October
2001; secured by equipment. 101,255 -
---------- ---------
7,311,368 6,511,520
Less: Current Maturities ( 967,883) ( 895,408)
---------- ----------
$6,343,485 $5,616,112
========== ==========
</TABLE>
As of December 31, 1996 long-term debt matures as follows:
1997 $ 967,883
1998 1,046,111
1999 1,068,969
2000 942,860
2001 714,478
Thereafter 2,571,067
----------
$7,311,368
==========
Substantially all of the Company's assets are pledged as collateral for
long-term debt.
Page 12
<PAGE>
Item 2. Management's Discussion and Analysis
MOYCO TECHNOLOGIES, INC.
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED DECEMBER 31, 1996
Results of Operations
Comparison of recent quarter (12/31/96) and immediate preceding Quarter
(9/30/96):
Net Sales increased by $505,322 and is mainly attributable to the
increased unit sales in both our dental and abrasive units.
The increase of $209,569 in gross profit is correlated to the increase
in volume. The procedure for computing inventories by department is the
gross profit method using the previous fiscal years actual gross profit
percentage, unless management is aware of a significant adjustment
required in the quarter, continues as the standard procedure in
computing interim quarterly accounting.
Inventories increased primarily as a result of the merger with Thompson
Dental Manufacturing Co., Inc. In addition, the abrasive division had
to maintain a high level of inventory to accommodate contract customers
just in time delivery schedules.
Operating expenses increased as a result of strategic investment costs
related to the Ultralap Abrasives Division projections for slurries
used in high-tech applications including CMP (Chemical Mechanical
Planarization) used in developing the next generation of semi-conductor
chips. In addition, legal fees and related costs for the government
investigation concerning the prior manufacture and deliveries of foot
powder were $154,581. There were also extra expenses related to the
merger with Thompson Dental.
The decrease in net income is related to operating expenses as referred
to above.
Working capital is sufficient for current operating needs however, the
need for additional sales levels will put further stress on working
capital needs. Also, professional fees and possible regulatory
penalties could place additional stress on working capital.
Inflationary pressures have significantly less bearing on current
profitability than the continued need for additional sales.
Page 13
<PAGE>
MOYCO TECHNOLOGIES, INC.
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996
Comparison of recent Quarter (12/31/96) and Equivalent Quarter
(12/31/95):
Net sales increased by $569,595 primarily in our dental division as a
result of increased demand of the Moyco Union Broach product line and
the sales generated by the Thompson Dental Manufacturing Co. Inc.
subsidiary.
The increase of $79,705 in gross profit is correlated to the increase
in volume. The procedure for computing inventories by department by the
gross profit method, using the previous fiscal years actual gross
profit percentage, unless management is aware of a significant
adjustment required in the quarter, continues as the standard procedure
in computing interim quarterly accounting.
Operating expenses increased as a result of the Thompson Dental merger,
increased strategic investment costs related to the Ultralap Division
CMP (chemical mechanical planarization) slurry project, and legal fees
and related costs associated with the government investigation
concerning the prior manufacture and deliveries of foot powder.
Working capital increased by repositioning current debt to long-term
debt, increased inventories and accounts receivables.
Working capital is sufficient for current operating needs, however the
need for additional sales levels is critical. Also, continuing
professional fees and possible regulatory penalties could place
additional stress on working capital.
Page 14
<PAGE>
MOYCO TECHNOLOGIES, INC.
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
SIX MONTHS ENDED DECEMBER 31, 1996
Comparison or Recent Year to date (12/31/96) and Equivalent Period in
Prior Year (12/31/95):
Net sales increased by $1,105,204. The increase was in both our
abrasive and dental segments. Costs of sales remained stable. The
procedure for computing interim inventories by department by the gross
profit method, using the previous fiscal years actual gross profit
method, using the previous fiscal years actual gross profit percentage,
unless management is aware of a significant adjustment required in the
quarter, continues as the standard procedure in computing interim
accounting.
Operating expenses increased $478,587 and is related to costs
associated with the Thompson Dental merger, extra-ordinary legal fees
and related costs associated with the government investigation
regarding the prior manufacture and deliveries of foot powder, and
product development especially relating to CMP abrasive slurries used
for the development of the next generation of semiconductor chips.
The decrease in net profit of $50,493 is directly related to the
increase in operating expense.
Increased sales are a constant requirement for growth. We continue to
seek acquisitions as well as new products to expand our critical mass.
In our high tech development as well as the dental industry, there are
many companies with substantially greater resources. In addition,
emerging as well as existing technologies are subject to rapid change
which can create large savings in sales in any given period. Some of
our new products are being tested and we continue to receive favorable
operating results. Rapid growth will require the need for additional
funds and alternative means of financing the potential growth are being
investigated.
Page 15
<PAGE>
MOYCO TECHNOLOGIES, INC.
MANAGEMENT'S ANALYSIS AND DISCUSSION OF
FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS
FOR THE
THREE MONTHS ENDED DECEMBER 31, 1996
Liquidity and Capital Resources:
It is anticipated that pressures on earnings will continue. The
continuing need to increase sales to offset costs is a reality. The
Company is committed to the Ultralap CMP (chemical mechanical
planarization) slurry project which will require additional funds. In
addition, professional fees and possible regulatory penalties could
effect profits. The addition of capital improvement projects of plant
facilities and equipment, along with the financial commitments will
require sales growth and earnings to repay the additional debt service.
Moyco currently has enjoyed twenty-five straight quarters of
profitability. Changes in the high tech products sold by our abrasives
division are subject to swings which directly effect net sales and
profits.
Litigation:
The Company has retained legal counsel to represent it in a government
investigation in which the government has asserted it has evidence of
violations of law and/or regulations that may have been committed by
the Company, certain officers and/or employees of the Company. Legal
counsel has not yet completed its investigation of these matters and,
therefore, cannot evaluate the likelihood of an unfavorable outcome to
the Company. The investigation centers around certain government
contracts for the prior manufacture and deliveries of foot powder.
Legal fees and related costs incurred during the quarter were $154,
581. The Company expects additional legal fees and related costs during
the next quarter.
There were no other material legal issues during the quarter.
Page 16
<PAGE>
Part II - Other Information
MOYCO TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of Section 13 and 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.
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report is signed below by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated.
MOYCO TECHNOLOGIES, INC.
(Registrant)
Date February 14, 1997 By /s/ Marvin S. Sternberg
-------------------------- -----------------------
Marvin E. Sternberg
President and Chief Executive Officer
Chairman of the Board
Date February 14, 1997 By /s/ Jerome Lipkin
-------------------------- -----------------
Jerome Lipkin
Vice President and Director
Executive Officer
Date February 14, 1997 By /s/ William G. Woodhead
-------------------------- -----------------------
William G. Woodhead
Secretary/Treasurer and Director
Page 17
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,406,002
<SECURITIES> 0
<RECEIVABLES> 2,014,082
<ALLOWANCES> 111,710
<INVENTORY> 4,114,645
<CURRENT-ASSETS> 7,623,946
<PP&E> 11,201,917
<DEPRECIATION> 4,695,082
<TOTAL-ASSETS> 15,211,013
<CURRENT-LIABILITIES> 2,058,070
<BONDS> 0
0
0
<COMMON> 24,159
<OTHER-SE> 5,963,335
<TOTAL-LIABILITY-AND-EQUITY> 15,211,013
<SALES> 6,996,708
<TOTAL-REVENUES> 7,032,577
<CGS> 4,237,659
<TOTAL-COSTS> 6,435,176
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327,057
<INCOME-PRETAX> 270,344
<INCOME-TAX> 74,609
<INCOME-CONTINUING> 195,735
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 195,735
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
