U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the quarterly period ended February 28, 1999.
[ ] 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: 0-8880
MARITIME TRANSPORT & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
New York 11-2196303
(State of jurisdiction of (I.R.S. Identification No.)
Employerincorporation or organization)
1535 Memphis Junction Road
Bowling Green, KY 42101
(Address of principal executive offices)
(800) 726-0337
(Registrant's telephone number, including area code)
108 Main St. Stamford, NY, 12167-1137
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark, whether the registrant:: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the 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
The Company had 15,463,021 shares of common stock outstanding
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
The condensed financial statements for the periods ended November 30, 1998
included herein have been prepared by Maritime Transport & Technology, Inc.,
(the "Company") without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission (the Commission"). In the opinion of
management, the statements include all adjustments necessary to present fairly
the financial position of the Company as of February 28, 1999, and the results
of operations and cash flows for the nine month periods ended February 28, 1998
and 1999.
The Company's results of operations during the nine months of the
Company's fiscal year are not necessarily indicative of the results to be
expected for the full fiscal year.
The financial statements included in this report should be read in
conjunction with the financial statements and notes thereto in the Company's
Annual Report on Form 10-K for the fiscal years ended May 31, 1997 and 1998.
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED PROFORMA BALANCE SHEET
February 28,
May 31, 1999
1998 Unaudited
Assets
Current assets
<S> <C> <C>
Cash and cash equivalents $145,079 $104,077
Accounts receivable 310,086 527,370
Inventory 170,795 213,314
Note receivable 13,200 13,200
Corporate income taxes receivable 8,925
Prepaid expenses 1,200 1,400
----- ---------------
Current assets 649,285 859,361
Capital assets-net 44,043 4,850
Other assets
Loans receivable - non affiliated 27,499 42,501
Loans receivable-affiliated 91,351 88,282
Security deposit 805 805
---- ------
Total other assets 119,655 131,588
-------- ------
Total assets $812,983 $ 995,771
======== ========
Liabilities and
Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $235,913 $305,203
Customer deposits 61,406 102,782
Corporate income tax payable 1,580 18,475
Investor loans payable 131,500 162,346
Notes payable-bank 109,338 121,502
---------- ------
Total current liabilities 539,737 710,308
Long term liabilities
Note payable - bank 13,855
------
Total liabilities 553,592
Capital stock
Common stock-authorized 80,000,000 common
shares, par value $.01 each, at May
31, 1998 and February 28, 1999the shares
outstanding were 15,130,705
and 15,463,021 respectively 151,308 154,631
Additional paid in capital 494,508 823,501
Retained earnings (386,425) (692,669)
--------- ---------
Total stockholders' equity 259,391 285,463
-------- -------
Total liabilities and stockholders' equity $812,983 $ 995,771
======== ========
See accompanying notes to financial statements.
F1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED February 28,
1998 1999
Unaudited Unaudited
<S> <C> <C>
Revenue $-0- $1,339,364
Costs of goods sold -0- 661,589
---------
Gross profit -0- 677,775
Operations:
General and administrative 43 888,511
Depreciation and amortization
48,539 ------ --------
Total expense 43 937,050
Income before corporate taxes (43) (259,275)
Corporate income taxes 27,400
Other income and expenses
Interest Income 1,052
Interest expense (20,621)
-------
Total other income and expenses (19,569)
Net income (loss) $(43) $(306,244)
===== =======
Net income (loss) per share -basic $(0.00) $(0.02)
======== =====
Number of shares outstanding-basic 15,130,705 15,463,021
=========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED February 28,
1998 1999
Unaudited Unaudited
<S> <C> <C>
Revenue $-0- $510,439
Costs of goods sold -0- 289,382
---- -------
Gross profit -0- 221,057
Operations:
General and administrative 43 523,368
Depreciation and amortization -0-
------
Total expense 43 523,368
Income before corporate taxes (43) (302,311)
Corporate income taxes 20,865
Other income and expenses
Interest Income 896
Interest expense (15,871)
-------
Total other income and expenses (14,975)
Net income (loss) $(43) $(338,151)
===== =======
Net income (loss) per share -basic $(0.00) $(0.02)
======== =====
Number of shares outstanding-basic 15,130,705 15,463,021
=========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHS ENDED
February 28, February 28,
1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $(43) $(306,244)
Non cash transactions 100,000
Depreciation -0- 48,539
Account receivables (217,284)
Inventory (42,519)
Prepaid expenses (200)
Accounts payable and accrued expenses 69,290
Customer deposits payable 41,376
Corporate taxes payable 25,820
----- -------
TOTAL CASH FLOWS FROM OPERATIONS (43) (281,222)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital assets (9,318)
Note receivable-affiliate 3,069
Note receivable- non affiliate (15,002)
--------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (21,251)
CASH FLOWS FROM FINANCING ACTIVITIES
Loan payable- affiliate
Loan payable- investors 30,846
Sale of shares of common stock 232,316
Note payable-bank (1,691)
---------
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 261,471
NET INCREASE (DECREASE) IN CASH (43) (41,002)
CASH BALANCE BEGINNING OF PERIOD 53 145,079
--- -------
CASH BALANCE END OF PERIOD $10 $104,077
=== =======
</TABLE>
See accompanying notes to financial statements
<PAGE> .
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
PROFORMA CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Additional Accumulated
Common Stock Common paid in deficit during
Stock capital development stage Total
<S> <C> <C> C> <C> <C> <C>
June 1, 1994 38,484,549 384,845 $-0- $(384,845) $-0-
May 31, 1995 Net profit 1,579 1,579
---------- --------- ------ ------ -----
May 31, 1995 38,484,549 $384,845 $-0- $(383,266) $1,579
May 31, 1996 Net profit 1,866 1,866
---------- -------- ------ ------ -----
May 31, 1996 38,484,549 384,845 $-0- (381,400) 3,445
May 31, 1997 Net loss (4,952) (4,952)
-------- -------- ----- ------ ------
May 31, 1997 38,484,549 384,845 $-0- $(386,372) $(1,527)
April 14, 1998(1) 3,848,455 38,485 346,360 (386,372) (1,527)
April 15, 1998(2) 11,282,250 112,823 148,148 228,981
May 31, 1998 Net loss (53) (53)
---------- -------- --------- ------- -------
May 31, 1998 15,130,705 $151,308 494,508 $(386,425) 259,391
Unaudited
Exercise of options 100,000 1,000 99,000 100,000
Sale of shares 232,316 2,323 229,993 232,316
Net loss (306,244) (306,244)
---------- --------- -------- ------- ------
February 28, 1999 15,463,021 $154,631 $823,501 $(692,669) $285,463
========== ======== ======== ========= ========
(1) Reflects a 10 to 1 reverse split.
(2) Reflects the issuance of shares for acquisitions valued at $.02 per share.
</TABLE>
See accompanying notes to financial statements
<PAGE>
MARITIME TRANSPORT & TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED NOVEMBER 30, 1998
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements of Maritime Transport &
Technology, (the "Company"), reflect all adjustments which are, in the opinion
of management, necessary to a fair statement of the results of the interim
periods presented. All such adjustments are of a normal recurring nature. The
financial statements should be read in conjunction with the notes to financial
statements contained in the Company's Annual Report on Form 10-Ksb for the year
ended May 31, 1998.
2. NET INCOME PER SHARE
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, EARNINGS PER SHARE ("Statement No.
128"). Statement No. 128 applies to entities with publicly held common stock or
potential common stock and is effective for financial statements issued for
periods ending after December 15, 1997. Statement No. 128 replaces APB Opinion
15, Earnings per Share ("EPS"). Statement No. 128 requires dual presentation of
basic and diluted earnings per share by entities with complex capital
structures. Basic EPS includes no dilution and is computed by dividing net
income by the total number of common shares outstanding for the period. Diluted
EPS reflects the potential dilution of securities that could dilute the shares
in computing the earnings of the Company such as common stock which may be
issuable upon exercise of outstanding common stock options or the conversion of
debt into common stock. Pursuant to the requirements of the Securities and
Exchange Commission, the calculation of the shares used in computing basic and
diluted EPS include the shares of common stock issued for the acquisition of
B.G. Banking Equipment, Inc. and Financial Building Equipment Exchange, Inc.
Shares used in calculating basic and diluted net income per share were as
follows:
<TABLE>
For the nine months For the six months
months ended months ended
February 28, February 28,
1998 1999
------------- --------------
<S> <C> <C>
Total number common
shares outstanding 15,130,705 15,463,021
========== ==========
</TABLE>
3. ACCOUNTING FOR INCOME TAXES
The Company follows Statement of Financial Accounting Standards ("SFAS")
No. 109, "Accounting for Income Taxes," which requires an asset and liability
approach of accounting for income taxes. Deferred tax assets and liabilities are
computed annually for differences between financial statement basis and tax
basis of assets, liabilities and available general business tax credit
carry-forwards. A valuation allowance is established when necessary to reduce
deferred tax assets to the amount expected to be realized.
4. Issuance of Shares of Common Stock
The Company issued 100,000 shares of common stock through exercise of
100,000 options issued pursuant to the Company's stock option plan value at
$1.00 for an aggregate consideration of $100,000 in consulting expenses.
The Company sold pursuant to a private placement 232,316 shares of common
stock at $1.00 per share for an aggregate consideration of $232,316.
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of Operation
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
for the Six months ended November 30, 1997 and 1998
------------------------------------------------
Except for the description of historical facts contained herein, this Form
10QSB contains certain forward looking statements that involve risks and
uncertainties as detailed herein and from time to time in the Company's filings
with the Securities and Exchange Commission and elsewhere. Such statements are
based on management's current expectations and are subject to a number of
factors and uncertainties which could cause actual results to differ materially
from those described in the forward-looking statements. These factors include,
among others, the Company's fluctuations in sales and operating results, risks
associated with international operations and regulatory, competitive and
contractual risks and product development.
Results of operations for the nine months ended February 28, 1999 as
compared to the nine months ended February 28, 1998.
- - - ----------------------------------------------------------------------------
Revenues were $1,339,364 nine months ended February 28, 1999 as compared to
$-0-nine months ended February 28, 1998. Costs of goods sold and related
expenses nine months ended February 28, 1999, were $661,589 as compared to $0
nine months ended February 28, 1998 representing a cost of goods sold and
related expenses of 100.0%nine months ended February 28, 1999 as compared to
0%nine months ended February 28, 1998.
General and administrative costs nine months ended February 28, 1999 were
$888,511, an increase of 100.0% over expenses of $43 nine months ended February
28, 1999.
Liquidity and capital resources as of the end of the six months ended November
30, 1998.
- - - --------------------------------------------------------------------------
The Company's cash balance was $104,077 and working capital was a $149,053
as at February 28, 1999.
The Company's primary short-term needs for capital, which are subject to
change, are for the fullfillment of orders, the search for the acquisition of
quality used equipment at the right price, pay continuing operating expenses.
Income tax: As of November 30, 1998, the Company has a loss $(306,244). The
Company's ability to utilize its tax credit carry-forwards in future years was
subject to an annual limitation pursuant to the "Change in Ownership Rules"
under Section 382 of the Internal Revenue Code of 1986, as amended. However, the
use of the Company's ultilization of carry forward losses was lost because of
the change in ownership of the Company.
The Company expects its capital requirements to increase over the next
several years as it continues to develop its business and seek new company
related acquisitions, increases in sales and administration infrastructure and
embarks on developing in-house business capabilities and facilities. The
Company's future liquidity and capital funding requirements will depend on
numerous factors, including the extent to which the Company's present management
can fund the continued capital requirements, the timing of regulatory actions
regarding the Company's potential acquisitions, the costs and timing of
expansion of sales, marketing activities, facilities expansion needs, and
competition in the mortgage business entered into.
The Company believes that its available cash and cash from management
contributions will be sufficient to satisfy its funding needs for the day to day
mortgage banking activities for at least the next 12 months. Thereafter, if cash
generated from any newly acquired or developed business operations is
insufficient to satisfy the Company's working capital and capital expenditure
requirements, the Company may be required to sell additional equity or debt
securities or obtain additional credit facilities. There can be no assurance
that such financing, if required, will be available on satisfactory terms, if at
all.
Year 2000 Readiness
The following disclosure is a Year 2000 ("Y2K") readiness disclosure
statement pursuant to the Year 2000 Readiness and Disclosure Act.
The Company's Year 2000 program is designed to minimize the possibility of
serious Year 2000 interruption. Possible Year 2000 worst case scenarios include
the interruption of significant parts of the Company's business as a result of
internal business system failure or the failure of the business systems of its
suppliers, distributors or customers. The potential effect to the operations of
the present business are minimized currently because the Company's reliance upon
computer systems in the day to day operations is minimal.
However, the Company decided to significantly upgrade its "business
systems" (all computer hardware and software used to run its businesses
including its operations management, administration and financial systems).
Specifications were developed for desired capabilities, including Year 2000
compliance. In 1998 the Company began assessing its Year 2000 exposure and
commenced implementation of a plan to achieve Year 2000 readiness. Based on its
review to date, the Company believes that its products and business software are
Year 2000 compliant.
The Company has also begun to survey major suppliers, distributors, and
customers to determine the status and schedule for their Year 2000 compliance.
To date, no significant issues have been identified, and the survey is expected
to be completed in the third quarter of 1999. Where it believes that a
particular supplier's situation poses unacceptable risks, the Company plans to
identify an alternative source.
The costs of the readiness program for business systems, other
infrastructure areas, and suppliers are a combination of incremental external
spending and use of existing internal resources. In total, the Company expects
to spend less than $1,000 to achieve readiness, of which approximately 10% has
been expended to date. This amount is based on the costs to upgrade the existing
business systems to Y2K compliant versions.
Milestones and implementation dates and the costs of the Company's Year
2000 readiness program are subject to change based on new circumstances that may
arise or new information becoming available that may change the underlying
assumptions or requirements.
Recent Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (SFAS 133) was issued in June
1998. It is effective for all fiscal years beginning after June 15, 1999. The
new standard requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the values of those derivatives would be accounted for depending on
the use of the derivatives and whether they qualify for hedge accounting. The
key criterion for hedge accounting is that the hedging relationship must be
highly effective in achieving offsetting changes in fair value or cash flows.
The Company does not currently engage in derivative trading or hedging activity.
The Company will adopt SFAS 133 in the fiscal year ending December 31, 1999,
although no impact on operating results or financial position is expected.
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use
In March of 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use". SOP 98-1 requires computer
software costs associated with internal use software to be charged to operations
as incurred until certain capitalization criteria are met. SOP 98-1 is effective
beginning January 1, 1999. The Company is currently assessing the impact that
adoption of this statement will have on consolidated financial position and
results of operations.
Forward - Looking Information
The Quarterly Report on Form 10-QSB contains forward-looking statements
concerning the Company's financial performance and business operations. The
Company wishes to caution readers of this Report on Form 10-K that actual
results might differ materially from those projected in the forward-looking
statements contained herein.
Factors which might cause actual results to differ materially from those
projected in the forward-looking statements contained herein include the
following: the seasonality of the business, inability of the Company to develop
the end user market for quality control products; inability of the Company to
grow the sales to the extent anticipated; the interruption of significant parts
of the Company's business as a result of internal business system failure or the
failure of the business systems of its suppliers or customers due to the
inability of such systems to properly handle credit card purchases after
December 31, 1999; and the potential insufficiency of Company resources,
including human resources, plant and equipment and management systems, to
accommodate any future growth.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
No legal proceedings were brought, are pending or are threatened during the
quarter.
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security-Holders
None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Maritime Transport & Technology, Inc.
(Registrant)
By: /s/ Paul Clark
------------------
Paul Clark
PRESIDENT
Dated: June 10, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the nine month period ended February 28, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> May-31-1998
<PERIOD-END> Feb-28-1999
<CASH> 104,077
<SECURITIES> 0
<RECEIVABLES> 527,370
<ALLOWANCES> 0
<INVENTORY> 213,314
<CURRENT-ASSETS> 859,361
<PP&E> 307,865
<DEPRECIATION> (307,865)
<TOTAL-ASSETS> 995,771
<CURRENT-LIABILITIES> 710,308
<BONDS> 0
0
0
<COMMON> 154,631
<OTHER-SE> 130,832
<TOTAL-LIABILITY-AND-EQUITY> 995,771
<SALES> 1,339,364
<TOTAL-REVENUES> 1,339,364
<CGS> 661,589
<TOTAL-COSTS> 937,050
<OTHER-EXPENSES> (19,569)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 20,621
<INCOME-PRETAX> (259,275)
<INCOME-TAX> 0
<INCOME-CONTINUING> (259,275)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (259,275)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
