SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
May 31, 1999 0-8880
(For fiscal year ended) (Commission file no.)
MARITIME TRANSPORT & TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
New York 11-2196303
(State of other jurisdiction of (I-R.S. employer
incorporation or organization) Identification no.)
1535 Memphis Junction Road
Bowling Green, KY 42101
(Address of principal office) (Zip code)
(502) 781 - 8453
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.01 par value per share
Indicate by check mark whether 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 registrant
was required to file such report(s), and (2)has been subject to such filing
requirements for the past 90 days.
Yes X No ____
$1,088,285 as of September 13, 1999
(Aggregate market value of the voting stock
held by non-affiliates of registrant)
14,787,955 shares, $.Ol par value, as of May 31, 1999
(Number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date)
DOCUMENTS INCORPORATED BY REFERENCE
INTO Part I
Annual Report of Registrant on Forms 10-K for the
fiscal year ended May 31, 1997 and 1998
PART I
ITEM 1. BUSINESS
EXCEPT FOR THE HISTORICAL INFORMATION CONTAINED HEREIN, THE MATTERS
DISCUSSED IN THIS ANNUAL REPORT ON FORM 10-K ARE FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, INCLUDING THE TIMELY DEVELOPMENT, INTRODUCTION
AND ACCEPTANCE OF NEW PRODUCTS, DEPENDENCE ON OTHERS, THE IMPACT OF COMPETITIVE
PRODUCTS, PATENT ISSUES, CHANGING MARKET CONDITIONS AND THE OTHER RISKS DETAILED
THROUGHOUT THIS FORM 10-K. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE
PROJECTED. THESE FORWARD-LOOKING STATEMENTS REPRESENT THE COMPANY'S JUDGMENT AS
OF THE DATE OF THE FILING OF THIS FORM 10-K. THE COMPANY DISCLAIMS, HOWEVER, ANY
INTENT OR OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
Maritime Transport & Technology, Inc. (the "Registrant") was incorporated
under the laws of the State of New York on June 26, 1968 under the name of
"Inter-County Premium Advancing Corp." On May 2, 1976, Registrant acquired 100%
(1,300,000 shares) of the issued and outstanding common stock, $.Ol par value
per share, of Delhi Chemicals, Inc., a New York corporation, in exchange for an
aggregate of 1,300,000 newly-issued shares of the common stock of Registrant.
The foregoing constituted a tax-free exchange within the meaning of Section 368
(A)(1)(B) of the Internal Revenue Code of 1954 as amended. On June 22, 1976,
pursuant to a Certificate of Merger filed with the Secretary of State-of New
York, Delhi chemicals, Inc. was merged into the Registrant and Registrant
amended its certificate of incorporation so as to change its name to "Delhi
Chemicals, Inc." in January and April of 1981, respectively, pursuant to
shareholder approval granted at a meeting of Registrant's shareholders held on
November 25, 1980, Registrant's certificate of incorporation was amended so as
to change its authorized common stock from 4,000,000 to 6,000,000 shares, and
its name to "Delhi Consolidated Industries, Inc."
From May 1976 until the Fall of 1983, Registrant was engaged in the
furniture refinishing products business as the distributor and franchiser of
"Houck's Process" furniture and metal stripping and refinishing products. In the
Fall of 1983, after experiencing eight (8) successive fiscal quarters in which
operating losses were incurred, Registrant discontinued all active business
operations. Registrant has not engaged in any active business operations since
such discontinuance.
On June 22, 1983, Registrant's shareholders approved a one-for-two reverse
split of all of Registrant's issued and outstanding common stock, $.Ol par
value, per share, effective July 27, 1983, resulting in there being 4,886,347
shares of Registrant's common stock outstanding after such reverse-split.
Subsequently, Registrant rescinded the issuance of 680,000 Shares for
non-delivery of consideration. Accordingly, there were 9,311,019
shares of common stock issued and outstanding. All references to the issued and
outstanding stock of Registrant, appearing hereinafter in this report, give
effect to the foregoing stock split.
In December, 1987, The Company agreed to purchase from Maritime Transport
and Technology, Inc. patents, metal forging engineering designs and technology.
The Company issued 4,990,000 shares of common stock to Maritime for the
acquisition, as a partial payment of a total consideration of 11,185,933 shares
of common stock and 7,100 shares of preferred stock. Subsequently, additional
shares were issued, primarily in exchange for cancellation of debt owed to James
Howell, President of the Company, bringing the total number of shares issued and
outstanding to 38,985,549.
In May, 1998, the Company completed the reverse acquisition of B.G. Banking
Equipment, Inc., ("B.G. Banking") and Financial Building Equipment Exchange,
Inc., ("FBEE"), Kentucky corporations. This merger had an effective date of June
1, 1998. In that transaction, the Company purchased all of the outstanding
shares of B.G. Banking Equipment, Inc., in exchange for 11,282,250 shares of the
Company's common stock. Prior to this exchange, the Company had done a ten for
one reverse split which had left the Company with 3,848,455 common shares issued
and outstanding. After the completion of the merger, the amount of the Company's
common stock issued and outstanding was 15,130,705.
The Registrant sells and services new, used and reconditioned automated
teller machines (ATMs), electronic and physical security systems, various
products used to equip bank facilities, software and systems for global
financial and commercial markets. Sales of systems and equipment are made
directly to customers by the registrant's sales personnel and by manufacturer's
representatives and distributors. The sales/support organization works closely
with customers and their consultants to analyze and fulfill the customers'
needs. Products are sold under contract for future delivery at agreed upon
prices.
INDUSTRY
In the past several years, acquisitions and mergers in the banking industry
have resulted in many large bank holding companies. Manufacturers and service
companies have not kept pace with the new larger banks. Geographic spread of
branches has created servicing problems. Many banks are unable to find and
purchase equipment needed for their day to day banking needs. Part of the reason
for this is the fact that the large banks have hired away most of the
experienced buyers, and the smaller banks are now faced with less experienced
staff, lower amounts of funds available for purchases in comparison to the
larger banks, and limited geographical access to suppliers. Even though there
are smaller service companies in almost every area, they still cannot provide
service to many of these small banks because of the lack of available parts. The
result is a large number of "home town" or limited branch banks which are unable
to keep pace with the larger banks in terms of their access to and acquisition
of much of the equipment needed to manage the bank - bank equipment such as
vault doors, safes, driveup equipment and ATM's.
<PAGE>
THE SERVICE
Because the Company handles pre-owned equipment, it has been able to sell
many parts desired by banks. The Company is now in the process of cataloging all
parts and equipment. The Company thus has specialized equipment that does not
age, such as vault doors, safes, and deposit boxes. Most of this equipment costs
more to manufacture than the price for which the Company can sell it. The larger
banks are now outsourcing to facilities maintenance groups. The Company has
become an outsource resource, including new equipment, pre-owned equipment and
replacement parts, and maintenance personnel. The Company views its market as
the smaller banks, and intends to act as an outsource operation for these banks,
supplying them with the know how, sources, and technical expertise needed to
acquire and maintain the equipment necessary to run a bank in this day and age.
Because the Company uses pre-owned equipment, it is able to do this at a very
competitive price.
THE COMPETITION
The Company knows of several other entities presently competing for the
same market. Many of these Companies have greater capital resources, larger
staffs and more sophisticated facilities and more experience in the industry
than the Company. Such companies may more effectively service clients than the
Company and may be more successful than the Company in their servicing and
marketing of the Company's products. There can be no assurance that other
companies will not enter the markets developed by the Company or its customers.
There can be no assurance that the Company will be able to compete successfully
in the future with existing or new competitors.
EMPLOYEES
Currently, the Company employs 19 full time employees, Paul Clark as
President, Roberta Clark as corporate secretary and vice president. Two persons
are employed in sales, four persons are employed in office/clerical capacities,
as well as one bookkeeper and one secretary. In addition there are six
installation personnel and three persons in service.
<PAGE>
ITEM 2. PROPERTIES
The Company presently occupies 24,000 square feet of office and warehouse
space located at Building 1535 Memphis Junction Road, Bowling Green, Kentucky
42101 for a monthly rent of $5,000 pursuant to a lease dated August 1, 1998 for
three years. This space is rented to the Company by Paul Clark, President of the
Company.
ITEM 3. LEGAL PROCEEDINGS
As at May 31, 1999 and the filing date hereof, no material legal
proceedings were pending to which the Registrant or any of its property is
subject, nor to the knowledge of the Registrant are such legal proceedings
threatened.
The Company intends to file a suit in the near future. Two of the Company's
past directors, Andrew Seim and Alexander Brosda, acting and individually and
acting as principals of Taurus Investments International, Inc. ( a Bermuda
corporation) (together "Taurus"), acting as Directors of B.G. Banking prior to
its acquisition by the Company and subsequent to the acquisition becoming
Directors of the Company, offered and sold on behalf of B.G. Banking what Taurus
has admitted to being an aggregate of 304,500 shares of common stock of B.G.
Banking for an aggregate consideration of $304,500. Taurus has remitted to B.G.
Banking and the Company a net proceeds of $109,673.05 and claims the difference
of $194,826 be retained by Taurus as payment for expenses and commissions.
Taurus has refused to disclose the names and numbers of shares of common stock
and refused to remit to the Company the proceeds of the shares sold.
The Company intends to enter into a lawsuit with Taurus demanding the
balance of $194,826 that was improperly withheld be remitted to the Company and
that Taurus disclose the names of the persons and the number of shares of common
stock sold to these individuals. As of May 31, 1999, Taurus has failed to turn
over the balance of money, provide the names of the stock subscribers and the
number of shares of common purchased.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Registrant submitted no matters to a vote of its security holders during
its fiscal year ended May 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANTIS COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Currently, the Company's Common Stock is traded over the counter
on the Bulletin Board. Following is a chart of the Company's
high and low bid information for each quarter within the last two
fiscal years. The listed quotations reflect inter-dealer prices,
without retail mark-ip, mark-down, or commission, and may not
represent actual transactions.
High Low
Fiscal Quarter (Year End) 4 1/2 1
Ending May 31, 1999
Fiscal Quarter Ending 4 1/4 1 1/8
Ending February 28, 1999
Fiscal Quarter Ending 2 5/8 1/4
Ending November 30, 1998
Fiscal Quarter Ending .01 .01
Ending August 31, 1998
Fiscal Quarter (Year End) .01 .01
Ending May 31, 1998
Fiscal Quarter Ending .01 .01
Ending February 28, 1998
Fiscal Quarter Ending 1/4 55/100
Ending November 30, 1997
Fiscal Quarter Ending 1 3/4 1/4
Ending August 31, 1997
(b) As of May 31, 1999, there were approximately 901 holders of
the Company's Common Stock.
(c) No dividends were paid during the fiscal year ending May 31,
1999.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE MATTERS DISCUSSED IN THIS MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS CONTAIN FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS COULD DIFFER
MATERIALLY FROM THOSE DISCUSSED HERE. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO
SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN THE
SECTIONS ENTITLED "BUSINESS" AND "RISK FACTORS," AS WELL AS THOSE DISCUSSED
ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K. THE COMPANY DISCLAIMS, ANY INTENT
OR OBLIGATION TO UPDATE THESE FORWARD-LOOKING STATEMENTS.
OVERVIEW
Maritime Transport & Technology (the "Company") was established in 1968.
The Company remained dormant for many years until the Company completed the
acquisition of B.G. Banking Equipment, Inc., ("B.G. Banking") and Financial
Building Equipment Exchange, Inc., ("FBEE"), Kentucky corporations. The Company
is now in the business of buying, selling, trading both new and refurbishing of
financial equipment for banks and other financial institutions. The Company
markets the products throughout the United States primarily through direct sales
to financial insitutions and other distributors supported by the Company's
direct sales force and soliciting new contacts through its presence on the
Internet.
The Company anticipates that its results of operations may fluctuate for the
foreseeable future due to several factors, including whether and when new
products at competitive prices are obtained and sources of good used banking and
banking related equipment and furniture available at favorable prices; market
acceptance of current or new products, delays, or inefficiencies, shipment
problems, seasonal customer demand, the timing of significant orders,
competitive pressures on average selling prices and changes in the mix of
products sold.
Operating results would also be adversely affected by a downturn in the
market for the Company's current and future products, order cancellations or
order rescheduling or remanufacturing or delays. The Company purchases and
resells new and used merchandise and remanufactures and ships its other products
shortly after receipt of orders and has not developed a significant backlog for
such products and does not anticipate it will develop a material backlog for
such products in the future.
Because the Company is continuing to increase its operating expenses,
primarily for personnel and activities supporting newly-introduced products, new
product development and entering new markets, the Company's operating results
would be adversely affected if its sales did not correspondingly increase or if
its product development efforts are unsuccessful or are subject to delays. The
Company has incurred losses due to the payment of consulting fees and the
issuance of shares of common stock in consideration for consulting expenses
charged to operations in lieu of the payment of cash.
The Company may not sustain revenue growth or return to profitability on a
quarterly or annual basis and its operating results may not be consistent with
predictions made by securities analysts.
RESULTS OF OPERATIONS
The following table sets forth operating data as a percentage of net
sales:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31,
------------------------------
1998 1999
----------- -----------
<S> <C> <C>
Net sales..................................... -0-% 100%
Cost of sales................................. -0-% 51.7%
--- -----
Gross profit.................................. -0-% 48.3%
Operating expenses:
Selling, general and administrative......... -0-% 38.2%
Depreciation ............................... -0-% 10.3%
----- -----
Total operating expenses................... -0-% 48.5%
Income (loss) from operations................ -0-% (2.6)%
Corporate State Taxes -0-% 0.7%
Other income, net............................. -0-% (0.2)%
---- ---
Net loss...................................... -0-% (3.5%)
</TABLE>
YEARS ENDED MAY 31, 1998 AND 1999
NET SALES. Net sales increased 100% to $1,933,737. In 1999 from $-0- in
1998. The increase was primarily attributable to the acquisition of B.G. Banking
and FBEE.
GROSS PROFIT. Gross profit increased 100% to $933,890 in 1999 from -0-% in
1998 primarily as a result of acquisition. The gross profit for new equipment
was % versus a gross profit from the sale of used and refurbished equipment was
%
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased 100% to $738,717 in 1999 from $53 in 1998. The
1999 Company's expanded sales force, increased marketing activities associated
with new products and the availability of purchasing of used equipment
opportunities and potential new products, and the expansion of administrative
functions to support the Company's expanded operations and business development
activities.
BENEFIT (PROVISION) FOR INCOME TAXES. As a result of the pre-tax loss
recorded for 1999, the Company not recorded a benefit for Federal income taxes
of $154,313. Instead the Company recognized no income tax benefit from the loss
generated in the year ended May 31, 1999. SFAS No. 109 requires that a valuation
allowance be provided if it is more likely than not that some portion or all of
a deferred tax asset will not be realized. The Company's ability to realize
benefit of its deferred tax asset will depend on the generation of future
taxable income. Because the Company has yet to recognize significant revenue
from the sale of its products, the Company believes that a full valuation
allowance should be provided. The Company will continue to assess the likelihood
of realization of such assets; however, if future events occur which make the
realization of such assets more likely than not, the Company will record a tax
benefit. The Company is liable for the payment of a Corporate Kentucky State on
tangible assets.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through revenues from
operations, private and public placements of equity securities, debt and capital
lease financing and interest income earned on the net proceeds from the private
placements. Since its reorganization, the Company has raised over $ 169,000 in
cash proceeds from the private placement of equity securities and $265,878 from
officer loans.
During the year ended May 31, 1999, the Company had negative cash flow from
operations of $229,228 in spite of a positive cash flow from operating
activities of $178,929 essentially because of an increase in accounts receivable
of $87,381, prepaid expenses of $400, inventory of $337,222, and a reduction in
accounts payable and accrued expenses of $3,318. Customer deposits payable
increased $8,717 and currect Corporate State tax liability increased by $11,447.
Other significant business activities affecting cash included the purchase of
fixed assets of $38,026, an increase of Notes receivable non affiliated party of
$2,991, a payoff of a bank loan of $107,651 and the conversion of investor loans
payable into shares of common stock aggregating $93,100.
During the year ended May 31, 1998, the Company was dormant and generated no
cash flow except to pay some minimal expenses to maintain its existence of $53.
The Company is evaluating various alternatives in addressing its future
facilities expansion needs. The alternatives being evaluated include
negotiations with various parties for the leasing of additional facility space
and the purchase of additional property to build a new or additional office and
warehousing facility. Relocation to a new facility or leasing of additional
facility space would be expected to result in an increase in rent upon
occupancy.
The Company believes that its available cash, cash from operations and funds
from existing credit arrangements will be sufficient to satisfy its funding
needs for at least the next 12 months. Thereafter, if cash generated from
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 additional capital, if needed, will be available on
satisfactory terms, if at all. Furthermore, any additional equity financing may
be dilutive to stockholders, and debt financing, if available, may include
restrictive covenants. The Company's future liquidity and capital funding
requirements will depend on numerous factors, including the extent to which the
Company's new products and products under consideration are successfully
developed, gain market acceptance and become and remain competitive, the timing
and results of regulatory actions in the banking industry, the costs and timing
of further expansion of sales, marketing and manufacturing activities,
facilities expansion needs. The failure by the Company to raise capital on
acceptable terms when needed could have a material adverse effect on the
Company's business, financial condition and results of operations.
IMPACT OF YEAR 2000 ("Y2K") ISSUE
The Company is implementing a plan to ensure its system, software and
facilities infrastructure will function properly with respect to dates in the
year 2000 and thereafter. Key financial, information and operational systems
have been assessed and approximately 90% of them have been verified as being
compliant. The Company is on schedule to have all remaining systems verified as
compliant by November 30, 1999. All key suppliers, distributors, financial
institutions and others with whom it does business have been contacted by the
Company to assess their Y2K readiness, and approximately 60% have stated that
they are compliant or will be compliant before December 31, 1999. The Company is
continuing to communicate with key suppliers, distributors, financial
institutions and others and believes that their readiness will not pose
significant operational problems for the Company, nor have a material adverse
effect on the Company's business. To date the Company has expended less than
$5,000 addressing the Y2K Issue and estimates the total cost of the project and
contingency plans, if necessary, to be under $10,000. The Company anticipates
that the Company will be in compliance with Y2K requirements by the end of
December 15, 1999.
However, if such modifications and conversions are not made or are not
completed in a timely fashion, the Y2K Issue could have a material adverse
impact on the operations of the Company. Additionally, the systems of other
companies on which the Company's systems rely may not be timely converted, which
may have an adverse effect on the Company's systems. The most likely worst case
scenario is that customers would be unable to order products or pay invoices or
suppliers would be unable to manufacture or deliver product. This would result
in reduced orders of products and the inability of the Company to manufacture
product.
The Company currently does not have contingency plans in the event it does
not complete all phases of the Y2K program. However, management is considering
contingency plans which involve, among other actions, manual workarounds,
increasing inventories of key components to the refurbishing process and
validating alternate vendors. The Company plans to evaluate the status of the
contingency plans by October 1999 and determine whether such plans are
necessary.
ITEM 7. FINANCIAL STATEMENTS
The financial statements are attached hereto at page XX.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
The Company did not change accountants for the fiscal year ending May 31, 1999.
<PAGE>
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS OF REGISTRANT
<TABLE>
<CAPTION>
Name Age Position
<S> <C> <C>
Paul Clark 55 President, Director, and
Chief Executive Officer
Roberta Clark 54 Vice President, Secretary, and Director
Albert Blankenship 65 Chief Financial Officer
</TABLE>
PAUL CLARK
Mr. Clark is the founder of B.G. Banking Equipment, Inc. (Formerly AAA
Alarms and Services, Inc., March 1977) He is also the President and CEO of
Financial Building Equipment Exchange, Inc. He has worked in a variety of
management and sales positions in the electronic security and banking equipment
industries as well as the U.S. Navy. His education and training were from
several technical schools including an Industrial Electronics degree received in
1970. Mr. Clark also received medical electronics specialist training as an
interior communication electrician with the United States Naval Submarine
Service. Mr. Clark also attends specialized educational courses annually to stay
current in the field of security.
ROBERTA CLARK
Ms. Clark has been a director, the secretary and Vice President of the
Company since May, 1998. From 1977 to 1998, Ms. Clark served in similar
positions at AAA Alarms. She attended Colorado State University in Fort Collins,
Colorado. In 1962 she received a B.A. in Art and in 1966 a Masters Degree in
Art.
ALBERT E. BLAKENSHIP
Mr. Blakenship is and has been since at least 1990 a practicing accountant.
He has extensive financial experience in a variety of industries, with both
publicaly and privately held corporations. He also managed financial and tax
affairs for a variety of corporate clients. Mr. Blakenship received his B.S. in
Business Administration from Bowling Green (KY) College of Commerce, and is a
retired U.S. Army officer. He holds certificate #871 for state board of
accountancy effective 2-14-62.
ITEM 10. EXECUTIVE COMPENSATION
On June 1, 1998, the Company agreed to Pay Mr. Paul Clark a salary of
$130,000 plus vacation time, health benefits and reimbursement for out of pocket
expensesMr. Paul Clark, President of the Company received an aggregate salary of
$129,600 consisting of cash payments of $33,600 and the Company has accrued
$96,000 for the year ended May 31, 1999.
Roberta Clark, Secretary to the Company received a salary of $21,600 plus
vacation and health benefits.
No other officer has received a salary in excess of $100,000.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information with respect to the share
ownership, as of May 31, 1999, of those persons known to Registrant to be the
beneficial owners of more than 5% of Registrant's common stock, $.Ol par value,
and by Re-gistrant's officers and directors:
<TABLE>
<CAPTION>
Number of Percentage
Name Shares of shares
Owned owned
<S> <C> <C>
Paul Clark 6,631,815 44.5%
1985 Claypool Alvaton Rd.
Bowling Green, Kentucky 42101
Roberta Clark 6,631,815 44.5%
1985 Claypool Alvaton Rd.
Bowling Green, Kentucky 42101
Albert Blankenship 131,320 0.8%
628 Sherwood Drive
Bowling Green, Kentucky 42101
</TABLE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Following are the related party transactions during the fiscal year ended
May 31, 1999.
a. Leased Office Space
The Company has entered into a three year lease with Paul Clark, President
of the Company beginning August 1, 1998, for the lease of an aggregate of 23,976
square feet of office and warehouse space located at Building 1535 Memphis
Junction Road, Bowling Green, Kentucky, 42101 for a monthly rent of $ 5,000 per
month.
Rent paid pursuant to this lease agreement for the year ending May 31, 1999
is $60,000.
b. Officer Salaries
Mr. Paul Clark, President of the Company received an aggregate salary of
$129,600 consisting of cash payments of $33,600 and the Company has accrued
$96,000 for the year ended May 31, 1999.
Roberta Clark, Secretary to the Company and Mr. Clark's wife, received a
salary of $21,600 plus vacation and health benefits.
c. Due to Related Parties
Certain officers of the Company have the following amounts due as of August
31, 1997 and May 31, 1998 aggregating $34,081 and $133,844 respectively. These
amounts are payable on demand without interest.
d. Managerial Relationship
Mr. Paul Clark is the President of both the Company, B.G. Banking and FBEE.
Paul and Roberta Clark are husband and wife.
e. Change in Managerial Control
On May 3, 1998, The Company entered into an Agreement with B.G. Banking and
FBEE, pursuant these affiliated entities controlled my Paul and Roberta Clark
exchanged all the issued and outstanding shares of common stock of these
entities for 11,282,250 shares of Maritime's common stock.
f. Purchase of Inventory from Paul Clark
In May, 1999, the Company purchased inventory that was personally owned by
Paul Clark aggregating $295,067. The purchase price represented the historical
price paid by Paul Clark for the inventory. The purchase price owed to Mr. Clark
was offset by monies owed to the Company by Mr. Clark aggregating $59,249 and
offsetting various non performing loans receivable by two entities aggregating
$37,246. The balance due Mr. Clark at May 31, 1999 is 198,572.
Item 13. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES AND REPORTS ON FORM 8-K
(a) All required exhibits are incorporated herein by reference from
the Company's Form 10-K filed for the year ending May 31, 1998.
(b) the company's Form 8-K reporting a change in control as of June
1, 1998 and filed in October, 1998, is incorporated herein by
reference.
<PAGE> THOMAS P. MONAHAN
CERTIFIED PUBLIC ACCOUNTANT
208 LEXINGTON AVENUE
PATERSON, NEW JERSEY 07502
(973) 790-8775
Fax (973) 790-8845
To The Board of Directors and Shareholders
of Maritime Transport & Technology, Inc.
I have audited the accompanying balance sheet of Maritime Transport &
Technology, Inc. as of May 31, 1999 and the related statements of operations,
cash flows and shareholders' equity for the years ended May 31, 1998 and 1999.
These financial statements are the responsibility of the Company's management.
My responsibility is to express an opinion on these financial statements based
on my audit.
I conducted my audit in accordance with generally accepted auditing
standards. Those standards require that I plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Maritime Transport &
Technology, Inc. as of May 31, 1999 and the results of its operations,
shareholders equity and cash flows for the years ended May 31, 1998 and 1999 in
conformity with generally accepted accounting principles.
/s/ Thomas Monahan
Thomas P. Monahan, CPA
September 8, 1999
Paterson, New Jersey
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
BALANCE SHEET
May 31, 1999
Assets
Current assets
<S> <C>
Cash and cash equivalents 122,161
Accounts receivable 397,467
Prepaid expenses 1,600
Inventory 508,017
Federal corporate incomes tax receivable 8,925
-------
Current assets 1,038,170
Property and equipment-net 35,702
Other assets
Security de[posits 805
Notes receivable 34,490
------
Total other assets 68,540
------
Total assets $1,105,167
==========
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $232,595
Customer deposits payable 70,123
Bank Loans payable 7,268
Corporate taxes payable 13,027
Officer loan payable 174,527
Investor loans payable 38,400
-------
Total current liabilities 535,940
Long term liabilities
Bank loans payable - net of short term portion 8,274
-------
Total liabilities 544,214
Stockholders' equity
Common Stock authorized 80,000,000shares, $0.01 Par value each.
At May 31, 1999 there are 14,787,955 shares outstanding. 147,881
Additional paid in capital 866,935
Retained earnings deficit (453,863)
--------
Total stockholders' equity 560,953
Total liabilities and stockholders' equity $1,105,167
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
For the For the
year ended year ended
May 31, May 31,
1998 1999
<S> <C> <C>
Revenue $-0- $1,933,737
Costs of goods sold -0- 999,847
Gross profit -0- 933,890
Operations:
General and administrative 53 738,717
Non cash expenses 200,000
Depreciation and amortization 46,367
---- ------
Total expense 53 985,084
Loss from operations before corporate income taxes (53) (51,194)
Corporate State income taxes 13,027
------
Loss from operations net of corporate income taxes (53) (64,221)
Other income and expenses
Interest income 3,220
Interest expenses (6,437)
Total other Income $(3,217)
Net income (loss) $(53) $(67,438)
====- =========
Net income (loss) per share -basic $(.00) $(.01)
======
Number of shares outstanding-basic 14,455,705 14,787,955
========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
For the For the
year ended year ended
May 31, May 31,
1998 1999
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income (loss) $(53) $(67,438)
Non cash transactions 200,000
Depreciation 46,367
Accounts receivable (87,381)
Prepaid expenses (400)
Inventory (337,222)
Accounts payable and accrued expenses (3,318)
Customer deposits payable 8,717
Corporate taxes payable 11,447
---- ------
TOTAL CASH FLOWS FROM OPERATIONS (53) (229,228)
CASH FLOWS FROM FINANCING ACTIVITIES
Officer loan payable 265,878
Sale of common stock 169,000
TOTAL CASH FLOWS FROM FINANCING ACTIVITIES 434,878
CASH FLOWS FROM INVESTING ACTIVITIES
Note receivable 13,200
Purchase of fixed assets (38,026)
Note receivable non affiliated party (2,991)
Bank loans payable (107,651)
Investor loans payable (93,100)
-------
TOTAL CASH FLOWS FROM INVESTING ACTIVITIES (228,568)
NET INCREASE (DECREASE) IN CASH (53) (22,918)
CASH BALANCE BEGINNING OF PERIOD -0- 145,079
--- -------
CASH BALANCE END OF PERIOD $53 $122,161
====
Non cash activities
Issuance of shares of common stock in consideration for $200,000
========
consulting fees
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
MARITIME TRANSPORT & TECHNOLOGY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS EQUITY
Retained
Common Stock Common Stock Additional earnings
Date paid in capital deficit Total
- ---- --------------- ------- -----
<S> <C> <C> <C> <C> <C>
Open balances June 1, 1998 15,130,705 $151,308 $494,508 $(386,425) $259,391
Issuance of shares for 100,000 1,000 199,000 200,000
consulting fees
Sale of shares 232,250 2,323 166,677 169,000
Cancellation of shares (675,000) (6,750) 6,750 -0-
Net loss (67,438) (67,438)
--------------- -------- --------
Balances May 31, 1999 14,787,955 $147,881 $866,935 (453,863) $560,953
=========== ========= ========= ========= ========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
MARITIME TRANSPORT & TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MAY 31, 1999
Note 1 - Formation of Company and Issuance of Common Stock
a. Formation and Description of the Company
Maritime Transport & Technology, Inc. (the "Company"), was formed under the
laws of the State of New York on June 26, 1968 and authorized to issue to
80,000,000 shares of common stock, $.01 par value. On May 31, 1998, the Company
completed the acquisition of B.G. Banking Equipment, Inc., ("B.G. Banking") and
Financial Building Equipment Exchange, Inc., ("FBEE"), Kentucky corporations.
The Company is in the business of buying, selling, trading and refurbishing of
financial equipment for banks and other financial institutions
b. Issuance of Common Stock
The Company has issued an aggregate of 100,000 shares of common stock
pursuant to an S-8 Stock option plan as follows: 50,000 shares of common stock
to Irv Fisher and 50,000 shares to Allen Sanders in consideration for consulting
services valued at an aggregate of $200,000.
In January, 1999, the Company received back for cancellation 675,000
shares of common stock that were issued as part of the acquisition of B.G.
Banking and FBEE and to be distributed to Andrew Seim, Alexander C.
Brosda and George Berglietner.
As of May 31, 1999, the Company has sold through two private placement
offerings an aggregate of 232,250 shares of common stock for an aggregate
consideration of $169,000 consisting of 42,500 shares of common stock sold at
and aggregate of $42,500 or $1.00 each per share and 189,750 shares of common
stock sold for an aggregate of $126,500 or $0.67 each per share.
As of May 31, 1999, the Company has sold an additional 38,400 shares of
common stock for an aggregate consideration of $38,400. These shares were issued
subsequent to the date of the financial statements.
Note 2-Summary of Significant Accounting Policies
a. Basis of Financial Statement Presentation
The consolidated financial statements of the Company presented consist of
the balance for the Company of as of May 31, 1999, and the balance sheet for
B.G. Banking and FBEE as of May 31, 1999 and the related consolidated statements
of operations, retained earnings and cash flows for the year ended May 31, 1999
for the Company, and the related statements of operations, retained earnings and
cash flows for the year ended May 31, 1999 for B.G. Banking and FBEE.
b. Cash and Cash Equivalents
The Company treats cash equivalents which includes temporary investments
with a maturity of less than three months as cash.
c. Inventory
Inventory has been recorded at the lower of cost or market under the
first-in-first-out method. Inventory components for B.G. Banking and FBEE as of
May 31, 1999 were goods available for sale aggregating $33,730 and 474,286
respectively.
d. Earnings 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 weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution of securities that could
share in 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
shares of common stock. As of May 31, 1999, there no are matters that would
effect the number of shares of common stock outstanding.
Shares used in calculating basic and diluted net income per share were as
follows:
<TABLE>
<CAPTION>
May 31, May 31,
1998 1999
------------
- ---------
<S> <C> <C>
Shares used in calculating per share
amounts - Basic (Weighted average
common shares outstanding) 14,455,705(1) 14,787,955
Effect of shares sold but
not issued as of May 31, 1999 38,400
------------- -------------
Total 14,455,705 14,826,355
======== ========
</TABLE>
(1) Gives retroactive effect to the cancellation of 675,000 shares of common
stock in January, 1999.
e. Revenue recognition
Revenue is recognized when products are shipped or services are rendered.
f. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
g. Asset Impairment
The Company adopted the provisions of SFAS No. 121, Accounting for the
impairment of long lived assets and for long-lived assets to be disposed of
effective January 1, 1996. SFAS No. 121 requires impairment losses to be
recorded on long-lived assets used in operations when indicators of impairment
are present and the estimated undiscounted cash flows to be generated by those
assets are less than the assets' carrying amount. SFAS No. 121 also addresses
the accounting for long-lived assets that are expected to be disposed of.
Long-lived assets and certain identifiable intangibles are reviewed for
impairment whenever events or changes in circumstances indicate that full
recoverability is questionable. There was no effect of such adoption on the
Company's financial position or results of operations.
h. Significant Concentration of Credit Risk
At May 31, 1999, the Company has concentrated its credit risk by maintaining
deposits in several banks. The maximum loss that could have resulted from this
risk totaled $-0- which represents the excess of the deposit liabilities
reported by the banks over the amounts that would have been covered by the
federal insurance.
i. Recent Accounting Standards
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, 2000,
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.
Note 3 - Acquisition of Subsidiaries
On May 3, 1998, The Company entered into an Agreement with B.G. Banking
and FBEE, pursuant to which the Company and an affiliated entity controlled my
Paul and Roberta Clark exchanged all the issued and outstanding shares of common
stock of these entities for 11,282,250 shares of Maritime's common stock. The
shares of common stock were released from escrow on May 31, 1998.
The transaction has been accounted for as a reverse acquisition and using
the purchase method of accounting with historic costs being the basis of
valuation, and accordingly, the accompanying financial statements include the
results of operations of the consolidated operations from the effective date of
the acquisition May 31, 1998.
In a separate private transaction, the principals of the Company
acquired on in December, 1997 27,943,370 shares of Maritime's common stock,
which subsequently reverse split in a ratio of 10 to 1 on April 14, 1998.
Note 4 - Related Party transactions
a. Leased Office Space
The Company has entered into a three year lease with Paul Clark,
President of the Company beginning August 1, 1998, for the lease of an aggregate
of 23,976 square feet of office and warehouse space located at Building 1535
Memphis Junction Road, Bowling Green, Kentucky, 42101 for a monthly rent of $
5,000 per month.
Rent paid pursuant to this lease agreement for the year ending May 31,
1999 is $60,000.
b. Officer Salaries
Mr. Paul Clark, President of the Company received an aggregate salary
of $129,600 consisting of cash payments of $33,600 and the Company has accrued
$96,000 for the year ended May 31, 1999.
Roberta Clark, Secretary to the Company received a salary of $21,600
plus vacation and health benefits.
No other officer has received a salary in excess of $100,000.
c. Due to Related Parties
Certain officers of the Company have the following amounts due as of August
31, 1997 and May 31, 1998 aggregating $34,081 and $133,844 respectively. These
amounts are payable on demand without interest.
d. Managerial Relationship
Mr. Paul Clark is the President of both the Company, B.G. Banking and FBEE.
Paul and Roberta Clark are husband and wife.
e. Change in Managerial Control
On May 3, 1998, The Company entered into an Agreement with B.G. Banking and
FBEE, pursuant these affiliated entities controlled my Paul and Roberta Clark
exchanged all the issued and outstanding shares of common stock of these
entities for 11,282,250 shares of Maritime's common stock.
f. Purchase of Inventory from Paul Clark
In May, 1999, the Company purchased inventory that was personally owned
by Paul Clark aggregating $295,067. The purchase price represented the
historical price paid by Paul Clark for the inventory. The purchase price owed
to Mr. Clark was offset by monies owed to the Company by Mr. Clark aggregating
$59,249 and offsetting various non performing loans receivable by two entities
aggregating $37,246. The balance due Mr. Clark at May 31, 1999 is 198,572.
g. Accrued Wages
On June 1, 1998, the Company agreed to Pay Mr. Paul Clark a salary of
$130,000 plus vacation time, health benefits and reimbursement for out of pocket
expenses. As of May 31, 1999, the Company has paid Mr. Clark a salary of $33,600
and accrued a liability for salary payable of $96,400.
Note 5 - Property Plant and Equipment
Property Plant and Equipment consists of the following at May, 31,
1999:
Equipment and tools $116,443
Vehicles and trucks 165,569
Furniture and fixtures 33,563
Leasehold improvements 18,822
-----------
Total $334,397
Less accumulated depreciation 298,695
-----------
Property Plant and Equipment -net $ 35,702
=======
Note 6 - Bank Loans Payable
<TABLE>
<S> <C>
Total amount due banks for vehicle loans at May 31, 1999 $15,542
Less current portion due 7,268
---------
Long term amount due $ 8,274
======
Bank loans aggregating $15,542 at May 31, 1999 are as follows:
</TABLE>
a. Loans Due South Central Bank of Bowling Green, Inc.
B.G. Banking is obligated to repay a loan payable to the South Central Bank
of Bowling Green, Inc. in the principal amount of $8,052 in 36 equal monthly
installments of $263.54 beginning January 16, 1998 with interest at 11%. The
balance due at May 31, 1999 is $4,570. The loan is secured by a 1992 Ford truck.
B.G. Banking is obligated to repay a loan payable to the South Central Bank
of Bowling Green, Inc. in the principal amount of $14,052 in 40 equal monthly
installments of $342.66 beginning June 20, 1998 with interest at 7.75%. The
balance due at May 31, 1999 is $10,973. The loan is secured by a 1995 Buick Park
Avenue.
Note 7 - Income Taxes
The Company provides for the tax effects of transactions reported in the
financial statements. The provision if any, consists of taxes currently due plus
deferred taxes related primarily to differences between the basis of assets and
liabilities for financial and income tax reporting. The deferred tax assets and
liabilities, if any, represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. As of May 31, 1998 and 1999, the Company
had no material current tax liability, deferred tax assets, or liabilities to
impact on the Company's financial position because the deferred tax asset
related to the Company's net operating loss carry forward and was fully offset
by a valuation allowance.
At May 31, 1999, the Company has net operating loss carry forwards for
income tax purposes of $453,863. These carry forward losses are available to
offset future taxable income, if any, and expire in the year 2010. The Company's
utilization of this carry forward against future taxable income may become
subject to an annual limitation due to a cumulative change in ownership of the
Company of more than 50 percent.
The components of the net deferred tax asset as of May 31, 1999 are as
follows:
Deferred tax asset:
Net operating loss carry forward $ 154,313
Valuation allowance $( 154,313)
-----------
Net deferred tax asset $ -0-
The Company recognized no income tax benefit for the loss generated for the
year ended May 31, 1998 and 1999.
The Company recognized no income tax benefit from the loss generated in the
year ended May 31, 1997. SFAS No. 109 requires that a valuation allowance be
provided if it is more likely than not that some portion or all of a deferred
tax asset will not be realized. The Company's ability to realize benefit of its
deferred tax asset will depend on the generation of future taxable income.
Because the Company has yet to recognize significant revenue from the sale of
its products, the Company believes that a full valuation allowance should be
provided.
Note 8 - Commitments and Contingencies
a. Financial consulting Agreements
During the year, the Company entered into various financial consulting
agreements with various clients under similar terms and conditions. As of May
31, 1998, all financial consulting relationships had been completed.
b. Private Placement - B.G. Banking
Prior to the Company's reverse acquisition of B.G. Banking and FBEE,
B.G. Banking offered and received subscriptions for 126,500 shares of its common
stock at $1.00 per share. Subsequent to the date of the Company's acquisition,
the purchasers of shares of comon stock were offered and received sharesof
common stock in the Company at a ratio of 1 share of B.G. Banking to 1.5 shares
of the Company's common stock. The Company has issued 189,750 shares of common
stock in satisfaction of the subscription agreements at a value of $0.67 per
share.
Two of the Company's directors, Andrew Seim and Alexander Brosda,
acting and individually and acting as principals of Taurus Investments
International, Inc. ( a Bermuda corporation) (together "Taurus"), acting as
Directors of B.G. Banking prior to its acquisition by the Company and subsequent
to the acquisition becoming Directors of the Company, offered and sold on behalf
of B.G. Banking what Taurus has admitted to being an aggregate of 304,500 shares
of common stock of B.G. Banking for an aggregate consideration of $304,500.
Taurus has remitted to B.G. Banking and the Company a net proceeds of
$109,673.05 and claims the difference of $194,826 be retained by Taurus as
payment for expenses and commissions. Taurus has refused to disclose the names
and numbers of shares of common stock and refused to remit to the Company the
proceeds of the shares sold.
The Company intends to enter into a lawsuit with Taurus demanding the
balance of $194,826 that was improperly withheld be remitted to the Company and
that Taurus disclose the names of the persons and the number of shares of common
stock sold to these individuals. As of May 31, 1999, Taurus has failed to turn
over the balance of money, provide the names of the stock subscribers and the
number of shares of common purchased.
Based upon the accounting provided by Taurus to the Company, the
Company may be liable for the issuance of up to 329,500 shares of common stock
if and when Taurus substantiates their representation as to the number of shares
of common stock sold and the aggregate consideration.
The Company may also be forced to defend itself against actions to be
brought by unknown subscribers to shares of common stock of B.G. Banking whose
purchase price has never been disclosed or delivered to the Company. The Company
is aware of one alleged purchaser who claims to have delivered funds to Taurus
and whose funds where apparently not turned over to the Company. In the opinion
of management, the Company has no liability to such purchasers and intends to
vigorously defend and such actions, if and when brought.
Subsequent to the date of the financial statements, the Company has
received approximately $42,000 from Taurus relating to the purchase of shares by
an unknown investor. The Company is holding this money in escrow pending
disposition.
As of May, 31, 1999, the Company has reserved 329,500 shares of common
stock pending possible issuance of shares in satisfaction of outstanding
subscription agreements.
c. Private Placement
The Company is offering 2,000,000 shares of common stock at $1.00 per
share on a "best efforts basis".
As of May 31, 1999, the Company sold 42,500 shares of common stock for
an aggregate consideration of $42,500.
The Company has reserved 1,957,500 shares of common stock pending the
completion of the private placement.
Note 9 - Business and Credit Concentrations
The amount reported in the financial statements for cash, trade accounts
receivable and investments approximates fair market value. Because the
difference between cost and the lower of cost or market is immaterial, no
adjustment has been recognized and investments are recorded at cost.
Financial instruments that potentially subject the company to credit risk
consist principally of trade receivables. Collateral is generally not required.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 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, thereunto duly authorized.
DATE: September 23, 1998 By: /s/ Paul Clark
PAUL CLARK
President, Chief Executive Officer
Pursuant to the requirements of Section 13 or 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, thereunto duly authorized.
DATE: September 23, 1998 By: /s/ Paul Clark
PAUL CLARK
President, Director
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from
financial statements for the twelve month period ended May 31, 1999 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> MAY-31-1999
<PERIOD-START> JUN-01-1998
<PERIOD-END> MAY-31-1999
<CASH> 122,161
<SECURITIES> 0
<RECEIVABLES> 397,467
<ALLOWANCES> 0
<INVENTORY> 508,017
<CURRENT-ASSETS> 1,038,170
<PP&E> 334,397
<DEPRECIATION> 298,695
<TOTAL-ASSETS> 1,105,167
<CURRENT-LIABILITIES> 232,595
<BONDS> 0
0
0
<COMMON> 147,881
<OTHER-SE> 413,072
<TOTAL-LIABILITY-AND-EQUITY> 1,105,167
<SALES> 1,933,737
<TOTAL-REVENUES> 1,933,737
<CGS> 933,890
<TOTAL-COSTS> 985,084
<OTHER-EXPENSES> (3,217)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (51,194)
<INCOME-TAX> 0
<INCOME-CONTINUING> (67,438)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (67,438)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
