UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
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: 0-1665
EXTECH CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 36-2476480
(State or other jurisdiction (I.R.S Employer
of incorporation or organization) Identification No.)
90 Merrick Avenue, East Meadow, New York 11554
(Address of principal executive offices) (Zip Code)
(516) 794-6300
(Registrant's telephone number, including area code)
(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
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.
(X) Yes ( ) No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13 or
15(d)
of the Securities Exchange Act of 1934 subsequent to the
distribution
of securities under a plan confirmed by a court. ( ) Yes ( )
No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
2,391,367 shares as of October 17, 1995
This document consists of 11 sequentially numbered pages.
<PAGE>
INDEX
EXTECH CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - September 30,
1995
(Unaudited)
Condensed Consolidated Statements of Operations - Nine
months and quarter ended September 30, 1995 and 1994
(Unaudited)
Condensed Consolidated Statements of Cash Flows - Nine
months ended September 30, 1995 and 1994 (Unaudited)
Notes to Condensed Consolidated Financial Statements -
Nine months ended September 30, 1995 and 1994
(Unaudited)
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
Sept. 30, 1995
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 560,145
Accounts receivable 65,502
Note receivable - net 51,847
Inventories 8,784
Prepaid expenses 15,930
__________
Total current assets 702,208
__________
PROPERTY AND EQUIPMENT, net 213,193
__________
OTHER ASSETS:
Operating equipment, net 14,940
__________
$ 930,341
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,295
Accrued expenses 114,195
Debentures payable 154,200
Accrued taxes payable 11,072
__________
283,762
__________
MINORITY INTEREST 560
__________
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value;
authorized 10,000,000 shares;
2,391,367 shares 23,914
Capital in excess of par 4,496,950
Deficit (3,874,845)
__________
646,019
$ 930,341
See notes to condensed consolidated financial statements.
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine months ended
Sept. 30,
1995 1994
_______________________
Revenues:
Rooms $ 697,069 $ 661,194
Other 51,617 74,426
Interest 13,855 6,977
________ ________
Total revenues 762,541 742,597
________ ________
Costs and expenses:
General, administrative
and sundry 274,944 256,153
Departmental 229,428 222,481
Depreciation and amortization 38,312 39,254
Energy costs 14,303 12,963
Lease rentals 141,278 195,961
Marketing 18,815 15,880
Property operation
and maintenance 11,583 17,493
Provision for bad debt 3,840 (285,500)
________ ________
732,503 474,685
________ ________
Net income $ 30,038 $ 267,912
========= =========
Income per common share:
Net income $ .01 $ .11
========= =========
Weighted average number of common
shares outstanding 2,391,367 2,391,367
========= =========
See notes to condensed consolidated financial statements.
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
Sept. 30,
1995 1994
______________________
Revenues:
Rooms $ 244,398 $ 182,185
Other 25,985 53,600
Interest 5,703 2,759
_________ _________
Total revenues 276,086 238,544
_________ _________
Costs and expenses:
General, administrative
and sundry 94,123 80,512
Departmental 80,728 73,314
Depreciation and amortization 12,770 13,146
Energy costs 4,731 3,814
Lease rentals 48,502 53,559
Marketing 6,738 4,682
Property operation
and maintenance 2,851 6,925
Provision for bad debt 1,740 (288,500)
_________ _________
252,183 (52,548)
_________ _________
Net income $ 23,903 $ 291,092
========= =========
Income per common share:
Net income $ .01 $ .12
========= =========
Weighted average number of common
shares outstanding 2,391,367 2,391,367
========= =========
See notes to condensed consolidated financial statements.
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
Sept. 30,
1995 1994
________________________
Cash flows from operating activities:
Net income $ 30,038 $267,912
Adjustments to reconcile net income
to net cash provided by (used in)
operating activities:
Depreciation and amortization 38,312 39,254
Provision for bad debts 3,840 (285,500)
Decrease (increase) in assets:
Accounts Receivable (12,774) 9,311
Inventories 2,920 3,631
Prepaid Expenses 27,501 (14,990)
Notes Receivable 4,168 (21,714)
Other assets (3,961) (276)
Increase (decrease) in liabilities:
Accounts payable 107 (1,963)
Accrued expenses (22,822) (79,055)
Accrued taxes payable 11,072 9,207
__________ _________
Net cash provided by (used in)
operating activities 78,401 (74,183)
__________ _________
Net cash (used in) investing activities:
Purchases of property and equipment (615) (2,048)
__________ _________
Net cash (used in)
investing activities: (615) (2,048)
__________ _________
Net increase in cash and cash
equivalents 77,786 (76,231)
Cash, beginning of period 482,359 493,392
__________ _________
Cash, end of period $ 560,145 $417,161
========== =========
See notes to condensed consolidated financial statements.
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
(UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of September 30,
1995, the Condensed Consolidated Statements of Operations for
the three and nine months ended September 30, 1995 and 1994
and the Condensed Consolidated Statements of Cash Flows for
the nine months ended September 30, 1995 and 1994 have been
prepared by the Company without audit. In the opinion of the
Company, the accompanying unaudited condensed consolidated
financial statements contain all adjustments necessary to
present fairly its financial position as of September 30,
1995, results of operations for the three and nine months
ended September 30, 1995 and 1994 and cash flows for the nine
months ended September 30, 1995 and 1994. This report should
be read in conjunction with the Company's annual report on
Form 10-KSB for the year ended December 31, 1994.
2. The results of operations and cash flows for the nine months
ended September 30, 1995 are not necessarily indicative of
the results to be expected for the full year.
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
Results of operations:
Nine months ended September 30, 1995 compared to 1994:
The Company's net income for the nine months ended September 30,
1995 was $30,038 as compared to a net income of $267,912 for the
nine months ended September 30, 1994. The decrease in net income
was primarily due to a $285,500 reversal in the allowance for bad
debts in the 1994 period. Excluding such reversal, the Company
would have experienced a loss of $17,588 for the nine months
ended September 30, 1994. The Company's operations were
profitable for the nine months ended September 30, 1995, as compared
to the 1994 period, primarily due to a retroactive adjustment in the
calculation of the annual rental obligation for the International
Airport Hotel (the "Hotel") effective January 1, 1994 (such
adjustment not being reflected in the Company's financial
statements until the fourth quarter of 1994). Prior to such
adjustment, the rent expense was equal to the greater of
approximately $154,000 or 30% of annual gross revenues, as
defined. In 1994, the annual rental was retroactively adjusted
to equal the greater of approximately $169,000 or 20% of annual
gross rentals, as defined. As a result, rent expense for the Hotel
was $141,278 for the nine months ended September 30, 1995 as compared
to $195,961 for the nine months ended September 30, 1994 (unadjusted
for the retroactive reduction).
Three months ended September 30, 1995 compared to 1994:
Revenues from the Hotel increased by $62,213 during the three
months ended September 30, 1995 as compared to 1994. The Company
believes that such increase was primarily the result of a general
increase in travel. Other Revenues decreased by $27,615 during
the three months ended September 30, 1995 as compared to the 1994
period due to higher royalties on the Company's specialized
clamping device in the earlier period. Costs and expenses
increased by $304,731 during the third quarter of 1995 as
compared to the 1994 period generally due to the reversal in the
bad debt allowance as described above with respect to the nine months
ended September 30, 1994.
<PAGE>
Liquidity and Capital Resources:
As of September 30, 1995, the Company had $560,145 in cash and
cash equivalents. As of such date, the Company had a working
capital surplus of $418,446. The Company did not have any material
commitments for capital expenditures as of September 30, 1995.
Reference is made to Item 5 of Part II of this Form 10-QSB for a
discussion of the status of the obligations owed by Robeson
Industries Corp. ("Robeson") to the Company.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None
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
Item 5. OTHER INFORMATION
In February 1993, the Company entered into a Subscription and
Stock Purchase Agreement (the "Subscription Agreement") with
Robeson pursuant to which the Company agreed to purchase from Robeson,
subject to the conditions set forth therein, (i) approximately
15% of the issued and outstanding shares of capital stock of
Robeson and (ii) all of the outstanding shares of capital stock of
Robeson's wholly-owned Hong Kong subsidiary, Robeson Industries
Hong Kong Ltd. ("Hong Kong") (the "Hong Kong Shares").
In May 1993, the Company advised Robeson that it was terminating
the Subscription Agreement due to the nonfulfillment of certain
of the conditions to the obligation of the Company to consummate
the transactions contemplated thereby. The Company also made demand
upon Robeson for repayment of the principal amount of $320,000
loaned by the Company during 1992 and 1993, together with
interest thereon, as well as reimbursement of expenses incurred by the
Company in connection with the Subscription Agreement.
Subsequently, in May 1993, Robeson filed a petition for
bankruptcy under Chapter 11 of the Bankruptcy Act with the United
States Bankruptcy Court for the District of New Jersey (the "Court").
In September 1993, the Company filed a proof of claim in such
proceeding as a secured creditor to recover the approximate
amount of $534,000.
Pursuant to a Plan of Reorganization of Robeson (the "Plan")
approved by the Court, in September 1994, in consideration of the
$320,000 in loans made by the Company to Robeson and other
recoverable expenses, the reorganized Robeson issued to the
Company a promissory note (the "Note") in the principal amount of
$385,000.
The Note provided for the payment of interest at the rate of 8%
per annum and the repayment of principal in 48 consecutive
monthly installments. Such installments covered an aggregate of 5% of
the principal amount of the Note during the initial six months,
an additional 7.5% thereof during the following six months, an
additional 37.5% thereof during the following 12 months, an
additional 25% thereof during the following 12 months and the
final 25% thereof during the last 12 months of the Note.
Pursuant to the Plan, payment of the Note was secured by a pledge of
all the outstanding shares of capital stock of Hong Kong (the "Hong
Kong Stock"). In addition, pursuant to the Plan, the Company received
a nominal minority equity interest in Robeson.
The first three payments under the Note were received by the
Company in October, November and December 1994. Effective
January 1995, Robeson ceased making payments under the Note. In March
1995, the Company demanded full payment of the Note, foreclosed
its security interest with respect to the Hong Kong Stock and
purchased such shares at an auction sale.
In September 1995, the Company agreed to cancel the Note in
consideration for the issuance by Robeson of a new promissory
note in the principal amount of $125,000 (the "New Note"). The New
Note provides for interest at the rate of 8% per annum and is payable
in 27 consecutive monthly installments of $5,000. The Company has
received the initial two installments due under the New Note.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
None
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
EXTECH CORPORATION
Dated: November 10, 1995 By: /s/ Morton L. Certilman
MORTON L. CERTILMAN
President (Chief
Operating Officer and
Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1995
<PERIOD-END> SEP-30-1995 SEP-30-1995
<CASH> 560,145 560,145
<SECURITIES> 0 0
<RECEIVABLES> 117,349 117,349
<ALLOWANCES> 0 0
<INVENTORY> 8,784 8,784
<CURRENT-ASSETS> 702,208 702,208
<PP&E> 213,193 213,193
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 930,341 930,341
<CURRENT-LIABILITIES> 283,762 283,762
<BONDS> 0 0
<COMMON> 23,914 23,914
0 0
0 0
<OTHER-SE> 622,105 622,105
<TOTAL-LIABILITY-AND-EQUITY> 930,341 930,341
<SALES> 697,069 244,398
<TOTAL-REVENUES> 762,541 276,086
<CGS> 0 0
<TOTAL-COSTS> 732,503 252,183
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> 0 0
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
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<NET-INCOME> 30,038 23,903
<EPS-PRIMARY> .01 .01
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