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, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number: 0-1665
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.
5,591,367 shares as of October 31, 1996
This document consists of 10 sequentially numbered pages.
<PAGE>
INDEX
EXTECH CORPORATION AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheet - September 30, 1996
(Unaudited)
Condensed Consolidated Statements of Operations - Nine months ended
September 30, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Operations - Three months
ended September 30, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Cash Flows - Nine months ended
September 30, 1996 and 1995 (Unaudited)
Notes to Condensed Consolidated Financial Statements Nine months ended
September 30, 1996 and 1995 (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
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
September 30, 1996
------------------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $1,084,534
Accounts receivable 58,382
Notes and other receivables 67,706
Inventories 4,728
Prepaid expenses and
other current assets 263,660
---------
Total current assets 1,479,010
=========
PROPERTY AND EQUIPMENT, net 167,690
---------
OTHER ASSETS:
Operating equipment, net 14,210
Deposits 10,000
---------
Total other assets 24,210
---------
$1,670,910
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,693
Accrued expenses 103,706
Debentures payable 154,200
Accrued taxes payable 10,711
---------
275,310
---------
MINORITY INTEREST 560
---------
STOCKHOLDERS' EQUITY:
Common Stock, $.01 par value;
authorized, 10,000,000 shares;
issued and outstanding,
5,591,367 shares 55,914
Capital in excess of par 5,264,950
Deficit (3,925,824)
----------
1,395,040
---------
$1,670,910
==========
See notes to condensed consolidated financial statements.
3
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine months ended
September 30,
1996 1995
---------------------
Revenues:
Rooms $ 735,275 $ 697,069
Other 17,366 51,617
Interest 27,543 13,855
--------- ---------
Total revenues 780,184 762,541
--------- ---------
Costs and expenses:
General, administrative
and sundry 382,863 274,944
Departmental 234,336 229,428
Depreciation and amortization 38,676 38,312
Energy costs 12,157 14,303
Lease rentals 146,168 141,278
Marketing 18,582 18,815
Property operation
and maintenance 17,872 11,583
Provision for bad debt 1,800 3,840
--------- ---------
852,454 732,503
--------- ---------
Net (loss) income $ (72,270) $ 30,038
=========== =========
Income per common share:
Net (loss) income $ (.02) $ .01
=========== ==========
Weighted average number of common
shares outstanding 3,781,148 2,391,367
=========== ==========
See notes to condensed consolidated financial statements.
4
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
September 30,
1996 1995
----------------------
Revenues:
Rooms $ 229,113 $ 244,398
Other 4,975 25,985
Interest 12,502 5,703
--------- ---------
Total revenues 246,590 276,086
--------- ---------
Costs and expenses:
General, administrative
and sundry 175,176 94,123
Departmental 82,829 80,728
Depreciation and amortization 12,844 12,770
Energy costs 4,846 4,731
Lease rentals 44,937 48,502
Marketing 5,382 6,738
Property operation
and maintenance 7,446 2,851
Provision for bad debt 600 1,740
--------- ---------
334,060 252,183
--------- ---------
Net (loss) income $ (87,470) $ 23,903
========== =========
Income per common share:
Net (loss) income $ ( .02) $ .01
=========== =========
Weighted average number of common
shares outstanding 5,591,367 2,391,367
========== ==========
See notes to condensed consolidated financial statements.
5
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Nine months ended
September 30,
1996 1995
--------------------
Cash flows from operating activities:
Net (loss) income $(72,270) $ 30,038
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 38,676 38,312
Provision for bad debts 1,800 3,840
Decrease (increase) in assets:
Accounts receivable (7,761) (12,774)
Inventories 2,462 2,920
Prepaid expenses and other
current assets (256,773) 27,501
Notes receivable (28,526) 4,168
Other assets (1,407) (3,961)
Deposits (10,000) -0-
Increase (decrease) in liabilities:
Accounts payable 3,137 107
Accrued expenses (35,795) (22,822)
Accrued taxes payable 10,711 11,072
---------- ---------
Net cash(used in)provided by
operating activities (355,746) 78,401
--------- ---------
Cash flows from investing activities:
Purchases of property and equipment ( 4,676) (615)
---------- ---------
Net cash (used in)
investing activities: ( 4,676) (615)
---------- ---------
Cash flows from financing activities:
Proceeds from issuance of stock 800,000 -0-
---------- ---------
Net cash provided by financing
activities 800,000 -0-
---------- ---------
Net increase in cash and cash
equivalents 439,578 77,786
Cash, beginning of period 644,956 482,359
----------- ---------
Cash, end of period $1,084,534 $ 560,145
=========== =========
See notes to condensed consolidated financial statements.
6
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995 (UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of September
30, 1996, the Condensed Consolidated Statements of
Operations for the three and nine months ended September
30, 1996 and 1995 and the Condensed Consolidated
Statements of Cash Flows for the nine months ended
September 30, 1996 and 1995 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,
1996, results of operations for the three and nine months
ended September 30, 1996 and 1995 and cash flows for the
nine months ended September 30, 1996 and 1995. This
report should be read in conjunction with the Company's
Annual Report on Form 10-KSB for the year ended December
31, 1995.
2. The results of operations and cash flows for the nine months ended
September 30, 1996 are not necessarily indicative of the results to be
expected for the full year.
7
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995
Results of Operations:
- ----------------------
The Company's net loss for the nine months ended September 30, 1996 was $72,270
as compared to a net income of $30,038 for the nine months ended September 30,
1995. Such loss was primarily the result of increased general, administrative
and sundry expenses of $107,919 (primarily due to a $54,810 increase in
professional fees relating to, among other matters, the transactions discussed
below under "Recent Developments", a $24,375 increase in officers compensation
expense, and a one-time appraisal fee of $10,000) as well as decreased other
revenues of $34,251 (primarily due to the receipt during the 1995 period of
$19,214 in royalty income with respect to the Company's pipe harness clamp and
$13,468 as a final distribution of proceeds from the sale of the Chicago
Executive House Hotel, as compared to no revenue from such sources in 1996).
Such increased expenses and decreased other revenues were offset by increased
room revenues of $38,206 and increased interest income of $13,688.
Liquidity and Capital Resources:
- --------------------------------
As of September 30, 1996, the Company had $1,084,534 in cash and cash
equivalents and a working capital surplus of $1,203,700. As of December 31,
1995, the Company had $644,956 in cash and cash equivalents and a working
capital surplus of $453,377. The increase in cash and cash equivalents and
working capital surplus was primarily the result of an $800,000 equity
investment made in June 1996 by the President and Chairman of the Board of the
Company and another investor.
The Company did not have any material commitments for capital expenditures as of
September 30, 1996.
Recent Developments:
- --------------------
In February 1996, concurrently with the execution of a letter of intent
providing for the acquisition of Phone America International, Inc. ("Phone
America"), the Company loaned $50,000 to Transcends Telecom Corporation
("Transcends"), a wholly-owned subsidiary of Phone America. The note evidencing
the loan (the "Note") was payable in August 1996 and the payment thereof was
secured by, among other things, a security interest in the accounts receivable
of Transcends. As a result of a default in payment by Transcends (which, the
Company has been advised, has since discontinued operations), the Company has
foreclosed its security interest in such accounts receivable which, the Company
believes, exceed the amount due under the Note. No assurance can be given as to
the collectibility of such accounts receivable.
8
<PAGE>
In July 1996, the Company entered into an agreement for the purchase of a
professional sports team for a purchase price of $850,000. The consummation of
the purchase was subject to, among other conditions, league approval of both the
transaction and the relocation of the team to Long Island. Upon execution of the
agreement, the Company paid to the seller, as a deposit, the sum of $250,000,
which amount was repayable in the event the transaction was not consummated
(other than as a result of a material default by the Company). Due to the
inability to obtain league approval, the agreement was terminated and, in
October 1996, the Company was repaid the $250,000 deposit.
9
<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
-----------------
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
(a) Exhibits
--------
3(a) Certificate of Incorporation, as amended 1
3(b) By-laws, as amended 2
27 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
None
- --------
1 Denotes document filed as an exhibit to the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1993 and incorporated herein by
reference.
2 Denotes document filed as an exhibit to the Company's Annual Report
on Form 10-K for the year ended December 31, 1989 and incorporated herein by
reference.
10
<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: By:/s/Morton L. Certilman
-------------------------------
MORTON L. CERTILMAN
President (Chief
Operating Officer and
Principal Financial
Officer)
11
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<EXCHANGE-RATE> 0
<CASH> 1,084,534
<SECURITIES> 0
<RECEIVABLES> 126,088
<ALLOWANCES> 0
<INVENTORY> 4,728
<CURRENT-ASSETS> 1,479,010
<PP&E> 263,660
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,670,910
<CURRENT-LIABILITIES> 275,310
<BONDS> 154,200
0
0
<COMMON> 55,914
<OTHER-SE> 1,339,126
<TOTAL-LIABILITY-AND-EQUITY> 1,670,910
<SALES> 0
<TOTAL-REVENUES> 780,184
<CGS> 0
<TOTAL-COSTS> 467,791
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<LOSS-PROVISION> 1,800
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (72,270)
<INCOME-TAX> 0
<INCOME-CONTINUING> (72,270)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (72,270)
<EPS-PRIMARY> (.02)
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