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 June 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 July 22, 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 - June 30, 1996
(Unaudited)
Condensed Consolidated Statements of Operations - Six months ended
June 30, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Operations - Three months ended
June 30, 1996 and 1995 (Unaudited)
Condensed Consolidated Statements of Cash Flows - Six months ended
June 30, 1996 and 1995 (Unaudited)
Notes to Condensed Consolidated Financial Statements Six months ended
June 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)
June 30, 1996
-------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,453,818
Accounts receivable 29,682
Notes and other receivables 69,828
Inventories 6,185
Prepaid expenses 15,076
-----------
Total current assets 1,574,589
-----------
PROPERTY AND EQUIPMENT, net 180,334
-----------
OTHER ASSETS:
Operating equipment, net 10,959
Deposits 10,000
-----------
Total other assets 20,959
-----------
$ 1,775,882
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 2,630
Accrued expenses 123,647
Debentures payable 154,200
Accrued taxes payable 12,335
-----------
292,812
-----------
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 (3,838,354)
-----------
1,482,510
-----------
$ 1,775,882
===========
See notes to condensed consolidated financial statements.
3
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Six months ended
June 30,
1996 1995
---------- ----------
Revenues:
Rooms $ 506,162 $ 452,671
Other 12,391 25,632
Interest 15,041 8,152
---------- ----------
Total revenues 533,594 486,455
---------- ----------
Costs and expenses:
General, administrative
and sundry 207,687 180,821
Departmental 151,507 148,700
Depreciation and amortization 25,832 25,542
Energy costs 7,311 9,572
Lease rentals 101,231 92,776
Marketing 13,200 12,077
Property operation
and maintenance 10,426 8,732
Provision for bad debt 1,200 2,100
---------- ----------
518,394 480,320
---------- ----------
Net income $ 15,200 $ 6,135
========== ==========
Income per common share:
Net income $ .01 $ .01
========== ==========
Weighted average number of common
shares outstanding 2,866,092 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
June 30,
1996 1995
---------- ----------
Revenues:
Rooms $ 204,551 $ 171,661
Other 5,728 18,948
Interest 8,854 4,768
----------- -----------
Total revenues 219,133 195,377
----------- -----------
Costs and expenses:
General, administrative
and sundry 106,618 83,989
Departmental 70,725 63,870
Depreciation and amortization 12,845 12,771
Energy costs 2,676 4,920
Lease rentals 39,046 37,820
Marketing 5,409 5,633
Property operation
and maintenance 5,861 3,986
Provision for bad debt 600 900
----------- -----------
243,780 213,889
----------- -----------
Net loss $ (24,647) $ (18,512)
=========== ===========
Income per common share:
Net loss $ (.01) $ (.01)
=========== ===========
Weighted average number of common
shares outstanding 3,340,818 2,391,367
=========== ===========
See notes to condensed consolidated financial statements.
5
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six months ended
June 30,
1996 1995
----------- -----------
Cash flows from operating activities:
Net income $ 15,200 $ 6,135
Adjustments to reconcile net income
to net cash provided by
operating activities:
Depreciation and amortization 25,832 25,542
Provision for bad debts 1,200 2,100
Decrease (increase) in assets:
Accounts receivable 21,539 24,708
Inventories 1,005 3,071
Prepaid expenses (8,189) 28,506
Notes receivable (30,648) -0-
Other assets 1,844 (1,578)
Deposits (10,000) -0-
Increase (decrease) in liabilities:
Accounts payable (926) 1,427
Accrued expenses (15,854) (41,238)
Accrued taxes payable 12,335 10,269
----------- -----------
Net cash provided by
operating activities 13,338 58,942
----------- -----------
Net cash (used in) investing activities:
Purchases of property and equipment (4,476) (516)
----------- -----------
Net cash (used in)
investing activities: (4,476) (516)
----------- -----------
Net cash 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 808,862 58,426
Cash, beginning of period 644,956 482,359
----------- -----------
Cash, end of period $ 1,453,818 $ 540,785
=========== ===========
See notes to condensed consolidated financial statements.
6
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995 (UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of June 30, 1996, the Condensed
Consolidated Statements of Operations for the three and six months ended
June 30, 1996 and 1995 and the Condensed Consolidated Statements of Cash
Flows for the six months ended June 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 June
30, 1996, results of operations for the three and six months ended June 30,
1996 and 1995 and cash flows for the six months ended June 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 six months ended June 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
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
Results of operations:
The Company's net income for the six months ended June 30, 1996 was $15,200 as
compared to a net income of $6,135 for the six months ended June 30, 1995. Such
increased net income was primarily the result of increased room revenues of
$53,491, offset by increased general, administrative and sundry expenses of
$26,866 (primarily due to a one-time $10,000 appraisal fee incurred in
connection with the equity financing discussed under "Liquidity and Capital
Resources" below) and decreased other revenues of $13,241 (primarily due to the
receipt during the 1995 period of $13,468 as a final distribution of proceeds
from the sale of the Chicago Executive House Hotel).
Liquidity and Capital Resources:
As of June 30, 1996, the Company had $1,453,818 in cash and cash equivalents and
a working capital surplus of $1,281,777. 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
June 30, 1996 (see, however, "Prospects" below).
Prospects:
On July 19, 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, which is scheduled for September, 1996, is 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 is repayable in the
event the transaction is not consummated (other than as a result of a material
default by the Company). The repayment of the deposit is secured by the grant of
a security interest in all of the seller's assets. The $600,000 balance of the
purchase price is payble at the closing. No assurances can be given that the
transaction will be consummated.
The Company is also exploring a number of other business opportunities in
connection with the acquisition and/or operation of sports franchises. Although
negotiations are occurring, no definitive arrangements are currently in place,
and no assurances
8
<PAGE>
can be given that any such transactions will be consummated.
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
One Report on Form 8-K was filed during the quarter ended
June 30, 1996 as set forth below:
Date of Event: June 3, 1996
Items Reported: 1 and 7
- --------
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.
9
<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: August 14, 1996 By: /s/ Morton L. Certilman
-----------------------
MORTON L. CERTILMAN
President (Chief
Operating Officer and
Principal Financial
Officer)
10
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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Jun-30-1996
<CASH> 1,453,818
<SECURITIES> 0
<RECEIVABLES> 99,510
<ALLOWANCES> 0
<INVENTORY> 6,185
<CURRENT-ASSETS> 1,574,589
<PP&E> 180,334
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,775,882
<CURRENT-LIABILITIES> 292,812
<BONDS> 0
0
0
<COMMON> 55,914
<OTHER-SE> 1,426,596
<TOTAL-LIABILITY-AND-EQUITY> 1,775,882
<SALES> 0
<TOTAL-REVENUES> 533,594
<CGS> 0
<TOTAL-COSTS> 518,394
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 15,200
<INCOME-TAX> 0
<INCOME-CONTINUING> 15,200
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,200
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
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