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, 1997
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, 1997
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, 1997 (Unaudited)
Condensed Consolidated Statements of Operations - Nine months ended
September 30, 1997 and 1996 (Unaudited)
Condensed Consolidated Statements of Operations - Three months ended
September 30, 1997 and 1996 (Unaudited)
Condensed Consolidated Statements of Cash Flows - Nine months ended
September 30, 1997 and 1996 (Unaudited)
Notes to Condensed Consolidated Financial Statements Nine months ended
September 30, 1997 and 1996 (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, 1997
------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,416,996
Accounts receivable 36,472
Notes and other receivables 27,058
Inventories 3,561
Prepaid expenses and
other current assets 14,018
----------
Total current assets 1,498,105
----------
PROPERTY AND EQUIPMENT, net 132,220
==========
OTHER ASSETS:
Operating equipment, net 10,053
Deposits 5,000
----------
Total other assets 15,053
----------
$1,645,378
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,272
Accrued expenses 36,991
Debentures payable 154,200
Accrued taxes payable 12,049
----------
Total current liabilities 209,512
----------
MINORITY INTEREST 560
----------
LONG TERM LIABILITIES: 59,883
----------
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 (3,945,441)
----------
1,375,423
----------
$1,645,378
==========
See notes to condensed consolidated financial statements.
3
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Nine months ended
September 30,
1997 1996
Revenues:
Rooms $ 697,702 $ 735,275
Other 16,237 17,366
Interest 47,580 27,543
---------- ----------
Total revenues 761,519 780,184
---------- ----------
Costs and expenses:
General, administrative
and sundry 379,824 382,863
Departmental 222,286 234,336
Depreciation and amortization 39,209 38,676
Energy costs 18,142 12,157
Lease rentals 139,986 146,168
Marketing 15,765 18,582
Property operation
and maintenance 19,973 17,872
Provision for bad debt 13,122 1,800
---------- ----------
848,307 852,454
Net (loss) $ (86,788) $ (72,270)
========== ==========
Income per common share:
Net (loss) $ (.02) $ (.02)
========== ==========
Weighted average number of common
shares outstanding 5,591,367 3,781,148
========== ==========
See notes to condensed consolidated financial statements.
4
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three months ended
September 30,
1997 1996
Revenues:
Rooms $ 185,067 $ 229,113
Other 6,964 4,975
Interest 17,380 12,502
---------- ----------
Total revenues 209,411 246,590
---------- ----------
Costs and expenses:
General, administrative
and sundry 120,212 175,176
Departmental 73,030 82,829
Depreciation and amortization 13,283 12,844
Energy costs 6,776 4,846
Lease rentals 39,291 44,937
Marketing 4,155 5,382
Property operation
and maintenance 7,490 7,446
Provision for bad debt 12,522 600
---------- ----------
276,759 334,060
---------- ----------
Net (loss) $ (67,348) $ (87,470)
========== ==========
Income per common share:
Net (loss) $ (.01) $ (.02)
========== ==========
Weighted average number of common
shares outstanding 5,591,367 5,591,367
========== ==========
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,
1997 1996
Cash flows from operating activities:
Net (loss) $ (86,788) $ (72,270)
Adjustments to reconcile net (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization 39,209 38,676
Provision for bad debts 13,122 1,800
Decrease (increase) in assets:
Accounts receivable 997 (7,761)
Inventories 2,839 2,462
Prepaid expenses and other
current assets 108,461 (6,773)
Notes receivable 54,798 (28,526)
Other assets (524) (1,407)
Deposits (5,000) (260,000)
Increase (decrease) in liabilities:
Accounts payable 4,298 3,137
Accrued expenses (26,752) (35,795)
Accrued taxes payable 12,049 10,711
---------- ----------
Net cash provided by (used in)
operating activities 116,709 (355,746)
---------- ----------
Cash flows from investing activities:
Purchases of property and equipment (17,834) (4,676)
---------- ----------
Net cash (used in)
investing activities: (17,834) (4,476)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of stock - 0 - 800,000
---------- ----------
Net cash provided by financing
activities - 0 - 800,000
---------- ----------
Net increase in cash and cash
equivalents 98,875 439,578
Cash, beginning of period 1,318,121 644,956
---------- ----------
Cash, end of period $1,416,996 $1,084,534
========== ==========
See notes to condensed consolidated financial statements.
6
<PAGE>
EXTECH CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
1. The Condensed Consolidated Balance Sheet as of September 30, 1997, the
Condensed Consolidated Statements of Operations for the three and nine
months ended September 30, 1997 and 1996 and the Condensed Consolidated
Statements of Cash Flows for the nine months ended September 30, 1997 and
1996 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, 1997, results of operations for the
three and nine months ended September 30, 1997 and 1996 and cash flows for
the nine months ended September 30, 1997 and 1996. This report should be
read in conjunction with the Company's Annual Report on Form 10-KSB for the
year ended December 31, 1996.
2. The results of operations and cash flows for the nine months ended
September 30, 1997 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, 1997 AND 1996
Results of Operations:
The Company's net loss for the nine months ended September 30, 1997 was $86,788
as compared to a net loss of $72,270 for the nine months ended September 30,
1996. The total revenues for the nine months ended September 30, 1997 was
$18,665 lower than the total revenues for the nine months ended September 30,
1996. The increased loss for 1997 as compared to 1996 was primarily the result
of the lower revenues for the current year as well as the Company's write off of
its loan receivable from Transcends Telecom Corporation.
Liquidity and Capital Resources:
As of September 30, 1997, the Company had $1,416,996 in cash and cash
equivalents and a working capital surplus of $1,288,593. As of December 31,
1996, the Company had $1,318,121 in cash and cash equivalents and a working
capital surplus of $1,263,038. The increase in cash and cash equivalents was
primarily the result of cash generated from operating activities for 1997,
including the receipt of $77,652 in royalty payments during the first quarter of
1997 (which royalty payments were recognized as revenue in 1996), and the
receipt of $33,308 in payments from Robeson Industries Corp. pursuant to a
certain promissory note.
The increase in working capital was primarily the result of the increase in cash
and cash equivalents and the reclassification of $59,883 of certain disputed
rental obligations of the Company's wholly-owned subsidiary, IAH, Inc., as long
term liabilities, rather than as accrued expenses.
The Company did not have any material commitments for capital expenditures as of
September 30, 1997; however, the Company is continuing to explore various
business opportunities. No definitive arrangements are currently in place and no
assurances can be given that any such transaction will be entered into.
8
<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 amended1
3(b) By-laws, as amended2
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 Quarterly Report
on Form 10-QSB for the quarter ended June 30, 1997 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: November 12, 1997 By:/s/ Morton L. Certilman
-----------------------
MORTON L. CERTILMAN
President (Chief Operating Officer
and Principal Financial Officer)
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>I
The schedule contains summary financial information extracted from the
financial Statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-START> Jan-01-1997
<PERIOD-END> Sep-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,416,996
<SECURITIES> 0
<RECEIVABLES> 63,530
<ALLOWANCES> 0
<INVENTORY> 3,561
<CURRENT-ASSETS> 1,498,105
<PP&E> 132,220
<DEPRECIATION> 39,209
<TOTAL-ASSETS> 1,645,378
<CURRENT-LIABILITIES> 209,512
<BONDS> 0
0
0
<COMMON> 55,914
<OTHER-SE> 5,264,950
<TOTAL-LIABILITY-AND-EQUITY> 1,645,378
<SALES> 0
<TOTAL-REVENUES> 761,519
<CGS> 0
<TOTAL-COSTS> 848,307
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (86,788)
<INCOME-TAX> 0
<INCOME-CONTINUING> (86,788)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (86,788)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
