SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: MARCH 31, 1996 COMMISSION FILE NO. 0-4076
EXOTECH INCORPORATED
(Exact name of Registrant as Specified in Charter)
State or Jurisdiction of
Incorporation or Organization: DELAWARE
IRS Identification No: 54-0700888
Address of Principal Office: 8502 Dakota Drive
Gaithersburg, MD. 20877
Registrant's Telephone Number: (301) 948-3060
Indicate by checkmark 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
requirement for the past 90 days.
Yes [x] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this Report.
CLASS: COMMON STOCK, PAR VALUE $0.10
OUTSTANDING AT
MARCH 31, 1996 942,387
<PAGE>
EXOTECH INCORPORATED
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE NO.
<S> <C>
CONSOLIDATED CONDENSED BALANCE SHEET
MARCH 31, 1996 AND JUNE 30, 1995................................ 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - THREE MONTHS AND NINE MONTHS
ENDED MARCH 31, 1996 AND 1995 ..................... 3
CONSOLIDATED CONDENSED STATEMENTS OF
CHANGES IN FINANCIAL POSITION - NINE MONTHS
ENDED MARCH 31, 1996 AND 1995 ..................... 4
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS ..................... 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS ..................... 6
PART II OTHER INFORMATION
OTHER FINANCIAL INFORMATION...................................... 7/8
SIGNATURES ..................... 9
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
</TABLE>
<TABLE>
<CAPTION>
ASSETS
March 31, June 30,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Accts. Receivable, Net $ 8,609 $ 10,932
Inventories
Work in Process 591,632 528,965
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 2,017 1,426
------- -----
Total Current Assets 648,883 587,948
PROPERTY, PLANT AND EQUIPMENT
NET 416 584
OTHER NON CURRENT ASSETS 7,026 7,849
------- -------
TOTAL ASSETS 656,325 596,381
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses 93,241 51,997
Other Current Liabilities 400,129 335,279
Notes Payable 369,512 311,793
------- -------
Total Current Liabilities 862,882 699,069
SHAREHOLDERS EQUITY
Common Stock, Par Value $.10 per share;
1,500,000 shares authorized; 970,135
issued; 942,387 outstanding 97,014 97,014
Paid-in-Surplus 1,169,645 1,169,645
Deficit (1,360,796) (1,256,927)
Treasury Stock (27,748 shares) (112,420) (112,420)
----------- -----------
Total Shareholders' Equity (206,557) (102,688)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 656,325 596,381
======= =======
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995
-------------------------- ---------------------------
3 Mos. 9 Mos. 3 Mos. 9 Mos.
----------- ENDED ----------- ----------- ENDED -----------
3/31 3/31 3/31 3/31
<S> <C> <C> <C> <C>
REVENUE
Contract Sales $101,659 $261,015 $169,075 $308,449
EXPENSES
Direct Labor 380 1,973 1,654 2,314
Overhead 4,924 16,998 7,270 18,840
Materials 36 36 -- 142
Travel -- 848 -- --
General & Administrative 735 2,307 1,238 3,585
Inventory Costs 70,002 234,836 156,881 276,681
------- -------- -------- -------
Cost of Contract Services 76,076 256,997 167,043 301,562
Operating Income (Loss) 25,583 4,018 2,032 7,134
Miscellaneous Income -- -- -- --
Research and Development Cost -- (88,100) -- --
Interest & Other (6,548) (19,786) (6,808) (20,240)
------- -------- ------- --------
NET INCOME BEFORE
TAXES 19,035 (103,868) (4,776) (13,106)
State Income Tax
Provision -- -- -- --
------- --------- ---------- --------
NET INCOME (LOSS) 19,035 (103,868) (4,776) (13,106)
Weighted Average Number of
Common Shares
Outstanding 942,387 942,387 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE 0.020 (0.110) (0.005) (0.014)
DIVIDENDS PER
COMMON SHARE None None None None
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
These statements have been prepared from the books of account without audit.
3
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
STATEMENT OF CASH FLOWS FOR
NINE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Income (Loss) (103,868) (13,106)
Add: Non cash Income Determinants
Depreciation and Amortization 863 1,966
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable 2,323 (22,217)
(Increase) Decrease in Prepaid Expenses 628 45
(Increase) Decrease in Inventory (62,667) 34,009
Increase (Decrease) in Accts. Payable 41,244 (24,389)
Increase (Decrease) in Payroll/Emp. Benefits 45,176 10,918
Increase (Decrease) in Accrued Interest 19,674 19,933
------- ------
Cash Provided By or (Used) For Operating Transactions (56,627) 7,061
----------- ---------
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes 57,719 --
Payments on Notes -- (4,900)
---------- -------
Cash Provided By or (Used For) Financing Transactions 57,719 (4,900)
CASH FLOWS FROM INVESTING TRANSACTIONS:
Purchase of Equipment -- (687)
Deposits 128 --
------- ------
Cash Provided By or (Used For) Investing Transactions 128 (687)
----------- --------- ------- ------
INCREASE (DECREASE) IN CASH 1,220 1,474
- ---------------------------
CASH BALANCE - BEGINNING 32 1,083
- ------------------------ ------- ------
CASH BALANCE - ENDING $1,252 $2,557
- --------------------- ======= ======
</TABLE>
4
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
The following is Management's discussion and analysis of certain significant
factors which have affected the Company's earnings during the periods included
in the accompanying consolidated condensed statement of operations.
A summary of the period to period changes in the principal items included in the
consolidated statement of operations is shown below:
<TABLE>
<CAPTION>
------------------------------------ COMPARISON OF ------------------------------------------
THREE MONTHS THREE MONTHS NINE MONTHS
---------------- ---------------- -------------
Mar 31 Dec 31 Mar 31 Mar 31 Mar 31 Mar 31
1996 1995 1996 1995 1996 1995
<S> <C> <C> <C> <C> <C> <C>
Net Sales 101,659 103,839 101,659 169,075 261,015 308,696
Cost of Sales 5,339 7,887 5,339 8,924 19,854 21,296
G&A Expense 735 719 735 1,238 2,307 3,585
Inventory Cost 70,002 119,784 70,002 156,881 234,836 276,681
Interest & Other (6,548) (6,637) (6,548) (6,808) (19,786) (20,240)
</TABLE>
5
<PAGE>
EXOTECH INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1.
In the opinion of Management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
March 31, 1996 and June 30, 1995 and the results of operations and changes in
financial position for the nine months ended March 31, 1996 and 1995 of Exotech
Incorporated and its inactive wholly-owned consolidated subsidiary, Exotech
Research & Analysis, Inc. There are no significant intercompany transactions.
NOTE 2.
Per share computations have been based on the weighted average shares
outstanding of 942,387 for the nine months ended March 31, 1996.
NOTE 3.
Notes Payable at March 31, 1996 consist of four demand notes of $74,000, $8,000
and $47,000, payable with interest at 8.5% per annum to three of the Company's
former directors. In addition, one demand note of $225,512 is payable with
interest at 8.5% per annum to one officer/employee. Periodically, the Company
has obtained producer loans from Spiral Biotech, Inc. that are secured by
inventory instruments. At March 31, 1996, there was an outstanding Producer Loan
of $15,000 without interest. This loan may be prepaid, in whole or in part, at
any time, without penalty.
6
<PAGE>
I. CHANGE IN FINANCIAL POSITION IN THE NINE MONTHS ENDED
MARCH 31, 1996.
In the nine months period ended March 31, 1996, a decrease of $102,878
in working capital resulted from a net loss from operations of
$103,868, offset in part by $990 in non-fund charges.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND NINE
MONTHS PERIOD AND THE SAME QUARTER AND NINE MONTHS PERIOD
LAST YEAR.
Revenue for the quarter ended March 31, 1996, at $101,659 was $67,416
lower compared to the same period one year earlier. Operating income
was $25,583 compared to a loss of $2,032 in the quarter ended March
31, 1995. After six months of poor results related to the costly
development of a production version of a new product, a recovery in
the latest quarter with a build-up of product inventory at reasonable
cost is in the opinion of Management, an indication of improved
potential for results in the fourth quarter.
For the nine months period ended March 31, 1996, revenue of $261,015
was 15.4% lower than that achieved one year earlier. The large net
loss of $103,868 reflects the expenditure of resources in the second
quarter to complete the development of the company's newest product.
Production of the fully developed instrument was started in the third
quarter. In the opinion of Management, the development work will
provide for improved fourth quarter results.
7
<PAGE>
PART II. OTHER FINANCIAL INFORMATION
ITEM 5.
As in the past, a shortage of working capital continues to be a significant
problem, resulting in occasional slow payments to creditors, and hampering the
development of new business to the fullest extent possible. In the opinion of
Management, the Company should be in a position to sustain operations at least
until such time as the results of current contracts and negotiations for new
business is determinable. Ultimate realization of the carrying value of prepaid
expenses and advances, property and equipment, and miscellaneous other assets
shown in the accompanying balance sheet depend on the effect of the matters
discussed herein.
The dollar amount of the backlog as of March 31, 1996 was $153,000, lower by
$50,800 compared to the backlog at December 31, 1995.
ITEM 6 (B)
There were no reports filed on Form 8-K for the nine months ended March 31,
1996.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Company has duly
caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
EXOTECH INCORPORATED
REGISTRANT
DATE: May 16, 1996
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
ROBERT D. SADLER, ASSISTANT SECRETARY
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 2,017
<SECURITIES> 0
<RECEIVABLES> 8,609
<ALLOWANCES> 0
<INVENTORY> 638,257
<CURRENT-ASSETS> 648,883
<PP&E> 231,530
<DEPRECIATION> 231,114
<TOTAL-ASSETS> 656,325
<CURRENT-LIABILITIES> 862,882
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (303,571)
<TOTAL-LIABILITY-AND-EQUITY> 656,325
<SALES> 261,015
<TOTAL-REVENUES> 261,015
<CGS> 256,997
<TOTAL-COSTS> 256,997
<OTHER-EXPENSES> 88,100
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,786
<INCOME-PRETAX> (103,868)
<INCOME-TAX> 0
<INCOME-CONTINUING> (103,868)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (103,868)
<EPS-PRIMARY> (0.110)
<EPS-DILUTED> (0.110)
</TABLE>
