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: SEPTEMBER 30, 1997 COMMISSION FILE NO. 0-4076
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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
SEPTEMBER 30, 1997 942,387
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<PAGE>
EXOTECH INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1997 AND JUNE 30, 1997.............. 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996........................ 3
STATEMENT OF CASH FLOWS FOR THREE
MONTHS ENDED SEPTEMBER 30, 1997 AND 1996........... 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........................ 8
SIGNATURES......................................... 9
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
SEPTEMBER 30, JUNE 30,
1997 1997
------------- --------
(Unaudited)
<S> <C>
CURRENT ASSETS
Accts. Receivable, Net $ 10,780 $ 18,225
Inventories
Work in Process 326,230 261,034
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 8,087 3,431
--------- ---------
Total Current Assets $391,722 $329,315
PROPERTY, PLANT AND EQUIPMENT
NET 264 294
OTHER NON CURRENT ASSETS 5,761 5,993
-------- --------
TOTAL ASSETS $397,747 $335,602
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses $115,225 $99,369
Other Current Liabilities 382,071 371,782
Notes Payable 425,794 385,294
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Total Current Liabilities $923,090 $856,445
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 (1,679,582) (1,675,082)
Treasury Stock (27,748 shares) (112,420) (112,420)
--------- ---------
Total Shareholders' Equity (525,343) (520,843)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $397,747 $335,602
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1997 1996
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------- --------------
<S> <C>
REVENUES
Contract Sales $ 51,935 $110,796
EXPENSES
Direct Labor 4,994 654
Overhead 7,764 786
Materials 585 -
General & Administrative 1,758 144
Inventory Costs 32,075 98,712
------ -------
Cost of Contract Sales 47,176 100,296
Operating Income (Loss) 4,759 10,500
Other Revenue (Expenses): - -
Interest & Other (9,257) (7,130)
NET INCOME BEFORE TAXES (4,498) 3,370
State Income Tax - -
NET INCOME (LOSS) (4,498) 3,370
Weighted Average Number of
Common Stock Outstanding 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE (.005) .004
DIVIDENDS PER COMMON SHARE 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
THREE MONTHS ENDED SEPTEMBER 30,
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C>
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Income (Loss) $ (4,498) $ 3,370
Add: Non cash Income Determinants
Depreciation and Amortization 260 275
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable 7,445 (7,487)
(Increase) Decrease in Prepaid Expenses (114) 6
(Increase) Decrease in Inventory (65,196) (28,355)
Increase (Decrease) in Accts. Payable 15,856 16,948
Increase (Decrease) in Payroll/Emp. Benefits 2,034 (11,493)
Increase (Decrease) in Accrued Interest 8,255 7,130
-------- -------
Cash Provided By or (Used) For Operating Transactions (35,958) (19,606)
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes 40,500 30,000
Payment on Notes 10,000
---------- ---------
Cash Provided By or (Used For) Financing Transactions 40,500 20,000
CASH FLOWS FROM INVESTING TRANSACTIONS:
Deposits -0- -0-
---------- ---------
Cash Provided By or (Used For) Investing Transactions -0- -0-
INCREASE (DECREASE) IN CASH 4,542 394
CASH BALANCE - BEGINNING 3,431 105
--------- --------
CASH BALANCE - ENDING $ 7,973 $ 499
</TABLE>
4
<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
September 30, 1997 and June 30, 1997 and the results of operations and changes
in financial position for the three months ended September 30, 1997 and 1996 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 three months ended September 30, 1997 and 1996.
NOTE 3.
Notes Payable at September 30, 1997 consist of four demand notes of $100,000,
$8,000 and $47,000, payable with interest at 8.5% per annum to three of the
Company's former directors. In addition, notes amounting to $250,794 are 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 (bacteria colony counters). At September 30, 1997,
there was an outstanding Producer Loan of $20,000 with interest at 9% per annum.
This loan may be prepaid, in whole or in part, at any time, without penalty.
NOTE 4.
Inventory cost shown in the cost of sales represents the cost of production of
goods sold that were incurred in the prior fiscal year.
5
<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 ENDED THREE MONTHS ENDED
Sept 30 June 30 Sept 30 Sept 30
1997 1997 1997 1996
------- ------- ------- --------
<S> <C>
Net Sales $51,935 $108,001 $51,935 $110,796
Direct Cost & Overhead 13,343 5,886 13,343 1,440
General & Administrative Expense 1,758 805 1,758 144
Inventory Cost 32,075 84,921 32,075 98,712
Cost of Sales 47,176 91,612 47,176 100,296
Interest & Other 9,257 14,180 9,257 7,130
Inventory Adjustment -- 281,117 -- --
</TABLE>
<PAGE>
I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS
ENDED SEPTEMBER 30, 1997.
In the three months period ended September 30, 1997, a decrease of
working capital of $4,238 resulted from a net loss from operations of
$4,498 and non-fund charges of $260. A loan of $20,000 was obtained
from Spiral Biotech, Inc.. It is secured by the work-in-progress
inventory of Autoplate instruments being produced under a purchase
order from the lender for a total of $180,000. The pay down of the
loan is scheduled out of the receipts for the instruments as they are
delivered. The order covers thirty instruments, the last of which is
to be delivered in December 1997. The loan will be repaid in full at
the delivery of the twelfth unit in October 1997. Additional financing
in the amount of $20,500 was obtained by a loan from an
officer/employee.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND THE SAME THREE MONTH
PERIOD LAST YEAR.
Revenue for the quarter ended September 30, 1997, was lower by $58,861
or 53% than the results one year earlier. Operating costs were lower
in the most recent quarter by $53,120 or 53% compared to the prior
year. The result was an operating profit of $4,759 and a net loss of
$4,498 compared to a net profit of $3,370 in the quarter ended one
year earlier. The large variations shown in the period-to-period
comparison are principally related to the phase of the product
manufacturing that characterizes the three month period. In the most
recent quarter, production of a new lot of thirty Autoplate
instruments was begun, requiring substantial effort and expenditures
for purchased parts and materials. This activity is reflected in the
increase of about $65,000 in inventory value. Sales in the period were
principally calibration, maintenance and repair services with only two
instrument products delivered. In the same period of the prior year,
the manufacturing cycle was further advanced so that eight new
instruments were delivered, accounting for $48,000 of the sales in the
period.
In the opinion of Management, the increased backlog of orders for the
Company's products and continued stringent control of costs will
provide for improved results in the following quarter.
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 depends upon sustained operations as a
going concern.
The dollar amount of the backlog as of September 30, 1997 was $350,000, an
increase of $150,000 from the backlog of the preceding quarter ended June 30,
1997.
ITEM 6 (B)
No reports on Form 8-K were filed in this quarter, ended September 30, 1997.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Company has duly
caused this amended Report to be signed on its behalf by the undersigned
thereunto duly authorized.
EXOTECH INCORPORATED
REGISTRANT
DATE: November 18, 1997
/s/ Robert G.Lyle
___________________________________
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 7,973
<SECURITIES> 0
<RECEIVABLES> 10,780
<ALLOWANCES> 0
<INVENTORY> 372,855
<CURRENT-ASSETS> 391,722
<PP&E> 231,530
<DEPRECIATION> 231,266
<TOTAL-ASSETS> 397,747
<CURRENT-LIABILITIES> 923,090
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (622,357)
<TOTAL-LIABILITY-AND-EQUITY> 397,747
<SALES> 51,935
<TOTAL-REVENUES> 51,935
<CGS> 47,176
<TOTAL-COSTS> 47,176
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,257
<INCOME-PRETAX> (4,498)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,498)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,498)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
