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, 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
March 31, 1997 942,387
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<PAGE>
EXOTECH INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
March 31, 1997 AND JUNE 30, 1996............................... 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - NINE MONTHS ENDED
MARCH 31, 1997 AND 1996......................................... 3
STATEMENT OF CASH FLOWS FOR NINE
MONTHS ENDED MARCH 31, 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................................... 7/8
SIGNATURES...................................................... 9
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
------
March 31, June 30,
1997 1996
----------- --------
(Unaudited)
<S><C>
CURRENT ASSETS
Accts. Receivable, Net $ 14,435 $ 11,073
Inventories
Work in Process 527,025 505,062
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Other Current Assets 64 344
Cash 375 105
----------- -----------
Total Current Assets 588,524 563,209
PROPERTY, PLANT AND EQUIPMENT
NET 281 411
OTHER NON-CURRENT ASSETS 6,225 6,921
----------- -----------
TOTAL ASSETS 595,030 570,541
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses 95,364 105,664
Other Current Liabilities 359,509 347,994
Notes Payable 382,094 372,294
----------- -----------
Total Current Liabilities 836,967 825,952
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 (1,396,176) (1,409,650)
Treasury Stock (27,748 shares) (112,420) (112,420)
----------- -----------
Total Shareholders' Equity (241,937) (255,411)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 595,030 570,541
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1997 1996
----------------------- -----------------------
3 Mos. 9 Mos. 3 Mos. 9 Mos.
----------- ENDED ----------- ----------- ENDED -----------
3/31 3/31 3/31 3/31
<S><C>
REVENUE
- -------
Contract Sales $137,171 $335,175 $101,659 $261,015
EXPENSES
- --------
Direct Labor 2,573 7,909 380 1,973
Overhead 6,054 16,122 4,924 16,998
Materials 149 533 36 36
Other Direct Costs 5,000 5,000 -- --
Travel 2,316 2,316 -- 848
General & Administrative 2,114 3,110 735 2,307
Inventory Costs 111,669 262,869 70,002 234,836
-------- -------- -------- --------
Cost of Contract Services 129,875 297,859 76,076 256,997
Operating Income (Loss) 7,296 37,316 25,583 4,018
Miscellaneous Income -- -- -- --
Research and Development -- -- -- (88,100)
Interest & Other (8,771) (23,700) (6,548) (19,786)
-------- -------- -------- --------
NET INCOME BEFORE
TAXES (1,475) 13,616 19,035 (103,868)
State Income Tax
Provision -- -- -- --
-------- -------- -------- --------
NET INCOME (LOSS) (1,475) 13,616 19,035 (103,868)
Weighted Average Number of
Common Shares
Outstanding 942,387 942,387 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE (0.00) 0.01 0.02 (0.11)
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>
1997 1996
---- ----
<S><C>
CASH FLOWS FROM OPERATING TRANSACTIONS
- --------------------------------------
Net Income (Loss) 13,616 (103,868)
Add: Non cash Income Determinants
Depreciation and Amortization 826 863
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable (3,362) 2,323
(Increase) Decrease in Prepaid Expenses 280 628
(Increase) Decrease in Inventory (21,963) (62,667)
Increase (Decrease) in Accts. Payable (10,300) 41,244
Increase (Decrease) in Payroll/Emp. Benefits (9,177) 45,176
Increase (Decrease) in Accrued Interest 20,550 19,674
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Cash Provided By or (Used) For Operating Transactions (9,530) (56,627)
----------- ----------
CASH FLOWS FROM FINANCING TRANSACTIONS:
- ---------------------------------------
Proceeds from Notes 39,800 57,719
Payments on Notes (30,000) --
------- --------
Cash Provided By or (Used For) Financing Transactions 9,800 57,719
CASH FLOWS FROM INVESTING TRANSACTIONS:
- ---------------------------------------
Purchase of Equipment -- --
Deposits -- 128
------- --------
Cash Provided By or (Used For) Investing Transactions -- 128
----------- ----------
INCREASE (DECREASE) IN CASH 270 1,200
- ---------------------------
CASH BALANCE - BEGINNING 105 32
- ------------------------ ------- --------
CASH BALANCE - ENDING 375 $1,252
======= ========
</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
March 31, 1997 and June 30, 1996 and the results of operations and changes in
financial position for the nine months ended March 31, 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 nine months ended March 31, 1997 and 1996.
NOTE 3.
Notes Payable at March 31, 1996 consist of four demand notes of $100,000, $8,000
and $47,000, payable with interest at 8.5% per annum to one of the Company's
present and two former directors. In addition, one demand note of $227,094 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 (bacteria colony counters). At March 31, 1997,
there was no outstanding Producer Loan.
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 THREE MONTHS NINE MONTHS
---------------------- ------------------------ -----------------------
Mar 31 Dec 31 Mar 31 Mar 31 Mar 31 Mar 31
1997 1996 1997 1996 1997 1996
<S><C>
Net Sales 137,171 87,208 137,171 101,659 335,175 261,015
Cost of Labor & Overhead 8,627 14,348 8,627 5,304 24,031 18,971
G&A Expense 2,114 852 2,114 735 3,110 2,307
Inventory Cost 111,669 52,488 111,669 70,002 262,869 234,836
------- ------ ------- ------ ------- -------
Cost of Sales 129,875 67,688 129,875 76,076 297,859 256,997
Interest & Other 8,771 7,799 8,771 6,548 23,700 19,786
</TABLE>
6
<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, 1997 was $265,500, higher by
$112,500 compared to that of the prior year, and $95,100 higher than the backlog
at December 31, 1996.
ITEM 6 (B)
There were no reports filed on Form 8-K for the nine months ended March 31,
1997.
7
<PAGE>
I. CHANGE IN FINANCIAL POSITION IN THE NINE MONTHS ENDED MARCH 31, 1997.
---------------------------------------------------------------------
In the nine months period ended March 31, 1997, a reduction of the
working capital deficit of $14,300 resulted from a net profit from
operations of $13,616 and non-fund charges of $826. Producer loans
totalling $30,000 - obtained from Spiral Biotech, Inc. in this period
were paid-down prior to the end of the period. Additional loans
amounting to $9,800 obtained from an officer of the Company are
outstanding.
An order received in March 1997 from Spiral Biotech, Inc. increased
backlog at the end of the period by $180,000 for instruments scheduled
for deliveries beginning in June 1997.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND NINE MONTH
------------------------------------------------------------
PERIOD AND THE SAME QUARTER AND NINE MONTHS PERIOD LAST YEAR.
-------------------------------------------------------------
Revenue for the quarter ended March 31, 1997, at $137,171, was $35,512
higher compared to the same period one year earlier. Operating income
was $4,018 compared to $25,583 in the quarter ended March 31, 1996.
The earlier period had unusually low costs related to completion of
the costly development of a production version of a new product. In
the opinion of Management, the most recent quarter results show a
continuation of modest progress over the past three quarters toward
profitable operations and recovery from the large losses incurred in
the prior year.
For the nine months period ended March 31, 1997, revenue of $335,175
was 28 percent higher than that achieved one year earlier. On the same
basis of comparison, the cost of sales was higher by about 16 percent,
resulting in a net profit of $13,616 as opposed to an net loss of
$103,868 in the prior year. These changes reflect the return to more
normal operating conditions for the Company after an intense and very
costly effort to develop a new product in the prior fiscal year.
8
<PAGE>
SIGNATURE
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 14, 1997
----------------------------
/s/ Robert G. Lyle
- -----------------------------------
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 375
<SECURITIES> 0
<RECEIVABLES> 14,435
<ALLOWANCES> 0
<INVENTORY> 573,650
<CURRENT-ASSETS> 588,524
<PP&E> 231,530
<DEPRECIATION> 231,249
<TOTAL-ASSETS> 595,030
<CURRENT-LIABILITIES> 836,967
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (338,951)
<TOTAL-LIABILITY-AND-EQUITY> 595,030
<SALES> 335,175
<TOTAL-REVENUES> 335,175
<CGS> 297,859
<TOTAL-COSTS> 297,859
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,700
<INCOME-PRETAX> 13,616
<INCOME-TAX> 0
<INCOME-CONTINUING> 13,616
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,616
<EPS-PRIMARY> 0.01
<EPS-DILUTED> 0.01
</TABLE>
