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: DECEMBER 31, 1996 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
DECEMBER 31, 1996 942,387
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EXOTECH INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1996 AND JUNE 30, 1996.................... 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - SIX MONTHS ENDED
DECEMBER 31, 1996 AND 1995 ............ 3
STATEMENT OF CASH FLOWS FOR SIX
MONTHS ENDED DECEMBER 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
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EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
ASSETS
December 31, June 30,
1996 1996
(Unaudited)
CURRENT ASSETS
Accts. Receivable, Net $ 18,833 $ 11,073
Inventories
Work in Process 570,509 505,062
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Other Current Assets 258 344
Cash 1,823 105
-------- -------
Total Current Assets 638,047 563,209
PROPERTY, PLANT AND EQUIPMENT
NET 324 411
OTHER NON-CURRENT ASSETS 6,457 6,921
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TOTAL ASSETS 644,829 570,541
========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses 119,813 105,664
Other Current Liabilities 359,393 347,994
Notes Payable 406,094 372,294
-------- -------
Total Current Liabilities 885,300 825,952
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 (1,394,710) (1,409,650)
Treasury Stock (27,748 shares) (112,420) (112,420)
----------- -----------
Total Shareholders' Equity (240,471) (255,411)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY 644,829 570,411
========= ========
See accompanying Notes to Consolidated Condensed Financial Statements.
2
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EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1996 1995
------------------------- ---------------------------
3 Mos. 6 Mos. 3 Mos. 6 Mos.
----------- ENDED ----------- ----------- ENDED -----------
12/31 12/31 12/31 12/31
<S> <C>
REVENUE
Contract Sales 87,208 198,004 103,839 159,356
EXPENSES
Direct Labor 4,682 5,336 827 1,593
Overhead 9,282 10,068 6,212 12,074
Materials 384 384 848 848
General & Administrative 852 996 719 1,572
Inventory Costs 52,488 151,200 207,884 252,934
------- -------- -------- -------
Cost of Contract Services 67,688 167,984 216,490 269,021
Operating Income (Loss) 19,520 30,020 (112,651) (109,665)
Miscellaneous Income -- -- -- --
Interest & Other (7,799) (14,929) (6,637) (13,238)
------- -------- ------- --------
NET INCOME BEFORE
TAXES 11,721 15,091 (119,288) (122,903)
State Income Tax
Provision -- -- -- --
----------- ----------- ---------- ---------
NET INCOME (LOSS) 11,721 15,091 (119,288) (122,903)
Weighted Average Number of
Common Shares
Outstanding 942,387 942,387 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE .01 .02 (.13) (.13)
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
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EXOTECH INCORPORATED AND SUBSIDIARY
STATEMENT OF CASH FLOWS FOR
SIX MONTHS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Income (Loss) 15,091 (122,903)
Add: Non cash Income Determinants
Depreciation and Amortization 551 576
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable (7,760) 6,175
(Increase) Decrease in Prepaid Expenses 86 629
(Increase) Decrease in Inventory (65,447) (11,982)
Increase (Decrease) in Accts. Payable 14,149 44,109
Increase (Decrease) in Payroll/Emp. Benefits (2,551) 27,782
Increase (Decrease) in Accrued Interest 13,799 13,164
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Cash Provided By or (Used) For Operating Transactions (32,082) (42,450)
----------- ---------
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes 33,800 42,719
Payments on Notes -- --
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Cash Provided By or (Used For) Financing Transactions 33,800 42,719
CASH FLOWS FROM INVESTING TRANSACTIONS:
Purchase of Equipment -- --
Deposits -- 128
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Cash Provided By or (Used For) Investing Transactions -- 128
----------- ---------
INCREASE (DECREASE) IN CASH 1,718 397
- ---------------------------
CASH BALANCE - BEGINNING 105 32
- ------------------------ ------ ------
CASH BALANCE - ENDING 1,823 429
====== ======
</TABLE>
4
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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
December 31, 1996 and June 30, 1996 and the results of operations and changes in
financial position for the six months ended December 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 six months ended December 31, 1996 and 1995.
NOTE 3.
Notes Payable at December 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
$221,094 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
December 31, 1996, there was an outstanding Producer Loan of $30,000 with
interest at 9.0% per annum. This loan may be prepaid, in whole or in part, at
any time, without penalty.
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 SIX MONTHS
---------------- ------------ -----------
Dec 31 Sept 30 Dec 31 Dec 31 Dec 31 Dec 31
1996 1996 1996 1995 1996 1995
<S> <C>
Net Sales 87,208 110,796 87,208 103,839 198,004 159,356
Cost of Labor & Overhead 14,348 1,440 14,348 7,887 15,788 14,515
G&A Expense 852 144 852 719 996 1,572
Inventory Cost 52,488 98,712 52,488 207,884 151,200 252,934
------- ------- ------- -------- -------- -------
Cost of Sales 67,688 100,296 67,688 216,490 167,984 269,021
Interest & Other (7,799) (6,601) (7,799) (6,637) (14,929) (13,238)
</TABLE>
6
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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 December 31, 1996 was $170,400, lower by
$32,600 compared to that of the prior year, and $67,952 lower than the backlog
at September 30, 1996. Negotiations have been completed that will increase
backlog by $204,000 in February, 1997.
ITEM 6 (B)
There were no reports filed on Form 8-K for the six months ended December 31,
1996.
7
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I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS ENDED
DECEMBER 31, 1996.
In the three months period ended December 31, 1996, a reduction of the
working capital deficit of $11,845 resulted from a net profit from
operations of $11,721 and non-fund charges of $275. A loan of $10,000
was obtained from Spiral Biotech, Inc.. It is secured by the
work-in-progress inventory of Laser Scanner instruments being under a
purchase order from the lender for a total of $87,000. The pay down of
the loan is scheduled out of the receipts for the instruments as they
are delivered. The order covers ten instruments, the last of which is
to be delivered in February, 1997. The loan will be repaid in full at
the delivery of the ninth unit.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND SIX MONTH
PERIOD AND THE SAME QUARTER AND SIX MONTHS PERIOD LAST YEAR.
Revenue for the quarter ended December 31, 1996, was lower by $16,631
compared to the same period in 1995. Operating income for the period
was $19,520 compared to a loss of $112,651 in the prior year. 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 six months period ended December 31, 1996, revenue of $198,004
was higher by about 24 percent compared to the same period in 1995. On
the same basis of comparison, the cost of sales was lower by about 38
percent, resulting in a net profit of $15,091 as opposed to an net
loss of $119,288 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 first half of
the prior fiscal year.
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: February 13, 1997
/s/
___________________________________
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9
[ARTICLE] 5
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] JUN-30-1997
[PERIOD-END] DEC-31-1996
[CASH] 1,823
[SECURITIES] 0
[RECEIVABLES] 18,833
[ALLOWANCES] 0
[INVENTORY] 617,134
[CURRENT-ASSETS] 638,047
[PP&E] 231,530
[DEPRECIATION] 231,206
[TOTAL-ASSETS] 644,829
[CURRENT-LIABILITIES] 885,300
[BONDS] 0
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 97,014
[OTHER-SE] (337,485)
[TOTAL-LIABILITY-AND-EQUITY] 644,829
[SALES] 198,004
[TOTAL-REVENUES] 198,004
[CGS] 167,984
[TOTAL-COSTS] 167,984
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 14,929
[INCOME-PRETAX] 15,091
[INCOME-TAX] 0
[INCOME-CONTINUING] 15,091
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 15,091
[EPS-PRIMARY] 0.02
[EPS-DILUTED] 0.02
</TABLE>
