SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-K (AMENDED 6 JANUARY 1997 AND 26 FEBRUARY 1997)
ANNUAL REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR FISCAL YEAR ENDED: JUNE 30, 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
SECURITIES REGISTERED PURSUANT TO
SECTION 12 (b) OF THE EXCHANGE ACT
None
SECURITIES REGISTERED PURSUANT TO
SECTION 12 (g) OF THE ACT
Common Stock par value $0.10 per share.
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 [ ]
At June 30, 1996, 942,387 shares of Common Stock were outstanding, and the
aggregate market value of the Common Stock of Exotech Inc. held by nonaffiliates
was approximately $56,750.
DOCUMENTS INCORPORATED BY REFERENCE
NONE
B-1
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULT OF OPERATIONS.
The Company's revenues of $367,259 were 1.0% lower than in fiscal year
1995, and 16% lower than in fiscal year 1994. The declines over these years
related in part to organizational and personnel disruptions in the Company's
principal customer and marketing agent for biotechnology instruments, Spiral
Biotech, Inc., and the sub-par quality of an imported automated plater
instrument, sold as a part of a system including Exotech products. The Company's
new product has replaced this instrument. The $43,365 billed in fiscal year 1994
proved uncollectible and was written off in the following year.
Sales of platers, laser bacterial colony counters and related
biotechnology products increased to $302,700 compared to $189,280 in 1995 and
$220,402 in 1994. There were no sales of radiometers nor Crystallographic
Scanners, although radiometer sales were $16,440 and $30,363 respectively in
1995 and 1994. Service and parts sales for Modulation Transfer Function Testers
were $17,350 compared to $9,000 and $57,000 respectively in 1995 and 1994.
Service and maintenance sales for the broad range of other laboratory
instruments was down to $47,584 compared to sales of $147,257 in the prior year
and $85,700 in fiscal 1994. The higher sales of service in fiscal year 1995
resulted from repairs to the imported plater instrument mentioned above.
The cost of operations, including $129,000 of research and development
costs, resulted in an operating loss of $127,367 compared to a profit of $2,057
in fiscal year 1995 and a loss of $8,812 in 1994. The impact of interest costs
resulted in a net loss of $152,584 compared to losses of $68,130 and $35,448 in
1995 and 1994, respectively.
A net increase in demand notes of $60,501 needed to sustain development
of a new automated plater instrument caused an increase in interest expense to
$29,817 compared to $26,822 in the prior year, and $27,752 in fiscal 1994. A
charge of $129,000 was incurred in the past year for research and development to
search out the combination of electronic and mechanical technology needed to
design and develop a state-of-the-art instrument with strong sales potential in
a highly competitive market. In the opinion of Management, that objective was
achieved through intense effort to deliver two preproduction prototypes and 14
units of the new instrument in the second quarter of fiscal 1996.
In the third and fourth quarter of the past year, orders for
instruments and services were increased by Spiral Biotech, Inc. bringing sales
to about the level of the prior year and increasing backlog to $279,000 at June
30, 1996, compared to $81,000 one year earlier and $45,300 at the end of fiscal
year 1994. In the opinion of Management, recent improvements in the marketing of
the biotechnology products will rejuvenate sales of the laser scanner
instruments together with increasing sales of the new automated plater.
Despite financial limitations that have impeded marketing of the
Crystallographic Scanner instruments, management believes that the results of
on-going collaborative studies and demonstrations of capabilities will improve
the prospects of sales to the potential customers who continue to show interest
in that instrument system. Furthermore, management is committed to explore the
prospects for collaborative arrangements with several well established suppliers
of manufacturing equipment to the semiconductor producer industry as a means to
generate increased exposure and sales potential for this product.
Over the past three fiscal years, as in prior years, the independent
accountants' report has
B-2
<PAGE>
included an explanatory paragraph, following the opinion paragraph, describing
the existence of a going concern uncertainty. The accountants have advised
Management that the principal cause for the going concern uncertainty is cash
flow shortages which have caused delays in meeting current obligations. In the
opinion of Management, the past three years of seriously depressed markets for
the Company's products caused substantial impediments to overcoming the
qualification stated by the accountants. Continued stringent control of costs
and cash outlays has enabled the Company to sustain high quality and timely
upgrades of its products while nurturing improved results from marketing efforts
in a very competitive environment. With a new product now experiencing a good
level of acceptance in the market, and growth in the Company's backlog for its
other biotechnology-related products, Management believes that increasing
revenue will provide sufficient cash to support operations throughout fiscal
year 1997. Additionally, the opportunity to build on the results of our current
activity will be pursued to reactivate sales of the Crystallographic Scanner
instruments and technology.
As shown in the Statements Of Cash Flows for the three years ended June
30 of 1996, 1995 and 1994, each period ended with a small positive cash balance.
The result of operating net losses in 1996 and 1994 caused negative cash flow
from operating transactions of ($60,428) and ($35,805) respectively. Offsetting
in these cases were net proceeds from notes of $60,501 in 1996 and in 1994
$33,500 plus a return of deposited funds in the amount of $1,334, which limited
the decrease in cash flow to ($971). In fiscal year 1995, $26,439 was provided
by operating transactions. That amount was offset by a net pay down of notes of
($26,903) and purchase of equipment of ($587) causing a decrease in cash of
($1,051). The Company continues to meet its cash flow obligations, although at
times delayed in some cases of trade payables and payroll, with receipts from
sales and financing activities comprised of loans from the Company's President
and from Spiral Biotech, Inc., its principal customer. The loans from Spiral
Biotech are secured by ordered instruments in progress and range from 30 to 40
percent of the purchase order value for the total order. No loans are in
default. The fluctuations in accounts payable relate to the amount of
work-in-progress for products on order.
It is noted that the Company's property, plant and equipment are nearly
fully depreciated. However, all essential items of these assets are maintained
in good repair and no replacements nor additions are anticipated in the next
year or more.
The Company's management and employees continue to be committed to
reestablishing progress toward our goal of profitability.
B-3
<PAGE>
Linton, Shafer & Company, P.A.
Certified Public Accountants
6 West Second Street
Frederick, MD 21701
301-663-5122
Principals: Edmond B. Gregory III, CPA, CBA
Kevin R. Hessler, CPA
Donald C. Linton, CPA, CFP
Joseph M. McCathran, CPA
Ronald W. Shafer, CPA
Report of Independent Certified Public Accountants
Board of Directors and Shareholders
Exotech, Incorporated
We have audited the accompanying consolidated financial statements and
related schedules of Exotech, Incorporated and Subsidiary included on pages 11
through 20 of the annual report on Form 10- K of Exotech, Incorporated and
Subsidiary as of June 30, 1996 and 1995 and for the years ended June 30, 1996,
1995 and 1994. These financial statements and related schedules are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and related schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and per share data
and ratios are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
Exotech, Incorporated and Subsidiary as of June 30, 1996 and 1995 and the
results of their operations and their cash flows for the years ended June 30,
1996, 1995 and 1994, in conformity with generally accepted accounting
principles.
B-4
<PAGE>
The accompanying consolidated financial statements have been prepared
assuming the Company will continue as a going concern. As shown in the financial
statements, the Company incurred a net loss of $152,584 during the year ended
June 30, 1996. This fact, among others discussed in Note 1 to the financial
statements, raises substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.
/s/ Linton, Shafer & Company, P.A.
September 20, 1996
B-5
<PAGE>
Linton, Shafer & Company, P.A.
Certified Public Accountants
6 West Second Street
Frederick, MD 21701
301-663-5122
Principals: Edmond B. Gregory III, CPA, CBA
Kevin R. Hessler, CPA
Donald C. Linton, CPA, CFP
Joseph M. McCathran, CPA
Ronald W. Shafer, CPA
Consent of Certified Public Accountants
We have issued our report dated September 20, 1996, accompanying the financial
statements and schedules of Exotech, Incorporated and Subsidiary contained in
the annual report on Form 10-K of Exotech, Incorporated and Subsidiary as of
June 30, 1996 and 1995, and for the years ended June 30, 1996, 1995 and 1994. We
consent to the use of the aforementioned report in the amendments to Form 10-K,
as amended January 6, 1997 and February 26, 1997.
/s/ Linton, Shafer & Company, P.A.
February 26, 1997
B-6
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE YEARS ENDED JUNE 30
Reference is made to Note 1 of the Notes to the Consolidated Financial
Statements for a description of operations of the Company and to Note 2 for a
description of the principal accounting policies followed by the Company.
<TABLE>
<CAPTION>
1996 1995 1994
---- ---- ----
<S> <C>
REVENUES
Instrument Sales $302,325 $213,845 $251,265
Parts, Repairs and Services 64,934 156,257 142,700
Prior Fiscal Year Services -- -- 43,365
--------- --------- --------
TOTAL SALES $367,259 $370,102 $437,330
COST OF OPERATIONS
Direct Cost and Overhead
Instrument Sales 287,536 180,600 243,562
Repairs, Parts and Service 56,162 137,366 140,414
R & D Costs 121,263 -- --
General and Administrative
Instrument Sales 18,345 28,444 39,433
Repairs, Parts and Service 3,583 21,635 22,733
R & D Costs 7,737 -- --
-------- ------- -------
TOTAL COST OF OPERATIONS 494,626 368,045 446,142
-------- ------- -------
OPERATING PROFIT (LOSS) (127,367) 2,057 (8,812)
- -----------------------
OTHER REVENUES
(EXPENSES)
Miscellaneous 4,600 (43,365) 1,116
Interest (29,817) (26,822) (27,752)
-------- -------- --------
NET LOSS BEFORE TAXES (152,584) (68,130) (35,448)
- ---------------------
INCOME TAXES -- -- --
--------- --------- --------
NET LOSS $(152,584) $(68,130) $(35,448)
- -------- ========== ========= =========
Loss per Common Share (.16) (.07) (.04)
Weighted average number of
common shares outstanding 942,387 942,387 942,387
</TABLE>
The accompanying notes are an integral part of these statements.
B-7
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
CURRENT ASSETS
Cash $105 $32
Accounts Receivable
(Note 2) Billed 11,073 54,300
Less: Allowance for Doubtful Account -- (43,368)
Inventories, at lower of
average cost or market
(Note 2) 551,687 575,450
Prepaid Expenses and Advances 344 1,394
------ -------
CURRENT ASSETS 563,209 587,808
PROPERTY, PLANT AND EQUIPMENT, at cost (Note 2)
Laboratory Equipment 160,980 160,980
Office Furniture & Equipment 70,550 70,550
------ --------
231,530 231,530
Less accumulated
depreciation and
amortization (231,119) (230,946)
--------- ---------
Total Property, Plant and Equipment - Net 411 584
OTHER ASSETS
Miscellaneous 6,921 7,849
----- -----
TOTAL ASSETS $570,541 $596,241
-------- --------
</TABLE>
The accompanying Notes are an integral part of these statements.
B-8
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS AS OF JUNE 30
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C>
CURRENT LIABILITIES
Notes Payable and Current
Maturities of Long Term
Debt (Note 5) $372,294 $311,793
Accounts Payable and Other
Accrued Liabilities 105,664 51,996
Accrued Payroll and Employee
Benefits 67,180 46,845
Accrued Officer Salary and
Benefits 201,510 212,285
Accrued Interest 79,304 76,149
------ ------
Current Liabilities 825,952 699,068
SHAREHOLDERS' DEFICIT
Common Stock, par value $.10
per share; 1,500,000 shares
authorized; 970,135 shares
issued and outstanding 97,014 97,014
Paid in Surplus 1,169,645 1,169,645
Accumulated Deficit (1,409,650) (1,257,066)
Treasury Stock 27,748 shares
at cost (112,420) (112,420)
--------- ---------
(255,411) (102,827)
--------- ---------
Total Liabilities and
Shareholders Deficit $570,541 $596,241
======== ========
</TABLE>
The accompanying Notes are an integral part of these statements.
B-9
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT
FOR THE THREE YEARS ENDED JUNE 30, 1996
<TABLE>
<CAPTION>
Common Stock Treasury Stock
($0.10) Paid-In Accumulated ----------------
Par Value Surplus (Deficit) Shares Cost
<S> <C>
Balance, June 30, 1993 970,135 $97,014 $1,169,645 $(1,153,488) 27,748 $(112,420)
Add (Deduct) - - - - - -
Net Profit (Loss) - - - (35,448) - -
---------- ---------- ------------- ------------- -------- ----------
Balance, June 30, 1994 970,135 $97,014 $1,169,645 $(1,188,936) 27,748 $(112,420)
Add (Deduct) - - - - - -
Net Profit (Loss) - - - (68,130) - -
---------- ---------- ------------- ------------- -------- ----------
Balance, June 30, 1995 970,135 $97,014 $1,169,645 $(1,257,066) 27,748 $(112,420)
Add (Deduct) - - - - - -
Net Profit (Loss) - - - (152,584) - -
---------- ---------- ------------- ------------- -------- ----------
Balance June 30, 1996 970,135 $97,014 $1,169,645 $(1,409,650) 27,748 $(112,420)
======= ======= ========== ============ ====== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
B-10
<PAGE>
EXOTECH INCORPORATED AND SUBSIDIARY
STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED JUNE 30
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN CASH 1996 1995 1994
- --------------------------- ---- ---- ----
<S> <C>
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Loss: $(152,584) $(68,130) $(35,448)
Add: Non Cash Income Determinants
Depreciation & Amortization 1,101 2,454 3,809
Add (Deduct): Changes in Current Assets and Liabilities:
(Increase) Decrease in Accounts Receivable (141) 83,447 (44,579)
(Increase) Decrease in Prepaid Expenses 1,050 (572) 29
(Increase) Decrease in Inventory 23,764 (27,899) (3,176)
Increase (Decrease) in Accounts Payable 53,667 (4,484) (10,613)
Increase (Decrease) in Accrued Payroll & Related 9,560 15,176 30,314
Increase (Decrease) in Accrued Interest 3,155 26,447 23,859
------ ------- ------
Cash Provided By (or) Used In Operating Transactions $(60,428) $26,439 $(35,805)
----------- ------- --------- -------- ---------
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes 87,500 4,000 55,000
Payment on Notes (26,999) (30,903) (21,500)
-------- -------- --------
Cash Provided By (or) Used In Financing Transactions 60,501 (26,903) 33,500
----------- ------- ------- -------- ------
CASH FLOWS FROM INVESTING TRANSACTIONS:
Purchase of Equipment -- (587) 1,334
------- ----- -------
Cash Provided By (or) Used In Investing Transactions -- (587) 1,334
----------- ------- ------- ----- -------
INCREASE (DECREASE) IN CASH 73 (1,051) (971)
CASH BALANCE - BEGINNING 32 1,083 2,054
----- ------ -------
CASH BALANCE - ENDING $105 $32 $ 1,083
===== ==== ==========
SUPPLEMENTAL INFORMATION
Interest Paid $26,160 $3,740 $2,936
Taxes -- -- --
</TABLE>
The accompanying notes are an integral part of these statements.
B-11
<PAGE>
EXOTECH INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) DISCUSSION OF OPERATIONS AND REALIZATION OF ASSETS
For the fiscal year ended June 30, 1996, the Company had an operating profit of
$1,633. The Company had an operating profit of $2,057 in the prior fiscal year.
At June 30, 1996, approximately $75,000 of accounts payable were more than 30
days old.
The accompanying financial statements have been prepared on the "going concern"
basis of generally accepted accounting principles. The ability of the Company to
continue normal operations is dependent upon its ability to obtain the required
amounts of working capital to finance the existing contracts, to continue the
acquisition of additional contracts, and to pursue instrument sales at prices
sufficient to recover costs and some profits. Management believes that improved
revenues now being experienced with the Company's new product together with
stringent control of costs and cash outlays will provide sufficient cash to
support its operations throughout the coming fiscal year.
Inventory of Crystallographic Scanners have experienced no sales activity since
their development approximately four years ago. Efforts have recently been
intensified to develop a marketing agreement with an established marketer of
capital equipment to the crystal growers and processors, or alternatively to
sell the products, design package, software, patents and licenses to larger
manufacturers of instruments with a significant presence in the semiconductor
processing equipment market. Should those efforts fail, the company may be
forced to charge off the carrying value of approximately $243,000 against
income.
At June 30, 1996, the remaining value (backlog) of existing sales contracts were
approximately $279,000.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Business
The Company is a manufacturer of Electro-optical instruments. It performs the
research and development required for those products.
Principle of Consolidation
The accompanying consolidated financial statements include the accounts of the
Company and its subsidiary, after elimination of all significant intercompany
transactions.
Revenue Accounting
The Company records revenue earned based on shipments of units of its products.
Inventory
Finished goods inventory is stated on the basis of the lower of costs (average)
or market value.
B-12
<PAGE>
Depreciation and Amortization
The Company uses a straight-line method of depreciation and amortization for
both tax and financial reporting purposes. The following time periods are used:
DEPRECIATION:
Laboratory equipment 5 or 8 years
Office furniture and equipment 5 years
AMORTIZATION:
Leasehold improvements Life of lease
Patents 12 years
Depreciation expenses recorded in the consolidated statement of operations are
as follows: 1994 - $3,809, 1995 - $2,454, and 1996 - $1,101, including
amortization of patents at the rate of $928 in each year. The Company's limit
for capitalization of property and equipment is $500 or more.
Income Taxes
Provisions for income taxes are based on pre-tax income reported in the
financial statements, using the guidance of Financial Accounting Standards Board
Statement No. 109 (FAS #109) "Accounting for Income Taxes." Differences between
income (loss) for financial reporting purposes and tax reporting arise from (a)
the capitalization and amortization of research and development costs for income
tax reporting purposes, but deducting these costs as expenses in the period
incurred for financial statement purposes; and (b) timing differences in
deducting net losses on contracts. There were no provisions for income taxes
required in the three year period ended June 30, 1996 due to the operating
losses for each of those years.
At June 30, 1996, the Company had net operating loss carryforwards of $371,357
which begin to expire in 1997. The Company also has incurred research and
experimental expenses of $129,000 in 1996, and $54,368 in prior years that have
been capitalized to be amortized over a sixty month period for income tax
purposes, but have been expensed in the period incurred for financial statement
reporting. While the accounting standard allows companies to recognize a
deferred tax asset on the tax effect of these timing differences, the Company
has provided a valuation allowance for the full amount since it is more likely
than not the deferred tax asset will not be realized.
The approximate tax effect of the carryforward and temporary difference for
the three years ended June 30 consist of:
1996 1995 1994
-------- -------- ------
Net operating loss carryforward $148,543 $150,545 $119,923
Deferred research and
experimental expenses 48,174 5,204 8,673
Less: Valuation allowance (196,717) (155,749) (128,596)
--------- --------- ---------
Deferred Tax Asset - net - 0 - - 0 - - 0 -
========= ========= =======
Net increase in valuation allowance $(40,968) $(27,153)
========= =========
B-13
<PAGE>
Following is a table reconciling the Company's accounting net loss for each of
the last three years ended June 30.
1996 1995 1994
-------- -------- ------
Accounting Net Loss $152,584 $68,130 $35,448
Nondeductible expense (250)
Research and experimental costs:
Capitalized on tax return (129,000) - -
Tax amortization 21,574 8,674 9,874
-------- -------- --------
Taxable Net Loss $ 45,158 $ 76,554 $ 45,322
======== ======== ========
Repairs and Betterments
Repairs are expensed as incurred. Betterments are capitalized and amortized over
the remaining useful life of the assets.
Accounts Receivable
Accounts receivable consist of amounts billed from sales as of June 30, 1996. In
the prior fiscal year an allowance for doubtful accounts was set up for $43,368.
This amount represents a claim for product development costs from fiscal year
ended June 30, 1994. This amount has since been written off, and there is no
allowance for doubtful accounts as of June 30, 1996, as the Company considers
accounts receivable to be fully collectible.
Cash And Cash Equivalents
The Company considers all highly liquid debt instruments purchased with a
maturity of three months or less to be cash equivalents.
Use of Estimates
In preparing financial statements in conformity with generally accepted
accounting principles, management is required to make estimates and assumptions
that affect the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.
(3) INVENTORY
Inventories are summarized as follows:
1996 1995
---- ----
Raw Materials $32,625 $ 32,625
Goods in Process 505,062 528,825
Finished Goods 14,000 14,000
--------- ---------
$551,687 $575,450
(4) RESEARCH AND DEVELOPMENT COSTS
The Company's accounting policy is to write off research and development costs
as incurred. In the fiscal year 1996, $129,000 of R&D costs related to the new
Autoplate 4000 product were incurred and written off. There were no R&D costs in
the prior two years.
B-14
<PAGE>
(5) NOTES PAYABLE
Notes payable at June 30, 1996, consist of three demand notes of $100,000,
$8,000 and $47,000 with interest at 8.5% per annum to three of the Company's
former directors. In addition, Notes amounting to $217,294 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 a negotiated interest rate.
1996 1995
---- ----
Average* aggregate amount outstanding during year $352,712 $333,089
Maximum amount outstanding during year 372,294 338,297
Average* interest rate on loans
outstanding at end of year 8.50% 8.48%
Average* interest rate incurred
during the period 8.50% 8.50%
*Average amounts outstanding during the year and related average interest rates
were determined from the average of the month-end amounts outstanding. The
average interest rate at each year-end was determined from the weighted average
of amounts outstanding at that time.
(6) COMMITMENTS AND CONTINGENCIES
All operations of the Company and subsidiary were conducted in leased
facilities. In March 1990, the Company entered into a lease agreement for a
three-year period for the present facilities at 8502 Dakota Drive, Gaithersburg,
MD. This lease was renegotiated and extended for three years expiring November
30, 1995 and was again extended for an additional three years effective December
1, 1995. The current lease expires November 30, 1998.
Non-Financing 1999 1998 1997
------ ------ -----
Building $13,220 $31,344 $30,431
(7) EARNINGS PER SHARE
Per share computations were based on the weighted average number of shares
outstanding during the periods, excluding options because the market price and
option price were the same.
(8) SUPPLEMENTAL PROFIT AND LOSS INFORMATION
Description 1996 1995 1994
----------- ---- ---- ----
Taxes other than income:
Payroll $9,588 $14,487 $18,307
Franchise, Personal Property and
other Miscellaneous 1,137 2,681 1,528
Rents, including equipment rental 40,097 39,823 38,488
B-15
<PAGE>
(9) DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
No disagreements exist between management and its independent public accounting
firm.
(10) TRANSACTIONS WITH SHAREHOLDERS
Sales to a company owned by a shareholder aggregated $340,841, $335,736 and
$340,397, (about 93, 91 and 78 percent, respectively, of total sales) for the
fiscal years ended June 30, 1996, 1995 and 1994, respectively. Amounts due from
such sales at June 30, 1996 and 1995 were $11,073 and $10,932, respectively.
Sales were consummated on terms similar to those prevailing with unaffiliated
customers.
(11) FAIR VALUES OF FINANCIAL INSTRUMENTS
The following methods and assumptions were used by the Company in estimating its
fair value disclosures for financial instruments:
Cash, cash equivalents, short-term investments: The carrying amounts
reported in the Consolidated Balance Sheets approximate fair values
because of the short maturities of the instruments.
B-16
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
(a), (b), (e)
<TABLE>
<S> <C>
NAME: ROBERT G. LYLE (67)
President, CEO of the Company and
subsidiary; Director.
Business experience
during past 5 years Same as above, since 1977.
Other Positions: None.
Other Directorships: None.
NAME: JAMES G. PAULI (41)
Treasurer (1995-96) and Director and Member
of Audit Committee (1992-96).
Business experience - Managing Consultant, Leader of Management Study Teams at during
past 5 years Electronic Data Systems, Inc., Herndon, VA Data Systems Consultants
and Designers (1995-96).
- Management Analyst, Price Waterhouse Audit and Management
Consulting Firm (1990-95).
Other Positions: None.
Other Directorships: None.
NAME: ANDREW WONG (43)
Secretary and Director (1996); Member of Audit Committee (1996).
Business experience - Vice President, Marketing, General Electric-Spacenet, McLean, during
past 5 years VA. Manager of Marketing Function for Telecommunications Division.
Responsible for selling customized private
networks to businesses in the United States
and international markets (1995-96).
- Director, Business Development,
COMSAT Mobile Communications, Bethesda,
MD. Responsible for identification,
analysis and implementation of mobile
wireless communications business
opportunities (1991-95).
Other Positions: None.
Other Directorships: Member, Board of Engineering Advisors, Univ. of California,
Lawrence Livermore Laboratory (1995-96).
</TABLE>
- --------------------
Note: All terms expire in December, 1997
c. Not applicable.
d. There are no family relationships between any of the above listed
directors and any other director or executive officer of the Company.
f. None of the directors or executive officers have been subject to any
bankruptcy or insolvency proceedings, criminal proceedings, or injunctions
against dealing in investments during the past three years.
B-17
<PAGE>
ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS
A. No individual in management received remuneration of $100,000
or more. Officers as a group of three people received no payments except for
$3,901 in disbursements for the group health and life insurance premiums for the
Chief Executive Officer. The total compensation for the Chief Executive Officer
in fiscal year 1996 was $3,901.
B. No annuity, pension or retirement benefits are proposed to be
paid to any director or officer in the event of his retirement. No remuneration
payments are proposed to be made in the future, directly or indirectly, to any
director or officer by the Company or its subsidiary pursuant to any existing
plan or arrangement.
C. There are no fees paid to directors for services in that
capacity.
D. No officer, or director of the Company: (1) received options
during the reporting period; or (2) exercised options during the reporting
period, or (3) held options as of September 1, 1996. The officers and directors
of the Company as a group did not: (1) receive options during the reporting
period, or (2) exercise options during the reporting period, or (3) hold options
as of September 1, 1996.
E. Termination of employment - the Company has no employment
termination agreements with officers or employees.
B-18
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON
FORM 8-K
A. 1. LIST OF FINANCIAL STATEMENTS IN PART II OF THIS REPORT.
PAGE NO.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................. 10-11
CONSOLIDATED STATEMENTS OF OPERATIONS FOR THREE YEARS
ENDED JUNE 30, 1996................................................ 12
CONSOLIDATED BALANCE SHEETS - JUNE 30, 1996 AND 1995................ 13-14
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE
YEARS ENDED JUNE 30, 1996.......................................... 15
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
INVESTMENT - FOR THE THREE YEARS ENDED JUNE 30, 1996............... 16
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.......................... 17-22
FINANCIAL DATA SCHEDULE............................................. 25
Schedules other than those listed above are omitted for the reason that they are
not required or are not applicable, or the required information is shown in the
financial statements or notes thereto.
Columns omitted from schedules filed have been omitted because the information
is not applicable.
Individual financial statements of the Company are omitted because it is
primarily an operating company and the subsidiary included in the consolidated
financial statements being filed in the aggregate does not have minority equity
interests and/or indebtedness to any person other than the parent in the amounts
which together exceed 5% of the total consolidated assets at the date of the
latest balance sheet filed excepting indebtedness incurred in the ordinary
course of business which is not overdue and which matures within one year of its
creation, whether evidenced by securities or not, and indebtedness which is
collateralized by the parent by guarantee, pledge, assignment or otherwise.
A. 2. PARENT AND SUBSIDIARY
The Company has no parent. The subsidiary of the Company is:
NAME: EXOTECH RESEARCH & ANALYSIS, INC.
STATE OF INCORPORATION: DELAWARE
SECURITIES OWNED BY THE COMPANY: COMMON STOCK, 100%
The foregoing is included in the consolidated statements of the Company
and subsidiary.
B-19
<PAGE>
A. 3. EXHIBITS
3.1 Restated Certificate of Incorporation of the Company which is hereby
identified as a BASIC DOCUMENT. The document was originally filed pursuant to a
Registration Statement (Form S-1) filed on November 8, 1968, and is incorporated
herein by reference.
3.2 By-Laws of the Company as revised amended on April 16, 1971, which is hereby
identified as a BASIC DOCUMENT. The document has been filed pursuant to FORM
10-K for the fiscal year ended June 30, 1971, and is incorporated herein by
reference.
3.3 Specimen copy of a certificate for the Company's common stock, par value
$.10 per share, which is hereby identified as a BASIC DOCUMENT. The specimen was
filed pursuant to a Registration Statement (form S-1) filed on November 8, 1968,
and is incorporated herein by reference.
3.3(a) Specimen copy of a certificate for the Company's common stock, par value
$.10 per share, reprinted due to exhaustion of the initial supply. This specimen
copy was identified as a BASIC DOCUMENT. This exhibit was filed with Form 8 for
the fiscal year ended June 30, 1975, and is incorporated herein by reference.
3.4 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION - EXOTECH
SYSTEMS, INC. changing its name to EXOTECH RESEARCH AND ANALYSIS, INC. certified
by the Secretary of the State of Delaware on the 12th day of August 1975, which
is identified as a BASIC DOCUMENT. The document was originally filed with the
Form 10-K for the fiscal year ended June 30, 1976, and is incorporated herein by
reference.
3.5 CERTIFICATE OF OWNERSHIP AND MERGER merging EXO-REALTY, INC. into EXOTECH
INCORPORATED, certified by the Secretary of State, State of Delaware on the 28th
day of June, 1976, which is identified as a BASIC DOCUMENT. The document was
originally filed with the Form 10-K for the fiscal year ended June 30, 1976, and
is incorporated herein by reference.
B. No Form 8-K reports were filed in the fiscal year covered in this report.
B-20
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) 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.
February 26, 1997 BY: /s/ Robert G. Lyle
- ------------------------- --------------------------------
DATE ROBERT G. LYLE, CHIEF EXECUTIVE OFFICER,
PRINCIPAL ACCOUNTING OFFICER AND DIRECTOR
February 26, 1997 BY: /s/ James G. Pauli
- ------------------------ --------------------------------
DATE JAMES G. PAULI, TREASURER (PRINCIPAL
FINANCIAL OFFICER) AND DIRECTOR
February 26, 1997 BY: /s/ Andrew Wong
- ------------------------ --------------------------------
DATE ANDREW WONG, SECRETARY AND DIRECTOR
B-21
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 105
<SECURITIES> 0
<RECEIVABLES> 11,073
<ALLOWANCES> 0
<INVENTORY> 551,687
<CURRENT-ASSETS> 563,209
<PP&E> 231,530
<DEPRECIATION> 231,119
<TOTAL-ASSETS> 570,541
<CURRENT-LIABILITIES> 825,952
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> 352,425
<TOTAL-LIABILITY-AND-EQUITY> 570,541
<SALES> 367,259
<TOTAL-REVENUES> 371,859
<CGS> 494,626
<TOTAL-COSTS> 494,626
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 29,817
<INCOME-PRETAX> (152,584)
<INCOME-TAX> 0
<INCOME-CONTINUING> (152,584)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (152,584)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
