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, 1998 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, 1998 942,387
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EXOTECH INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998 AND JUNE 30, 1998......... 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - THREE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997.................. 3
STATEMENT OF CASH FLOWS FOR THREE
MONTHS ENDED SEPTEMBER 30, 1998 AND 1997..... 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
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EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
ASSETS
------
SEPTEMBER 30, JUNE 30,
1998 1998
------------- --------
(Unaudited)
CURRENT ASSETS
Accts. Receivable, Net $ 21,935 $ 33,912
Inventories
Work in Process 308,419 287,437
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 3,015 7,057
----------- -----------
Total Current Assets $ 379,994 $375,031
PROPERTY, PLANT AND EQUIPMENT
NET 147 176
OTHER NON CURRENT ASSETS 9,924 10,156
----------- -----------
TOTAL ASSETS $ 390,065 $385,363
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses $ 83,201 $87,022
Other Current Liabilities 404,511 397,531
Notes Payable 413,573 411,775
----------- -----------
Total Current Liabilities $ 901,285 $ 896,328
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 (1,665,459) (1,665,204)
Treasury Stock (27,748 shares) (112,420) (112,420)
----------- -----------
Total Shareholders' Equity (511,220) (510,965)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 390,065 $ 385,363
=========== ===========
See accompanying Notes to Consolidated Condensed Financial Statements.
2
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EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
1998 1997
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------- ----------------
REVENUES
Contract Sales $ 99,930 $ 51,935
EXPENSES
Direct Labor 202 4,994
Overhead 2,666 7,764
Materials - 585
General & Administrative 398 1,758
Inventory Costs 86,939 32,075
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Cost of Contract Sales 90,205 47,176
Operating Income (Loss) 9,725 4,759
Other Revenue (Expenses): 151 -
Interest & Other (10,130) (9,257)
NET INCOME BEFORE TAXES (254) (4,498)
State Income Tax - -
NET INCOME (LOSS) (254) (4,498)
Weighted Average Number of
Common Stock Outstanding 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE (.00) (.005)
DIVIDENDS PER COMMON SHARE NONE NONE
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
THREE MONTHS ENDED SEPTEMBER 30,
------------------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING TRANSACTIONS
- --------------------------------------
Net Income (Loss) $ (254) $ (4,498)
Add: Non cash Income Determinants
Depreciation and Amortization 261 260
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable 11,977 7,445
(Increase) Decrease in Prepaid Expenses (937) (114)
(Increase) Decrease in Inventory (20,981) (65,196)
Increase (Decrease) in Accts. Payable (3,823) 15,856
Increase (Decrease) in Payroll/Emp. Benefits (1,275) 2,034
Increase (Decrease) in Accrued Interest 8,255 8,255
-------- --------
Cash Provided By or (Used) For Operating Transactions (6,777) (35,958)
----------- ---------
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes 1,798 40,500
Payment on Notes -0- -0-
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Cash Provided By or (Used For) Financing Transactions 1,798 40,500
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CASH FLOWS FROM INVESTING TRANSACTIONS:
Deposits -0- -0-
-------- --------
Cash Provided By or (Used For) Investing Transactions -0- -0-
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INCREASE (DECREASE) IN CASH (4,979) 4,542
- ---------------------------
CASH BALANCE - BEGINNING 6,441 3,431
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CASH BALANCE - ENDING $ 1,462 $ 7,973
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
September 30, 1998 and June 30, 1998 and the results of operations and changes
in financial position for the three months ended September 30, 1998 and 1997 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, 1998 and 1997.
NOTE 3.
Notes Payable at September 30, 1998 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 $245,175 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, 1998,
there was an outstanding Producer Loan of $13,398 without interest charge. 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
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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:
-------------- COMPARISON OF --------------
THREE MONTHS ENDED THREE MONTHS ENDED
Sept 30 June 30 Sept 30 Sept 30
1998 1998 1998 1997
------- ------- ------- -------
Net Sales $99,930 $172,287 $99,930 $51,935
Direct Cost & Overhead 2,868 19,360 2,868 13,343
General & Administrative Expense 398 2,287 398 1,758
Inventory Cost 86,939 137,713 86,939 32,075
Cost of Sales 90,205 159,360 90,205 47,176
Interest & Other 9,979 11,898 9,979 9,257
6
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I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS ENDED
------------------------------------------------------
SEPTEMBER 30, 1998.
-------------------
In the three months period ended September 30, 1998, 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 $150,000. The pay down of the loan is scheduled out
of the receipts for the instruments as they are delivered. The order
covers 25 instruments, the last of which is to be delivered in January
1999. The loan will be repaid in full at the delivery of the twelfth unit
in November 1998. Additionally, financing for future production on an
order for 100 Autoplate instruments received on September 28, 1998 will
be accommodated by means of scheduled progress payments negotiated as a
condition of that order.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND THE SAME
----------------------------------------------------------
THREE MONTH PERIOD LAST YEAR.
-----------------------------
Revenue for the quarter ended September 30, 1998, was higher by $47,995
or 92% than the results one year earlier. Operating costs were higher in
the most recent quarter by $43,029 or 91% compared to the prior year. The
result was an operating profit of $9,725 and a net loss of $254 compared
to a net loss of $4,498 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, deliveries of a new lot
of twenty-five Autoplate instruments was begun. The last of these
instruments, built to an order received in May 1998, will be delivered in
November. In August 1998, another order for twenty-five units was
received, requiring the first deliveries to begin in mid- November 1998.
The increase in frequency of orders for these instruments requires
substantial effort and expenditures for purchased parts and materials.
This activity is reflected in the increase of about $20,981 in inventory
value. Sales in the period were calibration, maintenance and repair
services in addition to thirteen Autoplate and two radiometer instrument
deliveries. In the same period of the prior year, the manufacturing cycle
was less advanced so that only two new instruments were delivered.
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
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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 is 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, 1998 was $730,000, an
increase of $544,000 from the backlog of the preceding quarter ended June 30,
1998.
ITEM 6 (B)
No reports on Form 8-K were filed in this quarter, ended September 30, 1998.
8
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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 13, 1998
_______________________
/s/ Robert G. Lyle
____________________________________
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 1,462
<SECURITIES> 0
<RECEIVABLES> 21,935
<ALLOWANCES> 0
<INVENTORY> 355,044
<CURRENT-ASSETS> 379,994
<PP&E> 231,530
<DEPRECIATION> 231,383
<TOTAL-ASSETS> 390,065
<CURRENT-LIABILITIES> 901,285
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (608,234)
<TOTAL-LIABILITY-AND-EQUITY> 390,065
<SALES> 99,930
<TOTAL-REVENUES> 100,081
<CGS> 90,205
<TOTAL-COSTS> 90,205
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,130
<INCOME-PRETAX> (254)
<INCOME-TAX> 0
<INCOME-CONTINUING> (254)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (254)
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> (0.00)
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