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, 1999 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
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, 1999 942,387
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<PAGE>
EXOTECH INCORPORATED
INDEX
PART I FINANCIAL INFORMATION PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
SEPTEMBER 30, 1999 AND JUNE 30, 1999................... 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - THREE MONTHS ENDED
SEPTEMBER 30, 1999 AND 1998............................ 3
STATEMENT OF CASH FLOWS FOR THREE
MONTHS ENDED SEPTEMBER 30, 1999 AND 1998............... 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
ASSETS
------
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
1999 1999
---- ----
(Unaudited)
CURRENT ASSETS
<S> <C> <C>
Accts. Receivable, Net $ 65,051 $ 85,270
Inventories
Work in Process 229,976 284,510
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 52,788 11,943
--------- ---------
Total Current Assets $394,440 $428,348
PROPERTY, PLANT AND EQUIPMENT
NET 2,740 1,726
OTHER NON CURRENT ASSETS 4,312 4,343
-------- --------
TOTAL ASSETS $401,492 $434,418
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses $ 23,277 $20,099
Other Current Liabilities 403,656 413,818
Notes Payable 389,972 399,072
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Total Current Liabilities $852,805 $913,889
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 (1,605,552) (1,633,710)
Treasury Stock (27,748 shares) (112,420) (112,420)
--------- ---------
Total Shareholders' Equity (451,313) (479,471)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $401,492 $434,418
======== ========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
<PAGE>
<TABLE>
<CAPTION>
EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
1999 1998
THREE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30 SEPTEMBER 30
---------------- ----------------
REVENUES
<S> <C> <C>
Contract Sales $207,081 $ 99,930
EXPENSES
Direct Labor 302 202
Overhead 2,829 2,666
Materials 10,820 -0-
Other Direct 100 -0-
General & Administrative 1,872 398
Inventory Costs 155,214 86,939
------- -------
Cost of Contract Sales 171,137 90,205
Operating Income (Loss) 35,944 9,725
Other Revenue (Expenses): -0- 151
Interest & Other 7,784 (10,130)
NET INCOME BEFORE TAXES 28,160 (254)
State Income Tax -0- -0-
NET INCOME (LOSS) 28,160 (254)
Weighted Average Number of
Common Stock Outstanding 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE .03 (.00)
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>
<TABLE>
<CAPTION>
EXOTECH INCORPORATED AND SUBSIDIARY
STATEMENT OF CASH FLOWS FOR
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------
1999 1998
---- ----
CASH FLOWS FROM OPERATING TRANSACTIONS
- --------------------------------------
<S> <C> <C>
Net Income (Loss) $ 28,160 $ (254)
Add: Non cash Income Determinants
Depreciation and Amortization 367 261
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable 20,219 11,977
(Increase) Decrease in Prepaid Expenses 600 (937)
(Increase) Decrease in Inventory 54,534 (20,981)
Increase (Decrease) in Accts. Payable 3,178 (3,823)
Increase (Decrease) in Payroll/Emp. Benefits (17,947) (1,275)
Increase (Decrease) in Accrued Interest 7,784 8,255
Increase (Decrease) in Deferred Revenue (45,000) -0-
-------- --------
Cash Provided By or (Used) For Operating Transactions 51,895 (6,777)
CASH FLOWS FROM FINANCING TRANSACTIONS:
- ---------------------------------------
Proceeds from Notes -0- 1,798
Payment on Notes 9,100 -0-
-------- --------
Cash Provided By or (Used For) Financing Transactions (9,100) 1,798
CASH FLOWS FROM INVESTING TRANSACTIONS:
- ---------------------------------------
Deposits (200) -0-
Purchase of Equipment (1,149) -0-
-------- --------
Cash Provided By or (Used For) Investing Transactions (1,349) -0-
INCREASE (DECREASE) IN CASH 41,446 (4,979)
- ---------------------------
CASH BALANCE - BEGINNING 8,868 6,441
--------- ---------
CASH BALANCE - ENDING $ 50,314 $ 1,462
</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, 1999 and June 30, 1999 and the results of operations and changes
in financial position for the three months ended September 30, 1999 and 1998 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, 1999 and 1998.
NOTE 3.
Notes Payable at September 30, 1999 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 $234,972 are payable
with interest at 8.5% per annum to one officer/employee.
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.
NOTE 5.
The Company received cash deposits from its principal customer on orders for
instruments and services amounting to $80,900 at June 30, 1999. The balance of
this liability is reduced incrementally upon discounted billing for delivered
instruments and services. At September 30, 1999 the balance of this liability
was $35,900.
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
1999 1999 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Sales $207,081 $253,480 $207,081 $99,930
Direct Cost & Overhead 14,051 9,169 14,051 2,868
General & Administrative Expense 1,872 708 1,872 398
Inventory Cost 155,214 172,654 155,214 86,939
Cost of Sales 171,137 182,531 171,137 90,205
Interest & Other 7,784 6,890 7,784 9,979
</TABLE>
<PAGE>
I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS ENDED SEPTEMBER 30,
1999.
In the three months period ended September 30, 1999, a decrease in the
deficit of working capital of $27,176 resulted from a net profit from
operations of $28,160 and non-fund charges of $367, less equipment
purchase and deposit totaling about $1,350. Discounted billings for
delivery of 24 Autoplate instruments and services reduced the
liability for deferred revenue by $45,000.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND THE SAME THREE MONTH
PERIOD LAST YEAR.
Revenue for the quarter ended September 30, 1999, was $207,081, 107%
higher than the results one year earlier. Operating costs were higher
in the most recent quarter by $80,932 or 90% compared to the prior
year. The result was an operating profit of $35,944 and a net profit
of $28,160 compared to a net loss of $254 in the quarter ended one
year earlier. The 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 twenty-four Autoplate instruments was a continuation of
deliveries from a large order that was put into production late in the
second quarter of fiscal year 1999. The increase in volume of orders
for these instruments required substantial effort and expenditures for
purchased parts and materials. This activity is reflected in the
recent quarter by the increase of about $68,275 in inventory costs.
Sales in the period were calibration, maintenance and repair services
in addition to twenty-four Autoplate and one radiometer instrument
deliveries. In the same period of the prior year, the manufacturing
cycle was less advanced so that only thirteen Autoplate and two
radiometer instruments were delivered.
In the opinion of Management, the current backlog of orders for the
Company's products and continued stringent control of costs will
provide for similar 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, hampering the development of new business to the fullest extent
possible. The shortage is the result of debt in the form of notes and interest
payable to a current and three former directors of the Company. 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
are 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, 1999 was $186,230; a
decrease of $113,770 from the backlog of the preceding quarter ended June 30,
1999.
ITEM 6 (B)
No reports on Form 8-K were filed in this quarter, ended September 30, 1999.
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 13, 1999
------------------------------
/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-30-2000
<PERIOD-END> SEP-30-1999
<CASH> 50,314
<SECURITIES> 0
<RECEIVABLES> 65,051
<ALLOWANCES> 0
<INVENTORY> 276,601
<CURRENT-ASSETS> 394,440
<PP&E> 234,373
<DEPRECIATION> 231,633
<TOTAL-ASSETS> 401,492
<CURRENT-LIABILITIES> 852,805
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (548,327)
<TOTAL-LIABILITY-AND-EQUITY> 401,492
<SALES> 207,081
<TOTAL-REVENUES> 207,081
<CGS> 171,137
<TOTAL-COSTS> 171,137
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,784
<INCOME-PRETAX> 28,160
<INCOME-TAX> 0
<INCOME-CONTINUING> 28,160
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,160
<EPS-BASIC> .03
<EPS-DILUTED> .03
</TABLE>
