<PAGE>
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, 1999 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, 1999: 942,387
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EXOTECH INCORPORATED
INDEX
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EXOTECH INCORPORATED
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C>
PART I FINANCIAL INFORMATION
CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBER 31, 1999 AND JUNE 30, 1999......................... 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - SIX MONTHS ENDED
DECEMBER 31, 1999 AND 1998.................................. 3
STATEMENT OF CASH FLOWS FOR SIX
MONTHS ENDED DECEMBER 31, 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
</TABLE>
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EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
ASSETS
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<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 1999
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(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Accts. Receivable, Net $ 55,152 $ 85,270
Inventories
Work in Process 210,838 284,510
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 37,550 11,943
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Total Current Assets $ 350,165 $ 428,348
PROPERTY, PLANT AND EQUIPMENT, NET 2,568 1,726
OTHER NON CURRENT ASSETS 4,081 4,343
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TOTAL ASSETS $ 356,814 $ 434,418
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LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses $ 18,240 $ 20,099
Other Current Liabilities 393,788 413,818
Notes Payable 386,072 399,072
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Total Current Liabilities $ 798,100 $ 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 (1,595,525) (1,633,710)
Treasury Stock (27,748 shares) (112,420) (112,420)
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Total Shareholders' Equity (441,286) (479,471)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 356,814 $ 434,418
=========== ===========
</TABLE>
See accompanying Notes to Consolidated Condensed Financial Statements.
2
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EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
1999 1998
-------------------- -------------------
3 Mos. 6 Mos. 3 Mos. 6 Mos.
-------ENDED-------- -------ENDED-------
12/31 12/31 12/31 12/31
----- ------ ----- -----
<S> <C> <C> <C> <C>
REVENUE
- -------
Contract Sales 156,791 363,872 224,398 324,328
EXPENSES
- --------
Direct Labor 95 397 115 317
Overhead 2,844 5,673 2,214 4,880
Materials (220) 10,700 -- --
General & Administrative 662 2,534 29 427
Inventory Costs 135,599 290,813 216,676 303,615
------- ------- ------- -------
Cost of Contract Services 138,980 310,117 219,034 309,239
Operating Income (Loss) 17,811 53,755 5,364 15,089
Other Income (Expense) -- -- 107 258
Interest & Other (7,784) (15,568) (10,867) (20,997)
------- ------- ------- -------
NET INCOME BEFORE
TAXES 10,027 38,187 (5,396) (5,650)
State Income Tax
Provision -- -- -- --
------- ------- ------- -------
NET INCOME (LOSS) 10,027 38,187 (5,396) (5,650)
Weighted Average Number of
Common Shares
Outstanding 942,387 942,387 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE .01 .04 (.01) (.01)
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
SIX MONTHS ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998
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<S> <C> <C>
CASH FLOWS FROM OPERATING TRANSACTIONS
- --------------------------------------
Net Income (Loss) 38,187 (5,650)
Add: Non cash Income Determinants
Depreciation and Amortization 769 522
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable 30,118 (8,230)
(Increase) Decrease in Prepaid Expenses 600 (1,076)
(Increase) Decrease in Inventory 73,672 (68,887)
Increase (Decrease) in Accts. Payable (1,859) (13,856)
Increase (Decrease) in Payroll/Emp. Benefits (38,499) (6,859)
Increase (Decrease) in Accrued Interest 15,569 16,510
Increase (Decrease) in Progress Payments (78,000) 108,900
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Cash Provided By or (Used For) Operating Transactions 40,557 21,374
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CASH FLOWS FROM FINANCING TRANSACTIONS:
- ---------------------------------------
Proceeds from Notes -- 16,000
Payments on Notes (13,000) (23,000)
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Cash Provided By or (Used For) Financing Transactions (13,000) (7,000)
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CASH FLOWS FROM INVESTING TRANSACTIONS:
- ---------------------------------------
Purchase of Equipment (1,149) --
Deposits (201) 5,090
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Cash Provided By or (Used For) Investing Transactions (1,350) 5,090
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INCREASE (DECREASE) IN CASH 26,207 19,464
- ---------------------------
CASH BALANCE - BEGINNING 8,868 6,442
- ------------------------ ------- -------
CASH BALANCE - ENDING 35,075 25,906
- --------------------- ======= =======
</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, 1999 and June 30, 1999 and the results of operations and changes in
financial position for the six months ended December 31, 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 six months ended December 31, 1999 and 1998.
NOTE 3.
Notes Payable at December 31, 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, one demand note of $231,072 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 (Autoplaters). At December 31, 1999, there was no
outstanding Producer Loan.
5
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
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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
1999 1999 1999 1998 1999 1998
<S> <C> <C> <C> <C> <C> <C>
Net Sales 156,791 207,081 156,791 224,398 363,872 324,328
Direct Cost & Overhead 2,719 14,051 2,719 2,329 16,770 5,197
G&A Expense 662 1,872 662 29 2,534 427
Inventory Cost 135,599 155,214 135,599 216,676 290,813 303,615
------- ------- ------- ------- ------- -------
Cost of Sales 138,980 171,137 138,980 219,034 310,117 309,239
Interest & Other 10,027 7,784 10,027 10,760 15,568 20,739
</TABLE>
6
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I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS ENDED DECEMBER 31, 1999.
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In the three months period ended December 31, 1999, a reduction of the
working capital deficit of $3,378 resulted from continued profitable
operations in the production of Autoplate instruments and related technical
support. In the quarter ended December 31, 1999, 21 units of this
instrument were delivered, accounting for revenue of $121,800. The
Autoplate production contract was negotiated to provide progress payments
for an accelerated production schedule. In addition to revenue from sales,
this contract has provided $2,900 as progress payment for work-in-progress.
The Company's principal customer in recent years was acquired by Advanced
Instruments, Inc. of Norwood, Massachusetts in October 1998, giving rise to
substantial improvement in sales and backlog. Non-fund charges in the
quarter were $769. All loans acquired from Spiral Biotech Inc. in prior
periods were paid in full.
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, 1999, was higher by $50,290
compared to the same period in 1998. Operating income for the period was
$17,811 compared to $5,364 in the prior year. In the opinion of Management,
the most recent quarter results show a continuing progress toward
profitable operations and recovery from the large losses incurred in prior
years.
For the six months period ended December 31, 1999, revenue of $363,872 was
higher by about twelve percent compared to the same period in 1998. On the
same basis of comparison, the cost of sales was higher by less than one
percent, resulting in a net profit of $38,187 compared to an net loss of
$5,650 in the prior year. These changes reflect the fluctuations between
periods that are cyclical according to the phase of the manufacturing
process occurring in the period. The cycle is dependent on the time of
receipt of an order for a lot of instruments. In the 1998 period,
production of a new lot of thirty Autoplate instruments was begun,
requiring substantial effort and expenditures prior to the delivery and
invoicing for the products which began in the last quarter. In the most
recent period, deliveries of the instruments were ongoing throughout the
period, without a startup of a new production lot.
7
<PAGE>
PART II. OTHER FINANCIAL INFORMATION
ITEM 5.
As in the past, a shortage of working capital continues to be a significant
problem, limiting efforts to develop new business to the fullest extent
possible, as well as causing occasional delays of 30 days in payments to
suppliers of materials for manufacturing. In the most recent six months period,
no accounts payable were more than 30 days old. Management also is continuing to
pursue opportunities to affiliate with other companies to increase marketing and
sales of its products and develop new products from Exotech's proprietary
technology. 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, 1999 was $35,000, lower by
$585,000 compared to the prior year, and $151,230 lower than the backlog at
September 30, 1999. Negotiations have been completed that will increase backlog
by $82,500 in February, 2000.
ITEM 6 (B)
There were no reports filed on Form 8-K for the six months ended December 31,
1999.
8
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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 11, 2000
-----------------------------
/s/ Robert G. Lyle
- -----------------------------------
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 35,075
<SECURITIES> 0
<RECEIVABLES> 55,152
<ALLOWANCES> 0
<INVENTORY> 257,463
<CURRENT-ASSETS> 350,165
<PP&E> 234,372
<DEPRECIATION> 231,804
<TOTAL-ASSETS> 356,814
<CURRENT-LIABILITIES> 798,100
<BONDS> 0
0
0
<COMMON> 97,014
<OTHER-SE> (538,300)
<TOTAL-LIABILITY-AND-EQUITY> 356,814
<SALES> 363,872
<TOTAL-REVENUES> 363,872
<CGS> 310,117
<TOTAL-COSTS> 310,117
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 15,568
<INCOME-PRETAX> 38,187
<INCOME-TAX> 0
<INCOME-CONTINUING> 38,187
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,187
<EPS-BASIC> 0.04
<EPS-DILUTED> 0.04
</TABLE>
