<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Commission File No. 0-10841
Ended October 31, 1996
ENERGY OPTICS, INC.
(Exact name of Registrant as specified in its Charter)
New Mexico 85-0273340
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1500 Rayos de Luna, Las Cruces, New Mexico 88005 (505) 523-4561
(Address of principal executive offices) (Telephone)
Indicate by check mark 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 requirements for the past 90 days.
YES X NO
----- -----
8,773,602 SHARES
<PAGE> 2
ENERGY OPTICS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
October 31, July 31,
1996 1996
(Unaudited)
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,414 $ 465
Accounts Receivable 3,000 0
------------ ------------
Total Current Assets $ 4,414 $ 465
Total Assets $ 4,414 $ 465
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Accounts Payable $ 2,753 $ 51,833
Deferred Compensation (Note 2) 0 190,425
Accrued Interest (Note 1) 0 50,224
Current Maturities on Long-Term
Debt (Note 1) 0 152,561
------------ ------------
Total Liabilities $ 2,753 $ 445,043
STOCKHOLDERS' EQUITY
Common Stock, $.001 Par Value, 10,000,000
shares authorized; shares issued
and outstanding $ 8,773 $ 7,808
Additional Paid-in Capital 4,322,202 3,963,923
Retained Earnings (Deficit) (4,416,310) (4,416,310)
Net Income (Loss) for Current Year 86,996 0
------------ ------------
Total Stockholders' Equity 1,661 (444,579)
------------ ------------
Total Liabilities & Stockholders' Equity $ 4,414 $ 465
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 3
ENERGY OPTICS, INC.
STATEMENTS OF OPERATION
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months For the Year
Ended October 31 Ended October 31
---------------------------- ----------------------------
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Revenue:
Sales $ 0 $ 0 $ 0 $ 0
------------ ------------ ------------ ------------
Costs and expenses:
General/Admin (86,996) 9,297 (86,996) 9,297
Research/Development 0 878 0 878
Amortization/Depr 0 0 0 0
------------ ------------ ------------ ------------
Total Costs and Expenses (86,996) 10,175 (86,996) 10,175
Operating income (loss) $ 86,996 $ (10,175) $ 86,996 $ (10,175)
------------ ------------ ------------ ------------
Other income (deductions):
Other, net 0 0 0 0
------------ ------------ ------------ ------------
Net earnings $ 86,996 $ (10,175) $ 86,996 $ (10,175)
============ ============ ============ ============
Weighted Average Number of
Common Shares Outstanding 8,290,952 7,500,052 8,290,952 7,500,052
Income (Loss) per Common Share $ .01 $ (.001) $ .01 $ (.001)
============ ============ ============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 4
ENERGY OPTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Three Months Three months
Ended Ended
October 31, October 31,
1996 1995
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATIONS
Received from customers $ 0 $ 0
Other Receipts 0 0
Paid to suppliers and subcontractors 0 0
Employee compensation & payroll taxes 0 0
Other operating cash payments 4,952 (3,555)
Interest paid 0 0
------------ ------------
Net cash provided (used) by
operations (4,952) (3,555)
CASH FLOW FROM FINANCING ACTIVITIES
Payments on long term debt (4,000) 0
Borrowings from related party, net 9,900 3,700
Sale of Stock 0 0
------------ ------------
Net cash provided (used) by
financing activities 5,900 3,700
------------ ------------
NET CHANGE IN CASH 948 145
CASH AT BEGINNING OF YEAR 465 321
------------ ------------
CASH AT END OF QUARTER $ 1,413 $ 466
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
ENERGY OPTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
October 31, October 31,
1996 1995
------------ ------------
<S> <C> <C>
RECONCILIATION OF NET INCOME (LOSS) TO
NET CASH PROVIDED (USED) BY OPERATIONS:
Income (Loss) $ 86,996 $ (10,175)
Adjustments to reconcile net income
(loss) to cash provided (used)
Depreciation and Amortization $ 0 $ 0
(Increase)/decrease in Accts/Rec for Cash 0 0
(Increase)/decrease in Inventories 0 0
(Increase)/decrease in Prepaids 0 0
Increase/(decrease) in Accts/Pay (91,948) 6,619
Increase/(decrease) in Accrued Exp 0 0
------------ ------------
Net cash provided (used)
by operations $ (4,952) $ (3,556)
============ ============
</TABLE>
<PAGE> 6
ENERGY OPTICS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 1996
(1) Long Term Debt
This note was from the Small Business Administration. As of October
31, 1996, this debt along with its interest was satisfied as stated in
the Management Discussion and Analysis.
(2) Deferred Compensation
This figure reflects wages and other amounts due to officers and
related parties.
<PAGE> 7
MANAGEMENT DISCUSSION AND ANALYSIS
The fiscal quarter ended October 31, 1996, had no revenue which is the same as
the corresponding quarter in FY95 and FY94. The net income of $86,996 or $.01
per share is due to the writeoff of unpaid expenses from previous fiscal years.
This compares with a loss of $10,175 or $.001 per share in the same quarter in
FY95 and a loss of $36,044 or $.01 per share in the like quarter of FY94. The
resulting net income is the current quarter was not due to operations, instead,
was due to forgiveness of debt (unpaid expenses and interest).
During this quarter, the Small Business Administration accepted Energy Optics
negotiated offer to compromise the outstanding obligation to the SBA of
$152,561 and interest for $4,000 cash and 400,000 restricted common shares of
Energy Optics, Inc. The Company directors eliminated the rest of the debt as
follows:
Edward Laughlin and Carolyn Laughlin forgave $38,744 in rent and mileage
reimbursement and an option to purchase 165,000 shares at $.25 per share and
then acquired 487,873 restricted common shares for $186,075 in debt to
Laughlins.
Molesworth and Associates (Gordon Molesworth) acquired 37,617 restricted common
shares as payment for $5,097 in services and 4,250 in debt and $5,000 in cash.
Steven M. Ward acquired 20,975 restricted common shares for $3,000 and $4,000
in cash.
All of the above transactions were at $.3814 per share.
These transactions have eliminated the outstanding debt of the Company. The
canceled note has not been received by the Company as of December 2, 1996. As
a result of the above listed extraordinary effort the Company can pursue a
multitude of avenues including acquisitions, mergers, additional capital,
borrowing, or sale.
The Company has not been successful in its efforts to gain support from other
companies for Driver Fatigue Alarm or the Silverless X-ray film work. The
Company has been unable to secure a patent for the Driver Fatigue Alarm.
The Company has a positive Balance Sheet for the first time in several years.
<PAGE> 8
PART II - Other Information
Changes in securities from October 17, 1996 (the cutoff for our last 10K report
on securities transactions), to December 2, 1996.
Edward Laughlin and Carolyn Laughlin forgave $38,744 in rent and mileage
reimbursement and an option to purchase 165,000 shares at $.25 per share and
then acquired 487,873 restricted common shares for $186,075 in debt to
Laughlins.
Molesworth and Associates (Gordon Molesworth) acquired 37,617 restricted common
shares as payment for $5,097 in services and $4,250 in debt and $5,000 in cash.
Steven M. Ward acquired 20,975 restricted common shares for $3,000 and $5,000
in cash.
All of the above transactions were at $.3814 per share.
During this time period no other officer, director, or 5% shareholder of the
Company has traded any Company shares.
/s/ Edward N. Laughlin
------------------------------------------
Edward N. Laughlin, President, Director,
Treasurer
<PAGE> 9
ENERGY OPTICS, INC.
DATED: December 6, 1996 By: /s/ Edward N. Laughlin
------------------ ---------------------------------------
Edward N. Laughlin, President,
CEO,CFO,Treasurer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
DATED: December 6, 1996 By: /s/ Edward N. Laughlin
------------------ ---------------------------------------
Edward N. Laughlin, President,
Director
DATED: December 6, 1996 By: /s/ Gordon Molesworth
------------------ ---------------------------------------
Gordon Molesworth, Director President,
Quantum Research, Inc.
<PAGE> 10
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
27 - Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> OCT-31-1995 OCT-31-1996
<PERIOD-END> OCT-31-1995 OCT-31-1996
<CASH> 0 0
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 0 0
<PP&E> 0 0
<DEPRECIATION> 0 0
<TOTAL-ASSETS> 0 0
<CURRENT-LIABILITIES> 0 0
<BONDS> 0 0
0 0
0 0
<COMMON> 7,500,052 8,290,952
<OTHER-SE> 0 0
<TOTAL-LIABILITY-AND-EQUITY> 0 0
<SALES> 0 0
<TOTAL-REVENUES> 0 0
<CGS> 0 0
<TOTAL-COSTS> 0 0
<OTHER-EXPENSES> 0 0
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 0 0
<INCOME-PRETAX> (10,175) 86,996
<INCOME-TAX> 0 0
<INCOME-CONTINUING> 0 0
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (10,175) 86,996
<EPS-PRIMARY> .01 .01
<EPS-DILUTED> 0 0
</TABLE>
