FORM 10-QSB/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Quarterly Report Under Section 13 or 15 (d)
of the Securities Exchange Act of 1934
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the combined three quarterly periods ended March 31, 1998
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
For Three Quarters Ended Commission File Number
March 31, 1998 0-9735
CDX CORPORATION
(Exact name of registrant
as specified in its charter)
COLORADO 84-0771180
(State of Incorporation) (I.R.S. Employer
Identification Number)
75 McNeil Way, No. 207
Dedham, MA 02026
(Address of principal
executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 320-0530
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 ninety days.
YES X NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
CLASS SHARES OUTSTANDING AT MARCH 31, 1998
Common, $.01 par value 6,208,228
<PAGE>
CDX CORPORATION
FORM 10-QSB/A QUARTERLY REPORT
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statement:
Condensed Balance Sheets as of March 31, 1998
and June 30, 1997 . . . . . . . . . . . . . . . . . . . . . 3
Condensed Statements of Operations - Three months ended
September 30, 1997 and September 30, 1996 . . . . . . . . . 4
Condensed Statements of Operations - Six months ended
December 31, 1997 and December 31, 1996 . . . . . . . . . . 5
Condensed Statements of Operations - Nine months ended
March 31, 1998 and March 31, 1997 . . . . . . . . . . . . . 6
Condensed Statements of Cash Flows - Nine months ended
March 31, 1998 and March 31, 1997 . . . . . . . . . . . . . 7
Notes to Condensed Financial Statements . . . . . . . . . . 8
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . . . . 9
Other Information . . . . . . . . . . . . . . . . . . . . . 10
<PAGE>
CDX CORPORATION
CONDENSED BALANCE SHEETS
ASSETS
March 31, 1998 June 30,1997
(unaudited) (note)
Current Assets:
Cash and Cash Equivalents $ 14,759 $ 1,305
Accounts Receivable, Net 26,031 39,488
Inventory 40,690 46,555
Prepaid Expenses & Other 7,493 17,473
Total Current Assets 88,973 104,821
Property at Cost:
Furniture & Equipment 189,442 187,998
Less Accumulated Depreciation (171,481) (167,770)
Property-Net: 17,961 20,228
New Product Development 83,209 44,623
Invention Rights 11,368 16,246
Intangible Assets, Net: 94,557 60,869
Total Assets $ 201,510 $ 185,918
LIABILITIES AND STOCKHOLDERS' EQUITY
March 31, 1998 June 30,1997
(unaudited) (note)
Current
Liabilities:
Accounts Payable-Trade $ 10,342 $ 159,617
Accounts Payable-Affiliate 59,951 270,500
Notes Payable-officers 0 206,705
Notes Payable 0 55,000
Accrued Interest Payable 48,816
Accrued Expenses & Other 14,473 36,458
Total Current Liabilities 84,766 777,096
Stockholders' Equity:
Common Stock,$.01 Par Value
Authorized 10,000,000 Shares
Issued: 4,887,927 ; 4,887,927 62,082 48,881
Preferred Stock 266,743
Capital Surplus 5,088,630 4,771,798
Accumulated Deficit - (5,300,710) (5,411,857)
Less Treasury Stock,
166 Shares;
No Assigned Value -------- --------
Total Stockholder's Equity $ 116,745 $ (591,178)
Total $ 201,510 $ 185,918
Note: The balance sheet at June 30, 1997, has been taken from the audited
financial statement at that date and condensed.
<PAGE>
CDX CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
1st Qtr-FY96 1st Qtr-FY97
September 30, 1996 September 30, 1997
Revenues:
Net Sales & Other Revenues $ 56,366 $ 93,957
Operating Costs & Expenses:
Cost of Sales 32,677 14,414
Selling & Administrative
Expenses 81,909 30,781
TOTAL OPERATING COSTS &
EXPENSES 114,586 45,194
Operating Income (Loss) (20,628) 11,172
Other Income
Interest Income 1 0
Interest Expense 3,176 7,273
Other 305 4,723
Income (Loss) Before Income Taxes (23,499) 8,622
Provision for Income Taxes --- ---
Net Earnings (Loss) $ (23,499) $ 8,622
Net Earnings (Loss) per $ (.006) $ (.002)
Common Share
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,558,094 4,888,094
<PAGE>
CDX CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Six Months Ended
2nd Qtr-FY96 2nd Qtr-FY97
December 31, 1996 December 31, 1997
Revenues:
Net Sales & Other Revenues $ 185,205 $ 117,954
Operating Costs & Expenses:
Cost of Sales 96,867 34,271
Selling & Administrative
Expenses 171,582 64,746
TOTAL OPERATING COSTS &
EXPENSES 268,450 99,018
Operating Income (Loss) (83,245) 18,936
Other Income
Interest Expense 7,541 12,768
Interest Income 2 1
Other (9,228) 4,952
Income (Loss) Before Income Taxes (100,013) 11,121
Provision for Income Taxes 250 0
Net Earnings (Loss) $ (100,263) $ 11,121
Net Earnings (Loss) per $ (.030) $ (.003)
Common Share
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,558,094 6,208,228
CDX CORPORATION
CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Nine Months Ended
3rd Qtr-FY96 3rd Qtr-FY97
March 31, 1997 March 31, 1998
Revenues:
Net Sales & Other Revenues $ 307,903 $ 182,784
Operating Costs & Expenses:
Cost of Sales 155,069 54,793
Selling & Administrative
Expenses 231,442 107,510
TOTAL OPERATING COSTS &
EXPENSES 386,511 162,303
Operating Income (Loss) (78,608) 20,231
Other Income
Interest Expense 10,601 12,768
Interest Income 2 1
Other (5,569) 4,769
Income (Loss) Before Income Taxes (94,776) 12,234
Provision for Income Taxes --- ---
Net Earnings (Loss) $ (94,776) $ 12,234
Net Earnings (Loss) per $ (.019) $ .003
Common Share
WEIGHTED-AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 3,558,094 6,208,228
<PAGE>
CDX CORPORATION
CONDENSED STATEMENTS OF CASH FLOW
(unaudited)
Nine Months Ended
March 31, 1997 March 31, 1998
OPERATING ACTIVITIES:
Net (Loss) $ (95,025) $ 12,235
Adjustments to Reconcile
Net Loss to Net Cash Provided/
(Used) by Operating Activities:
Depreciation & Amortization 9,900 8,590
A/R Allowance (947)
Changes in Operating
Assets & Liabilities:
Accounts Receivable 15,034 14,404
Inventory 16,053 5,865
Prepaid Expenses (2,558) 9,980
Accounts Payable-Trade 15,479 0
Accounts Payable-Affiliate 22,273 (386,147)
Accrued Expenses (14,099) (54,820)
Total Adjustments 62,082 (403,075)
Net Cash (Used for)
Operating Activities (32,943) (390,841)
INVESTING ACTIVITIES:
Purchase of Equipment (682)
Acquisition of Assets-Other (42,276) 0
Fixed Assets (1,444)
New Product Development (38,586)
Net Cash (Used for)
Investing Activities (42,958) (40,030)
FINANCING ACTIVITIES:
Short-term Borrowings 87,664 0
Issuance of Common Stock 13,000 13,201
Issuance of Preferred Stock 266,743
Note Payable - Bank 0 (3,707)
Note Payable - Affiliate (247,656)
Additional Paid in Capital 316,832
Adjustment to Prior Period
Retained Earnings 98,912
Net Cash Provided by
Financing Activities 100,664 444,325
Net (Decrease) in Cash
and Cash Equivalents 24,763 0
Cash and Cash Equivalents,
Beginning of Period (69) 1,305
Cash and Cash Equivalents,
End of Period $ 24,832 $ 14,759
<PAGE>
CDX CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. In the opinion of Management, the unaudited condensed financial
statements contain all adjustments (consisting of normal accruals) necessary
to present fairly the financial position as of March 31, 1998, the results of
operations for the nine months ended March 31, 1998 and the cash flows for
the nine months ended March 31, 1998. These statements should be read in
conjunction with the audited financial statements and notes thereto included
in the Company's Annual Report on Form 10-K for the year ended June 30, 1997.
The unaudited financial statements have been prepared in the ordinary
course of business for the purpose of providing information with respect
to the interim periods and have been prepared in accordance with Generally
Accepted Accounting Principles for interim financial information and with
the instructions to Form 10QSB and Rule 310 of Regulation S-B. Accordingly,
they do not include all of the information and footnotes required by
Generally Accepted Accounting Principles for complete financial statements.
2. Inventory consists of the following at March 31, 1998 and June 30,
1997.
March 31, 1998 June 30, 1997
(Unaudited)
Raw Material $ 14,577 $ 17,229
Work-in-Process 2,634 1,769
Finished Goods 23,479 27,557
Total $ 40,690 $ 46,555
3. Intangible assets consist of the following at March 31, 1998 and June
30, 1997.
March 31, 1998 June 30, 1997
Invention Rights, Net $ 11,368 $ 16,246
New Product Development Costs 83,209 44,623
Total $ 94,577 $ 60,869
4. Accounts Payable-Affiliate represents rent and related expenses
of office space.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales and operating revenues for nine months ended March 31, 1998,
decreased by 40.6% over the equivalent period in the prior year.
Cost of sales as a percentage of net sales and operating revenues
remained virtually unchanged compared with the same period in the prior
year.
Sales and administrative expenses in the nine months ended March 31,
1998, decreased by 53.5% as compared to the same period in the prior year.
This is primarily due to a reduced net sales and payroll and by the
assumption, during the period, of certain marketing costs associated with
CPR mask under a joint venture with an affiliate.
Liquidity
Working capital deficit at March 31, 1998, decreased from June 30,
1997. This improvement in the working capital deficit was primarily due
to a decrease in short term borrowings and an increase in shareholders'
equity, preferred stock, arising from a negotiated Recharacterization of
$266,743 in notes payable-affiliate under an earn-out pay arrangement.
Capital Resources
Management has not committed to any material capital expenditures
for the future.
Research and Development Resources
The Company has several products in the research and development stage.
Management continues to fund the R&D of these products as needed.
The Company has been in the process of developing new and innovative
products. The development of these products has taken longer than planned.
The Company brought some of these products to market, which have been met
with a demand for improvements and changes to the products. Management
plans to develop upgrades and improvements to existing products utilizing
state of the art technology and to re-market these products to a
substantial existing client base. Management expects sales and profits to
significantly increase when the improved products are re-marketed.
<PAGE>
BUSINESS AND PROPERTIES OF CDX CORPORATION
CDX Corporation is a Colorado corporation incorporated in 1978 with its
corporate offices headquartered in Dedham, Massachusetts.
The Business of the Company has consisted of the sale of computerized
pulmonary diagnostic equipment which is used in the medical profession to
test for indications of lung or congestive heart disease.
In December 1994 the Company acquired Compliance Systems, a manufacturer of
infection control products which provide emergency personnel with protection
during trauma response situations and assist compliance with certain OSHA
mandates. In FY96 the Company also introduced a new version of its Instant
Response Mask (IRM) with improved features designed to protect personnel
involved in administering emergency cardio-resuscitation techniques to
compliment the Compliance Systems product line.
CDX also generates revenue from the sale of consumable and accessory items
associated with its diagnostic equipment. In addition, the Company has
developed an upgrade for its spirometers marketed to existing
customers. The Company has an updated version of its Model 110S spirometer
currently which incorporates the latest technology. This product is
marketed to physician offices, hospitals and industrial sites.
<PAGE>
B. Products And Services
Approximately 17% of the Company's gross revenues in its most recent fiscal
year was attributable to the sale of its testing machines, 59% of gross
revenues was attributable to sales of consumable and accessory items and 9%
of gross revenues was attributable to repairs and maintenance. Bio-hazard
control products and the IRM comprised 13% of sales.
The Company's objective is to increase gross revenues with the introduction
of the upgrade and upgraded version of the current spirometer and to
aggressively pursue the export markets. A new version of the Instant Response
Mask was released in December 1995.
The types of products which the Company currently markets are described below.
1. Instant Response Mask
Provides protection against the transmission of infectious
pathogens during the administration of emergency resuscitation
techniques such as CPR.
2. 110S Spirometer
Computerized pulmonary diagnostic equipment which is used in
the medical profession to test for indications of lung or
congestive heart disease.
<PAGE>
3. 110M Spirometer
A metric version of the 110S Spirometer specifically designed
for the international markets.
4. 110MAX Spirometer
An upscale version of the 110S Spirometer with additional
features.
5. Biosponse
A portable bio-hazard spill kit for bloodborne pathogens which
complies with OSHA regulation.
6. Biopail
A complete clean up and personal protection for first reponders
against blood pathogens contained in a refillable two gallon
pail meeting OSHA Regulations.
Additionally, the Company provides for sale of disposable and accessory items
associated with its testing equipment as well as maintenance and service
agreements; it also offers disposable items for the infection control markets.
<PAGE>
C. Marketing And Customers
The Company's principal customers have historically been primary care
physicians, group practices, clinic, and medical centers. Portable
spirometers are typically used by internists, family physicians, and general
practitioners in their offices to conduct preliminary diagnostic tests of a
patients pulmonary function. Spirometers are also used extensively in
industry to provide screening diagnosis, establish baselines and monitor
pulmonary function in the workplace. The Company's customer base includes
pulmonologists, allergists, and cardiologists who require the speed,
accuracy, and flexibility of hospital-based systems in a small, light-weight,
portable system.
During the period ended March 31, 1998, the Company did not have any one
customer responsible for 10% or more of sales activity or revenues.
The Company currently markets its products directly to retail customers from
its Dedham, Massachusetts office and through medical equipment dealers and
distributors, supported through a network of factory trained manufacturer's
representatives. The Company supports this sales network through direct mail,
advertising in clinical and trade publications, and participation in national
and regional trade shows.
Relative to the IRM mask, the Company held exclusive worldwide distribution
rights under terms of an agreement with Valley Forge Scientific. During FYE
6.30.96 the Company relinquished its exclusive rights and has undertaken to
co-distribute the IRM with Valley Forge in return for a 10% royalty on all
IRM sales by Valley Forge.
D. Product Development
The Company has undertaken a product development program with the ultimate
objective of the following:
The development of products specifically targeted at the equipment needs of
the physician's office. During the period ended March 31, 1998, the Company
spent $ on research and development.
<PAGE>
Further, in March 1995 the Company acquired all rights to certain technology
relating to the firefighting and industrial markets from Global Environmental
Technologies, Inc.
E. Products Protection
The company holds a patent issued by the U.S. Patent office in 1981 for the
overall structure and function of its remote pulmonary function tester known
as the CDX 110. The Company's current products have protection under certain
claims of this patent. The patent does not apply outside the United States.
The Company holds a federal trademark "CDX" which is used on its products.
The Company uses additional trademarks related to the IRM mask.
The Company's developmental efforts on the IRM mask has resulted in a U.S.
patent application. As per the terms of an agreement between the Company and
Valley Forge Scientific this patent has been assigned to Valley Forge. Under
the further terms of this agreement, the Company received the exclusive
worldwide distribution rights for the IRM mask.
F. Backlog
The Company does not currently have any backlog of sales orders or delays of
shipments due to lack of parts or supplies.
G. Competition
The market for the Company's products is characterized by rapid advancements
in technology and by intense competition among a number of manufacturers and
distributors. The Company believes that it competes favorably in the market;
however, no assurance can be given that the Company will have the financial
resources, marketing, distribution, service or support capabilities, depth of
key personnel or technological expertise to compete successfully in the
future.
H. Employees
As of March 31, 1998, the Company employed three full-time employees.
<PAGE>
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS -
Neither the Registrant nor any of its affiliates
are a party, nor is any of their property subject, to material
pending legal proceedings or material proceedings known to be
contemplated by governmental authorities.
ITEM 2 CHANGES IN SECURITIES -
The Registrant converted notes payable ($266,742.63) to 266,743
shares of Preferred Stock, $1.00 par, in order to effectuate the
negotiated Recharacterizations of notes payable-affiliate under
a mutually accepted earn-out arrangement.
The Registrant issued 1,075,269 shares of Common Stock at $0.25
per share to convert $268,817.30 of shareholder accounts payable,
effectuating the negotiated Recharacterizations of accounts
payable under a mutually accepted earn-out arrangement.
The Registrant issued 244,865 shares of Common Stock at $0.25
per share to convert $61,216.37 of interest payable at 12-31-97,
effectuating the negotiated Recharacterizations of interest payable
under a mutually accepted earn-out arrangement.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES -
None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS -
None
ITEM 5 OTHER INFORMATION -
None
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K -
A. Exhibits
Exhibit 27. Financial Data Schedule
B. Reports on Form 8-K
None
ADDITIONAL EXHIBITS -
The exhibits required to be furnished are either not
applicable or the information can be clearly determined
from the filed material.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has dully caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CDX Corporation
/S/ Philip D. Schein
_________________________________________
Philip D. Schein, President and Secretary
/s/ Harold I. Schein
_______________________________________
Harold I. Schein, Chairman of the Board,
and Treasurer
Date: May 31, 1998
<PAGE>
INDEX TO EXHIBITS
(a) Exhibits:
The following documents are filed herewith or have been included as
exhibits to previous filings with the Commission and are incorporated
herein by this reference:
Exhibit No. Document
* 3.1 Restated Articles of Incorporation dated
July 3, 1985
(incorporated by reference to the exhibits
and Registrant's report filed on Form 10-K
dated September 25, 1985)
* 3.2 Articles of Amendment dated December 4, 1987
to the Restated Articles of Incorporation
(incorporated by reference to the exhibits
to Registrant's report filed on Form 10-K
dated September 15, 1989)
* 3.3 Bylaws dated July 5, 1985
(incorporated by reference to the exhibits
to Registrant's report filed on Form 10-K
dated September 15, 1989)
______________
* Incorporated by reference from the issuer's Annual Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
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