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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
X Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange
- --- Act of 1934
FOR THE PERIOD ENDED DECEMBER 31, 1996
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
- --- Exchange Act of 1934
COMMISSION FILE NUMBER: 000-02677
GAP INSTRUMENT INC.
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(Exact name of registrant as specified in its charter)
New York 11-1781357
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State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
100 Horse Block Rd., Yaphank, New York 11980
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 924-1700
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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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of February 13, 1997:
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Common Stock: $.000001 par value 111,290,603
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Class Number of Shares
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GAP INSTRUMENT INC.
Index
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Page No.
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PART I. Financial Information
Item 1. Financial Statements 3
Condensed Statements of Income - Quarters Ended
December 31, 1996 And April 1, 1995 3
Condensed Balance Sheets - December 31, 1996
and September 30, 1996 4
Condensed Statements of Cash Flows - Quarters
Ended December 31, 1996 And April 1, 1995 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 7
PART II. Other Information
Item 1. Legal Proceedings 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 8
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PART I FINANCIAL INFORMATION
ITEM 1. Financial Statements
GAP INSTRUMENT INC.
CONDENSED STATEMENTS OF INCOME
(Unaudited)
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<CAPTION>
First Fiscal Quarter Ended
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December 31, April 1,
1996 1995
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Net sales $ 92,279 $ 89,806
Costs and Expenses
Cost of sales 28,286 18,057
Selling, general and administrative expense 79,355 44,086
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Total costs and expenses 107,641 62,143
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Net Income (loss) from operations (15,362) 27,663
Reorganization expenses - professional fees -- (6,500)
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Net Income (Loss) (15,362) 21,163
Accumulated deficit - beginning $(3,982,881) $(3,584,666)
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Accumulated deficit - end $(3,998,243) $(3,563,503)
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Earnings per share:
Net income (loss) per share $ .00 $ .00
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GAP INSTRUMENT INC.
CONDENSED BALANCE SHEETS
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<CAPTION>
December 31, September 30,
1996 1996
ASSETS (Unaudited) (Audited)
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CURRENT ASSETS
Cash and cash equivalents $ 11,725 $ 20,984
Accounts receivable 33,441 72,135
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Total Current Assets 45,166 93,119
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation 44,317 44,317
OTHER ASSETS - Deposits -- 3,110
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TOTAL ASSETS $ 89,483 $ 140,546
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LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 150,805 $ 176,600
Liabilities resulting from Plan of
Reorganization, current maturities 28,345 49,251
Deferred revenue and customer deposits 33,702 33,702
Due to shareholders 112,000 101,000
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Total Current Liabilities 324,852 360,553
OTHER LIABILITIES
Liabilities resulting from Plan of
Reorganization, less current maturities 167,458 167,458
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Total Liabilities 492,310 528,011
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COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' DEFICIT
Common stock, $.000001 par value,
604,000,000 shares authorized, 111,290,603
shares issued and outstanding 111 111
Additional paid-in capital 3,595,305 3,595,305
Accumulated deficit (3,998,243) (3,982,881)
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Total Shareholders' Deficit (402,827) (387,465)
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TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 89,483 $ 140,546
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GAP INSTRUMENT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE FIRST QUARTER OF THE FISCAL YEARS
ENDED DECEMBER 31, 1996 AND APRIL 1, 1996
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<CAPTION>
First Fiscal Quarter Ended
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December 31, April 1,
1996 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(15,362) $ 21,163
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Changes in assets and liabilities:
Accounts receivable 41,804 (4,988)
Other assets (8,044)
Accounts payable and accrued expenses (25,795) (7,405)
Due to officers 10,000
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Total adjustments 16,009 (10,437)
Net cash provided by operating
activities 647 10,726
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CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder loans 11,000 --
Repayment of reorganization debt (20,906) --
Liabilities from Plan of Reorganization (7,322)
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Net cash used by financing activities (9,906) (7,322)
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NET INCREASE (DECREASE) IN CASH (9,259) 3,404
CASH - beginning 20,984 (1,553)
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CASH - end $ 11,725 $ 1,851
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GAP INSTRUMENT INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements at December 31, 1996 are unaudited
and reflect all adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position and
operating results for the interim period. All such adjustments are of a
normal recurring nature. The results of operations for the interim
period shown in this report is not necessarily indicative of results to
be expected for the fiscal year.
2. The Company has changed its fiscal year from December 31 to September
30. The accompanying financial statements include unaudited financial
statements for the first quarter of the fiscal 1997 year from October
1, 1996 to December 31, 1996, unaudited financial statements for the
first quarter of the fiscal 1996 year from January 1, 1996 to April 1,
1996, and audited financial statements for the nine months ended
September 30, 1996.
3. The Company is a party to litigation involving a former officer of the
Company. Management believes that the settlement of the claim will not
have a material adverse effect on the Company's financial position or
results of operations.
6
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ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Three Months Ended December 31, 1996 and April 1, 1996
The Company's first quarter net loss of $15,362 compares unfavorably to the
first quarter of the prior nine-month fiscal 1996 year in which a net income of
$21,163 was reported. The decrease is due primarily to the repayment of
liabilities resulting from the Plan of Reorganization. These liabilities are
discussed fully in MD&A submitted with Form 10-K for the fiscal year ending
September 30, 1996 and should be read in conjunction with the accompanying
financials for this interim period.
Net sales for the first quarters were $92,279 and $89,806 for December 31 and
April 1, 1996, respectively. Selling, general, and administrative expenses of
$79,355 and $44,086 for the same periods indicates a rise in the expense of
diversifying the Company's business from strictly a military product
manufacturer to a Value Added Network for the Federal Government and as an
Internet Service provider (ISP) for federal contractors.
7
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PART II OTHER INFORMATION
ITEM 1. Legal Proceedings
On September 24, 1993, the Company filed petitions for relief under chapter 11
of the federal bankruptcy laws in the United States Bankruptcy court for the
Eastern district of New York, The Company operated under the Court's protection
until October 5, 1995, when the Court confirmed the Company's plan of
reorganization. Pursuant to plan, the Company was relieved of all long-term debt
agreements. The Company's remaining liabilities were negotiated. The company
recognized an extraordinary gain of $293,870, representing the difference
between the carrying value of the liabilities and the amounts required to be
repaid by the Company. The resulting liabilities are reflected in the balance
sheet as "Liabilities Resulting from the Plan of Reorganization."
The Company is a party to litigation involving a former officer of the Company.
Management believes that the settlement of the claim will not have a material
adverse effect on the Company's financial position or results of operations.
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits
None.
B. Forms 8-K
The Company filed a Form 8-K dated November 8, 1996, reporting
changes in registrant's certifying accountant.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: February 14, 1997
GAP INSTRUMENT INC.
(Registrant)
/s/ James M. Edwardson
- ---------------------------------------
James M. Edwardson
Chairman of the Board of Directors,
and Chief Operating Officer
8
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<LEGEND>
THIS SHCEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STATEMENTS
OF INCOME BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10-Q AND10-K SEP 30, 1996
</LEGEND>
<S> <C>
<PERIOD-TYPE> OTHER
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 11,725
<SECURITIES> 0
<RECEIVABLES> 33,441
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 45,166
<PP&E> 60,120
<DEPRECIATION> 15,803
<TOTAL-ASSETS> 89,483
<CURRENT-LIABILITIES> 324,852
<BONDS> 0
0
0
<COMMON> 111
<OTHER-SE> (402,827)
<TOTAL-LIABILITY-AND-EQUITY> 89,483
<SALES> 92,279
<TOTAL-REVENUES> 92,279
<CGS> 28,286
<TOTAL-COSTS> 107,641
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (15,362)
<INCOME-TAX> 0
<INCOME-CONTINUING> (15,362)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (15,362)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
