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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 MARCH 31, 1997
OR
Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER: 000-02677
GAP INSTRUMENT CORPORATION
New York 11-1781357
State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization
100 Horse Block Rd., Yaphank, New York 11980
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (516) 924-1700
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 May 1, 1997:
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<CAPTION>
Common Stock: $.000001 par value 111,290,603
- ---------------------------------- ----------------
<S> <C>
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
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Item 1. Financial Statements 3
Condensed Statements of Income -
Quarters Ended December 31,1996 and
March 31, 1997 And March 31, and
June 30, 1996 3
Condensed Balance Sheets -
March 31, 1997 and
June 30, 1996 4
Condensed Statements of Cash Flows -
Six Months Ended March 31, 1997
And June 30, 1996 (Second Fiscal Quarter 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of
Results of Operations and Financial
Condition 6
PART II. Other Information
Item 1. Legal Proceedings 6
Item 6. Exhibits and Reports on Form 8-K 6
Signatures 7
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PART I FINANCIAL INFORMATION
ITEM 1. Condensed Financial Statements
GAP INSTRUMENT INC.
CONDENSED STATEMENT OF INCOME
(Unaudited)
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<CAPTION>
Three Months Ended Six Months Ended
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December 31, March 31, March 31, June 30,
1996 1996 1997 1996
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<S> <C> <C> <C> <C>
Net sales $ 92,279 $ 35,126 $ 96,543 $ 124,932
Costs and Expenses
Cost of sales 28,286 25,881 54,232 43,938
Selling, general and administrative expense 79,355 30,720 137,603 74,807
----------- ----------- ----------- -----------
Total costs and expenses 107,641 56,601 191,835 118,745
----------- ----------- ----------- -----------
Net Income (loss) from operations (15,362) (21,475) (95,292) 6,187
Reorganization expenses - professional fees -- (6,500)
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Net Income (Loss) (15,362) (21,475) (95,292) (313)
Accumulated deficit - beginning $(3,982,881) $(3,563,503) $(3,982,881) $(3,563,503)
----------- ----------- ----------- -----------
Accumulated deficit - end $(3,998,243) $(3,584,978) $(4,078,173) $(3,563,816)
----------- ----------- ----------- -----------
Earnings per share:
Net income (loss) per share $ .00 $ .00 $ .00 $ .00
----------- ----------- ----------- -----------
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GAP INSTRUMENT INC.
CONDENSED BALANCE SHEETS
(Unaudited)
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<CAPTION>
Second Fiscal Quarter Ended
---------------------------
March 31, June 30,
1997 1996
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 6,542 $ 435
Accounts receivable 10,509 26,055
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Total Current Assets 17,051 26,490
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation 44,317 34,139
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Total Current Assets $ 61,368 $ 60,629
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LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 174,514 $ 19,127
Liabilities resulting from Plan of
Reorganization, current maturities 37,730 47,194
Deferred revenue and customer deposits 66,963 --
Due to shareholders 114,000 66,000
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Total Current Liabilities $ 393,207 $ 132,321
OTHER LIABILITIES
Liabilities resulting from Plan of
Reorganization, less current maturities 150,918 170,484
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Total Liabilities $ 544,125 $ 302,805
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COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' DEFICIT
Common stock: 604,000,000 shares authorized
At 6/30/96: $.00001 par value, 108,543,353
shares issued and outstanding 1,085
At 3/31/97: $.000001 par value, 111,290,603
shares issued and outstanding 111
Additional paid-in capital 3,595,305 3,341,717
Accumulated deficit (4,078,173) (3,584,978)
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Total Shareholders' Deficit (482,757) (242,176)
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TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 61,368 $ 60,629
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GAP INSTRUMENT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
FOR THE SECOND QUARTER OF THE FISCAL YEARS
ENDED MARCH 31, 1997 AND JUNE 30, 1996
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<CAPTION>
Second Fiscal Quarter Ended
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March 31, June 30,
1997 1996
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $(95,292) $ (313)
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Changes in assets and liabilities:
Accounts receivable 61,626 35,725
Other assets -- (13,033)
Deferred revenue and customer deposits 36,371
Accounts payable and accrued expenses (2,086) (11,080)
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Total adjustments 95,911 11,612
Net cash provided by operating
activities 619 11,299
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CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder loans 13,000 10,000
Repayment of reorganization debt (28,061) --
Liabilities from Plan of Reorganization -- (19,311)
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Net cash used by financing activities (15,061) (9,311)
-------- --------
NET INCREASE (DECREASE) IN CASH (14,442) 1,988
CASH - beginning 20,984 (1,553)
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CASH - end $ 6,542 $ 435
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GAP INSTRUMENT INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements at March 31, 1997 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 second quarter of the fiscal 1997 year from
October 1, 1996 to March 31, 1997, unaudited financial statements for
the second quarter of the fiscal 1996 year from January 1, 1996 to
June 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.
GAP INSTRUMENT CORP.
ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Six Months Ended March 31, 1997 and June 30, 1996
The Company's second quarter net loss of $95,292 compares unfavorably to the
second quarter of the prior nine-month fiscal 1996 year in which a net loss of
$313 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 and second quarters were $96,543 and $124,932 for March
31, 1997 and June 30, 1996, respectively. Selling, general, and administrative
expenses of $137,603 and $74,807 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.
As GAP Instrument Corp. continues in the diversification process, it should be
noted that subscriptions for the network service are increasing as shown by the
rise in deferred revenue.
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
6
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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
7
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FIANCIAL INFORMATION EXTRACTED FROM STATEMENTS OF
INCOME, BALANCE SHEETS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 6,542
<SECURITIES> 0
<RECEIVABLES> 10,509
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 17,051
<PP&E> 59,842
<DEPRECIATION> 15,255
<TOTAL-ASSETS> 61,368
<CURRENT-LIABILITIES> 393,207
<BONDS> 0
0
0
<COMMON> 111
<OTHER-SE> (482,757)
<TOTAL-LIABILITY-AND-EQUITY> 61,368
<SALES> 96,543
<TOTAL-REVENUES> 96,543
<CGS> 54,232
<TOTAL-COSTS> 191,835
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (95,292)
<INCOME-TAX> 0
<INCOME-CONTINUING> (95,292)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (95,292)
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
