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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 JUNE 30, 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 June 30, 1997:
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<CAPTION>
Common Stock: $.000001 par value 436,797,603
- ----------------------------------- ----------------
<S> <C>
Class Number of Shares
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1
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GAP INSTRUMENT INC.
Index
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<CAPTION>
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 June 30,1997
And September 30, 1996 3
Condensed Balance Sheets -
June 30, 1997 and
September 30, 1996 4
Condensed Statements of Cash Flows -
Nine Months Ended June 30, 1997
And September 30, 1996 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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2
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PART I FINANCIAL INFORMATION
ITEM 1. Condensed Financial Statements
GAP INSTRUMENT INC.
CONDENSED STATEMENT OF INCOME
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<CAPTION>
Three Months Ended Nine Months Ended
---------------------------- -----------------------------
June 30, September 30 June 30, September 30,
1997 1996 1997 1996
(Unaudited) (Unaudited) (Unaudited) (Audited)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 190,912 $ 63,471 $ 287,455 $ 188,403
Costs and Expenses
Cost of sales 52,135 116,116 106,367 160,054
Selling, general and
administrative expense 101,805 345,257 239,408 420,064
----------- ----------- ----------- -----------
Total costs and expenses 153,940 461,373 345,775 580,118
----------- ----------- ----------- -----------
Net Income (loss) from operations 36,972 (397,902) (58,320) (391,715)
Reorganization expenses - professional fees (6,500)
----------- ----------- ----------- -----------
Net Income (Loss) 36,972 (397,902) (58,320) (398,215)
Accumulated deficit - beginning $(4,078,173) $(3,563,816) $(3,982,881) $(3,584,666)
----------- ----------- ----------- -----------
Accumulated deficit - end $(4,041,201) $(3,982,881) $(4,041,201) $(3,982,881)
----------- ----------- ----------- -----------
Earnings per share:
Net income (loss) per share $ .00 $ .00 $ .00 $ .00
----------- ----------- ----------- -----------
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GAP INSTRUMENT INC.
CONDENSED BALANCE SHEETS
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<CAPTION>
Third Fiscal Quarter Ended
-------------------------------
June 30, September 30
1997 1996
(Unaudited) (Audited)
----------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 27,257 $ 20,984
Accounts receivable 30,942 72,135
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Total Current Assets 58,199 93,119
PROPERTY AND EQUIPMENT, at cost, less
accumulated depreciation 44,317 44,317
OTHER ASSETS-Deposits 3,110 3,110
----------- -----------
Total Current Assets $ 105,626 $ 140,546
----------- -----------
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 208,124 $ 176,600
Liabilities resulting from Plan of
Reorganization, current maturities 35,588 49,251
Deferred revenue and customer deposits 53,702 33,702
Due to shareholders 114,000 101,000
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Total Current Liabilities $ 411,414 $ 360,553
OTHER LIABILITIES
Liabilities resulting from Plan of
Reorganization, less current maturities 139,997 167,458
----------- -----------
Total Liabilities $ 540,743 $ 528,011
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COMMITMENTS AND CONTINGENCIES (Note 3)
SHAREHOLDERS' DEFICIT
Common stock: 604,000,000 shares authorized
At 9/30/96: $.00001 par value, 111,290,603
shares issued and outstanding 111
At 6/30/97: $.000001 par value,436,797,603
shares issued and outstanding 437
Additional paid-in capital 3,594,979 3,595,305
Accumulated deficit (4,041,201) (3,982,821)
----------- -----------
Total Shareholders' Deficit (445,785) (387,465)
----------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' DEFICIT $ 105,626 $ 140,546
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4
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GAP INSTRUMENT CORP.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE THIRD QUARTER OF THE FISCAL YEARS
ENDED JUNE 30, 1997 AND SEPTEMBER 30, 1996
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<CAPTION>
Third Fiscal Quarter Ended
---------------------------
June 30, September 30,
1997 1996
(Unaudited) (Audited)
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (58,320) $(398,215)
--------- ---------
Adjustments to reconcile net income (loss)
to cash provided (used) by
operating activities:
Depreciation 8,674
Forfeiture of deposit 5,000
Issuance of stock in exchange for
services 252,614
Changes in assets and liabilities:
Accounts receivable 41,193 (10,358)
Deferred revenue and customer deposits 20,000 33,702
Accounts payable and accrued expenses 31,524 146,393
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Total adjustments 92,717 436,025
Net cash provided by operating activities 34,397 37,810
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Payments to acquire fixed assets (39,993)
--------- ---------
Net cash used by investing activities (39,993)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Shareholder loans 13,000 45,000
Cash overdraft (1,553)
Repayment of reorganization debt (41,124) (20,280)
--------- ---------
Net cash used by financing activities (28,124) 23,167
--------- ---------
NET INCREASE (DECREASE) IN CASH 6,273 20,984
CASH - beginning 20,984
--------- ---------
CASH - end 27,257 20,984
--------- ---------
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5
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GAP INSTRUMENT INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. The condensed financial statements at June 30, 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, audited financial statements for
the fiscal 1996 year from January 1, 1996 to 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.
GAP INSTRUMENT CORP.
ITEM 2. Management's Discussion and Analysis of Results of Operations and
Financial Condition
Nine Months Ended June 30, 1997 and September 30, 1996
The Company's third quarter net loss of $58,320 compares favorably to the prior
nine-month fiscal 1996 year in which a net loss of $ 398,215 was reported. The
decrease is due primarily to the issuance of stock in exchange for services in
fiscal year ended September 30, 1996. This issuance was discussed fully in the
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 and third quarters were $287,455 and $188,403
for June 30, 1997 and September 30, 1996, respectively. Selling, general, and
administrative expenses of $239,408 and $167,450 ( total expense of $420,064
less $252,614, the dollar value of services exchanged for stock) of 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 June 26, 1997 discussing
stock issuance.
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: August 15, 1997
GAP INSTRUMENT INC.
(Registrant)
/S/ James M. Edwardson
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James M. Edwardson
Chairman of the Board of Directors,
and Chief Operating Officer
7
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 27,257
<SECURITIES> 0
<RECEIVABLES> 30,942
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 58,199
<PP&E> 59,842
<DEPRECIATION> 15,255
<TOTAL-ASSETS> 3,110
<CURRENT-LIABILITIES> 105,626
<BONDS> 0
0
0
<COMMON> 437
<OTHER-SE> (446,222)
<TOTAL-LIABILITY-AND-EQUITY> 105,626
<SALES> 190,912
<TOTAL-REVENUES> 190,912
<CGS> 52,135
<TOTAL-COSTS> 153,940
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,972
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,972
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,972
<EPS-PRIMARY> .00
<EPS-DILUTED> .00
</TABLE>
