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 quarterly period ended July 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission file number 0-8006
COX TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
ARIZONA 86-0220617
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
69 MCADENVILLE ROAD
BELMONT, NORTH CAROLINA 28012
(Address of principal executive offices) (Zip Code)
(704) 825-8146
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicated 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 the latest practicable date.
Number of shares of Common Stock, no par value, outstanding
At August 31, 2000 ................................................. 24,518,065
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
FACE SHEET 1
INDEX 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Consolidated Balance Sheets
July 31, 2000 and April 30, 2000 4
Consolidated Statements of Operations and Accumulated Deficit
Three Months Ended July 31, 2000 and 1999 5
Statement of Cash Flows
Three Months Ended July 31, 2000 and 1999 6-7
Notes to Consolidated Financial Statements 7-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 9-12
PART II. OTHER INFORMATION AND SIGNATURES 13
2
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Cox Technologies, Inc. and its wholly-owned subsidiaries, Twin-Chart, Inc.,
Transit Services, Inc., Freshtag Research and Manufacturing, Inc., Vitsab, Inc.,
Vitsab AB, a Swedish corporation, and Cox Recorders Australia, Ltd., Pty., a 95%
owned Australian distribution company (collectively the Company), engage in the
business of producing and distributing transit temperature recording
instruments, both domestically in the United States and internationally. As an
enhancement and expansion of this business, the Company also is engaged in new
technologies for development of an electronic data temperature monitoring
system.
Concurrent with this electronic hardware/software research and development
effort, the Company has expended funds to further the development of
enzyme-based "smart labels" that detect temperature abuse in packages of
perishable goods. The Company has introduced this new technology, known as
Vitsab(R), to the food and pharmaceutical industries as a monitoring label
applied to packages of temperature sensitive products.
The condensed financial statements included herein have been prepared by
the registrant without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Although certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations, the registrant believes that the
disclosures herein are adequate to make the information presented not
misleading. It is recommended that these condensed financial statements be read
in conjunction with the financial statements and the notes thereto included in
the registrant's latest annual report on Form 10-K.
3
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
JULY 31, 2000 AND APRIL 30, 2000
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
July 31, 2000 April 30, 2000
------------- --------------
<S> <C> <C>
ASSETS
CURRENTS ASSETS:
Cash and cash equivalents (Note A) $ 789,097 $ 2,225,192
Accounts receivable, less allowance for doubtful
accounts of $28,664 at July 31, 2000 and April 30, 2000 1,696,799 1,627,601
Inventory (Note B) 1,741,908 1,625,615
Investment in securities 300,000 300,000
Notes receivable-current portion 20,741 24,948
Prepaid expenses 61,949 3,113
------------ ------------
TOTAL CURRENT ASSETS 4,610,494 5,806,469
Property and equipment (Net of accumulated depreciation) 5,938,624 5,406,760
Deposits 76,315 124,129
Goodwill 3,155,903 3,158,706
Notes receivable - non-current portion -0- 19,970
Patents 203,208 203,208
------------ ------------
TOTAL ASSETS $ 13,984,544 $ 14,719,242
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 730,877 $ 912,451
Current portion of long-term debt (Note A) 311,405 1,486,914
------------ ------------
TOTAL CURRENT LIABILITIES 1,042,282 2,399,365
Long-term debt (Note A) 3,997,888 2,928,359
------------ ------------
5,040,170 5,327,724
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, no par value; authorized 100,000,000 shares;
issued and outstanding; 24,514,565 shares at July 31, 2000
and 24,414,725 shares at April 30, 2000 20,969,067 20,868,467
Common stock subscribed 58,100 58,100
Contributed capital 420,982 420,982
Accumulated deficit (12,469,587) (11,920,132)
Less - Notes receivable for common stock:
Subscribed (34,188) (35,899)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 8,944,374 9,391,518
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,984,544 $ 14,719,242
============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
JULY 31, 2000 AND APRIL 30, 2000
--------------------------------------------------------------------------------
Three Months Ended July 31,
-----------------------------
2000 1999
------------ ------------
REVENUE:
Sales $ 2,423,781 $ 2,329,767
------------ ------------
COSTS AND EXPENSES:
Cost of sales 1,187,433 1,267,561
General and administrative expenses 1,058,302 633,838
Sales expense 452,406 335,020
Research and development 79,874 -0-
Depreciation and depletion 83,862 27,438
------------ ------------
TOTAL EXPENSES 2,861,877 2,263,857
------------ ------------
INCOME (LOSS) FROM OPERATIONS (438,096) 65,910
------------ ------------
OTHER INCOME (EXPENSE)
Other income (expense) 17,204 15,233
Interest expense (128,458) (43,695)
------------ ------------
TOTAL OTHER INCOME (EXPENSE) (111,254) (28,462)
------------ ------------
Earnings (loss) before income taxes (549,350) 37,448
Provisions for income taxes 105 -0-
------------ ------------
NET EARNINGS (LOSS) (549,455) 37,448
ACCUMULATED DEFICIT, beginning of period (11,920,132) (10,667,609)
------------ ------------
ACCUMULATED DEFICIT, end of period $(12,469,587) $(10,630,161)
============ ============
BASIC:
NET EARNINGS (LOSS) PER SHARE: $ (.02) $ .00
============ ============
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 24,414,565 21,368,186
============ ============
See Notes to Consolidated Financial Statements.
5
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
JULY 31, 2000 AND APRIL 30, 2000
--------------------------------------------------------------------------------
Three Months Ended July 31
----------------------------
2000 1999
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (549,455) $ 37,448
Adjustments to reconcile net earnings (loss)
to net cash used by operating activities:
Depreciation & amortization 83,862 27,438
CHANGES IN CURRENT ASSETS AND CURRENT LIABILITIES:
(Increase) decrease in current assets:
Accounts receivable (69,198) 84,967
Inventory (116,293) 165,209
Prepaid expenses (58,836) (4,671)
Notes receivable and investments 4,207 37,829
(Increase) decrease in non-current assets:
Deposits 47,814 (6,985)
Notes receivable - long term 19,970 (17,219)
Goodwill -0- 44,696
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses (181,574) (24,744)
Income taxes payable -0- (31,788)
----------- -----------
CASH PROVIDED (USED) BY OPERATING ACTIVITIES (819,503) 312,180
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Investment in securities -0- -0-
Issuance of common stock 100,600 -0-
Purchase of property and equipment (562,923) (12,026)
Acquisition of goodwill (50,000) -0-
----------- -----------
NET CASH (USED) BY INVESTING ACTIVITIES (512,323) (12,026)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Repayment on notes payable - Long term debt (1,295,980) (215,579)
Subscriptions receivable 1,711 (8,321)
Amounts borrowed under notes payable 1,190,000 -0-
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (104,269) (223,900)
----------- -----------
NET INCREASE (DECREASE) IN CASH (1,436,095) 76,254
CASH AND CASH EQUIVALENTS, beginning of period 2,225,192 1,250,810
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 789,097 $ 1,327,064
=========== ===========
See Notes to Consolidated Financial Statements.
6
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) - CONTINUED
JULY 31, 2000 AND JULY 31, 1999
--------------------------------------------------------------------------------
NOTE A - CASH AND NOTES PAYABLE
On July 13, 2000 the Company refinanced all of the short-term debt due to their
previous primary lender, including accrued interest, amounting to approximately
$1,177,000, through a secured long-term loan from their new primary lender
(Bank) in the amount of $1,190,000. The Bank has also provided a revolving line
of credit for working capital in the amount of up to $1,000,000 subject to a
maximum percentage of eligible accounts receivable and inventories.
Principal on the revolving line of credit is due on September 2, 2001. Interest
on the revolving line accrues at the rate of the Bank's prime rate plus .25% per
annum and is due monthly beginning in August 2000. As of the date of this
report, the Company has not utilized this revolving line of credit.
Principal payments on the long-term loan in the amount of $9,920 plus accrued
interest, which initially is the Bank's prime rate plus .625% per annum, are due
monthly from September 2, 2000 to August 2, 2001, inclusive. Commencing
September 2, 2001 long-term loan payments of $22,312 plus accrued interest are
due monthly until July 13, 2005.
The Company has agreed to certain covenants with respect to both the revolving
line and the long-term loan.
In addition, the Bank has agreed to finance the lease of a major piece of
production equipment to the Company. The cost of the equipment is approximately
$1,000,000 and the lease requires monthly lease payments of $17,040, including
interest at approximately 9.35% for a period of 84 months commencing December 1,
2000.
The Company has advanced approximately $400,000 in progress payments on the cost
of this equipment. Upon delivery and acceptance of the equipment the $400,000
will be repaid to the Company.
7
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
QUARTER ENDED JULY 31, 2000
--------------------------------------------------------------------------------
NOTE B - INVENTORY
Inventory at July 31, 2000 and April 30, 2000 consists of the following:
July 31, 2000 April 30, 2000
------------- --------------
Raw materials $ 512,716 $ 654,238
Work-in-progress 414,579 290,103
Finished goods 814,613 681,274
---------- ----------
$1,741,908 $1,625,615
========== ==========
NOTE C - INCOME TAXES
The Company and its subsidiaries file consolidated federal income tax returns
and separate state income tax returns.
NOTE D - COMMITMENTS AND CONTINGENCIES
There have been no changes in the disclosures of commitments, contingencies and
litigation as contained in the Company's annual report Form 10-K for the year
ended April 30, 2000.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company anticipates cash from operations, equity investment, and
borrowing from long-term lending sources adequate to meet cash requirements. At
present, the cash flow from operations is not adequate to meet cash requirements
and commitments of the Company. The Company intends to enter into equity, debt
or other financing arrangements to meet its further financial needs for
expansion into food safety control products and to provide for general working
capital needs. In this connection, reference is made to Note A of the notes to
consolidated financial statements.
COMPARISON OF OPERATIONS FOR 2000 AND 1999
The Company has two current operating segments that involve the (1)
production and distribution of temperature recording and monitoring devices,
both electronic "loggers" and graphic temperature recorders (referred to as
"Temperature Recorder Operations" as a group) and (2) oilfield operations and
other, which include all economic activity related to the oil production and the
holding of the oil leases and the operation of its Phoenix office.
Presented here is a summary of the operational business segments for the
quarters ended July 31, 2000 and 1999.
<TABLE>
<CAPTION>
2000 1999 2000 1999
---------- ---------- -------- --------
Temperature Temperature Oilfield Oilfield
Recorder Recorder Operations Operations
Operations Operations and Other and Other
---------- ---------- -------- --------
<S> <C> <C> <C> <C>
Sales $2,408,250 $2,327,767 $ 1,633 $ -0-
---------- ---------- -------- --------
Cost of sales 1,166,827 1,164,593 2,250 2,250
General & administrative 614,756 581,743 68,222 52,095
Sales expense 327,940 335,020 -0- -0-
Depreciation & amortization 16,762 15,436 -0- -0-
---------- ---------- -------- --------
Income (loss) from operations 281,965 230,975 (68,839) (54,345)
Interest expense -0- 7,755 -0- -0-
Other income (expense) 3,590 14,914 -0- 319
Income taxes -0- -0- 105 -0-
---------- ---------- -------- --------
Net earnings (loss) $ 285,555 $ 238,134 $(68,944) $(54,026)
========== ========== ======== ========
</TABLE>
TEMPERATURE RECORDER OPERATIONS
Sales increased $80,483 or 3.5% for the current year as compared to the
prior year. Cost of sales as a percent of sales was 48.5% for 2000 as compared
to 50% in 1999.
Sales expense decreased $7,080 or 2.1% in 2000 as compared to 1999. As a
percent of sales, these expenses were 13.6% for 2000 and 14.4% for 1999.
General and administrative expense increased $33,013 or 5.7% for 2000 as
compared to 1999. Expressed as a percent of sales, the general and
administrative expenses for 2000 were 25.5% and 25% for 1999. Overall the net
results of operations remained relatively constant for the years 2000 and 1999
with an improvement of $47,421 or 19.9% for year 2000.
9
<PAGE>
OILFIELD OPERATIONS AND OTHER
There were no oil production operations conducted directly by the Company
during the quarter ended July 31, 2000. However, financial results from the
farm-out arrangement are reflected in the figures presented. The Company
maintained certain insurance and other compliance matters pertaining to the
oilfield operations during this period, and these expenses are reflected in the
schedule above. By mutual agreement, the aforementioned farm-out arrangement has
been terminated and replaced by a new agreement. For further information
regarding this matter, please refer to Note O - Subsequent Events of notes to
consolidated financial statements in the annual report on Form 10-K of the
Company for the year ended April 30, 2000.
The other expenses relate to the Phoenix office of the Company which has
functioned as a management office for certain of the overall affairs of the
Company, the center for administration of oilfield activities and transactions,
and as a developmental location for aspects of software development.
COMPARISON OF SMART LABEL PROJECT AND EDS PROJECT FOR 2000 AND 1999
Research and development (R&D) segments are not currently operating
entities. All of the expenditures in these segments have been dedicated to
various aspects of business development, including formal research, development
of production techniques, and product research aimed at market readiness of the
product. Some small revenues have been generated in the sale of pre-production
materials.
Research and development segments are the (1) "smart label" project,
involving the research, technical and market development of the Vitsab(R) "smart
label" tags (and other allied tag technologies) and (2) EDS and Ancillary
Software Development Project, involving "logger" hardware engineering, software
development, systems integration and market research. The following data
summarize investment and income activity in these segments.
<TABLE>
<CAPTION>
2000 1999 2000 1999
----------- ----------- ------------ ------------
Smart Label Smart Label EDS/Software EDS/Software
Project Project Project Project
----------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Revenue $ 13,898 $ 2,000 $ -0- $ -0-
--------- --------- ---------- -----
Expenses 336,749 277,800 (261,271) -0-
Depreciation & amortization 67,100 12,000 -0- -0-
--------- --------- ---------- -----
Income (loss) operations (389,951) (287,800) (261,271) -0-
Interest expense (128,458) 35,940 -0- -0-
Interest income 13,614 -0- -0- -0-
--------- --------- ---------- -----
Net Expenses Invested in R&D $(504,795) $(323,740) $( 261,271) $ -0-
========= ========= ========== =====
</TABLE>
The Vitsab(R) facility and associated activities were acquired in June
1998. Income of $13,898 and $2,000 for prototype materials delivered for testing
are reflected for the three months ended July 31, 2000 and 1999. Other related
expenditures for this project are included in this table.
The EDS/Software project started during the year ended April 30, 2000, so
there are no expenditures reflected in 1999 for this project.
10
<PAGE>
MANAGEMENT COMMENTS ON RECENT DEVELOPMENTS
The following significant events are relevant to a better understanding of
the Company's current operations as previously reported in the annual report
Form 10-K for April 30, 2000:
1. REPLACED AUSTRALIAN DISTRIBUTOR WITH SUBSIDIARY OPERATION Due to
difficulties experienced the Company moved to preserve its market position
and aggressive sales stance by buying out the contract and inventory of its
existing distribution agency in Melbourne, Australia. A new company was
then formed to perform the sales and distribution function. The Company
hired the chief sales person away from the previous distribution company
and appointed him to the position of chief of sales and administration of
the new entity. This new entity is Cox Recorders, Australia, Ltd., Pty.,
and is a corporation formed under Australian law. The Company owns 95% of
this subsidiary.
2. HIRED SENIOR VICE PRESIDENT OF ENGINEERING, MR. URI M. DAHAN, AND BEGAN THE
DEVELOPMENT OF THE EDS "SMART CARD" TEMPERATURE LOGGER As part of its
ongoing efforts to achieve market leadership in technical products in
temperature monitoring, the Company started development of its EDS "Smart
Card" electronic temperature recorder. The conceptual origins of this
product began in 1996 when plans were laid to create a technologically
novel device for temperature monitoring. Late in 1999, the opportunity
arose to hire a design expert in the field of design for devices of this
type. The Company took the opportunity and hired Mr. Dahan to provide
design and product development leadership for the product. The final phase
of realization of this product from concept to prototype has been his
primary responsibility. Mr. Dahan was elected a director of the Company in
1999. His qualifications are summarized in Part II, Item 1(c).
3. HIRED SENIOR VICE PRESIDENT OF INFORMATION SYSTEMS, MR. MOHAMED HASSIM, TO
COMPLEMENT THE HARDWARE DEVELOPMENT OF THE EDS "SMART CARD" TEMPERATURE
LOGGER WITH COMPANION SOFTWARE With the advent of accelerated development
of the EDS "Smart Card" electronic temperature recorder, a parallel effort
was required to develop custom software to read the information from the
device. Mr. Hassim, a software designer and engineer was hired to head up
this project. Mr. Hassim has a distinguished background in software
development, and is a talented software designer.
4. INITIATED PURCHASE, DESIGN AND DEVELOPMENT OF A NEW HIGH-SPEED "SMART
LABEL" MACHINE The Company has performed an in depth market assessment of
demand for its Vitsab(R) "Smart Label" product. This assessment revealed
that market viability would be dependent upon the ability to produce the
product at high volumes during the initial phases of commercial
introduction. Existing machinery for production was essentially "pilot
plant" in scale; creation of new technology and machinery would therefore
be necessary to achieve commercial readiness for the Vitsab(R) product. The
Company engaged the services of a recognized designer and producer of
automated production machinery. The machinery, as of the preparation of
this document, is 90% complete as of the date of this report, and has been
successfully operated in a preliminary trial. The value of the machinery is
in excess of $1,100,000 (see item 10 below).
5. OBTAINED FINANCING OF $2,500,000 FROM TECHNOLOGY INVESTORS, LLC Rapid
expansion by the Company into new technologies has necessitated the
acquisition of financing for investment purposes. The Company entered into
an agreement with Technology Investors, LLC and its principals, Brian D.
Fletcher and Kurt C. Reid, which yielded the $2,500,000 in investment
capital to the Company. The details of this financing transaction appear in
Note K - Related-Party Matters of the notes to the consolidated financial
statements.
11
<PAGE>
6. HIRED CHIEF OPERATING OFFICERS, BRIAN D. FLETCHER AND KURT C. REID Mr.
Fletcher and Mr. Reid agreed to join the Company as Co-Chief Operating
Officers in 2000. Mr. Fletcher and Mr. Reid, along with President and CEO,
Dr. James L. Cox, constitute the new executive management committee of the
Company.
7. HIRED PRESIDENT OF VITSAB, INC., JAMES R. MCCUE The Company has planned for
the expansion of the Vitsab(R) operations in anticipation of commercial
readiness and high volume production. Mr. McCue was hired to head up the
expansion effort, and now serves as President of Vitsab, Inc., the core
subsidiary for the Company's Smart Label operations. Mr. McCue has
extensive experience in management and sales administration. He was
formerly involved in medical equipment sales and sales administration for a
large national firm.
8. BEGAN PROCESS OF REDUCING EXPENSES IN THE COX RECORDERS ASSEMBLY OPERATION
A review of operations within the Company revealed that reorganization of
certain of its procedures, policies and manufacturing protocols related to
recorder operations could result in substantial reductions in expenses.
Management has started to make significant changes aimed at greater
efficiency in workflow, more economic choices of outside services, and more
competitive sourcing of materials for operations. Some manufacturing
processes are being studied for automation, as well.
9. DOWNSIZING AND EXPENSE REDUCTION AT THE PHOENIX OFFICE The Phoenix office
of the Company has functioned as a management office for certain of the
overall affairs of the Company, the center for administration of oilfield
activities and transactions, and as a developmental location for aspects of
software development. Changes in the focus of some of these activities have
opened the possibility to downsize the scope of these office functions. The
Company has taken significant steps to reduce expenditure at the Phoenix
office by staff reduction, reduction in leased space, and reduction of
telecom service expense.
10. ESTABLISHED BANKING RELATIONSHIP WITH LONG-TERM LOAN, LINE OF CREDIT AND
LEASE FOR SMART LABEL MACHINE The Company has restructured its entire
banking relationship. The need for restructuring arose from prior bank debt
maturity and impending requirements for lease financing arising from the
acquisition of automated machinery for the high-speed production of the
Vitsab(R) product. Expansion of the new technologies, according to the
Company's projections and budgetary analyses, also required a new credit
line for working capital. All of these requirements have been recently
resolved with the establishment of a new banking relationship to supplant
the prior banking service provider. This refinancing/new financing
transaction is a significant event in the overall expansion plan for the
Company's future. Important details of this financing transaction appear in
Note O - Subsequent Events of the notes to the consolidated financial
statements.
11. SET UP FRESHTAG(TM) RESEARCH AND MANUFACTURING, INC., TO CONCENTRATE ON THE
DEVELOPMENT OF FRESHTAG(TM) PROJECT The Company was successful in the
acquisition of patent rights to technology developed by the FDA, the
FreshTag(TM). As sole patent rights holder, the Company is positioned to
offer FreshTag(TM) product in the future to what appear to be a substantial
market for this "Smart Label" technology. Projections of cash needs for the
commercial realization of this technology, however, have necessitated a
strategy of seeking of some outside funding for the project. A new
subsidiary, FreshTag Research and Manufacturing, Inc., was formed to serve
as the entity for performing the development, and as a vehicle for possible
future equity financing of the project.
12
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the annual report Form 10-K of the Company for the
year ended April 30, 2000, relative to legal proceedings. No changes or
determinations have occurred on such proceedings during the three months ended
July 31, 2000.
ITEMS 2, 3, 4 AND 5 ARE NOT APPLICABLE.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed during the three months ended
July 31, 2000.
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.
COX TECHNOLOGIES, INC.
(Registrant)
Date: 09-22-00 /s/ James L. Cox
------------------------------------
James L. Cox
Chairman, President and
Chief Executive Officer
Date: 09-22-00 /s/ Robert W. Dupree
------------------------------------
Robert W. Dupree
Chief Financial Officer
13
