FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
of the Securities Exchange Act of 1934
For Quarter ended October 31, 1999
Commission file number 0-8006
COX TECHNOLOGIES, INC.
FKA: Energy Reserve, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
ARIZONA 86-0220617
- ------------------------------ -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
69 McAdenville Road, Belmont, North Carolina 28912
--------------------------------------------------
Registrant's telephone number, including area code (704) 825-8146
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED
IN BANKRUPTCY PROCEEDINGS DURING
THE PRECEDING FIVE YEARS:
Indicated by check mark whether the registrant has filed all documents and
reports required to by filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE USERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class - Common Stock, without Par Value
23,280,922 Shares Outstanding at December 7, 1999
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
Page
----
FACE SHEET 1
INDEX 2
PART I. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS 3
Consolidated Balance Sheets at
October 31, 1999 and July 31, 1999 4
Consolidated Statements of
Operations and Accumulated Deficit
Three Months Ended October 31, 1999 & 1998 5
Six Months Ended October 31, 1999 & 1998 6
Statement of Cash Flows
Six Months Ended October 31, 1999 and 1998 7
Notes to Consolidated Financial Statements 8-9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10-14
PART II. OTHER INFORMATION AND SIGNATURES 15-16
2
<PAGE>
FINANCIAL
INFORMATION
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Cox Technologies, Inc. and its subsidiaries, Twin Chart, Inc., its subsidiary
Transit Services, Inc., Vitsab, AB, Sweden, Vitsab, Inc., Energy Reserve
Holdings, Inc., and Energy Reserve Financial Corporation (collectively the
Company), engage in the business of producing and distributing transit
temperature recording instruments, both domestically in United States and
internationally. The Company also engages in the business of acquiring,
developing and selling oil properties and of producing and selling crude oil for
its own account in United States. As such the Company has not and does not
engage in petroleum refining or retail marketing.
The Consolidated Financial Statements included herein have been prepared by the
Company, without audit, pursuant to the rules and regulations of the Securities
and Exchange Commission. 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, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the financial
statements and data notes thereto included in the Company's annual report on
Form 10-K, for the year ended April 30, 1999.
In the opinion of the Company, all adjustments have been included which are
necessary for the preparation of the balance sheets of Cox Technologies, Inc.
and consolidated subsidiaries at October 31, 1999 and April 30, 1999 and to a
fair statement of the results of operations for the three months ended October
31, 1999 and 1998 and for the six months ended October 31, 1999 and 1998.
3
<PAGE>
COX TECHNOLOGIES, INC., AND SUBSIDIARIES
FORMERLY ENERGY RESERVE, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
OCTOBER 31, 1999 AND APRIL 30, 1999
October 31, April 30,
1999 1999
------------ ------------
ASSETS
CURRENTS ASSETS:
Cash and cash equivalents (Note A) $ 1,605,169 $ 1,250,810
Accounts receivable, less allowance for
doubtful accounts of $29,527 at
October 31, 1999 and April 30, 1999 1,749,890 1,599,079
Inventory (Note B) 1,348,053 1,542,663
Investment in securities 51,211
Notes receivable-current portion 17,882 30,477
Prepaid expenses 62,703 65,860
------------ ------------
TOTAL CURRENT ASSETS 4,783,677 4,540,100
Property and equipment (net) 7,428,783 7,109,762
Investments in securities 375,671 300,000
Deposits 21,268 23,692
Goodwill (Note A) 829,526 886,783
Notes receivable - non-current portion 97.890 16,855
------------ ------------
TOTAL ASSESTS $ 13,536,815 $ 12,877,192
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 465,833 $ 582,542
Income taxes payable (Note C) 2,932 34,720
Current portion of long-term debt (Note A) 1,809,234 1,651,949
------------ ------------
TOTAL CURRENT LIABILITIES 2,277,999 2,269,211
Long-term debt 1,150,977 581,374
Minority Interest -0- 669
------------ ------------
3,428,976 2,851,254
------------ ------------
COMMITMENTS AND CONTINGENCIES (Note D)
STOCKHOLDERS' EQUITY
Common stock, no par value: authorized
100,000,000 shares; issued and outstanding
23,618,261, shares at October 31, 1999
and at April 30, 1999 20,306,099 20,306,098
Common stock subscribed 58,100 58,100
Contributed Capital 420,982 420,982
Treasury stock (45,920) (45,920)
Accumulated deficit (10,577,388) (10,667,609)
Less - notes receivable for common stock:
Subscribed (54,034) (45,713)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,107,839 10,025,938
------------ ------------
TAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 13,536,815 $ 12,877,192
============ ============
See notes to Financial Statements
4
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Three Months Ended October 31,
------------------------------
1999 1998
------------ ------------
REVENUE
Sales $ 2,342,379 $ 2,248,525
------------ ------------
COSTS AND EXPENSES
Cost of sales 1,173,300 1,129,310
General and administrative expenses 686,247 585,226
Sales expense 372,173 337,366
Interest expense 44,855 35,796
Depreciation and depletion 28,487 50,230
------------ ------------
TOTAL EXPENSE 2,305,062 2,137,928
------------ ------------
INCOME FROM OPERATIONS 37,317 110,597
------------ ------------
OTHER INCOME (expense)
Other income (expense) 18,456 186,640
------------ ------------
Earnings before income taxes 55,773 297,237
Provisions for income taxes (note c) 3,000 40,900
------------ ------------
NET EARNINGS 52,773 256,337
ACCUMULATED DEFICIT, beginning of period (10,630,161) (10,425,450)
------------ ------------
ACCUMULATED DEFICIT, end of period ($10,577,388) $(10,169,113)
============ ============
EARNINGS PER SHARE:
Net earnings (loss) $ 0.002 $ 0.01
============ ============
See notes to Financial Statements
5
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
Six Months Ended October 31,
------------------------------
1999 1998
------------ ------------
REVENUE
0Sales $ 4,672,146 $ 4,621,388
------------ ------------
COSTS AND EXPENSES
Cost of sales 2,440,861 2,307,536
General and administrative expenses 1,320,085 1,186,452
Sales expense 707,193 710,113
Interest expense 88,550 77,520
Depreciation and depletion 55,925 75,322
------------ ------------
TOTAL EXPENSES 4,612,614 4,356,943
------------ ------------
INCOME FROM OPERATIONS 59,532 264,445
------------ ------------
OTHER INCOME (EXPENSE)
Other income (expense) 33,689 206,061
------------ ------------
Earnings before income taxes 93,221 470,506
Provisions for income taxes (note C) 3,000 40,900
------------ ------------
NET EARNINGS 90,221 429,606
ACCUMULATED DEFICIT, beginning of period (10,667,609) (10,598,719)
------------ ------------
ACCUMULATED DEFICIT, end of period $(10,577,388) $(10,169,113)
============ ============
EARNINGS PER SHARE:
Net earnings (loss) $ 0.004 $ 0.02
============ ============
See notes to Financial Statements
6
<PAGE>
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
STATEMENT OF CASH FLOWS
Six Months Ended October 31,
----------------------------
1999 1998
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES
Net earnings $ 90,221 $ 429,606
Adjustments to reconcile net earnings
to net used by operating activities:
Depreciation and depletion 55,925 75,322
Loss on securities -0- 180,500
Allowance for doubtful accounts 863 -0-
(Acquisition) disposition of Goodwill 32,696 (803,184)
CHANGES IN CURRENT ASSETS AND CURRENT LIABILITIES
(Increase) decrease in current assets:
Inventory 194,610 (342,459)
Accounts receivable (151,674) (262,188)
Prepaid expenses 3,157 264,742
Notes receivable and investments (6,959)
(Increase) decrease in non-current assets:
Deposits 2,424 2,193
Deferred taxes 30,000
Notes receivable - long term (22,734)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses (117,377) 5,784
Income Taxes Payable (31,788) (25,568)
----------- -----------
NET CASH FROM OPERATING ACTIVITIES 79,057 (474,945)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Investment in securities (24,460) 300,000
Issuance of common stock 843,933
Purchase of property and equipment (350,385) (2,780,356)
----------- -----------
NET CASH FROM INVESTING ACTIVITIES (374,845) (1,636,423)
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES
Repayment on notes payable (437,844)
Amounts borrowed under notes payable 726,888 1,750,000
Repayment (additions) to subscriptions receivable (8,321) -0-
----------- -----------
NET CASH FROM INVESTING ACTIVITIES 650,147 1,312,156
----------- -----------
NET INCREASE (DECREASE) IN CASH 354,359 (799,212)
CASH, beginning of year 1,250,810 2,575,945
----------- -----------
CASH, end of year $ 1,605,169 $ 1,776,733
=========== ===========
See notes to Financial Statements
7
<PAGE>
COX TECHNOLOGIES, INC AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Quarter Ended October 31, 1999
SUPPLEMENTAL DISCLOSURE: Six Months Ended October 31,
----------------------------
1999 1998
------- -------
Interest paid $88,550 $35,796
Income taxes paid $ 8,950 $ -0-
NOTE A - CASH, NOTES PAYABLE AND COMMON STOCK
In June 1998, the Company acquired Vitsab, AB, a Swedish corporation in exchange
for 3,375,734 shares of the Company's unregistered common stock valued at
$843,933 or $0.25 per share and 950,000 shares of the common stock of VITSAB,
USA, Inc., a previously wholly-owned subsidiary of the Company with 4,750,000
shares of common stock outstanding and the assumption of certain debt in the
amount of $2,300,000 owed by VITSAB, AB to an unrelated company. The Company
borrowed $1,750,000 from the bank under two notes and security agreements and
liquidated the referenced $2,300,000 debt for the discounted sum of $1,750,000.
The Company has pledged a $1,000,000 certificate of deposit with the lending
bank as collateral for the $1,750,000 borrowed funds. The loans were due and
payable within on year from June 1998. Under terms of the notes and security
agreements the Company was obligated to make eleven (11) monthly payments of
$19,258.01 and one (1) final payment of all outstanding principal and accrued
interest due June 17, 1999. The bank extended the monthly payments through
September 1999 and in September 1999 subsequent to the date of this October 31,
1999 Report the Company refinanced its' indebtedness as follows:
a) consolidated the unpaid balance on the $1,750,000 loan with,
b) an additional loan of $500,000 and,
c) arranged for monthly interest only payments of $4,479.00 to the bank
with a maturity date of February 10, 2000 for the consolidated
indebtedness with,
d) the understanding the consolidated loan would be reviewed at the
maturity date for conversion to a long-term indebtedness if not paid
or assumed through an equity financing of the Vitsab corporate
structure independent of Cox Technologies, Inc.
8
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
NOTE B - INVENTORY
Inventory at October 31, 1999 and April 30, 1999 consists of the following:
1999
-------------------------------
October 31, April 30,
---------- ----------
Raw materials $ 297,662 $ 367,752
Work-in-progress 255,743 315,690
Finished goods 792,192 859,221
Crude oil 2,456 -0-
---------- ----------
$1,348,053 $1,542,663
========== ==========
NOTE C - INCOME TAXES
The Company and its subsidiaries file consolidated Federal income tax returns
and separate State income tax returns.
The Company's provision for income taxes is determined after application of a
portion of its net operating loss carry forward. As of October 31, 1999 the
Company's unused net operating loss carry forward was approximately $9,581,886.
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, 1999.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
At October 31, 1999 the Company had a working capital of $2,505,678. This is an
increase of $234,789 for the six months period May 1, 1999 to October 31, 1999.
The Company did not incur any long-term debt during this period, however
investment in property and equipment increased significantly by the acquisition
of Vitsab, AB. At present, cash flow from operations is adequate to meet the
cash requirements and commitments of the Company. However, the Company plans to
enter into equity, debt or other financing arrangements to meet its future
financial needs for expansion and:
(a) To provide for general working capital needs including the servicing
of the Vitsab, AB acquisition debt
(b) To repay outstanding liabilities
As previously disclosed, Vitsab, Inc. a wholly owned subsidiary of the Company
entered into a letter of intent with an investment broker to structure and
negotiate a private placement financing of up to $7,500,000 of Vitsab, Inc.
securities. The Company has terminated this agreement and is seeking a new
source of financing for Vitsab, Inc.
COMPARISON OF OPERATIONS FOR SECOND FISCAL QUARTER ENDED OCTOBER 31, 1999
AND 1998
As more fully described in its annual report, Form 10K for the year ended April
30, 1999, the Company has three (3) industry operating segments; a) time
temperature recorders (Recorders), b visual tag indicators (Vitsab) and c) crude
oil production (Oil).
Net earnings for the second fiscal quarter ended October 31, 1999 were $52,773,
which is a decrease of $203,564 from $256,337 net earnings for the same period
last year. This decrease was primarily due to a reduction of $168,936 in other
non-operating income in 1999 as compared to 1998. Earnings from operations for
1999 were $38,069, a decrease of $72,528 from the 1998 second fiscal quarter
earnings from operations.
10
<PAGE>
COMPARISON OF OPERATIONS FOR QUARTER ENDED (Continued)
The following schedule reflects the operations of the three industry segments of
the Company for the three months ended October 31, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months Ended July 31
---------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
Recorders Recorders Oil Oil Vitsab Vitsab
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Sales 2,342,379 2,245,525 0 0 0 3,000
Costs and Expenses
Cost of sales 993,926 935,863 2,250 2,447 177,124 191,000
General & administrative 556,191 539,233 49,324 36,136 80,732 0
Sales expense 372,173 337,366 0 0 0 0
Interest 4,855 4,921 0 0 40,000 40,732
Depreciation & depletion 15,926 29,230 0 0 12,561 21,000
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) operations 399,308 398,912 (51,574) (38,583) (310,417) (249,732)
Other income (expense) 18,023 (36,321) 433 222,961 0 0
---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes 417,331 362,591 (51,141) 184,378 (310,517) (249,732)
Income taxes 3,000 27,134 0 13,766 0 0
---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss) 414,331 335,457 (51,141) 170,612 (310,417) (249,732)
========== ========== ========== ========== ========== ==========
</TABLE>
TEMPERATURE RECORDER OPERATIONS
Sales increased by $96,854 or 4.3% for the second quarter 1999 fiscal year as
compared to the same period of 1998 fiscal year.
All categories of cost and expenses remained fairly static with only slight
increases in cost of sales, general administrative and sales expenses.
The Company is currently developing a new temperature logger that is expected to
be more functional and complete than presently available logger technology.
Management anticipates the initial marketing of this product before the end of
the current fiscal year ending April 30, 2000.
11
<PAGE>
OIL PRODUCTION OPERATIONS
As discussed in the Company's annual report, Form 10-K for the year-ended April
30, 1999, the oil field operations are being operated under a farm-out
arrangement with an experienced operator. The costs to the Company for direct
oil field operations consisted primarily of property taxes for both 1999 and
1998. The Company expects revenue from its oil production operations in the
third and fourth fiscal quarters of the current fiscal year.
The increase in general and administrative expenses of $13,188 in 1999 as
compared to 1998 was due to costs and expenses associated with the Company's CT
Telecom division which is being operated from the Phoenix office and is included
under the oil production operations. The CT Telecom division is developing a
computer software operating system that is expected to be a separate revenue
center for the Company by the fourth fiscal quarter of the fiscal year.
Other income of $222,961 for 1998 was realized from the settlement of
indebtedness at less than the recorded liability.
VITSAB OPERATIONS
This business segment was acquired in June 1998 and operations consist mainly of
marketing, production and product development. The Vitsab operations are more
fully disclosed in the Company's Form 10-K for the year-ended April 30, 1999.
Cost of sales expenditures represent costs of operations for both Malmo, Sweden
and Belmont, North Carolina operations. The net loss of the operation for the
three months periods of both 1999 and 1998 were virtually the same. Cost of
sales, which represents production costs, were down. General administrative
expenses represent organizational expenses and salaries incurred by both Belmont
and Malmo operations.
Cost of sales decreased $13,876 or 0.7% in 1999 as compared to the same period
for 1998. This was the result of executive and staff salaries with related
expenses in establishing a new management team to develop and market the Vitsab
product.
Management anticipates significant Vitsab sales prior to the end of the current
fiscal year ending April 30, 2000.
12
<PAGE>
COMPARISON OF OPERATIONS FOR SIX MONTHS PERIOD
The following schedule reflects the operations of the three industry segments of
the Company for the six months ended October 31, 1999 and 1998.
<TABLE>
<CAPTION>
Six Months Ended October 31
---------------------------------------------------------------------------
1999 1998 1999 1998 1999 1998
Recorders Recorders Oil Oil Vitsab Vitsab
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenue:
Sales 4,670,146 4,618,388 0 0 2,000 3,000
Costs and Expenses
Cost of sales 2,158,519 2,101,250 4,500 3,286 277,842 203,000
General & administrative 1,137,934 1,119,253 101,419 67,199 80,732 0
Sales expense 707,193 710,113 0 0 0 0
Interest 12,610 13,951 0 9,857 75,940 53,712
Depreciation & depletion 31,364 50,322 0 0 24,561 25,000
---------- ---------- ---------- ---------- ---------- ----------
Income (loss) operations 622,526 623,499 (105,919) (80,342) 457,075 (278,212)
Other income (expense) 32,937 (32,643) 752 238,704 0 0
---------- ---------- ---------- ---------- ---------- ----------
Earnings before income taxes 655,463 590,856 (105,167) 158,362 457,075 (278,712)
Income taxes 3,000 27,134 0 13,766 0 0
---------- ---------- ---------- ---------- ---------- ----------
Net earnings (loss) 652,463 563,722 (105,167) 144,596 (457,075) (278,712)
========== ========== ========== ========== ========== ==========
</TABLE>
* Vitsab operations for 1998 cover only four months.
TEMPERATURE RECORDER OPERATIONS
Sales increased slightly by $51,758 for the 1999 six-month period as compared to
the same 1998 period.
Cost of sales was 46.0% of sales for 1999 as compared to 45% for 1998.
General and administrative expense increased $18,681 as compared to 1998. As a
percent of sales, such expenses were 24.4% in 1999 as compared to 24.2% in 1998.
Sales expenses decreased $2,920 in 1999 as compared to 1998. As a percent of
sales, such expenses were 15.1% for 1999 and 15.4% for 1998. This decrease was
due primarily to fewer trade show and sales promotional expenses.
Interest expense was $1,341 less for 1999 than 1998 due to increased interest
bearing indebtedness of the recorder operations. Other income increased by
$65,580 due to interest earnings on investments in 1999 combined with a loss on
securities in 1998.
13
<PAGE>
COMPARISON OF SIX MONTHS (CONTINUED)
OIL PRODUCTION OPERATIONS
As discussed in the Company's annual report, Form 10-K for the year-ended April
30, 1999, the oil field operations are being operated under a farm-out
arrangement with an experienced operator. The costs to the Company for direct
oil field operations consisted primarily of property taxes for both 1999 and
1998. The Company expects revenue from its oil production operations in the
third and fourth fiscal quarters of the current fiscal year.
The increase in general and administrative expenses of $34,220 in 1999 as
compared to 1998 was due to costs and expenses associated with the Company's CT
Telecom division which is being operated from the Phoenix office and is included
under the oil production operations. The CT Telecom division is developing a
computer software operating system that is expected to be a separate revenue
center for the Company by the fourth fiscal quarter of the fiscal year.
VITSAB OPERATIONS
This business segment was acquired in June 1998 and operations consist mainly of
marketing, production and product development. The Vitsab operations are more
fully disclosed in the Company's Form 10-K for the year-ended April 30, 1999.
Cost of sales expenditures represent costs of operations for both Malmo, Sweden
and Belmont, North Carolina operations. The net loss of the operation for the
three months periods of both 1999 and 1998 were virtually the same. Cost of
sales, which represents production costs, were down. General administrative
expenses represent organizational expenses and salaries incurred by both Belmont
and Malmo operations.
A comparative analysis of the 1999 and 1998 operations would not be meaningful
as the 1998 operations cover only four months while the 1999 operations cover
six months.
Management anticipates significant Vitsab sales prior to the end of the current
fiscal year ending April 30, 2000.
14
<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, 1999, relative to legal proceedings and litigation. No charges
or determinations have occurred on such proceedings during the quarter covered
by this report.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) No exhibits are filed as a part of this report.
(b) There were no Form 8-K's filed by the Company during the quarter ended
October 31, 1999.
YEAR 2000 DISCLOSURE
1. COMPANY'S STATE OF READINESS
Management began addressing the Company's Year 2000 issues over two years ago,
at which time it was determined the accounting software was not Year 2000
compliant. New software was purchased and installed. The Company obtained a
written statement from the software vendor who attested to the Year 2000
readiness of this software. To accommodate this new software the Company updated
its network software with Novell 4.0 to interact with the accounting software in
a manner that will not interfere with its Year 2000 readiness. Management has
also reviewed all electronically based product software programs sourced from
third party vendors and have determined they are all Year 2000 compliant.
The Company has mailed questionnaire forms to all its mission critical
vendor/suppliers of parts for its assembly line. There has been virtually a 100%
return of these informational requests. Concurrently, the Company has been
qualifying alternate vendors/suppliers for potential replacement for any
non-compliant vendors.
2. COST TO ADDRESS THE COMPANY'S YEAR 2000 ISSUES
The Company has expended approximately $15,000 to date in addressing its Year
2000 readiness. By management analysis, the future outlay for addressing any
perceived Year 2000 issues will not exceed $25,000 including assembly line parts
and supplies under its contingency plan.
15
<PAGE>
3. RISKS OF THE COMPANY'S YEAR 2000 ISSUES
Management's analysis of its Year 2000 readiness indicate there are no Year 2000
issues that will have a material effect on its business, results of operations
or financial. This opinion is based upon the Company's accounting readiness is
now complete and all of the vendors of parts and supplies critical to its
operations have acknowledged Year 2000 readiness and compliance.
4. COMPANY'S CONTINGENCY PLANS
If management's analysis of its third party vendor capability had not been
achieved by June 1999, a contingency plan was developed providing for
stockpiling of assembly line parts and continuing new vendor sourcing of Year
2000 compliance vendors.
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
Date January 3, 2000 /s/ James L Cox
-----------------------------------------------
James L Cox, President Chief Executive Officer,
Director and Chairman
Date January 3, 2000 /s/ Robert W. Dupree
-----------------------------------------------
Robert W. Dupree, Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
SECURITIES AND EXCHANGE COMMISSION FORM 10-Q OF COX TECHNOLOGIES, INC. FOR THE
QUARTER ENDED OCTOBER 31, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> APR-30-2000
<PERIOD-START> MAY-01-1999
<PERIOD-END> OCT-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,605,169
<SECURITIES> 0
<RECEIVABLES> 1,749,890
<ALLOWANCES> 29,527
<INVENTORY> 1,348,053
<CURRENT-ASSETS> 4,783,677
<PP&E> 7,428,783
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,536,815
<CURRENT-LIABILITIES> 2,277,999
<BONDS> 0
0
0
<COMMON> 20,306,099
<OTHER-SE> (10,198,260)
<TOTAL-LIABILITY-AND-EQUITY> 13,536,815
<SALES> 2,342,379
<TOTAL-REVENUES> 2,342,379
<CGS> 1,173,300
<TOTAL-COSTS> 2,305,062
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 44,855
<INCOME-PRETAX> 55,773
<INCOME-TAX> 3,000
<INCOME-CONTINUING> 37,317
<DISCONTINUED> 0
<EXTRAORDINARY> 18,456
<CHANGES> 0
<NET-INCOME> 52,773
<EPS-BASIC> 0.002
<EPS-DILUTED> 0.002
</TABLE>
