FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-10944
MTX INTERNATIONAL, INC.
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(Exact name of small business issuer as specified in its charter)
Colorado 84-0729290
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
7901 E. Belleview Ave., Suite 50, Englewood, Colorado 80111
----------------------------------------------------- --------
(Address of principal executive offices) (Zip Code)
(303) 770-9840
-------------------------------------------------
(Registrants telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for at least 90
days.
Yes [X] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Shares Outstanding
Class of Securities
(as of December 31, 1996)
-----------------------------
Common Stock, $0.01 par value
10,774,398
Transitional Small Business Format (Check One)
Yes [ ] No [X]
<PAGE>
FORM 10-QSB
MTX INTERNATIONAL, INC.
INDEX
Page
Management's Discussion and Analysis or Plan of Operation 3
Legal Proceedings 4
Defaults Upon Senior Securities 4
Submission of Matters to a Vote of Security Holders 4
Other Information 4
Exhibits and Reports on Form 8-K 4
Financial Statements
Condensed Balance Sheet (Unaudited) - December 31, 1996 5
Condensed Statement of Operations (Unaudited) Three Months Year
Ended December 31, 1996 and 1995 7
Condensed Statement of Changes in Cash Flows (Unaudited) for the
Three Months Ended December 31, 1996 and 1995 8
Notes to Condensed Financial Statements 9
Signatures 10
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
The information required by Item 310(b) of Regulation S-B is included hereto
beginning on page 5.
Item 2. Management Discussion and Analysis or Plan of Operation
Capital and Source of Liquidity:
For the three months ended December 31, 1996, the Company experienced a net loss
from operating activities of $55,310 as compared to net loss of $27,428 for the
same period in 1995. Depreciation and amortization expenses remained relatively
unchanged for this period. Accounts receivable increased from $86,775 at
September 30, 1996 to $91,438 at December 31, 1996. Inventories increased from
$65,305 at September 30, 1996 to $65,396 at December 31, 1996. An employee
receivable, which reflects draws against commissions, decreased from $1,270 at
September 30, 1996 to $2 at December 31, 1996. Software acquisition and
development costs, net of amortization, decreased from $174,749 at September 30,
1996 to $172,450 at December 31, 1996. Prepaid expenses decreased from $6,670 at
September 30, 1996 to zero at December 31, 1996. Other assets remained
relatively the same for this period. For the period ended December 31, 1996,
accounts payable and accrued liabilities increased from $176,939 at September
30, 1996 to $207,474 at December 31, 1996. G. J. Novreske, CEO of the Company,
resigned as an employee and officer of the Company effective December 31, 1996
for personal reasons. As an agreed settlement with the company for past due
compensation, Mr. Novreske loaned the Company $24,000 in December 1996. A. W.
Blair, President and COO of the Company, as an agreed settlement with the
company for past due compensation and other business expenses, loaned the
Company $41,500 during December 1996. Other liabilities remained relatively the
same during the period. Ending cash decreased from $26,732 at September 30, 1996
to $9,436 at December 31, 1996.
Results of Operations:
Total revenues decreased $55,842 or 27% for the three months ended December
31,1996 as compared with the same period in the prior year. This decrease is the
result of a decline in sales of the Company's software products. Cost of sales,
service and consulting increased to 27% of sales for the three months ended
December 31, 1996 as compared to 22% of sales for the same prior year period.
Service and consulting revenue did not change significantly for the three months
ended December 31, 1996 compared with the same period in the prior year.
The total of marketing, general and administrative and all other expenses
decreased $15,044 or 7% for the three months ended December 31, 1996 as compared
to the same prior year period. General and administrative expenses increased
$13,040 or 15% for the three months ended December 31, 1996 as compared to the
same prior year period. Management is seeking ways to increase sales and
decrease expenses. The Company has retained the services of a independent
non-affiliated third party direct sales and marketing organization to attempt to
increase the sales of the Company's software and services.
Earnings decreased to a loss of $55,310 for the three month period ended
December 31, 1996 as compared to a loss of $27,428 for the same prior year
period. In management's opinion, the decreased earnings are primarily a result
of decreased revenue resulting from decreased software sales.
3
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
No legal proceedings are required to be disclosed hereunder.
Item 2. Changes In Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
Not Applicable.
Item 6. Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
(27) Financial Data Schedule
(b) Reports on Form 8-K
Registrant filed no reports on Form 8-K during the quarter for which this
report is filed.
4
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
(Unaudited)
ASSETS
December 31,
1996
-----------
<S> <C>
Current assets:
Cash ................................................. $ 9,436
Accounts receivable - trade, less allowance
for doubtful accounts of $0 ...................... 91,438
Employee receivable .................................. 2
Current portion of note receivable ................... 315
Inventory ............................................ 65,396
Prepaid expenses ..................................... --
----------
Total current assets ........................ 166,587
Property and equipment, at cost:
Computer equipment ................................... 64,359
Furniture and equipment .............................. 140,829
Leasehold improvements ............................... 676
Rental Equipment ..................................... 6,056
----------
211,920
Less accumulated depreciation ........................ 198,038
----------
Net property and equipment .................. 13,882
Other assets:
Software acquisition and development costs, net
of amortization of $622,245 ....................... 172,450
Refundable deposits .................................. 3,918
----------
Total other assets .......................... 176,368
----------
$ 356,837
==========
5
See accompanying notes.
<PAGE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31,
1996
-----------
<S> <C>
Current liabilities:
Notes payable shareholder - current portion .......... $ 50,485
Accounts payable ..................................... 138,976
Accrued liabilities .................................. 37,963
Deferred revenue ..................................... 71,280
----------
Total current liabilities ................... 298,704
Long-term debt - shareholder .................................. 12,880
Stockholders' equity:
Common stock, $.01 par value; 40,000,000 shares
authorized, 10,774,398 shares issued and
outstanding ....................................... 107,744
Stock subscriptions .................................. 10,000
Additional paid-in capital ........................... 2,225,459
Accumulated deficit .................................. (2,275,457)
----------
67,746
Less 68,160 common shares in treasury, at cost ....... 22,493
----------
Total stockholders' equity .................. 45,253
----------
$ 356,837
==========
</TABLE>
See accompanying notes.
6
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended
December 31,
------------------
1996 1995
---- ----
<S> <C> <C>
Revenues:
Sales ............................................... $ 55,609 $ 110,994
Service and consulting .............................. 93,879 93,698
Other ............................................... 7 645
-------- --------
149,495 205,337
Costs and expenses:
Costs of sales, service and consulting .............. 15,118 25,514
Marketing ........................................... 73,686 98,905
General and administrative .......................... 99,790 86,750
Depreciation and amortization ....................... 10,345 10,956
Research and development ............................ 8,248 10,502
-------- --------
207,187 232,627
-------- --------
(Loss) from operations ....................................... (57,692) (27,290)
Other income (expense):
Rental income ....................................... 2,383 --
Interest income ..................................... 8 275
Interest expense .................................... (9) (413)
Utilization of operating loss carry forward.......... -- --
-------- --------
2,382 (138)
Net income before income taxes ............................... (55,310) (27,428)
Provision for income taxes ...................................
-------- --------
Net income ................................................... $ (55,310) $ (27,428)
======== ========
Earnings per share: ................................. $ -- $ --
======== ========
</TABLE>
See accompanying notes.
7
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) before extraordinary item ................................. $(55,310) $(27,428)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization ......................................... 10,345 10,956
(Increase) decrease in accounts receivable ............................ (3,395) 16,537
(Increase) decrease in inventory ...................................... (91) 463
(Increase) decrease in prepaid expenses ............................... 6,670 2,434
(Increase) decrease in refundable deposits ............................ 400 --
Increase (decrease) in accounts payable ............................... 16,045 11,292
Increase (decrease) in accrued liabilities ............................ (46,580) 10,792
Increase (decrease) in deferred revenue ............................... (1,480) (57)
Increase (decrease) in guarantee liability ............................ -- (2,666)
-------- --------
Total adjustments .................................................. (18,086) 49,751
-------- --------
Net cash used by operating activities ....................................... (73,396) 22,323
Cash flows from investing activities:
Purchase of property and equipment .......................................... -- (459)
Purchase and development of computer software ............................... (7,265) (37,416)
-------- --------
Net cash used in investing activities ....................................... (7,265) (37,875)
Cash flows from financing activities:
Borrowings of short-term debt ............................................... 50,485 --
Borrowings of long-term debt ................................................ 12,880 --
Repayment of officer loan ................................................... -- (4,399)
-------- --------
Net cash provided (used) by financing activities ............................ 63,365 (4,399)
-------- --------
Net increase (decrease) in cash ...................................................... (17,296) (19,951)
Cash at beginning of period .......................................................... 26,732 60,491
-------- --------
Cash at end of period ................................................................ $ 9,436 $ 40,540
======== ========
</TABLE>
See accompanying notes.
8
<PAGE>
MTX INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. In the opinion of management, the accompanying unaudited condensed financial
statements contain all adjustments necessary to present fairly MTX
International, Inc.'s financial position as of December 31 1996 and the results
of operations and statement of cash flows for the three months ended December
31, 1996 and 1995.
2. Prior year costs of sales, service and consulting; and marketing expense,
have been restated to be consistent with expense classifications used for prior
year audited financial statements. This restatement does not affect gain or loss
from operations, net income or loss, or earnings per share.
3. Earnings per share have been computed using the weighted average number of
shares outstanding during each period, (10,774,398 shares at December 31, 1996
and 10,674,398 shares at December 31, 1995).
9
<PAGE>
SIGNATURES
MTX International, Inc.
-----------------------
Registrant
Date 8/27/97 By: /s/ A. W. Blair
-------------------------------------
President & Chief
Executive Officer
Date 8/27/97 By: /s/ Gary W. Williams
-------------------------------------
Gary W. Williams
Secretary, Controller
Date 8/27/97 By: /s/ Kevin J. Cox
-------------------------------------
Kevin J. Cox
Director
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MTX
INTERNATIONAL, INC.'S FINANCIAL STATEMENTS AT DECEMBER 31, 1996.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> DEC-31-1996
<CASH> 9,436
<SECURITIES> 0
<RECEIVABLES> 91,755
<ALLOWANCES> 0
<INVENTORY> 65,396
<CURRENT-ASSETS> 166,587
<PP&E> 211,920
<DEPRECIATION> 198,038
<TOTAL-ASSETS> 356,837
<CURRENT-LIABILITIES> 298,704
<BONDS> 0
0
0
<COMMON> 107,744
<OTHER-SE> (39,998)
<TOTAL-LIABILITY-AND-EQUITY> 356,837
<SALES> 55,609
<TOTAL-REVENUES> 149,495
<CGS> 15,118
<TOTAL-COSTS> 207,187
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,338
<INTEREST-EXPENSE> 9
<INCOME-PRETAX> (55,310)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,310)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
