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 June 30, 1997
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
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(Address of principal executive offices) (Zip Code)
(303) 770-9840
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(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 June 30, 1997)
-----------------------------
Common Stock, $0.01 par value
10,854,398
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 of Plan of Operation
Capital and Source of Liquidity:
For the nine months ended June 30, 1997, the Corporation experienced a net loss
from operations of $140,857 as compared to loss of $42,860 for the same period
in 1996. Depreciation and amortization expenses remained relatively unchanged
for this period. Accounts receivable decreased from $86,775 at September 30,
1996 to $77,683 at June 30, 1997. Inventories increased from $65,305 at
September 30, 1996 to $67,022 at June 30, 1997. An employee receivable, which
reflects draws against commissions, decreased from $1,270 at September 30, 1996
to zero at June 30, 1997. Software acquisition and development costs, net of
amortization, decreased from $174,749 at September 30, 1996 to $169,870 at June
30, 1997. Prepaid expenses decreased from $6,670 at September 30, 1996 to zero
at June 30, 1997. Other assets remained relatively the same for this period.
Accounts payable and accrued liabilities decreased from $207,474 at December 31,
1996 to $199,434 at June 30, 1997. The notes payable totaling $113,678 are to
shareholders and are classified as current since all are due within the next 12
months. A substantial portion of the notes payable are for loans made to the
Company by its President and CEO. Ending cash decreased from $26,732 at
September 30, 1996 to $22,157 at June 30, 1997.
Results of Operations:
Total revenues decreased $198,611 or 61% and $302,276 or 42% for the three and
nine months ended June 30, 1997 as compared with the same period in the prior
year. Service and consulting revenue decreased from $141,860 for the three
months and from $238,180 for the nine months ended June 30, 1997 to $70,874 for
the three months and $341,943 for the nine months ended June 30, 1996. As a
result of continued declines in sales, management terminated the use of a third
party commissioned sales organization as their performance proved to be
unsatisfactory. Management is recruiting senior sales management experienced in
the sales and marketing of accounting software systems.
Cost of sales, service and consulting decreased to 12% from 17% of sales and
service & consulting revenue for the three months ended June 30, 1997 and
decreased to 10% from 13% for the nine months ended June 30, 1997. Marketing
expenses increased to 53% of total revenue from 28% of total revenue for the
three months ended June 30 of each year and to 50% from 40% for the nine months
ended of each year. Management has initiated new advertising efforts and an
overhaul of the Company's Internet website to attempt to increase new sales.
General and administrative expenses increased to 63% from 32% of total revenues
for the three months ended June 30 of each year and to 61% from 40% for the nine
months ended June 30 of each year. This increase is due to the decline in sales.
Earnings decreased to a loss of $43,248 for the three month period ended June
30, 1997 as compared to net income of $44,613 and to a loss of $137,077 for the
nine months ended June 30, 1997 as compared to a loss of $43,696 for the
comparable prior year periods. The decline in earnings continues to be caused by
a decline in sales of software and related services. Management is continuing to
focus efforts on increasing sales while controlling expenses.
3
<PAGE>
The Company's new MTX Enterprise Accounting system was completed May 27, 1997,
at which time Microsoft advised the company that their new product was approved
for Microsoft BackOffice logo certification. The new product uses Microsoft
Access 97 and Microsoft SQL Server 6.5, and is fully integrated with Microsoft
Office 97. Management believes this new product will generate new sales.
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
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits - None.
(27) Financial Data Schedule
(b) Reports on Form 8-K
Registrant filed a Form 8-K on April 15, 1997 appointing a new Board of
Directors.
4
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
(Unaudited)
ASSETS
June 30,
1997
--------
<S> <C>
Current assets:
Cash .............................................................. $ 22,157
Accounts receivable - trade, less allowance
for doubtful accounts of $1,104 at 6/30/97 ..................... 77,683
Employee receivable ............................................... --
Current portion of note receivable ................................ 265
Inventory ......................................................... 67,022
Prepaid expenses .................................................. --
--------
Total current assets ..................................... 167,127
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 ..................................... 199,598
--------
Net property and equipment ............................... 12,322
Other assets:
Software acquisition and development costs, net
of amortization of $651,995 at 6/30/97 ......................... 169,870
Refundable deposits ............................................... 4,268
--------
Total other assets ....................................... 174,138
--------
$ 353,587
========
See accompanying notes.
5
<PAGE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED BALANCE SHEET
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30,
1997
--------
<S> <C>
Current liabilities:
Notes payable shareholders ........................................ $ 113,678
Accounts payable .................................................. 161,902
Accrued liabilities ............................................... 37,532
Deferred revenue .................................................. 76,989
---------
Total current liabilities ................................ 390,101
Stockholders' equity:
Common stock, $.01 par value; 40,000,000 shares
authorized, 10,854,398 shares issued and
outstanding .................................................... 117,744
Stock subscriptions ............................................... --
Additional paid-in capital ........................................ 2,225,459
Accumulated deficit ............................................... (2,357,224)
---------
(14,021)
Less 68,160 common shares in treasury, at cost .................... 22,493
---------
Total stockholders' equity ............................... (36,514)
---------
$ 353,587
=========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
CONDENSED STATEMENT OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
------------------------ -------------------------
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Revenues:
Sales ............................................. $ 50,953 $ 179,298 $ 177,636 $ 376,122
Service and consulting ............................ 70,874 141,860 238,180 341,943
Other ............................................. 1,083 363 1,090 1,117
--------- --------- --------- ---------
122,910 321,521 416,906 719,182
Costs and expenses:
Costs of sales, service
and consulting .................................. 15,280 54,797 43,670 100,307
Marketing ......................................... 66,006 90,827 212,437 293,572
General and administrative ........................ 78,194 105,681 254,865 291,380
Depreciation and amortization ..................... 11,045 13,490 32,088 37,070
Research and development .......................... 653 11,980 14,703 39,713
--------- --------- --------- ---------
171,178 276,775 557,763 762,042
--------- --------- --------- ---------
Income (loss) from operations .............................. (48,268) 44,746 (140,857) (42,860)
Other income (expense):
Rental income ..................................... 8,256 -- 10,639 --
Interest income ................................... 16 92 20 504
Interest expense .................................. (3,252) (225) (6,879) (1,340)
Utilization of operating loss carry
forward ........................................... -- 8,900 -- 8,900
--------- --------- --------- ---------
5,020 8,767 3,780 8,064
Net income (loss) before income taxes ...................... (43,248) 53,513 (137,077) (34,796)
Provision for income taxes ................................. -- (8,900) -- (8,900)
--------- --------- --------- ---------
Net income (loss) .......................................... $ (43,248) $ 44,613 $(137,077) $ (43,696)
========= ========= ========= =========
Earnings per share: ............................... $ -- $ -- $ -- $ --
========= ========= ========= ---------
</TABLE>
See accompanying notes.
7
<PAGE>
<TABLE>
<CAPTION>
MTX INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
NINE MONTHS ENDED JUNE 30, 1997 AND 1996
1997 1996
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) before extraordinary item ................................. $(137,077) $ (43,696)
Adjustments to reconcile net income (loss)
to net cash provided by operating activities:
Depreciation and amortization ......................................... 32,088 37,071
(Increase) decrease in accounts receivable ............................ 10,362 (41,146)
(Increase) decrease in inventory ...................................... (1,717) 2,182
(Increase) decrease in note receivable ................................ 50 --
(Increase) decrease in prepaid expenses ............................... 6,670 (955)
(Increase) decrease in refundable deposits ............................ 50 --
Increase (decrease) in accounts payable ............................... 38,971 62,783
Increase (decrease) in accrued liabilities ............................ (47,011) 22,913
Increase (decrease) in deferred revenue ............................... 4,229 8,316
--------- --------
Increase (decrease) in guarantee liability ............................ -- (2,667)
--------- --------
Total adjustments .................................................. 43,692 88,497
Net cash (used) provided by operating activities ............................ (93,385) 44,801
Cash flows from investing activities:
Purchases of property and equipment ......................................... -- (460)
Purchase and development of computer software ............................... (24,868) (76,177)
--------- --------
Net cash used in investing activities ....................................... (24,868) (76,637)
Cash flows from financing activities:
Borrowings from shareholder ................................................. 113,678 --
Common stock subscribed ..................................................... -- 1,500
Repayment of officer loan ................................................... -- (4,399)
--------- --------
Net cash provided by financing activities ................................... 113,678 (2,899)
--------- --------
Net increase (decrease) in cash ...................................................... (4,575) (34,735)
Cash at beginning of period .......................................................... 26,732 60,492
--------- --------
Cash at end of period ................................................................ $ 22,157 $ 25,757
========= ========
</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 March 30, 1997 and the results of
operations and statement of cash flows for the three months and nine months
ended June 30, 1997 and 1996.
2. Prior period costs and expenses have been restated to properly reflect the
amounts and to be consistent with the audited year end financial statement. The
restatement does not effect loss from operations or the net loss.
3. Earnings per share have been computed using the weighted average number of
shares outstanding during each period.
9
<PAGE>
SIGNATURES
MTX International, Inc.
-----------------------
Registrant
Date 8/29/97 By: /s/ A. W. Blair
-------------------------------------
President & Chief
Executive Officer
Date 8/29/97 By: /s/ Gary W. Williams
-------------------------------------
Gary W. Williams
Secretary, Controller
Date 8/29/97 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 JUNE 30, 1997.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 22,157
<SECURITIES> 0
<RECEIVABLES> 79,052
<ALLOWANCES> 1,104
<INVENTORY> 67,022
<CURRENT-ASSETS> 167,127
<PP&E> 211,920
<DEPRECIATION> 199,598
<TOTAL-ASSETS> 353,587
<CURRENT-LIABILITIES> 390,101
<BONDS> 0
0
0
<COMMON> 117,744
<OTHER-SE> (131,765)
<TOTAL-LIABILITY-AND-EQUITY> 353,587
<SALES> 177,636
<TOTAL-REVENUES> 416,906
<CGS> 43,670
<TOTAL-COSTS> 557,763
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,412
<INTEREST-EXPENSE> 6,879
<INCOME-PRETAX> (137,077)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (137,077)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
