SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q/A, AMENDMENT NO. 1
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
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 0-12547
Steritek, Inc.
(Exact name of registrant as specified in its charter)
New Jersey 22-2243703
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
121 Moonachie Avenue
Moonachie, NJ 07074
(Address of principal executive offices)
(Zip Code)
(201) 460-0500
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year, if changed
since last report)
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 [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be 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 ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 3,636,285 shares of Common Stock on October 25, 1998.
<PAGE>
INDEX
Page
Part I - Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheets..................... 3
Consolidated Statements of Operations........... 5
Consolidated Statements of Cash Flows........... 6
Notes to Consolidated Financial Statements...... 7
Item 2. Management's Discussion and Analysis............. 8
Item 3. Quantitative and Qualitative Disclosures About
Market Risk...................................... 8
Part II - Other Information....................................12
Signatures.....................................................13
<PAGE>
<TABLE>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements.
STERITEK, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30, June 30,
1998 1998
----------- -------------
(Unaudited) (Derived from
Audited
Financial
Statements)
<S> <C> <C>
ASSETS
Current Assets:
Cash $517,227 $557,565
Trade accounts receivable, less allowance for
doubtful accounts of $7,098 930,025 863,843
Inventories 300,670 352,715
Prepaid expenses and other assets 46,186 93,219
Deferred tax asset 422,300 422,300
---------- ----------
Total current assets 2,216,408 2,289,642
Property, equipment and improvements - at cost 3,950,209 3,868,825
Less: accumulated depreciation and
amortization 2,392,438 2,294,054
---------- ----------
Net property, equipment and improvements 1,557,771 1,574,771
---------- ----------
Other assets
Security deposits 65,412 65,412
---------- ----------
Total $3,839,591 $3,929,825
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
Current liabilities:
Line of Credit $150,000 -
Accounts payable 553,894 $525,613
Accrued expenses 216,448 256,901
Current portion:
Long-term debt 168,322 222,154
Capital lease obligations 7,575 9,939
Income taxes 10,918 32,091
---------- ---------
Total current liabilities 1,107,157 1,046,698
---------- ----------
Long-term debt, excluding current maturities 659,663 659,663
Capital lease obligations, less current maturities 9,439 9,439
---------- ----------
Total liabilities 1,776,259 1,715,800
Shareholders' equity:
Preferred stock, no par value, authorized
2,000,000 shares; none issued
Common stock, no par value, authorized
5,000,000 shares; issued and outstanding
3,636,285 shares 647,094 647,094
Retained earnings 1,416,238 1,566,931
---------- ----------
Total shareholders' equity 2,063,332 2,214,025
---------- ----------
$3,839,591 $3,929,825
========== ==========
</TABLE>
<PAGE>
<TABLE>
STERITEK, INC. AND SUBSIDIARY
(UNAUDITED)
CONSOLIDATED STATEMENTS OF OPERATIONS
<CAPTION>
Three Months Ended
September 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Sales $1,617,634 $2,010,682
Cost of sales 1,118,066 1,197,935
---------- ----------
Gross profit 499,568 812,747
Selling, general and administrative expenses 632,252 621,618
---------- -----------
Operating income (132,684) 191,129
Interest expense (18,009) (16,021)
--------- ----------
Income (loss) before taxes (150,693) 175,108
---------- ----------
Provision for income taxes:
Provision for federal income taxes - deferred 47,804
Provision for state income taxes - deferred 15,760
---------- ----------
Income (loss) from operations 63,564
---------- ----------
Net income (loss) ($150,693) $111,544
=========== ==========
Weighted-average number of common shares
outstanding 3,636,285 4,001,285
=========== ==========
Net income per common share ($0.04) $0.03
=========== ==========
</TABLE>
<PAGE>
<TABLE>
STERITEK, INC. AND SUBSIDIARY
(UNAUDITED)
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Three Months Ended
September 30,
-----------------------
1998 1997
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income ($150,693) $111,544
Adjustments to reconcile net (loss) income
to net cash (used in) provided by operating
activities:
Depreciation and amortization of machinery
and equipment 98,384 81,742
Changes in operating assets and liabilities:
(Increase) decrease in trade accounts
receivable (66,182) (367,158)
Decrease (increase) in inventories 52,045 21,081
Decrease (increase) in prepaid expenses
and other assets 47,033 62,059
Decrease (increase) in state sales
taxes payable (21,173)
Decrease in deferred tax asset 63,564
Decrease (increase) in accounts payable
and accrued expenses (12,172) 239,390
---------- ----------
Net cash (used in) provided by operating activities (52,758) 215,222
---------- ----------
Cash flows from investing activities:
Expenditures for purchase of machinery
and equipment (81,384) (352,979)
--------- ---------
Net cash used in investing activities (81,384) (352,979)
--------- ---------
Cash flows from financing activities:
Principal payments on long-term debt (53,832) ( 35,000)
Principal payments on capital lease obligations (2,364) ( 1,501)
Borrowings on capital lease obligations 18,797
Proceeds from officer's loan 50,000
Proceeds from bank line of credit 150,000
--------- ---------
Net cash provided by (used in) financing activities 93,804 32,296
--------- ---------
Net (decrease) increase in cash (40,338) (105,461)
Cash at beginning of period 557,565 212,127
--------- ---------
Cash at end of period $517,227 $106,666
========= ==========
Supplemental disclosures of cash flow information:
Interest paid $18,009 $16,021
========== ==========
</TABLE>
<PAGE>
STERITEK, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1998
1. Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted
accounting principles for interim financial information and
with the instructions for Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted
accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting only of
normally recurring accruals) considered necessary for a fair
presentation have been included. Operating results for the
three month period ended September 30, 1998 are not necessarily
indicative of the results that may be expected for the year
ending June 30, 1999. For further information, refer to the
consolidated financial statements and footnotes thereto
included in the Company's Form 10-K for the year ended June
30, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations
Three Months Ended September 30, 1998 as Compared to the Three Months
Ended September 30, 1997
Revenues for the three months ended September 30, 1998 decreased to
$1,617,634 from $2,010,682 for the same period in 1997. Revenues for
the three months ended September 30, 1998 included approximately:
(i) $1,376,213 from contract packaging, as compared to $1,862,127 for the
same period in 1997; and (ii) $241,421 from the Physicians Fax Network, as
compared to $148,555 for the same period in 1997. The decrease in
contract packaging revenues is principally attributable to the normal
fluctuation in contract packaging activity from period to period.
The Company has continued to aggressively market its contract packaging
business and its Physicians Fax Network.
The Company's cost of sales represented 69.1% of sales (or $1,118,066)
for the quarter ended September 30, 1998, as compared to 59.6% of sales (or
$1,197,935) for the quarter ended September 30, 1997. The increase in
cost of sales, as a percent of sales, is a result of the change in the
mix of the products packaged by the Company during the respective
periods.
Selling, general and administrative expenses ("SG&A") was 39.1% of
sales (or $632,252) for the quarter ended September 30, 1998, as
compared to 30.9% of sales (or $621,618) for the quarter ended
September 30, 1997. SG&A expenditures remained relatively constant
during the two periods.
The Company earned a profit of $111,544 (or 5.5% of sales) for the
quarter ended September 30, 1997, as compared to an operating loss of
($150,693) for the quarter ended September 30, 1998. The loss is
attributable to the Company's lower first quarter revenues and lower
margins resulting from the change in product mix.
There were no other material changes in the results of
operations in the Company's business.
Health care packaging services are typically provided by the
Company to its customers on an "as-needed" (purchase order-by-
purchase order) basis, and not pursuant to a long-term contract.
Because of the nature of the contract packaging business, the
Company's operating results can vary significantly from period to
period.
Liquidity and Capital Resources
The Company's working capital on June 30, 1998 was $1,242,944, as
compared to working capital of $1,109,251 on September 30, 1998.
The decrease in working capital is principally a result of the
operating activities of the Company during the first quarter.
On March 12, 1998, the Company executed a Note with the Bank of
New York in the amount of $785,000, payable over four years at a
fixed interest rate of 8.09%. The Note was issued to provide working
capital and to refinance a loan on June 17, 1997, in the amount of
$700,000 from the Bank of New York, payable monthly until June 17,
2002, at prime plus 1%. The proceeds of the June 17, 1997 borrowing
were used to retire prior indebtedness of the Company and to provide
working capital for operations. On April 13, 1998, the Company
executed an additional Note with the Bank of New York in the
amount of $146,000, payable over three years at a fixed interest
rate of 8.09%. The Note was issued to provide working capital
to the Company.
On March 12, 1998, the Company obtained a line of credit from
the Bank of New York in the amount of $250,000, at prime plus 1/2%.
The Company has drawn $150,000 on this line of credit as of the
date hereof.
The Company believes that funding for anticipated operations
and capital needs will come from existing working capital and
anticipated future operations.
Year 2000 Disclosure
The "year 2000" problem arises because many computer programs use
only the last two digits to refer to a year. These programs do not
properly distinguish a year that begins with "20" from a year that begins
with "19". If not corrected, these programs may fail or create
erroneous results. The extent of the potential impact from this problem is
not yet known. The Company has evaluated internally its software systems
and machinery and equipment for "year 2000" readiness. The Company believes
that such systems, machinery and equipment will not be materially
adversely affected by year 2000 issues. The Company has undertaken to
survey its vendors to ensure that they are also year 2000 compliant. The
Company has not yet completed this survey. The costs incurred by the
Company on year 2000 issues has not been material. Because of the nature
of the Company's business, the Company does not believe that it faces
significant risks as a result of the year 2000 problem.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The Company has no market risk sensitive instruments. The
amounts included in the balance sheets for cash and cash
equivalents, accounts receivable, prepaid expenses and other
assets, and accounts payable and accrued expenses approximated fair
value due to the short term nature of these instruments. The carrying
amount of long term debt and capital lease obligations approximate
fair value based on borrowing rates currently available to the
Company.
<PAGE>
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities and Use of Proceeds.
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
27. Financial Data Schedule
<PAGE>
STERITEK, INC. AND SUBSIDIARY
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.
Steritek, Inc.
By/s/ James K. Wozniak
James K. Wozniak, Vice President and
Treasurer (principal
financial and accounting officer)
Date: February 18, 1999
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM STERITEK,
INC. AND SUBSIDIARY (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
INCLUDED IN ITS FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 517,227
<SECURITIES> 0
<RECEIVABLES> 930,025
<ALLOWANCES> 7,098
<INVENTORY> 300,670
<CURRENT-ASSETS> 2,216,408
<PP&E> 3,950,209
<DEPRECIATION> 2,392,438
<TOTAL-ASSETS> 3,839,591
<CURRENT-LIABILITIES> 1,107,157
<BONDS> 669,102
0
0
<COMMON> 647,094
<OTHER-SE> 1,416,238
<TOTAL-LIABILITY-AND-EQUITY> 3,839,591
<SALES> 1,617,634
<TOTAL-REVENUES> 1,617,634
<CGS> 1,118,066
<TOTAL-COSTS> 1,118,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 18,009
<INCOME-PRETAX> (150,693)
<INCOME-TAX> 0
<INCOME-CONTINUING> (150,693)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (150,693)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
