<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the period ended June 30, 1997.
Commission file number 0-11284
Z-Axis Corporation
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(Exact name of registrant as specified in its charter)
Colorado 84-0910490
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(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
7395 E. Orchard Road, Suite 100
Greenwood Village, Colorado 80111
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(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (303) 713-0200
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 [ ]
The number of common shares outstanding as of June 30, 1997: 3,765,000.
Page 1 of 6
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CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Condensed Balance Sheets, March 31 and June 30, 1997. 3
Condensed Statements of Operations, Three month periods
ended June 30, 1997 and 1996. 4
Condensed Statements of Cash Flows, Three month periods
ended June 30, 1997 and 1996. 4
Notes to Condensed Financial Statements. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION
Item 1. Legal proceedings 6
Item 2. Changes in securities 6
Item 3. Defaults upon senior securities 6
Item 4 Submission of matters to a vote of security holders 6
Item 5. Other information 6
Item 6. Exhibits and reports on Form 8-K 6
SIGNATURES 6
Page 2 of 6
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PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONDENSED BALANCE SHEETS
June 30, 1997 March 31,1997
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(Unaudited)
ASSETS
Current assets:
Cash (1) $ 19,536 $ 24,692
Trade accounts receivable 636,684 862,104
Other current assets 21,587 28,018
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Total current assets 677,807 914,814
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Property and equipment, at cost 1,767,827 1,720,575
Accumulated depreciation (1,434,450) (1,395,578)
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Net property and equipment 333,377 324,997
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Deferred income taxes 163,430 166,000
Capitalized software costs, net 297,680 312,611
Other assets 17,305 17,486
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TOTAL ASSETS $ 1,489,599 $ 1,735,908
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Line of Credit $ 10,000 $ 200,000
Accounts payable 94,368 161,049
Accrued expenses 168,573 163,217
Deferred revenue 23,500 22,500
Current portion of long-term obligations 38,700 37,842
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Total current liabilities 335,141 584,608
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Long-term obligations 83,071 85,808
Stockholders' equity:
Common stock 3,765 3,765
Additional paid in capital 1,439,231 1,439,231
Retained earnings (deficit) (371,609) (377,504)
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Total stockholders' equity 1,071,387 1,065,492
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,489,599 $ 1,735,908
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See notes to condensed financial statements.
Page 3 of 6
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CONDENSED STATEMENTS OF OPERATIONS
Three months ended June 30,
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1997 1996
-----------------------
(Unaudited)
Net sales $ 760,595 $ 388,458
Operating expenses:
Production 373,410 245,263
General and administrative 153,828 166,191
Marketing 175,897 157,701
Depreciation 40,027 42,629
----------------------
Total operating expenses 743,162 611,784
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Income (loss) from operations 17,433 (223,326)
Other income (expense) (8,538) 16,822
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Income (loss) before income taxes 8,895 (206,504)
Income tax benefit (expense) (3,000) 68,146
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NET INCOME (LOSS) $ 5,895 $(138,358)
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INCOME (LOSS) PER COMMON SHARE OF STOCK:
NET INCOME (LOSS) PER COMMON SHARE OF STOCK $ 0.00 $ (0.04)
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WEIGHTED AVERAGE NUMBER OF COMMON SHARES
OUTSTANDING DURING THE PERIOD 3,765,000 3,765,000
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CONDENSED STATEMENTS OF CASH FLOWS
Three months ended June 30,
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1996 1996
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(Unaudited)
CASH FLOWS FROM OPERATIONS:
Net cash provided by operations $ 234,361 $ 131,925
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CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (47,640) (3,217)
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Net cash (used in) investing activities (47,640) (3,217)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Debt and capital lease payments (191,877) (15,154)
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Net cash (used in) financing activities (191,877) (15,154)
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Net (decrease) increase in cash $ (5,156) $ 113,554
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Page 4 of 6
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NOTE 1.
The accompanying Condensed Balance Sheets at March 31 and June 30, 1997 and
Condensed Statements of Operations and Cash Flows for the three month periods
ended June 30, 1997 and 1996 should be read in conjunction with the Company's
financial statements and notes for the years ended March 31, 1997, 1996 and
1995. These condensed financial statements contain all adjustments that
management considers necessary for fair presentation. Results for interim
periods are not necessarily indicative of results for a full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the Company's
financial statements and notes for the fiscal years ended March 31, 1997,
1996 and 1995. Except where otherwise noted, references to periods are to
periods of fiscal years ended March 31 of the year stated.
FINANCIAL CONDITION
At June 30, 1997, the Company's working capital position was $342,666, an
increase of $12,460 from the position at March 31, 1997. The year-to-date
increase is attributed to positive cash flows from operations. Cash flow
from operations was $234,361 during the current quarter. The majority of the
Company's cash flow from operations during the three months ended June 30,
1997 was used to paydown the line of credit and other outstanding debt
obligations. It is management's opinion that through cash management and
other measures, working capital for the foreseeable future will be sufficient
to meet operating requirements.
Capital additions during the first quarter of 1997, primarily for production
and research and development equipment, were $50,140, financed primarily
through capital leases.
Debt and capital lease payments were $191,877, net of borrowings, during the
three months ended June 30, 1997.
RESULTS OF OPERATIONS
Income from operations in the amount of $17,433 was recorded during the first
quarter of fiscal 1998, compared to a loss from operations in the amount of
$(223,326) during the corresponding period of the preceding fiscal year. The
increase in operating income from the first quarter of fiscal 1998, as
compared to the first quarter of fiscal 1997 was due to an increase in
revenues of 96% from $338,458 to $760,595. Corresponding operating expenses
increased by 22% for the first quarter of 1998, as compared to the first
quarter of 1997. Production expenses were higher than those of the
corresponding quarter of the preceding year primarily due to the increase in
labor needed to produce higher revenue levels. Included in the production
expense for the first quarter of 1997 is $58,030 of research and development
costs. Research and development costs are incurred as the Company continues
to refine and enhance the VuPoint system. Revenues from the rental of the
VuPoint system and the corresponding service revenues earned during the first
quarter of fiscal 1998 were $49,144 as compared to $0 during the
corresponding period of the preceding fiscal year. Management anticipates
that sales volumes and operating results are expected to remain at current
levels during the second quarter. However, management anticipates that sales
volumes and operating results will increase during the third quarter as a
result of increased client trial activity.
The Company had a net deferred tax asset of $163,430 at June 30, 1997 as
compared to $166,000 at March 31, 1997. The decrease in the deferred tax
asset was the direct result of the corresponding increase in the Company's
income before taxes for the first quarter of fiscal 1998. The company has
established a valuation allowance of $65,000 at June 30, 1997 and March 31,
1997 against the deferred tax asset as management believes that it is more
likely than not, that the deferred tax asset related to the tax credits and a
portion of the loss carryforwards may not be realized before all carryforward
expiration dates.
Page 5 of 6
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ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) No exhibits.
(b) No reports on Form 8-K have been filed during the quarter ended
June 30, 1996.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934 the registrant has duly caused this report of be signed
on its behalf by the undersigned, thereunto duly authorized.
Z-AXIS CORPORATION
By: /s/ Alan Treibitz
-------------------
Alan Treibitz
President
Date: August 14, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
/s/ Steven H. Cohen Director, Chief Executive Officer August 14, 1996
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/s/ Alan Treibitz Director, President, Treasurer,
- --------------------- Chief Financial Officer, Principal
Alan Treibitz Accounting Officer August 14, 1996
Page 6 of 6
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