<PAGE> 1
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1999
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 0-13328
SENTEX SENSING TECHNOLOGY, INC.
--------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-2333899
- --------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1801 East Ninth Street, Cleveland, Ohio 44114
- ----------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216)687-9133
(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 of 15(d) of the Securities and 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 [ ]
<PAGE> 2
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Securities and Exchange Act of 1934
after the distribution of securities under a plan confirmed by a court.
Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 78,919,762.
2
<PAGE> 3
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1998 AND MAY 31, 1999
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
1998 1999
(AUDITED) (UNAUDITED)
---------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 111,133 $ 35,708
Accounts receivable 699,409 690,145
Inventories 1,118,990 1,190,702
Other Current Assets 62,279 110,536
---------- ----------
TOTAL CURRENT ASSETS 1,991,811 2,027,091
EQUIPMENT AND IMPROVEMENTS - [NET
OF ACCUMULATED DEPRECIATION AND
AMORTIZATION] 175,500 145,273
OTHER ASSETS
Goodwill and other tangibles 376,784 367,923
Consulting contracts and other assets 404,184 400,585
---------- ----------
TOTAL ASSETS $2,948,279 $2,940,872
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
3
<PAGE> 4
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
NOVEMBER 30, 1998 AND MAY 31, 1999
<TABLE>
<CAPTION>
NOVEMBER 30, MAY 31,
1998 1999
(AUDITED) (UNAUDITED)
----------- -----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank loans $ 1,880,400 $ 2,000,000
Accounts payable 604,297 825,946
Accrued expenses and other current liabilities 779,524 539,924
Due to related party 551,000 889,000
----------- -----------
TOTAL CURRENT LIABILITIES 3,815,221 4,254,870
----------- -----------
LONG-TERM DEBT
Convertible subordinated notes payable 10,810 11,584
Other Accrued Expenses 288,899 267,349
----------- -----------
TOTAL LONG-TERM DEBT 299,709 278,933
----------- -----------
STOCKHOLDERS' EQUITY:
Common stock, no par value, authorized
200,000,000 shares, issued 87,865,762
and 87,865,762 shares, outstanding
78,919,762 and 78,919,762 shares,
respectively 2,880,079 2,880,079
Accumulated deficit (3,759,211) (4,187,254)
Treasury shares at cost, 8,946,000 shares (313,218) (313,218)
Cumulative translation adjustment 25,699 27,462
----------- -----------
TOTAL STOCKHOLDERS' EQUITY (1,166,651) (1,592,931)
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,948,279 $ 2,940,872
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE> 5
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS [UNAUDITED]
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
MAY 31, MAY 31, MAY 31, MAY 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net sales $ 1,174,828 $ 1,624,552 $ 2,406,429 $ 2,974,824
Cost of sales 601,965 812,118 1,211,224 1,520,072
------------ ------------ ------------ ------------
Gross profit 572,863 812,434 1,195,205 1,454,752
Selling, General and Admin 656,262 1,122,609 1,380,408 2,146,922
Research and Development 51,213 79,044 90,389 151,548
------------ ------------ ------------ ------------
Operating loss (134,612) (389,219) (275,592) (843,718)
------------ ------------ ------------ ------------
Other income (expense)
Interest income 0 20,366 0 35,458
Other income(expense) (1,427) 6,081 11,156 8,398
Interest expense (52,605) (68,690) (103,686) (121,118)
Foreign currency transaction loss (47,445) 3,262 (59,921) (4,523)
------------ ------------ ------------ ------------
Loss before income tax expense (236,089) (428,200) (428,043) (925,503)
Provision for income taxes 0 0 0 0
------------ ------------ ------------ ------------
Net loss $ (236,089) $ (428,200) $ (428,043) $ (925,503)
============ ============ ============ ============
Net loss per share $ 0 $ 0 $ (0.01) $ (0.01)
============ ============ ============ ============
Weighted Average Number of
Shares Outstanding 78,919,762 78,919,762 78,919,762 78,919,762
============ ============ ============ ============
</TABLE>
See Notes to Consolidated Financial Statements.
5
<PAGE> 6
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS [UNAUDITED]
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, MAY 31,
1999 1998
----------- -----------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss $ (428,043) $ (925,503)
Adjustments to reconcile net [loss] income to net cash
Provided by [used in] operating activities:
Depreciation and amortization 47,467 32,807
Change in assets and liabilities:
[Increase] decrease in:
Accounts receivable 9,264 171,633
Inventories (71,712) 39,538
Other current assets (48,318) (38,473)
Increase [decrease] in:
Accounts payable 221,649 177,560
Accrued expenses and other current liabilities (260,376) (158,798)
Currency translation adjustment 1,763 1,824
----------- -----------
TOTAL ADJUSTMENTS (100,263) 226,091
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (528,306) (699,412)
----------- -----------
INVESTING ACTIVITIES:
Acquisition of equipment and improvements (4,719) (5,601)
Payment to prior shareholder 0 (33,333)
----------- -----------
NET CASH USED BY INVESTING ACTIVITIES (4,719) (38,934)
----------- -----------
FINANCING ACTIVITIES:
Net proceeds on note payable - bank 119,600 95,400
Net proceeds on note payable - related party 338,000 551,000
Net decrease in factoring of accounts receivable 0 0
----------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 457,600 646,400
----------- -----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (75,425) (91,946)
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIODS 111,133 1,331,981
----------- -----------
CASH AND CASH EQUIVALENTS - END OF PERIODS $ 35,708 $ 1,240,035
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements.
6
<PAGE> 7
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [UNAUDITED]
[1] In the opinion of management, the unaudited financial statements contain all
adjustments [consisting of only normal recurring accruals and repayments]
necessary to present fairly the financial position at May 31, 1999 and the
results of operations and cash flows for the three months ended May 31, 1999 and
May 31, 1998.
These interim statements should be read in conjunction with the audited
financial statements and notes thereto included in the Company's Annual Report
on Form 10-KSB for the fiscal year ended November 30, 1998 (Commission File No.
2-13328).
[2] The results of operations for the three months ended May 31, 1999 and May
31, 1998 are not necessarily indicative of the results to be expected for the
full year.
[3] INVENTORY
Inventories consist of:
<TABLE>
<CAPTION>
MAY 31,
1999
----------
<S> <C>
Raw Materials $ 398,673
Work-in-Process 182,639
Finished Goods 609,390
----------
Total $1,190,702
==========
</TABLE>
[4] EARNINGS PER SHARE
Earnings [loss] per share are based on the weighted average number of common
shares outstanding for the periods presented, after adjustment for the shares
issued in the stock acquisition.
[5] PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of Sentex Sensing
Technology, Inc. and its wholly-owned subsidiaries [the "Company"]. All material
inter-company accounts and transactions have been eliminated in consolidation.
[6] STOCKHOLDERS' EQUITY
On May 15, 1998, Clarion Capital Corporation ("Clarion") converted two
convertible notes in the aggregate principal amount of $609,558 into an
aggregate number of 16,569,404 Common Shares of the Company. Immediately
thereafter, CPS Capital Ltd. ("CPS") purchased all 16,569,404 Common Shares from
Clarion for $230,000. Such shares have not been issued by the transfer agent.
7
<PAGE> 8
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS [CONT'D]
In addition, on May 15, 1998, CPS and the Company entered into the Second
Amended and Restated Management Services Agreement, pursuant to which CPS agreed
to accept 5,025,745 Common Shares in lieu of accrued management fees equaling
$196,900. Such shares have not been issued by the transfer agent. All the shares
acquired by CPS were acquired for investment purposes.
8
<PAGE> 9
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company formed two wholly owned subsidiaries, Sentex Systems, Inc.,
("Systems") and Sentex Acquisitions Corp. on May 31, 1991, to separate the
present operations of the Company into a subsidiary to continue the business of
designing, developing and marketing gas chromatographic devices, and a
subsidiary to develop and acquire new investment opportunities. On September 4,
1998, all of the outstanding capital stock of Systems was sold (see explanation
below under Financial Condition) and the Company is no longer in the gas
chromatography business.
Effective November 30, 1996, Monitek Technologies, Inc., a Delaware corporation
("Monitek") became a wholly owned subsidiary of the Company, pursuant to a
merger (the "Merger") of Sentex Merger Corp., a Delaware corporation and wholly
owned subsidiary of the Company, with and into Monitek. Monitek is now being
operated as a wholly owned subsidiary of the Company. Monitek also operates a
portion of its business through a wholly owned German subsidiary of Monitek
named Monitek GmbH, which over the last three years has accounted for over 60%
of Monitek's total revenues.
Hereinafter the "Company" shall refer to Sentex Sensing Technology, Inc. and its
wholly owned subsidiary, Monitek.
Monitek designs, develops, assembles and markets instruments for the measurement
of clarity (turbidity), suspended solids content, color, purity, flow, level and
volume of liquids in industrial and waste water environments. Monitek's current
line of products, which are based on optical, acoustic, magnetic and ultrasonic
technologies, have been specially adapted for various applications in the
chemical and petrochemical, food and beverage, water treatment, pulp and paper,
and bio-technology and pharmaceutical industries, where their abilities to
withstand high temperature, extremes in pressure and corrosive environments are
important factors. Monitek's products are currently sold world-wide.
In March 1998, the Company purchased Cypress Instruments, Inc. ("Cypress") for
the purpose of acquiring a new product line that has subsequently been folded
into the Monitek product line. The acquisition was not material to the overall
business of the Company.
FINANCIAL CONDITION
Working capital decreased to a negative $2,228,000 at May 31, 1999, as compared
to a negative $1,823,000 as of November 30, 1998. The decrease in working
capital is primarily due to the losses sustained by the Company during the first
half of Fiscal 1998. Cash and cash equivalents equaled approximately $36,000 as
of May 31, 1999, compared with $111,000 as of November 30, 1998. As set forth in
the independent auditors' report and notes to consolidated financial statements
that accompanied the Company's Form 10-KSB for the fiscal year ended November
30, 1998, the Company's recurring losses from operations and
9
<PAGE> 10
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
the resulting effect on cash flow have reduced the Company's liquidity to its
current level, which raises substantial doubt about the Company's ability to
continue as a going concern.
To address the Company's immediate working capital needs, the Company has
established a bank line of credit of $2,000,000, which was fully drawn on as of
May 31, 1999. This line of credit is secured by the personal guarantee of Robert
S. Kendall, the Chairman of the Company. From time to time, CPS has provided the
Company with temporary working capital loans and, as of May 31, 1999, there was
an outstanding borrowing of $889,000 on such loans. As a result of the
acquisition of Cypress, the Company became obligated to make payments to the
shareholders of Cypress (for payment of shares and performing future consulting
services) of approximately $535,000 over the next four fiscal years. An initial
payment of $150,000 was made to the Cypress shareholders in May 1999, and an
additional sum of approximately $96,000, of which $43,000 of such amounts is
currently past due, are payable in fiscal 1999.
To address the Company's working capital needs on a more long-term basis, the
Company will attempt to generate cash from internal operations of the Company.
To control the operating losses attributable to Systems, which totaled
approximately $700,000 during fiscal 1998, the Company sold Systems to ALR
Group, Incorporated ("ALR"). In addition, during the fourth quarter of fiscal
1998 and the first quarter of fiscal 1999, the Company's management has made
other significant reductions in operating expense. The Company estimates that
these measures will save the Company approximately $40,000 per month.
On September 4, 1998, the Company completed the sale of all of the outstanding
capital stock of Systems to ALR, which is principally owned by Amos Linenberg
("Linenberg"). Prior to the sale, Linenberg was the President of Systems and an
Executive Vice President of the Company. In the past, Linenberg has been a
principal shareholder of the Company and served as a director of the Company.
In consideration for all of the capital stock of Systems, ALR caused Mr.
Linenberg to terminate his existing Employment Agreement as of June 30, 1998,
which from July 1, 1998 through February 28, 2000 would have required payments
to Mr. Linenberg of approximately $325,000. Except for approximately $20,000 in
expenses, the Company paid all operating costs and expenses of Systems through
June 30, 1998 and ALR assumed all the costs and operating expenses of Systems
from July 1, 1998 through the closing. The Company incurred a $447,327 loss,
representing the disposal of the net assets of Systems.
10
<PAGE> 11
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
In connection with the sale of Systems to ALR, the Company retained Linenberg to
consult for the Company on an as needed basis. The consulting period began
effective July 1, 1998 and continued through December 31, 1998. Linenberg
received approximately $12,000 per month under this consulting arrangement.
Even after divesting itself of Systems and further reducing operating expenses,
however, there can be no assurance that the Company will generate a positive
cash flow for Fiscal 1999. The ultimate profitability of the Company depends, in
large part, on increasing the sales of Monitek products and continuing to reduce
expenses.
Net Operating Losses; IC-DISC
The Company has approximately $10,751,000 in net operating losses as of fiscal
1998, which will expire at various dates through the year 2012 that are mainly
attributable to losses incurred by Monitek. Federal tax law imposes restrictions
on the use of net operating loss carry-forwards in the event of a change in
ownership, such as a merger. Due to the Merger, approximately $6,265,000 of the
$10,751,000 net operating losses may be subject to these limitations and
potentially may not be able to provide any economic benefit to the Company.
As of April 1, 1991, Monitek's IC-DISC, Monitek International, Inc., was
effectively terminated. As a result, Monitek had begun repatriation of the
undistributed earnings of the IC-DISC as of April 1, 1991. The undistributed
earnings of approximately $780,000 has been and will continue to be recognized
as income, for tax return purposes, over the 10-year period ending March 31,
2001.
11
<PAGE> 12
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
RESULTS OF OPERATIONS
Six Months Ended May 31, 1999 Compared to Six Months Ended May 31, 1998
The Company's net sales decreased by 19%, from $2,975,000 for the six months
ended May 31, 1998 ("Fiscal 1998 Six Months") to $2,406,000 for the six months
ended May 31, 1999 ("Fiscal 1999 Six Months"). Sales of Systems' products
decreased to zero for the Fiscal 1999 Six Months compared to $292,000 for Fiscal
1998, as a result of the sale of Systems to ALR. Monitek's domestic sales
decreased by $63,000, or 7%, while export sales from the United States decreased
by $12,000, or 6%. Sales to Continental Europe by Monitek GmbH decreased by
$202,000, or 13%, from the Fiscal 1998 Six Months to the Fiscal 1999 Six Months,
primarily as a result of weakness in the European economy.
Cost of goods sold, as a percentage of sales, decreased to 50% for the Fiscal
1999 Six Months from 51% for the Fiscal 1998 Six Months, primarily as a result
of a change in product mix. Direct labor and overhead decreased to 13% of net
sales for the Fiscal 1999 Three Months from 14% for the comparable Fiscal 1998
period, while material costs remained constant at 37% of net sales.
Selling, general and administrative expenses decreased to $1,380,000 for the
Fiscal 1999 Six Months from $2,147,000 for the Fiscal 1998 Six Months. The sale
of Systems, which had total expenses of $413,000 during the Fiscal 1998 Six
Months, accounted for the majority of the total reduction. Cost reduction
measures, which were implemented by management during the second half of Fiscal
1998, resulted in a decrease of approximately $240,000 for the Fiscal 1999 Six
Months as compared to the Fiscal 1998 Six Months.
Research and development expenses decreased to $90,000 for the Fiscal 1999 Six
Months from $152,000 for the Fiscal 1998 Six Months, primarily as a result of a
decrease in activities by outside consultants.
Operating losses decreased to $275,000 for the Fiscal 1999 Six Months from
$844,000 for the Fiscal 1998 Six Months, primarily as a result of the reduction
in selling, general and administrative expenses, the reduction in research and
development expenses and the sale of Systems to ALR, partially offset by the
decrease in sales.
Foreign currency transactions between Monitek and its German subsidiary resulted
in losses of $60,000 for the Fiscal 1999 Six Months and $5,000 for the Fiscal
1998 Six Months as a result of fluctuations in the value of the U.S. Dollar
relative to the DM.
Net losses decreased to $428,000 for the Fiscal 1999 Six Months from $925,000
for the Fiscal 1998 Six Months, primarily as a result of the decrease in
operating losses, partially offset by the increase in foreign currency exchange
losses.
12
<PAGE> 13
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
CHANGES IN ACCOUNTING STANDARDS
In February 1997, SFAS 128, Earnings per Share and SFAS 129, Disclosure of
Information About Capital Structure, were issued. SFAS 128 establishes new
standards for computing and reporting earnings per share. SFAS 129 requires an
entity to explain the pertinent rights and privileges of outstanding securities.
The Company has adopted these new standards in the current fiscal year and the
affect of the adoption was not material.
In June 1997, SFAS 130, Reporting Comprehensive Income, was issued. SFAS 130
establishes new standards for reporting comprehensive income and its components
and is effective for fiscal years beginning after December 15, 1997. The Company
expects that comprehensive income (loss) will not differ materially from net
income (loss).
In June 1997, SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, was issued. SFAS No. 131 changes the standards for
reporting financial results by operating segments, related products and
services, geographic areas and major customers. The Company must adopt the new
standard no later that November 30, 1999.
In February 1998, SFAS 132, Employers' Disclosures about Pensions and other
Postretirement Benefits, was issued. SFAS 132 standardizes the disclosure
requirements for pension and other postretirement pension plans but does not
change the measure or recognition of those plans. SFAS 132 is effective for
fiscal years beginning after December 15, 1997. Management believes that this
pronouncement will have no material effect on the Company's financial statements
or disclosures thereto.
In June 1998, SFAS 133, Accounting for Derivative Instruments and Hedging
Activities, was issued. SFAS 133 establishes accounting and reporting standards
for derivative instruments and hedging activities. SFAS 133 is effective for
fiscal years beginning after June 15, 1998. Management believes this
pronouncement will have no effect on the financial statements.
YEAR 2000 COMPLIANCE
The inability of computers, software and other equipment utilizing
microprocessors to recognize and properly process data fields containing a two
digit year is commonly referred to as a Year 2000 Compliance issue. As the year
2000 approaches, such systems may be unable to accurately process certain
data-based information. The Company is in the process of identifying and
modifying all significant hardware and software applications that will require
modification to ensure Year 2000 Compliance. Internal and external resources are
being used to make the required modification and test Year 2000 Compliance. The
estimated cost to address Year 2000 issues is not expected to have a material
impact on the Company's business, operations or financial condition.
13
<PAGE> 14
SENTEX SENSING TECHNOLOGY, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONT'D)
In addition, the Company is communicating with external service providers to
ensure that the external providers are taking the appropriate action to address
Year 2000 issues. However, there can be no assurance that the systems of third
parties on which the Company's systems rely will convert, or that a conversion
that is incompatible with the Company's systems would not have an adverse effect
on the Company's systems.
14
<PAGE> 15
II. OTHER INFORMATION
ITEM 2
(a) Not applicable.
(b) Not applicable.
(c) Not applicable.
ITEM 5
TERMINATION OF LETTER OF INTENT
On or about April 17, 1999, the Company filed a press release disclosing that it
had entered into a non-binding letter of intent to sell substantially all of the
assets of Monitek. The terms of the Letter of Intent expired on July 1, 1999.
The Company has not extended the Letter of Intent and, for the time being, has
ceased negotiations with the potential acquirer.
CAUTIONARY STATEMENT FOR PURPOSES OF THE
"SAFE HARBOUR" OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
Certain statements in the Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Financial Statements included in
this Quarterly Report on Form 10-QSB, in the Company's press releases and in
oral statements made by or with the approval of an authorized executive officer
of the Company constitute "forward-looking statements" as that term is defined
under the Private Securities Litigation Reform Act of 1995. These may include
statements projecting, forecasting or estimating Company performance and
industry trends. The achievement of the projections, forecasts or estimates is
subject to certain risks and uncertainties. Actual results and events may differ
materially from those projected, forecasted or estimated. The applicable risks
and uncertainties include general economic and industry conditions that affect
all businesses, as well as matters that are specific to the Company and the
markets it serves.
General risks that may impact the achievement of such forecasts include
compliance with new laws and regulations; significant raw material price
fluctuations; currency exchange rate fluctuations; business cycles; and
political uncertainties. Specific risks to the Company include an inability of
the Company to finance its working capital needs; an inability of the Company to
curtail its recurring losses; an inability of the Company to successfully
integrate the business of Sentex and Monitek; a risk of recession in the
economies in which its products are sold, such as the Chemical or Petroleum
industries; and new or emerging products from current competitors. In light of
these and other uncertainties, the inclusion of a forward-looking statement
herein should not be regarded as a representation by the Company that the
Company's plans and objectives will be achieved.
15
<PAGE> 16
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Not applicable.
(b) Not applicable
SIGNATURE
Pursuant to the requirements of section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized:
Date: July 15, 1999 SENTEX SENSING TECHNOLOGY, INC.
By: /s/ Robert S. Kendall
-------------------------------------------
Robert S. Kendall, Chief Executive Officer
By: /s/ James S. O'Leary
-------------------------------------------
James S. O'Leary, Chief Financial Officer
16
<PAGE> 17
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
27.1 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF SENTEX SENSING TECHNOLOGY, INC. AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH QUARTERLY REPORT FILED ON FORM
10-QSB, FOR THE PERIOD ENDING MAY 31, 1999.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-START> DEC-01-1998
<PERIOD-END> MAY-31-1999
<CASH> 35,708
<SECURITIES> 0
<RECEIVABLES> 730,854
<ALLOWANCES> 40,709
<INVENTORY> 1,190,702
<CURRENT-ASSETS> 2,027,091
<PP&E> 343,308
<DEPRECIATION> 198,035
<TOTAL-ASSETS> 2,940,872
<CURRENT-LIABILITIES> 4,254,870
<BONDS> 0
0
0
<COMMON> 2,880,079
<OTHER-SE> 4,473,010
<TOTAL-LIABILITY-AND-EQUITY> 2,940,872
<SALES> 2,406,429
<TOTAL-REVENUES> 2,417,585
<CGS> 1,211,224
<TOTAL-COSTS> 1,211,224
<OTHER-EXPENSES> 1,530,718
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 103,686
<INCOME-PRETAX> (428,043)
<INCOME-TAX> 0
<INCOME-CONTINUING> (428,043)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (428,043)
<EPS-BASIC> (.01)
<EPS-DILUTED> (.01)
</TABLE>
