UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
[X] QUARTERLY REPORT PURSUANT TO 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 0-14273
DCX, INC.
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(Exact name of registrant as specified in its charter)
COLORADO 84-0868815
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1597 Cole Boulevard, Suite 300B, Golden CO 80401
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(Address of principal executive offices)
(Zip Code)
(303) 274-8708
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(Registrant's telephone number, including area code)
3002 North State Highway 83, Franktown, CO 80016-0569
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(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. [X] Yes [ ] No
4,450,409 Common Shares were outstanding as of December 31, 1996.
Number of pages in this report is 8.
<PAGE>
PART I, FINANCIAL INFORMATION (Item 1, Financial Statements, of this part is
replaced in its entirety with the following)
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Balance Sheets
December 31 September 30
1996 1996
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(Unaudited) Audited
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Assets
Current:
Cash and Cash equivalents $ 90,928 $ 209,637
Accounts receivable 1,313,498 995,040
Inventories 887,099 1,103,672
Prepaid expenses 127,466 195,832
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Total current assets 2,418,991 2,508,181
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Property and equipment:
At cost 2,039,534 2,039,534
Less: accumulated depreciation (790,210) (767,233)
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Net property and equipment 1,249,324 1,272,301
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Other assets 44,000 44,000
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$ 3,712,315 $ 3,820,482
================================================================================
See accompanying summary of accounting policies
and notes to financial statements
2
<PAGE>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Balance Sheets
December 31 September 30
1996 1996
(Unaudited) (Audited)
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current:
Notes payable $ 1,267,146 $ 1,279,623
Accounts payable 215,480 494,646
Accounts payable - terminated contracts 0 66,377
Accrued expenses 55,154 85,759
Accrued litigation settlement 521,000 521,000
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Total current liabilities 2,058,780 2,447,405
Long-term debt, less current maturities 24,060 24,060
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Total liabilities 2,082,840 2,471,465
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Commitments and Contingencies (Note
below, and Note 1 to Form 10-KSB,
September 30, 1996)
Stockholders' Equity:
Preferred stock, $.001 par value,
20,000,000 shares authorized,
Series A, 6% Cumulative Convertible
Redeemable
Preferred Stock; 1,000,000 authorized,
500 issued and outstanding (Note 6) 1 0
Capital paid in excess of par value
on preferred stock 449,999 0
Common stock, no par value, 2,000,000,000
shares authorized; shares issued and
outstanding, 4,450,409 and 4,434,109
at December 31, 1996 and
September 30, 1996, respectively 5,072,072 5,060,357
Subscriptions receivable (179,000) (179,000)
Additional paid-in capital 329,384 329,384
Accumulated deficit (4,042,981) (3,861,724)
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Total stockholders' equity 1,629,475 1,349,017
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$ 3,712,315 $ 3,820,482
================================================================================
See accompanying summary of accounting policies
and notes to financial statements
3
<PAGE>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Statements of Operations (Amended, see Note 7)
(Unaudited)
Three months ended
December 31
1996 1995
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Net sales $ 865,112 $ 904,311
Cost of sales 690,654 608,013
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Gross profit on sales 174,458 296,298
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General and administrative expenses 324,720 232,698
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Income (loss) from operations (150,262) 63,600
Other income (expense):
Interest expense (30,150) (37,222)
Investment and other income 1,071 10,357
Other expense (1,916) 0
Forgiveness of debt 0 87,826
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Net income (loss) $ (181,257) $ 124,561
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Net income (loss) from operations
per share $ (.03) $ .02
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Net income (loss) attributable to
common stock shareholders $ (347,923) $ 124,561
Net income (loss) attributable to
common stock per share $ (.08) $ .03
================================================================================
Weighted average number of shares of
common stock outstanding 4,447,692 4,105,121
================================================================================
See accompanying summary of accounting policies
and notes to financial statements
4
<PAGE>
<TABLE>
<CAPTION>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Statements of Cash Flows
(Unaudited)
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For the Three-Month Periods Ended December 31, 1996 1995
Operating activities:
<S> <C> <C>
Net income (loss) $ (181,257) $ 124,561
Adjustment to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Depreciation and amortization 23,977 21,552
(Increase) decrease in accounts receivable (318,458) 1,147,243
(Increase) decrease in inventory 216,573 (393,924)
(Increase) decrease in prepaid expenses 68,366 (5,358)
Decrease in other assets 0 15,000
Decrease in accounts payable (345,543) (226,006)
Decrease in other liabilities (30,605) (81,242)
Decrease in litigation settlement liability 0 (150,000)
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Net cash provided by (used in) operating activities (567,947) 451,826
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Investing activities:
Acquisition of property and equipment 0 6,999
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Net cash provided by (used in) investing activities 0 6,999
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Financing activities:
Payments on long-term debt, net (12,477) (248,993)
Issuance of common stock 11,715 0
Issuance of convertible preferred stock 450,000 0
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Net cash provided by (used in) financing activities 449,238 (248,993)
Net increase (decrease) in cash (118,709) 209,832
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Cash and cash equivalents, beginning of period $ 209,637 $ 125,844
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Cash and cash equivalents, end of period $ 90,928 $ 335,676
==============================================================================================
See accompanying summary of accounting policies and notes to financial statements
5
</TABLE>
<PAGE>
DCX, INC.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Condensed Consolidated Financial Statements
The condensed consolidated financial statements included herein have been
prepared by DCX, INC. without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. DCX, INC. believes that the disclosures
are adequate to make the information presented not misleading. In the opinion of
management, the accompanying unaudited consolidated financial statements contain
all adjustments (consisting only of normal recurring adjustments) necessary to
present fairly the Company's consolidated financial position as of December 31,
1996, the consolidated results of its operations for the three-periods ended
December 31, 1996, and 1995 and statements of cash flows for the three-month
periods then ended.
The accounting policies followed by the Company are set forth in the annual
report of September 30, 1996, filed on Form 10-KSB, and the audited consolidated
financial statements therein with the accompanying notes thereto. While
management believes the procedures followed in preparing these consolidated
financial statements are reasonable, the accuracy of the amounts are in some
respects dependent upon the facts that will exist, and procedures that will be
accomplished by DCX, INC. later in the year.
The consolidated results of operations for the three-month period ended December
31, 1996, are not necessarily indicative of the results to be expected for the
full year ending September 30, 1997.
(2) Accounts Receivable
Accounts receivable contain amounts computed under the cost-to-cost method to
determine percentage of completion as described in the Form 10-KSB for September
30, 1996.
(3) Provision for Income Taxes
At the beginning of the fiscal year the Company had net operating loss
carryforwards of $2,663,000 with expirations through 2011. At December 31, 1996,
the amount of the net operating loss carryforward balance is estimated at
$2,794,291. The Company expects to incur a minimal amount of alternative minimum
tax for the fiscal year. Since the Company is unable to determine that deferred
tax assets exceeding tax liabilities are more likely than not to be realized, it
will record a valuation allowance equal to the excess deferred tax assets at
fiscal year end.
6
<PAGE>
(4) Litigation
Claim for Breach of Contract. Following the termination of merger discussions
between the Company and an unrelated company, Airtech International Corporation
("Airtech"), the Company filed a claim for resulting damages of approximately
$400,000. During January, 1997, Airtech filed an answer to the claim denying the
Company's claim and counter claiming for breach of contract, fraud and
negligence claiming damages exceeding $27 million. The parties have agreed to
dismiss their claims with prejudice and have released any claims.
Terminated Contracts. As reported in the Form 10-KSB for September 30, 1995, and
1996, the Company and the Defense Logistics Agency (DLA) agreed to a final
settlement in November, 1995, on two of three terminated contracts. The last
partial payment, therefor, was received in January, 1996.
A third contract with DLA required the Company to design, develop test and
manufacture light sets to a specified schedule. Testing of the lights was
subcontracted; scheduling delays caused the Company to miss a required
submission date for the testing and resulted in termination of the contract in
1988. Vigorous litigation asserting the delay was government caused were pursued
to the United States Supreme Court. The Company's petition for certiorari was
denied in November, 1996. The Company recorded a reserve of $521,000 for the
loss in June, 1996; which is believed to be sufficient for the possible
reprocurement costs related to the difference between the Company's contract
price and the price incurred by DLA from the next lowest vendor as provided for
in the Federal Acquisition Regulations . The Company has filed with the Armed
Services Board of Appeals an appeal of the reprocurement costs. No hearing date
has been set. (See also Item 3, Legal Matters, and Note 5, Litigation, to the
financial statements in Form 10-KSB for September 30, 1996.)
(5) Lease Obligations
The Company leases various equipment under capital leases that expire through
June 2000 as noted in Note 7 to the Financial Statements in Form 10-KSB,
September 30, 1996.
(6) Subsequent Events
Key Man Life Insurance Proceeds.On January 7, 1997, the Company recorded
$400,000 of accounts receivable related to the proceeds of two Company owned key
man life insurance policies on a director of the Company. Proceeds of $250,000
on one of the policies have been received; the Company is completing formalities
related to the second policy in order to secure the proceeds of $150,000.
Convertible Preferred Stock. On January 23, 1997, the holder of Series A, 6%
Cumulative Convertible Redeemable Preferred Stock converted 100 shares into
common stock in accordance with the issue agreement. Accordingly, the Company
issued 123,308 shares of its common stock in exchange.
7. (Amended) Accounting for Preferred Stock Convertible at a Discount to
the Market.
The statement of operations has been amended to give effect for a discount of
25% of the common stock which would result and be deemed to be additional
dividend to the holders of the Company's 6% convertible preferred stock sold on
November 12, 1996. The convertible preferred stock is convertible into common
stock at a 25% discount to the five day average market price of the common stock
immediately preceding the conversion date which was lower than the five day
average market price at the date of placement. This difference, $166,666, on the
first possible date of conversion is an imputed discount and is deemed to be
additional dividend available to the holders of the preferred stock which
reduces income available to common stock shareholders. Accordingly, it was
reduced from cumulative net income to arrive at net income attributable to
common shareholders.
7
<PAGE>
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.
D C X , I N C .
Dated: November 6, 1997
/S/ Fred Beisser
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Frederick G. Beisser
Vice President-Finance & Administration,
Secretary & Treasurer and Principal
Financial Accounting Officer
8
