UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 0-14273
DCX, INC.
--------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
COLORADO 84-0868815
............................... ...................
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
200 West Forsyth St., Jacksonville, FL 32202
....................................................................
(Address of principal executive offices)
(Zip Code)
(904) 346-1319
.............................................
(Registrant's telephone number, including area code)
1597 Cole Boulevard, Suite 300B, Golden, CO 80401
.......................................................................
(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
10,798,092 Common Shares were outstanding as of March 31, 1998.
Transitional Small Business Format: Yes No X
----- -----
Number of pages in this report is 12.
<PAGE>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Balance Sheet
March 31
1998
(Unaudited)
- --------------------------------------------------------------------------------
Assets
Current:
Cash and cash equivalents $ 29,945
Accounts receivable 2,048,102
Inventories 0
Prepaid expenses 163,552
- --------------------------------------------------------------------------------
Total current assets 2,241,599
- --------------------------------------------------------------------------------
Property and equipment:
At cost 3,947,967
Less: accumulated depreciation (510,807)
- --------------------------------------------------------------------------------
Net property and equipment 3,437,160
- --------------------------------------------------------------------------------
Other Assets:
Other 156,488
Capaitalized software 219,106
Goodwill 5,343,143
- --------------------------------------------------------------------------------
Total other assets 5,720,737
- --------------------------------------------------------------------------------
$11,399,494
================================================================================
See accompanying notes to financial statements
2
<PAGE>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Balance Sheet
March 31
1998
(Unaudited)
- --------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Current:
Checks written against future deposits $ 163,255
Notes payable-current portion 1,220,000
Notes payable-related party 110,029
Accounts payable 872,082
Accrued expenses 695,432
Deferred revenue 57,319
Obligations under capital leases-current 137,943
Accrued litigation settlement 478,997
- --------------------------------------------------------------------------------
Total current liabilities 3,735,057
Note Payable, less current maturities 0
Obligations under capital leases 2,002,040
- --------------------------------------------------------------------------------
Total liabilities 5,737,097
- --------------------------------------------------------------------------------
Commitments and Contingencies (Note 5)
Stockholders' Equity:
Preferred stock, $.001 par value, 20,000,000 shares
authorized, no shares issued and outstanding at
March 31, 1998 0
Common stock, no par value, 2,000,000,000 shares
authorized;
10,798,092 shares issued and outstanding,
at March 31, 1998 12,357,868
Additional paid-in capital 2,054,586
Accumulated deficit (8,750,057)
- --------------------------------------------------------------------------------
Total stockholders' equity 5,662,397
- --------------------------------------------------------------------------------
$11,399,494
================================================================================
See accompanying notes to financial statements
3
<PAGE>
<TABLE>
<CAPTION>
PART I, FINANCIAL INFORMATION, Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Statements of Operations
(Unaudited)
Six months ended Three months ended
March 31 March 31
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $3,674,381 $ -- $1,873,452 $ --
Cost of sales
Salaries and employee benefits 2,481,372 193,618 1,209,978 116,411
Direct contract costs 621,424 -- 296,373 --
Other operating costs 1,744,672 141,671 921,531 65,239
- -------------------------------------------------------------------------------------------------------------------
Total costs and expenses 4,847,468 335,289 2,427,882 (171,650)
- -------------------------------------------------------------------------------------------------------------------
Operating loss (1,173,087) (335,289) (554,430) (171,650)
Other income (expense):
Interest expense (198,653) (69,764) (103,947) (39,614)
Insurance proceeds & other income 133,855 404,658 74,198 403,587
Other expense (56,756) (2,735) (46,415) (819)
- -------------------------------------------------------------------------------------------------------------------
Total other income (expense) (121,554) 332,159 16,666 363,154
- -------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations (1,294,644) (3,130) (537,764) 191,504
Gain (Loss) from discontinued operations (41,802) 280,995 68,157 267,618
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) (1,336,446) 277,865 (469,607) 459,122
- -------------------------------------------------------------------------------------------------------------------
Preferred stock dividends 14,910 -- -- --
Deemed preferred stock dividends 83,333 166,666 -- --
- -------------------------------------------------------------------------------------------------------------------
Net income (loss) attributable to
common stock shareholders $(1,434,689) $111,199 $(469,607) $459,122
- -------------------------------------------------------------------------------------------------------------------
Basic income (loss) per common share:
From continuing operations $ (.14) $ -- $ (.05) $ .04
From discontinued operations -- .06 .01 .06
Deemed and preferred stock dividends (.01) (.04) -- --
- -------------------------------------------------------------------------------------------------------------------
Basic income (loss)
per common share: $ (.15) $ .02 $ (.04) $ .10
- -------------------------------------------------------------------------------------------------------------------
Basic weighted average number of
common shares outstanding 9,395,562 4, 501,174 10,481,942 4,554,656
- -------------------------------------------------------------------------------------------------------------------
Diluted income (Loss) per common
share outstanding
From continuing operations $ (.14) $ -- $ (.05) $ .03
From discontinued operations -- .05 .01 .04
Deemed and preferred stock dividends (.01) (.03) -- --
- -------------------------------------------------------------------------------------------------------------------
Diluted income (loss)
per common share: $ (.15) $ .02 $ (.04) $ .08
- -------------------------------------------------------------------------------------------------------------------
Diluted weighted average number of shares
of common stock outstanding 9,395,562 5,896,285 10,481,942 5,949,767
===================================================================================================================
See accompanying notes to financial statements
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
PART I, FINANCIAL INFORMATION
Item 1. Financial Statements
DCX, Inc. and Subsidiaries
Condensed and Consolidated Statements of Cash Flows
(Unaudited)
For the Six-Month Periods Ended March 31, 1998 1997
- ----------------------------------------------------------------------------------------------------
Operating activities:
<S> <C> <C>
Net income (loss) $(1,336,446) $ 277,865
Adjustment to reconcile net income to net cash
used in operating activities:
Depreciation and amortization 384,941 45,955
Stock options issued for services performed 255,827 --
Write off of accumulated depreciation due to
discontinued operations (129,002) --
Changes in assets and liabilities:
accounts receivable 188,466 (639,959)
inventory -- (162,996)
other assets 54,291 ( 40,724)
accounts payable (506,618) 380,656
accrued expense (209,907) ( 68,563)
deferred revenue (132,035) --
litigation settlement liability (42,003) --
- -----------------------------------------------------------------------------------------------------
Net cash used in operating activities (1,472,486) (207,766)
- -----------------------------------------------------------------------------------------------------
Investing activities:
Receipt from sale of assets 1,100,000 --
Disposition (Acquisition) of property and equipment 2,445 (712)
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities 1,102,445 (712)
- -----------------------------------------------------------------------------------------------------
Financing activities:
Decrease in checks writtten against future deposits (106,332) --
Payments on long-term debt, net (427,151) (53,662)
Issuance of common stock 138,643 31,083
Issuance of convertible preferred stock 212,500 450,000
- -----------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities (182,340) 427,421
- -----------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (552,381) 218,943
Cash and cash equivalents, beginning of period 582,326 209,637
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 29,945 $428,580
====================================================================================================
See accompanying 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 March 31,
1998, the consolidated results of its operations for the periods ended March 31,
1998, and 1997 and statements of cash flows for the periods then ended.
The accounting policies followed by the Company are set forth in the annual
report of September 30, 1997, 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- and six-month periods
ended March 31, 1998, are not necessarily indicative of the results to be
expected for the full year ending September 30, 1998. Further, these financial
statements, as a result of the acquisition by the Company of PlanGraphics, Inc.
on September 22, 1997 and the subsequent divestiture of all manufacturing
operations, represent the results of the Company's geographic information
systems operating subsidiary, PlanGraphics, Inc. which is viewed as the
predecessor entity.
(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, 1997.
(3) Provision for Income Taxes
At the beginning of the fiscal year the Company had net operating loss
carryforwards of $4,000,000 with expirations through 2013. At March 31, 1998,
the amount of the net operating loss carryforward balance is estimated at
$4,965,000. The Company expects to incur a de minimis 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.
(4) Litigation
The Company has filed with the Armed Services Board of Appeals an appeal of
certain 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. A hearing date has been set
for September of 1998. 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. Subsequent to this quarter, counsel for DLA has requested mediation of
the appeal. (See Note 6, Litigation, to the financial statements in Form 10-KSB
for September 30, 1997.)
6
<PAGE>
(5) Lease Obligations
The Company leases various equipment as well as facilities under capital leases
that expire through the year 2002 as noted in Note 8 to the Financial Statements
in Form 10-KSB, September 30, 1997.
(6) Subsequent Events
Common Stock. In April, 1998 the Company completed a private placement of its
common stock which resulted in net proceeds of $532,500. The Company issued
500,000 shares of its common stock which are restricted from public trading in
the absence of a registration statement.
Note Extension. During April, a note with a balance of $595,000 due on April 24,
1998 was extended to July 24, 1998. The Company is in further discussions with
the holder of the note concerning a further extension.
7. Accounting for Preferred Stock Convertible at a Discount to the Market.
The statement of operations gives effect for a discount of 25% of the common
stock which would result and be deemed to be an additional dividend to the
holders of the Company's 6% convertible preferred stock sold on October 14,
1997. 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, $83,333 for the first quarter
and $166,666 for the prior year first quarter, on the first possible date of
conversion is an imputed discount and is deemed to be an 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.
8. Net Loss Per Common Share.
During the quarter ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standard ("SFAS") No. 128 issued by the Financial
Accounting Standards Board. SFAS No. 128 provides for the calculation of "Basic"
and "Diluted" earnings per share. Basic earnings per share includes no dilution
and is computed by dividing loss available to common shareholders by the
weighted average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution of securities that could
share in the earnings of an entity, to fully diluted earnings per share.
Because the Company incurred net losses in the periods ending March 31, 1998
none of its outstanding options or warrants were included in the computation of
diluted earnings per share for the current periods as their effect would be
anti-dilutive. Total warrants and options outstanding at March 31, 1998 were
1,240,446 and 6,967,850, respectively and at March 31, 1997 they were 258,801and
1,163,310, respectively.
9. Restatement of Prior Year Results of Operations for Discontinued Operations.
The Statement of Results of Operations for the prior year period has been
restated to conform to the current presentation. Revenue and related expenses of
the discontinued manufacturing operations have been reclassified to a separate
caption titled "Loss on discontinued operations" for both fiscal years in the
current report.
Pro Forma results of the discontinued defense manufacturing operations are:
<TABLE>
<CAPTION>
Periods ending March 31, 1998 1997
- ------------------------ ---------------------------- ---------------------------
Six Months Three Months Six Months Three Months
<S> <C> <C> <C> <C>
Revenue from
discontinued operations -0- -0- $2,537,167 $1,672,052
Gain (loss) from
discontinued operations $( 41,802) $ 68,157 $ 280,005 $ 267,618
</TABLE>
7
<PAGE>
PART 1, ITEM 2: MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OPERATIONS
Forward-Looking Statements. This quarterly report contains certain
forward-looking statements that describe the future business, prospects, actions
and possible results of DCX, Inc. (the "Company") and the expectations of the
Company and its management which are not historical facts and therefore
constitute forward-looking statements as contemplated in the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from those set forth. As a result, there
also can be no assurance that the forward-looking statements included herein
will prove to be accurate or that the objectives and plans of the Company will
be achieved.
Financial Condition:
Liquidity. Cash decreased $552,381 to a total of $29,945 from $582,326 at
September 30, 1997. The decrease was primarily due the net operating loss for
the quarter.
Presently, the Company has negative working capital of approximately $1,493,458.
The primary reason for this decrease from the first quarter report is the
reclassification of the real property note of $620,000 from long term debt into
a current liability. The decrease from September 30, 1997 is caused primarily by
reclassification of a long-term debt balance of $446,250 on a note payable
current liabilities in light of the due date for payoff of the note and the
reclassification of the real property note. The Company received an extended due
date on the latter note to July 24, 1998 and is in discussions to further extend
the note.
The Company's current ratio of total current assets to current liabilities
decreased to .60:1 from 1.32:1 a year ago and is also a decrease from .91:1 at
September 30, 1997.
The Company's liquidity could be adversely affected by the balloon payment of
$585,000 required on July 24, 1998 if management is unable to successfully
restructure the terms of the note through its current discussions or to find a
replacement lender.
The Company has established a litigation settlement reserve for the possible
costs connected with the Government's assertion of a claim for reprocurement
costs by the Defense Logistics Agency related to a contract terminated for
default. Presently the balance is about $479,000. The Company has entered into
mediation at the request of the Government to settle the matter and does not
anticipate a requirement for the entire amount. However, were the Company
compelled to satisfy assertions for the entire balance, it anticipates that
approximately $100,000 in would be liquidated in the form of common stock of the
Company, $145,000 would require immediate cash payment, and the remainder, about
$234,000 representing the reprocurement costs would be liquidated via a
three-year payment plan as provided for in the Federal Acquisition Regulations.
The immediate cash requirement of $145,000 would have to be disbursed from
present cash balances (considering the private placement completed subsequent to
the current reporting period, see Capital Resources, infra, and Note 6 to the
financial statements, supra) or from a future fund raising effort.
Ability to Continue as a Going Concern. As a result of losses from operations,
the forthcoming required balloon payment related to the subsidiary's debt, and
negative working capital, the Company's ability to continue as a going concern
remains in question. The report of the Company's independent certified
accountant at September 30, 1997 includes a comment concerning substantial doubt
about the Company's ability to continue as a going concern. Management's plan to
continue the operation of the Company includes: raising funds through additional
debt or equity instruments, of which there can be no assurance; the recent
completion of an investment banking agreement with a respected and prominent
investment banking organization to negotiate a credit facility for additional
acquisition and operating capital needs; expected increased cashflows from new
contracts awarded during the past nine months on which revenue producing work
has recently begun; and constraining the cost of operations coupled with an
additional contingency plan to generate further cost reductions and improved
cash flows.
Capital Resources. During the first quarter the Company sold a total of 250
shares of convertible preferred stock in a private offshore transaction which
resulted in net funding of $212,500. In addition, the Company entered into an
investment banking agreement with the intent of securing a credit facility large
enough to support its near term acquisition program.
8
<PAGE>
Subsequent to the end of this reporting period the Company completed a private
placement of common stock which resulted in net proceeds of $532,500. (See Note
6 to the financial statements, above.)
The Company's long-term liquidity requirements may be significant in order to
implement its plans. There can be no guarantee such funds can be secured.
Results of Operations:
(Readers of this report should take into account that the contract electronic
manufacturing operations of the Company during FY 1997 and prior were
discontinued upon sale of those assets and therefore are not relevant to
analysis of the Company's going-forward expectations.
First Half of Fiscal Year 1998
Revenue for the first half of FY 1998 amounted to $3,674,381 and was generated
entirely by the Company's operating subsidiary in geographic information systems
and is not comparable with restated revenue of nil for the first half of the
prior fiscal year. This level of current quarter revenue reflects a decline of
about 27% from the subsidiary's revenue for the same period of the prior year.
This decline from the subsidiary's prior year level of operations for the same
quarter resulted from the winding down of a significant long-term contract and a
delay in the commencement of work on replacement contract activity.
Total costs and expenses reached $4,847,471 or 131.9% of revenue. Approximately
$1,079,840 was related to parent company general and administrative costs and is
not comparable to reported costs for the prior year which resulted from
discontinued operations of the Company. Of this amount, approximately $257,363
was related to actions resulting from acquisition activities; and $196,000 of
acquisition amortization expenses were also recorded. The balance was related to
GIS operations and reflected a decrease from the costs for the same period, a
year prior which were not publicly reported. The decline in GIS related costs
resulted from management actions to reduce staffing and operating costs in
response to the temporary decline in revenue.
Interest expense increased over that of the prior year by $128,889 as a result
of the interest costs added from the GIS subsidiary acquired late in the fourth
quarter of FY 1997. However, trend analysis of both parent and subsidiary
interest expenses for the current period compared to interest expenses for the
same period of FY 1997 reveals a decrease of 78% for the parent company due to
certain leased manufacturing equipment costs no longer occurring because of the
divestiture of manufacturing assets and due to the retirement of the SBA-held
note and a decrease of about 15% in subsidiary generated interest expenses
resulting from retirement of certain debt.
Other expense increased over the prior year total primarily due to acquisition
expenses.
Insurance proceeds and other income decreased from prior year totals because the
prior year totals included receipt of proceeds amounting to $400,000 from keyman
life insurance policies carried on a former officer and director of the Company.
No such proceeds were received during the current reporting period.
Discontinued operations total reflects a decrease in expenses related to the
discontinued manufacturing operations.
Second Quarter of FY 1998.
Revenue for the second quarter of FY 1998 amounted to $1,873,452 and was
generated entirely by the Company's operating subsidiary in geographic
information systems and is not comparable with restated revenue of nil for the
second quarter of the prior fiscal year. This level of current quarter revenue
reflects a decline of approximately 25% from the subsidiary's revenue for the
same period of the prior year. This decline from the subsidiary's prior year
level of operations for the same quarter resulted from the winding down of a
significant long-term contract and a delay in the commencement of work on
replacement contract activity. It was, however, a very slight increase over the
previous quarter revenue.
9
<PAGE>
Total costs and expenses reached $2,427,882 or 129.6% of revenue. Approximately
$314,100 was related to parent company general and administrative costs and is
not comparable to reported costs for the prior year which resulted from
discontinued operations of the Company. Of this amount, approximately $125,000
was related to actions resulting from acquisition activities; and another
$98,000 of acquisition amortization expenses were recorded also. The balance,
$1,965,000, was related to GIS operations and reflected a decrease from the
costs for the same period, a year prior which were not publicly reported. The
decline in GIS related costs resulted from management actions to reduce staffing
and operating costs in response to the temporary decline in revenue.
Interest expense increased over that of the prior year by $64,333 as a result of
the interest costs added from the GIS subsidiary acquired late in the fourth
quarter of FY 1997. However, trend analysis of both parent company interest
($6,452) and subsidiary interest ($88,254) for the current quarter compared to
interest expenses for the same period of FY 1997 reveals a decrease of 78% for
the parent company due to certain leased equipment costs no longer occurring
because of the divestiture of manufacturing assets and due to the retirement of
the SBA-held note and a decrease of 15% in subsidiary generated interest
expenses resulting from retirement of certain debt.
Other expense increased over the prior year total primarily due to acquisition
related expenses.
Insurance proceeds and other income decreased from prior year totals because the
prior year totals included receipt of proceeds amounting to $400,000 from keyman
life insurance policies carried on a former officer and director of the Company.
No such proceeds were received during the current reporting period.
Discontinued operations total reflects a decrease in expenses related to the
discontinued manufacturing operations.
Fiscal Year 1997 Periods Reported. Results were restated to conform to current
year presentation. Therefor, manufacturing revenue and expenses, except for
certain administrative and compensation expenses, were reclassified to
discontinued operations. Pro Forma prior year results for the discontinued
operations are located in Note 9 to the financial statements.
First Half of Fiscal Year 1997
During the first six months of fiscal year 1997 net sales increased slightly by
$88,503 or 4 percent, over the same period of the prior year. Cost of sales was
2,059,827, or 81 percent of sales, and resulted in a gross profit of $477,337,
or 19 percent of sales, a decrease from 29 percent for same period of the prior
year. Decrease in gross profit occurred due to learning curve associated with
complex new products in certain new contracts and increased hourly labor costs.
Sales increase resulted from the growing production requirements to meet
increased demand in the defense industry.
General and administrative expenses of $531,631 for the current period increased
from $488,122 a year prior and reflect the increased costs of consulting and
legal advice during the period. Other income had an increase of $389,702 as a
result of proceeds from keyman life insurance policies.
Second Quarter of Fiscal Year 1997.
Second quarter sales for fiscal 1997 of $1,672,052 increased $127,702, or eight
percent, over the same quarter of the prior year. Cost of sales was $1,369,173,
or 82 percent of sales, and resulted in a gross profit of $302,879, or 18
percent of sales versus 27 percent for the same period of the prior year. The
decrease in gross profit was attributable to the learning curve effect
associated with new and more complex products, increased hourly labor costs and
slightly tighter margins on a contract coming into full scale production.
Management actions to stem unnecessary costs reduced general and administrative
expenses for the quarter by $48,513 or 39 percent. Interest expense has
increased somewhat because of imputed interest expense on leased equipment.
Sales increased slightly during the quarter over the prior year's quarter;
however, because of increased cost of sales, income from operations decreased by
43 percent. On the other hand, the Company recorded other income of $403,587
which propelled net income to $459,122, or $.10 per share, as compared to the
prior year's net income of $134,318, or $.03 per share.
10
<PAGE>
Loss from discontinued manufacturing operations reflects the results of
manufacturing operations which were reclassified as noted above.
Contract Backlog
The Company's only operating subsidiary has reported a backlog of contracts and
work assignments amounting to approximately $8.0 million. This work is related
to geographic information systems. Accordingly, it does lend itself to useful
comparison with the Company's manufacturing backlog from a year prior when there
was $6.2 million of uncompleted work in the manufacturing backlog..
PART II- OTHER INFORMATION
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.
During the current quarter the Company filed amended Form 10-KSB for the fiscal
year ended September 30, 1996. The filing amended certain regarding a
counterclaim by Airtech International Corporation to read "the Company believes
the allegations in the counterclaim are without merit" rather than that counsel
believes so.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8K.
Reports on Form 8-K filed since the beginning of the current quarter:
Current Report on Form 8-K, dated March 18, 1998, reporting the appointment of
Robert ("Robin") Vail as Chief Financial Officer on that date, that the Company
entered into a letter of intent to acquire Earth Information Systems, Corp. of
Austin, TX and reporting the status of NASDAQ listing requirements. (The Company
and Earth Information Systems Corporation have not executed a definitive
agreement as of this report.)
11
<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: May 13, 1998
/S/ Fred Beisser
----------------------------------------
Frederick G. Beisser
Vice President-Finance & Administration,
Secretary & Treasurer and Principal
Financial Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule contains summary financial information extracted from th
Form 10-QSB and is qualified inits entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 29,945
<SECURITIES> 0
<RECEIVABLES> 2,048,102
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 2,241,599
<PP&E> 3,947,967
<DEPRECIATION> (510,807)
<TOTAL-ASSETS> 11,399,494
<CURRENT-LIABILITIES> 3,735,057
<BONDS> 0
0
0
<COMMON> 12,357,868
<OTHER-SE> (6,695,471)
<TOTAL-LIABILITY-AND-EQUITY> 11,399,494
<SALES> 0
<TOTAL-REVENUES> 3,674,381
<CGS> 0
<TOTAL-COSTS> 4,847,468
<OTHER-EXPENSES> 56,756
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 198,653
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,294,644)
<DISCONTINUED> (41,802)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,434,689)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
