UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter period ended: October 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:# 0-14754
ELECTRIC & GAS TECHNOLOGY, INC.
(Exact Name of Registrant as specified in its Charter)
TEXAS 75-2059193
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
13636 Neutron Road, Dallas, Texas 75244-4410
(Address of Principal Executive Offices) (Zip Code)
(972) 934-8797
(Registrant's telephone number, including area code)
____________________________________________
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 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 shares outstanding of each of the Issuer's Classes
of Common Stock, as of the close of the period covered by this
report:
Common - $0.01 Par Value - 8,157,624 shares at December 2, 1998.
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
Index to Form 10-Q
For the Quarter Ended October 31, 1998
Page
Part I - Financial Information
1. Condensed Consolidated Financial Statements:
(a)Condensed Consolidated Balance Sheets as
of October 31, 1998 and July 31, 1998 3
(b)Condensed Consolidated Statements of
Operations for the three months
ended October 31, 1998 and 1997 4-5
(c)Condensed Consolidated Statements of
Cash Flows for the three months ended
October 31, 1998 and 1997 6-7
(d)Notes to Condensed Consolidated
Financial Statements 8-13
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 14-17
Part II - Other Information
Item 1 - Legal Proceedings 18
Item 6 - Exhibits and Reports on Form 8-K 18
Signature (pursuant to General Instruction E) 19
All other items called for by the instructions are
omitted as they are either inapplicable, not required,
or the information is included in the Condensed
Financial Statements or Notes thereto.
2
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
October 31, 1998 and July 31, 1998
ASSETS
<TABLE>
<S> <C> <C>
October 31, July 31,
1998 1998
CURRENT ASSETS (Unaudited)
Cash and cash equivalents $ 571,767 $ 542,086
Certificates of deposits 4,200,000 4,000,000
Investments, market 2,675,616 2,938,964
Accounts receivable, net 1,691,812 1,702,866
Inventories 3,248,157 3,199,398
Prepaid expenses 101,019 99,779
Total current assets 12,488,371 12,483,093
PROPERTY, PLANT AND EQUIPMENT, net 1,875,682 1,902,811
OTHER ASSETS 6,519,502 6,819,624
TOTAL ASSETS $20,883,555 $21,205,528
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,676,226 $ 1,762,482
Accounts payable 1,155,841 1,171,703
Accrued liabilities 163,194 145,352
Federal income taxes 160,121 197,611
Current maturities of long-term obligations 126,368 116,691
Total current liabilities 3,281,750 3,393,839
LONG-TERM OBLIGATIONS
Long-term obligations, less current maturities 1,565,125 1,627,650
MINORITY INTEREST IN SUBSIDIARY 43,780 46,659
STOCKHOLDERS' EQUITY
Preferred stock, $10 par value, 5,000,000 shares
authorized, 90,000 issued and outstanding 900,000 900,000
Common stock, $.01 par value, 30,000,000 shares
authorized and issued 8,157,624 and 8,198,224 81,576 81,982
Additional paid-in capital 9,196,816 9,260,866
Retained earnings 6,794,583 6,850,302
Pension liability adjustment (424,221) (424,221)
Cumulative translation adjustment (555,854) (531,549)
Total stockholders' equity 15,992,900 16,137,380
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $20,883,555 $21,205,528
</TABLE>
See accompanying notes.
3
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended October 31, 1998 and 1997
(Unaudited)
<TABLE>
<S> <C> <C>
Three months ended
October 31,
1998 1997
Sales $2,864,000 $2,776,782
Cost of goods sold 2,030,984 2,119,120
Gross profit 833,016 657,662
Selling, general and
administrative expenses 956,060 1,116,006
Operating profit (loss) (123,044) (458,344)
Other income and (expenses)
Interest, net 47,893 (39,318)
Minority interest in subsidiary 2,879 9,944
Investment gain - 906,458
Other 16,554 21,082
67,326 898,166
Earnings (Loss) from continuing operations (55,718) 439,822
Loss from discontinued operations - (317,063)
NET EARNINGS (55,718) 122,759
Dividend on preferred stock 15,879 15,879
Net earnings (loss) applicable to common stock $ (71,597) $ 106,880
</TABLE>
See accompanying notes.
4
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
Three Months Ended October 31, 1998 and 1997
(Unaudited)
Three months ended
October 31,
1998 1997
Earnings (loss) available per Common share:
Continuing operations $(0.01) $0.05
Discontinued operations - (0.04)
Net income $(0.01) $ 0.01
Earnings (loss) available per Common share - assuming dilution:
Continuing operations $(0.01) $ 0.05
Discontinued operations - (0.04)
Net income $(0.01) $ 0.01
See accompanying notes.
5
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended October 31, 1998 and 1997
(Unaudited)
<TABLE>
<S> <C> <C>
Three months ended
October 31,
1998 1997
Increase (decrease) in cash:
Cash flows from operating activities:
Net earnings (loss) $ (55,718) $ 122,759
Adjustments to reconcile net earnings ( loss)
to net cash provided by operating activities:
Discontinued operations - 317,063
Depreciation and amortization 48,589 78,015
Minority interest in subsidiary (2,879) (9,944)
Gain on investments - (906,458)
Changes in assets and liabilities:
Accounts receivable 11,054 11,585
Inventories (48,759) (14,093)
Prepaid expenses (1,240) 19,236
Other assets 298,451 (430,222)
Accounts payable (94,473) (308,144)
Accrued liabilities 17,842 (805,545)
Net cash provided by (used in) operating activities 172,867 (1,925,748)
Cash flows from investing activities:
Investments 63,348 (10,600,000)
Increase in long-term investments - (403,563)
Purchase of property, plant and equipment (19,789) (7,716)
Net cash provided by (used in) investing activities 43,559 (11,011,279)
Cash flows from financing activities:
Increase (decrease) in notes payable and
long-term obligations (122,289) (384,913)
Purchase and retirement of treasury stock (64,456) -
Payment to affiliates - (288,548)
Net cash provided by (used in) financing activities (186,745) (673,461)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 29,681 (13,610,488)
Cash and cash equivalents - beginning of period 542,086 14,503,417
Cash and cash equivalents- end of period $ 571,767 $ 892,929
</TABLE>
See accompanying notes.
6
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Three months ended October 31, 1998 and 1997
(Unaudited)
<TABLE>
<S> <C> <C>
Three months ended
October 31,
1998 1997
Supplemental disclosures of cash flow information:
Cash paid during the period for Interest $ 72,835 $ 72,737
</TABLE>
See accompanying notes.
7
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
October 31, 1998
(Unaudited)
NOTE A - GENERAL
Electric & Gas Technology, Inc.("the Company"or "ELGT") was
organized under the laws of the State of Texas on March 18, 1985,
to serve as a holding company for operating subsidiary
corporations. The Company presently is the owner of 100% of
Reynolds and Hydel and owns 91.5% of AMT and, through such
subsidiaries, operates in three distinct business segments: (1)
production of atmospheric water, filtration and enhanced water
products (AMT); (2) the manufacture and sale of natural gas
measurement, metering and odorization equipment (Reynolds); and
(3) the manufacture and sale of electric meter enclosures and
pole-line hardware for the electric utility industry and the
general public (Hydel). Effective October 1, 1997, the Company
agreed to sell its defense electronics business segment and on
December 31, 1997 it sold its plastics segment. Both such
operations have been treated as discontinued operations.
Effective July 31, 1997, the Company discontinued the operations
of its metal fabrication segment which previously was engaged in
the manufacture and sale of precision metal enclosures for
telecommunication and computer equipment (Logic). The Company
sold its Canadian heating division and its U.S. meter socket and
Test Switch divisions during fiscal 1996 and 1995. These
operations were part of the electric segment.
The accompanying condensed financial statements have been
prepared in accordance with the regulations of the Securities and
Exchange Commission (SEC) for inclusion in the Company's
Quarterly Report on Form 10-Q. They are subject to year-end
audit adjustments; however, they reflect all adjustments of a
normal recurring nature which are, in the opinion of Management,
necessary for a fair statement of the results of operations for
the interim periods.
The statements were prepared using generally accepted accounting
principles. As permitted by the SEC, the statements depart from
generally accepted accounting disclosure principles in that
certain data is combined, condensed or summarized that would
otherwise be reported separately and certain disclosures of the
type that were made in the Notes to Financial Statements for the
year ended July 31, 1998 have been omitted, even though they are
necessary for a fair presentation of the financial position at
October 31, 1998 and 1997 and the results of operations and cash
flows for the periods then ended.
8
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
October 31, 1998
(Unaudited)
NOTE B - INVENTORIES
Inventories are comprised as follows:
October 31, 1998 July 31, 1998
Raw Materials $1,121,532 $1,076,237
Work in process 450,886 443,566
Finished Goods 1,675,739 1,679,595
$3,248,157 $3,199,398
NOTE C - COMMON AND PREFERRED STOCK AND EARNINGS PER SHARE
On December 15, 1995, the Company closed on a Note Purchase
Agreement with Allied Products Corporation ("Allied"), thereby
obtaining Allied's right, title and interest in and to a certain
Promissory Note and all security existing thereunder and
obligations of Cooper Manufacturing Corporation ("Cooper") under
this Note and the Facility Agreement formerly executed by Cooper
and its shareholders in exchange for $100,000 in cash and newly
issued 90,000 shares of Series A, $10.00 par value, 7%
Convertible Preferred stock of the Company. The promissory note
was due on December 31, 1995 and demand for payment was made on
Cooper and its guarantors. The preferred stock is convertible
into common stock of the Company at the ratio of two shares of
common stock for each share of preferred stock. Each holder of
record of the shares of preferred stock is entitled to one vote
per share equal to the voting rights of the common shareholders.
The Company has agreed to make whole any deficiency upon
conversion and subsequent sale after December 31, 1997 of the
Company's common stock for less than $900,000. The Company's
common stock trades at less than $2.00 per share which if sold at
that price would require 450,000 shares to be sold to retire the
obligation to Allied. The Preferred shares are redeemable in
cash plus accrued dividends at any time as the result of an
underwriting as defined therein. Accumulated and unpaid
dividends to preferred stock amounted to approximately $181,233
at October 31, 1998.
The individuals whose stock was pledged and who personally
guaranteed the Allied Note, petitioned the court on behalf of
Cooper to file for protection under the U.S. Bankruptcy laws in a
Houston, Texas court. The Bankruptcy Court approved the debtor's
plan of reorganization in the Cooper bankruptcy on December 5,
1997. In accordance with such plan, the Company received cash of
$700,000, notes receivable totaling $220,000, a 2.5% royalty
agreement on new rigs sold and 1,000,000 shares of Cabec Energy
Corp. The investment in Cooper was adjusted to the value of the
consideration received.
9
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
October 31, 1998
(Unaudited)
NOTE C - COMMON AND PREFERRED STOCK AND EARNINGS PER
SHARE(Continued)
In 1997, The Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128, "Earnings
per Share". Statement 128 replaced the previously reported
primary and fully diluted earnings per share with basic and
diluted earnings per share. Unlike primary earnings per share,
basic earnings per share excludes any dilutive effects of
options, warrants and convertible securities. Dilute earnings
per share is very similar to the previously reported fully
diluted earnings per share. All earnings per share amounts for
all periods have been presented, and when necessary, restated to
conform to the Statement 128 requirements.
The following table sets forth the computation of basic and
diluted earnings per share:
Three months ended
1998 1997
Numerator
Net income (loss)from continuing
operations $ (55,718) $439,822
Preferred stock dividends (15,879) (15,879)
Numerator for basic earnings per share
Net income (loss) available to
common stockholders continuing
operations (71,597) 423,943
Discontinued operations - (317,063)
Net income (loss) available to
common stockholders $ (71,597) $ 106,880
Effect of dilutive securities
Preferred stock dividends $ 15,879 $ 15,879
10
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
October 31, 1998
(Unaudited)
NOTE C - COMMON AND PREFERRED STOCK AND EARNINGS PER
SHARE(Continued)
Three months ended
1998 1997
Numerator for diluted earnings per share
Net income (loss) available to
common stockholders after
assumed conversion continuing
operations $ (55,718) $439,822
Discontinued operations - (317,063)
Net income (loss) available to
common stockholders $ (55,718) $122,759
Demoninator
Demoninator for basic earnings per share
weighted-average shares 8,166,324 8,030,624
Effect of dilutive securities:
Options 290,000 290,000
Preferred stock 625,000 600,000
915,000 890,000
Demoninator for dilutive earnings per share
assumed conversion 9,081,324 8,920,624
Options to purchase shares ranging in price from $2.00 to $2.75
for 102,000 shares and shares ranging in price from $2.50 to
$4.68 for 395,000 shares were outstanding during 1998 and 1997,
respectively but were not included in the computation of dilutive
earnings per share because the options' exercise price was
greater that the average market price of the common shares and,
therefore, the effect would be antidilutive.
11
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
October 31, 1998
(Unaudited)
NOTE D - DISPOSITIONS
The Company discontinued its defense electronics business segment
(SMI) effective October 1, 1997 as result of an agreement to sell
this business segment to the president of SMI. Effective
December 31, 1997, the Company sold its plastics segment
(Fridcorp) for cash of approximately $760,000 with a
corresponding gain of approximately $210,000. Accordingly, the
financial statements have been reclassified to reflect these
segments as a discontinued operations. Sales, cost of goods
sold, selling, general and administrative expense and other were
as follows:
1997
Sales $ 918,684
Cost of goods sold 758,208
Selling, general and administrative 408,431
Other 69,108
Discontinued operations $(317,063)
12
<PAGE>
NOTE E - INDUSTRY SEGMENT DATA:
<TABLE>
<S> <C> <C> <C> <C> <C>
The Company's business is primarily comprised of three industry segments: i. water (AMT);
ii. natural gas measurement and recording devices and odorization (Reynolds); and iii.
electrical components and enclosures (Hydel) as set forth below. Operating profits
represent total sales less cost of sales and general and administrative expenses.
Three Months Ended October 31, 1998
(Unaudited)
General
Water Gas Electric Corporate Consolidated
Sales $ - $753,969 $2,110,031 $ - $2,864,000
Cost of goods sold 19,109 329,570 1,682,305 - 2,030,984
Selling, gen. & adm. 16,790 320,887 323,079 295,304 956,060
Operating profit(loss) (35,899) 103,512 104,647 (295,304) (123,044)
Interest, net - (12,343) (26,157) 86,395 47,893
Other income(expense) - 16,823 - 2,610 19,433
Net earnings (loss) from continuing
operations before income taxes $(35,899) $107,990 $ 78,490 $(206,299) $(55,718)
Assets:
Receivables $659 $433,180 $1,141,642 $116,331 $1,691,812
Inventory $423,133 $972,398 $1,852,626 $ - $3,248,157
Total assets $827,775 $2,114,546 $4,270,554 $13,670,680 $20,883,555
Depreciation $1,722 $14,333 $29,244 $3,290 $48,589
Additions PP&E $ - $947 $18,842 $ - $19,789
</TABLE>
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The Company, through its subsidiaries, operates within three
separate industries. These are (i) production of atmospheric
water, filtration and enhanced water products; (ii) the
manufacture of natural gas measurement equipment and gas
odorization products; and (iii) the manufacture and sale of metal
enclosures and other electrical equipment for use in the electric
utility industry.
Results of Operations
Summary. The Company reported net earnings (loss) from
continuing operations and net earnings of $(55,718) and $(55,718)
and $439,822 and $122,759 for the three months ended October 31,
1998 and 1997, respectively. Operating income increased by
$294,392 to $172,260 the result of slightly higher revenues,
improved margins and lower selling,general and administrative
expenses. The first quarter of fiscal 1997 was benefited by the
favorable treatment under the debtor's confirmed Plan for Cooper
Manufacturing Corporation in bankruptcy. Gross margins improved
from 23.68% to 29.09%. Selling, general and administrative
expenses as a relationship to revenues at the segment level
decreased from 28.08% to 23.07% of revenues. Net interest cost
decreased due mainly to decreased borrowing and earnings on
short-term investments.
Increases(decreases) for the three months period ended October
31, 1998, as compared with the similar period of 1997, for key
operating data were as follows:
Three Months Ended
October 31, 1998
Increase Percent
(Decrease) Change
Operating Revenues $87,218 3.14
Operating Income 294,392 241.04
Earnings (loss) from continuing operations
before income taxes (495,540) (112.67)
Net Earnings Per Share (.02) (200.00)
14
<PAGE>
The following table represents the changes [increase/(decrease)]
in operating revenues, operating income and net earnings before
income taxes by the respective industry segments when compared to
the previous period:
Three Months Ended
October 31, 1998
Increase
(Decrease) Percent
Operating Revenues:
Water $ (52,105) (59.74)
Gas 146,318 167.76
Electric (6,995) (8.02)
$ 87,218 100.00
Operating Income (Loss):
Water $ 65,302 22.18
Gas 187,077 63.55
Electric 42,013 14.27
294,392 100.00
General Corporate 40,908
Other Income (Expense) (830,840)
Earnings from continuing operations
before Income Taxes $(495,540)
Water segment had no revenues during the first quarter of fiscal
1999. Expenses amounted to $35,899 which were monies expended
for further development and testing of the newly designed
"Watermaker." The Company continues to test and develop this
technology to ultimately produce reliable, safe and marketable
products.
Gas revenues increased by $146,318 for the three months ended
October 31, 1998. Operating income increased by $187,077 for the
three months ended October 31, 1998, resulting in operating
profit of $103,512, the result of improved margins and reduced
selling, general and administrative expenses.
15
<PAGE>
Electric revenues remained approximately the same for the three
months ended October 31, 1998, decreasing by only $(6,995).
Gross margins for the three months remained relatively unchanged
around 20%. Operating profits increased by $ 42,013 due to the
lower carrying cost of the Paris, Texas facility and improved
performance in the Canadian operation. The electric segment now
consist of only the Canadian meter socket and pole line hardware
product lines selling almost entirely in the Canadian markets.
With the exception of expense relationships discussed above in
the specific segment discussion, such other relationships remain
consistent. Operating profits increased by 10.41%, the effect of
improved margins 5.40% and reduced selling, general and
administrative expenses by 5.01%, discussed above, for the three
months ended October 31, 1998.
Liquidity and Capital Resources
Liquidity. Current assets of the Company totaled $12,488,371 at
October 31, 1998 and $12,483,093 at July 31, 1998. Current
liabilities decreased slightly by $(112,089), resulting in a
increase in working capital (current assets less current
liabilities) to $9,206,621 at October 31, 1998, from $9,089,254
at July 31, 1998. The Company believes that it has and will
generate sufficient cash to meet its working capital requirements
and debt obligations.
Hydel has a working capital line-of-credit with a Canadian bank
in the amount of approximately $1,500,000. The Canadian credit
facility is secured by receivables, inventories and equipment of
Hydel.
The Company continues to borrow under its CIT Group
Credit/Finance, Inc. revolving and term loan facility. Borrowing
under the revolving portion is based on eligible accounts
receivable and inventory. The outstanding revolving loan balance
was $313,900 and the term loan balance was $70,278 at October 31,
1998.
Capital Expenditures
For Fiscal 1999, the Company (and its subsidiaries) does not
anticipate any significant capital expenditures, other than in
the ordinary course of replacing worn-out or obsolete machinery
and equipment utilized by its subsidiaries.
Dividend Policy
No cash dividends have been declared by the Company's Board of
Directors since the Company's inception. The Company does not
contemplate paying cash dividends on its common stock in the
foreseeable future since it intends to utilize it cash flow to
invest in its businesses. Cumulative dividends on the Series A,
7% Convertible Preferred Stock, have not been paid and amounted
to $181,233 as of October 31, 1998.
16
<PAGE>
Other Business Matters
Year 2000. The Company currently believes that it does not have
any significant exposure to uncertainties nor material
anticipated costs with regard to Year 2000 issues. The Company
has significantly reduced its operating subsidiaries over the
last two years minimizing certain risks. Current systems and any
anticipated upgrades are 2000 compliant.
Reporting Comprehensive Income. Statement of Financial Accounting
Standards No. 130 establishes standards for reporting and display
of comprehensive income, its components and accumulated balances.
Comprehensive income is defined to include all changes in equity
except those resulting from investments by owners and
distributions to owners. The company will be required to show its
pension liability adjustments and foreign currency translation
adjustments in comprehensive income.
Accounting for Post-Retirement Benefits. The Company provides no
post-retirement benefits; therefore, FASB No. 106 will have no
impact on the Company's financial position or result of
operations.
Inflation. The Company does not expect the current effects of
inflation to have any effect on its operations in the foreseeable
future. The largest single impact effecting the Company's
overall operations is the general state of the economy and
principally the home construction sector.
Information regarding and factors affecting forward looking
statements. Forward-looking statements include statements
concerning plans, objectives, goals, strategies, future events or
performances and underlying assumption and other statements which
are other than statements of historical facts. Certain statements
contained herein are forward-looking statements and, accordingly,
involve risks and uncertainties which could cause actual results
or outcomes to differ materially from those expressed in the
forward-looking statements. The Company's expectations, beliefs
and projections are expressed in good faith and are believed by
the Company to have a reasonable basis, including without
limitations, management's examination of historical operating
trends, data contained in the Company's records and other data
available from third parties, but there can be no assurance that
management's expectations, beliefs or projections will result, or
be achieved, or accomplished.
17
<PAGE>
PART II
ITEM 1. LEGAL PROCEEDINGS
Ammon & Rizos Co., Inc. Vs. Metal Products, Inc.-Cause No.; 97-
06860-C; District Court Dallas County, Texas. The former
manufacturers representative of Logic, Ammon & Rizos Co, has
filed a suit against the Company, the Company's chairman of the
board, Logic, and New Logic Design Metals, Inc. ("New Logic")(the
purchaser of the assets) for unpaid fees, assumed by New Logic
and a previous adjustment in prior fees plus prospective fees
from New Logic's sales. The case has yet to go to trial.
Management believes there will be no material effect on the
Company.
Allied Products Corp., a Delaware Corporation Vs. Electric & Gas
Technology, Inc., a Texas Corporation; Cause No. 97C5256: United
States District of Northern District of Illinois. Allied
Products Co has sued the Company under the Preferred Stock issued
by the Company in connection with its investment in Cooper
Manufacturing Corporation ("Cooper") and the rights pertaining
thereto. The suit was filed in the Eastern District of Illinois
(Chicago). The Company filed a counter suit alleging security
violations (10b5) demanding return of its Preferred Stock. In
addition, the Company has been advised by the Cooper's debtor-in-
possession that it has filed a suit claiming preference and other
violations by Allied. The ultimate resolution of this case will
depend in part upon the outcome of the Cooper bankruptcy case.
The bankruptcy court confirmed the debtor's Plan of
Reorganization on November 21, 1997. The court awarded Allied a
summary judgement and dismissed the Company's counterclaim on
November 3, 1998, however, the issue of damages was not addressed
by the court. The Debtor's estate continues to pursue its claims
against Allied and is considering the possibility of a three
party settlement between the Company, Allied and the bankruptcy
estate. The ultimate outcome of any such discussions cannot be
determined. Further, the Company may appeal the court's decision
and does not expect the damages, if any, to have a material
effect on the Company.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)NONE
(b)Reports on Form 8-K.
NONE
18
<PAGE>
SIGNATURE
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.
ELECTRIC & GAS TECHNOLOGY, INC.
/s/ Edmund W. Bailey
Edmund W. Bailey
Vice President and
Chief Financial Officer
Dated: December 11, 1997
19
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1999
<PERIOD-END> OCT-31-1998
<CASH> 571,767
<SECURITIES> 6,875,616
<RECEIVABLES> 1,702,940
<ALLOWANCES> 11,128
<INVENTORY> 3,248,157
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0
900,000
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</TABLE>
