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: January 31, 2000
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 - 8,343,417 shares at March 6, 2000.
<PAGE>
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
Index to Form 10-Q
For the Quarter Ended January 31, 2000
Page
Part I - Financial Information
1. Condensed Consolidated Financial Statements:
(a)Condensed Consolidated Balance Sheets as
of January 31, 2000 and July 31, 1999 3
(b)Condensed Consolidated Statements of
Operations for the three and six months
ended January 31, 2000 and 1999 4
(c)Condensed Consolidated Statements of
Changes in Stockholders' Equity for
six months ended January 31, 2000 5
(c)Condensed Consolidated Statements of
Cash Flows for the six months ended
January 31, 2000 and 1999 6
(d)Notes to Condensed Consolidated
Financial Statements 7-12
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 13-16
Part II - Other Information
Item 1 - Legal Proceedings 17
Item 6 - Exhibits and Reports on Form 8-K 17
Signature (pursuant to General Instruction E) 18
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
Consolidated Financial Statements or Notes thereto.
2
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
January 31, 2000 and July 31, 1999
ASSETS
January 31, July 31,
2000 1999
CURRENT ASSETS(Unaudited)
Cash and cash equivalents $ 504,025 $ 378,340
Certificates of deposit 1,713,886 2,810,842
Investments 3,318 519,646
Accounts receivable, net 1,668,274 1,606,637
Inventories 2,868,580 2,669,280
Prepaid expenses 38,554 61,906
Total current assets 6,796,637 8,046,651
PROPERTY, PLANT AND EQUIPMENT, net 1,778,163 1,797,363
OTHER ASSETS 4,646,017 3,628,276
TOTAL ASSETS $13,220,817 $13,472,290
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Notes payable $ 1,194,243 $ 1,731,202
Accounts payable 1,321,763 1,330,054
Accrued liabilities 245,076 276,060
Current maturities of long-term obligations 156,731 153,126
Total current liabilities 2,917,813 3,490,442
LONG-TERM OBLIGATIONS
Long-term obligations, less current
maturities 1,132,699 1,210,254
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 8,343,417 issued
and outstanding 83,434 83,434
Additional paid-in capital 9,258,795 9,258,795
Retained earnings 838,133 496,866
Pension liability adjustment (237,825) (237,825)
Cumulative translation adjustments (472,232) (529,676)
10,370,305 9,971,594
Reserve for preferred stock redemption (1,200,000) (1,200,000)
Total stockholders' equity 9,170,305 8,771,594
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $13,220,817 $13,472,290
See accompanying notes.
3
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three and Six Months Ended January 31, 2000 and 1999
(Unaudited)
Three months ended Six months ended
January 31, January 31,
2000 1999 2000 1999
Sales $3,069,538 $2,696,458 $6,106,488 $5,560,458
Cost of goods sold 2,374,495 1,991,264 4,622,283 4,022,248
Gross profit 695,043 705,194 1,484,205 1,538,210
Selling, general and
administrative expenses 813,498 1,011,863 1,650,286 1,967,923
Operating profit (loss) (118,455) (306,669) (166,081) (429,713)
Other income and (expenses)
Interest, net 4,296 58,770 51,934 106,663
Minority interest - 1,696 - 4,576
Investment gain 10,969 - 347,830 -
Other, net 105,301 31,644 107,584 48,198
120,566 92,110 507,348 159,437
NET EARNINGS (LOSS) 2,111 (214,559) 341,267 (270,276)
Dividend on preferred
stock 15,879 15,879 31,759 31,759
Net earnings (loss) applicable
to common stock $(13,768) $(230,438) $ 309,508 $(302,035)
Earnings (loss) available per Common share:
Net income $0.00 $(0.03) $0.04 $(0.04)
Earnings (loss) available per Common share - assuming dilution:
Net income $0.00 $(0.03) $0.04 $(0.03)
See accompanying notes.
4
ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Six months ended January 31, 2000
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
(Unaudited)
Accumulated Reserve
Other Redemption
Preferred Common Paid-in Retained Comprehensive Preferred
Stock Stock Capital Earnings Income Stock Total
Balance at July 31, 1999 $900,000 $83,434 $9,258,795 $496,866 $(767,501) $(1,200,000) $8,771,594
Net income 341,267 341,267
Currency translation adjustments 57,444 57,444
Comprehensive income (loss) 398,711
Balance at January 31, 2000 $900,000 $83,434 $9,258,795 $838,133 $(710,057) $(1,200,000) $9,170,305
</TABLE>
See accompanying notes.
5
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended January 31, 2000 and 1999
(Unaudited)
Six months ended
January 31,
2000 1999
Increase (decrease) in cash:
Cash flows from operating activities:
Net earnings (loss) $ 341,267 $ (270,276)
Adjustments to reconcile net earnings (loss)
to net cash provided by operating
activities:
Depreciation and amortization 103,739 96,727
Minority interest - (4,576)
Gain on investments (347,830) -
Changes in assets and liabilities:
Accounts receivable (61,637) 282,962
Inventories (199,300) (298,607)
Prepaid expenses 23,352 (24,031)
Other assets 49,350 415,984
Accounts payable 3,436 (105,555)
Accrued liabilities (30,984) 79,978
Net cash provided by (used in) operating
activities (118,607) 172,606
Cash flows from investing activities:
Investments 1,613,284 (93,444)
Increase in long-term investments (635,870) -
Purchase and retirement of treasury stock - (114,456)
Purchase of property, plant and equipment (84,539) (63,937)
Net cash provided by (used in) investing
activities 892,875 (271,837)
Cash flows from financing activities:
Increase (decrease) in notes payable and
long-term obligations (565,192) (231,576)
Due to/from affiliate (83,391) 62,449
Net cash provided by(used in)financing
activities (648,583) (169,127)
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 125,685 (268,358)
Cash and cash equivalents-beginning of period 378,340 542,086
Cash and cash equivalents - end of period $ 504,025 $ 273,728
Supplemental disclosures of cash flow information:
Cash paid during the year for Interest $ 275,033 $ 255,480
See accompanying notes.
6
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
January 31, 2000
(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, 1999 have been omitted, even though they are
necessary for a fair presentation of the financial position at
January 31, 2000 and 1999 and the results of operations and cash
flows for the periods then ended.
7
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31, 2000
(Unaudited)
NOTE B - INVENTORIES
Inventories are comprised as follows:
January 31, 2000 July 31, 1999
Raw Materials $1,064,883 $1,118,659
Work in process 376,822 370,982
Finished Goods 1,426,875 1,179,639
$2,868,580 $2,669,280
NOTE C - 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 approximately $1.00 per share which if
sold at that price would require 960,000 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
$260,112 at January 31, 2000.
An Illinois's court awarded a judgement on January 28, 1999 in
favor of Allied and against the Company in the amount of
approximately $1,100,000. The pending lawsuit between Allied and
the Company has now been settled and dismissed. The settlement
required the repurchase by the Company of the 90,000 shares of
preferred stock for $1.1 million which would satisfy a judgement
by the Court requiring such a purchase. An affiliate acquired
said 90,000 shares and the judgement. The transaction was
completed by the affiliate with $1.2 million of collateral
supplied by the Company. The affiliate is pursuing the sale of
the preferred stock, which if unsuccessful, the Company will
repurchase the preferred stock and retire same.
8
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31, 2000
(Unaudited)
NOTE C - PREFERRED STOCK AND EARNINGS PER SHARE(Continued)
The following table sets forth the computation of basic and
diluted earnings per share:
Three months ended Six months ended
2000 1999 2000 1999
Numerator
Net income (loss) $ 2,111 $(214,559) $341,267 $(270,276)
Preferred stock dividends (15,879) (15,879) (31,759) (31,759)
Numerator for basic earnings per share
Net income (loss) available to
common stockholders $ (13,768) $(230,438) $309,508 $(302,035)
Effect of dilutive securities
Preferred stock dividends $ 15,879 $ 15,879 $ 31,759 $ 31,759
Numerator for diluted earnings per share
Net income (loss) available to
common stockholders after
assumed conversion $ 2,111 $(214,559) $341,267 $(270,276)
Denominator
Denominator for basic earnings per share
weighted-average shares 8,343,417 8,148,624 8,343,417 8,164,241
Effect of dilutive securities:
Options 74,649 - 74,649 -
Preferred stock 960,000 - 960,000 -
1,034,649 - 1,034,649 -
Denominator for dilutive earnings per share
assumed conversion 9,378,066 8,148,624 9,378,066 8,164,241
9
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31, 2000
(Unaudited)
NOTE C - PREFERRED STOCK AND EARNINGS PER SHARE(Continued)
Assumed conversion of preferred stock 1999 is anti-dilutive.
Options to purchase shares ranging in price from $.50 to $.55 for
77,207 shares and shares ranging in price from $.50 to $2.75 for
352,000 shares were outstanding during 2000 and 1999,
respectively but were only included in the computation of
dilutive earnings per share for 2000 because the options'
exercise price was less than the average market price of the
common shares and were dilutive.
NOTE D - ACCUMULATED OTHER COMPREHENSIVE INCOME:
The components of other comprehensive income are as follows:
Currency Pension
Translations Liability
Adjustments Adjustments Total
Balance at July 31, 1999 $(529,676) $(237,825) $(767,501)
Currency translation adjustments 57,444 - 57,444
Balance January 31, 2000 $(472,232) $(237,825) $(710,057)
10
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31, 2000
(Unaudited)
NOTE E - INDUSTRY SEGMENT DATA:
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 January 31, 2000
General
Water Gas Electric Corporate Consolidated
Sales $ 2,241 $ 669,798 $2,397,499 $ - $3,069,538
Cost of goods sold 19,823 405,154 1,949,518 - 2,374,495
Selling, gen. & adm. 3,352 253,547 344,606 211,993 813,498
Operating profit(loss) (20,934) 11,097 103,375 (211,993) (118,455)
Interest, net - (16,616) (23,093) 44,005 4,296
Other income(expense) - 10,426 - 105,844 116,270
Net earnings (loss) $(20,934) $ 4,907 $ 80,282 $ (62,144) $ 2,111
Assets:
Receivables $ - $ 356,408 $1,149,700 $ 162,166 $1,668,274
Inventories $ 51,870 $ 819,208 $1,997,502 $ - $2,868,580
Total assets $281,285 $1,874,501 $4,309,636 $6,755,395 $13,220,817
Depreciation $1,189 $18,503 $29,451 $3,093 $52,236
Additions PP&E $ - $ 4,266 $24,171 $5,682 $34,119
11
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ELECTRIC & GAS TECHNOLOGY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
January 31, 2000
(Unaudited)
NOTE E - INDUSTRY SEGMENT DATA(Continued):
Six Months Ended January 31, 2000
General
Water Gas Electric Corporate Consolidated
Sales $ 2,241 $1,427,665 $4,676,582 $ - $6,106,488
Cost of goods sold 29,637 825,199 3,767,447 - 4,622,283
Selling, gen. & adm. 7,579 550,933 678,564 413,210 1,650,286
Operating profit(loss) (34,975) 51,533 230,571 (413,210) (166,081)
Interest, net - (29,226) (46,776) 127,936 51,934
Other income(expense) - 45,427 - 409,987 455,414
Net earnings (loss) $(34,975)$ 67,734 $ 183,795 $ 124,713 $ 341,267
Depreciation $2,378 $ 37,006 $ 58,170 $ 6,186 $ 103,740
Additions PP&E $ - $ 29,375 $ 49,482 $ 5,682 $ 84,539
Net earnings were materially effected by the Company's successful
resolution of its lawsuit with its former manufacturer's
representative of its discontinued metal fabrication segment.
The Company had previously provided a reserve of approximately
$500,000 against any potential exposure in connection with the
lawsuit and any claims made by the purchaser of the business.
This suit and any claims were settled whereby the Company
contributed approximately $200,000 to a global settlement. The
balance resulted in a gain of approximately $300,000.
12
<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 $341,267 and $2,111
for the six and three months ended January 31, 2000,
respectively. This compared to losses of $(270,276) and
$(214,559) for the six and three months ended January 31, 1999,
respectively. Operating income decreased by $(35,869) and
$(17,200) for the six and three month periods, the result of
reduced performance in the gas segment in both revenues and
margins. These reductions were partially offset by increased
revenue in the electric segment. Gross margins decreased from
27.66% to 24.31%, principally affected by the gas segment.
Selling, general and administrative expenses as a relationship to
revenues at the segment level decreased from 22.57% to 20.26% of
revenues.
Increases(decreases) for the three and six months period ended
January 31, 2000, as compared with the similar period of 1999,
for key operating data were as follows:
Three Months Ended Six Months Ended
January 31, 2000 January 31, 2000
Increase Percent Increase Percent
(Decrease) Change (Decrease) Change
Operating Revenues $373,080 12.15 $546,030 8.94
Operating profit (loss) (17,200) (15.53) (35,869) (12.67)
Net earnings 218,366 100.98 616,118 224.16
Net Earnings Per Share .03 100.00 .08 200.00
13
<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 Six Months Ended
January 31, 2000 January 31,2000
Increase Increase
(Decrease) Percent (Decrease) Percent
Operating Revenues:
Water $ 2,241 .60 $ 2,241 .41
Gas (70,492) (18.89) (66,594) (12.20)
Electric 441,331 118.29 610,383 111.79
$ 373,080 100.00 $546,030 100.00
Operating Profit (Loss):
Water $ (3,008) (17.49) $ 18,850 52.55
Gas (38,359) (223.02) (101,435) (282.79)
Electric 24,167 140.51 46,716 130.24
(17,200) 100.00 (35,869) 100.00
General Corporate 205,414 299,501
Other Income (Expense) 30,152 352,486
Net earnings $218,366 $616,118
Water revenues for the six months ended January 31, 2000 amounted
to $2,241 which was a sale of a demonstrator of this segments
"Watermaker" product occurring during the second quarter. No
revenues were recorded during fiscal 1999. Expenses were $37,216
and $23,175 for the six and three months ended January 31, 2000,
respectively. This compares to expenses of $53,825 and $17,926
for the six and three months ended January 31, 1999,
respectively.
The Company continues to test and develop this technology to
produce reliable, safe and marketable products.
Gas revenues decreased by $(66,594) and $(70,492) for the six and
three months ended January 31, 2000. Operating income decreased
by $(101,435) and $(38,359) for the six and three months ended
January 31, 2000, resulting in operating profit of $51,533 and
$11,097, respectively. Selling, general and administrative
expenses decreased by $(33,226) for the six month period. A new
BTU meter which has been under development for the past few years
is currently undergoing field testing. Significant sales from
this product are not expected until fiscal 2001.
14
<PAGE>
Electric revenues increased for the six and three months ended
January 31, 2000 by $610,383 and $441,331. Operating profits
increased by $46,716 and $24,167 for the six and three months
ended January 31, 2000, respectively. In spite of the revenue
increases, operating profits rose only slightly due to a decline
in margins of approximately 1%. The margins were affected by
competition, production equipment problems and product mix. The
electric segment 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 losses were reduced by 61.35% and 61.37%
for the six and three months ended January 31, 2000,
respectively, the effect of reduced selling, general and
administrative costs and electric segment's revenue increases.
Liquidity and Capital Resources
Liquidity. Current assets of the Company totaled $6,796,637 at
January 31, 2000, down from current assets of $8,046,651 at July
31, 1999, or a decrease of $(1,250,014). Current liabilities
decreased by $(572,629), resulting in a decrease in working
capital (current assets less current liabilities) to $3,878,824
at January 31, 2000, from $4,556,209 at July 31, 1999. 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 $2,200,000 and additional
equipment line of $650,000 in Canadian dollars. 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 $298,250 and the term loan balance was $48,825 at January 31,
2000.
Capital Expenditures
For Fiscal 2000, the Company 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 gas and water subsidiaries. Planned expenditures
of approximately $450,000 for new equipment in its electric
segment may occur during the last half of fiscal 2000 and/or the
first quarter of fiscal 2001. These additions are expected to be
partially financed through our Canadian financial institutions.
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 $260,112 as of January 31, 2000.
15
<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.
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 material effect on its operations in the
foreseeable future. The largest single impact affecting the
Company's overall operations is the general state of the economy
and principally new home construction.
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.
16
<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. This case was settled by all parties on
November 17, 1999 with a payment of $500,000 to the plaintiff of
which the Company contributed $200,000 to the settlement. The
balance of $300,000 was paid by New Logic. The Company had
previously sold (1997) its metal fabrication business to New
Logic.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)NONE
(b)Reports on Form 8-K.
NONE
17
<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: March 8, 2000
18
<PAGE>
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0
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