UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For Quarterly Period Ended March 31, 1997
Commission File Number 1-11046
TOP SOURCE TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)
Delaware 84-1027821
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7108 Fairway Drive, Suite 200, Palm Beach Gardens, Florida 33418
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (561) 775-5756
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. Yes X No ___
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at May 15, 1997
Common stock: $.001 par value 28,461,477 shares
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements Page
Consolidated Balance Sheet as of March 31, 1997
(Unaudited) and September 30, 1996.......................1
Consolidated Statements of Operations for the
Three and Six Months Ended March 31, 1997 and 1996
(Unaudited).............................................2-3
Consolidated Statements of Cash Flows for the Six
Months Ended March 31, 1997 and 1996 (Unaudited)..........4
Notes to Unaudited Interim Consolidated
Financial Statements....................................5-6
ITEM 2. Management's Discussion and Analysis of Interim
Financial Condition and Results of Operations...........6-10
PART II - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K.................................10
i
<PAGE>
<TABLE>
TOP SOURCE TECHNOLOGIES, INC.
Form 10-Q
CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 1997 AND SEPTEMBER 30, 1996
(UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
March 31 September 30
ASSETS 1997 1996
---------------- -----------------
Current Assets:
Cash and cash equivalents $1,240,493 $653,129
Accounts receivable trade (net of allowance of
$83,650 at March 31 and September 30) 3,714,048 4,100,672
Advances to officer 30,994 ---
Inventories 792,112 511,958
Prepaid expenses 306,874 325,946
Other 125,434 111,685
---------------- -----------------
Total current assets 6,209,955 5,703,390
Property and equipment, net 2,412,358 2,503,033
Manufacturing and distribution rights and patents, net 311,264 333,762
Capitalized database, net 2,389,444 2,494,860
Deferred income tax assets, net 355,000 355,000
Other assets, net 771,283 784,203
Net assets from discontinued operations --- 3,838,468
-----------------
================
TOTAL ASSETS $12,449,304 $16,012,716
================ =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $1,412,802 $1,836,395
Accrued salaries 12,200 229,939
Accrued liabilities 1,036,374 1,520,099
Net liabilities from discontinued operations --- 489,558
---------------- -----------------
Total current liabilities 2,461,376 4,075,991
Senior convertible notes 3,020,000 3,020,000
---------------- -----------------
Total liabilities 5,481,376 7,095,991
Commitments and contingencies
Stockholders' equity:
Preferred stock - $.10 par value, 5,000,000 shares
authorized; none outstanding --- ---
Common stock-$.001 par value, 50,000,000 shares
authorized; 28,461,477 and 28,446,477 shares issued and
outstanding on March 31 and September 30, respectively 28,461 28,446
Additional paid-in capital 28,744,451 28,723,853
Accumulated deficit (20,484,633) (19,703,789)
Treasury stock-at cost; 450,734 and 87,534 shares
on March 31 and September 30, respectively (1,320,351) (131,785)
---------------- -----------------
Total stockholders' equity 6,967,928 8,916,725
---------------- -----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $12,449,304 $16,012,716
================ =================
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
1
<PAGE>
<TABLE>
TOP SOURCE TECHNOLOGIES, INC.
Form 10-Q
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1997 1996
---------------- -----------------
Revenue:
Product sales $5,072,140 $3,294,201
Service revenue 172,860 16,727
---------------- -----------------
Net sales 5,245,000 3,310,928
---------------- -----------------
Cost of sales:
Cost of product sales 3,282,215 2,224,288
Cost of services 69,181 ---
---------------- -----------------
Cost of sales 3,351,396 2,224,288
---------------- -----------------
Gross profit 1,893,604 1,086,640
---------------- -----------------
Expenses:
General and administrative 1,188,892 1,430,050
Selling and marketing 375,368 344,426
Depreciation and amortization 272,927 228,801
Research and development 891 20,890
---------------- -----------------
Total expenses 1,838,078 2,024,167
---------------- -----------------
Income (loss) from operations 55,526 (937,527)
Other income (expense):
Interest income 28,301 25,339
Interest expense (70,703) (67,950)
Other income, net 20,266 5,711
---------------- -----------------
Net other expense (22,136) (36,900)
---------------- -----------------
Income (loss) before income taxes 33,390 (974,427)
Income tax expense (18,500) (167,500)
-----------------
---------------- -----------------
Income (loss) from continuing operations 14,890 (1,141,927)
---------------- -----------------
Income (loss) from discontinued operations 36,933 (106,083)
================ =================
Net income (loss) $ 51,823 $(1,248,010)
================ =================
Loss per weighted average common share outstanding:
Continuing operations ($0.04)
Discontinued operations (0.00)
=================
Total $ (0.04)
=================
Weighted average common shares outstanding 27,937,624
=================
Net income per common and common equivalent share:
Continuing operations $ 0.00
Discontinued operations 0.00
================
Total $ 0.00
================
Weighted average common and common equivalent shares:
Primary 28,560,577
================
Fully Diluted 28,560,690
================
</TABLE>
See accompanying notes to unaudited interim consolidated
financial statements.
2
<PAGE>
<TABLE>
TOP SOURCE TECHNOLOGIES, INC.
Form 10-Q
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
<C> <C>
1997 1996
---------------- -----------------
Revenue:
Product sales $8,269,677 $6,723,997
Service revenue 199,435 19,758
---------------- -----------------
Net sales 8,469,112 6,743,755
---------------- -----------------
Cost of sales:
Cost of product sales 5,505,334 4,317,823
Cost of services 78,435 ---
---------------- -----------------
Cost of sales 5,583,769 4,317,823
---------------- -----------------
Gross profit 2,885,343 2,425,932
---------------- -----------------
Expenses:
General and administrative 2,481,833 2,476,844
Selling and marketing 618,594 546,164
Depreciation and amortization 539,779 453,698
Research and development 3,225 34,097
---------------- -----------------
Total expenses 3,643,431 3,510,803
---------------- -----------------
Loss from operations (758,088) (1,084,871)
Other income (expense):
Interest income 67,034 66,111
Interest expense (141,150) (133,740)
Other income, net 26,427 39,949
---------------- -----------------
Net other expense (47,689) (27,680)
---------------- -----------------
Loss before income taxes (805,777) (1,112,551)
Income tax expense (37,000) (182,500)
-----------------
---------------- -----------------
Loss from continuing operations (842,777) (1,295,051)
---------------- -----------------
Income (loss) from discontinued operations 61,933 (2,688)
================ =================
Net loss $ (780,844) $ (1,297,739)
================ =================
Loss per weighted average common share outstanding:
Continuing operations $ (0.03) $ (0.05)
Discontinued operations 0.00 (0.00)
================ =================
Total $ (0.03) $ (0.05)
================ =================
Weighted average common shares outstanding 28,135,616 27,828,500
================ =================
</TABLE>
See accompanying notes to unaudited interim consolidated
financial statements.
3
<TABLE>
TOP SOURCE TECHNOLOGIES, INC.
Form 10-Q
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1997 1996
---------------- -----------------
Net loss ($780,844) ($1,297,739)
Adjustments to reconcile net loss to
net cash used in operating activities:
Loss (income) from discontinued operations (61,933) 2,688
Depreciation 558,664 496,180
Amortization 138,957 137,818
Disposal of equipment 178,324 16,627
Decrease in deferred income tax assets, net --- 150,000
Advance to officer (30,994) ---
Decrease (increase) in accounts receivable, net 386,624 (48,121)
Increase in inventories (280,154) (590,137)
Decrease in prepaid expenses 19,072 68,034
Increase in other assets (2,839) (71,184)
Decrease in accounts payable (423,593) (216,087)
Decrease in accrued salaries (217,739) (249,179)
Decrease in accrued liabilities (483,725) (430,656)
---------------- -----------------
Net cash used in operating activities (1,000,180) (2,031,756)
---------------- -----------------
INVESTING ACTIVITIES:
Purchases of property and equipment, net (1,007,369) (674,622)
Reimbursement of tooling costs 361,056 465,222
Additions to patent costs, net (9,033) (30,202)
Discontinued operations - change in net assets 3,410,843 225,307
---------------- -----------------
Net cash provided by (used in) investing activities 2,755,497 (14,295)
---------------- -----------------
FINANCING ACTIVITIES:
Proceeds from sale of common stock, net 20,613 844,641
Repurchase of treasury stock (1,188,566) ---
Proceeds from borrowings --- 960,000
-----------------
----------------
Net cash provided by (used in) financing activities (1,167,953) 1,804,641
---------------- -----------------
Net increase (decrease) in cash and cash equivalents 587,364 (241,410)
Cash and cash equivalents at beginning of period 653,129 1,154,137
---------------- -----------------
Cash and cash equivalents at end of period $1,240,493 $912,727
================ =================
</TABLE>
See accompanying notes to unaudited interim consolidated
financial statements.
4
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying financial statements of Top Source Technologies, Inc.
(the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do
not include all the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included in the accompanying
financial statements. The consolidated financial statements include the accounts
of the Company and its subsidiaries. All significant intercompany accounts and
transactions have been eliminated. The results of operations of any interim
period are not necessarily indicative of the results of operations for the
fiscal year. For further information, refer to the financial statements and
footnotes thereto included in the Company's annual report on Form 10-K/A No.1
for the year ended September 30, 1996. Certain fiscal year 1996 amounts have
been reclassified to conform to current year presentation.
New Accounting Standard
In February 1997, the Financial Accounting Standards Board ("FASB")"
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share". SFAS No. 128 supersedes the previous standard (Accounting Principles
Board Opinion No. 15), modifies the methodology for calculating earnings per
share, and is effective for periods ending after December 15, 1997; early
adoption is not permitted. Upon adoption, the Company will be required to
restate previously reported earnings per share data to conform with the
requirements of SFAS No. 128. Had the provisions of SFAS No. 128 been applicable
to the accompanying condensed consolidated financial statements, basic and
diluted earnings per share, as calculated in accordance with the provisions of
SFAS No. 128, would not have been different from the earnings per share amounts
reported herein for the quarter ending March 31, 1997.
2. INVENTORIES
Inventories consisted of the following:
March 31 September 30
1997 1996
---- ----
Raw materials $ 553,891 $ 398,248
Finished goods 238,221 113,710
------- -------
$ 792,112 $ 511,958
============ ============
5
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
NOTES TO UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
3. TREASURY STOCK
On November 12, 1996, the Company announced that it had put into effect
a stock repurchase plan to repurchase up to 400,000 shares of its common stock.
From November 12, 1996 through December 31, 1996, the Company repurchased
345,000 shares of the Company's common stock at an average purchase of $3.32.
For the period January 1, 1997 through May 15, 1997, the Company
purchased 33,700 shares at an average price of $2.12. In total, from November
12, 1996 through May 15, 1997, the Company repurchased 378,700 shares at an
average price of $3.22 per share.
All shares purchased through the period ended March 31, 1997 are
included in treasury stock in the accompanying balance sheet at March 31, 1997.
4. DISCONTINUED OPERATIONS
On September 12, 1996, the Company's Board of Directors approved a plan
to sell certain assets and liabilities of the Company's oil analysis subsidiary,
Top Source Oil Analysis, Inc., (currently inactive) formerly named United
Testing Group, Inc. ("UTG"). The sale was consummated on October 30, 1996. The
income and losses of UTG for the three and six months ended March 31, 1997 and
1996 are included in the consolidated statement of operations under
"discontinued operations." Income from discontinued operations for the three and
six month periods ended March 31, 1997 is the result of changes in estimates
relating to cost to dispose of these operations. Revenue from such operations
for both the three and six months ended March 31, 1997 was $0, and $1,137,283
and $2,286,135 for the three and six month periods ended in 1996, respectively,
and was not included in service revenue in the accompanying consolidated
statements of operations.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Total revenue for the three and six month periods ended March 31, 1997
was $5,245,000 and $8,469,112, respectively, compared to $3,310,928 and
$6,743,755, respectively, for the same periods in fiscal 1996. The $1,934,072
and $1,725,357 increase in revenue for the three and six month periods ended
March 31, 1997 is primarily attributable to increased product sales of overhead
speaker systems ("OHSS") at the Company's Top Source Automotive, Inc. subsidiary
("TSA"); it also had increased service revenue from the On-Site Analyzers
("OSAs") at Top Source Instruments, Inc. ("TSI") formerly named On-Site
Analysis, Inc. compared to the same periods ended March 31, 1996. Service
revenue for the three and six month period ended March 31, 1997 includes the
sale of an OSA unit for approximately $145,000 in February 1997.
6
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Results of Operations - (Continued)
The Company anticipates that TSA revenues during the third fiscal
quarter ending June 30, 1997 will be comparable to second quarter 1997 levels.
On June 30, 1997, the Company's contract to produce OHSS for the Jeep
Cherokee(TM) expires. The loss of this contract will be partially offset by
the commencement of OHSS production line shipments in August 1997 for the
new Jeep Grand Cherokee(TM)vehicle.
Based on existing programs, overall TSA revenue for the fourth quarter
of fiscal 1997, and for fiscal year 1998, excluding any new aftermarket business
that can be obtained, is estimated to be 20% to 35% below comparable fiscal 1997
levels.
TSA is currently seeking strategic relationships and has signed
confidentiality agreements with three major Original Equipment Manufacturer
("OEM") suppliers that could result in production line orders for OHSS in fiscal
years after 1998.
In addition, the Company is seeking strategic relationships with
several aftermarket suppliers. One test market program is scheduled to begin in
July 1997. These potential aftermarket programs, if successful, could result in
significant 1998 revenues; however, there can be no assurances that these
contracts can be obtained, or that these contracts will offset or exceed the
loss of revenues and profits on the Cherokee contract.
In May 1997, the Company shipped an OSA unit to an OEM located in
Detroit, Michigan for evaluation in powertrain development. Currently, there are
three OSA units being used for powertrain development at another Detroit OEM.
The Company expects to receive a purchase order and record revenue in the near
future from the sale of one of the three OSA units at the second OEM.
On May 16, 1997, the Company extended until December 31, 1997, its
letter agreement (originally signed on January 10, 1997) with Cleveland
Technical Center ("CTC") a division of Conam Inspection, Inc. (the purchaser of
the UTG assets - see Discontinued Operations) a subsidiary of Stavely
Industries, plc. from the United Kingdom, to jointly market OSAs in North
America. Under the terms of this agreement, TSI and CTC will jointly establish
pilot mini-laboratories for the purpose of determining the value of a North
American franchise. The Company believes it will sign a definitive franchise
agreement with Conam or other parties that will yield multiple OSA sales;
however, there can be no assurances as to the timing of this agreement.
Although the commercialization of OSAs has taken longer than
anticipated, based on the continuing reliability demonstrated by OSA units over
a long period of time, sales and marketing initiatives in progress, and customer
endorsements, the Company anticipates generating an increasing quarterly revenue
stream from OSA units, although there can be no assurances.
The gross profit margin for three months ended March 31, 1997 was 36.1%
compared to 32.8% for the same period in 1996. The increase in the gross profit
margin compared to the prior year is primarily attributable to decreased labor
and overhead costs relating to product sales at TSA.
7
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Results of Operations - (Continued)
General and administrative expenses decreased 16.9% for the three month
period ended March 31, 1997 compared to the same period in 1996. This decrease
is attributable to personnel reductions in the Company's corporate office,
offset by higher levels of expense at the Company's subsidiary, TSI, for the
comparable periods.
Selling and marketing increased 13.3% for the six months ended March
31, 1997 compared to the same period ended in 1996. The increase was primarily
attributable to the continued marketing and promotional activities in support of
the OSA.
Depreciation and amortization increased 19.3% and 19.0% for the three
and six month periods ended March 31, 1997 compared to the same periods in 1996.
The increase is primarily due to purchases of $1,007,369 in capital assets which
consists of additional OSA units at TSI and capital equipment expenditures at
TSA in the six months ended March 31, 1997. Depreciation and amortization of
$157,842 was allocated to cost of sales as it directly relates to the products
and services sold during the six months ended March 31, 1997 compared to
$180,300 for the same period ended in 1996.
The net income of $51,823 for the three months ended March 31, 1997
compared to a net loss of ($1,248,010) in the same period in 1996 is primarily
attributable to significantly increased product and service revenues, and
reduced general and administrative expenses. The decrease in the year to date
net loss of ($780,844) for six months ended March 31, 1997 compared to
($1,297,739) the same period in 1996 is primarily attributable to increased
product and service revenues.
The Company anticipates that profit levels will continue at comparable
levels through the third fiscal quarter ending June 30, 1997. On June 30, 1997
(as noted above) the Company's contract at TSA to produce the OHSS for the
Jeep Cherokee(TM) expires. The significant negative short term impact of the
loss of this contract on profitability will be partially offset by
production of OHSS for the new Grand Cherokee vehicle. In order to further
reduce the impact on profitability, the Company is (1) seeking aftermarket
alliances at TSA, (2) attempting to increase revenues of OSA units, and
(3) will implement cost reductions, if necessary. The Company believes that
these measures will be successful, however, there can be no assurances.
Liquidity and Capital Resources
Net cash used in operating activities was ($1,000,180) for the six
months ended March 31, 1997. This usage of cash was attributable to a net
operating loss of $145,156 which excludes depreciation, amortization and the
loss from discontinued operations, an increase in inventories of $280,154 due to
the model year changeover on the Chrysler Jeep Wrangler, a decrease in
accounts payable, accrued salaries, and accrued liabilities of $1,125,057. This
was partially offset by a decrease in accounts receivable of 386,624, disposal
of equipment of 178,324 and a decrease in prepaid expenses of $19,072.
8
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Liquidity and Capital Resources - (Continued)
Net cash provided by investing activities was $2,755,497. This source
of cash was attributable to the change in net assets of Top Source Oil Analysis,
Inc. ("TSOA"), formerly UTG, of $3,410,843 and reimbursement of tooling costs of
$361,056, offset by $1,007,369 expended for capital assets, and $9,033 for
patent costs.
Net cash used in financing activities was ($1,167,953) which consisted
of net proceeds from sales of common stock through exercise of stock options of
$20,613, which was offset by the repurchase of 363,200 shares of the Company's
common stock at an average purchase price of $3.27 per share, for a total of
$1,188,566.
Currently, the Company has a $3,750,000 credit facility with First
Union Bank of Florida, ("Bank"). This facility, which is secured by
substantially all of the assets of the Company, is comprised of two separate
lines, a $1,500,000 line for short term working capital ("Credit Line"), and a
$2,250,000 line to be used exclusively for the purchase of OSA units ("OSA
Line".)
On April 30, 1997, the Bank renewed the Credit Line until July 31,
1997; the OSA line expires on December 31, 1997. The Credit Line which has not
been utilized since fiscal 1995, and the OSA Line which has never been utilized
were both fully accessible at March 31, 1997. At May 15, 1997 no amounts were
outstanding on either Line.
On May 12, 1997, the Company received a definitive commitment from an
asset based lender to provide a $5,000,000 credit facility to the Company to
replace the Company's existing credit facility. Pending completion of final
legal documentation and due diligence by both the lender and the Company, the
Company anticipates accepting this commitment or a similar type of commitment
from another asset based lender, before the expiration of the Credit Line on
July 31, 1997. Based on the preliminary terms of the definitive commitment,
the Company would have immediate current borrowing availability of approxi-
mately $3,000,000.
Based on current cash balances, the Credit Line, and TSA and TSI
revenues, the Company believes it has sufficient cash flow and liquidity to fund
its current operations and anticipated increasing OSA commercialization.
Forward-Looking Statements
The statements discussed above under Results of Operations and
Liquidity and Capital Resources relating to the Company's expectations that it
anticipates (1) generating increasing revenue from OSAs and receiving additional
purchase orders for OSA units, (2) signing a definitive franchise agreement, (3)
obtaining aftermarket revenues at TSA , (4) maintaining fiscal second quarter
profitability levels through the third fiscal quarter, (5) developing strategic
relationships, (6) mitigating the financial impact of the loss Cherokee contract
(7) signing a new bank financing agreement and (8) improving current liquidity
are forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
9
<PAGE>
TOP SOURCE TECHNOLOGIES, INC.
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF INTERIM FINANCIAL
CONDITION AND RESULTS OF OPERATIONS - Continued
Forward-Looking Statements - (Continued)
As the text above discusses, the results expected by any or all of
these forward-looking statements may not occur. Important factors that could
cause actual results to differ materially from the forward-looking statements
include the following: (1) the decline in current production levels at Chrysler
for vehicles installing OHSS, (2) the continued reliability of the OSA
technology over an extended period of time, (3) the Company's ability to market
OSAs in various markets, (4) the acceptance of the OSA technology by the
marketplace, (5) the general tendency of large corporations to slowly change
from known technology to emerging new technology, (6) the Company's reliance on
a third party to manufacture OSAs, (7) potential future competition from third
parties that may develop proprietary technology which either does not violate
the Company's proprietary rights or is claimed not to violate the Company's
proprietary rights, and (8) unanticipated business or legal disagreements which
impacts the signing of a definitive franchise agreement, bank financing
agreement, or strategic relationships.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
27.0 Financial Data Schedule
b. Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended March 31, 1997.
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.
TOP SOURCE TECHNOLOGIES, INC.
By: /s/ DAVID NATAN
David Natan
Vice President and Chief Financial Officer
Dated: May 20, 1997
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> JAN-1-1997
<PERIOD-END> MAR-31-1997
<CASH> $1,204,493
<SECURITIES> 0
<RECEIVABLES> 3,714,048
<ALLOWANCES> 83,650
<INVENTORY> 792,112
<CURRENT-ASSETS> 6,209,955
<PP&E> 2,412,358
<DEPRECIATION> 2,331,169
<TOTAL-ASSETS> 12,449,304
<CURRENT-LIABILITIES> 2,461,376
<BONDS> 0
0
0
<COMMON> 28,461
<OTHER-SE> 6,939,467
<TOTAL-LIABILITY-AND-EQUITY> 12,449,304
<SALES> 8,469,112
<TOTAL-REVENUES> 8,469,112
<CGS> 5,583,769
<TOTAL-COSTS> 5,583,769
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (141,150)
<INCOME-PRETAX> (805,777)
<INCOME-TAX> (37,000)
<INCOME-CONTINUING> (842,777)
<DISCONTINUED> 61,933
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (780,844)
<EPS-PRIMARY> (0.03)
<EPS-DILUTED> 0
</TABLE>
