U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
( X ) QUARTERLY REPORT PURSUANT SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended ............. June 30, 1996
( ) TRANSITION REPORT PURSUANT SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ................... to ......................
Commission file number 33-11875-A
MEGALITH CORPORATION
Exact name of small business issuer as specified in its charter
Colorado 22-2701047
(State or other jurisdiction (IRS identification No.)
of incorporation or organization)
4720 Esco Drive, Fort Worth, Texas 76140
Address of principal executive offices
817-478-4299
Issuer's telephone number
None
(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) has filed all reports required by Section 13,
or 15(d) of the Exchange Act of 1934 during the past 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 the Company's common and preferred
stock as of June 30, 1996 are 11,418,181 and 11,307 respectively. In addition,
Company has granted options to various people to acquire 600,000 shares of
common stock for $0.50 each.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
Megalith Corporation and Subsidiary
Consolidated Balance Sheet
(Unaudited)
June 30 June 30
1996 1995
-------- --------
ASSETS (Unaudited) (Unaudited)
Current Assets
Cash $ 19,599 $(21,750)
Trade Accounts Rec , net 639,608 33,875
-------
Other receivable 76,953
Inventory after adjustments 820,259
Prepaid Expenses 1,250
Prepaid Insurance 33,463
Note Receivable 321,220
-------- --------
Total Current Assets $ 1,912,352 $ 12,125
Plant, Property & Equipment 8,962,296 54,000
Less; Accumulated Depreciation (204,075) 0
-------- --------
Net $ 8,758,221 $ 54,000
Other assets 6,156
-------- --------
Total Assets $10,676,729 $ 66,125
========== ========
LIABILITIES AND STOCKHOLDERS EQUITY
Current Liabilities
Accounts Payable, Trade $ 502,717 $ 60,000
Deposits from customers 23,992
American Factors 398,312
Accrued Expenses 21,340
Accrued Interest related to Esco 187,488
Short Term Notes to related parties 356,191
Current Portion of long term debt 743,110
Other current liabilities 28,287
--------
Total Current Liabilities $2,261,437
Long term notes payable net of current portion $3,019,868
Stockholders' Equity
Preferred Stock , 5,000,000 authorized
11,307 issued and outstanding
at June 30, 1996 $ 113,070 $ 0
Common Stock, 50,000,000 authorized
11,418,181 and 9,857,346
issued and outstanding at
June 30, 1996 and March 31, 1996 57,091 11,375
Additional Contributed Capital 5,901,604 73,304
Accumulated deficit (676,341) (78,554)
-------- --------
Total Stockholders' Equity 5,395,424 6,125
Total Liabilities & Equity $10,676,729 $ 66,125
========== ======
Page 2
<PAGE>
Megalith Corporation and Subsidiary
Consolidated Statements of Operations
Three Months Ended June 30
(Unaudited)
1996 1995
-------- --------
Revenues $ 725,763 $ 33,875
Cost of Goods Sold 519,315 27,750
-------- --------
Gross Profit 206,448 6,125
Expenses:
Selling, general & administrating exp. 292,298 0
Depreciation & Amortization 40,815
-------- --------
333,113 0
-------- --------
Operating Income (126,665) 6,125
Other income (expenses): (97,379) 194,564
Net Income (Loss) $(224,044) $200,689
======== ========
Net Income or (loss) per common and common
equivalent shares $ (0.02) $ 0.026
Number of common and common equivalent
shares outstanding 11,418,181 7,596,096
========== =========
Page 3
<PAGE>
Megalith Corporation and Subsidiary
Consolidated Statements of Stockholder's Equity
June 30, 1996
<TABLE>
<CAPTION>
Preferred Stock Common Stock
Issued Issued
---------------------- -------------------- Additional Retained Total
Amount Amount Paid in Earnings Stockholders'
Shares (at Par) Shares (at Par) Capital (Deficit) Equity
<S> <C> <C> <C> <C> <C> <C> <C>
Balance March 31, 1996 7,286 72,860 9,857,346 49,287 5,505,866 (452,297) 5,175,716
Shares issued to cancel notes 4,021 40,210 266,667 1,333 78,667 120,210
Shares issued for cash 1,294,168 6,471 317,071 323,542
Earnings (Loss) for quarter ended
June 30, 1996 (224,044) (224,044)
-------- -------- ---------- ------- --------- -------- ---------
Balance June 30, 1996 11,307 113,070 11,418,181 57,091 5,901,604 (676,341) 5,395,424
</TABLE>
Page 4
<PAGE>
Megalith Corporation and Subsidiary
Consolidated Statements of Cash Flows
Three Months Ended June 30
(Unaudited)
1996 1995
-------- --------
Cash flows from operating activities
Net income (loss) (224,044) 6,125
Cash used in operating activities:
Depreciation and amortization 40,815 0
Change in operating assets & liabilities:
Account receiveables 747
Other receiveables 75,897
Accounts payable 231,193
Customer prepayments (31,206)
Accrued expenses (17,014)
Inventory 21,988
Prepaid expenses 0
American Factors 42,363
Accrued Interest (22,652)
-------- --------
Net cash provided (used) by op activities 118,087 (34,597)
Cash flow from investing activities 0 (54,000)
Cash flow from financing activities:
Principal payment on notes (84,000) 60,000
-------- --------
Net increase (decrease) in cash 34,087 (28,597)
Cash, beginning of quarter (14,488) 722
-------- --------
Cash, end of quarter 19,599 (27,875)
Page 5
<PAGE>
Megalith Corporation and Subsidiary
Notes to Consolidated Financial Statements
June 30, 1996 and 1995
(Unaudited)
NOTE A - BASIS OF PRESENTATION
The accompanying Unaudited financial statements include Megalith
Corporation ("Megalith" or the "Company") and its wholly owned subsidiary, Esco
Elevator Corporation. These financial statements have been prepared by the
Company pursuant to the rules and regulations of the U.S. Securities and
Exchange Commission. Certain information and disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. In the opinion of management, all adjustments and disclosures
necessary to a fair presentation of these financial statements have been
included. Such adjustments consist of normal recurring adjustments.
The results of operations for the period ended June 30, 1996 are not
necessarily indicative of the results expected for the full year.
NOTE B - NOTES PAYABLE TO BANK AND OTHER OBLIGATIONS
In April, 1996, in exchange for canceling notes in the amount of $80,000.00
Company issued 266,667 shares of restricted common stock and 4,021 shares of
convertible preferred stock to one accredited investor. In addition under a
consulting agreement with Samad Group, Company issued 60,000 shares of common
stock to Samad Group.
Between May and June company raised $323,542 from a group of accredited
investors by issuing 1,294,168 shares of its restricted common stock. These
funds were used to acquire Vertical Lift Management ("VLM") and to cover
operating losses at Esco.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
CURRENT OPERATIONS
Revenues of the Company are derived from the sale of passenger and freight
elevators, components and replacement parts manufactured by its wholly-owned
subsidiaries, Esco Elevator Corporation and by service contracts of VLM.
For the quarter ending June 30, 1996, the revenues from sales of elevators
and parts were $725,763, with gross profit of $206,448 (or 28.44% of sales). The
Company incurred losses of $224,044.00 during the quarter.
Page 6
<PAGE>
On May 10, 1996 Company acquired 100% ownership of Vertical Lift Management
("VLM") of Irving, Texas which provides service, maintenance and installation of
elevators.
As described under subsequent events, on July 8, 1996, Company acquired
100% ownership of Dalcom Elevator Corporation in Garland, Texas. To achieve
economy of scale, as of August 10, 1996 Dalcom operations are moved to Esco and
its manufacturing is merged into Esco's manufacturing. Prior to merger with
Esco, Dalcom had approximately 60 employees. That number is reduced to 25
thereby reducing Dalcom's expenses.
PART II - OTHER INFORMATION
ITEM 1
LEGAL PROCEEDINGS
There is no new litigation filed against the Company since the last filing
which may have material adverse effect on the Company.
ITEM 2
CHANGE IN SECURITIES
Since the last filing, there has been no change or modification in the
rights of holders of common stock of the Company.
ITEM 3
DEFAULTS UPON SENIOR SECURITIES
(a) During the period of this filing, there has been no material default in the
payment of principal, interest, a sinking or purchase fund installment, or
any other material default not cured within 30 days, with respect to any
indebtedness of the Company.
(b) During the period of this filing, no dividends have been declared.
ITEM 4
SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
There has not been a shareholders meeting during this reporting time
period.
Page 7
<PAGE>
ITEM 5
OTHER INFORMATION
SUBSEQUENT EVENTS
On July 8, 1996, Company acquired 100% ownership of Dalcom Elevator
Corporation ("Dalcom") of Garland, Texas. Dalcom is a four year old company in
the business of manufacture and sales of elevator cabs and entrances.
As of August 10, 1996, Dalcom's operations are moved to Esco, in Fort
Worth, Texas.
Since the acquisition of Dalcom, Company's backlog of orders has increased
to over $ 5,000,000. Baggby Elevators, a distributor and installer of complete
elevators has agreed to purchase 100 elevators per year from Esco. That contract
is over $1,400,000 per year.
Mr. Darrell Armstrong, founder of Dalcom, has been assigned the title of
Director of operations and is managing the manufacturing and sales of the
combined companies. Mr. Armstrong has 25 years experience in the elevator
industry and thereby brings management strength to the Company.
After September 10, 1996, Company plans to raise additional capital through
the sales of its Series "C" preferred stock. In order to do that it will require
shareholders meeting to approve the amendment to its Articles of Incorporation
authorizing various Series of preferred stock. A shareholders meeting is
scheduled for September 10, 1996 at Company's headquarters.
MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's stock is eligible to be quoted on the National Association of
Security Dealers, Inc. Automated Quotations System (NASDAQ)OTC/BB. The Company
has seven (7) market makers.
The Company has not paid cash or stock dividends on its common stock in
either of its two most recent fiscal years and does not anticipate or
contemplate paying dividends in the foreseeable future. It is the present
intention of management to utilize all available funds for the development of
the Company's business. Several of the Company's current shareholders are
broker/dealers which hold title to the Company's shares for their customers.
Page 8
<PAGE>
SIGNATURES
In accordance with the requirement of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
MEGALITH CORPORATION:
/s/ Syed G. Zaidi
--------------------------------
Syed G. Zaidi, Chairman/CEO/ Director
Date: August 15, 1996
/s/ James W. Landrum
---------------------------
Mr. James W. Landrum
Vice President/Director
Date: August 15, 1996
Page 9
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 19,599
<SECURITIES> 0
<RECEIVABLES> 716,561
<ALLOWANCES> 0
<INVENTORY> 820,259
<CURRENT-ASSETS> 1,912,352
<PP&E> 8,962,296
<DEPRECIATION> 204,075
<TOTAL-ASSETS> 10,676,729
<CURRENT-LIABILITIES> 2,261,437
<BONDS> 3,019,868
0
113,070
<COMMON> 5,901,604
<OTHER-SE> 5,395,424
<TOTAL-LIABILITY-AND-EQUITY> 10,676,729
<SALES> 725,763
<TOTAL-REVENUES> 725,763
<CGS> 519,315
<TOTAL-COSTS> 292,298
<OTHER-EXPENSES> 97,379
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 187,488
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> (224,044)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (224,044)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
