<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934.
For the quarterly period ended September 30, 1995
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _____________________
Commission file number: 0-23380
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FIBERCORP INTERNATIONAL, INC.
-----------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 22-276935987
-------- ------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5300 W. Atlantic Avenue, Delray Beach, FL 33484-8197
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(407) 495-5568
--------------
(Issuer's telephone number)
----------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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.
[X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
Common Stock, $.01 Par Value
6,588,828 Shares as of November 16, 1995
<PAGE>
PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1 - FINANCIAL STATEMENTS.
FIBERCORP INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Balance Sheet
September 30, 1995
(unaudited)
<TABLE>
<S> <C>
Assets
------
Current assets:
Cash $ 8,841
Accounts receivable 193,398
Inventory 358,310
Prepaid expenses 94,629
----------
Total current assets 655,178
Property and equipment, less accumulated depreciation
and amortization of $623,453 200,271
Capitalized technology and other software, less
accumulated amortization of $1,260,633 2,900,220
Other assets 15,766
----------
$3,771,435
==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Notes payable $ 775,152
Current installments of long-term debt 312,613
Accounts payable 1,130,661
Accrued expenses 1,358,775
----------
Total current liabilities 3,577,201
Long-term debt, less current installments -
----------
Total liabilities 3,577,201
----------
Stockholders' equity:
Convertible preferred stock, series C, D, E, F and G - $.01
par value, Authorized 5,000,000 shares; issued and outstanding
3,859,254 shares ($3,859,254 liquidation preference) 38,592
Common stock - $.01 par value. Authorized 25,000,000
shares; issued and outstanding 6,588,828 shares 65,888
Additional paid-in capital 16,067,054
Accumulated deficit (15,977,300)
----------
Total stockholders' equity 194,234
----------
3,771,435
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
FIBERCORP INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
------------------- ---------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net sales $ 665,169 $ 2,868,436 $ 106,658 $ 912,293
Cost of goods sold 670,617 1,860,239 81,183 667,222
----------- ----------- --------- ---------
Gross profit (5,448) 1,008,197 25,475 245,071
Research and development expense 187,046 276,441 65,537 82,080
Selling, general and administrative
expense 1,721,787 2,873,866 342,366 917,000
----------- ----------- --------- ---------
Operating loss (1,914,282) (2,142,110) (382,429) (754,009)
Other expense - interest, net (116,660) (170,922) (40,478) (97,316)
----------- ----------- --------- ---------
Net loss (2,030,942) (2,313,032) (422,907) (851,325)
Preferred stock dividends 240,993 127,479 134,389 42,493
----------- ----------- --------- ---------
Net loss applicable to
common shareholders $(2,271,935) $(2,440,511) $(557,296) $(893,818)
=========== =========== ========= =========
Weighted average common
shares outstanding 6,548,356 6,288,760 6,588,828 6,264,159
Net loss per share of common stock $(.35) $(.37) $(.09) (.14)
======= ======= ======= =====
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FIBERCORP INTERNATIONAL, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,030,942) $(2,313,032)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization 507,307 469,913
Changes in assets and liabilities:
Accounts receivable 363,477 331,402
Inventory 86,460 (142,714)
Prepaid expenses and other assets (30,227) (5,418)
Accounts payable and accrued expenses 687,234 1,093,518
----------- -----------
Net cash used in operating activities (416,693) (566,331)
----------- -----------
Cash flows from investing activities:
Capital expenditures (14,736) (46,455)
Purchase of technology and software (32,000) (426,353)
----------- -----------
Net cash used in investing activities (46,736) (472,808)
----------- -----------
Cash flows from financing activities:
Proceeds from notes payable and long-term debt 155,000 999,000
Net payments on long-term debt and notes payable (380,935) (212,060)
Preferred stock dividends paid in cash (240,993) (127,493)
Proceeds from sale of common stock 257,375
Proceeds from sale of preferred stock 750,000 -
----------- -----------
Net cash provided by financing activities 283,072 916,822
----------- -----------
Net decrease in cash (180,357) (122,317)
Cash at beginning of period 189,198 564,219
----------- -----------
Cash at end of period $ 8,841 $ 441,902
=========== ===========
Supplemental disclosure of cash flow
information:
Cash paid for interest $ 57,863 $ 218,922
=========== ===========
Supplemental disclosure of non-cash investing
and financing activities:
Common stock issued in satisfaction
of long-term debt $ 101,324 $ -
=========== ===========
Common stock issued in satisfaction
of accrued interest and other accrued
liabilities $ 10,000 $ 60,625
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
FIBERCORP INTERNATIONAL, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
Nine months ended September 30, 1995
(unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not include all of the
information and disclosures required by generally accepted accounting
principles. However, such financial statements reflect all adjustments which
are, in the opinion of management, necessary for a fair statement of results for
the interim periods.
(2) Inventory
---------
Inventory is stated at the lower of cost (first-in, first-out method) or market
and consists of the following at September 30, 1995:
Finished goods $121,822
Raw materials 236,488
---------
$358,310
========
(3) T-1 Access Technology
----------------------
In December, 1993, the Company acquired certain technology which performs T-1
access, monitoring and testing ("T-1 Access"), for a purchase price of
$3,000,000 payable in shares of common stock of the Company. Certain accounting
rules now require justification of the carrying value of assets under various
certain conditions. In evaluating the Company's carrying value of this asset
and reviewing such evaluation with its independent accountants pursuant to these
rules prior to the filing of the Company's audited financial statements for the
year ended December 31, 1994, the Company was unable to supply sufficient
evidential matters relative to the carrying value of the T-1 Access technology.
Among the items that the Company was unable to evidence was its ability to fund
further development of this technology or perform the marketing efforts and
support necessary field tests required to introduce this technology to the
market. In October, 1995, the Company announced its intention to sell the T-1
Access Technology.
The Company and representatives of a financing group are holding discussions
regarding a possible financing for the Company (Refer to Part I, Item 2, See
Management's Plans). As part of those discussions, the representatives wish to
assess the market potential for T-1 Access. Therefore, they have requested that
the Company take no action to sell or otherwise reduce the current carrying
value of this technology until a market evaluation of this product line can be
conducted jointly by the Company and a telecommunications company affiliated
with the representatives. The Company has agreed to that request.
(4) Notes Payable and Long-Term Debt
--------------------------------
During the nine months ended September 30, 1995, the Company received $155,000
in financing in the form of seven notes payable, of which $145,000 of such notes
are from
5
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related parties. One of the notes is secured by certain inventory and accounts
receivable. The other notes are unsecured.
On March 29, 1995, Ronald G. Caravello, President of the Company, personally
assumed responsibility for a $101,324 note in exchange for the issuance of
common stock with an equivalent fair market value.
On April 26, 1995, the Company settled the Silver Web Corporation lawsuit
described in its 1994 Form 10-KSB for $442,018, which represented the face value
of the note, plus accrued interest to the date of settlement.
(5) Preferred Stock
---------------
During the nine-month period ended September 30, 1995, the Company issued a
total of 333,333 shares of Series G Convertible Preferred Stock for net proceeds
of $750,000. The shares are convertible into common stock of the Company with
the conversion rate determined by the price of the common stock on the date of
conversion. At September 30, 1995 no preferred shares had been converted.
(6) NASDAQ Listing Status
---------------------
In June, 1995, NASDAQ removed the Company's common stock from trading on its
Small Cap Market because the Company failed to maintain minimum capital and
surplus requirements. This action arose due to the Company's inability to
support, for purposes of its independent auditors, the carrying value of one of
its assets (see Note 3 T - 1 Access Technology). As a result, this asset was
excluded by NASDAQ in its determination of the Company's net capital and
surplus. The Company may reapply for trading on NASDAQ Small Cap Market if it
once again achieves the requisite net capital and surplus. The Company's stock
continues to trade on the "Electronic Bulletin Board" under the symbol: FCII.
6
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF PLAN OF OPERATIONS
- -------------------------------------------------------------------
Management's Discussion and Analysis of Results of Operations
- -------------------------------------------------------------
The Company had net sales of $106,658 in the three months ended September 30,
1995, compared to $912,293 in the three months ended September 30, 1994, which
represented a 88% decrease. For the nine-month period, the Company had net sales
of $665,169 in the nine months ended September 30, 1995, compared to $2,868,436
during the nine months ended September 30, 1994 which represented a 77%
decrease. The decreases are due to the reduction in backlog due to the
Company's inability to deliver due to its tight cash flow, the reduction in new
sales as existing customers wait for the Company to return to financial
stability before authorizing shipments or placing further orders and the
Company's decision to focus all of its very limited resources on the completion
of research and development of the initial battery monitoring products. Gross
profit for the third quarter ended September 30, 1995 was $25,475 and 24%,
whereas gross profit in the third quarter 1994 was $245,071 and 27%. For the
nine-month periods ended September 30, 1995 and 1994, gross profits were
$(5,448) and (1)% and $1,008,197 and 35%, respectively. While gross profit
percentages are influenced by product mix, volume of production and the amount
of engineering and installation effort required for each product sale, the
primary reason for the reduction in gross margin during 1995 was lower sales
volume.
Research and development expenses of $65,537 in the three months ended September
30, 1995 decreased by $16,543 and 20% as compared to $82,080 of such expenses in
the 1994 period. Research and development expenses of $187,046 in the nine
months ended September 30, 1995 decreased by $89,395 and 32% compared to
$276,441 of such expenses in the 1994 period. This decrease is attributable to
a general downsizing of research efforts to reflect the diminished financial
capacity of the Company. The research and development expenditures were
incurred in connection with the development of the new battery monitoring
products.
Selling and general and administrative expenses of $342,366 in the three months
ended September 30, 1995 decreased by $574,634 and 63% from $917,000 of such
expenses in the 1994 period. For the nine-month periods ending September 30,
1995 and 1994, such expenses decreased from $2,873,866 last year to $1,721,787
for the current year, a 40% decline. This decrease of $1,152,079 is the result
of reduced marketing and administrative activities as the Company continues to
reduce personnel and related overhead costs. Major categories of decreased
selling, general and administrative expenses during the 1995 period, as compared
to the 1994 period, include sales salaries and commissions, advertising and
promotions, administrative salaries and consulting and professional services.
Interest expense of $40,478 in the three months ended September 30, 1995
decreased by $56,838 and 58% as compared to $97,316 of such expense for the
three months ended September 30, 1994. The reduction in interest expense was
due to the payoff of the $409,000 Silver Web obligation in April 1995, as well
as the transfer of another $101,324 in debt to an officer of the Company in
March 1995. Interest expense of $116,660 in the nine months ended September 30,
1995 decreased by $54,262 and 32% as compared to $170,922 of such expense for
the nine months ended September 30, 1994. This decrease
7
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in interest expense was primarily caused by the Silver Web settlement and the
transfer of debt to an officer as discussed above.
For the three months ended September 30, 1995, the Company incurred a loss of
$422,907, a decrease of $428,418 or 50% compared to the $851,325 loss in the
prior year's three month's results. For the nine-month periods ending September
30, 1995, the loss was $2,030,942, a $282,090 and 12% decrease versus the 1994
results.
The impact of inflation has not been significant to the Company's operations.
Management's Discussion and Analysis of Financial Condition and Changes in
- --------------------------------------------------------------------------
Financial Condition
- -------------------
General
-------
The Company has incurred operating losses since inception. The Company's total
assets exceed its total liabilities by $194,234 at September 30, 1995, and the
Company has not yet generated positive cash flow from operations. In the
absence of positive cash flow from operations, management and a group of private
investors have provided the needed cash to enable the Company to continue
operating during the past several years. In order to enable the Company to
conserve cash resources, the Company has deferred salary payments to certain
officers and current as well as former employees, covering the periods from
November, 1994 through October, 1995. In July, 1995, because of the Company's
inability to pay salaries, it made a substantial reduction in its staff,
reducing personnel by 67% from thirty to ten. The Company is still suffering
adverse consequences from limited cash flow. In addition, the Company is
delinquent on payroll taxes, sales taxes and other obligations. The Company is
on a C.O.D. basis with most of its suppliers and vendors.
In order for the Company to attempt to restore itself to a position of financial
stability over the next several months via concluding a financing plan with
potential investors, the Company is actively attempting to work out repayment
programs with its various creditors. There can be no assurance that the Company
will be successful in concluding such arrangements. (See Part I, Item 2,
"Management's Plans" regarding management's plans for restructuring the
Company's debt and working out repayment programs with its creditors.)
At September 30, 1995, the Company's backlog was $328,000, with most items
scheduled for shipment in the fourth quarter of 1995 and the first quarter of
1996. The current backlog represents a decline of $1,172,000 and 78% versus
the $1,500,000 in backlog reported at June 30, 1995. Approximately $776,000 or
66% of this decline relates to one purchase order dated June, 1994 that the
Company no longer believes will be fulfilled. The remainder of the decrease is
primarily due to a marked softening of the sales backlog as customers wait for
the Company to return to financial stability before authorizing shipments or
placing further orders. The Company anticipates limited additional sales to its
existing customers and from new customers with its existing products, although
there can be no assurance that any such additional sales will materialize.
During the first quarter of 1995, the Company introduced its new line of Power
Products. This line, when fully developed, will represent proprietary battery
monitoring technology that allows users of commercial batteries to test various
functionalities (including remaining
8
<PAGE>
operating life), while the batteries remain on-line and in service. The
technology (US patent pending) also reports alarm data to central locations
where it can be received and analyzed by the Company's core products. The
Company is finalizing the design of the initial product. Beta testing units
are being jointly developed with Quest Controls, Inc. Please refer to Part II,
Item 5 for details on the Manufacturing and License Agreement with Quest
Controls, Inc. Field trials are scheduled to begin in December, 1995, with
production runs expected to commence in the second quarter of 1996. There can be
no assurance, however, that the field trials will be successful, or that the
product can be marketed successfully.
During 1995, management has taken several steps to reduce its debt and to raise
capital as follows:
. Raised additional capital through a private placement of preferred stock
for $250,000 in March 1995 and an additional $500,000 in April 1995.
. Converted a note payable of $101,324 to common stock through a private
placement in which an officer of the Company personally assumed the
debt.
. Borrowed an additional $155,000 through the issuance of seven notes, one
of which was secured by certain inventory and accounts receivable.
. During September, 1995 the Company factored an account receivable in
order to improve its cash flow. A director participated in this
financing. In October, 1995 the account receivable was paid and the
factoring relationship was terminated.
. During September, 1995, the Board of Directors authorized the issuance
of 650,000 shares of Series H, Cumulative Convertible Preferred Stock.
Each share of Series H could be purchased at $1.00 per share, had a
$1.00 liquidation preference, 2.5% dividend and could be converted into
2.7 shares of common stock.
In October, 1995, a group of officers, directors, advisors and
shareholders subscribed for a total of $512,999 of the Series H,
Cumulative Convertible Preferred Stock for notes and/or the conversion
of existing debt due them from the Company.
Prior to funding their cash subscription for the purchase of 316,797
shares of Series H Cumulative Preferred Stock, a group of the officers,
directors, advisors and shareholders deposited $316,797 into a separate
commitment account to pay for processing purchase orders for the core
technology, development of the Power Products and a limited amount of
operating overhead. As consideration for this funding commitment, the
Company agreed to pay interest on the amount of the funding commitment
at the rate of 18% simple interest per annum and a management fee of 15%
to Craig B. Stearns and further granted them five-year options to
acquire 855,352 shares at $0.37 per share. If the Company raises an
additional $250,000, the balance of the $316,797 funding commitment
will be tendered to the Company and the Series H Cumulative Preferred
Stock will automatically convert to common stock. If the Company does
not raise an additional $250,000, then the full amount of the funding
commitment will be considered payment for the 316,797 shares of Series H
Cumulative Preferred Stock and the interest payment obligation and the
management fee will terminate. As of November 15, 1995, $217,690 of the
9
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funding commitment had been used by the Company, and there was $99,107
still available to the Company under this arrangement.
Management's Plans
------------------
During the nine months ended September 30, 1995, management and the Board of
Directors began an extensive reassessment of FiberCorp's business activities,
strengths and direction. The reassessment concluded that FiberCorp's limited
financial and human resources must be focused on completion of the design and
testing of the Company's new battery monitoring technology (the "Power
Products"). The Company must also restructure and extend the payment terms of
its short and long-term liabilities (the "Debt Restructure Program").
The Power Products opportunity and Debt Restructure Program have enabled
FiberCorp to access a modest amount of working capital as previously described
above. These funds, however, have been available only to: (i) accelerate
development and field trial testing of the "Power Products"; (ii) support sales
of core monitoring technology; and (iii) begin executing the Debt Restructure
Program.
The Company continues to face a critical cash flow shortage. Its ability to
continue as a going concern depends primarily on the commercial success of its
Power Products and the restoration of its financial integrity as envisioned by
the Debt Restructure Program. The terms of the Debt Restructure Program have
not yet been finalized.
The product opportunity in the market for battery testing technology and the
planned debt restructure plan have provided the basis for a possible financial
transaction which the Company is currently negotiating with representatives of
an investment group. A condition to any such financial transaction will be,
however, that the Company first achieve a significant portion of its debt
restructure plan.
The representatives of the investment group have entered into a period of due
diligence in order to more closely examine the Company's financial condition and
finalize the terms and conditions of the proposed financial transaction. There
can be no assurance that these negotiations will be successful or that the
Company will otherwise be able to meet the new debt repayment terms that may be
achieved by the debt restructure program.
The Company and the representatives of the investment group have also held
preliminary discussions regarding the market for the Company's T-1 Access
technology. The Company had previously announced its intention to sell this
product line. The representatives have requested that the Company not sell this
technology until a joint evaluation can be conducted involving a separate
telecommunications company affiliated with the representatives. The Company has
agreed to that request.
In October, 1995, the Company entered into an agreement with a third party
whereby it will provide the engineering assistance to accelerate the final
prototype work for the field trials of the Company's Power Products. Please
refer to Part II, Item 5 for details on the manufacturing and license agreement
with Quest Controls, Inc.
The Company currently has limited financial resources, has incurred operating
losses since inception and has not generated positive cash flow from operations.
To the extent that cash is not available from the financing transaction or from
operations, the Company may not be
10
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able to meet its short-term working capital needs through continued borrowings
or capital contributions from management, the group of existing private
investors and potential new investors. Therefore, no assurances can be given
that the Company will be able to continue operating as a going concern.
PART II - OTHER INFORMATION
---------------------------
ITEM 1 - Legal Proceedings
The Company intends to address each of the following pending and threatened
legal matters within the context of its proposed Debt Restructure Program (see
"Management's Discussion and Analysis of Financial Condition . . . -Management's
Plans") and to negotiate cash settlements or seek extensions of payment
schedules. There can be no assurance that these negotiations will be successful
or that the Company will otherwise be able to meet any new debt repayment terms
that may be achieved by the Debt Restructure Program.
Pending Litigation
- ------------------
1. In October, 1995, FiberCorp, Inc. received from the County Court of Palm
Beach County, Florida, Fifteenth Judicial Circuit, a Notice of an Amended Order
resetting a pre-trial conference regarding a claim by AESP, Inc., plaintiff, a
vendor that has supplied materials to the Company. The plaintiff seeks $699,
plus interest, costs and attorney's fees.
2. In October, 1995, FiberCorp International, Inc. received notice of an Order
On Petition for Validation of Tax Warrants and Final Judgment from the Circuit
Court of the Fifteenth Judicial Circuit In Palm Beach County, Florida, regarding
a claim by John K. Clark, as Tax Collector, Palm Beach County, Florida,
petitioner. The petitioner seeks damages in the aggregate amount of $10,181,
plus interest, costs and attorney's fees for unpaid personal property taxes.
3. In September, 1995, FiberCorp, Inc. received notice of a Complaint from the
County Court of Palm Beach County, Florida regarding a claim by George Daly,
plaintiff, a former employee of the Company. The plaintiff seeks unpaid wages
and vacation in the aggregate amount of $9,125, plus interest, costs and
attorney's fees.
4. In September, 1995, FiberCorp International, Inc. received Notice of a
Summons and Complaint from the Circuit Court of the Fifteenth Judicial Circuit
In Palm Beach County, Florida, regarding a claim by Lippert/Heilshorn &
Associates, Inc., plaintiff. The plaintiff, a firm which performed public
relations work in the financial community, seeks damages in the
aggregate amount of $18,114, plus interest, costs and attorney's fees for
professional services rendered to the Company.
5. On October 20, 1995, a Final Judgment against FiberCorp, Inc. was granted by
the Circuit Court of the Seventeenth Judicial Circuit in Broward County,
Florida.in favor of Mobilecomm of Florida, Inc. The plaintiff was awarded an
aggregate amount of $19,524 for damages, interest, costs and attorney's fees for
certain mobile communication services and equipment provided to the Company on
which it had failed to make the agreed-upon payments in connection with a
repayment plan worked out with the plaintiff.
11
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6. In July, 1995, a judgment against FiberCorp, Inc. in the amount of $10,400
was awarded by Palm Beach County Court located in Palm Beach, Florida in favor
of Mupac Corporation.
7. In August, 1995, FiberCorp, Inc. and an officer of the Company received
notice of an Administrative Order 87-11 Conference For Civil Mediation from the
Thirteenth Judicial Circuit of the State of Florida, Mediation and Diversion
Services, Tampa, Florida regarding a claim by Larry Saunders, plaintiff, a
former employee of the Company. The plaintiff seeks unpaid wages in the
aggregate amount of $1,765, plus interest, costs and attorney's fees.
8. In October, 1995, a judgment against FiberCorp, Inc. in the amount of $2,115
was awarded by County Court located in Hillsborough County, Florida in favor of
Homer J. Thibodeaux, a former consultant.
Threatened Litigation
- ---------------------
During the past several months, several of the Company's creditors have advised
of their intentions to file legal actions and institute legal proceedings
against the Company. The Company intends to address each of its creditors
within the context of its Debt Restructure Program (see "Management's Discussion
and Analysis of Financial Condition . . . - Management's Plans") and to
negotiate cash settlements or seek extensions of payment schedules. There can
be no assurance that these negotiations will be successful or that the Company
will otherwise be able to meet the any new debt repayment terms that may be
achieved by the Debt Restructure Program.
ITEM 5- Other Information
1. Manufacturing and Licensing Agreement
On October 5, 1995 FiberCorp. Inc., ("FiberCorp.") a wholly-owned subsidiary of
FiberCorp International, Inc., entered into a letter of understanding with
Quest Controls, Inc. ("Quest"), located in Palmetto, Florida, whereby Quest and
FiberCorp. will participate in the development, field testing and manufacturing
of FiberCorp's proprietary battery monitoring technology (the "Power Products
"). Quest Controls, Inc. is a Florida -based electronic contract manufacturer
which sells its proprietary building management controller to customers,
including the Regional Bell Holding Companies. FiberCorp and Quest have been
working together since August, 1995 to finalize the development of the initial
models of the Power Products and to transition to Quest all FiberCorp's
manufacturing requirements. Quest will receive (a) a manufacturing agreement
with FiberCorp; (b) a licensing agreement with FiberCorp to market the Power
Products to certain of its customers; (c) 425,000 shares of common stock and
options to acquire 150,000 shares of the Company's Common Stock at a purchase
price of $1.00 per share and (f) $75,000 in cash of which $25,000 has been paid
to date. In October, 1995 FiberCorp shipped certain consignment inventory
related to its core technology, with a cost of $220,000, to Quest. FiberCorp
will compensate Quest for the sale of products assembled from such consignment
inventory at the rate of 30% of the Company's customary product sales price,
exclusive of any engineering and installation charges.
12
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2. Management Changes
On October 3, 1995, the Board of Directors elected Craig B. Stearns, a Director
of the Company, to the additional post of Chairman and Chief Executive Officer.
Mr. Stearns has been asked by the Board of Directors to assume responsibility
for redefining and implementing the Company's strategic plan. Ronald Caravello,
formerly Chairman, Chief Executive Officer and President, continues as
President.
13
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SIGNATURES
----------
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FiberCorp International, Inc.
(Registrant)
Date: November 17, 1995 /s/ Ellen M. Caravello
--------------------------------
Ellen M. Caravello
Executive Vice President
(Principal Accounting Officer)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FIBERCORP
INTERNATIONAL INC.'S 3RD QUARTER FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 8,841
<SECURITIES> 0
<RECEIVABLES> 193,398
<ALLOWANCES> 0
<INVENTORY> 358,310
<CURRENT-ASSETS> 655,178
<PP&E> 4,984,577
<DEPRECIATION> 1,884,086
<TOTAL-ASSETS> 3,771,435
<CURRENT-LIABILITIES> 3,577,201
<BONDS> 0
<COMMON> 38,592
0
65,888
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<TOTAL-REVENUES> 665,169
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<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 116,660
<INCOME-PRETAX> (2,030,942)
<INCOME-TAX> 0
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<EXTRAORDINARY> 0
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<NET-INCOME> (2,030,942)
<EPS-PRIMARY> (.31)
<EPS-DILUTED> (.31)
</TABLE>
