<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
Commission File No. 0-16335
OZO DIVERSIFIED AUTOMATION, INC.
7450 East Jewell Avenue, Suite A
Denver, Colorado 80231
Telephone: (303) 368-0401
Colorado 84-0922701
(State of Incorporation) (IRS Employer Identification No.)
Indicate by check mark whether the Issuer (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities
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
As of June 30, 1996, Registrant had 452,664 shares of its $.10 par
value common stock outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
OZO Diversified Automation, Inc.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 8,051 $ 3,162
Accounts and notes receivable, net
of allowance for doubtful accounts
of $11,022 (1995) 136,339 180,960
Inventories (Note 3) 421,665 506,396
Prepaid expenses 8,300 15,144
Other 9,548 0
------------ -------------
Total Current Assets 583,902 705,662
------------ -------------
PROPERTY AND EQUIPMENT
Manufacturing 160,186 160,186
Furniture and fixtures 156,958 154,062
Capitalized Lease 14,620 14,620
Vehicle 10,820 10,820
------------ -------------
342,584 339,688
Less accumulated depreciation 322,500 315,909
------------ -------------
Total Property and Equipment 20,084 23,779
OTHER ASSETS
Deferred Financing Costs 20,467 24,380
------------ -------------
Total Assets $ 624,453 $ 753,821
------------ -------------
------------ -------------
</TABLE>
See notes to financial statements
2
<PAGE>
PART I - FINANCIAL INFORMATION (CONTINUED)
OZO DIVERSIFIED AUTOMATION, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of notes payable $ 115,903 $ 22,899
Accounts payable and accrued
expenses 367,155 522,780
Note payable - Bank 53,812 27,500
------------ ------------
Total Current Liabilities 536,870 573,179
------------ ------------
OTHER LIABILITIES
Long Term Debt and Capitalized
Lease Obligation 244,306 248,406
Total Liabilities 781,176 821,585
------------ ------------
SHAREHOLDERS' DEFICIENCY
Preferred stock, $.10 par value
authorized 1,000,000 shares
issued - none
Common stock, $.10 par value
authorized, 5,000,000 shares
issued and outstanding -
452,664 shares (1996)
452,664 shares (1995) 45,261 45,261
Capital in excess of par value 1,169,809 1,169,809
Accumulated deficit (1,371,793) (1,282,834)
------------ ------------
Total Shareholders' Deficiency (156,723) (67,764)
------------ ------------
Total Liabilities &
Stockholders' Deficiency $ 624,453 $ 753,821
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements
3
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Net Sales $ 1,072,048 $ 778,719
Cost of Sales 589,527 418,397
----------- -----------
Gross Profit 482,521 360,322
Operating Expenses:
Marketing & Sales 204,100 128,402
Research & Development 81,309 84,322
General and Administrative 286,071 235,390
----------- -----------
571,480 448,114
----------- -----------
Income (loss) before taxes (88,959) (87,792)
----------- -----------
NET INCOME (LOSS) $ (88,959) $ (87,792)
----------- -----------
----------- -----------
INCOME (LOSS) PER SHARE $ ( 0.20) $ (0.19)
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
4
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) $ (88,959) $ (87,792)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Depreciation 6,591 8,716
Amortization of deferred
financing costs 3,913 3,913
Other (9,548) (2,697)
Decrease (increase) in assets:
Accounts receivable 44,621 (33,218)
Inventories 84,731 (127,932)
Prepaid expenses 6,844 8,210
Increase (decrease) in accounts
payable and accrued expenses (129,313) 210,833
----------- -----------
Total adjustments 7,839 67,825
----------- -----------
Net cash used in operating
activities (81,120) (19,967)
----------- -----------
Cash flows from investing activities:
Capital Expenditures (2,895) 0
----------- -----------
Net cash provided (used) in
investing activities (2,895) 0
----------- -----------
Cash flows from financing activities:
Increase (decrease) in notes payable 88,904 (8,187)
----------- -----------
Net cash provided (used) by
financing activities 88,904 (8,187)
----------- -----------
Net increase (decrease) in cash 4,889 (28,154)
Cash at beginning of period 3,162 47,111
----------- -----------
Cash at end of period $ 8,051 $ 18,957
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1996 1995
<S> <C> <C>
Net Sales $ 359,497 $ 485,017
Cost of Sales 209,114 250,463
----------- -----------
Gross Profit 150,383 234,554
Operating Expenses:
Marketing & Sales 73,862 66,677
Research & Development 41,118 43,789
General and Administrative 149,724 140,482
----------- ------------
264,704 250,948
----------- ------------
Income (loss) before taxes (114,321) (16,394)
----------- ------------
NET INCOME (LOSS) $ (114,321) $ (16,394)
----------- ------------
----------- ------------
EARNINGS (LOSS) PER COMMON SHARE $ (0.25) $ (0.04)
----------- ------------
----------- ------------
See notes to financial statements
6
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1996 AND 1995
(UNAUDITED)
In the opinion of management of OZO Diversified Automation, Inc. (the
Company), the accompanying unaudited financial statements reflect all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the financial position of the Company as of June 30, 1996
and the results of operations and changes in financial position for the
the six months ended June 30, 1996.
The results of operations for the six months ended June 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ending December 31, 1996.
These unaudited financial statements should be read in conjunction
with the Company's annual report on Form 10-KSB for the year ended
December 31, 1995.
NOTE 1 - A summary of significant accounting policies is currently
on file with the Securities and Exchange Commission on
Form 10-KSB.
NOTE 2 - Income Taxes:
At December 31, 1995, the Company had net operating loss
carryforwards totaling approximately $1,119,000 that may
be offset against future taxable income through 2010 and
research and development credits of approximately $63,000
expiring through 2010.
The Company has fully reserved the tax benefits of these
operating losses because the likelihood of realization of the
tax benefits cannot be determined. These carryforwards are
subject to review by the Internal Revenue Service.
Temporary differences between the time of reporting certain
items for financial and tax reporting purposes, primarily from
using different methods of reporting depreciation costs and
warranty and vacation accruals, are not considered significant
by management of the Company.
NOTE 3 - Inventories:
</TABLE>
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
<S> <C> <C>
Raw Materials $ 256,619 $ 293,230
Work in process 82,684 81,521
Finished Goods 82,362 131,645
$ 421,665 $ 506,396
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the first six months ended June 30, 1996, the Company had revenues of
$1,072,048, a 38% increase from revenues of $778,719 for the comparable
period in 1995. During the quarter ended June 30, 1996, the Company had
revenues of $359,497, a 26% decrease over revenues of $485,017 for the
comparable period in 1995.
The loss for the first half ended June 30, 1996 was $88,959, compared with
a loss of $87,792 for the comparable period in 1995. The loss for the
quarter was $114,321 compared to a loss of $16,394 in 1995. Working
capital, although limited, is expected to be adequate to fund operations
and order backlog. Contributing to the loss in the second quarter were
shipment delays due to delays in receipt of customer engineering information
necessary to complete in-line depaneling systems. The increase in sales
and marketing expenses was due to increased trade show activity and
sales commissions incurred. The increase in general and administrative
expenses was due to increases in costs of travel, payroll costs and
fringe benefits, office equipment rental, and incremental increases
in the majority of general and administrative categories. However,
as a percentage of revenues, general and administrative costs were
3% less than the period for the previous year in 1995.
Management is continuing focused marketing efforts in the depaneling
application. The Company participated in the NEPCON East industry
trade show held in June, 1996. The Company's PanelMASTER HS product,
introduced in 1995, and the PanelROUTER product, introduced in 1994,
continue to be well received in the industry. These products were developed
by the Company over the past two years to keep the Company's products
viable in a competitive marketplace that demanded higher speed
performance and factory automation requirements.
As of August 2, 1996 the Company had a backlog of open orders of $557,000
compared to a backlog at August 2, 1995 of open orders of $625,000. The
current backlog of the Company and forecasted orders, in management's
opinion, provide the opportunity for the Company to continue as a going
concern.
8
<PAGE>
PART II - OTHER INFORMATION
OZO Diversified Automation, Inc.
Items 1-5 Not Applicable.
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits - none.
b) No Reports on Form 8-K were filed during the quarter
ending June 30, 1996.
9
<PAGE>
SIGNATURES
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.
OZO DIVERSIFIED AUTOMATION, INC.
By: Marjorie Zimdars-Orthman
Marjorie Zimdars-Orthman
Principal Executive Officer
Principal Financial Officer
Dated: August 12, 1996
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 8,051
<SECURITIES> 0
<RECEIVABLES> 136,339
<ALLOWANCES> 0
<INVENTORY> 421,665
<CURRENT-ASSETS> 583,902
<PP&E> 342,584
<DEPRECIATION> 322,500
<TOTAL-ASSETS> 624,453
<CURRENT-LIABILITIES> 781,176
<BONDS> 240,000
0
0
<COMMON> 45,261
<OTHER-SE> (201,984)
<TOTAL-LIABILITY-AND-EQUITY> 624,453
<SALES> 1,072,048
<TOTAL-REVENUES> 1,072,048
<CGS> 589,527
<TOTAL-COSTS> 589,527
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (88,959)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (88,959)
<EPS-PRIMARY> (.20)
<EPS-DILUTED> 0
</TABLE>
