<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 September 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 September 30, 1996, Registrant had 452,664 shares of its $.10 par
value common stock outstanding.
1
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PART I - FINANCIAL INFORMATION
OZO Diversified Automation, Inc.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,187 $ 3,162
Accounts and notes receivable, net
of allowance for doubtful accounts
of $11,022 (1995) 164,941 180,960
Inventories (Note 3) 407,608 506,396
Prepaid expenses 8,500 15,144
Other 9,785 0
------------ -------------
Total Current Assets 592,021 705,662
------------ -------------
PROPERTY AND EQUIPMENT
Manufacturing 169,050 160,186
Furniture and fixtures 156,958 154,062
Capitalized Lease 195,246 14,620
Vehicle 10,820 10,820
------------ -------------
532,074 339,688
Less accumulated depreciation 334,660 315,909
------------ -------------
Total Property and Equipment 197,414 23,779
OTHER ASSETS
Deferred Financing Costs 18,510 24,380
------------ -------------
Total Assets $ 807,945 $ 753,821
------------ -------------
------------ -------------
</TABLE>
See notes to financial statements
2
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PART I - FINANCIAL INFORMATION (CONTINUED)
OZO DIVERSIFIED AUTOMATION, INC.
BALANCE SHEETS (CONTINUED)
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
(UNAUDITED)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of notes payable $ 150,610 $ 22,899
Accounts payable and accrued
expenses 421,997 522,780
Note payable - Bank 45,118 27,500
------------ ------------
Total Current Liabilities 617,725 573,179
------------ ------------
OTHER LIABILITIES
Long Term Debt and Capitalized
Lease Obligation 384,639 248,406
Total Liabilities 1,002,364 821,585
------------ ------------
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 (1,409,489) (1,282,834)
------------ ------------
Total Shareholders' Deficiency (194,419) (67,764)
------------ ------------
Total Liabilities &
Stockholders' Deficiency $ 807,945 $ 753,821
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements
3
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Net Sales $ 1,490,301 $ 1,355,392
Cost of Sales 773,018 699,164
----------- -----------
Gross Profit 717,283 656,228
Operating Expenses:
Marketing & Sales 252,781 256,742
Research & Development 119,992 122,982
General and Administrative 471,165 367,611
----------- -----------
843,938 747,335
----------- -----------
Income (loss) before taxes (126,655) (91,107)
----------- -----------
NET INCOME (LOSS) $ (126,655) $ (91,107)
----------- -----------
----------- -----------
INCOME (LOSS) PER SHARE $ ( 0.28) $ (0.20)
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
4
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net Income (loss) $ (126,655) $ (91,107)
Adjustments to reconcile
net loss to net cash used in
operating activities:
Depreciation 18,751 11,373
Amortization of deferred
financing costs 5,870 5,870
Other (9,785) (2,697)
Decrease (increase) in assets:
Accounts receivable 16,019 (93,371)
Inventories 98,789 (178,708)
Prepaid expenses 6,644 10,385
Increase (decrease) in accounts
payable and accrued expenses (83,165) 341,480
----------- -----------
Total adjustments 53,123 94,332
----------- -----------
Net cash used in operating
activities (73,532) 3,225
----------- -----------
Cash flows from investing activities:
Capital Expenditures (11,760) (642)
----------- -----------
Net cash provided (used) in
investing activities (11,760) (642)
----------- -----------
Cash flows from financing activities:
Increase (decrease) in notes payable 83,317 (12,148)
----------- -----------
Net cash provided (used) by
financing activities 83,317 (12,148)
----------- -----------
Net increase (decrease) in cash (1,975) (9,565)
Cash at beginning of period 3,162 47,111
----------- -----------
Cash at end of period $ 1,187 $ 37,546
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
1996 1995
<S> <C> <C>
Net Sales $ 418,254 $ 576,672
Cost of Sales 183,492 280,767
----------- -----------
Gross Profit 234,762 295,905
Operating Expenses:
Marketing & Sales 44,852 127,809
Research & Development 38,237 38,659
General and Administrative 189,369 132,753
----------- ------------
272,458 299,221
----------- ------------
Income (loss) before taxes (37,696) (3,316)
----------- ------------
NET INCOME (LOSS) $ (37,696) $ (3,316)
----------- ------------
----------- ------------
EARNINGS (LOSS) PER COMMON SHARE $ (0.08) $ (0.01)
----------- ------------
----------- ------------
See notes to financial statements
6
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED SEPTEMBER 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 September 30,
1996 and the results of operations and changes in financial position for
the nine months ended September 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 $ 295,210 $ 293,230
Work in process 50,573 81,521
Finished Goods 61,825 131,645
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$ 407,608 $ 506,396
</TABLE>
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the first nine months ended September 30, 1996, the Company had
revenues of $1,490,301, a 10% increase from revenues of $1,355,392 for
the comparable period in 1995. During the quarter ended September 30, 1996,
the Company had revenues of $418,254, a 27% decrease over revenues of
$576,672 for the comparable period in 1995.
The loss for the nine months ended September 30, 1996 was $126,655, compared
with a loss of $91,107 for the comparable period in 1995. The loss for the
quarter was $37,696 compared to a loss of $3,316 in 1995. Working
capital, although limited, is expected to be adequate to fund operations
and to facilitate completion of backlogged orders. Shipment delays,
due to late receipt of customer engineering information and deferred
customer quality tests, trial runs and sign-off, adversely affected
revenues for the third quarter. The increase in general and
administrative expenses was due to increases in costs of travel, payroll
costs and fringe benefits, and incremental increases in the majority of
general and administrative categories.
Management is continuing focused marketing efforts in the depaneling
application. The Company participated in the Surface Mount Technolgy industry
trade show held in September, 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 October 9, 1996 the Company had a backlog of open orders of $743,000
compared to a backlog of $625,000 for the same period a year ago. 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 1-4 Not Applicable.
Item 5 Other Information
On September 23, 1996 the Company initiated a significant change in
management by installing David J. Wolenski as President and Chief
Executive Officer. Mr. Wolenski joined the Company following a
fourteen year career with Schuller International, Inc. where he
held positions in research, engineering, business development, quality
assurance, and manufacturing. He succeeds Marjorie Zimdars-Orthman,
who held the position of President and CEO since 1992. Ms. Zimdars-
Orthman resigned from the position in order to assume a technical role
within the Company and to address operational improvements needed
within the Company's manufacturing division. Ron C. Carpenter
assumed the position of Chief Financial Officer.
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 September 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: David J. Wolenski Ron C. Carpenter
David J. Wolenski Ron C. Carpenter
Principal Executive Officer Principal Financial Officer
Dated: November 14, 1996
10
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 1,187
<SECURITIES> 0
<RECEIVABLES> 164,941
<ALLOWANCES> 0
<INVENTORY> 407,608
<CURRENT-ASSETS> 592,021
<PP&E> 532,074
<DEPRECIATION> 334,660
<TOTAL-ASSETS> 807,945
<CURRENT-LIABILITIES> 1,002,364
<BONDS> 240,000
0
0
<COMMON> 45,261
<OTHER-SE> (239,680)
<TOTAL-LIABILITY-AND-EQUITY> 807,945
<SALES> 1,490,301
<TOTAL-REVENUES> 1,490,301
<CGS> 773,018
<TOTAL-COSTS> 773,018
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (126,655)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (126,655)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> 0
</TABLE>
