<PAGE>
FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from _______________ to ______________
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 March 31, 1997, Registrant had 458,164 shares of its $.10 par
value common stock outstanding.
1
<PAGE>
PART I - FINANCIAL INFORMATION
OZO Diversified Automation, Inc.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,361 $ 3,111
Accounts and notes receivable, net
of allowance for doubtful accounts
of $6,500 352,595 257,775
Inventories (Note 3) 292,286 388,425
Prepaid expenses 500 11,385
Other 2,082 0
------------ -------------
Total Current Assets 648,824 660,696
------------ -------------
PROPERTY AND EQUIPMENT
Manufacturing 150,452 149,328
Furniture and Fixtures 156,958 156,958
Capitalized Lease 195,246 195,246
Leasehold Improvements 3,353 0
Vehicle 10,820 10,820
------------ -------------
516,829 512,352
Less accumulated depreciation 337,611 326,199
------------ -------------
Total Property and Equipment 179,218 186,153
OTHER ASSETS
Deferred Financing Costs 14,297 16,254
------------ -------------
Total Assets $ 842,339 $ 863,103
------------ -------------
------------ -------------
</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>
March 31, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of notes payable $ 50,871 $ 34,607
Accounts payable and accrued expenses 429,240 470,205
Note payable Bank 30,000 28,000
Note payable - Officer 84,000 84,500
------------ -----------
Total Current Liabilities 594,111 617,312
------------ -----------
OTHER LIABILITIES
Long Term Debt and Capitalized
Lease Obligation 358,289 387,387
------------ -----------
Total Liabilities 952,400 1,004,699
------------ -----------
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
458,164 shares 45,816 45,816
Capital in excess of par value 1,176,254 1,176,254
Accumulated deficit (1,332,131) (1,363,666)
------------- -----------
Total Shareholders Deficiency (110,061) (141,596)
Total Liabilities &
Stockholders' Deficiency $ 842,339 $ 863,103
------------- -----------
------------- -----------
</TABLE>
See notes to financial statements
3
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Net Sales $ 676,044 $ 712,550
Cost of Sales 386,659 380,413
------------ ------------
Gross Profit 289,385 332,137
------------ ------------
Operating Expenses:
Marketing & Sales 105,096 129,867
Research & Development 37,914 40,371
General and Administrative 114,840 136,537
------------ ------------
257,850 306,775
------------ ------------
Income before taxes 31,535 25,362
Provision for Income Taxes 6,307 5,072
Tax Benefit of Operating
Loss Carry Forward (6,307) (5,072)
------------ ------------
NET INCOME $ 31,535 $ 25,362
------------ ------------
------------ ------------
EARNINGS PER SHARE $ 0.07 $ 0.06
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements
4
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net Income $ 31,535 $ 25,362
Adjustments to reconcile net income
to net cash used in
operating activities:
Depreciation 11,412 3,388
Amortization of deferred
financing costs 1,957 1,957
Other (2,082) (2,082)
Decrease (increase) in assets:
Accounts receivable (94,820) (145,936)
Inventories 96,139 86,845
Prepaid expenses 10,885 15,144
Increase (decrease) in accounts
payable and accrued expenses (39,465) 37,337
----------- -----------
Total adjustments (15,974) (3,347)
----------- -----------
Net cash used in operating
activities 15,561 22,015
----------- -----------
Cash flows from investing activities:
Capital Expenditures (4,476) 0
----------- -----------
Net cash provided (used) in
investing activities (4,476) 0
----------- -----------
Cash flows from financing activities:
Increase (decrease) in notes payable (12,835) (5,541)
----------- -----------
Net cash provided (used) by
financing activities (12,835) (5,541)
----------- -----------
Net increase (decrease) in cash (1,750) 16,474
Cash at beginning of period 3,111 3,162
----------- -----------
Cash at end of period $ 1,361 $ 19,636
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(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 March 31, 1997
and the results of operations and changes in financial position
for the three months ended March 31, 1997.
The results of operations for the three months ended March 31, 1997 are
not necessarily indicative of the results that may be expected for the
year ending December 31, 1997.
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, 1996.
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, 1996, the Company had net operating loss
carryforwards totaling approximately $1,165,000 that may
be offset against future taxable income through 2011 and
research and development credits of approximately $51,000
expiring through 2011.
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>
<CAPTION>
March 31, December 31,
1997 1996
<S> <C> <C>
Raw Materials $ 239,683 $ 311,989
Work in process 44,823 76,436
Finished Goods 7,780 0
------------- ------------
$ 292,286 $ 388,425
</TABLE>
6
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the first three months ended March 31,1997, the Company had
revenues of $676,044, a 5.1% decrease from revenues of $712,550
recorded for the comparable period in 1996. The decrease in revenues
is due in part to delays in the receipt of equipment orders for
domestic sales, as well as soft economic conditions in various Far
Eastern markets where sales have been historically strong.
In both cases, Management expects that revenues will increase over
time, as the Far Eastern business sectors recover, and as delayed
equipment orders become rescheduled during future time periods.
Despite the slight decrease in total revenues reported during the first
quarter of 1997, the Company posted earnings of $31,535, a 24.3%
improvement over net income of $25,362 reported during the same period
in 1996. Earnings per share during this period improved to $0.07,
compared to $0.06 which was recorded during first quarter of 1996. The
improvement in net earnings can be attributed to modest price increases
(secured for the Company's products early in the year), aggressive cost
containment efforts adopted by Management in fourth quarter of 1996 and
continuing into 1997, as well as the realization of benefits resulting from
numerous re-engineering projects that the Company has actively pursued over
the past six months. These re-engineering activities include improvements
in manufacturing cycle times, upgrades in production equipment,
enhanced procurement and inventory procedures, quality defect reduction
programs, and numerous machine reliability initiatives. Management
intends to continue the re-engineering process, both in the Company's
manufacturing group, as well as in various administrative departments.
From a business perspective, the Company continues to focus on the
depaneling application as the primary market for its premium routing
equipment, the PanelMASTER HS and the PanelROUTER SI. In February the
Company attended the NEPCON West trade show, where both products were
displayed and demonstrated. Feedback from trade show attendees,
existing customers, and prospective buyers remains positive, and
Management believes that the market acceptance phase for its upper tier
products has progressed satisfactorily. The premium products were
developed by the Company over the past three years in order to remain
competitive in a marketplace that demands increasing speed and
performance, and enhanced functionality in terms of factory automation
and fixturing.
As of May 8, 1997 the Company had a backlog of open orders of
approximately $409,000, compared to a backlog of $490,000 on the same
date in 1996. The current backlog combined with the forecast of orders
in subsequent quarters, in Managements opinion, provide the opportunity
for the Company to continue as a going concern.
7
<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 March 31, 1997.
Item 7 Not Applicable
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 Accounting Officer
Principal Financial Officer Chief Financial Officer
Dated: May 15, 1997
8
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 1,361
<SECURITIES> 0
<RECEIVABLES> 352,595
<ALLOWANCES> 0
<INVENTORY> 292,286
<CURRENT-ASSETS> 648,824
<PP&E> 516,829
<DEPRECIATION> 337,611
<TOTAL-ASSETS> 842,339
<CURRENT-LIABILITIES> 594,111
<BONDS> 240,000
0
0
<COMMON> 45,816
<OTHER-SE> (155,877)
<TOTAL-LIABILITY-AND-EQUITY> 842,339
<SALES> 676,044
<TOTAL-REVENUES> 676,044
<CGS> 386,659
<TOTAL-COSTS> 386,659
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 31,535
<INCOME-TAX> 6,307
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31,535
<EPS-PRIMARY> .07
<EPS-DILUTED> 0
</TABLE>
