<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 June 30, 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 June 30, 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>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 37,975 $ 3,111
Accounts and notes receivable, net
of allowance for doubtful accounts
of $5,016 301,886 257,775
Inventories (Note 3) 295,889 388,425
Prepaid expenses 1,000 11,385
Other 2,082 0
------------ -------------
Total Current Assets 638,832 660,696
------------ -------------
PROPERTY AND EQUIPMENT
Manufacturing 151,953 149,328
Furniture and Fixtures 156,958 156,958
Capitalized Lease 195,246 195,246
Leasehold Improvements 3,353 0
Vehicle 10,820 10,820
------------ -------------
518,330 512,352
Less accumulated depreciation 349,012 326,199
------------ -------------
Total Property and Equipment 169,318 186,153
OTHER ASSETS
Deferred Financing Costs 12,340 16,254
------------ -------------
Total Assets $ 820,490 $ 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>
June 30, December 31,
1997 1996
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of notes payable $ 51,336 $ 34,607
Accounts payable and accrued expenses 474,136 470,205
Note payable Bank 30,000 28,000
Note payable - Officer 0 84,500
------------ -----------
Total Current Liabilities 555,472 617,312
------------ -----------
OTHER LIABILITIES
Long Term Debt and Capitalized
Lease Obligation 344,996 387,387
------------ -----------
Total Liabilities 900,468 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 (1,302,048) (1,363,666)
------------- -----------
Total Shareholders' Deficiency (79,978) (141,596)
Total Liabilities &
Stockholders' Deficiency $ 820,490 $ 863,103
------------- -----------
------------- -----------
</TABLE>
See notes to financial statements
3
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
Net Sales $ 1,428,189 $ 1,072,048
Cost of Sales 827,148 589,527
------------ ------------
Gross Profit 601,041 482,521
------------ ------------
Operating Expenses:
Marketing & Sales 212,084 204,100
Research & Development 77,322 81,309
General and Administrative 250,017 286,071
------------ ------------
539,423 571,480
------------ ------------
Income (loss) before taxes 61,618 (88,959)
Provision for Income Taxes 12,324 -
Tax Benefit of Operating
Loss Carry Forward (12,324) -
------------ ------------
NET INCOME (LOSS) $ 61,618 $ (88,959)
------------ ------------
------------ ------------
NET INCOME (LOSS) PER SHARE $ 0.13 $ (0.20)
------------ ------------
------------ ------------
</TABLE>
See notes to financial statements
4
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net Income (Loss) $ 61,618 $ (88,959)
Adjustments to reconcile net income
to net cash used in
operating activities:
Depreciation 22,814 6,591
Amortization of deferred
financing costs 3,913 3,913
Other (2,082) (9,548)
Decrease (increase) in assets:
Accounts receivable (44,112) 44,621
Inventories 92,536 84,731
Prepaid expenses 10,385 6,844
(Decrease) in accounts
payable and accrued expenses (78,569) (129,313)
----------- -----------
Total adjustments 4,885 7,839
----------- -----------
Net cash provided (used) in
operating activities 66,503 (81,120)
----------- -----------
Cash flows from investing activities:
Capital Expenditures (5,977) (2,895)
----------- -----------
Net cash (used) in
investing activities (5,977) (2,895)
----------- -----------
Cash flows from financing activities:
(Decrease) increase in notes payable (25,662) 88,904
----------- -----------
Net cash (used) provided by
financing activities (25,662) 88,904
----------- -----------
Net increase in cash 34,864 4,889
Cash at beginning of period 3,111 3,162
----------- -----------
Cash at end of period $ 37,975 $ 8,051
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
5
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
June 30,
1997 1996
<S> <C> <C>
Net Sales $ 752,146 $ 359,497
Cost of Sales 440,489 209,114
----------- -----------
Gross Profit 311,657 150,383
Operating Expenses:
Marketing & Sales 109,037 73,862
Research & Development 39,408 41,118
General and Administrative 133,127 149,724
----------- -----------
281,572 264,704
----------- -----------
Income (loss) before Taxes 30,085 (114,321)
Provision for Income Taxes 6,017 -
Tax Benefit of Operating
Loss Carry Forward (6,017) -
----------- -----------
NET INCOME (LOSS) $ 30,085 $ (114,321)
----------- -----------
----------- -----------
NET INCOME (LOSS) PER SHARE $ 0.07 $ (0.25)
----------- -----------
----------- -----------
</TABLE>
See notes to financial statements
6
<PAGE>
OZO DIVERSIFIED AUTOMATION, INC.
NOTES TO FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 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 June 30, 1997
and the results of operations and changes in financial position
for the six months ended June 30, 1997.
The results of operations for the six months ended June 30, 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>
June 30, December 31,
1997 1996
<S> <C> <C>
Raw Materials $ 265,696 $ 311,989
Work in process 14,884 76,436
Finished Goods 15,309 0
------------- ------------
$ 295,889 $ 388,425
------------- ------------
------------- ------------
</TABLE>
7
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
For the six months ended June 30,1997, the Company had
revenues of $1,428,189, an increase of 33% over the
comparable period in 1996. During the quarter ended June 30, 1997,
the Company recorded sales of $752,146, an increase of 109% over
the same quarter in the previous year. The increase in revenues
can be attributed to several factors, including but not limited to,
a favorable marketplace where the demand for electronic goods (and
hence the Company's products) continues to grow steadily; realization
of benefits from an aggressive marketing campaign aimed at achieving
top line growth; and, to a lesser extent, receipt of orders in second
quarter that were delayed at the customer's request from the first
quarter of 1997.
The Company posted earnings of $61,618 for the six months
ended June 30, 1997. This is in comparison to a loss of $88,959
for the six months ended June 30, 1996. Earnings per share during this
period improved to $0.13, compared to a loss of $0.20 recorded during
the first half of 1996. On a quarterly basis, earnings for the three
months ended June 30, 1997 were $30,085, compared to a loss of $114,321
for the same three months in 1996. In addition to a favorable sales
growth for new systems, the Company is also enjoying a resurgence in its
parts and service businesses, as the number of systems installed
worldwide continues to increase. As reported earlier, net earnings
have also been favorably impacted by price increases secured for the
Company's products (beginning in first quarter), 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 nine months.
In terms of business outlook, 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 June the
Company attended the NEPCON East trade show where the newly designed
PanelMASTER HS was introduced and demonstrated. The new design was
extremely well-received, with the product receiving favorable feedback
from trade show attendees, customers, and industry representatives.
The Company will continue its efforts to improve quality, performance,
and overall reliability on all core product lines.
As of July 28, 1997 the Company had a backlog of open orders of
approximately $336,000, compared to a backlog of $557,000 on
August 12, 1996. The current backlog combined with the forecast of orders
in subsequent quarters, in Management's opinion, provide the opportunity
for the Company to continue as a going concern.
Except for historical information contained herein, the statements in this
report are forward-looking statements that are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks and uncertainties
which may cause the Company's actual results in future periods to differ
materially from forecasted results. These risks and uncertainties include,
among other things, product demand and acceptance, market competition, and
risks inherent in the Company's international operations. These and other
risks are described elsewhere herein and in the Company's other filings with
the Securities and Exchange Commission.
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, 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: August 12, 1997
9
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 37,975
<SECURITIES> 0
<RECEIVABLES> 301,886
<ALLOWANCES> 0
<INVENTORY> 295,889
<CURRENT-ASSETS> 638,832
<PP&E> 518,330
<DEPRECIATION> 349,012
<TOTAL-ASSETS> 820,490
<CURRENT-LIABILITIES> 555,472
<BONDS> 240,000
0
0
<COMMON> 45,816
<OTHER-SE> (125,794)
<TOTAL-LIABILITY-AND-EQUITY> 820,490
<SALES> 1,428,189
<TOTAL-REVENUES> 1,428,189
<CGS> 827,148
<TOTAL-COSTS> 827,148
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 61,618
<INCOME-TAX> 12,324
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 61,618
<EPS-PRIMARY> .13
<EPS-DILUTED> 0
</TABLE>
