SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2000
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF 1934
For the transition period from__________to__________.
Commission File Number 33-18834-LA
OPAL TECHNOLOGIES, INC.
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(Exact name of small business issuer as specified in its charter)
Nevada 87-0306464
-------------------------------- -----------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
Suite 4704, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong
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(Address of principal executive offices)
852-2541-1999
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(Issuer's telephone number)
N/A
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(Former name, former address and formal fiscal year,
if changed since last report)
Check 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 preceding
twelve (12) months (or such shorter period that the Registrant was required to
file such reports) and (2) has been subject to such filing requirements for the
past ninety (90) days. Yes X No
As of June 1, 2000, 67,241,964 shares of Common Stock of the issuer were
outstanding.
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OPAL TECHNOLOGIES, INC.
FORM 10-QSB
INDEX
Page
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PART I - FINANCIAL INFORMATION
ITEM 1 . Financial Statements
Consolidated Balance Sheets as of March 31, 2000 and
December 31, 1999...................................................... 3
Consolidated Statements of Operations-for the three months ended
March 31, 2000 and 1999................................................ 5
Consolidated Statements of Cash Flows-for the three months ended
March 31, 2000 and 1999................................................ 6
Notes to Consolidated Financial Statements............................. 7
ITEM 2. Management's Discussion and Analysis or Plan of Operations.......... 8
PART II - OTHER INFORMATION..................................................10
2
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
OPAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
March 31, December 31,
2000 1999
--------- ---------
US$`000 US$`000
--------- ---------
ASSETS:
Current assets:
Cash and bank deposits 2,629 19
Accounts receivable, net 164 285
Due from a director - 1
Prepayments and other current assets 134 169
Inventories, net 935 954
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Total current assets 3,862 1,428
Property, machinery and equipment, net 8,049 8,045
Construction-in-progress 9,115 9,170
Licensing costs, net 790 803
Goodwill, net 163 166
Investment 4,882 4,882
========= =========
Total assets 26,861 24,494
========= =========
LIABILITIES AND MINORITY INTERESTS AND
SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings 4,052 870
Accounts payable 1,769 4,475
Accrued liabilities 2,970 584
Due to a director 7 7
Due to a related company - 84
Taxation payable 38 38
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Total current liabilities 8,836 6,058
Non-current payable 2,415
Loans from PRC joint venture partner 686 686
Loans from a shareholder 2,275 2,908
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Total liabilities 14,212 11,705
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Minority interests 1,872 1,955
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Shareholders' equity:
Common stock; par value US$0.001:
- authorized - 100,000,000 shares as of
December 31, 2000 and 200,000,000 shares as of
March 31, 2000 67 61
- outstanding and fully paid - 60,991,964 shares
as of December 31, 1999 and 67,241,964 shares as of
March 31, 1999 Preferred stock, par value US$0.001:
- authorized - 25,000,000 shares as of December 31,
1999 and March 31, 2000
- outstanding and fully paid - 100,000 shares as
of December 31, 1999 - -
and March 31, 2000 17,775 17,281
Additional paid-in capital (7,021) (6,475)
Accumulated losses (44) (33)
Cumulative translation adjustments
--------- ---------
Total shareholders' equity 10,777 10,834
--------- ---------
Total liabilities, minority interests and shareholders'
equity 26,861 24,494
========= =========
See Notes to Consolidated Financial Statements
3
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OPAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months
ended
March 31,
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2000 1999
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US$`000 US$`000
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Net sales 32 30
Cost of goods sold (23) (15)
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Gross profit 9 15
Selling, general and administrative expenses (572) (294)
Interest expense, net (65) (52)
Other expenses, net
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Profit / (Loss) before income taxes (628) (331)
Provision for income taxes 0 0
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Profit (loss) before minority interests (628) (331)
Minority interest 83 85
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Net income/(loss) (545) (246)
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Profit/ (loss) per common share 0 0
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See Notes to Consolidated Financial Statements
4
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OPAL TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
For the three months ended
March 31,
------------------------------
2000 1999
----------- ------------
US$`000 US$`000
----------- ------------
<S> <C> <C>
Cash flow from operating activities
Net income/(losses) (545) (246)
Adjustments to reconcile net income /(loss)
to net cash provided by /
(used in) operating activities -
Depreciation of property, machinery & equipment 62 7
Amortization of licensing costs 13 3
Amortization of good will 3 14
Minority interest (83) (85)
(Increase)/Decrease in operating assets -
Accounts receivable, net 121 70
Prepayments, and other current assets 35 4
Inventories, net 19 (56)
Increase /(Decrease) in operating liabilities -
Accounts payables (2,706) (127)
Accrued liabilities 2,386 (25)
Taxation payable 0 0
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Net cash provided by/(used in) operating activities (695) (441)
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Cash flows from investing activities
Acquisition of property, machinery & equipment 320 (66)
(Advance to) Repayment from a shareholder 0 0
(Advance to) Repayment from a director 1 (3)
(Advance to) Repayment from a related company 84 5
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Net cash provided by/(used in) investing activities 405 (64)
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Cash flows from financing activities
Short-term borrowings 3,182 603
Other loans 0 (29)
Increase/(Decrease) in non-current payable 362 0
Loans from PRC joint venture partner 0 0
Loans from a shareholder (633) 143
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Net cash provided by/(used in) financing activities 2,911 717
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Effect of cumulative translation adjustments (11) 0
Net increase / (decrease) in cash and bank deposits 2,610 212
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Cash and bank deposits, as of beginning of period 19 384
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Cash and bank deposits, as of end of period 2,629 596
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</TABLE>
See Notes to Consolidated Financial Statements
5
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OPAL TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
1. INTERIM PRESENTATION
The interim financial statements were prepared pursuant to the requirements
for reporting on Form 10-QSB. The December 31, 1999 balance sheet data was
derived from audited financial statements but does not include all
disclosures required by generally accepted accounting principles. The
interim financial statements and notes thereto should be read in
conjunction with the financial statements and notes thereto included in the
Company's report on Form 10-KSB for the year ended December 31, 1999. In
the opinion of management, the interim financial statements reflect all
adjustments of a normal recurring nature necessary for a fair statement of
the results for the interim periods presented.
2. MINORITY INTEREST
The minority interest reflects the 45% interest held by a non-related party
in Beijing Opal Agriculture Biochemistry, Co. Ltd., a PRC joint-venture
engaged in the manufacture and production of organic agricultural
fertilizer.
6
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This report contains forward looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended and Section 21E of the Securities
Exchange Act of 1934, as amended. The Company's actual results could differ
materially from those set forth on the forward looking statements as a result of
the risks set forth in a Company's filings with the Securities and Exchange
Commission, general economic conditions, and changes in the assumptions used in
making such forward looking statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
Material Changes in Results of Operations
Three Months Ended March 31, 2000Compared to the Three Months Ended March 31,
1999.
Net Sales. Net sales for the three months ended March 31, 2000 increased by
US$2,000 or 6.67% to US$32,000 from US$30,000 for the three months ended March
31, 1999. This increase is attributable to a slight increase in the sales of
liquid fertilizers. No granular fertilizers were sold during the three months
ended March 31, 2000.
Gross Profits. Gross profits for the three months ended March 31, 2000 decreased
by US$6,000 or 40% to US$9,000 from US$15,000 for the same period last year.
This decrease is attributable to a lack of granular fertilizer sales on which
there is a higher gross profit margin. Gross profit as a percent of sales was
28.1% for the three months ended March 31, 2000, compared to 50% for the
corresponding period of the prior year.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses for the three months ended March 31, 2000 increased by
US$278,000 or 94.5% to US$572,000 from US$294,000 for the corresponding period
of the prior year. The increase is attributable to an increase in the promotion
expenses for the Kunming Expo 99 and other related administrative expenses in
expectation of the production of 100,000 MT of organic granules.
Interest Expense, Net. Interest expense, net for the three months ended March
31, 2000 increased by US$13,000 or 25% to US$65,000 from US$52,000 for the
corresponding period of the prior year. This increase in interest expense
reflects increased borrowings by the Company.
Net Loss. The net loss after accounting for the minority interest for the three
months ended March 31, 2000 was US$545,000 compared with net loss of US$246,000
for the corresponding period of the prior year. The increase in the net loss is
attributable to a reduced gross profit, higher selling, general and
administrative expenses and higher interest charges.
Changes in Financial Condition, Liquidity and Capital Resources
For the past twelve months, the Company has funded its operations and
capital requirements with loans from the parent company, its PRC joint-venture
partner and a bank loan. As of March 31, 2000, the Company had cash of
US$2,629,000 but a working capital deficit of $4,974,000. This compares with
cash of US$19,000 and a working capital deficit of US$4,630,000 as of December
31, 1999.
Net cash used in operating activities increased to US$695,000 for the three
months ended March 31, 2000 from US$441,000 for the three months ended March 31,
1999. This increase resulted from an increase in the net operating loss and a
decrease in operating liabilities which were partially offset by a decrease in
operating assets.
7
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Net cash provided by investing activities increased to US$405,000 for the
three months ended March 31, 2000 from US$64,000 used in investing activities
for the three month ended March 31, 1999. This increase in cash flows from
investing activities is attributable to reduced expenditures for machinery and
equipment and repayment of funds from a related party.
Net cash provided by financing activities increased to US$2,911,000 for the
three months ended March 31, 2000 from US$717,000 for the three months ended
March 31, 1999. This increase is principally attributable to an increase in
short term borrowings and in non current payables which was partially offset by
repayment of a shareholder loan.
Subsequent to the end of the calendar quarter, the Company received the
proceeds from a US$10 million dollar loan. With the proceeds of this loan, the
Company has sufficient operations to fund its operations and execute its
business plan for the next twelve months.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Loan Agreement
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
8
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
OPAL TECHNOLOGIES, INC.
Dated: June 7, 2000 By: /s/ John K.C. Koon
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John K. C. Koon
President
Dated: June 7, 2000 By: /s/ Tammy Ho
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Tammy Ho
Chief Financial Officer
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