SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE
ACT
Commission file number 0-24506
Delta-Omega Technologies, Inc.
(Exact name of small business issuer as specified in its Charter)
Colorado 84-1100774
(State of Incorporation) (I.R.S. Employer
Identification Number)
119 Ida Road, Broussard, Louisiana 70518
(Address of principal executive offices) (Zip Code)
(318) 837-3011
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act
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........
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer s
classes of common equity as of the latest practicable date:
...... 12,745,320 shares of common stock as of December 31, 1996
This document is comprised of 12 pages
Delta-Omega Technologies, Inc.
Index to Quarterly Report
Part I
Financial Statements
Item 1. Financial Statements
Page
Consolidated Balance Sheet as
of November 30, 1996. . . . . . . . . . . . . . 2
Consolidated Statements of Operations,
three months ended November
30, 1996 and 1995. . . . . . . . . . . . . . . 3
Consolidated Statements of Cash Flows,
three months ended November 30,
1996 and 1995. . . . . . . . . . . . . . . . . 4
Notes to consolidated financial statements . . . 5
Item 2. Management's discussion and analysis
of financial condition and results
of operations . . . . . . . . . . . . 7
Part II
Other Information
Item 1. Legal Proceedings. . . . . . . . . . 9
Item 2. Changes in Securities . . . . . . . 9
Item 3. Defaults Upon Senior Securities. . . 9
Item 4. Submission Of Matters To A Vote
Of Security Holders . . . . . . . . . 9
Item 5. Other Information . . . . . . . . . . 9
Item 6. Exhibits And Reports on Form 8-K . . . 9
Signatures . . . . . . . . . . . . . . . . . . . 10
Part I.
Item 1. Financial Statements
Delta-Omega Technologies, Inc.
Consolidated Balance Sheet
(Unaudited)
ASSETS
November 30,
1996
Current Assets
Cash and equivalents $ 1,267,989
Accounts and notes receivable
Trade, net of allowance for losses 170,513
Other 62,156
Inventories 124,745
Prepaid expenses 10,389
Total current assets 1,635,792
Property and equipment,
net of accumulated depreciation 480,290
Intangible assets, net of
accumulated amortization 113,343
Other assets 9,240
Total assets $ 2,238,665
LIABILITIES AND SHAREHOLDERS EQUITY
Current Liabilities
Accounts payable 147,639
Current maturities of long-term
debt and leases 30,809
Other current and accrued liabilities 17,171
Total current liabilities 195,619
Long-term debt and leases,
net of current maturities 32,384
Shareholders equity:
Convertible, 7 percent cumulative,
non-participating preferred
stock, $.001 par value, shares
authorized, 40,000,000; issued
and outstanding 1,610,000 series B,
2,471,667 series C 4,082
Common stock, $.001 par value,
shares authorized, 100,000,000;
issued and outstanding 12,704,980 12,745
Additional paid-in capital 10,324,060
Retained deficit (8,330,225)
Total shareholders equity 2,010,662
Total liabilities and
shareholders equity $ 2,238,665
See accompanying notes to consolidated financial statements.
Delta-Omega Technologies, Inc.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended
November 30,
1996 1995
Net sales and gross revenues
Net product sales $ 295,610 $ 137,854
Cost of sales and revenues 221,460 65,659
Gross profit 74,150 72,195
Cost and expenses
Selling, general and
administrative 280,481 410,097
Research and development 18,306 14,186
Operating Loss (224,637) (352,088)
Non-operating income, net 8,091 5,853
Interest expense (1,712) (1,133)
Net loss available to
common shareholders (218,258) (347,368)
Weighted average shares
outstanding 12,731,873 12,418,807
Net loss per common share $ (.02) $ (.03)
See accompanying notes to consolidated financial statements.
Delta-Omega Technologies, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended
November 30, 1996
1996 1995
Net cash used in operating
activities $ (248,679) $ (329,228)
Cash flows from
investing activities:
Property acquisitions (15,214) (5,639)
Patent costs (427) (4,844)
Deposits 0 (140)
Net cash flows used in
investing activities (15,641) (10,623)
Cash flows from financing
activities:
Principal payments on
notes payable (2,036) (5,359)
Capital lease financing (1,807) (12,188)
Net cash flows provided by
(used in) financing activities (3,843) (17,547)
Net increase (decrease) in cash
and equivalents (268,163) (357,398)
Cash and equivalents,
beginning of period 1,536,152 588,418
Cash and equivalents,
end of period $1,267,989 $ 231,020
See accompanying notes to consolidated financial statements.
Delta-Omega Technologies, Inc.
Notes to Consolidated Financial Statements
November 30, 1996
Note A: Basis of presentation
The financial statements presented herein include the accounts of
Delta-Omega Technologies, Inc. and Delta-Omega Technologies, Ltd.
Intercompany balances and transactions have been eliminated in
consolidation.
The financial statements presented herein have been prepared by
the Company in accordance with the accounting policies in its
annual 10-KSB report for the year ended August 31, 1996 and
should be read in conjunction with the notes thereto. Results of
operations for the interim periods are not necessarily indicative
of results of operations which will be realized for the fiscal
year ending August 31, 1997.
In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) which are necessary for a fair
presentation of operating results for the interim periods
presented have been made.
Interim financial data presented herein are unaudited.
Note B: Shareholders' equity
The Company entered into an agreement on August 15, 1996 with
Baer and Company, L.L.C. to remunerate Baer and Company, L.L.C.
for expenses incurred during fund raising efforts on behalf of
the Company. On October 17, 1996, the Company issued 40,340
shares of common stock in lieu of cash for those expenses.
Item 2. Management's discussion and analysis of financial
condition and results of operations
RESULTS OF OPERATIONS
For the three months ended November 30, 1996, revenues totaled
$295,610 as compared to $137,854 for the same period in 1995.
Gross margins as a percent of revenue decreased due to a higher
percentage of the Company's total sales being derived from
institutional and industrial products and military contracts.
Sales in these markets are more competitive and yield lower
margins.
For the three months ended November 30, 1996, operating expenses
totaled $298,787 as compared to $424,283 for the same period in
1995. This resulted in an operating loss of $224,637 as compared
to the loss of $352,088 for the same period in 1995.
Revenue for the current period was higher as compared to the same
period a year earlier. This increase was due primarily to the
increased sales derived from the supply contract to furnish a
military aircraft cleaning compound for one (1) year and a
contract to supply chemical cleaning products to a large
specialized waste handling and container cleaning company that
serves the oil industry in the Gulf Coast region. Operating
expenses decreased due to the termination of the letter of intent
to acquire the assets and assume operations of Tuboscope Vetco
Environmental Services (TVES) that occurred on December 15, 1995.
Other income consisting primarily of interest income was $8,091
for the three months, an increase of $2,238 when compared with
the same period in the prior year. This resulted from an
increase in investment cash.
Interest expense was $1,712 for the three months as compared to
$1,133 for the same period in the prior year. This increase is
due to debt incurred to finance equipment purchases.
LIQUIDITY AND CAPITAL RESOURCES
Operating cash at November 30, 1996 was $1,267,989. Operations
used $248,679 for the first quarter of fiscal year 1997 as
compared to $329,228 in the first quarter of fiscal year 1996.
This was due primarily to the higher level of sales.
The Company enhanced its liquidity in the third quarter of fiscal
year 1996 by completing a private offering of Series C Preferred
Stock solely to accredited investors and raised approximately
$1.8 million. Proceeds from this offering are used to fund the
recurring losses and negative cash flows until the Company is
able to generate sufficient sales to become profitable. A
portion of the proceeds will be used to expand the Company's
technical capabilities, with the addition of advanced degreed
personnel and the purchase of specialized laboratory equipment.
On May 17, 1996, the Company announced the award of its first
major contract to supply the United States Air Force with DOT
111/113TM to be utilized for cleaning military aircraft and
aerospace ground equipment. The one-year contract provides for an
optional two-year extension and has the potential to generate
approximately $600,000 annually. During the first quarter of
fiscal 1997, average monthly sales of $45,000 to $50,000 were
generated from this contract.
One of the Company's soil remediation products and a portion of
its soil remediation unit were included as integral parts of a
bid to remediate jet fuel contaminated soil. The contract was
awarded by a major aviation company to Worldwide Remediation,
Inc. (WRI) of Houston, Texas. The Company, as a subcontractor to
WRI, is furnishing HazClean SR for use as the pre-treatment agent
and will be the active cleaning compound in the soil washing
operation of the project. Product sales associated with this
contract could reach $350,000 in fiscal year 1997.
The Company has successfully demonstrated a new technology for
recovering barite and oil from spent drilling muds. This unique
technology has commercial potential for the oil and gas
exploration business. Negotiations are underway with leading
service companies to form an alliance consisting of their
equipment combined with the Company's product and technical
support. The Company expects to have an alliance structured and
operational in fiscal year 1997. No estimate of revenues are
possible in this early stage of development because the results
of this technology have to be commercially explored. All
indications to this point, however, are positive and a full scale
on-site demonstration is scheduled in January 1997.
Management believes, although no assurances can be made, that
sales will continue to increase and cash flows from operations
will improve in fiscal year 1997.
Except for historical information contained herein, statements in
this discussion are forward looking statements. 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 forecast results.
The Company has no credit facilities.
Part II
Other Information
Part II.
Item 1. Legal Proceedings
not applicable
Item 2. Changes in Securities
not applicable
Item 3. Defaults Upon Senior Securities
not applicable
Item 4. Submission Of Matters To Vote Of Security Holders
not applicable
Item 5. Other information
not applicable
Item 6. Exhibits And Reports On Form 8-K
a) Exhibits
not applicable
b) Reports On Form 8-K
not applicable
SIGNATURES
The financial information furnished herein has not been audited
by an independent accountant; however, in the opinion of
management, all adjustments (only consisting of normal recurring
accruals) necessary for a fair presentation of the results of
operations for the three months ended November 30, 1996 and 1995
have been included.
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.
Delta-Omega Technologies, Inc.
(Registrant)
/s/ James V. Janes III
James V. Janes III
President
(Principal Officer)
/s/ Marian A. Bourque
Marian A. Bourque
Chief Accounting Officer
Date: January 14, 1997
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4,082
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