UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to____________
Commission file number: 0-18271
MAGELLAN TECHNOLOGY, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Utah 87-0467614
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization identification No.)
990 West Atherton Dr., Suite 205
Salt Lake City, Utah 84123
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 262-1792
Indicate by check mark whether the registrant (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 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____
Indicate the number of shares outstanding of each of the issuer's classes
of common stocks of the latest practicable date:
Outstanding at
Class September 30, 1996
------- --------------------
Common Stock, $.0002 par value 8,521,648 shares
<PAGE>
FORM 10-QSB
Financial Statements and Schedules
Magellan Technology, Inc.
For the Quarter Ended September 30, 1996
The following financial statements and schedules of the
registrant and its consolidated subsidiaries are submitted
herewith:
Part I - Financial Information
Item 1. Financial Statements
Condensed consolidated balance sheet
for September 30, 1996 and year-end
for Dec. 31, 1995 2
Condensed consolidated statement of
operations for the three and nine months
ended September 30, 1996 and 1995 4
Condensed statement of cash flows for
the six months ended September 30,
1996 and 1995 5
Notes to condensed consolidated
financial statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
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 Securities Holders 9
Item 5. Other information 9
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
Sep 30, 1996 Dec. 31, 1995
ASSETS (Unaudited) (Audited)
------------ ------------
Current Assets:
Cash $9,036 $149,778
Accounts Receivable 0 355,263
Other current assets 0 7,088
---------- ----------
Current Assets 9,036 512,129
---------- ----------
Property and Equipment:
Software 0 31,323
Leasehold Improvements 0 65,018
Office Furniture 0 40,066
Computer Equipment 0 318,172
Assets Under Capital Lease 0 357,960
Accumulated Depreciation 0 (347,692)
---------- ----------
Net Property and Equipment 0 464,847
---------- ----------
Deposits 0 37,586
Capitalized Software (Net) 0 87,346
Investment in SIS LLC 1,544,648
Investment in Skyhook Technology, Inc. 38,862
---------- ----------
1,583,510 124,932
---------- ----------
$1,592,546 $1,101,908
========== ==========
2
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Balance Sheet
Sep 30, 1996 Dec. 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY (Unaudited) (Audited)
------------ -------------
Current Liabilties:
Notes Payable $0 $193,595
Current Portion of long-term debt 0 182,958
Accounts Payable 6,290 168,246
Accrued liabilities 0 160,765
---------- ----------
Total current liabilities 6,290 705,564
Long-term debt 150,000 267,883
Deferred Revenue 0 1,439
---------- ----------
Total liabilities $156,290 $974,886
---------- ----------
Stockholders' Equity:
Common Stock, par value $.0002 per
share; 25,000,000 shares authorized
8,521,648 issued and outstanding 1,704 1,419
Additional paid-in capital 4,484,336 2,587,055
Retained Deficit (3,049,784) (2,461,452)
---------- ----------
Total stockholders equity (deficit) 1,436,256 127,022
---------- ----------
$1,592,546 $1,101,908
3
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- ---------------------
1996 1995 1996 1995
-------- -------- ---------- ----------
Revenue from sales: $164,130 $447,308 $1,150,046 $1,092,833
Earnings from Investment in SIS 5,054 5,054
Cost of Sales: 117,210 298,915 742,759 714,371
-------- -------- ---------- ----------
Gross Margin: 51,974 148,393 412,341 378,462
Operating Expenses:
Selling, General and
Administrative 31,318 100,930 243,919 271,015
Depreciation & Amortization 20,428 33,529 138,029 89,562
R & D expenses 0 351 0 2,120
-------- -------- ---------- ----------
Total operating expenses 51,746 134,810 381,948 362,697
-------- -------- ---------- ----------
Income (Loss) from operations: 228 13,583 30,393 15,765
Other income and expenses:
Purchased in-process
research & development (596,138) (596,138)
Other income 1,883 638 11,472 7,185
Interest Expense (9,182) (10,336) (34,060) (38,069)
-------- -------- ---------- ----------
Net Income(loss) ($603,209) $3,885 ($588,333) ($15,119)
======== ======== ========== ==========
Net Income(loss) per share ($0.08) ($0.00) ($0.08) ($0.00)
======== ======== ========== ==========
Weighted average shares
outstanding 8,250,219 13,616,596 7,636,000 13,616,596
========= ========== ========= ==========
4
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
----------------------
1996 1995
Cash flows from Operating Activities: --------- ---------
Net Income (loss) ($588,333) ($15,119)
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation 0 89,562
Cash Reconcilation 0
Forgiveness of Debt 0 0
(Increase) decrease in:
Accounts Receivable 355,263 (118,769)
Other current assets 7,088 (131,134)
Cash Deposits 37,586 7,857
Capitalized Software, Net 87,346 0
Increase (decrease) in:
Accounts payable (161,956) (129,197)
Accrued liabilities (160,765) (22,937)
Deferred revenue 0 (1,640)
--------- ---------
Net cash used in operating activities (423,771) (321,377)
--------- ---------
Cash flows from investing activities:
Proceeds from transfer of equipment to SIS, LLC 464,847 0
Purchase of Machinery and equipment 0 (22,199)
Investment in Subsidiary (1,583,510) 0
--------- ---------
Net cash used in investing activities (1,118,663) (22,199)
--------- ---------
Cash flows from financing activities:
Proceeds from notes payable and long-term debt 150,000 38,072
Reduction of long-term debt (645,875) (94,242)
Reduction of capital lease obligations (108,157)
Proceeds from issuance of common stock 1,897,566 534,928
--------- ---------
Net cash provided by financing
activities 1,401,691 370,601
--------- ---------
Net increase (decrease) in cash (140,743) 27,025
Cash, beginning of period 149,778 16,305
--------- ---------
Cash, end of period $9,035 $43,330
========= =========
5
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
September 30,
-------------------
1996 1995
Cash paid during the period for: ------- -------
Interest $9,155 $14,842
======= =======
Income Taxes $0 $0
======= =======
6
<PAGE>
MAGELLAN TECHNOLOGY, INC.
AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(1) The unaudited condensed consolidated financial statements include the
accounts of Magellan Technology, Inc. and subsidiary and include all
adjustments (consisting of normal recurring items) which are, in the
opinion of management, necessary to present fairly the financial
position as of September 30, 1996 and the results of operations for
the nine months ended September 30, 1996 and 1995 and cash flows for
the nine months ended September 30, 1996 and 1995. The results of
operations for the nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the entire
year.
(2) (Loss) per share is based on the weighted average number of shares
outstanding at September 30, 1996 and 1995, respectively. Shares
outstanding for 1995 and 1996 reflect the 2:1 reverse stock split that
occurred on March 8, 1996.
(3) During the third quarter, Magellan formed a Limited Liability Company
with UICI. Magellan received a 49% interest in the LLC in exchange
for all the assets and liabilities of Magellan's wholly owned
subsidiary SIS. UICI donated $3 million in equity and a $2 million
revolving line of credit.
(4) The Company sold 1,442,857 shares of stock and used the proceeds to
purchase 323,333 shares of Skyhook Technologies. This transaction has
taken place with four fundings -- two in the second quarter 1996
(885,744 shares of Magellan stock sold) and two in the third quarter
1996 (557,143 shares of Magellan stock sold). The Company also
acquired an additional 100,000 shares of Skyhook in September bringing
Magellan's total ownership to 32%. Hence, Magellan is deemed to have
substantial influence in Skyhook and must record the transaction
according to the Equity Method of Accounting. This change in method
requires the difference between the market value and the book value of
stock purchased to be classified as work-in-process. This purchase of
work-in-process caused Magellan to record a loss of $596,138.
7
<PAGE>
Part I - FINANCIAL INFORMATION
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations
Three-month period ended September 30, 1996 compared to the three-month
period ended September 30, 1995.
During the three month period ending September 30, 1996, Magellan formed a
Limited Liability Company, called SIS LLC, with UICI. Magellan donated all
the assets and liabilities of SIS, Inc. and received a 49% ownership in the
LLC. UICI donated $3 million in equity and a $2 million revolving line of
credit for the purpose of significantly expanding SIS' strategic plans.
Magellan is focusing on retiring all outstanding debt, and did retire
approximately $150,000 in debt in the third quarter.
Also, in the third quarter, Magellan borrowed $150,000 from SIS, LLC to
purchase additional shares of Skyhook Technology, Inc. This brings
Magellan's total ownership to 32% of outstanding Skyhook shares.
Due to the formation of SIS, LLC, the Company's books only reflect SIS
operations for one month, during which time Magellan stilled owned 100% of
SIS. In the future, Magellan books will only reflect their 49% share of
profit and losses in SIS. Accordingly, no comparison between current and
prior year's operating results is meaningful. However, in the third
quarter of 1996, SIS as a whole entity had sales of $523,522 compared to
$447,308 in 1995, a 17% increase, and net income of $10,443 in 1996
compared to $3,885 in 1995, a 167% increase.
Nine-month period ended September 30, 1996 compared to the nine-month
period ended September 30, 1995.
During the nine month period ended September 30, 1996, in addition to the
activity related above, Magellan raised $500,000 by selling stock. These
funds were used primarily in Magellan's acquisition of Skyhook Technology
stock.
Liquidity and Capital Resources
With the formation of SIS, LLC, Magellan's equity increased from $142,000
to $1.5 million. This increased equity and access to the revolving line
of credit will allow SIS, LLC to vigorously pursue its market niche.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1 Legal proceedings:
Satellite Image Systems, Inc. settled its lawsuit with CFL, Ltd. on
July 30, 1996, with Prejudice. The Company had already recorded the
amount of the settlement in a previous quarter, so there is no
material impact on the financial statements.
Item 2. Changes in Securities: None.
Item 3. Defaults Upon Senior Securities: None.
Item 4. Submission of Matters to a Vote of Security Holders: None
Item 5. Other information: None.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
MAGELLAN TECHNOLOGY, INC.
-------------------------
(Registrant)
/s/ Darwin D. Millet 11/13/96
- ------------------------------ ----------------------
Darwin Millet Date
President
10
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM MAGELLAN
TECHNOLOGY, INC. SEPTEMBER 30, 1996 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 9,036
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 0
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<DEPRECIATION> 0
<TOTAL-ASSETS> 1,592,546
<CURRENT-LIABILITIES> 6,290
<BONDS> 0
0
0
<COMMON> 1,704
<OTHER-SE> 1,434,552
<TOTAL-LIABILITY-AND-EQUITY> 1,592,546
<SALES> 0
<TOTAL-REVENUES> 1,150,046
<CGS> 742,759
<TOTAL-COSTS> 1,124,707
<OTHER-EXPENSES> 584,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 34,060
<INCOME-PRETAX> (588,333)
<INCOME-TAX> 0
<INCOME-CONTINUING> (588,333)
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<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (588,333)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.02)
</TABLE>
