U. S. 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 February 28, 1997.
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
For the transition period from to
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Commission File Number 33-36198
NET/TECH INTERNATIONAL, INC.
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(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 22-3038309
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(State or other Jurisdiction (I.R.S. Employer
of Incorporation or Identification No.)
Organization)
1 WEST FRONT STREET, SUITE 30, RED BANK, NEW JERSEY 07701
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(Address of Principal Executive Offices) (Zip Code)
Issuer's phone number, including area code: (908) 345-1100
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(Former name, former address and former 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 Exchange Act 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 [ ]
State the number of shares outstanding of each of the Registrant's classes of
common stock, as of the latest practicable date. As of February 28, 1997, 5,700
,799 shares of $0.01 par value common stock were outstanding.
Transitional Small Business Disclosure Format (check one). Yes [ ] No [X]
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NET/TECH INTERNATIONAL, INC.
TABLE OF CONTENTS
PAGE
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PART I - FINANCIAL INFORMATION (UNAUDITED)
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets 3
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION 9
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES 11
2
<PAGE>
NET/TECH INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
ASSETS
FEBRUARY 28, NOVEMBER 30,
1997 1996
(UNAUDITED)
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CURRENT ASSETS
Cash $ 73,802 $ 77,560
Accounts Receivable 0 0
Prepaid Expenses 6,080 0
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Total Current Assets 79,882 77,560
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FIXED ASSETS
Furniture and Equipment 19,999 19,999
Less: Accumulated Depreciation 6,985 6,460
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Net Fixed Assets 13,014 13,539
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INTANGIBLE ASSETS
Patent Application Costs (net of accumulated 63,321 64,352
amortization of $10,455 and $9,424 respectively)
Unamortized Organization Costs 84 84
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63,405 64,436
OTHER ASSETS
Security Deposits 21,950 21,950
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TOTAL ASSETS $178,251 $177,485
======== ========
The accompanying notes to consolidated financial statements are an integral
part of these statements.
3
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<TABLE>
<CAPTION>
NET/TECH INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
FEBRUARY 28, NOVEMBER 30,
1997 1996
(UNAUDITED)
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Accounts Payable $ 8,890 $ 22,939
Accrued Expenses and Interest 3,582 4,625
Obligations Under Capital Lease 1,287 1,287
----------- -----------
Total Current Liabilities 13,758 28,851
LONG TERM LIABILITIES 0 0
Obligations Under Capital Lease 2,961 3,264
STOCKHOLDERS' EQUITY (DEFICIT)
Common Stock, $.01 par value; 20,000,000 and
7,500,000 shares authorized; 5,755,212 and
5,697,212 shares issued and outstanding,
respectively 57,552 56,972
Additional Paid-In Capital 2,733,679 2,661,759
Deficit Accumulated During the Development Stage (2,629,699) (2,573,361)
----------- -----------
Total Stockholders' Equity 161,532 145,370
----------- -----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 178,251 $ 177,485
=========== ===========
</TABLE>
The accompanying notes to consolidated financial statements are an integral
part of these statements.
4
<PAGE>
NET/TECH INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF LOSS
THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
(UNAUDITED) (UNAUDITED)
------------ ------------
Revenue $0 $0
COSTS AND EXPENSES:
General & Administrative Expenses 43,685 8,818
Research and Development Expenses 0 0
Legal and Professional Fees 11,097 5,358
Depreciation 525 1,869
Amortization of Intangibles 1,031 167
OPERATING LOSS ($56,338) ($16,212)
OTHER (INCOME) AND EXPENSE:
Interest (Income) 0 0
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NET INCOME (LOSS) ($56,338) ($16,212)
NET INCOME (LOSS) PER SHARE ($0.01) ($0.00)
========== ==========
Number of Shares Used In Computation 5,726,212 4,860,806
========== ==========
The accompanying notes to consolidated financial statements are an integral part
of these statements.
5
<PAGE>
<TABLE>
<CAPTION>
NET/TECH INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
(UNAUDITED) (UNAUDITED)
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Profit (Loss) ($ 56,338) ($ 16,212)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Depreciation 525 1,604
Amortization of Intangible Assets 1,031 167
(Increase) Decrease in Prepaid Expenses (6,080) 500
Decrease in Security Deposits 0 150
Increase (Decrease) in Accounts Payable (14,050) (10,170)
(Decrease) In Accrued Expenses & Interest (1,043) (50,330)
Decrease in Other Current Assets 0 4,500
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Total Adjustments (19,617) (53,579)
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NET CASH (USED IN)
OPERATING ACTIVITIES (75,955) (69,791)
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Patent & Trademark Application Costs 0 0
Purchase of Fixed Assets 0 0
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NET CASH (USED IN) INVESTING ACTIVITIES $ 0 $ 0
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments under capital lease (303) 0
Sale of Common Stock 72,500 516,798
(Decrease) in Convertible Notes Payable 0 (446,275)
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NET CASH PROVIDED BY 72,197 70,523
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FINANCING ACTIVITIES
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (3,758) 733
--------- ---------
CASH AND CASH EQUIVALENTS BEGINNING OF YEAR 77,559 0
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CASH AND CASH EQUIVALENTS END OF YEAR $ 73,802 $ 733
========= =========
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
6
<PAGE>
NET/TECH INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
FEBRUARY 28, FEBRUARY 29,
1997 1996
(UNAUDITED) (UNAUDITED)
------------ ------------
Supplemental Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest $175 $ 0
Income Taxes $ 0 $ 0
The accompanying notes to consolidated financial statements are an integral part
of these statements.
7
<PAGE>
NOTE 1 - FINANCIAL STATEMENTS
The Balance Sheet as of February 28, 1997, the Statement of Operation
for the three months ended February 28, 1997 and the Statement of Cash Flows for
the three months ended February 28, 1997 have been prepared by the Company,
without audit. In the opinion of Management, all adjustments (which include only
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and changes in cash flows at February 28, 1997
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. It is suggested that these condensed
consolidated financial statements be read in conjunction with the financial
statements and notes thereto included in the Company's November 30, 1996 annual
report to shareholders. The results of operations for the period ended February
28, 1997 are not necessarily indicative of the operating results for the full
year.
In January, 1997, the Company received $72,500 from the sale of 58,000
shares of common stock. In March, 1997, subsequent to the balance sheet date,
the Company received $200,000 from the sale of 800,000 options to purchase its
common stock at $2.50 per share. These options are valid for a period of two
years. Exercise of these options would result in a cash infusion of $2,000,000
to the Company. Stock issued will be subject to Rule 144 restrictions.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Since its inception on January 10, 1990, Net/Tech International, Inc.
(the Company) has invested a substantial amount of its resources into the
development of its water-dispersible technology and hygiene monitoring unit.
This investment has been financed through both the private and public equity
markets.
PLAN OF OPERATION
CASH REQUIREMENTS AND STATUS
On February 28, 1997, the Company had a cash reserve of $73,802. In
January, 1997, the Company received $72,500 from the sale of 58,000 shares of
common stock.
In March, 1997, the Company received $200,000 from the sale of 800,000
options to purchase its common stock at $2.50 per share. These options are valid
for a period of two years. Exercise of these options would result in a cash
infusion of $2,000,000 to the Company. Stock issued will be subject to Rule 144
restrictions.
The Company believes that current cash reserves will fund operations
for the current year.
PRODUCT DEVELOPMENT AND STRATEGIC PLANS
On April 19, 1996, the Company entered into a contract with Stainless
Design Corporation (SDC) for Phase I of the miniaturization and development of
the production prototype for the Hygiene Guard(a) Hand Washing Monitoring
System.
On October 31, 1996, Net/Tech entered into a Phase II contract with SDC
for the development of the Hygiene Guard(a) Hand Washing Monitoring System.
Phase II shall complete the development through the production prototype stage.
According to SDC management estimates the production prototype should be
complete for Beta Product Test Site in the 2nd quarter of 1997.
On October 24, 1996, the Company acquired Pressure Point Technologies,
Inc. (PPT). The core technology of PPT is a batteryless remote control unit that
can operate televisions and garage doors utilizing finger pressure.
On November 25, 1996, Net/Tech obtained an option to purchase Stainless
Design Corporation (SDC). SDC is a manufacturing and installer of gas and
chemical delivery systems for the semi-conductor industry. SDC also is the
manufacturer for the Hygiene Guard(a) Hand Washing Monitoring System. After
thorough due diligence, it was determined that it was not in the best interests
of the Company to exercise the option.
No assurances can be made that the Company can identify any partners or
consultants to continue development or successfully complete the development of
its products or market them even if they are substantially completed. No
assurance can be made that the Company will successfully complete any
acquisition of other products or companies.
9
<PAGE>
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation(1)
3.2 By-Laws(1)
-------------------
(1) Incorporated by reference to the Company's Registration
Statement on Form S-1 (No. 33-36198).
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended February
28, 1997.
10
<PAGE>
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.
NET/TECH INTERNATIONAL, INC.
/s/ GLENN E. COHEN
----------------------------
Glenn E. Cohen
President and Chief Operating Officer
/s/ BRIAN K. BURKE
----------------------------
Brian K. Burke
Chief Financial Officer, Secretary
and Treasurer
Date: April 15, 1997
11
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> FEB-28-1997
<CASH> 73,802
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 79,882
<PP&E> 19,999
<DEPRECIATION> 6,985
<TOTAL-ASSETS> 178,251
<CURRENT-LIABILITIES> 13,758
<BONDS> 0
0
0
<COMMON> 57,552
<OTHER-SE> 103,980
<TOTAL-LIABILITY-AND-EQUITY> 178,251
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 56,338
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (56,338)
<INCOME-TAX> 0
<INCOME-CONTINUING> (56,338)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (56,338)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
