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 May 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
033-36198
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Commission File Number
NET/TECH INTERNATIONAL, INC.
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(Name of Small Business Issuer in its charter)
DELAWARE 22-3038309
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization). Identification No.)
1 WEST FRONT STREET, SUITE 30, RED BANK, NEW JERSEY 07701
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (732) 345-1100
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the 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: 9,758,671 shares outstanding on
2/2/2000.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [ ]
<PAGE>
10QSB
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Part I
Item 1
Balance Sheet Assets..................................................... 1
Balance Sheet Liabilities................................................ 2
Income Statement......................................................... 3
Cash Flow Statement...................................................... 4
Item 2................................................................... 5
Part II
Item 6................................................................... 7
<PAGE>
Part I
Item 1
Net/Tech International, Inc.
Balance Sheets
<TABLE>
<CAPTION>
May 31, November 30,
2000 1999
Assets
------
Current Assets
<S> <C> <C>
Cash $ 3,431 $ 18,589
Accounts receivable -- 24,000
Inventory
Prepaid expenses -- 3,168
---------------------------
Total Current Assets 3,431 45,757
---------------------------
Fixed Assets
Leasehold improvements -- --
Furniture and fixtures -- --
Machinery and equipment -- --
---------------------------
-- --
---------------------------
Less Accumulated Depreciation -- --
---------------------------
Intangible Assets
Patent application costs (net of accumulated
amortization of $7,500 and $5,000 respectively) 17,500 20,000
Other Assets
Security deposits -- 10,850
---------------------------
Total Assets $ 20,931 $ 76,607
===========================
</TABLE>
1
<PAGE>
Net/Tech International, Inc.
Liabilities and Stockholdrs' Equity
<TABLE>
<CAPTION>
Current Liabilities
<S> <C> <C>
Accounts payable and accrued expenses and interest $ 208,508 $ 173,745
Obligations under capital lease, current portion -- --
---------------------------
Total Liabilities 208,508 173,745
---------------------------
Stockholders' Equity (Deficit)
Common Stock, $.01 par value: 20,000,000 authorized;
9,758,671 and 9,758,671 shares issued and
outstanding, respectively 97,587 97,587
Additional paid-in capital 5,980,800 5,980,800
Deficit (6,265,964) (6,175,525)
---------------------------
Total Stockholders' Equity (187,577) (97,138)
---------------------------
Total liabilities and stockholders' equity $ 20,931 $ 76,607
===========================
</TABLE>
See accompanying notes to consolidated financial statements are an integral part
of these financial statements
2
<PAGE>
Net/Tech International, Inc.
Statement of Losses
<TABLE>
<CAPTION>
For the six For the Year For the Year
Months Ended Ended Ended
May 31, November 30, November 30,
2000 1999 1998
-------------------------------------------
<S> <C> <C> <C>
Revenue $ 12,000 $ 158,381 $ 36,022
Costs and Expenses:
Cost of Sales -- 12,535 14,674
Marketing, general & administrative expenses 101,438 295,211 1,298,821
Research, development and related expenses -- 25,298 419,013
Litigation Settlement -- 80,904
Depreciation and amortization 1,250 20,419 20,266
-------------------------------------------
Operating Loss (90,688) (275,986) (1,716,752)
Other (income) and expense
Interest Income (249) (2,602) (16,366)
Interest Expense -- 276 409
Loss on abandonment of assets -- 30,483 371,082
-------------------------------------------
Net Income (Loss) $ (90,439) $ (304,143) $(2,071,877)
===========================================
Net Income (loss) per share (0.01) (0.03) (0.29)
Nuber of Shares Used In Computation 9,758,671 9,680,894 7,085,086
</TABLE>
See accompanying notes to consolidated financial statements are an integral part
of these financial statements
3
<PAGE>
Net/Tech International, Inc.
Statement of Cash Flows
<TABLE>
<CAPTION>
For the Three For the Year For the Year
Months Ended Ended
February 29 November 30, November 30,
2000 1999 1998
-------------------------------------------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C> <C>
Net profit (loss) $ (90,439) $ (60,756) $(2,071,877)
ADJUSTMENTS TO RECONCILE NET LOSS TO NET
CASH USED IN OPERATING ACTIVITIES
Depreciation 16,091 12,873
Amortization of intangible assets 2,500 2,500 7,394
Loss (gain) on disposal of assets 30,133 119,795
Compensation paid in common stock -- 202,905
Accounts receivable 24,000 (146,563) (9,437)
Inventory -- 41,479
Prepaid expenses 3,168 9,251 (12,419)
Security deposits 10,850 -- (6,806)
Accounts payable, accrued expenses and interest 34,763 (55,642) 44,486
Accrued compensation -- (125,000)
Deposits -- 1,600
Other -- (84)
-------------------------------------------
Total Adjustments 75,281 (144,230) 276,786
-------------------------------------------
NET CASH (USED IN) OPERATING ACTIVITIES (15,158) (204,986) (1,795,091)
-------------------------------------------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment-net -- -- (80,572)
-------------------------------------------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock 65,000 1,205,000
Proceeds from options sold -- --
Principal payments under capital leases (1,759) (1,505)
-------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- 63,241 1,203,495
-------------------------------------------
NET INCREASE (DECREASE) IN CASH (15,158) (141,745) (672,168)
CASH AT BEGINNING OF YEAR 18,589 160,334 832,502
-------------------------------------------
CASH AT END OF YEAR $ 3,431 $ 18,589 $ 160,334
===========================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ 276 $ 409
Income taxes $ -- $ -- $ --
</TABLE>
The accompanying notes to the financial statements are an integral part of these
statements.
4
<PAGE>
Part II
NOTE 1: FINANCIAL STATEMENTS
The Balance Sheet as of May 31, 2000, the Statement of Operations for the
three months ended May 31, 2000 and the Statement of Cash Flows for the three
months ended May 31, 2000 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 May 31, 2000 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, 1999 annual
report to shareholders. The results of operations for the period ended May 31,
2000 are not necessarily indicative of the operating results for the full year.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS AND PLAN OF OPERATION.
RESULTS OF OPERATIONS
As of the quarter ending May 31, 2000, the Company has a negative cash flow
from operations. For the period ending May 31, 2000, the Company had losses of
$90,439. There are no internal resources as of May 31, 2000 or anticipated
operating cash flow to satisfy the existing payables unless the ROI acquisition
is closed.
COMPANY STATUS AND CHANGE IN TERMS OF PROPOSED ROI ACQUISITION
At the Annual Meeting of the Company on March 20, 2000, the Company's
Shareholders voted on a proposed acquisition by the Company of Results Oriented
Integration Corporation d/b/a ROI Corporation, a privately-held Georgia
corporation (ROI). The items voted upon at the annual meeting did not pass by
the requisite vote and the terms of the proposed acquisition have changed and,
therefore, all of the items voted upon at the Annual Meeting are being presented
again including such changes for ratification by the Shareholders at the Special
Meeting of Shareholders scheduled for July 26, 2000.
In March 1999, the Company sold the rights to its patented "Hygiene Guard
Hand Wash Monitoring System" to GOJO Industries. GOJO was in the process of
commercializing this technology, for which the Company was to receive payments
based on sales for up to 15 years. GOJO has informed the Company that it has
ceased commercialization of the patents it acquired from the Company. GOJO has
stopped making payments to the Company and has proposed transferring the patent
estate back to Net/Tech in exchange for termination of the agreement and a
general release. Currently, the Company has no income, no operations, and no
employees, and is unable to meet its financial obligations. If the Company does
not close the ROI acquisition, the Company will not be able to pay its debts and
will be forced to cease operating.
A condition to the closing of the ROI acquisition is the closing of a
private offering. The valuation of the Company and its ability to raise capital
was based on certain assumptions related to the Company's agreement with GOJO
Industries. Due to the GOJO situation and current market conditions, adjustments
to the terms of the ROI acquisition are required to successfully complete the
private offering and close the ROI acquisition. The new terms are included in
the Proxy Statement dated June 28, 2000, that was sent to all Shareholders.
RESULTS OF THE ANNUAL MEETING
The Company held its annual meeting on March 20, 2000. The Shareholders
voted on nine items. All voting took place in accord with the Company's bylaws
and the items up for vote and the results are as follows:
5
<PAGE>
1. To vote upon the acquisition by the Company of Results Oriented Integration
Corporation d/b/a ROI Corporation, a privately-held Georgia corporation
(ROI), through the issuance of 6,118,918 post-split shares of Common Stock
to be exchanged for all of the issued and outstanding shares of common
stock of ROI as follows:
(1) 2,352,988 shares will be delivered at closing; and
(2) 3,765,930 shares will be placed in escrow with a portion released each
fiscal year based on profitability of the Company for the fiscal years
ending in 2000, 2001, 2002, 2003, 2004, and 2005. Item 1 did not pass by a
majority of Shareholders with a vote of 4,358,015 votes for and 2,215,110
votes against with 1,000 votes abstaining.
2. To vote upon an amendment to the Company's certificate of incorporation
changing the name of the Company to Return On Investment Corporation d/b/a
ROI Corporation (or some similar name based on availability). Item 2 did
not pass by a majority of Shareholders with a vote of 4,358,015 votes for
and 2,215,110 votes against with 1,000 votes abstaining.
3. To ratify the appointment of BDO Seidman as independent public accountants.
Item 3 did not pass by a majority of Shareholders with a vote of 4,387,915
votes for and 2,185,110 votes against with 1,100 votes abstaining.
4. To elect the Board of Directors.
Item 4 did not pass by a majority of Shareholders with a vote of 4,405,748
votes for and 2,153,997 votes against with 14,400 votes abstaining.
5. To vote upon an amendment to the Company's certificate of incorporation
increasing the number of authorized shares of Common Stock to 100,000,000
shares (before the reverse split). Item 5 did not pass by a majority of
Shareholders with a vote of 4,356,315 votes for and 2,216,710 votes against
with 1,100 votes abstaining.
6. To vote upon a 1-for-6 reverse split of the Company's Common Stock.
Item 6 did not pass by a majority of Shareholders with a vote of 4,351,965
votes for and 2,221,060 votes against with 1,100 votes abstaining.
7. To vote upon issuance of up to 150,000 post-split shares of the Company's
Common Stock in lieu of payment of debt.
Item 7 did not pass by a majority of Shareholders with a vote of 4,355,815
votes for and 2,217,210 votes against with 1,100 votes abstaining.
8. To vote upon a private offering of from 2,000,000 to 3,000,000 post-split
shares of the Company's Common Stock.
Item 8 did not pass by a majority of Shareholders with a vote of 4,147,657
votes for and 2,217,810 votes against with 208,658 votes abstaining.
9. To vote upon institution of an incentive stock option plan for up to
1,000,000 post-split shares of the Company's Common Stock. Item 9 did not
pass by a majority of Shareholders with a vote of 4,147,657 votes for and
2,217,810 votes against with 208,658 votes abstaining.
SPECIAL MEETING
Based on the recommendation of the Board of Directors, the Company is
convening a Special Meeting of the Shareholders on July 26, 2000, with regard to
the following:
--------------------------------------------------------------------------------
Item 1. To approve the acquisition by the Company of Results Oriented
Integration Corporation d/b/a ROI Corporation (ROI) through the issuance of
6,118,918 post reverse split shares of Common Stock to be exchanged for all
of the issued and outstanding shares of common stock of ROI as follows: (1)
2,352,988 will be delivered at closing; and (2) 3,765,930 shares will be
placed in escrow with a portion released each fiscal year based on
profitability of the Company for the fiscal years ending in 2000, 2001,
2002, 2003, 2004, and 2005.
--------------------------------------------------------------------------------
Item 2. To approve an amendment to the Company's certificate of incorporation
changing the name of the Company to Return On Investment Corporation d/b/a
ROI Corporation (or some similar name based on availability).
6
<PAGE>
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Item 3. To ratify the appointment of BDO Seidman as independent public
accountants.
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Item 4. Election of four Directors to take office as of the closing of the ROI
acquisition. Nominees: Glenn E. Cohen, Charles A. McRoberts, John W.
McRoberts, Charles Pecchio, Jr.
--------------------------------------------------------------------------------
Item 5. To approve increasing the number of authorized shares of Common Stock to
100,000,000 shares.
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Item 6. To approve a 1-for-20 reverse split of the Company's Common Stock prior
to the closing of the ROI acquisition and the private placement.
--------------------------------------------------------------------------------
Item 7. To approve the issuance of up to 150,000 post reverse split shares of
the Company's Common Stock in lieu of payment of debt.
--------------------------------------------------------------------------------
Item 8. To approve a private offering of from 2,000,000 to 3,000,000 post
reverse split shares of Common Stock at $2.50 per share (before expenses).
--------------------------------------------------------------------------------
Item 9. To approve institution of an incentive stock option plan for up to
1,000,000 post reverse split shares.
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If the ROI acquisition does not close, the Company will not be able to pay
its debts and will be forced to cease operating.
Prior to the contemplated reverse split, the Company had 9,791,103 shares
issued and outstanding and 1,341,667 options and warrants. As a result of the
split, there will be approximately 490,000 shares and 67,100 options and
warrants issued and outstanding.
MANAGEMENT
At present there are 2 employees on the staff of the Company. Glenn E.
Cohen serves as the Chairman of the Board and Chief Executive Officer.
FORWARD LOOKING STATEMENTS
Statements wherein the terms "believes", "intends", or "expects" are
intended to reflect "forward looking statements" of the Company. The information
contained herein is subject to various risks, uncertainties and other factors
that could cause actual results to differ materially from the results
anticipated in such forward looking statements or paragraphs. Readers should
carefully review the risk factors described in other documents the Company files
from time to time with the Securities and Exchange Commission, including the
most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and any
Current Reports on Form 8-K.
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.
Item 4 Change in Accountant was filed since the last reporting
period (1)
--------------------------------------------------------------
(1) Incorporated by reference to the Company's
most recent 8-K and 8-K/A filing
7
<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
Chairman and Chief Executive Officer
8
