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, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
0-20436
Commission File Number
RT INDUSTRIES, INC.
(Name of Small Business Issuer in its Charter)
Delaware 65-0309477
(State or other jurisdiction (I.R.S. Employer Identification Number)
of incorporation or organization)
1875 East Lake Mary Boulevard 32773
Sanford, Florida (Zip Code)
(Address of principal executive offices)
65-0309477
Issuer's telephone number, including area code: (407) 322-8000
None
(Former Name, Former Address and Former Fiscal Year, if Changed
Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
The number of shares outstandfing of each of the issuer's classes of common
stock, as of the latest practicible date.
Class Outstanding at May 14, 1996
----- ---------------------------
Common Stock, par value $.001 per share 6,724,743
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The accompanying financial statements and information are submitted as
required by Form 10-QSB. The financial information does not include all
disclosures that are required by generally accepted accounting principles.
In the opinion of management, all adjustments that are necessary to present
fairly, the financial position of RT Industries, Inc. (the "Company") for
the periods included, have been made.
It is suggested that these Consolidated Financial Statements be read in
conjunction with the Consolidated Financial Statements and notes thereto
included in the Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1995.
1
<PAGE>
RT INDUSTRIES, INC.
Consolidated Balance Sheet
March 31, 1996
(Unaudited)
ASSETS
Current Assets:
Cash $ 256,167
Accounts receivable (net of allowance for
doubtful accounts of $534,000) 881,184
Inventory 3,572,281
Fixed assets held for sale 771,962
Prepaid expenses 312,924
--------
Total Current Assets 5,794,518
Fixed assets (net of accumulated
depreciation of $2,750,296) 3,571,074
Other assets 55,504
TOTAL ASSETS $9,421,096
The accompanying notes are an integral part of
these consolidated financial statements.
2
<PAGE>
RT INDUSTRIES, INC.
Consolidated Balance Sheet
March 31, 1996
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable $ 3,704,382
Accounts payable & accrued expenses 1,325,398
Related party payable 45,000
-----------
Total Current Liabilities 5,074,780
Long-Term Liabilities:
Notes payable 323,513
Related party payable 167,000
-------
Total Liabilities 5,565,293
Stockholders' Equity:
Common stock, $ .001 Par Value 6,017
Additional paid-in capital 9,652,235
Retained earnings (5,802,449)
-----------
3,855,803
---------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 9,421,096
===========
The accompanying notes are an integral part of
these consolidated financial statements.
3
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Income
(Unaudited)
Three Months Ended March 31,
1996 1995
-------------- --------
Net Sales $ 1,300,712 $ 2,627,726
Cost of goods sold 1,409,517 2,114,175
------------ -----------
Gross Profit (Loss) (108,805) 513,551
------------ -----------
Operating Expenses:
Selling and delivery 154,227 218,097
General and administrative 416,597 471,007
Interest 84,753 123,436
Provision for doubtful accounts 1,720 -
------------ --------
657,297 812,540
------------ --------
Loss before income tax benefit
and extraordinary item (766,000) (298,989)
Income tax benefit - (110,000)
-------------- ----------
Net Loss before extraordinary item $ (766,102) (188,989)
------------
Extraordinary item $ 26,863 $ 1,255,814
------------ -----------
Net Income (Loss) $ (739,239) $ 1,066,825
============ ===========
Net Loss per Share of Common Stock before
Extraordinary Item $ (.15) $ (.14)
=========== ===========
Net Earnings (Loss) Per Share $ (.14) $ .81
of Common Stock ============= ============
The accompanying notes are an integral part of
these consolidated financial statements.
5
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Stockholders' Equity
For the Three Months Ended March 31, 1996
(Unaudited)
COMMON STOCK
Balance - January 1, 1996 $ 5,081
Issuance of 885,600 shares of stock pursuant to
a private placement offering 886
Issuance of 50,000 shares of stock pursuant to a
professional services agreement 50
Balance - March 31, 1996 $ 6,017
=============
ADDITIONAL PAID-IN CAPITAL
Balance - January 1, 1996 $ 8,547,136
Issuance of 885,600 shares of stock pursuant to a private
placement offering (net of offering expenses of $63,465) 1,042,649
Issuance of 50,000 shares of stock pursuant to a
professional services agreement 62,450
Balance - March 31, 1996 $ 9,652,235
=============
RETAINED EARNINGS (DEFICIT)
Balance - January 1, 1996 $ (5,063,210)
Net Loss (739,239)
Balance - March 31, 1996 $ (5,802,449)
==========
TOTAL STOCKHOLDERS' EQUITY $ 3,855,803
=============
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) income $ (739,239) $ 1,066,825
---------- -----------
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Depreciation 153,056 154,594
Amortization 33,000 60,996
Provision For doubtful accounts 1,720 -
Issuance of common stock as payment
for professional services 62,500 -
Extraordinary item - cancellation of debt income (26,863) (1,255,814)
(Increase) Decrease In:
Accounts receivable 20,111 235,147
Inventory 249,546 113,592
Prepaid expenses 7,566 128,520
Other assets - 5,421
Increase (Decrease) In:
Accounts payable and accrued liabilities (149,035) (1,247,693)
Total Adjustments 351,601 (1,805,237)
----------- ------------
Net Cash Flows from Operating Activities (387,638) (738,412)
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (17,210) (19,978)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net payments under note payable to bank (491,277) (267,366)
Stockholder advances - 750,000
Notes payable - net (12,660) 214,243
Sale of common stock 1,043,535 -
---------- ---------
Net Cash Flows from Investing Activities 539,598 696,877
----------- ----------
NET INCREASE (DECREASE) IN CASH 134,750 (61,513)
CASH - beginning of year 121,417 186,837
----------- ----------
CASH - end of period $ 256,167 $ 125,324
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
7
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
- continued -
Three Months Ended March 31,
1996 1995
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 84,753 $ 123,436
============ ==========
Cash paid for income taxes $ - $ -
============= ========
Non-Cash Investing and Financing Activities
Notes payable - issued in exchange for professional
services contracts $ - $ 500,000
Common stock issued as repayment for notes payable - 100,000
Notes payable exchanged for common stock - (100,000)
Common stock issued in exchange for
professional services $ 62,500 $ 200,000
============ ===========
The accompanying notes are an integral part of
these consolidated financial statements.
8
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Operations and Organization
The Company, which was formed on January 16, 1992, now owns and
operates the following companies:
Ultra Brake Corporation
Ultratech of South Florida, Inc.
Roinco Worldwide, Inc.
RT Friction, Inc.
b. Unaudited Interim Statements
The financial statements as of March 31, 1996 and for the three month
periods ended March 31, 1996 and 1995 are unaudited. However, in the
opinion of management all adjustments (consisting solely of normal
recurring adjustments) necessary to reflect a fair presentation of the
financial statements for these interim periods have been made. The
results for the interim periods ended March 31, 1996 and 1995 are not
necessarily indicative of the results to be obtained for a full fiscal
year.
NOTE 2: INVENTORY
Major inventory components as of March 31, 1996 were as follows:
Raw materials $ 1,025,904
Work in process 182,005
Finished goods 2,364,372
-----------
Total $ 3,572,281
===========
9
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
- continued -
NOTE 3: EARNINGS PER SHARE
For the three months ended March 31, 1996 and March 31, 1995, the number of
shares used in computing the per share earnings was 5,132,445 and
1,324,476, respectively. On February 15, 1995 the Company effected a one
for five reverse stock split for shareholders of record on January 20,
1995. All references in the financial statements to average number of
shares outstanding and per share amounts have been restated to reflect the
reverse stock split.
NOTE 4: NOTES PAYABLE
The closing of the Company's manufacturing facility in Caruthersville,
Missouri resulted in a default with respect to certain equipment loans. As
a result of the default and the acceleration of the payment of the loans,
$258,000 has been classified as a current liability in the Consolidated
Balance Sheet. The Company and certain of the lenders who collectively had
a principal balance of approximately $424,000 agreed to settle their loans
for $212,000, plus a portion of the accrued interest. The Company is
currently negotiating with the remaining lenders to settle their loans on
terms satisfactory to all parties.
Among other things, the aforementioned defaults and the composition of its
trade debt (see Note 5), has caused the Company to be in default with
respect to certain covenants contained its loan agreement with Congress
Financial Corporation ("Congress"). Although aware of the defaults,
Congress continues to fund the credit line. Congress has not formally
waived the Company's defaults and, as such, can cease funding the credit
line and/or accelerate the loan and demand payment in full of the
outstanding balance. Accordingly, the Congress line of credit has been
classified in the Consolidated Balance Sheet at March 31, 1996 as a current
liability.
10
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
- continued -
NOTE 5: THE COMPOSITION
In connection with a debt restructuring, the Company called a meeting of
its Unsecured Trade Creditors ("Trade Creditors") on August 2, 1994 to
discuss the feasibility of a non-judicial work-out of its Unsecured Trade
Debt ("Trade Debt") approximating $3,032,000. At the time the Company
called the creditors' meeting, its cash flow was insufficient to allow it
both to meet its payable obligations and to support its desired growth. The
creditors' meeting was attended by Trade Creditors representing
approximately 70% of the Debt. Pursuant to the meeting, a Creditors
Committee was formed and the Company entered into a memorandum of
understanding with the Committee pursuant to which the Company agreed that
subject to acceptance of Trade Creditors holding 90% of the outstanding
Debt it would offer the Trade Creditors two proposed methods of payment of
the Trade Debt as set forth below:
(a) Proposal No. 1 - Thirty five (35%) percent of the Debt, (35% for each
$1.00 owed) to be paid in cash within ten (10) days after the
Effective Date.
(b) Proposal No. 2 - One Hundred (100%) percent of the Debt payable in
cash as follows:
(i) Five (5%) percent of the Debt payable in cash within ten (10)
days after the Effective Date.
(ii) Five (5%) percent of the Debt payable in cash with six (6)
months, and twelve (12) months, respectively, after the Effective
Date.
(iii)Seven and one-half (7-1/2%) percent of the Debt payable in cash
within eighteen (18) and twenty four (24) months, respectively,
after the Effective Date.
(iv) Ten (10%) percent of the Debt payable in cash within thirty (30),
thirty six (36), forty eight (48) months, respectively, after the
Effective Date; and
11
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
- continued -
NOTE 5: THE COMPOSITION (continued)
(v) Fifteen (15%) percent of the Debt payable in cash within fifty
four (54) and sixty (60) months, respectively, after the
Effective Date.
In addition, if net income after taxes of the Company and its
Subsidiaries on a consolidated basis exceeds $1,000,000 in any fiscal
year (excluding gain realized as a result of the Composition), fifty
(50%) percent of the excess will be paid to the Trade Creditors
accepting Proposal No. 2 and applied to the installment payments due
in the inverse order of the due dates.
On January 19, 1995, the Company entered into a Composition Agreement
with the Creditors Committee setting forth the Company's obligations
with respect to the repayment of the Trade Debt.
In February, 1995, the Creditors Committee sent out notices to all of
the Trade Creditors setting forth the proposed Composition together
with the request that such Trade Creditors advise the Creditors
Committee through submission of their ballots whether they would be
participating in the Composition and, if so, which of the Proposals
whey would be choosing. On March 7, 1995, approximately 91% of the
Trade Creditors, representing approximately $2,732,000 in Debt,
elected to participate in the Composition (Trade Creditors
representing approximately $2,500,000 of the Debt accepted Proposal 1
with the balance, approximately $232,000 of Debt, accepting Proposal
2).
On March 7, 1995, the Creditors Committee declared the Composition
effective. In addition, subsequent to March 7, 1995, the Creditors
Committee contacted those Trade Creditors who failed to respond to the
initial solicitation to determine whether such Trade Creditors were
interested in participating in the Composition. The Company is waiting
for responses from these Trade Creditors. The Company anticipates that
it will be able to enter into satisfactory arrangements with these
Trade Creditors.
12
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
- continued -
NOTE 5: THE COMPOSITION (continued)
To fund the Composition, the Company (i) borrowed $750,000 from Ronald
Tygar, its then President and principal shareholder, pursuant to a demand
note dated March 17,1995; (ii) utilized a $100,000 good faith deposit which
was held by the Creditors Committee (as a condition to proceeding with the
structuring of the Composition, the Company was required to deposit
$100,000 with the Creditors Committee, to be applied toward the
satisfaction of Claims pursuant to the Composition); and (iii) obtained a
commitment for a $200,000 credit line overdraft from its principal lender.
On March 17, 1995, the Company made its first distribution pursuant to the
Composition Agreement. All Trade Creditors accepting Proposal 1 received
$.35 for each $1.00 of Debt (approximately $875,000 in the aggregate) and
Trade Creditors accepting Proposal 2 received an initial installment equal
to $.05 for each $1.00 of Debt (approximately $11,000 in the aggregate). In
order to fund the first distribution, the Company applied the $750,000
borrowed from Ronald Tygar and the $100,000 good faith deposit previously
made with the Creditors Committee. The balance was funded from working
capital. A second and third distribution of $38,000 and $65,000 were made
on April 18, 1995 and December 20, 1995, respectively. The next installment
due under the terms of the Composition Agreement is for approximately
$25,000 and is payable in September, 1996.
NOTE 6: SUBSEQUENT EVENTS
Subsequent to March 31, 1996, the Company initiated a private placement of
its securities in the form of a units offering in order to raise additional
working capital and pay down debts. Each unit in the private placement
consists of one share of the Company's common stock and two redeemable
common stock purchase warrants and is offered at a price of $1.25 each. The
common stock warrants enable the holders to purchase one share of the
Company's common stock at a price of $4.20, subject to adjustment. The
"Warrants" are redeemable at the option of the Company at a redemption
price of $.005 per warrant under certain conditions. The private placement
memorandum requires a minimum purchase of 400,000 units and a maximum of
1,600,000 units.
13
<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
March 31, 1996
(Unaudited)
- continued -
NOTE 6: SUBSEQUENT EVENTS (continued)
However, on March 29, 1996, the Company Board of Directors unanimously
approved an increase in the maximum units available for sale by 800,000,
subject to such other necessary actions as determined by the Company's
attorneys. As of May 3, 1996, the Company has sold 1,593,600 units, and has
received proceeds from the offering of $1,881,430 (net of offering expenses
of $110,570).
14
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources
The Company has continued to direct its efforts towards resolving the
various remaining issues and obligations that have arisen from its program
for restructuring and consolidation of the Company's operations which it
had undertaken in the third quarter of 1994.
During the first quarter of 1995, the Company entered into a Composition
Agreement (the "Composition") with its trade creditors (See the
"Composition" for details). As a result thereof, the Company successfully
completed a non-judicial work-out of approximately $3,032,000 of trade
debt.
In order to fund the Composition, the (i) borrowed $750,000 from Ronald
Tygar, its then President and principal shareholder and his wife pursuant
to a demand note dated March 17, 1995 which bears interest at a rate of 7%
per annum (ii) utilized a $100,000 good faith deposit which was held by the
Creditors Committee, to be applied toward the satisfaction of claims
pursuant to the Composition and (iii) obtained a commitment for a $200,000
credit line overdraft from Congress Financial Corporation ("Congress") the
Company's primary lender. The first distribution to the Trade Creditors,
approximately $886,000, in the aggregate, was made on March 17, 1995. A
second and third distribution of approximately $38,000 and $65,000 were
made on April 18, 1995 and December 20, 1995, respectively. The next
installment due under the terms of the Composition Agreement is for
approximately $25,000 and is payable in September, 1996.
The Company was able to successfully refinance its existing obligation
under a $216,986 equipment note held by the City of Brownsville, Tennessee,
relating to the Company's discontinued Brownsville facility. The Company
has agreed to resume payments based on a revised amortization schedule
which was reduced by the sale of certain non-transferable equipment
(storage racks) collateralized under the loan agreement. The revised note
requires 89 monthly payments commencing November 1, 1995, and bears
interest at 3.75% and is based on a remaining principal balance of
$203,000.
The Company is also liable under a certain mortgage note held by the State
of Tennessee, relating to its purchase of the land and building in
Brownsville. These assets are recorded as "fixed assets held for sale" on
the Company's March 31, 1996 balance sheet. The Company has recently been
informed by the City of Brownsville that there is an unrelated third party
interested in purchasing the property which would relieve the Company from
its obligation under the aforementioned mortgage note. The City of
Brownsville indicated that the sale could be completed by the end of the
second quarter of 1996.
15
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources (continued)
During 1995 the Company was able to negotiate settlements with the holders
of the certain note obligations with an aggregate principal balance of
approximately $424,000 for lump sum payments of approximately $212,000 in
the aggregate, plus a portion of the accrued interest. The closing of the
Company's Missouri brake lining plant and movement of its inventory and
equipment to the Company's manufacturing plant in Sanford, Florida in July
1994, constituted events of default under the lease for the Missouri plant
and related equipment loan agreements.
The Company is currently negotiating with the remaining holders of the
equipment loans totaling $259,000. The Company believes that these
remaining loans will be settled at a discount, on terms satisfactory to all
parties. In addition, the Company remains liable under the execution of a
capital lease with the City of Caruthersville, Missouri. Although the
Company has just begun negotiations regarding such property it feels that
it will be able to reach a settlement beneficial to both parties.
As a result of the Caruthersville lease and equipment note defaults and the
Composition Agreement, the Company is in default with respect to certain
covenants contained in its loan agreement with Congress. Congress continues
to fund the line of credit, based on revised lending formulas, however
Congress has not agreed to formally waive Company's loan covenant
violations and could cease funding the line of credit or accelerate the
loan repayment term, or demand payment in full of the outstanding loan
balance.
As of March 31, 1996, the Company was indebted to Congress under its
secured line of credit for $1,950,465. The line of credit matures in April,
1997 and automatically renews on a yearly basis, unless terminated by
either party in accordance with the loan agreement, bears interest at a
rate of 1.5% above the prime rate as announced by Philadelphia National
Bank and is collateralized by all of the assets of the Company, excluding
real estate and existing first liens on equipment, and is personally
guaranteed by Ronald Tygar. In addition, the Company is charged a monthly
service fee of $4,000 during the term of the loan agreement.
During the first quarter of 1996, the Company initiated a private placement
of its securities in the form of a units offering to raise additional
working capital. Each unit in the private placement consists of one share
of the Company's common stock and two redeemable common stock purchase
warrants and is offered at a price of $1.25 each. The common stock warrants
enable the holders to purchase one share of the Company's common stock at a
price of $4.20. The warrants are redeemable at the option of the Company at
a redemption price of $.005 per warrant beginning six months from the
private placement closing date.
16
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources (continued)
The private placement memorandum requires a minimum purchase of 400,000
units and a maximum of 1,600,000 units. As of May 3, 1996, the Company has
sold 1,593,600 units and has received proceeds from the offering of
$1,881,430 (net of offering expenses of $110,570). On March 29, 1996,
through a Special Meeting of the Board of Directors, the Board voted on and
unanimously approved an action to increase the maximum units available for
sale by 800,000 units.
Notwithstanding the above, there still can be no assurance that the Company
will have sufficient funds to (i) meet its obligations with respect to the
Missouri Plant; (ii) pay the Lenders or its obligations pursuant to any
settlement agreements reached with the lenders; (iii) pay the future
installments which are due under the Composition; (iv) meet its obligations
on a going forward basis; or (v) repay Congress in the event of
acceleration of the Congress loan. The Company is currently negotiating
with alternative funding sources, but there can be no assurance that these
or other sources will provide the Company with the capital required in
order to meet its obligations. Unless the Company's borrowing, as set forth
in the loan agreement increase as a result of increased sales and/or
eligible inventories, the Company may be required to, or otherwise deem it
necessary to appropriate, to file a petition for reorganization under
Chapter 11 of the Bankruptcy Code. The Company cannot ascertain at this
time what the effects of a bankruptcy filing may have on the Company's
financial statements and the value of the Company's issued and outstanding
common stock.
Material Changes in Financial Condition
The Company's inventory decreased by $249,546 to $3,572,281 at March 31,
1996 as compared to $3,821,827 at December 31, 1995. The decrease was a
result of improved inventory management in response to the reduced level of
sales. Accounts payable and accrued expenses decreased to $1,325,398 at
March 31, 1996 from $1,489,296 at December 31, 1995. This decrease of
$163,898 is a result of utilizing the proceeds of the private placement in
order to pay down certain trade payables. In addition, as a result of the
proceeds of the private placement the Company was able to reduce its note
payable to Congress by $491,277 from $2,441,742 at December 31, 1995 to
$1,950,465 at March 31, 1996. The Company was able to pay down this note
obligation and remain at/or close to a borrowing level satisfactory to the
lender. During the first quarter Congress allowed the Company to create new
borrowings under the line of credit which were based on revised lending
formulas satisfactory to both Congress and the Company.
17
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Material Changes in Results of Operations
Quarter ended March 31, 1996
compared to March 31, 1995
For the three months ended March 31, 1996, the Company has a net loss
before extraordinary item of $766,102 as compared to a net loss before
extraordinary item of $188,989 for the three months ended March 31, 1995.
Net sales for the three months ended March 31, 1996 decreased by $1,327,014
or 51% to $1,300,712 from $2,627,726 for the three months ended March 31,
1995. The decrease in net sales is directly attributable to the loss of
certain customers, reduced sales to certain existing customers and the
Company's impaired ability to attract new customers as a result of the
Company's past financial difficulties. The Company believes that based upon
the successful completion of its restructuring it can eliminate customer
concerns regarding the Company's ability to deliver orders at a maximum
fill rate and in a timely and consistent manner. If the Company can
successfully convey this to the marketplace it can regain the customer base
it has lost and create an opportunity to attract potential new customers.
Gross profit, as a percentage of sales, decreased from 19.5% for the three
months ended March 31, 1995 to (8%) for the three months ended March 31,
1996. Although the Company was able to reduce fixed expenses included in
Cost of Sales, the inability of the Company to generate increased sales
volume offset much of the benefit.
Selling and delivery expense decreased to $154,227 for the three months
ended March 31, 1996 from $218,097 for the three months ended March 31,
1995. The decrease of $63,870 in selling and delivery expense is
attributable to the lower commissions and freight costs as a result of the
reduced level of sales.
General and administrative expenses decreased by $54,410 from $471,007 for
the three months ended March 31, 1995 to $416,597 for the three months
ended March 31, 1996. This decrease are a result of cost reductions arising
from the Company's continued efforts to reduce general and administrative
expenses.
Interest expense for the three months ended March 31, 1996 was $84,753 as
compared to $123,436 for the three months ended March 31, 1995. This
decrease of $38,683 is attributable to the reduced borrowing levels on all
of the Company's note obligations.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
Exhibits - None
Reports on Form 8-K
No reports were filed by the Company on Form 8-K during the fiscal quarter
ended March 31, 1996.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to signed on its behalf by the
undersigned thereunto duly authorized.
Dated: May 14, 1996
RT INDUSTRIES, INC.
By: John K. Kenney
President and Chief Executive Officer
(Principal Accounting Officer)
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 121,417
<SECURITIES> 0
<RECEIVABLES> 1,846,011
<ALLOWANCES> 534,000
<INVENTORY> 3,821,827
<CURRENT-ASSETS> 5,255,255
<PP&E> 7,076,122
<DEPRECIATION> 2,597,240
<TOTAL-ASSETS> 9,734,137
<CURRENT-LIABILITIES> 5,684,033
<BONDS> 6,245,130
0
0
<COMMON> 5,081
<OTHER-SE> 3,483,926
<TOTAL-LIABILITY-AND-EQUITY> 9,734,137
<SALES> 8,369,067
<TOTAL-REVENUES> 8,369,067
<CGS> 9,025,924
<TOTAL-COSTS> 9,025,924
<OTHER-EXPENSES> 4,130,566
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