<PAGE> 1
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 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
----------- ----------
0-20436
----------------------
Commission file number
RT Industries, Inc.
-------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
Delaware 65-0309477
-------- ----------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1875 E. Lake Mary Boulevard, Sanford, FL 32773
- ---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
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
------- --------
State the number of shares outstanding of each of the issuer's classes of common
stock, as of the latest practicable date.
Class Outstanding at November 14, 1996
- --------------------------------------- --------------------------------
Common Stock, par value $.001 per share 7,624,754
<PAGE> 2
PART 1. 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.
2
<PAGE> 3
RT INDUSTRIES, INC.
Consolidated Balance Sheet
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets
Cash $ 21,741
Accounts Receivable (not of allowance for doubtful $ 855,454
accounts of $823,058)
Inventory - Note 2 $3,599,313
Prepaid expense, principally income taxes $ 244,787
----------
$4,721,295
Total Current Assets
Fixed Assets(net of accumulated $3,403,683
depreciation of $3,041,409)
Other Assets $ 505
----------
TOTAL ASSETS $8,125,483
==========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
<PAGE> 4
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
1996 1995
<S> <C>
$7,913,223 $7,283,482
201,257 204,122
719,632 718,634
246,726 129,971
275,193 323,928
---------- ----------
9,356,031 8,660,137
---------- ----------
3,849,500 3,567,470
40,711 39,113
---------- ----------
3,890,211 3,606,583
---------- ----------
5,465,820 5,053,554
550,852 243,527
---------- ----------
4,914,968 4,810,027
---------- ----------
5,725 92,700
713,563 457,869
56,883 10,669
0 (36,347)
209,227 251,631
297,234 205,293
---------- ----------
1,282,632 981,815
---------- ----------
4,940,154 4,079,897
---------- ----------
1,257,446 1,711,945
410,903 641,400
---------- ----------
$ 846,543 $1,070,545
========== ==========
$ 0.55 $ 0.70
========== ==========
1,543,759 1,534,440
========== ==========
</TABLE>
2
<PAGE> 5
RT INDUSTRIES, INC.
Consolidated Balance Sheet
September 30, 1996
(Unaudited)
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C>
Notes payable $ 1,556,105
Accounts payable & accrued expenses $ 833,060
Related party payable $ 45,000
-----------
Total Current Liabilities $ 2,434,165
Long-Term Liabilities:
Notes payable $ 264,364
Related party payables $ 163,000
-----------
Total Liabilities $ 2,861,529
Stockholder's Equity:
Common stock, $.001 Par Value $ 7,045
Additional paid-in capital $12,577,195
Retained earnings $(7,320,286)
-----------
Total stockholders' equity $ 5,263,954
-----------
TOTAL LIABILITIES & STOCKHOLDERS EQUITY $ 8,125,483
===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
4
<PAGE> 6
RT INDUSTRIES, INC.
Consolidated Statement of Operations
September 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 3,194,619 $ 7,253,234
Cost of Goods Sold $ 3,590,617 $ 6,445,521
----------- -----------
Gross Profit $ (395,998) $ 807,713
----------- -----------
Operating Expenses:
Selling and delivery $ 463,920 $ 683,405
General and administrative $ 1,212,050 $ 2,101,132
Interest $ 210,251 $ 364,531
Provision for doubtful accounts $ 1,720 $ 214,110
----------- -----------
Total Operating Expense $ 1,887,941 $ 3,363,178
Loss before Income Tax benefit
and extraordinary item $(2,283,939) $(2,555,465)
Income Tax benefit $ 0 $ (540,000)
----------- -----------
Loss before extra ordinary item $(2,283,939) $(2,015,465)
Extraordinary item $ $26,863 $ 1,002,465
----------- -----------
Net (Loss) $(2,257,076) $(1,013,000)
=========== ===========
Net (Loss) per share of Common Stock before
extraordinary item (0.36) (0.81)
Net Earnings (Loss) per share of common stock (0.36) (0.41)
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements
5
<PAGE> 7
RT INDUSTRIES, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30,
1996 1995
---- ----
<S> <C> <C>
Net Sales $ 821,786 $ 2,072,652
Cost of Goods Sold $ 789,580 $ 2,133,114
--------- -----------
Gross Profit (Loss) $ 32,206 $ (60,462)
--------- -----------
Operating Expenses:
Selling and delivery $ 150,356 $ 249,111
General and administrative $ 449,551 $ 1,088,268
Interest $ 60,833 $ 114,748
Provision for doubtful accounts $ 0 $ 78,781
--------- -----------
Total Operating Expense $ 660,740 $ 1,530,908
Loss before Income Tax benefit
and extraordinary item $(628,534) $(1,591,370)
Income Tax benefit $ 0 $ (184,000)
--------- -----------
Loss before extra ordinary item $(628,534) $(1,407,370)
Extraordinary item $ 0 $ 192,198
--------- -----------
Net(Loss) $(628,534) $(1,215,172)
========= ===========
Net (Loss) per share of Common Stock before
extraordinary item (0.09) 0.41
Net Earnings (Loss) per share of common stock (0.09) 0.35
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
6
<PAGE> 8
RT INDUSTRIES, INC.
Consolidated Statements of Stockholders' Equity
For the Nine Months Ended September 30, 1996
(Unaudited)
<TABLE>
<S> <C>
COMMON STOCK
Balance - January 1, 1996 5,081
Issuance of 75,000 shares of stock pursuant to a
professional service agreements 75
Issuance of 1,594,000 shares pursuant to a private placement agreement 1,594
Issuance of 800,000 shares pursuant to a private placement agreement 800
Issuance of 75,000 shares pursuant to a private placement agreement 75
-----------
Balance September 30, 1996 7,625
===========
ADDITIONAL PAID-IN CAPITAL
Balance-January 1, 1996 $ 8,547,136
Issuance of 75,000 shares of stock pursuant to
professional service agreements $ 133,816
Issuance of 1,594,000 shares of stock pursuant to a
private placement agreement (Net of offering expenses $109,670) $ 1,882,330
Issuance of 800,000 shares of stock pursuant to a
private placement agreement (Net of offering expenses $65,588) $ 934,412
Issuance of 75,000 shares of stock pursuant to a
private placement agreement (Net of offering expenses $20,500) $ 54,500
Private placement of a cumulative convertible debenture (Net of
offering expense $125,000) $ 1,025,000
-----------
Balance-September 30, 1996 $12,577,194
===========
RETAINED EARNINGS (DEFICIT)
Balance-January 1, 1996 $(5,063,210)
Common stock, $001 Par Value $ 7,045
Net Income $(2,257,076)
-----------
Balance September 30, 1996 $(7,313,241)
===========
TOTAL STOCKHOLDER'S EQUITY $ 5,263,953
-----------
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
7
<PAGE> 9
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
---- ----
CASH FLOW FROM OPERATING ACTIVITIES
<S> <C> <C>
Net Income(Loss) $(2,257,076) $(1,013,000)
Adjustments to reconcile net income (loss)
to net cash provided (used) by operating activities:
Depreciation $ 444,169 $ 441,266
Amortization $ 88,000 $ 257,733
Provision for doubtful accounts $ 1,720 $ 214,110
Write-off of deferred consulting agreement $ 658,473
Issuance of Common Stock as payment for
professional services $ 62,500
Extraordinary item-cancellation of debt $ (26,863) $(1,002,465)
(Increase)Decrease In:
Accounts Receivable $ 22,418 $ 496,726
Inventory $ 222,614 $ 565,194
Prepaid Expenses $ 75,703 $ 113,102
Other Assets $ 78,523 $ 5,367
Increase (Decrease) In:
Accounts Payable and Accrued Liabilities $ (656,236) $(1,375,097)
----------- -----------
Total Adjustments $ 312,548 $ 374,409
Net cash Flows from Operating Activities $(1,944,528) $ (638,591)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property $ 771,962
(Purchase)/Sale of Fixed Assets $ (167,305) $ (94,406)
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
8
<PAGE> 10
RT IINDUSTRIES INC.
Consolidated Statements of Cash Flows
(Unaudited)
- continued -
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
---- ----
CASH FLOWS FROM FINANCING ACTIVITIES
<S> <C> <C>
Net proceeds(reduction) from revolving credit
demand note $(1,646,970) $ (818,827)
Net proceeds from issuance of common stock $ 3,967,559 $1,680,980
Notes payable-net $(1,080,394) $ (304,723)
----------- ----------
Net Cash Flow from Financing Activities $ 1,240,195 $ 557,430
NET DECREASE IN CASH $ (99,676) $ (175,567)
CASH-beginning of year $ 121,417 $ 186,837
----------- ----------
CASH-end of period $ 21,741 $ 11,270
----------- ----------
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
9
<PAGE> 11
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
1996 1995
---- ----
<S> <C> <C>
Cash paid for interest $207,751 $ 364,531
-------- -----------
Non-Cash Investing Activities
Professional services contracts exchanged
for notes payable $ 0 $ 477,158
Professional services contracts exchanged
for common stock $ 0 $ 325,000
Non-Cash Financing Activities
Notes payable-issued in exchange for professional
services contracts $ 0 $ 477,158
Common stock issued as repayment for notes payable $ 1,150,000
Notes payable exchanged for common stock $ 0 $(1,150,000)
Common stock issued in exchange for professional
services contracts $ 0 $ 325,000
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
10
<PAGE> 12
Notes to Consolidated Financial Statements
SEPTEMBER 30, 1996
(Unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Operations and Organization
The Company, which was formed on January 16, 1992 owns and operates the
following companies:
Ultra Brake Corporation
Ultratech of South Florida, Inc.
Roinco Manufacturing, Inc.
RT Friction, Inc.
As part of a general restructuring plan, Ultratech, RT Friction, and Ultra
Brake no longer conduct any business operations. These have been
consolidated and are performed by the Company or are contracted out to the
industry. The Company intends to undertake the necessary steps to dissolve
such subsidiaries under the applicable laws of each such subsidiary's
place of incorporation.
b. Unaudited Interim Statements
The financial statements as of Sept. 30, 1996 for the three month and nine
month periods ended September 30, 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 September 30, 1996 and 1995 are not
necessarily indicative of ...
NOTE 2: INVENTORY
Major inventory components as of September 30, 1996 were as follows:
Raw Materials $728,048
Work in Process $544,368
Finished Goods $2,470,455
Reserve ($143,558)
----------
Total $3,599,313
----------
11
<PAGE> 13
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
- continued -
NOTE 3: LOSS PER SHARE
For the nine months ended Sept. 30, 1996 and Sept. 30, 1995,
the number of shares used in computing the per share earnings
were 6,354,877 and 2,484,330, respectively.
On February 16, 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 (the "Missouri Plant") during the third quarter of 1994 resulted
in defaults with respect to certain equipment loans. As a result of these
defaults and the acceleration of the loan obligations (but taking into
account the Company's settlement of certain outstanding loans aggregating
$424,000), $258,000 has been classified as a current liability in the
Consolidated Balance Sheet. (See "Management's Discussion and Analysis or
Plan of Operation" in the Company's Form 10-KSB for the year ended 1995).
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 the
Trade Debt (see Note 5 to the Consolidated Financial Statements) has
caused the Company to be in default with respect to certain covenants
contained in its loan agreement with Congress Financial Corporation
("Congress"). Although aware of the defaults, Congress continues to fund
the credit line. Congress, however, has not 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 September 30, 1996 as a current liability.
12
<PAGE> 14
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
- continued -
NOTE 5: THE COMPOSITION
In connection with the debt restructuring, a committee of the Company's
unsecured trade creditors (the "Trade Creditors") on March 7, 1995 declared as
effective an agreement (the "Composition Agreement") providing for repayment by
the Company of the unsecured trade debt (the "Trade Debt") of the Company's
Trade Creditors electing to participate in the Composition Agreement,
representing approximately $2,732,000 of the $3,032,000 Trade Debt. (See Exhibit
10.35 previously submitted on Form S-18, as amended, initially filed with the
SEC on April 8, 1992; Note 5 to the Consolidated Financial Statements in Form
10-QSB for the lst Quarter, 1996 for a discussion of the proposals, ratification
process and funding of the same). Trade Creditors, representing approximately
$2,500,000 of the Trade Debt, elected a lump sum payment of $0.35 for every
$1.00 of the Trade Debt and have been paid. Trade Creditors, representing
$232,000 of the Trade Debt, who elected periodic payments have received fifteen
percent (15%) of the periodic payments. The next distribution under the
Composition Agreement, payable in March 1997, is for an aggregate payment of
approximately $25,000. Subsequent payments become payable in the third quarters
of 1997, as well as the first quarter of each of 1998 and 1999.
The Company has negotiated settlements with respect to the bulk of the Trade
Debt held by the nine percent (9%) of the Trade Creditors not electing to
participate in the Composition Agreement, representing approximately $300,000 of
the Trade Debt, and only $12,900 remains to be paid to such Trade Debtors.
The Company has negotiated satisfactory settlement arrangements with the balance
of the non-electing Trade Debtors and, as of this date, the company has
satisfied its obligation to such non-electing Trade Debtors in accordance with
such settlement arrangements.
13
<PAGE> 15
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
September 30, 1996
(Unaudited)
-continued-
NOTE 6: SUBSEQUENT EVENTS
During the nine month period ending September 30, 1996, the Company
consummated two private placements (the "Placement") of its securities in
the form of 1,600,000 units and 800,000 units in order to raise additional
working capital and to pay down debts. Each unit in the Placements
consisted of one share of the Company's common stock and two redeemable
common stock purchase warrants (the "Warrants") at a price of $1.25 each.
The 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. None of the common stock offered
pursuant to the Placements is registered under the 1933 Securities Act,
as amended and may not be sold in the United States absent such
registration or under some applicable exemption from registration
requirements. As of Sept. 30, 1996, the Company had received proceeds from
the placements of approximately $2,816,743 (net of expenses associated
with the offering of $175,258).
14
<PAGE> 16
RT INDUSTRIES, INC.
ITEM: 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Liquidity and Capital Resources
The Company has continued efforts to restructure and consolidate the Company's
operations which commenced in the third quarter of 1994.
In addition to the Composition Agreement (See Note 5 to the Consolidated
Financial Statements) and following the successful refinancing in the fourth
quarter 1995 of the equipment note held by the City of Brownsville, Tennessee
(See "Management's Discussion and Analysis or Plan of Operation" in Form
10-KSB for the year ended 1995), and settlement of various note obligations in
connection with the Missouri Plant (See "Management' Discussion and Analysis or
Plan of Operation" in Form 10-KSB for the year ended 1995), the Company has
continued to take steps to renegotiate and / or settle its outstanding
obligations, as hereinafter described.
With respect to that certain mortgage note held by the State of Tennessee
concerning the Company's prior purchase of land and improvements in Brownsville,
TN, the Company has been informed by the City of Brownsville that an unrelated
third party has purchased the property, thereby releasing the Company from any
further obligations under such mortgage note held by the State of Tennessee. The
company anticipates a formal release to be memorialized during the fourth
quarter 1996. The sale of the property had no net impact on the company's
balance sheet.
As concerns the closing of the Missouri Plant, the Company continues to
negotiate with the remaining holders of equipment loans totaling $259,000. The
Company believes that these remaining loans will be settled 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, management
believes that it will be able to reach a settlement beneficial to both parties.
15
<PAGE> 17
As a result of the defaults under the lease and equipment notes with respect to
the Missouri Plant as well as the Trade Debts, the Company remains 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 the 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 Sept. 30, 1996, the Company was indebted to Congress under its secured
line of credit for $794,771. 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. The loan 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. In addition, the Company is charged a monthly
service fee of $4,000 during the term of the loan agreement.
There can be no assurance that the company will have sufficient funds to (i)
meet its obligations with respect to the Missouri Plant; (ii) pay its lenders or
its obligations with respect to any settlement agreement reached with the
lenders; (iii) pay the future installments which are due under the Composition
Agreement; (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 or 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.
16
<PAGE> 18
MATERIAL CHANGES IN FINANCIAL CONDITION
As a result of the proceeds of the private placement completed in the third
quarter of 1996, the Company was able to reduce its note payable to Congress by
$1,646,971 from $2,441,742 at December 31, 1995 to $794,771 at Sept. 30, 1996,
and to maintain a borrowing level satisfactory to Congress.
For the nine months ended Sept. 30, 1996, the Company has a net loss of
$2,283,939 before extraordinary item as compared to a net loss of $2,015,465
before extraordinary item for the nine months ended Sept. 30, 1995. For the
three months ended Sept. 30, 1996, the Company had a net loss of $628,534 before
extraordinary items as compared to a net loss of $1,407,370 before extraordinary
items for the three months ended Sept. 30, 1995.
Net sales for the nine and three months periods ended Sept. 30, 1996 were
$3,194,619 and $821,786, respectively, as compared with net sales for the nine
and three months periods ended Sept. 30, 1995 of $7,253,234 and $2,072,652,
respectively. Comparing the nine and three months periods ended Sept. 30, 1996
and 1995, net sales decreased 56% and 60%, respectively. The decrease in net
sales is 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. Management believes
that based upon the successful completion of the Company's restructuring, it can
eliminate customer concerns regarding the Company's ability to deliver orders in
a timely and consistent manner.
For the nine and three months periods ended Sept. 30, 1996, gross loss as a
percentage of net sales were (12%) and (4%), respectively. 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 by $219,485 for the nine months ended
Sept. 30, 1996, as compared to the nine months ended Sept. 30, 1995, and
decreased by $98,755 for the three months ended Sept. 30, 1996 as compared to
the three months ended Sept. 30, 1995. The decrease in selling and delivery
expense is attributable to the lower commissions and freight costs as a result
of the reduced level of sales.
17
<PAGE> 19
General and administrative expenses decreased by $889,082 to $1,212,050 for the
nine months ended Sept. 30, 1996, from $2,101,132 for the nine months ended
Sept. 30, 1995. For the three months ended Sept. 30, 1996, such expenses
decreased by $638,717 to $449,551, from $1,088,268 for the three months ended
Sept. 30, 1995. This decrease is a result of cost reductions arising from the
Company's continued efforts to reduce general and administrative expenses.
Interest expense for the nine and three months periods ended Sept. 30, 1996,
were $210,251 and $60,833, respectively. For the nine and three months period
ended Sept. 30, 1995, interest was $364,531 and $114,748 respectively. This
decrease is attributable to the reduced borrowing levels on all of the Company's
note obligations.
18
<PAGE> 20
PART 11: OTHER INFORMATION
ITEM 1: Legal Proceedings
The Company negotiated a settlement of the civil matter filed in the United
States District Court, Western District of Missouri on or about February 15,
1996, (See "Legal Proceedings" in Form 10-KSB for the year ended 1995). It is
anticipated that such settlement will be memorialized during the fourth quarter
1996, which will result in the voluntary dismissal by the claimant of the civil
case against the Company.
ITEM 3: Defaults Upon Senior Securities
Except to the extent otherwise renegotiated and / or settled by the Company (See
Notes 4 and 5 to the Consolidated Financial Statements; See "Management's
Discussion and Analysis of Plan of Operation" discussion on "Liquidity and
Capital Resources"), the Company was in default of its notes and obligations at
the end of the third quarter of 1996, with respect to each of Congress, certain
Trade Creditors, the City of Cauthersville, MO and certain equipment lessors
associated with the Missouri Plant.
19
<PAGE> 21
ITEM 4: Submission of Matters to a Vote of Security Holders
On May 1, 1996, the Board of Directors of the Company authorized and approved an
increase in the authorized common stock for the Company from 10,000,000 shares
to 30,000,000 shares.
The Board solicited consent of the shareholders of the Company by proxy
statement mailed on or about June 11, 1996 (See Schedule 14A Definitive Proxy
Statement and Written Consent of the Shareholders of the Company filed with the
SEC on June 11, 1996). On or about July 1, 1996, a majority of the shareholders
approved by written consent the increase in the authorized shares of Common
Stock. By Certificate of Amendment filed with the Secretary of State of the
State of Delaware on August 7, 1996, the Company amended its Certificate of
Incorporation to provide for a total number of authorized shares of common stock
equal to 30,000,000 shares, $.001 par value per share.
ITEM 5: Other Information
The Company completed a private offering of its securities in the form of
cumulative convertible debentures during the third quarter of 1996 pursuant to
Regulation S promulgated by the Security and Exchange Commission under the
Securities Act of 1993, as amended, which resulted in the Company receiving, as
of September 30, 1996, proceeds of approximately $1,125,000 (net of expenses
associated with the offering of $125,000).
ITEM 6: Exhibits and Reports on Form 8-K
Exhibits
27 Financial Data Schedule (for SEC use only)
Reports on Form 8-K
No reports were filed by the Company on Form 8-K during the three fiscal
quarters ended Sept. 30, 1996.
20
<PAGE> 22
RT INDUSTRIES, INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to sign on its behalf by the undersigned
thereunto duly authorized.
Dated: November 13, 1996
RT Industries, Inc.
By:_/S/ John K. Kenney
John K. Kenney
President and Chief Executive Officer
21
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
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