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 June 30, 1997
[ ] 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 ororganization)
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 June 30, 1997
Common Stock, par value $.001 per share 9,751,269
<PAGE>
RT INDUSTRIES, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION 3
Item 1. Consolidated Financial Statements 3
Consolidated Balance Sheet (unaudited) at June 30, 1997
4
Consolidated Statement of Operations (unaudited) for the
six months ended June 30, 1997 and June 30, 1996 6
Consolidated Statement of Operations (unaudited) for the
three months ended June 30, 1997 and June 30, 1996 7
Consolidated Statement of Stockholders' Equity (unaudited)
for the six months ended June 30, 1997 8
Consolidated Statement of Cash Flows (unaudited) for
the six months ended June 30, 1997 and June 30, 1996 9
Notes to Consolidated Financial Statements 12
Item 2. Management's Discussion and Analysis or Plan of Operation 18
PART II. OTHER INFORMATION 20
Item 4. Other Information 20
Item 5. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
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<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements and information are
submitted as required by Form 10-QSB. The consolidated 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 and
10-KSB/A for the year ended December 31, 1996.
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<PAGE>
RT INDUSTRIES, INC.
Consolidated Balance Sheet
June 30, 1997
(Unaudited)
Current Assets
Cash $301,003
Cash reserved for merger 3,000,000
Accounts Receivable (net of allowance for
doubtful accounts of $254,723) 884,593
Inventory - Note 2 3,315,851
Prepaid expense 35,148
-----------
Total Current Assets $7,536,595
Fixed Assets (net of accumulated
depreciation of $3,548,843) 2,988,502
Other Assets 296,725
-----------
TOTAL ASSETS $10,821,822
===========
The accompanying notes are an integral part of
these consolidated financial statements.
-4-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Balance Sheet
June 30, 1997
(Unaudited)
Current Liabilities:
Notes payable $3,605,010
Accounts payable - trade 349,419
Accrued liabilities 513,722
------------
Total Current Liabilities $4,468,151
Long-Term Liabilities:
Notes Payable, less current maturities 196,945
------------
Total Liabilities $4,665,096
Stockholders' Equity:
Common Stock, $.001 par value per share 9,751
Additional paid-in capital 21,757,593
Accumulated deficit (15,610,618)
------------
Total stockholder's equity 6,156,726
------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $10,821,822
============
The accompanying notes are an integral part of
these consolidated financial statements
-5-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Operations
(Unaudited)
Six Months Ended June 30,
1997 1996
----------- -----------
Net Sales $1,495,303 $2,372,833
Cost of Goods Sold 1,388,634 2,801,037
----------- -----------
Gross Profit (Loss) 106,669 (428,204)
----------- -----------
Operating Expenses:
Selling and delivery 231,609 313,564
General and administrative 2,287,742 762,499
Interest 2,013,220 149,418
Bad debt expense 3,336 1,720
----------- -----------
Total Operating Expense $4,535,907 1,227,201
----------- -----------
Loss before extraordinary item (4,429,238) (1,655,405)
Extraordinary item 0 26,863
-----------
Net Loss ($4,429,238) ($1,628,542)
=========== ===========
Net Loss per share of Common Stock
before extraordinary item -0.49 -0.27
Net Loss per share of common stock -0.49 -0.27
The accompanying notes are an integral part of
these consolidated financial statements.
-6-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30,
1997 1996
----------- -----------
Net Sales $834,457 $1,072,121
Cost of Goods Sold 685,873 1,391,520
----------- -----------
Gross Profit 148,584 (319,399)
----------- -----------
Operating Expenses:
Selling and delivery 115,204 159,337
General and administrative 1,717,082 345,902
Interest 1,110,463 64,665
----------- -----------
Total Operating Expense 2,942,749 569,904
----------- -----------
Net Loss (2,794,165) (889,303)
=========== ===========
Net Loss per share of common stock -0.31 -0.14
The accompanying notes are an integral part of
these consolidated financial statements.
-7-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Stockholders' Equity
For the Six Months Ended June 30, 1997
(Unaudited)
COMMON STOCK
Balance - January 1, 1997 $8,323
Note conversion 300
Debenture conversion 1,128
Balance June 30, 1997 9,751
======
ADDITIONAL PAID-IN CAPITAL
Balance-January 1, 1997 $15,592,938
Converted Alliance note to stock 300,000
Converted debentures 4,031,322
Conversion discount expense for 1997 debentures 1,833,333
------------
Balance June 30, 1997 $21,757,593
============
ACCUMULATED DEFICIT
Balance-January 1, 1997 ($11,181,380)
Net Loss (4,429,238)
Balance June 30, 1997 ($15,610,618)
============
TOTAL STOCKHOLDERS' EQUITY $6,156,726
============
The accompanying notes are an integral part of
these consolidated financial statements.
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<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended June 30,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net Loss ($4,429,238) ($1,628,542)
Adjustments to reconcile net loss
to net cash provided (used) by operating activities:
Depreciation $320,836 $298,194
Amortization 0 $66,000
Provision for doubtful accounts 0 $1,720
Issuance of Common Stock as payment for prof. svce. 0 $62,500
Extraordinary item-cancellation of debt 0 ($26,863)
(Increase) Decrease In:
Accounts Receivable ($97,038) $119,454
Inventory $55,796 $242,081
Prepaid Expenses $333,472 $7,173
Other Assets ($24,835) 0
Increase (Decrease) In:
Accounts Payable ($34,898) $76,511
Accrued Liabilities $287,262 0
----------- -----------
Total Adjustments $840,597 $846,770
Net cash flows used in operating activities ($3,588,641) ($781,772)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets ($148,047) ($105,673)
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
-9-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
- continued -
Six Months Ended June 30,
1997 1996
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net reduction of revolving credit
demand note ($758,486) ($1,084,164)
Net proceeds from issuance of common stock $5,800,000 $2,236,083
Notes payable-net $1,039,629 ($51,223)
----------- -----------
Net cash flow from financing activities $6,081,143 $1,100,696
NET INCREASE IN CASH $2,344,455 $213,251
Cash-beginning of period $956,548 $121,417
----------- -----------
Cash-end of period $3,301,003 $334,668
=========== ===========
The accompanying notes are an integral part of
these consolidated financial statements.
-10-
<PAGE>
RT INDUSTRIES, INC.
Consolidated Statements of Cash Flows
(Unaudited)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Six Months Ended June 30,
1997 1996
---------- ----------
Cash paid for interest $2,013,220 $149,418
---------- ----------
Non-Cash Financing Activities
Note payable exchanged for common stock $300,000 0
The accompanying notes are an integral part of
these consolidated financial statements.
-11-
<PAGE>
Notes to Consolidated Financial Statements
March 31, 1997
(Unaudited)
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. Business Operations and Organization
The Company, which was formed on January 16, 1992, operates through its
wholly-owned subsidiary, Ultra Brake Corporation. Three other
subsidiaries, Ultratech of South Florida, Inc., Roinco Manufacturing,
Inc., and RT Friction, Inc. no longer conduct any business operations
and exist solely as name holding entities.
b. Unaudited Interim Statements
The financial statements as of June 30, 1997 for the three and six
month periods ended June 30, 1997 and 1996 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 June 30, 1997 and 1996 are not
necessarily indicative of the results to be obtained for a full fiscal
year.
NOTE 2: INVENTORY
Major inventory components as of June 30, 1997 were as follows:
Raw Materials $519,917
Packaging Materials $41,684
Work in Process $187,204
Finished Goods $2,710,604
Reserve for obsolescence ($143,558)
----------
Total $3,315,851
==========
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<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
- continued -
NOTE 3: LOSS PER SHARE
For the six months ended June 30, 1997 and June 30, 1996, the number of
shares used in computing the earnings per share were 9,042,020 and
6,137,743, respectively.
NOTE 4: NOTES PAYABLE
Line of Credit
In June 1997, the Company paid off the line of credit which was collateralized
by substantially all of the Company's business assets. As a result of this
action, collateralization of these assets has been released by the lender.
Convertible Debentures
At January 1, 1997, two 10% convertible debentures issued pursuant to offshore
securities subscription agreements, dated each of December 5, 1996 and December
17, 1996, in the aggregate amount of $1,500,000, were outstanding. Such
Debentures were issued in reliance upon exemption from registration afforded by
Regulation S ("Reg S") as promulgated by the Securities and Exchange Commission
under the Securities Act of 1933, as amended (the "Act"). Principal and accrued
interest were converted into an aggregate of 383,100 shares of the Company's
common stock in February 1997.
In March, 1997, the Company entered into an offshore securities subscription
agreement (the "Agreement") pursuant to which the Company sold four 10%
cumulative convertible debentures dated each of March 7, 1997, March 12, 1997,
March 12,1997 and March 20, 1997, respectively (the "March Debentures"), in the
aggregate amount of $5,500,000, in reliance upon the Reg S exemption.
Interest expense of $848,148 has been recorded for the first quarter and
interest expense of $985,185 has been recorded for the second quarter,
representing the difference between the aggregate conversion price of the March
Debentures and the aggregate market value of the Company's common stock at
issuance on the date of conversion.
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<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
- continued -
Convertible Debentures (continued)
The debentures mature on each of March 7, 1998, March 12, 1998, March 12, 1998,
and March 20, 1998, respectively (each a "Maturity Date") but may be converted
into shares of the Common Stock, par value $.001 per share, of the Company (the
"Shares") any time commencing sixty (60) days after the date of issuance of the
March Debentures as more particularly set forth in the following paragraph. Each
of the March Debentures entitles the holder to interest (payable in cash or in
kind as shares) on the unpaid principal amount at the date of conversion (the
"Conversion Date") at the rate of 10% per year, payable on a pro-rata basis at
the earlier of (i) the date the March Debentures are converted or redeemed or
(ii) the Maturity Date. The March Debentures cannot be converted before the
expiration of the aforesaid 60 day period.
Under the terms of the Agreement, the Company may, at its sole option upon three
business day's notice, redeem the March Debentures (or a portion thereof) at any
time prior to conversion, at a redemption price which shall be equal to (i) 110%
of the principal amount of the March Debentures to be redeemed if the Company
exercises its redemption rights on or before the Thirtieth day following the
date of sale of the March Debentures or (ii) 125% of the principal amount to be
redeemed, any time after the Thirtieth day following the date of sale of the
March Debentures.
Subject to a two-year mandatory conversion period for any Shares issued pursuant
to the default provisions of the Agreement (i.e., at the conversion date the
Company does not have sufficient authorized shares of Common Stock available for
issuance at the date of conversion), the holder of each of the March Debentures
is prohibited from converting that principal amount of the March Debentures
which would result in the issuance to such holder of Shares in excess of 4.9% of
the shares of Common Stock of the Company outstanding as at the date of such
conversion.
The Agreement, the purchase representation letters and forms of notice annexed
thereto and executed with respect to each of the March Debentures set forth
various investment representations by the subscribers, including, without
limitation that each subscriber (a) is not a "US Person" as such term is defined
in Reg S, (b) is outside of the United States (i) at the time the purchase order
for the debenture originated, (ii) at the time the Agreement was signed and
delivered by the subscriber and (iii) at the time such subscriber executed the
Notices; (c) is not purchasing or converting the debenture on behalf of a "US
Person" and (d) the transactions contemplated by the Agreement are not part of a
plan or scheme by such subscriber to evade the registration provisions of the
Act; and (e) the class to whom the securities were sold were "accredited
investors" as such term is defined in regulation D promulgated under the Act.
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<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
- continued -
Convertible Debentures (continued)
Each holder of the March Debentures has the right, at their sole option any time
commencing sixty days after the date of issuance but not later than the maturity
date, to convert the March Debentures held by them, in whole or in part, into
shares at a conversion price equal to the lesser of seventy-five percent of: (i)
the average closing bid price of the shares of Common Stock of the Company as
quoted on NASDAQ for the five (5) trading days preceding the date on which
notice of conversion is effective, or (ii) one hundred ten percent of the
average closing bid price of the shares of Common Stock of the Company as quoted
on NASDAQ for the five trading days preceding the date on which the funds
necessary to purchase such March Debentures were received by the Company.
As of June 30, 1997, principal and accrued interest for the March Debentures
were converted into an aggregate of 926,664 shares of the Company's common
stock.
Subsequent to June 30, 1997, principal and accrued interest for the March
Debentures were converted into an aggregate of 1,085,600 shares of the Company's
common stock. With these conversions, all of the March Debentures were converted
into shares of the Company's common stock.
Equipment Loans
As of June 30, 1997, the Company had three outstanding equipment loans, as
follows:
(i) An equipment loan with the City of Brownsville, TN, which was refinanced in
1995, with an outstanding principal balance of $163,641 plus interest per annum
equal to prime minus 5%, with a floor of 2.5% and a cap of 6.5%. Current monthly
installments on the note are $2,616 each with the final installment payment due
in March, 2003.
(ii) An equipment loan with Concord Financial with an outstanding balance of
$127,275, currently payable in monthly installments of $11,107 each, with the
final installment due June 1998.
(iii) The reinstated equipment loan with the First State Bank & Trust Co. of
Caruthersville, MO and the US Small Business Administration in connection with
the Company's former facility in the State of Missouri, with an outstanding
principal balance of $193,789, payable in monthly installments of $5,678 each,
with the final installment due July 2002.
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<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
- continued -
Convertible Notes Payable
Two unsecured convertible notes payable with interest at 8% due monthly and
principal due at the demand of the holder were converted into 300,000 shares of
Company common stock in February 1997.
Note Payable
In June 1997, the Company reached an agreement (the "Amended Settlement
Agreement") with Ron Tygar, the former President, CEO, and Chairman of the Board
of Directors of the Company, and related parties (collectively referred to as
the "Settlement Parties") to amend the previously executed Settlement agreement
dated January 30, 1997 (the "Agreement"). Under the Amended Settlement
Agreement, the Company made a payment to the Settlement Parties of the aggregate
sum of Three Hundred Fifty Thousand Dollars ($350,000) (the "Settlement
Payment") in full satisfaction of the obligations of the parties under the
Agreement except as otherwise provided in the Amended Settlement Agreement.
The $350,000 applied in the settlement described in the preceding paragraph was
borrowed by the Company from Elmgrove Associates II, L.P. ("Elmgrove II"). Such
loan bears interest at the rate of 8% per annum and is to mature on August 31,
1997. As additional consideration for such loan, the Company granted Elmgrove
warrants for the purchase of 10,000 shares of the Company's Common Stock at the
market price at May 31, 1997, the date of the loan. Such warrant has an exercise
period of five years from the date of grant. If the $350,000 is not repaid at
maturity, then a second warrant will be granted to Elmgrove bearing similar
terms but with an exercise price as of the August 31, 1997 maturity date.
Elmgrove Associates II, L.P. is a principal stockholder of the Company. Mandel
Sherman, a director of the Company is President and a principal stockholder of
Miss Sloan Ltd., an investment company and general partner of Elmgrove
Associates II, L.P.
NOTE 5: MERGER
In June 1997, the Company announced that it had entered into an agreement to
merge with Quality Automotive Company, Inc. (Quality). Quality is a privately
held manufacturer of friction materials, and brake pads, and a remanufacturer of
automotive brake shoes. Quality is based in Tappahannock, Virginia and employs
over 160 employees. The merger will become effective following completion of
certain due diligence items and the fulfillment of other conditions set forth in
the merger agreement. The merger is expected to be completed in the third
quarter of 1997. The Company has placed $3,000,000 in escrow to be held and paid
to the shareholders of Quality upon the merger.
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<PAGE>
RT INDUSTRIES, INC.
Notes to Consolidated Financial Statements
June 30, 1997
(Unaudited)
- continued -
NOTE 6: THE COMPOSITION
In connection with restructuring of the Company's then outstanding debt, 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 1st 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 Sept. 1997, is for an
aggregate payment of approximately $25,000. Subsequent payments become payable
in the first quarters of 1998, as well as the third quarter of each of 1998 and
1999.
The Company successfully negotiated settlements with respect to almost all of
the Trade Debt held by the seven percent (7%) of the unsecured trade creditors
not electing to participate in the Composition Agreement, representing
approximately $300,000 of the Trade Debt. The Company has satisfied its
obligation to such non-electing trade creditors in accordance with such
settlement arrangements.
NOTE 7: OTHER EVENTS
In May 1992 the Company entered into a lease agreement with the City Of
Caruthersville, Caruthersville, MO (the "City"), for a lease of a 25,000 square
foot building for use by the Company for manufacturing and distribution. As part
of the Company's restructuring plan the Company ceased operations at the
Caruthersville location and moved all material and equipment to its Sanford, FL
facility. The City of Caruthersville has attempted to find a tenant for the
facility, and has sub-let the building on a short term basis. The City has been
unsuccessful in finding a long term tenant for the facility, and, in the first
quarter of 1997, informed the Company that it had sub-let the building for only
fourteen months of the past thirty seven months. As a result of this disclosure,
the Company is liable for twenty three months past due lease payments at a
monthly rate of $2,270 per month. The Company recorded this charge in the 2nd
quarter less $20,000 already accrued.
In June 1997, the Company determined that it will have no future use or receive
any future benefit from the Missouri facility and expensed $442,118 representing
the remaining amount of the liability under the Missouri facility lease.
-17-
<PAGE>
RT INDUSTRIES, INC.
ITEM: 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
Statements other than historical information contained in this report are
considered forward looking and involve a number of risks and uncertainties.
Factors that could cause such statements not to be accurate include, but are not
limited to, increased competition for the Company's products, improvements in
alternative technologies, a lack of market acceptance for new products
introduced by the Company, and the failure of the Company to successfully market
its products.
Liquidity and Capital Resources
In June 1997, the Company paid off the line of credit which was collateralized
by most of the Company's business assets. As a result, collateralization of
these assets has been released by the lender.
In March 1997, the Company issued a total of $5,500,000 of convertible
debentures pursuant to Reg S. (See Note 4: Notes Payable). The funds received
from the issuance of the debentures will be used for: a) possible acquisitions;
b) general operating expenses; and c) the purchase of new plant equipment.
Interest expense of $1,833,333 has been recorded through 1997, for the
difference between the conversion prices of the March Debentures and the fair
market value of the Company's common stock at the date of issuance.
Material Changes in Financial Condition
Net sales for the six month period ended June 30, 1997 and 1996 were $1,495,303
and $2,372,833, 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 improvements in 1) product
quality 2) order fill levels, 3) order processing turnaround time, and the
Company's improving image in the market will attract new customers in the coming
periods. In addition, the Company has begun to market a complementary product
line which will substantially help in attracting new customers.
Gross profit for the period ending June 30, 1997 was $106,669 as compared to a
loss of $428,204 for the same period in 1996. Improvements in production and the
consolidation of facilities contributed to lower cost of goods sold.
Total operating Expenses for the six month period ending June 30, 1997 and 1996,
were $4,535,907 and $1,227,201, respectively. Selling and delivery expenses were
$81,955 lower in 1997 verses 1996. This reduction was the result of lower sales.
General and Administrative expenses for the period were $2,287,742 in 1997 and
$762,499, in 1996. The increase of $1,525,243 was the result of 1) an expense of
$403,275 for services relating to the placement of the March Debentures; 2) an
expense of $477,057 relating to the accrual of the remaining lease payments on
the Missouri facility; and 3) an increase in professional fees of $233,814.
-18-
<PAGE>
ITEM: 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION (continued)
Material Changes in Financial Condition (continued)
Interest expense for the six month period ending June 30, 1997 and 1996, were
$2,013,220 and $149,418 respectively. The increase of $1,863,802 was the result
of an expense of $1,833,333 relating to the conversion discount on the
$5,500,000 of convertible debentures.
The net loss for the period ending June 30, 1997 and 1996 was $4,429,238 and
$1,628,542, respectively. The increase of $2,800,696 was the result of the
increased expense in 1) interest expense associated with the March Debentures,
($1,833,333); 2) March Debentures placement cost ($403,275); Missouri lease
expense ($477,057); professional fees ($233,814). The total increase in expenses
in these four items was $2,947,479.
-19-
<PAGE>
PART II: OTHER INFORMATION
ITEM 4: Other Information
Agreement To Merge
In June 1997, the Company announced that it had entered into an agreement to
merge with Quality Automotive Company, Inc. (Quality). Quality is a privately
held manufacturer of friction materials, and brake pads, and a remanufacturer of
automotive brake shoes. Quality is based in Tappahannock, Virginia and employs
over 160 employees. The merger will become effective following completion of
certain due diligence items and the fulfillment of other conditions set forth in
the merger agreement. Both companies believe the merger will provide a platform
for the future growth of the combined business. The merger is expected to be
completed in the third quarter of 1997. The Company has placed $3,000,000 in
escrow to be held and paid to the shareholders of Quality upon the merger.
ITEM 5: Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Form 8-K
The Company filed a Report on Form 8-K dated March 24, 1997, as supplemented by
an amendment on Form 8-K/A dated April 2, 1997. (See Note 4: Convertible
Debentures)
-20-
<PAGE>
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: August 8, 1997
RT Industries, Inc.
By: /S/ Alfred H. Paul
-----------------------
Alfred H. Paul
Chief Financial Officer and Chief Accounting Officer
-21-
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,301,003
<SECURITIES> 0
<RECEIVABLES> 1,139,316
<ALLOWANCES> 254,723
<INVENTORY> 3,315,851
<CURRENT-ASSETS> 7,536,595
<PP&E> 2,988,502
<DEPRECIATION> 3,548,843
<TOTAL-ASSETS> 10,821,822
<CURRENT-LIABILITIES> 4,468,151
<BONDS> 0
0
0
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