<PAGE>
FORM 10-QSB
U.S. Securities and Exchange Commission
Washington, D.C. 20549
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _____________ to _________________
Commission File Number: 0-21394
Developed Technology Resource, Inc.
(Exact name of issuer as specified in its charter)
Minnesota 41-1713474
State of Incorporation I.R.S. Employer Identification No.
7300 Metro Boulevard, Suite 550
Edina, Minnesota 55439
Address of Principal Executive Office
(612) 820-0022
Issuer's Telephone Number
Check whether the issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the 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 ___
As of November 12, 1999, there were 805,820 shares of the
issuer's Common Stock, $0.01 par value per share, outstanding.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
INDEX
For the Quarter Ended September 30, 1999
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Unaudited Financial Statements
Condensed Balance Sheets 3
Condensed Statements of Operations 4
Condensed Statements of Cash Flows 5
Notes to Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Shareholders 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 16
<PAGE>
ITEM 1. CONDENSED UNAUDITED FINANCIAL STATEMENTS
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 308,894 $ 5,412
Receivables:
Trade, net -- 129,169
Sale of discontinued operations 200,000 200,000
FoodMaster International L.L.C. (FMI) -- 611,080
Other 155,760 4,000
Note receivable 631,467 600,000
Prepaid and other current assets 133,558 158,798
Total current assets 1,429,679 1,708,459
Furniture and Equipment, net 35,976 43,794
Investment in FMI 744,619 991,699
$2,210,274 $2,743,952
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 56,119 $ 241,458
Accrued liabilities 62,338 163,761
Deferred gain short-term 181,707 187,065
Total current liabilities 300,164 592,284
Non-current Deferred Gain 34,977 33,627
Total liabilities 335,141 625,911
Commitments and Contingencies -- --
Shareholders' Equity:
Common stock 8,058 8,058
Additional paid-in capital 6,264,920 5,956,323
Accumulated deficit (4,397,845) (3,846,340)
Total shareholders' equity 1,875,133 2,118,041
$2,210,274 $2,743,952
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Revenues:
Sales $ -- $ 69,900 $ 48,900 $ 309,148
Management fees from FMI joint
venture 271,277 308,508 933,358 937,438
Commissions and other income 1,350 1,350 4,008 27,008
272,627 379,758 986,266 1,273,594
Cost and Expenses:
Cost of sales -- 59,950 41,450 244,792
Selling, general and
administrative 298,352 327,146 989,098 1,040,083
298,352 387,096 1,030,548 1,284,875
Operating Loss (25,725) (7,338) (44,282) (11,281)
Other Income (Expense):
Interest income, net 15,723 40,499 48,454 198,880
Equity in earnings of FMI joint
venture (197,248) 76,311 (555,678) 256,056
Net Income $ (207,250) $ 109,472 $ (551,506) $ 443,655
Net Income (Loss) per Common Share:
Basic $ (0.26) $ 0.14 $ (0.68) $ 0.55
Diluted $ (0.26) $ 0.09 $ (0.68) $ 0.37
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED STATEMENTS OF CASH FLOWS
Nine Months Ended September 30, 1999 and 1998
(Unaudited)
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income (Loss) $ (551,506) $ 443,655
Adjustments to Reconcile Net Income (Loss) to Cash
Used by Operating Activities:
Depreciation 8,609 11,504
Provision for doubtful accounts (12,690) 2,182
Equity in earnings of FMI joint
venture 555,678 (256,056)
Changes in Operating Assets and Liabilities, net of
transfers to joint venture:
Receivables (63,262) 550,521
Receivable from FMI joint venture 664,441 (588,635)
Prepaid and other current assets (6,227) (61,222)
Accounts payable and accrued
liabilities (286,762) (182,286)
Deferred gains (4,008) (4,009)
Net cash provided (used) by
operating activities 304,273 (84,346)
INVESTING ACTIVITIES:
Proceeds from sale of furniture
and equipment 1,952 --
Purchases of furniture and
equipment (2,743) (16,793)
Net cash used by investing
activities (791) (16,793)
FINANCING ACTIVITIES:
Proceeds from exercise of stock
options -- 22,500
Net cash provided by financing
activities -- 22,500
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 303,482 (78,639)
CASH AND CASH EQUIVALENTS, Beginning
of Period 5,412 284,526
CASH AND CASH EQUIVALENTS, End of
Period $ 308,894 $ 205,887
</TABLE>
See accompanying notes to the financial statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Business
Developed Technology Resource, Inc. (DTR or the Company)
invests in and manages dairy and distribution operations in
three countries of the former Soviet Union (fSU) through
FoodMaster International L.L.C. (FMI), its joint venture with
Agribusiness Partners International L.P. (API). In addition to
managing FMI, DTR sells packaging equipment and manages the
operations of its 100% owned subsidiary, SXD, Inc.
During 1998, SXD, Inc. distributed X-ray tubes under DTR's
exclusive agreement with a Russian manufacturer, issued
unsecured short-term loans, and held ownership interests in
the coatings technology business of Phygen, Inc. and the
cancer detection business of Armed which had no reportable
business activity during 1999 or 1998. The x-ray tube
distribution agreement expired in March 1999 and the Company
is phasing out this operation during 1999.
Basis of Presentation
The interim financial statements of Developed Technology
Resource, Inc. (DTR) are unaudited, but in the opinion of
management, reflect all necessary adjustments for a fair
presentation of the financial position, as well as, the
results of operations and cash flows for the periods
presented.
The results of operations for any interim period are not
necessarily indicative of results for the full year. These
financial statements should be read in conjunction with the
Company's Annual Report and Notes thereto on Form 10-KSB for
the year ended December 31, 1998 as filed with the Securities
and Exchange Commission.
Going Concern Considerations
Since August 1998, the countries of the fSU, in which the
subsidiaries of FMI operate, have faced a series of adverse
economic conditions. Uncertainties regarding the political,
legal, tax or regulatory environment, including the potential
for adverse and retroactive changes in any of these areas
could significantly affect the Company. These countries have
had a significant devaluation of their local currency against
the US dollar, higher interest rates and reduced opportunities
for financing. As a result of these situations, several of
the subsidiaries have suffered significant losses in 1998 and
1999 from foreign currency translation losses as a result of
hyperinflationary accounting for foreign currency translation.
As a result, several of these subsidiaries carry an
accumulated deficit at March 31, 1999. DTR is committed to
working with FMI's subsidiaries to focus production on
profitable products and to address working capital shortages
as needed over the coming year. Working capital shortages
will be funded through loans from FMI, loans from third
parties or through the sale of equity.
The year 2000 (Y2k) issue arises because many computerized
systems use two digits rather than four to identify a year.
Date sensitive systems may recognize the year 2000 as 1900 or
some other date, resulting in errors when information using
the Y2k date is processed. The effects of the Y2k issue may
be experienced before, on, or after January 1, 2000 and if not
addressed, the impact on operations and financial reporting
may range from minor errors to significant systems failure
which could affect an entity's ability to conduct normal
business operations. It is not possible to be certain that
all aspects of the Y2k issue affecting the Company, including
those relating to the efforts of customers, suppliers, or
other third parties, will be fully resolved. DTR completed its
Y2k review on its own operations in June 1999. At this time,
all systems were completely Y2k compliant. Due to the nature
of the FMI subsidiaries' equipment and the upgrading of their
computerized systems by November 1999, no serious
interruptions in production or financial processing are
expected. The direct risks to the Company, and in particular,
the FMI subsidiaries are those resulting from the general
economic
<PAGE>
environment, government, and relationships with
suppliers and customers in the fSU. Several governments in
the fSU in which the FMI subsidiaries operate have indicated
that the national infrastructure of such countries will not be
Y2k compliant by January 1, 2000. As such, the FMI
subsidiaries have made contingency plans that include back-up
electric generators and manual processing of transactions,
among other things.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the financial
statements and reported amounts of revenues and expense during
the reporting period. Actual results could differ from those
estimates.
Reclassifications
Certain reclassifications were made to the 1998 financial
statements to present those financial statements on a basis
comparable with the current year. The reclassifications had
no effect on previously reported net loss or accumulated
deficit.
2. Ak-Bulak Option
Effective August 1996, the Company obtained an option to
purchase 80% of Ak-Bulak, an inactive company which owned the
other 50% of the FoodMaster joint venture. To exercise the
option, the Company agreed to pay certain pre-defined
outstanding debts of Ak-Bulak and to make capital improvements
to the dairy owned by FoodMaster. As of March 2, 1997, DTR
had paid $171,774 in connection with the exercise of this
option. On March 3, 1997, DTR contributed its 50% ownership
in FoodMaster along with this option to the FMI joint venture.
FMI repaid DTR for all but $14,045 of the costs paid through
March 2, 1997 to exercise the option (See Note 3).
3.Investment in FoodMaster International L.L.C. (FMI)
On March 3, 1997, DTR and API established the FMI joint
venture to acquire and operate dairies in the fSU. For a 40%
interest in FMI, DTR contributed its 50% ownership in
FoodMaster, the Ak-Bulak option (See Note 2), and its
opportunities for a future acquisition of a dairy in Moldova.
Exercise of the Ak-Bulak option by FMI in March 1997 increased
the ownership in FoodMaster to 90%. API agreed to contribute
$6 million dollars which was paid to FMI between March 1997
and June 1998 to further develop FMI's existing and future
dairy operations in the fSU for a 60% interest in FMI. On
September 11, 1998, DTR and API amended the FMI joint venture
agreement to allow API to contribute up to an additional $6
million dollars for an additional 10% ownership. This
additional contribution was paid to FMI between September 1998
and April 1999. By September 30, 1998, API had contributed
all $6 million of its initial commitment and $2.4 million of
its additional commitment to FMI. As of December 31, 1998,
API owned 67% and DTR owned 33% of FMI based on API's
additional investment of $3.8 million. API contributed the
remaining $2.2 million of the additional investment by April
1999 which reduced DTR's ownership to 30%. The investment
proceeds received by FMI were used to fund expansion of
existing facilities and to acquire four additional
subsidiaries. DTR has a right to earn a greater ownership
interest in FMI by achieving certain defined performance
targets based on returns to API.
Effective March 1997, DTR records its proportionate share (40%
from March 1997 to September 1998 and 33% from October 1998 to
December 1998 and 30% thereafter) of the net loss or income of
FMI in the statement of operations as equity in (loss)
earnings of FMI joint venture under the equity method of
accounting.
DTR also entered into a management agreement on March 3, 1997
with FMI, whereby DTR manages the day to day operations of FMI
and the dairy operations owned by FMI, and pursues future
dairy acquisitions for FMI for a management fee. The
management fee is a direct expense reimbursement, with no
profit margin, in accordance with a pre-approved budget
between DTR and FMI. Thus,
<PAGE>
management fees will increase or
decrease as DTR's expenses incurred for management activities
increase or decrease, with no effect on income because there
is no profit margin provided for in the agreement. There is
no stated contractual termination date in this agreement. The
Company is currently in negotiations with FMI to alter the
status of this agreement. The Company recorded management fee
revenue of $271,277, $308,508, $933,358 and $937,438 for the
three and nine month periods ended September 30, 1999 and
1998, respectively, in accordance with its management
agreement with FMI.
Summarized financial information from the unaudited financial
statements of FMI accounted for on the equity method is as
follows:
September 30, 1999
Current assets $6,085,056
Total assets 21,266,987
Current liabilities 4,351,551
Noncurrent liabilities 5,399,930
Joint-venture equity 11,515,506
DTR's 30% share of FMI 's equity 3,454,652
DTR's negative goodwill (amortized over 15 years) (2,710,033)
DTR's carrying value of FMI's equity 744,619
Nine Months Ended
September 30,
1999 1998
Sales $ 16,526,416 $ 14,626,757
Gross profit 2,882,308 3,900,452
Net income (loss) (2,397,905) 230,908
DTR's share of FMI's income (loss) before
amortization of DTR's negative goodwill (719,372) 92,363
DTR's share of equity in income (loss) of FMI joint
venture after amortization of negative goodwill (555,678) 256,056
4.Net Income (Loss) per Common Share
The following table reflects the calculation of basic and
diluted earnings per share.
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Numerator:
Net income (loss) $ (207,250) $ 109,472 $ (551,506) $ 443,655
Denominator:
Weighted average shares-
basic earnings 805,820 805,820 805,820 805,545
Dilutive effect of stock
options/warrants -- 383,095 -- 380,449
Weighted average shares-
diluted earnings 805,820 1,188,915 805,820 1,185,994
Net income per share - Basic $ (0.26) $ 0.14 $ (0.68) $ 0.55
Net income per share- Diluted$ (0.26) $ 0.09 $ (0.68) $ 0.37
</TABLE>
An aggregate of 663,333 and 5,000 options to acquire the
Company's common stock at September 30, 1999 and 1998,
respectively, have been excluded from the calculation of
diluted earnings per share as their effect would be
antidilutive.
<PAGE>
5. Supplemental Disclosures of Cash Flow Information:
Non-cash operating and investing activities:
In September 1998, API began its purchase of an additional 10%
of FMI for $6 million dollars as discussed in Note 3. For the
nine months ended September 30, 1999, they contributed $2.2
million to FMI resulting in a $308,598 increase in the value
of DTR's investment in FMI in order to recognize the
unrealized gain from the reduction in its ownership interest
in FMI. For the nine months ended September 30, 1998, they
contributed $2.4 million to FMI resulting in a $800,000
increase in the value of DTR's investment in FMI in order to
recognize the unrealized gain from the reduction in its
ownership interest in FMI. The API capital contribution to
FMI also increased DTR's paid-in-capital by this same amount
through September 1999 and 1998, respectively.
Supplemental cash flow information:
For the nine months ended September 30, 1999 1998
Cash paid for:
Interest $ 3,028 $ 1,256
Taxes $ -- $ --
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Statements other than current or historical information included
in this Management's Discussion and Analysis and elsewhere in
this Form 10-KSB, in future filings by Developed Technology
Resource, Inc. (the Company or DTR) with the Securities and
Exchange Commission and in DTR's press releases and oral
statements made with the approval of authorized executive
officers, should be considered "forward-looking statements" made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. These statements are subject to
certain risks and uncertainties that could cause actual results
to differ materially from historical earnings and those presently
anticipated or projected. DTR wishes to caution the reader not
to place undue reliance on any such forward-looking statements.
On March 3, 1997, DTR and Agribusiness Partners
International L.P. (API) established the FoodMaster International
LLC (FMI) joint venture to acquire and operate dairies in the
fSU. For a 40% interest in FMI, DTR contributed its 50% ownership
in FoodMaster, the Ak-Bulak option, and its opportunities for a
future acquisition of a dairy in Moldova. Exercise of the Ak-
Bulak option by FMI in March 1997 increased the ownership in
FoodMaster to 90%. API agreed to contribute $6 million dollars
which was paid to FMI between March 1997 and June 1998 to further
develop FMI's existing and future dairy operations in the fSU for
a 60% interest in FMI. On September 11, 1998, DTR and API
amended the FMI joint venture agreement to allow API to
contribute up to an additional $6 million dollars for an
additional 10% ownership. This additional contribution was paid
to FMI between September 1998 and April 1999. As of December 31,
1998, API owned 67% and DTR owned 33% of FMI based on API's
additional investment of $3.8 million. API contributed the
remaining $2.2 million of the additional investment by April 1999
which reduced DTR's ownership to 30%. The investment proceeds
received by FMI were used to fund expansion of existing
facilities and to acquire four additional subsidiaries. DTR has
a right to earn a greater ownership interest in FMI by achieving
certain defined performance targets based on returns to API.
Effective March 1997, DTR records its proportionate share
(40% from March 1997 to September 1998, 33% from October 1998 to
December 1998 and 30% thereafter) of the net income or loss of
FMI in the statement of operations as equity in (loss) earnings
of FMI joint venture under the equity method of accounting.
DTR also entered into a management agreement on March 3,
1997 with FMI, whereby DTR manages the day to day operations of
FMI, manages the subsidiaries of FMI, and pursues future dairy
acquisitions for FMI for a management fee. The management fee is
a direct expense reimbursement, with no profit margin, in
accordance with a pre-approved budget between DTR and FMI. Thus,
management fees will increase or decrease as DTR's expenses
incurred for management activities increase or decrease, with no
effect on income because there is no profit margin provided for
in the agreement. DTR is currently in negotiations with FMI to
transfer the management personnel and functions directly to FMI.
After this transaction, DTR will have more availability to pursue
other business opportunities.
Results of Operations
Revenues
The Company generated total revenues of $272,627 and
$986,266 during the three and nine months ended September 30,
1999, respectively, compared to $379,758 and $1,273,594 during
the three and nine months ended September 30, 1998,
respectively. The 23% decrease from 1998 nine month revenue
levels is primarily the result of the discontinuance of the
sales of x-ray tubes in March 1999 and no sales of food
packaging equipment in 1999.
<PAGE>
Sales for the three months ended September 30, 1999 and 1998
totaled $0 and $69,900, respectively. Sales for the nine months
ended September 30, 1999 and 1998 totaled $48,900 and $309,148,
respectively. Sales resulted from two areas within DTR -
equipment sales and x-ray tube sales.
Sales of and commissions on food packaging equipment were
$120,748 (39%) of total sales in the nine months ended September
30, 1998. There were no sales of equipment in 1999. Sales of
equipment occur sporadically throughout the year. They occur
primarily to subsidiaries of FMI throughout each year depending
on the amount of new customers and growth among existing
locations. There are no commitments to purchase nor are there
efforts to sell this packaging equipment. Sales are only
conducted on an as-needed basis.
Sales of x-ray tubes by SXD Inc., DTR's 100% owned
subsidiary, were $48,900 and $188,400 for the nine months ended
September 30, 1999 and 1998, respectively. The sales of x-ray
tubes accounted for $69,900 of the sales for the three months
ended September 30, 1998. There are several companies that
manufacture and sell x-ray tubes in direct competition to DTR.
At present, the Company does not have a measurable market share
and began phasing this division out of its operations in January
1999. In accordance with its plan to phase out this operating
division, the Company ended its relationship with its supplier,
Svetlana Rentgen, in March 1999. Therefore, there are no sales
of x-ray tubes after March 1999.
Management fee income billed to FMI for services was
$933,358 and $937,438 for the nine months ended September 30,
1999 and 1998, respectively. For the three months ended
September 30, 1999 and 1998, management fee income was $271,277
and $308,508, respectively. The management fee began on March
3, 1997.
Cost of Sales
The only cost of sales in 1999 was $41,450, which was
related to the cost on x-ray tubes. For the three and nine
months ended September 30, 1998, cost of sales was $59,950 and
$244,792. Cost of sales on equipment was $82,592 resulting in a
gross profit of $38,156 or 31.6% for the first nine months of
1998. X-ray tubes cost of sales were $162,200 in the first nine
months of 1998. Gross profit remained consistent with a 13% to
14% margin received on sales. Although the gross profit has
remained consistent over the past few years, the increase in
competition put pressure on the Company to lower its prices in
1999 to a level that would not be worth continuing this division.
Therefore, the Company did not renew its sales contracts with its
customers after March 1999.
Selling, general and administrative
Selling, general and administrative expenses for the three
months ended September 30, 1999 and 1998 were $298,352 and
$327,146, respectively. Selling, general and administrative
expenses for the nine months ended September 30, 1999 and 1998
were $989,098 and $1,040,083, respectively. The $28,794 and
$50,985 decrease in the three and nine month periods in 1999
compared to the same periods in 1998 were the result of less
travel, consulting and printing expenses in 1999. The majority of
these costs are offset by the management fee income of $271,277
and $308,508 for the three months ended September 30, 1999 and
1998, respectively, and $933,358 and $937,438 for the nine months
ended September 30, 1999 and 1998, respectively. These
management fees are charged to FMI as discussed above under
Revenues.
<PAGE>
Liquidity and Capital Resources
Operating Activities
DTR received net cash of $304,273 in the nine months of
1999 compared to cash used of $84,346 in the nine months of
1998. The increase in cash resulted primarily from FMI's payment
of DTR's management fees and additional collection of cash on
the final sales of x-ray tubes.
Investing Activities
In the first nine months of 1999, DTR sold $2,645 of
equipment at its net book value of $1,952 to FMI. In addition,
they purchased $2,743 of equipment. In 1998, DTR purchased
$16,793 in new software and equipment for its office in
Minneapolis, MN.
Financing Activities
In the first quarter of 1998, options to purchase 15,000
shares of DTR's Common Stock were exercised for a purchase price
of $1.50 per share.
Year 2000
The Company has been addressing Year 2000 (Y2k) issues.
Since the Company is not a direct manufacturer of products and
since all of its assets are less than six years old, most of its
exposure to the Y2k issue falls in the area of third parties.
According to its review in June 1999, all of the Company's
systems are Y2k compliant. The Company does not believe that
the costs related to the Y2k issue will be greater than $5,000
due to the reasons stated above.
The most risk that the Company faces in its operations is
that of the failure of third-party vendors to be ready for the
Y2k. The most direct risk could be a failure on the part of
telecommunication companies, which would impede the daily
communication between the Company and its subsidiaries.
Indirectly, the subsidiaries could experience a failure to
receive timely shipments of supplies which would result in a loss
of an indeterminable amount of revenues. As of November 1999, the
Company has its contingency plan for the aforementioned risks
prepared and ready to implement by January 1, 2000.
Due to the nature of the FMI subsidiaries' equipment and the
upgrading of their computerized systems by November 1999, no
serious interruptions in production or financial processing are
expected. The direct risks to the Company, and in particular,
the FMI subsidiaries are those resulting from the general
economic environment, government, and relationships with
suppliers and customers in the fSU. Several governments in the
fSU in which the FMI subsidiaries operate have indicated that the
national infrastructure of such countries will not be Y2k
compliant by January 1, 2000. As such, the FMI subsidiaries have
made contingency plans that include back-up electric generators
and manual processing of transactions, among other things.
Adverse Foreign Economic and Currency Conditions
Since August 1998, the countries of the fSU in which the
subsidiaries of FMI operate have faced a series of adverse
economic conditions. Uncertainties regarding the political,
legal, tax or regulatory environment, including the potential for
adverse and retroactive changes in any of these areas could
significantly affect the Company and the carrying value of its
investment in the FMI joint venture. The
<PAGE>
countries have seen a
significant devaluation of their local currency against the US
dollar, higher interest rates and reduced opportunities for
financing. DTR is committed to working with FMI's subsidiaries
to focus production on profitable products and to address working
capital shortages as needed over the coming year. In July 1999,
FMI sold 10% of its consolidated Kazakhstan operations for cash
of $1.8 million and it converted $1.8 million of its loans to the
Kazakhstan subsidiaries to equity so that its ownership would not
be dramatically diluted. This cash infusion was used to pay
DTR's management fees in 1999. Further working capital
shortages will be funded through loans from FMI, loans from third
parties or through the sale of additional equity.
Based on management's current projections for FMI and the
receipt of the $6 million additional investment from API into
FMI, the Company believes that the carrying value of its
investment in FMI at December 31, 1998 is not permanently
impaired and that DTR has sufficient working capital and
liquidity to fund its current operations through the coming year.
Management is continually looking for opportunities for growth.
<PAGE>
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS
No matters were submitted to a vote of the
shareholders during the quarter ended September 30,
1999.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
The following new Exhibits are filed as part of this
Form 10-QSB:
(a) List of Exhibits
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed no reports on Form 8-K during
the quarter ended September 30, 1999.
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Form
10-QSB:
No. Exhibit Description
27 Financial Data Schedule
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has caused this
report to be signed on its behalf by the undersigned, thereunto
duly authorized.
DEVELOPED TECHNOLOGY RESOURCE, INC.
Date: November 15, 1999 By
Name: John P. Hupp
Title: President
Date: November 15, 1999 By
Name: LeAnn H. Davis, CPA
Title: Chief Financial Officer
(Principal Financial & Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1999
<PERIOD-END> SEP-30-1999 SEP-30-1999
<CASH> 308,894 308,894
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 0 0
<CURRENT-ASSETS> 1,429,679 1,429,679
<PP&E> 135,663 135,663
<DEPRECIATION> (99,687) (99,687)
<TOTAL-ASSETS> 2,210,274 2,210,274
<CURRENT-LIABILITIES> 300,164 300,164
<BONDS> 0 0
0 0
0 0
<COMMON> 8,058 8,058
<OTHER-SE> 1,867,075 1,867,075
<TOTAL-LIABILITY-AND-EQUITY> 2,210,274 2,210,274
<SALES> 0 48,900
<TOTAL-REVENUES> 272,627 986,266
<CGS> 0 41,450
<TOTAL-COSTS> 298,352 1,030,548
<OTHER-EXPENSES> 197,248 555,678
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> (15,723) (48,454)
<INCOME-PRETAX> (207,250) (551,506)
<INCOME-TAX> 0 0
<INCOME-CONTINUING> (207,250) (551,506)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (207,250) (551,506)
<EPS-BASIC> (0.26) (0.68)
<EPS-DILUTED> (0.26) (0.68)
</TABLE>
