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 March 31, 2000
[ ] 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
(952) 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 May 12, 2000, there were 930,820 shares of the issuer's
Common Stock, $0.01 par value per share, outstanding.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
INDEX
For the Quarter Ended March 31, 2000
Page No.
PART I. FINANCIAL INFORMATION
Item 1. Condensed Unaudited Consolidated Financial Statements
Condensed consolidated balance sheets 3
Condensed consolidated statements of operations 4
Condensed consolidated statements of cash flows 5
Notes to condensed consolidated financial statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
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 CONSOLIDATED FINANCIAL STATEMENTS
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
March 31, December 31,
2000 1999
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 69,583 $ 193,319
Receivables:
From sale of discontinued
operations 200,000 200,000
FoodMaster International LLC(FMI) 32,708 --
Savory Snacks L.L.C. 323,535 323,521
Other 1,979 4,300
Note receivable, net of allowance
of $649,288 -- --
Prepaid and other current assets 22,150 23,044
Total current assets 649,955 744,184
Furniture and Equipment, net 32,082 35,161
$ 682,037 $ 779,345
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 25,463 $ 82,535
Due to FoodMaster International
LLC (FMI) -- 7,991
Accrued liabilities 17,500 23,555
Deferred gain 184,758 184,758
Total current liabilities 227,721 298,839
Non-current Deferred Gain 14,190 14,951
Total liabilities 241,911 313,790
Shareholders' Equity:
Common stock 9,308 8,058
Additional paid-in capital 6,470,838 6,264,920
Note receivable (82,500) --
Accumulated deficit (5,957,520) (5,807,423)
Total shareholders' equity 440,126 465,555
Commitments and Contingencies -- --
$ 682,037 $ 779,345
</TABLE>
See accompanying notes to the condensed consolidated financial
statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
Revenues:
Sales $ -- $ 48,900
Management fees from FMI joint venture 7,500 313,210
Commissions and other income 761 1,322
8,261 363,432
Cost and Expenses:
Cost of sales -- 41,450
Selling, general and administrative 159,029 324,888
159,029 366,338
Operating Loss (150,768) (2,906)
Other Income(Expense):
Interest income, net 671 10,946
Loss of FMI joint venture -- (153,510)
Net Loss $ (150,097) $ (145,470)
Net Loss per Common Share:
Basic $ (0.17) $ (0.18)
Diluted $ (0.17) $ (0.18)
Weighted Average Shares Outstanding:
Basic 888,238 805,820
Diluted 888,238 805,820
</TABLE>
See accompanying notes to the condensed consolidated financial
statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $ (150,097) $ (145,470)
Adjustments to reconcile net loss to cash
provided (used) by operating activities:
Depreciation 3,079 2,811
Equity in loss (earnings) of
FMI joint venture -- 153,510
Non-cash stock option expense 54,668 --
Changes in operating assets and liabilities:
Receivables 2,321 66,600
Receivable from FMI joint venture (40,699) 115,226
Receivable from Savory Snacks (14) --
Prepaid and other current assets 894 (25,292)
Accounts payable and accrued
liabilities (63,127) (147,191)
Deferred gains (761) (1,322)
Net cash provided(used) by
operating activities (193,736) 18,872
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of furniture
and equipment -- 1,740
Purchases of furniture and
equipment -- (426)
Net cash provided by
investing activities -- 1,314
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock
options 70,000 --
Net cash provided by
financing activities 70,000 --
INCREASE(DECREASE) IN CASH AND CASH
EQUIVALENTS (123,736) 20,186
CASH AND CASH EQUIVALENTS, Beginning
of Period 193,319 5,412
CASH AND CASH EQUIVALENTS, End
of Period $ 69,583 $ 25,598
</TABLE>
See accompanying notes to the condensed consolidated financial
statements.
<PAGE>
DEVELOPED TECHNOLOGY RESOURCE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Business
Developed Technology Resource, Inc. (DTR or the Company)
invests in and manages food processing operations in the
countries of the former Soviet Union (fSU) directly and
through FoodMaster International L.L.C. (FMI), its joint
venture with Agribusiness Partners International L.P. (API).
In addition to FMI, DTR managed the operations of its wholly-
owned subsidiary, SXD, Inc until January 2000 at which time
SXD was merged back into DTR.
During early 1999 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. The x-ray tube distribution
agreement expired in March 1999. In 1999, the increase in
competition put pressure on the Company to lower its prices to
a level that would not be worth continuing this division.
Thus, DTR did not seek to renew its purchase or sales
contracts.
The unaudited condensed consolidated financial statements have
been prepared by the Company, under the rules and regulations
of the Securities and Exchange Commission. The accompanying
condensed consolidated financial statements contain all normal
recurring adjustments which are, in the opinion of management,
necessary for the fair presentation of such financial
statements. Certain information and disclosures normally
included in the financial statements prepared in accordance
with generally accepted accounting principles have been
condensed or omitted under such rules and regulations although
the Company believes that the disclosures are adequate to make
the information presented not misleading. The year-end
balance sheet data was derived from the audited financial
statements, but does not include all disclosures required by
generally accepted accounting principles. These unaudited
condensed consolidated financial statements should be read in
conjunction with the financial statements and notes included
on Form 10-KSB for the year ended December 31, 1999. Interim
results of operations for the three-month period ended March
31, 2000 may not necessarily be indicative of the results to
be expected for the full year.
Basis of Presentation
DTR owns 30% of FMI and the Company records its proportionate
share of the net income or loss of FMI in the consolidated
statements of operations as loss or income of FMI joint
venture under the equity method of accounting. The excess of
DTR's underlying equity in net assets of FMI over the carrying
value of its investment ($3,273,866) is being amortized to
income over 15 years.
Net Loss per Common Share
Net loss per common share is computed by dividing net loss by
the weighted average number of common and potentially dilutive
securities outstanding during the year. Stock options and
warrants are included in the calculation of diluted net income
per share when the result is dilutive.
Foreign Currency Translation
Effective January 1, 1999, as required by generally accepted
accounting principles, FMI ceased to account for its fSU
operations as highly inflationary due to the sharp decline in
historical inflation levels. FMI remains cautious concerning
the future outlook for operations in the fSU. The Company and
FMI will continue to monitor the inflation rates in each of
the fSU countries in which it operates to determine if FMI
should revert to hyper-inflationary accounting.
In 2000, the functional currency of FMI's subsidiaries is the
local currency. Accordingly, FMI translates all assets and
liabilities into U.S. dollars at current rates. Revenues,
costs and expenses are translated at weighted average rates
during the year. Gains and losses resulting from the
translation of the consolidated financial statements are
excluded from the results of operations and are reflected as a
translation adjustment as a separate component of
shareholders' deficit. Gains and losses resulting from
foreign currency transactions are recognized in the
consolidated statement of operations in the period they occur.
For the financial results as of March 31,1999, the amounts
reflected for FMI's operations were prepared under the hyper-
inflationary accounting method which translates the results as
if the U.S. dollar is the local currency. Under this method,
all gains and losses resulting from the translation of the
consolidated financial statements were included in the results
of operations during the period. In December 1999, DTR
determined that the countries ceased to be highly inflationary
effective January 1, 1999 and reflected FMI's annual 1999
results assuming non-hyperinflation. Therefore, DTR will be
amending this 10QSB within a month to restate FMI's quarterly
1999 results, to reflect the results assuming non-
hyperinflation rather than hyper-inflationary accounting.
This change will not affect the results stated during the
three months ended March 31, 2000.
Use of Estimates
The preparation of consolidated 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 consolidated financial statements and reported
amounts of revenues and expense during the reporting period.
Actual results could differ from those estimates.
2.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. The countries have
seen 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 the first
quarter of 2000, 1999 and 1998, and carry an accumulated
deficit at March 31, 2000. DTR is committed to working
through FMI's Board of Directors to address working capital
shortages as needed over the coming year.
The Company has incurred substantial losses in recent years
and, as a result, has an accumulated deficit of $5,957,520 at
March 31, 2000. FMI has also experienced significant losses,
which has eliminated DTR's carrying value of its investment in
FMI at December 31, 1999. FMI's losses for the three months
ended March 31, 2000 and 1999 were approximately $356,000 and
$694,000, respectively. The Company's ability to continue as
a going concern depends upon successfully obtaining sufficient
financing to maintain adequate liquidity until such time as
DTR sells or receives a return on its investments. The
accompanying consolidated financial statements have been
prepared on a going concern basis, which assumes continuity of
operations and realization of assets and liabilities in the
ordinary course of business. The consolidated financial
statements do not include any adjustments that might result if
the Company was forced to discontinue its operations.
The Company plans to obtain cash through the collection of
$200,230 of its $323,535 receivable with Savory Snacks LLC and
the collection of its $649,288 note receivable. The remaining
$123,305 of the Savory Snacks receivable was converted to a
40% equity ownership in Savory Snacks as of April 1, 2000.
Additionally, the Company plans to receive income by providing
management and consulting services during 2000. Finally, the
Company may obtain some additional equity financing through
the issuance of additional shares of common stock. There are
no assurances, however, that such financing, if available will
be at a price that will not cause substantial dilution to the
Company's shareholders. If the Company is not able to
generate sufficient cash through its operating and financing
activities in 2000, it will not be able to pay its debts in a
timely manner.
3.Investment in FoodMaster International L.L.C. (FMI)
As of December 31, 1999, DTR owned 30% and API owned 70% of
FMI, respectively. DTR has a right to receive up to 6%
additional ownership interest in FMI by achieving certain
defined rates of returns for API upon API's transfer,
liquidation or sale of their ownership interest in FMI. DTR
records its proportionate share of the net income or loss of
FMI in the statement of operations as loss or income of FMI
joint venture under the equity method of accounting.
From March 1997 to November 1999, DTR managed the dairy
operations of FMI and pursued dairy acquisitions for FMI under
a management contract with FMI. DTR received direct expense
reimbursement, with no profit margin, in accordance with a pre-
approved budget between DTR and FMI. Thus, management fees
increased or decreased as DTR's expenses incurred for
management activities increased or decreased, with no effect
on income because there was no profit margin provided for in
the agreement. Under the terms of the management agreement,
DTR's key managers were required to work only for the
advancement of the FMI business. In November 1999, DTR agreed
to terminate its management agreement in order to pursue other
opportunities and to allow FMI to be self-managed. Some of
DTR managers were moved to positions with FMI while others
were released. During 2000, FMI contracted DTR to perform
some select financial services. DTR recorded management fee
revenue of $7,500 for the three months ended March 31, 2000 in
relation to these services. The Company recorded management
fee revenue of $313,210 for the three months ended March 31,
1999 in accordance with its prior management agreement with
FMI.
During 1999, the Company recorded a $1,518,554 loss, before
amortization of negative goodwill totaling $218,258, related
to its share of net losses from the FMI joint venture. As a
result of these losses, the Company's net investment in FMI
was reduced to zero. The Company's pro rata share of losses
for 1999 was $1,946,023. The excess of the losses over the
$1,518,554 loss recorded by the Company in 1999 totaled
$427,469. This amount increased to $479,802 at March 31,
2000. This amount will offset the Company's share of FMI's
net income, if any, in the future. During the three months
ended March 31, 2000, DTR recognized $54,564 of FMI's losses
as an offset to the negative goodwill amortization of $54,564.
Summarized financial information from the unaudited
consolidated financial statements of FMI accounted for on the
equity method is as follows:
March 31, 2000
(in thousands)
Current assets $ 4,776
Total assets 14,394
Current liabilities 4,127
Non-current liabilities 4,731
Joint-venture equity 5,537
DTR's 30% share of FMI 's equity 1,661
DTR's negative goodwill (amortized over 15 years) (2,601)
DTR's carrying value of FMI's equity -0-
Three Months Ended
March 31,
2000 1999
(in thousands)(in thousands)
Sales $ 5,653 $ 5,751
Gross profit 816 786
Net loss (356) (694)
DTR's share of FMI's loss before amortization of
DTR's negative goodwill (107) (12)
DTR's share of income (loss) of FMI joint venture,
net of amortization of negative goodwill (53) 42
4.Net Income (Loss) per Common Share
The following table reflects the calculation of basic and
diluted earnings per share.
Three Months Ended
March 31,
2000 1999
Numerator:
Net loss $ (150,097) $ (145,470)
Denominator:
Weighted average shares - Basic earnings 888,238 805,820
Dilutive effect of stock options/warrants -- --
Weighted average shares - Diluted earnings 888,238 805,820
Net loss per share - Basic $ (0.17) $ (0.18)
Net loss per share - Diluted $ (0.17) $ (0.18)
An aggregate of 313,333 and 663,333 options to acquire the
Company's common stock at March 31, 2000 and 1999,
respectively, have been excluded from the calculation of
diluted earnings per share as their effect would be
antidilutive.
5. Equity
In connection with the exercise of a stock option to acquire
125,000 shares of common stock, the Company granted the option
holder a nonrecourse note bearing interest at 4.87%. As a
result of this note, this stock option will be treated as a
variable stock option. This note is secured by 90,000 shares
owned by the former employee. During the three-month period
ended March 31, 2000, the Company recognized $13,998 as
compensation expense related to this loan.
On January 13, 2000, the Board of Directors agreed to amend
the employment agreement of John Hupp, President. The Board
voted to reduce his current number of stock options from
250,000 to 207,500 in order to reflect the merger SXD's assets
into DTR, and they offered him the option of a non-interest
bearing loan to purchase these options in the event that he is
terminated without cause. As a result of this significant
change, the original stock option must be revalued at the
current market price on this date. The original option price
was $1.22 per share and the market price on January 13, 2000
was $1.50. Therefore as of March 31, 2000, the Company
recognized $40,670 as compensation expense for the vested
options related to this transaction.
6. 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
three months ended March 31, 1999, API contributed $1.7
million to FMI resulting in a $158,597 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 March 1999.
In connection with a stock option exercise in January 2000,
the Company granted the optionee a nonrecourse note for
$82,500.
Supplemental cash flow information:
For the three months ended March 31, 2000 1999
Cash paid for:
Interest $ 241 $ 1,056
Taxes $ -- $ --
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
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.
From March 1997 to November 1999, DTR managed the dairy
operations of FMI and pursued dairy acquisitions for FMI under a
management contract with FMI. DTR received direct expense
reimbursement, with no profit margin, in accordance with a pre-
approved budget between DTR and FMI. Thus, management fees
increased or decreased as DTR's expenses incurred for management
activities increased or decreased, with no effect on income
because there was no profit margin provided for in the agreement.
Under the terms of the management agreement, DTR's key managers
were required to work only for the advancement of the FMI
business. In November 1999, DTR agreed to terminate its
management agreement in order to pursue other opportunities and
to allow FMI to be self-managed. Some of DTR's foreign managers
were offered positions with FMI while others were released.
Future management arrangements with FMI will be based on a
specific need basis as agreed upon by the FMI Board of Directors.
Revenues
The Company generated total revenues of $8,261 in the first
quarter of 2000, compared to $363,432 in the first quarter of
1999. The 98% decrease from 1999 revenue levels is the result of
the discontinuance of the sales of x-ray tubes in March 1999 and
the discontinuance of the FMI management fee contract in
November 1999.
Sales of x-ray tubes by SXD Inc., DTR's wholly-owned
subsidiary, were $48,900 in the first quarter of 1999. There were
several companies that manufacture and sell x-ray tubes in direct
competition to DTR. The Company did 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.
In 1999, management fee income resulted only from expenses
billed to FMI for services. These charges contained no profit
margin and were in accordance with a pre-approved budget between
DTR and FMI. In 2000, there will be no further management fees
charged to FMI by DTR under this old management contract.
However, FMI has contracted certain financial services from DTR,
and DTR is receiving $2,500 per month in accordance with this
agreement. During the three months ended March 31, 2000 and
1999, DTR billed $7,500 and $313,210, respectively in accordance
with its management agreements with FMI. Management fees
declined in 2000 due to the discontinuance of the old management
contract in November 1999, as discussed above. In the future,
FMI may contract additional management or consulting services
from DTR as agreed upon by the FMI Board of Directors. DTR is
also evaluating other management or consulting arrangements in
order to generate additional revenues.
Cost of Sales
The only cost of sales at March 31, 1999 relates to the cost
on x-ray tubes. The cost of $41,450 in the first quarter of 1999
provided a gross profit on x-ray tubes sales of 15.2%. 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 March 31, 2000 were $159,029 compared to $324,888
for the three months ended March 31, 1999. In the first quarter
of 2000, DTR recognized $54,668 of non-cash compensation expense
related to the issuance of stock options to employees. Since DTR
discontinued its management of FMI in November 1999 they incurred
fewer costs to manage DTR operations. However, most of the
costs that still remain are no longer being reimbursed through
management fees. Therefore in 2000, DTR is continuing to reduce
its overhead and is seeking opportunities to provide additional
management and consulting services. The majority of the 1999
costs were offset by the management fee income of $313,210 for
the three months ended March 31, 1999. These management fees were
charged to FMI as discussed above under Revenues.
Liquidity and Capital Resources
Operating Activities
DTR used $193,736 of cash in the first quarter of 2000
compared to receiving cash from operating activities in the
amount of $18,872 in the first quarter of 1999. The large
increase in cash used is resulting from DTR's expenses no longer
being reimbursed by FMI under a management contract.
Investing Activities
DTR neither sold nor purchased any assets during the three
months ended March 31, 2000. In the first quarter of 1999, DTR
sold $2,380 of equipment at its net book value of $1,740 to FMI.
Thus resulting in no gain or loss on the sales. Additionally,
DTR purchased $426 of equipment in the first quarter of 1999.
Financing Activities
On February 1, 2000, an employee exercised his right to
125,000 shares of the Company's common stock. The former
employee paid the Company $70,000 and gave the Company a
nonrecourse promissory note bearing interest at 4.87% per annum
for the balance owed of $82,500. The principal and interest are
due in five equal installments beginning February 2001 and each
year thereafter. This note is secured by 90,000 shares owned by
the former employee. There were no financing activities during
the three months ended March 31, 1999.
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 countries have
experienced a significant devaluation of their local currency
against the US dollar, higher interest rates and reduced
opportunities for financing. DTR is committed to working through
FMI's Board of Directors to address working capital shortages as
needed over the coming year. In August 1999, FMI sold 12.3% of
its consolidated Kazakhstan operations to an unaffiliated third
party for $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. DTR expects further working
capital shortages at FMI and its subsidiaries will be funded
through loans from FMI, loans from third parties or through the
sale of additional equity.
FMI is seeking to finalize negotiations to receive up to an
additional $2-$4 million in cash in the form of convertible debt
instruments at its consolidated FoodMaster Kazakhstan locations
from third-party investors.
DTR believes FMI has sufficient working capital and
liquidity to fund its current operations through the coming year.
The Company plans to obtain cash through the collection of
$200,230 of its $323,535 receivable with Savory Snacks LLC and
the collection of its $649,288 note receivable. The remaining
$123,305 of the Savory Snacks receivable was converted to a 40%
equity ownership by DTR in Savory Snacks as of April 1, 2000.
Additionally, the Company plans to receive income by providing
management and consulting services during 2000. Finally, the
Company may obtain some additional equity financing through the
issuance of additional shares of common stock. There are no
assurances, however, that such financing, if available will be at
a price that will not cause substantial dilution to the Company's
shareholders. If the Company is not able to generate sufficient
cash through its operating and financing activities in 2000, it
will not be able to pay its debts in a timely manner.
In November 1997, DTR's Board of Directors authorized
500,000 stock options to be awarded to Messrs Hupp and Sagadiev
over a five-year period as incentive compensation to build the
dairy processing business in the former Soviet Union. At the
same time, the board voted to establish a wholly-owned subsidiary
called SXD, Inc. to which these stock options would not
participate. DTR's minority interest in Phygen, Inc., a coating
technology business, its contractual rights to possible revenue
from the cancer detection technology being developed by Armed,
and the x-ray tube distribution business was transferred to SXD.
Additionally, DTR transferred $800,000 in cash and receivables to
SXD. Since November 1997, DTR's Board sought investment
opportunities for SXD outside of the former Soviet Union in an
effort to maximize shareholder value. Following the termination
of the x-ray tube distribution business in March 1999 and DTR's
needs for continued operations, the Board of Directors voted in
January 2000 to liquidate SXD by transferring all of the assets,
ownership interests, and liabilities back to DTR in complete
redemption of the outstanding common stock. The outstanding
stock options of Messrs. Hupp and Sagadiev were reduced by 17%
following the transfer of the assets back to DTR.
On January 13, 2000, the Board of Directors agreed to amend
the employment agreement of John Hupp, President. The Board
voted to reduce his current number of stock options from 250,000
to 207,500 (in accordance with the 17% reduction stated above),
and to offer him the option of a non-interest bearing loan to
purchase these options in the event that he is terminated without
cause. In addition, they granted him 40,000 new stock options at
a price per share equal to the mean between the bid and ask
prices as of that date. The Board also extended the offer of the
non-interest bearing loan to these options.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of the shareholders
during the quarter ended March 31, 2000.
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
21.1 Subsidiaries of Developed Technology
Resource, Inc., as amended
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by
Developed Technology Resource, Inc. during the
quarter ended March 31, 2000.
<PAGE>
EXHIBIT INDEX
The following Exhibits are filed as part of this Form 10-QSB:
No. Exhibit Description
21.1 Subsidiaries of Developed Technology Resource,
Inc. as amended
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: May 22, 2000 By _/s/ John P.Hupp________
Name: John P. Hupp
Title: President
Date: May 22, 2000 By _/s/ LeAnn H. Davis_____
Name: LeAnn H. Davis, CPA
Title: Chief Financial Officer
(Principal Financial &
Accounting Officer)
Date: May 22, 2000 By _/s/ Peter L. Hauser____
Name: Peter L. Hauser
Title: Director
Date: May 22, 2000 By _/s/ Roger W. Schnobrich
Name: Roger W. Schnobrich
Title: Director
EXHIBIT 21.1
SUBSIDIARIES OF DEVELOPED TECHNOLOGY RESOURCE, INC.
FOODMASTER INTERNATIONAL LLC
Developed Technology Resource, Inc. is a 30% owner in this Delaware
joint venture.
SAVORY SNACKS LLC
Developed Technology Resource, Inc. is a 40% owner in this Wisconsin
Corporation as of April 1, 2000.
PHYGEN, INC.
Developed Technology Resource, Inc. owns 10% of the capital stock of
this Minnesota Corporation.
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 69,583
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 649,955
<PP&E> 125,078
<DEPRECIATION> (92,996)
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<CURRENT-LIABILITIES> 227,721
<BONDS> 0
0
0
<COMMON> 9,308
<OTHER-SE> 430,818
<TOTAL-LIABILITY-AND-EQUITY> 682,037
<SALES> 0
<TOTAL-REVENUES> 8,261
<CGS> 0
<TOTAL-COSTS> 159,029
<OTHER-EXPENSES> 0
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<INCOME-PRETAX> (150,097)
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<NET-INCOME> (150,097)
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