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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED MAY 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 0-22720
CYCLO3PSS CORPORATION
(Name of Small Business Issuer as specified in its charter)
Delaware 87-0455642
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
3646 West 2100 South
Salt Lake City, Utah 84120-1202
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (801) 972-9090
Securities registered pursuant to Section 12(b) of the Exchange Act: None
Securities registered pursuant to Section 12(g) of the Exchange Act: $.001
Par Value Common Stock
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 preceding 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 .
Common Stock outstanding at July 14, 1997 - 12,798,340 shares of $.001 par value
Common Stock.
DOCUMENTS INCORPORATED BY REFERENCE: NONE
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<PAGE>
FORM 10-QSB
Financial Statements and Schedules
CyclO3PSS Corporation
For Three Months Ended May 31, 1997
The following financial statements and schedules of the registrant and
its consolidated subsidiaries are submitted herewith:
PART I - FINANCIAL INFORMATION
Page of
Form 10-Q
Item 1. Financial Statements
Consolidated Balance Sheets.................................3
Consolidated Statements of Operations.......................5
Consolidated Statements of Cash Flow........................6
Notes to Consolidated Financial Statements..................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..............12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings .........................................16
Item 2Changes in Securities.....................................16
Item 3Defaults Upon Senior Securities...........................16
Item 4Submission of Matters to a Vote of Security Holders.......16
Item 5Other Information.........................................16
Item 6(a)Exhibits...............................................16
Item 6(b)Reports on Form 8-K....................................16
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<PAGE>
CYCLO3PSS CORPORATION
Consolidated Balance Sheets
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(UNAUDITED)
May 31 February 28
1997 1997
------------ --------------
Assets
Current assets:
Cash $821,355 $1,275,636
Accounts receivable, less allowance for
doubtful accounts of $2,000 at May 31,
1997 and February 28, 1997 219,763 97,605
Inventories 115,282 100,584
Prepaid expenses 154,741 102,815
________________________
Total current assets 1,311,141 1,576,640
Property and equipment, net 335,809 370,994
Other assets:
Goodwill, net 483,253 540,375
Acquired patents, net 400,627 411,187
Developed patents and other, net 123,675 125,650
_________________________
$2,654,505 $3,024,846
=========================
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<PAGE>
CYCLO3PSS CORPORATION
Consolidated Balance Sheets (continued)
(UNAUDITED)
--------------------------------------------------------------
May 31 February 28
1997 1997
------------ --------------
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $141,040 $108,619
Accrued liabilities 90,620 135,190
Current portion of capital lease obligations 27,156 26,120
___________ ____________
Total current liabilities 258,816 269,929
Long-term debt obligations 1,156,000 1,156,000
Interest payable on long-term debt obligation 186,410 151,730
Long-term portion of capital lease obligations 30,303 37,356
Commitments and contingencies
Stockholders' equity:
Preferred stock:
Preferred stock issuable in series: par value $.01,
4,500,000 authorized:
Series "A" convertible preferred stock; 356,638
shares authorized; 356,638 shares issued and
outstanding 356 356
Series "B" convertible preferred stock; 30,000
shares authorized; 1,932 shares issued and
outstanding 19 19
Class "A" preferred stock, par value $.01; 500,000
shares authorized; none issued or outstanding -- --
Common stock, par value $.001; 55,000,000 shares
authorized; 12,793,340 shares issued at February
28, 1997 12,798 12,793
Additional paid-in capital 13,567,383 13,546,195
Accumulated deficit (11,972,035) (11,479,987)
Deferred compensation (84,000) (168,000)
Less treasury stock, 264,000 common shares at
cost (501,545) (501,545)
____________________________
Total stockholders' equity 1,015,923 1,409,831
____________________________
$2,654,505 $3,024,846
============================
See accompanying notes to consolidated financial statements
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<PAGE>
CYCLO3PSS CORPORATION
Consolidated Statements of Operations
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(UNAUDITED)
For the three months ended
May 31,
1997 1996
-------------- -------------
Net Revenues $302,391 $94,172
Costs and expenses:
Cost of sales 245,191 115,610
Research and development 77,865 234,271
Selling and marketing 47,452 51,019
General and administrative 271,107 314,875
Depreciation and amortization 108,830 116,772
___________________________
Total Expenses 750,445 832,547
Loss from operations (448,054) (738,375)
Interest income 14,212 2,104
Interest expense (58,206) (53,844)
___________________________
Net loss (492,048) (790,115)
Preferred stock dividends (38,958) -
___________________________
Net loss applicable to common stock $(531,006) $(790,115)
===========================
Net loss per common share
(.04) (.08)
===========================
Weighted average number of common shares
issued and outstanding 12,821,875 10,493,520
===========================
See accompanying notes to consolidated financial statements
- 5 -
<PAGE>
CYCLO3PSS CORPORATION
Consolidated Statements of Cash Flow
(UNAUDITED)
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<TABLE>
<CAPTION>
For the three months ended
May 31,
1997 1996
--------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(492,048) $(790,115)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization 108,830 116,772
Accrued interest on convertible debt issuance 34,680 34,707
Issuance of warrant with convertible debt 21,193 16,400
Common stock issued for services 84,000 -
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (122,158) 1,280
(Increase) decrease in inventories (14,698) 111,543
(Increase) decrease in prepaid expense (51,926) 32,638
Decrease in accounts payable and accrued liabilities (12,149) (71,822)
Increase in deferred revenue - 87,500
_____________________________
Net cash used in operating activities (444,276) (461,097)
_____________________________
Cash flows from investing activities:
Purchase of property and equipment (3,988) 0
____________________________
Net cash used in investing activities (3,988) 0
____________________________
Cash flows from financing activities:
Proceeds from issuance of common stock 0 354
Proceeds from issuance of convertible debt obligations 0 351,000
Principal payments under capital lease obligations (6,017) (3,855)
-----------------------------
Net cash used in (provided by) financing activities (6,017) 347,499
-----------------------------
Net decrease in cash (454,281) (113,598)
Cash at beginning of period 1,275,636 252,113
-----------------------------
Cash at end of period $821,355 $138,515
=============================
</TABLE>
See accompanying notes to consolidated financial statements.
- 6 -
<PAGE>
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------------------------------
1. Summary of Significant Accounting Policies
Financial Statements
The accompanying interim consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-QSB and Regulation
S-B. The balance sheet at February 28, 1997 represents the Company's audited
consolidated balance sheet at that date.
In the opinion of management, the accompanying consolidated financial
statements contain all normal recurring adjustments necessary to present
fairly the financial position of CyclO3PSS Corporation ("Company") as of May
31, 1997, and the results of its operations and its cash flows for the
interim periods ended May 31, 1997 and May 31, 1996. The operating results
for the interim periods are not necessarily indicative of the results for a
full year. These financial statements should be read in conjunction with the
Company's audited financial statements for the year ended February 28, 1997.
Organization
The Corporation was formed in Delaware in 1927. In 1990, the Corporation was
reorganized as CyclO3PSS Medical Systems, Inc. In 1995, the Company changed
its name to CyclO3PSS Corporation (the Company). The Company is engaged in
the manufacture, sale and installation of ozone washing and laundry sorting
and counting systems for commercial and institutional laundries, the
manufacture and sale of specialty compounds and chemicals, and research and
development of technologies for the sterilization and/or disinfection of
surgical and medical instruments.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiaries. All intercompany balances and transactions
have been eliminated.
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 and disclosure of
contingent liabilities at the date of the financial statements and the
reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
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<PAGE>
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
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1. Summary of Significant Accounting Policies (continued)
Cash and Cash Equivalents
Cash equivalents consist primarily of short term investments with
insignificant interest rate risk and original maturities of three months or
less at the date of acquisition. The carrying amount of cash and cash
equivalents reported on the balance sheets approximates their fair value.
Inventories
Inventories consist of raw materials and work-in-process and are stated at
the lower of cost or market, cost being determined using the first-in,
first-out (FIFO) method. Currently, inventory of $115,282 and $100,584
consists of raw materials only, as of May 31, 1997 and February 28, 1997
respectively.
Property & Equipment
Property and equipment are stated at cost, less accumulated depreciation.
Depreciation and amortization is determined using the straight-line method
over the estimated useful lives of the assets ranging from three to seven
years. Depreciation expense was $39,172 and $43,187 for the three months
ended May 31, 1997 and 1996 respectively.
Stock Options
The Company has elected to follow Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued Employees" (APB 25) and related Interpretations
in accounting for its employee stock options rather than adopting the
alternative fair value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-based Compensation" (SFAS 123). Under APB 25, because
the exercise price of the Company's stock options equals the market price of
the underlying stock on the date of grant, no compensation expense is
recognized.
Other Assets
Other assets consist primarily of goodwill and acquired patents which are
recorded at the lower of cost or their net realizable value. Goodwill is
amortized over five years. Acquired and developed patents are amortized on a
straight-line basis over the shorter of their estimated useful lives or the
remaining life of the patent. Amortization expense was $69,658 and $73,585
for the three months ended May 31, 1997 and 1996 respectively. The Company
periodically reviews the recoverability of these intangible assets in order
to record them at their net realizable value.
- 8 -
<PAGE>
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
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1. Summary of Significant Accounting Policies (continued)
Revenue Recognition
Revenue is recognized upon shipment, or in case of washing and laundry
system, it is recognized in part on receipt of an order and the corresponding
first progress payment, upon shipment and upon completion of installation, as
outlined in each individual contract.
Net Loss per Common Share
Net loss per common share is calculated after deduction of preferred stock
dividends divided by the weighted average number of shares of common stock
issued and outstanding during the period. Loss per common share for preferred
stock dividends was immaterial (less than one cent per share). Common stock
equivalents are not included in the computation as their effect would be
anti-dilutive.
New Accounting Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement
No. 128, Earnings per Share, which is required to be adopted by February 28,
1998. At that time, the Company will be required to change the method
currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating primary earnings per
share, the dilutive effect of stock options will be excluded. The impact is
not expected to be material since common stock equivalents are dilutive based
on the Company's anticipated losses.
2. Basis of Presentation
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern, which contemplates the realization
of assets and satisfaction of liabilities in the normal course of business.
The Company has sustained significant net losses which have resulted in an
accumulated deficit at February 28, 1997 of $11,479,987 and $11,972,035 at
May 31, 1997, and periodic cash flow difficulties, all of which raise
substantial doubt of the Company's ability to continue as a going concern.
The net loss for the year ended February 28, 1997 was $2,957,744 and $492,048
for the three months ended May 31, 1997. To date, the Company has funded its
operations through the issuances of common and preferred stock. The Company's
ability to accomplish its business strategy and to ultimately achieve
profitable operations is dependent upon its ability to raise additional
financing.
The Company believes that these conditions have resulted from the inherent
risks associated with small technology companies. Such risks include, but are
not limited to, the ability to (a) generate sales of its product at levels
sufficient to cover its costs and provide a return for investors, (b) attract
additional capital in order to finance growth, (c) further develop and
successfully market
- 9 -
<PAGE>
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------------------------------
commercial products and (d) successfully compete with other technology
companies having financial, production and marketing resources significantly
greater than those of the Company.
The Company is attempting to improve these conditions by way of financial
assistance through collaborative partnering agreements, issuances of
additional equity, debt arrangements, and product sales. Management is
confident that appropriate funding will be generated and future product sales
will result from these opportunities and that the Company will continue
operations through the next fiscal year.
3. Long-Term Debt
During the year ended February 29, 1996, the Company's Board of Directors
approved the issuance of $3,000,000 in convertible debt to individual
investors. Principal and interest are payable in full three years from the
date of execution of each note. Interest accrues at 12% per year on the
principal balance. The debt is secured by all the assets of the Company. The
lender can convert all or a portion of its outstanding principal and interest
into shares of common stock at $3.50 per share. Under the terms of the loan
agreements, the Company will issue each lender a warrant to purchase 1,000
shares of the Company's common stock at a price of $4.00 per share for each
$3,500 principal amount loaned to the Company. Each warrant is exercisable
for a period of 5 years from the date of the closing of each loan. The Board
of Directors has reserved 2,022,714 shares of the Company's common stock for
the conversion of debt and exercise of warrants offered with the convertible
debt.
At May 31, 1997, the Company had issued $1,226,000 in convertible debt
(described above) to the Company's directors or major stockholders, with
maturities between December 1998 and February 1999. Interest expense of
$34,680, which is included in interest payable on long-term debt obligations,
was recorded for the three months ended May 31, 1997.
The carrying amount of long-term debt approximates fair value. The fair value
of the Company's long-term debt was estimated using discounted cash flow
analysis, based on the Company's current incremental borrowing rates for
similar types of debt arrangements.
4. Stockholders' Equity
Preferred Stock
On May 30, 1996 the Board of Directors authorized for issuance 30,000 shares
of Series "B" convertible preferred stock with a $0.01 par value and a stated
value of $1,000 per share. The shares provide for payment of cumulative
dividends at 8% annually, paid in cash or stock at the Company's option. As
of May 31, 1997, 3,170 shares of Series "B" convertible preferred stock have
been issued for net proceeds of $2,755,000 after issuance costs of $415,000.
The Company also recorded the required 8% dividend in additional preferred
stock, rather than cash.
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<PAGE>
CYCLO3PSS CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------------------------------
4. Stockholders' Equity (Continued)
During the three months ended May 31, 1997, 3 shares of Series "B"
convertible preferred stock were converted to approximately 4,900 common
shares. Defferred compensation for three months ened May 31, 1997 decreased
to $84,000 from $168,000 for the year ended February 28, 1997, due to
recognition of certain deferred compensation expense as consulting fees.
5. Contingencies
The Company is involved in certain legal actions and claims arising in the
ordinary course of business. Management believes, based on advice of legal
counsel, that such litigation and claims will be resolved without material
effect on the Company's consolidated financial position, results of
operations or cash flows. These matters are described in the Company's Form
10-KSB for the year ended February 28, 1997.
PART I - ITEM 2
- 11 -
<PAGE>
MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company has been involved in research and development and marketing
several products since 1987. From the period since reactivation (March 2, 1987)
to May 31, 1997, the Company had incurred a cumulative net loss of $11,972,035.
The Company expects to continue to incur losses into the next fiscal year. The
Company's current cash assets may not be sufficient to fund its long term
operations and the Company may need to generate positive cash flow from
operations or raise additional debt or equity capital in order to fund its
operation in future. There can be no assurance that the Company will be able to
obtain additional capital to fund operations in the future. The Company's
financial position is discussed further below.
The Company's future operating results will depend on many factors,
including acceptance of the Company's laundry technologies, systems, equipment
and attendant products in the various markets for the Company's products and the
timing of FDA marketing clearance, if received, for the Company's medical
sterilization and disinfection products, which require such clearance, and the
demand for such products at that time. Additional factors include the Company's
ability to manufacture and market its products on a cost-effective basis, the
level of competition which it encounters in its various marketplaces, the
ability of the Company to develop product enhancements and new products in order
to achieve and maintain market share, and its ability to obtain adequate
financing.
Results of Operations
The Company's revenues were $302,391 for the three months ended May 31,
1997, and $94,172 for the three months ended May 31, 1996. Two of the Company's
wholly owned subsidiaries are currently contributing to the Company's revenues,
CyclO3PSS Textile Systems, Inc. ("CTS") and CyclO3PSS Biochemical Corporation
(CBC). The Company's gross margin for the three months ended May 31, 1997 was
$57,200 compared to $(21,438) for the three months ended May 31, 1996. This
significant increase in gross margin is attributable to increased sales of CTS
due to increasing acceptance of its technologies by its customers, and increased
sales of CBC due to increasing interest in and use of its products and services
by medical researchers and chemical suppliers and CBC's reputation for quality.
.
Research and development expenditures were $77,865 for the three months
ended May 31, 1997, and $234,271 for the three months ended May 31, 1996.
Although research and development expenses have been reduced tremendously,
management sees no continued overall reduction of these expenses. Research and
development costs are expected to increase due to anticipated redesign efforts
on the Company's laundry products and medical sterilization and disinfection
products.
The Company incurred general and administrative expenses of $271,107 for
the three months ended May 31, 1997, compared to $314,875 for the three months
ended May 31, 1996. This decrease is due to management's decision to take
aggressive steps to reduce current monthly expenses, even with a slight increase
in staffing. At quarter end May 31, 1997, the Company had 24 full time
employees, compared to 19 full time employees at quarter end May 31, 1996. As
the Company
- 12 -
<PAGE>
completes development on certain products and prepares for commercialization,
the human resource requirements of the Company will change.
The Company incurred selling and marketing expenses of $47,452 for the
three months ended May 31, 1997, compared to $51,019 for the three months ended
May 31, 1996. This decreased expense is attributable to significant re-use of
previously prepared sales and marketing materials. The Company anticipates that
marketing expenses will increase significantly in the fiscal year ending
February 28, 1998 due to the hiring and training of additional marketing and
sales personnel for the textiles operations (CTS) and the attendant costs
related to their endeavors. The Company also anticipates increasing its direct
marketing efforts to potential customers of CBC.
For the three months ended May 31, 1997, the Company had interest income of
$14,212 as compared to interest income for the three months ended May 31, 1996,
of $2,104. This increase was due to an increase in the amount of cash on hand.
The Company incurred $58,206 in interest expense for the three months ended May
31, 1997 including $2,313 attributable to equipment leasing arrangements,
$34,700 in interest accrued on long-term debt, and $21,193 in interest on
warrants accrued, in conjunction with the convertible debt offering (see
discussion below under Liquidity and Capital Resources in regards to this debt
offering). The Company anticipates that this amount will continue to increase
due to the convertible debt currently being recorded.
The Company's net loss for the three months ended May 31, 1997 was
$492,048, as compared to $790,115 for the three months ended May 31, 1996. The
Company anticipates that it will operate at a loss for the year ended February
28, 1998. However, it is anticipated that the losses will continue to decrease
as the revenues of CTS and CBC continue to increase.
Liquidity and Capital Resources
Management is aggressively exploring additional financing for the ongoing
operations of the Company and has entered into an investment banking agreement
with Southwest Securities Group. There are no assurances that the efforts to
locate and secure additional financing will be successful, and the failure to
secure this financing would substantially alter the management's assumptions as
presented heretofore and in the remainder of this section.
Cash used in operating activities was $444,276 for the three months ended
May 31, 1997, compared to $461,097 for the three months ended May 31, 1996. Cash
used for the three months ended May 31, 1997 was comprised of cash on hand and
collections of accounts receivable, which is comprised of VAC sales and service
from CyclO3PSS Textile Systems, Inc. and contract development and chemical
compound sales from CyclO3PSS Biochemical Corporation.
No Cash was provided from issuance of convertible debt for the three months
ended May 31, 1997, compared to $351,000 for the three months ended May 31,
1996.
Total assets decreased to $2,654,505 for the three months ended May 31,
1997 from $3,024,846 for the year ended February 28, 1997, primarily due to the
decrease in the Company's cash, which was the result of continued losses from
operations.
- 13 -
<PAGE>
Total current liabilities decreased slightly to $258,816 for the three
months ended May 31, 1997 from $269,929 for the year ended February 28, 1997.
All of the Company's current liabilities at May 31, 1997 were attributed to
accounts payable, accrued liabilities, and the current portion of certain
capital equipment leases. Long term liabilities increased to $1,379,766 for the
three months ended May 31, 1997 from $1,345,086 for the year ended February 28,
1997. Of the total, $1,342,410 represents principal and interest on debt
generated from the Company's offering of convertible debt instruments. The
additional $30,303 represents the long term portion of leases payable for
certain leased equipment, compared to $37,356 for the year ended February 28,
1997.
Plan of Operation
The plan of operation during the next twelve (12) months includes the
following:
1. Aggressively market the Company's Ozone Laundry Systems initially, to the
Healthcare market and then the commercial and Industrial Laundry
marketplaces.
2. Continue testing and validation and initiate sales and installation of the
Company's Healthcare Ozone Laundry Systems with healthcare providers in the
United States and Internationally.
3. Complete design and development of the Company's Ozone Laundry Systems for
institutional users such as hotels, resorts, prisons, etc and initiate
sales and installation of these systems to such institutions.
4. Continue to increase marketing, sales and installation of the Company's VAC
laundry counting and sorting systems to commercial, industrial,
institutional and healthcare customers.
5. Complete validation testing of the Company's liquid chemical sterilant,
SterOxTM, preparatory to completion of a licensing agreement with an
established medical product manufacturing/marketing company and/or
preparation and submission of a 510(k) Premarket Notification to the FDA.
6. Produce data and design elements in support of desired labeling claims for
FDA officials reviewing the Company's 510(k) Premarket Notification for the
STER-O3- ZONE 100TM.
7. Continued development of products and enhancements for the Company's
textile operations.
8. Increased marketing and continued growth of contract research and
development within the BioChemical group and the ongoing manufacture and
sales of their current and future products.
9. With adequate financing in place, there may be additional diversification
of the Company's business activities through future acquisitions or product
development.
- 14 -
<PAGE>
Although the Company will be primarily engaged in the aggressive sales and
support of its completed products, it anticipates that research and
development expenses will be ongoing, and could range from $800,000 to
$1,000,000 during the next twelve months in support and completion of key
future products.
The Company currently anticipates that its expenditures on equipment will
range from $200,000 - $400,000 during the next twelve months based upon
current manufacturing assumptions, assuming that the required financing is
obtained and available.
The Company had 24 full time and 4 part-time employees as of the year ended
February 28, 1997. The Company anticipates that no more than six additional
employees will be hired during the next twelve months, and then, only as the
market acceptance of the Company's textile systems accelerates. It is
anticipated that general and administrative expenses would not increase by
more than $200,000 on an annualized basis as a result of any such increase in
employees.
The information set forth herein as to anticipated research and development
costs, equipment purchases and increase in employees are management's best
estimate based upon current plans. Actual expenditures may be greater or less
than such estimates depending on many factors including, but not limited to
the availability of new technologies, the completion or lack of completion of
certain strategic alliances, and the timing and successful completion of the
Company's stated requirement to acquire additional operating and growth
capital.
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and development
activities and similar matters. The private Securities litigation Reform Act
of 1995 provides a safe harbor for forward looking statements. In order to
comply with the terms of the safe harbor, the Company notes that a variety of
factors could cause the Company's actual results and experience to differ
materially from the anticipated results or other expectations expressed in
the Company's forward looking statements. The risks and uncertainties that
may affect the operations, performance, development and results of the
Company's business include, but are not limited to, the following:
1. Market acceptance of the Company's products;
2. Obtaining additional operating capital in the form of debt or equity;
3. The existence of an orderly market in the Company's securities; and
4. Increased sales of the various products of the Company.
- 15 -
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. None.
Item 2. Changes in Securities. None.
Item 3. Defaults Upon Senior Securities. None.
Item 4. Submission of Matters to a Vote of Security Holders. None.
Item 5. Other Information. At the regular board of directors meeting held on May
30, 1997, William R. Stoddard was unanimously elected to the position of
Chief Executive Officer (CEO), replacing John Williams who had indicated
his intention to resign due to health related reasons. William Stoddard's
election as CEO was effective June 15, 1997. John Williams remains as
chairman of the board and will continue to be employed by the Company to
ensure continuity and a smooth transition.
Item 6. Exhibits. None.
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
CYCLO3PSS CORPORATION
Date: July 14, 1997 By/s/ William R. Stoddard
--------------------------------
William R. Stoddard
Chief Executive Officer
President
Principal Executive Officer
Date: July 14, 1997 By/s/ Mondis Nkoy
--------------------------------
Mondis Nkoy
Controller, Corporate Secretary
Principal Financial Officer
- 16 -
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CYCLOPSS CORPORATION'S FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> 821,355
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1997
<PERIOD-START> MAR-01-1997
<PERIOD-END> MAY-31-1997
<EXCHANGE-RATE> 1
<CASH> 821,355
<SECURITIES> 0
<RECEIVABLES> 219,763
<ALLOWANCES> 0
<INVENTORY> 115,282
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356
19
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</TABLE>
