UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark one)
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
[X] ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MAY 31, 2000.
OR
TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
[ ] ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______.
Commission file number: 1-12680
ORYX TECHNOLOGY CORP.
(Exact name of small business issuer as specified in its charter)
Delaware 22-2115841
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
1100 Auburn Street
Fremont, California 94538
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (510) 492-2080
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 ___
The number of shares outstanding of the issuer's Common Stock as of May
31, 2000 was 16,699,287.
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ORYX TECHNOLOGY CORP.
FORM 10-QSB
Table of Contents
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements .............................................. 3
Item 2. Management's Discussion and Analysis or Plan of Operations ........ 8
PART II. OTHER INFORMATION
Item 5. Other Information ................................................ 13
Item 6. Exhibits and Reports on Form 8-K ................................. 13
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
<CAPTION>
Assets May 31, February 29,
2000 2000
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,291,000 $ 4,529,000
Short term investments 993,000 989,000
Accounts receivable, net of allowance for doubtful
accounts of $0 and $40,000 24,000 50,000
Other current assets 39,000 127,000
------------ ------------
Total current assets 5,347,000 5,695,000
Property and equipment, net 281,000 262,000
Other assets 32,000 32,000
------------ ------------
$ 5,660,000 $ 5,989,000
============ ============
Liabilities, Mandatorily Convertible Redeemable
Preferred Stock and Stockholders' Equity
Current liabilities:
Accounts payable $ 44,000 $ 43,000
Accrued liabilities 440,000 672,000
Deferred revenue 19,000 19,000
------------ ------------
Total current liabilities 503,000 734,000
Series A 2% mandatorily convertible redeemable Preferred Stock 89,000 89,000
$0.001 par value; 3,000,000 shares authorized;
3,750 shares issued and outstanding,
Stockholder' equity:
Common Stock, $0.001 par value; 25,000,000 shares
authorized; 16,699,287 and 16,457,682 issued and outstanding 17,000 16,000
Additional paid-in capital 25,579,000 25,237,000
Accumulated deficit (20,528,000) (20,087,000)
------------ ------------
Total stockholders' equity 5,068,000 5,166,000
------------ ------------
$ 5,660,000 $ 5,989,000
============ ============
<FN>
See the accompanying notes to condensed consolidated financial statements.
</FN>
</TABLE>
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ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
May 31,
-----------------------------
2000 1999
------------ ------------
Net Revenue $ 61,000 $ 189,000
Cost of sales 126,000 342,000
------------ ------------
Gross profit (loss) (65,000) (153,000)
------------ ------------
Operating expenses:
General and administrative 419,000 446,000
Research and development 22,000 183,000
------------ ------------
Total operating expenses 441,000 629,000
------------ ------------
Loss from operations (506,000) (782,000)
Interest income (expense), net 66,000 34,000
Other income (expenses) -- (9,000)
------------ ------------
Loss from continuing operations (440,000) (757,000)
Discontinued operations:
Income from discontinued operations -- 268,000
Income on disposal of discontinued operation -- --
------------ ------------
Income from discontinued operations -- 268,000
------------ ------------
Net loss (440,000) (489,000)
Dividends (1,000) (1,000)
------------ ------------
Net loss attributable to Common Stock $ (441,000) $ (490,000)
============ ============
Basic and diluted loss per common share
from continuing operations $ (0.03) $ (0.05)
============ ============
Basic and diluted income per common share
from discontinued operations $ -- $ 0.02
============ ============
Basic and diluted net loss per common share $ (0.03) $ (0.03)
============ ============
Weighted average common shares used to
compute basic and diluted net loss per share
basic and diluted net loss per share (Note 3) 16,588,599 14,473,000
============ ============
See the accompanying notes to condensed consolidated financial statements.
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ORYX TECHNOLOGY CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
Three Months Ended
May 31,
-------------------------
2000 1999
----------- -----------
Cash flows from operating activities:
Net loss $ (440,000) $ (489,000)
Adjustments to reconcile net loss
to net cash provided by (used in)
operating activities:
Income from discontinued operations -- (268,000)
Loss from asset disposition -- 8,000
Depreciation and amortization 21,000 30,000
Non-cash stock compensation 7,000 84,000
Changes in assets and liabilities:
Accounts receivable, net 26,000 (334,000)
Other current assets 88,000 (67,000)
Other assets -- 1,000
Accounts payable 1,000 (27,000)
Accrued liabilities (232,000) 96,000
----------- -----------
Net cash used in continuing operations (529,000) (966,000)
Net cash provided by discontinued operations -- 620,000
----------- -----------
Net cash used in operations (529,000) (346,000)
----------- -----------
Cash flows from investing activities:
Capital expenditures (40,000) (34,000)
Proceeds from assets disposition -- 16,000
Purchase of short term investment (4,000) --
----------- -----------
Net cash used in investing activities (44,000) (18,000)
----------- -----------
Cash flows from financing activities:
Payment of capital lease obligations -- (4,000)
Repayment of notes payable -- (19,000)
Proceeds from exercise of warrants for Common Stock 12,000 3,360,000
Proceeds from exercise of options for Common Stock 324,000 2,000
Other (1,000) (1,000)
----------- -----------
Net cash provided by financing activities 335,000 3,338,000
----------- -----------
Net increase (decrease) in cash and cash equivalents (238,000) 2,974,000
Cash and cash equivalents at beginning of period 4,529,000 1,570,000
----------- -----------
Cash and cash equivalents at end of period $ 4,291,000 $ 4,544,000
=========== ===========
See the accompanying notes to condensed consolidated financial statements.
5
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ORYX TECHNOLOGY CORP.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - GENERAL
The information contained in the following Notes to Condensed Consolidated
Financial Statements is condensed; accordingly, the financial statements
contained herein should be reviewed in conjunction with the Company's Form
10-KSB for the year ended February 29, 2000.
The results of operations for the interim periods presented are not necessarily
indicative of the results expected for the entire year.
The financial information for the periods ended May 31, 2000 and 1999 included
herein is unaudited but includes all adjustments which, in the opinion of
management of the Company, are necessary to present fairly the financial
position of the Company and its subsidiary at May 31, 2000, and the results of
their operations and cash flows for the three month periods ended May 31, 2000
and May 31, 1999.
NOTE 2 - STOCKHOLDERS' EQUITY
On August 11, 1998, the Company entered into a seventeen month Marketing
Agreement (the "Agreement") to receive investor relation services from
Continental Capital. The Company agreed to issue to Continental Capital up to
202,500 shares of common stock in consideration for services to be received. At
November 30, 1999, all 202,500 shares of common stock have been issued. In
addition, a warrant to purchase 60,000 shares of common stock at $1.09 per share
with a two-year term was issued to Continental Capital. The Company recognized
expense as the services were received, and recorded expense of $53,349 during
the three month period ended May 31, 1999.
NOTE 3 - INCOME (LOSS) PER SHARE
Basic and diluted earnings per share for the periods presented have been
computed by dividing income or loss available to common stockholders by the
weighted average common shares outstanding for the period. Due to the net losses
from continuing operations incurred for the three month periods ended May 31,
2000 and May 31, 1999, all common stock equivalents outstanding were considered
anti dilutive and were excluded from the calculations of diluted net loss per
share. No adjustments were made to net loss attributable to common stock in the
calculation of basic or diluted earnings per share in fiscal 2001 or 2000. Anti
dilutive securities and common stock equivalents at May 31, 2000 which could be
dilutive in future periods include common stock options to purchase 3,351,000
shares of common stock, warrants to purchase 1,243,000 shares of common stock,
3,750 shares of Series A preferred stock which may be converted into 44,000
shares of common stock and subsidiary stock options to purchase 304,000 shares
in the Company's SurgX subsidiary which could reduce the Company's share of
profits in the calculation of earnings per share in future periods.
6
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NOTE 4 - COMPREHENSIVE INCOME
In March 1998, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 130, "Reporting Comprehensive Income." Comprehensive income, as
defined, includes all changes in equity during a period from non-owner sources
including unrealized gains and losses on available-for-sale securities. There is
no difference between net loss attributable to common stock and comprehensive
loss for all periods presented.
NOTE 5 - NEW ACCOUNTING STANDARD
In June 1998, the FASB issued Statement of Financial Accounting Standard No.
133, "Accounting for Derivative Instruments and Hedging Activities," (SFAS No.
133) which establishes accounting and reporting standards for derivative
instruments, and for hedging activities. It requires that an entity recognizes
all derivatives as either assets or liabilities in the statement of financial
position and measure those instruments at fair value. The Company will adopt
SFAS No. 133 as required for its second quarterly filing in fiscal 2001. The
Company currently does not hold any instruments which would be affected by SFAS
No. 133.
In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101 ("SAB 101"), Revenue Recognition in Financial Statements. SAB
101 provides guidance for revenue recognition under certain circumstances. SAB
101 is effective for the Company's fiscal year ending February 28, 2001.
Implementation of SAB 101 is not expected to require the Company to change
existing revenue recognition policies and therefore is not expected to have a
material effect on the Company's financial position or results of operations.
NOTE 6 - INSTRUMENTS AND MATERIALS DISCONTINUED OPERATIONS
On August 18, 1999, pursuant to the terms of an Asset Purchase Agreement dated
as of June 1, 1999 by and among Oryx Technology Corp. ("Oryx") and Oryx Advanced
Materials Inc. ("OAMI"), Oryx sold to OAMI certain specified assets associated
with Oryx' carbon target assembly manufacturing and related materials coating
business (the "Materials" business) for a cash payment of $400,000 and the
assumption of substantially all of the liabilities associated with such
business. The Company retained ownership of approximately $280,000 in accounts
receivable balances relating to the Materials business subsequent to the
disposition. In addition, Oryx licensed to OAMI certain patents and other
technology associated with the purchased assets. OAMI will pay Oryx royalty
payments over ten years, with a maximum royalty payment of $2.2 million for the
first three years, based on OAMI's gross profits. As of February 29, 2000, the
Company has received and recognized $249,000 in royalty payments from OAMI for
fiscal 2000. No payments were received from OAMI during the three month period
ended May 31, 2000.
In addition, on February 27, 1998, Corus Investments Ltd., a Bahamas Company,
acquired 8,000,000 shares of the authorized Class A Common Stock of Oryx
Instruments and Materials Corporation (the "Instruments" business) for a
purchase price of $500,000 (the "Sale"). Prior to the Sale, Instruments was a
wholly owned subsidiary of the Company. As part of the Sale, Instruments
redeemed 8,000,000 of the 10,000,000 shares of Class A Common Stock held by the
Company for an aggregate redemption price of $1,500,000.
The disposal of OAMI and Oryx Instruments and Materials have been aggregated as
they represent the final sale of one business segment, and the operating results
of OAMI and Oryx Instruments and
7
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Materials have been segregated and reported as discontinued operations. Prior
year financial statements have been restated to include the results of
operations of OAMI and Oryx Instruments and Materials as discontinued
operations. Revenue from discontinued operations was $1,049,000 and $4,037,000
for the year ended February 29, 2000 and February 28, 1999, respectively. Income
taxes related to the discontinued operations and the tax benefit resulting from
the gain on disposal of the OAMI business were immaterial. Transaction costs
related to the OAMI disposal were $55,000. The Company has no remaining assets
or liabilities relating to the Instruments and Materials business as of May 31,
2000. Revenue from discontinued operations was $1,049,000 for the three month
period ended May 31, 1999.
NOTE 7 - SUBSEQUENT EVENTS
In July 2000, Oryx Ventures LLC, the Company's newly formed investment and
management services entity, made a $500,000 equity investment in LOTS
Technology, Inc. ("LOTS"), a developer of digital optical storage technology.
Oryx Ventures will receive a warrant to purchase additional equity in LOTS as
compensation for senior advisory services to be provided. This investment and
warrant to be received represent approximately a 6.6% equity ownership in LOTS.
This investment will be accounted for under the cost method.
Item 2.
Management's Discussion and Analysis or Plan of Operations
This discussion and analysis is designed to be read in conjunction with the
Management's Discussion and Analysis set forth in the Company's Form 10-KSB for
the fiscal year ended February 29, 2000. As used herein, "we", "our", "us" and
the like refer to Oryx Technology Corp.
This Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995,
particularly statements regarding market opportunities, market share growth,
competitive growth, new product introductions by our licensees, success of
research and development efforts by our licensees and customer acceptance of new
products. These forward-looking statements involve risks and uncertainties, and
the cautionary statements set forth below identify important factors that could
cause actual results to differ materially from those predicted in any such
forward looking statements. Such factors include, but are not limited to,
adverse changes in general economic conditions, including adverse changes in the
specific markets for our products, adverse business conditions, dependence upon
our licensees for the commercial success of our products, adverse changes in
customer order patterns, increased competition, lack of acceptance of new
products, lack of success in technological advancement, and other factors.
All investors should carefully read the Form 10-KSB together with this Form
10-QSB, and consider all such risks before making an investment decision with
respect to the Company's stock.
Business Segments
During fiscal 1998 we initiated a restructuring of our operations. Through
fiscal 1998, we designed, manufactured and marketed specialized components,
analytical equipment and instrumentation products for original equipment
manufacturers, in the information technology industry. We operated three
majority owned subsidiaries, focusing on three distinct market segments:
o power conversion products (Oryx Power Products Corporation);
o electrical surge protection products (SurgX Corporation); and
8
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o materials analysis and test equipment and specialized materials
products (Oryx Instruments and Materials Corporation).
During the later part of fiscal 1998 we embarked upon a major restructuring
program which resulted in
[ ] the sale on February 27, 1998 of the test equipment portion of
the business of Oryx Instruments and Materials Corporation;
[ ] the sale on March 2, 1998 of substantially all of the business
of Oryx Power Products Corporation in its entirety.
[ ] the sale on August 18, 1999 of the remaining operations of
Oryx Instruments and Materials Corporation, consisting of the
carbon target assembly and related materials coating business.
As a result of our restructuring, we disposed of substantially all of our
operating businesses which accounted for substantially all of our revenue. In
the absence of increased sales of our SurgX and Intragene technologies through
our licensees, such restructuring have sharply reduced our revenues without
creating opportunities to offset the lost revenues.
Today we have two primary focuses:
[ ] collecting royalties for our SurgX and Intragene technologies;
from our SurgX licensees, Cooper Bussmann and IRISO
Electronics, Inc. , and from our Intragene technology
licensee, Oryx Advanced Materials, Inc. ; and
[ ] investing in technology start-up companies through a
majority-owned investment and management services company,
Oryx Ventures, LLC.
SurgX Corporation
SurgX Corporation, or SurgX, is currently the subsidiary through which we
license our surge protection technology. The underlying technologies developed
by SurgX are currently licensed exclusively to two licensees, Cooper Electronics
Technology, Inc., or Cooper Bussmann, and IRISO Electronics Company, Ltd., or
IRISO. Products manufactured by these licensees utilizing SurgX's proprietary
technology are targeted to be sold to original equipment manufacturers, or OEMs,
in the computer, communication, and electronics industries to provide protection
against electrostatic discharge, or ESD, events through discrete devices at the
printed circuit board level.
As the information technology industry increases capacity and performance, it is
requiring faster speeds, smaller chip geometries and lower operating voltages.
These developments have been accompanied by increases in product susceptibility
to failures from over-voltage threats mainly from ESD. Failure to address these
problems can result in the destruction of chips and circuitry. These threats can
originate from inside or outside the products and can arise from such factors as
ESD, induced lightning effects, spurious line transients and other complex
over-voltage sources. During the last decade, new products have emerged to
address protection of integrated circuits from ESD. Related specialized products
range from wrist straps worn by electronics assembly workers, to special
anti-static packaging of both components and sub-assemblies as well as board
level protection devices such as diodes and varistors.
9
<PAGE>
The global market for all over-voltage protection devices currently is estimated
at approximately $2.1 billion and includes some more mature transient voltage
suppression, or TVS, devices such as gas discharge tubes, varistors, and diodes.
The major markets targeted for new surge protection devices and technologies
such as those represented by our technology are telecommunication, automotive
and computers. Sales of surge protection devices are divided among varistors
(40%), diodes (40%), and gas discharge tubes and surge resistor networks (20%).
Our licensees, Cooper Bussmann and IRISO, have sole responsibility for marketing
products using our SurgX technology. The discrete TVS diode is the primary
market targeted by our licensees. This market is forecasted to be approximately
$900 million in calendar year 2000 with an estimated forecast annual average
growth rate of 8% in terms of dollar value, and 11% in terms of unit volume,
through 2003. To a lesser extent, our licensees will seek to participate in the
varistor market, which is approximately the same size as the diode segment.
Within these markets the most important use criteria tends to be cost. After
cost, the level of capacitance, response time, size, energy handling and leakage
current are important criteria. It is the latter criteria on which SurgX
competes. The low capacitance requirement of ESD protection devices in many
circuit designs have provide the initial entry into the diode market segment.
Our licensees have not focused on the low price, high volume diode market since,
to date, they have not been able to achieve product costs competitive with
diodes. However, they are currently focusing on cost reduction initiatives to
reduce product cost to better compete in the high volume, low price diode
market.
Cooper Bussmann is a leading manufacturer of fuses and its target market for
SurgX is the rapidly growing electronics market. Cooper Bussmann had initially
taken on the manufacturing of discrete components using SurgX. In fiscal 2000,
to address the market requirements of high volume and low cost, Cooper Bussmann
initiated offshore manufacturing through an Asian contract manufacturer. The
current capacity of this contract manufacturer is ten million units per month
with the ability to expand and handle increased capacity in the future to
accommodate anticipated demand for products incorporating SurgX technology.
During fiscal 2000, Cooper Bussmann also formed Cooper Electronic Technologies,
Inc. to handle research and development, sales and marketing functions to
support the marketing of Cooper Bussmann products incorporating SurgX and other
technologies.
Due to the transfer of manufacturing offshore and the reorganization of Cooper
Bussman in fiscal 2000, sales of SurgX products were minimal. However, Cooper
Bussmann's restructuring of its manufacturing and other operations is
facilitating its successful marketing of our SurgX technology and recently SurgX
technology has been designed-in products offered by five major OEMs and is also
in active product evaluation with approximately 40 customers.
IRISO received a 15-year co-license to manufacture and sell our SurgX technology
exclusively in Japan for board level ESD protection. These products are marketed
under the SurgX trademarks. In fiscal 1999 IRISO started volume production and
sales of the 0805 surface mount components. Sales in fiscal 2000 have been
minimal with IRISO shipping production quantities to two major OEMs and in
lesser amounts to five other customers. Eleven customers are currently
evaluating IRISO products incorporating the SurgX technology.
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Prior to fiscal year 2000, SurgX employees were dedicated to product development
and SurgX's approach to the market consisted of two parallel product paths: on
board-level ESD protection and on-chip ESD protection. During fiscal year 2000,
all SurgX research and development efforts were transferred to Cooper Electronic
Technologies, Inc., a business unit of Cooper Bussmann dedicated to technical
sales, marketing and development support of overvoltage protection technologies
and other technologies of Cooper Bussmann.
We are currently in the process of transferring the Surgx liquid manufacturing
process to our two licensees. Cooper Bussman is currently manufacturing their
own requirements of SurgX liquid as well as supplying our licensee, IRISO, with
their requirement of SurgX liquid until they get their manufacturing process
operational which is expected to be in January 2001.
We rely on our licensees, Cooper Bussmann and IRISO, for technological
improvements to the SurgX technology. At present, we do not support any research
and development or manufacturing activities internally. Our success will depend
upon our licensees' ability to maintain a competitive position with respect to
our proprietary and other enhanced technology and to continue to attract and
retain qualified personnel in all phases of our operations. Our business is, to
a large degree, dependent upon the enhancement of the SurgX current technology.
Critical to our success and future profitability will be the capacity of our
licensees to improve this technology.
Our future royalties from the licenses of our SurgX are based solely upon the
successful sales, marketing, manufacturing and development efforts of our
licensees.
While the license agreements for our SurgX technology contain minimum annual
royalty payment requirements for the licensees to maintain their exclusive
rights, there can be no assurance that the licensees will pay the minimum
royalty or that these minimum payments will provide enough revenue to continue
to support our operations. In the case of Cooper Bussmann, minimum royalty
payments through 2001 have already been satisfied to maintain exclusivity, and
there can be no assurances that we will receive any royalty payments from Cooper
Bussmann through this time period unless Cooper Bussmann is successful in
selling products using SurgX technology in excess of the minimum royalty
payments, and such sales have not yet been material. To date, Cooper Bussmann
and IRISO have shipped only limited quantities to customers of products
incorporating SurgX technology.
Oryx Ventures, LLC
We have established Oryx Ventures, LLC, a Delaware limited liability company, to
act as an investment and management services entity for us. Oryx Ventures will
be majority owned by Oryx and will be managed by Oryx employees. We will
contribute investment funds to Oryx Ventures from our existing cash balances and
from our internal cash flow generated from future royalty income from licensing
our SurgX and Intragene technologies.
Oryx Ventures will invest such funds and provide management services at the
direction of its board of managers, primarily with technology-oriented start-up
companies. Oryx Ventures will typically invest in early stage funding of
technology start-up companies and will provide its management services to these
companies to leverage its capital investment and facilitate such companies
securing more substantial funding from third parties. Through a management
services agreement, Oryx Ventures will provide services to its portfolio
companies in exchange for equity in these companies. These services may include:
senior executive mentoring, sales and marketing strategy, business development
activities, assistance in fund raising and administrative services such as
accounting, human resources and information technology services. Oryx will
receive a portion of the profits and losses from Oryx Ventures as well as a
portion of any assets distributed by Oryx Ventures upon liquidation or
otherwise.
11
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We intend to use the royalty revenues from our licensed SurgX and Intragene
technologies to fund investments in start-up technology companies. This
investment strategy involves a number of special risks, including:
[ ] increased operating expenses to support investment in our new
management services venture;
[ ] strain on managerial and operational resources as management
tries to support multiple businesses;
[ ] potential issuance of securities in connection with raising
capital to fund investments or using our equity in connection
with our investment strategy may lessen the rights of holders
of our currently outstanding securities;
[ ] being deemed as investment company and subjected to the
requirements of the 1940 act; and
[ ] the need to incur additional debt.
We may not be able to successfully address these problems. Moreover, our future
operating results will depend to a significant degree upon our ability to invest
in early stage development companies and insure their follow-on financing,
growth and success. In addition, many of the investment opportunities we are
currently examining are in early-stage companies with limited operating
histories and limited or no revenues. These investments may have a negative
impact on our financial statements. Further, we may not be able to successfully
develop these young companies and there can be no assurances that we will either
recoup our investments or receive any return on our investment in any company.
Results of Operations
For the quarter ended May 31, 2000, revenues decreased by $128,000 or 68% from
$189,000 for the quarter ended May 31, 1999, to $61,000 for the quarter ended
May 31, 2000. The decrease in revenue is primarily attributed to the absence of
government contract revenue for the quarter ended May 31, 2000. Revenue in the
future will be derived from royalties from our SurgX and Intragene technologies.
Future royalties will be based solely upon the successful sales, marketing,
manufacturing and development efforts of our licensees, and we have no view of
what level of revenue will be achieved in the future.
The Company's gross loss decreased from $153,000 for the quarter ended May 31,
1999, to $65,000 for the quarter ended May 31, 2000, representing a decrease of
$88,000 or 58%. The decrease in gross loss is primarily attributable to the
elimination of government contract expenses.
General and administrative expenses decreased from $446,000 for the quarter
ended May 31, 1999, to $419,000 for the quarter ended May 31, 2000, representing
a decrease of $27,000 or 6%. The decrease in general and administrative expenses
is related to decrease in compensation, consultants, and investor relation
expenses associated with a marketing program entered into with Continental
Capital on August 11, 1999, offset by an increase in expenses related to
launching the new Oryx Ventures investment entity.
Research and development expenses decreased from $183,000 in the quarter ended
May 31, 1999, to $22,000 for the quarter ended May 31, 2000, representing a
decrease of $161,000 or 88%. This reduction was due to the transfer of all of
our SurgX research and development activities to Cooper Electronic Technologies.
We anticipate minimal development expenditures in the future.
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<PAGE>
Liquidity and Capital Resources
The Company's working capital decreased by $117,000 from a surplus of $4,961,000
at February 29, 2000 to a surplus of $4,844,000 at May 31, 2000. Cash and cash
equivalents decreased by $238,000 from $4,529,000 for the year ended February
29, 2000 to $4,291,000 for the quarter ended May 31, 2000. This decrease in cash
and cash equivalents is primarily due to a $440,000 net loss from continued
operations for the three months ended May 31, 2000 plus changes in working
capital items, offset by proceeds of $336,000 from the exercise of warrants and
stock options for common stock. Management believes the Company has sufficient
capital to meet its fiscal 2001 operating plan, however, in the event the
Company does not meet its operating plan, there can be no assurance that the
Company will be able to raise equity or capital through the sale of equity, debt
financing, an asset sale or development contract in a timely manner, or at all.
PART II
OTHER INFORMATION
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit No. Description of Document
----------- -----------------------
27.1 Financial Data Schedule
(b) Reports on Form 8-K
The Company did not file any Reports on Form 8-K during the
quarter ended May 31, 2000.
13
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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.
ORYX TECHNOLOGY CORP.
Dated: July 14, 2000 By: /s/ Philip J. Micciche
----------------------------------------------
Philip J. Micciche
President, Chief Executive Officer and Director
(Principal Executive Officer)
/s/ Mitchel Underseth
----------------------------------------------
Mitchel Underseth
Chief Financial Officer and Director
(Principal Financial and Accounting Officer)
14
