<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
-------------- ----------------
Commission file number: 000-28112
MOTORVAC TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Small Business Issuer as Specified in Its Charter)
STATE OF DELAWARE 33-0522018
- ------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1431 S. VILLAGE WAY
SANTA ANA, CALIFORNIA 92705
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices)
(714) 558-4822
- --------------------------------------------------------------------------------
(Issuer's Telephone Number, Including Area Code)
N/A
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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 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
--- ---
(APPLICABLE ONLY TO CORPORATE ISSUERS)
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Title Date Outstanding
- ---------------------------- ------------------ -----------
Common Stock, $.01 par value September 30, 1997 4,514,918
Transitional Small Business Disclosure Format (check one): Yes No X
--- ---
<PAGE> 2
MOTORVAC TECHNOLOGIES, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1996 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,559,989 $ 1,740,877
Accounts receivable, net of allowance for doubtful accounts
of $14,952 (December 31, 1996) and $42,628 (September 30, 1997) 1,220,029 1,374,457
Inventories, net of reserve of $40,000 (December 31, 1996) and
$57,844 (September 30, 1997) 1,165,411 1,119,252
Other current assets 459,465 367,305
------------ ------------
Total Current Assets 5,404,894 4,601,891
PROPERTY AND EQUIPMENT net 259,651 236,179
INTANGIBLE ASSETS, (net of accumulated amortization of
$516,983 (December 31, 1996) and $787,542 (September 30, 1997) 1,307,460 1,036,901
Other Assets 17,227 0
------------ ------------
$ 6,989,232 $ 5,874,971
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and other current liabilities $ 894,612 $ 808,745
Short term note payable to bank 1,500,000 190,000
------------ ------------
Total Current Liabilities 2,394,612 998,745
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 10,000,000 shares authorized;
and 4,514,918 issued and outstanding at December 31, 1996
and September 30, 1997, respectively 45,149 45,149
Additional paid-in capital 16,523,553 16,523,553
Accumulated Deficit (11,974,082) (11,692,476)
------------ ------------
Total Stockholders' Equity 4,594,620 4,876,226
$ 6,989,232 $ 5,874,971
============ ============
</TABLE>
2
<PAGE> 3
MOTORVAC TECHNOLOGIES, INC.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------- ---------------------------
SEPT. 30 SEPT. 30 SEPT. 30 SEPT. 30
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
NET SALES $ 2,489,045 $ 2,650,581 $ 7,206,952 $ 5,821,421
COST OF SALES 1,517,457 1,607,794 4,087,145 3,432,220
----------- ----------- ----------- -----------
GROSS PROFIT 971,588 1,042,787 3,119,807 2,389,201
OPERATION EXPENSES 1,040,308 1,186,220 2,859,624 3,160,273
----------- ----------- ----------- -----------
INCOME (LOSS) FROM OPERATIONS (68,720) (143,433) 260,183 (771,072)
INTEREST, NET (10,284) (16,531) (21,818) 165,234
----------- ----------- ----------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES (58,436) (126,902) 282,001 (936,306)
PROVISION FOR INCOME TAXES 0 395
----------- ----------- ----------- -----------
NET INCOME (LOSS) $ (58,436) $ (126,902) $ 281,606 $ (936,306)
=========== =========== =========== ===========
NET INCOME (LOSS) PER SHARE AND COMMON
SHARE EQUIVALENT $ (0.01) $ (0.03) $ 0.06 $ (0.23)
=========== =========== =========== ===========
WEIGHTED AVERAGE OUTSTANDING COMMON AND
COMMON EQUIVALENT SHARES 4,514,918 4,514,918 4,514,918 3,986,195
=========== =========== =========== ===========
</TABLE>
3
<PAGE> 4
MOTORVAC TECHNOLOGIES, INC
STATEMENT OF CASH FLOW
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
SEPT. 30 SEPT. 30 SEPT. 30 SEPT. 30
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
CASH FLOW FROM OPERATION ACTIVITIES:
Net Income (Loss) $ (58,436) $ (126,902) $ 281,606 $ (936,306)
Discounts earned for early payments to ex-licensor (79,993) (79,993)
Adjustments to reconcile net income (loss) to net
cash used in operation activities:
Depreciation and amortization 118,336 117,403 358,329 348,264
Net change in operating assets and liabilities:
Accounts receivable 384,355 (230,865) (154,428) (481,242)
Inventories 97,902 47,315 46,159 147,956
Other current assets, intangibles and other assets 39,006 (94,508) 109,387 (52,358)
Interest payable to related parties 36,340 0 (586,896)
Accounts payable and other current liabilities (190,535) 9,750 (85,867) (117,678)
----------- ----------- ----------- -----------
Net cash provided by (used in) operation activities 390,628 (321,460) 555,186 (1,758,253)
----------- ----------- ----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES
Purchase of equipment (31,782) (8,916) (64,298) (35,442)
CASH FLOW FROM FINANCING ACTIVITIES
Net proceeds from issuance of 1,210,000 common stock (25,867) 5,130,187
Proceeds from issuance of notes payable to related parties 680,000
Payments to ex-licensor (44,736)
Payments of notes to related parties (158,493)
Decrease in loan payable to bank (600,000) (1,310,000) (123,572)
----------- ----------- ----------- -----------
Net cash provided by (used in) by financing activities (600,000) (70,603) (1,310,000) 5,528,122
---------- ---------- ----------- -----------
NET DECREASE IN CASH (241,154) (400,979) (819,112) 3,734,427
CASH, Beginning of period 1,982,031 4,140,414 2,559,989 5,008
----------- ----------- ----------- -----------
CASH, End of period $ 1,740,877 $ 3,739,435 $ 1,740,877 $ 3,739,435
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ 7,834 $ 45,934 $ 836,423
=========== =========== =========== ===========
Income taxes paid $ 395 $ 0
=========== =========== =========== ===========
Conversion of Preferred Series A Stock to Common Stock (net) $ 4,659,499
=========== =========== =========== ===========
Conversion of Preferred Series B Stock to Common Stock (net) $ 2,170,425
=========== =========== =========== ===========
Conversion of Notes Payable to Related Parties to Common Stock $ 4,410,300
=========== =========== =========== ===========
Non Cash Reduction in Payable to ex-licensor $ 79,993 $ 79,993
=========== =========== =========== ===========
</TABLE>
4
<PAGE> 5
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Notes to Unaudited Consolidated Financial Statements:
- -----------------------------------------------------
1. Basis of Presentation
The information set forth in these consolidated financial statements as
of September 30, 1997 is unaudited and may be subject to normal
year-end adjustments. In the opinion of management, the unaudited
financial statements reflect all adjustments, consisting only of normal
recurring adjustments, necessary to present fairly the financial
position of MotorVac Technologies, Inc. (the "Company" or "MTI") for
the period indicated. Results of operations for the interim period
ended September 30, 1997 are not necessarily indicative of the results
of operations for the full fiscal year.
Certain amounts in the prior years' Consolidated Financial Statements
have been reclassified to conform to the current fiscal year's
presentation.
Certain information normally included in footnote disclosures to the
financial statements has been condensed or omitted in accordance with
the rules and regulations of the Securities and Exchange Commission.
2. Litigation
As of September 30, 1997, the Company is involved in various lawsuits,
claims and inquiries arising from transactions entered into in the
ordinary course of business. While the Company's future liability with
respect to these matters cannot be predicted with certainty, it is the
opinion of the management, after consultation with outside counsel,
that any liability from lawsuits or claims known to the Company,
whether asserted or unasserted, would not have a material adverse
effect on the financial position or operations of the Company.
3. Inventories
Inventories, which include materials, supplies, labor and manufacturing
overhead, are summarized as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
------------ -------------
<S> <C> <C>
Materials and supplies 710,174 634,198
Work in process 74,792 75,270
Finished product 420,335 467,628
Reserve (40,000) (57,844)
--------- ---------
1,165,411 1,119,252
========= =========
</TABLE>
5
<PAGE> 6
4. Recent Accounting Pronouncements
Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128),
applicable to entities with publicly-held common stock or potential
common stock. This Statement supersedes APB Opinion No. 15, "Earnings
Per Share" (Opinion 15), and requires dual presentation of basic and
diluted EPS for entities with complex capital structures. Basic EPS
excludes dilution and replaces primary EPS. Diluted EPS is computed
similarly to fully diluted EPS pursuant to Opinion 15. FAS 128 is
effective for financial statements issued for periods ending after
December 15, 1997. Pro forma EPS amounts calculated under FAS 128 are
as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------------- ---------------------------
Sept. 30 Sept. 30 Sept. 30 Sept. 30
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Earnings Per Common Share:
Basic $(0.01) $(0.03) $0.06 $(0.23)
Diluted $(0.01) $(0.03) $0.06 $(0.23)
Shares Used in Per Share Calculation:
Basic 4,514,918 4,514,918 4,514,918 3,986,195
Diluted 4,514,918 4,514,918 4,514,918 3,986,195
</TABLE>
For the years beginning January 1, 1998, the Company will adopt SFAS
No. 130, Reporting Comprehensive Income, and SFAS No. 131, Disclosures
About Segments of an Enterprise and Related Information. The Company is
reviewing the impact of such statements on its financial statements.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
MotorVac Technologies, Inc. (the "Company") designs, develops,
assembles, markets and sells the MotorVac CarbonClean System for the diagnosis,
maintenance and repair of internal combustion engine fuel systems primarily for
the automotive after-market repair and service industry. The Company markets and
sells its fuel system cleaning machines and detergents through various
distribution channels, both in the United States and Canada ("Domestic") under
the trade name MotorVac, and outside the United States and Canada
("International") under the trade name CarbonClean.
The following discussion and analysis addresses the results of the
Company's operations for the nine months ended September 30, 1997, and for the
three months ended September 30, 1997, as compared to the Company's results of
operations for the nine months ended September 30, 1996, and for the three
months ended September 30, 1996. On May 1, 1996, the Company consummated an
initial public offering (the "IPO") of 1,100,000 shares of its common stock,
resulting in gross proceeds of approximately $5,912,500. On June 13, 1996, the
Company completed the sale of an additional 110,000 shares of its Common Stock
upon exercise
6
<PAGE> 7
of the underwriter's overallotment option (the "Overallotment"), resulting in
gross proceeds to the Company of approximately $591,250.
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, and the Company intends that
such forward-looking statements be subject to the safe harbors created thereby.
The Company may experience significant fluctuations in future operating results
due to a number of factors, including, among other things, the size and timing
of customer orders, new or increased competition, delays in new product
enhancements and new product introductions, quality control difficulties,
changes in market demand, market acceptance of new products, product returns,
seasonality in product purchases by distributors and end users, and pricing
trends in the automotive after-market industry in general, and in the specific
markets in which the Company is active. Any of these factors could cause
operating results to vary significantly from prior periods. Significant
variability in orders during any period may have a material adverse impact on
the Company's cash flow or work flow, and any significant decrease in orders
could have a material adverse impact on the Company's results of operations and
financial condition. As a result, the Company believes that period-to-period
comparisons of its results of operations are not necessarily meaningful and
should not be relied upon as any indication of future performance. Fluctuations
in the Company's operating results could cause the price of the Company's Common
Stock to fluctuate substantially.
Assumptions relating to the foregoing involve judgments with respect
to, among other things, future economic, competitive and market conditions, all
of which are difficult or impossible to predict accurately, and many of which
are beyond the control of the Company. In addition, the business and operations
of the Company are subject to substantial risks which increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company will be
achieved.
RESULTS OF OPERATIONS
Comparison of Three Months Ended September 30, 1997 and 1996
Net Sales. Net sales for the three months ended September 30, 1997
decreased $161,536 (approximately 6.1%) to $2,489,045 from $2,650,581 for the
three months ended September 30, 1996. This sales decrease was due to decreases
in both Domestic and International sales, with Domestic sales down 5.7% and
International sales down 7.7% from the same period last year. This sales
decrease was due to decrease in the number of MotorVac CarbonClean Systems sold,
from 1,527 systems sold for the three months ended September 30, 1996, to 1,363
systems sold for the three months ended September 30, 1997, and an increase in
the number of equivalent cases sold from 5,870 for the three months ended
September 30, 1996 to 7,190 equivalent cases sold for the three months ended
September 30, 1997.
For the three months ended September 30, 1997, Domestic sales were
$1,981,175 and International sales were $507,870. For the three months ended
September 30, 1996, Domestic sales were $2,100,212, and International sales were
$550,369.
Cost of Sales. Cost of sales for the three months ended September 30,
1997 decreased by $90,337 (approximately 5.6%) to $1,517,457 from $1,607,794 for
the three months ended September 30, 1996. The primary reason for the decrease
is the sales decrease of approximately 6.1% for the same period.
Gross Profit. Gross profit for the three months ended September 30,
1997 decreased by $71,799 (approximately 6.8%) to $971,588 from $1,042,787 for
the three months ended September 30, 1996. The primary reason for the decrease
was the sales decrease of 6.1% discussed above.
7
<PAGE> 8
Operating Expenses. Operating expenses decreased by $145,912
(approximately 12.3%) from $1,186,220 for the three months ended September 30,
1996, to $1,040,308 for the three months ended September 30, 1997. The decrease
was primarily attributable to approximately $195,179 in litigation expense being
incurred during the three months ended September 30, 1996, versus approximately
$0 for the three months ended September 30, 1997, a net litigation reimbursement
received during the three months ended September 30, 1997 from the Company's
insurance company of approximately $49,627, and an increase in the bad debt
reserve of $26,101 during the three months ended September 30, 1997.
Loss From Operations. As a result of the above, the loss from
operations for the three months ended September 30, 1997 of $68,720 improved by
$74,713 (approximately 52.1%) from a loss from operations of $143,433 for the
three months ended September 30, 1996.
Interest. Interest (net) revenue for the three months ended September
30, 1997 of $10,284 decreased by $6,247 (approximately 37.8%) from interest
(net) revenue of $16,531 for the three months ended September 30, 1996. This was
primarily due to an increase in net borrowings and the associated higher
interest expense for the three months ended September 30, 1997 as compared to
the three months ended September 30, 1996.
Net Income (Loss). The net loss for the three months ended September
30, 1997 of $58,436 improved by $68,466 (approximately 54.0%) from a net loss of
$126,902 for the three months ended September 30, 1996.
Comparison of Nine Months Ended September 30, 1997 and 1996
Net Sales. Net sales for the nine months ended September 30, 1997
increased $1,385,531 (approximately 23.8%) to $7,206,952 from $5,821,421 for the
nine months ended September 30, 1996. This sales increase was due to increase in
number of MotorVac CarbonClean systems sold, from 2,834 systems for the nine
months ended September 30, 1996 to 3,635 systems sold for the nine months ended
September 30, 1997, and increase in number of equivalent cases of detergent sold
from 29,825 for the nine months ended September 30, 1996 to 30,555 equivalent
cases of detergent sold for the nine months ended September 30, 1997.
Domestic sales for the nine months ended September 30, 1997 were
$5,345,636, and International sales for the same period were $1,861,316. For the
nine months ended September 30, 1996, Domestic sales were $3,862,797, and
International sales were $1,958,624.
Cost of Sales. Cost of sales for the nine months ended September 30,
1997 increased by $654,925 (approximately 19.1%) to $4,087,145 from $3,432,220
for the nine months ended September 30, 1996. The primary reason for the cost of
sales increase was the 23.8% increase in sales for the same period.
Gross Profit. Gross profit for the nine months ended September 30, 1997
increased $730,606 (approximately 30.6%) to $3,119,807 from $2,389,201 for the
nine months ended September 30, 1996. The primary reason for this was the sales
increase discussed above and product mix improvement of margins.
Operating Expenses. Operating expenses for the nine months ended
September 30, 1997 of $2,859,624 decreased by $300,649 (approximately 9.5%) from
$3,160,273 for the nine months ended September 30, 1996. This decrease was
primarily attributable to litigation expense incurred during the nine months
ended September 30, 1996, net litigation reimbursements and net credits during
the nine months ended September 30, 1997 of approximately $234,752, as well as
smaller increases in advertising, marketing, commissions and other items.
8
<PAGE> 9
Income (Loss) From Operations. As a result of the above, the income
from operations for the nine months ended September 30, 1997 improved by
$1,031,255 to a net income from operations of $260,183 from a net loss from
operations of $771,072 for the nine months ended September 30, 1996.
Interest. Interest (net) revenue for the nine months ended September
30, 1997 improved to a net interest revenue of $21,818 from net interest expense
of $165,234 for the nine months ended September 30, 1996. The primary reason for
the improvement is the investment by the Company of its cash and cash
equivalents since the IPO, as well as a reduction of borrowings and related
interest expense for the nine months ended September 30, 1997, when compared to
the same period in the prior year.
Net Income (Loss). The net income for the nine months ended September
30, 1997 improved by $1,271,912 to a net income of $281,606 from a net loss of
$936,306 for the nine months ended September 30, 1996.
LIQUIDITY AND CAPITAL RESOURCES
As of September 30, 1997, the Company had working capital of
$3,603,146. At December 31, 1996, the Company had working capital of $3,010,282.
For the Three Months Ended September 30, 1997
- ---------------------------------------------
Cash and cash equivalents at July 1, 1997 were $1,982,031. Cash
provided by operating activities during the three months ended September 30,
1997, which includes the net change in operating assets and liabilities, was
$390,628. Cash used in investing activities for the three months ended September
30, 1997 was $31,782 which represents the purchase of fixed assets and
manufacturing dies. Cash used in financing activities was $600,000 which
represents a pay-down of a loan payable to the bank. The net decrease in cash
for the three months ended September 30, 1997 was $241,151, resulting in ending
cash of $1,740,877.
For the Nine Months Ended September 30, 1997
- --------------------------------------------
Cash and cash equivalents at January 1, 1997 was $2,559,989. Cash
generated in operating activities for the nine months ended September 30, 1997
was $555,186. Cash used in investing activities was $64,298, which represents
the purchase of fixed assets and manufacturing dies. Cash used in financing
activities was $1,310,000 which represents pay-down of a loan payable to the
bank. The net decrease in cash for the nine months ended September 30, 1997 was
$819,112, resulting in ending cash of $1,740,877.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On February 28, 1996, the Company filed a proceeding in the United
States District Court, Northern District of Ohio, Eastern Division, against
Richard R. Green, individually and doing business as P & R Equipment Company,
Gregory M. Phillips, C.S.P. International, Inc. and certain other defendants
(collectively "CSP") seeking compensatory and punitive damages and injunctive
relief for trademark and trade name infringement, breach of contract, unfair
competition, deceptive trade practices, misappropriation of trade secrets,
breach of loyalty, and interference with contracts and business relations. In
connection with the foregoing proceeding, Messrs. Green, Phillips and the other
named defendants filed a counterclaim against the Company, pursuant to which
such defendants alleged that the Company brought the foregoing action for the
unlawful purpose of harassing and injuring the defendants and that the Company
was engaged in unfair competition and attempting to unlawfully restrain trade.
Such defendants have requested compensatory
9
<PAGE> 10
damages in the amount of $500,000, punitive damages in the amount of $1,000,000
and attorneys' fees and costs. The Company believed that the defendants'
counterclaims were without merit and intended to prosecute this action
vigorously. The Company also had filed an arbitration action in Orange County,
California against Messrs. Phillips and Green covering substantially the same
subject matter as the foregoing litigation. As reported in the Company's
Quarterly Report on Form 10-QSB for the period ended June 30, 1997, the Company
and CSP each dismissed all actions against each other effective July 29, 1997.
In addition to the foregoing, the Company, from time to time, is
involved in routine litigation incidental to the conduct of its business. Except
for the litigation described above, there are currently no material pending
legal proceedings to which the Company is a party to or to which any of its
property is subject.
ITEM 2. RULE 463 AND ITEM 701 OF REGULATION SB
In accordance with the Securities and Exchange Commission Rule 463 and
Item 701 of Regulation SB, effective September 2, 1997, the Company hereby
incorporates the information formerly included in Form SR for the period ended
September 30, 1997.
(1) File Number and Effective date of Registration Statement:
o April 25, 1996
Commission File Number:
o 333-1866-LA
(2) Date offering commenced:
o April 25, 1996
(3) If offering terminated before any securities were sold, an explanation
for such termination:
o N/A
(4) If offering did not terminate before any securities were sold, discuss:
(i) Whether the offering has terminated and, if so, whether it
terminated before the sale of all securities registered: o The
offering terminated after the sale of all securities
registered.
(ii) The name(s) of the managing underwriter(s), if any:
o Meridian Capital Group, Inc.
(iii) The title of each class of securities registered: o Common
Stock, $.01 par value
(iv) On account of the issuer:
Amount registered:
o 1,210,000 shares
Aggregate price of offering amount registered:
o $6,503,750
Amount sold:
o 1,210,000
Aggregate offering price of amount sold to date:
o $6,503,750
On account of any Selling Security Holder(s):
Amount registered:
o 32,850
Aggregate offering price of amount registered:
o $176,569
Amount sold:
o 32,850
Aggregate offering price of amount sold:
o $176,569
10
<PAGE> 11
<TABLE>
<S> <C> <C>
(v) Direct or indirect payments to directors, officers, Direct or indirect
general partners of the issuer or their associates; payments to others
to persons owning 10% or more of any class of (X if estimate)
equity securities of the issuer and to affiliates of
the issuer. (X if estimate)
Underwriters discounts
and commissions 650,375
Finders' Fees
Expenses paid to or for
the Underwriters 195,113
Other Expenses 504,788
Total Expenses 1,350,276
(vi) Net offering proceeds to issuer after deducting the
total expenses described in Subsection (v) above:
o $5,153,474
(vii) Use of Proceeds:
Direct or indirect payments to directors, officers, Direct or indirect
general partners of the issuer or their associates; payments to others
to persons owning 10% or more of any class of (X if estimate)
equity securities of the issuer and to affiliates of
the issuer. (X if estimate)
Repayment of
Indebtedness 123,572 1,310,000
Working Capital 1,142,597
Repayment of Interest
on Indebtedness 836,428
Investments:
o Short Term CD's 1,500,000
o Other Cash and
Cash Equivalents 240,877
</TABLE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Statement of Calculation of Net Profit (Loss) Per Share.
27.1 Financial Data Schedule in accordance with Article 5 of
Regulation SX.
(b) No reports on Form 8-K were filed during the quarter ended September
30, 1997.
11
<PAGE> 12
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.
MOTORVAC TECHNOLOGIES, INC.,
a Delaware corporation
By: /s/ LEE W. MELODY
----------------------------
Lee W. Melody
President and Chief
Executive Officer
Date: November 7, 1997
By: /s/ ALLAN T. MAGUIRE
----------------------------
Allan T. Maguire
Chief Accounting Officer
Date: November 7, 1997
12
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MOTORVAC TECHNOLOGIES, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
11.1 Statement of Calculation of Net Profit (Loss) Per Share.
27.1 Financial Data Schedule in accordance with Article 5 of
Regulation SX.
<PAGE> 1
EXHIBIT 11.1
MOTORVAC TECHNOLOGIES,INC.
CALCULATION OF NET INCOME (LOSS) PER SHARE
FOR THE THREE MONTHS AND THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND SEPTEMBER 30, 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
-------------------------- --------------------------
SEPT. 30 SEPT. 30 SEPT. 30 SEPT. 30
1997 1996 1997 1996
---------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net Income (Loss) $ (58,436) $ (126,902) $ 281,606 $ (936,306)
========== ========== ========== ==========
Weighted Average Outstanding Common and Common Equivalent Shares:
Common Stock Outstanding, December 31, 1996, December 31, 1995 4,514,918 948,000 4,514,918 948,000
Common stock equivalents:
Conversion of Series A Preferred Stock 966,247 966,247
Conversion of Series B Preferred Stock 570,150 570,150
Common Shares Issued in Initial Public Offering 1,100,000 1,100,000
Weighting of Initial Public Offering 1,100,000 638,321
Conversion of $4,410,300 of Notes Payable to Related party 820,521 820,521
Common Stock issued in Overallotment on June 15, 1996 110,000 110,000
Weighting of overallotment option 110,000 42,956
---------- ---------- ---------- ----------
4,514,918 4,514,918 4,514,918 3,986,195
Incremental shares, assuming exercise of options grants
outstanding at September 30, 1996 and September 30, 1997
(eliminated if dilutive to EPS) 0 0 0 0
Weighted Average Outstanding Common and Common Equivalent Shares 4,514,918 4,514,918 4,514,918 3,986,195
========== ========== ========== ==========
Net Income (Loss) per Share $ (0.01) $ (0.03) $ 0.06 $ (0.23)
========== ========== ========== ==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF MOTORVAC TECHNOLOGIES, INC. AS OF AND FOR THE PERIOD ENDED
SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUN-30-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,740,877
<SECURITIES> 0
<RECEIVABLES> 1,417,085
<ALLOWANCES> 42,628
<INVENTORY> 1,119,252
<CURRENT-ASSETS> 4,601,891
<PP&E> 613,700
<DEPRECIATION> 377,521
<TOTAL-ASSETS> 5,874,971
<CURRENT-LIABILITIES> 998,745
<BONDS> 0
0
0
<COMMON> 45,149
<OTHER-SE> 4,831,077
<TOTAL-LIABILITY-AND-EQUITY> 5,874,971
<SALES> 2,489,045
<TOTAL-REVENUES> 2,489,045
<CGS> 1,517,457
<TOTAL-COSTS> 1,517,457
<OTHER-EXPENSES> 1,040,308
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (10,284)
<INCOME-PRETAX> (58,436)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (58,436)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> 0
</TABLE>
