<PAGE> 1
U. S. 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 June 30, 1998
[ ] 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) 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
--- ---
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 June 30, 1998 4,514,918
Transitional Small Business Disclosure Format (check one);
Yes No X
---- -----
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MOTORVAC TECHNOLOGIES, INC.
BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------ ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,686,742 $ 1,665,120
Accounts Receivable, net of allowance for doubtful
accounts of $87,705 (June 30, 1998) and $43,542
(December 31, 1997) 1,262,755 1,763,212
Inventories, net of reserve of $117,310 (June 30, 1998)
and $69,610 (December 31, 1997) 1,741,151 1,197,544
Other Current Assets -- (including deposits with vendors
of $163,496 at June 30, 1998 and $133,585 at December
31, 1997) 394,574 394,100
------------ ------------
Total Current Assets 5,085,222 5,019,976
PROPERTY AND EQUIPMENT, net 252,069 231,928
INTANGIBLE ASSETS, net of accumulated amortization of
$1,026,109 (June 30, 1998) and $867,064 (December 31,
1997) 798,334 957,379
OTHER ASSETS 17,227 17,227
------------ ------------
$ 6,152,852 $ 6,226,510
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Other Current Liabilities $ 1,181,641 $ 1,105,243
Short-term note payable to bank 335,000 250,000
------------ ------------
Total Current Liabilities 1,516,641 1,355,243
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 10,000,000 shares
authorized; 4,514,918 issued and outstanding 45,149 45,149
Additional paid-in capital 16,523,553 16,523,553
Employee Stock Loans (65,164) (35,161)
Accumulated Deficit (11,867,327) (11,662,274)
------------ ------------
Total Stockholders' Equity 4,636,211 4,871,267
------------ ------------
$ 6,152,852 $ 6,226,510
============ ============
</TABLE>
(See accompanying Notes to Financial Statements)
<PAGE> 3
MOTORVAC TECHNOLOGIES, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $2,494,464 $2,691,124 $5,578,079 $4,717,907
Cost of sales 1,400,782 1,620,487 3,120,993 2,569,688
---------- ---------- ---------- ----------
Gross profit 1,093,682 1,070,637 2,457,086 2,148,219
Operating expenses 1,375,509 880,703 2,687,729 1,819,316
---------- ---------- ---------- ----------
(Loss) income from operations (281,827) 189,934 (230,643) 328,903
Interest (income) expense, net (14,994) (7,500) (31,240) (11,534)
---------- ---------- ---------- ----------
Income (loss) before provision for income
taxes (266,833) 197,434 (199,403) 340,437
Provision for income taxes 2,150 1,195 5,650 395
---------- ---------- ---------- ----------
Net (loss) income $ (268,983) $ 196,239 $ (205,053) $ 340,042
========== ========== ========== ==========
Basic net (loss) income per share $ (0.06) $ 0.04 $ (0.05) $ 0.08
========== ========== ========== ==========
Weighted average shares used to calculate
basic net (loss) income per share 4,514,918 4,514,918 4,514,918 4,514,918
========== ========== ========== ==========
Diluted net (loss) income per share $ (0.06) $ 0.04 $ (0.05) $ 0.08
========== ========== ========== ==========
Weighted average shares used to calculate
diluted net (loss) income per share 4,514,918 4,514,918 4,515,020 4,514,918
========== ========== ========== ==========
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE> 4
MOTORVAC TECHNOLOGIES, INC.
STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------ ------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (268,983) $ 196,239 $ (205,053) $ 340,042
Adjustments to reconcile net (loss)
income to net cash provided by (used
in) operating activities:
Depreciation and amortization 104,352 120,209 209,029 239,993
Net change in operating assets and
liabilities:
Accounts receivable 859,354 (461,608) 500,457 (538,783)
Inventories (599,780) 13,090 (543,607) (51,743)
Other 85,537 (11,679) (474) 70,381
Accounts payable and other current
liabilities 145,617 (218) 76,398 104,668
---------- ---------- ---------- ----------
Net cash provided by (used in)
operating activities 326,097 (143,967) 36,750 164,558
CASH FLOWS FROM INVESTING ACTIVITY:
Purchase of property and equipment (28,712) (19,974) (70,125) (32,516)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances to employees for stock
purchases (12,073) 0 (30,003) 0
Proceeds from (repayment) issuance of
notes payable to bank (240,000) (410,000) 85,000 (710,000)
---------- ---------- ---------- ----------
Net cash (used in) provided by
financing activities (252,073) (410,000) 54,997 (710,000)
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH 45,312 (573,941) 21,662 (557,958)
CASH AND CASH EQUIVALENTS, beginning
of period 1,641,430 2,555,972 1,665,120 2,559,989
---------- ---------- ---------- ----------
CASH AND CASH EQUIVALENTS, end of period $1,686,742 $1,982,031 $1,686,742 $1,982,031
========== ========== ========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
Interest paid $ 3,360 $ 15,344 $ 10,679 $ 38,100
========== ========== ========== ==========
Income taxes paid $ 3,850 $ 1,195 $ 7,200 $ 395
========== ========== ========== ==========
</TABLE>
(See Accompanying Notes to Financial Statements)
<PAGE> 5
Notes to Unaudited Consolidated Financial Statements
(for the Three and Six-Month Periods Ended June 30, 1998):
1. Basis of Presentation
The information set forth in these consolidated financial statements as
of June 30, 1998 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 three- and six-month
periods ended June 30, 1998 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. Legal Proceedings
As of June 30, 1998, the Company was involved in an arbitration
proceeding. See Part II, Item 1, of this Form 10-QSB.
3. Inventories
Inventories, which include materials, supplies, labor and manufacturing
overhead, are summarized as follows:
June 30, 1998 December 31, 1997
------------- -----------------
Materials and supplies 988,649 755,079
Work in process 17,069 17,069
Finished product 852,743 495,006
Reserve (117,310) (69,610)
--------- ---------
1,741,151 1,197,544
========= =========
4. Recent Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," applicable to entities with other comprehensive
income. This pronouncement is effective for the year beginning January
1, 1998. The Company had no items of other comprehensive income, as
defined, for the three- and six-month periods ended June 30, 1998 or
1997.
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related
Information," which requires that the Company report certain information
about operating segments. This pronouncement is effective for the year
beginning January 1, 1998. The Company designs, assembles, markets and
sells products to the automotive after-market industry. This is
considered to be the Company's only reportable operating segment.
<PAGE> 6
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 and the
TRANSTECH System for the replacement of automatic transmission fluid. The
Company's Automotive Solutions division markets and sells the Carbon Tune System
for the rapid cleaning of engine fuel systems, primarily for the automotive
after-market quick service industry. The Company markets and sells its fuel
system cleaning machines, transmission service machines and detergents through
various distribution channels, both in the United States and Canada ("Domestic")
under the trade names MotorVac, TRANSTECH and Carbon Tune, 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 three and six-month periods ended June 30, 1998, as
compared to the Company's results of operations for the same periods ended June
30, 1997.
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, pricing trends
in the automotive after-market industry in general and in the specific markets
in which the Company is active, as well as those discussed in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1997, as filed with
the Securities and Exchange Commission. 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 June 30, 1998 and 1997
Net Sales. Net sales for the three months ended June 30, 1998 decreased
$196,660 (approximately 7%) to $2,494,464 from $2,691,124 for the three months
ended June 30, 1997. This sales decrease was due
<PAGE> 7
primarily to a net reduction of Domestic purchases of gas units by the Company's
largest customer, partially offset by sales of TRANSTECH machines to the
customer. The TRANSTECH product line is new and had no sales in the second
quarter of 1997.
For the three months ended June 30, 1998, Domestic sales were $1,790,322
and International sales were $704,142. For the three months ended June 30, 1997,
Domestic sales were $2,095,728, and International sales were $595,396. Domestic
sales decreased primarily due to reduced purchases of machines by the Company's
largest customer. International sales increased due to higher machine sales.
Cost of Sales. Cost of sales for the three months ended June 30, 1998
decreased by $219,705 (approximately 14%) to $1,400,782 from $1,620,487 for the
three months ended June 30, 1997. The primary reasons for the decrease were
reduced costs related to the sales decline described above, and the improved
gross profit percentage discussed below.
Gross Profit. Gross profit for the three months ended June 30, 1998
increased by $23,045 to $1,093,682 from $1,070,637 for the three months ended
June 30, 1997. The primary reason for the increase was gross profit, as a
percentage of sales, increased approximately 4% to 43.8% for the quarter ended
June 30, 1998, from 39.8% for the quarter ended June 30, 1997. The increase was
primarily attributable to increased sales of relatively higher margin products
in the current quarter compared to the second quarter of 1997.
Operating Expenses. Operating expenses increased by $494,806
(approximately 56%) from $880,703 for the three months ended June 30, 1997, to
$1,375,509 for the three months ended June 30, 1998. The increase was primarily
attributable to several expense areas. The second quarter of 1997 included an
approximate $83,000 gain from a net settlement from an insurance company related
to litigation expenses incurred in 1996; there was no such gain for the quarter
ending June 30, 1998. In addition, for the three months ended June 30, 1998,
approximately $84,000 was incurred for a test by an independent testing agency
that documented the effectiveness of the diesel fuel cleaning machine. Other
significant increases included advertising expenses incurred in an effort to
gain greater customer awareness, and sales and promotion costs to initiate the
new Automotive Solutions product line.
Interest. Net interest income for the three months ended June 30, 1998
of $14,994 increased by $7,494 from net interest income of $7,500 for the three
months ended June 30, 1997.
Comparison of Six Months Ended June 30, 1998 and 1997
Net Sales. Net sales for the six months ended June 30, 1998 increased
$860,172 (approximately 18%) to $5,578,079 from $4,717,907 for the six months
ended June 30, 1997. This increase is due to sales of TRANSTECH Systems, which
had sales primarily to the Company's largest customer. Partially offsetting this
increase were decreases in sales of Domestic gas and diesel machines to the
Company's largest customer.
Domestic sales for the six months ended June 30, 1998 were $4,099,342,
and International sales for the same period were $1,478,737. For the six months
ended June 30, 1997, Domestic sales were $3,364,462, and International sales
were approximately $1,353,445. The reason for the increase in Domestic sales was
revenue from the new TRANSTECH machine. The increase in International sales was
due to higher sales from TRANSTECH, fuel machines and detergents.
Cost of Sales. Cost of sales for the six months ended June 30, 1998
increased $551,305 (approximately 21.5%) to $3,120,993 from $2,569,688 for the
six months ended June 30, 1997. The primary reason for the increase was the
increase in sales.
<PAGE> 8
Gross Profit. Gross profit for the six months ended June 30, 1998
increased $308,867 (approximately 14.4%) to $2,457,086 from $2,148,219 for the
six months ended June 30, 1997. The primary reason for this increase was the
sales increase discussed above. As a percentage of sales, gross profit decreased
to 44% from 45.5% for the six months ended June 30, 1997. The primary reason for
the decrease was a reduction of margin on International sales due to more
competitive pricing for the six months ended June 30, 1998 associated with
general currency erosion affecting Far Eastern countries. Other factors which
decreased the gross margin included increases as a percentage of sales in
warranty, royalty and freight expenses.
Operating Expenses. Operating expenses for the six months ended June 30,
1998 of $2,687,729 increased by $868,413 (approximately 48%) from $1,819,316 for
the six months ended June 30, 1997. This increase included a net litigation
reimbursement of approximately $185,000 realized in the six-month period ended
June 30, 1997. Other major cost increases were associated with expanded
marketing and sales efforts aimed at establishing a more diversified customer
base.
Interest. Net interest income for the six months ended June 30, 1998 was
$31,240, compared to net interest income of $11,534 for the six months ended
June 30, 1997.
LIQUIDITY AND CAPITAL RESOURCES
For the Three Months Ended June 30, 1998
The Company's cash balance at June 30, 1998 was $1,686,742. Cash of
$326,097 was provided by operating activities for the quarter ended June 30,
1998. Cash flow used for financing activities for the quarter was $252,073,
primarily reflecting repayment on a note payable to a bank. The net result was
an increase in cash of $45,312 from the beginning of the quarter. Working
capital as of June 30, 1998, at $3,568,581, decreased by $205,416 from the
beginning of the period.
The Company maintains a $1,500,000 revolving line of credit expiring
June 30, 1999 at the bank's prime rate. The line is secured by a certificate of
deposit of $1,500,000 expiring September 30, 1998. At June 30, 1998, $335,000
was outstanding under the line. The remaining outstanding balance on the line of
credit was repaid in July 1998.
The funds provided by operations of $326,097 for the quarter ended June
30, 1998 were primarily a result of a decrease of accounts receivable of
$859,834, due to both reduced sales and lower days aging compared to the first
quarter of 1998, and an increase of inventories of $599,780, reflecting a
buildup for anticipated sales at the end of the quarter, which did not fully
materialize.
The Company presently expects that current cash resources and the
available capacity under the line of credit, together with cash generated from
operations, will be sufficient to meet its operating and capital requirements
for the next twelve months. There can be no assurances that additional capital
will be available to the Company on favorable terms or at all.
INFORMATION SYSTEMS AND THE YEAR 2000
The Company has made an initial assessment of the ability of its primary
information systems to properly utilize dates beyond year 1999. The results of
this review indicate these systems are year 2000 compliant, and that no material
system design or correction effort will be required.
The developer of the primary accounting and business software the
Company uses has stated that the subject system and software are year 2000
compliant. Notwithstanding this representation, the Company plans, by the end of
1998, to run appropriate testing to confirm compliance. Because the accounting
software system
<PAGE> 9
is so widely used, the Company, at this time, does not anticipate any
significant problems in being compliant with respect to its systems, nor will it
require significant expenditures to effect compliance.
The Company is in the process of contacting vendors and others on whom
it relies to assure that their systems are compliant, or will be. These
inquiries are expected to be completed by the end of 1998. There is no assurance
that any of these parties will not have compliance problems. The Company has one
customer that represents over 50% of its sales for the six months ended June 30,
1998, and has several key vendors whose source and supply may not be easily
replaced. A year 2000 compliance problem incurred by this customer or key
vendors could have a materially adverse effect on the Company's business.
In the Company's report 10-KSB for its fiscal year ended December 31,
1997, it was reported, with respect to the year 2000 issue, that the Company
intended to replace its information and manufacturing computer software. In
recent months, the Company has decided not to replace such software, at least
for the next year. The system has been determined to be responsive to
Management's information requirements. Therefore, any significant expenditure in
this regard is no longer anticipated to be incurred in 1998, and no significant
costs have been incurred to date associated with the Company's Year 2000
assessment. Failure by the Company and/or its vendors or customers to complete
Year 2000 compliance work in a timely manner could have a material adverse
effect on certain of the Company's operations.
<PAGE> 10
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On March 17, 1998, the Company was served with a Demand for Arbitration
filed with the American Arbitration Association at its Irvine office by Max Q
Systems, Claimant. The dispute arises out of a License Agreement, dated January
1, 1994, between the Company as licensee and the Claimant as licensor. The
Claimant alleges that the Company failed to pay royalties as agreed under the
License Agreement and seeks payment of $20,000 plus royalties. On April 14,
1998, the Company filed a counter claim Demand for Arbitration alleging that it
was justified in terminating royalty payments due to breaches under the License
Agreement by the Claimant, and seeking damages of $100,000. This dispute has
been decided in the Company's favor. The $20,000-plus royalties will not have to
be paid; there will be no damages payable to the Company by Max Q Systems.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Net proceeds from the Company's Initial Public Offering in April 1996
totaled $5,153,474. Through June 30, 1998, such proceeds were used as follows:
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 1,250,000
Working Capital 1,256,732
Repayment of Interest on Indebtedness 836,428
Investments:
o Short Term CD's 1,500,000
o Other Cash and Cash Equivalents 186,742
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of MotorVac Technologies, Inc. (the
"Annual Meeting") was held on May 12, 1998 in Irvine, California. The matters
voted upon at the Annual Meeting and the voting of stockholders with respect
thereto were as follows:
PROPOSAL 1 - ELECTION OF DIRECTORS
Each of the candidates listed below was duly elected to the Board of
Directors at the Annual Meeting by the tally indicated.
<PAGE> 11
<TABLE>
<CAPTION>
Candidate Votes in Favor Votes Withheld
--------- -------------- --------------
<S> <C> <C>
Grant Ferrier 2,903,671 1,350
Stephen L. Greaves 2,901,571 3,450
Lee W. Melody 2,901,571 3,450
Ronald J. Monark 2,903,671 1,350
Gerald C. Quinn 2,903,671 1,350
Daniel P. Whelan 2,903,671 1,350
</TABLE>
PROPOSAL 2 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The selection of Deloitte & Touche LLP as independent auditors of the
Company for its fiscal year ending December 31, 1998 was ratified by the tally
indicated.
<TABLE>
<CAPTION>
Votes in Favor Votes Withheld Votes Abstained
-------------- -------------- ---------------
<S> <C> <C>
2,903,971 0 1,050
</TABLE>
ITEM 5. OTHER INFORMATION
Pursuant to a recent change to the Securities and Exchange Commission's
proxy rules, unless a stockholder who wishes to bring a matter before the
stockholders at the Company's 1999 annual meeting of stockholders notifies the
Company of such matter prior to February 20, 1999, management will have
discretionary authority to vote all shares for which it has proxies in
opposition to such matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Statement of Calculation of Basic and Diluted Net Income Per
Share.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
<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: August 12, 1998
By: /s/ David P. Nelson
---------------------------------
David P. Nelson
Chief Accounting Officer
Date: August 12, 1998
<PAGE> 13
MOTORVAC TECHNOLOGIES, INC.
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
11.1 Statement of Calculation of Basic and Diluted Net Income Per Share.
27.1 Financial Data Schedule.
<PAGE> 1
EXHIBIT 11.1
MOTORVAC TECHNOLOGIES, INC.
CALCULATION OF BASIC AND DILUTED NET INCOME (LOSS) PER SHARE
For the Three and Six Months Ended
June 30, 1998 and June 30, 1997
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
----------------------- -----------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1998 1997 1998 1997
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Net (loss) income $ (268,983) $ 196,239 $ (205,053) $ 340,042
========== ========= ========== =========
Basic net income (loss) per share:
Weighted average outstanding common shares 4,514,918 4,514,918 4,514,918 4,514,918
========== ========= ========== =========
Basic net income (loss) per share $ (0.06) $ 0.04 $ (0.05) $ 0.08
========== ========= ========== =========
Diluted net income (loss) per share:
Weighted average outstanding common shares 4,514,918 4,514,918 4,514,918 4,514,918
Incremental shares, assuming exercise
of options grants outstanding at June
30, 1998 and June 30, 1997
(eliminated if dilutive to EPS) 0 0 102 0
Weighted average outstanding common and
common equivalent shares 4,514,918 4,514,918 4,515,020 4,514,918
========== ========= ========== =========
Diluted net income (loss) per share $ (0.06) $ 0.04 $ (0.05) $ 0.08
========== ========= ========== =========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 1,686,742
<SECURITIES> 0
<RECEIVABLES> 1,350,460
<ALLOWANCES> 87,705
<INVENTORY> 1,741,151
<CURRENT-ASSETS> 5,085,222
<PP&E> 705,498
<DEPRECIATION> 453,429
<TOTAL-ASSETS> 6,152,852
<CURRENT-LIABILITIES> 1,516,641
<BONDS> 0
0
0
<COMMON> 45,149
<OTHER-SE> 4,636,211
<TOTAL-LIABILITY-AND-EQUITY> 6,152,852
<SALES> 2,494,464
<TOTAL-REVENUES> 2,494,464
<CGS> 1,400,782
<TOTAL-COSTS> 1,400,782
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