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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q/A
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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COMMISSION FILE NUMBER 0-23562
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MELTRONIX, INC.
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(Exact name of registrant as specified in its charter)
CALIFORNIA 94-3142624
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
9577 CHESAPEAKE DRIVE, SAN DIEGO, CALIFORNIA 92123
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (858) 292-7000
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Indicate by check whether the registrant (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 / /
At September 30, 2000, there were outstanding 12,745,769 shares of the
Registrant's Common Stock, no par value per share.
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<TABLE>
<CAPTION>
INDEX PAGE NO.
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PART I FINANCIAL INFORMATION
Item 1. Financial Statements:
Condensed Consolidated Balance Sheets .................................... 3
Condensed Consolidated Statements of Operations .......................... 4
Condensed Consolidated Statements of Cash Flows .......................... 5
Condensed Consolidated Statement of
Changes in Shareholders' Deficit ..................................... 6
Notes to Condensed Consolidated Financial Statements ..................... 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations ........................ 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk ............... 18
PART II OTHER INFORMATION
Item 1. Legal Proceedings ......................................................... 19
Item 2. Changes in Securities and Use of Proceeds ................................. 20
Item 3. Defaults upon Senior Securities ........................................... 20
Item 4. Submission of Matters to a Vote of Security Holders ....................... 20
Item 5. Other Information ......................................................... 21
Item 6. Exhibits and Reports on Form 8-K .......................................... 21
SIGNATURES ..................................................................................... 22
</TABLE>
2
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PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
MELTRONIX, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, December 31,
2000 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash $ 326,000 $ 335,000
Accounts receivable, net 1,501,000 1,708,000
Inventories 1,890,000 2,318,000
Other current assets 17,000 95,000
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TOTAL CURRENT ASSETS 3,734,000 4,456,000
Property, plant and equipment, net 1,418,000 1,830,000
Note receivable 10,000 --
Other non-current assets 26,000 63,000
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$ 5,188,000 $ 6,349,000
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Bank credit line $ 369,000 $ --
Current portion of long-term debt 594,000 279,000
Accounts payable 3,802,000 2,935,000
Accrued liabilities 1,160,000 869,000
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TOTAL CURRENT LIABILITIES 5,925,000 4,083,000
Long-term payables 76,000 2,133,000
Long-term debt, less current portion 30,000 47,000
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Series A Convertible Preferred stock, no par value 9,295,000 9,295,000
Common stock, no par value 42,493,000 40,269,000
Accumulated deficit (52,631,000) (49,478,000)
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Total shareholders' Equity (deficit) (843,000) 86,000
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$ 5,188,000 $ 6,349,000
=================================================================================================================
</TABLE>
3
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MELTRONIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended September 30,
-------------------------------- -------------------------------
2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Net sales $ 4,009,000 $ 2,031,000 $ 10,735,000 $ 5,955,000
Cost of goods sold 3,487,000 1,585,000 9,612,000 5,096,000
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Gross profit 522,000 446,000 1,123,000 859,000
Selling, general and administrative 878,000 692,000 2,727,000 1,739,000
Engineering and product development 262,000 146,000 943,000 516,000
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Loss from operations (618,000) (392,000) (2,547,000) (1,396,000)
Other income (expense):
Interest (expense), net (222,000) (509,000) (358,000) (1,522,000)
Other income, net - - 3,000 91,000
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Loss from operations before
provision for income taxes (840,000) (901,000) (2,902,000) (2,827,000)
Provision for income taxes - - - -
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Net loss (840,000) (901,000) (2,902,000) (2,827,000)
Dividends attributable to Series A 84,000 - 251,000 -
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Net loss available to
common shareholders $ (924,000) $ (901,000) $ (3,153,000) $ (2,827,000)
================================================================================================================================
BASIC AND DILUTED LOSS
PER COMMON SHARE $ (0.07) $ (0.08) $ (0.27) $ (0.26)
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</TABLE>
4
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MELTRONIX, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Nine months ended September 30,
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2000 1999
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<S> <C> <C>
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: $ (1,708,000) $ 14,000
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CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of fixed assets (98,000) (85,000)
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Net cash used by investing activities (98,000) (85,000)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under debt agreements 1,119,000 --
Principal payments on long-term debt
and promissory notes (258,000) (216,000)
Proceeds from issuance of common stock, net 936,000 --
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Net cash provided (used) by financing activities 1,797,000 (216,000)
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NET DECREASE IN CASH (9,000) (287,000)
CASH AT BEGINNING OF PERIOD 335,000 469,000
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CASH AT END OF PERIOD $ 326,000 $ 182,000
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</TABLE>
5
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MELTRONIX, INC.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN SHAREHOLDERS' EQUITY (DEFICIT)
(unaudited)
<TABLE>
<CAPTION>
Preferred Stock Common Stock Accumulated
Shares Amount Shares Amount Deficit Total
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<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 2000 9,362,777 $9,295,000 10,860,223 $40,269,000 $(49,478,000) $86,000
Common Stock Issued on
Exercise of Stock Options -- -- 1,001,104 422,000 -- 422,000
Non-employee stock-based
Compensation -- -- -- 535,000 -- 535,000
Debt Converted to Equity -- -- 542,109 753,000 -- 753,000
Private Placement -- -- 342,333 514,000 -- 514,000
Dividends on preferred stock -- -- -- -- (251,000) (251,000)
Net (loss) -- -- -- -- (2,902,000) (2,902,000)
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Balance at September 30, 2000 9,362,777 $9,295,000 12,745,769 $42,493,000 $(52,631,000) $(843,000)
==============================================================================================================================
</TABLE>
6
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MELTRONIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 - COMPANY OVERVIEW AND BASIS OF PRESENTATION
COMPANY OVERVIEW
MeltroniX, Inc. and its wholly-owned subsidiaries (collectively, the
"Company") provide high density semiconductor interconnect solutions to the OEM
electronics marketplace by offering design, volume manufacturing, and testing
capabilities. The Company targets high growth industries including Internet
equipment, wireless/telecommunication, broadband communication and other
electronic systems and integrated circuits (ICs) manufacturers. Headquartered in
San Diego, with on-site manufacturing facilities, the Company develops,
manufactures, tests and sells OEM microelectronic semiconductor assemblies.
Capitalizing on what it believes are overall industry trends to outsource design
and manufacturing of electronic systems and integrated circuits, the Company
offers both turnkey manufacturing and kitted subassembly services featuring
value added semiconductor interconnect design and test capabilities in addition
to contract assembly. MeltroniX, Inc. was incorporated in California in 1984.
BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements and related
notes as of September 30, 2000 and for the three and nine month periods ended
September 30, 2000 and 1999 are unaudited but include all adjustments
(consisting of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of financial position and results of
operations of the Company for the interim period. The results of operations for
the three and nine month periods ended September 30, 2000 are not necessarily
indicative of the operating results to be expected for the full fiscal year. The
information included in this report should be read in conjunction with the
Company's audited consolidated financial statements and notes thereto and the
other information, including risk factors, set forth for the year ended December
31, 1999 in the Company's Annual Report on Form 10-K. Readers of this Quarterly
Report on Form 10-Q are strongly encouraged to review the Company's Annual
Report on Form 10-K. Certain reclassifications have been made to the prior
quarters financial statements to be consistent with the current quarter
presentation.
NOTE 2 - LIQUIDITY
During the quarter and nine months ended September 30, 2000, the Company
experienced a net loss totaling $924,000 and $3,153,000 respectively and had
negative cash flows from operations for the nine months ended September 30,
2000 totaling $1,708,000. In addition, the Company had a working capital
deficit totaling $2,191,000, a tangible net worth deficit totaling $843,000
at September 30, 2000 and has not made timely payments and was not in
compliance with certain debt, lease and service agreements, see Note 6. The
Company must significantly improve its profitability and obtain additional
sources of liquidity through debt or equity financing to fund its operations,
repay debt now due and debt about to become due and working capital
requirements. There can be no assurance that any additional financing will
be available to the Company on a timely basis or on acceptable terms or at
all. The Company's inability to accomplish these goals will have a
materially adverse effect on the Company's business, consolidated financial
condition and operations.
NOTE 3 - INVENTORIES
Inventories consist of the following:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 December 31, 1999
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<S> <C> <C>
Raw materials ................................. $ 1,187,000 $ 1,728,000
Work-in-progress .............................. 939,000 1,057,000
Obsolescence reserve .......................... (236,000) (467,000)
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$ 1,890,000 $ 2,318,000
================== ===================
</TABLE>
7
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MELTRONIX, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 4 - EFFECTS OF INCOME TAXES
The Company has not recorded provisions for any income taxes for the three
and nine months ended September 30, 2000, since the Company's operations have
generated operating losses for both financial reporting and income tax purposes.
A 100% valuation allowance has been provided on the total deferred income tax
assets as they are not more likely than not to be realized.
The Company believes that it has incurred an ownership change pursuant to
Section 382 of the Internal Revenue Code and, as a result, the Company believes
that its ability to utilize its current net operating loss and credit
carry-forwards in current and subsequent periods will be subject to annual
limitations.
NOTE 5 - NET INCOME (LOSS) PER SHARE
The computation of diluted loss per share for both three and nine months
ended September 30, 2000 and 1999, excludes the effect of incremental common
shares attributable to the exercise of outstanding common stock options and
warrants and convertible preferred shares because their effect was antidilutive
due to losses incurred by the Company.
NOTE 6 - COMMITMENTS AND CONTINGENCIES
The Company entered into a lease for new manufacturing facilities and
corporate offices commencing September 1, 1997, and extending to October 31,
2002. Minimum monthly rental payments of $16,000 began on November 1, 1997,
with scheduled annual increases of 6% to 7% per year beginning November 1,
1998. The Company also entered into a professional service agreement in
September 2000 that allows the Company the use of a piece of test equipment
from the service supplier. The agreement provides currently for monthly
payments of $15,000 for October, November and December 2000. The agreement
can be amended by the Company contingent upon the Company's need for service
and provision of a change order to the service provider. The Company
currently owes the service supplier $15,000 which was due November 15, 2000.
On July 25, 2000, the Company entered into a formal payment plan with
Schlumberger for the settlement of its old outstanding payables. The
agreement calls for 17 equal installments of $25,317 to be paid on the last
day of each month commencing August 31, 2000. At September 30, 2000, the
Company was not in compliance with the agreement and owed approximately
$42,000 in arrears.
On October 18, 2000 MeltroniX, Inc. was notified by the United States
Bankruptcy Court that Lucien A. Morin, II, as Chapter 7 Trustee of H. J. Meyers
& Co., Inc. was seeking 1,000,000 common stock purchase warrants with a term of
five years from November 19, 1997, an exercise price of $1.00 per share, and has
certain registration rights. The Company has responded that H. J. Meyers & Co.
failed to fulfill the contract which was cancelled in August 1998 and no
warrants are due.
In June of 1999, the Company entered into a capital lease agreement with
Asymtec for the acquisition of manufacturing equipment. This agreement
expired in June of 2000. The Company did not make all of the monthly payments
as required by the agreement and owed approximately $137,000 on the equipment
at September 30, 2000.
On July 20, 2000, the Company entered into an Accounts Receivable
Financing Agreement with Silicon Valley Bank ("Bank Credit Line"). The term
of the Agreement is until July 19, 2001, is secured by all of the assets of
the Company, and the Company can borrow up to $1,500,000 in total over the
term. In consideration of the loan, 60,000 warrants were issued to Silicon
Valley Bank with an exercise price of $1.50 per share. The Agreement permits
the Company to borrow 70% of the amount of qualified accounts receivable
which are accepted by the bank. The Agreement originally required the Company
to maintain a net profit after taxes of at least $1.00 on a quarterly basis
beginning with the quarter ended June 30, 2000. The Company was in violation
of this covenant until it signed an Accounts Receivable Financing
Modification Agreement on November 14, 2000 ("Modification Agreement"). Under
the Modification Agreement the bank waived this default on the profitability
covenant and substituted a covenant requiring the Company to maintain a
certain EBITDA with no greater than a 15% negative variance. The Company
pursuant to the Modification Agreement, issued an additional 60,000 warrants
to Silicon Valley Bank with an exercise price of $1.50 per share and pays a
collateral handling fee based on the balance of the outstanding accounts
receivable every month. Approximately $600,000, the maximum amount available,
has been borrowed to date under the Agreement.
8
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ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS QUARTERLY REPORT CONTAINS FORWARD-LOOKING STATEMENTS CONCERNING THE
COMPANY'S ANTICIPATED FUTURE REVENUES AND EARNINGS, ADEQUACY OF FUTURE CASH FLOW
AND RELATED MATTERS. THESE FORWARD-LOOKING STATEMENTS INCLUDE, BUT ARE NOT
LIMITED TO, STATEMENTS CONTAINING THE WORDS "EXPECT", "BELIEVE", "WILL", "MAY",
"SHOULD", "PROJECT", "ESTIMATE", AND LIKE EXPRESSIONS, AND THE NEGATIVE THEREOF.
THESE STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL
RESULTS TO DIFFER MATERIALLY FROM THE STATEMENTS, INCLUDING COMPETITION, AS WELL
AS THOSE RISKS DESCRIBED IN THE COMPANY'S SEC REPORTS, INCLUDING THE COMPANY'S
FORM 10-K FILED PURSUANT TO THE SECURITIES AND EXCHANGE ACT OF 1934 ON APRIL 14,
2000.
The following discussion and analysis compares the results of operations for
the three and nine month periods ended September 30, 2000 and 1999, and should
be read in conjunction with the condensed consolidated financial statements and
the accompanying notes included within this report.
THREE MONTHS ENDED SEPTEMBER 30, 2000
For the three months ended September 30, 2000, net sales were $4.0
million as compared to net sales of $2.0 million for the third quarter of
1999, resulting in increased sales of $2.0 million or 100%. The increase in
net sales is primarily the result of sales to new customers. One customer was
68% of net sales for the three months ended September 30, 2000. Sales to the
Company's previously largest customer, Schlumberger, were less than 30% of
total sales for the quarter.
The backlog at September 30, 2000 was $11.8 million compared to $2.5
million at September 30, 1999, an increase of 372%. The increase in backlog
is due to an overall expansion of customers and increased business with
customers other than Schlumberger added as a result of the Company's focus on
wireless, telecommunications, internet equipment, and other high technology
electronic market segments. Approximately 85% of the backlog at September 30,
2000 was attributable to orders from three of the Company's largest
customers; Micronetworks (35%), Silicon Film (29%) and Microsource (21%). The
Company will need to secure additional financing to ensure that it has the
inventory, equipment and personnel necessary to fill the existing backlog
orders at September 30, 2000.
For the three months ended September 30, 2000, the cost of goods sold was
$3.5 million as compared to $1.6 million for the three months ended September
30, 1999, an increase of $1.9 million or 120%. The increase in cost of goods
sold is due to the increase in sales volume from new customers and includes
higher product costs associated with process and product development learning
curve experience associated with production ramp up on multiple new products.
Gross profit was $522,000 for the third quarter of 2000 as compared to
$446,000 for the third quarter of 1999, an increase of 17%. Gross profit as a
percent of sales was 13.0% for the third quarter of 2000 compared to 22% for
the third quarter of 1999. The decrease in gross profit as a percentage of sales
is attributable to costs associated with a change in product mix and expanding
production for new customers.
9
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Selling, general and administrative expenses were $0.9 million for the third
quarter of 2000, as compared to $0.7 million for the third quarter of 1999, an
increase of 26.9%. The increase is due to the Company's investment in marketing
and development of new customers as well as restructuring the executive
management team for future growth. A compensation charge for warrants issued
accounts for approximately $171,000 of the increase. Such warrant expense is a
non-cash charge.
Engineering and product development expenses were $262,000 for the third
quarter of 2000, representing an increase of $116,000 or 79.5% from the third
quarter of 1999. The increase is primarily comprised of an increase in
process and products development costs in 2000 as compared to 1999 which were
necessary to bring new technology expertise for BGA, flip chip, fine pitch
wire bonding, and other semiconductor interconnect technologies, to the
Company.
Interest expense was $222,000 for the third quarter of 2000, representing
a decrease of $287,000 or 56% from the third quarter of 1999. The primary
cause of the decrease in interest expense was the conversion of debt into
equity in October of 1999 partially offset by a charge for the issuance of
warrants in connection with certain notes payable of approximately $217,000.
Such warrant expense is a non-cash charge.
Dividends attributable to Series A convertible Preferred Stock were
$84,000 for the third quarter of 2000. The Series A convertible Preferred
Stock was issued in the 4th quarter of 1999 in relation to the conversion of
debt to equity.
NINE MONTHS ENDED SEPTEMBER 30, 2000
For the nine months ended September 30, 2000, net sales were $10.7
million as compared to net sales of $6.0 million for the first nine months of
1999, resulting in increased sales of $4.7 million or 78%. The increase in
net sales is primarily the result of sales to new customers, as well as
invoices for rework of $1,069,000 for an unusual and non recurring billing to
the Company's largest customer, Schlumberger and a billing to the same
customer for raw materials at cost in the amount of $940,000. Two customers
were 32% and 5% of net sales for the nine months ended September 30, 2000.
For the nine months ended September 30, 2000, the cost of goods sold was
$9.6 million as compared to $5.1 million for the nine months ended September 30,
1999, an increase of $4.5 million or 89%. The increase in cost of goods sold is
due to the increase in sales volume from new customers and includes higher
product costs associated with process and product development learning curve
experience associated with production ramp up on multiple new products. In
addition, the cost of goods sold includes the value of the $940,000 of raw
material sold to Schlumberger at cost.
Gross profit increased 31% to $1.1 million (10.5% of net sales) for the
first nine months of 2000 from $0.9 million (14.4% of net sales) for the
first nine months of 1999. This increase is due to an increase in overall
sales. Gross profit as a percentage of net sales decreased. This decrease is
attributable to initial start up costs associated with multiple new customer
10
<PAGE>
development programs, a decrease in sales to Schlumberger, and the raw material
sale of $940,000 to Schlumberger at cost under the terms of a manufacturing
agreement.
Selling, general and administrative expenses were $2.7 million for the first
nine months of 2000, representing an increase of $1 million or 58% from the
first nine months of 1999. The increase is due to the Company's investment in
marketing and development of new customers as well as restructuring the
executive management team for future growth. A compensation charge for warrants
issued accounts for approximately $288,000 of the increase. Such warrant expense
is a non-cash charge.
Engineering and product development expenses were $0.9 million for the first
nine months of 2000, representing an increase of $0.4 million or 83% from the
corresponding period of 1999. The increase is primarily comprised of an increase
in process and products development costs in 2000 as compared to 1999 which were
necessary to bring new technology expertise for BGA, flip chip, fine pitch wire
bonding, and other semiconductor interconnect technologies, to the Company.
Interest expense was $0.4 million for the first nine months of 2000,
representing a decrease of $1.2 million or 76.5% from the corresponding
period of 1999. The primary cause of the decrease in interest expense was the
conversion of debt into equity in October of 1999 partially offset by a
charge for the issuance of warrants of approximately $246,000. Such warrant
expense is a non-cash charge.
The Company has not recorded provisions for any income taxes for the nine
months ended September 30, 2000, since the Company's operations have generated
operating losses for both financial reporting and income tax purposes. A 100%
valuation allowance has been provided on the total deferred income tax assets,
as they are not more likely than not to be realized.
Dividends attributable to Series A convertible Preferred Stock were
$251,000 for the first nine months of 2000. The Series A convertible
Preferred Stock was issued in the 4th quarter of 1999 in relation to the
conversion of debt to equity.
The Company believes that it has incurred an ownership change pursuant to
Section 382 of the Internal Revenue Code, and, as a result, the Company believes
that its ability to utilize its current net operating loss and credit
carry-forwards in subsequent periods will be subject to annual limitations.
LIQUIDITY AND CAPITAL RESOURCES
Cash used in the Company's operating activities increased by $1.7M during the
period ended September 30, 2000 compared to the same period in 1999,
primarily as a result of the operating loss of $1.2M over the prior period.
Cash used in the Company's investing activities increased from $85,000 during
the period ended September 30, 1999 to $98,000 in the same period of 2000 due to
acquisition of new software in 2000.
11
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Cash flows from financing activities during nine months ended September 30,
2000, totaled $1,797,000 which funds were largely used to finance operating
activities. Cash used in financing activities for the same period in 1999
comprised debt repayments in the amount of $216,000. Cash provided by financing
activities in 2000 comprised the following, which are further explained below:
(1) three notes payable from related parties in the amount of $250,000 per note
(2) an accounts receivable financing agreement (3) a private placement which
generated $.5M and (4) proceeds on exercise of employee stock options
aggregating $.4M.
In June 2000, Transpac Capital Pte. Ltd., an existing shareholder and FI
Financial, a shareholder and an entity controlled by James T. Waring, a
director loaned the Company $250,000 each in exchange for a six month note
bearing interest at 9%. No payments are due on either of the notes until the
due date on December 14, 2000. The Company does not currently have the cash
to pay the principal and interest due on the Transpac Capital Pte note on
December 14, 2000. The Company has discussed payment arrangements with
Transpac Capital Pte. and is negotiating an agreement to extend, waive or
defer all or any part of the principal or interest due on December 14, 2000.
F1 Financial has agreed to extend the due date of its promissory note for six
months. In consideration of each of these loans the lenders were each issued
warrants to purchase 250,000 shares of common stock with an exercise price of
$1.344.
On July 20, 2000, the Company entered into an Accounts Receivable Financing
Agreement with Silicon Valley Bank ("Bank Credit Line"). The term of the
Agreement is until July 19, 2001, is secured by all of the assets of the
Company, and the Company can borrow up to $1,500,000 in total over the term.
In consideration of the loan, 60,000 warrants were issued to Silicon Valley
Bank with an exercise price of $1.50 per share. The Agreement permits the
Company to borrow 70% of the amount of qualified accounts receivable which
are accepted by the bank. The Agreement originally required the Company to
maintain a net profit after taxes of at least $1.00 on a quarterly basis
beginning with the quarter ended June 30, 2000. The Company was in violation
of this covenant until it signed an Accounts Receivable Financing
Modification Agreement on November 14, 2000 ("Modification Agreement"). Under
the Modification Agreement the bank waived this default on the profitability
covenant and substituted a covenant requiring the Company to maintain a
certain EBITDA with no greater than a 15% negative variance. The Company,
pursuant to the Modification Agreement, issued an additional 60,000 warrants
to Silicon Valley Bank with an exercise price of $1.50 per share and pays a
collateral handling fee based on the balance of the outstanding accounts
receivable every month. Approximately $600,000, the maximum amount available,
has been borrowed to date under the Agreement.
In July 2000, the Company issued 342,333 shares under a private placement to
accredited investors at a price per share of $1.50, aggregating total
proceeds of $.5M. In addition the new shareholders were granted warrants to
purchase 171,175 shares of common stock with an exercise price of $1.50 per
share.
Meltronix has encountered a cash liquidity issues because of significant
material issues from all of our major customers. In September, we had die
shortages from Schlumberger, MicroSource and MicroNetworks. The material
shortages resulted in production shutdowns, which halted invoicing, and
without cash reserves MeltroniX encountered a liquidity issue. Those
shortages continue today to a lesser degree. In addition, in September, our
largest customer changed wafer fab sources and this impacted our
manufacturing operations detrimentally. Product shutdowns due to material
shortages which the Company believes are common in the industry, IE DIE AND
TANTALUM CAPACITORS, have affected MeltroniX and its cash needs. Additional
financing is being sought to build a reserve against future material
shortages and customer and product diversity are continuing priorities for
the management at MeltroniX.
The Company has recently restructured its credit line with Silicon Valley
Bank and is working closely with all its suppliers and customers to obtain
modified terms during cash flow shortages due to temporary interruptions in
cash flow primarily due to industry wide component shortages.
The Company continues to seek out additional sources of capital to finance
its activities. Financing may not be available on terms and conditions
acceptable to the Company or at all. As of September 30, 2000 the Company had
a working capital deficiency of $2,191,000, an accumulated deficit of
$843,000 and $326,000 in cash and has not made timely payments to and/or was
not in compliance with certain debt, lease and service agreements. See Note 6
to the condensed consolidated financial statements.
There can be no assurance that the Company will be successful in any of its
future financing activities.
12
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RISK FACTORS
The Company's business is subject to numerous risks any one of
which, alone or in combination, could have a material adverse effect on
future results of operations. Additional risks and uncertainties not
presently known to the Company or that it deems immaterial may also affect
its business.
DEPENDENCE ON TWO CUSTOMERS FOR MAJORITY OF REVENUE AND THE
COMPANY'S REVENUE MAY DECLINE SIGNIFICANTLY IF EITHER CUSTOMER CANCELS. For
the nine months ended September 30, 2000 the Company was dependent on two
customers, Micro Networks and Schlumberger, for 32% and 44%, respectively, of
its net sales. Accordingly, unless and until the Company diversifies and
expands its customer base, its future success will significantly depend upon
the timing and size of future purchase orders, if any, from the Company's two
largest customers, and in particular:
- The product requirements of these customers;
- The financial and operational success of these customers; and
- The success of these customers' products.
The loss of any one of the Company's two major customers or the delay
of significant orders from such customers, even if only temporary, could, among
other things, reduce or delay the Company's recognition of revenues, harm its
reputation in the industry, and reduce the Company's ability to accurately
predict cash flow, and as a consequence, could materially adversely affect the
Company's business, financial condition and results of operations.
Sales to Schlumberger accounted for 81% of the Company's net sales for
the fiscal year ended December 31, 1999. Schlumberger has informed the Company
that Schlumberger plans further declines in the purchases it intends to make
from the Company during the remainder of 2000 and in 2001.
THE COMPANY HAS INCURRED LOSSES FOR THE NINE MONTHS ENDED SEPTEMBER
30, 2000, EXPECTS TO CONTINUE TO INCUR LOSSES THROUGH THE END OF THE FISCAL
YEAR AND MAY NOT BE PROFITABLE IN 2001. The Company has incurred a net loss
of $3,153,000 for the nine months ended September 30, 2000, does not expect
the last quarter of the current fiscal year to be profitable. For the nine
months ended September 30, 2000 the Company had negative cash flows from
operations of $1,700,000 and a working capital deficit of $2,191,000. The
Company will require additional sources of liquidity through debt or equity
financing to fund its operations and working capital requirements.
NEED FOR ADDITIONAL FINANCING. The Company believes that its
existing cash resources are sufficient to meet its working capital, capital
expenditure and vendor obligations for the next sixty days. The Company will
need additional financing after that date to meet its existing need for cash.
Additional financing may not be available on acceptable terms, if at all. If
adequate funds are not available, the Company may have to reduce its work
force, reduce product development, and/or reduce capital expenditures. As of
the date hereof, the Company does not have any contracts or commitments for
financing.
DEPENDENCE ON THE CONTINUED GROWTH IN THE WIRELESS
TELECOMMUNICATIONS, INTERNET EQUIPMENT AND HIGH BANDWIDTH COMMUNICATIONS
MARKETS. The Company's new business strategy is to target the wireless
telecommunications, internet equipment and high bandwidth communications
industries to sell its chip level integration and interconnect services.
These industries have experienced significant growth. If the rate of growth
slows or capital investments in one or more of these markets is reduced, or
other factors adversely affect these industries, it could materially and
adversely affect the business, financial condition, and results of the
operations of the Company.
FUTURE OPERATING RESULTS. The Company's operating results have
fluctuated in the past and may continue to fluctuate in the future depending
upon a variety of factors, including downward pressure in gross margins,
losses due to low shipping volume, delayed market acceptance, if any, of new
and enhanced versions of the Company's products, delays, cancellations or
reschedulings of orders, delays in product development, defects in products,
changes in the length of the design-to-production cycle, relationships with
and conditions of customers, subcontractors, and suppliers, receipt of raw
materials, including consigned materials, customer concentration and price
competition. In addition, operating results may fluctuate based upon several
other factors, including the Company's ability to retain present management
and to attract new customers, changes in pricing by the Company, its
competitors, subcontractors, customers or suppliers, and fluctuations in
manufacturing yields. Accordingly, the failure to receive anticipated orders
or delays in shipments due, for example, to unanticipated shipment
reschedulings or defects or to cancellations by customers, or to unexpected
manufacturing problems may cause net sales in a particular quarter to fall
significantly below the Company's expectations, which would materially
adversely affect the Company's operating results for such quarter. The impact
of these and other factors on the Company's net sales and operating results
in any future period cannot be forecasted with certainty. In addition, the
fixed overhead costs at the Company's facilities, the need for continued
expenditures for research and development, capital equipment and other
commitments of the Company, among other factors, will make it difficult for
the Company to reduce its expenses in a particular period if the Company's
sales goals for such period are not met. A large portion of the Company's
operating expenses are fixed and are difficult to reduce or modify should
revenues not meet the Company's expectations, thus magnifying the material
adverse impact of any such revenue shortfall. Accordingly, there can be no
assurance that the Company will not incur losses in the future or that such
losses will not have a material adverse effect on the Company's business,
financial condition and results of operations.
13
<PAGE>
VARIABILITY OF CUSTOMER REQUIREMENTS AND OPERATING RESULTS.
Electronics manufacturing service providers must provide increasingly rapid
product turnaround for their customers. Customers may cancel their orders,
change production quantities, or delay production for a number of reasons.
Cancellations, reductions, or delays by a significant customer, or by a group
of customers would materially affect the business, financial condition and
results of the operations of the Company. Other factors, in addition to the
short-term nature of the Company's customer's commitments, may contribute to
fluctuations in results of the operations of the Company, including those
discussed herein under Risk Factors. The Company makes significant decisions,
including the level of business it seeks and accepts, production schedules,
component procurement commitments, personnel needs and another resource
requirements, based upon the estimates of customer requirements. The
short-term nature of the Company's customers' commitments and the possibility
of rapid changes in the demand for their products reduce the ability of the
Company to estimate accurately future customer requirements. Customers may
occasionally require rapid increases in production, which can stress the
capacity of the Company and reduce margins. Although the Company has
increased its manufacturing capacity, there can be no assurance it will have
the capacity to meet the demands of customers. Because many of the costs of
the Company are relatively fixed, a reduction in customer demand can
adversely affect the gross margins and operating income.
TECHNOLOGICAL CHANGE; IMPORTANCE OF TIMELY PRODUCT INTRODUCTION;
UNCERTAINTY OF MARKET ACCEPTANCE AND EMERGING MARKETS. The markets for the
Company's products are subject to rapid technological change and new product
introductions and enhancements. Customers in the Company's markets require
products embodying increasingly advanced electronics interconnection
technology. Accordingly, the Company must anticipate changes in technology
and define, develop and manufacture or acquire new products that meet its
customers' needs on a timely basis. The Company anticipates that
technological changes could cause the Company's net sales to decline in the
future. There can be no assurance that the Company will be able to identify,
develop, manufacture, market, support or acquire new technologies
successfully, that any such new technologies will gain market acceptance, or
that the Company will be able to respond effectively to technological
changes. If the Company is unable for technological or other reasons to
develop services in a timely manner in response to changes in technology, the
Company's business, financial condition and results of operations will be
materially adversely affected. There can be no assurance that the Company
will not encounter technical or other difficulties that could in the future
delay the introduction of new products or product enhancements. In addition,
new product introductions by the Company's competitors could cause a decline
in sales or loss of market acceptance of the Company's products, which could
materially adversely affect the Company's business, financial condition and
results of operations.
Even if the Company develops and introduces new products, such products must
gain market acceptance and significant sales in order for the Company to achieve
its growth objectives. Furthermore, it is essential that the Company develops
business relationships with and supply products to customers whose end-user
products achieve and sustain market penetration. There can be no assurance that
the Company's products will achieve widespread market acceptance or that the
Company will successfully develop such customer relationships. Failure by the
Company to develop products that gain widespread market acceptance and
significant sales or to develop relationships with customers whose end-user
products achieve and sustain market penetration will materially adversely affect
the Company's business, financial condition and results of operations. The
Company's financial performance will depend in significant part on the continued
development of new and emerging markets such as the market for single and
multiple chipset interconnect solutions. The Company is unable to predict with
any certainty any growth rate and potential size of emerging markets.
Accordingly, there can be no assurance that emerging markets targeted by the
Company will develop or that the Company's products will achieve market
acceptance in such markets. The failure of emerging markets targeted by the
Company to develop or the failure by the Company's products to achieve
acceptance in such markets could materially adversely affect the Company's
business, financial condition and results of operations.
14
<PAGE>
NEW AND EXPANDED PRODUCT LINE COULD CAUSE PROBLEMS MANAGING SUCH
GROWTH. Failure to manage expanded products in new industries such as
wireless telecommunications, internet equipment and high bandwidth
communications could materially adversely affect the business, financial
conditions and results of the operations of the Company. The Company's
ability to compete effectively and to manage future growth will depend on its
ability to implement and improve operating and financial systems on a timely
basis for all of its product lines. The Company can give no assurance it will
be able to manage its future growth effectively.
SOLE OR LIMITED SOURCES OF SUPPLY; LIMITED SUPPLY OF CRITICAL
COMPONENTS. Certain raw materials essential for the manufacture of the
Company's products are obtained from a sole supplier or a limited group of
suppliers. There are a limited number of qualified suppliers of laminate
substrates and die which are of critical importance to the production of the
Company's products. The Company has experienced material problems in
acquiring sufficient quantities of die during the last quarter, which
resulted in production shutdowns. This inadequate supply has had a material
adverse impact on the ability to produce and deliver products. In the
manufacturing process, the Company may utilize consigned materials supplied
by certain of its customers. The Company's reliance on sole or a limited
group of suppliers and certain customers for consigned materials involves
several risks, including a potential inability to obtain an adequate supply
of required materials and reduced control over the price, timely delivery,
and quality of raw materials. There can be no assurance that problems with
respect to yield and quality of such materials and timeliness of deliveries
will not occur. Disruption or termination of these sources could delay
shipments of the Company's products and could have a material adverse effect
on the Company's business, financial condition and operating results. Such
delays could also damage relationships with current and prospective
customers, including customers that supply consigned materials.
HIGHLY COMPETITIVE INDUSTRY; SIGNIFICANT PRICE COMPETITION. The
electronic interconnection technology industry is intensely competitive. The
Company experiences intense competition worldwide from a number of
manufacturers, including MaxtekComponents Corporation, Natel Engineering,
VLSI Packaging, Raytheon Electronic Systems, and HEI Inc. The Company faces
competition from certain of its customers that have the internal capability
to produce products competitive with the Company's products and may face
competition from new market entrants in the future. In addition, corporations
with which the Company has agreements are conducting independent research and
development efforts in areas which are or may be competitive with the
Company. The Company expects its competitors to continue to improve the
performance of their current products and to introduce new products or new
technologies that provide improved performance characteristics. New product
introductions by the Company's competitors could cause a decline in sales or
loss of market acceptance of the Company's existing products which could
materially adversely affect the Company's business, financial condition and
results of operations.
15
<PAGE>
DEPENDENCE ON KEY PERSONNEL. The Company's financial performance
depends in part upon its ability to attract and retain qualified management,
technical, and sales and support personnel for its operations. Competition
for such personnel is intense, and there can be no assurance that the Company
will be successful in attracting or retaining such personnel. The loss of any
key employee, the failure of any key employee to perform in his current
position or the Company's inability to attract and retain skilled employees,
as needed, could materially adversely affect the Company's business,
financial condition and results of operations.
INTELLECTUAL PROPERTY MATTERS. Although the Company attempts to
protect its intellectual property rights through patents, trade secrets and
other measures, the Company believes its financial performance will depend
more upon the innovation, technological expertise, manufacturing efficiency
and marketing and sales abilities of its employees. There can be no assurance
that others will not independently develop similar proprietary information
and techniques or gain access to the Company's intellectual property rights
or disclose such technology, or that the Company can meaningfully protect its
intellectual property rights. There can be no assurance that any patent owned
by the Company will not be invalidated, circumvented or challenged, that the
rights granted thereunder will provide competitive advantages to the Company
or that any of the Company's pending or future patent applications will be
issued with the scope of claims sought by the Company, if at all. There can
be no assurance that others will not develop similar products, duplicate the
Company's products or design around the patents owned by the Company, or that
third parties will not assert intellectual property infringement claims
against the Company. Furthermore, there can be no assurance that foreign
intellectual property laws will protect the Company's intellectual property
rights.
ENVIRONMENTAL REGULATIONS. The Company is subject to a variety of
local, state, federal and foreign governmental regulations relating to the
storage, discharge, handling, emission, generation, manufacture and disposal
of toxic or other hazardous substances used to manufacture the Company's
products. The Company believes it is currently in compliance in all material
respects with such regulations and has obtained all necessary environmental
permits to conduct its business. Nevertheless, failure to comply with current
or future regulations could result in the imposition of substantial fines
against the Company, suspension of production, alteration of the Company's
manufacturing processes or cessation of operations. Compliance with such
regulations could require the Company to acquire expensive remediation
equipment or to incur substantial expenses. Any failure by the Company to
control the use, disposal, removal
16
<PAGE>
or storage of, or adequately restrict the discharge of, or assist in the cleanup
of, hazardous or toxic substances, could subject the Company to liabilities,
including joint and several liability under certain statutes. The imposition of
such liabilities could materially adversely affect the Company's business,
financial condition or results of operations. The Company has been notified by
the United States Environmental Protection Agency that it considers the Company
to be a potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986. See "Legal Proceedings."
NASDAQ NATIONAL MARKET LISTING REQUIREMENTS. The Company was
delisted from the Nasdaq National Market on March 13, 1997, as of which date
the Company's Common Stock began trading on the OTC Bulletin Board. The
Company may in the future be subject to continuing requirements to be listed
on the OTC Bulletin Board. There can be no assurance that the Company could
continue to meet such requirements. The price and liquidity of the Company's
common stock may be materially adversely affected if the Company is unable to
meet such requirements in the future.
DISCLOSURES RELATING TO LOW PRICED STOCKS; RESTRICTIONS ON RESALE OF
LOW PRICE STOCKS AND ON BROKER-DEAL SALE; POSSIBLE ADVERSE EFFECT OF "PENNY
STOCK" RULES ON LIQUIDITY FOR THE COMPANY'S SECURITIES. Since the Company's
securities were delisted from the NASDAQ SmallCap Market and the Company has
net tangible assets of less than $2,000,000, transactions in the Company's
securities are subject to Rule 15g-9 under the Exchange Act, which imposes
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and "accredited
investors" (generally, individuals with a net worth in excess of $1,000,000
or annual incomes exceeding $200,000 or $300,000 together with their
spouses). For transactions covered by this Rule, a broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to the sale.
Consequently, this Rule may adversely affect the ability of broker-dealers to
sell the Company's securities, and may affect the ability of purchasers of
the Company's stock to sell their stock.
The Commission has adopted regulations which generally define a "penny
stock" to be any non-NASDAQ equity security of a small company that has a market
price (as therein defined) less than $5.00 per share, or with an exercise price
of less than $5.00 per share subject to certain exceptions, and which is not
traded on any exchange or quoted on NASDAQ. For any transaction by
broker-dealers involving a penny stock (unless exempt), the rules require
delivery, prior to a transaction in a penny stock, of a risk disclosure document
relating to the penny stock market. Disclosure is also required to be made about
compensation payable to both the broker-dealer and the registered representative
and current quotations for the securities. Finally, monthly statements are
required to be sent disclosing recent price information for the penny stock held
in an account and information on the limited market in penny stocks. These
requirements may discourage prospective investors from purchasing the Company's
stock.
17
<PAGE>
VOLATILITY OF STOCK PRICE. The stock market in general has recently
experienced extreme price and volume fluctuations, that have affected the
market prices of technology companies. The common stock of the Company has
experienced significant price fluctuations since the beginning of 2000. Such
fluctuations have often been unrelated to or disproportionately impacted by
the operating performance of such companies. Factors such as actual or
anticipated operating results, announcements of technological innovations,
new products or new contracts by the Company, its competitors or their
customers, or events affecting other companies in the electronics, wireless
communications, internet, or high bandwidth communications industries, and
general market conditions may have a significant adverse effect on the market
price of the common stock of the Company.
ITEM 3 - QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK
NONE
18
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In May 1995, the United States Environmental Protection Agency ("EPA")
issues written notice to all known generators of hazardous waste shipped to a
Whittier California treatment facility. The EPAS notice indicated that these
generators (including the Company) were potentially the responsible parties
under the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986
("CERCLA"). The notice requires all of the generators of this waste to take
immediate actions to contain and prevent any further release of hazardous
substances at this site. In response to the EPA notice, the Company and
approximately 100 of the other named generators provided the necessary funding
to effect the removal and destruction of the hazardous wastes stored at this
site. At present, the Company believes its percentage of responsibility for this
site is less than one half of one percent; and that percentage is expected to
decrease substantially as additional generators are determined. In addition, the
Company along with other generators have provided certain funding to test the
soil and ground-water at this site, which testing is currently ongoing. Although
the cost incurred by the Company to date of removing and destroying the
hazardous waste stored at this facility was not significant, this effort does
not address the cleanup of potential soil and/or ground-water contamination
present at this site. Management is unable to estimate the possible cost of this
suit at this time, as the cost of clean up has not been determined. There can be
no assurance, therefore, that the costs and expenses associated with this action
will not increase in the future to a level that would have a material adverse
effect upon the Company's business, financial condition, results of operations
or cash flows.
Two of the Company's former consultants and directors, Lewis Solomon and
Gary Stein ("Plaintiffs"), filed a lawsuit on December 18, 1998 in the state of
New York against the Company and its major customer, Schlumberger. The former
consultants' services were terminated in July 1998. Mr. Solomon resigned from
the Board of Directors in August 1998. Mr. Stein resigned in December of the
same year. Since the filing of this lawsuit, the Company was successful in
causing it to be transferred to San Diego, California, which the Company
believes will make the Company's defense of this case more convenient and less
expensive. In the complaint, Plaintiffs have charged that the Company failed to
pay them for alleged consulting services, expense reimbursements and other forms
of compensation aggregating $101,250. Further, Plaintiffs allege they were
wrongfully terminated as consultants and seek damages to be determined at trial.
The Company is currently unable to quantify an amount, if any, that may be
payable should the plaintiffs prevail. The Company believes that Plaintiffs'
claims are without merit and will actively and vigorously oppose these
allegations. In addition, the Company has made substantial counterclaims against
plaintiffs for damages of $829,020, attorney's fees and additional damages to be
proven at trial. In the counterclaim, the Company alleged that (a) Mr. Solomon
and Mr. Stein, as directors, voted to approve an agreement between themselves
and the Company which, in addition to director fees already being paid to Mr.
Solomon and Mr. Stein, compensated them as consultants; (b) the agreement in
question was not approved by a majority of disinterested directors in accordance
with California Corporations Code 310 (a) ("Section 310") ; and (c) the
agreement in question was not signed by a Company
19
<PAGE>
officer with requisite authority to approve such an agreement. In addition,
the Company's counterclaim alleges that in approving the agreement in
question, Mr. Solomon and Mr. Stein breached their fiduciary duties and did
not provide any services of material benefit to the Company. And finally, the
Company alleges in its counterclaim that Mr. Solomon and Mr. Stein, as
directors, voted to grant themselves various stock options in violation of
Section 310. A court-supervised settlement conference was held in this case
in November 1999. On November 14, 2000 the Company was informed that it had
won its summary judgment motion against Mr. Stein and Mr. Solomon. The case
is now limited to approximately $70,000 in potential damages under the
consulting agreement. The Company will continue in good faith to contest this
lawsuit, which appears likely to go to trial sometime in 2001.
On October 18, 2000 MeltroniX, Inc. was notified by the United States
Bankruptcy Court that Lucien A. Morin, II, as Chapter 7 Trustee of H. J. Meyers
& Co., Inc. was seeking 1,000,000 common stock purchase warrants with a term of
five years from November 19, 1997, an exercise price of $1.00 per share, and has
certain registration rights. The Company has responded that H. J. Meyers & Co.
failed to fulfill the contract which was cancelled in August 1998 and no
warrants are due.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
In July 2000, the Company issued 342,333 shares of restricted common
stock at a price of $1.50 per share to accredited investors for a
total of approximately $500,000. In addition, the investors were
granted warrants to purchase a total of 171,175 shares of common
stock with an exercise price $1.50 per share. The shares were issued
in reliance on the exemptions provided by Section 4(2) and Regulation D
of the Securities Act of 1933, as amended.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's annual meeting of stockholders was held on July 26, 2000
at the MeltroniX, Inc. corporate offices. Stockholders of record at the
close of business June 8, 2000 were entitled to notice of and to vote
in person or by proxy at the annual meeting. At the date of record
there were 11,535,668 shares of common stock outstanding each entitled
to one vote per share and 9,362,777 shares of preferred stock entitled
to two votes per share. The matters presented for vote received the
required votes for approval and had the following total, for, against
and abstained as noted below.
1. To elect directors for the ensuing year, to serve until the next Annual
Meeting of Stockholders and until the successors are elected and have
qualified:
<TABLE>
<CAPTION>
Total Shares For Withheld Authority
Voted % Votes % Votes %
<S> <C> <C> <C> <C> <C> <C>
Andrew K. Wrobel 15,804,129 52.2% 15,796,659 52.2% - 0.0%
Abigail A. Barrow 15,804,129 52.2% 15,796,659 52.2% - 0.0%
Anthony J. A. Bryan 15,804,129 52.2% 15,796,659 52.2% - 0.0%
Frank Howland 15,804,129 52.2% 15,796,659 52.2% - 0.0%
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Lin Hong Wong 15,804,129 52.2% 15,796,659 52.2% - 0.0%
Waldemar Heeb 15,804,129 52.2% 15,796,659 52.2% - 0.0%
James T. Waring, Esq. 15,804,129 52.2% 15,796,659 52.2% - 0.0%
</TABLE>
20
<PAGE>
2. BDO Seidman, LLP ("BDO") was appointed as independent accountants of the
Company for the fiscal year ended December 31, 2000 with a vote of
15,798,808 for ratification of appointment.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Reports on Form 8-K.
None.
The Exhibits filed as part of this report are listed below.
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
<TABLE>
<S> <C>
MELTRONIX, INC.
(Registrant)
Date: November 19, 2000 By: /s/ Andrew K. Wrobel
---------------------- ---------------------------------------------------
Andrew K. Wrobel
Chairman of the Board of Directors of the Company
President and Chief Executive Officer, Director
Date: November 19, 2000 By: /s/ Randal D. Siville
---------------------- ---------------------------------------------------
Randal D. Siville
Vice President of Finance,
Chief Financial Officer and Secretary
(Principal Financial and Accounting Officer)
</TABLE>
22
