SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C.
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED: DECEMBERMARCH 31, 20002001 COMMISSION FILE NO. 0-4076
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EXOTECH INCORPORATED
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(Exact name of Registrant as Specified in Charter)
State or Jurisdiction of
Incorporation or Organization:STATE OR JURISDICTION OF
INCORPORATION OR ORGANIZATION: DELAWARE
IRS Identification No:IDENTIFICATION NO: 54-0700888
Address of Principal Office:ADDRESS OF PRINCIPAL OFFICE: 8502 Dakota Drive
Gaithersburg,DAKOTA DRIVE
GAITHERSBURG, MD. 20877
Registrant's Telephone Number:REGISTRANT'S TELEPHONE NUMBER: (301) 948-3060
Indicate by checkmark whether the RegistrantINDICATE BY CHECKMARK WHETHER THE REGISTRANT (1) has filed all reports required
to be filed by SectionHAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 orOR 15(d) of the Securities Exchange Act ofOF THE SECURITIES EXCHANGE ACT OF 1934 during
the precedingDURING
THE PRECEDING 12 months (or for such shorter period that the Registrant was
required to file such reports)MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS
REQUIRED TO FILE SUCH REPORTS), andAND (2) has been subject to such filing
requirement for the pastHAS BEEN SUBJECT TO SUCH FILING
REQUIREMENT FOR THE PAST 90 days.
YesDAYS.
YES [X] NoNO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this Report.INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT.
CLASS: COMMON STOCK, PAR VALUE $0.10
-----------------------------
OUTSTANDING AT
DECEMBERMARCH 31, 2000:2001 942,387
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EXOTECH INCORPORATED
INDEX
PAGE
PART I FINANCIAL INFORMATIONINFORMATION.......................................................PAGE NO.
CONSOLIDATED CONDENSED BALANCE SHEET
DECEMBERMarch 31, 20002001 AND JUNE 30, 2000...............................22000.............................................. 2
CONSOLIDATED CONDENSED STATEMENT OF
OPERATIONS - SIXNINE MONTHS ENDED
DECEMBERMARCH 31, 20002001 AND 1999........................................32000....................................................... 3
STATEMENT OF CASH FLOWS FOR SIXNINE
MONTHS ENDED DECEMBERMARCH 31, 20002001 AND 1999...........................42000.......................................... 4
NOTES TO CONSOLIDATED CONDENSED
FINANCIAL STATEMENTS..............................................5STATEMENTS.......................................................... 5
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF CONSOLIDATED CONDENSED STATEMENT
OF OPERATIONS.....................................................6OPERATIONS................................................................. 6
PART II OTHER INFORMATION
OTHER FINANCIAL INFORMATION.......................................8
SIGNATURES........................................................9INFORMATION................................................... 8
SIGNATURES.................................................................... 9
EXOTECH INCORPORATED
CONSOLIDATED BALANCE SHEET
ASSETS
ASSETS
DECEMBERMARCH 31, JUNE 30,
2001 2000
2000
--------------- --------------------------- ------------
(Unaudited)
CURRENT ASSETS
Accts. Receivable, Net $ 13,5581,180 $ 12,633
Inventories
Work in Process 271,206267,708 267,217
Raw Materials 32,625 32,625
Finished Goods 14,000 14,000
Cash and Other Current Assets 1,5622,673 3,861
-------- ------------------- -----------
Total Current Assets $332,951 $330,336$ 318,186 $ 330,336
PROPERTY, PLANT AND EQUIPMENT, NET 1,9811,839 2,265
OTHER NON CURRENT ASSETS 4.080 4,080
4,080
-------- ------------------- -----------
TOTAL ASSETS $339,012$324,105 $336,681
======== =================== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses $ 18,7927,352 $ 13,053
Other Current Liabilities 379,874385,800 396,267
Notes Payable 400,918399,348 403,223
---------- --------------------- -----------
Total Current Liabilities $799,584 $812,543$ 792,500 $ 812,543
SHAREHOLDERS EQUITY
Common Stock, Par Value $.10 per share;
1,500,000 shares authorized; 970,135
issued; 942,387 outstanding 97,014 97,014
Paid-in-Surplus 1,169,645 1,169,645
Deficit (1,614,811)(1,622,634) (1,630,101)
Treasury Stock (27,748 shares) (112,420) (112,420)
---------- ---------------------- ------------
Total Shareholders' Equity (460,572)(468,395) (475,862)
TOTAL LIABILITIES & SHAREHOLDERS'
EQUITY $ 339,012324,105 $ 336,681
========== ===================== ===========
See accompanying Notes to Consolidated Condensed Financial Statements.
2
EXOTECH INCORPORATED
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
2001 2000
1999
----------------------- ------------------------------------------------------- ------------------------------
3 Mos. 69 Mos. 3 Mos. 69 Mos.
----------- ENDED ----------- ----------- ENDED -----------
12/------------
3/31 12/3/31 12/3/31 12/3/31
----- ----- ----- ----------- ------ ------ ------
REVENUE
Contract Sales 42,776 108,893 156,791 363,872$10,051 $118,944 $42,073 $405,945
EXPENSES
Direct Labor 270 2113 95 397974 3,087 1,673 2,070
Overhead 2,241 9,373 2,844 5,6733,719 13,092 5,233 10,906
Materials 1,398-- 2,000 (220) 10,700852 11,552
Other Direct Costs 4,043 4,924-- 3,351 100 100
Travel -- 1,573 -- --
General & Administrative 1,822 3,841 662 2,5342,640 6,481 1,750 4,284
Inventory Costs 43,272 73,491 135,599 290,813
------ ------- ------- -------17,019 90,510 28,170 318,983
--------- -------- -------- ---------
Cost of Contract Services 53,046 95,742 138,980 310,11724,352 120,094 37,778 347,895
Operating Income (Loss) (10,270) 13,151 17,811 53,755
Other(14,301) (1,150) 4,295 58,050
Miscellaneous Income (Expense) 17,867 17,86914,191 32,060 585 585
Research and Development -- -- -- --
Interest & Other (7,860) (15,730) (7,784) (15,568)(7,714) (23,444) (7,576) (23,144)
------- -------- ------- ------- ---------------
NET INCOME BEFORE
TAXES (263) 15,290 10,027 38,187(7,824) 7,466 (2,696) 35,491
State Income Tax
Provision -- -- -- --
------- -------- ------- ------- ---------------
NET INCOME (LOSS) (263) 15,290 10,027 38,187(7,824) 7,466 (2,696) 35,491
Weighted Average Number of
Common Shares
Outstanding 942,387 942,387 942,387 942,387
EARNINGS (LOSS) PER
COMMON SHARE (.00) .016 .01 .04(0.01) 0.01 (0.00) 0.04
DIVIDENDS PER
COMMON SHARE None None None None
See accompanying Notes to Consolidated Condensed Financial Statements. These
statements have been prepared from the books of account without audit.
3
EXOTECH INCORPORATED AND SUBSIDIARY
STATEMENT OF CASH FLOWS FOR
SIXNINE MONTHS ENDED DECEMBERMARCH 31,
2001 2000
1999
---- ---------- ------
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Income (Loss) 15,290 38,1877,466 35,491
Add: Non cash Income Determinants
Depreciation and Amortization 284 769427 988
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable (925) 30,11811,453 64,649
(Increase) Decrease in Prepaid Expense 1296Expenses 1,737 600
(Increase) Decrease in Inventory (3,989) 73,672(491) 42,669
Increase (Decrease) in Accts. Payable 5,739 (1,859)(5,701) (11,275)
Increase (Decrease) in Payroll/Emp.Employee Benefits (31,961) (38,499)(34,250) (50,504)
Increase (Decrease) in Accrued Interest 15,568 15,56923,183 23,268
Increase (Decrease) in Progress Payments (78,000)
------- -------600 (80,900)
-------- ---------
Cash PROVIDED BY or (USED FOR) Operating Transactions 1,302 40,5574,424 24,986
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes -- --
Payments on Notes (2305) (13,000)
------- -------(3,875) (13,849)
-------- ---------
Cash PROVIDED BY or (USED FOR) Financing Transactions (2305) (13,000)(3,875) (13,849)
CASH FLOWS FROM INVESTING TRANSACTIONS:
Purchase of Equipment -- (1149)(1,149)
Deposits -- (201)
------- -------(114)
-------- ---------
Cash PROVIDED BY or (USED FOR) Investing Transactions -- (1,350)0 (1,263)
INCREASE (DECREASE) IN CASH (1,003) 26,207549 9,874
CASH BALANCE - BEGINNING 1,921 8,868
------- --------------- ---------
CASH BALANCE - ENDING 918 35,075
======= =======$ 2,470 $ 18,742
======== =========
4
EXOTECH INCORPORATED
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
NOTE 1.
In the opinion of Management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
DecemberMarch 31, 20002001 and June 30, 2000 and the results of operations and changes in
financial position for the sixnine months ended DecemberMarch 31, 20002001 and 19992000 of Exotech
Incorporated and its inactive wholly-owned consolidated subsidiary, Exotech
Research & Analysis, Inc. There are no significant intercompany transactions.
NOTE 2.
Per share computations have been based on the weighted average shares
outstanding of 942,387 for the sixnine months ended DecemberMarch 31, 20002001 and 1999.2000.
NOTE 3.
Notes Payable at DecemberMarch 31, 20002001 consist of four demand notes of $100,000, $8,000
and $47,000, payable with interest at 8.5% per annum to three of the Company's
former directors. In addition, one demand note of $245,918$244,348 is payable with
interest at 8.5% per annum to one officer/employee.
Periodically,NOTE 4.
Inventory cost shown in the Company has obtained producer loans from Spiral Biotech,
Inc.cost of sales, represents the cost of production of
goods sold that are secured by inventory instruments. At December 31, 2000, there
was no outstanding Producer Loan.were incurred in the prior fiscal year.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
The following is Management's discussion and analysis of certain significant
factors which have affected the Company's earnings during the periods included
in the accompanying consolidated condensed statement of operations.
A summary of the period to period changes in the principal items included in the
consolidated statement of operations is shown below:
---------------------------------------------------------------------- COMPARISON OF -----------------------------------------------------------------------------
THREE MONTHS THREE MONTHS SIXNINE MONTHS
---------------- ---------------- ---------------------
Dec 31 Sept 30 Dec----------------------- ----------------------- ------------------------
Mar 31 Dec 31 DecMar 31 DecMar 31 Mar 31 Mar 31
2001 2000 2001 2000 2001 2000 1999 2000 1999
Net Sales 10,051 42,776 66,117 42,776 156,791 108,893 363,87210,051 42,073 118,944 405,945
Direct CostCosts & Overhead 4,693 7,952 10,458 7,952 2,719 18,410 16,7704,693 7,858 23,103 24,628
G&A Expense 2,640 1,822 2,019 1,822 662 3,841 2,5342,640 1,750 6,481 4,284
Inventory Cost 17,019 43,272 30,219 43,272 135,599 73,491 290,813
------ ------ ------ ------- ------- -------17,019 28,170 90,510 318,983
--------- -------- --------- -------- -------- ---------
Cost of Sales 24,352 53,046 42,696 53,046 138,980 95,742 310,11724,352 37,778 120,094 347,895
Interest & Other Net 10,009 (7,968) 10,009 (7,784) 2,139 (15,568)7,714 7,860 7,714 7,576 23,444 23,144
6
I. CHANGE IN FINANCIAL POSITION IN THE THREENINE MONTHS ENDED DECEMBERMARCH 31, 2000.2001.
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In the threenine months period ended DecemberMarch 31, 2000,2001, a reduction of the
working capital deficit of $7,893 resulted from a net lossprofit from
operations of $263
resulted$7,466 and non fund depreciation charges of $426. The
production of Autoplate instruments under a fixed price contract
initiated in October 1998 was completed in January 2000. The Company
has restructured its operations to perform an anticipated increase in
instrument maintenance, repair and technical support services for
Spiral Biotech, Inc., an Advanced Instruments company. In the quarter
ended March 31, 2001, there were no sales of $122 in the deficitfour-channel Radiometers,
Model 100BX, from an inventory of working capital. To
counter the loss of profitability, reductions in force continued with
the resignation of two more employees. The staff now totals two
persons.
Current liabilities were reduced by Board of Directors resolution to
eliminate the accrued bonus accounts representing unused annual
vacation accrued in excess of the allowed limit established in the
company's personnel policies. The employees affected by this change
are serving as directors and approved of this adjustment. In an effort
to further reduce costs, permission was obtained from the landlord,
McShea Management Inc, to sublet about one-half of the company's
leased space. A sublease was arranged effective January 1, 2001
through the end of the company's lease that will pay about sixty
percent of the rental and utilities expense.24 units being marketed for immediate
sales.
II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND SIX MONTHNINE MONTHS PERIOD
AND THE SAME QUARTER AND SIXNINE MONTHS PERIOD LAST YEAR.
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Revenue for the quarter ended March 31, 2001, was $10,051 lower by
$114,015$32,022 compared to the same period in 1999. An operating2000. Operating loss of $10,270 resultedfor the
quarter was $14,301 compared to a$4,295 profit of $17,811 in the prior year. AcrossThe
result was a net loss of $7,824 in the board reductionsmost recent quarter compared to
a net loss of $2,696 in costs have beenthe same quarter in 2000. In the earlier
period, the deliveries of instruments under a large-production contract
was ended, while in the recent quarter a transition was being
implemented to stemreduce operating cost to the losses resultinglowest practicable level
commensurate with seeking revenue from drastically reduced revenue.sales of radiometers and laser
scanners, including services related to those instruments.
For the sixnine months period ended DecemberMarch 31, 2000,2001, revenue of $108,893$118,944
was lower by $254,979$287,001 compared to the same period in 1999.2000. The cost of
sales in the recent period was reduced by about $214,000 to achieve an operating profit for
the period of $13,151$120,094 compared to $53,755$347,895 in the prior year. An
inventory2000.
The result was operating income of 25 radiometers was completed$58,050 and net profit of $35,491 in
the period withended March 31, 2000 compared to $1,150 operating loss and
$7,466 net profit in 2001. These changes reflect the saleimpact of one unit prior to December 31. Requests for quotations are being
received in growing numbers as is customary as the spring season
approachesmajor
changes in the Northern Hemisphere.business strategy of a principal customer whose business
had accounted for up to 80 percent of total revenue in recent years.
Management is anticipatingpursuing improved sales of thesethe company's inventory of
instruments in response to increased
advertising on the web site and in printed catalogs.related calibration and maintenance services.
7
PART II. OTHER FINANCIAL INFORMATION
ITEM 5.
As in the past, a shortage of working capital continues to be a significant
problem, limiting efforts to develop new business to the fullest extent
possible, as well as causing occasional delays of 30 days in payments to
suppliers of materials and services. In the most recent nine months period, no
accounts payable were more than 30 days old. Management also is continuing to
pursue opportunities to affiliate with other companies to increase marketing and
sales of its products and develop new products from Exotech's proprietary
technology. In the opinion of Management, the Company should be in a position to
sustain operations at least until such time as the results of current contracts
and negotiations for new business is determinable. Ultimate realization of the
carrying value of prepaid expenses and advances, property and equipment, and
miscellaneous other assets shown in the accompanying balance sheet depend on the
effect of the matters discussed herein.
The dollar amount of the backlog as of DecemberMarch 31, 20002001 was $19,600,$3,100, lower by
$15,396$34,900 compared to that of the prior year, and $6,268$16,575 lower than the backlog
at September 30,December 31, 2000.
ITEM 6 (B)
There were no reports filed on Form 8-K for the sixnine months ended DecemberMarch 31,
2000.2001.
8
SIGNATURESSIGNATURE
Pursuant to the requirements of the Securities Act of 1934, the Company has duly
caused this Report to be signed on its behalf by the undersigned thereunto duly
authorized.
EXOTECH INCORPORATED
REGISTRANT
DATE: FebruaryMAY 12, 2001
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/s/
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ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER
9