U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
| (Mark One) |
| x | QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000 |
| |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ________ TO________ |
Commission File No. 0-16176
McLAREN PERFORMANCE TECHNOLOGIES, INC.
(Exact name of small business issuer as specified in its charter)
Delaware
| | 84-1016459
|
(State or other jurisdiction of
incorporation or organization) | | (IRS Employer Identification No.) |
| | | |
| | |
32233 West Eight Mile Road,
Livonia, Michigan
| | 48152
|
| (Address of principal executive offices) | | (Zip Code) |
(248) 477-6240
(Issuer's telephone number)
(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 Exchange Act 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. Yesx Noo
Applicable only to issuers involved in bankruptcy proceedings during the preceding five years:
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court. Yeso Noo
There were 10,236,343 shares of the Registrant's common stock outstanding as of December 31, 2000.
Transitional Small Business Disclosure Format (Check one): Yeso Nox
INDEX
| | | Page |
| | | |
| PART I. FINANCIAL INFORMATION | | |
| | | |
| Item 1. Financial Statements | | |
| | | |
| | Consolidated Condensed Unaudited Balance Sheet as ofDecember 31, 2000 | | 1 |
| | | | |
| | Consolidated Condensed Unaudited Statements of Operations
for the three month periods ended December 31, 2000 and 1999 | | 2 |
| | | | |
| | Consolidated Condensed Unaudited Statements of Cash Flows
for the three month periods ended December 31, 2000 and 1999 | | 3 |
| | | | |
| | Notes to Consolidated Condensed Unaudited Financial Statements | | 4 |
| | | | |
| Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations | | 5 |
| | | |
| PART II. OTHER INFORMATION AND SIGNATURES | | |
| | | |
| | Signatures | | 6 |
McLAREN PERFORMANCE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED UNAUDITED BALANCE SHEET AS OF DECEMBER 31, 2000
| | |
Assets | | |
| | | |
Current Assets: | | |
Cash and cash equivalents | 165,702 | |
Available for sale securities | 38,072 | |
Accounts receivable, net of allowance | | |
for doubtful accounts of $15,000 | 2,549,525 | |
Prepaid expenses and other | 483,644 | |
| |
| |
Total Current Assets | 3,236,943 | |
| | | |
Property and Equipment, at cost | | |
net of accumulated depreciation | | |
and amortization | 4,386,784 | |
| | | |
Intangible Assets, net of accumulated | | |
amortization of $69,078 and $27,783 at | | |
September 30, 2000 and 1999, respectively | 761,098 | |
| |
| |
Total Other Assets | 761,098 | |
| |
| |
Total Assets | 8,384,825 | |
| |
| |
Liabilities and Stockholders' Equity | | |
| | | |
Current Liabilities: | | |
Line of credit payable | 500,000 | |
Accounts payable | 1,593,681 | |
Customer deposits | 88,476 | |
Payroll and related | 93,967 | |
Accrued liabilities | 209,395 | |
Current portion of notes payable | 1,138,681 | |
| |
| |
Total Current Liabilities | 3,624,200 | |
| | | |
Notes payable—Net of current portion | 2,471,030 | |
| | | |
Total Liabilities | 6,095,230 | |
| | | |
Stockholders' Equity: | | |
Preferred Stock, $ .001 Par Value | | |
Authorized - 10,000,000 Shares | | |
No Shares Issued or Outstanding | — | |
Common Stock, $.00001 Par Value | | |
Authorized - 20,000,000 Shares | | |
Issued and Outstanding - 9,088,517 Shares
in 1999 and 10,236,343 Shares in 2000 | 102 | |
Additional Paid-In Capital | 15,302,296 | |
Accumulated Deficit | (12,912,623 | ) |
Less: Treasury Stock at Cost | (81,907 | ) |
Accumulated Comprehensive Loss | (18,273 | ) |
| |
| |
Total Stockholders' Equity | 2,289,595 | |
| |
| |
Total Liabilities and
Stockholders' Equity | 8,384,825 | |
| |
| |
See Accompanying Notes to Consolidated Condensed Unaudited Financial Statements.
1
McLAREN PERFORMANCE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDING DECEMBER 31, 2000 AND 1999
| | | | | |
| | 2000 | | | 1999 | |
| | | | | | |
Revenues: | | | | | |
License and Royalties | 140,275 | | | 163,176 | |
Contract and Other Services | 2,849,802 | | | 2,660,628 | |
| |
| |
Total Revenues | 2,990,077 | | | 2,823,804 | |
| | | | | | |
Cost of Revenues | 1,861,855 | | | 1,724,948 | |
| |
| |
Gross Profit | 1,128,222 | | | 1,098,856 | |
| | | | | | |
Operating Expenses: | | | | | |
Research and Development | 56,343 | | | 335,328 | |
Litigation and Settlement | 179,996 | | | 146,777 | |
Selling, General and Administrative | 880,439 | | | 931,416 | |
| |
| |
| | 1,116,778 | | | 1,413,521 | |
| |
| |
Income (Loss) from Operations | 11,444 | | | (314,665 | ) |
| | | | | | |
Other Income (Expense) | | | | | |
Interest Income | 1,703 | | | 6,552 | |
Interest Expense | (89,269 | ) | | (84,043 | ) |
Other | 16,916 | | | 13,659 | |
| |
| |
| | (70,650 | ) | | (63,832 | ) |
| |
| |
Income (Loss) Before Provision | | | | | |
for Income Taxes | (59,206 | ) | | (378,497 | ) |
| | | | | | |
Provision (Credit) for Income Taxes | — | | | — | |
| |
| |
Net Income (Loss) | (59,206 | ) | | (378,497 | ) |
| |
| |
Basic Earnings (Loss) Per Share | (0.01 | ) | | (0.04 | ) |
| |
| |
Weighted Average Number of Common Shares | | | | | |
Outstanding | 10,083,452 | | | 9,088,517 | |
| |
| |
| | | | | | |
Comprehensive Income (Loss): | | | | | |
| | | | | | |
Net Income (Loss) | (59,206 | ) | | (378,497 | ) |
Unrealized Loss on Marketable Securities | 6,744 | | | (2,415 | ) |
| |
| |
Comprehensive Income (Loss) | (52,462 | ) | | (380,912 | ) |
| |
| |
See Accompanying Notes to Consolidated Condensed Unaudited Financial Statements
2
McLAREN PERFORMANCE TECHNOLOGIES, INC.
CONSOLIDATED CONDENSED UNAUDITED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDING DECEMBER 31, 2000 AND 1999
| | | | | |
| 2000 | | | 1999 | |
| | | | | | |
Cash Flows from Operating Activities: | | | | | |
Net Income (Loss) | (59,206 | ) | | (378,497 | ) |
Adjustments to reconcile Net Income (Loss) to | | | | | |
Net Cash used in operating activities: | | | | | |
Depreciation and Amortization | 164,315 | | | 147,287 | |
Loss (Gain) on Disposal of Equipment | (2,336 | ) | | — | |
Changes in Operating Assets and | | | | | |
Liabilities: | | | | | |
Accounts Receivable | 195,161 | | | (802,429 | ) |
Prepaid Expenses and Other | 23,631 | | | (151,415 | ) |
Accounts Payable | 203,246 | | | 448,364 | |
Customer Deposits | (294,314 | ) | | 100,020 | |
Payroll and Related | (164,162 | ) | | 30,305 | |
Accrued Liabilities | (61,544 | ) | | (58,098 | ) |
| |
| |
Net Cash (Used) in Operating Activities | 4,791 | | | (664,463 | ) |
| | | | | | |
Cash Flows from Investing Activities: | | | | | |
Purchases of Marketable Securities | (438 | ) | | (416 | ) |
Additions to Property and Equipment | (197,597 | ) | | (187,495 | ) |
Proceeds from Disposal of Equipment | 81,730 | | | — | |
Additions to Intangible Assets | (52,516 | ) | | — | |
| |
| |
Net Cash used in Investing Activities | (168,821 | ) | | (187,911 | ) |
| | | | | | |
Net Cash from Financing Activities: | | | | | |
Borrowing under Line of Credit | 450,000 | | | 809,000 | |
Repayments under Line of Credit | (480,000 | ) | | (400,000 | ) |
Borrowing under Notes Payable | — | | | 75,000 | |
Repayments of Loan Payable | (487,038 | ) | | (79,359 | ) |
Proceeds from Issuance of Common Stock | 391,400 | | | — | |
| |
| |
Net Cash Provided by Financing Activities | (125,638 | ) | | 404,641 | |
| |
| |
Net (Decrease) in Cash and Cash Equivalents | (289,668 | ) | | (447,733 | ) |
| | | | | | |
Cash and Cash Equivalents at Beginning | | | | | |
of Period | 455,369 | | | 739,395 | |
| |
| |
Cash and Cash Equivalents at End | | | | | |
of Period | 165,701 | | | 291,662 | |
| |
| |
Unrealized Gain (Loss) on Marketable Securities | 6,744 | | | (2,415 | ) |
| |
| |
See Accompanying Notes to Consolidated Condensed Unaudited Financial Statements.
3
McLAREN PERFORMANCE TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED CONDENSED UNAUDITED FINANCIAL STATEMENTS
Net Income (Loss) Per Share
Net income (loss) per share is based on the weighted average number of common equivalent shares outstanding. Common stock equivalents were not considered in the calculation, as their effect would be antidilutive.
Income Tax
The Company did not provide for federal income taxes due to net operating loss carryforwards.
Equity Transactions
During the first quarter of fiscal 2001, the Company sold 347,826 of its shares to a director of the Company. Net proceeds after expenses totaled $391,400.
Subsequent Events
On February 13, 2001 the Company's McLaren Engines, Inc. subsidiary renewed its line of credit with a bank. The terms remained essentially unchanged.
4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ANDRESULTS OF OPERATION
The following should be read in conjunction with the Company's Annual Report on Form 10-KSB and the attached consolidated condensed financial statements and notes of the Company.
FORWARD-LOOKING STATEMENTS
This Report contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, which are intended to be covered by the safe harbor created thereby. These statements include the plans and objectives of management for future operations. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the control of the Company. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any ofthe assumptions could be inaccurate and, therefore, there can be no assurance that the forward-looking statements included in this Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.
THREE MONTHS ENDED DECEMBER 31, 2000 VERSUS THREE MONTHS ENDED DECEMBER 31, 1999
The Company experienced a net loss of $59,206 for the three months ended December 31, 2000, compared to a net loss of $378,497 for the three months ended December 31, 1999. The primary reason for the improvement in performance was a significant decrease in the cost of operation of the Company's Santa Barbara, California facility, from $335,328 for the three months ended December 31, 1999 to $56,343 for the three months ended December 31, 2000 (this expense is classified as "Research and Development" in the Company's financial statements). This is reflective of the move of the McLaren Traction operation to the Company's Livonia, Michigan location. The Company's Selling, General and Administrative expenses declined this quarter from the same period last year, from $931,416 for the three months ended December 31, 1999 to $880,439 for the three months ended December 31, 2000.
Revenues of the Company increased slightly during the quarter to $2,990,077 from the corresponding period ending December 31, 1999 when revenues were $2,823,804. This occurred despite a slight decline in revenue from the Company's McLaren Traction division due to production slowdowns in the month of December.
Due to trial preparation and the settlement of litigation, litigation costs continued to be a major expense item for the Company in the quarter, increasing to $179,996 in the period compared to $146,777 for the same period in 1999. It is anticipated that these expenses will decrease in future periods.
It is Management's belief that the improvement exhibited in the first quarter of the 2001 fiscal year is affirmation of the success of improvement strategies in operations that have been implemented by the Company. These yielded significant improvement in the results of fiscal 2000 over fiscal 1999. Management believes that the road to success will require a continuation of this strategy of optimization and improvement and this will continue to be a major focus of the Company. Management will continue to develop the growth of core, profitable business segments to maximize revenue and asset utilization and to pursue expansion in logical and synergistic areas. This growth will be further fueled by acquisition strategies, the first of which will be the planned completion of the Dart acquisition process begun in late 2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
5
On September 9, 1998, the Company filed an action against Dana Corporation ("Dana") alleging that Dana unlawfully terminated the parties' License Agreement. On April 6, 1999, the Company filed a patent infringement action against Dana alleging that Dana infringed upon the Company's patented GERODISC technology. On December 5, 2000, the United States District Court for the Eastern District of Michigan entered an Order granting Dana's motion for summary judgment and dismissing the Company's patent infringement action. The Company continues to explore its legal options with respect to the patent infringement action. Shortly after entry of the Court's Order, the Company and Dana agreed to a settlement of the Company's breach of contract action.
On December 30, 1999, Murat Okcuoglu, a former employee of the Company, filed an action against the Company in the Superior Court of Santa Barbara, California. In his complaint, Mr. Okcuoglu alleged that pursuant to his March 1, 1991, employment agreement with the Company, he was entitled to damages based on the Company's improper commercialization of ideas he allegedly originated. The Company recently settled this case.
ITEM 2. CHANGES IN SECURITIES. None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. None.
ITEM 5. OTHER INFORMATION. None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS. The following exhibits are filed herewith electronically:
EXHIBIT 10.1 Amended Termination and Severance Agreement dated as of January 15, 2001, between the Company and Jacqueline K. Kurtz.
(b) REPORTS ON FORM 8-K. None.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | McLAREN PERFORMANCE TECHNOLOGIES, INC. |
| | | |
| Date: February 14, 2001 | | /s/ Steven Rossi
______________________________________________
By: Steven Rossi, President |
| | | |
| Date: February 14, 2001 | | /s/ Jacqueline K. Kurtz
_____________________________________________
By: Jacqueline K. Kurtz, Chief Financial Officer |
6
