1
U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended June 30, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT
For the transition period from _______ to _________
Commission file number: 000-28112
MOTORVAC TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
STATE OF DELAWARE 33-0522018
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
1431 S. VILLAGE WAY
SANTA ANA, CALIFORNIA 92705
(Address of Principal Executive Offices)
(714) 558-4822
(Issuer's Telephone Number, Including Area Code)
N/A
----------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes [X] No [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Title Date Outstanding
Common Stock, $.01 par value June 30, 1999 4,491,437
Transitional Small Business Disclosure Format (check one);
Yes [ ] No [X]
2
Part I. Financial Information
Item I. Financial Statements
MOTORVAC TECHNOLOGIES, INC.
BALANCE SHEETS
JUNE 30, DECEMBER 31,
1999 1998
------------ ------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 1,657,053 $ 1,632,605
Accounts Receivable, net of allowance for doubtful accounts
of $78,416 (June 30, 1999) and $84,662 (December 31, 1998) 1,768,802 866,357
Inventories, net of reserve of $325,782 (June 30, 1999)
and $63,099 (December 31, 1998) 1,847,058 1,667,333
Other Current Assets - (including deposits with vendors of $145,858 at
June 30, 1999, and $196,030 at December 31, 1998) 266,073 275,245
------------ ------------
Total Current Assets 5,538,986 4,441,540
PROPERTY AND EQUIPMENT, net 330,468 242,666
INTANGIBLE ASSETS, net of accumulated amortization of
$1,353,637 (June 30, 1999) and $1,185,155 (December 31, 1998) 570,806 639,288
OTHER ASSETS 17,227 17,227
------------ ------------
$ 6,457,487 $ 5,340,721
============ ============
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts Payable and Other Current Liabilities $ 1,288,707 $ 954,567
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $.01 par value; 10,000,000 shares authorized;
4,491,437 issued and outstanding (June 30, 1999) and 4,453,918 (Dec. 31, 1998) 44,914 44,539
Additional paid-in capital 16,509,957 16,467,788
Employee Stock Loans (80,783) (78,432)
Accumulated Deficit (11,305,308) (12,047,741)
------------ ------------
Total Stockholders' Equity 5,168,780 4,386,154
------------ ------------
$ 6,457,487 $ 5,340,721
============ ============
(See Accompanying Notes to Financial Statements)
3
MOTORVAC TECHNOLOGIES, INC.
Statements of Operations
THREE MONTHS ENDED SIX MONTHS ENDED
------------------------------------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ----------- ---------- -----------
NET SALES $4,229,398 $2,494,464 $8,283,158 $5,578,079
COST OF SALES $2,553,852 1,400,782 $5,163,282 3,120,993
----------- ----------- ---------- -----------
GROSS PROFIT 1,675,546 1,093,682 3,119,876 2,457,086
OPERATING EXPENSES $ 1,235,055 1,375,509 $2,405,823 2,687,729
----------- ----------- ---------- -----------
OPERATING INCOME (LOSS) 440,491 (281,827) 714,053 (230,643)
INTEREST INCOME, NET $ 17,100 14,994 $ 28,458 31,240
----------- ----------- ---------- -----------
INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES 457,591 (266,833) 742,511 (199,403)
INCOME TAX (BENEFIT) PROVISION $ (972) 2,150 $ 78 5,650
----------- ----------- ---------- -----------
NET INCOME (LOSS) $ 458,563 $ (268,983) $ 742,433 $ (205,053)
=========== =========== ========== ===========
BASIC EARNINGS (LOSS) PER SHARE $ 0.10 $ (0.06) $ 0.17 $ (0.05)
=========== =========== ========== ===========
WEIGHTED AVERAGE SHARES USED TO CALCULATE BASIC
EARNINGS (LOSS) PER SHARE 4,491,437 4,517,918 4,478,178 4,514,918
=========== =========== ========== ===========
DILUTED EARNINGS (LOSS) PER SHARE $ 0.10 $ (0.06) $ 0.16 $ (0.05)
=========== =========== ========== ===========
WEIGHTED AVERAGE SHARES USED TO CALCULATE DILUTED
EARNINGS (LOSS) PER SHARE 4,532,909 4,517,918 4,503,389 4,514,918
=========== =========== ========== ===========
(See Accompanying Notes to Financial Statements)
4
MOTORVAC TECHNOLOGIES, INC.
Statements of Cash Flows
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 1998 1999 1998
----------- ----------- ----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (loss) $ 458,563 $ (268,983) 742,433 $ (205,053)
Adjustments to reconcile net income (loss) to net cash provided by:
used in operating activities:
Depreciation and amortization 126,797 104,352 239,396 209,029
Loss (gain) on disposal of fixed assets (15,353) 34,647
Net change in operating assets and liabilities:
Accounts receivable 683,824 859,354 (902,445) 500,457
Inventories 278,528 (599,780) (179,725) (543,607)
Other Current Assets 114,227 85,537 9,172 (474)
Accounts payable and other current liabilities (873,222) 145,617 334,140 76,398
----------- ----------- ----------- -----------
Net cash provided by operating activities 773,364 326,097 277,618 36,750
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (67,843) (28,712) (193,397) (70,125)
Purchase of Intangible Assets (99,966) (99,966)
----------- ----------- ----------- -----------
Net cash used in Investing activities (167,809) (28,712) (293,363) (70,125)
----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuances of common stock 31,544 42,544
Advances to employees for stock purchases (1,191) (12,073) (2,351) (30,003)
Net (repayment) borrowing on line of credit (650,000) (240,000) 0 85,000
----------- ----------- ----------- -----------
Net cash provided by financing activities (619,647) (252,073) 40,193 54,997
----------- ----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (14,092) 45,312 24,448 21,622
CASH AND CASH EQUIVALENTS, beginning of period 1,671,145 1,641,430 1,632,605 1,665,120
----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,657,053 $ 1,686,742 $ 1,657,053 $ 1,686,742
=========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Interest paid $ 5,672 $ 3,360 $ 9,819 $ 10,679
=========== =========== =========== ===========
Income taxes paid $ 3,850 $ 1,050 $ 7,200
=========== =========== =========== ===========
(See Accompanying Notes to Financial Statements)
5
Notes to Unaudited Financial Statements
(for the Three- and Six-Month Periods Ended June 30, 1999):
1. Basis of Presentation
The information set forth in these financial statements as of June 30,
1999 is unaudited and may be subject to normal year-end adjustments. In
the opinion of management, the unaudited financial statements reflect
all adjustments, consisting only of normal recurring adjustments,
necessary to present fairly the financial position of MotorVac
Technologies, Inc. (the "Company" or "MTI") for the period indicated.
Results of operations for the interim three- and six-month periods ended
June 30, 1999 are not necessarily indicative of the results of
operations for the full fiscal year.
Certain information normally included in footnote disclosures to the
financial statements has been condensed or omitted in accordance with
the rules and regulations of the Securities and Exchange Commission.
2. Inventories
Inventories, which include materials, supplies, labor and manufacturing
overhead, are summarized as follows:
June 30, 1999 December 31, 1998
------------- -----------------
Materials and supplies $ 1,178,835 $ 878,548
Work in process 31,903 45,731
Finished product 962,102 806,153
Reserve (325,782) (63,099)
----------- -----------
$ 1,847,058 $ 1,667,333
=========== ===========
3. Comprehensive Income
In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income," applicable to entities with other comprehensive
income. This pronouncement was effective for the year beginning January
1, 1998. The Company had no items of other comprehensive income, as
defined, for the three- or six-month periods ended June 30, 1999.
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4. Segment Information
In June 1997, the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related
Information," which requires that the Company report certain information
about operating segments. This pronouncement was effective for the year
beginning January 1, 1998.
Approximately 72% and 71% of the Company's net sales were made to one
customer during the three months ended June 30, 1999 and 1998,
respectively, and 73% and 79% for the six-month periods ending June 30,
1999 and 1998, respectively.
The Company sells its products through distributors in the domestic
(defined as U.S. and Canada) and the international marketplace. The
Company sells three types of products (percentages of sales for the six
months ended June 30, 1999 and 1998 are indicated): vehicle engine
decarbonizing machines (35% and 42%), detergent for use in the
decarbonizing machines (15% and 20%), and vehicle transmission flush
machines (47% and 34%); an additional 3% of sales is for machine parts.
The sales process is structured geographically between domestic and
international sales. All machine products are produced at, or
distributed from, the same plant. The Company's major customers
typically purchase all three product types. The Company uses information
based on products and geographic location; however, the business
activities are managed as a single segment. For the three and six months
ended June 30, 1999 and 1998, net sales by region were as follows:
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998
------------------ ------------------
North America $3,903,998 $1,790,727
South and Central America 95,518 31,623
Europe 80,486 280,226
Middle East and Africa 4,953 22,430
Asia 144,443 369,458
---------- ----------
$4,229,398 $2,494,464
========== ==========
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
1999 1998
---------------- ----------------
North America $7,714,758 $4,099,342
South and Central America 148,525 102,165
Europe 103,369 376,140
Middle East and Africa 21,213 34,846
Asia 295,293 965,586
---------- ----------
$8,283,158 $5,578,079
========== ==========
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
MotorVac Technologies, Inc. (the "Company") designs, develops,
assembles, markets and sells the MotorVac CarbonClean System for the diagnosis,
maintenance and repair of internal combustion engine fuel systems, the TRANSTECH
System for the replacement of automatic transmission fluid, and the Leakchek
System for diagnosing fluid and vapor leaks. The Company's Automotive Solutions
division markets and sells the Carbon Tune System for the rapid cleaning of
engine fuel systems, primarily for the automotive aftermarket quick service
industry, and the TRANSTECH System to National accounts. The Company markets and
sells its machines and detergents through various distribution channels, both in
the United States and Canada ("Domestic") under the trade names MotorVac,
TRANSTECH and Carbon Tune, and outside the United States and Canada
("International") under the trade name CarbonClean.
The following discussion and analysis addresses the results of the
Company's operations for the three- and six-month periods ended June 30, 1999,
as compared to the Company's results of operations for the same periods ended
June 30, 1998.
This Quarterly Report on Form 10-QSB contains certain forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and
the Company intends that such forward-looking statements be subject to the safe
harbors created thereby. The Company may experience significant fluctuations in
future operating results due to a number of factors, including, among other
things, the size and timing of customer orders, new or increased competition,
delays in new product enhancements and new product introductions, quality
control difficulties, changes in market demand, market acceptance of new
products, product returns, seasonality in product purchases by distributors and
end users, pricing trends in the automotive after-market industry in general and
in the specific markets in which the Company is active, as well as those
discussed in the Company's Annual Report on Form 10-KSB for the year ended
December 31, 1998, as filed with the Securities and Exchange Commission. Any of
these factors could cause operating results to vary significantly from prior
periods. Significant variability in orders during any period may have a material
adverse impact on the Company's cash flow or work flow, and any significant
decrease in orders could have a material adverse impact on the Company's results
of operations and financial condition. As a result, the Company believes that
period-to-period comparisons of its results of operations are not necessarily
meaningful and should not be relied upon as any indication of future
performance. Fluctuations in the Company's operating results could cause the
price of the Company's Common Stock to fluctuate substantially.
Assumptions relating to the foregoing involve judgments with respect to,
among other things, future economic, competitive and market conditions, all of
which are difficult or impossible to predict accurately, and many of which are
beyond the control of the Company. In addition, the business and operations of
the Company are subject to substantial risks which increase the uncertainty
inherent in the forward-looking statements. In light of the significant
uncertainties inherent in the forward-looking information included herein, the
inclusion of such information should not be regarded as a representation by the
Company or any other person that the objectives or plans of the Company will be
achieved.
RESULTS OF OPERATIONS
Comparison of Three Months Ended June 30, 1999 and 1998
Net Sales. Net sales for the three months ended June 30, 1999 increased
$1,734,934 (approximately 70%) to $4,229,398 from $2,494,464 for the three
months ended June 30, 1998. This sales increase was due
8
primarily to higher domestic sales of gas and TRANSTECH machines, and to sales
from the Automotive Solutions division, which had nominal revenues in 1998,
partially offset by a decrease in international sales.
For the three months ended June 30, 1999, Domestic sales were
approximately $3,148,000, International sales were approximately $380,000 and
Automotive Solutions sales were approximately $701,000. For the three months
ended June 30, 1998, Domestic sales were approximately $1,782,000, International
sales were approximately $704,000, and Automotive Solutions' sales were
approximately $8,000. International sales declined due to a slowdown in certain
international economies, primarily in the Far East region; Domestic sales
increased due to growth in TRANSTECH sales, which benefited from an updated
model which provides enhanced capability.
Cost of Sales. Cost of sales for the three months ended June 30, 1999
increased by $1,153,070 (approximately 82%) to $2,553,852 from $1,400,782 for
the three months ended June 30, 1998. The primary reason for the increase was
increased costs related to the sales increases described above; also
contributing to the increase was product mix and increased inventory reserve
costs discussed under Gross Profit.
Gross Profit. Gross profit for the three months ended June 30, 1999
increased by $581,864 to $1,675,546 from $1,093,682 for the three months ended
June 30, 1998. Gross profit, as a percentage of sales, decreased 4.2% from 43.8%
for the quarter ended June 30, 1998. The decrease in gross margin percentage was
due to a lower mix of detergent sales and higher inventory reserve costs for
obsolescence for the quarter ended June 30, 1999, compared to the comparable
period in 1998. While detergent sales increased 2% from the quarter ended June
30, 1998, they were 15% of sales in the current quarter compared to 24% of sales
in the 1998 quarter. This percentage decline was due to proportionately smaller
sales to the Company's largest customer. The Company is exploring alternate
sales strategies with this customer for detergent as well as other distribution
channels in order to achieve a higher proportion of detergent sales.
Operating Expenses. Operating expenses decreased by $140,454
(approximately 10%) from $1,375,509 for the three months ended June 30, 1998, to
$1,235,055 for the three months ended June 30, 1999. The decrease in expenses
for the current quarter primarily reflects lower advertising costs; the quarter
ended June 30, 1998 included an $84,000 expense for a diesel machine test.
Operating Income. As a result of the above, operating income for the
three months ended June 30, 1999 of $440,491 increased by $722,318 from an
operating loss of $281,827 for the three months ended June 30, 1998.
Comparison of Six Months Ended June 30, 1999 and 1998
Net Sales. Net sales for the six months ended June 30, 1999 increased
$2,705,079 (approximately 48%) to $8,283,158 from $5,578,079 for the six months
ended June 30, 1998. This sales increase was due primarily to higher domestic
sales of gas and TRANSTECH machines, and to sales from the Automotive Solutions
division, which had minimal revenues in 1998, partially offset by a decrease in
International sales.
For the six months ended June 30, 1999, Domestic sales were
approximately $6,462,000, International sales were approximately $629,000, and
Automotive Solutions' sales were approximately $1,192,000. For the six months
ended June 30, 1998, Domestic sales were approximately $4,091,000, International
sales were approximately $1,478,000, and Automotive Solutions sales were
approximately $9,000. International sales declined due to lower sales in the Far
East region; Domestic sales increased due to growth in TRANSTECH sales.
Cost of Sales. Cost of sales for the six months ended June 30, 1999
increased by $2,042,289 (approximately 65%) to $5,163,282 from $3,120,993 for
the six months ended June 30, 1998. The primary reason for the increase was
increased costs related to the sales increases and to product mix changes and
increased inventory reserve costs described above.
9
Gross Profit. Gross profit for the six months ended June 30, 1999
increased by $662,790 to $3,119,876 from $2,457,086 for the six months ended
June 30, 1998. Gross profit, as a percentage of sales, decreased 6.3% from 44.0%
for the six months ended June 30, 1998. Approximately 2.3 percentage points of
the decrease were due to an increase in sales of lower-margin products for the
six months ended June 30, 1999, compared to the six months ended June 30, 1998,
and approximately 2.3 percentage points of the decline in gross margin were due
to increased inventory reserve. Higher margin detergent sales increased 10% for
the six months ended June 30, 1999, from the same period in 1998; detergent
sales were 15% of total sales in 1999 compared to 20% of sales for the six
months ended June 30, 1998. This percentage decline was due to proportionately
smaller sales to the Company's largest customer. The Company is exploring
alternate sales strategies with this customer for detergent as well as other
distribution channels in order to achieve a higher proportion of detergent
sales.
Operating Expenses. Operating expenses decreased by $281,906
(approximately 10%) from $2,687,729 for the six months ended June 30, 1998, to
$2,405,823 for the six months ended June 30, 1999. The decrease in expenses for
the first six months of 1999 reflects cost reduction in several expense areas,
primarily sales costs and advertising.
Operating Income. As a result of the above, operating income for the six
months ended June 30, 1999 of $714,053 increased by $944,696 from an operating
loss of $230,643 for the six months ended June 30, 1998.
LIQUIDITY AND CAPITAL RESOURCES
For the Three Months Ended June 30, 1999
The Company's cash balance at June 30, 1999 was $1,657,053. Cash of
$773,364 was provided by operating activities for the three months ended June
30, 1999. Cash used for investing activities was $167,809 for purchases of fixed
and intangible assets. Cash flow used in financing activities for the quarter
was $619,647, primarily reflecting repayment on a note payable to a bank. The
net result was a decrease in cash of $14,092 from the beginning of the quarter.
Working capital as of June 30, 1999, at $4,250,279, increased by $763,306 from
the beginning of the quarter.
On August 4, 1999, the Company obtained from a bank a $1,000,000
revolving line of credit, at prime plus 1.5%, expiring August 2, 2000. The
credit availability is subject to a credit agreement which requires the Company
to maintain certain financial ratios and levels for working capital, as well as
other covenants, conditions and restrictions. Credit advances, should they be
drawn down, will be secured by receivables, inventory, equipment and other
operating assets. This line replaces a facility of $1,500,000 which was secured
by a certificate of deposit of like amount.
The Company presently expects that current cash resources and the
available capacity under the line of credit, together with cash generated from
operations, will be sufficient to meet its operating and capital requirements
for the next twelve months. There can be no assurances that additional capital
will be available to the Company on favorable terms or at all.
INFORMATION SYSTEMS AND THE YEAR 2000 ISSUE
The Company is preparing for the impact of the arrival of the Year 2000
on its business, as well as on the businesses of its customers, suppliers and
business partners. The "Year 2000 Issue" is a term used to describe the problems
created by systems that are unable to accurately interpret dates after December
31, 1999. These problems are derived predominantly from the fact that many
software programs have historically categorized the "year" in a two-digit
format. The Year 2000 issue creates potential risks for the Company with respect
to its business information system. The Company may also be exposed to risks
from third parties with
10
whom the Company interacts who fail to adequately address their own Year 2000
issues. The Company does not use any other date-sensitive system in its business
operation. None of the Company's products incorporate date-sensitive devices.
The Company has made an assessment of the ability of its primary
information systems to properly utilize dates beyond year 1999. The results of
this review indicate these systems are Year 2000 compliant, and that no material
system design or correction effort will be required.
The Company has retained an information technology consultant to perform
tests to validate Year 2000 compliance on its primary accounting and business
systems. These tests have validated compliance. The Company has also tested its
desktop computer environment and related network structure. These tests have
identified certain routine upgrades which will achieve compliance, and the
Company is proceeding to implement the upgrades. Because the accounting software
system the Company employs is so widely used, and because compliance tests have
been positive, the Company, at this time, does not anticipate any significant
problems in being compliant with respect to its systems, nor will it require
significant expenditures to effect compliance.
There can be no assurance that the Company will be completely successful
in its efforts to address Year 2000 issues. If these issues are not successfully
addressed, there could be impairment to Management information systems which
could result in lost revenue and negative impacts to profitability.
The Company has contacted its major vendors and customers to assure that
their systems are Year 2000 compliant. These parties have responded that they
all intend to be Year 2000 compliant. There is no assurance that any of these
parties will not have compliance problems. The Company has one customer that has
represented, and is expected to continue to represent, over 50% of its sales,
and has several key vendors whose source and supply may not be easily replaced.
A Year 2000 compliance problem incurred by this customer or key vendors could
have a materially adverse effect on the Company's business.
The Company is evaluating the need for certain contingency plans to
address situations that may result if the Company or any of the third parties
upon which the Company is dependent is unable to achieve Year 2000 readiness.
The Company is also evaluating the need for increasing inventory levels of key
components of its manufactured products.
STOCK REPURCHASE PROGRAM
On September 24, 1998, the Board of Directors announced approval of the
repurchase and cancellation of up to 451,492 shares of the Company's Common
Stock, which, at that time, constituted approximately 10% of the Company's
outstanding shares. New shares of Common Stock were reserved for issuance under
a stock compensation plan pursuant to which participating directors may elect to
receive shares of Common Stock of the Company in lieu of such directors' annual
retainer and meeting attendance fees, and for an employee stock purchase plan
for participating employees and officers of the Company. Stock purchases under
the repurchase program commenced October 2, 1998, and through December 31, 1998,
an aggregate of 61,000 shares of Common Stock have been repurchased for
aggregate consideration of $56,375. There were no stock purchases during the
quarter and six months ended June 30, 1999.
11
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Net proceeds from the Company's Initial Public Offering effective as of
April 25, 1996 (File No.: 333-1866-LA) totaled $5,153,474. Through June
30, 1999, such proceeds were used as follows:
Direct or indirect payments to
directors, officers, general
partners of the issuer or their
associates; to persons owning Direct or
10% or more of any class of Indirect
equity securities of the issuer Payment to
and to affiliates of the issuer. Others
(X if estimate) (X if estimate) Total
-------------------------------- --------------- ---------
Repayment of
Indebtedness 123,572 1,500,000 1,623,572
Working Capital 1,036,421 1,036,421
Repayment of Interest
on Indebtedness 836,428 836,428
Investments:
- - Short Term CD's 1,500,000 1,500,000
- - Other Cash and
Cash Equivalents 157,053 157,053
---------
Total 5,153,474
=========
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Stockholders of MotorVac Technologies, Inc. (the
"Annual Meeting") was held on May 13, 1999 in Irvine, California. The matters
voted upon at the Annual Meeting and the voting of stockholders with respect
thereto were as follows:
PROPOSAL 1 - ELECTION OF DIRECTORS
Each of the candidates listed below was duly elected to the Board of
Directors at the Annual Meeting by the tally indicated.
Candidate Votes in Favor Votes Withheld
--------- -------------- --------------
Grant Ferrier 4,052,383 14,700
Stephen L. Greaves 4,052,383 14,700
Lee W. Melody 4,052,283 14,800
Ronald J. Monark 4,052,283 14,800
Gerald C. Quinn 4,022,383 44,700
Daniel P. Whelan 4,052,383 14,700
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PROPOSAL 2 - APPROVAL OF 1998 EMPLOYEE STOCK PURCHASE PLAN
Votes For Votes Against Abstain Broker Non-Votes
--------- ------------- ------- ----------------
3,339,229 62,605 14,350 650,899
PROPOSAL 3 - APPROVAL OF 1998 STOCK COMPENSATION PLAN
Votes For Votes Against Abstain Broker Non-Votes
--------- ------------- ------- ----------------
3,325,479 80,305 10,400 650,899
PROPOSAL 4 - RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The selection of Deloitte & Touche LLP as independent auditors of the
Company for its fiscal year ending December 31, 1999 was ratified by the
tally indicated.
Votes For Votes Against Votes Abstained
--------- ------------- ---------------
4,028,683 33,400 5,000
ITEM 5. OTHER INFORMATION
Pursuant to a recent change to the Securities and Exchange Commission's
proxy rules, unless a stockholder who wishes to bring a matter before the
stockholders at the Company's 2000 annual meeting of stockholders notifies the
Company of such matter prior to February 28, 2000, management will have
discretionary authority to vote all shares for which it has proxies in
opposition to such matter.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Credit Agreement with Imperial Bank dated August 4, 1999.
10.2 Master Distributor Agreement dated as of April 1, 1999
between the Company and Global Leak Detection (U.S.A.),
Inc. (Portions of this Exhibit have been omitted, based on
a request for confidential treatment, and have been filed
with the Securities and Exchange Commission pursuant to
rule 24b-2 of the Exchange Act.)
10.3 Assembly Agreement dated as of April 1, 1999 between the
Company and Global Leak Detection (U.S.A.), Inc. (Portions
of this Exhibit have been omitted, based on a request for
confidential treatment, and have been filed with the
Securities and Exchange Commission pursuant to rule 24b-2
of the Exchange Act.)
11.1 Statement of Calculation of Basic and Diluted Net Income
Per Share.
27.1 Financial Data Schedule.
(b) No reports on Form 8-K were filed during the quarter ended June 30,
1999.
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In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MOTORVAC TECHNOLOGIES, INC.,
a Delaware corporation
By: s/ Lee W. Melody
-------------------------------------
Lee W. Melody, President and
Chief Executive Officer
Date: August 11, 1999
By: s/ David P. Nelson
-------------------------------------
David P. Nelson
Chief Financial Officer
Date: August 11, 1999
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MOTORVAC TECHNOLOGIES, INC.
EXHIBIT INDEX
10.1 Credit Agreement with Imperial Bank dated August 4, 1999.
10.2 Master Distributor Agreement dated as of April 1, 1999 between
the Company and Global Leak Detection (U.S.A.), Inc.
10.3 Assembly Agreement dated as of April 1, 1999 between the Company
and Global Leak Detection (U.S.A.), Inc.
11.1 Statement of Calculation of Basic and Diluted Net Income Per
Share.
27.1 Financial Data Schedule.