SECURITIES AND EXCHANGE COMMISSION
Washington, DC. 20549
FORM 10-Q
(x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2001 or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to _______________
Commission file number 0-9643
MEGATECH CORPORATION
(Exact name of registrant as specified in its charter)
Massachusetts 04-2461059
(State or other jurisdiction of (IRS. Employer
incorporation of organization) Identification No.)
555 WOBURN Street, TEWKSBURY, MA 01876
(Address of principal executive offices) (Zip Code)
(978) 937-9600
(Registrant's telephone number, including area code)
______________________________________________
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check mark 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
There were 3,815,408 shares of common stock outstanding at May 2, 2001.
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MEGATECH CORPORATION
QUARTERLY REPORT FORM 10-Q
March 31, 2001
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited) Page
Balance Sheet - March 31, 2001 and December 31, 2000 3
Statement of Operations- for the three months ended
March 31, 2001 and March 31, 2000 4
Statement of Cash Flows- for the three months ended
March 31, 2001 and March 31, 2000 5
Notes to Financial Statements- March 31, 2001 6
ITEM 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 8
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 8
ITEM 2. Changes in Securities and Use of Proceeds 8
ITEM 3. Defaults Upon Senior Securities 8
ITEM 4. Submission of Matters to a Vote of Security Holders 8
ITEM 5. Other Information 8
ITEM 6. Exhibits and Reports on Form 8-K 8
Signature Page 9
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PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEGATECH CORPORATION
BALANCE SHEET
MARCH 31, 2001 DEC. 31, 2000
(UNAUDITED) (AUDITED)
-------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 48,110 $ 27,585
Accounts receivable:
Trade 274,675 332,577
Other 11,555 7,763
Inventories 266,865 243,827
Prepaid expenses 2,274 5,859
----------------------------
Total current assets 603,479 617,611
Property, plant and equipment, net 73,817 75,544
Other assets 7,666 7,666
----------------------------
Total Assets $ 684,962 $ 700,821
============================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts Payable - trade $ 122,198 $ 95,381
Accrued Liabilities 91,207 86,921
Current portion of long-term debt 37,500 37,500
----------------------------
Total current liabilities 250,905 219,802
----------------------------
Stockholders' equity:
Common Stock, par value $.0143 per share,
5,000,000 shares authorized; 3,815,408
shares issued and outstanding, 54,560 54,560
Additional paid-in capital 4,015,044 4,015,044
Deficit (3,635,547) (3,588,585)
----------------------------
Total stockholders' equity 434,057 481,019
----------------------------
Total liabilities and stockholders' equity $ 684,962 $ 700,821
============================
See notes to financial statements.
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MEGATECH CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
QUARTER ENDED
MARCH 31, 2001 MARCH 31, 2000
--------------------------------
Sales $ 365,022 $ 681,465
Cost of sales 172,104 374,756
----------------------------
Gross profit 192,918 306,709
----------------------------
Operating expenses:
Selling 187,949 204,985
General and administrative 45,382 40,624
Research and development 5,564 9,211
----------------------------
Total operating expenses 238,895 254,820
----------------------------
Income (loss) from operations (45,977) 51,889
----------------------------
Other income (expense):
Interest income 86 930
Interest expense (881) (832)
Other income (expense) (190) 0
----------------------------
Other income (expense), net (985) 98
----------------------------
Net income (loss) $ (46,962) $ 51,987
============================
Net income (loss) per share - basic
and diluted $ (0.012) $ 0.014
============================
Weighted average number of common
shares outstanding 3,815,408 3,813,708
============================
See notes to financial statements.
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MEGATECH CORPORATION
STATEMENT OF CASH FLOWS
QUARTER ENDED
MARCH 31, 2001 MARCH 31, 2000
--------------------------------
Cash flows from operating activities:
Net income (loss) $(46,962) $ 51,987
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 4,617 4,617
Common stock issued as compensation 0 308
Changes in operating assets and liabilities:
Accounts receivable 54,110 77,789
Prepaid expenses 3,585 (6,068)
Inventories (23,038) 38,317
Accounts payable 26,817 61,795
Accrued liabilities 4,286 (191,786)
---------------------------
Net cash provided by operating activities 23,415 36,959
---------------------------
Cash flows from investing activities:
Purchases of property and equipment (2,890) (2,800)
---------------------------
Net increase in cash and cash equivalents 20,525 34,159
Cash & cash equivalents, beginning of period 27,585 75,857
---------------------------
Cash & cash equivalents, end of period $ 48,110 $ 110,016
===========================
See notes to financial statements.
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MEGATECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2001
1. BASIS OF PRESENTATION:
----------------------
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information and pursuant to the rules and regulations of
the Securities and Exchange Commission. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary
for a fair presentation of the financial position, results of
operations and cash flows have been included. Operating results for
interim periods are not necessarily indicative of the operating
results that may be expected for the full year. For further
information, refer to the financial statements and footnotes thereto
included in the Company's annual report on Form 10-K.
2. INVENTORIES:
------------
Inventories consisted of the following:
MARCH 31, 2001 DEC. 31, 2000
--------------------------------
Raw materials $134,535 $146,722
Work in process 38,385 8,993
Finished goods 93,945 88,112
--------------------------
$266,865 $243,827
==========================
3. MAJOR CUSTOMER INFORMATION:
---------------------------
For the period ended March 31, 2001 and 2000, sales to three and one
unrelated sales representatives comprised 75% and 61% of total sales,
respectively.
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ITEM 2.
MEGATECH CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR QUARTER ENDED MARCH 31, 2001 AND 2000
RESULTS OF OPERATIONS:
- ----------------------
Quarter Ended March 31, 2001 compared to quarter ended March 31, 2000
Sales for the quarter ended March 31, 2001 were $365,022, compared to
$681,465 for the same quarter last year. The decrease was primarily due to
a decrease in international sales.
Gross profit for the quarter ended March 31, 2001 was $192,918 or 53% of
sales, compared to $306,709 or 45% of sales, for the same quarter last
year. The increase as a percentage of sales is the result of lower
materials and labor costs.
Operating expenses for the quarter ended March 31, 2001 were $238,895 or
65% of sales, compared to $254,820 or 37% of sales, for the same quarter
last year. The increase as a percentage of sales is attributable to an
increase in commission expense and decreased sales.
The net loss for the quarter ended March 31, 2001 was $46,962 compared to a
net income of $51,987 for the same quarter last year. The decrease is the
result of the items discussed above.
LIQUIDITY AND CAPITAL RESOURCES:
- --------------------------------
Working capital as of March 31, 2001 was $352,575 compared to $397,809 in
working capital at December 31, 2000. The decrease was attributable to the
net loss for the quarter.
The company maintains a secured line of credit in the amount of $200,000.
At March 31, 2001, no borrowings were outstanding under this line. The
company believes that cash generated from operations, together with
existing sources of debt financing, will be sufficient to meet forseeable
cash requirements for the next twelve months.
The firm's backlog as of March 31, 2001 was approximately $255,155 compared
to $338,211 for the same period ended in 2000.
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MEGATECH CORPORATION
ITEM 3. QUANITATIVE AND QUALITATIVE DISCLOSURE ABOUT
MARKET RISK
Not applicable.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings: None.
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Item 2. Changes in Securities: None.
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Item 3. Defaults Upon Senior Securities: None.
- -----------------------------------------------------
Item 4. Submission of Matters to a
Vote of Security Holders: None.
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Item 5. Other Information: None.
- -----------------------------------------------------
Item 6. Exhibits and Reports on Form 8-K: None.
- -----------------------------------------------------
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SIGNATURES
----------
Pursuant to the requirement of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
MEGATECH CORPORATION
(Registrant)
May 2, 2001 /s/ Vahan V. Basmajian
- -----------------------------------------------------------------------
Date Vahan V. Basmajian
President, Treasurer
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