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 June 30, 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 August 1, 2001.
MEGATECH CORPORATION
QUARTERLY REPORT FORM 10-Q
June 30, 2001
PART 1. FINANCIAL INFORMATION
ITEM 1. Financial Statements (Unaudited) Page
Balance Sheet - June 30, 2001 and December 31, 2000 3
Statement of Operations- for the quarter and six
months ended June 30, 2001 and June 30, 2000 4
Statement of Cash Flows- for the six months ended
June 30, 2001 and June 30, 2000 5
Notes to Financial Statements- June 30, 2001 6
ITEM 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 9
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings 9
ITEM 2. Changes in Securities and Use of Proceeds 9
ITEM 3. Defaults Upon Senior Securities 9
ITEM 4. Submission of Matters to a Vote of Security Holders 9
ITEM 5. Other Information 9
ITEM 6. Exhibits and Reports on Form 8-K 9
Signature Page 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
MEGATECH CORPORATION
BALANCE SHEET
June 30, 2001 DEC. 31, 2000
(UNAUDITED) (AUDITED)
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ASSETS
Current assets:
Cash and cash equivalents $ 22,656 $ 27,585
Accounts receivable:
Trade 239,238 332,577
Other 11,307 7,763
Inventories 246,722 243,827
Prepaid expenses 10,140 5,859
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Total current assets 530,063 617,611
Property, plant and equipment, net 82,200 75,544
Other assets 7,666 7,666
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Total Assets $ 619,929 $ 700,821
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - Trade $ 47,560 $ 95,381
Accrued Liabilities 69,174 86,921
Current portion of long-term debt 37,500 37,500
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Total current liabilities 154,234 219,802
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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 (3,603,909) (3,588,585)
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Total stockholders' equity 465,695 481,019
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Total liabilities and
stockholders' equity $ 619,929 $ 700,821
=============================
See notes to financial statements.
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MEGATECH CORPORATION
STATEMENT OF OPERATIONS (UNAUDITED)
SIX MONTHS ENDED QUARTER ENDED
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June 30, 2001 June 30, 2000 June 30, 2001 June 30, 2000
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<s> <c> <c> <c> <c>
Sales $ 845,562 $1,268,932 $ 480,539 $ 587,467
Cost of sales 363,145 685,966 191,041 311,210
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Gross profit 482,417 582,966 289,498 276,257
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Operating expenses:
Selling 389,839 404,076 201,890 199,091
General and administrative 96,536 83,803 51,153 43,179
Research and development 9,397 18,050 3,834 8,839
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Total operating expenses 495,772 505,929 256,877 251,109
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Income (loss) from operations (13,355) 77,037 32,621 25,148
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Other income (expense):
Interest income 138 1,295 52 365
Interest expense (1,917) (1,582) (1,036) (750)
Other (190) 0 0 0
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Other income (expense), net (1,969) (287) (984) (385)
-----------------------------------------------------------
Net income (loss) $ (15,324) $ 76,750 $ 31,637 $ 24,763
===========================================================
Net income (loss) per share - basic
and diluted $ (0.004) $ 0.020 $ 0.008 $ 0.006
===========================================================
Weighted average number of common 3,815,408 3,813,708 3,815,408 3,813,708
===========================================================
See notes to financial statements.
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MEGATECH CORPORATION
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED
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June 30, 2001 June 30, 2000
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<s> <c> <c>
Cash flows from operating activities:
Net income (loss) $(15,324) $ 76,750
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 9,234 9,234
Common stock issued as compensation 0 308
Changes in operating assets and liabilities:
Accounts receivable 89,795 (70,052)
Prepaid expenses (4,281) (5,259)
Inventories (2,895) 86,300
Accounts payable (47,821) 30,291
Accrued liabilities (17,746) (172,868)
--------------------------
Net cash provided (used) by operating activities 10,962 (45,296)
--------------------------
Cash flows from investing activities:
Purchases of property and equipment (15,891) (3,902)
--------------------------
Net cash provided (used) by investing activities (15,891) (3,902)
--------------------------
Cash flows from financing activities:
Principal payments on notes payable (45,000) 0
Advances on notes payable 45,000 0
--------------------------
Net cash used by financing activities 0 0
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Net increase (decrease) in cash and
cash equivalents (4,929) (49,198)
Cash & cash equivalents, beginning of period 27,585 75,857
--------------------------
Cash & cash equivalents, end of period $ 22,656 $ 26,659
==========================
See notes to financial statements.
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MEGATECH CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 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:
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Inventories consisted of the following:
June 30, 2001 Dec. 31, 2000
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<s> <c> <c>
Raw materials $140,856 $146,722
Work in process 17,368 8,993
Finished goods 88,498 88,112
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$246,722 $243,827
============================
3. MAJOR CUSTOMER INFORMATION:
- ---------------------------------
For the period ended June 30, 2001 and 2000, sales to two unrelated
sales representatives comprised 63% and 65% 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 AND SIX MONTHS ENDED JUNE 30, 2001 AND 2000
RESULTS OF OPERATIONS:
- ----------------------
Quarter Ended June 30, 2001 compared to quarter ended June 30, 2000
Sales for the quarter ended June 30, 2001 were $480,539, compared to
$587,467 for the same quarter last year. The decrease was primarily due to
a decrease in domestic sales.
Gross profit for the quarter ended June 30, 2001 was $289,498 or 60% of
sales, compared to $276,257 or 47% of sales, for the same quarter last
year. The increase is the result of lower direct labor and materials
costs.
Operating expenses for the quarter ended June 30, 2001 were $256,877 or 53%
of sales, compared to $251,109 or 43% of sales, for the same quarter last
year. The increase is due to an increase in selling and marketing costs.
The net income for the quarter ended June 30, 2001 was $31,637 compared to
net income of $24,763 for the same quarter last year. The increase is the
result of the items discussed above.
Six months Ended June 30, 2001 compared to six months ended June 30, 2000
Sales for the six months ended June 30, 2001 were $845,562, compared to
$1,268,932 for the same period last year. The decrease was due to a
decrease in international sales.
Gross profit for the six months ended June 30, 2001 was $482,417 or 57% of
sales, compared to $582,966 or 46% of sales, for the same period last year.
The increase as a percentage of sales is the result of a decrease in direct
labor and materials costs.
Operating expenses for the six months ended June 30, 2001 were $495,772 or
59% of sales, compared to $505,929 or 40% of sales, for the same period
last year. The increase as a percentage of sales is attributable to an
increase in selling and marketing costs.
The net loss for the six months ended June 30, 2001 was $15,324 compared to
net income of $76,750 for the same period last year. The decrease is the
result of the items discussed above.
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LIQUIDITY AND CAPITAL RESOURCES:
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Working capital as of June 30, 2001 was $375,828 compared to $397,809 in
working capital at December 31, 2000. The decrease is attributable to the
net loss for the year.
The company maintains a secured line of credit in the amount of $200,000.
At June 30, 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 foreseeable
cash requirements for the next twelve months.
The firm's backlog as of June 30, 2001 was approximately $340,643
compared to $371,950 for same period ended in 2000.
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.
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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)
August 1, 2001 /s/ Vahan V. Basmjian
- -------------- ------------------------------------
Date Vahan V. Basmajian
President, Treasurer
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