1
UNITED STATES
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, 2000
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: 333-35508
RX TECHNOLOGY HOLDINGS, INC.
----------------------------
(Exact name of small business issuer as specified in its charter)
Nevada 82-0498177
------ ----------
(State of other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2264 Seventh Street, Mandeville, LA 70471
-----------------------------------------
(Address of principal executive offices)
(504) 727-9412
--------------
(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.
[ ] Yes [X] No
The number of shares of common stock outstanding of each of the issuer's classes
of common stock, as of September 20, 2000 was 9,026,870.
Transitional Small Business Disclosure Format [ ] Yes [X] No
2
RX TECHNOLOGY HOLDINGS, INC. AND SUBSIDIARY
FORM 10-QSB
FOR THE QUARTER ENDED JUNE 30, 2000
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets -
June 30, 2000 (Unaudited) and December 31, 1999............................. 1
Condensed Statements of Operations -
Three and Six Months Ended June 30, 2000
and 1999 (Unaudited)....................................................... 2
Condensed Statements of Cash Flow -
Six Months Ended June 30, 2000
and 1999 (Unaudited)....................................................... 3
Condensed Statement of Changes in Stockholders'
Equity From December 31, 1999 Through
June 30, 2000 (Unaudited)................................................... 4
Notes to Condensed Financial Statements (Unaudited).................................. 5
Item 2. Management's Discussion and Analysis or
Plan of Operations
Management's Discussion and Analysis of Financial
Condition and Results of Operations......................................... 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings..................................................................... 10
Item 2. Changes in Securities ................................................................ 11
Item 3. Defaults Upon Senior Securities ...................................................... 11
Item 4. Submission of Matters to a Vote of Security Holders .................................. 11
Item 5. Other Information .................................................................... 11
Item 6. Exhibits and Reports on Form 8-K ..................................................... 12
SIGNATURES ..................................................................................... 13
3
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
June 30,
2000 December 31,
Unaudited 1999
------------ ------------
Current assets
Cash $ 136,174 $ 109,958
Accounts receivable, less allowance for doubtful
accounts of $2,500 and $2,500 694,290 286,750
Inventories 591,534 190,055
------------ ------------
Total current assets 1,421,998 586,763
Property and equipment - at cost, less accumulated depreciation and amortization 3,866,231 2,538,168
Notes receivable 376,000 --
Due from shareholder 32,474 11,341
Other assets 40,440 25,981
------------ ------------
Total assets $ 5,737,143 $ 3,162,253
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Notes payable $ 1,615,530 $ 2,268,138
Accounts payable and accrued expenses 1,931,663 669,560
Other current liabilities -- 50,000
------------ ------------
Total current liabilities 3,547,193 2,987,698
Debt obligations, less current maturities 28,660 47,846
Deferred income taxes 93,063 93,063
------------ ------------
Total liabilities 3,668,916 3,128,607
------------ ------------
Stockholders' equity
Common stock, $.001 par value, 50,000,000 shares authorized,
9,026,870 issued and outstanding 9,027 2,027
Preferred stock, $.001 par value; 1,000,000 shares authorized, no shares
issued and outstanding -- --
Additional paid in capital 4,084,046 719,727
Retained earnings deficit (2,024,846) (688,108)
------------ ------------
Total stockholders' equity 2,068,227 33,646
------------ ------------
Total liabilities and stockholders' equity $ 5,737,143 $ 3,162,253
============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
-1-
4
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
Three Months Ended June 30 Six Months Ended June 30
2000 1999 2000 1999
------------ ------------ ------------ ------------
Revenues $ 2,787,261 $ 1,962,478 $ 3,082,916 $ 2,222,877
Cost of Revenues 1,271,098 1,000,316 1,406,525 1,124,840
------------ ------------ ------------ ------------
Gross profit 1,516,163 962,162 1,676,391 1,098,037
------------ ------------ ------------ ------------
Operating expenses
Photo sales expense 1,093,170 597,378 1,475,111 694,364
General and administrative 508,648 209,636 972,287 478,160
Depreciation and amortization 183,111 118,566 325,909 237,132
------------ ------------ ------------ ------------
Total Operating Expenses 1,784,929 925,580 2,773,307 1,409,656
------------ ------------ ------------ ------------
Income (loss) from Operations (268,766) 36,582 (1,096,916) (311,619)
Other income (expense):
Interest income 13,715 601 20,548 601
Interest expense (97,449) (208,368) (260,370) (314,905)
------------ ------------ ------------ ------------
Net loss $ (352,500) $ (171,185) $ (1,336,738) $ (625,923)
============ ============ ============ ============
Basic and diluted earnings (loss) per share $ (.04) $ (.03) $ (.17) $ (.13)
============ ============ ============ ============
Shares used in the calculation of earnings per share 9,026,870 4,944,347 7,946,941 4,944,347
============ ============ ============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
-2-
5
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 2000 AND 1999
(UNAUDITED)
June 30, June 30,
2000 1999
------------ ------------
Cash flows used in operating activities $ (634,241) $ (911,021)
------------ ------------
Cash flows used in investing activities:
Acquisitions of property and equipment (1,641,935) (776,468)
------------ ------------
Cash flows from financing:
Advances on short-term notes payable 446,500 2,094,743
Repayments of debt (1,373,134) (495,813)
Advances on line-of-credit 206,000 6,658
Proceeds from issuance of common stock 3,173,026 --
Purchase of stock warrants (150,000) --
------------ ------------
Net cash flows provided by financing activities 2,302,392 1,605,588
------------ ------------
Net increase (decrease) in cash 26,216 (81,901)
Cash, beginning of period 109,958 93,697
------------ ------------
Cash, end of period $ 136,174 $ 11,796
============ ============
Supplemental cash flow disclosures
Interest paid $ 351,689 $ 306,429
============ ============
Noncash investing and financing activities
Common stock issued in exchange for advances payable $ 375,000 $ --
============ ============
Stock warrant issued for 222,733 shares of common stock $ -- $ 150,000
============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
-3-
6
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
December 31, 1999 Through June 30, 2000
(Unaudited)
Additional
Common Paid - in Retained
Stock Capital Earnings Total
------------ ------------ ------------ ------------
Balance as of December 31, 1999 $ 2,027 $ 719,727 $ (688,108) $ 33,646
Recapitalization in connection with reverse
acquisition on February 16, 2000 4,973 16,795 -- 21,768
Purchase of warrant for 222,733 shares of common
stock -- (150,000) -- (150,000)
Issued 1,830,000 shares of common stock for cash
and loans net of issue cost of 63,975 1,830 3,136,695 -- 3,138,525
Issued 196,870 shares of common stock for cash 197 344,329 -- 344,526
Stock options issued to employee - second quarter -- 16,500 -- 16,500
Net loss for six months ended June 30, 2000 -- -- (1,336,738) (1,336,738)
------------ ------------ ------------ ------------
$ 9,027 $ 4,084,046 $ (2,024,846) $ 2,068,227
============ ============ ============ ============
See accompanying notes to Condensed Consolidated Financial Statements.
-4-
7
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The condensed consolidated financial statements included
herein have been prepared by RX Technology Holdings, Inc. (the
"Company", "we" or "our"), without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission ("SEC"). Certain
information and footnote disclosures normally included in accordance
with generally accepted accounting principles have been condensed or
omitted pursuant to such rules and regulations. However, the Company
believes that the disclosures are adequate to make the information
presented not misleading. The condensed consolidated financial
statements should be read in conjunction with the financial statements
and notes thereto included in the Company's Registration Statement on
Form SB-2 and the Prospectus, dated August 8, 2000, included therein
relating to 501,493 shares of Common Stock, $.001 par value per share
("Common Stock"), underlying 501,493 Common Stock purchase warrants.
The unaudited condensed consolidated financial statements
included herein reflect, in the opinion of management, all adjustments
(consisting primarily only of normal recurring adjustments) necessary
to present fairly the results for the interim periods. The results of
operations for the six months ended June 30, 2000 are not necessarily
indicative of results to be expected for the entire year ending
December 31, 2000, due, among other reasons, to the seasonal nature of
the Company's business.
2. Summary of Significant Accounting Policies
Organization
The Company is the successor consolidated entity formed by the
merger, on February 16, 2000, of RX Technology, Inc. ("RXT") and Valley
Excavation and Trucking, Inc. ("Valley"). Valley was originally
incorporated in Nevada on September 26, 1997. RXT was incorporated in
Nevada on December 22, 1993.
Concurrent with the merger, Valley, a publicly held company
and the legally surviving parent company, changed its name to that of
the Company. For accounting purposes, the merger has been treated as a
reverse acquisition, with RXT as the acquiror, and is accounted for as
a recapitalization of RXT.
RXT consummated the reverse acquisition of Valley on February
16, 2000. RXT's stockholders were issued 5,000,000 Valley shares on a
prorata basis in exchange for 2,027,139 shares of RXT.
The accompanying consolidated balance sheet as of June 30,
2000 includes the accounts of RXT and Valley. As a reverse acquisition,
the historical operating results prior to the acquisition are those of
RXT and only include the operating results of Valley after the
acquisition. All significant intercompany balances and transactions
have been eliminated.
-5-
8
RX TECHNOLOGY HOLDINGS, INC.
AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
2. Summary of significant accounting policies (continued)
The Company designs, installs, operates and services digital
image processing equipment, which performs the electronic capture and
presentation of pictures of guests at theme parks. In most theme parks
where the Company has operations, the Company hires and manages sales
staff. The Company has operations in the United States, Argentina,
Mexico and Canada.
Earnings per Share
Basic earnings per common share is calculated by dividing net
income (loss) available to common stockholders by the average number of
common shares outstanding during the year. Diluted earnings per common
share is calculated by adjusting outstanding shares, assuming
conversion of any potentially dilutive securities, such as stock
options or warrants. Potentially dilutive securities have been excluded
from the calculation of diluted loss per share for the six months ended
June 30, 2000, as their effect would have been antidilutive.
Stock-Based Compensation
The Company accounts for stock-based employee compensation
arrangements in accordance with provisions of Accounting Principles
Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees," and complies with the disclosure provisions of SFAS No.
123, "Accounting for Stock-Based Compensation." Under APB Opinion No.
25, compensation expense for employees is based on the excess, if any,
on the date of grant, of fair value of the Company's stock over the
exercise price.
The Company accounts for equity instruments issued to
non-employees in accordance with the provisions of SFAS No. 123 and
Emerging Issues Task Force Issue No. 96-18, "Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or
in Conjunction with Selling, Goods or Services." All transactions in
which goods or services are the consideration received for the issuance
of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument
issued, whichever is more reliably measurable. The measurement date of
the fair value of the equity instrument issued is the earlier of the
date on which the counterparty's performance is complete or the date on
which it is probable that performance will occur.
3. Notes Receivable
The Company converted certain advances and receivables from
related parties to notes during March 2000. The full balance of the
notes, plus interest at 8% per annum, is due on December 31, 2000.
-6-
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
This report 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. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies is
inherently uncertain. The Company's actual results and future developments could
differ materially from those expressed in or implied by the forward-looking
statements herein. Further information concerning the Company and its business,
including factors that could materially affect the Company's results and future
developments, is included in the Company's Registration Statement on Form SB-2
and the Prospectus, dated August 8, 2000, included therein relating to 501,493
shares of Common Stock underlying 501,493 Common Stock purchase warrants.
The Company does not undertake and specifically disclaims any obligation to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
The following management's discussion and analysis of financial condition and
results of operations should be read in conjunction with the financial
statements and accompanying notes appearing herein and in the Company's
Registration Statement on Form SB-2 and the Prospectus, dated August 8, 2000,
included therein relating to 501,493 shares of Common Stock underlying 501,493
Common Stock purchase warrants.
OVERVIEW
The Company is in the business of designing, building, installing, assembling,
servicing, operating and maintaining digital imaging photo systems. These photo
systems capture digital images at theme parks and display them on video monitors
to prospective purchasers desiring to purchase photographic copies of the
images.
The Company's primary revenue source is from sales of digitally captured
photographic images at theme parks. This revenue is primarily generated at the
"thrill rides" at the theme parks, but, for 2000, also includes revenue from
sales of digital images of park guests taken at random locations in the park as
they walk around the park facilities. In addition to these retail operations,
the Company sells supplies and services at wholesale to third party photo
operators. Such sales include photographic paper on which pictures are printed,
and computer hardware and software for capturing, printing and recording the
sales of photographic images; we also receive maintenance fees for the computer
hardware and software sold.
The business of the Company is highly seasonal in nature. Sales of digital
pictures at the theme parks can only occur during the operating season of the
park. While some theme parks are open year round, the vast majority of the parks
where the Company has operations are only open during the months of May-October,
with the beginning and ending portions of the season open only on weekends. Our
wholesale business is also highly seasonal in nature as our wholesale customers'
businesses follow the same seasonal pattern as the Company's.
-7-
10
This highly seasonal nature of our operating periods creates the need for
additional financing during the months when sales are limited.
As of June 30, 2000, we provided products and services at 62 operating sites, of
which 49 are serviced as retail operations located at 19 theme parks in the
United States and 3 are in international theme parks in Argentina, Mexico and
Canada. As of June 30, 2000, we also had 13 wholesale sites to which we provided
supplies and services. Our historical number of retail operating sites for the
years 1996 through 1999 are: 1996--7; 1997--8; 1998--19; and 1999--27.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, we had no available lines of credit or sources of financing
other than credit extended by trade suppliers, which is limited. In the first
quarter of 2000, we obtained approximately $3.5 million through the sale of our
Common Stock, and in May 2000, we obtained a $200,000 increase in a previously
existing line of credit, the funds from which have already been received. On May
15, 2000, we failed to make a scheduled payment on outstanding debt causing the
debt to be placed in default. All amounts due were paid with funds from
operations on June 21, 2000, and this default was waived by the lender. In June,
2000, we reached two agreements to borrow $150,000 each at an effective interest
cost of approximately 13% with principal payments due in installments with final
payments due on December 15, 2000. In July, 2000, we drew down an additional
$278,572 under an existing loan agreement. Following the end of the second
quarter, we became delinquent in the payment of approximately $200,000 in
payroll taxes due to lack of available funds, thereby causing a default in our
existing loan agreement. The payroll taxes were subsequently paid with the
proceeds of temporary loans to us, and we are seeking a waiver of the default in
the loan agreement.
The Company does not currently generate sufficient cash flow to timely meet its
obligations, but so far has been successful in delaying payments. The Company is
currently seeking up to an additional $10 million of funding through the sale of
its Common Stock in order to meet debt service requirements, fund capital
expenses and its working capital and other cash needs. If it does not receive
additional funds, it is uncertain how long the Company will be able to continue
to fund its operations. Whether the Company will be able to obtain additional
funding cannot be assured, and the failure to do so will have a material adverse
effect on the Company.
On September 5, 2000, the Company signed a letter of intent to acquire the stock
and certain assets of ITech International Limited and affiliated entities
("ITech") for $150,000 cash, 900,000 shares of Common Stock and options to
purchase 900,000 shares of Common Stock at an exercise price of $1.75 per share.
The transaction, which is subject to the negotiation and execution of definitive
agreements, is expected to be completed in the late third or early fourth
quarter of 2000. ITech, a software oriented company in business since 1999,
designs digital imaging systems that include retail imaging workstations, photo
ID systems and real estate office and imaging software. All of ITech's systems
are designed to be Internet and e-commerce enabled.
RESULTS OF OPERATIONS
COMPARISON OF THREE MONTHS ENDED JUNE 30, 2000 TO THE THREE MONTHS ENDED JUNE
30, 1999
Net loss for the three months ended June 30, 2000 was $352,500. This is an
increase of $181,315 from the same period in 1999.
-8-
11
Gross revenues for the three months ended June 30, 2000 were $2,787,261, an
increase of $824,783 or 42% compared to $1,962,478 for the same period of 1999.
This increase is the net result of higher sales from a larger number of retail
photo sales booths in operation during the first quarter 2000 and lower
wholesale sales to third party photo operators. The increase in retail photo
sales from new sites coming into service during the three months ended June 30,
2000 was partially offset by lower sales from existing operations in service
during the comparable period in 1999. These lower sales in 2000 from sites in
service during the first three months of 1999 is due primarily to lower
attendance at the theme parks where the Company's operations are located. As
complete information on the reason for this lower attendance is not readily
available to the Company, it cannot be predicted whether this represents a trend
that will continue.
Cost of sales for retail photo operations is composed of commissions/royalties
paid to the host theme park where our photo booths are located and direct cost
of supplies including the photographic paper that our pictures are printed on
and decorative folders in which the pictures are displayed. Cost of sales for
wholesale operations includes the cost of supplies and/or services sold at
wholesale to third parties.
Second quarter 2000 cost of sales was $1,271,098, an increase of 27% from
$1,000,316 in the same period of 1999, and a 5% improvement as a percent of
revenues to 46% in 2000 from 51% in 1999.
Photo sales expenses include labor and other expenses associated with staffing
and maintaining photo booth operations. In the second quarter 2000, photo booth
operation costs were $1,093,170 compared to $597,378 in the comparable period
1999, or 83% higher than the second quarter 1999. This increase is primarily
caused by the costs associated with a larger number of booths in operation. Such
costs include an increase in labor staffing costs of approximately $190,000 and
higher travel expense of approximately $78,000. Other cost increases in the
second quarter 2000 compared to the comparable period in 1999 were: booth
repairs - $31,800; freight -$25,700; supplies - $22,800; rental facilities -
$19,300 and telephone expense - $20,200.
General and administrative costs for the second quarter 2000 were $508,648
compared with $209,636 in the second quarter 1999 resulting in a 143% increase.
Higher costs during the second quarter 2000 compared to the second quarter 1999
were primarily higher labor expense by approximately $135,600 and higher
professional fees by approximately $118,500 for accounting, consulting and legal
services. Professional fees are higher primarily due to the additional expense
the Company has incurred in connection with the listing of its Common Stock on
the OTC Bulletin Board.
Depreciation and amortization increased $64,545 in the second quarter 2000 over
the same period in 1999 due to additional operating booths being placed in
service.
Interest expense decreased $110,919 in the second quarter 2000 over the same
period in 1999 due to the recognition of $150,000 in expense in the second
quarter 1999 associated with the issuance and subsequent repurchase of a
lender's warrant issued as additional compensation for the lender's loan to RXT.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 TO THE SIX MONTHS ENDED JUNE 30,
1999
Net loss for the six months ended June 30, 2000 was $1,336,738. This is an
increase of $710,815 from the same period in 1999.
Gross revenues for the six months ended June 30, 2000 were $3,082,916, an
increase of $860,039 or 39% compared to $2,222,877 for the same period of 1999.
This increase is the net result of higher retail sales from a
-9-
12
larger number of retail photo sales booths in operation during the six months
ended June 30, 2000 and lower wholesale sales to third party photo operators.
The increase in retail photo sales from new sites coming into service during the
six months ended June 30, 2000 was partially offset by lower sales from existing
operations in service during the comparable period in 1999. These lower sales in
2000 from sites in service during the first six months of 1999 is due primarily
to lower attendance at the theme parks where the Company's operations are
located. As complete information on the reason for this lower attendance is not
readily available to the Company, it cannot be predicted whether this represents
a trend that will continue.
Cost of sales for retail photo operations is composed of commissions/royalties
paid to the host theme park where our photo booths are located and direct cost
of supplies including the photographic paper that our pictures are printed on
and decorative folders in which the pictures are displayed. Cost of sales for
wholesale operations includes the cost of supplies and/or services sold at
wholesale to third parties.
For the six months ended June 30, 2000, cost of sales was $1,406,525, an
increase of 25% from the $1,124,840 in the comparable period of 1999 and a 5%
improvement as a percent of revenues to 46% in 2000 from 51% in 1999.
Photo sales expenses include labor and other expenses associated with staffing
and maintaining photo booth operations. For the six months ended June 30, 2000,
photo booth operation costs were $1,475,111 compared with $694,364 in the
comparable period 1999 for a 112% increase. This increase is primarily caused by
the costs associated with a larger number of booths in operation in the six
months ended June 30, 2000 than the comparable period 1999 and booth start-up
expenses incurred in the first quarter 2000. Such costs include an increase in
labor staffing costs of approximately $296,700, higher travel expense of
approximately $95,300, and higher booth expense in several other categories
including: supplies - $58,100; telephone expense - $23,400; booth repairs -
$27,000; freight - $32,000; and rental facilities- $21,800.
General and administrative costs for the six months ended June 30, 2000 were
$972,287 compared with $478,160 in the comparable period 1999 resulting in a
103% increase. Cost increases for the six months ending June 30, 2000 compared
to the comparable period in 1999 were primarily higher labor expense by
approximately $75,900 and higher professional fees by approximately $257,800 for
accounting, consulting and legal services. Professional fees are higher
primarily due to the additional expense the Company has incurred in connection
with the listing of its Common Stock on the OTC Bulletin Board.
Depreciation and amortization increased $88,777 for the six months ended June
30, 2000 over the same period in 1999 due to additional operating booths being
placed in service.
Interest expense decreased $54,535 for the six months ended June 30, 2000 over
the same period in 1999 due primarily to the net effect of the recognition of
$62,500 in expense from the issuance of Common Stock in the first quarter 2000
and the recognition of $150,000 in expense associated with the issuance and
subsequent repurchase of a lender's warrant issued as additional compensation
for the lender's loan to RXT.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
-10-
13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
On August 10, 2000, the SEC declared effective the Company's Registration
Statement on Form SB-2 (Registration Number 333-35508) relating to the
issuance of 501,493 shares of Common Stock underlying 501,493 Common Stock
purchase warrants ("Warrants"). The Warrants are exercisable for shares of
the Company's Common Stock. The Warrants were distributed to shareholders
of record as of May 1, 2000 on August 18, 2000. No Warrants have been
exercised, and no proceeds from the conversion of Warrants have been
received by the Company. The offering of Common Stock pursuant to the
Warrants has not terminated. The Company is not using an underwriter in
connection with the transaction. Subsequent to the effective date of the
registration statement, no expenses have been incurred for underwriting
discounts and commissions, finders' fees or expenses paid to, or for,
underwriters. Other actual expenses incurred subsequent to the effective
date of the registration statement are: transfer agents fees - $1,902;
legal fees - $705 and printing - $1,245. All such expenses were for third
party services, and no payments were made directly, or indirectly, to
directors, officers or general partners of the Company, to persons owning
ten percent or more of the Company's securities or to affiliates of the
Company.
On May 5, 2000, the Company granted Mr. D. A. Dunbar, our Vice President
and Chief Financial Officer, options to purchase up to 130,000 shares of
our Common Stock at $1.75 per share, of which options for 30,000 shares
were immediately exercisable and 100,000 options vest and become
exercisable quarterly after the date of grant in increments of 25% per
quarter. These stock options were granted in a transaction exempt from
registration under the Securities Act of 1933, as amended, in reliance on
Section 4(2) thereof as a transaction not involving a public offering.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
On May 15, 2000, RXT failed to make a scheduled payment on an outstanding
loan causing the loan to be in default. All amounts due were paid on June
21, 2000, and this default was waived by the lender.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER INFORMATION
Not applicable.
-11-
14
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
3.0* Articles of Incorporation of Valley Excavation and Trucking,
Inc. dated September 26, 1997 (incorporated by reference to
Exhibit 3.0 to Form SB-2, registration no. 333-35508, filed
April 24, 2000).
3.1* Amended Articles of Incorporation of Valley Excavation and
Trucking, Inc. dated February 17, 2000 (incorporated by
reference to Exhibit 3.1 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
3.2* Bylaws of the Valley Excavation and Trucking, Inc. dated
September 26, 1997 (incorporated by reference to Exhibit 3.5
to Form SB-2, registration no. 333-35508, filed April 24,
2000).
4.0* Form of Warrant Agreement with Interwest Transfer Co., Inc.
(incorporated by reference to Exhibit 4.0 to Form SB-2,
registration no. 333-35508 filed April 24, 2000).
4.1* Specimen Form of Common Stock Purchase Warrant (incorporated
by reference to Exhibit 4.1 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
4.2* Specimen Form of Common Stock Certificate (incorporated by
reference to Exhibit 4.2 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
27.0 Financial Data Schedule.
* Previously filed and incorporated herein by reference.
(b) Reports on Form 8-K
(i) None.
-12-
15
SIGNATURES
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.
RX TECHNOLOGY HOLDINGS, INC.
Date: September 22, 2000 By: /s/ Donald Rex Gay
--------------------------------
Donald R. Gay
Chairman, President, and
Chief Executive Officer
(Principal Executive Officer)
Date: September 22, 2000 By: /s/ D. A. Dunbar
--------------------------------
D. A. Dunbar
Vice President and Chief
Financial Officer
(Principal Financial and Accounting
Officer)
-13-
16
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------- -----------
3.0* Articles of Incorporation of Valley Excavation and Trucking,
Inc. dated September 26, 1997 (incorporated by reference to
Exhibit 3.0 to Form SB-2, registration no. 333-35508, filed
April 24, 2000).
3.1* Amended Articles of Incorporation of Valley Excavation and
Trucking, Inc. dated February 17, 2000 (incorporated by
reference to Exhibit 3.1 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
3.2* Bylaws of the Valley Excavation and Trucking, Inc. dated
September 26, 1997 (incorporated by reference to Exhibit 3.5
to Form SB-2, registration no. 333-35508, filed April 24,
2000).
4.0* Form of Warrant Agreement with Interwest Transfer Co., Inc.
(incorporated by reference to Exhibit 4.0 to Form SB-2,
registration no. 333-35508 filed April 24, 2000).
4.1* Specimen Form of Common Stock Purchase Warrant (incorporated
by reference to Exhibit 4.1 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
4.2* Specimen Form of Common Stock Certificate (incorporated by
reference to Exhibit 4.2 to Form SB-2, registration no.
333-35508, filed April 24, 2000).
27.0 Financial Data Schedule.
* Previously filed and incorporated herein by reference.