-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MRM2m+PCvXBpcxhn8EX5cDDYnqYn0XDE3RE0IZQh+U8LrF1aulhVtWeS8k3W23e+ EAeOEiTSi5U3X0nfL8WIeA== 0001112451-02-000007.txt : 20021114 0001112451-02-000007.hdr.sgml : 20021114 20021114125933 ACCESSION NUMBER: 0001112451-02-000007 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMASYS CORP CENTRAL INDEX KEY: 0001023198 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-ENGINEERING SERVICES [8711] IRS NUMBER: 541812385 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-21555 FILM NUMBER: 02823453 BUSINESS ADDRESS: STREET 1: 4900 SEMINARY RD STREET 2: STE 600 CITY: ALEXANDRIA STATE: VA ZIP: 22311 BUSINESS PHONE: 7037978111 MAIL ADDRESS: STREET 1: 4900 SEMINARY RD STREET 2: STE 600 CITY: ALEXANDRIA STATE: VA ZIP: 22311 10-Q 1 a10q0103.txt FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 2002 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 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 September 30, 2002 or / / Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the period from __________ to ___________ Commission file number 0-21555 ______________________ AMASYS CORPORATION (Exact name of registrant as specified in its charter) Delaware 54-1812385 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4900 Seminary Road Suite 800 Alexandria, Virginia 22311 (Address of principal executive offices) Registrant's Telephone number including area code (703) 797-8111 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 / / No /X/ As of November 14, 2002, 2,207,350 shares of the Common Stock of the registrant were outstanding. AMASYS CORPORATION TABLE OF CONTENTS Part I Financial Information: Page No. Item 1. Financial Statements Balance Sheets 3 at September 30, 2002 and June 30, 2002 Statements of Operations 4 for the Three Months Ended September 30, 2002 and 2001 Statements of Cash Flows 5 for the Three Months Ended September 30, 2002 and 2001 Notes to Financial Statements 6 Item 2. Management's Discussion and Analysis 9 of Financial Condition and Results of Operations Part II Other Information: Item 6. Exhibits and Reports on Form 8-K 10 SIGNATURES 11 AMASYS Corporation Balance Sheets September 30 June 30 2002 2002 ----------------------------- Assets Current assets: Cash and cash equivalents $ 12,364 $ 13,071 ----------- -------------- Total current assets 12,364 13,071 Note receivable - related party 908,954 914,954 Investments in common stock 679,909 733,449 ----------- ------------- Total assets $ 1,601,227 $ 1,661,474 =========== ============== Liabilities and stockholders' equity Current liabilities: Accounts payable and accrued expenses $ 45,249 $ 23,962 ----------- ------------- Total current liabilities 45,249 23,962 Stockholders' equity: Preferred stock, $.01 par value; 1,000,000 shares authorized; 196,000 Series A shares issued and outstanding 1,960 1,960 Common stock, $0.01 par value; 20,000,000 shares authorized; 2,207,350 shares issued and outstanding 22,073 22,073 Other comprehensive income (loss) 242,082 251,794 Retained earnings 1,289,863 1,361,685 ----------- ------------- Total stockholders' equity 1,555,978 1,637,512 ----------- ------------- Total liabilities and stockholders' equity $1,601,227 $ 1,661,474 =========== =============
See accompanying notes. AMASYS Corporation Statements of Operations Three months ended September 30 2002 2001 ---------------------------------- Other income: Interest income $ 22,799 $ 23,724 ---------------------------------- Total other income 22,799 23,724 ---------------------------------- Costs and expenses: Professional services 46,065 56,221 General and administrative 4,728 4,683 Amortization - 8,338 ---------------------------------- Total costs and expenses 50,793 69,242 ---------------------------------- Operating loss (27,994) (45,518) Equity in (losses) earnings (43,828) 14,348 Interest expense - (52,413) ---------------------------------- Loss before income taxes (71,822) (83,583) Provision for income taxes - - ---------------------------------- Net loss $ (71,822) $ (83,583) ================================== Per share data: Net loss per share: Basic $ (.03) $ (.04) ================================== Diluted $ (.03) $ (.04) ================================== Weighted average number of shares: Basic 2,207,350 2,207,350 ================================== Diluted 2,207,350 2,207,350 ==================================
See accompanying notes. AMASYS Corporation Statements of Cash Flows Three months ended September 30 2002 2001 --------------------------------- Operating activities Net loss $ (71,822) $ (83,583) Adjustments to reconcile (loss) net loss to net cash used in operating activities: Equity in losses (earnings) 43,828 (14,348) Accrued interest on note payable - 52,413 Amortization - 8,338 Changes in operating assets and liabilities: Interest receivable and other current assets - (7,900) Accounts payable and accrued expenses 21,287 39,815 --------------------------------- Net cash used in operating activities (6,707) (5,265) Financing activities Proceeds from note receivable 6,000 6,000 --------------------------------- Net cash provided by financing activities 6,000 6,000 Net (decrease) increase in cash and cash equivalents (707) 735 Cash and cash equivalents at beginning of period 13,071 2,252 --------------------------------- Cash and cash equivalents at end of period $ 12,364 $ 2,987 =================================
See accompanying notes. AMASYS CORPORATION NOTES TO FINANCIAL STATEMENTS (UNAUDITED) September 30, 2002 1. Basis of Presentation The accompanying interim financial statements of AMASYS Corporation (the "Company" or "AMASYS") are unaudited, but in the opinion of management reflect all adjustments (consisting only of normal recurring accruals) necessary for a fair presentation of the results for such periods. The results of operations for any interim period are not necessarily indicative of results for the full year. The balance sheet at June 30, 2002 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended June 30, 2002 ("2002 Form 10-K"), filed with the Securities and Exchange Commission on September 30, 2002. 2. Note Payable The Company entered into a Note Payable Agreement dated June 21, 1996 with the Pension Benefit Guaranty Corporation ("PBGC"). The note accrued interest at the rate of 9% per annum compounded semi-annually. The note was to be paid prior to its maturity on December 31, 2006 from any proceeds received by the Company from PBGC's pro-rata share of the proceeds of any and all sales of the Company's stock positions in Comtex News Network, Inc. ("Comtex") and Analex Corporation ("Analex") and value received from the 10% Senior Subordinated Note issued by Comtex to the Company on May 16, 1995. If neither of the above two events were to occur prior to December 31, 2006, the note would be considered cancelled. The Note was issued pursuant to the Third Joint Plan of Reorganization of Infotechnology, Inc. and Questech Capital Corporation dated January 26, 1994, which was confirmed by order of the United States Bankruptcy Court dated June 24, 1994. On February 15, 2002, the Company paid $189,998 to PBGC in full satisfaction for the note payable, pursuant to an agreement reached on February 1, 2002. The difference between the carrying amount of the debt at the date of payment and the amount paid was recorded as an extraordinary gain on the income statement during the third quarter of fiscal year 2002. 3. Net loss per Share The following table sets forth the computation of basic and diluted earnings per share: Three months ended September 30, 2002 2001 ------------------------- Numerator: Net loss $ (71,822) $ (83,583) ========================= Denominator: Denominator for basic earnings per share - weighted average Shares 2,207,350 2,207,350 Effect of dilutive securities: Stock options - - Convertible preferred stock - - ------------------------- Denominator for diluted earnings per share 2,207,350 2,207,350 ========================= Basic earnings per share $ (.03) $ (.04) Diluted earnings per share $ (.03) $ (.04)
4. Investment in Common Stock The following information presents condensed balance sheet information as of September 30, 2002 and June 30, 2002 and condensed income statement information for each of the three months ended September 30, 2002 and 2001 for the Company's investment in Comtex, which is accounted for using the equity method: September 30 June 30 2002 2002 ---------------------------- (in thousands) Current assets $ 1,729 $ 2,144 Other assets 3,397 3,456 Current liabilities 2,315 2,551 Long-term liabilities 980 948
4. Investment in Common Stock (continued) Three months ended September 30 2002 2001 ------------------------- (in thousands) Revenues $ 2,431 $ 3,464 Gross profit 1,560 2,386 Net (loss) income (267) 69
5. Comprehensive Income (Loss) Comprehensive income (loss) is comprised of the following: Three months ended September 30 2002 2001 ------------------------------- Net loss $ (71,822) $ (83,583) Unrealized (loss) gain on investment (9,712) 234,416 ------------------------------ $ (81,534) $ 150,833 ==============================
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW The Company's principal business is the maintenance of its equity interests in Comtex News Network, Inc. ("Comtex") and Analex Corporation ("Analex") and the Company's income is derived from equity and interest income related to these investments. The Company owns 2,153,437 shares of common stock of Comtex (SEC File No. 0-10541). Comtex trades on the OTC Electronic Bulletin Board under the symbol CMTX. More information concerning the operations of Comtex can be found in its own filings with the Securities and Exchange Commission. The Company owns 138,739 shares of the common stock of Analex Corporation (SEC File No. 0-5404), which trades on the OTC Electronic Bulletin Board under the symbol ANLX. More information concerning the operations of Analex can be found in its own filings with the Securities and Exchange Commission. The Company accounts for its investment in Comtex using the equity method, whereby the Company records its share of income or loss reported by Comtex based on its ownership interest. The Company also has a note receivable from Comtex, which bears interest at 10%. The Company's investment in Analex was accounted for using the equity method through March 2000. Due to a change in control at Analex in March 2000, in which a group of investors assumed control of Analex, the investment has since been accounted for pursuant to SFAS 115 Accounting for Certain Investments in Debt and Equity Securities. The Analex investment balance at each reporting period is reported based on the stock's trading value with any increases or decreases being presented as unrealized gains or losses in the statement of stockholders' equity. No investments have been made since the initial acquisition of interests of Comtex and Analex in 1996, nor has there been any interests nor dividends received. During February 2002, the Company's CEO exercised his options to acquire 2,540,503 shares of Comtex stock owned by the Company, which resulted in proceeds of $254,000. A portion of the Analex investment was sold in February and May 2002. RESULTS OF OPERATIONS Comparison of the three months ended September 30, 2002 to the three months ended September 30, 2001 The Company had a net loss of $72,000 during the three months ended September 30, 2002 compared to a net loss of $84,000 during the three months ended September 30, 2001. The decrease in net loss is due to a decrease in interest expense of $52,000 related to the extinguishment of debt during fiscal year 2002 and a decrease in operating costs and expenses of $18,000 (26.6%), offset by a decrease in equity in earnings of $58,000. Other income. Interest income decreased slightly due to the decrease in the average outstanding note receivable balance due from Comtex. Operating costs and expenses. Operating costs and expenses decreased $18,000 (26.6%) to $51,000 during the three months ended September 30, 2002 due to a decrease in professional services. Professional services decreased $10,000 primarily due to a decrease in consulting fees. In addition, amortization decreased $8,000 because the reorganization costs were fully amortized after the first quarter of fiscal year 2002. Equity in earnings. Equity in earnings decreased $58,000 due primarily to the decrease in the Company's share of earnings of Comtex, which reported a net loss of $267,000 during the three months ended September 30, 2002 compared to net income of $69,000 during the same period ended 2001. Interest expense. Interest expense decreased $52,000 due to the retirement of the note payable during the third quarter of fiscal year 2002. LIQUIDITY AND CAPITAL RESOURCES The Company had a deficiency in working capital of $33,000 at September 30, 2002. The Company has had minimal operating activity since commencing operations in 1996 and has not had any other uses of funds. Accordingly, the Company has not required any funding sources. The Company expects to meet its short-term obligation through payments of principal and interest from the note receivable from Comtex and from the sales of interests in Analex. CAUTIONARY STATEMENTS CONCERNING FORWARD-LOOKING STATEMENTS Except for the historical information contained herein, the matters discussed in this Form 10-Q include forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934. These forward-looking statements may be identified by reference to a future period or by use of forward-looking terminology such as "anticipate", "expect", "could", "may" or other words of a similar nature. Forward- looking statements, which the Company believes to be reasonable and are made in good faith, are subject to certain risks and uncertainties that could cause actual results to differ materially from those expressed in any forward-looking statement made by, or on behalf of, the Company. Item 4. CONTROLS AND PROCEDURES The Company's Chief Executive and Financial Officer has concluded, based on his evaluation within 90 days prior to the filing date of this report, that the Company's disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-14(c) and 15d-14(c)) are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the foregoing evaluation. Part II. Other Information Items 1 - 5. None. Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits None. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned there unto duly authorized. AMASYS CORPORATION (Registrant) Dated: November 14, 2002 By: /S/ C.W. GILLULY ____________________ C.W. Gilluly, Ed.D. President and Chief Executive Officer (Principal Executive Officer and Principal Financial and Accounting Officer) CERTIFICATIONS I, C.W. Gilluly, certify that: 1. I have reviewed this quarterly report on Form 10-Q of AMASYS Corporation; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the consolidated financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 14, 2002 /S/ C.W. GILLULY C.W. Gilluly President and Chief Executive Officer CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, C.W. Gilluly, the President and Chief Executive Officer of AMASYS Corporation (the "Company"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the period ending September 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 14, 2002 /S/ C.W. GILLULY C.W. Gilluly President and Chief Executive Officer CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. SECTION 1350 AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 The undersigned, C. W. Gilluly, the Principal Finance Officer of AMASYS Corporation (the "Company"), has executed this certification in connection with the filing with the Securities and Exchange Commission of the Company's Quarterly Report on Form 10-Q for the period ending September 30, 2002 (the "Report"). The undersigned hereby certifies that: (1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Date: November 14, 2002 /S/ C.W. GILLULY C.W. Gilluly Principal Finance Officer -----END PRIVACY-ENHANCED MESSAGE-----