-----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, CuT5yC2qfX9pz14RiGEFMh9VHw3xzykHM2KbhX44ADRjDuT0i3h7/NMEm6vDeOBB dX7PEnxy/bNF785/rErlHA== 0000950169-97-000144.txt : 19970228 0000950169-97-000144.hdr.sgml : 19970228 ACCESSION NUMBER: 0000950169-97-000144 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19970227 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EXOTECH INC CENTRAL INDEX KEY: 0000034047 STANDARD INDUSTRIAL CLASSIFICATION: INSTRUMENTS FOR MEAS & TESTING OF ELECTRICITY & ELEC SIGNALS [3825] IRS NUMBER: 540700888 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-04076 FILM NUMBER: 97545944 BUSINESS ADDRESS: STREET 1: 8502 DAKOTA DR CITY: GAITHERSBURG STATE: MD ZIP: 20877 BUSINESS PHONE: 3019483060 MAIL ADDRESS: STREET 1: 8502 DAKOTA DR CITY: GAITHERSBURG STATE: MD ZIP: 20877 FORMER COMPANY: FORMER CONFORMED NAME: RADIATION SYSTEMS INC DATE OF NAME CHANGE: 19681121 10-K/A 1 EXOTECH INCORPORATED 10-K/A SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. FORM 10-K (AMENDED 6 JANUARY 1997 AND 26 FEBRUARY 1997) ANNUAL REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR FISCAL YEAR ENDED: JUNE 30, 1996 COMMISSION FILE NO. 0-4076 -------------- ------ EXOTECH INCORPORATED (Exact name of Registrant as Specified in Charter) State or Jurisdiction of Incorporation or Organization: DELAWARE IRS Identification No: 54-0700888 Address of Principal Office: 8502 Dakota Drive Gaithersburg, MD. 20877 Registrant's Telephone Number: (301) 948-3060 SECURITIES REGISTERED PURSUANT TO SECTION 12 (b) OF THE EXCHANGE ACT None SECURITIES REGISTERED PURSUANT TO SECTION 12 (g) OF THE ACT Common Stock par value $0.10 per share. Indicate by checkmark 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 requirement for the past 90 days. Yes [x] No [ ] At June 30, 1996, 942,387 shares of Common Stock were outstanding, and the aggregate market value of the Common Stock of Exotech Inc. held by nonaffiliates was approximately $56,750. DOCUMENTS INCORPORATED BY REFERENCE NONE B-1 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS. The Company's revenues of $367,259 were 1.0% lower than in fiscal year 1995, and 16% lower than in fiscal year 1994. The declines over these years related in part to organizational and personnel disruptions in the Company's principal customer and marketing agent for biotechnology instruments, Spiral Biotech, Inc., and the sub-par quality of an imported automated plater instrument, sold as a part of a system including Exotech products. The Company's new product has replaced this instrument. The $43,365 billed in fiscal year 1994 proved uncollectible and was written off in the following year. Sales of platers, laser bacterial colony counters and related biotechnology products increased to $302,700 compared to $189,280 in 1995 and $220,402 in 1994. There were no sales of radiometers nor Crystallographic Scanners, although radiometer sales were $16,440 and $30,363 respectively in 1995 and 1994. Service and parts sales for Modulation Transfer Function Testers were $17,350 compared to $9,000 and $57,000 respectively in 1995 and 1994. Service and maintenance sales for the broad range of other laboratory instruments was down to $47,584 compared to sales of $147,257 in the prior year and $85,700 in fiscal 1994. The higher sales of service in fiscal year 1995 resulted from repairs to the imported plater instrument mentioned above. The cost of operations, including $129,000 of research and development costs, resulted in an operating loss of $127,367 compared to a profit of $2,057 in fiscal year 1995 and a loss of $8,812 in 1994. The impact of interest costs resulted in a net loss of $152,584 compared to losses of $68,130 and $35,448 in 1995 and 1994, respectively. A net increase in demand notes of $60,501 needed to sustain development of a new automated plater instrument caused an increase in interest expense to $29,817 compared to $26,822 in the prior year, and $27,752 in fiscal 1994. A charge of $129,000 was incurred in the past year for research and development to search out the combination of electronic and mechanical technology needed to design and develop a state-of-the-art instrument with strong sales potential in a highly competitive market. In the opinion of Management, that objective was achieved through intense effort to deliver two preproduction prototypes and 14 units of the new instrument in the second quarter of fiscal 1996. In the third and fourth quarter of the past year, orders for instruments and services were increased by Spiral Biotech, Inc. bringing sales to about the level of the prior year and increasing backlog to $279,000 at June 30, 1996, compared to $81,000 one year earlier and $45,300 at the end of fiscal year 1994. In the opinion of Management, recent improvements in the marketing of the biotechnology products will rejuvenate sales of the laser scanner instruments together with increasing sales of the new automated plater. Despite financial limitations that have impeded marketing of the Crystallographic Scanner instruments, management believes that the results of on-going collaborative studies and demonstrations of capabilities will improve the prospects of sales to the potential customers who continue to show interest in that instrument system. Furthermore, management is committed to explore the prospects for collaborative arrangements with several well established suppliers of manufacturing equipment to the semiconductor producer industry as a means to generate increased exposure and sales potential for this product. Over the past three fiscal years, as in prior years, the independent accountants' report has B-2 included an explanatory paragraph, following the opinion paragraph, describing the existence of a going concern uncertainty. The accountants have advised Management that the principal cause for the going concern uncertainty is cash flow shortages which have caused delays in meeting current obligations. In the opinion of Management, the past three years of seriously depressed markets for the Company's products caused substantial impediments to overcoming the qualification stated by the accountants. Continued stringent control of costs and cash outlays has enabled the Company to sustain high quality and timely upgrades of its products while nurturing improved results from marketing efforts in a very competitive environment. With a new product now experiencing a good level of acceptance in the market, and growth in the Company's backlog for its other biotechnology-related products, Management believes that increasing revenue will provide sufficient cash to support operations throughout fiscal year 1997. Additionally, the opportunity to build on the results of our current activity will be pursued to reactivate sales of the Crystallographic Scanner instruments and technology. As shown in the Statements Of Cash Flows for the three years ended June 30 of 1996, 1995 and 1994, each period ended with a small positive cash balance. The result of operating net losses in 1996 and 1994 caused negative cash flow from operating transactions of ($60,428) and ($35,805) respectively. Offsetting in these cases were net proceeds from notes of $60,501 in 1996 and in 1994 $33,500 plus a return of deposited funds in the amount of $1,334, which limited the decrease in cash flow to ($971). In fiscal year 1995, $26,439 was provided by operating transactions. That amount was offset by a net pay down of notes of ($26,903) and purchase of equipment of ($587) causing a decrease in cash of ($1,051). The Company continues to meet its cash flow obligations, although at times delayed in some cases of trade payables and payroll, with receipts from sales and financing activities comprised of loans from the Company's President and from Spiral Biotech, Inc., its principal customer. The loans from Spiral Biotech are secured by ordered instruments in progress and range from 30 to 40 percent of the purchase order value for the total order. No loans are in default. The fluctuations in accounts payable relate to the amount of work-in-progress for products on order. It is noted that the Company's property, plant and equipment are nearly fully depreciated. However, all essential items of these assets are maintained in good repair and no replacements nor additions are anticipated in the next year or more. The Company's management and employees continue to be committed to reestablishing progress toward our goal of profitability. B-3 Linton, Shafer & Company, P.A. Certified Public Accountants 6 West Second Street Frederick, MD 21701 301-663-5122 Principals: Edmond B. Gregory III, CPA, CBA Kevin R. Hessler, CPA Donald C. Linton, CPA, CFP Joseph M. McCathran, CPA Ronald W. Shafer, CPA Report of Independent Certified Public Accountants Board of Directors and Shareholders Exotech, Incorporated We have audited the accompanying consolidated financial statements and related schedules of Exotech, Incorporated and Subsidiary included on pages 11 through 20 of the annual report on Form 10- K of Exotech, Incorporated and Subsidiary as of June 30, 1996 and 1995 and for the years ended June 30, 1996, 1995 and 1994. These financial statements and related schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and related schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and per share data and ratios are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Exotech, Incorporated and Subsidiary as of June 30, 1996 and 1995 and the results of their operations and their cash flows for the years ended June 30, 1996, 1995 and 1994, in conformity with generally accepted accounting principles. B-4 The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern. As shown in the financial statements, the Company incurred a net loss of $152,584 during the year ended June 30, 1996. This fact, among others discussed in Note 1 to the financial statements, raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Linton, Shafer & Company, P.A. September 20, 1996 B-5 Linton, Shafer & Company, P.A. Certified Public Accountants 6 West Second Street Frederick, MD 21701 301-663-5122 Principals: Edmond B. Gregory III, CPA, CBA Kevin R. Hessler, CPA Donald C. Linton, CPA, CFP Joseph M. McCathran, CPA Ronald W. Shafer, CPA Consent of Certified Public Accountants We have issued our report dated September 20, 1996, accompanying the financial statements and schedules of Exotech, Incorporated and Subsidiary contained in the annual report on Form 10-K of Exotech, Incorporated and Subsidiary as of June 30, 1996 and 1995, and for the years ended June 30, 1996, 1995 and 1994. We consent to the use of the aforementioned report in the amendments to Form 10-K, as amended January 6, 1997 and February 26, 1997. /s/ Linton, Shafer & Company, P.A. February 26, 1997 B-6 EXOTECH INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE YEARS ENDED JUNE 30 Reference is made to Note 1 of the Notes to the Consolidated Financial Statements for a description of operations of the Company and to Note 2 for a description of the principal accounting policies followed by the Company.
1996 1995 1994 ---- ---- ---- REVENUES Instrument Sales $302,325 $213,845 $251,265 Parts, Repairs and Services 64,934 156,257 142,700 Prior Fiscal Year Services -- -- 43,365 --------- --------- -------- TOTAL SALES $367,259 $370,102 $437,330 COST OF OPERATIONS Direct Cost and Overhead Instrument Sales 287,536 180,600 243,562 Repairs, Parts and Service 56,162 137,366 140,414 R & D Costs 121,263 -- -- General and Administrative Instrument Sales 18,345 28,444 39,433 Repairs, Parts and Service 3,583 21,635 22,733 R & D Costs 7,737 -- -- -------- ------- ------- TOTAL COST OF OPERATIONS 494,626 368,045 446,142 -------- ------- ------- OPERATING PROFIT (LOSS) (127,367) 2,057 (8,812) - ----------------------- OTHER REVENUES (EXPENSES) Miscellaneous 4,600 (43,365) 1,116 Interest (29,817) (26,822) (27,752) -------- -------- -------- NET LOSS BEFORE TAXES (152,584) (68,130) (35,448) - --------------------- INCOME TAXES -- -- -- --------- --------- -------- NET LOSS $(152,584) $(68,130) $(35,448) - -------- ========== ========= ========= Loss per Common Share (.16) (.07) (.04) Weighted average number of common shares outstanding 942,387 942,387 942,387
The accompanying notes are an integral part of these statements. B-7 EXOTECH INCORPORATED AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF JUNE 30
1996 1995 ---- ---- CURRENT ASSETS Cash $105 $32 Accounts Receivable (Note 2) Billed 11,073 54,300 Less: Allowance for Doubtful Account -- (43,368) Inventories, at lower of average cost or market (Note 2) 551,687 575,450 Prepaid Expenses and Advances 344 1,394 ------ ------- CURRENT ASSETS 563,209 587,808 PROPERTY, PLANT AND EQUIPMENT, at cost (Note 2) Laboratory Equipment 160,980 160,980 Office Furniture & Equipment 70,550 70,550 ------ -------- 231,530 231,530 Less accumulated depreciation and amortization (231,119) (230,946) --------- --------- Total Property, Plant and Equipment - Net 411 584 OTHER ASSETS Miscellaneous 6,921 7,849 ----- ----- TOTAL ASSETS $570,541 $596,241 -------- --------
The accompanying Notes are an integral part of these statements. B-8 EXOTECH INCORPORATED AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS AS OF JUNE 30
1996 1995 ---- ---- CURRENT LIABILITIES Notes Payable and Current Maturities of Long Term Debt (Note 5) $372,294 $311,793 Accounts Payable and Other Accrued Liabilities 105,664 51,996 Accrued Payroll and Employee Benefits 67,180 46,845 Accrued Officer Salary and Benefits 201,510 212,285 Accrued Interest 79,304 76,149 ------ ------ Current Liabilities 825,952 699,068 SHAREHOLDERS' DEFICIT Common Stock, par value $.10 per share; 1,500,000 shares authorized; 970,135 shares issued and outstanding 97,014 97,014 Paid in Surplus 1,169,645 1,169,645 Accumulated Deficit (1,409,650) (1,257,066) Treasury Stock 27,748 shares at cost (112,420) (112,420) --------- --------- (255,411) (102,827) --------- --------- Total Liabilities and Shareholders Deficit $570,541 $596,241 ======== ========
The accompanying Notes are an integral part of these statements. B-9 EXOTECH INCORPORATED AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT FOR THE THREE YEARS ENDED JUNE 30, 1996
Common Stock Treasury Stock ($0.10) Paid-In Accumulated ---------------- Par Value Surplus (Deficit) Shares Cost Balance, June 30, 1993 970,135 $97,014 $1,169,645 $(1,153,488) 27,748 $(112,420) Add (Deduct) - - - - - - Net Profit (Loss) - - - (35,448) - - ---------- ---------- ------------- ------------- -------- ---------- Balance, June 30, 1994 970,135 $97,014 $1,169,645 $(1,188,936) 27,748 $(112,420) Add (Deduct) - - - - - - Net Profit (Loss) - - - (68,130) - - ---------- ---------- ------------- ------------- -------- ---------- Balance, June 30, 1995 970,135 $97,014 $1,169,645 $(1,257,066) 27,748 $(112,420) Add (Deduct) - - - - - - Net Profit (Loss) - - - (152,584) - - ---------- ---------- ------------- ------------- -------- ---------- Balance June 30, 1996 970,135 $97,014 $1,169,645 $(1,409,650) 27,748 $(112,420) ======= ======= ========== ============ ====== ==========
The accompanying notes are an integral part of these statements. B-10 EXOTECH INCORPORATED AND SUBSIDIARY STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED JUNE 30
INCREASE (DECREASE) IN CASH 1996 1995 1994 - --------------------------- ---- ---- ---- CASH FLOWS FROM OPERATING TRANSACTIONS Net Loss: $(152,584) $(68,130) $(35,448) Add: Non Cash Income Determinants Depreciation & Amortization 1,101 2,454 3,809 Add (Deduct): Changes in Current Assets and Liabilities: (Increase) Decrease in Accounts Receivable (141) 83,447 (44,579) (Increase) Decrease in Prepaid Expenses 1,050 (572) 29 (Increase) Decrease in Inventory 23,764 (27,899) (3,176) Increase (Decrease) in Accounts Payable 53,667 (4,484) (10,613) Increase (Decrease) in Accrued Payroll & Related 9,560 15,176 30,314 Increase (Decrease) in Accrued Interest 3,155 26,447 23,859 ------ ------- ------ Cash Provided By (or) Used In Operating Transactions $(60,428) $26,439 $(35,805) ----------- ------- --------- -------- --------- CASH FLOWS FROM FINANCING TRANSACTIONS: Proceeds from Notes 87,500 4,000 55,000 Payment on Notes (26,999) (30,903) (21,500) -------- -------- -------- Cash Provided By (or) Used In Financing Transactions 60,501 (26,903) 33,500 ----------- ------- ------- -------- ------ CASH FLOWS FROM INVESTING TRANSACTIONS: Purchase of Equipment -- (587) 1,334 ------- ----- ------- Cash Provided By (or) Used In Investing Transactions -- (587) 1,334 ----------- ------- ------- ----- ------- INCREASE (DECREASE) IN CASH 73 (1,051) (971) CASH BALANCE - BEGINNING 32 1,083 2,054 ----- ------ ------- CASH BALANCE - ENDING $105 $32 $ 1,083 ===== ==== ========== SUPPLEMENTAL INFORMATION Interest Paid $26,160 $3,740 $2,936 Taxes -- -- --
The accompanying notes are an integral part of these statements. B-11 EXOTECH INCORPORATED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (1) DISCUSSION OF OPERATIONS AND REALIZATION OF ASSETS For the fiscal year ended June 30, 1996, the Company had an operating profit of $1,633. The Company had an operating profit of $2,057 in the prior fiscal year. At June 30, 1996, approximately $75,000 of accounts payable were more than 30 days old. The accompanying financial statements have been prepared on the "going concern" basis of generally accepted accounting principles. The ability of the Company to continue normal operations is dependent upon its ability to obtain the required amounts of working capital to finance the existing contracts, to continue the acquisition of additional contracts, and to pursue instrument sales at prices sufficient to recover costs and some profits. Management believes that improved revenues now being experienced with the Company's new product together with stringent control of costs and cash outlays will provide sufficient cash to support its operations throughout the coming fiscal year. Inventory of Crystallographic Scanners have experienced no sales activity since their development approximately four years ago. Efforts have recently been intensified to develop a marketing agreement with an established marketer of capital equipment to the crystal growers and processors, or alternatively to sell the products, design package, software, patents and licenses to larger manufacturers of instruments with a significant presence in the semiconductor processing equipment market. Should those efforts fail, the company may be forced to charge off the carrying value of approximately $243,000 against income. At June 30, 1996, the remaining value (backlog) of existing sales contracts were approximately $279,000. (2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Nature of Business The Company is a manufacturer of Electro-optical instruments. It performs the research and development required for those products. Principle of Consolidation The accompanying consolidated financial statements include the accounts of the Company and its subsidiary, after elimination of all significant intercompany transactions. Revenue Accounting The Company records revenue earned based on shipments of units of its products. Inventory Finished goods inventory is stated on the basis of the lower of costs (average) or market value. B-12 Depreciation and Amortization The Company uses a straight-line method of depreciation and amortization for both tax and financial reporting purposes. The following time periods are used: DEPRECIATION: Laboratory equipment 5 or 8 years Office furniture and equipment 5 years AMORTIZATION: Leasehold improvements Life of lease Patents 12 years Depreciation expenses recorded in the consolidated statement of operations are as follows: 1994 - $3,809, 1995 - $2,454, and 1996 - $1,101, including amortization of patents at the rate of $928 in each year. The Company's limit for capitalization of property and equipment is $500 or more. Income Taxes Provisions for income taxes are based on pre-tax income reported in the financial statements, using the guidance of Financial Accounting Standards Board Statement No. 109 (FAS #109) "Accounting for Income Taxes." Differences between income (loss) for financial reporting purposes and tax reporting arise from (a) the capitalization and amortization of research and development costs for income tax reporting purposes, but deducting these costs as expenses in the period incurred for financial statement purposes; and (b) timing differences in deducting net losses on contracts. There were no provisions for income taxes required in the three year period ended June 30, 1996 due to the operating losses for each of those years. At June 30, 1996, the Company had net operating loss carryforwards of $371,357 which begin to expire in 1997. The Company also has incurred research and experimental expenses of $129,000 in 1996, and $54,368 in prior years that have been capitalized to be amortized over a sixty month period for income tax purposes, but have been expensed in the period incurred for financial statement reporting. While the accounting standard allows companies to recognize a deferred tax asset on the tax effect of these timing differences, the Company has provided a valuation allowance for the full amount since it is more likely than not the deferred tax asset will not be realized. The approximate tax effect of the carryforward and temporary difference for the three years ended June 30 consist of: 1996 1995 1994 -------- -------- ------ Net operating loss carryforward $148,543 $150,545 $119,923 Deferred research and experimental expenses 48,174 5,204 8,673 Less: Valuation allowance (196,717) (155,749) (128,596) --------- --------- --------- Deferred Tax Asset - net - 0 - - 0 - - 0 - ========= ========= ======= Net increase in valuation allowance $(40,968) $(27,153) ========= ========= B-13 Following is a table reconciling the Company's accounting net loss for each of the last three years ended June 30. 1996 1995 1994 -------- -------- ------ Accounting Net Loss $152,584 $68,130 $35,448 Nondeductible expense (250) Research and experimental costs: Capitalized on tax return (129,000) - - Tax amortization 21,574 8,674 9,874 -------- -------- -------- Taxable Net Loss $ 45,158 $ 76,554 $ 45,322 ======== ======== ======== Repairs and Betterments Repairs are expensed as incurred. Betterments are capitalized and amortized over the remaining useful life of the assets. Accounts Receivable Accounts receivable consist of amounts billed from sales as of June 30, 1996. In the prior fiscal year an allowance for doubtful accounts was set up for $43,368. This amount represents a claim for product development costs from fiscal year ended June 30, 1994. This amount has since been written off, and there is no allowance for doubtful accounts as of June 30, 1996, as the Company considers accounts receivable to be fully collectible. Cash And Cash Equivalents The Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Use of Estimates In preparing financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. (3) INVENTORY Inventories are summarized as follows: 1996 1995 ---- ---- Raw Materials $32,625 $ 32,625 Goods in Process 505,062 528,825 Finished Goods 14,000 14,000 --------- --------- $551,687 $575,450 (4) RESEARCH AND DEVELOPMENT COSTS The Company's accounting policy is to write off research and development costs as incurred. In the fiscal year 1996, $129,000 of R&D costs related to the new Autoplate 4000 product were incurred and written off. There were no R&D costs in the prior two years. B-14 (5) NOTES PAYABLE Notes payable at June 30, 1996, consist of three demand notes of $100,000, $8,000 and $47,000 with interest at 8.5% per annum to three of the Company's former directors. In addition, Notes amounting to $217,294 are payable with interest at 8.5% per annum to one officer/employee. Periodically, the Company has obtained Producer Loans from Spiral Biotech,Inc. that are secured by inventory instruments (bacteria colony counters) at a negotiated interest rate. 1996 1995 ---- ---- Average* aggregate amount outstanding during year $352,712 $333,089 Maximum amount outstanding during year 372,294 338,297 Average* interest rate on loans outstanding at end of year 8.50% 8.48% Average* interest rate incurred during the period 8.50% 8.50% *Average amounts outstanding during the year and related average interest rates were determined from the average of the month-end amounts outstanding. The average interest rate at each year-end was determined from the weighted average of amounts outstanding at that time. (6) COMMITMENTS AND CONTINGENCIES All operations of the Company and subsidiary were conducted in leased facilities. In March 1990, the Company entered into a lease agreement for a three-year period for the present facilities at 8502 Dakota Drive, Gaithersburg, MD. This lease was renegotiated and extended for three years expiring November 30, 1995 and was again extended for an additional three years effective December 1, 1995. The current lease expires November 30, 1998. Non-Financing 1999 1998 1997 ------ ------ ----- Building $13,220 $31,344 $30,431 (7) EARNINGS PER SHARE Per share computations were based on the weighted average number of shares outstanding during the periods, excluding options because the market price and option price were the same. (8) SUPPLEMENTAL PROFIT AND LOSS INFORMATION Description 1996 1995 1994 ----------- ---- ---- ---- Taxes other than income: Payroll $9,588 $14,487 $18,307 Franchise, Personal Property and other Miscellaneous 1,137 2,681 1,528 Rents, including equipment rental 40,097 39,823 38,488 B-15 (9) DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE No disagreements exist between management and its independent public accounting firm. (10) TRANSACTIONS WITH SHAREHOLDERS Sales to a company owned by a shareholder aggregated $340,841, $335,736 and $340,397, (about 93, 91 and 78 percent, respectively, of total sales) for the fiscal years ended June 30, 1996, 1995 and 1994, respectively. Amounts due from such sales at June 30, 1996 and 1995 were $11,073 and $10,932, respectively. Sales were consummated on terms similar to those prevailing with unaffiliated customers. (11) FAIR VALUES OF FINANCIAL INSTRUMENTS The following methods and assumptions were used by the Company in estimating its fair value disclosures for financial instruments: Cash, cash equivalents, short-term investments: The carrying amounts reported in the Consolidated Balance Sheets approximate fair values because of the short maturities of the instruments. B-16 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY (a), (b), (e) NAME: ROBERT G. LYLE (67) President, CEO of the Company and subsidiary; Director. Business experience during past 5 years Same as above, since 1977. Other Positions: None. Other Directorships: None. NAME: JAMES G. PAULI (41) Treasurer (1995-96) and Director and Member of Audit Committee (1992-96). Business experience - Managing Consultant, Leader of Management Study Teams at during past 5 years Electronic Data Systems, Inc., Herndon, VA Data Systems Consultants and Designers (1995-96). - Management Analyst, Price Waterhouse Audit and Management Consulting Firm (1990-95). Other Positions: None. Other Directorships: None. NAME: ANDREW WONG (43) Secretary and Director (1996); Member of Audit Committee (1996). Business experience - Vice President, Marketing, General Electric-Spacenet, McLean, during past 5 years VA. Manager of Marketing Function for Telecommunications Division. Responsible for selling customized private networks to businesses in the United States and international markets (1995-96). - Director, Business Development, COMSAT Mobile Communications, Bethesda, MD. Responsible for identification, analysis and implementation of mobile wireless communications business opportunities (1991-95). Other Positions: None. Other Directorships: Member, Board of Engineering Advisors, Univ. of California, Lawrence Livermore Laboratory (1995-96).
- -------------------- Note: All terms expire in December, 1997 c. Not applicable. d. There are no family relationships between any of the above listed directors and any other director or executive officer of the Company. f. None of the directors or executive officers have been subject to any bankruptcy or insolvency proceedings, criminal proceedings, or injunctions against dealing in investments during the past three years. B-17 ITEM 11. MANAGEMENT REMUNERATION AND TRANSACTIONS A. No individual in management received remuneration of $100,000 or more. Officers as a group of three people received no payments except for $3,901 in disbursements for the group health and life insurance premiums for the Chief Executive Officer. The total compensation for the Chief Executive Officer in fiscal year 1996 was $3,901. B. No annuity, pension or retirement benefits are proposed to be paid to any director or officer in the event of his retirement. No remuneration payments are proposed to be made in the future, directly or indirectly, to any director or officer by the Company or its subsidiary pursuant to any existing plan or arrangement. C. There are no fees paid to directors for services in that capacity. D. No officer, or director of the Company: (1) received options during the reporting period; or (2) exercised options during the reporting period, or (3) held options as of September 1, 1996. The officers and directors of the Company as a group did not: (1) receive options during the reporting period, or (2) exercise options during the reporting period, or (3) hold options as of September 1, 1996. E. Termination of employment - the Company has no employment termination agreements with officers or employees. B-18 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K A. 1. LIST OF FINANCIAL STATEMENTS IN PART II OF THIS REPORT. PAGE NO. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS.................. 10-11 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THREE YEARS ENDED JUNE 30, 1996................................................ 12 CONSOLIDATED BALANCE SHEETS - JUNE 30, 1996 AND 1995................ 13-14 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE YEARS ENDED JUNE 30, 1996.......................................... 15 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' INVESTMENT - FOR THE THREE YEARS ENDED JUNE 30, 1996............... 16 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.......................... 17-22 FINANCIAL DATA SCHEDULE............................................. 25 Schedules other than those listed above are omitted for the reason that they are not required or are not applicable, or the required information is shown in the financial statements or notes thereto. Columns omitted from schedules filed have been omitted because the information is not applicable. Individual financial statements of the Company are omitted because it is primarily an operating company and the subsidiary included in the consolidated financial statements being filed in the aggregate does not have minority equity interests and/or indebtedness to any person other than the parent in the amounts which together exceed 5% of the total consolidated assets at the date of the latest balance sheet filed excepting indebtedness incurred in the ordinary course of business which is not overdue and which matures within one year of its creation, whether evidenced by securities or not, and indebtedness which is collateralized by the parent by guarantee, pledge, assignment or otherwise. A. 2. PARENT AND SUBSIDIARY The Company has no parent. The subsidiary of the Company is: NAME: EXOTECH RESEARCH & ANALYSIS, INC. STATE OF INCORPORATION: DELAWARE SECURITIES OWNED BY THE COMPANY: COMMON STOCK, 100% The foregoing is included in the consolidated statements of the Company and subsidiary. B-19 A. 3. EXHIBITS 3.1 Restated Certificate of Incorporation of the Company which is hereby identified as a BASIC DOCUMENT. The document was originally filed pursuant to a Registration Statement (Form S-1) filed on November 8, 1968, and is incorporated herein by reference. 3.2 By-Laws of the Company as revised amended on April 16, 1971, which is hereby identified as a BASIC DOCUMENT. The document has been filed pursuant to FORM 10-K for the fiscal year ended June 30, 1971, and is incorporated herein by reference. 3.3 Specimen copy of a certificate for the Company's common stock, par value $.10 per share, which is hereby identified as a BASIC DOCUMENT. The specimen was filed pursuant to a Registration Statement (form S-1) filed on November 8, 1968, and is incorporated herein by reference. 3.3(a) Specimen copy of a certificate for the Company's common stock, par value $.10 per share, reprinted due to exhaustion of the initial supply. This specimen copy was identified as a BASIC DOCUMENT. This exhibit was filed with Form 8 for the fiscal year ended June 30, 1975, and is incorporated herein by reference. 3.4 CERTIFICATE OF AMENDMENT OF CERTIFICATE OF INCORPORATION - EXOTECH SYSTEMS, INC. changing its name to EXOTECH RESEARCH AND ANALYSIS, INC. certified by the Secretary of the State of Delaware on the 12th day of August 1975, which is identified as a BASIC DOCUMENT. The document was originally filed with the Form 10-K for the fiscal year ended June 30, 1976, and is incorporated herein by reference. 3.5 CERTIFICATE OF OWNERSHIP AND MERGER merging EXO-REALTY, INC. into EXOTECH INCORPORATED, certified by the Secretary of State, State of Delaware on the 28th day of June, 1976, which is identified as a BASIC DOCUMENT. The document was originally filed with the Form 10-K for the fiscal year ended June 30, 1976, and is incorporated herein by reference. B. No Form 8-K reports were filed in the fiscal year covered in this report. B-20 SIGNATURE Pursuant to the requirements of Section 13 or 15 (d) of the Securities Act of 1934, the Company has duly caused this amended Report to be signed on its behalf by the undersigned, thereunto duly authorized. February 26, 1997 BY: /s/ Robert G. Lyle - ------------------------- -------------------------------- DATE ROBERT G. LYLE, CHIEF EXECUTIVE OFFICER, PRINCIPAL ACCOUNTING OFFICER AND DIRECTOR February 26, 1997 BY: /s/ James G. Pauli - ------------------------ -------------------------------- DATE JAMES G. PAULI, TREASURER (PRINCIPAL FINANCIAL OFFICER) AND DIRECTOR February 26, 1997 BY: /s/ Andrew Wong - ------------------------ -------------------------------- DATE ANDREW WONG, SECRETARY AND DIRECTOR B-21 EX-27 2 EXHIBIT 27
5 12-MOS JUN-30-1996 JUN-30-1996 105 0 11,073 0 551,687 563,209 231,530 231,119 570,541 825,952 0 0 0 97,014 352,425 570,541 367,259 371,859 494,626 494,626 0 0 29,817 (152,584) 0 (152,584) 0 0 0 (152,584) (0.16) (0.16)
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