-----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, U2CZwLmGf/uEdMK6eKqPsA+5/SrRQkzHF4V41/5pAyS0++S5A9AHegvzSMlrJNW0 nwvSW6skx5uJfvSWqhxi8Q== 0000910647-99-000287.txt : 19991109 0000910647-99-000287.hdr.sgml : 19991109 ACCESSION NUMBER: 0000910647-99-000287 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991108 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEGATECH CORP CENTRAL INDEX KEY: 0000064708 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PUBLISHING [2741] IRS NUMBER: 042461059 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-09643 FILM NUMBER: 99743482 BUSINESS ADDRESS: STREET 1: 525 WOBURN STREET CITY: TEWKSBURY STATE: MA ZIP: 01876 BUSINESS PHONE: 6172731900 MAIL ADDRESS: STREET 1: 525 WOBURN STREET CITY: TEWKSBURY STATE: MA ZIP: 01876 10-Q 1 BODY OF 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, DC. 20549 FORM 10-Q (x) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1999 or ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ________________ to _______________ Commission file number 0-9643 MEGATECH CORPORATION (Exact name of registrant as specified in its charter) Massachusetts 04-2461059 (State or other jurisdiction of (IRS. Employer incorporation of organization) Identification No.) 555 WOBURN Street, TEWKSBURY, MA 01876 (Address of principal executive offices) (Zip Code) (978) 937-9600 (Registrant's telephone number, including area code) _____________________________________________________________ (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) There were 3,812,308 shares of common stock outstanding at November 1, 1999. -1- MEGATECH CORPORATION QUARTERLY REPORT FORM 10-Q September 30, 1999 PART 1. FINANCIAL INFORMATION ITEM 1. Financial Statements (Unaudited) Page Balance Sheet - September 30, 1999 and December 31, 1998 3 Statement of Operations- for the quarter and nine months ended September 30, 1999 and September 30, 1998 4 Statement of Cash Flows- for the nine months ended September 30, 1999 and September 30, 1998 5 Notes to Financial Statements- September 30, 1999 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk 9 PART II. OTHER INFORMATION ITEM 1. Legal Proceedings 9 ITEM 2. Changes in Securities and Use of Proceeds 9 ITEM 3. Defaults Upon Senior Securities 9 ITEM 4. Submission of Matters to a Vote of Security Holders 9 ITEM 5. Other Information 9 ITEM 6. Exhibits and Reports on Form 8-K 9 Signature Page 10 -2- PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS MEGATECH CORPORATION BALANCE SHEET
SEPT 30, 1999 DEC. 31, 1998 (UNAUDITED) (AUDITED) -------------------------------- ASSETS Current assets: Cash and cash equivalents $ 88,865 $ 187,580 Accounts receivable: Trade 310,002 101,502 Affiliate 0 355 Other 220 13,794 Inventories 321,658 399,868 Prepaid expenses 4,053 5,464 ----------------------------- Total current assets 724,798 708,563 ----------------------------- Property, plant and equipment, net 70,104 72,145 Other assets 7,666 7,666 ----------------------------- Total Assets $ 802,568 $ 788,374 ============================= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts Payable: Trade 164,077 163,729 Affiliate 193 0 Accrued Liabilities 93,005 214,358 ----------------------------- Total current liabilities 257,275 378,087 ----------------------------- Note payable 37,500 0 Stockholders' equity: Common Stock, par value $.0143 per share, 5,000,000 shares authorized; 3,812,308 shares issued and outstanding 54,230 54,230 Additional paid-in capital 4,013,947 4,013,947 Deficit (3,560,384) (3,657,890) ----------------------------- Total stockholders' equity 507,793 410,287 ----------------------------- Total liabilities and stockholders' equity $ 802,568 $ 788,374 =============================
See notes to financial statements. -3- MEGATECH CORPORATION STATEMENT OF OPERATIONS (UNAUDITED)
NINE MONTHS ENDED QUARTER ENDED ------------------------------ ------------------------------ SEPT 30, 1999 SEPT 30, 1998 SEPT 30, 1999 SEPT 30, 1998 ------------------------------------------------------------------ Sales $1,472,339 $1,353,367 $ 488,322 $ 271,689 Cost of sales 815,581 817,081 278,886 212,629 --------------------------------------------------------------- Gross profit 656,758 536,286 209,436 59,060 --------------------------- Operating expenses: Selling 421,261 462,684 117,155 108,687 General and administrative 122,503 118,572 39,749 42,743 Research and development 15,923 17,798 5,047 6,717 --------------------------------------------------------------- Total operating expenses 559,687 599,054 161,951 158,147 --------------------------------------------------------------- Income from operations 97,071 (62,768) 47,485 (99,087) --------------------------------------------------------------- Other income (expense): Interest 3,659 (892) 729 (649) Other (3,225) 54 0 0 --------------------------------------------------------------- Other income (expense), net 434 (838) 729 (649) --------------------------------------------------------------- Net income $ 97,505 (63,606) 48,214 (99,736) =============================================================== Net income per share - basic and diluted 0.026 (0.017) 0.013 (0.026) =============================================================== Weighted average number of common 3,812,308 3,792,308 3,812,308 3,792,308 ===============================================================
See notes to financial statements. -4- MEGATECH CORPORATION STATEMENT OF CASH FLOWS
NINE MONTHS ENDED -------------------------------- SEPT 30, 1999 SEPT 30, 1998 -------------------------------- Cash flows from operating activities: Net income (loss) $ 97,505 $ (63,606) Adjustments to reconcile net income to net cash provided by operating activities: Non-cash charges (credits) to net income (loss): Expiration of stock options 0 (26,250) Depreciation and amortization 13,569 14,687 Changes in operating assets and liabilities: Accounts receivable (194,571) 210,371 Prepaid expenses 1,411 11,644 Inventories 78,210 76,426 Accounts payable 541 (174,639) Accrued expenses (121,353) (2,351) ---------------------------- Net cash provided (used) by operating activities (124,688) 46,282 ---------------------------- Cash flows from investing activities: Purchases of property and equipment (14,753) (6,951) Sales of property and equipment 3,226 0 ---------------------------- Net cash provided (used) by investing activities (11,527) (6,951) Cash flows from financing activities: Principal payments on notes payable 0 (60,000) Advances on notes payable 37,500 35,000 ---------------------------- Net cash used by financing activities 37,500 (25,000) ---------------------------- Net increase (decrease) in cash and cash equivalents (98,715) 14,331 Cash & cash equivalents, beginning of period 187,580 55,026 ---------------------------- Cash & cash equivalents, end of period $ 88,865 $ 69,357 ============================
See notes to financial statements. -5- MEGATECH CORPORATION NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1999 1. BASIS OF PRESENTATION: ---------------------- The accompanying unaudited financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation of the financial position, results of operations and cash flows have been included. Operating results for interim periods are not necessarily indicative of the operating results that may be expected for the full year. For further information, refer to the financial statements and footnotes thereto included in the Company's annual report on Form 10-K. 2. INVENTORIES: ------------ Inventories consisted of the following:
SEPT 30, 1999 DEC. 31, 1998 -------------------------------- Raw materials $145,794 $186,176 Work in process 33,218 37,477 Finished goods 142,646 176,215 --------------------------- 321,658 399,868 ===========================
3. MAJOR CUSTOMER INFORMATION: --------------------------- For the period ended September 30, 1999 and 1998, sales to one and two unrelated sales representatives comprised 44% and 26% of total sales, respectively. -6- ITEM 2. MEGATECH CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR QUARTER AND NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998 RESULTS OF OPERATIONS: - ---------------------- Quarter Ended September 30, 1999 compared to quarter ended September 30, 1998 Sales for the quarter ended September 30, 1999 were $488,322 compared to $271,689 for the same quarter last year. The increase was primarily due to an increase in sales to the military. Gross profit for the quarter ended September 30, 1999 was $209,436 or 43% of sales, compared to $59,060 or 22% of sales, for the same quarter last year. The increase is the result of a writeoff of inventory of $70,409 in the quarter ended September 30, 1998. Operating expenses for the quarter ended September 30, 1999 were $161,951 or 33% of sales, compared to $158,147 or 58% of sales, for the same quarter last year. The increase is due to an increase in selling and marketing costs. The net income for the quarter ended September 30, 1999 was $48,214 compared to a net loss of $99,736 for the same quarter last year. The profits were derived from increased sales and better profit margins. Nine months Ended September 30, 1999 compared to nine months ended September 30, 1998 Sales for the nine months ended September 30, 1999 were $1,472,339, compared to $1,353,367 for the same period last year. The increase was due to an increase in military sales. Gross profit for the nine months ended September 30, 1999 was $656,758 or 45% of sales, compared to $536,286 or 40% of sales, for the same period last year. The increase is the result of a decrease in direct labor costs and material costs. Operating expenses for the nine months ended September 30, 1999 were $559,687 or 38% of sales, compared to $599,054 or 44% of sales, for the same period last year. The decrease is attributable to a decrease in selling and marketing salaries and commissions. The net income for the nine months ended September 30, 1999 was $97,505 compared to a net loss of $63,606 for the same period last year. The increase is the result of the items discussed above. -7- LIQUIDITY AND CAPITAL RESOURCES: - -------------------------------- Working capital as of September 30, 1999 was $467,523 compared to $330,476 in working capital at December 31, 1998. The increase is attributable to the net income for the quarter. The company maintains a secured line of credit in the amount of $100,000. At September 30, 1999, no borrowings were outstanding under this line. The company believes that cash generated from operations, together with existing sources of debt financing, will be sufficient to meet foreseeable cash requirements for the next twelve months. The firm's backlog as of September 30, 1999 was approximately $264,129 compared to $196,435 for same period ended in 1998. The Company is taking steps in 1999 to address Year 2000 readiness regarding manufacturing operations and internal systems. Outside computer consultants are being utilized to upgrade hardware and software required to become Year 2000 compliant. The estimated cost of such upgrades is approximately $15,000. As of September 30, 1999, the Company has incurred $11,014 in hardware upgrade costs. In addition to internal system upgrades, key suppliers of raw materials for manufacturing operations will be contacted to determine their readiness for Year 2000. In the event that a key supplier experiences Year 2000 problems, the Company believes that it has sufficient alternative suppliers to satisfy raw material needs. -8- MEGATECH CORPORATION ITEM 3. QUANITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK Not applicable. PART II: OTHER INFORMATION Item 1. Legal Proceedings: None. - -------------------------------------- Item 2. Changes in Securities: None. - ------------------------------------------ Item 3. Defaults Upon Senior Securities: None. - --------------------------------------------------- Item 4. Submission of Matters to a Vote of Security Holders: None. - -------------------------------------------- Item 5. Other Information: None. - ------------------------------------- Item 6. Exhibits and Reports on Form 8-K: None. - ---------------------------------------------------- -9- SIGNATURES ---------- Pursuant to the requirement of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MEGATECH CORPORATION (Registrant) November 1, 1999 /s/ Vahan V. Basmajian - --------------------------------------------------------------------------- Date Vahan V. Basmajian President, Treasurer -10- EX-27 2 FDS FOR 3RD QUARTER
5 9-MOS DEC-31-1999 SEP-30-1999 88,865 0 310,222 10,166 321,658 724,798 70,104 402,721 802,568 257,275 0 0 0 54,230 0 802,568 1,472,339 1,475,998 815,581 559,687 3,225 0 0 97,505 0 97,505 0 0 0 97,505 0.026 0.026
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