10-Q 1 actek10q3-01.txt ACTEK INC. FORM 10Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2001 Commission file number 2-92453-S ACTEK, INC. (Exact name of registrant as specified in its charter) WASHINGTON 91-1228719 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 12740 38th N. E. Seattle, Washington (Address of principal executive offices) 98125 (Zip Code) (206) 363-0217 (Registrant's Telephone Number, Including Area Code) 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 --- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock as of March 31, 2001: (Common Stock) 65,654 492 TABLE OF CONTENTS PART I PAGE ---- ITEM 1 Financial Statements 3 Statements of Balance Sheets as of March 31, 2001 And June 30, 2000 3 Statements of Operations for the Three Month Period Ended March 31, 2001 4-5 Statements of Cash Flows for the for the Three Month Period Ended March 31, 2001 6 Notes on Financial Statements 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 8 PART II ITEM 1 Legal Proceedings 9 ITEM 2 Changes in Securities 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 Page 2 of 9 ACTEK, INC. BALANCE SHEETS March 31, 2001 June 30, 2000 --------------- --------------- ASSETS CURRENT ASSETS Cash $ 2,598 $ 64,155 Accounts receivable, net of allowance for doubtful accounts 144,072 143,132 Inventory, net of reserve for obsolete inventory 361,402 236,117 Employee advances 147,058 145,341 --------------- --------------- TOTAL CURRENT ASSETS 655,129 588,745 --------------- --------------- PROPERTY AND EQUIPMENT Equipment 145,935 145,157 Vehicles 30,574 30,574 Leasehold improvements 6,434 6,434 Tooling 96,271 96,271 Accumulated depreciation (254,771) (244,474) --------------- --------------- TOTAL PROPERTY AND EQUIPMENT 24,444 33,962 --------------- --------------- OTHER ASSETS Investments (Bonds & Securities) 48,094 48,094 Deferred income taxes 81,487 81,487 --------------- --------------- TOTAL OTHER ASSETS 129,581 129,581 --------------- --------------- TOTAL ASSETS $ 809,154 $ 752,288 =============== =============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Bank overdraft $ - $ 3,879 Accounts payable 167,245 48,220 Accrued payroll and related liabilities 900 27,956 Notes payable - current portion 4,772 4,772 --------------- --------------- TOTAL CURRENT LIABILITIES 172,918 84,827 --------------- --------------- LONG-TERM DEBT Notes payable, net of current portion 118,150 121,754 --------------- --------------- COMMITMENTS AND CONTINGENCIES - - STOCKHOLDERS' EQUITY Common stock, $0.001 par value; 100,000,000 shares authorized, 65,654,492 issued and outstanding 65,654 65,654 Additional paid-in capital 718,495 718,495 Stock warrants 4,000 4,000 Accumulated deficit (270,227) (241,035) Accumulated other comprehensive income 163 (1,407) --------------- --------------- TOTAL STOCKHOLDERS' EQUITY 518,086 545,707 --------------- --------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 809,154 $ 752,288 =============== =============== Page 3 of 9 ACTEK, INC. STATEMENTS OF OPERATIONS For the 3 month For the 9 month For the Fiscal Period Ending Period Ending Year Ending March 31, 2001 March 31, 2001 June 30 2000 --------------- --------------- -------------- REVENUES $ 314,243 $ 792,229 $ 1,232,238 --------------- --------------- -------------- COST OF SALES Materials 16,477 249,940 466,745 Direct labor 54,307 163,547 255,355 Occupancy expense 3,347 9,090 11,403 Freight 2,927 8,576 21,694 Depreciation & amortization 574 1,721 2,212 Supplies 2,437 5,053 7,556 Overhead Allocation 5,061 14,315 - --------------- --------------- -------------- Total Cost of Sales 85,129 452,241 764,965 --------------- --------------- -------------- GROSS PROFIT 229,114 339,988 467,273 --------------- --------------- -------------- GENERAL AND ADMINISTRATIVE EXPENSES Depreciation and amortization 2,846 8,576 9,895 Salaries, wages and benefits 75,751 192,626 189,028 Legal and professional 20,431 53,523 29,715 Insurance 8,152 16,918 26,352 Bad debts - 10 15,851 Advertising 15,597 64,135 36,962 Occupancy 3,377 9,251 11,403 Other administrative expenses 6,906 23,243 43,305 --------------- --------------- -------------- Total General and Administrative Expenses 133,060 368,282 362,511 --------------- --------------- -------------- OPERATING INCOME 96,054 (28,294) 104,762 --------------- --------------- -------------- OTHER INCOME (EXPENSE) Dividend and interest income 20 7,467 16,920 Miscellaneous income 3 3 25 Interest Income/(expense) (5,618) (10,965) (13,979) --------------- --------------- -------------- Total Other Income/(Expense) (5,595) (3,494) 2,966 --------------- --------------- -------------- INCOME BEFORE INCOME TAXES 90,460 (31,789) 107,728 --------------- --------------- -------------- INCOME TAXES Current - - (20,084) Deferred - - - --------------- --------------- -------------- Total income taxes - - (20,084) --------------- --------------- -------------- NET INCOME $ 90,460 $ (31,789) $ 87,644 =============== =============== ============== Page 4 of 9 ACTEK, INC. STATEMENTS OF OPERATIONS (CONTINUED) For the 3 month For the 9 month For the Fiscal Period Ending Period Ending Year Ending March 31, 2001 June 30, 2000 June 30 2000 --------------- --------------- -------------- COMPREHENSIVE INCOME $ 90,460 $ (31,789) $ 87,644 BASIC NET INCOME PER COMMON SHARE $ nil $ nil $ nil DILUTED NET INCOME PER COMMON SHARE $ nil $ nil $ nil WEIGHTED AVERAGE NUMBER OF BASIC COMMON SHARES OUTSTANDING 65,654,492 65,654,492 65,654,492 WEIGHTED AVERAGE NUMBER OF DILUTED COMMON SHARES OUTSTANDING 69,654,492 69,654,492 69,654,492 Page 5 of 9 ACTEK, INC. STATEMENT OF CASH FLOWS For the 3 month For the 9 month For the Fiscal Period Ending Period Ending Year Ending March 31, 2001 March 31, 2001 June 30 2000 --------------- --------------- -------------- Cash flows from operating activities: Net income $ 90,460 $ (31,789) $ 87,644 --------------- --------------- -------------- Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,419 10,297 12,107 Deferred income taxes - - - Changes in assets and liabilities: Accounts receivable (62,804) (939) 51,562 Inventory (125,285) (125,286) (53,891) Employee advances 8,072 (1,717) (31,830) Prepaid expenses - - - Other assets - - - Bank overdraft - (3,879) (26,769) Accounts payable 54,859 119,026 (20,851) Accrued expenses 467 (22,887) 1,684 Interest payable - - 19 --------------- --------------- -------------- Net cash provided by operating activities (30,812) (57,174) 19,675 --------------- --------------- -------------- Cash flows from investing activities: Purchase of equipment - (779) (10,444) Purchase of investments - 0 (39,564) --------------- --------------- -------------- Net cash used in investing Activities - (779) (50,008) --------------- --------------- -------------- Cash flows from financing activities: Payments of notes payable (1,302) (3,604) (3,192) --------------- --------------- -------------- Net cash used by financing Activities (1,302) (3,604) (3,192) --------------- --------------- -------------- NET INCREASE (DECREASE) IN CASH (32,114) (61,557) (33,525) CASH, BEGINNING OF PERIOD 34,712 64,155 43,533 --------------- --------------- -------------- CASH, END OF PERIOD $ 2,598 $ 2,598 $ 10,008 =============== =============== ============== Page 6 of 9 ACTEK, INC. (UNAUDITED) Notes to Financial Statements ----------- The financial statements of ACTEK, INC. included herein, have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Although certain information normally included in financial statements prepared in accordance with generally accepted accounting principles has been condensed or omitted, ACTEK, INC. believes that the disclosures are adequate. These financial statements should be read in conjunction with the financial statements and notes thereto included in ACTEK, INC.'s annual report on Form10-K for the fiscal year ended June 30, 2000. The financial statements included herein reflect all normal recurring adjustments that, in the opinion of management, are necessary for a fair presentation. The results for interim periods are not necessarily indicative of trends or of results to be expected for a full year. The most significant change reflected in this report, compared to previous reports is the increase in the company's inventory which is $361,402 compared to $236,117 on June 30, 2000. This amount is based on an interim physical inventory taken on March 31, 2001, which resulted in a write-up of inventory previously expensed during the first two quarters of this fiscal year. Page 7 of 9 ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Company realized gross revenues of $314,243 in third quarter of fiscal year 2001 for a total of $792,229 for the first nine months of fiscal year 2001, which, when annualized, would be $1,056,305 compared to $1,232,238 in fiscal year 2000. The Company realized net income of $90,460 in the third quarter of fiscal year 2001. There was a $125,285 write-up of inventory previously expensed through cost of goods sold in the first six months reflecting the results of an interim physical inventory taken on March 31, 2001. Net loss for the first nine months of fiscal year 2001 is ($31,789). Net income for fiscal year 2000 was $87,644. Both the growth in inventory & the Net loss in operating results reflect changes in the marketplace during this fiscal year & our investments in the future growth of the company. The markets for our products have been undergoing what management believes to be a short-term down turn. The company has been developing new versions of our products for some time & in preparation for introduction of these products we have expended moneys for both development expenses & for additional inventory. At March 31, 2001, the Company has $655,129 in current assets including cash in the amount of $2,598. Current liabilities were $172,918, although $50,000 of that will be restructured into long-term debt after March 31. The Company's working capital balance is $482,211 at March 31, 2001 compared to $503,918 at June 30, 2000, which management believes preserves the Company in a good financial position. 8 of 9 PART II 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 SIGNATURES Pursuant to the requirements of Section 13 of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. ACTEK, INC. ----------- (Registrant) /s/ Frederick E. Graham /s/ Jeretta C. Graham ____________________________ ____________________________ Frederick E. Graham Jeretta C. Graham President and Director Secretary and Director May 16, 2001 May 16, 2001 ______________________________ ______________________________ Date Date Page 9 of 9