-----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, Ow5WFmNcoY0Z6HuEVY1FTi3HIdJq/PsjZdQSFmGJD5igSy8/+yUoxWs8i9Wldhpj RGpM5j6ebD/eMbwzNDzpDA== 0000893877-95-000136.txt : 19951017 0000893877-95-000136.hdr.sgml : 19951017 ACCESSION NUMBER: 0000893877-95-000136 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950831 FILED AS OF DATE: 19951016 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PCT HOLDINGS INC /NV/ CENTRAL INDEX KEY: 0000790023 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRIC LIGHTING & WIRING EQUIPMENT [3640] IRS NUMBER: 870431483 STATE OF INCORPORATION: NV FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-26088 FILM NUMBER: 95581064 BUSINESS ADDRESS: STREET 1: 434 OLDS STATION ROAD CITY: WENATCHEE STATE: WA ZIP: 98801 BUSINESS PHONE: 5096648000 MAIL ADDRESS: STREET 2: 434 OLDS STATION ROAD CITY: WENATCHEE STATE: WA ZIP: 98801 FORMER COMPANY: FORMER CONFORMED NAME: VERAZZANA VENTURES LTD DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: VERAZZANA VENTURES SYSTEMS LTD DATE OF NAME CHANGE: 19890618 10QSB 1 FORM 10-QSB 1 U.S. Securities and Exchange Commission Washington, D.C. 20549 FORM 10-QSB [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 31, 1995 [ ] 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 0-26088 PCT HOLDINGS, INC. (Exact name of small business issuer as specified in its charter) Nevada 87-0431483 (State or other jurisdiction of incorporation (I.R.S. Employer or organization) Identification No.) 434 Olds Station Road, Wenatchee, Washington 98801 (Address of Principal Executive Offices) Registrant's telephone number, including area code: (509) 664-8000 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______ ----- APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS Check whether the registrant filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by court. Yes____ No____ APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: As of October 11, 1995, 5,332,008 shares of the Company's Common Stock, par value $.001 per share, were outstanding. Transitional Small Business Disclosure Format (check one): Yes_____ No X ----- 2 PART 1 -- FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets - August 31 and May 31, 1995 Consolidated Statements of Income - First Quarter Ended August 31, 1995 and 1994 Consolidated Statements of Cash Flow - First Quarter Ended August 31, 1995 and 1994 Management's Statement and Notes to Consolidated Financial Statements 3 PCT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AUGUST 31 AND MAY 31, 1995 AUGUST 31 MAY 31 Assets 1995 1995 - ------ ----------- --------- (unaudited) (audited) Current Assets Cash $ 476,051 $ 1,078,637 Receivables 1,621,033 1,075,999 Inventory 4,942,063 4,375,162 Prepaid Expense 68,936 39,721 Other 281,181 278,795 ------------ ------------ Total Current Assets 7,389,264 6,848,314 ============ ============ Net Property, Plant & 3,209,609 3,008,122 Equipment Real Estate Held for Resale 676,253 676,253 Patents, net 454,635 478,092 Costs in Excess of NBV 462,687 462,687 Non-compete Agreement 100,000 100,000 Other 115,908 56,444 ------------ ------------ Total Assets $ 12,408,356 $ 11,629,912 ============ ============ Liabilities and Shareholders' Equity - ------------------------------------ Current Liabilities Accounts Payable $ 2,122,108 $ 1,527,467 Accrued Liabilities 366,622 518,065 Current Portion - LTD 2,677,401 2,448,000 Current Portion - C/L 48,585 51,000 Current Portion - N/P 600,000 510,000 Current Portion - Non-Com 35,000 35,000 ------------ ------------ Total Current Liabilities 5,849,716 5,089,532 ============ ============ Long Term Debt, net 540,739 319,574 Capital Leases, net 51,063 115,281 Notes Payable, net -- 457,644 Non-compete Agreement, net 65,000 65,000 Deferred Rent 146,710 128,711 ------------ ------------ Total Liabilities 6,653,228 6,175,742 ============ ============ Shareholders' Equity Common Stock 11,511,777 11,018,406 Accumulated Deficit (5,756,649) (5,564,236) ------------ ------------ Total Shareholders' Equity 5,755,128 5,454,170 ------------ ------------ Total Liabilities & Equity $ 12,408,356 $ 11,629,912 ============ ============ The accompanying notes are an integral part of the consolidated financial statements 4 PCT HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Income First Quarters Ended August 31, 1995 and 1994 Quarters Ended ----------------------------- August 31 August 31 1995 1994 Unaudited Unaudited --------- --------- NET SALES $ 3,456,473 $ 2,824,024 COST OF SALES 2,795,475 2,218,324 ----------- ----------- GROSS PROFIT 660,998 605,700 OPERATING EXPENSES 808,687 508,948 ----------- ----------- INCOME (LOSS) OPERATIONS (147,689) 96,752 ----------- ----------- OTHER INCOME AND EXPENSE Interest Income --- 18,920 Interest Expense (44,776) (93,815) Other 52 11,535 ----------- ----------- NET INCOME (LOSS) BEFORE FEDERAL INCOME TAX (44,724) (63,360) ----------- ----------- LESS: INCOME TAXES 0 (9,850) ----------- ----------- NET INCOME (LOSS) FOR THE PERIOD ($ 192,413) $ 23,542 =========== =========== PER SHARE OF COMMON STOCK ($ 0.02) $ 0.01 =========== =========== WEIGHTED AVERAGE SHARES OUTSTANDING DURING THE PERIOD 5,264,008 2,764,952 =========== =========== The accompanying notes are an integral part of the consolidated financial statements 5 PCT HOLDINGS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FIRST QUARTERS ENDED AUGUST 31, 1995 AND 1994 August 31 August 31 1995 1994 Unaudited Unaudited --------- --------- CASH FLOW FROM OPERATING ACTIVITIES Net cash from operating activities ($ 741,800) $ 203,734 ----------- ----------- CASH FLOW FROM INVESTING ACTIVITIES Purchase of property and equipment (293,661) (105,611) Purchase of Patents --- (450,000) Other Changes, net (74,299) --- ----------- ----------- Net cash from investing activities (367,960) (555,611) ----------- ----------- CASH FLOW FROM FINANCING ACTIVITIES Payments of Debt and Capital Leases (72,447) (104,404) Proceeds from Financing Debt 86,250 2,025,896 Payments on notes payable to stockholders --- (1,492,838) Sale of common stock 493,371 410,000 ----------- ----------- Net cash from financing activities 507,174 838,654 ----------- ----------- NET CHANGE IN CASH (602,586) 486,777 Cash, beginning of period 1,078,637 27,208 ----------- ----------- Cash, end of period $ 476,051 $ 513,985 =========== =========== The accompanying notes are an integral part of the consolidated financial statements. 6 PCT HOLDINGS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Management's Statement The accompanying unaudited consolidated financial statements have been prepared in accordance with Form 10-QSB instructions and, in the opinion of management, contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the Company's consolidated financial position as of August 31, 1995 and 1994, the consolidated results of operations for the three-month periods ended August 31, 1995 and 1994, and the consolidated statements of cash flow for the three-month periods ended August 31, 1995 and 1994. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's Annual Report(s) on Form 10-KSB. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. The financial statements should be read in conjunction with the audited financial statements and notes thereto for the years ended May 31, 1995 and 1994, which have been provided in their entirety in the Company's Form 10-KSB for the period ended May 31, 1995. The results of operations for the three-month periods ended August 31, 1995 and 1994 are not necessarily indicative of the results to be expected for the full year. Also, certain reclassifications have been made to the balance sheet and the statements of operations and cash flow to conform to the fiscal year 1995 presentations. Computations of Income and Loss per Share Income and Loss per common and common equivalent share are computed using the weighted average number of common and common equivalent shares outstanding during each period reflected in these financial statements. Common equivalent shares consist of stock options, which are excluded from the computation if antidilutive. Fully diluted income and loss per share did not differ significantly from primary income and loss per share in any period being reported. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview: The Company's revenues for the three-month period ended August 31, 1995 were derived from its three operating subsidiaries involved in the manufacture and sale of electrical connectors and instrument packages (Pacific Coast Technologies, Inc. ("PCTI")); high quality machined aluminum and metal parts (Cashmere Manufacturing Company, Inc. ("CMC")); and devices that filter out electromagnetic interference (Ceramic Devices, Inc ("CDI"), which was acquired on February 28, 1995). Revenues for the three-month period ended August 31, 1994 were derived from the operations of PCTI and CMC only. Results of Operations: Gross revenues for the quarter ended August 31, 1994 versus the quarter ended August 31, 1995 increased from $2,824,024 to $3,456,473, an increase of $632,449. $445,782 of the increase was attributable to CDI, leaving a net increase of $186,667, mostly attributable to the operations of PCTI, or a 21.9% increase in PCTI's revenues. This increase was due to generally higher average activity among the customer base of PCTI and a larger backlog in comparison to the same period in the prior year. CMC's revenues declined modestly during the same period, from $1,861,238 in 1994 to $1,836,129 in 1995, a $28,109 decrease, or 1.5%. Gross margins for the two comparable periods were 21.4% in 1994 versus 20.4% in 1995, a decrease due in part to higher levels of overtime labor utilization. Management is actively recruiting and training qualified production employees, particularly machinists, to reduce this factor. Operating expenses increased from $508,948 in 1994 to $808,687, an increase of $299,739. $146,112 of the increase was due to the addition of the CDI operating subsidiary. The balance of the increase, amounting to $155,627, was due in large part to legal costs of nearly $70,000 incurred during the quarter in connection with the Balo litigation described below and to legal and accounting fees related to completion and reporting of the transactions closed by the Company and its subsidiaries during fiscal year 1995. Interest expense declined from $93,815 in 1994 to $44,776 in 1995, reflecting reductions in long-term and short-term debt in comparison to the prior year. As reflected in the cash flow statement, the Company used a significant portion of stock sale proceeds to reduce debt. The corresponding decline in net income from the above stated factors totalled approximately $216,000, from income of $23,542 in 1994 to a net loss of $192,413 in 1995. 8 Liquidity: At August 31, 1995, total current assets were $7,389,264 and total current liabilities were $5,849,716, resulting in net working capital of $1,539,548, and a current asset and liability ratio of 1.3 to 1.0. Comparable amounts at August 31, 1994 were $6,848,314 of current assets and $5,089,532 in current liabilities, resulting in net working capital of $1,758,782, and a current ratio of 1.35 to 1.0. Although the Company continues to experience operating losses and will continue to require working capital and cash to support operations, management has adopted operational plans intended to bring each operating subsidiary to some level of profitability during the upcoming fiscal year 1996. Irrespective of these plans, there can be no assurance that the Company will reach profitability. During the quarter ended August 31, 1995, the Company completed its agreement for a working capital line of credit and a capital equipment line of credit with a technology-based bank, resulting in a net working capital line availability of $1,500,000 and capital equipment line availability of $250,000. Subsequent to the end of the first quarter, $1,000,000 of the operating line was drawn to provide a compensating balance to secure a letter of credit backing a demand loan of $2,000,000 included in current liabilities. An additional $150,000 has been drawn to support operations. The capital equipment line has not yet been utilized. Capital Resources: At August 31, 1995, the Company had no material purchase commitments for capital equipment. Additions and/or replacements of plant and equipment are generally provided through working capital or a trade-in for down payment resources, and a capital lease of long-term purchase note secured by the related equipment purchased. Inflation: Inflation has not had a significant impact on the Company's operations in the past two years, and is not expected to have a significant impact in the foreseeable future. II-1 PART II OTHER INFORMATION Item 1. Legal Proceedings In July 1992, Balo Precision Parts, Inc. ("Balo") informed PCTI that Balo believed that PCTI's hermetic connectors infringed Balo's U.S. Patent No. 5,110,307. Balo and PCTI were unable to resolve this matter and, on May 17, 1993, PCTI requested the U.S. Patent and Trademark Office to reexamine Balo's patent. The next day Balo filed a patent infringement action against PCTI in the U.S. District Court for the District of New Jersey. Balo's lawsuit was stayed pending the outcome of the Patent Office's reexamination of Balo's patent. The reexamination of Balo's patent has been concluded, and the New Jersey lawsuit has resumed. PCTI has answered Balo's complaint and has pursued discovery. On July 28, 1995, PCTI filed a motion for summary judgment in its favor, which was denied on September 8, 1995, on the basis that factual issues remain to be resolved at trial. PCTI also filed a patent infringement action against Balo, which has been consolidated with Balo's lawsuit. PCTI's lawsuit alleges that Balo's sales of hermetic connectors infringes U.S. Patent Nos. 4,690,480 and 5,041,019, both owned by PCTI. Balo and PCTI are seeking damages and an injunction against each other's continued manufacture and sale of hermetic connectors. The Company believes, and has been advised by its patent counsel, that PCTI has meritorious defenses to Balo's claims and that Balo infringes PCTI's patents. However, such opinions are not binding on a court, and it is not possible to predict the outcome of any litigation with certainty. If PCTI is not successful in this litigation, it could suffer a serious, material adverse impact on its financial condition and its operations, particularly its hermetic connector business. Item 2. Changes in Securities There were no changes in the instruments defining the rights of holders of any class of registered securities during the quarter. Item 3. Defaults upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None II-2 Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K a. Exhibits: 27 - Financial Data Schedule. b. Report on Form 8-K: During the period covered by this Report, no reports on Form 8-K were filed. II-3 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. PCT HOLDINGS, INC. Date: October 11, 1995 /s/ DONALD A. WRIGHT ----------------------------------------- Donald A. Wright, President & CEO Date: October 11, 1995 /s/ Nick A. Gerde ----------------------------------------- Nick A. Gerde, Vice President Finance/CFO and Principal Accounting Officer EX-27 2 FINANCIAL DATA SCHEDULE
5 This Schedule contains summary financial information extracted from the audited financial statements of PCT Holdings, Inc., and its subsidiaries for the three-month period ended August 31, 1995, and is qualified in its entirety by reference to such financial statements. 3-MOS MAY-31-1995 AUG-31-1995 476,051 0 1,666,240 45,207 4,942,063 7,389,264 5,275,502 (2,065,893) 12,408,356 5,849,716 540,739 11,511,777 0 0 (5,756,649) 12,408,356 3,456,473 3,456,473 2,795,475 808,687 (52) 0 44,776 (192,413) 0 (192,413) 0 0 0 (192,413) (0.02) (0.02)
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