-----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, E5WOMIuD2rVAfhPSOaPVZhvImUKFKV7TN4njOcWr2L1IAIzUESN54orGYbDPdrpF 3KhT2abXcnz8aQbnv9Zebg== 0000812152-98-000005.txt : 19981102 0000812152-98-000005.hdr.sgml : 19981102 ACCESSION NUMBER: 0000812152-98-000005 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981030 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: OZO DIVERSIFIED AUTOMATION INC /CO/ CENTRAL INDEX KEY: 0000812152 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 840922701 STATE OF INCORPORATION: CO FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16335 FILM NUMBER: 98734197 BUSINESS ADDRESS: STREET 1: 7450 EAST JEWELL AVE STE A CITY: DENVER STATE: CO ZIP: 80231 BUSINESS PHONE: 3033680401 MAIL ADDRESS: STREET 1: 7450 E JEWELL AVE STREET 2: STE A CITY: DENVER STATE: CO ZIP: 80231 10QSB 1 FORM 10QSB FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _______________ to ______________ Commission File No. 0-16335 OZO DIVERSIFIED AUTOMATION, INC. 7450 East Jewell Avenue, Suite A Denver, Colorado 80231 Telephone: (303) 368-0401 Colorado 84-0922701 (State of Incorporation) (IRS Employer Identification No.) Indicate by check mark whether the Issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 As of September 30, 1998, Registrant had 483,164 shares of its $.10 par value common stock outstanding. 1 PART I - FINANCIAL INFORMATION OZO Diversified Automation, Inc. BALANCE SHEETS ASSETS
September 30, December 31, 1998 1997 (Unaudited) CURRENT ASSETS Cash $ 607 $ 7,526 Accounts and notes receivable, net 131,296 255,414 Inventories (Note 3) 366,866 358,498 Prepaid expenses 11,215 25,631 ------------ ------------- Total Current Assets 509,984 647,069 ------------ ------------- PROPERTY AND EQUIPMENT Manufacturing 40,391 149,703 Furniture and Fixtures 83,581 169,747 Capitalized Lease 204,814 204,814 Leasehold Improvements 5,010 5,010 Vehicle 10,820 10,820 ------------ ------------- 344,616 540,094 Less accumulated depreciation 199,302 362,271 ------------ ------------- Total Property and Equipment 145,314 177,823 ------------ ------------- ------------ ------------- OTHER ASSETS Deferred Financing Costs 2,255 8,126 Other 2,859 2,859 ------------ ------------- 5,114 10,985 ------------ ------------- ------------ ------------- Total Assets $ 660,412 $ 835,877 ------------ ------------- ------------ -------------
See notes to financial statements 2 PART I - FINANCIAL INFORMATION (CONTINUED) OZO DIVERSIFIED AUTOMATION, INC. BALANCE SHEETS (CONTINUED) LIABILITIES AND SHAREHOLDERS' EQUITY
September 30, December 31, 1998 1997 (Unaudited) CURRENT LIABILITIES Current portion of notes payable $ 281,835 $ 280,036 and Capitalized Lease Obligation Accounts payable and accrued expenses 149,902 401,687 Note payable Bank 27,415 27,415 Note payable - Officer 78,609 0 Note payable - Director 75,000 - ------------ ----------- Total Current Liabilities 612,761 709,138 ------------ ----------- OTHER LIABILITIES Long Term Debt and Capitalized Lease Obligation 82,429 126,731 ------------ ----------- Total Liabilities 695,190 835,869 ------------ ----------- SHAREHOLDERS' EQUITY Preferred stock, $.10 par value authorized 1,000,000 shares issued - none Common stock, $.10 par value authorized, 5,000,000 shares issued and outstanding 483,164 shares (1998) 478,164 shares (1997) 48,316 47,816 Capital in excess of par value 1,198,004 1,193,004 Accumulated deficit (1,281,098) (1,240,812) ------------- ----------- Total Shareholders' (Deficiency) Equity (34,778) 8 Total Liabilities & Stockholders' Equity $ 660,412 $ 835,877 ------------- ----------- ------------- -----------
See notes to financial statements 3 OZO DIVERSIFIED AUTOMATION, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Nine Months Ended September 30, 1998 1997 Net Sales $ 1,352,919 $ 2,032,998 Cost of Sales 802,615 1,181,231 ------------ ------------ Gross Profit 550,304 851,767 ------------ ------------ Operating Expenses: Marketing & Sales 119,660 290,491 Research & Development 105,421 116,845 General and Administrative 365,508 365,988 ------------ ------------ 590,589 773,324 ------------ ------------ Income before taxes (40,285) 78,443 Provision for Income Taxes 15,689 Tax Benefit of Operating Loss Carry Forward (15,689) ------------ ------------ NET INCOME (LOSS) $ (40,285) $ 78,443 ------------ ------------ ------------ ------------ NET INCOME (LOSS) PER COMMON SHARE $ (0.08) $ 0.17 ------------ ------------ ------------ ------------ NET INCOME (LOSS) PER COMMON SHARE ASSUMING DILUTION $ (0.08) $ 0.17 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 480,942 458,164 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ASSUMING DILUTION 480,942 458,164 ------------ ------------ ------------ ------------
See notes to financial statements 4 OZO DIVERSIFIED AUTOMATION, INC. STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended September 30, 1998 1997 Cash flows from operating activities: Net Income $ (40,285) $ 78,443 Adjustments to reconcile net income to net cash used in operating activities: Depreciation 38,929 34,583 Amortization of deferred financing costs 5,871 5,871 Other 0 (2,082) Decrease (increase) in assets: Accounts receivable 124,118 (197,979) Inventories (8,369) 133,221 Prepaid expenses 14,416 1,910 Increase (decrease) in accounts payable and accrued expenses (249,986) (39,604) ----------- ----------- Net cash (used) provided by operating activities (115,306) 14,363 ----------- ----------- Cash flows from investing activities: Capital Expenditures (6,421) (9,213) ----------- ----------- Net cash (used) by investing activities (6,421) (9,213) ----------- ----------- Cash flows from financing activities: Payments of long term debt and capitalized lease obligations (44,302) (7,736) Proceeds from officer loan 213,200 0 Payments on officer loan (134,590) 0 Proceeds from director loan 75,000 Payments on director loan 0 Proceeds from issuance of common stock 5,500 0 ----------- ----------- Net cash provided (used) by financing activities 114,808 (7,736) ----------- ----------- Net increase (decrease) in cash (6,919) (2,586) Cash at beginning of period 7,526 3,111 ----------- ----------- Cash at end of period $ 607 $ 525 ----------- ----------- ----------- -----------
See notes to financial statements 5 OZO DIVERSIFIED AUTOMATION, INC. STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended September 30, 1998 1997 Net Sales $ 359,798 $ 604,809 Cost of Sales 182,970 354,083 ------------ ------------ Gross Profit 176,828 250,726 ------------ ------------ Operating Expenses: Marketing & Sales 15,346 78,407 Research & Development 24,979 39,523 General and Administrative 132,846 115,971 ------------ ------------ 173,171 233,901 ------------ ------------ ------------ ------------ Income before taxes 3,657 16,825 Provision for Income Taxes 731 3,365 Tax Benefit of Operating Loss Carry Forward (731) (3,365) ------------ ------------ NET INCOME (LOSS) $ 3,657 $ 16,825 ------------ ------------ ------------ ------------ NET INCOME (LOSS) PER COMMON SHARE $ (0.01) $ 0.04 ------------ ------------ ------------ ------------ NET INCOME (LOSS) PER COMMON SHARE ASSUMING DILUTION $ (0.01) $ 0.04 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING 483,164 458,164 ------------ ------------ ------------ ------------ WEIGHTED AVERAGE COMMON SHARES OUTSTANDING ASSUMING DILUTION 483,164 458,164 ------------ ------------ ------------ ------------
See notes to financial statements 6 OZO DIVERSIFIED AUTOMATION, INC. NOTES TO FINANCIAL STATEMENTS NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (UNAUDITED) The unaudited financial statements included herein were prepared from the records of the Company in accordance with Generally Accepted Accounting Principles and reflect all adjustments which are, in the opinion of Management, necessary to provide a fair statement of the results of operations and financial position for the interim periods. Such financial statements generally conform to the presentation reflected in the Company's Form 10-KSB filed with the Securities and Exchange Commission for the year ended December 31, 1997. The current interim period reported herein should be read in conjunction with the Company's Form 10-KSB subject to independent audit at the end of the year. The results of operations for the nine months ended September 30, 1998 are not necessarily indicative of the results that may be expected for the year ending December 31, 1998. Note 1 - A summary of significant accounting policies is currently on file with the Securities and Exchange Commission on Form 10-KSB. Note 2 - Income Taxes. At December 31, 1997, the Company had net operating loss carryforwards totaling approximately $962,000, that may be offset against future taxable income through 2011 and research and development credits of approximately $60,000 expiring through 2012. The Company has fully reserved the tax benefits of these operating losses because the likelihood of realization of the tax benefits cannot be determined. These carryforwards are subject to review by the Internal Revenue Service. Temporary differences between the time of reporting certain items for financial and tax reporting purposes, primarily from using different methods of reporting depreciation cost and warranty and vacation accruals, are not considered significant by Management of the Company. Note 3 - Inventories
September 30, 1998 December 31, 1997 Raw Materials $ 324,867 $ 358,498 Work in Progress 8,000 - Finished Goods 34,000 - ------------- ------------- $ 366,867 $ 358,498 ------------- ------------- ------------- -------------
7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS For the nine months ended September 30, 1998, the Company had revenues of $1,352,919 a 33.5% decrease from revenues of $2,032,998 recorded for the first nine months of 1997. For the quarter ended September 30, 1998, the Company had revenues of $359,798, a 40.5% decrease from revenues of $604,809, recorded for the third quarter of 1997. The decrease in revenues is primarily a result of weak economic conditions in Asia, as well as, capital spending curtailments by large Original Equipment Manufacturers (OEMs) in North America. These spending curtailments are also directly attributable to the uncertain business conditions in Asia. While Management cannot predict a timetable for a recovery in the Asian markets, it is believed that the weak business conditions in Asia will extend well into the second half of the year and possibly into the first half of 1999. Management is in the process of refocusing its sales efforts in markets that remain less affected by the Asian financial situation. Because of the decrease in total revenues reported during the first nine months of 1998, the Company posted a loss of $40,285, a 151.3% decrease from net income of $78,443, reported for the same period in 1997. Despite a decrease in total revenues reported during the third quarter of 1998, the Company posted a gain of $3,657, a 78.3% decrease from net income of $16,825 reported for the same period in 1997. In anticipation of an extended downturn in sales, Management has continued to undertake internal measures to reduce fixed costs and to match expense spending against projected revenues. The Company will voluntarily enforce its cost containment program for as long as conditions warrant. The Company continues to focus on the depaneling application market with its premium routing equipment, the 18HS PanelMASTER and the 16SI PanelROUTER. Both of these strategic product groups are continuously analyzed for improvements and incorporating requirements defined by our customers. In August, the Company attended the SMTrends Trade Show in Huntsville, Alabama, and the SMI Trade Show in San Jose, California. In addition, marketing efforts have been increased in the European Union and in Central and South America. Management has also reemphasized customer service, and is continuing production process improvements in an effort to preserve operating margins. The Company's Current Liabilities as of September 30, 1998, are $612,761, approximately $102,777 higher than Current Assets of $509,984. Included in the Current Liabilities as of September 30, 1998, are $240,000 in notes which are due December 30, 1998. As disclosed in the 1997 10-KSB report, Management is in the process of addressing the Company's debt obligations, and expects to have this issue resolved well in advance of the due date. Please see Part II, Note 5, for more information. Additionally, a $75,000 loan was made from a director of the Company to partially fund the operating loss incurred to date. 8 Cash flow from operating activities was a negative $115,306 for the nine months ended September 30, 1998, as compared to a positive $14,363 for the same period in 1997. This is directly attributable to reduced sales and a decrease in Accounts Payable. The negative operating cash flow had been primarily funded by the aforementioned loan from a director of the Company, in addition to a loan from an officer which is payable upon demand with interest at 2.0 percentage points above the prime rate. As of September, 30, 1998, the balance on these loans was approximately $75,000 and $78,609 respectively. During the third quarter the Company wrote-off assets which were fully depreciated and no longer in service. These write-offs included $109,311 in manufacturing equipment, and $92,587 in furniture and fixtures. As of October 26, 1998, the Company had an open order backlog of approximately $304,700, compared to a backlog of $368,000 on October 28, 1997. The open order backlog reflects an upturn in business conditions both domestically and internationally. However, as mentioned above, business conditions have continued to adversely impact the Company's open order backlog and remain unpredictable. The foregoing discussion does not give any effect to the completion of a sale of the Company's depaneling and routing business as described in Part II, Item 5 of this report. If the proposed transaction is completed, of which there can be no assurance, the Company's historical business will be discontinued. Except for historical information contained herein, the statements in this report are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks and uncertainties, which may cause the Company's actual results in future periods to differ materially, from forecasted results. These risks and uncertainties include, among other things, product demand and acceptance, market competition, and risks inherent in the Company's international operations. These and other risks are described elsewhere herein and in the Company's other filings with the Securities and Exchange Commission. 9 PART II - OTHER INFORMATION OZO Diversified Automation, Inc. Items 1- 4 Not Applicable. Item 5 On October 6, 1998 the Company announced that it had reached a nonbinding agreement in principle to sell its automation and depaneling business to JOT Automation, Inc., the U.S. subsidiary of JOT Automation Group Oyj, of Finland. The nature of the proposed transaction will be an asset sale between OZO and JOT, as opposed to a common stock purchase by JOT from OZO's current shareholders. The proposed transaction is currently scheduled to close before the end of the year. It is subject to satisfactory completion of due diligence, preparation of definitive agreements, and OZO shareholder approval among other standard closing conditions. It is anticiapated that the definitive purchase agreement will be signed by November 9, 1998. OZO will then seek shareholder approval of the agreement. Assuming shareholder approval is obtained the transaction will be finalized on or before December 31, 1998. OZO's Board of Directors and Officers have identified certain assets that are not for sale. They will determine if a new business is to be established in the public shell, or if the proceeds from the proposed transaction will be returned, in whole or in part, to the shareholders. Per the Company's corporate bylaws, the current common stock shareholders must approve the proposed transaction before it may be completed. If the proposed transaction is approved, OZO's Board of Directors and Officers will determine the next course of action regarding the disposition of the remaining operations. As part of the proposed transaction, JOT Automation, Inc. will acquire the OZO name and trademark. The OZO public shell, after the completion of the agreement with JOT, will likely change its name. This will be a decision to be considered by the Board of Directors (and likely to be a condition of the final agreement with JOT). Item 6 Exhibits and Reports on Form 8-K a) Exhibits-none. b) No Reports on Form 8-K were filed during the quarter ending September 30, 1998. Item 7 Not Applicable 10 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 thereunto duly authorized. OZO DIVERSIFIED AUTOMATION, INC. By: David J. Wolenski Brantley J. Halstead David J. Wolenski Brantley J. Halstead Principal Executive Officer Principal Accounting Officer Principal Financial Officer Chief Financial Officer Dated: October 30, 1998 11 EX-27 2
5 9-MOS DEC-31-1998 SEP-30-1998 607 0 131,296 0 366,866 509,984 344,616 199,302 660,412 612,761 0 0 0 48,316 (83,094) 660,412 359,798 359,798 182,970 182,970 0 0 0 3,657 0 0 0 0 0 3,657 0.01 0.01 Although the Company's tax liability in third quarter 1998 was $731, this amount was offset in its entirety by loss carryforwards from previous years. The net tax liability for the quarter ending September 30, 1998 is zero.
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