-----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, Vkmcl0axa0yF1khRNbi/R7l6RNqEIufE+CxGZUvXh1FiMk3A5yEEPwltB3PBVghu iIizgQhvVMScPEDP5KqnFA== 0000898430-95-002270.txt : 19951119 0000898430-95-002270.hdr.sgml : 19951119 ACCESSION NUMBER: 0000898430-95-002270 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MONITEK TECHNOLOGIES INC CENTRAL INDEX KEY: 0000814180 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INSTRUMENTS FOR MEASUREMENT, DISPLAY, AND CONTROL [3823] IRS NUMBER: 941689129 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-16544 FILM NUMBER: 95589912 BUSINESS ADDRESS: STREET 1: 1495 ZEPHYR AVE CITY: HAYWARD STATE: CA ZIP: 94544 BUSINESS PHONE: 5104718300 MAIL ADDRESS: STREET 1: 1495 ZEPHYR AVENUE CITY: HAYWARD STATE: CA ZIP: 94544 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 30, 1995 Commission File Number 33-14201 ------------------ -------- MONITEK TECHNOLOGIES, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Delaware 94-1689129 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1495 Zephyr Avenue, Hayward, CA 94544 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 471-8300 -------------- NONE -------------------------------------------------------------- (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 and 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 last 90 days. YES X NO____ --- Outstanding at CLASS September 30, 1995 ----- ------------------ COMMON STOCK - $.01 PAR VALUE 1,690,424 CLASS A COMMON STOCK - $.01 PAR VALUE 1,252,676 1 MONITEK TECHNOLOGIES, INC. -------------------------- TABLE OF CONTENTS ----------------- ITEM DESCRIPTION PAGE - ---- ----------- ---- PART I - FINANCIAL INFORMATION ------------------------------ 1. Financial Statements Consolidated Balance Sheets as of March 31,1995 (audited) and September 30, 1995 (unaudited)...........3 Consolidated Statements of Operations (unaudited) for the Three Months and Six Months Ended September 30, 1994 and September 30, 1995........................5 Consolidated Statements of Cash Flows (unaudited) for the Six Months Ended September 30, 1994 and September 30, 1995.................................6 Notes to Consolidated Financial Statements.............7 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................9 PART II - OTHER INFORMATION --------------------------- 6. Exhibits and Reports on Form 8-K......................12 SIGNATURE.............................................12 --------- 2 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS MARCH 31, 1995 AND SEPTEMBER 30, 1995
March 31, September 30, 1995 1995 (Audited) (Unaudited) ----------- -------------- ASSETS ------ Current Assets: Cash and equivalents..................................... $ 59,908 $ 70,988 Accounts receivable, less allowance for doubtful accounts of $35,465 and $44,578 896,704 1,038,120 Inventories.............................................. 1,488,502 1,253,420 Prepaid expenses......................................... - 21,778 Other current assets..................................... 113,213 111,639 ---------- ---------- Total Current Assets............................... 2,558,327 2,495,945 Property and equipment, less accumulated depreciation and amortization of $910,964 and $937,312.................................... 158,708 138,863 Product line acquisition costs, less accumulated amortization of $75,715 and $80,937...................................... 52,912 47,690 Other assets.............................................. 1,808 2,136 ---------- ---------- Total Assets........................................ $2,771,755 $2,684,634 ========== ==========
See accompanying notes to unaudited consolidated financial statements 3 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (CONT,D) MARCH 31, 1995 AND SEPTEMBER 30, 1995
March 31, September 30, 1995 1995 (Audited) (Unaudited) -------------- ------------- LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Current Liabilities: Notes payable to related parties......................... $ 200,000 $300,000 Current capital lease obligations........................ 5,005 2,606 Trade accounts payable................................... 345,573 499,475 Accrued liabilities...................................... 626,675 640,133 ----------- -------- Total Current Liabilities............................ 1,177,253 1,442,214 Stockholders' Equity: Common stock - $.01 par value, authorized 10,000,000 shares with 1,690,424 shares issued and outstanding................................. 16,904 16,904 Class A common stock - $.01 par value, authorized 2,000,000 shares, 1,252,676 shares issued and outstanding; convertible into common stock.......................... 12,527 12,527 Paid-in capital.......................................... 6,117,176 6,117,176 Accumulated deficit...................................... (4,602,382) (4,950 200) Cumulative translation adjustment........................ 50,277 46,013 ----------- -------- Total Stockholders' Equity........................... 1,594,502 1,242,420 ----------- ---------- Total Liabilities and Stockholders' Equity............................... $2,771,755 $2,684,634 =========== ===========
See accompanying notes to unaudited consolidated financial statements 4 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS AND SIX MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1995 (UNAUDITED)
Three Months Ended Six Months Ended ------------------------ ------------------------ September 30, September 30, 1994 1995 1994 1995 ----------- ----------- ----------- ----------- Net sales $1,531,145 $1,897,662 $3,215,285 $3,661,457 Cost of sales 714,496 886,071 1,447,490 1,691,322 ---------- ---------- ---------- ---------- Gross profit 816,649 1,011,591 1,767,795 1,970,135 Selling, general and administrative expenses 750,281 1,001,412 1,588,495 1,957,072 Research, development and product engineering 72,935 168,497 140,227 309,793 ---------- ---------- ---------- ---------- Operating profit (loss) (6,567) (158,318) 39,073 (296,730) Other income (expense): Interest expense (2,547) (24,394) (6,725) (31,410) Foreign currency trans- action gain 20,863 (19,963) 44,303 (23,462) Other income 6,503 2,111 11,732 3,784 Interest income 312 - 1,389 - ---------- ---------- ---------- ---------- Profit (loss) before income tax expense 18,564 (200,564) 89,772 (347,818) Income tax expense - - - - --------- ---------- ---------- ---------- Net profit (loss) $ 18,564 $ (200,564) $ 89,772 $ (347,818) =========== =========== =========== =========== Net profit (loss) per share $ .01 $ (.07) $ .02 $ (.12) ======== ======== ======== ======== Weighted average number of common shares outstanding 2,943,100 2,943,100 2,943,100 2,943,100 =========== =========== =========== ===========
See accompanying notes to unaudited consolidated financial statements 5 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 1994 AND SEPTEMBER 30, 1995 (UNAUDITED)
Six Months Ended ---------------- September 30, 1994 1995 ----------- ----------- Cash flows from operating activities: Cash received from customers $ 3,088,693 $ 3,523,505 Cash paid to suppliers and employees (3,243,154) (3,545,603) Interest received 1,389 - Interest paid (6,725) (31,410) Income taxes paid - - Other miscellaneous cash receipts (disbursements) 53,686 (26,160) ----------- ----------- Net cash used in operations (106,111) (79,668) Cash flows from investing activities: Capital expenditures (6,710) (6,853) Cash flows from financing activities: Net borrowings on line of credit - 100,000 Capital lease obligation payments (5,180) (2,399) --------- -------- Net cash used in financing activities (5,180) 97,601 --------- --------- Net decrease in cash and equivalents (118,001) 11,080 Cash and equivalents at beginning of period 254,473 59,908 --------- --------- Cash and equivalents at end of period $ 136,472 $ 70,988 =========== =========
See accompanying notes to unaudited consolidated financial statements 6 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS 1. The condensed consolidated financial statements include the accounts of Monitek Technologies, Inc. and its wholly owned subsidiary (collectively the "Company"). All significant intercompany balances and transactions have been eliminated in consolidation. The consolidated financial statements reflect all adjustments (which include only normal, recurring adjustments) which, in the opinion of management, are necessary for the fair presentation of the results of the Company at the dates of the balance sheets. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. These interim statements should be read in conjunction with the audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1995 (Commission File No. 0-16544). Results of operations for the six months ended September 30, 1995 are not necessarily indicative of the results to be achieved for the full fiscal year. 2. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market (net realizable value). Inventories consist of the following:
March 31, September 30, 1995 1995 --------- ------------ Raw Materials $393,586 $344,463 Component parts and work in progress 236,964 228,277 Finished goods 857,952 680,680 ---------- ---------- $1,488,502 $1,253,420 ========== ==========
7 MONITEK TECHNOLOGIES, INC. AND SUBSIDIARY NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - (CONT'D) 3. Income (Loss) Per Share The computation of net income (loss) per share is based on the weighted average number of common shares outstanding. No effect is given to outstanding stock options or warrants in the computation of income (loss) per share since they are deemed to be anti-dilutive. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL ------------------------------------------------- CONDITION AND RESULTS OF OPERATIONS ----------------------------------- RESULTS OF OPERATIONS - --------------------- Net sales increased by 14% for the three months and 24% for the six months ended September 30, 1995 ("Fiscal 1996 Three Months") and ("Fiscal 1996 Six Months") compared with the three months and six months ended September 30, 1994 ("Fiscal 1995 Three Months") and ("Fiscal 1995 Six Months"). Domestic sales increased by 12% and 14% for the Fiscal 1996 Three Months and Fiscal 1996 Six Months, respectively, while export sales from the United States decreased by 19% for the Fiscal 1996 Three Months and 13% for the Fiscal 1996 Six Months, compared with the comparable prior year periods. Sales to Continental Europe by Monitek GmbH increased by 45% for the Fiscal 1996 Three Months and 23% for the Fiscal 1996 Six Months compared with the Fiscal 1995 periods. Management attributes the decline in export sales to the fact that several of the Company's foreign distributors lack the proper training in products and applications. Recent trips by Company employees to South America and the Far East are expected to improve sales in those areas, and future trips are scheduled to other parts of the world. The increase in sales by Monitek GmbH was impacted by a $162,000 shipment of goods which has a final destination in the Far East. Such large orders are quite rare and, when they occur, they have a significant impact on the comparative analysis of year-to-year sales. Cost of sales, as a percentage of net sales, varied from 47% and 45% for the Fiscal 1995 Three Months and Fiscal 1995 Six Months to 47% and 46%, respectively, for the Fiscal 1996 Three Months and Six Months. Material costs, as a percentage of net sales, varied from 36% and 35% for the Fiscal 1995 Three Months and Six Months to 37% and 36%, respectively, for the comparable Fiscal 1996 periods, primarily as a result of a change in product mix. Direct labor and factory overhead varied from 11% and 10% of net sales for the Fiscal 1995 Three Months and Six Months to 10% and 10% for the comparable Fiscal 1996 periods. Selling, general and administrative expenses, as a percentage of net sales, increased from 49% and 49% for the Fiscal 1995 Three Months and Fiscal 1995 Six Months, respectively, to 53% for both of the comparable Fiscal 1996 periods, primarily as a result of 9 an accounting adjustment that was made during the Fiscal 1995 Three Months. At that time, the accrued bonus, payable to the Managing Director of Monitek GmbH, was finalized as a deferred compensation agreement, resulting in a reduction of expense in the amount of $107,000. Research, development and engineering expenses, as a percentage of net sales, increased from 4.8% and 4.4% for the Fiscal 1995 Three Months and Six Months compared to 8.9% and 8.5% for the comparable Fiscal 1995 periods. Spending during the Fiscal 1995 periods had been severely curtailed to conserve working capital and reduce operating losses. Subsequently, management made the decision to fund certain projects that had been placed on hold, resulting in the increased expenditures for the Fiscal 1996 Three Months and six months. Operating income (loss) went from a loss of $7,000 for the Fiscal 1995 Three Months and a profit of $39,000 for the Fiscal 1995 Six Months to losses of $158,000 and $297,000 for the Fiscal 1996 Three Months and Six Months, respectively, primarily as a result of the increase in selling, general and administrative expenses, and research, development and engineering expenses, as a percentage of sales, during the Fiscal 1996 periods. Foreign currency transactions resulted in gains of $21,000 and $44,000 for the Fiscal 1995 Three Months and Six Months compared with losses of $20,000 and $23,000 for the Fiscal 1996 Three Months and Six Months as a result of fluctuations in the value of the U.S. Dollar relative to the German Deutsche Mark. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Net working capital decreased from $1,381,000 on March 31, 1995 to $1,054,000 on September 30, 1995 as a result of the net loss for the period coupled with various minor changes in non-current assets and liabilities. The Company's unused sources of liquidity, consisting of unrestricted cash, increased from $60,000 on March 31, 1995 to $71,000 on September 30, 1995. As set forth in the notes to audited financial statements (Note 19) included in the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1994, the Company's recurring losses from operations and the resulting effect on cash flow raise substantial doubt about its 10 ability to continue as a going concern without additional sources of external financing. The Company's management is currently seeking other sources of financing including, but not limited to, loans collateralized by assets of the Company and a sale of equity securities, to fund its operating and working capital requirements. There is no assurance that such financing, if available, can be obtained on terms satisfactory to the Company. As an interim measure, the Company has entered into a temporary loan and security agreement with its major shareholder, Clarion Capital Corporation, to borrow funds at an interest rate of 10% per annum. At September 30, 1995, borrowings under this agreement totaled $300,000. At September 30, 1995, the Company had available net operating loss carryforwards of approximately $4,938,000 and $1,889,000 to offset future Federal and California taxable income, respective-ly. The Tax Reform Act of 1986 imposes certain restrictions on the amount of net operating loss carryforwards which can be used in any one year by the Company for losses prior to July 31, 1987, the date of the Company's initial public offering, which is deemed to be a change in ownership for Federal tax purposes. The Company's utilization of Federal net operating loss carryforwards from years prior to Fiscal 1988, totaling $1,640,000, is limited to approximately $620,000 per year. Deductions available for net operating losses generated in years subsequent to the change in ownership are unlimited. If the Company's income were to exceed the permissible net operating loss carryforward deduction, as to which there can be no assurance, the Company would incur liability for Federal income taxes on the excess earnings, even though net operating loss carryforwards would be available for future years. 11 OTHER INFORMATION ----------------- Exhibits and Reports on Form 8-K. (a) No exhibits are filed herewith. (b) No reports on Form 8-K were filed by the Registrant during the quarter ended September 30, 1995. SIGNATURE --------- 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. MONITEK TECHNOLOGIES, INC. -------------------------- (Registrant) DATED: November 13, 1995 - ------------------------ /s/ FRANK J. VETROVEC -------------------------- Frank J. Vetrovec President and Chief Operating Officer /s/ JAMES S. O'LEARY -------------------------- James S. O'Leary Executive Vice President and Chief Financial Officer 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 3-MOS 6-MOS MAR-31-1996 MAR-31-1996 JUL-01-1995 APR-01-1995 SEP-30-1995 SEP-30-1995 70,988 70,988 0 0 1,082,698 1,082,698 44,578 44,578 1,253,420 1,253,420 2,495,945 2,495,945 1,076,175 1,076,175 937,312 937,312 2,684,634 2,684,634 1,442,214 1,442,214 0 0 29,431 29,431 0 0 0 0 1,212,989 1,212,989 2,684,634 2,684,634 1,897,662 3,661,457 1,899,773 3,665,241 886,071 1,691,322 886,071 1,691,322 1,189,872 2,290,327 0 0 24,394 31,410 (200,564) (347,818) 0 0 (200,564) (347,818) 0 0 0 0 0 0 (200,564) (347,818) (.07) (.12) (.07) (.12)
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