-----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, L+C4SkqgY0esepZia/+OqUjKtsLl1P+Kz6wuC+hpF3zA98jH74BF96XsjatLBsrn IJk3RCO8RC4lyX4kbhqO/w== 0000927797-97-000003.txt : 19970222 0000927797-97-000003.hdr.sgml : 19970222 ACCESSION NUMBER: 0000927797-97-000003 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970213 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: GC INTERNATIONAL INC /CA CENTRAL INDEX KEY: 0000841708 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS PRIMARY METAL PRODUCTS [3390] IRS NUMBER: 942278595 STATE OF INCORPORATION: CA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-17259 FILM NUMBER: 97530081 BUSINESS ADDRESS: STREET 1: 156 BURNS AVE CITY: ATHERTON STATE: CA ZIP: 94027 BUSINESS PHONE: 4153228449 MAIL ADDRESS: STREET 1: 156 BURNS AVENUE CITY: ATHERTON STATE: CA ZIP: 94027 10-Q 1 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________ FORM 10-Q (Mark One) X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 1996 ----------------------- 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 000-17259 --------- GC INTERNATIONAL , INC. ----------------------- (Exact name of registrant as specified in its charter) CALIFORNIA 94-2278595 ----------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) (I.R.S. employer Identification no.) 156 BURNS AVENUE, ATHERTON CALIFORNIA 94027 - -------------------------------------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code (415) 322-8449 -------------- N/A --- Former name, former address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filled 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 ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. 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 January 31, 1996 was 5,748,499. GC INTERNATIONAL, INC. INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Balance Sheets December 31, 1996 and June 30, 1996 . . . . . . . . .1 Unaudited Condensed Statements of Operations Three Months and Six Months ended December 31, 1996 and December 31, 1995 . . . . . . . . . . . . . . . .2 Unaudited Statements of Cash Flows for the Six Months Ended December 31, 1996 and December 31, 1995 . . . . .3 Notes to Unaudited Condensed Financial Statements Ended December 31, 1996 and December 31, 1995 . . . . .4 Item 2. Management's Discussion and Analysis of Financial Condition & Results of Operation . . . . .5 PART II. OTHER INFORMATION: Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . .7 Item 2. Changes in Securities. . . . . . . . . . . . . . . . . .7 Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . .7 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . . . .7 Item 5. Other Information. . . . . . . . . . . . . . . . . . . .7 Item 6. Exhibits & Reports on Form 8-K . . . . . . . . . . . . .7 Signatures . . . . . . . . . . . . . . . . . . . . . . .8
GC INTERNATIONAL, INC. Condensed Balance Sheets (Unaudited) December 31 June 30 1996 1996 ---- ---- Assets Current assets: Cash ................................................ $ 227,904 $ 176,055 Accounts receivable, less allowance for doubtful accounts of $6,366 and $6,361 ..................... 684,850 648,435 Inventories ......................................... 454,149 539,397 Prepaid expenses ................................... 10,119 -0- ___________ ___________ Total current assets .................................. 1,377,022 1,363,887 Property and equipment, net ........................... 347,361 362,405 Deposits & Deferred Expenses .......................... 39,561 53,757 ------ ------ Total Assets .......................................... $ 1,763,944 $ 1,780,049 =========== =========== Liabilities and Stockholders' Equity (Deficit) ---------------------------------------------- Current liabilities: Short-term bank borrowings ......................... $ 73,284 $ 171,499 Current maturities of long-term debt ............... 22,298 21,023 Accounts payable ................................... 169,044 153,725 Accrued liabilities: Payroll 155,037 154,475 Customer Deposits ................................... 71,923 64,706 Commissions ......................................... 24,348 12,883 Vacation Pay ........................................ 221,533 261,248 Employee accruals ................................... 250,613 240,613 Other ............................................... 820,429 1,008,585 ------- --------- Total current liabilities .................... 1,808,509 2,088,757 Long-term debt, less current maturities ............. 46,593 58,070 Other long-term debt ................................ 170,850 128,424 Stockholders' equity (deficit): Common stock, without par value. Authorized 30,000,000 shares; issued and outstanding 5,748,499 shares ............................ 1,791,590 1,791,590 Accumulated deficit ................................... (2,053,598) (2,286,792) ---------- ---------- Net stockholders' equity (deficit) ................ (262,008) (495,202) -------- -------- Total Liabilities and Stockholders' Equity ............ $ 1,763,944 $ 1,780,049 =========== ===========
See notes to consolidated condensed financial statements.
GC INTERNATIONAL, INC. Condensed Statements of Operations (Unaudited) 3 Months Ended 6 Months Ended Dec. 31 Dec. 31 Dec.31 Dec.31 1996 1995 1996 1995 ---- ---- ---- ---- Net Sales ......................... $ 1,386,488 $ 1,231,830 $ 2,790,004 $ 2,613,278 Cost of Sales ..................... 946,358 830,185 1,931,207 1,785,742 ------- ------- --------- --------- Gross Profit .................. 440,130 401,645 858,797 827,536 Operating expenses: Selling ......................... 56,712 43,876 111,821 81,904 Administrative ................. 262,876 258,411 508,640 507,892 ------- ------- ------- ------- Operating Profit .............. 120,542 99,358 238,336 257,740 Other income (expense): Other income (expense), net ..... 29,530 (21,182) 22,632 (26,277) Interest expense, net of interest income ............... (2,507) (13,067) (5,679) (21,984) ------ ------- ------ ------- Income before discontinued operations ......... 147,565 65,109 255,289 189,479 Income before income taxes ........ 147,565 65,109 255,289 189,479 Income tax (benefit) .............. 20,521 726 22,095 (726) Net Profit ................. $ 127,044 $ 64,383 $ 233,194 $ 188,753 =========== =========== =========== =========== Earnings per common share: Primary ......................... $ .02 $ .01 $ .04 $ .03 Fully diluted .................. $ .02 $ .01 $ .04 $ .03 Weighted overage shares outstanding Primary ......................... 5,748,499 5,748,499 5,748,499 5,748,499 Fully diluted ................... 7,108,499 7,048,499 7,108,499 7,048,499
See notes to consolidated condensed financial statements.
GC INTERNATIONAL, INC. Statement of Cash Flows (Unaudited) 6 Months Ended -------------- Dec. 31 Dec. 31 1996 1995 ---- ---- Cash Flows from Operating Activities: Profit from operations ......................... $ 233,194 $ 188,753 Adjustments to Cash from operations: Depreciation and amortization (incr) decr ...... 25,737 34,027 Receivables (increase) decrease ................ (36,415) 89,480 Inventory (increase) decrease .................. 85,248 50,389 Accounts Payable increase (decrease) ........... 13,327 (231,090) Accrued liabilities increase (decrease) ........ (121,215) 20,643 Prepaid expenses (increase) decrease ........... (10,119) (2,706) Other assets and deposits (increase) decrease .......................... 14,196 5,786 ------ ----- Net cash provided (used) by operating activities ........................... 203,953 155,282 Cash flow from investing activities: Net (additions) deletions to property, plant and equipment .......................... (10,692) (40,749) ------- ------- Net cash provided (used) by investing activities ................................... (10,692) (40,749) Cash Flow from Financing Activities: Net increase (decrease) short term borrowings ................................... (141,412) (103,940) -------- -------- Net cash provided (used) by financing activities ................................... (141,412) (103,940) -------- -------- Net increase (decrease) in cash .................. 51,849 10,593 Cash at beginning of period ...................... 176,055 118,385 ------- ------- Cash at end of period ............................ $ 227,904 $ 128,978 ========= =========
GC INTERNATIONAL, INC. AND SUBSIDIARIES Notes to Condensed Financial Statements (Unaudited) Note 1 The financial statements included herein have been prepared by GC International, Inc., ("GCI") without audit, and include all adjustments which are, in the opinion of management, necessary for a fair presentation of the Company's financial position as of December 31, 1996, and June 30, 1996, and the results of operations for the three months and six months ended December 31, 1996 and 1995. Certain information and note disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations of the Securities and Exchange commission, although the Company believes that disclosure in such financial statements is adequate to make the information presented not misleading. The last audited financial statements of GCI were for the year ended June 30, 1989. Since that time, GCI has been unable to bear the cost of an audit as a result of its financial condition. GCI anticipates engaging an auditor to audit the financials statements for the year ended June 30, 1997. These financial statements should be read in conjunction with the Company's financial statements and notes thereto included in the Company's Form 10-K Annual Report filed with the Securities and Exchange Commission. The results of operations for the six-months ended December 31, 1996 are not necessarily indicative of the results of the full year. Note 2 Inventories are stated at the lower of cost (first-in, first-out method) or market and consist of the following:
Dec. 31 Dec. 31 1996 1995 ---- ---- Raw materials $69,087 $53,155 Work in process 385,062 439,836 ------- ------- Total $454,149 $492,991 ======== ========
GC INTERNATIONAL, INC. AND SUBSIDIARIES Notes to Financial Condition & Results of Operation (Unaudited) Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Comparison of six months ended December 31, 1996, and December 31, 1995. The Company's sales for the six months ending December 31, 1996, increased $176,726 or 6.8% over the comparable period of the prior year, generally reflecting the increase in new orders received by the Company's ALJ division as a result of strength in the economy generally. The backlog has remained relatively constant throughout the half and at December 31, 1996 was approximately $1,350,000. The cost of sales increased slightly to 69.2% compared to 68.3% in the prior year period, primarily as a result of increased overhead in manufacturing. Operating expenses increased to $620,461 compared to $589,796 in the prior period primarily as a result of increased investment in the company's sales representative program and marketing expense. Interest expense on bank debt decreased as a result of the reduction in principal. As a result, profit for the quarter was $127,044 or 9.2% compared to $64,383 or 5.2% for the prior year. The profit per share (undiluted) for the six months increased to $.04/ share compared to $.03/share in the prior period. During this period the company exhausted its Net Operating Loss carry forward for California income tax purposes and began paying or accruing a state tax charge of 9% of profits. The federal Net Operating Loss carry forward will preclude the Company from paying federal income taxes for 1997. However, it is anticipated that a nominal alternative minimum federal tax in the approximate amount of $1,250 will be due. Liquidity, Capital Resources, and Bank Loan Agreement Bank Loan Agreement ------------------- The Company's loan agreement with its bank was renewed until June 1, 1997. The agreement requires principal payments of $16,000/month; the loan bears interest at a rate of 2-1/2% above the bank's prime rate. As of December 31, 1996, outstanding borrowings on the loan were $73,284 as compared to $272,781 a year earlier. The loan is anticipated to be paid in full by June 1, 1997. Long Term Debt - -------------- Long-term Debt includes financed equipment and automobile purchases. Other long-term Debt includes the long-term portion of the Notes owed to Pre-petition Creditors (see Other Impacts on Liquidity Note 2) Liquidity - --------- As of December 31, 1996, the Company's cash position was $227,904 and working capital was a negative $431,487, compared to cash of $128,978 and a negative working capital of $724,870 in the prior year. The cash position improved during the quarter as a result of the profit of the Company during the first half. Other Impacts on Liquidity - -------------------------- The Company's liquidity is continuing to be positive and negatively impacted because of the following factors. (1) The company reported continuing profits and positive cash flow for the three months period ending December 31, 1996. (2) The Company must make payments to Pre-petition Creditors in accordance with the Plan of Reorganization under the Company's 1990 bankruptcy filing, which was discharged in 1991. Due to the cash shortage of the Company in the past, few payments have been made to creditors. Although the Company is in default with substantially all of the creditors, the Company is working to settle with certain creditors who have requested payment. The creditor notes generally do not provide for any specific remedies or for acceleration in the event of non- payment. (3) The Company settled an interim claim with the EPA for $100,000 plus interest for a Superfund Site cleanup in connection with waste generated by the company's former Raytee division. The Company made the first payment of $20,000 in August 1996. Payments of $20,000 plus fixed interest are due each successive August with the last payment due August 2000. The amount that may be due for the Final Claim is unknown at the present time. Capital Equipment Requirements and Equipment Leases - --------------------------------------------------- The Company, from time to time, has satisfied certain of its capital equipment requirements by entering into equipment leases with third parties or purchase arrangements with the equipment manufacturers. During 1996 and 1997, the Company has been able to arrange satisfactory equipment and automobile leases or purchase contracts. The Company anticipates that additional capital equipment will be required for the Company's operating divisions during 1997. Because of the Company's negative net worth and lack of working capital, it may not be possible to lease or purchase some or all of such equipment on terms satisfactory to the Company. If sufficient capital equipment is not available, the Company could be materially adversely affected. In addition, a continued shortage of capital resources could materially adversely affect the ability of the Company to make needed improvements and reduce profit levels. The Company will use its best efforts to satisfy its capital needs by using internally generated cash in excess of mandated debt repayments and by entering into other arrangements as available. There can be no assurances that cash resources will be adequate. PART II Item 1 Legal Proceedings: None Item 2 Changes in Securities: Not Applicable Item 3 Defaults upon Senior Securities: Not Applicable Item 4 Submission of Matters to a Vote of Securities Holders: Not Applicable. Item 5 Other Information: None Item 6 Exhibits and Reports on Form 8K: None GC INTERNATIONAL, INC. 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. GC International, Inc. ---------------------- (Registrant) February 9, 1997 F. Willard Griffith II - ---------------- ---------------------- Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer EX-27 2 FDS --
5 This schedule contains summary financial information extracted from (A) the consolidated statements of operations and the consolidated balance sheets. And is qualified in its entirety by reference to such (B) December 1996 10-Q reporting. 1 U S 6-MOS JUN-30-1997 OCT-01-1996 DEC-31-1996 1 227,904 0 691,216 (6,366) 454,149 1,377,022 1,291,458 (944,097) 1,763,944 1,808,509 0 0 0 1,791,590 (2,053,008) 1,763,944 1,386,488 1,386,488 946,358 946,358 290,058 0 2,507 147,565 20,521 127,044 0 0 0 127,044 .02 .02
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