-----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, AGoARupXjoTLWlbJKvTSttvCVBnY6dnoAmYOaN5HwHM/zuw+JqxsBRXZOGdpjKFw wDSSIcX5QMXlDjzLx0T99g== 0000927797-00-000027.txt : 20000215 0000927797-00-000027.hdr.sgml : 20000215 ACCESSION NUMBER: 0000927797-00-000027 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 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: SEC FILE NUMBER: 000-17259 FILM NUMBER: 540734 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 FORM 10-Q FOR DECEMBER 31, 1999 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, 1999 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 (650) 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 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 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 ___ No ___ APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 5,423,191. ----------- GC INTERNATIONAL, INC. INDEX ----- PART I. FINANCIAL INFORMATION: - -------------------------------- Item 1. Financial Statements Unaudited Condensed Balance Sheets December 31, 1999 and June 30, 1999........................1 Unaudited Condensed Statements of Operations Three and six months ended December 31, 1999 and December 31, 1998......................................2 Unaudited Statements of Cash Flows for the six months Ended December 31, 1999 and December 31, 1998..........3 Notes to Unaudited Condensed Financial Statements Ended December 31, 1999 and December 31, 1998..........4 Item 2. Management's Discussion and Analysis of Financial Condition & Results of Operation..............4 PART II. OTHER INFORMATION: - ----------------------------- Item 1. Legal Proceedings................................................6 Item 2. Changes in Securities............................................6 Item 3. Defaults Upon Senior Securities..................................6 Item 4. Submission of Matters to a Vote of Security Holders.............................................6 Item 5. Other Information................................................6 Item 6. Exhibits & Reports on Form 8-K...................................6 Signatures ..................................................... 7 GC INTERNATIONAL, INC.
BALANCE SHEETS December 31, 1999 June 30, 1999 Unaudited ----------- ------------- ASSETS Current Assets Cash ........................................... $ 184,236 $ 371,085 Accounts receivable, net of Allowance for doubtful accounts ................ 550,690 508,214 Of $5,133 at September 30 and $5,133 at June 30, 1999 Inventories .................................... 472,115 472,931 Prepaid expenses ............................... 26,754 6,787 Prepaid income tax ............................. -- 26,561 Deferred tax benefit ........................... 18,396 18,395 ----------- ----------- Total current assets ............... 1,252,190 1,403,972 Property and equipment, net ............... 505,031 548,106 Deposits & deferred expenses .............. 50,699 35,999 Deferred tax benefit ...................... 336,734 336,734 ----------- ----------- Total assets ...................... $ 2,144,654 $ 2,324,812 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities Accounts payable .......................... $ 142,554 $ 68,776 Accrued expenses .......................... 576,335 646,409 Income taxes payable ...................... (7,491) -- Notes payable ............................. 252,087 258,188 ----------- ----------- Total current liabilities ............. 963,486 973,373 Other Liabilities: Notes payable, net of current portion ..... 146,032 181,194 Other long term debt ...................... 320,000 320,000 Stockholders' equity: Common stock, without par value ........... 1,759,149 1,770,007 Accumulated deficit ....................... (1,044,013) (919,762) ----------- ----------- Net stockholders' equity .............. 715,136 850,245 Total Liabilities and Stock Holders Equity ............... $ 2,144,654 $ 2,324,812 =========== ===========
The accompanying notes are an integral part of these financial statements. 1 GC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS 3 Months Ended 6 Months Ended -------------- -------------- 12/31/99 12/31/98 12/31/99 12/31/98 (Unaudited) (Unaudited) -------------------------- -------------------------- Net sales ......................... 1,190,937 1,340,383 2,228,836 $ 2,796,596 Cost of sales ..................... 856,959 885,789 1,571,684 1,812,890 ----------- ----------- ----------- ----------- Gross profit ...................... 354,078 454,594 657,152 983,706 Operating expenses: Selling ......................... 46,082 73,875 87,994 142,525 General & Admin ................. 327,375 308,394 641,316 670,321 ----------- ----------- ----------- ----------- Income (loss)from operations ...... (19,380) 72,324 (72,158) 170,860 Other income (expense) Interest net .................... (719) (584) (4,206) (4,624) Other ........................... (42,041) (49,821) 47,889 (63,002) ----------- ----------- ----------- ----------- Income (loss) before income taxes .................... (62,140) 21,919 (124,242) 103,234 Provision for income taxes ........ -- 9,210 -- 18,220 ----------- ----------- ----------- ----------- Net income (loss) ................. $ (62,140) $ 12,709 $ (124,252) $ 85,014 =========== =========== =========== =========== Earnings per common share Primary and Fully diluted ....... $ (.02) $ 0.00 $ (.01) $ 0.01 Weighted average shares outstanding Primary ......................... 5,423,191 5,423,191 5,423,191 5,423,191 Fully diluted ................... 5,423,191 5,423,191 5,423,191 5,423,191
The accompanying notes are an integral part of these financial statements. 2 GC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS 6 Months Ended ---------------------------------- December 31, 1999 December 31,1998 (Unaudited) (Unaudited) --------- ----------- Cash flows from operating activities: Net income ........................................... $(124,252) $ 85,014 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization .................... 53,106 55,423 Gain on sale of property, plant & equipment ...... -- (1,850) Adjustments to cash from operations: Accounts Receivables ........(incr)decr ......... (42,476) (10,455) Inventory ...................(incr)decr ....... 816 (51,635) Accrued payable ............. incr(decr) ....... 73,778 70,629 Accrued liabilities ......... incr(decr) ....... (70,074) (28,447) Income taxes payable ........ incr(decr) ....... (7,491) 7,455 Prepaid income taxes ........ ....... 26,561 -- Reserve liability ........... incr(decr) ....... -- -- Prepaid expenses ............(incr)decr ....... (19,967) (22,789) Other assets & deposits .....(incr)decr ....... (14,700) (7,232) --------- --------- Net cash provided by operating activities ...... (124,699) 96,112 Cash flows from investing activities: Purchase of property, plant & equipment ........ (10,030) (130,408) Proceeds from sale of property, plant & equipment .................................. -- 1,850 --------- --------- Net cash provided (used) by investing activities (10,030) (128,558) Cash flows from financing activities: Payments on short term borrowings .............. (6,100) 1,415 Payments on long term debt ..................... (35,161) 36,886 Re-purchase of common stock .................... (10,859) -- New long term borrowings ....................... -- -- --------- --------- Net cash provided by financing activities ..... (52,120) 38,302 --------- --------- Increase (decrease) in cash and cash equivalents ..... (186,849) 5,856 Cash at beginning of period ...................... 371,085 323,920 --------- --------- Cash at end of period ................................ $ 184,236 $ 329,776 ========= =========
The accompanying notes are an integral part of these financial statements. 3 GC INTERNATIONAL, INC. Notes to Condensed Financial Statements 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, 1999, and December 31, 1998, and the results of it's operation for the three and six months ended December 31, 1999 and 1998. 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 it's disclosure in such financial statements is adequate to make the information presented not misleading. 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 three and six months ended December 31, 1999 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: December 31 December 31 1999 1998 ---- ---- Raw materials $66,101 $ 58,036 Work in process 406,014 473,372 ------- ------- Total $472,115 $531,408 ======= ======= Inventories increased at the end of December 1998 due to work in process that could not be shipped or was not scheduled to be shipped at the end of December. Inventories are expected to decrease during the next quarter. Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources - ------------------------------- As of December 31, 1999, the Company's cash position was $184,236 and working capital was $288,704, compared to cash of $371,085 and working capital of $430,599 in the prior period. The cash position decreased during the period as a result of continuing losses resulting from poor shipments at the ALJ division. Management believes that these funds and cash flow from operations are adequate to fund ongoing operations, if the division can increase sales and cash flow during 2000. However, there is no assurance that these funds will prove adequate if the Company is unable to obtain positive cash flow operations in the future. 4 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 2000, the Company has been able to arrange satisfactory purchase contracts. The Company anticipates that additional capital equipment will be required for the Company's operating divisions during 2000. The Company will use its best efforts to satisfy its capital needs by using internally generated cash in excess of debt repayments, cash resources and by entering into other arrangements as available. There can be no assurances that cash resources will be adequate. Factors Affecting Future Results - -------------------------------- The Company must make payments to certain creditors in accordance with the Company's 1991 Plan of Reorganization. The total of the non-interest bearing notes, at December 31, 1999 was $170,365 compared to $186,399 at December 31, 1998. The Company settled an interim claim with the EPA for $100,000 plus interest for a Superfund Site cleanup in connection with waste generated in the 1970's by a former division. The Company made the fourth payment of $20,000 in August 1999, with the last payment due August 2000. Based on the settlement reached with the EPA in 1996 for the interim claim, the Company believes that its reserve for future liability in the amount of $120,000 is adequate to cover any final settlement. As of February 1st the year 2000, there were no problems at the company and its suppliers and customers. There has been no current impact on operations, suppliers and payments from customers. Results of Operations - --------------------- Comparison of three and six months ended December 31, 1999, and December 31, 1998. The Company's sales for the six months ending December 31, 1999, decreased $567,760 or 20.3% and for the 3 month period ended December 31, 1999, sales decreased by $149,446 or 11.1% over the comparable period of the prior year. There has been a noticeable decrease in the Company's markets, the backlog which was approximately $1,250,417 at June 30, 1999 and $1,852,052 at June 30, 1998, increase at December 31, 1999 to $1,527,558. Significantly, a substantial part of the backlog is stretched out. The back-log has increased from $1,364,960 at September 30, 1999. If orders continue to be booked as a result of continued sales and marketing efforts, shipment could increase during the third quarter to enable a return to profitability. However, there are no assurances that the Company will be able to do so. The company has been increasing the marketing efforts by adding mailings to the schedule and is changing sales representatives in underperforming territories. 5 The Apollo Division has improved production yields and division profits have held up. Apollo shipments are expected to remain stable during the next six months and are therefore expected to provide profits and cash flow. However, Apollo increases are not expected to offset ALJ decreases. Therefore, the Company's profits, cash position and earnings per share will decrease as compared to 1999. The Company's cost of sales increased 4.2% in the 6 months ended December 31, 1999 over the comparable period. Operating expenses decreased $8,811 due to lower selling costs as compared to the prior six month period. The Company expects to continue heavy selling activities during the next six months to obtain new tooling and orders. Administrative expense increased due to an increase in management and sales personnel. As a result, the net loss increased in the quarter to $62,140(5%) as compared to profit of $12,709 in the prior period. As the backlog and monthly shipments have increased over the first half, ALJ is now facing the problem of a tight labor market. This results in increased overtime and labor costs to meet customer requirements, thereby decreasing gross margins. If ALJ is unable to hire sufficient qualified personnel, profits and cash flow will continue to be adversely affected. 6 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 10, 1999 F. Willard Griffith II - ------------------- ---------------------- Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer 7 EX-27 2 FDS --
5 1 U.S. 3-MOS JUN-30-2000 OCT-01-1999 DEC-31-1999 1 184,236 0 555,823 (5,133) 472,115 1,252,190 1,678,667 (1,173,636) 2,144,654 963,486 0 0 0 1,759,149 (1,044,013) 2,144,654 1,190,937 1,190,937 836,859 1,210,317 42,041 0 719 (62,140) 0 (62,140) 0 0 0 (62,140) (.017) (.017)
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