-----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, WjRaIQeiqXU7NRtfIq2x2k2nV7boWer1ESvb8R0Q0uEErU01rpGvXvG2GmnKL0/r Q+7nmJ4sNjhAiBxxNY9IKg== 0000927797-97-000033.txt : 19970512 0000927797-97-000033.hdr.sgml : 19970512 ACCESSION NUMBER: 0000927797-97-000033 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970330 FILED AS OF DATE: 19970509 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: 97599582 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 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 March 31, 1997 -------------- 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 (I.R.S. employer incorporation or organization) 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_____ No ___X__ 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 the latest practicable date 5,748,499. ---------- GC INTERNATIONAL, INC. INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Balance Sheets March 31, 1997 and June 30, 1996. . . . . . . . . . .1 Unaudited Condensed Statements of Operations Three Months and Nine Months ended March 31, 1997 and March 31, 1996. . . . . . . . . . . . . . . . . .2 Unaudited Statements of Cash Flows for the Nine Months Ended March 31, 1997 and March 31, 1996 . . . . . . . . .3 Notes to Unaudited Condensed Financial Statements Ended March 31, 1997 and March 31, 1996 . . . . . . . . .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) March 31 June 30 1997 1996 ---- ---- Assets ------ Current assets: Cash ................................................ $ 267,879 $ 176,055 Accounts receivable, less allowance for doubtful accounts of $6,365 and $6,361 ..................... 615,196 648,435 Inventories ......................................... 488,981 539,397 Prepaid expenses ................................... 9,094 0 ___________ ___________ Total current assets .................................. 1,381,150 1,363,887 Property and equipment, net ........................... 342,468 362,450 Deposits & Deferred Expenses .......................... 52,033 53,757 ------ ------ $ 1,775,651 $ 1,780,049 =========== =========== Liabilities and Stockholders' Equity (Deficit) Current liabilities: Short-term bank borrowings ......................... $ 24,508 $ 171,499 Current maturities of long-term debt ............... 42,965 21,023 Accounts payable ................................... 142,834 153,725 Accrued liabilities: Payroll ............................................. 160,671 154,475 Customer Deposits ................................... 72,149 64,706 Commissions ......................................... 15,078 12,883 Vacation Pay ........................................ 226,982 261,248 Employee accruals ................................... 255,613 240,613 Other ............................................... 819,102 1,008,585 ------- --------- Total current liabilities .................... 1,759,902 2,088,757 Long-term debt, less current maturities ............. 20,595 58,070 Other long-term debt ................................ 177,105 128,424 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 ................................. (1,973,541) (2,286,792) ---------- ---------- Net stockholders' equity (deficit) ................ (181,951) (495,202) -------- -------- $ 1,775,651 $ 1,780,049 =========== ===========
See notes to consolidated condensed financial statements.
GC INTERNATIONAL, INC. Condensed Statements of Operations (Unaudited) 3 Months Ended 9 Months Ended -------------- -------------- March 31 March 31 March 31 March 31 1997 1996 1997 1996 ---- ---- ---- ---- Net Sales ......................... $ 1,306,212 $ 1,273,587 4,096,216 $ 3,886,866 Cost of Sales ..................... 873,933 911,568 2,805,140 2,697,310 ------- ------- --------- --------- Gross Profit .................. 432,279 362,019 1,291,076 1,189,556 Operating expenses: Selling ......................... 66,318 43,699 178,139 125,603 Administrative .................. 272,386 275,567 781,026 783,460 ------- ------- ------- ------- Operating Profit (loss) ....... 93,575 42,753 331,911 280,493 Other income (expense): Other income (expense), net ..... 936 ( 5,377) 7,043 (31,653) Interest expense, net of interest income ............... (5,025) ( 5,049) 5,822 (27,033) ------ - ----- ----- ------- Income before income taxes ........ 89,486 32,327 344,776 221,807 Income tax benefit (expense) ...... (9,429) -0- (31,525) ( 726) ------ -------- ------- --------- --- Net Income ................. $ 80,057 $ 32,327 $ 313,251 $ 221,081 =========== =========== =========== =========== Earnings per Common Share Primary ......................... $ 0.01 $ 0.01 $ 0.05 $ 0.04 Fully Diluted ................... $ 0.01 $ 0.00 $ 0.04 $ 0.03 Weighted average 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. Fiscal Year to Date Statement of Cash Flows (Unaudited) March 31 March 31 1997 1996 ---- ---- Cash Flows from Operating Activities: - ------------------------------------- Profit from operations .......................... $ 313,251 $ 221,081 Adjustments to Cash from operations: Depreciation and amortization (incr) decr ........ 41,147 52,670 Depreciation of Automobile (increase) decr ....... 14,650 0 Receivables (increase) decrease .................. 33,239 91,304 Inventory (increase) decrease .................... 50,416 77,587 Accounts Payable increase (decrease) ............. (11,501) (260,927) Accrued liabilities increase (decrease) .......... (96,886) 29,206 Prepaid expenses (increase) decrease ............. (9,094) (5,344) Other assets and deposits(increase) decrease ..... 1,724 $ 37,663 ----- --------- Net cash provided (used) by operating activities ............................. 336,946 243,240 ------- ------- Cash flow from investing activities: Purchases of equipment ........................... (15,281) (45,391) Purchases of furniture & fixtures ................ (15,992) (1,400) Purchase of leasehold improvements ............... (4,586) 0 ------ - Net cash provided (used) by investing activities ..................................... (35,859) (46,791) ------- ------- Cash Flow from Financing Activities: Paydown of A/R Line to Comerica .................. (146,991) (147,554) Payments made on Chapter 11 debts ................ (126,740) (14,072) Payments made on equipment notes ................. (15,533) (8,099) Payments on SBE note ............................. 0 (49,003) Note payable on deferred rents ................... 0 28,541 Lease payable on new equipment ................... 0 8,379 Note payable to EPA .............................. 80,000 0 ------ - Net cash provided (used) by financing activities ..................................... (209,264) (181,808) -------- -------- Net increase (decrease) in cash .................... 91,824 14,640 Cash at beginning of period ........................ 176,055 118,385 Cash at end period ................................. $ 267,879 $ 133,025 ========= =========
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 March 31, 1997, and June 30, 1996, and the results of it's operation for the three months and nine months ended March 31, 1997 and 1996. 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 has engaged an auditor to audit the financial 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 nine-months ended March 31, 1997 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: March 31 March 31 1997 1996 ---- ---- Raw materials . $ 63,349 $ 52,637 Work in process 425,632 413,156 ------- ------- Total .. $488,981 $465,793 ======== ========
Management s Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Comparison of nine months ended March 31, 1997, and March 31, 1996. The Company's sales for the nine months ending March 31, 1997, increased $209,350 or 5.4% 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 the general strength in the economy. The backlog which was approximately $1,168,000 at June 30, 1996, has remained relatively constant throughout the nine months and at March 31, 1997 was approximately $1,177,000. However, lower orders in March, will result in reduced shipments and profits during the fourth quarter. This was expected, as one large customer s orders have been filled. The cost of sales decreased slightly to 68.5% compared to 69.4% in the prior year period, primarily as a result of increased efficiencies in manufacturing. Operating expenses increased to $331,911 compared to $280,493 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 $80,057 or 6.1% compared to $32,327 or 2.5% for the prior year. The profit per share (undiluted) for the nine month period increased to $0.05/ share compared to $0.04/share in the prior period. During the nine month 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. Ongoing Operations Plan - ----------------------- Management views the existing positive cash flow ($91,824 for the nine months ending March 31, 1997) as sufficient to meet the operating needs of the company and to make any required payments on outstanding debts as scheduled or required. The company has been and intends to continue making settlements on the pre-petition creditor notes wherever possible for less than the note balance. The company s plan of operations anticipates a modest 5% increase in sales for the fiscal year ending June 30, 1998 and will concentrate efforts on improving the manufacturing operations and margins by increasing efficiency and yields, thereby increasing cash flow availability. This plan is anticipated to provide the necessary cash required to meet future obligations. In addition, the company s bank loan, which had required monthly payments of principal of $16,000 per month, was paid in full on April 23, 1997. Therefore, the company s available cash flow increases immediately by $16,000.00 per month or $192,000.00 per year. 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 required 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 March 31, 1997, outstanding borrowings on the loan were $24,508 as compared to $221,227 a year earlier. On April 23, 1997, the loan was paid in full. 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 March 31, 1997, the Company's cash position was $267,879 and working capital was a negative $378,752, compared to cash of $133,025 and negative working capital of $723,163 in the prior year. The cash position improved during the quarter as a result of the profit of the Company. 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 and nine month period ending March 31, 1997. (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. Based on the settlement reached with the EPA in August 1996 for the interim claim, the Company believes that it s reserve for any future liability in the amount of $227,217 is adequate to cover any final settlement. 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 increase profit margins. 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) May 10, 1997 F. Willard Griffith II ------------ ---------------------- Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer 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) May 10, 1997 Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer EX-27 2 FDS --
5 1 U.S. 9-MOS JUN-30-1997 JAN-01-1997 MAR-31-1997 1 267,879 0 621,561 (6,365) 488,981 1,381,150 1,301,975 (959,507) 1,775,651 1,759,902 0 0 0 1,791,590 (1,973,541) 1,775,651 1,306,212 1,306,212 873,933 873,933 342,793 0 5,025 89,486 9,429 80,057 0 0 0 80,057 .01 .01
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