-----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, GdsT2f321726VO+NMdPqy2g/KDUTX/RcRHWVw+vSCYBysNCWDCKKRKKqURVG8YI3 KrJa9uLzBrnbhUSoqLwPqw== 0000927797-98-000067.txt : 19980518 0000927797-98-000067.hdr.sgml : 19980518 ACCESSION NUMBER: 0000927797-98-000067 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980515 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: SEC FILE NUMBER: 000-17259 FILM NUMBER: 98622107 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 QUARTERLY REPORT FOR MARCH 31, 1998 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, 1998 ------------------- 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 ofregistrant as specified in its charter) CALIFORNIA 94-2278595 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. employer Identification no.) incorporation or organization) 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 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 the latest practicable date 5,548,401. ---------- GC INTERNATIONAL, INC. INDEX PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Condensed Balance Sheets March 31, 1998 and June 30, 1997...........................1 Unaudited Condensed Statements of Operations Three months and nine months ended March 31, 1998 and March 31, 1997.........................................2 Unaudited Statements of Cash Flows for the nine months Ended March 31, 1998 and March 31, 1997................3 Notes to Unaudited Condensed Financial Statements Ended March 31, 1998 and March 31, 1997................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.
BALANCE SHEETS March 31 June 30 1998 1997 ------------- ------------ ASSETS Current Assets Cash .................................... $ 288,023 $ 278,791 Accounts receivable, net of Allowance for doubtful accounts of $6,707 at March 31 and $6,607 at June 30, 1997 ............. 622,667 654,411 Inventories ............................. 481,399 479,873 Prepaid expenses ........................ 74,600 3,333 Deferred tax benefit .................... 181,760 181,760 ----------- ----------- Total current assets ............. 1,648,450 1,598,168 Property and equipment, net ............. 561,037 418,733 Deposits & deferred expenses ............ 35,564 34,123 Deferred tax benefit .................... 108,799 261,920 ----------- ----------- Total assets .................... $ 2,353,849 $ 2,312,944 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable ........................ $ 133,895 $ 138,219 Accrued expenses ........................ 654,148 734,641 Income taxes payable .................... 34,594 55,635 Notes payable ........................... 365,734 527,002 ----------- ----------- Total current liabilities ........... 1,188,371 1,455,497 Other Liabilities: Notes payable, net of current portion ... 184,277 146,307 Reserve for future liability ............ 320,000 320,000 ----------- ----------- Total liabilities ................... 1,692,648 1,921,806 Stockholders' equity: Common stock, without par value ......... 1,791,590 1,791,590 Accumulated deficit ..................... (1,130,389) (1,400,450) ----------- ----------- Net stockholders' equity ............ 661,201 391,140 ----------- ----------- Total liabilities and stock holders equity ............. $ 2,353,849 $ 2,312,944 =========== ===========
The accompanying notes are an integral part of these financial statements. 1 GC INTERNATIONAL, INC.
CONDENSED STATEMENTS of OPERATIONS (Unaudited) 3 Months Ended 9 Months Ended ------------------------ -------------------------- Mar.31 Mar.31 Mar.31 Mar.31 1998 1997 1998 1997 ------------------------ -------------------------- Net Sales .......................................... $ 1,368,511 $ 1,306,212 $ 4,178,560 $ 4,096,216 Cost of Sales ...................................... 904,105 873,933 2,723,893 2,805,140 ----------- ----------- ----------- ----------- Gross Profit .............................. 464,406 432,279 1,454,667 1,291,076 Operating expenses: Selling ....................................... 59,998 66,318 166,130 178,139 Administrative ................................ 309,707 272,386 858,087 781,026 ----------- ----------- ----------- ----------- Income from Operations ............................. 94,701 93,575 430,450 331,911 Other income (expense): Other income (expense), net ................... (6,097) 936 (65,896) 7,043 Interest expense, net of interest income ............................... (1,782) (5,025) (5,738) 5,822 ----------- ----------- ----------- ----------- Income before income taxes and ..................... 86,822 89,486 358,816 344,776 extraordinary items Provision for income taxes ......................... (74,850) (9,429) (195,388) (31,525) ----------- ----------- ----------- ----------- Income before extraordinary item ................... 11,492 80,057 163,430 313,251 Extraordinary item ................................. 89,266 0 106,633 0 ----------- ----------- ----------- ----------- Net Income ........................... $ 101,238 $ 80,057 $ 270,061 $ 313,251 =========== =========== =========== =========== Earnings per Common Share Primary and fully diluted: Income before extraordinary item ................. $ -- $ .01 $ .03 $ .05 Extraordinary item ............................... .02 -- .02 -- ----------- ----------- ----------- ----------- Net Income ....................................... $ .02 $ .01 $ .05 $ .05 =========== =========== =========== =========== Weighted average shares outstanding Primary ....................................... 5,798,721 5,748,499 5,798,721 5,748,499 Fully Diluted ................................. 5,798,721 5,748,499 5,798,721 5,748,499
See notes to consolidated condensed financial statements. 2 GC INTERNATIONAL, INC.
Statement of Cash Flows (Unaudited) 9 Months Ended -------------- March 31 March 31 1998 1997 ---------- ----------- Cash Flows from Operating Activities: - ------------------------------------- Profit from operations ......................... $ 270,061 $ 313,251 Adjunoonstments to Cash from operations: - ---------------------------------------- Depreciation and amortization (incr) decr ....... 26,751 55,797 Receivables (increase) decrease ................. 31,743 33,239 Inventory (increase) decrease ................... (1,526) 50,416 Accounts Payable increase (decrease) ............ (4,323) (11,501) Accrued liabilities increase (decrease) ......... (101,534) (96,886) Prepaid expenses (increase) decrease ............ (71,267) (9,094) Other assets and deposits(increase) decrease .... 151,680 1,725 --------- --------- Net cash provided by operating activities ............................ 301,585 336,947 Cash flow from investing activities: - ------------------------------------ Purchases of equipment .......................... (219,442) (15,281) Purchases of furniture & fixtures ............... (2,932) (15,992) Purchase of leasehold improvements .............. (7,882) (4,586) Proceeds from sale of automobiles ............... 25,875 -- Disposal of equipment ........................... 415 -- Devaluation of idle assets ...................... 34,911 -- --------- --------- Net cash provided (used) by investing activities .................................. (169,055) (35,859) Cash Flow from Financing Activities: - ------------------------------------ Paydown of A/R Line to Comerica ................. -- (146,991) Payments made on notes .......................... (182,158) (126,740) Notes on new equipment .......................... 111,204 -- Payments made on equipment notes ................ -- (15,533) Payments made on automobiles .................... (12,146) -- Lease payable on new equipment .................. (20,198) -- Note payable to EPA ............................. (20,000) 80,000 --------- --------- Net cash used by financing activities ................ (123,298) (209,264) Net increase in cash ................................. 9,232 91,824 Cash at beginning of period .......................... 278,791 176,055 Cash at end period ................................... $ 288,023 $ 267,879 ========= =========
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 March 31, 1998, and June 30, 1997, and the results of its operations for the three and nine months ended March 31, 1998 and 1997. 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 nine months ended March 31, 1998 are not necessarily indicative of the results for 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 June 30 1998 1997 ---- ---- Raw materials $ 68,282 $ 51,858 Work in process 413,117 428,015 ------- ------- Total $481,399 $479,873 ======= ======= 4 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations - --------------------- Comparison of the three and nine months ended March 31, 1998, and March 31, 1997. The Company did not experience material changes in the results of its operations in the covered periods. Sales for the quarter increased by $62,023 or 4.7%. Income for operations decreased by $25,841 due to increased administration overhead. However, the gross profit increased by $32,127. The Company's sales for the nine months ending March 31, 1998, increased slightly by $82,344 or .2% over the comparable period of the prior year. The backlog which was approximately $1,180,000 at June 30, 1997, has increased to approximately $1,436,000 at March 31, 1998. The cost of sales decreased to 65.2% compared to 68.5% in the prior year period, primarily as a result of increased efficiencies in manufacturing. Although pre-tax income for the quarter was higher in 1997, the profit for the quarter after provision for taxes was $101,238 or 7.4% compared to $80,057 or 6.1% for the prior year, and $270,061 in the nine months as compared to $313,251 for the prior period. The profit per share for the nine month period remained constant at $.05/share. The reduction in after tax profits was a result of the increase in provision for taxes for the nine months from $31,525 in 1997 to $195,388 in 1998. The federal net operating loss carry forward will preclude the Company from paying full federal income taxes for 1998. However, it is anticipated that alternative minimum federal tax in the approximate amount of $10,000 will be due for 1998. The Company has no net operating loss carry forward for California income tax purposes and pays taxes at the rate of approximately 9% of net profits. Capital Resources - ----------------- Management views the existing positive cash flow as sufficient to meet the needs of the Company and to make any required payments on outstanding debts as scheduled or required. The Company has been making settlements on the pre-petition creditor notes for less than the note balance wherever possible. The Company intends to continue that program, as appropriate. As a result of the Company's settlement efforts, extraordinary income in the amount of $89,266 for the quarter and $106,673 for the nine months was recorded. 5 The Company's plan of operations anticipates a small increase in sales for the fiscal year ending June 30, 1998 and it 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 for the next 12 months. The Company currently does not have any lines of credit or bank loans and does not anticipate any need for borrowings for the near future. Notes payable increased $37,570 due to the financing of equipment. Long-term Debt includes financed equipment and automobile purchases and the EPA Settlement described herein. The reserve for future liability is for the estimated future EPA liability described herein. Liquidity - --------- As of March 31, 1998, the Company's cash position was $288,023 and working capital was a positive $460,079, compared to cash of $267,879 and negative working capital of $378,752 at March 31, 1997. The Company reported continuing profits and positive cash flow for the three and nine months period ending March 31, 1998. The Company must make payments to pre-petition creditors in accordance with the Company's 1991 Plan of Reorganization. Although the Company is in default with the remainder of the creditors, the Company is working to settle with certain creditors who have requested payment. The non-interest bearing creditor notes generally do not provide for any specific remedies or for acceleration in the event of non-payment. The total amount due to creditors at March 31, 1998 was $291,621 compared to $643,675 at March 31, 1997. 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 the Company's former Raytee division. The Company made the first and second payments of $20,000 each in August 1997 and 1998. Payments of $20,000 plus fixed interest are due each successive August with the last payment due August 2000. Based on the settlement reached with the EPA in August 1997, the Company believes that its reserve for future liability in the amount of $320,000 is adequate to cover any final settlement, although there can be no assurance thereof. 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 1997 and 1998, 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 1998. The Company will use its best efforts to satisfy its capital needs by using internally generated cash in and by entering into other arrangements as available. There can be no assurances that cash resources will be adequate. 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 7 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 11, 1998 F. Willard Griffith II ------------ ---------------------- Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer 8 EX-27 2 FDS --
5 1 U.S. 3-MOS JUN-30-1998 JAN-01-1998 MAR-31-1998 1 288,023 0 629,374 6,707 481,399 1,648,450 1,546,141 985,104 2,353,849 1,188,371 0 0 0 1,791,590 (1,130,389) 2,353,849 1,368,511 1,368,511 904,104 904,104 375,803 0 1,782 86,822 74,850 11,972 0 (89,266) 0 101,238 .02 .02
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