-----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, UtCyeGDFIJfAs3HYYBNt3zEFIhim9lDBA1ifVCV1we6171gMGdYEn3mINkSwJf0C Iotk5OrxtYZP8GOvjvcGSQ== 0000927797-98-000153.txt : 19981111 0000927797-98-000153.hdr.sgml : 19981111 ACCESSION NUMBER: 0000927797-98-000153 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981110 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: 98742259 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 SEPTEMBER 30, 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 September 30, 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 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 (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 ___ 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 ___ 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 September 30, 1998 and June 30, 1998...............................1 Unaudited Condensed Statements of Operations Three months ended September 30, 1998 and September 30, 1997.............................................2 Unaudited Statements of Cash Flows for the Three months Ended September 30, 1998 and September 30, 1997................3 Notes to Unaudited Condensed Financial Statements Ended September 30, 1998 and September 30, 1997................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 September 30 June 30 1998 1998 Unaudited ----------- ----------- ASSETS Current Assets Cash $ 368,756 $ 323,920 Accounts receivable, net of Allowance for doubtful accounts of $6,464 at September 30 and $6,464 at June 30, 1998 698,419 639,886 Inventories 489,280 479,773 Prepaid expenses 2,679 8,496 Deferred tax benefit 26,044 26,044 ---------- -------- Total current assets 1,585,177 1,478,119 Property and equipment, net 546,805 545,250 Deposits & deferred expenses 39,012 35,760 Deferred tax benefit 281,164 281,164 --------- --------- Total assets $2,452,158 $2,340,293 ========= ========== LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) Current liabilities: Accounts payable $ 184,286 $ 130,858 Accrued expenses 698,480 696,904 Income taxes payable 24,915 - Notes payable 258,168 266,713 --------- --------- Total current liabilities 1,165,849 1,094,474 Other Liabilities: Notes payable, net of current portion 140,912 172,726 Other long term debt 120,000 120,000 Litigation Reserve 200,000 200,000 Stockholders' equity: Common stock, without par value 1,791,590 1,791,590 Accumulated deficit (966,192) (1,038,497) ---------- ----------- Net stockholders' equity 825,397 753,093 Total Liabilities and Stock Holders Equity $2,452,158 $2,340,293 ========= =========
The accompanying notes are an integral part of these financial statements. 1 GC INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS 3 Months Ended ------------------------------------- September 30, 1998 September 30, 1997 (Unaudited) (Unaudited) ----------- ----------- Net sales $1,456,212 $1,382,715 Cost of sales 927,101 913,874 --------- --------- Gross profit 529,111 468,841 Operating expenses: Selling 68,650 48,505 General & Administrative 361,926 282,676 --------- ---------- Income from operations 98,535 137,660 Other income (expense) Interest, net (4,040) (4,292) Other (13,181) (2,636) ---------- ---------- Income before income taxes 81,314 130,732 Provision for income taxes 9,010 52,042 --------- --------- Net income $ 72,305 $ 78,690 ========= ========= Earnings per common share Primary and Fully diluted $0.01 $0.01 Weighted average shares outstanding Primary 5,548,401 5,798,721 Fully diluted 5,548,401 5,798,721
The accompanying notes are an integral part of these financial statements. 2 GC INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS 3 Months Ended ------------------------------------- September 30, 1998 September 30,1997 (Unaudited) (Unaudited) ----------- ----------- Cash flows from operating activities: - ------------------------------------- Net income $ 72,305 $ 78,690 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 31,843 25,912 Gain on sale of property, plant & equipment (1,850) - Adjustments to cash from operations: - ------------------------------------ Accounts Receivables (incr)decr (58,533) (55,468) Inventory (incr)decr (9,507) 25,785 Accrued payable (incr)decr 53,428 (38,164) Accrued liabilities (incr)decr 1,576 (7,860) Income taxes payable (incr)decr 24,915 11,763 Reserve liability (incr)decr - (665) Deferred tax (incr)decr - 47,679 Prepaid expenses (incr)decr 5,818 10,402 Other assets & deposits (incr)decr (3,252) (25,798) --------- --------- Net cash provided by operating activities 116,742 72,276 Cash flows from investing activities: - ------------------------------------- Purchase of property, plant & equipment (33,398) (7,025) Proceeds from sale of property, plant & equipment 1,850 - -------- -------- Net cash provided by investing activities (31,548) (7,025) Cash flows from financing activities: - ------------------------------------- Payments on short term borrowings (8,548) (29,748) Net cash used by financing activities (31,813) (28,947) New long term borrowings - - -------- -------- Net cash provided by financing activities (40,358) (58,695) Increase in cash and cash equivalents 44,836 6,556 Cash at beginning of period 323,920 278,791 -------- ------- Cash at end of period $ 368,756 $ 285,346 ======== ========
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 September 30, 1998, and June 30, 1998, and the results of it's operation for the three months ended September 30, 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 months ended September 30, 1998 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: September 30 September 30 1998 1997 ---- ---- Raw materials $ 60,675 $ 51,385 Work in process 428,605 402,703 ------- ------- Total $489,280 $454,088 ======= ======= Management's Discussion and Analysis of Financial Condition and Results of Operations Liquidity and Capital Resources - ------------------------------- As of September 30, 1998, the Company's cash position was $368,756 and working capital was a positive $419,329, compared to cash of $245,346 in the prior period. The cash position improved during the quarter as a result of the profit of the Company. Management believes that these funds and cash flow from operations are adequate to fund ongoing operations. However, there is no assurance that these funds will prove adequate if the Company is unable to maintain positive cash flow operations in the future. 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 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 1999. The Company will use its best 4 efforts to satisfy its capital needs by using internally generated cash in excess of debt repayments 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 September 30, 1998 was $190,899 compared to $443,021 at September 30, 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 a former division. The Company made the third payment of $20,000 in August 1998, 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. The Company has reviewed its internal computer systems for year 2000 compliance and is satisfied that all of its internal computer systems are either already year-2000 compliant or can be made year-2000 compliant through simple upgrades. The Company does not expect the costs of achieving full year-2000 compliance to be material for the internal systems. However, there can be no assurance that coding errors or other defects will not be discovered in the future. In addition, since the Company is very small in relation to many of its customers and suppliers, the Company has been unable to ascertain if any of its suppliers and customers are year-2000 compliant. Therefore, there can be no assurances that the Company's cash flow and materials from suppliers will not be interrupted which could result in severe disruptions in the Company's operations. Results of Operations - --------------------- Comparison of three months ended September 30, 1998, and September 30, 1997. The Company's sales for the three months ending September 30, 1998, increased slightly by $73,497 or 5.3% over the comparable period of the prior year. As a result of the continuing growth in the Company's markets, the backlog which was approximately $1,852,052 at June 30, 1998, increased slightly and at September 30, 1998 was approximately $1,979,000. There is no assurance that the growth will continue or that the Company's sales efforts will continue to be successful. The cost of sales decreased to 63.7% compared to 66.1% in the prior year period, primarily as a result of increased efficiencies in manufacturing, achieved partly through investment in new production equipment. Operating expenses increased to $430,576 (approximately $100,000) compared to $331,181 in the prior period as a result of increased investment in the Company's sales and marketing program and increases in G&A costs including audit and tax preparation and investment in administrative staff for planned growth. As a result, the profit for the quarter before taxes was $81,314 compared to $130,732 for the prior year. Provision for income taxes was lower because of tax credits and over-payments. Therefore, the net income after taxes remained relatively constant at 5% of sales versus 5.7% for the prior year. The profit per share for the three month period remain constant at $.01/share. 5 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) November 12, 1998 F. Willard Griffith II - ------------------- ------------------------------------- Date F. Willard Griffith II Chairman, Chief Executive Officer and Chief Financial Officer 6 EX-27 2 FDS --
5 1 U.S. 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 1 368,756 0 698,419 (6,464) 489,280 1,585,177 1,575,825 (1,029,019) 2,452,158 1,165,848 0 0 0 1,791,590 (966,192) 2,452,158 1,456,212 1,456,212 927,101 927,101 447,797 0 4,040 81,314 9,009 72,305 0 0 0 72,305 .01 .01
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