-----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, NdEy44TYB/Br3sgUE9V2gAxy0Aho/Z5L8SgqIHnXBhrxVsPufG3AGg2OQE82mCCc 7lkSLVEZLKTPn6VZ/rk11Q== 0001001348-97-000067.txt : 19970415 0001001348-97-000067.hdr.sgml : 19970415 ACCESSION NUMBER: 0001001348-97-000067 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970228 FILED AS OF DATE: 19970414 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELTA OMEGA TECHNOLOGIES INC CENTRAL INDEX KEY: 0000846978 STANDARD INDUSTRIAL CLASSIFICATION: INDUSTRIAL INORGANIC CHEMICALS [2810] IRS NUMBER: 841100774 STATE OF INCORPORATION: CO FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-24506 FILM NUMBER: 97579919 BUSINESS ADDRESS: STREET 1: 119 IDA ROAD CITY: BROUSSARD STATE: LA ZIP: 70518 BUSINESS PHONE: 3183676400 MAIL ADDRESS: STREET 1: 119 IDA ROAD CITY: BROUSSARD STATE: LA ZIP: 70518 FORMER COMPANY: FORMER CONFORMED NAME: BARCLAYS WEST INC DATE OF NAME CHANGE: 19900117 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended February 28, 1997 OR [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT Commission file number 0-24506 Delta-Omega Technologies, Inc. (Exact name of small business issuer as specified in its Charter) Colorado 84-1100774 (State of Incorporation) (I.R.S. Employer Identification Number) 119 Ida Road, Broussard, Louisiana 70518 (Address of principal executive offices) (Zip Code) (318) 837-3011 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act during the past 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 CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date:...12,760,320 shares of common stock as of March 31, 1997 This document is comprised of pages Delta-Omega Technologies, Inc. Index to Quarterly Report Part I Financial Statements Item 1. Financial Statements Page Consolidated Balance Sheet as of February 28, 1997 .. . .. . .. . .. . .. . .. . . 2 Consolidated Statements of Operations, three and six months ended February 28, 1997 and 1996.. . .. . .. . .. . .. . .. . .. . . 3 Statements of Cash Flows, six months ended February 28, 1997 and 1996. .. . .. . .. . .. . . 4 Notes to consolidated financial statements . .. . .. . .. . .. . .. . .. . .. . . 5 Item 2. Management's discussion and analysis of financial condition and results of operations . .. . .. . .. . . 5 Part II Other Information Item 1. Legal Proceedings. .. . .. . .. . .. . . 8 Item 2. Changes in Securities . .. . .. . .. . . 8 Item 3. Defaults Upon Senior Securities . .. . . 8 Item 4. Submission Of Matters To A Vote Of Security Holders . .. . .. . .. . .. . . 8 Item 5. Other Information. .. . .. . .. . .. . . 8 Item 6. Exhibits And Reports on Form 8-K. .. . . 8 Signatures . .. . .. . .. . .. . .. . .. . .. . . 9 Part I. Item 1. Financial Statements Delta-Omega Technologies, Inc. Consolidated Balance Sheet (Unaudited) ASSETS February 28, 1997 Current Assets Cash and equivalents $ 989,952 Accounts and notes receivable Trade, net of allowance for losses 149,175 Other 60,000 Inventories 170,352 Prepaid expenses 8,158 Total current assets 1,377,637 Property and equipment, net of accumulated depreciation 469,538 Intangible assets, net of accumulated amortization 127,005 Other assets 10,212 Total assets $ 1,984,392 LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities Accounts payable 144,164 Current maturities of long-term debt and leases 22,350 Other current and accrued liabilities 16,036 Total current liabilities 182,550 Long-term debt and leases, net of current maturities 48,724 Shareholders' equity: Convertible, 7 percent cumulative, non-participating preferred stock, $.001 par value, shares authorized, 40,000,000; issued and outstanding 1,595,000 Series B, 2,471,667 Series C 4,067 Common stock, $.001 par value, shares authorized, 100,000,000; issued and outstanding 12,760,320 12,760 Additional paid-in capital 10,324,060 Retained deficit (8,587,769) Total shareholders' equity 1,753,118 Total liabilities and shareholders' equity $ 1,984,392 See accompanying notes to consolidated financial statements. Delta-Omega Technologies, Inc. Consolidated Statements of Operations (Unaudited) Three Months Ended Six Months Ended February 28, February 28, 1997 1996 1997 1996 Net sales and gross revenues Net product sales $ 303,475 $ 158,910 $ 599,085 $ 296,764 Cost of sales and revenues 222,442 123,894 443,902 189,553 Gross profit 81,033 35,016 155,183 107,211 Cost and expenses Selling, general and administrative 266,794 294,683 547,275 704,780 Research and development 79,005 31,039 97,311 45,225 Operating Loss (264,766) (290,706) (489,403)(642,794) Other income, net 8,590 2,696 16,681 8,549 Interest expense (1,367) (1,499) (3,079) (2,632) Net loss available to common shareholders $(257,543) $(289,509)$(475,801)$(636,877) Weighted average shares outstanding 12,755,320 12,440,140 12,743,597 12,429,474 Net loss per common share $ (.02) $ (.02) $ (.04) $ (.05) See accompanying notes to consolidated financial statements. Delta-Omega Technologies, Inc. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended February 28, 1997 1996 Net cash used in operating activities $ (491,943) $ (573,623) Cash flows from investing activities: Property acquisitions (49,235) (8,257) Patent costs (15,427) (4,844) Proceeds from sale of property and equipment 800 0 Deposits 0 980 Net cash flows used in investing activities (63,862) (12,121) Cash flows from financing activities: Proceeds from borrowing 25,836 40,000 Principal payments on notes payable (4,200) (3,903) Capital lease financing (12,031) (17,296) Net cash flows provided by (used in) financing activities 9,604 18,801 Net increase (decrease) in cash and equivalents (546,200) (566,943) Cash and equivalents, beginning of period 1,536,152 588,418 Cash and equivalents, end of period $ 989,952 $ 21,475 See accompanying notes to consolidated financial statements. Delta-Omega Technologies, Inc. Notes to Consolidated Financial Statements February 28, 1997 Note A: Basis of presentation The financial statements presented herein include the accounts of Delta-Omega Technologies, Inc. and Delta-Omega Technologies, Ltd. Intercompany balances and transactions have been eliminated in consolidation. The financial statements presented herein have been prepared by the Company in accordance with the accounting policies in its annual 10-KSB report for the year ended August 31, 1996 and should be read in conjunction with the notes thereto. Results of operations for the interim periods are not necessarily indicative of results of operations which will be realized for the fiscal year ending August 31, 1997. In the opinion of management, all adjustments (consisting only of normal recurring adjustments) which are necessary for a fair presentation of operating results for the interim periods presented have been made. Interim financial data presented herein are unaudited. Note B: Shareholders' equity The Company entered into four agreements to issue stock options in lieu of cash for technical and marketing services rendered for the period May 1, 1996 through January 31, 1997 and in accordance with the terms of certain employment agreements. As per these agreements, on March 10, 1997 the Company issued 32,330 stock options with exercise prices ranging from $.75 to $1.00 per share. The stock options granted are not part of the Company's non-qualified stock option plan established in 1991. There was no compensation expense recorded upon issuance of these options because the exercise price exceeded the market price of the Company's common shares on the measurement date. Therefore, since there was no compensation expense associated with these options, the Company properly provided no accounting recognition. For meeting cash requirements, the Company will continue to use a stock option arrangement that is not part of the Company's 1991 non-qualified stock option plan. Item 2. Management's discussion and analysis of financial condition and results of operations This Quarterly Report on Form 10-QSB includes certain statements that may be deemed to be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of historical facts, included in this Form 10-QSB that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future, including such matters as future capital, research and development expenditures (including the amount and nature thereof), repayment of debt, business strategies, expansion and growth to the Company's operations and other such matters are forward-looking statements. These statements are based on certain assumptions and analyses made, by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. Such statements are subject to a number of assumptions, risks and uncertainties, including general economic and business opportunities (or lack thereof) that may be presented to and pursued by the Company, changes in laws or regulations and other factors, many of which are beyond the control of the Company. Readers are cautioned that any such statements are not guarantees of future performance and that actual results or developments may differ materially from those projected in the forward-looking statements. RESULTS OF OPERATIONS For the three and six months ended February 28, 1997, revenues totaled $303,475 and $599,085 respectively as compared to $158,910 and $296,764 for the same periods in 1996. Gross margins as a percent of revenue for the six months ended decreased due to a higher percentage of the Company's total sales being derived from markets that are more competitive and yield lower margins. As sales volumes continue to improve, average unit cost will decrease, thereby increasing gross margins. For the three and six months ended February 28, 1997, operating expenses totaled $345,799 and $644,586 respectively as compared to $325,722 and $750,005 for the same periods in 1996. This resulted in operating losses of $257,543 and $475,801 respectively as compared to the losses of $289,509 and $636,877 for the same periods in 1996. Revenue for the current period was higher as compared to the same period a year earlier. This increase was due primarily to the increased sales derived from the supply contract to furnish a military aircraft cleaning compound for one (1) year and a contract to supply chemical cleaning products to a large specialized waste handling and container cleaning company that serves the oil industry in the Gulf Coast region. Through February 28, 1997, the U.S. Air Force contract generated approximately $270,000 in sales. Operating expenses for the current period as compared to the same period a year earlier decreased due to the implementation of divisional budgets and stringent cost controls instituted by management. Research and Development increased for the current period as compared to the same period in fiscal year 1996 due primarily to the expenses incurred during the demonstration of a new technology for recovering barite and oil from spent drilling muds. Other income consisting primarily of interest income was $16,681 for the six months, an increase of $8,132 when compared with the same period in the prior year. This resulted from an increase in investment cash. Interest expense was $3,079 for the six months as compared to $2,632 for the same period in the prior year. This increase is due to debt incurred to finance equipment purchases. LIQUIDITY AND CAPITAL RESOURCES Operating cash at February 28, 1997 was $989,952. Operations used $546,200 for the second quarter of fiscal year 1997 as compared to $566,943 in the second quarter of fiscal year 1996. This decrease was due primarily to the higher level of sales. The Company enhanced its liquidity in the third quarter of fiscal year 1996 by completing a private offering of Series C Preferred Stock solely to accredited investors and raised approximately $1.8 million. Commencing in June 1996 as amended in August 1996, the Company offered Units of 2,471,667 Shares of Series C Preferred Stock and Class Z Warrants at an offering price of $.75 per Unit, with a minimum investment of 25,000 Units, or $18,750. The Company paid ten percent (10%) concessions to certain broker/dealers who consummated sales of the Units. Proceeds from this offering are used to fund the recurring losses and negative cash flows until the Company is able to generate sufficient sales to become profitable. A portion of the proceeds were used to expand the Company's technical capabilities, with the addition of advanced degreed personnel and the purchase of specialized laboratory equipment. On May 17, 1996, the Company announced the award of its first major contract to supply the United States Air Force with DOT 111/113TM to be utilized for cleaning military aircraft and aerospace ground equipment. The one-year contract provides for an optional two-year extension and has the potential to generate approximately $600,000 annually. The Company was notified in April, 1997 that the contract option was exercised for the twelve month period beginning June 1, 1997. The Company has successfully demonstrated a new technology for recovering barite and oil from spent drilling muds. This unique technology has commercial potential for the oil and gas exploration business. A full scale on-site demonstration was conducted in January 1997. All indications to this point are positive and the economic viability is presently being evaluated. Management believes, although no assurances can be made, that sales will continue to increase and cash flows from operations will improve in fiscal year 1997. In an effort to improve sales, the Company announced the selection of a Vice President of Sales and Marketing. Mr. David "Andy" Gordon will assume this position beginning on May 5, 1997. He brings a proven record of sales management abilities gained from over fifteen years experience with the Water Energy Management Group of Nalco Chemical Company. The Company has no unused credit facilities at this time. Part II Other Information Item 1. Legal Proceedings not applicable Item 2. Changes in Securities not applicable Item 3. Defaults Upon Senior Securities not applicable Item 4. Submission Of Matters To Vote Of Security Holders not applicable Item 5. Other information not applicable Item 6. Exhibits And Reports On Form 8-K a) Exhibits not applicable b) Reports On Form 8-K not applicable SIGNATURES The financial information furnished herein has not been audited by an independent accountant; however, in the opinion of management, all adjustments (only consisting of normal recurring accruals) necessary for a fair presentation of the results of operations for the three months and six months ended February 28, 1997 and 1996 have been included. 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. Delta-Omega Technologies, Inc. (Registrant) /s/ James V. Janes III James V. Janes III President (Principal Officer) /s/ Marian A. Bourque Marian A. Bourque Date: April 14, 1997 Chief Accounting Officer EX-27 2
5 3-MOS AUG-31-1997 FEB-28-1997 989,952 0 239,175 (30,000) 170,352 1,377,637 923,659 (454,121) 1,984,392 182,550 0 0 4,067 12,760 1,736,291 1,984,392 158,910 158,910 123,894 123,894 325,722 0 1,499 (289,509) 0 0 0 0 0 (289,509) (.02) 0
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