10-Q 1 a2070319z10-q.txt 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED: DECEMBER 31, 2001 COMMISSION FILE NO. 0-4076 ------------------ ------ EXOTECH INCORPORATED -------------------- (Exact name of Registrant as Specified in Charter) STATE OR JURISDICTION OF INCORPORATION OR ORGANIZATION: DELAWARE IRS IDENTIFICATION NO: 54-0700888 ADDRESS OF PRINCIPAL OFFICE: 8502 DAKOTA DRIVE GAITHERSBURG, MD. 20877 REGISTRANT'S TELEPHONE NUMBER: (301) 948-3060 INDICATE BY CHECKMARK 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 REQUIREMENT FOR THE PAST 90 DAYS. YES [X] NO [ ] INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT. CLASS: COMMON STOCK, PAR VALUE $0.10 ----------------------------- OUTSTANDING AT DECEMBER 31, 2001 942,387 ------- EXOTECH INCORPORATED INDEX

~~SECURITIES~~PART I FINANCIAL INFORMATION PAGE NO. CONSOLIDATED CONDENSED BALANCE SHEET DECEMBER 31, 2001 AND ~~EXCHANGE~~JUNE ~~COMMISSION~~30, 2001.............................. 2 CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS - SIX MONTHS ENDED DECEMBER 31, 2001 AND 2000....................................... 3 STATEMENT OF CASH FLOWS FOR THREE MONTHS ENDED DECEMBER 31, 2001 AND 2000.......................... 4 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS............................................. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS.................................................... 6 PART II OTHER INFORMATION OTHER FINANCIAL INFORMATION...................................... 8 SIGNATURES....................................................... 9

EXOTECH INCORPORATED CONSOLIDATED BALANCE SHEET

~~WASHINGTON~~ASSETS DECEMBER 31, DJUNE 30, 2001 2001 ------------------- ----------- (Unaudited) CURRENT ASSETS Accts. CReceivable, Net $ 265 $ 13,615 Inventories Work in Process 189,357 196,857 Raw Materials 32,625 32,625 Finished Goods 14,000 14,000 Cash and Other Current Assets 3,150 1,078 --------- --------- Total Current Assets $239,397 $258,175 PROPERTY, PLANT AND EQUIPMENT NET 1,402 1,696 OTHER NON CURRENT ASSETS 3,880 3,880 -------- -------- TOTAL ASSETS $244,679 $263,751 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accts. Payable & Other Accrued Expenses $ 12,550 $10,391 Other Current Liabilities 415,330 400,612 Notes Payable 415,594 411,126 ------- ------- Total Current Liabilities $843,474 $822,129 SHAREHOLDERS EQUITY Common Stock, Par Value $.10 per share; 1,500,000 shares authorized; 970,135 issued; 942,387 outstanding 97,014 97,014 Paid-in-Surplus 1,169,645 1,169,645 Deficit (1,753,034) (1,712,617) Treasury Stock (27,748 shares) (112,420) (112,420) --------- --------- Total Shareholders' Equity (598,795) (558,378) TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $244,679 $263,751 ======== ========

See accompanying Notes to Consolidated Condensed Financial Statements. 2 EXOTECH INCORPORATED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

~~FORM~~2001 2000 3 Mos. 6 Mos. 3 Mos. 6 Mos. ENDED ENDED REVENEUE: 12/31 12/31 12/31 12/31 ----- ----- ----- ----- Contract Sales 7,670 9,019 42,776 108,893 EXPENSES Direct Labor 132 132 270 2,113 Overhead 8,990 13,388 2,241 9,373 Materials 10 68 1,398 2,000 Other Direct Costs -Q- 115 4,043 4,924 General & Administrative 7,307 12,366 1,822 3,841 Inventory 7,000 7,500 43,272 73,491 -------- -------- -------- -------- Cost of Sales 23,439 33,569 53,046 95,742 Operating Income (Loss) (15,769) (24,550) (10,270) 13,151 Other Income (Expenses) -- -- 17,867 17,869 Interest & Other (8,364) (15,867) (7,860) (15,730) NET INCOME BEFORE TAX (24,133) (40,417) (263) 15,290 State Income Tax Provision -- -- -- -- -------- -------- -------- -------- NET INCOME (LOSS) (24,133) (40,417) (263) 15,290 Avg. No. Shares O/S 942,387 942,387 942,387 942,387 EARNINGS (LOSS) PER COMMON SHARE (0.03) (0.04) -- 0.016 Dividend per Common Share None None None None

3 EXOTECH INCORPORATED AND SUBSIDIARY STATEMENT OF CASH FLOWS FOR SIX MONTHS ENDED DECEMBER 31,

~~QUARTERLY~~2001 ~~REPORT~~2000 ~~UNDER~~---- ~~SECTION~~---- CASH FLOWS FROM OPERATING TRANSACTIONS -------------------------------------- Net Income (Loss) $(40,417) $ 15,290 Add: Non cash Income Determinants Depreciation and Amortization 284 284 Add (Deduct): Changes in Current Assets & Liabilities (Increase) Decrease in Accounts Receivable 13,350 OR(925) (Increase) Decrease in Prepaid Expenses 524 1,296 (Increase) Decrease in Inventory 7,500 (3,989) Increase (Decrease) in Accts. Payable 1,384 5,739 Increase (Decrease) in Payroll/Emp. Benefits (2,070) (31,961) Increase (Decrease) in Accrued Interest 16,690 15 ,568 Increase (DDecrease) in Deferred Revenue 107 -0- -------- -------- Cash PROVIDED BY or (USED) FOR Operating Transactions (2,648) 1,302 CASH FLOWS FROM FINANCING TRANSACTIONS: Proceeds from Notes 19,250 0 Payment on Notes (14,781) (2,305) -------- -------- Cash PROVIDED BY or (USED FOR) Financing Transactions 4,469 (2,305) CASH FLOWS FROM INVESTING TRANSACTIONS: Deposits -0- -0- Purchase of Equipment -0- -0- -------- -------- Cash PROVIDED BY or (USED FOR) Investing Transactions -0- -0- INCREASE (DECREASE) IN CASH 1,821 (1,003) CASH BALANCE - BEGINNING 1,329 1,921 -------- -------- CASH BALANCE - ENDING $ 3,150 $ 918

4 EXOTECH INCORPORATED NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS NOTE 1. In the opinion of Management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of December 31, 2001 and June 30, 2001 and the results of operations and changes in financial position for the three months ended December 31, 2001 and 2000 of Exotech Incorporated and its inactive wholly-owned consolidated subsidiary, Exotech Research & Analysis, Inc. There are no significant intercompany transactions. NOTE 2. Per share computations have been based on the weighted average shares outstanding of 942,387 for the six months ended December 31, 2001 and 2000. NOTE 3. Notes Payable at December 31, 2001 consist of four demand notes of $100,000, $8,000 and $47,000, payable with interest at 8.5% per annum to three of the Company's former directors. In addition, notes amounting to $260,594 are payable with interest at 8.5% per annum to one officer/employee. NOTE 4. Inventory cost shown in the cost of sales represents the cost of production of goods sold that were incurred in the prior fiscal year. NOTE 5. The Company received cash deposits from its tenant amounting to $4,265 at June 30, 2001. At December 31, 2001 the tenant prepaid utilities increasing the balance of this liability to $4,372. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS The following is Management's discussion and analysis of certain significant factors which have affected the Company's earnings during the periods included in the accompanying consolidated condensed statement of operations. A summary of the period to period changes in the principal items included in the consolidated statement of operations is shown below:

COMPARISON OF ~~THE~~--------------------------------------------------------------------- ~~SECURITIES~~THREE ~~EXCHANGE~~MONTHS ~~ACT~~ENDED OFTHREE ~~1934~~MONTHS ENDED SIX MONTHS ENDED 31-Dec 30-Sep 31-Dec 31-Dec 31-Dec 31-Dec 2001 2001 2001 2000 2001 2000 ---- ---- ---- ---- ---- ---- Net Sales $9,019 $7,670 $1,349 $42,776 $ 9,019 $108,893 Direct Cost & Overhead 13,703 9,132 4,571 7,952 13,703 18,410 General & Administrative Expense 12,366 7,307 5,059 1,822 12,366 3,841 Inventory Cost 7,500 7,000 500 43,272 7,500 73,491 Cost of Sales 33,569 23,439 10,130 53,046 33,569 95,742 Interest & Other (15,867) (8,364) (7,503) 10,009 (15,867) 2,139

6 I. CHANGE IN FINANCIAL POSITION IN THE SIX MONTHS ENDED DECEMBER 31, 2001. ----------------------------------------------------------------------- In the six months period ended December 31, 2001, an increase in the deficit of working capital of $40,123 resulted from a net loss from operations of $40,417 and non-fund charges of $294. The liability for deferred revenue decreased to $4,372. II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND THE SAME SIX MONTH PERIOD --------------------------------------------------------------------------- LAST YEAR. ---------- Revenue for the six months ended December 31, 2001, was $9,019 lower by $99,874 (92%) than the results one year earlier. Cost of sales and operating costs were lower in the most recent six months by $80,042 or 70% compared to the prior year. The result was an operating loss of $24,550 and a net loss of $40,417 compared to net income of $15,290 in the six months ended one year earlier. The variations shown in the period-to-period comparison are principally related to the phase out of the microbiological instruments product manufacturing that characterizes the six month periods. In the most recent six months, manufacturing was limited to Model 100BX Radiometers. This activity is reflected in the recent six months by the decrease of about $65,991 in inventory costs. Most of the revenue for the six months ended December 31, 2001 as from maintenance, repair and re-calibration services. In the opinion of Management, continued stringent control of costs will be necessary for continued operations while seeking new sales opportunities for the sale of Radiometers. 7 PART II. OTHER FINANCIAL INFORMATION ITEM 5. As in the past, a shortage of working capital continues to be a significant problem, hampering the development of new business to the fullest extent possible. The shortage is the result of debt in the form of notes and interest payable to a current and three former directors of the Company. In the opinion of Management, the Company is in a position to sustain operations at least until such time as the results of current negotiations for new business are determinable. Ultimate realization of the carrying value of prepaid expenses and advances, property and equipment, and miscellaneous other assets shown in the accompanying balance sheet depends upon sustained operations as a going concern. Further complicating this process is the death of the Company's president and chief executive officer on January 18, 2002. The affairs of the Company are currently being run by the Board of Directors. The dollar amount of the backlog as of December 31, 2001 was $0, a decrease of $800 from the backlog of the preceding quarter ended September 30, 2001. ITEM 6 (B) No reports on Form 8-K were filed in this quarter, ended December 31, 2001. 8 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Company has duly caused this amended Report to be signed on its behalf by the undersigned thereunto duly authorized. EXOTECH INCORPORATED REGISTRANT DATE: February 11, 2002 ------------------------------------- /s/ Theodore J. Parreco -------------------------- Secretary 9

FOR QUARTER ENDED: SEPTEMBER 30, 2001 COMMISSION FILE NO. 0-4076

EXOTECH INCORPORATED

(Exact name of Registrant as Specified in Charter)

State or Jurisdiction of Incorporation or Organization:		DELAWARE
IRS Identification No:		54-0700888
Address of Principal Office:		8502 Dakota Drive
		Gaithersburg, MD. 20877
Registrant's Telephone Number:		(301) 948-3060

Indicate by checkmark 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 requirement for the past 90 days. Yes ý No o

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this Report.

CLASS:		COMMON STOCK, PAR VALUE $0.10
OUTSTANDING AT SEPTEMBER 30, 2001		942,387

EXOTECH INCORPORATED

INDEX

PART I	FINANCIAL INFORMATION
	CONSOLIDATED CONDENSED BALANCE SHEET SEPTEMBER 30, 2001 AND JUNE 30, 2001
	CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
	STATEMENT OF CASH FLOWS FOR THREE MONTHS ENDED SEPTEMBER 30, 2001 AND 2000
	NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
	MANAGEMENT'S DISCUSSION AND ANALYSIS OF CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
PART II	OTHER INFORMATION
	OTHER FINANCIAL INFORMATION
	SIGNATURES

EXOTECH INCORPORATED

CONSOLIDATED BALANCE SHEET

ASSETS
	SEPTEMBER 30, 2001			JUNE 30, 2001
	(Unaudited)
CURRENT ASSETS
Accts. Receivable, Net	$	5,885		$		13,615
Inventories
Work in Process	189,857			196,857
Raw Materials	32,625			32,625
Finished Goods	14,000			14,000
Cash and Other Current Assets	131			1,078
Total Current Assets	$	242,498		$		258,175
PROPERTY, PLANT AND EQUIPMENT NET	1,554			1,696
OTHER NON CURRENT ASSETS	3,880			3,880
TOTAL ASSETS	$	247,932		$		263,751
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accts. Payable & Other Accrued Expenses	$	11,920			$		10,391
Other Current Liabilities	407,985				400,612
Notes Payable	410,536				411,126
Total Current Liabilities	$	830,441			$		822,129
SHAREHOLDERS EQUITY
Common Stock, Par Value $.10 per share; 1,500,000 shares authorized; 970,135 issued; 942,387 outstanding	97,014				97,014
Paid-in-Surplus	1,169,645				1,169,645
Deficit	(1,736,748		)		(1,712,617			)
Treasury Stock (27,748 shares)	(112,420		)		(112,420			)
Total Shareholders' Equity	(582,162		)		(558,378			)
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY	$ 247,932				$ 263,751

See accompanying Notes to Consolidated Condensed Financial Statements.

EXOTECH INCORPORATED

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

	2001			2000
	THREE MONTHS ENDED SEPTEMBER 30			THREE MONTHS ENDED SEPTEMBER 30
REVENUES
Contract Sales	$	7,670		$	66,117
EXPENSES
Direct Labor	132			1,843
Overhead	8,990			7,132
Materials	10			-0-
Other Direct	-0-			1,483
General & Administrative	7,307			2,019
Inventory Costs	7,000			30,219
Cost of Contract Sales	23,439			42,696
Operating Income (Loss)	(15,769		)	23,421
Other Revenue (Expenses):	-0-			2
Interest & Other	(8,364		)	(7,870		)
NET INCOME BEFORE TAXES	(24,133		)	15,553
State Income Tax	-0-			-0-
NET INCOME (LOSS)	(24,133		)	15,553
Weighted Average Number of Common Stock Outstanding	942,387			942,387
EARNINGS (LOSS) PER COMMON SHARE	(.03		)	.02
DIVIDENDS PER COMMON SHARE	NONE			NONE

See accompanying Notes to Consolidated Condensed Financial Statements.

These statements have been prepared from the books of account without audit.

EXOTECH INCORPORATED AND SUBSIDIARY

STATEMENT OF CASH FLOWS FOR

THREE MONTHS ENDED SEPTEMBER 30,

	2001			2000
CASH FLOWS FROM OPERATING TRANSACTIONS
Net Income (Loss)	$	(24,133	)	$	15,553
Add: Non cash Income Determinants
Depreciation and Amortization	142			143
Add (Deduct): Changes in Current Assets & Liabilities
(Increase) Decrease in Accounts Receivable	7,730			(445		)
(Increase) Decrease in Prepaid Expenses	544			730
(Increase) Decrease in Inventory	7,000			(16,315		)
Increase (Decrease) in Accts. Payable	1,529			(2,357		)
Increase (Decrease) in Payroll/Emp. Benefits	1,195			(4,793		)
Increase (Decrease) in Accrued Interest	8,344			7,784
Increase (Decrease) in Deferred Revenue	(2,165		)	-0-
Cash Provided By or (Used For) Operating Transactions	186			300
CASH FLOWS FROM FINANCING TRANSACTIONS:
Proceeds from Notes	9,200			2,500
Payment on Notes	(9,790		)	(2,239		)
Cash Provided By or (Used For) Financing Transactions	(590		)	261
CASH FLOWS FROM INVESTING TRANSACTIONS:
Deposits	-0-			-0-
Purchase of Equipment	-0-			-0-
Cash Provided By or (Used For) Investing Transactions	-0-			-0-
INCREASE (DECREASE) IN CASH	(404		)	561
CASH BALANCE - BEGINNING	1,329			1,921
CASH BALANCE - ENDING	$	925		$	2,482

EXOTECH INCORPORATED

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

NOTE 1.

In the opinion of Management, the accompanying unaudited consolidated condensed financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 2001 and June 30, 2001 and the results of operations and changes in financial position for the three months ended September 30, 2001 and 2000 of Exotech Incorporated and its inactive wholly-owned consolidated subsidiary, Exotech Research & Analysis, Inc. There are no significant intercompany transactions.

NOTE 2.

Per share computations have been based on the weighted average shares outstanding of 942,387 for the three months ended September 30, 2001 and 2000.

NOTE 3.

Notes Payable at September 30, 2001 consist of four demand notes of $100,000, $8,000 and $47,000, payable with interest at 8.5% per annum to three of the Company's former directors. In addition, notes amounting to $255,536 are payable with interest at 8.5% per annum to one officer/employee.

NOTE 4.

Inventory cost shown in the cost of sales represents the cost of production of goods sold that were incurred in the prior fiscal year.

NOTE 5.

The Company received cash deposits from its tenant amounting to $4,265 at June 30, 2001. The balance of this liability is reduced incrementally upon monthly billing for rent. At September 30, 2001 the balance of this liability was $2,100.

MANAGEMENT'S DISCUSSION AND ANALYSIS

OF THE

CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS

The following is Management's discussion and analysis of certain significant factors which have affected the Company's earnings during the periods included in the accompanying consolidated condensed statement of operations.

A summary of the period to period changes in the principal items included in the consolidated statement of operations is shown below:

	COMPARISON OF
	THREE MONTHS ENDED						THREE MONTHS ENDED
	Sept 30 2001			June 30 2001			Sept 30 2001			Sept 30 2000
Net Sales	$	7,670		$	13,447		$	7,670		$	66,117
Direct Cost & Overhead	9,132			5,342			9,132			10,458
General & Administrative Expense	7,307			1,667			7,307			2,019
Inventory Cost	7,000			20,067			7,000			30,219
Cost of Sales	23,439			27,076			23,439			42,696
Interest & Other	(8,364		)	(67,737		)	(8,364		)	(7,870		)

I. CHANGE IN FINANCIAL POSITION IN THE THREE MONTHS ENDED SEPTEMBER 30, 2001.

In the three months period ended September 30, 2001, an increase in the deficit of working capital of $23,989 resulted from a net loss from operations of $24,133 and non-fund charges of $132. The liability for deferred revenue decreased to $2,100.

II. INCOME AND EXPENSE IN THE MOST RECENT QUARTER AND THE SAME THREE MONTH PERIOD LAST YEAR.

Revenue for the quarter ended September 30, 2001, was $7,670 lower by $58,447 (88%) than the results one year earlier. Operating costs were lower in the most recent quarter by $19,257 or 45% compared to the prior year. The result was an operating loss of $15,769 and a net loss of $24,133 compared to a net profit of $15,553 in the quarter ended one year earlier. The variations shown in the period-to-period comparison are principally related to the phase out of the microbiological instruments product manufacturing that characterizes the three month periods. In the most recent quarter, manufacturing was limited to Model 100BX Radiometers. This activity is reflected in the recent quarter by the decrease of about $23,219 in inventory costs. Maintenance, repair and recalibration services yielded revenue of about $1,850.

In the opinion of Management, continued stringent control of costs will be necessary for continued operations while seeking new opportunities in the following quarter.

PART II. OTHER FINANCIAL INFORMATION

ITEM 5.

As in the past, a shortage of working capital continues to be a significant problem, hampering the development of new business to the fullest extent possible. The shortage is the result of debt in the form of notes and interest payable to a current and three former directors of the Company. In the opinion of Management, the Company is in a position to sustain operations at least until such time as the results of current negotiations for new business are determinable. Ultimate realization of the carrying value of prepaid expenses and advances, property and equipment, and miscellaneous other assets shown in the accompanying balance sheet depends upon sustained operations as a going concern.

The dollar amount of the backlog as of September 30, 2001 was $800, a decrease of $915 from the backlog of the preceding quarter ended June 30, 2001.

ITEM 6 (B)

No reports on Form 8-K were filed in this quarter, ended September 30, 2001.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, the Company has duly caused this amended Report to be signed on its behalf by the undersigned thereunto duly authorized.

		EXOTECH INCORPORATED
		REGISTRANT
DATE:	November 9, 2001
/s/ Robert G. Lyle
ROBERT G. LYLE, PRESIDENT AND CHIEF
EXECUTIVE OFFICER

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