-----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, Bnbx8Vi69KfdqfL8AqDLdpIP7J6Uybc70tV4zmEUZxdvjE7P++p8yTIkLvxUmVu3 bno1l3DzANXsWT0Zzf1R3A== 0001021408-02-002025.txt : 20020414 0001021408-02-002025.hdr.sgml : 20020414 ACCESSION NUMBER: 0001021408-02-002025 CONFORMED SUBMISSION TYPE: 10KSB PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20011130 FILED AS OF DATE: 20020213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NDC AUTOMATION INC CENTRAL INDEX KEY: 0000859621 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRICAL INDUSTRIAL APPARATUS [3620] IRS NUMBER: 561460497 STATE OF INCORPORATION: DE FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: 10KSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-18253 FILM NUMBER: 02540353 BUSINESS ADDRESS: STREET 1: 3101 LATROBE DR CITY: CHARLOTTE STATE: NC ZIP: 28211 BUSINESS PHONE: 7043621115 10KSB 1 d10ksb.txt NDC AUTOMATION, INC. - -------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-KSB (Mark One) [X] Annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended November 30, 2001 or ------------------- [_] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the transition period from ______________ to Commission file number 0-18253 ----------- NDC AUTOMATION, INC. (Name of small business issuer in its charter) Delaware 56-1460497 - ------------------------------- ----------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3400 Latrobe Drive, Charlotte, North Carolina 28211 - ---------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Issuer's telephone number (704) 362-1115 ---------------- Securities registered pursuant to Section 12(b) of the Exchange Act: Name of each exchange on Title of each class which registered None None - --------------------------------- --------------------------------- Securities registered pursuant to Section 12(g) of the Exchange Act: .01 Par Value Common Stock ---------------------------- (Title of Class) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the 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 --- Check disclosure of delinquent filers in response to Item 405 of Regulation S-B is not contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [_] State issuer's revenues for its most recent fiscal year: $6,015,214. The aggregate market value of the voting stock held by non-affiliates of the Registrant was $703,609, based upon the closing sales price of Common Stock on OTC Bulletin Board on January 31, 2002 of $0.29 per share. As of January 31, 2002, 3,586,451 shares of Registrant's Common Stock, par value $.01 per share, were outstanding. Portions of the Registrant's Annual Report to the security holders for the fiscal year ended November 30, 2001 furnished to the Commission pursuant to Rule 14a-3(b) under the Securities Exchange Act of 1934 are incorporated by reference in Part II, Items 6 and 7. In addition, portions of the Registrant's definitive proxy statement for the 2001 Annual Meeting of Shareholders to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 are incorporated by reference in Part III, Items 9, 10, 11 and 12. Transitional Small Business Disclosure Format (check one): Yes No X --- - - -------------------------------------------------------------------------------- PART I Item 1. Description of Business Business Development NDC Automation, Inc., now doing business under the "Transbotics" name, conducts the business previously carried on by Netzler and Dahlgren Company Technologies, Inc. ("NDCT"), NDC Systems, Inc. ("NDCS"), and another company also called NDC Automation, Inc. ("NDCA") (all collectively referred to hereunder as the "Company"). NDCT was founded in 1982 as the North American affiliate of NDC, Netzler & Dahlgren Co. AB ("Netzler & Dahlgren"), a Swedish Company. NDCT's strategy was to acquire or license Netzler & Dahlgren control technologies and products, and to enhance, modify, and otherwise adapt them for use by customers in North America. In 1984, NDCS was organized to market radio frequency identification ("RFID") technology products. Automation Technologies, Inc. ("ATI") was formed in 1985, but did not engage in the active conduct of business. In 1987, NDCA was formed to provide standard hardware and software packages for original equipment manufacturers ("OEMs") to expand applications of automatic guided vehicle systems ("AGVS") and RFID technologies into industries that traditionally did not use such technologies. Effective December 1, 1987, NDCT, NDCS, and NDCA were all merged into ATI. The surviving corporation changed its name to NDC Automation, Inc. The effect of the merger was to combine the business activities of three separate, but market-related, companies into a single, integrated enterprise. The Company became a Delaware corporation in December 1989 through a merger entered into for the purpose of changing the Company's state of incorporation. At that time its sole subsidiary was N/S Technology, Inc., an inactive North Carolina corporation which was dissolved in 1994. On March 28, 1990, the Company successfully completed its initial public offering netting $1,996,598 to improve its financial position for potential growth opportunities. On June 30, 1991, the Company acquired all of the common stock of Southeastern Software Developers, Inc. ("SSDI"), a South Carolina corporation, from its shareholders for stock in the Company and cash. SSDI developed and owned proprietary control and monitoring software used primarily in the textile industry. The Company has essentially absorbed the operations of SSDI and dissolved SSDI's corporate charter in 1996. Effective July 1, 1992, the Company acquired for cash and stock all of the outstanding shares of NDC Technology Australia PTY Ltd. ("NDCTA"), a company formed to acquire, develop, market, and sell hardware, software and engineering services incorporated into and used to control AGVS in the international market. NDCTA was sold on November 30, 1995 to its managing director. On June 22, 1993, the Company purchased the assets of AutoNavigator AB ("ANAB"), of Lulea, Sweden. A subsidiary of the Company, NDC Laser AB ("NDC Laser"), was formed to produce and distribute ANAB's laser device and related software, enhancing the Company's know-how in the AGV area. NDC Laser was sold November 30, 1995 to Netzler & Dahlgren. During the fiscal year ending November 30, 1996, the Company discontinued its marketing and distribution of the radio frequency identification products to primarily focus on its AGVS business. The Company also refocused its marketing and sales of AGVS equipment to OEM customers and system suppliers. In September 1997 the Company expanded its sales efforts to provide turn key AGV systems to end users. On November 30, 2000 the Company's license agreement with Netzler and Dahlgren AB was modified to allow the Company to pursue end user AGV business world wide on a non-exclusive basis. And in 2001 the Company started doing business as Transbotics Corporation. 1 Business of the Issuer The Company's current core business is to be a supplier of controls hardware, software, engineering services and other components that are incorporated into automated guided vehicles ("AGVs" or "vehicles") and into systems that incorporate one or more such vehicles ("AGV systems"). AGVs are driverless, computer-controlled vehicles that are programmed to transport materials through designated pickup and delivery routines within a particular facility (usually a manufacturing or distribution facility) and to transmit information concerning system status, inventory tracking and system controls to a system controller. The Company's AGV system products and services have been used in a variety of industries, including textiles, automotive, entertainment, newspaper publishing and electronics. These control products are designed to be of such general applicability as to be incorporated into many kinds of material handling vehicles. Consequently, they are used not only in custom-designed AGV vehicles and systems, but also to automate conventional material handling equipment such as forklifts and pallet jacks. The Company markets a laser guidance AGV control system, Lazerway(TM), which is viewed by management as superior to the traditional "wire guidepath" technology or other non-wire technologies for controlling the direction of an AGV. The laser technology permits the end user to alter the guidepaths of AGVs without changes in the user's facility. For further information regarding AGVs, see "AUTOMATED GUIDED VEHICLE SYSTEMS" below. The Company's philosophy includes selling its hardware, software and engineering services to OEM customers (i.e., manufacturers of AGVs) AGV systems and other vehicles that can be equipped for automation to fit the end-users' needs. The Company will sell such services through regular distribution or as a sub-contractor to such OEM customers. The Company also supplies turnkey AGV systems to end users. In 2001, sales of AGV related products and services accounted for almost all of the Company's net revenues as it did in 2000. The Company's principal office is located at 3400 Latrobe Drive, Charlotte, North Carolina, 28211, and its telephone number is (704) 362-1115. 2 Strategy The Company's mission is to strengthen its core business through active marketing, distribution and support of AGV system control technology, engineering and related products through sales to end users, AGV manufacturers, material handling system integrators and other equipment manufacturers who typically integrate the Company's products into system products for sale to the actual users of AGV systems. The Company is focusing its marketing efforts on its laser technology and AGV system solutions, Lazerway(TM), towards end user and OEM customers as well as to existing users of AGV systems for up-grading and retrofitting purposes. The Company has divested itself of all previous acquisitions to focus on its core business in North America. The Company's strategy is to increase awareness of its AGVS technology and system capabilities among end users as well as creating new relationships with AGVS suppliers and system suppliers that would be qualified to distribute the products or systems to end users. As part of the strategy, the Company intends to pursue potential niche markets of end users. The Company believes that its focus on laser technology rather than on wire technology can give it an advantage in the existing and future market place. The Company also has introduced related product lines such as batteries and chargers, under the Powerway label and A/C motors that can be distributed to targeted customers to supplement its existing AGV business. The Company will continue to review its strategy as it monitors the market, competition and growth opportunities for its products. Results of such reviews may affect the above strategies. There can be no assurance, however, that any of the above strategies or future strategies will meet management's objectives for success or growth. 3 AUTOMATED GUIDED VEHICLE SYSTEMS General AGVs are driverless, computer-controlled vehicles that are programmed to transport materials through designated pickup and delivery routines within a particular facility (usually a manufacturing or distribution facility) and to transmit system status, inventory tracking and control and other information. In many manufacturing and distribution processes, material handling needs are met by roller tables, conveyors, manually operated vehicles and other conventional methods. The AGVs can be rerouted within the constraints imposed by the particular system. The Company's AGV system products and services have been used in a variety of industries, including warehousing, textiles, newspaper publishing and electronics. Control systems and technology supplied by the Company are used for guidance and control of AGV systems in numerous production facilities. The vehicles can be made to move and stop, load and unload, and perform other functions. The AGVs load handling equipment is adapted to the type and weight of the material that it handles and may consist of a roller table, forklift, mechanical arm or other device. The vehicle's wheel and drive configurations vary, depending upon the degree of maneuverability required within the manufacturing or distribution facility. Automatic guided vehicles can be guided between pick-up and delivery points by several methods. The traditional method is an inductive loop, called a wire guidepath, which is embedded in the floor of the facility when the AGV system is installed. The vehicles in an AGV system are equipped with a sensor and guidance equipment that cause them to follow the guidepath. Because the installation of a wire guidepath requires cutting a channel in the floor of the facility, the wire guidepath method makes rerouting of AGVs less flexible. Moreover, this method of installation of the system makes it inappropriate for clean room environments and certain other applications. Vehicle guidance based on laser technology eliminates the need for extensive facility reconfiguration upon installation. The laser guidance technology employs a rotating laser beam emitted from a vehicle to sweep the room and calculate angles to detected reflectors. The data gathered in this manner is used by the vehicle's computer to determine its location and progress towards its destination. The vehicle can be rerouted remotely by computer. Management believes that the Company's laser guidance is superior to traditional technology because it permits the end user to alter the designated routines of AGVs without extensive reconfiguration of the facility . The end users of AGV systems typically are firms that need to move objects by vehicle within a single manufacturing or distribution facility. For example: A leading car manufacturer transports engines in its production facility with AGV's. A significant number of newspapers use AGV systems incorporating the Company's products to move paper rolls and finished editions through their printing plants. The Company offers over 20 standard items of equipment and over 10 standard software products with multiple options to its customers. In certain instances customers incorporate NDCA products into their own AGV systems for sale to end users. These control products are designed to be of such general applicability as to be useful in many kinds of material handling vehicles. Consequently, they are used not only in custom-designed AGV vehicles and systems, but also to upgrade conventional material handling equipment such as forklifts and pallet jacks. AGV systems can be custom-designed by system houses and OEMs, and occasionally by end users, to satisfy the material handling needs of an end user's facilities. The more complex AGV systems perform several functions and are controlled by highly sophisticated computer software. These systems track and maintain the flow of materials through an entire manufacturing or distribution process. In doing so, they use numerous vehicles to move parts and assemblies through the various operations necessary to produce the finished product. The AGV system's own computers provide host production computers with the information necessary for management to make real-time production decisions. 4 The License Agreement The Company's AGV system products and services incorporate technology licensed by, and products purchased from, Netzler and Dahlgren Co. AB, a Swedish based company ("Netzler & Dahlgren"), as well as technology that it has acquired or developed itself. Prior to November 30, 2000 the Company operated under a Master License Agreement ("MLA") dated December 1, 1987, as restated November 30, 1995, in which the Company received from Netzler & Dahlgren's AGV technology, hardware, software, know-how and consulting services. The Master License Agreement provided the Company the sole rights to commercially and technically utilize, apply and sub-license Netzler & Dahlgren's AGV system control technology and to sell its AGV system products in North America to OEMs who manufacture vehicles in North America. The MLA, however, did not prohibit customers in North America from purchasing complete AGVs equipped with Netzler & Dahlgren controls from other Netzler & Dahlgren licensees that manufactured vehicles outside of North America. Netzler & Dahlgren products do not include standard or custom vehicle frames for AGVs. On November 30, 2000, the Company renegotiated its license agreement with Netzler & Dalgren. The new agreement, dated November 30, 2000, expands the Company's territory to sell to end-users on a worldwide basis, and continues its rights to sub-license the technology in North America but on a non-exclusive basis. The new license agreement continues to allow the Company to distribute the Netzler & Dahlgren laser technology as described above in North America except for the Teach-in technology. The agreement was extended for ten (10) years and will expire on December 1, 2010 and is subject to automatic two year extensions unless and until either party, in compliance with certain procedures, notifies the other of its intention to terminate the agreement. It provides for payment of a 10% royalty on sub-license fees received by the Company with respect to AGV system technology. It also provides for the sale of products at prices determined annually. Royalties are due 30 days following receipt of payment by the Company. During the fiscal year ended November 30, 2001, the Company incurred no royalties to Netzler & Dahlgren with respect to technology sub-licenses and purchased an aggregate of $599,119 of hardware, software and engineering consulting services from Netzler & Dahlgren. Customers A substantial portion of the Company's business in any given year is derived from a limited number of customers, although the identity of those customers varies somewhat from year to year. For the fiscal year ended November 30, 2001, orders from the three largest customers accounted for 15.8%, 11.2% and 10.4% of the Company's net revenues. For fiscal 2000, orders from the three largest customers accounted for 21.8%, 7.2% and 6.7% of the Company's net revenues. For fiscal 1999, orders from the three largest customers accounted for 24.3%, 8.3% and 6.4% of the Company's net revenues. End users of the Company's products and services are reached generally by the Company's direct sales and sales to system suppliers and OEMs. The Company sold products to over six system supplier and OEM customers in 2001 that acquire the Company's products under various types of agreements. Depending on the terms of such agreements, the system supplier can typically obtain hardware, software and access the Company's specific AGV system know-how. AGV system products and services sold to system suppliers, OEMs and Netzler & Dahlgren as a group accounted for approximately 31%, 42% and 57% of the Company's net revenues in the fiscal years ended November 30, 2001, 2000 and 1999, respectively. For the fiscal year ended November 30, 2001, such customers accounted for approximately $1.9 million in net revenues. The Company also sold in 2001 its AGV system products and services directly to end users to incorporate such components and equipment into AGV systems suitable for their particular needs. AGV system products and services sold directly to end users accounted for approximately 69%, 58% and 43% of the Company's net revenues in the fiscal years ended November 30, 2001, 2000 and 1999, respectively. 5 Marketing The Company's marketing strategy and goal is to promote the advantages of its AGV control technology to the whole market, particularly the Lazerway(TM) system. The technology consists of a family of products, both hardware and software, capable of being incorporated into a broad variety of systems while preserving the identity and independence of the system supplier. The Company's sales and distribution efforts are directed toward end users as well as OEM customers , system suppliers. In its approach to certain prospective customers, the Company will suggest a teamed technology arrangement. In such an arrangement, the Company will work with its OEM customer to integrate the Company's products and services with their equipment. The goal is to fashion a material movement system that will satisfy the end user's particular needs. Such technology once installed can be maintained by factory floor technicians. The Netzler & Dahlgren technology has been used in more than 1000 AGV systems with over 7,000 vehicles (composed of as few as one vehicle and as many as 50 vehicles). The Company's marketing program is led by its President, its Executive Vice President, and marketing director, while the Sales Group is responsible for developing relationships with system suppliers, OEMs, distributors and end users. The Company attends the major trade shows held by the materials handling industry and advertises in various industry publications. Although the Company actively markets all of its products and services, a substantial part of its business is unsolicited. For example, a potential end user of the Company's products might solicit requests for proposals from more than one system supplier. A system supplier will incorporate the features of the Company's products and services in the technical specifications of its bid, in which case the pricing of its bid would reflect the cost of such products and services. It is possible for several system suppliers or OEMs to incorporate features of the Company's products and services into their bids, thus enhancing the likelihood that such products and services will be included in the AGV system finally selected by the end user. The bidding process takes, on average, three months to one year for completion. The design, manufacture and installation of AGV systems utilizing the Company's products and services require an additional six to twelve months. Backlog Backlog consists of all amounts contracted to be paid by customers but not yet recognized as net revenues by the Company. At November 30, 2001, the Company had a backlog of approximately $1,450,000 compared to $940,000 total backlog one year earlier. Substantial fluctuations in backlog are considered normal due to the size of AGV system contracts. Substantial fluctuations in the industry makeup of the Company's backlog also are considered normal. Patents and Proprietary Information Product developments sponsored and funded by the Company are the property of the Company and may be patented by the Company. The Company owns and licenses various patents and trademarks with varying expiration dates. Management believes that the Company's strong ability to modify and adapt its products to changing applications is just as significant to the maintenance of its competitive position as is the protection afforded by its patent and trademark rights. 6 Research and Development The Company's research and development activities are designed to complement existing products and services and not to innovate radically different technologies. Management relies upon Netzler & Dahlgren to innovate new technology to which the Company is entitled according to the terms of the License Agreement. The Company spent $80,562 for research and development in fiscal 2001 compared to $53,086 in fiscal 2000, but made no expenditures on research and development in 1999. Inventory The Company purchases considerable amounts of hardware and software from Netzler & Dahlgren. The lead time required for such purchases averages approximately sixteen weeks. Other manufactured products inventoried by the Company require similar lead times. Due to the long lead times required, a general increase in the volume of business can require increases in inventory levels. Competition The material handling industry is highly competitive, and technologies are being continuously developed or improved. The Company is a supplier of AGV systems worldwide and a supplier in North America of AGV system control technology, products and services designed to be incorporated into vehicles manufactured by others. Management believes that the flexibility and functionality of its controls and technology offer a competitive advantage relative to the technology of system suppliers and OEMs that produce controls and vehicles only for use in their own AGV systems. There can be no assurance that this competitive advantage will continue. While the Company endeavors continually to improve and upgrade its product and service offerings, there can be no assurance that other firms having greater financial resources for research, development and marketing will not develop products with characteristics superior to the Company's products or that render the Company's products obsolete. In summary, competition is derived much less from non-OEM companies supplying AGV control technology than from OEMs who offer turnkey AGV systems based on their own proprietary AGVS technology. The Company has yet to convert such major OEMs from their own AGVS technology to the Company's technology, thereby limiting the Company's access to the markets served by such OEMs. The terms of the new License Agreement do not prohibit Netzler & Dahlgren's licensees from entering the North American market or Netzler & Dahlgren signing up new licensees in North America to compete with the Company or the Company's sub-licensees or to supply completed AGVs to the Company's sub-licensees. During the last three years the Company noted an increased presence of such foreign licensees in the North American market compared to prior years. Management presently believes this trend may continue and could be a material threat to the Company's current and potential revenues. Employees The Company presently employs 33 persons full-time. None of the Company's employees is a party to a collective bargaining agreement. The Company considers its employee relations to be good. 7 Item 2. Properties None. Item 3. Legal Proceedings None. Item 4. Submission of Matters to a Vote of Security Holders None. 8 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters The Company's Common Stock previously traded on the National Association of Securities Dealers, Inc. ("NASDAQ") National Market under the symbol "AGVS". The Company's common stock began trading on the OTC Bulletin Board in November, 1995. As of November 30, 2001, 3,586,451 of the Company's 11,000,000 authorized shares of Common Stock were issued and outstanding. Trading in the Company's securities commenced on March 28, 1990. The table below indicates quarterly high and low bid and asked information for the years ended November 30, 2001 and 2000, respectively, as provided to the Company by the OTC Bulletin Board. The quotations reflect inter-dealer prices, without dealer mark-up, mark-down, or commission, and may not represent actual transactions. The approximate number of holders of record of common stock of the Company as of January 30, 2002 was 170. The Company believes that there are approximately 800 beneficial owners of the Company's common stock.
Market Price per Share ----------------------------------------------------------------------------- 2001 2000 ----------------------------------------------------------------------------- High Low High Low Quarter Ended Bid Ask Bid Ask Bid Ask Bid Ask - -------------------------------------------------------------------------------------------------------------------- February 28 0.81 0.91 0.13 0.16 0.72 0.97 0.26 0.33 May 31 0.47 0.63 0.15 0.20 1.19 1.22 0.38 0.53 August 31 0.37 0.45 0.21 0.30 0.50 0.75 0.26 0.28 November 30 0.34 0.51 0.21 0.25 0.32 0.47 0.19 0.20 ====================================================================================================================
The Company has never paid any cash dividends and has no present intention to declare or pay cash dividends. The Company intends to retain any earnings which it may realize in the foreseeable future to finance the development and expansion of its business. 9 Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations The information under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Registrant's Annual Report to the security holders furnished to the Commission under Rule 14a-3(b) of the Securities Exchange Act of 1934 (a copy of which is included in the exhibits hereto) is incorporated herein by reference. Item 7. Financial Statements The Financial Statements in the Registrant's Annual Report to the security holders furnished to the Commission under Rule 14a-3(b) of the Securities Exchange Act of 1934 (a copy of which is included in the exhibits hereto) are incorporated herein by reference. Item 8. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures None. PART III Item 9. Directors, Executive Officers, Promoters, and Control Persons; Compliance with Section 16(a) of the Exchange Act The information under the captions "Election of Directors", "Management" and "Compliance with Section 16(a) of the Securities Exchange Act of 1934" in the Registrant's definitive Proxy Statement are incorporated herein by reference. Item 10. Executive Compensation The information under the captions "Compensation of Directors" and "Executive Compensation" in the Registrant's definitive Proxy Statement are incorporated herein by reference. Item 11. Security Ownership of Certain Beneficial Owners and Management The information set forth under the caption "Security Ownership of Management and Others" in the Registrant's definitive proxy statement is incorporated herein by reference. Item 12. Certain Relationships and Related Transactions The information set forth under the captions "Certain Transactions" in the Registrant's definitive proxy statement is incorporated herein by reference. 10 PART IV Item 13. Exhibits and Reports on Form 8-K (a) Exhibits: Exhibit No. Description - ------- ----------- 3.1 (a)* Certificate of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to the Company's Form 10-K for the fiscal year ended November 30, 1990 (the 1990 Form 10-K) (b)* Certificate of Amendment dated May 27, 1993 (incorporated by reference to Exhibit 3.1 to the Company from S-1 dated August 27, 1993) 3.2 * Bylaws of the Company (incorporated by reference to Exhibit 3.2 to the Company's 1990 Form 10-K) 4.1 * Form of Common Stock certificate (incorporated by reference to Exhibit 4.1 to the Company's Registration Statement (No. 33-32925) on Form S-18 (the Form S-18)) 10.1 (a)* Profit Sharing Plan and Trust Agreement dated April 1, 1983, as amended (incorporated by reference to Exhibit 10.1 to the Company's 1990 Form 10-K) (b)* Nonstandardized Code 401(k) Profit Sharing Plan (incorporated by reference to Exhibit 10.48 to the Company's 1990 Form 10-K) (c)* Adoption Agreement #004 Nonstandard Code 401(k) Profit Sharing Plan dated October 26, 1992 (incorporated by reference to Exhibit 10.1(b) to the Company's Form 10-K for the fiscal year ended November 30, 1992 (the 1992 Form 10-K)) 10.2 (a)* License Agreement dated November 30, 2000 between the Company and Netzler and Dahlgren Co. AB (incorporated by reference to Exhibit 10.1 of the December 20, 2000 form 8K) (b)* Security Agreement dated March 2, 2001 between the Company and Netzler and Dahlgren Co. AB (incorporated by reference to Exhibit 10.2(h) to the Company's Form 10-K for the fiscal year ended November 30, 2000 (the 2000 Form 10-K)) 10.3 (a)* Agreement dated June 20, 1989 between the Company and Schabmuller GmbH (incorporated by reference to Exhibit 10.4 to the Form S-18) (b)* Exclusive Distribution Agreement dated February 9, 1995 between the Company and Schabmuller GmbH (incorporated by reference to Exhibit 10.4(b) to the Company's 1994 form 10-KSB) (c)* Distributorship Agreement dated February 19, 1998 between the Company and Schabmulerr Gmbh (incorporated by reference to Exhibit 10.4(c) 1998 form 10KSB 10.4 (a)* Know-How, Firmware and Documentation License Agreement dated November 30,1990 between the Company and Production Machinery Corporation (incorporated by reference to Exhibit 10.8(a) to the Company's Form 10-K for the fiscal year ended November 30, 1991 (the 1991 Form 10-K)) (b)* Technology License Agreement dated January 30, 1998 between the Company and Mentor AGVS (incorporated by reference to Exhibit 10.5(b) to the Company's 1998 form 10-KSB) (c)* Technology License Agreement dated December 1, 1999 between the Company and Mentor AGVS (incorporated by reference to Exhibit 10.4(c) to the Company's 1999 form 10-KSB) 11 Item 13. Exhibits and Reports on Form 8-K (b) Exhibits: Exhibit No. Description - ------- ----------- 10.5* Exclusive Distribution Agreement dated October, 1999 between the Company and MicroPower (incorporated by reference to Exhibit 10.6 to the Company's 1999 Form 10-K) 10.6* Service and Support Agreement dated December 14, 1999 between the Company and the Raymond Corporation (incorporated by reference to Exhibit 10.7 to the Company's 1999 Form 10-K) 10.7* Employment Agreement dated March 1, 1999 between Claude Imbleau and the Company (incorporated by reference to Exhibit 4 to the Company's May 31, 1999 form 10QSB) 10.8 (a)* Promissory Note from the Company to First Citizens Bank & Trust Company (incorporated by reference to Exhibit 10.56 to the Company's 1992 Form 10-K) (b)* North Carolina Note Modification Agreement dated May 16, 1997 between the Company and First Citizens Bank & Trust Company ( incorporated by reference to Exhibit 1 to the Company's May 31, 1997 Form 10QSB) (c)* North Carolina Note Modification dated May 21, 1999 between the Company and First Citizens Bank & Trust Company (incorporated by reference to Exhibit 3 to the Company's May 31, 1999 Form 10QSB) (d)* North Carolina Note Modification dated June 16, 2000 between the Company and First Citizens Bank & Trust Company (incorporated by reference to Exhibit 2 to the Company's May 31, 2000 Form 10QSB) 12 Item 13. Exhibits and Reports on Form 8-K Exhibit No. Description - ------- ----------- 10.9 (a)* Commitment letter dated December 18, 1996 for a revolving line of credit of $1,250,000 to be provided by National Canada Business Corp's to the Company . (incorporated by reference to Exhibit 10 to the Company's 1996 Form 10-KSB) (b)* Inventory and accounts receivable loan and security agreement dated February 28, 1997 between the Company and National Bank of Canada and National Canada Business Corp. (incorporated by reference to report on form 8K dated March 11, 1997) (c)* Confirmation letter for extending Line of Credit from National Canada Business Corp. to NDC Automation, Inc. dated April 1, 1998. (incorporated by reference to Exhibit 1 to the Company's May 31, 1998 Form 10QSB) (d)* First amendment to Inventory and accounts receivable loan and security agreement dated October 27, 1998 between the Company and National Bank of Canada and National Canada Business Corp. (incorporated by reference to Exhibit 10.11(d) to the Company's 1998 Form 10-KSB) (e)* First amendment to inventory repurchase agreement dated October 27, 1998 between the Company and National Bank of Canada and National Canada Business Corp. and Netzler & Dahlgren Co AB (incorporated by reference to Exhibit 10.11(e) to the Company's 1998 Form 10-KSB) (f)* Second amendment to inventory and accounts receivable loan and security agreement dated April 30 between Company and National Bank of Canada (incorporated by reference to Exhibit 1 to the Company's May 31, 1999 Form 10QSB) (g)* Amended, restated and substituted secured note dated April 30, 1999 between Company and National Bank of Canada (incorporated by reference to Exhibit 2 to the Company's May 31, 1999 Form 10QSB) (h)* Second amended, restated and substituted secured note dated November 30, 2000 between Company and Summit Business Capital Corp. (incorporated by reference to Exhibit10.3 to the Company's December 20, 2000 Form 8K) (i)* Third amendment to inventory and accounts receivable loan and security agreement dated November 30 between Company and Summit Business Capital Corp (incorporated by reference to Exhibit 10.4 to the Company's December 20, 2000 Form 8K) (j)* Third amended, restated and substituted secured note dated January 12, 2001 between Company and Summit Business Capital Corp. (incorporated by reference to Exhibit 10.10(j) to the Company's 2000 Form 10-KSB) (k)* Fourth amendment to inventory and accounts receivable loan and security agreement dated January 12, 2001 between Company and Summit Business Capital Corp. (incorporated by reference to Exhibit 10.10(k) to the Company's 2000 Form 10-KSB) 10.10 (a)* Reimbursement Agreement between NDC Automation, Inc. and Netzler & Dahlgren Co AB dated June 29, 1998 (incorporated by reference to Exhibit 2 to the Company's May 31, 1998 Form 10QSB) (b)* Deed of Trust between NDC Automation, Inc. and Netzler & Dahlgren Co AB dated June 29, 1998 (incorporated by reference to Exhibit 3 to the Company's May 31, 1998 Form 10QSB) (c)* Promissory Note between NDC Automation, Inc. and Netzler & Dahlgren Co AB dated June 30, 1998 (incorporated by reference to Exhibit 4 to the Company's May 31, 1998 Form 10QSB) 13 Item 13. Exhibits and Reports on Form 8-K Exhibit No. Description - ------ ----------- 10.10 (d)* Promissory Note between NDC Automation, Inc. and Netzler & Dahlgren Co AB dated June 30, 2000 (incorporated by reference to Exhibit 1 to the Company's August 31, 2000 Form 10QSB) 10.11* Representation Agreement dated January 27, 1999 between the Company and Harcon Engineering Inc. (incorporated by reference to Exhibit 10.16 to the Company's 1998 Form 10-KSB) 10.12* Agreement for purchase and sale of real property (incorporated by reference to Exhibit 10.2 to the Company's December 13, 2000 Form 8K) 10.13* Receipt of purchase order from an automobile manufacturer for approximately $800,000. (incorporated by reference to Exhibit 10.1 to the Company's January 24, 2001 Form 8K) 10.14* Receipt of purchase order from the aviation industry for approximately $900,000. (incorporated by reference to Exhibit 10.1 to the Company's February 9, 2001 Form 8K) 10.15 Certificate of Assumed Name as Transbotics Corporation 11.1 Computation of Earnings Per Share for November 30, 2001 13. Company's 2001 Annual Report 23.3 Consent of McGladrey & Pullen, LLP to the incorporation by reference in this Form 10-KSB 99.1* United States Letters Patent for Optical Navigation System for an Automatic Guided Vehicle, and Method (Patent No. 4,626,132; Date of Patent 08/15/89) (incorporated by reference to Exhibit 28.1 to the Form S-18) 99.2* United States Patent for Method and Apparatus for Providing Destination and Vehicle Function Information to an Automatic Guided Vehicle (Patent No. 4,780,817; Date of Patent 10/25/88) (incorporated by reference to Exhibit 28.2 to the Form S-18) 99.3* United States Patent and Trademark Office Notice of Recordation of Assignment Document for Automatic Guided Vehicle Traffic Control System and Method (Document Date 02/19/88) (incorporated by reference to Exhibit 28.3 to the Form S-18) 99.4* Canadian Letters Patent for Apparatus and Method for Optical Guidance System for Automatic Guided Vehicle (Patent No. 1,236,132; Date of Patent 05/17/88) (incorporated by reference to Exhibit 28.4 to the Form S-18) 99.5* United States Letters Patent for Automatically Guided Vehicle Having Steering Mechanism for Enabling Vehicle to Follow Guidance Wire (Patent No. 4,729,449; Date of Patent 03/08/88) (incorporated by reference to Exhibit 28.5 to the Form S-18). 99.6* United States Letters Patent for Apparatus and Method for Optical Guidance System for Automatic Guided Vehicle (Patent No. 4,626,995; Date of Patent 12/02/86) (incorporated by reference to Exhibit 28.6 to the Form S-18) 99.8* Canadian Certificate of Registration Trademark MAGIC POINT (No. 331696; Date of Registration 09/04/87) (incorporated by reference to Exhibit 28.9 to the Form S-18) 99.9* United States Certificate of Registration of Trademark MAGIC POINT (No. 1,417,335; Date of Registration 11/18/86) (incorporated by reference to Exhibit 28.10 to the Form S-18) 99.10* United States Certificate of Registration of Trademark ESCORT (No. 1,468,835; Date of Registration 12/15/87) (incorporated by reference to Exhibit 28.11 to the Form S-18) * Certain of the exhibits to this Report, indicated by an asterisk, are hereby incorporated by reference to other documents on file with the Commission, with which they are filed in fact, to be a part hereof as of their respective dates. 14 (b) Reports on Form 8-K 1. December 13, 2000 8K filing for Agreement for Purchase and Sale of Real Property 2. December 20, 2000 8K filing for License Agreement dated November 30, 2000 between the Company and Netzler & Dahlgren Co AB 3. January 24, 2001 8K filing for receipt of purchase order from an automotive customer, value approximately $800,000 4. February 9, 2001 8k filing for receipt of purchase order for a customer addressing the aviation industry, value approximately $900,000 15 SIGNATURES In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. NDC AUTOMATION, INC. Registrant By: /s/ Claude Imbleau ------------------------------------ Claude Imbleau President, CEO Chief Financial Officer By: /s/ Beverly Love ------------------------------------ Beverly Love Date: February 12, 2002 Chief Accounting Officer In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and date indicated. By: /s/ D. Bruce Wise ------------------------------------ D. Bruce Wise Chairman of the Board of Directors By: /s/Claude Imbleau ------------------------------------ Claude Imbleau President, CEO Director By: /s/ Richard D. Schofield ------------------------------------ Richard D. Schofield Director By: /s/ Raymond O. Gibson ------------------------------------ Raymond O. Gibson Director Date: February 12, 2002 16 EX-10.15 3 dex1015.txt CERTIFICATE OF ASSUMED NAME Exhibit 10.15 STATE OF NORTH CAROLINA CERTIFICATE OF ASSUMED NAME --------------------------- COUNTY OF MECKLENBURG The undersigned corporation, proposing to engage in business in Mecklenburg County, North Carolina, under an assumed name other than its corporate name, hereby certifies that: 1. The name under which the business is to be conducted is TRANSBOTICS CORPORATION. 2. The name and address of the owner of such business are: NDC Automation, Inc. 3400 Latrobe Drive Charlotte, NC 28211 IN WITNESS WHEREOF, this certificate is signed in the name of the corporation by its President and its company seal to be hereto affixed and attested by its Secretary, this the 25th day of May, 2001. ---- NDC AUTOMATION, INC. BY: /s/ Claude Imbleau ------------------------ Claude Imbleau, President ATTEST: BY: /s/ E. Thomas Watson ------------------------------- E. Thomas Watson, Secretary CORPORATE SEAL STATE OF NORTH CAROLINA COUNTY OF MECKLENBURG I, Gina E.B. Hartman, a Notary Public, do certify that E. Thomas Watson ----------------- personally came before me this the 30th day of May, 2001, and acknowledged the ---- he is the Secretary of NDC AUTOMATION, INC., a corporation, and that by authority duly given and as the act of the corporation, the foregoing instrument was signed in its name by it President, sealed with its corporate seal, and attested by himself as its Secretary. Witness my hand and official seal, this the 30th day of May, 2001. ---- /s/ Gina E.B. Hartman --------------------------------------------- Notary Public My Commission Expires: 01-18-2003 ---------- 1 North Carolina - Mecklenburg County The foregoing certificate of E.B. Hartman , Notary Public is ---------------------------------- certified to be correct. This instrument and this certificate are duly registered at the date and time in the book and page shown on the page thereof. By: /s/ Emen Dreher ------------------------------------------- Assistant/Deputy Register of Deeds 2 EX-11.1 4 dex111.txt COMPUTATION OF EARNINGS Exhibit 11.1 ------------ NDC AUTOMATION, INC COMPUTATION OF EARNINGS PER SHARE For The Year Ended November 30, 2001
FULLY PRIMARY DILUTED EPS EPS -------------------------- Exercise NUMBER OF SHARES UNDERLYING OUTSTANDING # shares Price --------------------- OPTIONS: 93 plan 49,000 $ 1.56000 $ 76,440.00 $ 76,440.00 97 Plan 44,500 $ 0.50000 $ 22,250.00 $ 22,250.00 $ 0.00 $ 0.00 -------- 93,500 ======== --------------------------- PROCEEDS UPON EXERCISE OF OPTIONS $ 98,690.00 $ 98,690.00 =========================== NUMBER OF SHARES UNDERLYING OUTSTANDING WARRANTS: 0 0 EXERCISE PRICE PER SHARE $ 0.00 $ 0.00 PROCEEDS UPON EXERCISE OF WARRANTS $ 0.00 $ 0.00 --------------------------- TOTAL PROCEEDS $ 98,690.00 $ 98,690.00 =========================== MARKET PRICE OF COMMON STOCK AVERAGE DURING THE PERIOD ENDED November 30, 2001 $ 0.29 CLOSING AT November 30, 2001 $ 0.21 SHARES THAT COULD BE REPURCHASED WITH TOTAL PROCEEDS 343,021 ============ 469,952 ============ EXCESS OF SHARES UNDERLYING OPTIONS/WARRANTS OVER SHARES THAT COULD BE REPURCHASED (249,521) (376,452) COMMON STOCK EQUIVALENT SHARES 0 0 WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 3,586,451 3,586,451 =========================== TOTAL AVERAGE NUMBER OF COMMON AND COMMON EQUIVALENT SHARES 3,586,451 3,586,451 =========================== NET INCOME $ 580,818.00 $ 580,818.00 =========================== EARNINGS PER SHARE $ 0.1619 $ 0.1619 ===========================
EX-12 5 dex12.txt COMPANY'S 2001 ANNUAL REPORT Exhibit 13 ANNUAL REPORT 2001 COVER PAGE INSIDE COVER FINANCIAL SUMMARY
================================================================================================================================= 00 to 01 99 to 00 At or For Year Ended November 30 2001 2000 1999 % Change % Change - --------------------------------------------------------------------------------------------------------------------------------- Operations - --------------------------------------------------------------------------------------------------------------------------------- Net revenues $6,015,214 $4,849,528 $5,818,222 24.0 (16.7) Net gain on sale of real property $ 581,023 $ 0 $ 0 NA NA Operating income (loss) $ 656,437 $ (552,513) $ 257,662 * * Income (loss) before income taxes (benefit) $ 583,871 $ (744,965) $ 19,753 * * Net income (loss) $ 580,818 $ (744,965) $ 19,753 * * Weighted average common shares outstanding 3,586,451 3,586,451 3,458,552 - 3.7 - --------------------------------------------------------------------------------------------------------------------------------- Per Share Data** - --------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ .16 $ (.21) $ .01 * * Cash dividends $ - $ - $ - NA NA Stockholders' equity (deficit) $ .08 $ (.08) $ .13 * * - --------------------------------------------------------------------------------------------------------------------------------- Financial Position - --------------------------------------------------------------------------------------------------------------------------------- Assets $1,984,837 $2,304,110 $3,392,190 (13.9) (32.1) Working capital (deficit) $ 124,511 $ (340,372) $ (560,625) * (39.3) Property and equipment $ 133,539 $1,013,063 $1,011,676 (86.8) 0.1 Long-term debt, less current maturities $0 $ 988,702 $ - (100.0) NA Stockholders' equity (Deficit) $ 286,904 $ (293,914) $ 451,051 * * - --------------------------------------------------------------------------------------------------------------------------------- Number of employees 33 25 25 Number of stockholders approx. 800 approx. 800 approx. 800 - ---------------------------------------------------------------------------------------------------------------------------------
* Because the data changes from negative to positive, the percentage of change is not meaningful. ** Earnings (loss) per share, assuming full dilution, are equivalent to earnings (loss) per share. ================================================================================ INDEX Financial Summary 1 Letter to Shareholders 2 Selected Financial Data 4 Management's Discussion and Analysis 5 Independent Auditor's Report 11 Balance Sheets 12 Statements of Operations 14 Statements of Stockholders' Equity (Deficit) 15 Statements of Cash Flows 16 Notes to the Financial Statements 18 Shareholder Information 29 Directors and Officers 29 1 DEAR FELLOW SHAREHOLDER: ================================================================================ "Strong determination and confidence " only begins to describe the effort and qualities of our employees and our new board of directors during 2001. Such qualities persevered notwithstanding the Company's negative equity of $293,914, at the beginning of our year and the possibility of losing our bank financing. Despite these odds, our staff grew by over 30%, we increased revenues by 24% and made a small profit from such revenues while significantly increasing the Company's working capital from the sale of its real property. Our customers played a significant role in our success, as they embraced our transition from being primarily a technology provider and consultant to more of a system supplier of AGVs to their industries. We also gained new customers in new niche markets due to our increased mechanical electrical and control expertise for "engineered to order products". We remain optimistic that such new ventures will allow the Company to continue its growth and be successful. Laserway (R) continues to be the Automatic Guided Vehicle technology of choice worldwide, due to the benefits of extensive past research and development and its commitment to continuous future improvement for the industry. In 2001 we relocated in space that more efficiently suits our needs and we began doing business as Transbotics Corporation to better define our unique identity and our role in the industry. Our name change aligns us as a " transport solution provider" and defines what we do. In fact, our name change goes back to our roots. Transport robot technology or AGV systems, which originated through NDC Sweden, has evolved to provide transportation for various industries. Transbotics continues this tradition by supplying a unique product designed and delivered with market familiarity. Today, we supply the entire system, including guidance, vehicles and integration. Although Company's financial condition continues to be weak for what we are trying to accomplish, the Company will continue to search for new equity and financing 2 to allow us the freedom to grow more aggressively. During these current economic times of uncertainty, especially after the events of September 11, 2001, all of us have learned that we must fight hard to preserve what we have already accomplished if we are to have a future. We are committed to looking to the heroic examples of the volunteer workers in recent months to motivate us in staying committed to the cause of creating a great future, for the Company. On behalf of the Board of Directors and our employees, I wish to thank you for your interest and continued support. February 2002 Sincerely yours, Claude Imbleau President 3 SELECTED FINANCIAL DATA
================================================================================================================================ At or For Year Ended November 30 -------------------------------------------------------------------------- 2001 2000 1999 1998 1997 - -------------------------------------------------------------------------------------------------------------------------------- Statements of Operations Data: Net revenues $ 6,015,214 $ 4,849,528 $ 5,818,222 $ 4,015,698 $ 4,076,897 Cost of goods sold 3,959,246 3,320,829 3,614,922 2,387,342 2,695,289 - -------------------------------------------------------------------------------------------------------------------------------- Gross profit $ 2,055,968 $ 1,528,699 $ 2,203,300 $ 1,628,356 $ 1,381,608 - -------------------------------------------------------------------------------------------------------------------------------- Net gain on sale of real property $ 581,023 $ - $ - $ - $ - - -------------------------------------------------------------------------------------------------------------------------------- Operating expenses: Selling $ 673,671 $ 710,944 $ 723,162 $ 662,780 $ 693,106 General and administrative 1,226,321 1,317,182 1,222,476 996,994 1,552,900 Research and development 80,562 53,086 - - - - -------------------------------------------------------------------------------------------------------------------------------- $ 1,980,554 $ 2,081,212 $ 1,945,638 $ 1,659,774 $ 2,246,006 - -------------------------------------------------------------------------------------------------------------------------------- Operating income (loss) $ 656,437 $ (552,513) $ 257,662 $ (31,418) $ (864,398) - -------------------------------------------------------------------------------------------------------------------------------- Net interest expense $ (72,566) $ (192,452) $ (237,909) $ (244,865) $ (195,962) - -------------------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (benefit) $ 583,871 $ (744,965) $ 19,753 $ (276,283) $(1,060,360) Federal and state income taxes 3,053 - - - - - -------------------------------------------------------------------------------------------------------------------------------- Net income (loss) $ 580,818 $ (744,965) $ 19,753 $ (276,283) $(1,060,360) ================================================================================================================================ Weighted average number of common shares outstanding (Basic and fully diluted) 3,586,451 3,586,451 3,458,552 3,453,451 3,453,451 ================================================================================================================================ Basic and diluted earnings (loss) per share $ .16 $ (.21) $ .01 $ (.08) $ (.31) ================================================================================================================================ Cash dividend declared per common share $ - $ - $ - $ - $ - ================================================================================================================================ Balance Sheets Data: Working capital (Deficit) $ 124,511 $ (340,372) $ (560,625) $ (563,725) $ 570,259 Total assets $ 1,984,837 $ 2,304,110 $ 3,392,190 $ 2,706,650 $ 2,757,331 Long-term debt, less current maturities $ - $ 988,702 $ - $ 114,889 $ 1,042,055 Total liabilities $ 1,697,933 $ 2,598,024 $ 2,941,139 $ 2,325,352 $ 2,099,750 Stockholders' equity (Deficit) $ 286,904 $ (293,914) $ 451,051 $ 381,298 $ 657,581
4 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ The following discussion and analysis should be read in conjunction with the financial statements (including the notes thereto) presented elsewhere herein. Overview The Company derives virtually all of its revenues from the sale of hardware, software and engineering services in connection with projects incorporating its Automated Guided Vehicle (AGV) control technology. In prior years the Company's net revenues from AGV systems, vehicles and technology were derived primarily from sales to customers serving, a limited number of industries - automotive, food and paper, textiles and newspaper publishing. The Company's results of operations can be expected to continue to depend substantially upon the capital expenditure levels in those industries and in other industries that it may enter. Due to the long sales cycle involved, uncertainties in timing of projects, and the large dollar amount a typical project usually bears to the Company's historical and current quarterly and annual net revenues, the Company has experienced, and can be expected to continue to experience, substantial fluctuations in its quarterly and annual results of operations. The Company sells its products and services primarily in two ways. Vehicles, technology and other products and services may be sold in a "project" that becomes an integrated AGV system. The other way is to sell hardware, software and services as standard items, with less involvement by the Company in overall system design. The Company generally would recognize lower net revenue but would realize a higher gross profit margin percentage in selling standard items, in each case compared to the sale of a project, due to the inclusion in project sales of other vendors' products and services with margins generally lower than the Company's own products and services. Between any given accounting periods, the levels of and mixture of standard item sales and project sales can cause considerable variance in net revenues, gross profit, gross profit margin, operating income and net income. Revenues from standard item sales are recognized upon shipment, while revenues from project sales are recognized under the "percentage of completion" method. Under this method, with respect to any particular customer contract, revenues are recognized as costs are incurred relative to each major component of the project. Although the percentage of completion method will ordinarily smooth out over time the net revenue and profitability effects of large projects, such method nevertheless subjects the Company's results of operations to substantial fluctuations dependent upon the progress of work on project components. Such components can differ markedly from one another in amount and in gross profit margin. Project contracts are billed upon attainment of certain "milestones." The Company grants payment terms of 30 days to its customers. It typically receives a cash advance ranging from 10% to 30% of the total contract amount. Bills are thereafter delivered as milestones are reached. Upon delivery of the project, the customer typically reserves a "retainage" of 10% to 20% pending system acceptance. Notwithstanding the receipt by the Company of cash advances and periodic payments upon reaching project milestones, the Company requires external financing for its costs and estimated earnings in excess of billings on uncompleted contracts, inventories, receivables and other assets. The Company's backlog consists of all amounts contracted to be paid by customers but not yet recognized as net revenues by the Company. 5 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ Strategy diversification: Management has taken the following actions in an attempt to increase revenues and minimize losses: . Establish and develop strategic alliances with selected customers . Pursue AGV system business in selected market niches . Grow the distribution business by adding supplementary products . Expand the aftermarket sales business The Company continues to explore raising additional equity and/or debt to ensure the viability of its operations and potential growth opportunities. (See Liquidity and Capital Resources for further information). Forward-looking statements: This report (including information included or incorporated by reference herein) contains certain forward-looking statements with respect to the financial condition, results of operation, plans, objectives, future performance and business of the Company. These forward-looking statements involve certain risk and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: a) Revenues from end user systems sales, new OEMs and new niches may be lower than expected or delayed. b) The Company might be unable to raise the additional working capital needed, directly or through a business combination, to finance the current business strategy. c) General economic or business conditions, either nationally or in the markets in which the Company is doing business, may be less favorable than expected resulting in, among other things, a deterioration of market share or reduced demand for its products. 6 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ RESULTS OF OPERATIONS The table below shows the relationship of income and expense items relative to net revenues for the fiscal years ended November 30, 2001, 2000 and 1999, respectively.
Percentage of Change Period to Period Percentage of Net Revenues Increase (Decrease) - ---------------------------------------------------------------------------------------------------------------------- Year Ended Year Ended For year Ended November 30, November 30, 2001 2000 1999 2000 to 2001 1999 to 2000 - ---------------------------------------------------------------------------------------------------------------------- Net Revenues 100.0 % 100.0 % 100.0 % 24.0 % (16.7)% Cost of goods sold 65.8 68.5 62.1 19.2 (8.1) - ---------------------------------------------------------------------------------------------------------------------- Gross profit 34.2 31.5 37.9 34.5 (30.6) Net gain on sale of property 9.6 - - NA - Operating expenses: Selling 11.2 14.7 12.4 (5.2) (1.7) General and administrative 20.4 27.1 21.0 (6.9) 7.7 Research and development 1.3 1.1 - 51.8 - - ---------------------------------------------------------------------------------------------------------------------- 32.9 42.9 33.4 (4.8) 7.0 - ---------------------------------------------------------------------------------------------------------------------- Operating income (loss) 10.9 (11.4) 4.4 * * Net interest expense (1.2) (4.0) (4.1) (62.3) (19.1) - ---------------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes (benefit) 9.7 (15.4) .3 * * Income Tax Expense .1 - - - - - ---------------------------------------------------------------------------------------------------------------------- Net income (loss) 9.6 % (15.4)% .3 % * % * % ======================================================================================================================
* Because the data changes from negative to positive, or from positive to negative, the percentage of change is not meaningful. 7 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ Fiscal Year Ended November 30, 2001 Compared To Fiscal Year Ended November 30, 2000. Net revenues increased by $1,165,686 or 24.0% from $4,849,528 for the fiscal year ended November 30, 2000 to $6,015,214 for the fiscal year ended November 30, 2001. The increase is primarily due to the increased turnkey project AGV system sales compared to the prior year. The company revenues during 2001 were derived from the following types of industries such as a special niche aviation, automotive, printing, food and beverage. The Company realized lower revenues in 2001 from the entertainment industry compared to the prior year, and no new systems were released in 2001. The Company will continue to focus on increasing revenues in 2002 by providing more AGV turnkey systems. Cost of goods sold increased from $3,320,829 to $3,959,246, or 19.2%, due primarily to the increased revenues. As a percentage of net revenues, cost of goods sold decreased to 65.8% compared to 68.5% the prior year. The primary reason for the decrease in percentage is the Company experienced higher margins on its turnkey AGV systems revenues in the current year compared to the prior. The Company also experienced lower cost for goods that were imported due to a strong U.S. dollar. Gross profit increased by $527,269, or 34.5%, from $1,528,699 to $2,055,968. The Company closed on the sale of its land and building in March 2001 for a sale price of $1,600,000 and realized a gain of $581,023 after deducting moving expenses of approximately $30,000 which significantly improved the Company's liquidity (see Note 12). The new location is 3400 Latrobe Drive, Charlotte, NC, 28211. In the new location, the Company is combining all its operations for testing, development, manufacturing and distribution to improve its operating efficiencies. Selling expenses decreased from $710,944 to $673,671, or 5.2% primarily due to lower travel expenses compared to the prior year. General and administrative expenses decreased by $90,861 from $1,317,182 to $1,226,321, or 6.9%. The decrease compared to the prior year was primarily due to the following: 1) lower office equipment lease and maintenance expense of approximately $40,000 and 2) decreased expenses in telephone, taxes, insurance and other general expenses of approximately $50,000. As a percentage of net revenues, general and administrative expenses decreased from 27.1% to 20.4% primarily due to the increase in revenues in 2001. The Company continued to invest in the development of new AGV products and increased its expenditures by 51.8% or $27,476 in the current year compared to the prior year. Primarily as a result of the foregoing, the operating income increased by $1,208,950 from an operating loss of $552,513 to an operating income of $656,437 for the current year. Net interest expense decreased from $192,452 to $72,566, a decrease of 62.3%. The repayment of the mortgage loan and line of credit in March 2001 significantly lowered the borrowing costs compared to the prior year resulting in the decline. Income tax expense of $3,053 is due to limitations on the utilization of the net operating loss carryforward. The Company continues to have loss carryforwards that are not assured to be realized. Primarily due to the sale of the land and building, higher gross profit and lower general and administrative expenses as described above, the Company's net income increased by $1,325,783 from a net loss of $744,965 to a net income of $580,818. Backlog Backlog consists of all amounts contracted to be paid by customers but not yet recognized as net revenues by the Company. At November 30, 2001, the Company had a backlog of approximately $1,450,000 compared to $940,000 total backlog one year earlier. Substantial fluctuations in backlog are considered normal due to the size of AGV system contracts. Substantial fluctuations in the industry makeup of the Company's backlog also are considered normal. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ Fiscal Year Ended November 30, 2000 Compared To Fiscal Year Ended November 30, 1999. Net revenues in 2000 decreased compared to the prior year. Revenues decreased by $968,694 or 16.7%, from $5,818,222 for the fiscal year ended November 30, 1999 to $4,849,528 for the fiscal year ended November 30, 2000. The Company's strategy to increase revenues by selectively selling turnkey systems to end users and system integrators adopted in September of 1997 was less successful in 2000 compared to 1999. The large order received from the automotive market through Harcon was the primary reason for the increased systems revenues in 1999. Cost of goods sold decreased from $3,614,922 to $3,320,829, or 8.1%, due primarily to the decreased revenues. As a percentage of net revenues, cost of goods sold increased to 68.5% compared to 62.1% the prior year. The primary reason for the increase is the Company experienced lower margins on turnkey systems revenues. Gross profit decreased by $674,601, or 30.6%, from $2,203,300 to $1,528,699. Selling expenses decreased from $723,162 to $710,944, or 1.7%. General and administrative expenses increased by $94,706 from $1,222,476 to $1,317,182, or 7.7%. The increase compared to the prior year was primarily due to the following: 1) rent cost increases due to a new test facility of approximately $35,000 2) increased office equipment maintenance expense of approximately $25,000 and 3) increased expenses in telephone, taxes, insurance and other general expenses. Primarily as a result of the foregoing, the operating results decreased by $810,175 from an operating income of $257,662 to an operating loss of $552,513 for the current year. Net interest expense decreased from $237,909 to $192,452, a decrease of 19.1%. Primarily as a result of the foregoing, the net results decreased by $764,718 from a net income of $19,753 to a net loss of $744,965. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS ================================================================================ Liquidity and Capital Resources The Company experiences needs for external sources of financing to support its working capital, capital expenditures and acquisition requirements when such requirements exceed its cash generated from operations in any particular fiscal period. The amount and timing of external financing requirements depend significantly upon the nature, size, number and timing of projects and contractual billing arrangements with customers relating to project milestones. The Company has relied upon bank financing under a revolving working capital facility, long-term debt, capital leases and proceeds of its public and private offerings to satisfy its external financing needs. During 2001, the Company lost its ability to obtain traditional bank financing when Netzler & Dahlgren withdrew their bank guarantee. During the year ended November 30, 2001 net cash provided from operating activities was $476,959. The Company operated under adverse liquidity conditions due to negative shareholders' equity and negative working capital through the first quarter of the year. To improve its liquidity, the Company sold its office property located at 3101 Latrobe Drive in March 2001 (see note 12) for $1,600,000 and realized a net gain of $581,023. Proceeds from the sale were used to retire the debt from the Company's mortgage lender (First Citizens Bank) in an amount of approximately $885,000, and the Company's bank credit line with Summit Business Capital Corporation (formerly known as National Bank of Canada) was fully paid in an amount of approximately $100,000. The pay off of the credit line permitted the termination of the Letter of Credit given by Netzler & Dahlgren in favor of Summit Business Capital Corporation. NDCA also applied approximately $80,000 from the sale proceeds against current payables to Netzler & Dahlgren. The Company was current at November 30, 2001 on its Note payable to Netzler & Dahlgren. The Company's receivables were pledged to Netzler & Dahlgren to secure its note receivable from the Company. Such pledge is to remain in place until its note is paid in full. During the fourth quarter of 2000, the Company renegotiated its license agreement with Netzler & Dalgren. The new agreement, dated November 30, 2000, expands the Company's territory to sell to end-users worldwide and to continue to sub-license the technology in North America , but on a non-exclusive basis rather than on an exclusive basis as in prior years. In addition, the note payable to Netzler & Dahlgren of $606,046 has been restructured with the interest lowered from 16% to 9% per annum. Netzler & Dahlgren has indicated to the Company that Netzler & Dahlgren's financial exposure to the Company must be reduced by timely payment of the current note. To ensure prompt payments, the Company must remain profitable or raise additional equity and/or debt to refinance the Note. In the first quarter of 2002, the Company began paying vendors on a deferred basis to meet its obligation to Netzler & Dahlgren on the note payable and retain its license agreement. There are no assurances that the deficiency in the cash flow will not reoccur. The Company had been exploring and continues to explore the possibility of raising additional equity capital or subordinated debt, either directly or possibly through a business combination, in order to improve its financial position and have the working capital to address potential growth opportunities. Management believes that its working capital is currently adequate due to the gains realized in the second quarter of 2001. There can be no assurances that the Company will be successful in maintaining its profitability or raising the additional capital or subordinated debt that may be necessary for the Company's operations. The Company's ability to continue as a going concern would be adversely affected if the Company is not able to consistently improve its working capital and liquidity. 10 INDEPENDENT AUDITOR'S REPORT To the Board of Directors NDC Automation, Inc. /dba/ Transbotics Corporation Charlotte, North Carolina We have audited the accompanying balance sheets of NDC Automation, Inc. as of November 30, 2001 and 2000, and the related statements of operations, stockholders' equity (deficit), and cash flows for each of the three years in the period ended November 30, 2001. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of NDC Automation, Inc. as of November 30, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended November 30, 2001 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 14 to the financial statements, there is substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 14. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. McGLADREY & PULLEN, LLP Charlotte, North Carolina January 11, 2002 11 BALANCE SHEETS
=========================================================================================== November 30, 2001 2000 - ------------------------------------------------------------------------------------------- ASSETS (Note 4) CURRENT ASSETS Cash and cash equivalents (Note 1) $ 427,288 $ 4,767 Accounts receivable, net (Notes 2, 5 and 8) 858,985 833,481 Inventories 262,542 371,723 Costs and estimated earnings in excess of billings on uncompleted contracts (Note 3) 248,074 39,968 Prepaid expenses and other assets 25,555 19,011 - ------------------------------------------------------------------------------------------- Total current assets $ 1,822,444 $ 1,268,950 - ------------------------------------------------------------------------------------------- NONCURRENT DEPOSITS $ 28,854 $ 22,097 - ------------------------------------------------------------------------------------------- PROPERTY AND EQUIPMENT Land (Note 12) $ -- $ 300,000 Building and improvements (Note 12) -- 1,126,623 Furniture, fixtures, and office equipment 140,378 148,143 Machinery and equipment 89,805 79,021 - ------------------------------------------------------------------------------------------- $ 230,183 $ 1,653,787 Less accumulated depreciation 96,644 640,724 - ------------------------------------------------------------------------------------------- $ 133,539 $ 1,013,063 - ------------------------------------------------------------------------------------------- $ 1,984,837 $ 2,304,110 ===========================================================================================
See Notes to Financial Statements 12 BALANCE SHEETS
=========================================================================================================== November 30, 2001 2000 - ----------------------------------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Note payable, bank (Note 4) $ - $ 293,082 Current maturities of long- term debt (Note 4 and 8) 178,739 369,858 Accounts payable and accrued expenses; including affiliates $254,922 at 2001 and $121,075 at 2000 (Note 8) 1,160,072 763,772 Billings in excess of costs and estimated earnings on uncompleted contracts (Note 3) 356,069 182,610 Income tax payable 3,053 - - ----------------------------------------------------------------------------------------------------------- Total current liabilities $ 1,697,933 $ 1,609,322 - ----------------------------------------------------------------------------------------------------------- LONG-TERM DEBT (Note 4 and 8) $ - $ 988,702 - ----------------------------------------------------------------------------------------------------------- COMMITMENTS (Note 9) STOCKHOLDERS' EQUITY (DEFICIT) (Notes 10 and 11) Preferred stock, par value $.01 per share authorized 1,000,000 shares; no shares issued $ - $ - Common stock, par value $.01 per share; 11,000,000 shares authorized at 2001 and 2000; 3,586,451 shares were issued and outstanding at 2001 and 2000, respectively 35,864 35,864 Additional paid-in capital 4,260,236 4,260,236 Accumulated deficit (4,009,196) (4,590,014) - ----------------------------------------------------------------------------------------------------------- $ 286,904 $ (293,914) - ----------------------------------------------------------------------------------------------------------- $ 1,984,837 $ 2,304,110 ===========================================================================================================
13 STATEMENTS OF OPERATIONS
============================================================================================================ Years ended November 30, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------ Net revenues (Notes 5 and 8) $ 6,015,214 $ 4,849,528 $ 5,818,222 Cost of goods sold (Note 8) 3,959,246 3,320,829 3,614,922 - ------------------------------------------------------------------------------------------------------------- Gross profit $ 2,055,968 $ 1,528,699 $ 2,203,300 - ------------------------------------------------------------------------------------------------------------- Net gain on sale of real property $ 581,023 $ - $ - - ------------------------------------------------------------------------------------------------------------- Operating expenses: Selling $ 673,671 $ 710,944 $ 723,162 General and administrative (Note 9) 1,226,321 1,317,182 1,222,476 Research and development 80,562 53,086 - - ------------------------------------------------------------------------------------------------------------- $ 1,980,554 $ 2,081,212 $ 1,945,638 - ------------------------------------------------------------------------------------------------------------- Operating income (loss) $ 656,437 ($552,513) $ 257,662 - ------------------------------------------------------------------------------------------------------------- Net interest expense (Note 8): $ (72,566) $ (192,452) $ (237,909) - ------------------------------------------------------------------------------------------------------------- Income (loss) before income taxes $ 583,871 ($744,965) $ 19,753 Federal and state income taxes (Note 6) 3,053 - - - ------------------------------------------------------------------------------------------------------------- Net income (loss) $ 580,818 ($744,965) $ 19,753 ============================================================================================================= Basic and diluted earnings (loss) per share $ .16 $ (.21) $ .01 ============================================================================================================= Weighted average common shares outstanding 3,586,451 3,586,451 3,458,552 ============================================================================================================= Dividends per common share $ - $ - $ - =============================================================================================================
See Notes to Financial Statements 14 STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
================================================================================================================================= Years Ended November 30, - --------------------------------------------------------------------------------------------------------------------------------- 2001 2000 1999 Amount Shares Amount Shares Amount Shares ------ ------ ------ ------ ------ ------ Common Stock: Balance, beginning $ 35,864 3,586,451 $ 35,864 3,586,451 $ 34,534 3,453,451 Issuance of common stock (Note 10) - - - - 1,330 133,000 - --------------------------------------------------------------------------------------------------------------------------------- Balance, ending $ 35,864 3,586,451 $ 35,864 3,586,451 $ 35,864 3,586,451 ================================================================================================================================= Additional Paid-in Capital: Balance, beginning $ 4,260,236 $ 4,260,236 $ 4,211,566 Issuance of common stock (Note 10) - - 48,670 - --------------------------------------------------------------------------------------------------------------------------------- Balance, ending $ 4,260,236 $ 4,260,236 $ 4,260,236 ================================================================================================================================= Accumulated Deficit: Beginning deficit ($4,590,014) ($3,845,049) $(3,864,802) Net income (loss) 580,818 (744,965) 19,753 - --------------------------------------------------------------------------------------------------------------------------------- Ending deficit ($4,009,196) ($4,590,014) $(3,845,049) ================================================================================================================================= - --------------------------------------------------------------------------------------------------------------------------------- Stockholders' Equity (Deficit) at November 30 $ 286,904 3,586,451 ($293,914) 3,586,451 $ 451,051 3,586,451 =================================================================================================================================
See Notes to Financial Statements 15 STATEMENTS OF CASH FLOWS
============================================================================================================================ Years ended November 30, 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) $ 580,818 $ (744,965) $ 19,753 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 52,494 82,327 82,085 Increase (decrease) in provision for doubtful accounts 46,275 (12,275) - (Gain) loss on sale of property and equipment (584,232) 9,454 - Gain on foreign currency exchange rate (7,203) (11,980) (15,959) Change in assets and liabilities: (Increase) decrease in accounts receivable (71,779) 1,061,087 (1,076,402) (Increase) decrease in inventories 109,181 (5,358) 227,429 (Increase) decrease in costs and estimated earnings in excess of billings on uncompleted contracts (208,106) (4,944) 101,523 (Increase) decrease in prepaid expenses and other assets (13,301) 10,484 (4,009) Increase (decrease) in accounts payable and accrued expenses 396,300 (106,156) 967,972 Increase in income tax payable 3,053 - - Increase (decrease) in billings in excess of costs and estimated earnings on uncompleted contracts 173,459 (26,662) 92,940 - ---------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY OPERATING ACTIVITIES $ 476,959 $ 251,012 $ 395,332 - ---------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from the sale of property and equipment $1,471,507 $ - $ - Purchase of equipment (60,245) (93,168) (33,849) - ---------------------------------------------------------------------------------------------------------------------------- NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES $1,411,262 $ (93,168) $ (33,849) - ----------------------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements 16 STATEMENTS OF CASH FLOWS
========================================================================================================================== Years ended November 30, 2001 2000 1999 - -------------------------------------------------------------------------------------------------------------------------- CASH FLOW FROM FINANCING ACTIVITIES Net borrowings (payments) on revolving credit agreement ($293,082) $ 124,929 $ (178,504) Principle payments on long-term borrowings ($1,179,821) (328,696) (266,621) Net proceeds from common stock issued - - 50,000 - -------------------------------------------------------------------------------------------------------------------------- NET CASH USED IN FINANCING ACTIVITIES ($1,472,903) ($203,767) ($395,125) - -------------------------------------------------------------------------------------------------------------------------- Effect of foreign currency exchange rate changes on cash and cash equivalents $ 7,203 $ 5,450 $ 15,959 - -------------------------------------------------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents $ 422,521 ($40,473) ($17,683) Cash and cash equivalents: Beginning 4,767 45,240 62,923 - -------------------------------------------------------------------------------------------------------------------------- Ending $ 427,288 $ 4,767 $ 45,240 ========================================================================================================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash payments for : Interest $ 72,566 $ 191,956 $ 233,533 SUPPLEMENTAL SCHEDULE OF NON CASH FINANCING ACTIVITIES Conversion of trade payables to long term debt $ - $ 606,046 $ -
17 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 1. Nature of Business and Significant Accounting Policies Nature of business: The Company was formed to acquire, develop, market, and sell hardware, software and engineering services that are incorporated into and used to control automatic guided vehicle systems ("AGVS"). The Company markets its products and services to designers of integrated automation systems, original equipment manufacturers, and end users primarily within the North American continent. A summary of the Company's significant accounting policies follows: Revenue recognition: The Company recognizes revenue from the sales of commercial products as shipments are made. The Company recognizes revenues under long-term contracts on the percentage of completion method, measured by the percentage of each component cost incurred to date to estimated total component contract costs for each component in the contract. Component costs include material, direct labor, subcontracts, engineering, overhead, and miscellaneous costs. Provisions for estimated losses are made in the period in which they first become determinable. "Costs and estimated earnings in excess of billings on uncompleted contracts" represent revenue recognized in excess of amounts billed. "Billings in excess of costs and estimated earnings on uncompleted contracts" represent billings in excess of revenues recognized. Estimates: The preparation of financial statements in conformity with accounting principle generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Cash and cash equivalents: For purposes of reporting the statements of cash flows, the Company considers all cash accounts , and all highly liquid debt instruments purchased with a maturity of three months or less, to be cash equivalents. The Company maintains demand deposits with a financial institution which are in excess of the federally insured amount. Inventories: The inventories are priced at the lower of cost or market, with cost being determined by the weighted average method. Inventories consist primarily of parts for computerized material handling systems purchased from Netzler & Dahlgren and motor-in-wheel drive units purchased from Schabmuller GMBH. Property and equipment: Property and equipment is stated at cost. Depreciation and amortization are primarily computed using the straight-line method over the following useful lives: Years ----- Building and improvements 21-28 Furniture, fixtures and office equipment 4-7 Machinery and equipment 3-5 18 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 1. Nature of Business and Significant Accounting Policies (Continued) Foreign currency translation: Payables to foreign companies that are denominated in foreign currencies are translated at rates that approximate the year-end foreign exchange rates. Resultant gains or losses are reflected in cost of goods sold. The costs of items of foreign origin which are included in inventory have been translated at historical exchange rates prevailing at the date of acquisition. Income taxes: Provisions for income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences, operating losses, and tax credit carryforwards, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. Earnings (losses) per common share: The Company adopted Statement of Financial Accounting Standards No. 128 (SFAS No.128) Earnings Per Share, which supersedes APB Opinion No. 15. SFAS No. 128 requires the presentation of earnings per share by all entities that have common stock or potential common stock, such as options, warrants, and convertible securities, outstanding that trade in a public market. Basic per share amounts are computed, generally, by dividing net income or loss by the weighted-average number of common shares outstanding. Diluted per share amounts assume the conversion, exercise, or issuance of all potential common stock instruments unless the effect is antidilutive, thereby reducing a loss or increasing the income per common share. The Company initially applied Statement No. 128 for the year ended November 30, 1998. As described in Note 11, at November 30, 2001, 2000 and 1999 the Company had options outstanding to purchase a total of 93,500, 90,617 and 134,092 shares of common stock, respectively, at a weighted-average exercise price of varying amounts. The inclusion of those potential common shares in the calculation of diluted loss per share would have an antidilutive effect. Therefore, basic and diluted loss per share amounts are the same in 2001, 2000 and 1999. Advertising: The Company follows the policy of charging production cost of advertising to expense as incurred. Advertising expenses for the years ending November 30, 2001, 2000 and 1999 were $14,860, $25,645, and $21,759 respectively. 19 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 2. Accounts Receivable Accounts receivable consist of the following at November 30, 2001 and 2000, respectively: 2001 2000 - ------------------------------------------------------------------------------ Trade and contract $ 939,413 $ 868,101 Less: Allowance for doubtful accounts (84,000) (37,725) - ------------------------------------------------------------------------------ $ 855,413 $ 830,376 Other - 1,380 Employees 3,572 1,725 - ------------------------------------------------------------------------------ $ 858,985 $ 833,481 ============================================================================== Note 3. Costs and Estimated Earnings on Uncompleted Contracts Costs and estimated earnings on uncompleted contracts consist of the following at November 30, 2001 and 2000, respectively: 2001 2000 - ------------------------------------------------------------------------------ Costs incurred on uncompleted contracts $ 2,173,777 $ 2,618,568 Estimated earnings 1,143,233 937,584 - ------------------------------------------------------------------------------ $ 3,317,010 $ 3,556,152 Less billings to date (3,425,005) (3,698,794) - ------------------------------------------------------------------------------ $ (107,995) $ (142,642) ============================================================================== Included in the accompanying balance sheets under the following captions: 2001 2000 - -------------------------------------------------------------------------------- Costs and estimated earnings in excess of billings on uncompleted contracts $ 248,074 $ 39,968 Billings in excess of costs and estimated earnings on uncompleted contracts (356,069) (182,610) - -------------------------------------------------------------------------------- $ (107,995) $ (142,642) ================================================================================ 20 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 4. Pledged Assets, Note Payable, Bank and Long-Term Debt
2001 2000 - -------------------------------------------------------------------------------------------------------------------- Note Payable Agreement allowed the Company to borrow up to $450,000 and bore interest at the lender's prime rate plus 2.75% per annum . The Company's loan outstanding was not to exceed the lesser of (a) U.S. $450,000 or (b) 80% of i) Qualified Accounts Receivable (as defined in the Loan Agreement) that are non-project Qualified Accounts and ii) Qualified Accounts that are project Qualified Accounts (as defined in the Loan Agreement) plus 50% of all eligible inventory, but in no event were (A) Inventory Value be in excess of $300,000 and (B) Inventory Value and Qualified Accounts that were project Qualified Accounts be in excess of $450,000. The Loan Agreement was further secured by 1) an Inventory Repurchase Agreement and 2) a $450,000 irrevocable Letter of Credit issued by a Swedish bank. Netzler & Dahlgren Co. AB (NDCab) was obligated to repay the Letter of Credit Bank any funds it disbursed under the Letter of Credit. The Company was ultimately responsible to repay to NDCab any amounts it paid in reimbursing the Letter of Credit Bank . The Repurchase Agreement guaranteed that NDCab would repurchase on certain conditions up to $300,000 worth of inventory, thereby providing funds to pay lender if the Company default on its loan obligations. The Loan Agreement terminated and was fully paid when the Company sold its land and building in March of 2001 as per Note 12. (1)(2) $ - $ 293,082 ==================================================================================================================== Long-term debt consists of the following: - -------------------------------------------------------------------------------------------------------------------- Mortgage note payable to a bank was based on a 9.5% fixed rate. Original principal balance of $1,013,484 was to be repaid in twelve (12) consecutive monthly principal and interest payments of $13,912, with one final payment of approximately $777,084 due on May 31, 2002 . The note was collaterized by the Company's land and building until the sale as per Note 12. $ - $ 907,112 Note payable to Netzler & Dahlgren Co AB, based on a 4.50% fixed rate from November 30, 2000 until March 31, 2001 and then 9.0% fixed rate from April 1, 2001 thru June 30, 2002. Original principal balance to be repaid in one payment of 952,412 Swedish Krona or approximately US$95,042 depending on the exchange rate at time of payment on April 1, 2001 and then fifteen (15) consecutive monthly principal payments of 238,103 Swedish Krona starting April 1, 2001, or approximately US$23,760 depending on the exchange rate at time of payment, plus interest. The note was collaterized by the Company's land and building until the sale as per Note 12; the Note is now collaterized solely by the Company's accounts receivable. 178,739 451,448 - -------------------------------------------------------------------------------------------------------------------- $ 178,739 $ 1,358,560 Less current maturities: 178,739 369,858 - -------------------------------------------------------------------------------------------------------------------- $ - $ 988,702 ====================================================================================================================
(1) The prime rate at November 30, 2001 was 5.00% and 9.50% at November 30, 2000. (2) The line of credit was secured by a first priority security interest in the Company's accounts receivable, inventory, software and intangibles. 21 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 5. Major Customers Net revenues and accounts receivable as of and for the years ended November 30, 2001, 2000, and 1999, respectively, include sales to the following major customers (each of which accounted for 10% or more of the total net revenues of the Company for those years): Amount of Net Revenues Year Ended November 30, Customer 2001 2000 1999 - -------------------------------------------------------------------------------- A $ * $ 1,057,382 $ 1,410,915 B 951,603 * * C 675,944 * * D 622,392 * * Accounts Receivable November 30, 2001 2000 1999 - -------------------------------------------------------------------------------- A $ * $ 225,574 $ 629,890 B 71,453 * * C 0 * * D 0 * * *Not a major customer. 22 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 6. Income Taxes Income taxes consist of the following components for the years ended November 30, 2001, 2000, and 1999, respectively: 2001 2000 1999 - -------------------------------------------------------------------------------- Current $ 3,053 $ - $ - Deferred - - - - -------------------------------------------------------------------------------- $ 3,053 $ - $ - ================================================================================ Net deferred tax assets consist of the following components as of November 30, 2001 and 2000, respectively: Deferred tax assets: Allowance for doubtful accounts $ 32,385 $ 14,663 Inventory valuation reserves 31,614 27,202 Net operating loss carryforward 1,506,143 1,766,165 General business credit carryforwards 48,420 45,367 Depreciation - 21,510 Other 2,208 3,910 Deferred tax liabilities: Depreciation (11,079) - Other (612) - - -------------------------------------------------------------------------------- $ 1,609,079 $ 1,878,817 Less valuation allowance 1,609,079 1,878,817 - -------------------------------------------------------------------------------- Net deferred taxes $ - $ - ================================================================================ The changes in the valuation allowance for the years ended November 30, 2001, 2000 and 1999 were $(269,738), $269,388 and $(9,219), respectively. The valuation reserve is the result of management's determination that the Company may not be able to generate sufficient future taxable income to realize the recorded deferred tax assets. A reconciliation of the statutory income tax to the income tax expense included in the Statements of Operations is as follows:
Years Ended November 30, 2001 2000 1999 - ------------------------------------------------------------------------------------------------------------------ % of % of % of Dollar Pre-tax Dollar Pre-tax Dollar Pre-tax Amount Income Amount Income Amount Income - ------------------------------------------------------------------------------------------------------------------ Statutory federal income tax (benefit) $ 198,516 34.0 $(253,288) (34.0) $ 6,716 (34.0) Increase (decrease) in taxes resulting from: State income taxes 29,194 5.0 (37,248) (5.0) 988 5.0 Changes in valuation allowance (269,738) (46.2) 269,388 36.2 (9,219) (46.7) Other 45,081 7.7 21,148 2.8 1,515 7.7 - ------------------------------------------------------------------------------------------------------------------ $ 3,053 .5 $ - - $ - - ==================================================================================================================
23 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 7. 401(k) Profit Sharing Plan The Company has a profit sharing plan, the contributions to which are discretionary. In 2001 the Company terminated its profit sharing plan to use a human resource firm which administers the Company's employees benefits. The 401(k) profit sharing plan allows both the Company and eligible employees to contribute. The Company may, at its discretion, match 50% of the participant's contribution, up to a maximum of 6% of the employee's salary or the maximum allowed by the IRS. The Company's contribution for the years ended November 30, 2001, 2000 and 1999 amounted to $23,742, $14,525, and $15,225 respectively. Note 8. Related Party Transactions Until June 6, 2001, the Company was related to NDC, Netzler & Dahlgren Co. AB (Netzler & Dahlgren) through common ownership. Netzler & Dahlgren is the Company's largest supplier of AGVS control technology. It sold its Company shares to two of Company's officers in 2001. During the third quarter of 2000 the Company continued to delay payments on trade payables to Netzler & Dahlgren due to cash not being available under the current line of credit. During the third quarter of 1999, Netzler & Dahlgren converted trade payables into a two year note with a principal amount of $606,046 to partially offset the net cash used for operations at that time (see Note 4 of the financial statements). On November 30, 1995, the Company signed a ten (10) year Master License Agreement with Netzler & Dahlgren to purchase certain products at stipulated prices. During the fourth quarter of 2000 the Company renegotiated its license agreement with Netzler & Dahlgren. The new agreement, dated November 30, 2000, is for ten years and expands the Charlotte based Company's territory to sell to end-users worldwide and to continue to sub-license the technology in North America but on a non-exclusive basis. In addition, the note payable to Netzler & Dahlgren of $606,046 was restructured with the interest lowered from 16% to 9%. Under the new agreement, Netzler & Dahlgren extended its existing Letter of Credit to NDCA's bank and the bank extended the Company's line of credit of $450,000 to April 30, 2001. The License Agreement provides for certain royalty payments based on 10% of revenues on license fee contracts entered into after November 30, 2000. Netzler & Dahlgren indicated to the Company that Netzler & Dahlgren's financial exposure to the Company had to be reduced. To do this within the time frame required by Netzler & Dahlgren, the Company entered into a contract to sell its building (see Note 12). Proceeds from the sale of the building were used to retire the debt from the mortgage and the Company's bank credit line. The pay off of the credit line permitted the termination of the Netzler & Dahlgren Letter of Credit to the bank. NDCA also payed approximately $80,000 from the proceeds against current payables to Netzler & Dahlgren. Further, the Company's receivables were pledged to Netzler and Dahlgren to secure its note receivable from the Company in exchange for security it had in the building until its note is paid in full. There can be no assurances that the Company can continue to operate as a going concern if it does not meet its remaining financial obligations to Netzler & Dahlgren. The Company's Executive Vice President, Tommy Hessler, owns 50% of NDC Technologies Australia PTY Ltd ("NDCTA") which is the Netzler & Dahlgren representative for Australia. In 2001 revenues from sales to NDCTA were $2,654 and purchases from NDCTA were $252,378. Prior to June 6, 2001, NDCTA was not related to the Company. The Company had the following transactions with Netzler & Dahlgren for the years ended November 30, 2001, 2000, and 1999, respectively:
2001 2000 1999 - ------------------------------------------------------------------------------------------------------- Revenues $ 89,899 $ 27,538 $ 77,986 ======================================================================================================= Purchases of hardware, software & engineering services $ 599,119 $ 551,901 $ 844,414 ======================================================================================================= Interest expense $ 22,177 $ 48,137 $ 70,178 =======================================================================================================
There was no royalty expense for the three years ended November 30, 2001. 24 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 9. Commitments At November 30, 2001, the Company had no outstanding forward exchange contracts. These contracts are purchased as needed from time to time to hedge identifiable foreign currency commitments. The Company leases property and equipment under long-term operating leases expiring on various dates through March, 2006 and on a month-to-month basis. Rental expense was $206,226, $137,383, and $109,347 for the years ended November 30, 2001, 2000, and 1999 respectively. Minimum rental commitments under long-term operating leases at November 30, 2001 were as follows: 2002 $ 176,520 2003 146,133 2004 143,884 2005 147,302 2006 62,375 ---------- $ 676,214 ========== The Company has an employment contract with the President which provides for a minimum annual base salary of $115,000. The base salary is subject to annual reviews. The contract expires on March 1, 2002. Note 10. Issuance of Common Stock On November 15, 1999, the Company sold 113,000 shares of common stock, par value $.01 per share in a private placement. The net proceeds to the Company from the sale of the shares was $50,000. The Company applied the proceeds to working capital needs and other general corporate needs. 25 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 11. Stock Option Plans The Company has adopted Statement of Financial Accounting Standards (`SFAS') No. 123, Accounting for Stock-Based Compensation. FASB Statement No.123, requires that the Company account for its stock based compensation plans using a fair value based method which measures compensation cost at the grant date based upon the value of the awards, which is then recognized over the vesting period. The accounting requirements of the statement apply to awards to employees entered into fiscal years that begin after December 15, 1995 and to transactions with non-employees entered into after December 15, 1995. The Statement allows and the Company has elected to continue to use APB Opinion No. 25 Accounting for Stock Issued to Employees to measure compensation cost, but is required to disclose the pro forma effect on net income and earnings per share to reflect the difference between the compensation cost from applying APB Opinion No. 25 and the related cost measured by the fair value method defined in the statement for all awards granted in years beginning after December 15, 1994. The Statement did not change the reporting required for the Plans discussed below. 1990 and 1993 Stock Option Plans: On October 10, 1990, the Compensation Committee of the Board of Directors adopted the NDC Automation, Inc. 1990 Stock Option Plan ("the 90 Plan"), the adoption of which was ratified by the shareholders at the annual meeting held on April 10, 1991. In September 1992, the Company registered up to 178,613 shares of common stock for issuance. On October 23, 1993, the Compensation Committee of the Board of Directors adopted the NDC Automation, Inc. 1993 Stock Option Plan ("the 93 Plan"), the adoption of which was ratified by the shareholders at the annual meeting held on May 5, 1994. Options to purchase 174,375 shares of common stock were granted pursuant to the 90 Plan and are available for exercise upon achievement by the Company of certain financial performance targets set by the Board of Directors on an annual basis. The options will be exercisable for a term of ten years, commencing on the date of the grant at an exercise price of $.7917 to $1.56 for new employees. The 93 Plan authorized 100,000 options to purchase common stock, of which 100,000 were granted and are available for exercise upon achievement by the Company of certain financial performance targets set by the Board of Directors on an annual basis. On October 24, 1994, the 93 Plan options were repriced with approval by the Compensation Committee at an exercise price of $1.56. Of the 274,375 total shares of common stock options granted, the Compensation Committee granted to the Company's current and former executive officers options to purchase 120,375 shares of common stock at an exercise price of $.7917 for the 90 Plan, and 18,000 shares of common stock for the 93 Plan at an exercise price of $1.56. The exercise price of the options granted is based on the average fair market value of the common stock for the five business days preceding the date of the grant. 1997 Stock Option Plan: On December 7, 1996, the Compensation Committee of the Board of Directors adopted The NDC Automation, Inc. 1997 Stock Option Plan ("the 97 Plan"), the adoption of which was ratified by the shareholders at the annual meeting held April 25, 1997. The 97 Plan authorized 225,000 options to all officers and employees in the form of incentive stock options, of which 210,000 were granted in January 1997 at an exercise price of $0.50 per share upon achievement by the Company of certain financial performance targets set by the Board of Directors on an annual basis. No pro forma compensation expense has been disclosed due to financial performance targets not being obtained in 1998 or 1997 and due to uncertainty of financial performance targets being obtained prospectively. 26 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 11. Stock Option Plans (continued) 2001 Stock Option Plan: On May 10, 2001, the Compensation Committee of the Board of Directors adopted The NDC Automation, Inc. 2001 Stock Option Plan ("the 01 Plan"), the adoption of which is to be ratified by the shareholders at the annual meeting to be held May 10, 2002. The 01 Plan authorized 225,000 options to all officers and employees in the form of incentive stock options, of which 75,000 were granted in May 2001 at an exercise price of $0.195 per share upon achievement by the Company of certain financial performance targets set by the Board of Directors on an annual basis. The performance target for 2001 was that the Company had to be profitable. Transactions involving these plans for the years ended November 30, 2001, 2000 and 1999 respectively, are summarized as follows:
STOCK OPTIONS 2001* 2000* - -------------------------------------------------------------------------------------------------------------- 90 Plan 93 Plan 97 Plan Total 90 93 Plan 97 Plan Total Plan ------------------------------------------ ------------------------------------------ Outstanding, December 1 13,567 49,800 81,750 145,117 29,542 51,800 158,250 239,592 Granted - - - - - - - - Canceled (13,567) (800) (37,250) (51,617) (15,975) (2,000) (76,500) (94,475) Exercised - - - - - - - - - ------------------------------------------------------------------ ------------------------------------------ Outstanding, November 30 - 49,000 44,500 93,500 13,567 49,800 81,750 145,117 ================================================================== ========================================== Exercisable, November 30 - 49,000 44,500 93,500 13,567 49,800 27,250 90,617 ================================================================== ==========================================
1999* STOCK OPTIONS - ------------------------------------------------------------------- 90 Plan 93 Plan 97 Plan Total ------------------------------------------ Outstanding, December 1 29,677 52,100 167,250 249,027 Granted - - - - Canceled (135) (300) (9,000) (9,435) Exercised - - - - - ------------------------------------------------------------------- Outstanding, November 30 29,542 51,800 158,250 239,592 =================================================================== Exercisable, November 30 29,542 51,800 52,750 134,092 =================================================================== * The weighted average exercise price per share of options outstanding, granted, canceled, exercised, or exercisable for the 90 Plan was $0.7917, for the 93 Plan is $1.56, for the 97 Plan is $0.50 and for the 01 Plan is $0.195. 27 NOTES TO FINANCIAL STATEMENTS ================================================================================ Note 12. Sale of land and building The Company closed on the sale of the land and building in March 2001 for $1,600,000 and realized a gain of $581,023 after deducting approximately $100,000 of closing costs and moving expenses of approximately $30,000. Proceeds from the sale were used to retire the the mortgage debt and the Company's bank credit line. The pay off of the credit line permitted the termination of Netzler & Dahlgren Letter of Credit to the bank. NDCA also applied approximately $80,000 from the sale proceeds against current payables to Netzler & Dahlgren. Further, the Company receivables will be pledged to Netzler and Dahlgren to secure its note receivable from the Company until its note is paid in full. Note 13. FASB Statements And Proposed Regulations On June 15, 1998, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (FAS 133). FAS 133 is effective for all fiscal quarters of all fiscal years beginning after June 15, 1999. FAS 133 requires that all derivative instruments be recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded each period in current earnings or other comprehensive income, depending on whether a derivative is designated as part of a hedge transaction and, if it is, the type of hedge transaction. The Company purchases foreign-currency exchange contracts to settle their international debts. The Company will purchase and settle these contracts on the same day. Any gains and losses on the foreign-currency-denominated debts are recorded as transaction adjustments in current earnings. The Company had a gain on foreign currency transactions of $11,151, $60,564, and $30,310 for the three year ended November 30, 2001. Note 14. Continued operations In the past years the Company has suffered operating losses but currently has an operating income. This left the Company with a deficit and negative working capital prior to the sale of its land and building (see Note 12). Due to the losses, lender contacts have indicated that it would take time for the Company to reestablish a line of credit. This raises substantial doubt about the Company's ability to continue as a going concern. Management has made the following actions in an attempt to increase revenues and minimize losses. . Establish and develop strategic alliances with selected customers . Pursue AGV system business in selected market niches . Grow the distribution business by adding new supplementary products . Expand the aftermarket sales business The Company has been successful during 2001 year by increasing revenues and returning the Company to profitability. There can be no assurance that the Company can successfully meet the objectives of any such activities to ensure the viability of its operations. 28 SHAREHOLDER INFORMATION ==================================================================================================================================== ANNUAL MEETING DIRECTORS The annual meeting will be held at 10:00 am, Friday, May 10, 2002, at NDC Automation's Corporate offices D. Bruce Wise in Charlotte, North Carolina. Chairman of the Board of Directors, NDC Automation, Inc. Chief Executive Officer, Integrated Technologies Group SHAREHOLDER RELATIONS A copy of NDC's Annual Report and form 10-KSB, which is filed with the Securities and Exchange Claude Imbleau Commission, will be sent to any shareholder upon Director written request to Manager-Investor Relations NDC Automation, Inc./dba/Transbotics Corporation Raymond O. Gibson 3400 Latrobe Drive Director Charlotte, North Carolina 28211 Richard D. Schofield CORPORATE OFFICES Director NDC Automation Inc./dba/Transbotics Corporation 3400 Latrobe Drive Charlotte, North Carolina 2821l-4849 (704) 362-1115 Telephone (704) 364-4039 Facsimile STOCK EXCHANGE LISTINGS OFFICERS Over the Counter: OTC Bulletin Board OTC Symbol: "AGVS.OB" Claude Imbleau President TRANSFER AGENT Chief Financial Officer First Citizens Bank Raleigh, North Carolina Tommy Hessler LEGAL COUNSEL Executive Vice President Parker, Poe, Adams and Bernstein, LLP Charlotte, North Carolina Beverly C. Love Shumaker, Loop and Kendrick, LLP Chief Accounting Officer Charlotte, North Carolina AUDITORS E. Thomas Watson McGladrey & Pullen, LLP Secretary, NDC Automation, Inc. Charlotte, North Carolina Partner at Parker, Poe, Adams and Bernstein LLP ====================================================================================================================================
COMMON STOCK DATA Market Price Per Share ----------------------------------------------------------------------- 2001 2000 ----------------------------------------------------------------------- Quarter Ended High Low High Low Bid Ask Bid Ask Bid Ask Bid Ask - ------------------------------------------------------------------------------------------------------------------------------------ February 28 0.81 0.91 0.13 0.16 0.72 0.97 0.26 0.33 May 31 0.47 O.63 0.15 0.20 1.19 1.22 0.38 0.53 August 31 0.37 0.45 0.21 0.30 0.50 0.75 0.26 0.28 November 30 0.34 0.51 0.21 0.25 0.32 0.47 0.19 0.20 ====================================================================================================================================
29 EX-23.3 6 dex233.txt CONSENT OF MCGLADREY & PULLEN Exhibit 23.3 CONSENT OF INDEPENDENT AUDITOR We hereby consent to the incorporation by reference in this Form 10-KSB of our report dated January 11, 2002, which appears on page 11 of the 2001 Annual Report to Shareholders of NDC Automation, Inc. McGLADREY & PULLEN, LLP Charlotte, North Carolina February 12, 2002 -----END PRIVACY-ENHANCED MESSAGE-----