-----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, HPVSCrqzVSKUaCeaNbpYDjeuv0u2hStaOf76iea8x7N5fTYTF11tjW1O1bYRImCH wY47K6tcG3HgomqPDbvz8g== 0000890725-97-000003.txt : 19971006 0000890725-97-000003.hdr.sgml : 19971006 ACCESSION NUMBER: 0000890725-97-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970731 FILED AS OF DATE: 19971003 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DEVELOPED TECHNOLOGY RESOURCE INC CENTRAL INDEX KEY: 0000890725 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 411713474 STATE OF INCORPORATION: MN FISCAL YEAR END: 1031 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21394 FILM NUMBER: 97690307 BUSINESS ADDRESS: STREET 1: 7300 METRO BLVD SUITE 550 CITY: EDNA STATE: MN ZIP: 55439 BUSINESS PHONE: 6128200755 MAIL ADDRESS: STREET 1: 7300 METRO BLVD SUITE 550 CITY: EDNA STATE: MN ZIP: 55439 10QSB 1 FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended July 31, 1997. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from ___________ to _____________ Commission File No. 0-21394 DEVELOPED TECHNOLOGY RESOURCE, INC. (Exact name of issuer as specified in its charter) MINNESOTA 41-1713474 (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 7300 Metro Blvd., Suite 550, Edina, Minnesota 55439 (Address of principal executive offices) (Zip Code) (612) 820-0022 (Issuer's telephone number, including area code) 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 issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes_____ No__X__ . State the number of shares outstanding of each of the issuer's classes of common equity. As of September 25, 1997, there were 790,820 shares of Common Stock, $.01 par value per share, outstanding. DEVELOPED TECHNOLOGY RESOURCE, INC. INDEX FOR THE QUARTER ENDED JULY 31, 1997 Page Number PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements -------------------- Condensed Balance Sheets 3 Condensed Statements of Operations 4 Condensed Statements of Cash Flows 5 Notes to Condensed Financial Statements 6 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 --------------------------------------------- PART II. OTHER INFORMATION ITEM 4. Submission of Matters to a Vote of Security Holders 9 --------------------------------------------------- ITEM 6. Exhibits and Reports on Form 8-K 9 -------------------------------- SIGNATURES 10 3 DEVELOPED TECHNOLOGY RESOURCE, INC. ITEM 1: FINANCIAL STATEMENTS CONDENSED BALANCE SHEETS (Unaudited)
July 31, October 31, 1997 1996 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 216,937 $ 635,609 Receivables: Trade, net 46,989 126,811 Sale of business division 360,000 360,000 FoodMaster International L.L.C. 339,393 -- Other 1,169 28,630 Inventory -- 205,999 Advance payments to suppliers -- 214,961 Prepaid and other current assets 38,500 34,670 ----------- ----------- Total current assets 1,002,988 1,606,680 Furniture and Equipment, Net 27,962 513,553 Investment in FoodMaster International L.L.C. 315,221 -- Receivable from Sale of Business Division 280,000 280,000 Deferred Acquisition Costs 150,000 35,616 ----------- ----------- $ 1,776,171 $ 2,435,849 =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 63,061 $ 188,916 Notes payable -- 70,910 Accrued liabilities 164,000 316,044 Customer deposits -- 44,876 Deferred grant revenue -- 13,055 Deferred gain on sale of business division 141,707 341,707 ----------- ----------- Total current liabilities 368,768 975,508 Deferred Gain on Sale of Business Division 280,000 280,000 Minority Interest in Joint Venture -- 244,121 Shareholders' Equity 1,127,403 936,220 ----------- ----------- $ 1,776,171 $ 2,435,849 =========== ===========
See accompanying notes to the condensed financial statements. 4 DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
Three Months Ended July 31, Nine Months Ended July 31, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- Revenue: Sales $ 158,281 $ 261,530 $ 2,318,298 $ 732,351 Management fees from FMI 286,230 -- 485,435 -- Commissions and other income 23,497 75,735 33,174 240,265 ----------- ----------- ----------- ----------- 468,008 337,265 2,836,907 972,616 ----------- ----------- ----------- ----------- Cost and Expenses: Cost of sales 137,319 233,030 1,641,790 595,996 Selling, general and administrative 211,194 146,527 937,419 608,277 ----------- ----------- ----------- ----------- 348,513 379,557 2,579,209 1,204,273 ----------- ----------- ----------- ----------- Operating Income (Loss) 119,495 (42,292) 257,698 (231,657) Other Income (Expense): Interest income (expense), net 579 17,839 13,817 49,499 Equity in net income (loss) of joint ventures (68,682) 55,095 (105,394) 110,869 ----------- ----------- ----------- ----------- Income (Loss) from Continuing Operations Before Income Tax and Minority Interest 51,392 30,642 166,121 (71,289) Income Taxes -- -- 75,500 -- ----------- ----------- ----------- ----------- Income (Loss) from Continuing Operations Before Minority Interest 51,392 30,642 90,621 (71,289) Minority Interest in Earnings of Joint Ventures -- -- (70,403) -- ----------- ----------- ----------- ----------- Income (Loss) from Continuing Operations 51,392 30,642 20,218 (71,289) Income(Loss) from Discontinued Operations 200,000 (67) 200,000 21,966 ----------- ----------- ----------- ----------- Net Income (Loss) $ 251,392 $ 30,575 $ 220,218 $ (49,323) =========== =========== =========== =========== Net Income (Loss) per Common Share: Primary: Continuing operations $ 0.06 $ 0.04 $ 0.06 $ (0.08) Discontinued operations 0.15 0.00 0.17 0.02 ----------- ----------- ----------- ----------- $ 0.21 $ 0.04 $ 0.23 $ (0.06) =========== =========== =========== =========== Fully Diluted: Continuing operations $ 0.06 $ 0.04 $ 0.06 $ (0.08) Discontinued operations 0.15 0.00 0.17 0.02 ----------- ----------- ----------- ----------- $ 0.21 $ 0.04 $ 0.23 $ (0.06) =========== =========== =========== =========== Weighted Average Common Shares Outstanding (assuming full dilusion) 1,301,740 838,966 1,138,317 838,966 =========== =========== =========== ===========
See accompanying notes to the condensed financial statements. 5 DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
Nine Months Ended July 31, 1997 1996 ----------- ----------- OPERATING ACTIVITIES: Net Income (Loss) $ 220,218 $ (49,323) Adjustments to Reconcile Net Income (Loss) to Cash Used by Operating Activities: Depreciation 32,817 40,545 (Gain) loss on sale of furniture and equipment (7,045) 6,494 Gain on sale of business division (200,000) -- Minority interest in earnings (loss) of joint venture 70,403 (110,869) Changes in Operating Assets and Liabilities: Receivables (371,981) (3,888) Inventories (206,981) 87,880 Prepaid and other current assets (41,760) 9,844 Advance payments to suppliers 5,648 (9,702) Accounts payable and accrued liabilities 134,934 (351,994) Deferred grant revenue (13,055) (103,897) Customer deposits (44,876) (2,049) ----------- ----------- Net cash used by operating activities (421,568) (486,959) ----------- ----------- INVESTING ACTIVITIES: Purchase of Short-term Investments -- (28,170) Proceeds from Sale of Furniture and Equipment 80,436 -- Purchases of Furniture and Equipment (7,926) (5,799) Advances/Contributions to Joint Ventures (47,204) (136,105) Deferred Acquisition Costs (22,410) -- ----------- ----------- Net cash provided (used) by investing activities 2,896 (170,074) ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (418,672) (657,033) CASH AND CASH EQUIVALENTS, Beginning of Period 635,609 1,296,243 ----------- ----------- CASH AND CASH EQUIVALENTS, End of Period $ 216,937 $ 639,210 =========== ===========
SUPPLEMENTAL DISCLOSURES OF NONCASH OPERATING AND INVESTING ACTIVITIES: The Company contributed $314,524 in net assets of its FoodMaster-Almaty operation to FoodMaster International L.L.C. for its 40% interest. In addition, the Company redeemed 48,190 shares of common stock in exchange for $29,035 in accounts receivable. The non-cash effects of these transactions have been removed from the applicable classifications shown above. See accompanying notes to the condensed financial statements. 6 DEVELOPED TECHNOLOGY RESOURCE, INC. NOTES TO CONDENSED FINANCIAL STATEMENTS July 31, 1997 (Unaudited) 1. Basis of Presentation The interim financial statements of Developed Technology Resource, Inc. (DTR) are unaudited, but in the opinion of management, reflect all necessary adjustments for a fair presentation of the financial position, as well as, the results of operations and cash flows for the periods presented. From November 1, 1997 through March 2, 1997, the condensed financial statements include the combined accounts of DTR and FoodMaster, DTR's 50% subsidiary in Kazakhstan. All significant intercompany transactions and balances were eliminated in consolidation. Effective with an agreement dated March 3, 1997 with Agribusiness Partners International L.P. (API) to form FoodMaster International L.L.C. (FMI), activity subsequent to March 2 is recognized under the equity method to reflect DTR's 40% interest. Under the equity method, DTR's share of the net income or losses of FMI is reflected in the statement of operations. The results of operations for any interim period are not necessarily indicative of results for the full year. These financial statements should be read in conjunction with DTR's Annual Report and Notes thereto on Form 10-KSB for the year ended October 31, 1996. 2. Change in Method of Accounting for Earnings Per Share In February 1997, the Finance and Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings Per Share," which is required to be adopted by DTR in the reporting period ending January 31, 1998. At that time, DTR will be required to change the method currently used to compute earnings per share and restate all prior periods. Under the new standard for calculating basic earnings per share, the dilutive effect of stock options will be eliminated. The impact of implementing SFAS No. 128 on the calculation of earnings per share for the periods ended July 31, 1997 and 1996 will not be material. 3. Investment in FoodMaster International L.L.C. On March 3, 1997, DTR and API announced the formation of FMI to pursue dairy opportunities in the former Soviet Union. Under this agreement, DTR contributed to FMI the FoodMaster operations in Kazakhstan, the Ak- Bulak option and its opportunities in Moldova. API agreed to fund $2.945 million to further develop DTR's current contributions and to provide an additional $3.055 million over the next two years to expand future FMI opportunities. Under the agreement, API currently owns 60% and DTR owns 40% of FMI. However, DTR has the opportunity to earn greater economic interest by reaching defined performance targets. DTR will account for its 40% interest in FMI under the equity method, recording its share of FMI's operating results as equity in net income(loss) of partnerships and joint ventures. Under a separate management agreement, DTR will manage the day to day operations of FMI and its future subsidiaries for a management fee. 4. Stock Redemption In the first quarter of fiscal 1997, 48,190 shares of common stock were redeemed in exchange for the satisfaction of $29,035 in accounts receivable owed by a former employee. 7 DEVELOPED TECHNOLOGY RESOURCE, INC. ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. Overview Statements other than current or historical information included in this Management's Discussion and Analysis and elsewhere in this Form 10-QSB, in future filings by Developed Technology Resource, Inc. (DTR) with the Securities and Exchange Commission and in DTR's press releases and oral statements made with the approval of authorized executive officers, should be considered "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are subject to certain risks and uncertainties that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. DTR wishes to caution the reader not to place undue reliance on any such forward-looking statements. On March 3, 1997, DTR and Agribusiness Partners International L.P. (API) announced the formation of FoodMaster International L.L.C. (FMI) to pursue dairy opportunities in the former Soviet Union (FSU). Under this agreement, DTR contributed to FMI the FoodMaster operations in Kazakhstan, the Ak-Bulak option and its opportunities in Moldova. API agreed to fund $2.945 million to further develop DTR's current contributions and to provide an additional $3.055 million over the next two years to expand future FMI opportunities. Under the agreement, API currently owns 60% and DTR owns 40% of FMI. However, DTR has the opportunity to earn greater economic interest by reaching defined performance targets. DTR will account for its 40% interest in FMI under the equity method, recording its share of FMI's operating results as equity in net income(loss) of partnerships and joint ventures. Under a separate management agreement, DTR will manage the day to day operations of FMI and its future subsidiaries for a management fee. Ongoing Business Strategy As the manager of operations for FMI, DTR's strategy is to expand FMI's dairy processing business in Kazakhstan and other regions of the FSU. FMI intends to exercise its option in the fourth quarter of fiscal 1997 to purchase 80% of Ak-Bulak, FMI's partner in FoodMaster Kazakhstan (FoodMaster), which will result in a 90% ownership of FoodMaster by FMI. FMI is continuing to expand its operations in Moldova and Akmola, Kazakhstan's new capital. DTR will continue to operate its x-ray tube and equipment sales business and look for opportunities to expand sales when available. Results of Operations FoodMaster Kazakhstan (FoodMaster) and FoodMaster International L.L.C. (FMI) For the three and nine month periods ended July 31, 1997, DTR received fees of $286,230 and $485,435, respectively, for managing the operations of FMI. From November 1, 1996 through March 2, 1997, the financial statements report the consolidated accounts of FoodMaster and DTR. During this time FoodMaster's consolidated sales and commissions were $1,724,798, cost of goods sold were $1,195,016 and selling, general & administrative expenses were $346,935. Since March 3, 1997 (the formation of FMI), DTR reports its FMI sales and related expenses, inclusive of FoodMaster results, under the equity method to reflect its 40% investment in FMI. From March 3, 1997 to July 31, 1997, DTR's share of the loss under the equity method in FMI was $105,394. 8 X-ray Tubes X-ray tube sales for the three month and nine month periods ended July 31, 1997 were $63,400 and $164,430, respectively. Cost of goods sold were $54,715 and $142,645, respectively. During the same periods in 1996, sales were $98,800 and $180,000 and cost of goods sold were $79,080 and $149,580, respectively. Currently, DTR expects to maintain stability in X-ray tube sales and an average profit margin of 13.0% to 14.0%. Food Packaging Equipment DTR recorded food packaging equipment sales of $94,881 and $428,890, respectively, for the three and nine months ended July 31, 1997. The related cost of goods sold was $82,604 and $304,129, respectively; resulting in 13% and 29% gross profit. The gross profit margin on sales in fiscal 1997 were higher than fiscal 1996 due to DTR selling the equipment directly rather than through a distributor. Discontinued Operations Effective December 31, 1995, DTR entered into an agreement to sell certain assets and the rights to its airport security equipment in the FSU to a United Kingdom company owned by a former DTR employee. DTR transferred assets, inventory, customer lists, promotional materials, and other items with a net book value on January 31, 1996 of $143,293. In exchange for these items, DTR received a cash payment of $45,000 to reimburse DTR for expenses related to this business during the first quarter of fiscal 1996 and a note receivable totaling $765,000 payable over the next 30 months. A portion of these payments are personally guaranteed by the former employee, and are collateralized by his ownership of 16,430 shares of DTR's common stock. Due to the inherent risks associated with operating in the FSU, including credit risk, the gain on this sale has been deferred and will be recognized as payments are received. DTR received payments of $170,000 during fiscal 1996 and a $200,000 payment in August 1997. At July 31, 1997, a $200,000 gain was recognized when it became apparent that DTR would collect this amount of the receivable. Additional contingent payments may also be received based on future performance. DTR retained the right to pursue airport security management contracts. 9 DEVELOPED TECHNOLOGY RESOURCE, INC. PART II. OTHER INFORMATION ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K The following exhibits are filed as part of this Form 10-QSB. (a) Exhibits 11 Statement Regarding Computation of Per-Share Earnings 27 Financial Data Schedule (b) Reports of Form 8-K No report on Form 8-K was filed by Developed Technology Resource, Inc. (DTR) during the quarter ended July 31, 1997. 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: September 25, 1997 DEVELOPED TECHNOLOGY RESOURCE, INC. ----------------------------------- (Registrant) /s/ John P. Hupp ----------------------------------- John P. Hupp, President /s/ LeAnn H. Davis ------------------------------------ LeAnn H. Davis Chief Financial Officer EX-11 2 COMPUTATION OF PER SHARE EARNINGS DEVELOPED TECHNOLOGY RESOURCE, INC. EXHIBIT 11 -- STATEMENT REGARDING COMPUTATION OF PER-SHARE EARNINGS (Unaudited)
Three Months Ended Nine Months Ended July 31, July 31, 1997 1996 1997 1996 --------- --------- --------- --------- Primary: Average shares outstanding 790,820 838,966 797,704 838,966 Shares assumed exercised from exercise of stock options 669,084 -- 446,056 -- Shares assumed to be repurchased with proceeds from exercise (subject to 20% limit) (158,164) -- (105,443) -- --------- --------- --------- --------- Total common and common equivalent shares 1,301,740 838,966 1,138,317 838,966 ========= ========= ========= ========= Net Income (Loss) $ 251,392 $ 30,575 $ 220,218 $ (49,323) Assumed interest revenue from purchase of government securities 23,800 -- 46,966 -- --------- --------- --------- --------- Adjusted net income (loss) $ 275,192 $ 30,575 $ 267,184 $ (49,323) ========= ========= ========= ========= Per-share amount $ 0.21 $ 0.04 $ 0.23 $ (0.06) ========= ========= ========= ========= Fully Diluted: Average shares outstanding 790,820 838,966 797,704 838,966 Shares assumed exerised from exercise of stock options 669,084 -- 446,056 -- Shares assumed to be repurchased with proceeds from exercise (subject to 20% limit) (158,164) -- (105,443) -- --------- --------- --------- --------- Total common and common equivalent shares 1,301,740 838,966 1,138,317 838,966 ========= ========= ========= ========= Net Income (Loss) $ 251,392 $ 30,575 $ 220,218 $ (49,323) Assumed interest revenue from purchase of government securities 23,652 -- 45,029 -- --------- --------- --------- --------- Adjusted net income (loss) $ 275,044 $ 30,575 $ 265,247 $ (49,323) ========= ========= ========= ========= Per-share amount $ 0.21 $ 0.04 $ 0.23 $ (0.06) ========= ========= ========= ========= NOTE: As the stock options assumed to be repurchased exceeds 20% of the shares already outstanding, the treasury stock method has been modified, as required, to assume the repurchase of up to 20% of the stock outstanding with the excess invested in government securities.
EX-27 3
5 9-MOS OCT-31-1997 JUL-31-1997 216,937 0 760,459 12,908 0 1,002,988 27,962 0 1,776,171 368,767 0 0 0 7,908 1,119,496 1,776,171 2,318,298 2,836,907 1,641,790 2,579,209 105,394 0 (13,817) 166,121 75,500 90,621 200,000 0 0 220,218 0.28 0.28
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