-----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, HwWzlUxf//ZhB0XPbYRkL+PRsg/4PYgJMcG6QxKVJ5QlnMaUER6k0adubfJFG//X l/kQ8VQmJXy9DTfY7PcbUA== 0000897101-98-000849.txt : 19980817 0000897101-98-000849.hdr.sgml : 19980817 ACCESSION NUMBER: 0000897101-98-000849 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980630 FILED AS OF DATE: 19980814 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: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21394 FILM NUMBER: 98690214 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 STREET 2: SUITE 170 CITY: EDNA STATE: MN ZIP: 55439 10QSB 1 FORM 10-QSB - -------------------------------------------------------------------------------- U.S. Securities and Exchange Commission Washington, D.C. 20549 [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1998 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________ to _________________ Commission File Number: 0-21394 DEVELOPED TECHNOLOGY RESOURCE, INC. (Exact name of issuer as specified in its charter) MINNESOTA 41-1713474 State of Incorporation I.R.S. Employer Identification No. 7300 METRO BOULEVARD, SUITE 550 EDINA, MINNESOTA 55439 Address of Principal Executive Office (612) 820-0022 Issuer's Telephone Number Check whether the issuer (1) has 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 __ As of August 12, 1998, there were 805,820 shares of the issuer's Common Stock, $0.01 par value per share, outstanding. DEVELOPED TECHNOLOGY RESOURCE, INC. INDEX FOR THE QUARTER ENDED JUNE 30, 1998 PAGE NO. -------- PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED UNAUDITED 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 9 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS 12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 12 SIGNATURES 14 2 ITEM 1. CONDENSED UNAUDITED FINANCIAL STATEMENTS DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED BALANCE SHEETS (UNAUDITED)
ASSETS JUNE 30, DECEMBER 31, 1998 1997 ------------ ------------ Current Assets: Cash and cash equivalents $ 233,290 $ 284,526 Receivables: Trade, net 68,269 80,820 Sale of discontinued operations 480,000 480,000 FoodMaster International L.L.C. (FMI) 343,537 371,801 Other 939 763 Note receivable 541,129 516,935 Prepaid and other current assets 99,502 41,352 ------------ ------------ Total current assets 1,766,666 1,776,197 Furniture and Equipment, net 46,136 39,381 Investment in FMI 1,014,662 834,917 ------------ ------------ $ 2,827,464 $ 2,650,495 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Accounts payable $ 133,457 $ 257,938 Accrued liabilities 94,762 147,337 Deferred gain short-term 467,065 467,065 ------------ ------------ Total current liabilities 695,284 872,340 Non-current Deferred Gain 36,328 38,986 Commitments and Contingencies -- -- Shareholders' Equity: Common stock 8,058 7,908 Additional paid-in capital 5,341,648 5,319,298 Accumulated deficit (3,253,854) (3,588,037) ------------ ------------ Total shareholders' equity 2,095,852 1,739,169 ------------ ------------ $ 2,827,464 $ 2,650,495 ============ ============
See accompanying notes to the financial statements. 3 DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, SIX MONTHS ENDED JUNE 30, ------------------------------ ------------------------------- 1998 1997 1998 1997 ------------ ------------ ------------ ------------ (As Restated (As Restated See Note 4) See Note 4) Revenues: Sales $ 214,430 $ 174,987 $ 239,248 $ 1,496,166 Management fees from FMI joint venture 335,098 375,456 628,930 439,555 Commissions and other income 24,336 1,229 25,658 42,601 ------------ ------------ ------------ ------------ 573,864 551,672 893,836 1,978,322 ------------ ------------ ------------ ------------ Cost and Expenses: Cost of sales 165,742 147,394 184,842 753,832 Selling, general and administrative 392,408 245,021 712,937 660,084 ------------ ------------ ------------ ------------ 558,150 392,415 897,779 1,413,916 ------------ ------------ ------------ ------------ Operating Income (Loss) 15,714 159,257 (3,943) 564,406 Other Income: Interest income, net 80,398 2,515 158,381 592 Equity in earnings of FMI joint venture 125,181 23,493 179,745 31,325 ------------ ------------ ------------ ------------ Income before Minority Interest 221,293 185,265 334,183 596,323 Minority Interest in Earnings of FoodMaster -- -- -- (64,571) ------------ ------------ ------------ ------------ Net Income $ 221,293 $ 185,265 $ 334,183 $ 531,752 ============ ============ ============ ============ Net Income per Common Share: Basic $ 0.27 $ 0.23 $ 0.41 $ 0.67 ============ ============ ============ ============ Diluted $ 0.18 $ 0.20 $ 0.28 $ 0.60 ============ ============ ============ ============
See accompanying notes to the financial statements. 4 DEVELOPED TECHNOLOGY RESOURCE, INC. CONDENSED STATEMENTS OF CASH FLOWS SIX MONTHS ENDED JUNE 30, 1998 AND 1997 (UNAUDITED)
1998 1997 ----------- ----------- (As Restated See Note 4) OPERATING ACTIVITIES: Net Income $ 334,183 $ 531,752 Adjustments to Reconcile Net Income to Cash Used by Operating Activities: Depreciation 8,366 26,673 Provision for doubtful accounts 2,182 (220,787) Gain on sale of furniture and equipment -- (3,180) Minority interest in earnings of joint venture -- 64,571 Equity in earnings of FMI joint venture (179,745) (179,745) Changes in Operating Assets and Liabilities, net of transfers to joint venture: Receivables (14,001) (4,165) Receivable from FMI joint venture 28,264 (567,040) Inventories -- (46,382) Prepaid and other current assets (58,150) 108,252 Accounts payable and accrued liabilities (177,056) (71,345) Deferred gains (2,658) (58,529) Customer deposits -- (68,667) ----------- ----------- Net cash used by operating activities (58,615) (488,592) ----------- ----------- INVESTING ACTIVITIES: Proceeds from Sale of Furniture and Equipment -- 75,875 Purchases of Furniture and Equipment (15,121) (38,438) Advances to Joint Venture -- 61,411 Deferred Acquisition Costs -- 87,730 ----------- ----------- Net cash provided (used) by investing activities (15,121) 186,578 ----------- ----------- FINANCING ACTIVITIES: Net proceeds on Note Payable -- 5,835 Proceeds from Exercise of Stock Options 22,500 -- ----------- ----------- Net cash provided by financing activities 22,500 5,835 ----------- ----------- DECREASE IN CASH AND CASH EQUIVALENTS (51,236) (296,179) CASH AND CASH EQUIVALENTS, Beginning of Period 284,526 425,366 ----------- ----------- CASH AND CASH EQUIVALENTS, End of Period $ 233,290 $ 129,187 =========== ===========
See accompanying notes to the financial statements. 5 DEVELOPED TECHNOLOGY RESOURCE, INC. NOTES TO CONDENSED UNAUDITED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Business Developed Technology Resource, Inc. (DTR or the Company) owns and manages food businesses in the countries of the former Soviet Union (fSU) through FoodMaster International L.L.C. (FMI), its joint venture with Agribusiness Partners International L.P. (API). FMI purchases dairy manufacturing facilities in the fSU and provides equipment and necessary capital. DTR manages the dairies and pursues future acquisitions for FMI. Using modern marketing techniques and packaging equipment, the dairies provide customers in the fSU better quality branded dairy products. In 1998 and 1997, DTR also sold equipment to various customers throughout the fSU. During 1998, DTR's 100% owned subsidiary, SXD, Inc., distributed X-ray tubes under an exclusive arrangement with a Russian manufacturer and held ownership interests in the coatings technology business of Phygen, Inc. and the cancer detection business of Armed. These operations were formerly operated by DTR until October 1997. 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. On June 30, 1998, the Company decided to change its year end from October 31 to December 31. As a result, a transition report was filed recently to show the results for the two-month period of November and December 1997 and 1996. This 10-QSB shows the six-month results from January to June 1998 and 1997 based on the Company's new year end of December 31. From January 1997 through February 1997, the financial statements include the operations of DTR and FoodMaster Corporation (FoodMaster), DTR's 50% owned subsidiary in Almaty, Kazakhstan. All significant intercompany transactions and balances were eliminated in consolidation. On March 3, 1997, DTR contributed its 50% ownership of FoodMaster to the FMI joint venture for a 40% ownership in FMI. Effective March 1997, DTR records its proportionate share of the net income or loss of FMI in the statement of operations as equity in earnings of FMI joint venture under the equity method of accounting. The excess of DTR's underlying equity in net assets of FMI over the carrying value of its investment is being amortized to income over 15 years. 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 the Company's Annual Report and Notes thereto on Form 10-KSB for the year ended October 31, 1997 and with the Company's Transition Report for the two month period ended December 31, 1997 as filed with the Securities and Exchange Commission. Segment Reporting In June 1997, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 131, DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION. This statement is effective for fiscal years beginning after December 15, 1997. The Company has not yet evaluated the full impact of the adoption of SFAS 131. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets 6 and liabilities at the date of the financial statements and reported amounts of revenues and expense during the reporting period. Actual results could differ from those estimates. 2. AK-BULAK OPTION Effective August 1996, the Company obtained an option to purchase 80% of Ak-Bulak, an inactive company which owned the other 50% of the FoodMaster joint venture. This purchase of 80% of Ak-Bulak would give DTR an additional 40% ownership of FoodMaster. To exercise the option, the Company agreed to pay certain pre-defined outstanding debts of Ak-Bulak, the other owner of FoodMaster, and to make capital improvements to the dairy owned by FoodMaster. As of March 2, 1997, DTR had paid $171,774 in connection with the exercise of this option. On March 3, 1997, DTR contributed its 50% ownership in FoodMaster along with its option to acquire the additional 40% ownership to the FMI joint venture. FMI repaid DTR for all but $14,045 of the costs paid through March 2, 1997 to exercise the option (See Note 3). 3. INVESTMENT IN FOODMASTER INTERNATIONAL L.L.C. (FMI) On March 3, 1997, DTR and API established the FMI joint venture, to acquire and operate dairies in the former Soviet Union. DTR contributed to FMI its 50% ownership in FoodMaster, the Ak-Bulak option (See Note 2) and its opportunities for a future acquisition of a dairy in Moldova. API agreed to fund $2.945 million to further develop the dairy operations in Kazakhstan and Moldova and to provide an additional $3.055 million over two years to expand FMI. By June 30, 1998, API contributed all $6 million of its commitment to FMI. Under the agreement, API currently owns 60% and DTR owns 40% of FMI. However, DTR has a right to earn a greater ownership interest of FMI by achieving certain defined performance targets based on returns to API. Effective March 1997, DTR records its proportionate share of the net income or loss of FMI in the statement of operations as equity in earnings of FMI joint venture under the equity method of accounting. DTR also entered into a management agreement with FMI, whereby DTR manages the day to day operations of FMI and the dairy operations owned by FMI, and pursues future dairy acquisitions for FMI for a management fee. The Company recorded management fee income of $628,930 and $439,555 for the six months ended June 30, 1998 and 1997, respectively, in accordance with its management agreement with FMI which began March 3, 1997. Summarized financial information from the unaudited financial statements of FMI carried on the equity basis is as follows:
June 30, 1998 ------------- Current assets $ 7,821,436 Total assets 16,342,788 Noncurrent liabilities 983,148 Shareholders' equity 9,807,746 DTR's share of FMI 's equity 3,923,098 DTR's carrying value of FMI's equity 1,014,662 Six Months Ended June 30, 1998 ------------- Sales $ 9,723,225 Gross profit 2,530,680 Net income 176,541 DTR's share of FMI's loss before adjustment of DTR's excess of net equity over carrying value of the investment 70,616 DTR's share of equity in earnings of FMI joint venture after adjustment 179,745
7 4. RESTATEMENT The Company has restated its financial statements to reflect the three and six months ended June 30, 1997 to properly account for the transfer of DTR's FoodMaster operations to the FMI joint venture which occurred in March 1997. In the prior year, DTR reported its operations with a fiscal year end of October 31 and accordingly filed a six month 10-QSB for the period ended April 30. 5. STOCK ACTIVITY On November 6, 1997, the Board of Directors adopted the 1997 Outside Directors Stock Option Plan, superseding the 1993 Outside Directors Stock Option Plan. In exchange for the surrender of all stock options previously granted to the outside directors, the Board granted stock options of 15,000 shares of common stock to the two current outside directors at an exercise price of $1.50 per share, which was equal to the market price on the grant date. As of June 30, 1998, 15,000 of the 30,000 issued options were exercised. 6. NET INCOME PER COMMON SHARE Effective November 1, 1997, DTR adopted Statement of Financial Accounting Standards (SFAS) No. 128, EARNINGS PER SHARE. Under this new standard, basic net income per share is computed by dividing net income by the weighted average number of common shares outstanding. Diluted net income per share includes the dilutive effect of shares which would be issued upon the exercise of outstanding stock options and warrants, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the period.
Three months ended June 30, Six months ended June 30, 1998 1997 1998 1997 ----------- ----------- ----------- ----------- Numerator: Net income $ 221,293 $ 185,265 $ 334,183 $ 531,752 =========== =========== =========== =========== Denominator: Weighted average shares-basic earnings 805,820 790,820 805,406 790,820 Dilutive effect of stock options/warrants 414,500 134,364 376,987 92,097 ----------- ----------- ----------- ----------- Weighted average shares-diluted earnings 1,220,320 925,184 1,182,393 882,917 =========== =========== =========== =========== Net income per share - Basic $ 0.27 $ 0.23 $ 0.41 $ 0.67 =========== =========== =========== =========== Net income per share - Diluted $ 0.18 $ 0.20 $ 0.28 $ 0.60 =========== =========== =========== ===========
Options and warrants to purchase 5,000 and 56,834 shares of common stock as of June 30, 1998 and 1997, respectively, were not included in the computation of diluted earnings per share because their exercise prices were greater than the average market price of the common shares and, therefore, their inclusion would be antidilutive. 7. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Non-cash operating and investing activities: On March 2, 1997, the Company contributed $626,917 in net assets of its FoodMaster joint venture to FoodMaster International L.L.C. (FMI) for its 40% interest as discussed in Note 3. The non-cash effects of these transactions have been removed from the appropriate categories in the operating and investing section of the Company's Statements of Cash Flows for the six months ended June 30, 1997. Supplemental cash flow information: For the six months ended June 30, 1998 1997 --------------------------------- ------------ ------------ Cash paid for: Interest $ 899 $ -- Taxes $ -- $ -- 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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. (the Company or 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 API established the FMI joint venture to acquire and operate dairies in the former Soviet Union. DTR contributed to FMI its 50% ownership in FoodMaster, the Ak-Bulak option and its opportunities for a future acquisition of a dairy in Moldova. API agreed to fund $2.945 million to further develop the dairy operations in Kazakhstan and Moldova and to provide an additional $3.055 million over two years to expand FMI. By June 30, 1998, API contributed all of its $6 million commitment to FMI. Under the agreement, API currently owns 60% of FMI. DTR owns 40% of FMI. However, DTR has a right to earn a greater ownership interest of FMI by achieving certain defined performance targets based on returns to API. Effective March 1997, DTR records its proportionate share of the net income or loss of FMI in the statement of operations as equity in earnings of FMI joint venture under the equity method of accounting. In November 1997, DTR's Board of Directors voted to establish a wholly-owned subsidiary company called SXD, Inc. with an investment of $800,000 in cash and receivables. SXD now owns and operates DTR's x-ray tube distribution business, ownership interests in the coating technology business of Phygen, Inc., and the cancer detection business of Armed. RESULTS OF OPERATIONS REVENUES The Company generated total revenues of $573,864 and $893,836 during the three and six months ended June 30, 1998, respectively, compared to $551,672 and $1,978,322 during the three and six months ended June 30, 1997, respectively. The 55% decrease in 1997 revenues is primarily the result of the change from the consolidated method of reporting joint venture operating results to the equity method as discussed above and by less sales of equipment discussed below. The decrease in 1997 revenues was offset by management fee income of $189,375 from March 3,1997 to June 30, 1997. Sales for the three months ended June 30, 1998 and 1997 totaled $214,430 and $174,987, respectively. Sales for the six months ended June 30, 1998 and 1997 totaled $239,248 and $1,496,166, respectively. Sales resulted from three areas within DTR - dairy operations of FoodMaster (until March 2, 1997), equipment sales, and x-ray tube sales. Since March 3, 1997, the dairy operations of FoodMaster are no longer reported on a consolidated basis with DTR due to the transfer of FoodMaster to FMI. The dairy operations of FoodMaster are consolidated in the financial statements of FMI, and DTR recognizes 40% of FMI's income or loss as equity in earnings of FMI joint venture in DTR's Statements of Operations. Therefore, there are no sales of FoodMaster in 1998. However, FoodMaster sales from January 1997 through February 1997 were $965,359 or 64.5% of DTR's total sales for the first six months of 1997. 9 Sales of food packaging equipment were $118,130 (55.1%) and $111,687 (63.9%) of total sales for the three months ended June 30, 1998 and 1997, respectively. The 5.8% increase in equipment sales is the result of additional features on the equipment sold in 1998. For the six months ended June 30, 1998 and 1997, sales of food packaging equipment was $120,748 (50.5%) and $429,177 (28.8%) of total sales, respectively. Sales of equipment occur sporadically throughout the year. Thus in 1998, no equipment sales occurred in the first quarter, but in 1997, sales occurred in both quarters. There are no current orders for additional equipment sales for the remainder of 1998. Sales of x-ray tubes by SXD, Inc., DTR's 100% owned subsidiary, increased 16.6% to $118,500 in the six months ended June 30, 1998 from $101,630 for the same period in 1997. The $16,870 increase occurred due to an increase in the quantity of orders from repeat customers during fiscal 1998. COST OF SALES Cost of sales for the three and six months ended June 30, 1998 was $165,742 and $184,842, respectively. For the three and six months ended June 30, 1997, cost of sales was $147,394 and $753,832. The 75.5% decrease in cost of sales between the six months ended June 30, 1998 and 1997 is the result of the change in accounting methods discussed above. Cost of sales reflects the cost of manufacturing the dairy products of FoodMaster for the first two months of 1997 and the cost of purchasing food packaging equipment and x-ray tubes. There is no cost of sales reflected for FoodMaster in fiscal 1998. FoodMaster cost of sales was $369,305 or 38% of FoodMaster sales for the six months ended June 30, 1997. Cost of sales on equipment sales was $82,592 resulting in a gross profit of $38,156 or 31.6% for the first six months of 1998 compared to $296,382 resulting in a gross profit of $132,795 or 17.6% in the first six months of 1997. During 1997, the Company spent more on sales commissions, thus reducing their overall gross profit. X-ray tubes cost of sales were $102,250 and $88,145 in the first six months of 1998 and 1997, respectively. Gross profit remained consistent with a 13% to 14% margin received on sales. Management does not expect these trends to change significantly for the remainder of 1998. SELLING, GENERAL AND ADMINISTRATIVE Selling, general and administrative expenses for the three months ended June 30, 1998 and 1997 were $392,408 and $245,021, respectively. Selling, general and administrative expenses for the six months ended June 30, 1998 and 1997 were $712,937 and $660,104, respectively. During the first six months of fiscal 1997, FoodMaster operations comprised $226,750 of the $660,104 SG&A expenses. Therefore, the Company's other SG&A expenses excluding the FoodMaster operations was $433,354. The $147,387 increase in 1998 and the $270,583 increase in 1997 excluding FoodMaster operations is the result of DTR hiring additional employees and consultants and increasing their travel to manage the dairy operations of FMI. However, these costs are offset by the management fees billed to FMI as discussed above under REVENUES. LIQUIDITY AND CAPITAL RESOURCES OPERATING ACTIVITIES DTR used net cash of $58,615 in the first six months of 1998 compared to cash used of $488,592 in the first six months of 1997. This large decrease in cash usage occurred because a majority of the operating expenses were paid in accordance with the management agreement between DTR and FMI 10 during all six months of 1998. Additionally, DTR did not increase advances to FMI in 1998 as much as they did in the six months ended June 30, 1997. INVESTING ACTIVITIES In 1998, DTR purchased $15,121 in new software and equipment for its office in Minneapolis, MN. In the first six months of 1997, DTR sold $72,695 of net equipment primarily to its FMI subsidiary receiving proceeds of $75,875. Additionally, DTR purchased $38,438 of equipment during this period in 1997. FINANCING ACTIVITIES In the first quarter of 1998, 15,000 options to purchase DTR's Common Stock were exercised for a purchase price of $1.50 per share. DTR's FoodMaster operations obtained $5,835 in net proceeds from bank financing during the period from January 1997 to February 1997, before the operations were transferred to FMI. In July 1998, DTR and API signed a term sheet that proposes to modify their original joint venture and management agreements from March 3, 1997 discussed above. API will be contributing an additional $4,000,000 (four million dollars) to the FMI venture using a current valuation of $18,000,000 (eighteen million dollars) for FMI. In addition, API has the option of contributing an additional $2,000,000 to FMI if both DTR and API agree to do so by October 15, 1998. After the $4 million contribution, DTR's ownership percentage will be 32.7% of FMI. This term sheet is not legally binding until both parties sign the final modification of the agreements which is expected to occur by August 31, 1998. Based on current projections, the Company believes there will be sufficient working capital and liquidity to fund its current operations through 1998. Management is continually looking for opportunities for growth and market dominance for its subsidiaries FMI and SXD. 11 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SHAREHOLDERS The Company held its Annual Shareholders meeting on April 14, 1998. The shareholders voted by a majority vote to re-elect the current board of directors (Peter L. Hauser, John P. Hupp and Roger W. Schnobrich) and to retain the services of Deloitte & Touche LLP as the Company's independent auditors. No other matters were submitted to a vote of the shareholders during the second quarter of 1998. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K The following new Exhibits are filed as part of this Form 10-QSB: (a) List of Exhibits 27.1 Financial Data Schedule (June 30, 1998) 27.2 Financial Data Schedule (June 30, 1997 Restated) (b) Reports on Form 8-K The Company filed one report on Form 8-K on June 30, 1998 to change its year end to December 31. There were no other reports on Form 8-K filed during the quarter ended June 30, 1998. 12 EXHIBIT INDEX The following Exhibits are filed as part of this Form 10-QSB: No. EXHIBIT DESCRIPTION --- ------------------- 27.1 Financial Data Schedule (June 30, 1998) 27.2 Financial Data Schedule (June 30, 1997 Restated) 13 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DEVELOPED TECHNOLOGY RESOURCE, INC. Date: August 12, 1998 By /s/ John P. Hupp ----------------------------------- Name: John P. Hupp Title: President Date: August 12, 1998 By /s/ LeAnn H. Davis ----------------------------------- Name: LeAnn H. Davis, CPA Title: Chief Financial Officer (Principal Financial & Accounting Officer) EX-27.1 2 FINANCIAL DATA SCHEDULE
5 3-MOS 6-MOS DEC-31-1998 DEC-31-1998 APR-01-1998 JAN-01-1998 JUN-30-1998 JUN-30-1998 233,290 233,290 0 0 1,446,564 1,446,564 12,690 12,690 0 0 1,766,666 1,766,666 158,458 158,458 112,322 112,322 2,827,464 2,827,464 695,284 695,284 0 0 0 0 0 0 8,058 8,058 2,087,794 2,087,794 2,827,464 2,827,464 214,430 293,248 573,864 893,836 165,742 184,842 558,150 897,779 (125,181) (179,745) 0 0 (80,398) (158,381) 221,293 334,183 0 0 221,293 334,183 0 0 0 0 0 0 221,293 334,183 0.27 0.41 0.18 0.28
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 3-MOS 6-MOS DEC-31-1997 DEC-31-1997 APR-01-1997 JAN-01-1997 JUN-30-1997 JUN-30-1997 129,187 129,187 0 0 1,252,407 1,252,407 14,213 14,213 0 0 1,392,017 1,392,017 156,335 156,335 125,621 125,621 2,180,210 2,180,210 773,513 773,513 0 0 0 0 0 0 7,908 7,908 1,398,789 1,398,789 2,180,210 2,180,210 174,987 1,496,166 551,672 1,978,322 147,394 753,832 392,415 1,413,916 (23,493) 33,246 0 0 (2,515) (592) 185,265 531,752 0 0 185,265 531,752 0 0 0 0 0 0 185,265 531,752 0.23 0.67 0.20 0.60
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