-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: [email protected]
Originator-Key-Asymmetric:
MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen
TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB
MIC-Info: RSA-MD5,RSA,
Jtv025Ff0UKesEQzwXQSE5V/5t37oWyor0fixbF6c8JcZ7Hl1ViR/YpzQezYmjFJ
I1Ef59dzf/ioXX4c1WTmUw==
<SEC-DOCUMENT>0000351129-98-000009.txt : 19980608
<SEC-HEADER>0000351129-98-000009.hdr.sgml : 19980608
ACCESSION NUMBER: 0000351129-98-000009
CONFORMED SUBMISSION TYPE: 10-K
PUBLIC DOCUMENT COUNT: 4
CONFORMED PERIOD OF REPORT: 19970630
FILED AS OF DATE: 19980605
SROS: NASD
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: CDX CORP
CENTRAL INDEX KEY: 0000351129
STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845]
IRS NUMBER: 840771180
STATE OF INCORPORATION: CO
FISCAL YEAR END: 0630
FILING VALUES:
FORM TYPE: 10-K
SEC ACT:
SEC FILE NUMBER: 000-09735
FILM NUMBER: 98642739
BUSINESS ADDRESS:
STREET 1: 75 MCNEIL WAY, NO. 207
STREET 2: NO 27
CITY: DEDHAM
STATE: MA
ZIP: 02026
BUSINESS PHONE: 781-320-0530
MAIL ADDRESS:
STREET 1: 75 MCNEIL WAY
STREET 2: NO 27
CITY: DEDHAM
STATE: MA
ZIP: 02026
</SEC-HEADER>
<DOCUMENT>
<TYPE>10-K
<SEQUENCE>1
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
CDX CORPORATION
(Exact name of Registrant as specified in its charter)
Commission file number 0-9735
Colorado 84-0771180
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
2 Charles Street 02904
Providence, RI (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code
(401)274-4700
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
None None
Securities registered pursuant to 12(g) of the Act:
Common Stock, Par Value $.01
(Title of class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes ___ No X.
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not 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-K or any
amendment to this Form 10-K. [ ]
Since February of 1986, there have been no published prices of the
Registrant's stock. The total number of shares held by nonaffiliates of the
Registrant as of September 30, 1997 was 1,330,191.
Indicate the number of shares outstanding of each of the Registrant's classes
of common stock, as of June 30, 1997
4,887,927
DOCUMENTS INCORPORATED BY REFERENCE
Document Part of 10-K into which incorporated
None
CDX CORPORATION
1997 Annual Report on Form 10-K
Table of Contents Page #
PART I
ITEM 1 - Business 3
A. General 3
B. Products And Services 3
C. Marketing And Customers 4
D. Product Development 4
E. Product Protection 5
F. Backlog 5
G. Competition 5
H. Employees 5
ITEM 2 - PROPERTIES 5
ITEM 3 - LEGAL PROCEEDINGS 5
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS 6
ITEM 6 - SELECTED FINANCIAL DATA 6
ITEM 7 - MANAGEMENT DISCUSSIONS AND ANALYSES OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 8
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURES 8
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 9
ITEM 11 - EXECUTIVE COMPENSATION 10
ITEM 12 - CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 12
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 13
PART IV
ITEM 14 - EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K 13
SIGNATURES 14
<PAGE> 3
PART I
Item 1. BUSINESS
A. General
CDX Corporation is a Colorado corporation incorporated in 1978 with its
corporate offices headquartered in Providence, Rhode Island.
The Business of the Company has consisted of the sale of computerized
pulmonary diagnostic equipment which is used in the medical profession to
test for indications of lung or congestive heart disease. Approximately
10,000 units have been sold.
In December 1994 the Company acquired Compliance Systems, a manufacturer of
infection control products which provide emergency personnel with protection
during trauma response situations and assist compliance with certain OSHA
mandates. In FY96 the Company also introduced a new version of its Instant
Response Mask (IRM) with improved features designed to protect personnel
involved in administering emergency cardio-resuscitation techniques to
compliment the Compliance Systems product line.
CDX also generates revenue from the sale of consumable and accessory items
associated with its diagnostic equipment. In addition, the Company has
developed an upgrade for its spirometers marketed to existing
customers. The Company has an updated version of its Model 110S spirometer
currently which incorporates the latest technology. This product is
marketed to physician offices, hospitals and industrial sites.
B. Products And Services
Approximately 17% of the Company's gross revenues in its most recent fiscal
year was attributable to the sale of its testing machines, 59% of gross
revenues was attributable to sales of consumable and accessory items and 9%
of gross revenues was attributable to repairs and maintenance. Bio-hazard
control products and the IRM comprised 13% of sales.
The Company's objective is to increase gross revenues with the introduction
of the upgrade and upgraded version of the current spirometer and to
aggressively pursue the export markets. A new version of the Instant Response
Mask was released in December 1995. Although initially well received, this
product has not lived up to the Company's expectations and marketing efforts
and expenditures in connection with it have been greatly reduced.
The types of products which the Company currently markets are described below.
1. Instant Response Mask
Provides protection against the transmission of infectious
pathogens during the administration of emergency resuscitation
techniques such as CPR.
2. 110S Spirometer
Computerized pulmonary diagnostic equipment which is used in
the medical profession to test for indications of lung or
congestive heart disease.
<PAGE> 4
3. 110M Spirometer
A metric version of the 110S Spirometer specifically designed
for the international markets.
4. 110MAX Spirometer
An upscale version of the 110S Spirometer with additional
features.
5. Biosponse
A portable bio-hazard spill kit for bloodborne pathogens which
complies with OSHA regulation.
6. Biopail
A complete clean up and personal protection for first reponders
against blood pathogens contained in a refillable two gallon
pail meeting OSHA Regulations.
Additionally, the Company provides for sale of disposable and accessory items
associated with its testing equipment as well as maintenance and service
agreements; it also offers disposable items for the infection control markets.
C. Marketing And Customers
The Company's principal customers have historically been primary care
physicians, group practices, clinic, and medical centers. Portable
spirometers are typically used by internists, family physicians, and general
practitioners in their offices to conduct preliminary diagnostic tests of a
patients pulmonary function. Spirometers are also used extensively in
industry to provide screening diagnosis, establish baselines and monitor
pulmonary function in the workplace. The Company's customer base includes
pulmonologists, allergists, and cardiologists who require the speed,
accuracy, and flexibility of hospital-based systems in a small, light-weight,
portable system.
During the year ended June 30, 1997, the Company did not have any one
customer responsible for 10% or more of sales activity or revenues.
The Company currently markets its products directly to retail customers from
its Rhode Island office and through medical equipment dealers and
distributors, supported through a network of factory trained manufacturer's
representatives. The Company supports this sales network through direct mail,
advertising in clinical and trade publications, and participation in national
and regional trade shows.
Relative to the IRM mask, the Company held exclusive worldwide distribution
rights under terms of an agreement with Valley Forge Scientific. During FYE
6.30.96 the Company relinquished its exclusive rights and has undertaken to
co-distribute the IRM with Valley Forge in return for a 10% royalty on all
IRM sales by Valley Forge.
D. Product Development
The Company has undertaken a product development program with the ultimate
objective of the following:
The development of products specifically targeted at the equipment needs of
the physician's office. During the year ended June 30, 1996, the Company
spent $8,657 on research and development.
<PAGE> 5
Further, in March 1995 the Company acquired all rights to certain technology
relating to the firefighting and industrial markets from Global Environmental
Technologies, Inc. The Company had planned to develop prototype units and
was involved in strategic discussions with several interested parties which
have established presence in these markets. The Company has abandoned
pursuit of this project.
E. Products Protection
The company holds a patent issued by the U.S. Patent office in 1981 for the
overall structure and function of its remote pulmonary function tester known
as the CDX 110. The Company's current products have protection under certain
claims of this patent. The patent does not apply outside the United States.
The Company holds a federal trademark "CDX" which is used on its products.
The Company uses additional trademarks related to the IRM mask.
The Company's developmental efforts on the IRM mask has resulted in a U.S.
patent application. As per the terms of an agreement between the Company and
Valley Forge Scientific this patent has been assigned to Valley Forge. Under
the further terms of this agreement, the Company received the exclusive
worldwide distribution rights for the IRM mask.
F. Backlog
The Company does not currently have any backlog of sales orders or delays of
shipments due to lack of parts or supplies.
G. Competition
The market for the Company's products is characterized by rapid advancements
in technology and by intense competition among a number of manufacturers and
distributors. The Company believes that it competes favorably in the market;
however, no assurance can be given that the Company will have the financial
resources, marketing, distribution, service or support capabilities, depth of
key personnel or technological expertise to compete successfully in the
future.
H. Employees
As of June 30, 1997, the Company employed two full-time employees.
Item 2. PROPERTIES
The Company's administrative offices and manufacturing facilities consist
of approximately 3,500 square feet of office, manufacturing and storage space
which it leases from a related party. The Company believes that its rental
costs are equal to or less than those which would be charged for comparable
space on month to month basis by a third party. The facilities have been
rented on a month to month basis since March 1, 1995. Rental space is
available in the area, and the Company expects to be able to continue to
obtain a lease for adequate space at costs comparable to its current rent.
Item 3. LEGAL PROCEEDINGS
There are no legal proceedings pending against the Company.
<PAGE> 6
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The corporation did not submit any matter to a vote of security holders
during the year ended June 30, 1997.
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND
RELATED SECURITY HOLDERS MATTERS
There is no established public trading market for the Corporation's
common stock. The stock is traded over-the-counter in privately negotiated
transactions between market makers and brokers. Prices are published in the
pink sheets issued by the National Quotation Bureau, but sales are not
systematically reported by market makers and brokers.
Holders
Based upon the number of record holders, the approximate number of
shareholders of the common stock of the Corporation as of June 30, 1997
was 809.
Dividends
No dividends have been declared during the past fiscal years with
respect to common stock.
Item 6. SELECTED FINANCIAL DATA
<TABLE>
<S> <C> <C> <C> <C> <C>
1997 1996 1995 1994 1993
Net Sales &
Operating
Revenues $379,608 $394,043 $445,285 $514,825 $568,925
Profit (Loss) $(122,372) (206,413) (75,028) (259,143) (171,709)
Profit (Loss)
per Common Share (.028) (.057) (.022) (.076) (.051)
Total Assets 185,918 184,081 303, 838 248,727 288,749
Long Term
Obligations 25,000 25,000 25,000 0 0
Cash Dividend
Declared
per Share 0.00 0.00 0.00 0.00 0.00
Weighted average
number of
Common Shares
outstanding 4,339,434 3,587,927 3,472,094 3,397,927 3,397,927
</TABLE>
<PAGE> 7
MARKET INFORMATION
CDX Corporation's common stock is traded over-the-counter in privately
negotiated transactions between makers and brokers.
<TABLE>
<CAPTION>
Price Range (closing bid) For fiscal year ending June 30:
1997 1996 1995
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Bid Prices Asked Prices Bid Prices Asked Prices Bid Prices Asked Prices
Quarter High Low High Low High Low High Low High Low High Low
1st .1562 .125 .1875 .1875 .1875 .1875 .3125 .3125 .1875 .15625 .25 .1875
2nd .125 .125 .1875 .1875 .15625 .15625 .25 .25 .1875 .15625 .25 .1875
3rd .125 .125 .1875 .1875 .15625 .15625 .25 .25 .25 .1875 .25 .1875
4th .125 .125 .1875 .175 .15625 .125 .1875 .1875 .1875 .1875 .3125 .3125
</TABLE>
These market quotations are from the National Daily Quotation Service. They
reflect prices between dealers without retail mark up, mark down or
commission. They do not represent actual transactions. No dividends have
been declared during the past two fiscal years with respect to common stock.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Results of Operations
Net Sales and Operating Revenues for FY 97 decreased by $14,402
which is down approximately 4% from the previous fiscal year. This compares
with a decrease of $51,242, or approximately 12%, in similar figures for FY
96 to FY 95. Cost of Sales decreased by $47,648 for FY 97 compared to FY 96,
with the Company sustaining an Operating Loss of $104,327. During the
previous fiscal year, costs and expenses increased by $78,439 from those of
FY 95 resulting in an Operating Loss of $195,928. FY 95 also showed an
Operating Loss of $66,193. Operating Losses as a percentage of Net Sales
were 27.5%, 49.7% and 14.9% for FY 97, FY 96 and FY 95, respectively.
Management plans to renew its efforts to reduce expenses and bring them into
line with margins as was successfully implemented in FY95 resulting in
reduction of $254,460 in Operating Costs and Expenses compared with FY 94.
Cost of Goods Sold as a percent of Net Sales decreased from 59.8%
(235,441) in FY 96 to 49.5% ($187,793) in FY 97 due primarily to decreased
cost of raw materials and greater use of contract services. Similar costs
for FY 95 to FY 96 increased from 52.3% ($232,924) to 62.7% ($247,463) of
Revenues.
Selling and Administrative Expenses decreased overall by $58,388, to
$296,142 for FY 97 from $354,430 for FY 96. As a percentage of Net Sales
these figures were 78.0% and 90.0% respectively which represents a 12.0%
decrease in such expenses between the two years. Comparable expenses for FY
95 were 62.6% ($278,554). The decrease in percentages of expenses shown in
FY 97 and FY 96 reflects a decrease in certain marginal advertising.
Interest expense for FY 97 increased $7,635 to $18,065 for the
entire year. In FY 96, interest expense decreased $1,358. Interest income
decreased by $75 in FY 97 from the prior year due to reduced cash levels
during FY 97. FY 96 interest income of $95 represented a $248 decrease from
FY 95.
<PAGE> 8
Inflation has had a minimum impact upon the Revenues and Costs of
the Company.
Liquidity And Capital Resources
In fiscal year 1997, the Company's liquidity remained constant.
This compares with a decrease of $150,440 for FY 96. In FY96 this was due to
favorable working capital changes related to collections on accounts
receivable and increases in inventory which were offset by operating losses
and increases in accounts payable in connection with marketing efforts for
the IRM mask and increased borrowing from an officer. In FY97 the stabilizing
liquidity was the result of consistency in inventories, prepaid expenses and
certain capitalized development costs offset by operating losses and consistency
in accounts payable, accrued expenses and short term borrowings from an
officer.
The Company expects that its current working capital position is
sufficient to continue to meet operating requirements during the coming
fiscal year and that it has sufficient reserves to meet some unforeseen
contingencies given a continued willingness on the part of several of its
officers to fund deficits with loans.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Item 14 of this report.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE> 9
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS
The current directors and executive officers of the Corporation, their
ages, their positions held in the Corporation and the term during which each
served in such position are as follows:
DIRECTORS
Year First Elected
Name and All Positions or Nominated to
Held With the Corporation Age Become a Director
Harold I. Schein 61 1985
Chairman of the Board,
Treasurer and Director
Philip D. Schein 33 1989
President, Secretary
and Director
Officers and directors are elected on an annual basis. The present term
of office for each director will expire at the next annual meeting of the
Company's stockholders at such time as his successor is duly elected.
Officers serve at the discretion of the Board of Directors.
EXECUTIVE OFFICERS
Name and All Positions Year First Term of
Currently Held Elected to Office
With the Corporation Age This Office Expiring
Harold I. Schein (2) 61
Chairman of the Board, 1989 (1)
Chief Executive Officer, 1989 (1)
Treasurer, 1989 (1)
Director 1985 (1)
Philip D. Schein (2) 33
President, 1992 (1)
Secretary, 1989 (1)
Director 1989 (1)
(1) The executive officers serve at the pleasure of the board of directors
and do not have fixed terms.
<PAGE> 10
(2) Philip D. Schein is the son of Harold I. Schein
HAROLD I. SCHEIN, 61, serves as Chairman of the Board, Chief Executive
Officer, Treasurer and a Director. Mr. Schein, since January 1990, has been
President of Richmond Square Capital Corporation, a Small Business Investment
corporation which is licensed by the SBA. Prior to 1990, Mr. Schein served
as chairman and chief executive officer of William Bloom & Son, Inc, a
manufacturer of store fixtures. From March 1989 to September 1992, Mr. Schein
also served as chairman of Piezo Electric Products, Inc. of Metuchen, New
Jersey, a publicly owned company. He is also a developer of commercial real
estate. Mr. Schein became chairman of the board of directors and treasurer
of the Corporation in March 1989.
PHILIP D. SCHEIN, 33, serves as President, Secretary and a Director. Mr.
Schein became secretary of the corporation in March 1989 and assumed the
office of president in October 1992. Prior to this, Mr. Schein held the
position of Executive Vice President of William Bloom & Son, a manufacturer
of custom store fixtures, where he was in charge of sales and manufacturing.
He is a 1985 graduate of Boston University.
Item 11. EXECUTIVE COMPENSATION
No executive officer received in excess of $100,000.
No executive officer of the Corporation received other compensation not
reported in the above cash compensation table in excess of $25,000 or 10% of
the compensation reported in the above cash compensation table.
Directors who are not regular, full-time employees may be compensated
for service on the board of directors at the rate of $1,500 per director per
quarter, i.e., $6,000 annually. In order to qualify for quarterly
compensation, a director must attend the majority of meetings held within the
quarter. No such payments have been made since 1989.
SUMMARY COMPENSATION TABLE
Annual Compensation
Long Term
Compensation
Awards
Securities
Name & Principal Fiscal Other Annual Underlying
Position Year Salary Compensation(1) Option/SARS(#)
________________ ______ _______ ____________ ______________
Philip D. Schein 1997 $65,000 5,000
President & CEO 1996 65,000 15,000
1995 65,000 0
Harold I. Schein 1997 $ 0 17,500
Chairman & 1996 0 0
Treasurer 1995 0 5,000
(1) Certain perquisites provided to each of the named executive officers
totaled less than 10 percent of each officer's total salary and
Stock Option Grants.
<PAGE> 11
OPTION/SAR GRANTS TABLE
<TABLE>
<CAPTION>
Option/SAR Grants in Last Fiscal Year
Individual Grants
<S> <C> <C> <C> <C> <C>
Percent of total
options/SARs
granted to Exercise or
Options/SARs employees in base price Grant date
Name Granted(#) fiscal year ($/sh) Expiration Date Value(1)
________________ ____________ ________________ ___________ _______________ ___________
Philip D. Schein 5,000 22.2 $0.25 10/98 $0
Harold I. Schein 17,500 77.8 0.25 04/98 0
</TABLE>
(1) Market value of underlying securities at grant date discounted by
two-thirds to reflect restrictive provisions, minus exercise or base price.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN 1997
AND
OPTION/SAR VALUES
<S> <C> <C>
Number of unexercised Value of unexercised in-the-money
options/SARs at fiscal year-end(#) options/SARs at fiscal year end($)
Name Exercisable/unexercisable Exercisable/unexercisable
_________________ __________________________________ __________________________________
Philip D. Schein 253,333/0 $6,000/$0
Harold I. Schein 602,500/0 $9,000/$0
</TABLE>
(1) Market value of underlying securities at FYE 6.30.97 discounted by
two-thirds to reflect restrictive provisions, minus exercise or base price.
Stock Option Plan
In November, 1987, the Shareholders of the Corporation approved an
incentive stock option plan which provides that options may be granted to
officers and employees, with a maximum aggregate number of 150,000 shares
issuable under the plan. Shares underlying granted options are exercisable
25% on the date of grant and 25% each year thereafter on a cumulative basis.
Unexercised options lapse ten years after the date of grant or expire within
90 days of termination of employment. Exercise price is fair market value of
a share of common stock at date of grant. The plan has a term of ten years.
In November 1987, the Directors of the Corporation approved a
Non-Qualified Stock Option Plan for employees, consultants and directors.
The Corporation has reserved 60,000 unregistered shares of its common stock
for use in this plan. During 1993, the Board of Directors reserved another
1,440,000 unregistered shares of its common stock for use in this plan. Each
of the four outside directors were granted options for 15,000 shares at $.10
per share exercisable during their continuation as an employee, director or
advisory member of, or consultant to the Company, and for the three year
period thereafter. In addition, during 1993, the Company granted one of its
<PAGE> 12
directors options for 250,000 shares at $.10 per share and granted one of its
consultants options for 77,800 shares at $.05 per share.
A summary of the plans at June 30, 1997 is as follows:
TOTAL SHARES SHARES AT OPTION OPTION
RESERVED OUTSTANDING PRICE
____________ ________________ _______
1987 Incentive Stock 150,000 0 n/a
Option Plan
1987 Non-Qualified
Stock Option Plan 1,500,000 310,000 $.10
77,800 $.05
100,000 $.25
15,000 $.25
22,500 $.25
In December 1992, the Company issued 600,000 warrants for its common
stock to certain of its officers and consultants in return for services. The
warrants are exercisable at $.02 per share with an expiration date of December
31, 1998. Also, in February 1995, the Company issued 75,000 warrants for
its common stock to an investor in connection with a loan. The warrants are
divided into three equal classes with exercise prices of $0.25, $0.375 and
$0.50 respectively with all classes expiring in February 1998.
Item 12. CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information as to persons other than management
(see the following table) who are known to management to beneficially own
more than 5% of the outstanding voting stock as of June 30, 1997.
Title Name and Address Amount and Nature of Percent of
of Class of Beneficial Owner Beneficial Ownership Class
________ ___________________ ____________________ __________
Common Mendel S. Kaliff 247,223 Direct 5.6%
Stock 70 N.E. Loop 410
No. 450
San Antonio, TX 78216
The following table sets forth the security ownership of all directors and
executive officers of the corporation as of June 30, 1997.
Title Name of Amount and Nature of Percent of
of Class Beneficial Owner Beneficial Ownership of Class Position
________ ________________ ____________________ __________ ________
Common Harold I. Schein 2,616,737 (1) 59.6% Treasurer,
Stock Director, and
Chairman of
the Board
<PAGE> 13
Common Philip D. Schein 426,000 (2) 9.7% President,
Stock Secretary,
Director
Common Directors and 3,042,737 69.3%
Stock Officers as a
Group (2 persons)
____________________________
(1) Shares subject to sole investment and voting power. Includes options
and warrants granted by the corporation to purchase 585,000 shares, as to
which option shares the optionee/warrantholder disclaims beneficial ownership.
(2) Shares subject to sole investment and voting power. Includes options
and warrants granted by the corporation to purchase 215,000 shares, as to
which option shares the optionee/warrantholder disclaims beneficial ownership.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into a lease agreement on March 26, 1990 with a
related party to rent its facilities in Providence, Rhode Island. Base
monthly rental payments were modified to $2,500 beginning October 1995 and the
lease term is five years, expiring on February 28, 1995. In May of 1996 the
Company and related party modified the terms of the lease to month to month
rental payments of $1,500. The Company subleases a part of this space to an
unrelated party for $500 per month. The Company believes this to be at or
below the rent for comparable space.
PART IV
Item 14. EXHIBITS, FINANCIAL SCHEDULES AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1. Financial Statements:
Opinions of independent public accountants dated
May 27, 1998 on the financial statements as follows:
Balance Sheets, June 30, 1997 and 1996.
Statements of Earnings for the years ended June 30, 1997,
1996 and 1995.
Statements of Cash Flows for the years ended June 30, 1997,
1996 and 1995.
<PAGE> 14
Statements of Changes in Stockholders' Equity for the years
ended June 30, 1997, 1996 and 1995.
2. Financial Statement Schedules:
All schedules for which provision is made in the applicable
regulations of the Securities and Exchange Commission have
been omitted because they are not required if the
information is shown in the financial statements and notes
thereto.
(b) Reports on form 8-K
No reports on Form 8-K were filed.
(c) Exhibits
See the Index of Exhibits immediately preceding the exhibits
attached to this report. The exhibits are incorporated herein
by this reference.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
CDX CORPORATION
(Registrant)
/s/Philip D.. Schein
By: __________________
Philip D. Schein
President
Dated: May 31, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/Harold I. Schein
_______________________ Chairman of the Board, May 31, 1998
Harold I. Schein Treasurer and Director
/s/Philip D. Schein
_______________________ President, Secretary and May 31, 1998
Philip D. Schein Director
<PAGE> 15
INDEX TO EXHIBITS
(a) Exhibits:
The following documents are filed herewith or have been included as
exhibits to previous filings with the Commission and are incorporated
herein by this reference:
Exhibit No. Document
* 3.1 Restated Articles of Incorporation dated
July 3, 1985
(incorporated by reference to the exhibits
and Registrant's report filed on Form 10-K
dated September 25, 1985)
* 3.2 Articles of Amendment dated December 4, 1987
to the Restated Articles of Incorporation
(incorporated by reference to the exhibits
to Registrant's report filed on Form 10-K
dated September 15, 1989)
* 3.3 Bylaws dated July 5, 1985
(incorporated by reference to the exhibits
to Registrant's report filed on Form 10-K
dated September 15, 1989)
x 23.1 Consent of Counsel, Mark T. Thatcher, P.C.
x 23.2 Consent of Cayer, Prescott, Clune & Chatellier,
LLP, Independent Certified Public Accountants
x 27.0 Financial Data Schedule
______________
* Incorporated by reference from the issuer's Annual Report Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
x Filed herewith
<PAGE>
CDX CORPORATION
FINANCIAL STATEMENTS
YEARS ENDED
JUNE 30, 1997, 1996, and 1995
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Stockholders and Board of Directors
CDX Corporation
We have audited the balance sheets of CDX Corporation as of June 30, 1997 and
1996, and the related statements of operations, stockholders' equity and cash
flows for the years ended June 30, 1997, 1996, and 1995. 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 generally accepted auditing
standards. Those standards require that we plan and perform the audits 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 CDX Corporation as of June
30, 1997 and 1996, and the results of its operations and its cash flows for
the years ended June 30, 1997, 1996, and 1995 in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 13 to the
financial statements, the Company has suffered recurring losses from
operations and has a net capital deficiency, which raises substantial doubt
about its ability to continue as a going concern. Management's plans
regarding those matters are also described in Note 13. The financial
statements do not include any adjustments that might result from this
uncertainty.
May 27, 1998 /s/ Cayer, Prescott, Clune & Chatellier, LLP
<PAGE>
CDX CORPORATION
BALANCE SHEETS
JUNE 30, 1997 and 1996
ASSETS
1997 1996
___________ __________
Current assets:
Cash $ 1,305 $ 69
Accounts receivable - trade (net of allowance
for doubtful accounts of $2,010
in 1997 and $1,560 in 1996) 39,488 53,177
Inventory 46,555 73,587
Prepaid expenses and other 17,473 6,497
Total current assets 104,821 133,330
Property and equipment -
net of accumulated depreciation 20,228 22,806
Other assets:
Invention rights and deferred product
development costs (less accumulated
amortization of $435,340 in 1997 and
$432,298 in 1996) 60,869 27,945
TOTAL ASSETS $ 185,918 $ 184,081
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable - trade $ 159,617 $ 182,659
Accounts payable - shareholder 270,500 243,544
Accrued interest payable 48,816 31,302
Accrued expenses 36,458 33,523
Total current liabilities 515,391 491,028
Other liabilities:
Notes payable - officers 206,705 119,859
Notes payable 55,000 55,000
Total other liabilities 261,705 174,859
Stockholders' equity:
Common stock, $.01 par value; 10,000,000
shares authorized, 4,888,093 and 3,588,093
shares issued at June 30, 1997 and 1996 48,881 35,881
Capital surplus 4,771,798 4,771,798
Deficit (5,411,857) (5,289,485)
Less treasury stock; 166 shares,
no assigned value ___________ ___________
Total stockholders' equity (591,178) (481,806)
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 185,918 $ 184,081
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CDX CORPORATION
STATEMENTS OF OPERATIONS
YEARS ENDED June 30, 1997, 1996, and 1995
1997 1996 1995
___________ ___________ ___________
Revenues:
Net sales and other revenues $ 379,608 $ 394,043 $ 445,285
Operating costs and expenses:
Cost of sales 187,793 235,441 232,924
Selling & administrative expenses 296,142 354,430 278,554
Total operating
costs and expenses 483,935 589,971 511,478
Operating loss (104,327) (195,928) (66,193)
Other income (expense):
Interest expense (18,065) (10,430) (11,788)
Interest income 20 95 343
Loss on investment (150) 2,610
Net other expense (18,045) (10,485) (8,835)
Net loss $ (122,372) (206,412) $ (75,028)
Net loss per common share $ (.028) $ (.057) $ (.022)
Weighted-average number of
common shares outstanding 4,339,434 3,587,927 3,472,094
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
CDX CORPORATION
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
<C> <C> <C> <C> <C> <C>
Shares
Shares Par Capital Accumulated Treasury
Outstanding Value Surplus Deficit Stock Total
<S> ___________ __________ ___________ ____________ ________ ___________
Balance, June 30, 1995 3,588,093 $ 35,881 $ 4,771,798 $(5,083,072) 166 $ (275,393)
Net Loss (206,413) (206,413)
Balance, June 30, 1996 3,588,093 35,881 4,771,798 (5,289,485) 166 (481,806)
Common Stock Issued 1,300,000 13,000 13,000
Net Loss (122,372) (122,372)
Balance, June 30, 1997 4,888,093 $ 48,881 $ 4,771,798 $ 5,411,857 166 $ (591,178)
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CDX CORPORATION
STATEMENTS OF CASH FLOWS
YEARS ENDED June 30, 1997,
1996, and 1995
1997 1996 1995
___________ ___________ ___________
Cash was provided by (used for):
Operating activities:
Net loss $ (122,372) $ (206,413) $ (75,028)
Items in net loss not
affecting cash:
Depreciation and amortization 10,321 20,797 24,596
Stock Based Compensation 13,000
Increase (decrease) in cash from
changes in assets and liabilities:
Accounts receivable 13,689 2,966 10,221
Inventory 27,032 36,372 (3,387)
Prepaid expenses and other (10,976) 8,134 (8,257)
Other assets (39,424) 17,176 (39,757)
Accounts payable - trade (23,042) 11,231 3,007
Accounts payable - shareholder 26,956 40,713 53,325
Other current liabilities 20,449 14,952 14,889
Total cash used for operations (84,367) (54,072) (23,001)
__________ __________ _________
Investing activities:
Purchase of property and equipment (1,243) (1,760) (2,385)
Total cash provided by
(used for) investing activities (1,243) (1,760) 225
Financing activities:
Cash overdraft (83)
Issuance of capital stock 1,901
Additional paid-in capital 45,600
Proceeds from notes payable -
officers 90,000 22,500 15,000
Proceeds from notes payable 39,009
Payments on notes payable (3,154) (2,741) (42,509)
Total cash provided by (used
for) financing activities 86,846 19,759 58,918
Increase (decrease) in cash
during the year 1,236 (36,073) 36,142
Cash balance, beginning of the year 69 36,142
Cash balance, end of the year $ 1,305 $ 69 $ 36,142
Supplemental disclosures of
cash flow information:
Cash paid during the year
for interest $ 551 $ 79 $ 2,980
SEE NOTES TO FINANCIAL STATEMENTS
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996 and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Background
CDX Corporation (the Company) was incorporated in June, 1978 to
engage in the manufacture and sale of computerized pulmonary diagnostic
equipment used in the medical profession. This equipment tests for
indications of lung or congestive heart disease. The Company also
manufactures and sells other medical and sanitization equipment.
Invention Rights
In 1978, the Company's two founding shareholders granted to the
Company partial invention rights relating to its pulmonary function screening
devices in exchange for 185,625 shares of common stock. In 1980, they
granted full rights to the device in exchange for an additional 75,000 shares
of common stock at a price of $1.332 per share. For financial accounting
purposes, the invention rights have been recorded at an estimated fair value
of $350,532 or $1.332 per share for the 260,625 shares of common stock issued,
and $3,380 for legal fees pertaining to the patent application. Such value is
considered appropriate based upon the substantial amount of cash invested by
shareholders at $1.332 per share, other than those who were issued common
stock in exchange for invention rights. Until fiscal year 1987, amortization
had been provided on a straight-line basis over an estimated useful life of
nineteen years. In 1987, Management reviewed the economic benefit of the
invention rights and accelerated the remaining amortization over a five year
period in order to represent fairly the remaining economic life of the
invention rights. The entire effect of this change in estimate is reflected
in the year ended June 30, 1987 and subsequent years.
In July of 1989, the Company entered into a contract for the
development of technological enhancements to its computerized pulmonary
equipment. For financial accounting purposes, these enhancements have been
recorded at cost, in accordance with Statement of Financial Accounting
Standards No. 86. Amortization is provided on a straight-line basis over the
estimated useful life of five years. Amortization began in January of 1991
with the introduction of the new Spiro-Max.
Revenue Recognition
Revenue is recognized upon the invoicing and shipping of equipment.
Accounts Receivable
An allowance for doubtful accounts receivable is provided equal to
the estimated collection losses that will be incurred in collection of all
receivables. Estimated losses are based on historical collection experience
coupled with review of the current status of the existing receivables and
amounted to $2,010 and $1,560 at June 30, 1997 and 1996, respectively. The
Company grants credit to customers who are located throughout the United
States.
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Inventories
Inventories are valued at the lower of cost or market using the
first-in, first-out method. Work in process and finished goods are valued at
production cost represented by materials, labor and overhead.
Property and Equipment
Property and equipment are recorded at cost. Depreciation and
amortization are recorded using the straight line and double declining
balance methods over the estimated useful lives of the assets.
Income Taxes
Effective July 1, 1993, the Company adopted Statement of Financial
Accounting No. 109, "Accounting for Income Taxes" (FAS 109). Under the
provisions of FAS 109, an entity recognizes deferred tax assets and
liabilities for the future tax consequences of events that have been
previously recognized in the Company's financial statements or tax returns.
The measurement of deferred tax assets and liabilities is based on provisions
of the enacted tax law; the effects of future changes in tax laws or rates
are not anticipated. The adoption of FAS 109 did not have an effect on the
Company's financial statements, nor have any prior year financial statements
been restated.
Per Share Data
Loss per common share was computed by dividing the net loss by the
weighted average number of shares of common stock outstanding and common
stock equivalents (unless antidilutive) during the periods (4,888,093 shares
at June 30, 1997 and 3,588,093 shares at June 30, 1996 and 3,588,093 shares
at June 30, 1995).
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 and liabilities and
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 those estimates.
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
2. INVENTORY
Inventory consisted of the following at June 30:
1997 1996
____ ____
Finished goods $27,557 34,224
Raw materials 17,229 35,720
Work-in-progress 1,769 3,643
Total $46,555 $73,587
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at June 30:
1997 1996
____ ____
Office equipment and furniture $66,400 $ 65,839
Production equipment 35,257 35,257
Computer equipment 70,084 69,402
Leasehold improvements 16,256 16,256
Total 187,997 186,754
Less: accumulated depreciation 167,769 163,948
Net property and equipment $20,228 $ 22,806
Depreciation expense for the years ended June 30, 1997 and 1996 was
$3,821 and $5,052, respectively.
4. INCOME TAXES
Due primarily to the utilization of net operating loss carryforwards, the
Company has no provisions for income taxes for 1997, 1996, and 1995.
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
4. INCOME TAXES (Continued)
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. The Company's net
deferred tax asset balances are primarily attributable net operating loss
carryforwards and tax credits. At June 30, 1997, 1996, and 1995, the
Company's deferred tax assets consisted of the following:
1997 1996 1995
____ ____ ____
Deferred tax assets $ 807,423 $1,157,131 $1,209,251
Valuation allowance (807,423) (1,157,131) (1,209,251)
Net deferred tax assets
recognized on the
accompanying balance sheets $ 0 $ 0 $ 0
The components of the income tax (benefit) consisted of the following for the
years ended June 30, 1997, 1996, and 1995:
1997 1996 1995
____ ____ ____
Current $(28,868) $(49,539) $(18,007)
Deferred - using a blended
federal and state rate of 24% 0 0 0
Tentative tax provision (benefit) (28,868) (49,539) (18,007)
Less: valuation allowance 28,868 49,539 18,007
Net income tax provision (benefit) $ 0 $ 0 $ 0
At June 30, 1997, the Company had net operating loss carryforwards of
approximately $3,281,059 available to offset future income that would
otherwise be subject to federal income taxes. Net operating loss carry-
forwards in the amounts of $810,624, $1,453,610 and $421,786 will expire
in 1997, 1996, and 1995 respectively.
The Company has investment tax credit carryforwards of approximately
$1,532 which will expire in years 1997 through 2001 and approximately
$18,437 of research and development costs that will expire in years 1997
through 2001.
If certain substantial changes in the Company's ownership should occur,
there would be an annual limitation on the amount of net operating loss
and investment tax credit carryforwards which could be utilized.
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
4. INCOME TAXES
At June 30, 1996, the Company had various credits and net operating
loss carry-forwards which may be offset against taxable income or federal
income tax of future years as follows:
Net Investment Development
Operating Loss Tax Credit Cost Credit
Expiration Carry - Carry - Carry -
Year Forwards Forwards Forwards
__________ ______________ ___________ __________
1997-98 810,624 502 2,660
1998-99 358,582 237
1999-00 362,574 158
2000-01 42,226 34
2001-02 142,408 601 15,777
2005-06 95,317
2006-07 348,949
2007-08 334,606
2008-09 207,266
2009-10 253,273
2010-11 204,950
2011-12 120,284
Total $3,281,059 $ 1,532 $ 18,437
Reductions in Investment Tax Credits carry-forwards are due to the
reduction of benefits provided by the Tax Reform Act of 1986.
The Company has a capital loss carryover of $80,000.
5. ACCRUED EXPENSES
Accrued expenses are as follows for June 30:
1997 1996
_______ _______
Accrued vacation $ 5,394 $ 4,212
Accrued taxes 1,814 6,157
Accrued payroll and commissions 1,064
Accrued professional and utilities 29,250 22,090
Total $36,458 $33,523
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996 AND 1995
6. NOTES PAYABLE - OFFICERS
During 1993, an officer of the Company loaned the Company $80,100,
with interest to be paid at 8%. During 1994, the same officer loaned the
Company an additional $5,000 at 8% interest. No payments are expected
during the next fiscal year per a forbearance agreement on December 2,
1996.
During 1995, an officer of the Company loaned the Company $15,000,
with interest to be paid at 8%. No payments are expected during the next
fiscal year.
During 1996, officers of the Company loaned the Company $22,500 with
interest to be paid at 9%, monthly principal and interest payments will
continue to be made during the next fiscal year.
During 1997, an officer of the Company loaned the Company $75,000,
with interest to be paid at 9%, monthly principal and interest payments
will continue to be made during the next fiscal year. Another officer
of the Company loaned the Company $15,000 with interest to be paid at
13.99%, monthly principal and interest payments will continue to be made
during the next fiscal year.
7. NOTES PAYABLE
At June 30, notes payable consisted of the following:
1997 1996
_______ _______
6% interest bearing note payable to a related party $25,000 $25,000
10% interest bearing note payable to a
related party.
25,000 25,000
Non-interest bearing payable to investor.
Repayment is based on product sales 5,000 5,000
Total $55,000 $55,000
8. STOCKHOLDERS' EQUITY
In November 1987, the Shareholders of the Company approved an
incentive stock option plan which provides that options may be granted to
officers and employees, with a maximum aggregate number of 150,000 shares
issuable under the plan. Shares underlying granted options are exercisable
25% on the date of grant and 25% each year thereafter on a cumulative basis.
Unexercisable options lapse ten years after the date of grant or expire within
90 days of termination of employment. Exercise price is fair market value of
a share of common stock at date of grant. The plan has a term of ten years.
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
8. STOCKHOLDERS' EQUITY (Continued)
In November 1987, the Directors of the Company approved a Non-Qualified
Stock Option Plan for employees, consultants and directors. The Company has
reserved 60,000 unregistered shares of its common stock for use in this plan.
During 1992, the Board of Directors reserved another 1,440,000
unregistered shares of its common stock for use in this plan. Each of the
four outside directors were granted options for 15,000 shares at $.10 per
share exercisable during their continuation as an employee, director or
advisory member of, or consultant to the Company, and for the three year
period thereafter. In addition, during 1993, the Company granted one of its
directors options for 250,000 shares at $.10 per share and granted one of its
consultants options for 77,800 shares at $.05 per share, and in 1994, the
Company granted to a related party options for 100,000 shares at $.25 per
share. In 1995 the Company granted to an officer of the Company a five year
option to purchase 15,000 shares at $.25 per share. In 1996, the Company
granted to officers of the Company five year options to purchase 22,500
shares at $.25 a share.
In addition, in 1992, the Company issued 600,000 warrants for its
common stock with an exercise price of $.02 to certain of its officers and
consultants in return for forbearance and modification of certain notes and
accounts payable and services. The warrants expire December 31, 1998.
Further, during 1995, the Company issued 75,000 warrants for its common stock
to an unrelated party in connection with a loan. The warrants are divided
equally into three classes of 25,000 each designated A, B, C with exercise
prices of $.25, $.375 and $.50, respectively, all of which expire in February
of 1998. The Company has reserved 675,000 of its authorized common stock in
connection with its warrants.
In December 1996, the Directors of the Company issued 1,300,000 shares
of authorized common stock at $.01 per share to officers of the Company
and a related party for services.
A summary of the plans at June 30, 1997 is as follows:
Total Shares Share Options
Option
Reserved Outstanding Price
____________ _____________ ______
1987 Incentive Stock Option Plan 150,000 75,000 $.225
1987 Non-Qualified Stock Option Plan 1,500,000 310,000 $.10
77,800 $.05
100,000 $.25
15,000 $.25
22,500 $.25
1992 Stock Warrants Plan 600,000 600,000 $.02
1995 Stock Warrants Plan 75,000 25,000 $.25
25,000 $.375
25,000 $.50
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, and 1995
9. LEASE AGREEMENT - RELATED PARTY
The Company entered into a lease agreement on March 26, 1990 with a
related party to rent its facilities in Providence, Rhode Island. Original
base monthly rental payments total $4,594 and the lease term is five years,
expiring on February 28, 1995. On September 1, 1994, the related party agreed
to reduce base monthly rental to $2,500 on June 1, 1996. The lease agreement
was not renewed and the Company is renting the facilities on a monthly basis.
Minimum lease payments and rental expense charged to operations are
as follows:
Date Minimum lease payments Rental expense
____ ______________________ ______________
1997 $19,452
1996 29,632
1995 $34,188 32,198
10. SEGMENT INFORMATION
Industry Segments
Approximately 92% of the Company's business consists of sales of
computerized pulmonary diagnostic equipment and supplies. The rest of the
Company's business consists of sales of infection and bio-hazard control
products. The Company does not operate in other industry segments. The
Company has no foreign operations.
Major Customers
The Company has sold its products primarily through an independent
national distribution network. In May of 1989, management put into effect a
plan to phase out the independent distributors and move towards a nationwide
team of commissioned representatives. During 1991, current management has
begun to restore the independent network of distribution and currently has in
excess of one hundred distributors. The final market for the Company's
products is the medical field, i.e. physicians, hospitals and the occupational
health sector. No distributor or customer accounted for 10% or more of the
Company's sales in 1997, 1996 or 1995.
11. SUPPLEMENTARY INCOME STATEMENT INFORMATION
For the years ended June 30, the following supplemental expense
information is presented for analysis.
1997 1996 1995
____ ____ ____
Repairs and maintenance $ 988 2,160 $11,485
Advertising 8,053 67,633 8,054
Sales and property taxes 2,489 2,355 18,917
Provision for doubtful accounts 1,800 1,800 1,349
(CONTINUED)
<PAGE>
CDX CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED JUNE 30, 1997, 1996, AND 1995
12. FINANCIAL INSTRUMENTS
The Company is engaged primarily in the distribution of specialized
medical equipment in North America. The Company performs ongoing credit
evaluations of its customers' financial condition and, generally, requires
no collateral from its customers.
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of trade accounts
receivable. Concentrations of credit risk with respect to trade receivables
are limited due to the number of customers comprising the customer base
and their dispersion across geographic areas.
The carrying amounts relected in the balance sheets for cash and
notes payable approximate the respective fair values due to the short
maturities of those instruments.
13. FUTURE OPERATIONS
The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplate
continuation of the Company as a going concern. However, the Company suffered
losses of $122,372, $206,413, and $75,028 during the years ended June 30,
1997, 1996, and 1995, respectively. In addition, the Company has a net
stockholders' deficiency of $591,178 at June 30, 1997.
The Company has been in the process of developing new and innovative
products. The development of these products has taken longer than planned.
The Company brought some of these products to market, which have been
met with a demand for improvements and changes to the products. Management
plans to develop upgrades and improvements to existing products utilizing
state of the art technology and to re-market these products to a substantial
existing client base. Management expects sales and profits to significantly
increase when the improved products are re-marketed.
While management is confident that the new products will increase
cash flow and make the Company profitable, there can be no assurance that the
expected magnitude of growth will be experienced. Should the Company's
expectations materialize, however, additional capital will not be required
in order for it to continue operations.
(CONCLUDED)
</TABLE>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>2
<TEXT>
CONSENT OF COUNSEL
I hereby consent to the use of my name as legal counsel in the Annual
Report filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934 for the fiscal year ended June 30, 1997 by CDX Corporation on Form
10-KSB.
MARK T. THATCHER, P.C.
/s/ Mark T. Thatcher
By:___________________
MARK T. THATCHER, ESQ.
Newport, RI
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.2
<SEQUENCE>3
<TEXT>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the use of our name as auditing firm in the
Annual Report filed pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended June 30, 1997 by
CDX Corporation on Form 10-KSB.
CAYER, PRESCOTT, CLUNE & CHATELLIER, LLP
/S/ Cayer, Prescott, Clune & Chatellier, LLP
May 27, 1998
Providence, Rhode Island
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-27
<SEQUENCE>4
<DESCRIPTION>ARTICLE 5 FIN. DATA SCHEDULE FOR FISCAL YEAR
ENDING JUNE 30, 1997
<TEXT>
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000351129
<NAME> CDX Corporation
<MULTIPLIER> 1
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<EXCHANGE-RATE> 1
<CASH> 1,305
<SECURITIES> 0
<RECEIVABLES> 39,488
<ALLOWANCES> 0
<INVENTORY> 46,555
<CURRENT-ASSETS> 104,821
<PP&E> 20,228
<DEPRECIATION> 0
<TOTAL-ASSETS> 185,918
<CURRENT-LIABILITIES> 515,391
<BONDS> 261,705
<PREFERRED-MANDATORY> 0
<PREFERRED> 0
<COMMON> 48,881
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 185,918
<SALES> 379,608
<TOTAL-REVENUES> 379,608
<CGS> 187,793
<TOTAL-COSTS> 483,935
<OTHER-EXPENSES> 18,045
<LOSS-PROVISION> (122,372)
<INTEREST-EXPENSE> (18,065)
<INCOME-PRETAX> (122,372)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (122,372)
<EPS-PRIMARY> (.028)
<EPS-DILUTED> (.028)
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
