SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the quarterly period ended January 31, 2004
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ............
to ............
Commission file number 0-8006
COX TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 86-0220617
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
69 McADENVILLE ROAD
BELMONT, NORTH CAROLINA 28012-2434
(Address of principal executive offices) (Zip Code)
(704) 825-8146
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicated 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 X No
Indicate by check mark whether the Registrant is an accelerated filer.
Yes No X
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Number of shares of Common Stock, no par value, outstanding
at March 15, 2004.....................................................38,167,077
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
INDEX
FACE SHEET ................................................................ 1
TABLE OF CONTENTS ......................................................... 2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited)
January 31, 2004 and April 30, 2003 ............................ 3
Consolidated Statements of Income (Unaudited)
Three Months and Nine Months Ended January 31, 2004 and 2003 ... 4-5
Consolidated Statements of Changes in Stockholders' Deficit
(Unaudited) Nine Months Ended January 31, 2004 and 2003 ........ 6
Consolidated Statements of Cash Flows (Unaudited)
Three Months and Nine Months Ended January 31, 2004 and 2003 .. 7-8
Notes to Consolidated Financial Statements 9-13
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations .........13-16
Item 3. Quantitative and Qualitative Disclosure About Market Risks .... 16
Item 4. Controls and Procedures ....................................... 16
PART II. OTHER INFORMATION AND SIGNATURES
Item 2. Changes in Securities and Use of Proceeds .................... 17
Item 6. Exhibits and Reports on Form 8-K .............................. 17
1. Exhibits
31.1 - Certification by Co-Chief Executive Officer ...... 19
31.2 - Certification by Co-Chief Executive Officer ...... 20
31.3 - Certification by Chief Financial Officer ......... 21
32.1 - Certification by Co-Chief Executive Officers ..... 22
32.2 - Certification by Chief Financial Officer ......... 23
2. Reports on Form 8-K .................................... 17
Signatures ................................................................ 18
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
January 31, 2004 April 30, 2003
---------------- --------------
ASSETS (Unaudited)
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 740,785 $ 572,149
Accounts receivable, less allowance
for doubtful accounts 1,270,668 964,078
Inventory, net 1,673,871 1,182,270
Note receivable 175,000 75,000
Prepaid expenses 59,310 17,733
------------ ------------
TOTAL CURRENT ASSETS 3,919,634 2,811,230
Property and equipment, net 196,938 505,688
Due from officer, net -- 8,928
Other assets 77,983 71,510
Patents -- 114,845
------------ ------------
TOTAL ASSETS $ 4,194,555 $ 3,512,201
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
- -------------------------------------
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 549,561 $ 291,948
Current portion of long-term debt 304,575 530,778
------------ ------------
TOTAL CURRENT LIABILITIES 854,136 822,726
OTHER LIABILITIES:
Long-term debt 378,566 862,393
Long-term debt - related parties 3,624,338 3,327,500
------------ ------------
TOTAL OTHER LIABILITIES 4,002,904 4,189,893
------------ ------------
TOTAL LIABILITIES 4,857,040 5,012,619
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' DEFICIT:
Common stock, no par value; authorized
100,000,000 shares; issued and outstanding;
38,331,825 shares at January 31, 2004 and
38,339,094 at April 30, 2003 23,253,876 23,252,804
Accumulated other comprehensive income (loss) (48,316) (32,591)
Accumulated deficit (23,855,145) (24,696,452)
Less - Notes receivable for common stock (12,900) (24,179)
------------ ------------
TOTAL STOCKHOLDERS' DEFICIT (662,485) (1,500,418)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 4,194,555 $ 3,512,201
============ ============
See Notes to Consolidated Financial Statements.
3
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended January 31,
------------------------------
2004 2003
---- ----
REVENUE:
Sales $ 2,481,510 $ 2,212,195
------------ ------------
COSTS AND EXPENSES:
Cost of sales 1,274,501 1,121,060
General and administrative 443,493 424,605
Selling 235,679 227,956
Depreciation 24,867 24,517
------------ ------------
TOTAL COSTS AND EXPENSES 1,978,540 1,798,138
------------ ------------
INCOME FROM OPERATIONS 502,970 414,057
------------ ------------
OTHER (INCOME) EXPENSE:
Other income (22,298) (50,697)
Interest expense 91,281 114,394
------------ ------------
TOTAL OTHER EXPENSE 68,983 63,697
------------ ------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 433,987 350,360
PROVISION FOR INCOME TAXES -- --
------------ ------------
INCOME FROM CONTINUING OPERATIONS 433,987 350,360
OPERATING LOSS FROM DISCONTINUED OPERATIONS 39,989 191,775
LOSS ON SALE OF ASSETS OF DISCONTINUED OPERATIONS 248,690 --
PROVISION FOR INCOME TAXES ON DISCONTINUED OPERATIONS -- --
------------ ------------
LOSS FROM DISCONTINUED OPERATIONS 288,679 191,775
------------ ------------
NET INCOME $ 145,308 $ 158,585
============ ============
EARNING (LOSS) PER SHARE, BASIC AND DILUTED:
Continuing Operations $ .01 $ .01
Discontinued Operations ($ .01) ($ .01)
Net Income $ .00 $ .00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 38,331,825 25,839,094
See Notes to Consolidated Financial Statements.
4
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended January 31,
-----------------------------
2004 2003
----- ----
REVENUE:
Sales $ 7,446,371 $ 6,387,739
------------ ------------
COSTS AND EXPENSES:
Cost of sales 3,609,674 3,478,813
General and administrative 1,334,283 1,348,486
Selling 689,592 682,973
Depreciation 73,694 72,806
------------ ------------
TOTAL COSTS AND EXPENSES 5,707,243 5,583,078
------------ ------------
INCOME FROM OPERATIONS 1,739,128 804,661
------------ ------------
OTHER (INCOME) EXPENSE:
Other income (48,289) (145,564)
Interest expense 332,717 357,467
------------ ------------
TOTAL OTHER EXPENSE 284,428 211,903
------------ ------------
INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,454,700 592,758
PROVISION FOR INCOME TAXES -- --
------------ ------------
INCOME FROM CONTINUING OPERATIONS 1,454,700 592,758
OPERATING LOSS FROM DISCONTINUED OPERATIONS 364,703 562,335
LOSS ON SALE OF ASSETS OF DISCONTINUED OPERATIONS 248,690 --
PROVISION FOR INCOME TAXES ON DISCONTINUED OPERATIONS -- --
------------ ------------
LOSS ON DISCONTINUED OPERATIONS 613,393 562,335
------------ ------------
NET INCOME $ 841,307 $ 30,423
============ ============
EARNING (LOSS) PER SHARE, BASIC AND DILUTED:
Continuing Operations $ .04 $ .02
Discontinued Operations ($ .02) ($ .02)
Net Income $ .02 $ .00
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 38,335,863 25,818,822
See Notes to Consolidated Financial Statements.
5
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT (UNAUDITED)
Accumulated Subscribed
Other Stock
Common Comprehensive Accumulated Less Note
Stock Income (Loss) Deficit Receivable Total
------------ ------------- ------------- ------------- -------------
Balance, April 30, 2002 $ 22,593,724 ($ 68,168) ($24,806,900) ($ 24,179) ($ 2,305,523)
Comprehensive income (loss) -
Net income (loss) -- -- 30,423 -- 30,423
Foreign currency
translation adjustment -- 52,347 -- -- 52,347
------
Total comprehensive income -- -- -- -- 82,770
Common stock issued 13,404 -- -- -- 13,404
Change in subscribed stock, net -- -- -- (883) (883)
------------ ------------ ------------ ------------ ------------
Balance, January 31, 2003 $ 22,607,128 ($ 15,821) ($24,776,477) ($ 25,062) ($ 2,210,232)
============ ============ ============ ============ ============
Balance, April 30, 2003 $ 23,252,804 ($ 32,591) ($24,696,452) ($ 24,179) ($ 1,500,418)
Comprehensive income -
Net income (loss) -- -- 841,307 -- 841,307
Foreign currency
translation adjustment -- (15,725) -- -- (15,725)
-------
Total comprehensive income -- -- -- -- 825,582
Common stock issued 1,072 -- -- -- 1,072
Change in subscribed stock, net -- -- -- 11,279 11,279
------------ ------------ ------------ ------------ ------------
Balance, January 31, 2004 $ 23,253,876 ($ 48,316) ($23,855,145) ($ 12,900) ($ 662,485)
============ ============ ============ ============ ============
See Notes to Consolidated Financial Statements.
6
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Three Months Ended January 31,
------------------------------
2004 2003
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 145,308 $ 158,585
Adjustments to reconcile net income
to net cash provided by operating activities:
Depreciation and amortization 39,121 76,898
Amortization of patents 9,570 10,994
Increase (decrease) in allowance for doubtful accounts 5,135 (2,195)
Other (6,857) (7,212)
Loss on sales of assets of discontinued operations 248,690 --
Decrease in valuation adjustment -- 1,785
--------- ---------
440,967 238,855
Changes in assets and liabilities:
(Increase) decrease in current assets:
Accounts receivable (133,147) (171,116)
Inventory (156,658) 126,770
Prepaid expenses 1,777 (15,347)
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses 37,110 54,378
--------- ---------
CASH PROVIDED BY CONTINUING OPERATING ACTIVITIES 190,049 233,540
--------- ---------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (30,000) (25,568)
Collection of note receivable from property held for sale -- 100,000
--------- ---------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (30,000) 74,432
--------- ---------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (decrease) in debt (45,818) (155,151)
Decrease in subscription receivable 12,901 (434)
--------- ---------
CASH USED IN FINANCING ACTIVITIES (32,917) (155,585)
--------- ---------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (6,535) 33,870
--------- ---------
NET INCREASE IN CASH 120,597 186,257
CASH AND CASH EQUIVALENTS, beginning of period 620,188 162,475
--------- ---------
CASH AND CASH EQUIVALENTS, end of period $ 740,785 $ 348,732
========= =========
Supplemental Cash Flow Information
Interest paid $ 9,174 $ 38,656
Income taxes paid $ -- $ --
Note received from sale of Vitsab operations $ 175,000 $ --
See Notes to Consolidated Financial Statements.
7
COX TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended January 31,
-----------------------------
2004 2003
---- ----
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 841,307 $ 30,423
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation 181,849 232,763
Amortization of patents 28,711 32,982
Increase (decrease) in allowance for doubtful accounts 6,170 (7,513)
Other (9,853) (29,071)
Loss on sale of assets 248,690
Decrease in valuation adjustment 8,928 32,139
----------- -----------
1,305,802 291,723
Changes in assets and liabilities:
(Increase) decrease in current assets:
Accounts receivable (312,760) 81,524
Inventory (655,201) 113,481
Prepaid expenses (41,577) 8,309
Increase (decrease) in current liabilities:
Accounts payable and accrued expenses 257,613 27,008
----------- -----------
CASH PROVIDED BY OPERATING ACTIVITIES 553,877 522,045
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property and equipment (43,675) (87,232)
Proceeds from sale of property held for sale -- 54,504
Collection of note receivable from property held for sale 75,000 100,000
----------- -----------
CASH PROVIDED BY INVESTING ACTIVITIES 31,325 67,272
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Issuance of common stock, net 1,072 13,404
Repayment of debt (413,192) (521,495)
Decrease in subscription receivable 11,279 (883)
----------- -----------
CASH USED IN FINANCING ACTIVITIES (400,841) (508,974)
----------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (15,725) 52,347
----------- -----------
NET INCREASE (DECREASE) IN CASH 168,636 132,690
CASH AND CASH EQUIVALENTS, beginning of period 572,149 216,042
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 740,785 $ 348,732
=========== ===========
Supplemental Cash Flow Information
Interest paid $ 36,959 $ 130,361
Income taxes paid $ -- $ --
Note received resulting from sale of property held for sale $ -- $ 175,000
Note received from sale of Vitsab operations $ 175,000 $ --
See Notes to Consolidated Financial Statements.
8
COX TECHNOLOGIES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
Cox Technologies, Inc., and Cox Recorders Australia, Ltd., Pty., an
Australian distribution company 95% owned by Cox Technologies, Inc.
(collectively "the Company"), engage in the business of producing and
distributing temperature recording instruments, both in the United States and
internationally.
The accompanying unaudited consolidated financial statements and notes
should be read in conjunction with the audited consolidated financial statements
and notes included in the Cox Technologies, Inc. 2003 Annual Report on Form
10-K. In the opinion of management, all adjustments (consisting solely of normal
recurring adjustments) necessary for a fair statement of the results of
operations for the interim periods have been recorded. Certain amounts
previously reported have been reclassified to conform with the current period's
presentation.
The accompanying unaudited condensed consolidated financial statements have
been prepared on a going concern basis, which contemplates continuity of
operations, realization of assets, and liquidation of liabilities and
commitments in the normal course of business.
On December 12, 2003, the Company entered into an Asset Purchase Agreement
with Sensitech Inc. and its wholly owned subsidiary Cox Acquisition Corp.,
pursuant to which Sensitech will acquire substantially all the assets and
business of the Company and, shortly thereafter, the Company will wind up its
operating business, effect a complete liquidation and dissolution of the
Company, and distribute any remaining cash to its shareholders (see details in
Note 6 of the Notes to Consolidated Financial Statements (Unaudited)). Both the
sale of assets and the liquidation and dissolution of the Company are subject to
approval by the Company's shareholders and other conditions. There can be no
assurance that these conditions will be met and the sale of assets and
dissolution consummated. The accompanying unaudited condensed consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. On January 29, 2004, the Asset Purchase Agreement
was amended for the sole purpose of extending the date on which either party
could terminate the agreement if the transaction had not yet been consummated.
On January 29, 2004, the Company sold its assets relating to the Vitsab
product line (other than cash and accounts receivable) to Rask Holding ApS for a
purchase price of $175,000 plus assumed liabilities. In the transaction, Rask
Holding acquired all of the assets associated with the Vitsab division, except
cash and accounts receivable, and assumed all liabilities relating to the Vitsab
division, except liabilities associated with a raw material purchase from a
specific vendor and for taxes resulting from operations of the Vitsab division
prior to January 29, 2004. The liabilities related to the Vitsab division were
$74,100 in future payments to be made to Mr. Peter Ronnow under an employment
agreement between him and the Company, and $7,000 in trade accounts payable. In
payment of the purchase price, Rask Holding delivered a promissory note in the
amount of $175,000 which was paid in full on February 18, 2004. Also, as part of
this agreement, the Company agreed to purchase 164,748 of the Company's common
shares held by Peter Ronnow for $.19 per share. This purchase resulted in a
payment to Mr. Ronnow of approximately $31,000 and was completed on February 10,
2004.
Stock-based Compensation
The Company has elected to follow Accounting Principles Board Opinion
("APB") No. 25, "Accounting for Stock Issued to Employees" (APB No. 25), and
related interpretations in accounting for its employee stock options. The
Company has adopted the disclosure-only provisions of SFAS No. 123, "Accounting
for Stock-Based Compensation." This statement defines a fair value method of
accounting for stock options or similar equity instruments. SFAS No. 123 permits
companies to continue to account for stock-based compensation awards under APB
No. 25, but requires disclosure in a note to the financial statements of the pro
forma net income and earnings per share as if the Company had adopted the new
method of accounting. SFAS No. 123 has been amended by Financial Accounting
Standards Board pronouncement number 148 ("FASB No. 148), "Accounting for
Stock-based Compensation - Transition and Disclosure". FASB No. 148 requires
prominent disclosure in the annual and quarterly statements of the Company on
stock-based compensation.
The Company has two stock option plans, the Stock Option Agreements By and
Between Cox Technologies, Inc. and Certain Executives ("Executive Plan") and the
2000 Stock Incentive Plan ("2000 Plan"). In accordance with the Executive Plan,
options to purchase an aggregate of up to 6,652,500 shares of the Company's
Common Stock were granted to certain executives of the Company. Options
generally were granted at the fair market value of the Company's Common Stock
9
determined on the date of the grant. Certain options were granted at an exercise
price below fair market value and $600,000 of compensation expense was charged
to operations in fiscal 2000. Options from the Executive Plan are exercisable on
various dates and expire on various dates. At January 31, 2004, 6,600,000
options under the Executive Plan are outstanding. In accordance with the 2000
Plan, up to 8,000,000 shares of the Company's Common Stock can be issued through
the use of stock-based incentives to employees, consultants and non-employee
members of the Board of Directors. The exercise price of options granted through
the 2000 Plan cannot be less than 85% of the fair market value of the Company's
Common Stock on the date of the grant. All outstanding options have been granted
at the fair market value; therefore, no compensation expense has been recorded.
Options from the 2000 Plan are exercisable on various dates from the date of the
grant and expire on various dates. Exceptions to the exercise date for both
plans are allowed upon the retirement, disability or death of a participant. An
exception is also allowed upon a change in control as defined in both plans.
The Company applies APB No. 25 in accounting for both Plans. Accordingly,
compensation cost is determined using the intrinsic value method under APB No.
25. For the periods ended October 31, 2003 and 2002, there was no stock-based
compensation expense recorded. Had compensation cost for both Plans been
determined consistent with the fair value method for compensation expense
encouraged under SFAS No. 123, the Company's net income and earnings per share
(EPS) would have been the pro forma amounts shown below for the nine month
fiscal periods ended January 31, 2004 and 2003.
January 31, 2004 January 31,2003
---------------- ---------------
Net income, as reported $ 791,307 $ 30,423
Proforma stock-based compensation - net of tax (372,546) (395,448)
----------- -----------
Net income (loss), proforma $ 481,761 $( 365,025)
========== ===========
Basic and diluted EPS, as reported $.02 $(.00)
Basic and diluted EPS, proforma $.01 $(.01)
Restricted stock was issued out of the 2000 Plan to consultants and
employees in lieu of cash payments totaling zero and 30,000 shares, respectively
for the nine months ended January 31, 2004 and 2003. At January 31, 2004, there
were 2,869,472 shares reserved for issuance under the 2000 Plan.
Accounts Receivable
The balance in the allowance for doubtful accounts is $51,803 and $45,750
at January 31, 2004 and April 30, 2003, respectively.
Recent Accounting Pronouncements
SFAS No. 143 addresses financial accounting and reporting for obligations
associated with the retirement of tangible long-lived assets and the associated
asset retirement costs. The provisions of SFAS No. 143 are required to be
applied starting with fiscal years beginning after June 15, 2002. The Company
has adopted the provisions of SFAS No. 143 effective May 1, 2003, and the
adoption of the provisions of SFAS No. 143 did not have a significant effect on
its financial position or results of operations.
SFAS No. 150 addresses the accounting for certain financial instruments
with characteristics of both liabilities and equity, and is effective for
interim periods beginning after June 15, 2003. The Company has adopted the
provisions of SFAS No. 150 effective August 1, 2003, and the adoption of the
provisions of SFAS No. 150 did not have a significant effect on its financial
position or results of operations.
FASB Interpretation No. 45 elaborates on the disclosures to made by a
guarantor in its interim and annual financial statements about its obligations
under certain guarantees that is has issued. The provisions of this
interpretation are required prospectively for guarantees issued or modified
after December 31, 2002. The Company has adopted the provisions of FASB
Interpretation No. 45 effective January 31, 2004, and the adoption of the
provisions of FASB Interpretation No. 45 did not have a significant effect on
its financial position or result of operations.
FASB Interpretation No. 46 addresses consolidation by business enterprises
of variable interest entities. The Company does not have any variable interest
entities as defined by FASB Interpretation No. 46 and therefore, the adoption of
the provisions of FASB Interpretation No. 46 did not have a material impact on
the financial position or results of operations.
10
2. INVENTORY
Inventory at January 31, 2004 and April 30, 2003 consists of the following:
January 31, 2004 April 30, 2003
------------------------ --------------------
Raw materials $ 416,101 $ 328,744
Work-in-process 461,165 103,059
Finished goods 846,605 800,467
------------ ------------
1,723,871 1,232,270
Less reserve 50,000 50,000
------------- ------------
Total $1,673,871 $1,182,270
============= ============
3. DEBT
On May 19, 2003, the Company executed a note modification agreement to
modify the note dated March 19, 2003. The effective date of the modification was
established when the Company made a principal payment on the note for $355,000.
The payment was made to Centura on May 21, 2003. The results of the modification
is to reduce the monthly principal payment to $21,000 plus accrued interest
beginning on June 15, 2003 and continuing until July 15, 2006 on which date the
balance of the note will mature. Also, beginning on the effective date of the
modification, the interest rate on the outstanding principal shall be calculated
at the bank's 30-day LIBOR base rate plus 2.5% per annum. As of October 31,
2003, Centura has waived the requirement of the Company to produce a borrowing
base calculation on a monthly basis. The Company's qualifying accounts
receivable and inventory are adequate to support the outstanding loan at January
31, 2004.
4. RELATED PARTY TRANSACTIONS
On January 20, 2003, the Company entered into a Stock Purchase Agreement
(the "TI Stock Purchase Agreement") with Technology Investors, LLC ("TI"), an
affiliate of Brian Fletcher and Kurt Reid, who are officers and directors of the
Company, pursuant to which TI agreed to purchase and the Company agreed to sell
12,500,000 shares of the Company's Common Stock at a price of $0.06 per share,
for a total purchase price of $750,000. This transaction was submitted to the
Company's shareholders for their approval at a special meeting of the
shareholders on March 12, 2003. With a quorum of shareholders present, a motion
was made and seconded to approve the TI Stock Purchase Agreement, and the motion
was passed by a unanimous vote of those present in person or represented by
proxy. The transaction was consummated on March 19, 2003. TI, together with Mr.
Fletcher and Mr. Reid and their affiliates, now collectively own and control
beneficially an aggregate of 15,832,437 shares of the Company's Common Stock, or
approximately 38% of the Company's issued and outstanding common stock. These
figures include the 2,899,471 shares of the Company's Common Stock that TI may
obtain by converting its existing promissory note, but exclude the options that
Mr. Fletcher and Mr. Reid own to purchase, in the aggregate, 3,000,000 shares of
the Company's Common Stock, which options are exercisable in varying increments
through September 9, 2009.
In March 2000, the Company entered into an agreement with TI whereby the
Company issued to TI a 10% subordinated convertible promissory note in the
amount of $2,500,000 (the "TI Note"), the entire principal and interest of which
are due on March 10, 2005. Alternatively, the principal amount of the TI Note
and interest accrued thereon may be converted, at the option of holder, into
shares of the Company's Common Stock at a conversion price of $1.25 per share.
As of January 31, 2004, the principal and accrued interest of $3,624,338 could
be converted into 2,899,471shares of the Company's Common Stock. Mr. Fletcher
and Mr. Reid serve as the sole managers of TI and share voting and dispositions
power with respect to the Common Stock issuable upon conversion of the TI Note.
See Note 5 below for further discussion of this transaction and the consequences
to the Company if it fails to meet its principal and accrued interest
obligations under the TI Note when they become due on March 10, 2005.
In addition, Mr. Fletcher and Mr. Reid were named directors of the Company.
The Company has agreed to nominate Mr. Fletcher and Mr. Reid for three
consecutive terms on the Board of Directors. Mr. Fletcher and Mr. Reid were also
both retained as consultants to the Company. In connection with their services
they each would receive compensation of $1 annually and a one-time grant of
immediately exercisable options to purchase 300,000 shares of the Company's
Common Stock at an exercise price of $1.25 per share for a period of up to ten
years.
11
In fiscal 2001, Mr. Fletcher and Mr. Reid each received stock options to
purchase 2,000,000 shares of the Company's Common Stock at an exercise price of
$.59 per share for a period of up to ten years.
In fiscal 2002, Mr. Fletcher and Mr. Reid each received stock options to
purchase 800,000 shares of the Company's Common Stock at an exercise price of
$.11 per share for a period of up to seven years. Also, the Board of Directors
approved an increase in compensation for Mr. Fletcher and Mr. Reid retroactive
to January 1, 2001, whereby they each would receive annual compensation of
$100,000, payable quarterly in unrestricted shares of the Company's Common Stock
valued at the average daily closing price during the quarter. During fiscal
2002, Mr. Fletcher and Mr. Reid were paid $75,000 of salary in unrestricted
shares of the Company's Common Stock at an average market price of $.35 per
share under this structure. On December 7, 2001, Mr. Fletcher and Mr. Reid
agreed to a decrease in their annual compensation to $1 effective October 1,
2001. On March 15, 2002, the Compensation Committee of the Board of Directors
approved a compensation structure, effective March 1, 2002, whereby Mr. Fletcher
and Mr. Reid would be compensated based on the actual monthly cash flow and
quarterly net income generated by the Company. The maximum annual compensation
would be capped at $210,000 each. During fiscal 2002, Mr. Fletcher and Mr. Reid
were compensated $7,500 each under this structure.
During fiscal 2003, Mr. Fletcher and Mr. Reid were each granted options to
purchase 200,000 shares of the Company's Common Stock at an exercise price of
$.11 per share for a period of up to seven years. Effective November 1, 2002,
the Board of Directors ratified the recommendation of the Compensation Committee
to change the compensation structure for both Mr. Fletcher and Mr. Reid and set
the annual salary rate at $100,000 per year.
On April 1, 2003, the Board of Directors modified the compensation plan for
Mr. Fletcher and Mr. Reid increasing their annual salary rate to $120,000 per
year, effective April 15, 2003, and establishing a quarterly bonus plan
beginning with the first quarter of fiscal 2004 based on the profitability of
the Company. The quarterly bonus is limited to 50% of the Company's net income
for the quarter and Mr. Fletcher and Mr. Reid can earn a non-cumulative bonus up
to $10,000 per quarter. During fiscal 2003, Mr. Fletcher and Mr. Reid were each
compensated approximately $99,000 as a payout from the fiscal 2002 compensation
arrangement and approximately $50,000 from the fiscal 2003 compensation
arrangement. At January 31, 2004, the Company has paid or accrued bonus
compensation to Mr. Fletcher and Mr. Reid totaling $30,000 each.
5. LIQUIDITY AND CAPITAL RESOURCES
The Company's cash flow from operations is currently not adequate to retire
the TI Note, and it is unlikely that cash flow will increase in an amount
sufficient for the Company to meet its obligations under the TI Note when the
principal and accrued interest become due on March 10, 2005. TI has indicated
that, in the event the Company becomes unable to meet its obligations under the
TI Note, TI may be willing to explore alternative financing arrangements,
including a restructuring of the TI Note prior to its due date. Alternatively,
the Company may seek a cash infusion elsewhere, through a separate debt or
equity offering, a strategic partnership or some form of business combination.
The Company may consider any or all of these alternatives in the event it
becomes unable to meet its debt obligation to TI, but there can be no assurance
that any deal will be consummated on terms acceptable to both the Company and TI
or another third party. Without such an arrangement, it is highly likely that
the Company would default on its obligations under the TI Note, at which time TI
would be entitled to exercise any and all remedies available to it under the TI
Note and applicable law, including bringing suit against the Company and its
assets. Should TI seek to enforce its right to timely repayment of the TI Note,
there is a risk that the Company will not be able to continue as a going
concern. Please refer to Note 6 of the Notes to Consolidated Financial
Statements (Unaudited) concerning the proposed asset sale and plan of
liquidation and dissolution of the Company.
6. PROPOSED ASSET SALE AND PLAN OF LIQUIDATION AND DISSOLUTION OF THE COMPANY
On December 12, 2003, the Company entered into an Asset Purchase Agreement
with Sensitech Inc. and its wholly owned subsidiary Cox Acquisition Corp.,
pursuant to which Sensitech will acquire substantially all the assets and
business of the Company. On January 29, 2004, the Asset Purchase Agreement was
amended for the sole purpose of extending the date on which either party could
terminate the agreement if the transaction had not yet been consummated. Subject
to the terms and conditions of the Asset Purchase Agreement, Sensitech will pay
approximately $10,532,000 to the Company in exchange for substantially all of
the assets of the Company exclusive of the Vitsab product line, cash and certain
furniture and equipment. Of the purchase price, $10,240,000 is payable in cash
with the remainder being paid through the assumption of an estimated $292,000 in
accounts payable. The purchase price may be adjusted based on changes in the
amount of receivables, inventory, payables, product claims, customer commitments
and claims for indemnification.
12
In connection with the negotiation of the asset sale, the Company has
agreed to continue manufacturing products for Sensitech during a transition
period to end no later than June 1, 2004, unless extended. In order to keep
qualified employees during the transition period, the Company has offered its
employees bonuses payments for remaining until their jobs or duties are
completed and their positions are terminated. The current estimated range for
these costs is $96,000 - $120,000 and none of these cost have been accrued at
January 31, 2004. After the closing of the asset sale and following expiration
of those manufacturing obligations, the Company's intention is to wind up its
operating business, effect a complete liquidation and dissolution of the
Company, and distribute any remaining cash to its shareholders.
Both the sale of assets and the liquidation and dissolution of the Company
are subject to approval by the Company's shareholders. The Board of Directors
has called for a special meeting of shareholders to consider the approval of
this sale of asset and also to consider approval of a plan whereby the Company
will convert its remaining assets to cash, pay all of its debts and distribute
the remaining net proceeds to the shareholders. Subject to the approval of
shareholders, it is anticipated that the sale will be consummated in the second
calendar quarter of 2004 and that a final distribution of cash to shareholders
will occur in the third or fourth calendar quarter of 2004.
ITEM 2. Management's Discussion And Analysis of Financial Condition
And Results of Operations
Recent Major Development - Proposed Sale of Assets and Plan of Liquidation
On December 12, 2003, the Company entered into an Asset Purchase Agreement
with Sensitech Inc. and its wholly owned subsidiary Cox Acquisition Corp.,
pursuant to which Sensitech will acquire substantially all the assets and
business of the Company. Subject to the terms and conditions of the Asset
Purchase Agreement, Sensitech will pay approximately $10,532,000 to the Company
in exchange for substantially all of the assets of the Company exclusive of the
Vitsab product line, cash and certain furniture and equipment. Of the purchase
price, $10,240,000 is payable in cash with the remainder being paid through the
assumption of an estimated $292,000 in accounts payable. The purchase price may
be adjusted based on changes in the amount of receivables, inventory, payables,
product claims, customer commitments and claims for indemnification.
In connection with the negotiation of the asset sale, the Company has
agreed to continue manufacturing products for Sensitech during a transition
period to end no later than June 1, 2004, unless extended. In order to keep
qualified employees during the transition period, the Company has offered its
employees bonuses payments for remaining until their jobs or duties are
completed and their positions are terminated. The current estimated range for
these costs is $96,000 - $120,000 and none of these cost have been accrued at
January 31, 2004. After the closing of the asset sale and following expiration
of those manufacturing obligations, the Company's intention is to wind up its
operating business, effect a complete liquidation and dissolution of the
Company, and distribute any remaining cash to its shareholders.
Both the sale of assets and the liquidation and dissolution of the Company
are subject to approval by the Company's shareholders. The Board of Directors
has called for a special meeting of shareholders to consider the approval of
this sale of asset and also to consider approval of a plan whereby the Company
will convert its remaining assets to cash, pay all of its debts and distribute
the remaining net proceeds to the shareholders. Subject to the approval of
shareholders, it is anticipated that the sale will be consummated in the second
calendar quarter of 2004 and that a final distribution of cash to shareholders
will occur in the third or fourth calendar quarter of 2004.
On March 10, 2004 the Company filed a definitive proxy statement with the
Securities and Exchange Commission relating to a special meeting of shareholders
of Cox Technologies at which the shareholders will vote on proposals seeking
approval of the asset sale and dissolution of Cox Technologies. On March 15,
2004 the Company mailed a notice of the special meeting to be held on April 15,
2004 along with a definitive proxy statement and proxy ballot to all holders of
record as of March 8, 2004.
Recent Major Development - Sale of Vitsab Business Line
On January 29, 2004, the Company sold its assets relating to the Vitsab
product line (other than cash and accounts receivable) to Rask Holding ApS for a
purchase price of $175,000 plus assumed liabilities. In the transaction, Rask
Holding acquired all of the assets associated with the Vitsab division, except
cash and accounts receivable, and assumed all liabilities relating to the Vitsab
division, except liabilities associated with a raw material purchase from a
specific vendor and for taxes resulting from
13
operations of the Vitsab division prior to January 29, 2004. The liabilities
related to the Vitsab division were $74,100 in future payments to be made to Mr.
Peter Ronnow under an employment agreement between him and the Company, and
$7,000 in trade accounts payable. In payment of the purchase price, Rask Holding
delivered a promissory note in the amount of $175,000, which was paid in full on
February 18, 2004. Also, as part of this agreement, the Company agreed to
purchase 164,748 of the Company's common shares held by Peter Ronnow for $.19
per share. This purchase resulted in a payment to Mr. Ronnow of approximately
$31,000 and was completed on February 10, 2004.
Comparison of Operations for 2004 and 2003
The Company operates in one reporting segment that involves the production
and distribution of temperature recording and monitoring devices, including the
Cox1 graphic temperature recorder, DataSource(R) and Tracer(R) electronic data
loggers, and temperature probes and related products.
Revenues from sales increased $269,315, or 12% and $1,058,632, or 17% for
the three and nine months ended January 31, 2004 as compared to the same periods
as last year. The revenues from sales of graphic recorders represented
$1,554,882 and $4,621,312 or 63% and 62%, for the three and nine months ended
January 31, 2004 of total revenues as compared to $1,600,623 and $4,702,819, or
72% and 74%, in the same periods last year. The revenue from sales of electronic
data loggers represented $858,440 and $2,643,286, or 35% and 36%, for the three
and nine months periods ended January 31, 2004 of total revenues as compared to
$578,089 and $1,558,559, or 26% and 24%, in the same periods last year. The
revenues from sales of temperature probes and other products represented $68,188
and $181,773, or 2% and 2%, for the three and nine months ended January 31, 2004
of total revenues as compared to $33,483 and $126,361, or 1% and 2%, in the same
periods last year. Sales of Cox1 units decreased 2% in the third quarter of 2004
and increased 3% for the nine months ended January 31, 2004 as compared to the
same periods last year and the average sales price decreased 4% and 5% for the
same periods. Sales of DataSource(R) units increased 64% and 85% for the three
and nine months ended January 31, 2004 as compared to the same periods last year
and the average sales price decreased 7% and 3% for the same periods. Sales of
Tracer(R) units increased 35% and 37% for the three and nine months ended
January 31, 2004 as compared to the same periods last year and the average sales
price decreased 13% and less than 1% for the same periods. Management believes
that the Company will continue to experience a decrease in average sales price
for all products due to competitive price pressure, but expects units sales for
its primary products to remain constant, or in the case of electronic data
loggers, to increase in future periods. Historically, the Company has had a
broad base of customers in a highly competitive market; however, the Company
finds that it's growth in revenues is developing from a smaller base of
customers.
Cost of sales increased $153,441 and $130,861, or 14% and 3%, respectively,
for the three and nine months ended January 31, 2004 as compared to the same
periods last year. The increases for both the third quarter and the nine months
of fiscal 2004 were driven by increases in revenue over the same periods last
year. Cost of sales also increased in both periods due a greater volume of
products returned for retriever fees and rebates and increase shipping costs.
For the third quarter of 2004, cost of sales as a percentage of revenues was 51%
and equal to the same quarter last year and for the nine month period ended
January 31, 2004 cost of sales as a percentage of revenues decreased to 48% as
compared to 55% for the same period last year. These improvements are
attributable to the Company's efforts to hold down labor and supply costs and to
a reduction in the price that the company pays for raw material components.
The Company contracts with a third party to manufacture and assemble
certain base versions of the Cox1 units at an offshore location. During the
first nine months of fiscal 2004, this location supplied approximately 56% of
the total number of units being utilized by the Company. Because of this
manufacturing arrangement, the Company has realized significant cost savings on
units manufactured in both the offshore and Belmont, North Carolina facilities.
If the sale to Sensitech is not completed, the Company will continue assembling
special use Cox1 units in the Belmont facility. The Belmont facility will also
continue to manufacture and assemble a certain percentage of the base Cox1
units. If necessary, the production capabilities of the Belmont facility can be
expanded to meet the total demand for all Cox1 units. The Company has identified
certain risks and uncertainties that are associated with offshore production
that include, but are not limited to, political issues, transportation risks and
the availability of raw materials. The Company will not experience foreign
currency exchange risks as all transactions are denominated in U.S. dollars.
General and administrative expenses for the three and nine months ended
January 31, 2004 increased $18,888 and decreased $14,203 or 4% and 1%,
respectively, as compared to the same periods last year. The increase in third
quarter of fiscal 2004 was due to increases in bad debt expense, temporary labor
costs, general liability and workers compensation insurance costs, professional
services expense and salary costs partially offset by decreases in miscellaneous
expenses, outside services costs and payroll taxes as compared to the same
period a year ago. The reduction for the nine month period was due to decreased
outside accountant costs, computer expenses, equipment leasing expenses,
miscellaneous expenses, outside services costs, salary costs, partially offset
by increases in bad debt expense, temporary labor costs, insurance expenses and
professional expenses.
14
Selling expense increased $7,723 and $6,618, or 3% and 1% respectively, for
the three and nine months ended January 31, 2004 as compared to the same periods
last year. The increase in the both periods was principally due to increases in
sales salaries and telephone expenses and was substantially offset by decreases
in travel expenses, trade show expenses and outside sales services.
Depreciation expense increased slightly for the three and nine months ended
January 31, 2004 as compared to the same periods last year. There has been only
a nominal amount of asset additions in fiscal 2004.
Other income decreased $28,399 and $97,275, or 56% and 67%, respectively,
for the three and nine months ended January 31, 2004 as compared to the same
period last year. This change in both periods was primarily related to the
decrease in the amount of the payments received as a result of the revision in
the agreement between the Company and its Copenhagen distributor for an option
to purchase all of the shares and assets of the company's wholly owned
subsidiary, Vitsab Sweden, AB.
Interest expense decreased $23,113 and $24,750, or 20% and 7%,
respectively, for the three and nine months ended January 31, 2004 as compared
to the same period last year. Interest expense is lower for both periods of
fiscal 2004 because of the decreases in the interest rate applied to the debt
and decreases in the principal balance.
The increase in accounts receivable as of January 31, 2004 was $306,590, or
32%, as compared to the balance at April 30, 2003, is primarily due to increased
sales in fiscal 2004 over fiscal 2003.
The increase in inventory as of January 31, 2004 was $491,601, or 42%, as
compared to the balance at April 30, 2003. This increase reflects the Company's
plan to be able to meet future demand for our products, especially for
electronic data loggers, on a timely basis.
The decrease in property and equipment of $308,750 at January 31, 2004 was
due to the sale of Vitsab assets, net of depreciation to Rask Holding, AsP and
to depreciation expense taken year to date.
The Company sold it patents with a carrying value of $86,134, net of
amortization, to Rask Holding, AsP as part of the Vitsab transaction.
Liquidity and Capital Resources
The Company derives cash from operations, equity sales, and borrowing from
long- and short-term lending sources to meet its cash requirements. At present,
the cash flow from operations appears adequate to meet cash requirements and
commitments of the Company during the 2004 fiscal year. Please refer to "Recent
Major Development - Proposed Asset Sale and Plan of Liquidation" concerning the
proposed asset sale and plan of liquidation and dissolution of the Company. If
the proposed asset sale and liquidation and dissolution of the Company are
approved and effected as currently planned, it is anticipated the Company would
have sufficient resources to satisfy existing obligations and distribute
approximately $0.16 to $0.20 per share to shareholders upon liquidation.
In March 2000, the Company entered into an agreement with TI whereby the
Company issued to TI a 10% subordinated convertible promissory note in the
amount of $2,500,000 (the "TI Note"), the entire principal and interest of which
are due on March 10, 2005. Alternatively, the principal amount of the TI Note
and interest accrued thereon may be converted, at the option of holder, into
shares of the Company's Common Stock at a conversion price of $1.25 per share.
As of January 31, 2004, the principal and accrued interest of $3,624,338 could
be converted into 2,899,471 shares of the Company's Common Stock. Mr. Fletcher
and Mr. Reid serve as the sole managers of TI and share voting and dispositions
power with respect to the Common Stock issuable upon conversion of the TI Note.
The Company's cash flow from operations is currently not adequate to retire
the TI Note, and it is unlikely that cash flow will increase in an amount
sufficient for the Company to meet its obligations under the TI Note when the
principal and accrued interest become due on March 10, 2005. TI has indicated
that, in the event the Company becomes unable to meet its obligations under the
TI Note, TI may be willing to explore alternative financing arrangements,
including a restructuring of the TI Note prior to its due date. Alternatively,
the Company may seek a cash infusion elsewhere, through a separate debt or
equity offering, a strategic partnership or some form of business combination.
The Company may consider any or all of these alternatives in the event it
becomes unable to meet its debt obligation to TI, but there can be no assurance
that any deal will be consummated on terms acceptable to both the Company and TI
or another third party. Without such an arrangement, it is
15
highly likely that the Company would default on its obligations under the TI
Note, at which time TI would be entitled to exercise any and all remedies
available to it under the TI Note and applicable law, including bringing suit
against the Company and its assets. Should TI seek to enforce its right to
timely repayment of the TI Note, there is a risk that the Company will not be
able to continue as a going concern.
On May 19, 2003, the Company executed a note modification agreement with
Centura Bank to modify the note dated March 19, 2003. The effective date of the
modification was established when the Company made a principal payment on the
note for $355,000. The payment was made to Centura on May 21, 2003. The results
of the modification is to reduce the monthly principal payment to $21,000 plus
accrued interest beginning on June 15, 2003 and continuing until July 15, 2006
on which date the balance of the note will mature. Also, beginning on the
effective date of the modification, the interest rate on the outstanding
principal shall be calculated at the bank's 30-day LIBOR base rate plus 2.5% per
annum. As of October 31, 2003, Centura has waived the requirement of the Company
to produce a borrowing base calculation on a monthly basis. The Company's
qualifying accounts receivable and inventory are adequate to support the
outstanding loan at January 31, 2004.
Forward-Looking Statements
Statements contained in this document, which are not historical in
nature, are forward-looking within the meaning of the Private Securities
Litigation Reform Act of 1995. Forward-looking statements give our current
expectations of forecasts of future events. You can identify these statements by
the fact that they do not relate strictly to historical or current facts. They
use words such as "estimate," "intend," "plan," and other words and terms of
similar meaning in connection with any discussion of future operating and
financial performance. Forward-looking statements are subject to risks and
uncertainties that may cause future results to differ materially from those set
forth in such forward-looking statements. Cox Technologies undertakes no
obligation to update forward-looking statements to reflect events or
circumstances after the date hereof. Such risks and uncertainties with respect
to Cox Technologies include, but are not limited to, its ability to successfully
implement internal performance goals, performance issues with suppliers,
regulatory issues, competition, the effect of weather on customers, exposure to
environmental issues and liabilities, variations in material costs and general
and specific economic conditions, the risk that the sale of assets to Sensitech
and/or the dissolution may not be consummated in a timely manner, on the terms
described above, or at all; the discretion of the Cox Technologies' shareholders
in approving the sale and/or the dissolution; changes in the value of the assets
and liabilities transferred to Sensitech and retained by Cox Technologies;
performance of the business of Cox Technologies prior to the closing of the
sale; delays in distributions to Cox Technologies shareholders and reduced
distributions due to unexpected liabilities and the inability to settle
obligations to creditors; delays in distributions due to the timing of sales of
non-cash assets, claim settlements with creditors and the amounts paid out under
warranty claims. From time to time, Cox Technologies may include forward-looking
statements in oral statements or other written documents.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
There was no material change in the Company's market risk during the
quarter ended January 31, 2004. For additional information on market risk, refer
to the "Quantitative and Qualitative Disclosure About Market Risk" section of
the Company's Annual Report on Form 10-K for the year ended April 30, 2003.
Item 4. DISCLOSURE CONTROLS AND PROCEDURES
The Co-Chief Executive Officers and the Chief Financial Officer of the
Company have concluded, based on their evaluation as of a date within 90 days
prior to the date of the filing of this Report, that the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in the reports filed or submitted by it under the
Securities Act of 1934, as amended, are recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commissions rules and forms and include controls and procedures designed to
ensure that information required to be disclosed by the Company in such reports
is accumulated and communicated to the Company's management, including the
Co-Chief Executive Officers and the Chief Financial Officer of the Company, as
appropriate to allow timely decisions regarding required disclosures.
There were no significant changes in the Company's internal controls or in
other factors that could significantly affect these controls subsequent to the
date of such evaluation.
16
PART II. OTHER INFORMATION AND SIGNATURE
Item 2. Changes in Securities and Use of Proceeds
(a) There were no changes in the Company's equity securities during
the quarter ended January 31, 2004.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
31.1 - Certification by Co-Chief Executive Officer
31.2 - Certification by Co-Chief Executive Officer
31.3 - Certification by Chief Financial Officer
32.1 - Certificate of Co-Chief Executive Officers
32.2 - Certificate of Chief Financial Officer
(b) Reports on Form 8-K:
i. The Company filed on December 12, 2003 a Current Report on
Form 8-K disclosing that the Company had entered into an
Asset Purchase Agreement with Sensitech Inc whereby
Sensitech would acquire substantially all the assets of Cox
Technologies, Inc.
ii. The Company filed on January 29, 2004 a Current Report on
Form 8-K disclosing that the Company had entered into an
Asset Purchase Agreement with Rask Holding AsP whereby Rask
purchased the Company's Vitsab line of business.
17
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.
COX TECHNOLOGIES, INC.
(Registrant)
Date: 03-16-04 /s/ Brian D Fletcher
-------- ------------------------
Brian D. Fletcher
Co-Chief Executive Officer
Date: 03-16-04 /s/ Kurt C. Reid
-------- ------------------------
Kurt C. Reid
Co-Chief Executive Officer
Date: 03-16-04 /s/ John R. Stewart
-------- -------------------------
John R. Stewart
Chief Financial Officer
18