Following three consecutive years years of substantial losses, Neotec Corp. has reported profits of $516,016 ($1.16 a share) for the year ended Jan. 31.
The Silver Spring company, which develops and manufactures electro-optical equipment to measure the quality of agriculture and industrial products, has suffered net losses of $1.5 million in the prior year, $2.77 million in fiscal 1975 and $770,669 in fiscal 1974.
In a report to stockholders, Neotec president Robert D. Rosenthal also reported that sales jumped to $5.4 million in the recent year compared with $4.2 million in the previous period.
He attributed Neotec's recovery to "growing acceptance" of the company's instruments by the agricultural business community. A grain quality analyzer which provides instant measurements of protein, moisture, and oil content of grain and oilseeds - is used widely in the grain industry, for example.
A key problem affecting Neotec in recent years was a ground meat analyzer, introduced in 1974 but subsequently recalled after operational difficulties. Investments in the product and lost sales contributed to the red ink performance in the three fiscal years.
In a report to the Securities and Exchange Commission, Neotec noted that its problems aren't over, despite the return to profitability. Substantial deficiencies in working capital and stockholders' equity have been suffered and in the past two fiscal years, Neotec defaulted under certain loan agreements.
"The continuation of the company as a going concern and the realization of the carrying value of its assets ($2.6 million) are dependent upon a number of factors, including the ability of the company to fund principal and interest payments on notes in default," Neotec said in its required annual report to the SEC.
Rosenthal, meanwhile told stockholders:
Starting in March, Neotec began paying current interest to its note holders for the first time in 18 months. The company also is studying methods of reducing its $5 million of debts.
Direct sales and service staffs are being enlarged in the U.S. and Canada; start-up expenses for new international sales operations may have a negative impact on earnings for the early months of the current fiscal year but "should result in better growth" for the balance of the year.
Thomas P. Murphy, a venture capital columnist for Forbes Magazine and operator of a venture capital fund in Stamford, Conn., has been elected to Neotec's board of directors.