-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EPkX13XK2YGL5gksYiFslnLjDzuLdDjAntJiSsQny1Dh7y/tZG2byT/r0ohyHJRT uLdKDgXiw6O1YVySvxqJ8w== 0001009191-01-500032.txt : 20010815 0001009191-01-500032.hdr.sgml : 20010815 ACCESSION NUMBER: 0001009191-01-500032 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DYNASIL CORP OF AMERICA CENTRAL INDEX KEY: 0000030831 STANDARD INDUSTRIAL CLASSIFICATION: GLASS, GLASSWARE, PRESSED OR BLOWN [3220] IRS NUMBER: 221734088 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-27503 FILM NUMBER: 1708585 BUSINESS ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08009 BUSINESS PHONE: 8567674600 MAIL ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08091 10QSB 1 dyn0601-10qsb.txt FORM 10QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB (Mark One) XX QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - --- ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001 TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE - --- ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______. Commission file number 000-27503 ____________________ DYNASIL CORPORATION OF AMERICA ------------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) New Jersey 22-1734088 -------------- ------------------------------- (State or other jurisdiction (IRS Employer Identification No.) of incorporation) 385 Cooper Road, West Berlin, New Jersey, 08091 ---------------------------------------------------------- (Address of principal executive offices) (856) 767-4600 -------------------------------------------------- (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days) Yes XX No ---- ---- The Company had 2,372,614 shares of common stock, par value $.0005 per share, outstanding as of July 31, 2001. 1 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES INDEX PAGE PART 1. FINANCIAL INFORMATION ---- ITEM 1. FINANCIAL STATEMENTS DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES ----------------------------------------------- CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2001 AND SEPTEMBER 30, 2000 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2001 AND 2000 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2001 AND 2000 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 7 PART II. OTHER INFORMATION 10 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 10 SIGNATURES 11 2 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED) ASSETS June 30 September 30 2001 2000 ---------- ---------- Current assets Cash and cash equivalents $ 361,554 $ 249,695 Accounts receivable 590,795 608,488 Inventory 783,637 909,223 Other current assets 34,452 32,596 ---------- ---------- Total current assets 1,770,438 1,800,022 Property, Plant and Equipment, net 1,765,034 1,838,599 Other Assets Restricted cash 200,000 0 Other Assets 19,125 20,534 ---------- ---------- Total Assets $3,754,597 $3,659,135 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion - long-term debt $416,289 $147,859 Accounts payable 105,371 101,871 Accrued expenses 181,145 165,751 ---------- ---------- Total current liabilities 702,805 415,481 Long-term Debt, net 1,169,822 1,620,885 Stockholders' Equity Common Stock, $.0005 par value, 25,000,000 shares authorized, 3,013,001 and 2,997,292 shares issued 2,372,377 and 2,356,668 shares outstanding 1,507 1,499 Additional paid in capital 1,079,380 1,062,309 Retained earnings 1,760,386 1,518,264 ---------- ---------- 2,841,273 2,582,072 Less 640,624 shares in treasury - at cost (959,303) (959,303) ---------- ---------- Total stockholders' equity 1,881,970 1,622,769 ---------- ---------- Total Liabilities and Stockholders' Equity $3,754,597 $3,659,135 ========== ==========
3 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended June 30 June 30 2001 2000 2001 2000 ---------- --------- ---------- ---------- Sales $1,321,187 $847,608 $4,025,547 $2,653,350 Cost of Sales 909,800 612,107 2,784,630 1,914,238 ---------- -------- ---------- ---------- Gross profit 411,387 235,501 1,240,917 739,112 Selling, general and administrative 234,241 176,023 649,588 517,819 ---------- --------- ---------- ---------- Income from Operations 177,146 59,478 591,329 221,293 Other income (expense) Interest expense - Net ( 30,571) ( 48,942) (116,297) (141,912) Other Charges (175,000) 0 (175,000) Loss on Disposal of Asset (57,911) 0 (57,911) 0 ---------- --------- ---------- ---------- Income (Loss) before Income Taxes (86,336) 10,536 242,121 79,381 Provision (benefit) for Income Tax 0 0 0 0 ---------- --------- ---------- ---------- Net income $ (86,336) $ 10,536 $ 242,121 $ 79,381 ========= ======== =========== ========== Net income (loss) per share Basic $ ( 0.04) $ 0.00 $ 0.10 $ 0.03 Diluted $ ( 0.04) $ 0.00 $ 0.10 $ 0.03 Weighted average shares outstanding 2,372,481 2,354,361 2,366,236 2,351,654
4 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended June 30 2001 2000 ---------- ----------- Cash flows from operating activities: Net income $ 242,121 $ 79,381 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 233,166 256,929 Amortization expense 2,556 2,556 Allowance for doubtful accounts Loss on disposal of Asset 57,900 0 (Increase) decrease in: Accounts receivable 17,693 (141,554) Inventories 125,586 (9,425) Prepaid expenses and other current assets (1,856) 1,585 Other assets (1,147) (4,181) Increase (decrease) in: Accounts payable 3,500 38,875 Accrued expenses 15,393 (65,242) --------- ----------- Net cash provided by operating activities 694,912 158,924 --------- ----------- Cash flows from investing activities: Acquisition of property, plant and equipment (95,201) (50,642) Increase in restricted cash (200,000) 0 --------- ----------- Net cash used in investing activities (295,201) (50,642) --------- ----------- Cash flows from financing activities: Issuance of common stock 17,081 2,659 Proceeds from Bank Debt 200,000 0 Repayments of long-term debt (504,933) (118,157) --------- ----------- Net cash used in financing activities (287,852) (115,508) --------- ----------- Net increase (decrease) in cash 111,859 (7,226) Cash - beginning of period 249,695 140,253 --------- ----------- Cash - end of period $ 361,554 $ 133,027 ========= ===========
5 DYNASIL CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The consolidated balance sheet as of September 30, 2000 was audited and appears in the Form 10-KSB previously filed by the Company. The consolidated balance sheet as of June 30, 2001 and the consolidated statements of operations and cash flows for the nine months ended June 30, 2001 and 2000, and the related information contained in these notes have been prepared by management without audit. In the opinion of management, all adjustments (which include only normal recurring items) necessary to present fairly the financial position, results of operations and cash flows in conformity with generally accepted accounting principles as of June 30, 2001 and for all periods presented have been made. Interim operating results are not necessarily indicative of operating results for a full year. Certain information and note disclosures normally included in the Company's annual financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's September 30, 2000 Annual Report on Form 10-KSB previously filed by the Company. 2. Inventories Inventories are stated at the lower of average cost or market. Cost is determined using the first-in, first-out (FIFO) method. Inventories consist primarily of raw materials, work-in-process and finished goods. The Company evaluates inventory levels and expected usage on a periodic basis and records adjustments for impairments as required. Inventories consisted of the following: June 30, 2001 September 30, 2000 ----------------- ------------------ Raw Materials 13,966 22,887 Work-in-Process 621,851 747,802 Finished Goods 147,820 138,534 ------- ------- 783,637 909,223 ======= ======= 3. Net Income Per Share Basic net income per share is computed using the weighted average number of common shares outstanding. The dilutive effects of potential common shares outstanding are included in diluted net earnings per share. Diluted net earnings per share exclude the impact of potential common shares since they would have resulted in an antidilutive effect. 4. Supplementary Disclosure of Cash Flow Information Non-cash investing and financing activities during the nine months ended June 30, 2001 were as follows: Purchase of property and equipment 217,501 Debt incurred (122,300) --------- Cash paid for property and equipment 95,201 ========= 6 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results of Operations Revenues for the three months ended June 30, 2001 were $1,321,187, an increase of 55.8% over revenues of $847,608 for the three months ended June 30, 2000. Revenues for the nine-months ended June 30, 2001 were $4,025,547, an increase of 51.7% over revenues of $2,653,350 for the nine-months ended June 30, 2000. The strong demand for synthetic fused silica and our ability to meet customer quick delivery requirements has played a major role in the improved revenues. We have seen growth in the traditional optics market as well as the rapidly increasing uses of synthetic fused silica in the electro-optical markets. Cost of sales for the three months ended June 30, 2001 were $909,800, or 68.8% of sales, an increase of $297,693 over the three months ended June 30, 2000 of $612,107, or 72.2% of sales. Cost of sales for the nine-months ended June 30, 2001 were $2,784,630, or 69.2% of sales, and increase of $870,392 over the nine-months ended June 30, 2000 of $1,914,238, or 72.1% of sales. Improvements, as measured by percentage of sales, in the current fiscal year can be attributed to our ability to control manufacturing expenses. A recent upgrade in our production schedule system enabled us to better manage the workflow. We were able to increase the throughput with minimal increase in manpower. A recent purchase of capital equipment also helped in this area. Gross profit for the three months ended June 30, 2001 was $411,387, or 31.1% of sales, an increase of $175,886 over the three months ended June 30, 2000 of $235,501, or 27.8% of sales. Gross profit for the nine months ended June 30, 2001 was $1,240,917, or 30.8% of sales, an increase of $501,805 over the nine months ended June 30, 2000 of $739,112, or 27.9% of sales. As discussed above increased sales and controlling expenses contributed to the substantial improvement. Selling, general and administrative expenses for the three months ended June 30, 2001 were $234,241, or 17.7% of sales, an increase of $58,218 over the three months ended June 30, 2000 of $176,023, or 20.8% of sales. Selling, general and administrative expenses for the nine months ended June 30, 2001 were $649,588, or 16.1% of sales, an increase of $131,769 over the nine months ended June 30, 2000 of $517,819, or 19.5% of sales. Major components of the increased selling, general and administrative expenses were an increase in sales salaries as a result of commissions being paid on higher sales, increased investor relations expenses, increased travel expense and increase in directors fees. Effective January 2001 the Board of Directors approved the following cash compensation for serving on the board: Chairman of the Board, $2,500 per month, all other non-employee directors, $1,000 per month. Prior to this period board members were compensated with stock options. Interest expense net, for the three months ended June 30, 2001 was $30,571, a decrease of $18,371 over the three months ended June 30, 2000 of $48,942. Interest expense for the nine months ended June 30, 2001 was $116,297, a decrease of $25,615 over the nine months ended June 30, 2000 of $141,912. (See discussion in Liquidity and Capital Resources section) In June 2001 management prepared an evaluation of the feasibility of continuing to pursue the market for "recycled" synthetic fused silica. This market encompasses the use of "drop-offs", converted to another form by melting or crushing, for various applications. The lack of a strong market led management to abandon this segment. This decision resulted in management writing down the carrying value of inventory identified for this market. The result was a one time charge of $175,000 to operations. 7 In June 2001 management re-evaluated the need for an addition to the existing plant. Previous engineering studies, drawings and permits had been completed with the goal to build a facility that could produce Excimer grade material. Further analysis showed that we could not compete in the Excimer grade material market and that the total cost to construct and operate a plant to manufacture Excimer material, had become cost prohibitive. This decision required management to write down the carrying value of the engineering work to date on the project. The result was a $57,911 charge for loss on disposal of Asset. Net loss for the three months ended June 30, 2001 was $86,336, or a negative $.04 in basic loss per share, a decrease of $96,872 from the net income for the three months ended June 30, 2000 of $10,536, or $.00 in basic earnings per share. Net income for the nine months ended June 30, 2001 was $242,121, or $.10 in basic earnings per share, an increase of $162,740 over the nine months ended June 30, 2000 of $79,381, or $.03 in basic earnings per share. The Company has no provision for income taxes for either period in 2001 or 2000. As of September 30, 2000, we have approximately $790,000 of net operating loss carryforwards to offset future income for federal tax purposes expiring in various years through 2019. In addition, the Company has approximately $214,000 of net operating loss carryforwards to offset certain future states' taxable income, expiring in various years through 2007. Liquidity and Capital Resources Cash increased by $111,859 for the nine months ended June 30,2001. Cash provided from operations of $694,912 was primarily used to reduce debt by $304,933, acquire property plant and equipment for $95,201, and increase restricted cash by $200,000. In March 2001 management negotiated a $200,000 three-year term note with Premier Bank at 7.25% interest, collateralized by $200,000 of certificates of deposit earning 5.12% interest. The funds were used to pay off $200,000 of subordinated debt at 12% interest that was due in December 2001. In addition, $150,000 of the 12% subordinated debt was paid off in January 2001 and June 2001 from internally generated funds. As of June 30, 2001 all of the 12% subordinated debt has been paid off. The Company believes that its current cash and cash equivalent balances, and net cash generated by operations, will be sufficient to meet its anticipated cash needs for working capital for at least the next 12 months. Expenditures for capital improvements in the next three to nine months will come from internally generated funds. Any business expansion will require the Company to seek additional debt or equity financing. Forward-Looking Statements The statements contained in this Quarterly Report on Form 10-QSB which are not historical facts, including, but not limited to, certain statements found under the captions "Results of Operations" and "Liquidity and Capital Resources" above, are forward-looking statements that involve a number of risks and uncertainties. The actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are the risks and uncertainties discussed in this Quarterly Report on Form 10-QSB, including, without limitation, the portions of such reports under the captions referenced above, and the uncertainties set forth from time to time in the Company's filings with the Securities and Exchange Commission, and other public statements. 8 Such risks and uncertainties include, without limitation, seasonality, interest in the Company's products, consumer acceptance of new products, general economic conditions, consumer trends, costs and availability of raw materials and management information systems, competition, litigation and the effect of governmental regulation. The Company disclaims any intention or obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. 9 PART II OTHER INFORMATION - ------------------ ITEM 1 LEGAL PROCEEDINGS NONE ITEM 2 CHANGES IN SECURITIES NONE ITEM 3 DEFAULTS ON SENIOR SECURITIES NONE ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS NONE ITEM 5 OTHER INFORMATION On August 1, 2001, John Kane was appointed CEO of the Company to assume the duties of Gen. Charles Searock, who has retired from active management. Mr. Kane also became a director of the Company upon his assumption of the CEO duties. The position of CEO is in addition to Mr. Kane's responsibility as President, Treasurer and Chief Financial Officer. Gen. Searock has agreed to remain a member of the Board of Directors. ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 10 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. DYNASIL CORPORATION OF AMERICA BY: /s/ John Kane DATED: August 14, 2001 --------------------------------- -------------------- John Kane, President, CEO, Treasurer, Chief Financial Officer and Principal Accounting Officer 11 -----END PRIVACY-ENHANCED MESSAGE-----