-----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, L1ZwgHEuFQCtaztVflFxGGcsIHpDkvFqfSDruz9ZHyMHUNBVWOvZ5WJL7XHExjvr Q4dAafpKLXerr/JFxASkgw== 0001009191-02-000015.txt : 20020812 0001009191-02-000015.hdr.sgml : 20020812 20020812104152 ACCESSION NUMBER: 0001009191-02-000015 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20020630 FILED AS OF DATE: 20020812 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: 02725952 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 dyn0602-10qsb.txt FORM 10-QSB 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, 2002 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 2,397,860 shares of common stock, par value $.0005 per share, outstanding as of July 31, 2002. 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, 2002 AND SEPTEMBER 30, 2001 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE AND NINE MONTHS ENDED JUNE 30, 2002 AND 2001 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE MONTHS ENDED JUNE 30, 2002 AND 2001 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 7 PART II. OTHER INFORMATION 9 ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K 9 SIGNATURES 10-11 2 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS UNAUDITED) ASSETS June 30 September 30 2002 2001 ---------- ---------- Current assets Cash and cash equivalents $ 156,880 $ 473,385 Accounts receivable 300,168 469,030 Inventory 624,378 768,707 Other current assets 39,187 26,577 ---------- ---------- Total current assets 1,120,613 1,737,699 Property, Plant and Equipment, net 926,671 1,701,730 Other Assets Restricted cash 200,000 200,000 Other Assets 16,317 18,873 ---------- ---------- Total Assets $2,263,601 $3,658,302 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion - long-term debt $202,205 $419,493 Accounts payable 101,794 139,736 Accrued expenses 84,377 120,527 ---------- ---------- Total current liabilities 388,376 679,756 Long-term Debt, net 965,946 1,116,187 Stockholders' Equity Common Stock, $.0005 par value, 25,000,000 shares authorized, 3,036,171 and 3,018,383 shares issued 2,395,547 and 2,377,759 shares outstanding 1,518 1,509 Additional paid in capital 1,087,713 1,082,542 Retained earnings 779,351 1,737,611 ---------- ---------- 1,868,582 2,821,662 Less 640,624 shares in treasury - at cost (959,303) (959,303) ---------- ---------- Total stockholders' equity 909,279 1,862,359 ---------- ---------- Total Liabilities and Stockholders' Equity $2,263,601 $3,658,302 ========== ==========
3 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended Nine Months Ended June 30 June 30 2002 2001 2002 2001 ---------- --------- ---------- ---------- Sales $ 651,281 $1,321,187 $2,057,490 $4,025,547 Cost of Sales 623,289 909,800 1,772,553 2,784,630 ---------- --------- ---------- ---------- Gross profit 27,992 411,387 284,937 1,240,917 Selling, general and administrative 174,223 234,241 511,146 649,588 Asset impairment ( 677,676) ( 677,676) ---------- --------- ---------- ---------- Income (loss) from Operations ( 823,907) 177,146 ( 903,885) 591,329 Other income (expense) Interest expense - net ( 15,102) ( 30,571) ( 54,377) ( 116,297) Other charges 0 ( 175,000) 0 ( 175,000) Loss on disposal of asset 0 ( 57,911) 0 ( 57,911) ---------- --------- ---------- ---------- Income (loss) before Income Taxes ( 839,009) ( 86,336) ( 958,262) 242,121 Income Taxes 0 0 0 0 ---------- --------- ---------- ---------- Net income (loss) ($839,009) ( $86,336) ($958,262) $ 242,121 ========= ========== =========== ========== Net income (loss) per share Basic ( $0.35) $ ( 0.04) ( $0.40) $ 0.10 Diluted ( $0.35) $ ( 0.04) ( $0.40) $ 0.10 Weighted average shares outstanding 2,395,514 2,372,481 2,391,928 2,366,236
4 DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Nine Months Ended June 30 2002 2001 ---------- ----------- Cash flows from operating activities: Net income (loss) ($ 958,262) $ 242,121 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 249,300 233,166 Amortization expense 2,556 2,556 Asset impairment 677,676 0 Loss on disposal of asset 0 57,900 (Increase) decrease in: Accounts receivable 168,862 17,693 Inventories 144,329 125,586 Prepaid expenses and other current assets (12,610) ( 1,856) Other assets 0 ( 1,147) Increase (decrease) in: Accounts payable (37,942) 3,500 Accrued expenses (36,151) 15,393 --------- ----------- Net cash provided by operating activities 197,758 694,912 --------- ----------- Cash flows from investing activities: Acquisition of property, plant and equipment (151,917) (95,201) Increase in restricted cash 0 (200,000) --------- ----------- Net cash used in investing activities (151,917) (295,201) --------- ----------- Cash flows from financing activities: Issuance of common stock 5,182 17,081 Proceeds from Bank Debt 0 200,000 Repayments of long-term debt (367,529) (504,933) --------- ----------- Net cash used in financing activities (362,347) (287,852) --------- ----------- Net increase (decrease) in cash (316,506) 111,859 Cash - beginning of period 473,386 249,695 --------- ----------- Cash - end of period $ 156,880 $ 361,554 ========= ===========
5 DYNASIL CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The consolidated balance sheet as of September 30, 2001 was audited and appears in the Form 10-KSB previously filed by the Company. The consolidated balance sheet as of June 30, 2002 and the consolidated statements of operations and cash flows for the nine months ended June 30, 2002 and 2001, 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, 2002 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, 2001 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, 2002 September 30, 2001 ----------------- ------------------ Raw Materials 290,933 379,899 Work-in-Process 180,116 224,739 Finished Goods 153,329 164,069 ------- ------- 624,378 768,707 ======= ======= 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. 6 ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results of Operations Revenues for the three months ended June 30, 2002 were $651,281, a decrease of 50.7% over revenues of $1,321,187 for the three months ended June 30, 2001. Revenues for the nine-months ended June 30, 2002 were $2,057,490 a decrease of 48.9% over revenues of $4,025,490 for the nine-months ended June 31, 2001.The Company continues to feel the effect of the continued slowdown in the semi-conductor and telecommunications industries. We do not anticipate any significant improvement in demand at least through the next quarter. Cost of sales for the three months ended June 30, 2002 were $623,289, or 95.7% of sales, a decrease of $286,511 over the three months ended June 30, 2001 of $909,800, or 68.8% of sales. Cost of sales for the nine-months ended June 30, 2002 were $1,772,553, or 86.1% of sales, a decrease of $1,012,077 over the nine-months ended June 30, 2001 of $2,784,630 or 69.1% of sales. The reduced demand for synthetic fused silica required management, in an effort to avoid accumulating excess inventory, to reduce output from the existing furnaces. The unabsorbed overhead, as a result of the reduced production, had a direct effect on the higher than normal cost of sales. Management has taken steps to reduce cost related to manufacturing so that going forward our cost structure will be more in line with our production levels. Gross profit for the three months ended June 30, 2002 was $27,992, or 4.3% of sales, a decrease of $383,395 over the three months ended June 30, 2001 of $411,387, or 31.1% of sales. Gross profit for the nine months ended June 30, 2002 was $284,937, or 13.8% of sales, a decrease of $955,980 over the nine months ended June 30, 2001 of $1,240,917, or 30.8% of sales. Asset impairment charges of $677,676 were required to bring the carrying value of the production furnaces in line with their market value. The combination of reduced demand and substantially reduced market pricing for synthetic fused silica required management to recognize the impairment. Selling, general and administrative expenses for the three months ended June 30, 2002 were $174,223 or 26.7% of sales, a decrease of $60,018 over the three months ended June 30, 2001 of $234,241, or 17.7% of sales. Selling, general and administrative expenses for the nine months ended June 30, 2002 were $511,146, or 24.8% of sales, a decrease of $138,442 over the nine months ended June 30, 2001 of $649,588, or 16.2% of sales. Reductions of $135,000 in employee cost were the major component of the year-to-date drop in selling, general and administrative expenses. Interest expense for the three months ended June 30, 2002 was $15,102, a decrease of $15,469 over the three months ended June 30, 2001 of $30,571. Interest expense for the nine months ended June 30, 2002 was $54,377, a decrease of $61,920 over the nine months ended June 30, 2001 of $116,297. The decrease in interest expense is related to the reduction and restructuring of our debt as mentioned in previous filings. Since June 30, 2001 total debt has been reduced by $417,960, in addition to the restructuring of $200,000 at lower rates. (See and Liquidity and Capital Resources section) Net loss for the three months ended June 30, 2002 was $839,009, or negative $.35 in diluted loss per share, a decrease of $752,673 over the net loss for the three months ended June 30, 2001 of $86,336, or $.04 in diluted loss per share. Net loss for the nine months ended June 30, 2002 was $958,262, or negative $.40 in diluted loss per share, a decrease of $1,200,383 over the nine months ended June 30, 2001 of net income of $242,121, or $.10 in diluted earnings per share. 7 The Company has no provision for income taxes for either period in 2002 or 2001. As of September 30, 2001, we have approximately $585,000 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 $17,000 of net operating loss carryforwards to offset certain future states' taxable income, expiring in various years through 2007. Liquidity and Capital Resources Cash decreased by $316,506 for the nine months ended June 30,2002. Cash provided from operations of $197,758 was primarily used to reduce debt by $367,529 and acquire property plant and equipment for $151,917. 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. The Company believes that its current cash and cash equivalent balances, along with the net cash generated by operations, is sufficient to meet its anticipated cash needs for working capital for at least the next 12 months. There are currently no plans for any major capital expenditures in the next six to nine months. 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. 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. 8 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 NONE ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits None (b) Reports on Form 8-K None 9 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 12, 2002 --------------------------------- ---------------- John Kane, President, CEO, Treasurer, Chief Financial Officer and Principal Accounting Officer CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of DYNASIL CORPORATION OF AMERICA (the "Company") on Form 10QSB for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Kane, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ' 1350, as adopted pursuant to ' 906 of the Sarbanes- Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ John Kane John Kane Chief Executive Officer August 12, 2002 10 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of Dynasil Corporation of America (the "Company") on Form 10QSB for the period ending June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Kane, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. ' 1350, as adopted pursuant to ' 906 of the Sarbanes- Oxley Act of 2002, that: (1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company. /s/ John Kane John Kane Chief Financial Officer August 12, 2002 11 -----END PRIVACY-ENHANCED MESSAGE-----