-----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, GGv3X4m08If1m1/X+W608Lg9t3+p68O7Hg1+f0MQnnijQbl280uur3AuVOBjE+hX tEKyHv33tZiP1BbTXsSjMQ== 0001260415-04-000010.txt : 20040212 0001260415-04-000010.hdr.sgml : 20040212 20040212082325 ACCESSION NUMBER: 0001260415-04-000010 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040212 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: 04588327 BUSINESS ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08091 BUSINESS PHONE: 8567674600 MAIL ADDRESS: STREET 1: 385 COOPER RD CITY: WEST BERLIN STATE: NJ ZIP: 08091 10QSB 1 dyn1203-10q.txt DYNASIL CORPORATION OF AMERICA 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 DECEMBER 31, 2003 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 2,238,881 shares of common stock, par value $.0005 per share, outstanding as of January 31, 2004. -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 DECEMBER 31, 2003 AND SEPTEMBER 30, 2003 3 CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002 4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND 2002 5 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 6 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS 7 ITEM 3. CONTROLS AND PROCEDURES 9 PART II. OTHER INFORMATION 10 ITEM 1 LEGAL PROCEEDINGS 10 ITEM 2 CHANGES IN SECURITIES 10 ITEM 3 DEFAULTS ON SENIOR SECURITIES 10 ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 10 ITEM 5 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 December 31 September 30 2003 2003 ---------- ---------- Current assets Cash and cash equivalents $ 305,212 $ 323,321 Accounts receivable, Net 305,811 242,919 Inventory 400,744 435,820 Other current assets 7,497 38,935 ---------- ---------- Total current assets 1,019,264 1,040,995 Property, Plant and Equipment, net 518,816 558,191 Other assets 9,802 10,654 ---------- ---------- Total Assets $1,547,882 $1,609,840 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Current portion - long-term debt $112,753 $140,925 Accounts payable 162,196 131,518 Accrued expenses 56,863 73,624 ---------- ---------- Total current liabilities 331,812 346,067 Long-term Debt, net 751,114 772,781 Stockholders' Equity Common Stock, $.0005 par value, 25,000,000 shares authorized, 3,048,476 and 3,047,857 shares issued 2,238,316 and 2,237,697 shares outstanding 1,524 1,524 Additional paid in capital 1,089,718 1,089,718 Retained earnings 360,056 386,092 ---------- ---------- 1,451,298 1,477,334 Less: 810,160 shares in treasury - at cost (986,342) (986,342) ---------- ---------- Total stockholders' equity 464,956 490,992 ---------- ---------- Total Liabilities and Stockholders' Equity $1,547,882 $1,609,840 ========== ==========
-3- DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) Three Months Ended December 31 2003 2002 -------- --------- Sales $ 622,494 $ 656,156 Cost of Sales 462,548 494,620 -------- -------- Gross profit 159,946 161,536 Selling, general and administrative 178,581 180,521 -------- -------- Loss from Operations (18,635) (18,985) Interest expense - net ( 7,401) ( 12,015) -------- -------- Loss before Income Taxes ( 26,036) ( 31,000) Income Taxes 0 0 -------- -------- Net Loss $ ( 26,036) $( 31,000) ======== ======== Net loss per share Basic $ ( 0.01) $ ( 0.01) Diluted $ ( 0.01) $ ( 0.01) Weighted average shares outstanding 2,238,254 2,388,361
-4- DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Three Months Ended December 31 2003 2002 ---------- ----------- Cash flows from operating activities: Net loss $( 26,036) $ ( 31,000) Adjustments to reconcile net loss to net cash provided by operating activities: Depreciation 39,375 49,251 Amortization expense 852 852 (Increase) decrease in: Accounts receivable ( 62,892) 67,465 Inventories 35,076 63,794 Prepaid expenses and other current assets 31,438 ( 3,799) Increase (decrease) in: Accounts payable 30,678 (87,330) Accrued expenses (16,761) (30,196) --------- ----------- Net cash provided by operating activities 31,730 29,037 --------- ----------- Cash flows from investing activities: Acquisition of property, plant and equipment 0 ( 7,505) --------- ----------- Net cash (used in) investing activities 0 ( 7,505) --------- ----------- Cash flows from financing activities: Buyback of common stock 0 ( 13,236) Repayments of long-term debt ( 49,839) ( 53,188) --------- ----------- Net cash (used in) financing activities ( 49,839) ( 66,424) --------- ----------- Net (decrease) in cash ( 18,109) ( 44,892) Cash - beginning of period 323,321 172,118 --------- ----------- Cash - end of period $ 305,212 $ 127,226 ========= ===========
-5- DYNASIL CORPORATION OF AMERICA NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The consolidated balance sheet as of September 30, 2003 was audited and appears in the Form 10-KSB previously filed by the Company. The consolidated balance sheet as of December 31, 2003 and the consolidated statements of operations and cash flows for the three months ended December 31, 2003 and 2002, 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 December 31, 2003 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, 2003 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: December 31, 2003 September 30, 2003 ----------------- ------------------ Raw Materials $ 176,926 $ 182,666 Work-in-Process 93,708 118,836 Finished Goods 130,110 134,318 ------- ------- $ 400,744 $ 435,820 ======= ======= 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- 4. Stock Based Compensation The Company has adopted the disclosure provisions of SFAS No. 148 effective December 31, 2002 and continues to account for stock-based compensation using the intrinsic value method. Accordingly, no compensation cost has been recognized in the financial statements for stock options issued to employees since the options were granted at the quoted market price on the date of grant. Stock options granted to consultants and other non- employees are reported at fair value in accordance with SFAS No. 123. The pro forma disclosures of net loss and net loss per common share required by SFAS No. 123 are shown below. December 31, 2003 December 31, 2002 ----------------- ----------------- Net loss, as reported ($ 26,036) ($ 31,000) Add: Stock-based employee compensation expense included in reported net income -0- -0- Less: Total stock-based employee compensation expense determined under fair value based method for all options -0- -0- ----------- ----------- Pro forma net loss ($ 26,036) ($31,000) =========== =========== Actual net loss per common share ($ 0.01) ($ 0.01) Pro forma net loss per common share ($ 0.01) ($ 0.01) During the quarters ended December 31, 2003 and 2002, no stock options were granted and no options were exercised. The Company cancelled -0- and 73,977 options during the quarters ended December 31, 2003 and 2002, respectively. Compensation expense relating to non-employee stock options granted during the quarters ended December 31, 2003 and 2002 were $-0-. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Overview The Company continued to struggle through the quarter with reduced sales volume as a result of the decline in demand for synthetic fused silica (SFS), although quote activity in both volume and make-up was encouraging for the first time in the last four quarters. In an effort to reduce our dependency on the fluctuating demand for SFS we have begun to offer a select group of other optical glasses to complement our existing line. It is too early to determine the overall effect of this effort on the near future results. We continue to generate positive cash flow from operations, while reducing our debt load. -7- Results of Operations Sales were $622,494 for the three months ended December 31, 2003, a decrease of 5.1% over sales of $656,156, for the three months ended December 31, 2002. Even though the decrease is disappointing, we are encouraged by the fact that the quarterly sales are 10.8% higher than the average quarterly sales for the last three previous quarters. Management believes based on industry publications and customer feedback that this upward trend in sales will continue through the fiscal year. We do not expect the traditional steep increase that has historically prevailed in our industry, but more of a steady, gradual improvement. During the quarter we added new materials (other optical glasses) to our product line. Our customer base currently has a need for these other types of glasses and they are a natural fit with our synthetic fused silica offerings. We expect to see new sales in this area over the next few quarters. Cost of sales were $462,548, or 74.3% of sales, for the three months ended December 31, 2003 and $494,620, or 75.3% of sales, for the three months ended December 31, 2002. The 1.0% improvement in cost of sales is related to the continuing monitoring of our expenses. We are starting to see the results of our efforts over the last year of reducing our costs to be more in line with the reduced levels of demand. Gross profit was $159,946, or 25.7% of sales, for the three months ended December 31,2003 and $161,536, or 24.7% of sales, for the three months ended December 31, 2002. The 1.0% improvement is related to those items discussed above. Selling, general and administrative expenses were $178,581, or 28.6% of sales, for the three months ended December 31, 2003. This is a decrease of $1,940, over the three months ended December 31, 2002 when expenses were $180,521, or 27.5% of sales. Increases in Insurance and Advertising Expenses were offset by a decrease in Computer Expense. Interest expense decreased to $7,401 for the three months ended December 31, 2003, from $12,015 for the three months ended December 31, 2002. The lower interest expense is a direct result of reducing our debt during fiscal year 2003, as discussed in previous filings. The net loss of $26,036 for the three months ended December 31, 2003, compared to a net loss of $31,000, for the three months ended December 31, 2002, generated a loss per share of $0.01, for the three months ended December 31, 2003 and 2002. The Company has no provision for income taxes for either period in 2003 or 2002. As of September 30, 2003, we have approximately $1,200,000 of net operating loss carryforwards to offset future income for federal tax purposes expiring in various years through 2020. In addition, the Company has approximately $633,000 of net operating loss carryforwards to offset future taxable income for state income tax purposes, expiring in various years through 2012. -8- Liquidity and Capital Resources Cash decreased by $18,109 for the three months ended December 31,2003. Cash provided from operations of $31,730 was offset by reductions in debt of $49,839. The Company will seek to refinance existing long-term debt to take advantage of lower interest rates and in anticipation of the balloon payment of $700,000, due in August 2005. 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. 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. ITEM 3 CONTROLS AND PROCEDURES The Company carried out an evaluation, under the supervision and the participation of its management, of the effectiveness of its disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the period covered by this report. Based on this evaluation, the Company's principal executive officer and principal financial officer concluded that its disclosure controls and procedures were effective. It should be noted that design of any system controls is based in part upon certain assumptions, and there can be no assurance that any design will succeed in achieving its stated goal. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the internal controls subsequent to the date the Company completed its evaluation, including any corrective actions with regard to significant deficiencies and material weakness. -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 NONE ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits and index of Exhibits 31.1(a) and (b) Rule 13a-14(a)/15d-14(a) Certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished but not filed for purposes of the Securities Exchange Act of 1934) (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:February 11,2004 --------------------------------- -------------------- John Kane, President, CEO, Treasurer, Chief Financial Officer and Principal Accounting Officer -11- EX-31 3 dynex311a-1203q.txt SARBANES/OXLEY SECTION 302 CERTIFICATION OF PRESIDENT/CEO EXHIBIT 31.1(a) CERTIFICATION PURSUANT TO RULE 13a-14(a)/15D-14(a) and SECTION 302 OF THE SARBANES-OXLEY ACT I, John Kane, the President and Chief Executive Officer of Dynasil Corporation of America, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dynasil Corporation of America; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s)and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the small business issuer and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and -1- 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: February 11, 2004 /s/ John Kane ------------------ --------------------------- John Kane President and Chief Executive Officer -2- EX-31 4 dynex311b-1203q.txt SARBANES/OXLEY SECTION 302 CERTIFICATION OF CFO EXHIBIT 31.1 (b) CERTIFICATION PURSUANT TO RULE 13a-14(a)/15D-14(a) and SECTION 302 OF THE SARBANES-OXLEY ACT I, John Kane, the President and Chief Financial Officer of Dynasil Corporation of America, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Dynasil Corporation of America; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officer(s)and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d- 15(f)) for the small business issuer and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and -1- 5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting. Date: February 11, 2004 /s/ John Kane ---------------------------- John Kane President and Chief Financial Officer -2- EX-32 5 dynex32-1203q.txt SARBANEX/OXLEY SECTION 906 CERTIFICATION EXHIBIT 32.1 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 ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, John Kane, President, Chief Executive Officer and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 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 President, Chief Executive Officer and Chief Financial Officer February 11, 2004 -----END PRIVACY-ENHANCED MESSAGE-----