-----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, PBROD6mZWp4MJiUzw1OoaOIPoBVqEn8xq41T1ggNqXPZhPvrPECyhSMwlEHkqjHM HrU+u379dpij1L+NolYyXQ== 0001125282-00-000986.txt : 20001218 0001125282-00-000986.hdr.sgml : 20001218 ACCESSION NUMBER: 0001125282-00-000986 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001215 FILER: COMPANY DATA: COMPANY CONFORMED NAME: VIKONICS INC /NY/ CENTRAL INDEX KEY: 0000814932 STANDARD INDUSTRIAL CLASSIFICATION: COMMUNICATIONS EQUIPMENT, NEC [3669] IRS NUMBER: 132759466 STATE OF INCORPORATION: NY FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-16034 FILM NUMBER: 789847 BUSINESS ADDRESS: STREET 1: 370 NORTH STREET CITY: TETERBOR STATE: NJ ZIP: 07608 BUSINESS PHONE: 2016418077 MAIL ADDRESS: STREET 1: 370 NORTH STREET CITY: TETERBORO STATE: NJ ZIP: 07608 10QSB 1 0001.txt QUARTERLY REPORT U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarterly Period Ended: September 30, 2000 -------------------------------- [ ] TRANSITION REPORT UNDER SECTION TO 13 OR 15 (d) OF THE EXCHANGE ACT For the transition period from _________ to _________ Commission File Number O-16034 ------- VIKONICS, INC. ---------------------------------------------------------------- (Exact name of small business issuer as specified in its charter) New York 13-2759466 - ---------------------------------- ------------------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 370 North Street Teterboro, New Jersey 07608 -------------------------------------------- (Address of principal executive offices) (201) - 641-8077 ---------------- (Issuer's telephone number) NONE ------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) has 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 X No --- --- State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practical date: Number of shares outstanding at December 13, 2000: 2,933,431 shares of common stock, par value $ .02 per share. Transitional Small Business Disclosure Format (Check one): Yes No X --- --- VIKONICS, INC. INDEX
PART I Financial Statements Page No. -------- Item 1 - Financial Statements (Unaudited) Balance Sheets: September 30 and March 31, 2000 3-4 Statements of Operations For Three Months Ended September 30, 2000 and 1999 5 For Six Months Ended September 30, 2000 and 1999 6 Statements of Cash Flows For Six Months Ended September 30, 2000 and 1999 7 Notes to Financial Statements 8-9 Item 2 - Management's Discussion and Analysis or Plan of Operation 10-11 PART II: Other Information 12 Signatures 13
2 VIKONICS, INC. BALANCE SHEETS ASSETS (UNAUDITED)
September 30, 2000 March 31, 2000 ------------------ -------------- CURRENT ASSETS: Cash $ 11,773 $ 2 0,680 Accounts receivable (less allowance for doubtful accounts of $10,000) 102,226 170,498 Inventories (Note 2) 75,425 87,657 Prepaid expenses and other current assets 11,978 18,497 ----------------- ----------------- TOTAL CURRENT ASSETS 201,402 297,332 ----------------- ----------------- EQUIPMENT AND FIXTURES - AT COST: Machinery and equipment 402,735 402,735 Furniture and fixtures 67,437 67,437 ----------------- ----------------- 470,172 470,172 Less, accumulated depreciation and amortization (451,176) (448,116) ----------------- ------------------ EQUIPMENT AND FIXTURES - NET 18,996 22,056 ----------------- ----------------- OTHER ASSETS 1,200 1,200 ----------------- ----------------- $ 221,598 $ 320,588 ================= =================
See notes to financial statements. 3 VIKONICS, INC. BALANCE SHEETS LIABILITIES AND SHAREHOLDERS' (DEFICIT) (UNAUDITED)
September 30, 2000 March 31, 2000 ------------------ -------------- CURRENT LIABILITIES: Notes and loans payable (Note 3) $ 717,728 $ 717,728 Accounts payable 235,707 253,869 Accrued expenses and other current liabilities (Note 4) 1,508,987 1,359,203 Deferred service income 21,973 46,423 ----------------- ---------------- TOTAL CURRENT LIABILITIES 2,484,395 2,377,223 ----------------- ---------------- SHAREHOLDERS' (DEFICIT): Preferred stock - $1 par value: Authorized - 2,000,000 shares Issued and outstanding - none Common stock - $.02 par value: Authorized - 10,000,000 shares Issued and outstanding - 2,933,431 58,669 58,669 Paid-in capital 5,641,094 5,641,094 Retained (deficit) (7,962,560) (7,756,398) ----------------- ---------------- TOTAL SHAREHOLDERS' (DEFICIT) (2,262,797) (2,056,635) ----------------- ---------------- $ 221,598 $ 320,588 ================= ================
See notes to financial statements. 4 VIKONICS, INC. STATEMENTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 2000 1999 ---- ---- SALES - NET $ 215,922 $ 439,712 COST OF GOODS SOLD 158,777 277,980 --------- --------- GROSS PROFIT 57,145 161,732 --------- --------- COSTS AND EXPENSES: Engineering, research and development 53,100 56,817 Marketing and sales 35,340 37,517 General and administrative 82,659 78,184 Depreciation and amortization 1,530 153 Interest expense 10,524 13,822 --------- --------- TOTAL COSTS AND EXPENSES 183,153 186,493 --------- --------- NET (LOSS) $(126,008) $ (24,761) ========= ========= (LOSS) PER SHARE (Note 6) - Basic and Diluted $ (.04) $ (.01) ========= ========= See notes to financial statements. 5 VIKONICS, INC. STATEMENTS OF OPERATIONS FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 2000 1999 ---- ---- SALES - NET $ 463,952 $ 916,697 COST OF GOODS SOLD 301,189 526,993 --------- --------- GROSS PROFIT 162,763 389,704 --------- --------- COSTS AND EXPENSES: Engineering, research and development 107,770 116,347 Marketing and sales 74,217 71,902 General and administrative 162,830 161,478 Depreciation and amortization 3,060 306 Interest expense 21,048 24,346 --------- --------- TOTAL COSTS AND EXPENSES 368,925 374,379 --------- --------- NET (LOSS) INCOME $(206,162) 15,325 ========= ========= (LOSS) INCOME PER SHARE (Note 6) - Basic and Diluted $ (.07) $ .01 ========= ========= See notes to financial statements. 6 VIKONICS, INC. STATEMENTS OF CASH FLOWS FOR SIX MONTHS ENDED SEPTEMBER 30, 2000 AND 1999 (UNAUDITED) 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net (loss) income $(206,162) $ 15,325 Adjustments to reconcile net (loss) income to net cash provided by operating activities: Depreciation and amortization 3,060 306 Changes in assets and liabilities: Decrease (increase) in: Accounts receivable 68,272 99,868 Inventories 12,232 19,556 Prepaid expenses and other current assets 6,519 (737) Increase (decrease) in: Accounts payable (18,162) 24,630 Accrued expenses and other liabilities 149,784 (12,057) Deferred service income (24,450) (19,273) --------- --------- Net cash provided by operating activities (8,907) 127,618 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment and fixtures - net -- (23,089) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of short term notes -- -- Repayment of debt -- -- --------- --------- Net cash used for financing activities -- -- INCREASE (DECREASE) IN CASH (8,907) 104,529 CASH - MARCH 31 20,680 30,219 --------- --------- CASH - SEPTEMBER 30 $ 11,773 $ 134,748 ========= ========= See notes to financial statements. 7 VIKONICS, INC. NOTES TO FINANCIAL STATEMENTS Note 1. - Financial Statements The financial statements include the accounts of the Company and Vikonics Canada Inc., its wholly-owned subsidiary, an entity without any activity during the periods presented. In the opinion of the Company, the accompanying unaudited financial statements contain all necessary adjustments which are all of a normal recurring nature for the fair presentation of its financial position as of September 30, 2000, the results of operations for the three and six months ended September 30, 2000 and 1999, and changes of cash flows for the six months ended September 30, 2000 and 1999. The results of operations for the three and six months ended September 30, 2000 are not necessarily indicative of the results to be expected for the full year. Note 2. - Inventories Inventories consisted of the following: September 30, 2000 March 31, 2000 ------------------ -------------- Raw materials $ 37,162 $ 44,962 Work-in-process 8,857 12,275 Finished goods 29,406 30,420 -------------- ------------ TOTAL $ 75,425 $ 87,657 ============== ============ Note 3. - Notes and Loans Payable; Legal Proceeding Notes and loans payable consists of: September 30, 2000 March 31, 2000 ------------------ -------------- Amounts due to private investors, directors, and legal counsel. $ 717,728 $ 717,728 ------------- ------------ On June 30, 1993, the Company entered into an amended agreement with private investors that provided the Company with a loan in the amount of $200,000 repayable in one year together with an interest rate of 9% annum. In addition, the amended agreement granted the investors two-year options to purchase an aggregate of 400,000 shares of common stock at an exercise price of $4.75 per share. In July 1993, one of the private investors assigned $20,000 of the loan along with options to purchase 40,000 shares of common stock to one of the Company's directors, who has since resigned from the board. Additionally, two of the former directors provided the Company with loans aggregating $120,000 during the months of August and September 1993 payable on demand with an interest rate of 9% per annum. 8 On June 24, 1994, the Company entered into an agreement with the above private investors, former directors, and the Company's retained legal counsel. Pursuant to the agreement the due date for the investors and former directors loans and fees payable $(250,000) to legal counsel were extended until the first to occur of (i) June 30, 1996, (ii) a public financing by the Company, or (iii) a private financing of the Company of not less than $2,500,000. As June 30, 1996 date has been reached, such amounts are now due. While the Company does not have the ability to pay the amounts due to private investors, former directors and legal counsel, it has attempted to renegotiate the terms of payment of these obligations. On September 17, 1998 the private investors filed a lawsuit in the Superior Court of New Jersey for the total principal amount of $200,000 together with accrued interest of $103,000. On June 15, 1999 a Judgment by Default against the Company was entered in the Superior Court of New Jersey, Bergen County. The Company will seek a satisfactory resolution of this judgment. There can be no assurance, however, that the Company will be able to resolve the judgment. The failure to do so will cause the Company to cease as a going concern. Additionally, at September 30, 2000, the Company had a remaining balance of $147,728 that was lent to the Company by two then directors during the Company's second fiscal quarter of 1995. Both loans are payable on demand with interest at 9% per annum. Note 4. - Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following: September 30, 2000 March 31, 2000 ------------------ -------------- Accrued warranty expense $ 38,000 $ 38,000 Accrued salaries, wages, and taxes 555,541 457,328 Accrued professional fees 55,000 40,000 Accrued officers' salaries 171,228 171,228 Accrued interest 632,926 593,878 Other 56,292 58,769 ---------------- --------------- $ 1,508,987 $ 1,359,203 ================ =============== Note 5. - Income Taxes At September 30, 2000 the Company had net operating loss carryforwards available amounting to approximately $7.4 million which will expire between 2001 and 2013. There is a remote possibility that net operating loss carryforwards of approximately $500,000 may not be available. There are no significant differences in the recognition of income and expenses for tax and financial reporting purposes. Federal income taxes normally provided for the six months ended September 30, 2000 and the three months ended September 30, 2000 have been offset by the effects of the reduction of the valuation allowance. Note 6. - (Loss) Income Per Share Basic and diluted per share data is based on the weighted average number of common shares outstanding. Common stock equivalents would be anti-dilutive and, therefore, were not included in the diluted per share computations. 9 Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION Results of Operations The Company's net sales for the three months ended September 30, 2000 decreased $224,000 (51%) compared to the same period a year ago. For the six months ended September 30, 2000 net sales decreased $453,000 (49%), compared to the corresponding period. The decrease is primarily due to sales of approximately $335,000 during the first six months of fiscal 2000 for a security system upgrade at a domestic United States Air Force Base without corresponding revenues earned from this customer during the first six months of the current 2001 fiscal year. Gross profits as a percentage of net sales for the three months ended September 30, 2000 was 26% compared to 37% during the same period a year ago. For the six months ended September 30, 2000, the gross profit percentage was 35% compared to 43% during the same period a year ago. The decrease in gross margin for the three and six months ended September 30, 2000 is due to the underabsorption of manufacturing overhead costs caused by the lower sales volume. Engineering, research and development expenses for three and six months ended September 30,2000 were $53,000 and $108,000, respectively, a decrease of 7% ($4,000) and 7% ($9,000) versus the expenses incurred during the same periods a year ago. These decreases are the result of a reduction in engineering part time staff and travel expenditures during the current fiscal year. Marketing and sales expenses for three and six months ended September 30, 2000 were $35,000 and $74,000, respectively, a decrease of 6% ($2,000) and an increase of 3% ($2,000) versus the expenses incurred during the same periods a year ago. The slight variations are due to travel schedule modifications from period to period with essentially no difference in total travel expenditures. General and administrative expenses for the three and six months ended September 30, 2000 were $ 83,000 and $163,000, respectively. These expenditures are substantially the same as the expenditures of $78,000 and $161,000 incurred during the same periods a year ago. The net (loss) for the three months ended September 30, 2000 was ($126,000) compared to a net loss of ($25,000) a year ago. The net loss for the six months ended September 30, 2000 was ($206,000) compared to net income of $15,000 a year ago, due to the factors regarding revenue and expenses described above. The future viability of the Company will depend upon the Company's success in raising revenue levels, maintaining low cost levels and, if necessary, raising additional financing. In addition, the future viability of the Company depends on the outcome of the legal proceeding described under Liquidity and Capital Resources. Liquidity and Capital Resources The Company's continued existence is dependent upon its ability to obtain contract awards which, in the aggregate, will provide significant revenues in the immediate future. While there can be no assurance of favorable results, the Company remains optimistic about obtaining these potential contract awards. To date, there has been no adverse effect on the Company's ability to perform on any of its contracts due to its limited working capital. The Company has also been able to maintain a satisfactory relationship with the majority of its suppliers and has been able to substitute for dissatisfied vendors, when necessary. For any large contract that the Company might be awarded in the future where working capital might hamper its ability to perform, the Company would attempt to negotiate adequate terms and delivery with the customer and/or, if necessary, obtain required financing. There can be no assurance, however, that the Company would be successful in these efforts. 10 The working capital deficit on September 30, 2000 was ($2,283,000) compared to ($2,080,000) on March 31, 2000. The increase in the working capital deficit is primarily due to the loss incurred for the six months ended September 30, 2000. At September 30, 2000 the Company had $12,000 in cash, compared to $21,000 in cash at March 31, 2000. Accounts receivable decreased by $68,000 during the six months ended September 30, 2000 due to the reduced sales level during the first six months of the current 2001 fiscal year. Notes and loans payable of $718,000 at September 30, 2000 consists of amounts due to private investors, former directors, and legal counsel. Pursuant to the agreement the due date for the investors and former directors loans and fees payable $(250,000) to legal counsel were extended until the first to occur of (i) June 30, 1996, (ii) a public financing by the Company, or (iii) a private financing of the Company of not less than $2,500,000. As June 30, 1996 date has been reached, such amounts are now due. While the Company does not have the ability to pay the amounts due to private investors, former directors and legal counsel, it has attempted to renegotiate the terms of payment of these obligations. On September 17, 1998 the private investors filed a lawsuit in the Superior Court of New Jersey for the total principal amount of $200,000 together with accrued interest of $103,000. On June 15, 1999 a Judgment by Default against the Company was entered in the Superior Court of New Jersey, Bergen County. The Company will seek a satisfactory resolution of this judgment. There can be no assurance, however, that the Company will be able to resolve the judgment. The failure to do so will cause the Company to cease as a going concern. Accounts payable of $236,000 at September 30, 2000 are $18,000 lower than the balance of $254,000 at March 31, 2000 due to reduced material purchase requirements necessary for the lower sales level. Accrued expenses and other current liabilities at September 30, 2000 of $1,509,000 are $150,000 higher than the $1,359,000 at March 31, 2000. The variance is due to an increase in accrued payroll taxes, payroll tax penalties and interest for the six months ended September 30, 2000. In total, the net cash (used for) operating activities was ($9,000) for the six months ended September 30, 2000, as compared to $128,000 provided by operating activities for the six months ended September 30, 1999. The Company has no significant capital expenditures plans at this time. 11 Part II - Other Information Item 6 - Exhibits and Reports on Form 8-K None 12 Signatures In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned there unto duly authorized. Vikonics, Inc. -------------- (Registrant) December 13, 2000 /s/ John J. Strong ----------------------------------------- John J. Strong President (duly authorized officer and principal financial officer) 13 -----END PRIVACY-ENHANCED MESSAGE-----