-----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, ScJZYgyqxAuibB+dVvfZ6BOMn+t4g5Wg4l9f6hxWCEUfwvmzGFCrMruwaakpA1Rl K8CxSqBidYBijK8iCE9TUg== 0000912057-97-005324.txt : 19970222 0000912057-97-005324.hdr.sgml : 19970222 ACCESSION NUMBER: 0000912057-97-005324 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 FILED AS OF DATE: 19970214 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDIA LOGIC INC CENTRAL INDEX KEY: 0000815185 STANDARD INDUSTRIAL CLASSIFICATION: MEASURING & CONTROLLING DEVICES, NEC [3829] IRS NUMBER: 042772354 STATE OF INCORPORATION: MA FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09605 FILM NUMBER: 97533503 BUSINESS ADDRESS: STREET 1: 310 SOUTH STREET STREET 2: P O BOX 2258 CITY: BOSTON STATE: MA ZIP: 02762 BUSINESS PHONE: 5086952006 MAIL ADDRESS: STREET 1: 310 SOUTH STREET STREET 2: P O BOX 2258 CITY: PLAINVILLE STATE: MA ZIP: 02762 10-Q 1 10-Q Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended: December 31, 1996 Commission File Number: 1-9605 Media Logic, Inc. ------------------------------------------------------ (Exact name of registrant as specified in its charter) Massachusetts 04-2772354 - ------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification Number) incorporation or organization) 310 South Street, P.O. Box 2258, Plainville, MA 02762 ----------------------------------------------------- (Address of principal executive offices) (Zip Code) (508) 695-2006 ---------------------------------------------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. X Yes ______No APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common stock, $.01 par value - 6,315,909 shares as of February 12, 1997 INDEX MEDIA LOGIC, INC. PART I. FINANCIAL INFORMATION Item 1. Consolidated condensed financial statements (Unaudited) Consolidated condensed balance sheets - December 31, 1996 and March 31, 1996 Consolidated condensed statements of operations - three and nine months ended December 31, 1996 and 1995 Consolidated condensed statements of cash flows - nine months ended December 31, 1996 and 1995 Notes to consolidated condensed financial statements - December 31, 1996 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities Item 3. Defaults upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
December 31, March 31, 1996 1996 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 307,663 $ 3,545,477 Accounts receivable, net 1,439,733 998,403 Inventories (Note 2) 3,340,086 2,467,149 Refundable income taxes 24,873 27,658 Other current assets 27,492 73,397 ------------ ------------ Total current assets 5,139,847 7,112,084 Property and equipment, net 592,922 793,038 Other assets 72,711 59,870 ------------ ------------ $ 5,805,480 $ 7,964,992 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,296,074 $ 343,873 Accrued expenses 535,687 605,453 ------------ ------------ Total liabilities 1,831,761 949,326 Stockholders' equity: Common stock, par value $.01 per share; 20,000,000 shares authorized; 6,315,909 and 6,213,809 shares issued and outstanding as of December 31, 1996 and March 31, 1996, respectively 63,159 62,138 Additional paid-in capital 19,283,328 19,167,072 Retained deficit (15,372,768) (12,213,544) ------------ ------------ Total stockholders' equity 3,973,719 7,015,666 ------------ ------------ $ 5,805,480 $ 7,964,992 ============ ============
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Nine Months Ended December 31, December 31, 1996 1995 1996 1995 ----------- ----------- ----------- ----------- NET SALES $ 897,376 $ 1,070,407 $ 2,972,809 $ 2,438,755 COSTS AND EXPENSES: Cost of products sold 739,535 752,164 2,017,060 1,862,706 Selling, general and administrative 883,465 1,191,900 2,820,786 3,401,426 expenses 463,436 956,870 1,316,292 2,608,497 Research and development expenses ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (1,189,060) (1,830,527) (3,181,329) (5,433,874) OTHER INCOME (EXPENSE): Interest income -- 50,675 73,035 81,724 Miscellaneous 1,273 (2,032) (4,808) 7,133 ----------- ----------- ----------- ----------- LOSS BEFORE INCOME TAXES (1,187,787) (1,781,884) (3,113,102) (5,345,017) PROVISION FOR INCOME TAXES -- -- 46,122 -- ----------- ----------- ----------- ----------- NET LOSS $(1,187,787) $(1,781,884) $(3,159,224) $(5,345,017) =========== =========== =========== =========== NET LOSS PER SHARE (NOTE 3) $ (.19) $ (.29) $ (.50) $ (1.00) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,315,439 6,151,385 6,255,950 5,370,397 =========== =========== =========== ===========
SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED) NINE MONTHS ENDED DECEMBER 31, 1996 1995 ----------- ----------- CASH USED BY OPERATING ACTIVITIES $(3,239,991) $(2,730,125) ----------- ----------- CASH PROVIDED (USED) BY INVESTING ACTIVITIES: Sale of marketable securities -- 2,031,289 Sale (purchase) of property and equipment, net (115,100) (6,993) ----------- ----------- (115,100) 2,024,296 ----------- ----------- CASH PROVIDED BY FINANCING ACTIVITIES: Exercise of stock options 117,277 78,869 Proceeds from private placement, net -- 4,983,668 ----------- ----------- 117,277 5,062,537 ----------- ----------- NET INCREASE (DECREASE) IN CASH (3,237,814) 4,356,708 CASH BALANCE, BEGINNING OF PERIOD 3,545,477 911,729 =========== =========== CASH BALANCE, END OF PERIOD $ 307,663 $ 5,268,437 =========== =========== SEE NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) December 31, 1996 (1) Operations and Basis of Presentation Media Logic, Inc. (the "Company") designs and manufactures tape-based data storage libraries targeted at the information needs of small to mid-sized businesses. The Company also supplies evaluation equipment for flexible computer disks and tape, and manufactures and sells industrial duplication equipment for high volume and high reliability applications. As permitted by rules of the Securities and Exchange Commission applicable to quarterly reports on Form 10-Q, these notes are condensed and do not contain all disclosures required by generally accepted accounting principles. Reference should be made to the consolidated financial statements and related notes included in the Company's Annual Report to Shareholders on Form 10-K for the fiscal year ended March 31, 1996. In the opinion of the management of Media Logic, Inc., the accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the Company's financial position at December 31, 1996, and the results of its operations and its cash flows for the nine months ended December 31, 1996 and December 31, 1995. (2) Inventories December 31, 1996 March 31, 1996 ------------------------- --------------------- Raw materials $1,477,014 $1,870,553 Work in process 147,168 139,265 Finished goods 1,715,904 457,331 ========================= ===================== $3,340,086 $2,467,149 ========================= ===================== (3) Loss per Share Net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Common stock equivalents were not considered in the determination of net loss per share, as their inclusion would be anti-dilutive. (4) Private Placement On September 29, 1995, the Company sold 1,000,000 shares of its common stock, $.01 par value per share, to a private investor at a price of $5.00 per share. In addition, the Company issued an additional 130,909 shares to its financial advisory firm in connection with this private placement. The Company's net proceeds from this transaction were $4,983,668 and are restricted to utilization in connection with the Company's automated data library (ADL) business, which it conducts through its subsidiary, Media Logic ADL, Inc.. Management's Discussion and Analysis of Financial Condition and Results of Operations Three and Nine Months Ended December 31, 1996 Compared to Three and Nine Months Ended December 31, 1995 Results of operations Sales: Sales for the three and nine month periods ended December 31, 1996 were $897,376 and $2,972,809 as compared with $1,070,407 and $2,438,755 for the three and nine months ended December 31, 1995. Sales for the three and nine month periods ended December 31, 1996 decreased 16.2% and increased 21.9%, respectively, as compared with the three and nine month periods ended December 31, 1995. Demand for the Company's traditional products continues to remain low, and while diskette prices have experienced a modest increase, margins remain low for disk manufacturers and the Company does not expect these manufacturers to make significant investments in additional capital equipment. During the quarter, the Company continued initial shipments of its new Scalable Library Architecture ("SLA") data tape libraries. The Company is continuing to pursue its traditional product lines. This includes not only the sale of new certification, test and duplication equipment but also upgrades, spare parts and maintenance for previously sold units. The Company also is continuing its program to expand its market introduction of its newly released line of Automated Data Library ("ADL") products. Gross Profit: Gross profit for the three and nine months ended December 31, 1996 was $157,841 and $955,749 as compared with $318,243 and $576,049 for the three and nine months ended December 31, 1995. The generation of a gross profit on low sales volume is reflective of the cost reduction measures which the Company has instituted. Expenses: Selling, General and Administrative ("SG&A") expenses for the three and nine months ended December 31, 1996 were $883,465 (98.4% of sales) and $2,820,786 (94.9% of sales) as compared with $1,191,900 (111.4% of sales) and $3,401,426 (139.5% of sales) for the three and nine months ended December 31, 1995. SG&A expense related to the Company's traditional product lines was $551,824 for the three months ended December 31, 1996 as compared with $761,357 for the three months ended December 31, 1995. SG&A expenses related directly to the product line of automated data libraries being developed by the Company's Media Logic ADL subsidiary were $331,641 in the three month period ended December 31, 1996 as compared with $430,543 in the three month period ended December 31, 1995. The Company expects that SG&A expenses related to ADL will increase as product development is completed and ADL continues the process of selling the libraries. Research and development expenses for the three and nine month periods ended December 31, 1996 were $463,436 (51.6% of sales) and $1,316,292 (44.3% of sales) as compared to $956,870 (89.4% of sales) and $2,608,497 (107.0% of sales) for the three and nine month periods ended December 31, 1995. Of the overall Company research and development expenses, $373,106 or 80.5% for the three month period ended December 31, 1996 were related to the development of the ADL product line of automated data libraries, compared to $831,391 or 86.9% for the three month period ended December 31, 1995. The Company believes that the ADL product line will provide a unique solution to the data storage and retrieval needs of a broad range of potential users. The Company further believes that the tape library market is large and growing and is the area in which the Company has the best opportunity for future growth. The Company began initial shipments of libraries during the quarter ended September 30, 1996. To date, the Company has not generated significant revenues from its ADL product line. Liquidity and Capital Resources: At December 31, 1996, the Company had working capital of $3.3 million compared to $6.2 million at March 31, 1996. The current ratio was 2.8 to 1 as of December 31, 1996 and 7.5 to 1 at March 31, 1996. The decrease in working capital is principally due to significant operating losses and funding of the development and introduction to the marketplace of the ADL family of products. The Company has no debt nor does it have a line of credit or other committed source of additional financing. In September 1995 the Company received $5,000,000 in a private placement which must and has been used exclusively in connection with the Company's ADL business. The Company anticipates that its existing cash resources will allow it to maintain its current and planned operations through mid to late March 1997. Because of its continuing losses from operations, the Company will be required to obtain additional capital in order to continue its operations. In December 1996 the Company announced it was seeking up to $5,000,000 in additional capital to be used primarily to strengthen the Company's marketing capabilities for the ADL product line. Although the Company has been actively pursuing additional financing opportunities, to date, the Company has not secured a committed source of additional funds. An investor has expressed an intention to invest in the Company, subject to the satisfaction of its due diligence review. There can be no assurance, however, that a commitment to invest will result or that closing of a financing will occur. The Company has no assurance that it will be able to raise additional capital in a timely manner or on favorable terms, if at all. If the Company is unable to secure additional financing, the Company will be forced to curtail or discontinue its operations by the end of the current fiscal quarter. The Company continually monitors the changing business conditions and takes whatever actions it deems necessary to protect and promote the Company's interests. Uncertainties The discussion in this report includes forward-looking statements based on management's current expectations. To the extent that any of the statements contained herein relating to the Company's products and its operations are forward-looking, such statements are based on management's current expectations that involve a number of uncertainties and risks. Factors that could cause future results to differ materially from such expectations include, but are not limited to: the uncertainty surrounding the Company's change from its traditional product base to automated data libraries and the risk that the Company's new products may not be able to be marketed at acceptable prices or receive commercial acceptance in the markets that the Company expects to target; the loss of the services of one or more of the Company's key individuals, which could have a material adverse impact on the Company; the development of competing or superior technologies and products from manufacturers, many of which have substantially greater financial, technical and other resources than the Company; the cyclical nature of the computer industry; the availability of additional capital to fund continued operations on acceptable terms, if at all; and general economic conditions in both the United States and overseas markets. As a result, the Company's future development efforts involve a high degree of risk. Actual results may differ materially from expectations. PART II. OTHER INFORMATION Item 1. LEGAL PROCEEDINGS None Item 2. CHANGES IN SECURITIES None Item 3. DEFAULTS UPON 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 27 Financial data schedule (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. MEDIA LOGIC, INC. Date: February 14, 1997 \S\ Paul M. O'Brien ----------------- ------------------------ Paul M. O'Brien Vice-President and Chief Financial Officer EX-27 2 EXHIBIT 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED CONDENSED BALANCE SHEETS AND STATEMENTS OF OPERATIONS FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-Q FOR THE YEAR-TO-DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 9-MOS MAR-31-1997 SEP-30-1996 307,663 0 2,070,898 631,165 3,340,086 5,139,847 1,994,140 1,401,218 5,805,480 1,831,761 0 0 0 63,159 19,283,328 5,805,480 2,972,809 2,972,809 2,017,060 6,154,138 4,808 0 0 (3,113,102) 46,122 (3,159,224) 0 0 0 (3,159,224) (.50) (.50)
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