-----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, NwSQ6Z2rFNHAqkBqrW6KN17jKaD9U7lWBtRkpzI/0AaclM7pqoMsQ7ge9ZFi2Edm Bev2vkdLa8575cUI7+o4lg== 0000950135-95-002371.txt : 19951119 0000950135-95-002371.hdr.sgml : 19951119 ACCESSION NUMBER: 0000950135-95-002371 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19950930 FILED AS OF DATE: 19951113 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: 95590970 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 MEDIA LOGIC, INC. 1 Form 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For Quarter Ended: September 30, 1995 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 incorporation or organization) Identification Number) 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) N/A - ------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report.) 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 -- 6,130,309 shares as of November 8, 1995. 2 INDEX MEDIA LOGIC, INC. PART I. FINANCIAL INFORMATION - ------- --------------------- Item 1. Consolidated financial statements (Unaudited) Consolidated condensed balance sheets -- September 30, 1995 and March 31, 1995. Consolidated condensed statements of operations -- three and six months ended September 30, 1995 and 1994. Consolidated condensed statements of cash flows -- six months ended September 30, 1995 and 1994. Notes to consolidated condensed financial statements -- September 30, 1995. 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 - ---------- 3 PART I. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
September 30, March 31, 1995 1995 ----------------- ---------------- ASSETS - ------ CURRENT ASSETS: Cash and cash equivalents $ 5,611,861 $ 911,729 Marketable securities 1,003,623 2,031,289 Accounts receivable, net 624,193 1,248,055 Inventories (Note 2) 3,414,289 3,694,397 Refundable income taxes 197,455 1,729,630 Other current assets 91,161 194,472 ----------------- ---------------- TOTAL CURRENT ASSETS 10,942,582 9,809,572 PROPERTY AND EQUIPMENT - NET 1,082,903 1,257,282 Other Assets 45,087 37,586 ----------------- ---------------- $12,070,572 $11,104,440 ================= ================ LIABILITIES AND STOCKHOLDERS' EQUITY - ------------------------------------ CURRENT LIABILITIES: Accounts payable $ 461,693 $839,033 Accrued expenses 406,176 478,558 Customer deposits -- 19,709 ----------------- ---------------- TOTAL LIABILITIES 867,869 1,337,300 STOCKHOLDERS' EQUITY: Common stock par value $.01 per share; authorized 20,000,000 shares, 6,120,109 and 4,979,000 outstanding as of September 30, 1995 and March 31, 1995, respectively 61,201 49,790 Additional paid-in capital 17,441,619 14,112,075 Retained deficit (6,300,117) (4,394,725) ------------------ --------------- TOTAL STOCKHOLDERS' EQUITY 11,202,703 9,767,140 ------------------ --------------- $12,070,572 $11,104,440 ================== ===============
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 4 PART 1. FINANCIAL INFORMATION MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
Three Months Ended Six Months Ended September 30, September 30, 1995 1994 1995 1994 --------------- --------------- --------------- --------------- NET SALES $ 701,363 $ 973,979 $ 1,368,34 $ 1,505,709 COSTS AND EXPENSES: Cost of products sold 543,411 803,671 1,110,542 2,083,199 Selling, general and administrative expenses 1,087,517 1,420,038 2,209,526 2,749,962 Research and development expenses 751,184 874,675 1,651,627 1,587,056 --------------- ---------------- --------------- -------------- LOSS FROM OPERATIONS (1,680,749) (2,124,405) (3,603,347) (4,914,508) OTHER INCOME (EXPENSE): Settlement costs -- (2,230,000) -- (2,230,000) Interest income 10,110 105,467 31,049 187,706 Miscellaneous 5,975 937 9,165 695 LOSS BEFORE BENEFIT FOR INCOME (1,664,664) (4,248,001) (3,563,133) (6,956,107) TAXES BENEFIT FOR INCOME TAXES -- (300,000) -- (600,000) --------------- -------------- NET LOSS $ (1,664,664) $ (3,948,001) $ (3,563,133) $(6,356,107) =============== ================ ================ ============== NET LOSS PER SHARE (NOTE 3) $ (.33) $ (.80) $ (.71) $ (1.28) =============== ================ ================ ============== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 5,004,550 4,963,004 4,991,912 4,961,908 =============== ================ ================ ==============
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 5 MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED SEPTEMBER 30, 1995 1994 -------------- -------------- CASH USED BY OPERATING ACTIVITIES $ (1,338,011) $ (3,971,025) INVESTING ACTIVITIES: Sale of marketable securities 1,027,666 3,088,777 Sale (purchase) of property and equipment 10,809 (149,915) -------------- -------------- Cash provided by investing activities 1,038,475 2,938,862 -------------- -------------- FINANCING ACTIVITIES: Exercise of stock options and disqualifying dispositions 16,500 14,675 Proceeds from private placement, net 4,983,168 -- -------------- -------------- Cash provided by financing activities 4,999,668 14,675 -------------- -------------- NET INCREASE (DECREASE) IN CASH 4,700,132 (1,017,488) CASH BALANCE, BEGINNING OF THE PERIOD 911,729 1,915,358 -------------- -------------- CASH BALANCE, END OF THE PERIOD $ 5,611,861 $ 897,870 ============== ==============
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 6 MEDIA LOGIC, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) September 30, 1995 (1) Basis of Presentation --------------------- 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, 1995. In the opinion of the management of Media Logic, Inc., the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring items) necessary to present fairly the Company's financial position at September 30, 1995, and the results of its operations and its cash flows for the six months ended September 30, 1995 and September 30, 1994. (2) Inventories -----------
September 30, 1995 March 31, 1995 --------------------- ------------------- Raw materials $ 1,697,842 $ 2,328,971 Work in process 1,635,166 695,971 Finished goods 81,281 669,455 --------------------- ------------------- $ 3,414,289 $ 3,694,397 ===================== =================== (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. 7 (4) Marketable Securities --------------------- As of September 30, 1995, marketable securities consist of investments in state and local municipal obligations which are carried at their quoted market values. Such amounts did not differ materially from the amortized cost basis of the securities. (5) 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 was $4,983,168 and will be restricted to utilization in connection with the Company's automated data library (ADL) business, which it conducts through its subsidiary, Media Logic ADL, Inc. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three and Six Months Ended September 30, 1995 Compared to Three and Six Months Ended September 30, 1994 RESULTS OF OPERATIONS - -------------------- SALES: - ----- Sales for the three and six month period ended September 30, 1995 were $701,363 and $1,368,348 as compared with $973,979 and $1,505,709 for the three and six months ended September 30, 1994. Sales for the three and six month period ended September 30, 1995 were down 39.0% and 10.0% as compared with the three and six month period ended September 30, 1994. Demand for certifiers, test equipment and duplication equipment remained low during the quarter. The Company experienced a higher level of interest from potential customers during the second quarter but this has not yet translated into substantially increased sales. The Company is committed to achieving the maximum possible revenues from its current 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 expansion of the Company's sales presence throughout the world has led to better identification of potential sales opportunities and is expected to generate increased sales throughout all product lines. GROSS PROFIT: - ------------ Gross profit for the three and six months ended September 30, 1995 was $157,952 and $257,806 as compared with $170,308 and $(577,490) for the three and six months ended September 30, 1994. Higher gross margins are reflective of the stringent controls which have been instituted and the significantly reduced costs which have resulted. EXPENSES: - -------- Selling, General and Administrative (SG&A) expenses for the three and six months ended September 30, 1995 was $1,087,517(155.1% of sales) and $2,209,526 (161.5% of sales) as compared with $1,420,038 (145.8% of sales)and $2,749,962 (182.6% of sales) for the three ended September 30, 1994. SG&A expense related to the Company's current product lines was $723,925 for the three months 9 ended September 30, 1995 as compared with $1,108,879 for the three months ended September 30, 1994. SG&A expenses related directly to a product line of automated data libraries being developed by the Company's MediaLogic ADL subsidiary were $363,592 in the three month period ended September 30, 1995 as compared with 311,159 in the three month period ended September 30, 1994. The Company expects that SG&A expenses related to ADL will increase as product development is completed and ADL begins the process of selling the libraries. Research and Development expenses for the three and six month period ended September 30, 1995 were $751,184 (107.1% of sales) and 1,651,627 (120.7% of sales) as compared to $874,675 (89.8% of sales) and 1,587,056 (105.4% of sales) for the three and six month period ended September 30, 1994. Of the overall Company research and development expenditure, $560,775 or 74.7% for the period ended 30, 1995 were related to the development of the ADL product line of automated data libraries. The Company has and will continue to devote a substantial portion of its resources to the development and introduction into manufacturing of the ADL product line. 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 expects the first shipment of libraries near the middle of fiscal year 1996. LIQUIDITY AND CAPITAL RESOURCES: - ------------------------------- At September 30, 1995, the Company had working capital of $10.1 million compared to $8.5 million at March 31, 1995. The current ratio was 12.8 to 1 as of September 30, 1995 and 7.3 to 1 at March 31, 1995. The increase in working capital is due to the investment of $5 million through a private placement of the Company's common stock. Funding of the development of the ADL family of products and continuing operating losses have negatively impacted working capital. The Company has no debt nor does it have a line of credit or other committed source of additional financing. The Company continually monitors the changing business conditions and takes whatever actions it deems necessary to protect and promote the Company's interests. 10 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 3.1 Restated Articles of Organization. Incorporated by reference to the Company's Annual Report on Form 10-K for its fiscal year ended March 31, 1993. 3.2 Bylaws. Incorporated by reference to the Company's Registration Statement on Form S-18 (No. 33-14722) effective July 23, 1987. 3.3 Stock Purchase Agreement dated as of September 25, 1995. 11 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: November 9, 1995 \S\ Paul M. O'Brien --------------------- -------------------------------- Paul M. O'Brien, Vice-President and Chief Financial Officer EX-3.3 2 STOCK PURCHASE AGREEMENT 1 MEDIA LOGIC, INC ________________________________________ 1,000,000 shares of Common Stock _________________________________________ STOCK PURCHASE AGREEMENT Dated as of September 25, 1995 __________________________________________ 2 STOCK PURCHASE AGREEMENT This Agreement is by and between Media Logic, Inc., a Massachusetts corporation (the "Company"), with principal offices at 310 South Street, Plainville, Massachusetts 02762, and Raymond Leclerc (the "Purchaser"), an individual residing at 4501 Pond Apple Drive, Naples, Florida 33999. In consideration of the mutual covenants contained in this Agreement, the parties agree as follows: SECTION 1. AGREEMENT TO SELL AND PURCHASE THE SHARES. At the Closing (as hereinafter defined), the Company shall sell to the Purchaser, and the Purchaser shall buy from the Company, upon the terms and conditions hereinafter set forth, 1,000,000 shares (the "Shares") of Common Stock, $.01 par value per share ("Common Stock:), of the Company at a purchase price of $5.00, being not less than the average of the closing prices for the Common Stock on the American Stock Exchange for the ten trading days immediately preceding the Closing. SECTION 2. ACKNOWLEDGMENTS AND AGREEMENTS OF THE PURCHASER. The Purchaser acknowledges and agrees that: (a) he will not resell any of the Shares for a year after the Closing and, after that but prior to the third anniversary of the Closing, he will not sell shares representing 5% or more of the Common Stock outstanding to any party without the Company's consent, which will not be unreasonably withheld; (b) prior to the third anniversary of the Closing, he will not acquire shares of Common Stock which would result in his owning more than 25% of the Common Stock then outstanding; and (c) he acknowledges the Shares are not registered under federal securities laws and he will comply with all applicable securities laws in connection with any future resale of Shares, including but not limited to the SEC's Rule 144, with which he has familiarized himself. SECTION 3. AGREEMENTS AND UNDERTAKINGS OF THE COMPANY. In connection with the sale and purchase of the Shares hereunder, the Company convenants and agrees with the Purchaser as follows: (a) the Purchaser will be appointed as a director of the Company as promptly after the Closing as practicable and will be nominated and endorsed by the Board as a director at each annual stockholders' meeting so long as he beneficially owns 10% or more of the Common Stock outstanding; 3 (b) as a director, the Purchaser will be appointed to the Compensation Committee of the Board; (c) the Company will afford the Purchaser the opportunity to have shares included in registered public offerings that it does, if the Purchaser so requests, subject to usual and customary provisions and, unless and until Rule 144 permits him to resell Shares after one year, he will also have the right to demand one registration of the public resale of Shares; and (d) the net proceeds of the sale of the Shares to the Purchaser will be used solely for the Company's automated data library (ADL) business. SECTION 4. CHANGES; COUNTERPARTS. Any term of this Agreement may be amended or compliance therewith waived with the written consent of both parties hereto. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parities. IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the 25th day of September, 1995. THE COMPANY: MEDIA LOGIC, INC. By: /s/ William E. Davis, Jr. -------------------------- Title: Chief Executive Officer THE PURCHASER: /s/ Raymond Leclerc ----------------------- EX-27 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995. 1 U.S. DOLLARS 3-MOS MAR-31-1996 JUL-01-1995 SEP-30-1995 1 5,611,861 1,003,623 1,231,815 (607,022) 3,414,289 10,942,582 2,182,463 (1,099,560) 12,870,572 867,869 0 61,261 0 0 0 12,070,572 701,363 701,363 543,411 2,382,112 (16,085) 0 0 (1,664,664) 0 (1,664,664) 0 0 0 (1,664,664) (.33) (.33)
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