-----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, MP6/STYCJqhMF2codO3dejor/la2ZL7Vu7TFNhULpfHHO+Qj7gz3l79K8C2DItyB Fnqq9IxOyFuM9TKQpxEr0Q== 0000950135-96-001046.txt : 19960216 0000950135-96-001046.hdr.sgml : 19960216 ACCESSION NUMBER: 0000950135-96-001046 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960214 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: 96520301 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 LOGICS, 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: December 31, 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 -- 6,209,809 shares as of January 31, 1996. 2 INDEX MEDIA LOGIC, INC. PART I. FINANCIAL INFORMATION Item 1. Consolidated financial statements (Unaudited) Consolidated condensed balance sheets -- December 31, 1995 and March 31, 1995. Consolidated condensed statements of operations -- three and nine months ended December 31, 1995 and 1994. Consolidated condensed statements of cash flows -- nine months ended December 31, 1995 and 1994. Notes to consolidated condensed financial statements -- December 31, 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)
December 31, March 31, 1995 1995 ------------ ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents $ 5,268,437 $ 911,729 Marketable securities -- 2,031,289 Accounts receivable, net 790,563 1,248,055 Inventories (Note 2) 3,221,978 3,694,397 Refundable income taxes -- 1,729,630 Other current assets 159,170 194,472 ------------ ------------ TOTAL CURRENT ASSETS 9,440,148 9,809,572 PROPERTY AND EQUIPMENT - NET 1,062,170 1,257,282 Other Assets 50,632 37,586 ------------ ------------ $ 10,552,950 $ 11,104,440 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 614,829 $ 839,033 Accrued expenses 454,716 478,558 Customer deposits -- 19,709 ------------ ------------ TOTAL LIABILITIES 1,069,545 1,337,300 STOCKHOLDERS' EQUITY: Common stock par value $.01 per share; authorized 20,000,000 shares, 6,209,809 and 4,979,000 outstanding as of December 31, 1995 and March 31, 1995, respectively 62,098 49,790 Additional paid-in capital 19,161,049 14,112,075 Retained deficit (9,739,742) (4,394,725) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 9,483,405 9,767,140 ============ ============ $ 10,552,950 $ 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 Nine Months Ended December 31, December 31, 1995 1994 1995 1994 ----------- ----------- ----------- ----------- NET SALES $ 1,070,407 $ 2,124,157 $ 2,438,755 $ 3,629,866 COSTS AND EXPENSES: Cost of products sold 752,164 1,382,476 1,862,706 3,465,676 Selling, general and administrative expenses 1,191,900 1,595,365 3,401,426 4,345,327 Research and development expenses 956,870 1,318,838 2,608,497 2,905,895 ----------- ----------- ----------- ----------- LOSS FROM OPERATIONS (1,830,527) (2,172,522) (5,433,874) (7,087,032) OTHER INCOME (EXPENSE): Settlement costs -- -- -- (2,230,000) Interest income 50,675 43,837 81,724 231,543 Other (2,032) (26,827) 7,133 (26,129) ----------- ----------- ----------- ----------- LOSS BEFORE BENEFIT FROM INCOME TAXES (1,781,884) (2,155,512) (5,345,017) (9,111,618) BENEFIT FROM INCOME TAXES -- (300,000) -- (900,000) ----------- ----------- ----------- ----------- NET LOSS $(1,781,884) $(1,855,512) $(5,345,017) $(8,211,618) =========== =========== =========== =========== NET LOSS PER SHARE (NOTE 3) $ (.29) $ (.37) $ (1.00) $ (1.65) =========== =========== =========== =========== WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING 6,151,385 4,972,935 5,370,397 4,965,597 =========== =========== =========== ===========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 5 MEDIA LOGIC, INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, 1995 1994 ----------- ----------- CASH USED BY OPERATING ACTIVITIES $(2,730,125) $(8,416,833) INVESTING ACTIVITIES: Sale of marketable securities 2,031,289 8,253,206 Sale (purchase) of property and equipment 6,054 (173,956) Other assets (13,047) (312,337) ----------- ----------- Cash provided by investing activities 2,024,296 7,766,913 ----------- ----------- FINANCING ACTIVITIES: Exercise of stock options and disqualifying dispositions 78,869 25,757 Proceeds from private placement, net 4,983,668 -- ----------- ----------- Cash provided by financing activities 5,062,537 25,757 ----------- ----------- NET INCREASE (DECREASE) IN CASH 4,356,708 (624,163) CASH BALANCE, BEGINNING OF THE PERIOD 911,729 1,915,358 =========== =========== CASH BALANCE, END OF THE PERIOD $ 5,268,437 $ 1,291,195 =========== ===========
SEE NOTES TO CONDENSED FINANCIAL STATEMENTS 6 MEDIA LOGIC, INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) December 31, 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 December 31, 1995, and the results of its operations and its cash flows for the nine months ended December 31, 1995 and December 31, 1994. (2) Inventories
December 31, 1995 March 31, 1995 -------------------- -------------------- Raw materials $ 1,635,966 $ 2,328,971 Work in process 1,508,434 695,971 Finished goods 77,578 669,455 -------------------- -------------------- $ 3,221,978 $ 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) 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. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Three and Nine Months Ended December 31, 1995 Compared to Three and Nine Months Ended December 31, 1994 RESULTS OF OPERATIONS SALES: Sales for the three and nine month period ended December 31, 1995 were $1,070,407 and $2,438,755 as compared with $2,124,157 and $3,629,866 for the three and nine months ended December 31, 1994. Sales for the three and nine month period ended December 31, 1995 were down 49.6% and 32.8% as compared with the three and nine month period ended December 31, 1994, reflecting low demand for certifiers and test equipment. Sales of duplication equipment increased as a result of greater penetration by the Company into this market. Sales of spare parts remained strong. 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 Company has been successful in identifying opportunities in areas of the world it had not previously served and in packaging its product offerings to meet competitive challenges in an increasingly price conscious environment. Initial sales by the Company's ADL Subsidiary of pre-production units of automated data libraries occurred in the third quarter. The Company expects to sell additional pre-production units in the fourth quarter. The Company has entered into an agreement with PAGG Corporation pursuant to which PAGG will manufacture, for the Company, the ADL line of tape libraries. Units are scheduled to be delivered in production volumes during the first quarter of Fiscal 1997. 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. GROSS PROFIT: Gross profit for the three and nine months ended December 31, 1995 was $318,243 and $576,049 as compared with $741,681 and $164,190 for the three and nine months ended December 31, 1994. The Company has been aggressive in pricing its products to meet competitive pressures while at the same time adhering to strict internal controls and reducing costs wherever possible to maximize gross profits. 9 EXPENSES: Selling, General and Administrative (SG&A) expenses for the three and nine months ended December 31, 1995 was $1,191,900(111.4% of sales) and $3,401,426 (139.5% of sales) as compared with 1,595,365 (75.1% of sales)and $4,345,327 (119.7% of sales) for the three and nine months ended December 31, 1994. SG&A expense related to the Company's current product lines was $761,357 for the three months ended December 31, 1995 as compared with $1,009,420 for the three months ended December 31, 1994. SG&A expenses related directly to a product line of automated data libraries being developed by the Company's MediaLogic ADL subsidiary were $430,543 in the three month period ended December 31, 1995 as compared with $585,945 in the three month period ended December 31, 1994. Research and Development expenses for the three and nine month period ended December 31, 1995 were $956,870(89.4% of sales) and $2,608,497 (107.0% of sales) as compared to $1,318,838 (62.1% of sales) and $2,905,894 (80.1% of sales) for the three and nine month period ended December 31, 1994. Of the overall Company research and development expenditure, $831,391 or 77.7% for the period ended December 31, 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. LIQUIDITY AND CAPITAL RESOURCES: At December 31, 1995, the Company had working capital of $8.4 million compared to $8.5 million at March 31, 1995. The current ratio was 7.8 to 1 as of December 31, 1995 and 7.3 to 1 at March 31, 1995. Funding of the development of the ADL family of products and initial production costs, as well as 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 Christian P. Marlowe and the Marlowe Engineering Company have raised certain claims against the Company in response to receiving notice of the Company's intent to terminate its agreements with them. Demands have been made for a severance payment, the vesting of stock options, the waiver by the Company of stock repurchase rights, the grant of an option to Mr. Marlowe to put any ADL stock he may own to the Company, and for rights in certain technology. The Company has been notified that if it does not agree to the demands which have been made, Mr. Marlowe and the Marlowe Engineering Company are prepared to pursue their claims pursuant to Chapter 93A of the General Laws of the Commonwealth of Massachusetts. The Company believes it is in compliance with all agreements with Mr. Marlowe and with the Marlowe Engineering Company. After having received notice of the claims, the Company, on January 17, 1996, filed a lawsuit in the Superior Court of the Commonwealth of Massachusetts seeking a declaration that its position is correct. 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 11 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. 12 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 12, 1996 \S\ Paul M. O'Brien ------------------------ Paul M. O'Brien, Vice-President and Chief Financial Officer EX-27 2 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-Q FOR THE QUARTER ENDED DECEMBER 31, 1995. 1 U.S. CURRENCY 3 MOS MAR-31-1996 OCT-01-1995 DEC-31-1995 1 5,268,437 0 1,415,128 (624,566) 3,221,978 9,440,148 2,217,218 (1,155,048) 10,552,950 1,069,545 0 62,098 0 0 19,161,049 10,552,950 1,070,407 1,070,407 752,164 2,148,770 (48,642) 0 0 (1,781,884) 0 (1,781,884) 0 0 0 (1,781,884) (.29) (.29)
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