-----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, VJJzVXmdk5JVxMj5SnXJD6iVGlv/lLhBpGV+rzcXyOumzPizMKnHBfmULc0ZAhlA Cjqqvxs7PihS+7VWRTN3ew== 0000950116-97-002021.txt : 19971111 0000950116-97-002021.hdr.sgml : 19971111 ACCESSION NUMBER: 0000950116-97-002021 CONFORMED SUBMISSION TYPE: 10QSB/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19971110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ROM TECH INC CENTRAL INDEX KEY: 0000948703 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 232694937 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB/A SEC ACT: SEC FILE NUMBER: 000-27102 FILM NUMBER: 97711686 BUSINESS ADDRESS: STREET 1: 2000 CABOT BLVD STREET 2: SUITE 110 CITY: LANGHORNE STATE: PA ZIP: 19047-1833 BUSINESS PHONE: 2157506606 MAIL ADDRESS: STREET 1: 2000 CABOT BLVD SUITE 110 CITY: LANGHORNE STATE: PA ZIP: 19047-1833 10QSB/A 1 - ------------------------------------------------------------------------------ U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-QSB/A (Mark One) |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-27102 ROMTECH, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 23-2694937 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification Number) 2000 Cabot Boulevard West, Suite 110 Langhorne, PA 19047-1833 (address of Principal executive offices) Issuer's Telephone Number, Including Area Code: 215-750-6606 Not Applicable (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 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. Yes ( X ) No ( ) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ( ) No ( ) APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: 6,285,128 shares of common stock, no par value per share, as of November 1, 1996. Transitional Small Business Disclosure Format (check one): Yes ( ) No ( X ) - ------------------------------------------------------------------------------ RomTech, Inc. The Registrant hereby amends its Form 10-QSB for the quarter ended September 30, 1996 for the purpose of amending certain financial information primarily relating to direct mail marketing costs. INDEX
Page Part I. Financial Information Item 1. Financial Statements: Consolidated Balance Sheet as of September 30, 1996...................................... 3 Consolidated Statements of Operations for the three months ended September 30, 1996 and 1995............................................................................ 4 Consolidated Statements of Cash Flows for the three ended September 30, 1996 and 1995..................................................................................... 5 Notes to Consolidated Financial Statements............................................... 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.................................................. 8-9 Part II. Other Information Signatures............................................................................... 10 Exhibit Index............................................................................ 11 Financial Data Schedule.................................................................. 12
Page 2 RomTech, Inc. Consolidated Balance Sheet (Unaudited) September 30, 1996 ------------- ASSETS Current assets: Cash and cash equivalents .............................. $ 758,596 Restricted cash ........................................ 14,788 Accounts receivable, net of allowance for doubtful accounts of $88,970 ................................. 577,358 Inventory .............................................. 280,929 Prepaid expenses ....................................... 89,952 ----------- Total current assets ............................ 1,721,623 Furniture and equipment, net .............................. 157,338 Intangibles and other assets .............................. 105,083 ----------- Total assets .................................... $ 1,984,044 =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Notes payable .......................................... $ 337,054 Accounts payable ....................................... 598,784 Accrued expenses ....................................... 643,640 ----------- Total current liabilities ....................... 1,579,478 Capital lease obligations net of current portion .......... 35,374 Notes payable-long term portion ........................... 296,519 Convertible subordinated debt ............................. 150,000 ----------- Total liabilities ............................... 2,061,371 Stockholders' deficit: Convertible preferred stock ............................ 1,000,000 Common stock, no par value (40,000,000 shares authorized: 6,285,128 issued and outstanding) ......... 4,237,517 Additional paid in capital ............................. 747,738 Accumulated deficit .................................... (6,062,582) ----------- Total stockholders' deficit ..................... (77,327) ----------- Total liabilities and stockholders' deficit ..... $ 1,984,044 =========== See accompanying notes to the consolidated financial statements. Page 3 RomTech, Inc. Consolidated Statements of Operations (Unaudited) Three months ended September 30, ------------------------------ 1996 1995 ---- ---- Net revenues $ 1,071,017 $ 629,124 Cost of revenues 317,457 206,517 ----------- ----------- Gross profit 753,560 422,607 Operating expenses: Product development 121,992 137,021 Selling, general and administrative 1,025,633 391,170 ----------- ----------- Total operating expenses 1,147,625 528,191 ----------- ----------- Operating loss (394,065) (105,584) Interest expense, net 13,513 63,009 ----------- ----------- Loss before taxes (407,578) (168,593) Income tax refund -- 3,152 ----------- ----------- Net loss ($ 407,578) ($ 165,441) =========== =========== Net loss per common share ($ 0.06) ($ 0.06) Weighted average common shares outstanding 6,285,128 2,859,440 See accompanying notes to the consolidated financial statements. Page 4 RomTech, Inc. Consolidated Statements of Cash Flows (Unaudited)
Three months ended September 30, ------------------------- 1996 1995 --------- --------- Cash flows from operating activities: Net loss ($407,578) ($165,441) Adjustment to reconcile net loss to net cash from operating activities: Depreciation and amortization 62,299 14,084 Loss on disposal of equipment 4,683 -- Interest expense incurred but not paid 4,350 45,945 Changes in items affecting operations net of effect from acquired businesses: Restricted cash (14,788) (10,469) Accounts receivable (152,060) (69,056) Prepaid expenses (48,542) 22,642 Inventory (75,708) 15,071 Accounts payable 222,617 62,255 Accrued expenses (82,650) 42,924 --------- --------- Net cash used in operating activities (487,377) (42,045) --------- --------- Cash flows from investing activities: Sales and maturities of short term investments 398,952 -- Purchase of furniture and equipment (27,023) (11,431) Purchase of software rights and other assets (58,654) -- Loan to related parties 500 -- --------- --------- Net cash provided by (used in) investing activities 313,775 (11,431) --------- --------- Cash flows from financing activities: Net advances of factored receivable -- 39,925 Net advances to officers -- 3,772 Repayment of note payable (7,483) (4,967) Repayment of lease obligations (14,982) (6,467) --------- --------- Net cash (used in) provided by financing activities (22,465) 32,263 --------- --------- Net decrease in cash and cash equivalents (196,067) (21,213) Cash and cash equivalents: Beginning of period 954,663 85,173 --------- --------- End of period $ 758,596 $ 63,960 ========= ========= Supplemental cash flow information: Cash paid during the quarter for interest $ 22,194 $ 6,367 ========= ========= Noncash investing activities: Capital lease additions during the quarter $ 38,388 $ -- ========= =========
See accompanying notes to the consolidated financial statements. Page 5 RomTech, Inc. Notes to Consolidated Financial Statements 1. Summary of Significant Accounting Policies Basis of Presentation The accompanying unaudited interim consolidated financial statements were prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The Notes to Consolidated Financial Statements included in the Form 10-KSB for the fiscal year ended June 30, 1996 should be read in conjunction with the accompanying statements. These statements include all adjustments (consisting only of normal recurring adjustments) which the Company believes are necessary for a fair presentation of the statements. The interim operating results are not necessarily indicative of the results for a full year. The accompanying consolidated financial statements as of September 30, 1996 include the accounts of RomTech, Inc., ("RomTech"), which successfully completed an initial public offering on October 18, 1995 with Applied Optical Media Corporation ("AOMC"), which merged with RomTech concurrent with the completion of RomTech's public offering, and Virtual Reality Laboratories, Inc. ("VRLI"), its wholly owned subsidiary, which was acquired on April 5, 1996 in a transaction accounted for using the pooling of interests method of accounting. As further described in Note 2, the AOMC merger was accounted for as a reverse acquisition whereby AOMC was deemed to be the acquiring entity for accounting purposes. In addition, the fiscal 1996 financial statements have been restated to reflect VRLI's operations on a pooled basis. Accordingly, the consolidated statements of operations include the activities of the following entities for the following periods: o July 1, 1995 to September 30, 1995 - AOMC and VRLI o July 1, 1996 to September 30, 1996 - RomTech, AOMC and VRLI Description of Business RomTech, Inc. (the "Company") is a Pennsylvania Corporation which was incorporated in July 1992. The Company develops, publishes, markets and is a reseller of a diversified line of personal computer software for consumer, educational and business applications. The Company's sales are primarily made through retail stores, by direct mail and sales of CD-ROM titles in jewel case packaging at computer trade shows. Consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Virtual Reality Laboratories, Inc. All intercompany balances and transactions have been eliminated. 2. Merger/Completion of Pubic Offering Applied Optical Media Corporation ("AOMC") On October 18, 1995, the Company merged with AOMC, whereby the stockholders of AOMC exchanged all their outstanding shares for 1,575,000 common shares of the Company and 425,000 warrants to purchase common shares at $.50 per share. In addition, concurrently with the Merger certain stockholders of AOMC exchanged debt with a carrying value of $1,936,452 for 1,000,000 shares of convertible preferred stock, a $300,000, 8.75% note payable, a $50,000 cash payment and forgiveness of $586,607 of debt. The preferred stock has a face value of $1,000,000 and is convertible into common stock of the Company beginning two years after October 18, 1995 at a price of $3.30 per share. The Company has the right to redeem the preferred stock for an aggregate redemption price of $1,000,000. Page 6 RomTech, Inc. Notes to Consolidated Financial Statements As a result of the AOMC merger, the former stockholders of AOMC had a majority of the voting rights of the combined enterprise on a fully diluted, if converted basis. Therefore, for accounting purposes, AOMC was considered the acquirer (reverse acquisition). The cost of acquiring the Company was based on the fair market value of the Company's net assets, which approximated their recorded value. In connection with the reverse acquisition, the outstanding shares of the Company and the shares of the Company issued to AOMC stockholders have been reflected as a recapitalization of the previously outstanding AOMC common stock. On October 18, 1995, the Company consummated an initial public offering of 1,550,000 shares of common stock at a price of $3.00 per share resulting in gross proceeds of $4,650,000 before deducting offering costs of $1,026,204. Virtual Reality Laboratories, Inc. ("VRLI") On April 5, 1996, the Company acquired VRLI, a California corporation, in a transaction structured as a merger of VRLI with a newly formed subsidiary of the Company ("RomTech subsidiary"), with the RomTech subsidiary as the surviving corporation. VRLI, which is located in San Luis Obispo, California, publishes software for use on desktop computers. Its products include business forms and imaging processing software targeted for the small-office, home-office market, three-dimensional landscape rendering software and astronomy software for special interest users and the education market. In connection with the acquisition, the Company issued a total of 1,284,440 shares of its common stock, in exchange for all of the equity interests of Virtual Reality, which included common stock, stock options, convertible subordinated debt and a $100,000 promissory note to an officer and stockholder of VRLI. In addition, the Company incurred acquisition-related expenses of approximately $757,804, including $204,340 in the form of the Company's Common Stock, related to investment banking, consulting, accounting and legal costs which were charged to operations. This acquisition was accounted for using the pooling-of-interests method, and accordingly the Company's historical financial statements presented have been restated to include the accounts and results of operations of VRLI. The following supplemental unaudited pro forma information summarizes the combined results of operations of the Company as if the combination with AOMC occurred July 1, 1995. Three months ended September 30, 1995 ------------------ Revenues $861,147 Net loss (415,517) Loss per share (.09) Weighted average common shares 4,462,181 3. Subsequent Event On September 27, 1996, the Company entered into an agreement in principle to acquire FileABC(TM), a Nevada Limited Partnership, ("FileABC") in exchange for $500,000 in cash and 200,000 shares of the Company's common stock and an additional 1,000,000 shares contingent upon achieving certain revenue targets. The terms of the agreement were amended on October 18, 1996, whereby FileABC will be paid $325,000 in cash in addition to the interim payments of $50,000 on July 17, 1996 and $125,000 on October 30, 1996. Additionally, a maximum of 1,200,000 shares will be paid to FileABC for each $1,000,000 of revenues generated from the sale of FileABC's current software product and any enhancements or derivative products on or before March 31, 2000. FileABC develops, publishes and markets document imaging, management and archiving software for the Windows(TM) operating systems. The acquisition is subject to certain conditions and is expected to be consummated during the second quarter of fiscal 1997. If completed, the acquisition of FileABC will be accounted for using the purchase method of accounting. Page 7 RomTech, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations The accompanying consolidated financial statements as of September 30, 1996 include the accounts of RomTech, Inc., ("RomTech"), which successfully completed an initial public offering on October 18, 1995 with Applied Optical Media Corporation ("AOMC"), which merged with RomTech concurrent with the completion of RomTech's public offering, and Virtual Reality Laboratories, Inc. ("VRLI"), its wholly owned subsidiary, which was acquired on April 5, 1996 in a transaction accounted for using the pooling of interests method of accounting. As further described in Note 2, the AOMC merger was accounted for as a reverse acquisition whereby AOMC was deemed to be the acquiring entity for accounting purposes. In addition, the fiscal 1996 financial statements have been restated to reflect VRLI's operations on a pooled basis. Accordingly, the consolidated statements of operations include the activities of the following entities for the following periods: o July 1, 1995 to September 30, 1995 - AOMC and VRLI o July 1, 1996 to September 30, 1996 - RomTech, AOMC and VRLI Management believes that the results of operations for the three months ended September 30, 1996 may not be indicative of anticipated future results because of the significant changes made in the combined businesses of AOMC, RomTech and Virtual Reality (see note 2 to the financial statements). The acquisition of Virtual Reality was accounted for using the pooling-of-interests method of accounting, and accordingly the Company's historical financial statements have been restated to include the accounts and results of operations of Virtual Reality. Results of Operations Three Months Ended September 30, 1996 and 1995 Net revenues for the three months ended September 30, 1996 were $1,071,000 compared to $629,000 for the three months ended September 30, 1995, representing an increase of $442,000 or 70.3%. This increase resulted primarily from increases in the distribution through the retail and direct mail channels of company developed titles and in the reselling of budget category jewel case products through the trade show channel. Cost of revenues for the three months ended September 30, 1996 was $317,000 compared to $207,000 for the three months ended September 30, 1995, representing an increase of $110,000 or 53.1% due mainly from the increase in revenues. The Company's gross profit margin increased to 70.4% in the three months ended September 30, 1996 from 67.2% for the three months ended September 30, 1995. Product development expenses for the three months ended September 30, 1996 were $122,000 compared to $137,000 for the three months ended September 30, 1995, a decrease of $15,000 or 10.9%. Selling, general and administrative expenses for the three months ended September 30, 1996 were $1,026,000 compared to $391,000 for the three months ended September 30, 1995 representing an increase of $635,000. The increase was primarily from increases in marketing costs of $302,000, salary and related costs of $113,000, commissions of $85,000 related to the increase in revenues and amortization costs of $48,000. Net interest expense for the three months ended September 30, 1996 was $14,000 compared to $63,000 for the three months ended September 30, 1995, a decrease of $49,000 or 77.8%. This decrease is due primarily to the reduction of long-term debt as a result of the merger between RomTech, Inc. and AOMC and the proceeds from the IPO concurrent with this merger, and the investment of the proceeds from the IPO. Page 8 RomTech, Inc. Management's Discussion and Analysis of Financial Condition and Results of Operations (continued) Liquidity and Capital Resources The financial information presented reflects the Company's financial position at September 30, 1996. As of September 30, 1996, the Company's cash and working capital balances were $758,596 and $142,145, respectively. To date the Company continues to operate at a loss. At September 30, 1996 the Company does not satisfy the minimum level of stockholders' equity required to be listed ($1,000,000) for trading on the Nasdaq SmallCap Market(TM). The Company is seeking additional capital to, among other things, increase its stockholders' equity to at least the minimum level required. The Company's ability to achieve positive cash flow depends upon a variety of factors, including the timeliness and success of developing and selling its products, the costs of developing, producing and marketing such products and various other factors, some of which may be beyond the Company's control. In the future, the Company's capital requirements will be affected by each of these factors. Although, the Company believes cash and working capital balances will be sufficient to fund the Company's operations for the foreseeable future, the Company plans to raise additional capital and it will seek such funding through additional public or private financings. There can be no assurances that the Company will achieve a positive cash flow or that additional financing will be available if and when required or, if available, will be on terms satisfactory to the Company. Currently, the Company has no significant capital expenditure commitments. On September 27, 1996, the Company entered into an agreement in principle to acquire FileABC(TM), a Nevada Limited Partnership, ("FileABC") in exchange for $500,000 in cash and 200,000 shares of the Company's common stock and an additional 1,000,000 shares contingent upon achieving certain revenue targets. The terms of the agreement were amended on October 18, 1996, whereby FileABC will be paid $325,000 in cash in addition to the interim payments of $50,000 on July 17, 1996 and $125,000 on October 30, 1996. Additionally, a maximum of 1,200,000 shares will be paid to FileABC for each $1,000,000 of revenues generated from the sale of FileABC's current software product and any enhancements or derivative products on or before March 31, 2000. FileABC develops, publishes and markets document imaging, management and archiving software for the Windows(TM) operating systems. The acquisition is subject to certain conditions and is expected to be consummated during the second quarter of fiscal 1997. If completed, the acquisition of FileABC will be accounted for using the purchase method of accounting. Management of the Company is nearing the completion of a private placement financing which along with funds generated from operations, management anticipates will be sufficient to fund operations, make acquisitions of proprietary products and software development companies, and make capital expenditures for at least the next twelve month period. The Company currently has no significant capital expenditure commitments. Page 9 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. ROMTECH, INC. (Registrant) Date: November 10, 1997 /s/ Joseph A. Falsetti ---------------- ----------------------- Joseph A. Falsetti Chief Executive Officer Principal Financial Officer Date: November 10, 1997 /s/ Gerald W. Klein ---------------- -------------------- Gerald W. Klein Vice President and Chief Financial Officer Page 10 RomTech, Inc. RomTech, Inc. Exhibit Index
Exhibit No. Description of Exhibit Page Number ----------- ---------------------- ----------- 10.1 Asset Acquisition Agreement Between RomTech, Inc. and FileABC, L.P. 27.1 Financial Data Schedule
Page 11 EX-27 2 ART. 5 FDS FOR 1ST QUARTER 10-QSB/A
5 1 3-MOS JUN-30-1997 SEP-30-1996 758,596 0 577,358 88,970 280,929 1,721,623 157,338 0 1,984,044 1,579,478 0 4,237,517 0 1,000,000 747,738 1,984,044 1,071,017 1,071,017 317,457 317,457 1,147,625 0 13,513 (407,578) 0 (407,578) 0 0 0 (407,578) (.06) (.06)
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