<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________________to______________________
Commission file number 0-26972
SWISSRAY International, Inc.
(Exact name of registrant as specified in its charter)
New York 16-0950197
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
320 West 77TH Street Suite 1 A, New York, New York 10024
(Address of principal executive offices) (Zip Code)
New York (914) 441 7841 Switzerland 011 41 41 914 12 00
(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:
The number of shares outstanding of each of the issuer's class of common stock,
as of the latest practicable date.
The number of shares outstanding of each of the registrant's classes of common
stock, as of May 8, 2000 is 23,311,782 shares, all of one class of $.01 par
value common stock.
1
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TABLE OF CONTENTS
Page
No.
PART I
Item 1. Financial Statements F1-F8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 3-7
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 7
PART II
Item 1. Legal Proceedings 7
Item 2. Changes in Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security
Holders 8
Item 5. Other Information 8
Item 6. Exhibits and Reports on Form 8-K 8
Signatures 9
2
<PAGE>
SWISSRAY INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
ASSETS
March 31, June 30,
2000 1999
--------- --------
(Unaudited)
CURRENT ASSETS
Cash and cash equivalents .......................... $ 3,245,610 $ 1,281,297
Accounts receivable, net of allowance for doubtful
accounts of $ 174,995 and $ 219,993 ................ 4,505,719 2,448,879
Inventories ........................................ 5,816,197 7,332,401
Prepaid expenses and sundry receivables ............ 840,063 866,804
---------- ----------
Total Current Assets ............................... 14,407,589 11,929,381
---------- ----------
PROPERTY AND EQUIPMENT ............................. 6,368,996 6,283,040
---------- ----------
OTHER ASSETS
Loan receivable .................................... 75,270 15,948
Licensing agreement ................................ 2,731,616 3,104,109
Patents and trademarks ............................. 178,528 199,906
Software development costs ......................... 281,756 347,763
Security deposits .................................. 36,533 28,035
Goodwill ........................................... 1,458,008 1,603,007
---------- ---------
TOTAL OTHER ASSETS ................................. 4,761,711 5,298,768
---------- ---------
Total Assets ....................................... $25,538,296 $23,511,189
========== ==========
F 1
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SWISSRAY INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEET
March 31, June 30,
2000 1999
--------- --------
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt ............ $ 154,558 $ 247,028
Notes payable - banks ........................... 3,689,144 3,667,159
Notes payable - short-term ...................... 713,308 1,700,000
Loan payable .................................... 116,073 126,006
Accounts payable ................................ 4,526,354 5,422,321
Accrued expenses ................................ 3,332,833 2,003,844
Restructuring ................................... 460,000 500,000
Customer deposits ............................... 2,061,903 278,507
--------- ----------
TOTAL CURRENT LIABILITIES ....................... 15,054,173 13,944,865
---------- -----------
Convertible Debentures, net of conversion benefit 14,242,793 15,305,852
---------- -----------
LONG-TERM DEBT, less current maturities ......... 179,847 195,095
---------- -----------
COMMON STOCK SUBJECT TO PUT ..................... 319,985 1,819,985
---------- -----------
STOCKHOLDERS' EQUITY
Common stock .................................... 227,864 140,062
Additional paid-in capital ...................... 87,046,553 69,028,013
Treasury Stock .................................. (2,040,000) (540,000)
Deferred Compensation ........................... - (1,282,500)
Accumulated deficit ............................. (87,262,687) (71,492,463)
Accumulated other comprehensive loss ............ (1,910,247) (1,787,735)
Common stock subject to put ..................... (319,985) (1,819,985)
---------- -----------
TOTAL STOCKHOLDERS' EQUITY ...................... (4,258,502) (7,754,608)
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ...... $ 25,538,296 $ 23,511,189
========== ===========
F 2
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SWISSRAY INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Nine Months Ended
March 31,
2000 1999
---------- ----------
Unaudited Unaudited
NET SALES ......................... $ 12,393,655 $ 13,220,776
COST OF SALES ..................... 9,372,120 10,404,489
---------- ----------
GROSS PROFIT ...................... 3,021,535 2,816,287
---------- ----------
OPERATING EXPENSES
Officers and directors compensation 2,650,288 564,089
Salaries .......................... 3,153,332 3,168,298
Selling ........................... 3,364,935 2,089,265
Research and development .......... 1,364,415 1,307,135
General and administrative ........ 1,320,325 1,381,517
Other operating expenses .......... 794,971 978,603
Bad debts ......................... 50,276 7,383
Depreciation and amortization ..... 1,025,967 892,857
---------- ----------
TOTAL OPERATING EXPENSES .......... 13,724,509 10,389,147
---------- ----------
LOSS BEFORE OTHER INCOME (EXPENSES) (10,702,974) (7,572,860)
Other income (expenses) ........... 409,269 (182,037)
Interest expense .................. (5,476,519) (2,156,457)
---------- ----------
OTHER INCOME (EXPENSES) ........... (5,067,250) (2,338,494)
---------- ----------
LOSS FROM CONTINUING OPERATIONS
BEFORE EXTRAORDINARY ITEMS ...... (15,770,224) (9,911,354)
Extraordinary expenses ............ -- (832,849)
---------- ----------
NET LOSS .......................... $(15,770,224) $(10,744,203)
========== ==========
LOSS PER COMMON SHARE
Loss from continuing operations ... $ (0.89) $ (2.09)
Extraordinary items ............... 0.00 (0.18)
---------- ----------
NET LOSS .......................... $ (0.89) $ (2.27)
========== ==========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ................ 17,807,655 4,752,041
F-3
<PAGE>
SWISSRAY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Nine Months Ended
March 31,
2000 1999
----------- ------------
Unaudited Unaudited
Net loss $(15,770,224) $(10,744,203)
Other comprehensive loss, net of tax:
Foreign translation adjustment (122,512) (246,606)
----------- -----------
Comprehensive loss $(15,892,736) $(10,990,809)
=========== ============
F-4
<PAGE>
SWISSRAY INTERNATIONAL INC.
CONSOLIDATED STATEMENT OF OPERATIONS
Three Months Ended
March 31,
2000 1999
---------- ---------
Unaudited Unaudited
NET SALES ......................... $ 5,436,627 $ 3,119,629
COST OF SALES ..................... 4,039,558 2,435,147
---------- ---------
GROSS PROFIT ...................... 1,397,069 684,482
---------- ---------
OPERATING EXPENSES
Officers and directors compensation 224,898 167,195
Salaries .......................... 730,201 1,103,721
Selling ........................... 992,447 650,984
Research and development .......... 469,343 463,546
General and administrative ........ 398,444 670,699
Other operating expenses .......... 223,251 417,596
Bad debts ......................... 34,275 --
Depreciation and amortization ..... 347,571 302,095
---------- ---------
TOTAL OPERATING EXPENSES .......... 3,420,430 3,775,836
LOSS BEFORE OTHER INCOME (EXPENSES) (2,023,361) (3,091,354)
Other income 388,780 176,959
Interest expense .................. (1,308,209) (743,760)
---------- ---------
OTHER INCOME (EXPENSES) ........... (919,429) (566,801)
---------- ---------
NET LOSS .......................... $ (2,942,790) $ (3,658,155)
========== =========
NET LOSS PER COMMON SHARE $ (0.14) $ (0.72)
========== =========
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING ................ 20,636,133 5,087,116
F-5
<PAGE>
SWISSRAY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended
March 31,
2000 1999
--------- ----------
Unaudited Unaudited
Net loss .................................... $(2,942,790) $(3,658,155)
Other comprehensive loss, net of tax:
Foreign translation adjustment ......... (204,056) (266,643)
--------- ----------
Comprehensive loss .......................... $(3,146,846) $(3,924,798)
========== ===========
F-6
<PAGE>
SWISSRAY INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
March 31,
2000 1999
--------- ----------
Unaudited Unaudited
CASH FLOWS FROM OPERATING ACTIVITES
Net loss ....................................... $(15,770,224) $(10,744,203)
Adjustment to reconcile net loss to net
cash used by operating activities
Depreciation and amortization ................. 1,080,732 1,000,667
Provision for bad debts ....................... (44,997) 643
Operating expenses through issuance of stock options
and common stock ............................. 2,809,936 --
Issuance of common stock in lieu of
interest payments ............................ 270,250 --
Interest expense on debt issuance cost and
conversion benefit ........................... 1,131,061 1,007,818
Interest expense on option value per black scholes 1,385,473 --
Settelment expense paid through issuance of
common stock 675,000 --
Amortization of deferred compensation ........... 1,282,500 (1,144,288)
Early extinguishment of debt (gain) .............. -- 832,849
(Increase) decrease in operating assets:
Accounts receivable ............................... (2,011,842) 458,899
Inventories ....................................... 1,516,204 341,319
Prepaid expenses and sundry receivables ........... 26,741 (492,131)
Increase (decrease) in operating liabilities:
Accounts payable .................................. (895,967) (51,069)
Accrued expenses .................................. 1,288,989 (1,144,266)
Customers deposits ................................ 1,783,396 (142,235)
--------- ----------
NET CASH USED BY OPERATING ACTIVITIES .............. (5,472,748) (8,931,709)
--------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Acquisition of proberty and equipment ......... (548,114) (563,077)
Patents and trademarks ........................ -- (1,546)
Other intangibles ............................. (13,698) --
Security deposits ............................. (8,498) 7,689
(Repayment of) increase in loan receivable ..... (59,322) 2,911
--------- ----------
NET CASH USED BY INVESTING ACTIVITIES .......... (629,632) (554,023)
--------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings ........... 21,985 18,545,444
Proceeds related to debentures ................ (1,063,059) --
Principal payment of short-term borrowings ...... (1,089,095) (11,024,348)
Principal payment of long-term borrowings ....... (15,248) (117,043)
Issuance of common stock for cash ............... 9,698,473 2,671,169
Issuance of stock options for cash .............. 2,136,149 --
Purchase of Treasury Stock ...................... (1,500,000) (540,000)
Payment to stockholders and officers ............ -- (2,207)
--------- ----------
CASH PROVIDED BY FINANCING ACTIVITIES ............ 8,189,205 9,533,015
--------- ----------
EFFECT OF EXCHANGE RATE ON CASH .................. (122,512) (171,231)
--------- ----------
NET INCREASE (DECREASE) IN CASH .................. 1,964,313 (123,948)
CASH AND CASH EQUIVALENT - beginning of period ... 1,281,297 1,281,552
--------- ----------
CASH AND CASH EQUIVALENTS - end of period ....... $ 3,245,610 $ 1,157,604
========= ==========
F-7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000
(1) The financial statements included herein have been prepared by the
Registrant, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to such
rules and regulations, although the Registrant believes that the disclosures are
adequate to make the information presented not misleading. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Registrant's annual
report on Form 10-K for the fiscal year ended June 30, 1999.
(2) In the opinion of management, the accompanying unaudited
consolidated financial statements contain all adjustments, consisting of only a
normal and recurring nature, necessary to present fairly the financial position
of the Registrant as of March 31, 2000 and the results of operations and cash
flows for the interim period presented. Operating results for the nine months
ended March 31, 2000 are not necessarily indicative of the results to be
expected for the full year ending June 30, 2000.
(3) INVENTORIES
Inventories are summarized by major classification as follows:
March 31, June 30,
---------------------------
2000 1999
---------- ----------
Raw materials, parts and supplies $3,569,261 $5,558,330
Work in process 1,140,982 1,048,197
Finished goods 1,105,954 725,874
---------- ----------
$5,816,197 $7,332,401
========== ==========
Inventories are stated at lower of cost or market, with cost being
determined on the first-in, first-out (FIFO) method. Inventory cost include
material, labor, and overhead.
F-8
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
All references herein to the "Registrant" refer to Swissray
International Inc. All references herein to the "Company" refer to Swissray
International, Inc. and its subsidiaries.
CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
Statements in this discussion which are not historical facts may be
considered forward looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended, including estimated cost savings to
be realized from restructuring activities and estimated proceeds from and timing
of facility sales. The words "believe," "expect," anticipate," "estimate", and
similar expressions identify forward looking statements. Any forward looking
statements involve risks and uncertainties that could cause actual events or
results to differ, perhaps materially, from the events or results described in
the forward looking statements. Readers are cautioned not to place undue
reliance on these forward looking statements, which speak only as of their
dates. The Company undertakes no obligation to publicly update or revise any
forward looking statements, whether as a result of new information, future
events or otherwise. Risks associated with the Company's forward looking
statements include, but are not limited to, risks associated with the Company's
history of losses and uncertain profitability, need for market acceptance of the
ddRMulti System, reliance on a single product, reliance on large customers,
risks associated with the Company's international operations, currency
fluctuations, the risk of new and different legal and regulatory requirements,
governmental approvals, tariffs and trade barriers, risks associated with
competition and technological innovation by competitors, dependence on patents
and proprietary technology, general economic conditions and conditions in the
healthcare industry, reliance on key management, limited manufacturing history
with respect to the ddRMulti-System, dependence on sole source suppliers, future
capital needs and uncertainty of additional financing, potential recalls and
product liability, dilution, effects of outstanding convertible debentures,
limited public market, liquidity, possible volatility of stock price, recently
adopted new listing standards for NASDAQ securities and environmental matters.
The following discussion and analysis should be read in conjunctionwith the
Consolidated Financial Statements, related notes and other information included
in this quarterly report on Form 10-Q.
GENERAL
3
<PAGE>
RESULTS OF OPERATIONS
(a) THREE-MONTH PERIOD ENDED MARCH 31, 2000 COMPARED TO THREE-MONTH PERIOD ENDED
MARCH 31, 1999
Net sales amounted to $5,436,627 for the three-month period ended March
31, 2000, compared to $3,119,629, an increase of $2,316,998, or 74.3% from the
three-month period ended March 31, 1999. The increase of 74.3% is manly due to
increase of ddR-sales of 523.2% whereas conventional OEM-Business decreased by
67.91%
Gross profit increased by $712,587 or 104.1% to $1,397,069 for the three-month
period ended March 31, 2000 from $684,482 for the three-month period ended March
31, 1999. Gross profit as a percentage of net revenues increase to 25.7% for the
three-month period ended March 31, 2000 from 21.9% for the three-month period
ended March 31, 1999. The increase in gross profit as a percentage of net
revenues is attributable to the fact that the percentage of sales of ddR-Systems
of total sales increased to 68.7% of total sales for the three-month period
ended March 31, 2000 from 19.2% for the three-month period ended March 31, 1999.
Operating expenses decreased by $355,406, or 9.4% to $3,420,430, or
62.9% of net revenues, for the three-month period ended March 31, 200, from
$3,775,836, or 121% of net revenues for the three-month period ended March 31,
1999. The principal items were selling of $992,447 or 18.3% of net sales for the
three-month period ended March 31, 2000 compared to $650,984 or 20.9% of net
sales for the three-month period ended March 31, 1999 and salaries (net of
officers and directors compensation) of $730,201 or 13.4% of net sales for the
three-month period ended March 31, 2000 compared to $1,103,721 or 35.4% of net
sales for the three-month period ended March 31, 1999. Research and development
expenses were $469,343 or 8.6% of net sales for the three-month period ended
March 31, 2000 compared to $463,546 or 14.9% of net sales for the three-month
period ended March 31, 1999.
Interest expenses increased to $1,308,209 for the three month ended
March 31, 2000 compared to $743,760 for the three month ended March 31, 1999.
This increase is primarily due the increase of interest expense for amortization
of Debenture issuance cost and Conversion Benefit.
(b) NINE-MONTH PERIOD ENDED MARCH 31, 2000 COMPARED TO NINE-MONTH PERIODS ENDED
MARCH 31, 1999
RESULTS OF OPERATIONS
Net sales amounted to $12,393,655 for the nine-month period ended March
31, 2000, compared to $13,220,776, an decrease of $827,120, or 6.3% form the
nine-month period ended March 31, 1999. The decrease of 6.3% is manly due to
decrease of conventional x-ray of 37% and conventional OEM-Business of 52.5%
whereas ddR Sales increase by 192.9%
Gross profit increased by $205,248, or 7.3% to $3,021,535 for the nine-month
period ended March 31, 2000 from $2,816,287 for the nine-month period ended
March 31, 1999. Gross profit as a percentage of net revenues increase to 24.4%
for the nine-month period ended March 31, 2000 from 21.3% for the nine-month
period ended March 31, 1999. The increase in gross profit as a percentage of net
revenues is attributable to the fact that the percentage of sales of ddR-Systems
of total sales increased to 47.7% of total sales for the nine-month period ended
March 31, 2000 from 15.3% for the nine-month period ended March 31, 1999.
4
<PAGE>
Operating expenses increased by $3,335,362, or 32.1% to $13,724,509, or
110.7% of net revenues, for the nine-month period ended March 31, 2000, from
$10,389,147, or 78.6% of net revenues for the nine-month period ended March 31,
1999. The principle items were selling of $3,364,935 or 27.2% of net sales for
the nine-month period ended March 31, 2000 compared to $2,089,265 or 15.8% of
net sales for the three-month period ended March 31, 1999, salaries (inclusive
officers and directors compensation) of $5,803,619 or 46.8% of net sales for the
nine-month period ended March 31, 2000 compared to $3,732,389 or 28.2% of net
sales for the three-month period ended March 31, 1999. Research and development
expenses were $1,364,415 or 11% of net sales for the nine-month period ended
March 31, 2000 compared to $1,307,135 or 9.9% of net sales for the nine-month
period ended March 31, 1999.
Interest expenses increased to $5,476,519 for the nine-month ended
March 31, 2000 compared to $2,156,457 for the nine-month ended March 31, 1999.
This increase is primarily due the increase of interest expense for amortization
of Debenture issuance cost and Conversion Benefit.
Gain on extinguishment of Debt was $0 for the nine-month ended March
31, 2000 compared to a loss of $832,849 for the nine-month ended March 31, 1999.
The extingushment gain or loss resulted from refinancing of Convertible
debentures.
FINANCIAL CONDITION
March 31, 2000 compared to June 30, 1998
Total assets of the Company on March 31, 2000 increased by $2,027,107 to
$25,538,297 from $23,511,189 on June 30, 1999, primarily due to the increase of
Current Assets. Current Assets increased $2,478,208 to $14,407,589 on March 31,
2000 from $11,929,381 on June 30, 1999. The increase is primarily attributable
to the increase of Accounts receivable of $2,056,840, the increase of Cash and
cash equivalents of $1,964,313 which was partially offset by the decrease in
inventory of $1,516,204 and the decrease in prepaid expenses and sundry
receivables of $26,741. Other Assets decreased by 537,057 to $4,761,711 on March
31, 2000 from $5,298,768 on June 30, 1999. The decrease is primarily
attributable to the amortization of the licensing agreement, patents &
trademark, software development cost and the goodwill.
On March 31, 2000, the Company had total liabilities of $29,796,798
compared to $31,265,297 on June 30, 1998. On March 31, 2000, current liabilities
were $15,054,173 compared to $13,944,865 on June 30, 1999. Working capital at
March 31, 2000 was $(646,584) compared to $(2,015,484) at June 30, 1999.
CASH FLOW AND CAPITAL EXPENDITURES NINE MONTHS PERIOD ENDED MARCH 31, 2000
COMPARED TO NINE MONTHS PERIOD ENDED MARCH 31, 1999
Cash used for operating activities for the nine-months ended March 31,
2000 was $5,472,748 compared to $8,931,709 for the nine-months ended March 31,
1999. Cash used for investing activities was $629,632 for the nine-months ended
March 31, 2000 compared to $554,023 for the nine-months ended March 31, 1999.
Cash flow from financing activities for the nine-months ended March 31, 2000 was
$8,189,205 compared to $9,533,015 for nine-months ended March 31, 1999.
5
<PAGE>
LIQUIDITY
The Company anticipates that its use of cash will be substantial for
the foreseeable future. In particular, management of the Company expects
substantial expenditures in connection with the production of the planned
increase of sales, the continuation of the strengthening and expansion of the
Company's marketing organization and, to a lesser degree, ongoing research and
development projects. The Company expects that funding for these expenditures
will be available out of the Company's, future cash flow and/or issuance of
equity and/or debt securities.
However, the availability of a sufficient future cash flow will depend
to a significant extent on the marketability of the Company's ddR- Systems.
Accordingly, the Company may be required to issue additional convertible
debentures or equity securities to finance such capital expenditures and working
capital requirements. There can be no assurance whether or not such financing
will be available on terms satisfactory to management.
Pursuant to an agreement entered into on September 2, 1999, the Company
authorized a purchaser to purchase 1,000,000 shares at $1.00 per share (which
occurred on September 7, 1999) and up to an additional 2,000,000 shares at $1.50
per share so long as the first 1,000,000 shares were purchased on or before
September 30, 1999 and so long as the purchaser purchased at least an additional
1,000,000 shares within 60 days of its first purchase. The first purchase, as
aforesaid, was made on September 7, 1999 (at $1.00 per share) while the next
1,000,000 shares were purchased on October 19, 1999 (500,000 shares at $1.50 per
share) and November 1, 1999 (500,000 shares at $1.50 per share). Having met the
purchase requirements, the purchaser was entitled (through March 1, 2000) to
purchase the balance of the shares referred to at $1.50 but only purchase
666,667 shares at such price in December 1999.
6
<PAGE>
EFFECT OF CURRENCY ON RESULTS OF OPERATIONS
The result of operations and the financial position of the
Company'ssubsidiaries outside of the United States is reported in the relevant
foreign currency (primarily in Swiss Francs) and then translated into US dollars
at the applicable foreign exchange rate for inclusion in the Company's
consolidated financial statements. Accordingly, the results of operations of
such subsidiaries as reported in US dollars can vary significantly as a result
of changes in currency exchange rates (in particular the exchange rate between
the Swiss Franc and the US dollar).
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable
PART II
Item 1. Legal Proceedings
None excepting that certain legal proceedings commenced in July 1998
against SRMI and two of it subsidiaries by Gary J. Durday, Kenneth R. Montler
and Michael E. Harle (hereinafter "Plaintiffs") heretofore summarized in SRMI's
Form 10-K for fiscal year ended June 30, 1999 were subsequently settled in
accordance with the terms and conditions of Settlement Agreement executed on
August 31, 1999 pursuant to which SRMI was required to pay and has since paid
the sum of $1,000,000 to Plaintiffs and is further obligated pursuant to terms
of August 31, 1999 promissory note to pay (over a period of 24 consecutive
months) an aggregate of $500,000 with interest at the rate of 9% per annum.
Dispute with J. Douglas Maxwell. On or about July 1, 1999 an action was
commenced in the Supreme Court, State of New York, County of New York (Index No.
113099/99) entitled J. Douglas Maxwell ("Maxwell") against Swissray
International, Inc. ("Swissray"), whereby Maxwell is seeking judgment in the sum
of $380,000 based upon his interpretation of various terms and conditions
contained in an Exchange Agreement between the parties dated July 22, 1996 and a
subsequent Mutual Release and Settlement Agreement between the parties dated
June 1, 1998. Swissray has denied the material allegations of Maxwell's
complaint and has asserted three affirmative defenses and two separate
counterclaims seeking (amongst other matters) dismissal of the complaint and
recision of the settlement agreement. Maxwell has submitted a motion for Summary
Judgment which Swissray has opposed and as of May 8, 2000 no Court determination
has been made with respect thereto. It is Swissray's management's intention to
contest this matter vigorously.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
7
<PAGE>
Item 3. DEFAULTS UPON SENIOR SECURITIES
None excepting for such penalties as have accrued with respect
to certain conditions and requirements contained in outstanding convertible
debentures pursuant to which the Company was required, in accordance with
related registration rights agreement, to file a Registration Statement by a
specific date and to have same declared effective (so as to register shares of
common stock underlying debentures) by a specified and agreed to date - which if
not timely accomplished results in commencement of penalty provisions.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
Not applicable
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - NONE -
(b) Reports on Form 8-K - NONE -
8
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
SWISSRAY INTERNATIONAL, INC.
By: /s/ RUEDI G. LAUPPER
---------------------------------
Ruedi G. Laupper, Chairman of the
Board of Directors, President and
Chief Executive Officer
Date: May 8, 2000
9
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<NAME> SWISSRAY INTERNATIONAL, INC.
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<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-1999
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0
0
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