U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended AUGUST 31, 1997
[ ] Transition report under Section 13 or 15(d) of the Exchange Act
For the transition period from __________ to __________
Commission File Number 0-21279
THERMACELL TECHNOLOGIES, INC.
(Exact Name of Small Business Issuer as Specified in Its Charter)
FLORIDA 59-3223708
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5419 PROVOST DR., HOLIDAY, FL 34690
(Address of Principal Executive Offices)
(813) 938-3269
(Issuer's Telephone Number)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such a
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
--- ---
The number of shares outstanding of the Issuer's Common Stock, $.0001
Par Value, as of September 1, 1997 was 2,859,551.
Transitional Small Business Disclosure Format:
Yes No X
--- ---
<PAGE>
THERMACELL TECHNOLOGIES, INC.
INDEX
PAGE
PART I - FINANCIAL INFORMATION ----
- ------------------------------
Item 1. Financial Statements
Balance Sheets -
November 30, 1996 and August 31, 1997........................ 1 - 2
Statements of Loss -
Three months ended and nine months ended
August 31, 1996 and 1997..................................... 3
Statements of Changes in Stockholders' Equity -
Three months ended and nine months ended August 31, 1997..... 4
Statements of Cash Flows -
Nine months ended August 31, 1996 and 1997................... 5
Notes to financial statements.................................. 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 7 - 12
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings............................................... 12
Item 5. Other Information............................................... 12
Item 6. Exhibits and Reports on Form 8-K................................ 13
Signatures..................................................... 13
Exhibit 11.............................................................. 14
i
<PAGE>
THERMACELL TECHNOLOGIES, INC.
BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
August 31, November 30,
1997 1996
---------------- ---------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 903,179 $ 3,512
Notes receivable - 213,750
Accounts receivable
Trade,net of allowance for uncollectible accounts
of $19,211 for 1997 and $21,000 for 1996 532,946 64,006
Officers 489,670 4,637
Other 500 6,000
----------------- ---------------
1,023,116 74,643
----------------- ---------------
Inventories 352,570 150,872
Prepaid expenses and other 52,531 14,018
----------------- ---------------
TOTAL CURRENT ASSETS 2,331,396 456,795
----------------- ---------------
PROPERTY AND EQUIPMENT 559,658 322,979
Less: accumulated depreciation (81,288) (41,060)
----------------- ---------------
478,370 281,919
----------------- ---------------
OTHER ASSETS
Restricted cash - 15,000
Deposits 6,454
Deferred offering costs - 297,648
Deferred income tax benefit, net 514,527 337,350
Goodwill and other intangibles, net 921,315 148,561
----------------- ---------------
1,442,296 798,559
----------------- ---------------
$ 4,252,062 $ 1,537,273
================= ===============
</TABLE>
See notes to financial statements.
1
<PAGE>
THERMACELL TECHNOLOGIES, INC.
BALANCE SHEETS(CONTINUED)
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
August 31, November 30,
1997 1996
----------------- ---------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Notes payable
Bridge financing $ - $ 1,898,500
Stockholders - 135,000
Other 10,276 24,323
----------------- ---------------
10,276 2,057,823
Accounts payable and accrued expenses
Trade accounts 598,320 444,537
Accrued payroll and payroll taxes 289,568 175,696
Accrued interest and other 83,884 223,156
----------------- ---------------
TOTAL CURRENT LIABILITIES 982,048 2,901,212
----------------- ---------------
STOCKHOLDERS' EQUITY
Preferred stock, par value $.0001
5,000,000 shares, authorized, issued
and outstanding, 1997 and 1996 500 500
Common stock, par value $.0001
Authorized 20,000,000 shares,
outstanding 2,859,551 and 869,899 shares,
1997 and 1996, respectively 286 87
Additional paid-in capital 5,564,334 184,314
Accumulated deficit (2,295,106) (1,548,840)
----------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 3,270,014 (1,363,939)
----------------- ---------------
$ 4,252,062 $ 1,537,273
================= ===============
</TABLE>
See notes to financial statements.
2
<PAGE>
THERMACELL TECHNOLOGIES, INC.
STATEMENTS OF LOSS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
August 31, August 31,
------------------------- -------------------------
------------------------- -------------------------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
----------- ------------ ----------- ------------
REVENUE
Sales $ 463,568 $ 171,777 $ 878,511 $ 430,597
LESS: COST OF SALES 283,284 78,549 492,806 248,686
----------- ------------ ----------- ------------
GROSS PROFIT 180,284 93,228 385,705 181,911
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 497,585 278,210 1,114,495 754,190
----------- ------------ ----------- ------------
LOSS FROM OPERATIONS (317,301) (184,982) (728,790) (572,279)
----------- ------------ ----------- ------------
OTHER INCOME AND EXPENSE
Commissions - - (35,000) -
Interest income 14,740 - 37,002 -
Interest expense - - (161,566) -
Other (35,089) (58,789) (35,089) (149,502)
----------- ------------ ----------- ------------
TOTAL OTHER INCOME AND EXPENSE (20,349) (58,789) (194,653) (149,502)
----------- ------------ ----------- ------------
LOSS BEFORE INCOME TAXES (337,650) (243,771) (923,443) (721,781)
INCOME TAXES
Deferred income tax benefit 66,776 48,754 177,178 144,356
----------- ------------ ----------- ------------
NET LOSS $ (270,874) $ (195,017) $ (746,265) $ (577,425)
=========== ============ =========== ============
Loss per common share $ (0.09) $ (0.28) $ (0.36) $ (0.82)
=========== ============ =========== ============
Weighted average number of
common shares outstanding 2,859,551 707,515 2,063,690 707,515
=========== ============ =========== ============
</TABLE>
See notes to financial statements.
3
<PAGE>
THERMACELL TECHNOLOGIES, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock Preferred Stock Additional
------------------------ ------------------------
Number of Number of Paid-in Accumulated
Shares Amount Shares Amount Capital Deficit Total
------------ ---------- ------------ ---------- ------------ -------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance November 30, 1996 869,899 $ 87 5,000,000 $ 500 $ 184,314 $ (1,548,840) $ (1,363,939)
Net loss for the three months ended
February 28, 1997 - - - - - (186,912) (186,912)
------------ ---------- ------------ ---------- ------------ -------------- -------------
Balance February 28, 1997 869,899 $ 87 5,000,000 $ 500 $ 184,314 $ (1,735,752) $ (1,550,851)
Stock Issued - public offering 1,989,652 $ 199 $ 5,428,928 $ 5,429,127
Net loss for the three months ended
May 31, 1997 - - - - - (288,479) (288,479)
------------ ---------- ------------ ---------- ------------ -------------- -------------
Balance May 31, 1997 2,859,551 $ 286 5,000,000 $ 500 $ 5,613,242 $ (2,024,231) $ 3,589,797
------------ ---------- ------------ ---------- ------------ -------------- -------------
Adjustment to Paid-in-capital (48,908) (48,908)
Net loss for the three months ended
August 31, 1997 (270,874) (270,874)
------------ ---------- ------------ ---------- ------------ -------------- -------------
Balance August 31, 1997 2,859,551 $ 286 5,000,000 $ 500 $ 5,564,334 $ (2,295,106) $ 3,270,014
============ ========== ============ ========== ============ ============== =============
</TABLE>
See notes to financial statements.
4
<PAGE>
THERMACELL TECHNOLOGIES, INC
STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months Ended
-----------------------------------
August 31, August 31,
1997 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net loss to net cash
used in operating activities
Net loss $ (746,265) $ (577,425)
Adjustments to reconcile net loss to net
cash provided by operating activities
Depreciation 59,011 30,998
Amortization 42,582 -
(Increase) in accounts receivable (468,940) (109,710)
(Increase) Decrease in inventories (201,698) (72,506)
(Increase) Decrease in prepaid expenses and other (38,513) -
(Increase) Decrease in deferred income tax benefit (177,177) (144,356)
(Decrease) in other assets (509,142) (205,867)
Increase (decrease) in accounts payable 153,783 184,211
Increase (decrease) in accrued expenses (25,400) 70,726
-------------- --------------
NET CASH USED IN OPERATING ACTIVITIES (1,911,759) (823,929)
-------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES
Collections on note receivable 213,750 -
Capital expenditures (255,462) (154,241)
Issuance of notes receivable and advances (479,533) (100,000)
-------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (521,245) (254,241)
-------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 5,380,218 -
Proceeds from issuance of notes payable - 1,110,797
Principal payments on notes payable (2,047,547) -
Costs associated with obtaining financing - (99,122)
-------------- --------------
NET CASH PROVIDED BY
FINANCING ACTIVITIES 3,332,671 1,011,675
-------------- --------------
NET INCREASE (DECREASE) IN CASH 899,667 (66,495)
CASH BEGINNING 3,512 90,773
-------------- --------------
CASH ENDING $ 903,179 $ 24,278
============== ==============
</TABLE>
See notes to financial statements.
5
<PAGE>
THERMACELL TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION
The accompanying unaudited financial statements, which are for interim periods,
do not include all disclosures provided in the annual financial statements.
These unaudited financial statements should be read in conjunction with the
financial statements and the footnotes thereto contained in Form 10-KSB for the
year ended November 30, 1996 of ThermaCell Technologies, Inc. (the "Company"),
as filed with the Securities and Exchange Commission.
In the opinion of the Company, the accompanying unaudited financial statements
contain all adjustments (which are of a normal and recurring nature) necessary
for a fair presentation of the financial statements. The results of operations
for the three month and nine month periods ended August 31, 1997 and August 31,
1996 are not necessarily indicative of the results to be expected for the full
year.
NOTE 2 - PER SHARE CALCULATIONS
Per share data was computed by dividing net loss by the weighted average number
of shares outstanding during the respective periods. On August 12, 1996, the
Company announced a ten (10) for one (1) reverse common stock split. Retroactive
effect was given to the outstanding stock.
NOTE 3 - ACQUISITION
On July 28, 1997, the Company acquired all the outstanding common stock,
representing 100% ownership of Atlas Chemical Company, a paint manufacturer and
distributor, located in Miami, Florida. For the fiscal year ending June 30,
1997, Atlas Chemical had annual revenues of $2.4 million and sustained a net
loss of approximately $68,000.
6
<PAGE>
THERMACELL TECHNOLOGIES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Form 10-QSB contains forward looking information and statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward looking statements contained in this Form 10-QSB.
GENERAL
The Company was incorporated in Florida in August, 1993, for the purpose of
developing, manufacturing and marketing insulating materials and coatings using
partially evacuated glass microspheres ("shells"). The Company's technology
utilizes the insertion of the shells in various materials and products that
improve the thermal resistive characteristics of such products.
The Company's business strategy is to (i) expand the marketing and distribution
of ThermaCool(TM) paints and coatings, (ii) develop and manufacture the
Company's own shells and (iii) expand the shell technology to other products,
such as drywall, gypsum board, home siding materials, and space foam insulation,
among others.
On November 30, 1995, the Company acquired the assets of C.F. Darling Paint &
Chemicals, Inc., a paint manufacturing company, located in Holiday, Florida. The
Company acquired these assets so that it would have a facility to produce and
develop paints and coatings for its ThermaCool(TM) product line.
On March 19, 1997, the Company completed a public offering for 1,375,000 Units,
each Unit consisting of one share of Common Stock, $.0001 par value, and one
Series A Redeemable Common Stock Purchase Warrant, at a price of $4.00 per Unit.
In addition, the underwriter exercised its over-allotment purchase option and
purchased 206,250 additional Units at the initial per Unit public offering price
less the underwriting discounts and commission.
On July 28, 1997, the Company acquired all the outstanding common stock,
representing 100% ownership of Atlas Chemical Company, a paint manufacturer and
distributor, located in Miami, Florida. The Company acquired this firm so that
it would have a larger manufacturing facility to both expand production of
coatings and to obtain an established marketing distribution channel which
included major accounts such as Builders Square, Ace Hardware, Kmart, among
others. For the fiscal year ending June 30, 1997, Atlas Chemical had annual
revenues of $2.4 million and sustained a net loss of approximately $68,000.
7
<PAGE>
THERMACELL TECHNOLOGIES, INC.
The Company has sustained significant operating losses since its inception.
Management's strategy of expanding the ThermaCool(TM) product line, developing a
commercially viable manufacturing process for shells and expansion into new
markets for its shell technology may result in the Company incurring additional
losses due to the costs associated with these strategies. The Company expects to
incur losses until it is able to increase its sales, expand its product line and
increase its distribution capabilities to a sufficient revenue level to offset
ongoing operating and expansion costs. The Atlas Chemical acquisition completed
on July 28, 1997 should accelerate the Company's plan to achieve profitable
operations.
RESULTS OF OPERATIONS
THREE MONTHS ENDED AUGUST 31, 1997 COMPARED TO THREE MONTHS ENDED AUGUST 31,
1996
Total consolidated revenue for the three months ended August 31, 1997 was
$463,568 compared to $171,777 for the same period of 1996, which represents an
increase of $291,791 or 170%. The increase was a result of both expanded sales
of paint products and coatings produced by the Company's paint manufacturing
facility and the sales contribution for one month of the recently acquired Atlas
Chemical Company.
Gross profit margins were 39% and 54%, respectively, for the three month period
ending August 31, 1997 as compared to the prior period ending August 31, 1996.
This decrease is the result of a change in mix of paint and coatings products
sold by the Company and the lower margin contribution of Atlas Chemical. It is
expected that with the higher levels of materials purchases, economies of scale
from the combined business will allow the Company to benefit from higher gross
profit margins in the future.
For the three months ended August 31, 1997, total selling, general and
administrative expenses(S,G & A) were $497,585, as compared to $278,210 for the
same period of the previous year, an increase of $219,375, or 79%. This increase
was due to higher expenses incurred by the company in marketing, staffing and
other expenses associated with the Company's operations together with the
additional costs for SG & A of the Atlas Chemical operation. The Company has
taken steps to reduce duplication of personnel and is in the process of
consolidating its staffing, marketing, and production for more efficient and
effective business operations. With the expanded distribution provided with the
Atlas acquisition, the Company should receive substantial benefit from sales of
its new coatings products to national customers. These efforts will allow the
Company to significantly grow its business over the next twelve months.
The Company continued to experience a loss from operations of $317,301 for the
period ending August 31, 1997 as compared to a loss of $184,982 for the same
prior year period. The higher consolidated gross profit for this period was more
than offset by the higher level of S, G & A expense incurred during this three
month period and consequently contributed to the higher operating loss.
Management anticipates that increasing levels of sales, including the
significant contribution of the Atlas business will result in improvement in
future operating performance.
8
<PAGE>
THERMACELL TECHNOLOGIES, INC.
Based upon management's current estimates of future taxable income, management
has determined that a valuation allowance of fifty percent (50%) is appropriate
during the current period ending August 31, 1997 to represent that portion of
deferred taxes that may be realized in the future.
The net loss, after income taxes benefit, and net loss per share were $270,874
and $.09 per share respectively, for the three months ended August 31, 1997 as
compared to a net loss and net loss per share of $195,017 and $.28 respectively,
for the same period in 1996. There was no interest expense in the present period
as compared to the prior year's quarter. Although the loss for the period
increased, the earnings per share declined due to the greater number of shares
outstanding for the period because of the shares issued in the Company's recent
successful underwriting.
With the financial resources provided by the underwriting, the Company plans to
aggressively market its paint and coatings products, with the added opportunity
presented by the Atlas acquisition to sell to numerous new customers. A focus of
its strategy will continue to be to expand within the Sunbelt Region of the
United States. In addition to the Company's marketing efforts, the Atlas
acquisition has more than doubled the Company's production capabilities that
could support higher levels of sales of its proprietary products. Management is
optimistic about the benefits of its near-term marketing programs.
The Company anticipates that improved raw material purchasing economies,
particularly with the purchase of Atlas Chemical, will result in cost savings in
raw material purchases within its manufacturing operation. This benefit will
only partially benefit Fiscal Year 1997 but its major impact will be felt during
the next fiscal year. The Company therefore anticipates improvement in its gross
profit margins during the forthcoming year as the Atlas Chemical business sees
these improved purchasing economies.
The completion of its Initial Public Offering ("IPO") during March 1997, the
second quarter of its fiscal year, has provided the Company with sufficient
capital to meet its present working capital needs and provides funds for
expansion of its operations for at least the next twelve months.
NINE MONTHS ENDED AUGUST 31, 1997 COMPARED TO NINE MONTHS ENDED AUGUST 31, 1996
Total revenue for the nine months ended August 31, 1997 was $878,511 compared to
$430,597 for the same period of 1996, which represents an increase of $447,914,
or 104%. The increase was a result of the sales contribution of the Atlas
Chemical acquisition completed recently together with the expanded sales of
paint products and coatings produced by the Company. These increased sales were
a direct result of increased marketing efforts and production capabilities.
9
<PAGE>
THERMACELL TECHNOLOGIES, INC.
Gross profit margins were 44% and 42%, respectively, for the present nine month
period ending August 31, 1997 as compared to the prior period ending August 31,
1996. This increase was the result of a change in mix of paint and coatings
products sold with the higher margined products contributing more significantly
during the period.
For the nine months ended August 31, 1997, total selling, general and
administrative expenses were $1,114,495, as compared to $754,190 for the same
period of the previous year, an increase of approximately $360,305, or 48%. This
increase was due to higher expenses incurred by the company in marketing,
staffing and other expenses associated with the Company's operations. In
addition, severance compensation equivalent to $55,000, a one year salary for a
former officer of the Company was expensed during this period. With the recent
acquisition of Atlas Chemical Company, it is anticipated that expansion of the
Company's business operations will be undertaken. It is further anticipated by
management that the Company will significantly expand its business over the next
twelve months.
The Company continued to experience a loss from operations of $728,790 for the
period nine month ending August 31, 1997 as compared to a loss of $572,279 for
the same prior year period. Although the gross profit increase for the current
period was $203,794, this higher margin contribution was offset by the higher
level of S G & A expense incurred. Management anticipates that increasing levels
of sales while maintaining the same SG & A expense level will result in an
improvement in its future operating performance.
Based upon management's current estimates of future taxable income, management
has determined that a valuation allowance of fifty percent (50%) is appropriate
during the current period ending August 31, 1997 to represent that portion of
deferred taxes that may be realized in the future.
The net loss, after income taxes benefit, and net loss per share were $746,265
and $.36 per share respectively, for the nine months ended August 31, 1997 as
compared to a net loss and net loss per share of $577,425 and $.82 respectively,
for the same period in 1996. This current period loss was higher but due to the
effect of more common shares outstanding, the loss per share was proportionately
reduced. During these two comparable periods, the weighted average shares
outstanding increased from 707,515 to 2,063,690. This increase is directly
attributed to the Company's successful underwriting that was concluded in March
1997.
10
<PAGE>
THERMACELL TECHNOLOGIES, INC.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has funded its operations and product development
activities with funds provided by issuing securities and from borrowings. During
the nine months ending August 31, 1997, the Company raised approximately $5.3
million through its successful public offering. On March 19, 1997, the Company
completed this public offering for 1,375,000 Units, each Unit consisting of one
share of Common Stock, $.0001 par value, and one Series A Redeemable Common
Stock Purchase Warrant, at a price of $4.00 per Unit. In addition, the
underwriter exercised its over-allotment purchase option and purchased 206,250
additional Units at the initial per Unit public offering price less the
underwriting discounts and commission. The Company repaid its indebtedness with
the proceeds of this Offering or the conversion of a portion of its outstanding
notes into common stock.
Although the Company is not presently profitable, its recent public offering
enables it to continue to self fund its business. Once the Company achieves
profitability, it will be in a position to fund itself on an operating basis.
The successful completion of the Offering in March 1997 has provided the Company
with capital to both improve its working capital position and provides adequate
capital resources for future operations. The Company has focused its marketing
efforts within the Sunbelt Region of the United States to increase consumer
awareness and acceptance of both its existing and new products. In addition to
this marketing effort, the Company has expanded its manufacturing capabilities
through the recent Atlas acquisition that will enable it to substantially
increase production of its proprietary products. Management believes the
proceeds from the Offering provided sufficient working capital to enable the
Company to sustain its operations and finance planned expansion over the next
twelve months.
For the nine month period ended August 31, 1997, the Company's net cash used in
operating activities was $1,911,759 in the current period compared with $823,929
used in operating activities in the comparable period last year. In this period,
cash used in operating activities principally resulted from a greater net loss
and the expansion of the Company's business requiring it to support higher
levels of accounts receivables, inventory and other assets. The major portion of
these assets are attributed to the acquisition of Atlas Chemical Company.
Net cash used in investing activities for the nine month period ended August 31,
1997 was $521,245 compared to $254,241 in the prior year, primarily attributed
to higher levels of capital expenditures and carrying of notes receivables and
advances.
Net cash from financing activities for the nine month period ended August 31,
1997 was $3,332,671 compared to $1,011,675 in the prior period. The present
period included the successful underwriting in which the Company raised
approximately $5.3 million and used $2.0 million to repay notes payables. In the
year ago period, the Company obtained bridge financing to assist in maintaining
operations while it sought to finalize a pending public offering of its
securities.
11
<PAGE>
THERMACELL TECHNOLOGIES, INC.
As of August 31, 1997, the Company had net working capital of $1,349,348 as
compared to a deficit net working capital at year-end November 1996 of $2.4
million. The Company's working capital position improved primarily because of
its IPO that increased cash available to the Company and allowed the support of
increased levels of accounts receivables and inventory while decreasing current
liabilities. The decrease in current liabilities is primarily due to the
repayment of bridge loans obtained during the prior year. The Company's ratio of
current assets to current liabilities was 2.3 at August 31, 1997.
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
------------------
On May 2, 1997, the Company was served with a summons regarding a civil
action filed in the United States District Court, Eastern District of Michigan
by IA, Inc., as plaintiff, that alleges the Company, and its president, John
Pidorenko, and Monroe Parker Securities, Inc., the Company's underwriter,
breached a marketing agreement executed by Mr. Pidorenko on March 26, 1992
relating to technologies developed by IA, Inc. This agreement contained a
confidentiality and non-disclosure clause for technologies purportedly developed
by IA, Inc. The Company was not a party to that agreement. The Company believes
that it has not infringed on any patents held by IA, Inc., non-withstanding the
validity of such patents and/or their claims. The petition requested various
court actions including a jury trial, but no specific request for damages. The
Company intends to vigorously defend itself in this action. The Company believes
it has meritorious defenses in this matter which is in a preliminary stage and
which will not be resolved until a considerable period of time has elapsed. The
Company has agreed to indemnify the Monroe Parker Securities, Inc., its
underwriter, against any claims asserted by this party.
On September 3, 1997 the Company and Mr. Pidorenko were named as defendants
in a lawsuit filed in Sarasota County, Florida by Mr. Kevin Horrell. The
complaint alleges, among other matters, that Mr. Horrell is entitled to 33,334
shares of the Company's common stock as part of his past funding arrangements,
repayment of attorney fees and costs and enforcement of a settlement agreement.
The Company believes it has meritorious defenses to the claims and that the
ultimate resolution of this matter will not have a material adverse effect on
its financial condition.
Item 5. OTHER INFORMATION
-----------------
On June 10, 1997, Mr. Gerald Couture was appointed Vice President of
Finance and Chief Financial Officer of the Company. In addition, on June 10,
1997, Mr. Couture and Mr. Stephen Drescher were appointed to the board of
directors of the Company. On August 25, 1997, Mr. Darryl Riley, a member of the
Board of Directors of the Company resigned.
The Board of Directors of the Company authorized on September 29, 1997, the
changing of the Company's fiscal year to September 30 rather than a November 30
fiscal year end.This will result in a ten month period for the short year ending
September 30, 1997.
Item 6. EXHIBITS AND REPORTS ON FORM 8K
-------------------------------
Form 8K, dated August 1, 1997 is incorporated herein by reference.
Form 8K/A, Amendment No.1, dated August 14, 1997 is incorporated herein
by reference.
12
<PAGE>
THERMACELL TECHNOLOGIES, INC.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant had
duly caused the report to be signed on its behalf by the undersigned thereunto
duly authorized.
ThermaCell Technologies, Inc.
Dated : 10/14/97 /s/ Gerald Couture
----------------------------
Gerald Couture
Vice-President,Finance and CFO
13
<PAGE>
EXHIBIT 11
THERMACELL TECHNOLOGIES, INC.
COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
August 31, August 31,
------------------------------- -------------------------------
1997 1996 1997 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Shares outstanding: 2,859,551 747,558 2,859,551 747,558
Weighted average shares outstanding 2,859,551 707,515 2,063,690 707,515
Net loss $ (270,874) $ (195,017) $ (746,265) $ (577,425)
Net loss per share $ (0.09) $ (0.28) $ (0.36) $ (0.82)
</TABLE>
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> DEC-01-1996
<PERIOD-END> AUG-31-1997
<CASH> 903,179
<SECURITIES> 0
<RECEIVABLES> 532,946
<ALLOWANCES> 19,211
<INVENTORY> 352,570
<CURRENT-ASSETS> 2,331,396
<PP&E> 478,370
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0
500
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<EPS-PRIMARY> (.36)
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</TABLE>
