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 December 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 January 1, 1998 was 3,067,709.
Transitional Small Business Disclosure Format:
Yes No X
--- ---
<PAGE>
THERMACELL TECHNOLOGIES, INC.
Index
Page
Part I - Financial Information ----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and December 31, 1997..................... 1 - 2
Consolidated Statements of Operations -
Three months ended December 31, 1996 and 1997................ 3
Consolidated Statements of Changes in Stockholders' Equity -
Three months ended December 31, 1997......................... 4
Consolidated Statements of Cash Flows -
Three months ended December 31, 1996 and 1997................ 5
Notes to Consolidated Financial Statements..................... 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.......................... 7 - 10
Part II - Other Information
Item 1. Legal Proceedings............................................... 10
Item 2. Changes in Securities........................................... 10
Item 5. Other Information............................................... 10
Item 6. Exhibits and Reports on Form 8-K................................ 11
Signatures..................................................... 11
Exhibit 11.............................................................. 12
i
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
Assets
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------------ -----------------
------------------ -----------------
(unaudited)
<S> <C> <C>
Current assets
Cash $ 287,575 $ 580,522
Accounts receivable, net 411,861 384,351
Other 5,455 1,676
Inventories 446,714 410,972
Prepaid expenses and other 7,389 8,886
------------------ -----------------
------------------ -----------------
Total current assets 1,158,994 1,386,407
------------------ -----------------
------------------ -----------------
Property and equipment 745,207 697,671
Less accumulated depreciation 117,038 86,773
------------------ -----------------
------------------ -----------------
628,169 610,898
------------------ -----------------
------------------ -----------------
Other assets
Deposits 14,795 14,795
Deferred income tax benefit, net 644,386 631,372
Goodwill, net 805,174 819,199
Other intangibles, net 77,758 80,004
------------------ -----------------
------------------ -----------------
1,542,113 1,545,370
------------------ -----------------
------------------ -----------------
Total assets $ 3,329,276 $ 3,542,675
================== =================
================== =================
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
Liabilities and Stockholders' Equity
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------------ -----------------
------------------ -----------------
(unaudited)
<S> <C> <C>
Current liabilities
Accounts payable 492,566 551,572
Accrued expenses 182,866 277,192
Accrued payroll and payroll taxes 187,019 187,321
Current maturities of long-term debt
Notes payable 13,452 18,434
Capital leases 12,883 16,977
------------------ -----------------
------------------ -----------------
Total current liabilities 888,786 1,051,496
------------------ -----------------
------------------ -----------------
Long-term debt, net of current maturities
Notes payable 41,856 41,856
Capital lease obligations 21,233 21,233
------------------ -----------------
------------------ -----------------
Total long-term debt, net of current maturities 63,089 63,089
------------------ -----------------
------------------ -----------------
Total Liabilities 951,875 1,114,585
------------------ -----------------
------------------ -----------------
Stockholders' equity
Preferred stock, par value $.0001
5,000,000 shares, authorized, issued
and outstanding 500 500
Common stock, par value $.0001
Authorized 20,000,000 shares,
3,067,709 and 3,021,139 issued and outstanding, respectively 306 301
Additional paid-in capital 5,587,599 5,564,319
Deduct notes receivable associated with stockholder loan (572,380) (550,460)
Accumulated deficit (2,638,624) (2,586,570)
------------------ -----------------
------------------ -----------------
Total stockholders' equity 2,377,401 2,428,090
------------------ -----------------
------------------ -----------------
Total liabilities and stockholders' equity $ 3,329,276 $ 3,542,675
================== =================
================== =================
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Three Months Ended
---------------------------------
December 31, December 31,
1997 1996
-------------- --------------
(unaudited) (unaudited)
<S> <C> <C>
Revenue
Sales $ 758,284 $ 193,387
Less cost of sales 492,709 131,547
--------------- -------------
Gross profit 265,575 61,840
Selling, general and administrative
expenses 339,645 435,050
--------------- -------------
Loss from operations (74,070) (373,210)
--------------- -------------
Other income (expense)
Commissions - (11,550)
Interest income 11,986 -
Interest expense (4,679) (32,730)
Other 1,695 (2,310)
--------------- -------------
Total other income (expense) 9,002 (46,590)
--------------- -------------
Loss before income taxes (65,068) (419,800)
Income taxes
Deferred income tax benefit 13,014 57,075
--------------- -------------
Net loss $ (52,054) $ (362,725)
=============== =============
Loss per common share $ (0.02) $ (0.47)
=============== =============
Weighted average number of
common shares outstanding 3,024,761 779,382
=============== =============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
(unaudited)
<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 September 30, 1997 3,021,139 $ 301 5,000,000 $ 500 $ 5,013,859 $(2,586,570) $ 2,428,090
Issuance of stock for
payment of services 46,570 5 - - 23,280 - 23,285
Note receivable associated
with stockholder loan - - - - (21,920) - (21,920)
Net loss for the Three Months
Ended December 31, 1997 - - - - - (52,054) (52,054)
----------- --------- ------------ --------- ------------- ------------- -------------
Balance December 31, 1997 3,067,709 $ 306 5,000,000 $ 500 $ 5,015,219 $(2,638,624) $ 2,377,401
=========== ========= ============ ========= ============= ============= =============
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Three Months Ended
----------------------------------
December 31, December 31,
1997 1996
--------------- ---------------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Reconciliation of net loss to net cash
used in operating activities
Net loss $ (52,054) $ (362,725)
Adjustments to reconcile net loss to net
cash used in operating activities
Depreciation 30,265 6,533
Amortization 16,271 -
Deferred income tax benefit (13,014) (57,075)
(Increase) in accounts and notes receivable (27,510) (76,323)
(Increase) in inventories (35,742) (24,479)
(Increase) in prepaid and other assets (2,282) (22,695)
Increase (decrease) in accounts payable (59,006) 280,855
Increase (decrease) in accrued expenses (94,628) 240,762
--------------- ---------------
Net cash used in operating activities (237,700) (15,147)
--------------- ---------------
Cash flows from investing activities
Capital expenditures (47,536) (64,298)
Expenditures for patent, net - (26,784)
--------------- ---------------
Net cash used in investing activities (47,536) (91,082)
--------------- ---------------
Cash flows from financing activities
Proceeds from issuance of common stock 23,285 -
Proceeds from issuance of notes payable - 202,995
Principal payments on notes payable (9,076) -
Loans to officer/stockholder (21,920) -
Costs associated with obtaining financing - (91,652)
--------------- ---------------
Net cash provided by financing activities (7,711) 111,343
--------------- ---------------
--------------- ---------------
Net increase (decrease) in cash (292,947) 5,114
Cash beginning 580,522 24,278
--------------- ---------------
Cash ending $ 287,575 $ 29,392
=============== ===============
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
Note 1 - Basis of presentation
The accompanying unaudited consolidated financial statements, which are for
interim periods, do not include all disclosures provided in the annual
consolidated 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 fiscal period ended September 30, 1997 of
ThermaCell Technologies, Inc. (the "Company"), as filed with the Securities and
Exchange Commission.
In the opinion of management, 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 months ended December 31, 1997 and December 31, 1996 are not
necessarily indicative of the results to be expected for the full year.
Note 2 - Per share calculations
The computation of net earnings (loss) per common share has been based upon the
weighted average number of shares of outstanding common stock, which for the
three month periods ended December 31, 1997 and December 31, 1996 were 3,024,761
and 779,382, respectively.
Note 3 - Accounting Change
The Company adopted Statement of Accounting Standards #128, Earnings per Share,
during the quarter ended December 31, 1997. Since the Company has reported a
loss only the basic earnings (loss) per share is reported as the reporting of
diluted earnings per share would be anti-dilutive.
6
<PAGE>
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The statements contained in this Report on Form 10-QSB, that are not purely
historical, are 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. These include statements regarding the Company's
expectations, intentions, or strategies regarding future matters. All
forward-looking statements included in this document are based on information
available to the Company on the date hereof. It is important to note that the
Company's actual results could differ materially from those projected in such
forward-looking statements contained in this Form 10-QSB. The forward-looking
statements contained here-in are based on current expectations that involve
numerous risks and uncertainties. Assumptions relating to the foregoing involve
judgments regarding, among other things, the Company's ability to secure
financing or investment for capital expenditures, future economic and
competitive market conditions, and future business decisions. All these matters
are difficult or impossible to predict accurately and many of which may be
beyond the control of the Company. Although the Company believes that the
assumptions underlying its forward-looking statements are reasonable, any of the
assumptions could be inaccurate and, therefore, there can be no assurance that
the forward-looking statements included in this form 10-QSB will prove to be
accurate.
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 New Port Richey,
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. The
operation was subsequently relocated to its present Holiday, Florida location.
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
paints and coatings and to obtain an established marketing distribution channel
which included major accounts such as Builders Square, Ace Hardware, among
others.
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
7
<PAGE>
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, that was
completed on July 28, 1997, should further the Company's plan to achieve
profitable operations.
RESULTS OF OPERATIONS
Three months ended December 31, 1997 compared to three months ended December 31,
1996
Total consolidated revenue for the three months ended December 31, 1997 was
$758,284 compared to $193,387 for the same period of 1996, which represents an
increase of $564,897, or 292%. This increase was a result of both expanded sales
of paint products and coatings produced by the Company with an entire quarter's
sales contribution of Atlas Chemical.
Gross profit margins were 35% and 32%, respectively, for the three month period
ended December 31, 1997, as compared to the prior period ended December 31,
1996. This increase is the result of a change in the mix of paint and coatings
products sold by the Company, and in part, by higher contribution margin from
Atlas Chemical because of product line changes and improved raw materials
purchasing for the Atlas product line.
For the three months ended December 31, 1997, total selling, general and
administrative expenses were $339,645, as compared to $435,050 for the same
period of the previous year, a decrease of approximately $95,405, or 22%. This
decrease is the result of reductions in the level of marketing, staffing and
other expenses associated with both the Company's Holiday, Florida facility and
the Atlas Chemical operations. 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
expansion of distribution channels provided by the Atlas Chemical acquisition,
the Company anticipates substantial benefit from the sales of its new technology
products to national customers.
The Company continued to experience losses from operations of $74,070 for the
period ended December 31, 1997 as compared to a loss of $373,210 for the same
prior year period. This reduction in the operating loss over the loss of the
preceding year period reflects the margin contribution of Atlas Chemical. The
higher consolidated gross profit for this period together with the lower level
of S. G. & A. expense incurred during this three month period contributed to
this improvement in the loss from operations. Management anticipates that
increasing levels of sales, including the contribution of the Atlas acquisition,
will result in improvement in future operating performances and eventually
profitable operations.
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 ended December 31, 1997 to represent that portion of
deferred taxes that may be realized in future periods.
The interest expense for the period ended December 31, 1997 was $4,679 as
compared to the prior year's quarter of $32,730. The interest expense for the
current period was incurred primarily for financing of company vehicles while
the prior year period included interest expense for bridge loan financing.
The net loss, after income tax benefit, and net loss per share were $52,054 and
$.02 per share respectively, for the three months ended December 31, 1997 as
compared to a net loss and net loss per share of $362,725 and $.47 respectively,
for the same period in 1996. This loss represents an 86% reduction over the net
loss experienced in the year ago quarter. The loss per share for the period was
also an 86% improvement over the previous year ago period. The weighted average
shares outstanding for the quarter ended December 31, 1997 was 3,024,761 as
compared to 779,382 for the preceding year quarter ended December 31, 1996. The
greater number of shares outstanding for the period is the result of the
Company's successful underwriting completed in March 1997.
8
<PAGE>
The Company has focused, in the recent quarter ended December 31, 1997, on
restructuring its operations to provide for efficient operations within its two
manufacturing facilities. This effort will be concluded during the quarter
ending March 1998. Thereafter, the company will aggressively market its paint
and coatings products, with the added opportunity presented by the Atlas
acquisition to sell its combined product line to both its customers and those
acquired from the Atlas Chemical acquisition. A focus of its strategy will be to
continue 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. Management is optimistic about the
benefits of its near-term marketing programs.
The Company anticipates further improvements in raw material purchasing
economies that will result in cost savings in such purchases within its
manufacturing operation. This benefit will continue in this fiscal year. The
Company also anticipates additional improvement in gross profit margins during
fiscal year resulting from these improved purchasing economies.
LIQUIDITY AND CAPITAL RESOURCES
To date, the Company has largely funded its operations and product development
activities with funds provided by issuing securities and from borrowings. During
the three months ended December 31, 1997, the Company did not raise any
additional capital for its operations.
Net cash used in operating activities for the three months ended December 31,
1997 was $237,700 compared to net cash used of $15,147 for the three months
ended December 31, 1996. This increase in cash used by operating activities is
due to the net loss and increases in accounts and notes receivables, inventories
and prepaid expenses and other assets coupled with a reduction in the levels of
accounts payable and accrued expenses. In the prior year period, increases in
both accounts payables and accrued expenses were a significant offset to
increased levels of current assets and the period's higher net loss.
Cash used in investing activities for the three months ended December 31, 1997
and 1996 was $47,536 and $91,082, respectively. Capital expenditures for the
recent period were reduced over the prior year period and the company incurred
no expense relating to expenditures for patents.
Cash used in financing activities for the three months ended December 31, 1997
was $7,711 as compared to cash provided by financing activities of $111,343 for
the three months ended December 31, 1996. During the recent quarter, the Company
issued common stock for services, advanced funds on a shareholder loan, and
further reduced the company's outstanding debt. In the prior three months period
ended December 31, 1996, the Company obtained funding through bridge loans that
provided capital for funding the company's operations.
As of December 31, 1997, the Company had net working capital of $270,208 as
compared to $334,911 at the period ended September 30, 1997. The decrease in net
working capital of $64,703 is primarily the result of a decrease in payables,
higher accounts receivable and inventory levels combined with accounts payable
and accrued expenses decrease. The Company's ratio of current assets to current
liabilities was 1.3 at December 31, 1997, and the same as at fiscal period end
September 30, 1997.
The Company is not presently profitable and continues to fund itself from the
proceeds of its March 1997 public offering. For the quarter ended December 31,
1997, the Company's loss before depreciation and amortization expense was
$5,518, its best operating performance since the Company was founded. Once the
Company achieves profitability, it will be in a position to fund itself on an
operating basis.
Management believes that additional capital will be needed to fund its present
plan to build within nine months a manufacturing facility to produce shells for
its paint and coating technology products. The Company is optimistic that such
funds will be available from investment or financing sources to provide for this
9
<PAGE>
expansion plan. Should funds not be readily available, management intends to
defer the building of such a manufacturing facility to a later time when funding
can be arranged.
The Company continues to focus 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
positioned itself to expand the near term production of its proprietary
products.
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 or about February 11, 1998, Mr. Kevin Horrell filed an amended complaint
against the Company and Mr. Pidorenko. The previous complaint has been dismissed
in the Circuit Court of the 12th Judicial Circuit, in and for Sarasota County,
Florida, Case No. 97-4867CA-01. Mr. Horrell alleges that he is due certain
unrestricted securities of the Company in connection with prior financing
activities. Mr. Horrell alleges breach of contract, fraud in the inducement of a
contract and violations of Rule 10b-5. The Company believes it has meritorious
defenses in this matter which is in a preliminary stage.
Item 2. Changes in Securities
To facilitate the Regulation S offering of Series B Convertible Preferred Stock
described in Item 5 below, the terms of the Series A Preferred Stock held by
John Pidorenko, the Company's founder, were amended to decrease the number of
outstanding Series A Preferred Shares from 5,000,000 to 2,500,000 with
corresponding adjustments to voting and conversion rights of the Series A
Preferred Shares.
Item 5. Other Information
On December 19, 1997, Mr. Stephen Drescher, a member of the board of directors
and the designee of Monroe Parker Securities, the Company's previous
underwriter, resigned effective that date.
On February 5, 1998, the Company was notified by NASDAQ that its listing on the
NASDAQ Small Markets was in violation of the tangible net assets requirements
for continued listing. This present requirement was implemented on August 27,
1997 and required the Company to maintain tangible net assets of $2 million. At
September 31, 1997, the Company did not meet this current requirement. The
Company's deficiency at that time was approximately $391,000.
In anticipation of the new NASDAQ listing requirements, on February 19, 1998,
the Company completed an offering of 1,500 shares of Series B Preferred Stock
to Thomson Kernaghan & Co.,Ltd. pursuant to Regulation S. The placement agent
for the offering was London Select Enterprises, Ltd.
10
<PAGE>
The total offering price for the Series B Preferred Stock was
$1,500,000.00. This preferred issue has an 8% yield. Commissions of $180,000,
totaling 12% of the offering price, were paid to the placement agent. The
Company claims exemption from registration for this transaction based upon
Regulation S because:
a. The Company is a Reporting Issuer as defined by Rule 902 of
Regulation S. The Company is in full compliance, to the extent applicable, with
all reporting obligations under either Section 13(a) or 15(d) of the Security
Exchange Act of 1934, as amended.
b. The Company has not offered the Series B Preferred Stock to any
person in the United States or any U.S. Person as that term is defined in
Regulation S.
c. At the time the buy order was received, the Company and/or its agents
reasonably believed that the purchasers in the offering were outside the United
States and were not U.S. Persons; and
d. The Company reasonably believes that the purchase of the Series B
Preferred Stock pursuant to the offering has not been prearranged with a
purchaser in the United States.
e. The Company nor any of its agents has engaged in any "Directed
Selling Efforts" (as that term is defined in Regulation S) nor has the Company
or any of its agents conducted general solicitation relating to the offering to
persons residing within the United States or U.S. Persons.
The Series B Preferred Shares are valued at $1,000.00 per share, and if
converted, the Series B Preferred Shares shall be converted into such number of
common shares of the Company as is obtained by dividing the aggregate value of
the shares of Series B Preferred Shares being so converted by the "Average Stock
Price" per share of the conversion shares. The "Average Stock Price" means the
lower of: (i) 70% of the average closing bid prices of common shares for the
period of five consecutive trading days immediately preceding the date of
conversion of the Series B Preferred Shares; or (ii) 70% of the average daily
closing bid prices of common shares for the period of five consecutive trading
days immediately preceding the date of subscription by the holder. Any holder of
Series B Preferred Shares may at any time commencing 45 days after the issuance
of any Series B Preferred Shares converted to 25%, and after 60 days convert up
to an additional 25%, and after 75 days convert up to an additional 25%, and
after 90 days convert 100% of his holdings of Series B Preferred Shares.
The funds will be used for construction of a shell manufacturing facility and
general corporate purposes. This capital infusion will permit the Company to
comply with the new NASDAQ Small Markets listing requirements.
Item 6. Exhibits and reports on Form 8K
There were no Form 8K's filed for the period.
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: 2/19/98 /s/ Gerald Couture
----------------------
Gerald Couture
Vice-President, Finance and CFO
11
THERMACELL TECHNOLOGIES, INC. AND SUBSIDIARY
Computation of Earnings Per Common Share
For the Three Months Ended
December 31, December 31,
-----------------------------------
1997 1996
---------------- ----------------
Shares outstanding: 3,067,709 869,899
Weighted average shares
outstanding 3,024,761 779,382
Net loss $ (52,054) $ (362,725)
Net loss per share $ (0.02) $ (0.47)
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> SEP-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 287,575
<SECURITIES> 0
<RECEIVABLES> 411,861
<ALLOWANCES> 89,809
<INVENTORY> 446,714
<CURRENT-ASSETS> 1,158,994
<PP&E> 628,169
<DEPRECIATION> 117,038
<TOTAL-ASSETS> 3,329,276
<CURRENT-LIABILITIES> 888,786
<BONDS> 0
0
500
<COMMON> 306
<OTHER-SE> 2,376,595
<TOTAL-LIABILITY-AND-EQUITY> 3,329,276
<SALES> 758,284
<TOTAL-REVENUES> 758,284
<CGS> 492,709
<TOTAL-COSTS> 492,709
<OTHER-EXPENSES> 9,002
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,679
<INCOME-PRETAX> (65,068)
<INCOME-TAX> (13,014)
<INCOME-CONTINUING> (52,054)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (52,054)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
