SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 for the quarterly period ended September 30, 1997
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: 000-22673
SCHICK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3374812
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
31-00 47th Avenue 11101
Long Island City, New York (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (718) 937-5765
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.
Yes [ X ] No [ ]
As of November 11, 1997 9,969,731 shares of common stock, par value $.01 per
share, were outstanding.
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SCHICK TECHNOLOGIES, INC.
TABLE OF CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements:
Consolidated Balance Sheet as of September 30, 1997
and March 31, 1997.......................................................... Page 1
Consolidated Statement of Operations for the three and six
months ended September 30, 1997 and 1996.................................... Page 2
Consolidated Statement of Cash Flows for the six
months ended September 30, 1997 and 1996.................................... Page 3
Notes to Consolidated Financial Statements ................................. Page 4
Item 2. Management's Discussion and Analysis of Financial Condition
And Results of Operations.......................................... Page 6
PART II. OTHER INFORMATION:
Item 1. Legal Proceedings........................................................... Page 8
Item 2. Changes in Securities and Use of Proceeds.................................. Page 8
Item 6. Exhibits and Reports on Form 8-K............................................ Page 9
SIGNATURE..................................................................................... Page 10
EXHIBIT 11.................................................................................... Page 11
EXHIBIT 27.................................................................................... Page 15
</TABLE>
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PART I. Financial Information
Item 1. Financial Statements
Schick Technologies, Inc.
Consolidated Balance Sheet
<TABLE>
<CAPTION>
Assets September 30, 1997 March 31, 1997
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(unaudited)
<S> <C> <C>
Current assets
Cash and cash equivalents $ 12,308,054 $ 1,710,429
Short-term investments 16,355,741 2,313,226
Accounts receivable, net of allowance for doubtful
accounts of $130,000 and $50,000, respectively 4,088,356 1,927,993
Inventories 7,250,670 2,510,959
Prepayments and other current assets 407,391 327,220
------------ ------------
Total current assets 40,410,212 8,789,827
Equipment, net 3,732,471 1,644,528
Investments 1,483,973 490,000
Deferred tax asset 121,582 --
Other assets 977,549 135,727
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Total assets $ 46,725,787 $ 11,060,082
============ ============
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued expenses $ 4,891,055 $ 2,102,293
Accrued salaries and commissions 824,336 540,061
Provision for warranty obligations 632,741 329,426
Deferred revenue 247,934 141,017
Deposits from customers 74,151 136,628
Capital lease obligations, current 24,099 22,200
------------ ------------
Total current liabilities 6,694,316 3,271,625
Notes payable -- 1,512,833
Accrued interest on notes payable -- 101,654
Capital lease obligations, long-term 74,422 86,991
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Total liabilities 6,768,738 4,973,103
Commitments -- --
Stockholders' equity
Preferred stock ($.01 par value; 2,500,000 shares
authorized, none issued and outstanding) -- --
Common stock ($.01 par value; 25,000,000 shares
authorized; 9,969,731 and 7,957,231 shares issued
and outstanding, respectively) 99,697 79,572
Additional paid-in capital 41,100,259 7,562,766
Accumulated deficit (1,242,907) (1,555,359)
------------ ------------
Total stockholders' equity 39,957,049 6,086,979
------------ ------------
Total liabilities and stockholders' equity $ 46,725,787 $ 11,060,082
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
1
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Schick Technologies, Inc.
Consolidated Statement of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended September 30, Six months ended September 30,
-------------------------------- --------------------------------
1997 1996 1997 1996
------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue, net $ 8,224,354 $ 3,160,329 $ 14,264,385 $ 5,787,211
Cost of sales 3,867,216 1,630,671 6,697,779 3,071,318
------------ ------------ ------------ ------------
Gross profit: 4,357,138 1,529,658 7,566,606 2,715,893
------------ ------------ ------------ ------------
Operating expenses:
Selling and marketing 2,087,926 1,126,390 3,883,509 1,998,380
General and administrative 853,802 344,743 1,731,466 730,945
Research and development 968,695 356,105 1,607,149 580,486
Patent litigation settlement -- -- 600,000 --
------------ ------------ ------------ ------------
Total operating expenses 3,910,423 1,827,238 7,822,124 3,309,811
------------ ------------ ------------ ------------
Income (loss) from operations 446,715 (297,580) (255,518) (593,918)
------------ ------------ ------------ ------------
Other income (expense)
Interest income 449,136 50,343 497,573 55,048
Interest expense (7,609) (46,725) (51,185) (71,994)
------------ ------------ ------------ ------------
Total other income (expense) 441,527 3,618 446,388 (16,946)
------------ ------------ ------------ ------------
Income (loss) before income tax 888,242 (293,962) 190,870 (610,864)
------------ ------------ ------------ ------------
Provision (benefit) for income
taxes (121,582) -- (121,582) --
------------ ------------ ------------ ------------
Net income (loss) $ 1,009,824 $ (293,962) $ 312,452 $ (610,864)
============ ============ ============ ============
Net income (loss) per common share $ 0.10 $ (0.04) $ 0.03 $ (0.08)
============ ============ ============ ============
Weighted average shares
outstanding 10,419,071 8,204,485 9,346,896 8,129,803
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
2
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Schick Technologies, Inc.
Consolidated Statement of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Six months ended September 30
-------------------------------------
1997 1996
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<S> <C> <C>
Net cash flows from operating activities:
Net income (loss) $ 312,452 $ (610,864)
Adjustments to reconcile net loss to net cash used in
operating activities
Depreciation 297,701 92,952
Amortization 543 36,667
Stock and option grant compensation 10,094 --
Accrued interest on investments (36,756) --
Non-cash interest expense -- 98,323
Changes in assets and liabilities:
Accounts receivable (2,160,363) 6,282
Inventories (4,572,711) (102,815)
Prepayments and other current assets (41,171) (23,765)
Other assets (59,365) (98,956)
Deferred tax assets (121,582) --
Accounts payable and accrued expenses 3,376,352 (192,229)
Deferred revenue 106,917 65,567
Deposits from customers (62,477) 3,771
Accrued interest on notes payable (101,654) 22,747
------------ ------------
Net cash used in operating activities (3,052,020) (702,320)
------------ ------------
Cash flows from investing activities:
Investment in capitalized software (39,000)
Purchases of available-for-sale investments -- (500,000)
Purchases of held-to-maturity investments (15,439,829) (2,653,007)
Proceeds from maturities of held-to-maturity investments 1,434,070 --
Business acquisition (1,450,000) --
Purchase of minority interest in Photobit Corporation (993,973) --
Capital expenditures (1,885,644) (401,784)
------------ ------------
Net cash used in investing activities (18,374,376) (3,554,791)
Cash flows from financing activities:
Net proceeds from issuance and sale of common stock
and warrants -- 4,311,800
Net proceeds from issuance and sale of common stock 33,547,524 --
Proceeds from issuance of long-term notes -- 1,000,000
Repayment of notes payable (1,512,833) --
Principal payments on capital lease obligations (10,670) (10,254)
------------ ------------
Net cash provided by financing activities 32,024,021 5,301,546
Net increase in cash and cash equivalents 10,597,625 1,044,435
Cash and cash equivalents at beginning of period 1,710,429 524,917
------------ ------------
Cash and cash equivalents at end of period $ 12,308,054 $ 1,569,352
============ ============
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
3
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Schick Technologies, Inc.
Notes to Consolidated Financial Statements (unaudited)
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1. Basis of Presentation
The consolidated financial statements of Schick Technologies, Inc. and its
subsidiaries (collectively the "Company") have been prepared in accordance
with generally accepted accounting principles for interim financial
information and the rules of the Securities and Exchange Commission (the
"SEC") for quarterly reports on Form 10-Q, and do not include all of the
information and footnote disclosures required by generally accepted
accounting principles for complete financial statements. These statements
should be read in conjunction with the audited financial statements and
notes thereto for the year ended March 31, 1997, included in the Company's
Prospectus dated July 1, 1997 forming a part of the company's Registration
Statement on Form S-1, as amended ("Form S-1"), which was initially filed
with the SEC on May 13, 1997.
In the opinion of management, the accompanying unaudited consolidated
financial statements include all adjustments (consisting of normal,
recurring adjustments) necessary for a fair presentation of results of
operations for the interim periods. The results of operations for the three
and six months ended September 30, 1997, are not necessarily indicative of
the results to be expected for the full year ending March 31, 1998.
The consolidated financial statements of the Company, at September 30,
1997, include the accounts of the Company and its wholly owned
subsidiaries, Schick New York (as hereinafter defined) and Schick X-Ray
Corporation. All significant intercompany balances have been eliminated
(see Notes 2 and 7).
2. Restructuring and recapitalization
In connection with the Company's initial public offering (the "IPO") under
the Securities Act of 1933, as amended, the Company engaged in the
following restructuring and recapitalization transactions. In April 1997,
Schick Technologies, Inc. ("Schick Delaware" or "The Company") and its
wholly owned subsidiary, STI Acquisition Corporation ("STI") were formed
under the General Corporation Law of the State of Delaware for the purpose
of forming a holding company and changing the state of incorporation of
Schick Technologies, Inc., a New York corporation ("Schick New York" or the
"Predecessor Corporation"). Effective June 4, 1997 (pursuant to a merger
agreement among Schick Delaware, the Predecessor Corporation and STI),
Schick Delaware issued 7,957,231 shares of its common stock for all the
outstanding common stock of the Predecessor Corporation. STI and the
Predecessor Corporation merged and the Predecessor Corporation was the
survivor of the merger, and became a wholly-owned subsidiary of Schick
Delaware. In connection with the restructuring and merger, the holders of
the Predecessor Corporation's outstanding warrants and options converted
such warrants and options to similar warrants and options of Schick
Delaware (based on the same ratio of exchange, 2.8 shares for 1 share,
applicable to the common stock exchange). Schick Delaware's articles of
incorporation also authorize 2,500,000 shares of preferred stock, $.01 par
value.
The 1996 Stock Option Plan of the Predecessor Corporation was amended by
Schick Delaware and the shares available for issuance pursuant to the Plan
were adjusted to 470,000. Schick Delaware also implemented its 1997 Stock
Option Plan for Non-Employee Directors ("the Directors Plan") whereby
nonqualified options to purchase up to 35,000 shares of the Company's
common stock may be granted to non-employee directors. Each option granted
under the Directors Plan becomes exercisable on the second anniversary date
of its grant and must have an exercise price equal to the fair market value
of the Company's common stock on the date of grant.
All common shares, stock options, warrants and related per share data
reflected in the accompanying financial statements and notes thereto, have
been presented as if the recapitalization had been effective for all
periods presented.
References herein to the operations and historical financial information of
the "Company" prior to the date of the restructuring refer to the
operations and historical financial information of the Predecessor
Corporation.
4
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Schick Technologies, Inc.
Notes to Consolidated Financial Statements (unaudited)
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3. Inventories
Inventories at September 30, 1997 and March 31, 1997 are comprised of the
following:
September 30, 1997 March 31, 1997
------------------ --------------
Raw materials ............................ $4,142,048 $1,671,010
Work-in-process........................... 2,129,940 421,863
Finished goods ........................... 978,682 418,086
---------- ----------
Total inventories .................... $7,250,670 $2,510,959
========== ==========
4. Initial Public Offering
In July 1997, the Company completed the IPO, selling 2,012,500 shares of
common stock at a price of $18.50 per share providing gross proceeds to the
Company of $37,231,250 and net proceeds, after underwriting discounts and
commissions and estimated offering expenses payable by the Company, of
approximately $33,547,000.
In July 1997, upon the declaration of the effectiveness of the Form S-1
filed in connection with the IPO, the Company repaid, as required by the
note agreement, a secured note payable in the principal amount of
$1,512,833 and accrued interest thereon in the amount of $144,296.
5. Patent Litigation Settlement
In July 1997, the Company , in connection with the settlement of certain
pending patent litigation involving a United States patent directed to a
display for digital dental radiographs, was granted a worldwide,
non-exclusive fully paid license covering such patent in consideration for
a payment by the Company of $600,000. The Company expensed the license fee
in the quarter ended June 30, 1997.
6. Keystone Acquisition
On September 24, 1997, the Company's wholly owned subsidiary, Schick X-Ray
Corporation ("Schick X-Ray"), a Delaware corporation, acquired certain
assets of Keystone Dental X-Ray Inc. ("Keystone"), a manufacturer of x-ray
equipment for the medical and dental radiology field, for $1,450,000 in
cash. Schick X-Ray was formed on September 24, 1997, for the sole purpose
of acquiring the assets of Keystone. Schick X-Ray acquired inventory,
manufacturing equipment, tooling and intellectual property. The acquisition
has been accounted for using the purchase method, and Schick X-Ray has
recorded goodwill in the amount of approximately $750,000, which is
included in other assets and will be amortized on a straight-line basis
over 10 years. The accounts of Schick X-Ray have been consolidated with
those of the Company at September 30, 1997.
7. Investment in Photobit Corporation
On September 30, 1997, the Company purchased a minority interest of 5%, for
approximately $1,000,000, in Photobit Corporation, a developer of
complementary metal-oxide semiconductor ("CMOS"), active-pixel sensor
("APS") imaging technology. The Company is the exclusive licensee of the
APS technology for medical applications and plans to utilize the technology
in its bone-mineral density device.
5
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. Actual results,
events and circumstances could differ materially from those set forth in such
statements due to various factors. Such factors include the changing economic
and competitive conditions in the medical and dental digital radiography market,
regulatory approvals, including approvals related to accuDEXA(TM), technological
developments, protection of technology utilized by the Company, patent
infringement claims and other litigation, and further risks and uncertainties,
including those detailed in the Company's other filings with the Securities and
Exchange Commission.
General
The Company designs, develops and manufactures digital imaging systems and
devices for the dental and medical markets. In the field of dentistry, the
Company has developed, and currently manufactures and markets, an intra-oral
digital radiography system. The Company has also developed a bone mineral
density measurement device to assist in the diagnosis of osteoporosis, which is
scheduled to be introduced in the fourth quarter of 1997, pending FDA marketing
clearance. In addition, the Company is developing large-area radiographic
imaging devices for digital mammography.
Results of Operations
Net revenue for the three months ended September 30, 1997, increased $5,064,025
(160%) to $8,224,354 from $3,160,329 for the comparable period of 1996. Net
revenue for the six months ended September 30, 1997, increased $8,477,174 (147%)
to $14,264,385 from $5,787,211 for the comparable period of 1996. The increase
was attributable principally to an increase in the number of CDR(TM) products
sold, including sales of the Company's CDRCam(TM) which was introduced in
February of 1997. The number of products sold was positively affected by the
Company's increased expenditures on sales and marketing, personnel recruiting,
sales events and other promotional activities.
Cost of sales for the three months ended September 30, 1997, increased
$2,236,545 (137%) to $3,867,216 (47% of net revenue) from $1,630,671 (51.6% of
net revenue) for the comparable period of 1996. Cost of sales for the six months
ended September 30, 1997, increased $3,626,461 (118%) to $6,697,779 (46.9% of
net revenue) from $3,071,318 (53.0% of net revenue) for the comparable period of
1996. The increase was due to the increase in sales of the Company's CDR(TM)
products. The decrease as a percentage of net revenue was primarily due to
increased manufacturing efficiencies, increased production yields, and economies
of scale generated by an increase in the number of CDR(TM) products sold.
Selling and marketing expenses for the three months ending September 30, 1997,
increased $961,536 (85.4%) to $2,087,926 (25.4% of net revenue) from $1,126,390
(35.6% of net revenue) for the comparable period of 1996. Selling and marketing
expenses for the six months ending September 30, 1997, increased $1,885,129
(94%) to $3,883,509 (27.2% of net revenue) from $1,998,380 (34.5% of net
revenue) for the comparable period of 1996. The increase in dollars was
attributable principally to the hiring and training of new salespeople as the
Company continued to increase the size of its national sales force. In addition,
the Company significantly increased its promotional activities to create greater
market awareness, and developed market strategies for new products.
General and administrative expenses for the three months ended September 30,
1997, increased $509,059 (147.7%) to $853,802 (10.4% of net revenue) from
$344,743 (10.9% of net revenue) for the comparable period of 1996. General and
administrative expenses for the six months ended September 30, 1997, increased
$1,000,521 (137%) to $1,731,466 (12.1% of net revenue) from $730,945 (12.6% of
net revenue) for the comparable period of 1996. The increase was primarily
attributable to the hiring of administrative personnel and legal fees associated
with patent infringement litigation.
Research and development expenses for the three months ended September 30, 1997,
increased $612,590 (172%) to $968,695 (11.8% of net revenue) from $356,105
(11.3% of net revenue) for the comparable period of 1996. Research and
development expenses for the six months ended September 30, 1997, increased
$1,026,663 (177%) to $1,607,149 (11.3% of net revenue) from $580,486 (10.0% of
net revenue)
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for the comparable period of 1996. The increase was attributable to the expenses
associated with the development of a bone mineral density measurement device,
enhancements to the Company's products, and initial development of a mammography
system.
In July 1997, the Company, in connection with the settlement of certain pending
patent litigation involving a United States patent directed to a display for
digital dental radiographs, was granted a worldwide, non-exclusive fully paid
license covering such patent in consideration for a payment by the Company of
$600,000.
Interest income increased to $449,136 in the three months ended September 30,
1997 from $50,343 in the comparable period of 1996. Interest income increased to
$497,573 in the six months ended September 30, 1997 from $55,048 in the
comparable period of 1996. These increases are attributable to higher cash
balances and investments in interest-bearing securities which were purchased
with the proceeds of the July 1, 1997 Initial Public Offering (the "IPO").
Interest expense decreased to 7,609 for the three-month period ended September
30, 1997 from $46,725 in the comparable period of 1996. Interest expense
decreased to $51,185 for the six-month period ended September 30, 1997 from
$71,994 in the comparable period of 1996. Interest expense was attributable
principally to the Merck Loan, which was repaid from the proceeds of the IPO.
Liquidity and Capital Resources
At September 30, 1997, the Company had $12,308,054 in cash and cash equivalents,
$16,355,741 in short-term investments and $33,715,896 in working capital
compared to $1,710,429 in cash and cash equivalents, $2,313,226 in short-term
investments and $5,518,202 in working capital at March 31, 1997. The increase in
working capital for the six months ended September 30, 1997, is primarily
attributable to the net proceeds from the issuance and sale of common stock in
connection with the Company's IPO (see below).
On July 7, 1997, the Company sold 1,750,000 shares of common stock in an IPO at
a price of $18.50 per share, resulting in net proceeds to the Company of
approximately $29,031,444 after deducting expenses. In addition, on July 10,
1997, the Company received approximately $4,516,080, net of expenses, upon the
exercise of the underwriters' over-allotment option to purchase 262,500 shares
of common stock. A portion of the proceeds from the IPO was used to retire the
debt due Merck & Co. in the principal amount of $1,512,833 and interest of
$144,296 (the "Merck Loan"). Additional proceeds were used to purchase assets in
Keystone Dental X-Ray Inc. ("Keystone") and a minority interest in Photobit
Corporation ("Photobit") as described below. The remaining proceeds are expected
to be used (i) to expand the Company's research and development capabilities,
(ii) to expand its sales and marketing effort, (iii) for working capital and
general corporate purposes, and (iv) for expansion of its facilities. Pending
such uses, the Company invests the net proceeds in investment-grade,
interest-bearing securities. From time to time, the Company may evaluate
potential acquisitions of assets, businesses and product lines, which would
complement or enhance the business of the Company. Depending on the cash
requirements of any such acquisition, the Company may finance such acquisition,
in whole or in part, with a portion of the net proceeds of the IPO.
On September 24, 1997, the Company's wholly owned subsidiary, Schick X-Ray
Corporation, acquired certain assets of Keystone Dental X-Ray, Inc., a
manufacturer of x-ray equipment for the medical and dental radiology field, for
$1,450,000 in cash. Schick X-Ray acquired inventory, manufacturing equipment,
tooling and intellectual property. The acquisition has been accounted for using
the purchase method.
On September 30, 1997, the Company purchased a minority interest of 5% in
Photobit Corporation, a developer of sensor imaging technology for approximately
$1,000,000. The Company is the exclusive licensee of a certain technology for
medical applications and plans to utilize the technology in its bone mineral
density measurement device.
The Company had no material cash requirement for income taxes for the six months
ending September 30, 1997.
7
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PART II OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is a named defendant in two lawsuits instituted by Trophy
Radiologie, S.A. ("Trophy S.A."). One lawsuit was instituted in France and the
other in the United States.
The French lawsuit was filed in November 1995, in the tribunal de Grande
Instance de Bobigny, the French patent court, and originally alleged that the
Company's CDR(TM) system infringes French Patent No. 2,547,495, European Patent
No. 129,451 and French Certificate of Addition No. 2,578,737. These patents, all
of which are related, are directed to a CCD-based intra-oral sensor. Since
filing its lawsuit, Trophy S.A. has withdrawn its allegation of infringement
with respect to the Certificate of Addition. Trophy S.A. is seeking a permanent
injunction and unspecified damages, including damages for its purported lost
profits. The Company believes that the lawsuit is without merit, and is
vigorously defending it. The Company is represented by the French law firm of
Pierre Cousin and French patent counsel Cabinet beau de lomenie.
The lawsuit in the United States was filed in March 1996 by Trophy S.A.,
Trophy Radiology, Inc., a United States subsidiary of Trophy S.A. ("Trophy
Inc.") and the named inventor on the patent in suit, Francis Mouyen, a French
citizen. The suit was brought in the United States District Court for the
Eastern District of New York, and alleges that the Company's CDR(TM) system
infringes United States Patent No. 4,593,400 (the "'400 Patent"), which is
related to the patents in the French lawsuit. Trophy S.A., Trophy Inc. and
Mouyen are seeking a permanent injunction and unspecified damages, including
damages for purported lost profits, enhanced damages for the Company's purported
willful infringement and an award of attorney fees. The Company believes that
the lawsuit is without merit, and is vigorously defending it. The Company is
represented by Fitzpatrick, Cella, Harper & Scinto, which has issued a formal
opinion that the CDR(TM) system does not infringe the `400 patent.
In addition, the Company has counter-sued Trophy S.A. and Trophy Inc. for
infringement of United States Patent No. 4,160,997, a recently expired patent
which was exclusively licensed to the Company by its inventor, Dr. Robert
Schwartz, and for false advertising and unfair competition. The Company believes
that its counter-suits are meritorious, and is vigorously pursuing them.
On September 12, 1997, the Company served two motions for summary judgment
seeking dismissal of the action pending in the United States District Court for
the Eastern District of New York, on the grounds of non-infringement and the
"best mode" defense. These motions are currently pending.
Item 2. Changes in Securities and Use of Proceeds
(d) On July 7, 1997, the Company's initial public offering (the "Offering")
of 1,750,000 shares of its common stock, $.01 par value per share (the "Common
Stock") closed. The Company's registration statement on Form S-1 (Registration
No. 333-33731) was declared effective by the Securities and Exchange Commission
on June 30, 1997. As part of the Offering, the Company granted to the
Underwriters an over-allotment option to purchase up to 262,500 shares of Common
Stock ("the "Underwriters' Option"). On July 10, 1997, the underwriters
exercised the Underwriters' Option .
The managing underwriter for the Offering was Lehman Brothers. The co-lead
underwriters were J.P. Morgan & Co. and Pacific Growth Equities, Inc.
The aggregate offering price of the 2,012,500 shares of Common Stock sold
in the Offering to the public was $37,231,250 (inclusive of the Underwriters'
Option), with proceeds to the Company after deduction of the underwriting
discount and commissions in the amount of $2,606,188, of $34,625,062 (before
deducting offering expenses payable by the Company).
During the period of July 1, 1997 through September 30, 1997, the aggregate
expenses incurred by the Company in connection with the issuance and
distribution of the shares of Common Stock offered and sold in the Offering,
including expenses paid for accounting, legal, printing and other expenses
amounted to $1,077,539.
As the Company's legal counsel in connection with the Offering, Kelly Drye
& Warren LLP received legal expenses paid by the Company. Mark Bane, Esq., a
partner of Kelly Drye & Warren LLP, is a director of the Company. Other than the
payment by the Company of legal expenses to Kelly Drye & Warren LLP, none of the
expenses paid by the Company in connection with the Offering or the exercise of
8
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the Underwriters' Option were paid, directly or indirectly, to directors,
officers, controlling stockholders (e.g., persons owning 10% or more of any
class of the Company's stock) of the Company, or affiliates.
The aggregate net proceeds received by the Company from the Offering and as
a result of the exercise of the Underwriters' Option, after deducting
underwriting and commissions and expenses were $33,547,524. During the period of
July 1, 1997 through September 30, 1997, such net proceeds have been applied as
follows: (i) $366,988 for leasehold improvements (ii) $855,234 for property,
plant, and equipment; (iii) $1,450,000 to purchase certain assets of Keystone
Dental X-Ray Corp.; (iv) $1,000,000 to purchase a 5% interest in Photobit, Inc.;
(v) $1,512,833 to pay the notes payable and the interest thereon to Merck & Co.,
Inc.; (vi) $15,000,000 to short term investments; (vii) $10,221,469 to money
market investments; and (viii) the remaining $3,141,000 was used for working
capital purposes. None of the net proceeds were paid, directly or indirectly, to
directors, officers, controlling stockholders, or affiliates of the Company.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The exhibits listed in the following table have been filed as
part of this Quarterly Report Report on Form 10-Q:
Exhibit Number
(10.1) Asset Purchase Agreement dated September 24, 1997 between
Schick X-Ray Corporation ("Schick X-Ray"), a wholly-owned subsidiary
of the Company, and Keystone Dental X-Ray, Inc. ("Keystone").
(Incorporated by reference to Exhibit 10.1 to Registrant's Current
Report on Form 8-K filed on October 9, 1997)
(11) Statement re: Computation of Per Share Earnings
(12) Financial Data Schedule
(b) Reports on Form 8-K:
A Current Report on Form 8-K was filed on October 9, 1997
reporting (under Item 2) the purchase of certain assets by Schick
X-Ray from Keystone.
9
<PAGE>
SCHICK TECHNOLOGIES, INC.
SIGNATURE
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
SCHICK TECHNOLOGIES, INC.
Date: November 14, 1997 By: /s/ David B. Schick
--------------------------------
David B. Schick
President and
Chief Executive Officer
By: /s/ David B. Spector
--------------------------------
David B. Spector
Chief Financial Officer and
Treasurer
(Principal Financial Officer)
10
EXHIBIT 11
Schick Technologies, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Days Weighted
Shares Outstanding Average Shares
---------------------------------------------------
<S> <C> <C> <C>
Three months ended September 30, 1997
Shares outstanding at July 1,1997 7,957,321 91 7,957,321
Sale and issuance of common stock 2,012,500 91 2,012,500
Stock options and warrants considered to be
common stock equivalents 438,191 91 438,191
Options issued during fiscal 1998 12,272 82
11,058
-----------
Weighted average shares outstanding 10,419,070
Net income for the three months ended
September 30, 1997 $ 1,009,824
-----------
Net income per share $ 0.10
===========
</TABLE>
11
EXHIBIT 11.1
Schick Technologies, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Days Weighted
Shares Outstanding Average Shares
-----------------------------------------------
<S> <C> <C> <C>
Three months ended September 30, 1996
Shares outstanding at April 1, 1996 7,052,870 91 7,052,870
Issuance of common stock upon conversion of notes payable 56,000 91 56,000
32,480 91 32,480
92,400 62 62,954
133,966 32 47,109
22,400 31 7,631
11,200 12 1,477
Issuance and sale of common stock 424,953 62 289,528
2,800 56 1,723
42,442 32 14,925
Shares issued as placement fee in private placement 2,520 62 1,717
3,450 32 1,213
Cheap stock consideration for stock, stock options and
warrants issued during fiscal 1997 871,026 29 277,580
539,927 6 35,600
538,396 24 141,995
391,054 1 4,297
371,199 19 77,503
361,272 12 47,639
Options outstanding 50,244 91 50,244
-----------
Weighted average shares outstanding 8,204,485
Net loss for the three months ended September 30, 1996 $ (239,962)
-----------
Net loss per share $ (0.04)
===========
</TABLE>
12
EXHIBIT 11.2
Schick Technologies, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Weighted
Days Average
Shares Outstanding Shares
--------------------------------------------
<S> <C> <C> <C>
Six months ended September 30, 1997
- -----------------------------------
Shares outstanding at April 1,1997 7,957,321 181 7,957,321
Sale and issuance of common stock 2,012,500 91 1,011,809
Cheap stock consideration for stock, stock options
and warrants issued during fiscal 1997 305,489 90 151,901
Stock options and warrants considered to be common
stock equivalents 438,191 91 220,306
Options issued during fiscal 1998 12,272 82 5,559
----------
Weighted average shares outstanding 9,346,896
Net income for the six months ended September 30, 1997 $ 312,452
----------
Net income per share $ 0.03
==========
</TABLE>
13
EXHIBIT 11.3
Schick Technologies, Inc.
Computation of Earnings Per Share
<TABLE>
<CAPTION>
Days Weighted
Shares Outstanding Average Shares
------------------------------- ---------------
Six months ended September 30, 1996
- -----------------------------------
<S> <C> <C> <C>
Shares outstanding at April 1, 1996 7,052,870 182 7,052,870
Issuance of common stock upon conversion of notes
payable 56,000 182 56,000
32,480 161 28,732
92,400 62 31,477
133,966 32 23,554
22,400 31 3,815
11,200 12 738
Issuance and sale of common stock 424,953 62 144,764
2,800 56 862
42,442 32 7,462
Shares issued as placement fee in private placement 2,520 62 858
3,450 32 607
Cheap stock consideration for stock, stock options
and warrants issued during fiscal 1997 871,026 120 574,303
539,927 6 17,800
538,396 24 70,997
391,054 1 2,149
371,199 19 38,752
361,272 12 23,819
Options outstanding 50,244 182 50,244
-----------
Weighted average shares outstanding 8,129,803
Net loss for the six months ended September 30, 1996 $ (610,864)
-----------
Net loss per share $ (0.08)
-----------
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements and is qualified in its entirety by reference
to such statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> SEP-30-1997
<CASH> 12,308,054
<SECURITIES> 16,355,741
<RECEIVABLES> 4,218,356
<ALLOWANCES> 130,000
<INVENTORY> 7,250,670
<CURRENT-ASSETS> 40,410,212
<PP&E> 4,457,256
<DEPRECIATION> 724,785
<TOTAL-ASSETS> 46,725,787
<CURRENT-LIABILITIES> 6,694,316
<BONDS> 0
0
0
<COMMON> 99,697
<OTHER-SE> 39,857,352
<TOTAL-LIABILITY-AND-EQUITY> 46,725,787
<SALES> 14,264,385
<TOTAL-REVENUES> 14,264,385
<CGS> 6,697,779
<TOTAL-COSTS> 7,822,124
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 51,185
<INCOME-PRETAX> 190,870
<INCOME-TAX> (121,582)
<INCOME-CONTINUING> 312,452
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 312,452
<EPS-PRIMARY> 0.03
<EPS-DILUTED> 0.03
</TABLE>
