UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 September 30, 1996
___ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________ to ____
Commission file number
International Dispensing Corporation
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 13-3856324
- -------------------------------- -------------------
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
342 Madison Avenue, Suite 1034, New York, N.Y. 10173
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(212) 682-2244
- --------------------------------------------------------------------------------
(Issuer's telephone number)
None
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports). and (2) has been subject
to such filing requirements for the past 90 days. Yes [X] No [_]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes or common
equity, as of the latest practicable date:
7,900,000 shares of Common Stock as of September 30, 1996
Transitional Small Business Disclosure Format (Check One): Yes [_] No [X]
<PAGE>
International Dispensing Corporation
Table of Contents
Part I - FINANCIAL INFORMATION Page No.
--------
Item 1. Balance Sheet at September 30,1996 (unaudited)
and December 31, 1995 2
Statement of Operations for the Three Months
and Nine months Ended September 30, 1996 3
Statement of Cash Flows
For the Nine Months Ended September 30, 1996 4
Notes to Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 6
Part II - OTHER INFORMATION 9
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, September 30
1995 1996
(unaudited)
----------- ------------
Assets
Current Assets:
<S> <C> <C>
Cash and cash equivalent $ 5,168 $ 138,976
----------- -----------
Total current assets; 5,168 138,976
Fixed Assets:
Leasehold improvements 4,475 5,872
Office equipment 4,350 7,079
Accumulated depreciation and amortization (882) (1,544)
----------- -----------
Net fixed assets 7,943 11,407
Other assets 14,677 75,447
Deferred issuance costs -- 42,298
----------- -----------
Total assets; $ 27,788 $ 268,128
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 45,806 $ 110,516
Due to affiliate 3,649,739 2,834,118
Convertible Promissory Notes 150,000 100,000
Promissory Notes -- 300,000
Bridge loans payable, current portion -- 1,050,000
----------- -----------
Total current liabilities 3,845,545 4,394,634
Bridge loans payable 175,000 --
----------- -----------
Total liabilities 4,020,545 4,394,634
Commitments and contingencies (Note 1)
Stockholders' Equity (Deficiency):
Preferred Stock, $.001 par value;
2,000,000 shares authorized; no shares issued
or outstanding -- --
Common Stock $.001 par value; 20,000,000 shares
authorized: 5,887,500 and
7,900,000 issued and outstanding as of December 31,1995
and September 30, 1996 respectively 5,888 7,900
Additional; paid-in capital 251,150 1,124,138
Deficit accumulated during the development stage (4,249,795) (5,258,544)
----------- -----------
Total stockholders' equity (deficiency) (3,992,757) (4,126,506)
----------- -----------
Total liabilities and stockholders'
equity (deficiency) $ 27,788 $ 268,128
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements
2
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Period
from Inception
Three Months Nine Months (October 10, 1995)
Ended Ended through
September 30, September 30, September 30,
1996 1996 1996
--------------- ------------- -------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Revenues $ -- $ -- $ --
Costs and expenses:
General and administrative 267,574 719,065 963,833
Depreciation and amortization 221 662 1,544
----------- ----------- -----------
Total costs and expenses 267,795 719,727 965,377
Loss from operations 267,795 719,727 965,377
Interest expense 13,007 39,022 43,167
----------- ----------- -----------
Net loss before extraordinary loss $ 280,802 $ 758,749 $ 1,008,544
Extraordinary loss on retirement of debt -- 250,000 250,000
----------- ----------- -----------
Net loss $ 280,802 $ 1,008,749 $ 1,258,544
=========== =========== ===========
Net loss per share before extraordinary item $ (0.04) $ (0.10)
Extraordinary loss per share $ -- $ (0.03)
Net loss per share $ (0.04) $ (0.13)
Weighted average shares outstanding 7,900,000 7,900,000
</TABLE>
The accompanying notes are an integral part of these financial statements
3
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Period
from Inception
Nine Months (October 10, 1995)
Ended through
September 30, September 30,
1996 1996
-------------- -------------
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net Loss $(1,008,749) $(1,258,544)
Adjustments to reconcile net loss to net cash used in
operating activities;
Depreciation and amortization 662 1,544
Non-cash compensation -- 76,238
Loss on retirement of debt 250,000
Changes in operating assets and liabilities;
Increase in other assets (103,068) (111,945)
Increase/(decrease) in accrued expenses 64,710 110,516
----------- -----------
Net cash used in operating activities (796,445) (1,182,191)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets (4,127) (12,952)
Purchase of license (815,620) (1,165,881)
----------- -----------
Net cash used in investing activities (819,747) (1,178,833)
Cash flows from financing activities:
Proceeds from private placement 1,750,000 2,100,000
Proceeds from issuance of convertible debt 150,000
----------- -----------
Net cash provided from financing activities 1,750,000 2,250,000
----------- -----------
Net increase in cash and cash equivalents, 133,808 138,976
Cash and cash equivalents, beginning of period 5,168 0
----------- -----------
Cash and cash equivalents, end of period $ 138,976 $ 138,976
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest -- --
Cash paid for taxes -- --
Non-cash investing and financing activities:
Issuance of common stock -- $ 5,800
Purchase of license from affiliate -- $ 4,000,000
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Information as of and for the period ended September 30, 1996 is unaudited)
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of September 30, 1996 and statements of operations
and statements of cash flows for the nine months ended and for the three months
ended September 30, 1996 have been prepared by International Dispensing
Corporation (the "Company") without audit. The results should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's Form SB-2 registration statement, declared effective on October 3,
1996, on file with the Securities and Exchange Commission. Results of operations
for the nine and three month periods are not necessarily indicative of the
operating results for the full year. Interim statements are prepared on a basis
consistent with year end statements.
In the opinion of management, the unaudited interim financial
statements furnished herein include all adjustments necessary for a fair
presentation of the results of operations of the Company. All such adjustments
are of a normal recurring nature, except for the extraordinary loss on
extinguishment of debt.
2. INITIAL PUBLIC OFFERING
In October 1996, the Company sold, in an initial public offering,
833,334 Units, each Unit consisting of two shares of Common Stock and two
redeemable Class A purchase warrants for $12.00 per Unit. Each warrant entitles
the holder to purchase one share of the Company's Common Stock for $7.00. The
warrants are redeemable by the Company at $.05 per warrant any time after
October 3, 1998 if certain conditions are met. The net proceeds, which the
Company received from the offering, amounted to approximately $8.7 million.
5
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The Company was incorporated in Delaware in October 1995 under the name
ReSeal Food Dispensing Systems, Inc. and changed its name to International
Dispensing Corporation on September 12, 1996. The Company was formed primarily
for the purpose of commercializing and marketing certain proprietary and
patented delivery and dispensing technologies (the "Technologies") licensed from
ReSeal International Corporation ("RIC"), which Technologies consist of barrier
oriented, closed delivery and dispensing systems (the "Systems") composed of:
(i) self-adjusting reservoir bodies, (ii) patented, barrier capable,
unidirectional flow valves (the "Valve Assemblies"), and (iii) as required,
mechanisms to activate and facilitate the product delivery and flow functions.
When utilized in dispensing flowable food and beverage products like milk,
juice, wine, etc., the Systems are designed to maintain the sterility, purity
and freshness of such products throughout its use life, with the possibility of
eliminating or reducing the need for adding preservatives to the product to keep
it fresh and/or refrigeration throughout its use life. The self-adjusting
reservoir body of a System is designed to shrink in proportion to the amount of
the product being dispensed through the Valve Assembly. The Valve Assemblies are
designed to dispense a product without letting either air or contaminants flow
back into the internal reservoir in which the remaining product is held. The
Company believes that by maintaining the purity of the product that remains in
the container, the Systems will provide higher levels of freshness for
significantly longer periods of time and, if preservatives are eliminated, the
level of purity, of a wide array of packaged flowable products.
The Company will focus its marketing activities on the application of
the licensed technologies in the Field of Use (as defined below) as set forth in
that certain Amended and Restated License Agreement, between the Company and
RIC, which encompasses the food and beverage industries as broadly defined.
"Field Of Use" means the use of the Technology to make, use, lease, sell or
distribute (a) any food or beverage dispensers or containers that embody the
Technology or the manufacture, use, lease, sale or distribution of which uses
the Technology intended for use in any acceptable food and beverage application.
With such categories, the applications of the licensed technologies can be
divided into a number of potential markets, including but not limited to the
following: (i) beverages, which include milk/cream, coffee, tea (hot and cold),
hot chocolate, juices, sweeteners, baby formula, baby food (in puree form),
wines and water: (ii) foods, which include soups, liquid eggs, liquid butter,
sauces, yogurt, melted cheese (nachos), baby foods and hot toppings in liquid
form; and (iii) condiments, which include ketchup, barbecue sauce, mayonnaise,
salad dressing, oils and mustard.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(continued)
The Company will undertake the formation of strategic alliances or
direct license/supply agreements with major food and beverage companies
currently generating substantial revenues from their existing markets. It is
further intended that these relationships will include co-development of new
products in tandem with the production of new dispensing systems which
incorporate the Technologies. Upon successful consummation of a strategic
alliance or direct license/supply relationship, of which there can be no
assurance, the customer or strategic partner will utilize the Technologies in
conjunction with products that have an existing market share, as well as the
System associated with the introduction of new products.
Result of Operations
The Company has not generated any revenues to date and must be
considered in the development stage. The activities of the Company since
inception in October 1995 have been primarily directed at formational activities
including the completion of initial capitalization, pursuant to which the
Company obtained aggregate capital of $2,250,000. These funds were procured
through the issuance by the Company of certain convertible notes, options and
the sale of Common Stock in a private placement concluded in February, 1996.
In addition, the Company has engaged in on-going marketing discussions
with a number of potential strategic alliance partners, licensees and end users
of the Technologies. In this regard, discussions have been conducted with major
companies in Canada and the United States to explore opportunities in the
product categories.
The Company has reported a net loss from operations of $1,258,544 since
inception.
Financial Condition
As reflected in the financial statements, the Company has experienced
continuing net losses and negative cash flows from operations and has maintained
negative working capital and negative equity at September 30, 1996. The
Company's continuing existence is dependent on its ability to raise additional
capital and achieve and maintain profitable operations. The Company continues to
be in the development stage and does not foresee operating revenue until fiscal
year 1997. Management plans to finance the Company by obtaining additional
financing through additional private placements of equity. As of September 30,
1996, the Company had liquid assets of $138,976.
7
<PAGE>
In October, 1996, the Company sold, in an initial public offering,
833,334 Units, each Unit consisting of two shares of Common Stock and two
redeemable Class A purchase warrants for $12.00 per Unit. Each warrant entitles
the holder to purchase one share of the Company's Common Stock for $7.00. The
warrants are redeemable by the Company at $.05 per warrant any time after
October 3, 1998 if certain conditions are met. The net proceeds, which the
Company received from the offering, amounted to approximately $8.7 million.
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 - Financial Data Schedule
(b) No reports on Forms 8-K have been filed for the quarter
for which this report is being filed.
9
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
INTERNATIONAL DISPENSING
CORPORATION
Date: November 19, 1996 /s/ Jon D. Silverman
--------------------
Jon D. Silverman
Chairman of the Board, Chief Executive
Officer & President
(Principal Executive Officer)
Date: November 19, 1996 /s/ David W. Brenman
--------------------
David W. Brenman
Chief Financial Officer and Treasurer
(Principal Accounting and Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE SEPTEMBER 30, 1996 QUARTERLY REPORT
FILED ON FORM 10-QSB AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 138,976
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 138,976
<PP&E> 7,079
<DEPRECIATION> (1,544)
<TOTAL-ASSETS> 268,128
<CURRENT-LIABILITIES> 4,394,634
<BONDS> 0
0
0
<COMMON> 7,900
<OTHER-SE> (4,134,406)
<TOTAL-LIABILITY-AND-EQUITY> 268,128
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 719,727
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 39,022
<INCOME-PRETAX> (758,749)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> (250,000)
<CHANGES> 0
<NET-INCOME> (1,008,749)
<EPS-PRIMARY> (.13)
<EPS-DILUTED> (.13)
</TABLE>
