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, 1997
[ ] 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 Identification No.)
incorporation or organization)
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:
9,566,668 shares of Common Stock as of November 12, 1997
Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X]
SEC 2334 (3/94)
<PAGE>
International Dispensing Corporation
Table of Contents
Part I - FINANCIAL INFORMATION Page No.
Item 1. Balance Sheet at September 30, 1997 (unaudited)
and December 31, 1996 .......................................... 2
Statements of Operations for the Nine Months
Ended September 30, 1997 and for the period from inception
(October 10, 1995) through September 30, 1997 .................. 3
Statements of Cash Flows
For the Nine Months Ended September 30, 1997 and for the
Period from inception (October 10, 1995)
through September 30, 1997 ..................................... 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 .............................................. 8
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
BALANCE SHEETS
September 30,
December 31, 1997
1996 (unaudited)
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents ..................................................... $ 4,268,963 $ 3,537,056
Miscellaneous receivable ...................................................... -- 97,154
Prepaid expense ............................................................... 95,833 69,697
----------- -----------
Total current assets ........................................ 4,364,796 3,703,907
Fixed Assets:
Leasehold improvements ........................................................ 7,270 7,270
Office equipment .............................................................. 4,350 4,350
Auto .......................................................................... -- 21,920
Accumulated depreciation and amortization ..................................... (2,044) (2,707)
----------- -----------
Net fixed assets ............................................ 9,576 30,833
Other assets ........................................................................... 95,761 95,761
----------- -----------
Total assets ................................................ $ 4,470,133 $ 3,830,501
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accrued expenses .............................................................. $ 117,759 $ 20,743
----------- -----------
Total current liabilities ................................... 117,759 20,743
----------- -----------
Total liabilities ........................................... 117,759 20,743
Commitments and contingencies
Stockholders' Equity:
Preferred Stock, $.001 par value; 2,000,000 shares authorized; no shares ...... -- --
issued or outstanding
Common Stock $.001 par value; 40,000,000 shares authorized; 9,566,668 ......... 9,567 9,567
issued and outstanding as of December 31, 1996 and September 30, 1997,
respectively
Additional paid-in capital .................................................... 9,895,286 9,895,286
Deficit accumulated during the development stage .............................. (5,552,479) (6,095,095)
----------- -----------
Total stockholders' equity .................................. 4,352,374 3,809,758
----------- -----------
Total liabilities and stockholders' equity .................. $ 4,470,133 $ 3,830,501
=========== ===========
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENTS OF OPERATIONS
Cumulative
from Inception
Three Months Nine Months (October 10, 1995)
Ended Ended through
September 30, September 30, September 30,
1997 1997 1997
(unaudited) (unaudited) (unaudited)
----------- ----------- -----------
<S> <C> <C> <C>
Revenues $ --- $ --- $ ---
Costs and expenses:
General and administrative ................................. 250,845 689.378 1,973,217
Depreciation and amortization .............................. 221 663 2,707
----------- ----------- -----------
Total costs and expenses ................. 251,066 690,041 1,975,924
Loss from operations ................................................ 251,066 690,041 1,975,924
Interest expense ........................................... -- -- 66,665
Interest income ............................................ (48,438) (147,425) (197,493)
----------- ----------- -----------
Net loss before extraordinary loss .................................. $ 202,628 $ 542,616 $ 1,845,096
Extraordinary loss on retirement of debt ............................ -- -- 250,000
----------- ----------- -----------
Net loss ............................................................ $ 202,628 $ 542,616 $ 2,095,096
=========== =========== ===========
Net loss per share .................................................. $ (0.02) $ (0.06)
Weighted average shares outstanding ................................. 9,566,668 9,566,668
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
Cumulative
from Inception
Nine Months October 10, 1995)
Ended through
September 30, September 30,
1997 1997
----------- -----------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net Loss ........................................................................ $ (542,616) $(2,095,096)
Adjustments to reconcile net loss to net cash used in
operating activities;
Depreciation and amortization ............................................. 663 2,707
Non-cash compensation ..................................................... -- 76,238
Loss on retirement of debt ................................................ -- 250,000
Changes in operating assets and liabilities;
Increase in miscellaneous receivable .................................. (97,154) (97,154)
(Increase) decrease in prepaid expenses ............................... 26,136 (69,697)
Increase in other assets .............................................. -- (89,960)
Increase (decrease) in accrued expenses ............................... (97,016) 20,743
----------- -----------
Net cash used in operating activities ................................................ (709,987) (2,002,219)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets ........................................................ (21,920) (33,540)
Purchase of license ............................................................. -- (4,000,000)
----------- -----------
Net cash used in investing activities ................................................ (21,920) (4,033,540)
Cash flows from financing activities:
Proceeds from private placement ................................................. -- 2,100,000
Proceeds from issuance of convertible debt ...................................... -- 150,000
Repayment of promissory notes ................................................... -- (300,000)
Repayment of bridge loans ....................................................... -- (1,050,000)
Repayment of convertible debt ................................................... -- (100,000)
Proceeds from initial public offerring .......................................... -- 8,772,815
----------- -----------
Net cash provided from financing activities .......................................... -- 9,572,815
----------- -----------
Net increase (decrease) in cash and cash equivalents, ................................ (731,907) 3,537,056
Cash and cash equivalents, beginning of period ....................................... 4,268,963 0
----------- -----------
Cash and cash equivalents, end of period ............................................. $ 3,537,056 $ 3,537,056
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest .......................................................... -- 66,665
Cash paid for taxes ............................................................. -- --
Non-cash investing and financing activities:
Issuance of common stock ........................................................ -- $ 5,800
Purchase of license from affiliate .............................................. -- $ 4,000,000
The accompanying notes are an integral part of these financial statements
</TABLE>
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
NOTES TO THE FINANCIAL STATEMENTS
(Information as of and for the period ended June 30,
1997 is unaudited)
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of September 30, 1997 and statements of operations
and statements of cash flows for the nine months ended 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 Annual Report on Form 10-KSB for the year
ended December 31, 1996. Results of operations for the nine and three month
periods is 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
retirement 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 for the
four year period commencing October 3, 1997. The warrants are redeemable by the
Company at $.05 per warrant any time after October 3, 1997 if certain conditions
are met. The net proceeds, which the Company received from the offering,
amounted to approximately $8.8 million.
3. RECENTLY ISSUED ACCOUNTING STANDARDS
In February, 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (FSAS) No. 128, Earning Per Share.
This statement establishes standards for computing and presenting earning per
share (EPS), replacing the presentation of currently required primary EPS with a
presentation of Basic EPS. For entities with complex capital structures, the
statement requires the dual presentation of both Basic EPS and Diluted EPS on
the face of the statement of operations. Under this new standard, Basic EPS is
computed based on weighted average shares outstanding and excludes any potential
dilution; Diluted EPS reflects potential dilution from the exercise or
conversion of securities into common stock or from other contracts to issue
common stock and is similar to the currently required fully diluted EPS. SFAS
No. 128 is effective for financial statements issued for periods ended after
December 15, 1997, including interim periods, and earlier application is not
permitted. When adopted, the Company will be required to restate its EPS data
for all prior periods presented. The company does not expect the impact of the
adoption of this statement to be material to previously reported EPS amounts.
<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 is focusing 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 (collectively the "Product") intended for use in an industrial or
commercial place of business in the preparation of food or beverage at such
place of business, (b) any food or beverage Product intended for use in an
industrial or commercial place of business by a customer purchasing food or
beverage at such place of business for consumption on or off the premises of
such place of business, or (c) any food or beverage Product intended to be sold
to or by food or beverage wholesale price discounters, retailers and similar
establishments that sell food or beverage to consumers. Within 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.
The Company has entered into a strategic alliance on November 10, 1997
with Packaging Systems, L.L.C., the parent company of Rapak, Inc. The resulting
products of this alliance, Joint Systems Development Agreement, are Bag-in-Box
with unique Valve/Pump Technology food and beverage delivery systems that will
be marketed to the food and beverage industries throughout the United States.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(continued)
The Company has solicited bid quotations from three different
suppliers, for the fabrication of multi-cavity molds for the manufacture of its
Gravity Feed Valve. Simultaneously, quotations for the manufacture of a single
cavity mold have been received. On July 21, 1997 a Purchase Order was issued to
WEPCO Plastics, Inc. for the production of a single cavity mold. The single
cavity mold will allow for the manufacture of prototype Gravity Feed Valves,
providing refinement capabilities for large production runs.
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.
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, Europe, Australia and the United States to explore
opportunities in the product categories.
The Company has reported a net loss from operations of $ 2,095,096
since inception.
FINANCIAL CONDITION
As reflected in the financial statements, the Company has experienced
continuing net losses and negative cash flows from operations through September
30, 1997. The Company's continuing existence is dependent on its ability to
attain profitable operations. The Company continues to be in the development
stage and does not foresee operating revenue until the first quarter of fiscal
year ending December 31, 1998. As of September 30, 1997, the Company had liquid
assets of $3,537,056.
In a private placement concluded in February 1996, the Company obtained
aggregate capital of $2,250,000 through the issuance by the Company of
convertible notes, options and the sale of Common Stock.
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 during
the four year period commencing October 3, 1997. The warrants are redeemable by
the Company at $.05 per warrant any time after October 3, 1997 if certain
conditions are met. The net proceeds, which the Company received from the
offering, amounted to approximately $8.8 million.
The Company does not foresee needing to raise additional funds in the
next 12 months.
<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.
<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 14, 1997 /s/ Jon D. Silverman
--------------------------------
Jon D. Silverman
Chairman of the Board, Chief Executive
Officer & President
(Principal Executive Officer)
Date: November 14, 1997 /s/ Jeffrey D. Lewenthal
--------------------------------
Jeffrey D. Lewenthal
Chief Financial Officer and Treasurer
(Principal Accounting and Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STAEMENTS CONTAINED IN THE SEPTEMBER 30, 1997 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-31-1996
<PERIOD-END> SEP-30-1997
<CASH> 3,537,056
<SECURITIES> 0
<RECEIVABLES> 97,154
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 3,703,907
<PP&E> 33,540
<DEPRECIATION> (2,707)
<TOTAL-ASSETS> 3,830,501
<CURRENT-LIABILITIES> 20,743
<BONDS> 0
0
0
<COMMON> 9,567
<OTHER-SE> 3,800,191
<TOTAL-LIABILITY-AND-EQUITY> 3,809,758
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 251,066
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (202,628)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (202,628)
<EPS-PRIMARY> (.02)
<EPS-DILUTED> (.02)
</TABLE>
