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 March 31, 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
incorporation or organization) Identification No.)
342 Madison Avenue, Suite 1034, New York, N.Y. 10173
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(Address of principal executive offices)
(212) 682-2244
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(Issuer's telephone number)
None
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(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:
9,566,666 shares of Common Stock as of May 12, 1997
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 March 31,1997 (unaudited)
and December 31, 1996 2
Statement of Operations for the Three Months
Ended March 31,1997
and for the Period from Inception
(October 10, 1995) through March 31, 1997 3
Statements of Cash Flows for the Three
Months Ended March 31, 1997
and for the Period from Inception
(October 10, 1995) through March 31, 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 9
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
(UNAUDITED)
Assets
Current Assets:
<S> <C> <C>
Cash and cash equivalents $ 4,268,963 $ 4,076,630
Prepaid expense 95,833 87,121
----------- -----------
Total current assets 4,364,796 4,163,751
Fixed Assets:
Leasehold improvements 7,720 7,270
Office equipment 4,350 4,350
Accumulated depreciation and amortization (2,044) (2,265)
----------- -----------
Net fixed assets 9,576 9,355
Other assets 95,761 95,761
----------- -----------
Total assets $ 4,470,133 $ 4,268,867
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities:
Accrued expenses $ 117,759 $ 47,602
----------- -----------
Total current liabilities 117,759 47,602
----------- -----------
Total liabilities 117,759 47,602
Commitments and contingencies
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;
9,566,668 issued and outstanding as of December 31, 1996 and March
31, 1997, respectively 9,567 9,567
Additional paid-in capital 9,895,286 9,895,286
Deficit accumulated during the development stage (5,552,479) (5,683,588)
----------- -----------
Total stockholders' equity (deficiency) 4,352,374 4,221,265
----------- -----------
Total liabilities and stockholders' equity (deficiency) $ 4,470,133 $ 4,268,867
=========== ===========
</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 (October 10, 1995)
Ended through
March 31, March 31,
1997 1997
---- ----
(unaudited) (unaudited)
<S> <C> <C>
Revenues $ -- $ --
Costs and expenses:
General and administrative 180,096 1,463,935
Depreciation and amortization 221 2,265
----------- -----------
Total costs and expenses 180,316 1,466,200
Loss from operations 180,316 1,466,200
Interest expense -- 66,665
Interest income (49,206) (99,275)
----------- -----------
Net loss before extraordinary loss $ 131,110 $ 1,433,590
Extraordinary loss on retirement of debt -- 250,000
----------- -----------
Net loss $ 131,110 $ 1,683,590
=========== ===========
Net loss per share $ (0.01)
Weighted average shares outstanding 9,533,333
</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
Three Months (October 10, 1995)
Ended through
March 31, March 31,
1997 1997
---- ----
(unaudited) (unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net Loss $ (131,110) $(1,683,588)
Adjustments to reconcile net loss to net
cash used in operating activities;
Depreciation and amortization 221 2,265
Non-cash compensation -- 76,238
Loss on retirement of debt -- 250,000
Changes in operating assets and
liabilities;
Increase in prepaid expenses 8,711 (87,121)
Increase in other assets -- (89,961)
Increase/(decrease) in accrued expenses (70,157) 47,602
----------- -----------
Net cash used in operating activities (192,333) (1,484,565)
----------- -----------
Cash flows from investing activities:
Purchase of fixed assets -- (11,620)
Purchase of license -- (4,000,000)
----------- -----------
Net cash used in investing activities -- (4,011,620)
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 in cash and cash equivalents, (192,333) 4,076,630
Cash and cash equivalents, beginning of period 4,268,963 0
----------- -----------
Cash and cash equivalents, end of period $ 4,076,630 $ 4,076,630
=========== ===========
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
</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 March 31, 1997
is unaudited)
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of March 31, 1997 and statements of operations and
statements of cash flows for the three 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 three month period 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, 1998 if certain conditions
are met. The net proceeds, which the Company received from the offering,
amounted to approximately $8.8 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 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.
-6-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
(continued)
The Company is undertaking the formation of strategic alliances and/or
direct license/supply agreements with major food and beverage companies, as well
as applicable equipment/bag-in-box manufacturers, 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.
The Company has solicited bid quotations from three different
suppliers, for the fabrication of multi-cavity molds for the manufacture of the
Valve Assemblies. Simultaneously, quotations for the manufacture of a single
cavity mold are being solicited. The single cavity mold will allow for the
manufacture of prototype tooling and refinement 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 and the United States to explore opportunities in
the product categories.
The Company has reported a net loss from operations of $ 1,683,590
since inception.
FINANCIAL CONDITION
As reflected in the financial statements, the Company has experienced
continuing net losses and negative cash flows from operations at March 31, 1997.
The Company's continuing existence is dependent on its ability to maintain
profitable operations. The Company continues to be in the development stage and
does not foresee operating revenue until the fourth quarter of fiscal year
ending December 31, 1997. As of March 31, 1997, the Company had liquid assets of
$4,076,630.
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.
-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 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, 1998, 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.
-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: May 15, 1997 /s/ Jon D. Silverman
--------------------
Jon D. Silverman
Chairman of the Board, Chief Executive
Officer & President
(Principal Executive Officer)
Date: May 15, 1997 /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 FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS CONTAINED IN THE MARCH 31, 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> MAR-31-1997
<CASH> 4,076,730
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 4,163,751
<PP&E> 11,620
<DEPRECIATION> (2,265)
<TOTAL-ASSETS> 4,268,867
<CURRENT-LIABILITIES> 47,602
<BONDS> 0
0
0
<COMMON> 9,567
<OTHER-SE> 4,211,698
<TOTAL-LIABILITY-AND-EQUITY> 4,268,867
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 180,316
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (131,110)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (131,110)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
