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, 2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________ to _______________
Commission file number 0-21489
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)
1111 Benfield Blvd., Suite 230, Millersville, Maryland 21108
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(Address of principal executive offices)
(410) 729-0125
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(Issuer's telephone number)
Not applicable
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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: 9,728,396 shares of Common Stock as
of November 14, 2000
Transitional Small Business Disclosure Format (Check One): Yes |_| No |X|
<PAGE>
International Dispensing Corporation
(A Development Stage Company)
Table of Contents
Part I - FINANCIAL INFORMATION
Page Number
-----------
Item 1. Financial Statements
Balance Sheets at September 30, 2000 (unaudited) 3
and December 31, 1999
Statements of Operations for the Nine and Three Months 4
Ended September 30, 2000 and 1999 and for the Period
from Inception (October 10, 1995) through September
30, 2000
Statements of Cash Flows for the Nine Months Ended 5
September 30, 2000 and 1999 and for the Period from
Inception (October 10, 1995) through September 30, 2000
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 6
Condition and Results of Operations
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 8
Item 2. Changes in Securities and Use of Proceeds 8
Item 3. Defaults Upon Senior Securities 8
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information. 8
Item 6. Exhibits and Reports on Form 8-K 9
2.
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
September 30, 2000 December 31, 1999
------------------ -----------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 431,747 $ 416,322
Accounts receivable
Prepaid expenses 26,447 14,739
------------ ------------
Total current assets 458,194 431,061
------------ ------------
Fixed Assets:
Office equipment 423,245 461,646
Accumulated depreciation and amortization (4,947) (4,947)
------------ ------------
Net fixed assets 418,298 456,699
------------ ------------
Other Assets 3,447 26,647
------------ ------------
Total assets $ 879,939 $ 914,407
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ -- $ 175,801
Accrued expenses and payroll taxes payable 66,588 51,821
------------ ------------
Total current liabilities 66,588 227,622
------------ ------------
Total liabilities 66,588 227,622
------------ ------------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.001 par value; 2,400,000 1,120,000
2,000,000 shares authorized, 1,000 and 560 shares
issued or outstanding, as of September 30, 2000 and
December 31, 1999, respectively
Common stock, $.001 par value;
40,000,000 shares authorized; 9,729 9,567
9,728,396 issued and outstanding as of September 30, 2000
and 9,566,668 as of December 31, 1999
Additional paid-in capital 9,920,124 9,895,286
Deficit accumulated during (11,516,502) (10,338,068)
development stage ------------ ------------
Total stockholders' equity 813,351 686,785
------------ ------------
Total liabilities and stockholders' equity $ 879,939 $ 914,407
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements
3.
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Nine Months Three Months
ended ended
---------------------------------------- ----------------------------------------
September 30, 2000 September 30, 1999 September 30, 2000 September 30, 1999
------------------ ------------------ ------------------ ------------------
(unaudited) (unaudited) (unaudited) (unaudited)
<S> <C> <C> <C> <C>
Revenues $ -- $ -- $ -- $ --
------------------ ------------------ ------------------ ------------------
Operating Expenses
General and adminstrative 1,194,650 1,070,040 334,333 378,198
Depreciation and amortization 5,400 1,800
------------------ ------------------ ------------------ ------------------
Total cost and expense 1,194,650 1,075,440 334,333 379,998
------------------ ------------------ ------------------ ------------------
Loss from operations (1,194,650) (1,075,440) (334,333) (379,998)
Other income (expense)
Interest expense -- -- -- --
Interest and other income 16,216 82,081 3,286 8,865
------------------ ------------------ ------------------ ------------------
Net loss before extraordinary loss
and discontinued operations (1,178,434) (993,359) (331,047) (371,133)
Extraordinary loss on retirement of debt -- -- -- --
Loss from discontinued operations -- -- -- --
------------------ ------------------ ------------------ ------------------
Net loss $ (1,178,434) $ (993,359) $ (331,047) $ (371,133)
================== ================== ================== ==================
Basic and diluted loss per share $ (0.12) $ (0.10) $ (0.04) $ (0.04)
Basic and diluted weighted average
shares outstanding 9,642,440 9,566,668 9,721,686 9,566,668
<CAPTION>
Cumulative
from Inception
October 10, 1995
through
September 30, 2000
------------------
(unaudited)
<S> <C>
Revenues $ --
------------------
Operating Expenses
General and adminstrative 6,764,053
Depreciation and amortization 24,047
------------------
Total cost and expense 6,788,100
------------------
Loss from operations (6,788,100)
Other income (expense)
Interest expense (66,665)
Interest and other income 429,190
------------------
Net loss before extraordinary loss
and discontinued operations (6,422,575)
Extraordinary loss on retirement of debt (250,000)
Loss from discontinued operations (843,927)
------------------
Net loss $ (7,516,502)
==================
Basic and diluted loss per share
Basic and diluted weighted average
shares outstanding
</TABLE>
The accompanying notes are an integral part of these financial statements
4.
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
Cumulative
from Inception
Nine months Nine months October 10, 1995
ended ended through
September 30, 2000 September 30, 1999 September 30, 2000
------------------ ------------------ ------------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (1,178,434) $ (993,359) $ (7,516,502)
Adjustment for (income) loss from discontinued operations -- -- 843,927
------------------ ------------------ ------------------
Net loss from continuing operations (1,178,434) (993,359) (6,672,575)
Adjustments to reconcile net loss to
net cash used in operating activities-
Depreciation and amortization -- 5,400 24,047
Compensation from stock grant -- -- 25,279
Non-cash compensation -- -- 87,199
Loss on retirement of debt -- -- 250,000
Changes in operating assets and liabilities:
Decrease in accounts receivable -- (57,170) --
(Increase) decrease in prepaid expenses (11,708) 43,545 (26,447)
(Increase) decrease in other assets 23,200 6,998 2,351
Increase (Decrease) in accrued expenses 14,767 (66,974) 41,309
Decrease in accounts payable (175,801) (5,462) --
Increase in escrow account -- 365,000 --
------------------ ------------------ ------------------
Net cash used in continuing operating activities: (1,327,976) (702,022) (6,268,837)
Net cash provided by (used in) discontinued operations: -- -- (843,927)
------------------ ------------------ ------------------
Net cash used by operating activities: (1,327,976) (702,022) (7,112,764)
------------------ ------------------ ------------------
Cash flows from operating activities:
Purchase of fixed assets 38,401 (198,140) (453,304)
Purchase of license -- -- (4,000,000)
------------------ ------------------ ------------------
Net cash used in investing activities 38,401 (198,140) (4,453,304)
------------------ ------------------ ------------------
Cash flows from financing activities:
Proceeds from issuance of preferred stock 1,280,000 -- 2,400,000
Proceeds from private placement -- -- 2,100,000
Payment for services issued as stock 25,000 -- 25,000
Proceeds from issuance of convertible debt -- -- 150,000
Repayment of promissory note -- -- (300,000)
Repayment of bridge loans -- -- (1,050,000)
Repayment of convertible debt -- -- (100,000)
Proceeds from initial public offering -- -- 8,772,815
------------------ ------------------ ------------------
Net cash provided from financing activities 1,305,000 -- 11,997,815
------------------ ------------------ ------------------
Net increase (decrease) in cash and cash equivalents 15,425 (900,162) 431,747
Cash and cash equivalents, beginning of period 416,322 1,270,527 --
------------------ ------------------ ------------------
Cash and cash equivalents,end of period 431,747 370,365 431,747
================== ================== ==================
Supplemental disclosure of cash flow information:
Cash paid for interest -- -- 66,665
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
5.
<PAGE>
International Dispensing Corporation
(A Development Stage Company)
Notes to the financial statements
(Information as of and for the period ended September 30, 2000 is unaudited)
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of September 30, 2000, statements of operations for
the three and nine months then ended and statements of cash flows for the nine
months then 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, 1999. Results of
operations for the three and nine 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.
2. GOING CONCERN
The Company's financial statements have been presented on the basis that it is a
going concern. The Company's development stage activities have resulted in an
accumulated deficit since inception to September 30, 2000, of approximately
$11.5 million and losses are continuing. Efforts to market its products have yet
to result in the Company generating revenue. The Company's primary source of
funds since inception has been from the sale of its common and preferred stock.
The Company completed a private placement of preferred stock in the third
quarter and has received commitments to provide funding to allow the Company to
continue its development of its new and licensed technologies. In addition,
management has taken certain steps and made significant management changes in an
effort to reduce operating expenses of the Company. The Company believes that
with the completion of production molds for one or more of its products,
scheduled for the fourth quarter of 2000, it will begin to generate sales
revenue in the first quarter of 2001.
The Company believes these steps will provide sufficient liquidity for it to
continue as a going concern. Accordingly, the financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and classification of liabilities or any
other adjustments that might result should the Company be unable to continue as
a going concern.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The following discussion and analysis should be read in conjunction with the
Company's financial statements, beginning on Page 3 and financial information
included elsewhere in this report.
The Company was formed primarily for the purpose of developing and marketing
technologies designed to maintain the sterility, purity and freshness of
flowable food and beverage products. The Company is focusing its research and
development and marketing activities on the application of its owned and
licensed technology.
On September 19, 2000 the Company announced the introduction of a commercially
sterile Gravity Flow Valve for which the Company has filed for patent
protection. The Gravity Flow Valve has been designed
6.
<PAGE>
to withstand a rigorous irradiation and steam sterilization process. The new
Gravity Flow Valve is in production and field trials are underway. The Company
anticipates that it will begin to generate revenue from this innovative product
in the first quarter of 2001.
The Company has completed the design and has filed for patent protection on a
new disposable beverage carafe that can safely transport up to 96 ounces of a
hot beverage. According to the National Coffee Association approximately 124
million cups of coffee are sold daily and approximately 75% of that business is
"to go". The beverage carafe allows consumers and food service providers to
safely transport multiple cups of coffee while maintaining the product's hot
temperature. The Company's new product will be produced early in the first
quarter and field trials will begin late in the first quarter of 2001.
The Company has also completed the design and filed for patent protection on a
new Fresh Flow System dispensing system that maintains the commercial sterility
of a beverage concentrate. The Fresh Flow System is a beverage dispensing system
that mixes viscous concentrates with water or another dilutent to produce
ready-to-drink juice, dairy, coffee or tea. The Fresh Flow System has been
designed to eliminate the need for a peristaltic pump to portion out the
beverage concentrate. The Company's anticipates this new product will be
produced in the first quarter of 2001.
The Company is undertaking the formation of strategic alliances and direct
license/supply agreements with major food, beverage and chemical companies, as
well as, applicable packaging and equipment suppliers. The Company anticipates
that it will be in a position to announce a strategic alliance by the first
quarter of 2001.
The Company is subject to a number of risks including the Company's lack of
prior operating history. The Company is also subject to the availability of
sufficient financing to meet its future cash requirements and the uncertainty of
future product development and regulatory approval and market acceptance of
proposed products. In the event of the bankruptcy of ReSeal International
Corporation ("RIC"), the status of the continuing obligations of the various
parties to and under the Company's License Agreement with RIC is unclear since a
court in a bankruptcy proceeding may not enforce such continuing obligations.
Additionally, other risk factors such as loss of key personnel, lack of
manufacturing capabilities, difficulty in establishing new intellectual property
rights and preserving and enforcing existing intellectual property rights as
well as product obsolescence due to the development of competing technologies
could impact the future results of the Company.
For further information concerning the business conducted by the Company, see
Item 1. "Description of Business" in the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 1999.
Results of Operations
Nine Months Ended September 30, 2000 Compared to Nine Months Ended September 30,
1999
Revenue - The Company has not generated any revenue since its inception.
Operating Expenses - For the nine months ended September 30, 2000 the Company
had operating expenses of $1,194,650, representing an $119,210 increase versus
the same period last year. In the first two quarters the increase was related to
the Company's research and product development expenditures (including fees paid
for engineering, testing and new patent filings). In the third quarter
additional expenditures were made for the tooling for injection molds to produce
new products.
Net Loss - For the nine months ended September 30, 2000, the Company had a net
loss of $1,178,434 versus a net loss of $993,359 for the nine months ended
September 30, 1999 principally as a result the Company's increased operating
expenses.
Three Months Ended September 30, 2000 Compared to Three Months Ended September
30, 1999
Revenue - The Company has not generated any revenue since its inception.
7.
<PAGE>
Operating Expenses - For the three months ended September 30, 2000 the Company
had operating expenses of $334,333, representing an $45,665 decrease versus the
same period last year. In the third quarter of 2000 the Company reduced
professional fees and personnel and travel expenses.
Net Loss - For the three months ended September 30, 2000, the Company had a net
loss of $331,047 versus a net loss of $371,133 for the three months ended
September 30, 1999. The smaller loss was principally as a result of the
Company's decreased operating expenses.
The Company has reported a loss from operations of $6,788,100 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, 2000.
The Company's continuing existence is dependent on its ability to achieve and
maintain profitable operations. The Company continues to be in the development
stage and does not anticipate generating any operating revenue until at least
the first quarter of the fiscal year 2001, at which time, it may be in a
position to generate revenue from sales of its products.
As of September 30, 2000, the Company had working capital of approximately
$391,606. In the third quarter, the Company negotiated the terms of an
additional equity investment by certain of its existing stockholders. The
commitment from the existing stockholders will provide the Company with
sufficient operating funds to continue operations through the first half of
2001. The Company's spending rate from January to August was approximately
$150,000 per month. The Company anticipates that for the fourth quarter of 2000
the monthly spending rate will be approximately $115,000 per month.
The Company anticipates that it will require an additional $3 to $4 million in
capital to finance its operations during the two-year period beginning in the
fourth quarter of fiscal 2000. The majority of that funding would be for
expenditures related to the development, sale and distribution of the Company's
new product lines, as well as, new product development efforts. The Company
expenditures would include capital expenditures for multi-cavity molds, steel
dyes, raw materials and the cost to manufacture the products. Although the
Company anticipates generating revenues in the first quarter of 2001, it
continues to study alternatives under which the Company may raise additional
funds.
PART II
OTHER INFORMATION
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information.
Jay Rosen resigned as a Director of the Company effective July 28, 2000.
8.
<PAGE>
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.
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 20, 2000 By: /s/ Gary Allanson
-----------------------------------------
Gary Allanson
Chief Executive Officer & President
(Principal Executive, Accounting and
Financial Officer)
9.
