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, 2000
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ______________to_______________
Commission file number 0-21489
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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
------------------------------------------------------------
(Address of principal executive offices)
(410) 729-0125
--------------
(Issuer's telephone number)
Not applicable
--------------
(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 May 11, 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 March 31, 2000 (unaudited) 3
and December 31, 1999
Statements of Operations for the Three Months 4
Ended March 31, 2000 and 1999 and for the Period from Inception
(October 10, 1995) through March 31, 2000
Statements of Cash Flows for the Three Months Ended 5
March 31, 2000 and 1999 and for the Period from Inception
(October 10, 1995) through March 31, 2000
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 7
Condition and Results of Operations
Part II - OTHER INFORMATION 9
2.
<PAGE>
INTERNATIONAL DISPENSING CORPORATION
(A Development Stage Company)
BALANCE SHEET
<TABLE>
<CAPTION>
March 31, 2000 December 31, 1999
-------------- -----------------
(unaudited)
<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 698,584 $ 416,322
Accounts receivable 3,300
Prepaid expenses 56,872 14,739
------------ ------------
Total current assets 758,756 431,061
Fixed Assets:
Office equipment 466,997 461,646
Accumulated depreciation and amortization (4,947) (4,947)
------------ ------------
Net fixed assets 462,050 456,699
Other Assets 27,397 26,647
------------ ------------
Total assets $ 1,248,203 $ 914,407
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 86,059 $ 175,801
Accrued expenses 42,084 51,821
------------ ------------
Total current liabilities 128,143 227,622
------------ ------------
Total liabilities 128,143 227,622
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.001 par value; 2,000,000 1,120,000
2,000,000 shares authorized,1,000 and 560 shares issued or outstanding, as of
March 31, 2000 and December 31, 1999, respectively
Common stock, $.001 par value; 9,657 9,657
40,000,000 shares authorized;
9,566,668 issued and outstanding, as of March 31, 2000
and December 31, 1999, respectively
Additional paid-in capital 9,895,286 9,895,286
Deficit accumulated during (10,784,793) (10,338,068)
development stage
------------ ------------
Total stockholders' equity 1,120,060 686,875
------------ ------------
Total liabilities and stockholders' equity $ 1,248,203 $ 914,497
============ ============
</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>
Cumulative
Three Months from Inception
ended October 10, 1995
-------------------------------- through
March 31, 2000 March 31, 1999 March 31, 2000
-------------- -------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Revenues -- -- $ 6,980
-------------- -------------- --------------
Operating Expenses
General and adminstrative 453,029 275,971 6,022,432
Depreciation and amortization 1,800 24,047
-------------- -------------- --------------
Total operating expenses 453,029 277,771 6,046,479
-------------- -------------- --------------
Loss from operations (453,029) (277,771) (6,039,499)
Other income (expense)
Interest expense -- -- (66,665)
Interest income 6,304 13,871 412,298
Miscellaneous income 50,647
-------------- -------------- --------------
Net loss before extraordinary loss
and discontinued operations (446,725) (213,253) (5,690,866)
Extraordinary loss on retirement of debt -- -- (250,000)
Loss from discontinued operations -- -- (843,927)
-------------- -------------- --------------
Net loss $ (446,725) $ (213,253) $ (6,784,793)
============== ============== ==============
Basic and diluted loss per share ($0.04) ($0.02)
Basic and diluted weighted average
shares outstanding 9,566,668 9,566,668
</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
Three months Three months October 10, 1995
ended ended through
March 31, 2000 March 31, 1999 March 31, 2000
-------------- -------------- ----------------
(unaudited) (unaudited) (unaudited)
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss $ (446,725) $ (213,253) $ (6,703,117)
Adjustment for(income) loss from discontinued operations -- -- 843,927
-------------- -------------- --------------
Net loss from continuing operations (446,725) (213,253) (5,859,190)
Adjustments to reconcile net loss to
net cash used in operating activities-
Depreciation and amortization 1,800 24,045
Compensation from stock grant -- -- 25,279
Non-cash compensation -- -- 87,199
Loss on retirement of debt -- -- 250,000
Changes in operating assets and liabilities: -- -- --
Increase in accounts receivable (3,300) -- (50,225)
(Increase) decrease in prepaid expenses (42,133) (6,995) (91,623)
Increase in other assets (750) (2) (21,597)
Increase (decrease) in accrued expenses (9,737) (30,140) 16,805
Increase in accounts payable (89,742) 22,321 86,059
-------------- -------------- --------------
Net cash used in continuing operating activities: (592,387) (226,269) (5,533,248)
Net cash provided by (used in) discontinued operations: -- -- (843,927)
-------------- -------------- --------------
Net cash used by operating activities: (592,387) (226,269) (6,377,175)
Cash flows from operating activities:
Purchase of fixed assets (5,351) (3,989) (497,057)
Purchase of license -- -- (4,000,000)
-------------- -------------- --------------
Net cash used in investing activities (597,738) (3,989) (4,497,057)
Cash flows from financing activities:
Proceeds from issuance of preferred stock 880,000 2,000,000
Proceeds from private placement -- -- 2,100,000
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 -- -- 8,772,816
-------------- -------------- --------------
Net cash provided from financing activities 880,000 -- 11,572,816
-------------- -------------- --------------
Net increase (decrease) in cash and cash equivalents 282,262 (230,258) 698,584
Cash and cash equivalents, beginning of period 416,322 1,270,527 --
-------------- -------------- --------------
Cash and cash equivalents,end of period $ 698,584 $ 1,040,269 $ 698,584
============== ============== ==============
Supplemental disclosure of cash flow information:
Cash paid for interest -- --
Non-cash investing and financing activities:
Issuance of common stock -- --
Purchase of license from affiliate -- --
</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 March 31, 2000 is unaudited)
1. THE COMPANY AND SIGNIFICANT ACCOUNTING POLICIES
The balance sheet as of March 31, 2000 and statements of operations and
statements of cash flows for the three 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 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.
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 from inception to March 31, 2000, in excess of $10.7
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.
Management plans include the completion of an additional private placement of
equity securities in 2000 to provide funding to allow the Company to continue
its development of its licensed technology. In addition, management has taken
certain steps and made significant management changes in an effort to reduce
operating expenses of the Company. Notwithstanding, the Company believes that it
will generate sales revenue from its first product 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.
6
<PAGE>
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 F-3, and financial
information included elsewhere in this report.
The Company was formed primarily for the purpose of commercializing and
marketing technologies designed to maintain the sterility, purity and freshness
of flowable food and beverage products. The Company is focusing its development
activities on the application of licensed technologies in the Field of Use as
set forth in its License Agreement with ReSeal International Corporation
("RIC"). The Field of Use under the License Agreement encompasses the food and
beverage industries as broadly defined. The Company is also independently
developing and marketing other dispensing technology.
The Company is undertaking the formation of strategic alliances or direct
license/supply agreements with major food and beverage companies, as well as
applicable equipment/bag-in-box manufacturers.
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
existing and proposed products. In the event of the bankruptcy of RIC, the
status of the continuing obligations of the various parties to and under the
License Agreement 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
Three Months Ended March 31, 2000 Compared to Three Months Ended March 31, 1999
Revenue - The Company has not generated any revenue since its inception.
Operating Expenses - For the three months ended March 31, 2000, the
Company had operating expenses of $453,029, representing a $175,258 increase
versus the same period in 1999. Operating expenses for the three months ended
March 31, 2000 included $173,052 in research and development related expenses,
$58,236 in legal fees for work on intellectual property matters and the
preparation of the Company's Annual Report on Form 10-KSB, and $59,600 in other
professional fees. Operating expenses
7
<PAGE>
in the first quarter of 1999 were $277,771, which included $78,419 in research
and development expenses, $29,000 in legal expenses and $2,300 in other
professional fees. The 63.1% increase in operating expenses over the comparable
period last year is due primarily to the acceleration of the Company's product
development efforts, including the development of the safety spout and beverage
carafe and the redesign of the gravity flow valve.
Net Loss - For the three months ended March 31, 2000, the Company had a
net loss of $446,715 versus a net loss of $213,253 for the three months ended
March 31, 1999. This increase in net loss of $233,472 equates to a 109.5%
increase over the comparable period last year, and is due primarily to the
Company's accelerated product development cycle.
The Company has reported a loss from operations of $6,039,499 since
inception.
Financial Condition
As reflected in the financial statements, the Company has experienced
continuing net losses and negative cash flows from operations through March 31,
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 ending December 31, 2001, at which
time, it may be in a position to generate revenue from sales of its products.
As of March 31, 2000, the Company had working capital of approximately
$630,000. The Company anticipates that during the fiscal year ending December
31, 2000 ("Fiscal 2000"), the Company will be spending at a rate of
approximately $165,000 per month. Therefore, the Company expects that it will
require additional capital to finance its operations during and after the third
quarter of Fiscal 2000.
The Company is currently studying the alternatives under which the Company
may raise additional funds. The Company expects that it will need an additional
$3,000,000 to $4,000,000 for the two-year period commencing in the third quarter
of Fiscal 2000. If the Company is not able to obtain additional funds on
satisfactory terms and conditions, it will have to scale back its research and
development and product commercialization activities. Ultimately, the Company's
ability to continue as a going concern is dependent upon its ability to sell its
equity securities and to produce and market its products (see Note 2 of Notes to
Financial Statements).
8
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
On February 22, 2000, the Company sold an aggregate of 440 shares of the
Company's Series B Redeemable Convertible Preferred Stock, par value $.001 per
share ("Series B Stock"), for an aggregate purchase price of $880,000. The
entire purchase price for the Series B Stock was paid for in cash. There were no
underwriters with respect to this transaction. The Company believes that the
Series B Stock was issued in transactions not involving a public offering in
reliance upon an exemption from registration provided by Section 4(2) of the
Securities Act of 1933, as amended.
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, 2000 /s/ Gary Allanson
-----------------------------------
Gary Allanson
Chief Executive Officer & President
(Principal Executive, Accounting
and Financial Officer)
10
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS CONTAINED IN THE MARCH 31, 2000 QUARTERLY REPORT FILED ON FORM 10-QSB
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 698,584
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 758,756
<PP&E> 466,997
<DEPRECIATION> 4,947
<TOTAL-ASSETS> 1,248,203
<CURRENT-LIABILITIES> 128,143
<BONDS> 0
0
2,000,000
<COMMON> 9,567
<OTHER-SE> 1,120,060
<TOTAL-LIABILITY-AND-EQUITY> 1,248,203
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 453,029
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (446,725)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (446,725)
<EPS-BASIC> (.04)
<EPS-DILUTED> (.04)
</TABLE>
