UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________________ to _______________________
Commission File Number 0-28351
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KOLORFUSION INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
COLORADO 84-1317836
- ----------------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
14510 East Fremont Ave., Englewood, CO 80112
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(Address of principal executive offices)
(303) 690-2910
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 ___
19,157,561 Common Shares were outstanding as of May 15, 2000
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KOLORFUSION INTERNATIONAL, INC.
I N D E X
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Balance Sheets
March 31, 2000 (Unaudited) and
June 30, 1999 1
Statements of Operations
Three months ended March 31, 2000 and 1999
and Nine months ended March 31, 2000 and 1999 (Unaudited) 2
Condensed Statements of Cash Flows
Nine months ended March 31, 2000 and 1999 (Unaudited) 3
Selected Notes to Condensed Financial
Statements (Unaudited) 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II. OTHER INFORMATION 6-7
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
KOLORFUSION INTERNATIONAL, INC.
CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 2000 1999
------------ ------------
(Unaudited) (Audited)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 16,494 $ 118,867
Trade accounts receivable 18,951 56,978
Inventories 71,653 74,067
------------ ------------
Total current assets 107,098 249,912
OTHER ASSETS:
Patents, net 2,009,961 2,779,721
Other -- 1,270
------------ ------------
2,009,961 2,780,991
LEASEHOLD IMPROVEMENTS AND EQUIPMENT, net 195,781 260,127
------------ ------------
$ 2,312,840 $ 3,291,030
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable $ 105,160 $ 111,327
Current obligation on payable to individual 189,000 189,000
Current portion of long-term debt 1,189 11,000
Payable to stockholders 440,000 200,000
Accrued interest payable 272,406 132,905
Other accrued expense 8,795 --
------------ ------------
Total current liabilities 1,016,550 644,232
PAYABLE TO INDIVIDUAL 1,804,898 1,804,898
LONG-TERM DEBT 7,679 7,679
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock 19,158 18,933
Additional paid-in capital 7,829,899 7,650,124
Accumulated deficit (8,365,344) (6,834,836)
------------ ------------
(516,287) 834,221
------------ ------------
$ 2,312,840 $ 3,291,030
============ ============
</TABLE>
Note: The balance sheet at June 30, 1999 has been taken from the audited
financial statements at that date, and has been condensed.
See Notes to Condensed Financial Statements.
1
<PAGE>
KOLORFUSION INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 62,329 $ 161,452 $ 167,858 $ 289,646
Expenses:
Cost of sales 135,000 27,895 339,251 174,366
Selling, general and administrative 171,737 386,310 695,575 960,950
Impairment loss -- -- 564,210 --
Other income (expense) (90,784) 98,936 (99,330) 18,529
------------ ------------ ------------ ------------
Net loss $ (335,192) $ (153,817) $ (1,530,508) $ (773,141)
============ ============ ============ ============
Loss per common share $ (.02) $ (.01) $ (.08) $ (.05)
============ ============ ============ ============
Loss per common share assuming dilution $ (.02) $ (.01) $ (.08) $ (.05)
============ ============ ============ ============
Weighted average outstanding shares 19,157,561 18,521,769 19,102,005 16,718,718
============ ============ ============ ============
</TABLE>
See Notes to Condensed Financial Statements.
2
<PAGE>
KOLORFUSION INTERNATIONAL, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
March 31
-----------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (1,530,508) $ (773,141)
Depreciation and amortization 272,675 221,526
Impairment loss 564,210 --
Change in:
Accounts receivable 38,027 (43,294)
Inventories 2,414 (43,188)
Accounts payable (6,167) 20,017
Other accrued expenses 148,296 1,140
------------ ------------
Net cash used in operating activities (511,053) (616,940)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of leasehold improvements
and equipment (2,779) (30,363)
Decrease in other assets 1,270 15,372
------------ ------------
Net cash used in investing activities (1,509) (14,991)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of common stock 180,000 750,000
Proceeds from payable to stockholder 240,000 --
Payments on long-term debt (9,811) (124,340)
------------ ------------
Net cash provided by financing activities 410,189 625,660
------------ ------------
Net decrease in cash (102,373) (6,271)
Cash and cash equivalents:
Beginning of period 118,867 57,334
------------ ------------
End of period $ 16,494 $ 51,063
============ ============
</TABLE>
See Notes to Condensed Financial Statements.
3
<PAGE>
KOLORFUSION INTERNATIONAL, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Condensed Financial Statements:
The condensed balance sheet as of March 31, 2000, the statement of
operations for the periods ended March 31, 2000 and 1999, and the
condensed statement of cash flows for the periods then ended have
been prepared by the Company, without audit. In the opinion of
management, all adjustments (which include only normal recurring
adjustments) necessary to present fairly the financial position,
results of operations and changes in cash flows at March 31, 2000
and for all periods presented have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is
suggested that these condensed financial statements be read in
conjunction with the financial statements and notes thereto included
in the Company's June 30, 1999 audited financial statements. The
results of operations for the period ended March 31, 2000 are not
necessarily indicative of the operating results for the full year.
Note 2. Impairment Loss:
Based on an assessment of the value of its patents, the Company
determined that the carrying amount was impaired and reduced the
patent value by $564,210. The remaining amount is being amortized
over nine years.
Note 3. Stockholders' Equity:
During the nine months ended March 31, 2000, stockholders' equity
changed for net loss of $1,530,508 and for the issuance of common
stock for $180,000.
4
<PAGE>
KOLORFUSION INTERNATIONAL, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Revenues decreased in the quarter ended March 31, 2000 to $62,329 from
$161,452 in 1999. The decline is due to the lack of long term processing
contracts. Cost of sales increased in the quarter ended March 31, 2000 to
$135,000 from $27,895 in 1999. The cost of sales increase was due to the
re-allocation of salary overhead and the expansion of leased facilities and
equipment between production and administration in comparison to the same
quarter of 1999. The Company expects the sales and profit margins to increase as
it acquires new customers and licensees. Selling, general and administrative
expenses decreased in the third quarter to $171,737 from $386,310 in 1999. The
result was a net loss in the quarter ended March 31, 2000 of $335,192 compared
to a net loss of $153,817 in the same quarter in 1999.
Revenues decreased in the nine months ended March 31, 2000 to $167,858
from $289,646 in 1999. The decline is due to the lack of long term processing
contracts. Cost of sales increased in the nine months ended March 31, 2000 to
$339,251 from $174,366 in 1999. The cost of sales increase was again due to the
re-allocation of salary overhead and the expansion of leased facilities and
equipment between production and administration. The Company expects the sales
and profit margins to increase as it acquires new customers and licensees for
its technology. Selling, general and administrative expenses decreased in the
first nine months to $695,575 as compared to $960,950 in the first nine months
of the previous year.. The result was a net loss in the nine months ended March
31, 2000 of $1,530,508 compared to a net loss of $773,141 in the same period in
1999.
5
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is aware of no legal proceeding which is pending or
threatened to which the Company is a party or of which its property
is subject.
Item 6. Exhibits and Reports on Form 8-K
(a) 27 - Financial Data Schedule
(b) No reports on Form 8-K were filed during the three months
ended March 31, 2000.
6
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
KOLORFUSION INTERNATIONAL, INC.
Date: 5/11/00 By: /s/ Stephen R. Nagel
-------------------------------------
Stephen R. Nagel
Chairman of the Board and Director
President
7
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 16,494
<SECURITIES> 0
<RECEIVABLES> 18,951
<ALLOWANCES> 0
<INVENTORY> 71,653
<CURRENT-ASSETS> 107,098
<PP&E> 394,506
<DEPRECIATION> 198,725
<TOTAL-ASSETS> 2,312,840
<CURRENT-LIABILITIES> 1,016,550
<BONDS> 0
0
0
<COMMON> 19,158
<OTHER-SE> (516,287)
<TOTAL-LIABILITY-AND-EQUITY> 2,312,840
<SALES> 62,329
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 397,521
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (335,192)
<INCOME-TAX> 0
<INCOME-CONTINUING> (335,192)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (335,192)
<EPS-BASIC> (0.02)
<EPS-DILUTED> (0.02)
</TABLE>
