UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended June 30, 2000
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Commission File Number 0-30652
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VIDEOPROPULSION, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 39-1976286
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
251 Info Highway, Slinger, Wisconsin 53086
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(Address of principal executive offices)
(262) 644-1000
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year, if changed since last
report)
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 ---
Indicate the number of shares outstanding of each of the issuers' classes of
common stock as of the latest practicable date.
18,534,448 Shares, Common Stock, $01 Par Value
(After consideration of July 3, 2000 4 for 1 forward stock split)
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VIDEOPROPULSION, INC.
FORM 10-QSB
For Quarter Ended June 30, 2000
INDEX
Page No
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Consolidated Condensed Balance Sheets 3 - 4
Consolidated Statements of Operations 5
Consolidated Condensed Statements of Cash Flows 6 - 7
Notes to Unaudited Financial Statements 8 - 9
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 11
PART II - OTHER INFORMATION
Item 2 - Changes in Securities 12
Signature 12
Exhibit Index
27.0 Financial Data Schedule - Three months ended June 30, 2000
Financial Data Schedule - Three months ended June 30, 1999
PART I - FINANCIAL INFORMATION
1. Financial Statements
VIDEOPROPULSION, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
<TABLE>
ASSETS (Unaudited) (Audited)
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June 30, 2000 December 31, 1999
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<S> <C> <C>
CURRENT ASSETS:
Cash and Cash Equivalents $125,481 $9,947
Accounts Receivable - Trade, net of allowances of
zero dollars at June 30, 2000 and December 31, 1999 81,275 11,990
Inventories 47,120 61,706
Prepaid Expenses 17,712 0
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Total Current Assets 271,588 83,643
PROPERTY AND EQUIPMENT, at cost
Machinery and Equipment 12,511 0
Less - Accumulated Depreciation (432) 0
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Net Property, Plant and Equipment 12,079 0
Other Assets 10,000 0
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Total Assets $293,667 $83,643
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LIABILITIES AND SHAREHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Accounts Payable - Trade $ 26,995 $ 0
Accounts Payable - Parent 76,279 0
Accrued Payroll and Payroll Taxes 0 0
Other Accrued Liabilities 142,550 20,760
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Total current liabilities 245,824 20,760
LONG-TERM DEBT
Other Long Term Debt 0 0
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Total liabilities 245,824 20,760
SHAREHOLDERS' INVESTMENT:
Common Stock, $01 par value, 24,900,000 shares
authorized, 18,534,448 issued and outstanding
on June 30, 2000 and on December 31, 1999 185,344 185,344
Additional paid-in capital 287,820 (12,090)
Retained (Deficit) Earnings (425,321) (110,371)
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Total shareholders' investment 47,843 62,883
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Total liabilities and shareholders' investment $293,667 $ 83,643
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</TABLE>
See accompanying notes.
VIDEOPROPULSION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
(Unaudited) (Unaudited)
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Three Months Ended Six Months Ended
June 30, June 30, 2000
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
NET SALES $ 246,703 $ 196,744 $ 370,778 $ 339,042
COST OF GOODS SOLD 45,091 44,416 78,480 78,272
---------- ---------- ---------- ----------
Gross Profit 201,612 152,328 292,298 260,770
OPERATING EXPENSES:
Engineering 121,961 80,601 216,158 143,291
Selling and Administrative 187,962 39,725 383,108 86,042
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309,923 120,326 599,266 229,333
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(Loss)Income from Operations (108,311) 32,002 (306,968) 31,437
Interest Expense 14 0 4,501 0
Interest Income (317) 0 (1,106) 0
Other Non-Operating Expenses 704 0 4,677 0
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(LOSS) INCOME BEFORE TAXES (108,712) 32,002 (315,040) 31,437
Benefit (Provision)-Income Taxes 0 0 0 0
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NET (LOSS) INCOME $ (108,712) $ 32,002 $ (315,040) $ 31,437
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BASIC AND FULLY DILUTED
(LOSS) EARNINGS PER SHARE $ (.01) $ .00 $ (.02) $ .00
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Average number of
shares outstanding 18,534,448 18,544,448 18,544,448 18,544,448
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---------- ---------- ---------- ----------
Average number of
shares - Assuming dilution 18,543,448 18,544,448 18,544,448 18,544,448
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</TABLE>
(After consideration of July 3, 2000 4 for 1 forward stock split)
See accompanying notes.
VIDEOPROPULSION, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
(Unaudited)
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Six Months Ended June 30,
2000 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income from continuing operations $ (315,040) $31,437
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation, amortization and deferred income taxes 432 0
Unearned Compensation 109,002 96,375
Compensation expense from forgiveness of notes receivable (109,002) (96,375)
from shareholders
Change in assets and liabilities:
Current assets, other than cash (82,412) (62,528)
Current liabilities, other than notes payable 225,065 (37,559)
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Net cash (Used) provided by operating activities (171,955) 0
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net of retirements (12,511) 0
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Net cash (used) in investing activities (12,511) 0
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital Contribution From Parent 300,000 0
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Net cash generated by (used) in financing activities 300,000 0
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Net increase (decrease) in cash and cash equivalents 115,534 0
Cash and cash equivalents at beginning of period 9,947 0
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Cash and cash equivalents at end of period $ 125,481 $ 0
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</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(Unaudited) June 30,
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2000 1999
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Cash paid during year for:
Interest $4,501 $ 0
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Income taxes $ 0 $ 0
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See accompanying notes.
VIDEOPROPULSION, INC.
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
1. BASIS OF PRESENTATION
The consolidated condensed financial statements include the accounts of
VideoPropulsion Inc. ("VDOP"), Inc. have been prepared by the Company,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission.
The historical share data in this report has been adjusted to reflect the
effect of the 4 for 1 forward stock split on July 3, 2000.
Certain information and footnote disclosures normally included in financial
statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations, and as such, the Company believes that the disclosures are
adequate to make the information presented not misleading. The results for
the quarter ended June 30, 2000 may not be indicative of the results for
the entire year. It is suggested these statements be read in conjunction
with the financial statements and the notes thereto included in the
Company's Form 10-SB/A for the Company's fiscal year ended December 31,
1999 and three months ended March 31, 2000 which was filed on June 16,
2000.
2. INVENTORIES
Cost of the Company's inventory is determined using the average cost first-
in, first-out (FIFO) inventory valuation method. The distribution between
major classes of inventories is as follows:
(Audited)
June 30, 2000 December 31,2000
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Finished Goods $47,120 $61,706
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$47,120 $61,706
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3. DISTRIBUTION OF SUBSIDIARY
In August of 1999, the board of directors of GENROCO, Inc. (VDOP's parent
corporation) began contemplating the spin-off and distribution of the
Company's Digital Video Broadcast (DVB) business as a separate company to
be named VideoPropulsion, Inc. The Company executed the distribution on
July 10, 2000 by issuing one new share of VideoPropulsion Inc. stock, for
each share of Company stock held by GENROCO shareholders of record, as of
the close of business on June 30, 2000.
Complete details are available in the amended SEC Form 10SB/A for
VideoPropulsion, which was filed with the SEC on June 19, 2000 and mailed
to each shareholder, as an information statement, on June 20, 2000.
For additional information, see GENROCO Inc.'s SEC Form 10-QSB for the six
months ended June 30, 2000 as filed with the SEC on August 14, 2000.
4. STOCK SPLIT
In July 2000, VideoPropulsion declared a 4 for 1 stock split as of July 3,
2000 with a distribution date of July 13 2000. As a result, shareholders
of record as of July 3, 2000 received 13,900,836 new shares to bring the
total outstanding amount to 18,534,448.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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RESULTS OF OPERATIONS
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Net sales for the Company for the three months ended June 30, 2000
("2000"), were $246,703 compared to $196,744 for the three months ended
June 30, 1999 ("1999"). Net sales for the Company for the six months ended
June 30, 2000 were $370,778 compared to $339,042 for the six months ended
June 30, 1999. The increase in revenue in 2000 can be attributed to the
Company's expanded customer base, most of whom are engaged in their own
unique product evaluation and development programs for new products that
they intend to sell into the digital video industry.
Cost of goods sold for the three months ended June 30, 2000 was $45,091,
compared to $44,416 for the three months ended June 30, 1999. Cost of
goods sold for the six months ended June 30, 2000 was $78,480, compared to
$78,272 for the six months ended June 30, 1999. This expense, which was
comprised of parts and labor associated with production and testing of
circuit boards shipped to customers, increased as sales increased.
Gross profit for the three months ended June 30, 2000 was $201,612 compared
to $152,328 for the three months ended June 30, 1999. Gross profit for the
six months ended June 30, 2000 was $292,298 compared to $260,770 for the
six months ended June 30, 1999.
The resulting gross margin percentages were 81.7% and 77.4% for the three
months ended June 30, 2000 and June 30, 1999, respectively. The resulting
gross margin percentages were 78.8% and 76.9% for the six months ended June
30, 2000 and June 30, 1999, respectively.
Research and development expenses for the three months ended June 30, 2000
were $121,961 compared to $80,601 for the three months ended June 30, 1999,
or 49.4% and 41.0% of net sales for 2000 and 1990 respectively. Research
and development expenses for the six months ended June 30, 2000 were
$216,158 compared to $143,291 for the six months ended June 30, 1999, or
58.3% and 42.3% of net sales for 2000 and 1990 respectively.
Selling, marketing, customer service and general and administrative
expenses for the three months ended June 30, 2000 were $187,962 compared to
$39,725 for the three months ended June 30, 1999 or 76.2% and 20.2% of net
sales for 2000 and 1999, respectively. Selling, marketing, customer
service and general and administrative expenses for the six months ended
June 30, 2000 were $383,108 compared to $86,042 for the six months ended
June 30, 1999 or 103.3% and 25.4% of net sales for 2000 and 1999,
respectively. The increases are primarily associated with additional
personnel costs related to the areas of sales and marketing.
Loss from operations for the three months ended June 30, 2000 was $108,311
compared to a gain of $32,002 for the three months ended June 30, 1999.
Loss from operations for the six months ended June 30, 2000 was $306,968
compared to a gain of $31,437 for the six months ended June 30, 1999.
The Company's provision for income tax expense was zero in 2000 and 1999.
Net loss for the three months ended June 30, 2000 was $108,712 ($.01 per
share) compared to a net gain of $32,002 ($.00 per share) for the three
months ended June 30, 1999. Net loss for the six months ended June 30,
2000 was $315,040 ($.02 per share) compared to a net gain of $31,437 ($.00
per share) for the six months ended June 30, 1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at June 30, 2000 was $125,481, an increase from
$9,947 at December 31, 1999.
During the six months ended June 30, 2000, net cash used in operating
activities was $171,955 versus no cash provided by operations for the six
months ended June 30, 1999.
Cash flows from investing activities for the six months ended June 30, 2000
was $12,511 relating to the acquisition of equipment versus zero for the
six months ended June 30, 1999.
Cash flows from Financing activities for the six months ended June 30, 2000
were $300,000 in the form of a capital contribution from the parent
(GENROCO, Inc.), versus zero for the six months ended June 30, 1999.
Stockholders' equity decreased by $15,040 or 23.9% to $47,843 at June 30,
2000 from $62,883 at December 31, 1999. The decrease is the result of a
net loss from operations totaling $315,040 offset by a $300,000 capital
contribution by the parent.
The Company's ratio of current assets to current liabilities (current
ratio) was 1.11 to 1 at June 30, 2000 versus 4.03 to 1 at December 31,
1999.
At December 31, 1999 and June 30, 2000, the Company had no bank line and is
dependent on the parent for its sources of working capital.
The Company continues to generate negative cash flows from operations.
Current forecasts indicate that the Company may not be unable to fund
current plans beyond the fourth quarter of fiscal 2000 unless it is able to
raise additional capital.
The Company is engaged in efforts to raise additional working capital in
the form of private placement equity during the next few months. The
Company is also discussing long-term financing arrangements with
institutional investors and venture capital companies in an effort to do an
equity offering during fiscal 2001. These discussions are in the
preliminary phase, and the Company has no firm commitments from any
potential investor to invest additional capital in the Company. There can
be no assurances that additional capital will be raised, either through a
private placement or by other means. In the event that the Company is not
successful in its efforts to raise additional working capital, as
contemplated above, it will be forced to cut back on general overhead and
product development expenses, which will serve to delay the release of new
products.
CAUTIONARY STATEMENT
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With the exception of historical facts, the statements contained in Item 2.
of this Form 10-Q may be forward looking statements. Statements in the
future tense and statements including the words "anticipate," "believe,"
continue," "estimate," "expect," "goal," "objective," "outlook," and other
similar expressions are intended to identify forward looking statements.
The forward looking statements in this 10-Q involve certain assumptions,
risks and uncertainties, many of which are beyond the Company's control,
that could cause our actual results and performance to differ. These
factors are not limited to, but certainly include: 1) cyclical downturns
affecting the markets for capital goods; 2) substantial increases in
interest rates that impact the cost of the Company's outstanding debt; 3)
the success of management in increasing sales and maintaining or improving
the operating margins of its businesses; 4) the availability of or material
increases in the costs of select raw materials or parts; and 5) actions
taken by competitors. Investors are directed to the Company's documents,
such as its initial filing on Form 10-SB/A filed with the Securities and
Exchange Commission.
PART II
OTHER INFORMATION
Item 2 Change in Securities
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4,633,612 common shares of stock were issued as a result of the spin-off to
shareholders of record on June 30, 2000. On July 3, 2000, the board of
directors of the Company declared a 4 for forward split, which resulted in
18,543,448 shares outstanding on a post-split basis. The articles of
Incorporation have been amended and authorized shares now consist of 24,900,000
common shares and 100,000 preferred shares.
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.
VIDEOPROPULSION, INC.
(Registrant)
/s/ Carl A. Pick
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Carl A. Pick
Chairman and Director
/s/ Barbara R. Pick
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Barbara R. Pick
CEO and Director
/s/ Keith E. Brue
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Keith E. Brue
Chief Financial Officer, Secretary and Director
(Principal Accounting and Financial Officer)
DATE: June 14, 2000
