SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 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 JUNE 30, 1995
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-8161
DIONICS, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
DELAWARE 11-2166744
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
65 RUSHMORE STREET
WESTBURY, NEW YORK 11590
(Address of Principal Executive Offices)
(516) 997-7474
(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports required 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
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, $.01 par value per share: 3,483,678
outstanding as of August 10, 1995
(excluding 164,544 treasury shares).
<PAGE>
PART I - FINANCIAL INFORMATION
DIONICS, INC.
Index to Financial Information
Period Ended June 30, 1995
ITEM PAGE HEREIN
Item 1 - Financial Statements:
Introductory Comments
Condensed Balance Sheet
Condensed Statement of Operations
Statement of Cash Flows
Notes to Financial Statements
Item 2 - Management's Discussion and
Analysis or Plan of Operation
<PAGE>
DIONICS, INC.
JUNE 30, 1995
The financial information herein is unaudited. However, in the
opinion of management, such information reflects all adjustments
(consisting only of normal recurring accruals) necessary to a fair
presentation of the results of operations for the periods being reported.
Additionally, it should be noted that the accompanying condensed financial
statements do not purport to be complete disclosures in conformity with
generally accepted accounting principles.
The results of operations for the six and three months ended June
30, 1995 are not necessarily indicative of the results of operations for
the full fiscal year ended December 31, 1995.
These condensed statements should be read in conjunction with the
company's financial statements for the year ended December 31, 1994.
<PAGE>
DIONICS, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
A S S E T S
CURRENT ASSETS:
Cash $ 56,300 $ 84,900
Accounts Receivable Trade
(Less Estimated Doubtful
Accounts of $5,000 in 1995
and $5,000 in 1994) Note 3 212,900 236,500
Inventory - Notes 1 and 3 364,600 298,300
Prepaid Expenses and Other
Current Assets 17,600 29,600
Total Current Assets 651,400 649,300
PROPERTY, PLANT AND
EQUIPMENT - NOTE 3
(At Cost Less Accumulated
Depreciation of
$1,560,200 in 1995 and
$1,526,100 in 1994) 123,700 157,800
DEPOSITS AND OTHER ASSETS -
Note 2 28,000 29,000
Total $ 803,100 $ 836,100
</TABLE>
<PAGE>
DIONICS, INC.
CONDENSED BALANCE SHEET
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
(Unaudited) (Unaudited)
L I A B I L I T I E S
<S> <C> <C>
CURRENT LIABILITIES:
Current Portion of
Long-Term Debt
Note 3 $ 16,100 $ 18,200
Accounts Payable 54,100 75,900
Accrued Expenses 47,300 49,400
Total Current
Liabilities 117,500 143,500
Deferred Interest
Payable 33,400 21,000
Deferred Compensation
Payable - (Note 2) 359,300 332,600
Long-Term Debt Less
Current Maturities
Note 3 1,033,900 1,033,900
Total Liabilities 1,544,100 1,531,000
CONTINGENCIES AND
COMMENTS
SHAREHOLDERS' EQUITY
Common Shares - $.01
Par Value - Authorized
5,000,000 Shares -
Issued - 3,648,222
Shares in 1995 and
3,648,222 Shares in
1994 36,400 36,400
Additional Paid-In
Capital 1,522,800 1,522,800
(Deficit) (2,079,600) (2,033,500)
(520,400) (474,300)
Less: Treasury Stock -
At Cost - 164,544 Shares
in 1995 and 164,544 Shares
in 1994 (220,600) (220,600)
Total Shareholders'
Equity (Deficit) (741,000) (694,900)
Total $ 803,100 $ 836,100
</TABLE>
<PAGE>
DIONICS, INC.
CONDENSED STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
JUNE 30, JUNE 30,
1995 1994 1995 1994
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Sales $ 318,800 $ 358,100 $ 604,900 $ 601,100
COST AND EXPENSES:
Cost of Sales (Including
Research and
Development Costs) 209,600 240,500 453,700 471,100
Selling, General
and Administrative
Expenses 75,500 85,900 153,600 161,800
Total Costs and
Expenses 285,100 326,400 607,300 632,900
NET INCOME (LOSS)
FROM OPERATIONS 33,700 31,700 (2,400) (31,800)
INTEREST AND OTHER INCOME 1,100 400 2,100 1,000
34,800 32,100 (300) (30,800)
INTEREST EXPENSE 22,900 21,600 45,800 32,300
NET PROFIT (LOSS)
FOR THE PERIOD $ 11,900 $ 10,500 $ (46,100) $ (63,100)
NET PROFIT (LOSS)
PER SHARE $ .003 $ .003 $ (.013) $ (.018)
Average Number
of Shares Outstanding
Used in Computation
of Per Share (Loss) 3,483,678 3,483,678 3,483,678 3,483,678
</TABLE>
<PAGE>
DIONICS, INC.
STATEMENT OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (Loss) $ (46,100)
Adjustment to Reconcile Net (Loss) to
Net Cash Used for Operating Activities:
Depreciation and Amortization 34,100
Deferred Compensation and Interest 39,100
Changes in Operating Assets and Liabilities:
(Increase) Decrease in Accounts Receivable 23,600
(Increase) Decrease in Inventory (66,300)
(Increase) Decrease in Prepaid Expenses and
Other Current Assets 12,000
(Increase) Decrease in Deposits and Other Assets 1,000
Increase (Decrease) in Accounts Payable (21,800)
Increase (Decrease) in Accrued Expenses (2,100)
Net Cash Used for Operating Activities (26,500)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of Debt 2,100
NET DECREASE IN CASH (28,600)
CASH - Beginning of Year 84,900
CASH - End of Year 56,300
</TABLE>
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 1 -INVENTORY:
Inventory is stated at the lower of cost (which represents cost of
materials and manufacturing costs on a first-in, first-out basis)
or market, and are comprised of the following:
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1995 1994
(Unaudited) (Unaudited)
<S> <C> <C>
Finished Goods $ 29,200 $ 11,900
Work-in-Process 244,300 201,200
Raw Materials 47,400 44,700
Manufacturing Supplies 43,700 40,500
Total $364,600 $298,300
</TABLE>
NOTE 2 -DEFERRED COMPENSATION PAYABLE:
In 1987 the company entered into an agreement with its chief exec-
utive officer which provided for payments to him commencing with the
year in which he reaches the age 65, provided that the officer does
not voluntarily terminate his employment prior to attaining age 65.
Such agreement further provides that in the event of death or if the
company terminates the employment of the officer prior to age 65 such
payments are to commence during the month subsequent to such event.
The company has an insurance policy on the life of the aforementioned
officer in an amount sufficient to fund the death benefits described
above. At December 31, 1994 the cash surrender value on the existing
policy net of loans approximated $4,300 and is included in other assets.
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 3 -LOANS PAYABLE - APPLE BANK
Effective as of January 31, 1994, the Company and Apple Bank for
Savings (the "Bank") entered into a Restructuring Agreement whereby
the Bank agreed to forgive a portion of existing indebtedness of the
Company and to restructure the balance. In October 1988, the Company
had obtained from the Bank a Commercial Equity Line in the original
principal amount of $1 million (the "Original Mortgage") and in 1990
the Company had obtained certain other asset-based loans from the bank
in the principal amount of $283,850 (the "1990 Loans"). Pursuant to
the Restructuring Agreement,
A. The bank has forgiven $376,146.59 of accrued and unpaid
interest stemming from the Original Mortgage and the 1990 Loans.
B. The 1990 Loans have been replaced by a new five-year term
loan, in the principal amount of $283,850, renewable at the Bank's
option for an additional term of five years. During the first five-
year period, the Company will pay interest only, computed at
an annual rate of 6.0 percent. Of that amount, only one-
third (2.0 percent) will be payable during the five year period,
with the remainder to accrue and become due at the end of the first
five-year period. Should the Bank choose to renew at that time,
the accrued but unpaid portion of the interest will be added to
the principal balance due.
C. The remaining balance of $750,000 outstanding on the Original Mortgage
Loan has been replaced by a new $415,000 Mortgage Loan plus
two additional Term Loans of $167,500 eac These are treated
as follows:
The new $415,000 Mortgage Loan has a five-year term, renewable at the
Bank's option. This new loan carries an annual interest rate of 7.5
percent. For the first two years of this new loan, the Company is
obligated to make payments of interest only, on a monthly basis.
Thereafter, monthly payments will include interest plus the
amount of $1,921.30 towards reduction of debt.
The first new Term Loan stemming from the Original Mortgage has
a face amount of $167,500 and carries the same interest rate
and payment terms as the new $283,850 Term Loan described in
Paragraph B above. That is, a five-year term, renewable at the
Bank's option, at an annual interest rate of 6.0 percent, only one-third
of which is payable during the initial five-year period.
The Second new Term Loan stemming from the Original Mortgage also
has a face amount of $167,500, but carries an annual interest rate of
4.0 percent, none of which is payable during the initial five-year
period. The entire accrued interest will be due at the end of the
five-year term, or added to the principal upon renewal, which is at
the Bank's option. Depending upon the Company achieving certain
financial performance levels during 1994 and 1995, the Bank has
agreed to forgive all of the principal of and accrued interest on the
second new Term Loan, and all of the deferred interest accrued on
the first new Term Loan and all of the deferred interest accrued
on the $283,850 new Term Loan.
<PAGE>
DIONICS, INC.
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
NOTE 3 -LOANS PAYABLE - APPLE BANK (CONTINUED)
D. The new Term Loan for $283,850 and the first Term Loan for
$167,500 also carry convertibility rights under which the Bank may, at
its sole discretion, exchange debt for Common Stock in the Company at
prices ranging from $.75 per share up to $1.25 per share, depending on
the date of such conversion, provided, however, that the aggregate number
of shares that the Bank may acquire will not exceed 15 percent of the
number of then outstanding shares of the Company's Common Stock, subject
to certain anti-dilution rights.
All the Company's Assets are pledged to the foregoing loans.
In September 1994, the Company was advised that the foregoing loans
were purchased from the Bank by D.A.N. Joint Venture, a Limited Partner-
ship, an affiliate of the Cadle Company.
<PAGE>
Item 2.Management's Discussion and Analysis or Plan of Operation
A. LIQUIDITY AND CAPITAL RESOURCES
Starting in 1987, unprofitable operations have resulted in a
significant drain on liquid assets. The Company consumed the proceeds of a
1988 real estate line of credit for one million dollars as well as a 1990
loan of $283,850 against Accounts Receivable and other assets. The
Company's inability to make payments of either interest or principal had
placed both loans in a non-performing default status for almost three
years.
In July of 1993, the Company sold one of its two buildings and then
paid the Bank $250,000 against the one-million dollar real estate loan,
thus reducing the balance owed to $750,000. With some measure of
difficulty and expense, the Company consolidated operations into its one
remaining building. Next, Management set about negotiating with the Bank
for a thorough restructuring of all remaining debt. The process was
successfully completed with the signing of a "RESTRUCTURING AGREEMENT
between DIONICS, INC. and APPLE BANK FOR SAVINGS," effective January 31,
1994. The previous default status was thus cured, an amount of $376,146.59
in past due interest was forgiven, and numerous other favorable changes
were made to the debt and payment obligations of the Company. (See Note 3
of the Financial Statement for a description of the Restructuring
Agreement.) For purposes of this discussion, however, it is fair to
summarize the Agreement as a considerable improvement in the Company's debt
profile. In September of 1994, the Company was advised that the above
loans were purchased from Apple Bank by D.A.N. Joint Venture, a Limited
Partnership, an affiliate of Cadle Company. All terms and conditions
remain unchanged.
The Company also successfully negotiated with three of its largest
creditors for reduced settlements on their accounts in exchange for the
timely completion of a monthly payment schedule. By December 31, 1994 all
three payment schedules were completed, resulting in Forgiveness of
Indebtedness of a total of $112,900.
The above events have provided the Company with some measure of relief
in its debt servicing requirements. As of June 30, 1995, the Company's
ratio of Current Assets to Current Liabilities is 5.54, improved from 1.83
at June 30, 1994. To the extent that this ratio is indicative of near-term
financial strength, the above improvement may be considered a very positive
sign for the Company.
Management has continued its search for additional Working Capital
with which to provide growth momentum for the Company. There are several
on-going contacts with potential lenders or acquirors, although no
assurance can be given of any success. Temporarily, at least, the
Company is able to support its operations, while striving to convert
them to positive cash flow. Working Capital at June 30, 1995 was $533,900
as compared to $505,800 at December 31, 1994 and $245,500 at June 30, 1994.
B. RESULTS OF OPERATIONS
Sales in the Second Quarter of 1995 were $318,800 down 11 percent from
the same period last year, but up 11 percent from the First Quarter of
1995. These fluctuations reflected several random re-scheduling events by
customers, both upward and downward, as the Company strives, through
advertising, for a larger customer base. For the First Half of 1995 the
Company had Sales of $604,900 as compared to $601,100 in the First Half of
1994.
The Gross Profit Margin in the Second Quarter, at 34 percent, was
approximately the same as the 33 percent level of the same period last
year, but up from the 15 percent level of the First Quarter of 1995. The
improvement in the current period reflects numerous largely non-variable
costs inherent in current operations plus the improved product
profitability in the sales mix of the current period.
Selling, General and Administrative Expenses were 23.6 percent of
Sales in the Second Quarter of 1995 as compared to 24 percent in the same
period last year, and 27.3 percent in the First Quarter of 1995.
The Company had a Net Income from Operations of $33,700 in the Second
Quarter of 1995 as compared to $32,100 in the same period last year, and a
Net Loss from Operations of $36,100 in the First Quarter of this year.
For the First Half of 1995, the Company showed a Net Loss from Operations
of $2,400 as compared to a Net Loss from Operations of $31,800 in the First
Half of 1994.
Interest Expenses for the Second Quarter of 1995 were $22,900 as
compared to $21,600 in the same period last year and $22,900 in the First
Quarter of this year.
The Company showed a NET PROFIT of $11,900 for the Second Quarter of
1995 as compared to a NET PROFIT of $10,500 in the same period last year,
and a NET LOSS of $58,000 in the First Quarter of this year. For the First
Half of 1995 the Company showed a NET LOSS of $46,100 as compared to a NET
LOSS of $63,100 in the First Half of 1994.
In an effort to increase Sales volume, the Company has been making
modest, periodic investments in advertising of its MOSFET-driver product
line. While this effort does bring in new customers, it is a slow process
that depends on catching customer projects at the design-in stage.
Frequently, there can be an 18 to 24 month lag between initial contact and
production usage. The Company has by now accumulated a group of satisfied
customers, but many of them do not have continuous need of our product.
There is a pattern of satisfied users who frequently go off stream at the
completion of some order of theirs, and then return as active users with
the next project that can use our product. As a result, monthly and
quarterly sales volumes will still fluctuate with the seasonal and business
cycle variations of our growing customer base.
Management is more convinced than ever that there is a large, untapped
market for the Company's patented photo-voltaic MOSFET-drivers. These,
along with our more traditional products can form the basis for a
profitable and growing business. Management is determined to pursue the
goal of increasing the market awareness of our numerous products, and hopes
to succeed here as it has in the debt resolution area. Risks of failure
continue, but the Company has at least taken a few steps back from the
brink and is moving slowly in a constructive direction.
<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) Exhibits. There are no exhibits applicable to this Form 10-
QSB.
(b) Reports on Form 8-K. Listed below are Current Reports on
Form 8-K filed by the Registrant during the fiscal quarter
ended June 30, 1995:
None
<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.
DIONICS, INC.
(Registrant)
Dated: AUGUST 10, 1995 By: /S/BERNARD KRAVITZ
Bernard Kravitz,
President
Dated: AUGUST 10, 1995 By: /S/BERNARD KRAVITZ
Bernard Kravitz,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM DIONICS,
INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED JUNE 30, 1995 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 56,300
<SECURITIES> 0
<RECEIVABLES> 212,900
<ALLOWANCES> 0
<INVENTORY> 364,600
<CURRENT-ASSETS> 651,400
<PP&E> 1,683,900
<DEPRECIATION> 1,560,200
<TOTAL-ASSETS> 803,100
<CURRENT-LIABILITIES> 117,500
<BONDS> 1,426,600
<COMMON> 36,400
0
0
<OTHER-SE> 1,522,800
<TOTAL-LIABILITY-AND-EQUITY> 803,100
<SALES> 604,900
<TOTAL-REVENUES> 604,900
<CGS> 453,700
<TOTAL-COSTS> 607,300
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 300
<INCOME-PRETAX> (46,100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (46,100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (46,100)
<EPS-PRIMARY> (.013)
<EPS-DILUTED> (.013)
</TABLE>
