UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
(Mark One)
XX 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 SECURITIES EXCHANGE
- --- ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______ TO ______.
Commission file number 000-27503
____________________
DYNASIL CORPORATION OF AMERICA
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(Exact name of small business issuer as specified in its charter)
New Jersey 22-1734088
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(State or other jurisdiction (IRS Employer Identification No.)
of incorporation)
385 Cooper Road, West Berlin, New Jersey, 08091
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(Address of principal executive offices)
(856) 767-4600
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(Registrant'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 XX No
---- ----
The Company had 2,354,408 shares of common stock, par value $.0005 per share,
outstanding as of April 30, 2000.
1
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
INDEX
PAGE
PART 1. FINANCIAL INFORMATION ----
ITEM 1. FINANCIAL STATEMENTS
DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
-----------------------------------------------
CONSOLIDATED BALANCE SHEET AS OF
MARCH 31, 2000 AND SEPTEMBER 30, 1999.......................1
CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE AND SIX MONTHS ENDED MARCH 31, 2000 AND 1999......2
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE SIX MONTHS ENDED MARCH 31, 2000 AND 1999................3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS..................4
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS........................7
PART II. OTHER INFORMATION.............................................11
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K...........................11
SIGNATURES........................................................12
2
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED)
ASSETS
<TABLE>
<S> <C> <C>
March 31 September 30
2000 1999
---------- ----------
Current assets
Cash and cash equivalents $ 181,772 $ 140,253
Accounts receivable 457,858 370,839
Inventory 970,982 958,023
Other current assets 58,161 46,599
---------- ----------
Total current assets 1,668,773 1,515,714
Property, Plant and Equipment, net 1,957,860 2,064,029
Other Assets 22,238 22,539
---------- ----------
Total Assets $3,648,871 $3,602,282
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion - long-term debt $155,441 $142,976
Accounts payable 155,860 92,464
Accrued expenses 97,881 152,534
---------- ----------
Total current liabilities 409,182 387,974
Long-term Debt, net 1,693,677 1,739,535
Stockholders' Equity
Common Stock, $.0005 par value, 25,000,000 shares
authorized, 2,994,768 AND 2,985,566 shares issued
2,354,144 and 2,344,942 shares outstanding 1,498 1,493
Additional paid in capital 1,060,911 1,058,525
Retained earnings 1,442,906 1,374,058
---------- ----------
2,505,315 2,434,076
Less 640,624 shares in treasury - at cost (959,303) (959,303)
---------- ----------
Total stockholders' equity 1,546,012 1,474,773
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Total Liabilities and Stockholders' Equity $3,648,871 $3,602,282
========== ==========
</TABLE>
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months Ended Six Months Ended
March 31 March 31
2000 1999 2000 1999
---------- ---------- ---------- ---------
Sales $1,040,323 $ 592,093 $1,805,742 $1,269,960
Cost of Sales 749,031 513,640 1,302,128 1,197,057
---------- ---------- ---------- ----------
Gross profit 291,292 78,453 503,614 72,903
Selling, general and administrative 191,550 161,867 341,795 320,835
--------- ---------- --------- ----------
Income (loss) from Operations 99,742 (83,414) 161,819 (247,932)
Other income (expense)
Interest expense (46,634) (48,467) (92,970) (97,812)
----------- ---------- --------- ---------
Income (Loss) before Income Taxes 53,108 (131,881) 68,849 (345,744)
Provision (benefit) for Income Tax 0 0 0 0
--------- ---------- --------- ---------
Net income (loss) 53,108 (131,881) 68,849 (345,744)
========= ========== ========= =========
Net income (loss) per share
Basic $ 0.02 $ (0.06) $ 0.03 $ (0.15)
Diluted $ 0.02 $ (0.06) $ 0.03 $ (0.15)
Weighted average shares outstanding 2,354,026 2,308,731 2,350,303 2,308,265
</TABLE>
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<S> <C> <C>
Six Months Ended
March 31
2000 1999
--------- -----------
Cash flows from operating activities:
Net income $ 68,849 $ (345,744)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 176,670 178,440
Amortization expense 1,704 1,704
Allowance for doubtful accounts
(Increase) decrease in:
Accounts receivable (87,019) 55,523
Inventories (12,959) 198,733
Prepaid expenses and other current assets (8,784) 5,460
Other assets (4,181) 2,778
Increase (decrease) in:
Accounts payable 63,396 (119,796)
Accrued expenses (54,364) (2,800)
--------- -----------
Net cash provided by (used in) operating activities 143,312 (25,702)
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Cash flows from investing activities:
Acquisition of property, plant and equipment (28,201) 2,312
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Net cash provided by (used in) investing activities (28,201) 2,312
--------- -----------
Cash flows from financing activities:
Issuance of common stock 2,100 6,407
Proceeds (Repayment) - Bank Debt 75,000
Repayments of long-term debt (75,692) (72,853)
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Net cash provided by (used in) financing activities (75,692) 8,554
--------- -----------
Net increase (decrease) in cash 41,519 (14,836)
Cash - beginning of period 140,253 45,980
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Cash - end of period $ 181,772 $ 31,144
========= ===========
</TABLE>
5
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DYNASIL CORPORATION OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. Basis of Presentation
The consolidated balance sheet as of September 30, 1999 was audited and
appears in the Form 10-KSB previously filed by the Company. The consolidated
balance sheet as of March 31, 2000 and the consolidated statements of
operations and cash flows for the six months ended March 31, 2000 and 1999,
and the related information contained in these notes have been prepared by
management without audit. In the opinion of management, all adjustments
(which include only normal recurring items) necessary to present fairly the
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles as of March 31, 2000 and for all
periods presented have been made. Interim operating results are not
necessarily indicative of operating results for a full year.
Certain information and note disclosures normally included in the Company's
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested that
these condensed consolidated financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
September 30, 1999 Annual Report on Form 10-KSB previously filed by the
Company.
2. Inventories
Inventories are stated at the lower of average cost or market. Cost is
determined using the first-in, first-out (FIFO) method. Inventories consist
primarily of raw materials, work-in-process and finished goods. The Company
evaluates inventory levels and expected usage on a periodic basis and records
adjustments for impairments as required.
Inventories consisted of the following:
March 31, 2000 September 30, 1999
----------------- ------------------
Raw Materials 12,277 21,777
Work-in-Process 814,298 800,395
Finished Goods 144,407 135,851
------- -------
970,982 958,023
======= =======
3. Net Income Per Share
Basic net income per share is computed using the weighted average number of
common shares outstanding. The dilutive effects of potential common shares
outstanding are included in diluted net earnings per share. Diluted net
earnings per share excludes the impact of potential common shares since they
would have resulted in an antidilutive effect.
4. Supplementary Disclosure of Cash Flow Information
Non-cash investing and financing activities during the six months ended March
31, 2000 were as follows:
Purchase of property and equipment $ 70,501
Debt incurred (42,300)
---------
Cash paid for property and equipment $ 28,201
=========
6
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Sales were $1,040,323 for the three months ended March 31,2000, an
increase of 75% over the comparable quarter of fiscal 1999. On a year-to-date
basis, sales were $1,805,742, 42% greater than the comparable period of the
prior fiscal year. The increase is due primarily to the increased demand in
both the semiconductor and optics markets. The international market played an
especially important role in the quarterly increase. International shipments
accounted for 26% of the total quarterly shipments, an increase of 16% over
the annual average.
Cost of sales was $749,031 for the three months ended March 31,2000, or
72% of sales. This is a decrease of 15% over the comparable quarter of fiscal
1999, when cost of sales were 87% of sales. On a year-to-date basis, cost of
sales was $1,302,128 or 72% of sales. This is a decrease of 22% over the
comparable year-to-date for fiscal 1999, when cost of sales was 94% of sales.
Management continues to monitor operating expenses closely, which has helped
to reduce expenses across the board.
Gross profit increased to $291,292 for the three months ended March 31,
2000, or 28% of Sales. This is an increase of 271% over the comparable
quarter of fiscal 1999. On a year-to-date basis, gross profit increased to
$503,614, or 28% of sales. This is an increase of 590% over the comparable
year-to-date for fiscal 1999.
Selling, general and administrative expenses increased to $191,550 for
the three months ended March 31, 2000, from $161,867 for the three months
ended March 31, 1999. Year-to-date March 31, 2000, selling general and
administrative expenses increased to $341,795, from $320,835 for the same
comparable period of fiscal 1999. As a percentage of sales, selling, general
and administrative expenses decreased to 18% for the three months ended March
31, 2000, from 27% for the three months ended march 31, 1999.
A major component of the increased selling, general and administrative
expenses for the three months ended March 31, 2000 was the commission expense
incurred, payable to outside representative, related to the increase in
international sales.
Interest expense decreased slightly to $46,634 for the three months
ended March 31, 2000, from $48,467 for the three months ended March 31,1999.
The decrease of $1,833 or 3.8% is a direct result of our reduced debt.
Net income increased to $53,108 for the three months ended March 31,
2000, from a loss of $131,881 for the three months ended March 31, 1999.
Year-to-date March 31,2000 net income increased to $68,849 from a loss of
$345,744 for the same comparable period of fiscal 1999. Basic earnings per
share increased to $.02 per share for the three months ended March 31,2000,
from a loss per share of $.06 for the three months ended March 31,1999.
7
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The Company has no provision for income taxes for either period in 2000
or 1999. As of September 30, 1999, we have approximately $947,000 of net
operating loss carryforwards to offset future income for federal tax purposes
expiring in various years through 2018. In addition, the Company has
approximately $466,000 of net operating loss carryforwards to offset certain
future states' taxable income, expiring in various years through 2006.
Liquidity and Capital Resources
Cash increased by $41,519 for the six months ended March 31,2000. The
majority of the increase can be attributed to the effect of net income and
depreciation, which generated $245,519. This increase was offset primarily by
an increase in accounts receivable of $87,019, acquisition of property, plant
and equipment for $28,201 and repayment of debt of $75,692.
The Company believes that its current cash and cash equivalent balances,
and net cash generated by operations, will be sufficient to meet its
anticipated cash needs for working capital for at least the next 12 months.
Any business expansion will require the Company to seek additional debt or
equity financing.
Forward-Looking Statements
The statements contained in this Annual Report on Form 10-K which are
not historical facts, including, but not limited to, certain statements found
under the captions "Business," "Results of Operations," and "Liquidity and
Capital Resources" above, are forward-looking statements that involve a
number of risks and uncertainties. The actual results of the future events
described in such forward-looking statements could differ materially from
those stated in such forward-looking statements. Among the factors that could
cause actual results to differ materially are the risks and uncertainties
discussed in this Annual Report on Form 10-K, including, without limitation,
the portions of such reports under the captions referenced above, and the
uncertainties set forth from time to time in the Company's filings with the
Securities and Exchange Commission, and other public statements. Such risks
and uncertainties include, without limitation, seasonality, interest in the
Company's products, consumer acceptance of new products, general economic
conditions, consumer trends, costs and availability of raw materials and
management information systems, competition, litigation and the effect of
governmental regulation. The Company disclaims any intention or obligation to
update any forward-looking statements, whether as a result of new
information, future events or otherwise.
9
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PART II
OTHER INFORMATION
- ------------------
ITEM 1 LEGAL PROCEEDINGS
NONE
ITEM 2 CHANGES IN SECURITIES
NONE
ITEM 3 DEFAULTS ON 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
Exhibit 27FDS - Financial Data Schedule
(b) Reports on Form 8-K
None
10
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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.
DYNASIL CORPORATION OF AMERICA
BY: /s/ Charles J. Searock, Jr. DATED: May 12,2000
--------------------------------- --------------------
Charles J. Searock, Jr.,
President and CEO
BY: /s/ John Kane DATED: May 12,2000
--------------------------------- --------------------
John Kane, Secretary, Treasurer,
and Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
11
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[ARTICLE] 5
[CIK] 0000030831
[NAME] DYNASIL CORPORATION OF AMERICA
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] SEP-30-2000
[PERIOD-END] MAR-31-2000
[CASH] 181,772
[SECURITIES] 0
[RECEIVABLES] 468,741
[ALLOWANCES] 10,883
[INVENTORY] 970,982
[CURRENT-ASSETS] 1,668,773
[PP&E] 5,613,419
[DEPRECIATION] 3,655,559
[TOTAL-ASSETS] 3,648,871
[CURRENT-LIABILITIES] 409,182
[BONDS] 1,693,677
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[COMMON] 1,498
[OTHER-SE] 1,544,514
[TOTAL-LIABILITY-AND-EQUITY] 3,648,871
[SALES] 1,805,742
[TOTAL-REVENUES] 1,805,742
[CGS] 1,302,128
[TOTAL-COSTS] 1,643,923
[OTHER-EXPENSES] 0
[LOSS-PROVISION] 0
[INTEREST-EXPENSE] 92,970
[INCOME-PRETAX] 68,849
[INCOME-TAX] 0
[INCOME-CONTINUING] 68,849
[DISCONTINUED] 0
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 68,849
[EPS-BASIC] .03
[EPS-DILUTED] .03
</TABLE>
