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 JUNE 30, 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 2,356,408 shares of common stock, par value $.0005 per share,
outstanding as of July 31, 2000.
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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
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CONSOLIDATED BALANCE SHEET AS OF
JUNE 30, 2000 AND SEPTEMBER 30, 1999 1
CONSOLIDATED STATEMENT OF OPERATIONS FOR
THE THREE AND NINE MONTHS ENDED JUNE 30, 2000 AND 1999 2
CONSOLIDATED STATEMENT OF CASH FLOWS FOR
THE NINE MONTHS ENDED JUNE 30, 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
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET PAGE 1
(UNAUDITED)
ASSETS
<TABLE>
<S> <C> <C>
JUNE 30 September 30
2000 1999
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Current assets
Cash and cash equivalents $ 133,027 $ 140,253
Accounts receivable 512,393 370,839
Inventory 967,448 958,023
Other current assets 47,792 46,599
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Total current assets 1,660,660 1,515,714
Property, Plant and Equipment, net 1,900,042 2,064,029
Other Assets 21,386 22,539
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Total Assets $3,582,088 $3,602,282
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current portion - long-term debt $155,441 $142,976
Accounts payable 131,339 92,464
Accrued expenses 87,294 152,534
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Total current liabilities 374,074 387,974
Long-term Debt, net 1,651,212 1,739,535
Stockholders' Equity
Common Stock, $.0005 par value, 25,000,000 shares
authorized, 2,995,032 AND 2,985,566 shares issued
2,354,408 and 2,344,942 shares outstanding 1,498 1,493
Additional paid in capital 1,061,169 1,058,525
Retained earnings 1,453,438 1,374,058
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2,516,105 2,434,076
Less 640,624 shares in treasury - at cost (959,303) (959,303)
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Total stockholders' equity 1,556,802 1,474,773
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Total Liabilities and Stockholders' Equity $3,582,088 $3,602,282
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</TABLE>
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS PAGE 2
(UNAUDITED)
<TABLE>
<S> <C> <C>
Three Months Ended Nine Months Ended
JUNE 30 JUNE 30
2000 1999 2000 1999
---------- ---------- ---------- ---------
Sales $ 847,608 $ 751,926 $2,653,350 $2,021,887
Cost of Sales 612,107 538,523 1,914,238 1,735,582
---------- ---------- ---------- ----------
Gross profit 235,501 213,403 739,112 286,305
Selling, general and administrative 176,023 158,383 517,819 479,216
--------- ---------- --------- ----------
Income (loss) from Operations 59,478 55,020 221,293 (192,911)
Other income (expense)
Interest expense (48,942) (48,917) (141,912) (146,729)
----------- ---------- --------- ---------
Income (Loss) before Income Taxes 10,536 6,103 79,381 (339,640)
Provision (benefit) for Income Tax 0 0 0 0
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Net income (loss) 10,536 6,103 79,381 (339,640)
========= ========== ========= =========
Net income (loss) per share
Basic $ 0.00 $ 0.00 $ 0.03 $ (0.15)
Diluted $ 0.00 $ 0.00 $ 0.03 $ (0.15)
Weighted average shares outstanding 2,354,361 2,330,500 2,351,654 2,315,676
</TABLE>
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DYNASIL CORPORATION OF AMERICA AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS PAGE 3
(UNAUDITED)
<TABLE>
<S> <C> <C>
NINE Months Ended
JUNE 30
2000 1999
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Cash flows from operating activities:
Net income $ 79,381 $ (339,640)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation 256,929 267,660
Amortization expense 2,556 2,556
Allowance for doubtful accounts
(Increase) decrease in:
Accounts receivable (141,554) (17,061)
Inventories (9,425) 284,340
Prepaid expenses and other current assets 1,585 10,653
Other assets (4,181) 2,778
Increase (decrease) in:
Accounts payable 38,875 (132,120)
Accrued expenses (65,242) (942)
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Net cash provided by (used in) operating activities 158,924 78,224
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Cash flows from investing activities:
Acquisition of property, plant and equipment (50,642) (5,333)
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Net cash provided by (used in) investing activities (50,642) (5,333)
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Cash flows from financing activities:
Issuance of common stock 2,649 26,881
Proceeds (Repayment) - Bank Debt 10,000
Repayments of long-term debt (118,157) (107,261)
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Net cash provided by (used in) financing activities (115,508) (70,380)
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Net increase (decrease) in cash (7,226) 2,511
Cash - beginning of period 140,253 45,980
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Cash - end of period $ 133,027 $ 48,491
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</TABLE>
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DYNASIL CORPORATION OF AMERICA
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS PAGE 4
(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 June 30, 2000 and the consolidated statements of
operations and cash flows for the nine months ended June 30, 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 June 30, 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:
June 30, 2000 September 30, 1999
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Raw Materials 37,600 21,777
Work-in-Process 781,417 800,395
Finished Goods 148,431 135,851
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967,448 958,023
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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 exclude 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 nine months ended June
30, 2000 were as follows:
Purchase of property and equipment $ 92,942
Debt incurred (42,300)
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Cash paid for property and equipment $ 50,642
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ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
Sales were $847,608 for the three months ended June 30,2000, an increase
of 13% over the comparable quarter of fiscal 1999. On a year-to-date basis,
sales were $2,653,350, 31% 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 year to date increase. International
shipments accounted for approximately 17% of the total year-to-date
shipments, an increase of 7% over the annual average.
Cost of sales was $612,107 for the three months ended June 30,2000, or
72.2% of sales. This is an increase of .6% over the comparable quarter of
fiscal 1999, when cost of sales was 71.6% of sales. On a year-to-date basis,
cost of sales was $1,914,238 or 72.1% of sales. This is a decrease of 16%
over the comparable year-to-date for fiscal 1999, when cost of sales was
85.8% of sales. Management continues to monitor operating expenses closely,
which has helped to reduce expenses across the board.
Gross profit increased to $235,501 for the three months ended June 30,
2000, or 27.8% of Sales. This is an increase of 10% over the comparable
quarter of fiscal 1999. On a year-to-date basis, gross profit increased to
$739,112, or 27.9% of sales. This is an increase of 158% over the comparable
year-to-date for fiscal 1999.
Selling, general and administrative expenses increased to $176,023 for
the three months ended June 30, 2000, from $158,383 for the three months
ended June 30, 1999. Year-to-date June 30, 2000, selling general and
administrative expenses increased to $517,819, from $479,216 for the same
comparable period of fiscal 1999. As a percentage of sales, selling, general
and administrative expenses decreased to 20.7% for the three months ended
June 30, 2000, from 21.1% for the three months ended June 30, 1999.
Major components of the increased selling, general and administrative
expenses for the nine months ended June 30,2000 were the increase in
commission expenses incurred, related to the increase in international sales,
and increase in professional fees, related to completion of reporting company
requirements.
Interest expense increased slightly to $48,942 for the three months
ended June 30, 2000, from $48,917 for the three months ended June 30,1999.
Net income increased to $10,536 for the three months ended June 30,
2000, from $6,103 for the three months ended June 30, 1999. Year-to-date June
30,2000 net income increased to $79,381 from a loss of $339,640 for the same
comparable period of fiscal 1999. Basic earnings per share for the three
month period ended June 30,2000 showed no change from the three month period
ended June 30, 1999. Year-to-date June 30, 2000 earnings per share increased
to $.03 per share from a loss per share of $.15 for the comparable period of
fiscal 1999.
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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 decreased by $7,226 for the nine months ended June 30,2000. Cash
provided from operations of $158,924 was primarily used to reduce debt by
$118,157 and acquire property plant and equipment for $50,642.
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 Quarterly Report on Form 10-QSB which
are not historical facts, including, but not limited to, certain statements
found under the captions "Results of Operations" and "Liquidity
and Capital Resources", 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 Report on Form 10-QSB,
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.
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PART II
OTHER INFORMATION
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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
Robert E. Hibshman, Sr., age 72, submitted his resignation from the Board
of Directors effective July 21, 2000, due to competing business interests and
a desire to phase into full retirement. His position on the Board of
Directors will not be filled at this time, thus reducing Board membership to
six.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 27FDS - Financial Data Schedule
(b) Reports on Form 8-K
None
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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: August 14,2000
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Charles J. Searock, Jr.,
President and CEO
BY: /s/ John Kane DATED: August 14,2000
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John Kane, Secretary, Treasurer,
and Chief Financial Officer (Principal
Financial Officer and Principal
Accounting Officer)
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