<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the period ended March 31, 1995
----------------------------------------------------
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 0-12573
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ASPEN IMAGING INTERNATIONAL, INC.
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(Exact name of registrant as specified in its charter)
Delaware 84-0724829
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(State of Incorporation) (I.R.S. Employer Identification No.)
1500 Cherry Street, Louisville, Colorado 80027
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (303) 666-5750
----------------------------
NA
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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
----- -----
Number of Common Shares Outstanding as of May 2, 1995: 4,098,356
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ASPEN IMAGING INTERNATIONAL, INC.
<TABLE>
<S> <C>
Page Number
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1995 and June 30, 1994. . . . . . . . . . . . . . 3
Consolidated Statements of Operations
for the Three Months and Nine Months Ended
March 31, 1995 and 1994 . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Nine Months Ended March 31,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . . . . 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . 8
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . 10
Item 1. Legal Proceedings.
Item 2. Changes in Securities.
Item 3. Defaults Upon Senior Securities.
Item 4. Submission of Matters to a Vote
of Security Holders.
Item 5. Other Information.
Item 6. Exhibits and Reports on Form 8-K.
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
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2.
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
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<TABLE>
<CAPTION>
March 31 June 30
1995 1994
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ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 2,475,672 $ 1,784,846
Marketable securities and short-term
investments 1,440,988 --
Receivables (less allowances of $21,444
and $75,000 for doubtful accounts) 909,411 1,201,544
Inventories -- Note B 915,338 1,798,115
Prepaid expenses and other current assets 167,430 21,873
----------- -----------
TOTAL CURRENT ASSETS 5,908,839 4,806,378
PROPERTY, PLANT AND EQUIPMENT
Leasehold improvements 140,457 80,724
Machinery and equipment 1,104,414 1,951,718
Molds and molds in progress 2,994,761 3,028,555
Office equipment and vehicles 322,853 1,282,297
----------- -----------
4,562,485 6,343,294
Less accumulated depreciation
and amortization 3,113,367 4,594,799
----------- -----------
1,449,118 1,748,495
BUILDING AND LAND HELD FOR SALE -- 2,155,000
NOTES RECEIVABLE 29,835 60,209
OTHER ASSETS, NET -- Note A 150,679 194,110
----------- -----------
TOTAL ASSETS $ 7,538,471 $ 8,964,192
=========== ===========
See notes to consolidated financial statements.
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3.
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<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets--Continued
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<CAPTION>
March 31 June 30
1995 1994
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<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 597,651 $ 696,828
Accrued salaries and payroll expenses 549,743 244,116
Current maturities of long-term debt -- 144,065
----------- -----------
TOTAL CURRENT LIABILITIES 1,147,394 1,085,009
LONG-TERM DEBT -- 852,305
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value;
authorized, 1,000,000 shares;
no shares issued -- --
Common Stock, $.001 par value;
authorized, 8,000,000 shares;
issued 4,192,356 shares 4,192 4,192
Capital in excess of par value 4,807,151 4,807,151
Retained earnings 1,598,703 2,215,535
----------- -----------
6,410,046 7,026,878
Treasury Stock at cost, 24,500 shares
at March 31, 1995 (18,969) --
----------- -----------
TOTAL STOCKHOLDERS' EQUITY 6,391,077 7,026,878
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 7,538,471 $ 8,964,192
=========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
4.
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<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
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<CAPTION>
Three Months Ended Nine Months Ended
March 31 March 31
---------------------------- ---------------------------
1995 1994 1995 1994
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<S> <C> <C> <C>
REVENUE
Net sales $ 1,704,402 $ 2,719,419 $ 5,603,703 $ 9,272,183
Other 56,978 3,532 184,868 116,424
----------- ------------ ----------- -----------
1,761,380 2,722,951 5,788,571 9,388,607
COST AND EXPENSES
Cost of products sold 1,400,959 2,200,592 4,406,770 7,435,720
Selling, general and
administrative 474,500 1,100,393 1,576,270 2,325,185
Interest 52 23,025 16,535 93,393
Severance and post-employment
costs from the elimination
of administrative personnel 54,493 -- 533,576 --
Charge related to elimination
of products and product lines -- 1,075,016 -- 1,075,016
----------- ------------ ----------- -----------
1,930,004 4,399,026 6,533,151 10,929,314
(LOSS) BEFORE INCOME TAXES (168,624) (1,676,075) (744,580) (1,540,707)
PROVISION (BENEFIT) FOR INCOME TAXES (127,748) (50,900) (127,748) --
----------- ------------ ----------- -----------
NET (LOSS) $ (40,876) $ (1,625,175) $ (616,832) $(1,540,707)
=========== ============ =========== ===========
NET (LOSS) PER COMMON SHARE $ (0.01) $ (0.39) $ (0.15) $ (0.38)
=========== ============ =========== ===========
WEIGHTED AVERAGE SHARES 4,187,095 4,192,356 4,190,628 4,105,399
=========== ============ =========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
5.
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<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
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<CAPTION>
Nine Months Ended
March 31
--------------------------------
1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) $ (616,832) $(1,540,707)
Adjustments to reconcile net (loss)
to net cash provided by
operating activities:
Depreciation and amortization 461,162 577,562
Provision for doubtful accounts (53,556) 45,000
(Gain) on disposal of assets (41,151) (90,734)
Charge relating to elimination
of products and product lines -- 1,075,016
Changes in operating assets
and liabilities:
Receivables 345,689 80,980
Inventories 882,777 1,285,545
Prepaid expenses and
other current assets (145,557) 133,422
Accounts payable and
accrued expenses (99,177) (455,155)
Accrued salaries and
payroll expenses 305,627 (285,904)
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,038,982 825,025
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property,
plant and equipment 2,261,077 113,145
Additions to property, plant
and equipment (187,965) (83,974)
Change in notes receivable 30,374 533,511
Purchase of investments (1,440,988) --
Change in other assets 4,685 23,780
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NET CASH PROVIDED BY
INVESTING ACTIVITIES 667,183 586,462
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowing under
line of credit agreement -- (981,806)
Sale of common stock, net -- 1,624,009
Purchase of treasury stock (18,969) --
Payment of long-term debt (996,370) (805,886)
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NET CASH (USED IN)
FINANCING ACTIVITIES (1,015,339) (163,683)
NET INCREASE IN CASH
AND CASH EQUIVALENTS 690,826 1,247,804
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,784,846 110,297
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CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 2,475,672 $ 1,358,101
=========== ===========
SUPPLEMENTAL INFORMATION:
Interest Paid $ 16,535 $ 70,146
=========== ===========
Taxes Paid $ -- $ --
=========== ===========
<FN>
See notes to consolidated financial statements.
</TABLE>
6.
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ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1995
NOTE A -- Basis Of Presentation
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The accompanying consolidated condensed financial statements include the
accounts of Aspen Imaging International, Inc. (the "Company") and its
wholly-owned subsidiaries, Aspen Ribbons International, Inc., a Domestic
International Sales Corporation, and Aspen Toner Corporation, a manufacturer of
laser toner. The financial statements have been prepared without audit and
reflect, in the opinion of management, all adjustments necessary for fair
statement of the results of the Company's operations for the periods presented.
These include only normal recurring adjustments. It is recommended that these
financial statements be read in conjunction with the Company's annual report
for the year ended June 30, 1994.
Other assets include $135,419 of formulas for the production of toner, net of
$189,581 accumulated amortization.
The Company recognizes sales when product is shipped.
Certain prior amounts have been reclassified to conform with the current year
presentation.
<TABLE>
NOTE B -- Inventories
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Inventories consisted of:
<CAPTION>
March 31 June 30
1995 1994
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<S> <C> <C>
Raw materials and component parts $ 387,377 $ 737,282
Finished goods, including goods
purchased for resale 527,961 1,060,833
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$ 915,338 $ 1,798,115
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7.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three and Nine Months Ended March 31, 1995 and 1994
- - ---------------------------------------------------------------------
As reported in the Company's Form 10-K for the year ended June 30, 1994 and in
the Company's Forms 10-Q for the quarters ended September 30, 1994 and December
31, 1994, the Company continues to reduce its product offerings and focus on
its traditional ribbon business for impact printers, particularly ribbons for
which the Company has molds, and on its toner products line for laser printers.
The reduction in sales and the reduction in inventory levels in the three and
nine month periods ended March 31, 1995 from the same periods in 1994, are
primarily the result of the elimination of unprofitable products from the
Company's product line and a continuing deterioration in the sale of the
Company's core products.
The reduction in gross profit for the three months ending March 31, 1995 is
primarily due to the Company expensing approximately $93,000 to cost of sales
for variences resulting from the underabsorption of overhead. These variances
from the Company's standard costs were the result of the Company's efforts to
reduce inventory levels to those more appropriate to its current rate of sales
and sales dropping below levels which could fully absorb the Company's normal
overhead costs. Although the Company continues to reduce its cost of sales,
underabsorbed overhead will continue until the Company achieves sufficient
sales to fully absorb overhead.
The Company has been reducing its ongoing selling, general and administrative
costs to be more in line with the Company's current rate of sales. The
severance and post-employment costs resulting from the elimination of
administrative personnel includes two people in the three month period and four
people in the nine month period, and includes payments to be paid to and on
behalf of Peter C. Williams, the Company's former President, who resigned from
his employment, offices and as a Director during December, 1994.
8.
<PAGE> 9
Liquidity and Capital Resources
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The investment in the Company by Buckeye Business Products, Inc., a Division of
Bobbie Brooks, Incorporated ("Buckeye"), in 1993, allowed the Company to
utilize its assets in a more productive manner in an effort to return the
Company to profitability.
The Company used Buckeye's investment to eliminate the Company's working
capital debt and the relationship with Buckeye allowed the Company to sell its
building, eliminate all long-term debt, and substantially reduce staffing
levels. This has resulted in a reduction in the Company's losses and cash
requirements, notwithstanding the continuing sales deterioration that began
several years ago.
The Company also intends to continue to explore the possibility of a merger or
other similar transaction with Buckeye.
On February 15, 1995, the Company announced that it would purchase, from time
to time in the open market, up to 750,000 shares of its stock. Through May 2,
1995, the Company has repurchased 94,000 of its shares at an aggregate purchase
price of approximately $76,300.
The Company's current ratio was 5.1 to 1 at March 31, 1995 compared to 4.4 to 1
at June 30, 1994. The Company has $2,475,672 in cash and cash equivalents and
$1,440,988 in marketable securities and other short-term investments and no
long-term debt at March 31, 1995. Accordingly, the Company believes that its
capital resources are more than sufficient to support its current and planned
levels of operations and its announced stock repurchase.
9.
<PAGE> 10
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
Financial Data Schedule
(b) Reports on Form 8-K
None
10.
<PAGE> 11
SIGNATURES
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.
ASPEN IMAGING INTERNATIONAL, INC.
/s/ Robert H. Kanner
-----------------------------------
Robert H. Kanner
Chairman of the Board
and Chief Financial Officer
Dated: May 12, 1995
11.
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<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 AND CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
<PERIOD-END> MAR-31-1995
<CASH> 2,475,672
<SECURITIES> 1,440,988
<RECEIVABLES> 930,855
<ALLOWANCES> 21,444
<INVENTORY> 915,338
<CURRENT-ASSETS> 5,908,839
<PP&E> 4,562,485
<DEPRECIATION> 3,113,367
<TOTAL-ASSETS> 7,538,471
<CURRENT-LIABILITIES> 1,147,394
<BONDS> 0
<COMMON> 4,192
0
0
<OTHER-SE> 6,386,885
<TOTAL-LIABILITY-AND-EQUITY> 7,538,471
<SALES> 5,603,703
<TOTAL-REVENUES> 5,788,571
<CGS> 4,406,770
<TOTAL-COSTS> 4,406,770
<OTHER-EXPENSES> 533,576
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,535
<INCOME-PRETAX> (744,580)
<INCOME-TAX> (127,748)
<INCOME-CONTINUING> (616,832)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (616,832)
<EPS-PRIMARY> (.15)
<EPS-DILUTED> (.15)
</TABLE>
