<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM l0-Q
(Mark One)
/ X / QUARTERLY REPORT PURSUANT TO SECTION l3 OR l5(d) OF THE SECURITIES
EXCHANGE ACT OF l934
For the period ended September 30, 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
ASPEN IMAGING INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 84-0724829
(State of Incorporation) (I.R.S. Employer Identification No.)
3830 Kelley Avenue, Cleveland, Ohio 44114
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (216) 881-5300
NA
(Former name, former address and former fiscal year,
if changed since last report.)
Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5(d) of the Securities Exchange
Act of l934 during the preceding l2 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 November 10, 1995: 3,988,756
1
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ASPEN IMAGING INTERNATIONAL, INC.
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
September 30, 1995 and June 30, 1995. . . . . . . . 3
Consolidated Statements of Operations
for the Three Months Ended
September 30, 1995 and 1994 . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Three Months Ended September 30,
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 l. 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
2
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<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
September 30, June 30,
1995 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,488,834 $ 2,870,575
Short-term investments 548,657 526,213
Marketable securities 484,000 987,900
Receivables (less allowances of $50,881
and $25,000 for doubtful accounts) 806,528 747,644
Inventories -- Note B 772,201 725,703
Prepaid expenses and other current assets 28,164 44,385
------------ -------------
TOTAL CURRENT ASSETS 6,128,384 5,902,420
PROPERTY AND EQUIPMENT
Leasehold improvements 140,457 140,457
Machinery and equipment 1,091,902 1,091,902
Molds 2,994,750 2,994,750
Office equipment and vehicles 322,261 322,261
------------ -------------
4,549,370 4,549,370
Less accumulated depreciation
and amortization 3,355,435 3,218,863
------------ -------------
1,193,935 1,330,507
NOTES RECEIVABLE 16,550 18,800
OTHER ASSETS, NET -- Note A 124,850 137,764
------------ ------------
TOTAL ASSETS $ 7,463,719 $ 7,389,491
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
3
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<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--CONTINUED
<CAPTION>
September 30, June 30,
1995 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 868,400 $ 671,163
Accrued salaries and payroll expenses 343,584 428,379
------------ ------------
TOTAL CURRENT LIABILITIES 1,211,984 1,099,542
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 Par Value;
authorized, 1,000,000 shares;
no shares issued -- --
Common Stock, $.001 par value;
4,192,356 shares issued and 3,988,756
shares outstanding at September 30,
1995 and 4,192,356 shares issued and
4,075,356 shares outstanding at
June 30, 1995 4,192 4,192
Capital in excess of par value 4,807,151 4,807,151
Unrealized gains on investments
available for sale 74,397 78,809
Retained earnings 1,530,182 1,494,140
------------ ------------
6,415,922 6,384,292
Treasury stock at cost, 203,600 shares
at September 30, 1995 and 117,000
shares at June 30, 1995 (164,187) (94,343)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,251,735 6,289,949
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 7,463,719 $ 7,389,491
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
4
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<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
Three Months Ended
September 30
l995 l994
<S> <C> <C>
REVENUE
Net sales $ 1,488,383 $ 2,192,323
Other 108,587 72,984
------------ ------------
1,596,970 2,265,307
COST AND EXPENSES
Cost of products sold 1,157,374 1,624,677
Selling, general and
administrative 403,554 545,644
Interest -- 16,483
------------ ------------
1,560,928 2,186,804
INCOME BEFORE INCOME TAXES 36,042 78,503
PROVISION FOR INCOME TAXES -- --
------------ ------------
NET INCOME $ 36,042 $ 78,503
============ ============
NET INCOME PER COMMON SHARE $ 0.01 $ 0.02
============ ============
WEIGHTED AVERAGE SHARES 4,037,626 4,192,356
============ ============
<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
<CAPTION>
Three Months Ended
September 30
l995 l994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 36,042 $ 78,503
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 149,486 139,967
Provision for doubtful accounts 40,000 3,250
(Gain) from sale of investments (35,881) --
(Gain) on disposal of assets (300) (44,676)
Changes in operating assets and liabilities:
Receivables (98,884) 30,148
Inventories (46,498) 220,898
Prepaid expenses and other current assets (6,223) (82,935)
Accounts payable and accrued expenses 197,237 (35,770)
Accrued salaries and payroll expenses (84,795) (52,931)
NET CASH PROVIDED BY OPERATING ACTIVITIES 150,184 256,454
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 300 108,234
Additions to property and equipment -- (75,388)
Change in notes receivable 2,250 31,867
Change in other assets -- 4,685
Proceeds from sale of investments 535,369 --
NET CASH PROVIDED BY INVESTING ACTIVITIES 537,919 69,398
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt -- (35,126)
Purchase of treasury stock (69,844) --
NET CASH (USED IN) FINANCING ACTIVITIES (69,844) (35,126)
NET INCREASE IN CASH AND CASH EQUIVALENTS 618,259 290,726
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 2,870,575 1,784,846
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,488,834 $ 2,075,572
SUPPLEMENTAL INFORMATION:
Interest Paid $ -- $ 16,483
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
September 30, 1995
NOTE A -- Basis Of Presentation
- -------------------------------
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, 1995.
The Company adopted the provisions of Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," for investments. Management determines the appropriate
classification of marketable securities at the time of purchase and
reevaluates such designation as of each balance sheet date. Marketable
securities held as available for sale are carried at fair value with any
unrealized gains or losses reported as a separate component of shareholders'
equity. Realized gains and losses on marketable securities held as
available for sale are included in other income. Interest and dividends on
securities classified as available for sale are included in other income.
Other assets include $112,205 of formulas for the production of toner, net
of $212,795 accumulated amortization.
The Company recognizes sales when product is shipped.
Certain prior amounts have been reclassified to conform with the current
year presentation.
NOTE B -- Inventories
- ---------------------
Inventories consisted of:
September 30 June 30
1995 1995
Raw materials and component parts $ 338,971 $ 324,703
Finished goods, including goods
purchased for resale 433,230 401,000
---------- ----------
$ 772,201 $ 725,703
========== ==========
7
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Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three Months Ended September 30, 1995 and 1994
- ----------------------------------------------------------------
As reported in the Company's Form 10-K for the year ended June 30, 1995, 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 in the three months ended September 30,
1995 from the same period in 1994, is primarily the result of the
elimination of unprofitable products from the Company's product line and a
continuing deterioration in the sales of the Company's core products.
Although inventory increased from June 30, 1995 to September 30, 1995,
inventory levels are lower at September 30, 1995 compared to September 30,
1994 by approximately $805,000. This is a result of the Company's efforts
to reduce inventory levels to those more appropriate to its current rate of
sales.
The current rate of sales, however, continues not to be sufficient to fully
absorb the Company's normal overhead costs. Approximately $28,000 of
overhead variances were expensed for the quarter ended September 30, 1995,
causing a decrease in the Company's gross profit.
The Company reduced its selling, general and administrative costs by
$140,000 for the three months ended September 30, 1995 to be more in line
with the Company's current rate of sales.
There was no interest expense in the first quarter due to the elimination of
debt.
8
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Liquidity and Capital Resources
- -------------------------------
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.
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
November 10, 1995, the Company has repurchased 203,600 of its shares at an
aggregate purchase price of $164,187.
The Company's current ratio was 5.1 to 1 at September 30, 1995 compared to
5.4 to 1 at June 30, 1995. The Company has $3,488,834 in cash and cash
equivalents and $1,032,657 in marketable securities and other short-term
investments and no long-term debt at September 30, 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
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PART II - OTHER INFORMATION
Item l. 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.
On October 24, 1995, the Company received a proposal from Pubco
Corporation ("Pubco") pursuant to which the Company would sell
all of its assets to a wholly-owned Pubco subsidiary and
Company's stockholders would receive one share of newly issued
Pubco Common Stock for each seven shares of the Company's Common
Stock owned by them. Pubco owns approximately 90% of Bobbie
Brooks, Incorporated, which owns approximately 43% of the
Company. The proposal must be approved by the Company's Board of
Directors, which has not yet considered the matter, and by the
Company's stockholders at a meeting called for such purpose. The
Company's Board of Directors expects to retain a financial
advisor to opine as to the fairness of the proposed transaction.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
None
10
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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: November 14, 1995
11
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EXHIBIT INDEX
Financial Data Schedule
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AT 9/30/95 AND CONSOLIDATED STATEMENT OF
OPERATIONS FOR THE 3 MONTHS ENDED 9/30/95 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1995
<CASH> 3,488,834
<SECURITIES> 1,032,657
<RECEIVABLES> 857,409
<ALLOWANCES> 50,881
<INVENTORY> 772,201
<CURRENT-ASSETS> 6,128,384
<PP&E> 4,549,370
<DEPRECIATION> 3,355,435
<TOTAL-ASSETS> 7,463,719
<CURRENT-LIABILITIES> 1,211,984
<BONDS> 0
<COMMON> 4,192
0
0
<OTHER-SE> 6,247,543
<TOTAL-LIABILITY-AND-EQUITY> 7,463,719
<SALES> 1,488,383
<TOTAL-REVENUES> 1,596,970
<CGS> 1,157,374
<TOTAL-COSTS> 1,157,374
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 36,042
<INCOME-TAX> 0
<INCOME-CONTINUING> 36,042
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 36,042
<EPS-PRIMARY> .01
<EPS-DILUTED> .01
</TABLE>
