<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 December 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
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 February 13, 1996: 3,988,756
<PAGE>
ASPEN IMAGING INTERNATIONAL, INC.
Page Number
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
December 31, 1995 and June 30, 1995 . . . . . . . . 3
Consolidated Statements of Operations
for the Three Months and Six Months Ended
December 31, 1995 and 1994. . . . . . . . . . . . . 5
Consolidated Statements of Cash Flows
for the Six Months Ended December 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. . . . . . . . . . . . . . . . . . . . 9
PART II - OTHER INFORMATION . . . . . . . . . . . . . . . . . . 11
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. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)--Note A.
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<CAPTION>
December 31, June 30,
1995 1995
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 3,814,195 $ 2,870,575
Short-term investments 545,100 526,213
Marketable securities available for sale 560,000 987,900
Receivables (less allowances of $65,881
and $25,000 for doubtful accounts) --
Note C 542,486 747,644
Inventories -- Note B 679,861 725,703
Prepaid expenses and other current assets 27,333 44,385
------------ ------------
TOTAL CURRENT ASSETS 6,168,975 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 307,203 322,261
------------ ------------
4,534,312 4,549,370
Less accumulated depreciation
and amortization 3,456,509 3,218,863
------------ ------------
1,077,803 1,330,507
NOTES RECEIVABLE 16,550 18,800
OTHER ASSETS, NET -- Note A 111,935 137,764
------------ ------------
TOTAL ASSETS $ 7,375,263 $ 7,389,491
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
3.
<PAGE>
<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS--CONTINUED
<CAPTION>
December 31, June 30,
1995 1995
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued expenses
-- Note C $ 713,596 $ 671,163
Accrued salaries and payroll expenses 275,048 428,379
------------ ------------
TOTAL CURRENT LIABILITIES 988,644 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 December 31,
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 150,397 78,809
Retained earnings 1,589,066 1,494,140
------------ ------------
6,550,806 6,384,292
Treasury stock at cost, 203,600 shares
at December 31, 1995 and 117,000
shares at June 30, 1995 (164,187) (94,343)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 6,386,619 6,289,949
------------ ------------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 7,375,263 $ 7,389,491
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
4.
<PAGE>
<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<CAPTION>
Three Months Ended Six Months Ended
December 31 December 31
l995 l994 1995 1994
<S> <C> <C> <C> <C>
REVENUE
Net sales -- Note C $ 1,210,414 $ 1,706,978 $ 2,698,797 $ 3,899,301
Other 81,279 54,906 189,865 127,890
------------ ------------ ------------ ------------
1,291,693 1,761,884 2,888,662 4,027,191
COST AND EXPENSES:
Cost of products sold -- Note C 883,357 1,381,134 2,040,730 3,005,811
Selling, general and
administrative -- Note C 349,452 556,126 753,006 1,101,770
Interest -- -- -- 16,483
Severance and post-employment
costs from the elimination
of administrative personnel -- 479,083 -- 479,083
------------ ------------ ------------ ------------
1,232,808 2,416,343 2,793,736 4,603,147
INCOME (LOSS) BEFORE INCOME TAXES 58,884 (654,459) 94,926 (575,956)
PROVISION FOR INCOME TAXES -- -- -- --
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ 58,884 $ (654,459) $ 94,926 $ (575,956)
============ ============ ============ ============
NET INCOME (LOSS) PER COMMON SHARE $ 0.01 $ (0.16) $ 0.02 $ (0.14)
============ ============ ============ ============
WEIGHTED AVERAGE SHARES 3,988,756 4,192,356 4,013,191 4,192,356
============ ============ ============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
5.
<PAGE>
<TABLE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<CAPTION>
Six Months Ended
December 31
l995 l994
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 94,926 $ (575,956)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 278,535 303,401
Provision for doubtful accounts 55,000 2,743
(Gain) from sale of investments (35,881) --
(Gain) on disposal of assets (4,076) (40,535)
Changes in operating assets and liabilities:
Receivables 150,158 126,347
Inventories 45,842 534,950
Prepaid expenses and other current assets (1,835) (22,996)
Accounts payable and accrued expenses 42,431 188,346
Accrued salaries and payroll expenses (153,331) 335,166
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 471,769 851,466
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property and equipment 4,076 2,259,077
Additions to property and equipment -- (187,965)
Change in notes receivable 2,250 21,489
Change in other assets -- 4,685
Proceeds from sale of investments 535,369 --
------------ ------------
NET CASH PROVIDED BY INVESTING ACTIVITIES 541,695 2,097,286
CASH FLOWS FROM FINANCING ACTIVITIES
Payment of long-term debt -- (996,370)
Purchase of treasury stock (69,844) --
------------ ------------
NET CASH (USED IN) FINANCING ACTIVITIES (69,844) (996,370)
NET INCREASE IN CASH AND CASH EQUIVALENTS 943,620 1,952,382
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 2,870,575 1,784,846
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,814,195 $ 3,737,228
============ ============
SUPPLEMENTAL INFORMATION:
Interest Paid $ -- $ 16,483
============ ============
Taxes Paid $ -- $ --
============ ============
<FN>
See notes to consolidated financial statements.
</TABLE>
6.
<PAGE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 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 $100,598 of formulas for the production of toner, net
of $224,402 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:
December 31 June 30
1995 1995
Raw materials and component parts $ 292,914 $ 324,703
Finished goods, including goods
purchased for resale 386,947 401,000
$ 679,861 $ 725,703
7.
<PAGE>
ASPEN IMAGING INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1995
NOTE C -- CERTAIN RELATED PARTY TRANSACTIONS
- --------------------------------------------
Of the amounts shown in the accompanying Consolidated Statements of
Operations, the following relate to transactions (all of which were
consummated at cost) with Bobbie Brooks, Incorporated, which owns
approximately 62% of the Company's Common Stock, and its affiliates,
including its Buckeye Business Products, Inc. Division (collectively,
"Buckeye"):
Three Months Ended Six Months Ended
December 31 December 31
1995 1994 1995 1994
Net sales
Includes product sales by the
Company to Buckeye at the
Company's cost of: $ 27,262 $ 50,904 $ 57,691 $117,747
======== ======== ======== ========
Cost of products sold
Includes product purchased from
Buckeye at Buckeye's cost of: $257,736 $313,571 $506,390 $637,602
======== ======== ======== ========
Includes personnel costs for
shipping and purchasing, and
rental for space, utilized by
the Company and provided by
Buckeye at Buckeye's cost of: $ 21,028 $ 56,581 $ 44,015 $ 59,818
======== ======== ======== ========
Selling, general and administrative
Includes personnel costs for
order entry, billing, legal
and accounting, utilized by the
Company and provided by
Buckeye at Buckeye's cost of: $ 16,223 $ 30,127 $ 42,600 $ 76,219
======== ======== ======== ========
Of the amounts shown on the accompanying Consolidated Balance Sheets, the
following relate to the above transactions:
December 31, 1995 June 30, 1995
Receivables
Includes receivables due
from Buckeye: $19,880 $ 32,119
======= ========
Accounts payable and
accrued expenses
Includes accounts payable
to Buckeye of: $52,303 $159,983
======= ========
8.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
RESULTS OF OPERATIONS
Comparison of the Three and Six Months Ended December 31, 1995 & 1994
- ---------------------------------------------------------------------
As reported in the Company's Form 10-K for the year ended June 30, 1995 and
in the Company's Form 10-Q for the quarter ended September 30, 1995, the
Company reduced its product offerings in order to 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
six month periods ended December 30, 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 sales of the
Company's core products. In addition, inventory levels are lower at
December 31, 1995 compared to December 31, 1994 by approximately $584,000.
The Company has reduced its manufacturing overhead to be more in line with
its current rate of sales, which is predominantly responsible for the
increase in gross profit percentage for the three and six months periods
compared to the same periods in 1994.
The Company reduced its selling, general and administrative costs by
approximately $205,000 for the three months and approximately $350,000 for
the six months, ended December 31, 1995, compared to the same periods in
1994, to be more in line with the Company's current rate of sales. Selling,
general and administrative costs for the three months ended December 31,
1995 also represented a decrease of approximately $50,000 from the three
months ended September 30, 1995.
There was no interest expense in the three or six month periods ended
December 31, 1995 due to the elimination of debt.
9.
<PAGE>
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
February 12, 1996, the Company has repurchased 203,600 of its shares at an
aggregate purchase price of $164,187.
The Company's current ratio was 6.2 to 1 at December 31, 1995 compared to
5.4 to 1 at June 30, 1995. The Company has $3,814,195 in cash and cash
equivalents and $1,105,100 in marketable securities and other short-term
investments and no long-term debt at December 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.
10.
<PAGE>
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 62% of the
Company. The proposal must be approved by the Company's Board of
Directors, which is considering the matter and has hired a
financial advisor to opine as to the fairness of the proposed
transaction, and by the Company's stockholders at a meeting
called for such purpose.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Financial Data Schedule
(b) Reports on Form 8-K
None
11.
<PAGE>
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: February 13, 1996
12.
<PAGE>
EXHIBIT INDEX
Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 1995, AND CONSOLIDATED
STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 3,814,195
<SECURITIES> 1,105,100
<RECEIVABLES> 608,367
<ALLOWANCES> 65,881
<INVENTORY> 679,861
<CURRENT-ASSETS> 6,168,975
<PP&E> 4,534,312
<DEPRECIATION> 3,456,506
<TOTAL-ASSETS> 7,375,263
<CURRENT-LIABILITIES> 988,644
<BONDS> 0
<COMMON> 4,192
0
0
<OTHER-SE> 6,382,427
<TOTAL-LIABILITY-AND-EQUITY> 7,375,263
<SALES> 2,698,797
<TOTAL-REVENUES> 2,888,662
<CGS> 2,040,730
<TOTAL-COSTS> 2,040,730
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 94,926
<INCOME-TAX> 0
<INCOME-CONTINUING> 94,926
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 94,926
<EPS-PRIMARY> .02
<EPS-DILUTED> .02
</TABLE>
