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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
December 2, 1996
ABC DISPENSING TECHNOLOGIES, INC.
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(Exact name of registrant as specified in its charter)
FLORIDA 0-14922 59-2001203
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
451 KENNEDY ROAD
AKRON, OHIO 44305
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (330) 733-2841
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The Company reports on a fiscal year which ends on the Saturday closest to
April 30. The current year ends April 26, 1997, the prior year ended April 27,
1996.
FAILURE TO MEET NASDAQ STOCK LISTING MINIMUM REQUIREMENTS
The Company has failed to meet the Nasdaq capital and surplus requirement, as
set forth in NASD Marketplace Rule 4310(c)(03). The Nasdaq Listing
Qualifications Panel has granted the Company an exception regarding this
requirement. The exception requires that the Company must make a public filing
with the SEC and Nasdaq on or before December 2, 1996. The filing must contain
a balance sheet no older than October 31, 1996 with pro forma adjustments for
any significant transactions occurring on or before the filing date. The filing
must evidence minimum capital and surplus in excess of $1,800,000, as well as
compliance with all other criteria necessary for continued listing. The Company
has met the December 2 requirement with a capital and surplus balance of
$2,437,000. The Company believes that it will be able to continue to meet
NASDAQ's maintenance schedule.
The exception further requires that the Company must make a second public
filing with the SEC and Nasdaq on or before January 3, 1997. The second filing
must contain a balance sheet no older than November 30, 1996 with pro forma
adjustments for any significant transactions occurring on or before the filing
date. The filing must evidence minimum capital and surplus in excess of
$2,400,000, as well as compliance with all other criteria necessary for
continued listing. In the event the Company fails to comply with any of the
terms of this exception, its securities will be immediately deleted from The
Nasdaq Stock Market.
IMPLEMENTATION OF A STRATEGIC PLAN
The Company recognizes the need to increase sales as quickly as possible and
also the need to review and implement long-term marketing and sales strategies.
With this in mind the Company has developed, with the assistance of an
accredited marketing consultant, a Strategic Plan for November 1, 1996 through
April 30, 1998. Corporate growth strategies include: 1) market penetration, 2)
market expansion, 3) product development and 4) diversification.
SIGNIFICANT ORDER
On July 17, 1995, the Company received a $7 million initial order for its new
Institutional Juice Dispenser. This is the largest, single order the Company
has ever received. The microprocessor-driven system mixes and dispenses from
juice concentrates, ensuring a controlled mixture and an accurate, standard
portion. The Company filed for a patent on the controlling electronics and
software. This new Juice Dispenser is now in field test. This order may be
incorporated into a new joint venture yet to be detailed, but nevertheless, the
Company regards the above order valid and enforceable. (see below)
COMPANY ANNOUNCES JOINT-VENTURE AGREEMENT
On October 22, 1996 the Company announced a preliminary agreement to form a
joint venture with Wa. H. Leahy Associates, a privately owned national
foodservice marketing company based in Chicago. The partnership combines ABC's
proprietary dispensing technology and equipment with a specially formulated
fresh-fruit concentrate developed by Leahy for sale to the institutional food
marketplace. The proposed agreement calls for the two companies to share
ongoing revenues and profits on a basis to be determined after completion of
field testing, which is expected to be concluded in January 1997.
COMPANY APPOINTS NEW PRESIDENT
On July 16, 1996, the Company appointed Charles M. Stinac, Jr. as President and
Chief Executive Officer to succeed Robert A. Cutting. Mr. Stinac, 45 years old,
has more than 20 years experience in the investment banking and brokerage
industry and has extensive experience in sales and marketing. Mr. Stinac was
formerly a Vice President with Roney & Company, a member firm of the New York
Stock Exchange.
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COMPANY ANNOUNCES CHANGE OF CFO
On October 1, 1996, the Company appointed consultant and turn-around specialist
Walter W. Crate, on an interim basis, the responsibilities of Chief Financial
Officer and Assistant to the President. Mr. Crate succeeds Gary T. Salhany, who
resigned as CFO to pursue other interests. His career has included serving as
chief operating officer of a $100 million, multi-national holding company and as
managing director of the Chicago office of Citicorp Investment Bank, Mr. Crate
has been involved in the acquisition of 25 companies, and he has acted in
advisory capacity to management and equity investors in the turnaround of
under-performing assets.
COMPANY APPOINTS DIRECTOR OF MARKETING/VICE PRESIDENT OF ENGINEERING
On October 17, 1996, Brian C. Sanders joined the Company in the
newly-established dual positions of Director of Marketing and Vice President of
Engineering--Paint and Industrial Division. Mr. Sanders was the founder and
president of ULTRABLEND Systems, Inc., which specializes in the research and
development, production and marketing of point-of-sale equipment for the paint
and coatings industry. He holds an engineering degree from Syracuse University.
COMPANY APPOINTS EUROPEAN DIRECTOR OF SALES AND SUPPORT SERVICES
On November 5, 1996, Nigel Whittaker was appointed to the newly established
position of Director of Sales and Support Services for Europe. Mr. Whittaker,
who is based in Manchester, England, will implement and supervise a sales,
marketing, and support organization exclusively for ABC's proprietary new
modular, 1B canister, automatic tinting dispenser, and related products, which
are being introduced in the U.S. this fall. His previous experience includes
serving as Managing Director of Ultrablend Systems (Europe) Ltd. and as
President of Applied Color Systems, Inc., based in Princeton, New Jersey, where
he spearheaded the sales and support growth for that company's Datacolor
International product line throughout the North and South American continents.
SIX MONTHS ENDED OCTOBER 26, 1996 COMPARED TO SIX MONTHS ENDED OCTOBER 28, 1995
The net loss was $1,384,000 for the six months ended October 26, 1996 compared
to $615,000 for the same period last year. Total revenues for the six months
ended October 26, 1996 was $2,138,000 compared to $3,811,000 for the same
period last year.
Product sales: October 26, 1996 October 28, 1995
Industrial dispensers $1,458,000 $2,950,000
Beverage dispensers 354,000 357,000
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1,812,000 3,307,000
Service and development sales
Industrial 105,000 237,000
Beverage 191,000 230,000
Other 30,000 37,000
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326,000 504,000
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Total revenues $2,138,000 $3,811,000
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ITEM 7. FINANCIAL STATEMENTS
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<TABLE>
<CAPTION>
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ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
Estimated Actual
Unaudited Unaudited
ASSETS December 2, 1996 July 27, 1996
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<S> <C> <C>
Current assets:
Cash and cash equivalents $1,372,000 $ 96,000
Trade receivables:
Accounts receivable, less allowance for doubtful accounts
of $152,000 as of October 26 and $136,000 as of April 27 425,000 718,000
Notes receivable (short-term) 33,000 30,000
Inventories 1,156,000 1,298,000
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Total current assets 2,986,000 2,142,000
Property, Plant, and Equipment 1,847,000 1,492,000
Less accumulated depreciation ( 821,000) ( 805,000)
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1,026,000 687,000
Other assets:
Notes receivable (long-term) 86,000 76,000
Intangible assets, less accumulated
amortization of $516,000 as of October 26
and $480,000 as of April 27 138,000 155,000
Patents pending and deferred charges 144,000 164,000
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Total other assets 368,000 395,000
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TOTAL ASSETS $ 4,380,000 $ 3,224,000
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Accounts payable $ 683,000 $ 736,000
Line of Credit 225,000 352,000
Notes payable to related party (110,000) 390,000
Current portion of long-term debt 18,000 25,000
Accrued liabilities:
Legal fees and settlement costs 41,000 155,000
Employee compensation and benefits 306,000 314,000
Warranty reserve 132,000 189,000
Other 177,000 324,000
Projected November loss 173,000 0
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Total current liabilities 1,645,000 2,485,000
Long-term debt 298,000 289,000
Stockholders' equity:
Common Stock, $.01 par value; authorized
50,000,000 shares; 17,158,860 shares issued
and outstanding (16,984,160 at April 27, 1996) 171,000 171,000
Preferred Stock 2,125,000 0
Additional paid-in capital 19,010,000 19,073,000
Retained earnings (deficiency) (18,643,000) (18,651,000)
Projected November loss ( 173,000) 0
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2,490,000 593,000
Less notes receivable-stockholders ( 53,000) ( 143,000)
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Total Stockholders' Equity 2,437,000 450,000
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,380,000 $ 3,224,000
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ITEM 7. Financial Statements
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ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Seven months ended December 2, 1996
Estimated
<TABLE>
<CAPTION>
Number of Common Stock Additional Retained Notes
Shares of $.01 Par Preferred Paid-in Earnings Receivable-
Common Stock Value Stock Capital (Deficiency) Stockholders
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Balance at April 27, 1996 16,984,160 $170,000 $ 0 $18,942,000 $(17,882,000) $(146,000)
Collection of notes receivable-
stockholders' 93,000
Issue of stock to Mezzanine
Financial Fund, L.P. 125,000 1,000 141,000
Issue of stock to Davis, Scott,
(Legal fees) 49,700
Preferred stock private placement 2,125,000
Private placement costs (73,000)
Net loss for the seven months
ended December 2, 1996 (761,000)
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Balance at December 2, 1996 17,158,860 $171,000 $2,125,000 ($19,010,000) $(18,643,000) $ (53,000)
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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 hereunto duly authorized.
ABC Dispensing Technologies, Inc.
Date: December 2, 1996 By: /s/ CHARLES M. STIMAC JR.
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Charles M. Stimac Jr.
President/CEO
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