FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 FOR THE PERIOD
ENDED JULY 31, 2000
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: 0-14922
ABC DISPENSING TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
FLORIDA 59-2001203
--------------------------------- --------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
451 KENNEDY ROAD AKRON, OHIO 44305
----------------------------------------- ------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (330) 733-2841
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK,
PAR VALUE $.01
----------------
(Title of class)
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: [ X ] Yes [ ] No
The number of shares outstanding of each of the registrant's classes of
common stock as of the latest practicable date is:
Common Stock outstanding at September 8, 2000 was 21,888,336 shares.
<PAGE>
INDEX
ABC DISPENSING TECHNOLOGIES, INC. AND SUBSIDIARIES
Part I Financial Information Page No.
--------------------------------------------------------------------------------
Item 1. Condensed Financial Statements (Unaudited)
Consolidated balance sheets - July 31, 2000 and April 30, 2000 3
Consolidated statements of operations - Three months ended
July 31,2000 and July 31, 1999 4
Consolidated statements of cash flows -Three months ended
July 31, 2000 and July 31, 1999 5
Consolidated statement of stockholders' equity -
Three months ended July 31, 2000 6
Notes to consolidated financial statements 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10-12
Part II Other Information
--------------------------------------------------------------------------------
Item 1. (Not Applicable)
Item 2. (Not Applicable)
Item 3. (Not Applicable)
Item 4. (Not Applicable)
Item 5. (Not Applicable)
Item 6. (A) Exhibits and Reports 13
Signature 14
2
<PAGE>
ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS JULY 31, 2000 APRIL 30, 2000
---------------------------------------------------------------------------------------------------------------------------
Current Assets
<S> <C> <C>
Cash and cash equivalents $ 32,000 $ 163,000
Accounts receivable, less allowance for doubtful accounts
of $34,000 as of July 31 and $33,000 as of April 30 233,000 306,000
Inventories (Note 3) 1,329,000 1,281,000
---------- ----------
Total current assets 1,594,000 1,750,000
Property, plant, and equipment 628,000 662,000
Other assets:
Intangible assets, less accumulated amortization of
$495,000 as of July 31 and April 30 17,000 17,000
Other 103,000 143,000
---------- ----------
120,000 160,000
---------- ----------
TOTAL ASSETS $ 2,342,000 $ 2,572,000
---------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT)
Current Liabilities
Current portion of long-term debt $ 19,000 $ 19,000
Short-term notes payable (Note 4) 175,000 175,000
Accounts payable 458,000 409,000
Accrued liabilities:
Accrued interest 282,000 226,000
Employee compensation and benefits 81,000 82,000
Warranty reserve 14,000 18,000
Other 203,000 235,000
Deferred income 294,000 302,000
---------- ----------
Total current liabilities 1,526,000 1,466,000
Long-term debt (Note 4) 2,221,000 2,119,000
Stockholders' equity/(deficit) (Note 6):
Preferred Stock - Series A, 9% cumulative;
authorized 840 shares 399 shares issued
and outstanding
Series B, 9% cumulative authorized 160 shares
24 shares issued and outstanding
Series C, 9% cumulative authorized 200 shares
37 shares issued and outstanding 5,608,000 5,608,000
Common Stock, $.01 par value; authorized 50,000,000
shares; 21,888,336 shares issued 219,000 219,000
Additional paid-in capital 20,654,000 20,654,000
Accumulated deficit (27,884,000) (27,492,000)
---------- ----------
(1,403,000) (1,011,000)
Less notes receivable - stockholders (2,000) (2,000)
----------
Total Stockholders' Equity/(Deficit) (1,405,000) (1,013,000)
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY/(DEFICIT) $ 2,342,000 $ 2,572,000
</TABLE>
3
<PAGE>
See accompanying notes.
ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
JULY 31, 2000 JULY 31, 1999
-------------------------------------------------------------------------------------------------------------
Revenues:
<S> <C> <C>
Equipment sales $ 58,000 $ 60,000
Service revenues 329,000 296,000
---------- ----------
387,000 356,000
Cost and expenses:
Cost of equipment sold 44,000 28,000
Service expenses 259,000 217,000
General and administrative 336,000 396,000
Selling and marketing 70,000 75,000
Research and development 37,000 19,000
---------- ----------
746,000 735,000
---------- ----------
Loss from operations (359,000) (379,000)
Other income (expense)
Interest expense (68,000) (32,000)
Other, net 35,000 -
---------- ----------
(33,000) 32,000)
---------- ----------
Net loss $ (392,000) $ (411,000)
---------- ----------
Net loss per share - Basic and Diluted (Note 5) $ (0.02) $ (0.03)
---------- ----------
</TABLE>
4
<PAGE>
See accompanying notes.
ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
UNAUDITED
<TABLE>
<CAPTION>
Three Months Ended
July 31, 2000 July 31, 1999
--------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net cash used in operating activities: $ (231,000) $ (477,000)
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant, and equipment
Investment in joint venture - -
------- --------
Net cash used in investing activities - -
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from private placement - -
Proceeds from collection of stockholders receivables - 1,000
Proceeds/(repayment) of notes payable 100,000 420,000
------- -------
Net cash provided by financing activities 100,000 421,000
------- -------
Net decrease in cash and cash equivalents (131,000) (56,000)
Cash and cash equivalents at beginning of year 163,000 65,000
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 32,000 $ 9,000
======= =======
</TABLE>
5
<PAGE>
See accompanying notes.
ABC DISPENSING TECHNOLOGIES, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Three months ended July 31, 2000 unaudited)
<TABLE>
<CAPTION>
Number of Stock Additional Accumulated
Shares of $.01 Par Preferred Paid-in Deficit Treasury
Common Stock Value Stock Capital Stock
<S> <C> <C> <C> <C> <C> <C>
Balance at April 30, 2000 21,888,336 $219,000 $5,608,000 $20,654,000 $(27,492,000) $(2,000)
------------------------------------------------------------------------------------------------
Net loss (392,000)
------------------------------------------------------------------------------------------------
BALANCE AT JULY 31, 2000 21,888,336 $219,000 $5,608,000 $20,654,000 $(27,884,000) $(2,000)
----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
See accompanying notes.
ABC DISPENSING TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of July 31, 2000 and for the
three months ended July 31, 2000 is unaudited)
The accompanying, unaudited condensed consolidated financial statements
have been prepared in accordance with generally accepted accounting principles
applicable to interim financial statements. Accordingly, they do not include all
of the information and notes required for complete financial statements. In the
opinion of management, all adjustments and reclassifications considered
necessary for a fair and comparable presentation have been included and are of a
normal recurring nature. Operating results for the three months ended July 31,
2000, are not necessarily indicative of the results that may be expected for the
year ending April 30, 2001. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's Form 10-K filed with the Securities and Exchange Commission on August
4, 2000.
1. SIGNIFICANT ACCOUNTING POLICIES
In fiscal year 2000, the Company changed its fiscal year end from a
52-53 week period ending on the Saturday closest to April 30 to an April 30 year
end, to more closely align closing periods with its major customers and vendors.
This change has increased the number of days included in the financials for the
three months ending July 31, 1999, from 91 calendar days to 97 calendar days. An
estimate of the impact of this six day change on a proforma basis yields sales
of $12,000, gross margin of $2,000 and allocated selling, general and
administrative expenses of $18,000 resulting in a net loss of $16,000.
2. GOING CONCERN UNCERTAINTY
The Company has reported a net loss for each year of operation since
its inception except for 1989, and as of July 31, 2000, has an accumulated
deficit of $27,884,000. The Company had negative cash flow from operating
activities of $1,375,000, $1,453,000, and $1,594,000 for the years ended April
30, 2000, April 24, 1999, and April 25, 1998, respectively. Management expects
that the Company will continue to incur losses and use cash in operations in the
near future.
Management recognizes the Company must generate additional funds to
ensure continuation of operations. The Company has been able to raise $6,573,000
in capital from private investors over the past four years through private
placements of both preferred and common stock. The Company raised $1,500,000
during the fiscal year ended April 30, 2000 using interest bearing Notes
Payable. The Company is continuing in it efforts to raise capital. The Company
hopes to satisfy its short-term (i.e., the next 12-month period) capital
requirements with the use of proceeds from the private placement of its 9%
Convertible Cumulative Preferred Stock and notes payable. The Company is
currently attempting to raise additional capital through an offering of its
Convertible Preferred Stock. The exact terms of this offering have not been
finalized. The company hopes to satisfy its longer term capital needs with
additional proceeds of offerings of the Company's equity and/or debt securities,
improvements in operational cash flow, warrant exercise proceeds, and
traditional credit facilities. There can be no assurance that at any time a
sufficient market for the Company's equity offerings or debt financings will be
available upon commercially reasonable terms, if at all. Further, there can be
no assurance, assuming the Company does successfully raise additional capital,
that the Company will achieve profitable operations or positive cash flow. These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. No adjustments to the amounts or classification of assets and
liabilities which could result from the outcome of this uncertainty are
reflected in the consolidated financial statements.
7
<PAGE>
ABC DISPENSING TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of July 31, 2000 and for the three
months ended July 31, 2000 is unaudited)
3. INVENTORIES
At July 31, 2000 and April 30, 2000, inventories consisted of the
following:
<TABLE>
<CAPTION>
July 31, 2000 April 30, 2000
------------------ ------------------
<S> <C> <C>
Raw Materials $ 770,000 $ 742,000
Work-in-process 230,000 225,000
Finished goods 329,000 314,000
------------------ ------------------
$1,329,000 $1,281,000
================== ==================
The above amounts are net of obsolescence reserves of $479,000 at both July 31,
2000 and April 30, 2000.
4. FINANCING ARRANGEMENTS
At July 31, 2000 and April 30, 2000, long-term debt consisted of the
following:
July 31, 2000 April 30, 2000
------------------ ------------------
Note payable to bank $ 226,000 $ 231,000
Note payable - Private party 2,010,000 1,902,000
(Less unamortized discount of $140,000 and $148,000 for July and April
respectfully)
Other 4,000 5,000
------------------ ------------------
2,240,000 2,138,000
Less amounts due within one year (19,000) (19,000)
------------------
Total Long-term debt $2,221,000 $2,119,000
------------------ ------------------
</TABLE>
The note payable to bank, which is secured by the Company's
headquarters facility, has an adjustable interest rate (9.03% at July 31, 2000)
which may not increase or decrease by more than 3% once every three years.
On August 1, 1999, the Company renegotiated most of the 10% APR, short
term notes to a 5 year, 10% APR Promissory Note that comes due on August 1,
2004. These notes are collatoralized with the intellectual property of the
Company. In return for converting the short term note to long term, the Company
issued 5 year Warrants to Purchase 2,500,000 Shares of Common Stock at the then
current market price of $.10 per share. The Warrants have been valued at
$175,000 using the Black-Scholes Option Pricing Model, using the following
weighted average assumptions: A Risk-Free interest rate of 6.355% and an
expected volatility of 88.55%. A discount on the notes payable has been recorded
for that amount which will be amortized on a straight line basis over the term
of the notes. During the quarter ended July 31, 2000, the Company raised an
additional $100,000 of capital using this long term Promissory Note.
5. NET LOSS PER SHARE
The following table sets forth the computation of net loss per share --
basic and diluted:
<TABLE>
<CAPTION>
3 MONTHS ENDED
--------------------------------------
July 31, July 31,
2000 1999
<S> <C> <C>
Numerator:
Net Loss $ (392,000) $ (411,000)
Preferred Stock Dividends (-) (223,000)
------------ -------------
Numerator for net loss per share - loss attributable
to common shareholders $ (392,000) $ (643,000)
Denominator:
Denominator for basic and diluted earnings
per share - weighted-average shares 21,888,336 19,168,049
------------ -------------
Net loss per share -- basic and diluted $ (0.02) $ (0.03)
============ =============
</TABLE>
The effect of potentially dilutive securities have not been included in
the above computations since such securities would have been anti-dilutive for
the periods presented. These potentially dilutive securities consisted of
options and warrants to purchase 7,771,985 and 5,287,500 shares of Common Stock
as of July 31, 2000 and July 31, 1999, respectively.
8
<PAGE>
ABC DISPENSING TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Information as of July 31, 2000 and for the three
months ended July 31, 2000 is unaudited)
6. PREFERRED STOCK
In September 1996 the shareholders of the Company approved an amendment
to the Company's Certificate of Incorporation to authorize up to 5,000,000
shares of Preferred stock. To date, the Company has authorized 840 shares as
Series A Preferred Stock, 160 shares of Series B Preferred Stock and 200 shares
of Series C Preferred Stock.
The Company offered shares of 9% convertible cumulative redeemable
Preferred Stock, Series A ("Series A Preferred Stock") in exchange for the
surrender of the Company's outstanding $25,000, 9% Convertible Subordinated
Redeemable Notes due August 1, 1999 ("Notes").
As of July 31, 2000, through private placements, the Company issued 399
shares of Series A Preferred Stock in exchange for notes or $12,500 cash per
share, generating gross proceeds of $4,988,000 to the Company.
The Series A Preferred Stock is convertible at the option of the
holder, in whole or in part, at any time after March 1, 1997 (the "Initial
Conversion Date") into Common Stock of the Company at a price per share of
Common Stock equal to (I) $1.00 per share, or (II) such adjusted price as may
form time to time be adjusted (the "Conversion Price"). If converted into Common
Stock, each Preferred Share will entitle the holder to receive warrants to
purchase a number of shares of Common Stock at a price of $1.25 per share, equal
to the number of shares of Common Stock into which the Preferred Shares were
converted. The warrants will be valid for a period of five years commencing from
the date of issuance.
The Series B Preferred Stock is convertible at the option of the holder
into Common Stock of the Company at a price of $.75 per share and is identical
to Series A Preferred Stock in all other aspects. The Company has authorized 160
shares and sold 24 shares as of April 30, 2000, generating gross proceeds of
$300,000.
The Series C Preferred Stock is a $10,000 denomination, 9% convertible
cumulative redeemable issue with a conversion price of $.25 per share. There are
no warrants attached to this issuance. The Company has authorized 200 shares and
sold 37 shares through April 30, 2000, generating gross proceeds of $370,000.
Series A, B, and C Preferred Shares pay dividends semi-annually each
February 1, and August 1, commencing on February 1, 1997. The Company may elect
to pay dividends in the form of Common Stock of the Company issued at 90% of the
then current market price of the Common Stock. For the purposes of this
calculation the "current market price" shall mean the average of the daily
closing prices for each of the thirty consecutive business days prior to such
dividend date.
On June 11, 1999, the Company paid its February 1, 1999 Preferred Stock
dividend requirement by issuing common stock. The total number of common shares
issued for the dividend was 1,231,565. The shares were valued at $0.191 per
share.
On April 18, 2000 the Company paid its August 1, 1999 and February 1,
2000, Preferred Stock dividend requirements by issuing common stock. The total
number of shares issued for August 1, 1999 was 924,408 and were valued at
$0.2714 per share. The total number of shares issued for February 1, 2000, was
1,795,880 and were valued at $0.1404 per share.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
QUARTER ENDED JULY 31, 2000 COMPARED TO THE QUARTER ENDED JULY 31, 1999
The net loss for the three months ended July 31, 2000 was $392,000, a
decrease of $19,000, or 4.6% over the net loss of 411,000 for the three months
ended July 31, 1999.
<TABLE>
<CAPTION>
REVENUES Three Months Ended
------------------------------------
July 31, July 31,
2000 1999
<S> <C> <C>
Equipment sales $ 58,000 $ 60,000
Service revenues 329,000 296,000
--------- ---------
Total $ 387,000 $ 356,000
========= =========
</TABLE>
Equipment sales for the first three months of fiscal 2001, ending July
31, 2000 decreased $2,000, or 3.3%, over the same period of the prior year.
Sales of paint colorant dispensers decreased $38,000. Sales of the Royal
Match(R) painT colorant dispensers have decreased because the equipment has not
yet gained widespread market acceptance. Sales of beverage equipment increased
$35,000, the Company is not actively marketing its beverage equipment but is
supporting dealer sales in Canada and accepting orders from domestic customers.
Service revenues for the first three months of fiscal 2001 increased
$33,000, or 11.1% from the same period of the prior year. The increase is due to
higher juice sales of $106,000, a $17,000 increase or 19.6% above the first
three months of fiscal 2000 and higher service contract revenues of $5,000 on
Royal Match(R) paint colorant dispensers .
<TABLE>
<CAPTION>
GROSS MARGINS Three Months Ended
--------------------------
July 31, July 31,
2000 1999
<S> <C> <C>
Equipment 20.8% 34.8%
==== ====
Service 41.4% 9.6%
==== ===
Total 38.3% 13.6%
==== ====
</TABLE>
For the first three months of fiscal 2001 gross margin as a percentage
of sales on equipment decreased 14 points over the same period of the prior
year. The decrease resulted from lower margins obtained from dealer sales of its
beverage equipment and lower Royal Match(R) paint colorant dispenser sales.
For the first three months of fiscal 2001 gross margin as a percentage
of service revenues increased 31.8 points over the same period of the prior
year. The increase is attributable to lower service labor and benefit costs and
lower parts costs that were associated with refitting the Royal Match(R) paint
colorant dispensers with automatic nozzle cappers.
GENERAL AND ADMINISTRATIVE
For the first three months of fiscal 2001 general and administrative
expenses decreased $60,000, or 15.1%, to $336,000, as compared to the same
period of fiscal 2000. This was due to headcount reductions and allocation of
administrative resources to marketing and direct product related activities.
SELLING AND MARKETING EXPENSES
For the first three months of fiscal 2001 selling and marketing expense
decreased $5,000, or 6.7%, to $70,000, down from $75,000 for the same period of
FY 2000. The decrease is due primarily to reorganization of the management
structure of the sales force.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESEARCH AND DEVELOPMENT
For the first three months of fiscal 2001, research and development
expenses increased $18,000, or 94.7%, to $37,000. The increase is due to a
reallocation of existing resources into software enhancement efforts required to
modify the Royal Match(R) paint dispensing system to meet the needs of new
customers.
INTEREST EXPENSE
For the first three months of fiscal 2001 interest expense increased
$36,000, or 112.5%, to $68,000. This is a result of higher notes payable
balances.
OTHER INCOME
Other income increased $35,000, to $35,000 for the first three months
of fiscal 2001 and represents the reversal of prior year adjustments.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash balance decreased to $32,000 as of July 31, 2000
from $163,000 at April 30, 2000. Operations for the three months ended July 31,
2000 required cash of $231,000, a decrease of $246,000, or 51.6%, when compared
to the three months ended July 31, 1999. The $231,000 use of cash was caused by
a net loss of $392,000 offset by decreased receivables of $73,000, increased
accounts payable of $49,000 and depreciation and amortization of $34,000.
Consistent with prior years, the Company's primary source of liquidity
has been private placements of equity and debt instruments. During the fiscal
year ended April 30, 2000, the Company generated $1,500,000 from the private
issuance of Notes payable.
In August, 1997, to raise additional capital, the Company began issuing
short term promissory notes through a private placement. The notes are sold in
multiples of $12,500, or fractions thereof, and accrue interest at the rate of
10%, with principal and interest due at maturity. The initial maturity date was
June 30, 1998, however, the Company had the option, which it exercised, to
extend the maturity date to December 31, 1998. The Company extended the maturity
date through negotiations with Holders of the Notes and their representatives
until December 31, 1999. On August 1, 1999, the Company renegotiated most of the
10% APR, short term notes to a 5 year, 10% APR Promissory Note that comes due on
August 1, 2004. These notes are collatoralized with the intellectual property of
the Company. In return for converting the short term note to long term, the
Company issued 5 year Warrants to Purchase 2,500,000 Shares of Common Stock at
the then current market price of $.10 per share. The Warrants have been valued
at $175,000 using the Black-Scholes Option Pricing Model, using the following
weighted average assumptions: A Risk-Free interest rate of 6.355% and an
expected volatility of 88.55%. A discount on the notes payable has been recorded
for that amount which will be amortized on a straight line basis over the term
of the notes. During the quarter ended July 31, 2000, the Company raised an
additional $100,000 of capital using this long term Promissory Note. As of July
31, 2000, the Company has issued notes in the aggregate of $2,325,000. The
Company anticipates using proceeds of equity offerings, additional extensions or
other re-financing options to satisfy the notes..
The Company intends to satisfy its short-term (i.e., the next 12-month
period) capital requirements using the proceeds of offerings of its equity
securities and the issuance of additional notes. The Company is currently
attempting to raise at least $2,000,000 through an offering of its convertible
preferred stock. The exact terms of this offering have not been finalized.
Longer term capital needs are anticipated to be satisfied by additional proceeds
of offerings of the Company's equity and/or debt securities, improvements in
operational cash flow, warrant exercise proceeds, and traditional credit
facilities. There can be no assurance that at any time a sufficient market for
the Company's equity offerings or debt financings will be available upon
commercially reasonable terms, if at all.
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES (CONT.)
The Company's long-term capital plan is critically dependent upon the
commercial success of its Products and, to the extent success is not timely
achieved, its ability to implement significant cost reduction programs. Toward
this end, Management has taken steps to increase revenue through sales and
marketing efforts that include the redeployment of research and development
resources of the Company to work closely with the Company's existing and
prospective customers in the paint and beverage industry. If it becomes
necessary to implement significant cost reduction programs, it is likely that
such programs will involve a significant curtailment of marketing and research
and development activities as well as payroll reductions which would likely have
an adverse affect on future operating results. There can be no assurance that
the Company will be successful in generating operating profit and sufficient
operational cash flow through the commercial success of its products or any such
cost reduction programs. If the Company is not successful in this regard,
Management will have to consider alternative uses of its assets including the
possible licensing or outright sale of one or more of its proprietary
technologies.
The current liquidity position of the Company and the inability of
operations to generate positive cash flow raises doubt about the Company's
ability to continue as a going concern (see Note 2 to the Financial Statements).
12
<PAGE>
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) The financial statements listed on the index set forth in Item 1 of
this Quraterly report on Form 10-Q are filed as part of this Quarterly
Report.
(b) The following exhibits are incorporated by reference herein or annexed
to this quarterly report:
3.1 Certificate of Incorporation of the Registrant.
3.2 Bylaws of the Registrant.*
10.1 Employment agreement dated March 1, 1997 by and between the Registrant
and Charles M. Stimac, Jr.*
10.2 Form of Director Option Agreement dated October 30, 1998.
10.3 Amended 1995 Stock Option Plan.*
10.4 Amendment #1 to Employment agreement between the Registrant and
Charles M. Stimac, Jr.
11.1 Statement regarding computation of per share earnings (see Financial
Statements at Item 1 of this Quarterly Report on Form 10-Q).
27. Financial Data Schedule (for S.E.C. electronic filing only)
* Incorporated by reference to a similarly numbered exhibit to the
retgistrants registration on form S-1 filed with the Commission on
April 8, 1998.
(c) Current reports on Form 8-K during the quarter ended July 31, 2000..
During the first quarter of Fiscal 2001, the Company filed no
reports on Form 8-K.
<PAGE>
SIGNATURE
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.
ABC DISPENSING TECHNOLOGIES, INC.
Date: September 12, 2000 /s/ Charles M. Stimac, Jr.
-----------------------------------------
Charles M. Stimac, Jr.
President/CEO
