SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended AUGUST 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-17741
EPOLIN, INC.
(Exact name of Small Business Issuer as Specified in its Charter)
New Jersey 22-2547226
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Identification
Organization) Number)
358-364 Adams Street
Newark, New Jersey 07105
(Address of Principal Executive Offices)
(973) 465-9495
(Issuer's Telephone Number, Including Area Code)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 No X
State the number of shares outstanding of each of the Issuer's classes of
common equity, as of the latest practicable date:
Common, no par value per share: 11,611,555
outstanding as of October 1, 1997
<PAGE>
PART I - FINANCIAL INFORMATION
EPOLIN, INC. AND SUBSIDIARY
Index to Financial Information
Period Ended August 31, 1997
Item Page Herein
Item 1 - Financial Statements:
Introductory Comments 3
Balance Sheet 4
Statement of Income 6
Statement of Cash Flows 8
Item 2 - Management's Discussion and
Analysis or Plan of Operation 9
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
AUGUST 31, 1997
The financial information herein is unaudited. However, in the
opinion of management, such information reflects all normal and recurring
adjustments necessary for a fair presentation of the financial results for
the periods being reported. Additionally, it should be noted that the
accompanying financial statements do not purport to be complete disclosures
in conformity with generally accepted accounting principles.
The results of operations for the six months ended August 31, 1997 are
not necessarily indicative of the results of operations for the full fiscal
year ending February 28, 1998.
These condensed statements should be read in conjunction with the
Company's audited financial statements for the fiscal year ended February
28, 1997.
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
BALANCE SHEET
(Unaudited)
ASSETS
AUGUST 31, 1997
Current assets:
Cash and cash equivalents $ 356,934
Accounts receivables 253,766
Inventories 325,838
Related Party - Advances 4,056
Prepaid Expenses:
Income Taxes 10,145
Other 14,764
Deferred taxes 100,555
Total current assets 1,066,058
Property, plant and equipment - at cost:
Machinery and equipment 203,043
Furniture and fixtures 11,036
Leasehold improvements 429,037
Total 643,116
Less: Accumulated deprecreciation and
amortization 525,253
Net depreciated costs 117,863
Other assets:
Loan receivable -related party 75,864
Deferred taxes 199,494
Security deposits 37,070
Cash value - life insurance policy 23,902
Total other assets 336,330
Total $ 1,520,251
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
BALANCE SHEET (CONTINUED)
(Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
AUGUST 31, 1997
Current liabilities:
Accounts payable 5,637
Accrued expenses 31,886
Total current liabilities 37,523
Deferred compensation 73,053
Total liabilities 110,576
Stockholders' equity:
Preferred stock, $2.50 par value: 940,000
shares authorized; none issued
Series A convertible non-cumulative preferred
stock, $15.513 par value: redemption price
and liquidation preference: 60,000 shares
authorized: 5,478 shares issued and redeemed
Common stock, no par value; 20,000,000 shares
authorized: 11,654,000 shares issued and
outstanding at 1997 and 1996 2,206,984
Common stock unissued 10,000
Paid-in capital 6,486
Accumulated deficit (813,795)
Total 1,409,675
Less: treasury stock -
Total stockholders' equity 1,409,675
Total $ 1,520,251
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF INCOME
(UNAUDITED)
THREE MONTHS ENDED AUGUST 31, 1997
Sales $403,758
Cost of expenses:
Cost of sales 130,852
Selling, general and
administrative expenses 217,526
Total 348,378
Operating income 55,380
Other income - interest 2,725
Net income $ 58,105
Per share data:
Net income per common share $ -
Weighted average number of
Shares of common outstanding $11,611,555
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF INCOME
(UNAUDITED)
SIX MONTHS ENDED AUGUST 31, 1997
Sales $ 747,218
Cost of expenses:
Cost of sales 257,932
Selling, general and
administrative expenses 395,043
Total 652,975
Operating income 94,243
Other income - Interest 5,089
Net income $ 99,332
Per share data:
Net income per common share $ 0.01
Weighted average number of
shares of common outstanding $ 11,611,555
<PAGE>
EPOLIN, INC. AND SUBSIDIARY
STATEMENT OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED AUGUST 31, 1997
Cash flows from operating activities:
Net income $99,332
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 29,658
Changes in assets and liabilities:
Accounts receivable (27,242)
Inventories 15,850
Advances and loans 16,041
Accounts payable (13,088)
Accrued expenses (1,328)
Taxes payable - payroll (6,347)
Net cash provided by operating activities: 112,876
Cash flows from investing activities:
Related party loan (4,360)
Payments for equipment - net (4,385)
Net cash used by investing activities (8,745)
Increase in cash 104,131
Cash and cash equivalents:
Beginning 252,803
Ending 356,934
Supplement Disclosure of Cash Flow Information:
Income taxes paid $ 175
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operation.
The following discussion should be read in conjunction with the
Financial Statements and Notes thereto included in this report and is
qualified in its entirety by the foregoing.
Overview
Epolin, Inc. (the "Company") is a manufacturing and research and
development company which was incorporated in the State of New Jersey in
May 1984. The Company is principally engaged in the development,
production and sale of near infrared dyes to the optical industry for laser
protection and for welding applications and other dyes, specialty chemical
products that serve as intermediates and additives used in the adhesive,
plastic, aerospace, pharmaceutical, flavors and fragrance industries to a
group of customers primarily in the United States, Europe, Australia and
the Far East.
Results of Operations
Sales for the three months ended August 31, 1997 were approximately
$404,000 while operating income was approximately $55,000. For the six
months ended August 31, 1997, the Company had sales of approximately
$747,000 and operating income of approximately $94,000. For the entire
fiscal year ended February 28, 1997, the Company reported sales of
approximately $1,414,000 and operating income of approximately $297,000.
Cost of sales for the three months ended August 31, 1997 was approximately
$131,000 and the Company's selling, general and administrative expenses for
the three months ended August 31, 1997 were approximately $218,000. For
the six months ended August 31, 1997, cost of sales was approximately
$258,000 and the Company's selling, general and administrative expenses
were approximately $395,000.
During the three and six months ended August 31, 1997, the Company
realized approximately, $2,700 and $5,100, respectively, in interest
income. Net income was approximately $58,000 for the three months ended
August 31, 1997 and approximately $99,000 for the six months ended August
31, 1997.
Liquidity and Capital Resources
As of August 31, 1997, the Company had working capital of
approximately $1,029,000 as compared to working capital of approximately
$908,000 as of February 28, 1997, an increase of approximately $121,000.
The Company's equity to debt ratio was approximately 12.7 to 1 as of August
31, 1997 as compared to an equity to debt ratio of 16.7 to 1 as of February
28, 1997. Stockholders' equity as of August 31, 1997 was approximately
$1,410,000 as compared to stockholders' equity of approximately $1,360,000
as of February 28, 1997. As of August 31, 1997, the Company had
approximately $357,000 in cash and cash equivalents, total assets of
approximately $1,520,000 and total liabilities of approximately $111,000,
as compared to $253,000 in cash and cash equivalents, total assets of
approximately $1,440,000 and total liabilities of approximately $81,000 as
of February 28, 1997. The Company believes that its available cash, cash
flow from operations and projected revenues will be sufficient to fund the
Company's operations for at least the next 12 months.
The Company does not anticipate making any significant additional
capital expenditures in the immediate future as it believes its present
machinery and equipment will be sufficient to meet its near term needs.
Inflation has not significantly impacted the Company's operations.
<PAGE>
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.
There are no exhibits applicable to this Form 10-QSB.
(b) Reports on Form 8-K.
Listed below are reports on Form 8-K filed during the fiscal
quarter ended August 31, 1997.
None.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this Report to be signed on its behalf by the undersigned
thereunto duly authorized.
EPOLIN, INC.
(Registrant)
Dated: October 9, 1997 By: /s/Murray S. Cohen
Murray S. Cohen,
Chief Executive Officer
Dated: October 9, 1997 By: /s/Murray S. Cohen
Murray S. Cohen,
Principal Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
EPOLIN, INC.'S QUARTERLY REPORT FOR THE QUARTER ENDED AUGUST 31, 1997
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> AUG-31-1997
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<SECURITIES> 0
<RECEIVABLES> 253,766
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<CURRENT-ASSETS> 1,066,058
<PP&E> 643,116
<DEPRECIATION> 525,253
<TOTAL-ASSETS> 1,520,251
<CURRENT-LIABILITIES> 37,523
<BONDS> 0
<COMMON> 2,206,984
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,520,251
<SALES> 747,218
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<OTHER-EXPENSES> 395,043
<LOSS-PROVISION> 0
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</TABLE>
