SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999.
[ ] 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: 0-16159
LECTEC CORPORATION
------------------
(Exact name of Registrant as specified in its charter)
Minnesota 41-1301878
--------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10701 Red Circle Drive, Minnetonka, Minnesota 55343
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 933-2291
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.
Yes [X] No [ ]
The number of shares outstanding of the registrant's common stock as of November
11, 1999 was 3,876,476 shares.
<PAGE>
LECTEC CORPORATION
FORM 10-Q - FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements and Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . I-1
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . I-9
Item 3. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . I-13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 2. Changes in Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 4. Submission of Matters to a Vote of Security Holders. . . . . . . . . . . . . . . . . . . . . . II-1
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-1
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . II-2
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
1999 1999
------------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 542,567 $ 1,022,025
Receivables
Trade, net of allowances of $112,032 (unaudited) and $101,751
at September 30, 1999 and June 30, 1999 2,178,237 2,335,314
Refundable income taxes 7,544 7,544
Other 8,434 8,687
----------- -----------
2,194,215 2,351,545
Inventories
Raw materials 1,575,671 1,324,973
Work-in-process 40,553 69,324
Finished goods 532,108 602,227
----------- -----------
Total inventories 2,148,332 1,996,524
Prepaid expenses and other 241,571 174,674
Deferred income taxes 354,000 354,000
----------- -----------
Total current assets 5,480,685 5,898,768
PROPERTY, PLANT AND EQUIPMENT - AT COST
Land 247,731 247,731
Building and improvements 1,929,956 1,841,742
Equipment 7,191,182 7,157,016
Furniture and fixtures 413,013 413,013
----------- -----------
9,781,882 9,659,502
Less accumulated depreciation 5,824,050 5,631,011
----------- -----------
3,957,832 4,028,491
OTHER ASSETS
Patents and trademarks, less accumulated amortization of $1,196,239
(unaudited) and $1,154,698 at September 30, 1999 and June 30, 1999 163,285 199,971
Other 5,343 5,343
----------- -----------
168,628 205,314
----------- -----------
$ 9,607,145 $10,132,573
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 1
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - CONTINUED
<TABLE>
<CAPTION>
(Unaudited)
September 30, June 30,
1999 1999
------------- ------------
<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 1,750,377 $ 1,676,776
Accrued expenses
Payroll related 418,969 403,075
Retail support programs 143,031 165,472
Other 192,530 181,730
------------ ------------
Total current liabilities 2,504,907 2,427,053
DEFERRED INCOME TAXES 197,000 197,000
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: 15,000,000 shares authorized;
3,876,476 shares (unaudited) and 3,876,476 shares issued
and outstanding at September 30, 1999 and June 30, 1999 38,765 38,765
Additional paid-in capital 11,262,654 11,262,654
Accumulated other comprehensive loss (11,841) (11,841)
Deficit in retained earnings (4,384,340) (3,781,058)
------------ ------------
6,905,238 7,508,520
------------ ------------
$ 9,607,145 $ 10,132,573
============ ============
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 2
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
September 30,
-----------------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Net sales $ 3,008,752 2,903,057
Cost of goods sold 2,069,471 1,885,804
----------- -----------
Gross profit 939,281 1,017,253
Operating expenses
Sales and marketing 735,045 333,533
General and administrative 559,090 586,461
Research and development 269,762 280,013
----------- -----------
1,563,897 1,200,007
----------- -----------
Loss from operations (624,616) (182,754)
Other income, net 21,334 31,801
----------- -----------
Loss before income taxes (603,282) (150,953)
Income tax expense -- 1,264
----------- -----------
Net loss $ (603,282) $ (152,217)
=========== ===========
Net loss per share - basic and diluted $ (0.16) $ (0.04)
Weighted average shares outstanding - basic and diluted 3,876,476 3,983,198
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 3
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended
September 30,
----------------------------
1999 1998
---------- ---------
<S> <C> <C>
Net loss $(603,282) $(152,217)
Other comprehensive income (loss)
Unrealized holding gains (losses) arising during period -- --
--------- ---------
Comprehensive loss $(603,282) $(152,217)
========= =========
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 4
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1999 1998
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (603,282) $ (152,217)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation and amortization 234,580 227,001
Changes in operating assets and liabilities:
Trade and other receivables 157,330 783
Inventories (151,808) (128,554)
Prepaid expenses and other (66,897) (96,860)
Accounts payable 73,601 355,632
Accrued expenses 4,253 2,719
----------- -----------
Net cash provided by (used in) operating activities (352,223) 208,504
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (122,380) (61,042)
Investment in patents and trademarks (4,855) (27,562)
----------- -----------
Net cash used in investing activities (127,235) (88,604)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchases and retirement of common stock -- (300,675)
----------- -----------
Net cash used in financing activities -- (300,675)
----------- -----------
Net decrease in cash and cash equivalents (479,458) (180,775)
Cash and cash equivalents at beginning of period 1,022,025 2,186,532
----------- -----------
Cash and cash equivalents at end of period $ 542,567 $ 2,005,757
=========== ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 5
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1999 1998
------- ------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest expense $ 1,114 $ -
Income taxes - 8,400
</TABLE>
See accompanying notes to the consolidated financial statements.
I - 6
<PAGE>
LECTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTERS ENDED SEPTEMBER 30, 1999 AND 1998
(1) GENERAL
The accompanying consolidated financial statements include the
accounts of LecTec Corporation (the "Company") and LecTec International
Corporation, a wholly-owned subsidiary. All significant intercompany balances
and transactions have been eliminated in consolidation. The Company's financial
statements for the three months ended September 30, 1999 should be read in
conjunction with its Annual Report on Form 10-K and its Annual Report to
Shareholders for the fiscal year ended June 30, 1999. The interim financial
statements are unaudited and in the opinion of management, reflect all
adjustments necessary for a fair presentation of results for the periods
presented. Results for interim periods are not necessarily indicative of results
for the year.
(2) NET EARNINGS (LOSS)
The Company's basic net earnings (loss) per share amounts have
been computed by dividing net earnings (loss) by the weighted average number of
outstanding common shares. The Company's diluted net earnings (loss) per share
amounts have been computed by dividing net earnings (loss) by the weighted
average number of outstanding common shares and common share equivalents, when
dilutive. Options and warrants to purchase 1,142,883 and 867,579 shares of
common stock with a weighted average exercise price of $6.48 and $7.75 were
outstanding during the three months ended September 30, 1999 and 1998, but were
excluded because they were antidilutive.
(3) SEGMENTS
The Company operates its business in one reportable segment - the
manufacture and sale of products based on advanced skin interface technologies.
Each of the Company's major product lines have similar economic characteristics,
technology, manufacturing processes, and regulatory environments. Customers and
distribution and marketing strategies vary within major product lines as well as
overlap between major product lines. The Company's executive decision makers
evaluate sales performance based on the total sales of each major product line
and profitability on a total company basis, due to shared infrastructures, to
make operating and strategic decisions. Net sales by major product line were as
follows:
Three months ended September 30, 1999 1998
------ ------
Conductive products $1,576,783 $1,974,546
Medical tape products 568,790 747,883
Therapeutic consumer products 863,179 180,628
---------- ----------
$3,008,752 $2,903,057
========== ==========
(4) STOCK REPURCHASE PROGRAM
In April 1998, the Company's Board of Directors authorized a stock
repurchase program pursuant to which up to 500,000 shares, or approximately
12.4% of the Company's outstanding common stock, may be repurchased. The shares
may be purchased from time to time through open market transactions, block
purchases, tender offers, or in privately negotiated transactions. The total
consideration for all shares repurchased under this program cannot exceed
$2,000,000. During the quarter ended September 30, 1999 no shares were
repurchased and during the quarter ended September 30, 1998, 90,850 shares were
repurchased for $300,675. Through September 30, 1999 the Company has repurchased
a total of 205,150 shares at a cost of $667,963 under this program.
I - 7
<PAGE>
(5) RISKS AND UNCERTAINTIES
The Year 2000 issue relates to limitations in computer systems and
applications that may prevent proper recognition of the year 2000. The potential
effect of the Year 2000 issue on the Company and its business partners will not
be fully determinable until the year 2000 and thereafter. If Year 2000
modifications are not properly completed either by the Company or entities with
whom the Company conducts business, the Company's financial condition and
results of operations could be adversely impacted.
I - 8
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
QUARTERS ENDED SEPTEMBER 30, 1999 AND 1998
RESULTS OF OPERATIONS
Net sales for the first quarter of fiscal 2000 were $3,008,752 compared
to net sales of $2,903,057 for the first quarter of fiscal 1999, an increase of
3.6%. The increase was primarily the result of increased therapeutic consumer
product sales which more than offset decreased conductive product and medical
tape sales. Therapeutic consumer product sales increased by 377.9% from $180,628
to $863,179 while conductive product sales, the Company's largest product group,
decreased by 20.1% and medical tape product sales decreased by 23.9%. The
therapeutic consumer product sales increase was primarily the result of
increased TheraPatch(R) sales volume, especially TheraPatch Vapor products. The
conductive product sales decrease was primarily the result of period-to-period
fluctuations in ordering patterns of two customers and the absence of sales to a
former customer who began manufacturing their own product. Sales to the former
customer in the prior year quarter were approximately $152,000. Medical tape
product sales decreased primarily due to a decrease in sales to several
low-margin medical tape customers.
Gross profit for the first quarter of fiscal 2000 was $939,281 compared
to $1,017,253 for the first quarter of fiscal 1999, a decrease of 7.7%. Gross
profit as a percent of net sales for the first quarter of fiscal 2000 was 31.2%
compared to 35.0% for the first quarter of fiscal 1999. The decrease in gross
profit for the quarter resulted primarily from increased labor, material and
contract packaging costs which more than offset the favorable impact of a change
in the sales mix toward higher-margin therapeutic consumer products. Labor costs
were higher in the current quarter primarily due to an increase in staffing
levels and increased contract and temporary labor. The increased material and
contract packaging costs were primarily related to production of our therapeutic
patch products. The installation of an automated packaging machine in the second
quarter is expected to reduce patch manufacturing costs.
Sales and marketing expenses were $735,045 and $333,533 during the
first quarters of fiscal 2000 and 1999, and as a percentage of net sales, were
24.4% and 11.5%. The increase in sales and marketing expense for the quarter was
primarily due to increased retail slotting fees, account performance expense,
advertising and staffing levels related to therapeutic consumer products sales
activities. The Company anticipates that sales and marketing expenses as a
percent of sales for the remainder of fiscal 2000 will be comparable to the
first quarter of fiscal 2000 due to marketing programs associated with
therapeutic consumer product sales.
General and administrative expenses were $559,090 and $586,461 during
the first quarters of fiscal 2000 and 1999, and as a percentage of net sales,
were 18.6% and 20.2%. The decrease in general and administrative expenses for
the quarter was primarily due to decreased consulting and legal expenses.
Research and development expenses for the first quarters of fiscal 2000
and 1999 were $269,762 and $280,013, and as a percentage of net sales, were 9.0%
and 9.6%. The decrease in research and development expense for the quarter
primarily reflects decreased costs for the testing of products under
development.
Other income, net decreased in the first quarter of fiscal 2000 to
$21,334 from $31,801 in the first quarter of fiscal 1999. The decrease was
primarily the result of decreased interest income due to lower cash and cash
equivalent balances.
The Company recorded a loss before income taxes of $603,282 in the
first quarter of fiscal 2000 compared to a loss before income taxes of $150,953
for the first quarter of fiscal 1999. The increased
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<PAGE>
loss in the current year first quarter was primarily the result of increased
sales and marketing expenses related to therapeutic consumer products retail
sales activities.
The Company recorded no income tax expense or benefit in the first
quarter of fiscal 2000 compared to income tax expense of $1,264 in the first
quarter of fiscal 1999. There was no income tax benefit recorded during the
first quarters of fiscal 2000 and 1999 since the loss benefit may not be
realizable by the Company. Income tax expense in the first quarter of fiscal
1999 reflects minimal tax expense associated with the Company's foreign sales
corporation subsidiary.
Inflation has not had a significant impact on the Company's operations
or cash flow.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents decreased by $479,458 to $542,567 during the
first quarter of fiscal 2000. Accounts receivable decreased by $157,330 to
$2,194,215 primarily due to a reduction of accounts 31 to 60 days old.
Inventories increased by $151,808 to $2,148,332 primarily due to increased raw
materials inventory. Accounts payable increased by $73,601 to $1,750,377 during
the first quarter of fiscal 2000. Capital spending for plant improvements and
equipment totaled $122,380 during the first quarter of fiscal 2000. There were
no material commitments for capital expenditures at September 30, 1999.
Working capital decreased to $2,975,778 at the end of the first quarter
of fiscal 2000 from $3,471,715 at the end of fiscal 1999. The Company had a
current ratio at the end of the first quarter of fiscal 2000 of 2.2 as compared
to 2.4 at the end of fiscal 1999.
The Company has no short or long-term debt. The Company had an
unsecured $1,000,000 working capital line of credit through September 1, 1998.
There were no borrowings outstanding under the line of credit during the fiscal
years ended June 30, 1999 or 1998. The Company is currently reviewing a proposal
from a bank to provide a new $2,000,000 secured, asset-based line of credit and
expects to finalize the line of credit by December 31, 1999. Management believes
that existing cash and cash equivalents, internally-generated cash flow and the
new secured line of credit the Company expects to obtain will be sufficient to
support anticipated operating and capital spending requirements during fiscal
2000. Management is currently evaluating additional sources of capital that may
be appropriate for funding longer-term growth and expansion of the business.
Maintaining adequate levels of working capital depends in part upon the success
of the Company's products in the marketplace, the relative profitability of
those products and the Company's ability to control operating expenses. Funding
of the Company's operations in future periods may require additional investments
in the Company in the form of equity or debt. There can be no assurance that the
Company will achieve desired levels of sales or profitability, or that future
capital infusions will be available.
IMPACT OF THE YEAR 2000 ISSUE
The Year 2000 ("Y2K") issue is the result of computer systems using a
two-digit format, as opposed to four digits, to indicate the year. Such computer
systems may be unable to interpret dates beyond the year 1999, which could cause
a system failure or other computer errors, leading to disruptions in operations.
A number of other date issues (e.g., incorrect handling of leap years) may also
cause problems. All of these issues are collectively referred to as Y2K. In
fiscal 1998, the Company developed a comprehensive program for Y2K compliance
consisting of two parts: internal systems compliance and third party compliance.
The internal systems compliance program includes informational,
manufacturing, financial and communication systems. A committee consisting of
representatives from all key areas of the Company developed the program. The
internal systems compliance program consists of five-phases. Phase I is the
identification of all internal computer systems in the Company, including
embedded microprocessor or similar circuitry. Phase II is the determination of
Y2K compliance for these systems. Phase III is
I - 10
<PAGE>
development and implementation of action plans to achieve compliance where
needed, and is followed by the testing in Phase IV of these systems after action
plans have been completed. Phase V involves establishing risk and developing
contingency plans where necessary (e.g., situations where compliance can not be
established or the risks associated with errors in establishing compliance are
significant).
The third party compliance program consists of three phases with Phase
I being the identification of major and/or critical third party vendors and
customers. Phase II consists of contacting these third parties and determining
their Y2K compliance. Phase III involves establishing risk and developing
contingency plans where necessary (e.g., situations where third party compliance
cannot be established or the risks associated with noncompliance are
significant).
The Company has completed Phases I and II of the internal systems
compliance program and found the majority of its systems and all of its core
systems to be Y2K compliant. The Y2K compliant status of the core systems
benefited from upgrades undertaken during the past several years to make these
systems adequate for the business needs of the Company. Plans to achieve Y2K
compliance for the non-core systems were developed and completed by the end of
calendar 1998 (Phase III). Phase IV of the program, testing of systems after
implementation of changes, was completed by June 30, 1999. Phase V, development
of contingency plans where necessary, was substantially completed by October 31,
1999 and the need for additional contingency measures will continue to be
evaluated throughout the remainder of calendar year 1999.
The Company has completed Phase I and II of the third party compliance
program for current vendors and customers and is contacting new vendors and
customers to determine their Y2K compliance. The Company is approximately 90%
complete with Phase III, the evaluation of responses, establishment of risk and
the development of contingency plans. Because of the diversity of sources
available for the Company's raw material, packaging material and supplies, the
Company believes that Y2K compliance issues for these third parties will not
have a material adverse effect on the Company's financial position, operations
or cash flow. There can, however, be no assurance that this will be the case. If
certain critical third party providers, such as those providers supplying
electricity, water or telephone service, experience difficulties resulting in
disruption of service to the Company, a shutdown of the Company's operations at
individual facilities could occur for the duration of the disruption. The
Company had substantially completed all phases of the third party compliance
program by October 31, 1999.
All costs for Y2K compliance have been expensed in the period incurred
and have been paid from operating funds. The Company does not specifically track
internal staff time spent on the Y2K issue, however, it has included an estimate
of the cost of this time in the estimated total costs. The Company estimates the
total costs for both the internal systems compliance program and the third party
compliance program through September 30, 1999 to be approximately $25,000, while
total costs for Y2K compliance are estimated to be less than $30,000.
The Company's ability to successfully identify and address Y2K issues
involves inherent risks and uncertainties, and depends upon a number of factors
including, but not limited to, the availability of key Y2K personnel, the
Company's ability to locate and correct all relevant computer codes, the
readiness of third parties, and the Company's ability to respond to unforeseen
Y2K complications. Depending upon such factors, the Y2K issues faced by the
Company could result in, among other things, business disruption, operation
problems, financial loss, legal liability and similar adverse consequences.
FORWARD-LOOKING STATEMENTS
From time to time, in reports filed with the Securities and Exchange
Commission (including this Form 10-Q), in press releases, and in other
communications to shareholders or the investment community, the Company may
provide forward-looking statements concerning possible or anticipated future
results of operations or business developments which are typically preceded by
the words "believes", "expects", "anticipates", "intends", "will", "may",
"should" or similar expressions. Such forward-looking statements are subject to
risks and uncertainties which could cause results or developments to
I - 11
<PAGE>
differ materially from those indicated in the forward-looking statements. Such
risks and uncertainties include, but are not limited to, the buying patterns of
major customers; competitive forces including new products or pricing pressures;
costs associated with and acceptance of the Company's new brand strategy; impact
of interruptions to production; dependence on key personnel; need for regulatory
approvals; changes in governmental regulatory requirements or accounting
pronouncements, unforeseen Y2K complications and third party disruptions; and
ability to satisfy funding requirements for operating needs, expansion or
capital expenditures.
I - 12
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no history of, and does not anticipate in the
future, investing in derivative financial instruments, derivative commodity
instruments or other such financial instruments. Transactions with international
customers are entered into in U.S. dollars, precluding the need for foreign
currency hedges. Additionally, the Company invests in money market funds and
short-term commercial paper, which experience minimal volatility.
Thus, the exposure to market risk is not material.
I - 13
<PAGE>
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES
There have been no changes in the rights of security holders.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
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
<TABLE>
<CAPTION>
Item No. Item Method of Filing
-------- ---- ----------------
<S> <C> <C> <C>
27 Financial data schedule . . . . . . . . . . . . . Filed herewith.
</TABLE>
(b) REPORTS ON FORM 8-K
None.
II-1
<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.
LECTEC CORPORATION
Date November 12, 1999 /s/ Rodney A. Young
----------------- ----------------------------------------------------
Rodney A. Young, Chief Executive Officer & President
Date November 12, 1999 /s/ Deborah L. Moore
----------------- ----------------------------------------------------
Deborah L. Moore, Chief Financial Officer
II-2
<TABLE> <S> <C>
<ARTICLE> 5
<CURRENCY> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 542,567
<SECURITIES> 0
<RECEIVABLES> 2,306,247
<ALLOWANCES> 112,032
<INVENTORY> 2,148,332
<CURRENT-ASSETS> 5,480,685
<PP&E> 9,781,882
<DEPRECIATION> 5,824,050
<TOTAL-ASSETS> 9,607,145
<CURRENT-LIABILITIES> 2,504,907
<BONDS> 0
0
0
<COMMON> 38,765
<OTHER-SE> 6,866,473
<TOTAL-LIABILITY-AND-EQUITY> 9,607,145
<SALES> 3,008,752
<TOTAL-REVENUES> 3,008,752
<CGS> 2,069,471
<TOTAL-COSTS> 2,069,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 12,000
<INTEREST-EXPENSE> 1,084
<INCOME-PRETAX> (603,282)
<INCOME-TAX> 0
<INCOME-CONTINUING> (603,282)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (603,282)
<EPS-BASIC> (.16)
<EPS-DILUTED> (.16)
</TABLE>
