U.S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
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 0-20701
COMPOSITECH LTD.
(Exact Name of Registrant as specified in its charter)
Delaware 11-2710467
------------- --------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
120 Ricefield Lane, Hauppauge, New York 11788
---------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (516) 436-5200
--------------
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
requirement for the past 90 days.
Yes | | No |X|*
- -
*Registrant became subject to such filing requirements on July 2, 1996.
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of August 12, 1996:
Common Stock $.01 par value 6,103,939
--------------------------- ---------
Class Number of shares
<PAGE>
COMPOSITECH LTD.
(a development stage company)
Index
Pages
-----
Part I - Financial Information
- - ------------------------------
Item 1. Financial Statements (unaudited)
Balance Sheets as of June 30, 1996, historical and pro forma........ 2
Statements of Operations for the three-month and six-month
periods ended June 30, 1995 and 1996 and cumulative
from June 13, 1984 (date of inception) through June 30, 1996...... 3
Statements of Cash Flows for the six-month periods ended June 30,
1995 and 1996 and cumulative from June 13, 1984
(date of inception) through June 30, 1996......................... 4
Notes to Financial Statements....................................... 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................... 7
Part II - Other Information
- - ---------------------------
Item 2. Changes in Securities............................................... 11
Item 4. Submission of Matters to a Vote of Security Holders................. 11
Item 5. Other Information................................................... 11
Item 6. Exhibits and Reports on Form 8-K.................................... 11
Signature.................................................................... 12
-1-
<PAGE>
COMPOSITECH LTD.
(a development stage company)
BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1996
Historical Pro Forma
------------- --------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and temporary investments $932,399 $6,298,399
Inventories 211,475 211,475
Accounts receivable - trade 44,901 44,901
Accounts receivable - other 84,096 84,096
Prepaid expenses and other 52,010 52,010
------------- --------------
Total current assets 1,324,881 6,690,881
Property and equipment at cost:
Production equipment 2,160,417 2,160,417
Laboratory equipment 137,463 137,463
Furniture, fixtures and equipment 291,865 291,865
Leasehold improvements 212,976 212,976
Construction-in-progress 251,640 251,640
Equipment under capital leases 120,770 120,770
------------- --------------
3,175,131 3,175,131
Less accumulated depreciation and amortization 933,013 933,013
------------- --------------
2,242,118 2,242,118
Deferred private placement fees and expenses, net 224,814
Deferred public offering expenses 567,824
Other assets and deferred charges, net 61,339 61,339
------------- --------------
Total assets $4,420,976 $8,994,338
============= ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities:
Accounts payable $478,476 $478,476
Deferred salaries 939,643 746,643
Accrued interest 318,157 32,157
Other accrued liabilities 460,400 460,400
Current maturities of long-term debt 4,055,000
------------- --------------
Total current liabilities 6,251,676 1,717,676
Long-term debt:
Notes payable to stockholders 850,000 850,000
10% secured notes - stockholders 745,000 745,000
------------- --------------
1,595,000 1,595,000
Capital lease obligations 30,946 30,946
Other liabilities 37,500 37,500
Commitments
Stockholders' equity (deficiency):
Undesignated preferred stock; authorized 4,000,000 shares,
none issued and outstanding
Series A convertible preferred stock, par value $3.00 per share;
authorized, issued and outstanding shares - 714,161 2,142,483 2,142,483
Convertible preferred stock, par value $5.00 per share;
authorized, issued and outstanding shares - 433,500 historical; none pro forma 2,167,500
Common stock, par value $.01 per share; authorized shares - 25,000,000;
issued and outstanding shares - 3,472,189 historical; 6,103,939 pro forma 34,722 61,039
Additional paid-in capital 10,407,619 21,880,978
Deficit accumulated during the development stage (18,246,470) (18,471,284)
------------- --------------
Total stockholders' equity (deficiency) (3,494,146) 5,613,216
------------- --------------
Total liabilities and stockholders' equity (deficiency) $4,420,976 $8,994,338
============= ==============
</TABLE>
See accompanying notes.
-2-
<PAGE>
COMPOSITECH LTD.
(a development stage company)
STATEMENTS OF OPERATIONS
(unaudited)
<TABLE>
<CAPTION>
Cumulative from
June 13, 1984
Three months ended Six months ended (date of inception)
June 30 June 30 through
----------------------------------- ----------------------------------- June 30,
1995 1996 1995 1996 1996
---------------- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C> <C>
Revenues:
Income from patent immunity agreement $5,012,515
Sales $13,842 $55,067 $20,002 $95,052 230,223
---------------- ---------------- ---------------- ---------------- ----------------
Total revenues 13,842 55,067 20,002 95,052 5,242,738
---------------- ---------------- ---------------- ---------------- ----------------
Costs and expenses:
Research and development 619,167 30,857 1,161,999 55,482 14,856,753
Manufacturing expenses 657,204 1,339,362 1,339,362
Selling, general and administrative 144,983 239,891 341,109 507,859 6,439,667
---------------- ---------------- ---------------- ---------------- ----------------
Total operating expenses 764,150 927,952 1,503,108 1,902,703 22,635,782
---------------- ---------------- ---------------- ---------------- ----------------
(Loss) from operations (750,308) (872,885) (1,483,106) (1,807,651) (17,393,044)
Other income (expenses):
Interest income 1,039 15,431 3,193 24,091 596,899
Interest and debt expense (net of interest
capitalized) (53,342) (213,262) (83,243) (430,956) (1,383,977)
Other 65,522 501 75,342 7,618 33,652
---------------- ---------------- ---------------- ---------------- ----------------
13,219 (197,330) (4,708) (399,247) (753,426)
(Loss) before provision
for income taxes (737,089) (1,070,215) (1,487,814) (2,206,898) (18,146,470)
Provision for income taxes 100,000
---------------- ---------------- ---------------- ---------------- ----------------
Net (loss) ($737,089) ($1,070,215) ($1,487,814) ($2,206,898) ($18,246,470)
================ ================ ================ ================ ================
Net (loss) per share ($0.18) ($0.24) ($0.37) ($0.52) ($5.81)
================ ================ ================ ================ ================
Shares used in computing net (loss)
per share 3,995,769 4,404,326 3,995,769 4,226,146 3,141,491
================ ================ ================ ================ ================
See accompanying notes.
</TABLE>
-3-
<PAGE>
COMPOSITECH LTD.
(a development stage company)
STATEMENTS OF CASH FLOWS
(unaudited)
.
<TABLE>
<CAPTION>
Cumulative from
June 13, 1984
Six months ended (date of inception)
June 30, through
--------------------------------- June 30,
1995 1996 1996
--------------- --------------- -------------------
<S> <C> <C> <C>
Cash Flows from Operating Activities
Net (loss) ($1,487,814) ($2,206,898) ($18,246,470)
Adjustments to reconcile net (loss) to net cash and
temporary investments used in operating activities:
Depreciation and amortization, including capital leases 141,252 127,842 1,952,019
Stockholder services credited to additional paid-in-capital 54,000 972,000
Loss on disposal of property and equipment 525,712
Private placement fee and expenses 86,046
Amortization of debt financing costs 5,094 153,077 321,610
Non-recourse notes applied to patent immunity agreement (3,012,515)
Changes in operating assets and liabilities:
Accrued interest on notes receivable (12,500)
Inventories (6,144) (84,173) (211,475)
Prepaid expenses (6,528) (4,812) (52,010)
Accounts receivable - trade (19,035) (44,901)
Accounts receivable - other (55,707) (84,096)
Other assets (1,260) 2,748 (19,533)
Accounts payable 12,921 260,400 478,476
Deferred salaries 240,270 73,995 939,643
Accrued interest 46,468 142,618 330,657
Other accrued liabilities 20,591 185,155 445,065
Income taxes payable (100,000)
--------------- --------------- -------------------
Net cash and temporary investments used in
operating activities (1,081,150) (1,424,790) (15,632,272)
Cash Flows from Investing Activities
Purchase of property and equipment - net (99,451) (314,188) (4,600,333)
--------------- --------------- -------------------
Net cash and temporary investments used in
investing activities (99,451) (314,188) (4,600,333)
Cash Flows from Financing Activities
Net proceeds from issuance of common stock 1,488,059 9,531,489
Net proceeds from notes payable 959,468 145,687 7,603,233
Payment received on notes receivable 750,000
Payment of notes payable (82,500) (1,457,500)
Proceeds from non-recourse notes plus interest 3,012,515
Net proceeds from issuance of Series A convertible preferred stock 1,062,264
Net proceeds from issuance of convertible preferred stock 1,920,620
Contribution to capital from stockholders 221,461
Payment of capital lease obligations (68,245)
Expenses - proposed financings (555,717) (606,787)
Private placement expenses - terminated financing (54,046)
--------------- --------------- -------------------
Net cash and temporary investments provided by
financing activities 959,468 1,745,529 21,165,004
--------------- --------------- -------------------
(Decrease) increase in cash and temporary investments (221,133) 6,551 932,399
Cash and temporary investments at beginning of period 253,546 925,848
--------------- --------------- -------------------
Cash and temporary investments at end of period $32,413 $932,399 $932,399
=============== =============== ===================
Supplemental disclosures of cash flow information
Noncash financing activities:
Capital lease obligations for property and equipment acquisitions $120,770
===================
Cash paid for:
Interest $19,308 $165,753 $669,686
=============== =============== ===================
Income taxes $100,000 $100,000
=============== ===================
</TABLE>
See accompanying notes.
-4-
<PAGE>
COMPOSITECH LTD.
(a development stage company)
Notes to Financial Statements
(Unaudited)
June 30, 1996
Note 1 - Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results for the three- and six-month periods ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the year
ended December 31, 1996. For further information, refer to the financial
statements and footnotes thereto for the year ended December 31, 1995 included
in the Company's prospectus for its initial public offering ("IPO") dated July
3, 1996.
The Company has developed an advanced laminate for printed circuit boards for
the electronics industry but has not as yet generated significant revenues from
this operation. Accordingly, the company's activities have been accounted for as
those of a "Development Stage Enterprise". As discussed in Note 2, the Company
closed its IPO on July 9, 1996. Based upon the application of the net proceeds
of the IPO as described herein, the Company plans to increase its production
capacity and estimates achieving a positive cash flow within one year from the
closing of the IPO. Such estimate reflects important assumptions regarding a
number of factors and future events, some of which are beyond the Company's
control. There can be no assurance that management has identified and made
appropriate assumptions regarding all factors that may affect the Company's
business in the future. Beyond such 12-month period, the Company plans to obtain
additional financing for further expansion from the exercise of the warrants or
commercial financing sources.
Note 2 - Balance Sheet/Statement of Stockholders' Equity/Subsequent Events
On April 1, 1996 and June 26, 1996, the Company raised $760,000 and $240,000,
respectively in negotiated offshore investments and issued an aggregate of
208,000 shares ($5.00 per share) of common stock after giving effect to
commission shares and an agreed upon adjustment in the number of shares. Net
proceeds after cash commissions and expenses were $954,466.
On June 26, 1996, the Company (i) increased the number of authorized shares of
common stock to 25,000,000 (ii) authorized 4,000,000 shares of undesignated
preferred stock and (iii) effected a one-for-two reverse split of the Company's
common stock. Retroactive effect has been given to the reverse split as if it
had occurred on the date of inception of the Company.
-5-
<PAGE>
On July 9, 1996, the Company completed an IPO in which the Company sold
2,415,000 units at $5.00 each, each unit consisting of one share of common stock
and one redeemable common stock warrant. The aggregate price was $12,075,000
which resulted in net proceeds of approximately $9,900,000 net of discounts,
commissions and estimated expenses. Each warrant entitles the holder to purchase
one share of common stock at $6.25 per share through July 3, 2001. At any time
after July 9, 1997, the warrants may be redeemed by the Company at $.01 per
warrant if the closing bid quotation of the common stock has been at least 150%
of the then exercise price of the warrants on each of 20 consecutive trading
days ending on a day not more than three days prior to the date of the notice of
redemption.
As a result of the closing of the IPO, the Company offset the full amount of its
deferred public offering expenses against additional paid-in capital.
On July 9, 1996, the outstanding convertible preferred stock automatically
converted into shares of common stock on the basis of one share of common stock
for each two shares of convertible preferred stock.
On July 10, 1996 through July 18, 1996, the Company repaid $4,055,000 of 10%
Secured Notes plus $286,244 of accrued interest which by their terms were to be
prepaid with the proceeds of the public offering. In this connection, the
Company wrote off $224,814 of deferred private placement fees and expenses
arising from this debt because of the acceleration of payment.
On July 19, 1996, the Company repaid $193,138 of deferred salaries to employees.
In view of the significance of these transactions, a pro forma balance sheet
giving effect to the foregoing transaction is presented.
Note 3 - Net Loss Per Share
Net loss per share is based on the weighted average number of shares of common
stock outstanding assuming the conversion of the Series A convertible preferred
stock into common stock. However, in accordance with Staff Accounting Bulletin
Number 83 ("SAB No. 83")of the Securities and Exchange Commission, the common
stock equivalents that were issued during the 12 months preceding the IPO at
prices below the IPO price have been included in the Company's loss per share
computation using the treasury stock method and the IPO price, and treated as if
they had been issued at the Company's inception even though they were
antidilutive in the period with losses.
-6-
<PAGE>
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Quarterly Report on Form 10-QSB contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. Actual results could differ materially from
those projected in the forward-looking statements as a result of a number of
important factors. For a discussion of important factors that could affect the
Company's results, please refer to the discussions below and in the Company's
prospectus for its initial public offering ("IPO") dated July 3, 1996.
Overview
The Company was founded in 1984 to develop copper-clad fiberglass epoxy
laminates used to manufacture printed circuit boards required by the electronics
industry. As part of its development program, the Company developed processes
and machinery to manufacture its unique laminates, designed and assembled
prototype equipment to produce 24" x 24" laminates, and designed, assembled and
debugged a production module to produce 36" x 48" laminates.
During 1995 and 1996, the Company has been producing and selling its laminates
in limited quantities for qualification and use in production by its customers.
The quantities produced have been limited because of working capital and
production constraints. The Company is in the development stage because it has
not earned significant revenues from its planned principal operations.
On July 9, 1996, the Company received net proceeds of approximately $9,900,000
from its IPO. Approximately $4,300,000 was used to reduce substantially debt and
accrued interest. The Company is using the remaining proceeds to add production
modules to its existing equipment and for working capital.
Results of Operations
Sales of laminates increased from $13,842 for the three months ended June 30,
1995 to $55,067 for the three months ended June 30, 1996 and from $20,002 for
the six months ended June 30, 1995 to $95,052 for the six months ended June 30,
1996. These increases resulted from additional orders of laminates by customers,
but were limited by the Company's working capital and production constraints. In
addition, the 1995 periods included debugging of equipment and more intensive
establishment of specifications for the Company's manufacturing process.
Research and development expenses decreased from $619,167 for the three months
ended June 30, 1995 to $30,857 for the three months ended June 30, 1996 and from
$1,161,999 for the six months ended June 30, 1995 to $55,482 for the six months
ended June 30, 1996. The decreases were due to the change in the focus of the
Company's activities from research and development to commercial production.
-7-
<PAGE>
Manufacturing expenses were $657,204 for the three months ended June 30, 1996
and $1,339,362 for the six months ended June 30, 1996. There were no
manufacturing expenses in the 1995 periods. This was due to the transition of
the Company's activities from research and development to commercial production.
The increases in manufacturing expenses in 1996 compared with research and
development expenses in 1995 were due to added personnel, purchases of
materials, overhead and other expenses related to commercial production.
Selling, general and administrative expenses increased from $144,983 for the
three months ended June 30, 1995 to $239,891 for the three months ended June 30,
1996 and from $341,109 for the six months ended June 30, 1995 to $507,859 for
the six months ended June 30, 1996. Patent expense in the 1996 periods increased
by approximately $20,000 and $27,000 respectively, due principally to increased
activity in the further development of the Company's international patent
estate. Other increases were in personnel costs and travel as the Company
increased its sales development and international activities.
Interest and debt expense increased from $53,342 for the three months ended June
30, 1995 to $213,262 for the three months ended June 30, 1996 and from $83,243
for the six months ended June 30, 1995 to $430,956 for the six months ended June
30, 1996. These increases were due to the borrowing under the 10% Secured Notes
in 1995 and 1996.
The foregoing resulted in the Company having a net loss of $737,089 for the
three months ended June 30, 1995 compared to $1,070,215 for the three months
ended June 30, 1996 and a net loss of $1,487,814 for the six months ended June
30, 1995 compared to $2,206,898 for the six months ended June 30, 1996. The
increased losses were principally the result of interest and debt expense and
greater expenses incurred in preparation for anticipated increases in
manufacturing volume. The loss for the three months ended June 30, 1996 was
approximately $66,000 less than for the first quarter of 1996 which had already
reflected increased activity over 1995.
Liquidity and Capital Resources
Prior to its IPO, the Company had financed its operations through private
placements of debt and equity securities and from income from a patent immunity
agreement. Some of this financing has come from officers and directors of the
Company.
At June 30, 1996, the Company had cash and temporary investments of $932,399. On
July 9, 1996, the Company received net proceeds of approximately $9,900,000 from
the IPO and subsequently repaid debt and interest of approximately $4,340,000
and deferred salaries of approximately $193,000. This had the effect of reducing
interest payments by $34,000 a month. The remaining funds of approximately
$5,400,000 are available to fund currently anticipated capital expenditures and
current operations (which require approximately $300,000 a month based upon
current production rates). As the Company increases its production rates, it
will have increased operating cash requirements through at least the end of 1996
before the effects of expanded production capacity are realized. Based upon the
application of the net proceeds of the IPO as described herein, the Company
plans to increase its production capacity and estimates achieving a positive
cash flow within one year from the closing of the IPO. Such estimate reflects
important assumptions regarding a number of factors and future events, some of
which are beyond the Company's control. There can be no assurance that
management has identified and
-8-
<PAGE>
made appropriate assumptions regarding all factors that may affect the Company's
business in the future. Beyond such 12-month period, the Company plans to obtain
additional financing for further expansion from the exercise of the warrants
issued as part of the IPO or commercial financing sources.
The Company is a development stage enterprise and has had limited revenues from
the sale of laminates, has incurred significant losses and has had substantial
negative cash flow since its inception. The Company expects significant
operating losses and negative cash flow to continue through 1996. The Company
will use a portion of the proceeds of the IPO to expand its production capacity
and plans to achieve significant revenues so as to conclude its development
stage. There can be no assurance that the Company will successfully complete
expansion of its production equipment, achieve broad commercial acceptance of
its product or generate sufficient revenues to achieve profitable operations.
On March 29, 1996, the Company signed a Memorandum of Understanding with three
Quebec institutional investors, providing for the initiation of certain studies
and procedures which may lead to an investment in the Company for the purpose of
forming a joint venture for the establishment of a plant in the greater Montreal
area to manufacture Compositech's laminates. The studies are in progress.
The Company has incurred losses since its inception and, therefore, has not been
subject to federal income taxes except for the alternative minimum tax in 1994.
As of December 31, 1995, the Company had net operating loss ("NOL") and tax
credit carryforwards for income tax purposes of approximately $13,800,000 and
$950,000, respectively, which may be available to reduce future taxable income
and future tax liabilities. These carryforwards begin to expire in 2003. The
Internal Revenue Code ("IRC") includes provisions which significantly limit
potential use of net operating losses in situations where there is a change in
ownership, as defined, of more than 50% during a three-year period. Accordingly,
if a change in ownership occurs, the ultimate benefit realized from these
carryovers may be significantly reduced in total, and the amount that may be
utilized in any given year may be significantly limited. The limitation is
computed based upon the fair market value of the Company at the time of the
ownership change multiplied by the federal long-term tax-exempt borrowing rate.
The common stock issuance in the IPO combined with the other stock issuances
completed by the Company during the past three years have initiated a change in
ownership as defined in the IRC. Accordingly, the Company is currently subject
to an annual limitation of NOL carryforwards of approximately $1,170,000.
Six Months Ended June 30, 1996 Compared with Six Months Ended June 30, 1995
Net cash and temporary investments used in operating activities increased from
$1,081,150 for the six months ended June 30, 1995 to $1,424,790 for the six
months ended June 30, 1996. The principal reason for the difference was the
increased activity in 1996 referred to above mitigated by increases in accounts
payable and the effect of the amortization of debt financing costs.
Net cash and temporary investments used in investment activities representing
capital expenditures for equipment increased from $99,451 for the six months
ended June 30, 1995 to $314,188 for the six months ended June 30, 1996. The
increase resulted from design and engineering of additional production modules
and the upgrading of existing equipment.
-9-
<PAGE>
Cash flows from financing activities increased from $959,468 for the six months
ended June 30, 1995 to $1,745,529 for the six months ended June 30, 1996. The
only financing activity in the 1995 period was the private placement of 10%
Secured Notes which netted $959,468. The principal financing activities in the
1996 period were the collection of $750,000 of notes receivable received in
connection with the 10% Secured Note financing in 1995, net proceeds from the
issuance of common stock in private placements of $1,488,059 and net proceeds
from the issuance of additional 10% Secured Notes of $145,687, offset by
$555,717 of expenses in connection with the IPO.
-10-
<PAGE>
Part II - Other Information
Item 2. Changes in Securities
Effective June 26, 1996, the Company implemented a one-for-two reverse split of
the Company's common stock, $.01 par value. Effective July 9, 1996, the
Company's outstanding shares of convertible preferred stock, $.01 par value,
converted into shares of the Company's common stock on the basis of one share of
convertible preferred stock for one-half share of common stock.
Item 4. Submission of Matters to a Vote of Security Holders
Pursuant to a written consent in lieu of an annual meeting of stockholders, on
May 24, 1996, the holders of 4,144,933 of the outstanding voting stock, or
approximately 52.6% of the outstanding voting stock on that date, elected the
following directors:
Jonas Medney
Fred E. Klimpl
John F. Gahran
Samuel S. Gross
Willard T. Jackson
Robert W. Middleton
Heinz-Gerd Reinkemeyer
James W. Taylor
Pursuant to a written consent in lieu of a meeting of stockholders, on June 5,
1996, the holders of 4,144,933 of the outstanding voting stock, or approximately
52.6% of the outstanding voting stock on that date, approved the amendment of
the Company's Certificate of Incorporation to effect a one-for-two reverse split
of the Company's common stock, increase the Company's total authorized capital
stock from eleven million eight hundred sixty-six thousand six hundred and
sixty-seven (11,866,667) shares of common stock, $.01 par value, to twenty-five
million (25,000,000) shares, and authorize four million (4,000,000) shares of
undesignated preferred stock, $.01 par value. The Company implemented the
amendment to its Certificate of Incorporation effective June 26, 1996.
Item 5. Other Information
On May 10, 1996, the Company filed a Registration Statement under the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") on Form 8-A registering
the Company's Units, common stock, $.01 par value, and redeemable common stock
warrants under Section 12(g) of the Exchange Act. That Registration Statement
became effective as of July 2, 1996. Prior to that date the Company was not
subject to the reporting requirements of Section 13 or 15(d) of the Exchange
Act.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
11 - Computation of Loss per Common Share
(b) Reports in 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.
COMPOSITECH LTD.
Dated: August 14, 1996 /s/ Samuel S. Gross
--------------------------------------
Executive Vice President and Treasurer
(Principal Accounting Officer and officer
duly authorized to sign this report on behalf
of the registrant)
-12-
EXHIBIT 11
COMPOSITECH LTD.
(a development stage company)
COMPUTATION OF LOSS PER COMMON SHARE
(unaudited)
<TABLE>
<CAPTION>
Cumulative from
June 13, 1984
For the three months ended For the six months ended (date of inception)
June 30, June 30, through
------------------------------- --------------------------------- June 30,
1995 1996 1995 1996 1996
------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Weighted averages shares outstanding (1) 3,995,769 4,404,326 3,995,769 4,226,146 3,141,491
============= ============== =============== =============== ===============
Net (loss) ($737,089) ($1,070,215) ($1,487,814) ($2,206,898) ($18,246,470)
============= ============== =============== =============== ===============
Net (loss) per share ($0.18) ($0.24) ($0.37) ($0.52) ($5.81)
============= ============== =============== =============== ===============
</TABLE>
(1) Includes common stock equivalents of 407,754 shares based on the
application of SAB No. 83 on cheap stock and assumes the conversion of all
preferred stock to common stock.
<TABLE> <S> <C>
<ARTICLE>5
<LEGEND>
This schedule contains summary financial information extracted from the
form 10-QSB for the period ended June 30, 1996 and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<CASH> 932,399
<SECURITIES> 0
<RECEIVABLES> 128,997
<ALLOWANCES> 0
<INVENTORY> 211,475
<CURRENT-ASSETS> 1,324,881
<PP&E> 3,175,131
<DEPRECIATION> 933,013
<TOTAL-ASSETS> 4,420,976
<CURRENT-LIABILITIES> 6,251,676
<BONDS> 1,595,000
0
4,309,983
<COMMON> 34,722
<OTHER-SE> (7,838,851)
<TOTAL-LIABILITY-AND-EQUITY> 4,420,974
<SALES> 95,052
<TOTAL-REVENUES> 95,052
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,902,703
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 430,956
<INCOME-PRETAX> (2,206,898)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,206,898)
<EPS-PRIMARY> (.52)
<EPS-DILUTED> 0.00
</TABLE>
