UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 1997
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 No. 33-21537-D
DAUPHIN TECHNOLOGY, INC.
(Exact name of registrant as specified in charter)
Illinois 87-0455038
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
800 E. Northwest Hwy., Suite 950, Palatine, Illinois 60067
(Address of principal executive offices) (Zip Code)
(847) 358-4406
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed 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 _____.
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Section 12, 13 or 15 (d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes X No _____.
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding
of each of the issuer's classes of common stock, as of the latest practicable
date: As of May 14, 1997, the number of Shares of the Registrant's Common Stock,
$.001 par value, 31,852,897 was issued and 29,547,111 was outstanding, with
2,305,786 treasury shares
DAUPHIN TECHNOLOGY, INC.
Table of Contents
PART I FINANCIAL INFORMATION Page
Item 1. Financial Statements
BALANCE SHEETS
March 31, 1997 and December 31, 1996 3
STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1997 and 1996 4
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Three Months Ended March 31, 1996,
Nine Months Ended December 31, 1996 and
Three Months Ended March 31, 1997 5
STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1997 and 1996 6
NOTES TO FINANCIAL STATEMENTS 7
Item 2. Management's Discussion and Analysis of Results of
Operations and Financial Condition 11
PART II OTHER INFORMATION 13
Item 1. Legal Proceedings
Item 2. Changes in the Rights of the Company's Security Holders
Item 3. Default by the Company on its Senior Securities
Item 4. Submission of Matters to a Vote of Securities Holders
Item 5. Other Information
Item 6(a). Exhibits
Item 6(b). Reports on Form 8-K
SIGNATURE 14
Page 2
DAUPHIN TECHNOLOGY, INC.
BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
March 31, December 31,
1997 1996
--------- ---------
CURRENT ASSETS:
Cash $ 144,383 $ 388,600
Restricted Cash ----- 232,000
Accounts Receivable
Trade 2,719 2,010
Other 9,187 -----
Inventory, net 2,693,796 2,652,461
Prepaid Expenses 12,251 12,251
--------- ---------
Total Current Assets 2,862,336 3,287,322
PROPERTY AND EQUIPMENT, net of Accumulated
Depreciation of $113,526 at March 31, 1997
and $103,074 at December 31, 1996 108,586 115,538
--------- ---------
TOTAL ASSETS $2,970,922 $3,402,860
========= =========
CURRENT LIABILITIES:
Accounts Payable $ 35,684 $ 204,450
Accrued Expenses 61,293 62,314
--------- ---------
Total Current Liabilities 96,977 266,764
LONG TERM LIABILITIES 40,951 43,196
--------- ---------
TOTAL LIABILITIES $ 137,928 $ 309,960
========= =========
SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 Par Value, 10,000,000
Shares Authorized but None Issued ------ ------
Common Stock $.001 Par Value, 100,000,000 Shares Authorized:
31,852,897 Shares and 31,706,397 Shares Issued at March 31,
1997 and December 31, 1996, and 29,547,111 Outstanding
at March 31, 1997 and December 31, 1996 31,853 31,706
Treasury Shares (1,488,352) (1,407,777)
Paid in Capital 24,016,982 23,869,829
Accumulated Deficit (19,727,489) (19,400,858)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 2,832,994 3,092,900
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $2,970,922 $3,402,860
========= =========
Page 3
DAUPHIN TECHNOLOGY, INC.
STATEMENTS OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
--------- ---------
NET SALES $ 22,317 $ 21,483
COST OF SALES 13,205 7,860
--------- ---------
Gross Profit 9,112 13,623
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE 335,734 124,932
RESEARCH AND DEVELOPMENT
EXPENSE 3,852 -----
--------- ---------
(Loss) before Reorganization Items and
Income Taxes (330,474) (111,309)
REORGANIZATION ITEMS:
Professional Fees ----- 61,403
INTEREST INCOME 3,843 -----
--------- ---------
(Loss) before Income Taxes (326,631) (172,712)
INCOME TAXES ----- -----
--------- ---------
NET LOSS $ (326,631) $ (172,712)
NET LOSS PER COMMON SHARE $ (0.01) $ (0.01)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 29,547,111 14,408,354
Page 4
DAUPHIN TECHNOLOGY, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
THREE MONTHS ENDED MARCH 31, 1996, NINE MONTHS ENDED DECEMBER 31, 1996
AND THREE MONTHS ENDED MARCH 31, 1997
Common Stock Paid-in Treasury Stock Accumulated
Shares Amount Capital Shares Amount Deficit Total
------- ------ --------- ------ -------- ----------- -----------
BALANCE
December 31, 1995
14,408,354 $14,408 ----- -----
$5,144,932 $(56,069,527) $(50,910,187)
Net (Loss) ----- ----- ----- ----- ----- (172,712) (172,712)
------- ------ --------- ------ -------- ----------- -----------
March 31, 1996
14,408,354 14,408 5,144,932 ----- ----- (56,242,239) (51,082,899)
Issuance of Common Stock in Connection with:
Bankruptcy
11,650,000 11,650 13,036,350 ----- ----- ----- 13,048,000
Purchase of Inventory
2,600,000 2,600 2,909,400 ----- ----- ----- 2,912,000
Private Placement
1,948,043 1,948 2,010,247 ----- ----- ----- 2,012,195
Settlement of Notes
1,100,000 1,100 768,900 ----- ----- ----- 770,000
Purchase of Treasury Stock
----- ----- ----- (2,159,286)(1,407,777) ----- (1,407,777)
Net Income
----- ----- ----- ----- ----- 36,841,381 36,841,381
------- ------ --------- ------ -------- ----------- -----------
December 31, 1996
31,706,397 $31,706 (2,159,286) $(19,400,858)
$23,869,829 $(1,407,777) $ 3,092,900
Issuance of Common Stock in Connection with:
Private Placement
146,500 147 147,153 ----- ----- ----- 147,300
Purchase of Treasury Stock
----- ----- ----- (146,500) (80,575) ----- (80,575)
Net Income ----- ----- ----- ----- ----- (326,631) (326,631)
------- ------ --------- ------ ---------- --------- ----------
March 31, 1997
31,852,897 $31,853 (2,305,786) $(19,727,489)
$24,016,982 $(1,488,352) $2,832,994
======= ====== ======== ======= ========== ========= ==========
Page 5
DAUPHIN TECHNOLOGY, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1997 1996
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES -
Net (Loss) $ (326,631) $ (172,712)
Non-Cash Items Included in Net (Loss):
Depreciation 10,452 6,663
Change in:
(Increase) in Accounts Receivable - Trade (709) (6,665)
(Increase)/Decrease in Accounts Rec - Other (9,187) 167,266
(Increase)/Decrease in Inventory (41,334) 8,711
(Decrease)/Increase in Accounts Payable (168,766) -----
(Decrease)/Increase Accrued Expenses (1,021) (183,539)
--------- ---------
Net Cash (Used For) Operating Activities (537,196) (180,276)
CASH FLOWS FROM INVESTING ACTIVITIES -
Purchase of Equipment and Furniture, Net (3,500) (8,357)
CASH FLOWS FROM FINANCING ACTIVITIES -
Long-Term Leases and Other Obligations (2,246) -----
Proceeds from Issuance of Shares
in Private Placement 66,725 -----
Increase in Short Term Borrowing ----- 139,729
--------- ---------
Net Cash Provided by Financing Activities 64,479 139,729
--------- ---------
Net (Decrease) in Cash (476,217) (48,904)
CASH BEGINNING OF PERIOD 620,600 92,604
--------- ---------
CASH END OF PERIOD $144,383 $ 43,700
========= =========
CASH PAID DURING THE PERIOD FOR -
Interest $ 793 $ 1,240
Income Taxes ----- -----
========= =========
Page 6
DAUPHIN TECHNOLOGY, INC.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS
Dauphin Technology, Inc. (the "Company") was founded to design, manufacture and
market mobile computing systems including laptop, notebook, handheld and pen-
based computers, components and accessories. From 1988 to 1992, it functioned
primarily as a development stage company which focused most of its efforts on
developing mobile computers that would meet the specifications of certain
government contracts. Historically, the Company marketed directly and through
computer solution providers to both the commercial and government markets.
The main product of the Company is a handheld computer - Desk Top Replacement,
2nd generation (DTR-2). The basic unit has a 486 central processing unit with
50 megahertz of processing speed. The unit has eight megabytes of random access
memory, a flat liquid crystal display, a 320 megabytes hard drive, voice and pen
recognition, and wireless communications capability. The units measure 9 inches
in length, 5.5 inches width, 1.25 inches thick and weigh 2.7 pounds. The
Company also offers various options and accessories to support the mobility and
versatility of the units which would include a factory installed CDROM module.
Random access memory, hard drive, software and attachments could be expanded or
added to match customer configuration requirements.
During the first quarter of 1997, the Company begun the development of the next
generation of hand-held, pen based mobile unit with color display and faster
processor then the DTR-2, which would be more versatile then any other hand-held
computer currently offered.
Through the acquisition of the Intercon Business Plan (See 1996 Events below),
the Company plans to achieve product diversification through development,
production and sale of industrial control panels which are similar in design and
manufacturability to its main product. The development of the Intercon products
is expected to commence in the near future.
2. BASIS OF PRESENTATION
On January 3, 1995, the Company filed a petition for relief under Chapter 11 of
the Federal Bankruptcy Code in the United States Bankruptcy Court for the
Northern District of Illinois, Eastern Division. During the first half of 1996,
the Company operated under Chapter 11 and without an approved Plan of
Reorganization.
1996 Events
In January, 1996, the Company has recovered all funds mistakenly paid to
professional advisors of Technology Partners L.L.C., Kevin Koy and Russ Felker
in the amount of $107,000, and terminated the employment agreements with Messrs.
Koy and Felker. In addition, the Company terminated a letter of intent and
related employment and stock incentive agreements related to a proposed purchase
of Cormark, Inc., an Illinois corporation and recovered a $60,000 deposit made
to Cormark in anticipation of the proposed purchase.
On February 6, 1996, the Company entered into an agreement with Victor Baron,
Savely Burd and Interactive Controls, Inc., an Illinois corporation
("Intercon"). Intercon has developed and is the owner of a business plan (the
"Intercon Business Plan") for the development, production, sale and installation
of miniature computers for industrial control and operation. Under the terms of
the agreement (the "Intercon Agreement"), the Company acquired the rights to the
Intercon Business Plan, and hired Baron to act as the Company's Chief Operating
Officer and President of the Company's new "Intercon Division." It also hired
Burd to act as its Chief Financial Officer. Messrs. Baron and Burd joined Mr.
Kandalepas to comprise a three person Executive Committee.
Under the terms of the Intercon Agreement, and in addition to an annual salary
and bonus payable to Baron and Burd, Intercon will be entitled to receive
certain shares of the reorganized Company's stock as payment for the transfer to
the Company of the Intercon Business Plan and Intercon's other assets. The
Intercon Agreement provides that commencing upon the effective date of the Plan
and thereafter during the balance of the term of the Agreement, Intercon (or its
successors) will be issued certain shares of the Company's common stock (the
"Asset Acquisition Shares") determined as follows:
Page 7
Subject to the adjustment procedures set forth below, during the term, Intercon
will receive:
(a) 1 million Asset Acquisition Shares the first fiscal year in which the
Company realizes aggregate gross revenue of $5 million (determined by reference
to the Company's year end financial statement which shall be prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis).
(b) 200,000 Asset Acquisition Shares for each additional $1 million in gross
sales realized by the Company in excess of $5 million and less than the
aggregate of $10 million in a single fiscal year (determined by reference to the
Company's year end financial statement, which shall be prepared in accordance
with GAAP, applied on a consistent basis). Intercon's right to receive Asset
Acquisition Shares under the provisions of this paragraph (b) shall terminate
when the aggregate number of Asset Acquisition Shares issued to Intercon under
the provisions of this paragraph (b) equals 1 million.
(c) After Intercon has received the Asset Acquisition Shares called for in
paragraph (a) and (b) above, but not prior thereto, it should also be entitled
to 0.25 Asset Acquisition Shares for each dollar in net earnings before taxes
which the Company realizes (determined by reference to the Company's year end
financial statement which shall be prepared in accordance with GAAP applied on a
consistent basis.)
Notwithstanding the forgoing, Intercon will not receive Asset Acquisition Shares
which would result in Intercon and/or its employees holding, in the aggregate,
in excess of 25% of the total of the Company's outstanding shares of common
stock, on a fully diluted basis, as of the effective date of the Plan.
On May 9, 1996, the Third Amended Plan of Reorganization was approved by the
shareholders and creditors and confirmed by the Court. On July 23, 1996 the
Bankruptcy Court approved the implementation of the Third Amended Plan of
Reorganization and discharged Dauphin as Debtor-in-Possession. This final
decree closed Dauphin's bankruptcy proceedings.
Prior to discharge, the Company issued the 11,650,000 shares of its common stock
pursuant to the Plan. This has effectively converted all pre-petition credit
holders to equity holders. Each present equity holder's position has been
diluted since additional shares of stock have been issued. Shareholder's Equity
- - Common Stock and Paid-in-Capital reflect the consequence of issuance of
additional shares in exchange for the debt at $1.12 per share. That price
corresponds to the share price of a private placement, described below, which
was completed at approximately the same time as approval and implementation of
the Third Amended Plan of Reorganization.
On April 19, 1996, TPL commenced a private placement of certain 9% unsecured
promissory notes convertible to certain Dauphin shares. As a result of the
private placement and conversion of notes as specified in the Private Placement
Memorandum, Dauphin received $995,408, or sixty percent of the proceeds of the
private placement, in exchange for 888,757 Reserve Shares at $1.12 per share.
On October 22, 1996 the Company issued a convertible note to Tiedemann/Economos
Global Emerging Growth Fund (a shareholder of the Company) in the principal
amount of $770,000. The note, at the election of the holder, was converted into
1,100,000 common shares. Simultaneously, the Company conducted a private
placement of 1,059,286 common shares for $796,616 or $0.75 per share to
qualified investors. The common shares issued in connection with these
transaction were unissued shares that were previously registered by the Company.
The funds obtained from these transactions were used to repurchase 2,159,286
common shares for $1,187,607 or $0.55 per common share that were issued as part
of the bankruptcy settlement to a former officer and director of the Company.
These shares are currently being held as treasury shares. As a result of the
transaction, Dauphin generated $379,009 for operating capital.
According to the Plan, in addition to the stock issued to satisfy creditors'
claims, the Company issued and registered 2,950,000 additional shares (the
"Reserve Shares") which can be used by the Company for future business
operations and growth.
On November 29, 1996, the Company successfully registered with the Securities
and Exchange Commission all corporate unregistered stocks issued in private
transactions prior to and as a result of bankruptcy settlement. Also, 2,950,000
reserve shares were registered for future capital or expansion needs of which
2,159,286 shares were reissued in connection with above described share
repurchase transaction.
Page 8
1997 Events
On January 27, 1997, the Company, conducted a private placement of 146,500
common shares for $147,300 or $1.01 per share to a qualified investor. The
common shares issued in connection with these transaction were unissued shares
that were previously registered by the Company. Funds obtained from these
transactions were used to repurchase 146,500 common shares for $80,575 or $0.55
per common share that were issued as part of the bankruptcy settlement to an
affiliate. These shares are currently being held as treasury shares. As a net
result of the transaction, the Company obtained $66,725 for operating capital.
On February 10, 1997 the Company signed a letter of intent to acquire Richard M.
Schultz and Associates, Inc. ("RMS"), an Illinois corporation engaged in
contract engineering and manufacturing services. According to the letter of
intent, the Company will exchange 205,000 shares for all outstanding shares of
RMS, with 105,000 of the Company shares set aside in an escrow account to be
released over the following three years based on satisfaction of certain
performance criteria. Currently, the Company is completing its due diligence of
RMS.
On February 17, 1997, the Company signed an agreement with Ewing & Company, an
investment banking firm, to provide financial advice and assist in raising
capital for the benefit of the Company. The agreement calls for structuring of
current and future acquisitions, capital raise and other financial services.
3. SUMMARY OF MAJOR ACCOUNTING POLICIES
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting periods.
Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenue on the sale of computers and accessories upon
delivery and the expiration of certain return provisions, if applicable.
Inventory
Inventory is stated at the lower of cost or market. Cost is determined on the
first-in, first-out (FIFO) basis. Inventory received as part of the
Reorganization plan was recorded at fair market value.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided using
straight-line methods over the estimated lives of the related assets, which
range between two and seven years.
Income Taxes
Effective January 1, 1991, the Company elected to adopt Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes," which
requires recognition of deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined based on the difference between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Change in control of the Company, which happened during 1995, resulted in
limitation of Net Operating Loss Carryforward that Company accumulated while in
bankruptcy.
Page 9
Income(Loss) Per Common Share
Income(Loss) per common share is calculated based on the monthly weighted
average number of common shares outstanding which were 29,547,111 for the three
month period March 31, 1997, and 14,408,354 for the period March 31, 1996.
Unaudited Financial Statements
The accompanying statements are unaudited. However, such information reflects
all adjustments (consisting of normal recurring adjustments) which are, in the
opinion of the management, necessary for a fair presentation of results for the
interim periods. The results of operations for the three months ended March 31,
1997, are not necessarily indicative of the results to be expected for the full
year.
4. LITIGATION SETTLEMENT
Due to the Company's filing for protection under Chapter 11 of the Federal
Bankruptcy Code, all legal proceedings and claims were subject to the automatic
stay. By entry of the Bankruptcy Court Order confirming the Company's Plan, all
such proceedings and claims have been satisfied and discharged pursuant to the
provisions of the Plan. The management is not aware of any existing or
threatened litigation.
5. LIABILITIES
On June 18, 1996 the Company established a $232,000 Secured Irrevocable Letter
of Credit with the First of America Bank to enable commencement of production of
its DTR-2 product. As of the date hereof, all funds for the production of DTR-2
have been disbursed and the Letter of Credit has been satisfied.
Certain first priority government tax liens, which existed prior to bankruptcy
petition filing, have not been discharged in bankruptcy. The Company is
obligated to repay approximately $21,000 of such liens on a monthly basis over
the next six years.
During the third quarter of 1996, the Company financed a purchase of certain
operating equipment. The Company financed approximately $23,000 of such
purchases over the next three years.
6. EMPLOYEE BENEFIT PLAN
Effective August 16, 1996 the Company adopted the Dauphin Technology 401(k)
Employee Savings Plan covering substantially all employees of the Company.
Participants may elect to defer up to 15% of their eligible compensation. The
Company, when profitable, at its sole discretion, may contribute certain amount
to the Plan. The Company did not contribute any funds to the Plan during the
first quarter of 1997.
Page 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION
CHANGES IN FINANCIAL POSITION
March 31,1997 Compared to December 31, 1996
Total assets decreased during the quarter to $2,971,000 at March 31, 1997 from
$3,403,000 at December 31, 1996. Decrease in cash from $388,600 on December 31,
1996 to $144,383 on March 31, 1997, was primarily due to payment of normal
operating expenses and certain non-recurring expenses. Restricted Cash that was
designated for the satisfaction of Letter of Credit was disbursed and the Letter
of Credit was settled. Accounts Receivable-other represent certain funds due to
the Company as part of the January private placement. As of the date hereof all
funds have been collected. Increase in inventory was due to production of 150
DTR-2 units ready for immediate resale to the market.
Total liabilities decreased by approximately $170,000 as a result of settlement
of the Letter of Credit. The remaining debt represents normal obligations
incurred in a day-to-day operations of the Company. Shareholders Equity -
Common Stock, Paid-in-Capital and Treasury Shares reflect the issuance of
additional shares as part of the private placement and the repurchase of shares
from an affiliate.
RESULTS OF OPERATIONS
March 31, 1997 Compared to March 31, 1996
Revenues
Total sales revenue in the first quarter were about the same in 1997 as in 1996
at $22,000. This was primarily due to a long-lead sales cycle of the available
product and certain market demands that forced the Company to incur additional
development costs and delays. Due to the small dollar value of sales the change
in the gross profit margin cannot be compared to historical margins and is not
indicative of future margins.
Expenses
Salaries and employment taxes for current employees represent a major part of
expenses for the quarter. The Company employs five more people now then it did
a year ago. Other large expenses were rents, legal and professional fees
related to SEC filings. The Company had to pay an annual corporate registration
fee in excess of $48,000 dollars due to a one time increase in Paid-in-Capital
account associated with emergence from Bankruptcy.
Net Income(Loss)
The (loss) after tax increased for the first quarter of 1997 to ($327,000) or
($0.01) per share from ($173,000) or ($0.01) per share in 1996. (Loss) per
common share is calculated based on the monthly weighted average number of
common shares outstanding which were 29,547,111 for the three month period March
31, 1997, and 14,408,354 for the period March 31, 1996.
LIQUIDITY AND CAPITAL RESOURCES
The Company's financial requirements were met through cash generated from
private equity placement.
Sales of DTR-2 should begin in the near future. Cash flow generated from the
sales of DTR-2, will be applied to current and future working capital needs.
The Company will be pursuing avenues to raise additional operating capital,
possibly through a credit facility.
Page 11
The Company has retained the services of Ewing & Company, an investment banking
firm, to provide certain working capital. The funds raised will be used to
complete the acquisition of R.M. Schultz and Associates, Inc., pursue other
mergers and/or acquisitions, and to deploy the next generation of products the
Company has been working on.
The Company believes that the funds it currently has on hand, when coupled with
its anticipated operating profits, any additional funds it may borrow in the
future, and the funds that were raised through the private placement of the
above described Reserve Shares, provide sufficient funds for the Company to
finance its operations.
Page 12
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The management of the Company is not aware of any current pending or threatening
litigation.
Item 2. Changes in the Rights of the Company's Security Holders. None.
Item 3. Default by the Company on its Senior Securities. None
Item 4. Submission of Matters to a Vote of Securities Holders. None.
Item 5. Other Information. None.
Item 6(a). Exhibits. None.
Item 6(b). Reports on Form 8-K. None.
Page 13
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, Registrant's Chief Financial Officer, thereunto duly authorized.
Dated: May 14, 1997
DAUPHIN TECHNOLOGY, INC.
(Registrant)
By: Savely Burd
(Chief Financial Officer)
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 144,383
<SECURITIES> 0
<RECEIVABLES> 11,906
<ALLOWANCES> 0
<INVENTORY> 2,693,796
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<PP&E> 222,112
<DEPRECIATION> (113,526)
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<LOSS-PROVISION> 0
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