SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
AMENDMENT NO. 1 TO
FORM 10-Q
ON FORM 10-Q/A
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 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 No. 1-10555
POLYVISION CORPORATION
(Exact name of registrant as specified in its charter)
New York 13-3482597
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
866 North Main Street Extension
Wallingford, Connecticut 06492
(Address of principal executive offices) (Zip Code)
(203) 294-6906
(Registrant's telephone number, including area code)
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 issuer's Common Stock,
par value $.001 per share, as of December 14, 1996, was
8,530,073.
POLYVISION CORPORATION
FORM 10-Q/A
INDEX
Page
PART I . FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . .
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets -
October 31, 1996 and April 30, 1996 . . . . . . . . . . . .
Condensed Consolidated Statements of Operations -
Three Months Ended October 31, 1996 and 1995. . . . . . . .
Condensed Consolidated Statements of Operations -
Six Months Ended October 31, 1996 and 1995. . . . . . . . .
Condensed Consolidated Statements of Cash Flows -
Six Months Ended October 31, 1996 and 1995. . . . . . . . .
Notes to Condensed Consolidated Financial Statements -
October 31, 1996. . . . . . . . . . . . . . . . . . . . . .
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations. . . . . .
PART II OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
POLYVISION CORPORATION AND SUBSIDIARIES
Condensed Consolidated BALANCE SHEETS
(Unaudited)
[CAPTION]
<TABLE>
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October 31, April 30,
(In thousands, except share data) 1996 1996
Assets
Current assets:
Cash and cash equivalents $ 305 $ 670
Accounts receivable, less allowance
(October--$558 and April--$575) 9,025 8,027
Inventories 3,405 3,735
Costs and estimated earnings in excess
of billings on uncompleted contracts 1,020 823
Prepaid expenses, deposits and other 309 345
Total current assets 14,064 13,600
Property, plant and equipment:
Furniture and fixtures 194 142
Building and leasehold improvements 1,219 1,320
Machinery and equipment 2,151 2,080
3,564 3,542
Less allowance for depreciation 2,163 2,140
Net property, plant and equipment 1,401 1,402
Goodwill, less accumulated amortization 3,909 3,981
(October--$1,323 and April--$1,251)
Total assets $19,374 $18,983
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
Condensed Consolidated BALANCE SHEETS
(Unaudited)
[CAPTION]
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<C>
October 31, April 30,
(In thousands, except share data) 1996 1996
Liabilities and stockholders' equity
Current liabilities:
Short-term borrowings $1,658 $1,252
Current maturities of long-term debt 1,100 220
Accounts payable 2,547 2,877
Accrued expenses 1,910 2,667
Accrued dividends 3,069 2,040
Billings in excess of costs and
estimated earnings on
uncompleted contracts 530 503
Total current liabilities 10,814 9,559
Long-term debt, less current maturities -- 980
Promissory note 4,295 3,335
Deferred interest 232 --
Royalties payable 750 750
Excess of net assets over purchase price
of acquisition, less
accumulated amortization
(October--$13 and April--$10) 272 275
Stockholders' equity:
Series A Preferred stock, $.01 par value,
at liquidation value; authorized
1,500,000 shares, issued
1,029,253 shares 25,731 25,731
Common stock, $.001 par value;
authorized 25,000,000 shares,
issued and outstanding 8,530,073
shares 9 9
Capital in excess of par value 38,524 38,524
Accumulated deficit (61,253) (60,180)
Total stockholders' equity 3,011 4,084
Total liabilities and stockholders'
equity $19,374 $18,983
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
Condensed Consolidated STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
For The Three Months Ended
October 31,
(In thousands, except per share data) 1996 1995
Net sales $9,523 $10,444
Cost of goods sold 7,096 7,895
Gross profit 2,427 2,549
Research and development 296 651
Selling, general and administrative 2,110 2,327
Operating profit (loss) 21 (429)
Other income (expense):
Interest (expense) (196) (130)
Interest and other income 13> --
Income (loss) before income taxes
(162) (559)
Income taxes -- --
Net income (loss) (162) (559)
Preferred stock dividends 518 511
Loss applicable to common stock ($680) ($1,070)
Loss per share of common stock ($0.08) ($0.13)
Average common shares outstanding 8,530,073 8,301,033
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
Condensed Consolidated STATEMENTS OF OPERATIONS
(Unaudited)
[CAPTION]
<TABLE>
<S> <C>
For The Six Months Ended
October 31,
(In thousands, except per share data) 1996 1995
Net sales $19,165 $21,063
Cost of goods sold 13,880 15,644
Gross profit 5,285 5,419
Research and development 625 1,396
Selling, general and administrative 4,382 4,692
Operating profit (loss) 278 (669)
Other income (expense):
Interest (expense) (397) (223)
Interest and other income 77 71
Income (loss) before income taxes (42) (821)
Income taxes -- --
Net income (loss) (42) (821)
Preferred stock dividends 1,029 1,022
Loss applicable to common stock ($1,071) ($1,843)
Loss per share of common stock ($0.13) ($0.23)
Average common shares outstanding 8,530,073 8,301,033
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
Condensed Consolidated STATEMENTS OF CASH FLOWS
(Unaudited)
[CAPTION]
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<S> <C>
Six Months Ended October
31,
(In thousands) 1996 1995
Cash flow from operating activities
Net income (loss) $(42) $(821)
Non-cash expenses included in net
income (loss):
Depreciation and amortization 247 363
Compensation expense for stock grants 23 --
Deferred interest 232 51
Changes in operating assets and liabilities:
Accounts receivable (998) (2,872)
Inventory 330 882
Prepaid expenses, deposits and other 36 133
Costs and estimated earnings in excess of
billings on uncompleted contracts (197) (29)
Accounts payable and accrued
liabilities (1,113) (936)
Billings in excess of costs and estimated
earnings on uncompleted contracts 27 478
Cash used for operating activities (1,455) (2,751)
Cash flow from investing activities
Purchases of property, plant and
equipment (211) (539)
Proceeds from sale of equipment 35 --
Cash used for investing activities (176) (539)
Cash flow from financing activities
Short-term borrowings 406 897
Repayments of long-term borrowings (100) (1,115)
Net receipts of receivable from affiliates -- 1,532
Borrowings on Alpine promissory note 960 2,129
Cash provided by financing activities 1,266 3,443
Net increase (decrease) in cash and cash
equivalents (365) 153
Cash and cash equivalents
at beginning of period 670 260
Cash and cash equivalents at end
of period $ 305 $ 413
The accompanying notes are an integral part of these condensed
consolidated financial statements.
</TABLE>
POLYVISION CORPORATION AND SUBSIDIARIES
NOTES TO Condensed Consolidated FINANCIAL STATEMENTS
(Unaudited)
October 31, 1996
(Dollars in thousands, unless otherwise noted)
NOTE 1 - BASIS OF PRESENTATION
PolyVision Corporation (formerly Information Display Technology,
Inc. or ("IDT")), through its wholly-owned subsidiaries,
Greensteel, Inc. ("Greensteel"), Posterloid Corporation
("Posterloid") and APV, Inc. ("APV"), collectively the "Company,"
is engaged in the development, manufacture and sale of information
display products. Greensteel is engaged in the manufacture and
sale of custom-designed and engineered writing, projection and
other visual display surfaces (such as porcelain chalkboards and
marker boards), custom cabinets, and work station and conference
center casework. Posterloid, which became a wholly-owned subsidiary
as a result of the Merger (see below), is engaged in the
manufacture and sale of indoor and outdoor menuboard display
systems to the fast food and convenience store industries, and
changeable magnetic signs used principally by banks to display
interest rates, currency exchange rates and other information.
APV, which also became a wholly-owned subsidiary of the Company as
a result of the Merger is engaged in the research, development,
licensing and initial manufacturing and testing of a proprietary
technology known as PolyVisionTM, a materials technology with
electrochemical and physical characteristics that allow it to
address applications in a number of display products markets.
On December 21, 1994, The Alpine Group, Inc. ("Alpine") acquired an
additional 82 percent of the outstanding common stock of Adience,
Inc. ("Adience") to increase its ownership in Adience to
approximately 87 percent, resulting in an indirect ownership in IDT
of approximately 70 percent. Also on December 21, 1994, IDT
entered into a Merger Agreement with Alpine and two of its
subsidiaries, APV and Posterloid (together, "IDG"), whereby the
Company would merge with IDG and the Company would be named
PolyVision Corporation. Because Alpine controlled both IDG and
IDT, the Merger, which was completed on May 24, 1995, resulted in
a new reporting entity which is being accounted for as a
reorganization of entities under common control. The merged entity
has adopted IDG's April 30 fiscal year end. The accompanying
financial statements give effect to push-down accounting to adjust
IDT's accounting basis to fair value related to the December 21,
1994 acquisition of Adience by Alpine. All significant
intercompany transactions and accounts have been eliminated in the
accompanying consolidated financial statements.
In connection with the Merger, APV transferred its previously
wholly-owned subsidiary, PolyVision France S.A., to Alpine at its
book value. Also in connection with the Merger, Alpine distributed
to its shareholders 76% of its ownership in the Company resulting
in Alpine retaining a 19% ownership of the Company's common stock.
The accompanying unaudited condensed consolidated financial
statements of the Company have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10
of Regulation S-X. Accordingly, they do not include all 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. The results of operations for the six month
period ended October 31, 1996, are not necessarily indicative of
the results that may be expected for a full fiscal year.
The accompanying unaudited condensed consolidated financial
statements should be read in conjunction with the Company's audited
financial statements included in the Company's annual report on
Form 10-K for the year ended April 30, 1996.
Loss applicable to common stock is computed by dividing net income
available to common stock by the weighted average number of shares
outstanding.
NOTE 2 - INVENTORIES
Inventories consist primarily of raw materials of $2,878 and
$3,206, work in process of $314 and $365, and finished goods of
$213 and $164 at October 31, 1996 and April 30, 1996, respectively.
NOTE 3 - CONTRACTS IN PROGRESS
The status of contract costs on uncompleted construction
contracts was as follows:
[CAPTION]
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Costs and esti- Billings in excess
mated earnings of costs and
in excess of Estimated
billings earnings Net
October 31, 1996:
Costs and estimated
earnings of $1,105 $5,372 $ 5,742
Billings (4,352) (6,272)
$1,020 $ (530) $ 490
April 30, 1996:
Costs and estimated
earnings of $1,425 $5,132 $6,551
Billings (4,309) (7,054)
$ 823 $ (503) $ 320
</TABLE>
Accounts receivable at October 31, 1996 and April 30, 1996 include
amounts billed but not yet paid by customers under retainage
provisions of approximately $1,555 and $1,754, respectively. Such
amounts are generally due within one year.
NOTE 4 - FINANCING ARRANGEMENTS
On April 25, 1996, Greensteel, as borrower, and the Company, as
guarantor, entered into a $5,000,000 Master Credit Agreement (the
"Agreement") with the Bank of Boston Connecticut to provide
financing for Greensteel's general working capital requirements.
The Agreement provides for a revolving credit facility of up to
$3,800,000 based upon eligible accounts receivable and inventory
as defined (unused and available borrowings were $1,835,000 at
October 31, 1996) at the Bank's prime rate plus 1% (9.25% at
October 31, 1996) and a $1,200,000 term loan payable in equal
monthly installments of $20,000 with interest at the Bank's prime
rate plus 1-1/2% (9.75% at October 31, 1996) beginning June 1,
1996 through August 1, 1997, with the remaining unpaid principal
amount of $900,000 due on August 31, 1997. The Agreement
terminates August 31, 1997 and provides for renewal at the Bank's
sole and absolute discretion.
Substantially all of Greensteel's assets are pledged as
collateral for the credit facility. The Agreement requires
Greensteel's compliance with certain financial covenants
including maintenance of a minimum tangible net worth and minimum
debt service coverage, as defined, and a restriction on dividends
to the Company, which requires maintenance of a modified debt
service coverage after taking into account any such dividends,
and on other transfers of funds to the Company or its other
subsidiaries. The Company is a guarantor of the Agreement and
has pledged Greensteel's common stock in connection therewith.
Greensteel is in compliance with all material covenants at
October 31, 1996.
On May 24, 1995, the Company entered into an agreement with
Alpine pursuant to which the Company may borrow from time to
time, until May 24, 1997, up to $5,000,000 from Alpine to be used
by the Company to fund its working capital needs, including
research, development and commercialization activities of APV's
PolyVisionTM display technology. Borrowings under the agreement
are unsecured and bear interest at a market rate reflecting
Alpine's cost of borrowing such funds (13% at October 31, 1996),
with interest payable semiannually in cash (but added to the
outstanding principal amount for the first 18 months). The
principal balance outstanding is due on May 24, 2005, subject to
mandatory prepayment of principal and interest, in whole or in
part, from the net cash proceeds of any public or private, equity
or debt financing made by the Company at any time before
maturity. Alpine's obligation to lend such funds to the Company
is subject to a number of conditions, including review by Alpine
of the proposed use of such funds by the Company.
NOTE 5 - COMMITMENTS AND CONTINGENCIES
In 1994, Reliance Insurance Company of New York (the "Plaintiff")
commenced an action in the Supreme Court of the State of New
York, County of Suffolk, against several defendants including the
Company seeking money damages based on the purported sale and
delivery by defendants of some 860 insulated metal curtain wall
panels manufactured by the Company in 1987 and of an additional
520 replacement panels in 1991 and 1992. Plaintiff has alleged
that such panels were defective in their design and manufacture.
In its original complaint, Plaintiff seeks damages of $385,000
allegedly already incurred and also estimated future damages.
Among the theories of liability advanced by Plaintiff are breach
of contract, breach of express warranty and implied warranty.
Pursuant to orders of the Court, the causes of action based on
the 1987 transaction were dismissed on statute of limitation
grounds. However, Plaintiff has been granted leave to serve an
amended complaint to allege, among other things, a claim under
the New Jersey Consumer Fraud Act (which might permit treble
damages), while preserving the right of the defendants, including
the Company to challenge the applicability of such Act. Since an
amended complaint has not yet been served, Plaintiff's theories
of liability and damages are as yet not completely certain.
Moreover, since an answer to the amended complaint, if served,
remains to be served, and, as well, discovery has yet to
commence, it is premature to render an estimate of the outcome of
this litigation.
In February 1992, the Company was cited by the Ohio Environmental
Protection Agency (the Ohio EPA) for violations of Ohio's
hazardous waste regulations, including speculative accumulation
of waste and illegal disposal of hazardous waste on the site of
its Alliance, Ohio, facility.
In December 1993, the Company and Adience signed a consent order
with the Ohio EPA and Ohio Attorney General that required the
Company and Adience to pay to the State of Ohio a civil
penalty of $200,000 of which the Company paid $175,000 and
Adience paid $25,000. In addition, the consent order required
the payment of stipulated penalties of up to $1,000 per day for
failure to satisfy certain requirements of the consent order,
including milestones in the closure plan. Removal and
remediation activities as contemplated under the consent order
have been completed.
The Company has submitted risk assessment reports which
demonstrate, in management's opinion, that no further cleanup
actions will be required on the remaining property area not
addressed under the closure plan. Based on administrative
precedent, the Company believes that it is likely that the Ohio
EPA will agree with the risk assessment reports. If such an
agreement is not reached, additional costs may have to be
incurred to complete additional remediation efforts. Although
there are no assurances that additional costs will not have to be
incurred, the Company believes that such costs will not need to
be incurred. At October 31, 1996, environmental accruals
amounted to $10,000, which represents management's reasonable
estimate of the amounts to be incurred in the resolution of this
matter. Since 1991, Adience and the Company have paid
$1,433,000 (excluding the $200,000 civil penalty) for the
environmental cleanup related to the Alliance facility.
Under the acquisition agreement pursuant to which the Company
acquired the property from Adience in 1990, Adience represented
and warranted that, except as otherwise disclosed to the Company,
no hazardous material had been stored or disposed of on such
property. No disclosure of storage or disposal of hazardous
material on the site was made; accordingly, Adience is required
to indemnify the Company for any losses in excess of $250,000.
The Company has notified Adience that it is claiming the right to
indemnification for all costs in excess of $250,000 incurred by
the Company in this matter, and has received assurance from
Alpine that Adience will honor such claim. Adience has
reimbursed the Company $1,383,000 through October 31, 1996. If
Adience is financially unable to honor its remaining obligation,
such costs would be borne by the Company.
The Company is involved in other various matters of litigation
incidental to the normal conduct of its business. In
management's opinion, the disposition of such litigation
will not have a material adverse impact on the Company.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of operations
Three and Six Months Ended October 31, 1996, Compared With Three
and Six Months Ended October 31, 1995
The following table summarizes, for the periods presented, the
respective amounts of
Greensteel, APV (except as to Net sales and Gross profit, of
which there were none) and Posterloid:
[CAPTION]
<TABLE>
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Three Months Six Months
Ended October 31, Ended October 31,
1996 1995 1996 1995
(in thousands, except
percentages)
Net sales
Greensteel ....... $7,615 $9,178 $15,414 $18,264
Posterloid ....... 1,908 1,266 3,751 2,799
9,523 10,444 19,165 21,063
Gross profit
Greensteel ........ 1,701 2,268 3,824 4,564
Posterloid ........ 726 281 1,461 855
2,427 2,549 5,285 5,419
Gross margin ......... 25.5% 24.4% 27.6% 25.7%
Selling, general and administrative
expenses
Greensteel ........ 1,492 1,500 3,158 3,120
Posterloid ........ 455 401 895 793
APV and Corporate .. 163 426 329 779
2,110 2,327 4,382 4,692
Research and development
APV ................ 296 651 625 1,396
Operating income (loss)
Greensteel ......... 210 768 666 1,444
Posterloid ......... 271 (120) 566 62
APV and Corporate .. (460) (1,077) (954) (2,175)
$21 ($429) $278 ($669)
</TABLE>
THREE AND SIX MONTHS ENDED OCTOBER 31, 1996 COMPARED WITH THE
THREE AND SIX MONTHS ENDED OCTOBER 31, 1995
The comparative fiscal 1997 decrease in net sales for the three and
six month periods of $921,000 and $1,898,000 respectively were
attributable to a $1,563,000 and a $2,850,000 decrease in revenues
at Greensteel, representing a year to date decline of 15.6%. This
decline represents a reduction in contract sales. The company is
in the process of converting its distribution channels to sales
through dealers and distributors, which do not require extended
project management and are not subject to construction cost
overruns or increased working capital requirements for performance
bonds and retainage. Distributor sales increased year to date by
19.3% and for the second quarter represented 43% of total sales up
from 38% in the first quarter. Greensteel is currently
aggressively seeking to expand its distributor base in order to add
coverage in weaker and open market regions and to increase market
share in selected territories. Greensteel's business is seasonal
and a disproportionate amount of its sales and most of its
operating profits occur in the first and second fiscal quarters of
the year. This occurs as a result of increased business activity
in the summer months when schools are closed and construction
activity increases. Posterloid increased its revenues for the
three and six months by $642,000 and $952,000 respectively. This
represents a year to date increase of 34.0%. This increase is
primarily attributable to increased sales to a few major restaurant
chains.
Consolidated gross profit for the second quarter decreased by
$122,000, $2,427,000 versus $2,549,000. This was due to
lower sales volume. Due to the spreading of fixed costs at
Posterloid over higher volume, margins increased from 24.4% to
25.5%. Year to date consolidated gross profit declined by
$134,000. Greensteel gross profit decreased by $740,000, yet
despite the decrease in sales, cost reduction efforts mostly due to
a favorable union contract, have resulted in margins only slightly
less than last year, 24.8% versus 25.0% in fiscal 1996. Posterloid
has significantly increased gross profits and margins by $606,000
year to date and from 30.5% to 38.9%.
Research and development costs declined for the second quarter and
year to date by $355,000 and $771,000 respectively. The
Company has determined that the most cost effective method in the
event of full scale production of PolyVision products is through
third party sub-contractors. In connection with this decision,
PolyVision technology R & D manufacturing related costs have been
reduced. Selling, general and administrative costs are down by
$217,000 for the three months and $310,000 for the six
months, primarily due to expense reductions at Greensteel net of
other expenses.
Due to the increased volume at Posterloid, and the company's
continued plan of consolidating facilities, the decision was made
in the second quarter to move this operation to larger quarters.
This will facilitate further increases in sales volume and also
help to lower costs with better material movement and higher
productivity. To further control its manufacturing costs through
better scheduling and capacity management in a complex environment,
the company has decided to implement a Manufacturing Resource
Planning (MRP II) business system encompassing all of its
operations. During the second quarter software and hardware
agreements were initiated to begin this process.
The Company's facility in Landis, North Carolina has been closed
and its production has been transferred to Greensteel's Dixonville
plant. The Landis facility is up for sale at an estimated net
price of $350,000.
In September 1996, the Company and General Atomics of San Diego, a
leading technology development company, entered into a joint
development and licensing agreement to develop and produce
PolyVision based electrochromic displays for consumer retail
applications. The applications will utilize the unique
characteristics of the PolyVision technology to address the demand
for low-cost dynamic POP displays. In addition, McDonnell Douglas
Technologies Inc. is continuing its R & D activity for both
government and commercial applications without any funding from
PolyVision. All other current licensees are continuing their
internal programs to commercialize PolyVision technology. There
can be no assurance, however, that commercially viable products
will be introduced or that such additional sources of funding will
be available on reasonable terms.
LIQUIDITY AND CAPITAL RESOURCES
During the six months ended October 31, 1996, the principal uses of
cash included approximately $1,455,000 used for operating
activities and approximately $176,000 for investing activities,
most of which was for the move by Posterloid to its new facilities.
Approximately $998,000 of such uses were due to increased accounts
receivable and $1,113,000 was used to reduce accounts payable and
accrued liabilities, these were offset by decreases in inventories,
additional deferred interest and depreciation / amortization all
totaling $809,000. Sources of cash included approximately $960,000
of long term borrowings from Alpine, and $406,000 of short-term
borrowings.
During the six months ended October 31, 1996, Greensteel used
approximately $803,000 for its operating activities while
Posterloid provided approximately $384,000 from its operating
activities.
On April 25, 1996, Greensteel, as borrower, and the Company, as
guarantor, entered into a $5,000,000 Master Credit Agreement (the
"Agreement") with the Bank of Boston Connecticut to provide
financing for Greensteel's general working capital requirements.
The Agreement provides for a revolving credit facility of up to
$3,800,000 based upon eligible accounts receivable and inventory as
defined (unused and available borrowings were $1,835,000 at October
31, 1996) at the Bank's prime rate plus 1% (9.25% at October 31,
1996) and a $1,200,000 term loan payable in equal monthly
installments of $20,000 with interest at the Bank's prime rate plus
1-1/2% (9.75% at October 31, 1996) beginning June 1, 1996 through
August 1, 1997, with the remaining unpaid principal amount of
$900,000 due on August 31, 1997. The Agreement terminates August
31, 1997 and provides for renewal at the Bank's sole and absolute
discretion. In order to meet working capital and long term
financing requirements, it is the intent of the Company to re-
negotiate the bank facility beyond August 31, 1997, however, there
can be no assurances this will be accomplished.
Substantially all of Greensteel's assets are pledged as collateral
for the credit facility. The Agreement requires Greensteel's
compliance with certain financial covenants including maintenance
of a minimum tangible net worth and minimum debt service coverage,
as defined, and a restriction on dividends to the Company, which
requires maintenance of a modified debt service coverage after
taking into account any such dividends, and on other transfers of
funds to the Company or its other subsidiaries. The Company is a
guarantor of the Agreement and has pledged Greensteel's common
stock in connection therewith. Greensteel was in compliance with
all such financial covenants at October 31, 1996.
On May 24, 1995, the Company entered into an agreement with Alpine
pursuant to which the Company may borrow from time to time, until
May 24, 1997, up to $5,000,000 from Alpine to be used by the
Company to fund its working capital needs, including research,
development and commercialization activities of APV's PolyVisionTM
display technology. Borrowings under the agreement are unsecured
and bear interest at a market rate reflecting Alpine's cost of
borrowing such funds (13% at October 31, 1996), with interest
payable semiannually in cash (but added to the outstanding
principal amount for the first 18 months). The principal balance
outstanding will be due on May 24, 2005, subject to mandatory
prepayment of principal and interest, in whole or in part, from the
net cash proceeds of any public or private, equity or debt
financing made by the Company at any time before maturity.
Alpine's obligation to lend such funds to the Company is subject to
a number of conditions, including review by Alpine of the proposed
use of such funds by the Company.
In the long term, the successful introduction of commercially
viable products will be required for APV to continue to support a
sustained research and development effort at its current level.
APV will continue to explore development and licensing
opportunities that further broaden the applications of its
PolyVisionTM technology and provide additional funding, of which
there can be no assurance.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
Exhibit 27: Financial Data Schedule
(b) Reports on Form 8-K:
None
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.
POLYVISION CORPORATION
Date: December 24, 1996 By:/s/Lawrence W. Hay
Lawrence W. Hay
Vice President-Finance and
Secretary (as both a duly
authorized officer of the
registrant and the
principal financial officer
or chief accounting officer
of the registrant)
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