SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ X ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-12
GENROCO, INC.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ X ] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11
1) Title of each class of securities to which transaction applies: ------
--------------
2) Aggregate number of securities to which transaction applies: ---------
-----------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
--------------------
4) Proposed maximum aggregate value of transaction: --------------------
5) Total fee paid: --------------------
[ ] Fee paid previously with preliminary materials
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid: --------------------
2) Form, Schedule or Registration Statement No.: --------------------
3) Filing Party: --------------------
4) Date Filed: --------------------
GENROCO, INC.
255 INFO HIGHWAY
SLINGER, WISCONSIN 53086
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 8, 2000
TO THE SHAREHOLDERS:
The 2000 Annual Meeting of Shareholders of GENROCO, INC., a Wisconsin
corporation (the "Company"), will be held on Friday, December 8, 2000 at 10:00
a.m. local time, at the Company's headquarters located at 255 Info Highway,
Slinger, WI 53086 for the following purposes:
1. To elect four directors for the ensuing year and until their
successors are elected and qualified;
2. To approve an amendment to the Company's Articles of Incorporation to
increase the authorized number of shares of Common Stock of the Company from
10,000,000 to 50,000,000; and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. A copy of the Company's Annual Report on
Form 10-KSB for the fiscal year ended March 31, 2000, which includes audited
financial statements, also accompanies this Notice.
Only shareholders of record at the close of business on November 17, 2000
are entitled to receive notice of and to vote at the Annual Meeting or any
adjournment thereof. A list of shareholders entitled to vote at the meeting
will be open for inspection at the Company's corporate headquarters for any
purpose germane to the meeting during ordinary business hours beginning November
28 and continuing to the date of the meeting.
All shareholders are cordially invited to attend the Annual Meeting in
person.
Sincerely,
/s/ Carl A. Pick
Carl A. Pick
Chairman and Chief Executive Officer
Slinger, Wisconsin
November 27, 2000
Please complete, date and sign the enclosed proxy and mail it promptly in the
enclosed envelope to assure representation of your shares, whether or not you
expect to attend the Annual Meeting. If you attend the Annual Meeting, you may
revoke the proxy and vote your shares in person.
GENROCO, INC.
255 INFO HIGHWAY
SLINGER, WISCONSIN 53086
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 8, 2000
SOLICITATION, EXECUTION AND REVOCATION OF PROXIES
Proxies in the accompanying form are solicited on behalf, and at the
direction, of the Board of Directors of GENROCO, Inc. (the "Company"). All
shares represented by properly executed proxies, unless such proxies have
previously been revoked, will be voted in accordance with the direction on the
proxies. If no direction is indicated, the shares will be voted FOR the
Company's nominees for election as directors at the Annual Meeting and FOR the
proposal to increase the authorized shares of common stock of the Company. The
Board of Directors is not aware of any other matter that may come before the
meeting. If any other matters are properly presented at the meeting for action,
including a question of adjourning the meeting from time to time, the persons
named in the proxies and acting thereunder will have discretion to vote on such
matters in accordance with their best judgment.
When stock is in the name of more than one person, the proxy is valid if
signed by any of such persons unless the Company receives written notice to the
contrary. If the shareholder is a corporation, an executive or other authorized
officer should sign the proxy in the name of such corporation. If signed as
attorney, executor, administrator, trustee, guardian or in any other
representative capacity, the signer's full title should be given and, if not
previously furnished, a certificate or other evidence of appointment should be
furnished to the Company.
This Proxy Statement and the form of proxy that is enclosed are being
mailed to the Company's shareholders commencing on or about November 24, 2000.
A shareholder executing and returning a proxy has the power to revoke it at
any time before it is voted. A shareholder who wishes to revoke a proxy can do
so by executing a later-dated proxy relating to the same shares and delivering
it to the Secretary of the Company prior to the vote at the Annual Meeting, by
written notice of revocation received by the Secretary prior to the vote at the
Annual Meeting or by appearing in person at the Annual Meeting, filing a written
notice or revocation and voting in person the shares to which the proxy relates.
In addition to the use of the mails, proxies may be solicited by personal
interview, telephone, telefax and telegram by the directors, officers and
employees of the Company. Such persons will receive no additional compensation
for such services. Arrangements may also be made with certain brokerage firms
and certain other custodians, nominees and fiduciaries for the forwarding of
solicitation materials to the beneficial owners of Common Stock held of record
by such persons, whereby such brokers, custodians, nominees and fiduciaries will
be reimbursed for their reasonable out-of-pocket expenses incurred in connection
therewith. All expenses incurred in connection with this solicitation will be
borne by the Company.
The mailing address of the principal corporate office of the Company is 255
Info Highway, Slinger, WI 53086.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
Only shareholders of record at the close of business on November 17, 2000
(the "Record Date"), will be entitled to vote at the meeting. On the Record
Date, there were issued and outstanding 9,327,224 shares of common stock, par
value $0.02, ("Common Stock"). Each holder of Common Stock is entitled to one
vote, exercisable in person or by proxy, for each share of the Company's Common
Stock held of record on the Record Date. The presence of a majority of the
Common Stock, in person or by proxy, is required to constitute a quorum for the
conduct of business at the Annual Meeting. The Inspector of Election appointed
by the Board of Directors shall determine the shares represented at the meeting
and the validity of proxies and ballots, and shall count all votes and ballots.
Directors are elected by a plurality of the votes cast by the holder of shares
entitled to vote in the election at a meeting at which a quorum is present. A
"plurality" means that the individuals who receive the largest number of votes
are elected as directors up to the maximum number of directors to be elected at
the meeting. The affirmative vote of a majority of such quorum is required with
respect to the approval of Proposal 2 set forth herein. Abstentions and broker
non-votes are each included in the determination of the number of shares present
for quorum purposes. Because abstentions represent shares entitled to vote, the
effect of an abstention will be the same as a vote cast against a proposal
except to the extent that the failure to vote for a director nominee results in
another nominee receiving a larger number votes. A broker non-vote, on the other
hand, will not be regarded as representing a share entitled to vote on the
proposal and, accordingly, will have no effect on the voting for such proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of September 30, 2000 there were 9,327,224 shares of Common Stock
outstanding. The table below sets forth as of September 30, 2000, certain
information regarding the shares of Common Stock beneficially owned by each
director of the Company and each named executive officer in the Summary
Compensation Table below, by all of the Company's executive officers and
directors as a group, and by those persons known by the Company to have owned
beneficially more than 5% of the outstanding shares of Common Stock, which
information as to beneficial ownership is based upon statements furnished to the
Company by such persons.
Position Number % of
Name and Address with the Director Of Outstanding
Of Beneficial Owner1<F1> Company Since Shares2<F2> Shares
------------------------ ------- ----- ----------- ------
Known 5% Holders:
GENROCO ESOP 3<F3> N/A N/A 708,852 4<F4> 7.6%
Directors and Executive
Officers:
Carl A. Pick (Husband of Director, 1988 2,059,670 5<F5> 22.1%
Barbara)c/o GENROCO, Inc. CEO,
255 Info Highway Chairman,
Slinger, WI 53086 President
Barbara R. Pick Director 1988 2,019,273 6<F6> 21.6%
(Wife of Carl)
c/o GENROCO, Inc.
255 Info Highway
Slinger, WI 53086
Chris Good Director, 1988 631,431 7<F7> 6.8%
c/o GENROCO, Inc. Vice
255 Info Highway President
Slinger, WI 53086
Keith E. Brue Director, 414,844 8<F8> 4.4%
c/o GENROCO, Inc. Executive
255 Info Highway Vice
Slinger, WI 53086 President,
COO, CFO, 1988
Secretary
All Directors and Officers N/A N/A 5,600,111 9<F9> 60.0%
as a Group (7 persons)
1<F1> The securities "beneficially owned" by a person are determined in
accordance with the definition of "beneficial ownership" set forth in the
regulations of the Securities and Exchange Commission and, accordingly, may
include securities owned by or for, among others, the spouse, children or
certain other relatives of such person, as well as other securities as to
which the person has or shares voting or investment power or has the right to
acquire within 60 days.
2<F2> Certain of the shares held by three directors secure loans from the
Company which are forgiven over a three-year term. Please see "Executive
Compensation" for details.
3<F3> The amount of shares listed for the ESOP excludes 331,668 shares of the
Company's stock attributed to Officers and Directors listed above and included
in their individual totals as follows: 114,438 for Mr. Pick, 110,543 for Ms.
Pick, 78,761 for Mr. Good, and 27,936 for Mr. Brue.
4<F4> As noted in footnote 3, excludes amount of shares held by named officers
and directors.
5<F5> Includes 60 shares held in a trust for the benefit of Michael Le Cuellar
and Nicole M Cuellar, 377,400 shares held in a HR-10 and 114,428 shares held in
the Company's ESOP. 111,520 shares are held by the Company as collateral in
connection with a loan of $323,560 to Mr. Pick for his purchase of Company
common stock. 332,000 shares which are held by a bank as collateral for a
credit line.
6<F6> Includes 363,000 shares held in a HR-10 plan and 110,593 shares held in
the Company's ESOP. 111,520 shares are held by the Company as collateral in
connection with a loan of $323,560 to Mrs. Pick for her purchase of Company
common stock. 332,860 shares are held by a bank as collateral for a personal
credit line.
7<F7> Includes 23,160 shares held in a HR-10 plan and 78,761 shares held in
the Company's ESOP. 59,632 shares are held by the Company as collateral in
connection with a loan of $203,146 to Mr. Good for his purchase of
Company common stock. 70,100 shares are held by a bank as collateral for a
personal credit line.
8<F8> Includes 27,936 shares held in the Company's ESOP. 55,222 shares are
held by the Company as collateral in connection with a loan of $183,301 for his
purchase of Company common stock. 216,000 shares are held by a bank as
collateral for a personal credit line.
9<F9> Includes 224,591 shares held in the Company's ESOP, and 2,694 shares held
in IRA plans. 136,032 shares are held by the Company as collateral for $464,281
in loans to three other officers in transactions related to the purchase of
Company common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
VOTE REQUIRED; NOMINEES
The Company has nominated four persons for election at the 2000 Annual
Meeting as directors for terms expiring at the 2001 Annual Meeting and until
their successors have been duly elected and qualified. Each of the nominees
currently is a director of the Company. The Company's annual meeting is usually
held in August, but has been delayed due to the Company's intent to add outsider
directors. To date, the Company has not been successful in nominating
candidates who will serve as directors.
SHARES REPRESENTED BY THE ENCLOSED PROXY WILL BE VOTED FOR THE COMPANY'S
NOMINEES, UNLESS OTHERWISE SPECIFIED ON THE PROXY. If any of the nominees shall
be unable or unwilling to serve as a director, it is intended that the proxy
will be voted for the election of such other person or persons as the Company's
management may recommend in the place of such nominee. The management has no
reason to believe that any of the nominees will not be candidates or will be
unable to serve.
All directors will hold office until the next Annual Meeting of
shareholders and the election and qualification of their successors. As
mentioned above, the Company is looking to add outside directors. If the
Company locates one or more qualified independent candidates to act as director,
the Board of Directors will have to amend the bylaws of the Company to increase
the size of the Board of Directors. Officers are elected annually and serve at
the pleasure of the Board of Directors.
Set forth below is certain biographical information (including principal
occupations) relating to the nominees.
CARL A. PICK, 52, is currently the Chairman of the Board, the Chief
Executive Officer, the President and a Director of the Company. He is
responsible for corporate development, marketing strategy, and overall corporate
management of the Company. Mr. Pick graduated from Yale University in 1971 with
a Bachelor's degree in Computer Engineering. Mr. Pick received a Master's degree
in Computer Science from Yale in 1974. He, along with Barbara Pick, his wife,
founded General Robotics Corporation ("GRC") in August 1974 and reorganized GRC
into the Company in 1988. Mr. Pick is married to Barbara R. Pick. Mr. Pick is
the Chairman of the High Speed Networking Forum and a director of
VideoPropulsion, Inc. (a company spun-off by the Company).
KEITH BRUE, 63, has served as an Executive Vice President, the Chief
Operations Officer, the Chief Financial Officer and the Secretary of the Company
since March 1997. He has been a Director of the Company since 1988. He is
responsible for manufacturing, materials, logistics, accounting and finance.
Mr. Brue received his MBA degree from the University of Chicago and has
extensive operations experience with a focus on dealing with mergers,
acquisitions and business systems processes. He began his career in public
accounting with a predecessor to Ernst & Young LLP and has over 20 years of
experience with several different high technology companies, including two which
were publicly held and traded on NASDAQ, as the result of initial public
offerings. Mr. Brue is a director of VideoPropulsion, Inc. (a company spun-off
by the Company).
BARBARA R. PICK, 49, is currently a Director of the Company. Mrs. Pick
has been the Chairman Chief Executive Officer and President of VideoPropulsion,
Inc. since its incorporation on October 1, 1999. Mrs. Pick also served as a
Vice President of Sales for the Company since incorporation in 1974 to September
30, 1999 and President of the Company from 1997 to September 30, 1999. Mrs.
Pick is married to Carl A. Pick.
CHRIS GOOD, 49, is currently a Director of the Company. Mr. Good has been
an Executive Vice President and the Chief Technical Officer of VideoPropulsion,
Inc. since its incorporation on October 1, 1999. He graduated with an honors
degree in Mathematics and Physics from King's College, University of London in
1971. He was formerly with ITT, then Compaq Computer Corporation, UK. He also
served as Executive Vice President and Chief Technical Officer of the Company
from 1987 to September 30, 1999
All of the directors have held the positions with the Company or other
organizations shown in the above descriptions during the past five or more years
except that (i) Ms. Pick and Mr. Good have held their respective positions with
VideoPropulsion, Inc. since its incorporation on October 1, 1999, prior to which
both of them worked for the Company as described above, and (ii) Mr. Brue held
the position of Chief Financial Officer for ImageMatrix, Inc. prior to joining
the Company in March of 1997. Messrs. Pick, Brue, Good and Ms. Barbara Pick are
each currently directors of VideoPropulsion, Inc.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Under the securities laws of the United States, the Company's directors,
its executive officers, and any persons holding more than 10% of the company's
Common Stock are required to report their initial ownership of the Company's
Common Stock and any subsequent changes in that ownership to the Securities and
Exchange Commission. Specific due dates for these reports have been
established, and the Company is required to disclose any failure to file by
these dates. Except for one set of Form 4's from Carl A. Pick, Barbara R. Pick,
Chris Good, Keith Brue, Donald Woelz, Joe Nordman, and Donald Benson, which were
due on April 10, 2000 but not filed until May 15, 2000, the Company believes
that all of these filing requirements were satisfied during the fiscal year
ended March 31, 2000 and to the date of this report. In making these
disclosures, the Company has relied solely on written representations of its
directors and executive officers and copies of the reports that they have filed
with the commission.
MEETINGS AND COMMITTEES
The Board of Directors of the Company held a total of six meetings
(including telephonic meetings) during the fiscal year ended March 31, 2000.
During the fiscal year ended March 31, 2000, all directors attended at least 75%
of the aggregate of all meetings of the Board of Directors. Currently, the
Company does not have an audit, nominating or compensation committee, but it
intends to form such committees once it has outside directors.
STOCK OPTIONS
The Company did not grant any options during fiscal 2000 and no options
were outstanding as of September 30, 2000. The Company does not have a stock
option plan available for grants.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid by the Company to
executives for services rendered during the fiscal years of 2000, 1999 and 1998.
Name and All Other
Principal Position Fiscal Year Salary Compensation 1<F10>
------------------ ----------- ------ -------------------
Carl A. Pick, CEO 2000 $ 71,602 $61,533
1999 95,953 2,838
1998 175,208 2,444
Barbara Pick, 2000 71,599 60,798
Former President 1999 95,953 2,527
1998 175,208 2,444
Chris Good, 2000 76,283 30,636
Former CTO 1999 83,678 4,850
1998 99,400 4,690
Keith Brue, CFO 2000 90,485 89,873
1999 84,177 7,639
1998 107,886 6,552
1<F10> These amounts are related to the value of health and life insurance
premiums paid by the Company on behalf of the employee, plus, for the 2000
fiscal year, forgiveness of notes issued by each listed employee in exchange
for Common Stock of the Company as follows: $56,500 for Mr. Pick, $56,500 for
Ms. Pick, $23,541 for Mr. Good and $79,441 for Mr. Brue.
DIRECTOR COMPENSATION
The Company pays director fees in different amounts to each of its four
directors. Directors compensation varies each year, and by individual, based on
the discretion of the board. The following table illustrates the total amount
of director fees paid to each director for fiscal 2000, 1999 and 1998.
2000 1999 1998
---- ---- ----
Carl Pick (2) $28,105 $30,795 $37,500
Barbara Pick 28,105 30,795 37,500
Chris Good 4,240 4,090 12,500
Keith Brue 4,000 4,000 2,500
SALE OF STOCK TO EMPLOYEES FOR NOTES
The Company periodically sells Company common stock to employees at prices
equal to approximately 85% of the average closing price for the stock over the
course of the previous 30 days in exchange for personal notes bearing interest
at a rate of 5.81% per annum. The stock purchase agreement stipulates that the
notes will be forgiven over a period of time (generally 1-3 per year for three
years), provided that the employee remains an employee of the Company and is not
terminated for "cause" for any reason. In the event that the employee's
employment arrangement terminates, for any reason, the Company has the right to
"Call" the stock at the sales price and the employee has the right to "Put" the
stock back to the Company in exchange for payment of the outstanding note at a
price equal to approximately 95% of the purchase price. In the event that the
Company terminates for any reason other than cause, the Company's "Call" is also
terminated.
CHANGE IN CONTROL
The Company does not have a change in control agreement with its officers.
However, the Company's loan program where the Company loans money to employees
to purchase stock in the Company and the loan is forgiven, generally over a
three year period, provides that the Company's right to "call" the stock
terminates upon a change in control. These loans bear interest at the rate of
5.81% per annum.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to effect the spin-off of VideoPropulsion, Inc. (formerly a
wholly owned subsidiary), GENROCO, Inc. and VideoPropulsion, Inc. entered into a
series of agreements designed to allow the two businesses to operate on an arms-
length basis in the future. These include, but are not limited to:
O Facilities Lease Agreement
O Transitional Trademark Use and License Agreement (which may be
amended by the parties)
O Interim Administrative Services Agreement
O Confidentiality and Non-Disclosure Agreement
The Company continues to sell its products to VideoPropulsion, Inc..
During the six months ended September 30, 2000, the Company sold $43,000 in
products to VideoPropulsion, Inc As noted above, the four directors of the
Company also serve as four directors of VideoPropulsion, Inc. The Chairman of
the Board of the Company establishes the salary of all employees.
The Company periodically makes temporary loans to its officers. During
fiscal 2000, loans were extended to Carl and Barbara Pick in the amount of
$267,000, all of which were repaid prior to March 31, 2000. As of September 30,
2000, the outstanding principal balance of all such temporary loans was $4,642.
For the fiscal year ended March 31, the outstanding principal balance of all
such temporary loans as of the end of each month ranged from a low of $0 (March)
to a high of $127,432.18 (July and August). The Company charges interest on
these loans at the rate of 5.81% per annum.
RECOMMENDATION
The Board of Directors unanimously recommends a vote "FOR" each of the
nominees for the Board of Directors. The directors own approximately 55% of the
outstanding Common Stock of the Company and intend to vote "FOR" the nominees.
PROPOSAL 2
PROPOSED INCREASE IN AUTHORIZED COMMON SHARES
The authorized capital stock of the Company presently consists of
10,000,000 shares of Common Stock, $.02 par value, and 1,000,000 shares of
Preferred Stock, $.02 par value, issuable in series. The following statements
are brief summaries of certain provisions relating to the Company's capital
stock contained in its Articles of Incorporation and Bylaws and in the laws of
Wisconsin.
COMMON STOCK
The Company's authorized Common Stock consists of 10,000,000 shares, $.02
par value, of which 9,327,224 shares are issued and outstanding as of September
30, 2000 and 592,677 have been reserved for issuance pursuant to the Company's
outstanding warrants to purchase Common Stock. The issued and outstanding
shares of Common Stock are fully paid and non-assessable by the Company, subject
to the personal liability which may be imposed on shareholders by Section
180.0622(2)(b) of the Wisconsin Business Corporation Law, as judicially
interpreted, for debts owing to employees for services performed, but not
exceeding six months service in any one case. Although Section 180.0622(2)(b)
provides that such personal liability of shareholders shall be "to an amount
equal to the par value of shares owned by them respectively, and to the
consideration for which their shares without par value was issued," the
Wisconsin Supreme Court, by a split decision without a written opinion, has
affirmed a judgment holding shareholders of a corporation liable under the
substantially identical predecessor statute in effect prior to January 1, 1991
(Section 180.40(6)) for unpaid employee wages to an amount equal to the
consideration for which their par value shares were issued rather than the
shares' lower stated par value. Local 257 of Hotel and Restaurant Employees and
Bartenders International Union v. Wilson Street East Dinner Playhouse, Inc., 126
Wis. 2d 284, 375 N.W.2d 664 (1985) (affirming the 1983 decision of the Circuit
Court for Dane County, Wisconsin, in Case No. 82-CV-0023). The Wilson Street
East case was subsequently overturned on other grounds. Holders of the Company's
Common Stock are entitled to one vote for each share held of record on all
matters submitted to a vote of the shareholders. As of September 30, 2000, there
were approximately 495 record holders of the Company's Common Stock. Each share
of the Company's Common Stock is entitled to equal dividend rights and to equal
rights in the assets of the Company available for distribution to holders of
Common Stock upon liquidation, subject to the rights of outstanding shares of
Preferred Stock. The Company's Articles of Incorporation and Bylaws do not
provide for preemptive rights of the holders of its Common Stock.
PREFERRED STOCK
The Company's authorized Preferred Stock presently consists of 1,000,000
shares, $.02 par value. The Company's Board of Directors may, without further
action by the Company's shareholders, from time to time direct the issuance of
Preferred Stock in series and may, at the time of issuance, determine the
rights, preferences and limitations of each series. Satisfaction of any dividend
preferences of Preferred Stock would reduce the amount of funds available for
the payment of dividends on Common Stock. Such shares could have varying and
different voting rights. Also, holders of Preferred Stock would normally be
entitled to receive a preference payment in the event of any liquidation,
dissolution or winding up of the Company before any payment is made to the
holders of Common Stock. The issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Company without
further action by the shareholders. The issuance of Preferred Stock with voting
and conversion rights may adversely affect the voting powers of the holders of
Common Stock, including the loss of voting control to others.
There are currently no outstanding shares of Preferred Stock and no intent
to issue any.
COMMON SHARES RESERVED FOR ISSUANCE
As of September 30, 2000, 592,677 shares of Common Stock are reserved for
issuance upon exercise of outstanding warrants.
ANTI-TAKEOVER PROVISIONS
Sections 180.1140 to 180.1144 of the "Wisconsin Business Combination Law
(the "WBCL") regulate a broad range of "business combinations" between a
"resident domestic corporation" (which the Company believes it is) and an
"Interested Stockholder." The Wisconsin Business Combination Statute defines a
"business combination" to include a merger or share exchange, sale, lease,
exchange, mortgage, pledge, transfer, or other disposition of assets equal to at
least 5% of the market value of the stock or assets of the Company or 10% of its
earning power, or issuance of stock or rights to purchase stock with a market
value equal to at least 5% of the outstanding stock, adoption of a plan of
liquidation, and certain other transactions involving an "interested
stockholder." An "interested stockholder" is defined as a person who
beneficially owns, directly or indirectly, 10% of the voting power of the
outstanding voting stock of the corporation or who is an affiliate or associate
of the corporation and beneficially owned 10% of the voting power of the then
outstanding voting stock within the last three years. The Wisconsin Business
Combination Statute prohibits a corporation from engaging in a business
combination (other than a business combination of a type specifically excluded
from the coverage of the statute) with an interested stockholder for a period of
three years following the date such person becomes an interested stockholder,
unless the board of directors approved the business combination or the
acquisition of the stock that resulted in a person becoming an interested
stockholder before such acquisition. Accordingly, the Wisconsin Business
Combination Statute's prohibition on business combinations cannot be avoided
during the three-year period by subsequent action of the board of directors or
shareholders. Business combinations after the three-year period following the
stock acquisition date are permitted only if (i) the board of directors approved
the acquisition of the stock by the interested stakeholders prior to the
acquisition date, (ii) the business combination is approved by a majority of the
outstanding voting stock not beneficially owned by the interested stockholder,
or (iii) the consideration to be received by shareholders meets certain
requirements of the statute with respect to form and amount.
In addition, the WBCL provides, in sections 180.1130 to 180.1133, that
certain mergers, share exchanges or sales, leases, exchanges or other
dispositions of assets in a transaction involving a "significant shareholder"
and a resident domestic corporation (as defined below) are subject to a
supermajority vote of shareholders (the "Wisconsin Fair Price Statute"), in
addition to any approval otherwise required. A "significant shareholder," with
respect to an resident domestic corporation, is defined as a person who
beneficially owns, directly or indirectly, 10% or more of the voting stock of
the corporation, or an affiliate of the corporation which beneficially owned,
directly or indirectly, 10% or more of the voting stock of the corporation
within the last two years. Such business combinations must be approved by 80%
of the voting power of the corporation's stock and at least two-thirds of the
voting power of the corporation's stock not beneficially held by the significant
shareholder who is party to the relevant transaction or any of its affiliates or
associates, in each case voting together as a single group, unless the following
fair price standards have been met: (i) the aggregate value of the per share
consideration is equal to the higher of (a) the highest price paid for any
common shares of the corporation by the significant shareholder in the
transaction in which it became a significant shareholder or within two years
before the date of the business combination, (b) the market value of the
corporation's shares on the date of commencement of any tender offer by the
significant shareholder, the date on which the person became a significant
shareholder or the date of the first public announcement of the proposed
business combination, whichever is higher, or (c) the highest liquidation or
dissolution distribution to which holders of the shares would be entitled, and
(ii) either cash, or the form of consideration used by the significant
shareholder to acquire the largest number of shares, is offered.
Under section 180.1150 (the "Wisconsin Control Share Statute") of the WBCL,
unless otherwise provided in the articles of incorporation (which is not the
case with respect to the Company's Amended and Restated Articles of
Incorporation), the voting power of shares, including shares issuable upon
conversion of convertible securities or exercise of options or warrants, of a
resident domestic corporation held by any person or persons acting as a group in
excess of 20% of the voting power in the election of directors is limited (in
voting on any matter) to 10% of the full voting power of those shares. This
restriction does not apply to shares acquired directly from the issuing public
corporation, in certain specified transactions, or in a transaction with respect
to which the corporation's shareholders have approved restoration of the full
voting power of otherwise restricted shares. In light of the 10% threshold
contained in the Wisconsin Business Combination Statute, the Wisconsin Control
Share Statute threshold of 20% may not be implicated unless the board of
directors approves a transaction that permits the shareholder to exceed the 10%
ownership level.
Section 180.1134 (the "Wisconsin Defensive Action Restrictions") of the
WBCL provides that, in addition to the vote otherwise required by law or the
articles of incorporation of an issuing public corporation, the approval of the
holders of a majority of the shares entitled to vote is required before such
corporation can take certain action while a takeover offer is being made or
after a takeover offer has been publicly announced and before it is concluded.
Under the Wisconsin Defensive Action Restrictions, shareholder approval is
required for the corporation to (i) acquire more than 5% of the outstanding
voting shares at a price above the market price from any individual or
organization that owns more than 3% of the outstanding voting shares and has
held such shares for less than two years, unless a similar offer is made to
acquire all voting shares, or (ii) sell or option assets of the corporation
which amount to at least 10% of the market value of the corporation, unless the
corporation has at least three independent directors (directors who are not
officers or employees) and a majority of the independent directors vote not to
have this provision apply to the corporation. The Company will have, following
the distribution, three independent directors, so the restrictions described in
clause (ii) will not initially apply to the Company. The restrictions described
in clause (i) above may have the effect of deterring a shareholder from
acquiring the Company's shares with the goal of seeking to have the Company
repurchase such shares at a premium over the market price.
The Company believes that it will qualify as a "resident domestic
corporation" because it is headquartered in Wisconsin and its Common Stock is
registered under Section 12 of the Securities and Exchange Act of 1934, as
amended. Accordingly the Company will have the above anti-takeover protection
discussed above.
CERTAIN ANTI-TAKEOVER EFFECTS
Certain provisions of the Company's Amended and Restated Articles of
Incorporation and By-Laws may have significant anti-takeover effects, including
the limitation on the number of directors.
The explicit grant in section 180.0827 of the WBCL, the "Wisconsin
Stakeholder Provisions" of discretion to directors to consider nonshareholder
constituencies could, in the context of an active "auction" of the Company, have
anti-takeover effects in situations where the interests of stakeholders of the
Company, including employees, suppliers, customers and communities in which the
Company does business, conflict with the short-term maximization of shareholder
value.
The Wisconsin Control Share Statute may deter any shareholder from
acquiring in excess of 20% of the outstanding stock of the Company and the
Wisconsin Fair Price Statute may discourage any attempt by a shareholder to
squeeze out shareholders without offering an appropriate premium purchase price.
In addition, the Wisconsin Defensive Action Restrictions may have the effect of
deterring a shareholder from acquiring the Company's shares with the goal of
seeking to have the Company repurchase the shares at a premium.
The statutory provisions and the Company's Amended and Restated Articles of
Incorporation and By-Law provisions referenced above are intended to encourage
persons seeking to acquire control of the Company to initiate such an
acquisition through arms-length negotiations with the Company's Board of
Directors, and to ensure that sufficient time for consideration of such a
proposal, and any alternatives, is available. Such measures are also designed
to discourage investors from attempting to accumulate a significant minority
position in the Company and then use the threat of a proxy contest as a means to
pressure the Company to repurchase shares at a premium over the market value.
To the extent that such measures make it more difficult for, or discourage, a
proxy contest or the assumption of control by a holder of a substantial block of
the Company's stock, they could increase the likelihood that incumbent directors
will retain their positions, and may also have the effect of discouraging a
tender offer or other attempt to obtain control of the Company, even though such
attempt might be beneficial to the Company and its shareholders.
INCREASED COMMON SHARES
From time to time, the Board has authorized the issuance or reservation of
shares of Common Stock in connection with the offering of Common Stock, the
exercise of employee options or warrants, and the issuance of securities
convertible into Common Stock. In the future, the Board may from time to time
conclude that the issuance of additional shares of Common Stock for such
purposes and potential acquisitions and private placements of Common Stock is in
the best interest of the Company.
To enable the Board to issue additional shares in connection with future
transactions, the Board is submitting for shareholder approval proposed
amendments to the Articles of Incorporation that would increase from 10,000,000
to 50,000,000 the number of shares of Common Stock that the Board is authorized
to issue without further shareholder approval. The availability of authorized
shares makes it possible to consummate potential transactions, including public
and private offerings and acquisitions, without the cost and delays that could
result if the Board were required to obtain shareholder authorization of
additional shares in the context of a particular transaction. However, such
availability, if approved, could have the effect of depriving the shareholders
of the opportunity to consider the merits of individual transactions.
At the present time, the Company needs additional working capital to
continue its operations and is contemplating issuing 750,000 shares of Common
Stock pursuant to a private placement for $2.00 per share. Purchasers of the
company's Common Stock under such private placement would also receive a warrant
entitling them to purchase one half share of Common Stock, for $3.00 per share,
for every share of Common Stock purchased through the private placement. The
Company's management is considering raising the amount to sell up to two million
shares of Common Stock. The net proceeds of such private placement will be used
to fund the company's working capital needs and other general corporate
purposes. There can be no assurances that the private placement will be
successful at all or on terms acceptable to the shareholders. The Company needs
funds in December to continue to operate its business or it may cease
operations.
While the Board's purpose in proposing the increase in authorized shares of
Common Stock is to provide the Company flexibility in meeting its future capital
needs and in accomplishing potential acquisitions, it might be possible for the
Board to issue a large number of shares of Common Stock to impede completion of
a proposed hostile merger, tender offer or other takeover attempt which some
shareholders may at the time deem to be in their best interest. A similar result
might also be achieved by the issuance, without shareholder approval, of a
series of Preferred Stock (which is already authorized for Board issuance
without shareholder approval) vested with special voting rights, conversion
rights or other rights and preferences to a party believed to be friendly to
management.
The issuance of additional shares of Common Stock could reduce existing
shareholders' percentage ownership and voting power in the Company and,
depending on the transaction in which they are issued, could affect the per
share book value or other per share financial information.
The effect of available authorized shares as an anti-takeover device is
limited by the Board's duties with respect to the terms under which shares would
be issued in takeover-related circumstances. Further, the Board has not
considered this possibility as a reason for increasing the number of authorized
shares, and it is not proposing the increase for the purpose of enhancing the
Company's ability to resist an unwanted takeover attempt. In addition, the
Company is unaware of any current proposal or plan of any third party to seek
control of the Company.
The proposed amendment would restate Article III of the Articles of
Incorporation to read as follows:
"ARTICLE III
Capital Stock
The authorized capital stock of this corporation shall
consist of Fifty Million (50,000,000) common shares, par
value $.02 per share and One Million (1,000,000) preferred
shares, par value $.02 per share.
The board of directors of this corporation is hereby vested
to the fullest extent permitted by the Wisconsin Business
Corporation Law to divide the preferred shared into series,
and within the limitations set forth in the Wisconsin
Business Corporation Law, the board of directors may fix and
determine the relative rights and preferences of the shares
of any preferred series so established."
Approval of the proposal requires the affirmative vote of the holders of at
least a majority of the outstanding voting shares. SHARES REPRESENTED BY THE
ENCLOSED PROXY WILL BE VOTED FOR THE PROPOSAL, UNLESS OTHERWISE SPECIFIED ON THE
PROXY.
RECOMMENDATION
The Board of Directors unanimously recommends a vote "FOR" approval of the
amendment to the Articles of Incorporation to increase the number of shares of
Common Stock that the Company is authorized to issue. The directors own
approximately 55% of the outstanding Common Stock of the Company and intend to
vote "FOR" approval of the amendment to the Articles of Incorporation to
increase the number of shares of Common Stock that the Company is authorized to
issue.
OTHER MATTERS
At the date of this Proxy Statement, the Company is unaware of any other
matters that are to be presented for action at the meeting. Should any other
matter come before the meeting, however, the persons named in the enclosed proxy
will have discretionary authority to vote all proxies with respect to such
matter in accordance with their judgment.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company selected Arthur Anderson LLP to audit the consolidated
financial statements of the Company for the fiscal year ending March 31, 2000.
Arthur Andersen's representatives are not expected to be present at the Annual
Meeting.
REPORT ON FORM 10-KSB
A COPY OF THE COMPANY'S FORM 10-KSB WITHOUT EXHIBITS FOR THE TRANSITION
PERIOD ENDED MARCH 31, 2000 HAS BEEN ENCLOSED WITH THIS PROXY STATEMENT.
SHAREHOLDERS MAY REQUEST A COPY OF THE EXHIBITS TO THE FORM 10-KSB, FREE OF
CHARGE, BY WRITING TO: KEITH BRUE, CHIEF FINANCIAL OFFICER, GENROCO, INC., 255
INFO HIGHWAY, SLINGER, WISCONSIN 53086.
FINANCIAL AND OTHER INFORMATION
Financial and other information regarding the Company, including the
Company's financial statements and management's discussion and analysis of
financial condition and results of operations, contained in the Company's Form
10-KSB (enclosed herein) is incorporated in this Proxy Statement by reference.
The information contained in this Proxy Statement does not purport to be
comprehensive and should be read together with the information contained in the
Company's Form 10-KSB incorporated herein. The Company's unaudited financial
statements for the first two fiscal quarters of the 2001 fiscal year are set
forth below.
CONSOLIDATED CONDENSED BALANCE SHEETS
ASSETS (Unaudited) (Audited)
------------- --------------
June 30, 2000 March 31, 2000
------------- --------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 701,212 $ 842,104
Accounts Receivable - Trade, Net of
Allowances of $3,000 at June 30
and March 31, 2000 134,052 274,677
Accounts Receivable from VideoPropulsion 76,279 72,604
Inventories 749,511 72,934
Prepaid Expenses 130,247 87,791
Employee Advances 35,015 64,868
Income Taxes Receivable 211,127 11,127
Net Assets of Discontinued Operations 47,842 56,554
---------- ----------
Total Current Assets 2,085,285 2,282,659
PROPERTY AND EQUIPMENT, at cost
Building 1,250,000 1,250,000
Building and Leasehold Improvements 90,419 90,419
Machinery and Equipment 855,584 795,096
---------- ----------
2,196,003 2,135,515
Less - Accumulated Depreciation and
Amortization 478,202 423,265
---------- ---------
Net Property, Plant and Equipment 1,717,801 1,712,250
Other Assets 146,938 137,749
---------- ----------
Total Assets $3,950,024 $4,132,658
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT (Unaudited) (Audited)
------------- --------------
June 30, 2000 March 31, 2000
------------- --------------
CURRENT LIABILITIES:
Accounts Payable $ 278,838 $ 412,679
Current Portion of Long Term Debt 360,476 352,980
Accrued Payroll and Payroll Taxes 87,607 139,651
Other Accrued Liabilities 134,374 112,567
---------- ----------
Total Current Liabilities 861,295 1,017,877
LONG-TERM DEBT:
Mortgage Payable 1,046,954 1,061,377
Payable to Banks 157,000 -
Capital Leases Payable 161,670 158,655
---------- ----------
Total Liabilities 2,226,919 2,237,909
SHAREHOLDERS' INVESTMENT:
Common Stock, $.02 par value, 10,000,000
shares authorized, 9,267,224
issued and outstanding on June 30,
2000 and 8,724,624 issued and
outstanding on March 31, 2000 185,345 87,246
Additional Paid-In Capital 6,821,752 4,624,171
Retained Deficit (2,622,366) (1,618,107)
Unearned Compensation (2,661,626) (1,100,225)
Advance to ESOP - (98,336)
----------- -----------
Total Shareholders' Investment 1,723,105 1,894,749
---------- ----------
$3,950,024 $4,132,658
---------- ----------
---------- ----------
See accompanying notes
CONSOLIDATED STATEMENTS OF OPERATIONS
(In Dollars, Except Per Share Data)
(Unaudited)
-----------------------------
Three Months Ended
June 30,
-----------------------------
2000 1999
---------- ----------
NET SALES $ 255,957 $ 938,170
COST OF GOODS SOLD 247,629 355,750
----------- -----------
Gross Profit 8,328 582,420
OPERATING EXPENSES:
Engineering 432,056 199,265
Selling and Administrative 434,833 386,966
----------- -----------
866,889 586,231
----------- -----------
Loss from Operations (858,561) (3,811)
Interest Expense 37,637 8,341
Interest Income 8,022 4,501
Other Non-Operating Expenses 7,370 6,502
----------- -----------
LOSS BEFORE TAXES (895,546) (14,153)
Income Tax Expense - 7,000
----------- -----------
NET LOSS FROM CONTINUING OPERATIONS
BEFORE INCOME TAXES (895,546) (21,153)
(Loss) / Earnings from Discontinuing
Operations (Less Applicable Tax
Provision of $0) (108,713) 32,002
------------ -----------
NET (LOSS) INCOME $ (1,004,259) $ 10,849
------------ -----------
------------ -----------
BASIC AND FULLY DILUTED (LOSS)
EARNINGS PER SHARE $ (.11) $ -
------------ -----------
------------ -----------
Average number of shares outstanding 8,905,490 7,669,980
------------ -----------
------------ -----------
Average number of shares - Assuming full
dilution 9,249,242 7,668,980
------------ -----------
------------ -----------
(After consideration of July 3, 2000, 2-for-1 forward stock split)
See accompanying notes
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
---------------------------
Three Months Ended
June 30,
---------------------------
2000 1999
----------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $(895,546) $ (21,153)
Adjustments to reconcile net income to net
cash provided by (used in) operating activities:
Depreciation, amortization and deferred
income taxes 55,748 30,436
Compensation expense from forgiveness
of notes receivable from shareholders 234,279 73,829
(Loss) Earnings from discontinued operations (108,713) 32,002
Change in assets and liabilities:
Current assets, other than cash 59,419 381,633
Current liabilities, other than notes
payable (167,014) (134,367)
--------- ---------
Net cash (used in) provided by
operating activities (821,828) 362,380
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment,
net of retirements (70,489) (103,964)
--------- ---------
Net cash used in investing activities (70,489) (103,964)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt 211,255 116,924
Principal payments of long-term debt (58,166) (175,000)
Issuance of common stock: (58,166) (175,000)
Private placement 500,000 -
Purchase of Stock - (42,464)
Advance to ESOP 98,336 61,883
--------- ---------
Net cash provided by (used in) financing
activities 751,425 (38,657)
--------- ---------
Net (decrease) increase in cash and cash
equivalents (140,892) 219,759
Cash and cash equivalents at beginning of
period 842,104 524,359
--------- ---------
Cash and cash equivalents at end of period $ 701,212 $ 744,118
--------- ---------
--------- ---------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(Unaudited) June 30,
-----------------------
2000 1999
--------- ---------
Cash paid during year for:
Interest $37,637 $ 8,341
------- -------
------- -------
$ - $ -
Income taxes ------- -------
------- -------
See accompanying notes
NOTES TO UNAUDITED FINANCIAL STATEMENTS
JUNE 30, 2000
1. BASIS OF PRESENTATION
The consolidated condensed financial statements include GENROCO, Inc. and
its wholly owned subsidiaries, VideoPropulsion, Inc. and GENROCO
International, Inc. (collectively the "Company" or "GENROCO") and have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission.
The financial results of VideoPropulsion, Inc. for the quarter are included
herein as a discontinued operation because it was spun off to its
shareholders on July 10, 2000. The historical financial data for GENROCO
has been adjusted to reflect the impact of treating VideoPropulsion, Inc.
as a discontinued operation.
The share data in this report has been adjusted to reflect the effect of
the 2-for-1 forward stock split distributed on July 13, 2000 to
shareholders of record on July 3, 2000.
Certain information and footnote disclosures normally included in financial
statements, prepared in accordance with generally accepted accounting
principles, have been condensed or omitted pursuant to such rules and
regulations, and as such, the Company believes that the disclosures are
adequate to make the information presented not misleading. The results for
the quarter ended June 30, 2000 may not be indicative of the results for
the entire year. These statements should be read in conjunction with the
financial statements and the notes thereto included in the Company's Form
10-KSB for the Company's fiscal year ended March 31, 2000.
2. INVENTORIES
Cost of the Company's inventory is determined using the average cost first-
in, first-out (FIFO) inventory valuation method. The distribution between
major classes of inventories is as follows:
(Unaudited) (Audited)
June 30, 2000 March 31, 2000
------------- --------------
Raw material and work-in-process $250,978 $480,018
-------- --------
Finished goods 498,533 192,916
-------- --------
$749,511 $672,934
-------- --------
-------- --------
3. DISTRIBUTION OF SUBSIDIARY
In August of 1999, the board of directors of GENROCO began contemplating
the spin-off and distribution of the Company's Digital Video Broadcast
(DVB) business as a separate company to be named VideoPropulsion, Inc. The
Company executed the distribution on July 10, 2000 by issuing one new
share of VideoPropulsion Inc. stock, for each share of Company stock held
by GENROCO shareholders of record, as of the close of business on June 30,
2000. The spin-off was recorded as a distribution as of July 10, 2000 and
served to reduce retained earnings by approximately $120,000.
4. STOCK SPLIT
In July 2000, GENROCO declared a 2 for 1 stock split as of July 3, 2000
with a distribution date of July 13, 2000. As a result, shareholders of
record as of July 3, 2000 received 4,633,612 additional shares to bring the
total outstanding amount to 9,267,224.
FINANCIAL STATEMENTS (UNAUDITED) FOR THE SIX MONTHS ENDED SEPTEMBER 30, 2000
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited) (Audited)
ASSETS
------------- ------------
September 30, March 31,
2000 2000
------------- ------------
CURRENT ASSETS:
Cash and Cash Equivalents $ 259,077 $ 842,104
Accounts Receivable - Trade, Net of
Allowances of $3,000 at September 30, 2000
and March 31, 2000 561,648 274,677
Accounts Receivable from VidoPropulsion, Inc. 142,715 72,604
Inventories 767,748 672,934
Prepaid Expenses 192,669 87,791
Employee Advances 36,616 64,868
Income Taxes Receivable - 211,127
Net Assets of Discontinued Operations - 56,554
---------- ----------
Total Current Assets 1,960,473 2,282,659
PROPERTY AND EQUIPMENT, at cost
Building 1,250,000 1,250,000
Building and Leasehold Improvements 90,419 90,419
Machinery and Equipment 864,237 795,096
---------- ----------
2,204,656 2,135,515
Less - Accumulated Depreciation and
amortization 533,418 423,265
---------- ----------
Net Property, Plant and Equipment . 1,671,238 1,712,250
Other Assets 154,871 137,749
---------- ----------
Total Assets $3,786,582 $4,132,658
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' (Unaudited) (Audited)
INVESTMENT ------------------ --------------
September 30, 2000 March 31, 2000
------------------ --------------
CURRENT LIABILITIES:
Accounts Payable $ 228,517 $ 412,679
Current Portion of Long Term Debt 342,833 352,980
Accrued Payroll and Payroll Taxes 97,259 139,651
Notes Payable to Banks 389,000 0
Other Accrued Liabilities 183,491 112,567
---------- ----------
Total Current Liabilities 1,241,100 1,017,877
LONG-TERM DEBT:
Mortgage Payable 1,036,454 1,061,377
Capital Leases Payable 130,329 158,655
---------- ----------
Total Liabilities 2,407,883 2,237,909
SHAREHOLDERS' INVESTMENT:
Common Stock, $.02 par value,
10,000,000 shares authorized,
9,267,224 issued and outstanding
on June 30, 2000 and 8,724,624
issued and outstanding on March
31, 2000 185,704 174,492
Additional Paid-In Capital 6,967,293 4,536,925
Retained Deficit (3,286,773) (1,618,107)
Unearned Compensation (2,467,923) (1,100,225)
Advance to ESOP (19,602) (98,336)
---------- ----------
Total Shareholders' Investment 1,378,699 1,894,749
---------- ----------
Total Liabilities and Shareholders' $3,786,582 $4,132,658
Investment ---------- ----------
---------- ----------
See accompanying notes
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
<TABLE>
Three Months Ended Six Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
NET SALES $ 678,045 $ 957,756 $ 934,002 $1,896,926
COST OF GOODS SOLD 348,353 408,378 595,982 764,128
--------- -------- ----------- ----------
Gross Profit 329,692 549,378 338,020 1,131,798
OPERATING EXPENSES:
Engineering 425,687 203,545 857,743 402,810
Selling and administrative 471,199 442,965 906,032 829,931
--------- -------- ----------- ----------
896,886 646,510 1,763,775 1,232,741
--------- -------- ----------- ----------
LOSS FROM OPERATIONS (567,194) (97,132) (1,425,755) (100,943)
Interest expense 36,217 10,123 73,854 18,464
Interest income 812 2,888 8,834 7,389
Other non-operating expenses 8,062 (9,910) 15,432 (3,408)
--------- -------- ----------- ----------
LOSS BEFORE TAXES (610,661) (94,457) (1,506,207) (108,610)
(Provision) Benefit - Income taxes. (5,904) 25,000 (5,904) 18,000
--------- -------- ----------- ----------
LOSS FROM CONTINUING OPERATIONS (616,565) (69,457) (1,512,111) (90,610)
Gain (Loss) from
Discontinued Operations 9,031 30,664 (99,682) 62,667
--------- -------- ----------- ----------
NET LOSS $(607,534) $(38,793) $(1,611,793) $ (27,943)
--------- -------- ----------- ----------
--------- -------- ----------- ----------
BASIC LOSS EARNINGS PER SHARE
$ (.07) $ .00 $ (.18) $ .00
DILUTED LOSS
PER SHARE $ (.07) $ .00 $ (.17) $ .00
Average number of
shares outstanding 9,282,224 7,728,150 9,043,252 7,481,058
--------- --------- ----------- ----------
--------- --------- ----------- ----------
Average number of
shares - Assuming full dilution 9,874,901 7,728,150 9,635,930 7,481,058
--------- --------- ----------- ----------
--------- --------- ----------- ----------
</TABLE>
See accompanying notes
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
(Unaudited)
------------------------------
Six Months Ended September 30,
------------------------------
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss from continuing operations $(1,512,111) $ (90,610)
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation, amortization and deferred income taxes 110,153 63,483
Compensation expense due to forgiveness of notes
receivable related to sale of stock to employees 391,802 154,815
(Loss) Earnings from discontinued operations (99,682) 62,666
Change in assets and liabilities:
Current assets, other than cash (154,645) (176,761)
Receivable from VideoPropulsion, Inc. (70,111) -
Current liabilities, other than notes payable (155,630) 107,620
----------- ---------
Net cash (used in) provided by operating activities (1,490,224) 121,213
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to property, plant and equipment, net of retirements (69,141) (178,926)
----------- ---------
Net cash used in investing activities (69,141) (178,926)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from lease financing and bank debt 680,244 783,049
Principal payments of lease financing and bank debt (354,640) (795,806)
Sale of common stock 572,000 -
Purchase of common stock - (22,464)
Advance to ESOP 78,734 61,883
Dividend associated with spin-off of VideoPropulsion, Inc. (56,873) -
----------- ---------
Net cash provided by financing activities 976,338 26,662
----------- ---------
Net decrease in cash and cash equivalents (583,027) (31,051)
Cash and cash equivalents at beginning of period 842,104 524,359
----------- ---------
Cash and cash equivalents at end of period $ 259,077 $ 493,308
----------- ---------
----------- ---------
</TABLE>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
(Unaudited)
-----------------------
September 30,
-----------------------
2000 1999
Cash paid during year for:
Interest $ 72,481 $ 18,464
-------- --------
-------- --------
Income Taxes $ - $175,036
-------- --------
-------- --------
See accompanying notes
GENROCO, INC. and Subsidiaries
NOTES TO UNAUDITED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. BASIS OF PRESENTATION
The consolidated condensed financial statements include the accounts of
GENROCO, Inc. and its wholly owned subsidiaries, GENROCO International,
Inc. (currently dormant and in the process of liquidation) and
VideoPropulsion, Inc., up to July 10, 2000, the effective date of the spin-
off, (collectively the "Company" or "GENROCO") and have been prepared by
the Company, without audit, pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements, prepared in
accordance with generally accepted accounting principles, have been
condensed or omitted pursuant to such rules and regulations, and as such,
the Company believes that the disclosures are adequate to make the
information presented not misleading. The results for the quarter ended
September 30, 2000 may not be indicative of the results for the entire
year. It is suggested these statements be read in conjunction with the
financial statements and the notes thereto, included in the Company's Form
10-KSB for its fiscal year ended March 31, 2000 which was filed on June 19,
2000.
2. INVENTORIES
Cost of the Company's inventory is determined using the average cost first-
in, first-out (FIFO) inventory valuation method. The distribution between
major classes of inventories is as follows:
(Unaudited) (Audited)
September 30, 2000 March 31, 2000
------------------ --------------
Raw Material and Work-In Process $495,248 $480,018
Finished Goods 272,500 192,916
-------- --------
$767,748 $672,934
-------- --------
-------- --------
3. DISTRIBUTION OF SUBSIDIARY
In August 1999, the board of directors of GENROCO began contemplating the
spin-off and distribution of the Company's Digital Video Broadcast (DVB)
business as a separate company to be named VideoPropulsion, Inc. The
Company executed the distribution on July 10, 2000 by issuing one share of
VideoPropulsion Inc. stock for each share of Company stock held by GENROCO
shareholders of record as of the close of business on June 30, 2000. The
spin-off was recorded as a distribution as of July 10, 2000 and served to
reduce retained earnings by $56,873.
4. STOCK SPLIT
In July 2000, GENROCO declared a 2-for-1 stock split to shareholders of
record as of July 3, 2000 with a distribution date of July 13, 2000. As a
result, shareholders of record as of July 3, 2000, received 4,633,612
additional shares to bring the total outstanding amount to 9,267,224 on a
post-split basis. Subsequent to the split, the Company has issued an
additional 60,000 shares to bring the total outstanding amount to 9,327,224
as of September 30, 2000. All financial information has been restated for
the split.
SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy material for
the 2001 Annual Meeting of shareholders must be received in writing by the
Company, at the address set forth on the first page of the Proxy Statement, on
or before July 27, 2001. Any such proposal will be subject to Rule 14a-8
promulgated under the Securities Exchange Act of 1934.
Notice of shareholder proposals for presentation at the 2001 Annual
Meeting, but which are not going to be presented to the Company for inclusion in
the proxy materials, will be considered untimely after October 10, 2001. If the
annual meeting date is changed, the Company shall disclose in the Form 10-QSB
such revised dates.
MATERIALS INCORPORATED BY REFERENCE
The Company's Form 10-KSB (enclosed herein) is incorporated in this Proxy
Statement by reference. The information contained in this Proxy Statement does
not purport to be comprehensive and should be read together with the information
contained in the Company's Form 10-KSB incorporated herein.
GENROCO, INC.
/s/ Carl A. Pick
------------------------------------
Carl A. Pick
Chairman and Chief Executive Officer
November 27, 2000
GENROCO, INC.
ANNUAL MEETING OF SHAREHOLDERS - DECEMBER 8, 2000
P R O X Y
COMMON STOCK
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
CARL A. PICK AND KEITH BRUE, and each of them, are hereby authorized as Proxies,
with full power of substitution, to represent and vote the Common Stock of the
undersigned at the Annual Meeting of Stockholders of GENROCO, Inc., a Wisconsin
corporation, to be held on Friday, December 8, 2000, or any adjournment thereof,
with like effect as if the undersigned were personally present and voting, upon
the following matters:
1. Election of Directors ----- FOR all nominees listed ----- WITHHOLD AUTHORITY
below (except as marked to to vote for all
the contrary below) nominees listed below
CARL A. PICK, KEITH BRUE, BARBARA R. PICK, CHRIS GOOD
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name on the line provided below.)
--------------------------------------------------------------------------------
2. Approve an Amendment to the Company's Articles of Incorporation to increase
the number of authorized shares of Common Stock from 10,000,000 to
50,000,000.
---------- FOR ---------- AGAINST ---------- ABSTAIN
(Continued on reverse side)
- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
(Continued from reverse side)
3. In their discretion, upon such other business as may properly come before
the Meeting or any adjournment thereof;
all as set out in the Notice and Proxy Statement relating to the Meeting,
receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER SPECIFIED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR PROPOSALS 1 AND 2.
Dated: -------------------------, 2000
--------------------------------------
Check appropriate box --------------------------------------
Indicate changes below: Signature(s) of Shareholder(s)
Address Change? ---- Name Change ---- PLEASE SIGN PERSONALLY AS NAME APPEARS
AT LEFT. When signing as attorney,
executor, administrator, personal
representative, trustee or guardian,
give full title as such. If signer is
a corporation, sign full corporate
name by duly authorized officer. If
stock is held in the name of two or
more persons, all should sign.
PLEASE SIGN AND DATE THIS PROXY AND RETURN IN ENCLOSED PREPAID ENVELOPE - PLEASE
DO NOT FOLD
