UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
Annual Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the year ended March 31, 2000
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
Commission File Number 1-15397
GENROCO, INC.
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(Exact name of registrant as specified in its charter)
Wisconsin 88-0230309
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(State or other jurisdiction of (IRS Employer Identification Number)
incorporation or organization)
255 Info Highway, Slinger, Wisconsin 53086
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(Address of principal executive offices) Zip code
(262) 644-8700
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(Registrant's telephone number, including area code)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT:
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 [__]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this form 10-K. [__]
As of March 31, 2000, the Company had 4,362,312 shares outstanding. The
aggregate value of the 1,102,000 shares of Common Stock held by non-
affiliates of the Company was $15,704,000, based on the closing price of
$14.25 per share on March 31, 2000 on the OTC Bulletin Board. This
calculation does not reflect a determination that certain persons are
affiliates of the Registrant for any other purpose.
The Company's revenue for the fiscal year ended March 31, 2000 is $2,510,336.
Documents incorporated by reference: Portions of the Registrant's Proxy
Statement for its 2000 Annual Meeting of Stockholders (the "Proxy
Statement"), to be filed with the Securities and Exchange Commission, are
incorporated by reference to Part III in this form 10-KSB Report.
TABLE OF CONTENTS
PART I....................................................... 3
Item 1. Description of Business............................. 4
Item 2. Description of Properties............................16
Item 3. Legal Proceedings................................... 16
Item 4. Submission of Matters to a Vote of Security Holders. 16
PART II...................................................... 17
Item 5. Market for Registrant's Common Equity and
Related Stockholder Matters......................... 17
Item 6. Management's Discussion and Analysis or Plan
of Operations....................................... 18
Item 7. Financial Statements................................ 23
Item 8. Changes in Disagreements With Accountants On
Accounting and Financial Matters.................... 35
PART III..................................................... 36
Item 9 - Directors, Executive Officers, Promoters and
Control Persons: Compliance with
Section 16 (a) of the Exchange Act.................. 36
Item 10. Executive Compensation.............................. 38
Item 11. Security Ownership of Certain Beneficial Owners
and Management...................................... 39
Item 12. Certain relationships and Related Transactions...... 41
PART IV...................................................... 42
Item 13. Exhibits, Financial Statement Schedules and
Reports on Form 8-K................................. 42
SIGNATURES................................................... 44
PART I
ITEM 1. DESCRIPTION OF BUSINESS
NOTE ABOUT FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements that relate to
future events or future financial performance. In some cases, forward-
looking statements can be identified by terminology such as "may," "will,"
"should," "expects," "plans," "anticipates," "believes," "estimates,"
"predicts," "intend," "potential," or "continue" or the negative of such
terms or other comparable terminology. These statements are only
predictions. Although GENROCO, Inc. believes that the expectations
reflected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance or achievements.
Actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including the
risks outlined under "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere in this Form 10-KSB.
All forward-looking statements included in this document are based
on information available to GENROCO on the date hereof. GENROCO assumes no
obligation to update any such forward-looking statements.
OVERVIEW OF THE COMPANY
GENROCO, Inc. (the "Company" or "GENROCO") is a 25-year-old, traded
(OTC BB: "GRCI"), engineering and marketing company that specializes
in offering its revolutionary TURBOstorR products that change the way the
computer industry integrates storage with traditional networks. The
Company provides enabling technology for seamless interoperability of
emerging Storage Area Networks (SANs) with evolving Local Area Networks
(LANs) and Wide Area Networks (WANs). By offering cross-platform support
for its technology, GENROCO is able to deliver unique,
extraordinarily high bandwidth, low host overhead products for this market.
The Company enjoys a global customer base that includes Compaq, Fujitsu,
SGI, Sun, the US Departments of Defense and Energy, CERN, as well as value-
added resellers (VARs).
GENROCO designs, manufactures and sells a range of high-performance network
interface cards, gateway/routers, and switches. The Company's products are
used in fabrics that connect data storage to superservers and sophisticated
workstations. The Company produces:
1) A Network Gateway/Router that enables equipment using different
industry standard hardware networking protocols (Fibre Channel
(FC), Gigabit Ethernet (GigE), HIPPI, Gigabyte System Network
(GSN), and OC-48 to directly interoperate between multiple vendor
fabrics (Cisco, Alteon, Extreme, Brocade, Ancor, Essential, etc.)
without the use of expensive intermediary servers.
2) Device drivers to provide higher bandwidth, lower overhead, OS
bypass Scheduled Transfer (ST) and SCSI over ST (SST) software
networking protocol capabilities in addition to conventional TCP/IP
on a wide range of UNIX platforms (Compaq Tru64, Sun Solaris, IBM
AIX, SGI Irix, HP HP-UX, Linux, etc.).
3) The low cost TURBOfibreR Fibre Channel (FC) to Gigabit Ethernet
(GigE) protocol converter.
4) The non-blocking, 8 port DataPropulsionTM Enterprise Switch that
(when used in conjunction with the Network Gateway/Router) allows
data to be transferred between storage devices and client server
devices with a total cross sectional bandwidth of 6,400 Megabytes
per second (MB/s) -- a typical 16 port FC Switch only offers a
total cross sectional bandwidth of approximately 1,600 MB/s.
5) A multiple terabyte network independent storage array consisting of
either RAID boxes or JBOD loops with data transfer speeds in excess
of 740 MB/sec.
6) PCI GSN, GigE, FC, HIPPI and OC48 Host Bus Adapter (HBA) cards
7) Digital Video Broadcast (DVB) HBAs and associated software drivers
HBA's sell for $2,000 to $15,000. Other equipment has sale prices ranging
from $25,000 to $500,000 per unit.
The Company is located at 255 Info Highway in Slinger, Wisconsin (approxi-
mately 35 miles northwest of Milwaukee) in a 22,000 square foot facility
and currently has 33 employees. The GENROCO's primary focus is the SAN
market and this effort currently consumes the majority of the Company's
available research and development resources. Over 70% of GENROCO is
owned by officers, directors, employees, and the Company's ESOP.
GENROCO developed its DVB technology as part of a custom engineering
project in 1995. DVB became a product line in 1996 and began operating as
a sales division in 1998. The Company recently formed VideoPropulsion,
Inc. ("VPI") as wholly owned subsidiary to focus on the development and
marketing of GENROCO's line of video transport hardware and software. The
Company intends to spin-off VPI in the form of a stock dividend to all
GENROCO, Inc. shareholders of record as of June 30, 2000. Because of
accumulated losses to date, the Company believes that this transaction is a
return of capital for income tax purposes and will not be deemed to be
taxable income to the recipient. The primary reasons for this strategic
move are to put the new organization in a position to focus dedicated
resources on the digital video marketplace, pursue alternate selling
strategies with a separate management team, and generate shareholder value
beyond what it could as an integral part of the Company.
The Company (initially General Robotics Corporation) has been in business
since 1974 and was reorganized under the laws of the State of Wisconsin in
1989 as GENROCO, Inc. The Company's Internet address is www.GENROCO.com.
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During fiscal year 2000, the Company registered its common stock under the
Securities Exchange Act of 1934, as amended, by filing a Form 10-SB so that
it could qualify to list its common stock on the NASD OTC Electronic
Bulletin Board.
OVERVIEW OF THE INDUSTRY CHALLENGES
LOCAL AREA NETWORKS (LAN) . . . STORAGE AREA NETWORKS (SAN) . . .WIDE AREA
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NETWORKS (WAN) . . . NETWORKING APPLICATIONS . . . STORAGE APPLICATIONS .
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. . I/O BOTTLE NECKS . . . INTEROPERABILITY ISSUES . . . THE GENROCO
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SOLUTION
--------
Local Area Networks (LAN) and Wide Area Networks (WAN) are typically used
as message passing applications and the technology of choice, for each, is
currently Gigabit Ethernet (GigE) and Asynchronous Transfer Mode (ATM),
respectively.
Storage Area Networks (SAN) consist of arrays of Fibre Channel (FC) disks,
which are directly accessible to servers via switches and are used to store
and manipulate large amounts of data and are thought of as archival
applications
All data packets (regardless of size) need to have "headers" which tell the
routing devices where to send them. I/O bottlenecks and interoperability
issues among LANs, SANs and WANs plague the industry because of the wide
variety of packet addressing protocols (TCP, IP, MAC, SNAP, Ethernet, ULA,
etc.) that have been adopted for networking applications, while
incompatible addressing conventions (FC-24, WWN, and Target LUN) are
required in storage environments. Since each protocol utilizes completely
different header schemes, they cannot be co-mingled without server
intervention. Heretofore, in order to get SANs to interoperate with LANs
and WANs, servers have needed to be employed as gateways and a SAN's FC
data streams needed to be repackaged into TCP/IP messages for LAN and/or
WAN clients to be able to store and retrieve information. These
technological differences and attunement problems have served to create
separate "Storage" and "Networking" markets.
Given the benefits associated with being able to seamlessly and efficiently
connect SANs, LANs, and WANs, GENROCO has devoted its R&D efforts to
this area, and has created techniques for such interoperability. The
Company's solution to reconciling messaging and storage networks
centers around three important pieces of know-how:
1) Techniques for mapping any hardware network protocol to and from a
common backbone (e.g. GSN today; InfiniBand tomorrow),
2) A method of encapsulating SCSI commands and data within Scheduled
Transfer (ST) (or other transport protocol such as SCSI/TCP, SCSI,
etc.) datagrams, and
3) An ability to send these datagrams across any type of network.
A typical data transfer between a SAN and a LAN or WAN exploits GENROCO
technology as follows:
1) A storage command is issued at the user level in an operating system
and passed to the SCSI protocol stack (which normally delivers a SCSI
command to the port driver for an FC HBA).
2) The GENROCO ST software layer intercepts the SCSI command and
encapsulates it in an ST message.
3) The ST message is passed to ANY LAN or WAN port driver (e.g. GigE) and
then on to the fabric that device operates on.
4) At some node of the fabric, a GENROCO Network Gateway/Router
translates the GigE packets to GSN packets.
5) Optionally, the GSN packets are routed through a GENROCO Enterprise
Switch.
6) At some point on the GSN backbone (switched or not), another GENROCO
Network Gateway/Router translates GSN packets to FC packets while also
de-encapsulating the SCSI command and then passes normal SCSI traffic
to the FC SAN fabric.
GENROCO is committed to trying to resolve SAN/LAN/WAN interoperability
issues by providing the enabling technology to allow SAN SCSI commands and
data the ability to bypass servers and make networked storage directly
accessible to LAN and WAN clients. This strategy is designed to allow
the Company to become a catalyst for merging these disparate spaces
into a single, more robust market, dedicated to better serving the needs
of customers. GENROCO plans to use its high speed switch fabric as
the foundation for future InfiniBand, Gigabyte Ethernet (10GigE), 2xFC,
and OC192 reconciliation.
OVERVIEW OF THE INDUSTRY IN GENERAL
-----------------------------------
REQUIREMENTS BY THE USER COMMUNITY ARE INCREASING
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As data continues to grow significantly in both volume and importance,
the ability of businesses to access this data in a fast, reliable and
efficient basis throughout the enterprise will become increasingly
critical. In recent years, there have been momentous technological
advancements in LANs for the transfer of data between the server
(which delivers the data) and the client (which receives the data)
over the network. The adoption of high-speed vehicles such as Gigabit
Ethernet has dramatically increased LAN transmission speeds commercial
networks. Improvements have also been made in the ability to share
access between multiple servers, increase the number of connected
devices on a network, and increase the distance between devices.
Despite the increased attention and resources which have been devoted
to the data storage sector of the industry, the technical capabilities
of data storage systems have not kept pace with increasing data
management demands and with the advancements in other networking
technologies. In the 1980s, the pervasiveness of PCs, workstations and
servers required broader connectivity, resulting in the development of
LANs and wide area networks (WANs) to support messaging between
computer systems. The data used by computers and servers connected to
LANs and WANs are typically located on computer storage systems and
servers, which store, process and manipulate data. The adoption of
high speed messaging technologies increased network transmission
speeds by more than 100 times during the 1990s, however, storage-to-
server data transmission speeds increased by less than 10 times during
this period. This imbalance has created bottlenecks between the local
or wide area network and business-critical storage systems. A logical
trend has developed to eliminate the need for servers as a means of
linking data bases.
FIBRE CHANNEL TECHNOLOGY MAY OPEN SOME DOORS
--------------------------------------------
To address the limitations of traditional server-to-storage
connections, Fibre Channel (FC) standards were developed in the early
1990s to facilitate high-performance storage connectivity solutions.
FC enables transfers of large blocks of data from one network device
to another at speeds up to 100 MB per second (200MB per second in full
duplex mode). Double-speed FC is in the process of being deployed.
FC is capable of supporting a large number of devices while providing
transmission reliability, guaranteed delivery, and transmission
distances of up to 20 kilometers. These features make FC well suited
for transferring data between servers and storage systems, but the
lack of TCP/IP standards for FC make it a difficult medium for direct
connection to LANs
and WANs.
While FC provides significant advantages, a backbone that can
reconcile heterogeneous network and storage traffic in an enterprise
offers capabilities above and beyond FC alone. Most importantly, such
an environment enables any client to directly access any storage
device on a given LAN, WAN, or SAN. In addition, such a backbone
provides the ability to economically scale networks to billions of
devices and the ability to connect devices that are located anywhere
in the world. Specific advantages are summarized in the following
table:
<TABLE>
Attribute Backbone Fibre Channel SCSI
------------------------ -------------------- ------------------- ------------------
<S> <C> <C> <C>
Maximum number of
connections Up to 4 billion Up to 16 million 15
Maximum bandwidth 1,600 megabytes (MB) 200 megabytes (MB) 80 MB/sec
Data transmission Full duplex Full duplex or Half Duplex
Half duplex
Connection distance 10,000 kilometers 10 kilometers 12 meters
(With OC-48/ Packets
over SONET)
Functionality Storage, Networking, Storage & Minimal Storage
Networking & Clustering
Protocol support SCSI, IP, ST, SST, SCSI, IP, others SCSI
Others
</TABLE>
LOCAL AREA NETWORKS (LAN) FOR NON-STORAGE APPLICATIONS ARE EVOLVING
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The technology of choice for local area networks ("LAN") in non-
storage applications has evolved from Ethernet (10 Mb/sec) to Fast
Ethernet ( 100 Mb/sec) to Gigabit Ethernet ( 1000 Mb/sec, i.e. 1
Gb/sec) and the Company anticipates that this will soon move on to
technologies rated at 10 Gb/sec, such as GSN, OC192, Gigabyte
Ethernet, and InfiniBand.
INDUSTRY GROWTH RATES
---------------------
During the past decade, the volume of business-critical data being
captured, created, processed, stored, accessed and manipulated, at all
levels of the global business environment, has increased dramatically.
This increase has been driven by a number of factors, including
increased dependence on data-intensive software applications used to
manage research projects and general business situations. These
applications include: (i) sophisticated database gathering and
retrieval techniques, known as data warehousing and data mining; (ii)
image and graphics production and/or distribution applications and
(iii) data-sharing situations. More recently, the volume of
business-critical data has accelerated as organizations have embraced
the internet and electronic commerce initiatives. As organizations
continue to adopt electronic transactions (with both suppliers and
customers) as the norm, the need for access to large volumes of data
on a real-time basis will continue to increase. Growth in data
storage has also been driven by the continued use of digital media,
including voice, video and music, which is being stored and
transmitted in electronic form to more efficiently reach a broad group
of users.
INDUSTRY CHALLENGES
As described above, a new challenge for suppliers of networking and storage
technology is to provide interoperability between SANs, LANs and WANs,
without the use of slow, expensive servers, while protecting, if possible,
the enormous investment that has been made in Ethernet and SCSI hardware.
GENROCO's CORE COMPETENCIES
GENROCO has expertise in the following technologies:
FIBRE CHANNEL ("FC")
--------------------
The Company has a great deal of FC expertise, dating back to 1995
when it released the industry's first PCI FC HBA. Today, GENROCO
is a leader in bridging FC to other networks.
SCHEDULED TRANSFER (ST)
-----------------------
ST is a new American National Standards Institute ("ANSI")
standard network protocol designed to allow many times higher
bandwidth with much lower processing requirements than other
current industry standards. ST commences, or "schedules" data
transfer, only when it is ready to be received. Further, it
allows Direct Memory Access (DMA) into the host system. This
allows the sending and receiving processors to operate at the
highest possible speed and efficiency by eliminating host
overhead requirements. Officers of the Company were participants
on the industry committee that adopted the ANSI standard.
GENROCO developed the standard for encapsulating SCSI commands
and data in ST.
GIGABYTE SYSTEMS NETWORK (GSN)
------------------------------
GSN is the highest bandwidth, lowest latency network in use
today, providing full duplex 800 Megabyte (MB) per second
transfers of error-free data. The technology is utilized wherever
organizations require timely movement of large amounts of
information including scientific and technical computing, digital
TV and movie production, transaction processing, video and film
archiving, and storage management. This ANSI standard provides
for communication between itself and other different technologies
including Gigabyte Ethernet, FC, HIPPI, OC-48. GENROCO tops the
industry in deployment of GSN products.
GIGABIT ETHERNET ("GIGE")
-------------------------
During Fiscal 1999 and 2000, the Company engaged in joint
development projects with CERN, the European Centre for High
Energy Physics in Geneva, Switzerland for the purpose of
developing network interface cards designed to bridge GigE to
other networks.
HIGH PERFORMANCE PARALLEL INTERFACE (HIPPI)
-------------------------------------------
HIPPI is an ANSI communication protocol designed by Los Alamos
National Laboratories which was developed to link supercomputers
to each other and large storage arrays. In recent years, HIPPI
has been overshadowed by GigE and FC technology, however, a
considerable number of legacy systems are still in service around
the world. The Company possesses the technology and products to
seamlessly link HIPPI and evolving networks..
OC-48TECHNOLOGY/PACKETS OVER SONET
----------------------------------
In order to extend its offerings to include wide area SANs, the
Company is currently engaged in a joint development project with
CERN for the producing a network router card for this protocol.
THE GENROCO STRATEGY
The Company's strategy is to focus on developing products to close the
technological gaps between the "Storage" and "Networking" worlds by
designing and manufacturing interconnect solutions which provide seamless
interoperability between SAN's, LAN's and WAN's with the added benefit of
lowering host CPU overhead.
GENROCO initially positioned itself as an engineering and marketing company
with a focus on solving complex data transfer problems for many of the
major manufacturers of supercomputers and top-end server systems. In the
1970's and 1980's, the Company focused on producing unique or custom
controller cards for a number of platform vendors with a focus on Digital
Equipment Corporation's (now owned by Compaq) requirements. Experience in
these areas led to original equipment manufacturer contracts for its
products with Compaq, Tektronix, Fujitsu, Hewlett-Packard, SGI, Sun and
others.
GENROCO is now positioning itself to be a provider of interconnect products
that allow customers to deploy SANs based on GigE or OC48 instead of
exclusively FC. The early adopters of these solutions are expected to be
government research labs, but as the Company hopefully extends software
support to Windows and Linux, more mainstream markets are expected to
develop.
During fiscal 2000, the Company developed a family of Switches and Network
Gateway/Routers which are designed to resolve interoperability among
disparate networks, the number of connections, and bandwidth problems
associated with building large SAN systems. The Company anticipates that
refinements of these products will eventually eliminate the need to rely on
servers to act as intermediary devices while providing seamless cross-
fabric support between FC, HIPPI, GigE, and/or OC-48.
DURING FISCAL 2000, THE COMPANY DEMONSTRATED ITS ABILITY TO LINK FC STORAGE
DEVICES TO GIGE SWITCHES, THUS CREATING THE WORLDS FIRST GIGE SAN SYSTEM
THAT DOES NOT NEED THE USE OF SERVERS AS INTERPRETIVE DEVICES. WHILE SUCH
PRODUCTS HAVE NOT YET BEEN COMMERCIALLY DELIVERED, THE COMPANY'S BUSINESS
PLAN CALLS FOR IT TO RELEASE SUCH DEVICES DURING FISCAL 2001.
PRODUCTS
The Company's product line consists of:
1) A Network Gateway/Router that enables equipment using different
industry standard hardware networking protocols (Fibre Channel (FC),
Gigabit Ethernet (GigE), HIPPI, Gigabyte System Network (GSN), and OC-
48 to directly interoperate between multiple vendor fabrics (Cisco,
Alteon, Extreme, Brocade, Ancor, Essential, etc.) without the use of
expensive intermediary servers.
2) Device drivers to provide higher bandwidth, lower overhead, OS bypass
Scheduled Transfer (ST) and SCSI over ST (SST) software networking
protocol capabilities in addition to conventional TCP/IP on a wide
range of UNIX platforms (Compaq Tru64, Sun Solaris, IBM AIX, SGI Irix,
HP HP-UX, Linux, etc.).
3) The low cost TURBOfibreR Fibre Channel (FC) to Gigabit Ethernet (GigE)
protocol converter.
4) The non-blocking, 8 port DataPropulsionTM Enterprise Switch that (when
used in conjunction with the Network Gateway/Router) allows data to be
transferred between storage devices and client server devices with a
total cross sectional bandwidth of 6,400 Megabytes per second (MB/s) -
- a typical 16 port FC Switch only offers a total cross sectional
bandwidth of approximately 1,600 MB/s.
5) A multiple terabyte network independent storage array consisting of
either RAID boxes or JBOD loops with data transfer speeds in excess of
740 MB/sec.
6) PCI GSN, GigE, FC, HIPPI and OC48 Host Bus Adapter (HBA) cards
7) MHz Digital Video Broadcast (DVB) HBAs and associated software
drivers
SALES AND MARKETING
The Company's current sales and marketing strategy is focused on an
indirect sales model executed through original equipment manufacturers
(OEMs), value added resellers (VARs), and system integrators.
The Company's OEM customers incorporate the Company's HBA and NIC offerings
into their end user products which are installed and field-serviced by the
OEM's technical support organizations. The sales cycle in selling to such
a customer can vary significantly in terms of its size, length and
complexity. This sales process generally involves the combined efforts of
the Company's sales, marketing, engineering and management teams and can
take from several weeks to more than a year.
The Company has entered into a distributor agreement with Tokyo Electron,
Limited a VAR who now represents the Company throughout Japan with respect
to sales of the Company's products in that territory.
The Company continues to develop its system integrator channels and has
embarked on a program to establish several new relationships within this
channel.
While first line customer support is provided by the Company's OEMs and
VARs who incorporate the GENROCO's offerings into their proprietary
products, second level support is provided to these partners on an as-
needed basis.
CUSTOMERS
The following customers comprise a significant portion of the Company's
business:
CUSTOMER REVENUE AS A PERCENT OF TOTAL REVENUE
----------------------------------------------
2000 1999
----- -----
Tektronix 46 % 28 %
Compaq 21 % 34 %
Fujitsu 5 % 19 %
SGI 4 % 3 %
The balance of the business is generated from approximately 20
customers.
The Company purchases its non-critical parts and services from suppliers
and distributors. The following suppliers comprise a significant portion
of the Company's cost of goods sold.
SUPPLIER COSTS AS A PERCENT OF TOTAL COST OF GOODS SOLD
------------------------------------------------------
2000 1999
----- -----
Multek 16% 10%
Insight 27% 20%
Hewlett Packard 7% 10%
Wyle 7% 4%
DASH 4% 5%
Arrow 10% 0%
Generally, the Company purchases its critical parts directly from
manufacturers. In the event that a manufacturer is unable to supply parts,
the Company would then select an alternate supplier, which it believes are
generally available. However a select few components are single-source and
if unavailable, the Company would be required to redesign the product.
Price increases are generally passed along to the customer.
All circuit board fabrication and circuit board assembly work is out-
sourced to high quality suppliers who are ISO 9001 certified and have
demonstrated the ability to produce quality products quickly.
The Company's dependence on a limited number of suppliers and the possible
unavailability of some key components may prevent it from being able to
produce its products at the level desired by customers. Some of the
components the Company uses in its products are available only from a
single supplier, or from a limited number of suppliers. These components
may occasionally be in short supply or unavailable from a sole source
supplier. The following factors could each have a material adverse effect
on the Company's ability to obtain components for the Company's products:
1. Scarce quantities of components
2. A reduction or interruption in component supply
3. A disruption of existing supplier relationships
4. An inability to develop alternative sources
5. A significant increase in the price of components
If the Company is unable to purchase components on a timely basis, it may
not be able to produce its products. In addition, the Company's
distributors are beginning to provide allocation schedule information,
designed to promote forward planning and purchase commitments, which in
itself constitutes a business risk beyond the control of the Company.
RESEARCH AND DEVELOPMENT
Research and development costs are expensed as incurred. Research and
development expenses for 2000 were $1,109,000 compared to $927,000 in 1999
or 44.2% and 21.9% of net sales for 2000 and 1999, respectively. Provided
there is adequate working capital, the Company expects to bring additional
equity capital into the company during fiscal 2001 and use these funds
to increase levels of research and development spending in 2001 and
thereafter. See "Management's Discussion and Analysis."
COMPETITION
Direct competition for the Company's GSN products is expected to come from
Intrusion (Formerly ODS Networks, Inc. who bought Essential Communication,
Inc.) and PMR, Inc. for switches, as well as Silicon Graphics, Inc. for the
Company's GSN host bus adapters. The Company hopes to deliver first-to-
market products with features and performance that exceed those of similar
offerings. GENROCO currently provides the industries only multi-protocol
switch with operating system support for network independent SANs.
The Company does not expect near-term competition for any of its
bridge/router products. The Company believes its current ability to provide
unique product features and robust interconnect solutions provides an
advantage over the known competition.
The Company's product development and marketing efforts are focused on the
SAN market, which has only recently begun to develop, but the Company
believes is evolving rapidly. Indirect competition for the Company's
products comes from existing FC solutions that are already in the
marketplace and offer satisfactory results. GENROCO's growth and
profitability will be limited if SAN technology does not become widely
accepted. The Company's success also depends in part upon market accep-
tance of its switching solutions in conjunction with the use of GigE
and FC fabrics. Because this technology is new, it is difficult to
predict its potential size or future growth rate. If the market does not
accept the use of switches, bridges and routers, the Company's business
could be adversely affected. There can be no assurances of the success of
this strategy.
The Company's existing products are sujbect to extensive competition and
are becoming commodity products. The Company is striving to develop new
products, as described herein.
INTELLECTUAL PROPERTY
The Company has two U.S. patent # 5,420,984 (covering peripheral
controllers and methods for rapid task switching and memory caching) which
was issued on May 30, 1995 and U.S. patent # 6,026,032 (covering high speed
data buffers using virtual first-in first-out registers) which was issued
in February, 2000.
The Company is in the process of applying for other patents covering buffer
memory with parallel data and transfer instruction buffering. In addition,
the Company has applied for additional patents relative to the digital
video product lines, all of which will be available for use by
VideoPropulsion, Inc. a wholly owned subsidiary.
The Company has sought to register the following trademarks: (1) GENROCO,
(2) SOLSTOR, (3) TURBOfibre, and (4) TURBOstor. Any use of the marks by
others on U.S. products in other classes may cause dilution of the mark and
the goodwill the Company has created in the mark.
EMPLOYEES
As of March 31, 2000, the Company had 25 full-time employees, 6 of which
were assigned full time to VideoPropulsion, Inc ( a wholly owned subsidiary
being positioned to be spun off in the form of a dividend to all
shareholders of record as of June 30, 2000). None of the Company's
employees are represented by a labor union or subject to any collective
bargaining agreement. The Company has never experienced work stoppages,
and it believes its employee relations are good.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company's principal administrative, sales and marketing, customer
support and research and development facilities are located in a single
office building in Slinger, Wisconsin and it currently occupies
approximately 18,000 square feet of space in the Slinger facility, which
the Company owns.
ITEM 3. LEGAL PROCEEDINGS
The Company is, from time to time, a party to litigation arising in the
normal course of its business. The Company believes that none of these
actions will have a material adverse effect on the financial condition or
results of operations of the Company. Currently there are no litigation
claims open.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The Company's common stock has been quoted on the NASD OTC market since
1995, with the exception of the period between December 1, 1999 to March
14, 2000 during which time the Company's common was quoted on the NASD
Electronic Bulletin Board. This break was related to the timing of filing
an effective registration statement for the purpose of qualifying as a
reporting company in accordance with Section 12(g) of the Securities
Exchange Act of 1934.
Quarterly Stock Prices
Bid
---------- ----------
High Low
------ ------
Quarter of 1999:
June 30, 1998 $2.238 $1.672
September 30, 1998 3.000 1.828
December 31, 1998 2.250 1.672
March 31, 1999 2.328 1.672
Quarter of 2000
June 30, 1999 2.171 1.672
September 30, 1999 11.000 1.672
December 31, 1999 14.000 7.625
March 31, 2000 17.000 8.000
Source: Dow Jones News Retrieval Service (Invest-text database)
These quotations represent bid prices without retail markup, markdown, or
commission, and may not reflect actual transactions.
As of March 31, 2000, there were approximately 170 shareholders of record
of the Company's common stock.
The Company has not paid any cash dividends for the two years ended March
31, 2000 and has no intention to pay a cash dividend in the future. The
Company does intend to pay a stock dividend during the first quarter of the
fiscal year ended March 31, 2001.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
Consolidated Statements of Operations
For the Years Ended March 31, 2000 and 1999
2000 1999
---------- ----------
Net Sales $2,510,336 $4,238,025
Cost of Goods Sold 1,299,495 1,729,214
---------- ----------
Gross Profit 1,210,841 2,508,811
Operating Expenses:
Research and Development 1,108,682 926,589
Selling 951,279 784,029
Customer Service 69,492 47,265
General and Administrative 815,532 601,569
---------- ----------
Total Operating Expenses 2,944,985 2,359,452
---------- ----------
(Loss) Income from Operations (1,734,144) 149,359
Other Expense (86,631) (35,456)
---------- ----------
(Loss) Income from Continuing Operations
Before Income Taxes (1,820,775) 113,903
Income Tax (Benefit) Provision (219,000) 28,000
---------- ----------
Net (Loss) Income from Continuing Operations (1,601,776) 85,903
---------- ----------
Loss from Discontinued Operations (Less Applicable
Tax Provision of $0) (253,944) (40,473)
---------- ----------
Net (Loss) Income $(1,855,720) $45,430
----------- ----------
----------- ----------
Earning Per Share, Basic and Diluted:
Net (Loss) Income from Continuing Operations $(.39) $.02
Discontinued Operations (.06) (.01)
---------- ----------
Net (Loss) Income Per Share $(.45) $.01
---------- ----------
---------- ----------
OVERVIEW
During 2000 the Company made significant investments in product
development. The majority of the engineering budget for 2000 was dedicated
to designing and demonstrating a Gigabyte System Network Storage Array
sustaining data transfers in excess of 600 megabytes per second -- eight
times the speed of current Fibre Channel disk arrays. During 2001 the
Company plans on continuing to invest in technology capable of being used
as building blocks for very high performance, ST enabled SANs that will
allow GigE and ATM clients to access storage directly, without intermediate
servers.
RESULTS OF OPERATION
YEARS ENDED MARCH 31, 2000 and 1999
In October, 1999, the Company formed a wholly-owned subsidiary,
VideoPropulsion, Inc. ("VPI"). initially contributed $63,000 in assets and
liabilities relating to the digital video business to VPI and, in March,
2000, invested an additional $200,000 into the venture. The Board of
Directors of the Company has since decided to spin off its digital video
business as a separately traded company and will issue one share of
VPI stock for each share of GENROCO, Inc. stock outstanding on the
scheduled record date of June 30, 2000. Complete details relating to this
forthcoming transaction have been set forth in an SEC Form 10-SB filed with
the Securities and Exchange commission. The Company's intent is to spin-off
VPI to shareholders of record on June 30, 2000.
The results of operation for VPI are being reported as a discontinued
operation, and the net losses of VPI prior to March 31, 2000 are included
in the Consolidated Statements of Operations under Loss from Operations
of Discontinued Subsidiary. Revenues from such operations were $580,000
and $420,000 for the years ended March 31, 2000 and 1999, respectively.
Losses from discontinued operations were $254,000 and $40,000 for the years
ended March 31, 2000 and March 31, 1999, respectively.
Net sales for the continuing operations of the Company for 2000 (Fiscal
Year ended March 31, 2000), after giving effect to the spin off, were
$2,510,000 compared to $4,328,000 for 1999. The 40.8% decline in revenue
in 2000 can be attributed to the Company's deliberate decision to focus
its R&D and Marketing resources on the development and deployment of new
bridge and switch technologies which have been designed to provide
communication protocol conversion technology between Gigabit Ethernet and
Fibre Channel. The resulting products have been used to demonstrate the
Company's ability to provide seamless interoperability between LAN's,
WAN's and SAN's. More specifically, the Company has developed the
ability to connect Fibre Channel storage devices to arbitrary networks,
without the use of servers and it is this market that the Company has
chosen to address in the immediate future. The Company is now trying to
develop this product for commercial sales.
The Company's traditional NIC and HBA products, which have typically been
sold to major supercomputer and superserver platform vendors, are fast
becoming commodity products. Rather than working on cost reduction of
these highly competitive products, the Company chose to focus its efforts
to provide technological solutions for integrating storage with traditional
networks, which resulted in declined sales for its traditional product
lines. Consequently, future sales will likely depend upon the development
and acceptance of the new products by the market.
Cost of goods sold for 2000 was $1,299,000, which declined as a result of
the reduced level of sales, compared to $1,729,000 for 1999. This expense,
which was comprised of parts and labor associated with production and
testing of circuit boards shipped to customers, decreased as sales dropped.
Gross profit for 2000 was $1,211,000 compared to $2,509,000 for 1999. The
resulting gross margin percentages were 48.2%, and 59.2% of net sales for
2000 and 1999, respectively. The decline in 2000 was due to a change in
product mix, together with reduced sales volume over which to spread fixed
production costs.
Research and development expenses for 2000 were $1,109,000 compared to
$927,000 in 1999 or 44.2% and 21.9% of net sales for 2000 and 1999,
respectively.
Selling, marketing, customer service and general and administrative
expenses for 2000 were $1,836,000 compared to $1,433,000 in 1999 or 73.2%
and 33.8% of net sales for 2000 and 1999, respectively. The increases
are primarily associated with additional personnel costs related to the
areas of sales and marketing. The increase in expenses, as a percentage
of revenue, is due to the lower net sales.
Loss from continuing operations in 2000 was $1,602,000 or $.39 per share
compared to income from continuing operations of $86,000 or $.02 per share
in 1999. The changes in earnings are the direct result of lower sales and
increased corporate overhead and research expense.
Loss from discontinued operations in 2000 was $254,000 compared to loss of
$40,000 in 1999.
The Company's provision for income tax refunds totaled $219,000 in 2000
versus a provision for income tax expense of $28,000 in 1999. The
effective tax rate in 2000, and 1999 was 10.6% and 38.1% respectively,
versus the combined State and Federal effective statutory rate of 39.2%.
Net operating loss carry-forwards available for future use totaled
approximately $950,000 as of March 31, 2000.
Net loss, including discontinued operations, for 2000 was $1,856,000 or
$.45 per share, compared to net income of $45,000 or $.01 per share in
1999.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position at March 31, 2000 was $842,000, an increase
from $524,000 at March 31, 1999. During 2000, net cash used in operating
activities was $1,039,000 versus net cash provided by operations of
$161,000 for 1999.
Stockholders' equity increased by approximately $622,000 or 53.6% to
$1,895,000 at March 31, 2000 from $1,233,000 at March 31, 1999. The
increase is primarily the result of selling 281,250 shares of common stock
to accredited investors, in a private placement of stock, for net proceeds
to the Company of $2,215,000, as noted above, less net losses of $1,856,000
for the year. GENROCO's ratio of current assets to current liabilities
(current ratio) declined to 2.2 to 1 at March 31, 2000 versus 3.71 to 1 at
March 31, 1999.
At March 31, 2000 the Company had no outstanding bank debt, but did have a
revolving line of credit with a bank of up to $700,000 based on eligible
accounts receivable versus an amount of $500,000 on March 31, 1999. Funds
borrowed under this agreement bear interest at the rate of LIBOR plus
2.50% (approximately 8.7% at March 31, 2000). This agreement terminates on
July 31, 2001 and has restrictive covenants including an obligation to
maintain tangible net worth in excess of $1,500,000 at March 31, 2000. The
Company was in compliance with the restrictive covenants as of March 31,
2000. Amounts borrowed at March 31, 2000 and March 31, 1999 were zero
and $425,000, respectively.
Expenditures for property and equipment during 2000 and 1999 were
$1,548,000 and $87,000, respectively. Of the $1,548,000 for 2000,
$1,310,000 can be attributed to the purchase of the Company's facility,
100% of which was financed.
In fiscal 2000, the Company acquired the previously leased 22,000 square
foot single story brick facility. The Company entered into loan agreements
with a bank and the former property owner. Each agreement contains a
mortgage lien against the building. The primary debt agreement with M&I
Bank is a mortgage of $1,110,000, bearing interest at an annual rate of
8.5%, being amortized over 20 years, with a balloon payment of
approximately $823,000 due in 2006. The secondary debt agreement, with the
former property owner of $200,000, bears annual interest at 9.0% and is
being repaid in accordance to a 20 year amortization schedule, with a
balloon payment of approximately $153,000 due in April 2001.
The Company continues to generate negative cash flows from operations.
Current forecasts indicate that the Company may be unable to fund current
plans beyond the second quarter of fiscal 2001 unless it is able to raise
additional capital.
The Company is engaged in efforts to raise additional working
the next few months. The Company is also discussing long-term financing
arrangements with institutional investors and venture capital companies in
an effort to do an equity offering during fiscal 2001. These discussions
are in the preliminary phase, and the Company has no firm commitments from
any potential investor to invest additional capital in the Company. There
can be no assurances that additional capital will be raised, either
through a private placement or by other means. In the event that the
Company is not successful in its efforts to raise additional working
capital, as contemplated above, it will be forced to cut back on
general overhead and product development expenses, which will serve to
delay the release of new products.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments, derivative commodity
instruments or other such financial instruments. Contracts with
international customers are entered into in US dollars, precluding the need
for foreign currency hedges. Additionally, the company invests in money
market funds, in U.S government obligations and other investment grade
securities, which experience minimal volatility. Thus, the exposure to
market risk is not significant.
ITEM 7. FINANCIAL STATEMENTS.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders of
GENROCO, Inc.:
We have audited the accompanying consolidated balance sheet of GENROCO, Inc. (a
Wisconsin corporation) and subsidiaries as of March 31, 2000 and 1999, and the
related consolidated statements of operations, stockholders' investment and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of GENROCO, Inc. and
subsidiaries as of March 31, 2000 and 1999, and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has suffered recurring losses from operations
that raises substantial doubt about its ability to continue as a going concern.
Management's plans in regard to these matters are also described in Note 3. The
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
ARTHUR ANDERSEN LLP
Milwaukee, Wisconsin
May 2, 2000
(execpt with respect to Note 14 as to which the date is June 15, 2000)
GENROCO, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
As of March 31, 2000
<TABLE>
Liabilities and
Assets 2000 1999 Stockholders' Investment 2000 1999
------ -------- -------- ------------------------ -------- --------
<S> <C> <C> <C> <C> <C>
Current Assets: Current Liabilities:
Cash and Cash Equivalents $842,104 $524,359 Accounts Payable $412,679 $145,823
Accounts Receivable, Net
of Allowance of $3,000 274,677 805,501 Income Taxes Payable - 48,373
Current Portion of Long-
Accounts Receivable from Term Debt 352,980 98,264
VideoPropulsion, Inc. 72,604 - Accrued Payroll and
Inventories 672,934 418,609 Payroll Taxes 139,651 180,392
Prepaid Expenses 87,791 56,504 Other Accrued Liabilities 112,567 48,115
Employee Advances 64,868 13,481 ---------- ----------
Income Taxes Receivable 211,127 - Total Current Liabilities 1,017,877 520,967
Net Assets of Discontinued
Operations 56,554 113,872 Long-Term Debt:
---------- ---------- Mortgage Payable 1,061,377 -
Total Current Assets 2,282,659 1,932,326 Line of Credit - 425,000
Capital Leases Payable 158,655 105,080
Plant and Equipment, at Cost: ---------- ----------
Total Debt 1,220,032 530,080
Building 1,250,000 -
Building and Leasehold Stockholders' Investment:
Improvements 90,419 10,593 Common stock, $.02 Par Value,
Machinery and Equipment 795,096 577,223 5,000,000 Shares Authorized,
---------- ---------- 4,362,312 and 3,847,086 Shares
2,135,515 587,816 Outstanding at March 31, 2000
and 1999, Respectively 87,246 76,941
Less- Accumulated Paid-in Capital 4,624,171 1,586,078
Depreciation and
Amortization 423,265 264,039 Retained (Deficit) Earnings (1,618,107) 237,613
---------- ---------- Unearned Compensation (1,100,225) (605,379)
Advance to ESOP (95,336) (61,883)
Net Plant and Equipment 1,712,250 323,777 ---------- ----------
Other Assets 137,749 28,314 Total Stockholders'
---------- ---------- Investment 1,894,749 1,233,370
---------- ----------
Total Assets $4,132,658 $2,284,417 Total Liabilities and
---------- ---------- Stockholders' Investment $4,132,658 $2,284,417
---------- ---------- ---------- ----------
---------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
GENROCO, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended March 31, 2000 and 1999
2000 1999
----------- ----------
Net Sales $2,510,336 $4,238,025
Cost of Goods Sold 1,299,495 1,729,214
----------- ----------
Gross Profit 1,210,841 2,508,811
Operating Expenses:
Research and Development 1,108,682 926,589
Selling 951,279 784,029
Customer Service 69,492 47,265
General and Administrative 815,532 601,569
----------- ----------
Total Operating Expenses 2,944,985 2,359,452
----------- ----------
(Loss) Income from Operations (1,734,144) 149,359
Other Expense (86,631) (35,456)
----------- ----------
(Loss) Income from Continuing
Operations Before Income Taxes (1,820,775) 113,903
Income Tax (Benefit) Provision (219,000) 28,000
----------- ----------
Net (Loss) Income from
Continuing Operations (1,601,776) 85,903
----------- ----------
Loss from Discontinued Operations (Less
Applicable Tax Provision of $0) (253,944) (40,473)
----------- ----------
Net (Loss) Income $(1,855,720) $45,430
----------- ----------
----------- ----------
Earning Per Share, Basic and Diluted:
Net (Loss) Income from Continuing Operations $(.39) $.02
Discontinued Operations (.06) (.01)
----------- ----------
Net (Loss) Income Per Share $(.45) $.01
----------- ----------
----------- ----------
The accompanying notes to consolidated financial statements are an integral part
of these statements.
GENROCO, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Investment
For the Years Ended March 31, 2000 and 1999
<TABLE>
Common Stock Retained Total
------------------------ Paid-in Earnings Unearned Advance Stockholders'
Shares Amount Capital (Deficit) Compensation to ESOP Equity
-------- -------- -------- --------- ------------ -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1998 3,482,820 $69,656 $ 943,779 $ 192,183 $ (154,008) $ - $1,005,173
Net Income - - - 45,430 - - 45,430
Retirement of
Purchased Shares (9,000) (180) (13,257) - - - (13,437)
Unearned Compensation 364,500 7,290 679,185 - (686,475) - -
Stock Grants to Employees 17,766 355 36,065 - - - 36,420
Cancellation--Shares
Previously Issued
to Employees (9,000) (180) (13,257) - 10,500 - (2,937)
Amortization of
Unearned Compensation - - - - 221,667 - 221,667
Advance to ESOP - - - - - (58,946) (58,946)
--------- ------- ---------- ----------- ----------- -------- ----------
Balances, March 31, 1999 3,847,086 76,941 1,586,078 237,613 (608,316) (58,946) 1,233,370
Net Loss - - - (1,855,720) - - (1,855,720)
Retirement of
Purchased Shares (12,894) (258) (22,206) - - - (22,464)
Sale of Stock 281,250 5,625 2,209,541 - - - 2,215,166
Unearned Compensation 339,870 6,798 1,005,282 - (1,012,080) - -
Stock Grants to Employees 400 8 4,092 - - - 4,100
Cancellation-Shares
Previously Issued
to Employees (93,400) (1,868) (158,616) - 160,484 - -
Amortization of
Unearned Compensation - - - - 356,750 - 356,750
Advance to ESOP - - - - - (36,453) (36,453)
--------- ------- ---------- ----------- ----------- -------- ----------
Balance, March 31, 2000 4,362,312 $87,246 $4,624,171 $(1,618,107) $(1,103,162) $(95,399) $1,894,749
--------- ------- ---------- ----------- ----------- -------- ----------
--------- ------- ---------- ----------- ----------- -------- ----------
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of these statements.
GENROCO, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended March 31, 2000 and 1999
2000 1999
----------- -----------
Cash Flows from Operating Activities:
Net (Loss) Income $(1,855,720) $45,430
Adjustments to Reconcile Net Income to
Net Cash from Operating Activities-
Depreciation and Amortization 161,002 109,888
Amortization of Unearned Compensation 356,750 221,667
Loss from Discontinued Operations 253,944 40,473
Change in-
Accounts Receivable 458,220 (314,608)
Inventories (254,325) 241,907
Prepaid Expenses and Employee Advances (293,801) 5,290
Other Assets (111,211) (19,266)
Accounts Payable 267,356 (109,221)
Accrued Liabilities (21,062) (60,441)
----------- -----------
Net Cash (Used In) Provided by
Operating Activities (1,038,847) 161,119
----------- -----------
Cash Flows from Investing Activities:
Purchase of Plant and Equipment (1,547,699) (87,421)
Investment in Subsidiary (200,000) -
----------- -----------
Net Cash Used in
Investing Activities (1,747,699) (87,421)
----------- -----------
Cash Flows from Financing Activities:
Proceeds from Long-Term Debt 1,649,634 1,397,690
Principal Payments of Long-Term Debt (704,966) (1,297,430)
Issuance of Common Stock 2,215,166 36,420
Purchase of Common Stock (22,464) (16,374)
Advance to ESOP (36,453) (58,946)
----------- -----------
Net Cash Provided by
Financing Activities 3,100,917 61,360
----------- -----------
Cash Provided by (Used in) Discontinued Operations 3,374 (116,885)
----------- -----------
Net Increase in Cash and Cash Equivalents 317,745 18,173
Cash and Cash Equivalents, Beginning of Year 524,359 506,186
----------- -----------
Cash and Cash Equivalents, End of Year $842,104 $524,359
----------- -----------
----------- -----------
The accompanying notes to consolidated financial statements are an integral part
of these statements.
GENROCO, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000 and 1999
(1) Description of the Company-
--------------------------
GENROCO, Inc. and subsidiaries (the "Company") is a Wisconsin corporation.
The Company is engaged in the design, manufacture and service of computer
components to customers who are engaged in the production and sale of high
performance computers and workstations as well as providing engineering and
design services to customers on a worldwide basis. These services include
complex software and engineering designs for applications specific products
requiring very high data transfer rates (in excess of 80 MB per second).
(2) Spin-off of Video Propulsion, Inc.-
----------------------------------
In March 2000, the Board of Directors of the Company approved spinning off
its digital video business as a separately traded public company. The
digital video business is considered to be in the development stage. On
October 4, 1999, the Company formed a wholly-owned subsidiary, Video
Propulsion, Inc. ("VPI") and transferred all of the assets and liabilities
of the digital video business to VPI. One share of VPI stock will be
issued for each share of GENROCO, Inc. stock outstanding on the spin-off
date. The Company's intent is to spin-off VPI on or before June 30, 2000.
The operating results of VPI are included in the Consolidated Statements of
Operations under Loss from Discontinued Operations. Revenues from the
digital video business were $580,259 and $419,968 for the years ended March
31, 2000 and 1999, respectively.
In January 2000, the Company loaned VPI $200,000. The note bears interest
at 9.5% and is payable on December 31, 2000. On March 31, 2000, the entire
balance of this note was forgiven and converted to equity in VPI.
(3) Going Concern-
-------------
The Company continues to generate negative cash flows from operations.
Current forecasts indicate that the Company may be unable to fund
operations beyond the second quarter of fiscal 2001 unless it is able to
raise additional capital. In addition, the Company has committed to fund
VPI's operations through December 31, 2000. The Company is engaged in
ongoing efforts to raise an additional $2,500,000 in private placement
equity during the first quarter of fiscal 2001. The Company is also
discussing long-term financing arrangements with institutional investors
and venture capital companies in an effort to do a secondary equity
offering for amount in excess of $20,000,000 during fiscal 2001. These
discussions are in the preliminary phase, and the Company has no firm
commitments from any potential investor to invest additional capital in the
Company. There can be no assurances that additional capital will be raised
either through a private placement or other means.
(4) Summary of Significant Accounting Policies-
------------------------------------------
(a) Revenue Recognition-
-------------------
Revenue from product sales is recognized when the products are
shipped.
The Company had two customers that individually accounted for 46% and
21% of net sales in 2000. The Company had three customers that
individually accounted for 34%, 28% and 19% of net sales in 1999.
Exports accounted for approximately 35% of the Company's net sales for
both 2000 and 1999. Net sales to Europe (primarily to France)
constituted approximately 32% and 34% for 2000 and 1999, respectively.
(b) Principles of Consolidation-
---------------------------
The consolidated financial statements include the accounts of GENROCO,
Inc. and its wholly owned subsidiaries, GENROCO International, Inc.,
which serves as the operating entity of the Company, and VPI. All
significant intercompany accounts and transactions have been
eliminated, unless they relate to the continuing operations of the
Company.
(c) Cash and Cash Equivalents-
-------------------------
Cash equivalents are defined as short-term investments which have an
original maturity of three months or less and are readily convertible
into cash.
(d) Inventories-
-----------
Inventories are stated at the lower of average cost or market,
determined using the first-in, first-out method. Inventories consist
of:
2000 1999
-------- --------
Raw Materials and Work-In-Process $480,018 $248,768
Finished Goods 192,916 169,841
-------- --------
$672,934 $418,609
-------- --------
-------- --------
(e) Plant and Equipment-
-------------------
Plant and equipment are stated at cost. The related depreciation and
amortization expense has been provided using the straight-line method
over the estimated lives of the machinery and equipment (3 to 5
years), building (20 years) and over the shorter of five years or the
remaining life of the lease for leasehold improvements. Equipment
leases that meet the criteria of capital leases have been capitalized
and are being amortized over the lesser of the estimated lives of the
machinery and equipment or the term of the lease.
(f) Other Assets-
------------
Other assets are composed of the following:
2000 1999
-------- -------
Patents (Net of Accumulated Amortization
of $6,070 as of March 31, 2000) $22,419 $13,913
Cash Surrender Value on Insurance
Policies (Net of Loans of $0 as of
March 31, 2000) 115,330 14,401
-------- -------
$137,749 $28,314
-------- -------
-------- -------
(g) Research and Development Costs-
------------------------------
Research and development costs are expensed as incurred and shown
separately as a component of operating expenses on the Consolidated
Statements of Operations.
(h) Use of Estimates-
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
(i) Net Income Per Common Share-
---------------------------
The Company accounts for earnings per share according to the
provisions of Statement of Financial Accounting Standards No. 128,
"Earnings Per Share" for purposes of calculating earnings per share.
Basic earnings per share of common stock is computed by dividing net
income by the weighted average number of common shares outstanding
during the period. Diluted earnings per share of common stock is the
same as basic earnings per share because there were no common stock
equivalents outstanding that were dilutive in 2000 or 1999. Average
common shares for computation of basic and diluted earnings per share
were 4,119,307 and 3,768,258 in 2000 and 1999, respectively. At March
31, 2000, there were 132,813 warrants outstanding that were anti-
dilutive (see Note 13). There were no warrants outstanding at March
31, 1999.
(j) Reclassifications-
-----------------
Certain reclassifications have been made to the prior year amounts for
consistency with the current year presentation.
(5) Revolving Credit Agreement-
--------------------------
During 1998, the Company entered into a revolving credit agreement with a
major bank which allowed the Company to borrow up to $500,000 based on a
borrowing base, defined primarily as qualified accounts receivable. This
agreement was amended in October 1999 which increased the borrowing base to
$700,000. The agreement bears interest at the rate of LIBOR plus 2.50%
(approximately 8.70% and 7.72% at March 31, 2000 and 1999, respectively),
terminates on July 31, 2001, and has restrictive covenants including an
obligation to maintain tangible net worth in excess of $1,500,000 and
$1,250,000 for fiscal 2000 and 1999, respectively. The agreement is
collateralized by current accounts receivable balances. The balance
outstanding was $0 and $425,000 at March 31, 2000 and 1999 respectively.
The Company was in compliance with all covenants during both 2000 and 1999.
(6) Long-Term Debt-
--------------
Long-term debt consists of:
2000 1999
---------- --------
Capital Leases (a)<F1> $511,635 $203,344
Other Long-Term Debt (b)<F2> 1,061,377 -
Line of Credit (see Note 5) - 425,000
---------- --------
1,573,012 628,344
Less- Current Maturities (352,980) (98,264)
---------- --------
$1,220,032 $530,080
---------- --------
---------- --------
(a)<F1> The capital leases are for machinery and equipment. These leases
range from 36 to 84 months and bear interest ranging from 8.4% to
16.52%.
(b)<F2> Other long-term debt consists of:
A mortgage note from Marshall & Ilsley Corporation is secured by
the underlying building. The loan is payable in monthly
principal and interest installments of $8,758 through September
7, 2006 with the remaining payment of $828,581 due on October 7,
2006. Amounts outstanding bear interest at 8.50%. The principal
balance outstanding at March 31, 2000 is $991,993.
A note from Marshall & Ilsley Corporation to fund building
improvements is also secured by the underlying building. The
loan is payable in monthly principal and interest installments of
$2,290 through September 7, 2004 with the remaining payment of
$4,478 due on October 7, 2004. Amounts outstanding bear interest
at 8.40%. The principal balance outstanding at March 31, 2000 is
$104,855.
A note from Aldrich Center Partnership is secured by a second
mortgage on the underlying building. The loan is payable in
monthly installments of $4,150 for a period of 18 months
beginning November 7, 1999. The balance of $153,311 is due March
7, 2001. Amounts outstanding bear interest at 9.00%. The
principal balance outstanding at March 31, 2000 is $186,556.
The maturities of long-term debt outstanding as of March 31, 2000 are as
follows:
Fiscal Year 2000 1999
-------- --------
2001 $352,980 $98,264
2002 159,851 491,921
2003 82,432 26,152
2004 61,534 6,556
2005 and Thereafter 916,215 5,451
---------- --------
$1,573,012 $628,344
---------- --------
---------- --------
(7) Income Taxes-
------------
The Company accounts for income taxes according to provisions of Statement
of Financial Accounting Standards No. 109 "Accounting for Income Taxes."
Components of the deferred income taxes as of March 31 are as follows:
2000 1999
-------- --------
Current Deferred Tax Asset-
Warranty Reserve $6,000 $975
Accrued Employee Benefits 6,000 7,239
Inventory Adjustments 95,000 22,651
Other 24,000 1,965
--------- --------
Total Current Deferred Tax Asset 131,000 34,000
Valuation Allowance (131,000) -
--------- --------
Net Current Deferred Tax Asset $ - $34,000
--------- --------
--------- --------
2001 1999
-------- --------
Noncurrent Deferred Tax Assets-
Net Operating Loss Carryforward $285,000 $ -
Research and Development Credit
Carryforward 369,000 -
Noncurrent Deferred Tax Liability-
Property, Plant and Equipment (46,000) (34,800)
--------- --------
Total Noncurrent Deferred
Tax Asset 608,000 (34,800)
Valuation Allowance (608,000) -
--------- --------
Net Noncurrent Deferred
Tax Liability $ - $(34,800)
--------- --------
--------- --------
The following is a summary of components of the provision for income taxes:
March 31,
---------------------
2000 1999
------ ------
Current Provision-
Federal Tax $219,000 $20,400
State Tax - 6,800
-------- -------
Current 219,000 27,200
Deferred - 800
-------- -------
Total Provision $219,000 $28,000
-------- -------
-------- -------
A reconciliation of the statutory Federal income tax rate to the effective
income tax rate is as follows:
March 31,
----------------------
2000 1999
------ ------
Federal Statutory Rate (34.0)% 34.0%
State Income Tax, Net of Federal benefit (5.2) 5.2
Deferred Tax Valuation Allowance 29.9 -
Business Tax Credits and Other (1.3) (1.1)
------- -----
Effective Income Tax Rate (10.6)% 38.1%
------- -----
------- -----
(8) Supplemental Disclosure of Cash Flow Information-
------------------------------------------------
2000 1999
------ ------
Cash Paid During the Year for-
Interest $92,484 $31,646
Income Taxes - $174,066
Noncash items-
Issuance of Common Stock for Notes
Receivable from Stockholders $918,105 $686,475
(9) Transactions with Related Parties-
---------------------------------
In order to effect the spin-off of VPI (currently a wholly-owned
subsidiary), GENROCO and VPI have 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
O Interim Administrative Services Agreement
O Confidentiality and Nondisclosure Agreement
The Company periodically sells inventory to VPI. The receivable due from
VPI at March 31, 2000 and 1999 was $72,604 and $0, respectively.
The Company periodically makes temporary loans to its officers and
employees. During 2000, loans were extended to certain officers of the
Company in the amount of $267,000, all of which was repaid prior to March
31, 2000. No loans to officers were made during 1999. The balance of
relocation advances made to employees as of March 31, 2000 and 1999 was
$64,868 and $0, respectively.
(10) Lease Commitments-
-----------------
The Company leased its operating facility located in Slinger, Wisconsin,
under an agreement that expired October 31, 1999. At that date, the Company
exercised its option to purchase the building. Total rent expense was
approximately $62,400 and $109,000 in 2000 and 1999, respectively.
(11) Employee Benefit Plans-
----------------------
The Company has an Employee Stock Ownership Plan and Trust (the "Plan"),
covering substantially all domestic employees. The Company's contribution
to the Plan is discretionary and is determined annually by the Board.
Expense recorded under the Plan was approximately $0 and $131,000 in 2000
and 1999, respectively. The Plan owned 563,512 and 558,600 shares of
Company stock as of March 31, 2000 and 1999, respectively.
The Company did not make a contribution to the Plan in 2000, however, the
Company advanced $36,453 to the Plan. The Company funded the 1999
contribution of $131,000, and made an advance to the Plan of $58,946. The
2000 and 1999 advances are included as a component of stockholders'
investment on the balance sheet.
The Company periodically grants shares of its common stock to certain
employees and officers. The common stock is granted to a participating
employee in exchange for a three-year note from the employee. To the
extent the employee remains employed at the Company, the note is forgiven
over a three-year period. This amount is recorded as unearned compensation
in the Consolidated Statements of Stockholder's investment and is amortized
on a straight-line basis as compensation expense over the life of the
notes. As of March 31, 2000 and 1999, $1,103,162 and $608,316 of unearned
compensation remained as a reduction of stockholders' investment,
respectively. Compensation expense related to the stock grants totaled
$356,750 and $221,667 in 2000 and 1999, respectively.
The Company sponsors a 401(k) plan. All Company employees are eligible
subject to certain requirements as defined in the plan document. The
Company can make discretionary profit sharing contributions to the plan as
determined by management. No Company contributions were made during 2000
or 1999.
(12) Stock Options-
-------------
The Company accounts for its option grants using the intrinsic value based
method pursuant to APB Opinion No. 25 and Statement of Financial Accounting
Standards No. 123 (SFAS No. 123). The Company granted executive stock
options on March 1, 1997 that vested over three years beginning April 1,
1997. During 1998, these options were cancelled prior to any options being
exercised. No compensation cost was recognized for these options pursuant
to the fair value method under SFAS No. 123. No options were granted
during 2000 or 1999 and no options were outstanding as of March 31, 2000 or
1999, respectively.
(13) Capital Stock-
-------------
Preferred stock authorized is 1,000,000 shares. As of March 31, 2000 and
1999, respectively, no preferred stock had been issued. Common stock
authorized is 5,000,000 shares. There were 4,362,312 and 3,847,086 shares
outstanding as of March 2000 and 1999, respectively.
On September 20, 1999, the Company executed a three for one stock split.
All share and per share data has been adjusted to reflect this split.
In December 2000, the Company raised $2,125,000 by selling 265,625 shares
of restricted common stock at $8.00 per share, with attached warrants to
purchase 132,813 shares at $12.00 per share, in a private placement to five
investors. In January 2000, additional funds of $125,000 were raised by
selling 15,625 shares of restricted common stock at $8.00 per share, with
attached warrants to purchase 7,813 shares at $12.00 per share, in a
private placement to two investors. The proceeds were recorded as paid-in
capital. The warrants expire in three years. As of March 31, 2000, no
warrants were exercised.
(14) Subsequent Event-
----------------
On June 15, 2000, the Company increased the number of authorized shares of
common stock from 5,000,000 to 25,000,000. In addition, the shares of
authorized common stock for VPI was increased to 24,900,000 and 100,000 of
preferred stock was also authorized for VPI.
ITEM 8 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL MATTERS
Not applicable.
PART III
ITEM 9 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
COMPLIANCE WITH SECTION 16 (A) OF THE EXCHANGE ACT.
The following is a listing of all directors and executive officers of the
Company. An officer remains in office until he or she resigns, dies or a
different person is appointed to the office. Directors shall hold office until
the next annual shareholders' meeting and until the director's successor has
been elected or until his or her resignation, death or removal.
NAME AGE POSITION
----------------------- ----- ------------------------------
Carl A. Pick 52 Chairman, Chief Executive Officer,
President and Director
Keith Brue 62 Executive Vice President, Chief
Financial Officer, Chief Operations
Officer, Secretary and Director
Eric Peterson 44 Vice President of Engineering
Joe Nordman 38 Vice President of Research &
Development
Michael McGowen 46 Chief Scientist
Don Woelz 53 Vice President of Sales and Marketing
Barbara Pick 49 Director
Chris Good 49 Director
CARL A. PICK - Chairman, Chief Executive Officer, President and Director. 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. He 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 GENROCO, Inc. in 1987. Mr. Pick is married to Barbara R. Pick. Mr. Pick
is the Chairman the High Speed Networking Forum.
KEITH BRUE - Executive Vice President, Chief Operations Officer, Chief Financial
Officer and Secretary since March, 1997. He has been a director of the Company
since 1986. 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.
DON WOELZ - Vice President of Sales and Marketing. He joined GRC in April of
1977 and has held the positions of Sales Engineer, National Sales Manager,
General Manager-CAD Systems Division, Vice President of Engineering, and Vice
President of Sales. He is responsible for general sales activities as well as
technology and market evaluations, trade shows and technology presentations, and
marketing communications. Mr. Woelz graduated from Marquette University in 1970
with a degree in Electrical Engineering and conducted his post-graduate studies
in Electrical Engineering and Computer Science at the University of Wisconsin -
Milwaukee.
ERIC PETERSON - Vice President of Engineering. Mr. Peterson joined the Company
in May, 2000. He is responsible for all engineering management activities,
including software and hardware development. Mr. Peterson graduated from the
University of Wisconsin, Superior in 1974 with a BS in Physics. His engineering
management experience including most recently serving as Director of Engineering
at Speedring Systems Division of Axsys Technologies.
JOSEPH NORDMAN - Vice President of Research and Development. He joined GRC in
February 1985. He is responsible for hardware development and management. Mr.
Nordman graduated from the University of Wisconsin in 1984 with a BSEE degree in
Electrical Engineering.
MICHAEL MCGOWEN - Chief Scientist. He is responsible for evaluating the
features and functions of all relevant products in the market place and
preparing product and marketing specifications for the Company's future
products. Mr. McGowen graduated from the University of New Mexico in 1988 with
a degree in computer science. He was the founder and CEO of Essential
Communications, Inc. He joined GENROCO in May of 2000.
BARBARA PICK - Director of GENROCO. Chief Executive Officer and President of
VideoPropulsion, Inc. since incorporation on October 1, 1999. She also served
as a Vice President of Sales for GENROCO since incorporation in 1974 to
September 30, 1999 and DVB Product manager for DVB and President of GENROCO from
1997 to September 30, 1999. Ms. Pick is married to Carl A. Pick.
CHRIS GOOD - Director of GENROCO. Executive Vice President and Chief Technical
Officer of VideoPropulsion, Inc. since 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 GENROCO, Inc. from 1987 to September 30, 1999
ITEM 10. EXECUTIVE COMPENSATION
The following table sets forth the compensation paid by the Company to
executives for services rendered during 1999, 1998 and 1997.
All Other
Name and Compensation
Principal Position Salary ($) ($) - (1)<F3>
---------------------------------- ---------- -------------
Carl A. Pick, CEO 2000 71,602 61,533
1999 95,953 2,838
1998 175,208 2,444
Barbara Pick, President 71,599 60,798
1999 95,953 2,527
1998 175,208 2,444
Chris Good, CTO 2000 76,283 30,636
1999 83,678 4,850
1998 99,400 4,690
Keith Brue, CFO / COO 2000 90,485 89,873
1999 84,117 7,639
1998 107,886 6,552
(1)<F3> These amounts are related to the value of health and life
insurance premiums paid by the Company on behalf of the employee.
DIRECTORS' COMPENSATION
The Company pays director fees to each of its four directors. Directors
compensation varies each year, and by individual based on performance of the
Company and at the discretion of the board. The following table illustrates the
total amount of director fees paid to each director for 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
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
% of
Position With Number of Outstanding
Name of Beneficial Owner (1)<F4> The Company Shares Shares
-------------------------------- ------------- --------- -----------
Carl A. Pick (Husband of Barbara) Director, CEO
Chairman 1,021,631 23.4%
Barbara R. Pick (Wife of Carl) Director 1,000,004 22.9%
Chris Good Director 315,456 7.2%
Keith E. Brue Director,
Sec./Treas. 201,435 4.6%
All Directors and Officers as
a Group (8 persons) (3)<F6> 2,730,725 62.6%
GENROCO ESOP (2)<F5> 304,069 7.0%
(1)<F4> 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)<F5> The ESOP owns 563,512 shares of GENROCO stock, 259,443 of which
are included in the amounts attributed to Officers and Directors.
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 requirec 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, 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 during the
fiscal year ended March 31, 2000. During fiscal year ended March 31, 2000, no
director attended fewer than 75% of the aggregate of all meetings of the Board.
The Company has no standing nominating or audit or compensation committee.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In order to effect the spin-off of VideoPropulsion, Inc. (currently a wholly-
owned subsidiary), GENROCO, Inc. and VideoPropulsion, Inc. have 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
O Interim Administrative Services Agreement
O Confidentiality and Non Disclosure Agreement
The Company periodically makes temporary loans to its officers and employees.
During 2000, loans were extended to certain officers of the Company in the
amount of $267,000, all of which was repaid prior to March 31, 2000.
PART IV
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
The exhibits listed in the following table have been filed as part of this
Registration Statement and may be found on the following sequential page
numbers.
2.1 Articles of Incorporation of the Company, as amended and restated to
date *<F7>
2.2 Articles of Merger*<F7>
2.3 Agreement and Plan of Merger*<F7>
2.4 By-Laws of the Company *<F7>
3.1 Specimen form of the Company's Common Stock Certificate *<F7>
6.1 Building Purchase Agreement *<F7>
6.2 $1,000,000 Mortgage Note- M&I Bank *<F7>
6.3 $110,000 Mortgage Note - M&I Bank *<F7>
6.4 Mortgage - former property owner *<F7>
6.5 Subscription Agreement associated with Private Placement in
December of 1999.
6.6 Stock Purchase Warrant Agreement associated with Private Placement in
December of 1999.
10.1 Form of General Assignment, Assumption and Agreement Regarding
Litigation, Claims and Other Liabilities between VideoPropulsion and the
Company
10.2 Form of Contribution Agreement, Plan and Agreement of Reorganization and
Distribution between VideoPropulsion and the Company
10.3 Lease between VideoPropulsion and the Company
10.4 Form of Tax Sharing And Indemnification Agreement by and between
VideoPropulsion and the Company
10.5 Form of Transitional Trademark Use and License Agreement
10.6 Interim Administrative Services Agreement
10.7 Form of Employee Benefits and Compensation Agreements between
VideoPropulsion and the Company
10.8 Form of Sale and Assumption of Liabilities
10.9 Consent of Arthur Andersen LLP
27.1 Financial Data Schedule - Twelve months ended March 31, 1999
27.2 Financial Data Schedule - Twelve months ended March 31, 2000
*<F7> These items have been incorporated by reference and are included within
the previously filed Form 10-SB.
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.
GENROCO, INC.
(Registrant)
Name Title
----------------------------- ------------------------------
/s/ Carl A. Pick
-----------------------------
Carl A. Pick Director, Chairman and CEO
(principal executive officer)
/s/ Keith E. Brue
-----------------------------
Keith E. Brue Director, Chief Financial Officer
(principal financial officer)
/s/ Barbara R. Pick
-----------------------------
Barbara R. Pick Director
/s/ Chris Good
-----------------------------
Chris Good Director
DATE: June 19, 2000
