<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended
--------------------------------------------------
[X] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from October 1, 1997 to December 31, 1997
---------------------- -----------------------
Commission file number: 0-18921
---------------------------------------------------------
RINGER CORPORATION
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Minnesota 41-0848688
- --------------------------------------------------------------------------------
(State of incorporation or organization) (I.R.S. Employer Identification No.)
9555 James Avenue South, Suite 200, Bloomington, Minnesota 55431-2543
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(612) 703-3300
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
[X] Yes [ ] No
The number of shares outstanding of each of the registrant's classes of
capital stock, as of January 31, 1998, was:
Common Stock, $.01 par value 16,688,061 shares
Transitional Small Business Issuer format: [ ] Yes [X] No
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS.
---------------------
RINGER CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1997
------------- --------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 423,272 $ 3,264,294
Accounts receivable 4,437,264 1,153,271
Inventories 8,803,909 2,805,661
Prepaid assets 1,180,250 221,186
------------ ------------
Total current assets 14,844,695 7,444,412
Property, plant and equipment, net 2,904,094 430,138
Intangible assets, net 13,469,697 6,653,501
Other assets 204,893 87,044
------------ ------------
Total assets $ 31,423,379 $ 14,615,095
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Bank line of credit $ 3,024,910 $ -
Accounts payable 7,818,030 1,273,570
Accrued expenses 1,961,898 1,087,924
Current portion of long-term debt 1,538,866 23,207
------------ ------------
Total current liabilities 14,343,704 2,384,701
Long-term debt 3,306,821 1,458,799
Shareholders' Equity:
Preferred stock, par value $.01 per share,
authorized 5,000,000 shares, no shares
issued and outstanding
Common stock, par value
$.01 per share, authorized
25,000,000 shares, issued
and outstanding 16,688,061 and 12,181,270
shares, respectively 166,881 121,813
Additional paid-in capital 37,603,682 33,421,087
Accumulated deficit (23,809,763) (22,613,212)
Cumulative translation adjustment (187,946) 158,093)
------------ ------------
Total shareholders' equity 13,772,854 10,771,595
------------ ------------
Total liabilities and shareholders' equity $ 31,423,379 $ 14,615,095
============ ============
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
RINGER CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
------------------------------
1997 1996
----------- -----------
<S> <C> <C>
NET SALES $ 4,767,233 $ 3,480,731
COST OF SALES 3,130,958 1,706,499
----------- -----------
Gross Profit 1,636,275 1,774,232
OPERATING EXPENSES:
Distribution 511,727 387,111
Sales & Marketing 1,032,010 817,539
General & Administration 897,685 325,073
Research & Development 178,913 124,617
Amortization of intangibles 147,426 93,625
----------- -----------
2,767,761 1,747,965
----------- -----------
INCOME (LOSS) BEFORE OTHER INCOME (1,131,486) 26,267
OTHER INCOME (EXPENSE), NET (65,065) 33,456
----------- -----------
NET INCOME (LOSS) $(1,196,551) $ 59,723
=========== ===========
Net income (loss) per common
share - basic and diluted $(.09) $.01
=========== ===========
Shares used in calculating basic and
diluted net income (loss) per share 13,312,840 10,921,930
=========== ===========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
RINGER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
December 31,
---------------------------
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(1,196,551) $ 59,723
Adjustments to reconcile net loss
to net cash used in operating activities:
Depreciation and amortization 243,071 124,682
Loss on sale of assets 3,819 3,868
(Increase) in assets:
Trade accounts and notes receivable (2,120,013) (2,555,381)
Inventories (707,341) (318,011)
Prepaid expenses (423,847) (134,736)
Increase (decrease) in liabilities:
Accounts payable 1,613,200 1,321,280
Accrued expenses 278,605 (325,576)
----------- -----------
Net cash used in operating activities (2,309,057) (1,824,151)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (259,852) (66,813)
Proceeds from sale of equipment 1,684
Purchase of intangible assets (13,227) (10,493)
Cash paid relating to acquisitions (164,495)
----------- -----------
Net cash used in investing activities (437,574) (75,622)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercise of stock options 8,913
Net borrowings on lines of credit 12,915
Purchase of intangible assets (101,606)
----------- -----------
Net cash used in investing activities (79,778) -
Effect of exchange rate changes on cash (14,613) 2,061
----------- -----------
Decrease in cash and cash equivalents (2,841,022) (1,897,712)
CASH AND CASH EQUIVALENTS:
BEGINNING OF PERIOD 3,264,294 3,288,781
----------- -----------
END OF PERIOD $ 423,272 $ 1,391,069
=========== ===========
See notes to consolidated financial statements.
4
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RINGER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED)
Note 1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information. They should be read in conjunction
with the annual financial statements included in the Company's Annual
Report on Form 10-KSB for the year ended September 30, 1997. In the
opinion of management, the interim financial statements include all
adjustments (consisting of normal recurring accruals) necessary for a
fair presentation of the results for the interim periods presented.
Operating results for the period of October 1, 1997 through December
31, 1997 are not necessarily indicative of the operating results to be
expected in future periods.
Effective December 15, 1997, the Company adopted Statement on Financial
Standard No. 128, "Earnings Per Share". Earnings or loss per share for
prior year periods have been restated for the adoption of SFAS No. 128.
The following table reflects the calculation of basic and diluted
earnings per share.
<TABLE>
<CAPTION>
Three Months Ended
December 31,
1997 1996
------------ ------------
<S> <C> <C>
Earnings (Loss) Per Share
-------------------------
Net income (loss) $ (1,196,551) $ 59,723
------------ ------------
Weighted average shares 13,312,840 10,921,930
------------ ------------
Net income (loss) per share $ (.09) $ .01
============ ============
Earnings (Loss) Per Share - Assuming Dilution
---------------------------------------------
Net income (loss) $ (1,196,551) $ 59,723
------------ ------------
Weighted average shares 13,312,840 10,921,930
Dilutive impact of options and warrants [*] [*]
------------ ------------
Weighted average shares and potential dilutive
shares outstanding 13,312,840 10,921,930
------------ ------------
Net income (loss) per share $ (.09) $ .01
============ ============
</TABLE>
[*] The impact of options and warrants are excluded because their
effect would be antidilutive.
Note 2. CHANGE IN FISCAL YEAR
Management announced on February 9, 1998 the decision to change the
Company's fiscal year end from September 30 to December 31. In future
financial reports for reporting periods beginning January 1, 1998 the
prior year financial statements included for comparison will be
presented to conform to the period ends associated with the Company's
new fiscal year.
Note 3. ACQUISITIONS
Merger with Southern Resources, Inc.
------------------------------------
On December 8, 1997, the Company completed a merger with Southern
Resources, Inc. ("SRI"), a Georgia based corporation which, through its
wholly-owned subsidiary, SureCo, Inc., manufactures and markets
pesticides to the home and garden and professional pest control markets
under the Rigo/Black Leaf(R) and AllPro(R) brands and under various
private label brand names. The Company acquired all of the outstanding
stock of SRI in exchange
5
<PAGE>
for 4,500,000 shares of the Company's unregistered, restricted common
stock having an aggregate valuation of $4,218,750. The Company intends
to operate SRI as a stand-alone subsidiary.
The SRI acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated fair
market values at the date of acquisition. The excess of purchase price
over the estimated fair market values of assets acquired and
liabilities assumed ("goodwill") was approximately $6,924,000. The
goodwill is being amortized on a straight-line basis over twenty years.
SRI's operations are included in the Company's consolidated statements
of operations from the effective date of the acquisition which, for
accounting purposes, is December 1, 1997. The Company is in the process
of validating fair values of assets acquired and liabilities assumed.
As part of this process, the Company has recorded a preliminary
allocation of the purchase price to the assets acquired and liabilities
assumed based on initial estimates of fair values. Upon completion of
this valuation process, the Company may adjust the preliminary
allocation of purchase price based on final determination of fair
values.
Acquisition of the assets of Dexol Industries, Inc.
---------------------------------------------------
In March 1997, the Company completed the acquisition of substantially
all of the assets of Dexol Industries, Inc. ("Dexol"), a California
based manufacturer and marketer of home and garden pesticides sold
under the Dexol(R) and various private label brand names, for an
aggregate purchase price of $3,012,790, plus a contingent performance
based earnout valued at up to $455,000, payable in shares of the
Company's restricted common stock (the "Dexol Acquisition"). The
purchase price was comprised of the issuance of 1,059,340 shares of the
Company's restricted common stock valued at $1,397,005, the issuance of
a promissory note to Dexol with a principal amount of $1,477,000
bearing simple interest at an annual rate of prime plus 3/4% and
estimated transaction costs of $138,785.
The Dexol Acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price has been allocated to the
assets acquired and liabilities assumed based on their estimated fair
market values at the date of acquisition. The excess of purchase price
over estimated fair market value of net assets acquired ("goodwill") of
approximately $1,685,000 is being amortized on a straight-line basis
over twenty years. Since the acquisition, the Company has operated the
acquired business as its Dexol division and has continued marketing
Dexol products. Dexol division operations are included in the Company's
consolidated statements of operations since the effective date of the
acquisition of March 1, 1997.
Note 4. Sales of the Company's products are generally greater during the period
of January 1 through June 30 of each year due to seasonal factors.
Note 5. All comparative data reflect application of consistent accounting
principles and contain no prior period adjustments.
Note 6. Inventory consists of the following:
December 31, September 30,
1997 1997
-------------- ---------------
Raw Materials $ 5,148,988 $ 1,697,454
Finished Goods 3,654,921 1,108,207
-------------- ---------------
$ 8,803,909 $ 2,805,661
============== ===============
Note 7. LONG-TERM DEBT
December 31,
1997
--------------
Term loan $ 3,025,241
Notes payable 1,805,241
Capital lease obligations 15,205
Less current portion (1,538,866)
--------------
$ 3,306,821
==============
6
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Note 8. Supplemental disclosure of cash flow information.
Cash paid (received) for interest during the period for:
Three Months Ended
December 31,
---------------------------------
1997 1996
-------------- ---------------
Interest paid $ 93,255 $ 718
Interest received (28,570) (34,359)
As discussed in Note 3, the Company completed the acquisition of SRI in
a non-cash transaction by issuing 4,500,000 shares of the Company's
unregistered, restricted common stock.
Note 9. PRO FORMA FINANCIAL INFORMATION
The following table sets forth unaudited pro forma sales, net loss
before taxes, net loss and loss per share for the Company as if the
Ringer Corporation, Dexol and SRI businesses had been combined at the
beginning of the periods shown. This pro forma financial information is
provided for illustrative purposes only. It is not necessarily
indicative of actual operating results that would have occurred had the
acquisition been in effect for the periods presented and is not
necessarily indicative of results which may be obtained in the future.
Three Months Ended
December 31,
-----------------------------
1997 1996
------------ ------------
Net Sales $ 6,178,703 $ 8,464,930
Net loss before taxes (3,720,814) (809,643)
Net loss (3,798,137) (809,643)
Loss per share $ (.27) $ (.05)
7
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
-------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS.
-----------------------------------
Merger with Southern Resources, Inc.
- ------------------------------------
On December 8, 1997, a subsidiary of Ringer Corporation (the "Company")
merged with Southern Resources, Inc. ("SRI") which, on that date, became a
wholly-owned subsidiary of the Company. Prior to the merger, SRI was privately
held. SRI is a Fort Valley, Georgia-based corporation with annual consolidated
sales of approximately $25 million, which, through its wholly owned subsidiary,
SureCo, Inc., manufactures and markets traditional liquid and granular
pesticides. Its products are sold under a variety of proprietary and private
label brand names to commercial and consumer retail markets throughout North
America. Commercial pesticides are sold principally under the AllPro(R) brand to
specialty agricultural, turf ornamental and professional pest control
distributors. Consumer products are sold into the consumer retail market
principally under the Rigo/Black Leaf(R) brand as well as under various private
label store brands. The Company intends to operate SRI as a stand-alone
subsidiary.
The Company acquired all of the outstanding stock of SRI in exchange for
4,500,000 shares of the Company's restricted common stock with an aggregate
valuation of $4,218,750. The SRI acquisition was accounted for under the
purchase method of accounting rather than the pooling-of-interest method as
originally contemplated. The change in methods is considered necessary by
management due to a change in strategic business operating plans which is likely
to disqualify the pooling method of accounting.
Under the purchase method of accounting, the purchase price has been
allocated to the assets acquired and liabilities assumed based on their
estimated fair market values at the date of acquisition. The excess of purchase
price over the estimated fair market values of assets acquired and liabilities
assumed ("goodwill") totals approximately $6,924,000. The goodwill is being
amortized on a straight-line basis over twenty years. SRI's operations are
included in the Company's consolidated statements of operations from the
effective date of the acquisition for accounting purposes of December 1, 1997.
The Company is in the process of validating fair values of assets acquired and
liabilities assumed. As part of this process, the Company has recorded a
preliminary allocation of the purchase price to the assets acquired and
liabilities assumed based on initial estimates of fair values. Upon completion
of this valuation process, the Company may adjust the preliminary allocation of
purchase price based on final determination of fair values.
Dexol Acquisition
- -----------------
In March 1997, the Company completed the acquisition of substantially all
of the assets of Dexol Industries, Inc. ("Dexol"), a California based
manufacturer and marketer of home and garden pesticides sold under the Dexol(R)
and various private label brand names, for an aggregate purchase price of
approximately $3,012,790 (the "Dexol Acquisition"). The purchase price was
comprised of the issuance of 1,059,340 shares of the Company's restricted common
stock valued at $1,397,005, the issuance of a promissory note to Dexol with a
principal amount of $1,477,000 bearing simple interest at an annual rate of
prime plus 3/4% and estimated transaction costs of $138,785.
The Dexol Acquisition was accounted for under the purchase method of
accounting. Accordingly, the purchase price has been allocated to the assets
acquired and liabilities assumed based on their estimated fair market values at
the date of acquisition. The excess of purchase price over estimated fair market
value of net assets acquired ("goodwill") of approximately $1,685,000 is being
amortized on a straight-line basis over twenty years. Since the acquisition, the
Company has operated the acquired business as its Dexol division and has
continued marketing Dexol products. Dexol division operations are included in
the Company's consolidated statements of operations from the effective date of
the acquisition which, for accounting purposes, is March 1, 1997.
8
<PAGE>
Results of Operations
- ---------------------
The following table sets forth, for the periods indicated, information
derived from the consolidated statements of operations of the Company as a
percentage of net sales:
For the Three Months
Ended December 31,
------------------------
1997 1996
-------- --------
Net sales 100.0% 100.0%
Cost of sales 65.7 49.0
------ ------
Gross profit 34.3 51.0
Operating Expenses:
Distribution 10.7 11.1
Sales & Marketing 21.6 23.5
General & Administrative 18.8 9.3
Research & Development 3.8 3.6
Amortization of intangibles 3.1 2.7
------ ------
58.0 50.2
Income (loss) before other income (23.7) .8
Other income, net (1.4) .9
------ ------
Net income (loss) (25.1)% 1.7%
====== ======
The following table sets forth the percentage of net sales represented by each
of the Company's major product categories:
Three Months Ended
December 31,
--------------------------
1997 1996
-------- --------
Pest control 91% 76%
Fertilizers and composting 9 24
-------- --------
100% 100%
======== ========
Comparison of the three months ended December 31, 1997 to the three months ended
December 31, 1996
Net Sales. Net sales increased $1,286,502 or 36.7% to $4,767,233 in the
---------
three months ended December 31, 1997 compared to $3,480,731 for the same three
months ended December 31, 1996. The increase was due to the addition of
approximately $2 million in 1997 sales from acquired businesses and product
lines added as a result of the 1997 Dexol and SRI acquisitions, partially offset
by lower sales of various products mainly caused by timing of shipments.
Sales during the three months ended December 31 consist primarily of
sales to distributors who resell the Company's products to retailers who, in
turn, sell to individual consumers. The Company's performance during the period
beginning January 1 through September 30 is dependent upon reorders from
distributors and from initial orders and reorders from direct customers who tend
to begin purchasing products during the three months ended March 31. The level
of sales for the fiscal year depends largely upon the level of retail sales of
the Company's products to home owner consumers and the level of unsold retail
inventory of the Company's products remaining in retail and wholesale
distribution channels carried over from the previous year. Retail sales to
consumers are affected by numerous outside circumstances such as weather,
competitors' products and sales and marketing programs, as well as new product
introductions. Each of these factors can fluctuate substantially from year to
year and from quarter to quarter. Total year
9
<PAGE>
sales cannot be accurately projected with any degree of certainty based on
results for the three months ended December 31.
Gross Margins. Gross margins decreased to 34.3% in the three months ended
-------------
December 31, 1997 compared to 51.0% in the three months ended December 31, 1996.
The decrease was due primarily to a shift in product mix to a higher percentage
of lower-margin traditional chemical pesticides and to high levels of
manufacturing overhead at SRI for the month December 1997, the first month of
inclusion in the Company's financial statements.
Operating Expenses. Distribution expenses increased $124,616, or 32.2%,
------------------
to $511,727 in the three months ended December 31, 1997 from $387,111 in the
same three months ended December 31, 1996, due primarily to increased variable
distribution costs on higher sales and the first-time inclusion of SRI
distribution operations for the month of December 1997. Sales and marketing
expenses increased $214,471 or 26.2%, to $1,032,010 for the three months ended
December 31, 1997 from $817,539 for the three months ended December 31, 1996.
The increase in sales and marketing expenses was largely due to the addition of
the SRI sales and marketing organization for the month of December 1997.
Increased variable selling expenses due to higher sales levels for the three
months ended December 31, 1997 compared to the three months ended December 31,
1996 also added to the increase. General and administrative costs increased
$572,612 or 176% to $897,685 for the three months ended December 31, from
$325,073 for the three months ended December 31, 1996. The increase was
primarily the result of additional administrative and corporate operating costs
incurred related to the addition and integration of the Dexol and SRI
businesses, a significant portion of which were eliminated effective December
31, 1997 as a result of headcount reductions at Dexol and SRI. Research and
development expenses increased $54,296 or 43.6% to $178,913 for the three months
ended December 31, 1997 compared to $124,617 for the three months ended December
31, 1996. The increase was due primarily to increased product registration costs
for products added in the Dexol acquisition.
Other Income, Net. Net other income (expense) decreased to net other
-----------------
expense of $65,065 for the three months ended December 31, 1997 compared to net
other income of $33,456 for the three months ended December 31, 1996. The
increase in net other expense was mainly due to increased interest expense on
increased borrowings on the Company's line of credit and interest expense
incurred on long-term and short-term debt assumed in the Dexol and SRI
acquisitions. In addition, the increase in net other expense was unfavorably
impacted by reduced royalty income on international licencing agreements.
Liquidity and Capital Resources
- -------------------------------
The Company's operations and cash needs are highly seasonal. During the
three months ended December 31 of each year, the Company usually solicits and
ships early orders and expands production to build inventory needed for its
major selling season. Most of the Company's shipments for the peak selling
season, and therefore most of the billings that result in revenue recognition
and in receivables, occur during the months of February through May of each
year. Accordingly, the Company typically consumes significant cash in operating
activities during the periods from October through May of each year as it
finances increases in inventory, primarily during the periods from October
through April, and increases in receivables, primarily during the period from
late December through the end of May.
Consistent with such seasonal fluctuations, cash decreased by $2,841,022
during the three months ended December 31, 1997. The decrease in cash reflects
the following: cash of $2,309,057 consumed in operating activities, primarily to
finance increased receivables, inventory and product registration prepayments,
and cash of $453,440 consumed in investing activities to purchase office
equipment and intangible assets and to pay acquisition related costs.
The Company relies on bank financing in the form of working capital lines
of credit to fund seasonal increases in receivables and inventory. The Company
currently has in place a three-year $25,000,000 credit facility with GE Capital
Services which funds working capital needs of the parent company and its wholly
owned subsidiary, Safer, Inc. The credit facility is intended to finance the
Company's seasonal working capital needs and to provide financing for future
acquisitions. There were no outstanding borrowings on this line of credit as of
December 31, 1997.
10
<PAGE>
In addition, the Company's wholly-owned subsidiary, SRI, has a $7,000,000
working capital credit facility with a commercial finance corporation which is
scheduled to mature on April 29, 1998. The Company intends to consolidate this
line into its GE Capital Services line at that time. Outstanding borrowings
under this line of credit totaled $3,024,910 as of December 31, 1997.
The Company believes that cash on hand and its credit facilities will
provide adequate financing to meet the Company's cash needs for fiscal 1998. In
connection with its merger and acquisition strategy and in light of long-term
capitalization considerations, however, the Company may seek additional forms of
long-term financing as such needs arise.
The Company has no material purchase commitments. Although the Company
continues to evaluate companies and product lines for possible acquisition, no
such agreements are currently in place.
The Company believes that inflation has not had a significant impact on
the results of its operations.
FORWARD LOOKING INFORMATION
- ---------------------------
The information contained in this Quarterly Report includes forward-
looking statements as defined in Section 21E of the Securities Exchange Act of
1934, as amended. These forward-looking statements involve a number of risks
and uncertainties, including demand from major customers, competition, changes
in product or customer mix or revenues, and changes in product costs and
operating expenses, and other factors disclosed throughout this Quarterly Report
and the Company's other filings with the Securities and Exchange Commission.
The actual results that the Company achieves may differ materially from any
forward-looking statements due to such risks and uncertainties. The Company
undertakes no obligation to revise any forward-looking statement in order to
reflect events or circumstances that may arise after the date of this report.
Readers are urged to carefully review and consider the various disclosures made
by the Company in this report and in the Company's other reports filed with the
Securities and Exchange Commission that attempt to advise interested parties of
the risks and uncertainties that may affect the Company's financial condition
and results of operations.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
The Company's wholly-owned subsidiary, SRI, is a party to a
governmental action and certain legal proceedings in Superior Court of Fulton
County, Georgia, brought by or on behalf of property owners in the area of SRI's
Fort Valley, Georgia, manufacturing site, relating to contamination discovered
on or near the site. Management believes that the contamination arose prior to
the purchase of the plant site by SRI from an unaffiliated predecessor owner.
The former owner has been cooperating with governmental authorities and has
initiated remedial activities on the site. Management believes that the
governmental and legal actions relating to the property will not result in loss
to SRI.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company held a special meeting of shareholders on December 8, 1997
to consider and vote upon a proposal to approve and adopt an Agreement and Plan
of Merger, dated October 3, 1997 (the "Merger Agreement"), among the Company, a
wholly-owned subsidiary of the Company (the "Merger Subsidiary") and Southern
Resources, Inc., a Georgia corporation ("SRI"). Pursuant to the Merger
Agreement, among other things, the Merger Subsidiary was merged with and into
SRI (the "Merger") and SRI became a wholly owned subsidiary of the Company. (See
Management Discussion and Analysis, "Merger with Southern Resources, Inc.")
Management solicited proxies with regard to this matter through a
Proxy Statement mailed to shareholders on or about October 31, 1997. At the
Shareholder meeting, a total of 12,181,270 shares were entitled to vote and a
total of 7,927,940, or 65.08%, were represented at the meeting by proxy or by
shareholders in person. The shares represented at the meeting were voted to
approve the Agreement and Plan of Merger dated October 3, 1997, with the
following vote:
For: 7,832,604 Against: 28,335 Abstain: 67,001
Item 5. OTHER INFORMATION - CHANGE IN FISCAL YEAR
Management announced on February 9, 1998 the decision to change the
Company's fiscal year end from September 30 to December 31. Accordingly, the
period covered by this Form 10-QSB, from October 1, 1997 through December 31,
1997, is a transition period to the Company's new fiscal year beginning January
1, 1998.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
--------
Exhibit
- -------
Number Description
- ------ -----------
4.1 Specimen certificate of Common Stock, $.01 par value (incorporated by
reference to Exhibit 4.1 of the Company's Registration Statement on
Form S-18, SEC File No. 33-36205-C).
* 10.1 1986 Employee Incentive Stock Option Plan (incorporated by reference
to Exhibit 4.4 of the Company's Registration Statement on Form S-8,
SEC File No. 33-37806).
* 10.2 Stock Option Plan for Non-Employee Directors (incorporated by
reference to Exhibit 10.2 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1993, SEC File No.
0-18921).
12
<PAGE>
10.3 Lease Agreement between the Company and 94th Street Associates, a
Minnesota Partnership, dated August 15, 1996 (incorporated by
reference to Exhibit 10.3 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1996, SEC File No.
0-18921.)
10.4 Lease Agreement between the Company and MEPC American Properties,
Inc., a Delaware corporation, dated August 16, 1996 (incorporated by
reference to Exhibit 10.4 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1996.)
* 10.5 Employment Agreement between the Company and Stanley Goldberg dated
September 13, 1992 (incorporated by reference to Exhibit 10.6 of the
Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 1992, SEC File No. 0-18921).
* 10.6 Amendment of Employment Agreement between the Company and Stanley
Goldberg, dated December 5, 1997 (incorporated by reference to Exhibit
10.6 of the Company's Amended Annual Report on Form 10-KSB/A for the
fiscal year ended September 30, 1997, SEC File No. 0-18921).
* 10.7 Employment Agreement between the Company and Mark G. Eisenschenk,
dated December 5, 1997 (incorporated by reference to Exhibit 10.7 of
the Company's Amended Annual Report on Form 10-KSB/A for the fiscal
year ended September 30, 1997, SEC File No. 0-18921)..
* 10.8 Stock purchase agreement, and related documents, between the Company
and Stanley Goldberg, dated April 29, 1997 (incorporated by reference
to Exhibit 10.8 of the Company's Amended Annual Report on Form
10-KSB/A for the fiscal year ended September 30, 1997, SEC File No.
0-18921).
* 10.9 Stock purchase agreement, and related documents, between the Company
and Mark G. Eisenschenk, dated April 29, 1997 (incorporated by
reference to Exhibit 10.9 of the Company's Amended Annual Report on
Form 10-KSB/A for the fiscal year ended September 30, 1997, SEC File
No. 0-18921).
10.10 Credit Agreement between the Company and General Electric Capital
Corporation dated May 2, 1997 (incorporated by reference to Exhibit
10.6 of the Company's Quarterly Report on Form 10-QSB for the third
fiscal quarter ended June 30, 1997, SEC File No. 0-18921).
10.11 Stock Subscription Warrant between the Company and Robert W. Fischer
Co., Inc. dated July 18, 1990 (incorporated by reference to Exhibit
10.16 of the Company's Registration Statement on Form S-18, SEC File
No. 33-36205-C).
10.12 Cross-Licensing and Joint Licensing/Sale Agreement between Ringer
Corporation and Mycogen Corporation, dated May 31, 1994 (incorporated
by reference to Exhibit 10.1 of the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended June 30, 1994, SEC File No.
0-18921).
10.13 Patent License Agreement between Ringer Corporation, Mycogen
Corporation and Monsanto Company, dated June 29, 1994 (incorporated by
reference to Exhibit 10.2 of the Company's Quarterly Report on Form
10-QSB for the fiscal quarter ended June 30, 1994, SEC File No.
0-18921).
* 10.14 Ringer Corporation 1996 Employee Stock Option Plan (incorporated by
reference to Exhibit 10.15 of the Company's Annual Report on Form
10-KSB for the fiscal year ended September 30, 1996.)
13
<PAGE>
27.1 Financial Data Schedule
(b) Reports on Form 8-K
-------------------
The Company filed a Current Report on Form 8-K on December 22, 1997 with
regard to the Company's merger with Southern Resources, Inc.
14
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has
duly caused this report to be signed on its behalf by the undersigned, hereunto
duly authorized.
RINGER CORPORATION
Dated: February 17, 1998 By /s/ Stanley Goldberg
-----------------------------
Stanley Goldberg
President and Chief Executive Officer
Dated: February 17, 1998 By /s/ Mark G. Eisenschenk
-----------------------------
Mark G. Eisenschenk
Executive Vice President and Chief
Financial Officer
(principal financial officer)
15
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<PERIOD-START> OCT-01-1997 OCT-01-1996
<PERIOD-END> DEC-31-1997 DEC-31-1996
<CASH> 423,272 3,264,294
<SECURITIES> 0 0
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