'<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 1-12694
SOLIGEN TECHNOLOGIES, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
WYOMING 95-4440838
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
19408 LONDELIUS STREET
NORTHRIDGE, CALIFORNIA 91324
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(818) 718-1221
(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 issuer was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of issuer's common stock outstanding as of January 20, 1997:
31,434,285
Transitional Small Business Disclosure Format: Yes [ ] No [X]
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
FORM 10-QSB
TABLE OF CONTENTS
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at December 31, 1996 and
March 31, 1996 . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the three
and nine months ended December 31, 1996 and 1995 . . . . . . 4
Consolidated Statements of Cash Flows for the nine
months ended December 31, 1996 and 1995. . . . . . . . . . . 5
Notes to Consolidated Financial Statements . . . . . . . . . 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. . . . . . . . . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . 12
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . 13
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1996 1996
---- ----
(UNAUDITED)
ASSETS
<S> <C> <C>
Current assets:
Cash $ 421,000 $ 1,189,000
Accounts receivable 989,000 447,000
Inventories 189,000 167,000
Prepaid expenses 84,000 55,000
------------ ------------
Total current assets 1,683,000 1,858,000
Property, plant and equipment 2,028,000 1,882,000
Less allowance for depreciation and amortization 910,000 625,000
------------ ------------
Net property, plant and equipment 1,118,000 1,257,000
Other assets 54,000 63,000
------------ ------------
TOTAL ASSETS $ 2,855,000 $ 3,178,000
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 371,000 $ 380,000
Accounts payable and accrued expenses 514,000 780,000
Deferred revenue 311,000 38,000
------------ ------------
Total current liabilities 1,196,000 1,198,000
Convertible debentures 400,000 --
Notes payable, net of current portion 105,000 146,000
------------ ------------
TOTAL LIABILITIES 1,701,000 1,344,000
Stockholders' equity:
Common stock, no par value:
Authorized -- 50,000,000 shares;
Issued and outstanding: 30,418,412 at December 31
and 29,738,330 at March 31 9,192,000 8,631,000
Accumulated deficit (8,038,000) (6,797,000)
------------ ------------
Total stockholders' equity 1,154,000 1,834,000
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,855,000 $ 3,178,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES:
Parts Now-TM- $ 690,000 $ -- $ 1,157,000 $ --
DSPC-Registered Trademark- production 282,000 229,000 472,000 611,000
Production parts 235,000 391,000 835,000 1,043,000
DSPC technology 127,000 133,000 163,000 408,000
---------- ----------- ------------ ------------
Total revenues 1,334,000 753,000 2,627,000 2,062,000
---------- ----------- ------------ ------------
COST OF REVENUES 654,000 506,000 1,617,000 1,378,000
---------- ----------- ------------ ------------
Gross profit 680,000 247,000 1,010,000 684,000
---------- ----------- ------------ ------------
OPERATING EXPENSES:
Research and development 260,000 232,000 803,000 719,000
Selling 171,000 153,000 521,000 338,000
General and administrative 264,000 211,000 760,000 701,000
---------- ----------- ------------ ------------
Total operating expenses 695,000 596,000 2,084,000 1,758,000
---------- ----------- ------------ ------------
Loss from operations (15,000) (349,000) (1,074,000) (1,074,000)
OTHER INCOME (EXPENSE):
Interest income 4,000 19,000 15,000 22,000
Interest expense (15,000) (2,000) (282,000) (36,000)
Other income -- -- 103,000 --
---------- ----------- ------------ ------------
Total other income (expense) (11,000) 17,000 (164,000) (14,000)
---------- ----------- ------------ ------------
LOSS BEFORE PROVISION FOR
INCOME TAXES (26,000) (332,000) (1,238,000) (1,088,000)
Provision for state income taxes 3,000 -- 3,000 --
---------- ----------- ------------ ------------
NET LOSS $ (29,000) $ (332,000) $ (1,241,000) $ (1,088,000)
---------- ----------- ------------ ------------
NET LOSS PER SHARE $ (000) $ (001) $ (004) $ (004)
---------- ----------- ------------ ------------
---------- ----------- ------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
DECEMBER 31,
------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities
Net loss $ (1,241,000) $ (1,088,000)
Depreciation and amortization 285,000 337,000
Non-cash interest expense on convertible debentures 250,000 --
Changes in assets and liabilities:
Increase in accounts receivable (542,000) (356,000)
Increase in inventories (22,000) (91,000)
(Increase) decrease in prepaid expenses 16,000 (8,000)
Decrease in accounts payable (266,000) (65,000)
Increase (decrease) in deferred revenues 273,000 (116,000)
Decrease in other assets 9,000 --
------------ ------------
Net cash used for operating activities (1,238,000) (1,387,000)
------------ ------------
Cash flows from investing activities:
Additions in property, plant and equipment (146,000) (249,000)
------------ ------------
Net cash used for investing activities (146,000) (249,000)
------------ ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (50,000) (96,000)
Convertible debentures, net of issuance costs 666,000 --
Proceeds from private placements, net of
issuance costs -- 2,785,000
------------ ------------
Net cash provided by financing activities 616,000 2,689,000
------------ ------------
Net increase (decrease) in cash (768,000) 1,053,000
Beginning of period 1,189,000 331,000
------------ ------------
End of period $ 421,000 $ 1,384,000
------------ ------------
------------ ------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The financial information included herein for the three and nine-month
periods ended December 31, 1996 and 1995 is unaudited; however, such
information reflects all adjustments consisting only of normal recurring
adjustments which are, in the opinion of management, necessary of a fair
presentation for the financial position, results of operations and cash flows
for the interim periods. The financial information as of March 31, 1996 is
derived from Soligen Technologies, Inc's 1996 Form 10-KSB. The interim
consolidated financial statements should be read in conjunction with the
consolidated financial statements and the notes thereto included in the
Company's 1996 Form 10-KSB. The Company filed Form 10-QSB/A-1 for the quarter
ended September 30, 1996 as an amendment to the previously filed Form 10-QSB
to reflect a change in the accounting treatment of the convertible debentures
financing completed September 13, 1996.
The results of operations for the interim periods presented are not
necessarily indicative of the results to be expected for the full year.
ACCOUNTING POLICIES
Reference is made to Note 1 of Notes to Financial Statements in the Company's
Annual Report on Form 10-KSB for the summary of significant accounting
policies.
INVENTORIES
Inventories are stated at the lower of cost or market on a first-in, first-out
basis. Inventories consist of the following:
DECEMBER 31, 1996
-----------------
Raw materials $ 155,000
Work in process 13,000
Finished goods 21,000
---------
Total inventory $ 189,000
---------
---------
DEFERRED REVENUE
Deferred revenue relates to the DSPC technology profit center. The deferred
revenue related to machine revenues results mainly from the Company's
issuance of licenses for the use of the machines, or to support the machines
in the form of maintenance, rather than the outright sale of machines.
6
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DEBT
NOTES PAYABLE AND CAPITAL LEASES
Notes payable and capital leases consist of the following at December 31, 1996:
Notes payable to former owners of A-RPM, collateralized $ 305,000
by equipment and furnishings, bearing interest at 8%,
interest payable quarterly, $85,000 currently due and
$220,000 due in 2000 (see Part II, Item 1)
Capital leases 167,000
Other notes to non-related parties, bearing interest from
8.125% to 12.3%, due at various dates through 1997 4,000
---------
Total capital leases and notes payable 476,000
Less current portion (371,000)
---------
Long term portion $ 105,000
---------
---------
CONVERTIBLE DEBENTURES
On September 13, 1996, the Company completed a $750,000 convertible debenture
financing in accordance with SEC Regulation S. The debentures bear interest at
the rate of 6% per annum and, if not earlier converted, principal and interest
is payable in full in cash or common stock on August 31, 1999. The $84,000 of
expenses related to the debenture financing were excluded from the consolidated
statements of cash flows as a non-cash transaction.
The debentures are convertible by the holder into shares of the Company's common
stock at a conversion price equal to 75% of the average price of the Company's
common stock on the American Stock Exchange (Emerging Company Market) for the
five trading days preceding the date of conversion. The Company has the right to
force the conversion of debentures on these terms at the rate of $50,000 per
week beginning October 15, 1996.
The Company recorded $250,000 in common stock as related to the debentures for
the conversion feature and $250,000 as non-cash interest expense in September
1996.
In connection with the above transaction, investors received warrants
exercisable for a total of 601,469 shares of the Company's common stock at
exercise prices of $1.1625 (as to 215,085 shares) and $1.29 (as to 386,384
shares). The warrants are exercisable for three years.
The placement agent for the financing received a commission equal to 10% of the
gross proceeds and warrants exercisable for 120,286 shares at exercise prices of
$0.775 (as to 43,010 shares) and $0.86 (as to 77,276 shares). The warrants are
exercisable for three years.
7
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENT
This Form 10-QSB includes a forward-looking statement which is denoted with
an "*" relating to cash and sources of liquidity. Investors are cautioned
that this forward-looking statement involves risks and uncertainties that
could cause actual results to differ materially from that in the
forward-looking statement. The Company is in the early stages of developing
the Parts Now business and does not have an easily predictable flow of
orders. The amount of available cash could last a longer or shorter period of
time depending upon the orders booked and related costs.
OVERVIEW
The following discussion should be read in conjunction with the accompanying
unaudited consolidated financial statements of Soligen Technologies, Inc ("STI")
and its wholly-owned subsidiaries Soligen, Inc ("Soligen") and Altop, Inc.
("Altop") (collectively referred to herein as the "Company") including the notes
thereto (see Part I, Item 1).
Based on technology licensed from MIT, the Company has developed, a
proprietary technology known as Direct Shell Production Casting
(DSPC-Registered Trademark-). The DSPC process enables the automatic creation
of ceramic molds ("Shells") similar to those commonly used in metal casting,
directly from a Computer Aided Design (CAD) file. DSPC is the only known
process from which a Shell can be created before patterns or tooling are
designed or made. As a result, DSPC becomes the only patternless casting
process whereby cast metal parts can be fabricated directly from the customer
CAD file. The Company's strategy is to combine this technological advantage
with conventional casting and CNC machining technologies in order to become
the premier out-sourcing vendor for production of cast metal parts which are
fully developed and ready for assembly. This out-sourcing service is called
Parts Now-Registered Trademark-.
Parts Now is designed to be a "one stop shop" for metal parts, a service the
Company plans to launch in stages. Unlike traditional manufacturing of metal
parts, where the production tooling must be made prior to producing a first
article (or prototype), the Company utilizes its proprietary DSPC technology to
create the first article before production tooling is made. Once the customer
approves the first article, the Company utilizes its DSPC technology to generate
the production tooling, then uses this tooling to manufacture production
quantities. In both cases the CAD file of the customer is the master. There are
three stages in developing Parts Now to its fullest capacity:
1. STAGE 1 -- Parts Now operates as a service bureau for functional cast and
machined parts focusing on the DSPC center reputation as the most
competitive producer of cast metal parts ("first article parts") made
directly from the customer CAD file. In preparation for stage 2, Soligen
acquired a conventional foundry and CNC machine shop.
2. STAGE 2 -- Parts Now combines DSPC with conventional casting by utilizing
DSPC to produce the production tooling for conventional casting (patterns
and core boxes), directly from the same CAD file as the approved first
article. At this stage, the Company has to be
8
<PAGE>
able to supply small to medium production quantities of cast metal parts,
but not mass production quantities.
3. STAGE 3 -- Parts Now establishes joint ventures with mass production
foundries which are able to use the DSPC made production tooling to augment
Parts Now's in-house production capabilities for mass production.
The following will elaborate on the three stages discussed above:
In fiscal 1996, the Company's primary focus at its DSPC production centers was
to serve customers as a stage 1 Parts Now center. This included creating cast
metal parts with very complex geometry in a variety of alloys. The Company set
up milestones for casting intake and exhaust manifolds in aluminum, ductile iron
and stainless steel. Some of these parts could not have been produced nor
delivered as quickly and cost-effectively using any other technique. The Company
has established repeat business with such companies as Ford Motor Company,
General Motors Corporation, Caterpillar, Inc., John Deere Company, Chicago
Pneumatic Tool Company, Walt Disney and Porter Cable Corporation. To prepare for
the implementation of stage 2 of the Company's Parts Now strategy, the Company
established a wholly owned subsidiary, Altop, an aluminum foundry and machine
shop located in Santa Ana, California.
In the first quarter of fiscal 1997, the Company began to implement the second
stage of its Parts Now strategy. The first two programs included producing first
article parts by DSPC, and, after customer approval of the first article parts,
creating production tooling from the same CAD files. The production tooling was
successfully used to conventionally cast aluminum parts which met the customer
requirements and were functionally identical to the DSPC made first article
parts.
As of December 31, 1996, the Company is continuing its transition from a
development stage company into a manufacturing/service company with continuing
revenues from operations. The Company operates four revenue-generating profit
centers:
1. PARTS NOW PROFIT CENTER (PARTS NOW): Revenues are generated from providing
program management of the "one stop shop" production services. Parts Now
is responsible for any contract which requires a combination of the DSPC
production center and the conventional casting and CNC machining
expertise. It consists of program managers who oversee the transition from
CAD to first article, to tooling, to conventional casting and later to mass
production (stage 3). It acquires services from the DSPC center and the
conventional foundry at cost.
2. DSPC PRODUCTION PROFIT CENTER: Revenues result from the production and
sale of first article and short run quantities of cast metal parts made
directly from the customer's CAD file. This profit center also provides
DSPC part and tool making services to the Parts Now Profit Center. These
services are charged to Parts Now at cost. Revenues for this product line
were initiated in the quarter ended March 31, 1995.
3. CONVENTIONAL CASTING PROFIT CENTER (PRODUCTION PARTS): Revenues result
from the production and sale of production quantities of cast and machined
metal parts to the Parts Now profit center (at cost) and from other
industrial customers. The Company began
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generating revenues for industrial customers, many of whom were customers
of A-RPM, whose assets where purchased as the basis for establishing
Altop, its aluminum foundry and machine shop, in July 1994. This profit
center is undergoing a transition from providing non-DSPC related,
conventional casting services for industrial customers only to providing
conventional casting of aluminum parts, utilizing DSPC made tooling, CNC
machining finishing and inspection services to the Parts Now Profit
Center.
4. DSPC TECHNOLOGY PROFIT CENTER: Revenues are generated by two peripheral
activities:
- MACHINE REVENUES result from the distribution and maintenance of DSPC
machines. Part of the Company's strategy is to enable companies in
certain applications to operate DSPC machines in-house. Initially,
this involved the sale of machines to be used in a specific
application (such as the sale of a DSPC machine to Johnson & Johnson
Orthopedics for the sole purpose of producing orthopedic implants),
subsequently evolving into the generation of revenues through
licensing, maintenance and upgrades.
- ENGINEERING CONTRACTS REVENUES involve participation in research
projects wherein Soligen provides technological expertise. Revenues in
this product line were initiated in the quarter ended December 31,
1994 as a part of the Company's participation in several industrial
consortia that included MIT and certain companies seeking to further
develop applications in advanced manufacturing.
RESULTS OF OPERATIONS
Revenues for the three months ended September 30, 1996 and three and nine months
ended December 31, 1996 and 1995 were as follows:
<TABLE>
<CAPTION>
Three Months
Ended Three Months Ended Nine Months Ended
September 30, December 31, December 31,
------------- ------------ ------------
1996 1996 1995 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Parts Now $ 379,000 $ 690,000 $ -- $ 1,157,000 $ --
DSPC production 62,000 282,000 229,000 472,000 611,000
Production parts 309,000 235,000 391,000 835,000 1,043,000
DSPC technology -- 127,000 133,000 163,000 408,000
---------- ----------- --------- ------------ -----------
Total revenues $ 750,000 $ 1,334,000 $ 753,000 $ 2,627,000 $ 2,062,000
---------- ----------- --------- ------------ -----------
---------- ----------- --------- ------------ -----------
</TABLE>
For the quarter ended December 31, 1996, revenues increased $581,000, or 77%, to
$1,334,000 from $753,000 for the similar period last year. During the comparable
period a year ago, combined revenues for Parts Now and DSPC increased $743,000,
or 324%, reflecting continued customer acceptance of the Company's core business
in the market place. Revenues for the third quarter of fiscal 1997 grew to
$1,334,000 from $750,000 in the second quarter ended September 30, 1996, an
increase of $584,000, or 78%. The Parts Now and DSPC revenues grew to $972,000
in the third quarter of fiscal 1997 from $441,000 in the second quarter of
fiscal 1997, an increase of $531,000, or 120%. Similarly, for the nine months
ended December 31, 1996, Parts Now and DSPC revenues increased by 167%, to
$1,629,000 from $611,000.
10
<PAGE>
In the transition from stage 1 to stage 2 of the Company's Parts Now strategy,
the trend continues of de-emphasizing either low or marginal profit margins, a
business segment unrelated to Parts Now profit objectives. As a result, Altop's
revenues from conventional casting contracts decreased $156,000 to $235,000, or
40% in the quarter ended December 31, 1996, and decreased $208,000 to $835,000,
or 20% for the nine months ended December 31, 1996.
For the three months ended December 31, 1996, DSPC technology revenues decreased
from $133,000 to $127,000 or 5% and for the nine months ended December 31, 1996,
revenues deceased from $408,000 to $163,000, or 60%. This decrease resulted from
expiration of R&D contracts with government agencies as well as license and
maintenance agreements for DSPC experimental machines. The DSPC technology
product line comprised of development contracts and selling operating licenses
for DSPC machines will continue; however, since it is not a part of the
Company's strategic business, the Company is not actively pursuing such
contracts.
Cost of revenues as a percentage of total revenues in the third quarter of
fiscal 1997 was 49% compared to 67% in the third quarter of fiscal 1996 and 66%
in the prior quarter. For the nine months ended December 31, 1996 and 1995, cost
of revenues as a percentage of total revenues was 62% and 67%, respectively. The
decrease in cost of revenues as a percentage of total revenues was due to a
reduction in per unit costs associated with increased production.
Research & development expenses were $260,000 in the third quarter of fiscal
1997, compared to $232,000 in the third quarter of fiscal 1996, an increase
of $28,000. For the nine months ended December 31, 1996, research and
development expenses were $803,000 compared to $719,000 recorded in the nine
months ended December 31, 1995, an increase of $84,000. These increases were
the result of the Company's continued effort to invest in research and
development of the DSPC technology and its applications as a key to its
future growth and prosperity. As a percentage of total revenues, research and
development costs decreased to 19% in the third quarter of fiscal 1997 from
31% in the third quarter of fiscal 1996. For the nine months ended December
31, 1996, research and development costs as a percentage of total revenues
deceased to 31% from 35% in the comparable period a year ago. These decreases
were the result of the Company's revenues growing faster than research and
development expenses.
Selling expenses were $171,000 in the third quarter of fiscal 1997, compared to
$153,000 in the third quarter of fiscal 1996 and $171,000 in the prior quarter.
For the nine months ended December 31, 1996, selling expenses were $521,000,
compared to $338,000 in the comparable period a year ago. The increase in
selling expenses is due primarily to the establishment of a sales team and the
Company's efforts to penetrate new markets for the underlying technology.
General and administrative expenses increased $53,000 to $264,000 for the
quarter ended December 31, 1996 from $211,000 for the quarter ended December 31,
1995. For the nine months ended December 31, 1996 and 1995, general and
administrative expenses increased to $760,000 from $701,000. The increase in
general and administrative expenses is the result of additional administrative
personnel to support the growth in revenues.
11
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Interest expense increased to $15,000 in the third quarter of fiscal 1997 from
$2,000 in the third quarter of fiscal 1996. This increase was caused primarily
by interest expense on the convertible debentures issued September 13, 1996. For
the nine months ended December 31, 1996, interest expense increased to $282,000
from $36,000 in the comparable period a year ago. This increase was caused by
the $250,000 non-cash additional interest expense and $11,000 cash interest
expense associated with the $750,000 convertible debenture financing completed
in the second quarter of fiscal 1997.
CASH AND SOURCES OF LIQUIDITY
The Company requires significant funds to continue operations. As of December
31, 1996, the Company had $1,410,000 in cash and accounts receivable,
representing an increase of $241,000 from $1,169,000 at September 30, 1996. This
overall increase in cash and accounts receivable resulted primarily from
operations. From inception, the Company has funded its operations through the
private sale of common stock and convertible debentures. On September 13, 1996,
the Company completed a private placement of $750,000, 6% convertible debentures
due on or before August 31, 1999. The Company received proceeds of $666,000, net
of finders and legal fees. During the third quarter ended December 31, 1996,
$350,000 of convertible debentures were converted to common stock.
Based upon projected level of revenues, the Company does not expect current cash
to be adequate beyond June 30, 1997*. Therefore, until the Company operates
profitably, as to which no assurance can be given, it will be necessary for the
Company to obtain outside funding to fund operations. The Company does not have
any bank financing, and it does not believe that financing from a bank or other
commercial lender is presently available to it. The Company is pursuing other
sources of outside funds. However, no assurance can be given that the Company
will be able to obtain the necessary funds when such funds are required, and the
failure to obtain necessary funding may have a materially adverse effect upon
its business and operations. Furthermore, if the Company is able to raise such
funds, the terms on which funds may be made available to the Company may result
in substantial dilution or may be otherwise on terms not favorable to the
Company.
PART II: OTHER INFORMATION
ITEM 1: LEGAL PROCEEDINGS
A-RPM LAWSUIT AND COUNTERCLAIM
On June 30, 1994, Altop, Inc, a wholly-owned subsidiary of the Company, acquired
substantially all of the assets of A-RPM Corporation, an aluminum foundry and
machine shop located in Santa Ana, California. The assets were acquired pursuant
to an Asset Purchase Agreement between Altop, A-RPM, the Company and Leland K
and Nancy B Lowry, the sole shareholders of A-RPM. As payment for the assets,
Altop delivered an initial cash payment in the amount of $100,000 and three
promissory notes in the total principal amount of $220,000. Altop also assumed
certain liabilities of A-RPM and agreed to deliver an additional payment of up
to $100,000 contingent upon determination of certain net asset values according
to a formula set forth in the Asset Purchase Agreement. Altop also entered into
an Employment Agreement with Leland K Lowry.
12
<PAGE>
On March 22, 1995, the Company and Altop commenced an action against A-RPM and
the Lowrys in the Superior Court for Orange County, California. The complaint in
this action seeks damages for breach of the Asset Purchase Agreement, fraud, and
negligent misrepresentation. In addition, the Company and Altop are requesting
declaratory relief confirming that the Company and Altop have no further
obligation to A-RPM and the Lowrys under the Asset Purchase Agreement, the
promissory notes and related transactions. The complaint also seeks an award of
attorneys' fees and costs.
A-RPM and the Lowrys have filed an answer to the complaint generally denying the
allegations of the complaint. In addition, they have filed a cross-complaint
stating actions against the Company and Altop for recovery of the entire
principal amount and accrued interest on the three promissory notes delivered in
connection with the Asset Purchase Agreement. The cross-complaint also seeks
foreclosure on the assets of Altop securing the promissory notes, recovery of
$85,000 alleged to be due and payable pursuant to the contingent payment
provisions of the Asset Purchase Agreement, and attorneys' fees and costs.
The Company and Altop intend to vigorously defend against the allegations of
the cross-complaint and to vigorously pursue recovery against A-RPM and the
Lowrys. A trial date has been set for March 3, 1997. Pending resolution of
this dispute, the Company has provided for a $305,000 liability in its
consolidated financial statements.
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11.1 Computation of Net Loss Per Share
(b) Reports on Form 8-K
None
13
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
SOLIGEN TECHNOLOGIES, INC.
Date: February 7, 1997 By: /s/ Yehoram Uziel
---------------------------------------------
Yehoram Uziel
President, CEO and Chairman of the Board
(Principal executive officer)
Date: February 7, 1997 By: /s/ Robert Kassel
---------------------------------------------
Robert Kassel
Chief Financial Officer
(Principal financial officer)
14
<PAGE>
EXHIBIT 11.1
SOLIGEN TECHNOLOGIES, INC.
COMPUTATION OF NET LOSS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
DECEMBER 31, DECEMBER 31,
------------ ------------
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average common
shares outstanding 30,080,540 28,913,330 29,852,400 25,648,874
Net loss $ (29,000) $ (332,000) $ (1,241,000) $ (1,088,000)
Net loss per share $ (0.00) $ (0.01) $ (0.04) $ (0.04)
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE INCLUDES SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND ON PAGES 3 AND 4 OF THE COMPANY'S FORM 10-QSB FOR THE QUARTER
AND YEAR TO DATE, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-START> APR-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 421
<SECURITIES> 0
<RECEIVABLES> 1,021
<ALLOWANCES> 32
<INVENTORY> 189
<CURRENT-ASSETS> 1,683
<PP&E> 2,028
<DEPRECIATION> 910
<TOTAL-ASSETS> 2,855
<CURRENT-LIABILITIES> 1,196
<BONDS> 400
0
0
<COMMON> 9,192
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 2,855
<SALES> 2,627
<TOTAL-REVENUES> 2,627
<CGS> 1,617
<TOTAL-COSTS> 1,617
<OTHER-EXPENSES> 2,084
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 282
<INCOME-PRETAX> (1,238)
<INCOME-TAX> 3
<INCOME-CONTINUING> (1,241)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,241)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
