<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A-1
-------------------------------------------
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED MARCH 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.
(Name of small business issuer in its charter)
WYOMING 95-4440838
(STATE OF (I.R.S. EMPLOYER
INCORPORATION) IDENTIFICATION NO.)
19408 LONDELIUS ST., NORTHRIDGE, CALIFORNIA 91324
(Address of principal executive offices) (Zip Code)
ISSUER'S TELEPHONE NUMBER: 818/718-1221
SECURITIES REGISTERED UNDER SECTION 12(b) OF THE EXCHANGE ACT:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
COMMON STOCK WITHOUT PAR VALUE AMERICAN STOCK EXCHANGE (EMERGING COMPANY
MARKETPLACE)
SECURITIES REGISTERED UNDER SECTION 12(g) OF THE EXCHANGE ACT: NONE
-------------------------------------------
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. YES [ X]
NO [ ]
CHECK IF THERE IS NO DISCLOSURE OF DELINQUENT FILERS IN RESPONSE TO ITEM
405 OF REGULATION S-B CONTAINED IN THIS FORM, AND NO DISCLOSURE WILL BE
CONTAINED, TO THE BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR
INFORMATION STATEMENTS INCORPORATED BY REFERENCE IN PART III OF THIS FORM
10-KSB/A-1 OR ANY AMENDMENT TO THIS FORM 10-KSB/A-1. [X]
THE ISSUER'S REVENUES FOR THE FISCAL YEAR ENDED MARCH 31, 1996 WERE
$2,815,000.
THE AGGREGATE MARKET VALUE OF THE VOTING STOCK HELD BY NON-AFFILIATES
COMPUTED BY REFERENCE TO THE PRICE AT WHICH THE STOCK WAS SOLD, OR THE AVERAGE
BID AND ASKED PRICE OF SUCH STOCK, AS OF MAY 30, 1996 WAS APPROXIMATELY
$29,192,000.
AS OF MAY 30, 1996, THERE WERE 29,738,330 SHARES OF COMMON STOCK, NO PAR
VALUE, OUTSTANDING.
THE INDEX TO EXHIBITS APPEARS ON PAGE 4 OF THIS DOCUMENT.
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<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the accompanying
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, included
elsewhere in this Annual Report.
OVERVIEW
As of March 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 three major revenue-generating
profit centers:
1. 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.
2. CONVENTIONAL CASTING PROFIT CENTER ("PRODUCTION PARTS"): Revenues result
from the production, and sale of production quantities of cast and machined
metal parts for industrial customers. The Company began generating
revenues in this area through Altop, its aluminum foundry and machine shop,
in July 1994. This profit center also provides conventional casting of
aluminum parts utilizing DSPC made tooling, CNC machining, finishing and
inspection services to the Parts Now Profit Center. These services are
charged to Parts Now at cost.
3. PARTS NOW PROFIT CENTER ("PARTS NOW"): Oversees the "one stop shop"
production services from receipt of the customer's CAD file through
production. 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. It acquires services from the DSPC Production
Center and the conventional casting center at cost.
Additionally, the Company has another profit center ("DSPC Technology Profit
Center") which combines two peripheral activities that generate revenues:
1. 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.
2. 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
1
<PAGE>
certain companies seeking to further develop applications in advanced
manufacturing. This product line may be discontinued after fiscal year
1996.
RESULTS OF OPERATIONS
From fiscal year 1995 to fiscal year 1996, operating revenues increased by
$1,163,000 from $1,652,000 to $2,815,000, gross margins increased from $417,000
to $872,000 and operating expenses increased from $2,388,000 to $3,036,000.
Included in operating expenses in fiscal 1996 were the write-off of goodwill in
the amount of $657,000 applicable to the A-RPM purchase and $41,000 related to
the development of the Company's Web site.
The Company's operating revenues for fiscal 1995 and fiscal 1996, classified by
product lines, are as follows (in $000's):
FISCAL FISCAL
1995 1996
---- ----
DSPC Production Center/Parts Now $ 94 $ 797
Production Parts 1,046 1,472
Machine Revenues 383 283
Engineering Contracts 129 263
------ ------
Total Operating Revenues $1,652 $2,815
Research and Development expenses decreased by $172,000, from $1,113,000 in
fiscal 1995 to $941,000 in fiscal 1996. The reduction was due to costs
associated with the DSPC Production Center product line which entered the
operational stage in January 1995. Prior to that time, all costs associated with
the DSPC product line were wholly developmental in nature.
Selling expenses increased by $250,000 in fiscal 1996. This increase resulted
from the formation of a sales staff which was largely responsible for the
increase in revenues in the current year. Initial sales were generated from
customers who learned about Soligen from trade publications as well as through
referrals from satisfied customers. Subsequently, the Company has been training
a direct sales force. In some territories, independent sales representatives
have been engaged to augment the direct sales force. At the end of fiscal 1996,
the Company had three sales representatives (each limited to his own accounts),
and four direct sales engineers, two of whom are still in training. The Company
is actively seeking a Vice-President of Sales to expand its sales force.
General & Administrative expenses decreased by $128,000, from $1,018,000 to
$890,000, from fiscal 1995 to fiscal 1996, largely as a result of the decline in
legal expenses associated with the settlement of the DTM Lawsuit. This
represents a reduction from 62% of revenues in fiscal 1995 to 32% of revenues in
fiscal 1996.
The Company increased capital assets by $408,000 in fiscal 1996, including the
construction of two DSPC machines. To meet quality requirements related to DSPC
technology and to better support the Parts Now product line, Altop sold four CNC
machines and purchased three others.
2
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MIT LICENSE: Soligen and the Massachusetts Institute of Technology ("MIT") are
parties to an agreement whereby MIT granted Soligen an exclusive license to
develop, manufacture, market and sell products utilizing technology and
processes patented by MIT. The Company is in the process of negotiating certain
amendments to the license agreement. The Company incurred $25,000 as its share
of the costs associated with filing and maintenance of all patent rights in
fiscal 1996. There were no royalties paid to MIT in fiscal 1996
SOURCES OF LIQUIDITY
The Company requires significant funds to continue operations. As of March 31,
1996, the Company had working capital of approximately $660,000. Since March
31, 1995, the Company has funded its operations through the private sale of
common stock. The Company received net proceeds of $536,000 from the private
placement of common stock which was completed in June 1995, net proceeds of
$2,211,000 from the private placement of common stock completed in September
1995 and net proceeds of $405,000 from the private placement of common stock
completed in January 1996. The Company does not expect current sources of
liquidity to be adequate beyond September 30, 1996. 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.
ITEM 7. FINANCIAL STATEMENTS
See Item 13 below and the index therein for a listing of the financial
statements and supplementary data filed as part of this report.
3
<PAGE>
ITEM 13. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. FINANCIAL STATEMENTS
The following financial statements are filed as part of this report:
<TABLE>
<CAPTION>
Page
------
<S> <C>
Report of Independent Public Accountants . . . . . . . . . . . . . . . . . . . 6
Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . .
Balance Sheet as of March 31, 1996 . . . . . . . . . . . . . . . . . . . . 7
Statements of Operations for the years ended March 31, 1995 and 1996 . . . 8
Statements of Stockholders' Equity for the years ended March 31, 1995
and 1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Statements of Cash Flows for the years ended March 31, 1995 and 1996 . . . . . 10
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
(b) 2. FINANCIAL STATEMENT SCHEDULES
All other schedules are omitted because they are not required or the required
information is shown in the financial statements or notes hereto.
(a) 3. EXHIBITS
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit 2.1 Share Exchange Agreement and Amendments . . . . . . . . . . . . . *
Exhibit 2.2 MIT Share Acquisition Agreement . . . . . . . . . . . . . . . . . *
Exhibit 2.3 Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . *
Exhibit 2.4 Pooling Agreement . . . . . . . . . . . . . . . . . . . . . . . . *
Exhibit 3.1 Articles of Incorporation of Soligen Technologies, Inc. . . . . . *
Exhibit 3.2 Bylaws of Soligen Technologies, Inc. . . . . . . . . . . . . . . *
Exhibit 3.3 First Amendment to Bylaws . . . . . . . . . . . . . . . . . . . . ***
Exhibit 4.1 Modification Agreement (Pooling) . . . . . . . . . . . . . . . . . ###
Exhibit 4.2 Subscription Agreement for Private Placement . . . . . . . . . . . ##
Exhibit 4.3 Subscription Agreement for Private Placement . . . . . . . . . . . . ##
Exhibit 10.1 Finder's Fee Agreement . . . . . . . . . . . . . . . . . . . . . *
Exhibit 10.2 Fiscal Agency Agreement . . . . . . . . . . . . . . . . . . . . . *
Exhibit 10.3 License Agreement and Amendments . . . . . . . . . . . . . . . . *
Exhibit 10.4 Amendment to License Agreement . . . . . . . . . . . . . . . . . #
Exhibit 10.5 Alpha Agreements . . . . . . . . . . . . . . . . . . . . . . . . *
Exhibit 10.6 Ashland Chemical Marketing Agreement . . . . . . . . . . . . . . *
Exhibit 10.7 Stock Option Plans . . . . . . . . . . . . . . . . . . . . . . . *
Exhibit 10.8 Subscription Agreement for Private Placement . . . . . . . . . . **
4
<PAGE>
Exhibit 10.9 Letter of Agreement with Consultant . . . . . . . . . . . . . . . **
Exhibit 11.1 Statement of Per Share Earnings . . . . . . . . . . . . . . . . . 22
Exhibit 16 Notice and Letters re: Change in Certifying Accountant . . . . . ****
Exhibit 21.1 Subsidiaries of the Registrant . . . . . . . . . . . . . . . . . ###
Exhibit 24.1 Power of Attorney of Dr. Mark W. Dowley . . . . . . . . . . . . ###
Exhibit 24.2 Power of Attorney of Patrick J. Lavelle . . . . . . . . . . . . . ###
Exhibit 24.3 Power of Attorney of Darryl J. Yea . . . . . . . . . . . . . . . ###
</TABLE>
* Incorporated by reference to the Registration Statement on Form 10-SB (Reg.
No. 1-12694) filed by the Company on December 20, 1993.
** Incorporated by reference to Amendment No. 1 to the Registration Statement
on Form 10-SB (Reg. No. 1-12694) filed by the Company on February 7, 1994.
*** Incorporated by reference to Amendment No. 2 to the Registration Statement
on Form 10-SB (Reg. No. 1-12694) filed by the Company on February 22, 1994.
**** Incorporated by reference to Form 8-K/A-2 filed by the Company on August
30, 1994.
# Incorporated by reference to Form 10-KSB filed by the Company on June 16,
1995.
## Incorporated by reference to Form 10-QSB filed by the Company on November
14, 1995.
### Incorporated by reference to Form 10-KSB filed by the Company on June 17,
1996.
(b) No reports on Form 8-K were filed during the quarter ended March 31, 1996.
5
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of
Soligen Technologies, Inc.:
We have audited the accompanying consolidated balance sheet of Soligen
Technologies, Inc. and subsidiaries (a Wyoming Corporation - collectively, the
Company) as of March 31, 1996, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the two years in the
period ended March 31, 1996. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
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 financial statements referred to above present fairly, in
all material respects, the financial position of Soligen Technologies, Inc. and
subsidiaries as of March 31, 1996, and the results of their operations and their
cash flows for each of the two years in the period ended March 31, 1996 in
conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
Los Angeles, California
May 28, 1996
6
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET - MARCH 31, 1996
ASSETS
CURRENT ASSETS:
Cash $1,189,000
Accounts receivable, net of allowance for
doubtful accounts of $87,000 447,000
Inventories 167,000
Prepaid expenses 55,000
----------
Total current assets 1,858,000
----------
PROPERTY, PLANT AND EQUIPMENT, net of accumulated
depreciation and amortization 1,257,000
OTHER ASSETS 63,000
----------
Total Assets $3,178,000
----------
----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 780,000
Deferred revenue 38,000
Notes payable 380,000
----------
Total current liabilities 1,198,000
----------
NOTES PAYABLE, net of current portion 146,000
COMMITMENTS AND CONTINGENCIES (Notes 5 and 7)
STOCKHOLDERS' EQUITY:
Common stock, no par value
Authorized--50,000,000 shares
Issued and outstanding--29,738,330 shares 8,631,000
Accumulated deficit (6,797,000)
----------
Total stockholders' equity 1,834,000
----------
Total Liabilities and Stockholders' Equity $3,178,000
----------
----------
The accompanying notes are an integral part of this balance sheet.
7
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
1995 1996
---- ----
REVENUES:
DSPC-Registered Trademark- production center $ 94,000 $ 797,000
Production parts 1,046,000 1,472,000
Machine revenues 383,000 283,000
Engineering contracts 129,000 263,000
----------- -----------
Total revenues 1,652,000 2,815,000
----------- -----------
COST OF REVENUES: 1,235,000 1,943,000
----------- -----------
Gross margin 417,000 872,000
----------- -----------
Research and development 1,113,000 941,000
Selling 257,000 507,000
General and administrative 1,018,000 890,000
Other - 41,000
Write-off of goodwill and related
acquisition costs - 657,000
----------- -----------
Total expenses 2,388,000 3,036,000
----------- -----------
Loss from operations (1,971,000) (2,164,000)
----------- -----------
OTHER INCOME (EXPENSE):
Interest income 20,000 46,000
Interest expense (39,000) (49,000)
----------- -----------
Loss before provision for
income taxes (1,990,000) (2,167,000)
Provision for state income taxes 2,000 5,000
----------- -----------
Net loss $(1,992,000) $(2,172,000)
----------- -----------
----------- -----------
Net loss per share $(0.09) $(0.08)
----------- -----------
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
Common Stock
------------------------- Accumulated
Shares Amount Deficit Total
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
BALANCE, March 31, 1994 20,873,330 $4,307,000 $(2,633,000) $ 1,674,000
Shares issued pursuant
to a private placement
(December 1994) 1,390,000 663,000 - 663,000
Shares issued pursuant
to a private placement
(January 1995) 570,000 272,000 - 272,000
Shares issued pursuant
to a private placement
(March 1995) 430,000 205,000 - 205,000
Shares issued pursuant
to options exercised
(March 1995) 10,000 3,000 - 3,000
Net loss for the year - - (1,992,000) (1,992,000)
---------- ---------- ----------- -----------
BALANCE, March 31, 1995 23,273,330 5,450,000 (4,625,000) 825,000
Shares issued pursuant
to DTM settlement
(April 1995) 50,000 29,000 - 29,000
Shares issued pursuant
to private placement
(June 1995) 1,090,000 536,000 - 536,000
Shares issued pursuant
to private placement
(September 1995) 4,500,000 2,211,000 - 2,211,000
Shares issued pursuant
to private placement
(February 1996) 825,000 405,000 - 405,000
Net loss for the year (2,172,000) (2,172,000)
---------- ---------- ----------- -----------
BALANCE, March 31, 1996 29,738,330 $8,631,000 $(6,797,000) $ 1,834,000
---------- ---------- ----------- -----------
---------- ---------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED MARCH 31, 1995 AND 1996
<TABLE>
<CAPTION>
1995 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,992,000) $(2,172,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Write-off of goodwill and related acquisition costs - 657,000
Depreciation and amortization 274,000 323,000
Changes in assets and liabilities, net
of effects from purchase of A-RPM:
Decrease (increase) in accounts receivable 15,000 (340,000)
Decrease (increase) in inventories (55,000) 65,000
Decrease (increase) in prepaid
expenses and other assets (36,000) (20,000)
Increase (decrease) in accounts payable
and accrued expenses 35,000 (82,000)
Increase (decrease) in deferred revenues 71,000 (188,000)
----------- -----------
Net cash used in operating activities (1,688,000) (1,757,000)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property, plant and equipment (478,000) (408,000)
Payment for purchase of A-RPM (100,000) -
Sale of investments 1,470,000 -
----------- -----------
Net cash provided by (used in)
investing activities 892,000 (408,000)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on line of credit (450,000) -
Principal payments under capital lease
obligations (51,000) (97,000)
Repayments of notes from officers and
shareholders (35,000) -
Payments on notes payable (31,000) (32,000)
Proceeds from issuance of debt 15,000 -
Proceeds from private placements, net of
issuance costs 1,140,000 3,152,000
Cash received from options/warrants exercised 3,000 -
----------- -----------
Net cash provided by financing activities 591,000 3,023,000
----------- -----------
Net increase (decrease) in cash (205,000) 858,000
Cash at beginning of period 536,000 331,000
----------- -----------
Cash at end of period $ 331,000 $ 1,189,000
----------- -----------
----------- -----------
</TABLE>
The accompanying notes are an integral part of these financial statements
10
<PAGE>
SOLIGEN TECHNOLOGIES, INC.
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1996
General
This Form 10-KSB/A-1 is filed as Amendment No. 1 to the previously filed Form
10-KSB for fiscal year ended March 31, 1996, so as to reflect in the
Consolidated Statements of Operations the write-off of goodwill ($657,000) and
the write-off related to development of a Web site ($41,000) as components in
the determination of loss from operations. Additionally, in the Consolidated
Statements of Funds Flow, the write-off of goodwill ($657,000) and the amount of
depreciation and amortization ($323,000) are disclosed individually.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
THE COMPANY AND NATURE OF THE BUSINESS
Soligen Technologies, Inc. (STI) is a Wyoming corporation which operates
through its wholly owned subsidiaries Soligen, Inc. (Soligen) and Altop,
Inc. (Altop) (collectively referred to as the Company).
Soligen is located in Northridge, California. It was founded to develop
and commercialize a new technology for creating metal parts and tooling
from computer designs. This technology, Direct Shell Production Casting
(DSPC-Registered Trademark-), is based on Three Dimensional Printing
(3DP-TM-) a patented process licensed to Soligen by the Massachusetts
Institute of Technology.
In June 1994, Altop was incorporated in Delaware. On June 30, 1994, Altop
acquired substantially all of the assets of A-RPM Corporation, an aluminum
foundry and machine shop. Altop immediately commenced operations as an
aluminum foundry and machine shop in the same location as A-RPM had
operated, in Santa Ana, California.
The Company will need to raise additional capital to fund future
operations. In addition, the Company faces certain other risks, including
those described in Note 7.
DSPC-Registered Trademark- is used to fabricate complex ceramic molds
(shells) of virtually any shape directly from a computer-aided design (CAD)
data file, for casting functional metal parts. The Company has four product
lines:
A. DSPC-Registered Trademark- Production Center - The production and
distribution of "first article" metal parts and tooling for quantity
production.
B. Production Parts - The quantity production of metal parts for
commercial users.
C. Machine Revenues - The production and distribution of DSPC-Registered
Trademark- machines to select customers.
11
<PAGE>
D. Engineering Contracts - Studies exploring new uses of related
technology.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of STI, Soligen
and Altop. All material intercompany balances and transactions have been
eliminated in consolidation.
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, liabilities and
disclosure of contingencies at the date of the financial statements, as
well as the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
CREDIT RISK
The Company's accounts receivable are unsecured and the Company is at risk
to the extent such amounts become uncollectable. As of March 31, 1996, no
single customer represented more than 10 percent of accounts receivable.
The Company s largest customer represented approximately 13 percent of
Revenues during fiscal 1996. For the year ended March 31, 1995, no single
customer represented more than 10 percent of Revenues.
INVENTORIES
Inventories are stated at the lower of cost or market on a first-in,
first-out basis. Inventories include raw materials, work in process and
finished goods.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost, less accumulated
depreciation and amortization. Depreciation and amortization are computed
on a straight-line basis over the expected lives of the assets, as follows:
Description Depreciation Life
------------------------------ --------------------
Office furniture and fixtures 3 years
Plant machinery and equipment 5 years
DSPC-Registered Trademark- machines 2 to 3 years
Leasehold improvements Lesser of asset life
or term of lease
12
<PAGE>
Property, plant and equipment consist of the following at March 31, 1996:
Office furniture and fixtures $ 54,000
Plant machinery and equipment 997,000
DSPC-Registered Trademark- machines 556,000
Leasehold improvements 12,000
Construction in progress - DSPC-Registered
Trademark- machines 263,000
------------
1,882,000
Less--Accumulated depreciation and
amortization (625,000)
------------
$1,257,000
------------
------------
GOODWILL
Goodwill represents the unamortized difference between the acquisition cost
of A-RPM and the fair value of net assets acquired. The goodwill is
amortized on a straight-line basis over eight years. See also discussion
below of "New Authoritative Pronouncements."
INCOME TAXES
The Company accounts for income taxes in accordance with Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (SFAS
No. 109). Under SFAS No. 109, deferred income taxes are recognized for the
tax consequences in future years of differences between the tax bases of
assets and liabilities and their financial reporting amounts at each
year-end, based on enacted tax laws and statutory tax rates applicable to
the periods in which the differences are expected to affect taxable income.
Valuation allowances have been established to reduce deferred tax assets to
the amount that could be anticipated to be realized. Income tax expense is
the tax payable for the period and the change during the period in deferred
tax assets and liabilities.
13
<PAGE>
The income tax expense for 1995 and 1996 is limited to minimum payments due
for each year due to the Company's large operating loss carryforward. The
Company's deferred tax asset and valuation reserve are as follows:
March 31, 1996
--------------
Deferred tax assets:
Net operating loss carryforward $2,354,000
Amortization of goodwill 230,000
Vacation accrual 15,000
Unicap 3,000
Allowance for bad debts 35,000
Other 7,000
----------
2,644,000
Deferred tax liabilities:
Depreciation (5,000)
----------
Total net deferred tax assets 2,639,000
Valuation allowance (2,639,000)
----------
Total $ -
----------
----------
There is no assurance that the Company will be profitable in future
periods, therefore, a valuation allowance has been recognized for the full
amount of the deferred tax asset for 1996. As of March 31, 1996, the
Company has a federal income tax operating loss carryforward of
approximately $6,100,000 which expires through 2011. Under Section 382 of
the Internal Revenue Code, the availability of net operating loss and
credit carryforwards may be reduced in the event of a greater than 50
percent change in ownership over a three-year period. In the event that
such a change is deemed to have occurred, the Company's use of net
operating losses and credits may be limited.
RESEARCH AND DEVELOPMENT
Research and development expenditures are charged to operations as
incurred.
LOSS PER SHARE
Loss per share is based on the weighted average number of shares
outstanding during each year. The weighted average number of shares used
in the computation of loss per share for 1995 and 1996 was 21,352,000 and
26,559,000, respectively.
NEW AUTHORITATIVE PRONOUNCEMENTS
In March 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for
the Impairment of Long-Lived Assets and Long-Lived Assets to be Disposed
Of," which required impairment losses to be recorded on long-lived assets
used in operations when indications of impairment are present and the
undiscounted
14
<PAGE>
cash flows estimated to be generated by those assets are less than the
assets' carrying amount. The Company adopted SFAS 121 in 1996 and the
impact on the Company's financial position and results of operations was
significant to the fourth quarter and fiscal year ended March 31, 1996.
Unamortized goodwill and related acquisition costs relating to the A-RPM
acquisition were written off pursuant to SFAS 121 guidelines and
management's assessment of the remaining (impaired) value of the assets.
(See also Note 7).
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS 123). SFAS 123 encourages, but does not require, a
fair value based method of accounting for employee stock options or similar
equity instruments. It also allows an entity to elect to continue to
measure compensation cost under Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," (APB 25) but requires pro forma
disclosure of net income and earnings per share as if the fair value based
method had been applied. The Company will be required to adopt this
standard effective in 1996. While the Company is still evaluating SFAS
123, it currently, expects to elect to measure compensation cost under APB
25 and comply with the pro forma disclosure requirements. Therefore, SFAS
123 will have no impact on the Company's financial position or results of
operations.
STATEMENTS OF CASH FLOWS
For purposes of the statements of cash flows, the Company considers
all highly liquid investments with an original maturity of three
months or less to be cash equivalents.
The Company paid $39,000 and $35,000 for interest in fiscal 1995 and
1996, respectively. The Company paid $2,000 and $5,000 for income
taxes in fiscal 1995 and 1996, respectively. During fiscal 1996, the
Company issued 50,000 shares pursuant to the DTM settlement (Note 7).
RECLASSIFICATIONS
Certain reclassifications have been made to the 1995 financial statements
to conform to the 1996 presentation.
2. INVENTORIES
Inventories consist of the following as of March 31, 1996:
Raw materials and parts $ 82,000
Work in process 50,000
Finished goods 35,000
--------
Total inventories $167,000
--------
--------
3. DEFERRED REVENUE
Deferred revenue relates to both the machine and customer parts revenues. The
deferred revenue related to machine revenues results mainly from the Company's
issuance of licenses to use the machines, or to support the machines in form of
maintenance, rather than the outright sales of machines.
15
<PAGE>
4. DEBT
Debt consists of the following at March 31, 1996:
Notes to former owners of A-RPM, collateralized
by equipment and furnishings, bearing
interest at 8 percent, interest payable
quarterly, due fiscal 1997 (Note 7) $305,000
Capital leases (Note 5) 206,000
Other notes to non-related parties, bearing
interest from 8.125 percent to 9.7 percent,
due at various dates through 1997 15,000
--------
526,000
Less--Current portion 380,000
--------
$146,000
--------
--------
The debt matures as follows:
1997 $380,000
1998 56,000
1999 60,000
2000 30,000
--------
$526,000
--------
--------
16
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
The Company leases certain property and equipment under capital and operating
lease agreements. The leases expire at various dates through 2000. A capital
lease obligation of $137,000 was incurred when the Company entered into a lease
for new equipment during 1995. Future minimum lease payments under capital
lease obligations and noncancelable operating leases at March 31, 1996 are
summarized as follows:
Capital Operating
Leases Leases
-------- --------
1997 $ 82,000 $100,000
1998 65,000 13,000
1999 69,000 -
2000 29,000 -
-------- --------
Total minimum lease payments 245,000 $113,000
--------
--------
Less--Amount representing interest (39,000)
--------
Present value of future minimum
lease payments 206,000
Less--Current portion (64,000)
--------
$142,000
--------
--------
Total rent expense was approximately $102,000 and $117,000 in 1995 and 1996,
respectively.
6. ACQUISITION OF A-RPM
On June 30, 1994, STI's wholly-owned subsidiary, Altop, Inc., acquired
substantially all of the assets of A-RPM Corporation, a foundry and machine shop
located in Santa Ana, California. The acquisition price was $420,000, with
$100,000 paid in cash and $320,000 in notes ($100,000 of which is contingent
upon determination of certain net asset values according to a formula set forth
in the Asset Purchase Agreement), plus assumption of stated liabilities (see
Note 7).
The following unaudited pro forma results of operations were prepared under the
assumption that the acquisition had occurred at the beginning of fiscal 1995.
The historical results of operations for the companies were combined and pro
forma adjustments made to present the effects of goodwill amortization and
interest expense on debt related to the acquisition:
Soligen Technologies, Inc.
Unaudited Pro Forma Condensed Summary Consolidated
Statement of Operations
1995
----------
Revenues $ 2,328,000
Net loss $(2,015,000)
Net loss per share $ (0.09)
17
<PAGE>
7. CONTINGENT LIABILITIES
MIT LICENSE - Soligen and the Massachusetts Institute of Technology (MIT)
entered into an agreement under which MIT granted Soligen an exclusive
license to develop, manufacture, market and sell products utilizing
technology and processes patented by MIT in the metal casting and sanitary
products fields of use. Terms of said agreement state that Soligen must
reimburse MIT for any fees incurred by MIT for the prosecution, filing and
maintenance of all patent rights.
Under the terms of the license, Soligen is required to generate the
following minimum net sales levels:
Amount of
Period Net Sales
-------------------- ---------
October 1991 to October 1994 $ 1,000,000
November 1994 to October 1996 $ 2,500,000
November 1996 to October 1997 $ 7,250,000
November to October thereafter $15,000,000
In addition, Soligen has an obligation to pay to MIT a royalty in the
amount of 4.5 percent of "Net Sales" on a quarterly basis, subject to a
minimum annual royalty of $50,000 due on December 31, 1994 and December 31
in each year thereafter. The license provides that if Soligen fails to
reach the sales minimums or pay the obligations delineated above, such
failure will be grounds for MIT to terminate the license on 90 days' notice
to Soligen.
The Company has met the requirement for minimum net sales of $1 million for
the period between November 1991 to October 1994. MIT has notified the
Company that any royalties payable under the license agreement may be
applied by the Company to the payment of the costs of defending the DTM
lawsuit (see below), through May 31, 1995.
LEGAL ACTIVITY - DTM - DTM Corporation (DTM) of Austin, Texas, has filed a
lawsuit against Soligen in the Western District of Texas, alleging
infringement of a United States patent (Housholder patent) of which DTM is
the assignee. Soligen was served on February 17, 1994 with notice of this
action. Soligen answered with a motion to dismiss for lack of
jurisdiction, and on September 9, 1994 was notified that DTM had
voluntarily dismissed the complaint in Texas, and filed a similar action in
Delaware.
In October 1994, Soligen filed a counterclaim alleging that the DTM patent
is invalid due to "prior art." In December 1994, Soligen filed a motion in
Delaware to transfer the action to California and an additional motion to
recoup court costs and attorney's fees arising from the Texas action. In
January 1995, Soligen filed a petition with the United States Patent Office
for re-examination of the Housholder patent. In March 1995, the United
States Patent Office granted Soligen's petition for re-examination of the
Housholder patent.
In April 1995, Soligen signed a Memorandum of Understanding with DTM and
MIT to settle the patent infringement lawsuit and to resolve, without
further litigation by DTM, related patent disputes between DTM and MIT that
impacted both Soligen and other MIT licensees of Three Dimensional Printing
(3DP-TM-) technology. The settlement provides for the issuance of 50,000
18
<PAGE>
shares of the Company's common stock to DTM, and an additional 50,000
shares contingent upon the final outcome of the pending petition for
re-examination of the Housholder patent. Soligen has issued 50,000 shares
and has provided $39,000 for the contingent issuance, which is included in
accounts payable and accrued liabilities. The Company believes the accrued
amount will be sufficient to cover the costs related to this matter.
LEGAL ACTIVITY - A-RPM - On March 22, 1995, Altop filed an action against
A-RPM and its shareholders for breach of contract and misrepresentations
related to its June 30, 1994 Asset Purchase Agreement of A-RPM. In May
1995, A-RPM filed a response and counter-complaint and no trial date has
been scheduled.
LEGAL ACTIVITY - OTHER - The Company is involved in the normal course of
its business in various other litigation matters. Although the Company's
counsel is unable to determine at the present time whether the Company will
have any liability in any of the pending matters, the Company believes that
none of the pending matters will have an outcome material to the financial
condition or business of the Company.
8. STOCK OPTION PLAN
The Company has a stock option plan that provides for incentive and
non-incentive stock options to employees, officers, directors and consultants
responsible for the success of the Company. During fiscal 1995, the Board of
Directors increased the options available under the plan to 3,500,000 shares.
Under the Plan, incentive stock options can be granted at prices not less than
100 percent of the fair market value at the date of grant while nonqualified
options can be granted at not less than 85 percent of the fair market value at
the date of grant. Options are generally exercisable in fourths, commencing one
year after the grant date and on the second, third and fourth anniversary of the
grant date, respectively.
Stock option information with respect to the Company's stock option plan is as
follows:
<TABLE>
<CAPTION>
Common Option Aggregate
Shares Available Options Price Option
Reserved for Grant Outstanding Per Share Price
-------- --------- ----------- --------- -----
<S> <C> <C> <C> <C> <C>
March 31, 1995 3,500,000 2,253,000 1,247,000 $0.74-1.62 $1,081,000
Granted - (2,130,000) 2,130,000 0.75 1,598,000
Canceled - 15,000 (15,000) 1.62 (24,000)
--------- --------- --------- ---------- ----------
March 31, 1996 3,500,000 138,000 3,362,000 $0.74-1.62 $2,655,000
--------- --------- --------- ---------- ----------
--------- --------- --------- ---------- ----------
</TABLE>
Option granted prior to March 31, 1995 were issued in Canadian dollars at $1.00
Canadian ($0.74 U.S. at March 31, 1996) and $2.20 Canadian ($1.62 U.S. at
March 31, 1996) per share. All options granted subsequent to March 31, 1995 are
issued in U.S. dollars. Of the options issued, 676,000 were exercisable at
March 31, 1996.
19
<PAGE>
9. PRIVATE PLACEMENTS
In fiscal 1995, STI initiated a private placement of 2,390,000 units at a price
of $.50 per unit. The private placement grossed $1,195,000, net of $55,000 in
issuance costs. Each unit consisted of one common share, one-half Class "A" and
one-half Class "B" warrant.
During the year ended March 31 ,1996, STI initiated three private placements
grossing $3,528,000, net of $376,000 in issuance costs. The June 1995 private
placement of 1,090,000 units was at a price of $0.55 per unit. Each unit issued
in connection with the June 1995 private placement consisted of one common
share, one Class "C" warrant and one-fifth Class "D" warrant. The September
1995 and January 1996 private placements of 53.25 units was at a price of
$55,000 per unit. Each unit consisted of 100,000 common shares and 100,000
Class "E" warrants. Any investor who purchased in aggregate at least 20 units,
the holder received Class "G" warrants. The Class "G" warrants shall be
redeemable if the closing price of the common stock is at least $1.75 for ten
consecutive trading days. In the event of such redemption, the exercise price
for the Class "G" warrant shall be reduced to $0.95 per share. In connection
with the September 1995 and February 1996 private placements, the Company issued
533,000 Class "F" warrants to the placement agent.
A summary of the common stock purchase warrants as of March 31, 1996 is as
follows:
Exercise Exercise Number
Class Price Term of Warrants
------ --------- --------- -----------
A $1.25 12 months 1,195,000
B $2.50 12 months 1,195,000
C $1.50 12 months 1,090,000
D $0.75 12 months 218,000
E $1.50 36 months 3,325,000
F $0.55 60 months 533,000
G $1.00 36 months 2,000,000
The exercise term commences the date of issuance; however, in February 1996 the
board of directors extended the exercise term for the Class "A", "B", "C" and
"D" warrants to be 12 months from the date of a S-3 filing, which is expected to
occur in July 1996.
20
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized, on this 26th day of February 1997.
SOLIGEN TECHNOLOGIES, INC.
(Registrant)
By: /s/Yehoram Uziel
---------------------------------
Yehoram Uziel, President, CEO,
Director, and Chairman of the Board
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/Yehoram Uziel President, CEO, Director, February 26, 1997
- ------------------------------------ and Chairman of the Board
Yehoram Uziel (principal executive officer)
/s/Robert E. Kassel Chief Financial Officer February 26, 1997
- ------------------------------------ (principal financial officer and
Robert E. Kassel principal accounting officer)
* /Dr. Mark W. Dowley Director February 26, 1997
- ------------------------------------
Dr. Mark W. Dowley
/s/Kenneth T. Friedman Director February 26, 1997
- ------------------------------------
Kenneth T. Friedman
* /Patrick J. Lavelle Director February 26, 1997
- ------------------------------------
Patrick J. Lavelle
* /Darryl J. Yea Director February 26, 1997
- ------------------------------------
Darryl J. Yea
*By: /s/Yehoram Uziel February 26, 1997
--------------------------------
Yehoram Uziel, Attorney-in-Fact
</TABLE>
21
<PAGE>
EXHIBIT 11.1
SOLIGEN TECHNOLOGIES, INC.
STATEMENT RE: COMPUTATION OF NET LOSS PER SHARE
THREE MONTHS ENDED TWELVE MONTHS ENDED
------------------ -------------------
3/31/96 3/31/95 3/31/96 3/31/95
------- ------- ------- -------
Revenues (000) $ 753 $ 578 $ 2,815 $ 1,652
Net Loss (000) ($ 1,079) ($ 451) ($ 2,172) ($ 1,992)
Weighted average number of
shares outstanding 29,738,330 22,789,997 26,559,000 21,352,497
Net Loss per share ($0.036) ($0.020) ($0.082) ($0.09)
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS FOUND ON
PAGES 7 AND 8 OF THE COMPANY'S FORM 10-KSB/A FOR THE YEAR TO DATE AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-START> APR-01-1995
<PERIOD-END> MAR-31-1996
<CASH> 1,189
<SECURITIES> 0
<RECEIVABLES> 534
<ALLOWANCES> 87
<INVENTORY> 167
<CURRENT-ASSETS> 1,858
<PP&E> 1,882
<DEPRECIATION> 625
<TOTAL-ASSETS> 3,178
<CURRENT-LIABILITIES> 1,198
<BONDS> 0
0
0
<COMMON> 8,631
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 1,834
<SALES> 2,815
<TOTAL-REVENUES> 2,815
<CGS> 1,943
<TOTAL-COSTS> 1,943
<OTHER-EXPENSES> 3,036
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> (2,167)
<INCOME-TAX> 5
<INCOME-CONTINUING> (2,172)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,172)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
