<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
(Mark One) FORM 10-QSB
[X] Quarterly report under section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended September 30, 2000
------------------------------------------------
[ ] Transition report under section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
--------------------- ------------------------
Commission file number 000-26434
---------------------------------------------------------
Kyzen Corporation
--------------------------------------------------------------------------------
(Exact Name of the Small Business Issuer as
Specified in Its Charter)
Tennessee 87-0475115
----------------------------------------- ------------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
430 Harding Industrial Drive, Nashville, TN 37211
-------------------------------------------------
(Address of Principal Executive Offices)
(615) 831-0888
--------------
(Issuer's Telephone Number, Including Area Code)
--------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report)
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
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. [ ] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
4,777,787 shares of Common Stock, $0.01 par value per share,
outstanding as of November 2, 2000
--------------------------------------------------------------------------------
Transitional Small Business Disclosure Format (Check one):
[ ] Yes [X] No
Page 1 of 15
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
Part I Financial Information
Item 1. Financial Statements:
Balance Sheet as of September 30, 2000 (unaudited) and
December 31, 1999 (audited) 3
Statement of Operations for the three and nine months ended
September 30, 2000 (unaudited) and 1999 (unaudited) 4
Statement of Cash Flows for the nine months ended
September 30, 2000 (unaudited) and 1999 (unaudited) 5
Notes to Unaudited 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 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
</TABLE>
Page 2 of 15
<PAGE> 3
KYZEN CORPORATION
--------------------------------------------------------------------------------
BALANCE SHEET
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31,
2000 1999
------------ ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 460,623 $ 589,039
Accounts receivable, net of allowance for doubtful accounts
of $10,662 in 2000 and $9,345 in 1999 829,304 650,639
Inventory 496,674 445,438
Other current assets 87,100 69,605
----------- -----------
Total current assets 1,873,701 1,754,721
Property and equipment, net 544,369 673,545
Patents, net 227,585 210,040
----------- -----------
Total assets $ 2,645,655 $ 2,638,306
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $ 522,152 $ 505,832
Accounts payable to related parties 5,560 1,460
----------- -----------
Total current liabilities 527,712 507,292
----------- -----------
Total liabilities 527,712 507,292
----------- -----------
Shareholders' equity:
Preferred Stock, $0.01 par value per share, 10,000,000 shares
authorized, no shares issued or outstanding at September
30, 2000 or December 31, 1999; 100,000 of which have
been designated Series A Junior Participating Preferred
Stock -- --
Common Stock, $0.01 par value per share, 40,000,000 shares
authorized, 4,777,787 and 5,100,014 shares issued and
outstanding at September 30, 2000 and December 31, 1999 47,778 51,001
Additional paid-in capital 5,302,717 5,299,494
Treasury stock, at cost (313) (313)
Accumulated deficit (3,232,239) (3,219,168)
----------- -----------
Total shareholders' equity 2,117,943 2,131,014
----------- -----------
Total liabilities and shareholders' equity $ 2,645,655 $ 2,638,306
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
Page 3 of 15
<PAGE> 4
KYZEN CORPORATION
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2000 1999 2000 1999
----------- ----------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Net sales $ 1,320,991 $ 1,419,364 $ 4,579,655 $ 4,449,675
Cost of sales 594,238 615,717 2,119,835 1,890,383
----------- ----------- ----------- -----------
Gross profit 726,753 803,647 2,459,820 2,559,292
Operating costs and expenses:
Selling, marketing, general and
administrative expenses 731,541 748,393 2,205,850 2,364,323
Research and development expenses 91,544 99,993 285,531 303,587
----------- ----------- ----------- -----------
Total operating expenses 823,085 848,386 2,491,381 2,667,910
----------- ----------- ----------- -----------
Operating income (loss) (96,332) (44,739) (31,561) (108,618)
Other income (expense) 7,230 4,797 18,490 (72,430)
----------- ----------- ----------- -----------
Net income (loss) $ (89,102) $ (39,942) $ (13,071) $ (181,048)
=========== =========== =========== ===========
Earnings per share - basic $ (0.02) $ (0.01) $ 0.00 $ (0.04)
=========== =========== =========== ===========
Earnings per share - diluted $ (0.02) $ (0.01) $ 0.00 $ (0.04)
=========== =========== =========== ===========
Weighted average shares outstanding
- basic 4,777,787 5,006,681 4,790,723 5,006,681
Weighted average shares outstanding
- diluted 4,777,787 5,006,681 4,790,723 5,006,681
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
Page 4 of 15
<PAGE> 5
KYZEN CORPORATION
--------------------------------------------------------------------------------
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
--------- ---------
(UNAUDITED)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (13,071) $(181,048)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Depreciation and amortization 209,680 214,590
Increase in accounts receivable (178,665) (1,347)
Increase in inventory (51,236) (49,779)
Increase in other current assets (17,495) (10,341)
Decrease in interest receivable from related parties -- 74,274
Increase (decrease) in accounts payable and accrued expenses 20,420 (46,281)
--------- ---------
Net cash provided (used) by operating activities (30,367) 68
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (66,765) (58,771)
Purchase of patent rights and related expenditures (31,284) (41,714)
--------- ---------
Net cash used by investing activities (98,049) (100,485)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long term debt -- (593)
--------- ---------
Net cash used by financing activities -- (593)
--------- ---------
NET DECREASE IN CASH AND CASH EQUIVALENTS (128,416) (101,010)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 589,039 523,915
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 460,623 $ 422,905
========= =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
--------------------------------------------------------------------------------
Page 5 of 15
<PAGE> 6
KYZEN CORPORATION
--------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
BACKGROUND
Kyzen(R) Corporation ("Kyzen" or the "Company") was formed to develop
environmentally safe chemical solutions to replace ozone-depleting solvents. The
Company manufactures and markets chemical solutions and processes used in
high-technology cleaning applications, including electronic assemblies and
precision metal and plastic components where precision cleaning processes are
required. The Company also manufactures peripheral equipment such as process
control systems and chemical handling systems that enhance the use by customers
of the Company's chemical solutions. Sales of such equipment totaled less than
10% of net sales in the nine months ended September 31, 2000. Typically these
products are sold as separate items and are integrated into a cleaning process
by the customer or by the Company as part of a contract service. The Company's
operations are located in Nashville, Tennessee and Manchester, New Hampshire.
The Company's operations are conducted within one reportable segment. Sales to
customers outside the United States totaled $184,892 or 14% of net sales for the
three months ended September 30, 2000, and $158,624 or 11% of net sales for the
three months ended September 30, 1999. For the nine months ended September 30,
2000, net sales to customers outside the United States totaled $801,869 or 18%
of net sales compared to $529,512 or 12% of net sales for the nine months ended
September 30, 1999.
INTERIM FINANCIAL STATEMENTS
The interim balance sheet dated as of September 30, 2000 and the interim
statements of operations and of cash flows for the three and nine months ended
September 30, 2000 and 1999 are unaudited, and certain information and footnote
disclosure related thereto, normally included in the financial statements
prepared in accordance with generally accepted accounting principles, have been
omitted, although management believes that the disclosures therein are adequate
to make information presented not misleading. In the opinion of management, the
unaudited interim financial statements were prepared following the same policies
and procedures used in the preparation of the audited financial statements and
all adjustments, consisting only of normal recurring adjustments to fairly
present the financial position, results of operations and cash flows with
respect to the interim financial statements, have been included. These
statements should be read in conjunction with the Company's financial statements
for the year ended December 31, 1999, which are included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1999. The results of
operations for the interim periods are not necessarily indicative of the results
for the entire year.
EARNINGS PER SHARE
In accordance with the provisions of Statement of Financial Accounting Standards
No. 128, "Earnings per Share" ("SFAS No. 128"), the Company calculates basic
earnings per share as income available to common shareholders divided by the
weighted average number of shares outstanding during the year. Diluted earnings
per share is calculated using the "if converted method" for convertible
securities and the treasury stock method for options and warrants as prescribed
by Accounting Principles Board Opinion No. 15. SFAS No. 128 has been applied to
the periods presented.
SFAS No. 128 requires the Company to disclose a reconciliation of the numerators
and denominators used in basic and diluted earnings per share. Basic earnings
per share have been computed by dividing net income (loss) by the weighted
average number of shares outstanding. Diluted earnings per share have been
computed by dividing net income (loss) by the weighted average number of shares
outstanding, including the dilutive effects of common stock options using the
treasury stock method which resulted in an additional 23,455 shares outstanding
in 2000. Because the Company incurred a net loss to date in 2000 and in 1999,
the effect of common stock options was not included in the computation of
diluted earnings per share as such effect was anti-dilutive.
Page 6 of 15
<PAGE> 7
KYZEN CORPORATION
--------------------------------------------------------------------------------
NOTES TO UNAUDITED FINANCIAL STATEMENTS
NOTE 2 INVENTORY
The following table details the components of inventory:
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 DECEMBER 31, 1999
------------------ -----------------
(unaudited)
<S> <C> <C>
Raw Materials $ 335,334 $ 294,042
Work in process 1,705 1,705
Finished goods 159,635 149,691
---------------- ---------------
Total Inventory $ 496,674 $ 445,438
================ ===============
</TABLE>
NOTE 3 SHAREHOLDER RIGHTS PLAN
In January 1999, the Board of Directors of the Company adopted a Shareholder
Rights Plan (the "Plan"). Under the terms of the Plan, the Company declared a
dividend of preferred stock purchase rights (the "Rights") which generally
become exercisable upon the earlier of ten days following a public announcement
that a person or group has acquired 15% or more of the Company's Common Stock or
ten days following the announcement of a tender offer which would result in a
person or group acquiring 15% or more of the Company's Common Stock. The Rights
entitle the registered holder of one share of Common Stock to purchase from the
Company one one-hundredth of a share of $0.01 par value Series A Junior
Participating Preferred Stock of the Company at a purchase price of $5.00 per
right (the "Purchase Price"), subject to certain adjustments. The Rights expire
at the close of business on January 15, 2009 unless earlier redeemed or extended
by the Company.
Under certain circumstances, the Plan allows each holder of Common Stock, other
than the acquiring person or group, to receive upon exercise, the number of
shares of Common Stock having a value equal to two times the Purchase Price.
NOTE 4 INCOME TAXES
No provision for income taxes has been included due to the availability of net
operating loss carry-forwards sufficient to cover the earnings for the first
nine months of 2000.
NOTE 5 SUBSEQUENT EVENTS
On October 31, 2000, the Company established a credit facility with The Bank of
Nashville, in the amount of $200,000 bearing an interest rate of 7.95%. This
facility is a 6-month revolving line of credit, collateralized by a certificate
of deposit in the same amount, earning interest at a rate of 5.95%.
On November 1, 2000, the Company loaned $100,000 to Christopher B. Cannon, a
founder and shareholder in the Company, pursuant to a short-term loan agreement.
This loan, collateralized by shares of the Company's Common Stock with a value
in excess of 100% of the principal amount of the loan, is for a 90-day period
bearing interest at a rate of prime (currently 9.5%) plus 1%.
Page 7 of 15
<PAGE> 8
KYZEN CORPORATION
--------------------------------------------------------------------------------
PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Net sales for the quarter ended September 30, 2000 from all business sources
decreased approximately 7% or $98,373 to $1,320,991 as compared to $1,419,364
for the quarter ended September 30, 1999. This decrease is attributable the
usual customer slowdowns which normally occur during the second and third
quarters, but which have fallen mainly in the third quarter this year.
International sales for the three months period ended September 30, 2000
increased $26,268 or approximately 14% compared to the same period in 1999. Even
with the slower sales we continue to increase our market share in our core
markets.
Gross profit for the quarter ended September 30, 2000 decreased 10% or $76,895
to $726,753 as compared to $803,648 for the quarter ended September 30, 1999.
This decrease is attributable to changes in our product mix.
Selling, marketing, general and administrative expenses for the quarter ended
September 30, 2000 decreased 2% or $16,853 to $731,541 as compared to $748,394
for the quarter ended September 30, 1999. These changes reflect management's
success in efforts to control expenditures in this area. We continue to monitor
these discretionary expenses and focus our spending on items that help to
generate revenue.
Research and development expenses for the quarter ended September 30, 2000
decreased 8% or $8,448 to $91,544 from $99,992 for the quarter ended September
30, 1999. This decrease is consistent with the prior quarter and reflects
management's resolve to control expenses and a more focused use of personnel
time in research and development.
Operating losses for the quarter ended September 30, 2000 increased 115% or
$51,594 to a loss of $96,332 from a loss of $44,738 for the quarter ended
September 30, 1999. This loss correlates directly with somewhat decreased
revenues, offset by focused control of other expenditures.
Other income for the quarter ended September 30, 2000 was $7,230 compared to
other income for the quarter ended September 30, 1999 of $4,796. The 58%
increase reflects higher interest income from cash reserves.
Net losses for the quarter ended September 30, 2000 increased by $49,160 to
$89,102 from a loss of $39,942 for the quarter ended September 30, 1999.
COMPARISON OF NINE MONTHS ENDED SEPTEMBER 30, 2000 AND SEPTEMBER 30, 1999
Net sales for the nine months ended September 30, 2000 increased approximately
3% or $129,980 to $4,579,655 from net sales of $4,449,675 for the nine months
ended September 30, 1999. This increase reflects balanced growth in our core
market. International sales for the nine months period ended September 30, 2000
increased $272,358 or approximately 51% compared to the same period in 1999.
Gross profit for the nine months ended September 30, 2000 decreased 4% or
$99,472 to $2,459,820, as compared to $2,559,292 for the nine months ended
September 30, 1999. This decrease is attributable to changes in our product mix.
Selling, marketing, general and administrative expenses for the nine months
ended September 30, 2000 decreased 7% or $158,473 to $2,205,850 as compared to
$2,364,323 for the nine months ended September 30, 1999. This decrease is the
result of the success of management's efforts to continue to control all
discretionary spending such as the printing of numerous brochures and reports
in-house. In addition, during the second quarter of 1999, the Company recorded a
non-cash charge of $20,129 for the value of options granted to non-employee
directors. There were no charges of this nature during the first nine months of
2000.
Page 8 of 15
<PAGE> 9
KYZEN CORPORATION
--------------------------------------------------------------------------------
PART I (CONT.)
Research and development expenses for the nine months ended September 30, 2000
decreased 6% or $18,056 to $285,531 from $303,587 for the nine months ended
September 30, 1999. This decrease reflects the control and allocation of
internal resources to both research and development of new products and a
focused allocation of personnel resources.
Operating losses for the nine months ended September 30, 2000 decreased 71% or
$77,057 from a loss of $108,618 for the nine months ended September 30, 1999, to
a loss of $31,561. This decrease is primarily due to increased sales of both
chemical and equipment products and the continued focus on lowering
administrative costs.
Other income for the nine months ended September 30, 2000 increased 126% or
$90,920 from an expense of $72,430 for the nine months ended September 30, 1999.
During the first nine months ended September 30, 1999, the Company recorded a
non-cash charge of approximately $87,181 due to collectibility concerns on notes
receivable from certain former employees and a reduction in interest on notes
receivable from former employees. This one-time charge did not occur in 2000.
Net losses for the nine months ended September 30, 2000 decreased 93% or
$167,977 to a loss of $13,071 from a loss of $181,048 for the nine months ended
September 30, 1999. This decrease is due to increased revenue and the control of
administrative spending by more efficient use of personnel, and the lack of any
non-recurring charges during the nine months ended September 30, 2000.
FORWARD-LOOKING STATEMENTS
Management has included in this report certain forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. When used,
statements which are not historical in nature, including the words "anticipate,"
"estimate," "should," "expect," "believe," "intend" and similar expressions are
intended to identify forward-looking statements. Such statements are, by their
nature, subject to certain risks and uncertainties. Among the factors that could
cause actual results to differ materially from those projected are the
following: business conditions and the general economy as they affect interest
rates; business conditions as they affect manufacturers of chemical raw
materials; the federal, state and local regulatory environment; changes in the
import and export rules, regulations and tariffs as they apply to countries
where the Company conducts its business; the ability of the Company to obtain
financing or equity capital with favorable terms and conditions; the
availability of new expansion and acquisition opportunities; changes in the
financial condition or corporate strategy of the Company's primary customers;
and the ability of the Company to develop new competitive product lines. Actual
results, events and performance may differ materially from those projected.
Readers are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company undertakes no
obligation to release publicly the results of any revisions to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Page 9 of 15
<PAGE> 10
KYZEN CORPORATION
--------------------------------------------------------------------------------
PART I (CONT.)
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of funds continues to be cash flows from operations
and the remaining proceeds from its initial public offering in 1995. The
Company's primary uses of funds are the funding of research and development of
new product lines, purchase of capital equipment, pursuit of patents and sales
and marketing activities.
As of September 30, 2000, the Company had working capital of $1,345,989 compared
to $1,247,429 as of December 31, 1999, representing an increase of $98,560 or 8%
from December 31, 1999. The increase in working capital comes from increased
accounts receivable, inventory and other asset balances, offset by increased
accounts payable balances and lower cash.
Cash used by operations of $30,367 for the nine months ended September 30, 2000
represented a $30,435 decrease over cash provided by operations of $68 during
the nine months ended September 30, 1999. This change is the result of higher
net income and higher inventory and accounts payable levels, offset by decreased
depreciation expense, the absence of one time charges such as the non-cash
charge and the write off of interest receivable from related parties, and higher
accounts receivable and other current asset levels.
Cash used by investing activities of $98,049 for the nine months ended September
30, 2000 represented a decrease of $2,436 or 2% from cash used by investing
activities during the nine months ended September 30, 1999 of $100,485. The
purchase of fixed assets increased $7,994, while the payment for patent rights
and related expenditures decreased $10,430.
The Company used no cash for financing activities in the nine months ended
September 30, 2000 and used $593 during the nine months ended September 30, 1999
for the payment of the balance due under a long-term debt agreement for office
equipment.
The Company anticipates, based on currently proposed plans and assumptions
relating to its operations and expansion plans, that its current cash balances
together with projected cash flow from operations will be sufficient to satisfy
its contemplated cash requirements at least through December 31, 2001. The
Company's cash requirements for the remainder of 2000 and beyond will depend
primarily upon the level of sales of chemical products, product development,
sales and marketing expenditures, timing of any acquisitions, timing of
expansion plans and capital expenditures. In the event the Company's plans
change, or its assumptions change or prove to be inaccurate (due to
unanticipated expenses, delays, or otherwise), the Company could be required to
seek additional financing from public or private debt and equity markets prior
to such time. There can be no assurance, however, that these sources will be
available to the Company on favorable terms, and unfavorable markets could limit
the Company's ability to obtain additional financing. Further, there can be no
assurance that the Company could obtain a credit facility, if needed, or that,
if obtained, it will be on favorable terms. Failure to obtain financing on terms
favorable to the Company could have a material adverse effect on the Company's
financial condition and results of operations. Additionally, the Company plans
to continue to investigate potential acquisition candidates that are consistent
with the Company's growth strategies, which would create additional financing
needs for the Company.
INTERNATIONAL TRADE DEVELOPMENTS
In 1998, manufacturers in the Peoples Republic of China became significant
suppliers to the Company. In 1999, the Company imported approximately 35% of its
raw material from foreign sources, the largest being China. The Company has
continued to import about the same amount of raw material from foreign sources
in 2000. In September 2000, the U.S. Senate voted to permanently normalize
American trade relations with China. This action provides some additional
assurance to the Company of the availability of the base raw materials it has
been using and eliminates some of the uncertainty and should assist the Company
in negotiating prices with both domestic and foreign suppliers.
RECENTLY ISSUED ACCOUNTING STANDARDS
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 133 establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts and for hedging activities. The Company has adopted
the provisions of SFAS No. 133 effective January 1, 2000. As the Company has not
engaged, and does not plan to engage in derivative or hedging activities, the
adoption of SFAS No. 133 has not had a material impact on the Company's
financial condition or results of operations.
Page 10 of 15
<PAGE> 11
KYZEN CORPORATION
--------------------------------------------------------------------------------
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION-SUBSEQUENT EVENTS
On October 31, 2000, the Company established a credit facility with The Bank of
Nashville. This facility is a six-month revolving line of credit, with a
maximum principal amount of $200,000. Any funds advanced to the Company pursuant
to the credit facility accrue interest at an annual rate of 7.95%. The
obligation of the Company to repay any monies advanced pursuant to the credit
facility is secured by a $200,000 certificate of deposit and the interest
thereon. The certificate of deposit bears interest at an annual rate of 5.95%.
As of November 1, 2000, the Company has borrowed $100,000 pursuant to the credit
facility.
On November 1, 2000, the Company loaned $100,000 to Christopher B. Cannon, a
founder and shareholder of the Company. The principal amount, together with the
interest accrued thereon, is due and payable on January 29, 2001. The loan bears
interest at an annual rate of 1.0% plus the prime rate as set forth in the Money
Rates Section of the Southeastern Edition of The Wall Street Journal as of
November 1, 2000 (9.5%). There is no prepayment penalty. The obligation of Mr.
Cannon to repay the loan is secured pursuant to a Stock Pledge and Security
Agreement which obligates him to pledge to the Company a number of shares of the
Company's Common Stock so that the aggregate market value of the pledged stock
is greater than 100% of the principal amount of the loan.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
Exhibit 3.1 Registrant's Amended and Restated Charter(6)
Exhibit 3.2 Amended Bylaws of Registrant(6)
Exhibit 4.1 Warrant and Registration Rights Agreement by and among Kyzen Corporation, Paulson
Investment Company, Inc., Nutmeg Securities, Ltd. and LaJolla Securities dated
August 3, 1995(1)
Exhibit 4.5 Specimen of Common Stock Certificate(7)
Exhibit 4.6 Specimen of Warrant Certificate(7)
Exhibit 10.1 Lease Agreement, dated June 11, 1993, between Harding Business Park, a partnership,
and Registrant for Registrant's headquarters and chemical manufacturing facilities(1)
Exhibit 10.3 Employee Agreements dated January 1, 1994 with officers and key employees of
Registrant(1)
(a) Kyle J. Doyel*
(b) Michael L. Bixenman*
(c) Thomas M. Forsythe*
Exhibit 10.4 1994 Employee Stock Option Plan* and forms of Stock Option Grant, Acceptance and
Exercise Notice and Agreement(1)
Exhibit 10.5 First Amendment to the 1994 Employee Stock Option Plan*(1)
Exhibit 10.6 Loan Agreements and 5% Promissory Notes between officers and key employees and
Registrant:(1)
(a) Kyle J. Doyel*
(b) Michael L. Bixenman*
(c) James J. Andrus*
</TABLE>
Page 11 of 15
<PAGE> 12
<TABLE>
<S> <C>
(d) Benjamin D. Wolfley*
(e) Thomas M. Forsythe*
Exhibit 10.7 Purchase Agreement, dated May 1, 1990 between Bix Manufacturing Company, Inc. and
Registrant(1)
Exhibit 10.8 Technology Exchange Agreement, dated December 17, 1993 between Bix Manufacturing
Company, Inc. and Registrant(1)
Exhibit 10.20 Warrant Agreement between Kyzen Corporation and American Stock Transfer & Trust
Company(1)
Exhibit 10.21 Reassignment of Patents to Bix Manufacturing Company, Inc.(1)
Exhibit 10.24 Lease Agreement, dated April 25, 1995 between Five-Forty North Associates, a partnership,
and the Registrant for Registrant's offices, demonstration facility, and equipment
manufacturing facilities(2)
Exhibit 10.25 Amended Lease Agreement, dated December 30, 1997, between Five-Forty North
Associates, a partnership, and the Registrant for Registrant's offices,
demonstration facility, and equipment manufacturing facilities(2)
Exhibit 10.29 Amended Lease Agreement, dated April 1, 1998, between Harding Business Park,
a partnership, and the Registrant for the Registrant's Nashville, TN headquarters
and chemical manufacturing facilities(3)
Exhibit 10.30 Rights Agreement, dated January 15, 1999, between Kyzen Corporation and American Stock
Transfer & Trust(4)
Exhibit 10.31 Form of Amendment No. 1 to Employment Agreements with certain officers of the
Company:(5)
(a) Kyle J. Doyel*
(b) Michael L. Bixenman*
(c) Thomas M. Forsythe*
Exhibit 10.32 Consulting Agreement with Redstone Securities (8)
Exhibit 27 Financial Data Schedule (for SEC use only)
</TABLE>
* Indicates a management contract or compensation plan or
arrangement.
(1) Filed as an exhibit to the Company's Registration Statement on
Form SB-2 (No. 33-91854-A) previously filed pursuant to the
Securities Act of 1933 and hereby incorporated by reference.
(2) Filed as an exhibit to the Company's annual report on Form 10-KSB
for the year ended December 31, 1997, previously filed pursuant
to the Securities Exchange Act of 1934 and hereby incorporated by
reference.
(3) Filed as an exhibit to the Company's quarterly report on Form
10-QSB for the quarter ended March 31, 1998, previously filed
pursuant to the Securities Exchange Act of 1934 and hereby
incorporated by reference.
(4) Filed as an exhibit to the Company's filing on Form 8-A dated
January 15, 1999 previously filed pursuant to the Securities
Exchange Act of 1934 and hereby incorporated by reference.
(5) Filed as an exhibit to the Company's quarterly report on Form
10-QSB for the quarter ended June 30, 1999, previously filed
pursuant to the Securities Exchange Act of 1934 and hereby
incorporated by reference.
(6) Filed as an exhibit to the Company's Registration Statement on
Form S-3 (No. 333-82021) dated June 30, 1999, previously filed
pursuant to the Securities Act of 1933 and hereby incorporated by
reference.
(7) Filed as an exhibit to the Company's Registration Statement on
Form S-3\A (No. 333-82021) dated August 2, 1999, previously filed
pursuant to the Securities Act of 1933 and hereby incorporated by
reference.
(8) Filed as an exhibit to the Company's annual report on Form 10-KSB
for the year ended December 31, 1999, previously filed pursuant
to the Securities Exchange Act of 1934 and hereby incorporated by
reference.
(b) Reports on Form 8-K
None.
Page 12 of 15
<PAGE> 13
KYZEN CORPORATION
--------------------------------------------------------------------------------
PART II (CONT.)
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
KYZEN CORPORATION
--------------------------------------------------------------------------------
(Registrant)
Date November 13, 2000 /s/ Kyle J. Doyel
------------------------------- --------------------------------------
(Signature)
Kyle J. Doyel
President and Chief Executive Officer
Date November 13, 2000 /s/ Thomas M. Forsythe
------------------------------- --------------------------------------
(Signature)
Thomas M. Forsythe
Treasurer and Chief Accounting Officer
Page 13 of 15
<PAGE> 14
KYZEN CORPORATION
--------------------------------------------------------------------------------
EXHIBITS
EXHIBIT INDEX AND EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
Exhibit 3.1 Registrant's Amended and Restated Charter(6)
Exhibit 3.2 Amended Bylaws of Registrant(6)
Exhibit 4.1 Warrant and Registration Rights Agreement by and among Kyzen Corporation, Paulson
Investment Company, Inc., Nutmeg Securities, Ltd. and LaJolla Securities dated
August 3, 1995(1)
Exhibit 4.5 Specimen of Common Stock Certificate(7)
Exhibit 4.6 Specimen of Warrant Certificate(7)
Exhibit 10.1 Lease Agreement, dated June 11, 1993, between Harding Business Park, a partnership,
and Registrant for Registrant's headquarters and chemical manufacturing facilities(1)
Exhibit 10.3 Employee Agreements dated January 1, 1994 with officers and key employees of
Registrant (1)
(d) Kyle J. Doyel*
(e) Michael L. Bixenman*
(f) Thomas M. Forsythe*
Exhibit 10.4 1994 Employee Stock Option Plan* and forms of Stock Option Grant, Acceptance and
Exercise Notice and Agreement(1)
Exhibit 10.5 First Amendment to the 1994 Employee Stock Option Plan*(1)
Exhibit 10.6 Loan Agreements and 5% Promissory Notes between officers and key employees and
Registrant:(1)
(f) Kyle J. Doyel*
(g) Michael L. Bixenman*
(h) James J. Andrus*
(i) Benjamin D. Wolfley*
(j) Thomas M. Forsythe*
Exhibit 10.7 Purchase Agreement, dated May 1, 1990 between Bix Manufacturing Company, Inc. and
Registrant(1)
Exhibit 10.8 Technology Exchange Agreement, dated December 17, 1993 between Bix Manufacturing
Company, Inc. and Registrant(1)
Exhibit 10.20 Warrant Agreement between Kyzen Corporation and American Stock Transfer & Trust
Company(1)
Exhibit 10.21 Reassignment of Patents to Bix Manufacturing Company, Inc.(1)
Exhibit 10.24 Lease Agreement, dated April 25, 1995 between Five-Forty North Associates,
a partnership, and the Registrant for Registrant's offices, demonstration facility, and
equipment manufacturing facilities(2)
Exhibit 10.25 Amended Lease Agreement, dated December 30, 1997, between Five-Forty North Associates,
a partnership, and the Registrant for Registrant's offices, demonstration facility, and
equipment manufacturing facilities(2)
Exhibit 10.29 Amended Lease Agreement, dated April 1, 1998, between Harding Business Park, a partnership,
and the Registrant for the Registrant's Nashville, TN headquarters and chemical manufacturing
facilities(3)
Exhibit 10.30 Rights Agreement, dated January 15, 1999, between Kyzen Corporation and American Stock
Transfer & Trust(4)
Exhibit 10.31 Form of Amendment No. 1 to Employment Agreements with certain officers of the
Company:(5)
(d) Kyle J. Doyel*
(e) Michael L. Bixenman*
(f) Thomas M. Forsythe*
Exhibit 10.32 Consulting Agreement with Redstone Securities (8)
Exhibit 27 Financial Data Schedule (for SEC use only)
</TABLE>
* Indicates a management contract or compensation plan or
arrangement.
Page 14 of 15
<PAGE> 15
KYZEN CORPORATION
--------------------------------------------------------------------------------
EXHIBITS (CONT.)
(1) Filed as an exhibit to the Company's Registration Statement on Form
SB-2 (No. 33-91854-A) previously filed pursuant to the Securities Act
of 1933 and hereby incorporated by reference.
(2) Filed as an exhibit to the Company's annual report on Form 10-KSB for
the year ended December 31, 1997, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(3) Filed as an exhibit to the Company's quarterly report on Form 10-QSB
for the quarter ended March 31, 1998, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(4) Filed as an exhibit to the Company's filing on Form 8-A dated January
15, 1999 previously filed pursuant to the Securities Exchange Act of
1934 and hereby incorporated by reference.
(5) Filed as an exhibit to the Company's quarterly report on Form 10-QSB
for the quarter ended June 30, 1999, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
(6) Filed as an exhibit to the Company's Registration Statement on Form
S-3 (No. 333-82021) dated June 30, 1999, previously filed pursuant to
the Securities Act of 1933 and hereby incorporated by reference.
(7) Filed as an exhibit to the Company's Registration Statement on Form
S-3\A (No. 333-82021) dated August 2, 1999, previously filed pursuant
to the Securities Act of 1933 and hereby incorporated by reference.
(8) Filed as an exhibit to the Company's annual report on Form 10-KSB for
the year ended December 31, 1999, previously filed pursuant to the
Securities Exchange Act of 1934 and hereby incorporated by reference.
Page 15 of 15
