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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): April 20, 2000
EPL TECHNOLOGIES, INC.
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(Exact name of Registrant as specified in Charter)
Colorado 333-42185 84-0990658
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
2 International Plaza, Philadelphia, PA 19113
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(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number including area code: 610-521-4400
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
EPL Technologies, Inc. reported today that its Annual Report on Form
10-K for the year ended December 31, 1999 had been filed with the Securities and
Exchange Commission prematurely in error by the Company's financial printer on
April 17, 2000 and that as a result the filing included a draft report of its
auditor as the audit had not been completed at that time. Such report should not
be relied upon. The Company expects that it will file an amendment to the Form
10-K with complete information shortly. The Company anticipates that the
financial statements included in the erroneous filing will not change
substantially. It expects that the amendment will reflect, among other things,
sales for the year ended December 31, 1999 of approximately $30.3 million rather
than approximately $30.7 million as previously reported, cost of sales of
approximately $30.2 million rather than approximately $30.4 million and net loss
of approximately $14.4 million rather than approximately $14.2 million, or
($1.10) per share rather than ($1.09) per share.
The Company also released the attached press release, announcing its
results of operations for 1999.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
Exhibit No. Description
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99.1 Press Release
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EPL Technologies, Inc.
Registrant
Dated: April 20, 2000 By: /s/ Paul L. Devine
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Name: Paul L. Devine
Title: President and Chief Executive Officer
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EXHIBIT 99.1
CONTACT:
Cameron Associates
Kevin McGrath, Investor Relations
(212) 245-8800
E-mail: [email protected]
[LOGO] EPL TECHNOLOGIES, INC.
2 International Plaza, Suite 245
Philadelphia, PA 19113-1507
Tel: 610-521-4400
Fax: 610-521-5985
FOR IMMEDIATE RELEASE
EPL TECHNOLOGIES REPORTS FOURTH QUARTER AND FULL YEAR 1999
OPERATING RESULTS
Philadelphia, PA - April 20, 2000 -- EPL Technologies, Inc. (Nasdaq: EPTG) today
reported operating results for the fourth quarter and full year ended December
31, 1999.
Revenues in the fourth quarter were $7,609,000 compared with $8,202,000 in the
same period of 1998. The net loss from operations for the fourth quarter of 1999
was $5,464,000 compared to a net loss of $4,015,000 for the fourth quarter of
1998. The loss per share for the quarter was $0.40 in 1999, compared to $0.36 in
1998. The increased loss in the fourth quarter compared to the same period a
year ago was primarily due to an increase in non-cash charges for warrants and
options issued in connection with the financing of the operating business during
the period, the income effect of a decline in fresh-cut corn revenue as outlined
below, and the development expenses incurred in connection with the
restructuring of the Company's corn and potato products marketed under the Green
Giant(R) Fresh brand name, the latter two of which impacted gross margins and
overhead. EPL's potato business formed a strategic alliance with Reser's in late
1999 and completed its restructuring in early February 2000, which change is
expected to significantly improve the operating results of the potato business
in 2000.
Paul L. Devine, Chairman and Chief Executive Officer of the Company, stated,
"During the fourth quarter of 1999, we experienced a number of significant
strategic events including; the restructuring of our capital base; the
commencement of our relationship with Reser's; the development of our
relationship with Monterey Mushroom following the receipt of a patent for our
mushroom fresh technology; and the implementation of a cost saving initiative
and new marketing program for our corn business. Most of our business segments
showed an increase in sales compared to the same period last year. The most
significant increase was generated from our UK Packaging business, which is now
close to achieving the number one ranking in fresh produce packaging in the UK
market. We have also restructured our corn business by reducing costs,
increasing manufacturing efficiencies, and focusing our efforts on maintaining a
higher
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sales price for our corn products. This restructuring, together with our new
relationship with Reser's, is expected to reduce the cash burden on EPL. We are
also pleased with the recent agreement with Monterey Mushrooms, and the
continued interest by companies in the healthcare and consumer products arena in
utilizing our proprietary perforating technology. We believe all of these
significant events position us well for 2000."
Sales of UK packaging materials were $3,170,000 in the three months ended
December 31, 1999 compared to $2,408,000 in the three months ended December 31,
1998. This 32% increase in sales was principally attributable to the Company's
continued execution of its strategic objective to reduce its dependence on lower
margin business and focus more on utilizing its proprietary perforating
technology to move into new, higher value-added areas. The Company gained new
business in perforated produce packaging and is now on its way to becoming a
major supplier to all of the leading processors. The Company expects these
positive sales trends to continue during 2000.
Sales of European packaging materials were $2,823,000 in the three months ended
December 31, 1999 compared to $2,980,000 in the three months ended December 31,
1998. The small decrease in sales of European packaging materials occurred at
the Company's Spanish subsidiary ("Fabbri"), and was principally due to delays
in the citrus crop and timing of purchases from its main customers, which is
expected to continue at least through the first quarter of 2000.
Sales of US packaging materials were $814,000 in the three months ended December
31, 1999 compared to $710,000 in the three months ended December 31, 1998. The
increase in U.S. packaging material sales was principally attributable to the
reversal of timing differences seen earlier in 1999. The Company expects these
positive sales trends to continue, at least for the first and second quarters of
2000.
Sales of the Company's processing technologies and related activities in the US
were $802,000 in the three months ended December 31, 1999 compared to $2,102,000
for the three months ended December 31, 1998. The decrease in sales of
processing technologies and related activities was mainly due to the lower
revenue from fresh-cut corn products sold through the Company's majority-owned
subsidiary, NewCorn LLC ("NewCorn"). The Company decided to restructure its corn
business, which involved a reduction in sales activities and a program to
maintain a higher sales price for its corn products during the fourth quarter.
This market withdrawal will also impact the first quarter 2000 revenue, but it
is expected to improve profitability. During the fourth quarter of 1999 the
Company implemented a number of new marketing initiatives to promote the
year-round purchase of its fresh corn product by its major customers. The
benefits of this should be realized in the later part of 2000. The Company
continued to experience growth in the volume of fresh-cut potato products sold
by its EPL Food Products, Inc. ("EPL Food") subsidiary under the "Green Giant(R)
Fresh" brand name. Subsequent to the year-end, the Company completed the
relocation of its potato processing equipment and production as part of its
previously announced strategic five-year manufacturing and co-pack agreement
with Reser's Fine Foods, Inc. Shipment of fresh-cut potato products commenced
from Reser's Pasco, Washington Facility in January 2000. In addition, the
Company and Reser's entered into a related five-year non-exclusive license
agreement for the Company's proprietary processing technology for potatoes.
The Company also continues to grow its capability in scientific and technical
services, and is seeing an increasing demand for food safety and hygiene
consulting services in the produce industry. From a low base, revenue from this
area has risen by 58% in the fourth quarter of 1999 over the same period in
1998.
Selling, general and administrative expenses increased to $4,132,000 in the
three months ended December 31, 1999 from $2,492,000 in the three months ended
December 30, 1998, an increase of $1,640,000. This
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increase was due primarily to: the non-cash expense of options granted to
non-employees and the fair value of warrants granted to certain consultants and
advisers to the Company, the continuing development of the Company's sales and
marketing efforts, particularly in the area of sales of processing technologies
and related activities for potatoes, corn and other costs, including the hiring
of additional personnel in some businesses and restructuring costs in other
businesses. In the Company's potato business, the agreement with Reser's is
expected to help facilitate revenue growth and margin improvement, as well as
lower incremental overhead costs. Research and development costs decreased to
$328,000 in the three months ended December 31, 1999, from $458,000 in the three
months ended December 31, 1998, a decrease of $130,000. This primarily reflects
the changing nature of a number of products, as they move from the product
development stage to the commercialization and marketing stage.
For the year ended December 31, 1999, revenues were $30,307,000 compared with
$32,978,000 for 1998. The net loss applicable to common stockholders for the
year ended December 31, 1999 was $15,618,000 or $1.10 per share compared to
$10,535,000 or $0.99 per share for the year ended December 31, 1998.
EPL announced in March 2000 that it had signed a long-term worldwide exclusive
marketing and licensing agreement with The Biotech Group, an affiliate of
Monterey Mushrooms. Under this agreement, EPL has licensed its Mushroom Fresh(R)
processing technology to The Biotech Group and will receive a royalty on the
sale of mushroom products that utilize EPL's technology. Monterey Mushrooms,
headquartered in Watsonville, CA, is the country's largest national marketer of
fresh mushrooms, supplying products for sale to supermarkets, foodservice, and
ingredient manufacture operations, and for preparation of processed, canned and
frozen mushroom products.
The Company is currently engaged in discussions with a number of potential
customers for new product applications and markets, especially in relation to
the Company's proprietary perforating capabilities, leveraging the knowledge
base of the U.K operations. These include applications in the produce,
horticultural, bakery and pharmaceutical industries, among others.
Mr. Devine also stated "Our vision to be the preferred supplier worldwide of
products and services for maintaining the integrity of fresh-cut produce remains
undiminished. Our strategy for our perforating and scientific support
businesses, which is designed to serve as the technology and financial support
platform for the launch of our proprietary technology, was affirmed again in
1999. We are pleased that this strategy continues to be validated into 2000, and
at an even more substantial level. We believe the Reser's transaction moves our
potato business to the next level, and we are actively exploring how we can do
the same with our corn business. The agreements with Reser's for potatoes and
The Biotech Group for mushrooms represent additional progress in our strategy to
introduce our processing technologies across a broader range of produce. We
continue to win new produce packaging business in the UK and Europe, which I
believe underscores our continued development of our proprietary perforating
technology. In addition, we are making progress on a number of other non produce
packaging projects that utilize our perforating technology and which, if
successful, have the potential to contribute materially to future revenues and
profits. Our goal continues to be to achieve operational profitability as soon
as possible and thus improve our cash flow position."
EPL Technologies, Inc. develops, manufactures and markets proprietary processing
technologies, packaging technologies and scientific and technical services,
which are designed to maintain the quality and integrity of fresh-cut produce.
Statements in this release that are not statements of historical fact and
reflect the intent, belief or expectations of the Company and its management
regarding the expected impact of events, circumstances
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and trends should be considered forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements are not guarantees of future performance, and actual results may vary
materially from those projected in the forward-looking statements. Meaningful
factors that may affect such results include, but are not limited to, (i) the
Company's product development and sales process, which remains lengthy and
resource intensive, (ii) the uncertainty of demand for and market acceptance of
the Company's products, (iii) personnel and production requirements and related
difficulties in managing multiple product lines, (iv) the Company's needs for
capital, which have been and are expected to continue to be substantial,
particularly in the near term, and its potential inability to obtain, if
necessary, additional financing on satisfactory terms and amounts, (v) the
Company's limited resources and experience in marketing and selling its products
and services, (vi) changes in the Company's product mix and strategic focus, and
(vii) increases in the expense or length of time required to introduce products
and penetrate markets.
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<TABLE>
<CAPTION>
TWELVE MONTHS ENDED DEC. 31, THREE MONTHS ENDED DEC. 31,
1999 1998 1999 1998
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<S> <C> <C> <C> <C>
Sales $ 30,307,000 $ 32,978,000 $ 7,609,000 $ 8,202,000
Cost of sales 30,199,000 29,482,000 8,072,000 8,814,000
------------ ------------ ------------ ------------
Gross profit 108,000 3,496,000 (463,000) (612,000)
Selling, general and administrative expenses 9,898,000 7,904,000 4,132,000 2,492,000
Research and development costs 1,870,000 1,573,000 328,000 458,000
Depreciation and amortization 2,141,000 1,719,000 541,000 453,000
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Net loss from operations (13,801,000) (7,700,000) (5,464,000) (4,015,000)
Interest expense, net 820,000 25,000 451,000 31,000
Gain on sale of fixed assets (285,000) 0 257,000 0
Net loss (income) from unconsolidated affiliates 62,000 56,000 49,000 56,000
------------ ------------ ------------
Loss before income tax (benefit) expense $(14,398,000) $ (7,781,000) $ (6,221,000) $ (4,102,000)
Income tax expense (benefit) 18,000 0 (49,000) 0
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Net loss $(14,416,000) $ (7,781,000) $ (6,172,000) $ (4,102,000)
Deduct
Accretion, discount and dividends on 1,202,000 2,754,000 850,000 135,000
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preferred stock
Net loss for common shareholders $(15,618,000) $(10,535,000) $ (7,022,000) $ (4,237,000)
============ ============ ============ ============
Loss per common share - basic $ (1.10) $ (0.99) $ (0.40) $ (0.36)
============ ============ ============ ============
Weighted average number of shares 14,222,000 10,599,000 20,179,130 11,470,261
EBITDA $(11,659,000) $ (5,981,000) $ (4,923,000) $ (3,562,000)
</TABLE>
Note: EBITDA excludes the gain on sales of fixed assets.
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