<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0-27102
ROMTECH, INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2694937
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
2000 Cabot Boulevard West, Suite 110
Langhorne, PA 19047-1833
(address of Principal executive offices)
Issuer's Telephone Number, Including Area Code: 215-750-6606
Not Applicable
(Former name, former address and former
fiscal year, if changed since last report.)
Check whether the issuer (1) has filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 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 ( )
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to 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: 6,285,128 shares of common
stock, no par value per share, as of November 1, 1996. Transitional Small
Business Disclosure Format (check one):
Yes ( ) No ( X )
<PAGE>
INDEX
Page
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Part I. Financial Information
Item 1. Financial Statements:
Consolidated Balance Sheet as of December 31, 1996............... 3
Consolidated Statements of Operations for the three and
six months ended December 31, 1996 and 1995..................... 4
Consolidated Statements of Cash Flows for the six months
ended December 31, 1996 and 1995................................ 5-6
Notes to Consolidated Financial Statements...................... 7-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 11-13
Part II. Other Information
Exhibit Index.................................................. 14
Signatures..................................................... 15
Financial Data Schedule....................................... 16
Page 2
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RomTech, Inc.
Consolidated Balance Sheet
(Unaudited)
December 31,
ASSETS 1996
----------------
Current assets:
Cash and cash equivalents $ 820,960
Restricted cash 14,788
Accounts receivable, net of allowance
for doubtful accounts of $92,971 927,653
Inventory 337,307
Prepaid expenses 502,695
-----------
Total current assets 2,603,403
Furniture and equipment, net 194,006
Other assets 153,685
-----------
Total assets $2,951,094
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 338,192
Accounts payable 773,643
Accrued expenses 504,086
-----------
Total current liabilities 1,615,921
Capital lease obligations net of current portion 60,226
Notes payable-long term portion 305,992
Convertible subordinated debt 150,000
-----------
Total liabilities 2,132,139
Stockholders' equity:
Convertible preferred stock 2,143,340
Common stock, no par value (40,000,000 shares
authorized; 6,285,128 issued and outstanding) 4,217,517
Additional paid in capital 704,738
Accumulated deficit (6,246,640)
------------
Total stockholders' equity 818,955
-----------
Total liabilities and stockholders' equity $2,951,094
===========
See accompanying notes to the consolidated financial statements.
Page 3
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<TABLE>
<CAPTION>
RomTech, Inc.
Consolidated Statements of Operations
(Unaudited)
Three months ended Six months ended
December 31, December 31,
--------------------------- ---------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net revenues $1,283,466 $ 675,108 $2,354,483 $1,304,232
Cost of revenues 365,039 226,550 682,496 433,067
------------ ------------ ------------ ------------
Gross profit 918,427 448,558 1,671,987 871,165
Operating expenses:
Product development 157,287 165,161 279,279 302,182
Selling, general and administrative 1,104,305 708,473 1,955,864 1,099,643
------------ ------------ ------------ ------------
Total operating expenses 1,261,592 873,634 2,235,143 1,401,825
Operating loss (343,165) (425,076) (563,156) (530,660)
Interest expense, net (14,967) (15,880) (28,480) (78,889)
------------ ------------ ------------ ------------
Loss before taxes (358,132) (440,956) (591,636) (609,549)
Provision for income tax -- 3,952 -- 800
------------ ------------ ------------ ------------
Net loss $ (358,132) $ (444,908) $ (591,636) $ (610,349)
============ ============ ============ ============
Net loss per common share $ (0.06) $ (0.08) $ (0.09) $ (0.14)
Weighted average common
shares outstanding 6,285,128 5,670,609 6,285,128 4,265,024
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 4
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<TABLE>
<CAPTION>
RomTech, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
Six months ended
December 31,
-----------------------------
1996 1995
------------ -----------
<S> <C> <C>
Cash flows from operating activities:
Net loss $ (591,636) $ (610,349)
Adjustment to reconcile net loss to net cash
from operating activities:
Depreciation and amortization 62,445 31,760
Loss on disposal of equipment 3,921 --
Interest expense incurred but not paid -- 55,000
Changes in items affecting operations net of
effect from acquired businesses:
Restricted cash (14,788) (22,719)
Accounts receivable (502,355) 144,531
Prepaid expenses (461,285) (5,563)
Inventory (132,086) (72,357)
Accounts payable 397,476 (158,690)
Accrued expenses (221,332) 192,566
------------ -----------
Net cash used in operating activities (1,459,640) (445,821)
Cash flows from investing activities:
Sales and maturities of short term investments 398,952 --
Purchase of short term investments -- (1,179,140)
Purchase of furniture and equipment (47,238) (72,211)
Purchase of software rights and other assets (89,606) (38,292)
Loan to related party 1,250 --
------------ -----------
Net cash provided by (used in) investing activities 263,358 (1,289,643)
Cash flows from financing activities:
Net proceeds of initial public offering of common stock 3,623,796
Net proceeds from issuance of convertible preferred stock 1,100,340 --
Proceeds from exercise of warrants -- 100,000
Proceeds from convertible subordinated debt -- 300,000
Net (repayments) advances of factored receivable -- (47,020)
Net (repayments) advances to officers -- (52,919)
Repayment of note payable (18,036) (381,250)
Repayment of lease obligations (19,725) (12,481)
------------ -----------
Net cash provided by financing activities 1,062,579 3,530,126
Net increase (decrease) in cash and cash equivalents (133,703) 1,794,662
Cash and cash equivalents:
Beginning of period 954,663 85,173
------------ -----------
End of period $ 820,960 $1,879,835
============ ===========
See accompanying notes to the consolidated financial statements.
Page 5
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RomTech, Inc.
Consolidated Statements of Cash Flows (continued)
(Unaudited)
Six months ended
December 31,
-----------------------------
1996 1995
------------ -----------
Supplemental cash flow information:
Cash paid for interest $ 43,101 $ 29,297
============ ===========
Noncash investing and financing activities:
Settlement of long term debt and officer's notes payable
through issuance of preferred stock, notes payable
and debt forgiveness, net of $50,000 cash payment. $ -- $1,886,452
============ ===========
Net liabilities assumed in reverse acquisition by issuance
of common stock $ -- $ 92,219
============ ===========
Capital lease additions $ 73,388 $ --
============ ===========
</TABLE>
See accompanying notes to the consolidated financial statements.
Page 6
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RomTech, Inc.
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited interim consolidated financial statements were
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. The Notes to Consolidated Financial Statements included in
the Form 10-KSB for the fiscal year ended June 30, 1996 should be read in
conjunction with the accompanying statements. These statements include all
adjustments (consisting only of normal recurring adjustments) which the Company
believes are necessary for a fair presentation of the statements. The interim
operating results are not necessarily indicative of the results for a full year.
The accompanying consolidated financial statements as of December 31, 1996
include the accounts of RomTech, Inc., ("RomTech"), which successfully completed
an initial public offering on October 18, 1995 with Applied Optical Media
Corporation ("AOMC"), which merged with RomTech concurrent with the completion
of RomTech's public offering, and Virtual Reality Laboratories, Inc. ("VRLI"),
its wholly owned subsidiary, which was acquired on April 5, 1996 in a
transaction accounted for using the pooling of interests method of accounting.
As further described in Note 2, the AOMC merger was accounted for as a reverse
acquisition whereby AOMC was deemed to be the acquiring entity for accounting
purposes. In addition, the fiscal 1996 financial statements have been restated
to reflect VRLI's operations on a pooled basis. Accordingly, the consolidated
statements of operations include the activities of the following entities for
the following periods:
o July 1, 1995 to October 17, 1995 - AOMC and VRLI
o October 18, 1995 to December 31, 1995 - RomTech, AOMC and VRLI
o July 1, 1996 to December 31, 1996 - RomTech, AOMC and VRLI
Description of Business
RomTech, Inc. (the "Company") is a Pennsylvania Corporation which was
incorporated in July 1992. The Company develops, publishes, markets and is a
reseller of a diversified line of personal computer software for consumer,
educational and business applications. The Company's sales are primarily made
through retail stores, by direct mail and sales of CD-ROM titles in jewel case
packaging at computer trade shows.
Consolidation
The consolidated financial statements include the accounts of the Company
and its wholly-owned subsidiary, Virtual Reality Laboratories, Inc. All
intercompany balances and transactions have been eliminated.
2. Completion of Pubic Offering/ Merger
Applied Optical Media Corporation ("AOMC")
On October 18, 1995, the Company merged with AOMC, whereby the stockholders
of AOMC exchanged all their outstanding shares for 1,575,000 common shares of
the Company and 425,000 warrants to purchase common shares at $.50 per share. In
addition, concurrently with the Merger certain stockholders of AOMC exchanged
debt with a carrying value of $1,936,452 for 1,000,000 shares of convertible
preferred stock, a $300,000, 8.75% note payable, a $50,000 cash payment and
forgiveness of $586,607 of debt. The preferred stock has a face value of
$1,000,000 and is convertible into common
Page 7
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RomTech, Inc.
Notes to Consolidated Financial Statements
stock of the Company beginning two years after October 18, 1995 at a price of
$3.30 per share. The Company has the right to redeem the preferred stock for an
aggregate redemption price of $1,000,000.
As a result of the AOMC merger, the former stockholders of AOMC had a
majority of the voting rights of the combined enterprise on a fully diluted, if
converted basis. Therefore, for accounting purposes, AOMC was considered the
acquirer (reverse acquisition). The cost of acquiring the Company was based on
the fair market value of the Company's net assets which approximated their
recorded value.
In connection with the reverse acquisition, the outstanding shares of the
Company and the shares of the Company issued to AOMC stockholders have been
reflected as a recapitalization of the previously outstanding AOMC common stock.
On October 18, 1995, the Company consummated an initial public offering of
1,550,000 shares of common stock at a price of $3.00 per share resulting in net
proceeds of $4,070,500 before deducting offering costs of $446,704.
In connection with the Company's initial public offering the Company's
Chief Executive Officer ("CEO") and a vice president each agreed to transfer
200,000 shares of the Company's common stock owned by them to PJM Trading
Company ("PJM") in connection with certain services provided to the Company by
PJM related to the Company's capital raising activity at the time of the initial
public offering. The Company's vice president effected the share transfer in May
1996. As of December 31, 1996, the Company's CEO had not yet effected the
transfer of his shares to PJM. For accounting purposes, the transfer of shares
by these principal shareholders is presumed to benefit the Company and should be
recognized in the financial statements of the Company. Therefore, the shares
transferred would result in a contribution of stock to the Company by the
principal shareholders and the issuance of shares to PJM for the same value.
These transactions have not been separately recognized in the Company's
financial statements since they had no net effect on the results of operations
or shareholders' equity.
Virtual Reality Laboratories, Inc. ("VRLI")
On April 5, 1996, the Company acquired VRLI, a California corporation, in a
transaction structured as a merger of VRLI with a newly formed subsidiary of the
Company ("RomTech subsidiary"), with the RomTech subsidiary as the surviving
corporation. VRLI, which is located in San Luis Obispo, California, publishes
software for use on desktop computers. Its products include business forms and
imaging processing software targeted for the small-office, home-office market,
three-dimensional landscape rendering software and astronomy software for
special interest users and the education market. In connection with the
acquisition, the Company issued a total of 1,284,440 shares of its common stock,
in exchange for all of the equity interests of Virtual Reality, which included
common stock, stock options, convertible subordinated debt and a $100,000
promissory note to an officer and stockholder of VRLI. In addition, the Company
incurred acquisition-related expenses of approximately $757,804, including
$204,340 in the form of the Company's Common Stock, related to investment
banking, consulting, accounting and legal costs which were charged to
operations. This acquisition was accounted for using the pooling-of-interests
method, and accordingly the Company's historical financial statements presented
have been restated to include the accounts and results of operations of VRLI.
Page 8
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RomTech, Inc.
Notes to Consolidated Financial Statements
The following supplemental unaudited pro forma information summarizes the
combined results of operations of the Company as if the combination with AOMC
occurred July 1, 1995.
Three months ended Six months ended
December 31, 1995 December 31, 1995
----------------- -----------------
Revenues $ 700,794 $1,561,941
Net loss (507,097) (922,614)
Loss per share (.08) (.17)
Weighted average common shares 5,974,510 5,322,726
3. Liquidity
As of December 31, 1996, the Company's cash and working capital balances
were $821,000 and $987,000, respectively. To date the Company continues to
operate at a loss. At December 31, 1996 the Company does not satisfy the minimum
level of stockholders' equity required to be listed ($1,000,000) for trading on
the Nasdaq SmallCap Market(TM). During the six months ended December 31, 1996,
the Company has successfully completed an issuance of convertible preferred
stock amounting to $1,100,340 in net proceeds. During January 1997, an
additional $28,000 in net proceeds relating to this offering was received by the
Company. The Company is currently seeking additional capital to, among other
things, increase its stockholders' equity to at least the minimum level
required. The Company's ability to achieve positive cash flow depends upon a
variety of factors, including the timeliness and success of developing and
selling its products, the costs of developing, producing and marketing such
products and various other factors, some of which may be beyond the Company's
control. In the future, the Company's capital requirements will be affected by
each of these factors. Although, the Company believes cash and working capital
balances will be sufficient to fund the Company's operations for the foreseeable
future, the Company plans to raise additional capital and it will seek such
funding through additional public or private financings. There can be no
assurances that the Company will achieve a positive cash flow or that additional
financing will be available if and when required or, if available, will be on
terms satisfactory to the Company. Currently, the Company has no significant
capital expenditure commitments.
4. Other Matters
Acquisition
On September 27, 1996, the Company entered into an agreement in principle
to acquire FileABC(TM), a Nevada Limited Partnership, ("FileABC") in exchange
for $500,000 in cash and 200,000 shares of the Company's common stock and an
additional 1,000,000 shares contingent upon achieving certain revenue targets.
The terms of the agreement were amended on October 18, 1996, whereby FileABC
will be paid $325,000 in cash in addition to the interim payments of $50,000 on
July 17, 1996 and $125,000 on October 30, 1996. Additionally, a maximum of
1,200,000 shares will be paid to FileABC for each $1,000,000 of revenues
generated from the sale of FileABC's current software product and any
enhancements or derivative products on or before March 31, 2000. FileABC
develops, publishes and markets document imaging, management and archiving
software for the Windows(TM) operating systems. The acquisition of FileABC is
subject to certain conditions and, if completed, the acquisition will be
accounted for using the purchase method of accounting.
Page 9
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RomTech, Inc.
Notes to Consolidated Financial Statements
4. Other Matters (continued)
Private Placement of Class Two Convertible Preferred Stock
On January 30, 1997, the Company completed a private placement of 1,271,340
shares of Class Two Convertible Preferred Stock (the "Convertible Preferred
Stock")and 355,975 Common Stock Purchase Warrants (the "Warrants") to purchase
355,975 shares of the Company's Common Stock for an aggregate purchase price of
$1,271,340. The number of shares of Convertible Preferred Stock which is
convertible into Common Stock beginning on May 15, 1997 are 1,171,340 shares
which were issued on November 15, 1996 in exchange for cash. An additional
100,000 shares of Convertible Preferred Stock, which was issued in exchange for
the forgiveness of $100,000 of debt as of January 30, 1997, will be convertible
into Common Stock beginning on July 30, 1997. The Convertible Preferred Stock is
convertible at the option of the holder beginning six months following the date
of issuance into the number of shares of Common Stock equal to the number of
shares of Convertible Preferred Stock surrendered for conversion divided by the
conversion price, which will be the lower of (i) $5.00 or (ii) ninety percent
(90%) of the average of the closing bid price of the Company's Common Stock for
the ten (10) business days immediately preceding the date on which the
Securities and Exchange Commission declares effective the registration statement
filed by the Company pursuant to the Registration Rights Agreement between the
Company and purchasers of the Convertible Preferred Stock. Each Warrant entitles
the holder to purchase one share of Common Stock at any time during the period
beginning six (6) months after the date of issuance of the Warrant until five
years after the date of issuance at a price equal to the lesser of (i) $6.25 or
(ii) the average of the closing bid price of the Company's Common Stock plus
$1.25, for the same ten (10) day period as the Convertible Preferred Stock. The
Company also granted 210,000 Warrants, to purchase 210,000 shares of the
Company's Common Stock, to the investment advisor ("Advisor Warrants") engaged
by the Company to assist in the private placement. The terms and conditions of
the Adviser Warrants are identical to the Warrants, except that the Adviser
Warrants are exercisable at an exercise price of $6.00.
Page 10
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RomTech, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The accompanying consolidated financial statements as of December 31, 1996
include the accounts of RomTech, Inc., ("RomTech"), which successfully completed
an initial public offering on October 18, 1995 with Applied Optical Media
Corporation ("AOMC"), which merged with RomTech concurrent with the completion
of RomTech's public offering, and Virtual Reality Laboratories, Inc. ("VRLI"),
its wholly owned subsidiary, which was acquired on April 5, 1996 in a
transaction accounted for using the pooling of interests method of accounting.
As further described in Note 2, the AOMC merger was accounted for as a reverse
acquisition whereby AOMC was deemed to be the acquiring entity for accounting
purposes. In addition, the fiscal 1996 financial statements have been restated
to reflect VRLI's operations on a pooled basis. Accordingly, the consolidated
statements of operations include the activities of the following entities for
the following periods:
o July 1, 1995 to October 17, 1995 - AOMC and VRLI
o October 18, 1995 to December 31, 1995 - RomTech, AOMC and VRLI
o July 1, 1996 to December 31, 1996 - RomTech, AOMC and VRLI
Management believes that the results of operations for the three months and
six months ended December 31, 1996 may not be indicative of anticipated future
results because of significant changes to be made in the combined businesses of
AOMC, RomTech and VRLI (see note 2 to the financial statements). The acquisition
of VRLI was accounted for using the pooling-of-interests method of accounting,
and accordingly the Company's historical consolidated financial statements have
been restated to include the accounts and results of operations of VRLI.
Results of Operations
Three Months Ended December 31, 1996 and 1995
Net revenues for the three months ended December 31, 1996 were $1,283,000
compared to $675,000 for the three months ended December 31, 1995, representing
an increase of $608,000 or 90.1%. This increase resulted primarily from
increases in the distribution through the retail and direct mail channels of
company developed titles and in the reselling of budget category jewel case
products through the trade show channel.
Cost of revenues, consists primarily of packaging costs (boxes and jewel
cases), CD-ROM pressing or replication activities through third party vendors
and royalty expenses. The cost of revenues for the three months ended December
31, 1996 was $365,000 compared to $227,000 for the three months ended December
31, 1995, representing an increase of $138,000 or 60.8% due mainly from the
increase in revenues. The Company's gross profit margin increased to 71.6% in
the three months ended December 31, 1996 from 66.4% for the three months ended
December 31, 1995.
Product development expenses consist primarily of personnel costs, supplies
and product testing. Product development expenses for the three months ended
December 31, 1996 were $157,000 compared to $165,000 for the three months ended
December 31, 1995, a decrease of $8,000 or 4.8%.
Selling, general and administrative expenses for the three months ended
December 31, 1996 were $1,104,000 compared to $708,000 for the three months
ended December 31, 1995 representing an increase of $396,000 or 55.9%. The
increase was primarily attributable to increases in: sales and marketing costs
$134,000, salary and related costs $31,000, commissions $84,000, depreciation
and amortization $29,000, outside services $87,000 and professional services
$24,000.
Net interest expense for the three months ended December 31, 1996 was
$15,000 compared to $16,000 for the three months ended December 31, 1995, a
decrease of $1,000 or 6.3%.
Page 11
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RomTech, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
Six Months Ended December 31, 1996 and 1995
Net revenues for the six months ended December 31, 1996 were $2,354,000
compared to $1,304,000 for the six months ended December 31, 1995, representing
an increase of $1,050,000 or 80.5%. This increase resulted primarily from
increases in the distribution through the retail and direct mail channels of
company developed titles and in the reselling of budget category jewel case
products through the trade show channel.
Cost of revenues, consists primarily of packaging costs (boxes and jewel
cases), CD-ROM pressing or replication activities through third party vendors
and royalty expenses. The cost of revenues for the six months ended December 31,
1996 was $683,000 compared to $433,000 for the six months ended December 31,
1995, representing an increase of $250,000 or 57.7% due mainly from the increase
in revenues. The Company's gross profit margin increased to 71.0% in the six
months ended December 31, 1996 from 66.8% for the six months ended December 31,
1995.
Product development expenses consist primarily of personnel costs, supplies
and product testing. Product development expenses for the six months ended
December 31, 1996 were $279,000 compared to $302,000 for the six months ended
December 31, 1995, a decrease of $23,000 or 7.6%.
Selling, general and administrative expenses for the six months ended
December 31, 1996 were $1,956,000 compared to $1,100,000 for the six months
ended December 31, 1995 representing an increase of $856,000 or 77.8%.
The increase was primarily attributable to increases in: sales and
marketing costs $301,000, salary and related costs $153,000, commissions
$162,000, depreciation and amortization $46,000, outside services $91,000 and
professional services $36,000.
Net interest expense for the six months ended December 31, 1996 was $28,000
compared to $79,000 for the six months ended December 31, 1995, a decrease of
$51,000 or 64.6%. This decrease is due primarily to the reduction of long term
debt related to the Merger between RomTech, Inc. and AOMC and the investment of
the proceeds from the IPO.
Liquidity and Capital Resources
The financial information presented reflects the Company's financial position at
December 31, 1996.
As of December 31, 1996, the Company's cash and working capital balances
were $821,000 and $987,000, respectively. To date the Company continues to
operate at a loss. At December 31, 1996 the Company does not satisfy the minimum
level of stockholders' equity required to be listed ($1,000,000) for trading on
the Nasdaq SmallCap Market(TM). During the six months ended December 31, 1996,
the Company has successfully completed an issuance of convertible preferred
stock amounting to $1,100,340 in net proceeds. During January 1997, an
additional $28,000 in net proceeds relating to this offering was received by the
Company. The Company is currently seeking additional capital to, among other
things, increase its stockholders' equity to at least the minimum level
required. The Company's ability to achieve positive cash flow depends upon a
variety of factors, including the timeliness and success of developing and
selling its products, the costs of developing, producing and marketing such
products and various other factors, some of which may be beyond the Company's
control. In the future, the Company's capital requirements will be affected by
each of these factors. Although, the Company believes cash and working capital
balances will be sufficient to fund the Company's operations for the foreseeable
future, the Company plans to raise additional capital and it will seek such
funding through additional public or private financings. There can be no
assurances that the Company will achieve a positive cash flow or that additional
financing will be available if and when required or, if available, will be on
terms satisfactory to the Company. Currently, the Company has no significant
capital expenditure commitments.
Page 12
<PAGE>
RomTech, Inc.
Management's Discussion and Analysis of
Financial Condition and Results of Operations (continued)
On September 27, 1996, the Company entered into an agreement in principle
to acquire FileABC(TM), a Nevada Limited Partnership, ("FileABC") in exchange
for $500,000 in cash and 200,000 shares of the Company's common stock. The terms
of the agreement were amended on October 18, 1996, whereby FileABC will be paid
$325,000 in cash in addition to the interim financing of $50,000 and $125,000
provided on July 17 and October 30, 1996, respectively. Additionally, a maximum
of 1,200,000 shares will be paid to FileABC for each $1,000,000 of revenues
generated from the sale of FileABC's current software product and any
enhancements or derivative products on or before March 31, 2000. FileABC
develops, publishes and markets document imaging, management and archiving
software for the Windows(TM) operating systems. The acquisition of FileABC is
subject to certain conditions and, if completed, the acquisition will be
accounted for using the purchase method of accounting.
Page 13
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RomTech, Inc.
Exhibit Index
Exhibit No. Description of Exhibit Page Number
----------- ------------------------ ------------
* 4.1 Certificate of Designation, Preferences, Powers,
Rights and Number of Shares of Class Two Convertible
Preferred Stock
* 4.2 Form of Purchase Agreement dated as of November 15, 1996
* 4.3 Form of Warrant Agreement dated as of November 15, 1996
* 4.4 Form of Registration Rights Agreement dated as of
November 15, 1996
* 4.5 Form of Agreement dated as of November 15, 1996
* 4.6 Purchase Agreement dated January 30, 1997 between RomTech,
Inc. and Odyssey Capital Group, L.P.
* 4.7 Agreement dated January 30, 1997 between RomTech, Inc.
and Odyssey Capital Group, L.P.
* 4.8 Registration Rights Agreement dated January 30, 1997
between RomTech, Inc. and Odyssey Capital Group, L.P.
*10.1 Asset Acquisition Agreement Between RomTech, Inc. and
FileABC, LP
27.1 Financial Data Schedule 14
- --------------------
* Incorporated by reference herein from the Registrant's Quarterly
Reports on Form 10-QSB or Form 8-K as filed with the Securities and
Exchange Commission on November 27, 1996 or January 30, 1997.
Page 14
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RomTech, Inc.
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.
ROMTECH, INC.
(Registrant)
Date: February 14, 1997 /s/ Joseph A. Falsetti
------------------ -----------------------
Joseph A. Falsetti
Chief Executive Officer
Principal Financial Officer
Date: February 14, 1997 /s/ Gerald W. Klein
------------------ --------------------
Gerald W. Klein
Vice President and
Chief Financial Officer
Page 15
<TABLE> <S> <C>
<ARTICLE> 5
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