SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______________
to______________
Commission file number: 0-16159
LECTEC CORPORATION
-------------------
(Exact name of Registrant as specified in its charter)
Minnesota 41-1301878
- - --------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
10701 Red Circle Drive, Minnetonka, Minnesota 55343
- - --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (952) 933-2291
Indicate by check mark whether the registrant (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 [ ]
The number of shares outstanding of the registrant's common stock as of February
13, 2001 was 3,915,676 shares.
LECTEC CORPORATION
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2000
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements and Notes to
Consolidated Financial Statements (unaudited) ................... I-1
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ........................................... I-7
Item 3. Quantitative and Qualitative Disclosure About Market Risk ....... I-10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings ............................................... II-1
Item 2. Changes in Securities and Use of Proceeds ....................... II-1
Item 3. Defaults Upon Senior Securities ................................. II-1
Item 4. Submission of Matters to a Vote of Security Holders ............. II-1
Item 5. Other Information ............................................... II-1
Item 6. Exhibits and Reports on Form 8-K ................................ II-1
Signature Page .................................................. II-3
Exhibit Index ................................................... II-4
PART I - FINANCIAL INFORMATION
ITEM 1- FINANCIAL STATEMENTS AND NOTES TO FINANCIAL STATEMENTS
LECTEC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, June 30,
2000 2000
------------ ------------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 285,620 $ 100,171
Trade receivables and other, net of allowances of $521,715
December 31, 2000 and June 30, 2000 2,190,207 2,645,710
Inventories
Raw materials 1,765,434 1,649,544
Work-in-process 40,323 23,201
Finished goods 487,542 574,941
------------ ------------
2,293,299 2,247,686
Prepaid expenses and other 410,868 242,543
------------ ------------
Total current assets 5,179,994 5,236,110
PROPERTY, PLANT AND EQUIPMENT - AT COST
Land 247,731 247,731
Building and improvements 1,968,384 1,879,006
Equipment 5,174,453 5,080,180
Furniture and fixtures 414,857 414,857
------------ ------------
7,805,425 7,621,774
Less accumulated depreciation 4,877,352 4,582,686
------------ ------------
2,928,073 3,039,088
OTHER ASSETS
Patents and trademarks, less accumulated amortization of $1,327,067
and $1,293,871 at December 31, 2000 and June 30, 2000 251,944 199,351
------------ ------------
$ 8,360,011 $ 8,474,549
============ ============
See accompanying notes to the condensed consolidated financial statements.
I - 1
LECTEC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS - CONTINUED
December 31, June 30,
2000 2000
------------ ------------
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Note payable to bank $ 343,325 $ 837,542
Current maturities of long-term obligations 24,125 22,562
Accounts payable 2,795,212 1,910,551
Accrued expenses 766,877 792,894
Customer deposits 150,000 160,000
------------ ------------
Total current liabilities 4,079,539 3,723,549
LONG-TERM OBLIGATIONS, LESS CURRENT MATURITIES 838,718 31,184
COMMITMENTS AND CONTINGENCIES -- --
SHAREHOLDERS' EQUITY
Common stock, $.01 par value: 15,000,000 shares authorized;
3,915,676 shares and 3,904,465 shares issued
and outstanding at December 31, 2000 and June 30, 2000 39,157 39,045
Additional paid-in capital 11,332,829 11,316,260
Accumulated other comprehensive income -- 4,845
Accumulated deficit (7,930,232) (6,640,334)
------------ ------------
3,441,754 4,719,816
------------ ------------
$ 8,360,011 $ 8,474,549
============ ============
See accompanying notes to the condensed consolidated financial statements.
I - 2
LECTEC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three months ended Six months ended
December 31, December 31,
----------------------------- -----------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
Net sales $ 4,056,484 $ 3,299,705 $ 8,245,378 $ 6,308,457
Cost of goods sold 2,697,711 2,236,691 5,252,574 4,306,162
------------ ------------ ------------ ------------
Gross profit 1,358,773 1,063,014 2,992,804 2,002,295
Operating expenses
Sales and marketing 1,092,232 863,655 2,294,571 1,598,700
General and administrative 681,209 688,783 1,459,907 1,247,873
Research and development 225,657 310,202 441,523 579,964
------------ ------------ ------------ ------------
1,999,098 1,862,640 4,196,001 3,426,537
------------ ------------ ------------ ------------
Loss from operations (640,325) (799,626) (1,203,197) (1,424,242)
Other income (expenses)
Interest expense (40,128) (992) (72,919) (2,076)
Other, net (11,543) 5,451 (13,782) 27,869
------------ ------------ ------------ ------------
Loss before income taxes (691,996) (795,167) (1,289,898) (1,398,449)
Income taxes -- -- -- --
------------ ------------ ------------ ------------
Net loss $ (691,996) $ (795,167) $ (1,289,898) $ (1,398,449)
============ ============ ============ ============
Net loss per share - basic and diluted $ (0.18) $ (0.20) $ (0.33) $ (0.36)
============ ============ ============ ============
Weighted average shares outstanding - basic and diluted 3,908,364 3,881,352 3,906,415 3,878,914
============ ============ ============ ============
See accompanying notes to the condensed consolidated financial statements.
I - 3
LECTEC CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended December 31,
-----------------------------
2000 1999
------------ ------------
Cash flows from operating activities:
Net loss $ (1,289,898) $ (1,398,449)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 327,862 473,902
Changes in operating assets and liabilities:
Trade and other receivables 455,503 385,280
Inventories (45,613) (151,339)
Prepaid expenses and other (184,247) (70,586)
Accounts payable 884,661 1,419
Accrued expenses and other (36,016) 22,663
------------ ------------
Net cash provided by (used in) operating activities 112,252 (737,110)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment (183,651) (247,204)
Investment in patents and trademarks (85,789) (44,035)
Proceeds from sale of investments 11,076 --
------------ ------------
Net cash used in investing activities (258,364) (291,239)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock 16,681 26,815
Net repayments of line of credit (494,217) --
Proceeds from long-term borrowing 820,000 --
Repayment of long-term obligations (10,903) --
------------ ------------
Net cash provided in financing activities 331,561 26,815
------------ ------------
Net increase (decrease) in cash and cash equivalents 185,449 (1,001,534)
Cash and cash equivalents at beginning of period 100,171 1,022,025
------------ ------------
Cash and cash equivalents at end of period $ 285,620 $ 20,491
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest expense $ 68,548 $ 2,137
Income taxes 2,000 --
See accompanying notes to the condensed consolidated financial statements.
I - 4
LECTEC CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) GENERAL
The accompanying condensed consolidated financial statements
include the accounts of LecTec Corporation (the "Company") and LecTec
International Corporation, a wholly-owned subsidiary which was dissolved and
merged into LecTec Corporation on December 31, 1999. All significant
intercompany balances and transactions have been eliminated in consolidation.
The Company's condensed consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of
America and should be read in conjunction with its Annual Report on Form 10-K
and its Annual Report to Shareholders for the fiscal year ended June 30, 2000.
The interim condensed consolidated financial statements are unaudited and in the
opinion of management, reflect all adjustments necessary for a fair presentation
of results for the periods presented. Results for interim periods are not
necessarily indicative of results for the year.
(2) NET LOSS PER SHARE
The Company's basic net loss per share amounts have been computed
by dividing net loss by the weighted average number of outstanding common
shares. The Company's diluted net loss per share amounts have been computed by
dividing net loss by the weighted average number of outstanding common shares
and common share equivalents, when dilutive. Options and warrants to purchase
987,084 and 1,093,443 shares of common stock with a weighted average exercise
price of $5.77 and $6.35 were outstanding during the six months ended December
31, 2000 and 1999, but were excluded because they were antidilutive.
(3) COMPREHENSIVE INCOME (LOSS)
For the quarter and six months ended December 31, 2000 there were
no items which the Company is required to recognize as components of
comprehensive income (loss), therefore comprehensive income (loss) was the same
as net loss.
(4) SEGMENTS
The Company operates its business in one reportable segment - the
manufacture and sale of products based on advanced skin interface technologies.
Each of the Company's major product lines has similar economic characteristics,
technology, manufacturing processes, and regulatory environments. Customers and
distribution and marketing strategies vary within major product lines as well as
overlap between major product lines. The Company's executive decision makers
evaluate sales performance based on the total sales of each major product line
and profitability on a total company basis, due to shared infrastructures, to
make operating and strategic decisions. Net sales by major product line were as
follows:
Three months ended Six months ended
December 31, December 31,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
Therapeutic consumer products $2,501,732 $ 919,555 $4,986,215 $1,782,734
Conductive products 1,553,082 1,927,578 3,103,727 3,504,361
Medical tape products 1,670 452,572 155,436 1,021,362
---------- ---------- ---------- ----------
$4,056,484 $3,299,705 $8,245,378 $6,308,457
========== ========== ========== ==========
I - 5
(5) NOTE PAYABLE TO BANK
In November 1999, the Company entered into a secured line of
credit with a maximum borrowing of $2,000,000. In September 2000, the line of
credit was increased to allow borrowing of up to $2,800,000. The credit
agreement expires in November 2001 and includes interest computed at the prime
rate plus three percentage points. The line of credit is secured by the
Company's receivables, inventory and equipment. Borrowings outstanding on the
line of credit as of December 31, 2000, were $343,325. The credit agreement
contains certain restrictive covenants which require the Company to maintain,
among other things, specified levels of net worth and not to exceed specified
cumulative losses. The Company was in compliance with all covenants as of
December 31, 2000.
(6) LONG-TERM OBLIGATION
In December 2000, the Company entered into a mortgage agreement
with gross proceeds of $820,000. The principal balance of the mortgage is due in
December 2002. Monthly payments of interest are computed at the prime rate plus
five percentage points (effective rate of 14.5% at December 31, 2000). The
mortgage is secured by the Company's real property.
(7) AGREEMENT TO SELL ASSETS
In November 2000, the Company entered into an agreement with the
Ludlow Company LP (Ludlow) and Sherwood Services AG (Sherwood), pursuant to
which Ludlow and Sherwood will purchase the Company's diagnostic electrode and
electrically conductive adhesive hydrogel business assets which are used to
produce the Company's conductive products. Under the agreement, the Company will
receive $7,250,000 in cash upon closing of the transaction, subject to
adjustment for changes in the net assets at the time of closing. The agreement
is subject to approval by the shareholders of the Company and other customary
closing conditions. The Company anticipates that the closing will occur in March
2001 immediately following its Annual Meeting of Shareholders.
(8) INCOME TAXES
The provision for income taxes for the three months and six months
ended December 31, 2000, has been offset principally by a valuation allowance
for deferred taxes.
I - 6
PART I - FINANCIAL INFORMATION
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
QUARTERS AND SIX MONTHS ENDED DECEMBER 31, 2000 AND 1999
RESULTS OF OPERATIONS
Net sales for the second quarter of fiscal 2001 were $4,056,484 compared to
net sales of $3,299,705 for the second quarter of fiscal 2000, an increase of
22.9%. The increase was primarily the result of increased therapeutic consumer
product sales which more than offset decreased conductive and medical tape
sales. Therapeutic consumer product sales increased by 172.1% from $919,555 to
$2,501,732 while conductive product sales decreased by 19.4% from $1,927,578 to
$1,553,082 and medical tape product sales decreased by 99.6% from $452,572 to
$1,670. The therapeutic consumer product sales increase was primarily the result
of sales of the new acne product to Johnson & Johnson Consumer Products
Worldwide as well as sales of the new vapor product to Novartis Consumer Health,
Inc. The decrease in conductive product sales was primarily the result of the
absence of a sales promotion offered to a major customer in the prior year, and
softening customer demand. The Company expects conductive product sales to
decrease in the remainder of fiscal 2001 due to the expected sale of assets used
to produce the conductive products. The decrease in medical tape product sales
was primarily due to a plan adopted by the Company at the end of fiscal 2000 to
exit the medical tape business. The Company expects minimal tape sales in the
remainder of fiscal 2001 as remaining inventories are liquidated.
Net sales for the first six months of fiscal 2001 were $8,245,378 compared
to net sales of $6,308,457 for the first six months of fiscal 2000, an increase
of 30.7%. The increase was primarily the result of increased therapeutic
consumer product sales which more than offset decreased conductive and medical
tape sales. Therapeutic consumer product sales increased by 179.7% from
$1,782,734 to $4,986,215 while conductive product sales decreased by 11.4% from
$3,504,361 to $3,103,727 and medical tape product sales decreased by 84.8% from
$1,021,362 to $155,436. The therapeutic consumer product sales increase was
primarily the result of sales of the new acne product to Johnson & Johnson
Consumer Products Worldwide as well as sales of the new vapor product to
Novartis Consumer Health, Inc. The decrease in conductive product sales was
primarily the result of the absence of a sales promotion offered to a major
customer in the prior year, and softening customer demand. The decrease in
medical tape product sales was primarily due to a plan adopted by the Company at
the end of fiscal 2000 to exit the medical tape business.
Gross profit for the second quarter of fiscal 2001 was $1,358,773 compared
to $1,063,014 for the second quarter of fiscal 2000, an increase of 27.8%. Gross
profit as a percent of net sales for the second quarter of fiscal 2001 was 33.5%
compared to 32.2% for the second quarter of fiscal 2000. The slight improvement
in gross profit for the quarter resulted primarily from an increase of
approximately $606,000 in gross profit related to increased sales volume and
the favorable impact of a change in the sales mix toward higher-margin
therapeutic consumer products. These items more than offset a decrease of
approximately $150,000 in gross profit related to the costs associated with
resolving a packaging issue that occurred in the current quarter, as well as, a
decrease of approximately $99,000 in gross profit related to increased labor
costs associated with higher production volumes and increased overtime related
to the production of therapeutic patch products.
Gross profit for the first six months of fiscal 2001 was $2,992,804
compared to $2,002,295 for the first six months of fiscal 2000, an increase of
49.5%. Gross profit as a percent of net sales for the first six months of fiscal
2001 was 36.3% compared to 31.7% for the first six months of fiscal 2000. The
increase in gross profit for the six months resulted primarily from an increase
of approximately $1,285,000 in gross profit related to increased sales volume
and the favorable impact of a change in the sales mix toward higher-margin
therapeutic consumer products. These items more than offset the decrease of
approximately $150,000 in gross profit related to the costs associated with
resolving a packaging issue that occurred in the current six months, as well as,
a decrease of approximately $254,000 in gross profit related to labor costs
associated with higher production volumes and increased overtime related to the
production of therapeutic patch products.
Sales and marketing expenses were $1,092,232 and $863,655 during the
second quarters of fiscal 2001 and 2000, and as a percentage of net sales, were
26.9% and 26.2% respectively. The
I - 7
increase in sales and marketing expenses for the quarter was primarily due to an
increase of $172,000 in media advertising expenses related to a TV ad campaign
for TheraPatch vapor products and an increase of $118,000 in cooperative
advertising expenses which more than offset a decrease of $80,000 in retail
slotting fees. The Company anticipates that sales and marketing expenses as a
percent of sales for the remainder of fiscal 2001 will be comparable to the
second quarter of fiscal 2001 due to marketing programs associated with the
TheraPatch product line.
Sales and marketing expenses were $2,294,571 and $1,598,700 during the
first six months of fiscal 2001 and 2000, and as a percentage of net sales, were
27.8% and 25.3%. The increase in sales and marketing expenses for the first six
months was primarily due to an increase of $622,000 in media advertising
expenses related to ad campaigns for TheraPatch products and an increase of
$112,000 in cooperative advertising expenses which more than offset a decrease
of $140,000 in retail slotting fees.
General and administrative expenses were $681,209 and $688,783 during
the second quarters of fiscal 2001 and 2000, and as a percentage of net sales,
were 16.8% and 20.9% respectively. During the first six months of fiscal 2001
and 2000 general and administrative expenses were $1,459,907 and $1,247,873, and
as a percentage of net sales, were 17.7% and 19.8% respectively. The Company
anticipates that general and administrative expenses as a percent of sales for
the remainder of fiscal 2001 will be comparable to the first six months of
fiscal 2001.
Research and development expenses for the second quarters of fiscal
2001 and 2000 were $225,657 and $310,202, and as a percentage of net sales, were
5.6% and 9.4%. For the first six months of fiscal 2001 and 2000 research and
development expenses were $441,523 and $579,964, and as a percentage of net
sales, were 5.4% and 9.2%. The Company anticipates that research and development
expenses as a percent of sales for the remainder of fiscal 2001 will increase
due to additional headcount and other increased costs associated with testing of
products under development.
Interest expense increased in the second quarter of fiscal 2001 to
$40,128 from $992 in the second quarter of fiscal 2000. Interest expense
increased in the first six months of fiscal 2001 to $72,919 from $2,076 in the
first six months of fiscal 2000. Both of the fiscal 2001 increases resulted
primarily from interest expense associated with increased borrowings under the
line of credit. Other income (expense), decreased in the second quarter of
fiscal 2001 to net expense of $11,543 from other income of $5,451 in the second
quarter of fiscal 2000. Other income (expense), decreased in the first six
months of fiscal 2001 to net expense of $13,782 from other income of $27,869 in
the first six months of fiscal 2000. Both of the fiscal 2001 decreases were
primarily the result of decreased interest income due to lower cash and cash
equivalent balances.
The Company recorded a loss before income taxes of $691,996 in the
second quarter of fiscal 2001 compared to a loss before income taxes of $795,167
for the second quarter of fiscal 2000. The Company recorded a loss before income
taxes of $1,289,898 in the first six months of fiscal 2001 compared to a loss
before income taxes of $1,398,449 for the first six months of fiscal 2000. The
decrease in loss for the current year second quarter and first six months was
primarily the result of increased gross profit that resulted from increased
sales volume, a shift in the sales mix toward higher-margin therapeutic consumer
products and the exit from the medical tape business. The increased gross profit
more than offset an increase in operating expenses related to advertising
expenses related to retail sales of the Company's TheraPatch products.
The provision for income taxes in the second quarter and first six
months of fiscal 2001 and 2000 has been offset principally by a valuation
allowance for deferred taxes.
Inflation has not had a significant impact on the Company's operations
or cash flow.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents increased by $185,449 to $285,620 during the
first six months of fiscal 2001. Accounts receivable decreased by $470,370 to
$2,172,510 during the first six months of fiscal 2001. The higher accounts
receivable balance at June 30, 2000 was primarily due to significant initial
I - 8
sales, with extended terms, to a TheraPatch customer in the fourth quarter of
fiscal 2000. Inventories increased by $45,613 to $2,293,299. Accounts payable of
$2,795,212 at December 31, 2000 increased by $884,661 during the first six
months primarily due to increased payables related to increased manufacturing
production and increased advertising expenses related to the TheraPatch product
line. Capital spending for manufacturing equipment and plant improvements
totaled $183,651 during the first six months of fiscal 2001. The Company entered
into a purchase commitment for production machinery in the amount of $154,482
during the first six months of fiscal 2001. This purchase commitment will be
fulfilled by the end of fiscal year 2001.
The Company had working capital of $1,100,455 and a current ratio of
1.3 at December 31, 2000 compared to working capital of $1,512,561 and a current
ratio of 1.4 at June 30, 2000.
The Company finalized a $2,000,000 asset-based line of credit in
November, 1999. In September 2000, the line of credit was increased to allow
borrowing of up to $2,800,000. Borrowings outstanding on the line of credit were
$343,325 as of December 31, 2000. The Company was in compliance with all
covenants as of December 31, 2000.
In December 2000, the Company entered into a mortgage agreement with
gross proceeds of $820,000.
Management believes that existing cash and cash equivalents,
internally-generated cash flow, the existing secured line of credit including
the line of credit increase, the mortgage loan, and the pending sale of the
Company's diagnostic electrode and electrically conductive adhesive hydrogel
business assets will be sufficient to support anticipated operating and capital
spending requirements during the remainder of fiscal 2001 and contribute to the
funding of longer-term growth and expansion of the business. Maintaining
adequate levels of working capital depends in part upon the success of the
Company's products in the marketplace, the relative profitability of those
products and the Company's ability to control operating expenses. Funding of the
Company's operations in future periods may require additional investments in the
Company in the form of equity or debt. There can be no assurance that the
Company will achieve desired levels of sales or profitability, or that future
capital infusions will be available.
FORWARD-LOOKING STATEMENTS
From time to time, in reports filed with the Securities and Exchange
Commission (including this Form 10-Q), in press releases, and in other
communications to shareholders or the investment community, the Company may
provide forward-looking statements concerning possible or anticipated future
results of operations or business developments which are typically preceded by
the words "believes", "expects", "anticipates", "intends", "will", "may",
"should" or similar expressions. Such forward-looking statements are subject to
risks and uncertainties which could cause results or developments to differ
materially from those indicated in the forward-looking statements. Such risks
and uncertainties include, but are not limited to, the buying patterns of major
customers; competitive forces including new products or pricing pressures; costs
associated with and acceptance of the Company's TheraPatch brand strategy;
impact of interruptions to production; dependence on key personnel; need for
regulatory approvals; changes in governmental regulatory requirements or
accounting pronouncements; ability to satisfy funding requirements for operating
needs, expansion or capital expenditures; and the matters discussed on our
"Cautionary Statements" filed as Exhibit 99.1 to this form 10-Q.
I - 9
PART I - FINANCIAL INFORMATION
ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has no history of, and does not anticipate in the future,
investing in derivative financial instruments, derivative commodity instruments
or other such financial instruments. Transactions with international customers
are entered into in U.S. dollars with the exception of TheraPatch sales to
Canadian customers, precluding the need for foreign currency hedges. These
Canadian sales have not been material.
I - 10
PART II
OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
None.
Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable.
Item 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
Item No. Item Method of Filing
-------- --------- ----------------
10.1 Loan Agreement and Promissory
Note By and Between LecTec
Corporation and Equity Holdings
II dated December 21, 2000. Filed herewith.
10.2 Asset Purchase Agreement dated Incorporated
November 17, 2000 by and among by reference
The Ludlow Company LP, Sherwood to LecTec
Services AG and LecTec Corporation's
Corporation. Preliminary
Proxy Statement
on Schedule
14-A filed
with the
Commission on
December 8,
2000.
99.1 Cautionary Statements. Filed herewith.
II-1
(b) REPORTS ON FORM 8-K
On November 21, 2000 the Company filed a report on Form 8-K
in connection with the signing of an Asset Purchase
Agreement dated November 17, 2000 by and among The Ludlow
Company LP, Sherwood Services AG and LecTec Corporation.
II-2
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 thereunto duly authorized.
LECTEC CORPORATION
Date February 14, 2001 /s/ Rodney A. Young
----------------- --------------------------------------
Rodney A. Young, Chief Executive Officer
& President
Date February 14, 2001 /s/ Douglas J. Nesbit
----------------- --------------------------------------
Douglas J. Nesbit, Chief Financial Officer
& Secretary (Principal Financial Officer)
II-3
EXHIBIT INDEX
Exhibits
- - --------
10.1 Loan Agreement and Promissory Note By and Between LecTec Corporation
and Equity Holdings II dated December 21, 2000.
10.2 Asset Purchase Agreement dated November 17, 2000 by and among The
Ludlow Company LP, Sherwood Services AG and LecTec Corporation
(incorporated by reference to LecTec Corporation's Preliminary Proxy
Statement on Schedule 14-A filed with the Commission on December 8,
2000).
99.1 Cautionary Statements.
II-4