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FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(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, 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: 0-22994
GUNTHER INTERNATIONAL, LTD.
(Exact name of small business issuer as specified in its charter)
DELAWARE 51-0223195
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
ONE WINNENDEN ROAD, NORWICH, CONNECTICUT 06360
(Address of principal executive offices) (Zip Code)
860-823-1427
(Issuers Telephone Number)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last year)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days.
YES X NO
-- --
The number of shares of the Registrant's Common stock outstanding as of January
31, 2001 was 4,291,769.
Transitional Small Business Disclosure Format (check one):
YES NO X
-- --
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GUNTHER INTERNATIONAL, LTD.
Index
Page
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PART I - - CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Balance Sheets as of December 31, 2000
and March 31, 2000 3
Condensed Statements of Operations for the three and nine
months ended December 31, 2000 and 1999 4
Condensed Statements of Cash Flows for the nine
months ended December 31, 2000 and 1999 5
Notes to Condensed Financial Statements 6-7
Item 2. Management's Discussion and Analysis or Plan of Operation 8-10
PART II - - OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
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PART I. CONDENSED FINANCIAL INFORMATION
Item 1. Financial Statements
Gunther International, Ltd.
Condensed Balance Sheets
December 31, 2000 March 31, 2000
----------------- --------------
Assets
Current Assets:
Cash $ 221,088 $ 87,136
Restricted cash 200,000 --
Accounts receivable, net 1,580,779 3,315,783
Costs and estimated earnings in excess
of billings on uncompleted contracts 560,279 200,691
Inventories 2,462,281 1,798,206
Prepaid expenses 180,378 280,874
------------ ------------
Total current assets 5,204,805 5,682,690
------------ ------------
Property and Equipment:
Machinery and equipment 1,874,680 1,485,369
Furniture and fixtures 516,907 378,852
Leasehold improvements 140,019 38,589
------------ ------------
2,531,606 1,902,810
Accumulated depreciation and
amortization (1,134,479) (808,354)
------------ ------------
1,397,127 1,094,456
Other Assets:
Excess of costs over fair value of net
assets acquired, net 2,607,295 2,774,893
Other 48,726 64,527
------------ ------------
2,656,021 2,839,420
------------ ------------
$ 9,257,953 $ 9,616,566
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current Liabilities:
Current maturities of long-term debt - related party $ 600,000 $ --
Current maturities of long-term debt - other 18,178 13,134
Notes payable to related parties 1,000,000 --
Note payable to bank -- 350,000
Accounts payable 2,832,986 2,502,231
Accrued expenses 1,254,189 1,385,066
Billings in excess of costs and estimated
earnings on uncompleted contracts 682,466 1,052,734
Deferred service contract revenue 1,472,941 1,856,974
Note payable to stockholder 150,000 150,000
------------ ------------
Total current liabilities 8,010,760 7,310,139
------------ ------------
Long-term debt, less current maturities:
Related parties 4,861,536 5,261,446
Other 63,506 15,732
------------ ------------
Total long-term debt 4,925,042 5,277,178
------------ ------------
Commitments and contingencies (Note 3)
Stockholders' Equity (Deficit):
Common stock 4,292 4,292
Additional paid-in capital 12,188,556 12,188,556
Accumulated deficit (15,870,697) (15,163,599)
------------ ------------
Total Stockholders' Equity (Deficit) (3,677,849) (2,970,751)
------------ ------------
$ 9,257,953 $ 9,616,566
============ ============
See accompanying notes
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Gunther International, Ltd.
Condensed Statements of Operations
December 31,
------------------------------------------------------------------
For the Three Months Ended For the Nine Months Ended
---------------------------- -------------------------------
2000 1999 2000 1999
--------- --------- ---------- ----------
Sales:
Systems $ 3,466,202 $ 2,102,167 $ 9,854,723 $ 7,997,491
Maintenance 2,580,753 2,425,030 7,516,941 7,076,485
--------- --------- ---------- ----------
Total sales 6,046,955 4,527,197 17,371,664 15,073,976
--------- --------- ---------- ----------
Cost of sales:
Systems 2,497,981 1,713,842 6,848,990 5,755,615
Maintenance 2,043,150 1,979,352 6,001,590 6,204,714
--------- --------- ---------- ----------
Total cost of sales 4,541,131 3,693,194 12,850,580 11,960,329
--------- --------- ---------- ----------
Gross profit 1,505,824 834,003 4,521,084 3,113,647
--------- --------- ---------- ----------
Operating expenses:
Selling and administrative 1,125,870 1,310,287 3,412,335 3,091,814
Research and development 403,740 282,599 1,131,065 988,444
--------- --------- ---------- ----------
Total operating expenses 1,529,610 1,592,886 4,543,400 4,080,258
--------- --------- ---------- ----------
Operating loss (23,786) (758,883) (22,316) (966,611)
Interest expense, net (185,659) (145,052) (506,282) (406,307)
Litigation (Note 3) -- -- (178,500) --
--------- --------- ---------- ----------
Net loss $ (209,445) $ (903,935) $ (707,098) $ (1,372,918)
========= ========= ========== ==========
Basic and fully diluted loss per share $ (0.05) $ (0.21) $ (0.16) $ (0.32)
========= ========= ========== ==========
Weighted average number of common
shares outstanding 4,291,769 4,291,769 4,291,769 4,291,769
========= ========= ========== ==========
See accompanying notes
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Gunther International, Ltd.
Condensed Statements of Cash Flows
For the nine months ended December 31, 2000 and 1999
2000 1999
----------- -----------
Operating activities:
Net loss $ (707,098) $(1,372,918)
Adjustments to reconcile net loss to net cash
provided by (used for) operating activities:
Depreciation and amortization 504,523 421,995
Provision for doubtful accounts 35,000 19,400
Interest accrued on related party note payable 200,088 179,008
Changes in operating assets and liabilities:
Accounts receivable 1,700,004 (598,407)
Inventories (664,075) 121,000
Prepaid expenses 100,496 (108,086)
Accounts payable 330,755 (345,406)
Accrued expenses (130,877) 9,683
Deferred service contract revenue (384,033) 526,327
Billings, costs and estimated earnings on
uncompleted contracts - net (729,856) 430,685
----------- -----------
Net cash provided by (used for) operating activities 254,927 (716,719)
----------- -----------
Investing activities:
Acquisitions of equipment and leasehold improvements (553,056) (449,975)
----------- -----------
Net cash used for investing activities (553,056) (449,975)
----------- -----------
Financing activities:
Repayment of notes payable and long-term debt (667,919) (509,889)
Transfer (to) from restricted cash (200,000) 150,000
Proceeds from notes payable and long-term debt 1,300,000 1,350,000
----------- -----------
Net cash provided by financing activities 432,081 990,111
----------- -----------
Net increase (decrease) in cash 133,952 (176,583)
Cash, beginning of period 87,136 731,943
----------- -----------
Cash, end of period $ 221,088 $ 555,360
=========== ===========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $ 317,436 $ 236,545
Cash paid for income taxes 1,118 7,561
Supplemental Disclosure of Non-Cash Investing Activities:
Property and equipment acquired for notes payable $ 70,740 $ --
See accompanying notes
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GUNTHER INTERNATIONAL, LTD.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
In the opinion of management, the accompanying unaudited interim
condensed financial statements have been prepared in accordance with generally
accepted accounting principles and contain all adjustments (consisting of only
normal recurring adjustments) necessary to present fairly the financial position
and the results of operations and cash flows for the interim periods presented.
These financial statements should be read in conjunction with the financial
statements and related notes included in the Company's Annual Report on Form
10-KSB for the fiscal year ended March 31, 2000. The results of operations for
the interim periods are not necessarily indicative of results to be expected for
the full year. The condensed balance sheet as of March 31, 2000 was derived from
the audited financial statements at that date.
2. LONG - TERM DEBT AND LIQUIDITY:
During the quarter ended December 31, 1998, in exchange for cash of
$4.0 million, the Company issued an 8% note payable to Gunther Partners LLC
("Gunther Partners") with a face value of $4.0 million and also granted Gunther
Partners a warrant to purchase up to 35% of the pro forma, fully diluted number
of shares of the Company's Common Stock, determined as of the date of exercise,
at any time through November 2003 at an exercise price of $1.50 a share. The
warrant was valued at $345,000 and has been included in additional paid-in
capital. The note was valued at $3,655,000, which resulted in an effective
interest rate of 9.8%. The debt discount on the note is being amortized by the
effective interest method. Interest on the note payable to Gunther Partners is
paid quarterly at the stated rate of 8%. Through June 30, 1999, the Company made
principal payments of $800,000 on this note. In September 1999, the Company and
Gunther Partners agreed to modify the terms of the note. In connection
therewith, Gunther Partners loaned the Company $800,000, thereby restoring the
principal amount of the loan to $4.0 million. As amended, the outstanding
balance is due in principal installments of $200,000 commencing on October 1,
2001 through April 1, 2002; $100,000 on May 1, 2002; and $2,500,000 on October
1, 2003. If, at any time prior to October 1, 2001, the accumulated deficit of
the Company improves by $1.0 million or more compared to the amount at June 30,
1999 of $14.4 million (a "Triggering Event"), then the principal payments
otherwise due from October 1, 2001 through May 1, 2002 shall become due in
consecutive monthly installments beginning on the first day of the second month
following the Triggering Event. The debt is secured by a first priority interest
in all tangible and intangible personal property (excluding accounts receivable,
patents and trademarks) and a secondary interest in accounts receivable, patents
and trademarks.
In April 2000, the Company borrowed an additional $500,000 from Gunther
Partners which is payable on demand; however, Gunther Partners has agreed to
defer payment until April 1, 2001 if the Company's cash flow will not support
the repayment. On November 30, 2000, the Company borrowed $500,000 from a
director (the "Promissory Note"), the proceeds of which were used to pay in full
the Company's existing revolving loan agreement with a bank. The director acted
on behalf of Gunther Partners in fulfillment of a prior commitment letter, dated
June 19, 2000 (the "Commitment Letter"), pursuant to which Gunther Partners
agreed to make up to $500,000 of additional financing available to the Company.
The loan, bearing interest at 8.5%, is due and payable on November 30, 2001,
although it can be prepaid without penalty at the discretion of the Company. In
consideration for the extension of the payment terms under the Promissory Note
for a period of time in excess of the time required under the Commitment Letter,
the Company agreed to extend the expiration date of the stock purchase warrants
previously granted to Gunther Partners by one calendar day for each calendar day
from and after April 1, 2001 that any principal or interest owed under the
Promissory Note remains unpaid. These loans, totaling $1,000,000 are classified
as notes payable to related parties in the current liabilities section of the
balance sheet.
On April 21, 2000, the Company borrowed $150,000 from a director. This
amount, together with interest at the rate of 8% per annum, was repaid in full
on April 28, 2000.
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
For the nine months ended December 31, 2000 and year ended March 31,
2000, the Company incurred net losses of $707,000 and $759,000, respectively. At
December 31, 2000, the Company has a deficiency in working capital of $2.8
million and a stockholders'
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deficit of $3.7 million. On November 30, 2000, the Company borrowed $500,000
from a director, which was used to pay in full the Company's existing revolving
loan agreement with a bank. The director acted on behalf of Gunther Partners in
fulfillment of the Commitment Letter. The Company now has notes payable to
related parties of $1.0 million due within the next twelve months as well as
$600,000 of current maturities of long-term debt to related parties. These
conditions may raise doubt about the Company's ability to meet its obligations
as they become due in the ordinary course of business.
The net loss of $707,000 for the nine months ended December 31, 2000
included a charge of $178,500 attributable to litigation while cash of $255,000
was provided by operating activities. At December 31, 2000, backlog for
high-speed assembly system and upgrade orders, consisting of total contract
price less revenue recognized to date for all signed orders on hand, was $3.7
million. These same orders will generate cash of $4.2 million through June 30,
2001 as they are completed and delivered. Under the Company's normal sales
pricing policy, approximately 50% of the sales price of each system is received
by the Company within 30 days from the time an order is placed by a customer;
approximately 40% is received at the time the system is shipped to the customer
and the remaining 10% is received approximately 30 days after delivery of the
system. As a result, the Company receives a significant cash flow benefit from
the receipt of new orders.
Over a two year period beginning in January 1999, the Company has
required an additional $1.0 million to fund operations and make capital
purchases. Over that same period the Company has made capital purchases of over
$1.2 million. The Company expects capital expenditures over the next twelve
months to be no more than $400,000.
On a going forward basis, management believes that the Company's cash
and cash equivalents at December 31, 2000, together with the cash to be derived
from operating activities, will not be sufficient to meet the Company's
currently scheduled debt maturities during the next twelve months. As a result,
management expects that the Company will be required to defer or otherwise
refinance the aforementioned scheduled debt maturities beyond that period. Based
on preliminary discussions with the related party lenders, management expects
that the Company will be able to obtain a deferral of some or all of these
scheduled debt maturities. Accordingly, the accompanying financial statements do
not include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities in the event the Company is unable to obtain such a deferral.
Ultimately, the ability of the Company to continue as a going concern will be
dependent on achieving consistently profitable operations, which in turn will be
dependent on attaining sufficient sales levels. If adequate sales levels are not
attained, the Company will be required to consider other courses of action,
including the issuance of additional debt and/or equity. The Company has no
commitments for additional debt or equity at this time. There can be no
assurance that the Company will not need significantly more cash than is
presently forecasted by management or that the Company's current and expected
sources of cash will be sufficient to fund the Company's ongoing operations.
3. COMMITMENTS AND CONTINGENCIES:
In fiscal 1999, two purported class action lawsuits were filed against
the Company, its then-current chief executive officer and its then-current chief
financial officer asserting claims under the federal securities law. The actions
were filed in the United States District Court for the District of Connecticut.
On January 4, 1999, the two actions were consolidated. Among other things, the
complaint alleges that the Company's financial statements for the first three
quarters of fiscal 1998 were materially false and misleading in violation of
Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act") and
Rule 10b-5 promulgated thereunder, and Section 20(a) of the Exchange Act. The
plaintiffs are seeking compensatory damages and reimbursement for the reasonable
costs and expenses, including attorneys' fees, incurred in connection with the
action. Although the Company is vigorously defending the action, it has accrued
$215,000, of which $178,500 was expensed during the first quarter of the current
fiscal year, based on management's best estimate of potential settlement costs
and expenses that are likely to be incurred by the Company in connection with
the litigation.
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Item 2. Management's Discussion and Analysis or Plan of Operation
Results of Operations
Systems sales include sales of high-speed assembly systems, upgrades to
previously sold systems and inc.jet imager systems and ancillary products.
Systems sales for the three and nine months ended December 31, 2000 were $3.5
million and $9.9 million, respectively, an increase of 65% and 23%,
respectively, over the comparable periods of the prior year. Sales of high speed
assembly systems and upgrades for the three and nine months ended December 31,
2000 were $2.8 million and $8.2 million, respectively, an increase of 65% and
22% over the comparable periods of the prior year. Backlog consists of total
contract price less revenue recognized to date for all signed orders on hand. A
summary of orders, sales and backlog for the each of the last four fiscal
quarters for the high speed assembly systems and upgrades is as follows:
(in millions)
December 31, 2000 September 30, 2000 June 30, 2000 March 31, 2000
Backlog, beginning of period $5.6 $3.4 $4.2 $4.5
Orders .9 4.9 1.9 3.1
Sales (2.8) (2.7) (2.7) (3.4)
--- --- --- ---
Backlog, end of period $3.7 $5.6 $3.4 $4.2
=== === === ===
Maintenance sales for the three and nine months ended December 31, 2000 were
$2.6 million and $7.5 million, respectively, an increase of 6% over the
comparable periods of the prior year. The increase is primarily attributable to
the larger number of systems under service contract from shipments and an
increase in service coverage for several clients.
Gross profit for the three and nine months ended December 31, 2000 was $1.5
million and $4.5 million, respectively, an increase of 81% and 45% over the
comparable periods of the prior year. The gross margin as a percentage of
systems sales increased to 28% for the quarter ended December 31, 2000 from 19%
for the quarter ended December 31, 1999. The gross margin as a percentage of
system sales increased to 31% for the nine months ended December 31, 2000 from
28% for the quarter ended December 31, 1999. The increase in gross margin on
systems sales for the three months ended December 31, 2000 is attributable to a
higher volume of systems in process during the period. The gross margin on
maintenance sales increased to 21% and 20% for the three and nine months ended
December 31, 2000, respectively, from 18% and 12% for the comparable periods of
the prior year. The increase in gross margin on maintenance sales for the three
months is attributable to a decrease in direct labor while revenues increased.
The increase in gross margin on maintenance sales for the nine months is
attributable to a decrease in direct labor and a slight decrease in service
parts costs while revenues increased.
Selling and administrative expenses for the three and nine months ended December
31, 2000 were $1.1 million and $3.4 million, respectively, a decrease of 14% and
an increase of 10% over the comparable periods of the prior year. Selling and
administrative expenses, as a percentage of total revenues, for the three and
nine months ended December 31, 2000 were 19% and 20%, respectively, as compared
to 29% and 21% for the comparable periods of the prior year. The decrease in
selling and administrative expenses for the three months is primarily
attributable to a decrease in personnel costs and a decrease in promotional
expenses related to the annual industry trade show. The increase in selling and
administrative expenses for the nine months is primarily attributable to an
increase in commissions and royalties, both of which are based on revenues, and
an increase in costs associated with the Company's Quality Initiative Program,
which began in late fiscal 1999 and the Company's biennial Users' Conference.
Research and development expenses for the three and nine months ended December
31, 2000
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\were $404,000 and $1.1 million, respectively, an increase of 43% and 14% over
the comparable periods of the prior year. Research and development expenses, as
a percentage of total revenues, for the three and nine months ended December 31,
2000 were 7% as compared to 6% and 7% for the comparable periods of the prior
year. The increase in the research and development expenses was primarily
attributable to an increase in materials required on research and development
projects during the three months ended December 31, 2000, primarily the new
Series W system introduced at the industry trade show during the quarter.
Interest expense increased $41,000 to $186,000 for the quarter ended December
31, 2000 from $145,000 for the quarter ended December 31, 1999. Interest expense
increased $100,000 to $506,000 for the nine months ended December 31, 2000 from
$406,000 for the nine months ended December 31, 1999. The increase was due to an
increase in debt.
The Company has accrued $215,000 based on management's best estimate of
potential settlement costs and expenses that are likely to be incurred by the
company in connection with certain pending litigation (See Footnote 3), $178,500
of which was expensed during the first quarter of the current fiscal year.
Liquidity and Capital Resources
The Company's primary need for liquidity is to fund operations while it
endeavors to increase sales and achieve consistent profitability. Historically,
the Company has derived liquidity through systems and maintenance sales
(including customer deposits), financing arrangements with banks and other third
parties and, from time to time, sales of its equity securities.
For the nine months ended December 31, 2000 and year ended March 31, 2000, the
Company incurred net losses of $707,000 and $759,000, respectively. At December
31, 2000, the Company has a deficiency in working capital of $2.8 million and a
stockholders' deficit of $3.7 million. On November 30, 2000, the Company
borrowed $500,000 from a director, which was used to pay in full the Company's
existing revolving loan agreement with a bank. The director acted on behalf of
Gunther Partners in fulfillment of a prior commitment letter, dated June 19,
2000 pursuant to which Gunther Partners agreed to make up to $500,000 of
additional financing available to the Company. The Company now has notes payable
to related parties of $1.0 million due within the next twelve months as well as
$600,000 of current maturities of long-term debt to related parties. These
conditions may raise doubt about the Company's ability to meet its obligations
as they become due in the ordinary course of business.
The net loss of $707,000 for the nine months ended December 31, 2000 included a
charge of $178,500 attributable to litigation while cash of $255,000 was
provided by operating activities. At December 31, 2000, backlog for high-speed
assembly system and upgrade orders, consisting of total contract price less
revenue recognized to date for all signed orders on hand, was $3.7 million.
These same orders will generate cash of $4.2 million through June 30, 2001 as
they are completed and delivered. Under the Company's normal sales pricing
policy, approximately 50% of the sales price of each system is received by the
Company within 30 days from the time an order is placed by a customer;
approximately 40% is received at the time the system is shipped to the customer
and the remaining 10% is received approximately 30 days after delivery of the
system. As a result, the Company receives a significant cash flow benefit from
the receipt of new orders.
Over a two year period beginning in January 1999, the Company has required an
additional $1.0 million to fund operations and make capital purchases. Over that
same period the Company has made capital purchases of over $1.2 million. The
Company expects capital expenditures over the next twelve months to be no more
than $400,000.
On a going forward basis, management believes that the Company's cash and cash
equivalents at December 31, 2000, together with the cash to be derived from
operating activities, will not be sufficient to meet the Company's currently
scheduled debt maturities during the next twelve months. As a result, management
expects that the Company will be required to defer or otherwise refinance the
aforementioned scheduled debt maturities beyond that period. Based on
preliminary discussions with the related party lenders, management expects that
the Company will be able to obtain a deferral of some or all of these scheduled
debt maturities. Accordingly, the accompanying financial statements do not
include any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and classification of
liabilities in the event the Company is unable to obtain such a deferral.
Ultimately, the ability of the Company to continue as a going concern will be
dependent on achieving consistently profitable operations, which in turn will be
dependent on attaining sufficient sales levels. If adequate sales levels are not
attained, the Company will be required to consider other potential courses of
action, including the issuance of additional debt and/or equity. The Company has
no
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commitments for additional debt or equity at this time. See "Forward Looking
Statements," below. There can be no assurance that the Company will not need
significantly more cash than is presently forecasted by management or that the
Company's current and expected sources of cash will be sufficient to fund the
Company's ongoing operations.
INFLATION
The effect of inflation on the Company has not been significant during the last
two fiscal years.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. In general, any
statements contained in this report that are not statements of historical fact
may be deemed to be forward-looking statements within the meaning of Section
21E. Without limiting the generality of the foregoing, the words "believes,"
"anticipates," "plans," "expects," and other similar expressions are intended to
identify forward-looking statements. Investors should be aware that such
forward-looking statements are based on the current expectations of management
and are inherently subject to a number of risks and uncertainties that could
cause the actual results of the Company to differ materially from those
reflected in the forward-looking statements. Some of the important factors which
could cause actual results to differ materially from those projected include,
but are not limited to, the following: general economic conditions and growth
rates in the finishing and related industries; competitive factors and pricing
pressures; changes in the Company's product mix; technological obsolescence of
existing products and the timely development and acceptance of new products;
inventory risks due to shifts in market demands; component constraints and
shortages; the ramp-up and expansion of manufacturing capacity; and the
continued availability of financing. The Company does not undertake to update
any forward-looking statement made in this report or that may from time-to-time
be made by or on behalf of the Company.
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GUNTHER INTERNATIONAL, LTD.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
As previously reported, a purported class action lawsuit was filed against
the Company, its then-current chief executive officer and its then-current chief
financial officer asserting claims under the federal securities law. The action
was filed in the United States District Court for the District of Connecticut.
Among other things, the complaint alleges that the Company's financial
statements for the first three quarters of fiscal 1998 were materially false and
misleading in violation of Section 10(b) of the Securities Exchange Act of 1934
(the "Exchange Act") and Rule 10b-5 promulgated thereunder, and Section 20(a) of
the Exchange Act. The plaintiffs are seeking compensatory damages and
reimbursement for the reasonable costs and expenses, including attorneys' fees,
incurred in connection with the action.
Item 6. Exhibits and Reports on Form 8-K.
A. Exhibits required by Item 601 of Regulation S-B:
10.1 Promissory Note Agreement dated November 30,
2000 between Robert Spiegel and the Registrant.
B. Reports on Form 8-K.
None.
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GUNTHER INTERNATIONAL, LTD.
SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GUNTHER INTERNATIONAL, LTD.
(Registrant)
/s/ Michael M. Vehlies Date: February 14, 2001
----------------------
Michael M. Vehlies
Chief Financial Officer and Treasurer
(On behalf of the Registrant and as
Principal Financial and Accounting Officer)
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