UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): August 19, 2003
DONLAR CORPORATION
(Exact name of registrant as specified in its charter)
Illinois 000-11472 36-3683785
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
6502 South Archer Road, Bedford Park, Illinois 60501
Registrant's telephone number, including area code: (708) 563-9200
(Address of principal executive offices) (Zip Code)
(Former name or former address, if changed since last report.)
ITEM 5. OTHER EVENTS
On August 19, 2003, the Company issued the following press release.
DONLAR CORPORATION ANNOUNCES
SECOND QUARTER AND FIRST HALF 2003 RESULTS
BEDFORD PARK, IL -- (AUGUST 19, 2003) -- DONLAR CORPORATION (OTC: DLRC), a world
leader in green chemistry, products and technology, today announced that the
Company reported revenue of approximately $1.1 million for the second quarter
ended June 30, 2003, up 12% from revenue reported for the second quarter of
2002. For the first six months of 2003, the Company reported revenue of
approximately $2.2 million, up 17% over the same time period in 2002.
The Company reported revenue for the second quarter of 2003 of $1,136,783
compared to $1,014,403 for the second quarter of 2002, an increase of
approximately 12%. The Company continues to see its main revenue growth in the
oil field services industry and continues to develop sales in the agricultural
market. Net loss in the second quarter of 2003 was reduced to approximately $1.2
million, compared to a net loss of $1.6 million for the second quarter of 2002.
The decrease in net loss was primarily attributable to a reduction in interest
expense relating to conversion of debt.
The Company reported revenue for the first half of 2003 of $2,218,898 compared
to $1,892,087 for the first six months of 2002, an increase of approximately
17%. The Company reported a net loss in the first six months of 2003 of $5.6
million compared to a net loss of approximately $4.1 million for the comparable
six-month period in 2002. The increase in net loss was primarily attributable to
expenses relating to the merger of Donlar Corporation and Donlar Biosyntrex
Corporation in the first quarter 2003, as well as the conversion of debt.
Larry Koskan, President and CEO of Donlar, stated: "We are pleased with the
acceptance of Donlar's scale and corrosion inhibitor products in the oil
production, water treatment, detergents and mining industries. Our agricultural
business has continued to develop with positive results in plant health and
yield enhancement in the premium vegetable markets. Our markets are responding
to our protein polymer technology, which is leading to revenue growth and wider
acceptance of Donlar's products. The Company continues to focus on achieving
sales growth in all our markets, maintaining good expense control and developing
new products, all demonstrating our commitment of quality products and services
to our customers, employees and shareholders."
ABOUT DONLAR
Donlar Corporation is at the forefront of providing a new class of protein
biopolymers that help customers by providing solutions while satisfying
environmental concerns for the creation of non-toxic products for a wide range
of industrial, agricultural and consumer markets. The Company's non-hazardous,
non-toxic, hypoallergenic, environmentally friendly and biodegradable thermal
polyaspartate (TPA) biopolymers are protected by 187 Company-owned patents. The
Company's applications for its products include the markets of oil field
operations, fertilizers, detergents and water treatment. Donlar's beta-protein
biopolymers are manufactured in its 50,000 square foot facility located in Peru,
Illinois. (www.donlar.com)
This press release contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements, which involve a number of risks and
uncertainties. The contents of this release should be considered in conjunction
with the risk factors in Donlar Corporation's most recent filings with the
Securities and Exchange Commission on Forms 10-QSB and 10-KSB and current
reports on Form 8-K.
DONLAR CORPORATION
CONDENSED BALANCE SHEET (UNAUDITED)
JUNE 30, 2003
ASSETS
Current assets
Cash $ 91,320
Receivables 311,920
Inventories, net 724,835
Prepaid expenses 74,173
--------------
Total current assets 1,202,248
Property and equipment, net 8,356,279
Patents 1,748,876
Other assets 239,970
--------------
Total assets $ 11,547,373
==============
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities
Current portion of convertible debt $ 21,033,352
Short term notes payable 71,000
Accounts payable 648,699
Accrued expenses 4,229,738
--------------
Total current liabilities 25,982,789
Shareholders' deficit
Common stock, no par value 37,068,228
Senior convertible preferred stock, no par value 19,905,500
Additional paid-in capital 84,258,805
Accumulated deficit (155,667,949)
--------------
Total shareholders' deficit (14,435,416)
--------------
Total liabilities and shareholders' deficit $ 11,547,373
==============
DONLAR CORPORATION
CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months For the six months
ended June 30, ended June 30,
2003 2002 2003 2002
------------ ------------ ------------ ------------
Revenues $ 1,136,783 $ 1,014,403 $ 2,218,898 $ 1,892,087
Cost of revenue 854,715 752,072 1,532,830 1,610,059
Research and Development 147,954 133,216 308,832 270,152
Selling, general and administrative 522,138 255,087 1,266,707 1,029,543
------------ ------------ ------------ ------------
Total operating expenses 1,524,807 1,140,375 3,108,369 2,909,754
------------ ------------ ------------ ------------
Loss from operations (388,024) (125,972) (889,471) (1,017,667)
Other income (expense)
Interest expense (798,252) (1,610,141) (2,138,925) (2,977,436)
Debt conversion expense - - (2,579,527) (289,655)
Gain on disposal of fixed assets - - - 74,478
Other 7,587 139,398 7,588 160,743
------------ ------------ ------------ ------------
Total other expense (790,665) (1,470,743) (4,710,864) (3,031,870)
------------ ------------ ------------ ------------
Loss before income taxes (1,178,689) (1,596,715) (5,600,335) (4,049,537)
Provision for income taxes - - - -
------------ ------------ ------------ ------------
Net loss before extraordinary item (1,178,689) (1,596,715) (5,600,335) (4,049,537)
Extraordinary loss on retirement of debt - - - (1,212,120)
------------ ------------ ------------ ------------
Net loss $(1,178,689) $(1,596,715) $(5,600,335) $(5,261,657)
============ ============ ============ ============
Net loss per common share:
Basic: (0.06) (0.06) (0.27) (0.20)
Diluted: (0.06) (0.06) (0.27) (0.20)
Weighted average shares
of common stock outstanding:
Basic 20,793,360 25,831,050 20,793,360 25,831,050
Diluted 20,793,360 25,831,050 20,793,360 25,831,050
DONLAR CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED JUNE 30,
2003 2002
------------ -------------
Cash flows from operating activities
Net loss $(5,600,335) $ (5,261,657)
Adjustments to reconcile net loss to net cash
used in operating activities
Depreciation and amortization 544,793 542,343
Issuance of Common Stock for services - 27,536
Interest expense related to amortization of debt discount 44,955 2,007,544
Debt conversion expenses 2,579,527 289,655
Gain on disposal of fixed assets - (74,478)
Change in assets and liabilities
Receivables (3,400) 29,628
Inventories 204,981 576,834
Prepaid expenses and other assets (58,605) (9,594)
Accounts payable 377,904 (1,002,911)
Accrued expenses 1,941,704 (399,980)
------------ -------------
Net cash provided by (used in) operating activities 31,524 (3,275,080)
Cash flows from investing activities
Proceeds from sale of property and equipment - 103,942
Purchase of property and equipment (42,542) (34,715)
Purchase of patents - (83,255)
------------ -------------
Net cash used in investing activities (42,542) (14,028)
Cash flows from financing activities
Principal repayments of convertible notes - (17,111,948)
Proceeds from issuance of convertible notes - 20,970,107
Principal repayments of notes payable - (263,000)
Proceeds from notes payable - 11,000
Deferred financing costs - (270,419)
------------ -------------
Net cash provided by financing activities - 3,335,740
------------ -------------
Net (decrease) increase in cash and cash equivalents (11,018) 46,632
Cash and cash equivalents at beginning of period 102,338 3,746
------------ -------------
Cash and cash equivalents at end of period $ 91,320 $ 50,378
============ =============
Supplemental disclosure of cash flow information:
Interest paid $ 3,332 $ 28,184
Income tax paid - -
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DONLAR CORPORATION
Dated: August 19, 2003 By: /s/ Larry P. Koskan
---------------------------------
Larry P. Koskan, Chief Executive
Officer