UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------------
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _______ TO _______
COMMISSION FILE NUMBER 1-12694
SOLIGEN TECHNOLOGIES, INC.
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
WYOMING 95-4440838
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
19408 LONDELIUS STREET
NORTHRIDGE, CALIFORNIA 91324
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES, INCLUDING ZIP CODE)
(818) 718-1221
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Check whether the issuer (1) 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 issuer was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Number of shares of issuer's Common Stock outstanding as of August 5, 1999:
32,911,641
Transitional Small Business Disclosure Format: Yes [ ] No [X]
SOLIGEN TECHNOLOGIES, INC.
FORM 10-QSB
TABLE OF CONTENTS
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets at June 30, 1999 (unaudited) and
and March 31, 1999......................................................... 3
Consolidated Statements of Operations for the three months ended
June 30, 1999 and 1998 (unaudited)......................................... 4
Consolidated Statements of Cash flows for the three months ended
June 30, 1999 and 1998 (unaudited)......................................... 5
Notes to Consolidated Financial Statements................................. 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations .................................................... 8
PART II OTHER INFORMATION
Item 2. Changes in Securities...................................................... 13
Item 5. Other Information ........................................................ 14
Item 6. Exhibits and Reports on Form 8-K........................................... 14
Signatures ............................................................... 15
2
PART I: FINANCIAL INFORMATION
ITEM 1: CONSOLIDATED FINANCIAL STATEMENTS
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
JUNE 30, MARCH 31,
1999 1999
---- ----
(UNAUDITED)
ASSETS
Current assets:
Cash $ 271,000 $ 429,000
Accounts receivable 1,049,000 817,000
Inventories 132,000 121,000
Prepaid expenses 105,000 63,000
-------------- ---------------
Total current assets 1,557,000 1,430,000
Property, plant and equipment 2,443,000 2,369,000
Less: allowance for depreciation and amortization 1,896,000 1,817,000
------------- -------------
Net property, plant and equipment 547,000 552,000
Other assets 42,000 37,000
--------------- ---------------
TOTAL ASSETS $ 2,146,000 $ 2,019,000
=============== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 716,000 $ 628,000
Trade accounts payable 389,000 309,000
Payroll and related expenses 270,000 170,000
Accrued expenses 278,000 345,000
Deferred revenue 34,000 33,000
--------------- ---------------
Total current liabilities 1,687,000 1,485,000
Notes payable, net of current portion 8,000 10,000
Stockholders' equity:
Preferred stock, no par value:
Authorized - 10,000,000 shares
Issued and outstanding - 1,800 and 2,000
shares, respectively 900,000 1,000,000
Common stock, no par value:
Authorized - 90,000,000 shares
Issued and outstanding - 32,911,641 and
32,682,338 shares, respectively 10,647,000 10,500,000
Accumulated deficit (11,096,000) (10,976,000)
--------------- --------------
Total stockholders' equity 451,000 524,000
--------------- --------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,146,000 $ 2,019,000
=============== ==============
The accompanying notes are an integral part of these financial statements.
3
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
--------
1999 1998
---- ----
REVENUES $ 1,607,000 $ 1,640,000
COST OF REVENUES 1,030,000 1,096,000
------------ ------------
Gross profit 577,000 544,000
------------- -------------
OPERATING EXPENSES:
Research and development 280,000 244,000
Selling 177,000 180,000
General and administrative 183,000 236,000
Non-cash compensation 21,000 38,000
-------------- --------------
Total operating expenses 661,000 698,000
------------- -------------
Loss from operations (84,000) (154,000)
OTHER INCOME (EXPENSE):
Interest income 2,000 1,000
Interest expense (41,000) (56,000)
Other income 3,000 8,000
--------------- ---------------
Total other income (expense) (36,000) (47,000)
-------------- --------------
LOSS BEFORE PROVISION FOR
INCOME TAXES (120,000) (201,000)
Provision for state income taxes -- 2,000
------------ -------------
NET LOSS $ (120,000) $ (203,000)
------------ -------------
BASIC AND DILUTED
NET LOSS PER SHARE $ (0.00) $ (0.01)
============ =============
The accompanying notes are an integral part of these financial statements.
4
SOLIGEN TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
--------
1999 1998
---- ----
Cash flows from operating activities
Net loss $ (120,000) $ (203,000)
Depreciation and amortization 79,000 126,000
Non-cash interest expense 26,000 35,000
Non-cash compensation expense 21,000 38,000
Changes in assets and liabilities:
Increase in accounts receivable (232,000) (37,000)
Increase in inventories (11,000) (2,000)
Increase in prepaid expenses (42,000) (41,000)
Increase (decrease) in trade accounts payable 80,000 (224,000)
Increase (decrease) in payroll and related expenses 100,000 (10,000)
Increase (decrease) in accrued expenses (67,000) 58,000
Increase in deferred revenues 1,000 4,000
Increase in other assets (5,000) --
-------------- ------------
Net cash used for operating activities (170,000) (256,000)
-------------- ------------
Cash flows from investing activities:
Additions in property, plant and equipment (74,000) (75,000)
-------------- ------------
Net cash used for investing activities (74,000) (75,000)
-------------- ------------
Cash flows from financing activities:
Principal payments under capital lease obligations (10,000) (28,000)
Payments on notes payable (17,000) (22,000)
Net borrowings (payments) under revolving line of credit 94,000 (171,000)
Proceeds from issuance of notes payable 19,000 --
Preferred stock issuance -- 800,000
-------------- ------------
Net cash provided by financing activities 86,000 579,000
-------------- ------------
Net increase (decrease) in cash (158,000) 248,000
Cash - beginning of period 429,000 215,000
-------------- ------------
Cash - end of period $ 271,000 $ 463,000
============== ============
The accompanying notes are an integral part of these financial statements.
5
SOLIGEN TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
BASIS OF PRESENTATION
The financial information included herein for the three month period ended June
30, 1999 and 1998 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are, in the
opinion of management, necessary for a fair presentation of the financial
position, results of operations and cash flows for the interim periods. The
financial information as of March 31, 1999, is derived from Soligen
Technologies, Inc.'s Annual Report on Form 10-KSB for the fiscal year ended
March 31, 1999. The interim consolidated financial statements should be read in
conjunction with the consolidated financial statements and the notes thereto
included in the Company's 1999 Form 10-KSB.
The results of operations for the interim periods presented are not necessarily
indicative of the results to be expected for the full year.
ACCOUNTING POLICIES
Reference is made to Note 1 of Notes to Financial Statements in the Company's
Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999 for the
summary of significant accounting policies.
INVENTORIES
Inventories are stated at the lower of cost or market on a first-in, first-out
basis. Inventories consist of the following:
June 30, 1999
-------------
Raw materials and parts $ 65,000
Work in process 55,000
Finished goods 12,000
------------
Total inventories $ 132,000
============
DEFERRED REVENUE
Deferred revenue relates to the DSPC technology profit center. The deferred
revenue related to machine revenues results mainly from the Company's issuance
of licenses for the use of the machines, or to support the machines in the form
of maintenance, rather than the outright sale of machines.
6
DEBT
NOTES PAYABLE AND CAPITAL LEASES
Notes payable and capital leases consists of the following at June 30, 1999:
Notes to various investors and related parties, bearing
interest at 12 percent, due in October 1999 $ 170,000
Notes to insurance company, bearing interest at
9.84 percent, due in October 1999 29,000
Revolving line of credit, secured by certain assets
bearing interest at the bank's prime rate (7 3/4 percent
at June 30, 1999) plus 3 percent 489,000
Note to finance company, bearing interest at
0.9 percent, due in August 2001 16,000
Capital leases 20,000
------------
724,000
Less - current portion (716,000)
------------
$ 8,000
===========
In December 1997, the Company's Board of Directors approved a short-term
subordinated promissory note and warrant financing. The offering was completed
in a private placement transaction to accredited investors only pursuant to
Regulation D and Rule 506 thereunder. A total of six investors loaned a total of
$220,000 to the Company in December 1997, and one investor loaned an additional
$40,000 to the Company in January 1998. Each investor received a promissory note
in the principal amount of the amount loaned, bearing interest at the rate of
12% per annum and due six months from the date of the promissory note. In
addition, for each dollar loaned to the Company the investors received a common
stock purchase warrant exercisable for two shares of the Company's common stock
(resulting in the issuance of warrants exercisable for a cumulative total of
520,000 shares of the Company's common stock). The warrants are exercisable for
a period of five years at $0.50 per share. A finder's fee in the amount of
$17,000 was paid to a non-employee member of the Company's Board of Directors in
consideration of services provided in connection with the financing. One of the
investors was a non-employee member of the Company's Board of Directors, one
investor was an employee member of the Company's Board of Directors, and the
remaining five investors were unaffiliated private investors. On June 12, 1998,
the Company extended $220,000 notes payable under the same terms and conditions
for an additional 45 days. In connection with this extension, warrants
exercisable for 110,000 shares of the Company's common stock were issued to the
investors. On July 27, 1998, the Company extended $210,000 notes payable under
the same terms and conditions for an additional 90 days. In connection with this
extension, warrants exercisable for 210,000 shares of the Company's common stock
were issued to the investors. On October 25, 1998, the Company extended $140,000
notes payable for an additional six months under the same terms and conditions
except for a change in the exercise price of the issued warrants. In
7
connection with this extension, warrants exercisable for 330,000 shares of
the Company's common stock exercisable at $0.375 per share were issued to the
investors.
In December 1998, the Company's Board of Directors approved an additional
subordinated promissory note and warrant financing in the principal amount of up
to $500,000. The offering is for accredited investors only pursuant to
Regulation D and Rule 506 thereunder. Such notes are to bear interest at 12% per
annum and to be due April 25, 1999 and each such note purchaser to receive
warrants to purchase four shares of the Company's Common Stock exercisable at
$0.375 per share for each dollar of principal loaned to the Company per year of
the term of the note, pro-rated to the stated term of the note. Pursuant to this
financing, one investor loaned $30,000 to the Company in November 1998,
resulting in the issuance of warrants exercisable for a total of 50,000 shares
of the Company's common stock. The warrants are exercisable for a period of five
years. On April 25, 1999, the Company extended $170,000 notes payable for an
additional six months under the same terms and conditions except for a change in
the exercise price of the issued warrants. In connection with this extension,
warrants exercisable for 340,000 shares of the Company's common stock
exercisable at $0.1875 per share were issued to the investors.
PREFERRED STOCK
On April 24, 1998, the Company entered into a Series A Convertible Preferred
Stock Purchase Agreement providing for the private placement of up to 3,000
shares of a newly authorized series of preferred stock. The Company received
gross proceeds of $800,000 in April 1998, $100,000 in July 1998 and $100,000 in
September 1998 from the sale of 1,600, 200 and 200 shares, respectively, of
Series A Preferred Stock to three private investors pursuant to the Series A
Convertible Preferred Stock Purchase Agreement. In June 1999, two private
investors converted 200 shares of Series A Preferred Stock into 229,303 shares
of the Company's common stock.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
THIS QUARTERLY REPORT ON FORM 10-QSB CONTAINS CERTAIN FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE BASED LARGELY ON THE COMPANY'S
CURRENT EXPECTATIONS AND ARE SUBJECT TO A NUMBER OF RISKS AND UNCERTAINTIES
INCLUDING, AMONG OTHERS (i) CUSTOMER ACCEPTANCE OF THE COMPANY'S "ONE STOP SHOP"
PARTS NOW PROGRAM; (ii) THE POSSIBLE EMERGENCE OF COMPETING TECHNOLOGIES; AND
(iii) THE COMPANY'S ABILITY TO OBTAIN ADDITIONAL FINANCING REQUIRED TO SUPPORT
ITS CONTINUING OPERATIONS AND PROJECTED REVENUE GROWTH. ACTUAL RESULTS COULD
DIFFER MATERIALLY FROM THESE FORWARD-LOOKING STATEMENTS. IN VIEW OF THESE RISKS
AND UNCERTAINTIES, THERE CAN BE NO ASSURANCE THAT THE FORWARD-LOOKING STATEMENTS
CONTAINED IN THIS QUARTERLY REPORT ON FORM 10-QSB WILL IN FACT TRANSPIRE.
The following discussion should be read in conjunction with the accompanying
Financial Statements of Soligen Technologies, Inc ("STI") and its wholly-owned
subsidiary Soligen, Inc.
8
("Soligen") (collectively referred to herein as the "Company") including the
notes thereto, included elsewhere in this Quarterly Report. On December 31,
1998, Altop, Inc., a wholly- owned subsidiary of Soligen Technologies, Inc.,
was merged into Soligen, Inc. and will operate as Soligen - Santa Ana
Division.
OVERVIEW
The Company has developed a proprietary technology known as Direct Shell
Production Casting ("DSPC-Registered Trademark-"). This technology is
embodied in the Company's DSPC 300 System (the "DSPC System"), which produces
ceramic casting molds directly from Computer Aided Design ("CAD") files.
These ceramic molds are used to cast metal parts, which conform to the CAD
design. This unique capability distinguishes the DSPC System from typical
rapid prototyping technologies that are characterized by the ability to
produce non-functional, three-dimensional representations of parts from CAD
files.
The Company's DSPC System is based upon proprietary technology developed by the
Company and certain patent and other proprietary rights licensed to Soligen, a
wholly-owned subsidiary of the Company, by the Massachusetts Institute of
Technology ("MIT") pursuant to a license agreement (the "License") dated October
18, 1991, as amended. Pursuant to the License, MIT granted Soligen an exclusive,
world-wide license until October 1, 2006 to develop, manufacture, market and
sell products utilizing certain technology and processes for the production of
ceramic casting molds for casting metal parts. The license continues on a
non-exclusive basis thereafter until the expiration of the last patent relating
to the licensed technology. The exclusive period may be extended by mutual
agreement of both parties.
The Company believes that the rapid mold production capabilities of the DSPC
System provide a substantial competitive advantage over existing producers of
cast metal parts. Use of the DSPC System eliminates the need to produce tooling
(patterns and core boxes) for limited runs of metal parts, thereby reducing both
the time and the labor otherwise required to produce ceramic casting molds for
casting the metal parts. It provides for a paradigm shift by enabling engineers
to postpone the design or the fabrication of production casting tooling until
after the designed part has been functionally tested. This ability, in addition
to expediting the design verification and testing, enables manufacturers to save
time and money by designing with very little chance for error, on the first
attempt the production casting tools, which are required for large production
runs.
The DSPC System can also be used to produce the production tooling (usually
made of steel), required to cast the parts in larger production runs. To
capitalize on this advantage, the Company plans to form a network of rapid
response production facilities owned either by the Company or by licensed
third parties. This network will operate under the trade name Parts
Now-Registered Trademark- service. These facilities will include DSPC
production facilities and foundries with in-house machine shops. The Company
intends to establish itself as a leading manufacturer of cast metal parts by
providing a seamless transition from CAD file to finished part.
9
The Company operates the following four major revenue-generating production
centers:
1. PARTS NOW CENTER: Oversees the "one stop shop" production services from
receipt of the customer's CAD file through production. Parts Now is
responsible for any contract which requires a combination of the DSPC
production center and conventional casting and CNC machining expertise. The
Parts Now Center consists of program managers who oversee the transition
from CAD to first article, to tooling, to conventional casting and later to
mass production. The center acquires services from the DSPC Production
Center and the Production Parts Center.
2. DSPC PRODUCTION CENTER: Revenues result from using the DSPC process in the
production and sale of first article and short run quantities of cast metal
parts made directly from the customer's CAD file. This center also provides
DSPC parts and tool making services to the Parts Now Center
3. PRODUCTION PARTS CENTER: Revenues result from the production, and sale of
production quantities of cast and machined aluminum parts for industrial
customers. The Company generates revenues in this area through its aluminum
foundry and machine shop division in Santa Ana, CA. This center is limited
to conventional casting of aluminum parts that do not utilize DSPC made
tooling.
4. DSPC TECHNOLOGY CENTER: Revenues result from the sale, lease, license or
maintenance of DSPC machines and from participation in research and
development projects wherein the Company provides technological expertise.
RESULTS OF OPERATIONS
Revenues for the three months ended March 31, 1999 and the three months June 30,
1999 and 1998 were as follows:
THREE MONTHS THREE MONTHS ENDED
ENDED JUNE 30,
MARCH 31, -------
1999 1999 1998
---- ---- ----
Parts Now-Registered Trademark- $ 1,074,000 $ 902,000 $ 715,000
DSPC-Registered Trademark- production 348,000 423,000 600,000
Production parts 148,000 257,000 288,000
DSPC-Registered Trademark- technology 27,000 25,000 37,000
----------- ----------- -----------
Total revenues $ 1,597,000 $ 1,607,000 $ 1,640,000
=========== =========== ===========
Revenues for the quarter ended June 30, 1999 were $1,607,000, a decrease of 2%
compared to $1,640,000 in the quarter ended June 30, 1998 and increased from
$1,597,000 in the quarter ended March 31, 1999. Compared to the comparable
period a year ago, combined revenues for Parts Now and DSPC production increased
to $1,325,000 from $1,315,000 and decreased from $1,422,000 in the quarter ended
March 31, 1999. Production parts decreased to $257,000 in the
10
quarter ended June 30, 1999 from $288,000 in the similar quarter last year
and increased from $148,000 in the quarter ended March 31, 1999. DSPC
technologies revenues were also relatively flat decreasing to $25,000 for the
quarter ended June 30, 1999 from $37,000 in the similar quarter last year and
decreased from $27,000 in the quarter ended March 31, 1999.
Gross profit for the three months ended June 30, 1999 was $577,000 or 36% as
compared to $544,000 or 33% in the quarter ended June 30, 1998. The increased
gross profit was due to lower depreciation and better management of production
supplies.
Research and development expenses increased 15% to $280,000 for the quarter
ended June 30, 1999 from $244,000 in the quarter ended June 30, 1999. The
Company intends to continue the advancement of DSPC technology and its
applications in the market place.
Selling expenses were relatively flat decreasing to $177,000 for the quarter
ended June 30, 1999 from $180,000 in the similar quarter last year.
General and administrative expenses decreased 22% to $183,000 for the quarter
ended June 30, 1999 from $236,000 in the quarter ended June 30, 1998. The
decrease was the result of lower wages and professional fees.
The Company issued stock options to non-employees in fiscal 1996 and, according
to SFAS No. 123 (Accounting for Stock-Based Compensation), non-cash compensation
expense is to be recognized over the expected period of benefit. As a result,
the Company recognized $21,000 and $38,000 non-cash compensation expense,
respectively, for the quarters ended June 30, 1999 and June 30, 1998. The
Company expects to recognize approximately $73,000 non-cash compensation expense
during fiscal 2000.
Interest expense decreased to $41,000 in the quarter ended June 30, 1999 from
$56,000 in the similar quarter ended last year. The Company issued warrants to
the short-term debt investors and, according to SFAS No. 123, non-cash interest
expense related to the warrants is to be recognized over the expected period of
the loan. As a result, the Company recognized $26,000 and $35,000 non-cash
interest expense, respectively, in the quarters ended June 30, 1999 and June 30,
1998. The Company expects to recognize approximately $48,000 non-cash interest
expense through October 1999. The additional interest expense in the amount of
$15,000 and $21,000, respectively, for the quarters ended June 30, 1999 and June
30, 1998 was the result of payments made for capital leases, other notes
payable, short-term debt investors and the commercial lender associated with the
revolving line of credit.
CASH AND SOURCES OF LIQUIDITY
At June 30, 1999, working capital decreased to $(130,000) compared to working
capital of $838,000 at June 30, 1998, and $(55,000) at March 31, 1999. At June
30, 1999, the Company had $1,320,000 in cash and accounts receivable, compared
to cash and accounts receivable of $1,758,000 at June 30, 1998 and $1,246,000 at
March 31, 1999.
11
In April 1998, the Company received net proceeds of $775,000 from the sale of
1,600 shares of Series A Preferred Stock to two private investors. The Series A
Convertible Preferred Stock Purchase Agreement, as amended, between the Company
and these investors, permitted additional sales of Series A Preferred Stock to
be completed prior to September 8, 1998. In July 1998, the Company received
additional net proceeds of $88,000 from the sale of 200 shares of Series A
Preferred Stock to the same two private investors pursuant to the Series A
Convertible Preferred Stock Purchase Agreement. In addition, in September 1998,
the Company received additional net proceeds of $94,000 from the sale of 200
shares of Series A Preferred Stock to a third investor pursuant to the Series A
Convertible Preferred Stock Purchase Agreement.
The current lender that provides the Company a $1 million revolving line of
credit, has made notification that the credit facility will not be extended
beyond August 31, 1999. A new lender has given an oral commitment to provide the
Company with a $1 million revolving line of credit at an advance rate of 80% of
eligible accounts receivable. This oral commitment is still subject to
satisfactory completion of the lender's due diligence. It is anticipated the
agreement with this new lender will be signed prior to August 31, 1999.
The Company is also in discussions with potential equity investors for a
$750,000 convertible debt financing with an anticipated closing date in
September 1999. The Company requires significant funds to expand and continue
operations. Based upon current projections the Company believes the current
cash, funds anticipated to be received from the revolving line of credit and
funds anticipated to be raised from private sources will be adequate to fund
operations through March 2000. The Company is actively seeking to raise these
additional funds; however, there can be no assurance as to the success of these
efforts.
YEAR 2000 DISCLOSURE
The Company reviewed its hardware and related software used for operations and
financial management and made necessary changes to become Year 2000 compliant.
The incremental costs to become compliant did not have a material effect on the
Company's consolidated financial statements. The Company has and continues to
contact major vendors and other third parties that do business with the Company
to check on the status of their efforts to resolve any Year 2000 issues. The
Company prepared a contingency plan based on the Year 2000 readiness of major
vendors and customers. In order to provide for an uninterrupted production flow
at year-end, the Company plans to increase the inventory of critical production
items. The Company is presently unable to assess the likelihood that it will
experience significant operational problems due to unresolved third party
issues; there can be no assurance that these entities will achieve timely Year
2000 compliance and therefore could have a material impact on the Company's
operations.
12
PART II: OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES
In December 1997, the Company's Board of Directors approved a short-term
subordinated promissory note and warrant financing. The offering was completed
in a private placement transaction to accredited investors only pursuant to
Regulation D and Rule 506 thereunder. A total of six investors loaned a total of
$220,000 to the Company in December 1997, and one investor loaned an additional
$40,000 to the Company in January 1998. Each investor received a promissory note
in the principal amount of the amount loaned, bearing interest at the rate of
12% per annum and due six months from the date of the promissory note. In
addition, for each dollar loaned to the Company the investors received a common
stock purchase warrant exercisable for two shares of the Company's common stock
(resulting in the issuance of warrants exercisable for a cumulative total of
520,000 shares of the Company's common stock). The warrants are exercisable for
a period of five years at $0.50 per share. A finder's fee in the amount of
$17,000 was paid to a non-employee member of the Company's Board of Directors in
consideration of services provided in connection with the financing. One of the
investors was a non-employee member of the Company's Board of Directors, one
investor was an employee member of the Company's Board of Directors, and the
remaining five investors were unaffiliated private investors. On June 12, 1998,
the Company extended $220,000 notes payable under the same terms and conditions
for an additional 45 days. In connection with this extension, warrants
exercisable for 110,000 shares of the Company's common stock were issued to the
investors. On July 27, 1998, the Company extended $210,000 notes payable under
the same terms and conditions for an additional 90 days. In connection with this
extension, warrants exercisable for 210,000 shares of the Company's common stock
were issued to the investors. On October 25, 1998, the Company extended $140,000
notes payable for an additional six months under the same terms and conditions
except for a change in the exercise price of the issued warrants. In connection
with this extension, warrants exercisable for 330,000 shares of the Company's
common stock exercisable at $0.375 per share were issued to the investors.
In December 1998, the Company's Board of Directors approved an additional
subordinated promissory note and warrant financing in the principal amount of up
to $500,000. The offering is for accredited investors only pursuant to
Regulation D and Rule 506 thereunder. Such notes are to bear interest at 12% per
annum and to be due April 25, 1999 and each such note purchaser to receive
warrants to purchase four shares of the Company's Common Stock exercisable at
$0.375 per share for each dollar of principal loaned to the Company per year of
the term of the note, pro-rated to the stated term of the note. Pursuant to this
financing, one investor loaned $30,000 to the Company in November 1998,
resulting in the issuance of warrants exercisable for a total of 50,000 shares
of the Company's common stock. The warrants are exercisable for a period of five
years. On April 25, 1999, the Company extended $170,000 notes payable for an
additional six months under the same terms and conditions except for a change in
the exercise price of the issued warrants. In connection with this extension,
warrants exercisable for 340,000 shares of the Company's common stock
exercisable at $0.1875 per share were issued to the investors.
13
ITEM 5. OTHER INFORMATION
The Nasdaq-Amex staff has notified the Company of its intention to delist the
Company. This determination is based on the Company not meeting the continued
listing guidelines. The Company appealed this determination and a hearing was
held May 24, 1999. The Nasdaq-Amex staff has not advised the Company of its
decision regarding the appeal. In the event the Company's Common Stock is
delisted from the American Stock Exchange's Emerging Company Marketplace,
trading in the Company's Common Stock would thereafter be conducted in the
over-the-counter market in the so-called "pink sheets" published by the National
Quotation Bureau or the OTC Bulletin Board of the National Association of
Securities Dealers, Inc. and on the Vancouver Stock Exchange under the symbol
SGT. As a consequence of such delisting by Nasdaq-Amex, the Company may find it
more difficult to raise additional funds.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS: The following exhibits are filed as part of this report:
EXHIBIT
NUMBER DESCRIPTION
------- -----------
11.1 Computation of Net Loss Per Share
27 Financial Data Schedule for the Quarter Ended June 30, 1999
(b) Reports on Form 8-K.
None
14
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
SOLIGEN TECHNOLOGIES, INC.
Date: August 12, 1999 By: /s/ Yehoram Uziel
----------------------------------------
Yehoram Uziel
President, CEO and Chairman of the Board
(Principal executive officer)
Date: August 12, 1999 By: /s/ Robert Kassel
----------------------------------------
Robert Kassel
Chief Financial Officer
(Principal financial officer)
15