U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Quarterly Period Ended June 30, 2002
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 For the Transition Period From to
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.
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Commission file number 000-25727
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THE CHROMALINE CORPORATION
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(Exact name of small business issuer as specified in its charter)
Minnesota 41-0730027
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(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
4832 Grand Avenue
Duluth, Minnesota 55807
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(Address of principal executive offices) (Zip code)
(218) 628-2217
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Issuer's telephone number
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act 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 |_|
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practical date: Common Stock, $.10
par value - 1,248,127 shares outstanding as of August 12, 2002.
Transitional Small Business Disclosure Format (check one):
Yes |_| No |X|
THE CHROMALINE CORPORATION
QUARTERLY REPORT ON FORM 10-QSB
PART I. FINANCIAL INFORMATION PAGE NO.
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Item 1. Financial Statements:
Balance Sheets
as of June 30, 2002 (unaudited) and December 31, 2001 3
Statements of Operations
for the Three Months and Six Months Ended June 30, 2002 and 2001 (unaudited) 4
Statements of Cash Flows
for the Six Months Ended June 30, 2002 and 2001 (unaudited) 5
Notes to Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION 12
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SIGNATURES 14
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2
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE CHROMALINE CORPORATION
BALANCE SHEETS
JUNE 30 DECEMBER 31
2002 2001
ASSETS (UNAUDITED)
Current Assets:
Cash and cash equivalents $ 210,253 $ 543,679
Marketable securities 241,892 237,154
Trade receivables, less allowance for doubtful accounts of
$100,000 2,099,395 1,472,982
Inventories 1,737,974 1,605,670
Prepaid expenses and other assets 233,172 118,178
Income tax refund receivable 133,030
Deferred taxes 68,000 68,000
------------ -----------
Total current assets 4,590,686 4,178,693
PROPERTY, PLANT, AND EQUIPMENT, at cost:
Land and building 1,355,588 1,355,588
Machinery and equipment 2,217,125 2,189,159
Office equipment 1,128,074 1,036,077
Vehicles 136,094 223,265
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4,836,881 4,804,089
Less accumulated depreciation 3,571,766 3,501,330
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1,265,116 1,302,759
PATENT, net of amortization of $37,295 and $32,788 respectively 71,983 76,490
NONCOMPETE AGREEMENT, net of amortization of $13,333 and $10,000
respectively 86,667 90,000
LICENSE AGREEMENTS, net of amortization of $520 49,480
OTHER 187,500 187,500
DEFERRED TAXES 213,000 213,000
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$ 6,464,432 $ 6,048,442
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 422,115 $ 297,556
Line of credit 150,000
Accrued compensation 154,199 143,338
Income tax payable 55,945
Other accrued expenses 19,773 27,508
------------ -----------
Total current liabilities 802,032 468,402
CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value $.10 per share; authorized 250,000
shares; issued none
Common stock, par value $.10 per share; authorized 4,750,000
shares; issued and outstanding 1,248,127 shares and 1,271,627 124,813 127,163
Additional paid-in capital 1,269,489 1,293,460
Retained earnings 4,278,363 4,170,246
Accumulated other comprehensive income (loss) (10,265) (10,829)
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Total stockholders' equity 5,662,400 5,580,040
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$ 6,464,432 $ 6,048,442
============ ===========
See notes to financial statements.
3
THE CHROMALINE CORPORATION
STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS SIX MONTHS ENDED
ENDED JUNE 30 JUNE 30
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2002 2001 2002 2001
SALES $3,164,255 $ 2,691,234 $ 5,946,627 $ 5,549,246
COSTS AND EXPENSES:
Cost of goods sold 1,771,311 1,509,006 3,394,998 3,051,520
Selling, general, and administrative 1,015,296 1,030,834 1,965,857 2,036,628
Research and development 187,263 208,126 366,585 400,943
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2,973,870 2,747,966 5,727,440 5,489,091
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INCOME(LOSS) FROM OPERATIONS 190,385 (56,732) 219,187 60,155
INTEREST EXPENSE 170 170
INTEREST INCOME 9,997 9,642 18,346 27,657
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INCOME(LOSS) BEFORE INCOME TAXES 200,212 (47,090) 237,363 87,812
FEDERAL AND STATE INCOME
TAX EXPENSE(BENEFIT) 68,971 (17,900) 83,075 28,600
---------- ----------- ------------- --------------
NET INCOME(LOSS) $ 131,241 $ (29,190) $ 154,288 $ 59,212
========== =========== ============= ==============
EARNINGS(LOSS) PER SHARE:
Basic $ 0.11 $ (0.02) $ 0.12 $ 0.05
========== =========== ============= ==============
Diluted $ 0.11 $ (0.02) $ 0.12 $ 0.05
========== =========== ============= ==============
WEIGHTED AVERAGE COMMON SHARES
ASSUMED OUTSTANDING:
Basic 1,248,127 1,271,627 1,256,002 1,271,627
========== =========== ============= ==============
Diluted 1,248,127 1,271,627 1,256,002 1,274,750
========== =========== ============= ==============
See notes to financial statements.
4
THE CHROMALINE CORPORATION
STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS
ENDED JUNE 30
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2002 2001
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income $ 154,288 $ 59,212
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 159,805 192,487
Gain on disposed assets (19,632)
Changes in working capital components:
Decrease (increase) in:
Trade receivables (626,413) (58,960)
Prepaid expenses and other assets (114,993) (130,925)
Inventories (132,304) (55,979)
(Decrease) increase in:
Accounts payable 124,559 (129,835)
Accrued expenses 3,126 (32,114)
Income taxes payable/receivable 188,975 96,414
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Net cash used in operating
activities (262,587) (59,700)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Purchase of property and equipment (94,169) (60,209)
Payment for license agreement (50,000)
Net activity in marketable securities (4,176) 447,878
Note receivable (75,000)
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Net cash (used in)/provided by (148,345) 312,669
investing activities
CASH FLOWS FRON FINANCING
ACTIVITIES:
Proceeds from revolving credit agreement 150,000
Re-purchase of company stock (72,492)
------------ -------------
Net cash provided by 77,508
financing activities
NET (DECREASE) INCREASE IN CASH
AND CASH EQUIVALENTS (333,426) 252,969
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 543,679 71,493
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CASH AND CASH EQUIVALENTS AT
END OF PERIOD $ 210,253 $ 324,462
============ =============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Income taxes paid (refunded) $ (105,900) $ (67,814)
============= ==============
NON-CASH:
Loan receivable converted to stock $ $ 75,000
============ =============
See notes to financial statements.
5
THE CHROMALINE CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
1. Notes to Financial Statements
The balance sheet of The Chromaline Corporation (the Company) as of
June 30, 2002, and the related statements of operations for the three
and six months ended June 30, 2002 and 2001, and cash flows for the six
months ended June 30, 2001 and 2000, have been prepared without being
audited.
In the opinion of management, these statements reflect all adjustments
(consisting of only normal recurring adjustments) necessary to present
fairly the financial position of The Chromaline Corporation as of June
30, 2002, and the results of operations and cash flows for all periods
presented.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles
generally accepted in the United States of America, have been condensed
or omitted. Therefore, these statements should be read in conjunction
with the financial statements and notes thereto included in the
Company's December 31, 2001 Form 10-KSB.
The results of operations for interim periods are not necessarily
indicative of results that will be realized for the full fiscal year.
2. Inventory
The major components of inventory at June 30, 2002 and December 31,
2001 are as follows:
June 30, 2002 Dec 31, 2001
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Raw materials $ 678,918 $ 638,424
Work-in-progress 281,884 236,493
Finished goods 1,003,720 942,301
Reduction to LIFO cost (226,548) (211,548)
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Total Inventory $1,737,974 $1,605,670
=========== ==========
3. Stockholders' Equity
Six Months Ended
June 30, 2002
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Total Stockholders' Equity-December 31, 2001 $ 5,580,040
Net income $154,288
Unrealized gain on available-
for-sale investments 564
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Comprehensive income 154,852
Stock re-purchase (72,492)
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Total Stockholders' Equity-June 30, 2002 $ 5,662,400
===============
6
4. Net Income per Common Share
Basic and diluted earnings per share are presented in accordance with
Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings
per Share". The difference between average common shares and average
common and common equivalent shares is the result of outstanding stock
options.
7
THE CHROMALINE CORPORATION
The information presented below in Management's Discussion and Analysis
of Financial Condition and Results of Operations contains forward-looking
statements within the meaning of the safe harbor provisions of Section 21E of
the Securities Exchange Act of 1934, as amended. Such statements are subject to
risks and uncertainties, including those discussed under "Factors that May
Affect Future Results" below, that could cause actual results to differ
materially from those projected. Because actual results may differ, readers are
cautioned not to place undue reliance on these forward-looking statements.
Certain forward-looking statements are indicated by italics.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following management's discussion and analysis focuses on those
factors that had a material effect on the Company's financial results of
operations during the second quarter of 2002, the six months ended June 30, 2002
and the same periods of 2001. It should be read in connection with the Company's
unaudited financial statements and notes thereto included in this Form 10-QSB.
FACTORS THAT MAY AFFECT FUTURE RESULTS
Certain statements made in this Quarterly Report on Form 10-QSB, which
are summarized below, are forward-looking statements that involve risks and
uncertainties, and actual results may be materially different. Factors that
could cause actual results to differ include, but are not limited to, those
identified as follows:
- - The Company's belief that the recent draw on its line of credit
will be repaid in a short period of time with cash from
operations--Changes in anticipated operating results resulting
from decreased sales or increased operating expenses, or changes
in the Company's anticipated spending requirements, may impact the
timing or ability of the Company to make this repayment.
- - The belief that the Company's current financial resources, cash
generated from operations and the Company's capacity for debt
and/or equity financing will be sufficient to fund current and
anticipated business operations and capital expenditures. The
belief that the Company's low debt levels and available line of
credit make it unlikely that a decrease in product demand would
impair the Company's ability to fund operations--Changes in
anticipated operating results, credit availability, equity market
conditions or the Company's debt levels may further enhance or
inhibit the Company's ability to maintain or raise appropriate
levels of cash.
- - The Company's expectation that total capital expenditures in 2002
will be less than in 2001 and will be funded with cash generated
from operating activities--This expectation may be affected by
changes in the Company's anticipated capital expenditure
requirements resulting from unforeseen required maintenance or
repairs. The funding of these expenditures may be affected by
changes in anticipated operating results resulting from decreased
sales or increased operating expenses.
- - The Company's belief that the quality of its receivables is high
and that strong internal controls are in place to maintain proper
collections--This belief may be impacted by domestic economic
conditions, by economic, political, regulatory or social
conditions in foreign markets, or by the failure of the Company to
properly implement or maintain internal controls.
- - The Company's belief that its vulnerability to foreign currency
fluctuations and general economic conditions in foreign countries
is not significant--This belief may be impacted by economic,
political and social conditions in foreign markets and changes in
regulatory and competitive conditions or a change in the amount or
geographic focus of the Company's international sales.
- - The Company's plans to continue to invest in research and
development efforts, expedite internal product development and
invest in technological alliances, as well as the expected focus
and results of such investments--These plans and expectations may
be impacted by general market conditions,
8
unanticipated changes in expenses or sales, delays in the
development of new products, technological advances, the ability
to find suitable and willing technology partners or other changes
in competitive or market conditions.
- - The Company's efforts to grow its international business--These
efforts may be impacted by economic, political and social
conditions in current and anticipated foreign markets, regulatory
conditions in such markets, unanticipated changes in expenses or
sales, changes in competitive conditions or other barriers to
entry or expansion.
CRITICAL ACCOUNTING POLICIES
The Company prepares the financial statements in conformity with
accounting principles generally accepted in the United States of America.
Therefore, the Company is required to make certain estimates, judgments and
assumptions that the Company believes are reasonable based upon the information
available. These estimates and assumptions affect the reported amounts of assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the periods presented. The accounting policies,
which Chromaline believes are the most critical to aid in fully understanding
and evaluating its reported financial results, include the following:
Accounts Receivable. The Company performs ongoing credit evaluations of
its customers and adjusts credit limits based upon payment history and the
customer's current credit worthiness, as determined by review of the current
credit information. The Company continuously monitors collections and payments
from its customers and maintains a provision for estimated credit losses based
upon historical experience and any specific customer collection issues that have
been identified. While such credit losses have historically been within
expectations and the provisions established, the Company cannot guarantee that
it will continue to experience the same collection history that has occurred in
the past.
Inventory. Inventories are valued at the lower rate of cost or market
value. The Company monitors its inventory for obsolescence and records
reductions in cost when required.
RESULTS OF OPERATIONS
QUARTER ENDED JUNE 30, 2002 COMPARED TO QUARTER ENDED JUNE 30, 2001
Sales. The Company experienced record sales during the second quarter
of 2002 of $3.16 million, which were 17.5% higher than the $2.69 million in
sales during the same period in 2001. Sales were strong across most geographical
markets and products lines.
Cost of Goods Sold. Cost of goods sold during the second quarter of
2002 was $1.77 million, or 56.0% of sales, compared to $1.51 million, or 56.1%
of sales, during the same period in 2001. Quarter over quarter margins were
essentially unchanged, ending the recent decrease the Company has experienced in
this area due to a shifting product mix. The Company's sales of higher margin
film products increased helping to mitigate the effects of increased sales of
lower margin glass and crystal products
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $1.02 million, or 32.3% of sales, in the
second quarter of 2002, from $1.03 million, or 38.3% of sales, for the same
period in 2001. Expenses were lower in the second quarter of 2002 due to
decreased headcount, travel, legal fees and automobile expenses. These lower
expenses were partially offset by higher trade show costs as the Company has
increased its presence at industry events in 2002. The second quarter of 2001
included a $15,000 increase in the Company's bad debt allowance. The second
quarter of 2001 also included legal fees of $42,000 related to negotiation of an
agreement with The Aicello Corporation, N.A. ("Aicello") ending an ongoing its
lawsuit.
Research and Development Expenses. Research and development expenses
during the second quarter of 2002 were $187,000, or 5.9% of sales, versus
$208,000, or 7.7% of sales, for the same period in 2001. The reduction was due
to lower costs for production trials, lab supplies and consulting fees.
9
Interest Expense. The Company incurred minimal interest expense on a
$150,000 loan drawn from its revolving credit facility on June 20, 2002. This
draw funded a $125,000 royalty payment to Aicello, which was the second of two
royalty payments required under the agreement made in January 2001.
Interest Income. Interest income was essentially unchanged at $10,000
for the second quarter of 2002. Interest is earned primarily from government
obligation revenue bonds of various municipalities and school districts in the
State of Minnesota.
Income Taxes. Income taxes increased to $69,000, or an effective rate
of 35%, during the second quarter of 2002, versus an income tax benefit of
$18,000, or an effective rate of 38%, for the second quarter of 2001.
SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2001
Sales. The Company's sales during the first six months of 2002
increased to $5.95 million, or 7.2%, from $5.55 million in sales during the same
period in 2001. Sales growth in the first quarter was concentrated in our
abrasive etching line and in sales to Asia. In the second quarter, the sales
growth became more broad-based among geographical markets and product lines.
Cost of Goods Sold. Cost of goods sold during the first half of 2002
was $3.39 million, or 57.0% of sales, compared to $3.05 million, or 55.0% of
sales, during the same period in 2001. The cost of goods sold differential
experienced in the first quarter of 2002 of 58.0% of sales versus 54.0% of sales
in the first quarter of 2001 improved to approximately 56.0% for the second
quarters of both 2002 and 2001. Changes in these costs, both in absolute dollars
and as a percentage of sales, are driven primarily by a shift in product mix.
During the first quarter of 2002, more lower-margin emulsion and glass was sold
compared to the first quarter of 2001. During the second quarter of 2002, the
product mix shifted towards higher margin films.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses decreased to $1.97 million, or 33.1% of sales, in the
first half of 2002, from $2.04 million, or 36.7% of sales, for the same period
in 2001. The Company is seeking to control overhead costs in several areas,
including headcount, legal fees, travel, supplies and automobile expenses. The
first six months of 2001 included a $45,000 increase in the Company's bad debt
allowance reflecting the risk associated with an increased presence in Europe
and India. It also included legal fees of $104,000 related to negotiation of the
agreement with Aicello.
Research and Development Expenses. Research and development expenses
during the first half of 2002 were $367,000, or 6.2% of sales, versus $401,000,
or 7.2% of sales, for the same period in 2001. The reduction was due to lower
costs for production trials, lab supplies and consulting fees.
Interest Expense. The Company incurred minimal interest expense on a
$150,000 loan drawn from its revolving credit facility on June 20, 2002. This
draw funded a $125,000 royalty payment to Aicello, which was the second of two
royalty payments required under the agreement made in January 2001.
Interest Income. Interest income decreased to $18,000 for the first
half of 2002 compared to $28,000 for the same period in 2001. The decrease was
due to the utilization of invested cash resources for the repurchase of 23,500
shares of the Company's Common Stock in the first quarter of 2002.
Income Taxes. Income taxes increased to $83,000, or an effective rate
of 35%, during the first half of 2002 from $29,000, or an effective rate of 33%,
for the first half of 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its operations principally with funds
generated from operations. These funds have been sufficient to cover the
Company's normal operating expenditures, annual capital requirements, and
research and development expenditures.
Cash and cash equivalents were $210,000 and $324,000 at June 30, 2002
and June 30, 2001, respectively. The Company used $263,000 in cash for operating
activities during the three months ended June 30, 2002 and used
10
$60,000 in cash for operating activities during the same period in 2001. Cash
used for operating activities is primarily the result of adjusting net income
for non-cash depreciation.
During the first six months of 2002, trade receivables increased to
$626,000. The increase in receivables was driven primarily by substantially
higher sales over previous periods, as the second quarter of 2002 provided
record sales for the Company. International sales were up over 30% in the second
quarter. Payment terms for international customers vary, but average 60 to 90
days. The Company believes that the quality of its receivables is high and that
strong internal controls are in place to maintain proper collections. Inventory
levels increased $132,000, mainly in finished goods. Prepaid expenses increased
$115,000, primarily due to a $125,000 prepaid royalty payment to Aicello.
Accounts payable increased $125,000, reflecting timing of payments for inventory
to suppliers. Accrued expenses increased $3,000.
During the first six months of 2001, trade receivables increased by
$59,000, reflecting increased sales of Nichols products and crystal glass and
sales to the European region. Prepaid expenses increased $131,000, reflecting a
$150,000 prepaid royalty payment to Aicello. Inventories increased $56,000,
primarily due to an increase in raw materials. Accounts payable decreased
$130,000 and accrued expenses decreased $32,000.
The Company used $148,000 and provided $313,000, in cash for investing
activities during the six months ended June 30, 2002 and June 30, 2001,
respectively. During the first six months of 2002, the Company purchased $94,000
in capital equipment and business software. During the first half of 2002, the
Company purchased, for $50,000, a license for technology applicable to its
abrasive etching business. During the first half of 2001, the Company purchased
$60,000 in capital equipment. During this same period, the Company sold a
portion of its investment holdings in general revenue obligation bonds. These
proceeds were used to participate in a $50,000 bridge loan to Apprise
Technologies of Duluth, Minnesota that converted into stock and warrants on July
1, 2001. These proceeds also funded the $150,000 prepaid royalty payment made to
Aicello as part of the license agreement and funded the $73,000 in prepaid
production costs to Apprise for a radiometer project.
During the first quarter of 2002, the Company repurchased 23,500 shares
of its outstanding Common Stock for $72,000. This is an ongoing program in which
the Company may repurchase up to 50,000 shares of its Common Stock on the open
market.
A bank line of credit exists providing for borrowings of up to
$1,250,000. Outstanding debt under this line of credit is collateralized by
accounts receivable and inventory and bears interest at 2.25 percentage points
over the 30-day LIBOR rate. The Company made a $150,000 draw on this line of
credit on June 20, 2002, primarily to cover a royalty payment to Aicello. The
Company expects to repay this draw within a short period of time, utilizing cash
from operations.
The Company believes that current financial resources, its line of
credit, cash generated from operations and the Company's capacity for debt
and/or equity financing will be sufficient to fund current and anticipated
business operations. The Company also believes that its low debt levels and
available line of credit make it unlikely that a decrease in demand for the
Company's products would impair the Company's ability to fund operations. Future
activities undertaken to expand the Company's business may include acquisitions,
building expansion and additions, equipment additions, new product development
or pursuit of marketing opportunities.
CAPITAL EXPENDITURES
Through June 30, 2002, the Company spent $94,169 on capital
expenditures in 2002. This spending included plant equipment upgrades to improve
efficiency and reduce operating costs, additions to the Company's new business
software implemented in January 2002, the purchase of a new vehicle under the
Company's rotating replacement policy for outside salespeople and improvements
to the Company's trade show booths.
Commitments for additional capital expenditures of $50,000 include
ongoing manufacturing equipment upgrades, development equipment to modernize the
capabilities and processes of the Company's research and development laboratory
to improve measurement and quality control processes. Total 2002 commitments are
expected to be less than 2001 capital expenditures and are expected to be funded
with cash generated from operating activities.
11
INTERNATIONAL ACTIVITY
The Company markets its products to over 50 countries in North America,
Europe, Latin America, Asia and other parts of the world. Foreign sales were
approximately 31% of total sales for the three months ended June 30, 2002. This
compares with foreign sales of 28% of total sales during the same period in
2001. Sales to foreign markets for the six months ended June 30, 2002 and 2001
were both 32% of total sales. International sales in the second quarter of 2002
were higher as a percentage to total sales as compared to the same period in
2001. The fluctuation of certain foreign currencies has not significantly
impacted the Company's operations because the Company's foreign sales are not
concentrated in any one region of the world. The Company believes its
vulnerability to uncertainties due to foreign currency fluctuations and general
economic conditions in foreign countries is not significant.
Substantially all of the Company's foreign transactions are negotiated,
invoiced and paid in U.S. dollars. A portion of the Company's foreign sales are
invoiced and paid in Euros. Chromaline has not implemented a hedging strategy to
reduce the risk of foreign currency translation exposures, which management does
not believe to be significant based on the scope and geographic diversity of the
Company's foreign operations as of June 30, 2002.
FUTURE OUTLOOK
Chromaline has invested over 6% of its sales dollars in research and
development over the past several years. The Company plans to maintain its
efforts in this area and expedite internal product development as well as form
technological alliances with outside experts to ensure commercialization of new
product opportunities.
In addition to its traditional emphasis on domestic markets, the
Company will continue efforts to grow its business internationally by attempting
to develop new markets and expanding market share where it has already
established a presence.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's Annual Meeting was held April 25, 2002. The shareholders
took the following action:
The shareholders elected six directors to hold office until the next
annual meeting of shareholders. The shareholders present in person of by
proxy cast the following numbers of votes in connection with the
election of directors, resulting in the election of all nominees:
12
Votes For Votes Against Abstentions
--------- ------------- -----------
Charles H. Andresen 1,125,307 6,710 27,930
David O. Harris 1,125,307 6,710 27,930
Gerald W. Simonson 1,125,307 6,710 27,930
William C. Ulland 1,125,307 6,710 27.930
Rondi Erickson 1,125,307 6,710 27,930
H. Leigh Severance 1,125,307 6,710 27.930
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
The following exhibits are filed as part of this Quarterly Report on
Form 10-QSB for the quarterly period ended June 30, 2002:
Exhibit Description
- ------- -----------
3.1 Restated Articles of Incorporation of Company, as amended.(1)
3.2 By-Laws of the Company, as amended.(1)
11 Computation of Net Earnings per Common Share
Copies of Exhibits will be furnished upon request and payment of the
Company's reasonable expenses in furnishing the Exhibits.
(B) REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the registrant during the
quarterly period ended June 30, 2002.
- --------
1 Incorporated by reference to the like numbered Exhibit to the Company's
Registration Statement on Form 10-SB (File No. 000-25727).
13
THE CHROMALINE CORPORATION
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
THE CHROMALINE CORPORATION
DATE: August 13, 2002 By: /s/ Jeffery A. Laabs
-----------------------------------
Jeffery A. Laabs,
Chief Financial Officer, Treasurer
and Secretary
(Duly authorized officer and
Principal Financial Officer)
14
CERTIFICATION UNDER SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the
undersigned certifies that this periodic report fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934
and that information contained in this periodic report fairly presents, in all
material respects, the financial condition and results of operations of The
Chromaline Corporation.
DATE: August 13, 2002 By: /s/ William C. Ulland
--------------------------------------
William C. Ulland,
Chairman, Chief Executive Officer and
President
DATE: August 13, 2002 By: /s/ Jeffery A. Laabs
--------------------------------------
Jeffery A. Laabs,
Chief Financial Officer, Treasurer and
Secretary
15
INDEX TO EXHIBITS
Exhibit Description Page
- ------- ----------- ----
3.1 Restated Articles of Incorporation of Company, as amended...................... Incorporated by Reference
3.2 By-Laws of the Company, as amended............................................. Incorporated by Reference
11 Computation of Net Earnings per Common Share................................... Filed Electronically
16