-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A7a4Zl6HHjFqfKNTF4LlhfqjdbgrsyRXWIZgVFMpGuMxtrKaGJ6dVkzukXC4majZ lOeAvwO8s2SdcdUo4M+1gQ== 0001096906-00-000094.txt : 20000516 0001096906-00-000094.hdr.sgml : 20000516 ACCESSION NUMBER: 0001096906-00-000094 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000515 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AIR PACKAGING TECHNOLOGIES INC CENTRAL INDEX KEY: 0001085117 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 954337254 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-26105 FILM NUMBER: 634611 BUSINESS ADDRESS: STREET 1: 25620 RYE CANYON ROAD CITY: VALENCIA STATE: CA ZIP: 91355 BUSINESS PHONE: 6612942222 MAIL ADDRESS: STREET 1: 25620 RYE CANYON ROAD CITY: VALENCIA STATE: CA ZIP: 91355 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ( X ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ____________________TO_____________________ AIR PACKAGING TECHNOLOGIES, INC. (EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER) DELAWARE 95-4337254 (STATE OF INCORPORATION) (IRS EMPLOYER ID NO.) 25620 RYE CANYON ROAD, VALENCIA, CALIFORNIA 91355 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (661) 294-2222 (Issuer's telephone number) APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS: INDICATE BY CHECK MARK WHETHER THE REGISTRANT HAS FILED ALL DOCUMENTS AND REPORTS REQUIRED TO BE FILED BY SECTIONS 12,13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 SUBSEQUENT TO THE DISTRIBUTION OF SECURITIES UNDER A PLAN CONFIRMED BY A COURT. YES__________ NO__________ APPLICABLE ONLY TO CORPORATE ISSUERS: INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF COMMON STOCK, AS OF THE LATEST PRACTICABLE DATE. AS OF MARCH 31, 2000, THERE WERE 7,520,415 SHARES OF COMMON STOCK OUTSTANDING. AIR PACKAGING TECHNOLOGIES, INC TABLE OF CONTENTS ----------------- PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS BALANCE SHEETS - MARCH 31, 2000 AND DECEMBER 31, 1999 1 STATEMENTS OF OPERATIONS - THREE MONTHS ENDED MARCH 31, 2000 AND 1999 2 STATEMENTS OF CASH FLOWS - THREE MONTHS ENDED MARCH 31, 2000 AND 1999 3 NOTES TO FINANCIAL STATEMENTS 4 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 7 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS 12 ITEM 2. CHANGES IN SECURITIES 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 12 ITEM 6. EXHIBITS 13 SIGNATURES 13 AIR PACKAGING TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS
3/31/00 12/31/99 (Unaudited) (Audited) ---------- ------- ASSETS CURRENT ASSETS Cash. . . . . . . . . . . . . . . . . . . . . 511,128 1,150,151 Trade receivables, net of allowance of $22,630 and $22,630. . . . . . . . . . . . . 108,658 57,603 Inventories, net of reserve of $33,000 and $33,000. . . . . . . . . . . . . . . . . 681,987 577,389 Advances and prepaids . . . . . . . . . . . . 50,339 41,895 ------------ ------------- Total current assets. . . . . . . . . . . . 1,352,112 1,827,038 Property and equipment, net of depreciation of $1,556,258 and $1,498,949 . . . . . . . . 676,655 714,186 Intangible assets, net of amortization of of $588,656 and $575,960 . . . . . . . . . . 220,973 229,378 Deferred financing costs, net of amortization of $19,792 and $10,417 . . . . . . . . . . . 130,208 139,583 Deposits. . . . . . . . . . . . . . . . . . . 60,100 60,100 ------------ ------------- TOTAL ASSETS. . . . . . . . . . . . . . . . 2,440,048 2,970,285 ============ ============= LIABILITIES & STOCKHOLDERS' EQUITY CURRENT LIABILITIES ACCOUNTS PAYABLE & accrued expenses . . . . . 232,237 402,031 Deferred revenue. . . . . . . . . . . . . . . 14,992 8,795 ------------ ------------- TOTAL CURRENT liabilities . . . . . . . . . 247,229 410,826 Senior convertible notes. . . . . . . . . . . 1,500,000 1,500,000 ------------ ------------- Total long term liabilities . . . . . . . . 1,500,000 1 ,500,000 Common stock, $.O1 par value per share. Authorized - 50,000,000 shares; Issued and outstanding 7,520,415 at March 31, 2000 and 7,966,408 at December 31, 1999. . . . . . . . . . . . . . 75,204 79,664 Additional paid in capital. . . . . . . . . . 20,794,247 20,789,787 Accumulated deficit . . . . . . . . . . . . . (20,176,632) (19,809,992) ------------ ------------- TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . 692,819 1,059,459 ------------ ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY. . 2,440,048 2,970,285 ============ =============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS. AIR PACKAGING TECHNOLOGIES, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS
Three months Three months ended ended 3/31/00 3/31/99 (Unaudited) (Unaudited) --------------- ----------- Net sales . . . . . . . . . . . . . . . . . . 147,452 199,029 Cost of sales. . . . . . . . . . . . . . . . 129,343 184,912 --------------- ----------- Gross profit. . . . . . . . . . . . . . . . . 18,109 14,117 Operating expenses: General, administrative and selling expenses. 366,753 378,957 Research and development. . . . . . . . . . . - 677 --------------- ----------- Total operating expenses. . . . . . . . . . . 366,753 379,634 Loss from operations. . . . . . . . . . . . . (348,644) (365,517) Interest expense/(income) . . . . . . . . . . 17,996 (3,507) --------------- ----------- Net loss. . . . . . . . . . . . . . . . . . . (366,640) (362,010) =============== =========== Loss per common share: Basic and diluted . . . . . . . . . . . . . (0.05) (0.05) --------------- ----------- Weighted average number of common shares outstanding: Basic and diluted . . . . . . . . . . . . . 7,520,415 6,789,255 ------------------- -----------
See notes to consolidated financial statements. AIR PACKAGING TECHNOLOGIES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Three months months ended ended 3/31/00 3/31/99 (Unaudited) (Unaudited) ------------- ----------- Cash flows from operating activities: Net loss . . . . . . . . . . . . . . . . . . (366,640) (362,010) Adjustments to reconcile net loss to net cash used in operating activities: . . . . - - Depreciation and amortization. . . . . . . 79,379 68,138 Increase (decrease) from changes in: Trade receivables. . . . . . . . . . . . . (51,055) (29,962) Inventories. . . . . . . . . . . . . . . . (104,598) (177,470) Advances and prepaids. . . . . . . . . . . (8,444) 50,266 (Decrease) increase from changes in: Accounts payable & accrued liabilities . . (169,794) (41,714) Deferred revenue . . . . . . . . . . . . . 6,197 (88) -------------- ----------- Net cash used in operating activities. . . (614,955) (492,840) -------------- ----------- Cash flows from investing activities: Purchases of property and equipment. . . . . (19,778) (12,504) Patent expenditures. . . . . . . . . . . . . (4,290) (14,245) -------------- ----------- Net cash used in investing activities. . . (24,068) (26,749) -------------- ----------- Cash flows from financing activities: Proceeds from exercise of warrants. . . . . - 615,000 -------------- ----------- Net cash provided by financing activities - 615,000 -------------- ----------- Net (decrease) increase in cash. . . . . . . (639,023) 95,411 Cash, beginning of period . . . . . . . . . . 1,150,151 125,799 -------------- ----------- Cash, end of period. . . . . . . . . . . . . 511,128 221,210 ============== =========== Supplemental disclosure of cash flow information: Cash paid during the three months for: Income taxes. . . . . . . . . . . . . . . . 800 Interest - -
See notes to consolidated financial statements. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2000 (UNAUDITED) NOTE 1 - STATEMENT OF INFORMATION FURNISHED - ------------------------------------------------- In the opinion of management the accompanying unaudited financial statements contain all adjustments (consisting only of normal and recurring accruals) necessary to present fairly the financial position as of March 31, 2000, and the results of operations and cash flows for the three month periods ended March 31, 2000 and 1999. These results have been determined on the basis of generally accepted accounting principles and practices applied consistently with those used in the preparation of the Company's Annual Report and the Form 10-K for the fiscal year ended December 31, 1999. The results of operations for the three month period ended March 31, 2000 are not necessarily indicative of the results to be expected for any other period or for the entire year. Certain information and footnote disclosures normally included in financial statements presented in accordance with generally accepted accounting principles have been condensed or omitted. The accompanying financial statements should be read in conjunction with the Company's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1999. NOTE 2 - EARNINGS (LOSS) PER COMMON SHARE - ------------------------------------------------ The Company computes loss per common share under SFAS No. 128, "Earnings Per Share," which requires presentation of basic and diluted earnings (loss) per share. Basic earnings (loss) per common share is computed by dividing income or loss available to common shareholders by the weighted average number of common shares outstanding for the reporting period. Diluted earnings (loss) per common share reflects the potential dilution that could occur if securities or other contracts, such as stock options, to issued common stock were exercised or converted into common stock. Common stock options were not included in the computation of diluted loss per common share for the three months ended March 31, 2000 and 1999 because the effect would be antidilutive. NOTE 3 - STOCK SPLIT - ------------------------ In January 2000, the Board of Directors declared a one-to-ten reverse stock split. All stock-related data in the consolidated financial statements reflect the stock split for all periods presented. NOTE 4 - EXERCISE OF WARRANTS AND OPTIONS - ------------------------------------------------ The Company issued 410,000 shares of its common stock at $1.50 per share upon the exercise of warrants by a shareholder during the three months ended March 31, 1999. On March 24, 2000, the Board of Directors approved a temporary reduction in the exercise price of all warrants and options outstanding. The exercise price was reduced from $1.50 to the average bid price of the Company's common stock for the twenty-five trading days immediately prior to the receipt of a notice of conversion with a minimum conversion price of $0.50. The notice of exercises must be received by April 30, 2000. During the three months ended March 31, 2000, the Company cancelled 100,000 stock options outstanding to officers and issued an additional 375,000 stock options, which expire December 31, 2004 and are subject to certain vesting terms. During the three months ended March 31, 2000, a warrant holder submitted 40,000 warrants to purchase common stock for cancellation by the Company. NOTE 5 - SENIOR CONVERTIBLE NOTES - -------------------------------------- During the year ended December 31, 1999, the Company issued $1,500,000 in Senior Convertible Notes with interest payable annually on June 30 at 7% per annum. The Senior Convertible Notes are unsecured and due on September 30, 2003. At the option of the holder, the holder may convert the principal amount of such Note at any time before September 30, 2003, into shares of common stock. The conversion price is equal to or greater than the fair value of the stock on the date the Senior Convertible Notes were issued. At the holder's option, the holder may elect to receive any annual interest payment in common stock of the Company at a 20% discount. The difference between the fair market value of the stock on date of conversion and the conversion price will be recorded as additional interest expense. In conjunction with these Notes, the Company paid a finder's fee of $150,000 and other financing costs, which is being amortized over the life of the Notes. On March 24, 2000, the Board of Directors of the Company approved a temporary reduction in the conversion price on the 7% Senior Convertible Debenture into common stock. The conversion price was reduced from $1.50 to the average bid price of the Company's common stock for the twenty-five trading days immediately prior to the receipt of a notice of conversion, with a minimum conversion price of $0.50. The notice of conversion for the temporary reduction must be received by April 30, 2000 and must include all accrued interest through May 31, 2000. As a result, the Company will record an expense related to the reduction in conversion price. During April 2000, the Company received notices of conversion from all of the debenture holders. NOTE 6 - LIQUIDITY AND GOING CONCERN - ------------------------------------------- The financial statements as of March 31, 2000 have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. However, there is substantial doubt about the Company's ability to continue as a going concern because of the magnitude of the Company's losses during the past three years of ($1,853,012), ($1,723,647) and ($1,824,199)in 1999, 1998, and 1997, respectively and a net loss of ($366,640) for the three months ended March 31, 2000 and an accumulated deficit of ($20,176,632) at March 31, 2000. The Company's continued existence is dependent upon its ability to raise additional capital, to increase sales, to significantly improve operations, and ultimately become profitable. The Company believes that future investments and certain sales-related efforts will provide sufficient cash flow for it to continue as a going concern in its present form. However, there can be no assurance that the Company will achieve such results. Accordingly, the consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amount and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern. On March 27, 2000, the Company entered into a one-year investment banking agreement with Givigest Fiduciaria SA "Givigest" to raise equity capital. As of April 30, 2000, the Company has been advised that $225,000 has been raised pursuant to the agreement and the subscription agreement is being prepared and the funds will be forwarded to the Company during the second quarter of fiscal 2000. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - -------------------------------------------------------------------------------- OF OPERATIONS - -------------- GENERAL Air Packaging Technologies, Inc. (APTI) manufactures and markets a line of industrial packaging products under the name "Air Box" . The Air Box provides reusable protective packaging during shipping and storage for a wide range of higher value items. It provides vastly superior protection from ESD (electro static discharge) damage and moisture. It also provides see-through transparency for visual inspection of the product during shipment and upon receipt. The Company has an aggressive on-going plan to increase its sales activity and achieve a profitable business level of sales. In past time periods, the Company's sales activities have been limited by a lack of funds, incomplete designs and poor manufacturing quality. All of the known design and quality problems of the Company were resolved successfully in the fourth quarter of fiscal 1998. Only since January 1999 has the Company been able to concentrate on developing future sales with major customers. 1. RESULTS OF OPERATIONS Net sales for the three months ended March 31, 2000 were $147,452 compared to net sales of $199,029 for the comparable period of the preceding year. This represents a decrease of $51,577 or 26%. The net decrease is primarily due to sales of the SDS Air Box product line which were made to one customer during the first quarter of fiscal 1999 and were not repeated during the first quarter of fiscal 2000. This decrease is partially offset by an increase in sales of the Air Box product line during the three months ended March 31, 2000 from the comparable period of the preceding year. Cost of sales decreased $55,569 or 30% for the three months ended March 31, 2000. The decrease is due to the related decrease in sales. As sales increase, additional working capital is required to fund inventory and work in process. As a result of these factors, the Company has an ongoing and urgent need for infusion of additional working capital. General, administrative and selling expenses decreased by $12,204 or 3% during the three months ended March 31, 2000 as compared to the three months ended March 31, 1999. The net decrease is primarily due to a decrease in legal professional fees during the first quarter of fiscal 2000. Interest expense (income) was $17,996 at March 31, 2000 and $(3,507) at March 31, 1999. Interest expense increased approximately $26,000 for the three months ended March 31, 2000 as compared to the three months ended March 31, 1999 which is related to the 7% interest-bearing Convertible Senior Notes which were issued during the third and fourth quarters of fiscal 1999. Interest income increased approximately $6,800 during the three months ended March 31, 2000 from the comparable period of the prior year as the Company had an increase in cash placed in an interest-earning account. As a result of the above, net loss for the three month period ended March 31, 2000 decreased by $4,630 to $366,640 from $362,010. The Company is currently in a loss carry-forward position. The net operating loss carry-forward balance as of March 31, 2000 was approximately $18,600,000 compared to $18,200,000 as of December 31, 1999. The net operating loss carry-forward is available to offset future taxable income through 2019. The Company's net operating loss carry-forwards may be limited due to ownership changes as defined under Section 382 of the Internal Revenue Code of 1986. At March 31, 2000, the Company had a deferred tax asset, which primarily related to the net operating losses. A 100% valuation allowance has been established as management cannot determine whether it's more likely than not that the deferred tax assets will be realized. 2. LIQUIDITY AND CAPITAL RESOURCES During the Company's operating history, it has yet to show a net profit for any given fiscal year. The Company sustained net losses of approximately $1,853,000, $1,724,000 and $1,824,000 for the fiscal years ended December 31, 1999, 1998 and 1997, respectively that have caused the Company's Independent Certified Public Accountants to issue an explanatory paragraph in their opinions which expresses substantial doubt about the Company's ability to continue as a going concern. The Company has required periodic infusions of capital to survive and remain solvent. There can be no assurance that the Company will continue to be able to attract additional capital and there can be no assurance that the Company will become profitable in the foreseeable future. The Company's primary need for capital has been to purchase raw materials, upgrade machinery and continue to develop and enhance patents and trademarks. On March 24, 2000, the Board of Directors of the Company approved a temporary reduction in the conversion price on the 7% Senior Convertible Debenture into common stock. The conversion price was reduced from $1.50 to the average bid price of the Company's common stock for the twenty-five trading days immediately prior to the receipt of a notice of conversion, with a minimum conversion price of $0.50. The notice of conversion for the temporary reduction must be received by April 30, 2000 and must include all accrued interest through May 31, 2000. As a result, the Company will record an expense related to the reduction in conversion price. As of April 30, 2000, the Company received notices of conversion from all of the debenture holders. On March 24, 2000, the Board of Directors also approved a temporary reduction in the exercise price of all warrants and options outstanding. The exercise price was reduced from $1.50 to the average bid price of the Company's common stock for the twenty-five trading days immediately prior to the receipt of a notice of conversion with a minimum conversion price of $0.50. The notice of exercises must be received by April 30, 2000. During the three months ended March 31, 2000, the Company cancelled 100,000 stock options outstanding to officers and issued an additional 335,000 stock options, which expire December 31, 2004 and are subject to certain vesting terms. During the three months ended March 31, 2000, a warrant holder submitted 40,000 warrants to purchase common stock for cancellation by the Company. On March 27, 2000, the Company entered into a one-year investment banking agreement with Givigest Fiduciaria SA "Givigest" to raise equity capital. As of April 30, 2000, the Company has been advised that $225,000 has been raised pursuant to the agreement and the subscription agreement is being prepared and the funds will be forwarded to the Company during the second quarter of fiscal 2000. The Company's working capital as of March 31, 2000 was $1,104,883 compared to working capital of $1,416,212 at December 31, 1999. The decrease is primarily due to the increase in cash outflows during the first three months of fiscal 2000. The net receivables were $108,658 at March 31, 2000 compared to $57,603 at December 31, 1999. The net increase of $51,055 is due to additional receivables recorded for sales during the three months ended March 31, 2000 partially offset by payments on receivables at December 31, 1999. Inventories at March 31, 2000 were $681,987 and $577,389 at December 31, 1999. The increase of $104,598 or 18% is primarily due to an increase in finished goods for upcoming shipments. Advances and prepaids were $50,339 at March 31, 2000 compared to $41,895 at December 31, 1999. The increase is primarily due to a loan receivable of approximately $9,000 that was made during the first three months of fiscal 2000. Inventory is evaluated by reviewing on hand materials and related quantities and confirming that the market for the respective materials is continually present. The Company analyzes all inventory items for slow movement and repair and fully reserves items that do not move for at least three months. The days in inventory ratio increased by 70% from 183 at December 31, 1999 to 311 at March 31, 2000. This is due to the increase in finished goods inventory for upcoming shipments. The inventory turnover at December 31, 1999 was 2.0 compared with 1.2 at March 31, 2000. The Company recognized a 12% gross profit during the three months ended March 31, 2000 compared to a 7% gross profit during the three months ended March 31, 1999. The Company will continue to operate at low margins until sales increase substantially. In addition, as sales increase, additional working capital is required to fund inventory and work in process. As a result of these factors, the Company has an ongoing and urgent need for an infusion of additional working capital. This need was met in fiscal 1999 by the placement of Senior Convertible Notes of $1,500,000. The Company will continue to require an infusion of additional working capital in order to develop its business. The source, timing and costs of such infusion is uncertain, and there is no certainty that the Company will be successful in raising additional working capital, either through the sale of debt or equity securities, or through commercial banking lines of credit. The Company currently has no banking lines of credit. The Company had cash outflows of $614,955 from operating activities for the three months ended March 31, 2000 compared to cash outflows of $492,840 for the three months ended March 31, 1999. The change in net outflows of $122,115 from operating activities between the two comparable quarters primarily resulted from the decrease in trade receivables of $21,093, the decrease in advances and prepaids of $58,710 and the decrease in accounts payable and accrued expenses of $128,080, which was partially offset by the increase in inventories of $72,872, the increase in deferred revenue of $6,285 and the decrease in the net loss from operations after adjustments for non-cash items of $6,611. Net cash used in investing activities was $24,068 for the three months ended March 31, 2000 compared to $26,749 for the three months ended March 31, 1999. The net decrease is due to the reduction in patent expenditures during the first quarter of fiscal 2000, offset by increases in property and equipment expenditures. Cash flows from financing activities were $0 during the three months ended March 31, 2000 compared to $615,000 during the three months ended March 31, 1999. During the three months ended March 31, 1999, the Company received proceeds from the exercise of warrants totaling $615,000. There were no warrants exercised during the three months ended March 31, 2000. 3. SEASONALITY AND INFLATION The Company's sales do not appear to be subject to any seasonal fluctuations. The Company does not believe that inflation has had a material impact on its operations. 4. YEAR 2000 Many existing computer systems and applications use only two digits to identify a year in the date field without considering the impact of the change in the century. As a result, such systems and applications could fail or create erroneous results unless corrected so that they can process data related to the Year 2000. The Company relies on its systems and applications in operating and monitoring all major aspects of its business, including financial statements, such as general ledger, accounts receivable and accounts payable. The Company also relies, directly and indirectly on external systems of business enterprises such as its suppliers, creditors and financial organizations for accurate exchange of data. Following the Year 2000 transition, the Company has not experienced any known disruption to its business as of Year 2000. The cost of the Company's Year 2000 programs was approximately $25,000, which was not material to the Company's financial position or results of operations. Although the Company's business systems were Year 2000 compliant by December 31, 1999, the Company makes no assurances regarding Year 2000 compliance of third party systems. The Company has not incurred any problems with third parties related to Year 2000 but can not guarantee that it will not in the future. FORWARD LOOKING STATEMENT - --------------------------- The above paragraphs and other parts of this Form 10-QSB Report include "Forward Looking Statements". All statements other than statements of historical fact included herein, including any statements with respect sales forecast, future product acceptance or other future matters, are Forward Looking Statements. Although the Company believes that there is a reasonable basis for the projections reflected in such Forward Looking Statements, it can give no assurance that such expectation will prove to be correct. Certain of the important factors that could cause actual results to differ materially and negatively from the Company's expectations, among others, included a slow down in the trend in sales and orders during the remainder of the year, an inability to obtain sufficient working capital to meet order demand, and/or a worldwide economic slowdown. PART II - OTHER INFORMATION ITEM 1. - LEGAL PROCEEDINGS A former employee of the Company was seeking a severance payment of $101,500 per terms of his employment agreement, which was voluntarily terminated in November 1998. The Company has established a liability for the entire amount. Mediation was held during April 2000 between the parties and the issue was tentatively settled. ITEM 2. - CHANGES IN SECURITIES In January 2000, the Board of Directors declared a one-to-ten reverse stock split. All stock-related data in the consolidated financial statements reflect the stock split for all periods presented. In 1991, certain stockholders of the Company entered into an escrow agreement under which a total of approximately 450,000 shares of the Company's common stock were placed in escrow. The shares were entitled to be released from escrow based on the performance of the Company as measured by cash flow (as defined by the agreement) and certain other conditions. Per the agreement, the Company would cancel any shares remaining in escrow at December 31, 1999. The Company's transfer agent canceled all such shares in January 2000. The shares are included in the number of shares outstanding for prior periods presented but have been excluded from the computation of basic and diluted loss per share for each of the prior periods presented. ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted in the first quarter of fiscal 2000. ITEM 6. - EXHIBITS (3)(I) ARTICLES OF INCORPORATION. INCORPORATED BY REFERENCE TO EXHIBITS ATTACHED TO AMENDED FORM 10 FILED JULY 23, 1999. (3)(II) BYLAWS. INCORPORATED BY REFERENCE TO EXHIBITS ATTACHED TO AMENDED FORM 10 FILED JULY 23, 1999. (10) MATERIAL CONTRACTS. INCORPORATED BY REFERENCE TO EXHIBITS ATTACHED TO FORM 10 FILED APRIL 11, 2000, FORM 10Q FILED NOVEMBER 12, 1999 AND AMENDED FORM 10 FILED JULY 23, 1999. (27). FINANCIAL DATA SCHEDULE SIGNATURES PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED. AIR PACKAGING TECHNOLOGIES, INC. /s/ Donald Ochacher --------------------- DONALD OCHACHER CHIEF EXECUTIVE OFFICER /s/ Janet Maxey ----------------------------------- JANET MAXEY CHIEF FINANCIAL OFFICER DATE: May 12, 2000_______ ----------------------- EX-27 2
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S BALANCE SHEET AS OF MARCH 31, 2000 AND STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2000. 1 3-MOS DEC-31-1999 JAN-01-2000 MAR-31-2000 511128 0 131288 (22630) 681987 1352112 2232913 (1556258) 2440048 247229 0 0 0 75204 617615 2440048 147452 147452 129343 129343 366753 0 17996 (366640) 0 (366640) 0 0 0 (366640) (.05) (.05) FOR THE PURPOSES OF THIS EXHIBIT, PRIMARY MEANS BASIC.
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