UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 5, 2009
DesignLine Corporation
(Exact name of registrant as specified in its charter)
Delaware | 333-148735 | 27-1263294 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
2309 Nevada Boulevard Charlotte, North Carolina | 28273 | |
(Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code:704-494-7800
(Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheets
As of October 3, | As of December 31, | |||||||
2009 | 2008 | |||||||
(Unaudited) | ||||||||
Assets | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 1,924,289 | $ | 5,371 | ||||
Restricted Cash | 4,172,435 | — | ||||||
Accounts Receivable, Net | 5,418,085 | 1,721,122 | ||||||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | 4,943,418 | — | ||||||
Inventories, Net | 6,852,956 | 6,893,447 | ||||||
Prepaid Expenses and Other Current Assets | 1,995,325 | 907,286 | ||||||
Total Current Assets | 25,306,508 | 9,527,226 | ||||||
Property, Plant and Equipment, Net | 5,845,268 | 4,042,228 | ||||||
Goodwill | 2,768,000 | — | ||||||
Intangible Assets, Net | 9,816,049 | 3,951,756 | ||||||
Other Assets | 6,627,170 | 2,007,500 | ||||||
Total Assets | $ | 50,362,995 | $ | 19,528,710 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current Liabilities | ||||||||
Current Maturities of Long-Term Debt | $ | 980,738 | $ | 1,176,637 | ||||
Accounts Payable | 11,320,590 | 7,045,226 | ||||||
Short-Term Borrowings | 8,685,376 | 7,061,806 | ||||||
Accrued Expenses | 1,408,396 | 1,218,017 | ||||||
Advance Payments on Contracts | 12,355,653 | 174,745 | ||||||
Convertible Notes, Net of Debt Discount of $410,272 at October 3, 2009 | 3,389,763 | — | ||||||
Derivative Liabilities | 582,289 | — | ||||||
Total Current Liabilities | 38,722,805 | 16,676,431 | ||||||
Long-Term Debt, Net of Current Maturities | 59,953 | 110,464 | ||||||
Total Liabilities | 38,782,758 | 16,786,895 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ Equity | ||||||||
Preferred Stock, $.0001 par value: authorized 15,000,000 shares, none issued or outstanding at October 3, 2009 and December 31, 2008 | — | — | ||||||
Common Stock, $.0001 par value: authorized 55,000,000 shares, 35,230,333 and 29,300,000 issued and outstanding at October 3, 2009 and December 31, 2008, respectively | 3,523 | 2,930 | ||||||
Additional Paid-In Capital | 28,402,048 | 14,124,899 | ||||||
Accumulated Other Comprehensive Income (Loss) | 99,155 | (958,961 | ) | |||||
Accumulated Deficit | (16,924,489 | ) | (10,427,053 | ) | ||||
Total Stockholders’ Equity | 11,580,237 | 2,741,815 | ||||||
Total Liabilities and Stockholders’ Equity | $ | 50,362,995 | $ | 19,528,710 | ||||
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Consolidated Statements of Operations
(Unaudited)
For the Three Month Period Ended | For the Nine Month Period Ended | |||||||||||||||
October 3, | September 30, | October 3, | September 30, | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||||
Sales | $ | 9,857,020 | $ | 7,804,144 | $ | 31,900,210 | $ | 20,961,011 | ||||||||
Cost of Sales | 10,028,871 | 5,965,930 | 30,920,420 | 16,925,142 | ||||||||||||
Gross (Loss) Profit | (171,851 | ) | 1,838,214 | 979,790 | 4,035,869 | |||||||||||
General and Administrative Expenses | (2,981,548 | ) | (2,542,898 | ) | (6,667,872 | ) | (6,082,895 | ) | ||||||||
Operating Loss | (3,153,399 | ) | (704,684 | ) | (5,688,082 | ) | (2,047,026 | ) | ||||||||
Other Expense | (24,906 | ) | (11,282 | ) | (33,821 | ) | (24,662 | ) | ||||||||
Interest Income | 30,885 | 138 | 74,916 | 7,855 | ||||||||||||
Interest Expense | (449,568 | ) | (95,681 | ) | (850,450 | ) | (259,694 | ) | ||||||||
Net Loss | $ | (3,596,988 | ) | $ | (811,509 | ) | $ | (6,497,437 | ) | $ | (2,323,527 | ) | ||||
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Consolidated Statements of Cash Flows
(Unaudited)
For the Nine Month Period Ended | ||||||||
October 3, 2009 | September 30, 2008 | |||||||
Cash Flows from Operating Activities | ||||||||
Net Loss | $ | (6,497,437 | ) | $ | (2,323,527 | ) | ||
Adjustments to Reconcile Net Loss to Net Cash Provided (Used) by Operating Activities: | ||||||||
Depreciation | 715,670 | 467,569 | ||||||
Amortization | 299,075 | 322,948 | ||||||
Loss on Disposal of Property, Plant and Equipment | 1,572 | 9,614 | ||||||
Common Stock Issued to Consultants | 260,000 | — | ||||||
Common Stock Issued for Interest on Convertible Notes | 208,343 | — | ||||||
Amortization of Discount on Subordinated Debt | 179,498 | — | ||||||
Change in Fair Value of Derivative Instruments | (7,841 | ) | — | |||||
Changes in Operating Assets and Liabilities: | ||||||||
Restricted Cash | (4,172,435 | ) | — | |||||
Accounts Receivable | (3,696,963 | ) | (2,397,319 | ) | ||||
Costs and Estimated Earnings in Excess of Billings on Uncompleted Contracts | (4,943,418 | ) | — | |||||
Inventories | 40,491 | (2,630,072 | ) | |||||
Prepaid Expenses and Other Current Assets | (991,690 | ) | 113,598 | |||||
Other Assets | (4,619,670 | ) | — | |||||
Accounts Payable | 4,425,364 | 73,957 | ||||||
Accrued Expenses | 190,739 | 891,321 | ||||||
Advance Payment on Contracts | 12,180,908 | 211,283 | ||||||
Net Cash Used by Operating Activities | (6,427,794 | ) | (5,260,628 | ) | ||||
Cash Flows from Investing Activities | ||||||||
Purchases of Property, Plant and Equipment | (2,080,079 | ) | (533,870 | ) | ||||
Proceeds from Disposition of Property, Plant and Equipment | 302,970 | 20,708 | ||||||
Net Cash Used by Investing Activities | (1,777,109 | ) | (513,162 | ) | ||||
Cash Flows from Financing Activities | ||||||||
Issuance of Common Stock | 1,576,000 | 3,600,000 | ||||||
Issuance of Convertible Notes | 7,350,035 | — | ||||||
Net Proceeds from Short-Term Borrowings | 1,623,570 | 2,240,327 | ||||||
Proceeds from Long-Term Debt | 194,207 | 112,063 | ||||||
Repayments of Long-Term Debt | (440,617 | ) | (979,003 | ) | ||||
Net Cash Provided by Financing Activities | 10,303,195 | 4,973,387 | ||||||
Effect of Exchange Rate Changes | (179,374 | ) | 696,326 | |||||
Net Increase (Decrease) in Cash and Cash Equivalents | 1,918,918 | (104,077 | ) | |||||
Cash and Cash Equivalents, Beginning of Period | 5,371 | 143,209 | ||||||
Cash and Cash Equivalents, End of Period | $ | 1,924,289 | $ | 39,132 | ||||
Supplemental Cash Flow Information: | ||||||||
Cash Paid for Taxes | $ | — | $ | — | ||||
Cash Paid for Interest | $ | 352,902 | $ | 234,327 | ||||
Noncash Activities: | ||||||||
Acquisition of Goodwill with Common Stock | $ | 2,768,000 | $ | — | ||||
Acquisition of Intangibles with Common Stock | $ | 3,185,000 | $ | — | ||||
Acquisition of Business with Common Stock and Subordinated Debt | $ | 2,580,400 | $ | — | ||||
Conversion of Debt to Common Stock | $ | 4,300,000 | $ | — | ||||
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Notes to Unaudited Consolidated Financial Statements
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Notes to Unaudited Consolidated Financial Statements
October 3, 2009 | December 31, 2008 | |||||||
Trade Accounts Receivable | $ | 5,418,085 | $ | 1,721,122 | ||||
Less: Allowance for Doubtful Accounts | — | — | ||||||
Accounts Receivable, Net | $ | 5,418,085 | $ | 1,721,122 | ||||
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Notes to Unaudited Consolidated Financial Statements
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Notes to Unaudited Consolidated Financial Statements
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Notes to Unaudited Consolidated Financial Statements
Assumptions: | ||||
The estimated fair value of the Company’s stock based on recent transactions and internal valuation models using market values of comparable companies and discounted cash flows: | $ | 2.08 | ||
The volatility of the Company’s stock based on comparable companies as the Company’s stock was not publicly traded: | 88 | % | ||
The likelihood that the Company will complete the financing transactions contemplated in the Sub Notes: | 95 | % |
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Notes to Unaudited Consolidated Financial Statements
Exercise Price | ||||||||
Instrument | Per Share | Potential Shares | ||||||
Convertible Subordinated Notes | $ | 1.00 | 1,650,000 | |||||
Senior Subordinated Convertible Promissory Notes | (1 | ) | 1,400,000 | |||||
Warrants | (1 | ) | 350,000 | |||||
Total | 3,400,000 | |||||||
(1) | Exercise price equal to (a) $1.00 per share of common stock (or the lower amount in the event of subsequent financings at a price less than $1.00 per share) or (b) if the Company consummates certain financing transactions on or before December 31, 2009, 75% of the purchase price paid by the investors in the financing transaction. |
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Notes to Unaudited Consolidated Financial Statements
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Notes to Unaudited Consolidated Financial Statements
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FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
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For the Three Month | For the Nine Month | |||||||||||||||||||||||
Period Ended | Period Ended | |||||||||||||||||||||||
October 3, | September 30, | October 3, | September 30, | |||||||||||||||||||||
2009 | 2008 | Change | 2009 | 2008 | Change | |||||||||||||||||||
Sales | $ | 9,857,020 | $ | 7,804,144 | 26.3 | % | $ | 31,900,210 | $ | 20,961,011 | 52.2 | % | ||||||||||||
Cost of Sales | 10,028,871 | 5,965,930 | 68.1 | % | 30,920,420 | 16,925,142 | 82.7 | % | ||||||||||||||||
Gross (Loss) Profit | (171,851 | ) | 1,838,214 | (109.3 | %) | 979,790 | 4,035,869 | (75.7 | %) | |||||||||||||||
Gross Margin | (1.7 | %) | 23.6 | % | 3.1 | % | 19.3 | % | ||||||||||||||||
General and Administrative Expenses | (2,981,548 | ) | (2,542,898 | ) | 17.3 | % | (6,667,872 | ) | (6,082,895 | ) | 9.6 | % | ||||||||||||
Operating Loss | (3,153,399 | ) | (704,684 | ) | 347.5 | % | (5,688,082 | ) | (2,047,026 | ) | 177.9 | % | ||||||||||||
Other Expense | (24,906 | ) | (11,282 | ) | 120.8 | % | (33,821 | ) | (24,662 | ) | 37.1 | % | ||||||||||||
Interest Income | 30,885 | 138 | N/A | 74,916 | 7,855 | 853.7 | % | |||||||||||||||||
Interest Expense | (449,568 | ) | (95,681 | ) | 369.9 | % | (850,450 | ) | (259,694 | ) | 227.5 | % | ||||||||||||
Net Loss | $ | (3,596,988 | ) | $ | (811,509 | ) | 343.2 | % | $ | (6,497,437 | ) | $ | (2,323,527 | ) | 179.6 | % | ||||||||
Buses Sold | 49 | 45 | 8.9 | % | 147 | 129 | 14.0 | % |
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Revolving Credit Facility(1) | $ | 6,517,256 | ||
Overdraft Facility(2) | 2,167,519 | |||
Total | $ | 8,684,775 | ||
(1) | $7.0 million revolving credit facility with a lender in the United States, collateralized by a first-priority interest in substantially all of our U.S. assets. As amended on October 22, 2009, the revolving credit facility matures on December 1, 2009 and bears a floating interest rate based on the 30-day LIBOR rate plus a margin of 7.0% per annum. | |
(2) | $3.5 million New Zealand Dollar overdraft facility with a lender in New Zealand, collateralized by all of the property of DesignLine NZ. This facility provides for letters of credit, an overdraft facility and other instruments up to a limit of $3.5 million NZD. Overdrafts bear interest at a variable rate based on the Official Cash Rate established by the Reserve Bank of New Zealand (7.02% per annum at October 3, 2009). This facility has no stated maturity date and all amounts due are payable upon demand. |
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For the Years Ending December 31, | Amount | |||
2009 | $ | 13,337,579 | ||
2010 | 140,469 | |||
2011 | 38,166 | |||
2012 | 9,888 | |||
2013 | — | |||
Total | $ | 13,526,102 | ||
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DesignLine Corporation | ||||
Dated: November 19, 2009 | By: | /s/ Brad C. Glosson | ||
Brad C. Glosson | ||||
Chief Executive Officer | ||||
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