<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Period Ended January 29, 1995
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or
[_] Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the Transition Period from
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to
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Commission File Number 0-8567
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DATAMETRICS CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 95-3545701
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(State or other jurisdiction (I.R.S. Employer
incorporation or organization) Identification Number)
21135 Erwin St.
Woodland Hills, California 91367
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(Address of principal executive offices) (Zip Code)
(818)598-6200
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(Registrant's telephone number, including area code)
Not applicable
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Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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
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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 the court.
Yes No
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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 practical date.
Common Stock. $.01 Par Value--9,342,455 shares as of February 17, 1995
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BALANCE SHEETS Datametrics Corporation
(unaudited)
<TABLE>
<CAPTION>
January 29, October 30,
(In thousands, except for share data) 1995 1994
=============================================================== ============= =============
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $1,014 $988
Accounts receivable 5,221 8,730
Inventory 6,110 6,038
Income taxes receivable 325 325
Prepaid expenses 391 267
Deferred tax asset 571 571
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Total current assets 13,632 16,919
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Property and Equipment, At Cost:
Machinery and equipment 4,262 3,710
Furniture, fixtures & computer equipment 2,366 2,172
Leasehold improvements 374 363
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7,002 6,245
Accumulated depreciation and amortization (4,132) (3,970)
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Net property and equipment 2,870 2,275
Deferred Tax Assets 64 64
Other Assets 751 692
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$17,317 $19,950
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LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank -- $ 600
Accounts payable $ 948 1,917
Accrued commissions and payroll 530 845
Accrued warranty 164 182
Other accrued liabilities 402 368
Advance payments and progress payments on contracts 286 538
Current portion of capital lease and loan obligations 430 108
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Total current liabilities 2,760 4,558
CAPITAL LEASE OBLIGATIONS 147 32
LONG TERM DEBT DUE AFTER ONE YEAR 642 --
OTHER LONG-TERM LIABILITIES 139 150
DEFERRED TAX LIABILITY 76 76
EXCESS OF ACQUIRED NET ASSETS OVER COST 457 533
SERIES B REDEEMABLE PREFERRED STOCK 956 940
564,556 shares authorized, issued and outstanding (liquidation
preference and redemption price $988)
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value--15,000,000 shares
authorized; 9,331,955 shares issued and
outstanding in 1995 (9,258,452 in 1994) 93 93
Additional paid-in capital 14,678 14,608
Accumulated deficit (2,631) (1,040)
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Total stockholders' equity 12,140 13,661
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$17,317 $19,950
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</TABLE>
See accompanying notes
1
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Cash Flows Statement Datametrics Corporation
(Unaudited)
<TABLE>
<CAPTION>
For The Three Month Period
Ended
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January 29, January 30,
(In thousands)(Brackets denote cash outflows) 1995 1994
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($1,575) ($242)
Adjustments:
Amortization of excess of acquired net assets (76) (56)
Depreciation 174 151
Changes in balance sheet items:
Accounts receivable 3,509 981
Inventory (72) (854)
Prepaid expenses (124) (15)
Accounts payable (969) (428)
Accrued commissions and payroll (315) (237)
Advance and progress payments from customers (252) 120
Other accrued liabilities 34 67
Income taxes -- (81)
Other (88) (327)
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Net cash provided by (used in) operating activities 246 (921)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and equipment (570) (133)
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Net cash used in investing activities (570) (133)
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings on notes payable 750 3,150
Payments on notes payable (1,350) (1,800)
Proceeds from the issuance of common stock 70 28
Borrowings of long-term debt 933 --
Payments on long-term debt (16) --
Payments on capital lease obligations (37) (36)
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Net cash provided by financing activities 350 1,342
Net increase in cash and cash equivalents 26 288
Cash and cash equivalents at the beginning of the period 988 199
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CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD $1,014 $487
============ ==========
Cash paid during the period for:
Interest $8 $48
Noncash investing and financing activities:
Accretion on preferred stock 16 14
Issuance of capital lease obligations 199 --
</TABLE>
See accompanying notes.
2
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STATEMENTS OF OPERATIONS Datametrics Corporation
(Unaudited)
<TABLE>
<CAPTION>
For The Three Month Period
Ended
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January 29, January 30,
(In thousands, except share and per share data) 1995 1994
============================================== =========== ===========
<S> <C> <C>
SALES $3,451 $5,634
Cost of sales 2,703 3,949
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Gross profit 748 1,685
OPERATING EXPENSES:
Research & development 1,035 409
Selling, general & administrative 1,356 1,682
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2,391 2,091
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Loss from operations (1,643) (406)
INTEREST EXPENSE, NET 8 42
AMORTIZATION OF EXCESS OF ACQUIRED NET ASSETS OVER COST (76) (56)
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Loss before provision for income taxes (1,575) (392)
PROVISION (BENEFIT) FOR INCOME TAXES -- (150)
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NET LOSS (1,575) (242)
Preferred stock dividends or accretion (16) (14)
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Loss applicable to common stockholders ($1,591) ($256)
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Loss per share of common stock:
Primary: ($0.16) ($0.03)
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Fully diluted: ($0.16) ($0.03)
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WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING:
Primary 10,118 7,762
Fully diluted 10,118 7,762
</TABLE>
3
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NOTES TO FINANCIAL STATEMENTS
JANUARY, 1995
(UNAUDITED)
1. THE FINANCIAL STATEMENTS INCLUDE THE ACCOUNTS OF DATAMETRICS CORPORATION.
Financial statements included herein have been prepared by the Company, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosure normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information presented not misleading. It is suggested that these
condensed financial statements be read in conjunction with the statements and
notes thereto included in the Company's latest Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
The information reflects all adjustments (consisting of normal recurring
adjustments) which are, in the opinion of Management, necessary to present a
fair statement of the results of operations for the interim periods. Much of
the Company's business is longer term and involves varying development,
production, and delivery schedules. Accordingly, results of a particular
quarter or quarter to quarter comparisons of recorded sales and profits may not
be indicative of future operating results or results for the fiscal year ending
October 29, 1995.
From our latest Annual Report on Form 10-K for which the following notes have
been omitted; note (1) pertains to summary of significant accounting policies
with the respect to line of business, revenue recognition, change in accounting
principle accounts receivable, inventories, major customers, cash and cash
equivalents, and property and equipment; note (2) pertains to the acquisition;
note (3) pertains to accounts receivable; note (4) pertains to inventory; note
(5) pertains to income taxes; note (6) pertains to debt; note (7) pertains to
leases; note (8) pertains to preferred stock; note (9) pertains to stock option
plans; note (10) pertains to contingencies; note (11) pertains to employee
benefit plans; and note (12) pertains to quarterly financial data.
4
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Inventories are stated at the lower of cost (first-in, first-out) or market and
include materials, labor, and overhead. Inventories as of January 29, 1995 are
as follows:
<TABLE>
<S> <C>
Raw Material $4,347,000
Work-in Process 1,763,000
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$6,110,000
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</TABLE>
5
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
RESULTS OF OPERATIONS
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Three Month Period Ended January 29, 1995 Compared
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To The Three Month Period Ended January 29, 1994
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The Company's operating cycle is long term and involves various types of
production contracts and varying production delivery schedules. The contract
process in which products are offered for sale is generally set before costs are
incurred and the prices are based on estimates of these costs which include the
anticipated impact of inflation. Accordingly, results of a particular quarter,
or quarter-to-quarter comparisons of recorded sales and profits, may not be
indicative of future operating results. The following comparative analysis
should be viewed in this context.
Sales for the three month period ended January 29, 1995 were $3,451,000, a
decrease of $2,183,000 or 38.7% compared to $5,634,000 for the same period the
prior year. Sales from printer and workstation contracts relating to the
Milstar programs, which should be completed during fiscal 1995, declined $2.1
million dollars while other defense related workstation sales increased $0.6
million, other defense related printer sales declined $0.3 million and sales to
NASA and other customers declined $0.4 million.
Gross profits for the three month period ended January 29, 1995 were $748,000
(21.7 % of sales), a decrease of $937,000 or 55.6% compared to $1,685,000
(29.9% of sales) for the same period the prior year. Gross profits as a
percentage of sales were adversely impacted by fixed costs being absorbed by
lower overall sales levels. Gross profits were also adversely impacted by the
change in product mix.
Research and development expenses were $1,035,000 for the three month period
ended January 29, 1995, an increase of $626,000 or 153.1%, compared with
$409,000 for the same period the prior year. The majority of fiscal 1995
expenditures relate to the development of the Company's high speed color printer
product.
Selling, general, and administrative expenses for the three month period ended
January 29, 1995 were $1,356,000 (39.3% of sales), a
6
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decrease of $326,000 or 19.4% compared with $1,682,000 (29.9% of sales) for the
same period the prior year. This dollar amount decrease is attributable to
lower military sales and marketing expenses partially offset by increased
marketing expenses for the color printer.
Interest expense amounted to $17,000 (offset by $9,000 of interest income) for
the period ended January 29, 1995, a net decrease of $25,000 compared with
$42,000 of net interest expense for the same period the prior year. This
decrease is due to lower borrowings and interest income partially offset by
increased capital leases. Amortization of excess of acquired net assets over
cost of was $76,000 for the three month period ended January 29, 1995 compared
to $56,000 for the same period last year. The amortization is a result of the
acquisition of Rugged Digital in August 1993.
The net loss for the three months ended January 29, 1995 amounted to
$1,575,000 compared with a net loss of $242,000 for the same period in the prior
year.
LIQUIDITY AND CAPITAL RESOURCES
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The Company had a revolving line of credit agreement (the "Credit Agreement")
with a bank, collateralized by substantially all of the Company's assets, which
allowed the Company to borrow $3,000,000 at the bank's reference rate plus .25%
(9.0% reference rate at January 29, 1995). The facility expired on January 31,
1995 and there was no outstanding balance at January 29, 1995.
The Company has entered into a revolving line of credit with a new bank. The
advance rate is eighty (80%) of eligible accounts receivable, plus eighty (80%)
of eligible progress billing receivables, to a maximum of the progress billing
receivable sublimit, which will not exceed the lesser of ten percent (10%) of
eligible accounts receivable or $500,000. The lending facility is capped at
$7,000,000 and expires on March 4, 1996. The interest rate is prime plus .25%.
The loan is secured by substantially all the Company's assets.
The Credit Agreement requires the Company to maintain certain financial ratios
and restricts or limits the Company's ability to (i) create certain lines, (ii)
convey, transfer, or sell assets, (iii) incur additional indebtedness, (iv)
redeem or repurchase any class of stock, and (v) pay dividends on its preferred
or common stock.
7
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From time to time the Company receives advance payments on certain contracts.
These funds may be used for working capital requirements and other general
corporate purposes until needed to complete the contracts. At January 29, 1995,
the Company had no advance payments in excess of costs.
The Company's working capital and current ratios at the end of fiscal years
1992, 1993, 1994 and the period ending January 29, 1995 were $4,856,000,
$8,708,000, $12,361,000 and $10,872,000 and 2.4, 2.6, 3.7 and 4.9 respectively.
The improvement in financial position over these periods is the result of
raising $5.1 million in a stock offering in 1994; and the Company's focus on
reducing asset levels and cutting operating costs. These actions have allowed
the Company to reduce long-term debt while increasing cash flow.
Management believes that the Company must purchase approximately $1,500,000 of
capital equipment (including capitalized leases) during fiscal 1995. The
Company's other principal commitments for fiscal 1995 are federal and state
income taxes, lease obligations for the Company's facility, operating leases,
principal and interest due on equipment borrowings, redemption of the Series B
Preferred Stock and interest on bank borrowings.
Management expects to finance the capital expenditure requirements and other
commitments from the new bank line of credit, capital leases and working
capital. In addition, pursuant to an agreement reached in February 1995, the
Company expects that in March 1995, the representation of the underwriters for
the Company's 1994 stock offering will exercise the warrants previously granted
to it and the Company will receive the aggregate warrant exercise price of
$535,000.00 in cash. The Company is also pursuing additional financing
alternatives for continued development and implementation of its commercial
color printer program.
BUSINESS ENVIRONMENT
As part of its diversification strategy, the Company has continued to invest
substantial resources in developing its commercial business. Results for 1995
are expected to be impacted by continued heavy investment in the Company's
CYMax(TM) commercial color printer program, during which time the Company
expects to introduce products to the market for field evaluation. During the
second half of 1995, the Company expects to make initial customer deliveries and
to ramp-up production, which the Company anticipates will begin generating
8
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incremental commercial revenues.
Companies engaged in supplying equipment and services to U.S. government defense
programs are subject to special risks including dependence on government
appropriations, contract termination without cause, contract renegotiation, and
the intense competition for the available defense business.
Because of the foregoing, as well as other factors affecting the Company's
operating results, past financial performance should not be considered to be a
reliable indicator of future performance.
PART II. OTHER INFORMATION
None.
9
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this Form 10-Q to be signed on its behalf by its duly
authorized representatives.
DATAMETRICS CORPORATION
-----------------------
(Registrant)
Dated: March 17, 1995 /s/ Sidney E. Wing
__________________________ ___________________________
Sidney E. Wing
President and Chief
Executive Officer
Dated: March 17, 1995 /s/ John J. Van Buren
__________________________ ___________________________
John J. Van Buren
Sr. Vice President and
Chief Financial Officer
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
ACCOMPANYING CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF DATAMETRICS
CORPORATION AS OF AND FOR THE THREE MONTH PERIOD ENDING JANUARY 29, 1995 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-29-1995
<PERIOD-END> JAN-29-1995
<CASH> 1,014
<SECURITIES> 0
<RECEIVABLES> 5,227
<ALLOWANCES> 6
<INVENTORY> 6,110
<CURRENT-ASSETS> 13,632
<PP&E> 7,002
<DEPRECIATION> 4,132
<TOTAL-ASSETS> 17,317
<CURRENT-LIABILITIES> 2,760
<BONDS> 0
<COMMON> 93
956
0
<OTHER-SE> 14,678
<TOTAL-LIABILITY-AND-EQUITY> 17,317
<SALES> 3,451
<TOTAL-REVENUES> 3,451
<CGS> 2,703
<TOTAL-COSTS> 2,703
<OTHER-EXPENSES> 2,315
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8
<INCOME-PRETAX> (1,575)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,575)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,575)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
